Section 7.6 No Alteration of Project Site. Not less than thirty (30) days prior to making any alterations or repairs to the Project Site (except for emergency repairs) or any Improvement that may have an Adverse Effect on the operation and maintenance of the Project, City shall inform Ava in writing and, thereafter, shall use commercially reasonable efforts to conduct such repairs, alterations or Improvements in compliance with any reasonable request made by Ava within ten (10) days after having received such written request to mitigate such Adverse Effect. If any repair, alteration or Improvement results in a permanent and material adverse economic impact on the Project, City may request relocation of the Project under Article 11 hereof. To the extent that temporary disconnection or removal of the Project is necessary to perform such alterations or repairs, Ava shall use commercially reasonable efforts to cause Developer to perform such work, and any re-connection or re-installation of the Project, at City’s cost. Ava shall use commercially reasonable efforts to cause Developer to make any alterations and repairs in a good and workmanlike manner, in compliance with all Applicable Law. For purposes of this Section 7.6, “Adverse Effect” means any set of circumstances or facts which impairs or limits the performance of the Project, including, but not limited to, any event, circumstance or fact that could (i) reduce the solar production of the Generating Project, (ii) adversely impact the performance of the Storage Project, (iii) violate the underlying Project Equipment’s safety and operating standards, or (iv) void any warranty of the Project or the underlying Project Equipment.
Section 7.7 Project Repair and Maintenance. Ava shall, directly or indirectly through Developer, cause the Projects to be operated and maintained in accordance with Prudent Operating Practices. Ava may cause Developer to suspend delivery of electricity from the Project to the Delivery Point for the purpose of maintaining and repairing the Project; provided that Ava shall cause Developer to use commercially reasonable efforts to (i) minimize any interruption in service to the City and (ii) limit any such suspension of service to weekend or off-peak hours. Scheduled and unscheduled maintenance and repairs shall be undertaken at Ava’s sole cost and expense, except that City shall reimburse Ava for the reasonable cost of any repairs or maintenance resulting from damage caused by City, its agents, employees or contractors. Ava will provide to City written schedules for scheduled maintenance for the Project (each a “Planned Outage”) for each Contract Year no later than thirty (30) days prior to the first day of the applicable Contract Year. City may provide comments no later than ten (10) days after receiving any such schedule, and Ava will in good faith take into account any such comments. Ava will deliver to City the final updated Attachment Staff Report Item 16D
General Terms and Conditions | 15
schedule of Planned Outages no later than ten (10) days after receiving City’s comments. Ava shall be permitted to reduce deliveries of Product during any period of such Planned Outages; provided however, such Planned Outages shall not exceed one hundred twenty (120) hours in any calendar year, plus such additional hours as are reasonably necessary for Ava to comply with maintenance as required by Applicable Law. Notwithstanding the foregoing, Ava shall be permitted to reduce deliveries of Product during a (i) Forced Outage or (ii) a Force Majeure Event, as the result of either of which, Ava shall provide City written notice of such event, including the anticipated duration (if known). Except to the extent expressly provided under this Agreement, City shall have no obligations or liability with respect to the maintenance or repair of Project Equipment.
Section 7.8 City-Requested Outages. Upon City’s written request, Ava shall cause Developer to take the Project off-line for a total of five (5) days during each Contract Year (each event a “City-Requested Outage” and the five-day period the “Outage Allowance”). The Outage Allowance includes all City-Requested Outage hours undertaken by Developer for maintenance or repairs for which City is responsible pursuant to Section 7.7 or requested by City under this Section 7.8 (other than due to the fault or negligence of Ava). City’s request shall be delivered at least five (5) days in advance. City is not obligated to accept or pay for electricity from the Project for City-Requested Outages up to the annual Outage Allowance. If City’s aggregate hours for City-Requested Outages exceed the Outage Allowance in a given Contract Year, other than a Force Majeure Event, Ava shall cause Developer to reasonably estimate the amount of electricity, based on the daily average derived from consumption of Project Energy from the consecutive three weeks immediately preceding the latest City-Requested Outage, that would have been delivered to City during such excess City-Requested Outages, and City shall pay Ava for such amount in accordance with this Agreement.
Section 7.9 Use and Payment of Contractors and Subcontractors. Ava may use properly licensed and qualified contractors and subcontractors to perform its obligations under this Agreement. Ava shall ensure that all contractors and subcontractors are sufficiently qualified and experienced equal to the standard observed by a competent practitioner of the profession in which the consultant or subcontractor is engaged. However, Ava shall be responsible for the quality of the work performed by its contractors and subcontractors. Ava shall pay when due all valid charges from all contractors, subcontractors, and suppliers supplying goods or services to Ava under this Agreement.
Section 7.10 Prevailing Wages; Hiring Requirements.
(a) Prevailing Wage. In accordance with the terms of the Developer Agreement, Ava shall use reasonable efforts to ensure that all contractors, subcontractors, and employees hired or contracted by which will perform construction work or otherwise provide services on any Project Site related to the construction of any Project (such work or services, the “On-Site Services”, and each such contractor or subcontractor, an “On-Site Contractor”) are paid wages at rates not less than those prevailing for workers performing similar work in the locality as provided by applicable California law, if any. Nothing in the Developer Agreement shall require Developer or its subcontractors or contractors to comply with, or assume liability created by inapplicable provisions of any California labor laws.
Attachment Staff Report Item 16D
General Terms and Conditions | 16
(b) Hiring Requirements. In accordance with the terms of the Developer Agreement, Ava shall use commercially reasonable efforts to cause Developer and/or each On-Site Contractor to (i) hire individuals who reside in either Alameda County or San Joaquin County for the performance of the majority of total hours spent performing On-Site Services, and (ii) utilize union labor in the performance in On-Site Services.
Section 7.11 Notice of Hazardous Substances. If any product being offered, delivered or supplied to the City or at the Project Site in connection with this Agreement is listed in the Hazardous Substances list of the Regulations of the Director of Industrial Relations with the California Occupational Safety and Health Standards Board, or if the product presents a physical or health hazard as defined in the California Code of Regulations, General Industry Safety Order, Section 5194 (T8CCR), Hazard Communication, the Ava shall cause Developer to include a Material Safety Data Sheet (“MSDS”) with delivery or shipment to the Project Site. Each MSDS shall include the contract/purchase order number and identify the “Ship To Address.” Ava shall cause Developer to ensure all shipments and containers comply with the labeling requirements of Title 49, Code of Federal Regulations by identifying the Hazardous Substance, name and address of the manufacturer, and the appropriate hazard warning regarding potential physical safety and health hazards.
ARTICLE 8
PERFORMANCE GUARANTEES; WARRANTIES
Section 8.1 Guaranteed Energy Production.
(a) Guaranteed Energy Production. Starting on the second (2nd) Contract Year, during each Performance Measurement Period, Ava shall be required to deliver to City no less than eighty-five percent (85%) of the Expected Annual Contract Quantity set forth on Exhibit I (the “Guaranteed Energy Production”). For purposes of determining whether Ava has achieved the Guaranteed Energy Production, Ava shall be deemed to have delivered to City the “Adjusted Energy Production”, which shall consist of (1) all Project Energy (measured in kWh) actually delivered by Ava to City during the applicable Contract Year, and (2) any energy in the amount it could have delivered to City but was prevented from delivering to City by reason of (i) the occurrence of a Force Majeure Event (so long as such Force Majeure Event was properly declared in accordance with Section 10.1), (ii) Planned Outage, and/or (iii) Forced Outage (“Lost Output”).
For each Contract Year, Ava shall be deemed to have achieved the Guaranteed Energy Production if the Adjusted Energy Production is greater than or equal to eighty-five percent (85%) of the Expected Annual Contract Quantity. If Ava fails to achieve the Guaranteed Energy Production amount in any Contract Year, Ava shall pay City damages calculated in accordance with Section 8.1(b). For purposes of this Section 8.1, “Performance Measurement Period” means each rolling three (3) Contract Year period starting on the second (2nd) Contract Year (i.e., Contract Years 2, 3, and 4 shall comprise the first such period, Contract Years 5, 6, 7 and shall constitute the second such period, etc.) during the Portfolio Delivery Period. (b) Guaranteed Energy Damages. On or before the fifteen (15th) day of the first monthly billing period of the following Performance Measurement Period, City shall invoice Ava for all Guaranteed Energy Damages accrued, if any, during the preceding Performance Measurement Period, in accordance with the following:
Attachment Staff Report Item 16D
General Terms and Conditions | 17
(i) In any Performance Measurement Period, in the event that Ava fails to achieve the Guaranteed Energy Production, Ava shall pay City the Guaranteed Energy Damages accrued during such Performance Measurement Period; provided, however, that Ava shall have no obligation to pay Guaranteed Energy Damages in excess of seventy-five percent (75%) of the applicable PV Payments accrued during such Performance Measurement Period (the “Guaranteed Energy Damages Cap”).
Section 8.2 Guaranteed Storage Availability.
(a) Guaranteed Storage Availability. Starting on the second (2nd) Contract Year, during each Contract Month, Ava shall be required to maintain a Monthly Storage Availability greater than or equal to ninety percent (90%) (the “Guaranteed Storage Availability”). For purposes of determining the Monthly Storage Availability, a Storage Project shall be deemed to be available during the occurrence of any of the following events (each, an “Excused Storage Event”): (i) Force Majeure Event, (ii) Planned Outage, (iii) City-Requested Outage (to the extent such outages do not exceed the Outage Allowance for the applicable Contract Year), or (iv) Forced Outage. In each Contract Month, the “Monthly Storage Availability” shall be calculated for each Storage Project as a percentage based on the quotient of (A) (i) the total number of hours in the Contract Month, minus (ii) the total number of hours in such Contract Month during which the Storage Project was unavailable other than as a result of Excused Storage Event; divided by (B) the total number of hours in the Contract Month. Ava shall be deemed to have achieved the Guaranteed Storage Availability in a particular Contract Month if the Monthly Storage Availability is greater than or equal to 90%.
(b) Guaranteed Storage Damages. In any Contract Month, if Ava fails to achieve the Guaranteed Storage Availability, the following terms shall apply:
(i) If the Monthly Storage Availability for any Storage Project is less than 90% but greater than seventy percent (70%), Ava shall owe City liquidated damages (“Guaranteed Storage Damages”) in an amount equal to the product of (A) the applicable Storage Payment for such Contract Month; multiplied by (B) (i) 90% minus the Monthly Storage Availability, multiplied by (ii) two (2). Such Guaranteed Storage Damages shall be passed through from Ava to the City in the form of a bill credit on a monthly invoice issued hereunder which reduces the Monthly Payment owed by the City.
(ii) If the Monthly Storage Availability for any Storage Project is less than seventy percent (70%), the applicable Storage Payment owed by City for such Contract Month shall be reduced to zero dollars ($0).
Section 8.3 Ava Performance Warranties.
(a) Roof Damage Warranty. Ava warrants that no damage will be inflicted on the roof of any Improvement on which any Project (“Project Roof”) is installed as a result of the installation or maintenance of such Project (“Roof Damage Warranty”). With respect to each Project, Ava shall provide such Roof Damage Warranty starting on the applicable Construction Start date and ending on the date that is the later of (x) ten (10) years after Ava’s most recent performance of installation or maintenance activities on such Project Roof or (y) the expiration of Attachment Staff Report Item 16D
General Terms and Conditions | 18
any then-effective installer warranty on the applicable Project Roof. In the event that Ava or Developer damages any Project Roof during the term of the Roof Damage Warranty, Ava shall promptly repair and remedy such damage to the reasonable satisfaction of City. (b) Workmanship Warranty. Ava warrants that each Project will be fit for its intended purpose and free from defects in design, materials, and workmanship for a period of [three (3) years]1, starting on the Commercial Operation Date. If the Project (or any component or portion thereof) fails to conform to the foregoing warranty, Ava shall, at its own expense, remedy such defect in a timely manner.
(c) Project Equipment Warranty. With respect to each Project, Ava warrants that on the applicable Commercial Operation Date, all Project Equipment will be (1) new, (2) Error-Free, (3) provided by a Tier 1 Supplier, and (4) with respect to each Storage Project only, (i) benefits from a manufacturer’s warranty (including an energy retention warranty), and (ii) includes all of the components, functionality, and other material features that affect performance and the user experience of a standard, high-quality storage project.
Section 8.4 NO OTHER WARRANTY. EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT, AVA MAKES NO WARRANTIES OR GUARANTEES, EXPRESS OR
IMPLIED, AND EXPLICITY DISCLAIMS ANY WARRANTY OR GUARANTEE IMPLIED
BY LAW, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE OR NON-INFRINGEMENT AND IMPLIED WARRANTIES OF CUSTOM OR USAGE.
ARTICLE 9
RECS AND INCENTIVES; OPTIMIZATION SAVINGS
Section 9.1 Renewable Energy Credits. Upon purchasing the Product pursuant to this Agreement, City is entitled to the benefit of and will retain all ownership interests in the RECs associated with such Product. Ava is entitled to the benefit of and will retain all ownership in the Incentives. Ava shall cooperate with City in obtaining, securing, and transferring any and all RECs to the City. City is not obligated to incur any out–of–pocket costs or expenses in connection with such actions unless reimbursed by Ava. Ava shall not make any filings or statements inconsistent with City’s ownership interests in the RECs. If any RECs are delivered directly to Ava, Ava shall promptly pay or deliver such items to City. For the avoidance of doubt, so long as Ava cooperates in City obtaining all ownership interests in the RECs, Ava shall have the unrestricted right to obtain and utilize all other Incentives, Ancillary Services, and Capacity Attributes associated with the Product hereunder.
Section 9.2 Delivery of RECs. Ava shall take, or cause to be taken, all actions and execute all documents or instruments necessary to ensure that all WREGIS Certificates associated 1 NTD: Developer will not agree to a workmanship warranty of 15 years but offered a warranty of 3 years. Ava believes this is acceptable because Developer is providing a production guarantee on the PV and an availability guarantee on the BESS that lasts the duration of the Delivery Period for each Project. Further, it is unusual for Developers to offer workmanship warranties in the PPA context, so we view this as a win.
Attachment Staff Report Item 16D
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with all RECs corresponding to all Project Energy are issued, tracked, and transferred in a timely manner to the City for the City’s sole benefit. Ava shall transfer the RECs to the City. Ava shall comply with all Applicable Law, including the WREGIS Operating Rules, regarding the certification and transfer of such WREGIS Certificates to the City and the City shall be given sole title to all such WREGIS Certifications. In addition, with respect to each Project, prior to COD, Ava shall register the Project, or cause the Project to be registered, with WREGIS, and establish an account with WREGIS (“Ava WREGIS Account”), which Ava shall maintain until the end of the applicable Delivery Period. Ava shall transfer the WREGIS Certificates using Forward Certificate Transfers (as described in the WREGIS Operating Rules) from the Ava WREGIS Account to the WREGIS account(s) of the City or the account(s) of a designee that the City identifies by notice to Ava (“City WREGIS Account”). Notwithstanding the foregoing, in the event that the City does not have a City WREGIS Account, Ava shall deliver all RECs hereunder via Attestation Form.
Section 9.3 Optimization Savings. Ava shall provide Optimization Savings with the Product. “Optimization Savings” means the savings realized on City’s utility bill(s) directly attributable to the use of the Project and shall include, but not be limited to, savings that are realized from demand charge management, energy arbitrage, load shaping, and coincident peak, installed capacity tag mitigation, or any front of the meter savings, which shall be reflected in the form of a credit reduction to the applicable Monthly Payment on monthly invoices issued by Ava hereunder.
For the avoidance of doubt, any City savings resulting from a rate or tariff switch, Monthly Bill Credit, Storage Incentive Payment or other upfront Ava incentives enabled by the presence and/or operation of the Project shall be considered Optimization Savings. Ava shall provide Optimization Savings in a commercially reasonable manner, but Ava shall have discretion over the manner in which Optimization Savings are provided, including which services comprising constituent parts of Optimization Savings to provide at any particular time, to accrue Total System Benefit. Ava shall have no obligation and makes no guarantees as to the amount of Optimization Savings that will be provided to the City hereunder.
Section 9.4 Grid Services. Ava and City acknowledge that the Storage Projects are capable of generating revenue through demand response, capacity, and/or wholesale energy (collectively, the “Grid Services”, and each a “Grid Service”). Grid Services may be provided through, to, or in connection with the CAISO, the Local Electric Utility, or an aggregator. Ava may enroll the Storage Project in Grid Services if (i) Ava provides advance written notice to the City and (ii) Ava determines, in its reasonable discretion, that such enrollment will not reduce the realized Optimization Savings or impair the Storage Project’s twenty percent (20%) battery back-up reserve. If Ava enrolls the Storage Project in Grid Services, Ava shall receive any value resulting from the Grid Services provided, including revenues, environmental benefits, and grid reliability and resiliency.
ARTICLE 10
FORCE MAJEURE; BUDGETARY NON-APPROPRIATION EVENT
Section 10.1 Force Majeure Event. If either Party reasonably is unable to timely perform any of its obligations (other than payment obligations) under this Agreement in whole or in part due to a Force Majeure Event and without the fault or negligence of the Party relying thereon as justification for such delay, that Party will be excused from performing such obligations for the Attachment Staff Report Item 16D
General Terms and Conditions | 20
duration of the time that such Party remains affected by the Force Majeure Event; provided, that such Party uses commercially reasonable efforts to mitigate the impact of the Force Majeure Event and resumes performance of its affected obligations as soon as reasonably practical. The Party affected by the Force Majeure Event shall notify the other Party as soon as reasonably practical after the affected Party becomes aware that it is or will be affected by a Force Majeure Event. If the Force Majeure Event occurs during the Term and impacts the ability of the Project to deliver electricity to the Delivery Point or to provide capacity, as applicable, the Term will be extended day-for-day for each day delivery is suspended due to the Force Majeure Event.
Section 10.2 Termination Due To Force Majeure. With respect to each Project, after the Commercial Operation Date, either Party shall have the right, but not the obligation, to either (a) terminate the applicable Project or (b) relocate the applicable Project in accordance with Section 11.1, in each case, after the occurrence of the following (each, a “Force Majeure Failure”): (1) due to a Force Majeure Event, Ava is unable to meet its obligations under this Agreement for a period greater than ninety (90) consecutive days; or (2) the Project is (i) destroyed by a Force Majeure Event and Ava is unable to cause Developer to rebuild the Project within one (1) year, or (ii) is rendered permanently inoperable by a Force Majeure Event. For the avoidance of doubt, Force Majeure Delays occurring prior to the Commercial Operation Date shall be subject to the requirements in Section 4.6(b).
Section 10.3 Budgetary Non-Appropriation Event. Notwithstanding anything to the contrary, due to the constitutional limitations levied on City, it may be unable to appropriate funds for the procurement of any utility services for a particular fiscal year (a “Budgetary Non-Appropriation Event”). If a Budgetary Non-Appropriation Event occurs with respect to City during the Delivery Period of any Project hereunder, then City shall notify Ava of the starting date of such Budgetary Non-Appropriation Event (the “Non-Appropriation Start Date”) within thirty (30) days of its receipt of the invoice for the first month affected by such Budgetary Non-Appropriation Event. During a Budgetary Non-Appropriation Event, if City does not otherwise have other funds available to make payments otherwise due under this Agreement, City is not obligated to accept delivery of or pay for any Product delivered under this Agreement for the period starting on the Non-Appropriation Start Date until such Budgetary Non-Appropriation Event has terminated (such period, the “Non-Appropriation Period”), which shall be confirmed by City in a writing timely delivered to Ava after the City has properly appropriated funds for payment hereunder. For the avoidance of doubt, during the Non-Appropriation Period, Ava shall have no obligation to deliver any Product hereunder. City agrees that it shall use its best efforts to seek appropriation for utility services during the term of this Agreement. If a Budgetary Non-Appropriation Event continues for more than one hundred eighty (180) days, Ava (but not City) may, at its sole discretion, terminate this Agreement.
Section 10.4 Exercise of City Permitting Authority. After Construction Start, if City lawfully, fairly, and neutrally applies its authority to deny, suspend, revoke or terminate a certificate, permit, franchise, approval, authorization or power under Applicable Law (its “Permitting Authority”), and such lawful exercise of the City’s Permitting Authority causes Ava or Developer to be unable to lawfully conduct operations on the Project Site (a “Lawful Permitting Denial Event”), then except where such exercise of Permitting Authority constitutes a City Project Default under Section 13.5(a) or 13.5(b), Ava may, at its sole discretion, terminate the Affected Projects in accordance with Section 10.5 below.
Attachment Staff Report Item 16D
General Terms and Conditions | 21
Section 10.5 No-Fault Termination. After Construction Start, if either Party terminates one or more Projects (the “Affected Projects”) due to a Force Majeure Failure in accordance with Section 10.2, a Budgetary Non-Appropriation Event in accordance with Section 10.3, or a Lawful Permitting Denial Event in accordance with Section 10.4, then upon any such termination (1) neither Party shall have any liability to the other Party with respect to such Affected Projects other than those that survive this Agreement, and (2) Ava shall have the option to deliver a Relocation Request in accordance with Section 11.1. Notwithstanding the foregoing, the occurrence and continuation of a Force Majeure Event, Budgetary Non-Appropriation Event or Lawful Permitting Denial Event shall not, to the extent an Event of Default exists during the continuation of a Force Majeure Event or Non-Appropriation Period, as applicable, limit either Party’s ability to declare an Event of Default pursuant to Article 13 and receive a Termination Payment, to the extent applicable.
ARTICLE 11
RELOCATION AND REMOVAL UPON TERMINATION
Section 11.1 Relocation Requests. With respect to each Project, at any time during the Project Term, either Party shall have the right to propose in writing the relocation of the applicable Project to a new Project Site upon the occurrence of an EOD Relocation Event or No-Fault Relocation Event (a “Relocation Request”). If both Parties agree in their reasonable discretion that the Relocation Request is practically feasible and preserves the economic value of the agreement, the Parties shall seek to negotiate in good faith an agreement for the relocation of the Project, which relocated site shall be subject to the approval of Ava in its reasonable discretion and subject to the negotiation of a mutually acceptable license. Upon successful relocation of the Project due to an EOD Relocation Event, any Event of Default associated with the original Project Site shall be deemed to have been cured, if applicable, and the Non-Defaulting Party shall have no right to declare an Event of Default associated therewith. The costs associated with any relocation performed due to an EOD Relocation Event shall be borne entirely by the Defaulting Party, whereas the costs and expenses associated with any relocation performed due to a No-Fault Relocation Event shall be split evenly between the Parties; provided, if an relocation occurs during the Delivery Period, City shall be required to continue to make monthly PV Payments for the period of time between decommissioning of the Project at the original Project Site and the Commercial Operation Date of the Project at the new Project Site based upon a pro rata calculation of the Expected Annual Contract Quantity for such period. If the Parties are unable to reach agreement on relocation of the Project within one hundred twenty (120) days after the date of receipt of City’s proposal, then such Relocation Request shall be deemed withdrawn and the applicable Project may be terminated in accordance with this Agreement. For purposes of this Section 11.1, an “EOD Relocation Event” shall be deemed to have occurred (a) with respect to either Party, if an Event of Default occurs, and such Event of Default could reasonably be cured by moving the Project to another Project Site; or (b) the City terminates or withdraws the applicable Project from this Agreement for any reason other than an Ava Event of Default. A “No-Fault Relocation Event” shall be deemed to have occurred if (i) any Early Termination Event occurs, or (ii) a Force Majeure Failure occurs.
Section 11.2 Removal Services. Upon the expiration or earlier termination of this Agreement or any PSA hereunder, Ava shall, directly or indirectly through Developer, at Ava’s sole expense (unless expressly provided otherwise in this Agreement), within ninety (90) days Attachment Staff Report Item 16D
General Terms and Conditions | 22
after the applicable termination or expiration (the “Removal Deadline”), perform the following actions to remove the Project from the Project Site (the “Removal Services”): (i) remove all tangible property comprising the Project, personal property of Ava and/or Developer, and all other related equipment, (ii) ensure that the Project Site be returned to substantially its original condition (excluding ordinary wear and tear) including by (x) removing the Project’s mounting pads or other support structures and (y) repairing and restoring the roof and the roof membrane, subject to Section 8.3(a). City shall ensure that Ava and/or Developer is given sufficient access, space, and cooperation as reasonably necessary to facilitate the Removal Services. This provision shall survive the expiration or termination of this Agreement and any PSA hereunder.
Section 11.3 Abandonment. If Ava fails to commence the Removal Services by the applicable Removal Deadline, any property not removed from the Project Site shall be deemed abandoned by Ava and/or Developer, and shall become the property of City and City may, at its option, remove the Project and/or Project Equipment from the Project Site and relocate to a warehouse or otherwise dispose of such property or retain ownership thereof indefinitely, as it determines in its sole discretion. If the City performs any Removal Services after the Removal Deadline in accordance with this Section 11.3, Ava shall reimburse City for the cost of such Removal Services (the “Removal Costs”) within thirty (30) days of receipt of an invoice thereof.
City shall have no liability to Ava or Developer for any property deemed abandoned per this Section 11.3. This provision shall survive the expiration or termination of this Agreement and any PSA hereunder.
Section 11.4 Ava Removal Security. If a Credit Downgrade Event occurs with respect to Ava at any time during the Term, within forty five (45) days of such Credit Downgrade Event, Ava shall post or deliver to City a security deposit of $50/kW of Contract Capacity (“Ava Removal Security”) in the form of a Letter of Credit or cash. If (i) Ava fails to commence the Removal Services by the applicable Removal Deadline, and (ii) fails to reimburse City for the cost of Removal Services within thirty (30) days of receipt in accordance with Section 11.3, then, to the extent such Ava Removal Security is available in accordance with this Section 11.4, City may draw on any outstanding Letter of Credit and retain any cash then held by City to satisfy any amounts owed by Ava with respect to the Removal Costs only; provided, that City shall be obligated to return any surplus proceeds in excess of the Removal Costs after Ava’s obligations under Section 11.3 have been satisfied. Ava shall maintain the Ava Removal Security until (a) the Removal Services have been completed and (b) the Removal Costs have been paid or reimbursed by the responsible Party in full pursuant to the terms of this Agreement. Following the occurrence of both (a) and (b), City shall promptly return to Ava the Ava Removal Security, less any amounts drawn thereon in accordance with this Section 11.4.
ARTICLE 12
MEASUREMENT
Section 12.1 Meter. Each Project’s electricity output during the Term shall be measured by the applicable City’s meter, which shall be a revenue grade meter that meets ANSI-C12.20 standards for accuracy (the “Meter”). The Meter shall be installed, commissioned, and operated by Developer throughout the applicable Project Term at Developer’s sole cost and expense.
Throughout the Term, Developer shall provide reasonable access to the Meter and measurement data associated therewith to Ava and the City.
Attachment Staff Report Item 16D
General Terms and Conditions | 23
ARTICLE 13
DEFAULTS, REMEDIES, AND DAMAGES
Section 13.1 Ava Project Defaults. With respect to the affected Project only, Ava shall be deemed a Defaulting Party upon the occurrence of any of the following events (each, an “Ava Project Default”):
(a) The Project fails to achieve the Commercial Operation Date by the Commercial Operation Deadline (subject to any FM Delay Cure Period or COD Delay Cure Period thereto);
(b) A Forced Outage lasting longer than two hundred seventy (270) days occurs with respect to such Project; provided, however, that this Section 13.1(b) shall not apply to a Forced Outage caused solely by a Force Majeure Event; or (c) Due to acts or omissions of Ava, a mechanics’ Lien is filed against the Project, and such Lien has not been discharged, bonded or contested by Ava in good faith by proper legal proceedings within twenty (20) days of receipt of notice thereof.
Section 13.2 City’s Remedies for Ava Project Default. If a Ava Project Default has occurred and is continuing, and following the expiration of any applicable cure period set forth therein, City may perform any and all of the following actions: (i) suspend performance under this Agreement with respect to such Project, (ii) accelerate all amounts owing between the Parties with respect to such Project, (iii) withhold a portion of any payments due to Ava under this Agreement in an amount attributable to such Project, and (iv) terminate the applicable PSA. Upon the termination of any PSA hereunder, Ava shall perform the Removal Services for such Project in accordance with Section 11.2 at Ava’s sole expense.
Section 13.3 Ava Portfolio Defaults. Ava shall be deemed a Defaulting Party under this Agreement upon the occurrence of any of the following events (each, a “Ava Portfolio Default”):
Ava delivers to City, without City’s prior consent, energy or other product from a resource outside of the City Portfolio;
(a) a Bankruptcy Event shall have occurred with respect to Ava; (b) Ava fails to pay City any undisputed amount owed under this Agreement within sixty (60) days after receipt of notice from City of such past due amount; (c) The failure by Ava to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default under this Article 13) and such failure is not remedied within thirty (30) days after notice thereof (or such longer additional period, not to exceed an additional sixty (60) days, if Ava is unable to remedy such default within such initial thirty (30) day period despite exercising commercially reasonable efforts; provided, that the cure period under this Section 13.3(c) may be extended by an additional subsequent period not to exceed ninety (90) days in the event that such Ava Portfolio Default is caused by a default of Developer under the Developer Agreement and Developer’s Financing Party has stepped in to effectuate a cure after the expiration of the corresponding cure period set forth in the Developer Agreement); and
Attachment Staff Report Item 16D
General Terms and Conditions | 24
(d) Any representation or warranty made by Ava herein is false or misleading in any material respect when made or when deemed made or repeated, and such default is not remedied within thirty (30) days after notice thereof (or such longer additional period, not to exceed an additional sixty (60) days, if Ava is unable to remedy such default within such initial thirty (30) day period despite exercising commercially reasonable efforts; provided, that the cure period under this Section 13.3(c) may be extended by an additional subsequent period not to exceed ninety (90) days in the event that such Ava Portfolio Default is caused by a default of Developer under the Developer Agreement and Developer’s Financing Party has stepped in to effectuate a cure after the expiration of the corresponding cure period set forth in the Developer Agreement).
Section 13.4 City’s Remedies for Ava Portfolio Default. If a Ava Portfolio Default has occurred and is continuing, and the following the expiration of any applicable cure period set forth therein, City may perform any and all of the following actions: (i) suspend performance under this Agreement, (ii) accelerate all amounts owing between the Parties, (iii) withhold all payments due to Ava under this Agreement, (iv) terminate this Agreement upon providing written notice to Ava, and upon any such termination, demand payment from Ava of the Termination Payment (as such amount may be adjusted in accordance with Section 5.6), and (v) exercise any other right or remedy available at law or in equity, except to the extent such remedies are expressly limited under this Agreement; provided, that no termination may occur unless and until written notice has been delivered to any Financing Party for which City has received notice in accordance with Section 18.2. Upon the termination of this Agreement, Ava shall perform the Removal Services for the entire City Portfolio in accordance with Section 11.2 at Ava’s sole expense.
Section 13.5 City Project Default. With respect to the affected Project only, City shall be deemed a Defaulting Party upon the occurrence of any of the following events (each, a “City Project Default”):
(a) Due to acts or omissions of the City, Ava indirectly loses its rights to use and enjoy the Project Site under the license, unless the Parties can agree to relocate the Project in accordance with Section 11.1, and except where such acts or omissions of the City constitute the lawful application of City’s Permitting Authority pursuant to Section 10.4; and (b) The occurrence of any act or omission by City that operates to suspend, revoke or terminate any certificate, permit, franchise, approval authorization or power necessary for Ava to lawfully conduct operations on the Project Site, except where such acts or omissions of the City (i) were initiated or caused by the City due to acts or omissions of Ava, Developer or any of their respective contractors, agents or employees, and (ii) constitute the lawful application of City’s Permitting Authority pursuant to Section 10.4
Section 13.6 Ava’s Remedies for City Project Default. If a City Project Default has occurred and is continuing, and following the expiration of any applicable cure period set forth therein, Ava may perform any and all of the following actions: (i) suspend performance under this Agreement with respect to such Project, (ii) accelerate all amounts owing between the Parties with respect to such Project, (iii) withhold a portion of any payments due to City under this Agreement in an amount attributable to such Project, and (iv) terminate the applicable PSA. Upon the termination of any PSA hereunder, Ava shall perform the Removal Services for such Project in accordance with Section 11.2 at City’s sole expense.
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Section 13.7 City Portfolio Default. City shall be deemed a Defaulting Party under this Agreement upon the occurrence of any of the following events (each, a “City Portfolio Default”):
(a) a Bankruptcy Event shall have occurred with respect to City; (b) City fails to pay Ava any undisputed amount owed under the Agreement within sixty (60) days after receipt of notice from Ava of such past due amount; (c) The failure by City to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default set forth in this Article 13), and such failure is not remedied within thirty (30) days after notice thereof (or such longer additional period, not to exceed an additional sixty (60) days, if City is unable to remedy such default within such initial thirty (30) day period despite exercising commercially reasonable efforts); or
(d) Any representation or warranty made by City herein is false or misleading in any material respect when made or when deemed made or repeated, and such default is not remedied within thirty (30) days after notice thereof (or such longer additional period, not to exceed an additional sixty (60) days, if City is unable to remedy such default within such initial thirty (30) day period despite exercising commercially reasonable efforts).
Section 13.8 Ava’s Remedies for City Portfolio Default. If a City Portfolio Default has occurred and is continuing, and following the expiration of any applicable cure period set forth therein, Ava may perform any and all of the following actions: (i) suspend performance under this Agreement, (ii) accelerate all amounts owing between the Parties, (iii) withhold all payments due to City under this Agreement, (iv) terminate this Agreement upon providing written notice to City, and upon any such termination, demand payment from City of the City Termination Payment, and (v) exercise any other right or remedy available at law or in equity, except to the extent such remedies are expressly limited under this Agreement. Upon receiving payment of the City Termination Payment, Ava shall perform the Removal Services in accordance with Section 11.2 at City’s sole expense.
.
ARTICLE 14
REPRESENTATIONS, WARRANTIES, AND COVENANTS
Section 14.1 Ava Representations and Warranties. Ava represents and warrants to City the following:
(a) Valid Existence. Ava is a joint powers authority and a validly existing community choice aggregator, duly organized, validly existing and in good standing under the laws of the State of California and the rules, regulations, and orders of the California Public Utilities Commission, and is qualified to conduct business in each jurisdiction of the Joint Powers Agreement members.
(b) No Conflicts. The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfilment of and compliance by Ava with the Attachment Staff Report Item 16D
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provisions of this Agreement will not conflict with or constitute a breach of a default under any Applicable Law present in effect having applicability to Ava, the documents of formation of Ava or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Ava is a party or by which any of its property is bound.
Section 14.2 City’s Representations and Warranties. City represents and warrants to Ava the following:
(a) Valid Existence. The City is a municipal corporation, duly organized, validly existing, and in good standing under the laws of the State of California, and is qualified to conduct business in the City of [____].
(b) No Conflicts. The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfilment of and compliance by the City with any provisions of this Agreement will not conflict with or constitute a breach of a default under any Applicable Law present in effect having applicability to the City, the documents of formation of the City, or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which the City is a party or by which any of its property is bound.
(c) Licenses. (i) City has achieved Site Control for the Project Site such that City has the full right, power, and authority to grant the Licenses in Article 6, and (ii) such grant of the Licenses does not violate any Law applicable to City or the Project Site and is not inconsistent with and will not result in a breach or default under any agreement by which City is bound or that affects the Project Site.
(d) Other Agreements. Neither the execution and delivery of this Agreement by City nor the performance by City of any of its obligations under this Agreement conflicts with or will result in a breach or default under any agreement or obligation to which City is a party or by which City is bound.
(e) Accuracy of Information. All information provided by City to Ava, as it pertains to (i) the Project Site, (ii) the Improvements on which the Project is to be installed, if applicable, (iii) City’s planned use of the Project Site and any applicable Improvements, and (iv) City’s estimated electricity requirements, if provided, is accurate in all material respects. (f) City Status. City is not a public utility or a public utility holding company and is not subject to regulation as a public utility or a public utility holding company. City is a “local public entity” as defined in Section 900.4 of the Government Code of the State of California. (g) Limit on Use. No portion of the electricity generated by the Project shall be used to heat a swimming pool.
Section 14.3 General Covenants. Each Party covenants to and for the benefit of the other Party that throughout the Term:
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(a) Each Party shall maintain (or obtain from time to time, as required) all Governmental Approvals necessary for it to legally perform its obligations under this Agreement. (b) Each Party shall undertake its obligations under this Agreement in compliance with (i) all Applicable Law (including, but not limited to, those related to workplace safety, employment discrimination, prevailing wage, non-discrimination and non-preference, and conflicts of interest), Prudent Operating Practices, (ii) all applicable operating policies, criteria, rules, guidelines, tariffs and protocols of the CAISO and the Local Electric Utility, and (iii) all applicable requirements of the CPUC, CARB, FERC, NERC, and WECC (including WECC Scheduling Practices).
Section 14.4 Covenants of Ava. Ava covenants to and for the benefit of City that throughout the Term:
(a) None of Ava, its employees, contractors or agents have been suspended, debarred, or excluded from, or ineligible from, receiving federal or state funds. Ava shall notify City if Ava is suspended, barred, excluded or determined to be ineligible for receiving state or federal funds at any time during the Term within thirty (30) days of Ava obtaining knowledge thereof.
