Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, October 29, 2025
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:
Calabasas City Hall
Council Conference Room
100 Civic Center Way
Calabasas, CA 91302
Camarillo City Hall
Administrative Conference Room
601 Carmen Drive
Camarillo, CA 93010
Rolling Hills Estates City Hall
Conference Room
4045 Palos Verdes Drive North
Rolling Hills Estates, CA 90274
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
PUBLIC COMMENT: Members of the public may submit their comments by one of the following options:
• Email Public Comment: Members of the public are encouraged to submit written comments on any agenda item to [email protected] up to four hours before the meeting. Written public comments will be announced at the meeting and become part of the meeting record. Public comments received in writing will not be read aloud at the meeting. • Provide Public Comment During the Meeting: The General Public Comment item is reserved for persons wishing to address the Committee on any Clean Power Alliance-related matters not on today’s agenda. Public comments on matters on today’s Consent Agenda and Regular Agenda shall be heard at the time the matter is called. Comments on items on the Consent Agenda are consolidated into one public comment period. Members of the public who wish to address the Committee at CPA’s Office are requested to complete a comment card and provide it to staff. If you are attending from a remote location, please identify yourself to a CPA representative when your item is called. Each speaker is limited to two (2) minutes (in whole-minute increments) per agenda Agenda Page 1
item with a cumulative total of five 5 minutes to be allocated between the General Public Comment, the entire Consent Agenda, or individual items in the Regular Agenda. Please refer to Policy No. 8 – Public Comment for additional information.
NAVIGATING OUR AGENDA PACKETS: The meeting agenda packets are bookmarked PDFs, which display a list of agenda items to the left of the page and allow you to click to view specific items within the packet. If viewing in your browser, click the "document outline" button in the upper left corner of the screen.
If the PDF is downloaded, the bookmark panel (ribbon icon) appears on the left side of the screen.
ACCESSIBILITY: Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least two (2) working days before the meeting at [email protected] or (213) 713- 5995. Notification in advance of the meeting, while not required, will enable us to make reasonable arrangements to ensure accessibility to this meeting and the materials related to it.
CALL TO ORDER & ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from September 24, 2025, Finance Committee Meeting
2. Receive and File September 2025 Risk Management Team Report
3. Receive and File September 2025 Investment Report
4. Receive and File August 2025 Financial Dashboard
REGULAR AGENDA
5. Receive Report from the Independent Auditor and Review Fiscal Year 2024- 2025 Financial Statements and Fiscal Year 2024-2025 Budget to Actual Report
6. A. Recommend that the Board of Directors Approve up to $4.5 Billion of Prepayment Transactions with Goldman Sachs (GS), Morgan Stanley (MS), Royal Bank of Canada (RBC), or JPMorgan (JPM) as CPA's Underwriter & Prepaid Supplier; and
B. Recommend that the Board of Directors Approve the Delegation of Authority to Staff to Select Funding Recipient(s) for Prepayment Transactions Completed with GS, MS, and/or JPM; RBC will Serve as the Funding Recipient for any Prepayment Transactions Completed with RBC.
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING DATE TO BE DETERMINED
Public Records: Public records that relate to any item on the open session agenda for a Committee Meeting are available for public inspection. Those records that are distributed less than 72 hours prior to the meeting are available for public inspection at the same time they are distributed to all, or a majority of, the members of the Committee. Public records are available for inspection at CPA’s Office at 801 S. Grand Ave., Suite 400, Los Angeles, CA 90017, or online at www.cleanpoweralliance.org/agendas.
Agenda Page 2
Staff Report – Agenda Item 1
To: Finance Committee
Subject: Approve Minutes from the September 24, 2025, Finance Committee Meeting
Date: October 29, 2025
RECOMMENDATION
Approve.
ATTACHMENT
1. Minutes
Agenda Page 3
MINUTES
Finance Committee
of the Clean Power Alliance of Southern California
Regular Meeting
Wednesday, September 24, 2025, 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
Administrative Conference Room
601 Carmen Drive
Camarillo, CA 93010
Clean Power Alliance Office
Executive Conference Room
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Calabasas City Hall
Council Conference Room
100 Civic Center Way
Calabasas, CA 91302
Claremont City Hall
Council Office
207 Harvard Avenue
Claremont, CA 91711
Carson City Hall
Executive Conference Room
701 East Carson Street
Carson, CA 90745
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
CALL TO ORDER & ROLL CALL
Chair Santangelo called the meeting to order at 11:00 a.m. and 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 Remote
Rolling Hills
Estates
Steve Zuckerman Committee Member Remote
Santa Monica Pam O’Connor Committee Member Present
Thousand Oaks David Newman Committee Member Remote
All votes are unanimous, unless otherwise stated.
Finance Committee Item 1
Agenda Page 4
GENERAL PUBLIC COMMENT
There was no public comment.
CONSENT AGENDA
1. Approve Minutes from the June 25, 2025, Finance Committee Meeting
2. Receive and File August 2025 Risk Management Team Report
3. Receive and File August 2025 Investment Report
4. Receive and File July 2025 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. Oral Report from the Chief Financial Officer
David McNeil, Chief Financial Officer, reported that the annual financial audit is underway; findings will be presented to the Finance Committee in October. Mr.
McNeil summarized the potential impacts to competitiveness with SCE as SCE’s rates may go down, and the PCIA could potentially increase. However, he noted that CPA has healthy reserves it can utilize in such cases.
6. Recommend to the Board of Directors the Selection of Municipal Capital Markets (MCM) to Serve as CPA’s Municipal Financial Advisor and Chapman & Cutler (Chapman) to Provide Legal Advice and Counsel relating to any Prepay Transactions
Kate Freeman, Senior Manager, Strategic Finance, stated that CPA completed five prepay transactions in 2023 and 2024, issuing $5.9 billion of prepay bonds, leading to approximately $361 million of energy cost savings over the next eight years. Ms.
Freeman discussed constraints on future prepays; up to $4.5 billion additional prepay bond transactions could be supported by CPA’s energy portfolio.
Ms. Freeman reviewed prepay market dynamics. Staff will be requesting authorization from the Board in the future to issue bonds totaling $4.5 billion over the next 18 months and this authorization will require the support of service providers. Staff described how they chose MCM and Chapman as these service providers and how these providers will assist staff with the issuance and process.
Committee Member Newman asked for more information about staff’s strategy to position CPA in the market. Ms. Freeman explained that CPA exercises some caution in disclosing the timing and size of future transactions to maximize savings.
Ms. Freeman added that CPA could gauge market viability close to the time of announcing plans to issue bonds and consider using multiple banks to diversify credit. In response to questions from Committee Member Newman, Ms. Freeman also explained how fees are structured and negotiated.
Committee Member Kulcsar asked about the rationale for a 90% threshold. Staff responded that CPA must deliver prepaid energy to its customers and must have contracts which it can prepay. The 10% buffer helps ensure that CPA operates the prepay program within the above constraints, notably by ensuring that CPA will Finance Committee Item 1
Agenda Page 5
have sufficient energy contracts to support the prepay program while allowing it to sell energy on a wholesale basis if needed.
Motion: Committee Member O’Connor, Santa Monica
Second: Committee Member Calaycay, Claremont
Vote: The item was approved by a roll call vote.
COMMITTEE MEMBER COMMENTS
None.
ADJOURN
Chair Santangelo adjourned the meeting at 11:33 a.m.
Finance Committee Item 1
Agenda Page 6
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 2025 Risk Management Team Report Date: October 29, 2025
September 2025 RMT REPORT
Key Actions
• Reviewed the counterparty credit exposure summary
• Reviewed June 2025 day-ahead load forecast performance • Reviewed the September load forecast update
• Reviewed August 2025 market performance
• Reviewed 2025 - 2029 energy positions
• Reviewed 2025 - 2030 Renewable and Carbon-Free positions • Reviewed PCC1 purchase and sales strategy
• Reviewed 2025 - 2026 Sunzia test energy forecast
• Reviewed the 2025 - 2027 slice of day RA position
• Reviewed CF purchase and sales strategy
• Reviewed COD impacts on RA compliance
• Reviewed RA purchase and sales strategy
• Reviewed Energy Risk Management Policy (ERMP) compliance for RA, REC, CF, and Energy
• Reviewed Long-Term Energy Contract amendments and terminations • Reviewed September 2025 CRR Allocations
• Reviewed the Negative REC Price strategy
Agenda Page 7
Finance Committee Item 2
Policy Compliance
Policy Deviation Required Action
Beginning in June 2024, the
renewable energy hedge ratio
exceeded the maximum hedge
percentage for 2027 due to the
addition of new renewable energy
supply from a PPA.
Beginning in November 2024, the
renewable energy hedge ratio
exceeded the maximum hedge
percentage for 2028-2030 due to a
reduction in the renewable energy
product targets that are used for
long-term power planning and
position management.
None.
The deviations for 2027-2030 will resolve
themselves as CPA nears these years and the
maximum hedge percentages increase.
Beginning in September 2025, the
energy hedge ratio for Q3 2028
exceeded the maximum hedge
percentage by 0.2% due to a
reduction in forecast load.
None.
The deviation will resolve itself on January 1st,
2026 when the maximum hedge percentage for
Q3 2028 increases.
ATTACHMENT
None.
Agenda Page 8
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 2025 Investment Report Date: October 29, 2025
RECOMMENDATION
Receive and file.
