HomeMy WebLinkAbout2020-12-17; Clean Energy Alliance JPA; ; 12/17/2020 CEA JPA ExhibitsClean Energy Alliance
JOINT POWERS AUTHORITY
Regular Board Meeting
December 17, 2020, 2 p.m.
Hosted by the City of Carlsbad
12/17/20 CLEAN ENERGY ALLIANCE - DRAFT
Item 6: CEA Pro Forma Update
Barbara Boswell, Interim Chief Executive Officer
John Dalessi, Pacific Energy Advisors
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Item 6: CEA Pro Forma Update
•Recommendation
0 Receive presentation on the updated CEA Pro Forma.
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Item 6: CEA Pro Forma Update
•Background:
O Financial Projection based on current market conditions for:
o Forecasted Customer Energy Usage (Load)
o Forward Energy Price Curve
o SDG&E Projected Generation Rates
o SDG&E Projected PCIA Rates
o Reflects financial picture if CEA were to set rates and purchase
energy based on today's market
o Can, and will, change as market conditions change, and until
CEA sets its rates and enters into energy contracts
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Item 6: CEA Pro Forma Update
•Changes since last presentation:
o SDG&E Projected rates — ERRA Rate Proceeding:
O Concerns with Departing Load assumptions in rate setting
O Artificially low rates
O PCIA projected to increase to capped amount
O Impacts CEA's ability to be cost competitive with SDG&E
12/17/20 CLEAN ENERGY ALLIANCE - DRAFT
Item 6: CEA Pro Forma Update
•Energy Forward Price Curve
O Significant Increase in Forward Price Curve coming out of
summer
O 90% of CEA expenses are power supply related
O Pro Forma based on procuring ALL of CEA's power supply needs
at today's prices
0 CEA would ladder procures to mitigate impacts of price
volatility
0 Pro Forma is a snapshot
12/17/20 CLEAN ENERGY ALLIANCL - ORAFT
Item 6: CEA Pro Forma Update
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Item 6: CEA Pro Forma Update
•CEA Customer Usage (Load) Assumptions
o Refined based on SDG&E data provided through phasing
discussions
o Excluded Poseidon Desalination Plant due to special billing
arrangements with SDG&E
0 Pending on-going discussions for CEA service options
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Item 6: CEA Pro Forma Update
•July 2020 Base Pro Forma Assumptions
o 50% Renewable Energy Default increasing to 100% by 2035
o Renewable Energy sourced from PCC1 and PCC2 at allowable
levels
O Contributing 5% to operating reserve to achieve 20% reserve by
2025
o 90% participation rate
O Cost parity with SDG&E (CEA rates set so customers pay same
for generation as they would as SDG&E customer, taking into
account SDG&E PCIA fees)
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Annual DRAFT Pro Forma Projections fora Community Choice Aggregation Program - Parity; 50% Renewable Default to 200%Renewable by 2035
Clean Energy Alliance
Fiscal Year Ending: 2020 2021 2022 2023 2024 2025
I.Revenue
9,913,235 69,767,349 71,127,161 72,508,987 73,913,166
II.Operating Expenses
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 1,223,938 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) (418,721) 5,731,326 8,032,632 7,802,071 8,380,167
III.Financing
Interest
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) (992,054) 5,085,076 6,629,579 6,399,458 6,977,693
IV.Cash From Financing 450,000 4,500,000
V.Other Uses
CP UC and CAISO Deposits 147,000 500,000
Collateral Deposits 0 2,500,000
Reserve Additions
495,662 3,488,367 3,556,358 3,625,449 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 14,861,495
VIII.Cumulative Net Surplus
12,284 1,608,993 4,682,213 7,456,222 10,738,257
VI. Combined Cumulative Reserve & Cumulative
Net Surplus
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 Ma nagement Services, Uncollectibles
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Item 6: CEA Pro Forma Update
•December 2020 Base Pro Forma Update
O Using same based assumptions as July 2020
o Updated Market Conditions
O Overall cost parity with SDG&E for Generation costs
12/17/20 CLEAN ENERGY ALLIANCE - DRAFT
Fiscal Year Ending: 2020 2021 2022 2023 2024 2025
I.Revenue
4,714,374 38,398,225 39,056,596 39,730,718 40,538,324
Revenue -Voluntary 100% Green
Subtotal Revenue
4,714,374 38,398,225 39,056,596 39,730,718 40,538,324
II.Operating Expenses
Power Supply
6,060,081 40,424,629 39,774,066 38,517,680 38,152,022
