Pioneer Community Energy
Audit & Finance Committee
January 3, 2024
11:00 AM
2510 Warren Drive, Suite B, Rocklin, CA 95677
Remote Locations
2121 University Drive, Rocklin, CA 95765
This regular meeting will convene in person at the address printed above, be accessible on the Zoom platform at the following link: https://us06web.zoom.us/j/88361414283; and live streamed for viewing on the Pioneer website:
https://pioneercommunityenergy.org/about-us/meetings-and-agendas/.
Members of the public may participate in person or by remote audio/visual access. Those who participate remotely and wish to comment should be prepared to use the Zoom platform via computer or telephone. Public comment will be opened for each agenda item in sequence.
How to Participate Using Zoom
You can join the meeting using the following link:
https://us06web.zoom.us/j/88361414283. When you join the meeting, you will be muted by default. To inform the Clerk that you would like to make a public comment, you will use the “Raise Hand” feature.
Public Comment via Computer or Smartphone
If you would like to make a comment, you will use the “Raise Your Hand” feature.
Please note that you should only raise your hand during the item to which you will comment. Instructions for using the “Raise Hand” feature when using a computer or mobile device can be found at the link:
https://support.zoom.us/hc/en-us/articles/205566129-Raising-your-hand-in-a-webinar Public Comment via telephone (Audio Only Option)
1. Dial 1 (669) 900-6833
2. When asked for the meeting ID, enter 883 6141 4283#
3. When asked for your participant ID, press # to continue You will be muted by default. To inform the Clerk that you would like to make a comment during each agenda item, dial *9 to “Raise your hand.” When it is your turn to speak, the clerk will identify you by the last three digits of your phone number, at that time dial *6 to unmute yourself and state your name and comment for the record. Please note that you should only raise your hand during the item to which you will comment.
Committee Members
Greg Janda
Chair
City of Rocklin
Greg Janda
David Bass, Alternate
County of El Dorado
John Hidahl
Lori Parlin, Alternate
City of Lincoln
Holly Andreatta
Dan Karleskint, Alternate
City of Nevada City
Gary Petersen
I. GENERAL ADMINISTRATIVE FUNCTION – PART 1
A. CALL TO ORDER
1. Roll Call
B. AGENDA REVIEW
C. PRESENTATIONS BY THE PUBLIC ON MATTERS NOT ON THE AGENDA WITHIN THE
JURISDICTION OF THE BOARD
Persons may address the Committee on items not on this agenda. Please limit comments to 3 minutes per person. According to State Law (the Brown Act), items must first be noticed on the agenda before any discussion or action. The Committee is prohibited from discussing issues not on the agenda brought to them at this time.
II. CONSENT AGENDA
1) APPROVAL OF THE CONSENT AGENDA
All items on the Consent Agenda have been recommended for approval by the Executive Director. All Consent items will be approved by a single vote. Anyone may ask to address Consent items prior to the Committee acting, and the item may be moved for discussion. a) Approve minutes of the December 6, 2023 regular meeting.
III. REGULAR AGENDA
2) Audit Report (KOEHN)
Receive Audit Report as presented by Pioneer’s Independent Auditor, Pisenti & Brinker. 3) Annual Selection of Officers (KOEHN)
a) Elect Chair and Vice Chair of the Committee for 2024 i. Selection of Chair of the Audit & Finance Committee for 2024 ii. Selection of Vice Chair of the Audit & Finance Committee for 2024 4) GENERAL ADMINISTRATIVE FUNCTION – PART 2
A. ADJOURNMENT
Accommodations
Pioneer Community Energy is committed to ensuring that persons with disabilities are provided the resources to participate fully in its public meetings. If you are hearing impaired, we have listening devices available. If you require additional disability-related modifications or accommodations, including auxiliary aids or services, please contact the Clerk of the Board. If requested, the agenda shall be provided in appropriate alternative formats to persons with disabilities. All requests must be in writing and must be received by the Clerk five business days prior to the scheduled meeting for which you are requesting accommodation. Requests received after such time will be accommodated only if time permits.
Affidavit of Posting
I, Eric Acedo, Acting Clerk, declare under penalty of perjury that the foregoing agenda for the January 3, 2024 meeting of the Pioneer Community Energy Audit & Finance Committee was posted and available for public review on December 22, 2023 at the offices of Pioneer Community Energy, 2510 Warren Drive, Suite B, Rocklin, CA 95677; remote location: 2121 University Drive, Rocklin, CA 95765; and on the Pioneer website at:
https://pioneercommunityenergy.org/about-us/meetings-and-agendas/.
All public materials related to an item on this agenda submitted to the Audit & Finance Committee after distribution of the agenda packet are also made available for public inspection on Pioneer’s website at:
https://pioneercommunityenergy.org/about-us/meetings-and-agendas/ Any document provided at the meeting by staff or by the public will be provided by the Board Clerk upon request by phone at (916) 758-8946, or by email at: [email protected].
PIONEER COMMUNITY ENERGY
AUDIT & FINANCE COMMITTEE
December 6, 2023
Minutes
Entry No. 1
Heard General Administrative Functions, Part I.
Call to Order
Pioneer Community Energy Audit & Finance Committee met in open session at 3:00 PM on December 6, 2023. The Members convened in person and the meeting was accessible to the public at Pioneer Community Energy, 2510 Warren Drive, Suite B, Rocklin, California, 95677; at remote locations: Nevada City – City Hall, Wetherall Conference Room, 317 Broad Street, Nevada City, CA 95959; and was accessible for viewer participation on the Zoom platform at the following link:
https://us06web.zoom.us/j/81066158564; and live streamed for viewing on the Pioneer website:
https://pioneercommunityenergy.org/about-us/meetings-and-agendas/.
Roll Call
Committee Chair Janda (Rocklin); Director Hidahl (El Dorado County); and Director Petersen (Nevada City). Director Andreatta (Lincoln) was absent.
Chair Janda presided over the meeting.
Public Comment
There were no comments from the public regarding items not listed on this agenda.
Agenda Review
Reviewed the meeting agenda for December 6, 2023, with no amendments made to the agenda.
Entry No. 2
Acted on the Consent Agenda as follows:
Approved Minutes of the September 6, 2023 Audit & Finance Committee regular meeting.
MOTION: Hidahl/Petersen. Vote: 3:0:1.
ROLL CALL VOTE: Hidahl, Petersen, Janda.
Absent: Andreatta.
Entry No. 3
Audit Report Update
Received an audit update from Pioneer’s independent auditor, Brett Bradford, Pisenti & Brinker LLP, who reported that the final report will be complete by December 15, 2023; and currently there are no findings to report for years ended June 30, 2023.
Entry No. 4
Rates Discussion
Received presentation and discussed rates for 2024.
Consistent with the last two years, the Committee voted to recommend that the Board select Option 2 (Balance Approach). The new rates would be effective as of January 1, 2024.
MOTION: Hidahl/Petersen. Vote: 3:0:1.
ROLL CALL VOTE: Hidahl, Petersen, Janda.
