Agenda packet — Clean Power Alliance Board of Directors, May 14, 2026

Board of Directors of the
Clean Power Alliance of Southern California
Regular Meeting
Thursday, May 14, 2026
2:00 p.m.

Visit CPA’s YouTube Channel to view a Live Stream of the Meeting www.youtube.com/@CPApublicmeetings
*There may be a streaming delay of up to 90 seconds. This is a view-only live stream.

Clean Power Alliance
Diana Mahmud Board 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
Closed Session Room
100 Civic Center Way
Calabasas, CA 91301
Ventura County Government Center
Rincon Meeting Room
Hall of Administration
800 South Victoria Avenue
Ventura, CA 93009
Whittier City Hall
Admin Conference Room
13230 Penn Street
Whittier, CA 90602
South Bay Cities Council of Governments
Conference Room
357 Van Ness Way, Suite 90
Torrance, CA 90501
Beverly Hills City Hall
Conference Room 4A
455 North Rexford Drive
Beverly Hills, CA 90210
CalCCA Annual Conference
SAFE Credit Union Convention Center
Meeting Room 5B
1400 J St, Sacramento, CA 95814
California Contract Cities Association Annual
Conference
Renaissance Esmeralda Resort & Spa
Toulon Conference Room
44400 Indian Wells Ln,
Indian Wells, CA 92210
Santa Paula City Hall
Councilmember Office
970 East Ventura Street
Santa Paula, CA 93060
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 Board on any Clean Power Alliance-related matters not on today’s Agenda Page 1
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 Board at CPA’s Office are requested to complete a comment card and provide it to staff. If you are attending from a remote location, please identify yourself to a CPA representative when your item is called.

Each speaker is limited to two (2) minutes (in whole-minute increments) per agenda item with a cumulative total of five 5 minutes to be allocated between the General Public Comment, the entire Consent Agenda, or individual items in the Regular Agenda. Please refer to Policy No. 8 – Public Comment for additional information.

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ACCESSIBILITY: Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least two (2) working days before the meeting at [email protected] or (213) 713- 5995. Notification in advance of the meeting, while not required, will enable us to make reasonable arrangements to ensure accessibility to this meeting and the materials related to it.

CALL TO ORDER AND PLEDGE OF ALLEGIANCE

ROLL CALL

GENERAL PUBLIC COMMENT

CONSENT AGENDA

1. Approve Minutes from the April 2, 2026, Board of Directors Meeting

2. Re-appoint 12 Community Advisory Committee Members for the May 2026 – April 2028 Term

3. Adopt Resolution No. 26-05-106 Approving Amendments to CPA’s Investment Policy No. 2020-14

4. Approve and Authorize the Chief Executive Officer to Execute an Amendment to the Professional Services Agreement with CLEAResult Consulting, Inc. to Modify the Instant AC Savings Program Scope, with No Change to the PSA Term or Not-To-Exceed Budget of $2,310,703

5. Receive and File Monthly Bill Positions Report

6. Receive and File Monthly Community Advisory Committee Report Agenda Page 2

REGULAR AGENDA
Action Item

7. Approve a Rate Setting Approach for FY 2026/27:

A. Select an Option That Reflects CPA’s Projected Cost of Service (COS) and Establishes Total Bill Comparison Targets for Residential and Small Business Rates Using Southern California Edison’s (SCE) June 1, 2026, Rates:

I. Option 1 – “Clean-Up”, with a Reserve Percentage Target of 58-65%:

Target 100% Green Power Rates to Provide a 7.5% Premium, Clean Power a 1% Premium, and Lean Power a 1% Discount;
II. Option 2 (Recommended by Executive Committee) – “Historical” Total Bill Comparisons, with a Reserve Percentage Target of 56-63%: Target 100% Green Power Rates to Provide a 7% Premium, Clean Power a 0% Discount and, Lean Power a 2% Discount;
III. Option 3 – Low Reserve Buffer, with a Reserve Percentage Target of 53- 60%: Target 100% Green Power Rates to Provide a 6% Premium, Clean Power a 1% Discount and, Lean Power a 3% Discount;
B. Update Rates for Large Commercial, Industrial, Pumping and Agriculture, and Streetlighting Rate Classes Based on CPA’s Projected COS and the Selected Rate Approach Option
Information Item

