2075 Woodside Road | Redwood City, CA 94061
(650) 260-0005 | peninsulacleanenergy.com
Regular meeting of the Audit and Finance Committee of the Peninsula Clean Energy Authority (PCEA)
AGENDA
Tuesday, October 15, 2024
8:30 am
PLEASE NOTE: This meeting will be held in a hybrid format with both in-person and Zoom participation options for members of the public;
Board members shall appear in person.
In-Person Meeting Location:
PCEA Lobby, 2075 Woodside Road, Redwood City, CA 94061
Zoom, Virtual Meeting Link:https://pencleanenergy.zoom.us/j/89514559357 Meeting ID: 895-1455-9357 Passcode: 2075 Phone: +1 (669) 444-9171
INTRODUCTION
This meeting of the Peninsula Clean Energy Audit and Finance Committee will be held at the Peninsula Clean Energy Lobby: 2075 Woodside Road, Redwood City, CA 94061 and by teleconference pursuant to California Assembly Bill 2449 and the Ralph M. Brown Act, CA Gov’t Code. Section 54950, et seq.
Members of the Committee are expected to attend the meeting in person and should reach out to Assistant General Counsel for Peninsula Clean Energy, Jennifer Stalzer, with questions or accommodation information ([email protected]). For information regarding how to participate in the meeting remotely, please refer to the instructions at the end of the agenda. In addition, a video broadcast of the meeting can be viewed at https://www.peninsulacleanenergy.com/Audit and Finance-committee following the meeting.
Public Participation
The PCEA Audit and Finance Committee meeting may be accessed through Zoom online at https://pencleanenergy.zoom.us/j/89514559357. The meeting ID is: 895-1455-9357 and the passcode is:
2075. The meeting may also be accessed via telephone by dialing +1(669) 444-9171. Enter the webinar ID: 895-1455-9357, then press #. (Find your local number:
https://pencleanenergy.zoom.us/u/kTlH1Ocod). Peninsula Clean Energy uses best efforts to ensure audio and visual clarity and connectivity. However, it cannot guarantee the connection quality.
Members of the public can also attend this meeting physically at the Peninsula Clean Energy Lobby at 2075 Woodside Road, Redwood City, CA 94061.
Written public comments may be emailed to PCEA Board Clerk, Nelly Wogberg ([email protected]) and such written comments should indicate the specific agenda item on which the member of the public is commenting.
Spoken public comments will be accepted during the meeting in the Board Room(s) or remotely through Zoom at the option of the speaker. Please use the “Raise Your Hand” function in the Zoom platform, or press *6 if you phoned into the meeting, to indicate that you would like to provide comment. 1 1. Approval of Minutes from the August 12, 2024 Audit and Finance Committee Meeting
2. Chair Report
3. Staff Report
4. Receive and Recommend Approval of the Audited Financial Statements for Fiscal Year 2023-2024 (Action)
5. Committee Members' Reports (Discussion)
Please note that Peninsula Clean Energy Audit and Finance Committee meetings are a limited public forum, and all public comment must relate to something that is within the subject matter jurisdiction of the Committee. If comments do not relate to the subject matter jurisdiction of the Committee, we will stop the comment and move on to the next speaker. General Counsel will assist in identifying comments that are not related to the subject matter jurisdiction of the Committee.
ADA Requests
Individuals who require 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, should contact Nelly Wogberg, Board Clerk, by 10:00 a.m. on the day before the meeting at ([email protected]). Notification in advance of the meeting will enable PCEA to make reasonable arrangements to ensure accessibility to this meeting, the materials related to it, and your ability to comment.
Closed Captioning is available for all PCEA Board meetings. While watching the video broadcast in Zoom, please enable captioning.
CALL TO ORDER / ROLL CALL / APPROVE TELECONFERENCE PARTICIPATION UNDER AB 2449
This item is reserved to approve teleconference participation request for this meeting by Director pursuant to Brown Act revisions of AB 2449 due to an emergency circumstance to be briefly described.
PUBLIC COMMENT
This item is reserved for persons wishing to address the Committee on any PCEA-related matters that are not otherwise on this meeting agenda. Public comments on matters listed on the agenda shall be heard at the time the matter is called. Members of the public who wish to address the Committee are customarily limited to two minutes per speaker. The Committee Chair may increase or decrease the time allotted to each speaker.
ACTION TO SET AGENDA AND TO APPROVE CONSENT AGENDA ITEMS
REGULAR AGENDA
ADJOURNMENT
Public records that relate to any item on the open session agenda are available for public inspection. The records are available at the Peninsula Clean Energy offices or on PCEA Website at:
https://www.peninsulacleanenergy.com.
JOINING INSTRUCTIONS
2 Instructions for Joining a Zoom Meeting via Computer or Phone Best Practices:
Please mute your microphone when you are not speaking to minimize audio feedback If possible, utilize headphones or ear buds to minimize audio feedback If participating via videoconference, audio quality is often better if you use the dial-in option (option 2 below) rather than your computer audio
Options for Joining
Videoconference with Computer Audio - see Option 1 below Videoconference with Phone Call Audio - see Option 2 below Calling in via Telephone/Landline - see Option 3 below
Videoconference Options:
Prior to the meeting, we recommend that you install the Zoom Meetings application on your computer by clicking here https://zoom.us/download.
If you want full capabilities for videoconferencing (audio, video, screensharing) you must download the Zoom application.
Option 1 Videoconference with Computer Audio:
From your computer, click on the following link that is also included in the meeting calendar invitation: https://pencleanenergy.zoom.us/j/89514559357 The Zoom application will open on its own or you will be instructed to open Zoom.
After the application opens, the pop-up screen below will appear asking you to choose ONE of the audio conference options. Click on the Computer Audio option at the top of the pop-up screen.
Click the blue, "Join with Computer Audio" button.
In order to enable video, click on "Start Video" in the bottom left-hand corner of the screen. This menu bar is also where you can mute/unmute your audio.
