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).
George Tyson, Chair
Town of Los Altos Hills
Larry Klein, Vice Chair
City of Sunnyvale
Elliot Scozzola
City of Campbell
J.R. Fruen
City of Cupertino
Zach Hilton
City of Gilroy
Sally Meadows
City of Los Altos
Rob Rennie
Town of Los Gatos
Garry Barbadillo
City of Milpitas
Bryan Mekechuk
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Pat Showalter
City of Mountain View
Tina Walia
City of Saratoga
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
Friday, February 28, 2025
2:00 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/83477598568
Or by Telephone (Audio only):
US: +1 669 219-2599
Webinar ID: 834 7759 8568
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
Roll Call
SILICON VALLEY \3/ 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).
George Tyson, Chair
Town of Los Altos Hills
Larry Klein, Vice Chair
City of Sunnyvale
Elliot Scozzola
City of Campbell
J.R. Fruen
City of Cupertino
Zach Hilton
City of Gilroy
Sally Meadows
City of Los Altos
Rob Rennie
Town of Los Gatos
Garry Barbadillo
City of Milpitas
Bryan Mekechuk
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Pat Showalter
City of Mountain View
Tina Walia
City of Saratoga
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)
1) Approve Minutes of the October 21, 2024, Audit Committee Meeting Regular Calendar
2) Elect Chair and Vice Chair of the 2025 SVCE Audit Committee (Action) 3) Overview of Committee Function (Discussion)
4) Approve Assignment of Auditor Contract to Kosmatka Donnelly & Co. LLP (Action)
5) Receive Financial Audit Report from Pisenti & Brinker, LLP and Recommend the SVCE Board of Directors Accept the Audit Findings (Action) 6) Establishing Rate Stabilization Fund Under GASB 62 (Informational) Committee/Staff Remarks
Public Comment on Closed Session
Closed Session
THREAT TO PUBLIC SERVICES OR FACILITIES
Consultation with: Amrit Singh, Chief Financial Officer and Director of Administrative Services, Nik Zanotto, Senir Manager of IT and Administrative Services Report from Closed Session
Adjourn
SILICON VALLEY \3/ CLEAN ENERGY
Silicon Valley Clean Energy
Audit Committee Meeting
Monday, October 21, 2024
1:00 p.m.
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
DRAFT MEETING MINUTES
Call to Order
Chair Mekechuk called the meeting to order at 1:04 p.m.
Roll Call
Present:
Bryan Mekechuk (Chair), Monte Sereno
Sheila Mohan (Vice Chair), Cupertino
Sergio Lopez, Campbell
Harjot Sangha, Gilroy (Participated remotely)
Absent:
None
Public Comment on Matters Not Listed on the Agenda
No speakers.
Consent Calendar
MOTION: Director Sangha moved and Vice Chair Mohan 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 29, 2024, Audit Committee Meeting Item 1 1 Draft Minutes 10/21/24 Audit Committee Meeting Regular Calendar
2) SVCE Financial Audit Kick-off: Pisenti & Brinker, LLP (Discussion) Amrit Singh, CFO and Director of Administrative Services, introduced Kellin Gilbert, CPA, Pisenti & Brinker LLP to the Committee.
Mr. Gilbert provided information on the SVCE planned audit procedures, Management and Auditor roles and responsibilities, and a proposed timeline for completion.
Mr. Gilbert responded to questions from committee members regarding the approximate audit report date and applied risk assessment procedures.
Chair Mekechuk opened public comment.
No speakers.
Chair Mekechuk closed public comment.
3) SVCE Policy Review Update (Discussion)
Michael Callahan, General Counsel, provided information on SVCE’s policy updates and the internal flow process. He stated the financial related policies would be going to the Finance and Administration Committee for discussion, with other policies being presented to the Executive Committee before being brought to the Board of Directors for approval in December.
Mr. Callahan responded to questions from committee members regarding future policy updates, provided examples of the types of amendments being made to the policies, and confirmed there were no significant policy changes that would fall under the purview of the Audit Committee.
Chair Mekechuk opened public comment.
No speakers.
Chair Mekechuk closed public comment.
Public Comment on Closed Session
No speakers.
The Committee convened to Closed Session at 1:33 p.m.
Closed Session
THREAT TO PUBLIC SERVICES OR FACILITIES
Consultation with: Amrit Singh, Chief Financial Officer and Director of Administrative Services, Nik Zanotto, Senior Manager of IT and Administrative Services
The Committee returned from closed session at 2:28 p.m.
Report from Closed Session
Chair Mekechuk announced there was nothing to report.
Adjourn
Chair Mekechuk adjourned the meeting at 2:30 p.m.
