Board of
Directors
Regular Meeting
June 26, 2025
Welcome
and
Call to
Order
Roll
Call
11 Land
Acknowledgement
13 Recognition of Outgoing
Community Advisory Committee
Member
Gary Jahns
14 Welcome Staff
Sara Saragosa
Executive Assistant
Nadeem Bahou
Data Analyst
Items to
be Added,
Withdrawn
or
Reordered
on the
Agenda
Public
Comment
on non-Agenda
Items
17 Consent
Calendar
1. Approve May 22, 2025, Meeting Minutes
2. Receive and File Treasurer’s Report for Period Ending April 30, 2025
3. Receive and File Update on Programs
4. Receive and File Update on Power Services
5. Receive and File Update on Customer Operations
6. Receive and File Update on Marketing, Public Relations, and Local Government Affairs
7. Receive and File Community Advisory Committee Monthly Report
8. Receive and File Update on Regulatory and Legislative Affairs Public
Comment
on
Consent
Calendar
19 Regular
Agenda
9. Approve Community Advisory Committee Member for City of Chula Vista
10. Consider Amendments to Executive Employment Agreements a. Approve Amended and Restated Employment Agreement for Chief Executive Officer
b. Approve First Amendment to Employment Agreement for General Counsel
11. Tariffs, Tax Credits and Executive Orders: New-Build Market Outlook Update
12. Public Hearing - AB 2561 - Status of vacancies, recruitment and retention efforts
13. Approve the FY 2025-2026 Operating Budget, the FY 2025-2026 Capital Budget, and the FY 2026-2030 Capital Investment Plan
14. Approve Update to San Diego Community Power’s Energy Risk Management Policy: California Carbon Allowance and Carbon Offset Transactions and Obligations
15. Adoption of Resolution No. 2025-07, Authorizing Execution of an Energy Prepayment Transaction, Related Documents, and ‘Form of’ Documents Subject to Maximum Issuance Amount, Limitation on Fees, and Minimum Required Savings
16. Approve Amended and Restated Energy Storage Service Agreement with Yellow Pine Solar III, LLC
17. Approve Energy Storage Service Agreement for the North Johnson Energy Center 20 Item No. 9
Presenter:
Xiomalys Crespo, Senior Community Engagement Manager
Approve Community Advisory Committee Member for City of Chula Vista
Recommendation:
Approve appointment of Alonso Gonzalez to the Community Advisory Committee for the City of Chula Vista
21 • The Community Advisory Committee (CAC) includes 2 members from each member agency.
• Appointments are to prioritize residents from diverse social, economic, and racial backgrounds that are representative of all residents within Community Power's service territory.
• Staff promoted the vacancy via social media, the Board of Directors, the CAC and directly engaging with member agency staff and the public; and worked with Director Inzunza to review the process and the three applications received to determine a nomination for appointment based on Membership Terms & Criteria. • Director Inzunza has nominated Alonso Gonzalez.
Membership Criteria & Selection Process
Public
Comment on
Item No. 9
23 ITEM NO. 9
BOARD
MEMBER
COMMENTS
AND
QUESTIONS
Approve Community Advisory Committee
Member for City of Chula Vista
Recommendation:
Approve appointment of Alonso Gonzalez to the
Community Advisory Committee for the City of
Chula Vista
24 Item No. 10
Presenter:
Nicholaus Norvell, Special Legal Counsel
Consider Amendments to Executive Employment Agreements
a. Approve Amended and Restated Employment Agreement for Chief Executive Officer
Recommendation: Approve Amended and Restated Chief Executive Officer Employment Agreement
b. Approve First Amendment to Employment Agreement for General Counsel Recommendation: Approve First Amendment to General Counsel Employment Agreement
Public
Comment on
Item No. 10
26 ITEM NO. 10
BOARD
MEMBER
COMMENTS
AND
QUESTIONS
Consider Amendments to Executive Employment Agreements
a. Approve Amended and Restated Employment Agreement
for Chief Executive Officer
Recommendation: Approve Amended and Restated Chief
Executive Officer Employment Agreement
b. Approve First Amendment to Employment Agreement for
General Counsel
Recommendation: Approve First Amendment to General Counsel Employment Agreement
27 Item No. 11
Recommendation:
Receive and file the Community Power staff status report on federal policy and budget as it relates to clean energy procurement Presenter:
Patrick Welch, Associate Director of Legislative Affairs Andrea Torres, Director of Origination
Tariffs, Tax Credits and Executive Orders: New-Build Market Outlook Update
28 Potential Federal Policy Changes
Overview – Clean Energy Tax Credits
• A prior Congress and Administration significantly
expanded support for clean energy through tax
credits and funding initiatives
• The current Congress is undertaking a budget
reconciliation process that could result in
reductions to energy tax credits
• The House of Representatives approved H.R. 1
(One Big Beautiful Bill Act) on May 22 that would
roll back residential clean energy and utility scale
tax credits and the Senate issued their proposal
on June 16
• It is a fluid situation, and the final outcome is
unclear
29 Federal Budget Reconciliation
Clean Energy Tax Credits: Current Law
• The Investment and Production Tax Credits provide a
30% credit when a clean energy project starts
construction
• It is available for wind, solar, energy storage,
geothermal, and other clean energy technologies
• They sunset starting in 2032 or when greenhouse gas
emissions fall 25% below 2022 levels
• Also provides for a 30% residential solar and storage tax credit and a credit up to $3,200 for home energy
efficiency improvements. They must be claimed by
December 31, 2032, with step downs thereafter
• The up to $7,500 electric vehicle tax credit sunsets on December 31, 2032
Source: Brattle
30 Federal Budget Reconciliation
Proposed Changes to Utility Scale Tax Credits
