Clean Power Alliance Finance Committee
October 30, 2024

REVISED
Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, October 30, 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
Council Office
207 Harvard Avenue
Claremont, CA 91711
Thousand Oaks City Hall
City Manager’s Office, Council Office #1
2100 Thousand Oaks Blvd.

Thousand Oaks, CA 91362
Rolling Hills Estates City Hall
Conference Room
4045 Palos Verdes Drive North
Rolling Hills Estates, CA 90274
Calabasas City Hall
Council Conference Room
100 Civic Center Way
Calabasas, CA 91302
Carson City Hall
City Manager’s Conference Room
701 East Carson Street
Carson, CA 90745
Location Added
PUBLIC COMMENT: Members of the public may submit their comments by one of the following options:
• Email Public Comment: Members of the public are encouraged to submit written comments on any agenda item to [email protected] up to four hours before the meeting. Written public comments will be announced at the meeting and become part of the meeting record. Public comments received in writing will not be read aloud at the meeting. • Provide Public Comment During the Meeting: The General Public Comment item is reserved for persons wishing to address the Committee on any Clean Power Alliance-related matters not on today’s agenda. Public comments on matters on today’s Consent Agenda and Regular Agenda shall be heard at the time the matter is called. Comments on items on the Consent Agenda are consolidated into one public comment period. Members of the public who wish to address the Committee at CPA’s Office are requested to complete a comment card and provide it to staff. If you are attending from a remote location, please identify yourself to a CPA representative when your item is called. Each speaker is limited to two (2) minutes (in whole-minute increments) per agenda

item with a cumulative total of five 5 minutes to be allocated between the General Public Comment, the entire Consent Agenda, or individual items in the Regular Agenda. Please refer to Policy No. 8 – Public Comment for additional information.

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 & ROLL CALL

GENERAL PUBLIC COMMENT

CONSENT AGENDA

1. Approve Minutes from the September 25, 2024, Finance Committee Meeting

2. Receive and File September 2024 Risk Management Team Report

3. Receive and File September 2024 Investment Report

4. Receive and File August 2024 Financial Dashboard

REGULAR AGENDA

5. Receive Report from the Independent Auditor and Review Fiscal Year 2023- 2024 – Audited Financial Statements and FY 2023-2024 Budget to Actual Report

COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING ON DECEMBER 3, 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.

Staff Report – Agenda Item 1
To: Finance Committee
Subject: Approve Minutes from September 25, 2024, Finance Committee Meeting
Date: October 30, 2024

RECOMMENDATION
Approve.

ATTACHMENT

1. Minutes

Finance Committee Item 1

MINUTES
Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, September 25, 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 11:03 a.m. and Gabby Monzon, Clerk of the Board, conducted roll call.

Roll Call
Camarillo Susan Santangelo Committee Chair Remote
Calabasas Ed Albrecht Committee Member Remote
Carson Reata Kulcsar Committee Member Absent
Claremont Corey Calaycay Committee Member Absent
Rolling Hills Estates Steve Zuckerman Committee Member Remote Santa Monica Pam O’Connor Committee Member Absent
Thousand Oaks David Newman Committee Member Remote
All votes are unanimous unless otherwise stated.

GENERAL PUBLIC COMMENT
There was no public comment.

Finance Committee Item 1

CONSENT AGENDA

1. Approve Minutes from the June 26, 2024, Finance Committee Meeting

2. Receive and File August 2024 Risk Management Team Report

3. Receive and File August 2024 Investment Report

4. Receive and File July 2024 Financial Dashboard
Motion: Committee Member Newman, Thousand Oaks
Second: Committee Member Zuckerman, Rolling Hills Estates 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, described changes to the Financial Dashboard that went into effect in July 2024. Mr. McNeil summarized financial performance in July and provided an outlook for the balance of the year's third calendar quarter.

Mr. McNeil provided an update on the CPA Prepay Transactions, noting that Goldman Sachs was selected as an underwriter for CPA’s third prepaid bond issuance in August 2024.

Regarding Committee Member Zukerman's inquiry about the Prepay Transactions Summary presentation materials, Mr. McNeil agreed to streamline the terminology (total/cumulative initial period savings and annual initial period savings) to make it easier for Board members to understand.

In response to Chair Santangelo’s question about whether there will be a presentation to the entire Board on the prepays, Mr. McNeil expressed that a presentation would likely occur after prepays four and five have been completed, and there will be a need for authorization for additional prepays. Mr. Bardacke said he would provide information regarding the third prepay bond issuance in the October Management Report to the Board.

Answering Committee Member Albrecht’s question regarding rates for prepays, how they move, the margin between good and bad, and capturing them at the right time, Mr.

McNeil stated that five-to-ten-year interest rates have the most impact on prepay bond economics and that staff and its Municipal Financial Advisor consider market conditions when planning prepay bond issuances.

COMMITTEE MEMBER COMMENTS
Committee Member Zuckerman asked about delinquencies, and Mr. McNeil noted that he will put something on an upcoming agenda to provide the committee with an update.

ADJOURN
Committee Chair Santangelo adjourned the meeting at 11:27 a.m.

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 September 2024 Risk Management Team Report Date: October 30, 2024
September 2024 RMT REPORT
Key Actions
• Reviewed the counterparty credit exposure summary
• Reviewed June 2024 day-ahead load forecast performance • Reviewed August 2024 market performance
• Reviewed energy positions and approved 2025-2028 hedge proposal for monthly RFO
• Reviewed positions for Resource Adequacy (RA), RPS and Carbon-Free energy products (CF)
• Reviewed 2024-2025 COD impacts on RA compliance
• Reviewed the status of Rexford and Desert Quartzite test energy • Reviewed the 2025-2027 slice of day RA position
• Reviewed Energy Risk Management Policy (ERMP) compliance for RA, REC, CF, and Energy
• Reviewed long-term energy contract amendments and terminations • Reviewed September 2024 CRR Allocations
• Reviewed and approved the Negative REC Price Strategy Policy Compliance
Policy Deviation Required Action
In April 2024, the energy
hedge position for the third
quarter of 2027 (July to
None.

Finance Committee Item 2
September) exceeded the
maximum hedge limit for
that period.

This policy deviation arises 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.

This policy deviation also arises from the latest load
forecast which includes a reduction in demand in Q3 2027 which increased CPA's hedge percentage for this period.

This deviation is expected to be resolved by Q3 2025 as the electricity production period nears and the
corresponding policy hedge limit maximums increase
above the level of energy hedges under contract.

ATTACHMENT
None.

Staff Report – Agenda Item 3
To: Finance Committee
From: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Receive and File September 2024 Investment Report Date: October 30, 2024

RECOMMENDATION
Receive and file.

ATTACHMENT

1. September 2024 Report

Clean Power Alliance Investment Report
September 2024
Statement
Local Agency Investment
Fund (LAIF)
Certificates of Deposit
(CDs)
California Asset Management
Program (CAMP)
US Treasury
Securities
Beginning Balance 16,778 80,000,000 284,636,283 0
Deposits - 10,000,000 0 997
Maturities & Withdrawals - 10,000,000 10,000,000 0
Ending Balance 16,778 80,000,000 275,864,595 997
Interest Earned* 64 365,210 1,228,312 1
Average Yield** 4.58% 5.01% 5.29% 5.12%
Weighted Average Term to Maturity (Months) 7.0 5.0 2.0 0.7 **Average yield for LAIF & CAMP is reported on a monthly basis; average yield for CDs is determined based on a weighted average annual basis Transaction Type Deposit Maturity
Depository River City Bank River City Bank
Par Amount 10,000,000 10,000,000
Rate 4.46% 5.46%
Placement Date 9/26/2024 3/28/2024
Maturity Date 3/27/2025 9/26/2024
Term (weeks) 26 52
Interest Earnings (Total) 224,866 275,971
Summary of Transactions (CDs)
* Interest earned on LAIF is based on daily compounding, account balances and monthly effective yield published by LAIF. Interest earned on CDs is based on the fixed interest rate of each CD and is paid out in full at maturity.

Interest earned on UST is based on the yield of each UST and is paid out at maturity (for terms <6mo) or biannually (for terms >6mo)

Staff Report – Agenda Item 4
To: Finance Committee
From: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Receive and File August 2024 Financial Dashboard Date: October 30, 2024

RECOMMENDATION
Receive and file.

ATTACHMENT

1. August 2024 Financial Dashboard

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
Non-Operating Income: interest income arising from deposits and investments net of borrowing costs and fees Investments: liquid and high-quality securities with maturities of 91 days or more Cash and Cash Equivalents: Includes bank deposits and high quality and liquid securities with maturities of less than 90 days Year to date (YTD): Represents the fiscal period beginning July 1, 2024 YTD
August
2024
Financial Dashboard
Note: Numbers may not sum up due to rounding.

Active Accounts
1,043,388
Participation Rate

93.0%
YTD Sales Volume
2,223 GWh
Aug Volume
1,117 GWh
Agr/Oth
Com-Lg
18%
Com-Sm
27%
Res
53%
In August 2024 CPA’s net position fell by $11.7 million, $11.5 million less than the budgeted reduction in net position of $23.2 million.

August 2024 revenues were $176.9 million, $1.3 million or 1% higher than FY 2024/25 budget.

