AGENDA – FINANCE AND RISK MANAGEMENT COMMITTEE – SAN DIEGO COMMUNITY POWER 1 AGENDA
Meeting of the Finance and Risk Management Committee
San Diego Community Power (SDCP)
October 20, 2022
8:00 a.m.
The meeting will proceed as a teleconference meeting in compliance with waivers to certain provisions of the Brown Act provided for under Government Code section 54953(e)(1)(A), in relation to the COVID-19 State of Emergency and recommended social distancing measures. There will be no location for in-person public attendance. In compliance with the Brown Act, SDCP is providing alternatives to in-person public attendance for viewing and participating in the meeting. Further details are below.
Note: Any member of the public may provide comments to the Board of Directors on any agenda item.
When providing comments to the Board, it is requested that you provide your name and city of residence for the record. Commenters are requested to address their comments to the Board as a whole through the Chair. Comments may be provided in one of the following manners:
1. Providing Oral Comments During Meeting. To provide comments during the meeting, join the Zoom meeting by computer, mobile phone, or dial-in number. On Zoom video conference by computer or mobile phone, use the “Raise Hand” feature. This will notify the moderator that you wish to speak during a specific item on the agenda or during non-agenda Public Comment.
Members of the public will not be shown on video but will be able to speak when called upon. If joining the meeting using the Zoom dial-in number, you can raise your hand by pressing *9.
Comments will be limited to three (3) minutes. Please be aware that the Chair has the authority to reduce equally each speaker's time to accommodate a large number of speakers.
2. Written Comments. Written public comments must be submitted prior to the start of the meeting by using this (web form). Please indicate a specific agenda item when submitting your comment.
All written comments received prior to the meeting will be provided to the Board members in writing. In the discretion of the Chair, the first ten (10) submitted comments shall be stated into the record of the meeting. Comments read at the meeting will be limited to the first 400 words.
Comments received after the start of the meeting will be collected, sent to the Board members in writing, and be part of the public record.
If you have anything that you wish to be distributed to the FRMC, please provide it via [email protected], who will distribute the information to the Members.
The public may participate using the following remote options:
Teleconference Meeting Webinar https://zoom.us/j/93476863568 Telephone (Audio Only) (669) 900-6833 or (253) 215-8782 | Webinar ID: 934 7686 3568 AGENDA – FINANCE AND RISK MANAGEMENT COMMITTEE – SAN DIEGO COMMUNITY POWER 2 Welcome
Roll Call
Public Comment for Items Not on the Agenda
Items to be Added, Withdrawn, or Reordered on the Agenda
MEETING AGENDA
1. Treasurer’s Report for Period Ending 8/31/22
Recommendation: Receive and File Treasurer’s Report for Period Ending 8/31/22
2. Preliminary FYE 2022 Auditor’s Report Presentation by Pisenti & Brinker Recommendation: Receive and File Preliminary FYE 2022 Auditor’s Report from Pisenti & Brinker
Committee Member Announcements
Committee Members may briefly provide information to other members and the public. There is to be no discussion or action taken on comments made by Directors unless authorized by law.
Adjournment
Availability of Committee Documents
Copies of the agenda and agenda packet are available at https://sdcommunitypower.org/resources/meeting-notes/. Late-arriving documents related to a FRMC meeting item which are distributed to a majority of the Members prior to or during the FRMC meeting are available for public review as required by law. Previously, public records were available for inspection at San Diego Community Power, 2488 Historic Decatur Road, Suite 250, San Diego, CA 92106. However, due to the Governor’s Executive Orders N-25-20 and N-29-20 and the need for social distancing, in-person inspection is now suspended. Public records, including agenda-related documents, can instead be requested electronically at [email protected] or by mail to SDCP at, 815 E Street, Suite 12716, San Diego, CA 92112. The documents may also be posted at the above website.
SAN DIEGO COMMUNITY POWER
Staff Report – Item 1
-------------------------------------------------------------------------------------------------------------------- To: Financial and Risk Management Committee
From: Eric W. Washington, Chief Financial Officer
Via: Karin Burns, Chief Executive Officer
Subject: Treasurer’s Report –Presentation of Financial Results for Fiscal Year-to-Date 2023 Period ended 8/31/22 Date: October 20, 2022
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Receive and File Report
BACKGROUND
San Diego Community Power (SDCP) maintains its accounting records on a full accrual basis in accordance with Generally Accepted Accounting Principles (GAAP) as applicable to governmental enterprise funds.
SDCP has prepared its year-to-date financial statements for the period ended August 31, 2022, along with budgetary comparisons.
