Agenda packet — Clean Power Alliance Finance Committee, April 22, 2026

Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, April 22, 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
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.

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CALL TO ORDER & ROLL CALL

GENERAL PUBLIC COMMENT

CONSENT AGENDA

1. Approve Minutes from the February 25, 2026, Finance Committee Meeting

2. Receive and File March 2026 Risk Management Team Report

3. Receive and File March 2026 Investment Report

4. Receive and File February 2026 Financial Dashboard

REGULAR AGENDA

5. Oral Report from the Chief Financial Officer

6. Recommend to the Board of Directors Approval of Proposed Amendments to the Investment Policy at its May 14, 2026, Meeting

7. Receive Presentation on Budget Priorities and Draft FY 2026-27 and 2027-28 Operating Expense Budgets

COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING ON MAY 27, 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 February 25, 2026, Finance Committee Meeting
Date: April 22, 2026

RECOMMENDATION
Approve.

ATTACHMENT

1. Minutes
Agenda Page 3

MINUTES
Finance Committee
of the Clean Power Alliance of Southern California
Regular Meeting
Wednesday, February 25, 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
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. Director Newman attended this meeting pursuant to Section 54953 (c) of the Government Code.

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 Present
All votes are unanimous, unless otherwise stated.

GENERAL PUBLIC COMMENT
There was no public comment.

Finance Committee Item 1
Agenda Page 4

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
Motion: Committee Member O’Connor, Santa Monica
Second: Committee Member Kulcsar, Carson
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’s sixth pre-pay transaction was priced last week in a less favorable interest rate environment than experienced in the past, but CPA will still benefit from expected savings.

6. Receive Presentation on FY 2025-26 Financial Performance and Outlook Mr. McNeil reported that CPA has made significant progress toward meeting its 50% reserve target and is in sound financial health. CPA’s projected financial results reflect lower energy costs that 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 can shift gears and focus on reserve maintenance rather than reserve growth. CPA is well positioned to manage continued competitive pressure over the coming years.

Committee Member Albrecht congratulated staff for creating financial stability through careful modeling and cost management. Committee Member Newman asked how CPA would respond if volatility returned to the energy market or if there were changes in the economy in general. Mr. McNeil responded that staff conduct scenario modeling using data from historical volatility and prepare for worst-case scenarios. He added that CPA’s “A” credit rating is a good indicator of CPA’s ability to manage volatility.

Staff clarified for Committee Member Calaycay that CPA has no debt to refinance, but that interest rates impact interest income.

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
Kate Freeman, Senior Manager of Strategic Finance, stated that staff proposes increasing the DLOH target from 120 days to a range of 150 to 240 days in the Reserve Policy. The proposed DLOH range better aligns with the existing reserve target range of 30% to 50% of operating expenses. Staff also aim to clarify the method of reserve measurement and reserve targeting during the annual budgeting and rate setting processes and related clarifications and adjustments.

As for the Fiscal Stabilization Fund, staff proposes increasing the maximum FSF balance from 10% of annual revenues to 20% and 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 Finance Committee Item 1
Agenda Page 5
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. Increasing the FSF balance improves CPA’s ability to use FSF balances to manage downside events, including expected competitive pressure on CPA’s rates.

Committee Member Kulcsar expressed support for the recommendations but asked for clarification regarding funding for community programs. Staff stated that the allocation of reserves to the FSF would not affect funding for community programs.

Motion: Committee Member Newman, Thousand Oaks
Second: Committee Member Zuckerman, Rolling Hills Estates Vote: Item 7 was approved by a roll call vote.

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
Ms. Freeman provided historical information on CPA’s credit agreement with J.P.

Morgan and described the proposed amendments. 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. If the Committee approves the recommendations, staff will present a resolution and proposed amendments to the Board at its March meeting.

Committee Member Albrecht inquired about the cooperative negotiations and working relationship with J.P. Morgan. Staff confirmed the bank has been a constructive and engaged credit partner for CPA.

Motion: Committee Member Calaycay, Claremont
Second: Committee Member Albrecht, Calabasas
Vote: Item 8 was approved by a roll call vote.

COMMITTEE MEMBER COMMENTS
None.

ADJOURN
Chair Santangelo adjourned the meeting at 11:54 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: David McNeil, Chief Financial Officer
Ted Bardacke, Chief Executive Officer
Subject: Receive and File March 2026 Risk Management Team Report Date: April 22, 2026
March 2026 RMT REPORT
Key Actions
• Reviewed the counterparty credit exposure summary
• Reviewed December 2025 day-ahead load forecast performance • Reviewed February 2026 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 2025-2026 Voluntary Allocation update
• Reviewed Sunzia test energy forecast
• Reviewed 2026 - 2028 slice of day RA position
• 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 March 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 March 2026 Investment Report
Date: April 22, 2026

RECOMMENDATION
Receive and file.

ATTACHMENT

1. March 2026 Investment Report
Agenda Page 9
Clean Power Alliance Investment Report
March 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 17,993 20,000,000 179,141,337 6,319,524 199,556,151 405,035,006 Amortization & Accretion** 0 0 0 0 122,716 122,716
Deposits & Purchases 0 0 577,422 971,245 0 1,548,667
Maturities & Withdrawals 0 10,000,000 0 0 0 10,000,000
Ending Balance 17,993 10,000,000 179,718,759 7,290,769 199,678,868 396,706,389 Book Value*
Beginning Balance 17,993 20,000,000 179,141,337 6,319,524 202,698,449 408,177,304 Amortization & Accretion 0 0 0 0 (3,135,806) (3,135,806) Deposits & Purchases 0 0 577,422 971,245 0 1,548,667
Maturities & Withdrawals 0 10,000,000 0 0 0 10,000,000
Ending Balance 17,993 10,000,000 179,718,759 7,290,769 199,562,643 396,590,164 Interest Earned*** 57 65,817 577,422 17,220 538,627 1,199,143 Yield**** 3.83% 4.08% 3.80% 3.56% 3.88% 3.84%
Weighted Average Term to Maturity (Months) 7.0 0.8 2.0 1.0 45.0 23.6 **** 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 4.19%
Placement Date 3/27/2025
Maturity Date 3/26/2026
Term (weeks) 52
Interest Earnings (Total) 426,680
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 February 2026 Financial Dashboard Date: April 22, 2026

RECOMMENDATION
Receive and file.

