Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, May 27, 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
Closed Session Room
100 Civic Center Way
Calabasas, CA 91302
Camarillo City Hall
Administrative Conference Room
601 Carmen Drive
Camarillo, CA 93010
Claremont City Hall
Council Office
207 Harvard Avenue
Claremont, CA 91711
Rolling Hills Estates City Hall
Conference Room
4045 Palos Verdes Drive North
Rolling Hills Estates, CA 90274
Thousand Oaks City Hall
City Manager’s Office, Council Office #1
2100 Thousand Oaks Blvd.
Thousand Oaks, CA 91362
PUBLIC COMMENT: Members of the public may submit their comments by one of the following options:
• Email Public Comment: Members of the public are encouraged to submit written comments on any agenda item to [email protected] up to four hours before the meeting. Written public comments will be announced at the meeting and become part of the meeting record. Public comments received in writing will not be read aloud at the meeting. • Provide Public Comment During the Meeting: The General Public Comment item is reserved for persons wishing to address the Committee on any Clean Power Alliance-related matters not on today’s agenda. Public comments on matters on today’s Consent Agenda and Regular Agenda shall be heard at the time the matter is called. Comments on items on the Consent Agenda are consolidated into one public comment period. Members of the public who wish to address the Committee at CPA’s Office are requested to complete a comment card and provide it to staff. If you are attending from a remote location, please identify yourself to a CPA representative when your item is called. Each speaker is limited to two (2) minutes (in whole-minute increments) per agenda item with a cumulative total of five 5 minutes to be allocated between the General Public Comment, the entire Consent Agenda, or individual items in the Regular Agenda. Please refer to Policy No. 8 – Public Comment for additional information.
NAVIGATING OUR AGENDA PACKETS: The meeting agenda packets are bookmarked PDFs, which display a list of agenda items to the left of the page and allow you to click to view specific items within the packet. If viewing in your browser, click the "document outline" button in the upper left corner of the screen.
If the PDF is downloaded, the bookmark panel (ribbon icon) appears on the left side of the screen.
ACCESSIBILITY: Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least two (2) working days before the meeting at [email protected] or (213) 713- 5995. Notification in advance of the meeting, while not required, will enable us to make reasonable arrangements to ensure accessibility to this meeting and the materials related to it.
CALL TO ORDER & ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from the April 22, 2026, Finance Committee Meeting
2. Approve the Selection of Baker Tilly to Continue as the Independent Financial Auditor for CPA’s Fiscal Year 2025-26 Financial Statements
3. Receive and File April 2026 Risk Management Team Report
4. Receive and File April 2026 Investment Report
5. Receive and File Fiscal Year 2025-26 Q3 Financial Report
REGULAR AGENDA
6. Oral Report from the Chief Financial Officer
7. Recommend Approval of the Budget Policy and Proposed Fiscal Year 2026-27 and Fiscal Year 2027-28 Budgets to the Board of Directors at its June 4, 2026, Meeting
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING ON JUNE 24, 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.
Staff Report – Agenda Item 1
To: Finance Committee
Subject: Approve Minutes from the April 22, 2026, Finance Committee Meeting
Date: May 27, 2026
RECOMMENDATION
Approve.
ATTACHMENT
1. Minutes
MINUTES
Finance Committee
of the Clean Power Alliance of Southern California
Regular Meeting
Wednesday, April 22, 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
Closed Session 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
Thousand Oaks City Hall
City Manager’s Office, Council Office #1
2100 Thousand Oaks Blvd.
Thousand Oaks, CA 91362
CALL TO ORDER & ROLL CALL
Chair Santangelo called the meeting to order at 11:00 a.m. and Annie Mendoza, Deputy Clerk of the Board, conducted roll call.
ROLL CALL
Camarillo Susan Santangelo Committee Chair Remote
Calabasas Ed Albrecht Committee Member Remote
Carson Reata Kulcsar Committee Member Absent
Claremont Corey Calaycay Committee Member Remote
Rolling Hills Estates Steve Zuckerman Committee Member Remote Santa Monica Pam O’Connor Committee Member Present
Thousand Oaks David Newman Committee Member Absent
All votes are unanimous, unless otherwise stated.
Finance Committee Item 1
GENERAL PUBLIC COMMENT
There was no 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
Motion: Committee Member Albrecht, Calabasas
Second: Committee Member Calaycay, Claremont
Vote: The consent agenda was approved by a roll call vote
REGULAR AGENDA
5. Oral Report from the Chief Financial Officer
David McNeil, Chief Financial Officer, noted that CPA’s maturation is the reason for the proposed amendments to the investment policy and for the concurrent work on a two-year budget. CPA has built up cash reserves, creating opportunities to invest in a broader range of investments to earn higher returns. Mr. McNeil closed his report by encouraging the Committee to review the February financial dashboard, which shows positive progress.
6. Recommend to the Board of Directors Approval of Proposed Amendments to the Investment Policy at its May 14, 2026, Meeting
Mr. McNeil presented CPA’s investment policy and summarized the proposed amendments, developed in collaboration with Chandler Asset Management, that comply with the California Government Code and follow industry best practices.
The goal is to expand CPA’s acceptable investment types, identify prohibited investments, and enhance risk mitigation practices.
In response to Committee Member Zuckerman's inquiry about choosing Chandler and their service fees, Mr. McNeil stated that staff solicited bids from prominent asset managers, including Chandler, PFM, Goldman Sachs, and Morgan Stanley.
Chandler will manage a $100 million portfolio and charge six basis points per dollar of assets under management. Mr. McNeil added that CPA’s independent custodian will be U.S. Bank, and staff will be able to monitor investments online. Committee Member Zuckerman asked the Committee to go to page 21 of the presentation that addressed investment returns, noting that COVID affected earnings due to rate inversions that spurred safety strategies.
Committee Member Albrecht commented that his research on Chandler shows they are an excellent firm that specializes in public agencies. He cautioned about investing in high-yield funds, was glad for the access to CPA’s investment information, and congratulated staff for taking advantage of the opportunity to increase CPA’s returns. He added that having an asset management firm will be helpful when the market declines or interest rates change. Chair Santangelo remarked that the City of Camarillo also uses Chandler and that she’s been satisfied with their asset management, communication, and reports.
Finance Committee Item 1
Motion:
Second:
Vote:
Committee Member Calaycay, Claremont
Committee Member O’Connor, Santa Monica
Item 6 was approved by a roll call vote.
7. Receive Presentation on Budget Priorities and Draft FY 2026-27 and 2027-28 Operating Expense Budgets
Jennifer Stevenson, Financial Planning and Analysis Manager, presented draft Fiscal Year 2026-2027 and Fiscal Year 2027-2028 operating expense budget details, noting that budgeted increases in operating costs are driven primarily by increases in customer programs, communications and marketing, software, and staffing.
Committee Member Zuckerman asked staff to prepare comparison charts with other CCAs showing operating and staffing expenses as a percentage of total revenue. Staff responded that they could accommodate that request once other agencies have published their proposed budgets. Committee Member Albrecht supported CPA advertising during large events such as the Olympics and World Cup and asked staff to inform Board members of the TV commercial schedule or other outreach so the information could be passed on to constituents.
COMMITTEE MEMBER COMMENTS
None.
ADJOURN
Chair Santangelo adjourned the meeting at 11:57 a.m.
Finance Committee Item 1
Staff Report – Agenda Item 2
To: Finance Committee
From: Hui Lisano, Senior Director of Finance and Accounting David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Approve Selection of Baker Tilly to Continue as the Independent Financial Auditor for CPA’s FY 2025/26 Financial Statements Date: May 27, 2026
RECOMMENDATION
Approve the selection of Baker Tilly to continue as the Independent Financial Auditor for CPA’s FY 2025/26 Financial Statements Audit.
