Item 7
VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 7
______________________________________________________________________________ TO: Board of Directors
FROM: Edward Burnham, Finance and Operations Director
Mitch Sears, Executive Officer
SUBJECT: Financial Update – December 31, 2022 (unaudited) financial statements (with comparative year to date information) and Actual vs. Budget year to date ending December 31, 2022
DATE: February 9, 2023
RECOMMENDATION
Accept VCE Financial Statements (unaudited) for the period of December 1, 2022 to December 31, 2022 (with comparative year to date information) and Actual vs. Budget year to date ending December 31, 2022.
BACKGROUND & DISCUSSION
The attached financial statements are prepared in a form to satisfy the debt covenants with River City Bank pursuant to the Line of Credit and are required to be prepared monthly.
The Financial Statements include the following reports:
• Statement of Net Position
• Statement of Revenues, Expenditures and Changes in Net Position • Statement of Cash Flows
In addition, Staff is reporting the Actual vs. Budget variances year to date ending December 31, 2022.
Financial Statements for the period December 1, 2022 – December 31, 2022 In the Statement of Net Position, VCEA, as of December 31, 2022, has a total of $8,497,996 in its checking, money market and lockbox accounts, $1,100,000 restricted assets for the Debt Service Reserve account, $1,998,276 restricted assets related to supplier deposits, and $2,709,273 restricted assets for the Power Purchases Reserve account.
Item 7
The term loan with River City Bank includes a current portion of $712,255. The line of credit with the County of Yolo was paid in full on December 29, 2022. On December 31, 2022, VCE’s net position is $15,848,882.
In the Statement of Revenues, Expenditures, and Changes in Net Position, VCEA recorded $5,710,078 of revenue (net of allowance for doubtful accounts), of which $6,588,058 was billed in December, and $3,430,397 represent estimated unbilled revenue. The cost of electricity for the December revenue amount totaled $4,578,927. For December, VCE’s gross margin was approximately 13% and net income totaled $599,073. The year-to-date change in net position was $6,114,633.
In the Statement of Cash Flows, VCEA cash flows from operations were $7,616,356 due to December cash receipts of revenues being more than the monthly cash operating expenses.
Actual vs. Budget Variances for the year to date ending December 31, 2022 Below are the financial statement line items with variances >$50,000 and 5% • Electric Revenue – ($4,422,520) and -5% – Unfavorable variance due to the 2022 Budget incorporated revenues associated with extreme temperatures and drought conditions. These revenues have not fully materialized in the actuals for 2022. • Purchased Power – ($7,409,799) and -11% – Unfavorable variance due to warmer weather than forecast during the winter months, heat storms in June and September, and gas prices driving short-term power market increases. • Marketing Collateral – 59,200 and 25% – favorable variance related to the delay of engagement activities related normalization post COVID-19.
• Contingency – $240,000 and 100% – favorable variance to budget is due to not having a need yet to utilize the contingency funds set aside in the budget.
Attachments
1. Financial Statements (Unaudited) December 1, 2022 to December 31, 2022 (with comparative year to date information.)
2. Actual vs. Budget for the year to date ending December 31, 2022
VALLEY CLEAN ENERGY ALLIANCE
FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD OF NOVEMBER 1 TO DECEMBER 31, 2022