ATTACHMENT

1. February 2026 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
February
2026
Financial Dashboard
Note: Numbers may not sum up due to rounding.

Active Accounts
1,070,709
Participation Rate

92.8%
YTD Sales Volume
7,207 GWh
February Volume
756 GWh
Res
47%
Com - Lg
22%
Com - Sm
30%
Agr/Oth
1%
In February 2026, CPA’s net position increased by $1.4 million, $1.8 million lower than the budgeted net gain of $3.1 million. Energy revenues were $75.8 million, 18% lower than budgeted primarily due to a rate reduction that began in the month, and lower than forecasted residential heating demand, which impacted both energy revenues and energy costs. Cost of energy was $71.3 million, 16% lower than budgeted and was further impacted by lower than budgeted energy market prices and the non-utilization of energy contingencies.

Year to date, CPA’s net position has increased by $42.4 million, $74.5 million higher than budgeted. YTD revenues totaled $860.7 million, 6% less than budgeted, due to mild weather this fiscal year generally reducing customer load, and the introduction of the interim rate reduction in February. YTD energy expenses were $796.0 million, 13% less than budgeted, due to lower than forecasted market prices for energy and renewables, and the non-use of energy contingencies. Absent contingencies, energy costs YTD were $58.9 million, 7% below budget. YTD operating expenses totaled $37.9 million, 24% less than budgeted, mainly due to timing differences across four areas:
staffing, where hiring has progressed slower than planned; customer program incentives, which are distributed as customers enroll in programs and will extend into future fiscal years; communications and marketing, where campaigns slow in the winter; and professional services, where two project budgets have shifted to next fiscal year and some engagements have come in under budget. Consultant activity and communication and marketing campaign expenses are expected to increase in Q4.

As of February 28th, 2026, CPA had unrestricted cash, cash equivalents, and investments of $656.7 million, as well as $119.5 million available in its bank line of credit, representing 248 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: David McNeil, Chief Financial Officer
Subject: Report from the Chief Financial Officer
Date: April 22, 2026
The CFO will provide an oral update on CPA’s financial operations.

Agenda Page 13
Staff Report – Agenda Item 6
To: Finance Committee
From: Kate Freeman, Strategic Finance Manager
Ammad Mansoor, Analyst, Strategic Finance
Reviewed by: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Proposed Amendments to Investment Policy
Date: April 22, 2026

RECOMMENDATION
Recommend to the Board of Directors approval of proposed amendments to the Investment Policy at its May 14th Board meeting as described in the attached Investment Policy redlines.

ATTACHMENTS

1. Proposed Amendments to Investment Policy Presentation

2. Investment Policy (Clean)

3. Investment Policy (Redline)
Agenda Page 14
Proposed Amendments to Investment Policy
April 22, 2026
Agenda Page 15
2 Recommend to the Board of Directors approval of proposed amendments to the Investment Policy at its May 14th Board meeting as described in the attached Investment Policy redlines.

Action Requested
Agenda Page 16
In March 2020, the Board approved the Investment Policy which governs the management of CPA’s cash, deposits, and investments (“Funds”). The Policy:
• Outlines CPA’s investment objectives
• Defines a standard of care
• Defines acceptable and prohibited investment types
• Establishes practices for the purchase, safekeeping, and custody of investments • Requires reporting on CPA’s investment transactions
The Board amended the Investment Policy in March 2024 to add the California Asset Management Program (“CAMP”) as an acceptable investment type In February 2026, CPA engaged Chandler Asset Management (“Chandler”) to provide external investment management services
• Chandler is a SEC-registered Investment Adviser with ~$45B assets under management that currently serves dozens of California-based public agencies including several CCAs Staff and Chandler reviewed the Investment Policy and have proposed amendments consistent with CA Government Code and industry best practice. A proposed redline to the Investment Policy highlighting material changes appears as Attachment 3 Investment Policy: Background
3 Agenda Page 17
4 Summary of Proposed Amendments (1 of 3)
Expand Acceptable Investment Types
• Broaden range of acceptable investment types
• Additional investment types include municipal securities, corporate bonds, asset-backed securities, and commercial paper. These investment types are:
• permitted under California Government Code
• authorized in other CCAs’ Investment Policies
• Define credit quality minimums and concentration limits for each investment type • The new investment types entail the incurrence of credit risk and reduced liquidity for which credit quality minimums and concentration limits are appropriate. • A detailed overview of these investment criteria is shown on slide 12 Expand detail regarding Prohibited Investment Types and Practices Expand prohibited investment types to include supranational obligations (eg bonds issued by the IMF), futures, options, and foreign currency denominated securities Define prohibited investment practices consistent with California Government Code Agenda Page 18
5 Summary of Proposed Amendments (2 of 3)
Enhance risk mitigation practices
• Credit Risk
• Establishes a 5% single-issuer concentration cap for most investment types • Market Risk:
• Ensure adequate levels of deposits and short-term investments to meet liquidity needs before investing in longer-term securities
• Ensure duration of CPA’s investment portfolio will remain approximately equal (+/- 20%) to the duration of a comparable Market Benchmark
• Create maximum term to maturity for each investment type Establish a methodology for evaluating the performance of CPA’s investment portfolio • Monthly reporting will compare the investment portfolio’s performance relative to an appropriate Market Benchmark selected by Treasurer
Agenda Page 19
Illustrative Investment Portfolio – Marin Clean Energy
The tables to the right illustrate
MCE’s investment portfolio’s
security types, allocation %s and
credit quality with a broader range
of acceptable asset types.

