HomeMy WebLinkAbout2020-02-20; Clean Energy Alliance JPA; ; Approve Selection of Permanent Banking Service Provider and Credit SolutionClean Energy Alliance
JOINT POWERS AUTHORITY
DATE:
TO:
FROM:
ITEM 2:
Staff Report
February 20, 2020
Clean Energy Alliance Board of Directors
Barbara Boswell, Interim Chief Executive Officer
Marie Berkuti, Interim Treasurer
Approve Selection of Permanent Banking Service Provider and Credit Solution
RECOMMENDATION:
1. Approve selection of River City Bank to provide permanent banking services to Clean
Energy Alliance.
2. Authorize the Interim Chief Executive Officer to execute an agreement for banking
services, for a three-year term, with the option to extend for two additional years, subject
to General Counsel approval.
3. Authorize the Interim Chief Executive Officer and Interim Treasurer to develop a funding
strategy for initial Clean Energy Alliance start-up costs and return in April 2020 for Board
consideration.
BACKGROUND AND DISCUSSION:
At its November 19, 2019 meeting, the Clean Energy Alliance Board authorized the CEA Treasurer
to establish an interim bank account and directed staff to issue a Request for Proposal (RFP( for
permanent banking services and credit solution.
The RFP was issued on January 15, 2020, with proposals due February 7, 2020.
The following summarizes the responses received on February 7:
Banking C111dlt Est Monthly Earnings Est Bal to cover I Financial Institution Services Solution CCA Experience Cost Creclt Rate costs Notes
First Jl!ar banking fees wa~
Banc of Calil'omia y N N -$276/month 0.65" $500,000 $2,500 COl'M!ISion allowance for supplies
N-Banking
JPMorgan y y Y-Oedit -$310/month 1.05" $345,000 No banking experience with anrent CCAs.
N -Banking
MUFG Union Bank y y Y-Credit -$1300/montl 0.65" $3.0M No banki11K experience with anrent CCAs.
Waive banki"K fees through May 2021
~ understancing of CCA transactions
River Ci.y Bank y y y -$500/month 0~ $UM Signficant experien:e supportirc current CCAs
Feb.20,2020 Item #2 Page 1 of 2
Banking Services
February 20, 2020
Banking Service Provider
Credit Solution
Page 2 of 2
The selection of a financial institution is a critical component of establishing CEA's lockbox as
security for energy purchase transactions. As such, selecting a bank that is experienced with this
arrangement and comfortable being a party to the anticipated security and
intercreditor/collateral agent agreements is a key criterion in the selection process.
All four proposers can provide the operational banking services requested in the RFP and meet
minimum credit rating and collateralization thresholds. Of the four, River City Bank stands out
as the only financial institution with current experience providing banking services to operating
CCAs that includes being a party to what is now the standard security and intercreditor/collateral
agent agreements. Their proposal demonstrated a thorough understanding of the CCA business
and daily transactions CEA will need to have supported once it is entering into energy
procurement contracts and serving its customers.
River City Bank can provide the needed operational account for day to day business, a lockbox
account that will received daily deposits from San Diego Gas & Electric and be the source of
collateral and payments to energy suppliers, as well as provide an interest bearing sweep account
for idle funds, currently offering an interest rate of 1.97%.
Credit Solution
The RFP requested proposals to provide funding for the anticipated $4.0M in initial start-up costs
and offers to provide credit support for anticipated future energy procurement needs. Three
institutions provided proposals in response to the request: JPMorgan, MUFG Union and River
City Bank.
There are several different options available to CEA to provide the needed funding for the initial
start-up costs, including a loan or line of credit from a financial institution, loans from 3rd parties
such as vendors, and additional loans from member agencies.
It is recommended that the Interim Chief Executive Officer and Interim Treasurer evaluate the
options and return to the Board in April 2020 with a proposed solution that would provide
funding for the fiscal year 2020/21 start up and administrative costs. The solution should
minimize cost to CEA while providing protections/limiting exposure to the member agency
general funds.
Feb.20,2020 Item #2 Page 2 of 2