8. Receive Presentation Fiscal Years 2026-27 and 2027-28 Budget Priorities Election Item

9. Open Nomination Period for Executive Committee At-Large Positions for the July 2026 – June 2028 Term

COMMITTEE CHAIR UPDATES
Director Cedric Hicks, Chair, Legislative & Regulatory Committee Director Susan Santangelo, Chair, Finance Committee
Director Robert Parkhurst, Chair, Energy Planning & Resources Committee

MANAGEMENT REPORT

BOARD MEMBER COMMENTS

REPORT FROM THE CHAIR
ADJOURN – NEXT REGULAR MEETING JUNE 4, 2026
Public Records: Public records that relate to any item on the open session agenda for a regular Board 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 Board. 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 3
Commonly Used Acronyms
BESS Battery Energy Storage System
CAC Community Advisory Committee
CAISO California Independent System Operator
CALCCA California Community Choice Association
CalEVIP California Electric Vehicle Incentive Program
CARB California Air Resources Board
CARE California Alternate Rates for Energy (Low Income Discount Rate) CCA Community Choice Aggregation
CEC California Energy Commission
CPUC California Public Utilities Commission
DA Direct Access (Private Retail Energy Supplier)
DAC Disadvantaged Community (As Defined by Calenviroscreen 3.0) DER Distributed Energy Resources
DR Demand Response
ERMP Energy Risk Management Policy
ERRA Energy Resource Recovery Account (SCE Generation Rate Setting)
ESA Energy Storage Agreement
EVSE Electric Vehicle Supply Equipment (EV Charger)
FERA Family Electric Rate Assistance (Low Income Discount Rate) GHG Greenhouse Gas
IOU Investor Owned Utility
IRP Integrated Resource Plan
JPA Joint Powers Authority
Agenda Page 4
Commonly Used Acronyms
Kwh Kilowatt-Hour (A Measure of Energy Used in A One-Hour Period) Kw Kilowatt = 1,000 Watts (Watt = A Measure of Instantaneous Power) LSE Load Serving Entity
MB Medical Baseline (Discount Rate for Medical Equipment Needs) MW Megawatt = 1,000 Kilowatts
Mwh Megawatt-Hour = 1,000 Kilowatt-Hours
NEM Net Energy Metering (Usually for Customers with Solar) OAT Other Applicable Tariffs
PCIA Power Charge Indifference Adjustment (Can Be Called “Exit Fee”) PCC1 Renewable Energy Generated Inside California
PCC2 Renewable Energy Generated Outside California
PCC3 A REC from A Renewable Resource, Delivered Without Energy PCL Power Content Label
POU Publicly Owned or Municipal Utility
PPA Power Purchase Agreement
PSPS Public Safety Power Shutoff
PV Photovoltaic (Solar) Panels
RA Resource Adequacy
REC Renewable Energy Credit
RPS Renewables Portfolio Standard
T&D Transmission and Distribution
TOU Time Of Use (Used to Refer to Rates that Differ by Time Of Day) WECC Western Electricity Coordinating Council
Agenda Page 5
Staff Report – Agenda Item 1
To: Board of Directors
Subject: Approve Minutes from the April 2, 2026, Board of Directors Meeting Date: May 14, 2026

RECOMMENDATION
Approve.

ATTACHMENT

1. Minutes
Agenda Page 6
Board of Directors Item 1

MINUTES
Board of Directors of the
Clean Power Alliance of Southern California
Regular Meeting
Thursday, April 2, 2026, 2:00 p.m.

