Central Coast Community Energy (3CE) Policy Board
June 21, 2023

Policy Board of Directors
June 21, 2023
1:30 p.m.

Central Coast Community Energy
70 Garden Court, Suite 300
Boardroom
Monterey, CA 93940

REMOTE LOCATION VIA TELECONFERENCE
Any interested parties or community members may attend, and participate in, the meeting at the following addresses where Board members may also join the meeting from:

County of Santa Cruz
701 Ocean Street, Third Floor Training Room
Santa Cruz, CA 95060
City of Gonzales
City Hall
147 Fourth Street
Gonzales, CA 93936
City of San Luis Obispo
City Hall
990 Palm Street, Council Chambers
San Luis Obispo, CA 93401
City of Santa Maria
City Hall
110 East Cook Street, Council Chambers
Santa Maria, CA 93454
County of Santa Barbara
County Administration Building
105 East Anapamu Street,
Board of Supervisors Conference Room
Santa Barbara, CA 93101
Public may participate through ZOOM. For ZOOM participation please join by computer audio at:
https://us02web.zoom.us/j/82977357049
Or join by phone:
+1 669 900 6833 or +1 669 219 2599
Enter this Webinar ID Number: 829 7735 7049 when prompted. Please note there is no Participant Code, you will press # again after the recording prompts you.

You will be placed in the meeting as an attendee. To make a public comment:
 If joined by computer, please press the button to raise your hand  If joined by phone, please push *9 on your keypad
If you have anything that you wish to be distributed to the Board, please provide 15 copies to a member of 3CE staff or the Board Clerk, who will distribute the information to the Board members and staff.

The public may comment on the consent agenda and matters not listed on the agenda but within the Board's jurisdiction at the opening of the meeting. The Board may not take action at this meeting on any item not listed on the Agenda other than to refer the matter to staff or set it for a future meeting. The public may comment on a specific item listed on this agenda when the Board considers that item. Speakers are limited to 3 minutes each.

In addition, members of the public may request and receive copies without undue delay of any documents that are distributed to the Board, unless there is a specific exemption under the Public Records Act that prevents the disclosure of the record. (Cal. Gov’t Code Section 54957.5) In compliance with Government Code Section 54957.5, non-exempt writings that are distributed to a majority or all of the Board in advance of a meeting and that relate to an agenda item will be made available at 3CE’s offices located at 70 Garden Court, Suite 300, Monterey, CA 93940 during normal business hours and are also available on the 3CE website located at: https://pub-3ce.escribemeetings.com/

AGENDA

Welcome & Roll Call
Pledge of Allegiance
Corrections or Additions
The Clerk will announce agenda corrections or proposed additions of emergency, urgency, or continued items, which will be acted on by the Board as provided in Section 54954.2 of the California Government Code.

Public Comment on Items on the Consent Calendar and Items Not listed on the Agenda The public may address the Board on the Consent Calendar and any matter within the jurisdiction of the Board but not on the agenda.

CONSENT CALENDAR

1. Approve Minutes from the February 15, 2023 Regular Meeting of the Policy Board

2. Approve Minutes from the May 15, 2023 Special Meeting of the Policy Board of Directors

3. Receive the Fiscal Year 2021-22 Audited Financial Statements

4. Receive the Fiscal Year 2022-23 Mid-Year Budget Re-forecast and Approve to Increase Appropriation

5. Appoint Dewayne Woods as Treasurer for Central Coast Community Energy

6. Appoint Charles McKee as General Counsel for Central Coast Community Energy

7. Receive Update on FY 2022-23 Energy Programs

8. Regulatory Quarterly Update

9. Treasurer's Report

PRESENTATION

10. Geothermal Project

REGULAR AGENDA

11. Community Advisory Council Report

12. Operations Board Report

13. CEO Report
a. Staffing Updates
b. Market and Regulatory Impacts on Cost of Energy
c. CAISO Interconnection Enhancements Initiative
d. Geothermal Project Comes Online

14. Consider and Approve 3CE's Project Selection Criteria

15. Adopt Resolution PB-2023-05 Authorizing CEO to Execute a Clean Energy Purchase Contract with California Community Choice Financing Authority and Ancillary Documents and Agreements to Effectuate the Prepay Financing Transaction Adjournment
Policy Board of Directors
February 15, 2023
9:00 A.M.

Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
The meeting was called to order at 9:00 A.M. with 2 members attending in-person and 13 members attending via teleconference pursuant to AB 361 and a quorum established.

Directors Present: Adams, Baron, Brooks, Donaldson, Dutra, Freeman, Kosmicki, Hamon, Marx, McPherson, Nomura, Cordero, Waage, Vice Chair Williams, Chair McShane Directors Absent: Keeley (arrived at 9:06am), Orona, Rios CEO confirmed that there were no corrections or additions to the agenda.

The Chair opened the public comment period for the consent agenda and items not listed on the agenda.

There were no public comments.

Chair closed the public comment period in the consent agenda.

CONSENT AGENDA
MOTION: Moved by Director Adams, Seconded by Director McPherson to approve the consent agenda.

ACTION: The Motion Carried with a voice vote: 16/0/2
AYES: Adams, Baron, Brooks, Donaldson, Dutra, Freeman, Keeley, Kosmicki, Hamon, Marx, McPherson, Nomura, Patino, Waage, Vice Chair Williams, Chair McShane
NOES: None
ABSENT: Orona, Rios

1. Approved Minutes of the December 20, 2022 Meeting of the Policy Board

2. Found, Pursuant to AB 361 and in order for the Policy Board of Directors to Continue Meeting Remotely, that the COVID-19 Pandemic State of Emergency Declared by Governor Newsom is Still In Effect; The Policy Board of Directors has Reconsidered the Circumstances of the State of Emergency; and the Monterey County Health Officer Continues to Recommend Social Distancing Measures for Meetings of Legislative Bodies (Action Item)

3. Received the Community Advisory Council Report

4. Received the Operations Board Report

5. Received the CEO Report
a) Customer Enrollment and Engagement Report
b) Update On FY 22-23 Community Energy Programs
c) Update On FY 22-23 Member Agency Services
d) 3CE Contracts < $100k

6. Received the Regulatory and Legislative Quarterly Update

7. Received the Treasurer's Report

REGULAR AGENDA

8. 2021-2022 Annual Report Presentation
ACTION: Discussion item; no action required.

9. Adopted a Ceremonial Resolution PB-2023-01 Commending Tom Habashi Chair opened public comment period.

There were no public comments.

Chair closed the public comment period.

MOTION: Moved by Director McPerson, Seconded by Director Freeman to approve.

ACTION: The Motion Carried with a voice vote: 16/0/2
AYES: Adams, Baron, Brooks, Donaldson, Dutra, Freeman, Keeley, Kosmicki, Hamon, Marx, McPherson, Nomura, Patino, Waage, Vice Chair Williams, Chair McShane
NOES: None
ABSENT: Orona, Rios

10. Workshop: 2023 Regulator and Legislative Outlook
Chair opened public comment period.

There were no public comments.

Chair closed the public comment period.

Adjourned at 10:50 A.M.

Policy Board of Directors
May 15, 2023, 10:30 am
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
County of Santa Cruz
701 Ocean Street,
Third Floor Training Room
Santa Cruz, CA 95060
City of Pismo Beach
City Hall
Council Chambers
760 Mattie Road, Pismo Beach, CA 93449
City of San Luis Obispo
City Hall
990 Palm Street, Council
Chambers San Luis Obispo, CA
93401
City of Santa Maria
City Hall
110 East Cook Street, Council Chambers Santa
Maria, CA 93454
County of Santa Barbara
County Administration
Building 105 East
Anapamu Street,
Board of Supervisors Conference
Room Santa Barbra, CA 93101

MINUTES
The meeting was called to order at 10:33 AM with 13 members attending in 6 locations and a quorum established.

Directors Present: County of Santa Cruz: Brooks, McPherson 3CE Headquarters: Adams, Baron, Donaldson, Freeman, Kosmicki, Chair McShane City of Pismo Beach: Waage
City of San Luis Obispo: Marx
City of Santa Maria: Patino
County of Santa Barbara: Nomura, Vice Chair Williams
Directors Absent: Dutra, Keeley, Martin, Orona, Rios

REGULAR AGENDA

1. Adopt Resolution PB-2023-02 Setting the Regular Meeting Schedule of the Policy Board of Directors The Chair opened the public comment period.

