Finance & Risk
Management
Committee
Meeting
June 8, 2023
Welcome
&
Call to
Order
Roll
Call
4 Items to
be Added,
Withdrawn
or
Reordered
on the
Agenda
Public
Comment
for Items
NOT
on the
Agenda
Regular
Meeting
Agenda
Welcome
Roll Call
Items to be Added, Withdrawn or Reordered on
the Agenda
Public Comment for items Not on the Agenda
REGULAR AGENDA
1. Approval of May 18, 2023 Meeting Minutes
2. Treasurer’s Report for Period Ending 4/30/23
3. Approval of the FY 2023-24 Operating Budget
4. Approval of Remainder of Collections/Delinquency Policy for Residential Customers
Committee Member Announcements
Adjournment
8 Item 1
Approval of May 18, 2023 Meeting Minutes
Recommendation:
Approve May 18, 2023 Meeting Minutes
Presenter:
Kimberly Isley
Clerk of the Board
Public
Comment
for Item 1
10 Item 2
Treasurer’s Report for Period Ending 04/30/23
Recommendation:
Receive and File Treasurer’s Report for Period
Ending 04/30/23
Presenter:
Dr. Eric Washington,
Chief Financial Officer
11 Results for the period underperformed overall
compared to the adopted budget:
• Net operating revenues 1.0 percentage
point under budget.
• Operating expenses came in 3.0
percentage points under budget
Financial results for the YTD FY23:
• $695.2M in net operating revenues
• $646.5M in total expenses (includes
energy costs of $624.9M or 90% of net
revenues)
• $48.7M change in YTD net position
Item 2: Treasurer’s Report
YTD FY23 Budget v. Actual
12 Item 2: Treasurer’s Report
Year-to-date financial results compared to
projections:
• Net operating revenues were 1% higher
than proforma projections
• Total expenses were 1% under the
proforma projections
• Change in net position was $10.5M over
the projected
YTD FY23 Proforma v. Actual
13 Cash
47%
180-Days
Goal Unmet
Reserves
53%
$204M
Total Liquidity
FY 2022-23 YTD
$37M
Outstanding
Debt
FY 2022-23 YTD
$49M
Reserve
Contribution
FY 2022-23 YTD
47%
Percent Reserve
Goal Met
FY 2022-23
Item 2: Treasurer’s Report CONTRIBUTION RESERVES GOAL DEBT Reserve contribution
for the fiscal year
Outstanding loans
FY23 YTD
Other Liabilities
Total available liquidity
FY23 YTD
$49M - Actual
$36M - Budget
$37M - Budget
$107M - Goal
$204M
$190M Reserve
Target FY23
$M $20M $40M $60M
LOC
$M $50M $100M $150M $200M
LOC Unrestricted
Cash
$M $50M $100M
14 Item 2: Treasurer’s Report
$75.7M
$85.9M
$54.4M $61.6M
$73.2M
$56.5M
$73.9M
$190.8M $196.0M $203.5M
30% 26% 17% 24% 25%
16% 25%
34% 37%
47%
$0.0M
$50.0M
$100.0M
$150.0M
$200.0M
$250.0M
7/31/20228/31/20229/30/2022
10/31/202211/30/202212/31/2022
1/31/20232/28/20233/31/20234/30/2023
Year-to-Date Reserves FY 2023
Unrestricted Cash Lines of Credit Reserve Goal Total Reserves Percent of Unrestricted Cash to Reserve Target RESERVE GOAL: $190.1M 15 Item 2: Treasurer’s Report
Public
Comment
for Item 2
17 Item 2
Recommendation:
Receive and File Treasurer’s Report for Period
Ending 04/30/23
18 Item 3
Approval of the FY 2023-24 Operating Budget
Recommendation:
Recommend Board approval of the FY2023-24
Operating Budget
Presenter:
Dr. Eric Washington,
Chief Financial Officer
19 Budget - History
SDCP was formed
In October 2019
CCA ordinances
passed in September
First Board meeting
in late October
CPUC Implementation
Plan submitted in late
December
2019 2020
Implementation
budget of $3,315,000
FY20 Net Loss of
$ (1,070,110)
2021
FY21 budget
of $42,810,047
FY21 Net Loss of
$ (14,048,637)
SDCP
Implementation
and Start-Up
SDCP Becomes
Official Electricity
Provider for First
5 Cities
2022
FY22 budget
of $297,409,999
FY22 Net Income of
$42,530,952
Full Enrollment - SD County and
National City
2023
FY23 Budget
of $695,936,815
FY23 Proj. Net Income of
$157,713,219
2024
All Enrollment
Complete Over the past 4-years we have
scaled to full enrollment and are
projected to substantially grow
reserves.
