Finance & Risk
Management
Committee
Meeting
January 11, 2024
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Withdrawn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Items to be Added, Withdrawn or Reordered on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 November 9, 2023 Meeting Minutes
2. Treasurer’s Report for Period Ending 11/30/23
3. Presentation on the Update on SDCP’s 2024 Projected Rate Changes
Committee Member Announcements
Adjournment
8 Item 1
Approval of November 9, 2023 Meeting Minutes
Recommendation:
Approve November 9, 2023 Meeting Minutes
Presenter:
Sandra Vences
Deputy Clerk of the Board
Public
Comment
for Item 1
10 Item 1
Recommendation:
Approve November 9, 2023 Meeting Minutes
11 Item 2
Treasurer’s Report for Period Ending 11/30/23
Recommendation: Receive and File Treasurer’s
Report for Period Ending 11/30/23
Presenter:
Dr. Eric Washington,
Chief Financial Officer
12 Budget Comparison
YTD FY24 as of
11/30/23 (5 mos) FY24 YTD Budget Budget Variance ($) Budget (%) Net Operating Revenues $ 734,849,330 $ 767,744,428 $ (32,895,098) 96% Total Expenses $ 533,868,988 $ 464,474,524 $ 69,394,464 115% Change in Net Position $ 200,980,342 $ 303,269,904 $ (102,289,562) -34% Overall, compared to the adopted budget the
result as of 11/30/23 were as follows:
• Net operating revenues were 4.0
percentage points under budget.
• Operating expenses came in 15.0
percentage points over budget
Financial results for the YTD FY24:
• $734.85M in net operating revenues
• $533.87M in total expenses (includes
energy costs of $521.34M or 71% of net
revenues)
• $200.98M change in YTD net position
Item 2: Treasurer’s Report
YTD FY24 Budget v. Actual
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
$900,000,000
Net Operating Revenues Total Expenses Change in Net Position YTD FY24 Results v. Budget
YTD FY24 as of 11/30/23 (5 mos) FY24 YTD Budget
13 Proforma Comparison
YTD FY24 as of
11/30/23 (5 mos)
FY24 YTD
ProForma
ProForma
Variance ($)
Proforma
(%)
Net Operating Revenues $ 734,849,330 $ 767,744,428 $ (32,895,098) -4% Total Expenses $ 533,868,988 $ 463,638,309 $ 70,230,679 15% Change in Net Position $ 200,980,342 $ 304,106,119 $ (103,125,777) -34% Item 2: Treasurer’s Report
Year-to-date financial results compared to
projections:
• Net operating revenues were 4% lower
than proforma projections
• Total expenses were 15% over the
proforma projections
• Change in net position was $103.13M
under the projected
YTD FY24 Proforma v. Actual
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
$900,000,000
Net Operating Revenues Total Expenses Change in Net Position YTD FY24 Results v. Proforma
YTD FY24 as of 11/30/23 (5 mos) FY24 YTD ProForma
14 Item 2: Treasurer’s Report
$519M
Total Liquidity
FY 2023-24 YTD
$0M
Outstanding
Debt
FY 2023-24 YTD
$201M
Reserve
Contribution
FY 2023-24 YTD
83%
Percent Reserve
Goal Met
FY 2023-24
CONTRIBUTION RESERVES
GOAL DEBT
Reserve contribution
for the fiscal year
Outstanding loans
FY24 YTD
Total available liquidity
FY24 YTD
$491M 180-DCOH
Reserve Target FY24
$201M Actual
$303M Budget
$202M – Goal
$M $20M $40M $60M
$0 LOC
$519M
Cash
83%
Unmet
Reserves
17%
$M $200M $400M $600M
$406M
Cash
$113M
LOC
$M $100M $200M $300M
FYTD
FYTD
Reserve Contribution
15 Item 2: Treasurer’s Report
149
Days
Cash on Hand
190
Days
Cash on Hand with
Total Liquidity
$73.2M $56.5M $73.9M
$190.8M $196.0M $203.5M
$230.3M
$297.9M
$362.0M
$439.0M
$506.0M $520.7M $519.3M
25% 16%
25% 34% 37%
47% 61%
97%
50%
64%
77%
85% 83%
$0.0M
$100.0M
$200.0M
$300.0M
$400.0M
$500.0M
$600.0M
11/30/202212/31/2022
1/31/20232/28/20233/31/20234/30/20235/31/20236/30/20237/31/20238/31/20239/30/2023 10/31/202311/30/2023
Rolling 12 Month Reserves FY 2023-24
Unrestricted Cash Lines of Credit Reserve Goal Total Reserves FY24 RESERVE GOAL: $491.1M
16 Item 2: Treasurer’s Report
17 Item 2
Treasurer’s Report for Period Ending 11/30/23
Recommendation: Receive and File Treasurer’s
Report for Period Ending 11/30/23
Presenter:
Dr. Eric Washington,
Chief Financial Officer
Public
Comment
for Item 2
19 Item 2
Recommendation:
Receive and File Treasurer’s Report for Period
Ending 11/30/23
20 Item 3
Presentation on the Update on SDCP’s 2024
Projected Rate Changes
Recommendation:
Receive and File the presentation on the Update on
SDCP’s 2024 Projected Rate Changes
Presenter:
Aaron Lu, Senior Rates and Strategy Analyst
Tim Manglicmot, Senior Finance Manager
21 2023 and 2024 Rates Timeline
01-23-2023
• Board
adopted
rates
effective 02-
01-2023.
04-01-2023
• SDCP
expanded
service to
National City
and
Unincorporate
d County of
San Diego.