Of the listed investment types,
CPA’s current Policy only permits
US Treasuries which are rated AAA.
6 The broader range of investment types allows MCE to diversify its investments and record returns that are above its performance benchmark
Agenda Page 20
7 Investment Returns
$128,182,000
$125,091,000
$119,936,000
The chart below depicts the growth of $100 million hypothetical portfolios invested in US Treasury & Agency, Asset-Backed Securities (“ABS”), and Corporate securities, respectively, over ten years
Expanding acceptable investment types to include ABS and Corporate securities should increase CPA’s investment returns over the long term
Agenda Page 21
8 Summary of Proposed Amendments (3 of 3)
Additional amendments:
• Expands detail regarding the use of third-party custodian(s) to hold cash and securities in CPA’s name
• Expands detail regarding internal controls and audits consistent with current CPA practices
• Expands detail regarding the contents of monthly investment reports • Adjusts delegation of authority for future Policy Amendments • Current Policy permits ExCom (with FinCom review) to amend the Policy • Given the increased risk and complexity of investment activity, the delegation of authority to ExCom and FinCom to approve amendments to the Policy is limited changes to acceptable deposit types and reporting requirements. All other policy amendments must be approved by the Board.
• Adds a glossary of investment terms (Appendix 1)
• Other administrative and clarifying edits
Agenda Page 22
9 Summary
CPA staff and CPA’s asset manager, Chandler, have reviewed the Investment Policy and plan to recommend amendments aimed at expanding the types of acceptable investments and adding enhancements to manage risk
The amendments would permit Chandler to increase expected investment returns while maintaining CPA’s primary objectives of safeguarding the principal of its funds and meeting its liquidity needs
California law provides comprehensive and conservative guidelines under which all municipal agencies, including CPA, are required to invest their funds
Staff believe that adhering to the requirements of the Code and the Investment Policy, together with receiving investment management services provided by Chandler, provides a sound framework upon which to invest CPA funds
Agenda Page 23
10 Action Requested
Recommend to the Board of Directors approval of proposed amendments to the Investment Policy at its May 14th Board meeting as described in the attached Investment Policy redlines.

Agenda Page 24
Questions?
Agenda Page 25
12 Appendix 2 – Summary of Investment Criteria for
Acceptable Investment Types
Investment Type Maximum
Maturity
Maximum % of
Investment Portfolio
Maximum Per
Issuer
Minimum
Credit Rating3
Local Government Investment Pools N/A None None N/A
US Treasury Obligations 5 years None None None
Federal Agency Securities 5 years 20% (limit for callable agency securities) 30% None
Bankers’ Acceptances 180 days 40% 5% A-1 (short-term debt rating) A (long-term debt rating)
Negotiable Certificates of Deposit 5 years 30% 5% A-1 (short-term debt rating) A (long-term debt rating)
Mutual Funds and Money Market Mutual
Funds N/A 20%
10% (mutual funds) 20% (money market
mutual funds)
Highest possible letter /
numerical rating from not
less than 2 NRSROs
Municipal Securities 5 years 30% 5% A
Commercial Paper 397 days 25% 5% A-1
Repurchase Agreements 1 year None None None
Corporate Medium-Term Notes 5 years 30% 5% A
Asset-Backed, Mortgage-Backed,
Mortgage Pass-Through Securities, and
Collateralized Mortgage Obligations
5 years 20% 5% AA
Except where otherwise specified, this column refers to the minimum credit rating a security or issuer must have received from at least one nationally recognized statistical rating organization (“NRSRO”)
Agenda Page 26
Policy Title Investment Policy
Policy Number 2020-14 Effective Date Original: 03/05/2020 Amended: 02/01/2024
Amended: 05/14/2026
This Investment Policy (“Policy”) establishes guidelines for the management of cash, deposits, and investments (together, “Funds”) at Clean Power Alliance of Southern California (“CPA”)1.

I. Investment Objectives
When managing Funds, CPA’s primary objectives, in the following order of importance, shall be to (1) safeguard the principal of the Funds, (2) meet the liquidity needs of CPA, and (3) achieve a return on investment on Funds.

A. Safety: Safety of principal is the foremost objective of cash and investment management activities. The investment of Funds shall be undertaken in a manner that seeks to ensure the preservation of principal.

B. Liquidity: The Funds shall remain sufficiently liquid to meet all operating needs that may be reasonably anticipated. Since all possible cash demands cannot be anticipated, the investment of Funds in deposits or instruments that are available on demand is recommended.

C. Return on Investment: The deposit and investment portfolio shall be designed with the objective of attaining a market rate of return throughout the economic cycle while considering risk and liquidity constraints. The return on deposits and investments is of secondary importance compared to the safety and liquidity objectives described in I.A. and I.B., above.

Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.” III. Delegation of Authority
Pursuant to Section 53607, the Board of Directors hereby delegates responsibility to manage Funds to CPA’s Chief Financial Officer, acting as CPA’s Treasurer, or in lieu thereof, the Chief 1 Further definitions are available in Appendix 1.
2 All further statutory references are to the California Government Code unless otherwise stated.

Agenda Page 27
Executive Officer. The Treasurer is authorized to appoint an employee or another authorized individual as the Treasurer deems necessary for the prompt and faithful discharge of its duties pursuant to Section 53607.

IV. Acceptable Deposits
A. Deposits are subject to the Local Agency Security Program (“LASP”) administered by the California Department of Financial Protection and Innovation (“DFPI”) pursuant to Section 53630 through 53686. The following types of deposits are permitted:

1. Deposits at Bank(s): Funds may be invested in non-interest-bearing depository accounts to meet CPA’s operating and collateral needs and grant requirements.

Funds not needed for these purposes may be held in interest-bearing depository accounts.

2. Placement Service Deposits: Funds may be invested in deposits placed with a private sector entity that assists in the placement of deposits with eligible financial institutions located in the United States pursuant to Section 53601.8.

3. Non-Negotiable Certificates of Deposit: Funds may be invested in Non-Negotiable Certificates of Deposit pursuant to Sections 53635 and 53652.

V. Acceptable Investment Types
CPA seeks to restrict eligible investments permitted by Sections 53600 et seq to those securities listed below. In the event a discrepancy is found between this Policy and the California Government Code, the more restrictive parameters will take precedence.

A. The following types of investments are permitted consistent with Government Code Section 53601 and as described in Appendix 2:

1. Local Government Investment Pools (“LGIP”)
i. Local Agency Investment Fund (“LAIF”): Funds may be invested in the Local Agency Investment Fund established by the California State Treasurer for the benefit of local agencies pursuant to Section 16429.1.
ii. California Asset Management Program (“CAMP”): Funds may be invested in the California Asset Management Program pursuant to Section 53601(m).

2. US Treasury Obligations: Funds may be invested in United States Treasuries and other government obligations pursuant to Section 53601(b).