Staff 41,900 120,000 300,000 309,000 318,270 327,818
Administrative Costs 237,460 997,707 2,321,597 2,357,115 2,397,955 2,447,281
Subtotal Operating Expenses 279,360 7,177,788 43,046,227 42,440,181 41,233,905 40,927,122
Operating Margin (279,360) (2,463,414) (4,648,002) (3,383,585) (1,503,188) (388,797)
III.Financing
Interest - 81,594 168,787 133,327 96,515 58,298
Principal - 650,000 926,553 961,902 1,532,400 1,036,697
Reserve Contribution - 235,719 -
Subtotal Financing
967,312 1,095,340 1,095,229 1,628,914 1,094,995
Operating Margin Less Financing (279,360) (3,430,726) (5,743,341) (4,478,815) (3,132,102) (1,483,793)
IV.Cash From Financing 450,000 5,650,000
V.Other Uses
CPUC and CAISO Deposits 147,000 500,000
Collateral
1,000,000
Subtotal Other Uses 147,000 1,500,000
VI.Net Surplus/(Deficit) 23,640 719,274 (5,743,341) (4,478,815) (3,132,102) (1,483,793)
VII.Cumulative Reserve
235,719 235,719 235,719 235,719 235,719
VIII.Cumulative Net Surplus 23,640 719,274 (5,024,068) (9,502,882) (12,634,984) (14,118,777)
•At cost parity -
•Revenue not sufficient to cover
energy costs, financing &
operating reserves
Annual Pro Forma Projections for a Community Choice Aggregation Program -Parity
Clean Energy Alliance
10-Dec-20
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Item 6: CEA Pro Forma Update
•December 2020 Base Pro Forma Update — Scenario 2
o Using same based assumptions as July 2020
o Updated Market Conditions
O Setting CEA Generation rates to cover costs
CEA per KWh rate would be lower than SDG&E's comparable
rates
0 SDG&E PCIA fee drives overall generations costs higher as a
CEA customer under current market conditions
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Fiscal Year Ending: 2020
I.Revenue
Revenue - Voluntary 100% Green
Subtotal Revenue
II.Operating Expenses
Power Supply
Staff
Administrative Costs
Subtotal Operating Expenses
6,060,081
41,900 120,000
237,460 997,707
279,360 7,177,788
40,424,629
300,000
2,321,597
43,046,227
39,774,066
309,000
2,357,115
42,440,181
38,517,680
318,270
2,397,955
41,233,905
38,152,022
327,818
2,447,281
40,927,122
Operating Margin
III.Financing
Interest
Principal
Reserve Contribution
81,594
650,000
281,016
168,787
926,553
2,035,647
133,327
961,902
2,346,303
96,515
1,532,400
2,384,767
58,298
1,036,697
2,431,141
(279,360) (1,557,467) 3,130,987
Subtotal Financing
Operating Margin Less Financing
IV.Cash From Financing
V.Other Uses
CPUC and CAISO Deposits
Collateral
Subtotal Other Uses
VI.Net Surplus/(Deficit)
VII.Cumulative Reserve
VIII.Cumulative Net Surplus
3,441,533 4,013,681 3,526,136
1,044,354 2,447,750 4,169,553
450,000 5,650,000
147,000 500,000
1,000,000
147,000 1,500,000
23,640 1,579,924
281,016
23,640 1,579,924
2,316,663
1.579.924
1,044,354 2,447,750 4,169.553
4,662,966 7,047,733 9,478,873
5.072.027 9.241.580 2.624.278
1,012,610 3,130,986
(279,360) (2,570,076)
5,620,321 46,177,213 46,926,067 47,695,336 48,622,810
5,620,321 46,177,213 46,926,067 47,695,336 48,622,810
4,485,886 6,461,431 7,695,689
Annual Pro Forma Projections for a Community Choice Aggregation Program - Premium
Clean Energy Alliance
10-Dec-20
•Reflects higher customer opt out
•16% compared to base 10%
•Average residential customer bill
3.6%, or $3.50 per month, higher
than SDG&E bundled service
•CEA is NOT setting rates today
•February 2021
•CEA is NOT procuring power today
•Spring 2021
•SDG&E 2021 final rates not yet
approved
•. Late December 2020
•Market conditions will continue to
be monitored
•Pro Forma update in February
2021 with rate setting
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Item 6: CEA Pro Forma Update
Board Discussion
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Item 7: CEA Terms & Conditions,
Product Branding, Default Energy
Options and Programs
Barbara Boswell, Interim Chief Executive Officer
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Item 7: CEA Terms & Conditions, Product
Branding, Default Energy Options and Programs
—Recommendation
1) Approve energy product options to offer at launch, or other alternatives as determined by
the Clean Energy Alliance Board:
*50% Renewable Energy Product — Minimum Default Energy Product
*100% Renewable Energy Product — Alternative Default Energy Product Option for
Member Agencies; Voluntary Opt-Up Product for customers at a rate premium
