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).
Tina Walia, Chair
City of Saratoga
George Tyson, Vice Chair
Town of Los Altos Hills
Elliot Scozzola
City of Campbell
Sheila Mohan
City of Cupertino
Zach Hilton
City of Gilroy
Sally Meadows
City of Los Altos
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Bryan Mekechuk
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Pat Showalter
City of Mountain View
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, February 29, 2024
1:00 pm
Silicon Valley Clean Energy Office
333 W. El Camino Real, Suite 330
Sunnyvale, CA
City of Gilroy City Hall
7351 Rosanna Street
Gilroy, CA 95020
Teleconference Meeting Information:
https://svcleanenergy-org.zoom.us/j/88137405536
Or by Telephone (Audio only):
US: +1 669 219-2599
Webinar ID: 881 3740 5536
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 via email up to three hours before the meeting begins to Board Clerk Andrea Pizano at [email protected] and will be distributed to the Audit Committee. 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
SILICON VALLEY
CLEAN ENERGY
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).
Tina Walia, Chair
City of Saratoga
George Tyson, Vice Chair
Town of Los Altos Hills
Elliot Scozzola
City of Campbell
Sheila Mohan
City of Cupertino
Zach Hilton
City of Gilroy
Sally Meadows
City of Los Altos
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Bryan Mekechuk
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Pat Showalter
City of Mountain View
Larry Klein
City of Sunnyvale
Otto Lee
County of Santa Clara
svcleanenergy.org
333 W El Camino Real
Suite 330
Sunnyvale, CA 94087
Roll Call
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)
1) Approve Minutes of the September 19, 2023, Audit Committee Meeting Regular Calendar
2) Welcome and Audit Committee Overview (Discussion)
3) Selection of 2024 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/Cybersecurity Assessment Update (Discussion)
Committee/Staff Remarks
Adjourn
SILICON VALLEY
CLEAN ENERGY
Silicon Valley Clean Energy
Audit Committee Meeting
Tuesday, September 19, 2023
12:00 p.m.
Silicon Valley Clean Energy Office
333 W. El Camino Real, Suite 330
Sunnyvale, CA
10960 Santa Teresa Drive
Cupertino, CA 95014
DRAFT MEETING MINUTES
Call to Order
Chair Mekechuk called the meeting to order at 12:12 p.m.
Roll Call
Present:
Bryan Mekechuk (Chair), Monte Sereno
Sheila Mohan (Vice Chair), Cupertino (Participated remotely) Sergio Lopez, Campbell
Harjot Sangha, Gilroy
Murali Srinivasan, Sunnyvale
Absent:
None
Public Comment on Matters Not Listed on the Agenda
No speakers.
Consent Calendar
MOTION: Director Lopez moved and Committee member Sangha seconded the motion to approve the Consent Calendar.
Chair Mekechuk opened public comment.
No speakers.
Chair Mekechuk closed public comment.
The motion carried unanimously by verbal roll call vote. 1) Approve Minutes of the February 16, 2023, Audit Committee Meeting Item 1 1 Draft Minutes: 9/19/23 Audit Committee Meeting SILICON VALLEY <3/ CLEAN ENERGY
ATTEST:
_____________________________
Andrea Pizano, Board Secretary
Item 1 2 Draft Minutes: 9/19/23 Audit Committee Meeting SILICON VALLEY <3/ CLEAN ENERGY
Regular Calendar
2) SVCE Financial Audit Kick-off: Pisenti & Brinker LLP (Discussion) Amrit Singh, CFO and Director of Administrative Services, introduced the item and Pisenti & Brinker LLP’s Kellin Gilbert, lead Audit Partner, and Aliandra Schaffer, Engagement Supervisor. Mr. Gilbert provided a kick-off presentation to the committee that included the following:
• A timeline for the audit of the year ended September 30, 2023 and 2022; • Roles and responsibilities respective to management and the auditor; • Pre-audit communication;
• Planned risk assessment procedures; and
• Planned audit procedures;
Chair Mekechuk provided information on Mike Maher of Maher Accountancy and his role in the audit.
Staff and Pisenti & Brinker LLP responded to committee member questions regarding potential discrepancies, years of service from Pisenti & Brinker LLP working on SVCE’s financial audits, if there were any special accounting standards for this audit, if there were any new compliance requirements, amount of Maher Accountancy CCA clients and how many of them share the same fiscal year as SVCE, amount of financial audits Pisenti & Brinker LLP performs for CCAs, and approximate date draft financial statements will be ready.