Option 2 Videoconference with Phone Call Audio
From your computer, click on the following link that is also included in the Meeting Calendar Invitation: https://pencleanenergy.zoom.us/j/89514559357 The Zoom Application will open on its own or you will be instructed to Open Zoom. 3 After the application opens, the pop-up screen below will appear asking you to choose ONE of the audio conference options. Click on the Phone Call option at the top of the pop-up screen.
Please dial +1 (669) 444-9171.
You will be instructed to enter the meeting ID: 895-1455-9357 followed by #.
You will be instructed to enter in your participant ID. Your participant ID is unique to you and is what connects your phone number to your Zoom account.
After a few seconds, your phone audio should be connected to the Zoom application on your computer.
In order to enable video, click on "Start Video" in the bottom left-hand corner of the screen. This menu bar is also where you can mute/unmute your audio.
Audio Only Options:
Please note that if you call in/use the audio only option, you will not be able to see the speakers or any presentation materials in real time.
Option 3: Calling in via Telephone/Landline:
Please dial +1 (669) 444-9171.
You will be instructed to enter the meeting ID: 895-1455-9357 followed by #.
You will be instructed to enter your Participant ID followed by #. If you do not have a participant ID or do not know it, you can press # to stay on the line.
You will be instructed to enter the meeting passcode 2075 followed by #. 4 DATE: May 6, 2024
MEETING DATE: October 15, 2024
VOTE REQUIRED: Majority Vote
TO: Honorable Peninsula Clean Energy Authority Executive Committee FROM: Nelly Wogberg, Board Clerk
SUBJECT: Approval of Minutes from the August 12, 2024 Audit and Finance Committee Meeting
Item No. 1
PENINSULA CLEAN ENERGY AUTHORITY
JPA Board Correspondence
RECOMMENDATION
Approval of Minutes from the August 12, 2024 Audit and Finance Committee Meeting ATTACHMENTS:
08-12-24 Special AFC Minutes.pdf
5 Special Meeting of the Audit and Finance Committee of the Peninsula Clean Energy Authority (PCEA)
Minutes
Monday, August 12, 2024
10:00 a.m.
Zoom Video Conference and Teleconference
CALL TO ORDER
Meeting was called to order at 10:06 a.m. in virtual teleconference, in the Peninsula Clean Energy Authority lobby, and is Los Banos City Hall Conference Room B.
ROLL CALL
Participating:
Tom McCune, Belmont Participating under AB 2449
Donna Colson, Burlingame,
Carlos Romero, East Palo Alto, Chair
Leslie Ragsdale, Hillsborough
Paul Llanez, Los Banos
Absent:
A quorum was established.
PUBLIC COMMENT: None
Motion to Approve Remote Participation under AB 2449 for Director Tom McCune Director Colson moved, seconded by Director Romero to allow Tom McCune to Participate remotely MOTION PASSED: 5-0 (Absent: 0)
JURISDICTION BOARD MEMBER YES NO ABSTAIN ABSENT
Belmont Director McCune X
Burlingame Director Colson X
East Palo Alto Director Romero X
Hillsborough Director Ragsdale X
Los Banos Director Llanez X
Totals 5
ACTION TO SET AGENDA AND TO APPROVE CONSENT AGENDA ITEMS Public Comment: None
MOTION: Director Ragsdale moved, seconded by Director Colson to set the Agenda and approve Agenda Item Number 1.
1. Approval of the Minutes for the May 13, 2024 Meeting 6 MOTION PASSED: 5-0 (Absent: 0)
JURISDICTION BOARD MEMBER YES NO ABSTAIN ABSENT
Belmont Director McCune X
Burlingame Director Colson X
East Palo Alto Director Romero X
Hillsborough Director Ragsdale X
Los Banos Director Llanez X
Totals 5
REGULAR AGENDA
2. Chair Report
Carlos Romero, Chair of the Audit and Finance Committee gave a brief chair report.
3. Staff Report
Nick Bijur, Chief Financial Officer, provided an update to the Committee on Prepay Transaction, and the JP Morgan / First Republic Bank Integration.
4. Q4 Fiscal Year 2024 Financial Report (Quarter Ending June 30, 2024) (Discussion) Nick Bijur, Chief Financial Officer, provided an update to the Committee on the Q4 Fiscal Year 2024 Financial Report.
Public Comment: None
5. Committee Members’ Reports
None.
ADJOURNMENT
Meeting was adjourned at 10:45a.m.
7 DATE: October 3, 2024
MEETING DATE: October 15, 2024
VOTE REQUIRED: Majority Vote
TO: Honorable Peninsula Clean Energy Authority Audit and Finance Committee FROM: Nicholas Bijur, Chief Financial Officer
SUBJECT: Receive and Recommend Approval of the Audited Financial Statements for Fiscal Year 2023-2024 (Action)
Item No. 4
PENINSULA CLEAN ENERGY AUTHORITY
JPA Board Correspondence
RECOMMENDATION
Receive and Recommend Approval of the Audited Financial Statements for Fiscal Year 2023- 2024.
BACKGROUND
The financial statements for Fiscal Year 2023-2024 have been prepared by Peninsula Clean Energy's (PCE) finance team, with support from Maher Accountancy, and audited by Pisenti & Brinker, an independent auditing firm based in Petaluma, CA. The audit work began in July 2024 and the financial statements are ready for the Audit and Finance Committee’s review.
Upon recommendation of approval of these statements by the Audit and Finance Committee, the statements will be presented to the Board of Directors for their final approval.
Pisenti & Brinker has provided auditing services to PCE since 2017. In order to abide by California rules that require a change in audit partner at least every seven year, Kellin Gilbert recently assumed the role of engagement partner for PCE this year. Kellin will provide an overview of the audit process and results during the meeting.