*Minimum State Renewable Portfolio Standards Product — Voluntary Opt-Down for
Customers at a reduced rate
2)Approve Product Names, or other alternatives as determined by the CEA Board:
Green Impact — 50% Renewable Energy Product
Clean Impact — 100% Renewable Energy Product
Local Impact — Meets State Required Renewable Energy Standards (If Approved by
Board)
Personal Impact — Net Energy Metering Program
3)Approve CEA Terms and Conditions — General Service and Net Energy Metering
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Item 7: CEA Terms & Conditions, Product
Branding, Default Energy Options and Programs
•Product Offerings
O Section 6.5 of CEA JPA Agreement
o Base Default product greater than or equal to 50% Renewable
o Board will establish optional product offerings with higher
renewable and/or GHG-free content
Survey of CCAs throughout the state
o 19 offer voluntary 100% renewable energy (opt-up product)
O 2 offer voluntary 50% renewable energy (one is 100% carbon free)
o No CCAs offer a 75% renewable energy in addition to 100%
renewable
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Item 7: CEA Terms & Conditions, Product
Branding, Default Energy Options and Programs
•JPAs allow member agencies to select the based default or one of
the voluntary opt-up products as default
o Rates determined by product selected as default
o Those with 100% as default also allow individual customers to opt
down
o CPA has a 36% renewable energy product as an opt down option
O Provides option for those customers who have cost concerns
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Item 7: CEA Terms & Conditions, Product
Branding, Default Energy Options and Programs
•Based on JPA Agreement & research recommend:
o 50% renewable energy product as minimum default option
o 100% renewable energy product
o Voluntary opt-up for customers
o Available for communities to select as default
O Minimum State RPS (36% in 2021; 39% in 2022)
o Voluntary opt-down for customers
o Alternative for those customers with cost concerns
o Alternative to opting out
•Rates for products will be set by Board in February 2021
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Item 7: CEA Terms & Conditions, Product
Branding, Default Energy Options and Programs
•Product Names
o Reflect CEA Identity and Brand
o Best to avoid reference to renewable content (50 or 100)
o CEA JPA and Board Adopted Policies reflect recurring theme
o "Impact"
o Local Economy, Environment, Greenhouse Gas Emissions
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Item 7: CEA Terms & Conditions, Product
Branding, Default Energy Options and Programs
•Product Names
o Green Impact — 50% Renewable Energy Product
o Clean Impact — 100% Renewable Energy Product
o Local Impact — Minimum RPS (if approved by Board as part of
offerings)
o Personal Impact — Net Energy Metering Program
o Theme of Impact would be continued into future products &
programs
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Item 7: CEA Terms & Conditions, Product
Branding, Default Energy Options and Programs
•Program Terms & Conditions
o Customer rights and responsibilities related to taking service from
CEA
o General Terms & Conditions based on best practices and rules that
guide CCA operations
o Provide information on: Billing, enrollment, discount programs
(CARE/FERALetc) Opting out and failure to pay
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Item 7: CEA Terms & Conditions, Product
Branding, Default Energy Options and Programs
•Net Energy Metering (NEM) Terms & Conditions
o Applicable to customers with self generation (solar)
o Receive credit for system generation based on applicable rate
o Receive charge for usage based on applicable rate
o Credits offset charges each billing period
o Excess credits will flow to next billing period for future offset
•Excess charges will flow to customer bill
o At end of 12-month period, kWh generated compared to kWh used
— excess kWh will be eligible for Net Surplus Compensation (NSC)
•NSC rate set by Board in February
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Item 7: CEA Terms & Conditions, Product
Branding, Default Energy Options and Programs
•Net Energy Metering (NEM) Terms & Conditions
o Applicable to customers with self generation (solar)
o NSC payments in excess of $100 will be paid by check
