Audit & Finance Committee Meeting
May 13, 2024
The meeting will begin shortly. Thank you!
Chair Report
Appointment of Audit and Finance
Committee Chair
Staff Report
Peninsula Clean Energy
Staff Report
• Excess cash fully invested -- CAMP (~$140M), Chandler (~$100M) and PFM (~$100M)
• Moody’s meeting on May 7
• Preparing for possible Prepay transaction
• Engaged PFM and Chapman & Cutler
• Launched RFP for investment bank, presentations planned for the week of June 3 • FY 2025 budget and 5-year forecast, including updated cost of service rate setting methodology (presentation today)
• Rate Stabilization Fund (presentation today)
• Staffing update
Q3 FY24 Financial Review
Peninsula Clean Energy 7
Detailed Financial Statement
Actual Budget Var Fav/(Unf) Actual Budget Var Fav/(Unf)
OPERATING REVENUES
Electricity sales, net 110,731,354 113,289,646 (2,558,292) 341,678,584 363,569,288 (23,251,245) Green electricity premium 714,057 705,821 8,236 2,263,594 2,237,285 26,309 Total Operating Revenue 111,445,411 113,995,468 (2,550,057) 343,942,178 365,806,573 (23,224,935)
OPERATING EXPENSES
Cost of energy 81,959,563 80,371,497 (1,588,066) 245,881,512 241,381,216 (4,500,296) Gross Profit 29,485,848 33,623,971 (4,138,123) 98,060,666 124,425,357 (26,364,691)
OTHER OPERATING EXPENSES
Staff compensation 2,637,659 2,708,200 70,542 7,022,898 8,214,601 1,191,703 Data manager 884,644 967,788 83,144 2,651,838 2,903,364 251,526 Service fees - PG&E 330,120 350,000 19,880 989,577 1,050,000 60,423 Consultants & professional services 243,630 349,412 105,782 908,504 1,434,079 525,575 Legal 252,786 390,640 137,853 636,315 1,183,919 547,604 Communications and noticing 825,937 626,710 (199,227) 1,626,332 2,323,430 697,098 General and administrative 666,374 1,009,701 343,328 2,134,462 3,097,683 963,222 Community Energy Programs 4,070,227 3,181,500 (888,727) 10,127,887 9,544,500 (583,387) Depreciation 21,176 70,250 49,074 59,140 133,667 74,527 Total Other Operating Expenses 9,932,552 9,654,201 (278,351) 26,156,952 29,885,243 3,728,290 OPERATING INCOME 19,553,296 23,969,770 (4,416,474) 71,903,714 94,540,114 (22,636,400) Non-Operating Income 4,554,066 161,298 4,392,768 12,485,774 483,894 12,001,880 CHANGE IN NET POSITION 24,107,362 24,131,068 (23,706) 84,389,488 95,024,008 (10,634,521) Quarter Ending March 2024 YTD March 2014
Peninsula Clean Energy
(in MWh) Actual Budget Variance Var (%)
Residential 1,075,134 1,159,651 (84,517) -7.3%
Commercial and Industrial 1,487,294 1,510,342 (23,048) -1.5% Total 2,562,428 2,669,994 (107,565) -4.0%
YTD Base Load
• YTD load 4% below budget due in part to mild
summer and warmer winter
• Q3 variance (-5%) partly due to under-estimating
behind the meter generation and over-estimating
EV charging behavior
• Revisiting load forecasting methodology
8 Customer Load
200,000
225,000
250,000
275,000
300,000
325,000
350,000
Jul Aug Sept Oct Nov Dec Jan Feb Mar
Total Load (MWh)
Actuals Budget FY22-23 Actual
Peninsula Clean Energy
Actual Budget Fav/(Unf) Fav/(Unf)
Q1-FY 2022/2023 $114.0 $120.0 ($6.0) -5.0%
Q2-FY 2022/2023 101.2 100.6 0.6 0.6%
Q3-FY 2022/2023 107.1 72.1 35.1 48.6%
Q4-FY 2022/2023 106.4 75.1 31.3 41.6%
Total 2022/2023 $428.8 $367.8 $61.0 16.6%
Q1-FY 2023/2024 $133.0 $136.0 ($3.0) -2.2%
Q2-FY 2023/2024 99.5 115.9 (16.3) -14.1%
Q3-FY 2023/2024 111.4 114.0 (2.6) -2.2%
YTD FY 2023/2024 $343.9 $365.8 ($21.9) -6.0%