3. Federal Agency Securities: Funds may be invested in Federal Agency Securities or United States Government-Sponsored Enterprise (“GSE”) obligations, participations, or other instruments pursuant to Section 53601(f).

4. Bankers’ Acceptances: Funds may be invested in Banker’s Acceptances pursuant to Section 53601(g).

5. Negotiable Certificates of Deposit (“NCDs”): Funds may be invested in NCDs pursuant to Section 53601(i) and subject to Section 53601.8.

6. Mutual Funds and Money Market Mutual Funds
i. Mutual Funds: Funds may be invested in mutual funds pursuant to Section 53601(l)(1) and subject to Section 53601(l)(3).
ii. Money Market Mutual Funds: Funds may be invested in money market funds pursuant to Section 53601(l)(2) and subject to Section 53601(l)(4).

Agenda Page 28

7. Municipal Securities: Funds may be invested in municipal securities including obligations of CPA, the State of California, and any local agency within the State of California, pursuant to Section 53601(c).

8. Municipal Securities (Registered treasury notes or bonds) of any of the other 49 states: Funds may be invested in municipal securities (registered treasury notes or bonds) of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California, pursuant to Section 53601(d)

9. Commercial Paper: Funds may be invested in Commercial Paper pursuant to Section 53601(h).

10. Repurchase Agreements: Funds may be invested in Repurchase Agreements pursuant to Section 56301(j).

11. Corporate Medium-Term Notes (MTNs): Funds may be invested in corporate MTNs pursuant to Section 53601(k).

12. Asset-Backed, Mortgage-Backed, Mortgage Pass-Through Securities, and Collateralized Mortgage Obligations: Funds may be invested in asset-backed securities, mortgage-backed securities, mortgage pass-through securities, and collateralized mortgage obligations from issuers not previously defined in this Policy pursuant to Section 53601(o).

VI. Prohibited Investment Types and Practices
A. The following investment types are prohibited:

1. Pursuant to Section 53601.6, CPA shall not invest Funds in any security that could result in a zero- or negative-interest accrual, or less, if held to maturity. These prohibited investments include, but are not limited to, inverse floaters, range notes, or mortgage-derived interest-only strips. Under a provision sunsetting on January 1, 2031, securities backed by the U.S. Government that could result in a zero- or negative-interest accrual if held to maturity are permitted.

2. State law notwithstanding, any investment types not specifically described in Section V are prohibited, including, but not limited to:
i. Supranational obligations pursuant to Section 53601(q). ii. Futures.
iii. Options.
iv. Foreign currency denominated securities.

B. The following investment practices are prohibited:

1. Trading securities for the sole purpose of speculating on the future direction of interest rates.

2. Purchasing or selling securities on margin.

3. The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage.

4. The purchase of a security with a forward settlement date exceeding 45 days from the time of the investment.

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VII. Risk Management
A. Mitigating Credit Risk
Credit risk is the risk that a security will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. CPA will mitigate credit risk by adopting the following strategies:
• Implement the diversification requirements included in Section V and Appendix 2 of this Policy.
• No more than 5% of investments may be deposited with or invested in securities issued by any single issuer unless otherwise specified in this Policy. • Consider the sale of a security prior to its maturity and record a capital gain or loss in order to manage the quality, liquidity or yield of the investment portfolio in response to market conditions or CPA’s risk preferences.

B. Mitigating Market Risk
Market risk is the risk that a security’s value will fluctuate due to changes in the general level of interest rates. CPA will mitigate market risk by providing adequate liquidity for short-term cash needs, and by making longer-term investments only with Funds that are not needed for current cash flow purposes.

CPA further recognizes that certain types of securities, including variable rate securities, securities with principal paydowns prior to maturity, and securities with embedded options, will affect the market risk profile of the investment portfolio differently in different interest rate environments. CPA, therefore, adopts the following strategies to control and mitigate its exposure to market risk:
• The maximum stated final maturity of individual securities in the investment portfolio will be five (5) years, except as otherwise stated in Section 53600 et seq. or in this Policy.
• The duration of the investment portfolio will generally be approximately equal (+/-20%) to the duration of the Market Benchmark, a readily-available index selected by the Treasurer based on CPA’s investment objectives, constraints and risk tolerances.

VIII. Bids and Purchase of Securities
Prior to the purchase of an investment pursuant to this Policy the persons authorized to make investments shall assess the market and market prices using information obtained from available sources including investment services, broker or dealers, and the media. A competitive bid process, when practical, will be used to place all investment purchases and sales transactions.

Any competitive bid process used pursuant to this Policy shall be exempt from CPA’s Non-Energy Contracting Policy.

IX. Brokers
Broker/dealers shall be selected by the Chief Executive Officer upon recommendation by the Treasurer. Selection of broker/dealers shall be based upon the following criteria: the reputation and financial strength of the company or financial institution, the reputation and expertise of the individuals employed, and pursuant to the requirements of Section 53601.5. The Chief Executive Officer shall require any selected broker, brokerage firm, dealer, or securities firm to affirm that it has not, within any 48-consecutive month period, made a political contribution to any member of the CPA Board, or any candidate who may join the CPA Board in an amount exceeding the limitations contained in Rule G-37 of the Municipal Securities Rulemaking Board, the Political Reform Act, including section 84308, or any applicable CPA Policy, as amended from time to Agenda Page 30
time. The selected broker or dealers shall be provided with and acknowledge receipt of this Policy, the Vendor Communication Policy, and the Campaign Contribution Disclosure Form.

X. Delivery, Safekeeping, and Custody
The delivery and safekeeping of all securities shall be made through a third-party custodian when practical and cost effective as determined by the Treasurer and in accordance with Section 53608.

All investment transactions shall be conducted on a delivery-versus-payment (“DVP”) basis. To protect against potential losses due to failure of individual securities dealers, and to enhance access to securities, interest payments and maturity proceeds, all cash and securities, with the exceptions noted below, in the investment portfolio shall be held in safekeeping in CPA’s name by a third party custodian, acting as agent for CPA under the terms of a custody agreement executed by the custodian and CPA. All investment transactions will require a safekeeping receipt or acknowledgment generated from the trade. A monthly report will be received by CPA from the custodian listing all securities held in safekeeping with current market data and other information.