ATTACHMENT
1. September 2025 Investment Report
Agenda Page 9
Clean Power Alliance Investment Report
September 2025
(in USD unless otherwise noted)
Local Agency
Investment
Fund (LAIF)
Certificates of Deposit
(CDs)
California Asset
Management Program
(CAMP)
US Bank Custodial
Account
US Treasury Securities Total
Beginning Balance 17,554 60,000,000 175,577,431 3,082,599 198,860,653 437,538,238 Amortization & Accretion** 0 0 0 0 114,533 114,533
Deposits & Purchases 0 0 629,325 964,913 0 1,594,238
Maturities & Withdrawals 0 10,000,000 0 0 0 10,000,000
Ending Balance 17,554 50,000,000 176,206,756 4,047,512 198,975,186 429,247,008 Book Value*
Beginning Balance 17,554 60,000,000 175,577,431 3,082,599 200,622,693 439,300,277 Amortization & Accretion 0 0 0 0 (307,814) (307,814)
Deposits & Purchases 0 0 629,325 964,913 0 1,594,238
Maturities & Withdrawals 0 10,000,000 0 0 0 10,000,000
Ending Balance 17,554 50,000,000 176,206,756 4,047,512 200,314,879 430,586,701 Interest Earned*** 60 209,402 629,325 10,888 515,149 1,364,824 Yield**** 4.21% 4.26% 4.36% 3.97% 3.88% 4.12%
Weighted Average Term to Maturity (Months) 7.0 3.8 2.0 1.0 51.0 24.9 **** 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 yield to maturity at purchase date; total yield is the weighted average yield for the whole portfolio Transaction Type Maturity
Depository River City Bank
Par Amount 10,000,000
Rate 4.36%
Placement Date 3/27/2025
Maturity Date 9/25/2025
Term (weeks) 26
Interest Earnings (Total) 219,770
** Represents the change in book value of UST assets due to amortization/accretion of bond premium/discount at purchase over the lifetime of the asset *** 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)
* Book value represents the original purchase cost of US Treasury assets adjusted for amortization/accretion. Market value reflects the month-end fair market value of US Treasury assets based on current interest rate and market conditions. Market Value* Agenda Page 10
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 2025 Financial Dashboard Date: October 29, 2025
RECOMMENDATION
Receive and file.
ATTACHMENT
1. August 2025 Financial Dashboard
Agenda Page 11
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 and other (grant related) revenues less allowance for doubtful accounts Cost of energy: Includes all direct power costs incurred to serve CPA’s load Operating expenses: Includes general, administrative, consulting, payroll, and other costs required to fund operations Operating Income: Represents the difference between revenues and cost of energy and operating expenses 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 90 days or less Year to date (YTD): Represents the fiscal period beginning July 1, 2025 YTD
August
2025
Financial Dashboard
Note: Numbers may not sum up due to rounding.
Active Accounts
1,041,327
Participation Rate
92.9%
YTD Sales Volume
2,045 GWh
August Volume
1,099 GWh
Res
53%
Com - Lg
18%
Com - Sm
27%
Agr/Oth
2%
In August 2025 CPA’s net position increased by $14.5 million, $22.6 million more than the budgeted decrease in net position of $8.1 million. August 2025 revenues were $3.6 million (3%) higher than budgeted and energy costs for the month were $15.5 million (11%) below budget. Operating expenses were $1.4 million below budget and nonoperating income was $2.1 million above budget.
August’s favorable results are primarily attributable to moderated wholesale energy prices caused by relatively mild weather.
Year-to-date, CPA’s net position increased by $14.5 million, $24.3 million higher than the budgeted decrease of $9.8 million. YTD revenues were $270.2 million, $9.6 million or 3% less than budgeted primarily due to July’s moderate temperatures which resulted in lower load than expected. YTD energy cost was $251.1 million, $29.6 million or 11% less than budgeted primarily due to the non-utilization of contingencies and lower than budgeted market energy costs. Absent contingencies, energy costs YTD were $11.1 million or 4.2% less than budgeted. Operating expenses were $9.2 million YTD, $2.9 million or 24% less than budgeted primarily due to lower than budgeted spending on customer programs and staffing expenses. Non-operating income, primarily made up of interest income, was $4.6 million YTD, $1.4 million or 42% higher than budgeted.
As of August 31st, 2025, CPA had unrestricted cash, cash equivalents, and investments of $382.4 million, as well as $114.4 million available in its bank line of credit, representing 207 Days Liquidity on Hand. CPA is financially sound and in compliance with its bank and other credit covenants.
Agenda Page 12
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 2024-2025 Audited Financial Statements and Fiscal Year 2024- 2025 Budget to Actual Report
Date: October 29, 2025
RECOMMENDATION
Receive report from the Independent Auditor and review Fiscal Year 2024-2025 Financial Statements and Fiscal Year 2024-2025 Budget to Actual report.
BACKGROUND
Each year, CPA publishes its financial statements for the fiscal year, which ends on June
30. CPA’s Bylaws require the Finance Committee to select an independent auditor to perform an annual financial audit of the accounts of CPA. In May 2025, the Finance Committee selected Baker Tilly to perform an audit of CPA’s Fiscal Year 2024-25 financial statements. Baker Tilly has performed CPA’s annual audit since Fiscal Year 2018-19; this year, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Board (GASB) standards, Baker Tilly changed the partner-in-charge of CPA’s audit.
CPA staff is responsible for the preparation and fair presentation of the financial statements. The independent auditor performs tests to provide reasonable assurance that the financial statements are free from material misstatement and prepared in accordance with GAAP and GASB standards. The FY 2024-25 Audited Financial Statements Agenda Page 13
Finance Committee Item 5
(Attachment 3) consist of the following:
• Independent Auditors’ Report (Auditors’ Report)
• Management’s Discussion and Analysis
• Financial Statements, including:
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 2024-25 Financial Statements “present fairly, in all material respects, the financial position of Clean Power Alliance of Southern California as of June 30, 2025, and 2024, 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 unmodified 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 2024-25. The net position increased by $136.9 million, up from a $106.1 million increase in the prior year.
A higher increase in net position in FY 2024-25 than in FY 2023-24 is primarily due to a deferral of 2023-24 revenue and its transfer to the Fiscal Stabilization Fund, and higher interest and investment income, offset by decreased electricity revenues resulting from retail electric rate decreases and higher electricity costs.
Agenda Page 14
Finance Committee Item 5
• Cost of energy increased by $57.9 million to $1,277 million in FY 2024-25 from $1,220 million in FY 2023-24. The increase is primarily due to higher costs for renewable energy and increased Resource Adequacy costs. • Operating expenses, excluding the cost of energy, increased year over year from $41.2 million in FY 2023-24 to $50.8 million in FY 2024-25, an increase of
23.3%. This increase is primarily due to increased staffing costs and higher costs for contract services, particularly related to data management, customer programs, and marketing.
• Accounts receivable decreased from $143.2 million in 2024-23 to $97.3 million in FY 25-24, primarily due to an increase in the bad debt reserve estimate, resulting from additional reserves for active residential accounts based on the collections and delinquency behavior of these customers. Increasing the bad debt reserve adjustment reduces the accounts receivable balance. • In FY 25-24, CPA invested $174.3 million in U.S. Treasury Notes, which are high-quality and liquid securities pursuant to and consistent with CPA’s Investment Policy.
• In May 2025, CPA elected to amend the credit agreement with JP Morgan to reduce the size of the facility to $120 million from $160 million. • As of June 30, 2025, CPA had no loans or bank debt outstanding. CPA had outstanding letters of credit, utilizing its credit agreement with JP Morgan, in the amount of $5.647 million; $114.353 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 $546.3 million as of June 30, 2024, to $653.3 million as of June 30, 2025.
• The financial results comply with CPA’s credit covenants.
Key financial metrics and additional analysis of FY 2024-25 results are presented in the Presentation of FY 2024-25 Financial Results (see Attachment 5).
Agenda Page 15
Finance Committee Item 5
Fiscal Stabilization Fund
In June 2024, CPA deferred revenue of $135 million to the Fiscal Stabilization Fund pursuant to CPA’s Board-approved Fiscal Stabilization Fund Policy. No funds were used in FY 2024/2025, and no additional funds were deferred. The funds may be used in later years if financial results were negatively impacted by uncontrollable events as described in the Fiscal Stabilization Fund Policy.
FY 2024-25 Budget to Actual Report
The FY 2024-25 Budget to Actual Report (see Attachment 4) compares actual results for the 12-month period ending June 30, 2025, with the FY 2024-25 Budget approved by the Board in June 2024.
Budget to Actual highlights include:
• Electricity revenues were $141.8 million, or 9% below budget, as a result of milder weather conditions, lower than forecast electricity consumption, and an interim rate reduction effective March 2025.
• Cost of energy was $115.9 million, 8% below budget, primarily due to the non-utilization of contingencies and lower-than-budgeted energy costs. • Operating expenditures were 25% under budget primarily due to lower spending on general and administrative expenses, customer programs, and other services, and the non-utilization of contingencies. • CPA was within budget limits for all operating expense budget line items Additional analysis of Budget to Actual results, including a comparison of actual FY 2024- 25 results with the FY 2024-25 Budget approved by the Board in June 2024, appears in the Presentation of FY 2024-25 Financial Results (Attachment 5).
Agenda Page 16
Finance Committee Item 5
Summary
For the year ending June 30, 2025, CPA increased the net position and total liquidity by $136.9 million and $107.9 million, respectively. Reserves and Days Liquidity on Hand were 45% and 180 days, respectively, as of June 30, 2025, 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 Results Letter
3. FY 2024-25 Audited Financial Statements
4. FY 2024-25 Budget to Actual Report
5. Presentation of FY 2024-25 Financial Results
Agenda Page 17
Reporting & Insights from
2025 Audit:
Clean Power Alliance of
Southern California
October 29, 2025
Agenda Page 18
2 Audit Discussion
Clean Power Alliance Agenda
What was covered by this year’s audit
Required Communication with Governing
Body
Impact of future standards
Discussion
Agenda Page 19
3 Audit Overview
Clean Power Alliance
Fieldwork occurred September 2nd through
September 5th
Management and staff were cooperative and
readily available.
Audit was conducted remotely with no difficulties.
Agenda Page 20
4 Testing Methods
Clean Power Alliance
Evaluating and assessing risk
Interviewing employees and documenting
business processes
Testing business processes for weaknesses and
adherence to policies
Statistical sampling
Agenda Page 21
5 Testing Methods (cont.)
Clean Power Alliance
Independent confirmations
Tracing to source documents
Agenda Page 22
6 Audit Overview
Clean Power Alliance
Controls
reviewed in
key
transaction
areas
Disbursements
Payroll
Billing
Cash and investments
Financial reporting
Information technology
Agenda Page 23
7 What Were the Audit Results
Clean Power Alliance
Audit performed in accordance with Generally Accepted Auditing Standards
Audit objective – reasonable assurance that financial
statements are free from material misstatement
Financial statements of CPA received an Unmodified Opinion No material weaknesses or significant deficiencies in controls Agenda Page 24
8 Auditor Communication to Those Charged with
Governance
Clean Power Alliance
No audit findings or concerns
Baker Tilly agrees with CPA’s accounting
policies and disclosures
Auditor
responsibility &
independence
Board
responsibility
No significant
or unusual
transactions
There were no
identified
adjustments to
the financial
statements
Accounting
policies and
estimates
Agenda Page 25
9 Upcoming Accounting Impacts
Clean Power Alliance
GASB 103 – Financial Reporting Model Improvements FY 2026 GASB 104 – Disclosure of Certain Capital Assets FY 2026 Agenda Page 26
10 Thank You!
Clean Power Alliance
We appreciate the work done by the Clean Power Alliance accounting staff and management in preparing for and assisting in the audit! Agenda Page 27
Clean Power Alliance
Discussion
Agenda Page 28
12 Contact Info
Clean Power Alliance
Aaron Worthman, Principal
D: 512 975 7281
[email protected]
Ryan Theiler, Senior Manager
D: 608 240 2571
[email protected]
Agenda Page 29
Reporting and insights
from the fiscal year 2025
audit:
Clean Power Alliance of
Southern California
June 30, 2025
Agenda Page 30
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 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.