No Public Comments Received.

The Chair closed public comment period.

MOTION: Moved by Director Adams, seconded by Director Freeman to approve.

ACTION: The Motion Carried with a roll call vote: 12/0/6 AYES: Adams, Baron, Brooks, Donaldson, Freeman, Kosmicki, McPherson, Nomura, Patino, Waage, Vice Chair Williams, Chair McShane
NOES: None
ABSENT: Dutra, Keeley, Martin, Marx (no audio), Orona, Rios

2. Adopt Resolution PB-2023-03 Approving the Sixth Amendment to the Central Coast Community Energy Joint Powers Agreement and Approve Inclusion of the County of San Luis Obispo as a 3CE Member The Chair opened the public comment period.

The following individual(s) addressed the Board.
 Zachary Lute
The Chair closed public comment period.

MOTION: Moved by Director McPherson, seconded by Director Adamsto approve.

ACTION: The Motion Carried with a roll call vote: 12/1/5 AYES: Adams, Baron, Brooks, Donaldson, Freeman, Kosmicki, Marx, McPherson, Nomura, Waage, Vice Chair Williams, Chair McShane
NOES: Patino
ABSENT: Dutra, Keeley, Martin, Orona, Rios

3. Adopt Resolution PB-2023-04 Approving Addendum No. 5 to the 3CE Community Choice Aggregation Implementation Plan and Statement of Intent
The Chair opened the public comment period.

No public comments received.

The Chair closed public comment period.

ACTION: The Motion Carried with a roll call vote: 12/1/5 AYES: Adams, Baron, Brooks, Donaldson, Freeman, Kosmicki, Marx, McPherson, Nomura, Waage, Vice Chair Williams, Chair McShane
NOES: Patino
ABSENT: Dutra, Keeley, Martin, Orona, Rios
Adjourned at 11:02am
Staff Report Item 3
TO: 3CE Policy Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Dewayne Woods, Interim Chief Financial Officer SUBJECT: Receive the Fiscal Year 2021-22 Audited Financial Statements DATE: 6/21/2023
RECOMMENDATION:

Receive the Fiscal Year 2021-22 Audited Financial Statements.

DISCUSSION:

With the conclusion of Fiscal Year 2021-22 Central Coast Community Energy has successfully completed its fifth year of operation. The attached Audited Financial Statement for FY 2021-22 was prepared by 3CE staff and Maher Accountancy and has received an unqualified (“clean”) opinion from our outside auditing firm Pisenti & Brinker, LLP (“P&B”).

On April 26, 2023, the Audit & Finance Committee received the Audited Year-End Financial Statements for FY 2021-22 and a presentation from P&B discussing the auditors’ unqualified (“clean”) opinion on 3CE’s financials for the fiscal year ended September 30, 2022. The Audit & Finance Committee recommended forwarding the financial statements to the Policy Board for the June 21, 2023, meeting.

Attached are the Audited Financial Statements and the P&B presentation provided to the Audit & Finance Committee.

ATTACHMENT(S):

1. Central Coast Community Energy Audited Financial Statement for FY 2021-22

2. Pisenti & Brinker, LLP Presentation
Financial
Statements
Years Ended September 30, 2022 and 2021

INCLUDING REPORT OF INDEPENDENT AUDITORS

CENTRAL COAST COMMUNITY ENERGY
YEARS ENDED SEPTEMBER 30, 2022 AND 2021

TABLE OF CONTENTS
Independent Auditor’s Report ………………………………………………………... 1 Management’s Discussion and Analysis ……………………………………………... 4 Basic Financial Statements:

Statements of Net Position ……………………………………………………. 11
Statements of Revenues, Expenses and Changes in Net Position ……………. 12 Statements of Cash Flows …………………………………………………….. 13
Notes to the Basic Financial Statements …………………………………….... 15 Supplementary Information:

Schedule of Expenditures of Federal Awards………………………………….. 26 Notes to Schedule of Expenditures of Federal Awards ………………………. 27 Compliance:

Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards………………………… 28 Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance…………………………………………………………….. 30
Schedule of Findings and Questioned Costs………………………………….. 33 Summary Schedule of Prior Audit Findings………………………………….. 35