Absent: Andreatta.
2 Chief Operating Officer Kang provided an update on Biomass and the final California Public Utilities Commission (CPUC) decision regarding AB 843 Implementation.
Entry No. 5
Internal Controls
Received presentation overview on Internal Controls that focused on payment and revenue flow and the importance of Maher Accountancy expertise that supplements the few Pioneer finance staff in ensuring that proper internal controls are in place. Maher Accountancy provides critical support that contributes to the ‘clean’ audited financial reports that Pioneer has received.
Entry No. 6
Heard General Administrative Functions, Part II.
Executive Director Eckert informed the Board that Pioneer Community Energy met with Standard & Poors regarding a credit rating for Pioneer which would be an advantage in business and pricing. The outcome is expected in two-three weeks.
Public Affairs, Marketing & Programs Director Stassi-Vanacore reported that staff are tracking the opt-out rate for Nevada City and Grass Valley to be at 40 as of today; and that El Dorado Hills Community Service District requested a staff report for the District to vote on joining Pioneer and to update them on the 2024 rates.
The meeting adjourned at 3:44 PM.
TABLE OF CONTENTS
Independent Auditors Report .......................................................................................................1 Managements Discussion and Analysis .....................................................................................4 Basic Financial Statements:
Statements of Net Position
...
...11
Statements of Revenues, Expenses and Changes in Net Position ................. .................12
Statements of Cash Flows
. .................13
Notes to the Basic Financial Statements
. .................15
Supplementary Information:
Combining Financial Statements
...
.............32
PIONEER COMMUNITY ENERGY
MANAGEMENTS DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
4 The Managements Discussion and Analysis provides an overview of Pioneer Community Energys (Pioneer) financial activities as of and for the years ended June 30, 2023 and 2022. The information presented here should be considered in conjunction with the audited financial statements.
BACKGROUND
The formation of Pioneer was made possible in 2002 by the passage of California Assembly Bill 117, enabling communities to purchase power on behalf of their residents and businesses and creating competition in power generation.
Pioneer was created as a California Joint Powers Authority (JPA) in August 2015. Pioneer was established to provide electric power at competitive cost as well as to provide other benefits within Placer County, including reducing greenhouse gas emissions related to the use of power, procuring energy with a priority on stimulating local job creation through various programs and development, promoting long-term electric rate stability and energy reliability for residents and business, the use and development of local renewable resources, as well as promoting personal and community ownership of renewable resources.
Pioneer currently services eight jurisdictions located in El Dorado and Placer counties, including the cities and towns of Auburn, Colfax, Loomis, Lincoln, Placerville, and Rocklin, and the unincorporated areas of El Dorado and Placer Counties. Service to the cities of Grass Valley and Nevada City is scheduled to begin in January 2024. Governed by a Board of Directors (Board) consisting of elected representatives from each jurisdiction, Pioneer is responsible for the acquisition of electric power for its service area. Pioneer has the rights and powers to set rates for the services it furnishes, incur indebtedness, and issue bonds or other obligations.
PIONEER COMMUNITY ENERGY
MANAGEMENTS DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
5 Financial Reporting
Pioneer presents its financial statements as an enterprise fund under the economic resources measurement focus and the accrual basis of accounting, in accordance with generally accepted accounting principles (GAAP) for proprietary funds, as prescribed by the Governmental Accounting Standards Board (GASB).
Contents of this report
This report is divided into the following sections:
Managements Discussion and Analysis.
The basic financial statements:
o The Statements of Net Position include all of Pioneers assets, liabilities, and net position and provide 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 Pioneers revenues 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 debt financing. o The Notes to the Basic Financial Statements, which provide additional details and information related to the basic financial statements.
PIONEER COMMUNITY ENERGY
MANAGEMENTS DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
6 FINANCIAL HIGHLIGHTS
The following table is a summary of Pioneers assets, liabilities, and net position and a discussion of significant changes for the years ended of June 30:
2023 2022 2021
Assets
Current assets 97,006,292 $ 63,926,086 $ 43,877,431 $
Noncurrent assets 6,005,204 7,127,240 10,399,115 Total assets 103,011,496 71,053,326 54,276,546 Liabilities
Current liabilities 17,298,224 17,195,547 9,250,662
Noncurrent liabilities 13,388,282 17,392,289 20,924,501 Total liabilities 30,686,506 34,587,836 30,175,163 Net position
Net investment (deficit) in capital assets (191,411) (133,169) - Unrestricted 72,516,401 36,598,659 24,101,383 Total net position 72,324,990 $ 36,465,490 $ 24,101,383 $ Current Assets
Current assets increased each year as a result of Pioneers operating surpluses. The surpluses were the result of rate increases and territorial expansion into the City of Placerville and unincorporated El Dorado County that began in January 2022. Pioneers current assets are mostly comprised of cash and cash equivalents, investments, accounts receivable, accrued revenue, and prepaid expenses and deposits. Accrued revenue differs from accounts receivable in that it represents electricity provided to Pioneer customers that had not yet been invoiced as of the statement of net position date.
Noncurrent Assets
Other noncurrent assets consist of the long-term portion of the outstanding principal balance on Property Assessed Clean Energy (PACE) program loans and a leased asset that is presented in accordance with Governmental Accounting Standards Board No. 87 Leases (GASB 87).
The balance in the PACE program has been declining as loans continue to be paid down. The PACE program ceased to take new applications after August 2021 and is no longer making new loans.
PIONEER COMMUNITY ENERGY
MANAGEMENTS DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
7 Current Liabilities
The largest component of current liabilities is the unpaid cost of electricity delivered to customers, which remained stable from year to year. Other components of current liabilities include accounts payable for services, the current portion of bonds and note payable, taxes and surcharges due to other governments and other accrued liabilities. The increase in current liabilities from 2021 to 2022 is a result of the increased costs associated with the expansion into the City of Placerville and unincorporated El Dorado County that began in 2022.
Noncurrent Liabilities
Noncurrent liabilities include the portion of bonds and note payable principal due after one year.
The decrease in bonds and note payable reflects debt payments made.
Revenues and Expenses
The following table is a summary of Pioneers results of operations and a discussion of significant changes for the years ended June 30:
2023 2022 2021
Operating revenues 199,600,868 $ 115,635,810 $ 82,597,443 $ Grant revenue 1,041,957 1,396,552 - Interest and investment returns 247,223 (142,111) (69,041) Total income 200,890,048 116,890,251 82,528,402 Operating expenses 164,224,209 103,735,929 79,688,391 Interest and financing expense 806,339 790,215 749,068 Total expenses 165,030,548 104,526,144 80,437,459 Change in net position 35,859,500 $ 12,364,107 $ 2,090,943 $ Operating Revenues
Pioneers operating revenues are derived from the sale of electricity to commercial and residential customers throughout its territory. Pioneer began providing electricity to the City of Placerville and unincorporated El Dorado County in January 2022. This is the main driver of revenues from 2021 to 2022, as this enrollment occurred in the middle of the fiscal year 2022. This also accounts for the revenue increase from 2022 to 2023 as fiscal year 2023 was the first full year that included these additional customers. In addition to customer expansion, rate increases also provided for revenue increases each year.
