AGENDA – FINANCE AND RISK MANAGEMENT COMMITTEE – SAN DIEGO COMMUNITY POWER 1 Appro
AGENDA
Meeting of the Finance and Risk Management Committee
San Diego Community Power (SDCP)
April 11, 2024
3:00 p.m.
City of San Diego Metropolitan Operations Complex (MOC II) Auditorium 9192 Topaz Way, San Diego, CA 92123
The meeting will be held in person at the above date, time and location. Finance and Risk Management Committee (FRMC) Members and members of the public may attend in person. Under certain circumstances, FRMC Members may also attend and participate in the meeting virtually pursuant to the Brown Act (Gov. Code § 54953). As a convenience to the public, SDCP provides a call-in option and internet-based option for members of the public to virtually observe and provide public comments at its meetings. Additional details on in-person and virtual public participation are below. Please note that, in the event of a technical issue causing a disruption in the call-in option or internet-based option, the meeting will continue unless otherwise required by law, such as when an FRMC Member is attending the meeting virtually pursuant to certain provisions of the Brown Act.
Note: Any member of the public may provide comments to the Finance and Risk Management Committee on any agenda item. When providing comments to the FRMC, it is requested that you provide your name and city of residence for the record. Commenters are requested to address their comments to the FRMC as a whole through the Chair. Comments may be provided in one of the following manners:
1. Providing Oral Comments During Meeting. Anyone attending in person desiring to address the FRMC is asked to fill out a speaker’s slip and present it to the Clerk of the Board or the Secretary. To provide remote 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.
2. Written Comments. Written public comments must be submitted prior to the start of the meeting by using this (Web Comment Form). Please indicate a specific agenda item when submitting your comment. All written comments received prior to the meeting will be provided to the FRMC 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 FRMC 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.
AGENDA – FINANCE AND RISK MANAGEMENT COMMITTEE – SAN DIEGO COMMUNITY POWER 2 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
WELCOME
CALL TO ORDER
ROLL CALL
PLEDGE OF ALLEGIANCE
ITEMS TO BE ADDED, WITHDRAWN, OR REORDERED ON THE AGENDA
PUBLIC COMMENTS FOR ITEMS NOT ON THE AGENDA
Opportunity for members of the public to address the Board on any items not on the agenda but within the jurisdiction of the Board. Members of the public may provide a comment in either manner described above.
MEETING AGENDA
1. Approve February 15, 2024, Meeting Minutes
Recommendation: Approve February 15, 2024, Meeting Minutes.
2. Review of Treasurer’s Report for Period Ending February 29, 2024 Recommendation: Receive and File Treasurer’s Report for Period Ending February 29, 2024.
3. Recommend Board Approval of Power100 Green-e Certified Service Recommendation:
Recommend Board Approval of the Power100 Green-e certified service.
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
Compliance with the Americans with Disabilities Act
SDCP Committee meetings comply with the protections and prohibitions of the Americans with Disabilities Act.
Individuals with a disability who require a modification or accommodation, including auxiliary aids or services, in order to participate in the public meeting may contact (888) 382-0169 or [email protected]. Requests AGENDA – FINANCE AND RISK MANAGEMENT COMMITTEE – SAN DIEGO COMMUNITY POWER 3 for disability-related modifications or accommodations require different lead times and should be provided at least 72-hours in advance of the public meeting.
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 Board meeting item which are distributed to a majority of the Members prior to or during the Board meeting are available for public review as required by law. Public records, including agenda-related documents, can be requested electronically at [email protected] or by mail to SDCP, PO BOX 12716, San Diego, CA 92112. The documents may also be posted at the above website.
Such public records are also available for inspection, by appointment, at San Diego Community Power, 2305 Historic Decatur Road, Suite 200, San Diego, CA 92106. Please contact [email protected] to arrange an appointment.
MINUTES – FINANCE AND RISK MANAGEMENT COMMITTEE – SAN DIEGO COMMUNITY POWER 1 FINANCE AND RISK MANAGEMENT COMMITTEE
SAN DIEGO COMMUNITY POWER (SDCP)
City of San Diego Metropolitan Operations Complex (MOC II) Auditorium 9192 Topaz Way
San Diego, CA 92123
MINUTES
February 15, 2024
The Committee minutes are prepared and ordered to correspond to the Committee Agenda.