ATTACHMENTS:
PCE 2023-24 Draft 10.8.24.pdf
8 FINANCIAL STATEMENTS
FISCAL YEARS ENDED JUNE 30, 2024 AND 2023
WITH REPORT OF
INDEPENDENT AUDITORS
DRAFT
9 TABLE OF CONTENTS
Independent Auditor’s Report …………………………………………………........... 1 Management’s Discussion and Analysis ……………………………………………... 4 Basic Financial Statements:
Statements of Net Position …………………………………………………… 9
Statements of Revenues, Expenses and Changes in Net Position ….................. 10 Statements of Cash Flows …………………………………………………….. 11
Notes to the Basic Financial Statements ……………………………………… 13 DRAFT
10 Auditor’s Report Page 1
DRAFT
11 Auditor’s Report Page 2
DRAFT
12 PENINSULA CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2024 AND 2023
4 The purpose of management’s discussion and analysis (MD&A) is to help stakeholders and other readers understand what the financial statements and notes in this report say about Peninsula Clean Energy’s (PCE) financial health and why it has changed since last year. It contains information drawn from other parts of the report, accompanied by explanations informed by the finance staff’s knowledge of PCE’s finances.
Overview of the Financial Statements
PCE’s financial report contains basic financial statements, which include:
o The Statements of Net Position include all of PCE’s assets, liabilities, and net position and provides information about the nature and amount of resources and obligations at a specific point in time.
o The Statements of Revenues, Expenses, and Changes in Net Position report all of PCE’s revenue and expenses for the years shown.
o The Statements of Cash Flows report the cash provided and used by operating activities, as well as other sources and uses, such as capital and investing activities. o The notes to the Basic Financial Statements provide additional details and information related to the basic financial statements.
DRAFT
13 PENINSULA CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2024 AND 2023
5 Financial Summary
PCE’s Net Position
2024 2023 2022
Current assets 203,029,376$ 230,229,924$ 94,350,493$
Noncurrent assets:
Capital assets, net 7,192,785 3,245,102 2,355,826
Other noncurrent assets 264,984,028 115,190,369 107,941,671 Total noncurrent assets 272,176,813 118,435,471 110,297,497 Total assets 475,206,189 348,665,395 204,647,990
Current liabilities 55,478,759 37,979,864 33,563,898
Noncurrent liabilities 2,527,330 3,059,539 3,413,358
Total liabilities 58,006,089 41,039,403 36,977,256
Deferred inflows of resources 68,000,000 - -
Net position
Net Investment in capital assets 5,455,117 399,493 126,979 Unrestricted 343,744,983 307,226,499 167,543,755
Total net position 349,200,100$ 307,625,992$ 167,670,734$ As of June 30, 2024, PCE’s total net position was approximately $349,000,000, an increase of $42,000,000 or 14% as compared to June 30, 2023. Most of the increase in net position was in increases in cash and investments, as a result of PCE’s operating surplus discussed below.
PCE’s Changes in Net Position
2024 2023 2022
Operating revenues 388,612,693$ 428,218,199$ 237,898,558$ Nonoperating revenues - grants - 789,539 1,824,346
Nonoperating revenues - investments 14,844,423 2,164,071 (6,153,368) Total revenues 403,457,116 431,171,809 233,569,536
Operating expenses 361,835,489 291,154,063 246,539,330
Nonoperating expenses 47,519 62,488 76,525
Total expenses 361,883,008 291,216,551 246,615,855
Change in net position 41,574,108$ 139,955,258$ (13,046,319)$ Electricity sale increases in 2024 were offset by the $68,000,000 voluntary deferral into the new Rate Stabilization Fund. The cost of electricity, a component of operating expenses, increased from fiscal year 2023 to fiscal year 2024 due to increases in renewable energy and resource adequacy market costs.
DRAFT
14 PENINSULA CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2024 AND 2023
6 Detailed Analysis
Current assets decreased from $230,000,000 at the end of fiscal year 2023 to $203,000,000 at the end of fiscal year 2024. This decrease was due to transferring funds to the Rate Stabilization Fund, reported on the Statement of Net Position as noncurrent cash and cash equivalents, offset by operating surpluses primarily driven by increased electricity rates charged to customers. Current assets at the end of fiscal year 2024 were primarily comprised of cash and investments of $129,00,000, accounts receivable of $32,000,000, and accrued revenue of $26,000,000.
Capital assets are reported net of depreciation and amortization. Each year, the change is mostly due to capital asset acquisitions less depreciation and amortization expense. Capital assets include construction in progress, leasehold improvements, furniture, equipment and roof top solar and battery storage.
Other noncurrent assets include investments of $192,000,000 and $114,000,000 at the end of fiscal years 2024 and 2023, respectively. Also included in other noncurrent assets at the end of fiscal year 2024 is cash of $68,000,000 segregated in a Rate Stabilization Fund used to defer revenue for later years when financial results necessitate draws on reserves. By postponing revenue recognition to future years, PCE will be positioned to avoid sudden rate increases to address unanticipated spikes in energy costs and other unforeseen circumstances.
The largest component of current liabilities is the cost of electricity delivered to customers that is not paid by PCE at the end of the fiscal year. Current liabilities for the cost of energy increased each year due to changes in payment terms of certain energy products, as well as the prices of those products. Accrued cost of electricity was approximately $44,000,000 and $26,000,000 at the end of fiscal years 2024 and 2023, respectively.
Noncurrent liabilities consist of supplier security deposits and the long-term portion of lease liability related to PCE’s office premises. The reduction each year is the result of amortization of the lease liability.
Except for the effect of the deferral to the Rate Stabilization Fund, operating revenues increased each year from fiscal years 2022 to 2024, primarily from territory expansions and increases in rates charged to customers. PCE also receives revenues from sources other than retail customer sales. These sources include liquidated damage revenue resulting from supplier noncompliance with contract provision and grant income used to assist with various customer programs. Revenue from liquidated damages increased from fiscal year 2023 to fiscal year 2024 primarily due to delays in the operations of certain energy supplier facilities.