Item 1 2 Draft Minutes 10/21/24 Audit Committee Meeting ATTEST:
_____________________________
Andrea Pizano, Board Secretary
Item 1 3 Draft Minutes 10/21/24 Audit Committee Meeting
Staff Report – Item 2
Item 2: Elect Chair and Vice Chair of the 2025 SVCE Audit Committee From: Monica Padilla, CEO
Prepared by: Andrea Pizano, Sr. Executive Assistant and Board Clerk Date: 2/28/2025
RECOMMENDATION
Select a Chair and Vice Chair of the Silicon Valley Clean Energy (SVCE) Audit Committee (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 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 29, 2024 meeting (Director Bryan Mekechuk as Chair, and Director Sheila Mohan as Vice Chair).
Since 2025 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 2025 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 2
Agenda Item: 2 Agenda Date: 2/28/2025
FISCAL IMPACT
No fiscal impact from the selection of a Chair and Vice Chair of the committee.
Item 2
Staff Report – Item 3
Item 3: Overview of Committee Function
From: Monica Padilla, CEO
Prepared by: Andrea Pizano, Sr. Executive Assistant and Board Clerk Date: 2/28/2025
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 3
Staff Report – Item 4
Item 4: Approve Assignment of Auditor Contract to Kosmatka Donnelly & Co. LLP From: Monica Padilla, CEO
Prepared by: Michael Callahan, General Counsel
Date: 2/28/2025
RECOMMENDATION
Staff requests that the Audit Committee recommend that the Board of Directors approve assignment of the auditor contract from Pisenti & Brinker to Kosmatka Donnelly & Co., LLP.
BACKGROUND
Our current auditor, Pisenti & Brinker (P&B), announced they have merged with Kosmatka Donnelly & Co., LLP (KDP). The Board is responsible for selecting the auditor and may determine whether to accept the assignment of the current contract to KDP.
ANALYSIS & DISCUSSION
The Audit Committee and Board selected our current auditor P&B on January 29, 2025, P&B informed Silicon Valley Clean Energy (SVCE) that it has merged with KDP and intends to continue to perform under the agreement. Section 12 of SVCE’s agreement with P&B defines a change of ownership as an assignment and SVCE must consent to assign the agreement.
Currently, the audit is effectively complete, and staff sees no value in refusing to accept the assignment at this time. Staff recommends that the contract continue to its current term of September 30, 2027 because the services and terms of the original contract will remain the same under the assignment.
STRATEGIC PLAN
N/A – SVCE is required by law to perform an audit.
ALTERNATIVE
An alternative would result in terminating the auditor agreement and likely initiating a new audit which would incur additional costs. Staff recommends against this alternative, given the audit is effectively complete.
FISCAL IMPACT
No fiscal impact from accepting the assignment of the P&B contract to KDM.
Item 4
SILICON VALLEY \3/ CLEAN ENERGY
Staff Report – Item 5
Item 5: Receive Financial Audit Report from Pisenti & Brinker, LLP and Recommend the SVCE Board of Directors Accept the Audit Findings
From: Monica Padilla, CEO
Prepared by: Andrea Pizano, Sr. Executive Assistant/Board Clerk Date: 2/28/2025
This item will be addressed in the form of an oral report and presentation from external auditor Kellin Gilbert of Kosmatka Donnelly & Co., LLP (previously Pisenti & Brinker LLP.)
ATTACHMENT
1. Draft Letter of Significant Deficiencies or Material Weaknesses Identified
2. Draft SVCE 2024-25 Financial Statements
Item 5
SILICON VALLEY \3/ CLEAN ENERGY
Pisenti & Brinker LLP has joined practices with Kosmatka, Donnelly & Co., LLP (dba, KDP Certified Public Accountants, LLP). The former Pisenti & Brinker LLP Partners are now Partners of KDP Certified Public Accountants, LLP (KDP). KDP Certified Public accountants, LLP is a licensed CPA firm that provides attest services to its clients. Pisenti & Brinker Management LLC provides professional tax and business consulting services to its clients. Pisenti & Brinker Management, LLC and KDP Certified Public Accountants, LLP practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable laws, regulations, and professional standards. 3562 Round Barn Circle, Suite 200
Santa Rosa, CA 95403
(707) 542-3343 Office
(707) 527-5608 Fax
January 31, 2025
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, 2024 and 2023, 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.
