Finance & Risk
Management
Committee
Meeting
October 19, 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Withdrawn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Items to be Added, Withdrawn or Reordered on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 September 14, 2023 Meeting Minutes
2. Treasurer’s Report for Period Ending 8/31/23
3. FYE 2023 Financial Audit Progress Report Presentation
4. Recommend Board Approval of Net Billing Tariff
5. Update on Existing Net Energy Metering Policy
Committee Member Announcements
Adjournment
8 Item 1
Approval of September 14, 2023 Meeting Minutes
Recommendation:
Approve September 14, 2023 Meeting Minutes
Presenter:
Sandra Vences
Deputy Clerk of the Board
Public
Comment
for Item 1
10 Item 1
Recommendation:
Approve September 14, 2023 Meeting Minutes
11 Item 2
Treasurer’s Report for Period Ending 8/31/23
Recommendation:
Receive and File Treasurer’s Report for Period
Ending 8/31/23
Presenter:
Dr. Eric Washington,
Chief Financial Officer
12 Results for the period underperformed overall
compared to the adopted budget:
• Net operating revenues 1.0 percentage
point over budget.
• Operating expenses came in 10.0
percentage points over budget
Financial results for the YTD FY24:
• $345.32M in net operating revenues
• $214.07M in total expenses (includes
energy costs of $720.34M or 81% of net
revenues)
• $131.25M change in YTD net position
Item 2: Treasurer’s Report
YTD FY23 Budget v. Actual
Budget Comparison
YTD FY24 as of
08/31/23 (2 mos) FY24 YTD Budget Budget Variance ($) Budget (%) Net Operating Revenues $ 345,321,525 $ 342,884,273 $ 2,437,252 101% Total Expenses $ 214,073,840 $ 194,238,450 $ 19,835,390 110% Change in Net Position $ 131,247,685 $ 148,645,823 $ (17,398,138) -12% $-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
$400,000,000
Net Operating Revenues Total Expenses Change in Net Position YTD FY23 Results v. Budget
YTD FY24 as of 08/31/23 (2 mos) FY24 YTD Budget
13 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 10% over the
proforma projections
• Change in net position was $17.7M under
the projected
YTD FY23 Proforma v. Actual
Proforma Comparison
YTD FY24 as of
08/31/23 (2 mos)
FY24 YTD
ProForma
ProForma
Variance ($)
Proforma
(%)
Net Operating Revenues $ 345,321,525 $ 342,884,273 $ 2,437,252 1% Total Expenses $ 214,073,840 $ 193,931,678 $ 20,142,162 10% Change in Net Position $ 131,247,685 $ 148,952,595 $ (17,704,910) -12% $-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
$400,000,000
Net Operating Revenues Total Expenses Change in Net Position YTD FY23 Results v. Proforma
YTD FY24 as of 08/31/23 (2 mos) FY24 YTD ProForma
14 FY24 Cost of Energy Projection
800
900
1,000
1,100
1,200
F M A M J J A S O
Non-Energy
Energy
$ Millions
2023
FY24 Expense Projections
+11%
FY24 Cost of Energy
Increase
Jun 23 to Oct 23
15 Reserves
64%
Unmet
Reserves
36%
Item 2: Treasurer’s Report
$439M
Total Liquidity
FY 2023-24 YTD
$21M
Outstanding
Debt
FY 2023-24 YTD
$131M
Reserve
Contribution
FY 2023-24 YTD
64%
Percent Reserve
Goal Met
FY 2023-24
CONTRIBUTION RESERVES
GOAL DEBT
Reserve contribution
for the fiscal year
Outstanding debt
FY24 YTD
Total available liquidity
FY24 YTD
$131M Actual
$149M Budget
$21M
$202M – Goal
$439M
$491M 180-DCOH
Reserve Target FY24
$M $100M $200M
FYE 24 Reserve Contribution
FYTD
FYTD
$M $20M $40M $60M
LOC
$M $200M $400M $600M
$315M
Cash
$124
LOC
16 Item 2: Treasurer’s Report
$85.9M
$54.4M $61.6M $73.2M $56.5M $73.9M
$190.8M $196.0M $203.5M
$230.3M
$297.9M
$362.0M
$439.0M
26%
17% 24% 25%
16% 25% 34%
37% 47%
61%
97%
50%
64%
$0.0M
$100.0M
$200.0M
$300.0M
$400.0M
$500.0M
$600.0M
8/31/20229/30/2022
10/31/202211/30/202212/31/2022
1/31/20232/28/20233/31/20234/30/20235/31/20236/30/20237/31/20238/31/2023 Year-to-Date Reserves FY 2023-24
Unrestricted Cash Lines of Credit Reserve Goal Total Reserves FY24 RESERVE GOAL: $491.1M
17 Item 2: Treasurer’s Report
Public
Comment
for Item 2
19 Item 2
Recommendation:
Receive and File Treasurer’s Report for Period
Ending 8/31/23
20 Item 3
Fiscal Year End 2023 Financial Audit Progress
Report Presentation
Recommendation:
Receive and File Fiscal Year End 2023 Financial
Audit Progress Report Presentation