Chair Mekechuk opened public comment.
No speakers.
Chair Mekechuk closed public comment.
3) IT/Cybersecurity Assessment Update (Discussion)
CFO and Dir. of Finance and Administration Singh introduced the item; Nik Zanotto, Senior Manager of Technology and Administrative Services, presented an update on SVCE’s IT and cybersecurity assessment to the committee and responded to committee member questions.
Chair Mekechuk opened public comment.
No speakers.
Chair Mekechuk closed public comment.
Committee/Staff Remarks
CFO and Dir. of Finance and Administration Singh thanked committee members for their time and noted the next meeting of the Audit Committee would be in the new year to receive the financial audit results.
Adjournment
Chair Mekechuk adjourned the meeting at 1:04 p.m.
Staff Report – Item 2
Item 2: Welcome and Audit Committee Overview
From: Girish Balachandran, CEO
Prepared by: Andrea Pizano, Sr. Executive Assistant and Board Clerk Date: 2/29/2024
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
SILICON VALLEY
CLEAN ENERGY
Staff Report – Item 3
Item 3: Selection of 2024 SVCE Audit Committee Chair and Vice Chair From: Girish Balachandran, CEO
Prepared by: Andrea Pizano, Sr. Executive Assistant and Board Clerk Date: 2/29/2024
RECOMMENDATION
Select 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 February 16, 2023 meeting (Director Bryan Mekechuk as Chair, and Director Sheila Mohan as Vice Chair).
Since 2024 committee membership was ratified at the February Board of Directors meeting and committee members have changed, this committee is in need of a new Chair and Vice Chair.
Process and Procedure for Chair/Vice Selection
At the meeting, those interested in the role of 2024 Chair or Vice Chair will inform the Chair by self-nomination; nominations of other members of the Committee will also be accepted. Once all nominations have been made, each interested member will be given an opportunity to make a statement.
If there is more than one person interested in either role, a roll call vote will be performed by the Board Clerk.
Each Committee member will be asked to vote for their selection by name. For this Committee of four members, a vote of three members will be required to identify the Chair/Vice Chair. A ratification vote will be taken to solidify the selection.
In the event three votes are not reached, the top two candidates with the most votes will continue for additional rounds of votes until three votes are received.
STRATEGIC PLAN
N/A
ALTERNATIVE
Staff is open to suggestions from the committee on selection of the Chair and/or Vice Chair.
Item 3
SILICON VALLEY \3/ CLEAN ENERGY
Agenda Item: 3 Agenda Date: 2/29/2024
FISCAL IMPACT
No fiscal impact from the selection of a Chair and Vice Chair of the committee.
Item 3
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: Amrit Singh, CFO and Director of Administrative Services Date: 2/29/2024
This item will be addressed in the form of an oral report and presentation from external auditor Kellin Gilbert of Pisenti & Brinker LLP.
ATTACHMENT
1. Draft Letter of Significant Deficiencies or Material Weaknesses Identified
2. Draft SVCE 2022-23 Financial Statements
Item 4
SILICON VALLEY
CLEAN ENERGY
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
February 22, 2024
To Management and the Board of Directors
Silicon Valley Clean Energy Authority
333 W. El Camino Real, Suite 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, 2023 and 2022, 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
Kellin Gilbert
Partner
Item 4
Attachment 1
PISENTI & BRINKER llp
Certified Public Accountants A Advisors
RSM a* nrocponaentiv ownedmcTOirr
RSM US Alliance
Financial Statements
Years Ended:
September 30, 2023
September 30, 2022
With Report of Independent Auditors
Silicon Valley Clean Energy Authority
Item 4
Attachment 2
SILICON VALLEY <3/ CLEAN ENERGY
SILICON VALLEY CLEAN ENERGY AUTHORITY
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
TABLE OF CONTENTS
Independent Auditor’s Report ……………………………………………………....... 1 Management’s Discussion and Analysis ……………………………………………... 3 Basic Financial Statements:
Statements of Net Position …………………………………………………… 9
Statements of Revenues, Expenses and Changes in Net Position …................. 10 Statements of Cash Flows …………………………………………………….. 11
Notes to the Basic Financial Statements ……………………………………… 13 Item 4
Attachment 2
SANTA ROSA Ÿ 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 3562 Round Barn Circle, Suite 200
Santa Rosa, CA 95403
(707) 542-3343 Ÿ Office
(707) 527-5608 Ÿ Fax
pbllp.com
Independent Auditor's Report
To the Board of Directors
Silicon Valley Clean Energy Authority
Report on the Audits of the Financial Statements
Opinion
We have audited the accompanying financial statements of Silicon Valley Clean Energy Authority (SVCE), as of and for the years ended September 30, 2023 and 2022, and the related notes to the financial statements, which collectively comprise SVCE’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SVCE as of September 30, 2023 and 2022, and the changes in financial position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audits of the Financial Statements section of our report. We are required to be independent of SVCE and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about SVCE’s ability to continue as a going concern for 12 months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditor's Responsibilities for the Audits of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists.
