Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Tuesday, December 3, 2024
1:00 p.m.
Visit CPA’s YouTube Channel to view a Live Stream of the Meeting www.youtube.com/@CPApublicmeetings
*There may be a streaming delay of up to 90 seconds. This is a view-only live stream.
Clean Power Alliance
Executive Conference Room
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Members of the public may also participate in this meeting at the following locations:
Calabasas City Hall
Council Conference Room
100 Civic Center Way
Calabasas, CA 91302
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
Carson City Hall
City Manager’s Conference Room
701 East Carson Street
Carson, CA 90745
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.
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ACCESSIBILITY: Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least two (2) working days before the meeting at [email protected] or (213) 713- 5995. Notification in advance of the meeting, while not required, will enable us to make reasonable arrangements to ensure accessibility to this meeting and the materials related to it.
CALL TO ORDER & ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from the October 30, 2024, Finance Committee Meeting
2. Receive and File October 2024 Risk Management Team Report
3. Receive and File October 2024 Investment Report
4. Receive and File September 2024 Financial Dashboard
5. Receive and File FY 2024/2025 Q1 Financial Report
REGULAR AGENDA
6. Report from the Chief Financial Officer
7. Bad Debt Reserve and Accounts Receivable Update
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING ON JANUARY 22, 2025
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. Page 2 of 30
Staff Report – Agenda Item 1
To: Finance Committee
Subject: Approve Minutes from October 30, 2024, Finance Committee Meeting
Date: December 3, 2024
RECOMMENDATION
Approve.
ATTACHMENT
1. Minutes
Finance Committee Item 1
MINUTES
Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, October 30, 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 11:01 a.m. Annie Mendoza, Deputy 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 Remote
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.
Finance Committee Item 1
GENERAL PUBLIC COMMENT
There was no 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
Motion: Committee Member Zuckerman, Rolling Hills Estates Second: Committee Member Newman, Thousand Oaks
Vote: The consent agenda was approved by a roll call vote.
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 Bethany Ryers, the independent auditor from Baker Tilly, presented the fiscal year 2023-2024 audit results. Ms. Ryers provided an overview of responsibilities, key areas of focus, and significant findings. Ms. Ryers reported that Baker Tilly agreed with CPA’s accounting policies and disclosures and had no audit adjustments or concerns. Furthermore, Ms. Ryers discussed future accounting standards that will take effect in 2026 and how they will impact the organization.
Committee Member Zuckerman asked about the letter of credit issued to SCE; Mr.
McNeil clarified that the letter of credit was to meet CPA’s obligation pursuant to the CPUC’s mandated Financial Service Requirement, which is set to cover administrative costs of involuntary customer return.
Mr. Bardacke clarified for Committee Member Kulcsar that sick leave could be accumulated but cannot be cashed out upon separation. In contrast, vacation has a limited cash-out policy that allows staff who have exceeded a certain number of hours to cash out once a year. Ms. Ryers further added that although sick leave may not be cashed out, it is still recorded as a liability.
Ms. Ryers responded to several questions from committee members regarding the Fiscal Stabilization Fund and deferred inflow of resources, other receivables, and accounts receivable, potential changes in procedures and staff responsiveness during the audit.
Hui Lisano, Senior Director of Finance and Accounting, presented the financial results for the fiscal year 2023-2024. In reviewing the summary, Ms. Lisano clarified that CPA’s Reserve Policy targets are 120 days, not 150, as stated in the PowerPoint presentation. Ms. Lisano reviewed the Fiscal Stabilization Fund and
Finance Committee Item 1
the balance sheet components, noting that assets remain very liquid. Committee Member Zuckerman inquired about the $380,000 increase in intangible assets; Ms. Lisano explained that intangible assets are related to the lease agreement, which CPA is required to report under assets and liabilities. Ms. Lisano highlighted that the balance sheet was very healthy with zero debt and high net positions.
Regarding the Fiscal Stabilization Fund, Committee Member Kulcsar asked when the $135 million was transferred; Ms. Lisano responded that it was done in June 2024. Ms. Lisano continued to review the budget to actual amounts, noting that the change in net position would be $42 million below budget if revenue were not deferred to the Fiscal Stabilization Fund.
COMMITTEE MEMBER COMMENTS
None.