Variance
Revenue
9 • Q3 revenue is $2.6 million (-2%)
below budget
• Due primarily to lower load than
budgeted
• YTD revenue is $21.9 million
(-6%) below budget
• $12 million CARE/FERA rebate
in December
• Lower load than budgeted
Peninsula Clean Energy
Actual Budget Fav/(Unf) Fav/(Unf)
Q1-FY 2022/2023 $84.9 $77.3 ($7.6) -9.8%
Q2-FY 2022/2023 71.6 66.3 (5.3) -8.0%
Q3-FY 2022/2023 51.3 58.2 6.9 11.9%
Q4-FY 2022/2023 57.4 62.4 5.0 8.0%
Total 2022/2023 $265.2 $264.2 ($1.0) -0.4%
Q1-FY 2023/2024 $93.8 $90.5 ($3.3) -3.6%
Q2-FY 2023/2024 70.2 70.5 0.4 0.5%
Q3-FY 2023/2024 82.0 80.4 (1.6) -2.0%
YTD FY 2023/2024 $245.9 $241.4 ($4.5) -1.9%
Variance
Cost of Energy
10 • Q3 cost of energy is $1.6 million
(2%) higher than budget, despite
lower load
• Due primarily to higher RA costs
($5.5 million), which was
expected, and congestion costs
Peninsula Clean Energy
Actual Budget
Var
Fav/(Unf)
Var
Fav/(Unf)
Revenues $343.9 $365.8 ($21.9) -6.0%
Cost of Energy 245.9 241.4 (4.5) -1.9%
Gross Profit $98.1 $124.4 ($26.4) -21.2%
Other Opex 26.2 29.9 3.7 12.5%
Non-Operating Income 12.5 0.5 12.0 2480.3%
Change in Net Position $84.4 $95.0 ($10.6) -11.2%
YTD 2024 YTD 2023
Var
Fav/(Unf)
Var
Fav/(Unf)
Revenues $343.9 $322.3 $21.6 6.7%
Cost of Energy 245.9 207.8 (38.1) -18.3%
Gross Profit $98.1 $114.5 ($16.5) -14.4%
Other Opex 26.2 18.4 (7.8) -42.3%
Non-Operating Income 12.5 2.0 10.5 534.6%
Change in Net Position $84.4 $98.1 ($13.7) -14.0%
Year-to-Date vs FY23 (in millions)
Year-to-Date vs Budget (in millions)
Change in Net Position (CINP)
11 • YTD CINP of $84.4 million is $10.6
million (-11%) below budget
• Primarily due to CARE/FERA
rebate and higher energy costs
• Offset in part by OpEx savings
($3.7 million) and interest income
($12 million)
• Staff compensation below
budget by $1.2 million due to
delayed hiring
• Timing of communications and
marketing spend
Peninsula Clean Energy
(in millions) Mar-23 Jun-23 Sep-23 Dec-23 Mar-24
First Republic Bank $30.9 $32.4 $40.2 $45.7 $15.5
Other Accounts 46.2 0.1 0.0 0.0 0.0
Cash $77.1 $32.4 $40.2 $45.7 $15.5
CAMP 0.0 0.0 0.0 90.2 141.8
PFM 64.7 64.3 64.5 106.7 107.0
Chandler (was FRB) 60.2 60.0 60.2 102.1 102.6
Fidelity 20.0 50.5 71.4 0.0 0.0
Schwab 0.0 46.7 57.4 0.2 0.0
Total Investments $145.0 $221.6 $253.4 $299.3 $351.4
Total Cash & Investments $222.1 $254.1 $293.7 $345.0 $366.9 Days Cash on Hand 268 319 351 370
Cash and Investment Summary – Quarterly Trend
12 Appendix
Peninsula Clean Energy 14
Revenue – Monthly Trend
Actual Budget Var Fav/(Unf) Var Fav/(Unf) %
Dec-22 $35.0 $35.2 ($0.2) -0.5%
Jan-23 34.9 26.6 8.3 31.2%
Feb-23 35.2 23.2 12.0 51.9%
Mar-23 37.1 22.3 14.8 66.2%
Apr-23 32.0 20.0 12.1 60.4%
May-23 34.6 24.0 10.6 44.1%
Jun-23 39.8 31.2 8.7 27.8%
Jul-23 42.8 44.2 (1.3) -3.0%
Aug-23 48.1 46.5 1.6 3.5%
Sep-23 42.0 45.3 (3.3) -7.3%
Oct-23 37.8 38.2 (0.4) -1.1%
Nov-23 35.0 36.8 (1.7) -4.7%
Dec-23 26.7 40.9 (14.2) -34.7%
Jan-24 39.3 41.9 (2.5) -6.0%
Feb-24 36.2 37.7 (1.5) -3.9%
Mar-24 35.9 34.4 1.4 4.2%
Revenue Comparison vs. Budget (in millions)
Peninsula Clean Energy 15
Cost of Energy – Monthly Trend
Actual Budget Var Fav/(Unf) Var Fav/(Unf) %
Dec-22 $31.4 $22.8 ($8.6) -37.6%
Jan-23 16.3 19.8 3.5 17.5%
Feb-23 17.6 18.4 0.7 4.0%
Mar-23 17.3 20.0 2.7 13.7%
Apr-23 19.1 19.3 0.1 0.7%
May-23 19.9 21.4 1.5 7.0%
Jun-23 18.4 21.8 3.4 15.4%
Jul-23 29.2 29.0 (0.2) -0.7%
Aug-23 37.3 34.0 (3.2) -9.5%
