Pursuant to the Americans with Disabilities Act, if you need special assistance in this meeting, please contact the Clerk for the Authority at (408) 721-5301 x1005. Notification 48 hours prior to the meeting will enable the Authority to make reasonable arrangements to ensure accessibility to this meeting. (28 CFR 35.105 ADA Title II).
Liz Gibbons, Chair
City of Campbell
George Tyson, Vice Chair
Town of Los Altos Hills
Jon Willey
City of Cupertino
Zach Hilton
City of Gilroy
Neysa Fligor
City of Los Altos
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Javed Ellahie
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Margaret Abe-Koga
City of Mountain View
Tina Walia
City of Saratoga
Larry Klein
City of Sunnyvale
Otto Lee
County of Santa Clara
svcleanenergy.org
333 W El Camino Real
Suite 330
Sunnyvale, CA 94087
Silicon Valley Clean Energy
Audit Committee Meeting
Thursday, March 3, 2022
12:00 pm
Teleconference Meeting
Webinar:
https://svcleanenergy-org.zoom.us/j/83607041440
Or by Telephone (Audio only):
US: +1 669 219-2599
Webinar ID: 836 0704 1440
This meeting will be conducted in accordance with California Government Code Section 54953(e), in consideration of the Coronavirus (COVID-19). All members of the Silicon Valley Clean Energy Audit Committee and staff will participate in this meeting by teleconference.
Members of the public may observe this meeting electronically by accessing the meeting via instructions above. Public Comments can be sent in advance of the meeting to Board Clerk Andrea Pizano at [email protected] and will be read within the public comment period or the applicable agenda item. The public will also have an opportunity to provide comments during the meeting. Members of the public using Zoom may comment during public comment or the applicable agenda item by using the Raise Hand feature and you will be recognized by the Chair. Those using the telephone (audio only) feature should press star 9 on your phones to initiate the “Raise Hand” function in Zoom. You will then be announced, unmuted, and your time to speak will begin.
The public may provide comments on any matter listed on the Agenda. Speakers are customarily limited to 3 minutes each, however, the Committee Chair may increase or decrease the time allotted to each speaker based on the number of speakers, the length of the agenda and the complexity of the subject matter. Speaking time will not be decreased to less than one minute.
If you are an individual with a disability and need a reasonable modification or accommodation pursuant to the Americans with Disabilities Act (“ADA”) please contact Board Clerk Andrea Pizano at [email protected] prior to the meeting for assistance.
AGENDA
Call to Order
Roll Call
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Pursuant to the Americans with Disabilities Act, if you need special assistance in this meeting, please contact the Clerk for the Authority at (408) 721-5301 x1005. Notification 48 hours prior to the meeting will enable the Authority to make reasonable arrangements to ensure accessibility to this meeting. (28 CFR 35.105 ADA Title II).
Liz Gibbons, Chair
City of Campbell
George Tyson, Vice Chair
Town of Los Altos Hills
Jon Willey
City of Cupertino
Zach Hilton
City of Gilroy
Neysa Fligor
City of Los Altos
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Javed Ellahie
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Margaret Abe-Koga
City of Mountain View
Tina Walia
City of Saratoga
Larry Klein
City of Sunnyvale
Otto Lee
County of Santa Clara
svcleanenergy.org
333 W El Camino Real
Suite 330
Sunnyvale, CA 94087
Public Comment on Matters Not Listed on the Agenda
The public may provide comments on any matter not listed on the Agenda provided that it is within the subject matter jurisdiction of SVCE. Speakers are customarily limited to 3 minutes each, however, the Committee Chair may increase or decrease the time allotted to each speaker based on the number of speakers, the length of the agenda and the complexity of the subject matter. Speaking time will not be decreased to less than one minute.
Consent Calendar (Action)
1a) Approve Minutes of the August 18, 2021, Audit Committee Meeting 1b) Direction to Staff to Poll Committee Members for Next Meeting Date Regular Calendar
2) Welcome and Audit Committee Overview (Discussion)
3) Selection of 2022 SVCE Audit Committee Chair and Vice Chair (Action) 4) Receive Financial Audit Report from Pisenti & Brinker, LLP and Recommend the SVCE Board of Directors Accept the Audit Findings (Action) 5) IT and Automated Meter Infrastructure (AMI) Audit Update (Discussion) Committee/Staff Remarks
Adjourn
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Margaret Abe-Koga, Chair
City of Mountain View
Liz Gibbons, Vice Chair
City of Campbell
Jon Willey
City of Cupertino
Zach Hilton
City of Gilroy
Neysa Fligor
City of Los Altos
George Tyson
Town of Los Altos Hills
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Javed Ellahie
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Tina Walia
City of Saratoga
Gustav Larsson
City of Sunnyvale
Susan Ellenberg
County of Santa Clara
svcleanenergy.org
333 W El Camino Real
Suite 330
Sunnyvale, CA 94087
Silicon Valley Clean Energy
Audit Committee Meeting
Wednesday, August 18, 2021
9:00 am
Pursuant to State of California Executive Order N-29-20, dated March 17, 2020, the meeting is conducted via teleconference.
DRAFT MINUTES
Chair Mekechuk noted due to connectivity issues, Vice Chair Wei would be chairing the meeting.
Call to Order
Vice Chair Wei called the meeting to order at 9:11 a.m. with all present committee members participating via teleconference.
Roll Call
Present:
Chair Bryan Mekechuk, City of Monte Sereno
Vice Chair Hung Wei, Cupertino
Director Evelyn Chua, Milpitas
Absent:
Director Yvonne Martinez Beltran, City of Morgan Hill
Comment on Matters Not Listed on the Agenda
The public may provide comments on any matter not listed on the Agenda provided that it is within the subject matter jurisdiction of SVCE. Speakers are customarily limited to 3 minutes each, however, the Committee Chair may increase or decrease the time allotted to each speaker based on the number of speakers, the length of the agenda and the complexity of the subject matter. Speaking time will not be decreased to less than one minute.