ADJOURN
Committee Chair Santangelo adjourned the meeting at 12:06 p.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 October 2024 Risk Management Team Report Date: December 3, 2024
October 2024 RMT REPORT
Key Actions
• Reviewed the counterparty credit exposure summary
• Reviewed July 2024 day-ahead load forecast performance • Reviewed September 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 monthly hedge targets for on-peak and off-peak energy. • Reviewed long-term energy contract amendments and terminations • Reviewed October 2024 CRR Allocations
• Reviewed and approved the Negative REC Price Strategy
Finance Committee Item 2
Policy Compliance
Policy Deviation Required Action
Beginning in April 2024,
the energy hedge position
for the third quarter of
2027 (July to September)
exceeded the maximum
hedge limit for that period.
None.
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 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 October 2024 Investment Report Date: December 3, 2024
RECOMMENDATION
Receive and file.
ATTACHMENT
1. October 2024 Investment Report
Clean Power Alliance Investment Report
October 2024
(in USD unless otherwise noted)
Local Agency
Investment
Fund (LAIF)
Certificates of Deposit
(CDs)
California Asset
Management Program
(CAMP) US Treasury Securities
Beginning Balance 16,778 80,000,000 275,864,595 0
Deposits & Purchases - 10,000,000 40,000,000 49,999,491 Maturities & Withdrawals - 10,000,000 5,000,000 1,000
Ending Balance 16,977 80,000,000 312,064,378 50,000,488 Interest Earned* 64 365,210 1,199,783 167,741
Yield** 4.52% 4.87% 5.03% 3.93%
Weighted Average Term to Maturity (Months) 7.0 5.5 2.0 59.0 **Yield for LAIF & CAMP is reported on a monthly average basis; yield for CDs is determined based on a weighted average annual basis; yield for US Treasuries is equivalent to the coupon rate divided by month-end bond price Transaction Type Deposit Maturity
Depository River City Bank River City Bank
Par Amount 10,000,000 10,000,000
Rate 4.34% 5.49%
Placement Date 10/24/2024 4/25/2024
Maturity Date 10/23/2025 10/24/2024
Term (weeks) 52 26
Interest Earnings (Total) 442,287 277,508
Transaction Type Deposit Maturity
Depository US Bank National Trust US Bank National Trust Par Amount 49,240,000 1,000
Coupon Rate 3.88% 5.11%
Placement Date 10/2/2024 9/26/2024
Maturity Date 9/30/2029 10/22/2024
Term (months) 61 1
Estimated Interest Earnings (Total) 9,540,604 3
* 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) Summary of Transactions (CDs)
Summary of Transactions (US Treasury Securities)
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 September 2024 Financial Dashboard Date: December 3, 2024
RECOMMENDATION
Receive and file.
ATTACHMENT
1. September 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
September
2024
Financial Dashboard
Note: Numbers may not sum up due to rounding.
Active Accounts
1,043,387
Participation Rate
93%
YTD Sales Volume
3,236 GWh
Sep Volume
1,013 GWh
Agr/Oth
2% Com-Lg
19%
Com-Sm
27%
Res
52%
Sep Year-to-Date
in $000,000's Actual Budget Variance % Actual Budget Variance % Energy Revenues 160.3 159.2 1.0 1% 513.1 506.0 7.1 1%
Cost of Energy 196.1 209.9 -13.8 -7% 553.3 583.6 -30.4 -5% Net Energy Revenue -35.8 -50.6 14.8 -29% -40.2 -77.7 37.5 -48% Operating Expenses 4.3 5.3 -1.0 -19% 11.7 15.3 -3.6 -24% Operating Income -40.1 -55.9 15.9 -28% -51.9 -92.9 41.1 -44% Non-Operating Income 1.6 0.8 0.8 99% 4.5 2.6 1.9 73%
Change in Net Position -38.4 -55.1 16.7 -30% -47.3 -90.3 43.0 -48% In September 2024 CPA’s net position fell by $38.4 million, $16.7 million or 30% less than the budgeted reduction in net position of $55.1 million. September 2024 revenues were $160.3 million, $1 million or 1% higher than FY 2024/25 budget. September cost of energy was $196.1 million, $13.8 million or 7% 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 $47.3 million, $43.0 million or 48% less than the budgeted reduction in net position of $90.3 million primarily due to higher than forecast revenue in July 2024 and the non-utilization of energy cost contingencies. Operating costs were $3.6 million or 24% below budget due to lower than budgeted spending on general and administrative expenses, customer programs and other services, and the non-utilization of contingencies.
