HomeMy WebLinkAbout2022-01-13; Clean Energy Alliance JPA; MinutesDocuSign Envelope ID: EA085BFA-73A6-4CEB-85F2-667599498283
Clean Energy Alliance -Board of Directors
Adjourned Meeting Minutes
January 13, 2022, 2:00 p.m.
Virtual Meeting
Teleconference Locations Per Government Code Section 54953(3) {Assembly Bill 361)
CALL TO ORDER -Chair Becker called to order the adjourned meeting of the Clean Energy Alliance
at 2:02 p.m.
ROLL CALL: Board members: Druker, Inscoe, Musgrove, Acosta, Chair Becker
FLAG SALUTE: Chair Becker led the flag salute.
BOARD COMMENTS & ANNOUNCEMENTS PRESENTATIONS: Board Member Acosta commented
that she is now the primary representative to the CEA Board and shared her excitement on
working with the Board.
PRESENTATIONS: None
PUBLIC COMMENT: None
Consent Calendar
Item 1: Consideration of Adoption of Resolution No. 2022-001 Approving Credit
Agreement Amendment and Fee Agreement with JPMorgan Increasing the Line
of Credit from $6MM to $15MM
RECOMMENDATION
1) Adopt Resolution No. 2022-001 approving credit agreement amendment with
JPMorgan, in a form substantially as attached, increasing the line of credit from
$6MM to $1SMM and authorize the Chief Executive Officer to execute all
documents, subject to Special and General Counsel approval; and
2) Approve related Fee Agreement with JPMorgan and authorize the Chief
Executive Officer to execute all documents, subject to Special and General
Counsel approval.
Board Member Druker recused himself from participating on this item due to a conflict of
interest -the company he works with has a financial relationship with JPMorgan/Chase.
Member Druker left the virtual dias by muting his mic and exiting video.
Alternate Board Member Worden recused himself from participating on this item due to a
conflict of interest -owning stock in JPMorgan and left the virtual dias by muting his mic and
exiting video.
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Chief Executive Officer Barbara Boswell presented the item and explained that current market
conditions pushed power supply costs in excess of estimates and significant constraints with
supply and drought has affected hydroelectric supply, and delays in new renewable facilities
coming on line which has caused an increase in pricing beyond what was expected for initial
procurement and driven the need to request an increase in CEA's Line of Credit. JPMorgan
reviewed current agreement and financial projections and JPMorgan Credit Committee
authorized a credit increase form $6.00MM to $15.00MM with no change to repayment date
terms. Additional quarterly and annual reporting requirements will include debt service
coverage ratio, days liquidity on hand, updates to annual budget, liquidity report disclosing
available liquidity, unrestricted cash report, and power supply hedge position. In addition, CEA
rate increases of 5% or greater must be reported to JPMorgan within five business days of
Board adoption; the Debt Service Coverage Ratio (DSCR) must be maintained at l.40X with test
start date move from 6/30/22 to quarter ending 6/30/2023. If the DSCR is not met the
amendment allows for liquidity on hand to be substituted for curing the default which can be
used two times in any four consecutive quarters. Repayment of $5,000,000 principal payment
of outstanding line of credit is due by December 31, 2023, and may be re-borrowed after 30-
day waiting period.
Ms. Boswell reviewed the rolling power supply hedge requirement percentages for Calendar
Years 2022 through 2024 commenting that annual meetings between JPMorgan and CEA to
review and discuss market conditions will take place and based on the meeting the hedge
positions may be rolled into future years at JPMorgan discretion. However, if CEA
demonstrates that achieving the hedge positions would be adverse to CEA's financial position
they will not be required. Lastly, the current interst rate London Interbank Offered Rate
(LIBOR) is discontinued to Secured Overnight Financing Rate (SOFR). Staff, legal team, and
technical consultants determined terms are accepatable and achievable.
Board comments and questions included: How will energy procurement for Escondido and San
Marcos take place; the price difference in short term energy versus long range energy
procurement; CEA rate increase and if CEA is able to maintain the 2% savings over SDG&E rates;
CEA team analysis to drawdown $5.00MM versus JPMorgan recommendation to drawdown
$6.00MM -is that to address any gap and assuming interest will be paid on $6.00MM is that
necessary to do at this time; CEA payment of original $5.00MM by 12/2023 and if analysis of
lowering reserves to pay off JPMorgan debt might be warranted.
Chief Executive Officer Boswell explained that energy procurement takes place monthly in slices
of what needs are to accommodate price fluxuation; short term procurement is more costly
than long range procurement; SDG&E rates increased to reflect the higher cost of power, CEA
was able to maintain the 2% savings on the generation portion on the Clean Impact product;
JPMorgan looks at the credit increase request as a one-time amendment setting the line of
credit at a level that would address any unanticipated cost related to expansion and there is a
small fee (1-2%) assessed on available funds that are not drawn; Board policy indicates 5%
revenue is set aside into operational reserve and dipping into that reserve to repay the loan is
not recommended by staff.
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Mr. Rob Howard of Oceanside addressed the Board regarding the line of credit and adequate
funding for expansion of CEA.
Motion by Chair Becker, second by Board Member Musgrove, to adopt Resolution No. 2022-001
approving credit agreement amendment with JPMorgan, in a form substantially as attached
to the agenda item, increasing the line of credit from $6MM to $1SMM and authorize the
Chief Executive Officer to execute all documents, subject to Special and General Counsel
approval; and approve related Fee Agreement with JPMorgan and authorize the Chief
Executive Officer to execute all documents, subject to Special and General Counsel approval.
Motion carried unanimously, 4/0.
BOARD MEMBER REQUESTS FOR FUTURE AGENDA ITEMS: Chair Becker requested t hat
election of a new Vice Chair be placed on the next agenda.
Member Musgrove requested that the term of service for Chair and Vice Chair be added to CEA
JPA bylaws.
ADJOURN : Chair Becker adjourned the meeting at 2:47 p.m.
G~·
Susan Caputo, MMC
Interim Board Clerk