Vice Chair Wei opened public comment.
Seeing none, Vice Chair Wei closed public comment.
Consent Calendar (Action)
1) Approve Minutes of the March 3, 2021, Audit Committee Meeting MOTION: Motion by Chair Mekechuk, second by Vice Chair Wei, to approve the March 3, 2021, Audit Committee Meeting minutes.
Motion passed by roll call vote 3/0/1.
AYES: 3 Directors: Mekechuk, Wei, Chua
NOES: 0 Directors:
ABSENT: 1 Director: Martinez Beltran
Item 1a Draft Minutes of the August 18, 2021 Audit Comm Meeting , , ~ SILICON VALLEY
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Margaret Abe-Koga, Chair
City of Mountain View
Liz Gibbons, Vice Chair
City of Campbell
Jon Willey
City of Cupertino
Zach Hilton
City of Gilroy
Neysa Fligor
City of Los Altos
George Tyson
Town of Los Altos Hills
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Javed Ellahie
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Tina Walia
City of Saratoga
Gustav Larsson
City of Sunnyvale
Susan Ellenberg
County of Santa Clara
svcleanenergy.org
333 W El Camino Real
Suite 330
Sunnyvale, CA 94087
At this time, Chair Mekechuk identified the 3 items he would like to see covered, so that the Auditor can anticipate and plan for these issues:
1) Identify any internal controls and weaknesses that the Auditor should address.
2) Identify key estimates for the Auditor to address, i.e., accounts receivable. 3) Identify key transactions for the Auditor in advance, rather than discover during the audit.
Regular Calendar
Due to prior Committee commitments CEO Balachandran suggested to hear Item 4 first, then proceed to Items 2 and 3.
MOTION: Motion by Director Chua, seconded by Chair Mekechuk to move agenda items being heard in the following order: 4, 2 and 3. Motion passed by roll call vote 3/0/1.
AYES: 3 Directors: Mekechuk, Wei, Chua
NOES: 0 Directors:
ABSENT: 1 Director: Martinez Beltran
4) Financial Audit Kick-off (Discussion)
Amrit Singh, CFO for SVCE, introduced speakers Brett Bradford and Andrea Lifto with Pisenti and Brinker, SVCE Auditors.
Mr. Bradford reported he is planning the audit for the fiscal year that ends September 30, 2022. He has started preliminary conversations with Mike Maher and his team around the timing for receiving documents and draft financial statements to complete the audit.
Mr. Bradford noted that he has met with Dir. Mekachuk and Amrit on several occasions to review and anticipate large transactions that would be addressed in the audit. Mr. Bradford noted that they pay particular attention to allowances.
Director Chua asked what takeaways Pisenti and Brinker found.
Mr. Bradford noted that he had several meetings with staff regarding their internal review; noting that staff recognized weaknesses in some controls and implemented measures to address those. Mr. Bradford noted that the audit team will consider any information shared by management.
Amrit Singh noted that focus of Management Partners is to minimize SVCE’s operational risk. We know there are holes and gaps in areas in which we can enhance management of operational risk.
Vice Chair Wei opened public comments, seeing none.
Item 1a Draft Minutes of the August 18, 2021 Audit Comm Meeting , , ~ SILICON VALLEY
~CLEAN ENERGY
Margaret Abe-Koga, Chair
City of Mountain View
Liz Gibbons, Vice Chair
City of Campbell
Jon Willey
City of Cupertino
Zach Hilton
City of Gilroy
Neysa Fligor
City of Los Altos
George Tyson
Town of Los Altos Hills
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Javed Ellahie
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Tina Walia
City of Saratoga
Gustav Larsson
City of Sunnyvale
Susan Ellenberg
County of Santa Clara
svcleanenergy.org
333 W El Camino Real
Suite 330
Sunnyvale, CA 94087
Vice Chair Wei closed public comments
Chair Mekechuk requested a meeting with Mr. Bradford before year end. He also noted for the record; that the auditors are independent going forward and if there are any issues that they find during the audit that they should be confident they have open channels of communication to the committee. 2) Development of Controls Introduction (Discussion)
Jim Steele, Management Partners gave the staff report. He highlighted three specific projects to focus on; 1) creating budget model for 2022 year; 2) review financial policies and reporting practices, making recommendations to CEO for improvements; 3) preparing internal controls for best practices for procedures for CEO and staff in accordance with best practices.
Vice Chair Wei open public comments, seeing none.
Vice Chair Wei closed public comments
3) Internal Technology Audit Update (Discussion)
Kevin Armstrong, Administrative Services Manager gave the staff report and a PowerPoint presentation (available on the SVCE website). Mr. Armstrong noted the three audits covering different areas; 1) Information Technology Audit, currently in process with an expected completion in September 2021; 2) Advance Metering Infrastructure Audit, results due to CPUC by April 2022, expected start in Nov/Dec of 2021; 3) Security Review and Gap Assessment, currently in process, expected completion by end of year 2021.
Mr. Armstrong reported the following firms associated with these audits. 1) Information Technology Audit will be conducted by Hutchinson and Bloodgood via Abbott, Stringham, Lynch; 2) Advance Metering Infrastructure Audit conducted by Abbott, Stringham, Lynch; 3) Security Review and Gap Assessment, conducted by Securicon.
Each consultant gave a brief overview and PowerPoint presentation for each item (presentations provided on website).
Vice Chair Wei requested staff forward presentations to Committee members.
Vice Chair Wei opened public comments, seeing none.
Vice Chair Wei closed public comments
Committee/Staff Remarks
No remarks, currently.
Adjourn
There being no further business, Vice Chair Wei adjourned the meeting at 10:25 a.m.