The only exceptions to the foregoing shall be depository accounts and securities purchases made with: (i) LGIPs; (ii) time certificates of deposit, and (iii) mutual funds and money market mutual funds, since these securities are not deliverable.

The Treasurer shall review all transaction confirmations for conformity with the original transaction.

XI. Conflict of Interest
CPA staff shall comply with state law and applicable CPA policies regarding conflicts of interest.

All participants in the investment process shall act as custodians of the public trust. Investment officials shall recognize that the Funds are subject to public review and evaluation. Thus, employees and officials involved in the investment process shall refrain from personal business activity that could create a conflict of interest or the appearance of a conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions.

Employees involved in the investment process and investment officials shall disclose to the Treasurer any material interests in financial institutions with which they conduct business, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the investments. Employees and officers shall refrain from undertaking any personal investment transactions with the same individual with whom business is conducted on behalf of CPA.

XII. Internal Controls and Audits
The Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of CPA are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.

Funds shall be subject to a process of independent review by its external auditors. CPA’s external auditors shall review the Funds in connection with CPA’s annual audit for compliance with the Policy pursuant to Section 27134. The results of the audit shall be reported to the Treasurer.

XIII. Reports
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A. Monthly: The Treasurer will perform a monthly review of the investment function. Following the commencement of investment transactions, the Treasurer shall submit a monthly report to the Finance Committee including all investment transactions, percentage of the investment portfolio represented by each investment type, and average investment portfolio credit quality.

B. Annually: The Treasurer will submit an annual report to the Finance Committee within 90 days of the end of a fiscal year providing the following:
• A list of individual securities by investment type, issuer, credit risk rating, CUSIP number, settlement date of purchase, date of maturity, par value and dollar amount invested on all securities, the market value and source of the market value information; • A statement that the investment portfolio is in compliance with this Policy and in accordance with Section 53646 or the manner in which the investment portfolio is not in compliance; and
• A statement of CPA’s ability to meet anticipated cash requirements for the upcoming 12 months.

XIV. Performance Evaluation
The deposits and investments portfolio shall be designed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account CPA’s risk constraints, the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments.

The Treasurer shall monitor and evaluate the investment portfolio’s performance relative to the chosen Market Benchmark(s), which will be included in the Treasurer’s monthly report.

Benchmarks may change over time based on changes in market conditions or cash flow requirements.

XV. Policy Administration and Limited Delegation for Amendments The Treasurer will review this Policy and associated procedures on an annual basis to determine whether they should be amended, supplemented, or updated to account for changing business conditions and/or regulatory requirements. The Executive Committee is authorized to approve changes to (a) Section IV provided that any additions to the authorized deposits are approved by California Government Code and (b) Reporting requirements under Section XII of this Policy following the review and recommendation for approval of the proposed changes by the Finance Committee.

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APPENDIX 1. GLOSSARY OF INVESTMENT TERMS
AGENCIES. Shorthand market terminology for any obligation issued by a government-sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are not guaranteed by the full faith and credit of the US government. Examples are:

FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds.

FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market. FHLB issues discount notes and bonds.

FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity in the housing market. FHLMC, also called “Freddie Mac” issues discount notes, bonds and mortgage pass-through securities.

FNMA. Like FHLB and Freddie Mac, the Federal National Mortgage Association was established to provide credit and liquidity in the housing market. FNMA, also known as “Fannie Mae,” issues discount notes, bonds and mortgage pass-through securities.

GNMA. The Government National Mortgage Association, known as “Ginnie Mae,” issues mortgage pass-through securities, which are guaranteed by the full faith and credit of the US Government.

PEFCO. The Private Export Funding Corporation assists exporters. Obligations of PEFCO are not guaranteed by the full faith and credit of the US government.

TVA. The Tennessee Valley Authority provides flood control and power and promotes development in portions of the Tennessee, Ohio, and Mississippi River valleys. TVA currently issues discount notes and bonds.

ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.

BANKER’S ACCEPTANCE. A money market instrument created to facilitate international trade transactions.

It is highly liquid and safe because the risk of the trade transaction is transferred to the bank which “accepts” the obligation to pay the investor.

BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy.

BID. The indicated price at which a buyer is willing to purchase a security or commodity.

BROKER. A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from their own position.

CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION (“DFPI”). The Department of Financial Protection and Innovation (DFPI) is a state agency that protects California consumers and oversees the operations of state-licensed financial institutions including banks, credit unions, debt collectors, non-bank mortgage lenders, student loan services, money transmitters, and others. The DFPI also licenses and regulates a variety of financial businesses including securities brokers and dealers, investment advisers, payday lenders, certain fiduciaries, and non-bank lenders.

CALLABLE. A callable security gives the issuer the option to call it from the investor prior to its maturity.

The main cause of a call is a decline in interest rates. If interest rates decline, the issuer will likely call its current securities and reissue them at a lower rate of interest.

CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate.

COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies.

COLLATERALIZED BANK DEPOSIT. A bank deposit that is collateralized at least 100% (principal plus interest to maturity). The deposit is collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMO). Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities.

COLLATERALIZED TIME DEPOSIT. Time deposits that are collateralized at least 100% (principal plus interest to maturity). These instruments are collateralized using assets set aside by the issuer such as Agenda Page 33
Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.

COMMERCIAL PAPER. The short-term unsecured debt of corporations.

COUPON. The rate of return at which interest is paid on a bond.

CREDIT RISK. The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer.

DEALER. A dealer acts as a principal in security transactions, selling securities from and buying securities for their own position.

DELIVERY VS. PAYMENT (DVP). A securities industry procedure whereby payment for a security must be made at the time the security is delivered to the purchaser’s agent.

DISCOUNT. The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker’s acceptances, are known as discount securities. They sell at a discount from par and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons, trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality.

DIVERSIFICATION. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk.

DURATION. The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a security to changes interest rates.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC). The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency insuring deposits in U.S. banks and thrifts in the event of bank failures. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices.

FEDERALLY INSURED TIME DEPOSIT. A time deposit is an interest-bearing bank deposit account that has a specified date of maturity, such as a certificate of deposit (CD). These deposits are limited to funds insured in accordance with FDIC insurance deposit limits.

