Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, February 25, 2026
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
Carson City Hall
Executive Conference Room
701 East Carson Street
Carson, CA 90745
Rolling Hills Estates City Hall
Conference Room
4045 Palos Verdes Drive North
Rolling Hills Estates, CA 90274
Claremont City Hall
Council Office
207 Harvard Avenue
Claremont, CA 91711
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.
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If the PDF is downloaded, the bookmark panel (ribbon icon) appears on the left side of the screen.
ACCESSIBILITY: Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least two (2) working days before the meeting at [email protected] or (213) 713- 5995. Notification in advance of the meeting, while not required, will enable us to make reasonable arrangements to ensure accessibility to this meeting and the materials related to it.
CALL TO ORDER & ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from the January 28, 2026, Finance Committee Meeting
2. Receive and File January 2026 Risk Management Team Report
3. Receive and File January 2026 Investment Report
4. Receive and File FY 2025-26 Q2 Financial Report
REGULAR AGENDA
5. Oral Report from the Chief Financial Officer
6. Receive Presentation on FY 2025-26 Financial Performance and Outlook
7. Recommend to the Board of Directors Approval of:
a. Proposed Amendments to the Financial Reserve Policy as Presented in Attachment 3 to the Staff Report; and
b. Proposed Amendments to the Fiscal Stabilization Fund Policy as Presented in Attachment 5 to the Staff Report
8. Recommend that the Board of Directors Approve an Amended Credit Agreement and Amended Fee Agreement with J.P. Morgan Consistent with the Terms Presented on Slide 5 of the Presentation
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING ON MARCH 25, 2026
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 January 28, 2026, Finance Committee Meeting Date: February 25, 2026
RECOMMENDATION
Approve.
ATTACHMENT
1. Minutes
Agenda Page 3
MINUTES
Finance Committee
of the Clean Power Alliance of Southern California
Regular Meeting
Wednesday, January 28, 2026, 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
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
Rolling Hills Estates City Hall
Conference Room
4045 Palos Verdes Drive North
Rolling Hills Estates, CA 90274
Thousand Oaks City Hall
City Manager’s Office, Council Office #1
2100 Thousand Oaks Blvd.
Thousand Oaks, CA 91362
Carson City Hall
Executive Conference Room
701 East Carson Street
Carson, CA 90745
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 Absent
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 October 29, 2025, Finance Committee Meeting
2. Receive and File December 2025 Risk Management Team Report
3. Receive and File December 2025 Investment Report
4. Receive and File November 2025 Financial Dashboard
Motion: Committee Member Zuckerman, Rolling Hills Estates Second: Committee Member Calaycay, Claremont
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 CPA selected Chandler Asset Management, based in San Diego, to help invest cash and review CPA’s investment policy. Mr. McNeil described future agenda items for the Finance Committee, including revisions to the Financial Reserves and Fiscal Stabilization Fund Policies.
Committee Member Zuckerman inquired about the search for an asset management firm, and Mr. McNeil stated that CPA ran a competitive process, considered proposals from four prominent fixed-income asset managers, and selected Chandler as the best firm for CPA’s needs. Mr. McNeil also thanked Committee Member Albrecht for his expert input on investment management.
6. Provide Input on Proposal for a 2-Year Budget Structure Jennifer Stevenson, Financial Planning and Analysis Manager, explained that as CPA's business has matured with increasingly predictable multi-year planning, the annual budget structure presents opportunities for streamlining and improvement.
Staff is proposing a two-year budget structure in which the Board would approve two consecutive annual fiscal-year budgets simultaneously.
Under this proposal, the Board would be presented with a budget amendment for the second year of the two-year cycle to update revenue, energy costs, and contributions to the net position in line with the annual rate-setting process. This proposal seeks to increase agility, enhance efficiency, and optimize resources within the operating expense budget while maintaining appropriate oversight. Ms.
Stevenson described the current budget process and detailed how a two-year cycle would benefit CPA’s operations and spending.
Committee Member Albrecht remarked that he was impressed by the proposal, noting that CPA has grown as an organization and that a two-year budget cycle would improve financial operations. Committee Member Zuckerman expressed support, as did Committee Member Kulcsar. Staff clarified to the Committee that the CPA’s financial statements would continue to be audited annually. Both Chair Santangelo and Committee Member Calaycay noted that their cities were on two-year cycles before the pandemic and expressed support for the efficiency of budgets being approved for two years.
Finance Committee Item 1
Agenda Page 5
7. Receive Presentation on Bad Debt Reserve and Accounts Receivable Ms. Stevenson reported that CPA's bad debt reserve estimate methodology has been adjusted to reflect customer payment behavior, CPUC mandates, and SCE’s collection activities. Ms. Stevenson explained that CPA routinely assesses its bad-debt estimation method to ensure it accurately reflects recent customer payment behavior. CPA’s bad-debt reserve calculation methodology establishes fixed bad-debt reserve percentages representing the probability of non-payment, which are applied to Accounts Receivable grouped into different delinquency or aging buckets. CPA last updated the bad debt reserve percentages for both active and inactive accounts in March 2020 and November 2023, and in June 2025 updated the bad debt reserve percentages for Active Residential customer accounts who participate in payment arrangements and those with debt greater than 120 days outstanding.
Committee Member Albrecht asked about payment arrangements when an account is in arrears; staff responded that the customer would have an agreement with SCE to pay a certain amount per month, and that if they default on that, they will receive another disconnection notice and make a new payment arrangement.
Staff clarified for Committee Member Zuckerman that SCE can track bad debt customers if they open a new account within the SCE territory, and that another person at the bad-debt address may be able to open a new account in their name.
He also asked about estimates for successful collections, and staff stated that they have compared CPA’s calculations to SCEs, and they align.
Committee Member Kulcsar asked about the collections process; staff responded that SCE would try to collect for 90 days and, if unsuccessful, will refer the account to CPA for collection efforts. At that time, the debt is removed from SCE’s books, and CPA’s portion is placed on CPA’s books. CPA has been working with SCE to obtain accurate customer data in a timely manner, so collection has a better chance of success. CPA’s Board has approved a Collection Policy to govern CPA’s collections activities, but CPA has not yet started to collect accounts returned by SCE.