Item 1a Draft Minutes of the August 18, 2021 Audit Comm Meeting , , ~ SILICON VALLEY
~CLEAN ENERGY
Staff Report – Item 1b
Item 1b: Direction to Staff to Poll Committee Members for Next Meeting Date From: Girish Balachandran, CEO
Prepared by: Andrea Pizano, Board Clerk/Executive Assistant Date: 3/3/2022
RECOMMENDATION
Direct staff to distribute a poll for availability for the next meeting(s) of the Audit Committee.
BACKGROUND
Per SVCE’s policy FP1-A, Establish Audit Committee, the Audit Committee shall meet as often as it determines as necessary or appropriate to fulfill its responsibilities, but no fewer than twice annually – once to review the audit plan and once to review the audited financials, and related documents, and to review the audit engagement, special investigations, financial irregularities and internal control failures.
ANALYSIS & DISCUSSION
Rather than take time during the meeting to identify an ideal meeting date and time approximately six months from now, staff is requesting direction from the committee to distribute a poll to determine availability of members and schedule the next meeting date.
A presentation from CFO and Director of Administrative Services Amrit Singh will outline the suggested timeframe for the next meetings of the committee (August and September 2022).
STRATEGIC PLAN
N/A
ALTERNATIVE
An alternative to distributing a poll for availability would be to discuss among the committee and identify a meeting date during the March 3, 2022 meeting.
FISCAL IMPACT
No fiscal impact from the selection of the next meeting date.
Item 1b
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Staff Report – Item 2
Item 2: Welcome and Audit Committee Overview
From: Girish Balachandran, CEO
Prepared by: Andrea Pizano, Board Clerk/Executive Assistant Date: 3/3/2022
Amrit Singh, CFO and Director of Administrative Services, will provide a presentation with an overview of the Audit Committee including the committee’s purpose, financial and IT audit information, and timing of future meetings.
ATTACHMENT
The presentation for this item is posted to the SVCE website.
Item 2
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Staff Report – Item 3
Item 3: Selection of 2022 SVCE Audit Committee Chair and Vice Chair From: Girish Balachandran, CEO
Prepared by: Andrea Pizano, Board Clerk/Executive Assistant Date: 3/3/2022
RECOMMENDATION
Establish a Chair and Vice Chair of the Audit Committee to preside over Committee meetings.
BACKGROUND
At the February 14, 2018 SVCE Board of Directors meeting, the Board approved the formation of an Audit Committee, consistent with Board Policy FP1-A, Establish Audit Committee.
ANALYSIS & DISCUSSION
As a permanent standing committee of the Board of Directors, the Audit Committee is subject to the Brown Act for all meetings. In order to provide for efficient and reliable Committee meeting organization, Staff recommends the Committee appoint a Chair to preside over its meetings, and a Vice Chair to act in the absence of the Chair. The last Chair and Vice Chair of the committee were selected at the March 3, 2021 meeting.
Since 2022 committee membership was ratified at the February Board of Directors meeting and new members have joined, this committee is in need of a new Chair and Vice Chair.
STRATEGIC PLAN
N/A
ALTERNATIVE
Staff is open to any suggestions from the committee on selection of the Chair and/or Vice Chair.
FISCAL IMPACT
No fiscal impact from the selection of a Chair and Vice Chair of the committee.
Item 3
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Staff Report – Item 4
Item 4: Receive Financial Audit Report from Pisenti & Brinker, LLP and Recommend the SVCE Board of Directors Accept the Audit Findings
From: Girish Balachandran, CEO
Prepared by: Andrea Pizano, Board Clerk/Executive Assistant Date: 3/3/2022
This item will be addressed in the form of an oral report and presentation from external auditor Brett Bradford of Pisenti & Brinker LLP.
ATTACHMENT
1. Draft Letter of Significant Deficiencies or Material Weaknesses Identified
2. Draft SVCE 2020-21 Financial Statements
Item 4
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A.
SANTA ROSA PETALUMA
RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. 3562 Round Barn Circle, Suite 200
Santa Rosa, CA 95403
(707) 542-3343 Office
(707) 527-5608 Fax
pbllp.com
March 4, 2022
To Management and the Board of Directors
Silicon Valley Clean Energy Authority
333 W. El Camino Real, #330
Sunnyvale, California
In planning and performing our audits of the financial statements of Silicon Valley Clean Energy Authority (SVCE) as of and for the years ended September 30, 2021 and 2020, in accordance with auditing standards generally accepted in the United States of America, we considered SVCE’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of SVCE’s internal control.
Accordingly, we do not express an opinion on the effectiveness of SVCE’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A deficiency in design exists when (a) a control necessary to meet the control objective is missing, or (b) an existing control is not properly designed so that, even if the control operates as designed, the control objective would not be met. A deficiency in operation exists when a properly designed control does not operate as designed or when the person performing the control does not possess the necessary authority or competence to perform the control effectively.
A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, we did not identify any deficiencies in internal control during our audits that we consider to be material weaknesses or significant deficiencies. However, material weaknesses or significant deficiencies may exist that were not identified.
This communication is intended solely for the information and use of management and the Board of Directors and is not intended to be, and should not be, used by anyone other than these specified parties.
PISENTI & BRINKER LLP
Brett Bradford
Partner
DRAFT Item 4
Attachment 1
• •
PISENTI & BRINl<ER LLP
Certified Public Accou n tants & Advisors
RSM""us'Ama";;;; RS~A
Financial Statements
Years Ended:
September 30, 2021
September 30, 2020
With Report of Independent Auditors
Silicon Valley Clean Energy Authority
DRAFT Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
TABLE OF CONTENTS
Independent Auditor’s Report ………………………………………………………... 1 Management’s Discussion and Analysis ……………………………………………... 3 Basic Financial Statements:
Statements of Net Position …………………………………………………… 11
Statements of Revenues, Expenses and Changes in Net Position …................. 12 Statements of Cash Flows …………………………………………………….. 13
Notes to the Basic Financial Statements ……………………………………… 15 DRAFT Item 4
Attachment 2
1 Auditors’ Report Page 1
DRAFT Item 4
Attachment 2
2 Auditors’ Report Page 2
DRAFT Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
3 The Management’s Discussion and Analysis provides an overview of Silicon Valley Clean Energy Authority’s (SVCE) financial activities as of and for the years ended September 30, 2021 and 2020. The information presented here should be considered in conjunction with the audited financial statements.