o NSC payments less than $100 credited to customer account
o NEM accounts reset to zero at completion of true-up
Mirrors SDG&E NEM program
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Item 7: CEA Terms & Conditions,
Product Branding, Default Energy
Options and Programs
Board Discussion
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Item 8: Approve Credit Solution
with JP Morgan for Start-up and
Working Capital
Barbara Boswell, Interim Chief Executive Officer
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Item 8: CEA Credit Solution
•Recommendation:
O Authorize Interim CEO to execute all documents and take all
necessary actions to secure CEA's financing with JP Morgan,
subject to General Counsel approval, or other alternative as
determined by CEA Board
•$5,000,000 for start-up and working capital costs;
o $5,000,000 (subject to credit approval and CEA Board
Authorization) for liquidity via Standby Letters of Credit or cash
postings for power contracts;
o $5,000,000 (subject to credit approval and CEA Board
Authorization) available upon launch for additional working
capital or liquidity support for power purchase agreements
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Item 8: CEA Credit Solution
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
July 14, 2020
City of Solana Beach City Council approved guaranty up to $175,000
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
City of Carlsbad City Council considered loan terms and conditions; did not approve making loan to
CEA.
July 28, 2020
August 20, 2020
CEA Board approved executing promissory note with Calpine Energy Solutions for administrative
costs through January 2021
November 19, 2020
CEA Board Authorized negotiation of CEA Credit Solution
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Item 8: CEA Credit Solution
•Updated Funding Need:
Admin Costs Feb —June 2021 $540,000
CAISO Deposit 500,000
Deposits 245,000
Energy Supply Costs 3,125,848
Working Capital 589,152
TOTAL FUNDING NEED $5,000,000
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Credit Facility
Amount
Term
Security
Interest Rate
Loan Fees
Item 8: CEA Credit Solution River City
Bank Option
River Cit Bank - $4,000,000
Nonrevolving Line of Credit (NRLOC)/Revolving Line of Credit (RLOC)
$2,500,000 NRLOC
$1,500,000 RLOC
2 years with option to convert both NRLOC and RLOC to term loan for up to an
additional 3 years for total 5-year term
$2.5M NRLOC secured by one of the following options:
1)Guarantee from one or all of the JPA Members or other creditworthy party
2)Cash Collateral for 100% of NRLOC loan amount
3)Combination of guarantees and cash collateral at levels acceptable to RCB
NRLOC - One-month US Treasury Bill yield plus 2.5% subject to a 3.00% floor
RLOC - One-month US Treasury Bill yield plus 3.0% subject to a 3.50% floor
Term Loan — 3-Year US Treasury Note yield plus 3.00% subject to a 3.50% floor
$15,000
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Item 8: CEA Credit Solution River City
Bank Option
•Pros —
o RCB Experience working with CCAs & Understanding of Industry
o Good Experience working with RCB on Banking Needs
o Favorable Interest Rate
•Cons —
o Credit Solution doesn't meet current need
o Potential need for guarantee
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Credit Facility
Amount
Term
Security
Interest Rate
Undrawn Fee
Loan Fees
Item 8: CEA Credit Solution JP Morgan
Option
JP Morgan - $5,000,000 Start-Up & Working Capital
Revolving Line of Credit (RLOC)
$5,000,000
Up to 5 Years
CEA only — Nonrecourse to the member agencies
One-month or three-month LIBOR plus 3.45% (1-month LIBOR
was .15388% last week)
1.95% calculated on the undrawn portion of the $5.0M RLOC
$50,000
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Item 8: CEA Credit Solution JP Morgan
Option
•Pros —
(3 Credit Facilities beyond Initial Need (future needs met)
o Non-Recourse to Member Agencies
•Cons —
o Covenants
o Terms have been improved — rate covenant limited to costs not paid
form other sources or contractual obligations
o Slightly higher interest rate
CI Reflected in pro forma presented
•CEA has received full credit approval by JP Morgan to move forward
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Item 8: CEA Credit Solution
Board Discussion
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