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HomeMy WebLinkAbout2020-07-16; Clean Energy Alliance JPA; ; Clean Energy Alliance Draft Financial Pro-FormasClean Energy Alliance JOINT POWERS AUTHORITY Staff Report DATE: July 16, 2020 TO: Clean Energy Alliance Board of Directors FROM: Barbara Boswell, Interim Chief Executive Officer ITEM 4: Clean Energy Alliance Draft Financial Pro-Formas RECOMMENDATION: Receive informational item on Clean Energy Alliance Draft Financial Pro-Formas. BACKGROUND AND DISCUSSION: At its regular Board meeting June 18, 2020, the Board requested an informational item be brought back to the July 18 meeting to review the Clean Energy Alliance (CEA) Pro-Forma scenarios. There are currently 3 scenarios being evaluated based on different renewable energy portfolio mix related to portfolio category of renewable energy. Portfolio Content Category (PCC) 1 is renewable energy generated within California, PCC 2 is renewable energy generated outside California. They scenarios include: • Base Assumption o 50% Renewable Default Energy Product increasing to 100% by 2035 o 82% Portfolio Content Category (PCC) 1/18% PCC 2 Renewable Energy Product Mix • Option 1 o 50% Renewable Default Energy increasing to 100% by 2035 o 100% PCC 1 at launch • Option 2 o 50% Renewable Default Energy increasing to 100% by 2035 o 100% PCC1 by 2023 Each of these renewable energy mixes are being further evaluated related to rate discounts for CEA customers, including 1% discount, 2% discount and rate parity as compared to San Diego Gas & Electric (SDG&E) generation rates. The current projections, using the financing costs related to the credit option with River City Bank are shown below. Base Pro-Forma Scenario July 16, 2020 Lterolt4 Page 1 of 10 July 16, 2020 CEA Financial Pro-Forma Page 2 of 10 Base @ Rate Parity Annual DRAFT Pro Fomsa Projections for a Community Choke Aggregation Program - Base RCB/Calpine Credit Solution Clean Energy Alliance Fiscal Yea Ending: 2020 2021 2022 2023 2024 2025 I. Revenue 9,913,235 69,767,349 71,127,161 72,508,987 73 3,166 II. Operating Experts. Power Supply 8,988,017 60,976,876 59,978,716 61,512,028 62,261,087 Staff 50,000 120,000 600,000 618,000 636,540 655,636 Administrative Costs* 253,000 1,223,936 2,459,148 2,497,813 2,558 347 2,616,275 Subtotal Operating Expenses 303,000 10,331,956 64,036,023 63,094,529 64,706 915 65,532,998 Operating Margin (303,000) (418,721) 5,731,326 8,032,632 7,802,071 8,380,167 III. Financing Irreenst 123,333 146,250 116,038 69,822 22,280 Principal 450,000 500,000 1,287,015 1,332,791 1,380,194 Subtotal Financing 573,333 646,250 1,403,053 1402,613 ,402,474 Operating Margin Less Financing (303,000) (992,054) 5,085,076 6,629,579 6,399,458 6,977,693 IV. Cash From Financing 450000 4,500,000 . . - V. Other Uses CPUC and CAISO Deposits 147,000 500,000 Collateral Deposits 0 2,500000 Reserve Additions 495,662 3,488,367 3,556,356 3625,449 3,695,658 Subtotal Other Uses 147,000 3,495,662 3,488,367 3,556,358 3,625,449 3,695,658 VI. Net Surplus/(Deficit) 12,284 1,596,708 3,073,221 2,774,009 3,282,035 VII. Cumulative Reserve 495,662 3,984,029 7,540,387 11,165,837 14,861,49 VIII. Cumulative Net Surplus 12,284 1,608,993 4,682,213 7,456,222 10,738,257 VI. Combined Cumulative Reserve & Cumulative I 507,946 5,593,022 12,222,601 18,622,059 25,599,752 * Comprised of Technical and Legal Services, Customer Outreach and Communications, Utility