The One Big Beautiful Bill Act
• New sunset: Projects must begin construction 60 days after enactment or be placed into service by December 31, 2028 • Foreign entity requirements: Projects could not receive “material assistance” and could not be “influenced by” foreign entities of concern
Senate Finance Committee Proposal
• New sunset/phase down: Solar and wind: 60% for projects that begin construction in 2026, 20% in 2027, and 0% in 2028
• All other clean energy technologies: 75% for projects that begin construction in 2034, 50% in 2035, and 0% in 2036
• Foreign entity requirements: Projects could not receive material assistance based on a cost ratio standard, with a safe harbor provision for contracts in place today
Pelicans Jaw Project
31 Federal Budget Reconciliation
Residential Energy Tax Proposals
The One Big Beautiful Bill Act
• New sunset: December 31, 2025
Senate Finance Committee
• New sunset: 180 days after enactment
Source: CalMatters
32 Federal Budget Reconciliation
Two Other Utility Scale Energy Tax Credit Legislative Proposals HR 2838 Ending Intermittent Energy Subsidies Act
• Would phase out tax credits for utility-scale wind and solar projects only based on a ”placed into service” standard • Starting with 80% credit value in 2026 and lowering by another 20% each year thereafter; fully eliminated in 2030
HR 3291 Certainty for Our Energy Future Act
• Would create a new December 31, 2030, sunset for utility-scale wind and solar projects only
• Would maintain the “start of construction” standard and provide safe harbor for projects currently under construction
• Neither would impact non-solar/wind technologies or residential clean energy tax credits
Pelicans Jaw Project
33 Federal Budget Reconciliation
Timeline and next steps
• The Senate and House must agree to a single budget
reconciliation bill
• It could be H.R. 1 or the Senate Finance Committee
proposal, or something else
• Many other issues are at stake in the bill such as Medicaid and income tax issues
• It’s a fluid situation and the final outcome is unclear • Community Power continues to monitor developments and stay in touch with our Congressional representatives about operational and customer impacts
34 Federal Energy Project Permitting
Executive Order Paused Bureau of Land Management (BLM) Processes • The Unleashing American Energy executive order
was issued on January 20
• It revoked Tackling the Climate Crisis at Home and
Abroad, an executive order issued in 2021
• The Department of Interior issued a 60-day
moratorium on renewable energy permitting, which
has since been lifted
• BLM is not prioritizing renewable energy permitting
on federal lands
• The initial pause and de-emphasis on prioritizing
renewable energy impacts the pace and scale of
project approvals, including Community Power’s
Purple Sage project
35 Tariffs
Background
• U.S. imposed varying levels of tariffs on Chinese
goods during the first Trump administration and
during the Biden administration
• Extreme tariff volatility since January
• Varying % of tariffs applied to all countries sourcing material supply for renewable energy and storage
projects. 10% is a baseline
• China is a dominant supplier of raw
materials/components along the PV supply chain,
but PV modules themselves are primarily supplied
by Vietnam, Thailand, Malaysia and Cambodia, as
well as South Korea, India and the U.S.
• Steep tariffs have been imposed on aluminum and
steel (doubled recently from 25% to 50%), which
have impacted the cost of supply for renewable
energy, and across other construction industries as
well
Source: Solar Power World: https://www.solarpowerworldonline.com/2025/04/commerce-reveals-final-tariff-amounts-on-southeast-asian-solar-imports/ “AD” stands for “anti-dumping”; “CVD” stands for “countervailing duty” Vietnam Example
36 Tariffs
Legal challenges
• On May 28, the U.S. Court of International
Trade froze sweeping tariffs on the basis
that the Administration improperly used the
International Emergency Economic Powers
Act of 1977
• Federal appeals court has since allowed
the Administration’s most sweeping tariffs
to remain in effect while it reviews a lower-court decision 37 Tariffs: a focus on China
Currently in a 90-
day pause starting
May 12th.
Source: Peterson Institute for International Economics
38 Tariffs: a focus on China
• China is a dominant supplier of
raw materials for battery storage
including graphite, cobalt, as well
as BESS module manufacturing
• Multiple points along the BESS
supply chain that tariffs can affect
• To a lesser extent, China is also a
supplier of wind turbines and
generators, and other energy high
voltage equipment
Source: https://troescorp.com/what-is-battery-energy-storage/ BESS component diagram
39 Impacts of Federal Actions on Portfolio
CONTRACTED NOT YET
UNDER CONSTRUCTION
PIPELINE
PORTFOLIO: Community Power is well positioned to meet its 75% clean energy target by 2027 with ten years to meet its 100% target by 2035.
CONTRACTED UNDER
CONSTRUCTION
All of Community Power’s developing
RPS portfolio is projected to come online
by end of 2028 with approximately 2/3 of
contracted volume under development
having either: 1) started construction
with major equipment procured or 2) met
safe harbor requirements, mitigating the
risk of both tax credit eligibility losses or
tariff increases.
Community Power is monitoring
project development closely. It is
too soon to accurately quantify
the risks to project costs and
viability from tax credits eligibility
losses or tariff increases. Capex
could increase due to both the
volatility of tariff risk and the loss
of tax credits.
Tariffs: Community Power is
prioritizing projects that are better
positioned to mitigate tariff
exposure due to developer-specific
procurement and project financing
strategies.
