Valley Clean Energy Board Meeting – April 14, 2022
via video/teleconference
Item 16 – CC Power Long Duration Storage (LDS): Goal Line Project 1 yvonnehunterphotography.com
Public Comments
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Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)]
1. Long Duration Storage Procurement Goals
2. CPUC Mid-term Reliability Procurement Order
3. Onward Energy’s Goal Line Project Overview
4. CC Power Participating Members
5. Allocations and Authority
6. Contract Structure
7. Conclusion / Recommendation
3 Item 16 – CC Power LDS Goal Line Project: Overview
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] • Enhance portfolio value via cost-effective resources: value of energy + capacity > costs • Integrate intermittent resources (solar + wind)
• Support grid reliability
• Share development and project performance risk via new joint powers agency → California Community Power (CC Power)
• “Right-size” project subscription
• Meet potential CPUC procurement mandates
4 Item 16 – CC Power LDS Goal Line Project: LDS Joint Procurement Goals Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] • LSEs required to collectively procure 11,500 MW NQC of new resources • Follow-on to November 7, 2019 CPUC decision mandating 3,300 MW NQC procurement for 2021-2023 to maintain reliability
• Contract of at least 10 years
• Allocated to LSEs by load share
• Resources must be zero-emission or RPS eligible (no fossil resources) • 4,500 MW of obligation subject to specific category requirements 5 Item 16 – CC Power LDS Goal Line Project: Mid-term Reliability Procurement Order (MTR)
D.21-06-035 adopted by CPUC on June 24, 2021 to address mid-term reliability Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 6 Item 16 – CC Power LDS Goal Line Project: Procurement Order Timing Procurement Category 2023 2024 2025 2026 Total
Zero-emissions generation, generation paired with
storage, or demand response resources - - 2,500 - 2,500 Firm zero-emitting resources - - - 1,000 1,000
Long-duration storage resources - - - 1,000 1,000
Remaining New Capacity Required - - 7,000
Total Annual Capacity Requirements 2,000 6,000 1,500 2,000 11,500 Procurement Obligation in Net Qualifying Capacity (MW) for All LSEs by Category and Year 1,000 MW of LDS ordered by CPUC
• Technology agnostic
• 8-hour minimum discharge duration
• COD June 2026 – demonstrate reasonable effort by February 2023 • 10-year minimum term
• Subject to Effective Load Carrying Capability (ELCC) adjustments Procurement Category 2023 2024 2025
Indicative
2026
Indicative
4-Hour Battery 96.3% 90.7% 74.2% 69.0%
6-Hour Battery 98.0% 93.4% 79.6% 75.1%
8-Hour Battery 98.2% 94.3% 82.2% 78.2%
8-Hour Pumped Storage Hydro 76.8%
12-Hour Pumped Storage Hydro 80.8%
CPUC Interim ELCCs
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 7 Item 16 – CC Power LDS Goal Line Project: Project Overview Goal Line was one of the highest-ranking LDS projects out of the Joint RFO issued in October 2020
• Seller - Goal Line BESS 1, LLC
• Developer – Onward Energy
• Technology –Lithium-ion, 8 hours discharge duration
• Project size - 50 MW/400 MWh
• Product – Tolling Agreement w/full capacity rights
• Location – Escondido, CA
• COD – June 2025
• Price - fixed $/kw-mo, no escalation
• Term – 15 years
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 8 Item 16 – CC Power LDS Goal Line Project: Member Participation 6 CCAs agreed to move forward with joint LDS procurement for Goal Line • MTR LDS procurement mandate for the 6 CCAs is 77.5 MW1 • 99.1 MW adjusted by ELCC
• Goal Line is 50 MW nameplate – meeting nearly 50% of ELCC adjusted need under the MTR • Capacity to be allocated based on MTR share obligation 1) PCE participated in the Tumbleweed project but is not a participant in the Goal Line proj.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 9 Item 16 – CC Power LDS Goal Line Project: Allocations & Authority Each CCA will seek their respective governing body authority to participate CCA Entitlement Share
%
Expected
Entitlement Share
MW
CPSF 21.50% 10.75
RCEA 4.00% 2.00
SJCE 24.22% 12.11
SVCE 28.42% 14.21
SCPA 17.36% 8.68
VCE 4.50% 2.25
Total 100% 50
MTR
Requirement
NQC MW
MTR
Obligation
NQC MW
Tumbleweed
Entitlement
Nameplate MW
Remaining
Need NQC
MW
Goal Line
Entitlement
Nameplate
MW
Net Open
Position
+Surplus/(-)
Deficit NQC MW
4.0 5.1 2.86 2.25 2.25 0
VCE will satisfy the MTR obligation through participation in the Tumbleweed & Goal Line LDS projects Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 1 0
Item 16 – CC Power LDS Goal Line Project: Contract Structure Energy Storage Services Agreement Project Participation Share Agreement LDS Project CCA Customers
(Each participating CCA executes with Developer’s Seller entity and CC Power) Buyer Liability Pass Through Agreements
Operations Agreement Scheduling
Coordinator
Agreement
VCE to execute the PPSA and the BLPTA (the Operating Agreement will be signed at a later date) Developer CC Power CC Power 6 CCAs
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] • Goal Line was selected through a robust and competitive solicitation process • Goal Line NPV to participating CCAs is highly uncertain • Project is expected to include project labor agreement • Contracting Structure includes a “step-up” provision which exposes VCE to taking up to additional capacity (based on contract share) in the event a participant defaults1 • Procurement of Long Duration Storage (8-hours or more) is mandated through MTR order • VCE’s expected share of Goal Line is 2.25 MW (nearly 50% of obligation) • VCE’s has a need for additional long duration storage2 • Recommendation: Authorize the Executive Officer to execute the following agreements:
• Project Participation Share Agreement (PPSA)
• Energy Storage Service Agreement (ESSA) - Buyer Liability Pass Through Agreement (BLPTA) 11 Item 16 – CC Power LDS Goal Line Project: Conclusion/Recommendation 1) Staff will seek approval from the VCE Board for a maximum authorized amount of 3.61MW. 2) Per the Carbon Neutral study VCE has a need beyond the mandate which can be procured at a later date.