August cost of energy was $186.2 million, $8.4 million lower than the FY 2024/25 budget primarily due to the non-utilization of contingencies. For the year-to-date, CPA’s net position fell by $8.9 million, $26.3 million less than the budgeted reduction in net position of $35.2 million primarily due to warmer than normal weather and higher revenue in July 2024 and the non-utilization of contingencies. Operating costs were $2.6 million below budget year-to-date due to lower than budgeted spending on general and administrative expenses, customer programs and other services, and the non-utilization of contingencies.

As of August 30th, 2024, CPA had unrestricted cash, cash equivalents, and investments of $436 million, and $159.853 million available in its bank line of credit representing 163 Days Liquidity on Hand.  CPA is financially sound and in compliance with its bank and other credit covenants.

Staff Report – Agenda Item 5
To: Finance Committee
From: Hui Lisano, Senior Director of Finance and Accounting David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Report from the Independent Auditor and Review of Fiscal Year 2023-2024 Audited Financial Statements and Fiscal Year 2023- 2024 Budget to Actual Report
Date: October 30, 2024

RECOMMENDATION
Receive report from the Independent Auditor and review Fiscal Year 2023-2024 Financial Statements and FY 2023-2024 Budget to Actual report.

BACKGROUND
Each year CPA publishes its June 30 fiscal year-end financial statements. CPA’s Bylaws require the Finance Committee to select an independent auditor to perform a financial audit of the accounts of CPA annually. In April 2024, the Finance Committee selected Baker Tilly to perform an audit of CPA’s Fiscal Year 2023-24 financial statements.

CPA staff is responsible for the preparation and fair presentation of the financial statements. The independent auditor performs tests to ensure that the financial statements are free from material misstatement. The FY 2023-24 Financial Statements (Attachment 3) consist of the following:
• Independent Auditors’ Report (Auditors’ Report)
• Management’s Discussion and Analysis
• Financial Statements, including:

Finance Committee Item 5
o Statements of Net Position
o Revenues and Expenses and Changes in Net Position
o Statements of Cash Flows
o Notes to the Financial Statements

DISCUSSION
Auditors’ Report
The Auditors’ Report includes its opinion that CPA’s FY 2023-24 Financial Statements “present fairly, in all material respects, the financial position of Clean Power Alliance of Southern California as of June 30, 2024, and 2023, and the respective changes in financial position and cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America”. The Auditors’ Report contains what is generally regarded as an unqualified or “clean” audit opinion.

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

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

Financial Highlights
• CPA recorded strong financial results in FY 2023-24. The net position increased by $106 million, up from a $80.3 million increase in the prior year and CPA deferred $135 million of revenue to the Fiscal Stabilization Fund consistent with the Board approved Fiscal Stabilization Fund Policy allowing these funds to be deployed in future years (see below for details).
• CPA’s FY 2023-24 financial results benefited from the following:
• Increases in retail electricity rates on July 2023 and new community enrollments in March 2024.
• Increases in investments and cash balances in high interest-earning accounts.
• Operating expenses, excluding the cost of energy, increased year over year from

Finance Committee Item 5
$34.7 million in FY 2022-23 to $41.1 million in FY 2023-24, an increase of 18.6%. • Cash was positively impacted by the operating surpluses, which were mainly driven by rate increases that went to effect in July 2023. Accounts receivable increased primarily due to the retail sales increase resulting from rate increases, more jurisdictions electing to adopt 100% Green as their default rate product, and three new community enrollments in March 2024. Other receivables increased compared to the prior year due to an increase in wholesale sales of electricity and receivables from the California Community Choice Financing Authority (CCCFA).

Prepaid expenses increased primarily due to increased Resource Adequacy costs and prepayments for Resource Adequacy. Deposits decreased primarily due to lower energy prices in June 2024 and lower posting obligations required by the California Independent Systems Operator (CAISO).
• In March 2024 CPA extended the term of its Credit Agreement with JP Morgan, keeping the facility size at $160 million and extending the expiry date to March 31, 2026.
• As of June 30, 2024, CPA had no loans, bank debt, or letters of credit outstanding, and apart from a $147,000 letter of credit issued to SCE, $159.853 million of CPA’s line of credit was unutilized.
• Total liquidity (unrestricted cash and cash equivalents and unused bank lines of credit) increased year over year from $289.3 million as of June 30, 2023, to $546.2 million as of June 30, 2024.
• The financial results comply with CPA’s credit covenants.

Key financial metrics and additional analysis of FY 2023-24 results are presented in the Presentation of FY 2023-24 Financial Results (see Attachment 5).

Fiscal Stabilization Fund
In September 2020, CPA’s Board approved the Fiscal Stabilization Fund (“Fund”) policy (“Policy”). The Fund allows CPA to defer revenue in years when financial results are strong and to apply deferred revenue in years when financial results are negatively

Finance Committee Item 5
impacted by uncontrollable events. Deferring revenue in years when financial results are strong allows CPA to apply these funds in years when financial results are less robust, providing CPA with a tool to guard against rate shocks, maintain compliance with financial covenants, and achieve annual budget objectives.

The Chief Executive Officer is authorized to exercise discretion and make transfers to and from the Fund consistent with the Policy objectives and under one of the following two conditions: A. Transfers when increases in the Net Position would exceed 4% of revenues in the absence of a transfer or B. Transfers when increases in the Net Position would fall below 4% of revenues in the absence of a transfer from the Fund.

The $135 million transfer in FY 2023/24 meets the authorization requirements and goals of the Policy. This year’s transfer to the Fund is consistent with CPA and stakeholder expectations vis-a-vis CPA’s A- Issuer Credit Rating.

FY 2023-24 Budget to Actual Report
The FY 2023-24 Budget to Actual Report (see Attachment 4) compares actual results for the 12-months ending June 30, 2024, with the FY 2023-24 Budget approved by the Board in June 2023.

Budget to Actual highlights include:
• Electricity revenues were 5% below budget as a result of cooler than normal weather conditions and lower than forecast electricity consumption. CPA deferred $135 million of revenue to the Fund resulting in Operating revenues that were $223 million or 14% below budget.
• Cost of energy were 2% below budget. Energy costs were negatively impacted by an increase in the 2023 Market Price Benchmark promulgated by CPUC in early October 2023 which increased certain renewable energy costs offset by energy consumption which was lower than forecast.
• Operating expenditures were 26% under the budget primarily due to lower spending on general and administrative expenses, customer programs and other

Finance Committee Item 5
services, and the non-utilization of contingencies.

CPA was within budget limits for all operating expense budget line items with the exception of SCE services which were $42.6 thousand or 2% over the budget. SCE service expenses exceeded the budget due to unanticipated charges levied by SCE that related to services performed in prior fiscal years.

Additional analysis of Budget to Actual results, including a comparison of actual FY 2023- 24 results with the FY 2023-24 Budget approved by the Board in June 2023, appears in the Presentation of FY 2023-24 Financial Results (Attachment 5).

Summary
For the year ending June 30, 2024, CPA increased the net position and total liquidity by $106 million and $257 million respectively. Reserves and Days Liquidity on Hand were 37% and 158 days respectively as of June 30, 2024 consistent with CPA’s financial objectives. CPA is in sound financial health and is well-positioned to serve its customers and deliver on its mission.

ATTACHMENTS

1. Presentation from the Independent Auditor

2. Audit Result Letter

3. FY 2023-24 Audited Financial Statements

4. FY 2023-24 Budget to Actual Report

5. Presentation of FY 2023-24 Financial Results

Reporting & Insights from
2024 Audit:

Clean Power Alliance of
Southern California
October 30, 2024

2 2
• Audit Results • Required communication to
Governing Body
• Impact of future
standards
• Discussion
AGENDA

3 Our responsibilities

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

4 Planned scope & timing

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

5 Key areas of focus & significant findings

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

6 Audit approach & results

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

7 Auditor communication to those charged with
governance

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
No audit findings or concerns
Baker Tilly agrees with CPA’s
accounting policies and
disclosures
Auditor
responsibility &
independence
Board
responsibility
No audit
adjustments
Accounting
policies and
estimates

8 Future accounting standards update

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

Discussion
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. The name Baker Tilly and its associated logo is used under license from Baker Tilly International limited. The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. © 2024 Baker Tilly Advisory Group, LP

10 Client service team
Bethany Ryers, CPA

PRINCIPAL
P: +1 (608) 240 - 2382
E: [email protected]
Ryan Theiler, CPA

MANAGER
P: +1 (608) 240 - 2571
E: [email protected]
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. The name Baker Tilly and its associated logo is used under license from Baker Tilly International limited. The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. © 2024 Baker Tilly Advisory Group, LP

Reporting and insights
from 2024 audit:

Clean Power Alliance of
Southern California
June 30, 2024

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

BAKER TILLY ADVISORY GROUP, LP AND BAKER TILLY US, LLP, TRADING AS BAKER TILLY, MEMBERS OF THE GLOBAL NETWORK OF BAKER TILLY INTERNATIONAL LTD., THE MEMBERS OF WHICH ARE SEPARATE AND INDEPENDENT LEGAL ENTITIES. BAKER TILLY US, LLP IS A LICENSED COPA FIRM THAT PROVIDES ASSURANCE SERVICES TO ITS CLIENTS. BAKER TILLY ADVISORY GROUP, LP AND ITS SUBSIDIARY ENTITIES PROVIDE TAX AND CONSULTING SERVICES TO THEIR CLIENTS AND ARE NOT LICENSED CPA FIRMS.

Executive summary
October 24, 2024
To the Board of Directors
Clean Power Alliance of Southern California
Los Angeles, California
We have completed our audit of the financial statements of Clean Power Alliance of Southern California (CPA) for the year ended June 30, 2024, and have issued our report thereon dated October 24, 2024.

