Finance & Risk
Management
Committee
Meeting
January 18, 2022
2 Regular
Meeting
Agenda
1. Welcome
2. Roll Call
3. Public Comment for Items Not on the Agenda
4. Items to be Added, Withdrawn or reordered on the
Agenda
5. Treasurer’s Report for Period Ending 11/30/2021
6. 6/30/2021 Fiscal Year End Audited Financial Statement
7. 2022 Rates
Committee Member Announcements
Adjournment
3 Item 5
Treasurer’s Report for Period Ending 11/30/21
Presenter:
Eric Washington,
Chief Financial Officer
4 Item 5: Treasurer’s Report
Results for the period were positive compared to
the budget:
• Net operating revenues were 11% over the
budgeted amount
• Operating expenses came in 6% over budget
Financial results for the YTD FY22:
• $171.69M in net operating revenues
• $145.62M in total expenses (includes
energy costs of $142.77M or 83% of
net revenues)
• $26.07M change in net position
Budget Comparison
YTD FY22 as of
11/30/21 (5 mos)
FY22 YTD
Budget
Budget
Variance ($) Budget (%)
Net Operating Revenues $ 171,688,410 $ 154,711,116 $ 16,977,294 111 Total Expenses $ 145,620,316 $ 137,961,797 $ 7,658,519 106 Change in Net Position $ 26,068,094 $ 16,749,319 $ 9,318,775 5 Item 5: Treasurer’s Report
Year-to-date financial results compared to
projections:
• Net operating revenues were inline
with projections
• Total expenses were $2.70M less than
projected
• Change in net position was $1.10M
over the projected
Proforma Comparison
YTD FY22 as of
11/30/21 (5 mos)
FY22 YTD
ProForma
ProForma
Variance ($) Proforma (%)
Net Operating Revenues $ 171,688,410 $ 173,280,085 $ (1,591,675) -0.92% Total Expenses $ 145,620,316 $ 148,315,466 $ (2,695,150) -1.82% Change in Net Position $ 26,068,094 $ 24,964,619 $ 1,103,475 4.42% 6 Item 6
6/30/21 Fiscal Year End Audited Financial
Statement
Recommendation: Receive and File Fiscal Year End
Audited Financial Statement
Presenter:
Eric Washington,
Chief Financial Officer
7 Item 7
Approval of 2022 Rates to be Effective February
1, 2022
Presenter:
Cody Hooven, Chief Operating Officer
Lucas Utouh, Director of Data Analytics and Account Services 8 Guiding Principles
Key Considerations
1. Determine costs
• Power costs
• Renewable and system power contracts
• Resource Adequacy
• Operations
• Staffing, professional services, marketing, etc.
• Programs – Community Power Plan, Feed-in tariff, community solar, etc. • Credit/bank obligations
• Reserves
2. Customer Value
• Quality – higher renewables at competitive costs
• Stability – consider future years
• Communication – ensuring transparency in rates and products for customers • Future enrollments – 2023 new customers
3. Compare to SDG&E
• Ensure competitiveness in cost and quality
9 2021/2022 Rates Timeline
April
2021
June
2021
Aug.
2021
Nov.
2021
Dec.
2021
Jan.
2022
Feb.
2022
Board adopted
rates, effective
June 1
SDCP expanded
service to Phase
2 customers
Board review of
2022 rate
expectations
Board adopts
2022 rates
SDG&E rate
change
SDG&E submits
application for
its 2022 Electric
Sales Forecast
SDG&E rate
change;
SDG&E files Nov.
update to 2022
ERRA Forecast
Application;
2021 ERRA
balance still
outstanding
CPUC approved
SDG&E’s 2022
ERRA Forecast
Application
SDG&E 2022
rates and PCIA
effective Jan. 1
SDCP rates
effective Feb. 1
10 $-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
On-Peak Power Prices for Summer 2022 (SP-15 Forwards)
What’s Changed
Market prices increased causing rates to increase across utilities and CCAs 11 Pro Forma Analysis
Fiscal impact with no rate change
• Projected revenues of $353.6M for
fiscal year ending June 30, 2022.
