Item 5
VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 5
______________________________________________________________________________ TO: Board of Directors
FROM: Mitch Sears, Executive Director
Edward Burnham, Finance and Operations Director
SUBJECT: Financial Update – October 31, 2023 (unaudited) financial statements (with comparative year to date information) and Actual vs. Budget year to date ending October 31, 2023
DATE: December 14, 2023
RECOMMENDATION:
Accept the following Financial Statements (unaudited) for the period of October 1, 2023 to October 31, 2023 (with comparative year to date information) and Actual vs. Budget year to date ending October 31, 2023.
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 October 31, 2023.
Financial Statements for the period October 1, 2023 – October 31, 2023 In the Statement of Net Position, VCE, as of October 30, 2023, has a total of $20,566,948 in its checking, money market and lockbox accounts, $1,100,000 restricted assets for the Debt Service Reserve account, $1,800,000 restricted assets related to supplier deposits, and $2,596,549 restricted assets for the Power Purchases Reserve account. VCE has incurred obligations from Member agencies and owes as of October 30, 2023 a total of $9,987. VCE member obligations are incurred monthly due to staffing, accounting, and legal services.
The term loan with River City Bank includes a current portion of $271,108. On October 31, 2022, VCE’s net position was $27,828,963.
Item 5
In the Statement of Revenues, Expenditures, and Changes in Net Position, VCE recorded $ 9,069,660 of revenue (net of allowance for doubtful accounts), of which $8,612,012 was billed in October, and $4,883,354 represent estimated unbilled revenue. The cost of electricity for the October revenue totaled $7,894,881. For October, VCE’s gross margin was approximately 13% and the net income totaled $853,259. The year-to-date change in net position was 12,418,429.
In the Statement of Cash Flows, VCE cash flows from operations were $2,981,756 due to October cash receipts of revenues being more than the monthly cash operating expenses.
Actual vs. Budget Variances for the year to date ending October 31, 2023 Below are the financial statement line items with variances >$50,000 and 5% • Electric Revenue – ($6,442,406) and -7% – Unfavorable variance due to retail load variance lower than forecasted due to mild winter and spring.
• Purchased Power – ($786,459) and -1% – unfavorable variance due to gas prices driving short-term power market increases during winter offset by lower load than forecasted. • Salaries – $52,293 and 5% favorable variance open positions for part-time Regulatory Analyst and Office Support Specialist.
• CC Power – ($59,263) and 282% unfavorable variance related to PPA contract participation. • Wholesale Energy Services – ($340,912) and -42% unfavorable variance related to the transition of services to TEA starting in Q123 budgeted for Q223.
• Credit Support Services (SMUD) – $101,982 and 40% favorable variance related to lower retail load than forecasted due to mild winter and summer.
• Operational Support Services (SMUD) – ($94,779) and -188% unfavorable variance related to Percentage of Income Payment Plan (PIPP) program implementation, bill presentment, and base green rate implementation. • Legal General Counsel – $113,424 and 83% favorable variance related to lower operational support requirements than budgeted.
• Strategic Plan Implementation – $81,091 or 68% favorable variance due to timing difference. • Contingency – ($200,00) 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) October 1, 2023 to October 31, 2023 (with comparative year to date information.)