PREPARED ON FEBRUARY 1, 2023
2 ASSETS
Current assets:
Cash and cash equivalents 8,497,996 $
Accounts receivable, net of allowance 11, 085,080
Accrued revenue 3,430,397
Prepaid expenses 53,420
Other current assets and deposits 2,139,195
Total current assets 25,206,088
Restricted assets:
Debt service reserve fund 1,100,000
Power purchase reserve fund 2,709,273
Total restricted assets 3,809,273
TOTAL ASSETS $ 29,015,361
LIABILITIES
Current liabilities:
Accounts payable 5,486,908 $
Accrued payroll 96,998
Interest payable 3,985
Due to member agencies (28)
Accrued cost of electricity 3,878,641
Other accrued liabilities 948,991
Security deposits - energy supplies 1,980,000
User taxes and energy surcharges 58,729
Limited Term Loan 712,255
Loan - County of Yolo -
Total current liabilities 13,166,479
Total noncurrent liabilities -
TOTAL LIABILITIES $ 13,166,479
NET POSITION
Restricted
Local Programs Reserve 224,500
Restricted 3,809,273
Unrestricted 11,815,109
TOTAL NET POSITION $ 15,848,882
(UNAUDITED)
VALLEY CLEAN ENERGY ALLIANCE
STATEMENT OF NET POSITION
DECEMBER 31, 2022
3 FOR THE PERIOD
ENDING
DECEMBER 31, 2022 YEAR TO DATE
OPERATING REVENUE
Electricity sales, net 5,710,078 $ 85,327,479 $
Other revenue - 1,158,974 $
TOTAL OPERATING REVENUES 86,486,453 5,710,078 $
OPERATING EXPENSES
Cost of electricity 4,578,927 74,399,899 $
Contract services 328,355 2,814,742 $
Staff compensation 103,712 1,265,933 $
General, administration, and other 59,031 1,849,431 $
TOTAL OPERATING EXPENSES 80,330,005 5,070,025 $
TOTAL OPERATING INCOME (LOSS) 6,156,448 640,054 $
NONOPERATING REVENUES (EXPENSES)
Interest income 11,251 46,501 $
Interest and related expenses (52,232) (88,316) $
TOTAL NONOPERATING REVENUES
(EXPENSES) (41,815) (40,981) $
CHANGE IN NET POSITION 6,114,633 599,073 $
Net position at beginning of period 15,249,809 9,734,249 $ Net position at end of period 15,848,882 $ 15,848,882 $ (UNAUDITED)
CHANGES IN NET POSITION
FOR THE PERIOD OF DECEMBER 1, 2022 TO DECEMBER 31, 2022 (WITH COMPARATIVE YEAR TO DATE INFORMATION)
VALLEY CLEAN ENERGY ALLIANCE
STATEMENT OF REVENUES, EXPENDITURES AND
4 FOR THE
PERIOD ENDING
DECEMBER 31,
2022 YEAR TO DATE
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from electricity sales 6,863,810 $ 71,111,107 $ Payments received from other revenue sources - 1,158,283 Payments to purchase electricity (3,581,110) (70,929,352) Payments for contract services, general, and adminstration 4,431 937,409 ,290 Payments for staff compensation (97,634) (1,141,963)
Net cash provided (used) by operating activities 1,135,484 7,616,356
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Principal payments of Debt (2,043,417) 602,439
Interest and related expenses (52,440) (84,661)
Net cash provided (used) by non-capital financing
activities 517,778 (2,095,857)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income 11,251 38,070
Net cash provided (used) by investing activities 38,070 11,251 NET CHANGE IN CASH AND CASH EQUIVALENTS 1,550,413 5,531,750 Cash and cash equivalents at beginning of period 6,775,519 3,292,458 Cash and cash equivalents at end of period $ 6,088,653 12,307,269 $ Cash and cash equivalents included in:
Cash and cash equivalents 8,497,996 8,497,996
Restricted assets 3,809,273 3,809,273
Cash and cash equivalents at end of period $ 12,307,269 12,307,269 $
VALLEY CLEAN ENERGY ALLIANCE
STATEMENTS OF CASH FLOWS
FOR THE PERIOD OF DECEMBER 1 TO DECEMBER 31, 2022
(WITH YEAR TO DATE INFORMATION)
(UNAUDITED)
5 FOR THE
PERIOD ENDING
DECEMBER 31,
2022 YEAR TO DATE
Operating Income (Loss) 640,054 $ 4,423,697 $