Item 4
Attachment 2
PISENTI & BRINKER up
Certified Public Accountants A Advisors
RSM A* tnocpcnrjcntly ov/qcorncTOcr
RSM US Alliance
Independent Auditor's Report (continued)
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we
· Exercise professional judgment and maintain professional skepticism throughout the audits. · Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. · Obtain an understanding of internal control relevant to the audits in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of SVCE’s internal control. Accordingly, no such opinion is expressed. · Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
· Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about SVCE’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits, significant audit findings, and certain internal control-related matters that we identified during the audits.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management's discussion and analysis be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.
We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Santa Rosa, California
February20, 2024
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
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, 2023 and 2022. 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.
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 The Notes to the Basic Financial Statements provide additional details and information related to the basic financial statements.
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
4 FINANCIAL HIGHLIGHTS
The following table is a summary of SVCE’s assets, liabilities, and net position, and a discussion of significant changes during the years ended September 30:
2023 2022 2021
Current assets 376,699,458$ 270,632,455$ 206,813,185$
Noncurrent assets
Investments 56,819,513 - -
Capital and lease assets, net 1,259,365 1,681,871 2,122,391 Other noncurrent assets 45,130 45,330 45,330
Total noncurrent assets 58,124,008 1,727,201 2,167,721
Total assets 434,823,466 272,359,656 208,980,906
Current liabilities 86,003,663 51,733,663 34,519,867
Noncurrent liabilities 24,283,988 7,942,472 8,425,392
Total liabilities 110,287,651 59,676,135 42,945,259
Net position
Net investment in capital assets 348,144 287,728 269,927 Restricted for security collateral 163,861 162,014 4,000,216 Unrestricted 324,023,810 212,233,779 161,765,504
Total net position 324,535,815$ 212,683,521$ 166,035,647$ Current Assets
Current assets were approximately $376,699,000 at the end of 2023 and are mostly comprised of cash, accounts receivable, investments and accrued revenue. Accrued revenue differs from accounts receivable in that it is the result of electricity provided to SVCE customers that has not yet been invoiced. Current assets increased each year as a result of SVCE’s operating surpluses.
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
5 Noncurrent Assets
During 2023, SVCE purchased investments that are scheduled to mature in more than one year.
SVCE reports investments, other than non-negotiable CDs, at fair value in the noncurrent assets section of its Statements of Net Position.
Capital assets, including right-of-use assets, were approximately $1,259,000 at the end of 2023, 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.
A lease asset is reported in accordance with Governmental Accounting Standards Board No. 87 Leases (GASB 87) that was implemented during 2022, with a restatement back to 2020. According to GASB, the Statement aims to increase the usefulness of governments’ financial statements by requiring reporting of certain lease assets and liabilities that previously were not recognized on the statement of net position.
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
The most significant element of current liabilities is the obligation to pay the cost of electricity delivered to customers. Accrued cost of electricity at the end of fiscal year 2023 increased compared to the prior year. This was a result of increased prices of electricity purchased as well as a small increase in the volume of purchased electricity outstanding.
Other components include taxes and surcharges due to other governments and various other accrued liabilities.
SVCE receives deposits from energy suppliers as a form of collateral on committed future purchases. As of September 30, 2023, SCVE held approximately $1.0 million of deposits expected to be returned or applied within one year.
Noncurrent Liabilities
Noncurrent liabilities increased in 2023 as a result of collateral deposits from energy suppliers held by SVCE that are not due to be returned within a year. There was little change in deposits from 2021 to 2022.
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
6 The following table is a summary of SVCE’s results of operations and a discussion of significant changes for the years ended September 30:
2023 2022 2021
Operating revenues 503,675,151$ 363,521,534$ 242,600,167$ Nonoperating revenues 9,262,831 1,870,954 273,895
Total income 512,937,982 365,392,488 242,874,062
Operating expenses 401,057,113 318,708,488 257,751,261
Nonoperating expenses 28,576 36,126 230,632
Total expenses 401,085,689 318,744,614 257,981,893
Change in net position 111,852,293$ 46,647,874$ (15,107,831)$ Operating Revenues
SVCE’s operating revenues are derived from the sale of electricity to commercial and residential customers throughout its territory. SVCE’s customer territory was stable each year, with approximately 280,000 customers enrolled. Rate increases in effect during 2023 and 2022 account for the majority of the increase in revenue from the prior years.