DRAFT
15 PENINSULA CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2024 AND 2023
7 Detailed Analysis (continued)
Grant income from the California Arrearage Payment Plan (CAPP) was included in nonoperating revenues for fiscal years 2022 and 2023. This grant was applicable for two years and did not recur in fiscal year 2024. Investment income increased each year due to changes in market interest rates as well as increases in invested assets.
Operating expenses increased each year primarily due to market forces that resulted in increases in the cost of electricity, PCE’s largest expense. PCE procures energy from a variety of sources to reduce market risk and to maintain a balanced renewable power portfolio. The primary driver of the increase in energy costs from 2023 to 2024 was the rising costs in the resource adequacy market.
Significant Capital Asset and Long-Term Financing Activity Included in capital assets are office equipment, such as computers, furniture, leasehold improvements and rooftop solar and battery backup systems.
PCE reached agreements with several cities and the County of San Mateo to install solar and battery storage on public buildings. Costs associated with this agreement are shown as capital assets.
Assets that are leased by PCE, such as office premises, are recorded in the Statement of Net Position with a related liability for future obligations.
PCE does not have any outstanding financing debt. DRAFT 16 PENINSULA CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2024 AND 2023
8 Currently Known Facts, Decisions, or Conditions
PCE expects to experience steady load growth over the next 10 years due to organic load growth, addition of new customers, increase in building electrification, and higher electric vehicle (EV) adoption rates. At the same time, rising costs for procurement of renewable energy and storage projects, Resource Adequacy (RA), and environmental attributes will increase the cost of energy.
Despite these challenges, PCE remains committed to its goal of delivering 100% renewable energy by 2030 while maximizing renewable energy matching against load on a time-coincident basis. Currently, 56% of PCE's energy mix is sourced from renewable resources, and PCE is focused on balancing sustainability, affordability, and reliability as demand continues to grow.
PCE has a portfolio of energy programs supporting electrification of buildings and transportation, load shaping, and fostering local solar and storage. In fiscal year 2024-25, PCE is investing over $25 million in programs including technical assistance for solar and EV charging installations, finance support for electrification and solar systems, and financial incentives for EVs, EV charging, and electric appliances. Adoption of clean energy technologies is in a period of accelerating adoption contributing to customer load growth. In addition, local and regional agencies continue to adopt policies accelerating the transition to clean electric buildings and transportation systems.
In the past, PCE’s rates were linked to PG&E’s, consistently offering a 5% discount compared to PG&E’s generation rates. However, PCE recently decoupled from PG&E, allowing greater flexibility in setting PCE’s rates. PCE’s current rates are designed to cover the full cost of energy delivery, including RA, operating expenses, and funding for customer programs. Additionally, this change enables PCE to better meet its financial goals, such as maintaining reserves and liquidity.
Requests for Information
This financial report is designed to provide PCE’s board members, stakeholders, customers, and creditors with a general overview of PCE’s finances and to demonstrate PCE’s accountability for the funds under its stewardship.
Please address any questions about this report or requests for additional financial information to the finance department at 2075 Woodside Road, Redwood City, CA 94061 or contact [email protected].
DRAFT
17 BASIC FINANCIAL STATEMENTS
DRAFT
18 PENINSULA CLEAN ENERGY AUTHORITY
STATEMENTS OF NET POSITION
JUNE 30, 2024 AND 2023
9 The accompanying notes are an integral part of these financial statements.
ASSETS 2024 2023
Current assets
Cash and cash equivalents 111,932,959$ 130,225,289 $
Accounts receivable, net of allowance 32,381,329 37,224,799 Accrued revenue 25,740,350 22,224,560
Investments 16,828,861 9,473,416
Other receivables 6,315,467 6,273,418
Prepaid expenses 4,611,128 8,566,209
Deposits and other assets 5,219,282 16,242,233
Total current assets 203,029,376 230,229,924
Noncurrent assets
Cash and cash equivalents - unrestricted 68,000,000 -
Investments 192,300,331 113,806,280
Other receivables 4,493,035 1,195,215
Deposits and other assets 190,662 188,874
Construction in progress 5,322,353 1,433,434
Capital assets, net of depreciation and amortization 1,870,432 1,811,668 Total noncurrent assets 272,176,813 118,435,471
Total assets 475,206,189 348,665,395
LIABILITIES
Current liabilities
Accrued cost of electricity 43,668,621 25,646,569
Accounts payable 2,950,037 1,161,115
Other accrued liabilities 899,037 1,829,885
Deferred revenue 4,372,157 4,844,063
User taxes and energy surcharges due to other governments 1,166,699 1,240,296 Deposits - energy suppliers 1,889,999 2,758,099
Lease liability 532,209 499,837
Total current liabilities 55,478,759 37,979,864
Noncurrent liabilities
Deposits - energy suppliers 1,799,451 1,799,451
Lease liability 727,879 1,260,088
Total noncurrent liabilities 2,527,330 3,059,539
Total liabilities 58,006,089 41,039,403
DEFERRED INFLOWS OF RESOURCES
Rate Stabilization Fund 68,000,000 -
NET POSITION
Net investment in capital assets 5,455,117 399,493
Unrestricted 343,744,983 307,226,499
Total net position 349,200,100$ 307,625,992$
DRAFT
19 PENINSULA CLEAN ENERGY AUTHORITY
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
YEARS ENDED JUNE 30, 2024 AND 2023
10 The accompanying notes are an integral part of these financial statements. 2024 2023
OPERATING REVENUES
Electricity sales, net 442,203,020$ 423,844,350$
Green electricity premium 2,980,743 3,011,461
Rate stabilization (68,000,000) -
Liquidated damages revenue 6,555,711 252,060
Grant revenue 3,270,369 1,110,328
Other income 1,602,850 -
Total operating revenues 388,612,693 428,218,199
OPERATING EXPENSES
Cost of electricity 325,171,050 265,207,567
Contract services 12,534,557 10,726,493
Staff compensation 9,841,887 8,001,779
Other operating expenses 13,709,671 6,650,426
Depreciation and amortization 578,324 567,798