Agenda Items can be taken out of order during the meeting.
The Agenda Items were considered in the order presented.
WELCOME
CALL TO ORDER
Chair McCann (Chula Vista) called the Finance and Risk Management Committee meeting to order at 3:02 p.m.
ROLL CALL
PRESENT: Chair McCann (Chula Vista), Director Aguirre (Imperial Beach), Director Parent (La Mesa)
ABSENT: None
Also Present: Chief Financial Officer (“CFO”)/Treasurer Washington, General Counsel Tyagi, Interim Board Clerk Wiegelman
PLEDGE OF ALLEGIANCE
CFO/Treasurer Washington led the Pledge of Allegiance.
ITEMS TO BE ADDED, WITHDRAWN, OR REORDERED ON THE AGENDA There were no items to be added, withdrawn, or reordered.
MINUTES – FINANCE AND RISK MANAGEMENT COMMITTEE – SAN DIEGO COMMUNITY POWER 2 PUBLIC COMMENTS FOR ITEMS NOT ON THE AGENDA
There were no public comments.
MEETING AGENDA
1. Approve January 11, 2024 Meeting Minutes
ACTION: Motioned by Director Parent (La Mesa) and seconded by Chair McCann (Chula Vista) to approve the minutes of the Finance and Risk Management Committee meeting held Thursday, January 11, 2024. The motion carried by the following vote:
Vote: 2-0-1
Yes: Chair McCann (Chula Vista) and Director Parent (La Mesa) No: None
Abstained: Director Aguirre (Imperial Beach)
2. Review of Treasurer’s Report for Period Ending December 31, 2023 CFO/Treasurer Washington presented the Treasurer’s Report for period ending December 31, 2023.
Following Committee questions and comments, no action was taken.
3. Approve Mid-Year Budget Amendment
CFO/Treasurer Washington provided a PowerPoint presentation on the mid-year budget amendment, highlighting the budget development timeline, the proposed Fiscal Year (FY) 2023- 2024 amended budget, the change in the net operating revenue, total expenses and net position, and the budget changes by category.
Committee questions and comments ensued.
ACTION: Motioned by Chair McCann (Chula Vista) and seconded by Director Aguirre (Imperial Beach) to recommend the SDCP Board of Directors approve the mid-year budget amendment.
The motion carried by the following vote:
Vote: 3-0
Yes: Chair McCann (Chula Vista), Director Aguirre (Imperial Beach), Director Parent (La Mesa)
No: None
Abstained: None
Absent: None
4. Presentation on Clean Energy Prepayment Financing
CFO/Treasurer Washington and Mike Berwanger, Managing Director, PFM Advisors, provided a PowerPoint presentation on the clean energy prepayment financing, highlighting the prepayment MINUTES – FINANCE AND RISK MANAGEMENT COMMITTEE – SAN DIEGO COMMUNITY POWER 3 transaction background, procedure, and goal, prepayments that have been completed by public utilities in California, prepayments that have been completed by Community Choice Aggregations in California, entities involved in an energy prepayment transaction, energy prepayment structure mechanics, how savings would be generated, the limited assignment of a power purchase agreement, and the favorable risk allocation – “take-and-pay” structure.
Following Committee questions and comments, no action was taken.
5. Approve Professional Services Agreement with Chandler Asset Management, Inc. for up to $250,000 for Financial and Investment Portfolio Management Services through February 2025
CFO/Treasurer Washington provided a PowerPoint presentation on the Professional Services Agreement with Chandler Asset Management, Inc., highlighting the finance and investment management Request for Proposal (RFP), the schedule for the competitive selection process, and the four-week transition timeline.