Kosmatka Donnelly & Co., LLP
Kellin Gilbert
Partner
Item 5
Attachment 1
1 Financial Statements
Years Ended:
September 30, 2024
September 30, 2023
With Report of Independent Auditors
Silicon Valley Clean Energy Authority
Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
TABLE OF CONTENTS
Independent Auditor’s Report ……………………………………………………....... 1 Management’s Discussion and Analysis ……………………………………………... 4 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 Item 5
Attachment 2
Pisenti & Brinker LLP has joined practices with Kosmatka, Donnelly & Co., LLP (dba, KDP Certified Public Accountants, LLP). The former Pisenti & Brinker LLP Partners are now Partners of KDP Certified Public Accountants, LLP (KDP). KDP Certified Public accountants, LLP is a licensed CPA firm that provides attest services to its clients. Pisenti & Brinker Management LLC provides professional tax and business consulting services to its clients. Pisenti & Brinker Management, LLC and KDP Certified Public Accountants, LLP practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable laws, regulations, and professional standards. 3562 Round Barn Circle, Suite 200
Santa Rosa, CA 95403
(707) 542-3343 Office
(707) 527-5608 Fax
Independent Auditor’s Report
To the Board of Directors
Silicon Valley Clean Energy Authority
Opinion
We have audited the accompanying financial statements of Silicon Valley Clean Energy Authority (SVCE), which comprise the statements of net position as of September 30, 2024 and 2023, the related statements of revenue, expenses and changes in net position, and cash flows for the years then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of SVCE as of September 30, 2024 and 2023, and the results of its operations 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 Audit 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 within one year after the date that the financial statements are issued or available to be issued, including any currently known information that may raise substantial doubt shortly thereafter.
Item 5
Attachment 2
Independent Auditor’s Report (continued)
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.
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.
Item 5
Attachment 2
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.
Kosmatka, Donnelly & Co., LLP
Santa Rosa, California
January 31, 2025
Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
4 The purpose of management’s discussion and analysis (MD&A) is to help stakeholders and other readers understand what the financial statements and notes in this report say about Silicon Valley Clean Energy Authority’s (SVCE) financial health and why it has changed since last year. It contains information drawn from other parts of the report, accompanied by explanations informed by the finance staff’s knowledge of SVCE’s finances.
Overview of the Financial Statements
SVCE’s financial report contains basic financial statements, which include:
o The Statements of Net Position include all of SVCE’s assets, liabilities, and net position and provides 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 capital and investing activities. o The notes to the Basic Financial Statements provide additional details and information related to the basic financial statements.
Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
5 Financial Summary
SVCE’s Net Position
2024 2023 2022
Current assets $ 420,352,985 $ 376,699,458 $ 270,632,455 Noncurrent assets:
Capital assets, net 761,171 1,259,365 1,681,871
Other noncurrent assets 150,052,998 56,864,643 45,330
Total noncurrent assets 150,814,169 58,124,008 1,727,201 Total assets 571,167,154 434,823,466 272,359,656
Current liabilities 70,667,155 86,003,663 51,733,663
Noncurrent liabilities 15,303,125 24,283,988 7,942,472
Total liabilities 85,970,280 110,287,651 59,676,135
Net position
Net Investment in capital assets 358,431 348,144 287,728 Unrestricted 484,838,443 324,187,671 212,395,793
Total net position 485,196,874 $ $ 324,535,815 $ 212,683,521 As of September 30, 2024, SVCE’s total net position was approximately $485,000,000, an increase of $161,000,000 or 50% as compared to September 30, 2023. Most of the increase in net position was a result of SVCE’s operating surplus discussed below.
SVCE’s Changes in Net Position
2024 2023 2022
Operating revenues $ 534,489,788 $ 503,675,151 $ 363,521,534 Nonoperating revenues 23,348,067 9,262,831 1,870,954
Total revenues 557,837,855 512,937,982 365,392,488
Operating expenses 397,162,572 401,057,113 318,708,488
Nonoperating expenses 14,224 28,576 36,126
Total expenses 397,176,796 401,085,689 318,744,614
Change in net position 160,661,059 $ $ 111,852,293 $ 46,647,874 Increases in electricity sales accounted for most of the increase in total income. The cost of electricity, a component of operating expenses, decreased approximately 4% from fiscal year 2023 to fiscal year 2024 due to changes in volume and market prices.
Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
6 Detailed Analysis
Current assets increased from $377,000,000 at the end of fiscal year 2023 to $420,000,000 at the end of fiscal year 2024. This increase was due to operating surpluses as well as the timing in paying operating expenses. Current assets at the end of fiscal year 2024 were primarily comprised of cash and investments of $330,000,000, accounts receivable of $43,000,000, and accrued revenue of $30,000,000.
Capital assets are reported net of depreciation and amortization. Each year, the change is mostly due to capital asset acquisitions, less depreciation and amortization expense. Capital assets include leasehold improvements, furniture and equipment, a vehicle, and a lease asset related to SVCE’s office premises.
Other noncurrent assets include investments of $150,000,000 and $57,000,000 at the end of fiscal years 2024 and 2023, respectively.