Nonoperating Revenues
The nonoperating revenue increase from 2021 to 2022 was primarily the result of grant income from the California Arrearage Payment Plan (CAPP) that was received in 2022. The increase from 2022 to 2023 was the result of investment income from market rate increases and increased invested amounts.
Operating Expenses
SVCE’s largest operating expense is the purchase of electricity for retail customer use. SVCE procures energy from a variety of sources, aiming at purchasing electricity at competitive costs and maintaining a balanced renewable power portfolio. Electricity costs increased as a result of rising market prices. 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 operational demands.
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
7 ECONOMIC OUTLOOK
SVCE serves approximately 96% of all eligible customers in the service area, and that rate of participation is expected to remain stable in 2024.
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 (LSEs) 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 LSEs to procure 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. Senate Bill 1020 sets interim clean targets of 90% and 95% by 2035 and 2040. SVCE’s current policy is to procure 100% of retail sales, adjusted for transmission and distribution losses, from GHG-free resources. To date SVCE has executed 17 RPS contracts of ten years or more in duration and has met its RPS requirements for long-term procurement. SVCE is on the path to meeting its requirements as ordered by the CPUC under the Mid-term Reliability Procurement decision (R.20-05-003).
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 the 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, geothermal 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 the load in the CAISO market.
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
8 ECONOMIC OUTLOOK (continued)
In the fiscal year ending September 30, 2023, SVCE’s retail load increased by about 2% from the prior fiscal year to 3.82 Terrawatt-hours (TWhrs). SVCE expects retail load to grow to 3.99 TWhrs for the Fiscal Year ending September 30, 2024, resulting primarily from commercial load increase along with load modifier load growth. Over the next ten years, SVCE expects the load to grow by about 1% 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.
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. SVCE has now signed long-term arrangements with two major customers for customized power supply offerings and is working with additional prospective customers.
SVCE expects to continue to provide competitive electric rates. Volatile energy prices and the variability of the PG&E customer exit fee can be barriers to providing stable rates. The exit fee will increase in 2024, relative to the 2023 rate. As of January 2023, SVCE has increased its discount relative to PG&E’s generation service to 4 percent. SVCE is engaged in the development of both legislative and regulatory policies that impact rates (e.g., procurement mandates, load management standards, and reliability proceedings). Additionally, SVCE’s commitment to building healthy cash reserves has placed SVCE in a stable position to manage volatile energy prices, and future regulatory and legislative risks.
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 into favorable energy purchase commitments. SVCE received a “Baa1” credit rating in the Summer of 2023 from Moody’s and an ‘A’ credit rating from S&P Global in May 2023, both affirmed a stable outlook for SVCE.
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
Item 4
Attachment 2
BASIC FINANCIAL STATEMENTS
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENTS OF NET POSITION
SEPTEMBER 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements.9 2023 2022
Current assets
Cash and cash equivalents - unrestricted 230,530,644$ 167,673,753$ Accounts receivable, net of allowance 49,889,393 55,663,227 Investments 34,331,496 -
Accrued revenue 30,432,122 25,508,698
Other receivables 4,396,286 81,714
Prepaid expenses 1,353,177 977,928
Deposits 25,602,479 20,565,121
Cash - restricted 163,861 162,014
Total current assets 376,699,458 270,632,455
Noncurrent assets
Deposits 45,130 45,330
Investments 56,819,513 -
Lease asset, net of amortization 842,625 1,324,125
Capital assets, net of depreciation 416,740 357,746
Total noncurrent assets 58,124,008 1,727,201
Total assets 434,823,466 272,359,656
Current liabilities
Accrued cost of electricity 78,604,532 36,054,862
Accounts payable 2,857,744 1,007,808
Other accrued liabilities 1,286,104 1,094,075
User taxes and energy surcharges due to other governments 1,726,800 1,693,997 Supplier security deposits 1,020,000 11,400,000
Lease liability 508,483 482,921
Total current liabilities 86,003,663 51,733,663
Noncurrent liabilities
Supplier security deposits 23,881,250 7,031,250
Lease liability 402,738 911,222
Total noncurrent liabilities 24,283,988 7,942,472
Total liabilities 110,287,651 59,676,135
Net investment in capital assets 348,144 287,728
Restricted for security collateral 163,861 162,014
