Palm Springs approves guaranteeing Desert Community Energy's $20 million line to support long‑term power procurement

Palm Springs City Council voted May 28 to continue serving as guarantor for Desert Community Energy’s (DCE) revolving line of credit and to increase the guaranteed amount to $20 million, public documents and presentations show.

The nut graf: staff and DCE financial advisers said the increase would help DCE secure long‑term power contracts, free cash currently used as collateral to earn market returns, and bolster liquidity ratios that affect DCE’s credit profile.

LP McCloy, appearing by video, summarized the request and handed the discussion to Claude Kilgore, the finance lead supporting DCE. “DCE has not drawn on the line of credit since February 2023,” Kilgore told the council, and “as of just today, it has over $27,000,000 liquid cash in the bank,” details he cited to show the agency’s capacity to meet advances if necessary.

Kilgore outlined three reasons for increasing the guaranty: to secure long‑term power agreements (including using standby letters of credit), to support daily operations and to improve liquidity metrics that rating agencies use. He said the change would help DCE negotiate with counterparties and reduce financing friction when arranging procurement of sustainable resources.

Council members asked technical questions about DCE’s financial position and the risk to the city. Christopher Mooney, the City’s finance director and treasurer, characterized the fiscal impact to Palm Springs as minimal under current forecasts. He said the city would only have to provide financial support if the unlikely worst‑case scenario materialized and DCE could not meet obligations; council members pushed staff for clarity on what that scenario would look like.

Kilgore and Mooney offered additional data during the meeting: DCE’s net position was reported as approximately $36 million as of March 31, the agency holds an unassigned fund balance in the roughly $35 million range, and annual revenues were described in the meeting as about $70 million. Kilgore also noted the organization receives independent annual audits and had earned clean opinions since inception.

Council action: the council authorized the city to remain guarantor and to increase DCE’s guaranteed line of credit to $20 million so DCE can obtain standby letters of credit and improve its liquidity metrics; staff noted the authorization would not create an immediate fiscal liability for the city under current assumptions. Council members requested continued quarterly reporting from DCE and emphasized that any draw on the guaranty would be brought to the council for review.

Ending: staff said the authorization would help DCE secure lower‑cost long‑term power contracts and support the agency’s investment‑grade transition; council members asked for continuing transparency and quarterly financial reports.