Tax credits: Procurement costs
may increase for projects that
don’t meet the criteria.
*Note: The majority of Community Power’s contracted standalone energy storage tolling portfolio is not yet under construction and therefore more exposed to tariff risk, but under the Senate’s proposal, storage would remain eligible for tax credits and be grandfathered from the proposed FEOC rules.
Public
Comment on
Item No. 11
41 ITEM NO. 11
BOARD
MEMBER
COMMENTS
AND
QUESTIONS
Tariffs, Tax Credits and Executive Orders: New-Build
Market Outlook Update
Recommendation:
Receive and file the Community Power staff status
report on federal policy and budget as it relates to
clean energy procurement
42 Item No. 12
Recommendation:
Hold a public hearing, receive comments, and accept report on the status of Community Power employee vacancy rates and recruitment and retention efforts.
Presenter:
Chandra Pugh, Senior Director of People Operations and Administration Public Hearing - AB 2561 – Status of Vacancies, Recruitment and Retention Efforts
43 Background
Assembly Bill (AB) 2561 (McKinnor) amended the Myers-Milias-Brown Act (MMBA) to add Government Code Section 3502.3, which created a new obligation for public agencies to present the status of vacancies and recruitment and retention efforts. The public hearing must be held at least once per fiscal year prior to adopting an annual budget. During the hearing, the public agency shall identify any necessary changes to policies, procedures, and recruitment activities that may lead to obstacles in the hiring process. The law also allows recognized employee organizations, which Community Power does not have, an opportunity to present at the public hearing. The new law took effect on January 1, 2025, and applies to all public agencies. 44 Requirements
• "Status" of vacancies -31 vacancies of which 27 were new positions
• Recruitment and retention efforts
• Present findings and make any recommendations, if needed, to recruitment and retention efforts
45 Current Vacancies
Status:
Chief Commercial Officer: In-Person interviews.
Using outside Executive recruiter to source
candidates. No foreseen obstacles to hiring.
Community Outreach Representative (Part-time):
Virtual interviews. High number of applications
submitted. No foreseen obstacles to hiring.
Senior Origination Associate: Reposted
46 Findings
For the Fiscal Year 2024-2025, thirty-one vacancies have been filled, three are currently open, and three were not filled. The two current vacancies are: Chief Commercial Officer and Community Outreach Representative (Part-Time) and Sr. Origination Associate. For the three positions that were not filled, the hiring managers determined at the time that other operational needs took priority over filling those positions.
Community Power did encounter difficulties in filling the Rates Analyst and Origination Manager positions. Due to the specification of these roles, the candidates that applied did not meet the role requirements which resulted in a limited qualified applicant selection for the positions. Human Resources (HR) recommended that both positions be reposted with either a lower or higher salary grade. The Origination Manager position was reposted as a Senior Origination Associate. For the Rates Analyst position, the position was reposted as a Senior Rates Analyst and the candidate has been filled.
Very low turnover rate of 5.63%
47 48
Recruitment Efforts: Candidate Survey
Public
Comment on
Item No. 12
50 ITEM NO. 12
BOARD
MEMBER
COMMENTS
AND
QUESTIONS
Public Hearing - AB 2561 – Status of Vacancies,
Recruitment and Retention Efforts
Recommendation:
Hold a public hearing, receive comments, and accept report on the status of Community Power employee vacancy rates and recruitment and retention efforts.
51 Item No. 13
Recommendation:
Adopt Resolution No. 2025-06, approving the FY 2025-2026 Operating Budget, the FY 2025-2026 Capital Budget, and the FY 2026-2030 Capital Investment Plan Presenter:
Karin Burns, Chief Executive Officer
Community Power Staff
Approve the FY 2025-2026 Operating Budget, the FY 2025-2026 Capital Budget, and the FY 2026-2030 Capital Investment Plan
52 Budget Development for FY 2025-2026
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
Community Power
Board
Staff develop
operating budgets
Baseline budget is
developed
May
Community Power
Board Preview
June
Financial and Risk
Management
Committee Review
Community Power
Board Approval
July 1 Budget
Implemented
Midyear budget
review (February)
Budget amendments
as necessary
53 Budget Priorities
Community Power’s guiding budget principles
1. Fiscal Responsibility. Making budget decisions that allow for the short- and long-term success and stability of the agency
2. Ensuring Sufficient Funding. Understanding the risks of a volatile market and setting rates appropriately while prioritizing affordability
3. Building Reserves. Hitting reserve targets creates opportunities to lower rates and make them more stable for customers
4. Ensuring Transparency. Providing accurate information and noting changes to plans allows for informed decision making from our Board of Directors
5. Keeping the Public Informed. Hosting public meetings and making documents public as early as possible allows for the public to better understand where Community Power is investing ratepayer dollars and outside funding to advance renewable power, adopt clean energy technologies, and prioritize competitive rates
54 Budget Highlights
Fiscal Responsibility. Continuing to work toward our reserve goals to ensure long-term financial strength
Organizational Sustainability. Strengthening our internal capacity to support long-term strategy and service delivery Stable, Competitive Rates. Maintaining affordability through disciplined operations, long - term procurement and financial foresight
Programs and Incentives. Scaling Solar Battery Savings and launching the SDREN portfolio to support clean energy adoption, equity and resilience
Capital Investment Plan. Advancing our Capital Investment Plan to guide infrastructure development and ensure transparency
55 FY 2025-2026 Operating Budget
Item
FY 2024-2025
Amended Budget,
$M
FY 2025-2026
Proposed Budget,
$M
Gross Revenue 1,243.0 1,221.0
Less Uncollectible Accounts (21.8) (21.4)
Net Revenue 1,221.3 1,199.6
Cost of Energy 1,116.8 956.7
Non-Energy Costs 50.8 54.3
Subtotal Operating Expense 1,167.6 1,010.9
Debt Service 1.3 1.9
Capital Investment Plan 18.2 22.2
Total Expense 1,187.1 1,035.0
Net Position 34.2 164.6
(3.0%)
PowerOn
Discount
Approved 2/7/25
(5.0%)
PowerBase
Discount
Approved 2/7/25
($160.1M)
Cost of Energy
Decrease
+$3.5M
Non-Energy
Increase
+$4.0M
CIP Contribution
+$164.6
Net Position
56 Budget – Non-Energy Costs
Budget Changes by Category
Professional
Services
Personnel
Marketing and
Outreach
General and
Administrative
Professional Services remains relatively
even.