Unrestricted 324,023,810 212,233,779
Total net position 324,535,815$ 212,683,521$
NET POSITION
ASSETS
LIABILITIES
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements.10 2023 2022
OPERATING REVENUES
Electricity sales, net 500,150,468$ 359,373,795$
GreenPrime electricity premium 1,456,427 1,741,940
Liquidated damages 2,019,600 2,371,250
Other income 48,656 34,549
Total operating revenues 503,675,151 363,521,534
OPERATING EXPENSES
Cost of electricity 375,015,282 300,290,056
Contract services 10,228,607 9,255,297
Staff compensation and benefits 9,682,535 6,744,553
Other operating expenses 5,509,407 1,836,654
Depreciation and amortization 621,282 581,928
Total operating expenses 401,057,113 318,708,488
Operating income 102,618,038 44,813,046
NONOPERATING REVENUES (EXPENSES)
Grant income 716,553 1,545,172
Interest and investment returns 8,546,278 325,782
Financing costs (28,576) (36,126)
Nonoperating revenues (expenses), net 9,234,255 1,834,828 CHANGE IN NET POSITION 46,647,874 111,852,293
Net position at beginning of year 212,683,522 166,035,647 Net position at end of year 324,535,815$ 212,683,521$
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements.11 2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 511,002,951$ 326,719,985$
Receipts of liquidated damages 2,019,600 2,371,250
Other operating receipts 38,633,263 11,512,300
Payments to suppliers for electricity (372,229,527) (313,073,540) Payments for other goods and services (14,469,068) (11,536,855) Payments of staff compensation and benefits (9,393,101) (6,554,946) Payments of taxes and surcharges to other governments (8,512,842) (5,469,828) Net cash provided by operating activities 147,051,276 3,968,366
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Grant revenue received 716,553 1,545,172
Finance costs paid (28,576) (170,068)
Net cash provided by non-capital
financing activities 687,977 1,375,104
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments under lease obligation (507,480) (500,642)
Payments to acquire capital assets (188,270) (141,408)
Net cash (used) by capital and related
financing activities (695,750) (642,050)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment income received 6,946,208 325,783
Purchase of investments (91,130,973) -
Net cash provided (used) by investing activities (84,184,765) 325,783 Net change in cash and cash equivalents 62,858,738 5,027,203 Cash at beginning of year 167,835,767 162,808,564
Cash at end of period 230,694,505$ 167,835,767$
Reconciliation to the Statement of Net Position
Cash and cash equivalents - unrestricted 230,530,644$ 167,673,753$ Cash - restricted 163,861 162,014
Total cash 230,694,505$ 167,835,767$
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements.12 2023 2022
Operating income 102,618,038$ 44,813,046$
Adjustments to reconcile operating income to net
cash provided by operating activities
Depreciation and amortization expense 621,282 581,928
(Increase) decrease in:
Accounts receivable 5,773,835 (29,673,042)
Accrued revenue (4,923,424) (11,098,078)
Market settlements receivable - 269,012
Other receivables (2,734,538) 148,771
Prepaid expenses (375,249) 1,400,308
Current deposits (5,037,158) (19,839,037)
Increase (decrease) in:
Accrued cost of electricity 41,494,549 5,140,221
Accounts payable 1,839,430 (529,568)
Other accrued liabilities 216,587 628,293
Energy settlements payable 1,055,121 87,550
User taxes and energy surcharges due to other governments 32,803 638,962 Supplier security deposits 6,470,000 11,400,000
Net cash provided by operating activities 147,051,276$ 3,968,366$
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
13 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, 2023, 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).
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
14 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 – net 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, and then unrestricted resources as they are needed.
CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, SVCE defines cash to include cash on hand, demand deposits money market funds, and short-term investments with an original maturity of three months or less. 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.
INVESTMENTS
Investments are stated at fair value based on prices listed on a national exchange for debt securities. Certificates of deposits are stated at cost. While SVCE intends to hold its securities to maturity, all investments could readily be converted to cash should SVCE choose to do so.
Investments with a maturity of less than one year are shown as current assets in the Statement of Net Position. Investments with a maturity of one year or more are shown as noncurrent assets in the Statement of Net Position.
SVCE’s Investment Policy permits the investment of funds in depository accounts, certificates of deposit, the Local Agency Investment Fund (LAIF) program operated by the California State Treasury, United States Treasury obligations, Federal Agency Securities, commercial paper, corporate notes, and asset-backed securities.