As of September 30th, 2024, CPA had unrestricted cash, cash equivalents, and investments of $465.4 million, and $159.9 million available in its bank line of credit representing 155 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: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Receive and File FY 2024/2025 Q1 Financial Report Date: December 3, 2024
RECOMMENDATION
Receive and file.
ATTACHMENT
1. FY 2024/2025 Q1 Financial Report
2024 2023
ASSETS
Current assets
Cash and cash equivalents $ 415,364,739 $ 214,637,920
Investments 50,001,000 -
Accounts receivable, net of allowance 194,134,580 178,053,347 Accrued revenue 95,689,500 95,598,809
Other receivables 25,755,326 6,018,812
Interest receivable 1,928,495 4,535,918
Prepaid expenses 7,336,589 2,438,081
Deposits 5,985,219 6,757,546
Restricted cash - 1,200,000
Total current assets 796,195,447 509,240,433
Noncurrent assets
Capital assets, net of depreciation and amortization 2,226,407 2,629,142 Deposits 88,875 88,875
Total noncurrent assets 2,315,282 2,718,017
Total assets $ 798,510,729 $ 511,958,450
LIABILITIES
Current liabilities
Accounts payable $ 2,949,549 $ 3,659,186
Accrued cost of electricity 349,762,082 252,430,863
Other accrued liabilities 4,764,203 3,040,288
User taxes and energy surcharges due to other governments 15,312,311 12,838,356 Security deposits from energy suppliers 964,500 374,700 Unearned program funds 3,974,242 4,592,822
Lease liability, current 433,075 409,017
Counterparty collateral deposit - 233,280.00
Total current liabilities 378,159,962 277,578,511
Noncurrent liabilities
Security deposits from energy suppliers 3,146,852 3,149,860 Lease liability, noncurrent 1,718,091 2,151,166
Other Accrued Liability-N/C 148,849 129,072
Total noncurrent liabilities 5,013,792 5,430,099
Total liabilities $ 383,173,754 $ 283,008,609
DEFERRED INFLOWS OF RESOURCES
Fiscal Stabilization Fund 135,000,000 -
NET POSITION
Investment in capital assets $ 75,241 $ 68,959
Restricted for collateral - 1,200,000
Unrestricted 280,261,734 227,680,881
Total net position $ 280,336,975 $ 228,949,840
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF NET POSITION
AS OF SEPTEMBER 30, 2024 AND 2023
2024 2023
OPERATING REVENUES
Electricity sales, net $ 512,595,843 $ 483,041,606
Other revenue 492,741 408,245
Total operating revenues 513,088,585 483,449,851
OPERATING EXPENSES
Cost of electricity 553,270,787 466,950,144
Contract services 5,751,340 5,288,028
Staff compensation 5,127,402 4,069,451
General and administration 792,412 663,951
Total operating expenses 564,941,941 476,971,573
Operating income (loss) (51,853,357) 6,478,277
NONOPERATING REVENUES (EXPENSES)
Interest income 4,691,237 1,124,252
Interest and related expenses (141,812) (184,451)
Interest expense - lease (13,326) (15,758)
Total nonoperating revenues (expenses) 4,536,100 924,043 CHANGE IN NET POSITION (47,317,257) 7,402,320
Net position at beginning of period 327,654,232 221,547,520 Net position at end of period $ 280,336,975 $ 228,949,840
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
FOR THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
2024 2023
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Net operating income (loss) $ (51,853,357) $ 6,478,277
Adjustments to reconcile operating income to net
cash provided (used) by operating activities
Depreciation expense 43,774 50,390
Amortization expense 119,727 95,727
Revenue adjusted for allowance for uncollectible accounts 7,338,466 6,853,739 (Increase) decrease in:
Accounts receivable (58,305,340) (61,648,032)
Energy market settlements receivable - (6,018,812)
Other receivables (14,252,384) (3,707,502)
Accrued revenue (471,635) (8,369,145)
Prepaid expenses 83,956,329 43,714,769
Deposits (3,653,800) 9,193,760
Increase (decrease) in:
Accounts payable (96,352) (3,349,775)
Energy market settlements payable (6,604,014) (988,634) Accrued cost of electricity 109,496,145 93,433,613
Other accrued liabilities 740,557 320,072
User taxes due to other governments 4,561,438 4,267,499 Supplier security deposits (2,997,000.00) 180,000
Unearned program funds (80,431) 240,338
Counterparty collateral deposit - 233,280.00
Net cash provided (used) by operating activities 67,942,122 80,979,563
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Interest and related expense payments (134,579) (109,446) Net cash provided (used) by non-capital
