Audit & Finance Committee Meeting
August 14, 2023
Chair Report
Staff Report
Peninsula Clean Energy
Staff Report
Audit
o Audit Update
o Engaged and started audit activities
o Picenti & Brinker
o Audit Schedule
o October 16 - Target for Audit & Finance Committee to review draft audit financials o October 26 – Target for Board of Directors approval of Final Audited Financials Investment Management – Special A&F Meeting Sept 11?
o Review of Current Investment Policy
o Recommendations for portfolio
FY 2022-2023 Q4 and EOY Financial Report
PRELIMINARY (Subject to Audit)
July 1, 2022 through June 30, 2023
Peninsula Clean Energy
FY 2022-2023 Year-to-Date Actual vs. Budget
Load Performance
• Total customer load
o Year-to-date is 2.5% below budget
o Q4 was 8.8%% below Budget due to mild spring mostly due to Residential
15.3% below Budget
6 Year-to-date Base load as of June 2023
(in kWh) Actual Budget Variance Variance as % Budget
Residential 1,445,284,498 1,533,630,259 (88,345,761) -5.8% Commercial and Industrial 1,937,550,834 1,936,472,230 1,078,604 0.1% Total 3,382,835,333 3,470,102,490 (87,267,157) -2.5%
Peninsula Clean Energy
Revenue – Quarterly Trend
7 Quarterly
• Q4 revenues were $31,3 MM above
Budget
• Offsetting earlier below-Budget
performance
• Current PCE customer rates
increased by approximately 50%
over prior rates
• 15% increase in PG&E rates
• 90% decrease in PCIA rates
Revenue by Quarter as of June 30,2023 June-23
Quarter
Actual Budget Var Fav/(Unf)
Q1-FY 2021/2022 $58.4 $61.0 ($2.6)
Q2-FY 2021/2022 $45.1 $52.5 ($7.5)
Q3-FY 2021/2022 $43.8 $50.3 ($6.5)
Q4-FY 2021/2022 $92.0 $58.4 $33.6
Total YTD 2021/2022 $239.2 $222.2 $17.0
Q1-FY 2022/2023 $114.0 $120.0 ($6.0)
Q2-FY 2022/2023 $101.2 $100.6 $0.6
Q3-FY 2022/2023 $107.1 $72.1 $35.1
Q4-FY 2022/2023 $106.4 $75.1 $31.3
Total YTD FY22/23 $428.8 $367.8 $61.0
Revenue vs Budget
Peninsula Clean Energy 8
Revenue – Monthly Trend
Revenue (Last 13 Months) June-23
Month
Actual Budget Var Fav/(Unf)
Jun-22 $36.3 $23.3 $13.0
Jul-22 $35.2 $39.2 ($3.9)
Aug-22 $37.0 $41.1 ($4.1)
Sep-22 $41.7 $39.7 $2.0
Oct-22 $32.4 $33.8 ($1.4)
Nov-22 $33.8 $31.6 $2.2
Dec-22 $35.0 $35.2 ($0.2)
Jan-23 $34.9 $26.6 $8.3
Feb-23 $35.2 $23.2 $12.0
Mar-23 $37.1 $22.3 $14.8
Apr-23 $32.0 $20.0 $12.1
May-23 $34.6 $24.0 $10.6
Jun-23 $39.8 $31.2 $8.7
Revenue Comparison vs Budget (in Millions)
Peninsula Clean Energy
Cost of Energy – Quarterly Trend
9 Quarterly
• Q4 Cost of Energy was $0.5 MM
above Budget
• Despite higher load than
Budget
• Most significant negative
variance was the result of high
Resource Adequacy costs.
