Redwood Coast Energy Authority
633 3rd Street, Eureka, CA 95501
Phone: (707) 269-1700 Toll-Free (800) 931-7232 Fax: (707) 269-1777 E-mail: [email protected] Web: www.redwoodenergy.org
BOARD OF DIRECTORS REGULAR MEETING AGENDA
NEW MEETING LOCATION
Wharfinger Building, downstairs Bay Room October 26, 2023 1 Marina Way, Eureka, CA 95501 Thursday, 3:30 p.m.
Any member of the public needing special accommodation to participate in this meeting or access the meeting materials should email [email protected] or call (707) 269- 1700 at least 3 business days before the meeting. Assistive listening devices are available.
Pursuant to Government Code section 54957.5, all writings or documents relating to any item on this agenda which have been provided to a majority of the Board, including those received less than 72 hours prior to the Committee’s meeting, will be made available to the public at www.RedwoodEnergy.org.
NOTE: Speakers wishing to distribute materials to the Board at the meeting, please provide 13 copies to the Board Clerk.
THIS IS A HYBRID IN-PERSON AND VIRTUAL MEETING.
The Board of Directors has returned to in-person hybrid meetings. When attending Board meetings, please socially distance as much as possible and be courteous to those who choose to wear a mask.
To participate in the meeting online, go to https://us02web.zoom.us/j/81972368051. To participate by phone, call (669) 900-6833 or (253) 215-8782. Enter webinar ID: 819 7236 8051.
To make a comment during the public comment periods, raise your hand in the online Zoom webinar, or press star (*) 9 on your phone to raise your hand. You will continue to hear the meeting while you wait. When it is your turn to speak, a staff member will unmute your phone or computer. You will have 3 minutes to speak.
You may submit written public comment by email to [email protected].
Please identify the agenda item number in the subject line. Comments will be included in the meeting record but not read aloud during the meeting.
While downloading the Zoom application may provide a better meeting experience, Zoom does not need to be installed on your computer to participate. After clicking the webinar link above, click “start from your browser.”
1 RCEA October 26, 2023, Board of Directors Meeting Agenda
OPEN SESSION Call to Order
1. ROLL CALL - REMOTE DIRECTOR PARTICIPATION
1.1. 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.
2. REPORTS FROM MEMBER ENTITIES
3. ORAL COMMUNICATIONS
This time is provided for people to address the Board or submit written communications on matters not on the agenda.
At the conclusion of all oral communications, the Board may respond to statements. Any request that requires Board action will be set by the Board for a future agenda or referred to staff.
4. CONSENT CALENDAR
All matters on the Consent Calendar are considered to be routine by the Board and are enacted in one motion. There is no separate discussion of any of these items. If discussion is required, that item is removed from the Consent Calendar and considered separately. At the end of the reading of the Consent Calendar, Board members or members of the public can request that an item be removed for separate discussion.
4.1 Approve Minutes of September 28, 2023, Board Meeting.
4.2 Approve Disbursements Report.
4.3 Accept Financial Reports.
4.4 Approve Conflict of Interest Waiver with Braun Blaising & Wynne for representation in contract negotiations with Sonoma Clean Power Authority.
5. REMOVED FROM CONSENT CALENDAR ITEMS
Items removed from the Consent Calendar will be heard under this section.
6. OLD BUSINESS
6.1. 2018-2019 Financial Audit Report and Presentation by Auditor Baker Tilly US.
Accept and Approve Redwood Coast Energy Authority Financial Statements June 30, 2019 and 2018 and Associated Independent Auditors’ Report By Baker Tilly US, LLP.
COMMUNITY CHOICE ENERGY (CCE) BUSINESS (Confirm CCE Quorum) Items under this section of the agenda relate to CCE-specific business matters that fall under RCEA’s CCE voting provisions, with only CCE-participating jurisdictions voting on these matters with weighted voting as established in the RCEA joint powers agreement.
7. OLD CCE BUSINESS
7.1. Proposed RCEA Net Billing Tariff Adoption
Adopt Resolution No. 2023-9, Approving the RCEA Net Billing Tariff. 2 RCEA October 26, 2023, Board of Directors Meeting Agenda
8. NEW CCE BUSINESS
8.1. Energy Risk Management Quarterly Report – Information only
END OF COMMUNITY CHOICE ENERGY (CCE) BUSINESS
9. NEW BUSINESS - None
10. STAFF REPORTS
10.1 Executive Director’s Report
11. FUTURE AGENDA ITEMS
Any request that requires Board action will be set by the Board for a future agenda or referred to staff.
12. CLOSED SESSION
12.1. Public Employee Performance Evaluation, pursuant to Government Code Section 54957(b)(1): Executive Director.
13. RECONVENE TO OPEN SESSION
14. CLOSED SESSION REPORT
15. ADJOURNMENT
NEXT REGULAR MEETING
Thursday, November 16, 2023, 3:30 p.m.
Wharfinger Building downstairs Bay Room, 1 Marina Way, Eureka, CA 95501.
Online and phone participation will also be possible via Zoom.
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STAFF REPORT
Agenda Item # 1.1
AGENDA DATE: October 26, 2023
TO: RCEA Board of Directors
FROM: Eileen Verbeck, Deputy Executive Director
SUBJECT: Member Teleconference Participation
BACKGROUND
Since emergency Brown Act meeting law changes went into effect in 2020 due to the COVID-19 public health emergency, the RCEA Board of Directors, Community Advisory Committee and the subcommittees of those bodies met online with no physical, public meeting location.
Governor Newsom signed AB 361 into law in September 2021, which allowed these bodies to continue meeting completely virtually without publishing each member’s participation location while the COVID state of emergency continued and state or local officials recommended social distancing measures or the RCEA Board determined that meeting in person posed health and safety risks.
The COVID-19 State of Emergency ended on February 28, 2023, and RCEA Board and CAC meetings returned to meeting in-person at a physical location, with allowances under existing Brown Act rules or new AB 2449 Brown Act rules should a Board or CAC member need to participate from a remote location for certain reasons. If another state of emergency is declared, these bodies may be able to return to completely remote meetings.
SUMMARY
RCEA Board Directors may attend up to two meetings per year from a remote location without making the location accessible to the public for the following reasons:
1. “Just cause”
a. To provide childcare or caregiving need to a child, parent, grandparent, grandchild, sibling, spouse, or domestic partner;
b. Due to a contagious illness that prevents the member from attending in-person; c. Due to a need related to a physical or mental disability as defined in Government Code sections 12926 and 12926.1 not otherwise accommodated; and d. Due to travel while on official business of the legislative body or another state or local agency.
2. “Emergency circumstance” due to a physical or family medical emergency that prevents the member from attending in person.
If a Board Director would like to attend the meeting remotely due to an emergency circumstance, the Board will take action by majority vote to approve the Director’s remote participation. A vote is not necessary for a request to attend remotely for just cause. A brief 5
description, protecting the Director’s (or Director’s family member’s) medical privacy, needs to be provided in both cases.
The remotely participating Board Director needs to publicly disclose at the meeting before any action (vote) is taken, whether anyone 18 years of age or older is present in the room at the remote location with the Director, and the general nature of the individual’s relationship with the Director.
If the Board Director anticipates needing to participate remotely for more than 2 meetings per year, staff recommends arranging for a publicly and ADA accessible space with visual and audio meeting capabilities from which to participate.
Staff asks to be notified one-week in advance, if possible, of remote meeting attendance so the Director’s publicly and ADA accessible remote meeting address can be published in the agenda, if required per Brown Act open meeting laws.
Current Remote Participation Requests
As of the writing of this staff report, there are no requests for “just cause” or “emergency circumstances” remote director participation.
RECOMMENDED ACTION (if needed)
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. 6 Redwood Coast Energy Authority
633 3rd Street, Eureka, CA 95501
Phone: (707) 269-1700 Toll-Free (800) 931-7232 Fax: (707) 269-1777 E-mail: [email protected] Web: www.redwoodenergy.org
BOARD OF DIRECTORS DRAFT MEETING MINUTES
Jefferson Community Center Auditorium September 28, 2023 1000 B Street, Eureka, CA 95501 Thursday, 3:30 p.m.
Chair Sheri Woo called a regular meeting of the Board of Directors of the Redwood Coast Energy Authority to order on the above date at 3:31 p.m. Notice of this meeting was posted on September 25, 2023.
PRESENT: Natalie Arroyo, Alternate Director Jana Ganion, Kris Mobley, Frankie Myers (participated from Weitchpec Yurok Tribe Office from 4:05 to 5:01 p.m.), Elise Scafani, Vice Chair Sarah Schaefer, Jack Tuttle, Frank Wilson, Chair Sheri Woo. ABSENT: Scott Bauer, Skip Jorgensen, Jason Ramos.
STAFF AND OTHERS PRESENT: Business Planning and Finance Director Lori Biondini, Finance Specialist Ronnie Chausse, General Counsel Nancy Diamond, Power Resources Director Richard Engel, Senior Power Resources Manager Jocelyn Gwynn, Executive Director Matthew Marshall, Account Services Manager Sally Regli, Humboldt County Health Officer Dr. Candy Stockton, Board Clerk Lori Taketa, Deputy Executive Director Eileen Verbeck.
REPORTS FROM MEMBER ENTITIES
Director Arroyo praised Executive Director Marshall’s and a Biomass Technical Advisory Group member’s participation in the Redwood Region Economic Development Conference.
Chair Woo reported that PG&E says it will repair the Ruth Lake 2 MW hydroelectric plant grid interconnection by the end of 2023. The Humboldt Bay Municipal Water District has lost electricity sales revenue for2023, a copious rainfall year, which would have benefited ratepayers. Staff noted the complaint and will discuss next steps with Water District staff.
ORAL COMMUNICATIONS
Members of the public Bob Rhode and Jesse Noell submitted written comment opposing biomass energy production and supporting distributed solar energy generation, respectively.
Chair Woo closed the non-agenda item public comment period.
CONSENT CALENDAR
4.1 Approve Minutes of August 24, 2023, Board Meeting.
4.2 Approve Disbursements Report.
4.3 Accept Financial Reports.
4.4 Approve Resolution 2023-8, Approving and Attesting to the Veracity of the 2022 Power Source Disclosure Report and Power Content Label.
4.5 Approve the Attached Update to the Executive Director Salary Range Based on a Midpoint of $267,000 Effective July 1, 2023.
7 RCEA September 28, 2023, Board of Directors Meeting DRAFT Minutes
Chair Woo requested item 4.1 be removed and Business Planning and Finance Director Biondini requested 4.5 be removed from the consent calendar. No member of the public requested removal of consent calendar items.
M/S: Arroyo, Schaefer: Approve Consent Calendar items 4.2, 4.3 and 4.4.
The motion passed with a unanimous vote. Ayes: Arroyo, Ganion, Mobley, Scafani, Schaefer, Tuttle, Wilson, Woo. Noes: None. Absent: Bauer, Jorgensen, Myers. Abstain:
None.
Chair Woo requested the words “Power Resources” be removed from the first paragraph of section 8.2 on page 4 of the August 24, 2023, RCEA Board minutes.
Business Planning and Finance Director Biondini submitted written comment, expressed concern over the process used to calculate the Executive Director salary midpoint increase and suggested alternative actions.
The directors discussed:
• Higher Executive Director salaries at other Community Choice Aggregators and the anticipated difficulties of recruiting an experienced replacement. • Changing workplace norms, including remote executive work options. • Different methods of adjusting the Executive Director’s salary. • The importance of equitable methods in adjusting salary schedules. • Appropriate roles for staff and the Board in re-evaluating salary schedule development methods.
M/S: Mobley, Tuttle: Approve Consent Calendar items 4.1 and 4.5.
The motion passed. Ayes: Ganion, Mobley, Scafani, Tuttle, Wilson, Woo. Noes: Arroyo, Myers, Schaefer. Absent: Bauer, Jorgensen. Abstain: None.
CCE BUSINESS - Chair Woo confirmed there was a CCE Business quorum present.
OLD CCE BUSINESS
6.1 Presentation on Public Health Impacts of Biomass Energy Plants on Nearby Populations, by Dr. Candy Stockton, Health Officer, Humboldt County Department of Health and Human Services. (Information only)
Dr. Stockton shared data on short-term respiratory impacts on populations near biomass energy plants based on a New York state study which she deemed most comparable to Humboldt County’s demographics and health care structure. Using the study’s findings, Humboldt County could expect roughly 7-8 emergency room lower respiratory disease visits per month, which is significant in the context of Humboldt County’s small population and limited medical resources. Dr. Stockton discussed socioeconomic and other factors that may contribute to nearby residents not seeking medical care during a respiratory emergency and absenteeism impacts on school-age children and working adults. Dr. Stockton stressed that she was not advocating for one energy source or another but providing context for energy procurement decision-making.
8 RCEA September 28, 2023, Board of Directors Meeting DRAFT Minutes
The Directors discussed:
• How Scotia’s geography and weather patterns do not significantly change the New York study findings’ applicability to Scotia.
• The need for careful air quality study design and measurement to assure usable results for assessing regulation compliance, and the need for CalPoly Humboldt involvement in an air quality study. Staff offered RCEA funding for this effort if needed. • The need to consider costs to the community and inequitable distribution of impacts when making any energy procurement decision.
• The possibility of gathering relevant air pollutant data as part of the County’s Live Well Humboldt Community Health Improvement Plan research.
Member of the public Walt Paniak submitted an article on air pollution’s effect on antibiotic effectiveness and pointed to Humboldt Sawmill Company’s PM 2.5 particle emission levels.
Chair Woo closed the public comment period.
6.2 Biannual RCEA Strategic Plan Update (Information only) Executive Director Marshall reported on agency work on strategic plan goals. Recent work was highlighted:
• Rural Regional Energy Network statewide energy efficiency funding and program development,
• The upcoming 2022 Power Content Label energy source postcard, • Current status of the delayed Sandrini solar project, which will provide 40% of RCEA’s customer electricity load when completed, and
• The pending launch of RCEA’s second electric bike rebate program.
The directors discussed:
• The possibility of the program purchasing e-bikes in bulk to reduce cost, the cost of electric bikes at local stores, and challenges of ordering inexpensive e-bikes online. • E-bike rebate outreach efforts, RCEAs e-bike rebate webpage and the expectation that the state’s and RCEA’s rebates will go quickly.
• The need to engage now to advocate for offshore wind energy transmission routes that meet multiple Humboldt County objectives, including Tribal Nation energy reliability and regional infrastructure investment needs at problem areas such as Willow Creek and Southern Humboldt.
• The need to pursue funding for Schatz Energy Research Center to continue research on offshore wind energy transmission.
There were no comments from the public and Chair Woo closed the comment period.
OLD BUSINESS
8.1 Foster Clean Power A Renewable America Solar Project Contract Amendment Senior Power Resources Manager Gwynn reported on this project whose conditional use permit has already been granted by the County. The contract’s amendments, negotiated so both RCEA and the developer shoulder industry cost increases, were described. The contract price changes improve the project’s viability after wet weather delays and financing challenges. There were no comments from the public and Chair Woo closed the comment period.
9 RCEA September 28, 2023, Board of Directors Meeting DRAFT Minutes
M/S: Arroyo, Schaefer: Approve Amendment 1 to the Foster Clean Power A LLC Power Purchase Agreement and authorize the Executive Director to execute all applicable documents.
The motion passed with a unanimous vote. Ayes: Arroyo, Ganion, Mobley, Scafani, Schaefer, Tuttle, Wilson, Woo. Noes: None. Absent: Bauer, Jorgensen, Myers. Abstain:
None.
8.2 Electric Vehicle Charging Hub Project Design Contract Executive Director Marshall described this project to install 10 electric vehicle charging sites across the county, and the current step of hiring the electrical engineering designers. There were no comments from the public and Chair Woo closed the comment period.
M/S: Mobley, Tuttle: Authorize the Executive Director to execute all applicable documents for Professional Electrical Design and Engineering Services associated with the North Coast Plug-In Electric Vehicle Charging Network Phase 2 Project with Whitchurch Engineering, Inc. for a not to exceed value of $99,088, subject to RCEA General Counsel review.
The motion passed with a unanimous vote. Ayes: Arroyo, Ganion, Mobley, Scafani, Schaefer, Tuttle, Wilson, Woo. Noes: None. Absent: Bauer, Jorgensen, Myers. Abstain:
None.
NEW BUSINESS
9.1 RCEA Office Building Property Purchase and Development Deputy Executive Director Verbeck described RCEA’s current and projected office space needs, previous efforts to locate a suitable building, and plans for staff, public meeting and educational space in a new office location. The proposed cash purchase of a vacant Old Town lot on which to build an office building was described. The ad hoc Building Relocation Subcommittee scope of work was extended through the property development process.
There were no comments from the public and Chair Woo closed the comment period.
M/S: Schaefer, Arroyo:
Approve Resolution No 2023-07, Accepting Real Property Interests in Assessor’s Parcel Number 001-131-007, 805 3rd Street, Eureka CA.
Approve the expenditure of $285,000 plus closing fees and costs estimated to be less than $5,000 for the acquisition of real property at 805 3rd Street, Eureka, CA, APN 001-131-007.
The motion passed with a unanimous vote. Ayes: Arroyo, Ganion, Mobley, Scafani, Schaefer, Tuttle, Wilson, Woo. Noes: None. Absent: Bauer, Jorgensen, Myers. Abstain:
None.
10 RCEA September 28, 2023, Board of Directors Meeting DRAFT Minutes
STAFF REPORTS
10.1 Executive Director’s Report
Executive Director Marshall reported from the CalCCA strategic planning sessions that other CCAs were facing similar procurement challenges as RCEA and are discussing measures to address current market constraints. Regulatory and Legislative Policy Manager Faith Yakovleva was introduced. Staff added that Board meetings will move to the Wharfinger Building’s downstairs Bay Room for easier ADA accessibility and sound starting next month and announced a morning open house to inform contractors and vendors of rebates and other RCEA efficiency programs. There were no public comments on this agenda item.