Executive summary
October 23, 2025
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, 2025 and have issued our report thereon dated October 23, 2025.
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:
• Aaron Worthman, Principal: [email protected] or +1 (512) 975 7281 • Ryan Theiler, Senior Manager: [email protected] or +1 (608) 240 2571 Sincerely,
Baker Tilly US, LLP
Aaron Worthman, CPA, Principal
Ryan Theiler, Senior Manager
Agenda Page 31
© 2025 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 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
Agenda Page 32
© 2025 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.
Agenda Page 33
© 2025 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 the 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 auditors’ 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 nonfinancial 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 Payroll Net position calculations Financial reporting and required disclosures
Internal control matters
We considered the 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 the 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.
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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. As described in Note 2, CPA changed accounting policies related to compensated absences by adopting GASB Statement No. 101, Compensated Absences, in fiscal year 2025. CPA did not restate fiscal year 2024 for this change as the impact was not material. 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.
• 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 and 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.
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Significant difficulties encountered during the audit
We encountered no significant difficulties in dealing with management and completing our audit.
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 noncompliance 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.
Agenda Page 37
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Other matter
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.
Agenda Page 38
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Audit committee resources
Our business is to know every aspect of yours and to maintain a constant lookout for what's next. We invite you to learn about some of the trending challenges and opportunities for public sector organizations like yours and how Baker Tilly can help.
To explore more trending topics and regulatory updates, visit our resource page at https://www.bakertilly.com/insights/audit-committee-resource-page.
Funding evaluation and pursuit
Public sector organizations may be eligible for grants, tax credits and other financial incentives through funding opportunities such as the Inflation Reduction Act, the Clean Communities Investment Accelerator and the Infrastructure Investment and Jobs Act.
Baker Tilly can help you navigate, understand and pursue various federal and state funding sources through grant research and tracking, advising and writing and management and compliance services.
Digital transformation
Digitizing public services can be a game changer for governments. Streamlining inefficient processes, providing digital access and delivery of services to meet public expectations, implementing technology to protect constituent data, leveraging information to make data-driven decisions and migrating outdated on-premises systems to the cloud are crucial to an entity’s success.
Through these types of digital services, Baker Tilly can help you scale with future demand and be better positioned to rapidly respond to changing demands.
Cybersecurity
Public sector organizations face significant challenges from cyber threats and IT regulations. It can feel like you are on the defense keeping up with the latest risks, regulations and emerging trends. To mitigate risk, you must understand your organization’s unique vulnerabilities, cybersecurity processes and controls.
Baker Tilly can help enhance your cybersecurity posture and ensure compliance, with solutions in IT compliance and security and cybersecurity and data protection to safeguard your data and navigate complex risk environments.
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Management representation letter
Agenda Page 40
801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
October 23, 2025
Baker Tilly US, LLP
4807 Innovate Lane
Madison, WI 53718
Dear Baker Tilly US, LLP:
We are providing this letter in connection with your audits of the financial statements of Clean Power Alliance of Southern California as of June 30, 2025 and 2024 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 in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). We confirm that we are responsible for the fair presentation of the previously mentioned financial statements in conformity with U.S. GAAP. 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 audits.
Financial Statements
1) We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated July 1, 2025, including our responsibility for the preparation and fair presentation of the financial statements in accordance with U.S. GAAP.
2) The financial statements referred to above are fairly presented in conformity with U.S. GAAP.
The financial statements include all properly classified funds of the utility required by U.S.
GAAP 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.
Agenda Page 41
801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
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 U.S GAAP. 7) All events subsequent to the date of the financial statements and for which U.S. GAAP 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) There is one known claim, whose effects could rise to a potential loss contingency and therefore, may be considered when preparing the financial statements. Other than this single claim, there are no known or possible litigation, claims, or assessments that should be considered when preparing financial statements. See CPA General Counsel’s Letter dated September 22, 2025. There are no unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed in accordance with U.S. GAAP.
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.
Agenda Page 42
801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
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. 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) Clean Power Alliance of Southern California has no plans or intentions that may materially affect the carrying value or classification of assets, liabilities, deferred inflows of resources or net position.
Agenda Page 43
801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
21) 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. 22) 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 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 U.S. GAAP.
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.
23) 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.
24) 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.
25) The financial statements include all component units as well as joint ventures with an equity interest, and properly disclose all other joint ventures and other related organizations, if any. 26) Components of net position (net investment in capital assets; restricted; and unrestricted) are properly classified and, if applicable, approved.
Agenda Page 44
801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
27) 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.
28) Provisions for uncollectible receivables, if any, have been properly identified and recorded. 29) Deposits and investments are properly classified, valued, and disclosed (including risk disclosures, collateralization agreements, valuation methods, and key inputs, as applicable). 30) Provision, when material, has been made to reduce excess or obsolete inventories to their estimated net realizable value.
31) Capital assets, including infrastructure and intangible assets, are properly capitalized, reported, and, if applicable, depreciated/amortized. Any known impairments have been recorded and disclosed.
32) The operations and rate setting process meet the condition for application of accounting for regulated operations as outlined in GASB Statement 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.
33) 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. 34) 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.
35) Unused lines of credit, collateral pledged to secure debt and direct borrowings and private placements have been properly identified and disclosed. 36) We have identified any leases, subscription-based information technology agreements 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.
Agenda Page 45
801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
37) We have reviewed our employment agreements and personnel policy related to compensated absences and believe our calculation of compensated absences is in alignment with the requirements of GASB Statement No. 101.
38) We have evaluated our ongoing operations and determined there are no concentrations or constraints meeting the requirements for disclosure under GASB Statement No. 102.39. 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 do not prepare and have no plans to prepare an annual report.
40) We are responsible for the estimation methods and assumptions used in measuring assets and liabilities reported or disclosed at fair value, including information obtained from brokers, pricing services or third parties. Our valuation methodologies have been consistently applied from period to period. The fair value measurements reported or disclosed represent our best estimate of fair value as the measurement date in accordance with the requirements of GASB Statement No. 72 – Fair Value Measurement. In addition, our disclosures related to fair value measurements are consistent with the objectives outlined in GASB Statement No. 72. We have evaluated the fair value information provided to us by brokers, pricing services or other parties that has been used in the financial statements and believe this information to be reliable and consistent with the requirements.
41) There have been no changes to our assessment or applicability in regards to all previously effective GASB Statements that were deemed immaterial or did not impact Clean Power Alliance of Southern California at the time the statements were effective.
Sincerely,
Clean Power Alliance of Southern California
Signed: _______________________________
David McNeil, Chief Financial Officer
Signed: _______________________________
Ted Bardacke, Chief Executive Officer
Agenda Page 46
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Accounting changes relevant to CPA
Future accounting standards update
GASB
statement
number Description
Potentially
impacts
you Effective date
103 Financial reporting model improvements 6/30/2026
104 Disclosure of certain capital assets 6/30/2026
Further information on upcoming GASB pronouncements.
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. • Major component unit information and budgetary comparison information - Statement 103 is designed to improve the consistency of the reporting of major component unit information and budgetary comparison information by specifying required placement of that information.
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Revisions to disclosures for certain capital assets
Governments are required to provide information on capital assets in the footnotes to the financial statements as outlined in GASB Statement No. 34. Recent standards have impacted the accounting and reporting for capital assets and as a result GASB issued Statement No. 104, Disclosure of Certain Capital Assets to provide enhanced disclosures for certain capital assets, including (a) Lease assets reported under Statement No. 87, intangible right-to-use assets reported under Statement No. 94 and subscription assets reported under Statement No. 96 should all be disclosed separately and by major class of underlying asset. In addition, if there are any other intangible assets reported they should also be disclosed separately. (b) Capital assets that are held for sale should have the ending balance with separate disclosure for historical cost and related accumulated depreciation as well as any outstanding debt for which the asset is pledged as collateral disclosed by major class of asset. Assets held for sale are defined as those for which the government has decided to pursue the sale and it is probable that the sale will be finalized within one year of the financial statement date.
While these changes are focused on footnote disclosures it is important to plan ahead to ensure the required information is available for implementation.
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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. 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.
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? Agenda Page 49
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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.
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.
Agenda Page 50
CLEAN POWER ALLIANCE OF SOUTHERN
CALIFORNIA
Basic Financial Statements with Independent
Auditors’ Report
Agenda Page 51
For the Fiscal Years Ended June 30, 2025 and 2024
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 Agenda Page 52
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, 2025 and 2024, 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, 2025 and 2024, 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 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.
Agenda Page 53
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 23, 2025
2 Agenda Page 54
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2025 AND 2024
3 The Management's Discussion and Analysis section provides an overview of Clean Power Alliance of Southern California's (CPA’s) financial activities as of and for the fiscal years ending June 30, 2025 and 2024. 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, deferred inflows of resources, 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.
Agenda Page 55
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2025 AND 2024
4 MANAGEMENT’S DISCUSSION AND ANALYSIS
Agenda Page 56
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2025 AND 2024
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 32,000 additional accounts from La Canada Flintridge, Lynwood and Port Hueneme.
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).
Agenda Page 57
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2025 AND 2024
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, 2025, 2024, and 2023.
Current Assets
Current assets were approximately $564,239,000 at the end of FY 2024-25 and were mainly comprised of $297,235,000 of cash and cash equivalents, $97,305,000 of accounts receivable, $73,349,000 of accrued revenue, $70,000,000 of investments, $10,142,000 of other receivables and $7,929,000 of deposits. Investments were made in Certificates of Deposit with a one-year maturity or less and are redeemable upon demand.
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, $143,168,000 of accounts receivable, $95,218,000 of accrued revenue, $60,000,000 of investments, $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.