PIONEER COMMUNITY ENERGY
MANAGEMENTS DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
8 Grant Revenue and Investment Returns
Grant revenue increased from 2021 to 2022 primarily the result of a grant from the California Arrearage Payment Program (CAPP) to provide relief to customers with past-due accounts arising during the COVID-19 pandemic. CAPP grant income declined from 2022 to 2023.
Investment losses were recognized in 2021 and 2022 due to market value changes for investments held. Increases in the general interest rate climate in 2023 contributed to increased investment returns.
Operating Expenses
Pioneers largest expense each year was the purchase of electricity delivered to retail customers.
Pioneer procures energy from a variety of sources and focuses on maintaining a balanced power portfolio at competitive costs. Electricity costs increased each year from 2021 to 2023. While the cost of electricity rose due to market pressures, the main cause of the increase was the expansion to the City of Placerville and unincorporated area of El Dorado County that required additional electricity purchases.
Expenses for staff compensation, contract services and other operating expenses increased each year as the organization continued to grow to support its customer demands.
ECONOMIC OUTLOOK
Pioneer Background
Pioneer serves approximately 85% of all eligible customers in its service territory and this has remained relatively stable since launch. Service to the cities of Grass Valley and Nevada City will begin January 2024 and is expected to result in about a 5.5% increase in revenue. Pioneer staff expects a successful expansion due to our focus on pre-launch outreach and education throughout 2023 combined with prudent energy procurement to ensure that the expansion cities can participate in the same generation rate as current ratepayers.1
Pioneers mission is to provide competitive electric rates, reliable service, and a choice in energy options. Since launching in February 2018, actual and projected customer electricity generation savings through December 2023 is estimated to be almost $85 million compared to Pacific Gas & Electric (PG&E). Pioneers customers currently pay 15%-20% less than PG&Es generation rates. PG&Es most recent Energy Resource Recovery Account filing has indicated (not finalized) that the Power Charge Indifference Adjustment (PCIA) (i.e., exit fee) that is charged to Pioneer customers will be minimal or even negative for all of Pioneers customer vintages (2017, 2021, and 2023) which would contribute to an ongoing Pioneer discount, reinforcing Pioneers generation rate competitive advantage when compared to PG&E. 1 Pioneer has already secured the required energy, renewable energy certificates, and resource adequacy for the expansion into Grass Valley and Nevada City.
PIONEER COMMUNITY ENERGY
MANAGEMENTS DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
9 ECONOMIC OUTLOOK (continued)
Pioneer Energy Procurement
Pioneer procures energy consistent with its Board-approved Energy Risk Management Policy that aligns customer load with procurement consisting of California Independent System Operator (CAISO) energy, renewable energy certificates (RECs), and resource adequacy (RA), varying in tenor from 1 month to 20 years. Californias Renewables Portfolio Standard (RPS) requires load-serving entities (LSEs), such as Pioneer, to supply their retail sales with minimum quantities of eligible renewable energy both on an annual basis in increasing amounts up to 60% in 2030 and through long-term commitments greater than ten years. The State has also directed LSEs to procure 100% of their retail sales from greenhouse gas (GHG) free and/or other eligible renewable resources by 2045. Pioneers standard product offering complies with the state laws for renewable and GHG-free energy. Pioneer also offers a Green100 product that consists of 100% renewable energy. The RA resources support grid reliability by ensuring there will be enough supply in the right locations and with sufficient ramping capability to meet load in the CAISO market. Pioneer is 100% hedged for CAISO energy in 2024, 100% procured for its 2024 and compliance period 4 renewable energy requirements, and fully compliant for its 2024 year-ahead RA requirements.
Starting in 2021, there has been a significant runup in energy, REC, and RA prices, mainly due to scarcity in the market for the latter two. Increased PG&E Citygate gas prices drove energy prices higher, while supply constraints led to delays in renewable energy and storage projects that in turn drove REC and RA prices higher. Pioneer has been able to weather the price increases through its laddered hedging strategy (i.e., purchasing percentages of energy, REC, and RA on a scheduled basis similar to dollar cost averaging).
Of all the renewable energy resources, Pioneer puts a high priority on procuring biomass energy due to the abundance of biomass in the region and the resulting benefits of local investment, job creation, reduction of wildfire risk, and serving as a baseload renewable energy resource that provides grid resiliency in an otherwise intermittent renewable energy space. The issue has always been its higher associated cost, and in order to help lower the cost of biomass energy procurement and level the playing field with the investor-owned utilities (IOUs), Pioneer led the effort to get Assembly Bill (AB) 843 passed on a unanimous, bipartisan basis in 2021. This bill enabled community choice aggregators like Pioneer to participate in the Bioenergy Market Adjusting Tariff (BioMAT) program (subsidized biomass energy) that the IOUs have had exclusive access to.
The California Public Utilities Commission has offered a Proposed Decision on the implementation process for AB 843, and a Final Decision is expected at the end of November 2023. Pioneer has at least one project in advanced stages to contract with and intends to secure more. In addition to the implementation of the BioMAT program, Pioneer adopted in November 2023 a feed-in tariff program that offers local biomass and small hydroelectric projects above market prices to further bolster biomass energy procurement efforts.
PIONEER COMMUNITY ENERGY
MANAGEMENTS DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
10 ECONOMIC OUTLOOK (continued)
Programs
Due to Pioneers stable financial condition, the Board approved funding for energy efficiency programs. The budget is capped at 1% of operating revenues. Staff will be working collaboratively with the Advisory Committee in developing programs to launch in 2024.
Green Prepay Bond Transaction
In order to lower the cost of its renewable energy power purchase agreements, Pioneer entered into a 30-year green prepay bond transaction during fiscal year 2022-23 that bundles the renewable power purchase agreements as a long-term financial transaction. These types of transactions are available for municipal utilities and tax-exempt entities such as Pioneer that enable a meaningful power procurement cost savings opportunity. This prepay structure has historically been utilized for natural gas procurement but has recently been expanded to include renewable energy that is received through a long-term power purchase agreement. The first discounted energy month was June 2023 and the expected energy savings for the first five years of the bond transaction is over $13 million. This is a financing tool that is not available to Pioneers competitor and will contribute to continued rate stability and rate competitiveness.
Financial Strength
Pioneer has a strong focus on continuing to build credit capacity through increased cash reserves and entering favorable energy purchase commitments. Pioneers rate adjustment in January 2023 provided a lower cost to customers compared to PG&E and also provided Pioneer the opportunity to strengthen its reserves. The Board has adopted an increased reserve target of 160 days of liquidity and is anticipated to reach that target during fiscal year 2024-25. The progress towards the reserve target provides an opportunity for credit rating discussions with a national rating agency during Fiscal Year 2023-24. Management intends to continue its conservative use of financial resources and expects ongoing operating surpluses that will build the reserves.