FUTURE AGENDA ITEMS
Directors requested staff reports on RCEA’s role and work on offshore wind electricity distribution and transmission issues, and a discussion on the salary schedule structure and potential changes. There were no public comments on this agenda item.
Chair Woo adjourned the meeting at 5:42 p.m.
Lori Taketa
Clerk of the Board
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12 Accrual Basis Redwood Coast Energy Authority
Disbursements Report
As of August 31, 2023
Type Date Num Name Memo Amount
Liability Check 08/04/2023 ACH EDD Taxes, Paydate 8/4/23 -7,234.83 Liability Check 08/04/2023 ACH Internal Revenue Service Taxes, Paydate 8/4/23 -32,957.12 Liability Check 08/04/2023 ACH Newport Group Deferred compensation,Paydate 8/4/23 -13,444.38 Bill Pmt -Check 08/04/2023 ACH Viridity Energy Solutions, Inc. Tierra Buena RA-July 2023 -16,900.00 Liability Check 08/04/2023 16191 HealthEquity Inc Health Savings Account, Paydate 8/4/23 -72.07 Check 08/04/2023 16192 CCE Customer VOID: Ck 16192 $228.57 and reissue on 8/4/23 Ck 16234 0.00 Check 08/04/2023 16193 Justin Ly CCE Equipment Rebate - Res #DS-R-230719-1481 -150.00 Check 08/04/2023 16194 CCE Customer CCE Equipment Rebate - Res #DS-R-230706-1460 -100.00 Check 08/04/2023 16195 CCE Customer PA Equipment Rebate - Res #DS-R-230703-1454 -150.00 Check 08/04/2023 16196 CCE Customer Heat Pump Rebate #DS-R-230622-1413 -1,450.00 Check 08/04/2023 16197 CCE Customer Heat Pump Rebate #DS-R-230608-1387 -1,550.00 Check 08/04/2023 16198 CCE Customer Heat Pump Rebate #DS-R-230703-1455 -1,400.00 Check 08/04/2023 16199 CCE Customer Heat Pump Rebate #DS-R-230627-1425 -725.00 Check 08/04/2023 16200 CCE Customer CCE Heat Pump Rebate #DS-R-230714-1472 -1,200.00 Check 08/04/2023 16201 CCE Customer Heat Pump Rebate #DS-R-230703-1451 -1,450.00 Check 08/04/2023 16202 SacTown Contractor's Corp. PA Direct Install Non-RES Humboldt Petroleum-21 sites -21,351.81 Bill Pmt -Check 08/04/2023 16203 Advanced Display & Signs Qty 40 Blackout Decals -122.99 Bill Pmt -Check 08/04/2023 16204 AT&T Back up internet: 06/19 - 07/18 -163.00 Bill Pmt -Check 08/04/2023 16205 Bithell, M. July 2023 Mileage Reimb #2 -41.92 Bill Pmt -Check 08/04/2023 16206 Boudreau, D. Mileage Reimburement July 2023 -104.80 Bill Pmt -Check 08/04/2023 16207 Braun Blaising & Wynne Legal Services - Regulatory -June 2023 -739.89 Bill Pmt -Check 08/04/2023 16208 Colonial Life Insurance Premiums July 2023 -2,256.20 Bill Pmt -Check 08/04/2023 16209 Developed Employment Services, LLC. Facilities maintenance work-Yard Work 633 3rd St. -64.23 Bill Pmt -Check 08/04/2023 16210 Donald Dame Professional Services July 2023 -350.00 Bill Pmt -Check 08/04/2023 16211 HSU - Sponsored Programs Foundation MD/HD ZEV Services - 6/1/23-6/30/23 -1,331.28 Bill Pmt -Check 08/04/2023 16212 Humboldt Bay Coffee Co. August 2023 Office Coffee -77.85 Bill Pmt -Check 08/04/2023 16213 Humboldt Transit Authority Bus Rides for RCEA Staff Apr-Jun 2023 -98.70 Bill Pmt -Check 08/04/2023 16214 Law Office of David Peffer June 2023 - RuralREN regulatory and legal support -11,222.00 Bill Pmt -Check 08/04/2023 16215 Liebert Cassidy Whitmore June 2023 Legal Opinion/Personnel Rule Review -6,981.89 Bill Pmt -Check 08/04/2023 16216 Los Bagels Co., Inc. E-Bike Workshop Refreshments -247.26 Bill Pmt -Check 08/04/2023 16217 Mission Uniform & Linen August 2023 janitorial services -97.80 Bill Pmt -Check 08/04/2023 16218 Newport Group Participant Fees for Retirement Plan - Q3 -942.66 Bill Pmt -Check 08/04/2023 16219 Nicklas, Alida M Mileage reimbursement - July 2023-2 -44.27 Bill Pmt -Check 08/04/2023 16220 North Coast Cleaning July 2023 janitorial services -970.00 Bill Pmt -Check 08/04/2023 16221 North Country Fair North Country Fair 2023 Booth Fees & License -220.00 Bill Pmt -Check 08/04/2023 16222 PG&E Engineering Engineering advance for EVSE at Orleans VFD site -3,500.00 Bill Pmt -Check 08/04/2023 16223 PG&E EV Account EV stations 06/14/2023-07/16/2023 -1,228.25 Bill Pmt -Check 08/04/2023 16224 PG&E Office Utility 06/14-07/16/23 utilities for 633 3rd Street -1,093.35 Bill Pmt -Check 08/04/2023 16225 Pierson Building Center 633 3rd St: supplies to fix toilet -5.45 Bill Pmt -Check 08/04/2023 16226 Premier Financial Group Advisory Fee for Q2 2023 -4,842.46 Bill Pmt -Check 08/04/2023 16227 Recology 633 3rd St: July 2023 garbage service -105.52 Bill Pmt -Check 08/04/2023 16228 Security Lock & Alarm July and August 2023 invoices -527.73 Bill Pmt -Check 08/04/2023 16229 Times Printing Company August 2023 Move-in mailers -1,494.22 Bill Pmt -Check 08/04/2023 16230 Verbeck, E. July 2023 Facility purchase reimbursement -318.96 Bill Pmt -Check 08/04/2023 16231 Visual Concepts Metal Frame for Custom Tent Top for Outreach -400.00 Bill Pmt -Check 08/04/2023 16232 Weiser, N. July 2023 Mileage Reimbursement -12.25 Bill Pmt -Check 08/04/2023 16233 WREGIS Retired RECs - Qty 302,366 -1,209.46 Check 08/04/2023 16234 CCE Customer Res EVSE rebate #REVSE32 -228.97 Paycheck 08/04/2023 ACH Employees Payroll -79,782.75
Check 08/07/2023 16235 VISA July 2023 Statement 06/22/2023 - 07/20/2023 -10,458.28 Bill Pmt -Check 08/11/2023 16236 Boone, J. CalCCA Meeting Per Diem Meals -140.00 Bill Pmt -Check 08/11/2023 16237 Engel, R. CalCCA Meeting Per Diem Meals -140.00 Bill Pmt -Check 08/11/2023 16238 Regli, S CalCCA Meeting Per Diem Meals -140.00 Bill Pmt -Check 08/18/2023 ACH Humboldt Sawmill Co. July 2023 Electricity Generation -450,907.41 Bill Pmt -Check 08/18/2023 ACH Keenan Anthem Medical Insurance August 2023 -29,637.95 Bill Pmt -Check 08/18/2023 ACH Leapfrog Energy July 2023 RA -36,740.00 Bill Pmt -Check 08/18/2023 ACH Snow Mountain Hydro, LLC July 2023 Electricity Generation -3,986.17 Liability Check 08/18/2023 ACH CICCS Coalition for Controlling Insurance EAP plan premiums 2023-8 -63.24
13 Accrual Basis Redwood Coast Energy Authority
Disbursements Report
As of August 31, 2023
Type Date Num Name Memo Amount
Liability Check 08/18/2023 ACH EDD Taxes, paydate 08/18/23 -7,439.46 Liability Check 08/18/2023 ACH Internal Revenue Service Taxes, paydate 08/18/23 -33,700.86 Liability Check 08/18/2023 ACH Newport Group Deferred compensation, paydate 08/18/23 -13,313.51 Bill Pmt -Check 08/18/2023 ACH CalPine Corporation Calpine July 2023 Costs -63,217.20 Check 08/18/2023 16239 CCE Customer CCE Equipment Rebate - Res #DS-R-230703-1459 -100.00 Check 08/18/2023 16240 CCE Customer Heat Pump Rebate #DS-R-230703-1453 -800.00 Check 08/18/2023 16241 CCE Customer Heat Pump Rebate #DS-R-230627-1435 -1,525.00 Check 08/18/2023 16242 CCE Customer Heat Pump Rebate #DS-R-230627-1432 -725.00 Check 08/18/2023 16243 CCE Customer Heat Pump Rebate #DS-R-230710-1463 -1,000.00 Check 08/18/2023 16244 CCE Customer PA install -DI-NR-220929-0593 -85.15 Check 08/18/2023 16245 American Energy Partners PA install -Mad River Brewery- DI-NR-220520-0283 -478.46 Check 08/18/2023 16246 American Energy Partners PA install -Humboldt Petroleum-9 projects -4,784.60 Check 08/18/2023 16247-59 NEM Customers NEM Account Close Out -1,343.25 Bill Pmt -Check 08/18/2023 16260 Aiqueous, LLC Stage 6 Next 90 & Stage 7 Jan-Dec 2023 -3,351.00 Bill Pmt -Check 08/18/2023 16261 AM Conservation July and August 2023 invoices -2,372.10 Bill Pmt -Check 08/18/2023 16262 Amazon.com Monthly billing - July 2023 -2,463.55 Bill Pmt -Check 08/18/2023 16263 Ameritas - Dental Insurance premiums - September 2023 -2,199.64 Bill Pmt -Check 08/18/2023 16264 Ameritas - Vision Insurance premiums - September 2023 -452.96 Bill Pmt -Check 08/18/2023 16265 AT&T RCAM router charges: 07/29 - 08/28/2023 -768.52 Bill Pmt -Check 08/18/2023 16266 AT&T Long Distance Toll-free charges 07/25/2023 - 08/24/2023 -165.34 Bill Pmt -Check 08/18/2023 16267 Baker Tilly US, LLP Audit services - period ending 7/28/23 -18,785.51 Bill Pmt -Check 08/18/2023 16268 Boudreau, D. Mileage & Employee Reimb related to RCAM site -83.27 Bill Pmt -Check 08/18/2023 16269 Carter Properties, LLC 917 3rd Street Office Lease -September 2023 -2,300.00 Bill Pmt -Check 08/18/2023 16270 City Clerks Association of California 2023 Membership Dues for Lori Taketa -250.00 Bill Pmt -Check 08/18/2023 16271 City of Arcata July 2023 Utility User Tax #6310 -13,348.71 Bill Pmt -Check 08/18/2023 16272 City of Arcata July 2023 Excessive Energy Use Tax #6315 -2,107.93 Bill Pmt -Check 08/18/2023 16273 City of Eureka-Water 917 & 633 3rd water bills -426.47 Bill Pmt -Check 08/18/2023 16274 David L. Moonie & Co., LLP April & July 2023 accounting services -554.00 Bill Pmt -Check 08/18/2023 16275 Diamond, Nancy July 2023 legal services -9,044.20 Bill Pmt -Check 08/18/2023 16276 HireRight Background Check: two new hires -277.97 Bill Pmt -Check 08/18/2023 16277 HSU - Sponsored Programs Foundation TO2 RCAM Operations Support June 2023 -4,961.56 Bill Pmt -Check 08/18/2023 16278 Humboldt Fence Co. Porch fence and gate at 917 3rd Street -7,375.00 Bill Pmt -Check 08/18/2023 16279 Liebert Cassidy Whitmore July 2023 HR legal services -6,799.50 Bill Pmt -Check 08/18/2023 16280 Local Worm Guy Compost pickup - July 2023 917 & 633 3rd -60.00 Bill Pmt -Check 08/18/2023 16281 Mission Uniform & Linen August 2023 janitorial services -152.49 Bill Pmt -Check 08/18/2023 16282 NYLEX.net, Inc. Network support services - September 2023 -3,620.00 Bill Pmt -Check 08/18/2023 16283 O&M Industries 633 3rd St: HVAC annual inspection -216.00 Bill Pmt -Check 08/18/2023 16284 Optimum Business-633 633 3rd St: Phone & Internet - 07/28 - 08/27/2023 -1,100.51 Bill Pmt -Check 08/18/2023 16285 Petty Cash Replenish petty cash for 07.01.23-07.31.23 -23.34 Bill Pmt -Check 08/18/2023 16286 PG&E Office Utility 07/07-08/06/23 utilities for 917 3rd Street -251.89 Bill Pmt -Check 08/18/2023 16287 Times Printing Company August 2023 mailers -545.42 Bill Pmt -Check 08/18/2023 16288 Ubeo Business Services 633 3rd St Printer Charges: 07/06-08/05/23 -172.45 Bill Pmt -Check 08/18/2023 16289 Verizon Wireless Tablet/cell service - 06/29 - 07/28/2023 -1,956.86 Bill Pmt -Check 08/18/2023 16290 Winzler, John Office Lease - 633 3rd Street September 2023 -7,752.50 Liability Check 08/18/2023 16291 HealthEquity Inc Health Savings Account, paydate 8/18/23 -72.07 Check 08/18/2023 16292 CCE Customer CCE Equipment Rebate - Res #DS-R-230815-1514 -50.00 Bill Pmt -Check 08/18/2023 16293 Scrapper's Edge Certificate frames -67.37 Paycheck 08/18/2023 ACH Employees Payroll -81,275.77
Check 08/20/2023 Debit Umpqua Service Charge -159.90
Bill Pmt -Check 08/21/2023 ACH PG&E Voluntary Allocation Apr 2023 Forecast Price- RPS -48,132.93 Bill Pmt -Check 08/21/2023 16294 Alber's Tractor and Ag Work Mowing services for RCAM 8/3,8/10 & 8/11 -1,500.00 Bill Pmt -Check 08/21/2023 16295 Humboldt Land Title 805 3rd Street, Earnest Deposit for Escrow -20,000.00 Bill Pmt -Check 08/21/2023 16296 PG&E CCA July 2023 CCE Charges -21,892.08 Bill Pmt -Check 08/21/2023 16297 Sloan, J. CalCCA Meeting Per Diem Meals -140.00 Bill Pmt -Check 08/31/2023 ACH Viridity Energy Solutions, Inc. Tierra Buena RA-August 2023 -16,900.00 TOTAL -1,165,815.67
14 Redwood Coast Energy Authority
Profit & Loss Budget vs. Actual
July through August 2023
Jul - Aug 23 Budget % of Budget
Ordinary Income/Expense
Income
Total 4 GRANTS AND DONATIONS 250.00 0.00 100.0%
5 REVENUE EARNED
Total 5000 · Revenue - government agencies 20,562.32 10,641,170.00 0.19% Total 5100 · Revenue - program related 499,193.45 35,000.00 1,426.27% Total 5400 · Revenue-nongovernment agencies 44,588.35 400,000.00 11.15% Total 5500 · Revenue - Electricity Sales 13,761,949.10 98,822,720.00 13.93% Total 5 REVENUE EARNED 14,326,293.22 109,898,890.00 13.04% Total Income 14,326,543.22 109,898,890.00 13.04%
Gross Profit 14,326,543.22 109,898,890.00 13.04%
Expense
Total 6 WHOLESALE POWER SUPPLY 11,601,657.46 77,731,548.00 14.93% Total 7 PERSONNEL EXPENSES 495,071.93 5,434,518.00 9.11% Total 8.1 FACILITIES AND OPERATIONS 116,104.42 1,754,484.00 6.62% Total 8.2 COMMUNICATIONS AND OUTREACH 19,928.37 622,590.00 3.2%
8.4 PROFESSIONAL & PROGRAM SRVS
8400 · Regulatory 27,650.28 205,000.00 13.49%
8410 · Contracts - Program Related Ser 20,242.50 8,080,900.00 0.25% 8420 · Accounting 41,602.51 191,000.00 21.78%
8430 · Legal 27,907.50 195,000.00 14.31%
8450 · Wholesale Services - TEA 136,187.38 766,853.00 17.76% 8460 · Procurement Credit - TEA 29,273.86 635,821.00 4.6% 8470 · Data Management - Calpine 125,596.56 887,187.00 14.16% Total 8.4 PROFESSIONAL & PROGRAM SRVS 408,460.59 10,961,761.00 3.73% Total 8.5 PROGRAM EXPENSES 78,772.81 290,014.00 27.16%
Total 8.6 INCENTIVES & REBATES 41,226.51 591,500.00 6.97% Total 9 NON OPERATING COSTS 365.17 304,500.00 0.12%
Total Expense 12,761,587.26 97,690,915.00 13.06%
Net Ordinary Income 1,564,955.96 12,207,975.00 12.82%
Net Income 1,564,955.96 12,207,975.00 12.82%
15 Redwood Coast Energy Authority
Balance Sheet
As of August 31, 2023
Aug 31, 23
ASSETS
Current Assets
Checking/Savings
1010 · Petty Cash 300.00
1060 · Umpqua Checking Acct 0560 190,183.21
1071 · Umpqua Deposit Cntrol Acct 8215 14,054,583.91
1075 · Umpqua Reserve Account 2300 1,700,000.00
1076 · First Republic Bank - 4999 62,263.94
Total Checking/Savings 16,007,331.06
Total Accounts Receivable 85,047.62
Other Current Assets
1101 · Allowance for Doubtful Accounts -5,247,571.35
1103 · Accounts Receivable-Other 18,498,374.19
1120 · Inventory Asset 35,452.21
1205 · Prepaid Insurance 17,900.62
1210 · Retentions Receivable 6,609.18
1499 · Undeposited Funds 26.00
Total Other Current Assets 13,310,790.85
Total Current Assets 29,403,169.53
Total Fixed Assets 9,049,261.14
Other Assets
1700 · Security Deposits 4,153,623.26
Total Other Assets 4,153,623.26
TOTAL ASSETS 42,606,053.93
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Total Accounts Payable 4,840,950.35
Total Credit Cards 21,575.90
Other Current Liabilities
2002 · Deposits Refundable 1,521,045.01
2011 · NEM Escrow Liability 145,802.73
2013 · Unearned Revenue - PA 2020-2023 136,075.28
Total 2100 · Payroll Liabilities 157,950.14
2200 · Accrued Expenses
2221 · Electrical Energy Surcharge 26,739.69
Total 2200 · Accrued Expenses 26,739.69
Total Other Current Liabilities 1,987,612.85
Total Current Liabilities 6,850,139.10
Total Long Term Liabilities 6,218,497.58
Total Liabilities 13,068,636.68
Equity
2320 · Investment in Capital Assets 153,263.67
3900 · Fund Balance 27,795,831.91
Net Income 1,564,955.96
Total Equity 29,514,051.54
TOTAL LIABILITIES & EQUITY 42,582,688.22
16
STAFF REPORT
Agenda Item # 4.4
AGENDA DATE: October 26, 2023
TO: Board of Directors
PREPARED BY: Jocelyn Gwynn, Senior Power Resources Manager SUBJECT: BB&W Conflict of Interest Waiver for SCPA Negotiations
SUMMARY
Staff are negotiating a resource adequacy (RA) agreement with Sonoma Clean Power Authority (SCPA) to procure a portion of their capacity for RCEA’s compliance with the California Public Utilities Commission’s (CPUC) Mid-Term Reliability (MTR) procurement requirements, in addition to general RA procurement requirements. While RCEA’s procurement efforts to secure capacity for the 2024 MTR tranche through competitive solicitations were successful, due to delays in those projects coming online RCEA currently has a need to secure additional 2024 capacity, so is seeking compliance through a bilateral transaction with SCPA.