Total current assets decreased as of June 30, 2025, compared to the prior year, particularly accounts receivable, accrued revenue, and prepaid expenses. Accounts receivable decreased primarily due to an increase in the bad debt reserve estimate resulting from additional reserves for active residential accounts based on the delinquency behavior of residential customers and the collections activity of CPA’s billing and collections agent, SCE. Increasing the bad debt reserve adjustment reduces the accounts receivable balance. Accrued revenue decreased compared to the prior year, primarily due to lower electricity consumption and the implementation of reduced retail electric rates effective March 2025. Prepaid expenses decreased mainly due to the decrease in contracted volumes of Resource Adequacy that required prepayment as compared with the prior year. 2025 2024 2023
Current assets $ 564,238,651 $ 738,426,529 $ 407,408,168 Noncurrent assets 176,130,516 2,478,783 2,835,591
Total assets 740,369,167 740,905,312 410,243,759
Current liabilities 136,452,817 273,275,114 183,290,311 Noncurrent liabilities 4,361,168 4,975,965 5,405,928
Total liabilities 140,813,985 278,251,079 188,696,239
Deferred inflows of resources 135,000,000 135,000,000 - Net position
Investment in capital assets (46,379) 133,840 87,507
Restricted for collateral - - 1,200,000
Unrestricted 464,601,561 327,520,392 220,260,013
Total net position $ 464,555,182 $ 327,654,232 $ 221,547,520 Agenda Page 58
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2025 AND 2024
7 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 accounts receivable due 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.
Noncurrent Assets
Noncurrent assets were approximately $176,131,000 at the end of FY 2024-25 and $2,479,000 at the end of FY 2023-24.
Noncurrent assets increased as of June 30, 2025, compared to the prior year. The increase was mainly due to $174,259,000 of investments in U.S. Treasury notes, offset by the reduction in capital assets due to amortization and depreciation expenses.
Noncurrent assets decreased as of June 30, 2024, compared to the prior year, mainly due to the amortization of the office lease as an intangible asset and depreciation expenses.
Current Liabilities
Current liabilities consist primarily 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, various other accrued liabilities and unearned program funds.
Unearned program funds represent funds for customer programs received from the CPUC and not yet spent.
Total current liabilities decreased as of June 30, 2025, compared to the prior year, primarily due to a decrease in accrued energy costs resulting from improved timing in receiving energy invoices compared to the prior fiscal year.
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.
Agenda Page 59
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2025 AND 2024
8 Noncurrent Liabilities
Noncurrent liabilities decreased as of June 30, 2025, from the prior year primarily as a result of amortization of the long-term portion of a lease liability and the reduction of supplier security deposits offset by accruals of retention incentives.
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.
Deferred Inflows of Resources
In June 2024, CPA deferred revenue of $135,000,000 to the Fiscal Stabilization Fund pursuant to CPA’s Board-approved Fiscal Stabilization Fund Policy. No funds were used in FY 2024/2025, and no additional funds were deferred. The funds may be used in later years if financial results were negatively impacted by uncontrollable events as described in the Fiscal Stabilization Fund Policy.
Revenues and Expenses
The following table summarizes CPA’s results of operations for the years ending June 30:
Total Income
Operating revenues arise from retail electricity sales to customers and funding to support CPA’s Power Share program. CPA reports electricity revenues, net of uncollectible accounts expenses, as described in the Notes to the Financial Statements.
Operating revenues increased to approximately $1,443,469,000 in FY 2024-25 from $1,356,577,000 in FY 2023-24. FY 2024-25 revenue was higher than the prior year primarily because prior year revenue was reduced by transfer to the Fiscal Stabilization Fund (See Notes to the Financial Statements). FY 2024-25 revenue was reduced by a reduction in retail electric rates, which went into effect in March 2025.
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 2025 2024 2023
Operating revenues $ 1,443,468,993 $ 1,356,577,153 $ 1,167,777,256 Interest and investment income 22,299,651 10,877,122 1,770,273 Total income 1,465,768,644 1,367,454,275 1,169,547,529
Operating expenses 1,328,256,401 1,260,700,163 1,088,598,932 Nonoperating expenses 611,293 647,400 654,305
Total expenses 1,328,867,694 1,261,347,563 1,089,253,237 Change in net position $ 136,900,950 $ 106,106,712 $ 80,294,292 Agenda Page 60
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2025 AND 2024
9 electric rates that went into effect in July 2023 and new community enrollments in March 2024, offset by the deferral of revenue and its transfer to the Fiscal Stabilization Fund.
Year-over-year changes in interest and investment income reflect changes in market interest rates, increases in investments and increases in cash balances in interest-earning accounts. CPA invests funds pursuant to and 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 costs associated with borrowing agreements.
Operating expenses increased to $1,328,256,000 in FY 2024-25 from $1,260,700,000 in FY 2023-
24. The increase is primarily due to increased renewable energy costs and higher Resource Adequacy costs. CPA purchases its energy supply from various sources to reduce market risk and maintain a balanced renewable energy portfolio. Staffing costs increased year-over-year mainly due to CPA’s hiring of additional staff to support the organization's growth, as well as increases in employee benefit and staff retention incentive program expenses. Contract services increased year over year, primarily due to the expansion of customer programs. The growth in these programs required additional expenses associated with contracted support and services. This reflects CPA’s continued investment in customer program development and engagement initiatives.
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.
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 $136,901,000 in FY 2024-25. CPA’s net position increased by $106,107,000 in FY 2023-24 and by $80,294,000 in FY 2022-23.
CPA had a higher increase in net position in FY 2024-25 than in FY 2023-24, mainly due to a deferral of 2023-24 revenue and its transfer to the Fiscal Stabilization Fund, and higher interest and investment income, offset by decreased electricity revenues resulting primarily from retail electric rate decreases, and higher electricity costs.
Agenda Page 61
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2025 AND 2024
10 CPA had a higher increase in net position in FY 2023-24 as compared to FY 2022-23 due to increased electricity revenues 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.
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 180 and 158 days of liquidity on hand as of June 30, 2025, and 2024, respectively. Investments are made in high-quality and liquid securities pursuant to and consistent with 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 the Fiscal Stabilization Fund balance. Reserves were 45.1% and 36.6% of operating expenses as of June 30, 2025, 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, 2025, CPA had an issuer credit rating of A- with a stable outlook from Standard & Poor’s (S&P) Global Ratings.
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.
SB 350 has been superseded by SB 100 and SB 1020, described below.
Agenda Page 62
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED JUNE 30, 2025 AND 2024
11 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, the California Governor 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.
Commitments under power purchase agreements decreased to $12.4 billion as of June 30, 2025, from $12.9 billion as of June 30, 2024, due in part to energy cost reduction affected by three energy prepayment transactions which occurred during FY 2024-25, and to the cancellation of a long-term power purchase agreement prior to construction. CPA enters into power purchase agreements consistent with CPA’s Board-approved Energy Risk Management Policy.
REQUESTS 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.
Agenda Page 63
12 BASIC FINANCIAL STATEMENT
Agenda Page 64
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENTS OF NET POSITION
YEARS ENDED JUNE 30, 2025 AND 2024
The accompanying notes are an integral part of these financial statements. 13
2025 2024
Current assets
Cash and cash equivalents $ 297,234,579 $ 333,509,421
Investments 70,000,000 60,000,000
Accounts receivable, net of allowance 97,304,782 143,167,706 Accrued revenue 73,349,087 95,217,865
Other receivables 10,142,000 11,502,942
Interest receivable 2,315,977 1,404,260
Prepaid expenses 5,962,975 91,292,917
Deposits 7,929,251 2,331,418
Total current assets 564,238,651 738,426,529
Noncurrent assets
Capital assets, net of depreciation and amortization 1,782,734 2,389,908 Deposits 88,875 88,875
Investments 174,258,907 -
Total noncurrent assets 176,130,516 2,478,783
Total assets $ 740,369,167 $ 740,905,312
Current liabilities
Accounts payable $ 3,254,851 $ 3,045,901
Accrued cost of electricity 107,720,929 246,869,951
Other accrued liabilities 9,302,824 4,165,262
User taxes and energy surcharges due to other governments 10,692,841 10,750,873 Security deposits from energy suppliers 180,000 3,961,500 Unearned program funds 4,849,605 4,054,673
Lease liability, current 451,767 426,955
Total current liabilities 136,452,817 273,275,115
Noncurrent liabilities
Security deposits from energy suppliers 2,366,852 3,146,852 Lease liability, noncurrent 1,377,346 1,829,113
Other noncurrent liabilities 616,970 -
Total noncurrent liabilities 4,361,168 4,975,965
Total liabilities $ 140,813,985 $ 278,251,080
Fiscal stabilization fund 135,000,000 135,000,000
Investment in capital assets $ (46,379) $ 133,840
Unrestricted 464,601,561 327,520,392
Total net position $ 464,555,182 $ 327,654,232
NET POSITION
ASSETS
LIABILITIES
DEFERRED INFLOWS OF RESOURCES
Agenda Page 65
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
YEARS ENDED JUNE 30, 2025 AND 2024
The accompanying notes are an integral part of these financial statements. 14 2025 2024
OPERATING REVENUES
Electricity sales for resale, net $ 1,440,562,620 $ 1,489,775,404 Revenue transferred (to) from fiscal stabilization fund (135,000,000) - Other revenue 2,906,373 1,801,749
Total operating revenues 1,443,468,993 1,356,577,153
OPERATING EXPENSES
Cost of electricity 1,277,421,945 1,219,546,896
Contract services 24,768,864 20,234,442
Staff compensation 22,779,394 18,049,088
General and administration 3,286,198 2,869,737
Total operating expenses 1,328,256,401 1,260,700,163
Operating income 115,212,593 95,876,990
NONOPERATING REVENUES (EXPENSES)
Interest and investment income 22,299,651 10,877,122
Interest and financing expenses (611,293) (647,400)
Total nonoperating revenues 21,688,357 10,229,722
CHANGE IN NET POSITION 136,900,950 106,106,712
Net position at beginning of year 327,654,232 221,547,520 Net position at end of year $ 464,555,182 $ 327,654,232 Agenda Page 66
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2025 AND 2024
The accompanying notes are an integral part of these financial statements. 15
2025 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 1,456,667,747 $ 1,490,560,438 Other operating receipts 10,262,342 9,502,441
Payments to suppliers for electricity (1,236,710,470) (1,154,182,679) Payments for other goods and services (27,530,656) (26,386,384) Payments for staff compensation (22,436,812) (17,259,935) Tax and surcharge payments to other governments (52,600,211) (51,135,317) Net cash provided by operating activities 127,651,940 251,098,564
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Interest and related expense payments (569,168) (563,600) Net cash used by non-capital financing activities (569,168) (563,600)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments to acquire capital assets (10,183) (255,920)
Payments on lease (principal and interest) (476,456) (462,578) Net cash used by capital and related financing activities (486,639) (718,498)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments (184,258,907) (60,000,000)
Interest income received 21,387,933 9,706,076
Net cash provided by investing activities (162,870,974) (50,293,924) Net change in cash and cash equivalents (36,274,841) 199,522,542 Cash and cash equivalents at beginning of year 333,509,421 133,986,879 Cash and cash equivalents at end of year $ 297,234,579 $ 333,509,421 Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) 297,234,579 333,509,421 Cash and cash equivalents $ 297,234,579 $ 333,509,421
NONCASH INVESTING ACTIVITIES
2025 2024
Change in fair value of investments $ 801,370 $ -
Agenda Page 67
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2025 AND 2024
The accompanying notes are an integral part of these financial statements. 16 2025 2024
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Net operating income $ 115,212,593 $ 95,876,990
Adjustments to reconcile operating income to net
cash provided (used) by operating activities
Depreciation expense 159,997 229,819
Amortization expense 457,360 382,908
(Increase) decrease in:
Accounts receivable, net of allowance 45,862,924 (19,908,653) Other receivables 1,360,941 (10,907,739)
Accrued revenue 21,868,778 (7,988,201)
Prepaid expenses 85,329,943 (45,140,068)
Deposits (5,597,833) 13,619,888
Increase (decrease) in:
Accounts payable 208,951 (3,963,060)
Energy market settlements payable (435,708) 5,775,142
Accrued cost of electricity (138,713,314) 81,108,925
Other accrued liabilities 5,761,909 1,366,616
User taxes due to other governments (58,032) 2,180,016
Fiscal stabilization fund 135,000,000 -
Supplier security deposits (4,561,500) 3,763,792
Unearned program funds 794,931 (297,811)
Net cash provided by operating activities $ 127,651,940 $ 251,098,564 Agenda Page 68
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
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, 2025, 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).