The largest component of current liabilities is the cost of electricity delivered to customers that was not yet paid by SVCE by the end of the fiscal year. Current liabilities for the cost of energy fluctuated each year due to changes in payment terms of certain energy products, as well as the prices of those products. Accrued cost of electricity was approximately $64,000,000 and $79,000,000 at the end of fiscal years 2024 and 2023, respectively.
Noncurrent liabilities consist of supplier security deposits held by SVCE as collateral.
Operating revenues increased each year from fiscal years 2022 to 2024, primarily from increases in rates charged to customers. SVCE also receives revenues from sources other than retail customer sales. These sources include liquidated damage revenue resulting from electricity suppliers’ noncompliance with contract provision and grant income used to assist with various customer programs.
Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
7 Detailed Analysis (continued)
Grant income from the California Arrearage Payment Plan (CAPP) was included in nonoperating revenues for fiscal years 2022 and 2023. This grant was applicable for two years and did not recur in fiscal year 2024. Investment income increased each year due to changes in market interest rates as well as increases in invested assets.
Operating expenses fluctuated each year primarily due to market forces that affect the cost of electricity, SVCE’s largest expense. SVCE procures energy from a variety of sources to reduce market risk and to maintain a balanced renewable power portfolio. The primary driver of the decrease in energy costs from 2023 to 2024 was decrease in certain market prices.
Significant Capital Asset and Long-Term Financing Activity SVCE does not own assets used for electric generation or distribution. Included in capital assets are office equipment, such as computers, furniture, a vehicle, leasehold improvements and a leased asset.
Assets that are leased by SVCE, such as office premises, are recorded in the Statement of Net Position with a related liability for future obligations.
Currently Known Facts, Decisions, or Conditions
SVCE serves approximately 96% of all eligible customers in the service area, and that participation rate is expected to remain stable in 2025.
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 annually and through long-term commitments of more than ten years. The state has also directed load-serving entities (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. SVCE has executed 18 RPS contracts of ten years or more 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).
Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
8 Currently Known Facts, Decisions, or Conditions (Continued) SVCE uses a portfolio risk-management approach in its power purchasing program, seeking low-cost supply and 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 to balance cost stability and 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 California Public Utilities Code (CPUC), the California Energy Commission (CEC), and California Independent System Operator (CAISO). The RA resources ensure enough supply in the right locations and sufficient ramping capability to meet the load in the CAISO market.
In the fiscal year ending September 30, 2024, SVCE’s retail load increased by about 2% from the prior fiscal year to 3.93 Terrawatt-hours (TWhrs). SVCE expects retail load to grow to 4.01 TWhrs for the Fiscal Year ending September 30, 2025, resulting primarily from residential load increase due to transportation and building electrification load growth. Over the next ten years, SVCE expects the load to grow by about 2% per year. 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. SVCE’s long-term load forecast is driven primarily by the number and types of customers. SVCE’s planning accounts for the expected load growth from the transportation, data center (including artificial intelligence), and building electrification sectors.
In 2019, the Board of Directors approved a Commercial Pricing Policy that allows SVCE to offer innovative customized contract offerings to customers that support long-term customer retention.
SVCE has signed long-term arrangements with two major customers for customized power supply offerings and is working with additional prospective customers.
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
9 Currently Known Facts, Decisions, or Conditions (Continued) SVCE expects to continue to provide competitive electric rates. Volatile energy prices and the variability of the power charge indifference adjustment (PCIA) can be barriers to providing stable rates. The PCIA is an accounting mechanism to ensure indifference between bundled and unbundled customers to pay for assets procured by IOUs on behalf of their customers before unbundled customers departed (for a CCA or ESP, e.g.). For SVCE, the PCIA is calculated by determining the market value of Pacific Gas and Electric Company’s (PG&E) portfolio for assets procured in 2017 or prior. SVCE’s customers pay a proportionate share of the costs incurred for that legacy portfolio. As of January 2023, SVCE has increased its discount relative to PG&E’s generation service to 4 percent. SVCE continues to advocate for legislation and regulatory proceedings that impact rates (e.g., procurement mandates, load management standards, and reliability proceedings).
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 sets aside funds, known as reserves, to ensure it can continue serving customers even during times of financial stress, such as when energy costs are highly volatile. SVCE’s analyses of the reserves required to withstand plausible risk events indicate a reserve target to cover 350 days of operation or about $430 million. Risk event analyses, also called stress tests in the industry, evaluate how extreme but plausible scenarios could deplete reserves. These tests provide valuable insight for shaping fiscal year budgets and reserve targets to help mitigate the impact of potential risks. They can also ensure that SVCE remains resilient in different scenarios and help guide the development of the agency’s strategic plan. Risks include market price, revenue, counterparty credit and performance, load and generation fluctuations, operational and financial liquidity, and regulatory and legislative changes.