Presenter:
Dr. Eric Washington,
Chief Financial Officer
21 FYE 23 Audit Timeline
July
Board approves
contract extension
with Pisenti & Brinker
FYE 23 SDCP Audit
Engagement Begins
FRMC FYE 23 Audit
Update
Board FYE23 Audit
Update
FYE 23 Audit in
Progress
August September October November
FRMC receives full
FYE 23 Audit
Board receives full
FYE 23 Audit
San Diego Community Power
Report to the Finance and Risk Management
Committee
October 19, 2023
Pisenti & Brinker LLP Introduction:
• Brett Bradford, CPA
• Audit Partner
• 20 years in public accounting and performing audits of government entities
• Currently working with several CCA’s throughout California • Aliandra Schaffer
• Supervisor
• 4 years in public accounting and performing audits of governments (CCA’s)
Update on Status of current audit:
• The June 30, 2023 audit is well underway:
• No issues to report at this time.
• The audit is going well and we are receiving all
requested data.
• We are approximately 80% complete at this time.
• No significant deficiencies or material weakness in
internal control noted at this time.
Brett Bradford: 707-577-1582
Aliandra Schaffer: 707-577-1535
Questions?
Public
Comment
for Item 3
27 Item 3
Recommendation:
Receive and File Fiscal Year End 2023 Financial
Audit Progress Report Presentation
28 Item 4
Recommend Board Approval of Net Billing Tariff
Recommendation:
Recommend Board Approval of Net Billing Tariff
Presenters:
Colin Santulli, Director of Programs
Nelson Lomeli, Program Manager
29 Table of
Contents
1. What is Net Billing
Tariff (NBT)?
2. Why adopt NBT?
3. Generation Adders
4. Net Surplus
Compensation
What is Net Billing Tariff?
31 • Net Billing Tariff (NBT) is the next evolution in the new set of rules in California for customers who generate their own clean electricity on-site. • NBT replaces Net Energy Metering (NEM) on how customers are compensated for self-generating electricity that they export to the grid to reduce their electric utility bill. • NBT is for new generation customers that interconnected on or after April 15, 2023. • Does not impact current NEM customers until they complete their 20-year legacy period.
What is Net Billing Tariff?
32 Background on Net Billing Tariff
A Lookback on Net Energy Metering
• Through its proceeding establishing NBT, the CPUC issued an evaluation of the NEM 2.0 Tariff (called a Lookback Study).
• The study determined that as it stands, the NEM program is not cost-effective and leads to higher rates.
• The CPUC determined that a new tariff was needed and solicited ideas from multiple parties in addition to commissioning Energy and Environmental Economics, Inc. (E3) to draft a white paper on potential successors.
• After various hearings, testimony, briefings, and proposals, the CPUC approved NBT in December 2022 for implementation by December 15, 2023.
33 • NBT is designed to balance the costs
to all customers and equity.
• Simultaneously, encourage
sustainable growth of distributed
generation.
• Designed to help promote the
adoption of battery storage for
renewable energy generation
sources.
• Intended to better reflect the needs of
the grid and send appropriate price
signals to help with grid resiliency.
Advantages of Net Billing Tariff
Adopt a Net Billing Tariff
and
Use SDG&E’s Avoided Cost
Calculator Rates
35 • Staff conducted an in-depth analysis
and forecast of solar growth to
determine options.
• Staff determined that adopting NBT
could save all SDCP customers over
$20.7 million over three years.
• These savings will be passed onto
customers through rate savings,
adders, and customer programs, such
as battery incentives.
Analysis of Net Billing Tariff
Anticipated Costs in Millions
$32
$8.5
$2.8
$0
$5
$10
$15
$20
$25
$30
$35
Extend NEM Adopt NBT
Millions
Costs over 3 Years ($ MM)
Adder
36 • Under NBT, credits for electricity
exported to the grid are valued at ACC
rates, instead of retail prices.
• SDCP Power Services Staff analyzed
SDG&E’s ACC documentation for
thoroughness, professionalism, and
adequacy.
• Staff determined that SDG&E’s ACC
rates were a sufficient proxy for
SDCP’s load curve.
• Staff recommends using SDG&E’s
ACC rates for NBT.