SANTA ROSA      PETALUMA

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Santa Rosa, CA 95403
(707) 542‐3343    Office
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Independent Auditor's Report
To the Board of Directors
Central Coast Community Energy
Monterey, California
Report on the Audits of the Financial Statements
Opinion
We have audited the accompanying financial statements of Central Coast Community Energy (3CE), as of and for the years ended September 30, 2022 and 2021, and the related notes to the financial statements, which collectively comprise 3CE’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of 3CE as of September 30, 2022 and 2021, and the changes in financial position 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) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audits of the Financial Statements section of our report. We are required to be independent of 3CE 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 3CE’s ability to continue as a going concern for 12 months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

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 and Government Auditing Standards 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 and Government Auditing Standards, 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 3CE’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 3CE’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.

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.

Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the financial statements that collectively comprise 3CE's basic financial statements. The schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Unform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and the related notes to the schedule of expenditures of federal awards, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audits of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April 17, 2023, on our consideration of 3CE's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to solely describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of 3CE’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering 3CE's internal control over financial reporting and compliance.

Santa Rosa, California
April 17, 2023

CENTRAL COAST COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
4 The Management’s Discussion and Analysis provides an overview of Central Coast Community Energy’s (3CE) financial activities as of and for the years ended September 30, 2022 and 2021.

The information presented here should be considered in conjunction with the audited financial statements.

BACKGROUND
3CE’s formation was made possible in 2002 by the passage of California Assembly Bill 117, which enabled communities to purchase power on behalf of their residents and businesses as an alternative to legacy Investor-Owned Utilities (IOU).
3CE is a Community Choice Aggregator (CCA) established on February 21, 2017 pursuant to Public Utilities Code Section 366.2 and operating as a Joint Powers Authority (JPA) pursuant to Government Code section 6500 et seq. 3CE currently serves residential, commercial and agricultural/industrial customers in communities located within its service area. 1 3CE serves approximately 450,000 customer accounts forecast to consume 5,000 gigawatt hours (GWh) per year. 3CE is committed to charging competitive retail rates, offering innovative energy programs to facilitate electrification and reducing greenhouse gas (GHG) emissions through long-term contracts for existing and new utility scale renewable electricity generation. 3CE has established an innovative procurement strategy to accelerate the reduction of GHG emissions, committing 3CE to developing a resource mix which delivers clean renewable energy for 60% of 3CE demand by the year 2025 and 100% of 3CE demand by the year 2030. 3CE is governed by a Policy Board and an Operations Board. The Policy Board consists of elected officials from member jurisdictions, while the Operations Board consists of senior staff from those jurisdictions. The Policy Board provides guidance and approval in strategic planning and goal setting, budgets, rates, large capital expenditures, and financing. The Operations Board provides guidance and approval on contracts, agreements, and policies that govern day-to-day operations. 3CE has the rights and powers to set rates for its services, incur debt, and issue bonds or other obligations.
1 As of September 30, 2022, 3CE’s members included the California Cities and Towns of Arroyo Grande, Atascadero, Buellton, Carpinteria, Capitola, Carmel-by-the-Sea, Del Rey Oaks, Goleta, Gonzales, Greenfield, Grover Beach, Guadalupe, Hollister, Marina, Monterey, Morro Bay, Pacific Grove, Paso Robles, Pismo Beach, Salinas, San Juan Bautista, San Luis Obispo, Sand City, Santa Cruz, Santa Maria, Scotts Valley, Seaside, Soledad Solvang and Watsonville as well as the Counties of Monterey, San Benito, Santa Cruz and Santa Barbara.

CENTRAL COAST COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
5 Financial Reporting
3CE 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 proprietary funds, as prescribed by the Governmental Accounting Standards Board (GASB).

Contents Of This Report
This report is divided into the following sections:
 Management’s discussion and analysis.
 The basic financial statements:
o The Statements of Net Position include all of 3CE’s assets, liabilities, and net position and provide 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 3CE’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 asset acquisitions and investing activities.
o The Notes to the Basic Financial Statements provide additional details and information related to the basic financial statements.