SVCE is committed to investing funds not needed for operations or to meet reserve requirements into our communities via lower rates and customer and community decarbonization programs that disperse funds through rebates, scholarships, services, and grants. As of the fiscal year ending September 30, 2024, SVCE has remaining earmarked funds of about $95 million towards these decarbonization programs. Most of these programs have been implemented and are currently available to customers. SVCE is working to market and increase customer adoption, which takes time and can stretch out the disbursement of these funds across many years. Yearly fund disbursements are expected to increase in the coming years with accelerated customer adoption of these programs. In addition to continued baseline funding for decarbonization programs, SVCE plans to implement a policy directing any additional funds to support future customer rate stability, further scaling adoption of pollution-free appliances, and investments in local clean power supply technology.
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
10 Currently Known Facts, Decisions, or Conditions (Continued) SVCE strongly focuses on building 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 board members, stakeholders, 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 the finance department at 333 W. El Camino Real, #330, Sunnyvale, CA 94087 or contact [email protected].
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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, 2024 AND 2023
The accompanying notes are an integral part of these financial statements. 11 2024 2023
ASSETS
Current assets
Cash and cash equivalents $ 261,473,872 $ 230,694,505
Accounts receivable, net of allowance 43,061,445 49,889,393 Accrued revenue 29,579,485 30,432,122
Other receivables 16,224,969 4,396,286
Prepaid expenses 843,135 1,353,177
Deposits 709,798 25,602,479
Investments 68,460,281 34,331,496
Total current assets 420,352,985 376,699,458
Noncurrent assets
Deposits 45,130 45,130
Investments 150,007,868 56,819,513
Capital assets, net of depreciation and amortization 761,171 1,259,365 Total noncurrent assets 150,814,169 58,124,008
Total assets 571,167,154 434,823,466
LIABILITIES
Current liabilities
Accrued cost of electricity 64,433,952 78,604,532
Accounts payable 1,770,065 2,857,744
Other accrued liabilities 2,006,073 1,286,104
User taxes and energy surcharges due to other governments 1,679,325 1,726,800 Supplier security deposits 375,000 1,020,000
Lease liability 402,740 508,483
Total current liabilities 70,667,155 86,003,663
Noncurrent liabilities
Supplier security deposits 15,303,125 23,881,250
Lease liability - 402,738
Total noncurrent liabilities 15,303,125 24,283,988
Total liabilities 85,970,280 110,287,651
NET POSITION
Net investment in capital assets 358,431 348,144
Unrestricted 484,838,443 324,187,671
Total net position $ 485,196,874 $ 324,535,815
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENTS REVENUES, EXPENSES
AND CHANGES IN NET POSITION
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
The accompanying notes are an integral part of these financial statements. 12 2024 2023
OPERATING REVENUES
Electricity sales, net $ 530,672,320 $ 500,150,468
GreenPrime electricity premium 2,498,428 1,456,427
Liquidated damages 1,291,500 2,019,600
Other income 27,540 48,656
Total operating revenues 534,489,788 503,675,151
OPERATING EXPENSES
Cost of electricity 361,542,484 375,015,282
Contract services 14,235,827 10,228,607
Staff compensation and benefits 12,525,043 9,682,535
Other operating expenses 8,219,946 5,509,407
Depreciation and amortization 639,272 621,282
Total operating expenses 397,162,572 401,057,113
Operating income 137,327,216 102,618,038
NONOPERATING REVENUES (EXPENSES)
Investment income 23,348,067 8,546,278
Grant income - 716,553
Finance costs (14,224) (28,576)
Nonoperating revenues (expenses), net 23,333,843 9,234,255 CHANGE IN NET POSITION 160,661,059 111,852,293
Net position at beginning of year 324,535,815 212,683,522 Net position at end of year $ 485,196,874 $ 324,535,815 Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
The accompanying notes are an integral part of these financial statements. 13 2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 549,801,243 $ 511,002,951
Receipts of liquidated damages 1,216,500 2,019,600
Receipts of security deposits 34,632,586 15,470,000
Other operating receipts 15,290 38,633,263
Payments to suppliers for electricity (386,298,737) (359,547,762) Payments of security deposits (18,875,780) (28,151,765) Payments for other goods and services (22,723,427) (14,469,068) Payments of staff compensation and benefits (12,352,507) (9,393,101) Payments of taxes and surcharges to other governments (8,997,384) (8,512,842) Net cash provided by operating activities 136,417,784 147,051,276
CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES
Grant revenue received - 716,553
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments of lease obligation (522,705) (536,056)
Payments to acquire capital assets (151,584) (188,270)
Net cash used by capital and related
financing activities (674,289) (724,326)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment income received 22,096,463 6,946,208
Proceeds from investment sales 54,494,824 -
Purchase of investments (181,555,415) (91,130,973)
Net cash used by investing activities (104,964,128) (84,184,765) Net change in cash and cash equivalents 30,779,367 62,858,738 Cash and cash equivalents at beginning of year 230,694,505 167,835,767 Cash and cash equivalents at end of year $ 261,473,872 $ 230,694,505 Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
The accompanying notes are an integral part of these financial statements. 14 2024 2023
Operating income $ 137,327,216 $ 102,618,038
Adjustments to reconcile operating income to net
cash provided by operating activities
Depreciation and amortization expense 639,272 621,282
(Increase) decrease in:
Accounts receivable, net of allowance 6,827,948 5,773,835 Accrued revenue 852,637 (4,923,424)
Other receivables (10,833,628) (2,734,538)
Prepaid expenses 510,042 (375,249)
Current deposits 24,892,681 (5,037,158)
Increase (decrease) in:
Accrued cost of electricity (14,170,580) 42,549,670
Accounts payable (1,077,173) 1,839,430
Other accrued liabilities 719,969 216,587
User taxes and energy surcharges due to other governments (47,475) 32,803 Supplier security deposits (9,223,125) 6,470,000
Net cash provided by operating activities $ 136,417,784 $ 147,051,276 2024 2023
NONCASH INVESTING ACTIVITIES
Unrealized appreciation and
timing differences in investment income $ 1,251,604 $ 1,600,070
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
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, 2024, 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, 2024 AND 2023
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 – 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.