Meeting videos are available on CPA's YouTube Channel.
http://www.youtube.com/@CPApublicmeetings
Board members participated from the following locations:

Calabasas City Hall
Closed Session Room
100 Civic Center Way
Calabasas, CA 91301
Clean Power Alliance
Diana Mahmud Board Room
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
South Bay Cities Council of Governments
Conference Room
357 Van Ness Way, Suite 90
Torrance, CA 90501
Ventura County Government Center
CEO Point Mugu Room, Hall of Administration
800 South Victoria Avenue
Ventura, CA 93009
Beverly Hills City Hall
Conference Room 4A
455 North Rexford Drive
Beverly Hills, CA 90210
Whittier City Hall
Admin Conference Room
13230 Penn Street
Whittier, CA 90602

CALL TO ORDER & PLEDGE OF ALLEGIANCE
Chair Klein Lopez called the meeting to order at 2:01 p.m. and Director Calaycay led the Pledge of Allegiance.

ROLL CALL
Gabriela Monzon, Clerk of the Board, conducted roll call.

Roll Call
1 Agoura Hills Deborah Klein Lopez Chair Present
2 Alhambra Jeff Maloney Director Present
3 Arcadia Paul Cheng Director Remote
4 Beverly Hills Craig Corman Director Remote
5 Calabasas Ed Albrecht Director Remote
6 Camarillo Susan Santangelo Director Remote
7 Carson Cedric Hicks Director Remote
8 Claremont Corey Calaycay Director Present
9 Culver City Yasmine-Imani McMorrin Director Present
10 Downey Mario Trujillo Director Remote
Agenda Page 7
Board of Directors Item 1
11 Hawaiian Gardens Ramie L. Torres Alternate Remote
12 Hawthorne Alex Monteiro Director Remote
13 Hermosa Beach Doug Krauss Alternate Remote
14 La Cañada Flintridge Stephanie Fossan Director Present 15 Los Angeles County Lindsey Horvath Vice Chair Present 16 Lynwood Juan Muñoz-Guevara Director Present
17 Malibu Absent
18 Manhattan Beach David Lesser Director Remote
19 Monrovia Edward Belden Director Remote
20 Moorpark Chris Barrett Director Remote
21 Ojai Michelle Ellison Alternate Remote
22 Oxnard Bert Perello Director Remote
23 Paramount Michelle Muller Alternate Remote
24 Port Hueneme Laura Hernandez Director Remote
25 Redondo Beach Brad Waller Director Present
26 Rolling Hills Estates Debby Stegura Director Remote
27 Santa Monica Gleam Davis Alternate Present
28 Santa Paula Absent
29 Sierra Madre Robert Parkhurst Director Present
30 Simi Valley Rocky Rhodes Director Remote
31 South Pasadena Casey Law Alternate Present
32 Temple City Ed Chen Director Present
33 Thousand Oaks David Newman Director Remote
34 City of Ventura Ryyn Schumacher Director Remote
35 Ventura County Vianey Lopez Vice Chair Remote
36 West Hollywood Chelsea Byers Alternate Remote
37 Westlake Village Kristopher Galvez Alternate Remote
38 Whittier Yahaera Oropeza Alternate Remote
All votes are unanimous unless otherwise stated.

Agenda Page 8
Board of Directors Item 1

GENERAL PUBLIC COMMENT
None.

CONSENT AGENDA

1. Approve Minutes from March 5, 2026, Board of Directors Meeting

2. Approve CPA’s Portion of the CalCCA Special Assessment for SCE’s 2024, 2025, and 2026 Energy Resource Recovery Account (ERRA) Review and 2027 and 2028 ERRA Forecast Applications for a Total Not-to-Exceed (NTE) Amount of $574,860, which includes a NTE Amount of $330,000 for Keyes & Fox, and a NTE Amount of $244,860 for NewGen Strategies, LLC for Services Performed from April 3, 2026 to December 31, 2027

3. Receive and File Monthly Bill Positions Report

4. Receive and File Monthly Community Advisory Committee Report Motion: Director Parkhurst, Sierra Madre
Second: Director Davis, Santa Monica
Vote: The consent agenda was approved by roll call vote.

REGULAR AGENDA

5. Elect a Board Chair to Serve a Term from July 2026 to June 2028 Chair Klein Lopez introduced the item, stating that Director Robert Parkhurst from Sierra Madre was the only candidate nominated for the Board Chair position.

Director Parkhurst thanked his colleagues for their confidence in him, expressing his desire to follow the example of previous CPA Board Chairs.