Braun Blaising and Wynne (BB&W) typically represents RCEA in negotiations of power contracts, in addition to RCEA General Counsel. BB&W also provides legal and regulatory support services to many other CCAs. BB&W provides regulatory services to SCPA but does not represent SCPA in contract negotiations. Staff request the Board approve a waiver of this conflict of interest so staff can proceed with BB&W representing RCEA in the negotiations with SCPA. The waiver has been reviewed and approved by RCEA General Counsel.
ALIGNMENT WITH RCEA’S STRATEGIC PLAN
Not applicable.
EQUITY IMPACTS
Not applicable.
FINANCIAL IMPACT
None, the waiver is simply to proceed with negotiations. 17
STAFF RECOMMENDATION
Approve Conflict of Interest Waiver with Braun Blaising &Wynne for representation in contract negotiations with Sonoma Clean Power Authority.
ATTACHMENTS
Conflict of Interest Waiver with BB&W
18 Braun Blaising & Wynne, P.C.
Attorneys at Law
555 Capitol Mall, Suite 570, Sacramento, California 95814 Telephone: (916) 326-5812 www.braunlegal.com
October 18, 2023
Sheri Woo
Board Chair
Redwood Coast Energy Authority
633 3rd Street
Eureka, CA 95501
(707) 269-1700
RE: Conflict of Interest Waiver
Dear Ms. Woo:
Braun Blaising & Wynne, P.C. (“Firm”) has an existing attorney-client relationship with the Redwood Coast Energy Authority (“RCEA”). The Firm provides RCEA with regulatory and transactional support, including assisting in the negotiation of power purchase agreements and resource adequacy agreements. The Firm also represents the Sonoma Clean Power Authority (“SCPA”). RCEA and SCPA have entered into negotiations for RCEA to purchase a resource adequacy product from SCPA. RCEA has asked the Firm to assist in the review and negotiation of a proposed contract for these transactions. Although our firm does not represent or otherwise provide support to SCPA in the negotiation of contracts, nevertheless we believe there is the potential for a conflict.
The Firm provides support to SCPA in relation to various regulatory proceedings at the California Public Utilities Commission (“CPUC”). Additionally, the Firm serves as general counsel to California Community Power (“CC Power”), which is a joint powers authority comprised of Community Choice Aggregators (“CCAs”), including both SCPA and RCEA.
It is my understanding that the scope of the Firm’s role in supporting RCEA in the review and negotiation of the resource adequacy agreement between RCEA and SCPA does not include an evaluation of the commercial terms of the contract, such as price or quantity. Further, the Firm is prohibited from disclosing any confidential information of SCPA that it may possess by California Business and Professions Code § 6068(e) and Rule 1.6 of the California Rules of Professional Conduct.
19 2
RULES OF PROFESSIONAL CONDUCT
Rule 1.7 of the California Rules of Professional Conduct provides in pertinent part:
(a) A lawyer shall not, without informed written consent from each client and compliance with paragraph (d), represent a client if the representation is directly adverse to another client in the same or a separate matter.
(b) A lawyer shall not, without informed written consent from each affected client and compliance with paragraph (d), represent a client if there is a significant risk the lawyer’s representation of the client will be materially limited by the lawyer’s responsibilities to or relationships with another client, a former client or a third person, or by the lawyer’s own interests.
. . .
(d) Representation is permitted under this rule only if the lawyer complies with paragraphs (a), (b), and (c), and:
(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; and
(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal.
Our representation of RCEA in the review of the proposed resource adequacy agreement implicates Rule 1.7(b).
OUR REPRESENTATION
Our Firm has no role in the review or negotiation of power purchase agreements or resource adequacy agreements for SCPA. However, this fact does not obviate the actual conflict that exists if our Firm represents SCPA in other capacities. As such, California law requires that we obtain written informed consent from each client before continuing representation.
ADVERSE CONSEQUENCES
We cannot predict every negative impact for you which may occur as a result of giving consent as requested here, however the reasonably foreseeable adverse consequences that could arise are the following:
• We may be tempted to favor the interests of one client over the other. • Our exercise of independent judgment relating to RCEA matters may be impaired or 20 3
clouded by our relationship with SCPA.
• We may be restricted from forcefully advocating a client's position for fear of alienating the other client.
• We may impair the position, claims or defenses of one client because of an adverse position we take for another client.
• We may be forced to withdraw from representing either or both clients because of disputes or further conflicts of interest, which could increase either or both clients' attorney's fees and costs.
• There may be an appearance of impropriety in our representation of the clients simultaneously.
YOUR CONSENT
This letter sets forth the factual background in this matter. However, if you believe that there is any other information that you need before consent can be granted, please let me know immediately.
In the event that circumstances change or we become aware of new information that requires a new consent from the parties, you will be promptly notified of that fact, and continued representation will be subject to the informed written consent of involved parties.
You are entitled to and should consider obtaining an independent legal opinion regarding the advisability of signing this consent form.
Your execution of this consent form will constitute an acknowledgment of full disclosure in compliance with the requirements of Section 1.7 of the California Rules of Professional Conduct previously quoted in this letter, and that you knowingly and voluntarily consent to representation by the Firm despite actual conflicts of interest. Such signature will acknowledge your consent to the Firm’s representation of RCEA as described above, and shall apply to all work performed on or after October 18, 2023.
Thank you for your expeditious consideration of this matter. If you have any questions, please do not hesitate to contact me.
Sincerely,
Justin Wynne
Braun Blaising & Wynne, P.C.
21 4
AGREED AND ACCEPTED:
Redwood Coast Energy Authority
By:_______________________________
Sheri Woo
Board Chair
Redwood Coast Energy Authority
Dated: __________________
22
STAFF REPORT
Agenda Item # 6.1
AGENDA DATE: October 26, 2023
TO: Board of Directors
PREPARED BY: Lori Biondini, Director of Business Planning and Finance SUBJECT: Financial Audit Report and Presentation
BACKGROUND
On January 26, 2023, the Board approved engaging with Baker Tilly US, LLP for independent accounting services, including auditing of RCEA’s financial statements for the years ended June 30, 2018 through 2022.
As noted in the staff report for the above-referenced January agenda item, RCEA ended its previous engagement with Pisenti & Brinker in 2022 upon mutual agreement that it was in the best interest of both parties to terminate. Shortly after, RCEA identified Baker Tilly US, LLP as a qualified accounting firm to provide required financial auditing services.
SUMMARY
Baker Tilly US, LLP has finished auditing RCEAs financial statements for the years ended June 30, 2018 and 2019, and provided their Independent Auditors’ Report and summary of their audit process, attached. A representative from Baker Tilly will be available at the Board meeting to provide an overview of the report and answer questions.
STAFF RECOMMENDATION
Accept and Approve Redwood Coast Energy Authority Financial Statements June 30, 2019 and 2018 and Associated Independent Auditors’ Report By Baker Tilly US, LLP.
ATTACHMENTS
1. Redwood Coast Energy Authority Financial Statements June 30, 2019 and 2018
2. Reporting and insights from 2019 and 2018 audit: Redwood Coast Energy Authority June 20, 2019 and 2018
23 This page
intentionally
left blank.
24 Redwood Coast Energy Authority
Financial Statements
June 30, 2019 and 2018
25 Redwood Coast Energy Authority
Table of Contents
June 30, 2019 and 2018
Page
Independent Auditors' Report 1
Management's Discussion and Analysis (Unaudited) 3
Basic Financial Statements
Statements of Net Position 6
Statements of Revenues, Expenses and Changes in Net Position 7 Statements of Cash Flows 8
Notes to the Basic Financial Statements 9
26 Independent Auditors' Report
To the Board of Directors of
Redwood Coast Energy Authority
We have audited the accompanying financial statements of Redwood Coast Energy Authority, as of and for the years ended June 30, 2019 and 2018, and the related notes to the financial statements, which collectively comprise the Redwood Coast Energy Authority's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Redwood Coast Energy Authority's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Redwood Coast Energy Authority's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Redwood Coast Energy Authority as of June 30, 2019 and 2018, and the respective changes in financial position and cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America.
1 Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020-2022 Baker Tilly US, LLP 27 Other Matter
The financial statements of the Redwood Coast Energy Authority as of June 30, 2017, prior to restatement, were audited by other auditors whose report dated December 7, 2018, expressed an unmodified opinion on those statements.
As part of the audit of the June 30, 2018 financial statements, we also audited the adjustments described in Note 8 that were applied to restate the 2017 financial statements. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2017 financial statements of the Redwood Coast Energy Authority other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2017 financial statements as a whole.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Madison, Wisconsin
October 16, 2023
2 28
3 Management's Discussion and Analysis, Years Ended June 30, 2018, and 2019 The Management's Discussion and Analysis provides an overview of Redwood Coast Energy Authority's financial activities as of and for the years ended June 30, 2018, and 2019. The information presented here should be considered in conjunction with the audited financial statements.
BACKGROUND
The Redwood Coast Energy Authority (RCEA) was formed in 2003 as a Joint Powers Authority (JPA) of the seven incorporated cities of Humboldt County, California, and the County of Humboldt, with the subsequent addition of Humboldt Bay Municipal Water District. The mission of RCEA is to develop and implement sustainable energy initiatives that reduce energy demand, increase energy efficiency, and advance the use of clean, efficient, and renewable resources available in the region.
As a JPA, RCEA is governed by a board of appointed directors from each member agency. RCEA further amended the JPA in 2016 to operate as a Community Choice Aggregator (CCA) providing electric power and related benefits within RCEA's service area.
Financial reporting
RCEA presents it financial statements as an enterprise fund under the accrual basis of accounting, in accordance with Generally Accepted Accounting Principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB).
RCEA's basic financial statements are comprised of four components: 1) Statements of Net Position, 2) Statements of Revenues, Expenses, and Changes in Net Position, 3) Statement of Cash Flows and 4) Notes to the basic financial statements.
The Statements of Net Position include all RCEA's assets and liabilities with the difference reported as net position and provides information about the nature and amounts of resources and obligations at a specific point in time.
The Statements of Revenues, Expenses, and Changes in Net Position report all RCEA's revenue and expenses for the years shown.
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 and capital activities.
Notes to the Basic Financial Statements, which provide additional details and information related to the basic financial statements.
29 4
FINANCIAL HIGHLIGHTS
The following table is a summary of RCEA's assets, liabilities, and net position and a discussion of significant changes for the years ending June 30:
2019 2018
Restated
2017
Current assets $11,419,561 $9,475,941 $8,167,669
Noncurrent assets 982,040 157,633 151,725
Total assets 12,401,601 9,633,547 8,319,394
Current liabilities 3,784,458 3,184,472 6,804,598
Noncurrent liabilities 40,293 92,519 775,095
Total liabilities 3,824,751 3,276,991 7,579,693
Net position
Investment in capital assets 981,245 154,930 147,112
Unrestricted 7,595,605 6,201,653 592,589
Total net position $8,576,850 $6,356,583 $739,701
2017 has been restated to correct errors recorded related to accounts receivable and electric sales revenue. See Note 8 for more details.
Current assets
Current assets were approximately $11,420,000 at the end of 2019 and were primarily comprised of cash of $4,018,000, accounts receivable of $4,719,000, and accrued revenue of $2,247,000. Cash and accrued revenue increased from 2018 to 2019 due to slightly higher generation rates. Accounts receivable increased due to the continued accumulation of uncollected revenues.
Capital assets
Capital assets are presented net of depreciation. Capital assets held by RCEA in 2018 include leasehold improvements, office furniture and equipment, and electric vehicle charging equipment. In 2019 capital assets also included construction in progress of a solar power generation plant and battery storage system.
Current and noncurrent liabilities
The largest component of current liabilities is the accrued cost of electricity which increased from 2018 to 2019 due to an increase of power procurement costs. Current and noncurrent portions of notes payable decreased from 2018 to 2019 due to principal payments made during the year.
The following table is a summary of RCEA's results of operations and a discussion of significant changes for years ending June 30:
2019 2018
Restated
2017
Operating Revenues $47,278,809 $45,161,224 12,699,346
Operating Expenses 45,904,882 39,501,243 12,760,703
Operating Income (Loss) 1,373,927 5,659,981 (61,357)
Nonoperating Revenues
(Expenses)
(14,010) (43,099) (4,975)
Capital Contributions 860,350 - -
Change in net position $2,220,267 $5,616,882 $(66,332)
2017 has been restated to correct errors recorded related to accounts receivable and electric sales revenue. See Note 8 for more details.
30 5
Operating revenues
Operating revenues increased from 2018 to 2019 primarily from small rate increases and territory expansion to include the City of Ferndale mid-way through the 2018 fiscal year. RCEA also receives revenues from sources other than retail electricity sales. These sources include State grants and contracts to provide energy efficiency services and other customer programs.
Operating expenses
Operating expenses increased from 2018 to 2019 due to the rising cost of energy and energy products in the market. RCEA procures energy from a variety of sources and uses long-term contracts as well as short-term hedging to minimize this risk and maintain a balanced power portfolio.
PURCHASE COMMITMENTS AND ECONOMIC OUTLOOK
RCEA enters into various purchase agreements to meet regulatory and voluntary renewable portfolio standard (RPS) and greenhouse gas (GHG) free targets, as well as to meet its goals of providing local renewable energy at a competitive retail rate while managing exposure to changing market prices. The purchase commitments are aligned with expected demand for electricity and by procuring power from diverse technologies and geographic locations. Expected obligations under power purchase agreements totaled $46,020,248 as of June 30, 2019.
For the year ended June 30, 2020, the following factors affect RCEA's finances:
The continued operation of RCEA's Community Choice Aggregation program, The continued implementation of the grant and contract-funded energy efficiency and other customer programs,
Continuing activities related to promoting electric vehicles including planning for and construction of charging infrastructure funded partially by State incentives and grants, The continued construction of a solar powered generating and storage microgrid facility funded partially by grant funds from the California Energy Commission.
REQUEST FOR INFORMATION
This financial report is designed to provide RCEA's board members, stakeholders, customers, and creditors with a general overview of the RCEA's finances and to demonstrate RCEA's accountability for the funds under its stewardship.
Please address any questions about this report or requests for additional financial information to the Redwood Coast Energy Authority, Attn: Director of Business Planning and Finance, 633 3rd Street, Eureka, CA 95501.