Total operating expenses 361,835,489 291,154,063
Operating income 26,777,204 137,064,136
NONOPERATING REVENUES (EXPENSES)
Grant revenue - 789,539
Investment income 14,844,423 2,164,071
Finance costs (47,519) (62,488)
Nonoperating revenues (expenses), net 14,796,904 2,891,122 CHANGE IN NET POSITION 41,574,108 139,955,258
Net position at beginning of year 307,625,992 167,670,734 Net position at end of year 349,200,100$ 307,625,992$
DRAFT
20 PENINSULA CLEAN ENERGY AUTHORITY
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2024 AND 2023
11 The accompanying notes are an integral part of these financial statements. 2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 457,426,586$ 427,757,814$
Receipts from grantors 3,270,369 5,788,891
Receipts of supplier security deposits 14,735,000 16,363,798 Other operating receipts 8,158,561 -
Payments to suppliers for electricity (305,666,849) (273,473,707) Payments for other goods and services (30,617,940) (19,025,668) Payments for deposits and collateral (2,238,725) (26,743,771) Payments of staff compensation (9,643,002) (7,970,572)
Payments of taxes and surcharges to other governments (6,346,905) (6,064,477) Net cash provided by operating activities 129,077,095 116,632,308
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Grant revenue - 789,539
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments of lease obligation (547,354) (531,409)
Payments to acquire capital assets (5,113,486) (371,391) Net cash used by capital and related financing activities (5,660,840) (902,800)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from investment sales 57,048,636 42,294,286
Investment income received 9,947,512 3,440,698
Purchase of investments (140,704,733) (41,806,194)
Net cash provided (used) by investing activities (73,708,585) 3,928,790 Net change in cash and cash equivalents 49,707,670 120,447,837 Cash and cash equivalents at beginning of year 130,225,289 9,777,452 Cash and cash equivalents at end of year 179,932,959 $ 130,225,289$ Reconciliation to the Statement of Net Position
Cash and cash equivalents (current) 111,932,959$ 130,225,289$ Cash and cash equivalents (noncurrent) 68,000,000 -
Cash and cash equivalents 179,932,959$ 130,225,289$
NONCASH CAPITAL FINANCING ACTIVITIES
Capital acquisitions included in accounts payable and other liabilities 477,580$ -$
NONCASH INVESTING ACTIVITIES
Unrealized appreciation (depreciation) and
timing differences in investment income 4,896,911$ (1,276,627)$ DRAFT
21 PENINSULA CLEAN ENERGY AUTHORITY
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED JUNE 30, 2024 AND 2023
12 The accompanying notes are an integral part of these financial statements.
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
2024 2023
Operating income 26,777,204$ 137,064,136$
Adjustments to reconcile operating income to net
cash provided by operating activities
Depreciation and amortization expense 578,324 567,798
(Increase) decrease in:
Accounts receivable, net of allowance 4,843,470 (4,355,420) Accrued revenue (3,515,790) (1,502,579)
Other receivables (1,418,862) (4,337,373)
Prepaid expenses 3,955,081 (3,589,638)
Deposits and other assets 11,783,042 (10,660,000)
Increase (decrease) in:
Accrued cost of electricity 18,022,051 (1,492,350)
Accounts payable 1,311,342 (10,688)
Other accrued liabilities 154,836 (60,633)
Deferred revenue (471,906) 4,570,563
User taxes and energy
surcharges due to other governments (73,597) 158,465
Deposits - energy suppliers (868,100) 280,027
Rate Stabilization Fund 68,000,000 -
Net cash provided by operating activities 129,077,095$ 116,632,308$ DRAFT
22 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
13 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
Peninsula Clean Energy (PCE) is a joint powers authority created on February 29, 2016. As of June 30, 2024, parties to its Joint Powers Agreement consist of the following local governments:
County Cities and Towns
San Mateo Atherton Menlo Park
Belmont Millbrae
Brisbane Pacifica
Burlingame Portola Valley
Colma Redwood City
Daly City San Bruno
East Palo Alto San Carlos
Foster City San Mateo
Half Moon Bay South San Francisco
Hillsborough Woodside
Los Banos
PCE is separate from and derives no financial support from its members. PCE is governed by a Board of Directors whose membership is composed of elected officials representing the member governments.
A core function of PCE is to provide electric service that includes renewable sources, and it operates as a Community Choice Aggregation Program subject to California Public Utilities Code Section 366.2.
PCE began its energy delivery operations in October 2016. Electricity is acquired from electricity suppliers and delivered through existing physical infrastructure and equipment managed by Pacific Gas and Electric Company.
DRAFT
23 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
14 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
BASIS OF ACCOUNTING
PCE’s financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements.
PCE’s operations are accounted for as a governmental enterprise fund and are reported using the economic resources measurement focus and the accrual basis of accounting – similar to business enterprises. Accordingly, revenues are recognized when they are earned, and expenses are recognized at the time liabilities are incurred. Enterprise fund-type operating statements present increases (revenues) and decreases (expenses) in total net position. Reported net position is segregated into three categories – investment in capital assets, restricted and unrestricted.
When both restricted and unrestricted resources are available for use, it is PCE’s policy to use restricted resources first, and then unrestricted resources as they are needed.
CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, PCE defines cash and cash equivalents to include cash on hand, demand deposits and short-term investments with an original maturity of three months or less. For the purpose of the Statements of Net Position, restricted cash balances are presented separately.
INVESTMENTS
Investments are stated at fair value based on prices listed on a national exchange for debt securities. Certificates of deposits are stated at cost. PCE intends to hold its securities to maturity.
Investments with a maturity of less than one year are shown as current assets in the Statement of Net Position. Investments with a maturity of one year or more are shown as noncurrent assets in the Statement of Net Position.