BACKGROUND/DISCUSSION
Pursuant to its Joint Powers Agreement, CPA is required to complete an audit of its annual financial statements by an independent auditor. CPA’s Bylaws authorize the Finance Committee to:
select an Independent Auditor who shall perform a financial audit of the accounts of the Alliance on an annual basis. The Independent Auditor shall be accredited in the State of California and provide independent, accurate, and timely assessments of the Alliance’s financial activities in compliance with generally accepted government auditing standards.
Although there is no requirement for public agencies to change audit firms, Assembly Bill 1345 (“AB 1345”) requires local governments to rotate the lead audit partner after six consecutive fiscal years.
https://www.sco.ca.gov/aud_auditor_rotation_requirements.html Finance Committee Item 2
Even though CPA is not a local government, CPA staff view the application of AB 1345 as a sound governance practice. Accordingly, in April 2025, CPA staff issued a competitive solicitation for audit services, invited proposals from 13 accounting firms, after Baker Tilly’s prior engagement partner, Bethany Ryers, completed six consecutive years as CPA’s lead audit partner.
In May 2025, the Finance Committee approved the selection of Baker Tilly, with a new lead partner, Aaron Worthman, to perform the audit of CPA’s FY 2024/25 financial statements and authorized staff to negotiate a contract for audit services.
Staff recommends retaining Baker Tilly for FY 2025/26 as an auditor for the following reasons:
The Government Finance Officers Association (GFOA) best practices recommend that public agencies enter into multi-year agreements with independent auditors, generally for terms of at least five years. Multi-year engagements promote continuity, reduce transition and start-up costs, and minimize disruption to the audit process.
https://www.gfoa.org/materials/audit-procurement
Baker Tilly has extensive experience auditing electric utilities and other public-sector entities. Following its 2025 merger with Moss Adams, Baker Tilly is now the sixth-largest accounting and advisory firm in the US, providing CPA with access to significant governmental audit expertise, deep technical resources, and specialized industry knowledge.
Baker Tilly has substantial experience auditing California Community Choice Aggregators (CCAs) and related organizations. In addition to serving as CPA’s auditor for the past six fiscal years, Baker Tilly also audits Marin Clean Energy, Redwood Coast Energy Authority, and California Community Choice Financing Authority.
Baker Tilly has significant expertise in California energy markets and municipal electric utilities. Current and recent clients include Northern California Power Agency, Balancing Authority of Northern California, Sacramento Municipal Utility District, Trinity Public Utilities District, and Modesto Irrigation District.
Finance Committee Item 2
The proposed engagement partner, Aaron Worthman, leads Baker Tilly’s Energy and Utilities Practice and specializes in serving governmental and utility entities.
Based on CPA’s experience with Mr. Worthman as the lead audit partner last year, Baker Tilly has continued to demonstrate strong engagement continuity, low staff turnover, consistent partner and management availability, clear and effective communication throughout the audit process, and timely delivery of audit results.
Since 2020, Baker Tilly has disclosed to the Finance Committee that it performs a limited-scope attestation engagement for Southern California Edison (SCE). This engagement involves an examination of decommissioning costs associated with a nuclear generating facility partially owned and operated by SCE. SCE has renewed this engagement, and it remains ongoing. Baker Tilly has represented that it maintains strict personnel segregation between the SCE and CPA engagements and has completed internal independence reviews to confirm that its independence with respect to CPA is not impaired.
FISCAL IMPACT
The estimated cost of the FY 2025/26 audit engagement is $33,000. Funding for this expenditure is included in the proposed FY 2026/27 Operating Budget, which will be presented to the Board of Directors for approval on June 4, 2026.
ATTACHMENT
None.
Staff Report – Agenda Item 3
To: Finance Committee
From: Lyon Hardgrave, Director, Energy Risk Management
Approved By: Ted Bardacke, Chief Executive Officer
David McNeil, Chief Financial Officer
Subject: Receive and File April 2026 Risk Management Team Report Date: May 27, 2026
April 2026 RMT REPORT
Key Actions
• Reviewed the counterparty credit exposure summary
• Reviewed January 2026 day-ahead load forecast performance • Reviewed March 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 April 2026 CRR Allocations
• Reviewed the Negative REC Price strategy
Finance Committee Item 3
Policy Compliance
Policy Deviation Required Action
The renewable energy hedge ratio
exceeds the maximum hedge
percentage for 2027-2031 due to
cumulative PPA supply additions,
lower-than-anticipated load growth,
and updates to product content
strategy that reduced clean power
RE targets by 5-10% in 2027-2030.
None.
The deviations for 2027-2030 will be resolved as
CPA nears these years and the maximum hedge
percentages increase.
ATTACHMENT
None.
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 April 2026 Investment Report
Date: May 27, 2026
RECOMMENDATION
Receive and file.
ATTACHMENT
1. April 2026 Investment Report
Clean Power Alliance Investment Report1
April 2026
(in USD unless otherwise noted)
Investment Type:
Local Agency
Investment
Fund (LAIF)
Certificates of Deposit
(CDs)
California Asset
Management Program
(CAMP)
US Bank Custodial
Account
US Treasury Securities Total
Issuer/Depository: State of California River City Bank California Asset Management Trust US Bank, N.A. US Department of the Treasury Beginning Balance 17,933 10,000,000 179,718,759 7,290,769 199,678,868 396,706,329 Amortization & Accretion3 0 0 0 0 118,142 118,142
Deposits & Purchases 176 0 558,851 719,192 0 1,278,218
Maturities & Withdrawals 0 10,000,000 0 0 0 10,000,000
Ending Balance 18,109 0 180,277,609 8,009,961 199,797,010 388,102,689 Book Value2
Beginning Balance 17,933 10,000,000 179,718,759 7,290,769 199,562,643 396,590,104 Amortization & Accretion 0 0 0 0 (421,529) (421,529)
Deposits & Purchases 176 0 558,851 719,192 0 1,278,218
Maturities & Withdrawals 0 10,000,000 0 0 0 10,000,000
Ending Balance 18,109 0 180,277,609 8,009,961 199,141,114 387,446,793 Interest Earned4 56 25,580 558,851 19,192 520,392 1,124,070 Yield5 3.81% 4.08% 3.78% 3.54% 3.88% 3.83%
Weighted Average Term to Maturity (Months) 7.0 0.0 2.0 1.0 44.0 23.6 5 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 4.08%
Placement Date 4/24/2025
Maturity Date 4/23/2026
Term (weeks) 52
Interest Earnings (Total) 415,250
1 This report is in compliance with CPA's Investment Policy as approved by the Board of Directors and in alignment with California Government Code Section 53646.
Market Value2
2Book 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. 3Represents the change in book value of UST assets due to amortization/accretion of bond premium/discount at purchase over the lifetime of the asset 4 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)
Staff Report – Agenda Item 5
To: Finance Committee
From: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Receive and File FY 2025-26 Q3 Financial Report Date: May 27, 2026
RECOMMENDATION
Receive and file.