BACKGROUND
The formation of SVCE was made possible by the passage, in 2002, of California Assembly Bill 117, enabling communities to purchase power on behalf of their residents and businesses and creating competition in power generation.
SVCE was created as a California Joint Powers Authority (JPA) on March 31, 2016. SVCE was established to provide electric power at competitive costs as well as to provide other benefits within Santa Clara County, including reducing energy related greenhouse gas emissions, securing energy supply and price stability, and providing energy efficiencies and local economic benefits.
Governed by a board of directors (Board) consisting of elected representatives from each jurisdiction, SVCE has the rights and powers to set rates for the electricity it furnishes, incur indebtedness, and issue bonds or other obligations. SVCE is responsible for the acquisition of electric power for its service area. SVCE serves the unincorporated areas of Santa Clara County and the cities and towns of Campbell, Cupertino, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Milpitas, Monte Sereno, Morgan Hill, Mountain View, Saratoga, and Sunnyvale.
DRAFT Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
4 Financial Reporting
SVCE presents its financial statements as an enterprise fund under the economic resources measurement focus and accrual basis of accounting, in accordance with generally accepted accounting principles (GAAP) for proprietary funds, as prescribed by the Governmental Accounting Standards Board (GASB).
Contents of this report
This report is divided into the following sections:
Management’s discussion and analysis.
The basic financial statements:
o The Statements of Net Position include all of SVCE’s assets, liabilities, and net position and provide information about the nature and amount of resources and obligations at a specific point in time.
o The Statements of Revenues, Expenses, and Changes in Net Position report all of SVCE’s revenue and expenses for the years shown.
o The Statements of Cash Flows report the cash provided and used by operating activities, as well as other sources and uses, such as financing and investing activities. o Notes to the Basic Financial Statements provide additional details and information related to the basic financial statements.
DRAFT Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
5 FINANCIAL HIGHLIGHTS
The following table is a summary of SVCE’s assets, liabilities, and net position, and a discussion of significant changes for the years ended September 30:
2021 2020 2019
Current assets $ 206,813,185 $ 220,538,554 $ 177,676,248 Noncurrent assets
Capital assets, net 316,766 119,175 148,038
Other noncurrent assets 45,330 145,130 129,060
Total noncurrent assets 362,096 264,305 277,098
Total assets 207,175,281 220,802,859 177,953,346
Current liabilities 34,061,545 39,659,471 34,958,389
Noncurrent liabilities 7,031,250 - -
Total liabilities 41,092,795 39,659,471 34,958,389
Net position
Investment in capital assets 316,766 119,175 148,038
Restricted for security collateral 4,000,216 4,500,000 5,000,000 Unrestricted 161,765,504 176,524,213 137,846,919
Total net position $ 166,082,486 $ 181,143,388 $ 142,994,957 Current Assets
Current assets were approximately $206,813,000 at the end of 2021 and are mostly comprised of cash and cash equivalents, accounts receivable, and accrued revenue. Accrued revenue differs from accounts receivable in that it is the result of electricity use by SVCE customers before invoicing to those customers has occurred. Total current assets decreased in 2021 primarily because of a drop in the rates SVCE charges its customers.
DRAFT Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
6 Capital Assets
Capital assets were approximately $317,000 at the end of 2021, net of accumulated depreciation, primarily consisting of furniture and electronic equipment for use in SVCE’s administrative office.
SVCE does not own assets used for electric generation or distribution. The increase from 2020 relates to the acquisition of furniture and leasehold improvements.
Other Noncurrent Assets
Other noncurrent assets consist of various deposits for energy supply, regulatory and other operating purposes. The deposits have remained relatively stable over the last three years.
Current Liabilities
This category consists mostly of the cost of electricity delivered to customers that is not yet due to be paid by SVCE. Other components include taxes and surcharges due to other governments and various other accrued liabilities. Current liabilities had minor fluctuations from 2019 to 2021 as purchasing requirements were relatively stable.
Noncurrent Liabilities
Noncurrent liabilities increased in 2021 as a result of collateral deposits from energy suppliers held by SVCE that are not due to be returned within a year.
DRAFT Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
7 The following table is a summary of SVCE’s results of operations and a discussion of significant changes for the years ended September 30:
2021 2020 2019
Operating revenues $ 242,600,167 $ 297,043,720 $ 292,473,135 Nonoperating revenues 273,985 1,729,841 1,230,787
Total income 242,874,152 298,773,561 293,703,922
Operating expenses 257,748,103 260,274,619 228,999,528
Nonoperating expenses 186,951 350,511 144,157
Total expenses 257,935,054 260,625,130 229,143,685
Change in net position (15,060,902) $ $ 38,148,431 $ 64,560,237 Operating Revenues
SVCE’s operating revenues are derived from the sale of electricity to commercial and residential customers throughout its territory. SVCE’s customer base was fairly stable each year, with approximately 280,000 customers enrolled. SVCE decreased the rates it charges to customers during 2021, resulting in a planned drop in operating revenues. SVCE has sufficient cash reserves to absorb the impact of the resulting decrease in net position. SVCE reports its revenue net of an allowance for uncollectible accounts.
From 2019 to 2020, the increase in revenue is directly related to changes in billing rates and customer usage patterns. In 2020, SVCE received $6,600,000 in revenue from damages as the result of the termination of one of its long-term energy supply contracts that failed to meet certain development milestones.
Nonoperating revenues, which primarily consists of investment income, decreased in 2021 because of lower interest rates and increased in 2020 due to higher interest rates.