(b) All personnel performing operation and maintenance services for the Projects shall be licensed and in good standing, and sufficiently qualified, experienced, and trained in accordance with Prudent Operating Practices.
(c) Pursuant to the Developer Agreement, starting on the Commercial Operation Date, Ava shall require Developer to post and maintain a performance security deposit of $200/kW of capacity for each Project (“Developer Performance Security”) until all of Developer’s payment and performance obligations under the Developer Agreement have been satisfied in full. Per the terms of the Developer Agreement, Ava shall be entitled to draw on such Developer Performance Security for a Project to satisfy any damages or other amounts owed by Developer to Ava under the Developer Agreement, including as reimbursement for Removal Costs.
ARTICLE 15
INSURANCE
At all times during the Term, the Parties shall maintain the following insurance, as applicable:
Section 15.1 Ava’s Insurance. Ava shall cause Developer to obtain and maintain the policies of insurance in amounts and with coverage as set forth in Exhibit IV of the applicable Addendum for the Term of this Agreement.
Section 15.2 City’s Insurance. City is a self-insured public agency. Upon Ava’s or Developer’s request, City shall deliver to Ava or Developer certificates of insurance evidencing the insurance coverage.
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ARTICLE 16
INDEMNIFICATION AND LIMITATIONS OF LIABILITY
Section 16.1 Indemnity by the Parties. To the fullest extent permitted by law, each Party (“Indemnifying Party”) shall defend, indemnify, and hold harmless, with counsel of its own choosing (subject to terms of the next paragraph), the other Party, and its successors and assigns, and their elected officials, officers, directors, employees, agents, affiliates and representatives (each, an “Indemnified Party”) from and against any and all third-party claims, liability or losses (“Claims”), including but not limited to those losses arising from (i) personal injury or death, (ii) damage to property, (iii) taxes for which the Indemnifying Party is responsible under this Agreement, (iv) fines or penalties payable by the Indemnified Party or (v) any other actions resulting in damages, losses or liabilities to the extent such losses result from or arise out of or in any way are connected with the Indemnifying Party’s performance of this Agreement or, in the case of Ava, (i) City’s use of any service, technology or good provided by Ava to City under this Agreement infringes any patent, trademark, copyright or other intellectual property right, including trade secret rights, of a third-party, except as may arise solely from the negligence, willful misconduct or violation of Law by the Indemnified Party, its officers, employees, subcontractors or agents or (ii) City’s damages stemming from failure to release specific records pursuant to the California Public Records Act at Ava’s direction that City not release such specific requested records related to this Agreement to the public. Notwithstanding the above, an Indemnifying Party shall not be required to defend, indemnify, and hold harmless an Indemnified Party for the Indemnified Party’s own negligent acts, omissions or willful misconduct. It is the intent of the Parties that where negligence is determined to have been joint or contributory, principles of comparative negligence will be followed, and each Party shall bear the proportionate cost of any loss damage, expense or liability attributable to that Party’s negligence. (a) Design Professional Services. To the extent that a portion of Ava’s services under this Agreement are design professional services subject to Civil Code Section 2782.8, and to the extent that a particular claim or litigation arises from such design professional services, Ava’s obligations under this Section 16.1(a) shall be subject to any applicable limitations mandated by Civil Code Section 2782.8.
Section 16.2 Notice and Participation in Third Party Claims. The Indemnified Party shall give the Indemnifying Party written notice with respect to any liability asserted under a Claim as soon as possible upon the receipt of information of any possible Claim or of the commencement of such Claim. The Indemnifying Party may assume the defense of any Claim, at its sole cost and expense, with counsel designated by the Indemnifying Party and reasonably satisfactory to the Indemnified Party. The Indemnified Party may, however, select separate counsel if both Parties are defendants in the Claim and such defense or other form of participation is not reasonably available to the Indemnifying Party. The Indemnifying Party shall pay the reasonable attorneys’ fees incurred by such separate counsel until such time as the need for separate counsel expires.
The Indemnified Party may also, at the sole cost and expense of the Indemnifying Party, assume the defense of any Claim if the Indemnifying Party fails to assume the defense of the Claim within a reasonable time. Neither Party may settle any Claim covered by this Section 16.2 unless it has obtained the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. The Indemnifying Party has no liability under this Section 16.2 for any Claim for which such notice is not provided if the failure to give notice prejudices the Indemnifying Party.
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All of the Parties’ obligations under this Section 16.2 are intended to apply to the fullest extent permitted by Law and shall survive the expiration or sooner termination of this Agreement.
Section 16.3 Environmental Indemnification.
(a) Ava Indemnity. Ava shall cause Developer to indemnify, defend, and hold harmless all of City’s Indemnified Parties from and against all liabilities arising out of or relating to the existence at, on, above, below or near the Project Site of any Hazardous Substance to the extent deposited, spilled or otherwise caused by Developer, Ava or any of their contractors, agents or employees, to the extent such liabilities do not result from the gross negligence or willful misconduct of City.
(b) City Indemnity. City shall indemnify, defend, and hold harmless Developer and all of Ava’s Indemnified Parties from and against all liabilities arising out of or relating to the existence at, on, above, below or near the Project Site of any Hazardous Substance, except to the extent deposited, spilled or otherwise caused by Developer, Ava or any of their contractors, agents or employees, to the extent such liabilities to not result from the gross negligence or willful misconduct of Developer or Ava.
(c) Notice. Each Party shall promptly notify the other Party if it becomes aware of any Hazardous Substance on or about the Project Site generally or any deposit, spill or release of any Hazardous Substance.
Section 16.4 Limitations on Liability.
(a) No Consequential Damages. EXCEPT TO THE EXTENT PART OF (A)
AN EXPRESS REMEDY OR EXPRESS MEASURE OF DAMAGES HEREIN, INCLUDING
ANY TERMINATION PAYMENT, (B) A THIRD PARTY INDEMNITY CLAIM, OR (C) RESULTING FROM A PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, PUNITIVE,
EXEMPLARY, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR LOSSES
OR DAMAGES FOR LOST REVENUE OR LOST PROFITS, WHETHER FORESEEABLE OR
NOT, ARISING OUT OF, OR IN CONNECTION WITH THIS AGREEMENT BY STATE, IN TORT OR IN CONTRACT.
(b) Cumulative Remedies. IF NO REMEDY OR MEASURE OF DAMAGES
IS EXPRESSLY PROVIDED, OR IF A REMEDY OR MEASURE OF DAMAGES IS
EXPRESSLY NON-EXCLUSIVE, THE NON-DEFAULTING PARTY SHALL HAVE THE
RIGHT TO EXERCISE ALL RIGHTS AND REMEDIES AVAILABLE TO IT AT LAW OR IN
EQUITY, PROVIDED, HOWEVER, THAT THE LIABILITY OF THE DEFAULTING PARTY
SHALL BE LIMITED TO DIRECT, ACTUAL DAMAGES ONLY AND ALL OTHER DAMAGES AND REMEDIES ARE WAIVED.
(c) Exclusive Remedies. FOR BREACH OF ANY PROVISION OF THIS
AGREEMENT FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
PROVIDED IN THIS AGREEMENT, THE RIGHTS OF THE NON-DEFAULTING PARTY
AND THE LIABILITY OF THE DEFAULTING PARTY SHALL BE LIMITED AS SET
FORTH IN THIS AGREEMENT, AS THE SOLE AND EXCLUSIVE FULL, AGREED UPON Attachment Staff Report Item 16D
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AND LIQUIDATED DAMAGES, AND NOT AS A PENALTY, AND ALL OTHER DAMAGES OR REMEDIES ARE WAIVED.
(d) Limitation on Ava Liability Prior to COD. Notwithstanding anything herein to the contrary, with respect to each Project, Ava’s liability for Commercial Operation Delay Damages shall by capped in the aggregate at an amount equal to the Developer Performance Security.
ARTICLE 17
CHANGE IN LAW; COMPLIANCE EXPENDITURE CAP
Section 17.1 Changes in Law. Subject to Section 17.2 below, in the event that any Change in Law occurring after the Effective Date results in this Agreement or any provisions hereof incapable of being performed or administered, then either Party may request that Ava and the City entered into negotiations to make the minimum changes to this Agreement necessary to make this Agreement capable of being performed and administered, while attempting to preserve to the maximum extent possible the benefits, burdens, and obligations set forth in this Agreement as of the Effective Date. Upon delivery of such a request, the Parties shall engage in such negotiations in good faith. If the Parties are unable, within sixty (60) days after delivery of such request, to agree upon changes to this Agreement or to resolve issues relating to changes to this Agreement, then either Party may submit issues pertaining to changes to this Agreement to the dispute resolution process set forth in Section 20.4. Notwithstanding the foregoing, (i) a change in cost shall not in and of itself be deemed to render this Agreement or any of the provisions hereof incapable of being performed or administered, or constitute, or form the basis of, a Force Majeure Event, and (ii) all unaffected provisions of this Agreement shall remain in full force and effect during any period of such negotiation or dispute resolution.
Section 17.2 Compliance Expenditure Cap. With respect to each Project, if a Change in Law has increased Ava’s known or reasonably expected costs to comply with its obligations under this Agreement or the applicable PSA (any action required to be taken by Ava to comply with such Change in Law, a “Compliance Action”), then the Parties agree that the maximum amount of costs and expenses Ava shall be required to bear during the Project Term to comply with all such obligations shall be capped at One Hundred Dollars ($100) per kW of such Project’s Guaranteed Nameplate Capacity or Storage Inverter Power, as applicable, in aggregate over the Project Term (the “Compliance Expenditure Cap”). If Ava reasonably anticipates the need to incur out-of-pocket expenses in excess of the Compliance Expenditure Cap in order to take any Compliance Action, Ava shall provide notice to the City of such anticipated out-of-pocket expenses. If, within ten (10) Business Days after receiving Ava’s notice, the City does not agree in writing to reimburse Ava for all costs and expenses of Compliance Actions in excess of the Compliance Expenditure Cap, Ava’s obligation to take any and all applicable Compliance Actions, and deliver any and all Product that may not be delivered in the absence of such Compliance Actions, shall be waived.
ARTICLE 18
ASSIGNMENT AND FINANCING
Section 18.1 Assignment.
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(a) Restrictions on Assignment. This Agreement may not be assigned in whole or in part by City. Ava may, by providing prior written notice to City, assign, mortgage, pledge or otherwise directly or indirectly assign its interests in this Agreement to (i) any Financing Party, (ii) any entity through which Ava is obtaining financing from a Financing Party or (iii) any California joint powers authority (each, a “Permitted Assignee”); provided, that, Ava is not released from liability hereunder as a result of any assignment to a joint powers authority unless such joint powers authority assumes Ava’s obligations hereunder by binding written instrument.
Ava will provide prior written notice to City of any assignment of the Agreement by the Developer. (b) Successors and Permitted Assignees. This Agreement is binding on and inures to the benefit of successors and Permitted Assignees.
Section 18.2 Financing and Collateral Assignment. The Parties acknowledge that Ava and/or Developer may obtain debt or equity financing or other credit support from lenders, investors, including tax equity investors, or other third parties (each a “Financing Party”) in connection with the installation, construction, ownership, operation, and maintenance of the Project and that Ava’s obligations under the financing documents may be secured by, among other collateral, a pledge or collateral assignment of Ava’s rights under this Agreement.
Section 18.3 Termination Requires Consent. Ava and City agree that any right of Ava to terminate this Agreement is subject to the prior written consent of any Financing Party.
ARTICLE 19
CONFIDENTIALITY
Section 19.1 Confidential Information. To the maximum extent permitted by Applicable Law, if either Party provides Confidential Information to the other or, if in the course of performing under this Agreement or negotiating this Agreement, a Party learns Confidential Information of the other Party, the receiving or learning Party shall (i) protect the Confidential Information from disclosure to third parties with the same degree of care accorded its own confidential and proprietary information and (ii) refrain from using such Confidential Information, except in the negotiation, performance, enforcement and, in the case of Ava, financing, of this Agreement.
(a) Confidential Information does not include any information that (i) becomes publicly available other than through breach of this Agreement, (ii) is required to be disclosed to a Governmental Authority under Applicable Law or pursuant to a validly issued subpoena, (iii) is independently developed by the receiving Party or (iv) becomes available to the receiving Party without restriction from a third party under no obligation of confidentiality. If disclosure of information is required by a Governmental Authority, the disclosing Party shall, to the extent permitted by Applicable Law, notify the other Party of such required disclosure promptly upon becoming aware of such required disclosure and shall reasonably cooperate with the other Party’s efforts to limit the disclosure to the extent permitted by Applicable Law. (b) The Parties acknowledge and agree that the Agreement and any transaction entered into in connection herewith are subject to the requirements of the California Public Records Act (Government Code Section 6250 et seq.). In order to designate information as Attachment Staff Report Item 16D
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confidential, the disclosing Party must clearly stamp and identify the specific portion of the material designated with the word “confidential.” The Parties agree not to over-designate material as Confidential Information. Over-designation includes stamping whole agreements, entire pages or series of pages as “confidential” that clearly contain information that is not Confidential Information.
Section 19.2 Permitted Disclosures. Notwithstanding Section 19.1, (a) a Party may provide such Confidential Information to its affiliates and to its and its affiliates’ respective officers, directors, members, managers, employees, agents, contractors, consultants, counsel, and Financing Parties, and their respective consultants and counsel (collectively, “Representatives”), and potential direct or indirect assignees of this Agreement if such potential assignees are first bound by a written agreement or legal obligation restricting use and disclosure of Confidential Information. Each Party is liable for breaches of this provision by any Person to whom that Party discloses Confidential Information; and (b) upon request or demand made to either Party hereto by a validly issued subpoena or any third party not a Party hereto and not otherwise subject to the provisions of Section 19.2(a) pursuant to the California Public Records Act for production, inspection and/or copying of Confidential Information (“Requested Confidential Information”), the disclosing Party shall as soon as practical, prior to releasing any Requested Confidential Information, notify the other Party in writing via electronic mail that such request has been made. The other Party shall be solely responsible for taking at its sole expense whatever legal steps are necessary to prevent release of the Requested Confidential Information to the third party by the disclosing Party. If the other Party takes no such action within ten days after receiving the foregoing notice from the disclosing Party, the disclosing Party shall, at its discretion, be permitted to comply with the third party’s request or demand and is not required to defend against it. If the other Party takes or attempts to take such action, the disclosing Party shall provide timely and reasonable cooperation to the other Party, if requested by the other Party, and the other Party agrees to indemnify and hold harmless the disclosing Party and its Representatives from any claims, liability, award of attorneys’ fees or damages, and to defend any action, claim or lawsuit brought against any of the disclosing Party or its Representatives for the disclosing Party’s refusal to disclose any Requested Confidential Information.
Section 19.3 Miscellaneous. All Confidential Information remains the property of the disclosing Party and will be returned to the disclosing Party or destroyed (at the receiving Party’s option) after the receiving Party’s need for it has expired or upon the request of the disclosing Party. Each Party acknowledges that the disclosing Party would be irreparably injured by a breach of this Article 19 by the receiving Party or its Representatives or other Person to whom the receiving Party discloses Confidential Information of the disclosing Party and that the disclosing Party may be entitled to equitable relief, including injunctive relief and specific performance, for breaches of this Article 19. To the fullest extent permitted by Applicable Law, such remedies shall not be deemed to be the exclusive remedies for a breach of this Article 19 but will be in addition to all other remedies available at Law or in equity. The obligation of confidentiality will survive termination of this Agreement for a period of two years.
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Section 19.4 Goodwill and Publicity. Neither Party may (a) make any press release or public announcement of the specific terms of this Agreement or the use of renewable energy or storage involving this Agreement (except for filings or other statements or releases as may be required by Applicable Law) or (b) use any name, trade name, service mark or trademark, as applicable, of the other Party in any promotional or advertising material without the prior written consent of the other Party. The Parties shall coordinate and cooperate with each other when making public announcements regarding this Agreement, the Project and its use, and each Party may promptly review, comment upon, and approve any publicity materials, press releases or other public statements before they are made. Notwithstanding the above, Ava is entitled to place signage on the Project Site with written approval from City reflecting its association with the Project and to make public statements regarding the transactions contemplated by this Agreement and the Project and its use as part of the Ava’s monthly, public board meetings. . Ava may not use the name of City or reference any endorsement from City in any fashion for any purpose, without the prior express written consent of City.
ARTICLE 20
GENERAL PROVISIONS
Section 20.1 Interpretation. Unless otherwise defined or required by the context in which any term appears: (i) headings and the rendering of text in bold and italics are for convenience and reference purposes only and do not affect the meaning or interpretation of this Agreement, (ii) the singular includes the plural and vice versa, (iii) the words “herein,” “hereof”, and “hereunder” refer to this Agreement as a whole and not to any particular section or subsection of this Agreement, (iv) references to any agreement, document or instrument mean such agreement, document or instrument as amended, restated, modified, supplemented or replaced from time to time, (v) the words “include,” “includes” and “including” mean include, includes and including “without limitation,” (vi) references to “or” shall be deemed to be disjunctive but not necessarily exclusive (i.e., unless the context dictates otherwise, “or” shall be interpreted to mean “and/or” rather than “either/or”), (vii) words “herein,” “hereunder,” and “hereof” refer to the provisions of this Agreement as a whole and not to any particular portion or provision of this Agreement, and (viii) references to any statute, code or statutory provision are to be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or reenacted, and include references to all bylaws, instruments, orders, and regulations for the time being made thereunder or deriving validity therefrom unless the context otherwise requires. The captions or headings in this Agreement are strictly for convenience and will not be considered in interpreting this Agreement. As used in this Agreement, “dollar” and the “$” sign refer to United States dollars.
Section 20.2 Choice of Law; Venue. The law of the State of California governs all matters arising out of this Agreement without giving effect to conflict of laws principles. In the event that a suit is brought by either Party hereunder, the Parties agree that venue shall be exclusively vested in the state courts of California in the County of Alameda or if federal jurisdiction is appropriate, exclusively in the United States District Court in the Northern District of California.
Section 20.3 Dispute Resolution. The Parties shall negotiate in good faith and attempt to resolve expeditiously and inexpensively any dispute, controversy or claim arising out of or relating Attachment Staff Report Item 16D
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to this Agreement (a “Dispute”) within fifteen (15) days after the date that a Party gives written notice of such Dispute to the other Party. If the Parties are unable to resolve a Dispute arising hereunder within the earlier of either thirty (30) days of initiating such discussions, or within forty (40) days after submission of notice of the Dispute, the Parties shall submit the Dispute to mediation prior to seeking any and all remedies available at Law in or equity. The Parties will cooperate in selecting a qualified neutral mediator selected from a panel of neutrals and in scheduling the time and place of the mediation as soon as reasonably possible, but in no event later than thirty (30) days after the request for mediation is made. The Parties agree to participate in the mediation in good faith and to share the costs of the mediation, including the mediator’s fee, equally, but such shared costs shall not include each Party’s own attorneys’ fees and costs, which shall be borne solely by such Party. If the mediation is unsuccessful, then either Party may seek any and all remedies available to it at Law or in equity, subject to the limitations set forth in this Agreement.
Section 20.4 Notices. All notices under this Agreement shall be in writing and delivered by hand, electronic mail, overnight courier or regular, certified or registered mail, return receipt requested, and will be deemed received upon personal delivery, acknowledgment of receipt of electronic transmission, the promised delivery date after deposit with overnight courier or five days after deposit in the mail. Notices must be sent to the Person identified on Exhibit V at the addresses set forth on Exhibit V. Each Party may designate a different Person and address by sending written notice to the other Party, to be effective no sooner than ten days after the date of submission of such notice designating a different Person and address.
Section 20.5 Survival. The provisions of this Agreement that should reasonably be considered to survive termination of this Agreement, including, without limitation the provisions enumerated in this Section 20.5, will survive termination of this Agreement:
(a) obligations to pay by either Party that have accrued prior to termination or expiration;
(b) obligations to repair damage caused by either Party under Article 7, Article 8 or otherwise;
(c) Section 5.6 (Pass Through Damages);
(d) Section 5.7 (Books and Records);
(e) Section 11.2 (Removal);
(f) Section 11.3 (Abandonment);
(g) Section 11.4 (Ava Removal Security)
(h) Article 13 (Defaults, Remedies, and Damages);
(i) Article 14 (Representations and Warranties);
(j) Article 16 (Indemnification and Limitations on Liability); Attachment Staff Report Item 16D
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(k) Article 19 (Confidentiality); and
(l) Article 20 (General Provisions).
Section 20.6 Compliance with All Laws. The Parties shall at all times comply with all Applicable Laws. City shall at all times keep Ava fully informed of City’s charter, codes, ordinances, and regulations and of all state and federal laws in any manner affecting the performance of this Agreement to ensure that the Parties shall at all times comply with all applicable local codes, ordinances, and regulations, as they may be amended from time to time.
Examples of such regulations include but are not limited to California Occupational Safety and Health Act of 1973, Labor Code §6300 et. seq., the Fair Packaging and Labeling Act, and the standards and regulations issued there under.
Section 20.7 Good Faith & Fair Dealing. The Parties agree to act reasonably and in accordance with the principles of good faith and fair dealing in the performance of this Agreement.
Unless expressly provided otherwise in this Agreement, (i) wherever this Agreement requires the consent, approval or similar action by a Party, such consent, approval or similar action shall not be unreasonably withheld or delayed, and (ii) wherever this Agreement gives a Party a right to determine, require, specify or take similar action with respect to matters, such determination, requirement, specification or similar action shall be reasonable.
Section 20.8 Cooperation. The Parties agree to reasonably cooperate with each other in the implementation and performance of this Agreement. Such duty to cooperate shall not require either Party to act in a manner inconsistent with its rights under this Agreement.
Section 20.9 Construction. The Parties acknowledge that this Agreement was jointly prepared by them, by and through their respective legal counsel, and any uncertainty or ambiguity existing herein shall not be interpreted against either Party on the basis that the Party drafted the language, but otherwise shall be interpreted according to the application of the rules on interpretation of contracts.
Section 20.10 Non-Discrimination. Ava shall comply with all Applicable Laws, including City’s policies concerning nondiscrimination and equal opportunity in contracting. Such laws include but are not limited to the following: Title VII of the Civil Rights Act of 1964 as amended; Americans with Disabilities Act of 1990; The Rehabilitation Act of 1973 (Sections 503 and 504); California Fair Employment and Housing Act (Government Code sections 12900 et seq.); and California Labor Code sections 1101 and 1102. Ava shall not discriminate (i) against any subcontractor, employee or applicant for employment or (ii) in the provision of services provided under this Agreement because of age, race, color, national origin, ancestry, religion, sex/gender, sexual orientation, mental disability, physical disability, medical condition, political beliefs, organizational affiliations or marital status in the recruitment or selection for training, including apprenticeship, hiring, employment, utilization, promotion, layoff, rates of pay or other forms of compensation.
Section 20.11 Non-Exclusive Contract. This Agreement does not establish an exclusive contract between the City and the Ava for the purchase of electricity or power or any services. To the extent that the City has remained in compliance with and has not defaulted under any terms of Attachment Staff Report Item 16D
General Terms and Conditions | 36
this Agreement, the City expressly reserves all its rights, including but not limited to, the following: the right to utilize others to provide electricity, products, support and services; the right to request proposals from others with or without requesting proposals from the Ava; and the unrestricted right to bid any such product, support or service.
Section 20.12 Further Assurances. Each Party shall provide such information, execute and deliver any instruments and documents, and take such other actions as may be reasonably requested by the other Party, which are not inconsistent with the provisions of this Agreement and which do not involve the assumptions of obligations other than those provided for in this Agreement, to give full effect to this Agreement and to carry out the intent of this Agreement.
Section 20.13 Waivers. No provision or right or entitlement under this Agreement may be waived or varied except in writing signed by the Party to be bound. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision, nor will such waiver constitute a continuing waiver unless otherwise expressly provided.
Section 20.14 Non-Dedication of Projects. Nothing in this Agreement may be construed as the dedication by either Party of its Projects or equipment to the public or any part thereof.
Neither Party may knowingly take any action that would subject the other Party, or other Party’s Projects or equipment, to the jurisdiction of any Governmental Authority as a public utility or similar entity. Neither Party may assert in any proceeding before a court or regulatory body that the other Party is a public utility by virtue of such other Party’s performance under this Agreement.
If Ava is reasonably likely to become subject to regulation as a public utility, then the Parties shall use commercially reasonable efforts to restructure their relationship under this Agreement in a manner that preserves their relative economic interests while ensuring that Ava does not become subject to any such regulation. If the Parties are unable to agree upon such restructuring, Ava may terminate this Agreement without further liability under this Agreement except with respect to liabilities accrued prior to the date of termination and remove the Project in accordance with Section 11.2 of this Agreement.
Section 20.15 Service Contract. The Parties intend this Agreement to be a “service contract” within the meaning of Section 7701(e)(3) of the Internal Revenue Code of 1986. City shall not take the position on any tax return or in any other filings suggesting that it is anything other than a City of electricity from the Project.
Section 20.16 No Agency, Lease, Joint Venture or Partnership. No provision of this Agreement may be construed or represented as creating a partnership, trust, joint venture, fiduciary or any similar relationship between the Parties. No Party is authorized to act on behalf of the other Party, and neither may be considered the agent of the other. Ava shall perform pursuant to this Agreement as an independent contractor and not as an officer, agent, servant or employee of City.
Ava shall be solely responsible for the acts and omissions of its officers, agents, employees, contractors, and subcontractors, if any. Nothing herein shall be considered as creating a partnership or joint venture between City and Ava. No Person performing any services and/or supplying all goods shall be considered an officer, agent, servant or employee of City, nor shall any such Person be entitled to any benefits available or granted to employees of City. Any terms in this Agreement referring to direction from City shall be construed as providing for direction as to policy and the result of Ava’s work only, and not as to the means by which such a result is obtained. City does Attachment Staff Report Item 16D
General Terms and Conditions | 37
not retain the right to control the means or the method by which Ava performs work under this Agreement.
Section 20.17 Account Manager. Ava must assign an account manager to City to facilitate the contractual relationship and to be fully responsible and accountable for fulfilling City’s requirements. Ava represents and warrants that such account manager will ensure that City receives adequate support, problem resolution assistance, and required information on a timely basis.
Section 20.18 Entire Agreement, Modification, Severability. This Agreement, together with all of the exhibits, constitutes the entire agreement of the Parties regarding its subject matter and supersedes all prior proposals, agreements or other communications between the Parties, oral or written. This Agreement may be modified only by a writing signed by both Parties. If any provision of this Agreement is found unenforceable or invalid, such provision shall not be read to render this Agreement unenforceable or invalid as a whole. In such event, such provision shall be rectified or interpreted so as to best accomplish its objectives within the limits of Applicable Law.
Section 20.19 Forward Contract. The transaction contemplated under this Agreement constitutes a “forward contract” within the meaning of the United States Bankruptcy Code, and the Parties further acknowledge and agree that each Party is a “forward contract merchant” within the meaning of the United States Bankruptcy Code. Each Party further agrees that, for all purposes of this Agreement, each Party waives and agrees not to assert the applicability of the provisions of 11 U.S.C. § 366 in any bankruptcy proceeding wherein such Party is a debtor. In any such proceeding, each Party further waives the right to assert that the other Party is a provider of last resort to the extent such term relates to 11 U.S.C. §366 or another provision of 11 U.S.C. § 101- 1532.
Section 20.20 No Third-Party Beneficiaries. Except as otherwise expressly provided herein, this Agreement and all rights hereunder are intended for the sole benefit of the Parties hereto, and the Financing Parties to the extent provided herein or in any other agreement between a Financing Party and Ava or City, and do not imply or create any rights on the part of, or obligations to, any other Person.
Section 20.21 Disentanglement. Ava shall cooperate with City to ensure a smooth transition at the time of termination of this Agreement, regardless of the nature or timing of the termination. Ava shall cooperate with City’s efforts to ensure that there is no interruption of electricity and no adverse impact on the provision of services or City’s activities. Ava shall return to City all City assets or information in Ava’s possession. Ava shall deliver to City or its designee, at City’s request, all documentation and data related to City, including, but not limited to, City data and client files, held by Ava, and Ava shall destroy all copies thereof not turned over to City, all at no charge to City.
Section 20.22 Accountability. Ava will be the primary point of contact and assume the responsibility of all matters relating to this Agreement, including those involving the manufacturer, deliverer or any subcontractor, as well as payment issues. If issues arise, the Ava must act as soon as reasonably practicable to correct or resolve the issues.
Attachment Staff Report Item 16D
General Terms and Conditions | 38
Section 20.23 Cooperation with Review. Ava shall cooperate with City’s periodic review of Ava’s performance. Such review may be conducted on a bi-annual basis, in the reasonable discretion of City, upon no less than 60 days’ advance written notice to Ava.
Section 20.24 Authority. The signatories hereto represent and warrant that they are duly authorized on behalf of their respective entities to enter into and consummate this Agreement.
Section 20.25 Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument. The Parties agree that the digital signatures of the signatories included in this Agreement are intended to authenticate this writing and to have the same force and effect as manual signatures. Any digital signature shall have the same legal validity and enforceability as a manually executed signature or use of a paper-based record keeping system to the fullest extent permitted by Applicable Law. [Remainder of Page Intentionally Left Blank]
Attachment Staff Report Item 16D
[Signature Page to [___] City PPA – Critical Municipal Projects] IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the Effective Date.
[CITY]
By:
Name:
Title:
Ava Community Energy, a California joint
powers authority
By:
Name: Howard Chang
Title: Chief Executive Officer
APPROVED AS TO FORM:
By:
Name: Inder Khalsa
Title: General Counsel
Date:
Attachment Staff Report Item 16D
Schedule I | 1
Schedule I
Defined Terms
“Adjusted Energy Production” has the meaning set forth in Section 8.1(a) “Adverse Effect” has the meaning set forth in Section 7.6. “Adverse Environmental Conditions” means (i) the existence or the continuation of the existence of Environmental Contamination (including, without limitation, a sudden or non-sudden accidental or non-accidental Environmental Contamination), or exposure to or release of any substance, chemical, material, pollutant, Hazardous Substance, odor or audible noise or other release or emission in, into or onto the environment at, in, by or related to the Project Site, (ii) the environmental aspect of the transportation, storage, treatment or disposal or materials in connection with the Project, or (iii) the violation, or alleged violation, of any Environmental Law, permits or licenses of, by or from any Governmental Authority relating to environmental matters connected with the applicable Project Site.
“Affected Projects” has the meaning set forth in Section 10.5. “Agreement” has the meaning set forth in the Preamble.
“Ancillary Services” means operating reserves, regulation, black-start capability, reactive supply, voltage control, frequency response, contingency reserves, other products associated with electric generation and Energy that a Project is capable of providing and all other beneficial attributes and outputs of the Project not required for the operation of the Project. “Annual Escalator” has the meaning set forth in Section 5.1(a)(i). “Applicable Law” means all national, state, local or municipal laws, statutes, codes, acts, treaties, ordinances, orders, judgments, writs, decrees, injunctions, rules, regulations, Governmental Approvals, licenses, permits, directives, and requirements of all regulatory and other Governmental Authorities.
“Attestation Form” means documentation provided by Ava to City transferring title to the RECs, specifying the Project, REC quantity, and REC vintage with respect to the RECs sold herein. “Authority Having Jurisdiction” or “AHJ” means any agency, organization, office or Person responsible for enforcing the requirements of a statute, regulation, code or standard, or for approving equipment, materials, an installation or a procedure in relation to a Project. “Ava Event of Default” means an Ava Portfolio Default or an Ava Project Default, or both, as the context may require.
“Ava Pass-Through Costs” has the meaning set forth in Section 5.6 “Ava Portfolio Default” has the meaning set forth in Section 13.3.
Attachment Staff Report Item 16D
Schedule I | 2
“Ava Project Default” has the meaning set forth in Section 13.1. “Ava Removal Security” has the meaning set forth in Section 11.4. “Ava Termination Payment” means the corresponding amount set forth in Exhibit VI. “Ava WREGIS Account” has the meaning set forth in Section 9.2. “Avoided Utility Cost” means $[__]/kWh.
“Bankruptcy Event” means with respect to any entity, the occurrence of any of the following:
such entity (a) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Law, or has any such petition filed or commenced against it and such case filed against it is not dismissed in 60 days, (b) makes an assignment or any general arrangement for the benefit of creditors, (c) otherwise becomes bankrupt or insolvent (however evidenced), (d) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (e) is generally unable to pay its debts as they fall due.
“Bill Credit Disqualifying Event” has the meaning set forth in Section 5.1(d). “Budgetary Non-Appropriation Event” has the meaning set forth in Section 10.3. “Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in the State of California are authorized or required to close. “CAISO” means the California Independent System Operator or any successor entity performing similar functions.
“Capacity Attribute” means any current or future defined characteristic, certificate, tag, credit, or accounting construct associated with the amount of power that the Project can accept at or deliver to the Delivery Point at a particular moment and that can be purchased and sold under CAISO market rules, including Resource Adequacy Benefits. “CARB” means the California Air Resources Board.
“Change in Law” means (i) the enactment, adoption, promulgation, modification or repeal after the Effective Date of any Applicable Law or regulation, (ii) the imposition of any material conditions on the issuance or renewal of any applicable permit after the Effective Date (notwithstanding the general requirements contained in any applicable permit at the time of application or issue to comply with future laws, ordinances, codes, rules, regulations or similar legislation) or (iii) a change in any utility rate schedule or tariff approved by any Governmental Authority.
“City” has the meaning set forth in the Preamble.
“City Portfolio” means, collectively, all Projects contemplated under this Agreement.
Attachment Staff Report Item 16D
Schedule I | 3
“City Portfolio Default” has the meaning set forth in Section 13.7. “City Project Default” has the meaning set forth in Section 13.5. “City WREGIS Account” has the meaning set forth in Section 9.2. “City-Requested Outage” has the meaning set forth in Section 7.8. “City Termination Payment” means the corresponding amount set forth in Exhibit VII. “Claims” has the meaning set forth in Section 16.1.
“COD Delay Cure Period” means (a) with respect to Tranche A Projects, a period of up to forty five (45) days, and (b) with respect to Tranche B Projects, a period of up to one hundred twenty (120) days.
“COD Delay Damages” means, with respect to each Project, for each day after the Commercial Operation Deadline that the applicable Project has not achieved COD, liquidated damages in an amount equal to the Pass-Through Damages received from Developer pursuant to the Developer Agreement, less any reasonably incurred Ava Pass-Through Costs calculated in accordance with Section 5.6.
“COD Delay Notice” has the meaning set forth in Section 4.6(c). “Commercial Operation” means that the Project is mechanically complete, capable of providing electricity to the Delivery Point at the capacity specified on the applicable Project Site Addendum, subject to the caveats set forth in this Agreement, and has permission to operate from the relevant Governmental Authority. The Project is fully operational, reliable, and interconnected, fully integrated and synchronized with the distribution system. “Commercial Operation Date” or “COD” means, for each Project, the date upon which Commercial Operation has been achieved, as indicated via written notice from Ava to the City in accordance with Section 4.6(d).
“Commercial Operation Deadline” has the meaning set forth in Section 4.6(a). “Commissioning Test” has the meaning set forth in Section 4.6(d). “Compliance Action” has the meaning set forth in Section 17.2. “Compliance Expenditure Cap” has the meaning set forth in Section 17.2. “Confidential Information” means, whether oral or written, which is delivered by the receiving Party or learning Party, including information that either the learning Party or the receiving Party stamps or otherwise identifies as “confidential” or “proprietary” before disclosing it to the other. “Construction Start” has the meaning set forth in Section 4.4(a). “Construction Start Date” has the meaning set forth in Section 4.4(a).
Attachment Staff Report Item 16D
Schedule I | 4
“Contract Capacity” means the sum of the Guaranteed Nameplate Capacity of each Generating Project and Storage Inverter Power of each Storage Project within the City Portfolio. “Contract Month” means any calendar month during the Term, commencing on the first calendar month to occur subsequent to the Commercial Operation Date of the first Project to achieve COD hereunder.
“Contract Price” means the Renewable Rate or the Storage Rate, or both, as the context may require.
“Contract Year” means any consecutive twelve (12)-month period during the Term, commencing on the Commercial Operation Date of the first Project to achieve COD and ending on the last day of such twelve (12)-month period.
“CPUC” means the California Public Utilities Commission or any successor agency performing similar statutory functions.
“Credit Downgrade Event” means (a) the long-term, senior, unsecured debt rating of Ava (i) falls below BBB- from S&P and (ii) Baa3 from Moody’s, or (b) Ava is no longer rated by either of S&P and Moody’s.
“Cumulative Storage Contract Capacity” means the aggregate Storage Contract Capacity of all Storage Projects within the City Portfolio.
“Delivery Period” has the meaning set forth in Section 3.1. “Delivery Point” means, with respect to each Project, the point where such Project is interconnected to City’s existing electrical system.
“Design Plan” has the meaning set forth in Section 4.3. “Developer” means, [Green Bridge], a [_____], or any successor thereto, in each case, with whom Ava is contracting for the installation, construction, operation, and maintenance of the Project. “Developer Agreement” has the meaning set forth in Section 2.1. “Developer Performance Security” has the meaning set forth in Section 14.4(c). “Discharging Energy” means, with respect to a Storage Project, all Energy delivered to the applicable Delivery Point from the Storage Project, as measured by the Meter in accordance with CAISO metering requirements and Prudent Operating Practices, adjusted pursuant to CAISO requirements for any applicable Electrical Losses.