ATTACHMENTS
1. FY 2025-26 Q3 Financial Report
2. March 2026 Financial Dashboard
2026 2025
ASSETS
Current assets
Cash and cash equivalents 444,770,083 $ 357,176,103 $
Investments 10,000,000 60,000,000
Accounts receivable, net of allowance 78,310,417 130,906,215 Accrued revenue 49,835,274 60,112,392
Other receivables 21,232,043 39,776,694
Interest receivable 1,773,843 1,482,434
Prepaid expenses 12,459,633 2,325,121
Deposits 3,146,668 4,847,135
Total current assets 621,527,961 656,626,094
Noncurrent assets
Capital assets, net of depreciation and amortization 1,606,779 1,932,668 Deposits 89,875 88,875
Investments 199,562,643 69,571,079
Total noncurrent assets 201,259,297 71,592,622
Total assets 822,787,258 $ 728,218,716 $
LIABILITIES
Current liabilities
Accounts payable 3,252,261 $ 3,247,424 $
Accrued cost of electricity 137,110,495 158,097,273
Other accrued liabilities 6,655,933 4,929,168
User taxes and energy surcharges due to other governments 10,007,462 12,038,609 Security deposits from energy suppliers 750,000 180,000 Unearned program funds 5,996,251 4,380,605
Lease liability, current 471,010 445,428
Total current liabilities 164,243,411 183,318,507
Noncurrent liabilities
Security deposits from energy suppliers 2,794,952 2,366,852 Lease liability, noncurrent 1,023,032 1,494,042
Other noncurrent liabilities 581,765 462,631
Total noncurrent liabilities 4,399,750 4,323,526
Total liabilities 168,643,161 $ 187,642,033 $
DEFERRED INFLOWS OF RESOURCES
Fiscal stabilization fund 135,000,000 135,000,000
NET POSITION
Investment in capital assets 112,737 $ (6,802) $
Unrestricted 519,031,360 405,583,485
Total net position 519,144,097 $ 405,576,683 $
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF NET POSITION
AS OF MARCH 31, 2026 AND 2025
2026 2025
OPERATING REVENUES
Electricity sales for resale, net 938,724,220 $ 1,163,291,689 $ Other revenue 3,480,883 2,356,998
Total operating revenues 942,205,102 1,165,648,687
OPERATING EXPENSES
Cost of electricity 860,512,769 1,067,570,793
Contract services 20,871,204 17,215,860
Staff compensation 19,240,390 16,457,525
General and administration 2,883,607 2,370,093
Total operating expenses 903,507,970 1,103,614,271
Operating income 38,697,132 62,034,416
NONOPERATING REVENUES (EXPENSES)
Interest and investment income 16,243,462 16,361,478
Interest and financing expenses (351,679) (473,444)
Total nonoperating revenues 15,891,782 15,888,035
CHANGE IN NET POSITION 77,922,451 54,588,914
Net position at beginning of period 464,555,182 327,654,233 Net position at end of period 519,144,097 $ 405,576,683 $
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
FOR NINE MONTHS ENDED MARCH 31, 2026 AND 2025
2026 2025
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Net operating income (loss) 38,697,132 $ 62,034,416 $
Adjustments to reconcile operating income to net
cash provided (used) by operating activities
Depreciation expense 97,057 121,275
Amortization expense 304,769 346,148
Revenue adjusted for allowance for uncollectible accounts 4,864,388 18,917,107 (Increase) decrease in:
Accounts receivable 14,129,977 (6,655,616)
Other receivables (11,090,043) (28,273,752)
Accrued revenue 23,513,813 35,105,473
Prepaid expenses (6,496,658) 88,967,796
Deposits 4,781,583 (2,515,716)
Increase (decrease) in:
Accounts payable (2,591) 201,523
Energy market settlements payable (5,011,138) (4,526,401) Accrued cost of electricity 34,400,704 (84,246,276)
Other accrued liabilities (2,655,543) 1,215,358
User taxes due to other governments (685,379) 1,287,737 Supplier security deposits 998,100 (4,561,500)
Unearned program funds 1,146,646 325,932
Net cash provided by operating activities 96,992,818 $ 77,743,502 $
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Interest and related expense payments (347,981) (424,180) Net cash used by non-capital financing activities (347,981) (424,180)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments to acquire capital assets (225,871) (10,183)
Payments on lease (for both principal and interest) (365,322) (354,682) Net cash used by capital and related financing activities (591,193) (364,864)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchased of investments 33,778,670 (69,571,079)
Interest income received 17,703,190 16,283,304
Net cash provided (used) by investing activities 51,481,860 (53,287,775) Net change in cash and cash equivalents 147,535,504 23,666,682 Cash and cash equivalents at beginning of period 297,234,579 333,509,421 Cash and cash equivalents at end of period 444,770,083 $ 357,176,103 $ Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) 444,770,083 357,176,103 Cash and cash equivalents 444,770,083 $ 357,176,103 $
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF CASH FLOWS
FOR NINE MONTHS ENDED MARCH 31, 2026 AND 2025
2025/26 YTD
Budget
2025/26 YTD
Actual
2025/26 YTD
Budget Variance
(Under) Over
2025/26 YTD
Actual / Budget
% 2025/26 Budget
2025/26
Remaining
Budget
2025/26
Remaining
Budget %
Operating revenues
Revenue - electricity, net 1,011,006,264 $ 938,724,220 $ (72,282,044) $ 93% 1,319,740,816 $ 381,016,596 $ 29% Revenue transferred from/(to) Fiscal Stabilization Fund - - - - - Other revenues 3,425,940 3,480,883 54,943 102% 4,514,184 1,033,301 23% Total operating revenues 1,014,432,204 942,205,102 (72,227,102) 93% 1,324,255,000 382,049,898 29% Energy costs
Energy procurement 860,512,769 997,396,917 (136,884,148) 86% 1,207,444,000 346,931,231 29% Total energy costs 997,396,917 860,512,769 (136,884,148) 86% 1,207,444,000 346,931,231 29% Operating revenues less energy costs 81,692,334 17,035,287 64,657,047 480% 116,811,000 35,118,666 30% Operating Expenditures
Staffing 20,625,390 19,240,390 (1,385,000) 93% 27,846,000 8,605,610 31% Technical services 1,757,125 1,046,716 (710,409) 60% 2,465,000 1,418,284 58% Legal services 1,218,580 478,894 (739,686) 39% 1,542,000 1,063,106 69% Other professional services 2,115,284 967,115 (1,148,169) 46% 2,802,000 1,834,885 65% Communications and outreach 4,492,000 3,280,263 (1,211,737) 73% 6,079,000 2,798,737 46% Mailers 1,130,130 679,871 (450,259) 60% 1,425,000 745,129 52% Billing data manager 9,175,605 8,881,455 (294,150) 97% 12,279,000 3,397,545 28% SCE services 1,798,735 1,101,100 (697,635) 61% 2,404,000 1,302,900 54% Customer programs 10,240,850 4,435,790 (5,805,060) 43% 14,425,000 9,989,210 69% General and administrations 4,138,762 2,883,607 (1,255,155) 70% 5,836,000 2,952,393 51% Total operating expenditures 56,692,461 42,995,202 (13,697,259) 76% 77,103,000 34,107,798 44% Operating income 38,697,132 (39,657,174) 78,354,306 - 39,708,000 1,010,868 3% Non-operating revenues (expenditures) Interest income 19,446,165 16,243,462 (3,202,703) 84% 26,568,000 10,324,538 39% Finance and interest expense (1,048,335) (351,679) 696,656 34% (1,176,000) (824,321) 70% Total non-operating revenues (expenditures) 18,397,830 15,891,782 (2,506,048) 86% 25,392,000 9,500,218 37% Change in net position 54,588,914 (21,259,344) 75,848,258 - 65,100,000 10,511,086 16% Other uses Capital outlay 253,499 225,871 (27,628) 89% 338,000 112,129 33% Depreciation and Amortization (473,180) (401,826) 71,354 85% (617,000) (215,174) 35% Total other uses (219,681) (175,955) 43,726 80% (279,000) (103,045) 37% Change in fund balance $ 54,764,870 (21,039,663) $ 75,804,533 $ - 65,379,000 $ 10,614,130 $ 16%
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
BUDGETARY COMPARISON SCHEDULE
FOR NINE MONTHS ENDED MARCH 31, 2026
Note Mar-26 Dec-25 Sep-25 Jun-25 Mar-25
1 Working Capital 457,284,550 435,354,915 417,818,194 427,785,834 473,307,586 2 Current Ratio 3.8 3.3 2.9 4.1 3.6
3 Days Sales Outstanding 23 27 34 25 31
4 Equity 654,144,097 634,827,460 616,047,547 599,555,182 540,576,683 5 Equity to Assets % 80% 77% 74% 81% 74%
6 Adjusted Unrestricted Cash 451,225,131 406,670,965 369,549,451 364,687,727 414,629,251 7 Investments 199,562,643 201,008,363 200,314,879 174,258,907 69,571,079 8 Available Line of Credit 119,512,000 119,512,000 114,012,000 114,353,000 154,353,000 9 Total Liquidity 770,299,774 727,191,328 683,876,330 653,299,634 638,553,330 10 Days Liquidity on Hand (TTM) 249 227 216 180 174
11 Gross Margin (quarterly) 12% 10% 6% 24% 12%
12 Net Margin (quarterly) 8% 7% 4% 21% 9%
Percentage Change from Prior Quarter
Working Capital 5% 4% -2% -10% 6%
Current Ratio 14% 13% -29% 15% 46%
Days Sales Outstanding -15% -23% 40% -20% 5%
Equity 3% 3% 3% 11% 6%
Equity to Assets % 3% 4% -9% 9% 20%
Available Cash 11% 10% 1% -12% -17%
Investments -1% 0% 15% 150% -1%
Available Line of Credit 0% 5% 0% -26% 0%
Total Liquidity 6% 6% 5% 2% -12%
Days Liquidity on Hand (TTM) 10% 5% 20% 3% -13%
Select Financial Indicators
0 100
200
300
400
500
600
700
800
900
Mar-25 Jun-25 Sep-25 Dec-25 Mar-26
Millions ($)
Financial Indicators
Working Capital Equity Total Liquidity
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
March
2026
Financial Dashboard
Note: Numbers may not sum up due to rounding.