Director Parkhurst was unanimously elected as Chair for a two-year term running July 2026 through June 2028.

6. Direct Staff to (A) Proceed with Activities Necessary to Operationalize CPA’s Ownership of Assets and Delivery Approach for Power Ready Round 2 and (B) Return to the Board for Approval of the Potential Sites, the Proposed Budget, and Other Actions Necessary to Effectuate the Launch of the Procurement of Services Matt Langer, Chief Operating Officer, provided background on the Power Ready program and an update on Round 1 portfolio progress. Interest from the Board in transmission ownership and challenges with the implementation of the current PPA model led staff to develop an ownership model focusing on Round 2. CPA has screened 132-member agency and community sites, out of which 24 agency sites have been assessed for technical feasibility. CPA is working with member agencies to finalize site designs and confirm interest in moving forward.

Mr. Langer described the challenges in the current PPA model and the opportunities available through system ownership. Staff identified a Design-Build process utilizing a Build-Transfer Agreement (BTA). Design-Build is a project delivery method that utilizes one Engineering, Procurement, and Construction (EPC) contractor to provide both the engineering (design) and construction (build) functions supported by an Owner's Representative to provide project development and oversight. CPA will use a best-value approach for selection, including experience, safety, and quality. Other CCAs are already utilizing a similar project delivery method to develop their projects. Staff consulted with industry experts and technical consultants to better understand potential risks and believes that the risks are manageable for CPA given the planned mitigations and the scale of the Agenda Page 9
Board of Directors Item 1
program. Mr. Langer outlined each party’s role in the process and noted that estimated costs are $13,200,000 for a hypothetical portfolio of project, which would be updated after project selection. CPA would not utilize debt financing, and a new CPA project manager position is already included in this year’s staffing budget. Mr.

Langer concluded with an overview of next steps and a timeline.

In response to Chair Klein Lopez’s question, staff explained that after 20 years, the asset may be decommissioned or, if still viable, sold to the Site Host after appraisal.

Director Law asked if staff has considered options in the event an EPC or O&M contractor lacks experience with long-term maintenance; staff noted that they may consider combining solicitations to secure a contractor capable of both the EPC and O&M services, or an O&M provider prior to construction completion. Staff also clarified for Director Newman that the EPC contractor owns the asset during construction and after completion, CPA would own the solar panels, batteries, equipment and other operational components, but not the building nor the land.

Director Lesser asked about equipment failure before the 20-year term expiration, and Mr. Langer noted that staff plans to select suppliers with long operating histories to ensure equipment warranties are honored. Otherwise, CPA may need to assume the risk of equipment failure.

Director Albrecht asked about preferred sites in Southern California and the feasibility of purchasing real estate. Mr. Langer explained that in Round 2, sites from non-profit locations and buildings owned by special districts were included.

The goal was to boost resiliency by utilizing structures that already serve a community purpose. However, land ownership may be a consideration in Round 3 or beyond.

Motion: Vice Chair Horvath, Los Angeles County
Second: Director Waller, Redondo Beach
Vote: Item 6 was approved by a roll call vote.

7. Direct Staff to Prepare and Present to the Board for Approval: (A) Annual Budgets for Both Fiscal Years 2026-27 and 2027-28; and, (B) A Budget Policy that includes Controls for Transfers and Reporting as Described in the Item Jennifer Stevenson, Financial Planning and Analysis Manager, explained that CPA's business has matured with increasingly predictable multi-year expense planning and staff is recommending the annual budget structure change to a budget cycle where two consecutive fiscal year budgets are approved. The new structure would improve operational flexibility as projects are increasingly spanning multiple fiscal years, and business decisions can be constrained by line-item allocations. If a two fiscal year budget cycle is adopted, the Board would be able to approve two consecutive fiscal year budgets simultaneously, and in the second year of the budget cycle, the Board would review a budget amendment to update revenue, cost of energy, and contribution to the net position. Ms. Stevenson explained control and reporting mechanisms.

Director Santangelo, Finance Committee Chair, reported that the committee discussed the proposed budget structure, focusing on controls and accountability, and unanimously supported the proposal. Director Muñoz-Guevara expressed support for the new process and asked about Board reporting in the short-term.