“Dispute” has the meaning set forth in Section 20.3.
“Early Termination Event” has the meaning set forth in Section 3.2(a). “Effective Date” has the meaning set forth in the Preamble.
Attachment Staff Report Item 16D
Schedule I | 5
“Electrical Losses” means all transmission or transformation losses between the Project and the Delivery Point, including, as applicable, losses associated with (i) delivery of PV Energy to the Delivery Point, (ii) delivery of Charging Energy to the Storage Project, (iii) conversion of Charging Energy into Discharging Energy, and (iv) delivery of Discharging Energy to the Delivery Point.
“Energy” means electrical energy generated by the Generating Project. “Environmental Attributes” means any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled, attributable to the generation from the Project (to the extent of sales to City of Energy pursuant to Article 5), and its displacement of conventional energy generation. Environmental Attributes include, without limitation, RECs, and all of the following:
(a) any avoided emissions of pollutants to the air, soil or water such as sulfur oxides (Sox), nitrogen oxides (Nox), carbon monoxide (CO) and other pollutants; (b) any avoided emissions of carbon dioxide (CO2), methane (CH4) and other greenhouse gases (GHGs) that have been determined by the United Nations Intergovernmental Panel on Climate Change to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere; and (c) the reporting rights to these avoided emissions.
“Environmental Contamination” means the presence of a Hazardous Substance in a concentration exceeding legally allowable limits in violation of Applicable Law, including Environmental Law.
“Environmental Law” means any Applicable Law related to (a) the prevention, abatement or elimination of pollution, (b) the protection or preservation of the environment (including air, soil, land surface, subsurface strata, ground water, surface water, coastal water, and wetlands), wildlife (including endangered, threatened or protected species, migratory birds and bald or golden eagles), wildlife habitat, cultural resources, or natural resources, and (c) the use, generation, handling, treatment, storage, disposal, release, transportation or regulation of, or exposure to, Hazardous Substances.
“EOD Relocation Event” has the meaning set forth in Section 11.1. “EPC Contract” means, with respect to each Project, one or more commercially negotiated contract(s) for the engineering, procurement, construction, and installation of the applicable Project, which shall be entered into by and between Developer and an EPC Contractor. “EPC Contractor” means [Gridscape] 2
, or any other contractor proposed by Developer and
approved by Ava in its reasonable discretion.
“Error-Free” means the Project Equipment (i) is free from material defects in design, materials, and workmanship, (ii) substantially conforms to the specifications set forth in this Agreement, including the Design Plan, and (iii) functions as designed. 2 NTD: Parties to confirm full entity name.
Attachment Staff Report Item 16D
Schedule I | 6
“Estimated Construction Start Date” has the meaning set forth in the applicable PSA. “Event of Default” means an Ava Event of Default or a City Event of Default, as the context may require.
“Exclusive License” has the meaning set forth in Section 6.1(f). “Excused Storage Event” has the meaning set forth in Section 8.2(a). “Expected Annual Contract Quantity” has the meaning set forth in Exhibit I. “FERC” means the Federal Energy Regulatory Commission.
“Financing Party” has the meaning set forth in Section 18.2. “FM Delay Cure Period” has the meaning set forth in Section 4.6(b). “Force Majeure Delay” has the meaning set forth in Section 4.6(b). “Force Majeure Event” means any event or circumstance beyond the reasonable control of and without the fault or negligence of breaching Party, including, without limitation, failure or interruption of the production, delivery or acceptance of electricity due to: an act of god; war (declared or undeclared); sabotage; piracy; riot; insurrection; civil unrest or disturbance; military or guerilla action; terrorism; economic sanction or embargo; civil strike, work stoppage, slow-down, or lock-out; explosion; fire; earthquake; epidemic; pandemic or any of the following related to the Outbreak: (i) action by a Governmental Authority that is broader or more restrictive than those measures in effect on the Effective Date or (ii) new events, circumstances or conditions related to the Outbreak arising after Effective Date, provided that such new event, circumstance or condition related to the Outbreak directly impacts the breaching Party’s ability to perform its obligations under this Agreement; abnormal weather condition or actions of the elements; hurricane; flood; lightning; wind; drought; animals; the binding order of any Governmental Authority; the failure to act on the part of any Governmental Authority (including, without limitation delays in permitting not caused by actions or omissions of the Party seeking such permit); unavailability of electricity from the utility grid; and failure or unavailability of equipment, supplies or products outside of Ava’s control or due to a Force Majeure Event.
Notwithstanding the foregoing, a Force Majeure Event does not include economic conditions that render a Party’s performance of this Agreement at the Contract Price unprofitable or otherwise uneconomic (including an increase in component costs for any reason, including foreign or domestic tariffs, City’s ability to buy the Product, or any component thereof at a lower price, or Ava’s ability to sell the Product, or any component thereof, at a higher price, than under the Agreement); the inability of a Party to make payments when due under this Agreement, unless the cause of such inability is an event that would otherwise constitute a Force Majeure Event as described above that disables physical or electronic Projects necessary to transfer funds to the payee Party; Ava’s inability to obtain sufficient labor, equipment, materials, or other resources to build or operate the Project except to the extent such inability is caused by a Force Majeure Event; any equipment failure except if such equipment failure is caused by a Force Majeure Event; or the Outbreak or the effects or impacts of the Outbreak, except as set forth above.
Attachment Staff Report Item 16D
Schedule I | 7
“Force Majeure Failure” has the meaning set forth in Section 10.2. “Forced Outage” means an unexpected failure of one or more components of the Project that prevents Ava from generating Energy or making Project Energy available at the Delivery Point and that is not the result of a Force Majeure Event.
“Generating Project” has the meaning set forth in the Preamble. “Governmental Approval” means all authorizations, consents, approvals, waivers, exceptions, variances, filings, permits, orders, licenses, exemptions, notices to and declarations of or with any Governmental Authority and shall include those siting and operating permits and licenses, and any of the foregoing under any applicable Environmental Law, that are required for the development, use, and operation of any Project hereunder.
“Governmental Authority” means any foreign, federal, state, local or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental Authority Having Jurisdiction or effective control over a Party. “Grid Services” has the meaning set forth in Section 9.4. “Guaranteed Energy Damages” means liquidated damages in an amount equal to the product of (a) the applicable Avoided Utility Cost, multiplied by (b) the Guaranteed Energy Shortfall. “Guaranteed Energy Damages Cap” has the meaning set forth in Section 8.1(b)(i). “Guaranteed Energy Production” has the meaning set forth in Section 8.1(a). “Guaranteed Energy Shortfall” means, with respect to each year in any Performance Measurement Period, the difference between (a) the product of (i) Expected Annual Contract Quantity, and (ii) 0.85; and (b) the Adjusted Energy Production. “Guaranteed Nameplate Capacity” has the meaning set forth on the applicable PSA. “Guaranteed Storage Availability” has the meaning set forth in Section 8.2(a) “Guaranteed Storage Damages” has the meaning set forth in Section 8.2(b)(i). “Hazardous Substance” means any chemical, waste or other substance (a) which now or hereafter becomes defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “pollution,” “pollutants,” “regulated substances,” or words of similar import under any laws pertaining to the environment, health, safety or welfare, (b) which is declared to be hazardous, toxic, or polluting by any Governmental Authority, (c) exposure to which is now or hereafter prohibited, limited or regulated by any Governmental Authority, (d) the storage, use, handling, disposal or release of which is restricted or regulated by any Governmental Authority, or (e) for which remediation or cleanup is required by any Governmental Authority.
Attachment Staff Report Item 16D
Schedule I | 8
“Improvements” means any buildings and other improvements on the Project Site other than the Project or the Project Equipment.
“Incentives” means (i) a payment paid by a utility or state or local Governmental Authority based in whole or in part on the cost or size of the Project such as a rebate, (ii) a performance-based incentive paid as a stream of periodic payments by a utility, state or Governmental Authority based on the production of the Project, (iii) investment tax credits, production tax credits, and similar tax credits, grants or other tax benefits under federal, state or local law, and (iv) any other attributes, commodity, revenue stream or payment in connection with the Project (such as ancillary or capacity revenue), in each case of (i) through (iv) relating to the construction, ownership, use or production of energy from the Project, provided that Incentives shall not include RECs. “Indemnified Party” has the meaning set forth in Section 16.1. “Indemnifying Party” has the meaning set forth in Section 16.1. “Initial Term” has the meaning set forth in Section 3.1. “Insolation” has the meaning set forth in Section 7.4.
“Interconnection Agreement” means the interconnection agreement entered into by Developer pursuant to which the Project will be interconnected with the Transmission System, and pursuant to which Developer’s interconnection Projects and any other interconnection Projects will be constructed, operated, and maintained during the Term.
“Interest Rate” has the meaning set forth in Section 5.3. “Invoice Information” has the meaning set forth in Section 5.2. “Joint Powers Act” means the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.).
“Joint Powers Agreement” means that certain Joint Powers Agreement dated December 1, 2016, as amended from time to time, under which Ava is organized as a Joint Powers Authority in accordance with the Joint Powers Act.
“kW” means kilowatts in alternating current, unless expressly stated in terms of direct current. “kWh” means kilowatt-hour measured in alternating current, unless expressly stated in terms of direct current.
“Lawful Permitting Denial Event” has the meaning set forth in Section 10.4. “Letter of Credit” means an irrevocable, standby letter of credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such bank having a credit rating of at least A-without an outlook designation of “stable” from S&P or A3 with an outlook designation of “stable” from Moody’s, the form of which shall be mutually agreeable to the Parties.
Attachment Staff Report Item 16D
Schedule I | 9
“License Term” has the meaning set forth in Section 6.1(a). “Licensed Professional Engineer” means an independent, professional engineer selected by Ava and reasonably acceptable to City, licensed in the State of California. “Licensees” has the meaning set forth in Section 6.1(a). “Licenses” has the meaning set forth in Section 6.1(f). “Lien” has the meaning set forth in Section 6.3.
“Local Electric Utility” means Pacific Gas and Electric Company, an investor-owned utility headquartered in San Francisco, California.
“Lost Output” has the meaning set forth in Section 8.1(a). “Meter” has the meaning set forth in Section 12.1.
“Modified Design Plan” has the meaning set forth in Section 4.3. “Monthly Bill Credit” has the meaning set forth in Section 5.1(d). “Monthly Payment” has the meaning set forth in Section 5.1(a) “Monthly Storage Availability” has the meaning set forth in Section 8.2(a). “MSDS” has the meaning set forth in Section 7.11.
“NERC” means the North American Electric Reliability Corporation. “No-Fault Relocation Event” has the meaning set forth in Section 11.1. “Non-Appropriation Period” has the meaning set forth in Section 10.3. “Non-Appropriation Start Date” has the meaning set forth in Section 10.3. “Non-Exclusive License” has the meaning set forth in Section 6.1(a). “On-Site Services” has the meaning set forth in Section 7.10(a). “On-Site Contractor” has the meaning set forth in Section 7.10(a). “Optimization Savings” has the meaning set forth in Section 9.3. “Outage Allowance” has the meaning set forth in Section 7.8. “Outbreak” means the outbreak of coronavirus disease (COVID-19) that was first reported from Wuhan, China on or about December 31, 2019 and declared a “Public Health Emergency of International Concern” by the World Health Organization on January 30, 2020.
Attachment Staff Report Item 16D
Schedule I | 10
“Parties” and “Party” have the meanings set forth in the Preamble. “Performance Measurement Period” has the meaning set forth in Section 8.1(a). “Permitted Assignee” has the meaning set forth in Section 18.1. “Permitting Authority” has the meaning set forth in Section 10.4. “Person” means any individual, sole proprietorship, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, incorporated organization, institution, public benefit corporation, unincorporated organization, government entity or other entity.
“Planned Outage” has the meaning set forth in Section 7.7. “Portfolio Delivery Period” means the period starting on the first Commercial Operation Date to occur with respect to any Project hereunder and ending upon the expiration or early termination of all Project Terms hereunder.
“Product” means PV Energy, Storage Capacity, and RECs.
“Progress Report” has the meaning set forth in Section 4.2. “Project” means any individual Generating Project or Storage Project. “Project Energy” means the sum of PV Energy and Discharging Energy during the monthly billing period contemplated under this Agreement, net of Electrical Losses and Station Use, as measured by the Meter, which Meter will be adjusted in accordance with CAISO meter requirements and Prudent Operating Practices to account for Electrical Losses and Station Use. “Project Equipment” means PV modules, PV inverters, PV racking, battery modules, battery inverters, charge controllers, electrical panels, electrical disconnects, electric meters, transformers, and any other supporting equipment, structures, and security features, each to the extent applicable for any given Project.
“Project Monthly Payment” has the meaning set forth in Section 5.1(a)(ii). “Project Roof” has the meaning set forth in Section 8.3(a). “Project Site” means, with respect to a Project, the real property upon which such Project shall be installed, as described or depicted in the applicable PSA. “Project Term” has the meaning set forth in Section 3.1. “Prudent Operating Practice” means (a) the applicable practices, methods, and acts required by or consistent with Applicable Laws and reliability criteria, and otherwise engaged in or approved by a significant portion of the solar industry during the relevant time period with respect to distributed generation generating projects with integrated storage in the Western United States or (b) any of the practices, methods, and acts that, in Attachment Staff Report Item 16D
Schedule I | 11
light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, and expedition. Prudent Operating Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to acceptable practices, methods or acts generally accepted in the industry with respect to distributed generation generating projects with integrated storage in the Western United States.
Prudent Operating Practice includes compliance with Applicable Laws, applicable reliability criteria, and the criteria, rules, and standards promulgated in the National Electric Safety Code and the National Electrical Code, as they may be amended or superseded from time to time, including the criteria, rules and standards of any successor organizations. “PV Energy” means that portion of Energy that is delivered directly to the Delivery Point from a Generating Project and is not Discharging Energy.
“PV Payment” has the meaning set forth in Section 5.1(a)(i). “REC” means a renewable energy credit or certificate under any state renewable portfolio, standard or federal renewable energy standard, voluntary renewable energy credit certified by a non-governmental organization, pollution allowance, carbon credit and any similar environmental allowance or credit and green tag or other reporting right under Section 1605(b) of The Energy Policy Act of 1992 and any present or future federal, state, or local law, regulation or bill, and international or foreign emissions trading program, in each case relating to the construction, ownership, use or production of energy from the Project, provided that RECs shall not include Incentives.
“Relocation Request” has the meaning set forth in Section 11.1. “Removal Costs” has the meaning set forth in Section 11.3. “Removal Deadline” has the meaning set forth in Section 11.2. “Removal Services” has the meaning set forth in Section 11.2. “Renewable Rate” means the Tranche A PPA Rate or the Tranche B PPA Rate, or any or all of the foregoing as the context may require.
“Renewal Term” has the meaning set forth in Section 3.1. “Representatives” has the meaning set forth in Section 19.2. “Requested Confidential Information” has the meaning set forth in Section 19.2(b). “Resource Adequacy Benefits” means the rights and privileges attached to the Project that satisfy any entity’s resource adequacy obligations, as those obligations are set forth in any CPUC decision and includes any local, zonal or otherwise locational attributes associated with the Project, in addition to flex attributes.
“Roof Damage Warranty” has the meaning set forth in Section 8.3(a).
Attachment Staff Report Item 16D
Schedule I | 12
“Site Control” means that City: (A) is the fee simple owner of the Project Site; or (B) is the lessee of the Project Site pursuant to a lease which (i) has a term no shorter than the duration of the Initial Term, and (ii) authorizes City to act in all manners relating to the control and operation of the Project Site.
“Station Use” means:
(a) the Energy produced or discharged by the Project that is used within the Project to power the lights, motors, control systems, and other electrical loads that are necessary for operation of the Project; and
(b) the Energy produced or discharged by the Project that is consumed within the Project’s electric energy distribution system as losses. “Storage Capacity” means the maximum dependable operating capability of the Storage Project to discharge electric energy that can be sustained for four consecutive hours (in kWh). “Storage Contract Capacity” means the nameplate Storage Capacity, in kWh, of a Storage Project, as specified in the applicable PSA.
“Storage Inverter Power” means the nameplate discharging power rating, in kilowatts, of a Storage Project, as specified in the applicable PSA.
“Storage Payment” has the meaning set forth in Section 5.1(a)(i). “Storage Project” has the meaning set forth in the Recitals. “Storage Rate” has the meaning set forth in Section 5.1(a)(i). “Term” has the meaning set forth in Section 3.1.
“Termination Payment” means the Ava Termination Payment or City Termination Payment, or both, as the context may require.
“Tier 1” means, with respect to the Generating Project, any equipment offered by any Tier 1 Supplier and, with respect to a Storage Project, any battery storage system that (i) is offered by any Tier 1 Supplier, (ii) benefits from a manufacturer’s warranty (including an energy retention warranty), and (iii) includes all of the components, functionality, and other material features that affect performance and the user experience (i.e., data acquisition and operating controls) of a standard, high-quality storage project.
“Tier 1 Supplier” means a “Tier 1 Module Manufacturer” as listed from time to time by Bloomberg New Energy Finance’s PV Market Outlook, published on a quarterly basis, or if no longer published, a similar publication agreed upon by Ava and City in writing, and as agreed to by City.
“Total System Benefit” means the sum of all revenue and bill savings from Optimization Savings realized by the operation of the Project, net of any electricity expenses associated with the Attachment Staff Report Item 16D
Schedule I | 13
operation of the Project, as calculated by Ava. Total System Benefit does not include RECs or Incentives. A hypothetical calculation of Total System Benefit is as follows: [estimated cumulative Project Site utility expenses during the Term if the Project did not exist] less [estimated cumulative Project Site utility expenses during the Term with the Project in operation] less [cumulative Monthly Payments during the Term].
“Tranche A PPA Rate” has the meaning set forth in Section 5.1(a)(i). “Tranche A Project” means a Project designated as such in the applicable PSA. “Tranche B PPA Rate” has the meaning set forth in Section 5.1(a)(i). “Tranche B Project” means a Project designated as such in the applicable PSA. “Transmission System” means the transmission Projects operated by the CAISO, now or hereafter in existence, which provide energy transmission service downstream from the Delivery Point.
“WECC” means the Western Electricity Coordinating Council.
Attachment Staff Report Item 16D
Exhibit I | 1
EXHIBIT I
EXPECTED ANNUAL CONTRACT QUANTITY
Attachment Staff Report Item 16D
Exhibit II | 1
EXHIBIT II
FORM OF PROJECT SITE ADDENDUM
The Parties shall populate a form of this Exhibit II for each Project included within the applicable City Portfolio.
Project Name:
Type of Project: £ Generating Project £ Storage Project Project Description: [e.g., carport, rooftop, etc.]
City/Site Owner:
Tranche: £ Tranche A £ Tranche B
Property: [street address]
Project Site Information:
• Description: [to describe, including the legal description and any applicable Improvements]
• Access points needed for Developer to install and service the Project:
• Construction assumptions (if any):
• Electrical diagrams: [to be attached hereto]
• Metering information:
Delivery Point:
Generating Project Terms (if applicable):
• Guaranteed Nameplate Capacity (kW): [__]
Storage Project Terms (if applicable):
• Storage Inverter Power (kW): [as estimated prior to COD] • Storage Contract Capacity (kWh): [as estimated prior to COD] Milestone Schedule:
• Estimated Construction Start Date:
• Construction Start Deadline:
• Estimated Commercial Operation Date:
• Commercial Operation Deadline:
Attachment Staff Report Item 16D
Schedule I | 2
PSA-Specific Terms:3
1. [Buyout Option.
(a) Generally. Upon the occurrence of any Buyout Date, City shall have the right, but not the obligation, to exercise its option to purchase the Project (the “Buyout Option”) for a purchase price equal to the Fair Market Value of the Project (the “Buyout Option Price”).
To exercise such Buyout Option, City shall, not less than one hundred eighty (180) days and not more than two hundred forty (240) days prior to the proposed Buyout Date, provide written notice to Ava of City’s intent to exercise the Buyout Option with respect to the Project on such Buyout Date. Within ninety (90) days of receipt of City’s notice, Ava shall send written notice to City that sets forth the Buyout Option Price for the Project, which notice shall also include Ava’s determination of Fair Market Value and reasonably detailed documentation supporting such determination. City shall then have a period of forty five (45) days after receipt of such notice from Ava to confirm its decision to either (a) exercise the Buyout Option, (b) decline the Buyout Option or (c) dispute Ava’s determination of Fair Market Value in accordance with Section 1(c) of this PSA below.
(b) Confirmation of Buyout Option. If City confirms its exercise of the Buyout Option in writing to Ava (whether without or after an appraisal rendered in accordance with Section 1(c) below), the Parties shall perform the following actions (together, the “Buyout Option Conditions Precedent”): (1) the Parties shall execute all documents necessary to (A) transfer title to the Project to City on the Buyout Date, as-is, where-is, free and clear of all Liens arising by, through or under Ava, and (B) assign to City any manufacturer warranties, permits, interconnection agreements, as-built designs, and any other documentation reasonably requested by City for the Projects, which are in effect as of the Buyout Date, and (2) City shall pay the Buyout Option Price to Ava. Upon satisfaction of the Buyout Option Conditions Precedent, the applicable provisions of this PSA shall terminate automatically and the Project shall be withdrawn from the Agreement.
(c) Determination of Fair Market Value. If, within forty five (45) days of receipt of the Buyout Option notice described in Section 1(a) above, City disputes Ava’s determination of Fair Market Value in writing, then each Party shall, at its own cost, select an Independent Appraiser to determine the Fair Market Value of the Project under a written valuation opinion delivered to both Parties. Such valuation opinions shall consider the price that an independent third party would be willing to pay for the Project in place and in use (but not, for clarity, including any revenues expected under this Agreement) in an arm’s length transaction, as well as the age, location, size, equipment type, and anticipated duration. The Fair Market Value of the Project shall be the simple average of the two values provided in the written valuation opinions and shall be binding on the Parties for purposes of determining the Buyout Option Price.
2. Defined Terms. In addition to those terms defined in Schedule I, the following defined terms shall be deemed to apply only with respect to this PSA:
3 NTD: The PSA-Specific Terms below shall only apply to the Fremont Family Resource Center Project and shall be deleted from the PSA for all other Projects.
Attachment Staff Report Item 16D
Schedule I | 3
“Buyout Date” means, with respect to the Project, [July 1st] of each calendar year during the Delivery Period.
“Fair Market Value” means the value of the Project, as determined by an Independent Appraiser, which would be exchanged in an arms’ length transaction between an informed and willing buyer under no compulsion to buy and an informed and willing seller under no compulsion to sell; provided, however, that in such determination: (i) the Project shall be assumed to be in the condition in which it is required to be maintained and returned under this Agreement, taking into account ordinary wear and tear, and such value has not been diminished due to the existence of any damage history, which shall not include ordinary wear and tear; (ii) the Project shall be valued on an installed basis; and (iii) costs of removing the Project from the Project Site shall not be a deduction from, or addition to, such valuation.
“Independent Appraiser” means an individual who is a member of a national or regional accounting, engineering or energy consulting firm qualified by education, experience, and training to determine the value of renewable energy generation systems (with respect to the Generating Project) and battery energy storage systems (with respect to the Storage Project) of the size and age and with the operational characteristics of the Project. Except as may be otherwise agreed by the Parties, an Independent Appraiser shall not be (or within ten (10) years before his or her appoint have been) a director, officer, or employee of, or directly or indirectly retained as consultant or adviser to, either of the Parties.] Attachments:
• Attachment A: Project Site Safety & Security Requirements Attachment Staff Report Item 16D
Exhibit III | 1
EXHIBIT III
CITY-SPECIFIC TERMS
Attachment Staff Report Item 16D
Exhibit IV | 1
EXHIBIT IV
INSURANCE REQUIREMENTS
A. ENDORSEMENTS AND CONDITIONS APPLYING TO ALL PHASES
INSURANCE
Without limiting the Ava’s indemnification of the City, the Ava shall provide and maintain at its own expense, during the term of this Agreement, or phase of this Agreement if coverage is phase-specific, or as may be further required herein, the following insurance coverages and provisions:
1. REDUCTION OR LIMIT OF OBLIGATION: All insurance policies, including excess and umbrella insurance policies, shall include an endorsement and be primary and non-contributory and will not seek contribution from any other insurance (or self-insurance) available to the City. The primary and non-contributory endorsement shall be at least as broad as ISO Form 20 01 04 13. Pursuant to the provisions of this Agreement insurance effected or procured by the Ava shall not reduce or limit Ava’s contractual obligation to indemnify and defend the Indemnified Parties.
2. EVIDENCE OF COVERAGE: Before commencing operations under this Agreement, Ava shall provide Certificate(s) of Insurance and applicable insurance endorsements, in form and satisfactory to City, evidencing that all required insurance coverage is in effect. The required certificate(s) and endorsements must be sent as set forth in the notices.
The Ava shall not receive a notice to proceed with the work under this Agreement until it has obtained all insurance required and such insurance has been approved by the City. This approval of insurance shall neither relieve nor decrease the liability of the Ava.
3. DURATION OF COVERAGE: All required insurance shall be maintained during the entire term of this Agreement or phase of this Agreement to which it applies. In addition, insurance policies and coverage(s) written on a claims-made basis:
• Shall be maintained during the entire term of this Agreement or phase of this Agreement to which it applies and until 5 years following the letter of termination of this Agreement/phase of this Agreement and acceptance of all work provided under this Agreement.
• The retroactive date must be before the execution date of the contract or the beginning of contract work.
• If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the contract effective, or start of work date, the Ava must purchase extended reporting period coverage for a minimum of five (5) years after completion of work.
4. ADDITIONAL INSURED: All insurance required herein with the exception of Personal Automobile Liability, Workers’ Compensation and Employers Liability, shall be endorsed to name as additional insured: City or, its elected officials, officers, agents, employees, Attachment Staff Report Item 16D
Exhibit IV | 2
volunteers, and representatives. The Additional Insured endorsement shall be at least as broad as ISO Form Number CG 20 38 04 13.
In all cases, the additional insured endorsement shall be at least as broad as ISO Form CG 20 38 04 13.
All private property owners granting “Rights of Entry” for construction of the work shall be covered as insureds under the same coverage as provided the City as respects their ownership of the property and the work to be done thereon.
5. INSURER FINANCIAL RATING: Insurance shall be maintained through an insurer with an A.M. Best Rating of no less than A: VII or equivalent shall be admitted to the State of California unless otherwise waived by Risk Management, and with deductible amounts acceptable to the City. Acceptance of Ava’s insurance by City shall not relieve or decrease the liability of Ava hereunder. Any deductible or self-insured retention amount or other similar obligation under the policies shall be the sole responsibility of the Ava.
6. SUBCONTRACTORS: Ava shall include all subcontractors as an insured (covered party) under its policies or shall verify that the subcontractor, under its own policies and endorsements, has complied with the insurance requirements in this Agreement, including this Exhibit V. Additional Insured endorsement shall be at least as broad as ISO Form Number CG 20 38 04 13.
7. JOINT VENTURES: If Ava is an association, partnership or other joint business venture, required insurance shall be provided by one of the following methods:
• Separate insurance policies issued for each individual entity, with each entity included as a “Named Insured” (covered party), or at minimum named as an “Additional Insured” on the other’s policies.
• Coverage shall be at least as broad as in the ISO forms named above. Joint insurance program with the association, partnership or other joint business venture included as a “Named Insured”.
8. NOTICE OF CANCELLATION:
All coverage as required herein shall not be canceled or changed so as to no longer meet the specified City insurance requirements without 30 days’ prior written notice of such cancellation or change being delivered to the City or their designated agent.
9. SELF-INSURANCE:
City acknowledges that some insurance requirements contained in this Agreement may be fulfilled by self-insurance on the part of the Ava. However, this shall not in any way limit liabilities assumed by the Ava under this Agreement. Any self-insurance shall be approved in writing by City upon satisfactory evidence of financial capacity. Ava’s obligation hereunder may be satisfied in whole or in part by adequately funded self-insurance programs or self-insurance retentions. City acknowledges that some insurance Attachment Staff Report Item 16D
Exhibit IV | 3
requirements contained in this Agreement may be fulfilled by a combination of primary and excess liability policies. However, this shall not in any way limit liabilities assumed by Ava under this Agreement.
B. DESIGN PHASE INSURANCE REQUIREMENTS
Insurance required during the design phase will include:
1. Commercial General Liability Insurance for bodily injury (including death) and property damage which provides limits as follows:
a. Each occurrence -$2,000,000
b. General aggregate -$2,000,000
c. Personal Injury -$2,000,000
2. General liability coverage shall include:
a. Project Site and Operations
b. Personal Injury liability
c. Severability of interest
3. Automobile Liability Insurance
For bodily injury (including death) and property damage which provides total limits of not less than one million dollars ($1,000,000) combined single limit per occurrence applicable to all owned, non owned and hired vehicles.
4. Workers’ Compensation and Employer’s Liability Insurance a. Statutory California Workers’ Compensation coverage including broad form all states coverage.
b. Employer’s Liability coverage for not less than one million dollars ($1,000,000) per occurrence.
5. Professional Errors and Omissions Liability Insurance a. Coverage shall be in an amount of not less than two million dollars ($2,000,000) per occurrence/aggregate.
b. If coverage contains a deductible or self-retention, it shall not be greater than two hundred fifty thousand dollars ($250,000) per occurrence/event. c. Coverage as required herein shall be maintained for a minimum of three years following termination or completion of this Agreement.
Attachment Staff Report Item 16D
Exhibit IV | 4
6. Claims Made Coverage
If coverage is written on a claims’ made basis, the Certificate of Insurance shall clearly state so. In addition to coverage requirements above, such policy shall provide that:
a. Policy retroactive date coincides with or precedes the consultant’s start of work (including subsequent policies purchased as renewals or replacements). b. Policy allows for reporting of circumstances or incidents that might give rise to future claims.
C. CONSTRUCTION PHASE INSURANCE REQUIREMENTS
The following limits shall apply:
1. Commercial General Liability Insurance for bodily injury (including death) and property damage which provides limits as follows:
a. Each occurrence -$2,000,000
b. General aggregate -$4,000,000
c. Products/Completed Operations aggregate ** - $4,000,000 d. Personal Injury -$2,000,000
A minimum of 50% of each of the aggregate limits must remain available at all times unless coverage is project specific.
2. General liability coverage shall include:
a. Project Site and Operations
b. **Products/Completed Operations with limits of four million dollars ($4,000,000) per aggregate to be maintained for three (3) years following acceptance of the work by City.
c. Contractual Liability expressly including liability assumed under this Agreement.
If the Ava is working within fifty (50) feet of a railroad or light rail operation, any exclusion as to performance of operations within the vicinity of any railroad bridge, trestle, track, roadbed, tunnel, underpass or crossway shall be deleted, or a railroad protective policy provided.
d. Personal Injury liability
e. City’s and Ava’s protective liability
f. Severability of interest
Attachment Staff Report Item 16D
Exhibit IV | 5
g. Explosion, Collapse, and Underground Hazards (X, C and U) h. Broad Form Property Damage liability
3. General liability coverage shall include the following endorsements, copies of which shall be provided to City:
a. Contractual Liability Endorsement:
Insurance afforded by this policy shall apply to liability assumed by the insured under written contract with City.
b. X C & U (Explosion, Collapse and Underground) Endorsement:
Insurance afforded by this policy shall provide X, C and U Hazards coverage.
4. Automobile Liability Insurance
For bodily injury (including death) and property damage which provides total limits of not less than one million dollars ($1,000,000) combined single limit per occurrence applicable to all owned, non-owned and hired vehicles.
5. Workers’ Compensation and Employer’s Liability Insurance a. Statutory California Workers’ Compensation coverage including broad form all states coverage.
b. Employer’s Liability coverage for not less than one million dollars ($1,000,000) per occurrence.
6. Property Installation floater:
The property installation floater shall provide property damage coverage for any building, structure, machinery or equipment damaged, impaired, broken, or destroyed during the performance of the work, including during transit, installation and testing at the entity’s site. The coverage shall be in the amount of the value of the completed Project and materials.
D. OPERATIONS AND MAINTENANCE PHASE INSURANCE REQUIREMENTS The following limits shall apply:
1. Commercial General Liability Insurance - for bodily injury (including death) and property damage which provides limits as follows:
a. Each occurrence -$2,000,000
b. General aggregate -$4,000,000
Attachment Staff Report Item 16D
Exhibit IV | 6
c. Personal Injury -$2,000,000
2. General liability coverage shall include:
• Project Site and Operations
• Personal Injury liability
• Severability of interest
3. Automobile Liability Insurance
For bodily injury (including death) and property damage which provides total limits of not less than one million dollars ($1,000,000) combined single limit per occurrence applicable to all owned, non-owned and hired vehicles.
4. Workers’ Compensation and Employer’s Liability Insurance • Statutory California Workers’ Compensation coverage including broad form all-states coverage. • Employer’s Liability coverage for not less than one million dollars ($1,000,000) per occurrence.
Attachment Staff Report Item 16D
Exhibit V | 1
EXHIBIT V
NOTICES4
[City] Ava
All Notices:
Street:
City:
Attn:
Phone:
Email:
All Notices:
1999 Harrison Street, Suite 800
Oakland, CA 94612
Attn: Ava CMF
Phone: (833) 699-3223
Email: [email protected]
Reference Numbers:
Duns:
Federal Tax ID Number:
Reference Numbers:
Duns: 081103072
Federal Tax ID Number: 82-2262960
Invoices:
Attn:
Phone:
Email:
Invoices:
Attn: Ava CMF
Phone: (833) 699-3223
Email: [email protected]
With an additional copy to:
[email protected]
Payments:
Attn:
Phone:
Email:
Payments:
Attn: Ava CMF
Phone: (833) 699-3223
Email: [email protected]
With an additional copy to:
[email protected]
Wire Transfer:
BNK:
ABA:
ACCT:
Wire Transfer:
BNK: River City Bank
2485 Natomas Park Drive, Suite 100,
Sacramento, CA 95833
ABA: 121133416
Credit and Collections:
Attn:
Phone:
Email:
Credit and Collections:
Attn: Ava CMF
Phone: (833) 699-3223
Email: [email protected]
With an additional copy to:
[email protected]
4 NTD: Please note that we plan to redact financial information prior to submitting this PPA to the public record.
Attachment Staff Report Item 16D
Exhibit IV | 2
[City] Ava
Emergency Contact:
Attn:
Phone:
Email:
Emergency Contact:
Attn: Ava CMF
Phone: (833) 699-3223
Email: [email protected]
With additional Notices of an Event of
Default to:
Attn:
Phone:
Email:
With additional Notices of an Event of
Default to:
Attn: Ava CMF
Phone: (833) 699-3223
Email: [email protected]
With an additional copy to:
[email protected]
Attachment Staff Report Item 16D
Exhibit V | 1
EXHIBIT VI
AVA TERMINATION PAYMENT SCHEDULE
Attachment Staff Report Item 16D
Exhibit V | 1
EXHIBIT VII
CITY TERMINATION PAYMENT SCHEDULE
Attachment Staff Report Item 16D
Draft 2024.10.29
ASSET PURCHASE AGREEMENT
by and among
[AVA COMMUNITY ENERGY]
and
[GREEN BRIDGE]
dated as of [Date]
Attachment Staff Report Item 16E
TABLE OF CONTENTS
Page
-i-ARTICLE I Definitions .................................................................................................................. 1
1.1 Definitions. .......................................................................................................... 1 ARTICLE II PURCHASE AND SALE OF PROJECT ASSETS; CLOSING ............................ 11
2.1 Purchase and Sale of .......................................................................................... 11
2.2 Assumed Liabilities ........................................................................................... 11
2.3 Excluded Liabilities ........................................................................................... 11
2.4 Payments ........................................................................................................... 12
2.5 Documentation .................................................................................................. 12
2.6 Withholding ....................................................................................................... 12 ARTICLE III CLOSING; CLOSING DELIVERIES; CONDITIONS PRECEDENT ................ 12
3.1 Closing. .............................................................................................................. 12
3.2 Conditions Precedent. ........................................................................................ 15
3.3 Satisfaction of Conditions ................................................................................. 17 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF Seller ..................................... 17
4.1 Organization, Authority and Qualification.. ...................................................... 17
4.2 Interests in Project Assets .................................................................................. 17
4.3 No Conflicts ...................................................................................................... 17
4.4 Consents and Approvals .................................................................................... 18
4.5 Litigation ........................................................................................................... 18
4.6 Compliance with Laws; Permits. ....................................................................... 18
4.8 Real Property ..................................................................................................... 18
4.9 Material Contracts ............................................................................................. 20
4.10 Brokers .............................................................................................................. 20
4.11 Title to Assets .................................................................................................... 20
4.12 Intellectual Property .......................................................................................... 20
4.13 Environmental Matters ...................................................................................... 20
4.14 Disclaimer ......................................................................................................... 21
4.15 Insurance.. ......................................................................................................... 21
4.16 Reports. .............................................................................................................. 21
4.17 Seller Credit Support Obligations.. ................................................................... 21
4.18 Sufficiency of Project Assets. ........................................................................... 21 ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER .................................. 22
5.1 Organization and Authority of Buyer ................................................................ 22
5.2 No Conflicts ...................................................................................................... 22
5.3 Consents and Approvals .................................................................................... 22
5.4 Litigation ........................................................................................................... 22
5.5 Brokers .............................................................................................................. 22
5.6 Solvency; Fraudulent Conveyance .................................................................... 22
5.7 Investigation by Buyer ...................................................................................... 23
5.8 Disclaimer ......................................................................................................... 23 Attachment Staff Report Item 16E
TABLE OF CONTENTS
(continued)
Page
-ii-ARTICLE VI COVENANTS AND AGREEMENTS ................................................................. 23
6.1 Further Assurances; Post-Closing Cooperation ................................................ 23
6.2 Books and Records; Access. ............................................................................. 24
6.3 Solicitation of Other Bids. ................................................................................. 24
6.4 Transfer Taxes ................................................................................................... 25 ARTICLE VII INDEMNIFICATION AND SURVIVAL ........................................................... 25
7.1 Survival of Representations, Warranties, Covenants and Agreements ............. 25
7.2 Indemnification. ................................................................................................ 25
7.3 Indemnity Procedures ........................................................................................ 26
7.4 Tax Effect .......................................................................................................... 28
7.5 Insurance Offset ................................................................................................ 28
7.6 Subrogation ....................................................................................................... 28
7.7 Exclusivity ......................................................................................................... 28
7.8 Mitigation .......................................................................................................... 28 ARTICLE VIII TERMINATION AND REPURCHASE OBLIGATION .................................. 29
8.1 Termination. ...................................................................................................... 29
8.2 Notice of Termination ....................................................................................... 29
8.3 Effect of Termination. ....................................................................................... 29 ARTICLE IX MISCELLANEOUS .............................................................................................. 30
9.1 Assignment ........................................................................................................ 30
9.2 Limitation of Liability ....................................................................................... 30
9.3 Confidentiality ................................................................................................... 30
9.4 Public Announcements ...................................................................................... 31
9.5 Expenses ............................................................................................................ 31
9.6 Severability ........................................................................................................ 31
9.7 No Third-Party Beneficiaries ............................................................................ 31
9.8 Waiver ............................................................................................................... 32
9.9 Governing Law .................................................................................................. 32
9.10 Jurisdiction ........................................................................................................ 32
9.11 Waiver of Jury Trial .......................................................................................... 32
9.12 Headings ............................................................................................................ 32
9.13 Counterparts ...................................................................................................... 32
9.14 Notices ............................................................................................................... 32
9.15 Construction ...................................................................................................... 33
9.16 Disclosure Schedule .......................................................................................... 33
9.17 Entire Agreement .............................................................................................. 34 Exhibit A Form of Bill of Sale and Assignment Agreement Exhibit B Reserved
Attachment Staff Report Item 16E
TABLE OF CONTENTS
(continued)
Page
-iii-Exhibit C Form of Engineering, Procurement and Constructions Terms and Conditions Exhibit D Form of Estoppel
Exhibit E Form of Power Purchase Agreement
Exhibit F Form of Project Information Summary
Attachment Staff Report Item 16E
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of [___] (the “Signing Date”), is made and entered into by and between [AVA COMMUNITY ENERGY], a [___] (“Seller”) and [GREEN BRIDGE], a [____] (“Buyer”). Capitalized terms not otherwise defined herein have the meanings set forth in Section 1.1 hereof.