Active Accounts
1,072,449
Participation Rate
92.9%
YTD Sales Volume
8,063 GWh
March Volume
860 GWh
Res
46%
Com - Lg
22%
Com - Sm
30%
Agr/Oth
2%
In March 2026, CPA’s net position increased by $12.2 million, $1.4 million higher than the budgeted net gain of $10.8 million. Energy revenues were $81.5 million, 16% lower than budgeted, primarily due to the interim rates introduced in February. Cost of energy was $64.5 million, 22% lower than budgeted, driven by lower than budgeted energy market prices and the non-utilization of energy contingencies.
Year to date, CPA’s net position has increased by $54.6 million, $75.9 million higher than the budgeted decrease in net position of $21.3 million. YTD revenues totaled $942.2 million, 7% less than budgeted, due to mild weather this fiscal year generally reducing customer load and the introduction of interim rates in February. YTD energy expenses were $860.5 million, 14% 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 8% below budget. YTD operating expenses totaled $43.0 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 tend to spend most in Q1 and Q4; 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 March 31st, 2026, CPA had unrestricted cash, cash equivalents, and investments of $654.3 million, as well as $119.5 million available in its bank line of credit, representing 250 Days Liquidity on Hand. CPA is financially sound and in compliance with its bank and other credit covenants.
Staff Report – Agenda Item 6
To: Finance Committee
From: David McNeil, Chief Financial Officer
Subject: Report from the Chief Financial Officer
Date: May 27, 2026
The CFO will provide an oral update on CPA’s financial operations.
Staff Report – Agenda Item 7
To: Finance Committee
From: Jennifer Stevenson, Financial Planning & Analysis Manager Reviewed by: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Budget Policy and Proposed FY 2026-27 and FY 2027-28 Budgets Date: May 27, 2026
RECOMMENDATION
Recommend approval of the Budget Policy and Proposed Fiscal Year (FY) 26/27 and FY 27/28 Budgets to the Board of Directors at its June 4, 2026 meeting.
BACKGROUND
CPA develops annual budgets to govern the receipt of revenues, the incurrence of expenses, and capital expenditures made during upcoming fiscal years. The Proposed FY 26/27 and FY 27/28 Budgets are provided in Attachments 2 and 3.
The Proposed FY 26/27 and FY 27/28 Budgets incorporate the budget priorities presented to, and rate-setting approach approved by, the Board at its May 14, 2026, meeting. Staff will present the Proposed FY 26/27 and FY 27/28 Budgets to the Board for approval on June 4, 2026.
At its April 2, 2026 meeting the Board directed Staff to prepare a Budget Policy to establish guidelines for the approval, administration, amendment, and reporting of two consecutive fiscal year budgets at CPA. The Proposed Budget Policy is provided in Attachment 4.
Finance Committee Item 7
SUMMARY
The FY 26/27 Proposed Budget reflects lower energy costs, a lower contribution to Reserves, and higher operating expenses from the prior fiscal year. These key elements were considered in the rate setting approach approved by the Board in May and enable CPA to reduce revenue through lower rates, while covering costs and maintaining the target Reserve balance and liquidity goals outlined in the Reserve Policy.
The FY 27/28 Proposed Budget reflects a year-over-year increase in operating expenses.
Revenues, energy costs and the change in reserves reflect a reserve percentage of 58%.
This reserve percentage is subject to change pending amendments to the revenues and cost of energy that will be determined in the 2027 rate setting process.
Other key takeaways:
Lower energy expenses are driven by lower renewable energy and day ahead energy costs arising from decreasing market prices.
Higher operating expenses in FY 26/27 primarily reflect investments in staffing, marketing and communications, and technology.
Higher operating expenses in FY 27/28 reflect investments in staffing, technology, and customer programs.
The projected increase in net position is expected to bring CPA’s Reserve percentage to 57% by June 30, 2027 with a days liquidity on hand level of 256 days, consistent with CPA’s Board approved Reserve Policy, leaving CPA well prepared to respond to market, policy, regulatory, and competitiveness volatility in the future.
DISCUSSION
The Proposed Budget sets forth changes to the following budget line items:
FY 26/27 Revenue – electricity net (-$223,957,000; 17% decrease): Budgeted electricity revenues are based on estimates of customer electricity usage and the cost of service to procure generation for customers. Budgeted revenues reflect a year-over-year Finance Committee Item 7
increase in budgeted load of 3.1%; the projected increase in load is derived from increased customer transportation and building electrification, a reduced rate of customer solar additions, and refinements in CPA’s load forecast modeling. Budgeted revenues include an allowance for bad debt equal to 0.75% of revenues or $8.3 million.
Budgeted revenues are lower than the prior year’s budget primarily due to the reduced rates contemplated in the rate approach approved by the Board on May 14, 2026 offset by a projected draw from the fiscal stabilization fund (FSF) to supplement revenue numbers and contribute to a positive change in net position. The projected FSF draw is budgeted at $54 million, however actual transfer is calculated and transacted at the close of the fiscal year, pursuant to the FSF policy.
FY 26/27 Other revenue (+$2,980,000; 66% increase), FY 27/28 Other revenue (+$45,000; 1% increase): Other revenue includes operating revenues from sources other than retail electricity sales. Other revenue includes funding from the California Public Utilities Commission (CPUC) to support the Power Share program and funding through the Southern California Equitable Building Decarbonization grant. Other Revenue partially offsets the increase in expenses budgeted these FYs in the Customer Programs, Staffing, Mailers, and Communications budget line items.
FY 26/27 Cost of energy (-$136,776,000; 11% decrease): Cost of energy includes expenses associated with the purchase of system energy, renewable energy, Resource Adequacy, and charges by the California Independent System Operator (CAISO) for load and services performed by the CAISO. CAISO’s charges for load are based on electricity consumed by CPA customers and related line losses and priced at the Default Load Aggregation Point (DLAP). Credits for energy generation scheduled into the CAISO market and revenues arising from Congestion Revenue Rights (CRRs) are netted from the cost of energy. CRRs are financial instruments created by the CAISO which enable load serving entities, such as CPA, to manage price differences between wholesale energy delivery locations and retail use points. CAISO credits for energy generation are based on wholesale energy deliveries and Locational Margin Prices (LMPs). The Finance Committee Item 7
budgeted cost of energy is projected to decrease year-over-year due to decreases in renewable energy and day ahead energy market costs. The cost of energy budget includes a contingency equal to 4.6% of the projected cost of energy.