FIDUCIARY. A person or organization that acts on behalf of another person(s) or organization that puts their clients’ interest ahead of their own as they are bound both legally and ethically to act in the best interests of their clients.

JOINT POWERS AUTHORITY (JPA). An entity created by two or more public agencies that share a common goal in order to jointly exercise powers common to all members through a joint powers agreement or contract.

LEVERAGE. Borrowing funds in order to invest in securities that have the potential to pay earnings at a rate higher than the cost of borrowing.

LIQUIDITY. The speed and ease with which an asset can be converted to cash.

LOCAL AGENCY INVESTMENT FUND (LAIF). A voluntary investment fund open to government entities and certain non-profit organizations in California that is managed by the State Treasurer’s Office.

LOCAL AGENCY SECURITY PROGRAM (LASP). The LASP administers California Government Code Section 53630 through 53686, and California Code of Regulations Section 16001.1.1 through 16010.1.3, governing the reporting and collateralization of California local agency deposits by insured depository institutions.

LOCAL GOVERNMENT INVESTMENT POOL. Investment pools that range from the State Treasurer’s Office Local Agency Investment Fund (LAIF) to county pools, to Joint Powers Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market mutual funds.

MAKE WHOLE CALL. A type of call provision on a bond that allows the issuer to pay off the remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump sum payment that equals the net present value (NPV) of future coupon payments that will not be paid because of the call. With this type of call, an investor is compensated, or "made whole." MARGIN. The difference between the market value of a security and the loan a broker makes using that security as collateral.

MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.

MARKET VALUE. The price at which a security can be traded.

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MATURITY. The final date upon which the principal of a security becomes due and payable. An investment’s term or remaining maturity is measured from the settlement date to final maturity.

MEDIUM-TERM NOTES. Unsecured, investment-grade senior debt securities of major corporations which are sold in relatively small amounts on either a continuous or an intermittent basis. MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences.

MODIFIED DURATION. The percent change in price for a 100-basis point change in yields. Modified duration is the best single measure of a portfolio’s or security’s exposure to market risk.

MONEY MARKET. The market in which short-term debt instruments (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded.

MONEY MARKET MUTUAL FUND. A mutual fund that invests exclusively in short-term securities. Examples of investments in money market funds are certificates of deposit and U.S. Treasury securities.

Money market funds attempt to keep their net asset values at $1 per share.

MORTGAGE PASS-THROUGH SECURITIES. A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security.

MUNICIPAL SECURITIES. Securities issued by state and local agencies to finance capital and operating expenses.

MUTUAL FUND. An entity which pools the funds of investors and invests those funds in a set of securities which is specifically defined in the fund’s prospectus. Mutual funds can be invested in various types of domestic and/or international stocks, bonds, and money market instruments, as set forth in the individual fund’s prospectus. For most large, institutional investors, the costs associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio.

NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO). A credit rating agency that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.

NEGOTIABLE CERTIFICATE OF DEPOSIT (CD). A short-term debt instrument that pays interest and is issued by a bank, savings or federal association, state or federal credit union, or state-licensed branch of a foreign bank. Negotiable CDs can be traded in a secondary market.

OFFER (ASK). An indicated price at which market participants are willing to sell a security. Also referred to as the “ask price”.

PAYDOWN. A reduction in the principal amount owed on a bond, loan, or other debt.

PLACEMENT SERVICE DEPOSITS. A private service that allows local agencies to invest in FDIC-insured deposits with one or more banks, savings and loans, and credit unions located in the United States. IntraFi (formerly known as CDARS) is an example of an entity that provides this service.

PREMIUM. The difference between the par value of a bond and the cost of the bond, when the cost is above par.

PRUDENT INVESTOR (PRUDENT PERSON) RULE. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as “Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes.”
REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse repurchase agreement.

SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the customer’s name.

SECURITIES AND EXCHANGE COMMISSION (SEC). The U.S. Securities and Exchange Commission (SEC) is an independent federal government agency responsible for protecting investors, maintaining fair and orderly functioning of securities markets and facilitating capital formation. It was created by Congress in 1934 as the first federal regulator of securities markets. The SEC promotes full public disclosure, protects investors against fraudulent and manipulative practices in the market, and monitors corporate takeover actions in the United States. SECURITIES AND EXCHANGE Agenda Page 35
COMMISSION (SEC) RULE 15C3-1. An SEC rule setting capital requirements for brokers and dealers. Under Rule 15c3-1, a broker or dealer must have sufficient liquidity in order to cover the most pressing obligations. This is defined as having a certain amount of liquidity as a percentage of the broker/dealer's total obligations. If the percentage falls below a certain point, the broker or dealer may not be allowed to take on new clients and may have restrictions placed on dealings with current client. STRUCTURED NOTE. Notes issued by Government Sponsored Enterprises (FHLB, FNMA, etc.) and Corporations, which have imbedded options (e.g., call features, step-up coupons, floating rate coupons, derivative-based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve.

SHORT-TERM INVESTMENT. Short‑term investments are financial assets held with the intent and ability to be converted to cash within one year, that are readily marketable, provide daily liquidity, and are managed to limit exposure to fluctuations in principal value to meet near‑term cash flow needs.

SUPRANATIONAL. A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries.

THIRD PARTY CUSTODIAN. An independent, third-party custodial safekeeping provider that has a fiduciary responsibility for safekeeping their client’s assets to minimize the risk of a fraudulent transaction.

TOTAL RATE OF RETURN. A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio.

U.S. TREASURY OBLIGATIONS. Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds.

TREASURY BILLS. All securities issued with initial maturities of one year or less are issued as discounted instruments and are called Treasury bills. The Treasury currently issues three-and six-month T-bills at regular weekly auctions. It also issues “cash management” bills as needed to smooth out cash flows.

TREASURY NOTES. All securities issued with initial maturities of two to ten years are called Treasury notes and pay interest semi-annually.

TREASURY BONDS. All securities issued with initial maturities greater than ten years are called Treasury bonds. Like Treasury notes, they pay interest semi-annually.

VOLATILITY. The rate at which security prices change with changes in general economic conditions or the general level of interest rates.

YIELD TO MATURITY. The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost.