31 2019 2018
Assets
Current Assets
Cash and cash equivalents $ 2,867,462 4,017,737 $
Accounts receivable, net of allowance 3,914,425 4,719,212 Unbilled revenue 1,864,085 2,247,311
Other receivable 699,203 294,037
Prepaid expenses 1,712 -
Inventory 26,666 35,452
Deposits 104,100 104,100
Total current assets 11,419,561 9,475,941
Noncurrent Assets
Plant in service 291,177 299,318
Accumulated depreciation (133,544) (177,628)
Construction work in progress - 860,350
Total noncurrent assets 157,633 982,040
Total assets $ 12,401,601 $ 9,633,574
Liabilities and Net Position
Current Liabilities
Accounts payable $ 321,422 345,229 $
Accrued cost of electricity 2,149,404 3,017,854
Accrued wages 148,927 142,351
Accrued compensation 70,690 76,798
Security deposits - 150,000
Retentions payable - 3,994
Current portion of notes payable 490,035 52,226
Total current liabilities 3,184,472 3,784,458
Noncurrent Liabilities
Note payable 92,519 40,293
Total noncurrent liabilities 92,519 40,293
Total liabilities 3,276,991 3,824,751
Net Position
Net investment in capital assets 981,245 154,930
Unrestricted 6,201,653 7,595,605
Total net position 6,356,583 8,576,850
Total liabilities and net position $ 12,401,601 $ 9,633,574 Redwood Coast Energy Authority
Statements of Net Position
June 30, 2019 and 2018
See notes to financial statements
6 32
2019 2018
Revenues
Charges for service $ 43,234,841 45,919,955 $
Grant revenue 1,357,477 1,926,383
Other revenue 1,377 -
Total operating revenues 45,161,224 47,278,809
Operating Expenses
Purchased power 32,750,101 39,517,984
Operation and maintenance 6,342,814 6,702,563
Depreciation 44,084 48,579
Total operating expenses 39,501,243 45,904,882
Operating income 1,373,927 5,659,981
Nonoperating Revenues (Expenses)
Investment income 275 5,527
Interest expense (14,285) (48,626)
Nonoperating revenues (14,010) (43,099)
Income before contributions 1,359,917 5,616,882
Capital Contributions - 860,350
Change in net position 2,220,267 5,616,882
Net Position, Beginning (as restated) 6,356,583 739,701 Net Position, Ending $ 8,576,850 $ 6,356,583
Redwood Coast Energy Authority
Statements of Revenues, Expenses and Change in Net Position Years Ended December 31, 2019 and 2018
See notes to financial statements
7 33
2019 2018
Cash Flows From Operating Activities
Received from customers $ 41,837,516 45,284,491 $
Received from grants 1,926,383 1,357,477
Paid to suppliers for goods and services (42,730,572) (41,028,116) Paid to employees for operating payroll (2,209,539) (2,248,935) Net cash flows from operating activities 526,244 1,662,461 Cash Flows From Capital and Related Financing Activities Acquisition and construction of capital assets (54,487) (868,491) Capital contributions received - 860,350
Debt retired (1,908) (1,908)
Net cash flows from capital and related financing activities (56,395) (10,049) Cash Flows From Noncapital and Related Financing Activities Interest paid (48,626) (14,285)
Debt retired (596,583) (488,127)
Net cash flows from non-capital and related financing activities (645,209) (502,412) Cash Flows From Investing Activities
Interest income 275 5,527
Net cash flows from investing activities 275 5,527
Net change in cash and cash equivalents (169,833) 1,150,275 Cash and Cash Equivalents, Beginning 3,037,295 2,867,462 Cash and Cash Equivalents, Ending $ 2,867,462 4,017,737 $ Reconciliation of Operating Income to Net Cash Flows From Operating Activities
Operating income $ 5,659,981 1,373,927 $
Nonoperating revenue (expense)
Noncash items in operating income:
Depreciation 44,084 48,579
Changes in assets and liabilities:
Accounts receivable (963,545) (804,787)
Unbilled revenue (177,717) (383,226)
Other receivables (258,921) 405,166
Inventory (8,786) (4,951)
Deposits - (100,000)
Prepaid expenses (1,712) -
Accounts payable 23,807 (284,622)
Accrued cost of electricity (3,404,172) 857,880
Accrued compensation 6,108 11,612
Security deposits - 150,000
Net cash flows from operating activities $ 526,244 1,662,461 $ Redwood Coast Energy Authority
Statements of Cash Flows
Years Ended June 30, 2019 and 2018
See notes to financial statements
8 34
Redwood Coast Energy Authority
Notes to Financial Statements
June 30, 2019 and 2018
9 1. Summary of Significant Accounting Policies
Reporting Entity
The Redwood Coast Energy Authority (RCEA) is a joint powers authority formed in 2003 under California Government Code Section 6500 to develop and implement sustainable energy initiatives that reduce energy demand, increase energy efficiency and advance the use of clean, efficient and renewable resources available in the Humboldt County region of California. The member agencies of RCEA are the County of Humboldt, the Humboldt Bay Municipal Water District, the cities of Arcata, Blue Lake, Eureka, Ferndale, Fortuna, Rio Dell and Trinidad. RCEA is governed by a Board of Directors comprised of representatives of the member agencies.
RCEA began the delivery of electricity in May 2017. RCEA provides electric service to retail customers as a Community Choice Aggregation Program (CCA) under the California Public Utilities Code Section 366.2. Electricity is acquired from commercial suppliers and delivered through existing physical infrastructure and equipment managed by the California Independent System Operator and PG&E.
Basis of Accounting
RCEA'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.
RCEA'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 RCEA's policy to use restricted resources first, then unrestricted resources as they are needed.
In March 2018, the GASB issued Statement No. 88 - Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. This statement defines debt for purposes of disclosure in notes to financial statements and establishes additional financial statement note disclosure requirements related to debt obligations of governments, including direct borrowings and direct placements. RCEA adopted this statement effective July 1, 2018.
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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, RCEA has defined cash and cash equivalents to include cash on hand, demand deposits and short-term investments with an original maturity of three months or less.
35 Redwood Coast Energy Authority
Notes to Financial Statements
June 30, 2019 and 2018
10 Accounts Receivable
Accounts receivable represent program revenues which have been earned for which the related cash has not been received. Accounts receivable were as follows:
2019 2018
Accounts receivable from customers $ 6,099,772 $ 5,251,021 Allowance for uncollectible accounts (1,380,560) (1,336,596)
Total $ 4,719,212 $ 3,914,425
The majority of account collections occur within the first few months following customer invoicing.
RCEA estimates that a portion of the billed amounts will not be collected. The allowance for uncollectible accounts at the end of a period includes amounts billed during the current and prior fiscal years.
Inventory
Inventory is generally used for construction, operation and maintenance work, not for resale.
Inventory is valued at the lower of cost or market utilizing the average cost method and charged to construction or expense when used.
Deposits
Various energy contracts entered into by RCEA require RCEA to provide a supplier with a security deposit. These deposits are generally held for the term of the contract. Deposits are classified as current or noncurrent depending on the length of the time the deposits are expected to be held.
Capital Assets and Depreciation
Capital assets are generally defined by RCEA as assets with an initial, individual cost of more than $2,000 and an estimated useful life in excess of one year.
Capital assets of RCEA are recorded at cost or the estimated acquisition value at the time of contribution to RCEA. Major outlays for capital assets are capitalized as projects are constructed.
Depreciation is computed according to the straight-line method over estimated useful lives of five to ten years for equipment. Leasehold improvements are depreciated over the shorter of 1) the useful life of the leasehold improvement or 2) the remaining years of the lease.
Long-Term Obligations
Long-term debt and other obligations are reported as liabilities. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Gains or losses on prior refundings are amortized over the remaining life of the old debt or the life of the new debt, whichever is shorter. The balance at year end for premiums and discounts is shown as an increase or decrease in the liability section of the statement of net position. The balance at year end for the loss on refunding is shown as a deferred outflow in the statement of net position.
Accrued Compensation
RCEA pays employees bi-weekly and fully pays its obligation for health benefits and contributions to its defined contribution retirement plan each month. RCEA is not obligated to provide post-employment healthcare or other fringe benefits and, accordingly, no related liability is recorded in these financial statements. RCEA provides compensated time off, and the related liability is recorded in these financial statements.
36 Redwood Coast Energy Authority
Notes to Financial Statements
June 30, 2019 and 2018
11 Security Deposits
Various energy contracts entered into by RCEA require the supplier to provide RCEA 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:
Investment in Capital Assets - This component of net position consists of capital assets, net of accumulated depreciation and is reduced by outstanding borrowings that are attributable to the acquisition, construction or improvement of those assets.
Restricted - This component of net position consists of net assets subject to external constraints on their use imposed by creditors (such as through debt covenants), grantors, contributors or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.
Unrestricted - This component of net position consists of net position that does not meet the definition of “investment in capital assets” or “restricted”.
Revenue and Expenses
RCEA distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with RCEA's principal ongoing operations. The principal operating revenues of RCEA include revenues derived from the provision of electricity to retail customers. Electricity sales are reported net of changes to the allowance for uncollectable accounts. Operating expenses for RCEA include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
Revenue Recognition
RCEA recognizes revenue on an 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. RCEA's methodology used to calculate the allowance for doubtful accounts considers the impacts of the recession and the suspension of customer electricity disconnections.
Grant Revenue
The California Public Utilities Commission (CPUC) and the Local Government Commission (LGC), a California not-for-profit membership organization, have undertaken a pilot project to encourage the formation of regional organizations such as RCEA to promote energy efficiency, conservation and increased local self-reliance. The CPUC has made funds available to the LGC to help local governments establish and operate agencies such as RCEA. Funds are collected from rate payers by Pacific Gas and Electric (PG&E) and distributed to RCEA in accordance with the objectives of this project.
37 Redwood Coast Energy Authority
Notes to Financial Statements
June 30, 2019 and 2018
12 Capital Contributions
Cash and capital assets are contributed to the RCEA from customers or external parties. The value of property contributed to the RCEA are reported as revenue on the statements of revenues, expenses and changes in net position.
Electrical Power Purchased
During the normal course of business, RCEA 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 wholesale sales and generation credits, and load and other charges arising from RCEA's participation in the CAISO's centralized market. The cost of electricity and capacity is recognized as "Purchased Power" in the Statements of Revenues, Expenses and Changes in Net Position.
Income Taxes
RCEA is a joint powers authority under the provisions of the California Government Code and is not subject to federal or state income or franchise taxes.
Effect of New Accounting Standards on Current Period Financial Statements The Governmental Accounting Standards Board (GASB) has approved the following:
GASB has approved GASB Statement No. 87, Leases, GASB Statement No. 91, Conduit Debt Obligations, GASB Statement No. 92, Omnibus 2020, GASB Statement No. 93, Replacement of Interbank Offered Rates, GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, GASB Statement No. 96, Subscription-Based Information Technology Arrangements, GASB Statement No. 99, Omnibus 2022, 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, the application of these standards may result in restating of these financial statements. Management is evaluating the effects of these new pronouncements.
2. Cash and Cash Equivalents
As of June 30, 2019 and 2018, RCEA maintains its cash in both interest-earning and noninterest-earning bank accounts with Umpqua Bank.
California Government Code Section 16521 requires banks to collateralize amounts of public funds in excess of the FDIC limit of $250,000 in an amount equal to 110% of deposit balances.
As of June 30, 2019 and 2018, RCEA maintains $20,955 and $20,681 of its cash in the Humboldt County Treasury, respectively. The County pools these funds with those of other governmental entities in the County and invests the cash. These pooled funds are carried at cost which approximates market value.
Interest earned is deposited quarterly into participating funds. Any investment losses are proportionately shared by all funds in the pool.
The County is authorized to deposit cash and invest excess funds by California Government Code Section 53648 et seq. The Humboldt County Treasury had no investments in derivatives. RCEA does not have a specific policy which relates to interest rate risk. 38 Redwood Coast Energy Authority
Notes to Financial Statements
June 30, 2019 and 2018
13 Custodial Credit Risk
Deposits
Custodial credit risk is the risk that in the event of a financial institution failure, RCEA deposits may not be returned to RCEA. RCEA's policy for deposits is that they be insured by the FDIC.
RCEA maintains cash in bank accounts, which at times may exceed federally insured limits.
RCEA is not exposed to custodial credit risk.
Investment Policy
No formal investment policy has been adopted by RCEA.
3. Capital Assets
A summary of changes in capital assets for 2019 follows:
Balances
7/1/2018 Increases Decreases
Balances
6/30/2019
Construction work in progress $ - $ 860,350 $ - $ 860,350 Capital assets being
depreciated:
Leasehold improvements 41,994 3,978 - 45,972
Equipment 249,183 4,163 - 253,346
Total capital assets
being depreciated 291,177 8,141 - 299,318
Less accumulated depreciation:
Leasehold improvements (8,155) (3,174) - (11,329)
Equipment (125,389) (40,910) - (166,299)
Total accumulated
depreciation (133,544) (44,084) - (177,628)
Capital assets being
depreciated, net $ 157,633 $ 35,943 $ - $ 121,690
39 Redwood Coast Energy Authority
Notes to Financial Statements
June 30, 2019 and 2018
14 A summary of changes in capital assets for 2018 follows:
Balances
7/1/2017 Increases Decreases
Balances
6/30/2018
Capital assets being
depreciated:
Leasehold improvements $ 41,994 $ - $ - $ 41,994
Equipment 194,696 54,487 - 249,183
Total capital assets
being depreciated 236,690 54,487 - 291,177
Less accumulated depreciation:
Leasehold improvements (6,055) (2,100) - (8,155)
Equipment (78,910) (46,479) - (125,389)
Total accumulated
depreciation (84,965) (48,579) - (133,544)
Capital assets being
depreciated, net $ 151,725 $ 5,908 $ - $ 157,633
4. Notes Payable
RCEA obtained a loan with PG&E in January 2014 for energy upgrades in the amount of $10,974 at 0% interest for 69 months.
In January 2017, RCEA also obtained a nonrevolving line of credit from the County of Humboldt (County), Headwaters Fund and Redwood Region Economic Development Commission (RREDC) for working capital in the amount of $700,000 at 5% interest for 72 months. RCEA will pay interest only payments for 12 months and following the first 12 months the draw period will close and the borrowed amount will become a fully paid loan with principal and interest payments after 60 months with a maturity date of January 31, 2023. However, RCEA paid off the remaining principal balance prior to maturity and the outstanding balance is $0 as of June 30, 2019.
Beginning in July 2016, RCEA incurred startup costs associated with the CCA program with The Energy Authority, (TEA), for Phase I and Phase II of the project totaling $187,197 prior to the launch of the program in May 2017. Payment for these costs was deferred until Phase III of the project and will be amortized over 48 months at 5%.
Beginning in October 2016, RCEA executed an agreement with Local Energy Aggregation Network (LEAN) associated with the CCA program totaling $289,235. Payment for these costs were deferred until RCEA began generating revenue and payment began in August 2017. The payments will be paid over 12 months at 5%.
All of the aforementioned debt is directly placed with a third party.
40 Redwood Coast Energy Authority
Notes to Financial Statements
June 30, 2019 and 2018
15 The outstanding balances as of June 30, 2019 and 2018 are as follows:
Loan Description Final Maturity Interest Rate 2019 2018
PG&E 11/30/2019 0.00% $ 795 $ 2,704
County of Humboldt 4/30/2019 5.00% - 414,541
TEA Loan 3/31/2021 5.00% 91,724 140,651
LEAN Loan 7/1/2018 5.00% - 24,658
Total $ 92,519 $ 582,554
Future payments obligations are as follows:
Principal Interest Total
Years ending June 30:
2020 $ 52,226 $ 3,418 $ 55,644
2021 40,293 844 41,137
Total $ 92,519 $ 4,262 $ 96,781
In the event of a default by RCEA under the Loan Documents, RREDC shall initiate default collection procedures and all necessary recovery procedures as provided in the Loan Documents. These procedures include sending to RCEA 30, 60 and 90-day delinquency notices and the preparation of a Notice of Default to be executed by the RREDC. Upon notice of default and after the 90-day delinquency notice, all materials in RREDC's possession related to the Loan Documents and this agreement shall be made available by RREDC to the County. RREDC may upon the express written approval of County, initiate litigation to collect on the Loan. Under no circumstances shall RREDC initiate litigation to collect the loan without the express written approval of the County.
Long-Term Obligation Summary
Long-term obligation activity for the year ended June 30, 2019 is as follows:
7/1/2018
Balance Additions Reductions
6/30/2019
Balance
Due Within One
Year
Notes Payable 582,554 - 490,035 92,519 52,226
Long-term obligation activity for the year ended June 30, 2018 is as follows:
7/1/2017
Balance Additions Reductions
6/30/2018
Balance
Due Within One
Year
Notes Payable 1,181,045 - 598,491 582,554 490,035
41 Redwood Coast Energy Authority
Notes to Financial Statements
June 30, 2019 and 2018
16 5. Retirement Plan
RCEA has established a Savings Incentive Match Plan for employees (a Simple IRA) where RCEA and employees make contributions to individual retirement accounts (IRAs). Under the Simple IRA, RCEA must make contributions matching participating employee contributions, up to a maximum of 3% of an employee's gross salary per year. Employees may contribute up to the maximum federally allowed amount. All regular employees of RCEA are eligible to participate in the Simple IRA plan. Plan contributions by RCEA for the years ended June 30, 2019 and 2018 were $42,289 and $39,547, respectively.
6. Risk Management
RCEA is covered for general business, liability, automobile and errors and omissions through the Special Districts Risk Management Authority (SDRMA), a public entity risk pool. As a member of a public entity risk pool, RCEA is responsible for appointing an employee as a liaison between RCEA and SDRMA, implementing all policies of the SDRMA and promptly paying all contributions. SDRMA is responsible for providing insurance coverage as agreed upon, assisting RCEA with implementation, providing claims adjusting and defending any civil action brought against an officer of RCEA.
RCEA is exposed to various insurable risks of loss related to torts; theft of, damage to and destruction of assets; and errors and omissions. During the year, RCEA 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 the commercial liability in any of the past three years. There were no significant reductions in coverage compared to the prior year.
On July 12, 2018, RCEA's Board adopted the Energy Risk Management Policy (ERMP). The ERMP establishes RCEA's Energy Risk Program and applies it to all power procurements and related business activities that may impact the risk profile of RCEA. The ERMP documents the framework by which RCEA staff and consultants will identify and quantify risk, develop and execute procurement strategies, develop controls and oversight and monitor and measure and report on the effectiveness of the ERMP. Risks covered by the ERMP include market price risk, credit risk, volumetric risk, operational risk, opt-out risk, legislative and regulatory risk and other risks arising from operating as a Community Choice Aggregation and participating in California energy markets. The Board approved updates to the ERMP in July 2019, July 2020 and July 2021.
RCEA maintains other risk management policies, procedures and systems that help mitigate and manage credit, liquidity, financial, regulatory and other risks not covered by the ERMP.
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, RCEA enters into netting arrangements whenever possible and where appropriate obtains collateral and other performance assurances from counterparties. 42 Redwood Coast Energy Authority
Notes to Financial Statements
June 30, 2019 and 2018
17 7. Purchase Commitments
Power and Electric Capacity
In the ordinary course of business, RCEA enters into various power purchase and energy storage 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 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.
RCEA enters into power purchase and energy storage agreements in order to comply with state law and elective targets for renewable and greenhouse gas (GHG) free products and to ensure stable and competitive electric rates for its customer.
