Finance & Risk
Management
Committee
Meeting
June 6, 2022
Welcome
Roll Call
Public Comment for
items Not on the Agenda
Items to be Added,
Withdrawn or Reordered
on the Agenda
REGULAR AGENDA
1. Report on
Treasurer’s Report
for Period Ending
4/30/22
2. Approval of FY 2023
Operating Budget
Committee Member
Announcements
Adjournment
Regular
Meeting
Agenda
3 Item 1
Treasurer’s Report for Period Ending 4/30/22
Recommendation: Receive and File Treasurer’s
Report for Period Ending 4/30/22
Presenter:
Dr. Eric Washington,
Chief Financial Officer
4 Results for the period were in line compared to
the amended budget:
• Net operating revenues 1.1% under budgeted
amount due to billing timing differential
expected to be resolved next reporting period.
• Operating expenses came in 13.7% under the
budgeted amount
Financial results for the YTD FY22:
• $274.95M in net operating revenues
• $264.75M in total expenses (includes
energy costs of $257.57M or 97% of
net revenues)
• $10.20M change in YTD net position
Item 1: Treasurer’s Report
YTD FY22 Budget v. Actual
Budget Comparison
YTD FY22 as of
4/30/22 (10 mos)
FY22 YTD
Budget
Budget
Variance ($) Budget (%)
Net Operating Revenues $ 274,947,538 $ 277,946,768 $ (2,999,230) 99 Total Expenses $ 264,751,778 $ 274,906,492 $ (10,154,714) 96 Change in Net Position $ 10,195,760 $ 3,040,276 $ 7,155,484 $-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
Net Operating Revenues Total Expenses Change in Net Position YTD FY22 Results v. Budget
YTD FY22 as of 4/30/22 (10 mos) FY22 YTD Budget
5 Item 1: Treasurer’s Report
Year-to-date financial results compared to
projections:
• Net operating revenues were 0.9%
under the proforma projections
• Total expenses were 3.4% under the
proforma projections
• Change in net position was $6.83M
over the projected
YTD FY22 Proforma v. Actual
Proforma Comparison
YTD FY22 as of
4/30/22 (10 mos)
FY22 YTD
ProForma
ProForma
Variance ($) Proforma (%)
Net Operating Revenues $ 274,947,538 $ 277,553,840 $ (2,606,302) -0.94% Total Expenses $ 264,751,778 $ 274,185,332 $ (9,433,554) -3.44% Change in Net Position $ 10,195,760 $ 3,368,508 $ 6,827,252 202.68% $-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
Net Operating Revenues Total Expenses Change in Net Position YTD FY22 Results v. Proforma
YTD FY22 as of 4/30/22 (10 mos) FY22 YTD ProForma
6 Item 1
Recommendation:
Receive and File Treasurer’s Report for Period
Ending 4/30/22
Presenter:
Dr. Eric Washington,
Chief Financial Officer
7 Item 2:
Presentation of the Fiscal Year (FY) 2023
Operating Budget
Recommendation: Recommend Board approval
of the FY 2023 Operating
Presenter:
Dr. Eric Washington,
Chief Financial Officer
8 Budget Development for FY 2022-23
The schedule for budget development is the following.
Develop Operating
Revenue Estimate
Develop Operating
Expense Estimate
Develop financial
plan for credit rating
in 3-years
February March-April
Staff develop
operating budgets
Baseline budget is
developed
May
Strategic planning
sessions with SDCP
Board
SDCP Board Preview
(Presentation)
June
Financial and Risk
Management
Committee Review
SDCP Board Approval
July 1st Budget
Implemented
Mid-year budget
review (February)
Budget amendments
as necessary
9 • Focus on community programs by
staffing up our Programs team and
launching initial pilot programs.
• Phase 4 enrollment of the County of
San Diego and National City during the
first half of calendar year 2023.
• Continued outreach through community
events, sponsorships and advertising
to inform customers about SDCP.
• High cost of energy with continued
increases in forward electricity prices.