Services Fees, Data Management Services, Uncollectibles The Base scenario at rate parity with SDG&E for generation results in: • Net Surplus each year; can be utilized for Board directed rate discounts/programs/additional reserve contribution. • 20% Cumulative Operating Reserve by 2025 July 16, 2020 Item #4 Page 2 of 10 July 16, 2020 CEA Financial Pro-Forma Page 3 of 10 Base with 1% Rate Discount Annual DRAFT Pro Forma Projections for a Community Choice Aggregation Program- Base® 1% Rate Discount Clean Energy Alliance Fi c I Year Ending: 2020 2021 2022 2023 2024 2025 I. Revenue 9,773,664 68,750,216 70,094,719 71,461,007 72,849,414 II. Operating Expenses Power Supply 8,988,017 60,976,876 59,978,716 61,512,028 62,261,087 Staff 50,000 235,060 600,000 618,000 636,540 655,636 Administrative Costsk 253,000 1,108,938 2,459,148 2,497,813 2,558,347 2,616,275 Subtotal Operating Expenses 303,000 10,331,956 64,036,023 63,094,529 64 706,915 65,532,998 Operating Margin (303,000) (558,292) 4,714,192 7,000,190 6,754,091 7,316,415 III. Financing idenest 123,333 146,250 116,038 69,822 22,280 Principal 450,000 500,000 1,287.015 1,332,791 1,350,194 Subtotal Financing 573,333 646,250 1,403,053 1,402,613 1,402,474 Operating Margin Less Financing (303,000) (1,131,625) 4,067,942 5,597,137 5,351,478 5,913,941 IV. Cash From Financing 450,000 4,500,000 - - V. Other Uses CPUC and CAISO Deposits 147,000 500,000 Collateral Deposits 0 2,500,000 Reserve Additions 368,375 3,437,511 3,504,736 3,573,050 3,542,471 Subtotal Other Uses 147,000 3,368,375 3,437,511 3,504,736 3,573,050 3,642,471 VI. Net Surplus/(Deficit) 0 630,432 2,092,401 1,778,428 2,271,471 VII. Cumulative Reserve 368,375 3,805,886 7,310,622 10,883,672 14,526 43 VIII. Cumulative Net Surplus 0 630,432 2,722,833 4,501,261 6,772,732 VI. Combined Cumulative Reserve & Cumulative Net Surplus 68,375 4,436,318 10,033,455 15,384,933 21,298,875 * Comprised of Technical and Legal Services, Customer Outreach and Communications, Utility Services Fees, Data Management Services, Uncollectibles The Base scenario with 1% discount compared to 5DG&E for generation results in: • Net Surplus beginning FY 2022 (first full fiscal year of serving customers); can be utilized for Board directed rate discounts/programs/additional reserve contribution. • FY 20/21 Operating Reserve Contribution 3.8% (short of 5% goal) • 20% Cumulative Operating Reserve by 2025 July 16, 2020 Item #4 Page 3 of 10 July 16, 2020 CEA Financial Pro-Forma Page 4 of 10 Base Scenario with 2% Rate Discount Annual DRAFT Pro Forma Projections fore Community Choke Aggregation Program - Base Scenario with e‘Yo Discount Clean Energy Allia nce F cal Year Ending. 2020 2021 2022 2023 2024 2025 I. Revenue 9,634093 67,733,082 69,062,278 70,413,027 71,785,662 II. Operating Expenses Power5 °poly 8,988,017 60,976,876 59,978,716 61,512,028 62,262,087 Staff 50,000 235,000 600,000 618,000 636,540 655,636 Administrative Costs* 253,000 1,108,938 2,459,148 2,497,813 2,558,347 2,616,275 Subtotal Operating Expenses 303,000 10,331,956 64,036,023 63,094,529 64,706,915 65,532,998 Operating Margin (303,000) (697,862) 3,697,059 5,967,749 5,706,112 6,252,664 III. Financing larten.