2) Actual vs. Budget for the year to date ending October 31, 2023
VALLEY CLEAN ENERGY ALLIANCE
FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD OF OCTOBER 1 TO OCTOBER 31, 2023
PREPARED ON DECEMBER 5, 2023
2 ASSETS
Current assets:
Cash and cash equivalents $ 20,566,948
Accounts receivable, net of allowance 12,178,830
Accrued revenue 564,497
Prepaid expenses 116,041
Inventory - Renewable Energy Credits 600,000
Other current assets and deposits 2,227,703
Total current assets 36,254,019
Restricted assets:
Debt service reserve fund 1,100,000
Power purchase reserve fund 2,596,549
Total restricted assets 3,696,549
TOTAL ASSETS $ 39,950,568
LIABILITIES
Current liabilities:
Accounts payable $ 381,777
Accrued payroll 76,136
Interest payable 1,108
Due to member agencies 9,987
Accrued cost of electricity 7,469,137
Other accrued liabilities 2,040,441
Security deposits - energy supplies 1,800,000
User taxes and energy surcharges 71,911
Limited Term Loan 271,108
TOTAL LIABILITIES $ 12,121,605
NET POSITION
Net position:
Local Programs Reserve $ 224,500
Restricted 3,696,549
Unrestricted 23,907,914
TOTAL NET POSITION $ 27,828,963
(UNAUDITED)
VALLEY CLEAN ENERGY ALLIANCE
STATEMENT OF NET POSITION
OCTOBER 31, 2023
3 FOR THE PERIOD
ENDING
OCTOBER 31, 2023 YEAR TO DATE
OPERATING REVENUE
Electricity sales, net $ 9,069,660 $ 78,954,737
Other revenue 70,500 701,719
TOTAL OPERATING REVENUES 9,140,160 79,656,456
OPERATING EXPENSES
Cost of electricity 7,894,881 61,969,245
Contract services 217,113 2,685,451
Staff compensation 107,036 1,170,963
General, administration, and other 110,013 1,630,871
TOTAL OPERATING EXPENSES 8,329,043 67,456,530
TOTAL OPERATING INCOME (LOSS) 811,117 12,199,926
NONOPERATING REVENUES (EXPENSES)
Interest income 43,082 232,873
Interest and related expenses (940) (14,371)
TOTAL NONOPERATING REVENUES
(EXPENSES) 42,142 218,502
CHANGE IN NET POSITION 853,259 12,418,429
Net position at beginning of period 26,975,704 15,410,534 Net position at end of period $ 27,828,963 $ 27,828,963 (UNAUDITED)
CHANGES IN NET POSITION
FOR THE PERIOD OF OCTOBER 1, 2023 TO OCTOBER 31, 2023
(WITH COMPARATIVE YEAR TO DATE INFORMATION)
VALLEY CLEAN ENERGY ALLIANCE
STATEMENT OF REVENUES, EXPENDITURES AND
4 FOR THE
PERIOD ENDING
OCTOBER 31, 2023 YEAR TO DATE
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from electricity sales $ 11,210,609 $ 80,749,939 Payments received from other revenue sources 70,500 701,719 Payments to purchase electricity (7,885,956) (59,709,133) Payments for contract services, general, and adminstration (322,381) (3,616,800) Payments for staff compensation (91,016) (1,211,112)
Other cash payments - (268,507)
Net cash provided (used) by operating activities 2,981,756 16,914,613
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Principal payments of Debt (44,726) (259,860)
Interest and related expenses (939) (15,505)
Net cash provided (used) by non-capital financing
activities (45,665) (275,365)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of nondepreciable assets
Acquisition of capital assets
Net cash provided (used) by capital and related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income 43,082 232,872
Net cash provided (used) by investing activities 43,082 232,872 NET CHANGE IN CASH AND CASH EQUIVALENTS 2,979,173 16,603,613 Cash and cash equivalents at beginning of period 21,284,324 108,877,956 Cash and cash equivalents at end of period 24,263,497 125,481,570 Cash and cash equivalents included in:
Cash and cash equivalents 20,566,948 20,566,948
Restricted assets 3,696,549 3,696,549
Cash and cash equivalents at end of period $ 24,263,497 $ 24,263,497
VALLEY CLEAN ENERGY ALLIANCE
STATEMENTS OF CASH FLOWS
FOR THE PERIOD OF OCTOBER 1 TO OCTOBER 31, 2023
(WITH YEAR TO DATE INFORMATION)
(UNAUDITED)
5 FOR THE
PERIOD ENDING
OCTOBER 31, 2023 YEAR TO DATE
Operating Income (Loss) $ 811,117 $ 12,199,926
Depreciation expense