financing activities (134,579) (109,446)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments to acquire capital assets - (28,544)
Payments on lease (principal and interest) (118,227) (114,784) Net cash provided (used) by capital and related financing activities (118,227) (143,327)
CASH FLOWS FROM INVESTING ACTIVITIES
Investments purchased 9,999,000 -
Interest income received 4,167,002 1,124,252
Net cash provided (used) by investing activities 14,166,002 1,124,252 Net change in cash and cash equivalents 81,855,318 81,851,041 Cash and cash equivalents at beginning of period 333,509,421 133,986,879 Cash and cash equivalents at end of period $ 415,364,739 $ 215,837,920 Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) $ 415,364,739 $ 214,637,920 Restricted cash - 1,200,000
Cash and cash equivalents $ 415,364,739 $ 215,837,920
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF CASH FLOWS
FOR THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
2024/25 YTD
Budget
2024/25 YTD
Actual
Operating revenues
Revenue - electricity, net $ 505,294,300 $ 512,595,843
Other revenues 662,740 492,741
Total operating revenues 505,957,040 513,088,585
Energy costs
Energy procurement 583,627,835 553,270,787
Total energy costs 583,627,835 553,270,787
Operating revenues less energy costs (77,670,795) (40,182,202) Operating Expenditures
Staffing 5,687,800 5,127,402
Technical services 463,400 510,308
Legal services 280,235 221,292
Other professional services 580,339 259,307
Communications and outreach 995,490 543,877
Mailers 210,480 179,523
Billing data manager 3,011,000 2,774,306
SCE services 561,800 534,933
Customer programs 2,217,850 727,793
General and administrations 1,251,179 792,412
Total operating expenditures 15,259,573 11,671,155
Operating income (92,930,368) (51,853,357)
Non-operating revenues (expenditures)
Interest income 2,791,700 4,691,237
Finance and interest expense (163,490) (155,138)
Total non-operating revenues (expenditures) 2,628,210 4,536,100 Change in net position (90,302,158) (47,317,257)
Other uses
Capital outlay 81,120 -
Depreciation and Amortization (209,800) (163,501)
Total other uses (128,680) (163,501)
Change in fund balance $ (90,173,478) $ (47,153,756)
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
BUDGETARY COMPARISON SCHEDULE
FOR THREE MONTHS ENDED SEPTEMBER 30, 2024
Select Financial Indicators
Note Sep-23 Dec-23 Mar-24 Jun-24 Sep-24
1 Working Capital 231,661,922 277,941,452 349,898,822 465,151,413 418,035,485 2 Current Ratio 1.8 2.4 2.4 2.7 2.1
3 Days Sales Outstanding 34 32 34 35 35
4 Equity 228,949,840 275,996,512 347,678,394 462,654,232 415,336,975 5 Equity to Assets % 45% 57% 58% 62% 52%
6 Adjusted Unrestricted Cash 210,880,080 235,264,684 362,023,214 386,401,069 419,476,092 7 Available Line of Credit 159,853,000 159,853,000 159,853,000 159,853,000 159,853,000 8 Total Liquidity 370,733,080 395,117,684 521,876,214 546,254,069 579,329,092 9 Days Liquidity on Hand (TTM) 114 118 155 158 157
10 Gross Margin 3% 9% 13% 10% -8%
11 Net Margin 2% 7% 10% 8% -9%
Percentage Change from Prior Quarter
Working Capital 3% 20% 26% 33% -10%
Current Ratio -17% 29% 3% 11% -22%
Days Sales Outstanding -13% -5% 4% 4% -1%
Equity 3% 21% 26% 33% -10%
Equity to Assets % -17% 28% 2% 7% -17%
Adjusted Unrestricted Cash 63% 12% 54% 7% 9%
Available Line of Credit 0% 0% 0% 0% 0%
Total Liquidity 28% 7% 32% 5% 6%
Days Liquidity on Hand (TTM) -23% 3% 32% 2% -1%
Note Description Note Description
1 Current Assets less Current Liabilities 7 Total Line of Credit less Borrowing and Letters of Credit 2 Current Assets divided by Current Liabilities 8 Sum of Available Cash and Line of Credit 3 Accounts receivable divided by Sales divided by 365 9 Total Liquidity divided by trailing 12 month expenses divided by 365 4 Net Position plus Fiscal Stabilization Fund 10 Operating revenue less energy cost divided by operating revenue 5 Equity (Net Position + FSF) divided by Total Assets 11 Change in net position divided by operating revenue 6 Unrestricted cash and cash equivalents less supplier deposits -
100
200
300
400
500
600
Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Millions ($)
Fiscal Quarter
Financial Indicators
Working Capital Equity Total Liquidity
Staff Report – Agenda Item 6
To: Finance Committee
From: David McNeil, Chief Financial Officer
Subject: Report from the Chief Financial Officer
Date: December 3, 2024
The CFO will provide an oral update on CPA’s first quarter financial results.