FY 2025
$24.3m
FY 2026
$24.6m
Recruitment strategy of 7 new staff.
Current staffing: Hired (80), previously
authorized (7), new requests (7).
FY 2025
$18.6m
FY 2026
$21.1m
Marketing and Outreach budget slightly
lower.
FY 2025
$3.0m
FY 2026
$2.6m
Increase as Community Power has
scaled in staffing.
FY 2025
$4.9m
FY 2026
$5.9m
Capital Transfer Continued Solar Battery Savings
proposed funding of $18.8 million.
FY 2025
$18.2m
FY 2026
$22.2m
57 Finance Highlights
Practice fiscal strategies to promote long-term sustainability • Affordability.Execute clean prepayment transactions aimed at generating significant annual savings on power costs • Middle-Office Risk. Building controls and oversight for Community Power’s largest cost center given potential regulatory and legislative changes • Adding Two Positions. Additional support to build the middle-risk office and to support expanded customer programs
• Enterprise Resource Planning Software. Implementation of Enterprise Resource Planning (ERP) to streamline processes and enhance efficiency, leading to reduced costs, better customer service, and improved decision-making in support of the enterprise-wide data platform 58 Power Services Highlights
Procuring renewable energy for our customers
• Adjusting Assumptions. Managing risk to account as best as possible for volatile energy markets • Adding Two Key Analyst Roles. Both roles support the goal to reach 100% renewable energy by 2035 while keeping rates competitive • Cost-effective Compliance. Budgeting appropriately to meet requirements for resource adequacy and renewable portfolio standards • Advanced Analytics to Mitigate Risk. Implementing and integrating an Energy Trading and Risk Management system • Implementing the Solar Advantage Program. Getting Disadvantaged Communities Green Tariff (DAC-GT) contracts in place advances local procurement targets while providing significant bill discounts for working families • Portfolio Diversity. A variety of energy sources allows for more stable pricing and enhanced reliability 59 Operations Highlights
Advancing operational efficiency
IT, Data
Analytics and
Customer
Operations
Legislative and
Regulatory
Affairs
Customer
Programs Public Affairs
Project Management Office
60 IT, Data Analytics and Customer Operations
Highlights
Making data-driven decisions to provide world-class service externally and internally
• Cybersecurity Enhancements. Protecting customer data and streamlining internal IT functions • Enterprise-wide Data Platform. Centralizing and standardizing data to enhance internal collaboration and to better serve our customers • Improve Communications with SDG&E. Aiming to resolve issues that affect customer experience • Contact Center Improvements. Supporting training and performance monitoring to provide high- quality service • Customer Education and Awareness of Service Options. Collaborating with the Public Affairs team to inform customers about their electricity choices • Implementing Competitive Rates. Providing customers with the lowest rates possible while creating sustainable, equitable rate structures 61 Legislative and Regulatory Affairs Highlights
Advocating for local control at the State and Federal level • Participating in Trade Associations and Organizations. Engaging and partnering with organizations such as CalCCA (California Community Choice Association) elevates Community Power’s voice in legislative and regulatory advocacy
• Maintaining Staffing. The current team of five monitored or engaged with over 60 regulatory proceedings and approximately 150 pieces of legislation in FY2025 • Promoting Affordability. Advocating in Sacramento and at the California Public Utilities Commission to shape the legislative and regulatory landscape to better meet customer needs 62 Customer Programs Highlights
Advancing the clean energy transition for all
• Launching the San Diego Regional Energy Network. Launching 10 programs focused on energy efficiency with the goal of reducing customer energy use and generating bill savings • Expanding Solar Battery Savings. An allocation of $18.8 million nearly doubles the investment of the pilot program that incentivizes the adoption of solar plus storage systems and reduces Community Power resource adequacy requirements
• Integrating a Distributed Energy Resource Management System and Flex Load Strategies.