REQUEST FOR INFORMATION
This financial report is designed to provide Pioneers customers and creditors with a general overview of the organizations finances and to demonstrate Pioneers accountability for the funds under its stewardship.
Please address any questions about this report or requests for additional financial information to 2510 Warren Dr., Suite B, Rocklin, CA 95677.
Respectfully submitted,
Donald Eckert Jr, Executive Director
BASIC FINANCIAL STATEMENTS
PIONEER COMMUNITY ENERGY
STATEMENTS OF NET POSITION
AS OF JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 11 2023 2022
ASSETS
Current assets
Cash and cash equivalents 18,318,638 $ 13,762,144 $
Investments 41,205,891 14,830,290 Accounts receivable, net of allowance 18,853,246 17,465,041 Accrued revenue 9,787,087 9,527,730 Other receivables 2,361,347 - Interest receivable 286,831 105,318 Contractual assessments receivable 540,445 244,636 Prepaid expenses 41,041 2,056,036 Deposits 5,611,766 5,934,891 Total current assets 97,006,292 63,926,086 Noncurrent assets Contractual assessments receivable 4,554,962 5,560,981 Lease asset, net of amortization 1,450,242 1,566,259 Total noncurrent assets 6,005,204 7,127,240
Total assets 103,011,496 71,053,326 LIABILITIES
Current liabilities
Accrued cost of energy 14,974,963 15,357,098 Accounts payable 474,783 390,414 Other accrued liabilities 406,504 490,276 Interest payable 95,767 119,595
Deposits - energy suppliers 393,756 21,857 Bonds payable 221,666 208,542 Note payable 655,164 549,991 Lease liability 75,621 57,774 Total current liabilities 17,298,224 17,195,547 Noncurrent liabilities Bonds payable 5,220,393 6,368,628 Note payable 6,601,857 9,382,007 Lease liability 1,566,032 1,641,654
Total noncurrent liabilities 13,388,282 17,392,289 Total liabilities 30,686,506 34,587,836
NET POSITION
Net investment (deficit) in capital assets (191,411) (133,169) Unrestricted net position 72,516,401 36,598,659 Total net position 72,324,990 $ 36,465,490 $
PIONEER COMMUNITY ENERGY
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
YEARS ENDED JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 12 2023 2022
OPERATING REVENUES
Electricity sales, net 199,266,165 $ 114,994,421 $
Service charges 334,703 641,389 Total operating revenues 199,600,868 115,635,810 OPERATING EXPENSES Cost of electricity 154,793,109 96,395,324 Contract services 5,675,881 4,429,183 Staff compensation 2,987,978 2,338,563 Other operating expenses 767,241 572,859 Total operating expenses 164,224,209 103,735,929 Operating income 35,376,659 11,899,881 NONOPERATING REVENUES (EXPENSES) Grant revenue 1,041,957 1,396,552 Interest and investment returns 247,223 (142,111) Interest and financing expense (806,339) (790,215) Nonoperating revenues (expenses), net 482,841 464,226 CHANGE IN NET POSITION 12,364,107 35,859,500 Net position of year 36,465,490 24,101,383 Net position at end of year 72,324,990 $ 36,465,490 $
PIONEER COMMUNITY ENERGY
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 13 2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 198,140,056 $ 100,771,369 $
Other operating receipts 616,957 151,935
Contractual assessments received, net 999,913 2,523,468 Payments to suppliers for electricity (155,236,471) (92,485,640) Payments for goods and services (6,584,112) (4,783,162) Payments for staff compensation (2,895,943) (2,285,829) Payments of taxes and surcharges to other governments (517,943) (447,129) Net cash provided by operating activities 34,522,457 3,445,012 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Grant revenue received 1,041,957 1,396,552 Bond proceeds - 1,013,989 Principal paid on bonds and note (3,810,089) (4,531,565) Interest and related expense payments (765,615) (740,959) Net cash used by non-capital financing activities (3,533,747) (2,861,983) CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments of lease liabilities (122,325) (118,762) CASH FLOWS FROM INVESTING ACTIVITIES Sale of investments 13,500,000 - Investment income 190,109 24,968 Purchase of investments (40,000,000) (15,000,000) Net cash used by investing activities (26,309,891) (14,975,032) Net change in cash and cash equivalents 4,556,494 (14,510,765) Cash and cash equivalents at beginning of year 13,762,144 28,272,909 Cash and cash equivalents at end of year 18,318,638 $ 13,762,144 $
PIONEER COMMUNITY ENERGY
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 14 2023 2022
Operating income 35,376,659 $ 11,899,881 $
Adjustments to reconcile operating income to net
cash provided by operating activities
Amortization expense 116,017 - (Increase) decrease in:
Accounts receivable, net (1,388,205) (8,952,708) Accrued revenue (259,357) (5,658,686) Other receivables (2,361,347) 301,254 Prepaid expenses 2,014,995 (1,580,450) Deposits 323,125 (2,562,132) Contractual assessments receivable 710,210 1,882,079 Increase (decrease) in:
Accrued cost of electricity (382,136) 7,931,563
Accounts payable 84,369 45,366 Other accrued liabilities (296,338) 175,775 Energy surcharges due to other governments 3,509 (58,787) Supplier security deposits 580,956 21,857
Net cash provided by operating activities 34,522,457 $ 3,445,012 $
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
15 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
Pioneer Community Energy (Pioneer) is a California joint powers authority created in August of 2015. As of June 30, 2023, parties to its Joint Powers Agreement consist of the following local governments:
Counties Cities and Towns
El Dorado Auburn Lincoln
Placer Colfax Nevada City
Grass Valley Placerville
Loomis Rocklin
Pioneer is separate from and derives no financial support from its members. Pioneer is governed by a Board of Directors whose membership is composed of elected officials representing the member governments.
A core function of Pioneer is to provide electric service that includes providing electric energy at competitive rates and it operates as a Community Choice Aggregation (CCA) subject to California Public Utilities Code Section 366.2.
Pioneer operates two programs, the CCA Program and the mPOWER Program.
CCA Program Pioneer began providing electric generation services to its customers in February of 2018 and began providing services to the unincorporated area of El Dorado County and the City of Placerville in January 2022. Pioneer supplies electric energy to retail customers through its CCA Program. Pioneer participates in the wholesale energy market to acquire its energy and related products (resource adequacy and renewable energy) from a variety of wholesale energy suppliers. Pioneers energy is delivered through existing physical infrastructure and equipment owned and operated by the incumbent utility. mPOWER Program The mPOWER Program provides assessment financing to property owners for the installation of energy efficiency, water conservation and distributed generation improvements. The mPOWER Program is supported from revenues derived from assessments attached to and collected on participating property owners property tax bills. Pioneer stopped accepting new applications for the mPOWER program after August 31, 2021.
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
16 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
BASIS OF ACCOUNTING
Pioneers 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.
Pioneers 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, if applicable net investment in capital assets, restricted and unrestricted.