• Other energy costs (in total)
were below Budget
Cost of Energy by Quarter as of June 30,2023 June-23
Quarter
Actual Budget Var Fav/(Unf)
Q1-FY 2021/2022 $56.5 $57.6 $1.1
Q2-FY 2021/2022 $51.1 $53.9 $2.8
Q3-FY 2021/2022 $56.2 $52.9 ($3.4)
Q4-FY 2021/2022 $62.8 $52.3 ($10.5)
Total YTD 2021/2022 $226.7 $216.7 ($10.0)
Q1-FY 2022/2023 $84.9 $77.3 ($7.6)
Q2-FY 2022/2023 $71.6 $66.3 ($5.3)
Q3-FY 2022/2023 $51.3 $58.2 $6.9
Q4-FY 2022/2023 $62.9 $62.4 ($0.5)
Total YTD FY22/23 $270.7 $264.2 ($6.5)
Cost of Energy vs. Budget
Peninsula Clean Energy 10
Cost of Energy – Monthly Trend
Cost of Energy (Last 13 months) June-23
Month
Actual Budget Var Fav/(Unf)
Jun-22 $23.6 $18.2 ($5.4)
Jul-22 $23.1 $23.7 $0.6
Aug-22 $25.7 $26.9 $1.2
Sep-22 $36.1 $26.7 ($9.4)
Oct-22 $19.1 $21.9 $2.8
Nov-22 $21.1 $21.5 $0.5
Dec-22 $31.4 $22.8 ($8.6)
Jan-23 $16.3 $19.8 $3.5
Feb-23 $17.6 $18.4 $0.7
Mar-23 $17.3 $20.0 $2.7
Apr-23 $19.1 $19.3 $0.1
May-23 $19.9 $21.4 $1.5
Jun-23 $23.9 $21.8 ($2.1)
Revenue Comparison vs Budget (in Millions)
Peninsula Clean Energy
FY 2022-23 Q4 Financial Performance –
Year to Date Actual vs. Budget
11 Actual Budget Var Fav/ (Unf) Actual Budget Var Fav/ (Unf)
OPERATING REVENUES
Electricity Sales, net 105,727,831 74,470,195 31,257,637 425,744,218 364,961,141 60,783,077 Green electricity premium 714,647 676,109 38,538 3,011,460 2,822,550 188,910 Total Operating Revenue 106,442,478 75,146,303 31,296,174 428,755,678 367,783,691 60,971,987
OPERATING EXPENSES
Cost of energy 62,894,824 62,436,641 (458,182) 270,659,009 264,208,440 (6,450,570) Staff compensation 2,208,995 2,145,805 (63,189) 8,001,778 8,583,221 581,443 Data Manager 885,321 900,000 14,679 3,604,390 3,600,000 (4,390) Service Fees - PG&E 333,045 337,500 4,455 1,323,863 1,350,000 26,137 Consultants & Professional Services 240,898 316,360 75,461 951,686 1,431,813 480,127 Legal 217,047 368,500 151,453 1,205,757 1,474,000 268,243 Communications and Noticing 280,920 737,677 456,757 1,329,437 2,686,208 1,356,771 General and Administrative 618,780 588,669 (30,111) 2,283,867 2,382,000 98,133 Community Energy Programs 3,171,051 2,160,000 (1,011,051) 7,580,877 8,640,000 1,059,123 Depreciation 18,313 24,000 5,687 75,078 96,000 20,922
Total Operating Expenses 70,869,193 70,015,152 (854,041) 297,015,742 294,451,682 (2,564,060) Operating Income (Loss) 35,573,284 5,131,151 30,442,133 131,739,936 73,332,009 58,407,927 NON-OPERATING REVENUES (EXP.)
Total Nonoperating Income/(Expense) 448,719 150,000 298,719 2,416,131 600,000 1,816,131 CHANGE IN NET POSITION 36,022,004 5,281,151 30,740,852 134,156,067 73,932,009 60,224,058 Current Quarter
Quarter ending June 2023
Year-to-date
Peninsula Clean Energy
Change in Net Position (Year-to-date)
12 YTD
• CINP is $134.2 MM, well above
the Budget level
Compared to Prior Year
• Full-year CINP of $134.2 MM is
significantly better than $31.5 MM
loss in the prior year
• Significant increases in rates more
than offset higher energy costs Change in Net Position - YTD as of June 2023 June-23 Actual Budget Variance
Revenues $ 428,755,678 $ 367,783,691 $ 60,971,987
Cost of Energy 270,659,009 264,208,440 (6,450,570)
Other Opex 26,356,733 30,243,242 3,886,509
Non-Opex/ (Income) 2,416,131 600,000 1,816,131
Net Position $ 134,156,067 $ 73,932,009 $ 60,224,058
Change in Net Position - Year-over-year as of June 2023 YTD 2022-23 YTD 2021-22 Variance
Revenues $ 428,755,678 $ 237,898,558 $ 190,857,120
Cost of Energy 270,659,009 226,678,063 (43,980,946)
Other Opex 26,356,733 19,861,267 (6,495,466)
Non-Opex/ (Income) 2,416,131 (4,405,547) 6,821,678
Net Position $ 134,156,067 $ (13,046,319) $ 147,202,386 Year-over-year Comparison (YTD)
Year-to-date vs Budget
Peninsula Clean Energy
Cash Reserves – Days Cash on Hand
13 Actual June 30,
2023
Total Cash/ Investments Balance $254,073,593
Restricted by Term/ Covenant $0
Unrestricted Cash (per Approved Reserve Policy) $254,073,593 Days Cash on Hand (per Approved Reserve Policy) 312
Approved Reserve Policy (Days Cash on Hand) 180
Unrestricted Cash in Excess of Current Reserve Policy $107,600,077 Peninsula Clean Energy
Cash and Investment Summary – Quarterly Trend
14 Investment Manager balances at
06/30/2023:
• PFM = $64.3 MM
• FRB = $60.0 MM
Note: $14.7 MM of cash is on deposit with CAISO and not reflected in this summary Cash and Investment Summary - Quarterly Trend
Jun-22 Sep-22 Dec-22 Mar-23 Jun-23
Investment Account - US Bank (Combined PFM/FRB)
Asset Summary
Cash & Equivalents $ 181,685 $ 2,561,110 $ 184,866 $ 284,672 $ 505,766 Accrued Income $ - $ - $ - $ 568,609
Fixed Income $ 125,734,015 $ 119,021,594 $ 122,716,994 $ 124,675,994 $ 123,279,696 Ending Balance $ 125,915,700 $ 121,582,704 $ 122,901,860 $ 124,960,666 $ 124,354,070 Other Accounts (Unrestricted)