(Increase) decrease in net accounts receivable 2,707,766 (1,093,743) (Increase) decrease in accrued revenue (586,161) 2,865,900 (Increase) decrease in prepaid expenses (21,918) (116,041) (Increase) decrease in inventory - renewable energy credits (600,000) (600,000) (Increase) decrease in other assets and deposits - (268,507) Increase (decrease) in accounts payable 14,910 (17,757) Increase (decrease) in accrued payroll 16,020 (40,149)
Increase (decrease) in due to member agencies - (196,457) Increase (decrease) in accrued cost of electricity 608,925 2,860,112 Increase (decrease) in other accrued liabilities 11,753 1,029,777 Increase (decrease) in user taxes and energy surcharges 19,344 23,045 Net cash provided (used) by operating activities $ 2,981,756.00 $ 16,646,106.07 Adjustments to reconcile operating income to net cash provided (used) by operating activities:
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
(WITH YEAR TO DATE INFORMATION)
(UNAUDITED)
FOR THE PERIOD OF OCTOBER 1 TO OCTOBER 31, 2023
VALLEY CLEAN ENERGY ALLIANCE
STATEMENTS OF CASH FLOWS
VALLEY CLEAN ENERGY
2023 YTD ACTUAL VS. BUDGET
FOR THE YEAR TO DATE ENDING 10/31/23
Description YTD
Actuals
YTD
Budget
YTD
Variance
%
over/-under
Electric Revenue $ 83,273,594 $ 89,716,000 $ (6,442,406) -7% Other Revenues - Programs $ 701,719 $ 550,000 $ 151,719 28% Interest Revenues $ 232,872 $ 35,000 $ 197,872 565%
Purchased Power $ 61,893,459 $ 61,107,000 $ (786,459) -1% Purchased Power Base $ 61,893,459 $ 58,196,000 $ (3,697,459) -6% Purchased Power Contingency 2% $ - $ 2,911,000 $ 2,911,000 100% Labor & Benefits $ 1,172,679 $ 1,202,000 $ 29,321 2%
Salaries & Wages/Benefits $ 947,707 $ 1,000,000 $ 52,293 5% Contract Labor (SMUD Staff Aug) $ - $ 25,000 $ 25,000 100% Human Resources & Payroll $ 224,972 $ 177,000 $ (47,972) -27% Office Supplies & Other Expenses $ 253,197 $ 176,800 $ (76,397) -43% Technology Costs $ 39,028 $ 35,800 $ (3,228) -9%
Office Supplies $ 9,107 $ 2,000 $ (7,107) -355%
Travel $ 15,724 $ 5,000 $ (10,724) -214%
CalCCA Dues $ 107,520 $ 111,000 $ 3,480 3%
CC Power $ 80,263 $ 21,000 $ (59,263) -282%
Memberships $ 1,555 $ 2,000 $ 445 22%
Contractual Services $ 2,501,051 $ 2,412,600 $ (88,451) -4% Other Contract Services $ - $ 22,000 $ 22,000 100%
Don Dame $ 3,364 $ 9,000 $ 5,636 63%
SMUD - Credit Support $ 152,418 $ 254,400 $ 101,982 40% SMUD - Wholesale Energy Services $ 1,159,212 $ 818,900 $ (340,312) -42% SMUD - Call Center $ 717,209 $ 697,500 $ (19,709) -3%
SMUD - Operating Services $ 148,179 $ 53,400 $ (94,779) -177% Commercial Legal Support $ 28,220 $ 25,000 $ (3,220) -13% Legal General Counsel $ 22,576 $ 136,000 $ 113,424 83%
Regulatory Counsel $ 139,651 $ 175,000 $ 35,349 20%
Joint CCA Regulatory counsel $ 25,719 $ 28,000 $ 2,281 8% Legislative - (Lobbyist) $ 55,000 $ 55,000 $ - 0%
Accounting Services $ 10,542 $ 24,000 $ 13,458 56%
Financial Consultant $ - $ 35,000 $ 35,000 100%
Audit Fees $ 38,960 $ 79,400 $ 40,440 51%
Marketing $ 251,762 $ 220,000 $ (31,762) -14%
Marketing Collateral $ 220,980 $ 210,000 $ (10,980) -5% Community Engagement Activities & Sponsorships $ 10,000 30,782 $ (20,782) $ -208% Program Costs $ 936,101 $ 695,000 $ (241,101) -35%
Program Costs $ 169,596 $ 145,000 $ (24,596) -17%
Programs - EV $ 115,105 $ - $ (115,105) 100%
Programs - AgFIT $ 642,428 $ 550,000 $ (92,428) -17%
Programs - Heat Pump $ 8,972 $ - $ (8,972) 100%
Rents & Leases $ 23,076 $ 22,000 $ (1,076) -5%
Hunt Boyer Mansion $ 23,076 $ 22,000 $ (1,076) -5%
Other A&G $ 349,925 $ 455,800 $ 105,875 23%
Development - New Members $ - $ 21,000 $ 21,000 100%
Strategic Plan Implementation $ 38,909 $ 120,000 $ 81,091 68% PG&E Data Fees $ 198,748 $ 230,000 $ 31,252 14%
Insurance $ 29,400 $ 9,500 $ (19,900) -209%
Banking Fees $ 82,868 $ 75,300 $ (7,568) -10%
Miscellaneous Operating Expenses $ 2,311 $ 6,000 $ 3,689 61% Contingency $ - $ 200,000 $ 200,000 100%
TOTAL OPERATING EXPENSES 67,383,560 $ 66,497,200 $ (886,360) $ -1% Interest on RCB loan $ 14,371 $ 15,900 $ (1,529) -10%
Interest Expense - Bridge Loan $ - $ 40,000 $ (40,000) -100% NET INCOME 16,810,254 $ 23,747,900 $ (6,937,646) $ -29%