Making it easier for customers to use electricity when it is least expensive, shifting consumption off of peak
• Implementing the Solar Advantage Program. Approving projects can provide bill discounts of 20% to nearly 10,000 low-income households • Adding Two Positions. Six out of 14 total programs positions are funded externally through the San Diego Regional Energy Network and other grants 63 Public Affairs Highlights
Connecting with community
• Scaling Back Costs. Embracing digital tools to move away from printed materials and shifting marketing dollars from the operating budget to outside funding sources, saving $800,000 from FY2025 • Enhancing Strategic Communications. Adding a strategic communications associate to increase earned media opportunities and develop more cohesive messaging • Maintaining Funding to Reinvest in Communities.Partnerships, sponsorships and outreach activities that build trust with community stakeholders and create educational opportunities for the public
• Utilizing the Power Network. Working with local Community-Based Organizations to assist with translation, outreach and advocacy to lift their voices and provide value to Community Power customers
• Educating the Public. The marketing and outreach budget, along with external funding through SDREN, aims to encourage stakeholders to take advantage of programmatic and service offerings, engage in the clean energy transition, and save money
Public
Comment on
Item No. 13
65 ITEM NO. 13
BOARD
MEMBER
COMMENTS
AND
QUESTIONS
Approve the FY 2025-2026 Operating Budget, the FY
2025-2026 Capital Budget, and the FY 2026-2030
Capital Investment Plan
Recommendation:
Adopt Resolution No. 2025-06, approving the FY
2025-2026 Operating Budget, the FY 2025-2026
Capital Budget, and the FY 2026-2030 Capital
Investment Plan
66 Item No. 14
Recommendation:
Adoption of Resolution No. 2025-05, approving Addendum 2 to San Diego Community Power’s Energy Risk Management Policy: California Carbon Allowance and Carbon Offset Transactions and Obligations and authorize the CEO to approve procurement of California Carbon Allowance (CCA) and Carbon Offset (CO) to meet San Diego Community Power compliance obligations under California’s Cap-and-Trade Program.
Presenter:
Jennine Camara, Director of Portfolio Management
Approve Update to San Diego Community Power’s Energy Risk Management Policy: California Carbon Allowance and Carbon Offset Transactions and Obligations
67 Addendum 2 Overview
• Goal – Meet Community Power’s compliance obligations under California’s Cap-and-Trade Program
• How – Approve update to Community Power’s Energy Risk Management Policy to allow the CEO to approve procurement of CCA and CO products in quarterly auctions, and secondary carbon allowance and carbon offset markets
Background
• Under California’s Cap-and-Trade Program, electric importers, such as Community Power, have a compliance obligation to purchase carbon allowances or offsets • Community Power will consider the cost of carbon, renewable priorities, and overall benefit to ratepayers when evaluating use of electric imports to meet power supply needs and resource adequacy requirements
68 Procurement of California Carbon
Allowances and Carbon Offsets
• Carbon allowances are available for trade in CARB’s quarterly auctions, and secondary carbon offset and allowance markets
• Community Power will only acquire carbon allowances or offsets to meet obligations, consistent with established Energy Risk Management Policy principles prohibiting taking speculative positions
• The following transaction product volumetric and notional transaction limits are included in addendum 2:
Delegation of Authority per
Transaction by Position/Title
Product
Type
Volumetric Limit
(MTCO2e)
Notional Value
Limit
Chief Executive Officer CCA/CO 20,000 $1,000,000
Public
Comment on
Item No. 14
70 ITEM NO. 14
BOARD
MEMBER
COMMENTS
AND
QUESTIONS
Approve Update to San Diego Community Power’s
Energy Risk Management Policy: California Carbon
Allowance and Carbon Offset Transactions and
Obligations
Recommendation:
Adopt Resolution No. 2025-05, approving Addendum
2 to San Diego Community Power’s Energy Risk
Management Policy: California Carbon Allowance and
Carbon Offset Transactions and Obligations and
authorize the CEO to approve procurement of
California Carbon Allowance (CCA) and Carbon
Offset (CO) to meet San Diego Community Power
compliance obligations under California’s Cap-and-Trade Program 71 Item No. 15
Presenter:
Eric Washington, Chief Financial Officer
Jeb Spengler, Strategic Finance Manager
Adoption of Resolution No. 2025-07, Authorizing Execution of an Energy Prepayment Transaction, Related Documents, and ‘Form of’ Documents Subject to Maximum Issuance Amount, Limitation on Fees, and Minimum Required Savings
Recommendation:
Adopt Resolution No. 2025-07, approving parameters under which an energy prepayment transaction can be completed; authorizing and approving documents or “form of” documents supporting the prepay transaction; and directing California Community Choice Financing Authority (CCCFA) to make payments to service providers for issuance costs from prepay bond proceeds 72 Goal and Benefits of Prepay Transactions
1. Source of cost savings that can lower customer rates and/or help build reserves • Initial assignment of VAMO energy contract volume with CPA as counterparty • Volume assigned will represent ~10% of SDCP’s load
• Annual savings of ~$4.5 million+, depending on market conditions, or ~8-12% of assigned energy procurement costs
• Each transaction can generate close to 1% in ratepayer savings versus SDG&E • Under SDCP Strategic Initiatives, pre-pay bond program is #1 priority for addressing affordability
2. Replicate the first transaction’s structure with the same transaction parties
3. Service provider fees paid from bond proceeds on a contingency basis • Only sunk costs are staff time, rating agency fee and Kestrel Green Bond fee
4. SDCP is not responsible for bond repayment; Debt is non-recourse to SDCP 73 2024 Prepay #1 Transaction Highlights
Aggregate Bond Principal $1,000,500,000
Municipal Bond Rating Aa3
Green Certification Kestrel Green Bond Verifiers
Initial Bond Pricing Period • 8 Years (Nov. 1, 2032)
• After the initial period, bonds will be repriced per the negotiated repricing agreement and a new discount will be established based on the then prevailing market conditions
Final Bond Maturity Date • February 1, 2055
Discount Achieved • $13.945/MWh 11/24 – 11/26
• $11.150/MWh 11/26 – 11/32
• ~$6.87 million per year for SDCP through initial 8-year period.