This letter presents communications required by our professional standards.

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

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

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

© 2024 Baker Tilly US, LLP Page | 3
Responsibilities
Our responsibilities
As your independent auditor, our responsibilities include:
• Planning and performing the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Reasonable assurance is a high level of assurance. • Assessing the risks of material misstatement of the financial statements, whether due to fraud or error. Included in that assessment is a consideration of CPA's internal control over financial reporting. • Performing appropriate procedures based upon our risk assessment. • Evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management.
• Forming and expressing an opinion based on our audit about whether the financial statements prepared by management, with the oversight of the Board of Directors:
• Are free from material misstatement
• Present fairly, in all material respects and in accordance with accounting principles generally accepted in the United States of America
• Our audit does not relieve the Board of Directors of their responsibilities.

We are also required to communicate significant matters related to our audit that are relevant to the responsibilities of the Board of Directors, including:
• Internal control matters
• Qualitative aspects of CPA's accounting practice including policies, accounting estimates and financial statement disclosures
• Significant unusual transactions
• Significant difficulties encountered
• Disagreements with management
• Circumstances that affect the form and content of the auditors' report • Audit consultations outside the engagement team
• Corrected and uncorrected misstatements
• Other audit findings or issues

© 2024 Baker Tilly US, LLP Page | 4
Audit status
Significant changes to the audit plan
There were no significant changes made to either our planned audit strategy or to the significant risks and other areas of emphasis identified during the performance of our risk assessment procedures.

© 2024 Baker Tilly US, LLP Page | 5
Audit approach and results
Planned scope and timing
Audit focus
Based on our understanding of CPA and environment in which you operate, we focused our audit on the following key areas:
• Key transaction cycles
• Areas with significant estimates
• Implementation of new accounting standards
Our areas of audit focus were informed by, among other things, our assessment of materiality. Materiality in the context of our audit was determined based on specific qualitative and quantitative factors combined with our expectations about CPA's current year results.

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

Significant risk areas Testing approach Conclusion
Management override of
controls
Incorporate unpredictability into
audit procedures, emphasize
professional skepticism and
utilize audit team with industry
expertise
Procedures identified provided
sufficient evidence for our audit
opinion
Improper revenue recognition
due to fraud
Confirmation or validation of
certain revenues supplemented
with detailed predictive analytics
based on non-financial data and
substantive testing of related
receivables
Procedures identified provided
sufficient evidence for our audit
opinion
Potential for inaccurate billing
data from SCE
Review Calpine SOC report and
perform walkthrough to assess
the procedures established to
validate the data
Procedures identified provided
sufficient evidence for our audit
opinion

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

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

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

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

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

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

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

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

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

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

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

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

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Uncorrected misstatements and corrected misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management.

There were no misstatements identified.

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

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

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

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

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

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

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

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

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

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

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

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

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

© 2024 Baker Tilly US, LLP Page | 11
Management representation letter

801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
October 24, 2024
Baker Tilly US, LLP
4807 Innovate Lane
Madison, WI 53718
Dear Baker Tilly US, LLP:

We are providing this letter in connection with your audit of the financial statements of Clean Power Alliance of Southern California as of June 30, 2024 and 2023 and for the years then ended for the purpose of expressing an opinion as to whether the financial statements present fairly, in all material respects, the financial position of the Clean Power Alliance of Southern California and the respective changes in financial position and cash flows, where applicable, in conformity with accounting principles generally accepted in the United States of America (GAAP). We confirm that we are responsible for the fair presentation of the previously mentioned financial statements in conformity with accounting principles generally accepted in the United States of America. We are also responsible for adopting sound accounting policies, establishing and maintaining internal control over financial reporting, and preventing and detecting fraud.

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

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

Financial Statements
1) We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated June 21, 2022, including our responsibility for the preparation and fair presentation of the financial statements in accordance with U.S. GAAP.

801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
2) The financial statements referred to above are fairly presented in conformity with accounting principles generally accepted in the United States of America. The financial statements include all properly classified funds of the utility required by accounting principles generally accepted in the United States of America to be included in the financial reporting entity.
3) We acknowledge our responsibility for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 4) We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud.
5) Significant assumptions we used in making accounting estimates, including those measured at fair value, if any, are reasonable in accordance with U.S. GAAP. 6) Related party relationships and transactions, including revenues, expenditures/expenses, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties have been appropriately accounted for and disclosed in accordance with the requirements of accounting principles generally accepted in the United States of America. 7) All events subsequent to the date of the financial statements and for which accounting principles generally accepted in the United States of America require adjustment or disclosure have been adjusted or disclosed. No other events, including instances of noncompliance, have occurred subsequent to the financial statement date and through the date of this letter that would require adjustment to or disclosure in the aforementioned financial statements.
8) All material transactions have been recorded in the accounting records and are reflected in the financial statements.
9) We are not aware of any known actual, possible, pending, or threatened litigation, claims, or assessments or unasserted claims or assessments that are required to be accrued or disclosed in the financial statements in accordance with accounting principles generally accepted in the United States of America, and we have not

801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
consulted a lawyer concerning litigation, claims, or assessments that have or are anticipated to have a material impact.

Information Provided
10) We have provided you with:
a) Access to all information, of which we are aware, that is relevant to the preparation and fair presentation of the financial statements, such as financial records and related data, documentation, and other matters.
b) Additional information that you have requested from us for the purpose of the audit. c) Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence.
d) Minutes of the meetings of the Board of Directors or summaries of actions of recent meetings for which minutes have not yet been prepared.
11) We have disclosed to you results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud. 12) We have no knowledge of any fraud or suspected fraud that affects the entity and involves:
a) Management,
b) Employees who have significant roles in internal control, or c) Others where the fraud could have a material effect on the financial statements. 13) We have no knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees, former employees, regulators, or others.

801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
14) We have no knowledge of known instances of noncompliance or suspected noncompliance with provisions of laws, regulations, contracts, or grant agreements, or abuse, whose effects should be considered when preparing financial statements. 15) We have disclosed to you the names of our related parties and all the related party relationships and transactions, including side agreements, of which we are aware.

Other
16) There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting practices. 17) We have a process to track the status of audit findings and recommendations. 18) We have identified to you any previous financial audits, attestation engagements, and other studies related to the audit objectives and whether related recommendations have been implemented.
19) We have identified to you any investigations or legal proceedings that have been initiated with respect to the period under audit.
20) We are responsible for compliance with federal, state, and local laws, regulations, and provisions of contracts and grant agreements applicable to us, including tax or debt limits, debt contracts, and IRS arbitrage regulations; and we have identified and disclosed to you all federal, state, and local laws, regulations and provisions of contracts and grant agreements that we believe have a direct and material effect on the determination of financial statement amounts or other financial data significant to the audit objectives, including legal and contractual provisions for reporting specific activities in separate funds.
21) There are no:
a) Violations or possible violations of budget ordinances, federal, state, and local laws or regulations (including those pertaining to adopting, approving and amending budgets), provisions of contracts and grant agreements, tax or debt limits, and any related debt covenants whose effects should be considered for disclosure in the

801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
financial statements or as a basis for recording a loss contingency, or for reporting on noncompliance, except those already disclosed in the financial statement, if any.
b) Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by accounting principles generally accepted in the United States of America.
c) Rates being charged to customers other than the rates as authorized by the applicable authoritative body.
d) Violations of restrictions placed on revenues as a result of bond resolution covenants such as revenue distribution or debt service funding. 22) Clean Power Alliance of Southern California has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral.
23) Clean Power Alliance of Southern California has complied with all aspects of contractual agreements that would have a material effect on the financial statement in the event of noncompliance.
24) The financial statements properly classify all funds and activities. 25) Components of net position (net investment in capital assets; restricted; and unrestricted) are properly classified and, if applicable, approved. 26) Clean Power Alliance of Southern California has no derivative financial instruments such as contracts that could be assigned to someone else or net settled, interest rate swaps, collars or caps.
27) Provisions for uncollectible receivables, if any, have been properly identified and recorded.

801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
28) Deposits and investments are properly classified, valued, and disclosed (including risk disclosures, collateralization agreements, valuation methods, and key inputs, as applicable).
29) Provision, when material, has been made to reduce excess or obsolete inventories to their estimated net realizable value.
30) Capital assets, including infrastructure and intangible assets, are properly capitalized, reported, and, if applicable, depreciated/amortized. Any known impairments have been recorded and disclosed.
31) The operations and rate setting process meet the condition for application of accounting for regulated operations as outlined in GASB No. 62. All regulatory items included in the financial statements have been approved and are being accounted for in accordance with specific action taken by the regulatory body and as such the expectation of future recovery or refund is reasonable. 32) We have appropriately disclosed Clean Power Alliance of Southern California's policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position are available and have determined that net position were properly recognized under the policy.
33) We acknowledge our responsibility for the required supplementary information (RSI).

The RSI is measured and presented within prescribed guidelines and the methods of measurement and presentation have not changed from those used in the prior period.

We have disclosed to you any significant assumptions and interpretations underlying the measurement and presentation of the RSI.
34) Unused lines of credit, collateral pledged to secure debt and direct borrowings and private placements have been properly identified and disclosed. 35) We have identified any leases or other contracts that are required to be reported as leases and are in agreement with the key assumptions used in the measurement of any lease related assets, liabilities or deferred inflows of resources.