Analysis of Avoided Cost Calculator Rates
Example of ACC Rates
Average of Loa Months
Hour of Day 1 2 3 4 5 6 7 8 9 10 11 12 Grand Total
0 $ 0.053 $0.049 $0.051 $0.038 $0.053 $0.051 $0.053 $0.053 $0.052 $0.050 $0.046 $0.053 $ 0.050 1 $ 0.053 $0.049 $0.052 $0.031 $0.048 $0.047 $0.049 $0.051 $0.049 $0.047 $0.045 $0.053 $ 0.048 2 $ 0.054 $0.049 $0.052 $0.029 $0.044 $0.047 $0.049 $0.050 $0.048 $0.046 $0.045 $0.053 $ 0.047 3 $ 0.054 $0.048 $0.050 $0.028 $0.040 $0.048 $0.048 $0.050 $0.047 $0.046 $0.045 $0.052 $ 0.046 4 $ 0.053 $0.049 $0.050 $0.029 $0.041 $0.049 $0.047 $0.050 $0.046 $0.045 $0.045 $0.052 $ 0.046 5 $ 0.053 $0.049 $0.051 $0.031 $0.045 $0.049 $0.048 $0.049 $0.046 $0.045 $0.045 $0.053 $ 0.047 6 $ 0.056 $0.053 $0.053 $0.032 $0.043 $0.049 $0.049 $0.048 $0.048 $0.046 $0.047 $0.054 $ 0.048 7 $ 0.060 $0.053 $0.047 $0.026 $0.022 $0.042 $0.042 $0.049 $0.046 $0.047 $0.042 $0.055 $ 0.044 8 $ 0.057 $0.040 $0.032 $0.011 $0.018 $0.038 $0.041 $0.051 $0.043 $0.043 $0.042 $0.055 $ 0.039 9 $ 0.054 $0.037 $0.025 $0.009 $0.017 $0.040 $0.043 $0.053 $0.044 $0.042 $0.043 $0.055 $ 0.039 10 $ 0.053 $0.036 $0.024 $0.008 $0.017 $0.041 $0.043 $0.053 $0.044 $0.042 $0.042 $0.055 $ 0.038 11 $ 0.052 $0.036 $0.025 $0.008 $0.017 $0.040 $0.043 $0.052 $0.044 $0.043 $0.043 $0.053 $ 0.038 12 $ 0.051 $0.035 $0.024 $0.011 $0.016 $0.039 $0.042 $0.051 $0.043 $0.042 $0.042 $0.053 $ 0.037 13 $ 0.051 $0.036 $0.020 $0.008 $0.016 $0.038 $0.041 $0.050 $0.043 $0.041 $0.043 $0.052 $ 0.037 14 $ 0.051 $0.037 $0.020 $0.006 $0.014 $0.039 $0.041 $0.050 $0.042 $0.041 $0.045 $0.052 $ 0.036 15 $ 0.052 $0.040 $0.021 $0.003 $0.013 $0.039 $0.041 $0.051 $0.044 $0.043 $0.050 $0.054 $ 0.038 16 $ 0.060 $0.057 $0.025 $0.004 $0.013 $0.042 $0.044 $0.055 $0.051 $0.049 $0.054 $0.057 $ 0.043 17 $ 0.065 $0.066 $0.048 $0.011 $0.024 $0.053 $0.066 $0.151 $0.069 $0.077 $0.055 $0.061 $ 0.062 18 $ 0.065 $0.064 $0.064 $0.042 $0.059 $0.062 $0.070 $0.318 $3.121 $0.055 $0.054 $0.062 $ 0.336 19 $ 0.065 $0.064 $0.066 $0.041 $0.054 $0.062 $0.345 $0.923 $3.515 $0.055 $0.055 $0.061 $ 0.442 20 $ 0.065 $0.064 $0.065 $0.041 $0.056 $0.063 $0.149 $0.325 $0.175 $0.054 $0.055 $0.060 $ 0.098 21 $ 0.063 $0.064 $0.063 $0.040 $0.054 $0.060 $0.064 $0.441 $0.060 $0.055 $0.054 $0.057 $ 0.090 22 $ 0.058 $0.057 $0.060 $0.038 $0.053 $0.061 $0.061 $0.342 $0.058 $0.053 $0.050 $0.054 $ 0.079 23 $ 0.054 $0.052 $0.056 $0.037 $0.055 $0.058 $0.057 $0.056 $0.051 $0.049 $0.050 $0.055 $ 0.053 Grand Total $ 0.056 $0.049 $0.043 $0.023 $0.035 $0.048 $0.066 $0.143 $0.326 $0.048 $0.047 $0.055 $ 0.078 Generation Adders
38 • In establishing NBT, the CPUC aimed
for new customers to payback their
renewable energy investment within 9
years.