-t 123,333 146,250 116,038 69,822 22,280 Principal 450,000 500,000 1,287,015 1,332,791 1,380,194 Subtotal Financing 573,333 646,250 1,403,053 1,402,613 1,402,474 Operating Margin Less Financing (303,000) 1,271,195) 3,050,809 4,564,696 4,303,499 4,850,190 IV. Cash From Financing 450,000 4,500,000 V. Other Uses CPUC and CAISO Deposits 147,000 500,000 . Collateral Deposits 0 2,500,000 Reserve Additions 228,805 3,050,809 3,453,114 3,520,651 3,589,283 Subtotal Other Uses 147,000 3,228,805 3,050,809 3,453,114 3,520,651 3,589,283 VI. Net Surplusf(Deficit) PI (0) 1,111,582 782,847 1,260,907 VII. Cumulative Reserve 228,805 3,279,614 6,732, 28 10,253,379 13,842,662 VIII. Cumulative Net Suiplu (0) (1) 1,111,581 1,894,429 3,155,33 VI. Combined Cumulative Reserve &Cumulative Net Surplus 228,805 3,279,613 7,844,309 12,147,808 16,997,998 *comprised of Technical and Legal Services, Customer Outreach and Communications, Utility Services Fees, Data Management Services, Uncollectibles The Base scenario with 2% discount compared to SDG&E for generation results in: • Net Surplus beginning FY 2023 can be utilized for Board directed rate discounts/programs/additional reserve contribution. • FY 20/21 Operating Reserve Contribution 2.4% and FY 21/22 contribution 4.5% (short of 5% goal) • 19.2% Cumulative Operating Reserve by 2025 July 16, 2020 Item #4 Page 4 of 10 July 16, 2020 CEA Financial Pro-Forma Page 5 of 10 Option 1— 100% PCC1 at Launch — Rate Parity Annual DRAFT Pro Forma Projections for a Community Choke Aggregation Program- Rate Parity and l00%PCCa at Launch Clean Energy Alliance Fi cal Year Ending: 2020 2021 2022 2023 2024 2025 I. Revenue 9,913235 69,767,349 71,127,161 72,508,987 73,913,166 II. Operating Expenses Power 5 upply 9,008,910 61,168848 60,232,062 61,785,316 62,526,043 Staff 50,000 235,000 600,000 618,000 636,540 655,636 Administrative Costs* 253,000 1,109,006 2,460,107 2,499,080 2,559,714 2,617,600 Subtotal Operating Expenses 303,000 10,352,916 64,228,956 63,349,142 64,981,570 65,799,279 Operating Margin (303,000) (439,681) 5,538,393 7,778,019 7,527,417 8,113,886 W. Financing idenst 123,333 146,250 116,038 69,822 22,280 Principal 450,000 500,000 1,287,015 1,332,791 1,380,194 Subtotal Financing 573,333 646,250 1,403,053 1,402,613 1,402,474 Operating Margin Less Financing (303,000) (1,013,014) 4,892,143 6,374,966 5.124.804 6,711,412 IV. Cash From Financing 450,000 4,500,000 V. Other Uses CPUC and CAI SO Deposits 147,000 500,000 Collateral Deposits CI 2,500,000 Reserve Additions 486,986 3,437,511 3,504,736 3,573,050 3,642,471 Subtotal Other Uses 147,000 3,486,986 3,437,511 3,504,736 3,573,050 3,642,471 VI. Net Surplus/(Deficit) (0) 1,454,533 2,870,230 2,551,754 3,068,942 VII. Cumulative Reserve 486,986 3,924,497 7,429,233 11,002,283 14,544,754 VIII. Cumulative NetSurplus 0) 1,454,632 4,324,862 6,876,616 9,945,558 VI. Combined Cumulative Reserve & Cumulative Net Surplus 486,986 5,379,129 11,754,095 17,878,899 24,590,311 s Comprised of Technical and Legal Services, Customer Outrea ch and Communications, UtilityServices Fees, Data Management Services, Uncollectibles The Option 1 scenario at rate parity compared to SDG&E for generation results in: • Net Surplus beginning FY 2022 can be utilized for Board directed rate discounts/programs/additional reserve contribution. • 19.8% Cumulative Operating Reserve by 2025 July 16, 2020 Item #4 Page 5 of 10 July 16, 2020 CEA Financial Pro-Forma Page 6 of 10 Option 1 — 100% PCC1 at Launch — 1% Rate Discount Annual DRAFT Pro Forma Projections for a Community Choke Aggregation Program - 1% Discount and l00%PCCIL at Launch Clean Energy Alliance Fiscal Year Ending: 2020 2.021 2022 2023 2024 2025 I. Revenue 9,773,664 68,750216 70,094,719 71 461 007 72 849,414 II. Operating Expenses PowerSupply 9,008,910 61,168,848 60,232,062 61,785,316 62,526,043 Staff 50,000 235,000 600,000 618,000 636,540 655,636 Administrative Costs. 