(CEA Interim Administrator) August 7, 2019 Califor orni nia a - - PowerPoint PPT Presentation

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(CEA Interim Administrator) August 7, 2019 Califor orni nia a - - PowerPoint PPT Presentation

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California Wildfire Fund Governing Board Meeting Wednesday (CEA Interim Administrator) August 7, 2019 Califor orni nia a Depa partment tment of Food od and d Agricultur iculture Auditorium, Room 131 1220 N Street Sacramento,

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Wednesday August 7, 2019

California Wildfire Fund Governing Board Meeting (CEA – Interim Administrator)

Califor

  • rni

nia a Depa partment tment of Food

  • d and

d Agricultur iculture Auditorium, Room 131 1220 N Street Sacramento, California 95814 1:00 p.m.

2

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019 3

ITEM 1 Meeting Call to Order

  • Governor
  • Treasurer
  • Insurance Commissioner
  • Speaker of the Assembly
  • Chair of the Senate Rules Committee

Establishment of a quorum

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019 4

ITEM 2 Executive Report

Interim Administrator of California Wildfire Fund

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019 5

AB 1054: Legislative Intent

ITEM 2•Executive Report

AB 1054 “It is the intent of the Legislature to provide a mechanism that allows electrical corporations that are safe actors to guard against impairment of their ability to provide safe and reliable service because of the financial effects of wildfires in their service territories using mechanisms that are more cost effective than traditional insurance, to the direct benefit

  • f ratepayers and prudent electrical corporations.”
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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019 6

Voting Members (3)

  • Governor
  • Insurance Commissioner
  • Treasurer

Non-Voting Members (2)

  • Assembly Speaker
  • Senate Rules Chair

Voting Members (9)

  • Governor
  • Insurance Commissioner
  • Treasurer
  • Sec. of Natural Resources
  • 3 Appointed by Governor
  • 1 Appointed by Senate Rules
  • 1 Appointed by Assembly Speaker

Appointed by California Catastrophe Response Council Services Agreement (TBD)

CEA Governing Board California Earthquake Authority California Catastrophe Response Council California Wildfire Fund Administrator

Oversight solely with regard to support services provided to the California Wildfire Fund Administrator

California Wildfire Fund Governance Structure

ITEM 2•Executive Report

Cali lifornia rnia Catastr trop

  • phe

Respons ponse e Council cil Cali lifornia rnia Earthqua quake e Authority rity

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019 7

CEA Governing Board California Earthquake Authority

  • Gov. Code § 8899.70 (d)

“Until a majority of the council is appointed, the governing board of the California Earthquake Authority shall assume the authorities and duties of the council.”

  • Ins. Code § 10089.6 (a) (2)

“The authority shall be authorized to exercise the powers of the California Wildfire Fund Administrator… until the appointment of the administrator by the council.”

ITEM 2•Executive Report

Interim erim Calif ifornia

  • rnia Wild

ldfire re Fund Gove

  • verna

nance nce St Structure ucture

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019

Calif lifor

  • rnia

ia Wildf ldfir ire e Fund

$2 $21 1 B

Repayment of SMIF loan Revenue stream into California Wildfire Fund

Util ilit ities s $1 $10. 0.5 5 B

  • Initial Contribution: $7.5 B
  • Annual Contribution: $300 M ($3 B total)

Ratep epaye yers s $1 $10. 0.5 5 B

  • Initial SMIF Loan: $2 B
  • Annual Revenue Stream from DWR Surcharge: $900 M

SMIF

$2 B Loan

DWR Surcharge

$900 M/Year

+

SoCal Edison (31.5%)

Initial: $2.363 B Annual: $94.5 M

  • By 9/10/19
  • Following Safety

Plan approval

SDG&E (4.3%)

Initial: $323 M Annual: $12.9 M

  • By 9/10/19
  • Following Safety

Plan approval

PG&E (64.2%)

Initial: $4.815 B Annual: $192.6 M

  • Upon emerging

from bankruptcy

  • Following Safety

Plan approval 2 1 1 2

ITEM 2•Executive Report

California Wildfire Fund

The contribution numbers in this chart are approximate figures for illustration purposes only.