PCE’s Investment Policy permits the following types of investments:
U.S. Treasury obligations Repurchase agreements
Obligations of the State of California Local Agency Investment Fund Bonds of any of the other 49 states San Mateo County Pool Commercial paper Local Government Investment Pools
Negotiable certificates of deposits Bankers' acceptances Demand deposits Medium-term notes
Passbook savings accounts Asset-backed securities
Money market funds Supranationals
DRAFT
24 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
15 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
PREPAID EXPENSES
Payments made to vendors that will benefit periods beyond the end of the current fiscal year are recorded as prepaid expenses.
DEPOSITS
Contracts to purchase energy may require PCE to provide the supplier with advanced payments or security deposits. Deposits are generally held for the term of the contract and are classified as current or noncurrent assets depending on the length of time the deposits will be outstanding.
LEASE ASSET AND LEASE LIABILITY
PCE recognizes an asset and liability when it enters into certain leasing arrangements. The leased asset is amortized over the term of the lease. The lease liability is the present value of payments expected to be paid to the lessor during the lease term. PCE’s only leased asset and liability relate to its office premises.
CAPITAL ASSETS AND DEPRECIATION
PCE’s policy is to capitalize furniture and equipment valued over $5,000 that is expected to be in service for over one year. Depreciation is computed according to the straight-line method over estimated useful lives of three years for electronic equipment, seven years for furniture, ten years for leasehold improvements and twenty years for roof top solar and battery storage.
DEFERRED REVENUE
Deferred revenue consists of payments received in advance from customers for which revenue has not been earned and is shown as a current liability in the Statement of Net Position.
DEPOSITS – ENERGY SUPPLIERS
Various energy contracts entered into by PCE require the supplier to provide PCE with a security deposit. These deposits are generally held for the term of the contract or until the completion of certain benchmarks. Deposits are classified as current or noncurrent depending on the length of time the deposits will be held.
DRAFT
25 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
16 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
RATE STABILIZATION FUND
In May 2024, PCE created a Rate Stabilization Fund (RSF) in accordance with GASB Statement No. 62 to allow PCE to defer revenue in years when financial results are strong for use in future years when financial results may decline. PCE’s RSF allows a deferral of revenues into the RSF when the projected addition to net position is greater than 3% of total budgeted revenues. Deposits can be made into the RSF until the balance equals 15% of the total budgeted revenues in the then-current fiscal year. Additionally, withdrawals of revenues from the RSF can be made in a fiscal year when change in net position is projected to be negative or if necessary to satisfy any covenants, and contractual obligations. The amount deposited into the fund is shown as a reduction of operating revenues and reported on the statements of net position as a deferred inflow of resources. Transfers to this fund were $68,000,000 and $0 in fiscal years 2024 and 2023, respectively.
NET POSITION
Net position is presented in the following components:
Net Investment in capital assets: This component of net position consists of capital assets, net of accumulated depreciation and amortization and reduced by outstanding borrowings that are attributable to the acquisition, construction, or improvement of those assets. PCE did not have any such outstanding borrowings as of June 30, 2024 and 2023.
Unrestricted: This component of net position consists of net position that does not meet the definition of “investment in capital assets” or “restricted.”
OPERATING AND NONOPERATING REVENUES
Revenues that are derived from or related to the delivery of energy or other programs are classified as operating revenues. This includes revenue derived from the provision of energy to retail and wholesale customers, liquidated damages resulting from energy suppliers that fail to fulfill contract provision, and reimbursable grant revenues. Many of PCE’s retail customers have opted to purchase a 100% renewable electricity product and pay a $0.01 per kilowatt hour premium.
Revenues derived from this premium are reported throughout these financial statements as “Green electricity premium.”
Investment income and grants that are not earned from the delivery of program activities are considered “nonoperating revenues”.
REVENUE RECOGNITION
PCE recognizes revenue according to the accrual basis. This includes invoices issued to customers during the reporting period and electricity estimated to have been delivered but not yet billed. Management estimates that a portion of the billed amounts will be uncollectible.
Accordingly, an allowance for uncollectible accounts has been recorded.
DRAFT
26 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
17 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
OPERATING AND NONOPERATING EXPENSES
Operating expenses include the costs of electricity, services, administrative expenses, and depreciation of capital assets. Expenses not meeting this definition are reported as nonoperating expenses.
ELECTRICAL POWER PURCHASED
During the normal course of business, PCE purchases electrical power from numerous suppliers.
Electricity costs include the cost of energy and capacity arising from bilateral contracts with energy suppliers as well as generation credits, and load and other charges arising from PCE’s participation in the California Independent System Operator’s centralized market. The cost of electricity and capacity is recognized as “Cost of Electricity” in the Statements of Revenues, Expenses and Changes in Net Position.
To comply with the State of California’s Renewable Portfolio Standards (RPS) and self-imposed benchmarks, PCE acquires RPS eligible renewable energy evidenced by Renewable Energy Certificates (Certificates) recognized by the Western Renewable Energy Generation Information System (WREGIS). PCE obtains Certificates with the intent to retire them and does not sell or build surpluses of Certificates with a profit motive.
PCE purchases capacity commitments from qualifying generators to comply with the California Public Utilities Commission’s Resource Adequacy Program. The goals of the Resource Adequacy Program are to provide sufficient resources to the California Independent System Operator to ensure the safe and reliable operation of the electrical grid in real-time and to provide appropriate incentives for the siting and construction of new resources needed for reliability in the future.
STAFFING COSTS
PCE pays employees semi-monthly and fully pays its obligation for health benefits and contributions to its defined contribution retirement plan each month. PCE is not obligated to provide post-employment healthcare or other fringe benefits and, accordingly, no related liability is recorded in these financial statements. PCE provides compensated time off, and the related liability is recorded in these financial statements.
INCOME TAXES
PCE is a joint powers authority under the provision of the California Government Code and is not subject to federal or state income or franchise taxes.
DRAFT
27 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
18 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation of the current-year financial statements. These reclassifications did not result in any change in previously reported net position or change in net position.