Sep-23 27.3 27.5 0.2 0.7%
Oct-23 25.5 24.1 (1.4) -5.7%
Nov-23 21.0 21.4 0.4 1.7%
Dec-23 23.7 25.0 1.4 5.5%
Jan-24 32.6 32.1 (0.5) -1.7%
Feb-24 24.1 25.8 1.6 6.4%
Mar-24 25.2 22.5 (2.7) -12.0%
Cost of Energy Comparison vs. Budget (in millions)
Rate Stabilization Fund
Peninsula Clean Energy
Rate Stabilization Fund Overview
• Accounting policy that allows government entities, such as PCE, to recognize expenses and revenues from rates designed to recover those costs in the same period • Rationale:
o Stabilize customer rates by avoiding rate increases to address spikes in energy costs, or to offset reductions in rates due to the PCIA
o Defer revenues in years when financial results are strong to be used in future years when financial results are not as strong or stressed
o Could be drawn upon to meet potential financial covenants if needed • Accounting impact (see next page):
o Reduce revenues (and Change in Net Position) in the accounting period deferral is made o Increase revenues (and Change in Net Position) in the accounting period revenue is recognized • No impact to cash
• MCE, Clean Power Alliance, Ava and Sonoma Clean Power have implemented Rate Stabilization Funds 17 Peninsula Clean Energy
Year 1 Year 2 Year 3 Year 1 Year 2 Year 3
Electricity Sales $100 $105 $110 $100 $105 $110
Revenue Deferred to/from Rate Stabilization Fund - - - (10) 10 - Total Operating Revenue 100 105 110 90 115 110
Costs 85 109 103 85 109 103
Change in Net Position $15 ($4) $7 $5 $6 $7
Balance Sheet
Cash 15 11 18 15 11 18
Rate Stabilization Fund 10 - -
With Rate Stabilization
Accounting Example
18 No impact
to cash
Revenue deferred
to Year 2
Smooths net
revenue without
changing rates
Peninsula Clean Energy
Proposed Guidelines
• Staff will consider deferral of revenues when projected addition to Net Position is greater than 3% of revenue
• Deposits can be made into the Rate Stabilization Fund until the balance equals 15% of revenues
• Staff will consider withdrawals of revenues when Change in Net Position is projected to be negative or as necessary to satisfy any covenants
• Staff will notify the Board of Directors after a transfer (deferral or recognition) is made 19 Peninsula Clean Energy
Recommendation
• Establish a Rate Stabilization Fund under GASB 62 to help PCE stabilize customer rates
• Authorize the Chief Executive Officer or the Chief Financial Officer to transfer in or transfer out, from time to time, such amount as prudent and appropriate and based on the proposed guidelines
20 Preliminary Budget and
5-Year Forecast
Peninsula Clean Energy
Product FY25 Increase
relative to FY24
Energy ($/MWh) 9%
REC ($/MWh) 69%
GHG-Free ($/MWh) 452%
RA ($/kW-month) 46%
Cost of Energy
• Cost of Energy increase due to:
o Significantly higher REC, GHG-Free and RA prices (see below) o Contingency (~7.5% of FY25 costs)
o Load increase largely due to normalized weather (~5%) and new commercial load for Google, Caltrain, Hudpac, and SMCCD (~3%)
22 2023 2024 2025
Items Actual Actual + Forecast Forecast $ %
Cost of energy 265,207,567 333,944,638 437,859,673 103,915,035 31%
Variance vs FY2024
FY25 Increases
Energy 34,987,771
REC/GHG-Free 11,651,343
Capacity 36,542,643
Other -1,260,983
Contingency 21,994,261
Total 103,915,035
Peninsula Clean Energy
Programs - Expense
• Increase in Programs expense driven by:
o Surplus Funds (member agency grants and school building electrification) o New programs (GovBE, Turnkey BE, Resi PV+storage)
o Ramp-up in existing programs (Home Upgrade, appliances, EV charging) 23 2023 2024 2025
Items Actual Actual + Forecast Forecast $ %
Community Energy Programs 7,233,127 13,309,387 27,370,000 14,060,613 106% Variance vs FY2024
Expenses
Buildings - Codes 200,000
Buildings - Existing 15,000,000
EV - Vehicles 800,000
EV - Managed Chg 150,000
EV - Chg (EV Ready) 4,000,000
EV - Fleet 360,000
EV - Bike 300,000
DER - Gov Solar 160,000
DER - Residential 500,000
DER - FLEXmarket 2,200,000
Member Agency Energy Grants 3,000,000
Other/misc/uncategorized 700,000
Peninsula Clean Energy
Programs – Revenue and Capital Expense
• Expanded capital programs
o GovPV ($21 million)
o Surplus Funds (~$7 million) --
financing for GovBE and
residential storage
• Programs expenses offset by
external revenues ($5.1 million)
and return of capital ($1.7 million)
24 Program Revenues
CPUC Revenues (2,300,000)
Menlo Park CEC Grant (2,000,000)
Other (CALeVIP return) (800,000)
Total External Revenues (5,100,000)
Balance Sheet
Outlay
OBF Capital 3,000,000
DER-Gov Solar 21,100,000
GovBE Capital 3,600,000
Resi Energy Storage 3,000,000
Inflow
OBF Revenues (950,000)
DER-Gov Solar (240,000)
GovBE Revenue (514,286)
All Revenues & Outlays 23,895,714
Peninsula Clean Energy
Compensation
• Staff compensation increase due to:
o 14 additional headcount in FY24 (3 of which were vacancies from 2023) o 8 new headcount proposed in FY25 (4 of which are for the proposed in-house customer contact center)
o Assumes 7% salary increase effective July 1 (average of 5% merit/COLA plus selective market adjustments)
• Proforma compensation increase of 18% (assuming full staffing in 2024) 25 2023 2024 2025
Items Actual Actual + Forecast Forecast $ %
Staff compensation 8,001,778 9,731,098 13,492,872 3,761,774 39% # of FTE 39 53 61
% of Revenue 1.9% 2.4% 2.8%
Variance vs FY2024
Peninsula Clean Energy
Other Operating Expenses
• Calpine and PG&E costs relatively stable
• Consultants increase primarily due to Power Resources (battery optimization, transmission and reclass of broker fees)
• Legal increase due to anticipated Federal and Power Resources support • Communication increase due to branding, marketing and website support ($550k) and community partner and school grants ($200k)
• G&A increase primarily due to new software across multiple departments ($1.5 million) 26 2023 2024 2025
Items Actual Actual + Forecast Forecast $ %
Data Manager 3,604,390 3,619,626 3,600,000 (19,626) -1% Service Fees - PG&E 1,323,863 1,339,577 1,334,400 (5,177) 0% Consultants & Professional Services 951,686 1,262,916 1,641,002 378,086 30% Legal 1,205,757 1,026,954 1,396,509 369,555 36%
Communications and Noticing 1,329,437 2,153,842 2,700,073 546,231 25% General and Administrative 2,283,867 3,064,014 4,835,836 1,771,821 58% Depreciation 75,078 160,223 338,644 178,421 111%
Variance vs FY2024
Peninsula Clean Energy
No Rate Change "Break-Even" 5% discount
Operating Revenues 495,637,925 487,205,448 475,333,286
Rate Stabilization Fund - - 15,000,000
Revenues 495,637,925 487,205,448 490,333,286
Total Costs 487,205,448 487,205,448 487,205,448
Change in Net Position 8,432,477 - 3,127,838
Total Cash & Cash Equivalents 355,843,715 347,511,696 335,539,076 Days Cash on Hand (DCOH) 263 257 248
Discount to PG&E 0% -3% -5%