FY 26/27 Staffing (+$3,730,000; 13% increase), FY 27/28 Staffing (+$4,438,000; 14% increase): Staffing costs include salaries and benefits payable in accordance with CPA’s Board-approved Employee Handbook, and salary grades and ranges approved by the Board on February 6, 2025. In FY 26/27 51% and in FY 27/28 67% of the staffing budget increases are driven by the full-year impact of the prior fiscal year’s new hires, merit increases, cost-of-living adjustment (COLA),1 and retention incentives. In FY 26/27, 40% of the increase is due to 8-10 newly budgeted positions. In FY 27/28, 33% of the budget increase is provided as a contingency for new hires. The actual need for new positions for the FY27/28 fiscal year will be determined midway through the FY 26/27 fiscal year.
These budgets reflect a continuation of CPA’s retention program incentive through FY 26/27 and FY 27/28, which was approved by the Board’s at its September 7, 2023 meeting.
The budgeted staffing cost increases are composed of the following:
1 COLA is awarded at the beginning of the calendar year and is equal to the annual inflation rate for the Los Angeles Metro Area for the previous 12 months as published by the Bureau of Labor Statistics.
Finance Committee Item 7
Approximately $575,000 of each year’s staffing expenses are reimbursable via CPUC Power Share customer program funding, and Southern California Equitable Building Decarbonization grant funding administered by the County of Los Angeles.
FY 26/27 Technical services (+$38,000; 2% increase ), FY 27/28 Technical services (+$570,000; 23% increase): Technical services are comprised of professional services for scheduling coordination, assistance with short- and long-term energy contracting, risk and portfolio management, and support for customer programs where engineering or other technical expertise is required. Scheduling coordinators provide a variety of services including scheduling generating and storage assets and customer energy use into the CAISO markets, managing CRR purchases and sales, validating CAISO invoices, and providing risk management and energy contract management software. Budget increases in both fiscal years are primarily driven by additional energy contracts projected to come online requiring additional services from our scheduling coordinator.
The budgeted technical services expenses are composed of the following:
Finance Committee Item 7
FY 26/27 Legal services (-$133,000; 9% decrease), FY 27/28 Legal services (- $76,000; 5% decrease): Legal services support CPA’s contracting, including energy contracting for short- and long-term energy, resource adequacy, and non-energy contracting, including banking, finance, and local programs. Legal services also include support for specific regulatory proceedings (e.g., SCE’s ERRA Applications, SCE General Rate Case, and other compliance obligations), employment matters, governance, and general liability management. The budgeted decrease in legal services is partially due to the anticipated hiring of an additional Assistant General Counsel, primarily to cover energy contracting.
The majority of the budget in this section is provided by the firms listed in the following table:
Legal Service Major Providers
Energy Contracting Hall Energy Law
Clean Energy Counsel
Keyes & Fox
Perkins Coie
Regulatory Compliance and CPUC Proceeding
Advocacy
Braun Blaising & Wynne
Keyes & Fox3
BRB Law LLP
Customer Programs Support Shute Mihaly & Weinberger
Banking and Finance Chapman and Cutler, LLP
Employment Law and Compliance Liebert Cassidy Whitmore, APC General Liability and Governance Colantuono, Highsmith & Whatley Shute Mihaly & Weinberger
Morgan, Lewis & Bockius LLP
FY 26/27 Other services (+$83,000; 3% increase), FY 27/28 Other services (+$563,000; 20% increase): Other services represent professional services not budgeted under Technical or Legal services and includes costs associated with energy compliance auditing, financial audits and audit support, rate setting and cost of service analysis, state and federal lobbying services, non-technical assistance for customer 3 A portion of Keyes & Fox’s retention in the Regulatory/CPUC category is completed through CalCCA’s Special Assessments. The participating CCAs, generally the CCAs who serve markets withing SCE territory, share the costs of the Special Assessment.
Finance Committee Item 7
programs, staff support services including recruitment, payroll, and benefits administration, IT support including software implementations, and human resources compliance. The proposed FY 27/28 budget increase is due primarily to budgeting for services to support the implementation of new power settlement and financial system software applications.
The budgeted other services expenses are composed of the following:
FY 26/27 Communications and marketing services (+$3,971,000; 65% increase), FY 27/28 Communications and marketing services (+$866,000; 9% increase):
Communications and marketing related services include costs associated with customer outreach, marketing, branding, website management, translation, advertising, special events, and sponsorships. The increase in communications and marketing expenses reflects investments in activities and consultants to support customer acquisition for CPA’s customer programs through advertising, sponsorship, social media, educational outreach, and branding efforts, as well as expected marketing cost increases due to local media markets impacted by special events over these fiscal years (2026 Elections, 2027 Super Bowl, 2028 Olympics).
61% of the communications and marketing budget is directed towards supporting Programs initiatives. In response to Board feedback, the non-Programs budget within communications expenses reflect increased investments in public relations and customer outreach and education to advance CPA’s priorities of enhancing customer engagement, Finance Committee Item 7
increasing participation rates, and assisting customers in saving money, reducing their environmental impact, and adapting to a changing climate.
The budgeted communications expenses are composed of the following:
FY 26/27 Customer notices and mailing services (+$568,000; 40% increase), FY 27/28 Customer notices and mailing services (+$120,000; 6% increase): This budget item supports communications with CPA’s customers. Approximately one third of the budgets are for mailings required by the CPUC. Costs include printing and postage and are increasing primarily due to an increase in Program-related mailings which have proven highly successful, particularly with hard-to-reach demographics.
The budgeted customer notices and mailing services expenses are composed of the following:
FY 26/27 Billing data management services (+$509,000; 4% increase), FY 27/28 Billing data management services (+$416,000; 3% increase): Billing data manager costs are based on the number of customer meters served by CPA and monthly per- Finance Committee Item 7
meter rates charged by CPA’s billing data manager. Calpine Energy Services is contracted to serve as CPA’s billing data manager through July 2027. Increased costs reflect an inflation escalator on per-meter charges included in the Calpine contract approved by the Board on April 1, 2021, and a contingency for potential contract transition costs in FY 27/28.
FY 26/27 Service fees – SCE (-$1,278,000; 53% decrease), FY 27/28 Service fees – SCE (+$16,000; 1% increase): Service fees are charged by Southern California Edison (SCE) for a variety of customer billing and administrative services. The year-over-year decrease in service fees reflects SCE’s service fee changes effective November 2025, including the discontinuation of the Electronic Data Interchange (EDI) Value-Added Network (VAN) charge – a long-standing CCA service fee that CPA had contested – pursuant to a CPUC General Rate Case decision.
FY 26/27 Customer Programs (+$257,000; 2% increase), FY 27/28 Customer Programs (+$2,765,000; 19% increase): Customer programs represent direct costs associated with providing energy programs to CPA customers and other related services.
Direct costs include both incentives for participation and payments to third parties for program implementations. The customer programs budgets support ongoing programs including the CPA Power Share program (expenses and above-market energy costs are reimbursable from CPUC), Power Response, Power Ready, Energized Communities, Sun Storage Rebate, Energy Team, Instant AC Savings program, Solar and Battery Access program, EV SmartCharge program and the Wildfire Recovery program. The Electric Vehicle Charging program funded by CALeVIP and the Reach Code program are sunsetting in the new budgets. New customer programs being launched over the two fiscal years including a new program focused on demand response for commercial customers, a Multifamily Efficient Cooling program, and a Multifamily EV Charging program.