2. CASH AND CASH EQUIVALENTS
PCE maintains its cash in both interest-bearing and non-interest-bearing deposit accounts in several banks. PCE’s deposits are subject to California Government Code Section 16521, which requires banks to collateralize public funds in excess of the Federal Deposit Insurance Corporation (FDIC) limit of $250,000 by 110%. Certain short-term investments with original maturities of less than three months are classified as cash and cash equivalents, which are not subject to the collateral requirement or FDIC coverage. Accordingly, the amount of risk is not disclosed. PCE monitors its risk exposure on an ongoing basis.
3. ACCOUNTS RECEIVABLE
Accounts receivable were as follows as of June 30:
2024 2023
Accounts receivable from customers 37,763,313$ 40,713,367$ Allowance for uncollectible accounts (5,381,984) (3,488,568) Net accounts receivable 32,381,329$ 37,224,799$
The majority of account collections occur within the first few months following the issuance of customer invoices. PCE estimates that a portion of the billed accounts will not be collected. PCE continues collection efforts on accounts in excess of de minimis balances regardless of the age of the account. Although collection success generally decreases with the age of the receivable, PCE continues to have success in collecting older accounts. The allowance for uncollectible accounts at the end of a period includes amounts billed during the current and prior fiscal years. During 2024 and 2023, PCE recorded $2,797,000 and $3,162,000, respectively, as an increase to the allowance for uncollectible accounts due to bad debt expense. Amounts estimated to be uncollectable are reported as a reduction in electricity sales in the Statement of Revenues, Expenses and Changes in Net Position. Other changes in the allowance for uncollectible accounts from year to year are the result of account write-offs.
DRAFT
28 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
19 4. INVESTMENTS
During the years ended June 30, 2024 and 2023, PCE purchased investments with original maturities of three months or more. As of June 30, the fair value of investments was as follows:
2024 2023
Current Investments:
U.S. Treasury Securities 8,608,553$ 9,227,405$
Corporate bonds 7,154,986 246,011
Municipal bonds 1,065,322 -
Total current investments 16,828,861$ 9,473,416 $
2024 2023
Noncurrent Investments:
U.S. Treasury Securities 133,062,721$ 73,316,271$
Corporate bonds 56,311,594 34,176,492
Municipal bonds 2,926,016 6,313,517
Total noncurrent investments 192,300,331$ 113,806,280$
FAIR VALUE MEASUREMENT
GASB Statement No. 72, Fair Value Measurement and Application, sets forth the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are significant other observable inputs, and Level 3 inputs are significant unobservable inputs.
In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. PCE’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.
As of June 30, 2024 and 2023, PCE’s investments are considered Level 1 inputs. Quoted prices in active markets were used for determining fair value measurement.
DRAFT
29 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
20 4. INVESTMENTS (continued)
CREDIT RISK
Credit risk is the risk an issuer or other counterparty to an investment will not fulfill its obligations. As of June 30, 2024 and 2023, PCE’s investments were rated as follows:
2024 2023
U.S. Treasury Securities NR and Aaa NR and Aaa
Certificates of Deposit NR NR
Corporate Bonds NR & Baa1 to Aaa A3 to Aaa
Municipal Bonds NR & Aa3 to Aaa NR & Aa2 to Aaa
Moody's Investors Service
PCE’s investment policy addresses this risk. PCE limits investments to those allowed by Section 53601 of the California Government Code that addresses the risk allowable for each investment.
CUSTODIAL CREDIT RISK
Cash and cash equivalents
Custodial credit risk is the risk that in the event of a financial institution failure, PCE’s deposits may not be returned to PCE. PCE’s deposits fully insurance or collateralized.
As of June 30, 2024 and 2023, none of PCE’s bank balances are known to be individually exposed to credit risk.
Investments
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, PCE would not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. All of PCE’s investments are exposed to credit risk.
PCE’s investment policy addresses custodial credit risk. All investments owned by PCE shall be held in safekeeping by a third-party custodian, acting as an agent for PCE under the terms of a custody agreement.
DRAFT
30 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
21 4. INVESTMENTS (continued)
INTEREST RATE RISK
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Duration is a measure of the price sensitivity of a fixed income portfolio to changes in interest rates. It is calculated as the weighted average time to receive a bond’s coupon and principal payments. The longer the duration of a portfolio, the greater its price sensitivity to changes in interest rates. PCE manages its exposure to declines in fair values by limiting the weighted average maturity of its investments.
Following is a summary of investment maturities as of June 30, 2024:
Investment Type Fair Value Less Than 1 Year 1-5 Years More than 5 years U.S. Treasury Securities 141,671,274$ 8,608,553$ 131,786,566$ 1,276,155$ Corporate bonds-U.S. 59,795,065 7,154,986 52,640,079 -
Corporate bonds-foreign 3,671,515 - 3,671,515 -
Municipal bonds 3,991,338 1,065,322 2,926,016 -
209,129,192$ 16,828,861$ 191,024,176$ 1,276,155$
Investment Maturities
Following is a summary of investment maturities as of June 30, 2023:
Investment Maturities
Investment Type Fair Value Less Than 1 Year 1-5 Years
U.S. Treasury Securities 82,543,676$ 9,227,405$ 73,316,271$ Corporate bonds-U.S. 33,478,162 246,011 33,232,151
Corporate bonds-foreign 944,341 - 944,341
Municipal bonds 6,313,517 - 6,313,517
123,279,696$ 9,473,416$ 113,806,280$
DRAFT
31 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
22 5. CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2024 was as follows:
Beginning
balance Increases Decreases
Ending
balance
Capital assets not being depreciated:
Construction in progress $ 1,433,434 $ 4,494,918 $ (606,000) $ 5,322,352 Capital assets being depreciated and amortized:
Furniture and equipment 444,402 - (13,868) 430,534
Leasehold improvements 236,873 31,541 - 268,414
Roof top solar and battery storage - 606,000 - 606,000
Lease asset 3,079,488 - - 3,079,488
Total capital assets being depreciated and amortized 3,760,763 637,541 (13,868) 4,384,436 Less accumulated depreciation and amortization:
Furniture, equipment and leasehold improvements (470,939) (85,604) 13,415 (543,128) Lease asset (1,478,156) (492,720) - (1,970,876)
Total accumulated depreciation and amortization (1,949,095) (578,324) 13,415 (2,514,004) Total capital assets, net of depreciation and amortization 3,245,102$ 4,554,136$ (606,453)$ 7,192,785$ Capital asset activity for the year ended June 30, 2023 was as follows:
Beginning
balance Increases Decreases
Ending
balance
Capital assets not being depreciated:
Construction in progress $ - $ 1,433,434 -$ $ 1,433,434 Capital assets being depreciated and amortized:
Furniture and equipment 444,402 - - 444,402
Leasehold improvements 213,233 23,640 - 236,873
Lease asset 3,079,488 - - 3,079,488
Total capital assets being depreciated and amortized 3,737,123 23,640 - 3,760,763 Less accumulated depreciation and amortization:
Furniture, equipment and leasehold improvements (395,861) (75,078) - (470,939) Lease asset (985,436) (492,720) - (1,478,156)
Total accumulated depreciation and amortization (1,381,297) (567,798) - (1,949,095) Total capital assets, net of depreciation and amortization 2,355,826$ 889,276$ -$ 3,245,102$
DRAFT
32 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
23 6. LEASE
A lease asset is reported in accordance with Governmental Accounting Standards Board No. 87 (GASB 87).