CENTRAL COAST COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
6 FINANCIAL HIGHLIGHTS
The following table is a summary of 3CE’s assets, liabilities, and net position, and a discussion of significant changes for the years ended September 30:
2022 2021 2020
Current assets 259,993,090 $ 229,102,332 $ 194,879,069 $ Noncurrent assets
Capital assets, net 219,319 328,942 314,877
Other noncurrent assets 1,731,180 79,280 123,182
Total noncurrent assets 1,950,499 408,222 438,059
Total assets 261,943,589 229,510,554 195,317,128
Current liabilities 45,601,781 32,490,845 36,578,478
Noncurrent liabilities 9,131,250 7,031,250 -
Total liabilities 54,733,031 39,522,095 36,578,478
Net position
Investment in capital assets 219,319 328,942 314,877
Restricted for security collateral 294,000 294,000 1,500,000 Unrestricted 206,697,239 189,365,517 156,923,773
Total net position 207,210,558 $ 189,988,459 $ 158,738,650 $ Current Assets
Current assets were approximately $259,993,000 at the end of 2022 and consist of cash, accounts receivable, accrued revenue, investments, and deposits. Accrued revenue is revenue from energy delivered but not invoiced to customers. Accounts receivable reflects energy delivered and invoiced but not paid for by customers. Total current assets increased each year as a result of 3CE’s operating surplus for the years.

CENTRAL COAST COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
7 Noncurrent Assets
Capital assets, net of accumulated depreciation, were approximately $219,000 at the end of 2022 primarily reflecting the acquisition of furniture and equipment for employees. The change in 2022 mostly reflects depreciation expense.
3CE does not own assets used for electricity generation, transmission or distribution.

Other noncurrent assets consist of the long-term portion ($1,708,000) of a $2,000,000 loan made in 2022 to the County of Santa Cruz regarding their acquisition of generator equipment.

Also included in other noncurrent assets are deposits for regulatory and other operating purposes.

Current Liabilities
Current liabilities of $45,602,000 as of September 30, 2022 consist primarily of the cost of electricity delivered to customers that is not yet due to be paid by 3CE. Current liabilities also include amounts owed for trades payable, personnel costs, taxes and surcharges owed to other governments, and deposits received from suppliers. Accrued cost of electricity at the end of 2022 increased compared to the prior year. This was a result of increased prices of electricity purchased as well as a small increase in the volume of purchased electricity outstanding. There was a small decrease in this account from 2020 to 2021 as market price fluctuations were not as pronounced.

Noncurrent Liabilities
Some contracts require the supplier to provide 3CE with a security deposit. These deposits are held by 3CE until certain contract milestones are met or contracts are completed. As part of its risk management policy, 3CE requires energy suppliers to post collateral deposits in some cases.

Summary of Revenues, Expenses, and Changes in Net Position The following table is a summary of 3CE’s results of operations and a discussion of significant changes for the years ended September 30:
2022 2021 2020
Operating revenues 401,698,835 $ 287,931,441 $ 233,915,415 $ Nonoperating revenues 3,800,219 702,036 2,417,363
Total income 405,499,054 288,633,477 236,332,778
Operating expenses 388,276,955 257,383,668 197,290,842
Change in net position 17,222,099 $ 31,249,809 $ 39,041,936 $

CENTRAL COAST COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
8 Operating Revenues
Operating revenues from electricity sales increased approximately $54,900,000 from 2020 to 2021 due primarily to the addition of approximately 100,000 new customer accounts in January 2021.

Operating revenues from electricity sales increased from 2021 to 2022 by approximately $111,219,000 as a result of both 3CE’s customer base coming entirely online for the full year in 2022, and rate increases that went into effect during the year.

Included in operating revenues in 2022 is liquidated damages revenue earned as a result of performance issues from energy suppliers.

Nonoperating Revenues
The nonoperating revenues increase from 2021 to 2022 was primarily the result of grant income from the California Arrearage Payment Plan (CAPP) that was received in 2022.

Operating Expenses
3CE’s largest operating expense continues to be the purchase of electricity delivered to its customers. 3CE purchases energy products from markets and is developing a balanced diversified renewable power portfolio. Operating expenses increased each year due to an increase in the number of customers and rising market prices.

