REGION — The Clean Energy Alliance has received a “clean” bill of financial health and reported a nearly $2 million surplus after its updated operating budget was released in October.
A third-party accounting firm presented the CEA board with a “clean” audit report during a Nov. 17 meeting. The audit, conducted by LSL CPAs and Advisors for the week of Sept. 26, found no significant deficiencies, material weaknesses or noncompliance with laws.
As a result, the firm determined no adjustments were necessary.
“It was a clean audit opinion,” said Ryan Domino, an LSL assurance partner. “All in all, it was a very good audit.”
The audit covers the revenues and expenditures for the member cities of Carlsbad, Del Mar and Solana Beach. The total operating revenues for the 2021-22 fiscal year were $61 million, with operating expenses at $62 million.
In 2021-22, CEA earned $55.4 million from its customers but paid $59.4 million to energy suppliers, $2.4 million for goods and services and nearly $1 million for other charges and collateral. As a result, the agency’s final net position in fiscal 2021-22 was negative $3.7 million, compared to a $2.7 million deficit the previous year.
But “cash flows from operating activities” showed a $7.2 million shortfall. Plus, CEA has $13.5 million in outstanding loans from JPMorgan Chase. The North County, joint powers authority, must pay back $5 million of the total loan amount by December 2023.
Despite the looming debt, CEO Barbara Boswell said the municipal aggregator’s budget is currently on track with a net position of $1.8 million thanks to a September heat wave.
The first four months of fiscal 2022-23 show CEA’s operating revenues at $32.8 million with $26.9 million in expenditures. The agency’s gains wiped out a $3.7 million deficit, leaving the agency with a nearly $2 million surplus heading into the rest of the year.
Conversely, the agency must execute several short-term natural gas contracts, which Boswell said will be expensive due to market instability.
The inland cities of Escondido and San Marcos will begin service in 2023, potentially net positives for Clean Energy Alliance. The cities of Oceanside and Vista are set to join the energy conglomerate in 2024.
A complete reconciliation of the budget will be presented to the CEA board during a January meeting.
Other CCE news
According to sources, San Clemente has reconsidered joining the CEA and is waiting to commit to any new energy agency. The city was considering joining the CEA but has since pulled back.
The city’s trepidation comes after Orange County recently dropped its bid to join the Orange County Power Authority after a series of audits found inappropriate bids, a lack of transparency, financial troubles and more for the community choice energy agency, according to the Voice of Orange County.
Additionally, an Orange County grand jury released a report titled “Orange County Power Authority: Come Clean,” which details the shortcomings of the energy provider.
According to the report, the county Power Authority was “reluctant” to share information with the grand jury, meeting minutes and videos were removed from the service provider’s website, and rate increases were not disclosed, among other allegations.
The grand jury also expressed concerns the energy agency’s leadership needed more experience and questioned the group’s long-term renewable energy contracts.
“A shortage of new renewable projects available to interested buyers has caused prices for power purchase agreements to rise 9.7 percent since the beginning of 2022 and 28.5 percent since the beginning of 2021,” according to the report.
During its mid-year budget report, the Orange County Power Authority saw an increase of projected energy costs to be $14.2 million higher than expected due to increased prices, according to a study by LevelTen Energy.