The following table represents the expected, undiscounted, contractual commitments for energy storage, power and electric capacity outstanding as of June 30, 2019:
Years ending June 30:
2020 $ 14,553,460
2021 11,385,548
2022 7,482,715
2023 6,968,790
2024 5,226,593
2025 - 2026 403,142
Total $ 46,020,248
8. Restatement of Net Position
Net Position as of July 1, 2017 has been restated to correct errors recorded in fiscal year 2017 related to accounts receivable and electric sales revenue. In May and June of 2017 customer payments were mistakenly recorded as revenue rather than a reduction of accounts receivable. In addition, an error occurred in the calculation of the monthly unbilled revenue calculation.
Net position, July 1, 2017 $ 1,128,352
Customer payments recorded as revenue (854,293)
Error in unbilled revenue 465,642
Net position, restated $ 739,701
Net income of the year ended June 30, 2017 would have decreased by $388,651 from the amount previously reported.
43 Redwood Coast Energy Authority
Notes to Financial Statements
June 30, 2019 and 2018
18 9. Subsequent Events
RCEA evaluated subsequent events through the date that the financial statements were available to be issued, for events requiring recording or disclosure in the financial statements.
USDA Loan
On June 1, 2021, RCEA secured a guaranteed loan to finance construction of electric generation facilities through the U.S. Department of Agriculture (USDA) Rural Utilities Service program totaling $6,600,000 with an effective interest rate of 1.79%. RCEA completed two loan draws totaling $6,287,592 subsequent to June 30, 2019 as the project continues.
Debt Issue
On February 8, 2022, RCEA entered into a $2,000,000 unsecured loan agreement with Blue Lake Rancheria. The obligation is payable over 7 months and bears an interest rate of 8.00%. 44 Reporting and insights
from 2019 and 2018 audit:
Redwood Coast Energy
Authority
June 30, 2019 and 2018
45 THIS COMMUNICATION IS INTENDED SOLELY FOR THE INFORMATION AND USE OF THOSE CHARGED WITH GOVERNANCE, AND, IF APPROPRIATE, MANAGEMENT, AND IS NOT INTENDED TO BE AND SHOULD NOT BE USED BY ANYONE OTHER THAN THESE SPECIFIED PARTIES.
BAKER TILLY US, LLP, TRADING AS BAKER TILLY, IS A MEMBER OF THE GLOBAL NETWORK OF BAKER TILLY INTERNATIONAL LTD., THE MEMBERS OF WHICH ARE SEPARATE AND INDEPENDENT LEGAL ENTITIES.
Executive summary
October 16, 2023
To the Board of Directors
Redwood Coast Energy Authority
633 3rd Street
Eureka, CA 95501
We have completed our audits of the financial statements of Redwood Coast Energy Authority (the Authority) for the year ended June 30, 2019 and 2018 and have issued our report thereon dated October 16, 2023. This letter presents communications required by our professional standards.
Your audits should provide you with confidence in your financial statements. The audit was performed based on information obtained from meetings with management, data from your systems, knowledge of your Authority’s operating environment and our risk assessment procedures. We strive to provide you clear, concise communication throughout the audit process and of the final results of our audits.
Additionally, we have included information on key risk areas Redwood Coast Energy Authority should be aware of in your strategic planning. We are available to discuss these risks as they relate to your organization’s financial stability and future planning.
If you have questions at any point, please connect with us:
Bethany Ryers, Partner: [email protected] or +1 (608) 240 2382 Ryan Theiler, Manager: [email protected] or +1 (608) 240 2571 Sincerely,
Baker Tilly US, LLP
Bethany Ryers, CPA
Partner
46 © 2023 Baker Tilly US, LLP Page | 3
Responsibilities
Our responsibilities
As your independent auditor, our responsibilities include:
Planning and performing the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Reasonable assurance is a high level of assurance. Assessing the risks of material misstatement of the financial statements, whether due to fraud or error. Included in that assessment is a consideration of the Authority’s internal control over financial reporting.
Performing appropriate procedures based upon our risk assessment. Evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management.
Forming and expressing an opinion based on our audit about whether the financial statements prepared by management, with the oversight of the Board of Directors:
Are free from material misstatement
Present fairly, in all material respects and in accordance with accounting principles generally accepted in the United States of America
Our audit does not relieve management or the Board of Directors of their responsibilities.
We are also required to communicate significant matters related to our audit that are relevant to the responsibilities of the Board of Directors, including:
Internal control matters
Qualitative aspects of the Authority’s accounting practice including policies, accounting estimates and financial statement disclosures
Significant unusual transactions
Significant difficulties encountered
Disagreements with management
Circumstances that affect the form and content of the auditors’ report Audit consultations outside the engagement team
Corrected and uncorrected misstatements
Other audit findings or issues
47 © 2023 Baker Tilly US, LLP Page | 4
Audit status
Significant changes to the audit plan
There were no significant changes made to either our planned audit strategy or to the significant risks and other areas of emphasis identified during the performance of our risk assessment procedures. 48 © 2023 Baker Tilly US, LLP Page | 5
Audit approach and results
Planned scope and timing
Audit focus
Based on our understanding of the Authority and environment in which you operate, we focused our audit on the following key areas:
Key transaction cycles
Areas with significant estimates
Implementation of new accounting standards
Our areas of audit focus were informed by, among other things, our assessment of materiality. Materiality in the context of our audit was determined based on specific qualitative and quantitative factors combined with our expectations about the Authority’s current year results.
Key areas of focus and significant findings
Significant risks of material misstatement
A significant risk is an identified and assessed risk of material misstatement that, in the auditor’s professional judgment, requires special audit consideration. Within our audit, we focused on the following areas below.
Significant risk areas Testing approach Conclusion
Management override of
controls
Incorporate unpredictability into
audit procedures, emphasize
professional skepticism and
utilize audit team with industry
expertise
Procedures identified provided
sufficient evidence for our audit
opinion
Improper revenue recognition
due to fraud
Confirmation or validation of
certain revenues supplemented
with detailed predictive analytics
based on non-financial data and
substantive testing of related
receivables
Procedures identified provided
sufficient evidence for our audit
opinion
Other areas of emphasis
We also focused on other areas that did not meet the definition of a significant risk, but were determined to require specific awareness and a unique audit response.
Other areas of emphasis
Cash and investments Revenues and receivables General disbursements Payroll Long-term debt Financial reporting and required disclosures
Capital assets including
infrastructure
Net position calculations
49 © 2023 Baker Tilly US, LLP Page | 6
Internal control matters
We considered the Authority’s internal control over financial reporting as a basis for designing our audit procedures for the purpose of expressing an opinion on the financial statements. We are not expressing an opinion on the effectiveness of the Authority’s internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis.
A material weakness is a deficiency or combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. We identified the following deficiencies as material weaknesses:
Financial statement close process
Properly designed systems of internal control provide your organization with the ability to process and record accurate monthly and year-end transactions and annual financial reports.
Our audit includes a review and evaluation of the internal controls relating to financial reporting. Common attributes of a properly designed system of internal control for financial reporting are as follows:
There is adequate staffing to prepare financial reports throughout the year and at year-end. Material misstatements are identified and corrected during the normal course of duties. Complete and accurate financial statements, including footnotes, are prepared. Financial reports are independently reviewed for completeness and accuracy.
Our evaluation of the internal controls over financial reporting has identified control deficiencies that are considered material weakness surrounding the preparation of financial statements and footnotes, adjusting journal entries identified by the auditors, journal entry approval, account reconciliations, and an independent review of financial reports.
Management has not prepared financial statements that are in conformity with generally accepted accounting principles. In addition, we recommend the Authority set up a process and control to ensure account reconciliations are performed and around the approval of journal entries. User entity controls over utility billing
Auditing standards require that we perform procedures to obtain an understanding of RCEA and their internal control environment as part of the annual audit. This includes an analysis of significant transaction cycles and an analysis of RCEA’s year-end financial reporting process and preparation of financial statements.
RCEA uses a third-party service provider, Calpine Energy Services, LLC (Calpine), to perform their billing function. Calpine received a System and Organization Controls (SOC 1) Report to provide comfort to their customers that controls around the processing of customer information is appropriately designed and operating effectively.
50 © 2023 Baker Tilly US, LLP Page | 7
Included in the SOC 1 report is a list of complementary user entity controls that RCEA should have in order to achieve the control objectives listed in the report. One of the listed user entity controls is, “User entities are responsible for validating the completeness and accuracy of information received from Calpine Energy Solutions and for notifying Calpine Energy Solutions in a timely manner of erroneous information or information not received.” Currently, RCEA does not have a process in place to reconcile information received from Calpine including a monthly reconciliation of expected load and energy to reported actual, review of new community enrollments, and verification new rates are applied correctly.
We recommend RCEA continue to work toward gaining additional controls and processes to validate the information received from Calpine by:
Spot checking individual invoices.
Performing a high-level analysis to ensure that total consumption amounts per each rate classification has a reasonable change from historical amounts.
Other comments and recommendations
Investment policy
During our testing, it was noted that RCEA does not have a formal investment policy. We recommend that RCEA develop and formally approve an investment policy. The policy should list:
1) Which institutions are authorized for RCEA.
2) What types of investments you will use at those institutions (CD, checking, money market, repurchase agreements, other).
3) What is the maximum you will invest at any institution without obtaining collateral.
Once this policy is implemented, RCEA should complete an ongoing review of the investments within the portfolio to ensure investments remain in compliance with your investment policy and state statutes. This policy becomes your strategy for maximizing interest earnings while maintaining security for the investments. It takes on increased importance with your increased investment balances.
Policy for allowance of doubtful accounts
During our testing, it was noted that RCEA does not have a formal policy for their allowance for doubtful accounts. RCEA’s informal policy was to write off 0.30% of electricity sales. However, upon inquiry with management, it was determined that 3% of sales is a more accurate estimate for uncollectible accounts.
As RCEA collects more historical data for the collectability of customers, we recommend that RCEA implements a policy that allows the utility to systematically write off an estimated percentage of outstanding accounts receivables deemed uncollectible on an annual basis. This policy should be reviewed periodically to ensure it aligns with the actual collectability from customers.
Required communications
Qualitative aspect of accounting practices
Accounting policies: Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we have advised management about the appropriateness of accounting policies and their application. The significant accounting policies used by the Authority are described in Note 1 to the financial statements. As described in Note 1, the Authority changed accounting policies related to debt disclosures by adopting GASB Statement No. 88, Certain Disclosures Related to Debt including Direct Borrowings and Direct Placements in 2019.
We noted no transactions entered into by the Authority during the year for which accounting policies are controversial or for which there is a lack of authoritative guidance or consensus or diversity in practice.
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Restatement: As described in Note 8, net Position as of July 1, 2017 has been restated to correct errors recorded in fiscal year 2017 related to accounts receivable and electric sales revenue. In May and June of 2017, customer payments were mistakenly recorded as revenue rather than a reduction of accounts receivable. In addition, an error occurred in the calculation of the monthly unbilled revenue.
Accounting estimates: Accounting estimates, including fair value estimates, are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements, the degree of subjectivity involved in their development and because of the possibility that future events affecting them may differ significantly from those expected. The following estimates are of most significance to the financial statements:
Estimate Management’s process to
determine
Baker Tilly’s conclusions
regarding reasonableness
Unbilled revenue Evaluate the July Calpine
monthly usage report and
calculation of the estimated
portion for June
Reasonable in relation to the
financial statements as a whole
Allowance for Doubtful
Accounts
Estimated at 3% of electricity
sales
Reasonable in relation to the
financial statements as a whole
There have been no significant changes made by management to either the processes used to develop the particularly sensitive accounting estimates, or to the significant assumptions used to develop the estimates, noted above.
Financial statement disclosures: The disclosures in the financial statements are neutral, consistent and clear.
Significant unusual transactions
There have been no significant transactions that are outside the normal course of business for the Authority or that otherwise appear to be unusual due to their timing, size or nature.
Significant difficulties encountered during the audit
We encountered no significant difficulties in dealing with management and completing our audit.
Disagreements with management
Professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit.
Audit report
There have been no departures from the auditors’ standard report. 52 © 2023 Baker Tilly US, LLP Page | 9
Audit consultations outside the engagement team
We encountered no difficult or contentious matters for which we consulted outside of the engagement team.
Uncorrected misstatements and corrected misstatements
Professional standards require us to accumulate misstatements identified during the audits, other than those that are clearly trivial and to communicate accumulated misstatements to management.
Management is in agreement with the misstatements we have identified, and they have been corrected in the financial statements. The schedule within the Appendix summarizes the material corrected misstatements, that, in our judgment, may not have been detected except through our auditing procedures. The internal control matters section of this report describes the effects on the financial reporting process indicated by the corrected misstatements, other than those that we consider to be of a lesser magnitude than significant deficiencies and material weaknesses.
Other audit findings or issues
We encountered no other audit findings or issues that require communication at this time.
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Authority’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Management’s consultations with other accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters. During the periods audited, the Authority consulted with miscellaneous accounting firms for bookkeeping services.
Written communications between management and Baker Tilly The attachments include copies of other material written communications, including a copy of the management representation letter.
Compliance with laws and regulations
We did not identify any non-compliance with laws and regulations during our audit.
Fraud
We did not identify any known or suspected fraud during our audit.
Going concern
Pursuant to professional standards, we are required to communicate to you, when applicable, certain matters relating to our evaluation of the Authority’s ability to continue as a going concern for a reasonable period of time but no less than 12 months from the date of the financial statements, including the effects on the financial statements and the adequacy of the related disclosures, and the effects on the auditor's report. No such matters or conditions have come to our attention during our engagement. 53 © 2023 Baker Tilly US, LLP Page | 10
Independence
We are not aware of any relationships between Baker Tilly and the Authority that, in our professional judgment, may reasonably be thought to bear on our independence.
Related parties
We did not have any significant findings or issues arise during the audit in connection with the Authority’s related parties.
Other matters
We applied certain limited procedures to the required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
Nonattest services
The following nonattest services were provided by Baker Tilly:
Financial statement preparation
Adjusting journal entries
Accounting assistance
None of these nonattest services constitute an audit under generally accepted auditing standards, including Government Auditing Standards.
54 © 2023 Baker Tilly US, LLP Page | 11
Audit committee resources
Visit our resource page for regulatory updates, trending challenges and opportunities in your industry and other timely updates.
Visit the resource page at https://www.bakertilly.com/page/audit-committee-resource-center. 55 © 2023 Baker Tilly US, LLP Page | 12
Management representation letter
56 57
4) We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud.
5) Significant assumptions we used in making accounting estimates, including those measured at fair value, if any, are reasonable.
6) All events subsequent to the date of the financial statements and for which accounting principles generally accepted in the United States of America require adjustment or disclosure have been adjusted or disclosed. No other events, including instances of noncompliance, have occurred subsequent to the financial statement date and through the date of this letter that would require adjustment to or disclosure in the aforementioned financial statements. 7) All material transactions have been recorded in the accounting records and are reflected in the financial statements.
8) We are in agreement with the adjusting journal entries you have proposed, and they have been posted to the appropriate accounts.
9) There are no known or possible litigation, claims, and assessments whose effects should be considered when preparing the financial statements. There are no unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed in accordance with accounting principles generally accepted in the United States of America. 10) Guarantees, whether written or oral, under which RCEA is contingently liable, if any, have been properly recorded or disclosed.
Information Provided
11) We have provided you with:
a. Access to all information, of which we are aware, that is relevant to the preparation and fair presentation of financial statements, such as financial records and related data, documentation, and other matters.
b. Additional information that you have requested from us for the purpose of the audit. c. Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence.
d. Minutes of the meetings of RCEA or summaries of actions of recent meetings for which minutes have not yet been prepared.
12) We have not completed an assessment of the risk that the financial statements may be materially misstated as a result of fraud.
13) We have no knowledge of any fraud or suspected fraud that affects the entity and involves:
a. Management,
b. Employees who have significant roles in internal control, or c. Others where the fraud could have a material effect on the financial statements. 14) We have no knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees, former employees, regulators, or others. 15) We have no knowledge of known instances of noncompliance or suspected noncompliance with provision of laws, regulations, contracts, or grant agreements, or abuse, whose affects should be considered when preparing financial statements. 16) There are no related parties or related party relationships and transactions, including side agreements, of which we are aware.
Other
17) There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting.
18) We have identified to you any investigations or legal proceedings that have been initiated with respect to the period under audit. We have a process to track the status of audit findings and recommendations.
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19) We have provided our views on reported findings, conclusions, and recommendations, as well as our planned corrective actions, for our report.
20) We are responsible for compliance with federal, state, and local laws, regulations, and provisions of contracts and grant agreements applicable to us, including tax or debt limits, debt contracts, and IRS arbitrage regulations; and we have identified and disclosed to you all federal, state, and local laws, regulations and provisions of contracts and grant agreements that we believe have a direct and material effect on the determination of financial statement amounts or other financial data significant to the audit objectives, including legal and contractual provisions for reporting specific activities in separate funds. 21) There are no:
a. Violations or possible violations of budget ordinances, federal, state and local laws or regulations (including those pertaining to adopting, approving and amending budgets), provisions of contracts and grant agreements, tax or debt limits, and any related debt covenants whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency, or for reporting on noncompliance, except those already disclosed in the financial statement, if any. b. Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by accounting principles generally accepted in the United States of America. c. Rates being charged to customers other than the rates as authorized by the applicable authoritative body.
22) Redwood Coast Energy Authority has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral. 23) In regards to the nonattest services performed by you listed below, we acknowledge our responsibility related to these nonattest services and have 1) accepted all management responsibility; 2) designated an individual with suitable skill, knowledge, or experience to oversee the services; 3) evaluated the adequacy and results of the services performed, and 4) accepted responsibility for the results of the services. a. Financial statement preparation
b. Adjusting journal entries
c. Accounting assistance
None of these nonattest services constitute an audit under generally accepted auditing standards, including Government Auditing Standards.
24) Redwood Coast Energy Authority has complied with all aspects of contractual agreements that would have a material effect on the financial statement in the event of noncompliance. 25) Components of net position (net investment in capital assets; restricted; and unrestricted) are property classified and, if applicable, approved.