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APPENDIX 2. SUMMARY OF RISK MANAGEMENT CRITERIA FOR ACCEPTABLE INVESTMENT TYPES Investment Type Maximum
Maturity
Maximum % of
Investment
Portfolio
Maximum Per
Issuer
Minimum
Credit Rating3
Local Government
Investment Pools N/A None None N/A
US Treasury Obligations 5 years None None None
Federal Agency Securities 5 years
20% (limit for
callable agency
securities)
30% None
Bankers’ Acceptances 180 days 40% 5% A-1 (short-term debt rating) A (long-term debt rating)
Negotiable Certificates of
Deposit 5 years 30% 5% A-1 (short-term debt rating)A (long-term debt rating) Mutual Funds and Money
Market Mutual Funds N/A 20%
10% (mutual funds)
20% (money market
mutual funds)
Highest possible
letter/numerical rating from
not less than 2 NRSROs
Municipal Securities 5 years 30% 5% A
Commercial Paper 397 days 25% 5% A-1
Repurchase Agreements 1 year None None None
Corporate Medium-Term
Notes 5 years 30% 5% A
Asset-Backed, Mortgage-Backed, Mortgage Pass-Through Securities, and Collateralized Mortgage
Obligations
5 years 20% 5% AA
3 Except where otherwise specified, this column refers to the minimum credit rating a security or issuer must have received from at least one nationally recognized statistical rating organization (“NRSRO”).

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Policy Title Investment Policy
Policy Number 2020-14 Effective Date Original: 03/05/2020 Amended: 02/01/2024
Amended:
05/14/2026
This Investment Policy (“Policy”) establishes guidelines for the management of cash, deposits, and investments (together, “Funds”) at Clean Power Alliance of Southern California (“CPA”)1.

II. Standard of Care
CPA will manage investments in accordance with the Prudent Investor Standard pursuant to California Government Code Section 53600.32:
“[G]overning bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling or managing public funds, a trustee shall act with care, skill, prudence and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.” III. Delegation of Authority
Pursuant to Section 53607, the Board of Directors hereby delegates responsibility to manage Funds to CPA’s Chief Financial Officer, acting as CPA’s Treasurer, or in lieu thereof, the Chief 1 Further definitions are available in Appendix 1.
2 All further statutory references are to the California Government Code unless otherwise stated.

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Executive Officer. The Treasurer is authorized to appoint an employee or another authorized individual as the Treasurer deems necessary for the prompt and faithful discharge of its duties pursuant to Section 53607.

1. Deposits at Bank(s): Funds may be invested in non-interest-bearing depository accounts to meet CPA’s operating and collateral needs and grant requirements.

Funds not needed for these purposes may be held in interest-bearing depository accounts. or Federal Deposit Insurance Corporation (“FDIC”) insured certificates of deposit with maturities not to exceed five (5) years. Banks eligible to receive deposits 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 Treasurer will monitor the credit quality of eligible banks holding CPA deposits that exceed FDIC insurance limits to ensure the safety of CPA deposits.

2.3. Non-Negotiable Certificates of Deposit: Funds may be invested in Non-Negotiable Certificates of Deposit pursuant to Sections 53635 and 53652.

V. Acceptable Investment Types
CPA seeks to restrict eligible investments permitted by Sections 53600 et seq to those securities listed below. In the event a discrepancy exists between this Policy and the California Government Code, the more restrictive parameters will take precedence.

A. The following types of investments are permitted consistent with Government Code Section 53601 and as described in Appendix 2:

2. US Treasury Obligations: Funds may be invested in United States Treasuries and other government obligations pursuant to Section 53601(b).

4. Bankers’ Acceptances: Funds may be invested in Banker’s Acceptances pursuant to Section 53601(g).

5. Negotiable Certificates of Deposit (“NCDs”): Funds may be invested in NCDs pursuant to Section 53601(i) and subject to Section 53601.8.

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9. Commercial Paper: Funds may be invested in Commercial Paper pursuant to Section 53601(h).

10. Repurchase Agreements: Funds may be invested in Repurchase Agreements pursuant to Section 56301(j).

11. Corporate Medium-Term Notes (MTNs): Funds may be invested in corporate MTNs pursuant to Section 53601(k).

7.12. Asset-Backed, Mortgage-Backed, Mortgage Pass-Through Securities, and Collateralized Mortgage Obligations: Funds may be invested in asset-backed securities, mortgage-backed securities, mortgage pass-through securities, and collateralized mortgage obligations from issuers not previously defined in this Policy pursuant to Section 53601(o).

VI. Prohibited Investment Types and Practices
A. The following investment types are prohibited:

B. The following investment practices are prohibited:

1. Trading securities for the sole purpose of speculating on the future direction of interest rates.

2. Purchasing or selling securities on margin.

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3. The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage.

4. The purchase of foreign currency denominated securities.The purchase of a security with a forward settlement date exceeding 45 days from the time of the investment.

VII. Risk ManagementInvestment Portfolio Management
The term to maturity of any Funds invested shall not exceed five (5) years pursuant to Section 53601. The Treasurer will allocate Funds among authorized investments consistent with the objectives and standards of care outlined in this Policy.

A. Mitigating Credit Risk in the Portfolio
Credit risk is the risk that a security or a portfolio will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. CPA will mitigate credit risk by adopting the following strategies:
 Implement the diversification requirements included in Section V and Appendix 2 of this Policy.
 No more than 5% of investments may be deposited with or invested in securities issued by any single issuer unless otherwise specified in this Policy.  Consider the sale of a security prior to its maturity and record a capital gain or loss in order to manage the quality, liquidity or yield of the investment portfolio in response to market conditions or CPA’s risk preferences.

B. Mitigating Market Risk in the Portfolio
Market risk is the risk that the portfolioa security’s value will fluctuate due to changes in the general level of interest rates. CPA will mitigate market risk by providing adequate liquidity for short-term cash needs, and by making longer-term investments only with Funds that are not needed for current cash flow purposes.

CPA further recognizes that certain types of securities, including variable rate securities, securities with principal paydowns prior to maturity, and securities with embedded options, will affect the market risk profile of the investment portfolio differently in different interest rate environments. CPA, therefore, adopts the following strategies to control and mitigate its exposure to market risk:
 The maximum stated final maturity of individual securities in the investment portfolio will be five (5) years, except as otherwise stated in Section 53600 et seq. or in this Policy.
 The duration of the investment portfolio will generally be approximately equal (+/- 20%) to the duration of the Market Benchmark, a readily-available index selected by the Treasurer based on CPA’s investment objectives, constraints and risk tolerances.