ACTION: Motioned by Chair McCann (Chula Vista) and seconded by Director Aguirre (Imperial Beach) to recommend the SDCP Board of Directors approve the Professional Services Agreement with Chandler Asset Management, Inc. for up to $250,000 for Financial and Investment Portfolio Management Services through February 2025. The motion carried by the following vote:
Vote: 3-0
Yes: Chair McCann (Chula Vista), Director Aguirre (Imperial Beach), Director Parent (La Mesa)
No: None
Abstained: None
Absent: None
COMMITTEE MEMBER ANNOUNCEMENTS
There were no announcements.
ADJOURNMENT
Chair McCann (Chula Vista) adjourned the meeting at 3:43 p.m.
SAN DIEGO COMMUNITY POWER
Staff Report – Item 2
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Finance and Risk Management Committee From: Eric W. Washington, Chief Financial Officer
Via: Karin Burns, Chief Executive Officer
Subject: Review of Treasurer’s Report for Period Ending 2/29/2024 Date: April 11, 2024
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Receive and File Treasurer’s Report for Period Ending 02/29/24.
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 February 29, 2024, along with budgetary comparisons.
SDCP additionally reports monthly metrics during its Board meetings as part of its Update on Back-Office Operations. As part of the Treasurer’s Report, certain key metrics related to risk are to be presented during Financial and Risk Management Committee (FRMC) meetings.
On February 22, 2024, the SDCP Board of Directors (Board) approved a mid-year budget amendment for Fiscal Year 2023-24 that included net operating revenues of $1,304,274,067, total expenses of $1,071,601,284, and a resulting net position of $232,672,783. Given that the Board approval occurred on February 22, 2024, the review of the Treasurer’s Report for period ending February 29, 2024, is a comparison against the original Fiscal Year 2023-24 budget adopted by the Board on June 22, 2023. Next month’s Treasurer’s Report for period ending March 31, 2024, will include a comparison against the mid-year budget amendment adopted by the Board on February 22, 2024.
ANALYSIS AND DISCUSSION
Actual financial results for the period ended 02/29/24: $945.30 million in net operating revenues were reported compared to $985.59 million budgeted for the period. $732.67 million in total expenses were reported (including $714.42 million in energy costs) compared to $717.52 million budgeted for the period (including $681.34 million budgeted for energy costs). After expenses, SDCP’s change in net position of $212.63 million was reported for Fiscal Year 2023-24. The following is a summary of the actual results compared to the Fiscal Year 2023-24 Adopted Budget.
Table 1: Budget Comparison Versus Actual Results
• Net operating revenues finished $40.29 million (or 4.0 percentage points) under the budget primarily due to lower-than-expected customer load corelated with cooler weather in the summer months in 2023.
• Operating expenses finished $15.15 million (or 2.0 percentage points) over the budget primarily due to higher-than-expected energy costs and higher usage in the winter months.
Financial results for the period underperformed the projections presented in the year-to-date proforma. SDCP’s change in net position was 21% under the projection primarily due to actual energy costs being higher than projected.
The following is a summary to actual results compared to the fiscal year-to-date proforma.
Table 2: Proforma Comparison Versus Actual Results
Budget Comparison
YTD FY24 as of
02/29/24 (8 mos) FY24 YTD Budget Budget Variance ($) Budget (%) Net Operating Revenues $ 945,301,062 $ 985,591,771 $ (40,290,709) 96% Total Expenses $ 732,671,313 $ 717,517,113 $ 15,154,200 102% Change in Net Position $ 212,629,749 $ 268,074,658 $ (55,444,909) -21% Proforma Comparison
YTD FY24 as of
02/29/24 (8 mos)
FY24 YTD
ProForma
ProForma
Variance ($)
Proforma
(%)
Net Operating Revenues $ 945,301,062 $ 985,591,771 $ (40,290,709) -4% Total Expenses $ 732,671,313 $ 716,535,213 $ 16,136,100 2% Change in Net Position $ 212,629,749 $ 269,056,558 $ (56,426,809) -21% Figure 1: Proforma versus Actual Results
For the period ending 2/29/24, SDCP contributed $212,629,749 to its net position compared to the expected gain of $268,074,658 per the Fiscal Year 2023-24 adopted budget. Total SDCP reserves at the end of the period were $383,260,342 based on cash and cash equivalents – unrestricted, and total available liquidity (including lines of credit) was $533,260,342. SDCP has a total Fiscal Year 2023-24 year-end reserve target of $491,079,452, which is equivalent to 180-days of total operating expenses as set in SDCP’s Reserve Policy and Strategic Goals.