26) Redwood Coast Energy Authority has no derivative financial instruments such as contracts that could be assigned to someone else or net settled, interest rate swaps, collars or caps. 27) Provisions for uncollectible receivables, if any, have been properly identified and recorded. 28) Deposits and investments are properly classified, valued, and disclosed (including risk disclosures, collateralization agreements, valuation methods, and key inputs, as applicable). 29) Provision, when material, has been made to reduce excess or obsolete inventories to their estimated net realizable value.
30) Capital assets, including infrastructure and intangible assets, are property capitalized, reported, and, if applicable, depreciated/amortized. Any known impairments have been recorded and disclosed.
31) We have appropriately disclosed RCEAs policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposed for which both restricted and unrestricted net position are available and have determined that net position were properly recognized under the policy.
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32) We acknowledge our responsibility for the required supplementary information (RSI). The RSI is measured and presented within prescribed guidelines and the methods of measurement and presentation have not changed from those used in the prior period. We have disclosed to you any significant assumptions and interpretations underlying the measurement and presentation of the RSI.
33) We agree with the restatement presented in the current year's financial statements. 34) We have implemented GASS Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, and believe that all direct borrowings, direct placements, lines of credit or debt default clauses have been identified and properly disclosed in the financial statements in compliance with the Standard. 35) We have reviewed our long-term debt agreements and believe that all terms related to significant events of default with finance-related consequences, termination events with finance-related consequences and subjective acceleration clauses have been properly identified and disclosed.
36) Unused lines of credit, collateral pledged to secure debt and direct borrowings and private placements have been properly identified and disclosed. 37) The auditing standards define an annual report as "a document, or combination of documents, typically prepared on an annual basis by management or those charged with governance in accordance with law, regulation, or custom, the purpose of which is to provide owners (or similar stakeholders) with information on the entity's operations and the financial results and financial position as set out in the financial statements." Among other items, an annual report contains, accompanies, or incorporates by reference the financial statements and the auditors' report thereon. We confirm that we do no prepare and have no plans to prepare an annual report.
Sincerely,
Redwood Coast Energy Authority
,_
Signed:
Lori Biondini, Director of Business Development and Finance Signed:
Matthew Marshall, Executive Director
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© 2023 Baker Tilly US, LLP Page | 17
Material corrected misstatements
61 Redwood Coast Energy Authority 310
Year End: June 30, 2019 Associate Sr. Associate Manager Normal adjusting journal entries RT18036 8/15/2023
Date: 7/1/2016 To 6/30/2019 Partner Review IR/CDR
Account No: 17A01 To 19A10 BR10327 9/12/2023
Number Date Name Account No Reference Annotation Debit Credit 17A01 6/30/2017 Accounts Receivable-Other 1103 C.103 474,935.14 17A01 6/30/2017 Electricity Sales 5510 C.103 474,935.14 To record the variance between the
AR accrual actually made and the amount summarized on the monthly 'RCEA Energy Revenue' spreadsheets.
18A01 6/30/2018 Investment in Capital Assets 2320 KK.101 1,908.48 18A01 6/30/2018 LTD - TEA Phase I & II 3203 KK.101 54,849.00 18A01 6/30/2018 Repayment of Debt 9180 KK.101 1,908.48
18A01 6/30/2018 Repayment of Long Term Debt 9190 KK.101 54,849.00 To move the debt payments out of
net position and out of income statement accounts.
18A02 6/30/2018 Investment in Capital Assets 2320 GL 4,410.38 18A02 6/30/2018 Depreciation expense 8139 GL 4,410.38
To reverse depreciation expense
booked to equity.
18A03 6/30/2018 Retained Deposits 1700 GL 100,000.00
18A03 6/30/2018 Performance Bond 8510 GL 100,000.00
To account for the deposit with
CPUC as an asset account rather than running it through an expense in 2018. 18A04 6/30/2018 TEA Phase I & II 2703 KK.101 8,302.78
18A04 6/30/2018 Interest Expense 9100 KK.101 8,302.78
To split the interest portion of
the TEA Phase I & II debt payment from the principal.
18A05 6/30/2018 Accounts Receivable-Other 1103 C.102.1 2,855,635.33 18A05 6/30/2018 Electricity Sales 5510 C.102.1 2,855,635.33 To reverse the June, 2017 accounts
receivable accrual that was incorrectly reversed on 7/1/2017 (FY2018). 18A06 6/30/2018 Accounts Receivable-Other 1103 C.103 82,249.96 18A06 6/30/2018 Electricity Sales 5510 C.103 82,249.96
To record the variance between the
AR accrual actually made and the amount summarized on the monthly 'RCEA Energy Revenue' spreadsheets
18A07 6/30/2018 Fixed Asset 1500 U.101 54,487.00
18A07 6/30/2018 Furniture & Equipment 8102 U.101 7,078.00 18A07 6/30/2018 Office Repairs 8114 U.101
18A07 6/30/2018 Hardware & equipment 8103.1 U.101 32,453.00 18A07 6/30/2018 Software 8103.2 U.101 7,179.00
18A07 6/30/2018 Telecommunications 8104.2 U.101 7,777.00 To move capital expenditures from
their expense accounts to the fixed asset account
18A08 6/30/2018 Accumulated depreciation 1600 U.101 29,858.37 18A08 6/30/2018 Accumulated depreciation 1600 U.101 14,309.90 18A08 6/30/2018 Depreciation expense 8139 U.101 29,858.37 18A08 6/30/2018 Depreciation expense 8139 U.101 14,309.90 To move true-up depreciation
10/6/2023
10:00 AM Page 1
62 Redwood Coast Energy Authority 310-1
Year End: June 30, 2019 Associate Sr. Associate Manager Normal adjusting journal entries RT18036 8/15/2023
Date: 7/1/2016 To 6/30/2019 Partner Review IR/CDR
Account No: 17A01 To 19A10 BR10327 9/12/2023
Number Date Name Account No Reference Annotation Debit Credit expense per the capital asset depreciation schedule.
18A09 6/30/2018 Allowance for Doubtful Accounts 1101 C.910 1,177,988.22 18A09 6/30/2018 Allowance for Doubtful Accounts 1101 C.910 18A09 6/30/2018 Accounts Receivable-Other 1103 C.910
18A09 6/30/2018 Uncollectable Accounts 5580 C.910 1,177,988.22 To accrue for the allowance of
undoubtful accounts with 3% estimate rather than 0.30% of electricity sales. 18A10 6/30/2018 LEAN Debt 2704 KK.102 289,235.37
18A10 6/30/2018 LEAN Debt 2704 KK.102 264,577.40
18A10 6/30/2018 LEAN Energy 8412 KK.102 289,235.37
18A10 6/30/2018 Data Management - Calpine 8470 KK.102 272,470.57 18A10 6/30/2018 Interest Expense 9100 KK.102 7,893.17
To record the LEAN debt as a
liability and record the payments on the debt to reduce the liability rather than as an expense.
18A11 6/30/2018 Inventory Asset 1120 D.101 4,951.12
18A11 6/30/2018 EV Station Equip-Svcs-Supplies 8132 D.101 4,951.12 To true up the inventory amount to
be consistent with the listing at year-end
19A01 6/30/2019 Investment in Capital Assets 2320 KK.101 1,908.48 19A01 6/30/2019 LTD - TEA Phase I & II 3203 KK.101 54,849.00 19A01 6/30/2019 Repayment of Debt 9180 KK.101 1,908.48
19A01 6/30/2019 Repayment of Long Term Debt 9190 KK.101 54,849.00 To move the debt payments out of
net position and out of income statement accounts.
19A02 6/30/2019 Investment in Capital Assets 2320 GL 35,270.00 19A02 6/30/2019 Depreciation expense 8139 GL 35,270.00
To reverse depreciation expense
booked to equity.
19A03 6/30/2019 TEA Phase I & II 2703 KK.101 5,921.43
19A03 6/30/2019 Interest Expense 9100 KK.101 5,921.43
To split the interest portion of
the TEA Phase I & II debt payment from the principal.
19A04 6/30/2019 Fixed Asset 1500 8,141.00
19A04 6/30/2019 Furniture & Equipment 8102
19A04 6/30/2019 Office Repairs 8114 3,978.00
19A04 6/30/2019 Hardware & equipment 8103.1 4,163.00
19A04 6/30/2019 Software 8103.2
19A04 6/30/2019 Telecommunications 8104.2
To move capital expenditures from
their expense accounts to the fixed asset account
19A05 6/30/2019 Accumulated depreciation 1600 U.101 8,813.94 19A05 6/30/2019 Depreciation expense 8139 U.101 8,813.94 To move true-up depreciation
expense per the capital asset depreciation schedule.
10/6/2023
10:00 AM Page 2
63 Redwood Coast Energy Authority 310-2
Year End: June 30, 2019 Associate Sr. Associate Manager Normal adjusting journal entries RT18036 8/15/2023
Date: 7/1/2016 To 6/30/2019 Partner Review IR/CDR
Account No: 17A01 To 19A10 BR10327 9/12/2023
Number Date Name Account No Reference Annotation Debit Credit 19A06 6/30/2019 Allowance for Doubtful Accounts 1101 C.910 94,087.25 19A06 6/30/2019 Allowance for Doubtful Accounts 1101 C.910 19A06 6/30/2019 Accounts Receivable-Other 1103 C.910
19A06 6/30/2019 Uncollectable Accounts 5580 C.910 94,087.25 To accrue for the allowance of
undoubtful accounts with 3% estimate rather than 0.30% of electricity sales. 19A07 6/30/2019 Accounts Receivable-Other 1103 C.102 145,802.73 19A07 6/30/2019 NEM Escrow Liability 2011 C.102 145,802.73 To accrue for the NEM Escrow
Liability that is summarized on the RCE AR Aging report. 19A08 6/30/2019 LEAN Debt 2704 KK.102 24,657.97
19A08 6/30/2019 Data Management - Calpine 8470 KK.102 24,760.71 19A08 6/30/2019 Interest Expense 9100 KK.102 102.74
To record the payment of LEAN debt
as a reduction to a liability rather than an expense.
19A09 6/30/2019 Inventory Asset 1120 D.100 8,786.09
19A09 6/30/2019 EV Station Equip-Svcs-Supplies 8132 D.100 8,786.09 To true up the inventory amount to
be consistent with the listing at year-end.
5,813,932.25 5,813,932.25
Net Income (Loss) (968,571.57 )
10/6/2023
10:00 AM Page 3
64 © 2023 Baker Tilly US, LLP Page | 21
Client service team
Bethany Ryers, CPA
Partner
4807 Innovate Lane
Madison, WI 53718
United States
T +1 (608) 240 2382
[email protected]
Ryan Theiler, CPA
Manager
4807 Innovate Lane
Madison, WI 53718
United States
T +1 (608) 240 2571
[email protected]
65 © 2023 Baker Tilly US, LLP Page | 22
Accounting changes relevant to Redwood
Coast Energy Authority
Future accounting standards update
GASB
Statement
Number Description
Potentially
Impacts
you Effective Date
87 Leases 6/30/2022
89 Accounting for Interest Incurred before the
End of a Construction Period
6/30/2022
90 Majority Equity Interests 6/30/2021
91 Conduit Debt 6/30/2023
92 Omnibus 2020 6/30/2022
93 Replacement of Interbank Offered Rates 6/30/2022
94 Public-Private and Public-Public Partnerships
and Availability Payment Arrangements
6/30/2023
96 Subscription-Based Information Technology
Arrangements
6/30/2024
97 Certain Component Unit Criteria, and
Accounting and Financial Reporting for IRC
Section 457 Deferred Compensation Plans
6/30/2022
98 The Annual Comprehensive Financial Report 6/30/2022
99 Omnibus 2022 6/30/2024
100 Accounting Changes and Error Corrections 6/30/2025
101 Compensated Absences 6/30/2025
Further information on upcoming GASB pronouncements.
66 © 2023 Baker Tilly US, LLP Page | 23
Preparing for the new lease standard
GASB's new single model for lease accounting will be effective soon. This standard will require governments to identify and evaluate contracts that convey control of the right to use another entity's nonfinancial asset as specified in the contract for a period of time in an exchange or exchange-like transaction. Contracts meeting the criteria for control, term and other items within the standard will result in recognizing a right to use asset and lease liability or a receivable and deferred inflow of resources.
We recommend RCEA review this standard and start planning now as to how this will affect your financial reporting. We recommend that you begin by completing an inventory of all contracts that might meet the definition of a lease. The contract listing should include key terms of the contracts such as:
Description of contract
Underlying asset
Contract term
Options for extensions and terminations
Service components, if any
Dollar amount of lease
In addition, RCEA should begin to establish a lease policy to address the treatment of common lease types, including a dollar threshold for each lease. We are available to discuss this further and help you develop an action plan.
Learn more about GASB 87.
Public-Private and Public-Public Partnerships
GASB 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements provides guidance related to public-private and public-public partnerships (PPP) and availability payment arrangements (APA).
A PPP is an arrangement in which an entity contracts with an operator to provide public services by conveying control of the right to operate or use infrastructure or other capital asset. A common example of PPP is a service concession arrangement.
An APA is an arrangement in which an entity compensates an operator for services that may include designing, constructing, financing, maintaining, or operating an asset.
RCEA should start to identify any contracts that could meet either definition to ensure they are reviewed for applicability and accounted for correctly when the standard is effective. Initial steps include reviewing contracts that didn’t meet the definition of a lease under GASB 87 and identifying any other agreements where the organization contracts with or partners with another entity to provide services. Once these contracts or agreements are identified they will need to be analyzed using the criteria in GASB No. 94. 67 © 2023 Baker Tilly US, LLP Page | 24
Future accounting for subscription-based IT arrangements Subscription-based IT arrangements include contracts that convey control of the right to use another party’s IT software. It would not include any licensing arrangements that provide a perpetual license, which would still be accounted for as an intangible asset. Subscription-based IT arrangements are becoming more and more popular with IT vendors. This standard mirrors the new lease standard. The RCEA will be able to utilize the systems put into place to implement the lease standard to properly account for these contracts. Common examples of these contracts in the utility industry include:
Leasing space in the cloud
GIS systems
SCADA systems
Some work order or inventory systems as well as some general ledger or billing systems The RCEA should work with its IT department and department managers to determine a population listing of contracts that would fall under this standard to determine the potential future impact to financial reporting.
68 © 2023 Baker Tilly US, LLP Page | 25
Two-way audit communications
As part of our audit of your financial statements, we are providing communications to you throughout the audit process. Auditing requirements provide for two-way communication and are important in assisting the auditor and you with more information relevant to the audit.
As this past audit is concluded, we use what we have learned to begin the planning process for next year’s audit. It is important that you understand the following points about the scope and timing of our next audit:
a. We address the significant risks of material misstatement, whether due to fraud or error, through our detailed audit procedures.
b. We will obtain an understanding of the five components of internal control sufficient to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing and extent of further audit procedures. We will obtain a sufficient understanding by performing risk assessment procedures to evaluate the design of controls relevant to an audit of financial statements and to determine whether they have been implemented. We will use such knowledge to:
Identify types of potential misstatements.
Consider factors that affect the risks of material misstatement. Design tests of controls, when applicable, and substantive procedures. c. We will not express an opinion on the effectiveness of internal control over financial reporting or compliance with laws, regulations and provisions of contracts or grant programs. d. The concept of materiality recognizes that some matters, either individually or in the aggregate, are important for fair presentation of financial statements in conformity with generally accepted accounting principles while other matters are not important. In performing the audit, we are concerned with matters that, either individually or in the aggregate, could be material to the financial statements. Our responsibility is to plan and perform the audit to obtain reasonable assurance that material misstatements, whether caused by errors or fraud, are detected.
Our audit will be performed in accordance with auditing standards generally accepted in the United States of America.
We are very interested in your views regarding certain matters. Those matters are listed here:
a. We typically will communicate with your top level of management unless you tell us otherwise. b. We understand that the governing board has the responsibility to oversee the strategic direction of your organization, as well as the overall accountability of the entity. Management has the responsibility for achieving the objectives of the entity. c. We need to know your views about your organization’s objectives and strategies, and the related business risks that may result in material misstatements. d. We anticipate that RCEA will receive an unmodified opinion on its financial statements based on historical results and our discussions with management noting no anticipated significant changes in financial reporting.
e. Which matters do you consider warrant particular attention during the audit, and are there any areas where you request additional procedures to be undertaken? f. Have you had any significant communications with regulators or grantor agencies? 69 © 2023 Baker Tilly US, LLP Page | 26
g. Are there other matters that you believe are relevant to the audit of the financial statements? Also, is there anything that we need to know about the attitudes, awareness and actions of the governing body concerning:
a. The entity’s internal control and its importance in the entity, including how those charged with governance oversee the effectiveness of internal control? b. The detection or the possibility of fraud?
We also need to know if you have taken actions in response to developments in financial reporting, laws, accounting standards, governance practices, or other related matters, or in response to previous communications with us.
With regard to the timing of our audit, here is some general information. If necessary, we may do preliminary financial audit work during the months of April- June, and sometimes early in July. Our final financial fieldwork is scheduled during the summer to best coincide with your readiness and report deadlines. After fieldwork, we wrap up our financial audit procedures at our office and may issue drafts of our report for your review. Final copies of our report and other communications are issued after approval by your staff. This is typically 6-12 weeks after final fieldwork, but may vary depending on a number of factors.
Keep in mind that while this communication may assist us with planning the scope and timing of the audit, it does not change the auditor’s sole responsibility to determine the overall audit strategy and the audit plan, including the nature, timing and extent of procedures necessary to obtain sufficient appropriate audit evidence.
We realize that you may have questions on what this all means, or wish to provide other feedback. We welcome the opportunity to hear from you.