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
15 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
PREPAID EXPENSES AND DEPOSITS
Contracts to purchase energy may require SVCE to provide the supplier with advanced payments or security deposits. Deposits are generally held for the term of the contract and are classified as current or noncurrent assets depending on the length of time the deposits will be outstanding.
Also included are prepaid expenses and deposits for regulatory and other operating purposes.
LEASE ASSET AND LEASE LIABILITY
SVCE recognizes an asset and liability when it enters into certain leasing arrangements. The leased asset is amortized over the term of the lease. The lease liability is the present value of payments expected to be paid to the lessor during the lease term. SVCE’s only leased asset and liability relates to its office premises.
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.
SUPPLIER SECURITY DEPOSITS
Various energy contracts require the supplier to provide SVCE with a security deposit. These deposits are generally held for the term of the contract or until the completion of certain benchmarks. Deposits are classified as current or noncurrent depending on the length of time the deposits will be held.
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
16 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
NET POSITION
Net position is presented in the following components:
Net Investment in capital assets: This component of net position consists of capital assets, net of accumulated depreciation and amortization and reduced by outstanding borrowings that are attributable to the acquisition, construction, or improvement of those assets.
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 NONOPERATING REVENUE
Revenue from the sale of electricity to customers is considered operating revenue.
Investment income includes interest earned on bank deposits as well as unrealized gains and losses on its investment holdings. Grant revenue, interest and investment income are considered nonoperating activity.
REVENUE RECOGNITION
SVCE recognizes revenue on the accrual basis. This includes invoices issued to customers during the reporting 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 amortization and depreciation of capital assets. Expenses not meeting this definition are reported as nonoperating expenses.
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
17 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
COST OF ELECTRICITY
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 and for generation credits, and load and other charges arising from SVCE’s participation in the CAISO’s 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. 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.
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.
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
18 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
2. CASH AND CASH EQUIVALENTS
SVCE maintains its cash in both interest-bearing and non-interest-bearing accounts. SVCE’s deposits are subject to California Government Code Section 16521, which requires banks to provide 110% collateralization on public funds in excess of the Federal Deposit Insurance Corporation limit of $250,000. Certain short-term investments with original maturities of less than three months are classified as cash and cash equivalents, which are not subject to the collateral requirement or FDIC coverage previously mentioned. Accordingly, the amount of risk is not disclosed. SVCE monitors its risk on an ongoing basis.
At the end of each year, SVCE had restricted cash that was held as collateral for either its bank letters of credit postings, or collateral held in accordance with certain security agreements with suppliers.
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
19 3. ACCOUNTS RECEIVABLE
Accounts receivable were as follows as of September 30:
2023 2022
Accounts receivable from customers 52,689,393$ 58,563,227$ Allowance for uncollectible accounts (2,800,000) (2,900,000) Net accounts receivable 49,889,393$ 55,663,227$
The majority of account collections occur within the first few months following the issuance of customer invoices. 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. In 2023 and 2022, SVCE received CAPP funds (see Note 7) that helped recover previously written off accounts receivable.
4. INVESTMENTS
During the year ended September 30, 2023, SVCE purchased investments with original maturities of three months or more. As of September 30, the fair value of investments was as follows:
2023 2022
Current Investments:
U.S. Treasury Bonds and Notes 8,750,279$ -$
Commercial Paper 18,981,723 -
Certificate of Deposits 6,599,494 -
Total current investments 34,331,496$ -$
2023 2022
Noncurrent Investments:
U.S. Treasury Bonds and Notes 41,492,790$ -$
Federal Agency Commercial 1,336,930 -
Corporate Notes 9,893,896 -
Certificate of Deposits 829,694 -
Asset-Backed Securities 3,266,203 -
Total noncurrent investments 56,819,513$ -$
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
20 4. INVESTMENTS (CONTINUED)
FAIR VALUE MEASUREMENT
GASB Statement No. 72, Fair Value Measurement and Application, sets forth the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are significant other observable inputs, and Level 3 inputs are significant unobservable inputs.
In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. SVCE’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.
As of September 30, 2023, SVCE’s investments are considered Level 1 inputs. Quoted prices in active markets were used for determining fair value measurement (except CDs, which are based on the nominal value).
CREDIT RISK
Credit risk is the risk an issuer or other counterparty to an investment will not fulfill its obligations. Certain investments, such as obligations of the U.S. government or obligations explicitly guaranteed by the U.S. government, are not considered to have credit risk.