801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
36) We have assessed the impact of GASB Statement No. 96, Subscription-Based Information Technology Arrangements, and have determined the impact to be immaterial.
37) The auditing standards define an annual report as “a document, or combination of documents, typically prepared on an annual basis by management or those charged with governance in accordance with law, regulation, or custom, the purpose of which is to provide owners (or similar stakeholders) with information on the entity’s operations and the financial results and financial position as set out in the financial statements.” Among other items, an annual report contains, accompanies, or incorporates by reference the financial statements and the auditors’ report thereon. We confirm that we have not prepared an annual report. Should CPA elect to prepare an annual report in the future it will share the annual report with Baker Tilly before publishing the report.

Sincerely,
Clean Power Alliance of Southern California
Signed: _______________________________
Signed: _______________________________
David McNeil
Chief Financial Officer
Ted Bardacke
Chief Executive Officer

© 2024 Baker Tilly US, LLP Page | 19
Client Service Team
Bethany Ryers, CPA
Principal
4807 Innovate Ln
Madison, WI 53718
United States
T +1 (608) 240 2382 | Madison
[email protected]

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

© 2024 Baker Tilly US, LLP Page | 20
Accounting changes relevant to CPA
Future accounting standards update
GASB Statement
Number Description
Potentially
impacts you Effective date
101 Compensated Absences 6/30/2025
102 Certain Risk Disclosures 6/30/2025
103 Financial Reporting Model
Improvements 6/30/2026
Further information on upcoming GASB pronouncements.

Updated accounting and reporting for compensated absences The Governmental Accounting Standards Board (GASB) issued its Statement No. 101, Compensated Absences, in June 2022. The objective of GASB 101 is to update the recognition and measurement guidance for compensated absences for state & local government employers. It supersedes GASB No. 16, Accounting for Compensated Absences, issued in 1992, as well as earlier guidance, and addresses changes resulting from the types of leave now being offered. GASB 101 is effective for fiscal years beginning after December 15, 2023 (i.e., June 30, 2025 for CPA).

GASB 101 more appropriately reflects a liability when a government incurs an obligation for compensated absences, and will improve comparability of reporting between governments that offer different types of leave. It requires that liabilities be recognized for (1) leave that has not been used, and (2) leave that has been used but not yet paid in cash or settled-up via non-cash means. Compensated absences is defined as leave for which employees may receive one or more of the following:
• Cash payments when the leave is used for time off;
• Other cash payments, such as payment for unused leave upon termination of employment, or; • Noncash settlements, such as conversion to defined benefit postemployment benefits.

Examples of compensated absences provided in GASB 101 include vacation, sick leave, paid time off (PTO), holidays, parental leave, bereavement leave, and certain types of sabbatical leave. Payment or settlement of compensated absences could occur during employment, or upon termination of employment. GASB 101 does not apply to benefits that are within the scope of GASB 47, Accounting for Termination Benefits.

GASB 101 requires that a liability should be recognized for leave that has not been used if all of the following are true:
• The leave is attributable to services already rendered; • The leave accumulates, and;
• The leave is “more likely than not” (i.e., likelihood of more than 50%) to be used for time off or otherwise paid in cash or settled through noncash means (101 provides factors to assess this criteria). (This differs from GASB 16, which required payment to be “probable” to be recognized).

Under GASB 101, governments will now need to accrue for time that has accumulated and is likely to be used, even if the employee is not eligible for a payout upon termination. This was not a requirement under GASB 16, and thus may result in a higher compensated absence liability.

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GASB 101 requires liabilities for compensated absences to be recognized in financial statements prepared using the economic resources measurement focus equal to the amount of leave that has not yet been used and leave that has been used but not yet paid or settled.

Other changes in financial statement disclosures include the change in compensated absences liability can now be disclosed as a net change, rather than gross increases/decreases in the liability. Also, governments are no longer required to disclose which fund has typically liquidated the liability.

We recommend that CPA begin to review the guidance contained in GASB 101 within the context of your existing compensated absences policies and accounting practices, in order to be better informed in terms of the information that you will need for this implementation.

New guidance on disclosure of certain risks
The requirements in GASB Statement No. 102, Certain Risk Disclosures is meant to provide financial statement users with information about certain risks when circumstances make a government vulnerable to a heightened possibility of loss or harm. It requires governments to disclose essential information about risks related to vulnerabilities due to certain concentrations or constraints. (a) The Statement defines a concentration as a lack of diversity related to an aspect of a significant inflow or outflow of resources—for example, a small number of companies that represent a majority of employment in a government's jurisdiction, or a government that relies on one revenue source for most of its revenue.
(b) The Statement defines a constraint as a limitation imposed on a government by an external party or by formal action of the government's highest level of decision-making authority—such as a voter-approved property tax cap or a state-imposed debt limit.

Concentrations and constraints may limit a government's ability to acquire resources or control spending.

The Statement generally requires a government to disclose information about a concentration or constraint if all of the following criteria are met:
(a) The concentration or constraint is known to the government prior to issuing the financial statements.
(b) The concentration or constraint makes the government vulnerable to the risk of a substantial impact.
(c) An event or events associated with the concentration or constraint that could cause a substantial impact have occurred, have begun to occur, or are more likely than not to begin to occur within 12 months of the date the financial statements are issued.

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The disclosures should include a description of the following:
• The concentration or constraint,
• Each event associated with the concentration or constraint that could cause a substantial impact if the event has occurred or has begun to occur prior to the issuance of the financial statements, and
• Actions taken by the government to mitigate the risk prior to the issuance of the financial statements.

Changes to the financial reporting model
GASB Statement 103, Financial Reporting Model Improvements, builds on Statement 34 by providing key targeted improvements to the financial reporting model. Its requirements are designed to:
• Enhance the effectiveness of governmental financial reports in providing information essential for decision making and assessing a government's accountability, and • Address certain application issues.

The targeted improvements contained in Statement 103 establish or modify existing accounting and financial reporting requirements related to:
• Management's discussion and analysis - While the overall requirements do not substantially change management's discussion and analysis, the modifications are meant to improve the analysis included in this section and provide details about the items that should be discussed as currently known facts, decisions, or conditions expected to have a significant financial effect in the subsequent period.
• Unusual or infrequent items (previously known as extraordinary and special items) - The new Statement simplifies GASB literature by eliminating the separate presentation of extraordinary and special items. Under the requirement of Statement 103, applicable items will either be identified as unusual or infrequent, or both.
• Presentation of the proprietary fund statement of revenues, expenses and changes in fund net position - The changes are designed to improve consistency around the classification of items in these statements by better defining what should be included in operating revenues and expenses and nonoperating revenues and expenses including, for example, the addition of subsidies received or provided as a new category of nonoperating revenues and expenses.

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

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

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

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

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

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

© 2024 Baker Tilly US, LLP Page | 25
Keep in mind that while this communication may assist us with planning the scope and timing of the audit, it does not change the auditor's sole responsibility to determine the overall audit strategy and the audit plan, including the nature, timing and extent of procedures necessary to obtain sufficient appropriate audit evidence.

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

CLEAN POWER ALLIANCE OF SOUTHERN

CALIFORNIA
Basic Financial Statements with Independent
Auditors’ Report

For the Fiscal Years Ended June 30, 2024 and 2023

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

Statements of Net Position …………………………………………………… 13
Statements of Revenues, Expenses and Changes in Net Position …................ 14 Statements of Cash Flows …………………………………………………… 15
Notes to the Basic Financial Statements ……………………………………. 17

Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.

Independent Auditors' Report
To the Board of Directors of
Clean Power Alliance of Southern California
Opinion
We have audited the accompanying financial statements of Clean Power Alliance of Southern California (CPA), as of and for the years ended June 30, 2024 and 2023, and the related notes to the financial statements, which collectively comprise the CPA's basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of CPA as of June 30, 2024 and 2023, and the changes in financial position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

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

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

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

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

1 of 99
In performing an audit in accordance with GAAS, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the CPA's internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the CPA's ability to continue as a going concern for a reasonable period of time.

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

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

Madison, Wisconsin
October 25, 2024

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CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2024 AND 2023
3 MANAGEMENT’S DISCUSSION AND ANALYSIS

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2024 AND 2023
4 The Management's Discussion and Analysis section provides an overview of Clean Power Alliance of Southern California's (CPA) financial activities as of and for the fiscal years ending June 30, 2024 and 2023. The information presented here should be considered in conjunction with the audited financial statements.

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

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2024 AND 2023
5 BACKGROUND
CPA was formed pursuant to California Assembly Bill 117, which enables communities to purchase power on behalf of their residents and businesses and creates retail choices for electric generation services.

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

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

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

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

In May 2019, CPA enrolled approximately 100,000 commercial accounts. CPA enrolled approximately 4,000 residential and commercial accounts from Westlake Village in June 2020 and approximately 38,000 residential and commercial accounts from Hermosa Beach, Monrovia, and Santa Paula in March 2024. In October 2025, CPA will enroll approximately 33,000 additional accounts from three new jurisdictions.

CPA's goal is to provide customers with competitively priced and affordable electricity with high renewable energy content and low greenhouse gas emissions. Currently, CPA offers its customers three electricity products to choose from: Lean Power, Clean Power, and 100% Green Power. Lean Power provides 40% clean energy; Clean Power provides at least 50% clean energy and 100% Green Power provides 100% renewable energy content.