COMMITTEE MEMBER COMMENTS
None
ADJOURN
Chair Santangelo adjourned the meeting at 11:44 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 January 2026 Risk Management Team Report Date: February 25, 2026
January 2026 RMT REPORT
Key Actions
• Reviewed the counterparty credit exposure summary
• Reviewed October 2025 day-ahead load forecast performance • Reviewed December 2025 market performance
• Reviewed 2026 - 2030 energy position recommendations
• Reviewed 2025 - 2030 Renewable and Carbon-Free positions • Reviewed PCC1 purchase and sales strategy
• Reviewed CF purchase and sales strategy
• Reviewed the 2025 Voluntary Allocation update
• Reviewed Sunzia test energy forecast and COD update
• Reviewed 2026 - 2028 slice of day RA position
• Reviewed 2026 LT PPA 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 January 2026 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.
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 January 2026 Investment Report Date: February 25, 2026
RECOMMENDATION
Receive and file.
ATTACHMENT
1. January 2026 Investment Report
Agenda Page 9
Clean Power Alliance Investment Report
January 2026
(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 17,746 30,000,000 178,034,499 5,785,224 199,326,802 413,164,270 Amortization & Accretion** 0 0 0 0 120,293 120,293
Deposits & Purchases 188 0 582,347 16,665 0 599,200
Maturities & Withdrawals 0 10,000,000 0 0 0 10,000,000
Ending Balance 17,933 20,000,000 178,616,846 5,801,889 199,447,095 403,883,763 Book Value*
Beginning Balance 17,746 30,000,000 178,034,499 5,785,224 201,008,363 414,845,832 Amortization & Accretion 0 0 0 0 (396,659) (396,659)
Deposits & Purchases 188 0 582,347 16,665 0 599,200
Maturities & Withdrawals 0 10,000,000 0 0 0 10,000,000
Ending Balance 17,933 20,000,000 178,616,846 5,801,889 200,611,704 405,048,372 Interest Earned*** 59 106,387 582,347 16,665 537,230 1,242,689 Yield**** 3.93% 4.14% 3.85% 3.57% 3.88% 3.88%
Weighted Average Term to Maturity (Months) 7.0 2.2 2.0 1.0 46.9 24.2 **** 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 4.24%
Placement Date 1/30/2025
Maturity Date 1/29/2026
Term (weeks) 52
Interest Earnings (Total) 431,880
Market Value*
* 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. ** 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)
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 FY 2025-26 Q2 Financial Report Date: February 25, 2026
RECOMMENDATION
Receive and file.
ATTACHMENT
1. FY 2025-26 Q2 Financial Report
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
December
2025
Financial Dashboard
Note: Numbers may not sum up due to rounding.
Active Accounts
1,070,809
Participation Rate
92.8%
YTD Sales Volume
5,601 GWh
December Volume
876 GWh
Res
49%
Com - Lg
21%
Com - Sm
28%
Agr/Oth
2%
In December 2025, CPA’s net position increased by $13.6 million, $23.3 million more than the budgeted loss of $9.8 million. Energy revenues were $95.4 million, 11% lower than projected, and the cost of energy was $79.7 million, 29% lower than budgeted. Revenue and cost of energy were lower than budgeted primarily due to lower than forecasted residential heating load attributable to mild weather. Cost of energy was also impacted by lower than budgeted energy market prices and the non-utilization of energy contingencies.
Year to date, CPA’s net position increased by $35.3 million, $67.1 million higher than budgeted. YTD revenues totaled $690.4 million, 4% less than budgeted, due to mild weather in the first half of the fiscal year reducing customer load, and lower than budgeted bad debt expense primarily attributable to the change in methodology and a one time increase in bad debt expense implemented in June 2025. YTD energy expenses were $638.4 million, 12% less than budgeted, due to lower than forecasted market prices for energy, lower than projected renewable energy costs primarily due to delay damages received from a counterparty, lower than forecast resource production, lower CAISO charges, and the non-use of energy contingencies. Absent contingencies, energy costs YTD were $40.7 million (6%) below budget. YTD operating expenses totaled $28.5 million, 23% less than budgeted, mainly due to the timing of spending on staffing, customer program incentives, and professional service expenses.
As of December 31st, 2025, CPA had unrestricted cash, cash equivalents, and current and long-term investments of $607.7 million, as well as $119.5 million available in its bank line of credit, representing 227 Days Liquidity on Hand.
CPA is financially sound and in compliance with its bank and other credit covenants.
Agenda Page 12
2025 2024
ASSETS
Current assets
Cash and cash equivalents $ 379,801,167 $ 465,543,491
Investments 30,000,000 40,001,000
Accounts receivable, net of allowance 100,700,431 138,104,655 Accrued revenue 67,323,175 82,555,206
Other receivables 11,950,679 5,226,253
Interest receivable 2,284,201 2,545,556
Prepaid expenses 16,428,256 1,663,243
Deposits 14,983,048 18,302,736
Total current assets 623,470,957 753,942,140
Noncurrent assets
Capital assets, net of depreciation and amortization 1,520,848 2,071,571 Deposits 89,875 88,875
Investments 201,008,363 70,000,000
Total noncurrent assets 202,619,086 72,160,446
Total assets $ 826,090,043 $ 826,102,586
LIABILITIES
Current liabilities
Accounts payable 3,550,468 3,107,344
Accrued cost of electricity 160,328,482 282,860,315
Other accrued liabilities 5,612,170 4,817,560
User taxes and energy surcharges due to other governments 11,151,411 11,995,190 Security deposits from energy suppliers 1,513,350 480,000 Unearned program funds 5,495,604 4,016,255
Lease liability, current 464,557 439,233
Total current liabilities 188,116,042 307,715,897
Noncurrent liabilities
Security deposits from energy suppliers 1,616,852 4,346,852 Lease liability, noncurrent 1,141,845 1,606,402
Other noncurrent liabilities 387,843 297,697
Total noncurrent liabilities 3,146,541 6,250,952
Total liabilities $ 191,262,583 $ 313,966,849
DEFERRED INFLOWS OF RESOURCES
Fiscal stabilization fund 135,000,000 135,000,000
NET POSITION
Investment in capital assets $ (85,554) $ 25,936
Unrestricted 499,913,013 377,109,801
Total net position $ 377,135,737 499,827,459 $
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF NET POSITION
AS OF DECEMBER 31, 2025 AND 2024
Agenda Page 13
2025 2024
OPERATING REVENUES
Electricity sales for resale, net $ 688,958,018 $ 862,407,862 Other revenue 1,410,751 1,702,973
Total operating revenues 690,368,769 864,110,835
OPERATING EXPENSES
Cost of electricity 638,433,908 801,870,112
Contract services 14,295,510 11,089,808
Staff compensation 12,322,658 10,631,240
General and administration 1,918,658 1,572,449
Total operating expenses 666,970,734 825,163,610
Operating income 23,398,035 38,947,226
