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It explains the Dividend Program framework adopted in June 2019, including a requirement for at least a 5% net margin before considering dividends. Staff presents minimum allocations to the Local Programs Reserve and cash reserves, estimates a discretionary amount after cash reserves, and evaluates scenarios emphasizing reserve targets, credit rating readiness, and possible customer rate discounts beginning as early as July 1.",{"@graph":69,"@context":126},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/allocation-of-2023-net-margin-staff-report-item-6/315792/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/allocation-of-2023-net-margin-staff-report-item-6/315792.png","ImageObject",300,407,{"name":92,"@type":93},"Mali","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-24","2026-09-20",true,{"@type":102,"interactionType":103,"userInteractionCount":52},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118,122],{"name":109,"@type":110,"acceptedAnswer":111},"What is the purpose of this staff report for Item 6?","Question",{"text":112,"@type":113},"It presents options for how the Board can allocate the estimated 2023 net margin for discussion and feedback by the Community Advisory Committee.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"How does the Dividend Program determine whether dividends are considered?",{"text":117,"@type":113},"It requires a minimum 5% audited net margin (less principal debt payments) before dividends are considered under the adopted guidelines.",{"name":119,"@type":110,"acceptedAnswer":120},"What minimum allocations are proposed for 2023 net margin?",{"text":121,"@type":113},"The minimum allocation includes $238,000 to the Local Programs Reserve and $10,039,500 to cash reserves, resulting in $0 allocated to customer dividends under the minimum allocation approach.",{"name":123,"@type":110,"acceptedAnswer":124},"What is the focus of Staff’s discretionary allocation recommendation?",{"text":125,"@type":113},"Staff considers allocating the majority of the discretionary amount to cash reserves to support reserve targets and readiness for an initial investment grade credit rating, while acknowledging potential additional program funds and rate discounts starting as early as July 1.","https://schema.org",{"og:url":83,"og:type":128,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":130,"canonical":83},"index,follow",{"doc_id":132,"site_id":62},315792,1790219843,{"code":4,"msg":5,"data":135},{"doc_id":132,"user_id":136,"nickname":92,"user_avatar":137,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":138,"file_id":139,"file_url":140,"file_type":141,"file_size":142,"view_count":52,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":81,"language":143,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":144,"faqs":145,"seo_title":146,"seo_description":67,"update_tm":147,"read_time":39,"preview_page_count":4},2336475104362,"https://ap-avatar.wpscdn.com/avatar/22000c4c46a41b752dd?x-image-process=image/resize,m_fixed,w_180,h_180&k=1786595829695023868","VALLEY CLEAN ENERGY ALLIANCE COMMUNITY ADVISORY COMMITTEE  \nStaff Report – Item 6  \n\n| TO: | Community Advisory Committee |\n| --- | --- |\n| FROM: | Edward Burnham, Director of Finance & Internal Operations |\n| SUBJECT: | Allocation of 2023 Net Margin |\n| DATE: | March 28, 2024 |\n\nRECOMMENDATION  \n1. Informational – Discussion and Feedback  \nOVERVIEW  \nThis staff report presents the various options the Board has in determining how to allocate the estimated net margin for 2023. Staff is presenting this information to the Community Advisory Committee (CAC) for discussion and feedback. VCE’s audit is in progress and financial statements will be presented to the Board at the April meeting. Taking into account the Dividend Program parameters, as well as available and forecast cash reserves, Staff is considering various options outlined below for VCE’s 2023 net margin of $16 .5 million:  \n• Minimum allocation of $238,000 to the Local Programs Reserve (LPR)  \n• Minimum allocation of $10,039,500 to cash reserves  \n• Discretionary Allocation (After Cash Reserves) of $5,510,500  \nBACKGROUND AND ANALYSIS  \nThe Board adopted the VCE Rate Structure & Dividend Program Guidelines on June 17, 2019, to guide the allocation of the audited net margin for each year. The guidelines can be found here.  \nKey aspects of the Dividend Program are:  \n• Every year, the audited Net Margin (Less Principal Debt Payments) is to be allocated amongst Cash Reserves, LPR, and Cash Dividends, at the Board’s discretion  \n• Require a minimum 5% net margin before considering if any dividends are paid  \nBased on the estimated 2023 Financial Statements, the conditions above have been met. Staff will present the final recommendation of the allocation of net margin to the Board on May 09, 2024, to meet timeline requirements for possible additional rate credits outlined below. As noted, when the Board adopted the Dividend Program Policy in June 2019 a 5% minimum net margin is in the lower range of typical net margin goals for the utility sector and most other industries.  \nDividend Program Formula   \nThe adopted Dividend Program formula recommends allocating the net margin as follows:  \n• Net margin up to 5% is to be allocated as follows:  \no At least 5%(of the 5%) goes to LPR for program implementation  \no The balance goes to cash reserves  \n• Net margin above 5% is to be allocated as follows:  \no At least 50% to cash reserves  \no Remainder allocated amongst customer dividends and LPR Below is a summary of VCE’s Allocation for 2023:  \nTable 1-VCE Dividend Program Allocation-2023  \n\n| Description Electricity Sales Operating Expense Operating Margin\u003Cbr>Principal Debt Payments\u003Cbr>Adjusted Net Margin less principal Debt Payments Adjusted Net Margin Percentage\u003Cbr>Estimated 2023 Results 95,330,080 78,830,080 16,500,000\u003Cbr>712,252\u003Cbr>15,788,000 16.56% | Avg. Days\u003Cbr>Cash 216,000 |  |\n| --- | --- | --- |\n| \u003Cbr>|  |  |\n| Allocation of Net Margin up to 5% Cash Reserves Allocation Local Programs Allocation\u003Cbr>Percentage 95% 5%\u003Cbr>Allocation Amount 4,529,000 238,000\u003Cbr>Allocation of Net Margin above 5% Allocation to Cash Reserves\u003Cbr>Percentage 50%\u003Cbr>Allocation Amount 5,510,500\u003Cbr>Operating Days Cash 21 1\u003Cbr>26 |  | Minimum Minimum\u003Cbr>Minimum |\n\nBased on the customer dividend program formula above, VCE minimum allocations result in $238,000 to LPR, $0 to dividends, and the balance to cash reserves. The estimated discretionary allocation amount for 2023 is $5,510,500.  \nDiscretionary Allocation Considerations:  \nBased on the current and forecasted cash reserve for 2023 and previous direction from the Board regarding reserve targets, Staff is considering a recommendation to allocate the majority of the discretionary allocation to cash reserves for the initial investment grade credit rating. VCE is estimated to have ended 2023 with ~90+ days and is currently projected to end 2024 with ~180+ in unrestricted operating cash. The Board has set reserve targets to increase to 180+ days of ca","cbCaitV9p2Ws9BEq","https://ap.wps.com/l/cbCaitV9p2Ws9BEq","pdf",190003,"English","# Recommendation\n# Overview\n# Background and Analysis\n## Dividend Program Formula\n# Allocation Summary for 2023\n# Discretionary Allocation Considerations\n# Allocation Scenarios","[{\"question\":\"What is the purpose of this staff report for Item 6?\",\"answer\":\"It presents options for how the Board can allocate the estimated 2023 net margin for discussion and feedback by the Community Advisory Committee.\"},{\"question\":\"How does the Dividend Program determine whether dividends are considered?\",\"answer\":\"It requires a minimum 5% audited net margin (less principal debt payments) before dividends are considered under the adopted guidelines.\"},{\"question\":\"What minimum allocations are proposed for 2023 net margin?\",\"answer\":\"The minimum allocation includes $238,000 to the Local Programs Reserve and $10,039,500 to cash reserves, resulting in $0 allocated to customer dividends under the minimum allocation approach.\"},{\"question\":\"What is the focus of Staff’s discretionary allocation recommendation?\",\"answer\":\"Staff considers allocating the majority of the discretionary amount to cash reserves to support reserve targets and readiness for an initial investment grade credit rating, while acknowledging potential additional program funds and rate discounts starting as early as July 1.\"}]","Allocation of 2023 Net Margin - Staff Report – Item 6 | PDF",1789906498]