70 Redwood Coast Energy
Authority
2019 & 2018
Financial Statement Audit
Auditor’s Report to Governing Body
October 26, 2023
17 17
• Audit Results • Required
Communication to
Governing Body
• Impact of Future
Standards
• Discussion
AGENDA
18 Our responsibilities
Redwood Coast Energy Authority
• As your independent auditor, our responsibilities include:
– Planning and performing the audit to obtain reasonable assurance about whether the basic financial statements are free from material misstatement. Reasonable assurance is a high level of assurance. – Assessing the risks of material misstatement of the basic financial statements, whether due to fraud or error. Included in that assessment is a consideration of RCEA’s internal control over financial reporting. – Performing appropriate procedures based upon our risk assessment. – Evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management.
– Forming and expressing an opinion based on our audit about whether the basic financial statements prepared by management, with the oversight of the Board of Directors:
– Are free from material misstatement
– Present fairly, in all material respects, and in accordance with accounting principles generally accepted in the United States of America
– Our audit of the basic financial statements does not relieve management or the Board of Directors of their responsibilities. 19 Planned scope and timing
Redwood Coast Energy Authority
• Audit focus
• Based on our understanding of RCEA and the environment in which you operate, we focused our audit on the following key areas:
– Key transaction cycles
– Areas with significant estimates
– Implementation of new accounting standards including GASB 88 - Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements • Our areas of audit focus were informed by, among other things, our assessment of materiality. Materiality in the context of our audit was determined based on specific qualitative and quantitative factors combined with our expectations about RCEA's current year results.
20 Key areas of focus and significant findings
Redwood Coast Energy Authority
Other key areas of emphasis
We also focused on other areas that did not meet the definition of a significant risk but were determined to require specific awareness and a unique audit response.
Other key areas of emphasis
Cash and investments Revenues and receivables General disbursements Payroll Net position calculations Financial reporting and required disclosures
21 Audit approach and results
Redwood Coast Energy Authority
Audit performed in accordance with Generally Accepted Auditing Standards
Audit objective – reasonable assurance that financial statements are free from material misstatement
Financial statements of RCEA received an Unmodified Opinion There were two material weaknesses related to the financial statement close process and utility billing
22 Auditor communication to those charged with
governance
Redwood Coast Energy Authority
No other audit findings or concerns
Baker Tilly agrees with RCEA’s
accounting policies and disclosures
Auditor
responsibility &
independence
Board
responsibility
Audit adjustments
and restatement
Accounting
policies and
estimates
23 Future accounting standards update
Redwood Coast Energy Authority
GASB
Statement
Number Description
Potentially
Impacts
you
Effective
Date
87 Leases 6/30/2022
89 Accounting for Interest Incurred before the End of a Construction Period
6/30/2022
90 Majority Equity Interests 6/30/2021
91 Conduit Debt 6/30/2023
92 Omnibus 2020 6/30/2022
93 Replacement of Interbank Offered Rates 6/30/2022
94 Public-Private and Public-Public Partnerships and Availability Payment Arrangements
6/30/2023
96 Subscription-Based Information Technology Arrangements 6/30/2024 97 Certain Component Unit Criteria, and Accounting and Financial Reporting for IRC Section 457 Deferred Compensation Plans 6/30/2022
98 The Annual Comprehensive Financial Report 6/30/2022
99 Omnibus 2022 6/30/2024
100 Accounting Changes and Error Corrections 6/30/2025
101 Compensated Absences 6/30/2025
Discussion…
25 Client Service Team
Bethany Ryers, CPA
Partner
P: +1 (608) 240-2382
E: [email protected]
Ryan Theiler, CPA
Manager
P: +1 (608) 240-2571
E: [email protected]
Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2022 Baker Tilly US, LLP
STAFF REPORT
Agenda Item # 7.1
AGENDA DATE: October 26, 2023
TO: Board of Directors
PREPARED BY: Sally Regli, Account Services Manager
SUBJECT: RCEA Net Billing Tariff
BACKGROUND
The state’s utilities are transitioning customers with behind-the-meter solar and other generation from Net Energy Metering (NEM) 2.0 to Net Billing Tariff (NBT). A presentation on implementation of the RCEA NBT was given to the Board in August 2023. The Board directed staff to develop the RCEA NBT that mirrored the Pacific Gas and Electric (PG&E) NBT methodology. The Board also stipulated that staff come back to the Board in Spring 2024 and report on the impacts experienced since the program’s effective date, along with potential revisions to the tariff and an energy storage incentive.
NEM customers currently represent 6% of RCEA’s total account base, with 78% of those NEM accounts being residential customers, and approximately 16% being customers enrolled in the California Alternative Rates for Energy (CARE) and Family Electric Rate Assistance (FERA) programs.
SUMMARY
Staff have designed the RCEA NBT to be effective on December 15, 2023, which is the effective date of PG&E’s NBT. The framework of the RCEA NBT mirrors the PG&E NBT methodology with enhancement of the Energy Export Credit (EEC) and a Net Surplus Compensation commensurate with our current NEM program. Customer bill presentation has not been finalized and RCEA is monitoring PG&E and Calpine’s continued efforts to finalize this phase of implementation. The following are key features of the proposed RCEA NBT that apply to customers’ generation charges and credits:
• The use of the Electric Home rate plan (E-ELEC) for residential customers and the use of otherwise applicable rate for non-residential customers. • Customers’ energy exports (energy exported to the grid, in excess of energy used on-site) will be valued utilizing the same methodology and the same hourly Avoided Cost Calculator (ACC) rates as PG&E bundled customers. There will be no additional Energy Export Credit for CARE/FERA customers. Similar to the RCEA NEM schedule a generation bonus of $0.01/kWh will be applied to net generation for all customers. • Customers will be trued-up annually in the Spring at Net Surplus Compensation rates for net energy exports in excess of energy imports over the course of the year. To benefit the RCEA customer, there will be no modification of the final credit formula with the adjustment for duplication.
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• Customers who are already receiving service on RCEA NEM prior to April 15, 2023, will not be affected by the NBT for the duration of their 20-year NEM legacy period.
Along with the RCEA NBT, staff are including the amended RCEA Net Energy Metering (NEM) Tariff that establishes a sunset date of December 14, 2023, after which new customer enrollments in NEM will cease. Existing NEM customers who received Permission to Operate from PG&E prior to April 15, 2023, will remain on the NEM schedule until their 20-year legacy period expires. Interim NEM customers who received Permission to Operate between April 15, 2023, and December 14, 2023, will be transitioned to the RCEA NBT on April 1, 2024, following our annual NEM cash-out process.
Until PG&E and RCEA billing systems are fully operational, customers on the RCEA NBT will be billed under the RCEA NEM schedule. These NBT transitional customers will be switched to NBT billing on their next billing cycle after April 1, 2024.
PG&E’s proposed NBT implementation schedule is pending approval by the CPUC. Staff may bring amendments to the Board for approval at a future date to align provisions with the finalized and approved PG&E NBT.
ALIGNMENT WITH RCEA’S STRATEGIC PLAN AND POLICIES
Adoption of the NBT and potentially a subsequent energy storage incentive to be brought back to the Board in Spring 2024 aligns with Strategic Plan goals including supporting installation of customer solar photovoltaic energy systems (Appendices A and B), providing a NEM program that encourages more distributed local generation and more equitably compensates such generation (strategy 4.3.2), providing education on all electric rate schedule options (strategy
4.3.6), and providing information on all available rate schedules including NEM.
EQUITY IMPACTS
In the next 6 months, staff will develop a potential energy storage incentive to bring back to the Board for consideration in Spring 2024 that will encourage pairing storage with solar systems to improve solar adoption. Staff will consider incorporating income qualification criteria for customers to be eligible for the proposed storage incentives or a portion thereof.
FINANCIAL IMPACTS
Estimated annual impacts to RCEA with the Net Billing Tariff will vary depending on customer adoption rates over time, battery optimization, and energy market prices that determine the ACC rates.
Using an assumption of 10 account enrollments in 2023 and growing at 10 accounts per month and based on historical average monthly RCEA NEM system data, estimated two-year impact indicates an increase in revenue of $280,000 with implementation of the proposed RCEA NBT as compared to continuing to place the same number of new solar customers on the existing RCEA NEM schedule. This is due to the lower Avoided Cost Calculator rates paid for generation. These savings could be reinvested back into the community via programs, such as the incentive program to encourage pairing battery energy storage systems with solar installations, which staff will bring to the Board in Spring 2024.
The CCE program’s financial model has not yet been updated to include the NBT implementation, pending the Board’s RCEA NBT approval.
72
RECOMMENDED ACTION
Adopt Resolution 2023- 9 Approving the RCEA Net Billing Tariff.
ATTACHMENTS
Resolution 2023-9, A Resolution of the Board of Directors of the Redwood Coast Energy Authority Approving the RCEA Net Billing Tariff.
73
RESOLUTION NO. 2023-9
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE REDWOOD COAST ENERGY AUTHORITY
APPROVING THE RCEA NET BILLING TARIFF
WHEREAS, Senate Bill (SB) 656 (Alquist, Stats. 1995, ch. 369), codified in Section 2827 of the Public Utilities Code, established net energy metering (NEM) in California. The statute directed every electric utility in California to develop a standard contract or tariff to allow eligible customer-generators to receive a financial credit on their electric bills for energy fed back to the utility’s grid; and WHEREAS, California Public Utilities Commission Decision 22-12-056 ordered the Investor Owned Utilities including Pacific Gas and Electric Company (PG&E) to create the Electric Schedule Net Billing Tariff (NBT), which is the successor to Schedule Net Energy Metering (NEM); and WHEREAS, Redwood Coast Energy Authority (RCEA) is a retail supplier of electricity and has developed an NBT consistent with most of the key features of the PG&E NBT, to be effective December 15, 2023; and WHEREAS, RCEA has amended the NEM Tariff to reflect a sunset date of December 14, 2023; and WHEREAS, RCEA’s NBT is provided hereto as Exhibit I and amended NEM Tariff is provided hereto as Exhibit II.
NOW, THEREFORE, IT IS HEREBY DETERMINED AND ORDERED that the Board:
1. Approve the RCEA Net Billing Tariff; and
2. Approve the amended RCEA Net Energy Metering Tariff.
Adopted this 26th day of October 2023.
ATTEST:
Sheri Woo, RCEA Board Chair Lori Taketa, Clerk of the Board Date: _________________________ Date: ________________________ 74
CLERK'S CERTIFICATE
I hereby certify that the foregoing is a true and correct copy of Resolution 2023-9 passed and adopted at a regular meeting of the Redwood Coast Energy Authority, County of Humboldt, State of California, held on the 26th day of October 2023, by the following vote:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
Clerk of the Board, Redwood Coast Energy Authority
75 RCEA Net Billing Tariff – Effective December 15, 2023 Page 1 of 6 RCEA Net Billing Tariff
APPLICABILITY: Redwood Coast Energy Authority’s Net Billing Tariff (“RCEA NBT”) shall be effective on December 15, 2023, and shall apply to (1) RCEA customers served under Pacific Gas & Electric’s Net Billing Tariff Rate Schedule1 (“PG&E NBT”), and (2) RCEA customers who are automatically transitioned to the PG&E NBT following the termination of their 20-year PG&E Net Energy Metering tariff (“PG&E NEM”) legacy period2
. RCEA rates and tariffs may be amended or replaced by RCEA from time to time. The RCEA NBT may be amended or replaced by RCEA’s Board of Directors (“Board”) at a duly noticed public meeting of the Board.
To be eligible for the RCEA NBT, customers shall use a Renewable Electrical Generation Facility (”Generation Facility”), as defined in the PG&E NBT, within the capacity limits described in the PG&E NBT, that is located on the customer’s owned, leased, or rented premises, interconnected to, and operating in parallel with PG&E’s transmission and distribution systems, and is intended primarily to offset the customer’s own electrical requirements. The PG&E NBT is referred to as the “Solar Billing Plan” in PG&E’s customer-facing communications.
Residential customers taking service on the RCEA NBT must take service on the electric home rate (“E-ELEC”) as their otherwise-applicable RCEA rate schedule (“OAS”). Non-residential customers may take service on any open, applicable time-of-use rate schedule. The RCEA NBT does not allow customers to aggregate load from multiple meters.
Eligible RCEA customers with a permission to operate (“PTO”) date on or after April 15, 2023, are automatically enrolled in the RCEA NBT on the effective date of the RCEA NBT. Prior to the effective date of the RCEA NBT, customers who begin service on the RCEA NBT will be initially served under the RCEA NEM on an interim basis and will be transitioned to the RCEA NBT on their next billing cycle after April 1, 2024.
CHARGES, CREDITS AND BILLING: RCEA’s charges and credits for energy in kilowatt-hours or kWh are calculated as described below.
A) Energy Charges:
As determined in each billing period, Energy Charges are calculated by multiplying the customer’s energy consumption (electricity imported from the grid, as recorded on the import channel of the customer’s PG&E meter) in kWh by the applicable energy rate components ($/kWh) in the residential E-ELEC or non-residential OAS tariff.
B) Energy Credits:
As determined in each billing period, Energy Credits are calculated by multiplying the customer’s hourly electricity exported to the grid, as recorded on the export channel of the customer’s PG&E meter, in kWh by the applicable hourly Energy Export Credit (EEC) Rate, which is the generation 1 PG&E’s proposed NBT Schedule was submitted to the California Public Utilities Commission in Advice Letter 6848-E, available at www.pge.com/tariffs/advice-letters.page 2 NBT Legacy Provisions are as stated in the PG&E NBT, Special Conditions Section 6.
Exhibit I
76
component of the associated hourly EEC Rate from the applicable California Public Utilities Commission’s Avoided Cost Calculator (“CPUC ACC”), for each hour of the billing period as further described below. Energy Credits are calculated monthly and offset RCEA charges incurred during the billing period, as described in Section C.
For RCEA NBT customers with a PTO date on or after April 15, 2023, and before December 31, 2027, EEC Rates3 will be a “locked-in,” nine-year schedule of values for each hour from the most recent CPUC ACC adopted as of January 1 of the calendar year applicable to the customer’s PTO date. After the nine-year lock-in period, measured from the PTO date, the EEC Rates will be based on averaged hourly avoided cost values from the most recent CPUC ACC, adopted as of January 1 of each calendar year. Customers that enroll in RCEA NBT after its initial five years of availability will not receive a locked-in, nine-year schedule and will be compensated from the most recent CPUC ACC.
For Customers enrolled in the California Alternate Rates for Energy (“CARE”) and Family Electric Rates Assistance (“FERA”), the CARE and FERA discount shall not be applied to the EEC Rate.
C) Monthly Settlement of RCEA Energy Charges and Credits:
Each customer will receive a statement as part of their monthly PG&E bill indicating accrued RCEA Energy Charges for electric energy imported and RCEA Energy Credits for energy exported during the applicable monthly billing cycle. When a customer’s RCEA Energy Credits exceed their RCEA Energy Charges during the monthly billing cycle, resulting in an accrued credit balance, the balance shall be noted on the customer’s bill and carried over as a bill credit for use in subsequent billing cycles. Credits accrued during previous billing cycles will offset subsequent RCEA charges, reducing these otherwise applicable charges by an equivalent amount to such credits until either (1) the credit balance is exhausted, (2) an annual account true-up is performed, or 3) the customer ceases RCEA service. If an RCEA NBT customer opts-out of the RCEA program and returns to bundled service, that customer will receive a direct payment, described in Section E, for any credits that remain on the account.
If the eligible customer-generator is a “Net Generator,” as determined by production exceeding usage during a discrete billing cycle, the net energy production shall be valued at the EEC rate plus a NBT production premium of $0.01/kWh. The value of all new energy production during the billing cycle shall be credited to RCEA customers as described above.
D) RCEA Annual NBT True-Up Process:
i) Each year in April, RCEA will perform a true-up of the most recent twelve (12) monthly billing cycles, or the amount of billing cycles the customer has been enrolled in NBT if less than 12 months (the “Relevant Period”) for all active customers (“NBT Annual True-Up”).
For customers who receive PTO on or after April 15, 2023, and before December 15, 2023, RCEA will complete a NEM Annual Cash-Out process in April 2024, after which the customer will begin their RCEA NBT Relevant Period. For these customers, their first NBT Annual True-Up will take place in April 2025.
a. Net Surplus Compensation (“NSC”) will be calculated on the amount of generation 3 Energy Export Compensation Rates are posted at: https://www.pge.com/energyexportcredit 77
that exceeds total customer energy usage during the Relevant Period, as measured in kWh (“Net Surplus Energy”). RCEA will determine at the time of the NBT Annual True-Up whether each customer has produced Net Surplus Energy over the course of the Relevant Period. If a customer has produced Net Surplus Energy, then RCEA shall credit such customer an amount not to exceed $5,000, that is equal to the current PG&E NSC rate per kWh, as defined in the PG&E NSC Rate Schedule, multiplied by the quantity of Net Surplus Energy produced by the customer during the Relevant Period, consistent with RCEA’s Annual Cash-Out practice described in Section E. The NSC Rate information can be found in the PG&E NBT Section 5(b).
b. NSC Renewable Attribute Adder: RCEA will include a Renewable Attribute Adder (“RAA”) with the NSC rate if the eligible customer or their designee provides a completed and executed Form 79-1155-024 verifying that the customer has completed all of the following: (a) registered their generating facility in the Western Renewable Energy Generation Information System (“WREGIS”); (b) obtained Renewables Portfolio Standard (“RPS”) certification from the California Energy Commission (“CEC”) for the customer’s Generation Facility and provides this certification to RCEA; and (c) transferred ownership of the Renewable Energy Credits (RECs) associated with the customer’s Net Surplus Energy to RCEA’s WREGIS account. For details on the CEC and WREGIS certification process, refer to the CEC’s RPS Eligibility Guidebook.
5 RCEA will use the RAA values calculated by PG&E using the most recent Western Electricity Coordinating Council (“WECC”) average renewable premium, based on United States Department of Energy (“DOE”) published data. The RAA will only be paid to those customers eligible for NSC who provide RECs to RCEA.
Value of RECs = Net Surplus kWh x RAA.
The RAA is updated annually by PG&E and is available at: https://www.pge.com/.