NONOPERATING REVENUES (EXPENSES)
Interest and investment income 12,116,628 10,850,672
Interest and financing expenses (242,385) (316,394)
Total nonoperating revenues 11,874,243 10,534,279
CHANGE IN NET POSITION 35,272,278 49,481,504
Net position at beginning of period 464,555,182 327,654,232 Net position at end of period $ 499,827,460 $ 377,135,736
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
FOR SIX MONTHS ENDED DECEMBER 31, 2025 AND 2024
Agenda Page 14
2025 2024
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Net operating income (loss) $ 23,398,034 $ 38,947,226
Adjustments to reconcile operating income to net
cash provided (used) by operating activities
Depreciation expense 65,296 83,401
Amortization expense 203,179 234,936
Revenue adjusted for allowance for uncollectible accounts 6,375,630 12,316,941 (Increase) decrease in:
Accounts receivable (9,771,278) (7,253,890)
Other receivables (1,808,679) 6,276,688
Accrued revenue 6,025,912 12,662,659
Prepaid expenses (10,465,281) 89,629,675
Deposits (7,054,798) (15,971,318)
Increase (decrease) in:
Accounts payable 295,617 61,443
Energy market settlements payable (3,352,208) (4,106,698) Accrued cost of electricity 55,959,761 40,097,061
Other accrued liabilities (3,900,053) 935,594
User taxes due to other governments 458,570 1,244,317
Supplier security deposits 583,350 (2,281,500)
Unearned program funds 645,999 (38,418)
Net cash provided by operating activities $ 172,838,119 57,659,053 $
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Interest and related expense payments (241,277) (275,970) Net cash used by non-capital financing activities (275,970) (241,277)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments to acquire capital assets (6,589) -
Payments on lease (for both principal and interest) (243,548) (236,454) Net cash used by capital and related financing activities (250,137) (236,454)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchased of investments 14,130,736 (50,001,000)
Interest income received 11,268,212 9,709,376
Net cash provided (used) by investing activities 25,398,948 (40,291,624) Net change in cash and cash equivalents 82,566,588 132,034,070 Cash and cash equivalents at beginning of period 297,234,579 333,509,421 Cash and cash equivalents at end of period 379,801,167 $ 465,543,491 $ Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) 379,801,167 465,543,491 Cash and cash equivalents 379,801,167 $ 465,543,491 $
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF CASH FLOWS
FOR SIX MONTHS ENDED DECEMBER 31, 2025 AND 2024
Agenda Page 15
2025/26 YTD
Budget
2025/26 YTD
Actual
2025/26 YTD
Budget Variance
(Under) Over
2025/26 YTD
Actual / Budget
% 2025/26 Budget
2025/26
Remaining
Budget
2025/26
Remaining
Budget %
Operating revenues
Revenue - electricity, net 718,087,664 $ 688,958,018 $ (29,129,646) $ 96% 1,319,740,816 $ 630,782,798 $ 48% Other revenues 2,337,696 1,410,751 (926,945) 60% 4,514,184 3,103,433 69% Total operating revenues 720,425,360 690,368,769 (30,056,591) 96% 1,324,255,000 633,886,231 48% Energy costs
Energy procurement 638,433,908 726,855,251 (88,421,343) 88% 1,207,444,000 569,010,092 47% Total energy costs 726,855,251 638,433,908 (88,421,343) 88% 1,207,444,000 569,010,092 47% Operating revenues less energy costs (6,429,891) 51,934,861 58,364,752 - 116,811,000 64,876,139 56% Operating Expenditures
Staffing 13,404,780 12,322,658 (1,082,122) 92% 27,846,000 15,523,342 56% Technical services 1,137,250 690,436 (446,814) 61% 2,465,000 1,774,564 72% Legal services 887,185 315,213 (571,972) 36% 1,542,000 1,226,787 80% Other professional services 1,411,092 681,473 (729,619) 48% 2,802,000 2,120,527 76% Communications and outreach 2,905,000 2,189,100 (715,900) 75% 6,079,000 3,889,900 64% Mailers 835,260 635,486 (199,774) 76% 1,425,000 789,514 55% Billing data manager 6,072,210 5,884,894 (187,316) 97% 12,279,000 6,394,106 52% SCE services 1,193,470 836,508 (356,962) 70% 2,404,000 1,567,492 65% Customer programs 6,659,905 3,062,398 (3,597,507) 46% 14,425,000 11,362,602 79% General and administrations 2,621,403 1,918,658 (702,745) 73% 5,836,000 3,917,342 67% Total operating expenditures 37,127,555 28,536,827 (8,590,728) 77% 77,103,000 48,566,173 63% Operating income (43,557,446) 23,398,034 66,955,480 39,708,000 16,309,966 Non-operating revenues (expenditures) Interest income 12,658,855 12,116,628 (542,227) 96% 26,568,000 14,451,372 54% Finance and interest expense (921,302) (242,385) 678,917 26% (1,176,000) (933,615) 79% Total non-operating revenues (expenditures) 11,737,553 11,874,243 136,690 101% 25,392,000 13,517,757 53% Change in net position (31,819,893) 35,272,277 67,092,170 - 65,100,000 29,827,723 46% Other uses Capital outlay 168,998 6,589 (162,409) 4% 338,000 331,411 98% Depreciation and Amortization (329,360) (268,475) 60,885 82% (617,000) (348,525) 56% Total other uses (160,362) (261,887) (101,525) 163% (279,000) (17,113) 6% Change in fund balance $ (31,659,531) $ 35,534,164 $ 67,193,695 - $ 65,379,000 $ 29,844,836 46%
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
BUDGETARY COMPARISON SCHEDULE
FOR SIX MONTHS ENDED DECEMBER 31, 2025
Agenda Page 16
Note Dec-25 Sep-25 Jun-25 Mar-25 Dec-24
1 Working Capital 435,354,915 417,818,194 427,785,834 473,307,586 446,226,243 2 Current Ratio 3.3 2.9 4.1 3.6 2.5
3 Days Sales Outstanding 27 34 25 31 29
4 Equity 634,827,459 616,047,547 599,555,182 540,576,683 512,135,737 5 Equity to Assets % 77% 74% 81% 74% 62%
6 Adjusted Unrestricted Cash 406,670,965 369,549,451 364,687,727 414,629,251 500,717,639 7 Investments 201,008,363 200,314,879 174,258,907 69,571,079 70,000,000 8 Available Line of Credit 119,512,000 114,012,000 114,353,000 154,353,000 154,353,000 9 Total Liquidity 727,191,328 683,876,330 653,299,634 638,553,330 725,070,639 10 Days Liquidity on Hand (TTM) 227 216 180 174 200
11 Gross Margin (quarterly) 10% 6% 24% 12% 29%
12 Net Margin (quarterly) 7% 4% 21% 9% 28%
Percentage Change from Prior Quarter
Working Capital 4% -2% -10% 6% 7%
Current Ratio 13% -29% 15% 46% 16%
Days Sales Outstanding -23% 40% -20% 5% -16%
Equity 3% 3% 11% 6% 23%
Equity to Assets % 4% -9% 9% 20% 19%
Available Cash 10% 1% -12% -17% 9%
Investments 0% 15% 150% -1% 0%
Available Line of Credit 5% 0% -26% 0% 0%
Total Liquidity 6% 5% 2% -12% 18%
Days Liquidity on Hand (TTM) 5% 20% 3% -13% 20%
Select Financial Indicators
0 100
200
300
400
500
600
700
800
Dec-24 Mar-25 Jun-25 Sep-25 Dec-25
Millions ($)
Financial Indicators
Working Capital Equity Total Liquidity
Agenda Page 17
Staff Report – Agenda Item 5
To: Finance Committee
From: David McNeil, Chief Financial Officer
Subject: Report from the Chief Financial Officer
Date: February 25, 2026
The CFO will provide an oral update on CPA’s financial operations.