Ms. Stevenson stated that the Finance Committee would receive a year-end report Agenda Page 10
Board of Directors Item 1
and the Board would receive a presentation after the first year’s books were closed to allow for review of spending. Chair Klein Lopez remarked that her city uses a two-year budget cycle and the system works well as it allows for adjustments related to unpredictable circumstances.

Motion: Director Calaycay, Claremont
Second: Director Muñoz-Guevara, Lynwood
Vote: Item 7 was approved by a roll call vote.

8. Receive Presentation on FY 2026-27 Rates Outlook
Ted Bardacke, Chief Executive Officer, stated that rate options for the new fiscal year will reflect the impacts of a cost environment that may widen the price spreads between CPA’s energy products. Reserves may end up ahead of budget and in exceedance of the Board’s 50% maximum reserve target, affording CPA the ability to incur a loss in FY 2026-2027 if needed to reduce rates while still maintaining reserves at or above the maximum target. Losses would be offset by a transfer from the Fiscal Stabilization Fund (FSF). As for competitiveness with SCE, current total bill comparisons are near historic norms, but falling renewable energy and RA prices may continue to drive PCIA rates up and SCE generation rates down, which may lead to higher customer bills and a worsening of CPA’s competitive position in the beginning of 2027, similar to January 2026.

Mr. Bardacke discussed Board direction from the 2025 Board Retreat regarding product content strategy, including keeping Lean Power the least cost option for customers and providing staff flexibility to choose best annual mix of renewable and carbon-free (CF) energy in the Clean Power product, with the continual goal to exceed SCE’s base product on environmental performance with lower greenhouse gas emissions. CPA’s product content targets for 2026-2027 are similar to 2025. Mr. Bardacke reviewed product price differentials among each of CPA’s rate products, based on cost-of-service calculations and highly dependent on renewable energy and brown power prices. Staff is still evaluating the new fiscal year’s product differentials and will reflect them in the proposed rate options.

In response to Director Monteiro’s suggestion that CPA could provide a one-time credit on customers’ electricity bills due to PCIA volatility, Mr. Bardacke responded that a one-time credit may make sense if reserves hit 60% and CPA has excess funds. Staff may present a ‘do-nothing’ option if the PCIA worst-case scenario does not materialize. Director Parkhurst inquired about the recent rate adjustments, and Mr. Bardacke stated that two interim rate adjustments addressed increases in the PCIA and decreases in SCE rates, whereas a third instance was during the gas price shock of late 2022. Staff is running different forecasts and scenarios for PCIA changes; currently there are indications it may increase or decrease by two cents, both of which would be significant, with the actual figure known by the end of December. Mr. Bardacke referenced an open CPUC proceeding that may favor CPA customers and mentioned legislation by CalCCA that will make available underlying data used by SCE to calculate the PCIA.

Chair Klein Lopez asked when the PCIA will no longer influence CPA electricity rates and Mr. Bardacke stated the timeframe is the late 2030s. Director Lesser asked about speeding up that timeframe, and staff noted that the CPUC will conduct a comprehensive review the PCIA in the next three years, potentially Agenda Page 11
Board of Directors Item 1
providing an opportunity for CCAs to buy-out old expensive energy contracts that the IOUs are committed to. Issuing bonds may be a way to raise funds for such a purchase, which would come with risks.

COMMITTEE CHAIR UPDATES
Director Hicks, Legislative & Regulatory Committee Chair, provided a report on Lobby Day. Assembly Member Jacqui Irwin has taken over as author of AB 2396, which would authorize CCAs to develop, finance, and operate eligible transmission projects. Mr.

Bardacke added that such projects would help CPA lower costs for all ratepayers through public financing; he and David McNeil, Chief Financial Officer, will be expert witnesses at an upcoming hearing of the Assembly’s Utilities and Energy Committee. Director Hicks encouraged other directors to participate in future Lobby Day events and thanked those who participated this year.