Agenda Page 69
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
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’s policy is to use restricted resources first, then unrestricted resources as needed.
CASH AND CASH EQUIVALENTS
Cash includes cash on hand, demand deposits with banks, and deposits in other kinds of accounts or cash management pools that have the general characteristics of demand deposit accounts in that CPA may deposit additional cash at any time and also effectively may withdraw cash at any time without prior notice or penalty.
INVESTMENTS
Investments reported on the Statements of Net Position are comprised of certificates of deposit and United States Treasury Notes with an original term to maturity of more than three months.
Non-negotiable certificates of deposit are not subject to fair value assessments and are stated at cost. U.S. Treasuries are stated at fair value. CPA intends to hold its securities to maturity.
Investments with a remaining term to maturity of less than one year, are shown as current assets in the Statement of Net Position. Investments with a remaining term to maturity of one year or more are shown as noncurrent assets in the Statement of Net Position.
Permitted investments are defined in the CPA’s Investment Policy.
PREPAID EXPENSES
Payments made to vendors that will provide benefits in periods beyond the end of the current fiscal year are recorded as prepaid expenses. Prepaid energy expenses were approximately $5,174,000 and $90,453,000 as of June 30, FY 2024-25 and FY 2023-24. The prior year prepaid Agenda Page 70
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
19 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) expense balance was driven by high Resource Adequacy prices and limited market supply during a time when suppliers required advance payments to secure resources.
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. Depending on the length of time the deposits will be outstanding, they are classified as current or noncurrent assets.
OTHER RECEIVABLES
Other receivables primarily consist of receivables related to the wholesale sales of excess energy purchased, as well as accrued interest receivable. These receivables are expected to be collected within the next fiscal year and are considered fully collectible.
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 into 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.
OTHER ACCRUED LIABILITIES
Other accrued liabilities consist primarily of amounts owed for employee compensated absences, deferred revenue, and unspent grant funds as of June 30, 2025. Accrued compensated absences represent the value of earned but unused vacation and other leave benefits. The liability is recognized as employees earn these benefits in accordance with GASB Statement No. 101, Compensated Absences. Deferred revenues represent payments received in advance for services that have not yet been performed or earned, and unspent grant funds represent grant proceeds received that have not yet been expended.
Agenda Page 71
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
20 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 Power Share program funding from the California Public Utility Commission. The amount represents funds received by CPA, but not yet spent on the Power Share program-specific expenses.
FISCAL STABILIZATION FUNDS
In Fiscal Year 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 Fiscal Year 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 and 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, 2025, and 2024 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, laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.
Agenda Page 72
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
21 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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 funds earned from the delivery of program activities. Electricity sales are reported net of changes to the allowance for uncollectible accounts. Other revenue consists of revenue that is not related to the sales of electricity to CPA customers.
Investment income is considered “non-operating revenue.”
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. Electricity costs are 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. 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 Agenda Page 73
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
22 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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; 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.
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.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
Effective for the fiscal year ended June 30, 2025, CPA implemented the provisions of the following GASB statements:
GASB Statement No. 101, Compensated Absences: This statement establishes recognition and measurement guidance for liabilities associated with compensated absences, including vacation, sick leave, and other paid time off benefits that accumulate and are attributable to services already Agenda Page 74
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
23 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) rendered by employees. Management evaluated the impact of implementing GASB 101 on CPA’s financial statements and determined that current policies were substantially consistent with the recognition and measurement requirements of the standard. The adoption of GASB 101 had an immaterial impact on CPA’s financial position and results of operations.
GASB Statement No. 102, Certain Risk Disclosures: This statement requires governments to disclose material risks and uncertainties that could affect their financial statements, including the nature of the risk, potential financial impact, conditions or events that could trigger the risk, and how management monitors or mitigates the risk. Based on management’s evaluation, as of June 30, 2025, no events or conditions were identified that are material or require disclosure under GASB 102.
3. CASH AND CASH EQUIVALENTS
As of June 30, 2025, 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), in an interest-earning account with U.S. Bank, and in the California Local Agency Investment Fund (LAIF). As of June 30, cash and cash equivalents were as follows:
Cash and cash equivalent 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 Home Loan Deposit Corporation (FHLDC) in amounts equal to 110% and 105% of the 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 2025 2024
Cash and cash equivalents held at:
River City Bank $ 94,812,000 $ 129,856,000
California Asset Management Program 199,219,000 203,636,000 U.S. Bank 3,187,000 -
California Local Agency Investment Fund 17,000 17,000
Total cash & cash equivalents $ 297,235,000 $ 333,509,000 Agenda Page 75
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
24 3. CASH AND CASH EQUIVALENTS (continued)
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 cash equivalents 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 equivalents 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.
5. INVESTMENTS
During the fiscal years ended June 30, 2025 and 2024, CPA purchased investments with original maturities of three months or more. As of June 30, the fair value of investments was as follows:
Agenda Page 76
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
25 5. INVESTMENTS (continued)
*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 the fair value.
As of June 30, 2025, CPA’s investments are considered Level 1 inputs. Quoted prices in active markets were used to determine fair value measurement. As of June 30, 2024, CPA held no individual investments requiring classification under the fair value hierarchy, as all investments were either cash equivalents or held at cost.
CUSTODIAL CREDIT RISK
Cash and Cash Equivalents
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 2025 2024
Current Investments:
Certificates of deposit * $ 70,000,000 $ 60,000,000
Total current investments $ 70,000,000 $ 60,000,000
2025 2024
Noncurrent Investments:
U.S. Treasury Notes $ 174,258,907 $ -
Total noncurrent investments $ 174,258,907 $ -
Agenda Page 77
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
26 5. INVESTMENTS (continued)
by deposit guarantees provided by the Federal Deposit Insurance Corporation (FDIC) for balances up to $250,000.
As of June 30, 2025 and 2024, none of CPA’s bank balances are known to be individually exposed to material levels of custodial credit risk.
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 U.S. Treasuries, LAIF, and CAMP.
INTEREST RATE RISK
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. CPA’s investments are limited to U.S. Treasury securities and non-negotiable certificates of deposit. U.S. Treasury securities are subject to interest rate risk, as their fair values may fluctuate in response to changes in market interest rates. Certificates of deposit are generally held to maturity and are not subject to fluctuations in fair value. CPA manages its exposure to declines in fair values of investments by limiting its investments subject to fair value adjustments, restricting its investments to high quality securities authorized under its Investment Policy, and by limiting the term to maturity of its Treasury investments.
As of June 30, 2025, CPA’s investments were as follows:
Investment Type Fair Value Less Than 1 Year 1-5 Years
U.S. Treasury securities $ 174,258,907 $ - $ 174,258,907 Certificates of deposit 70,000,000 70,000,000 -
Total: $ 244,258,907 $ 70,000,000 $ 174,258,907
Investment Maturities
Agenda Page 78
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
27 5. INVESTMENTS (continued)
As of June 30, 2024, CPA’s investments were as follows:
6. LEASE
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 were 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 in variable costs for both FY2024-25 and FY2023-2024.
As of June 30, 2025, the Company has reported $1,436,000 in right-of-use (ROU) intangible assets, net of amortization, and $1,829,000 in lease liabilities related to this agreement.
Amortization expense was $383,000 and interest expense was $50,000 for the right to use the office space during the fiscal year.
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. For the right to use the office space during the fiscal year, amortization expense was $383,000, and interest expense was $59,000.
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.
Investment Type Fair Value Less Than 1 Year 1-5 Years
Certificates of deposit $ 60,000,000 $ 60,000,000 $ -
Total: $ 60,000,000 $ 60,000,000 $ -
Investment Maturities
Agenda Page 79
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
28 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, 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 $106,188,000 and $68,534,000 in FY 2024-25 and FY 2023-24, respectively.