Agenda Page 18
Staff Report – Agenda Item 6
To: Finance Committee
From: David McNeil, Chief Financial Officer
Reviewed by: Nancy Whang, General Counsel
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Fiscal Year 2025-26 Financial Performance and Outlook Date: February 25, 2026
Staff will provide a presentation on the item.
ATTACHMENT
1. FY 2025-26 Financial Performance and Outlook Presentation Agenda Page 19
FY 2025-26 Financial Performance
and Outlook
February 25, 2026
Agenda Page 20
Summary
2 CPA has made tremendous strides to meet its 50% reserve target and is in sound financial health.
As of December 31, 2025, CPA had total liquidity of $608 million, including unrestricted cash, cash equivalents, and short and long-term investments, and $120 million available in its bank line of credit, representing 227 Days Liquidity on Hand.
For the fiscal year to date (YTD), CPA increased the net position by $35 million, well ahead of budget.
Looking forward, CPA’s projected financial results reflect lower energy costs which will be offset by lower revenues resulting from the rate reduction approved by the Board in February 2026.
As CPA achieves its 50% reserve target it is able to shift gears and focus on reserve maintenance rather than reserve growth.
CPA is well positioned to manage continued competitive pressure over the coming years.
Agenda Page 21
Income Statement: Budget to Actual Comparison
3 Revenue was 4% lower than budgeted due to mild weather conditions and lower heating and cooling load.
Energy costs were 12% below budget due lower than budgeted energy consumption and prices, and the non utilization of contingencies. Absent contingencies, energy costs YTD were $40.7 million (6%) below budget.
All other Expenses (Revenues) includes operating expenses, and non operating interest income and expenses. Operating costs were lower than budgeted primarily because of lower than projected spending in staffing, programs, and professional services.
CPA recorded a net gain of $35.3 million through the first six months of FY 2025-26, $67.1 million above the budgeted decrease in net position of $31.8 million.
Agenda Page 22
Income Statement: YTD Comparison
YTD Q2 2025 revenues are lower than 2024 due
primarily to lower CPA retail rates that went into
effect in July 2025
Both years experienced mild weather in July –
December which generally results in lower loads
and lower net energy expense as customers are
not using their electric heating and cooling
appliances
Energy expenses in 2025 are 21% lower than
2024 due in part to lower energy market prices
Growing battery resources on the California grid
has:
• Lowered energy prices as we are able to dynamically
shift solar energy away from peak solar hours (midday)
and into the evening peak
• Increased supply and lowered the cost of Resource
Adequacy (RA)
Despite lower rates and revenues, lower energy
costs allowed CPA to increase its net position in
2025
Agenda Page 23
4 FY 2025-26 Financial Outlook
Better than budgeted Q2 2026 fiscal YTD results are expected to be offset by the effect of the rate reduction which went into effect on February 1st, 2026 Better than expected December results has led to a projected increase in the net position in FY 2025-26 of ~$40 million, before transfers to the Fiscal Stabilization Fund (FSF)(see next slide).
Staff do not anticipate the need for an amendment to the FY 2025-26 budget at this time.
Agenda Page 24
5 Financial Outlook
Scenario 1: Assume Current Rates
The assumptions used in Scenario 1 and 2 are intended for modelling and informational purposes only. Actual rates and financial projections will be determined in CPA’s future annual rate setting and budgeting processes.
Scenario 1 projections assume that the January 2026 adopted rates remain in effect over the forecast period.
CPA is expected to defer revenue to the FSF in FY 2025-26 and draws on the FSF in FY 2026-27 and FY 2027- 28 in order to ensure a positive contribution to the net position The net margin (contribution to net position / revenues) is expected to downshift in the coming years as CPA seeks to maintain reserves at or near the top of the 50% reserve target range (see next slide). 6 For modelling and informational purposes only
Agenda Page 25
Financial Outlook
Scenario 1: Assumes Current Rates cont.
CPA is expected to maintain robust liquidity over the forecast period with Days Liquidity on Hand (DLOH) in the 180-190 day range consistent with CPA’s A credit rating from S&P.
CPA’s reserve % is similarly forecast to be maintained at or near the top of the target reserve % range.
7 For modelling and informational purposes only
Agenda Page 26
Financial Outlook
Scenario 2: Assumes rates adjusted to meet 50% Reserve Targets 8 Scenario 2 projections assume a year-over-year rate increase of 1.8% in FY 2026-27 and a year-over-year decrease of 3.6% in FY 2027-28, effective July 1st of each year, in order to maintain CPA’s reserves at a 50% reserve target
Scenario 2 also draws on the FSF in FY 2026-27 and FY 2027-28 in order to ensure a positive contribution to the net position
Similar to Scenario 1, scenario 2 liquidity remains robust For modelling and informational purposes only
Agenda Page 27
Financial Outlook - Scenario 1 vs Scenario 2
9 Revenues, reserves, and liquidity differ slightly in accordance with the rate/revenue assumptions in each scenario. However, net position under both Scenarios 1 and 2 reach 50% by the end of FY 2026-27.