MANAGEMENT REPORT
Mr. Bardacke discussed an upcoming ribbon-cutting event in Carson celebrating completion of a Power Share project; reviewed important dates for the Board and reported that $50 million from the Rebuilding Incentives for Sustainable Electric Homes program will be available to CPA customers. He thanked Vice Chair Horvath and her colleague, Los Angeles County Supervisor Kathryn Barger, and their staffs, for helping release the funds that support wildfire survivors in rebuilding all-electric homes.

Director Waller suggested that participation reporting include reference to the last 6 or 12 months of participation rates for comparison and identifying trends. Director Perello thanked CPA staff for unlocking the RISE money and making it available to people rebuilding their homes after wildfires.

BOARD MEMBER COMMENTS
None.

REPORT FROM THE CHAIR
None.

ADJOURN
Chair Klein Lopez adjourned the meeting at 3:41 p.m.

Agenda Page 12
Staff Report – Agenda Item 2
To: Board of Directors
From: Christian Cruz, Senior Community Outreach Manager Reviewed by: Gina Goodhill, Senior Director, Government Affairs Francis Choi, Assistant General Counsel

Approved by: Ted Bardacke, Chief Executive Officer
Subject: Re-Appointment of Community Advisory Committee Members for the 2026-2028 Two-Year Term
Date: May 14, 2026

RECOMMENDATION
Re-appoint 12 Community Advisory Committee (CAC) Members for the May 2026 – April 2028 term.

BACKGROUND
On June 7, 2018, the Board of Directors approved a structure for the CAC to provide input on various policy and planning issues and be a voice for CPA in the community. As per the CPA Bylaws (Article 8, Section 5), the two-year term of service for current CAC members expired at the end of April.1

RECOMMENDED CAC RE-APPOINTMENTS
In March, staff contacted all current CAC members to inform them of upcoming term expirations and to inquire whether they wished to be considered for re-appointment. All fourteen members responded, with twelve requesting re-appointment. Two representatives -- one from the Gateway Cities region and one from the East Ventura/West L.A. County region – are unable to continue their service on the CAC and indicated they will not seek re-appointment.
1 The term of service of each CAC member will be two years commencing at the Board Meeting in May and expiring in April two years later. There shall be no limit to the number of terms a CAC member may serve.

Agenda Page 13
Board of Directors Item 2
Staff will begin soliciting interest from prospective candidates to fill the two vacated CAC seats in the Gateway Cities and East Ventura/West L.A. County regions. In addition, staff is currently soliciting interest for a San Gabriel Valley seat, which was vacated in February.

ATTACHMENT

1. Recommended CAC Re-Appointments
Agenda Page 14
Board of Directors Item 2

RECOMMENDED CAC RE-APPOINTMENTS
East Ventura/West LA County
(Agoura Hills, Camarillo, Calabasas, Moorpark,
Simi Valley, Thousand Oaks, and Westlake
Village)
Proposed re-appointments:
• Angus Simmons
• Kat Selm
(1 vacant seat)
San Gabriel Valley
(Alhambra, Arcadia, Claremont, La Cañada
Flintridge, Monrovia, Sierra Madre, South
Pasadena, Temple City)
Proposed re-appointment:
• Hamarz Aryafar
(1 vacant seat)
West/Unincorporated Ventura County
(Ojai, Oxnard, Port Hueneme, Santa Paula,
Ventura, Unincorporated Ventura County)
Proposed re-appointments:
• Kent Bullard
• Daniel Mora
South Bay
(Carson, Hawthorne, Hermosa Beach, Manhattan
Beach, Redondo Beach, Rolling Hills Estates)
Proposed re-appointments:
• Cort Cassady
• Diane Wallace
Gateway Cities
(Downey, Hawaiian Gardens, Lynwood,
Paramount, Whittier)
Proposed re-appointment:
• Genaro Bugarin
(1 vacant seat)
Westside
(Beverly Hills, Culver City, Malibu, Santa Monica,
West Hollywood)
Proposed re-appointments:
• Cris Gutierrez
• David Haake
Unincorporated LA County
Proposed re-appointments:
• Neil Fromer
• Margaret Fuentes
Agenda Page 15
Staff Report – Agenda Item 3
To: Board of Directors
From: Kate Freeman, Senior Manager, Strategic Finance
Ammad Mansoor, Analyst, Strategic Finance
Reviewed by: David McNeil, Chief Financial Officer
Nancy Whang, General Counsel
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Adopt Resolution No. 26-05-106 Approving Amendments to CPA’s Investment Policy
Date: May 14, 2026

RECOMMENDATION
Adopt Resolution No. 26-05-106 approving amendments to CPA’s Investment Policy as contained in Exhibit A attached hereto.