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019 9

Recommended Action Items

Agenda nda Item m 3: Calif ifor

  • rni

nia Wildfire ire Fund d Set etup p and Capi pita talizati ization a) Approve Custodial Banking and Demand Deposit Account agreements b) Approve Asset-Management Services agreements c) Approve Investment Consulting agreement d) Authorize Procurement of additional Asset Managers e) Approve Investment Policies for the California Wildfire Fund f) Authorize Development and Implementation of cost allocation methodology Agenda nda Item m 4: Calif ifor

  • rni

nia Wildfire ire Fund d Risk k Transf sfer er Issues sues a) Approve procurement of a risk-transfer intermediary b) Approve risk-transfer guidelines c) Authorize CEA staff to execute risk-transfer contracts

ITEM 2•Executive Report

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019 10

ITEM 3 California Wildfire Fund Setup and Capitalization

a) Custodial Banking and Demand Deposit Accounts b) Asset-Management Services c) Investment Consulting d) Additional Asset Managers e) Investment Policies f) Cost Allocation Methodology

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019

RESOLUTION 3(a)•Custodial Banking and Demand Deposit Accounts

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Recommended Action:

Approve, adopt and ratify agreement by CEA, as Interim Administrator of and on behalf

  • f the California Wildfire Fund, and U.S. Bank, National Association (USB) for Custodial

Banking and Demand Deposit Accounts.

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019

RESOLUTION 3(b)•Asset-Management Services

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Recommended Action:

Approve, agreements by CEA, as Interim Administrator of and on behalf of the California Wildfire Fund, for Asset Management services from:

  • Eaton Vance Management
  • PFM Asset Management
  • RBC Global Asset Management
  • Smith Graham & Co.
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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019

RESOLUTION 3(c)• Investment Consulting

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Recommended Action:

Approve, adopt and ratify agreement by CEA, as Interim Administrator of and on behalf

  • f the California Wildfire Fund, for Investment Consulting services to be preformed by

Raymond James & Associates.

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019

RESOLUTION 3(d)• Additional Asset Managers

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Recommended Action:

Authorize CEA to undertake expediated procurement and engagement of additional asset managers for the California Wildfire Fund in anticipation of additional capitalization.

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019

RESOLUTION 3(e)• Investment Policies

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Recommended Action:

Approve and adopt proposed California Wildfire Fund investment policies.

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019

RESOLUTION 3(f)• Cost Allocation Methodology

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Recommended Action:

Authorizing CEA staff to develop, document and implement a cost allocation methodology to allocate all administration expenses arising from or related to the California Wildfire Fund for payment by the California Wildfire Fund.

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019 17

ITEM 4 California Wildfire Fund Risk Transfer

a) Risk transfer intermediary b) Risk transfer guidelines c) Risk transfer contracts

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019

RESOLUTION 4(a)• California Wildfire Fund Risk Transfer

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Recommended Action:

Authorize CEA, as Interim Administrator of the California Wildfire Fund, to contract for reinsurance intermediary and advisory services.

Intermediary Services

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019

RESOLUTION 4(b)• California Wildfire Fund Risk Transfer

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Recommended Action:

Approve and adopt Risk Transfer Guidelines for the California Wildfire Fund.

Risk Transfer Guidelines

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019

RESOLUTION 4(c)• California Wildfire Fund Risk Transfer

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Recommended Action:

Authorize CEA, as Interim Administrator of the California Wildfire Fund, to purchase insurance, reinsurance and other forms of risk transfer to protect the California Wildfire Fund and increase the durability and claim-paying capacity of the California Wildfire Fund.

Risk Transfer Purchase

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019 21

ITEM 5 Plan of Operations

Development of a plan of operations for the California Wildfire Fund

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019

ITEM 5• Plan of Operations

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Recommended Action:

No action required – discussion only

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019 23

ITEM 6 Public Comment

Public comment on matters that do not appear

  • n this agenda and requests by the public that

those matters be placed on a future agenda.

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CEA · Wildfire Fund Governing Board Meeting · August 7, 2019 24

ITEM 7 Adjournment

Thank you for attending this meeting of the California Earthquake Authority Governing Board.

Gener eral al Infor

  • rma

matio tion

Shann nnon

  • n McEue

Euen (916) 661-5430 (Direct) Toll free (877) 797-4300

Media dia Cont ntact act

Chris is Nance ce (916) 799-5558 (Direct) cnance@calquake.com

Agend enda Inform rmat ation ion

Tom m We Welsh (916) 661-5527 (Direct) Toll free (877) 797-4300