Total revenues would be the same over the 2 year period in both scenarios; scenario 2 frontloads the revenue by increasing then decreasing rates while scenario 1 maintains more stable revenues and rates.
In both scenarios we project dipping into the FSF to draw approximately $82M over the two years. Longer range forecasts project recovery of FSF withdrawals in future years.
Both scenarios comply with CPA’s banking agreement and are broadly consistent with CPA’s S&P A credit rating.
$300
$350
$400
$450
$500
$550
$600
$650
$700
FY2023-24 FY2024-25 FY2025-26 FY2026-27 FY2027-28
in millions
Trends over historical and projected years
Scenario 1 -Reserves
Scenario 2 -Reserves
Scenario 1 -Unrestricted
cash and equivalents, ST
& LT investments
Scenario 2 -Unrestricted
cash and equivalents, ST
& LT investments
Agenda Page 28
Key Take-Aways and Next Steps
10 CPA has made tremendous strides to meet its 50% reserve target and is in sound financial health.
The focus in the years ahead will be on maintaining reserves and DLOH at current levels while offering competitive rates.
Energy costs and market volatility have downshifted significantly which has lowered CPA’s costs and revenue requirement. The downside is that these same forces are increasing the PCIA charge our customer’s must pay and lowering SCE’s generation rate, intensifying competitive pressure.
Multi year projections indicate that CPA has room to reduce revenues while maintaining strong reserve balances (Scenario 2). But PCIA increases in calendar 2027 may exert additional pressure.
Staff will be updating financial projections and preparing budgets for the upcoming budget and rate setting processes which will begin in March 2026.
Agenda Page 29
Thank You! Questions?
Agenda Page 30
YTD Budget to Actual Analysis for 6 months ending December 31, 2025 Agenda Page 31
12 Staff Report – Agenda Item 7
To: Finance Committee
From: Kate Freeman, Strategic Finance Manager
Reviewed by: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Amendments to Reserve and Fiscal Stabilization Fund (FSF) Policies
Date: February 25, 2026
RECOMMENDATION
Recommend to the Board of Directors approval of:
a. Proposed amendments to the Reserve Policy as presented in attachment 3 to the staff report; and,
b. Proposed amendments to the Fiscal Stabilization Fund Policy as presented in attachment 5 to the staff report.
ATTACHMENTS
1. Presentation on Amendments to Reserve and FSF Policies
2. Proposed Reserve Policy (clean)
3. Proposed Reserve Policy (redline against current Reserve Policy)
4. Proposed Fiscal Stabilization Fund Policy (clean)
5. Proposed Fiscal Stabilization Fund Policy (redline against current Fiscal Stabilization Fund Policy)
Agenda Page 32
Draft Amendments to Reserve and Fiscal
Stabilization Fund Policies
February 25, 2026
Agenda Page 33
2 Recommend to the Board of Directors approval of:
A. Proposed amendments to the Reserve Policy at its March 5th Board meeting as described in the attached Reserve Policy redlines B. Proposed amendments to the Fiscal Stabilization Fund (FSF) Policy at its March 5th Board meeting as described in the attached FSF Policy redlines
Action Requested
Agenda Page 34
In March 2019, the Board approved the Reserve Policy which defines minimum, target, and maximum reserves. Reserves are defined as the Net Position plus funds held in the FSF and reserve targets are expressed as a percentage of CPA’s total operating budget expenditures (the sum of Costs of Energy and Operating Expenses) for a given fiscal year The Reserve Policy establishes guidelines enabling CPA to satisfy working capital requirements, procure energy at competitive rates, adhere to contractual covenants, maintain its investment-grade credit rating, cover unanticipated expenditures, and support rate stability
The Board amended the Reserve Policy in February 2021 to clarify that funds held in the FSF are considered reserves and to add the goal of securing 120 days liquidity on hand (DLOH)
Reserve Policy: Background
Agenda Page 35
3 4
Increase the DLOH target from 120 days (current) to 150-240 days. Key considerations:
Credit Rating: DLOH is among S&P’s key metrics for evaluating retail utility credit strength; their “Very Strong” range of 150-270 DLOH corresponds to CPA’s current “A” rating
Policy Alignment: The proposed DLOH range better aligns with the existing reserve target range of between 30% and 50% of operating expenses Scenario Modeling: CPA’s financial projections and “stress case” scenario modeling indicate that a 150-240 DLOH range provides strong financial resources to meet CPA’s operational needs under stressed conditions
CCA peers: Most CCAs target liquidity levels between 120 and 270 DLOH (see slide 9) Clarify the method of reserve measurement (using financial statement results) and reserve targeting during the annual budgeting and rate setting processes (using budget and other projections) and related clarifications and adjustments These amendments align with current practice and are considered by staff as administrative in nature
The attached redline to the Reserve Policy also includes clarifications that staff view as administrative or clean-up in nature
Reserve Policy: Draft Amendments Summary
Agenda Page 36
In September 2020, the Board approved the FSF Policy which establishes guidelines for managing and administering the FSF. The Policy authorizes the CEO to defer revenue into the FSF in years when financial results are strong and withdraw deferred revenue from the FSF in years when financial results are negatively impacted by uncontrollable events.
The FSF helps CPA to manage future rate shocks or uncertainty, ensure compliance with its financial covenants, and achieve annual budget objectives.
CPA has utilized the FSF over the past several years to defer revenue in years with strong financial results and apply those revenues to subsequent years. The current FSF balance is $135 million.
5 FSF Policy: Background
Agenda Page 37
FSF Policy: Draft Amendments Summary
6 Increase the maximum FSF balance from 10% of annual revenues (current) to 20% of annual revenues
The current $135 million FSF balance is near the maximum 10% policy limit Authorize the CEO to defer revenue into the FSF in instances in which the Net Position would increase in the absence of a transfer, provided that the transfer does not result in a reduction of the Net Position
The current CEO authority is limited to transfers in instances in which the contribution to the Net Position exceeds 4% of revenues in the absence of a transfer Key Considerations:
Increasing the maximum FSF balance to 20% of annual revenues and adding flexibility to increase the FSF balance improves CPA’s ability to use FSF balances to manage downside events, including expected competitive pressure on CPA’s rates Staff reviewed other CCA reserve policies (see slide 9) and found that fund balance maximums ranged from 10% to 25% of annual revenues
The attached redline to the FSF Policy also includes clarifications that staff view as administrative or clean-up in nature
Agenda Page 38
A.