Operating Expenses
SVCE’s largest operating expense is the purchase of electricity for retail customer use. SVCE procures energy from a variety of sources and focuses on purchasing at competitive costs and maintaining a balanced renewable power portfolio. Expenses for staff compensation, consulting, data management and other general and administrative expenses increased each year as the organization continued to grow to support its business demands.
DRAFT Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
8 ECONOMIC OUTLOOK
Silicon Valley Clean Energy serves approximately 96% of all eligible customers in the service area, and that rate of participation is expected to remain stable in 2021.
SVCE’s mission is to reduce dependence on fossil fuels by providing carbon free, affordable, and reliable electricity and innovative programs for the SVCE community. Since its launch, SVCE has:
Committed about $1.6 billion in renewable energy contracts Secured over 720 MW in renewable energy projects, including 173 MW of energy storage Provided $77 million in on-bill savings
Reduced 35% regional energy-related emissions (since 2017) Avoided 575 million pounds of greenhouse gas emissions Provided $21 million in customer offers and services
Processed more than 200 customer rebates for heat pump water heaters Helped lead the formation of California Community Power and California Community Choice Financing Authority
Achieved annual savings of $1.9M from securing California’s first ever Clean Energy Project Revenue Bonds
Achieved ‘A’ credit rating from S&P Global with a stable outlook and a Moody’s Baa2, stable rating.
SVCE procures energy consistent with its Board-approved Energy Risk Management Policy that aligns customer demand for clean energy with short and long-term purchases of clean energy resources. SVCE complies with state laws and its own targets for renewable and greenhouse gas (GHG) free energy. California’s Renewable Portfolio Standard (“RPS”) requires load-serving entities such as SVCE to supply their retail sales with minimum quantities of eligible renewable energy both on an annual basis and through long-term commitments of greater than ten years. The state has also directed load serving entities (LSEs) for new clean energy and capacity resources by 2026 to meet grid reliability goals. Senate Bill 100 directs all LSEs to procure 60% of their portfolios from RPS-eligible resources by 2030, and 100% of their retail sales from GHG-free resources (or eligible renewable resources) by 2045. SVCE’s current policy is to procure 100% of retail sales from GHG-free resources. To date SVCE has executed 13 RPS contracts of ten years or more in duration and has met its RPS requirements for long-term procurement. SVCE intends to solicit additional long-term renewable resources to meet Board-directed goals and as ordered by the CPUC under the Mid-term Reliability Procurement decision (R.20-05-003).
DRAFT Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
9 ECONOMIC OUTLOOK (continued)
SVCE uses a portfolio risk-management approach in its power purchasing program, seeking low-cost supply as well as diversity among technologies, production profiles, project sizes and locations, counterparties, length of contract, and timing of market purchases. SVCE’s procurement strategy through 2030 includes regularly procuring new and existing California renewables by 2030, via contracts with terms of 10 years or more. The strategy also includes investing in storage paired with solar, stand-alone storage, long-duration storage, and large hydroelectric resources.
SVCE continually manages its forward load obligations and supply commitments with the objective of balancing cost stability and cost minimization. SVCE closely monitors its open positions for Portfolio Content Category 1 (“PCC 1”) renewable energy and carbon-free, non-RPS eligible, based on calendar-year targets. SVCE maintains its clean portfolio coverage targets of up to 100% in the near-term and leaves a greater portion open in the medium- to long-term, consistent with generally accepted industry practice.
SVCE also procures electric capacity or Resource Adequacy (“RA”), a California program jointly administered by the CPUC, the CEC, and CAISO. The RA resources ensure there will be enough supply in the right locations and with sufficient ramping capability to meet load in the CAISO market.
In fiscal year ending September 30, 2021, SVCE’s retail load dropped by about 3% from the prior fiscal year to 3.75 Terrawatt-hours (TWhrs). SVCE expects retail load to return to pre-Covid levels at 3.95 TWhrs for Fiscal Year ending September 30, 2022. Over the next ten years, SVCE expects load to grow at about 0.5% per year. SVCE’s long-term load forecast is driven primarily by the number and types of customers that SVCE expects to serve. The forecast also incorporates load-modifying effects of increasing electric vehicle adoption and charging, behind the meter solar and/or storage (via net energy metering), and energy efficiency.
Senate Bill 237 was passed in 2018 and increased the cap for direct access participation for large commercial and industrial customer load. In June 2021, the CPUC submitted a recommendation to the Legislature which opposed further expansion of direct access. The CPUC stated that, when compared to maintaining the current cap, expanding direct access risks increases in greenhouse gas emissions and could significantly complicate the State’s efforts to maintain grid reliability. A reduction in statewide commercial and industrial electric load due to COVID in 2020 and 2021 has created additional capacity under the statewide direct access (DA) cap. The impact is expected to be minimal to SVCE, with less than 2% of current load at risk. SVCE is being proactive in anticipation of potential future direct access expansion. In 2019, the Board of Directors approved a Commercial Pricing Policy that allows SVCE to be innovative in customized contract offerings to customers that supports long-term customer retention.
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
10 ECONOMIC OUTLOOK (continued)
SVCE expects to continue to provide competitive electric rates. The unpredictable PG&E customer exit fee has been a barrier to providing stable rates, yet the exit fee will be significantly lower in 2022 than in recent years. SVCE has prioritized regulatory and legislative work with respect to the exit fee process and has implemented a proactive approach on other regulatory and legislative issues, such as integrated resource planning and grid reliability. Additionally, SVCE’s commitment to building up healthy cash reserves has placed SVCE in a stable position to manage future regulatory and legislative risk including changes to the customer exit fees.
SVCE has a strong focus on continuing to build credit capacity through increased cash reserves, complying with the energy risk management policy and credit guidelines, and entering in favorable energy purchase commitments. SVCE received an investment grade credit rating in Summer 2020 from Moody’s and an ‘A’ credit rating from S&P Global in January 2021.