RECITALS
WHEREAS, Seller owns, beneficially and of record the Project Assets (as defined below); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the right, title and interest in and to the Project Assets (as defined below) pursuant to the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows.
AGREEMENT
ARTICLE I
DEFINITIONS
1.1 Definitions.
(a) Defined Terms. As used in this Agreement, the following defined terms have the meanings indicated below:
“Acquisition Proposal” has the meaning ascribed to it in Section 6.3. “Actions” means any action, audit, suit, litigation, hearing, assessment, dispute, proceeding, mediation, arbitration, investigation, or other similar action of or before any Governmental Authority (in each case, whether civil, criminal or administrative). “Affiliate” means as to an entity, any other entity that, directly or indirectly, owns or controls, is owned or controlled by or is under common ownership or control with such entity. For the purposes of this definition, “control” and its derivatives mean, with respect to any entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities or otherwise. “Agreement” means this Asset Purchase Agreement, the Disclosure Schedules and Exhibits hereto, as amended, modified or supplemented from time to time. “ALTA Survey” means an ALTA/NSPS Land Title Survey (which shall include an overlay of the approved site plan of the Project and any other approved improvements, structures or Attachment Staff Report Item 16E
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Encumbrances to be located on the Project Real Property) meeting the “2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys”, all in a form and substance reasonably acceptable to Buyer.
“Bankruptcy” means, with respect to a Person, that such Person (a) commences a voluntary case under the Bankruptcy Code; (b) files a petition seeking to take advantage of any Bankruptcy Laws; (c) consents to or fails to contest in a timely and appropriate manner any petition filed against it in an insolvency case under the Bankruptcy Laws; (d) applies for, or consents to or fails to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or the like of itself or of a substantial part of its assets; (e) admits in writing its inability to pay, or generally not paying, its debts (other than those that are the subject of bona fide disputes) as they become due; (f) makes a general assignment for the benefit of creditors other than in the ordinary course of business; (g) takes any action for the purpose of effecting any of the foregoing; or (h) has a case or other proceeding commenced by a third party against it seeking (i) relief under any Bankruptcy Laws or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of such Person of all or any substantial part of its assets, and such case or proceeding continues undismissed or unstayed for a period of sixty (60) days.
“Bankruptcy Code” means Title 11 of the United States Code, as amended from time to time, or any similar federal or state law for the relief of debtors. “Bankruptcy Laws” means the Bankruptcy Code and all other liquidation, bankruptcy, assignment for the benefit of creditors, conservatorship, moratorium, receivership, insolvency, rearrangement, reorganization or similar debtor relief Laws of the United States or other applicable jurisdictions in effect from time to time.
“Base Purchase Price” means [_______________________] dollars ($[ ]). “Books and Records” means all books, records, ledgers, reports, plans and files, documents, correspondence, studies, and other similar materials that are maintained by, or for, the Project, whether in hard-copy or electronic form; provided, however, that Books and Records do not include any information relating to bids received in connection with the transactions contemplated by this Agreement or information and analysis (including financial analysis) relating to such bids or any other information relating to Seller’s preparation or negotiation of this Agreement, any marketing and advertising materials, or any investment or financing matters. “Business Day” means any day other than a Saturday, Sunday or a legal holiday in the State of [_________________].
“Buyer” has the meaning ascribed to such term in the preamble of this Agreement. “Buyer Burdensome Condition” means any requirement, term, obligation, condition or other measure imposed on Buyer, its Affiliates, or any of the Project Assets by a Governmental Authority in connection with any Required Approval or Project Permit that, individually or in the aggregate with all other such requirements, terms, obligations, conditions or other measures, (a) requires Buyer to sell or divest any of the Project Assets or other assets or businesses of Buyer or any of its Affiliates, (b) would reasonably be expected to be adverse to Buyer’s ability to construct Attachment Staff Report Item 16E
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or operate the Project Assets or other assets or businesses of Buyer or any of its Affiliates in any material respect, including with respect to cost, (c) would prohibit or limit the ownership, leasing, licensing, construction, operation, or maintenance of any portion of the Project Assets or other assets or businesses of Buyer or any of its Affiliates, or (d) would otherwise reasonably be expected to have a Material Adverse Effect on the Project or Buyer. “Buyer Conditions Precedent” has the meaning ascribed to such term in Section 3.2.2. “Buyer Indemnitees” has the meaning ascribed to such term in Section 7.2(a). “Buyer’s Knowledge” means the actual knowledge of the individuals listed in Schedule 1.1(a).
“Change” has the meaning ascribed to such term in the definition of “Material Adverse Effect” below.
“Change Order” has the meaning ascribed to such term in the EPCA. “Claim Limit” has the meaning ascribed to such term in Section 7.2(c)(iii). “Claim Notice” means written notification pursuant to Section 7.3 of a Third-Party Claim as to which indemnity under Section 7.2 is sought by an Indemnified Party, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third-Party Claim and for the Indemnified Party’s claim against the Indemnifying Party under Section 7.2, together with the amount or, if not then reasonably determinable, the estimated amount, determined in good faith, of the Loss arising from such Third-Party Claim.
“Claim Threshold” has the meaning ascribed to such term in Section 7.2(c)(iii). “Closing” has the meaning ascribed to such term in Section 3.2.1. “Closing Date” has the meaning ascribed to such term in Section 3.2.1. “Code” means the U.S. Internal Revenue Code of 1986, as amended. “Confidential Information” means all information, data, documents, agreements, files, and other materials (in any form or medium of communication, including whether disclosed orally or disclosed or stored in written, electronic, or other form or media) whether or not marked or otherwise identified as “confidential,” which is obtained from or disclosed by or on behalf of the Seller or its Representatives or otherwise, and whether obtained before or after the date hereof relating directly or indirectly to the Project, including, without limitation, all notes, analyses, compilations, reports, forecasts, data, studies, samples, interpretations, summaries, and other documents and materials (in any form or medium of communication, whether oral, written, electronic, or other form or media) prepared by or for the Buyer which contain or otherwise reflect such information, data, documents, agreements, files, or other materials. The term “Confidential Information” as used herein does not include information that: (i) at the time of disclosure or thereafter is generally available to and known by the public (other than as a result of its disclosure directly or indirectly by the Buyer or its Representatives in violation of this Agreement); (ii) was Attachment Staff Report Item 16E
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available to the Buyer on a non-confidential basis from a source other than the Seller or its Representatives, provided that such source, to the Buyer’s Knowledge, is not and was not bound by a confidentiality agreement with respect to such information or otherwise prohibited from transmitting such information by a contractual, legal, or fiduciary obligation; (iii) was in the Buyer’s possession before receiving such information from the Seller, provided that such information, to the Buyer’s Knowledge is not and was not subject to another confidentiality agreement and is not and was not prohibited from being disclosed by any other contractual, legal, or fiduciary obligation; or (iv) has been independently acquired or developed by the Buyer without reference to the Confidential Information and without violating any of its obligations under this Agreement.
“Consent” means any consent, approval, authorization, consultation, waiver, permit, grant, agreement, certificate, exemption, order, registration, declaration, filing, notice of, with or to any Person or under any Law, in each case required to permit the consummation of the Transactions. “Consumer” shall mean a natural person party to a Consumer Agreement who leases, or agrees to purchase energy produced by, a Project.
“Consumer Agreement” means, with respect to a Project, the PPA, lease agreement, or other financing agreement between a Consumer and Seller, together with all ancillary agreements and documents thereto, each as attached to the applicable Work Order. “Contract” means any written loan or credit agreement, bond, debenture, note, mortgage, indenture, lease, supply agreement, license agreement, development agreement or other contract, agreement, obligation, commitment or instrument that is legally binding, including all amendments thereto.
“Data Room” shall mean the virtual data room hosted by [___________] to which Seller has been given access by Buyer.
“Disclosure Schedules” has the meaning ascribed to such term in the preamble to Article IV.
“Dollar” means such currency of the United States that at the time of payment shall be legal tender for the payment of public and private debts. “Easements” means easements, rights-of-way, licenses, occupancy or encroachment permits, or similar entitlements which are used, or to be used, for or in the development, construction, ownership, operation, use or maintenance of the Project. “Encumbrance” means any encumbrance, Lien, charge, pledge, mortgage, title retention agreement, security interest of any nature, adverse claim, exception, reservation, easement, right of occupation, any matter capable of registration against title, option, right of pre-emption or privilege or any agreement or other commitment, whether written or oral, to create any of the foregoing (excluding restrictions on transfer arising under securities Laws). “Environmental Laws” shall mean all present and future Laws pertaining to or imposing liability or standards of conduct concerning environmental protection, human health and safety, Attachment Staff Report Item 16E
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contamination or clean-up or the use, handling, generation, release or storage of Hazardous Material, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, the Resource Conservation and Recovery Act, as amended, the Emergency Planning and Community Right-to-Know Act of 1986, as amended, the Hazardous Substances Transportation Act, as amended, the Solid Waste Disposal Act, as amended, the Clean Water Act, as amended, the Clean Air Act, as amended, the Toxic Substances Control Act, as amended, the Safe Drinking Water Act, as amended, the Occupational Safety and Health Act, as amended (to the extent relating to human exposure to Hazardous Materials), the National Environmental Policy Act, as amended, and all analogous state or local statutes, any state superlien Law and environmental clean-up Laws and all regulations adopted in respect of the foregoing Laws whether now or hereafter in effect. [“EPCA” means that certain Engineering, Procurement and Constructions Terms and Conditions, by and between Seller and [___], substantially in the form of Exhibit C attached hereto, and together with the applicable Work Orders, for the installation of each Project.] “FERC” means the Federal Energy Regulatory Commission, and any successor agency. “Final Completion” has the meaning ascribed to such term in the EPCA. “Fundamental Representations” means those representations and warranties contained in Section 4.1 (Organization, Authority and Qualification), Section 4.2 (Interests in Project Assets), Section 4.10 (Brokers), Section 4.11 (Title to Assets), Section 5.1 (Organization and Authority of Buyer), Section 5.5 (Brokers), Section 5.6 (Solvency; Fraudulent Conveyance), and Section 5.7 (Investigation by Buyer).
“GAAP” means United States generally accepted accounting principles consistently applied from period to period and throughout any period in accordance with the past practices of Seller.
“Governmental Authority” means any federal, state, local or other governmental, regulatory or judicial agency, authority, or other entity having legal jurisdiction over the Project or the Parties. For the purposes of this Agreement, homeowners’ or property owners’ associations are considered entities having legal jurisdiction over the Project. “Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered or issued by or with any Governmental Authority. “Hazardous Material” means any substance, element, compound or mixture, whether solid, liquid or gaseous: (a) which is defined as “solid waste,” “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic substance,” or a word, term, or phrase of similar meaning or regulatory effect under any Environmental Law or is otherwise regulated under any Environmental Law; (b) which is otherwise hazardous and is subject to regulation by any Governmental Authority; (c) petroleum hydrocarbons or any petroleum product; (d) polychlorinated biphenyls (PCBs); (e) asbestos-containing materials; (f) radioactive materials; (g) lead; (h) mold; (i) mycotoxin; (j) urea formaldehyde foam insulation; (k) radon gas; (l) any solid waste or waste or substance that is listed, defined, designated or classified as, or otherwise Attachment Staff Report Item 16E
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determined by any Environmental Law to be, ignitable, corrosive, radioactive, dangerous, toxic, explosive, infectious, radioactive, mutagenic or otherwise hazardous. “Indemnified Party” means any Person claiming indemnification under any provision of Article VII.
“Indemnifying Party” means any Person against whom a claim for indemnification is being asserted under any provision of Article VII.
“Indemnity Notice” means written notification pursuant to Section 7.3(b) of a claim for indemnity under Article VII by an Indemnified Party, specifying the nature of and basis for such claim, together with the amount or, if not then reasonably determinable, the estimated amount, determined in good faith, of the Loss arising from such claim. “Intellectual Property” means all intellectual property rights of every type, including all United States and foreign: (a) trademarks, service marks, trade names, Internet domain names, designs, logos, slogans and general intangibles of like nature, together with goodwill, registrations and applications relating to the foregoing; (b) patents and patent applications; (c) copyrights and copyright applications and registrations; and (d) trade secrets and other confidential information, technology, know-how, inventions, processes, formulae, algorithms, models and methodologies. “Law” means any United States federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order, other requirement or rule of law. “Leasehold Title Policy” means with respect to Seller’s leasehold interest in the Project Real Property, an ALTA owner’s title insurance policy issued by the Title Company, in the amount of the Base Purchase Price and together with such endorsements, and otherwise in such form, as Buyer may require in its sole and absolute discretion.
“Liabilities” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, known or unknown, matured or unmatured or determined or determinable, including those arising under any Law, Action or Governmental Order and those arising under any Contract, arrangement or undertaking (but excluding any future performance obligations under any such Contracts, arrangements or undertakings).
“Lien” means any mortgage, pledge, deed of trust, hypothecation, assignment, deposit arrangement, charge, security interest, encumbrance, lien (statutory or other), or other security agreement of any kind or nature whatsoever, any conditional sale or other title retention agreement, or any financing lease having substantially the same effect as any of the foregoing. “Loss” means any and liabilities (including liabilities arising out of the application of the doctrine of strict liability), obligations, losses, damages, penalties, fines, claims, penalties, actions, suits, judgments, costs, expenses and disbursements, (including reasonable legal, accounting, and engineering fees and expenses and reasonable costs of investigation), of whatsoever kind and nature, including those resulting from property injury, bodily injury, or death, in each case whether or not involving a third party claim.
Attachment Staff Report Item 16E
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“Made Available” means posted to, and not removed from, the Data Room, as of one Business Day prior to the Closing Date; provided, however, that any documents or information that Buyer is required to provide to the Seller in order for Buyer’s representation in Section 4.9 to be true, correct and complete shall be deemed to have been “Made Available” to Buyer for purposes of this Agreement.
“Material Adverse Effect” means any change, effect, event, occurrence, state of facts or development (each, a “Change”) that individually or in the aggregate is materially adverse to the business, financial condition or results of operations of the Project or Project Assets; provided, however, that none of the following shall be deemed (either alone or in combination) to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect: (a) any Change attributable to the execution of this Agreement, the disclosure or consummation of the Transactions, the taking of any action contemplated thereby, or the identity of Buyer, (b) any Change arising from or relating to any existing event, occurrence, state of facts or development with respect to which the Buyer has knowledge as of the date hereof (including any matter set forth in the Disclosure Schedules), (c) any Change in, or effects arising from or relating to, general business or economic conditions affecting the industry in which the Project operates, including, without limitation, changes in wholesale and/or utility electricity prices or renewable energy credits, (d) any Change in, or effects arising from or relating to, national or international political or social conditions, (e) any pandemic or outbreak of disease (including COVID-19 or any other coronavirus), (f) any Change in, or effects arising from or relating to, financial, banking, or securities markets, (g) any Change in, or effects arising from or relating to, changes in GAAP or Laws, (h) any Change in, or effects arising from or relating to, any seasonal fluctuations in the business, including, without limitation, changes in wholesale and/or utility electricity prices or renewable energy credits; or (i) any failure of Seller to achieve any projections, forecasts, estimates, plans, predictions, performance metrics or operating statistics, provided that the underlying facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of Material Adverse Effect may be taken into account in determining whether there has been a Material Adverse Effect; provided, however, that any such adverse effect described in the preceding clauses (c) through (f) shall be excluded only to the extent that such adverse effect does not disproportionately affect Seller relative to other Persons engaged in the industries in which Seller operates. “Material Contracts” means each of the EPCA, the Work Orders, the Consumer Agreements, and all interconnection Contracts for electricity. “NTP Fee Payment” has the meaning set forth in the Project Information Summary and represents the payment by Buyer to Seller in consideration of the Project Assets at Closing in an amount equal to one hundred percent (100%) of the Base Purchase Price. “Parties” means Buyer and Seller collectively, and each of them may be referred to as a “Party”.
“Permits” means each and every national, regional and local license, authorization, certification, filing, recording, permit or other approval with or of any Governmental Authority, including each and every environmental, land use, construction or operating permit and any agreement, consent or approval from or with any Governmental Authority that is required by any Attachment Staff Report Item 16E
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Law or that is otherwise necessary for the performance of the installation or for operation, maintenance and use of a Project.
“Permitted Encumbrances” means (a) Encumbrances imposed by law such as carriers’, warehouseman’s, mechanics’, materialmen’s, landlords’, laborers’ suppliers’ and vendors’ liens and other statutory liens securing obligations which are not yet delinquent or the validity of which are being contested in good faith by appropriate actions; (b) Encumbrances for Taxes, assessments and other governmental charges not yet delinquent or the validity of which are being contested in good faith by appropriate actions; (c) deposits to secure utility interconnection, the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business consistent with past practice; (d) all matters of record, reciprocal easement agreements and other encumbrances on title to real property that are disclosed on the title commitment and survey that were delivered to Buyer by Seller prior to the date of this Agreement and that do not and would not be reasonably expected to, individually or in the aggregate, materially impair the value of, or materially impair the construction or operation of the Project or the Project Real Property; (e) all applicable zoning, entitlement, conservation restrictions, land use restrictions and other governmental rules and regulations (other than any such Encumbrances created or enforceable due to a breach or violation of, or non-compliance with, any such ordinances, codes or other Law); (f) existing utility, access and other easements and rights of way of record; and (g) Encumbrances identified in Schedule 7.1. “Person” means an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity, or a Governmental Authority.
“Post-Closing Tax Period” means any Tax period or portion thereof that begins the day after the Closing Date.
“PPA” means that certain [Power Purchase Agreement], by and between the [Company] and [___], substantially in the form of Exhibit E attached hereto. “Pre-Closing Tax Period” means any Tax period or portion thereof ending before the Closing Date (including the portion of any Straddle Period ending on the day preceding the Closing Date).
“Project” shall mean a ground mount or rooftop photovoltaic system including photovoltaic panels, racking systems, wiring and other electrical devices, conduit, weatherproof housings, hardware, inverters, remote operating equipment, connectors, meters, disconnects, over current devices and battery storage (including any replacement or additional parts included from time to time) and, unless the context otherwise requires a reference to such ground-mount or rooftop photovoltaic system only, shall include the applicable Consumer Agreement and/or Utility Program Agreement related to such photovoltaic system and all other related rights, Permits and manufacturer, installer and other warranties applicable thereto. “Project Assets” means all assets, properties, rights and interests of every kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible, and whether at or deliverable to the Project Site), owned, entered into or leased by, or licensed to Seller, Attachment Staff Report Item 16E
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as of the specified date, in each case, which relate to or are used or held for use in connection with the Project, as set forth in Schedule 1.1(c) attached hereto. “Project Capacity” has the meaning ascribed thereto in the Project Information Summary and refers to the design energy production capacity of the Project, as applicable, specified in direct and alternating current.
“Project Information Summary” means the information set forth in Exhibit F. “Project Real Property” means the leasehold interests, easement interests, or other real property interests of Seller acquired pursuant to a Real Property Agreement. “Project Real Property Owner” means the landlord or grantor that is the party to the applicable Real Property Agreement or the Person obtaining title or rights to the Project Real Property from such Person subsequent to the execution and recording of a memorandum of the applicable Real Property Agreement.
“Project Site” means the Project Real Property upon which the Project will be located. “Purchase Price” means the result of (a) the Base Purchase Price, plus (b) any Change Order adjustments.
“Real Property Agreements” means, with respect to a Project, any contract to which the applicable Project Company is party that grants to such Project Company a real property interest in the applicable Project Site or that memorializes such real property interest in the applicable land records, in form and substance satisfactory to Buyer.
“Reports” means the reports listed in the Project Information Summary. “Representatives” means the directors, officers, employees, agents or advisors (including, without limitation, attorneys, accountants, consultants, bankers and financial advisors) of Seller and Buyer and their Affiliates.
“Required Approvals” means the Consents set forth in Schedule 4.4. “Required Permits” means the Permits set forth in Schedule 3.3(e). “Seller” has the meaning ascribed to such term in the preamble of this Agreement. “Seller Conditions Precedent” has the meaning ascribed to such term in Section 3.2.3. “Seller Indemnitees” has the meaning ascribed to such term in Section 7.2(b). “Seller’s Knowledge” or “Knowledge of Seller” means the actual knowledge, after reasonable inquiry and investigation (as opposed to any constructive or imputed knowledge) of the individuals listed in Schedule 1.1(b).
“Signing Date” has the meaning ascribed to such term in the preamble of this Agreement.
Attachment Staff Report Item 16E
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“SNDA” means a subordination, non-disturbance and attornment agreement to be entered into by and among, if applicable, Buyer, the Project Real Property Owner and any mortgagor parties.
“Subsidiaries” means, as of the relevant date of determination, with respect to any Person, a corporation, limited liability company or other Person of which 50% or more of the voting power of the outstanding voting equity securities or 50% or more of the outstanding economic equity interest is held, directly or indirectly, by such Person. “Substantial Completion” has the meaning ascribed to such term in the EPCA. “Substantial Completion Date” has the meaning ascribed to such term in the EPCA. “Taxes” means any federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, ad valorem, stamp, occupation, windfall or other profits, environmental (under Section 59A of the Code), customs, assessments, charges, duties, tariffs, fees, levies, real property, personal property, capital stock, employment, social security (or similar), unemployment, disability, payroll, license, employee or other withholding taxes (together with any interest, penalties, additional amounts or additions to tax in respect of the foregoing).
“Taxing Authority” means any agency or political subdivision of any federal, foreign, state, local or municipal government entity with the authority to impose any Tax. “Tax Return” means any report, return, document, declaration or other information or filing required to be supplied to any Taxing Authority or jurisdiction (foreign or domestic) with respect to Taxes.
“Third-Party Claim” has the meaning ascribed to such term in Section 7.3(a). “Title Company” means [___].
“Transactions” means the transactions contemplated by or effectuated pursuant to this Agreement, the Assignment of Project Assets substantially in the form of Exhibit A attached hereto, and any other transactions reasonably contemplated or effectuated hereunder or thereunder. “Transfer Taxes” has the meaning ascribed to such term in Section 6.4. “Treasury Regulations” means the United States Treasury Regulations promulgated under the Code.
“Utility” means [___].
“Utility Program Agreement” means any interconnection, tariff or other program operated or provided by the Utility by which the Project receives payment for Project-generated electricity, renewable energy credits or other credits for energy supply to or for the benefit of customers.
Attachment Staff Report Item 16E
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“Work” has the meaning ascribed to such term in the EPCA. “Work Order” means those certain work orders issued pursuant to and defined in the EPCA.
ARTICLE II
PURCHASE AND SALE OF PROJECT ASSETS; CLOSING
2.1 Purchase and Sale of Project Assets. Upon and subject to the terms and conditions set forth in this Agreement and in consideration of the NTP Fee Payment, Seller shall sell, assign, convey and transfer at the Closing to Buyer, and Buyer shall purchase, acquire and accept at the Closing from Seller, all of the right, title and interest of Seller in and to the Project Assets, so that upon the Closing, Buyer shall own, directly, all of the Project Assets free and clear of all Encumbrances or other limitations whatsoever except for applicable restrictions on Buyer’s ability to transfer under federal and state securities laws.
2.2 Assumed Liabilities. Subject to the terms and conditions set forth herein, Buyer shall assume and agree to pay, perform and discharge only the following Liabilities of Seller (collectively, the “Assumed Liabilities”), and no other Liabilities: all Liabilities in respect of the Material Contracts that are included in the Project Assets but only to the extent that such Liabilities thereunder are required to be performed after the Closing Date, were incurred in the ordinary course of business and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by Seller on or prior to the Closing.
2.3 Excluded Liabilities. Notwithstanding the provisions of Section 2.2 or any other provision in this Agreement to the contrary, Buyer shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Seller or any of its Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (the “Excluded Liabilities”). Seller shall, and shall cause each of its Affiliates to, pay and satisfy in due course all Excluded Liabilities which they are obligated to pay and satisfy. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited to, the following:
(a) any Liabilities of Seller arising or incurred in connection with the negotiation, preparation, investigation and performance of this Agreement, any ancillary agreements and the transactions contemplated hereby and thereby, including, without limitation, fees and expenses of counsel, accountants, consultants, advisers and others; (b) any Liability for (i) Taxes of Seller or relating to the Project, the Project Assets or the Assumed Liabilities for any Pre-Closing Tax Period; (ii) Taxes that arise out of the consummation of the transactions contemplated hereby or that are the responsibility of Seller pursuant to Section 6.4; or (iii) other Taxes of Seller of any kind or description (including any Liability for Taxes of Seller that becomes a Liability of Buyer under any common law doctrine of de facto merger or transferee or successor liability or otherwise by operation of contract or Law); (c) any Liabilities relating to or arising out of the Excluded Assets; (d) any Liabilities in respect of any pending or threatened Action arising out of, relating to or otherwise in respect of the operation of the Project or the Project Assets to the extent such Action relates to such operation on or prior to the Closing Date; Attachment Staff Report Item 16E
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(e) any Liabilities of Seller arising under or in connection with any Benefit Plan providing benefits to any present or former employee of Seller; (f) any Liabilities of Seller for any present or former employees, officers, directors, retirees, independent contractors or consultants of Seller, including, without limitation, any Liabilities associated with any claims for wages or other benefits, bonuses, accrued vacation, workers' compensation, severance, retention, termination or other payments; (g) any Environmental Claims, or Liabilities under Environmental Laws, to the extent arising out of or relating to facts, circumstances or conditions existing on or prior to the Closing or otherwise to the extent arising out of any actions or omissions of Seller; (h) any Liabilities associated with debt, loans or credit facilities of Seller and/or the Project owing to financial institutions; and
(i) any Liabilities arising out of, in respect of or in connection with the failure by Seller or any of its Affiliates to comply with any Law or Governmental Order.
2.4 Payments. In consideration of the purchase by Buyer and sale by Seller and its Affiliates of the Project Assets and the other matters set forth herein, on the Closing Date, Buyer shall pay Seller an amount equal to the NTP Fee Payment as set forth in Project Information Summary, which shall be paid by Buyer to Seller in United States Dollars by wire transfer of immediately available funds to the bank account designated by Seller by written notice to Buyer.
2.5 Documentation. Seller agrees to provide Buyer with a receipt, confirmation or other appropriate documentation reasonably requested by Buyer from time to time in order to evidence payments made by Buyer to Seller and for payments made pursuant to this Agreement.
2.6 Withholding. Notwithstanding any other provision of this Agreement, and acknowledging that absent a change in Tax law the Parties believe that withholding will not apply to amounts payable under this Agreement, Buyer shall be entitled to deduct and withhold from any amount otherwise payable pursuant to this Agreement such amounts as Buyer is required to deduct and withhold under any provision of the Code or any applicable Law. Any such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding was made.
ARTICLE III
CLOSING; CLOSING DELIVERIES; CONDITIONS PRECEDENT
3.1 Closing.
3.1.1 Closing Date. The consummation of the purchase by Buyer, and the sale by Seller, of the Project Assets (the “Closing”) shall take place (electronically) at such place as the Parties mutually determine, as soon as practicable but in no event later than the third (3rd) Business Day after the satisfaction or waiver of the Buyer Conditions Precedent and Seller Conditions Precedent (other than those conditions to be satisfied or waived at the Closing) or such other date and place as the Parties shall mutually agree (the “Closing Date”). The Closing shall be effective as of 11:59:59 P.M., Eastern Time, on the Closing Date. Documents to be delivered at the Closing Attachment Staff Report Item 16E
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shall be delivered to the place of Closing by electronic transmission on the Closing Date. Each of Buyer and Seller shall further deliver such other evidence, instruments, documents and certificates required to be delivered by such Parties pursuant to this Article III.
3.1.2 Buyer’s Closing Deliveries. At the Closing, Buyer shall deliver, or cause to be delivered, to Seller all of the following, in form and substance reasonably acceptable to Seller:
(a) the NTP Fee Payment, to an account or accounts designated in writing by Seller prior to Closing;
(b) a certificate, dated as of the Closing Date, executed by a duly authorized officer of Buyer, certifying as to the matters set forth in Sections 3.2.3(a) and 3.2.3(b); (c) a certificate, dated as of the Closing Date, executed by a duly authorized officer of Buyer certifying that: (i) the Buyer has duly authorized the execution, delivery and performance by Buyer of this Agreement and the Transactions and the resolutions effecting such authorization remain in full force and effect as of the Closing Date, (ii) a true, accurate and complete copy of the resolutions of the Buyer duly authorizing the execution, delivery and performance by Buyer of this Agreement, and the Transactions, and that such resolutions are in full force and effect as of the Closing Date, and (iii) attached thereto is evidence of the incumbency of Buyer’s officers or managers that executed this Agreement, any other agreement delivered on the Closing Date, and any certificate delivered in connection with the Closing; and (d) a counterpart signature page to the Assignment of Project Assets, duly executed by Buyer substantially in the form of Exhibit A attached hereto.
3.1.3 Seller’s Closing Deliveries. At the Closing, Seller shall deliver, or cause to be delivered, to Buyer all of the following, in form and substance reasonably acceptable to Buyer:
(a) A Bill of Sale and Assignment Agreement for all Project Assets and Assumed Liabilities substantially in the form of Exhibit A attached hereto, duly executed by Seller, including duly executed transfer documentation in respect of the Project Assets as may be reasonably requested by Buyer;
(b) a certificate, dated as of the Closing Date, executed by a duly authorized officer or manager of Seller, certifying as to the matters set forth in Sections 3.2.2(a), 3.2.2(b) and
3.2.2(c);
(c) for the Seller, a certificate, dated as of the Closing Date, executed by a duly authorized signatory of Seller, certifying that: (i) attached thereto is a true, accurate and complete copy of Seller’s Joint Powers Agreement and certifying that the Joint Powers Agreement remains in full force and effect, (ii) a true, accurate and complete copy of the resolutions of the Board of Directors of Seller duly authorizing the execution, delivery and performance by Seller of this Agreement, and the Transactions, and that such resolutions are in full force and effect as of the Closing Date, and (iii) the incumbency of Seller’s officers or managers that executed the Agreement, any other agreement delivered on the Closing Date, and any certificate delivered in connection with the Closing;
Attachment Staff Report Item 16E
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(d) except as set forth on Schedule 3.3(e), evidence that each Governmental Authority having jurisdiction with respect to the Project has approved the Project and issued all applicable Permits for the Project, in each case in a form and substance reasonably satisfactory to Buyer, that is final and non-appealable, and which remains in full force and effect; (e) copies of all construction milestone certificates for the Project pursuant to the EPCA that have been obtained as of the Closing Date; (f) certification of non-foreign status, in the form and manner which complies with the requirements of Section 1445(b)(2) of the Code and Treasury Regulations Section 1.1445- 2(b)(2) with respect to Seller (and its direct or indirect regarded owner, as applicable); (g) for Seller, a properly completed and executed IRS Form W-9, dated as of the Closing Date and certifying that Seller is not subject to backup withholding; (h) [a Phase I environmental report for such Project, or reliance letter related thereto, dated within one hundred eighty (180) days of the Closing Date, in form and substance reasonably satisfactory to Buyer;
(i) an ALTA Survey for the Project, dated within thirty (30) days of the Closing Date and certified to Seller, Buyer and the Title Company; (j) an executed estoppel from each Project Real Property Owner to a Real Property Agreement, dated within ten (10) days of the Closing Date, substantially in the form of Exhibit D;
(k) a copy of a geotechnical report or pile load testing report for the Project, in form and substance reasonably satisfactory to Buyer;
(l) a Leasehold Title Policy in accordance with Section 4.8.1; (m) title affidavits, mechanic’s lien indemnifications and such other customary affidavits as the Title Company may reasonably require in order to issue the Leasehold Title Policy, each in form and substance approved by Buyer in its reasonable discretion; (n) such conveyancing, recording, or transfer tax forms, returns or certificates, if any, as are required to be delivered or signed by Seller by applicable Law in connection with the proper consummation of the transactions contemplated by this Agreement; (o) an executed SNDA, in form and substance reasonably satisfactory to Buyer; (p) all other documents, instruments, agreements and certificates that the Title Company may require in connection with the proper consummation of the transactions contemplated by this Agreement or in order to issue the Leasehold Title Policy; (q) confirmation of approval of the interconnection required for the Project by the Utility or applicable Governmental Authority;] and
Attachment Staff Report Item 16E
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(r) such other agreements, amendments, certificates, instruments or documents, in form and substance reasonably acceptable to Buyer, as may be reasonably requested by Buyer to effect the Closing.
3.2 Conditions Precedent.
3.2.1 Generally. For purposes of this Agreement, Buyer’s obligation to cause the Closing to occur is subject to the satisfaction, or waiver in writing by Buyer, of each of the Buyer Conditions Precedent, and Seller’s obligation to cause the Closing to occur is subject to the satisfaction, or waiver in writing by Seller, of each of the Seller Conditions Precedent.
3.2.2 Buyer Conditions Precedent to the Closing. Unless and until the following conditions precedent (the “Buyer Conditions Precedent”) are satisfied, or waived in writing by Buyer, Buyer shall not be obligated to effect the Closing hereunder:
(a) Representations and Warranties. The Fundamental Representations and the representations and warranties made by Seller in this Agreement that are qualified with respect to materiality, including by reference to Material Adverse Effect, shall be true and accurate in all respects, and the representations and warranties made by Seller in this Agreement, other than the Fundamental Representations, that are not so qualified shall be true and accurate in all material respects, in each case on and as of the Closing Date (except those representations and warranties that address matters only as of a specified date, the truth and accuracy of which shall be determined as of that specified date) as though made on and as of the Closing Date, and there shall have been delivered to Buyer a certificate to such effect, dated as of the Closing Date, signed by Seller. (b) Performance. Seller shall have performed and complied with, in all material respects, the agreements, covenants and obligations required by this Agreement to be so performed or complied with by Seller at or before the Closing, and there shall have been delivered to Buyer a certificate to such effect, dated as of the Closing Date, signed by Seller. (c) No Material Adverse Effect. There shall have been no Material Adverse Effect, nor shall any event or events have occurred, and no circumstances exist, that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Material Adverse Effect.