7. CAPITAL ASSETS
Capital asset activities for the years ended June 30, 2025 and 2024, were as follows:
Year ended June 30, Principal Interest Total
2026 451,767$ 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
$ 1,829,113 $ 1,916,054 86,941 $
Balances at
June 30, 2024 Additions Dispositions
Balances at
June 30, 2025
Capital assets
Office equipment $ 15,053 $ 10,183 $ - $ 25,236
Computer equipment 483,997 - - 483,997
Website/App development 315,102 - - 315,102
Leasehold improvements 436,985 - - 436,985
Intangible assets-office 3,095,195 - 3,095,195 -
Total capital assets 4,346,332 10,183 4,356,515 -
Less accumulated depreciation & amortization
Office, computer, leasehold, and website (680,064) (234,449) (914,513) - Intangible assets-office (1,276,360) (382,908) (1,659,268) - Total accumulated depreciation & amortization (1,956,424) (617,357) (2,573,781) - Total capital assets, net of depreciation & amortization $ 2,389,908 $ (607,174) $ 1,782,734 - $ Agenda Page 80
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
29 7. 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 JPMorgan 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 JPMorgan 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. In May 2025, CPA elected to amend the credit agreement with JP Morgan to reduce the size of the facility to $120 million.
As of June 30, 2025 and 2024, CPA had no loans outstanding under the credit facility and is in compliance with credit covenants.
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, 2025 and 2024, there were 85 and 76 plan members, respectively. CPA contributed $1,538,000 and Balances at
June 30, 2023 Additions Dispositions
Balances at
June 30, 2024
Capital assets
Office equipment $ 15,053 $ - $ - $ 15,053
Computer equipment 298,427 199,705 (14,135) 483,997
Website/App development 244,752 70,350 - 315,102
Leasehold improvements 436,985 - - 436,985
Intangible assets-office 3,095,195 - 3,095,195 -
Total capital assets 4,090,412 270,055 (14,135) 4,346,332 Less accumulated depreciation & amortization
Office, computer, leasehold, and website (450,244) (229,820) (680,064) - Intangible assets-office (893,452) (382,908) (1,276,360) - Total accumulated depreciation & amortization (1,343,696) (612,728) (1,956,424) - Total capital assets, net of depreciation & amortization $ 2,746,716 $ (342,673) $ (14,135) $ 2,389,908 Agenda Page 81
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
30 9. DEFINED CONTRIBUTION RETIREMENT PLAN (continued)
$1,274,000 during the years ended June 30, 2025 and 2024, 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, crime and cyber crime, and property damage. Settled claims have not exceeded CPA’s commercial liability insurance coverage in any of the past three 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 CPA's risk profile. 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, July 2024, and July 2025.
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.
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 Agenda Page 82
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
31 11. PURCHASE COMMITMENTS (continued)
contracts to purchase energy from as-available resources such as solar, wind, and hydroelectric 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, 2025:
Totals are rounded to the nearest thousand.
As of June 30, 2025, 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 million.
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 the benefits of CCCFA but are not represented on the CCCFA Board of Directors. CCCFA was created on June 25, 2021, and its financial statements are available online at http://www.cccfa.org/keydocuments.html.
CCCFA was formed as a conduit issuer to assist its members by undertaking the financing or refinancing of energy prepayments on behalf of one or more of the members by, among other Agenda Page 83
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2025 AND 2024
32 12. JOINT VENTURE (continued)
things, issuing or incurring tax-advantaged 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.
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 year ending June 2024, CPA contributed approximately $30,000 to CCCFA to assist in its operating activities. No contributions were requested by CCCFA during the year ending June 2025.
In February 2023, CCCFA issued the first series of Clean Energy Revenue Bonds on behalf of CPA in the par amount of $998,780,000, and in June 2023, it issued the second series of Clean Energy Revenue Bonds on behalf of CPA in the par amount of $958,290,000. In 2024, CCCFA issued three additional series of Clean Energy Revenue Bonds on behalf of CPA in the par amounts of $1,524,180,000 in August, $1,152,995,000 in November, and $1,290,750,000 in December. 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.
13. FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for future fiscal years ending after June 30, 2025
GASB No. 103, Financial Reporting Model Improvements, and GASB No. 104, Disclosure of Certain Capital Assets.
Management is evaluating the effects of the implementation of these statements.
14. SUBSEQUENT EVENTS
New Community Enrollments
In October 2025, CPA will begin providing electric service to thirty-two thousand additional customer accounts located in La Cañada Flintridge, Lynwood, and Port Hueneme.
Agenda Page 84
FY 2024/25
Budget
FY 2024/25
Actual
FY 2024/25
Budget Variance
(Under) Over
FY 2024/25
Actual / Budget
%
FY 2024/25
Remaining
Budget
FY 2024/25
Remaining
Budget %
Operating revenues
Revenue - electricity, net 1,582,354,000 $ 1,440,562,620 $ (141,791,380) $ 91% 141,791,380 $ 9% Other revenues 2,939,000 2,906,373 (32,627) 99% 32,627 1% Total operating revenues 1,585,293,000 1,443,468,993 (141,824,007) 91% 141,824,007 9% Energy costs
Energy procurement 1,393,295,000 1,277,421,945 (115,873,055) 92% 115,873,055 8% Total energy costs 1,393,295,000 1,277,421,945 (115,873,055) 92% 115,873,055 8% Operating revenues less energy costs 191,998,000 166,047,048 (25,950,952) 86% 25,950,952 14% Operating Expenditures
Staffing 24,076,000 22,779,394 (1,296,606) 95% 1,296,606 5% Technical services 1,936,000 1,531,201 (404,799) 79% 404,799 21% Legal services 1,089,000 747,742 (341,258) 69% 341,258 31% Other professional services 2,257,000 1,331,507 (925,493) 59% 925,493 41% Communications and outreach 3,982,000 3,561,996 (420,004) 89% 420,004 11% Mailers 842,000 489,845 (352,155) 58% 352,155 42% Billing data manager 12,041,000 11,289,323 (751,677) 94% 751,677 6% SCE services 2,250,000 2,097,975 (152,025) 93% 152,025 7% Customer programs 13,208,000 3,719,274 (9,488,726) 28% 9,488,726 72% General and administrations 5,828,000 3,286,198 (2,541,802) 56% 2,541,802 44% Total operating expenditures 67,509,000 50,834,456 (16,674,544) 75% 16,674,544 25% Operating income 124,489,000 115,212,592 (9,276,408) 93% 9,276,408 7% Non-operating revenues (expenditures) Interest income 9,503,000 22,299,651 12,796,651 235% (12,796,651) Finance and interest expense (645,000) (611,293) 33,707 95% (33,707) 5% Total non-operating revenues (expenditures) 8,858,000 21,688,357 12,830,357 245% (12,830,357) Change in net position 133,347,000 136,900,950 3,553,950 103% (3,553,950) Other uses Capital outlay 325,000 10,183 (314,817) 3% 314,817 97% Depreciation and Amortization (794,000) (617,357) 176,643 78% (176,643) 22% Total other uses (469,000) (607,174) (138,174) 129% 138,174 Change in fund balance $ 133,816,000 $ 137,508,123 $ 3,692,123 103% $ (3,692,123)
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
BUDGETARY COMPARISON SCHEDULE
FOR FISCAL YEAR ENDED JUNE 30, 2025
Agenda Page 85
Presentation of
FY 2024-25 Financial Results
October 29, 2025
Agenda Page 86
Summary
CPA received a “clean” audit opinion of its FY 2024-25 financial results from its Auditor, Baker Tilly.
CPA increased its net position and liquidity by $137 million and $107 million, respectively.
Days Liquidity on Hand (DLOH)* and the Reserve Percentage (Net position plus Fiscal Stabilization Fund / Fiscal Year Expenses) increased to 180 days and 45% respectively.
CPA’s FY 2024-25 financial results were impacted by:
• A decrease in retail rates in March 2025 and milder weather conditions than budgeted
• Lower than budgeted market prices for energy
• Increase in investments and favorable interest rates improved interest income CPA was within budget limits for all budget expense line items 2 *Days liquidity on hand is calculated as the sum of available cash including investments and available line of credit, divided by expenses for the 12 trailing months, divided by 365.
Agenda Page 87
Balance Sheet Components, as of June 30:
3 Cash, cash equivalents, and current and non-current investments increased from $394M to $541M year-over-year Accounts receivable decreased by $46M year-over-year due to an increase in the bad debt reserve estimate resulting from additional reserves for active residential accounts based on the delinquency behavior of residential customers and the collections activity of CPA’s billing and collections agent, SCE Agenda Page 88
Balance Sheet Components, as of June 30:
4 Accrued cost of electricity was $139M less at June 30, 2025 than prior year primarily due to delayed invoicing by a supplier in 2024 which increased accrued cost of electricity as of June 30, 2024
Agenda Page 89
5 Balance Sheet Components, as of June 30:
Net position increased by $137M. There were no additions or withdrawals from the Fiscal Stabilization Fund
Agenda Page 90
Select Financial Indicators
Working capital and unrestricted cash decreased year over year due to an increase in long-term investments
Days Liquidity on Hand increased from 158 to 180 days as a result of an increase in cash which has been used to purchase long term investments, thereby increasing total liquidity offset by a reduction in the bank line of credit from $160 million to $120 million 6 Agenda Page 91
Budget to Actual Analysis
Operating revenues were $142 million or 9% under budget due to a decrease in retail rates in March 2025 and milder weather conditions than expected, which reduced electricity consumption and revenue
Other revenues arise primarily from funding received through the California Public Utilities Commission (CPUC) to offset Power Share Program costs
7 Agenda Page 92
Budget to Actual Analysis
Energy procurement costs were $116M or 8% lower than budget due to the non utilization of contingencies, mild weather conditions and lower than budgeted market prices
Net operating revenues (row 7) were $26M or 14% lower than budgeted, which was expected due to the interim rate change implemented in March 2025 8 Agenda Page 93
Budget to Actual Analysis
Operating expenses were $17M or 25% under budget due primarily to non-utilization of contingencies, and the delayed timing of expense incurrences for customer programs CPA was within budget limits for all budget expense line items 9 Agenda Page 94
Budget to Actual Analysis
Interest income exceeded the budget due to increases in investments and cash balances in high interest-earning accounts
The change in net position for FY 2024-25 was $4M or 3% higher than budgeted 10 Agenda Page 95
Questions?