$-
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
Net Operating Revenues Total Expenses Change in Net Position YTD FY24 Results v. Budget
YTD FY24 as of 02/29/24 (8 mos) FY24 YTD Budget
Figure 2: Participation Rates as of 3/28/2024
Phase 4 mass enrollment process in National City and Unincorporated County of San Diego for Non-Net Energy Metering (NEM) customers was officially completed as of May 2023. The participation rate for this new phase is fluid and will change as we continue with our enrollment of Net Energy Metering (NEM) customers from April 2023 through March 2024. In the interim, we are reporting on the opt outs and eligible accounts associated with the phase based on those accounts that we have noticed for enrollment on a rolling basis as of the reporting month.
Staff are also presenting State of SDCP Arrearages related to financial risk for FRMC consideration and for regular review. Additional metrics can be added by request. The below arrearage data includes SDCP’s Receivables aged 120+ Days as of 3/1/2024.
Figure 3: State of SDCP Arrearages as of 3/01/2024
Figure 4: State of SDCP Arrearages Residential vs Commercial as of 3/01/2024
FISCAL IMPACT
N/A
ATTACHMENTS
Attachment A: 2024 Year-to-Date Period Ended 2/29/24 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 February 29, 2024, 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
March 25, 2024
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com Current assets
Cash and cash equivalents - unrestricted 383,260,342$
Cash and cash equivalents - restricted 500,000
Accounts receivable, net of allowance 89,250,486
Accrued revenue 39,673,779
Prepaid expenses 2,896,570
Other receivables 451,927
Deposits 4,634,907
Total current assets 520,668,011
Noncurrent assets
Cash and cash equivalents - restricted 1,147,000
Lease asset, net of amortization 1,418,819
Capital assets, net of depreciation 135,551
Total noncurrent assets 2,701,370
Total assets 523,369,381
Current liabilities
Accrued cost of electricity 110,351,390
Accounts payable 1,053,392
Other accrued liabilities 5,355,524
State surcharges payable 404,247
Deposits - energy suppliers 5,312,500
Interest and finance costs payable 193,164
Lease liability 850,666
Total current liabilities 123,520,883
Noncurrent liabilities
Supplier security deposits 624,000
Lease liability 702,718
Total noncurrent liabilities 1,326,718
Total liabilities 124,847,601
Restricted for collateral 1,647,000
Unrestricted 396,874,780
Total net position 398,521,780$
NET POSITION
SAN DIEGO COMMUNITY POWER
STATEMENT OF NET POSITION
As of February 29, 2024
ASSETS
LIABILITIES
See accountants' compilation report. 2
OPERATING REVENUES
Electricity sales, net $ 944,221,312
Grant revenue 807,250
Other income 322,200
Total operating revenues 945,350,762
OPERATING EXPENSES
Cost of electricity 714,621,854
Contract services 12,277,201
Staff compensation 7,134,637
Other operating expenses 2,252,491
Depreciation and amortization 432,041
Total operating expenses 736,718,224
Operating income 208,632,538
NON-OPERATING REVENUES (EXPENSES)
Interest income 5,174,982
Interest and financing expense (1,298,071)
Nonoperating revenues (expenses), net 3,876,911
CHANGE IN NET POSITION 212,509,449
Net position at beginning of year 186,012,331
Net position at end of year $ 398,521,780
SAN DIEGO COMMUNITY POWER
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
Eight Months Ended February 29, 2024
See accountants' compilation report. 3
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 1,006,250,136$
Receipts of supplier security deposits 31,759,733
Receipts from wholesale sales 14,871,895
Other operating receipts 1,129,450
Payments to suppliers for electricity (679,805,003)
Payments for goods and services (12,890,784)
Payments of staff compensation and benefits (6,852,195) Payments for deposits and collateral (2,804,693)
Payments of state surcharges (1,742,916)