(d) Closing Deliveries. Seller shall have delivered, or caused to be delivered, to Buyer all items required to be delivered pursuant to Section 3.1.3, in form and substance reasonably satisfactory to Buyer.
(e) No Proceedings. No order, injunction, judgment, decree or ruling of any Governmental Authority is in effect which restrains, hinders, or prohibits the consummation of the Transactions, nor shall there be pending, any action, suit, investigation or proceeding by or before any Governmental Authority which is reasonably likely to (i) restrain, hinder, prohibit or challenge the validity of the Transactions or (ii) prohibit the ownership, use, development and operation of the Project by Buyer.
(f) Legislation. No applicable Law shall have been enacted which prohibits or restricts the consummation of the Transactions.
Attachment Staff Report Item 16E
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(g) No Claim Regarding Project Assets or Proceeds. There will not have been made or threatened by any third party any claim asserting that such third party (i) is the holder or the beneficial owner of the Project Assets or (ii) is entitled to all or any portion of the Purchase Price.
(h) Material Contracts. Each of the Material Contracts shall (i) have been duly and validly executed by each party thereto and (ii) be in full force and effect. (i) Required Approvals. The Required Approvals have been duly obtained, made or given and are in full force and effect and are not subject to any pending appeals or requests for reconsideration or rehearing and all periods for filing an appeal or requesting reconsideration or rehearing have expired and none of the Required Approvals imposes any Buyer Burdensome Condition.
(j) Permits. Seller holds all right, title and interest in and to all of the Permits and all such Permits are in full force and effect, without default or noncompliance or, to Seller’s Knowledge, any threat of default or noncompliance, thereunder.
3.2.3 Seller Conditions Precedent to the Closing. Unless and until the following conditions precedent (the “Seller Conditions Precedent”) are satisfied, or waived in writing by Seller, Seller shall not be obligated to effect the Closing hereunder:
(a) Representations and Warranties. The Fundamental Representations and the representations and warranties made by Buyer in this Agreement that are qualified with respect to materiality, including by reference to Material Adverse Effect, shall be true and accurate in all respects, and the representations and warranties made by Buyer in this Agreement, other than the Fundamental Representations, that are not so qualified shall be true and accurate in all material respects, in each case on and as of the Closing Date (except those representations and warranties that address matters only as of a specified date, the truth and accuracy of which shall be determined as of that specified date) as though made on and as of the Closing Date, and there shall have been delivered to Seller a certificate to such effect, dated as of the Closing Date, signed by Buyer. (b) Performance. Buyer shall have performed and complied with, in all material respects, the agreements, covenants and obligations required by this Agreement to be so performed or complied with by Buyer at or before the Closing, and there shall have been delivered to Seller a certificate to such effect, dated as of the Closing Date, signed by Buyer. (c) Closing Deliveries. Buyer shall have delivered, or caused to be delivered, to Seller all items required to be delivered pursuant to Section 3.1.2, in form and substance reasonably satisfactory to Seller.
(d) No Proceedings. No order, injunction, judgment, decree or ruling of any Governmental Authority is in effect which restrains, hinders or prohibits the consummation of the Transactions, nor shall there be pending, any action, suit, investigation or proceeding by or before any Governmental Authority which is reasonably likely to restrain, hinder, prohibit, delay or challenge the validity of any of the Transactions.
Attachment Staff Report Item 16E
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(e) Legislation. No applicable Law shall have been enacted which prohibits or restricts the consummation of the Transactions.
3.3 Satisfaction of Conditions. Subject to the terms and conditions of this Agreement, each of the Parties hereto shall, and shall cause its Affiliates as appropriate, to use their commercially reasonable efforts to take, or to cause to be taken, all action and to do, or to cause to be done, all things necessary, proper or advisable to consummate, as promptly as practicable, the Transactions, including, but not limited to, the satisfaction of the conditions precedent listed in Section 3.2 that are within the control of such Party and the obtaining of all consents, waivers, authorizations, orders and approvals of third parties, including Governmental Authorities, required of it by this Agreement. Each Party shall, and shall cause its Affiliates as appropriate, to cooperate fully with the other Parties hereto in assisting such Parties to comply with this Section 3.3.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as otherwise set forth in a disclosure schedule relating to any particular representation and warranty (collectively, the “Disclosure Schedules”), Seller represents and warrants to Buyer that all of the statements contained in this ARTICLE IV are true as of the Closing Date.
4.1 Organization, Authority and Qualification. Seller is duly organized, validly existing and in good standing under the jurisdiction of its formation. Seller has all necessary power and authority to enter into, execute, deliver and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement by Seller has been duly authorized by all requisite action on the part of Seller. This Agreement has been duly executed and delivered by Seller and, assuming due authorization, execution and delivery by the Buyer, this Agreement is a legal, valid and binding obligation of Seller, enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally.
4.2 Interests in Project Assets.
(a) There are no outstanding options, warrants, rights, commitments, preemptive rights or agreements of any kind to which the Seller is a party to or by which the Seller is bound which would obligate the Seller to issue, deliver, purchase or sell any additional interests of any kind in the Project or Project Assets.
(b) Seller owns, directly, beneficially and of record, one hundred percent (100%) of the Project Assets, free and clear of all Encumbrances, except Permitted Encumbrances.
4.3 No Conflicts. The execution, delivery and performance of this Agreement by Seller does not and shall not: (a) violate, conflict with or result in the breach of the formation documents, operational documents or organizational approvals (or other comparable organizational documents) of Seller; (b) conflict with or violate any Law or Governmental Order applicable to Seller; (c) violate, conflict with or result in a breach of or default under (with or without due notice or lapse of time or both) any of the terms, conditions or provisions of any Material Contract; Attachment Staff Report Item 16E
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(d) result in the creation of any Encumbrance upon the Project Assets, or (e) give any Person the right to modify, terminate or accelerate any obligation under any Governmental Order or Material Contract.
4.4 Consents and Approvals. Except as set forth on Schedule 4.4, the execution, delivery and performance of this Agreement by Seller do not and shall not require any Consent of any Person, except: (a) as may be necessary as a result of any facts or circumstances relating to Buyer or any of its Affiliates; or (b) to the extent that the failure to obtain any such Consent would not reasonably be expected to have a Material Adverse Effect.
4.5 Litigation. No Action by or against the Seller is pending or, to the Knowledge of Seller, threatened, challenging the legality, validity or enforceability of this Agreement or the consummation of the Transactions. Except as set forth on Schedule 4.5, there are no (a) Actions pending against the Seller that affect or could reasonably be expected to affect the Project Assets or (b) outstanding Governmental Orders by which the Project Assets are bound.
4.6 Compliance with Laws; Permits.
(a) The Project is in compliance with all Laws applicable to the Project Assets in all material respects.
(b) Seller has all Permits necessary for the operation of the Project in compliance with all Laws and Governmental Orders in all material respects, and such Permits are valid and in full force and effect. No Action is pending or, to the Knowledge of Seller, threatened to revoke, suspend, cancel, terminate, or adversely modify any such Permit. (c) The Project Information Summary, attached hereto and made a part hereof as Exhibit F, sets forth a true, correct and complete list of all Permits that have been obtained and issued in the name of Seller or the Project as of the Signing Date. (d) The Project Information Summary, attached hereto and made a part hereof as Exhibit F, sets forth a true, correct and, to Seller’s Knowledge, complete list of all Permits that have been applied for in the name of Seller or the Project, or are expected by Seller to be applied for in the name of Seller or the Project, but that have not been issued as of the Signing Date. (e) The Permits listed on the Project Information Summary are, to Seller’s Knowledge, all of the Permits required by Law for the development and construction of the Project as contemplated by this Agreement.
(f) Seller has provided to Buyer true, correct and complete copies of all Permits that have been obtained and issued in the name of Seller on or prior to the Closing Date, by making such copies available in the Data Room or by otherwise providing such copies to Buyer.
4.8 Real Property.
4.7.1 Title. As of the Signing Date, Seller holds good and valid leasehold interests and Easement or fee interests, as applicable, in the Project Site free and clear of all Encumbrances.
Attachment Staff Report Item 16E
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4.7.2 Real Property Agreements. The Project Information Summary contains a true, correct and complete list of all Real Property Agreements. Seller has delivered to Buyer true, correct and complete copies of all Real Property Agreements and related recorded memorandums, to the extent such Real Property Agreement was entered into on or prior to the Closing Date.
4.7.3 Legal, Valid and Binding Agreements. Each Real Property Agreement constitutes a legal, valid and binding agreement of Seller and, to Seller’s Knowledge, of each other party thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other Laws relating to or affecting creditors’ rights generally and general equitable principles.
4.7.4 Defaults; Breaches. Except as set forth in Schedule 4.8.4, (a) Seller is not in breach or default in any material respect under any Real Property Agreement and, to Seller’s Knowledge, no other party to a Real Property Agreement is in breach or default in any material respect thereunder and (b) to Seller’s Knowledge, no event has occurred which, with notice or lapse of time, or both, would constitute a breach or default in any material respect by Seller or any other party to a Real Property Agreement, or would permit the termination, modification or acceleration of a Real Property Agreement.
4.8.1 4.7.5 Recordation. Except as set forth in Schedule 4.8.5, all Real Property Agreements or a memorandum of lease with reference thereto has been recorded in the official real estate records of [___________].
4.7.6 Leasehold Title Policy. Seller shall be obligated, at Seller’s sole cost and expense, to take (and hereby covenants to take) any and all actions as may be required by the Title Company to issue the Leasehold Title Policy (including without limitation satisfaction, elimination and removal of record of the applicable conditions, requirements and exceptions shown on the title commitment or any other title matters or encumbrances necessary for the Title Company to issue the Leasehold Title Policy), without exception for: (A) any Encumbrances other than Permitted Encumbrances (B) any title matter or Encumbrance that was voluntarily placed upon the Project Real Property or any part thereof by Seller or their Affiliates on or following the date of this Agreement, and (C) any other Encumbrance which can be satisfied or removed with the payment of a sum certain on or affecting the Project Real Property or any part thereof. Buyer shall pay directly to Title Company all premiums, fees and charges of the Title Company for or in connection with the issuance of the Leasehold Title Policy.
4.7.8 Other Project Assets. Except as set forth in Schedule 4.8.7, as of the Signing Date, Seller holds good and marketable title or valid license or usage rights in and to the Project Assets sufficient for their intended use for the Project, free and clear of all Encumbrances, other than Permitted Encumbrances.
4.7.9 Condemnation, Rezoning and Moratoriums. None of Seller or any of its Affiliates or to Seller’s Knowledge, any predecessor in interest under any Real Property Agreement, has received written notice of condemnation, rezoning proceeding, solar moratoriums, taking or any similar proceeding against or relating to any portion of the Project.
Attachment Staff Report Item 16E
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4.7.10 Options and Preferential Rights. Except as may be set forth in the Real Property Agreements, there are no outstanding options, rights of first offer, rights of first refusal or other preferential rights to lease or purchase the Project Real Property or any portion thereof or interest thereof.
4.7.11 Flood Plains and Significant Conditions. Except as disclosed on the ALTA Survey, no portion of the Project Real Property is located in any area designated as a flood plain or has been designated as an historical landmark by any Governmental Authority, and no cemetery, burial grounds or other matters of “archeological significance” are located on or a part of the Project Real Property.
4.7.12 Special Assessments. There exists no and are presently no pending, and Seller has not received written notice of, special assessments, special service area or district charges, drainage, improvement, water, preservation, user, conservation, transportation or other special district charges or assessments, impact fees, annexation fees, water or sewer bills, recapture, repayment or development charges or taxes of any nature with respect to the Project Real Property or any part thereof that are payable at Closing or that may or shall become due and payable after Closing.
4.9 Material Contracts. The Project Information Summary contains a true, correct and complete list of all Material Contracts. Seller has Made Available to Buyer a true and complete copy of each Material Contract, redacted with respect to any cost or pricing information. Each Material Contract is valid and binding on Seller and, to the Knowledge of Seller, is valid and binding on the other parties thereto. Except as set forth on Schedule 4.9, Seller and, to the Knowledge of Seller, the other parties thereto are not in material default or breach under any such Material Contract, and there are no pending claims affecting the Material Contracts as of which Seller has written notice. Seller has sufficient experience, expertise, and labor resources to oversee the Work in accordance with the requirements of the EPCA.
4.10 Brokers. Other than as set forth on Schedule 4.10, Seller shall be solely responsible for the fees and expenses of any broker, finder or investment banker entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Seller or its Affiliates.
4.11 Title to Assets. Seller has valid title to, or valid leasehold interests or other comparable contract rights in or relating to, all of the Project Assets, free and clear of all Encumbrances, other than Permitted Encumbrances.
4.12 Intellectual Property. The Seller owns or holds a valid and enforceable agreement, license, permit, certificate, franchise or other authorization or right to use the technology and Intellectual Property rights necessary to own, lease, operate, maintain and repair the Project Assets, and no actions by the Seller that have been performed or are expected to be performed under the Material Contracts infringe upon or misappropriate the Intellectual Property rights of any other Person
4.13 Environmental Matters. Seller has Made Available to Buyer all environmental assessment reports with respect to the Project. To Seller’s Knowledge: (a) each Project is in Attachment Staff Report Item 16E
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material compliance with all applicable Environmental Laws and Permits; (b) no notice of violation of such Environmental Laws or Permits has been issued by any Governmental Authority with respect to the Project which has not been resolved; (c) there is no pending or threatened action, charge, claim, demand, suit, proceeding, petition, governmental investigation or arbitration in respect of any Environmental Laws or Permits with respect to the Project; (d) there has been no release of, or exposure to, any Hazardous Material on, from or related to the Project that has resulted in or could reasonably be expected to result in any material liability or material obligation with respect to the Project; and (e) no action has been taken by Seller or the Project that would cause the Project not to be in material compliance with all applicable Environmental Laws or Permits pertaining to Hazardous Materials.
4.14 Disclaimer. EXCEPT AS SET FORTH IN THIS ARTICLE IV, NONE OF
SELLER, ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES OR REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY,
IN RESPECT OF SELLER OR ITS AFFILIATES, ANY SUCH OTHER REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED.
4.15 Insurance. The Project Information Summary contains a summary description of all material insurance policies maintained by or on behalf of the Seller in relation to the Project or Project Assets. Such insurance policies are in full force and effect and all premiums due and payable for such insurance policies have been paid. Neither the Seller nor any Affiliate of the Seller has received any written notice from the insurer under any such insurance policy disclaiming coverage to the Seller in relation to the Project or Project Assets, reserving rights with respect to a particular claim involving the Project or Project Assets or such policy in general, or canceling any such policy that has not been replaced on substantially similar terms. Except as set forth in Schedule 4.18, there is no Action pending or, to Seller’s Knowledge, threatened in writing, in each case, involving the Project or Project Assets in respect of any insurance policy set forth in Schedule
4.18. 4.16 Reports. Seller has obtained and Made Available to Buyer all of the Reports listed in the Project Information Summary. Seller has delivered to Buyer a true, correct and complete copy of each final Report to the extent such Report was in the possession of Seller or its Affiliates on or prior to the Closing Date. To Seller’s Knowledge, there has been no material change in any findings or conclusions of any final Report delivered by Seller to Buyer other than any for which Seller has, as of the Closing Date, redelivered such Report to Buyer in final form as revised to address such material change.
4.17 Seller Credit Support Obligations. Except as set forth on Schedule 4.17, there are no guaranties, letters of credit, performance or surety bonds or similar credit support arrangements issued by Seller or its Affiliates with respect to or for the account of the Project, including pursuant to the Material Contracts and the Real Property Agreements.
4.18 Sufficiency of Project Assets. Seller is not aware nor should reasonably be aware of any reason why the Project Assets are insufficient to enable the continued construction, development, interconnection, operation and maintenance of the Project at the Project Site and at the Project Capacity in accordance with Permits.
Attachment Staff Report Item 16E
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as otherwise set forth in a Disclosure Schedules, Buyer represents and warrants to Seller that all of the statements contained in this ARTICLE IV are true as of the Closing Date.
5.1 Organization and Authority of Buyer. Buyer is a limited liability company organized, validly existing and in good standing under the Laws of the State of Delaware. Buyer has all necessary limited liability company power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as conducted at the date of this Agreement. The execution and delivery of this Agreement by Buyer, the performance by Buyer of its obligations hereunder and the consummation by Buyer of the Transactions have been duly authorized by all requisite limited liability company action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer, and assuming due authorization, execution and delivery by Seller, this Agreement is a legal, valid and binding obligation of Buyer, enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally.
5.2 No Conflicts. Assuming that all Consents contemplated by Section 5.3 have been obtained, the execution, delivery and performance of this Agreement by Buyer does not and shall not: (a) violate, conflict with or result in the breach of the certificate of incorporation or bylaws (or similar organizational documents) of Buyer; (b) conflict with or violate any Law or Governmental Order applicable to Buyer; or (c) violate, conflict with or result in a breach of or default under (with or without due notice or lapse of time or both) any of the terms, conditions or provisions of any Contract to which Buyer or any of its Subsidiaries is a party immediately prior to the Closing or by which Buyer or any of its Subsidiaries or any of their respective properties or assets may be bound except, in the case of clauses (b) or (c), as would not, individually or in the aggregate, materially and adversely affect the ability of Buyer to carry out its obligations under, and to consummate the Transactions contemplated by, this Agreement.
5.3 Consents and Approvals. The execution, delivery and performance of this Agreement by Buyer does not and shall not require any Consent of any Person, except to the extent failure to obtain such Consent would not prevent or materially delay the consummation by Buyer of the Transactions.
5.4 Litigation. No Actions by or against Buyer or any of its Affiliates are pending or, to Buyer’s Knowledge, threatened, challenging the legality, validity or enforceability of this Agreement or the consummation of the Transactions.
5.5 Brokers. Buyer shall be solely responsible for the fees and expenses of any broker, finder or investment banker entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Buyer.
5.6 Solvency; Fraudulent Conveyance. As of the Closing Date, the Buyer and each of its Subsidiaries (i) shall be able to pay their respective debts as they become due and (ii) shall own assets which have a fair saleable value (if sold as an entirety with reasonable promptness in an Attachment Staff Report Item 16E
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arm’s length transaction under present conditions) in excess of their Liabilities (whether liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured, unsecured or otherwise). The Buyer and each of its Subsidiaries shall have adequate capital to carry on their respective businesses, including as contemplated by the Transactions. No transfer of property is being made and no obligation is being incurred in connection with the Transactions with the intent to hinder, delay or defraud either present or future creditors of the Buyer and its Subsidiaries.
5.7 Investigation by Buyer. Buyer and its counsel have conducted their own independent review and analysis of the Project Assets, and Buyer acknowledges that it has been provided access to the properties, premises and records of Seller applicable for this purpose. In entering into this Agreement, except for the representations and warranties of Seller expressly set forth in Article IV, Buyer has relied solely upon its own investigation and analysis and that of its counsel, and Buyer acknowledges that, other than in the case of fraud or willful misconduct, except for the representations and warranties of Seller expressly set forth in Article IV, none of Seller nor any of its directors, officers, employees, agents or advisors makes any representation or warranty, either express or implied, as to the accuracy or completeness of any of the information provided or Made Available to Buyer or any of its directors, officers, employees, agents or advisors.
Without limiting the generality of the foregoing, none of Seller nor any of its directors, officers, employees, agents or advisors or any other Person has made a representation or warranty to Buyer, nor shall any of the foregoing have or be subject to any liability to Buyer or any of its directors, officers, employees, agents or advisors, with respect to (a) any projections, estimates, plans, forecasts, prospects or budgets (including the reasonableness of the assumptions underlying any of the foregoing) for the Project or (b) any material, documents or information relating to the Project Made Available to Buyer or its directors, officers, employees, agents or advisors in any “data room” or otherwise, except in the case of (a) or (b) as expressly and specifically covered by a representation or warranty set forth in Article IV.
5.8 Disclaimer. EXCEPT AS SET FORTH IN THIS ARTICLE V, NONE OF
BUYER, ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES OR REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF BUYER OR ITS AFFILIATES. ANY SUCH OTHER REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 Further Assurances; Post-Closing Cooperation. Subject to the terms of this Agreement, at any time or from time to time after the Closing, each of the Parties shall execute and deliver such other documents and instruments, provide such materials and information and take such other actions as may reasonably be necessary, proper or advisable, to the extent permitted by Law, to fulfill its obligations under this Agreement or to otherwise effect the Transactions, including any assistance with account transitioning.
Attachment Staff Report Item 16E
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6.2 Books and Records; Access.
(a) For a period of three (3) years after the Closing Date, each Party and their Affiliates shall preserve and retain all corporate, accounting, Tax, legal, auditing or other Books and Records relating to the Project Assets (including any documents relating to any governmental or non-governmental actions, suits, proceedings or investigations) relating to the Project Assets prior to the Closing Date. Notwithstanding the foregoing, during such three-year (3-year) period, Buyer may dispose of any such Books and Records which are offered to, but not accepted by, Seller.
(b) After the Closing Date, each Party and their Affiliates shall permit the other Party and its authorized Representatives to have reasonable access to, and to inspect and copy, all materials referred to in Section 6.2(a) and to meet with officers and employees of the other Party on a mutually convenient basis in order to obtain explanations with respect to such materials and to obtain additional information and to call such officers as witnesses; provided, however, that nothing in this Agreement shall limit any Party’s or their Affiliates’ rights of discovery. (c) No later than the Closing Date, Seller shall deliver to Buyer any Books and Records (to the extent providing such to Buyer does not violate any Law) that have not previously been provided to Buyer.
6.3 Solicitation of Other Bids.
Unless and until this Agreement is terminated pursuant to Article VIII, Seller shall not, and shall not authorize or permit any of its Affiliates or any of its or their Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Seller shall immediately cease and cause to be terminated, and shall cause its Affiliates and all of its and their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. [For purposes hereof, “Acquisition Proposal” shall mean any inquiry, proposal or offer from any Person (other than Buyer or any of its Affiliates) concerning a sale, acquisition, purchase, lease, exchange merger, other business combination transaction involving the Project or Project Assets or other disposition of any significant portion of the Project or Project Assets.] (a) In addition to the other obligations under this Section 6.3, Seller shall promptly (and in any event within three (3) Business Days after receipt thereof by Seller or its Representatives) advise Buyer orally and in writing of any written Acquisition Proposal received, together with the material terms and conditions of such Acquisition Proposal and the identity of the Person making the same.
(b) Seller agrees that the rights and remedies for noncompliance with this Section 6.3 shall include having such provision specifically enforced by any court having equity jurisdiction.
Attachment Staff Report Item 16E
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6.4 Transfer Taxes. Any sales, use, value added, gross receipts, excise, registration, stamp duty, transfer or other similar Taxes or governmental fees (including any interest or penalties related thereto) that may be payable with respect to the transfer of the Project Assets pursuant to this Agreement (“Transfer Taxes”) shall be borne fifty percent (50%) by Seller and fifty percent (50%) by Buyer. Buyer shall prepare and in a timely manner file all returns in respect of Transfer Taxes; provided, however, that any such returns shall be subject to the approval of Seller, which approval shall not be unreasonably withheld, delayed or conditioned.
ARTICLE VII
INDEMNIFICATION AND SURVIVAL
7.1 Survival of Representations, Warranties, Covenants and Agreements. The representations and warranties contained in this Agreement (other than the Fundamental Representations) shall expire on the date that is the later of (a) the date on which Substantial Completion for the Project is achieved or (b) the first anniversary of the Closing Date. The Fundamental Representations shall survive until expiration of the applicable statute of limitations.
The covenants and agreements that contemplate actions to be taken or not taken or obligations in effect after the Closing shall survive in accordance with their terms. Any representation, warranty, covenant or agreement in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to this Section 7.1 if a Claim Notice or Indemnity Notice (as applicable) shall have been timely given in good faith based on facts reasonably expected to establish a valid claim under this Article VII on or prior to such termination date, until the related claim for indemnification has been satisfied or otherwise resolved as provided in this Article VII.
7.2 Indemnification.
(a) Subject to the provisions of this Article VII, from and after the Closing, Seller shall indemnify Buyer and its Affiliates, and their respective officers, directors, managers, employees, successors and assigns (collectively, the “Buyer Indemnitees”) in respect of, and hold them harmless from and against, any and all Losses suffered, incurred or sustained by a Buyer Indemnitee by reason of or resulting from: (i) any inaccuracy or breach of a representation or warranty of the Seller contained in Article III of this Agreement; (ii) any nonfulfillment of or failure to perform any covenant or agreement on the part of Seller contained in this Agreement or any Material Contract, including, without limitation, with respect to Losses incurred by Buyer in connection with any delays in the prosecution of the Work performed by Seller or Seller’s Affiliates, vendors, or subcontractors pursuant to the EPCA; (iii) any Excluded Asset or any Excluded Liability; or (iv) any Third-Party Claim based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Seller or any of its Affiliates (other than the Project Assets or Assumed Liabilities) conducted, existing or arising on or prior to the Closing Date.
(b) Subject to the provisions of this Article VII, from and after the Closing, Buyer shall indemnify Seller and its Affiliates, and their respective officers, directors, managers, employees, successors and assigns (collectively, the “Seller Indemnitees”) in respect of, and hold them harmless from and against, any and all Losses suffered, incurred or sustained by a Seller Indemnitee by reason of or resulting from: (i) any inaccuracy or breach of a representation or Attachment Staff Report Item 16E
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warranty of Buyer contained in Article V of this Agreement; (ii) any nonfulfillment of or failure to perform any covenant or agreement on the part of Buyer, contained in this Agreement; or (iii) any Assumed Liability.
(c) The indemnity obligations of the Parties under this Article VII shall be limited as set forth in this Section 7.2(c).
(i) No indemnity shall be payable under this Article VII with respect to Losses for which the Indemnified Party has not provided the Indemnifying Party a Claim Notice or Indemnity Notice, as applicable, with respect to such claim, setting forth in reasonable detail the specific facts and circumstances pertaining thereto as soon as practical following the time at which the Indemnified Party discovered such claim (except the failure to promptly deliver such Claim Notice or Indemnity Notice shall not be a waiver of the Indemnified Party’s rights under this Article VII except to the extent the Indemnifying Party is materially prejudiced by any delay in the delivery of such notice), and in any event prior to the expiration of the applicable survival period specified in Section 7.1. (ii) No indemnity shall be payable under Section 7.2(a)(i) or Section 7.2(b)(i) until the aggregate of any individual Loss, or series of related Losses exceed $15,000 (the “Claim Threshold”), after which only such Losses in excess of such amount shall be recoverable; provided that the foregoing limitation shall not apply to claims for breach of Fundamental Representations.
(iii) No Buyer Indemnitee shall be entitled to any further indemnification under (x) Section 7.2(a)(i) after the aggregate of all Losses paid by Seller to all Buyer Indemnitees equals $250,000 (the “Claim Limit”); provided that the foregoing limitation shall not apply to claims for breach of Fundamental Representations, or (y) this Agreement (including in respect of claims for breach of a Fundamental Representation) after the aggregate of all Losses paid by Seller equals the Base Purchase Price. No Seller Indemnitee shall be entitled to any further indemnification under (x) Section 7.2(b)(i) after the aggregate of all Losses paid by Buyer to all Seller Indemnitees equals $250,000; provided that the foregoing limitation shall not apply to claims for breach of Fundamental Representations or (y) this Agreement (including in respect of claims for breach of a Fundamental Representation) after the aggregate of all Losses paid by the Buyer equals the Base Purchase Price.
(iv) An Indemnifying Party’s indemnity obligations under this Article VII shall be reduced by the amount of any insurance proceeds actually recovered (less the cost to collect the proceeds of such insurance and the amount, if any, of any retroactive or other premium adjustments reasonably attributable thereto).
7.3 Indemnity Procedures. All claims for indemnification by any Indemnified Party under Section 7.2 shall be asserted and resolved as set forth in this Section 7.3. (a) In the event any claim or demand in respect of which an Indemnified Party might seek indemnity under Section 7.2 is asserted against or sought to be collected from such Indemnified Party by a Person other than Seller, Buyer or any Affiliate of Seller or Buyer (a Attachment Staff Report Item 16E
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“Third-Party Claim”), the Indemnified Party shall as soon as practical following the time at which the Indemnified Party discovered such claim deliver a Claim Notice to the Indemnifying Party, provided, however, the failure to promptly deliver such Claim Notice shall not be a waiver of the Indemnified Party’s rights under this Article VII except to the extent the Indemnifying Party is materially prejudiced by any delay in the delivery of such notice. The Indemnifying Party shall have the right to control the defense of such Third-Party Claim at its expense and through counsel of its choice by providing written notice of its election to assume such defense within twenty (20) days following the Indemnifying Party’s receipt of the notice of the Third Party Claim, and, except as otherwise provided herein, in which case the Indemnifying Party shall not be liable to the Indemnified Party for any fees of counsel or any other expenses with respect to the defense of such Third-Party Claim; provided that (i) if such Third Party Claim would reasonably be expected to result in injunctions or other equitable remedies in respect of the Indemnified Party or its business, then the Indemnified Party shall be entitled to retain its own counsel at the reasonable expense of the Indemnifying Party, (ii) if such Third Party Claim may reasonably result in criminal proceedings in respect of the Indemnified Party or any of its Affiliates, including any director, officer or employee of the Indemnified Party or any of its Affiliates, or in respect of the business of the Indemnified Party or any of Affiliates, then the Indemnified Party shall be entitled to retain its own counsel at the reasonable expense of the Indemnifying Party, (iii) if such Third Party Claim may reasonably be expected to result in Losses in excess of the monetary limitation of a party set forth in Section 7.2(c)(iii), then the Indemnified Party shall be entitled to retain its own counsel at the reasonable expense of the Indemnifying Party, (iv) if the Indemnified Party reasonably determines based upon the written advice of counsel that a conflict of interest exists that would make it inappropriate for the same counsel to represent both the Indemnified Party and the Indemnifying Party, then the Indemnified Party shall be entitled to retain its own counsel at the reasonable expense of the Indemnifying Party and (v) the Indemnified Party may, at its sole cost and expense, retain separate counsel to participate in, but not control, any defense or settlement of any Third-Party Claim, and the Indemnifying Party shall reasonably cooperate with such participation. If the Indemnifying Party elects to control the defense of any Third-Party Claim, the Indemnifying Party shall have the right to settle such Third-Party Claim if the Indemnified Party (or its Affiliates, if applicable) receive a full and unconditional release in favor of, and without the imposition of equitable relief or any other restriction of any kind on, or the admission of wrongdoing by, the Indemnified Party (or its Affiliates, if applicable); provided that if the proposed settlement provides for relief other than the payment of money damages, the Indemnifying Party may settle such Third-Party Claim only with the consent of the Indemnified Party, which consent shall not be unreasonably withheld, conditioned or delayed. The Indemnified Party shall reasonably cooperate with the Indemnifying Party and its counsel in contesting any Third-Party Claim, including in making any counterclaim against the Person asserting the Third-Party Claim, or any cross-complaint against any Person (other than the Indemnifying Party or any of its Affiliates). The party controlling the defense of a Third Party Claim shall in a timely manner keep the other party advised of the status of such Third Party Claim and the defense thereof and will consider in good faith recommendations made by such other party with respect thereto, but shall otherwise have full and exclusive control of the conduct of the defense of such Third Party Claim.
(b) In the event any Indemnified Party should have a claim under Section 7.2 against any Indemnifying Party that does not involve a Third-Party Claim, the Indemnified Party shall as soon as practical following the time at which the Indemnified Party discovered such claim Attachment Staff Report Item 16E
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promptly deliver an Indemnity Notice to the Indemnifying Party; provided the failure to promptly deliver such Indemnity Notice shall not be a waiver of the Indemnified Party’s rights under this Article VII except to the extent the Indemnifying Party is materially prejudiced by any delay in the delivery of such notice.
7.4 Tax Effect. Any amounts paid pursuant to this Article VII shall be considered an adjustment to the Purchase Price for Tax purposes to the extent allowed under applicable Law.
Buyer and Seller, and each of their respective Affiliates, shall prepare and file, and cause their Affiliates to prepare and file, Tax Returns consistent with the treatment described in the foregoing sentence.
7.5 Insurance Offset. The amount of any Loss for which indemnification is provided under this Article VII shall be determined net of any amounts recovered by an Indemnified Party or any of such Indemnified Party’s Affiliates under or pursuant to any insurance policy, title insurance policy, indemnity, reimbursement arrangement or contract pursuant to which or under which such Indemnified Party or such Indemnified Party’s Affiliates is a party or has rights; provided, however, that any amounts actually received pursuant to this Section 7.5 shall be reduced by any amounts incurred by the Indemnified Party or any of such Indemnified Party’s Affiliates in pursuing such recovery (except to the extent such amounts actually received include such amounts incurred in pursuing recovery).
7.6 Subrogation. Each Indemnified Party hereby waives any subrogation rights that its insurer may have with respect to any indemnifiable Losses. After any indemnification payment is made to any Indemnified Party pursuant to this Article VII, the Indemnifying Party shall, to the extent of such payment, be subrogated to all rights (if any) of the Indemnified Party against any third party in connection with the Losses to which such payment relates. Without limiting the generality of the preceding sentence, any Indemnified Party receiving an indemnification payment pursuant to the preceding sentence shall execute, upon the written request of the Indemnifying Party, any instrument reasonably necessary to evidence such subrogation rights.
7.7 Exclusivity. After the Closing, to the extent permitted by Law and except with respect to claims based on fraud, criminal activity, or willful misconduct and claims for equitable remedies (including specific performance), the indemnities set forth in this Article VII shall be the exclusive remedies of the Indemnified Parties for any inaccuracy in any representation or warranty, misrepresentation, breach of warranty or nonfulfillment or failure to be performed of any covenant or agreement contained in this Agreement.
7.8 Mitigation. Any Indemnified Party that becomes aware of a Loss for which it may seek indemnification under this Article VII shall use commercially reasonable efforts to mitigate the Loss to the extent reasonably practicable and shall consider any mitigating actions reasonably requested by the Indemnifying Party. Neither Party’s failure to mitigate shall limit an Indemnified Party’s right under this Article VII to file any claim for Losses or take any other action.
Attachment Staff Report Item 16E
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ARTICLE VIII
TERMINATION AND REPURCHASE OBLIGATION
8.1 Termination.
8.1.1 Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated at any time:
(a) by the mutual written consent of the Parties;
(b) by Seller on the one hand, or Buyer on the other, if there has been a breach of any representation, warranty, covenant or other agreement made by the other Party, which breach (i) cannot be cured or (ii) remains uncured for forty-five (45) days after notice of such breach is received by the breaching Party or such longer period as may be reasonably required to cure such breach, provided that the breaching Party is diligently working to cure such breach (such period not to exceed ninety (90) days);
(c) by either Party, if a Governmental Authority shall have issued a final and non-appealable order, injunction, judgment, decree or ruling permanently restraining, enjoining or otherwise prohibiting the consummation of the Transactions, or if there shall be any applicable Law that makes consummation of the Transactions illegal or otherwise prohibited (d) by Seller upon written notice to Buyer, upon the Bankruptcy of Buyer; or (e) by Buyer upon written notice to Seller, upon the Bankruptcy of Seller.
8.2 Notice of Termination. Any Party desiring to terminate this Agreement shall give written notice of such termination to the other Party.
8.3 Effect of Termination.
8.3.1 If this Agreement shall be terminated pursuant to Section 8.1 (prior to Closing), in addition to any other rights it may have under this Agreement or otherwise, all further obligations of the Parties under this Agreement (other than the provisions which by their terms are intended to survive the expiration or termination of this Agreement, including Article VII, Article VIII, Article IX and this Section 8.3) shall be terminated without further Liability of any Party to the other Party and the exercise of such right of termination will not be an election of remedies; provided, however, that nothing herein shall relieve any Party from Liability for fraud, willful misconduct or intentional breach of the terms or provisions of this Agreement.
8.3.2 Upon termination of this Agreement by a Party for any reason, Buyer shall, at Seller’s request, return or destroy all documents and other materials of Seller solely relating to the Project, Project Assets and the Transactions contemplated hereby. Each Party shall also, at the request of the other Party, return to the other Party or destroy any information relating to the Parties to this Agreement furnished by one Party to the other, whether obtained before or after the execution of this Agreement. Notwithstanding the foregoing, the provisions of this Section 8.3 shall not apply to (a) the extent that a Party preserves copies of such documents, materials or information in connection with such Party’s enforcement of its rights or remedies under this Attachment Staff Report Item 16E
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Agreement (b) any copies of documents or materials relating by a Party or its counsel if required law or for regulatory or compliance purposes (including any such information contained in board or committee papers) or (c) any documents or materials that are contained in an archived computer system backup in accordance with a Party’s or its counsel’s security and/or disaster recovery procedures.
ARTICLE IX
MISCELLANEOUS
9.1 Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns. No assignment shall be made by any party without the prior written consent of the other Parties; provided, (i) any party may assign this Agreement to any Affiliate of such party without such consent and (ii) Buyer may assign this Agreement to any financial institution providing purchase money or other financing to Buyer from time to time as collateral security for such financing, provided, that in each case, no such assignment shall relieve the assigning party of any of its obligations hereunder. Any purported assignment in contravention of this Section 9.1 shall be null and void.