Proposed amendments to the Reserve Policy at its March 5th Board meeting as described in the attached Reserve Policy redlines
Highlighted Amendment:
Amend the Days Liquidity On Hand (DLOH) target from 120 DLOH to a range of 150 to 240 DLOH
B. Proposed amendments to the Fiscal Stabilization Fund (FSF) Policy at its March 5th Board meeting as described in the attached FSF Policy redlines Highlighted Amendments:
Increase the maximum FSF balance from 10% of annual revenues to 20% of annual revenues
Expand the CEO’s authority to defer revenue into the FSF to instances in which the Net Position would increase in the absence of a transfer, provided the transfer does not result in a reduction of the Net Position
Next steps: staff will draft resolutions reflecting the draft amendments to the proposed Policies for the Board to adopt at its March 5, 2026 meeting 7 Action Requested
Recommend to the Board of Directors approval of:
Agenda Page 39
Questions?
Agenda Page 40
9 Summary of Peer CCA Reserve and FSF Policies
CCA Minimum Reserves /
Liquidity
Target Reserves /
Liquidity
Maximum Reserves /
Liquidity
Maximum FSF
Balance
Marin Clean Energy 60% of projected energy + operating expenses 240 DLOH 10% of total revenues
Ava Community Energy 25% of projected
operating expenses
50% of projected
operating expenses
75% of projected
operating expenses
20% of operating
expenses
Silicon Valley Clean
Energy 120 DLOH 350 DLOH 500 DLOH N/A
San Diego Community
Power 180 DLOH 225 DLOH 270 DLOH 12.5% of budgeted
operating expenses
Central Coast Community
Energy (3CE)
25% of budgeted
appropriation
25% of budgeted cost
of energy
Sonoma Clean Power 180 DLOH 365 DLOH N/A
Peninsula Clean Energy 180 DLOH 15% of revenues
Peer CCAs have a range of reserves targets, liquidity targets, and targets pertaining to deferred revenue funds similar to CPA’s FSF Agenda Page 41
Policy Title Financial Reserves
Policy Number CPA 2019-09 Original: 09/2019
Amended: 02/04/2021
Amended: 03/0/2026
1. Purpose
Adequate reserves enable CPA to satisfy working capital requirements, procure energy at competitive rates, adhere to contractual covenants, maintain an investment grade credit rating, cover unanticipated expenditures, and support rate stability.
The Financial Reserves Policy (“Reserve Policy”) establishes minimum and maximum reserve targets, total maximum percentage of operating expenses, a days liquidity on hand target, and describes reserve targets established through budgeting and rate setting processes.
2. Policy
A. Minimum and Maximum Reserves Targets
CPA will maintain reserves in an amount equal to a Minimum target of 30% and a Maximum target of 50% of Operating Expenses.
Reserves are defined as the Net Position plus the balance in the Fiscal Stabilization Fund1 as reported in the Statements of Net Position. Operating Expenses are those expenses identified in the Statements of Revenues, Expenses and Changes in Net Position2. Reserve percentages represent Reserves divided by Operating Expenses.
B. Upcoming Fiscal Year Reserve Targets and Contributions The Board will establish reserve targets or target range midpoints for upcoming fiscal years through the annual budget and rate setting processes that are no less than the Minimum and no greater than the Maximum targets.
1 The Fiscal Stabilization Fund is governed by the Fiscal Stabilization Fund Policy. 2 The components of Operating Expenses described in the Statements of Revenue, Expenses and Net Position are cost of electricity, contract costs, staff compensation and general and administration.
Agenda Page 42
Target reserve percentages calculated as part of the budget and rate setting processes shall be based on projected fiscal year-end reserve balances divided by budgeted Operating Expenses.
Reserve contributions shall be determined through the aforementioned processes and events impacting revenues and expenses that occur during the year.
C. Days Liquidity on Hand (DLOH) Target
Reserves shall support a DLOH target equal to 150 to 240 days5.
D. Excess Reserves
If reserve funds exceed 60% of Operating Expenses, CPA will consider reducing reserves by enhancing programs expenditures, capital improvements, paying down debt, and/or reducing rates or margins.
3. Reporting
Reserves will be monitored during the fiscal year and reported in CPA’s annual audited financial statements.
4. Periodic Review of Policy
The Chief Financial Officer will review this Reserve Policy and associated procedures on a periodic basis to determine whether they should be amended, supplemented, or updated to account for changing business conditions and/or regulatory requirements. If an amendment is warranted, the Reserves Policy amendment will be submitted to the Board for approval.
5 DLOH = (unrestricted cash, cash equivalents, and investments + unused bank lines of credit) x 365 / (operating expenses for the current fiscal year)
Agenda Page 43
Policy Title Financial Reserves
Policy Number CPA 2019-09 OriginalAmended
Date:
02/04/202109/2019
Amended: 02/04/2021
Amended: 03/0/2026
1. Purpose
1. PURPOSE
Adequate reserves will enable CPA to satisfy working capital requirements, procure energy at competitive rates, adhere to contractual covenants, obtain and maintain an investment grade credit rating, cover unanticipated expenditures, and support rate stability.
The Financial Reserves Policy (“Reserve Policy”) establishes outlines the appropriate target levels (minimum and maximum reserve targets, total maximum percentage of operating expenses, a days liquidity on hand target, and describes reserve targets established through budgeting and rate setting processes.
2. Policy
A. Minimum and Maximum Reserves Targets
CPA will maintain ) of reserves in an amount equal to a Minimum target of 30% and a Maximum target of 50% of Operating Expenses.
. Reserves are defined as the Net Position plus the balancefunds held in the Fiscal Stabilization Fund1 as reported in the Statements of . The Net Position. Operating Expenses are those expenses identified in represents the difference between CPA’s assets and liabilities as defined by the Statements of Revenues, Expenses and Changes in Net Position 2 . Reserve percentages represent Reserves divided by Operating Expenses.
B. UpcomingGovernment Accounting Standards Board and consistent with generally accepted accounting principles. The Fiscal Year Reserve Targets and Contributions Stabilization Fund is governed by CPA’s Fiscal Stabilization Fund Policy.
The Board will establish
1 The Fiscal Stabilization Fund is governed by the Fiscal Stabilization Fund Policy. 2 The components of Operating Expenses described in the Statements of Revenue, Expenses and Net Position are cost of electricity, contract costs, staff compensation and general and administration.