REQUEST FOR INFORMATION
This financial report is designed to provide SVCE’s customers and creditors with a general overview of SVCE’s finances and to demonstrate SVCE’s accountability for the funds under its stewardship.
Please address any questions about this report or requests for additional financial information to 333 W. El Camino Real, Suite 330, Sunnyvale, CA 94087.
Respectfully submitted,
Girish Balachandran, Chief Executive Officer
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Attachment 2
BASIC FINANCIAL STATEMENTS
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENTS OF NET POSITION
SEPTEMBER 30, 2021 AND 2020
The accompanying notes are an integral part of these financial statements. 11 2021 2020
Current assets
Cash and cash equivalents $ 158,808,348 $ 159,924,735
Accounts receivable, net of allowance 25,990,183 31,458,312 Accrued revenue 14,410,621 17,517,224
Market settlements receivable 269,012 107,318
Other receivables 230,485 208,000
Prepaid expenses 2,378,236 2,590,546
Deposits 726,084 4,232,419
Restricted cash 4,000,216 4,500,000
Total current assets 206,813,185 220,538,554
Noncurrent assets
Capital assets, net of depreciation 316,766 119,175
Deposits 45,330 145,130
Total noncurrent assets 362,096 264,305
Total assets 207,175,281 220,802,859
Current liabilities
Accrued cost of electricity 30,827,091 36,744,837
Accounts payable 1,537,376 1,333,121
Other accrued liabilities 642,043 425,732
User taxes and energy surcharges due to other governments 1,055,035 1,155,781 Total current liabilities 34,061,545 39,659,471
Noncurrent liabilities
Supplier security deposits 7,031,250 -
Total liabilities 41,092,795 39,659,471
Investment in capital assets 316,766 119,175
Restricted for security collateral 4,000,216 4,500,000
Unrestricted 161,765,504 176,524,213
Total net position $ 166,082,486 $ 181,143,388
LIABILITIES
NET POSITION
ASSETS
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
The accompanying notes are an integral part of these financial statements. 12 2021 2020
OPERATING REVENUES
Electricity sales, net $ 241,484,417 $ 295,515,259
GreenPrime electricity premium 1,014,531 1,315,254
Other income 101,219 213,207
Total operating revenues 242,600,167 297,043,720
OPERATING EXPENSES
Cost of electricity 238,586,555 244,925,916
Contract services 9,490,474 8,970,429
Staff compensation and benefits 5,474,124 4,603,241
General and administration 4,109,299 1,722,054
Depreciation 87,651 52,979
Total operating expenses 257,748,103 260,274,619
Operating income (loss) (15,147,936) 36,769,101
NONOPERATING REVENUES (EXPENSES)
Interest income 273,985 1,729,841
Financing costs (186,951) (350,511)
Nonoperating revenues, net 87,034 1,379,330
CHANGE IN NET POSITION (15,060,902) 38,148,431
Net position at beginning of year 181,143,388 142,994,957 Net position at end of year $ 166,082,486 $ 181,143,388 DRAFT Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
The accompanying notes are an integral part of these financial statements. 13 2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 255,739,767 $ 303,275,935
Other operating receipts 13,609,316 3,433,790
Payments to suppliers for electricity (247,219,228) (247,069,273) Payments for other goods and services (13,523,208) (10,511,456) Payments for staff compensation and benefits (5,247,813) (4,542,701) Payments of taxes and surcharges to other governments (4,766,832) (5,640,255) Net cash provided (used) by operating activities (1,407,998) 38,946,040
CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES
Finance costs paid (186,951) (285,301)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments to acquire capital assets (295,207) (14,151)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income received 273,985 1,729,841
Net change in cash and cash equivalents (1,616,171) 40,376,429 Cash and cash equivalents at beginning of year 164,424,735 124,048,306 Cash and cash equivalents at end of year $ 162,808,564 $ 164,424,735 Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) $ 158,808,348 $ 159,924,735 Restricted cash 4,000,216 4,500,000
Cash and cash equivalents $ 162,808,564 $ 164,424,735
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
The accompanying notes are an integral part of these financial statements. 14 2021 2020
Operating income (loss) $ (15,147,936) $ 36,769,101
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:
Depreciation expense 87,651 52,979
Revenue adjusted for uncollectible accounts 1,100,000 - (Increase) decrease in:
Accounts receivable 4,368,129 (1,181,498)
Accrued revenue 3,106,604 2,054,876
Market settlements receivable (161,694) 59,339
Other receivables (22,485) (190,100)
Prepaid expenses 212,310 (1,321,841)
Current deposits 3,606,134 (1,987,933)
Increase (decrease) in:
Accrued cost of electricity (5,917,746) 4,612,528
Accounts payable 214,220 377,109
Other accrued liabilities 216,311 (186,990)
User taxes and energy surcharges due to other governments (100,746) (83,210) Supplier security deposits 7,031,250 (28,320)
Net cash provided (used) by operating activities $ (1,407,998) $ 38,946,040
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
15 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
Silicon Valley Clean Energy Authority (SVCE) is a Joint Powers Authority created on March 31, 2016. As of September 30, 2021, parties to its Joint Powers Agreement consist of the following local governments:
Unincorporated areas of Santa Clara County Milpitas
Campbell Monte Sereno
Cupertino Morgan Hill
Gilroy Mountain View
Los Altos Saratoga
Los Altos Hills Sunnyvale
Los Gatos
SVCE is separate from and derives no financial support from its members. SVCE is governed by a Board of Directors whose membership is composed of elected officials representing the member governments.
SVCE was formed to study, promote, conduct, operate, and manage energy and energy-related climate change programs, and to exercise all other powers necessary and incidental to accomplishing these objectives. A core function of SVCE is to provide electric service that includes the use of renewable sources under the Community Choice Aggregation Program under California Public Utilities Code Section 366.2.