9.2 Limitation of Liability. NO PARTY SHALL BE LIABLE TO ANY OTHER
PARTY FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY
OR PUNITIVE DAMAGES OF ANY CHARACTER, RESULTING FROM, ARISING OUT OF,
IN CONNECTION WITH OR IN ANY WAY INCIDENT TO ANY ACT OR OMISSION OF A
PARTY RELATED TO THE PROVISIONS OF THIS AGREEMENT, IRRESPECTIVE OF
WHETHER CLAIMS OR ACTIONS FOR SUCH LOSSES ARE BASED UPON CONTRACT,
WARRANTY, NEGLIGENCE, STRICT LIABILITY OR ANY OTHER THEORY AT LAW OR EQUITY; PROVIDED, HOWEVER, THAT SUCH LIMITATION OF LIABILITY SHALL NOT
APPLY TO FRAUD OR THE INTENTIONAL MISREPRESENTATION OR WILLFUL MISCONDUCT OF A PARTY.
9.3 Confidentiality.
9.3.1 Buyer shall keep the Confidential Information strictly confidential and shall not use the Confidential Information for any purpose other than to evaluate, negotiate, and consummate the Transactions. Buyer shall not disclose or permit its Representatives to disclose any Confidential Information except: (a) if required by law, regulation, or legal or regulatory process; (b) to its Representatives, to the extent necessary to permit such Representatives to assist the Buyer in evaluating, negotiating, and consummating the Transactions; or (c) to any actual or potential sources of financing (debt, equity, or otherwise) who are or may be engaged to provide financing to the Buyer or its Affiliates. Buyer shall be responsible for any breach of this Agreement by any of its Representatives except for breaches committed by any such Representative that has executed its own confidentiality agreement with the Seller with respect to the Transactions.
9.3.2 Except for such disclosure as is necessary, in the written opinion of Buyer’s counsel, to not to be in violation of any applicable law, regulation, order, or other similar requirement of any governmental, regulatory, or supervisory authority, the parties shall not, and shall not permit any of their Representatives to, without the prior written consent of the other party, disclose to any Person: (a) the fact that the Confidential Information has been Made Available to Attachment Staff Report Item 16E
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the Buyer or its Representatives or that the Buyer or its Representatives has received or inspected any portion of the Confidential Information; (b) the existence or contents of this Agreement; (c) the fact that investigations, discussions, or negotiations are taking or have taken place concerning the Transactions, including the status thereof; or (d) any terms, conditions, or other matters relating to the Transactions.
9.3.3 If Buyer or any of its Representatives is required, in the written opinion of Buyer’s counsel, to disclose any Confidential Information, by law, regulation, or legal or regulatory process, the Buyer shall: (a) take all reasonable steps to preserve the privileged nature and confidentiality of the Confidential Information, including requesting that the Confidential Information not be disclosed to non-parties or the public; (b) give the Seller prompt prior written notice of such request or requirement so that the Seller may seek, at its sole cost and expense, an appropriate protective order or other remedy; and (c) reasonably cooperate with the Seller to obtain such protective order. In the event that such protective order or other remedy is not obtained, the Buyer (or such other Persons to whom such request is directed) will furnish only that portion of the Confidential Information which, on the advice of the Buyer’s counsel, is legally required to be disclosed and, upon the Seller’s request, use commercially reasonable efforts to obtain assurances that confidential treatment will be accorded to such information.
9.4 Public Announcements. No party hereto shall issue or make any public announcement, press release or other public disclosure regarding this Agreement or its subject matter without Seller’s prior written consent, in the case of any proposed disclosure by Buyer, or without Buyer’s prior written consent, in the case of any proposed disclosure by Seller, except for any such disclosure that is, in the opinion of the disclosing party’s counsel, required by applicable Law or the rules of any applicable stock exchange. In the event a party is, in the opinion of its counsel, required to make a public disclosure by applicable Law or the rules of any applicable stock exchange, such party shall, to the extent practicable, submit the proposed disclosure in writing to Seller, in the case of any proposed disclosure by Buyer, or the Buyer, in the case of any proposed disclosure by Seller, prior to the date of disclosure and provide Seller or Buyer, as applicable, a reasonable opportunity to comment thereon.
9.5 Expenses. Except as otherwise specified herein, each party shall bear its own expenses with respect to the Transactions.
9.6 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future Laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
9.7 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties and their permitted assigns and nothing herein, express or implied (including Article VII), shall Attachment Staff Report Item 16E
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give or be construed to give to any Person, other than the Parties and such permitted assigns, any legal or equitable rights hereunder.
9.8 Waiver. The failure of any party to enforce any part of this Agreement at any time shall not be construed as a waiver of that part, nor shall it forfeit any rights to future enforcement thereof. Any waiver hereunder shall be effective only if delivered to the other Parties in writing by the party making such waiver.
9.9 Governing Law. This Agreement shall be construed and enforced in accordance with and governed by the Laws of the State of New York without regard to the conflicts of Laws provisions thereof.
9.10 Jurisdiction. The Parties agree that any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Transactions shall be brought in the United States District Court for the Southern District of New York so long as such court shall have subject matter jurisdiction over such Action, or alternatively in any New York state court located in the County of New York if the aforesaid United States District Court does not have subject matter jurisdiction, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the Parties hereby irrevocably consents to the jurisdiction of such court (and of the appropriate appellate courts therefrom) in any such Action and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such Action in any such court or that any such Action which is brought in such court has been brought in an inconvenient forum.
9.11 Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS. EACH OF THE PARTIES HERETO HEREBY: (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER;
AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE TRANSACTIONS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
9.12 Headings. The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part hereof.
9.13 Counterparts. The Parties may execute this Agreement in one or more counterparts, and each fully executed counterpart shall be deemed an original.
9.14 Notices. All communications, notices and Consents provided for herein shall be in writing and be given in person or by means of email, telex, facsimile or other means of wire transmission (with request for assurance of receipt in a manner typical with respect to communications of that type), by overnight courier or by mail, and shall become effective: (a) on Attachment Staff Report Item 16E
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delivery if given in person; (b) on the date of transmission if sent by email, telex, facsimile or other means of wire transmission; (c) one (1) Business Day after delivery to the overnight service; or (d) four (4) Business Days after being mailed, with proper postage and documentation, for first-class registered or certified mail, prepaid. Notices shall be addressed as follows:
If to Buyer, to:
[___________]
[___________]
[___________]
If to Seller, to:
[___________]
[___________]
[___________]
provided, however, that if any party shall have designated a different address by notice to the others, then to the last address so designated.
9.15 Construction. The language in all parts of this Agreement shall be construed, in all cases, according to its fair meaning. The Parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other gender as the context requires. The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Disclosure Schedules hereto) and not to any particular provision of this Agreement. Article, Section and Disclosure Schedule references are to the Articles, Sections, and Disclosure Schedules to this Agreement unless otherwise specified. Unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement. The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive.
Unless otherwise specified in a particular case, the word “days” refers to calendar days.
References herein to this Agreement shall be deemed to refer to this Agreement as of the date of such agreement and as it may be amended thereafter, unless otherwise specified. All references to “dollars” or “$” shall be deemed references to the lawful money of the United States of America.
9.16 Disclosure Schedule. Each exception set forth in the Disclosure Schedules is identified by reference to, or has been grouped under a heading referring to, a specific individual section or subsection of this Agreement; provided, however, that the inclusion of any item referenced in one section or subsection of the Disclosure Schedules shall be deemed to refer to any other section or subsection of the Disclosure Schedules (and accordingly to the applicable sections or subsections of this Agreement which contain references to the Disclosure Schedules), whether or not an explicit cross-reference appears, if the applicability of such item to the other section or subsection is reasonably apparent. The inclusion of any information in the Disclosure Schedules Attachment Staff Report Item 16E
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shall not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever.
9.17 Entire Agreement. This Agreement (including the Disclosure Schedules referred to herein) and the Confidentiality Agreement constitute the entire agreement among the Parties and supersedes any prior understanding, agreements, or representations by or among the Parties, written or oral to the extent they relate in any way to the subject matter hereof.
10.19 Amendment. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by the Parties.
[SIGNATURE PAGES FOLLOW]
Attachment Staff Report Item 16E
[Signature Page to Asset Purchase Agreement]
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized representatives as of the date first written above.
SELLER:
[SELLER]
By ______________________________________
Name: ________________________________
Title: _________________________________
BUYER:
[BUYER]
By ______________________________________
Name: ________________________________
Title: _________________________________
Attachment Staff Report Item 16E
A-1
EXHIBIT A
FORM OF BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT This BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Assignment Agreement”), dated as of [___] (the “Effective Date”), is made and entered into by and between [___], a [___] (“Assignor”), with a mailing address of [___], and [___], a [___] (“Assignee”) with a mailing address of [___]. Assignor and Assignee are referred to herein, individually, as a “Party,” and collectively, as the “Parties.”
RECITALS
WHEREAS, Assignor and Assignee are parties to that certain Asset Purchase Agreement of even date herewith (the “Purchase Agreement”) and hereby desires to sell, contribute, assign, transfer, convey and deliver the Project Assets to Assignee; WHEREAS, Assignee desires to assume and accept from Assignor the Project Assets in each case upon the terms and subject to the conditions of this Assignment Agreement; WHEREAS, Capitalized terms used herein but not otherwise defined shall have the meaning set forth in the Purchase Agreement; and
WHEREAS, the Parties desire to carry out the intent and purpose recited herein by each Party’s execution and delivery to the other Party of this Assignment Agreement evidencing the vesting in Assignee of the Project Assets.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Assignment Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Section 1. Transfer of Project Assets. Effective as of the Effective Date, Assignor does hereby irrevocably sell, assign, transfer, convey, deliver and contribute to Assignee, and Assignee does hereby purchase, acquire, take and accept from Assignor, all of Assignor’s right, title and interest in and to the Project Assets, free and clear of all liens, encumbrances, liabilities, and obligations of every nature and description. All Project Assets hereby contributed and assigned to the Assignee shall be deemed to have been contributed and assigned effective as of the date first written above, except to the extent that any consents are required for such assignment, in which case such Project Assets shall be deemed to be assigned automatically upon obtaining such consent.
Section 2. Assumption of Liabilities. As part of the consideration for the transfer of the Project Assets, effective as of the Effective Date, Assignee does hereby assume from the Assignor, all burdens, obligations and liabilities in connection with the Assumed Liabilities and agrees to observe and perform all of the duties, obligations, terms, provisions and covenants, and Attachment Staff Report Item 16E
A-2
to pay and discharge all of the liabilities of the Assignor to be observed, performed, paid or discharged, in connection with the Assignment.
Section 3. Facsimile Signature; Counterparts. This Assignment Agreement may be executed in any number of counterparts (including by means of facsimile or portable document format (PDF)), each of which, when executed, shall be deemed to be an original and all of which together will be deemed to be one and the same instrument binding upon all Parties notwithstanding the fact that not all Parties are signatory to the original or the same counterpart.
Delivery of an executed counterpart of a signature page to this Assignment Agreement by facsimile or portable document format (PDF) shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 4. Governing Law. This Assignment Agreement shall be governed by and construed in accordance with, and all disputes (whether for breach of contract or a tort) arising out of this Assignment Agreement or the transactions contemplated hereby shall be governed by, the laws of the State of New York without reference to any choice of law principles or rules thereof (including any borrowing statute) that would cause the application of the laws of another jurisdiction.
Section 5. Successors and Assigns. This Assignment Agreement and the rights hereunder are not assignable unless such assignment is consented to in writing by all Parties.
Subject to the preceding sentence, this Assignment Agreement and all the provisions hereof shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.
Section 6. Amendments; Waivers, Etc. Neither this Agreement nor any term hereof may be amended, changed, waived, discharged or terminated other than by an instrument in writing, signed by the party against which enforcement of such amendment, change, waiver, discharge or termination is sought.
Section 7. Interpretations. The headings of the sections contained in this Agreement are solely for convenience of reference and shall not affect the meaning or interpretation of this Agreement.
Section 8. Modification. This Agreement constitutes the entire understanding of the parties, and supersedes any and all agreements or understandings of any of the parties with respect to the subject matter set forth herein, and may not be modified or otherwise changed orally, but only by a writing signed by the party against whom enforcement of any such waiver, change, modification, extension, or discharge is sought.
[Remainder of Page Intentionally Left Blank]
Attachment Staff Report Item 16E
A-3
IN WITNESS WHEREOF, this Assignment is executed as of the Effective Date.
ASSIGNOR:
[SELLER]
By ______________________________________
Name: ________________________________
Title: _________________________________
ASSIGNEE:
[BUYER]
By ______________________________________
Name: ________________________________
Title: _________________________________
Attachment Staff Report Item 16E
B-1
EXHIBIT B
PROJECT MANAGEMENT SERVICES
Not applicable.
Attachment Staff Report Item 16E
2 EXHIBIT C
FORM OF ENGINEERING, PROCUREMENT AND CONSTRUCTION
Attachment Staff Report Item 16E
3 EXHIBIT D
FORM OF ESTOPPEL
Attachment Staff Report Item 16E
4 EXHIBIT E
FORM OF POWER PURCHASE AGREEMENT
Attachment Staff Report Item 16E
5 EXHIBIT F
PROJECT INFORMATION SUMMARY
PROJECT INFORMATION
Base Purchase Price ($):
NTP Fee Payment:
Solar – Mounting [Roof or Ground or Canopy]:
Solar – System Capacity (kW DC STC):
Solar – Estimated Annual Generation (kWh):
Battery – Description of System to be Installed:
EV – Quantity of EVSEs to be Installed:
Mechanical Completion Deadline:
Substantial Completion Deadline:
Estimated Placed-in-Service Date (Permission to Operate Date):
MATERIAL CONTRACTS
[Power Purchase Agreement dated as of ______ by and among ____ and ____] [Engineering, Procurement and Constructions Terms and Conditions, by and between the _____ and ____]
[Interconnection Agreement dated as of ______ by and among ____ and ____] [Net Energy Metering Agreement dated as of ______ by and among ____ and ____] [Rooftop Solar Lease dated as of ______ by and among ____ and ____]
REAL PROPERTY AGREEMENTS
[Land Lease Option and Lease Agreement dated as of ______ by and among ____ and ____]
Attachment Staff Report Item 16E
6 [Land Lease Option Assignment Agreement dated as of ______ by and among ____ and ____]
[Land Lease Amendment dated as of ______ by and among ____ and ____]
PERMITS
[Land Use Approval]
[Zoning/Planning Board Approval]
[Fire Department Approval]
REPORTS
[Phase I Environmental Site Assessment (ESA), dated as of ___] [Phase I ESA Reliance Letter, dated as of ___]
[Wetland Delineation Report, dated as of ___]
[Geotechnical Report, dated as of ___]
INSURANCE POLICIES
[Insert]
BANK ACCOUNTS
[Insert]
Attachment Staff Report Item 16E
7 Schedule 1.1(a)
Knowledge of Buyer
Attachment Staff Report Item 16E
8 Schedule 1.1(b)
Knowledge of Seller
Attachment Staff Report Item 16E
9 Schedule 1.1(c)
Project Assets
Attachment Staff Report Item 16E
10 Schedule 3.3(e)
Required Permits
Attachment Staff Report Item 16E
11 Schedule 4.4
Required Approvals
Attachment Staff Report Item 16E
12 Schedule 4.5
Litigation
Attachment Staff Report Item 16E
13 Schedule 4.7
Taxes
Attachment Staff Report Item 16E
14 Schedule 4.8.4
Breach or Default of any Real Property Agreements
Attachment Staff Report Item 16E
15 Schedule 4.8.5
Real Property Agreements Not Yet Recorded
Attachment Staff Report Item 16E
16 Schedule 4.8.7
Other Project Assets
Attachment Staff Report Item 16E
17 Schedule 4.9
Material Breach or Default of Material Contracts
Attachment Staff Report Item 16E
18 Schedule 4.10
Reserved
Attachment Staff Report Item 16E
19 Schedule 4.11
Brokers
Attachment Staff Report Item 16E
20 Schedule 4.18
Actions with respect to Insurance Policies
Attachment Staff Report Item 16E
21 Schedule 4.19
Bank Accounts
Attachment Staff Report Item 16E
22 Schedule 4.21
Credit Support Obligations
Attachment Staff Report Item 16E
23 Schedule 8.1
Encumbrances
Attachment Staff Report Item 16E
Critical Municipal Facilities:
Request for Approval
November 20, 2024
Attachment Staff Report Item 16F
Agenda
2 1. Overview
2. CMF Program Structure
3. Key Counterparties
4. Next Steps
Attachment Staff Report Item 16F
1. Transaction Overview
3 Attachment Staff Report Item 16F
Executive Summary / Request for Consent
• Ava is working with a renewable energy developer,
GreenBridge, to design, construct, and operate solar and storage systems across 34 municipal sites by entering
power purchase agreements (“PPAs”) with 6 participating cities.
• City project portfolios are designed to deliver energy savings over the contract terms, as well as resiliency
benefits to protect against grid outages and extreme
weather events.
• Projects to be constructed in phases to achieve
commercial operation on varying timelines in 2025-2027. • Ava working towards execution of a master PPA with
Green Bridge by early December to enable early-phase
projects to kickoff development to support NEM2.0
qualification deadlines.
• Nov Board Approval Requests:
1) Negotiate and execute Developer PPA and Asset
Transfer Agreements with GreenBridge LLC
2) Negotiate and execute PPAs with Cities and provide
Solar and Storage incentives to Cities
4 Participating Cities
•Berkeley
•Fremont
•Hayward
•Livermore
•Oakland
•San Leandro
Attachment Staff Report Item 16F
Microgrid Description
5 Microgrid Layout Berkeley Live Oak Rec Center
Attachment Staff Report Item 16F
2. CMF Program Structure
6 Attachment Staff Report Item 16F
Developer & City PPA Overview
Ava to enter long-term energy service agreements with each participating city, which go “back-to-back” with master agreement Ava enters with experienced project developer. 7 • Developer PPA: Ava to enter master purchase agreement (“PPA”) with Green Bridge (experienced C&I-scale developer) which will construct, operate, and own the systems and sell the site energy generation and optimization services to Ava. • City PPAs: Ava to separately enter individual PPAs with each city that passes through rights / obligations of the master PPA:
▪ Ava to sell energy generation and energy services (e.g. use of battery energy storage system and optimization software) to Cities
▪ Ava to deliver construction, operation, and system maintenance (directly or indirectly via Developer’s obligations in the master PPA)
• Benefits to Cities:
▪ Multi-city initiative enables scale-based benefits in commercial terms for Cities relative to single-project financing, e.g. Lower costs/ increased savings, higher quality contractual terms, etc. ▪ Ava (trusted entity) transacts with Cities directly to close and administer the services ▪ Ava holds ability to deliver ancillary services and incentives to Cities Attachment Staff Report Item 16F
Transaction Diagram
8 GreenBridge
Developer & DER
Owner
Ava
Community
Energy
Participating
Cities
(multiple)
Developer PPA City PPA
(Various)
Energy delivery, energy
services
Energy delivery & services
energy services
Monthly payment ($) Monthly payment ($)
Gridscape
EPC Subcontractor
Engineering,
procurement, &
construction
services
System
cost $
Battery optimization
software service
provider
Financing
Parties
Interest in ITCs, project
revenues, and asset
ownership
Working
capital
($)
Payment ($) Battery
software
services
Lunar
Prospective grid
services platform
MSA
Platform &
capacity
fees ($)
VPP-enabling
software
services
[Prospective grid services
agreement]
DER capacity commitment
Payment / incentive ($)
Structural Summary
1. Developer and Ava enter master Developer PPA.
Developer constructs & owns DERs; Ava pays for
energy services.
2. Ava enters passthrough PPA (“City PPA”) with
each participating City as final offtaker.
3. Ava maintains optionality to enter future grid
services arrangements with Cities.
EPCA
Ava managing high degree of complexity while streamlining the development process on behalf of Cities.
Attachment Staff Report Item 16F
Asset Purchase Agreement
• In advance of Developer PPA execution, Ava entered
Consulting Services Agreement (“CSA”) with Gridscape
to conduct and pay up to $1.8M for preliminary design,
development, and interconnection application work for
NEM2.0 projects
• CSA was critical to support development ahead of
NEM2.0 cliff dates and requisite PG&E approval
milestones
• Ava to simultaneously execute Asset Purchase
Agreement (“APA”) with Green Bridge to assign Ava’s
development assets to Green Bridge for ongoing project
development
▪ Under APA, Green Bridge to pay Ava for any development assets undertaken by Ava for projects
▪ Ava will retain the costs of development for work related to projects deemed non-viable or terminated prior to NTP
9 Ava
Community
Energy
GreenBridge
Developer & DER
Owner
Gridscape
EPC Subcontractor
Development
assets
Development
assets
Fee payment ($)
Fee payment ($) CSA
APA
Attachment Staff Report Item 16F
Labor Commitments
10 Ava working with Developer to ensure construction labor is paid at prevailing wages and contracts with local, union labor.
• Commitment to Local: Developer committing to hire construction contractors and subcontractors residing in Alameda or San Joaquin county (“Local Hires”).
• Prevailing wages: Commitment to pay prevailing wages at local level across each City.
• Use of union labor: Developer committing to use union labor where it is possible to (i) use Local Hires, (ii) meet project development timelines, and (iii) meet cost neutrality requirements of the Cities.
• In the event that the Developer cannot find union labor that can meet all items above, it will provide advance notice to Ava and provide an alternative proposal that meets (i)-(iii).
Attachment Staff Report Item 16F
City Portfolios
11 Portfolio Profile by City
Site list and capacity figures pending finalization
Site Types
*Parking lot does not have storage
Attachment Staff Report Item 16F
PPA Pricing to Ensure City Savings
• City portfolios must meet cost neutrality over PPA term • Developer commits to design and price each City portfolio to meet cost neutrality • Developer agrees to limitations on price changes for NEM3.0 projects • Each City has 2 separate PPA rates applicable to its (i) NEM2.0 and (ii) NEM3.0 project cohorts ▪ NEM2.0 projects: Pricing is locked at PPA execution
▪ NEM3.0 projects: Pricing may change due to design changes, but only to extent that City portfolio remains cost-neutral • If pricing changes impair cost neutrality, then Ava/City has right to remove minimum projects to achieve cost neutrality ▪ City-specific pricing and savings figures to be shared with Cities shortly after 11/6 • Ava collecting 2.5% surcharge to collect for: Administration, legal expenses, extra-ordinary charges and potential removal fee
12 Developer commits to a pricing construct that (i) ensures each City achieves portfolio savings, (ii) locks pricing for early-stage projects, and (iii) sets guardrails on pricing changes for late-stage projects.
City Savings Calculation
Estimated site utility costs during term without projects (-) Estimated site utility costs during term with projects = Estimated City utility bill savings
(-) cumulative PPA payments for the projects
= Cumulative net energy bill savings to City
Attachment Staff Report Item 16F
Ava Providing Solar and Storage Incentives
13 • Ava requesting permission apply approved CMF budget of $7M towards Solar & Storage incentives structured like the upcoming publicly available Community Resilience Hub
incentives
• All projects will receive an incentive of $2/month/kWh of aggregate BESS nameplate capacity for 5 years. NEM3.0
projects will also receive an upfront incentive of $400/kWh to account for lower bill savings.
• Current projects forecast to use $2.5M of incentives, leaving remaining funds for future projects
• Incentive to be passed to Cities as a monthly bill credit on City PPA invoices from Ava for a 5-year credit term
• Ava retains option to use the upfront incentive via an optional prepayment of the Developer PPA if the pre-payment delivers additional savings to the Cities
Attachment Staff Report Item 16F
3. Key Counterparties
14 Attachment Staff Report Item 16F
RFO Process
• Initial RFO in July 2022, for projects with 4 Cities and selected SunWealth LLC as Asset Owner and received approval from BoD to negotiate and execute agreement in January 2023.
• Ava and SunWealth were unable to successfully agree on PPA • Ava re-issued RFO with 8 participating Cities in November of 2023 and received four bids. After initial review 2 bidders were shortlisted • Greenbridge was selected as final counterparty progress with PPA negotiations
15 Attachment Staff Report Item 16F
Financing Partner: Green Bridge
• North Carolina-based commercial and utility-scale renewable energy financing and development platform
• Founded in 2020 by legacy GE Capital leadership, with over 38 years of renewables and energy financing and development experience • Has funded over $1B of projects to date, with pipeline of over $250M in development
• Uses institutional tax equity and debt financing capital to deliver competitive PPA pricing
• Lever relationships with best-in-class operational service providers to support its operational services
16 Attachment Staff Report Item 16F
Engineering, Procurement, & Construction (EPC):
Gridscape
Gridscape
▪ Headquartered in Fremont
▪ Portfolio includes 19 municipal solar and/or storage microgrid projects in California
▪ Deep capabilities in microgrid solar and storage design, engineering, procurement, installation, interconnection, and operation & maintenance
▪ Levers network of subcontractors as boots-on-the-ground for project construction
17 Attachment Staff Report Item 16F
4. Next Steps
18 Attachment Staff Report Item 16F
Next Steps & Timing
Next two months
• Mid-November: Finalize Developer PPA form; deliver pricing to Cities • Ava 11/20 Board Meeting: Authorize CEO to negotiate and execute • Early Dec: Execute Developer PPA
• EOM Dec: Execute City PPA with all Cities
• Jan 2025: NEM2.0 design finalization & long-lead equipment orders placed • 2025-2027: Projects constructed, interconnected, & operationalized in phases 19 Nov 2024:
Negotiate final
Developer PPA
Nov 2024: Board
consent to execute
Developer / City PPAs
Dec 2024:
Execute
Developer
PPA
Dec 2024:
Execute City
PPAs
Jan 2025: EPC order
long-lead items &
finalizes designs for
NEM2.0 projects
2025: Project
permitting,
construction, and
interconnection for
project portfolio
Q1 2026: Target
commercial operation
start for NEM2.0
projects
Q1 2027: Target
commercial operation
start for SBP projects
CMF Timeline
City City Council
Approval Date
Berkeley 11/12
Fremont 12/3
Hayward 10/15
Livermore 11/25 & 12/9
Oakland 11/12
San Leandro 12/2
City Calendar for Approval to Execute
Attachment Staff Report Item 16F
Appendix
20 Attachment Staff Report Item 16F
Equipment, Operations, & Warranties
• Major Equipment
▪ All equipment vetted by GreenBridge’s independent engineer and supported by manufacturer’s warranty on performance and functionality:
• Solar modules: Minimum 25 year warranty
• Battery energy storage systems: Minimum 10 year warranty • Inverters: Minimum 5 year warranty
• Installer warranties:
▪ Workmanship warranty: 3 years
▪ Roof warranty: 10 years
• Operations & Maintenance: Gridscape
▪ As original EPC, maintenance benefitted by Gridscape warranties and project familiarity
21 Attachment Staff Report Item 16F
Third-Party Advisors
• Outside counsel: Ava representation and transaction
document drafting by Wilson Sonsini, a leading renewable energy and clean technology law firm.
• Energy modeling: Project site assessment verification services provided by EcoMotion, an experienced
consultancy with specialty in microgrid resiliency projects. 22 Program structure and project consultation has been supported by best-in-class advisory.
Attachment Staff Report Item 16F
Ava’s Responsibilities & Risk Mitigants
23 Issue Risk(s) Mitigation
Billing • Risk of Ava coming out of pocket to make monthly PPA payments to Developer
• Ava collects City payments through City PPA and passes them through to Developer under Developer PPA
• Monthly Payment sized on same reported energy metrics to ensure City payment covers Ava’s payment
• Billing cycle: City pays Ava before Ava pays Developer Equipment
Performance
• Poor solar or battery performance result in reduced
energy savings delivered to the site
• solar performance guarantee, with damages payable to Cities if not met to incentive
• Developer backstops BESS performance triggers for BESS availability, efficiency, and capacity with EOD ramifications
Project Operation &
Maintenance
• Solar or BESS equipment fails or underperforms
during contract term
• System owner fails to maintain system to prudent
operating standards
• Developer bears cost & responsibility of project O&M services to Ava, which Ava passes along to Cities
• Original installer (Gridscape) serving as O&M provider, with support of their workmanship & roof warranties
• Developer posts replenishable performance security as reserve for project maintenance and system removal throughout term
Development Timing • Project construction and commissioning runs late, causing certain projects to miss NEM2.0 deadline
and/or inconvenience at project sites
• Developer owes damages passed through to Cities in event project does not meet target operation start date
• City has project termination rights if COD is delayed greater than 45 days (for NEM2.0 projects) or 120 days (for SBP projects).
Equipment Selection &
Procurement
• Equipment does not meet industry standards around
performance and/or warranty
• Sourcing practices conflict with federal/state/local
regulations
• Developer approved vendor requires technical opinion by reputable third-party independent engineer • Major components supported by fulsome manufacturer’s warranty. • Developer required to comply with trade regulations, including UFLPA & modern slavery
Program has been designed to offer cost-neutral renewable-based energy resiliency for Cities. Ava directly provides services to Cities, while mitigating risk to Ava though Developer’s ownership.
Attachment Staff Report Item 16F
24 Issue Risk Mitigation
Project Insurance • Unforeseen installer liability during construction • Disaster, wildfire, extreme weather, or other insurable event results in system loss during operation
• Developer required to maintain fulsome construction all-risk and operating all-risk insurance
• Force majeure language limits performance obligation
Project Removal • Cities left bearing the responsibility and expense of removing systems from their sites at end of term
• Developer required to perform and pay for end-of-term project removals
• Developer posts replenishable performance security to support end-of-term project removal • Ava bears obligation to pay for end-of-term project removals if not covered by Developer
• In event Ava loses investment grade status, Ava to post cash or LC security at City’s benefit for use in system removals
Project / Portfolio
Termination Rights
• Project terminations or default by City leave Ava at risk of performing PPA buyer obligations to Developer
• Project termination or default by Developer leave Ava at risk of performing seller obligations to City
• Agreements designed to cross-terminate at project & portfolio level • In event of post-construction City early termination, City makes termination payment that passes through to Developer
Developer Risk • Developer is unable to perform its obligations through the end of the term due to financial distress or
changes to its business model
• Developer’s use of traditional renewable project financing creates likelihood of ownership assignment to reputable asset managers in event of Developer insolvency
• In a severe downside scenario, Ava has buyout rights and manager transition rights to step into Developer obligations to the projects Ava’s Responsibilities & Risk Mitigants (cont.)
Attachment Staff Report Item 16F
Staff Report Item 17
Staff Report Item 17
To: Ava Community Energy Authority
From: Jason Bartlett, Senior Finance Manager
Subject: Fiscal Year 2023-2024 Annual Financial Audit
Date: November 20, 2024
__________________________________________________________________ Recommendation
Accept and file the audited financial statements for fiscal year 2023-2024.
Background and Discussion
Each year, Ava conducts an audit of the fiscal year end financial statements (the “audit”). The annual audit is conducted by an independent, external CPA and team.
In June of 2024, Ava completed a competitive RFP process and selected Pisenti & Brinker, LLP (P&B) as the Authority’s auditor. P&B has been Ava’s previous auditor and their familiarity with Ava’s finances and their experience across the CCA space made them the best selection.
The audit consists of four general sections—the Independent Auditor’s Report, the Management Discussion and Analysis (MD&A), the Basic Financial Statements, and Notes to the Basic Financial Statements. The following is a general discussion of each section and pertinent findings.
The Independent Auditor’s Report concludes their opinion of the financial statements as materially accurate with no significant deficiencies or material weakness in internal controls identified. They state focus on financial activities related to revenue recognition, cash, accrued costs, renewable energy expenses, Staff Report Item 17
supplier security deposits, and financial statement note disclosures among other areas of Ava’s financial operations. They propose no adjustments to the financial statements and found no unusual transactions or applications of accounting principles.
The Management Discussion and Analysis provides an overview of Ava’s financial activities for the fiscal years reported and gives information on financial position, reporting protocols, and overall economic factors that relate to Ava activities.
Specifically, this section provides a narrative of Ava’s operational history, a summary of financial position, a detailed analysis of financially relevant activities, and currently known facts and conditions of risk elements related to Ava’s operations.
The Basic Financial Statements provide an independently verified, accurate portrait of Ava’s financial position as of June 30, 2024. The three statements are the Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, and Statement of Cash Flow. Specific high-level details to these statements are:
• Annual Operating Revenues: $909,536,352
• Annual Operating Expenses: $749,162,050
• Annual Net Nonoperating Activities: $12,303,453
• Net position increase by $172,677,755 to $535,344,031 Notes to the Basic Financial Statements discuss several aspects of the Basic Financial Statements and provide greater details on areas such as accounting policies, cash and capital positions, risk management, commitments, and known subsequent events.
Fiscal Impact
This report has no financial impact
Committee Recommendation
The audited financial statements were presented to the Finance, Administrative, and Procurement Subcommittee on November 13, 2024, but without quorum.
Attachments
A. Presentation from the Auditor, Pisenti & Brinker
B. Ava Community Energy Audited Financial Statements for Fiscal Year 2023-2024 Ava Community Energy
Report to the Board of Directors
November 20, 2024
Attachment Staff Report Item 17A
Introduction
• Kellin Gilbert, CPA
• Audit Partner
• 17 years in public accounting and performing audits of government entities
• Currently working with several CCA’s throughout California • Aliandra Schaffer
• Engagement Manager
• 5 years in public accounting and performing audits of governments (CCA’s)
Attachment Staff Report Item 17A
Results of current year audit:
• The audit is complete. We have reported the following:
• Unmodified opinion – Based on our audit, the financial statements are materially accurate.
• No significant deficiencies or material weakness in
internal control have been identified.
Attachment Staff Report Item 17A
Audit of the year ended June 30, 2024
Financial Statements
Relative Roles & Responsibilities
• Management is responsible for preparing the Financial Statements and establishing a system of internal control.
• Auditor is responsible for auditing the Financial Statements • Considering risks of material misstatement in the Financial Statements
• Considering internal controls relevant to the Financial Statements • Performing tests of year-end balances based on risk assessment • Evaluating adequacy of disclosures
Attachment Staff Report Item 17A
Risk Assessment for the year ended
June 30, 2024
Our audit is a risk-based audit. Risk assessment procedures include:
• Gain understanding of the entity’s operating characteristics, practices, and procedures.
• Compare to our knowledge of similar entities, industry and professional guidance.
• Review procedures and controls surrounding significant transaction cycles and business processes.
Attachment Staff Report Item 17A
Risk Assessment for the year ended
June 30, 2024
Significant areas of focus
• Revenue recognition
• Accounts receivable and accrued revenue
• Test a sample of customer billings
• Relate total cash received during the year to revenue • Review revenue recognition through year-end and method for determining (accrued revenue)
• Cash
• Confirmations sent to financial institutions
Attachment Staff Report Item 17A
Risk Assessment for the year ended
June 30, 2024
Significant areas of focus
• Accrued Cost of Electricity
• Review subsequent bills from electricity providers and cash payments • Supplier Security Deposits
• Reviewed contracts and determined completeness of amounts recorded • Financial Statement Note Disclosures – Complete and without bias Attachment Staff Report Item 17A
Required Board Communications
• There were no new material accounting policies adopted by Ava Community Energy throughout the period audited.
• We did not identify any significant or unusual transactions or applications of accounting principles where a lack of
authoritative guidance exists.
• We did not propose any adjustments to the financial
statements.
Attachment Staff Report Item 17A
• There were no disagreements with management concerning the scope of our audit, the application of accounting principles, or the basis for management’s judgments on any significant matters. • We did not encounter any difficulties in dealing with management during the performance of our audit.
Required Board Communications
(continued)
Attachment Staff Report Item 17A
Kellin Gilbert: 707-577-1511
Questions?
Attachment Staff Report Item 17A
Financial Statements
Years ended June 30, 2024 and June 30, 2023
with Independent Auditor’s Report
Contact us
[email protected]
1-833-699-3223
Visit and follow us
AvaEnergy.org
@PoweredbyAva
At right: Ava Community Energy’s Scott Haggerty
Wind Energy Center in Livermore, CA
Attachment Staff Report Item 17B
TABLE OF CONTENTS
Independent Auditor’s Report ………………………………………………….......... 1 Management’s Discussion and Analysis ……………………………………………... 4 Basic Financial Statements:
Statements of Net Position …………………………………………………… 10
Statements of Revenues, Expenses and Changes in Net Position …................ 11 Statements of Cash Flows ……………………………………………………. 12
Notes to the Basic Financial Statements ……………………………………… 14 Attachment Staff Report Item 17B
Independent Auditor's Report
To the Board of Directors
Ava Community Energy Authority
Opinion
We have audited the accompanying financial statements of Ava Community Energy Authority (Ava), which comprise the statements of net position as of June 30, 2024 and 2023, the related statements of revenue, expenses and changes in net position, and cash flows for the years then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Ava as of June 30, 2024 and 2023, and the results of its operations and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Ava and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Ava’s ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued, including any currently known information that may raise substantial doubt shortly thereafter.
Attachment Staff Report Item 17B
Independent Auditor's Report (continued)
Auditor's Responsibilities for the Audits of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the audits. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audits in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Ava’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Ava’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits, significant audit findings, and certain internal control-related matters that we identified during the audits.