VII.VIII. Bids and Purchase of Securities
Prior to the purchase of an investment pursuant to this Policy the persons authorized to make investments shall assess the market and market prices using information obtained from available sources including investment services, broker or dealers, and the media. A competitive bid process, when practical, will be used to place all investment purchases and sales transactions. Any competitive bid process used pursuant to this Policy shall be exempt from CPA’s Non-Energy Contracting Policy.

VIII.IX. Brokers
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Broker/dealers shall be selected by the Chief Executive Officer upon recommendation by the Treasurer. Selection of broker/dealers shall be based upon the following criteria: the reputation and financial strength of the company or financial institution, the reputation and expertise of the individuals employed, and pursuant to the requirements of Section 53601.5. The Chief Executive Officer shall require any selected broker, brokerage firm, dealer, or securities firm to affirm that it has not, within any 48-consecutive month period, made a political contribution to any member of the CPA Board, or any candidate who may join the CPA Board in an amount exceeding the limitations contained in Rule G-37 of the Municipal Securities Rulemaking Board, the Political Reform Act, including section 84308, or any applicable CPA Policy, as amended from time to time. The selected broker or dealers shall be provided with and acknowledge receipt of this Policy, the Vendor Communication Policy, and the Campaign Contribution Disclosure Form.

IX. Losses
Losses are acceptable on a sale before maturity and may be taken if required to meet the liquidity needs of CPA or if the reinvestment proceeds will earn an income flow with a present value higher than the present value of the income flow that would have been generated by the original investment, considering any investment loss or foregoing interest on the original investment.

X. Delivery, and Safekeeping, and Custody
The delivery and safekeeping of all securities shall be made through a third-party custodian when practical and cost effective as determined by the Treasurer and in accordance with Section 53608.

All investment transactions shall be conducted on a delivery-versus-payment (“DVP”) basis. To protect against potential losses due to failure of individual securities dealers, and to enhance access to securities, interest payments and maturity proceeds, all cash and securities in the investment portfolio, with the exceptions noted below, shall be held in safekeeping in CPA’s name by a third party custodian, acting as agent for CPA under the terms of a custody agreement executed by the custodian and CPA. All investment transactions will require a safekeeping receipt or acknowledgment generated from the trade. A monthly report will be received by CPA from the custodian listing all securities held in safekeeping with current market data and other information.

The Treasurer shall review all transaction confirmations for conformity with the original transaction.

XI. Conflict of Interest
CPA staff shall comply with state law and applicable CPA policies regarding conflicts of interest.

All participants in the investment process shall act as custodians of the public trust. Investment officials shall recognize that the Fundsortfolio areis subject to public review and evaluation.

Thus, employees and officials involved in the investment process shall refrain from personal business activity that could create a conflict of interest or the appearance of a conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions.

Employees involved in the investment process and investment officials shall disclose to the Agenda Page 42
Treasurer any material interests in financial institutions with which they conduct business, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the investmentsortfolio. Employees and officers shall refrain from undertaking any personal investment transactions with the same individual with whom business is conducted on behalf of CPA.

XII.XIII. Reports
A. Monthly: The Treasurer will perform a monthly review of the investment function. Following the commencement of investment transactions, the Treasurer shall submit a monthly report to the Finance Committee including all investment transactions, percentage of the investment portfolio represented by each investment type, and average investment portfolio credit quality to the Finance Committee. Investment transactions are defined as the purchase, sale or exchange of securities.

B. Annually: The Treasurer will submit an annual report to the Finance Committee within 690 days of the end of a fiscal year providing the following:
i. A list of individual securities by investment type, issuer, credit risk rating, CUSIP number, settlement date of purchase, date of maturity, par value and dollar amount invested on all securities, the market value and source of the market value information;
ii. A statement that the investment portfolio is in compliance with this Policy and in accordance with Section 53646 or the manner in which the investment portfolio is not in compliance; and
iii. A statement of CPA’s ability to meet anticipated cash requirements for the upcoming 12 months.

The Treasurer shall monitor and evaluate the investment pPortfolio’s performance relative to the chosen Market Benchmark(s), which will be included in the Treasurer’s monthly report.

Benchmarks may change over time based on changes in market conditions or cash flow requirements.

XV. Policy Administration and Limited Delegation for AmendmentsAnnual Review Agenda Page 43
The Treasurer will review this Policy and associated procedures on an annual basis to determine whether they should be amended, supplemented, or updated to account for changing business conditions and/or regulatory requirements. The Executive Committee is authorized to approve changes to (a) Section IV provided that any additions to the authorized deposits are authorized by the California Government Code and (b) Reporting requirements under Section XIII of this Policy following the review and recommendation for approval of the proposed changes by the Finance Committee. Except as provided herein, all other changes or amendments to this Policy shall be brought to and approved by the Board of Directors.

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APPENDIX 1. GLOSSARY OF INVESTMENT TERMS
AGENCIES. Shorthand market terminology for any obligation issued by a government-sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are not guaranteed by the full faith and credit of the US government. Examples are:

FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds.

FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market. FHLB issues discount notes and bonds.

GNMA. The Government National Mortgage Association, known as “Ginnie Mae,” issues mortgage pass-through securities, which are guaranteed by the full faith and credit of the US Government.

PEFCO. The Private Export Funding Corporation assists exporters. Obligations of PEFCO are not guaranteed by the full faith and credit of the US government.

ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.

BANKER’S ACCEPTANCE. A money market instrument created to facilitate international trade transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to the bank which “accepts” the obligation to pay the investor.

BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy.

BID. The indicated price at which a buyer is willing to purchase a security or commodity.

BROKER. A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from their own position.

CALLABLE. A callable security gives the issuer the option to call it from the investor prior to its maturity.

The main cause of a call is a decline in interest rates. If interest rates decline, the issuer will likely call its current securities and reissue them at a lower rate of interest.

CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate.

COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies.

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COLLATERALIZED TIME DEPOSIT. Time deposits that are collateralized at least 100% (principal plus interest to maturity). These instruments are collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.