• Net surplus for FY22 is $579K and a
(- $31M) Net Deficit in FY23
• Cash flow negative in some months
• Loss of confidence from creditors
Scenario 0: No Rate Change
Annual Pro Forma Projections
Year Ending: 2022 2023 2024 2025 2026
I. Revenue
Base Retail Revenue 351,557,466 552,120,233 676,319,949 679,701,548 683,100,056 Power100 Premium 2,055,952 3,384,750 4,153,561 4,174,329 4,195,201 Subtotal Operating Revenue 353,613,418 555,504,983 680,473,510 683,875,878 687,295,257 II. Operating Expenses
Power Supply 321,943,425 556,402,001 621,732,417 610,162,174 605,073,341 Staff 4,500,000 4,635,000 4,774,050 4,917,272 5,064,790 Professional/Technical services 843,483 941,194 1,007,560 1,031,853 1,056,845 Legal 300,000 309,000 318,270 327,818 337,653
Communications, Mktg, Enrollment 3,371,116 1,768,444 2,045,190 2,067,749 2,090,791 Other General and Administrative 420,000 432,600 445,578 458,945 472,714 Regulatory and CalCCA Fees 895,000 921,850 949,506 977,991 1,007,330 Data Management 1,670,376 8,975,759 11,494,481 11,666,041 11,724,371 Utility Service Fees 803,581 3,328,677 4,122,141 4,267,034 4,417,020 Uncollectibles/Other 1,673,735 2,888,573 3,234,446 3,179,384 3,156,224 Subtotal Operating Expenses 336,420,716 580,603,098 650,123,638 639,056,261 634,401,079 Operating Margin 17,192,703 (25,098,115) 30,349,872 44,819,616 52,894,178 III. Financing
Interest 686,256 572,377 436,054 296,283 152,978
Principal 2,202,120 5,379,529 5,515,569 5,655,049 5,798,057 Reserve Contribution - - - - -
Subtotal Financing 2,888,376 5,951,906 5,951,623 5,951,332 5,951,034 Operating Margin Less Financing 14,304,326 (31,050,021) 24,398,249 38,868,284 46,943,144 IV. Cash From Financing - - - - -
V. Other Uses
CPUC and CAISO Deposits - - - - -
Collateral Deposits 13,725,000 - - - -
Subtotal Other Uses 13,725,000 - - - -
VI. Net Surplus/(Deficit) 579,326 (31,050,021) 24,398,249 38,868,284 46,943,144 12 Pro Forma Analysis
Fiscal impact of proposed rates
• Projected revenues of $386.7 million
during the current fiscal year ending
June 30, 2022.
• Net surplus for FY22 is $29.5M (7.65%
reserve)
• Cash flow positive
• Reserve target builds toward a 90 days
cash on hand target (policy adopted
June 24, 2021)
FY2022
(No Rate Change)
FY2022
(Proposed Rate
Change)
Gross Revenues $353,613,418 $386,707,472
Oper. Expenses $337,106,972 $341,209,566
Net Surplus/(Deficit) $579,326 $29,570,787
Cumulative Reserve
Amount $579,326 $30,150,113
Gross Rev. Reserves % 0.16% 7.65%
Days Cash on Hand
(DCOH) 0.63 32.25
13 Projected Bill Comparison – Vintage 2020
Small Commercial
*PCIA and Franchise fees are included in SDG&E’s generation costs Ave. monthly usage: 7806 kWh
Current Rates Effective 11/1/2021 Proposed Rates Effective 2/1/2022 Rate: TOU-M (Small Commercial) SDCP SDG&E SDCP SDG&E SDCP Savings Generation $576.69 $861.68 $661.68 $956.05 -
*PCIA $247.13 $251.43 -
*Franchise Fees $18.48 $22.46 -
Total Generation Related Charges $842.30 $861.68 $935.57 $956.05 -2% SDG&E Delivery $1,136.26 $1,136.26 $1,258.02 $1,258.02
TOTAL AVERAGE MONTHLY BILL $1,978.56 $1,997.94 $2,193.59 $2,214.07 -1% Total Bill Change since 11/2021 -- 11% 11%
Total Bill Change since 6/2021 11% 13%
14 Projected Bill Comparison – Vintage 2021
Residential
*PCIA and Franchise fees are included in SDG&E’s generation costs Ave. monthly usage: 447 kWh
Current Rates Effective 11/1/2021 Proposed Rates Effective 2/1/2022 Rate: DR (Residential) SDCP SDG&E SDCP SDG&E SDCP Savings Generation $35.73 $54.67 $54.09 $70.06 -
*PCIA $16.85 $12.67 -
*Franchise Fees $1.45 $1.77 -
Total Generation Related Charges $54.03 $54.67 $68.53 $70.06 -2% SDG&E Delivery $97.82 $97.82 $104.47 $104.47 -
TOTAL AVERAGE MONTHLY BILL $151.85 $152.49 $173.00 $174.53 -1% Total Bill Change since 11/2021 -- 14% 14%
Total Bill Change since 6/2021 14% 26%
15 Bifurcation of Rates by Vintage
• 2022/Phase 3 customers will be assessed a
different PCIA by SDG&E than Phase 1 and
2 customers because they are enrolled in
different “vintage” years
• Two sets of rates are needed in 2022 to
balance this
• Bifurcation will maintain a fair, equitable and
balanced rate structure for all customers
16 Summary of Proposed Rates
How does SDCP compare to SDG&E?
• Savings are maintained or increased from 1% to 2%
• Higher renewable content (50% SDCP vs 31% SDG&E)
• Power100 significantly lower cost than SDG&E’s EcoChoice • Community Power Plan and other customer programs underway • 2022 contributions towards reserves maintain financial stability • Prepares SDCP for 2023 expected market/costs shifts and unexpected costs • Satisfies credit obligations
Finance &
Risk
Management
Next Regular Meeting
February 17, 2022