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

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2024 AND 2023
6 FINANCIAL HIGHLIGHTS
The following table summarizes CPA's assets, liabilities, deferred inflows of resources, and net position for the fiscal years (FY) ending June 30, 2024 and 2023.

Current Assets
Current assets were approximately $738,427,000 at the end of FY 2023-24 and were mainly comprised of $333,509,000 of cash and cash equivalents, $60,000,000 of investments, $143,168,000 of accounts receivable, $95,218,000 of accrued revenue, $11,503,000 of other receivables and $91,293,000 of prepaid expenses. Investments were made in Certificates of Deposit with a one-year maturity or less and are redeemable upon demand.

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

Total current assets increased as of June 30, 2024, compared to the prior year, particularly cash, investments, accounts receivable, and prepaid. Cash increased year over year primarily due to operating surpluses, which were mainly driven by rate increases that went into effect in July 2023.

Accounts receivable increased primarily due to the retail sales increase resulting from rate increases, more jurisdictions electing to adopt 100% Green as their default rate product, and three new community enrollments in March 2024. Other receivables increased compared to the prior year mainly due to an increase in wholesale sales of electricity and receivables from the California Community Choice Financing Authority (CCCFA). Prepaid expenses increased primarily due to increased Resource Adequacy costs and prepayments for Resource Adequacy. Deposits decreased primarily due to lower energy prices in June 2024 and lower posting obligations required by the CAISO.

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2024 AND 2023
7 Total current assets increased as of June 30, 2023, compared to the prior year, mainly as a result of increases in cash, prepaid expenses, accrued revenue, and accounts receivable. Cash increased mainly due to operating surpluses and reduced collateral posting required by the CAISO. Prepaid expenses increased compared to the prior year, mostly due to the prepayments required pursuant to Resource Adequacy contracts. Accounts receivable increased primarily due to greater retail sales increase resulting from rate increases, more jurisdictions converting to the 100% Green rate, and the suspension by SCE of disconnections and late payments penalties applied to residential accounts receiving funding under the California Arrearage Payment Program (CAPP).

Noncurrent Assets
Noncurrent assets decreased as of June 30, 2024 and 2023 compared to the prior years, mainly due to the amortization of the office lease as an intangible asset and depreciation expenses.

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

Total current liabilities increased as of June 30, 2024, compared to the prior year, primarily due to increases in security deposits from energy suppliers and accrued energy costs resulting from higher renewable energy and resource adequacy costs.

Total current liabilities increased as of June 30, 2023, compared to the prior year, mainly due to increases in accrued energy costs.

Noncurrent Liabilities
Noncurrent liabilities decreased as of June 30, 2024, from the prior year primarily as a result of amortization of the long-term portion of lease liability.

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

Deferred Inflows of Resources
In 2024, CPA deferred revenue of $135,000,000 to the Fiscal Stabilization Fund pursuant to CPA’s Board approved Fiscal Stabilization Fund Policy. The funds may be used in later years if financial results were negatively impacted by uncontrollable events as described in the Policy.

Revenues and Expenses
The following table summarizes CPA’s results of operations for the years ending June 30:

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2024 AND 2023
8 Total Income
Operating revenues arise from electricity sales to customers and funding to support CPA’s Power Share program. CPA reports electricity revenues, net of uncollectible account expenses, as described in the Notes to the Financial Statements.

Operating revenues increased to approximately $1,356,577,000 in FY 2023-24 from $1,167,777,000 in FY 2022-23. Revenue increased primarily as a result of increases in retail electricity rates that went into effect in July 2023, new community enrollments in March 2024, and were offset by the deferral of revenue and its transfer to the Fiscal Stabilization Fund (See Notes to the Financial Statements).

Operating revenues increased in FY 2022-23 from the prior year due to increases in retail electricity rates that went into effect in July 2022 and April 2023.

Year-over-year changes in interest income and investment income reflect changes in market interest rates, increases in investments and increases in cash balances in interest-earning accounts.

CPA invests funds consistent with its Board approved Investment Policy.

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

Operating expenses increased to $1,260,700,000 in FY 2023-24 from $1,088,599,000 in FY 2022-

23. The increase is mainly due to increased renewable energy purchases and higher resource adequacy costs. CPA purchases its energy supply from various resources in order to reduce market risk and maintain a balanced, renewable energy portfolio. Staffing costs increase year-over-year mainly due to CPA’s hiring of additional staff to support the organization's growth, as well as increases in employee benefits and the implementation of a staff retention incentive program.

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2024 AND 2023
9 Electricity costs and other operating expenses increased in FY 2022-23 from the prior year primarily due to increased energy costs, contract services, and staffing costs.

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

CPA’s net position increased by $106,107,000 in FY 2023-24. CPA’s net position increased by $80,294,000 in FY 2022-23 and by $67,045,000 in FY 2021-22.

CPA had a higher increase in net position in FY 2023-24 as compared to FY 2022-23 due to increased electricity sales resulting primarily from rate increases and higher interest income offset by a deferral of revenue and its transfer to the Fiscal Stabilization Fund, increased energy costs, and staffing expenses.

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

LIQUIDITY AND CAPITAL RESOURCES
CPA maintains a strong liquidity position by targeting 150 days of liquidity on hand pursuant to its Board approved Reserve Policy. Liquidity is defined as the sum of cash and cash equivalents, investments, and available bank lines of credit. CPA had 97 and 158 days of liquidity on- hand as of June 30, 2023, and 2024, respectively. Investments are made in high-quality and liquid securities pursuant to CPA’s Investment Policy.

CPA maintains a strong capital position by targeting reserves equivalent to 30% to 50% of its annual operating expenses pursuant to its Board approved Reserve Policy. Reserves are defined as the sum of the Net Position and Fiscal Stabilization Fund balance. Reserves were 20.4% and

36.6% of operating expenses as of June 30, 2023, and 2024, respectively.

CREDIT RATING
CPA manages its financial position with the objective of maintaining an investment-grade credit rating. Credit rating agencies consider quantitative (financial metrics) and qualitative (business and operating characteristics) factors when assessing credit quality. As of June 30, 2024, CPA had an issuer credit rating of A- with a stable outlook from Standard & Poor’s (S&P) Global Ratings.

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2024 AND 2023
10 PURCHASE COMMITMENTS AND ECONOMIC OUTLOOK
During the normal course of business, CPA enters into various agreements, including renewable energy agreements, energy storage agreements, and other agreements to purchase power and electric capacity (Resource Adequacy). CPA enters into power purchase agreements and energy supply agreements to comply with state law and voluntary targets for renewable and greenhouse gas (GHG) free products. California law established a Renewable Portfolio Standard (RPS) that requires load-serving entities, such as CPA, to gradually increase the amount of renewable energy they deliver to their customers.

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

In September 2018, the California Governor signed SB 100, the 100 Percent Clean Energy Act of 2018, into law. SB 100 increases the amount of renewable energy that must be delivered to customers by most load-serving entities, including CPA, to 60% of their annual retail sales by the end of the 2028-2030 compliance period. SB 100 also further establishes as state policy that eligible renewable energy resources and zero-carbon resources supply 100 percent of all retail sales of electricity to California end-use customers and 100 percent of electricity procured to serve all state agencies by December 31, 2045.

California’s Renewable Portfolio Standard provides compliance flexibility and waiver mechanisms, including increased flexibility to apply excess renewable energy procurement in one compliance period to future compliance periods. SB 350 requires at least 65% of the RPS procurement conducted by a retail seller, such as CPA, to come from its contracts of ten years or more in duration.

In September 2022, California Governor Newsom signed SB 1020. SB 1020 adds interim targets to the policy framework originally established in SB 100 to require renewable energy and zero-carbon resources to supply 90% of all retail electricity sales by 2035 and 95% of all retail electricity sales by 2040.

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

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2024 AND 2023
11 Commitments under power purchase agreements increased to $12.9 billion as of June 30, 2024, from $8.8 billion as of June 30, 2023, consistent with CPA’s Board-approved Energy Risk Management Policy.

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

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

12 BASIC FINANCIAL STATEMENTS

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

STATEMENTS OF NET POSITION
YEARS ENDED JUNE 30, 2024 AND 2023
13

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

STATEMENTS OF REVENUE, EXPENSES

AND CHANGES IN NET POSITION
YEARS ENDED JUNE 30, 2024 AND 2023
The accompanying notes are an integral part of these financial statements. 14

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2024 AND 2023
The accompanying notes are an integral part of these financial statements. 15

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2024 AND 2023
The accompanying notes are an integral part of these financial statements. 16

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
17 1. REPORTING ENTITY
Clean Power Alliance of Southern California (CPA) is a joint powers authority created on June 27, 2017. As of June 30, 2024, parties to its Joint Powers Agreement consist of the following local governments:

* La Canada Flintridge, Lynwood, and Port Hueneme are officially parties to the JPA as of March 2024. Customers in those jurisdictions will begin receiving service from CPA in October 2025.

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

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

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

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
18 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, demand deposits, money market accounts, and investments with an original maturity of three months or less. The Statement of Net Position presents restricted cash balances separately.

INVESTMENTS
Investments reported on the Statements of Net Position are comprised of certificates of deposit with a maturity greater than three months. Certificates of deposit are not subject to fair value assessments and are stated at cost. Investments with a maturity of less than one year are shown as current assets in the Statement of Net Position.

Permitted investments are defined in CPA’s Investment Policy and include funds invested in depository accounts, certificates of deposit, money market funds, the California Asset Management Program (CAMP), and the Local Agency Investment Fund (LAIF) program operated by the California State Treasury.