Attachment Staff Report Item 17B
Independent Auditor's Report (continued)
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management's discussion and analysis be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Santa Rosa, California
November 14, 2024
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2024 AND 2023
4 The purpose of management’s discussion and analysis (MD&A) is to help stakeholders and other readers understand what the financial statements and notes in this report say about Ava Community Energy Authority’s (Ava) financial health and why it has changed since last year. It contains information drawn from other parts of the report, accompanied by explanations informed by the finance staff’s knowledge of Ava’s finances.
Background
The formation of Ava was made possible in 2002 by the passage of California Assembly Bill 117, enabling communities to purchase power on behalf of their residents and businesses and creating competition in power generation.
Ava was created as a California Joint Powers Authority (JPA) effective December 1, 2016, and was established to provide electric power at competitive costs as well as provide other benefits within Alameda County, including reducing greenhouse gas emissions related to the use of power, procuring energy with a priority on the use and development of local renewable resources, stimulating local job creation through various programs and development, promoting personal and community ownership of renewable resources, as well as promoting long-term electric rate stability and energy reliability for residents and businesses.
In June 2018, Ava began providing service to its first approximately 55,000 customer accounts as part of its initial enrollment phase. This initial phase included municipal and business accounts.
The next major enrollment of residential accounts began in November 2018, which added approximately 500,000 accounts. In April 2021, Ava expanded their service territory by adding approximately 80,000 accounts. As of June 30, 2024, Ava had approximately 640,000 customers enrolled.
On October 31, 2023, East Bay Community Energy Authority changed its name to Ava Community Energy Authority to reflect its diversifying customer base from its expansion into the California central valley. Governed by a board of directors (Board) consisting of elected representatives from each jurisdiction, Ava has the rights and powers to set rates for the services it furnishes, incur indebtedness, and issue bonds or other obligations. Ava is responsible for the acquisition of electric power for its service area.
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2024 AND 2023
5 Overview of the Financial Statements
Ava’s financial report contains basic financial statements, which include:
o The Statements of Net Position include all of Ava’s assets, liabilities, and net position and provides information about the nature and amount of resources and obligations at a specific point in time.
o The Statements of Revenues, Expenses, and Changes in Net Position report all of Ava’s revenue and expenses for the years shown.
o The Statements of Cash Flows report the cash provided and used by operating activities, as well as other sources and uses, such as capital and investing activities. o The notes to the Basic Financial Statements provide additional details and information related to the basic financial statements.
Financial reporting
Ava presents its financial statements as an enterprise fund under the economic resources measurement focus and accrual basis of accounting, in accordance with Generally Accepted Accounting Principles (GAAP) for enterprise funds, as prescribed by the Governmental Accounting Standards Board (GASB).
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2024 AND 2023
6 Financial Summary
AVA’S NET POSITION
2024 2023 2022
Current assets $ 729,240,319 $ 441,433,975 $ 319,677,508 Noncurrent assets:
Capital assets, net 10,367,342 9,600,031 8,760,016
Other noncurrent assets 58,952,539 54,436,185 16,356,858 Total noncurrent assets 69,319,881 64,036,216 25,116,874 Total assets 798,560,200 505,470,191 344,794,382
Current liabilities 179,709,182 85,012,415 96,450,766
Noncurrent liabilities 3,600,000 4,787,500 -
Total liabilities 183,309,182 89,799,915 96,450,766
Deferred inflows of resources 79,916,987 53,014,000 15,814,000 Net position
Net investment in capital assets 9,658,727 9,600,031 8,760,016 Restricted for collateral - 1,000,000 9,000,000
Unrestricted 525,675,304 352,056,245 214,769,600
Total net position $ 535,334,031 $ 362,656,276 $ 232,529,616 As of June 30, 2024, Ava’s total net position was approximately $535,000,000, an increase of $173,000,000 or 48% as compared to June 30, 2023. Most of the increase in net position was in an increase in cash, as a result of Ava’s operating surplus discussed below.
AVA’S CHANGES IN NET POSITION
2024 2023 2022
Operating revenues $ 909,536,352 $ 817,931,312 $ 555,332,546 Nonoperating revenues - grants - 4,050,916 7,901,267
Nonoperating revenues - investments 13,149,786 2,609,002 221,757 Total income 922,686,138 824,591,230 563,455,570
Operating expenses 749,162,050 693,785,891 501,933,974
Nonoperating expenses 846,333 678,679 903,504
Total expenses 750,008,383 694,464,570 502,837,478
Change in net position 172,677,755 $ $ 130,126,660 $ 60,618,092 Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2024 AND 2023
7 Detailed Analysis
Increases in electricity sales accounted for most of the increase in total income. The cost of electricity, a component of operating expenses, increased approximately 7% from fiscal year 2023 to fiscal year 2024.
Current assets increased from $441,000,000 at the end of fiscal year 2023 to $729,000,000 at the end of fiscal year 2024. This increase was due to operating surpluses primarily driven by increased electricity rates charged to customers. Current assets at the end of fiscal year 2024 were primarily comprised of cash of $574,000,000, which includes $22,000,000 of cash held in a Rate Stabilization Fund, accounts receivable of $85,000,000, and accrued revenue of $61,000,000.
Capital assets are reported net of depreciation and amortization. Each year, the change represents the cost of capital assets acquired less depreciation and amortization expense for the year. Capital assets held by Ava include an office building, furniture and equipment, and a lease asset related to Ava’s office premises.
Other noncurrent assets include cash of $57,000,000 segregated in a Rate Stabilization Fund used to hold revenue that is to be deferred for recognition and use in later years in period when there is a need to supplement revenues. By postponing revenue recognition to future years, Ava is positioning itself to avoid sudden rate increases to address unanticipated spikes in energy costs and other unforeseen circumstances. Rate Stabilization Funds that are intended to be recognized in revenue within one year of these financial statements are included as cash in the current asset section.
The largest component of current liabilities is the cost of electricity delivered to customers that was not paid by Ava at fiscal year-end. Current liabilities for the cost of energy increased each year due to changes in payment terms of certain energy products, as well as the prices of those products.
Noncurrent liabilities consist of supplier security deposits held by Ava as collateral.
Operating revenues increased each year from fiscal years 2022 to 2024, primarily from increases in rates charged to customers. Ava also receives revenues from sources other than retail customer sales. These sources include liquidated damage revenue resulting from supplier noncompliance with contract provisions and grant income used to support various customer programs. Revenue from liquidated damages increased from fiscal year 2023 to fiscal year 2024 primarily due to delays in the operations of certain energy supplier facilities.
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2024 AND 2023
8 Detailed Analysis (continued)
Grant income from the California Arrearage Payment Plan (CAPP) was included in nonoperating revenues for fiscal years 2022 and 2023. This grant was applicable for two years and did not recur in fiscal year 2024. Investment income increased each year due to changes in market interest rates as well as increases in invested assets.
Operating expenses increased each year primarily due to market forces that resulted in increases in the cost of electricity, Ava’s largest expense. Ava procures energy from a variety of sources to reduce market risk and to maintain a balanced renewable power portfolio. The primary driver of the increase in energy costs from 2023 to 2024 was the rising renewable energy and resource adequacy market.
Significant Capital Asset and Long-Term Financing Activity Included in capital assets are an office building and land, and furniture and equipment.
Office premises leased by Ava are reported in the Statement of Net Position as “lease asset.” The related future payments are reported as “lease liability.” Ava does not have any outstanding financing debt.
Currently Known Facts, Decisions, or Conditions
California Independent System Operator (CAISO) system power prices experienced volatility through the year ended June 30, 2024. Intra-year variability was somewhat consistent with year-to-year historical variability that occurs due to seasonal and annual weather changes and was also characterized by carrying over a marked increase in total energy prices above historical levels from the previous year.
Infrastructure supply development remains somewhat constrained. In previous years the driver of these constraints included lingering supply chain disruptions, but now interconnection bottlenecks plague California as well as the rest of the United States. These constraints are driven by the increased demand for renewable and other energy resources by urban electrification and the growth in technology data center and associated artificial intelligence processing needs.
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2024 AND 2023
9 Currently Known Facts, Decisions, or Conditions (continued) Ava has certain contracts in place that mitigate exposure to price spikes in the CAISO markets, but currently CAISO market prices as well as electricity futures prices in liquid forward markets are declining. At the same time, the overall market for electricity and the related commodity products is experiencing a rising price environment. The rising price environment is driven by elevated costs to enter into long-term offtake agreements (e.g. power purchase agreements (PPAs) and energy storage offtake agreements), elevated prices for Resource Adequacy, and dramatically elevated costs for environmental attributes like Renewable Energy Certificates (RECs). Noting that both Resource Adequacy and RECs are required commodities for compliance with California legislative obligations.
Ava has in place a formal risk management policy that includes guidance on target levels of non-financial hedges. Energy hedging is intended to reduce the financial risk of unexpected price surges by contracting for a significant portion of future energy at fixed prices. Purchases made at fixed contractual prices reduce the need to purchase energy at the volatile daily open market. The target hedge percentages depend on factors including time and the hedge pricing relative to historical energy costs. In general, Ava targets hedging 60-100% of its exposure in energy products on a short-duration basis of under a year and aims to hedge greater than 80% of its exposure going into any particular month. Ava has complied with its risk management policy and regulations.
Year-over-year, Ava has retained a strong customer and revenue base with low opt-out levels. Ava continues to be actively engaged on legislative and regulatory matters that can impact Ava's energy procurement requirements and, therefore, energy-related expenditures. This provides some level of additional certainty on Ava revenues.
Requests for information
This financial report is designed to provide Ava’s board members, stakeholders, customers, and creditors with a general overview of Ava’s finances and to demonstrate Ava’s accountability for the funds under its stewardship.
Please address any questions about this report or requests for additional financial information to 1999 Harrison Street, Suite 2300, Oakland, CA 94612.
Attachment Staff Report Item 17B
BASIC FINANCIAL STATEMENTS
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
STATEMENTS OF NET POSITION
AS OF JUNE 30, 2024 AND 2023
10 The accompanying notes are an integral part of these financial statements. 2024 2023
Current assets
Cash and cash equivalents - unrestricted $ 574,113,778 $ 291,035,233 Accounts receivable, net of allowance 84,962,803 84,198,659 Accrued revenue 60,952,393 45,767,329
Market settlements receivable 807,102 -
Other receivables 242,447 90,568
Prepaid expenses 2,825,541 18,388,084
Deposits 6,143,357 147,000
Cash - restricted 1,000,000 -
Total current assets 729,240,319 441,433,975
Noncurrent assets
Cash in Rate Stabilization Fund - unrestricted 57,472,293 53,014,000 Deposits 1,193,774 931,164
Loan receivable 286,472 491,021
Capital assets, net of depreciation and amortization 10,367,342 9,600,031 Total noncurrent assets 69,319,881 64,036,216
Total assets 798,560,200 505,470,191
Current liabilities
Accrued cost of electricity 149,299,510 65,136,135
Accounts payable 5,352,155 4,295,566
Advances from grantors 9,052,151 -
Other accrued liabilities 3,523,316 5,930,936
User taxes and energy surcharges due to other governments 7,444,637 7,404,678 Lease liability 708,615 -
Security deposits - energy suppliers 4,328,798 2,245,100 Total current liabilities 179,709,182 85,012,415
Noncurrent liabilities
Security deposits - energy suppliers 3,600,000 4,787,500 Total liabilities 183,309,182 89,799,915
Rate Stabilization Fund 79,916,987 53,014,000
Net investment in capital assets 9,658,727 9,600,031
Restricted for collateral 1,000,000 -
Unrestricted 525,675,304 352,056,245
Total net position $ 535,334,031 $ 362,656,276
NET POSITION
DEFERRED INFLOWS OF RESOURCES
LIABILITIES
ASSETS
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
YEARS ENDED JUNE 30, 2024 AND 2023
11 The accompanying notes are an integral part of these financial statements. 2024 2023
OPERATING REVENUES
Electricity sales, net $ 919,222,939 $ 847,306,890
Revenue deferred to Rate Stabilization Fund, net (26,902,987) (37,200,000) Liquidated damages 15,330,202 6,150,378
Grant revenue 1,440,935 1,498,666
Other operating revenues 445,263 175,378
Total operating revenues 909,536,352 817,931,312
OPERATING EXPENSES
Cost of electricity 707,476,247 658,204,854
Contract services 18,980,445 18,104,240
Staff compensation 16,269,116 12,950,359
Other operating expenses 5,736,911 4,435,677
Depreciation and amortization 699,331 90,761
Total operating expenses 749,162,050 693,785,891
Operating income 160,374,302 124,145,421
NONOPERATING REVENUES (EXPENSES)
Grant revenue 4,050,916 -
Investment income 13,149,786 2,609,002
Financing costs (846,333) (678,679)
Nonoperating revenues (expenses), net 12,303,453 5,981,239 CHANGE IN NET POSITION 172,677,755 130,126,660
Net position at beginning of year 362,656,276 232,529,616 Net position at end of year $ 535,334,031 $ 362,656,276
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2024 AND 2023
12 The accompanying notes are an integral part of these financial statements. 2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 939,057,618 $ 878,374,195
Receipts from grantors 4,564,468 -
Receipts of supplier security deposits 6,804,858 8,602,600 Other operating receipts 17,226,004 12,650,524
Payments to suppliers for electricity (611,040,073) (618,685,214) Payments for other goods and services (22,702,802) (21,223,125) Payments of staff compensation (15,937,300) (12,694,993) Payments for deposits and collateral (7,212,418) (51,689,464) Tax and surcharge payments to other governments (35,743,923) (32,070,485) Net cash provided by operating activities 275,016,432 163,264,038
CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES
Grant revenue 4,050,916 -
Payments of financing costs (675,281) (899,099)
Net cash provided (used) by non-capital
financing activities (675,281) 3,151,817
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments under lease obligation (433,780) -
Payments to acquire capital assets (359,262) (1,011,413) Net cash used by capital and related financing activities (793,042) (1,011,413)
CASH FLOWS FROM INVESTING ACTIVITIES
Principal payments received of loan receivable 204,549 8,979 Investment income received 12,784,180 2,606,751
Net cash provided by investing activities 12,988,729 2,615,730 Net change in cash and cash equivalents 286,536,838 168,020,172 Cash and cash equivalents at beginning of year 345,049,233 177,029,061 Cash and cash equivalents at end of year $ 631,586,071 $ 345,049,233 Reconciliation to the Statement of Net Position
Cash and cash equivalents - unrestricted (current) $ 574,113,778 $ 291,035,233 Cash and cash equivalents - restricted (current) 1,000,000 - Cash and cash equivalents - unrestricted (noncurrent) 57,472,293 53,014,000 Cash and cash equivalents $ 631,586,071 $ 345,049,233
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED JUNE 30, 2024 AND 2023
13 The accompanying notes are an integral part of these financial statements. 2024 2023
Operating income $ 160,374,302 $ 124,145,421
Adjustments to reconcile operating income to net
cash provided by operating activities
Depreciation and amortization expense 699,331 90,761
(Increase) decrease in:
Accounts receivable (764,144) (4,384,259)
Market settlements receivable 807,102 (807,102)
Other receivables (50,198) 6,214,035
Accrued revenue (15,185,064) 1,822,681
Prepaid expenses 15,562,543 (9,659,760)
Deposits (5,995,042) 14,992,053
Increase (decrease) in:
Accrued cost of electricity 84,163,375 4,852,765
Accounts payable 1,025,455 1,772,053
Other accrued liabilities 254,156 313,794
Advances from grantors 4,564,468 -
Deferred revenue 1,721,004 3,985,600
User taxes due to other governments 39,959 1,558,396
Security deposits from energy suppliers 896,198 (18,832,400) Rate Stabilization Fund 26,902,987 37,200,000
Net cash provided by operating activities $ 275,016,432 $ 163,264,038
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
14 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
Ava Community Energy Authority (Ava), formerly East Bay Community Energy, is a California joint powers authority created on December 1, 2016. As of June 30, 2024, parties to its Joint Powers Agreement consist of the following local governments, plus one representative (non-voting) from the Community Advisory Committee (CAC):
County Cities
Alameda Albany Newark
Berkeley Oakland
Dublin Piedmont
Emeryville Pleasanton
Fremont San Leandro
Hayward Stockton
Lathrop Tracy
Livermore Union City
Ava is separate from and derives no financial support from its members. Ava is governed by a Board of Directors (Board) whose membership is composed of elected officials representing the member governments.
A core function of Ava is to provide electric service that includes the use of renewable sources under the Community Choice Aggregation Program under California Public Utilities Code Section 366.2.
Ava began its energy delivery operations in June 2018. Electricity is acquired from electricity suppliers and delivered through existing physical infrastructure and equipment managed by Pacific Gas and Electric Company.
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
15 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
BASIS OF ACCOUNTING
Ava’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements.
Ava’s operations are accounted for as a governmental enterprise fund and are reported using the economic resources measurement focus and the accrual basis of accounting – similar to business enterprises. Accordingly, revenues are recognized when they are earned, and expenses are recognized at the time liabilities are incurred. Enterprise fund-type operating statements present increases (revenues) and decreases (expenses) in total net position. Reported net position is segregated into three categories – investment in capital assets, restricted and unrestricted.
When both restricted and unrestricted resources are available for use, it is Ava’s policy to use restricted resources first, and then unrestricted resources as they are needed.
CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, Ava defines cash and cash equivalents to include cash on hand, demand deposits, and short-term investments with an original maturity of three months or less. For the purpose of the Statements of Net Position, restricted cash balances are presented separately. Restricted cash reported on the Statements of Net Position includes collateral on a credit facility, as well as a required minimum balance to be maintained in one of its bank accounts.
MARKET SETTLEMENTS RECEIVABLE
Ava receives generation scheduling and other services from a registered California Independent System Operator (CAISO) scheduling coordinator.
PREPAID EXPENSES
Payments made to vendors that will benefit periods beyond the end of the current fiscal year are recorded as prepaid expenses.
DEPOSITS
Contracts to purchase energy may require Ava to provide the supplier with advanced payments or security deposits. Deposits are generally held for the term of the contract and are classified as current or noncurrent assets depending on the length of time the deposits will be outstanding.
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
16 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
LEASE ASSET AND LEASE LIABILITY
Ava recognizes an asset and liability when it enters into certain leasing arrangements. The leased asset is amortized over the term of the lease. The lease liability is the present value of payments expected to be paid to the lessor during the lease term. Ava’s only leased asset and liability relate to its office premises.
CAPITAL ASSETS AND DEPRECIATION
Ava’s policy is to capitalize furniture and equipment valued over $1,000 that is expected to be in service for over one year. Depreciation is computed according to the straight-line method over estimated useful lives of three years for electronic equipment, seven years for furniture and leasehold improvements, unless limited by the length of the original lease term. Ava does not own any electric generation assets.
ADVANCES FROM GRANTORS
Ava received grant funding from various grantors. The amount in this category represents funds received by Ava, but not yet expended to carry out specific goals. See Note 6 for additional information related to grants administered by Ava.
SECURITY DEPOSITS – LIABILITY
Various energy contracts entered into by Ava require the supplier to provide Ava with a security deposit. Security deposits are held by Ava for the duration of the contract or until certain milestones are met. Deposits are classified as current or noncurrent depending on the length of time the deposits will be held.
RATE STABILIZATION FUND
Ava created a Rate Stabilization Fund to allow Ava to defer revenue in years when financial results are strong to be used in future years when financial results are stressed. In accordance with GASB Statement No. 62 and GASB Statement No. 65, the amount recognized as an addition to the fund is shown as a reduction of operating revenues and reported on the statements of net position as a deferred inflow of resources.
Ava directed revenue of $37,408,000 and $37,200,000 to the Rate Stabilization Fund for the years ended June 30, 2024 and 2023, respectively. Ava removed $10,500,000 and $0 from the Rate Stabilization Fund for the years ended June 30, 2024 and 2023, respectively. The removal of funds resulted in a recognition of revenue in the same amount. The accumulated balance in the Rate Stabilization Fund at June 30, 2024 and 2023 was approximately $79,917,000 and $53,014,000, respectively. Cash held for Rate Stabilization Fund purposes that are intended to be recognized as revenue within one year of these financial statements are included as cash in the current asset section. Otherwise, the related cash is included in the noncurrent asset section.
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
17 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
NET POSITION
Net position is presented in the following components:
Net Investment in capital assets: This component of net position consists of capital assets, net of accumulated depreciation and amortization and is reduced by outstanding borrowings that are attributable to the acquisition, construction, or improvement of those assets. Ava did not have any such borrowings outstanding as of June 30, 2024 and 2023.
Restricted: This component of net position consists of constraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.
Unrestricted: This component of net position consists of net position that does not meet the definition of “investment in capital assets” or “restricted.”
OPERATING AND NONOPERATING REVENUES
Operating revenues include revenues derived from the provision of energy to retail customers and grant revenue related to the delivery of program activities. Operating revenues are affected by amounts directed to or from the Rate Stabilization Fund.
Investment income is considered “nonoperating revenue.” Certain grant revenue that is not subject to performance obligations, such as from the California Arrearage Payment Program (CAPP), is also considered “nonoperating revenue.”
REVENUE RECOGNITION
Ava recognizes revenue on an accrual basis. This includes invoices issued to customers during the reporting period and electricity estimated to have been delivered but not yet invoiced.
Management estimates that a portion of the invoiced amounts will be uncollectible. Accordingly, an allowance for uncollectible accounts has been recorded.
OPERATING AND NONOPERATING EXPENSES
Operating expenses include the costs of sales and services, administrative expenses, and depreciation on capital assets. Expenses not meeting this definition are reported as nonoperating expenses.
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
18 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ELECTRICAL POWER PURCHASED
During the normal course of business, Ava purchases electrical power from numerous suppliers.
Electricity costs include the cost of energy and capacity arising from bilateral contracts with energy suppliers as well as generation credits, and load and other charges arising from Ava’s participation in CAISO’s centralized market. The cost to acquire electricity and capacity is recognized as “Cost of Electricity” in the Statements of Revenues, Expenses and Changes in Net Position.
To comply with the State of California’s Renewable Portfolio Standards (RPS) and self-imposed benchmarks, Ava acquires RPS eligible renewable energy evidenced by Renewable Energy Certificates (Certificates) recognized by the Western Renewable Energy Generation Information System. Ava obtains Certificates with the intent to retire them and does not sell or build surpluses of Certificates with a profit motive. Ava recognizes an expense that corresponds to the volume sold to its customers for its various renewable and carbon-free products. This expense recognition increases accrued cost of electricity reported on the Statements of Net Position until the time the payment has been made to the supplier.
Ava purchases capacity commitments from qualifying electricity generators to comply with the California’s Resource Adequacy Program. The goals of the Resource Adequacy Program are to provide sufficient resources to CAISO to ensure the safe and reliable operation of the electrical grid in real-time and to provide appropriate incentives for the siting and construction of new resources needed for reliability in the future.
STAFFING COSTS
Ava pays employees semi-monthly and fully pays its obligation for health benefits and contributions to its defined contribution retirement plan monthly. Ava is not obligated to provide post-employment healthcare or other fringe benefits, and accordingly, no related liability is recorded in these financial statements. Ava provides compensated absences, and the related liability is recorded in these financial statements.
INCOME TAXES
Ava is a joint powers authority under the provision of the California Government Code and is not subject to federal or state income or franchise taxes.
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
19 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts in the prior year financial statements have been reclassified for comparative purposes to conform to the presentation of the current-year financial statements. These reclassifications did not result in any change in the previously reported net position.
2. CASH AND CASH EQUIVALENTS
Ava maintains its cash in both interest-bearing and non-interest-bearing accounts. Ava’s deposits are subject to California Government Code Section 16521, which requires that banks collateralize public funds in excess of the Federal Deposit Insurance Corporation limit of $250,000 by 110%.
Ava has no deposit or investment policy that addresses a specific type of risk that would impose restrictions beyond this code. Accordingly, the amount of risk is not disclosed. Ava monitors its risk exposure to its banks on an ongoing basis.
3. ACCOUNTS RECEIVABLE
Accounts receivable were as follows as of June 30:
2024 2023
Accounts receivable from customers 110,562,803 $ $ 117,017,715 Allowance for uncollectible accounts (25,600,000) (32,819,056) Net accounts receivable $ 84,962,803 $ 84,198,659
The majority of account collections occur within the first few months after a customer is invoiced.
Ava estimates that a portion of the billed accounts will not be collected. Ava continues collection efforts on accounts in excess of de minimis balances regardless of the age of the account. Although collection success generally decreases with the age of the receivable, Ava continues to have success collecting older accounts. The allowance for uncollectible accounts at the end of a period includes amounts billed during the current and prior fiscal years. During the year ended June 30, 2023, Ava received CAPP funds (see Note 6) that helped Ava recover funds for previously written off accounts receivable.
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
20 4. CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2024, was as follows:
Beginning
balance Increases
Ending
balance
Capital assets not being depreciated:
Building - not in service $ 5,131,484 $ - $ 5,131,484
Land 4,255,380 - 4,255,380
Total capital assets not being depreciated 9,386,864 - 9,386,864 Capital assets being depreciated and amortized:
Furniture and equipment 481,818 318,485 800,303
Leasehold improvements 71,911 - 71,911
Lease asset 1,076,246 - 1,076,246
Total capital assets being depreciated and amortized: 481,818 1,466,642 1,948,460 Less accumulated depreciation and amortization:
Furniture, equipment and leasehold improvements (268,651) (161,208) (429,859) Lease asset (538,123) - (538,123)
Total accumulated depreciation and amortization (268,651) (699,331) (967,982) Total capital assets, net of depreciation and amortization 9,600,031 $ $ 767,311 $ 10,367,342 Capital asset activity for the year ended June 30, 2023, was as follows:
Beginning
balance Increases
Ending
balance
Capital assets not being depreciated:
Building - not in service $ 4,350,153 $ 781,331 $ 5,131,484 Land 4,255,380 4,255,380 - Total capital assets not being depreciated 8,605,533 781,331 9,386,864 Capital assets being depreciated and amortized:
Furniture and equipment 332,373 149,445 481,818
Less accumulated depreciation and amortization:
Furniture, equipment and leasehold improvements (177,890) (90,761) (268,651) Total capital assets, net of depreciation and amortization 8,760,016 $ $ 840,015 $ 9,600,031 Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
21 5. DEBT
In October 2022, Ava closed its revolving credit agreement with Barclays Bank and entered into a new agreement with U.S. Bank (formerly Union Bank). The available credit line under the new agreement is $200,000,000. The credit agreement enhances Ava’s overall liquidity for potential working capital needs and collateral requirements. This agreement terminates in October 2025.
The borrowing rate on the credit facility is 1.4%.
Ava had no debt outstanding under either line of credit agreement as of June 30, 2024 or 2023.
However, Ava did issue standby letters of credit secured by the line of credit agreement. As of June 30, 2024 and 2023, these letters of credit reduce the available portion of the line by approximately $34,000,000 and $39,770,000, respectively, but are not considered debt to Ava.
6. GRANTS
Ava administered a grant from the California Arrearage Payment Program (CAPP) that offered financial assistance for California energy utility customers to help reduce past due energy bill balances that increased during the COVID-19 pandemic. In 2022 this program was funded through the federal American Rescue Plan Act (ARPA) with Coronavirus State and Local Fiscal Recovery Funds. The program was funded by the State of California in 2023.
Ava also administers a grant from the California Public Utilities Commission (CPUC) for the Disadvantaged Communities Green Tariff (DAC-GT). This grant provides for bill discounts to eligible customers.
In addition to the two grants mentioned above, Ava also administers several small grants generally aimed at energy efficiency measures.
The following is a summary grant revenue for the years ended June 30:
2024 2023
CAPP $ 4,050,916$ -
DAC-GT 1,241,704 1,228,613
Miscellaneous 199,231 270,053
Total grant revenue 1,440,935 $ 5,549,582$
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
22 7. DEFINED CONTRIBUTION RETIREMENT PLAN
The Ava 401(a) Plan (the Plan) is a defined contribution retirement plan administered by LT Trust. As of June 30, 2024, there were 81 plan members. Ava is required to contribute a match up to 6% of annual covered payroll to the Plan and contributed $1,697,000 and $1,456,000 during the years ended June 30, 2024 and 2023, respectively. Ava has elected out of the Social Security system for employees eligible for the Plan. As part of this election, Ava makes required “replacement” contributions to the Plan. Plan provisions are established and may be amended by the Board.
8. RISK MANAGEMENT
Ava is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; and errors and omissions. During the years, Ava purchased insurance policies from investment-grade commercial carriers to mitigate risks that include those associated with earthquakes, theft, general liability, errors and omissions, and property damage. Deductible limits range from $0 to $1,000. Settled claims have not exceeded coverage in the last two years. There were no significant reductions in coverage compared to the prior year. From time to time, Ava may be party to various pending claims and legal proceedings. Although the outcome of such matters cannot be forecasted with certainty, it is the opinion of management and Ava’s legal counsel that the likelihood is remote that any such claims or proceedings will have a material adverse effect on Ava’s financial position or results of operations.
Ava maintains risk management policies, procedures and systems that help mitigate credit, liquidity, market, operating, regulatory and other risks that arise from participation in the California energy market. Credit guidelines include a preference for transacting with investment-grade counterparties, evaluating counterparties’ financial condition and assigning credit limits as applicable. These credit limits are established based on risk and return considerations under terms customarily available in the industry. In addition, Ava enters into netting arrangements whenever possible and where appropriate obtains collateral and other performance assurances from counterparties.
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
23 9. PURCHASE COMMITMENTS
In the ordinary course of business, Ava enters into various power purchase agreements in order to acquire renewable and other energy and electric capacity. The price and volume of purchased power may be fixed or variable. Variable pricing is generally based on the market price of either natural gas or electricity at the date of delivery. Variable volume is generally associated with contracts to purchase energy from as-available resources such as solar, wind, and hydroelectric facilities.
The following table details the obligations on existing energy, renewable, and resource adequacy (RA) contracts as of June 30, 2024:
Year ending June 30,
2025 $ 730,300,000
2026 634,000,000
2027 454,100,000
2028 403,700,000
2029 361,200,000
2030-2048 4,180,700,000
Total $ 6,764,000,000
10. LEASE
A lease asset is reported in accordance with GASB No. 87.
In July 2023, Ava entered into two lease agreements, one a sublease and one a main lease, for its office premises. Both agreements are for the same office space and each lease runs in succession over the period September 1, 2023 through October 31, 2032. The sublease will be in effect until April 2025 when the main lease becomes active. Rental expense for Ava’s office space was $618,000 and $519,000 for the years ended June 30, 2024, and 2023, respectively.
As of June 30, 2024, future minimum lease payments under the sublease were projected to be $709,000.
Attachment Staff Report Item 17B
AVA COMMUNITY ENERGY AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2024 AND 2023
24 11. JOINT VENTURE
AVA participates in a joint powers agreement (JPA) through the California Community Choice Financing Authority (CCCFA). CCCFA was formed as a conduit issuer to assist its members by undertaking the financing or refinancing of energy prepayments that can be financed with tax advantaged bonds on behalf of one or more of the members by issuing or incurring bonds and entering into related contracts with its members. Any debt or liability incurred by CCCFA on behalf of a member to prepay for renewable energy is not a debt or liability of that member.
Furthermore, the assets of CCCFA in the form of prepaid energy or reserves held by the respective bond trustees for any prepayment transaction undertaken on behalf of a member does not constitute an asset or reserve of that member.
CCCFA has issued bonds whose proceeds are to being used to finance energy purchases that will be delivered to AVA. No debt, liability, or obligation of CCCFA is a debt, liability, or obligation of AVA. AVA will purchase energy from CCCFA in the same manner as it purchases energy from other suppliers. The outstanding purchase commitments related to these financing facilities are included in Note 9. AVA purchased approximately $56,436,000 and $49,243,000 from CCCFA during fiscal years 2024 and 2023, respectively. The financial statements of CCCFA are available online at http://www.cccfa.org/key-documents.html.
12. FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for years ending after June 30, 2024:
GASB has approved GASB No. 102, Certain Risk Disclosures, and GASB No. 103, Financial Reporting Model Improvements.
Management is evaluating the effect of implementation of these statements.
13. SUBSEQUENT EVENTS
NEW MEMBERS
Ava anticipates beginning electric deliveries to recently admitted members of the cities of Stockton and Lathrop in 2025. Service to these communities is expected to increase Ava total load by approximately 13% when fully incorporated.
The County of San Joaquin has voted to join Ava Community Energy, and Ava’s Board of Directors has approved the County’s admission. An implementation plan has been filed with the CPUC and is currently being evaluated. If certified, service to the County would be expected to begin sometime in the 2026 calendar year.
Attachment Staff Report Item 17B
Staff Report Item 18
Staff Report Item 18
To: Ava Community Energy Authority
From: Jason Bartlett, Senior Finance Manager
Subject: Fiscal Year 2023-2024 Budget to Actuals and Surplus Allocations Date: November 20, 2024
__________________________________________________________________ Recommendation
Receive a report on Ava’s actual financial performance to approved budget for the fiscal year ending June 30, 2024, reconciliation of net revenues from the budget to net position from the audit, and the resulting surplus revenue allocations.
Background and Discussion
June 21, 2023, the Board of Directors (the “Board”) approved the fiscal year budget for July 1, 2023 through June 30, 2024 by resolution R-2023-37.
Budget to Actuals Comparison
Overall, performance of the actual revenues and expenses were within 1.6% of budgeted amounts. General highlights are as follows:
• Operating revenues were slightly under by 2%
• Operating expenditures were slightly higher by 1.6%
• Interest returns on cash holdings were higher than expected due to high interest rates through the year
• Recovered damages from undelivered contracts also contributed to net revenues • ~$10.5MM was recognized from GASB 62 Rate Stabilization Fund (RSF) for customer on-bill credits from the previous fiscal year (FY2022-2023) net revenues
Staff Report Item 18
• ~$37.4MM was deferred to GASB 62 RSF in accordance with Board approved waterfall (discussed later in this memo)
• Actual net revenues were $176.9MM compared to budgeted $179.8MM Table 1 provides the line item details on the actual performance compared to budget Budget Net Revenues to Audit Net Position Reconciliation The Budget is an internal proforma document set at the discretion of the Board. The financial statements in the Audit are standardized by generally accepted accounting REVENUES Budget Actuals
Electricity Sales 950,386,000 927,809,610 -2.4%
Uncollectable (12,095,000) (8,586,671) -29.0%
Total Revenue and Other Sources 938,291,000 919,222,939 -2.0%
EXPENDITURES & OTHER USES
OPERATING EXPENDITURES
Cost of Energy 682,367,000 707,476,247 3.7%
Data Management/Customer Service 7,769,000 7,729,768 -0.5% PG&E Service Fees 2,719,000 2,723,416 0.2%
CAISO Scheduling Coordinator 731,000 708,964 -3.0%
Personnel 21,911,000 16,269,116 -25.7%
Marketing & Communications 5,303,000 2,582,110 -51.3%
Legal, Policy, & Regulatory Affairs 3,509,000 1,368,407 -61.0% Other Professional Services 2,505,000 1,383,794 -44.8%
General & Administrative 5,711,000 4,332,803 -24.1%
Total Current Expenditures 732,525,000 744,574,625 1.6%
OTHER SOURCES & USES
Investment Income 1,680,000 13,149,786 682.7%
Other Income 48,000 445,263 827.6%
Liquidated Damages - 15,330,202 100.0%
Interest & Financing Costs (1,650,000) (780,181) -52.7% Local Development Transfer (25,500,000) (25,500,000) 0.0% Capital Expenditures * (500,000) (390,397) -21.9%
Total Other Sources & Uses (25,922,000) 2,254,673 -108.7% GROSS INCREASE (DECREASE) 179,844,000 176,902,987 -1.6% Revenue Recognized from Rate Stabilization Fund** - 10,504,837 100.0% Revenue Deferred to Rate Stabilization Fund (29,844,000) (37,407,824) 25.3% NET INCREASE (DECREASE) *** 150,000,000 150,000,000 0.0% * Depreciation has been removed and is expressed as Capital Expenditures ** Amount not determinable at time of budget approval
*** Net Increase is allocated to working capital and reserves Staff Report Item 18
principles (GAAP) and have additional rules set forth by the Governmental Accounting Standards Board (GASB)
Ava drafts each budget in accordance with industry best practices and does best efforts to align with GAAP and GASB standards, but fundamental differences exist and reconciliation should be defined.
As presented in the audited financial statements, the change in net position was approximately $172.7MM, and the net revenues from budget actuals is $176.9MM.
Table 2 provides the reconciliation by line item between the audited net position and the budget actuals net revenues.
The remaining $150MM balance is allocated to reserve funds and working capital and is described in further details in the next section of this report.