Budget - Highlights
10 Budget – Changes since 5/26 Board Meeting
Item 5/26 Board
Meeting, $M
6/6 FRMC
Meeting, $M
Net Change Update
Net Revenue 689.2 709.0 19.8ERRA reduction removed due
to higher energy costs
Cost of Energy 641.9 661.6 19.7Forward market prices continue to increase since May 2022
Interest and Related
Expense 6.3 1.3 (5.0)Principal payments offset by
restricted cash
Professional Services and
Consultants 17.0 16.8 (0.2)Reclass programs consultant to Programs
Programs 0.7 1.1 0.4Reclass programs consultant
from professional services
Marketing and Outreach 4.1 4.1 0.0
Total (4.9)
11 Budget – Summary
Ratepayer
Revenue (Net),
$716M (99%of
GR)
FY 23 Operating Budget
Revenue Projection
Cost of Energy,
661M (93% of
Total Expense)
Personn
el, …
Profession
al … Programs, $1M, General and Administrative 0% ,
$3M, 0%
FY 23 Operating Budget
Expense Projection
* Pro Forma estimates are as of May 2022
Item FY 23 Proposed
Budget, $M
FY 22 Amended,
$M
Gross Revenue 716.1 380.8
Less Uncollectible Accounts (7.2) (2.7)
Net Revenue 709.0 378.1
Cost of Energy 661.6 329.5
Non-Energy Costs 31.9 11.7
Subtotal Operating Expense 693.6 341.1
Debt Service 1.3 0.7
Total Expense 675.2 341.9
Net Position 14.1 36.1
12 Budget – Key Revenue Assumptions
• Opt-out rate is assumed to be 5%.
• Participation rate in Power100 assumed at 7% of revenues (currently 6.4% as of 5/9/22).
• Uncollectible accounts assumed at 1% of total gross revenue. • Enrollment of Phase 4 expected to begin during the first half of 2023. • Power prices have increased in 2023 which triggered the removal of ERRA.
Item FY 23 Proposed, $M FY 22 Amended, $M
Gross Revenue 716.1 380.8
Less Uncollectible Accounts (7.2) (2.7)
Net Revenue 709.0 378.1
13 Budget – Cost of Energy
FY23 Budget Projections,
$M Feb 2022 May 2022 June 2022
Cost of Energy 597.8 641.9 661.6
• Outlook for future years has worsened due to continued increases in forward electricity prices, with natural gas prices having reached 18-year highs. • Between February and May, projected cost of energy for FY23 has increased 7.4% or $44.1 million.
• Since May 2022, projected cost of energy for FY23 has increased 3.1% or $19.7 million.
14 Proposed FY 2022-23 Budget - Highlights
Budget by Category
Revenue
Cost of Energy
Includes Phase 1 through Phase
3. Phase 4 starts in 2023.
Assumes hedging as of May
2022 and forward prices for the
remaining, unhedged energy.
FY22
$378.1m
FY22
$329.5m
Professional
Services
Personnel
Marketing and
Outreach
General and
Administrative
FY23
$709.0m
FY23
$661.6m
Data Management and SDG&E
fees comprise majority.
FY22
$5.1m
FY23
$16.8m
14 new staff and 2 interns - Power Services to 8 staff and Programs to 7 staff.
FY22
$4.0m
FY23
$7.5m
Mandatory enrollment notices,
communication consultants,
mailers, printing, sponsorships.
FY22
$1.7m
FY23
$4.1m
Office space, equipment,
membership dues, and other
general operational costs.
FY22
$0.8m
FY23
$2.5m
Net Position
+14.0m
FY23 FY22
Programs Initial pilot programs launch and
other community-based program efforts.
FY22
$0.0m
FY23
$1.1m
Interest and
Related Exp.
Repayment of loan principle,
interest costs and potential
renewal fees or letters of credit.
FY22
$0.7m
FY23
$1.3m
15 FY 2023 Budget –
Details
16 Budget – CCA Comparison
Community Choice
Aggregator
Years Est.
(JPA eff.
Date)
Customer
Accounts*
Cost of
Energy, $M**
Non-Energy
Costs, $M
Net
Ratepayer
Revenue, $M
Energy
Costs/Net
Revenue (%)
Clean Power Alliance Jun 2017 972,500 834.28 32.665 895.25 93% San Diego Community
Power Oct 2019 931,675 661.64 33.260*** 708.98 93%
East Bay Community Energy Dec 2016 613,263 442.34 37.757 499.70 89% Marin Clean Energy Dec 2008 470,000 410.70 49.436 483.96 85% Central Coast Community
Energy Mar 2018 296,000 326.30 32.179 351.53 93%
Peninsula Clean Energy Feb 2016 296,000 216.70 24.994 222.24 98% *Customer accounts from CalCCA as of October 2021, SDCP customer accounts are projected as of April 2023 **Cost of energy, non-energy costs and ratepayer revenue are from FY22 adopted budgets. SDCP costs and revenue are from its June 2022 Proforma. ***SDCP includes debt service costs of $1.3M whereas most other CCAs do have minimal or zero debt service costs. 17 Item 2:
Presentation of the Fiscal Year (FY) 2023
Operating Budget
Recommendation: Recommend Board approval
of the FY 2023 Operating
Presenter:
Dr. Eric Washington,
Chief Financial Officer
Finance & Risk
Management
Committee
Meeting
Next Regular Meeting
July 7, 2022