PREPAID EXPENSES
Payments made to vendors for services performed beyond the end of the current fiscal year are recorded as prepaid expenses.

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
19 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

CAPITAL ASSETS AND DEPRECIATION
CPA’s policy is to capitalize furniture and equipment valued over $5,000 that is expected to be in service for over one year. Depreciation is computed according to the straight-line method over estimated useful lives of three years for electronic equipment, seven years for furniture and eight years for leasehold improvements. CPA does not own any electric generation or storage assets.

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

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

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

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
20 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

FISCAL STABILIZATION FUNDS
In 2020, CPA’s Board approved the Fiscal Stabilization Fund policy to allow CPA to defer revenue in years when financial results are strong for use in future years when financial results may be negatively impacted by uncontrollable events as described in the Policy. In accordance with GASB Statement No. 62, the amount deposited into the fund is shown as a reduction of operating revenues and reported on the statements of net position as a deferred inflow of resources. Deferring revenue for use in future years reduces the impact of unplanned rate changes that would otherwise be necessary to meet CPA’s financial objectives.

In 2024, CPA transferred $135,000,000 to the Fiscal Stabilization Fund. The Fiscal Stabilization Fund balance is included in cash and cash equivalents.

NET POSITION
Net position is presented in the following components:

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

CPA did not have any outstanding borrowings as of June 30, 2024, and 2023 attributable to those assets.

Restricted: This component of net position consists of net assets subject to external constraints on their use imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.

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

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

Investment income is considered “non-operating revenue.”

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
21 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

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

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

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

Electricity costs include the cost of energy and capacity arising from bilateral contracts with energy suppliers as well as wholesale sales and generation credits, and load and other charges arising from CPA’s participation in the CAISO’s centralized market. The cost of electricity and capacity is recognized as “Cost of Electricity” in the Statements of Revenues, Expenses, and Changes in Net Position. To comply with the State of California’s Renewable Portfolio Standards (RPS) and other product content targets, CPA acquires RPS-eligible renewable energy evidenced by Renewable Energy Certificates (Certificates) recognized by Western Renewable Energy Generation Information System (WREGIS). CPA obtains Certificates with the intent to retire them and does not sell or build surpluses of Certificates with a profit motive. CPA purchases capacity commitments from qualifying generators to comply with the California Energy Commission’s Resource Adequacy Program. The goals of the Resource Adequacy Program are to provide sufficient resources to the CAISO to ensure the safe and reliable operation of the grid in real-time and to provide appropriate incentives for the siting and construction of new resources needed for reliability in the future.

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

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
22 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) In September 2023, the Board approved the Retention Incentive Program whose purpose is to retain management-level staff and promote high performance. Retention incentive amounts are approved by the Board on an annual basis and are earned over two-year periods beginning July 1, 2023.

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

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

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

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

3. CASH AND CASH EQUIVALENTS
As of June 30, 2024, CPA maintains its cash in both interest-earning and non-interest-earning bank accounts with River City Bank, in the California Asset Management Program (CAMP) and in the California Local Agency Investment Fund (LAIF). Cash totaling $109,856,000 is in River City Bank accounts; $203,636,000 is in the CAMP account; $20,000,000 is in certificates of deposit with terms less than three months; and $17,000 is in the LAIF account.

Cash balances are subject to the Local Agency Security Program (LASP) administered by the California Department of Financial Protection and Innovation (DFPI) pursuant to California Government Code, Section 53630 through 53686. The LASP is designed to protect government agency deposits and requires banks holding agency deposits to collateralize deposits in excess of $250,000 with highly rated government securities and/or a letter of credit issued by the Federal

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
23 3. CASH AND CASH EQUIVALENTS (continued)
Home Loan Deposit Corporation (FHLDC) in amounts equal to 110% and 105% of agency deposits respectively. Government securities collateralizing agency deposits are required to be held by third-party trust companies with legal and regulatory obligations to the DFPI. The DFPI is the beneficiary of FHLDC letters of credit collateralizing agency deposits. CPA’s Board approved Investment Policy requires that when managing funds, CPA’s primary objectives, in the following order of importance, shall be to (1) safeguard the principal of the funds, (2) meet the liquidity needs of CPA, and (3) achieve a return on investment on funds in CPA’s control.

Risk is monitored on an ongoing basis.

CPA maintains its cash in CAMP to earn higher interest rates and have same-day liquidity without penalty. CAMP is a California Joint Powers Authority established in 1989 under provisions of the California Joint Exercise of Powers Act to provide public agencies with professional investment services. CAMP funds are governed by California Government Code 53600, which only allows investments in low-risk eligible securities. CAMP funds are considered government agency deposits and are subject to California’s Local Agency Protection Program, which protects agency deposits.

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

Cash and cash equivalents include funds held in the Fiscal Stabilization Fund.

4. ACCOUNTS RECEIVABLE
Accounts receivable were as follows as of June 30:

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

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
24 5. INVESTMENTS
During the fiscal year ending June 30, 2024, CPA purchased investments with original maturities of three months or more. As of June 30, the balance of investments was as follows:
*These are non‐negotiable certificates of deposit with original terms of more than three months and less than one year.

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

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

As of June 30, 2024 and 2023, CPA held no individual investments subject to classification under the fair value hierarchy.

CUSTODIAL CREDIT RISK
Bank Deposits
Custodial credit risk for bank deposits is the risk that in the event of a bank failure, CPA’s deposits may not be returned to it. CPA’s bank deposits are protected by LASP as described in Note 3 and by deposit guarantees provided by the Federal Deposit Insurance Corporation (FDIC) for balances up to $250,000. CPA has not experienced any such losses in its deposit accounts.

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
25 5. INVESTMENTS (continued)
Investments
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, CPA would not be able to recover the value of the investment or collateral securities that are in possession of an outside party. Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in CPA’s name, and are held by the counterparty. CPA does not believe it is exposed to significant custodial credit risk arising from its investments in LAIF and CAMP.

6. LEASE
CPA’s lease assets are reported in accordance with Governmental Accounting Standards Board No. 87 (GASB 87).

Property Lease
CPA entered into an agreement to lease approximately 11,000 square feet of office space in Los Angeles, California, for 8 years, commencing in March 2021. Monthly base rent payments are approximately $32,000 in the first year of the lease and are subject to 3% annual rent escalations on each anniversary of lease commencement. The lease expires in February 2029. CPA also pays a pro-rata share of operating expenses and property taxes, which are not included in the measurement of the lease liability as they are variable in nature. The Company paid $23,000 and $20,000 in FY2023-24 and FY2022-2023, respectively, for those variable costs.

As of June 30, 2024, the Company has reported $1,819,000 in right-of-use (ROU) intangible assets, net of amortization, and $2,256,000 in lease liabilities related to this agreement.

Amortization expense was $383,000 and Interest Expense was $59,000 for the right to use the office space during the fiscal year.

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

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

CPA has the option to extend the lease for two additional years. The table below represents the future lease principal and interest payments under this agreement.

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
26 6. LEASE (continued)

Storage Contract Arrangements
In providing electricity to its customers, CPA has entered into two stand-alone energy storage and seven co-located solar and energy storage agreements, which achieved commercial operation as of June 2024. Stand-alone energy storage assets receive charging energy from the grid.

Collocated energy storage assets receive charging energy from collocated solar facilities.

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

Variable payments for storage under stand-alone energy storage and collocated solar and energy storage agreements totaled approximately $68,534,000 and $32,023,000 in FY 2023-24 and FY 2022-23, respectively.

7. CAPITAL ASSETS
Capital asset activities for the years ended June 30, 2024 and 2023, were as follows:

Year ended June 30, Principal Interest Total
2025 426,955 49,501 476,456
2026 451,767 38,982 490,749
2027 477,612 27,860 505,472
2028 504,535 16,101 520,636
2029 395,199 3,998 399,197
$ 136,442 2,256,068 $ 2,392,510 $

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
27 6. CAPITAL ASSETS (continued)
Depreciation and amortization expenses are included under general and administration on the Statements of Revenues, Expenses and Changes in Net Position.

8. DEBT
JP Morgan Chase Bank Credit Facility
In September 2021, CPA entered into an $80 million Revolving Credit Agreement with JP Morgan Chase. The Revolving Credit Agreement provides a revolving borrowing and letter of credit facility which can be used for working capital purposes and to post collateral.

In June 2023, CPA amended the credit agreement with JP Morgan to increase the size of the facility to $160 million and extend the expiry of the agreement from October 31, 2023, to March 31, 2024. In March 2024, the Board approved an extension of the maturity date of CPA’s Credit Agreement with JPM to March 31, 2026, from March 31, 2024.

As of June 30, 2024, CPA had no loans outstanding under the credit facility and is in compliance with credit covenants. Loan principal activity and balances were as follows for the following direct borrowings:

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
28 9. DEFINED CONTRIBUTION RETIREMENT PLAN
The Clean Power Alliance of Southern California Plan (Plan) is a defined contribution retirement plan established by CPA to provide benefits at retirement to its employees. The Plan is administered by Nationwide Retirement Solutions. Currently, the employer contribution is 6% of the employee’s salary plus an additional 4% employer match contribution for a maximum annual employer contribution to the Plan equal to 10% of the employee’s salary. As of June 30, 2024, there were 76 plan members. CPA contributed $1,274,000 and $994,000 during the years ended June 30, 2024 and 2023, respectively. Plan provisions and contribution requirements are established and may be amended by the Board of Directors.