Budget Surplus Waterfall Allocations
On January 17, 2024, the Board approved resolution R-2024-2 to more clearly define how to allocate the budget surplus. The final allocation waterfall of surplus budget revenues is to be contributed in the following manner:
• The first $50 million is to be retained for working capital needs • The next $100 million is to be allocated to reserve funds • The remaining balance is to be allocated as:
o 60% dedicated to on-bill credits to customers with some portion specifically applied to CARE and FERA customers (recommendations will be presented in Item 18 in this meeting)
o 40% dedicated to incentives for clean storage investment for net-billing tariff projects with an emphasis on resilience development Table 3 shows the budgeted and actual allocations of the waterfall items Reconciled Item Details Amount Balance
Audited Net Position Includes GASB 62 Net Deferral 172,677,755 Depreciation Accrued depreciation of assets 173,377,086 (699,331) LD Budget Allocation Budgeted capital transfer to Programs 25,500,000 147,877,086 LD Revenue from Grants FY 23/24 grant revenue in Programs 1,440,935 146,436,151 LD Actual Expenses Actual FY 23/24 Program expenses (4,321,877) 150,758,028 Capital Outlay Capital reconcilliation 150,367,631 390,397 GASB 87 Lease Lease obligations outstanding as of 6/30/2024 150,000,000 367,631 Staff Report Item 18
Reserve Fund Balance
The Reserve Fund, as established by R-2021-2 and governed by policy P10.1, works to provide a suitable cash balance to guard against expense shocks. The fund balance is set to meet annual operating expense targets. These targets meet Ava financial objectives, including but not limited to:
• Securing favorable commercial terms with vendors and power providers • Maintain Ava’s “A Stable” credit rating
• Provide funds for unanticipated expenditures
• Maintain long-term Ava financial independence and rate stability Table 4 shows the annual contributions and withdraws to reserve funds, reserve balances, annual operating expenses, and percent of operating expense coverage provided by the reserve fund balance.
Fiscal Impact
There is no net impact on the current budget. There will be the recognition of the amount to cover on-bill credits from the RSF as revenue to offset the reduced revenues provided by the on-bill credit to customers.
Committee Recommendation
This was reviewed by the Finance, Administrative, & Procurement subcommittee on November 13, 2024 as an informational item. All matters raised in that meeting have been addressed in this memorandum.
Allocation Budget Actuals % Change
Revenues After Operations & Other Uses 179,484,000 176,902,987 -1.4% GASB 62 RSF Recognition 10,504,837 - 100.0%
Net Revenues 179,484,000 187,407,824 4.4%
Contributions
Working Capital 50,000,000 129,484,000 137,407,824 6.1% Reserve Funds 100,000,000 29,484,000 37,407,824 26.9%
Remaining
On-Bill Credits 60% 17,690,400 22,444,694 26.9%
Net Billing Tariff Program 40% 11,793,600 14,963,130 26.9% Contribution Year Contribution Withdraws Balance Operating Expenses PctCoverage 2018-2019 40,513,687 - 40,513,687 410,686,000 9.9%
2019-2020 49,704,640 - 90,218,327 383,045,000 23.6%
2020-2021 - - 90,218,327 471,897,000 19.1%
2021-2022 65,655,073 - 155,873,400 562,667,000 27.7%
2022-2023 75,000,000 - 230,873,400 732,885,000 31.5%
2023-2024 100,000,000 - 330,873,400 810,350,000 40.8%
Staff Report Item 18
Attachment
A. Presentation
FY 2023-2024 Budget Surplus,
Waterfall Allocations, and
Reserve Fund Balance
Board of Directors
November 20, 2024
Attachment Staff Report Item 18A
FY 2024 Budget to Actuals
2 Overall, actuals came in very much aligned with net
budget expectations: • Revenue slightly under by 2% • Overall Operating Expenditures higher by 1.6% • Other Sources & Uses had largest variance due to elevated interest rates through the year and
damages recovered from undelivered contracts
• ~$10.5MM was recognized from GASB 62 Rate
Stabilization Fund for customer On-Bill Credits
from FY 2022-2023 net revenues
• ~$37.4MM deferred to GASB 62 Rate Stabilization
Fund in accordance with Board approved waterfall
(discussed further)
REVENUES Budget Actuals
Electricity Sales 950,386,000 927,809,610 -2.4%
Uncollectable (12,095,000) (8,586,671) -29.0%
Total Revenue and Other Sources 938,291,000 919,222,939 -2.0%
EXPENDITURES & OTHER USES
OPERATING EXPENDITURES
Cost of Energy 682,367,000 707,476,247 3.7%
Data Management/Customer Service 7,769,000 7,729,768 -0.5% PG&E Service Fees 2,719,000 2,723,416 0.2%
CAISO Scheduling Coordinator 731,000 708,964 -3.0%
Personnel 21,911,000 16,269,116 -25.7%
Marketing & Communications 5,303,000 2,582,110 -51.3%
Legal, Policy, & Regulatory Affairs 3,509,000 1,368,407 -61.0% Other Professional Services 2,505,000 1,383,794 -44.8%
General & Administrative 5,711,000 4,332,803 -24.1%
Total Current Expenditures 732,525,000 744,574,625 1.6%
OTHER SOURCES & USES
Investment Income 1,680,000 13,149,786 682.7%
Other Income 48,000 445,263 827.6%
Liquidated Damages - 15,330,202 100.0%
Interest & Financing Costs (1,650,000) (780,181) -52.7% Local Development Transfer (25,500,000) (25,500,000) 0.0% Capital Expenditures * (500,000) (390,397) -21.9%
Total Other Sources & Uses (25,922,000) 2,254,673 -108.7% GROSS INCREASE (DECREASE) 179,844,000 176,902,987 -1.6% Revenue Recognized from Rate Stabilization Fund** - 10,504,837 100.0% Revenue Deferred to Rate Stabilization Fund (29,844,000) (37,407,824) 25.3% NET INCREASE (DECREASE) *** 150,000,000 150,000,000 0.0% * Depreciation has been removed and is expressed as Capital Expenditures ** Amount not determinable at time of budget approval
*** Net Increase is allocated to working capital and reserves Attachment Staff Report Item 18A
Budget Net Revenues to Audit Net Position Reconciliation 3 The Budget is an internal proforma document set at the discretion of the Board. The financial statements in the Audit are standardized by Generally Accepted Accounting Principles (GAAP) and have additional rules set forth by the Governmental Accounting Standards Board (GASB).
Ava drafts each budget in accordance with industry best practices and does best efforts to align with GAAP and GASB standards, but fundamental differences exist and reconciliation should be defined.
The table below reconciles the audited Net Position increase to the budget actuals Net Revenues The remaining $150MM balance is allocated to reserve funds and working capital and is described in further details in the next two slides. Reconciled Item Details Amount Balance Audited Net Position Includes GASB 62 Net Deferral 172,677,755 Depreciation Accrued depreciation of assets 173,377,086 (699,331) LD Budget Allocation Budgeted capital transfer to Programs 25,500,000 147,877,086 LD Revenue from Grants FY 23/24 grant revenue in Programs 1,440,935 146,436,151 LD Actual Expenses Actual FY 23/24 Program expenses (4,321,877) 150,758,028 Capital Outlay Capital reconcilliation 150,367,631 390,397 GASB 87 Lease Lease obligations outstanding as of 6/30/2024 150,000,000 367,631 Attachment Staff Report Item 18A
Waterfall Discussion
4 June 21, 2023, the Board of Directors (BOD) approved the fiscal year budget for July 1, 2023 through June 30, 2024 by Resolution R-2023-37.
This resolution allocated surplus revenues to abide by a waterfall of contributions in the following manner:
• The first $50 million to be retained for working capital needs • The next $100 million to be allocated to reserve funds • The remaining balance was to be split with 50% being allocated to long-term renewable energy and/or clean storage investments and 50% to be determined at a future date January 17, 2024, the BOD approved Resolution R-2024-2, to restructure and more clearly define the remaining balance allocations as:
• 60% to be dedicated to on-bill credits with some portions specifically applied to CARE and FERA customers
• 40% to be dedicated to incentives for clean storage investments as incentives for net-billing tariff projects with an emphasis on resilience development.
Attachment Staff Report Item 18A
Waterfall Distribution
5 In accordance with Board resolutions R-2023-37 and R-2024-2, the allocation of net revenues is as follows:
• The first $50 million is recognized and retained for working capital needs • The next $100 million is recognized and added to the reserve fund balance • The remaining amount is deferred to the GASB 62 Rate Stabilization Fund to be recognized in the following manner:
• $22,444,694 to be applied to customer bills as a credit in the current fiscal year • $14,963,130 to be applied as program incentives for net billing tariff solar & storage program Allocation Budget Actuals % Change
Revenues After Operations & Other Uses 179,484,000 176,902,987 -1.4% GASB 62 RSF Recognition 10,504,837 - 100.0%
Net Revenues 179,484,000 187,407,824 4.4%
Contributions
Working Capital 50,000,000 129,484,000 137,407,824 6.1% Reserve Funds 100,000,000 29,484,000 37,407,824 26.9%
Remaining
On-Bill Credits 60% 17,690,400 22,444,694 26.9%
Net Billing Tariff Program 40% 11,793,600 14,963,130 26.9% Attachment Staff Report Item 18A
Reserve Fund Balance
6 The Reserve Fund, as established by resolution R-2021-2 and governed by policy P10.1, works to provide a suitable cash balance to guard against expense shocks. The fund balance is set to meet annual operating expense targets. These targets meet Ava financial objectives, including but not limited to:
• Securing favorable commercial terms with vendors and power providers • Maintain Ava’s “A Stable” credit rating
• Provide funds for unanticipated expenditures
• Maintain long-term Ava financial independence and rate stability Contribution Year Contribution Withdraws Balance OpEx to Cover PctOps 2018-2019 40,513,687 - 40,513,687 410,686,000 9.9%
2019-2020 49,704,640 - 90,218,327 383,045,000 23.6%
2020-2021 - - 90,218,327 471,897,000 19.1%
2021-2022 65,655,073 - 155,873,400 562,667,000 27.7%
2022-2023 75,000,000 - 230,873,400 732,885,000 31.5%
2023-2024 100,000,000 - 330,873,400 810,350,000 40.8%
Attachment Staff Report Item 18A
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7 Attachment Staff Report Item 18A
Staff Report Item 19
Staff Report Item 19
To: Ava Community Energy Authority
From: Kelly Brezovec, Sr. Director, Account Services
Subject: Request that the Board adopt a resolution regarding on-bill credit allocation of surplus revenue from Fiscal Year 2023-2024.
Date: November 20, 2024
__________________________________________________________________ Summary/Recommendation
Staff requests that the Board adopt a Resolution on proposed Fiscal Year 2023-2024 surplus revenue bill credit options based on the January 2024 Fiscal Year Budget Surplus Allocation Resolution.
To review, the plan allocation is as follows:
1. $50 million to be retained for working capital needs
2. $100 million to be contributed to reserve funds
3. The remaining balance to be split 60/40 between:
a. One-time on-bill credits to customers, with some portion applied specifically to California Alternate Rates for Energy (CARE) / Family Electric Rate Assistance (FERA) customers
b. Incentives for an Ava Solar and Storage Program
Table 1 identifies the credits available for the on-bill credits and the Ava Solar and Storage Program, following the allocation approved in January 2024. A discussion of the budget and performance compared to forecast is available in the Budget to Actuals, Waterfall, and Reserves presentation at the November 13, 2024, Finance, Administration, and Procurement Subcommittee.
Staff Report Item 19
Allocation Budget Actuals % Change
Net Revenues $179,484,000 $187,404,824 4.4%
Contributions
Working Capital $50,000,000 $129,484,000 $137,404,824 6.1% Reserve Funds $100,000,000 $29,484,000 $37,407,824 26.9% Remaining
On-Bill Credits 60% $17,690,400 $22,444,694 26.9%
Ava Solar + Storage
Program 40% $11,793,600 $14,963,130 26.9%
Table 1: FY 2023-2024 Net Revenues and Fund Allocations Staff recommends allocating the one-time on-bill credits to customers as follows:
• $75 for CARE/FERA customers,
• $11.68 for non-CARE/FERA residential customers, and
• $0.0026 per kilowatt-hour used during fiscal year 2023-2024.
This credit allocation provides each customer class with a larger credit than they received from the FY2022-2023 surplus revenue credits. Later in this Staff Report this series of credits is identified as “Option 3.”
Financial Impact
Allocation of surplus funds from the previous fiscal year has already been approved by the Ava Board and does not have an impact on ongoing operations. The financial impact on customer bills is discussed below in the Analysis section.
Analysis and Context
History
In the January 2024 resolution, Fiscal Year Budget Surplus Allocation, The Board agreed to move forward with the Finance, Administrative, and Procurement subcommittee’s recommendation where 60% of the unallocated budget surplus is to be dedicated to on-bill credits with some portion specifically applied to CARE and FERA customers.
Since the assignment of the unallocated budget surplus credit is by customer class, and exactly what portion will go to CARE and FERA customers is still to be determined, the Board is expected to provide guidance at the November Board meeting in advance of customers seeing these credits in December - February.
Credits have been applied to customer bills in 2022 and 2023; staff recommend reviewing the proposed credits for 2023-2024 through the lens of previous customer experiences and potential expectations.
Fiscal Year 2022-2023:
Staff Report Item 19
The 2022-2023 budget included a $50 credit for CARE customers, specifically to be applied in Q1/Q2. In August/September 2022, CARE/FERA customers received a $50 “EBCE CARE Customer 2022” credit.
The 2022-2023 budget also allowed for a Budget Surplus Waterfall Allocation as follows:
1. Working Capital Needs: $50MM
2. Reserve Account Funding: $75MM
3. 50/50% split of any excess to:
a. Incremental Long-term Renewable Energy/Clean Energy Storage Investments b. One-time On-Bill Credits to customers
Based on the 2022-2023 surplus, $10,504,837 was allocated to “revenue share” customer credits. The credits were split pro-rata based on total load between the residential and non-residential segments. Approximately 40% of total usage was attributed to Residential customers. Every active residential customer received the same credit amount, $7.27. Non-residential customers received a credit based on a volumetric calculation of $0.002 per kWh of FY 2022-2023 usage. Table 1 identifies credits provided by customer class.
The non-residential credits were provided based on annual consumption; Table 1 provides average credits for common commercial rates.
Non-residential
Customer Size
Average Annual Usage
(kWh) Average Credit
Small (B1) 16,632 $33
Medium (B10) 205,176 $410
Large (B19) 2,676,288 $5,353
Table 1: FY 2022-2023 Average Non-residential Surplus Revenue Credits On the bill, these credits were identified as “Ava Customer Dividend.” Residential credits were applied to the bill in December and non-residential in January/February.
Fiscal Year 2023-2024:
The 2023-2024 budget again included a special $50 CARE or FERA credit. On the bill, these credits were the “Ava Customer Credit.” These were applied in November 2023.
To review, in January 2024, the Board approved a surplus allocation plan:
1. $50 million to be retained for working capital needs
2. $100 million to be contributed to reserve funds
3. The remaining balance to be split 60/40 between:
a. One-time on-bill credits to customers, with some portion applied specifically to CARE/FERA customers
b. Incentives for an Ava Solar and Storage Program
Staff Report Item 19
Note: The 2024-2025 budget did NOT include a special Q1/Q2 CARE allocation. The 2023- 2024 surplus will be the “fall” credit that CARE customers may be accustomed to receiving from Ava.
2023-2024 Surplus and Credit Options
Following the direction of the Board’s resolution from January 2024, for the credit assignments described in table 3, staff first assigned a value to credits for CARE/FERA customers. Then, using the same methodology applied to the FY 2022-2023 surplus, staff divided the remaining funds proportionally between residential and non-residential, based on 2022-2023 actual load (annual usage). Also, based on the operational success of applying the FY 2022-2023 surplus, residential credits are divided equally among all customers. Non-residential, or commercial, credits are applied based on actual usage in the previous fiscal year. In options 1, 2, and 3, CARE/FERA customers receive only the CARE credit, so their load is not included in the proportional division. In options 4 and 5, CARE/FERA customers receive both their unique credit and the residential credit, so their load is included in the total residential load.
Staff used the following assumptions in developing Options 1, 2 and 3, shown in Table 4.
CARE/FERA Customer Count 108,415
Residential Customer Count, total 512,850
Non-residential load, 2023-2024 3,747,420,727 kWh
Residential load, total, 2023-2024 2,189,688,525 kWh
CARE/FERA load, 2023-2024 368,023,164 kWh
Total Surplus Available $22,444,694
Table 2: Assumptions for analysis
Option 1: $125 for CARE/FERA Credit
Customer Class
%
Funds Total Bill Credit Note
Residential 13% $2,934,630 $7.26 Similar to 2023 credit CARE/FERA 60% $13,551,875 $125.00 Does not receive Residential Credit Non-residential 27% $5,958,189 $0.0016 Same to 2023 credit Option 2: $100 for CARE/FERA Credit
Customer Class
%
Funds Total Bill Credit Note
Residential 17% $3,829,054 $9.47 Nearly double 2023 credit CARE/FERA 48% $10,841,500 $100.00 Does not receive Residential Credit Non-residential 35% $7,774,140 $0.0021 Similar to 2023 credit Option 3: $75 for CARE/FERA Credit
Staff Report Item 19
Customer Class
%
Funds Total Bill Credit Note
Residential 21% $4,723,478 $11.68 Nearly double 2023 credit CARE/FERA 36% $8,131,125 $75.00 Does not receive Residential Credit Non-residential 43% $9,590,091 $0.0026 1.5x 2023 credit Option 4: $50 for CARE/FERA Credit
Customer Class
%
Funds Total Bill Credit Note
Residential 28% $6,298,859 $12.28 Nearly double 2023 credit CARE/FERA 24% $5,420,750 $50.00 Also receives Residential Credit Non-residential 48% $10,725,085 $0.0029 1.5x 2023 credit Option 5: $40 for CARE/FERA Credit
Customer Class
%
Funds Total Bill Credit Note
Residential 30% $6,699,995 $13.06 Nearly double 2023 credit CARE/FERA 19% $4,336,600 $40.00 Also receives Residential Credit Non-residential 51% $11,408,099 $0.0030 1.5x 2023 credit Option 6: No special credit to CARE/FERA
Customer Class
%
Funds Total Bill Credit Note
Residential 37% $8,304,537 $16.19 More than double 2023 credit Non-residential 63% $14,140,157 $0.0038 Almost double 2023 credit Table(s) 3: Staff identified options for 2023-2024 bill credits Staff recommends the middle option, Option 3. Table 4 provides an overview of all options provided with a comparison to the previous credits shared with customers.
FY22/23
FY23/24
Budget
To be applied Dec-24 to Feb-25
Option 1 Option 2 Option 3 Option 4 Option 5 Option 6
Residential Credit $7.27 (Dec-23) $7.26 $9.47 $11.68 $12.28 $13.06 $16.19 CARE Credit
(Total)
$50 (Aug-22)
$7.27 (Dec-23) $50 (Nov-23) $125 $100 $75 $62.28 $53.06 $16.19 Non-Residential
(per kWh)
$0.002/kWh
(Jan-24) $0.0016 $0.0021 $0.0026 $0.0029 $0.003 $0.0038 Table 4: Summary of Options
Staff Report Item 19
Customer Bill Impact
The non-residential credits by option vary widely based on annual usage; table 6 provides context. Staff recommends option 3. For a small or medium commercial customer, this is an extra $10 and $120 credit, respectively, compared to 2023.
Non-residential
Customer Size
Average
Annual
Usage (kWh) Option 1 Option 2 Option 3 Option 4 Option 5 Option 6 Small (B1) 16,632 $27 $35 $43 $48 $50 $63
Medium (B10) 205,176 $328 $431 $533 $595 $616 $780
Large (B19) 2,676,288 $4,282 $5,620 $6,958 $7,761 $8,029 $10,170 Table 5: Example credits for average commercial customers With significantly less usage variability, residential bills are more meaningful to compare year-to-year and for an “average” household. Tables 6 and 7 provide a snapshot of average annual electricity bills for residential CARE/FERA customers and residential customers respectively; annual bills are inclusive of generation and delivery charges. Staff used the default rate, which was E-1, a flat generation rate with tiered delivery charges, until 2021 when the new default was a time-of-use rate, TOU-C.
Default CARE/FERA Rate
Rate Year
Average
Monthly Usage
(kWh)
PG&E Average
Annual Bill ($)
Ava Average
Annual Bill ($)
Ava Average
Annual with
Credits ($)
E-1 2019 338 $659 $651
E-1 2020 338 $693 $689
E-1 2021 429 $925 $919
E-TOUC 2022 339 $889 $871 $821
E-TOUC 2023 343 $934 $904 $846
E-TOUC 2024 341 $1,080 $1,050 $975
Table 6: Average annual CARE/FERA residential bills, 2019-2024 In 2022, compared to 2021, CARE customers experienced lower annual bills due to a decrease in average monthly usage, annual electricity bills were lowered further through the Ava $50 bill credit. In 2023, customers would have seen average monthly bills increase from $871 to $904, however the $57 in bill credits from Ava effectively offset this increase. Should Ava apply a $75 credit to customer bills in 2024, customers would again be shielded from the bulk of the nearly $100 annual increase.
Standard residential customer bills, shown below in Table 7 do not experience this same benefit, as the credit has not been nearly as significant.
Staff Report Item 19
Default Residential Rate
Rate Year
Average
Monthly Usage
(kWh)
PG&E Average
Total Annual
Bill ($)
Ava Average
Total Annual
Bill ($)
Ava Average
Total Annual
Bill with
Credits ($)
E-1 2019 359 $1,070 $1,063
E-1 2020 359 $1,165 $1,160
E-1 2021 402 $1,358 $1,353
E-TOUC 2022 373 $1,525 $1,505
E-TOUC 2023 365 $1,549 $1,516 $1,502
E-TOUC 2024 360 $1,776 $1,744 $1,732
Table 7: Average annual residential bills, 2019-2024
Another way to look at this information is shown in Figures 1 and 2, with the same information provided graphically.
Figure 1: Average annual CARE/FERA residential bills, 2019-2024 Figure 2: Average annual residential bills, 2019-2024
Review of Option 3
Staff recommends Option 3, as this provides a larger credit than all three customer groups received last year. These bill credits would be applied to customer bills one to three months after Board approval.
Customer Group
Proposed Credit from
FY23-24 Surplus
Residential $11.68
CARE/FERA $75
Non-Residential $0.0026 per kWh
Small (B1) $43
Medium (B10) $533
Large (B19) $6,958
Staff Report Item 19
Table 8: Option 3, review
Committee Recommendation
This item was prepared for the Finance, Administration, and Procurement Subcommittee meeting on November 13, 2024. There was not a quorum at that meeting.
Attachments
A. Resolution
B. PowerPoint
Attachment Staff Report 19A
RESOLUTION NO. R-2024-xx
A RESOLUTION OF THE BOARD OF DIRECTORS
OF AVA COMMUNITY ENERGY AUTHORITY ON ON-BILL CREDIT
ALLOCATION OF SURPLUS REVENUE FROM FISCAL YEAR 2023-2024 WHEREAS, Ava Community Energy Authority (“Ava”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, under the Joint Exercise of Powers Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of Ava and parties to the Joint Powers Agreement (“JPA”) in March of 2020. The city of Stockton was added as a member to Ava in September of 2022. The city of Lathrop was added as a member to Ava in October of 2023. San Joaquin County was added as a member to Ava in July 2024. On October 24, 2023, Ava legally adopted the name Ava Community Energy Authority, where it had previously used the name East Bay Community Energy Authority since its inception; WHEREAS, on January 17, 2024, the Board of Directors (the “Board”) approved a plan to allocate Fiscal Year 2023-2024 revenues to working capital, reserve, incentives for net-billing tariff projects (Ava Solar and Storage Program), and on-bill credits with some portion specifically applied to California Alternate Rates for Energy (CARE) and Family Electric Rate Assistance (FERA) customers; WHEREAS, staff have completed the financial audit for Fiscal Year 2023-2024, and the Board has approved the audit results; and
WHEREAS, approximately $22 million is available for on-bill credits, which will be shared among customers through a credit on their Ava bill.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF AVA COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. Apply credits to customer bills as follows: $75 to each active CARE or FERA customer first, then split the remaining funds proportionally based on load from July 1, 2023 to June 30, 2024 between residential and non-residential customers.
Residential customers will receive the same credit while non-residential customers will receive a credit proportional to their usage from July 1, 2023 to June 30, 2024.
ADOPTED AND APPROVED this 20th day of November 2024.
Attachment Staff Report 19A
Jack Balch, Chair
ATTEST:
Adrian Bankhead, Clerk of the Board
Fiscal Year 2023-2024 Surplus
Allocation: On-bill Customer Credits
Board of Directors
November 20, 2024
Attachment Staff Report Item 19B
Summary
2 The January 2024 Budget Surplus Allocation resolution identified the following allocation:
1. $50 million to be retained for working capital needs
2. $100 million to be contributed to reserve funds
3. The remaining balance to be split 60/40 between:
o One-time on-bill credits to customers, with some portion applied specifically to CARE/FERA customers
o Incentives for an Ava Solar and Storage Program
Staff seeks feedback on proposed FY2023-2024 surplus revenue bill credit options. Based on the 23-24 financial audit ~ $22M is available for on-bill credits.
Attachment Staff Report Item 19B
History
3 • Previous budgets have provided for on-bill customer credits as follows:
FY 22/23 FY23/24
Residential Credit $7.27, Dec 2023 TBD
CARE Customer Credit $50, Aug 2022
$7.27 Dec 2023
$50, Nov 2023
Commercial Credit $0.002/kWh, Jan 2024 TBD
• The CARE customer credits provided in 2022 and 2023 were authorized by the board at $50 each
• Credits that were funded by surplus revenue were calculated by staff, splitting the total amount available into residential and commercial based on percentage of total load.
o Commercial customers were provided a custom credit based on actual usage
o Residential customers all received the same amount
Attachment Staff Report Item 19B
Summary of Options: FY23-24 Surplus Revenue On-bill Credits 4 One-time Bill Credit
Customer Class 2023 Option 1 Option 2 Option 3 Option 4 Option 5 Residential $7.27 $7.26 $9.47 $11.68 $12.28 $13.06
CARE/FERA $57.27 $125.00 $100.00 $75.00 $62.28 $53.06
Non-Residential
Credit (per kWh) $0.0020 $0.0016 $0.0021 $0.0026 $0.0029 $0.0030 Small (B1) $33 $27 $35 $43 $48 $50
Medium (B10) $410 $328 $431 $533 $95 $616
Large (B19) $5,353 $4,282 $5,620 $6,958 $7,761 $8,029
Attachment Staff Report Item 19B
Recommendation (Option 3)
5 Customer Group
Customer Credits
Received 2023
Proposed Credit from
FY23-24 Surplus
Residential $7.27 $11.68
CARE/FERA $57.27 $75
Non-Residential $0.0020 per kWh $0.0026 per kWh
Small (B1) $33 $43
Medium (B10) $410 $533
Large (B19) $5,353 $6,958
Attachment Staff Report Item 19B
Effect on Customer Bills:
CARE/FERA Customers with
Option 3
6 Rate Year
Average
Monthly
Usage (kWh)
PG&E
Average
Annual Bill
($)
Ava Average
Annual Bill
($)
Ava Average
Annual with
Credits ($)
E-TOUC 2022 339 $889 $871 $821
E-TOUC 2023 343 $934 $904 $846
E-TOUC 2024 341 $1,080 $1,050 $975
500
600
700
800
900
1,000
1,100
1,200
2019 2020 2021 2022 2023 2024
Average Annual Bills
CARE/FERA
PG&E Ava Ava with Credits
Attachment Staff Report Item 19B
Subcommittee
Recommendation and
Next Steps
7 • This item was prepared for the Finance,
Administration, and Procurement Subcommittee
meeting, which did not have a quorum.
• Following the Board's approval, staff will move
forward with on-bill credits
Attachment Staff Report Item 19B
Thank you!
AvaEnergy.org
+1 833.699.3223
[email protected]
PoweredWithAva
Online
Phone
Email
Social
8 Attachment Staff Report Item 19B
Attachment Staff Report Item 19B
Appendix: Options
10 Option 1: $125 for CARE/FERA Credit
Customer
Class % Funds Total Bill Credit Note
Residential 13% $2,934,630 $7.26 Similar to 2023 credit CARE/FERA 60%
$13,551,875
$125.00
Does not receive Residential
Credit
Non-residential 27% $5,958,189 $0.0016 Same to 2023 credit Option 2: $100 for CARE/FERA Credit
Customer
Class % Funds Total Bill Credit Note
Residential 17% $3,829,054 $9.47 Nearly double 2023 credit CARE/FERA 48%
$10,841,500
$100.00
Does not receive Residential
Credit
Non-residential 35% $7,774,140 $0.0021 Similar to 2023 credit Option 3: $75 for CARE/FERA Credit
Customer
Class % Funds Total Bill Credit Note
Residential 21% $4,723,478 $11.68 Nearly double 2023 credit CARE/FERA 36% $8,131,125 $75.00
Does not receive Residential
Credit
Non-residential 43% $9,590,091 $0.0026 1.5x 2023 credit Option 4: $50 for CARE/FERA Credit
Customer
Class % Funds Total Bill Credit Note
Residential 28% $6,298,859 $12.28 Nearly double 2023 credit CARE/FERA 24% $5,420,750 $50.00 Also receives Residential Credit Non-residential 48% $10,725,085 $0.0029 1.5x 2023 credit Option 5: $40 for CARE/FERA Credit
Customer
Class % Funds Total Bill Credit Note
Residential 30% $6,699,995 $13.06 Nearly double 2023 credit CARE/FERA 19% $4,336,600 $40.00 Also receives Residential Credit Non-residential 51% $11,408,099 $0.0030 1.5x 2023 credit Option 6: No special credit to CARE/FERA
Customer
Class % Funds Total Bill Credit Note
Residential 37% $8,304,537 $16.19 More than double 2023 credit Non-residential 63% $14,140,157 $0.0038 Almost double 2023 credit Attachment Staff Report Item 19B
Ayla Peters-Paz
Local Clean Energy Alliance
339 15th St Suite 208
Oakland, CA 94612
[email protected]
510-619-8948
Subject: Need for Specifically-Allocated Funding for Community-Driven Resilience Hubs from 2023-2024 Budget Surplus
November 20, 2024
Dear Ava Community Energy Board Members, Alternates, and Community Advisory Committee,
We urge the Board of Directors of Ava Community Energy to allocate funding from the 2023-2024 budget surplus for a Community Resilience Hub program, beyond what has been outlined in the current budget surplus description.
This funding would support Community-Driven Resilience Hubs in day-to-day operations, microgrid readiness, and immediate needs in the face of climate crises and other disasters.
Local Clean Energy Alliance has long advocated for Ava Community Energy to allocate funding for resilience hubs in their budget or fiscal year surplus, in addition to solar and storage offerings. Although Solar and Storage incentives are necessary for resilience hubs, they are not enough to fully address a community’s resilience needs.
Local Clean Energy Alliance seeks to ensure that resilience hubs receive funding and resources not just for their energy resilience efforts, but also for other forms of resilience as well. With more comprehensive funding, resilience hubs could provide other vital services to their communities, such as food refrigeration, cooling and heating centers, air filtration, and access to portable solar batteries.
Local Clean Energy Alliance asks Ava Community Energy to fulfill its larger responsibility to its constituents by funding a diverse range of resilience hub programs in community trusted locations that support environmental justice needs.
We urge the Ava Community Energy Board of Directors to prioritize energy justice and equity by:
1. Committing funding from the 2023-2024 surplus budget for a Community Resilience Hub program,
2. Making sure that part of the Community Resilience Hub program funding is accessible to smaller, less resourced Community-Based Organizations. This funding should target established and trusted community spaces in Environmental Justice and frontline communities,
3. Allotting funding for a training and coalition building program (a “network”) for resilience hubs and their partners to ensure they develop into robust community spaces,
4. Providing a grants program for smaller CBOs at $50,000 annually over 3 years (totaling $150,000 per grant).
As climate change worsens and with uncertainty in a new federal administration, there will be an increased need for access to localized energy emergency services.
Now, more than ever, communities need stronger infrastructure to withstand the impacts of destabilizing climate events and investments in their day-to-day needs.
BIPOC and low-income communities are often the first and most vulnerable victims of climate crises. In light of that, we must invest in creative, holistic solutions to make sure these communities thrive.
Clean Power to the People,
Local Clean Energy Alliance
Jessica Tovar
Ayla Peters-Paz
Hernando Sanchez
Jesse Gutierrez
Karin Krisdiva
Kathy Liang
Adrian Bankhead <[email protected]>
Ava - 11/20/24 - Susan Silber public comment
Adrian Bankhead <[email protected]> Thu, Nov 21, 2024 at 9:40 AM To: Ava Board of Directors <[email protected]>
Cc: [email protected]
Bcc: Matthew Jorgens <[email protected]>, Ben Barrientos <[email protected]>, Matt Bedolla <[email protected]>, Dan Wright <[email protected]>, Ed Hernandez <[email protected]>, Aaron Tiedemann <[email protected]>, Gabriela Christy <[email protected]>, Betsy Andersen <[email protected]>, Sherry Hu <[email protected]>, Olga Bolotina <[email protected]>, Minnie Diallo <[email protected]>, Jack Balch <[email protected]>, Jaime Patino <[email protected]>, Maria Long <[email protected]>, Robin López <[email protected]>, "Elisa Marquez (Scheduling)" <[email protected]>, John Perkins <[email protected]>, Julie Roche <[email protected]>, Lorraine Souza <[email protected]>, Elisa Marquez <[email protected]>, Teresa Cox <[email protected]>, Igor Tregub <[email protected]>, Dan Kalb <[email protected]>, Juan Gonzalez <[email protected]>, Sukhdeep Kaur <[email protected]>
Dear Ava Board of Directors,
Please see the written public comment below from Susan Silber. This public comment letter will be added to the agenda packet and saved on the public meetings page.
Let me know if you have any questions.
Thank you,
Adrian
_________________________________
My name is Susan Silber and I am a resident of Berkeley. I am the founder and Project Director of the nonprofit organization Collective Resilience, and have been working for the past 7 years with nonprofits and governmental agencies to support and develop resilience hubs here in Alameda County, including collaborating closely with the Local Clean Energy Alliance.
We want to thank you for committing to support resilience hubs, but are asking to specifically allocate at least $3 million dollars more from the 2023-2024 budget surplus into the development of a comprehensive Community Resilience Hub program, beyond the net billing tariff solar and storage programming that has been outlined in the current budget surplus description.
I wanted to share a brief story about why comprehensive funding is needed. I had the good fortune to be in Asheville North Carolina a few weeks ago, about a month after Hurricane Helene devastated this region, which was heartbreaking to see and hear about. Residents were without energy for about 5 days, and without potable water for about a month. That being said, the stories of resilience blew my mind. Asheville is known for its plethora of community initiatives and groups which cultivate trust and relationships with community members, and it showed in a big way during the hurricane.
I love hearing stories of neighbors coming together to share food, volunteers bringing water to seniors and other vulnerable populations, countless businesses and schools immediately turning into pop-up resilience hubs to distribute supplies. These stories really solidified my belief in the power and potential of supporting a decentralized network of sites serving as resilience hubs, the need to provide training and to consider not just energy needs but food, water and other basic needs as well. 11/21/24, 9:41 AM Ava Community Energy Mail - Ava - 11/20/24 - Susan Silber public comment https://mail.google.com/mail/u/0/?ik=703fa6ea73&view=pt&search=all&permmsgid=msg-a:r7026461854767053229&simpl=msg-a:r702646185476705… 1/2 With a comprehensive Community Resilience Hub program, resilience hubs can not only more comprehensively serve their communities during climate or energy disasters, but also better help their communities thrive on a day-to-day basis.
As you know, the definition of resilience hubs is that they are spaces where community members can access services for disaster response and recovery, as well as “to gather, organize, and access resilience-building social services on a daily basis.” So by their true definition, resilience hubs are holistic, they are community-led and community-driven.
Energy resilience through solar and storage are very much needed, but they alone cannot create a resilience hub. A resilience hub needs funding for programs that center building relationships and social cohesion (which are even more important in today's polarized world), and funding for food distribution and other programs, or nature-based solutions like community gardens and rain gardens.
Moreover, resilience hubs cannot exist as islands. We need funding to develop a coalition which could provide capacity building, communications portals and connections between the sites, governmental agencies and the nonprofits providing support for them.
We are at a make or break moment in history here, having just elected the most anti-environmental administration which could tear down safety nets and defund climate resilience programs. That means that resilience hubs will be even more urgently needed, as they replace some of the programs that our government had previously relied on.
As climate change worsens and with uncertainty in a new federal administration, there will be an increased need for localized energy services and investments in day-to-day resilience I have seen a great deal of excitement for resilience hubs over the years, but planning for them and their programming will not magically appear. It will take resources. Ava Community Energy, we know you have those resources, you have a $179 million dollar surplus. Put it to good use. Urge you to jumpstart this proposed coalition of resilience hubs, and funding for not just solar and storage but also for other programming needs, funding which should accessible to trusted smaller, less resourced Community-Based Organizations in frontline communities - in other words, an expansion of your successful mini-grants programs.
Let Ava Community Energy think outside the box a little bit. Fund what the community wants and needs.
Listen to the community and what we want, what we know is best for our community. We ask Ava Community Energy to invest in creative, holistic solutions to make sure communities can thrive.
Susan Silber
supporting resilience sites - hubs, spaces and neighborhoods - to evolve and flourish Project Director: www.collectiveresiliencenow.org
Calendly appointment link
11/21/24, 9:41 AM Ava Community Energy Mail - Ava - 11/20/24 - Susan Silber public comment https://mail.google.com/mail/u/0/?ik=703fa6ea73&view=pt&search=all&permmsgid=msg-a:r7026461854767053229&simpl=msg-a:r702646185476705… 2/2