Finance Committee Item 7
The budgeted customer programs expenses are composed of the following:
The small FY 26/27 increase in Customer Programs expenses as compared to previous years’ results from improved expense timing projections for existing programs. The larger increase in FY 27/28 is to support increased customer incentive availability for newly launched and existing successful incentive programs, particularly Energized Communities.
FY 26/27 Data and Software (+$1,059,000; 44% increase), FY 27/28 Customer Programs (+$2,301,000; 66% increase): Data and Software expenses represent costs for software applications and data infrastructure across CPA. Previously contained within the General and Administrative (G&A) budget, these significantly increasing investments are now presented as a stand-alone budget line item. Increases in data and software expenses over the two fiscal year budgets represent investments in building out CPA’s database infrastructure and reporting capabilities, financial management software upgrades, software to optimize energy expense management with modeling, contract settlements, and storage optimization, and investments in cybersecurity.
Finance Committee Item 7
FY 26/27 General and Administration (+$82,000; 2% increase), FY 27/28 General and Administration (+$223,000; 6% increase): Expenditures under the G&A budget support CPA’s organizational operations and include memberships and dues for professional organizations such as CalCCA, the California Community Choice Financing Authority (CCCFA), and Chambers of Commerce, insurance expenses, office rent and operations, human resource expenses, Board and Committee expenses, travel costs, and depreciation/amortization for fixed assets. The FY 25/26 G&A budget has been reduced by an amount equal to the budgeted FY 25/26 Data and Software expenses to enable a more informative year-over-year comparison.
FY 26/27 Finance and interest expense (-$543,000; 46% decrease), FY 27/28 Finance and interest expense (+$541,000; 85% increase): Finance and interest expenses represent fees, borrowing interest, and letter of credit costs associated with CPA’s loan facility with JP Morgan. Finance and interest expenses include a contingency to allow for borrowing or posting letters of credit. The variance in the budgeted expenses across fiscal years reflects the cadence of possible calls for increased letter of credit postings to counterparties.
FY 26/27 Interest income (-$4,380,000; 16% decrease), FY 27/28 Interest income (- $1,265,000; 6% decrease): Interest income represents income earned on funds in Certificates of Deposits and savings accounts held by River City Bank, on US Treasury note investments, and on funds held in other investment accounts including the California Asset Management Program (CAMP) and the Local Agency Investment Fund (LAIF).
CPA invests funds and earns interest income pursuant to its Investment Policy which prioritizes the safety and liquidity of investments and investment returns. The projected decrease in interest income arises from the expectation of a reduction in yields on CPA’s investments.
Finance Committee Item 7
FY 26/27 Capital outlay (+$52,000; 15% increase), FY 27/28 Capital outlay (+$10,000; 3% increase): Expenditures associated with capital outlay support and accommodate equipment purchases and office improvements as they age and need to be replaced.
PROPOSED BUDGET POLICY
The proposed Budget Policy was prepared at the Board’s direction on April 2, 2026, to govern the preparation and management of annual budgets.
The proposed Budget Policy would require that every two years staff present the Board with the next two consecutive fiscal year budgets simultaneously for approval. The proposed policy also authorizes the CEO and CFO to make limited operating expense budget transfers between budget lines and/or fiscal years, subject to controls, when reasonable and necessary to support the timely operations of CPA.
The policy outlines transfer controls including maximum annual transfer limits, approval requirements, and limitations; stipulates that no additional budget may be transferred into a staffing line and that no budget may be transferred out of the customer programs incentives budget. The expectation is that as part of the Y2 (e.g. second year) annual rate setting process, staff will present the Board with a budget amendment to update the Y2 budgeted revenue and cost of energy line items reflecting the new rates and recent energy cost projections.
ATTACHMENTS
1. Proposed FY 26/27 & FY 27/28 Budget Presentation
2. Proposed FY 26/27 Budget
3. Proposed FY 27/28 Budget
4. Draft Budget Policy
Budget Policy and Proposed FY 26/27 &
FY 27/28 Budgets
May 27, 2026
Recommendation:
Recommend approval of the Budget Policy and Proposed Fiscal Year (FY) 26/27 & FY 27/28 Budgets to the Board of Directors.
FY26/27 & FY27/28 Budget Process
3 January – April 2026 (Staff) – Goal Setting, Departmental Budgeting, Rate Design Planning, Energy Cost Projections & Consolidated Budget Planning
January 28, 2026 (Finance Committee) - 2-year Budget Cycle Proposal March 19, 2026 (Executive Committee) - 2-year Budget Cycle Proposal April 2, 2026 (Board) – 2-year Budget Cycle Proposal
April 16, 2026 (Executive Committee) – Budget Priorities April 22, 2026 (Finance Committee) – Budget Priorities and Draft FY26/27 & FY27/28 OpEx budgets May 14, 2026 (Board) – Budget Priorities
May 21, 2026 (Community Advisory Committee) – Draft Budgets, Budget Priorities, and 2-year Budget Cycle Proposal May 21, 2026 (Executive Committee) – Draft FY26/27 & FY27/28 Budgets & Draft Budget Policy May 27, 2026 (Finance Committee) – Proposed FY26/27 & FY27/28 Budgets & Draft Budget Policy June 4, 2026 (Board) – Proposed FY26/27 & FY27/28 Budgets & Proposed Budget Policy FY 26/27 & FY 27/28 Budgets Key Takeaways
4 FY26/27 budgeted revenues are projected to decrease by 13% year-over-year Reflects the rate setting approach approved by the Board at its May 14, 2026 board meeting and a projected draw on the Fiscal Stabilization Fund (FSF) FY 26/27 the budgeted cost of energy is projected to decrease by 11% year-over-year Reflects lower renewable and day ahead energy costs arising from decreasing market prices, and includes a contingency equal to 4.6% of energy costs Operating expenses reflect the budget priorities presented to FinCom and ExCom in April, and feedback received from the Board and Community Advisory Committee in May o In FY26/27 (Y1) OpEx is budgeted to increase by 12% due primarily to investments in staffing, communications and marketing, and technology
o In FY27/28 (Y2) OpEx is budgeted to increase by 14% due primarily to investments in staffing, customer programs, and technology
In FY26/27 the budgeted increase in net position of $22 million is projected to bring CPA’s reserve percentage to 57%, which remains above the target range established by CPA’s Reserve Policy and assumes no interim rate adjustment during the fiscal year FY26/27 Budget Overview
5 Row 2: Forecast transfers from the FSF
into revenues allow CPA to record an
increase in net position
Row 10: $21M increase in net position
includes the FSF transfer specified in row
2. Absent the FSF transfer, CPA would
budget a loss of ~$33M
Row 11: The net position at the beginning
of FY 25/26 has been updated to reflect
the actual ending net position for FY24/25
Row 12: The net position at the end of FY
25/26 has been updated to reflect current
projections
Row 13: The FSF balance for FY 25/26
(B13) reflects a projected transfer of $70M
to the FSF by the end of FY 25/26. The FSF
balance as of FY26/27 (C13) reflects a
projected $54M draw from the FSF in
26/27
FY 26/27 Net Energy Revenue
6 Budgeted electricity revenues reflect the FY26/27 rate approach approved by the Board on May 14, 20261 and are shown net of bad debt expense which is budgeted at 0.75% of revenue, or -$8.3 million, in FY26/27. Other revenue represents grant funding received to support the Power Share and Equitable Building Decarbonization programs
Lower revenues are offset by lower energy costs that reflect lower renewable and day ahead energy costs arising from decreasing market prices, and include a contingency equal to 4.6% of energy costs Note that FY27/28 revenues and energy costs will be updated as part of the 2027 rate setting process 1 FY26/27 Rate Approach: Lean -2%, Clean 0%, 100% Green +7% compared to Residential/Small Business SCE base rates FY26/27 & FY27/28 OpEx Highlights
Staffing – FY26/27’s 13% increase reflects COLA, merit, staff retention investments, and 8 – 10 new hires. FY27/28’s 14% increase includes the same retention efforts and a contingency for new hires Communications and Marketing, and Mailers – 65% increase in Y1 to support customer programs marketing, public relations, customer education, and brand awareness
Customer Programs – 19% increase in Y2 to expand successful programs and support launch of new programs Data & Software – 44%, 66% increases in Y1 and Y2 respectively for infrastructure buildout and software investments to increase productivity, mitigate risk, and optimize energy expenditures 7 Staffing cost increases are decelerating as
CPA matures. New hires would provide
primarily professional / technical support
Communications & Marketing budget year-over-year growth reflects support for CPA’s growing suite of customer programs and customer engagement Customer Programs growth tracks to development of program offerings and improved expense timing projections
Data & Software budget growth reflects CPA’s deepening investments in technology and innovation
Operating Expense Year-over-Year Trends
8 Non-Operating Revenue and Reserves
9 Interest income is projected to decrease by 16% and 6% year-over-year due to projected decreases in interest rates as compared to rate forecasts in last year’s budget CPA invests funds and earns interest income pursuant to its Investment Policy which prioritizes the safety and liquidity of investments and investment returns
The budgeted FY 26/27 increase in net position would increase the reserve1 percentage to 57%2 and Days liquidity on hand (DLOH)3 would increase to 256 days, both consistent with the Reserve Policy 1 Reserves are the sum of the Net Position and Fiscal Stabilization Fund (also known as balance sheet equity) and are not equivalent to, nor held as, cash 2 Reserve % equals reserves divided by cost of energy and operating expenses. As costs are projected to decrease by a greater % than reserves, the Reserve % is projected to increase despite the nominal decrease in reserves of $31.8 million 3 DLOH is equal to the sum of cash, investments and available line of credit divided by average daily expenses Per Board direction, a Budget Policy has been prepared detailing that every second year staff will present the Board with the next two consecutive fiscal year budgets simultaneously for approval.