ANALYSIS AND DISCUSSION
Financial results for the period ended 8/31/22: $180.02 million in net operating revenues were reported compared to $166.74 million budgeted for the period. $167.73 million in total expenses were reported (including $163.67 million in energy costs) compared to $151.77 million budgeted for the period (including $145.73 million budgeted for energy costs). After expenses, SDCP’s change in net position of $12.29 million was for the period. The following is a summary of the actual results compared to the budget for the period ended 8/31/22.
• Net operating revenues finished $13.28 million (or 8.0 percentage points) over the budget primarily due to opt outs performing better than projected and due to higher demand from non-residential customers.
• Operating expenses finished $15.97 million (or 10.5 percentage points) over the budget primarily due to higher-than-expected energy usage and energy costs.
Financial results for the period performed under the projections presented in the year-to-date proforma. SDCP’s change in net position was -16.7% under the projection similarly and primarily due to better opt-out performance and to higher-than projected energy usage and costs.
The following is a summary to actual results compared to the fiscal year-to-date proforma.
For the period ending 8/31/22, SDCP contributed $12,291,129 to its reserves but was expecting to contribute $14,976,019 per the FY 2022-23 adopted budget. Total SDCP reserves at the end of the period were $49,277,515 and total available liquidity (including lines of credit) was $85,937,433. SDCP has a total FY 2022-23 year-end reserve target of $171,276,631, which is equivalent to 90-days of total operating expenses.
FISCAL IMPACT
N/A
ATTACHMENTS
Attachment A: 2023 Year-to-Date Period Ended 8/31/22 Financial Statements 1 ACCOUNTANTS’ COMPILATION REPORT
Management
San Diego Community Power
Management is responsible for the accompanying financial statements of San Diego Community Power (a California Joint Powers Authority) which comprise the statement of net position as of August 31, 2022, and the related statement of revenues, expenses, and changes in net position, and the statement of cash flows for the period then ended in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the accompanying statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, conclusion, nor provide any assurance on these financial statements.
Management has elected to omit substantially all of the note disclosures required by accounting principles generally accepted in the United States of America in these interim financial statements. San Diego Community Power’s annual audited financial statements include the note disclosures omitted from these interim statements. If the omitted disclosures were included in these financial statements, they might influence the user’s conclusions about the Authority’s financial position, results of operations, and cash flows. Accordingly, these financial statements are not designed for those who are not informed about such matters.
We are not independent with respect to the Authority because we performed certain accounting services that impaired our independence.
Maher Accountancy
San Rafael, CA
September 28, 2022
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com Current assets
Cash and cash equivalents 49,277,515 $
Accounts receivable, net 82,384,452
Accrued revenue 50,996,793
Prepaid expenses 5,152,347
Other receivables 339,429
Deposits 13,732,407
Total current assets 201,882,943
Noncurrent assets
Restricted cash 7,500,000
Deposits 3,450,000
Total noncurrent assets 10,950,000
Total assets 212,832,943
Current liabilities
Accrued cost of energy 131,344,602
Accounts payable 1,791,862
Other accrued liabilities 1,478,571
State surcharges payable 363,807
Security deposits 9,124,000
Interest payable 50,197
Total current liabilities 144,153,039
Noncurrent liabilities
Other noncurrent liabilities 517,741
Bank note payable 13,340,082
Total noncurrent liabilities 13,857,823
Total liabilities 158,010,862
Restricted for collateral 2,500,000
Unrestricted 52,322,081
Total net position 54,822,081 $
NET POSITION
SAN DIEGO COMMUNITY POWER
STATEMENT OF NET POSITION
As of August 31, 2022
ASSETS
LIABILITIES
See accountants' compilation report. 2
OPERATING REVENUES
Electricity sales, net 180,004,873 $
Total operating revenues 180,004,873
OPERATING EXPENSES
Cost of energy 163,673,157
Contract services 2,505,164
Staff compensation 786,171
General and administration 568,371
Total operating expenses 167,532,863
Operating income (loss) 12,472,010
NON-OPERATING REVENUES (EXPENSES)
Investment income 19,688
Interest and financing expense (200,569)
Nonoperating revenues (expenses) (180,881)
CHANGE IN NET POSITION 12,291,129
Net position at beginning of period 42,530,952
Net position at end of period 54,822,081 $
SAN DIEGO COMMUNITY POWER
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
Two Months Ended August 31, 2022
See accountants' compilation report. 3
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 144,314,042 $
