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File Number: 16-590 <br />operation at that time. The Board will need to secure working capital to cover its expenses <br />leading up to the delivery of electricity, which is projected for fall of 2017. Based on the <br />experience of other CCA entities, this capital is typically provided by a bank line of credit that <br />requires a credit guarantee until such time that the CCA’s customers have been enrolled and <br />the program is fully resourced. The Technical Study's pro forma analysis identified up to $51 <br />million in working capital needs, the majority of which would cover initial power purchases and <br />be repaid within five years of customer enrollment and ratepayer revenues. The financial <br />model showed that this level of financing could be paid back within that timeframe, while still <br />building a substantial reserve for the Authority in its early years. Appendix B provides further <br />detail on required activities and consulting services needed for startup. <br />Fiscal Impacts <br />In addition to San Leandro residents and businesses, the City would become a customer of <br />EBCE. This would allow each of San Leandro’s municipal electric accounts to be served by <br />EBCE, and make the City eligible to participate in any future efficiency or incentive programs <br />that may be developed by EBCE. Based on current renewable and nonrenewable energy <br />supply prices, as well as the assessment in the MRW technical feasibility study, it is possible <br />that the City could lower total energy costs for its electric accounts. Staff will conduct this <br />financial analysis once more is known about EBCE’s initial retail rates. <br />The City will also continue to be eligible to participate in incentive programs offered through <br />PG&E that lower the cost of energy upgrade projects in municipal facilities as well as homes <br />and businesses. <br />Some City staff time will be required to monitor and assess EBCE activities as such activities <br />may affect San Leandro. Such cost would be reflected in future budget recommendations. <br />Lastly, it is common for newly formed CCAs to issue an RFP for the startup capital, and that <br />responding banks usually ask for a loan guarantee of around 10%. According to the Technical <br />Feasibility Study, it is expected that the proposed CCA would need $51 million in startup <br />capital, which would put the loan guarantee amount at approximately $5.1 million. If the CCE <br />Board requests that the guarantee be split up among the member agencies (as has been <br />done with the other CCAs), it is conceivable that the City of San Leandro would have to take <br />on a portion of that loan guarantee in the order of several hundred thousand dollars. This <br />guarantee wouldn’t require cash, but would rather be a liability on the books for the period of <br />the loan, likely two to three years in duration. <br />Reasons for Recommendation <br />Participation in EBCE will result in more local control over San Leandro’s power supply, <br />reduced greenhouse emissions, as well as the possibility of lower costs for ratepayers, and <br />increased jobs in the clean energy sector for the region. The anticipated greenhouse gas <br />reductions would help San Leandro to more effectively meet its established sustainability <br />goals. <br />Attachments to Staff Report <br />·Appendix A - Alameda County Staff’s Summary of MRW Technical Feasibility Study <br />Page 5 City of San Leandro Printed on 11/16/2016