The budget policy authorizes CEO and CFO to make the following limited operating expense budget transfers, subject to controls, when reasonable and necessary to support the timely operations of CPA:
• Move budgeted line amounts between the two fiscal year budgets • Move budget amounts between Operating Expense lines
The policy outlines transfer controls including maximum annual transfer limits, approval requirements, and limitations; no additional budget may be transferred into staffing, and no funds may be transferred out of the customer programs incentives budget As part of the Y2 (e.g. second year) annual rate setting process, staff is expected to present the Board with a budget amendment to update Y2 budgeted revenue and cost of energy line items reflecting new rates and update energy cost projections. 10 Summary of Draft Budget Policy
The FY 26/27 Proposed Budget reflects:
Lower revenues ($1.16 billion; year-over-year decrease of $167 million or 13%) Lower energy costs ($1.07 billion; year-over-year decrease of $137 million or 11%) Higher operating expenses ($86.0 million; year-over-year increase of $8.9 million or 12%) An increase in the net position ($22.2 million; year-over-year decrease of $42.9 million or 66%) Decrease in Reserves of $31.8 million which results in a reserve percentage of 57% and a DLOH of 256 days
The FY 27/28 Proposed Budget reflects:
Higher operating expenses ($98.2 million; year-over-year increase of $12.2 million or 14%) Revenues, energy costs and the change in reserves reflect a reserve percentage of 58%. The increase in reserve % is subject amendments to the revenues and cost of energy that will be considered in next year’s rate setting process.
CPA financial metrics continue to compare favorably with peer CCAs and are consistent with CPA’s “A” credit rating and bank credit covenants
11 Summary
Recommendation:
Recommend approval of the Budget Policy and Proposed FY 26/27 and FY 27/28 Budgets to the Board of Directors.
Questions?
Select CCA Metrics and Comparisons
14 CPA’s metrics for total operating expenses and staffing costs compare favorably with industry averages Reserve Policy Targets
CPA Reserve Policy
“CPA shall grow reserves to maintain a minimum reserve target equal to 30% of total operating budget expenditures, with a goal of increasing the reserve to a maximum reserve target of 50% of total operating budget expenditures… If reserve funds exceed 60% of Operating Expenses, CPA will consider reducing reserves by enhancing programs expenditures, capital improvements, paying down debt, and/or reducing rates or margins.”
15 Current Staffing + Proposed FY 26/27 Positions
Department Current Positions Proposed New Positions Total Executive (including Board Office) 7 0 7
Legal 3 1 Support Power Supply 4
Coms & Marketing 14
(one grant funded, two open)
2 (+2) Support Programs and Admin
(Enhanced PR and Events) 16 (+2)
Customer Care 4 1 Support Customer Inquiries 5
Customer Programs 12
(two open)
1 Demand Management 13
Data & Systems 8
(one open)
1 Cybersecurity 9
Finance (including Accounting, FP&A, Load Forecasting, Risk Management, Strategic Initiatives, Treasury)
15 (one open)
0 15
Government Affairs 6 1 Enhanced Community/Policy Support 7 Operations (including Non-Energy Procurement, Strategic Accounts) 3 0 3 People & Culture/Admin 5 0 5
Power Supply 16
(one open)
1 Support CAISO/PPA settlements 17
Rates & Strategy 4 0 4
Regulatory Affairs 4 0 4
Contingency - TBD -
Total 101 8-10 109-111
A B C D E
In dollars unless otherwise noted
FY 2025/26
Budget
FY 2026/27
Budget Difference Difference (%)
Revenue - Electricity net 1,319,741,000 1,095,784,000 (223,957,000) -17% Transfer from Fiscal Stabilization Fund 1
- 54,000,000 54,000,000 0%
Other revenue 4,514,000 7,494,000 2,980,000 66%
TOTAL REVENUE 1,324,255,000 1,157,278,000 (166,977,000) -13% TOTAL ENERGY COSTS 1,207,444,000 1,070,668,000 (136,776,000) -11% NET ENERGY REVENUE 116,811,000 86,610,000 (30,201,000) -26%
OPERATING EXPENSES
Staffing 27,846,000 31,576,000 3,730,000 13%
Technical services 2,465,000 2,503,000 38,000 2%
Legal services 1,542,000 1,409,000 (133,000) -9%
Other services 2,802,000 2,885,000 83,000 3%
Communications and marketing services 6,079,000 10,050,000 3,971,000 65% Customer notices and mailing services 1,425,000 1,993,000 568,000 40% Billing data management services 12,279,000 12,788,000 509,000 4% Service fees - SCE 2,404,000 1,126,000 (1,278,000) -53% Customer programs 14,425,000 14,682,000 257,000 2%
Data and Software 2,425,000 3,484,000 1,059,000 44%
General and administration 3,411,000 3,493,000 82,000 2% TOTAL OPERATING EXPENSES 77,103,000 85,989,000 8,886,000 12% OPERATING INCOME 39,708,000 621,000 (39,087,000) -98%
Finance and interest expense 1,176,000 633,000 (543,000) -46% TOTAL NON OPERATING EXPENSES 1,176,000 633,000 (543,000) -46% Interest Income 26,568,000 22,188,000 (4,380,000) -16%
TOTAL NON OPERATING REVENUE 26,568,000 22,188,000 (4,380,000) -16% NON OPERATING REVENUE (EXPENSE) 25,392,000 21,555,000 (3,837,000) -15% CHANGE IN NET POSITION 65,100,000 22,176,000 (42,924,000) -66% RESERVES PROJECTION (as of May 2026)
NET POSITION BEGINNING OF PERIOD2
464,555,182 487,000,000 22,444,818 5%
NET POSITION END OF PERIOD3
487,000,000 509,176,000 22,176,000 5%
FISCAL STABILIZATION FUND4
205,000,000 151,000,000 (54,000,000) -26%
RESERVES END OF PERIOD (Net Position + FSF) 692,000,000 660,176,000 (31,824,000) -5% Other Uses
Capital Outlay 338,000 390,000 52,000 15%
Depreciation & Amortization (617,000) (746,280) (129,280) 21% CHANGE IN FUND BALANCE 65,379,000 22,532,280 (42,846,720) -66% 2 FY25/26 Beginning Net Position is updated to reflect the actual audited FY24/25 end net position 3 FY25/26 Ending Net Position is updated based on recent forecasts, this informs the FY26/27 Beginning Net Position 4 FSF reflects a projected FY25/26 addition of $70M, FY26/27 reflects a budgeted withdrawal of $54M Note: Funds may not sum precisely due to rounding
1 Transfers to/from the Fiscal Stabilization Fund (FSF) are included for illustration, actual transfers are calculated and transacted at the close of the fiscal year pursuant to the FSF policy CLEAN POWER ALLIANCE of SOUTHERN CALIFORNIA