On August 1, 2017, PCE entered into an 86-month non-cancelable lease for its office premises.
The rental agreement includes an option to renew the lease for two additional five-year terms. In September 2019, the lease was extended an additional two years to September 30, 2026. As part of the extension, PCE leased additional office space through the same termination date.
Rental payments under this lease were $573,000 and $543,000 for the years ended June 30, 2024 and 2023, respectively.
As of June 30, 2024, future minimum lease payments under this lease were projected as follows:
Principal Interest Total
Year ending June 30,
2025 532,209$ 31,563$ 563,772$
2026 566,100 14,586 580,686
2027 161,779 877 162,656
Total 1,260,088$ 47,026$ 1,307,114$
7. GRANTS
PCE participates in a grant programs of the California Public Utilities Commission (CPUC) for the Disadvantaged Communities Green Tariff (DAC-GT) and the FLEXmarket program. The DAC-GT grant provides bill discounts for eligible customers while FLEXmarket provides incentives for customers to install various energy saving equipment in their homes or business.
PCE administered a grant from the California Arrearage Payment Program (CAPP) that offers financial assistance for California energy utility customers to help reduce past due energy bill balances that increased during the COVID-19 pandemic. This program is funded through the federal American Rescue Plan Act (ARPA) with Coronavirus State and Local Fiscal Recovery Funds.
DRAFT
33 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
24 7. GRANTS (continued)
The following is a summary of grant revenue for the years ended June 30:
2024 2023
Operating grants:
DAC-GT 1,182,963$ 1,110,328$
FLEXmarket 2,087,406 -
3,270,369 1,110,328
Nonerating grant:
CAPP - 789,539
Total grant revenue 3,270,369$ 1,899,867$
8. DEFINED CONTRIBUTION RETIREMENT PLAN
PCE provides retirement benefits through the County of San Mateo 401(a) Retirement Plan (Plan). The Plan is a defined contribution (Internal Revenue Code 401(a)) retirement plan established to provide benefits at retirement to employees of certain qualified employers admitted by the Plan. The Plan is administered by Empower. As of June 30, 2024, there were 53 plan participants. PCE is required to contribute 6% of the annual covered payroll and up to an additional 4% of annual covered payroll to match employee contributions. PCE contributed $698,000 and $574,000 during the years ended June 30, 2024 and 2023, respectively. Plan provisions and contribution requirements are established and may be amended by the Board of Directors.
DRAFT
34 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
25 9. RISK MANAGEMENT
PCE is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; and errors and omissions. During the year, PCE purchased insurance policies from investment-grade commercial carriers to mitigate risks that include those associated with earthquakes, theft, general liability, errors and omissions, and property damage. Settled claims have not exceeded coverage in the last two years. There were no significant reductions in coverage compared to the prior year. PCE has general liability coverage of $2,000,000 as well as a $10,000,000 umbrella policy. Deductibles on the various policies range from $0 to $25,000.
From time to time, PCE may be party to various pending claims and legal proceedings. PCE has no current litigation or claims pending that are expected to have a material adverse effect on PCE’s financial position or results of operations.
PCE maintains risk management policies, procedures and systems that help mitigate credit, liquidity, market, operating, regulatory and other risks that arise from participation in the California energy market. Credit guidelines include a preference for transacting with investment-grade counterparties, evaluating counterparties’ financial condition and assigning credit limits as applicable. These credit limits are established based on risk and return considerations under terms customarily available in the industry. In addition, PCE enters into netting arrangements whenever possible and where appropriate obtains collateral and other performance assurances from counter parties.
DRAFT
35 PENINSULA CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
26 10. PURCHASE COMMITMENTS
In the ordinary course of business, PCE enters into various power purchase agreements to acquire renewable and other energy and electric capacity. The price and volume of purchased power may be fixed or variable. Variable pricing is generally based on the market price of either natural gas or electricity at the date of delivery. Variable volume is generally associated with contracts to purchase energy from as-available resources such as solar, wind, and hydro-electric facilities.
The following table details the obligations to purchase existing energy, renewable, and resource adequacy (RA) contracts as of June 30, 2024:
Year ending June 30,
2025 373,100,000$
2026 253,800,000
2027 261,600,000
2028 246,700,000
2029 234,800,000
2030-2046 2,184,200,000
Total 3,554,200,000$
11. FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for years ending after June 30, 2024:
GASB has approved GASB No. 102, Certain Risk Disclosures, and GASB No. 103, Financial Reporting Model Improvements.
Management is evaluating the effect of implementation of these statements.
DRAFT
36