Agenda Page 44
2. POLICY
Reserve Target Levels
CPA shall grow reserves to maintain a minimum reserve targets or target range midpoints for upcoming fiscal years through the annualequal to 30% of total operating budget expenditures, with a goal of increasing the reserve to a maximum reserve target of 50% of total operating budget expenditures. Reserves shall not exceed 60% of total operating budget expenditures.
Operating budget expenditures consist of operating expenses and the cost of energy.
Reserve percentages and target percentages represent reserves divided by the following year’s total operating budget expenditures.
Reserves shall support the goal of securing 120 days liquidity on hand.i Funding the Target Amount
Funding reserves will come from an excess of revenues over expenditures. The contribution to reserves is determined through CPA’s budgeting and rate setting processes that are no less than the Minimum and no greater than the Maximum targets.
Target reserve percentages calculated as part of the budget and rate setting processes shall be based on projected fiscal year-end reserve balances divided by budgeted Operating Expenses.
Reserve contributions shall be determined through the aforementioned processes and events impacting revenues and expensesexpenditures that occur during the year.
C. Days Liquidity on Hand (DLOH) Target
Reserves shall support a DLOH target equal to 150 to 240 days3.
D. Excess Reserves
If reserve funds exceed 60% of Operating Expensesthe maximum level, CPA will consider reducing reserves by enhancing programs expenditures, capital improvements, paying down debt, and/or reducing rates or margins.
Periodic Review of Targets
If CPA’s risks decline or new risk factors emerge as a result of changes in the industry, legislation, or economic conditions, the reserve target will be reviewed, and the funding level may be adjusted accordingly.
Reporting
3 DLOH = (unrestricted cash, cash equivalents, and investments + unused bank lines of credit) x 365 / (operating expenses for the current fiscal year)
Agenda Page 45
ReservesReserve levels will be monitored during the fiscal year and reported in CPA’s annual audited financial statements.
3. Periodic Review of Policy
The Chief Financial Officer will review this Reserve Policy and associated procedures on a periodic basis to determine whether they should be amended, supplemented, or updated to account for changing business conditions and/or regulatory requirements. If an amendment is warranted, the Reserves Policy amendment will be submitted to the Board for approval.
i
Days liquidity on hand = (unrestricted cash and investments + unused bank lines of credit) x 365 / (operating expenses for the current year)
Agenda Page 46
Policy Title Fiscal Stabilization Fund
Policy Number 16 Original: 09/03/2020
Amended: 03/05/2026
1. Purpose
This Fiscal Stabilization Fund Policy (Policy) establishes guidelines for the management and administration of the Fiscal Stabilization Fund (Fund) at Clean Power Alliance of Southern California (CPA).
2. Objectives
The Fund allows CPA to defer revenue in years when financial results are strong and to apply deferred revenue in years when financial results are negatively impacted by uncontrollable events. Deferring revenue in years when financial results are strong allows CPA to apply these funds in years when financial results are less robust, providing CPA with a tool to guard against future rate shocks or uncertainty, maintain compliance with financial covenants, and achieve annual budget objectives.
Transfers to or from the Fund are expenditure neutral and no authority to expend funds is provided under this Policy.
3. Accounting
A. Government Accounting Standards Board Standard
The Fund is accounted for under Government Accounting Standards Board (GASB) Statement 62 and GASB Statement 63. GASB Statement 63 codifies and standardizes “the presentation of deferred outflows of resources and deferred inflows of resources and their effects on [state and local government’s] net position.”
B. Accounting of Fund Transfer
Deferral of current revenue and a transfer into the Fund reduces revenue and the change in Net Position in that year by the same amount. Transfers from the Fund increase revenues and the change in Net Position in the year of the transfer. Net Agenda Page 47
Position is the difference between assets and liabilities as reported in CPA’s financial statements.
4. Reporting
The Fund balance is recorded on the Statement of Net Position in a separate section following liabilities entitled Deferred Inflows of Resources. Transfers to and from the Fund are recorded in the Statements of Revenues, Expenses and Changes in Net Position under Operating Revenues.
The Treasurer shall report all transfers to and from the Fund to the Finance Committee and the Board of Directors in the Quarterly or Annual Financial Statements for the applicable time period in which the transfer occurred.
5. Authorized Transfers
The Chief Executive Officer is authorized to exercise discretion and make transfers to and from the Fund consistent with the Policy objectives and under the following two conditions:
A. Transfers to the Fund: Transfers to the Fund are authorized when there is an actual or anticipated increase in the Net Position, provided the transfer does not result in a decrease in the Net Position.i
B. Transfers from the Fund: Transfers from the Fund are authorized when funds are available in the Fund and the actual or anticipated increase in the Net Position would fall below the 4% of revenues in the absence of a transfer from the Fund.ii
6. Maximum Fund Balance
The fund balance is capped at 20% of CPA annual revenues.
7. Fund Holdings and Investments
Fund balances are not required to be held in a separate account and may be comingled with other funds held by CPA. All fund balances are subject to CPA’s Investment Policy.
8. Policy Administration
The Treasurer is the officer in charge of the administration of this Policy.
Agenda Page 48
iii
i Example 1:
A Annual revenues: $750 million
B Actual increase in Net Position before transfer: $32 million C=B Eligible to transfer to the Fund: $32 million
In the above example the actual increase to the Net Position is $32 million and the Chief Executive Officer is authorized to transfer up to $32 million to Fund.
ii Example 2:
A Annual revenues: $750 million
B=Ax4% 4% increase in Net Position: $30 million
C Actual increase in Net Position before transfer: $28 million D Fund balance before transfer: $2 million
E=C-B Eligible to transfer from the Fund: $2 million
In the above example the actual increase in the Net Position before transfers is $28 million, the Fund balance before transfer is $2 million and the Chief Executive Officer is authorized to transfer the $2 million from the Fund to operating revenues.
Agenda Page 49
Policy Title Fiscal Stabilization Fund
Policy Number 16 OriginalEffective: 09/039/3/2020
Amended: 03/05/2026
Purpose
This Fiscal Stabilization Fund Policy (Policy) establishes guidelines for the management and administration of the Fiscal Stabilization Fund (Fund) at Clean Power Alliance of Southern California (CPA).
I. Objectives
The Fund allows CPA to defer revenue in years when financial results are strong and to apply deferred revenue in years when financial results are negatively impacted by uncontrollable events. Deferring revenue in years when financial results are strong allows CPA to apply these funds in years when financial results are less robust, providing CPA with a tool to guard against future rate shocks or uncertainty, maintain compliance with financial covenants, and achieve annual budget objectives.