Other operating receipts 39,362
Payments to suppliers for electricity (90,403,120)
Payments for goods and services (1,467,680)
Payments to employees for services (704,675)
Payments for deposits and collateral (41,000,000)
Payments for state surcharges (332,586)
Net cash provided (used) by operating activities 10,445,343
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Principal payments - loans (18,000,000)
Principal payments - note (5,000,000)
Interest and related expense payments (264,234)
Net cash provided (used) by non-capital
financing activities (23,264,234)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income received 19,688
Net change in cash and cash equivalents (12,799,203)
Cash and cash equivalents at beginning of period 69,576,718 Cash and cash equivalents at end of period 56,777,515 $ Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) 49,277,515 $
Restricted cash 7,500,000
Cash and cash equivalents 56,777,515 $
SAN DIEGO COMMUNITY POWER
STATEMENT OF CASH FLOWS
Two Months Ended August 31, 2022
See accountants' compilation report. 4
Operating income 12,472,010 $
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities
Provision for uncollectible accounts 1,817,015
(Increase) decrease in:
Accounts receivable (33,814,477)
Accrued revenue (4,057,178)
Other receivables (339,429)
Prepaid expenses (691,039)
Deposits (7,491,350)
Increase (decrease) in:
Accrued cost of electricity 74,113,098
Accounts payable 1,166,907
Other accrued liabilities 738,565
State surcharges payable 31,221
Supplier security deposits (33,500,000)
Net cash provided (used) by operating activities 10,445,343 $
SAN DIEGO COMMUNITY POWER
STATEMENT OF CASH FLOWS (continued)
Two Months Ended August 31, 2022
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
See accountants' compilation report. 5
1 ACCOUNTANTS’ COMPILATION REPORT
Board of Directors
San Diego Community Power
Management is responsible for the accompanying special purpose budgetary comparison schedule of San Diego Community Power (SDCP), a California Joint Powers Authority, for the period ended August 31, 2022, and for determining that the budgetary basis of accounting is an acceptable financial reporting framework. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the accompanying statement nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management.
Accordingly, we do not express an opinion, a conclusion, nor provide any assurance on this special purpose budgetary comparison statement.
The special purpose statement is prepared in accordance with the budgetary basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. This report is intended for the information of the Board of Directors of SDCP.
Management has elected to omit substantially all of the note disclosures required by accounting principles generally accepted in the United States of America in these interim financial statements.
SDCP’s annual audited financial statements will include the note disclosures omitted from these interim statements. If the omitted disclosures were included in these financial statements, they might influence the user’s conclusions about the Authority’s financial position, results of operations, and cash flows.
Accordingly, these financial statements are not designed for those who are not informed about such matters.
We are not independent with respect to SDCP because we performed certain accounting services that impaired our independence.
Maher Accountancy
San Rafael, CA
September 28, 2022
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com 2022/23 YTD
Budget
2022/23 YTD
Actual
2022/23 YTD
Budget
Variance
(Under) Over
2022/23
YTD
Actual/
Budget %
2022/23 Annual
Budget
2022/23
Budget
Remaining
REVENUES AND OTHER SOURCES Gross Ratepayer Revenues 168,427,287 181,823,104 $ 13,395,817 108% 716,146,107 $ 534,323,003 $ Less Uncollectible Customer Accounts (1,684,273) (1,818,231) (133,958) 108% (7,161,461) (5,343,230) Total Revenues and Other Sources 166,743,014 180,004,873 13,261,859 708,984,646 528,979,773 OPERATING EXPENSES Cost of Energy 145,726,815 163,673,157 17,946,342 112% 661,638,828 497,965,671 Professional Services and Consultants 3,182,035 2,445,467 (736,568) 77% 16,881,036 14,435,569 Personnel Costs 1,205,025 786,171 (418,854) 65% 7,951,499 7,165,328 Marketing and Outreach 615,000 461,364 (153,636) 75% 4,164,167 3,702,803 General and Administrative 441,010 166,704 (274,306) 38% 2,591,363 2,424,659 Programs 364,167 - (364,167) 0% 1,395,000 1,395,000
Total Operating Expenses 151,534,052 167,532,863 15,998,811 694,621,893 527,089,030 Operating Income (Loss) 15,208,962 12,472,010 (2,736,952) 14,362,753 1,890,743 NON-OPERATING REVENUES (EXPENSES) Investment income - 19,688 19,688 - (19,688) Debt Service and Bank Fees (232,944) (200,569) 32,375 86% (1,314,922) (1,114,353) Total Non-Operating Revenues (Expenses) (232,944) (180,881) 52,063 (1,314,922) (1,134,041) CHANGE IN NET POSITION $ 12,291,129 14,976,018 $ (2,684,889) $ 13,047,831 $ 756,702 $
SAN DIEGO COMMUNITY POWER
BUDGETARY COMPARISON SCHEDULE
Two Months Ended August 31, 2022
See accountants' compilation report.