253,000 1,109,006 2,460,107 2,499,080 2,559,714 2,617,600 Subtotal Operating Expenses 303,000 10,352,916 64,228,956 63,349,142 64,981,570 65,799,279 Operating Margin (303,000) (579,252) 4,521,260 6,745,577 6,479,437 7,050,134 III. Financing lotenst 123,333 146,250 116,038 69,822 22,280 Principal 450,000 500,000 1,287,015 1,332,791 1,380,194 Subtotal Financing 573,333 646,250 1,403,053 1,402,613 1,402,474 Operating Margin Less Financing (303,000) (1,152,585) 3,875,010 5,342,524 5.076,824 5,647,660 IV. Cash From Financing 450,000 4,500,000 - V. Other Uses CPUC and CAISO Deposits 147,000 500,000 Collateral Deposits 0 2,500,000 Reserve Additions 347,415 3,437,511 3,504,736 3,573,050 3,642,471 Subtotal Other Uses 147,090 3,347,415 3,437,511 3,504,736 3,573,050 3,642,471 VI Net Surplus/(Deficit) 0 437,499 1,837,789 1,503,774 2,005,190 VW Cumulative Reserve 347,415 3,784,926 7,289,662 10,862,712 14,505,183 VIII. Cumulative Net Surplus 0 437,499 2,275,288 3,779,062 5,784,251 VI. Combined Cumulative Reserve & Cumulative Net Surplus 47,415 4,222,425 9,564,949 14,641,774 20,289,434 * Comprised of Technical and Legal Services, Customer Outreach and Communications, Utility Services Fees, Data Management Services, Uncollectibles The Option 1 scenario with 1% rate discount compared to SDG&E for generation results in: • Net Surplus beginning FY 2022 can be utilized for Board directed rate discounts/programs/additional reserve contribution • 3.6% Reserve Contribution in FY 20/21 (short of 5% goal) • 20% Cumulative Operating Reserve by 2025 July 16, 2020 Item #4 Page 6 of 10 July 16, 2020 CEA Financial Pro-Forma Page 7 of 10 Option 1 — 100% PCC1 at Launch — 2% Rate Discount Annual DRAFT Pro Forma Projections for a Community Choke Aggregation Program - a% Discount and l00%PCCa. at Launch Clean Energy Alliance Fiscal Year Ending: 2020 2021 2022 2023 2024 2025 I. Revenue 9,634,093 67,733,082 69,062,278 70413,027 71,785,662 II. Operating Expenses Power S upply 9,038,910 61,168,848 60,232,062 61,785,316 62,526,043 Staff 50,000 235,000 600,000 618,000 636,540 655636 Administrative Costs* 253,000 1,109,006 2,460,107 2,499,080 2,559,714 2,617,600 Subtotal Operating Expenses 303,000 10,352,916 64,228,956 63,349,142 64,981,570 65,799,279 Operating Margin 303,000) (718,823) 3,504,126 5,713,136 5,431,458 5,985,383 III. Financing llobarest 123,333 146,250 116,038 69,822 22,280 Principal 450,000 500,000 1,287,015 1,332,791 1,380,194 Subtotal Financing 573,333 646,250 1,403,053 1,402,513 1,402,474 Operating Margin Less Financing (303,000) (1,292,156) 2,857,876 4,310,083 4,028,845 4,583,909 IV. Cash From Financing 450,000 4,500,000 V. Other Uses CPUC and CAISO Deposits 147,000 500,000 Collateral Deposits 0 2,500,000 Reserve Additions 207,844 2,857,876 3,453,114 3,520,651 3,589,283 Subtotal Other Uses 147,000 3,207,844 2,857,876 3,453,114 3,520,651 3,589.263 VI. Net Surplusipeficit) 0 0 856,969 508,193 994,626 VII. Cumulative Reserve 207,844 3,065,720 6,518,834 10.039,485 13,628,768 VIII. Cumulative Net Surplus 0 1 856,970 1,385,163 2,359,789 VI. Combined Cumulative Reserve & Cumulative Net Surplus 207,844 3,065,721 7,375,804 11,404,648 15,988,557 * Comprised of Technical and Legal Services, Customer Outreach and Communications, Utility Services Fees, Data Management Services, Uncollectibles The Option 1 scenario with 2% rate discount compared to SDG&E for generation results in: • Net Surplus beginning FY 2023 can be utilized for Board directed rate discounts/programs/additional reserve contribution • 2.1% Reserve Contribution in FY 20/21 and 4.2% in FY 21/22 (short of 5% goal) • 19% Cumulative Operating Reserve by 2025 July 16, 2020 Item #4 Page 7 of 10 July 16, 2020 CEA Financial Pro-Forma Page 8 of 10 Option 2 — 100% PCC1 by 2023 — Rate Parity Annual DRAFT Pro Forma Projections for a Community Choke Aggregation Program - Rate Parity and l00%PCCI. by 2°23 Clean Energy Alliance FisraIYearEnding: 2020 2021 2022 2023 2024 2025 I. Revenue 9,913,235 69,767,349 71,127,161 72,506,987 73,913,166 II. Operating Expenses Power Supply 8,988,017 61,018,825 60,161,460 61,785,316 62,526,043 Staff 50,000 235,000 600,000 618,000 636,540 655,636 Administrative Costs* 253,000 1,109,1306 2,460,107 2,499,080 2,559,714 2,617,600 Subtotal Operating Expenses 303,000 10,332,024 64,078,933 63,278,540 64,981,570 65,799,279 Operating Margin (303,000) (418,789) 5,688,416 7,848,620 7,527,417 8,113,886 Ill. Financing Whams/ 123,333 146,250 116,038 69,822 22,280 Principal 450,000 500,000 1,287,015 1,332,791 1,380,194 Subtotal Financing 573,333 646,250 1,403,053 1,402,613 1,402,474 Operating Margin less Financing (303,000) (992,122) 5,042,166 6,445,567 6,124,804 6,711,412 IV. Cash From Financing 450,000 4,500,000 - - V. Other Uses CPUC and CAISO Deposits 147,000 500,000 Collateral Deposits 0 2,500,000 Reserve Additions 486,986 3,437,511 3,504,736 3,573,050 3,642,471 Subtotal Other Uses 147,000 3,486,986 3,437,511 3,504,736 3,573,050 3,642,471 VI. Net Surplus/(Defifft) 20,892 1,604,656 2,940,832 2,551,754 3,068,942 MI. Cumulative Reserve 486,986 3,924,497 7,429,233 11,002,283 14,644,754 VIII. Cumulative Net Surplus 20,892 1,625,547 4,566,379 7,118,133 10,187,074 VI. Combined Cumulative Reserve & Cumulative Net Surplus 507,878 5,550,044 11,995,612 18,120,416 24,831,828 * Comprised of Technical and Legal Services, Customer Outreach and Communications, Utility Services Fees, Data Management Services, Uncollectibles The Option 2 scenario at rate parity compared to SDG&E for generation results in: • Net Surplus beginning FY 2021 can be utilized for Board directed rate discounts/programs/additional reserve contribution • 19.8% Cumulative Operating Reserve by 2025 July 16, 2020 Item #4 Page 8 of 10 July 16, 2020 CEA Financial Pro-Forma Page 9 of 10 Option 2 — 100% PCC1 by 2023 — 1% Rate Discount Annual DRAFT Pro Forma Projections for a Community Choke Aggregation Program - 146 Discount and nu o% PCCx by acia3 Clean Energy Milo nee Fiscal Yea Ending: 2020 2021 2022 2023 2024 2025 I. Revenue 9,773,664 68,750,216 70,094 719 71,461,007 72,849,414 II. Operating Expenses Power Supply 8,988,017 61,018,825 60,161,460 61,785,316 62,526,043 Staff 50,000 235,000 600,000 618,000 636,540 655,636 Administrative Costs* 253,000 1,108,938 2,459,357 2,498,727 2,559,714 2,617,600 Subtotal Operating Expenses 303,000 10,331,956 64,078,183 63,278,187 64,981,570 65,799,279 Operating Margin (303,000) (558,292) 4,672,033 6,816,532 6,479,437 7,050,134 It. Financing idenast 123,333 146,250 116,038 69,822 22,280 Principal 450,000 500,000 1,287,015 1,332,791 1,380,194 Subtotal