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

On July 12, 2018, CPA’s Board adopted the Energy Risk Management Policy (ERMP). The ERMP establishes CPA’s Energy Risk Program and applies to all power procurements and related business activities that may impact the risk profile of CPA. The ERMP documents the framework by which CPA’s staff and consultants will identify and quantify risk, develop and execute procurement strategies, develop controls and oversight, monitor, and measure and report on the effectiveness of the CPA’s Energy Risk Program. Risks covered by the ERMP include market price risk, credit risk, volumetric risk, operational risk, opt-out risk, legislative and regulatory risk, and other risks arising from operating as a Community Choice Aggregation and participating in California energy markets. The Board approved updates to the ERMP in July 2019, July 2020, July 2021, July 2022, July 2023 and July 2024.

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

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

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
29 11. PURCHASE COMMITMENTS

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

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

The following table represents the expected, undiscounted contractual commitments for energy storage, power, and electric capacity outstanding as of June 30, 2024:

Totals are rounded to the nearest thousand.

As of June 30, 2024, CPA had non-cancellable contractual commitments to contract and professional service providers through December 31, 2027, for services yet to be performed. Fees associated with these contracts are based on volumetric activity and are expected to be approximately $15.1 million.

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
30 12. JOINT VENTURE
In July 2022, CPA’s Board of Directors authorized CPA to join California Community Choice Financing Authority (CCCFA) as a Founding Member. CPA joined CCCFA in September 2022 and participates in the Joint Powers Agreement with CCCFA along with other Founding Members Central Coast Community Energy, Ava Community Energy, MCE, and Silicon Valley Clean Energy. Other CCAs are Associate Members, receiving benefits of CCCFA but are not represented on the CCCFA Board of Directors.

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

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

In February 2023, CCCFA issued a first set of Clean Energy Revenue Bonds on behalf of CPA in the par amount of $998,780,000, in June 2023 issued a second set of Clean Energy Revenue Bonds on behalf of CPA in the par amount of $958,290,000. The proceeds were used to finance energy purchases that will flow to CPA over a term of 30 years. CPA will purchase energy from CCCFA in the same manner as CPA purchases energy from other suppliers. The outstanding purchase commitments related to these financings are included in Note 11.

Each member of CCCFA is responsible for paying an equal portion of CCCFA’s general and administrative operating costs as determined by its board. During the years ending June 2024 and 2023, CPA contributed approximately $30,000 and $68,000 to CCCFA to assist in its operating activities.

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

12. FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for future fiscal years ending after June 30, 2024: GASB has approved GASB No. 101, Compensated Absences, GASB No. 102, Certain Risk Disclosures, GASB No. 103, Financial Reporting Model Improvements, and GASB No. 104, Disclosure of Certain Capital Assets

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
31 Management is evaluating the effect of the implementation of these statements.

13. SUBSEQUENT EVENTS
Clean Energy Project Revenue Bonds
On July 11, 2024, the Board adopted Resolutions authorizing the issuance of up to three Clean Energy Project Revenue Bond transactions of up to $1.5 billion each, subject to certain parameters, with a total amount not exceeding $4.5 billion across all transactions. One of the three authorized issuances, as described below, was completed.

On August 27, 2024, CCCFA issued the Series 2024B Bond on behalf of CPA in the par amount of $1,524,180,000. The proceeds were used to finance energy purchases that will flow to CPA over a term of 29 years pursuant to the transaction’s Clean Energy Purchase Contract (CEPC).

CPA will purchase energy from CCCFA in the same manner as CPA purchases energy from other suppliers. Consistent with the above-noted Board Resolution, the amounts payable by CPA under the Clean Energy Purchase Contract were limited to the equivalent of a prepay bond par amount of $1.5 billion.

On September 5, 2024, the Board adopted a Resolution authorizing the amendment of the CEPC executed in relation to the Series 2024B Bonds to permit CPA to purchase a 30th year of energy supply as originally intended, equating the energy volumes and term of the CEPC with the final aggregate principal amount of the Bonds and term thereof.

The Series 2024B prepay transaction is expected to provide energy cost savings to CPA of $93 million over the initial eight-year period of the bond, or approximately $11.6 million annually.

New Community Enrollments
In October 2025, CPA will begin providing electric service to an estimated thirty-three thousand additional customer accounts located in La Cañada Flintridge, Lynwood, and Port Hueneme.

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

BUDGETARY COMPARISON SCHEDULE
FOR YEARS ENDED JUNE 30, 2024
2023/24 YTD
Budget Variance Actual / Budget
(Under) Over
2023/24 YTD 2023/24
Remaining
Budget
2023/24
Remaining
Budget %
2023/24 YTD
Budget
2023/24 YTD
Actual % 2023/24 Budget
Operating revenues
Revenue - electricity, net
Revenue transferred from/(to) Fiscal Stabilization Fund Other revenues
$ 1,576,284,820
-
3,238,179
1,579,523,000
$ 1,489,775,404
(135,000,000)
1,801,749
$ (86,509,416)
(135,000,000)
(1,436,430)
95% $ 1,576,284,820
-
3,238,179
1,579,523,000
$ 86,509,416 5%
-
56%
86%
1,436,430
87,945,846
44%
Total operating revenues 1,356,577,153 (222,945,846) 6% Energy costs
Energy procurement
Total energy costs
1,243,338,000
1,243,338,000
1,219,546,896
1,219,546,896
(23,791,104)
(23,791,104)
98%
98%
1,243,338,000
1,243,338,000
23,791,104
23,791,104
2%
2%
Operating revenues less energy costs 336,185,000 137,030,257 (199,154,743) 41% 336,185,000 64,154,743 19% Operating Expenditures
Staffing
Technical services
Legal services
Other professional services
Communications and outreach
Mailers
Billing data manager
SCE services
20,072,000
1,809,000
1,054,000
1,975,000
2,157,000
1,023,000
11,262,000
2,165,000
9,643,000
4,501,000
55,661,000
18,049,088
1,151,523
740,695
792,595
1,585,983
634,899
10,855,347
2,207,635
2,265,763
2,869,737
41,153,267
(2,022,912)
(657,477)
(313,305)
(1,182,405)
(571,017)
(388,101)
(406,653)
42,635
90%
64%
70%
40%
74%
62%
96%
102%
23%
64%
74%
20,072,000
1,809,000
1,054,000
1,975,000
2,157,000
1,023,000
11,262,000
2,165,000
9,643,000
4,501,000
55,661,000
2,022,912
657,477
313,305
1,182,405
571,017
388,101
10%
36%
30%
60%
26%
38%
4%
-2%
77%
36%
26%
406,653
(42,635)
7,377,237
1,631,263
14,507,733
Customer programs
General and administrations
Total operating expenditures
(7,377,237)
(1,631,263)
(14,507,733)
Operating income 280,524,000 95,876,991 (184,647,009) 34% 280,524,000 49,647,009 18% Non-operating revenues (expenditures)
Interest income 4,314,000
(1,563,000)
2,751,000
10,877,122
(647,400)
10,229,722
6,563,122
915,600
7,478,722
252%
41%
372%
4,314,000
(1,563,000)
2,751,000
(6,563,122)
(915,600)
(7,478,722)
-152%
59%
-272%
Finance and interest expense
Total non-operating revenues (expenditures)
Change in net position 283,275,000 106,106,712 (177,168,288) 37% 283,275,000 42,168,288 15% Other uses
Capital outlay
Depreciation and Amortization
Total other uses
378,000
(719,000)
(341,000)
255,920
(626,862)
(370,943)
(122,080)
92,138
(29,943)
68%
87%
109%
38%
378,000
(719,000)
(341,000)
122,080
(92,138)
29,943
32%
13%
-9%
Change in fund balance $ 283,616,000 $ 106,477,655 $ (177,138,345) $ 283,616,000 $ 42,138,345 15%

Presentation of
FY 2023-24 Financial Results
October 30, 2024

Summary
CPA received a “clean” audit opinion of its FY 2023-24 financial results from its Auditor, Baker Tilly.

CPA increased its net position and liquidity by $106 million and $257 million respectively and added $135 million to the Fiscal Stabilization Fund (see slide 4).

Days Liquidity on Hand and the Reserve Percentage (Net position plus Fiscal Stabilization Fund / Annual Expenses) increased to 158 days and to 37% respectively. CPA’s Reserve Policy targets are 150 days and 30-50% respectively.

CPA’s FY 2023-24 financial results benefited from the following:
• An increase in retail rates on July 1, 2023 and new community enrollments in March 2024
• Increase in investments and cash balances and higher interest rates improved interest income

2 Summary - Continued
CPA financial results were negatively impacted by:
• Abnormal weather for much of half of FY2023-24 which reduced electricity consumptions and revenue.
• Significant increase in 2023 Market Price Benchmark by CPUC which increased certain renewable energy costs .

CPA was within budget limits for all budget expense line items with the exception of SCE service expenses ($42.6 thousand, or 2% over the budget).

3 Fiscal Stabilization Fund
In September 2020, CPA's Board approved a Fiscal Stabilization Fund (“Fund”) policy, enabling the organization to defer revenue during strong financial years and use it during downturns caused by uncontrollable events.

The Fund would help CPA to address rate shocks, comply with financial covenants, and meet annual budget goals.

The CEO is authorized to make transfers to and from the Fund if Net Position increases would either exceed or be below 4% of revenues without a transfer from the Fund.