Net cash provided by operating activities 349,915,623
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Principal payments - bank note (35,730,000)
Interest and related expense payments (1,627,931)
Net cash provided (used) by non-capital
financing activities (37,357,931)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments of lease liability (317,235)
Payments to acquire capital assets (71,550)
Net cash (used) by capital and related financing activities (388,785)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income received 4,907,555
Net change in cash and cash equivalents 317,076,462
Cash and cash equivalents at beginning of year 67,830,880 Cash and cash equivalents at end of year 384,907,342$
Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) 383,260,342$
Restricted cash - current 500,000
Restricted cash - noncurrent 1,147,000
Cash and cash equivalents 384,907,342$
SAN DIEGO COMMUNITY POWER
STATEMENT OF CASH FLOWS
Eight Months Ended February 29, 2024
See accountants' compilation report. 4
Operating income 208,632,538$
Adjustments to reconcile operating income to net
cash provided by operating activities
Depreciation and amortization expense 432,041
(Increase) decrease in:
Accounts receivable, net 21,263,245
Accrued revenue 39,119,005
Prepaid expenses 27,630,928
Other receivables 49,215
Deposits 13,021,443
Increase (decrease) in:
Accrued cost of electricity 33,006,047
Accounts payable 614,126
Other accrued liabilities 1,560,877
State surcharges payable (96,342)
Supplier security deposits 4,682,500
Net cash provided by operating activities 349,915,623$
SAN DIEGO COMMUNITY POWER
STATEMENT OF CASH FLOWS (continued)
Eight Months Ended February 29, 2024
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED 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 operating fund budgetary comparison schedule of San Diego Community Power (SDCP), a California Joint Powers Authority, for the period ended February 29, 2024, 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
March 25, 2024
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com 2023/24 YTD
Budget
2023/24 YTD
Actual
2023/24 YTD
Budget
Variance
(Under) Over
2023/24
YTD
Actual/
Budget %
2023/24 Annual
Budget
2023/24 Budget
Remaining
REVENUES AND OTHER SOURCES Gross Ratepayer Revenues 1,026,658,095 983,563,867$ (43,094,228) 96% 1,346,325,552$ 362,761,685$ Less: Uncollectible Customer Accounts (41,066,324) (39,342,555) 1,723,769 96% (53,853,022) (14,510,467) Grant Revenue - 807,250 807,250 - (807,250) Other income 272,500 272,500 - (272,500) Total Revenues and Other Sources 985,591,771 945,301,062 (40,290,709) 1,292,472,530 347,171,468 OPERATING EXPENSES Cost of Energy 681,343,128 714,572,154 33,229,026 105% 948,529,425 233,957,271 Professional Services and Consultants 15,655,384 11,739,478 (3,915,906) 75% 22,939,626 11,200,148 Personnel Costs 8,644,596 7,134,637 (1,509,959) 83% 13,178,031 6,043,394 Marketing and Outreach 2,029,756 1,423,451 (606,305) 70% 2,973,829 1,550,378 General and Administration 5,469,283 1,497,825 (3,971,458) 27% 7,861,973 6,364,148 Programs 189,917 177,346 (12,571) 93% 278,250 100,904 Total Operating Expenses 713,332,064 736,544,891 23,212,827 995,761,134 259,216,243 Operating Income (Loss) 272,259,707 208,756,171 (63,503,536) 296,711,396 87,955,225 NON-OPERATING REVENUES (EXPENSES) Investment Income - 5,174,982 5,174,982 - (5,174,982) Interest and Related Expenses (1,625,049) (1,301,404) 323,645 80% (2,437,574) (1,136,170) Transfer to Capital Investment Program (2,560,000) - 2,560,000 0% (3,840,002) (3,840,002) Total Non-Operating Revenues (Expenses) (4,185,049) 3,873,578 8,058,627 (6,277,576) (10,151,154) NET INCREASE (DECREASE) 268,074,658$ 212,629,749$ (55,444,909)$ 290,433,820$ 77,804,071$
SAN DIEGO COMMUNITY POWER
BUDGETARY COMPARISON SCHEDULE
Eight Months Ended February 29, 2024
OPERATING FUND
See accountants' compilation report.