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 following types of investments:
U.S. Treasury obligations Medium term notes
U.S. Agency obligations Negotiable certificates of deposits Municipal obligations Asset-backed securities
Deposits at banks Supranational obligations
Local Agency Investment Fund Joint power authority pool Commercial paper Money market funds
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
17 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
PREPAID EXPENSES
Payments made to vendors that will benefit periods beyond the end of the current fiscal year are recorded as prepaid expenses.
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. The balance in current deposits decreased significantly from 2023 to 2024 due to changes collateral requirements with certain counterparties, including changing credit risk and the completion of certain contracts.
LEASE ASSET AND LEASE LIABILITY
SVCE recognizes an asset and liability when it enters into certain leasing arrangements. The cost of 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 relate 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.
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
18 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.
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
Operating revenues include energy sales to retail and wholesale customers, and liquidated damages from suppliers that fail to meet delivery commitments.
Investment income and grants that are not earned from the delivery of program activities are considered “nonoperating revenues”.
REVENUE RECOGNITION
SVCE recognizes revenue according to 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 amounts.
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, 2024 AND 2023
19 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, 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 electricity 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 electricity 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.
Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
20 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 may 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.
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
21 3. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
ACCOUNTS RECEIVABLE
Accounts receivable were as follows as of September 30:
2024 2023
Accounts receivable from customers 45,861,445 $ $ 52,689,393 Allowance for uncollectible accounts (2,800,000) (2,800,000) Net accounts receivable 43,061,445 $ $ 49,889,393
The majority of account collections occur within the first few months following the issuance of customer invoices. SVCE estimates that a portion of the invoiced 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 ending allowance for uncollectible accounts reflects the remaining balance after certain accounts were fully written off.
OTHER RECEIVABLES
Other receivables consist primarily of amounts due from energy counterparties, generally as a result of certain wholesale transactions for energy products. The receivable balance at September 30, 2024 increased from the prior year as a result of a large resale agreement that was not in place during the prior year.
4. INVESTMENTS
During the years ended September 30, 2024 and 2023, SVCE purchased investments with original maturities of three months or more. As of September 30, investments, presented at fair value, were as follows:
2024 2023
U.S. Treasury bonds and notes $ 85,082,906 $ 50,243,069 Supranational obligations 862,521 -
Federal agency commercial 10,539,032 1,336,930
Corporate notes 42,194,852 9,893,896
Commercial paper 37,181,428 18,981,723
Certificate of deposits 9,228,478 7,429,188
Bank note 646,226 -
Asset-backed securities 32,732,706 3,266,203
Total investments $ 218,468,149 $ 91,151,009
Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
22 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, 2024 and 2023, SVCE’s investments are considered Level 1 inputs, except for certificates of deposits, which are based on the nominal value. Quoted prices in active markets were used for determining fair value measurement.