Financing 573,333 646,250 1,403,053 1,402,613 1,402,474 Operating Margin Less Financing (303,000) (1,131,625) 4,025,783 5,413,479 5,076,824 5,647,660 IV. Cash From Financing 450,000 4,500,000 - - V. Other Uses CPUC and CAISO Deposits 147,000 500,000 Collateral Deposits 0 2,500,000 Reserve Additions 368,375 3.437,511 3,504,736 3,573,050 3,642,47 Subtotal Other Oses 147,000 3,358,375 3,437,511 3,504,736 3,573,050 3,642,471 VI. Net Surplus/(Deficit) 0 588,272 1,908,743 1,503,774 2,005,190 VII. Cumulative Reserve 368,375 3,805,886 7,318,622 10,883,672 14,526,143 VIII. Cumulative Net Surplus 0 588,272 2,497,016 4,000,790 6,005,979 VI. Combined Cumulative Reserve & Cumulative Net Surplus 368,375 4,394,158 9,807,637 14,884,462 20,532,122 *Comprised of Technical and Legal Services, Customer Outreach and Communications, Utility Services Fees, Data Management Services, Uncollectibles The Option 2 scenario with 1% rate discount compared to SDG&E for generation results in: • Net Surplus beginning FY 2022 can be utilized for Board directed rate discounts/programs/additional reserve contribution • 3.8% reserve contribution FY 20/21 (short of 5% goal) • 20% Cumulative Operating Reserve by 2025 July 16, 2020 Item #4 Page 9 of 10 July 16, 2020 CEA Financial Pro-Forma Page 10 of 10 Option 2 — 100% PCC1 by 2023 — 2% Rate Discount Annual DRAFT Pro Forma Projections for a Community Choke Aggregation Program - 296 Discount and l00%PCC3. by 202 Clean Energy Alliance Fi cal Yea Ending: 2020 2021 2022 2023 2024 2025 I Revenue 9,634,093 67,733082 69,062,278 70,413,027 71,785,662 II. Operating Expenses PowerSupply 8,988,017 61,018,825 60,161,460 61,785,316 62,526,043 Staff 50,000 235,000 600,000 618,000 636,540 655,636 Administrative Costs. 253,000 1,108,938 2,459,357 2,498,727 2,559,714 2,617,600 Subtotal Operating Expenses 303,000 10,331,956 64,078,103 63,278,187 64,981,570 65,799,279 Operating Margin ( 03,000) (697,862) 3,654,899 5,784,091 5,431,458 5,986,383 III. Financing liolbenest 123,333 146,250 116,038 69,822 22,280 Principal 450,000 500,000 1,287,015 1,332,791 1,380,194 Subtotal Financing 573,333 646,250 1,403,053 1,402,613 1,402,474 Operating Margin Less Financing (303,000) (1,271,195) 3,008,649 4,381,038 4,028,845 4,583,909 IV. Cash From Financing 450,000 4,500,000 - - . V. Other Uses CPUC and CAISO Deposits 147,000 500,000 Collateral Deposits 0 2,500,000 Reserve Additions 228,805 3,008,649 3,453,114 3,520,651 3,589,283 Subtotal Other Uses 147,000 3,228,805 3,008,649 3,453,114 3,520,651 3,589,283 VI t Surplus/(Deficit) (0) 0 927,924 508,193 994,626 VII. Cumulative Reserve 228,805 3,237,454 6,690,568 10,211.219 13,000,502 VIII. Cumulative Net Surplus 10 0 927,924 1,436,117 2,430,743 VI. Combined Cumulative Reserve & Cumulative Net Surplus 228,805 3,237,454 7,618,492 11,647,306 16,231,245 * Comprised of Technical and Legal Services, Customer Outreach and Communications, Utility Services Fees, Data Management Services, Uncollectibles The Option 2 scenario with 2% rate discount compared to SDG&E for generation results in: • Net Surplus beginning FY 2023 can be utilized for Board directed rate discounts/programs/additional reserve contribution • 3.8% reserve contribution FY 20/21; 4.4% reserve contribution FY 21/22 (short of 5% goal) 19.2% Cumulative Operating Reserve by 2025 FISCAL IMPACT There is no fiscal impact by this action. ATTACHMENTS: None July 16, 2020 Item #4 Page 10 of 10