When both restricted and unrestricted resources are available for use, it is Pioneers policy to use restricted resources first, and then unrestricted resources as they are needed.
CASH AND CASH EQUIVALENTS
For the purpose of the Statements of Cash Flows, Pioneer 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.
INVESTMENTS
Investments are stated at fair value based on information from the State of Californias Local Agency Investment Fund (LAIF). Investments with a maturity of less than one year are shown as current assets in the Statement of Net Position.
Pioneers Investment Policy permits the investment of funds in United States Treasury obligations, LAIF, commercial paper, certificates of deposits, and money market mutual funds.
PREPAID EXPENSES AND DEPOSITS
Contracts to purchase energy may require Pioneer 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.
Also included are prepaid expenses and deposits for regulatory and other operating purposes.
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
17 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
LEASE ASSET AND LEASE LIABILITY
Pioneer 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. Pioneers only leased asset and liability relate to its office premises.
DEPOSITS ENERGY SUPPLIERS
Various energy contracts entered into by Pioneer require the supplier to provide Pioneer 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.
NET POSITION
Net position is presented in the following components:
Net investment in capital assets: This component of net position consists of capital assets, lease assets, net of accumulated depreciation and amortization, and reduced by outstanding borrowings that are attributable to the acquisition, constructions, or improvement of those assets. Pioneers only component in this category relates to its leased asset.
Restricted: This component of net position consists of constraints placed on net asset use primarily imposed by creditors (such as through debt or credit covenants), grantors, contributors, or laws or regulations of other governments, or constraints imposed by law through constitutional provisions or enabling legislation. Pioneer did not have any restricted net position as of June 30, 2023 or 2022.
Unrestricted: This component of net position consists of net position that does not meet the definition of net investment in capital assets or restricted.
OPERATING AND NON-OPERATING REVENUES
Operating revenues include revenue from the sale of electricity to customers for the CCA Program, and assessments and fees for the mPOWER program.
Investment income is considered non-operating revenue.
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
18 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
REVENUE RECOGNITION
Pioneer recognizes revenue according to the accrual basis of accounting. 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.
OPERATING AND NONOPERATING EXPENSES
Operating expenses include the costs of electricity and services, administrative expenses and amortization of right-to-use assets. Expenses not meeting this definition are reported as nonoperating expenses.
ELECTRIC POWER PURCHASED
During the normal course of business, Pioneer purchases electric power from numerous suppliers.
Electricity costs include the cost of electricity and capacity arising from bilateral contracts with energy suppliers as well as generation credits, and load and other charges arising from Pioneers participation in the California Independent System Operators (CAISO) 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 Californias Renewable Portfolio Standards (RPS) and self-imposed benchmarks, Pioneer acquires RPS eligible renewable energy evidenced by Renewable Energy Certificates (Certificates) recognized by the Western Renewable Energy Generation Information System (WREGIS). Pioneer obtains Certificates with the intent to retire them and does not sell or build surpluses of Certificates with a profit motive. Pioneer recognizes an expense on a monthly basis that corresponds to the volume of electricity sold to its customers. This expense recognition increases accrued cost of electricity reported on the Statements of Net Position. Payments made to suppliers reduce the accrued cost of electricity.
Pioneer purchases capacity commitments from qualifying generators to comply with the California Public Utilities Commissions Resource Adequacy Program. The goals of the Resource Adequacy Program are to provide sufficient resources to CAISO to ensure the safe and reliable operation of the grid in real-time and to provide appropriate incentives for the siting and construction of new resources needed for reliability in the future.
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
19 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
STAFFING COSTS
Pioneer pays employees bi-weekly and fully pays its obligation for health benefits and contributions to its defined contribution retirement plan each month. Pioneer is not obligated to provide post-employment healthcare or other post-employment benefits (OPEB), and, accordingly, no related liability is reported in these financial statements. Pioneer provides compensated time off, and the related liability is reported in these financial statements.
INCOME TAXES
Pioneer 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.
ESTIMATES
The preparation of financial statements in conformity with GAAP 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 the previously reported net position or change in net position.
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
20 2. CASH AND CASH EQUIVALENTS
Pioneer maintains its cash in both interest-bearing and non-interest-bearing deposit accounts at Umpqua Bank and the Placer County Treasurer. Pioneers bank 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 previously mentioned.
3. INVESTMENTS
As of June 30, the fair value of investments was as follows:
2023 2022
Local Agency Investment Fund 41,205,891 $ 14,830,290 $
Revenue earned in the California Local Agency Investment Fund (LAIF) are allocated quarterly to the participating funds using the daily cash balance of each fund. Participants in LAIF include voluntary and involuntary participants. Pioneer is a voluntary participant. LAIF is not registered with the Securities and Exchange Commission as an investment company.
LAIF information can be obtained from the California State Treasurer.
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. Pioneers assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. Deposits and withdrawals from LAIF are made on the basis of $1 which is substantially equal to fair value. Pioneers proportionate share of investments at LAIF as of June 30, 2023 and 2022 of approximately $41,206,000 and $14,830,000, respectively, are not required to be categorized under the fair value hierarchy.
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
21 3. 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, 2023 and 2022, Pioneers investments were rated as follows:
2023 2022
Local Agency Investment Fund Not rated Not rated
Pioneers investment policy addresses this risk. Pioneer limits investments to those allowed by Section 53601 of the California Government Code that addresses this risk allowed 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, Pioneers deposits may not be returned to Pioneer. Pioneers 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%.
As of June 30, 2023 and 2022, none of Pioneers bank balances are known to be individually exposed to credit risk.
CUSTODIAL CREDIT RISK INVESTMENTS
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, Pioneer 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 Pioneers investments are exposed to custodial credit risk.
Pioneers investment policy addresses this risk. All investments owned by Pioneer shall be held in safekeeping by a third-party custodian, acting as an agent for Pioneer under the terms of a custody agreement.
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
22 3. 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 bonds coupon and principal payments. The longer the duration of a portfolio, the greater its price sensitivity to changes in interest rates. Pioneer 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, 2023:
Investment type Fair value Less than 1 Year 1-5 years
Local Agency Investment Fund 41,205,891 $ 29,631,156 $ 11,574,735 $ Following is a summary of investment maturities as of June 30, 2022:
Investment type Fair value Less than 1 Year 1-5 years
Local Agency Investment Fund 14,830,290 $ 10,136,503 $ 4,693,787 $
4. ACCOUNTS RECEIVABLE
Accounts receivable were as follows as of June 30:
2023 2022
Accounts receivable from customers 22,965,272 $ 20,056,061 $ Allowance for uncollectible accounts (4,112,026) (2,591,020) Net accounts receivable 18,853,246 $ 17,465,041 $
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
23 4. ACCOUNTS RECEIVABLE (CONTINUED)
The majority of account collections occur within the first few months following customer invoicing. Pioneer estimates that a portion of the billed accounts will not be collected. Pioneer 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, Pioneer 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 2023 and 2022, Pioneer recorded $1,521,000 and $217,000, respectively, as a net increase to the allowance for uncollectible accounts due to bad debt expense and write offs. In 2023 and 2022, Pioneer received CAPP funds that helped recover previously written off accounts receivable. Bad debt expense is reported as a reduction in electricity sales on the Statement of Revenues, Expenses and Changes in Net Position.