Energy Volume Supported by Bond Proceeds • 4,113,481 MWh (initial term) Power Delivery Start Date • January 1, 2025
74 SDCP Prepay Energy Cost Savings
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
2025 2026 2027 2028 2029 2030 2031 2032
Annual Energy Cost Savings
Prepay #1 Prepay #2 (estimated)
75 Parties involved in 2024 Prepay Transaction
• Bond Issuer: California Community Choice Financing Authority (CCCFA) • Prepay Supplier/Bond Underwriter: Morgan Stanley
• Funding Recipient Counterparty: Large taxable organizations such as Insurance Companies and Banks (Pacific Life Insurance, )
• Municipal Financial Advisor: PFM Financial Advisors LLC & PFM Swap Advisors LLC • Counsel: Orrick, Herrington & Sutcliffe (Bond & Tax Counsel) | Chapman & Cutler LLP (Disclosure & Issuer’s Counsel)
• Trustee/Custodian: U.S. Bank
• Commodity Swap Counterparty: Royal Bank of Canada (RBC) • Credit Rating Agency: Moody’s
• Green Bond Opinion: Kestrel
76 Current PPA Structure
Process:
1. SDCP pays for monthly deliveries of energy
at full PPA contract price,
SDCP Existing PPAs
(VAMO)
1 Energy
payment
MWhs + RECs
One-Time (Upfront)
Monthly or Ongoing
77 Prepay Structure (Basic)
Term: 30-year bonds repricing every 5-10 years
depending on the optimal spread between taxable
and tax-exempt interest rates.
Process:
1. CCCFA issues the Bonds to fund the
prepayment for Energy.
2. CCCFA uses bond proceeds to prepay
Energy Supplier (Morgan Stanley) for 30-
years of energy deliveries.
3. CCCFA sells SDCP all of the energy
delivered by Morgan Stanley on a pay-go
basis at an index price less the discount.
4. SDCP partially assigns, using Limited
Assignment Agreement, energy supply
contract to Morgan Stanley (MS), the Prepay
supplier. MS agrees to pay contract price to
energy supplier.
Energy
Supplier (MS) SDCP CCCFA
Tax-Exempt
Bond
Investors
Debt
Service
Bond
Proceeds
Existing PPAs
(VAMO)
3 1
4 2
Energy
payment
less
discount
MWhs + RECs
MWhs + RECs + Debt
Service
Prepayment
MWhs +
RECs
Energy
Payments
at full PPA
price
Assigned
PPAs
One-Time (Upfront)
Monthly or Ongoing
Potential Bond Investors
• Vanguard
• Blackrock
• Nuveen
• Invesco
• Franklin Templeton
• ecipient
78 Prepay Structure (Advanced)
Term: 30-year bonds repricing every 5-10 years depending on the optimal spread between taxable and tax-exempt interest rates.
Process:
1. CCCFA issues the Bonds to fund the prepayment for
Energy.
2. CCCFA uses bond proceeds to prepay Energy Supplier
(Morgan Stanley) for 30-years of energy deliveries.
3. Morgan Stanley enters into Commodity Swap with RBC
for energy purchases at index prices.
4. CCCFA enters into Commodity Swap with RBC for
energy sales at index price.
5. CCCFA sells SDCP all of the energy delivered by Morgan Stanley on a pay-go basis at an index price less the
discount.
6. Energy Supplier enters into a Funding Agreement with a Funding Recipient to pay scheduled monthly amounts
and an Energy Management Agreement with Morgan
Stanley Capital Group.
7. SDCP assigns it rights to receive EPS compliant Energy under existing and future PPAs to Morgan Stanley
Energy
Supplier
(Prepay SPV)
Commodity
Swap
Counterparty
(RBC)
SDCP CCCFA
Tax-Exempt
Bond
Investors
Debt
Service
Bond
Proceeds
Funding
Recipient
Morgan
Stanley
Capital Group
PPAs (VAMO)
5 4
1 7
6 3
2 Index
Price less
Discount
Energy
Fixed Price
Index Price
Fixed Price
Index Price
Energy
Prepayment
Scheduled
Amounts
Funding
Agreement
Energy
Mgmt.
Agreement
Index
Price
Index
Price Energy
Assigned
PPAs
Past Funding
Recipients
• Pacific Life
• New York Life
• Athene Annuity
• Deutsche Bank
• American
General Life
Recipient
One-Time (Upfront)
Monthly or Ongoing
79 Prepayments That Have Been Completed by
CCAs in California
Date Amt. ($000) Issuer Description Beneficiary
09/2021 1,234,720 CCCFA (21A) Elec (Green) SVCE, AVA
11/2021 602,655 CCCFA (21B) Elec (Green) MCE
06/2022 931,120 CCCFA (22A) Elec (Green) AVA
12/2022 459,640 CCCFA (23A) Elec (Green) Pioneer
01/2023 841,550 CCCFA (23B) Elec (Green) SVCE
02/2023 998,780 CCCFA (23C) Elec (Green) CPA
06/2023 958,290 CCCFA (23D) Elec (Green) CPA
08/2023 997,895 CCCFA (23E) Elec (Green) AVA
10/2023 647,750 CCCFA (23F) Elec (Green) CCCE
12/2023 1,038,285 CCCFA (23G) Elec (Green) MCE
01/2024 1,101,625 CCCFA (24A) Elec (Green) SVCE
08/2024 1,524,180 CCCFA (24B) Elec (Green) CPA
10/2024 959,825 CCCFA (24C) Elec (Green) PCE
10/2024 1,152,995 CCCFA (24D) Elec (Green) CPA
Date Amt. ($000) Issuer Description Beneficiary
10/2024 1,152,995 CCCFA (24D) Elec (Green) CPA
11/2024 1,243,210 CCCFA (24E) Elec (Green) SJCE
11/2024 1,000,500 CCCFA (24F) Elec (Green) SDCP
11/2024 775,590 CCCFA (24G) Elec (Green) SCPA
12/2024 1,290,750 CCCFA (24H) Elec (Green) CPA
01/2025 493,345 CCCFA (25A) Elec (Green) VCEA
06/2025 1,062,605 CCCFA (25B) Elec (Green) MCE
07/2025 (est.) *** CCCFA (25_) Elec (Green) AVA
07/2025 (est.) *** CCCFA (25_) Elec (Green) SDCP
Total 20,468,305
*** Preliminary
80 Documents for Board Approval
Document Content
Appendix A Contains certain information regarding SDCP, for inclusion in the Preliminary Official Statement and Official Statement for the Bonds.