Agenda Page 96
Staff Report – Agenda Item 6
To: Finance Committee
From: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Recommendation for Prepay Transactions
Date: October 29, 2025
RECOMMENDATION
A. Recommend that the Board of Directors approve up to $4.5 billion of prepayment transactions with Goldman Sachs (GS), Morgan Stanley (MS), Royal Bank of Canada (RBC), or JPMorgan (JPM) as CPA's Underwriter & Prepaid Supplier; and B. Recommend that the Board of Directors approve the delegation of authority to staff to select funding recipient(s) for prepayment transactions completed with GS, MS, and/or JPM; RBC will serve as the funding recipient for any prepayment transactions completed with RBC
ATTACHMENT
1. Prepay Transactions Presentation
Agenda Page 97
Proposed Clean Energy Prepayment
Transactions
October 29, 2025
Agenda Page 98
Recommend that the Board of Directors approve up to $4.5 billion of transactions with Goldman Sachs (GS), Morgan Stanley (MS), Royal Bank of Canada (RBC), or JPMorgan (JPM) as CPA's Underwriter & Prepaid Supplier Recommend that the Board approve the delegation of authority to Staff to select the Funding Recipient(s) for prepayment transactions completed with GS, MS, and/or JPM. The RBC parent company will serve as the Funding Recipient for any prepayment transactions completed with RBC
Recommendation
2 Agenda Page 99
Prepays are well-established financing mechanisms, grounded in the US tax code, that allow municipal utilities and CCAs to leverage their status as issuers of tax-exempt debt to reduce energy costs (see slides 11-15 for an overview of prepay transactions) CPA completed five prepay transactions in 2023 and 2024, issuing $5.9 billion of prepay bonds leading to approximately $361 million of energy cost savings over the next eight years, an average annual savings of $45 million (see slides 16–20 for a summary of each prepay transaction) On September 24, Staff provided the Finance Committee with an overview of CPA current contracts eligible for prepayment and previewed Staff’s recommendation to request approval for an additional $4.5 billion of prepay transactions
On October 16, the Board approved service contracts with Municipal Capital Markets (MCM) and Chapman & Cutler (Chapman) to support the preparation and execution of up to four future CPA prepay transactions
On October 23, Staff provided the Executive Committee with an overview of the planned approach for future prepay transactions. The Executive Committee supported the proposed approach Background
3 Agenda Page 100
4 Consistent with the approach used in 2024, Staff are planning a two-step solicitation approach for future prepay transactions:
1.Staff will request the Board adopt four Resolutions enabling the completion of up to $4.5 billion of prepay transactions with any of four Underwriters & Prepaid Suppliers (described on slide 6) using approved pro forma contracts and subject to certain transaction criteria
2.In advance of each prepay transaction, Staff will issue a solicitation for refreshed pricing from the four Underwriters & Prepaid Suppliers and identify the best partner with whom to transact
Authorizing multiple transactions and Underwriters & Prepaid Suppliers provides the following benefits:
Ensures that CPA receives best available pricing and terms from the most experienced and well-regarded Underwriters & Prepaid Suppliers in the market Grants CPA the flexibility to transact expeditiously when market conditions are favorable
This two-step strategy delivered significant savings to CPA in 2024 (see next slide)
Proposed Approach for Future Prepays (Two-Step)
Agenda Page 101
5 Bond Series CCA Underwriter Transaction Date Par Amount ($M) Initial Period Savings ($M/yr) CCCFA 2021A MCE Goldman Sachs Nov-21 603 3.2
CCCFA 2021B SVCE/EBCE (Ava) Morgan Stanley Sep-21 1,235 4.2 CCCFA 2022A EBCE (Ava) Morgan Stanley Jun-22 931 4.8
CCCFA 2023A Pioneer CE Goldman Sachs Dec-22 460 2.4
CCCFA 2023B SVCE Morgan Stanley Jan-23 842 4.7
CCCFA 2023C CPA Goldman Sachs Feb-23 999 7.7
CCCFA 2023D CPA Goldman Sachs Jun-23 958 6.0
CCCFA 2023E EBCE (Ava) Morgan Stanley Aug-23 998 6.1
CCCFA 2023F 3CE Goldman Sachs Oct-23 648 5.0
CCCFA 2023G MCE Goldman Sachs Nov-23 1,038 6.8
CCCFA 2024A SVCE Morgan Stanley Jan-24 1,102 7.7
CCCFA 2024B CPA Goldman Sachs Aug-24 1,524 11.2
CCCFA 2024C PCE Goldman Sachs Sep-24 960 5.7
CCCFA 2024D CPA RBC Royal Bank Oct-24 1,153 8.9
CCCFA 2024E SJCP Morgan Stanley Nov-24 1,243 8.2
CCCFA 2024F SDCP Morgan Stanley Nov-24 1,001 6.7
CCCFA 2024G Sonoma Goldman Sachs Nov-24 776 6.3
CCCFA 2024H CPA Goldman Sachs Dec-24 1,291 11.5
CCCFA 2025A Valley CE Goldman Sachs Mar-25 493 3.4
CCCFA 2025B MCE Goldman Sachs Jun-25 1,063 6.3
CCCFA 2025D SDCP Morgan Stanley Jul-25 1,006 6.0
CCCFA 2025C Ava Morgan Stanley Sep-25 1,004 5.8
CCCFA 2025E Ava Goldman Sachs Oct-25 961
CCCFA Total 22,286 138.6
CCCFA Prepay Bond Transactions (2021-2025)
CCAs issued
$22 billion of
prepay bonds
since 2021, of
which CPA
accounted for
26%
CPA completed
3 prepay
transactions
between Aug
and Dec 2024
achieving the
highest average
annual dollar
savings among
its CCA peer
group
Agenda Page 102
Proposed Approach: Selection of Banks
6 In August 2025, Staff ran a solicitation process to identify qualified and experienced Underwriters & Prepaid Suppliers to structure and market energy prepayment transactions.
Staff received bids from:
Goldman Sachs (Underwriter) & J. Aron (Prepaid Supplier) Morgan Stanley (Underwriter) & Morgan Stanley Capital Group (Prepaid Supplier) RBC (Underwriter) & RBC Energy Prepay SPV (Prepaid Supplier) JPMorgan (Underwriter) & JPMorgan Ventures Energy Corporation (Prepaid Supplier) These banks are qualified and experienced providers capable of structuring and executing prepay transactions for CPA
GS, MS, and RBC are the top three issuers of prepay bonds in the past five years and are collectively responsible for >80% of all prepay issuances over the period. The Board authorized transactions with these banks in July 2024.
JPM has underwritten six gas prepay transactions since 2020 and recently added staff experienced in electric prepay transactions; CPA views new entrants to the CA electric prepay market positively
Agenda Page 103
7 Staff plan to request the Board adopt four Resolutions encompassing the following approvals or authorizations for each of the four Underwriters & Prepay Suppliers:
1. Define the parameters which must be satisfied in order to execute prepay transactions Bonds will be limited obligations of CCCFA, not obligations of CPA CPA will complete no more than $4.5 billion of transactions in total (across all prepaid suppliers) Aggregate bond principal of each prepay transaction will not exceed $1.5 billion The "Monthly Discount" and "Minimum Discount" (i.e., CPA's cost savings) as provided for in the Clean Energy Purchase Contracts will be at least 5% of fixed cash flows or equivalent $ per MWh CCCFA's total cost of issuance (TCOI) shall not exceed 1.25% of the amount of bond proceeds Transactions must be completed no later than June 30, 2027
2. Execution of proposed CPA documents or document forms (described on Slide 11)
3. Direction to CCCFA to make payments out of bond proceeds to service providers for activities required to issue the prepay bonds
These Resolutions are substantially similar to those approved by the Board in July 2024 to support CPA's third, fourth, and fifth prepay transactions Summary of Proposed Board Action
Agenda Page 104
√ September 24 (Finance Committee) - Presented prepay portfolio overview, requested recommendation to Board to approve service contracts with MCM and Chapman √ October 16 (Board) - Approved service contracts with MCM, Chapman √ October 23 (Executive Committee) – Presented prepay plans; requested input October 29 (Finance Committee) – Propose recommendation for Board to approve additional prepay transactions
November 6 (Board) – Approval of Resolutions authorizing Staff to execute up to $4.5 billion of prepay transactions with any of four Underwriters & Prepaid Suppliers given:
1. Utilization of an approved set of “Form of” contracts with each
2. Achievement of CPA’s minimum savings parameter
3. Time period for transaction execution and maximum bond issuance amount November 2025 (CCCFA Board) - Approval of Resolutions authorizing prepay transactions Proposed Board and Committee Timeline
8 Agenda Page 105
Recommend that the Board of Directors approve up to $4.5 billion of transactions with Goldman Sachs (GS), Morgan Stanley (MS), Royal Bank of Canada (RBC), or JPMorgan (JPM) as CPA's Underwriter & Prepaid Supplier Recommend that the Board approve the delegation of authority to Staff to select the Funding Recipient(s) for prepayment transactions completed with GS, MS, and/or JPM. The RBC parent company will serve as the Funding Recipient for any prepayment transactions completed with RBC
Recommendation
9 Agenda Page 106
Questions?