To: Finance Committee
From: David McNeil, Chief Financial Officer
Approved by: Ted Bardacke, Chief Executive Officer
Subject: Bad Debt Reserve and Accounts Receivable Update Date: December 3, 2024
Staff will provide a presentation on this item.
ATTACHMENT
1. Accounts Receivable Update Presentation
Staff Report – Agenda Item 7
Account Receivable Update
December 3, 2024
Accounts Receivable - Overview
Past due active commercial accounts receivable have stabilized albeit at higher levels than pre-Covid norms.
Past due active residential accounts receivable remain elevated despite the resumption of disconnection activity by SCE in August 2023.
CPA’s Bad Debt Reserve represents an estimate of uncollectable accounts receivable. Management believe that the Reserve is conservatively estimated.
While past due residential customer account balances are large and remain a focus for management, the unreserved portion of 90+ day delinquent accounts receivable represents less that 5% CPA’s total reserves (net position + fiscal stabilization fund) and does not pose a threat to the financial health of the organization
2 AR Aging - Active Commercial Customers
3 Active commercial
past due AR
balances fell
beginning in May
2022 when SCE
resumed issuing
disconnection
notices and have
been stable
4 AR Aging - Active Residential
Active residential
past due balances fell
after the
application of
two CAPP
fundings in the
first quarter of
2022 and 2023
(see arrows to
the right)
Although
elevated, active
residential past
due balances
have begun to
stabilize as SCE
has resumed
disconnection
efforts (see
following slides)
Background on Residential Collections
5 Active residential accounts receivable are subject to a variety of consumer protections, including:
• requiring utilities to offer customers 12-month payment plans prior to disconnection • prohibiting utilities from requiring payment of a deposit for establishment or reestablishment of service • prohibiting utilities from requiring payment of a reconnection fee following disconnection • requiring utilities to verify that customers are enrolled in all applicable assistance programs before initiating a disconnection
IOUs are further subject to a 4% annualized cap on the number of disconnections that IOUs can instigate
Payment Arrangements are used by IOUs to address past due balances.
Payment Plans allow customers to make equal payments with annual true ups.
• Payment plans can result in aged accounts receivable balances despite customers remaining “current” under the terms of the plans as described in the next slide.
Accounts Receivable – Active Residential Customers
6 As of October 2024, 31k or 3.5% of CPA’s active residential customers have 180+ past due balances representing $14.7 million and have either not or only recently received a disconnection notice from SCE. Management believe this represents the backlog of Covid-19 era past due residential accounts.
Approximately 21% of customers with delinquent accounts receivable have been placed on payment arrangements
Accounts Receivable – Active Residential Customers
7 As SCE continues disconnection activity, the number of accounts with past due balances has recently fallen and the number of customers on payment arrangements has increased Approximately 30% of customers that are disconnected pay their past due balance in full and are reconnected
The bulk of first-time disconnected customers are reconnected following their placement on payment arrangements. Approximately 80% of customers on payment arrangements are ultimately disconnected and are not returned to service with SCE
At its current rate of collections and disconnection activity CPA expects SCE to work through back log of active residential past due accounts receivable over the next 12 to 24 months
Inactive Accounts and CPA Collections Update
8 CPA’s inactive residential and commercial accounts receivable are fully reserved (allowance for doubtful accounts = AR balances)
CPA’s Collections Policy and Collections Guidelines were approved by the Board in July 2021 and by the Finance Committee in January 2022 respectively to govern collections of inactive customer accounts receivable returned to CPA by SCE. CPA deferred collection of inactive accounts following the onset of Covid-19 and remains in a holding pattern as it addresses reporting issues associated with accounts receivable balances with SCE
Bad Debt Reserve
9 Bad Debt Reserve as of September 30, 2024 ($76.4m) represented approximately 78% of 90+ days past due residential and commercial active and inactive customer accounts receivable and 95% of 180+ days past due AR
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