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 September 30, 2024 and 2023, credit risk for other investments were rated as follows:
Moody's Investors Service 2024 2023
Supranational Agency Bond and Notes AAA -
Corporate Notes BBB+ to AA1 BBB+ to AA1
Commercial Paper A-1 to A+ A-1 to A-1+
Certificate of Deposits A-1 to A+ A to A-1+
Asset-Backed Securities NR to AAA AAA
S&P Rating
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 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
23 4. INVESTMENTS (CONTINUED)
CUSTODIAL CREDIT RISK – CASH AND CASH EQUIVALENTS
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, 2024 and 2023, none of SVCE’s bank balances are known to be individually exposed to custodial 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 custodial 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 the percentages of investments by maturity date as of September 30, 2024 and 2023:
2024 2023
0 - 6 months 11.99% 32.48%
6 - 12 months 19.36% 15.89%
1 - 2 years 28.88% 32.50%
2 - 3 years 31.02% 15.43%
3 - 4 years 5.27% 1.38%
4 - 5 years 3.48% 2.32%
Over 5 years 0.00% 0.00%
Total 100.00% 100.00%
Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
24 5. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2024 was as follows:
Beginning
balance Increases Decreases
Ending
balance
Capital assets being depreciated and amortized:
Furniture and equipment $ 758,883 $ 129,051 $ (3,674) $ 884,260 Leasehold improvements 134,273 15,701 - 149,974
Lease asset 2,287,125 - - 2,287,125
Total capital assets being depreciated and amortized 3,180,281 144,752 (3,674) 3,321,359 Less accumulated depreciation and amortization:
Furniture, equipment and leasehold improvements (476,416) (157,772) - (634,188) Lease asset (1,444,500) (481,500) - (1,926,000)
Total accumulated depreciation and amortization (1,920,916) (639,272) - (2,560,188) Total capital assets, net of depreciation and amortization 1,259,365 $ $ (494,520) $ (3,674) $ 761,171 Capital asset activity for the year ended September 30, 2023 was as follows:
Beginning
balance Increases Decreases
Ending
balance
Capital assets being depreciated and amortized:
Furniture and equipment $ 567,107 $ 198,776 $ (7,000) $ 758,883 Leasehold improvements 134,273 - - 134,273
Lease asset 2,287,125 - - 2,287,125
Total capital assets being depreciated and amortized 2,988,505 198,776 (7,000) 3,180,281 Less accumulated depreciation and amortization:
Furniture, equipment and leasehold improvements (343,634) (139,782) 7,000 (476,416) Lease asset (963,000) (481,500) - (1,444,500)
Total accumulated depreciation and amortization (1,306,634) (621,282) 7,000 (1,920,916) Total capital assets, net of depreciation and amortization 1,681,871 $ $ (422,506) -$ 1,259,365 $
6. LEASE
A lease asset is reported in accordance with Governmental Accounting Standards Board No. 87 Leases (GASB 87).
In February 2024 SVCE amended its non-cancelable lease for its office premises, extending the lease through October 31, 2025.
Rental payments under this lease were $529,000 and $519,000 for the years ended September 30, 2024 and 2023, respectively.
As of September 30, 2024, future minimum lease payments under the lease were projected as approximately $403,000.
Item 5
Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
25 7. GRANT REVENUE
SVCE administered 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. This program concluded in 2023.
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, 2024 and 2023, SVCE had 62 and 48 plan participants, respectively. SVCE is required to contribute 10% of covered payroll as a match to required employee contributions. SVCE contributed approximately $981,000 and $758,000 during the years ended September 30, 2024 and 2023, 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 $500.
SVCE maintains risk management policies, procedures and systems that help mitigate credit, liquidity, market, operating, regulatory and other risks that arise from participation in the California energy market.
Credit guidelines include a preference for transacting with investment-grade counterparties, evaluating counterparties’ financial condition and assigning credit limits as applicable. These credit limits are established based on risk and return considerations under terms customarily available in the industry. In addition, SVCE enters into netting arrangements whenever possible and, where appropriate, obtains collateral and other performance assurances from counterparties.
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
26 10. PURCHASE COMMITMENTS
POWER AND ELECTRIC CAPACITY
In the ordinary course of business, SVCE enters into various power purchase agreements to acquire renewable and other energy and electric capacity. The price and volume of purchased power may be fixed or variable. Variable pricing is generally based on the market price of either natural gas or electricity at the date of delivery. Variable volume is generally associated with contracts to purchase energy from as-available resources such as solar, wind and hydro-electric facilities.
SVCE enters into power purchase agreements in order to comply with state law and voluntary targets for renewable and greenhouse gas (GHG) free products and to ensure stable and competitive electric rates for its customers.
The following table represents the expected, undiscounted, contractual obligations outstanding as of September 30, 2024:
Years ending September 30,
2025 276,000,000$
2026 197,000,000
2027 205,000,000
2028 207,000,000
2029 203,000,000
2030-2046 1,975,000,000
Total $ 3,063,000,000
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
27 11. JOINT VENTURE
The SVCE participates in a joint powers agreement (JPA) through the California Community Choice Financing Authority (CCCFA). CCCFA was formed to assist its members by undertaking the financing or refinancing of energy prepayments through 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.
CCCFA issued the following bonds, excluding original issue premium, 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.