Full
Enrollment – First 5 Cities
FY24 Budget of
$1,002,038,940
FY24 Projected Net
Income of
$290,433,590
20 • First full fiscal year of full enrollment
from Phase 1, 2, 3 and 4.
• Thoughtfully scale the agency by adding
23 staff to grow to 59 total staff.
• Continued outreach through community
events, sponsorships and advertising
to inform customers about SDCP.
• Addition of Capital Investment Plan
(CIP) to shift programs and projects over
multi-year periods.
Budget - Highlights
Budget Development for FY 2023-24
The Board adopted 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
Strategic planning
sessions with SDCP
Board
Staff develop
operating budgets
Baseline budget is
developed
May
Financial and Risk
Management
Committee Review
SDCP Board Preview
(Information Item)
June
SDCP Board Approval July 1st Budget
Implemented
Mid-year budget
review (February)
Budget amendments
as necessary
22 Budget – Material Changes since May Meeting
Item 5/18 FRMC
Meeting, $M
6/8 FRMC
Meeting, $M Net Change Update
Net Revenue 1,292.5 1,292.5 -
Cost of Energy 971.6 948.5 (23.1)Energy contracts updated through June 2023.
Interest and Related Expense 2.4 2.4 -
Professional Services 22.9 22.9 -
Personnel Costs 13.4 13.2 (0.2)Minor logistical changes related to timing and sequencing of new hires.
General and Administration 7.5 7.5 -
Programs 0.3 0.3 -
Marketing and Outreach 2.9 2.9 -
Total (23.3)
23 75%
Cost of
Energy
FY24 Cost of Energy /
Net Revenue
Budget – Summary
Item FY 23 Amended
Budget, $M
FY 24 Proposed
Budget, $M
Gross Revenue 939.2 1,346.3
Less Uncollectible Accounts (9.4) (53.9)
Net Revenue 929.8 1,292.5
Cost of Energy 738.8 948.5
Non-Energy Costs 32.0 46.9
Subtotal Operating Expense 770.8 995.4
Debt Service 1.3 2.4
Capital Investment Program 0.0 4.2
Total Expense 772.1 1,002.0
Net Position 157.7 290.5
Cumulative Net Position 200.2 490.7
Days Cash on Hand 94.8 178.8
24 290.5 82.5 112.1 126.8 163.8
0 200
400
600
800
1,000
1,200
1,400
1,600
FY24 FY25 FY26 FY27 FY28
90-Day Threshold
Jun 2023
$M
Operating Budget, $M FY24 FY25 FY27 FY27 FY28
Net Revenue 1,292.5 1,151.1 1,180.8 1,225.8 1,271.9
Total Expense 1,002.0 1,068.6 1,068.7 1,099.0 1,108.0
Annual Reserve (Net Position) 290.5 82.5 112.1 126.8 163.8 Reserves (Cumulative Net Surplus) 490.7 573.2 685.3 812.1 975.9 90-Day Expense Target 250.5 267.2 267.2 274.8 277.0
180-Day Expense 501.0 534.3 534.4 549.5 554.0
180-Day Threshold
Aug 2024
Updated ProForma Projections
25 Budget – Personnel
Department
SDCP
(Existing/
Proposed)
Marin Clean
Energy
Clean Power
Alliance
East Bay
Community
Energy
Peninsula
Clean Energy
Central Coast
Com. Energy
Existing SDCP Staff 36 - - - - -
Data Analytics and
Account Services 6 16 12 11 8 7
Executive Team - 5 6 2 3 8
Finance 3 4 9 3 2 3
Human Resources 1 5 3 3 6 6
Operations 1 6 1 4 7 3
Power Services 4 7 15 8 7 4
Programs 1 16 4 7 8 2
Regulatory and
Legislative 3 10 11 8 8 2
Public Affairs 4 16 5 8 3 7
Total 59 85 66 54 41 35
26 Budget – Next Steps
Public
Comment
for Item 3
28 Item 3
Recommendation:
Recommend Board approval of the FY2023-24
Operating Budget
29 Item 4
Approval of Remainder of Collections/Delinquency
Policy for Residential Customers
Recommendation:
Approve the Remainder of Collections/Delinquency
Policy for Residential Customers