SVCE began its energy delivery operations in April 2017. Electricity is acquired from commercial and municipal suppliers and delivered through existing physical infrastructure and equipment managed by Pacific Gas and Electric Company (PG&E).
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
16 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
BASIS OF ACCOUNTING
SVCE’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements.
SVCE’s operations are accounted for as a governmental enterprise fund and are reported using the economic resources measurement focus and the accrual basis of accounting – similar to business enterprises. Accordingly, revenues are recognized when they are earned, and expenses are recognized at the time liabilities are incurred. Enterprise fund type operating statements present increases (revenues) and decreases (expenses) in total net position. Reported net position is segregated into three categories – investment in capital assets, restricted and unrestricted.
When both restricted and unrestricted resources are available for use, it is SVCE’s policy to use restricted resources first, then unrestricted resources as they are needed.
CASH AND CASH EQUIVALENTS
For purpose of the Statements of Cash Flows, SVCE defines cash and cash equivalents to include cash on hand and demand deposits. SVCE has cash that is restricted under various security agreements. This is reported as restricted cash on the Statements of Net Position and the Statements of Cash Flows.
DEPOSITS
Various energy contracts entered into by SVCE require SVCE to provide a supplier with a security deposit. These deposits are generally held for the term of the contract. Deposits are classified as current or noncurrent assets depending on the length of time the deposits will be held. While these energy contract related deposits make up the majority of this item, other components of deposits include those for regulatory and other operating purposes.
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
17 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
CAPITAL ASSETS AND DEPRECIATION
SVCE’s policy is to capitalize furniture and equipment valued over $1,000 that is expected to be in service for over one year. Depreciation is computed according to the straight-line method over estimated useful lives of three years for electronic equipment, five years for automobiles and seven years for furniture and leasehold improvements. SVCE does not own any electric generation assets.
NET POSITION
Net position is presented in the following components:
Investment in capital assets: This component of net position consists of capital assets, net of accumulated depreciation and reduced by outstanding borrowings that are attributable to the acquisition, construction, or improvement of those assets. SVCE did not have any outstanding borrowings as of September 30, 2021 or 2020.
Restricted: This component of net position consists of constraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.
Unrestricted: This component of net position consists of net position that does not meet the definition of “investment in capital assets” or “restricted”.
OPERATING AND NON-OPERATING REVENUE
Revenue from the sale of electricity to customers is considered operating revenue. Interest income is considered non-operating revenue.
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SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
18 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
REVENUE RECOGNITION
SVCE recognizes revenue on the accrual basis. This includes invoices issued to customers during the period and electricity estimated to have been delivered, but not yet billed. Management estimates that a portion of the billed amounts will be uncollectible. Accordingly, an allowance for uncollectible accounts has been recorded. Revenue is presented net of estimated uncollectible charges.
OPERATING AND NONOPERATING EXPENSES
Operating expenses include the costs of electricity and services, administrative expenses, and depreciation on capital assets. Expenses not meeting this definition are reported as nonoperating expenses.
ELECTRICAL POWER PURCHASED
During the normal course of business SVCE purchases electrical power from numerous suppliers.
Electricity costs include the cost of energy and capacity arising from bilateral contracts with energy suppliers as well as generation credits, and load and other charges arising from SVCE’s participation in the California Independent System Operator’s (CAISO) centralized market. The cost of electricity and capacity is recognized as “Cost of Electricity” in the Statements of Revenues, Expenses and Changes in Net Position.
To comply with the State of California’s Renewable Portfolio Standards (RPS) and self-imposed benchmarks, SVCE acquires RPS eligible renewable energy evidenced by Renewable Energy Certificates (Certificates) recognized by the Western Renewable Energy Generation Information System (WREGIS). SVCE obtains Certificates with the intent to retire them and does not sell or build surpluses of Certificates with a profit motive. An expense is recognized at the point that the cost of the Certificate is due and payable to the supplier.
SVCE purchases capacity commitments from qualifying generators to comply with the California Energy Commission’s Resource Adequacy Program. The goals of the Resource Adequacy Program are to provide sufficient resources to CAISO to ensure the safe and reliable operation of the grid in real-time and to provide appropriate incentives for the siting and construction of new resources needed for reliability in the future.
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
19 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
STAFFING COSTS
SVCE pays employees bi-weekly and fully pays its obligation for health benefits and contributions to its defined contribution retirement plan as they come due. SVCE is not obligated to provide post-employment healthcare or other fringe benefits and, accordingly, no related liability is recorded in these financial statements. SVCE provides compensated time off, and the related liability is recorded in these financial statements.
INCOME TAXES
SVCE is a Joint Powers Authority under the provision of the California Government Code. As such it is not subject to federal or state income or franchise taxes.
ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation of the current-year financial statements. These reclassifications did not result in any change in previously reported net position or change in net position.
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SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
20 2. CASH AND CASH EQUIVALENTS
SVCE maintains its cash in interest and non-interest-bearing accounts. SVCE’s deposits are subject to California Government Code Section 16521 which requires banks to collateralize public funds in excess of the Federal Deposit Insurance Corporation limit of $250,000 by 110%.
SVCE monitors its risk exposure on an ongoing basis. SVCE’s investment policy permits the investment of funds in depository accounts, certificates of deposit, and the California Local Agency Investment Funds (LAIF). As of September 30, 2021, all of SVCE’s cash and cash equivalents were held in depository accounts.
At the end of each year, SVCE had restricted cash that was held as collateral for its bank line of credit, as well as collateral held in accordance with certain security agreements with suppliers.