Power Supply Contract Contract between CCCFA and SDCP to provide for the sale and delivery of prepaid quantities of Emissions Performance Standards (EPS) compliant energy for 30-years.
PPA Payment Custodial
Agreement
Agreement among the CCCFA, SDCP, MSCG and U.S. Bank detailing payments to be made to third party energy supplier for assigned Power Purchase Agreements.
Form of Limited Assignment
Agreement
Details the terms of the limited assignment of each energy PPA that SDCP assigns into prepay. Signed by SDCP, the original PPA counterparty and Morgan Stanley. 81 Documents for Board Approval (cont.)
Document Content
Letter Agreement re: PPA
Assignments
Agreement among MSCG, the Prepaid Supplier, SDCP and the CCCFA specifying the terms of assigning long term Power Purchase Agreements that SDCP has with a third-party energy supplier.
Prepaid Energy Project
Administration Agreement
Agreement by and between CCCFA and SDCP to provide for the administration of certain operational matters during the term of the Bonds.
Memorandum of
Understanding
Agreement between SDCP and CCCFA indemnifying CCCFA from specific rating agency and Green Bond fees.
82 Board Authorized Execution Parameters
• Aggregate principal amount of bonds will not exceed $1.5 billion • Minimum discount of at least 8% of the fixed cash flows or equivalent $ per MWh • Total issuance costs will not exceed 1.00% of the amount of bond proceeds issued • Bonds are not obligations of SDCP
Public
Comment
on Item
No. 15
84 ITEM NO. 15
BOARD
MEMBER
COMMENTS
AND
QUESTIONS
Adoption of Resolution No. 2025-07, Authorizing
Execution of an Energy Prepayment Transaction,
Related Documents, and ‘Form of’ Documents
Subject to Maximum Issuance Amount, Limitation on
Fees, and Minimum Required Savings
Recommendation:
Adopt Resolution No. 2025-07, approving parameters
under which an energy prepayment transaction can
be completed; authorizing and approving documents
or “form of” documents supporting the prepay
transaction; and directing California Community
Choice Financing Authority (CCCFA) to make
payments to service providers for issuance costs
from prepay bond proceeds
85 Item No. 16
Presenter:
Kenny Key, Director Power Contracts
Approve Amended and Restated Energy Storage Service Agreement with Yellow Pine Solar III, LLC
Recommendation:
Approve the proposed Amended and Restated Renewable Energy Storage Service Agreement with Yellow Pine Solar III, LLC to move the capacity between project sites, reduce the fixed capacity price, and make additional minor amendments, and authorize the Chief Executive Officer to execute the agreement 86 Background & Amendment Scope
• Community Power Board approved ESSA with Desert Sands in October 2023
• Desert Sands project is no longer viable due to delays in network upgrades • Current Amendment:
• Move 60 MW of 8-hour capacity from the Desert Sands project site to the Yellow Pine 3 project site
• Reduced price
• Modified commercial operations date to 6/1/27
• Clean up edits for slice of day resource adequacy accounting 87 Yellow Pine Battery Storage: Project Summary
• Yellow Pine 3 Battery Storage (YP3 BESS) is a stand-alone storage project being developed by NextEra
• 60MW/480MWh (8-hour) lithium-ion battery
• Location: Clark County, NV
88 YP3 BESS: Key Terms
• Product: Full toll and Resource Adequacy benefits
• Pricing: Fixed for a 20-year term
• Timeline: Guaranteed Commercial Operation Date is June 1, 2027 • Community Power would receive financial compensation in the event of seller’s failure to successfully achieve certain development milestones as well as seller’s failure to meet guaranteed efficiency rates once the project is operational. 89 YP3 BESS: Project Summary – Battery Technology
• Industry testing:
• Batteries used in their facilities undergo rigorous industry testing and certification • This ensures that the cell and module designs are robust • Safety systems:
• Each container is equipped with fire protection and control systems to comply with National Fire Protection Association (NFPA) standards
• Temperature management:
• Each facility is equipped with its own thermal management system to ensure it operates within a prescribed temperature range
• Detection:
• Sensors that alarm when an abnormal condition arises
• Monitoring:
• Typically, each battery energy storage system is equipped with a battery management system, which can automatically shut down an affected unit
• Engaging first responders:
• NextEra works with and trains local first responders and fire officials to coordinate any response, in the unlikely event of a fire
90 YP3 BESS: Workforce Development and Community Benefits • The project will provide 11 construction jobs and 1 permanent jobs • The project will use union labor. NextEra’s primary engineering and procurement contractor will execute a project labor agreement for the project
• Project will contribute $250,000 to a community benefit fund to benefit stakeholders in SDCP service territory
• Benefits to local communities:
• NextEra provides sole sponsorship of developing solar curriculum and research at University of Nevada Las Vegas, including mentoring the annual senior design project focused on solar energy systems • NextEra hosts a Renewable Energy Training (RET) simulation lab at University of Nevada Las Vegas and College of Southern Nevada
• NextEra provides presentations at local high schools in Southern Nevada that highlight the benefits of renewable energy and growing career opportunities within the state