5. DEBT
BONDS PAYABLE
mPOWER PROGRAM REVENUE BONDS
On January 26, 2017, the Pioneer Board authorized the issuance of revenue bonds to provide the capital necessary for financing residential property energy efficiency improvements of $25 million and $25 million for non-residential property improvements for the mPower program.
Pioneer uses the designation R in its bond series naming system to signify bonds financing residential improvements and NR to signify bonds financing non-residential improvements.
During the fiscal year ended June 30, 2022, Pioneer issued revenue bonds Series R 2021-22 in the amount of $1.0 million. All mPOWER Program series bonds are classified as direct borrowings and are payable solely from assessments and fees from participating property owners.
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
24 5. DEBT (Continued)
The following is a summary of Pioneers bonds outstanding as of June 30, 2023:
Maturity
Interest
Rates
Issuance
Amount
Outstanding
Balance June
30, 2023
Type of indebtedness
Revenue bonds
(mPOWER Program)
Series R 2016-17 9/2/2037 3.00% 492,589 $ 63,093 $
Series R 2017-18 9/2/2038 3.00% 5,380,276 1,442,876 Series NR 2017-18 9/2/2038 3.00% 138,323 121,873 Series R 2018-19 9/2/2039 4.50% 5,656,485 1,071,482 Series NR 2018-19 9/2/2039 4.50% 418,152 290,577 Series R 2019-20 9/2/2040 4.50% 2,730,091 842,662 Series NR 2019-20 9/2/2040 4.50% 544,507 - Series R 2020-21 9/2/2041 4.50% 1,544,622 776,264 Series NR 2020-21 9/2/2031 4.50% 128,249 - Series R 2021-22 9/2/2042 4.50% 1,013,989 833,232 Total (mPOWER Program) 18,047,283 $ 5,442,059 Less: Amounts due within one year 221,666 Amounts due after one year 5,220,393 $
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
25 5. DEBT (Continued)
NOTE PAYABLE
In May 2021, Pioneer borrowed $10,500,000 from Umpqua Bank at an interest rate of 3.85% per annum. The monthly payment of principal and interest is $76,880 and the loan is scheduled to be paid off in November 2032. Pioneer has pledged net revenues to secure payment of the note.
The following is a summary of changes in bonds and note payable for the year ended June 30, 2023:
Balance July
1, 2022 Additions
Principal
Repayments
Balance June
30, 2023
Due Within
One Year
Bond Title, Series Number
Series R 2016-17 (mPOWER) 69,439 $ - $ (6,346) $ 63,093 $ 3,244 $ Series R 2017-18 (mPOWER) 1,746,262 - (303,386) 1,442,876 64,212 Series NR 2017-18 (mPOWER) 126,351 - (4,478) 121,873 4,747 Series R 2018-19 (mPOWER) 1,375,811 - (304,329) 1,071,482 49,130 Series NR 2018-19 (mPOWER) 304,295 - (13,718) 290,577 14,541 Series R 2019-20 (mPOWER) 1,111,353 - (268,691) 842,662 28,334 Series NR 2019-20 (mPOWER) - - - - - Series R 2020-21 (mPOWER) 890,568 - (114,304) 776,264 24,449 Series NR 2020-21 (mPOWER) - - - - - Series R 2021-22 (mPOWER) 953,091 - (119,859) 833,232 33,009 Total 6,577,170 $ - $ (1,135,111) $ 5,442,059 $ 221,666 $ Balance July
1, 2022 Additions
Principal
Repayments
Balance June
30, 2023
Due Within
One Year
Note Payable
Umpqua Bank 9,931,998 $ - $ (2,674,977) $ 7,257,021 $ 655,164 $
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
26 5. DEBT (Continued)
CHANGES IN BONDS AND NOTES PAYABLE
The following is a summary of changes in bonds and note payable for the year ended June 30, 2022:
Balance July
1, 2021 Additions
Principal
Repayments
Balance June
30, 2022
Due Within
One Year
Bond Title, Series Number
Series R 2016-17 (mPOWER) 190,701 $ - $ (121,262) $ 69,439 $ 3,531 $ Series R 2017-18 (mPOWER) 2,396,687 - (650,425) 1,746,262 69,838 Series NR 2017-18 (mPOWER) 130,576 - (4,225) 126,351 4,479 Series R 2018-19 (mPOWER) 2,615,291 - (1,239,480) 1,375,811 56,093 Series NR 2018-19 (mPOWER) 322,617 - (18,322) 304,295 13,718 Series R 2019-20 (mPOWER) 2,183,975 - (1,072,622) 1,111,353 33,897 Series NR 2019-20 (mPOWER) 58,342 - (58,342) - - Series R 2020-21 (mPOWER) 1,544,622 - (654,054) 890,568 26,986 Series NR 2020-21 (mPOWER) 128,249 - (128,249) - - Series R 2021-22 (mPOWER) - 1,013,988 (60,897) 953,091 - Total 9,571,060 $ 1,013,988 $ (4,007,878) $ 6,577,170 $ 208,542 $ Balance July
1, 2021 Additions
Principal
Repayments
Balance June
30, 2022
Due Within
One Year
Note Payable
Umpqua Bank 10,455,684 $ - $ (523,686) $ 9,931,998 $ 549,991 $
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
27 5. DEBT (Continued)
MINIMUM FUTURE OBLIGATIONS
Minimum future obligations for the outstanding mPOWER Program Revenue Bonds and the note payable are as follows:
Principal Interest Total
Years ended June 30,
2024 221,666 $ 215,688 $ 437,354 $
2025 232,081 206,572 438,653 2026 243,299 197,014 440,313 2027 257,897 186,943 444,840
2028 273,370 176,268 449,639
2029-2033 1,562,727 701,815 2,264,542 2034-2038 1,741,033 367,686 2,108,720 2039-2043 909,985 65,920 975,906 Total 5,442,059 $ 2,117,908 $ 7,559,967 $ Principal Interest Total
Years ended June 30,
2024 655,164 $ 267,400 $ 922,564 $
2025 623,096 241,727 864,823 2026 765,258 215,047 980,305 2027 735,242 187,322 922,564
2028 764,054 158,510 922,564
2029-2033 3,714,206 325,482 4,039,688 Total 7,257,021 $ 1,395,487 $ 8,652,508 $ mPOWER Program Revenue Bonds
Note Payable
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
28 6. GRANT REVENUE
Pioneer 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 account balances that increased during the COVID-19 pandemic. In 2022 this program is funded through the federal American Rescue Plan Act (ARPA) with Coronavirus State and Local Fiscal Recovery Funds. The program was funded by the State of California in 2023. Grant revenue recognized for the years ended June 30, 2023 and 2022 was $1,041,957 and $1,396,552, respectively.