As of June 30, 2023, credit risk for other investments were rated as follows:
Moody's Investors Service 2023
Commercial Paper NR to P-1
Corporate Notes BBB+ to AA1
Certificate of Deposits A1 to P-1
Asset-Backed Securities NR to Aaa
SVCE’s investment policy addresses this risk. SVCE limits investments to those allowed by Section 53601 of the California Government Code that addresses the risk allowable for each investment.
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
21 4. INVESTMENTS (CONTINUED)
CUSTODIAL CREDIT RISK - CERTIFICATE OF DEPOSITS
Custodial credit risk is the risk that in the event of a financial institution failure, SVCE’s deposits may not be returned to SVCE. 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 (FDIC) limit of $250,000 by 110%.
As of September 30, 2023 and 2022, none of SVCE’s bank balances are known to be individually exposed to credit risk.
CUSTODIAL CREDIT RISK - INVESTMENTS
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, SVCE would not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. All of SVCE’s investments are exposed to credit risk.
SVCE’s investment policy addresses this risk. All investments owned by SVCE shall be held in safekeeping by a third-party custodian, acting as an agent for SVCE under the terms of a custody agreement.
INTEREST RATE RISK
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Duration is a measure of the price sensitivity of a fixed income portfolio to changes in interest rates. Duration is calculated as the weighted average time to receive a bond’s coupon and principal payments. The longer the duration of a portfolio, the greater its price sensitivity to changes in interest rates. SVCE manages its exposure to declines in fair values by limiting the weighted average maturity of its investments.
Following is a summary of investment maturities as of September 30, 2023:
Investment Maturities
Investment Type Fair Value Less Than 1 Year 1-5 Years
U.S. Treasury Bonds and Notes 50,243,069$ 8,750,279$ 41,492,790$ Federal Agency Commercial 1,336,930 - 1,336,930
Commercial Paper 18,981,723 18,981,723 -
Corporate Notes 9,893,896 - 9,893,896
Certificate of Deposits 7,429,188 6,599,494 829,694
Asset-Backed Securities 3,266,203 - 3,266,203
$ 34,331,496$ 56,819,513$ 91,151,009
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
22 5. CAPITAL ASSETS AND LEASE ASSET
Capital asset activity for the years ended September 30, 2023 and 2022 was as follows:
Furniture &
Equipment
Leasehold
Improvements
Accumulated
Depreciation Total
Balances at September 30, 2021 482,096$ 77,876$ (243,206)$ 316,766$ Additions 85,011 56,397 (100,428) 40,980
Balances at September 30, 2022 567,107 134,273 (343,634) 357,746 Additions 198,776 - (139,782) 58,994
Dispositions (7,000) - 7,000 -
Balances at September 30, 2023 758,883$ 134,273$ (476,416)$ 416,740$ Lease asset activity for the years ended September 30, 2023 and 2022 was as follows:
Lease Asset
Accumulated
Amortization Total
Balances at September 30, 2021 2,287,125$ (481,500)$ 1,805,625$ Additions - (481,500) (481,500)
Balances at September 30, 2022 2,287,125 (963,000) 1,324,125 Additions - (481,500) (481,500)
Balances at September 30, 2023 2,287,125$ (1,444,500)$ 842,625$
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
23 6. LEASE
A lease asset is reported in accordance with Governmental Accounting Standards Board No. 87 Leases (GASB 87) that was implemented during 2022, with a restatement back to 2020.
According to GASB, the Statement aims to increase the usefulness of governments’ financial statements by requiring reporting of certain lease assets and liabilities that previously were not recognized on the statement of net position.
In December 2019 SVCE amended its non-cancelable lease for its office premises, extending the lease through June 30, 2025.
Rental payments under this lease were $519,000 and $501,000 for the years ended September 30, 2023 and 2022, respectively.
As of September 30, 2023, future minimum lease payments under the lease were projected as follows:
Principal Interest Total
Years ending September 30,
2024 508,483$ 14,222$ 522,705$
2025 402,738 3,554 406,292
Total 911,221$ 17,776$ 928,997$
7. GRANT REVENUE
SVCE administers a grant from the California Arrearage Payment Program (CAPP) that offers financial assistance for California energy utility customers to help reduce past due energy account balances that increased during the COVID-19 pandemic. In 2022 this program was funded through the federal American Rescue Plan Act (ARPA) with Coronavirus State and Local Fiscal Recovery Funds. The program was funded by the State of California in 2023. Grant revenue recognized for the years ended September 30, 2023 and 2022 was approximately $717,000 and $1,545,000, respectively.