SUMMARY OF PROPOSED AMENDMENTS
CPA staff, with support from investment advisory and portfolio management consultant Chandler Asset Management (“Chandler”), recommend amendments to CPA’s Investment Policy (“Policy”) consistent with California Government Code. The proposed amendments:
• Expand Acceptable Deposit and Investment Types
• Provide greater specificity on Prohibited Investment Types and Practices • Enhance risk mitigation practices to manage both credit and market risks • Establish a methodology for evaluating the performance of CPA’s investment portfolio
• Delegate authority to the Executive Committee to amend the Policy under certain limited conditions
Agenda Page 16
Board of Directors Item 3
• Incorporate other administrative or clarifying amendments The amendments would permit CPA to increase expected investment returns while maintaining CPA’s primary objectives of safeguarding the principal of its funds and meeting its liquidity needs.

BACKGROUND
In March 2020, the Board approved the 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
In March 2024, the Board approved an amendment to the Policy to add the California Asset Management Program (“CAMP”) as an acceptable investment type.

In February 2026, CPA engaged Chandler to provide investment advisory and portfolio management services. Chandler is a SEC-registered Investment Adviser with approximately $45 billion in assets under management that currently serves dozens of California-based public agencies, including CPA member agencies and CCAs such Marin Clean Energy, Peninsula Clean Energy, San Diego Community Power, and Sonoma Clean Power. Chandler is a fiduciary of CPA and will be granted discretion to manage a portfolio of CPA Funds consistent with the Policy.

Staff presented the proposed amendments to the Investment Policy to the Finance Committee at its April 22nd, 2026, meeting at which time the Finance Committee unanimously recommended Board approval of the proposed amendments.

Agenda Page 17
Board of Directors Item 3

DISCUSSION OF PROPOSED AMENDMENTS
Expand Acceptable Deposit and Investment Types
Proposed amendments would broaden the range of acceptable deposit and investment types to include additional deposit and investment types allowed under California Government Code and authorized under other CCA investment policies. These additional deposit and investment types include:
• Non-Negotiable Certificates of Deposits
• Mutual Funds and Money Market Mutual Funds
• Municipal Securities within the State of California
• Municipal Securities of any of the other 49 states
• Commercial Paper
• Repurchase Agreements
• Corporate Medium-Term Notes (“MTNs”)
• Asset-Backed, Mortgage-Backed, Mortgage Pass-Through Securities, and Collateralized Mortgage Obligations
Enhance Risk Mitigation Practices
Proposed amendments to the Policy specify risk mitigation practices to manage both credit and market risks within CPA’s investment portfolio.

Credit risk is mitigated by establishing credit quality minimums and concentration limits for each investment type. Concentration limits refer to the maximum percentage of CPA investments that may be held in a single investment type and/or with a single issuer of investment securities.

Market risk is mitigated by creating a maximum term to maturity for each investment type and ensuring:
• CPA maintains adequate levels of deposits and short-term investments to meet liquidity needs before investing in longer-term securities. • The duration of CPA’s investment portfolio remains approximately equal to (+/- 20%) to the duration of a Market Benchmark, a readily-available index selected by Agenda Page 18
Board of Directors Item 3
the Treasurer1 based on CPA’s investment objectives, constraints and risk tolerances. Duration measures the price sensitivity of a security or a portfolio to changes in interest rates. This criterion ensures that CPA’s investment portfolio will be structured and managed such that its sensitivity to interest rate changes is broadly aligned with that of the Market Benchmark.

The risk management criteria for investments are summarized in Appendix 2 of the proposed Policy amendments (see below).

Figure 1 - Summary of Risk Management Criteria for Acceptable Investment Types 3Except 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”) Establish Methodology for Evaluating Portfolio Performance Monthly reporting will compare the investment portfolio’s performance relative to an appropriate Market Benchmark selected by the Treasurer.