Unrestricted - Wilmington LockBox $ 8,133,146 $ 8,629,298 $ 9,255,756 $ 46,206,759 $ 62,335 Operating Account - First Republic $ 1,365,681 $ 13,332,832 $ 17,476,093 $ 29,023,794 $ 32,373,431 Savings Account - First Republic $ 74,032 $ 678,657 $ 36,540,546 $ 1,908,497 $ 8,497 Fidelity MMA $ - $ - $ 20,029,063 $ 50,529,226
Schwab MMA $ - $ - $ - $ 46,743,235
Other Accounts $ 22,908 $ 2,800 $ 2,800 $ (1,300) $ 2,800 Subtotal Unrestricted (non-Investment accounts) $ 9,595,766 $ 22,643,588 $ 63,275,194 $ 97,166,813 $ 129,719,523 Other Accounts (Restricted)
Restricted Cash - Wilmington LockBox $ - $ - $ - $ - $ - Restricted Cash - First Republic $ - $ - $ - $ - $ -
Subtotal Restricted (non-Investment accounts) $ - $ - $ - $ - $ - Total Cash $ 135,511,466 $ 144,226,292 $ 186,177,054 $ 222,127,480 $ 254,073,593 Peninsula Clean Energy
Proposed Revisions to Policy #14 and Policy #17
• Policy #14 spells out who can approve/sign contracts that commit PCE to payment
• Policy #17 spells out who must review and approve invoices to authorize payment by wire, check or ACH
• PCE has grown and matured and added significant strength in senior and middle management staff to warrant streamlining of activities and pushing responsibility closer to competent managers
15 Peninsula Clean Energy
Proposed Revisions to Policy #14
Delegation of Authority Policy
• Policy #14 spells out who can approve/sign contracts that commit PCE to payment
• Current policy
o CEO can approve any contract/commitment up to $100,000 if the commitment is included in the already Board-approved budget
o CFO can approve any contract /commitment for “Operating or General and Administrative Expenses” up to $100,000 if included in approved budget • Proposed policy
o CEO, COO, or CFO can approve any contract/commitment up to $100,000 if included in approved budget
16 Peninsula Clean Energy
Recommendation/Resolution
RESOLUTION RECOMMENDING THAT THE BOARD OF DIRECTORS
APPROVE THE REVISED POLICY #14
17 Peninsula Clean Energy
Proposed Revisions to Policy #17
Disbursement and Invoice Payment Policy
• Invoice Approvals
o No change to policy that requires manager/director of each area, who are closest to the expense commitment, to be involved in approving any invoice before a payment can be processed
o No change to policy requiring final approval by CFO or CEO of every invoice payment before a payment can be processed
• Approval Levels - Different levels by expense area
1. Invoices not related to Power Resources
2. Invoices related to Power Resources administration activities
3. Invoices related to Energy/Electricity procurement
18 Peninsula Clean Energy
Proposed Revisions to Policy #17
Invoices NOT related to Power Resources activity
o Up to $10,000 – Level 1: Responsible area Manager or Director approval o $10,000 to $100,000 – Level 2: Responsible area Director approval is required. o Over $100,000 – Level 3: CEO or COO approval is required. COO can only approve invoices relating to areas of supervisorial responsibility. o Following the required approvals above, the CFO will review and approve ALL invoices, regardless of amount. In the event that CFO is not available, CEO approval is required.
19 Peninsula Clean Energy
Proposed Revisions to Policy #17
Invoices related to Power Resources administration
• Expenses in the following categories (examples)
o Consulting
o Legal
o Forecasting and scheduling
o Subscriptions
o Penalties and interest
• Invoice Approval Levels
o Up to $10,000 – Level 1: Responsible area Manager or Director approval o $10,000 to $100,000 – Level 2: Responsible area Director approval is required. o Over $100,000 – Level 3: CEO approval is required.
o Following the required approvals above, the CFO will review and approve ALL invoices, regardless of amount. In the event that CFO is not available, CEO approval is required.. 20 Peninsula Clean Energy
Proposed Revisions to Policy #17
Invoices related to Energy/Electricity activity
• Expenses in the following categories (examples)
o CAISO charges and collateral deposits
o Hedge and PPA energy purchases
o RECs and Carbon Free expenses
o Resource Adequacy
o PPA and other Supplier Security Deposits
• Invoice Approval Levels
o Up to $3,000,000 – Level 1 and Level 2 - Responsible area Manager AND Director of Power Resources are required.
o Over $3,000,000 – Level 3 – CEO approval is required. o In the 10 months from July 1, 2022, through April 30, 2022, 378 payments were made. Of those, 14 were over $3,000,000 and 137 were under $100,000.
o Following the required approvals above, the CFO will review and approve ALL invoices, regardless of amount. In the event that CFO is not available, CEO approval is required. 21 Peninsula Clean Energy
Recommendation/Resolution
RESOLUTION RECOMMENDING THAT THE BOARD OF DIRECTORS
APPROVE THE REVISED POLICY #17
22 Committee Members’ Reports
Adjournment