3. ACCOUNTS RECEIVABLE AND ACCRUED REVENUE
Accounts receivable were as follows as of September 30:
2021 2020
Accounts receivable from customers 28,590,183 $ $ 32,958,312 Allowance for uncollectible accounts (2,600,000) (1,500,000) Net accounts receivable 25,990,183 $ $ 31,458,312
The majority of account collections will occur within the first few months following customer invoicing. SVCE estimates that a portion of the billed accounts will not be collected. SVCE continues collection efforts on accounts in excess of de minimis balances regardless of the age of the account. Although collection success generally decreases with the age of the receivable, SVCE continues to be successful in collecting older accounts. The allowance for uncollectible accounts at the end of a period includes amounts billed during the current and prior fiscal years and is adjusted for write-offs.
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SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
21 4. MARKET SETTLEMENTS RECEIVABLE
SVCE receives generation scheduling and other services from a scheduling coordinator registered with CAISO. Energy settlements due from the scheduling coordinator were approximately $269,000 and $107,000 as of September 30, 2021 and 2020, respectively.
5. CAPITAL ASSETS
Capital asset activity for the years ended September 30, 2021 and 2020 was as follows:
Furniture &
Equipment
Leasehold
Improvements
Accumulated
Depreciation Total
Balances at September 30, 2019 245,351 $ $ 5,263 $ (102,576) $ 148,038 Additions 24,116 (52,979) - (28,863)
Balances at September 30, 2020 269,467 5,263 (155,555) 119,175 Additions 212,629 72,613 (87,651) 197,591
Balances at September 30, 2021 482,096 $ $ 77,876 $ (243,206) $ 316,766
6. DEBT
As of September 30, 2021 and 2020, SVCE had a bank line of credit in the amount of $35,000,000 to provide additional liquidity for operations as needed. The line of credit matures in October 2022.
As of September 30, 2021, SVCE had not drawn any cash proceeds on the line of credit. However, the line of credit was used to issue Letters of Credit to energy suppliers which totaled approximately $2,682,000. These Letters of Credit reduce the available balance on the revolving line of credit.
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SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
22 7. DEFINED CONTRIBUTION RETIREMENT PLAN
SVCE provides retirement benefits through the Silicon Valley Clean Energy Authority Public Agency Retirement System Defined Contribution Plan (Plan). The Plan is a defined contribution 401(a) Retirement Plan established to provide benefits at retirement to employees of certain qualified employers admitted by the Plan. The Plan is administered by the Public Agency Retirement System (PARS). At September 30, 2021 and 2020, SVCE had 27 and 25 plan participants, respectively. SVCE is required to contribute up to 10% of covered payroll as a match to required employee contributions. SVCE contributed approximately $414,000 and $413,000 during the years ended September 30, 2021 and 2020, respectively. Plan provisions and contribution requirements as they apply to SVCE are established and may be amended by the Board of Directors.
8. RISK MANAGEMENT
SVCE is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; and errors and omissions. During the year, SVCE purchased insurance policies from investment-grade commercial carriers to mitigate risks that include those associated with earthquakes, theft, general liability, errors and omissions, and property damage. SVCE has general liability coverage of $2,000,000 with a deductible of $500.
SVCE maintains risk management policies, procedures and systems that help mitigate credit, liquidity, market, operating, regulatory and other risks that arise from participation in the California energy market.
Credit guidelines include a preference for transacting with investment-grade counterparties, evaluating counterparties’ financial condition and assigning credit limits as applicable. These credit limits are established based on risk and return considerations under terms customarily available in the industry. In addition, SVCE enters into netting arrangements whenever possible and, where appropriate, obtains collateral and other performance assurances from counterparties.
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SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
23 9. PURCHASE COMMITMENTS
POWER AND ELECTRIC CAPACITY
In the ordinary course of business, SVCE enters into various power purchase agreements to acquire renewable and other energy and electric capacity. The price and volume of purchased power may be fixed or variable. Variable pricing is generally based on the market price of either natural gas or electricity at the date of delivery. Variable volume is generally associated with contracts to purchase energy from as-available resources such as solar, wind and hydro-electric facilities.
SVCE enters into power purchase agreements in order to comply with state law and voluntary targets for renewable and greenhouse gas (GHG) free products and to ensure stable and competitive electric rates for its customers.
The following table represents the expected, undiscounted, contractual obligations outstanding as of September 30, 2021:
Years ending September 30,
2022 235,000,000 $
2023 165,000,000
2024 134,000,000
2025 109,000,000
2026 103,000,000
2027-2043 1,077,000,000
Total 1,823,000,000 $
As of September 30, 2021, SVCE had non-cancelable contractual commitments to professional service providers through December 2024 for services yet to be performed. Fees associated with these contracts are based on volumetric activity and are expected to be $10.3 million.
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SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
24 10. OPERATING LEASE
In December 2019 SVCE amended its non-cancelable lease for its office premises, extending the lease through June 30, 2025.
Rental expense for SVCE’s office space was $453,000 and $395,000 for the years ended September 30, 2021 and 2020, respectively.
As of September 30, 2021, future minimum lease payments under the lease are as follows:
Years ending September 30,
2022 492,693 $
2023 507,480
2024 522,705
2025 400,770
Total 1,923,648 $
11. FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for future fiscal years ending after September 30, 2021:
GASB has approved GASB Statement No. 87, Leases, GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, GASB Statement No. 96, Subscription-Based Information Technology Arrangements; and GASB Statement No. 97, Certain Component Unit Criteria and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. Management is analyzing its activity to determine the effect of the new guidance on its operating results and financial condition.
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Attachment 2
Staff Report – Item 5
Item 5: IT and Automated Meter Infrastructure (AMI) Audit Update From: Girish Balachandran, CEO
Prepared by: Andrea Pizano, Board Clerk/Executive Assistant Date: 3/3/2022
This item will be addressed in the form of presentation from Finance and Administration staff on an overview of the IT and Automated Meter Infrastructure (AMI) audits performed for SVCE.
ATTACHMENT
The presentation for this item is posted to the SVCE website.
Item 5
/ A"\ SILICON VALLEY
~CLEAN ENERGY