HomeMy WebLinkAbout2020-11-19; Clean Energy Alliance JPA; ; Authorize Interim Chief Executive Officer to Negotiate Terms for Clean Energy Alliance Credit SolutionClean Energy Alliance
JOINT POWERS AUTHORITY
Staff Report
DATE: November 19, 2020
TO: Clean Energy Alliance Board of Directors
FROM: Barbara Boswell, Interim Chief Executive Officer
ITEM 8: Authorize Interim Chief Executive Officer to Negotiate Terms for Clean Energy Alliance
Credit Solution
RECOMMENDATION:
Authorize Interim Chief Executive Officer to negotiate terms for Clean Energy Alliance Credit Solution.
BACKGROUND AND DISCUSSION:
At its August 20, 2020 meeting, the Clean Energy Alliance (CEA) Board directed staff to continue working
on a credit solution for its start-up and initial power supply costs and return to the Board at its November
19 meeting with options.
Actions taken to date related to pursuing a credit solution include:
February 20, 2020 Considered RFP responses for Credit Solution and put selection on hold until June
2020.
June 18, 2020 Considered Credit Solution offers from JP Morgan and River City Bank. Directed
staff to reach out to Member Agencies regarding providing guaranty for River
City Bank option for $2.5M of a total $4.0M credit solution.
July 8, 2020 City of Solana Beach City Council approved guaranty up to $175,000.
July 14, 2020 City of Carlsbad City Council directed staff to return with to City Council with
potential loan to CEA in lieu of providing guaranty.
July 20, 2020 City of Del Mar City Council approved guaranty up to $75,000.
July 28, 2020 City of Carlsbad City Council considered loan terms and conditions; did not
approve making loan to CEA.
August 20, 2020 CEA Board approved executing promissory note with Calpine Energy Solutions
for administrative costs through January 2021.
Since CEA began its efforts related to identifying its start-up credit solution, activities have progressed in
support of the May 2021 launch, and as a result there is more clarity into the actual energy supply costs
to be incurred prior to launch. This had increased the credit need to $4,342,808 as detailed below:
Funding Need for Credit Solution
Admin Costs February —June 2021 $540,000
CAISO Deposit 500,000
Deposits 245,000
Energy Supply Costs 3,057,808
TOTAL FUNDING NEED $4,342,808
November 19, 2020
Credit Solution
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CEA staff has worked with both JP Morgan and River City Bank related to updated terms of credit
solutions. Both financial institutions have indicated a willingness to update its credit terms. Below
reflects the summary of those conversations:
River City Bank: Due to the credit solution being funded closer to launch, RCB has Indicated a
willingness to consider a credit solution that does not require guarantees from Member Agencies,
subject to credit approval.
JP Morgan: JP Morgan has provided revised credit terms that increases the term from 3 years to 5
years; revised its rate covenants to be applicable to only those costs not covered by other sources; and
is open to discussions about a carve out for a rate subsidy program. The loan is subject to credit
approval.
The updates to both the credit options are beneficial to CEA, and bring both options closer in alignment
with regards to pros and cons.
Staff recommends continuing discussions with both financial institutions to determine the option that
provides the greatest benefits at the lowest cost, and to begin completing the due diligence process
with both banks to ascertain approval, and return with the final option at the December 17, 2020
meeting.
FISCAL IMPACT
The credit solution will be repaid from future energy sales revenues.
ATTACHMENTS:
None
November 19, 2020
Credit Solution
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