At the conclusion of each Relevant Period, the eligible customer must notify RCEA that the RECs associated with the Net Surplus Energy have been transferred to RCEA’s WREGIS account.
E) RCEA NBT Cash Out Process:
Any current customer who has a combined EEC and NSC value of $100 or more that exceeds any outstanding RCEA charges, will be sent a payment by check via U.S. Mail to the customer’s U.S. mailing address on file at the time of mailing for the credit balance on their account, as determined through RCEA’s Annual NBT True-Up process as specified in section D. Customers receiving direct payment will have an equivalent amount removed from their RCEA NBT account balance at the time of check issuance. In the event that customers do not have a combined EEC and NSC value exceeding $100, such credit balance will be carried forward to offset future RCEA charges.
All cashed-out RCEA NBT accounts will be reset to zero kilowatt-hours of Net Surplus Energy, annually, and the only RCEA NBT credits carried forward on the customer’s account will be the 4 pge.com/tariffs/assets/pdf/tariff book/ELEC_FORMS_79-1155-02 5 https://www.energy.ca.gov/programs-and-topics/programs/renewables-portfolio-standard 78
combined and/or standalone EEC and/or NSC credit balances less than $100. i) RCEA Cash-Out for Terminations: Customers who close their electric account through PG&E, opt-out of RCEA and return to PG&E bundled service, or move outside of the RCEA service area shall be trued up according to RCEA’s NBT Annual True-Up Process. If applicable, the customer shall receive a refund payment by check via U.S. Mail to the customer’s U.S. mailing address on file at the time of mailing for any Energy Credits on their account that exceeds outstanding RCEA charges at the time of true-up, up to the total amount of RCEA charges paid by the customer during the Relevant Period. If determined to have produced Net Surplus Energy during the Relevant Period, the customer shall also receive a check via U.S. Mail to the customer’s mailing address on file at the time of the Annual NBT True-Up, up to a maximum of $5,000.
F) RCEA NBT Program:
Customers are subject to all applicable terms and conditions and billing procedures of PG&E for PG&E charges as described in PG&E’s NBT (with the exception of RCEA OAS generation charges, which are described in RCEA’s generation rate schedule). RCEA may amend this tariff to align with the PG&E NBT following CPUC approval of the PG&E NBT and any future amendments to the PG&E NBT. RCEA calculates and applies generation charges and credits on a monthly basis. PG&E will continue to calculate and apply charges and credits for delivery, transmission, and other services as detailed in PG&E’s NBT, and RCEA credits cannot be applied to any PG&E charges.
Please review the PG&E NBT6 for more information.
G) Return to PG&E Bundled Service:
RCEA customers participating in the RCEA NBT may opt out and enroll in PG&E’s bundled service, subject to any applicable restrictions imposed by PG&E. Customers who opt out of RCEA service are subject to the PG&E NBT.
If a customer opts out RCEA will perform an Annual NBT True-Up of their account, as specified in Section E, at the time of enrollment in PG&E bundled service.
For details concerning opting out of RCEA service, please contact RCEA Customer Service at [email protected].
6 https://www.pge.com/tariffs/index.page
79 Updated October 18, 2023 Page 1
ELECTRIC SCHEDULE NEM – NET ENERGY METERING
APPLICABILITY: Redwood Coast Energy Authority (RCEA) This Nnet Eenergy Mmetering schedule (RCEA NEM Tariff) schedule is applicable to a RCEA customer (hereinafter “eligible customer-generator” or “customer”) who uses an eligible Renewable Electrical Generation Facility, as defined in PG&E’s Electric Schedule NEM (http://www.pge.com/tariffs/ERS.SHTML#ERS), within the capacity limits described in PG&E’s Electrical Schedule NEM that is located on the customer’s owned, leased, or rented premises, is interconnected and operates in parallel with PG&E’s transmission and distribution systems, and is intended primarily to offset part of all of the customer’s own electrical requirements. This schedule is also applicable to customers who meet the following conditions: (hereinafter “eligible customer-generator” or “customer”). 1) Customer is enrolled under one of the PG&E net energy metering rate schedules named in this paragraph (“PG&E NEM Schedules”). This rate schedule is available on a first-come, first-served basis, subject to participatory limit(s) established in PG&E Electric Schedules NEM (the “participatory limit”), to customers that satisfy all necessary application, interconnection, and inspection requirements (as described in PG&E Electric Schedules NEM). This NEM schedule also applies to customers served under NEM2, NEMV (Virtual Net Energy Metering), NEMVMASH (Virtual Net Energy Metering for Multifamily Affordable Housing), NEMA (NEM Aggregation) and Multiple Tariff facilities as described by PG&E Electric Schedule NEM. Once the participatory limit has been reached, this NEM schedule will be closed to new customers. 2) This Schedule is closed to new customers as of December 15, 2023, unless the customer is applying for Load Aggregation (NEM2A), as detailed in PG&E Electric Schedule NEM2 Special Condition 6. Notwithstanding the foregoing, customers beginning service on or after April 15, 2023, but before the PG&E Net Billing Tariff (NBT) adopted by that decision is approved, will temporarily be subject to the RCEA NEM schedule, then transitioned to NBT once the NBT billing systems are implemented by PG&E and RCEA. Customers applying before April 15, 2023, are subject to the application requirements specified in PG&E NEM2 Special Condition 3 (Interconnection) to maintain eligibility on RCEA NEM.
The RCEA NEM Tariff may be amended from time to time or replaced by RCEA’s Board of Directors (“Board”) at a duly noticed public meeting of the Board1.
Eligible RCEA customers who meet the requirements for a PG&E NEM Schedule will be automatically enrolled in the RCEA NEM Tariff at the time of initially enrolling with PG&E or at the time PG&E accepts them into PG&E’s NEM Program.
Customers enrolled in or eligible for the RCEA NEM Tariff may voluntarily elect to be served instead under the RCEA Net Billing Tariff (“RCEA NBT Tariff”).2 Customers who voluntarily switch from the RCEA NEM Tariff to the RCEA NBT Tariff or who are automatically transitioned to the RCEA NBT Tariff following the termination of their NEM legacy period are not eligible to return to service under the RCEA NEM Tariff.This rate schedule is available on a first‐come, first‐served basis, subject to participatory limit(s) established in PG&E Electric Schedules NEM (the “participatory limit”), to customers that satisfy all necessary application, interconnection and inspection requirements (as described in PG&E Electric Schedules NEM). This NEM schedule also applies to customers served under NEM2, NEMV (virtual Net Energy Metering), NEMVMASH (Virtual Net Energy Metering for Multifamily Affordable Housing), NEMA (NEM Aggregation) and Multiple Tariff facilities as described by PG&E Electric Schedule NEM. Once the participatory limit has been reached, this NEM schedule will be closed to new customers.
1 Board agendas are available at: https://redwoodenergy.org/board‐of‐directors 2 Information about the RCEA NBT Program is available at: https://redwoodenergy.org/ Exhibit II
80 Updated October 18, 2023 Page 2
TERRITORY: The entire Redwood Coast Energy Authority (RCEA) Community Choice Energy program service area of Humboldt County.
RATES: All rates charged under this NEM schedule will be in accordance with the eligible customer-generator’s otherwise-applicable RCEA rate schedule (OAS). An eligible customer-generator serviced under this schedule is responsible for all charges from its OAS including monthly minimum charges, customer charges, meter charges, facilities charges, demand charges and surcharges, and all other charges owed to RCEA or PG&E – any applicable PG&E charges will be addressed in a corresponding tariff. Charges for energy (kWh) supplied by RCEA will be based on the net metered usage in accordance with this NEM schedule.
BILLING: Customers with NEM service will be billed by RCEA as follows:
a) For a customer with Non-Time of Use Rates:
The cost or credit associated with any net usage or production during the customer’s normal billing cycle shall be determined as follows:
If the eligible customer-generator is a “Net Consumer”,,” as determined by usage exceeding production during a discrete billing cycle, the eligible customer-generator will be billed in accordance with the eligible customer-generator’s OAS.
If the eligible customer-generator is a “Net Generator”,,” as determined by production exceeding usage during a discrete billing cycle, the net energy production shall be valued at the OAS plus a NEM production premium of $0.01/kWh. The value of all net energy production during the billing cycle shall be credited to RCEA customers as described in Section (c). b) For a customer with TOU Rates:
If the eligible customer-generator is a Net Consumer (as defined above) during any discrete TOU period, the net kWh consumed during such period shall be billed in accordance with the eligible customer-generator’s OAS.
If the eligible customer-generator is a Net Generator (as defined above) during any discrete TOU period, net energy production during each TOU period shall be valued in consideration of the eligible customer-generator’s OAS plus a NEM production premium of $0.01/kWh, applying OAS rates to the quantity of energy produced within each TOU period. The value of all net energy production during the billing cycle shall be credited to RCEA customers as described in Section (c). c) Monthly Settlement of RCEA Charges/Credits:
NEM customers will receive a statement in their monthly PG&E bills indicating any accrued charges for their usage during the billing cycle. Customers who have accrued credits during previous billing cycles will see these credits applied against current RCEA generation charges. Any remaining balance will be due and must be paid in consideration of the due date and remittance advice reflected on each PG&E bill.
When a customer’s net energy production results in a net bill credit during any billing cycle, the value of any net energy production during the billing cycle shall be noted on the customer’s bill and carried over as a bill credit for use in subsequent billing periods. d) RCEA Annual Cash-Out:
During the May billing cycle of each year, all current eligible RCEA NEM customers with a credit balance of more than $100 will be automatically sent a direct payment as compensation for the accrued credit balance – this payment will be made by check issued from RCEA to the customer sent to the billing address on file with PG&E; any credit balance will be determined as of the customer’s April billing cycle. Customers who are eligible for the RCEA Cash-Out process will have 81 Updated October 18, 2023 Page 3
an equivalent credit removed from their NEM account balance at the time of check issuance. The maximum amount for direct payments is $5,000. In the event that a customer has accrued more than $5,000 in credit, a check will be issued to the customer for $5,000 and the remaining balance will be carried over to the next month. Aggregated NEM customers are not eligible for the Cash-Out process.
Customers who close their electric account through PG&E or move outside of RCEA service area prior to the May cash-out will be sent a check to their billing address on file with PG&E for the balance of their NEM credit.
e) Return to PG&E Bundled Service:
RCEA customers with NEM service may opt out and return to PG&E bundled service at any time.
Customers should be advised that PG&E will perform a true-up of their account at the time such customers return to PG&E bundled service. As described in PG&E Electric Rule 23 (https://www.pge.com/tariffs/assets/pdf/tariffbook/ELEC_RULES_23.pdf (http://www.pge.com/tariffs/ER.SHTML#ER), certain RCEA customers returning to PG&E service may receive Transitional Bundled Service (TBS) for a limited period of time; TBS will expose such customers to various market price risks – please review PG&E’s applicable electric rules and tariffs for additional information.
If an RCEA NEM customer opts-out of the RCEA program and returns to bundled service, that customer will receive a direct payment, described above in Section (d), for any generation credits that remain on the account.
f) PG&E NEM Services:
RCEA NEM customers are subject to PG&E’s terms, conditions and billing procedures for any non-generation services, as described in PG&E’s Electric Schedule NEM, NEM2 and related PG&E tariff options addressing NEM service. Customers should be advised that while RCEA reconciles payment/credit balances for generation on a monthly basis, PG&E will continue to assess charges for delivery, transmission and other services. Most NEM customers will receive an annual true-up from PG&E for these non-generation services.
Customers are encouraged to review PG&E’s most up-to-date NEM tariffs, which are available on PG&E’s website: http://www.pge.com/tariffs/ERS.SHTML#ERS. 82 Presentation to the RCEA Board of Directors
October 26, 2023
Outline:
• Net Billing Tariff Development Considerations
• Key Features of the RCEA Net Billing Tariff
• Next Steps
NBT Development Considerations
Align with PG&E NBT methodology.
Align with billing system constraints.
Consideration for anticipated NBT customer base.
Compatibility with Net Energy Metering (NEM)
account processes.
Ability to provide pricing work products billing
RCEA NBT Key Features
• Rate: PG&E and RCEA both require
residential customers to switch to
the Home Electric Rate (E-ELEC).
• Value of Energy Exports: PG&E
and RCEA both use same Energy
Export Credit and Net Surplus
Compensation Rates.
• Net Generation Bonus: PG&E has
an EEC adder for CARE/FERA
customers; RCEA NBT has a
$0.01/kWh adder for all
customers.
RCEA NBT Key Features cont.
• Annual True-Up: PG&E and RCEA NBT
o PG&E True-Up based on Permission to
Operate date & Relevant Period.
o RCEA NBT True-Up based on April
yearly process that aligns with the NEM
Cash-Out.
• Renewable Certificates: RCEA and
PG&E include a Renewable Attribute
Adder for eligible commercial customers.
RCEA NBT Key Features cont.
• Interim Billing: Until PG&E and RCEA
billing systems are fully operational,
customers on RCEA NBT will be billed
under the RCEA NEM schedule.
Next Steps
• Track implementation costs and
impacts.
• Develop solar plus storage incentive
program and bring to Board in Spring
2024.
• Monitor approval of PG&E’s proposed
NBT by the CPUC. RCEA staff may
bring amendments to the Board to
align with the final approved PG&E
NBT.
Questions
Thank you
STAFF REPORT
Agenda Item # 8.1
AGENDA DATE: October 26, 2023
TO: Board of Directors
PREPARED BY: Jaclyn Harr, TEA Client Services Manager
Jocelyn Gwynn, Acting Director of Power Resources
SUBJECT: Energy Risk Management Quarterly Report
BACKGROUND
The RCEA Board of Directors adopted an Energy Risk Management Policy (RCEA-ERMP-Approved-Dec-2022.pdf (redwoodenergy.org) in December 2016 and most recently revised in December 2022, to establish functions and procedures to manage the risks associated with the Community Choice Energy program’s power procurement activities. In accordance with this policy, a quarterly update on activities and projected financial performance is presented to the Board during regularly scheduled meetings.
SUMMARY
The Energy Authority (TEA) Client Services Manager Jaclyn Harr and RCEA staff will provide an energy risk management quarterly update.
ALIGNMENT WITH RCEA’S STRATEGIC PLAN
Not applicable.
EQUITY IMPACTS
Not applicable.
RECOMMENDED ACTION
Accept Energy Risk Management Quarterly Report.
ATTACHMENTS
Energy Risk Management Quarterly Report slides will be presented at the meeting. 83 RCEA
Energy Risk Management
Quarterly Report
October 2023 Board Meeting
Topics
39 • General Financial Update
• Renewable Energy Credit (REC) Discussion
• Long-Term Procurement Update (verbal discussion)
• Capacity Markets & Regionalization Update (verbal discussion) General Financial Update
40 Overview of Financial Drivers
41 Revenues:
• Updated forecast of PG&E rates for 2024 onward increased • +$6.2M impact in 2024
• +$2.6M impact in 2025
Net Power Costs:
• Forward energy prices increased over forecast horizon • Calendar Year 2024 up 6% (average hedged: ~70%)
• Calendar Year 2025 up 1% (average hedged: ~65%)
• Increased prices for environmental products (RECs & Carbon-Free) and capacity products (System & Flex RA)
Forecasted PG&E Generation Rate & PCIA
42 $-
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
$/MWh
Jul Gen Rate Oct Gen Rate Jul PCIA Oct PCIA
Forward Energy Prices for RCEA
43 $-
$20
$40
$60
$80
$100
$120
$140
$/MWh
Jul Board Forward On-Peak Oct Board Forward On-Peak
Jul Board Forward Off-Peak Oct Board Forward Off-Peak
Annual Net Revenue Forecast
44 2023 2024 2025
Jul Board $10,537,333 $(8,289,321) $18,263,504
Oct Board $11,415,564 $(1,435,662) $22,796,121
-$10M
-$5M
$0M
$5M
$10M
$15M
$20M
$25M
$0M
$5M
$10M
$15M
$20M
$25M
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Jul-23
Oct-23
Jan-24
Apr-24
Jul-24
Oct-24
Jan-25
Apr-25
Jul-25
Cash Balance Historical + Projected 45
Cash Balance History & Projection
46 Two-Year Cash Projection
Oct - Dec 2023 CY 2024 Jan - Sep 2025
Min Avg Ending Min Avg Ending Min Avg Ending
July Board $16.4M $20.1M $21.7M $14.9M $18.4M $17.8M $7.3M $15.9M $23.2M Oct Board $13.6M $17.0M $18.8M $15.6M $21.1M $22.3M $15.9M $24.8M $35.3M $0M
$5M
$10M
$15M
$20M
$25M
$30M
$35M
Jul Board Oct Board
Renewable Energy Credit (REC)
Discussion
47 Various Renewable Procurement Standards
48 Each state with an RPS program writes the
rules a little different from each other
California state law has three
“Product Content Categories”
(PCC) of RECs:
• PCC1: Eligible renewable
resources directly connected to
California’s grid
• PCC2: Out-of-state eligible
renewable resources with energy
imported into California’s grid
• PCC3: Eligible renewable
resources but energy is not
brought to California’s grid
(REC Only)
REC Procurement Options for RCEA
49 PCC1
PCC2
PCC3
“Texas”
“National”
• PCC1, PCC2, and
PCC3 are all
eligible for
procurement for
California RPS
• Texas and
“National” RECs
are not eligible
for California RPS
PCC3 REC Scenario Examples
Scenario 1 Scenario 2 50
PCC2
REC
PCC3
REC
PCC1
REC
PCC3
REC
Verbal updates on:
- Long-Term Procurement
- Capacity Markets & Regionalization
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84 STAFF REPORT
Agenda Item # 10.1
AGENDA DATE: October 26, 2023
TO: Board of Directors
FROM: Matthew Marshall, Executive Director
SUBJECT: Executive Director’s Report
SUMMARY
Executive Director Matthew Marshall will provide updates on topics as needed.
RECOMMENDED ACTION
None. (Information only.)
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intentionally
left blank.
86