• The CPUC determined that due to the
high rates in SDG&E territory, projects
already achieve a 9-year payback.
• They provided adders for new
customers in PG&E and SCE territory,
but not SDG&E.
Net Billing Tariff Avoided Cost Calculator Plus
Adders
Simple Payback Periods for NBT Customers
Stand-alone Solar Payback Period (years)
Customer Segment PG&E SCE SDG&E
Residential Non-CARE $0.022 $0.040 $0.000
Residential CARE $0.090 $0.093 $0.000
All Non-Residential $0.000 $0.000 $0.000
CPUC-approve ACC+ Adders
39 SDCP Generation Adders
Proposed to Make the Tariff the Most Customer-centric and Competitive • Enhance the competitiveness of SDCP’s NBT and value of SDCP to customers • Close the generation bill credit gap and reduce the payback period to make adoption more financially attractive for customers
• Ensure simplicity and ease of understanding of the adder • Address and promote equity for CARE and/or FERA customers • Support grid reliability
Proposed Generation Adders
40 SDCP Generation Adders
Proposed to Make the Tariff the Most Customer-centric and Competitive • Provide an adder for 6 years to all new customers, including commercial, that install new generation in the next three years
o Base adder of $0.0075/kWh makes for a 6-year simple payback period • Provide a higher adder for 6 years to CARE/FERA customers that install new generation in the next three years to reduce payback period
o CARE adder of $0.11/kWh reduces simple payback period to 6 years from 8 years! Simple Payback Periods for NBT Customers
Stand-alone Solar Payback Period (years)
Net Surplus Compensation
42 Net Surplus Compensation
A Customer-centric Approach for Annual Net Electricity Exported • Under NBT, the CPUC authorized the utilities to implement an “adjustment” to the NSC process that would result in a lower NSC amount for NBT customers. • The utilities contend that since all electricity exports are paid already at ACC rates, paying for NSC at the NSC rate (which is essentially the ACC) would be a double payment. • SDCP takes a customer-centric view that the generation of billing credits using the ACC is different than the compensation of excess annual electricity. • Staff propose to not implement an adjustment during the NSC process and cash out. • Staff estimates that NSC payments may cost approximately $3.2 million over three years. • NBT-served customers would follow the standard NSC process where a check is automatically issued if the NSC payment amount is $100 or more, otherwise, the amount is rolled over into the next billing cycle.
Stakeholder Engagement
44 Stakeholder Engagement
Broad Outreach Conducted to Solicit Feedback
• SDCP Board of Directors
• SDCP Community
Advisory Committee
Members
• Local Public Agencies’
Elected Officials and Staff
• California Solar & Storage
Association (CalSSA)
• Climate Action Campaign
(CAC)
• GRID Alternatives
• International Brotherhood
of Electrical Workers
(IBEW) 569
• Local Chambers Of
Commerce
• Economic Development
Corporations
• Other Community Choice
Aggregators
• Sierra Club
• Utility Consumers' Action
Network (UCAN)
• Vote Solar
• Solar Energy Industries
Association (SEIA)
• Baker Electric
• Cleantech San Diego
Energy Working Group
Recommendations Summary
46 SDCP’s Recommendations to the Board
Create a More Equitable Playing Field for All
1. Approve NBT for all new customers and transitioning customers.
2. Utilize SDG&E’s Avoided Cost Calculator rates for billing credits.
3. Provide Generation Adders for 6 years to all new NBT customers that install generation systems in the next three years, with a higher amount for CARE/FERA customers.
4. Adopt the standard approach to Net Surplus Compensation for NBT customers and do not implement an adjustment.
Public
Comment
for Item 4
48 Item 4
Recommendation:
Recommend Board Approval of Net Billing Tariff
49 Item 5
Update on Existing Net Energy Metering Policy
Recommendation:
Receive and File the Update on Existing Net Energy
Metering Policy
Presenter:
Lucas Utouh, Director, Account Services & Data Analytics 50 1. Remove $2,500 Net Surplus Compensation (NSC) limit per account per relevant period
2. Adoption of a NEM Generation Credit Refund to ensure that customers are not negatively impacted by SDCP’s default monthly NEM billing option
Proposed Updates to SDCP’s NEM Policy
Public
Comment
for Item 5
52 Item 5
Recommendation:
Receive and File the Update on Existing Net Energy
Metering Policy
Committee Member
Announcements
Adjournment
Next Regular
Finance & Risk
Management
Committee
Meeting
November 9, 2023