Fiscal Year 2025
FY2025 Revenue Scenarios
• Anticipating 11% decrease in PG&E generation rates in July 2024 (will be confirmed in June) • Three rate/revenues scenarios
• Recognition of revenue from the Rate Stabilization Fund in FY25 will allow PCE to offer a 5% discount to PG&E while maintaining sufficient DCOH (248 days) 27 Peninsula Clean Energy
2023 2024 2025
Items Actual Actual + Forecast Forecast $ %
OPERATING REVENUES
Electricity Sales, net 423,844,351 446,408,470 466,932,277 20,523,807 5% Green electricity premium 3,011,460 2,986,702 3,061,010 212,294 7% Non-Energy Related Revenue 2,151,927 4,296,016 5,340,000 1,085,581 25% Rate Stabilization Fund (65,000,000) 15,000,000 74,660,000 -115% Total Operating Revenues 429,007,738 388,691,188 490,333,286 21,642,098 6% Variance vs FY2024
FY2025 Revenue – 5% discount
• 5% increase in revenues (excluding the Rate Stabilization Fund) due to increased base load (8%), CARE/FERA rebate in 2024, offset by lower average net rates
28 Excludes impact of
Rate Stabilization Fund
Peninsula Clean Energy
2023 2024 2025 2026 2027 2028 2029
Items Actual Actual + Forecast Forecast Forecast Forecast Forecast Forecast
OPERATING REVENUES
Electricity Sales, net 423,844,351 446,408,470 466,932,277 499,829,350 499,376,223 475,428,413 506,178,840 Green electricity premium 3,011,460 2,986,702 3,061,010 3,077,269 3,093,691 3,110,278 3,127,030 Non-Energy Related Revenue 2,151,927 4,296,016 5,340,000 13,365,000 3,950,000 2,235,000 12,820,000 Rate Stabilization Fund (65,000,000) 15,000,000 20,000,000 - - - Total Operating Revenues 429,007,738 388,691,188 490,333,286 536,271,619 506,419,914 480,773,691 522,125,870
OPERATING EXPENSES
Cost of energy 265,207,567 333,944,638 437,859,673 472,862,283 431,493,210 409,195,902 442,113,059 Gross Profit 163,800,171 54,746,550 52,473,613 63,409,336 74,926,704 71,577,789 80,012,811
OTHER OPERATING EXPENSES
Staff compensation 8,001,778 9,731,098 13,492,872 15,942,859 17,178,593 18,693,021 19,902,748 Data Manager 3,604,390 3,619,626 3,600,000 3,600,000 3,600,000 3,600,000 3,600,000 Service Fees - PG&E 1,323,863 1,339,577 1,334,400 1,334,400 1,334,400 1,334,400 1,334,400 Consultants & Professional Services 951,686 1,262,916 1,641,002 1,664,706 1,676,312 1,681,077 1,700,590 Legal 1,205,757 1,026,954 1,396,509 1,444,598 1,496,382 1,548,977 1,605,545 Communications and Noticing 1,329,437 2,153,842 2,700,073 2,129,493 2,176,283 2,224,481 2,274,138 General and Administrative 2,283,867 3,064,014 4,835,836 4,896,589 5,142,698 5,383,924 5,615,312 Community Energy Programs 7,233,127 13,309,387 27,370,000 34,680,000 36,760,000 32,060,000 43,310,000 Depreciation 75,078 160,223 338,644 1,518,644 2,684,894 2,684,894 2,684,894 Total Other Operating Expenses 26,008,983 35,667,638 56,709,337 67,211,290 72,049,562 69,210,775 82,027,628 Operating Income (Loss) 137,791,188 19,078,912 (4,235,724) (3,801,954) 2,877,142 2,367,014 (2,014,817) NON-OPERATING REVENUES (EXP.)
Total Nonoperating Income/(Expense) 2,164,071 12,647,072 7,363,562 7,363,562 7,363,562 7,363,562 7,363,562 CHANGE IN NET POSITION 139,955,259 31,725,983 3,127,838 3,455,104 10,127,809 9,610,908 5,221,897 Total Cash & Cash Equivalents 254,073,593 376,646,952 335,539,076 302,049,256 306,322,816 311,170,535 312,340,708 DCOH 319 372 248 205 223 239 219
Preliminary 5-Year Forecast
29 Committee Members’ Reports
Adjournment