05-15-2023
• SDG&E
submitted its
Application
for Approval
of its 2024
Electric Sales
Forecast.
10-13-2023
• SDG&E filed
October
Update to
2024 Electric
Sales
Forecast.
12-14-2023
• Staff
provided
update to
Board on
2024
expectations.
01-01-2024
• SDG&E’s
implementati
on of its 2024
generation
rates and the
PCIA.
01-18-2024
• SDCP’s
Board adopts
2024 rates,
effective 02-
01-2024.
22 SDCP
Generation Rates
SDG&E
Generation Rates
PCIA Franchise
Fee
Effective January 1, 2024 Varies by Customer &
Vintage
Customer
Residential
Small Commercial
Medium & Large C&I
Agriculture
Lighting
Vintage Year
Vintage 2020 – Phase 1 & 2
Vintage 2021 – Phase 3
Vintage 2022 – Phase 4
1.088% x SDG&E Rate February 2024 SDCP
Rate Mechanics
23 Rate Development Policy Objectives
Objectives
Priorities
Cost
Recovery
Simplicity
Transparency
Avoid Cost- Shifting
Reserves
Competitiveness
Stability
Equity Cost of
Service
Strategic Goals
90-Days Cash
$250.0 million
October 2023
180-Days Cash
$500.0 million
October 2025
Investment Grade
Credit Rating
November 2025
Rate Stabilization
$70.0 million
TBD
24 • Equity recognizes that each person has different circumstances and allocates the exact resources and opportunities needed to reach an equal outcome. • This trifurcation will maintain a fair, equitable, and balanced rate structure that does not create winners and losers across our customers.
Rate Trifurcation
SDCP 2020
Vintage Rate
SDCP 2021
Vintage Rate
SDCP 2022
Vintage Rate
PCIA PCIA
Franchise Fee Franchise Fee Franchise Fee
SDG&E Commodity Rate SDCP Trifurcated Rates
SDCP's Value Proposition
SDCP Trifurcation of Rates Illustration.
25 SDG&E generation rates, effective 01-01-2024
• SDG&E’s system average generation rate decreased by 23%. • The primary driver for the decrease in commodity rates is that SDG&E’s forecasted costs of purchasing electricity in 2024 are expected to decrease. Actualization of balancing account projections and projected increases in load may also contribute to the generation rate decrease.
2024 Generation Rate Projections
SDG&E Generation Rates
Rate Group Current ($/kWh) Proposed ($/kWh) Difference % Difference Proposed ($/kWh) Difference % Difference Proposed ($/kWh) Difference % Difference Residential 0.197 0.180 -0.02 -8.6% 0.164 -0.03 -16.8% 0.151 -0.05 -23.0% Small Commercial 0.174 0.160 -0.01 -8.4% 0.139 -0.04 -20.4% 0.128 -0.05 -26.3% Medium & Large C&I 0.204 0.185 -0.02 -9.1% 0.170 -0.03 -16.6% 0.158 -0.05 -22.6% Agriculture 0.146 0.134 -0.01 -8.2% 0.121 -0.02 -17.0% 0.112 -0.03 -23.0% Streetlighting 0.129 0.117 -0.01 -8.8% 0.107 -0.02 -16.7% 0.091 -0.04 -29.1% System Total 0.195 0.178 -0.02 -8.5% 0.162 -0.03 -16.9% 0.150 -0.04 -23.0% October-23 November-23 December-23
26 Cost of Energy Projection and Strategy
4.1 Market Price Risk
Prices in electricity markets exhibit high
volatility, and appropriate forward
procurement and hedging
approaches are necessary to manage
exposure to pricing volatility within the
CAISO or bilateral energy markets.
Hedging Strategy
Future Periods, e.g., 2024
2023
Energy Futures
Trending Lower
“Electric generation rates are
projected to decrease primarily due
to lower costs of purchasing
electricity.
-SDG&E Advice Letter 4344-E
23% Average Decrease
• Decrease effective 1/1/24
27 Long-Term
Financial
Health
Why Reserves?
180-Day Target
$500.0 million
Strategic Goal
Power
Purchase
Agreements
Rate
Stability
Debt
Issuance
Programs
Leveraging Funds
January 2024
(Rate Setting)
28 SDCP Reserve Build
November 2023
$406.0 million
Treasurer’s Report
June 2023
$186.0 million
Budget Adoption
January 2023
(Rate Setting)
December 2022
$57.6 million
December Estimate
180-Day Target
$500.0 million
Strategic Goal
June 2023
(Budget Adopted)
November 2023
(Current)
Through October, SDCP has built 153-
days of cash on hand and is near its 180-
day cash on hand strategic goal target.
SDCP needs to consider maintaining
and building reserves to continue
reaching its strategic-plan goals of 180-
days cash on hand.
January 2024
(Rate Setting)
29 Summary
• SDG&E’s system average generation rate decreases by 23%, driven by projected decrease in electricity procurement costs. • Three sets of rates (trifurcation) are needed in 2024 to ensure a fair, equitable and balanced rate structure for all customers. • SDCP must consider maintaining and building reserves to continue reaching its strategic-plan goals of 180-days cash on hand. • SDCP will recommend to the Board to adopt a rate change on January 18, 2024.
Public
Comment
for Item 3
31 Item 3
Recommendation:
Receive and File the presentation on the Update on
SDCP’s 2024 Projected Rate Changes
Committee Member
Announcements
Adjournment
Next Regular
Finance & Risk
Management
Committee
Meeting
February 15, 2024