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
24 8. 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 Public Agency Retirement System (PARS). At September 30, 2023 and 2022, SVCE had 48 and 40 plan participants, respectively. SVCE is required to contribute up to 10% of covered payroll as a match to required employee contributions. SVCE contributed approximately $758,000 and $519,000 during the years ended September 30, 2023 and 2022, respectively. Plan provisions and contribution requirements as they apply to SVCE are established and may be amended by the Board of Directors.
9. 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 $500.
SVCE maintains risk management policies, procedures and systems that help mitigate credit, liquidity, market, operating, regulatory and other risks that arise from participation in the California energy market.
Credit guidelines include a preference for transacting with investment-grade counterparties, evaluating counterparties’ financial condition and assigning credit limits as applicable. These credit limits are established based on risk and return considerations under terms customarily available in the industry. In addition, SVCE enters into netting arrangements whenever possible and, where appropriate, obtains collateral and other performance assurances from counterparties.
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
25 10. PURCHASE COMMITMENTS
POWER AND ELECTRIC CAPACITY
In the ordinary course of business, SVCE enters into various power purchase agreements to acquire renewable and other energy and electric capacity. The price and volume of purchased power may be fixed or variable. Variable pricing is generally based on the market price of either natural gas or electricity at the date of delivery. Variable volume is generally associated with contracts to purchase energy from as-available resources such as solar, wind and hydro-electric facilities.
SVCE enters into power purchase agreements in order to comply with state law and voluntary targets for renewable and greenhouse gas (GHG) free products and to ensure stable and competitive electric rates for its customers.
The following table represents the expected, undiscounted, contractual obligations outstanding as of September 30, 2023:
Years ending September 30,
2024 301,000,000$
2025 206,000,000
2026 184,000,000
2027 186,000,000
2029 193,000,000
2029-2046 2,206,000,000
Total 3,276,000,000$
Item 4
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2023 AND 2022
26 11. JOINT VENTURE
The SVCE participates in a joint powers agreement (JPA) through the California Community Choice Financing Authority (CCCFA). CCCFA was formed as a conduit issuer to assist its members by undertaking the financing or refinancing of energy prepayments that can be financed with tax advantaged bonds on behalf of one or more of the members by issuing or incurring bonds and entering into related contracts with its members. Any debt or liability incurred by CCCFA on behalf of a member to prepay for renewable energy is not a debt or liability of that member.
Furthermore, the assets of CCCFA in the form of prepaid energy or reserves held by the respective bond trustees for any prepayment transaction undertaken on behalf of a member does not constitute an asset or reserve of that member.
In September 2021, CCCFA issued bonds partially related to SVCE in the amount of $1,234,720,000, excluding original issue premium, the applicable proceeds of which are to be used to finance energy purchases that will be delivered to SVCE. No debt, liability, or obligation of CCCFA is a debt, liability, or obligation of SVCE. SVCE will purchase energy from CCCFA in the same manner as it purchases energy from other suppliers. SVCE purchased approximately $29,081,000 and $15,320,000 from CCCFA during fiscal years 2023 and 2022, respectively. In January 2023, CCCFA issued additional bonds related to SVCE in the amount of $841,550,000, excluding original issue premium. The outstanding purchase commitments related to these financing facilities are included in Note 10.
Each member of CCCFA is responsible for paying an equal portion of CCCFA’s general and administrative operating costs as determined by its board. During the years ended September 30, 2023, and 2022, SVCE contributed approximately $87,000 and $46,000, respectively, to CCCFA to assist in its operating activities.
The financial statements of CCCFA are available online at http://www.cccfa.org/key-documents.html.
12. FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for years ending after September 30, 2023:
GASB has approved GASB Statement No. 100, Accounting Changes and Error Corrections – An Amendment of GASB Statement No. 62, and GASB Statement No. 101, Compensated Absences.
Management is evaluating the effect of implementation of these statements.
Item 4
Attachment 2
Staff Report – Item 5
Item 5: IT/Cybersecurity Assessment Update
From: Girish Balachandran, CEO
Prepared by: Amrit Singh, CFO and Director of Administrative Services Date: 2/29/2024
This item will be addressed in the form of a presentation from Nik Zanotto, Sr. Manager of Technology and Administrative Services.
ATTACHMENT
The presentation for this item is posted to the SVCE website.
Item 5
SILICON VALLEY
CLEAN ENERGY