Fiscal Year 2026/27 Proposed Budget
A B C D E
In dollars unless otherwise noted FY 2026/27 Budget FY 2027/28 Budget Difference Difference (%) Revenue - Electricity net 1,095,784,000 1,135,103,000 39,319,000 4% Transfer from Fiscal Stabilization Fund 1
54,000,000 14,000,000 (40,000,000) 0%
Other revenue 7,494,000 7,539,000 45,000 1%
TOTAL REVENUE 1,157,278,000 1,156,642,000 (636,000) 0%
TOTAL ENERGY COSTS 1,070,668,000 1,058,429,000 (12,239,000) -1% NET ENERGY REVENUE 86,610,000 98,213,000 11,603,000 13%
OPERATING EXPENSES
Staffing 31,576,000 36,014,000 4,438,000 14%
Technical services 2,503,000 3,073,000 570,000 23%
Legal services 1,409,000 1,333,000 (76,000) -5%
Other services 2,885,000 3,448,000 563,000 20%
Communications and marketing services 10,050,000 10,916,000 866,000 9% Customer notices and mailing services 1,993,000 2,113,000 120,000 6% Billing data management services 12,788,000 13,204,000 416,000 3% Service fees - SCE 1,126,000 1,142,000 16,000 1%
Customer programs 14,682,000 17,447,000 2,765,000 19%
Data and Software 3,484,000 5,785,000 2,301,000 66%
General and administration 3,493,000 3,716,000 223,000 6% TOTAL OPERATING EXPENSES 85,989,000 98,191,000 12,202,000 14% OPERATING INCOME 621,000 22,000 (599,000) -96%
Finance and interest expense 633,000 1,174,000 541,000 85% TOTAL NON OPERATING EXPENSES 633,000 1,174,000 541,000 85% Interest Income 22,188,000 20,923,000 (1,265,000) -6%
TOTAL NON OPERATING REVENUE 22,188,000 20,923,000 (1,265,000) -6% NON OPERATING REVENUE (EXPENSE) 21,555,000 19,749,000 (1,806,000) -8% CHANGE IN NET POSITION 22,176,000 19,771,000 (2,405,000) -11% RESERVES PROJECTION (as of May 2026)
NET POSITION BEGINNING OF PERIOD2
487,000,000 509,176,000 22,176,000 5%
NET POSITION END OF PERIOD 509,176,000 528,947,000 19,771,000 4% FISCAL STABILIZATION FUND3
151,000,000 137,000,000 (14,000,000) -9%
RESERVES END OF PERIOD (Net Position + FSF) 660,176,000 665,947,000 5,771,000 1% Other Uses
Capital Outlay 390,000 400,000 10,000 3%
Depreciation & Amortization (746,280) (864,600) (118,320) 16% CHANGE IN FUND BALANCE 22,532,280 20,235,600 (2,296,680) -10% 2 FY26/27 Beginning Net Position reflects recent forecasts for FY25/26 ending net position Note: Funds may not sum precisely due to rounding
3 FSF reflects a projected FY25/26 addition of $70M, FY26/27 reflects a budgeted withdrawal of $54M, FY27/28 reflects a budgeted withdrawal of $14M
1 Transfers to/from the Fiscal Stabilization Fund (FSF) are included for illustration, actual transfers are calculated and transacted at the close of the fiscal year pursuant to the FSF policy
CLEAN POWER ALLIANCE of SOUTHERN CALIFORNIA
Fiscal Year 2027/28 Proposed Budget
Policy Title Budget Policy
Policy Number 2026-20 Effective Date Original: 06/04/2026
1. Purpose
CPA's annual, board approved budgets sustain Clean Power Alliance of Southern California's ("CPA") operations and advance its mission and strategic goals. This Budget Policy (“Policy”) establishes guidelines for the approval, administration, amendment, and reporting of annual, board approved budgets at CPA.
2. Two-year Budget Cycle
Beginning in June 2026, and every two years thereafter, staff shall present to the Board two consecutive fiscal year budgets simultaneously for approval.
3. Operating Expense Budget Transfers
A. The Board of Directors (“Board”) delegates to the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) the authority to review and jointly approve of transfers between operating expense1 (“OpEx”) budget line items, as specified herein:
1. Transfer budgeted line item amounts between fiscal years within the two-year cycle (“Inter-Year Transfers”).
2. Transfers of budget line item amounts between OpEx lines within a fiscal year (“Inter-Line Transfers”).
Inter-Year Transfers and Inter-Line Transfers are collectively referred to as “Transfer(s).”
B. Any Transfers specified in 3.A, above, must comply with all of the following conditions:
1. Maximum Fiscal Year Inter-Line Transfer
a. Aggregate per line item Inter-Line Transfers within a fiscal year shall be limited to the greater of $250,000 or 10%.
2. Limits on Customer Programs Budget
1 Operating Expenses (“OpEx”) refers to non-energy expenditures - consisting of staffing, goods, and services - that support CPA’s business operations.
DRAFT
a. Transfers from the Customer Programs budget shall only (i) reduce funds otherwise available for program implementation and (ii) fund expenses that benefit or advance a Customer Program.
3. Limits on Staffing Budget
a. Staffing budget line item shall not be increased by Transfers b. Staffing budget line item may be reduced through Inter-Year or Inter-Line Transfers.
4. Inter-Year Transfers
a. Any Inter-Year Transfer shall be supported by a corresponding reduction in that Fiscal Year’s budget.
C. Any Transfers that do not comply with Sections 3.B.1-4, above, shall be brought to the Board for approval.
5. Budget Amendments
Budget amendments must be approved by the Board of Directors2 following review by the Finance Committee.
6. Reporting
The CFO shall report to the Board the following:
A. Monthly: Budget to Actual reporting in the Financial Dashboard; and, B. Quarterly: Fiscal year to date Budget to Actual reporting including a report of any Transfers.
7. Delegation of Authority
The Board further delegates to both the CEO and CFO the authority to administer this Policy, including but not limited to the Transfers described in Section 3. In the event of a Vacancy, as defined herein, the CEO or CFO may appoint a designee to act on their behalf or if no designee is selected, either the CEO or CFO may act independently until such time as the Vacancy no longer exists. A “Vacancy” includes paid time off, termination of employment, or a leave authorized under CPA’s Employee Handbook.
8. Periodic Review of Policy
The CFO shall review this Policy on an annual basis to determine if amendments or other changes are needed to address changing business conditions, changes in law or regulation, or other similar events. Amendments to this Policy shall be approved by the Board of Directors following review by the Finance Committee. 2 Per section 7.3.1 of the Joint Powers Agreement.