Valley Clean Energy Board Meeting – April 14, 2022
via video/teleconference
Item 17 – 7/1/21 to 12/31/21 Audit – James Marta & Company 12 yvonnehunterphotography.com
Public Comments
13 To Provide Public Comment on any agenda item please:
➢ E-mail 300 words or less to: [email protected] OR
Join the Public Comment Queue by
➢ “Raising Hand” on Zoom Meeting
OR
➢ Press *9 if joining by phone
Emailed comments received before the item has concluded will be read into the record.
Emailed comments received after the item has concluded but before the end of the meeting will not be read but will be included in the meeting record.
Presented by
James Marta CPA, CGMA, ARPM
VALLEY CLEAN ENERGY ALLIANCE
SUMMARY OF AUDIT RESULTS
DECEMBER 31, 2021
14 James Marta & Company LLP
Agenda • Communications with Those Charged with Governance • December 31, 2021 Valley Clean Energy Alliance (VCE)
Financial Information and Auditor’s Report
15 COMMUNICATION WITH
THOSE CHARGED WITH GOVERNANCE
16 James Marta & Company LLP
Professional
standards require
that we provide
you with
information related
to our audit of
VCE. This
information is
summarized as
follows:
• Responsibilities and Opinion • Financial statements are the responsibility of management
• Our responsibility is to express
an audit opinion
• We issued an unmodified
opinion (the best and auditor
can give)
17 James Marta & Company LLP
REPORT TO YOU - INTERACTIONS WITH MANAGEMENT
Management Consultations
with Other Independent
Accountants:
✓ None
Disagreements with
Management of Difficulties
Encountered:
✓ None
Management
Representations:
✓ Received
James Marta & Company LLP
REPORT TO YOU
QUALITATIVE
ASPECTS OF
ACCOUNTING
PRACTICES
• Significant Accounting Policies and
Changes in Those Policies - No changes
• Management Judgments and
Accounting Estimates
• Accounts receivable, unbilled
revenues, allowance for
uncollectible accounts
• Appropriate and in-line with
standards
19 James Marta & Company LLP
AUDIT
PROCEDURES
• An Audit is more than just assurance regarding the fairness of presenting financial statements. An Audit involves gaining an understanding of the organization’s systems and controls.
- Understanding; systems, policies and procedures
- Tests of control
- Gathering other audit evidence, review of details, performing test calculations - Review of accounting methods and reporting
20 James Marta & Company LLP
RESULTS OF
THE AUDIT
21 Consideration Area Result
Planned Scope and Timing Scope as anticipated
Audit was not performed within the agreed timeline
Findings Identified in
Performing the Audit
2021-01 Closing Entries: There were adjustments
identified during the audit that were not identified by management as part of their standard closing
process.
Significant Adjustments or
Disclosures Not Reflected in
the Financial Statements
None
FINANCIAL STATEMENTS
WITH INDEPENDENT AUDITOR'S REPORT
22 James Marta & Company LLP
INDEPENDENT
AUDITOR'S
REPORT
• Pages 1-3 of the Audited Financial
Statements
• Unmodified opinion (Page 1),
the best opinion that we can provide
23 James Marta & Company LLP
MANAGEMENT’S
DISCUSSION &
ANALYSIS
(MD&A)
• Pages 4-8
• Financial Highlights
• Condensed financial statements and graphs plus narrative about why balances changed from prior years
• Analysis of balances and transactions
• Facts or conditions that are expected to have a significant effect 24 James Marta & Company LLP
STATEMENT OF
NET POSITION
25 Cash decreased $4.1M
Accounts Receivable are
down by $1.7M
Liabilities are down by
$2.8M
Largest factor is Accrued
cost of electricity – down
$2.1M
Net position is
down $3.1M
James Marta & Company LLP
STATEMENT OF
REVENUES,
EXPENSES,
AND CHANGES
IN NET
POSITION
26 Primary drivers: • Electricity sales and
costs for 6 month
period versus 12
month
• Conscious pricing
decisions
• COVID19
James Marta & Company LLP
STATEMENT OF
CASH FLOWS
27 Operation used
$3.9M of cash
Financing used
$220k of cash
Net cash used in the
6 months was
$4.1M
James Marta & Company LLP
NOTES • Pages 12-18
• Note 1, page 12 describes the change in fiscal year end • Note 1, page 14 summarizes restricted and unrestricted net position • Note 3, page 15 shows receivables and accrued; the allowance assumes certain reimbursements from the state for customer delinquent accounts. • Note 4 page 16, Line of Credit; balance at year end was zero • Note 4 page 16, chart shows payments made on term loan from River City Bank • Note 6 page 17, describes management consideration of GASB 87 implementation for leases
• Note 10 page 18, describes management plans regarding future changes in customer rates
28 James Marta & Company LLP
INDEPENDENT
AUDITOR’S
REPORT
ON INTERNAL
CONTROL AND
COMPLIANCE
• One Material Weaknesses identified
• 2021-01 Closing Entries
• No instances of noncompliance
identified
29 James Marta & Company LLP
Thank you to
Valley Clean Energy Alliance staff
for the partnership
in completing this engagement.
30 James Marta CPA, CGMA, ARPM
QUESTIONS?
31