In FY2019-20, CPA deferred $27 million of revenue to the Fund, which were used in FY2020-21 to offset increased costs arising from extreme heat events of summer 2020.

In FY2023-24, CPA transferred $135 million to the Fund, consistent with the agency and stakeholder expectations vis-a-vis CPA’s A- Issuer Credit Rating.

4 Balance Sheet Components, as of June 30:
5 A B C D E F
2024 % Total 2023 % Total % Change
ASSETS
1 Current assets
2 Cash and cash equivalents $ 333,509,421 45% 132,786,879 $ 32% 151% 3 Investments 60,000,000 8% - 0% -
4 Accounts receivable, net of allowance 143,167,706 19% 123,259,054 30% 16% 5 Accrued revenue 95,217,865 13% 87,229,664 21% 9%
6 Other receivables 11,502,941 2% 595,202 0.1% 1833%
7 Interest receivable 1,404,260 0.2% 233,214 0.1% 502%
8 Prepaid expenses 91,292,917 12% 46,152,849 11% 98%
9 Deposits 2,331,418 0.3% 15,951,306 4% -85%
10 Restricted cash 0% 1,200,000 - 0.3% -100%
11 Total current assets 738,426,529 99.7% 407,408,168 99.3% 81% 12 Noncurrent assets
13 Capital assets, net of depreciation 571,073 0.1% 544,973 0.1% 5% 14 Intangible - right-to-use lease asset 1,818,835 0.2% 2,201,743 0.5% -17% 15 Deposits 0.01% 88,875 88,875 0.02% 0%
16 Total noncurrent assets 2,478,783 0.3% 2,835,591 0.7% -13% 17 Total assets $ 740,905,312 100% 410,243,759 $ 100% 81%

Balance Sheet Components, as of June 30:
6 A B C D E F
2024 % Total 2023 % Total % Change

LIABILITIES
18 Current liabilities
19 Accounts payable $ 3,045,901 1% 7,008,961 $ 4% -57%
20 Accrued cost of electricity 246,869,951 89% 159,985,884 85% 54% 21 Other accrued liabilities 4,165,262 1% 2,774,283 1% 50% 22 User taxes and energy surcharges due to other governments 10,750,873 4% 8,570,857 5% 25% 23 Security deposits from energy suppliers 3,961,500 1% 194,700 0.1% 1935% 24 Unearned program funds 4,054,673 1% 4,352,484 2% -7% 25 Lease liability, current 426,955 0.2% 403,141 0.2% 6% 26 Total current liabilities 273,275,114 98% 183,290,311 97% 49% 27 Noncurrent liabilities
28 Supplier security deposits 3,146,852 1% 3,149,860 2% -0.1% 29 Lease liability, noncurrent 1,829,113 1% 2,256,068 1% -19% 30 Total noncurrent liabilities 4,975,965 2% 5,405,928 3% -8% 31 Total liabilities $ 278,251,079 100% 188,696,239 $ 100% 47%

7 Balance Sheet Components, as of June 30:

A B C D E F
2024 % Total 2023 % Total % Change
32 Fiscal Stabilization Fund 135,000,000 100% - - 0%

NET POSITION
33 Investment in capital assets $ 133,840 0.04% $ 87,507 0.04% 53% 34 Restricted for collateral - 0% 1,200,000 0.54% -100% 35 Unrestricted 327,520,392 99.96% 220,260,013 99.42% 49% 36 Total net position $ 327,654,232 100% 221,547,520 $ 100% 48%

DEFERRED INFLOWS OF RESOURCES

Select Financial Indicators
Working capital, equity and available cash increased largely as a result of the increase in net position. Days Liquidity on Hand increased from 97 to 158 days as a result of an increase in cash.

The current ratio and margins were increased as a result of increase in cash and electricity sales.
8 Jun-24 Jun-23 % Change Description
Working Capital 465,151,413 224,117,857 108% Current Assets less Current Liabilities Current Ratio 2.7 2.2 23% Current Assets divided by Current Liabilities Day Sales Outstanding 35 39 -10% Accounts receivable divided by Gross Revenue multiplied by 365 Equity 462,654,232 221,547,520 109% Net Position plus Fiscal Stabilization Fund Equity to Assets % 62% 54% Equity (Net Position + FSF) divided by Total Assets Available Cash 386,401,069 129,442,319 199% Unrestricted cash and cash equivalents less supplier deposits Available Line of Credit 159,853,000 159,853,000 0% Total Line of Credit less Borrowing and Letters of Credit Total Liquidity 546,254,069 289,295,319 89% Sum of Available Cash and Line of Credit Days Liquidity on Hand (TTM) 158 97 63% Total Liquidity divided by trailing 12-month expenses divided by 365 Gross Margin 10% 10% Operating revenue less energy cost divided by operating revenue Net Margin 8% 7% Change in net position divided by operating revenue Reserve % 37% 20% Net Position plus Fiscal Stabilization Fund divided by total operating expenses

Budget to Actual Analysis
Operating revenues were $223 million or 14% below budget.

Other revenues arise primarily from funding received through the California Public Utilities Commission (CPUC) to offset Power Share Program costs. 9 A B C D E
2023/24 YTD
Budget
2023/24 YTD
Actual
2023/24 YTD
Budget Variance
(Under) Over
2023/24 YTD
Budget Variance
%
Operating revenues
1 Revenue - electricity, net $ 1,576,284,820 $ 1,489,775,404 $ (86,509,416) -5% 2 Revenue transferred from/(to) Fiscal Stabilization Fund - (135,000,000) (135,000,000) 0% 3 Other revenues 3,238,179 1,801,749 (1,436,430) -44%
4 Total operating revenues 1,579,523,000 1,356,577,153 (222,945,846) -14%

Budget to Actual Analysis
Energy procurement costs were 2% lower than budget. Energy costs were negatively impacted by an increase in the 2023 Market Price Benchmark promulgated by CPUC in early October 2023 which increased certain renewable energy costs offset by energy consumption which was lower than forecast.
10 A B C D E
2023/24 YTD
Budget
2023/24 YTD
Actual
2023/24 YTD
Budget Variance
(Under) Over
2023/24 YTD
Budget Variance
%
Energy costs
5 Energy procurement 1,243,338,000 1,219,546,896 (23,791,104) -2% 6 Total energy costs 1,243,338,000 1,219,546,896 (23,791,104) -2% 7 Operating revenues less energy costs 336,185,000 137,030,257 (199,154,743) -59%

Budget to Actual Analysis
Operating expenses were 26% under the budget due primarily to non-utilization of contingencies, conservative use of funds, the performance of services later in the year than budgeted, and lower staffing costs.

CPA was within budget limits for all budget expense line items with the exception of SCE service expenses ($42.6 thousand, or 2% over the budget). 11 A B C D E
2023/24 YTD
Budget
2023/24 YTD
Actual
2023/24 YTD
Budget Variance
(Under) Over
2023/24 YTD
Budget Variance
%
Operating Expenditures
8 Staffing 20,072,000 18,049,088 (2,022,912) -10%
9 Technical services 1,809,000 1,151,523 (657,477) -36% 10 Legal services 1,054,000 740,695 (313,305) -30%
11 Other professional services 1,975,000 792,595 (1,182,405) -60% 12 Communications and outreach 2,157,000 1,585,983 (571,017) -26% 13 Mailers 1,023,000 634,899 (388,101) -38%
14 Billing data manager 11,262,000 10,855,347 (406,653) -4% 15 SCE services 2,165,000 2,207,635 42,635 2%
16 Customer programs 9,643,000 2,265,763 (7,377,237) -77% 17 General and administrations 4,501,000 2,869,737 (1,631,263) -36% 18 Total operating expenditures 55,661,000 41,153,267 (14,507,733) -26% 19 Operating income 280,524,000 95,876,991 (184,647,009) -66%

Budget to Actual Analysis
Interest income exceeded the budget due to increases in investments and cash balances in high interest-earning account.
12 A B C D E
2023/24 YTD
Budget
2023/24 YTD
Actual
2023/24 YTD
Budget Variance
(Under) Over
2023/24 YTD
Budget Variance
%
Non-operating revenues (expenditures)
20 Interest income 4,314,000 10,877,122 6,563,122 152%
21 Finance and interest expense (1,563,000) (647,400) 915,600 -59% 22 Total non-operating revenues (expenditures) 2,751,000 10,229,722 7,478,722 272% 23 Change in net position 283,275,000 106,106,712 (177,168,288) -63% Other uses
24 Capital outlay 378,000 255,920 (122,080) -32%
25 Depreciation and Amortization (719,000) (626,862) 92,138 -13% 26 Total other uses (341,000) (370,943) (29,943) 9%
27 Change in fund balance $ 283,616,000 $ 106,477,655 $ (177,138,345) -62%

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Budget to Actual Analysis Detail
Other professional services were 60% under base budget due to collection services, Mercer, and strategic planning budget that were not utilized and lower than budgeted in information technology, regulatory, and accounting support services during the fiscal year.

Communications and outreach and Customer Programs were 26% and 77% under budget respectively mainly due to new customer programs taking additional time to roll out. For the most part these budgeted expenses were rolled forward to FY 2024/25, such as in the case of budgeted expenses for Energized Communities, CALeVIP, and Power Response.

Mailer expenses were 38% under budget mainly due to some mailing expenses being expended under the general and administration budget line item. Additionally, delays in customer program implementations reduced the need for the mailer budget.

General and administration expenses were 36% under the budget mainly due to less staff travel, and professional development and conference fees than were anticipated for FY2023-

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