7. DEFINED CONTRIBUTION RETIREMENT PLAN
Pioneer established the Pioneer Community Energy defined contribution retirement plan under Internal Revenue Code Section 401(a) and 457(b), to provide retirement benefits for its employees. The Plan is administered by a third-party retirement plan administrator. As of June 30, 2023, there were 16 active plan members. Pioneer contributes a minimum of $1,000 per employee per month to the Plan and contributed amounts of $256,000 and $193,000 in total during the fiscal years ended June 30, 2023 and 2022, respectively. Plan provisions and contribution levels were established by and may be amended by the Pioneer Board at any time.
The Plan does not create long-term liabilities such as those associated with defined benefit pension plans.
8. RISK MANAGEMENT
Pioneer is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; and errors and omissions. During the years ended June 30, 2023 and 2022, Pioneer purchased liability and property insurance from commercial carriers. Coverage includes property, general liability, errors and omissions and non-owned automobile. Pioneer has general liability coverage of $4,000,000 and $10,000,000 of cyber liability coverage. Deductibles on the various policies range from $0 to $10,000.
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
29 9. PURCHASE COMMITMENTS
In the ordinary course of business, Pioneer enters into various power purchase agreements in order 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, 2023:
Years ending June 30,
2024 168,700,000 $
2025 157,500,000 2026 126,300,000
2027 79,700,000 2028 58,400,000
2029-2046 436,500,000 Total 1,027,100,000 $
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
30 10. LEASE
A lease asset is reported in accordance with Governmental Accounting Standards Board No. 87 (GASB 87) which requires reporting of certain lease assets and liabilities in the statement of net position.
In May 2018, Pioneer entered into an 88-month non-cancelable lease for office space in Rocklin.
The lease includes an option to renew for two consecutive terms of five years each.
Payments under this lease were $122,000 and $119,000 for the years ended June 30, 2023 and 2022, respectively.
As of June 30, 2023, future minimum lease payments under this lease were projected as follows:
Principal Interest Total
Years ending June 30,
2024 75,621 $ 61,889 $ 137,510 $
2025 82,783 58,853 141,635 2026 92,198 55,526 147,724
2027 101,455 51,799 153,255
2028 110,110 47,742 157,852
2029-2033 697,979 165,222 863,201
2034-2036 481,507 25,786 507,293
Total 1,641,653 $ 466,817 $ 2,108,470 $
11. FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for years ending after June 30, 2023:
GASB has approved GASB Statement No. 100, Accounting Changes and Error Corrections An Amendment of GASB Statement No. 62; and GASB Statement No. 101, Compensated Absences. When they become effective, application of these standards may restate portions of these financial statements.
PIONEER COMMUNITY ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
31 12. JOINT VENTURE
Pioneer participates in a joint powers agreement (JPA) through the California Community Choice Financing Authority (CCCFA). CCCFA was formed as a conduit issuer to assist its members by undertaking the financing or refinancing of energy prepayments that can be financed with tax advantaged bonds on behalf of one or more of the members by, among other things, issuing or incurring bonds and entering into related contracts with its members. Any debt or liability incurred by CCCFA on behalf of a member to prepay for renewable energy is not a debt or liability of that member. Furthermore, the assets of CCCFA in the form of prepaid energy or reserves held by the respective bond trustees for any prepayment transaction undertaken on behalf of a member does not constitute an asset or reserve of that member.
In January 2023, CCCFA issued bonds in the amount of $459,640,000, excluding original issue premium, the proceeds of which to be used to finance energy purchases that will be delivered to Pioneer. No debt, liability, or obligation of CCCFA is a debt, liability, or obligation of Pioneer.
Pioneer will purchase energy from CCCFA in the same manner as it purchases energy from other suppliers. Pioneer purchased approximately $326,000 from CCCFA during fiscal year 2023. The outstanding purchase commitments related to these financing facilities are included in Note 9.
Each member of CCCFA is responsible for paying an equal portion of CCCFAs general and administrative operating costs as determined by its board. During the years ended June 30 2023, and 2022, Pioneer contributed approximately $68,000 and $0, respectively, to CCCFA to assist in its operating activities.
The financial statements of CCCFA are available online at http://www.cccfa.org/key-documents.html. 1 . SUBSEQUENT EVENT
The Cities of Grass Valley and Nevada City became members of Pioneer during fiscal year 2023 with Board representatives beginning April 2023. Service will begin to be provided to the two cities beginning January 2024.
Pioneer entered into an amended lease agreement that is expected to take effect during the fiscal year 2024. The effective date is contingent upon completion of certain tenant improvements subsequent to June 30, 2023.
PIONEER COMMUNITY ENERGY
SUPPLEMENTARY INFORMATION
COMBINING STATEMENTS OF NET POSITION
AS OF JUNE 30, 2023 AND 2022
32 2023 2022
CCA
Program
mPOWER
Program
Total CCA
Program
mPOWER
Program
Total
ASSETS
Current assets
Cash and cash equivalents 17,570,066 $ 748,572 $ 18,318,638 $ 12,637,495 $ 1,124,649 $ 13,762,144 $ Investments 41,205,891 - 41,205,891 14,830,290 - 14,830,290 Accounts receivable, net of allowance - 18,853,246 18,853,246 17,465,041 - 17,465,041 Accrued revenue 9,787,087 - 9,787,087 9,527,730 - 9,527,730 Other receivables 2,361,347 - 2,361,347 - - - Interest receivable 275,053 11,778 286,831 28,128 77,190 105,318 Contractual assessments receivable - 540,445 540,445 - 244,636 244,636 Prepaid expenses 41,041 - 41,041 2,056,036 - 2,056,036 Deposits 5,611,766 - 5,611,766 5,934,891 - 5,934,891 Total current assets 95,705,497 1,300,795 97,006,292 62,479,611 1,446,475 63,926,086 Noncurrent assets Contractual assessments receivable - 4,554,962 4,554,962 - 5,560,981 5,560,981 Lease asset, net of amortization 1,450,242 - 1,450,242 1,566,259 - 1,566,259 Total noncurrent assets 1,450,242 4,554,962 6,005,204 1,566,259 5,560,981 7,127,240 Total assets 97,155,739 5,855,757 103,011,496 64,045,870 7,007,456 71,053,326 LIABILITIES Current liabilities