Presenter:
Lucas Utouh,
Director, Data Analytics & Account Services
30 Collections/Delinquency Policy Objectives
1. Provide a framework for SDCP staff and Back Office Service provider to better serve our customers, to treat them with respect and dignity, and to set clear expectations on the handling of past due customer charges (arrearages).
2. Minimize and mitigate bad debts for the overall long term financial viability, resiliency and competitiveness of our organization. 31 State of Arrearages in Our Region
*Data from the California Public Utilities Commission (CPUC). 32 Residential Arrearages in Our Region
*Data from the California Public Utilities Commission (CPUC). 33 State of SDCP Arrearages
*SDCP’s Receivables aged 120 Days+ as of 6/2/2023.
34 Programs assisting customers with Arrearages
1. Low-Income Home Energy Assistance Program (LIHEAP) program. Federally funded and administered by the California Department of Community Service and Development (CSD), offers up to $1,000 in financial aid for SDG&E customer bills.
2. Arrearage Management Payment (AMP) program.
Enrollee must be a current SDG&E residential customer and must participate in the CARE or FERA program.
Must have been a customer for minimum of six months and had at least one on-time payment in the last two years.
Once enrolled, participants must make on-time payments of their current month's bill amount for 12 consecutive months.
AMP will forgive a maximum of $8,000 upon successful completion in the program.
3. California Arrearage Payment Program (CAPP).
Over $2 billion state budget allocation for past-due energy bills during COVID; over $900 million allocated for IOUs and CCAs
Administered by Dept of Community Services (CSD)
Utilities including SDG&E applied credits automatically to eligible customer account balances for arrearages between 3/4/2020 and 12/31/2021. 35 4. Percentage of Income Payment Plan (PIPP) pilot program. Allows a participant to pay a predetermined affordable percentage of their monthly income toward their electricity or natural gas bill.
Participants will receive a monthly bill cap for current charges set at four percent of their household’s monthly income.
Monthly bill caps will be standardized for households in two income tiers: 0-100 percent of Federal Poverty Guidelines, and 101-200 percent of Federal Poverty Guidelines.
5. Automatic Extended Payment Plans.
Ordered by the CPUC in June 2021 whereby:
IOUs directed to automatically enroll eligible customers per the below • Residential and small business customers
• With arrears 60+ days old as of 9/30/2021
• 24 month plans for residential customers, 24+ for small business customer • Small business customers’ monthly bill increase for payment plan capped at 10% • 5% for small business customers located in a Disadvantaged Community • Customers may miss up to 3 payments before the payment plan is considered broken and arrearages may result in disconnection
Programs assisting customers with Arrearages
Public
Comment
for Item 4
37 Item 4
Recommendation:
Approve the Remainder of Collections/Delinquency
Policy for Residential Customers
Committee
Member
Announcements
Adjournment
Next Regular
Finance & Risk
Management
Committee
Meeting
July 13, 2023