Audit & Finance Committee Meeting
October 15, 2024
This meeting will begin shortly!
Chair Report
Staff Report
Peninsula Clean Energy
Prepay Transaction Overview
4 • On Monday, September 30th PCE successfully priced its first Prepay transaction (transaction closed on October 10)
• Assigning four long-term PPAs:
o Geysers (geothermal)
o Heber (geothermal)
o Mustang (solar)
o Voyager (wind)
• Prepaid MWh: 6.8 million MWh over 8 years, or 881k MWh per year, representing ~25% of PCE’s 2023 load
• Transaction obtained an A2 rating by Moody’s based on the funding recipient’s credit, American General Life Insurance Company
• Green Bonds certification from Kestrel Verifiers based on prepayment of renewable electricity sources
• $960 million of bonds issued by CCCFA to fund prepayment Peninsula Clean Energy
Municipal Bond Offering
5 • Expedited marketing process to capture favorable
market tone
o Press release two days prior to mailing offering
document
o Mailing 15 minutes after Board approval
o Pricing on the 2nd business day after mailing
• Bond offering very well-received with orders from 49
unique accounts totalling over $3 billion
• Orderbook featured 9 orders larger than $100
million, with the largest orders from major municipal
bond funds
• 3.3x oversubscription enabled yield reduction to
3.65%, 5 bps better than price guidance, thereby
increasing PCE’s savings
Investor Allocation
Vanguard Group 200,000
Franklin Funds 87,000
Mackay Shields 87,000
Blackrock 70,000
Alliance 67,500
Capital Group 65,000
White Haven 55,000
Fidelity 55,000
Lord Abbett 40,000
Nuveen 21,000
All Other (38) 212,325
Total 959,825
Peninsula Clean Energy
Significant Cost Savings
6 $0
$10
$20
$30
$40
$50
$60
$70
2025 2026 2027 2028 2029 2030 2031 2032
Prepaid Value Savings
• Total savings of $46 million, or 12.3%, over 8-year period (average of $5.7 million per year) • Savings largely due to the spread between tax-exempt and taxable rates (3.65% vs 4.66%) Appendix
Transaction Diagram
Initial Issuance and Cash Flows
1. Debt Issuance – CCCFA issues tax-exempt bonds
2. Prepayment – CCCFA remits bond proceeds to Prepay
LLC in return for 30 years of assigned electricity deliveries
3. Unsecured Loan – Prepay LLC loans bond proceeds to
Funding Recipient (American General Life). American
General Life makes fixed monthly payments to Prepay
LLC equal to assigned electricity multiplied by PPA price Monthly Cash / Energy Flows
4. Assigned PPAs – PCE assigns to J. Aron certain rights and obligations as Buyer; J. Aron makes monthly
payments to PPA counterparties for assigned delivered
energy
5. Electricity Supply – Prepay LLC enters into long-term agreement to purchase electricity from J. Aron to match assigned electricity quantities/terms
6. Project Participant – CCCFA sells PCE all assigned
electricity delivered by Prepay LLC at a discountedprice Risk/Considerations and Mitigations
• There is no incremental financial risk to PCE following the Prepay • PCE is not responsible for interest payments on the bonds or repayment of debt; the debt is non-recourse to PCE
• If the Prepay program terminates earlier that expected for any reason, such as due to the Funding Recipient’s failure to pay interest, the assigned PPAs revert to PCE and any savings are eliminated going forward, however, PCE is no worse off had it not executed the transaction
• Any incremental operational risk due to increased settlement complexity will be minimized through training, support from our advisors, and additional staff if needed Audited Financial Statements
FY 2023-2024
(Pisenti & Brinker)
Peninsula Clean Energy
Report to the Audit & Finance Committee
October 15, 2024
Peninsula Clean Energy
Introduction
• Kellin Gilbert, CPA
• Audit Partner
• 17 years in public accounting and performing audits of government entities
• Currently working with several CCA’s throughout California • Aliandra Schaffer
• Engagement Supervisor
• 5 years in public accounting and performing audits of governments (CCA’s)
Peninsula Clean Energy
Audits of the years ended June 30, 2024 and 2023
Financial Statements:
• The audit is near completion. We anticipate reporting the following:
• Unmodified opinion – Based on our audit, the financial statements are materially accurate.
• No significant deficiencies in internal control have
been noted.
Peninsula Clean Energy
Audits of the years ended June 30, 2024 and 2023
Financial Statements:
Relative Roles & Responsibilities
• Management is responsible for preparing the Financial Statements and establishing a system of internal control
• Auditor is responsible for auditing the Financial Statements • Considering risks of material misstatement in the Financial Statements
• Considering internal controls relevant to the Financial Statements • Performing tests of year-end balances based on risk assessment • Evaluating adequacy of disclosures
Peninsula Clean Energy
Risk Assessment for the years ended June 30, 2024
and 2023
Our audit is a risk-based audit. Risk assessment procedures include:
• Gain understanding of the entity’s operating characteristics, practices, and procedures.
• Compare to our knowledge of similar entities, industry and professional guidance.
• Review procedures and controls surrounding significant transaction cycles and business processes.
Peninsula Clean Energy
Audit Procedures
Significant Areas of Focus
• Revenue recognition
• Accounts receivable and revenue
• Test a sample of customer billings
• Relate total cash received during the year to revenue • Look at cash received subsequent to year-end and relate to A/R • Review revenue recognition through year-end and the method for determining (accrued revenue)
• Cash
• Confirmations sent to financial institutions
Peninsula Clean Energy
Audit Procedures
Significant Areas of Focus
• Accrued Cost of Electricity
• Review subsequent bills from electricity providers and cash payments • Accrued REC Expense
• Supplier Security Deposits
• Reviewed contracts and determined completeness of amounts recorded • Financial Statement Note Disclosures – Complete and without bias Peninsula Clean Energy
Required Communications to Those Charged
with Governance
• There were no new material
accounting policies adopted by
Peninsula Clean Energy
throughout the period audited.
• No alternative treatments of
accounting principles for material
items in the financial statements
have been discussed with
management.
Peninsula Clean Energy
Required Communications to Those Charged
with Governance (continued)
• We did not propose any
adjustments to the financial
statements.
• We did not identify any
significant or unusual
transactions or applications of
accounting principles where a
lack of authoritative guidance
exists.
Other required communications with those charged with governance:
Peninsula Clean Energy
Required Communications to Those Charged
with Governance (continued)
• There were no disagreements with
management concerning the
scope of our audit, the application
of accounting principles, or the
basis for management’s
judgements on any significant
matters.
• We did not encounter any
difficulties in dealing with
management during the
performance of our audit.
Other required communications with those charged with governance:
Kellin Gilbert: 707-577-1511
Questions?
Audited Financial Statements
FY 2023-2024 (Action)
Peninsula Clean Energy
Recommendation
23 • Recommends to the Board of Directors approval of the audited financial statements for Fiscal Year 2023-2024
Adjournment