Accrued cost of energy 14,974,963 - 14,974,963 15,357,098 - 15,357,098 Accounts payable 474,783 - 474,783 390,414 - 390,414 Other accrued liabilities 404,873 1,631 406,504 456,573 33,703 490,276 Interest payable 23,283 72,484 95,767 31,865 87,730 119,595 Deposits - energy suppliers 393,756 - 393,756 21,857 - 21,857 Bonds payable - 221,666 221,666 - 208,542 208,542 Note payable 655,164 - 655,164 549,991 - 549,991 Lease liability 75,621 - 75,621 57,774 - 57,774 Total current liabilities 17,002,443 295,781 17,298,224 16,865,572 329,975 17,195,547 Noncurrent liabilities Bonds payable - 5,220,393 5,220,393 - 6,368,628 6,368,628 Note payable 6,601,857 - 6,601,857 9,382,007 - 9,382,007 Lease liability 1,566,032 - 1,566,032 1,641,654 - 1,641,654 Total noncurrent liabilities 8,167,889 5,220,393 13,388,282 11,023,661 6,368,628 17,392,289 Total liabilities 25,170,332 5,516,174 30,686,506 27,889,233 6,698,603 34,587,836 NET POSITION Net investment (deficit) in capital assets (191,411) - (191,411) (133,169) - (133,169) Unrestricted net position 72,176,818 339,583 72,516,401 36,289,806 308,853 36,598,659 Total net position 71,985,407 $ 339,583 $ 72,324,990 $ 36,156,637 $ 308,853 $ 36,465,490 $
PIONEER COMMUNITY ENERGY
SUPPLEMENTARY INFORMATION
COMBINING STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
YEARS ENDED JUNE 30, 2023 AND 2022
33 2023 2022
CCA
Program
mPOWER
Program
Total CCA
Program
mPOWER
Program
Total
OPERATING REVENUES
Electricity sales, net 199,266,165 $ - $ 199,266,165 $ 114,994,421 $ - $ 114,994,421 $ Service charges 45,000 289,703 334,703 182,816 458,573 641,389 Total operating revenues 199,311,165 289,703 199,600,868 115,177,237 458,573 115,635,810 OPERATING EXPENSES Cost of electricity 154,793,109 - 154,793,109 96,395,324 - 96,395,324 Contract services 5,624,070 51,811 5,675,881 4,320,370 108,813 4,429,183 Staff compensation 2,987,978 - 2,987,978 2,324,055 14,508 2,338,563 Other operating expenses 766,843 398 767,241 569,479 3,380 572,859 Total operating expenses 164,172,000 52,209 164,224,209 103,609,228 126,701 103,735,929 Operating income 35,139,165 237,494 35,376,659 11,568,009 331,872 11,899,881 NONOPERATING REVENUES (EXPENSES) Grant revenue 1,041,957 - 1,041,957 1,396,552 - 1,396,552 Investment gains (losses) 222,492 24,731 247,223 (100,342) (41,769) (142,111) Interest and financing expense (574,844) (231,495) (806,339) (463,851) (326,364) (790,215) Nonoperating revenues (expenses), net 689,605 (206,764) 482,841 832,359 (368,133) 464,226 CHANGE IN NET POSITION 30,730 35,828,770 35,859,500 12,400,368 (36,261) 12,364,107 Net position at beginning of year 36,156,637 308,853 36,465,490 23,756,269 345,114 24,101,383 Net position at end of year 71,985,407 $ 339,583 $ 72,324,990 $ 36,156,637 $ 308,853 $ 36,465,490 $
PIONEER COMMUNITY ENERGY
SUPPLEMENTARY INFORMATION
COMBINING STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2023 AND 2022
34 2023 2022
CCA
Program
mPOWER
Program
Total CCA
Program
mPOWER
Program
Total
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 198,140,056 $ - $ 198,140,056 $ 100,771,369 $ - $ 100,771,369 $ Other operating receipts 616,957 - 616,957 151,935 - 151,935 Contractual assessments received, net - 999,913 999,913 - 2,523,468 2,523,468 Payments to suppliers for electricity (155,236,471) - (155,236,471) (92,485,640) - (92,485,640) Payments for goods and services (6,499,835) (84,277) (6,584,112) (4,662,693) (120,469) (4,783,162) Payments for staff compensation (2,895,943) - (2,895,943) (2,271,321) (14,508) (2,285,829) Payments of taxes and surcharges to other governments (517,943) - (517,943) (447,129) - (447,129) Net cash provided by operating activities 33,606,821 915,636 34,522,457 1,056,521 2,388,491 3,445,012 CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES
Grant revenue received 1,041,957 - 1,041,957 1,396,552 - 1,396,552 Bond proceeds - - - - 1,013,989 1,013,989 Principal paid on bonds and note (2,674,978) (1,135,111) (3,810,089) (1,537,675) (2,993,890) (4,531,565) Interest and related expense payments (518,874) (246,741) (765,615) (398,878) (342,081) (740,959) Net cash used by non-capital financing activities (2,151,895) (1,381,852) (3,533,747) (540,001) (2,321,982) (2,861,983) CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments of lease liabilities (122,325) - (122,325) (118,762) - (118,762) CASH FLOWS FROM INVESTING ACTIVITIES Sale of investments 13,500,000 - 13,500,000 - - - Investment income 99,970 90,139 190,109 41,253 (16,285) 24,968 Purchase of investments (40,000,000) - (40,000,000) (15,000,000) - (15,000,000) Net cash provided (used) by investing activities (26,400,030) 90,139 (26,309,891) (14,958,747) (16,285) (14,975,032) Net change in cash and cash equivalents 4,932,571 (376,077) 4,556,494 (14,560,989) 50,224 (14,510,765) Cash and cash equivalents at beginning of year 12,637,495 1,124,649 13,762,144 27,198,484 1,074,425 28,272,909 Cash and cash equivalents at end of year 17,570,066 $ 748,572 $ 18,318,638 $ 12,637,495 $ 1,124,649 $ 13,762,144 $ Reconciliation of Operating Income to Net Cash Provided by Operating Activities
2023 2022
CCA
Program
mPOWER
Program
Total CCA
Program
mPOWER
Program
Total
Operating income 35,139,165 $ 237,494 $ 35,376,659 $ 11,568,009 $ 331,872 $ 11,899,881 $ Adjustments to reconcile operating income to net
cash provided by operating activities
Amortization expense 116,017 - 116,017 - - - (Increase) decrease in:
Accounts receivable, net (1,388,205) - (1,388,205) (8,952,708) - (8,952,708) Accrued revenue (259,357) - (259,357) (5,658,686) - (5,658,686) Other receivables (2,361,347) - (2,361,347) 118,438 - 301,254 Prepaid expenses 2,014,995 - 2,014,995 (1,580,450) - (1,580,450) Deposits 323,125 - 323,125 (2,562,132) - (2,562,132) Contractual assessments receivable - 710,210 710,210 - 2,064,895 1,882,079 Increase (decrease) in:
Accrued cost of electricity (382,136) - (382,136) 7,931,563 - 7,931,563 Accounts payable 84,369 - 84,369 45,366 - 45,366 Other accrued liabilities (264,270) (32,068) (296,338) 184,051 (8,276) 175,775 Energy surcharges due to other governments 3,509 - 3,509 (58,787) - (58,787) Supplier security deposits 580,956 - 580,956 21,857 - 21,857 Net cash provided by operating activities 33,606,821 $ 915,636 $ 34,522,457 $ 1,056,521 $ 2,388,491 $ 3,445,012 $
ORAL PRESENTATION ONLY
THERE WILL BE NO WRITTEN REPORT
FOR THIS ITEM
ITEM # 3