Agenda Page 107
11 Each of the four Resolutions would authorize the execution or approval of the following documents and document forms with each of GS, JPM, MS, and RBC:
1. Clean Energy Purchase Contract – Agreement between CPA and CCCFA to purchase assigned discounted electricity
2. Operational Services Agreement – Agreement between CPA and CCCFA permitting CPA to control various actions of CCCFA relating to project operations
3. Memorandum of Understanding with CCCFA – CPA agrees to indemnify CCCFA for rating agency and green bond certification fees in the event the prepay bonds are not issued
4. Form of Limited Assignment Agreement – Form of agreement between CPA, PPA Sellers, and [Prepaid Supplier] governing the assignment of existing and future PPAs
5. Letter Agreement re: Limited Assignment Agreement1
– CPA and [Prepaid Supplier] agree to use
the Form of Limited Assignment Agreement for future PPA assignments
6. PPA Custodial Agreement – Provides for creation of a custody account for receipt of payments from [Prepaid Supplier] and CPA to settle monthly PPA Seller invoices
7. Appendix A of Preliminary Official Statement – Provides descriptive, operating, and financial information regarding CPA; used for marketing the Bonds (will be identical for all four Resolutions) 1 For RBC, the Letter Agreement re: LAA is included as Exhibit F of the Clean Energy Purchase Contract rather than as a separate document Summary of Prepaid Supplier Documents
Agenda Page 108
Prepay LLC
4 5
6 12
Initial Issuance and Cash Flows
1. Debt Issuance – CCCFA issues the prepay bonds
2. Prepayment – CCCFA remits net bond proceeds to [Prepay LLC] in return for 30 years of assigned electricity deliveries
3. Unsecured Loan – [Prepay LLC] loans net bond proceeds to [Prepaid Supplier Parent Bank] or another Funding
Recipient. The Funding Recipient makes fixed monthly
payments to [Prepay LLC] equal to expected assigned
electricity multiplied by the PPA price of an assigned
energy project
Monthly Cash / Energy Flows
4. Assigned PPAs – CPA assigns certain rights and obligations as a Buyer on existing PPAs to [Prepaid Supplier]; [Prepaid Supplier] makes monthly payments to PPA Sellers for
assigned delivered energy
5. Electricity Supply – [Prepay LLC] enters into a long-term agreement to purchase electricity from J. Aron to match assigned electricity quantities/terms
6. Project Participant – CCCFA sells CPA all assigned electricity delivered by [Prepay LLC] at the discounted prepay price [Prepay LLC]/CPA is able to solicit bids from
third-party Funding Recipients and may
select a non-[Parent Bank] party if they offer
greater savings to CPA
Funding Recipient
(Prepaid Supplier Parent
Bank or 3rd party)
Project
Participant
(CPA)
The Bonds Prepaid Supplier
Issuer
(CCCFA)
Prepayment Transaction Diagram (with SPV)
Agenda Page 109
13 CPA prepay transaction will involve the sale of tax-exempt bonds to bond holders by CCCFA(1) CCCFA remits the net bond proceeds to a special purpose entity, [Prepay LLC], in return for a 30-year supply of electricity pursuant to the Master Power Supply Agreement (MPSA) The creation of [Prepay LLC] provides transparency and market level savings for the initial period of the prepay (5-10 years) as well as at each subsequent interest rate reset which is estimated to occur each 5-10 years over the bond term. Without [Prepay LLC], prepay transaction terminates if [Prepaid Supplier Parent Bank] (Parent Bank) cannot offer minimum savings at reset. [Prepay LLC] lends the net bond proceeds to [Parent Bank] under an unsecured term loan agreement (the Funding Agreement). [Parent Bank] makes monthly payments to [Prepay LLC] sufficient to allow it to meet its payment obligations under the Electricity Purchase Sale & Service Agreement (EPSSA; see below). [Parent Bank] issues a guaranty to back obligations of [Prepay LLC] under the MPSA(2).
[Prepaid Supplier] and [Prepay LLC] enter into the EPSSA under which [Prepay LLC] purchases electricity + related products from [Prepaid Supplier] for delivery to CCCFA. [Prepaid Supplier] equitizes [Prepay LLC] through the Subordinated Term Loan Agreement. (1)CPA does not issue the bonds. Bond proceeds do not flow to CPA or to renewable energy project developers/owners. CPA has no obligation to repay the bonds.
(2)The bonds carry the credit rating of [Parent Bank] or selected 3rd Party Transaction Summary – Prepay Bond Issuance (with SPV)
Agenda Page 110
14 CPA assigns certain rights and obligations under its existing PPAs to [Prepaid Supplier] via LAAs Under the LAAs, PPA Sellers will deliver assigned renewable energy to [Prepaid Supplier] and [Prepaid Supplier] assumes the obligation to pay the PPA Sellers for the assigned energy Title to the renewable energy passes instantaneously from PPA Seller to [Prepaid Supplier] to [Prepay LLC] to CCCFA to CPA at the energy delivery point CPA retains other rights and unassigned payment obligations under the PPAs CPA and CCCFA enter the Clean Energy Purchase Contract (CEPC) under which CPA purchases assigned electricity + related products from CCCFA at a discounted price. This is the source of CPA’s savings.
CCCFA uses CPA’s payments to service debt owed to bond holders.
CPA is responsible for assigning sufficient electricity into the prepay transaction via the LAAs If an LAA terminates or expires, CPA will designate another PPA Seller for the term of the CEPC PPA Sellers continue to provide a single monthly invoice for energy and related costs. Monthly payment obligations to PPA Sellers are split between CPA and [Prepaid Supplier] as follows:
[Prepaid Supplier] sells assigned energy to [Prepay LLC] under the EPSSA, [Prepay LLC] sells energy to CCCFA under the MPSA, and CCCFA sells energy to CPA under the CEPC [Prepaid Supplier] pays the PPA Seller for assigned energy at the PPA price. CPA pays the PPA Seller for any unassigned obligations under the PPA.
Settlement of payments are set forth in the PPA Custodial Agreement.
Transaction Summary – PPA Assignments and Settlement
Agenda Page 111
15 California Community Choice Financing Authority (CCCFA) (Bond Issuer) Issues bond; uses bond proceeds to pay [Prepay LLC] in exchange for a 30-year supply of energy Delivers energy to CPA in exchange for prepay energy payments under the CEPC Pays Bond Investors
[Parent Bank] or selected 3rd Party (Funding Recipient) Receives term loan from [Prepay LLC] for amount of bond proceeds Makes monthly payments to [Prepay LLC] allowing it to meet obligations to [Prepaid Supplier] under the EPSSA [Prepaid Supplier] / [Prepay LLC] (Prepaid Supplier)
CPA assigns one or more existing PPAs to [Prepaid Supplier], which assumes the PPA obligations of the “buyer” [Prepaid Supplier] delivers energy to [Prepay LLC] under the EPSSA; [Prepay LLC] delivers energy to CCCFA under the MPSA
[Prepaid Supplier] makes monthly payments to PPA Seller via Custodial Account for assigned energy CPA (Project Participant / Purchaser)
Makes fixed monthly payments to CCCFA / Bond Trustee for prepaid energy Makes monthly payments to PPA Seller via Custodial Account for non-prepaid energy, unassigned obligations PPA Sellers
Receive monthly cash flows from Custodial Account for energy assigned to [Prepaid Supplier] + non-prepaid energy and unassigned obligations
Service Providers
Municipal Financial Advisor, Bond and Tax Counsel, CPA Prepay Legal Counsel, Prepay Bond Underwriters Support the structuring and issuance of a prepay Bond
Prepayment Transaction – Entities (with SPV)
Agenda Page 112
16 California Community Choice Financing Authority (CCCFA) issued $998,780,000 of bonds on February 15, 2023. The bonds were issued at an average yield of 4.60%. The bonds received a “Green Bonds” designation from Kestrel Verifiers and were rated Baa1 by Moody’s.
Bonds were oversubscribed by 1.6x, attracting 34 bidders. Roughly 2/3 of bids came from major bonds and mutual funds. CPA’s name was known and well-regarded among investors.
CPA has assigned three PPAs into the prepay:
Geysers geothermal (50 MW)
Arlington solar + storage (233 MW / 132 MW)
Resurgence solar + storage (48 MW / 40 MW)
During the initial eight-year period of the bonds, CPA will recognize energy cost savings of $66.5 million, or roughly $7.8 million annually CPA Prepay 1 – Transaction Summary
Agenda Page 113
17 California Community Choice Financing Authority (CCCFA) issued $958,290,000 of bonds on June 7, 2023. The bonds were issued at an average yield of 4.62%. The bonds received a “Green Bonds” designation from Kestrel Verifiers and were rated A2 by Moody’s.
Bonds were undersubscribed by 0.93x, attracting 22 bidders. Nearly all of bids came from major bonds and mutual funds, with the top 10 investors accounting for ~88% of bids. CPA’s name was known and well-regarded among investors.
CPA has assigned four PPAs into the prepay:
White Hills / Mohave wind (300 MW)
Daggett 2 solar + storage (65 MW / 52 MW)
Daggett 3 solar + storage (123 MW / 61.5 MW)
Estrella solar + storage (56 MW / 28 MW)
During the initial five-year period of the bonds, CPA will recognize energy cost savings of $32.4 million, or roughly $6.5 million annually CPA Prepay 2 – Transaction Summary
Agenda Page 114
18 California Community Choice Financing Authority (CCCFA) issued $1,524,180,000 of bonds on August 27, 2024. The bonds were issued at an average yield of 4.05%. The bonds received a “Green Bonds” designation from Kestrel Verifiers and were rated A1 by Moody’s.
Bonds were oversubscribed by 1.6x, attracting 38 bidders. Nearly all of bids came from major bonds and mutual funds, with the top 10 investors accounting for ~79% of bids. CPA’s name was known and well-regarded among investors.
CPA has assigned several PPAs into the prepay:
High Desert solar + storage (100 MW / 50 MW)
Arica solar + storage ( 93.5 MW / 71 MW)
SCE VAMO (annual quantity of 751,600 MWh, June 2025 – May 2026 only) Rexford solar + storage ( 300 MW / 240 MW, beginning June 2026) Golden Fields solar (40 MW, beginning June 2026)
Voyager wind (21.6 MW, beginning June 2026)
Solar Star 3 solar + storage (47 MW / 23 MW, beginning Q3 2026) During the initial period of the bonds (8.3 years), CPA will recognize energy cost savings of $93.0 million, or roughly $11.2 million annually CPA Prepay 3 – Transaction Summary
Agenda Page 115
19 California Community Choice Financing Authority (CCCFA) issued $1,152,995,000 of bonds on November 14, 2024. The bonds were issued at an average yield of 3.83%. The bonds received a “Green Bonds” designation from Kestrel Verifiers and were rated Aa1 by Moody’s.
Put bonds were oversubscribed by 1.1x, attracting 48 bidders, while there was an unsold serial bond balance of $37.2 million that was underwritten by RBC. Nearly all of bids came from major bonds and mutual funds, with the top 10 investors accounting for ~76% of bids.
CPA’s name was known and well-regarded among investors.
CPA has assigned two PPAs into the prepay:
Heber geothermal (14 MW)
Desert Quartzite solar + storage (300 MW / 150 MW)
During the initial period of the bonds (7.8 years), CPA will recognize energy cost savings of $70.0 million, or roughly $8.9 million annually CPA Prepay 4 – Transaction Summary
Agenda Page 116
20 California Community Choice Financing Authority (CCCFA) issued $1,290,750,000 of bonds on December 20, 2024. The bonds were issued at an average yield of 3.62%. The bonds received a “Green Bonds” designation from Kestrel Verifiers and were rated Aaa by Moody’s.
Bonds were oversubscribed by 2.8x, attracting 60 bidders. Nearly all of bids came from major bonds and mutual funds, with the top 10 investors accounting for ~62% of bids. CPA’s name was known and well-regarded among investors.
CPA has assigned one energy contract into the prepay:
SDCP PCC1 (average annual quantity of 840,750 MWh)
During the initial period of the bonds (8.6 years), CPA will recognize energy cost savings of $99.3 million, or roughly $11.5 million annually CPA Prepay 5 – Transaction Summary
Agenda Page 117