(Increase) decrease in net accounts receivable 336,852.06 (4,114,087.47) (Increase) decrease in accrued revenue 802,209 (2,464,412.74) (Increase) decrease in prepaid expenses (21,338) 853,148.00 Increase (decrease) in accounts payable 4,916,644 125,522.43 Increase (decrease) in accrued payroll 6,078 27,011.00
Increase (decrease) in due to member agencies - (117,973.00) Increase (decrease) in accrued cost of electricity 997,817 (2,451,345.00) Increase (decrease) in other accrued liabilities (76,630) 739,870.78 Increase (decrease) in user taxes and energy surcharges 14,671 (74,704.90) Net cash provided (used) by operating activities $ 2,322,202 7,616,356 $
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
(WITH YEAR TO DATE INFORMATION)
(UNAUDITED)
FOR THE PERIOD OF DECEMBER 1 TO DECEMBER 31, 2022
VALLEY CLEAN ENERGY ALLIANCE
STATEMENTS OF CASH FLOWS
VALLEY CLEAN ENERGY
2022 YTD ACTUAL VS. BUDGET
FOR THE YEAR TO DATE ENDING 12/31/22
Description YTD
Actuals
YTD
Budget
YTD
Variance
%
over/-under
Electric Revenue $ 85,327,480 $ 89,750,000 $ (4,422,520) -5% Other Revenues - Programs $ 1,158,974 $ - $ 1,158,974 100% Interest Revenues $ 46,826 $ 18,000 $ 28,826 160%
Purchased Power $ 74,399,899 $ 66,990,100 $ (7,409,799) -11% Purchased Power Base $ 74,399,899 $ 65,669,600 $ (8,730,299) -13% Purchased Power Contingency 2% $ - $ 1,320,500 $ 1,320,500 100% Labor & Benefits $ 1,265,933 $ 1,300,800 $ 34,867 3%
Salaries & Wages/Benefits $ 1,052,440 $ 1,089,600 $ 37,160 3% Contract Labor (SMUD Staff Aug) $ - $ 40,800 $ 40,800 100% Human Resources & Payroll $ 213,493 $ 170,400 $ (43,093) -25% Office Supplies & Other Expenses $ 213,850 $ 201,400 $ (12,450) -6% Technology Costs $ 59,311 $ 39,400 $ (19,911) -51%
Office Supplies $ 10,343 $ 2,400 $ (7,943) -331%
Travel $ 2,183 $ 6,000 $ 3,817 64%
CalCCA Dues $ 114,123 $ 127,200 $ 13,077 10%
CC Power $ 26,891 $ 24,000 $ (2,891) -12%
Memberships $ 1,000 $ 2,400 $ 1,400 58%
Contractual Services $ 2,590,526 $ 2,643,300 $ 52,774 2% Other Contract Services $ - $ 25,200 $ 25,200 100%
Don Dame $ 9,491 $ 10,200 $ 709 7%
SMUD - Credit Support $ 531,707 $ 580,600 $ 48,893 8%
SMUD - Wholesale Energy Services $ 603,594 $ 593,400 $ (10,194) -2% SMUD - Call Center $ 868,431 $ 799,100 $ (69,331) -9%
SMUD - Operating Services $ 77,877 $ 60,600 $ (17,277) -29% Commercial Legal Support $ 15,324 $ - $ (15,324) 100%
Legal General Counsel $ 106,550 $ 154,800 $ 48,250 31%
Regulatory Counsel $ 198,318 $ 199,200 $ 882 0%
Joint CCA Regulatory counsel $ 45,314 $ 32,400 $ (12,914) -40% Legislative - (Lobbyist) $ 60,000 $ 60,600 $ 600 1%
Accounting Services $ 9,138 $ 26,400 $ 17,262 65%
Financial Consultant $ - $ 25,200 $ 25,200 100%
Audit Fees $ 64,783 $ 75,600 $ 10,817 14%
Marketing $ 181,000 $ 246,000 $ 65,000 26%
Marketing Collateral $ 180,800 $ 240,000 $ 59,200 25%
Community Engagement Activities & Sponsorships $ 6,000 200 $ 5,800 $ 97% Programs $ 1,217,082 $ 174,000 $ (1,043,082) -599%
Program Costs $ 126,317 $ 174,000 $ 47,683 27%
Programs - AgFIT $ 1,090,765 $ - $ (1,090,765) 100%
Rents & Leases $ 17,600 $ 21,600 $ 4,000 19%
Hunt Boyer Mansion $ 17,600 $ 21,600 $ 4,000 19%
Other A&G $ 444,263 $ 369,200 $ (75,063) -20%
Development - New Members $ - $ 25,200 $ 25,200 100%
Strategic Plan Implementation $ 6,078 $ 51,000 $ 44,922 88% PG&E Data Fees $ 282,343 $ 276,000 $ (6,343) -2%
Insurance $ 12,249 $ 8,400 $ (3,849) -46%
Banking Fees $ 143,592 $ 8,600 $ (134,992) -1570%
Miscellaneous Operating Expenses $ 176 $ 7,200 $ 7,024 98% Contingency $ - $ 240,000 $ 240,000 100%
TOTAL OPERATING EXPENSES 80,330,330 $ 72,193,600 $ (8,136,730) $ -11% Interest on RCB loan $ 35,629 $ 33,600 $ 2,029 6%
Interest Expense - Bridge Loan $ 52,688 $ 72,900 $ (20,212) -28% NET INCOME 6,114,633 $ 17,467,900 $ (11,353,267) $ -65%