Deal Date issued Amount
2021B September 2021 1,234,720,000 $
2023B January 2023 841,550,000
2024A January 2024 1,101,625,000
$ 3,177,895,000
SVCE will purchase energy from CCCFA in the same manner as it purchases energy from other suppliers. SVCE purchased approximately $46,622,000 and $29,081,000 from CCCFA during fiscal years 2024 and 2023, respectively. The outstanding purchase commitments related to these financing facilities of $251,143,000 are included in Note 10. This amount represents executed energy contracts assigned to CCCFA at September 30, 2024. Additional contracts will be assigned throughout the full bond period.
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, 2024, and 2023, SVCE contributed approximately $30,000 and $87,000, 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.
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Attachment 2
SILICON VALLEY CLEAN ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
28 12. FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for years ending after September 30, 2024:
GASB has approved GASB Statement No. 102, Certain Risk Disclosures, and GASB No. 103, Financial Reporting Model Improvements.
Management is evaluating the effect of implementation of these statements.
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Attachment 2
Staff Report – Item 6
Item 6: Establishing Rate Stabilization Fund Under GASB 62 From: Monica Padilla, CEO
Prepared by: Amrit Singh, CFO and Director of Administrative Services Date: 2/28/2025
RECOMMENDATION
This is an informational item to provide the Silicon Valley Clean Energy (SVCE) Audit Committee (Committee) with an overview of staff’s recommendation to the Finance and Administration Committee at the February 26, 2025, meeting and SVCE Board of Directors at the March 12th, 2025, meeting to establish a Rate Stabilization Fund under the Government Accounting Standard Board (GASB) Standard 621.
BACKGROUND
GASB 62 is an accounting method available to government entities, allowing SVCE to recognize revenues set aside for certain costs in the same period as expenses occur under Generally Accepted Accounting Principles (GAAP). Currently, the Board directs funding for programs and other earmarked projects, such as purchasing an SVCE office building, in each fiscal year’s budget. While these funds are transferred from the respective fiscal year’s operating budget (non-GAAP accounting), the financial statements (GAAP accounting) do not recognize these expenditures until they are incurred. Under GASB 62, revenues can be deferred to account for these earmarked funds to a Rate Stabilization Fund. When expenditure occurs, the deferred revenues can be recognized from the Rate Stabilization Fund.
Ava Community Energy, Clean Power Alliance, Marin Clean Energy, Orange County Power Authority, and Sonoma Clean Power have implemented GASB 62.
ANALYSIS & DISCUSSION
GASB 62 accounting will enable SVCE to defer revenues to future periods and recognize those revenues in periods when expenditures occur for projects that the Board directed those revenues toward. For example, for Fiscal Year 2023-2024, the Board directed $20 million toward purchasing an SVCE office building. With GASB 62, staff could have deferred revenues of $20 million, reducing the addition to the net position by $20 million.
When SVCE completes purchasing the office building, SVCE could recognize the $20 million in deferred revenues, thereby not impacting that fiscal year's addition to net position or net revenues.
This accounting provision impacts the reporting of SVCE’s net position in the financial statements. It lowers the net position for the fiscal year, when revenues are deferred, and increases it for the fiscal year when those revenues are recognized. The deferred revenues create a corresponding liability in the Statement of Net Position. Staff’s assessment of the impact on readers of financial statements is likely positive because the net position can now account for unspent funds that are earmarked for projects, either not fully implemented or not yet started.
1 The Governmental Accounting Standards Board (GASB) is the organization that determines and updates generally accepted accounting principles (GAAP) for government entities.
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SILICON VALLEY \3/ CLEAN ENERGY
Agenda Item: 5 Agenda Date: 02/28/2025
The criterion staff proposes to defer or recognize revenues to and from the rate stabilization fund will attempt to keep GAAP recognized net revenues positive to the extent possible. At the end of the fiscal year, staff working with SVCE’s accountant may defer revenues such that total deferred revenues do not exceed the balance of unspent earmarked funds and the addition to net position does not fall below 2% of the revenues.
If the addition to the GAAP net position falls below 2% of revenues for any fiscal year, revenues may be recognized from the rate stabilization fund to the extent balance exists such that the GAAP addition to the net position is at or above 2% of the revenues and/or to adjust the rate stabilization balance to reflect the outstanding balance of all earmarked budgeted funds.
STRATEGIC PLAN
Prudently managing SVCE’s financial position is supported by Strategic Plan Goal 6 – “Maintain healthy financial position; avoid failures in the management of market risk, credit risk, liquidity risk, operational risks, and enterprise risks.”
FISCAL IMPACT
Implementing a Rate Stabilization Fund is an accounting change without direct financial impact. The fiscal year in which revenues are deferred would show a commensurate reduction in net revenues, and the fiscal year in which revenues are recognized would show a commensurate increase in net revenues in the financial statements.
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