Transfers to or from the Fund are expenditure neutral and no authority to expend funds is provided under this Policy.
II. Accounting
A. Government Accounting Standards Board Standard
The Fund is accounted for under Government Accounting Standards Board (GASB) Statement 62 and GASB Statement 63. GASB Statement 63 codifies and standardizes “the presentation of deferred outflows of resources and deferred inflows of resources and their effects on [state and local government’s] net position.”
B. Accounting of Fund Transfer
Deferral of current revenue and a transfer into the Fund reduces revenue and the change in Net Positionnet position in that year by the same amount. Transfers from Agenda Page 50
the Fund increase revenues and the change in Net Positionnet position in the year of the transfer. Net Positionposition is the difference between assets and liabilities as reported in CPA’s financial statements.
III. Reporting
The Fund balance is recorded on the Statementstatement of Net Positionnet position in a separate section following liabilities entitled Deferred Inflows of Resources. Transfers to and from the Fund are recorded in the Statements of Revenues, Expenses and Changes in Net Position under Operating Revenues.
The Treasurer shall report all transfers to and from the Fund to the Finance Committee and the Board of Directors in the Quarterly or Annual Financial Statements for the applicable time period in which the transfer occurred.
IV. Authorized Transfers
The Chief Executive OfficerDirector is authorized to exercise discretion and make transfers to and from the Fund consistent with the Policy objectives and under the following two conditions:
A. Transfers to the Fund:when increases in the Net Position would exceed 4% in the absence of a transfer: Transfers to the Fund are authorized when there is an actual or anticipated increase in the Net Positionmay occur when increases to the net position would exceed 4% of revenues in the absence of a transfer, provided the transfer does not result in a decrease in the Net Positioncontribution to the net position that is less than 4% of revenues.
i
B. Transfers from the Fund:when increases in the Net Position would fall below 4% of revenues in the absence of a transfer from the Fund: Transfers from the Fund are authorizedmay occur when funds are available in the Fund and the actual or anticipated increase in the Net Positionnet position would fall below the 4% of revenues in the absence of a transfer from the Fund.ii
Agenda Page 51
V. Maximum Fund Balance
The fund balance is capped at 2010% of CPA annual revenues.
VI. Fund Holdings and Investments
Fund balances are not required to be held in a separate account and may be comingledcommingled with other funds held by CPA. All fund balances are subject to CPA’s Investment Policy.
VII. Policy Administration
The Treasurer is the officer in charge of the administration of this Policy. i Example 1:
A Annual revenues: $750 million
B=Ax4% 4% increase to net position: $30 million
C Actual increase in Net Positionnet position before transfer: $32 million D=C=-B Eligible to transfer to the Fund: $32$2 million
In the above example the actual increase to the Net Positionnet position is $32 million and the Chief Executive OfficerDirector is authorized to transfer up to $322 million to Fund. ii Example 2:
A Annual revenues: $750 million
B=Ax4% 4% increase in Net Position: net position:
$30 million
C Actual increase in Net Positionnet position before transfer: $28 million D Fund balance before transfer: $2 million
E=C-B Eligible to transfer from the Fund: $2 million
In the above example the actual increase in the Net Positionnet position before transfers is $28 million, the Fund balance before transfer is $2 million and the Chief Executive OfficerDirector is authorized to transfer the $2 million from the Fund to operating revenues.
Agenda Page 52
Staff Report – Agenda Item 8
To: Finance Committee
From: Kate Freeman, Strategic Finance Manager
Reviewed by: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Credit Facility Agreement with JPMorgan
Date: February 25, 2026
RECOMMENDATION
Recommend that the Board of Directors approve an amended Credit Agreement and amended Fee Agreement with JPMorgan, consistent with the terms described herein, at its March 5, 2026, meeting.
ATTACHMENTS
1. Credit Facility Agreement with JPMorgan Presentation Agenda Page 53
Credit Facility Agreement with
JPMorgan
February 25, 2026
Agenda Page 54
Recommend that the Board approve an amended Credit Agreement and amended Fee Agreement with JPMorgan consistent with the terms described herein at its March 5, 2026 meeting.
2 Recommendation
Agenda Page 55
CPA uses its Credit Agreement with JPMorgan to a) provide letters of credit to support certain regulatory obligations and energy contracts and b) borrow funds to provide working capital if needed. The current agreement provides a facility size of $120 million and expires on March 31, 2026.
Maintenance of a credit facility is important to:
Demonstrate and support financial strength to market participants and CPA’s credit rating agency, Standard & Poor’s (S&P)
Provide additional liquidity to address unexpected and adverse financial events
Supporting the days liquidity on hand (DLOH) target range described in CPA’s Reserve Policy
3 Background – Credit Agreement
Agenda Page 56
CPA entered into a Credit Agreement with JPMorgan in September 2021, providing CPA with an $80 million credit facility through October 2023 In June 2023, the Board approved an amendment to the Credit Agreement increasing the size of the credit facility to $160 million and extending the term of the agreement to March 31, 2024
In Fall 2023, staff solicited proposals from four banks for a $160M credit facility with a term extending to March 31, 2026. Two offers were received and JPM’s proposal was selected on the basis of lower fees. The Board approved a two-year extension and amendment of the Credit Agreement in March 2024
In May 2025, the Board approved a reduction in the size of the credit facility from $160M to $120M
In November 2025, staff solicited a quote from JPMorgan for terms of an amended & extended Credit Agreement and an amended Fee Agreement 4 History with JPMorgan
Agenda Page 57
Highlights of draft amendment terms include:
A two-year extension in the expiration date (to March 31, 2028) Reduced letter of credit fees (1.10% vs current 1.25%)
Reduced undrawn fees (0.325% vs current 0.33%)
Expanded contractual rights for CPA to cure a breach of its debt service coverage covenants, should one occur, and to support covenant compliance in years in which CPA records lower margins
The draft Credit and Fee Agreement amendments would maintain CPA’s access to borrowings and letters of credit, support CPA’s liquidity, and provide avenues for CPA to satisfy various contractual and regulatory obligations including its Financial Security Requirement (FSR) as obligated by the CPUC.
5 Discussion
Agenda Page 58
6 Recommendation
Recommend that the Board approve an amended Credit Agreement and amended Fee Agreement with JPMorgan consistent with the terms described herein at its March 5, 2026 meeting
Next steps
Subject to the Finance Committee’s recommendation, staff will prepare a resolution and proposed amendments for inclusion on the Board’s March 5th consent agenda
Agenda Page 59