• NextEra established an internship program that leads to career opportunities at NextEra solar and storage sites. • NextEra has offered Clark County Public Schools to apply for our $50,000 STEM Classroom Makeover Grant • NextEra contributes back-to-school supplies in Clark County Public Schools • NextEra contributes to the Three-Square Food Bank in Clark County 91 YP3 BESS: Staff Analysis
• With commercial operations commencing in 2027, and a resource adequacy guarantee in 2028, the YP3 BESS project will contribute to Community Power’s compliance requirements for mid-term reliability and long-duration storage
• Pricing is competitive with comparable product offerings received from Community Power’s recent RFOs
• NextEra is highly experienced developer, owner, operator, among the world’s largest renewable generators and battery energy storage developers, with over 28 GWs of renewables in operation and another 18 GWs in development Public
Comment
on Item
No. 16
93 ITEM NO. 16
BOARD
MEMBER
COMMENTS
AND
QUESTIONS
Approve Amended and Restated Energy Storage
Service Agreement with Yellow Pine Solar III, LLC
Recommendation:
Approve the proposed Amended and Restated
Renewable Energy Storage Service Agreement with
Yellow Pine Solar III, LLC to move the capacity
between project sites, reduce the fixed capacity price, and make additional minor amendments, and
authorize the Chief Executive Officer to execute the
agreement.
94 Item No. 17
Presenter:
Kenny Key, Director of Power Contracts
Approve Energy Storage Service Agreement for the North Johnson Energy Center
Recommendation:
Approve the proposed 15-year Energy Storage Service Agreement with North Johnson Energy Center, LLC for a 50 MW/200 MWh, 4-hour battery energy storage facility and authorize the Chief Executive Officer to execute the agreement
95 NJEC: Project Summary & Background
• North Johnson Energy Center (NJEC) is a stand-alone storage project being developed by Wellhead Electric Company, Inc. (Wellhead)
• 50MW/200MWh (4-hour) lithium-ion battery
• Location: El Cajon
• BOD Actions: Approved Feb. 27, 2025
96 NJEC: Key Terms
• Product: Full toll and Resource Adequacy benefits
• Pricing: Fixed for a 15-year term
• Timeline: Guaranteed Commercial Operation Date is June 1, 2026 • Community Power would receive financial compensation in the event of seller’s failure to successfully achieve certain development milestones as well as seller’s failure to meet guaranteed efficiency rates once the project is operational. 97 NJEC: Amendment Scope
• Increased price due to tariff impacts
• Increased number of cycles per day
• Pricing adjustment if commercial operations are delayed • Clean up edits for resource availability calculations and slice of day resource adequacy accounting
98 NJEC: Project Summary – Battery Technology
• North Johnson Energy Center (NJEC) has selected batteries supplied by Tesla • Tesla MegaPack2XL’s have an excellent safety record
• Since 2023, 10,000 MegaPack2XL’s have been placed into service with no major incidents
• MegPack 2XL design features with an objective of safety • Purpose built containers with California Fire Code compliant spacing • Liquid cooling system
• Relatively small grouping of cells
• Lithium-Iron Phosphate (LFP) chemistry that is intrinsically very safe and design limits potential for thermal runaway without external activation 99 NJEC: Workforce Development and Community Benefits
• Wellhead is committed to using union labor at the project and has committed to entering into a Project Labor Agreement that is near execution
• Project development will bring approximately 130 clean-energy jobs throughout construction and will be staffed during operations by Wellhead's 6-person San Diego area O&M staff • Project is located in a disadvantaged community and will help displace local and regional gas-fired generation in peak hours and fewer renewable curtailments will occur • Wellhead is providing scholarships to local high schools for students continuing education in the areas of Science, Technology, Engineering and Math 100
NJEC: Staff Analysis
• The project would contribute to Community Power’s local capacity target and provide local RA
• The long-term purchase of capacity, energy arbitrage, and ancillary services will provide Community Power with significant value and cost certainty over the term of this ESSA Public
Comment
on Item
No. 17
102
ITEM NO. 17
BOARD
MEMBER
COMMENTS
AND
QUESTIONS
Approve Energy Storage Service Agreement for the
North Johnson Energy Center
Recommendation:
Approve the proposed 15-year Energy Storage
Service Agreement with North Johnson Energy
Center, LLC for a 50 MW/200 MWh, 4-hour battery
energy storage facility and authorize the Chief
Executive Officer to execute the agreement
Report by
Chief
Executive
Officer
104
Recent Events
EcoFest Encinitas San Diego Regional Chamber's Congressional Luncheon 105
Community Power in the Community
Port of San Diego's
Day at the Park
Imperial Beach Suncoast
Farmer's Market
Power Network
Quarterly Meeting
Padres' High School All-Star
Game
106
Hiring Updates
Open Positions
• Senior Origination Associate
• Portfolio Analyst
Interviewing
• Chief Commercial Officer
• Community Outreach Representatives
Upcoming Start Dates
• July 08: Pete Polonsky, Senior Rates Analyst
Directors'
Comments
Adjournment
Next Regular
Board of Directors Meeting
August 28, 2025