Limited Delegation of Authority to the Executive Committee The current Policy permits the Executive Committee to amend the Policy following review and recommendation of the Finance Committee. Given the increased complexity of investment activity allowed under the proposed amendments to the Policy, the delegation of authority to Executive Committee and Finance Committee to approve amendments to 1 CPA’s Chief Financial Officer serves as the organization’s Treasurer.

Agenda Page 19
Board of Directors Item 3
the Policy would be revised to limit those delegated changes to acceptable deposit types and reporting requirements. This would allow swift action if necessary during an unforeseen financial event and adjust reporting protocols with minimal administrative burden. All other Policy amendments must be approved by the Board.

Additional Amendments
Additional amendments include expanded detail on the following:
• Prohibited Investment Types and Practices
• The use of third-party custodian(s) to hold cash and securities in CPA’s name • Conflicts of interest provisions governing the actions of CPA staff and investment officials involved in the investment process
• Internal controls and audits used to ensure that the assets of CPA are protected from loss, theft or misuse
• The addition of a glossary of investment terms)
• The addition of a table summarizing applicable risk management criteria for acceptable investment types. Other administrative and clarifying edits

ATTACHMENTS

1. Resolution No. 26-05-106 with amended Investment Policy (clean) attached as Exhibit A.

2. Amended Investment Policy (simplified redline) highlighting material changes compared to the current Investment Policy.

Agenda Page 20
RESO NO. 26-05-106

Page 1 of 16 ends

RESOLUTION NO. 26-05-106

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

TO AMEND THE INVESTMENT POLICY

THE BOARD OF DIRECTORS OF THE CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA DOES HEREBY FIND, RESOLVE, AND ORDER AS FOLLOWS:

WHEREAS, the Clean Power Alliance of Southern California (formerly known as Los Angeles Community Choice Energy Authority) (“Clean Power Alliance” or “CPA”) was formed on June 27, 2017; and
WHEREAS in March 2020, the Board of Directors (the “Board”) adopted Investment Policy 2020-14 (“Investment Policy”) to establish guidelines for the management of cash, deposits, and investments; and
WHEREAS in adopting the Investment Policy, the Board determined that CPA’s primary objectives when managing funds are to safeguard the principal of the funds, meet the liquidity needs of CPA, and to achieve a return on investment on funds in CPA’s control; and
WHEREAS, the Board adopted an amendment to the Investment Policy in February 2024 to permit investment in the California Asset Management Program; WHEREAS, on May 14, 2026 the Board was presented with data, facts, and information supporting the need and benefit in amending the Investment Policy; and, WHEREAS, the Board finds it reasonable and prudent to amend the Investment Policy to expand Acceptable Deposit and Investment Types, expand detail regarding Prohibited Investment Types and Practices, enhance risk mitigation practices to manage both credit and market risks, establish a methodology for evaluating the performance of CPA’s investment portfolio, delegate authority to the Executive Committee to amend the Policy under certain conditions, and incorporate other administrative or clarifying amendments as contained in Exhibit A.

NOW THEREFORE, BE IT DETERMINED, ORDERED, AND RESOLVED,

BY THE BOARD OF DIRECTORS OF THE CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA THAT:

1. The Board of Directors hereby approves amendments to Policy No. 14 Investment Policy, attached as Exhibit A.

2. The amendments to Policy No. 14 Investment Policy, as attached herein, are effective as of May 14, 2026.

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3. Any and all acts authorized pursuant to this Resolution and performed prior to the passage of this Resolution are hereby ratified and approved.

APPROVED AND ADOPTED this 14th day of May 2026.

Deborah Klein Lopez, Chair
ATTEST:

Gabriela Monzon, Secretary

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Exhibit A
Amended Investment Policy

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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.

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.

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 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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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 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

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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).

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

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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.

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.

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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 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.

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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
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

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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

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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 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

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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.

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.

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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.

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.

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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 Rating5
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
5 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:

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.

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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).

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:

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.

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 41
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 42
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.

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.

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.

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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.