CENTRAL COAST COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
9 ECONOMIC OUTLOOK
The fiscal year ended September 30, 2022 was a year of continued growth and resilience as the nation emerged from the Covid-19 pandemic. 3CE began service to eight new cities and unincorporated Santa Barbara County. It now serves over 440,000 residential, commercial and agricultural/industrial customer meters in a service area spanning five counties: Santa Cruz, Monterey, San Benito, San Luis Obispo, and Santa Barbara.

Operating revenues grew over $114,000,000, driven primarily by the addition of new members and rate adjustments to reflect the increased cost of energy. Operating expenses, comprised primarily of energy costs, increased approximately $131,000,000 due to a combination of rising market prices, higher volumes to serve new members, and delays in new power projects resulting from supply chain and inflationary pressures.

Over time, 3CE’s growing portfolio of renewable energy and storage is expected to lower the cost and volatility of the energy it supplies to customers, helping it maintain a robust financial position. 3CE’s non-energy administrative costs - which include contract services, staffing costs, and general and administrative expenses, but exclude energy program costs, remained under 6% of revenues, reflecting its focus on delivering value for customers. 3CE’s cost of service rate (COS) structure ensures that customers pay only what it costs to serve them and keeps 3CE competitive with legacy Investor-Owned Utility (IOU) Rates. Fiscal year 2022 was the first year with COS rates for the PG&E service area. 3CE is among the first CCAs to implement COS rates, a framework in which costs are functionalized, classified, and allocated to customer classes. This approach, which is distinct from the indexed approach prevalent among CCAs, led to significant average customer savings versus IOU rates in 2022 and has continued to do so in 2023. These savings strengthen 3CE’s competitive position. 3CE will explore expanding the COS approach to its Southern California Edison service area in the next two years. 3CE has not been immune to the impact of the pandemic and the shifting regulatory landscape.

Supply chain and inflationary challenges have delayed power projects and increased costs.

Regulatory risk has increased in the past year and continues to impact energy procurement costs.

Despite these challenges, investments from the Inflation Reduction Act, a renewed political focus on developing new renewable resources, and the significant compliance value in battery storage provide an opportunity for 3CE to continue providing new resources at cost competitive rates. As a result, 3CE’s financial position and foundation remains strong and it is positioned for continued success.

CENTRAL COAST COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
10 REQUEST FOR INFORMATION
This financial report is designed to provide 3CE’s customers and creditors with a general overview of the organization’s finances and to demonstrate 3CE’s accountability for the funds under its stewardship.

Please address any questions about this report or requests for additional financial information to 70 Garden Court, Suite 300, Monterey, CA 93940.

Respectfully submitted,
Tom Habashi, Chief Executive Officer

BASIC FINANCIAL STATEMENTS

CENTRAL COAST COMMUNITY ENERGY
The accompanying notes are an integral part of these financial statements. 11

STATEMENTS OF NET POSITION
SEPTEMBER 30, 2022 AND 2021
2022 2021
Current assets
Cash and cash equivalents 150,096,869 $ 159,444,623 $
Accounts receivable, net of allowance 47,107,600 37,376,299 Accrued revenue 18,161,946 20,011,097
Energy settlements receivable - 7,856,108
Loan receivable 292,002 -
Other receivables 2,003,955 919,329
Prepaid expenses 308,419 1,538,193
Deposits 8,293,930 1,662,683
Restricted cash 294,000 294,000
Investments 33,434,369 -
Total current assets 259,993,090 229,102,332
Noncurrent assets
Deposits 23,182 79,280
Loan receivable 1,707,998 -
Capital assets, net of depreciation 219,319 328,942
Total noncurrent assets 1,950,499 408,222
Total assets 261,943,589 229,510,554
Current liabilities
Accrued cost of electricity 40,074,582 28,649,424
Accounts payable 1,589,211 1,231,718
Other accrued liabilities 1,996,024 1,151,069
User taxes and energy surcharges due to other governments 1,941,964 1,458,634 Total current liabilities 45,601,781 32,490,845
Noncurrent liabilities
Security deposits - energy suppliers 9,131,250 7,031,250 Total liabilities 54,733,031 39,522,095
Investment in capital assets 219,319 328,942
Restricted for security collateral 294,000 294,000
Unrestricted 206,697,239 189,365,517
Total net position 207,210,558 $ 189,988,459 $

NET POSITION
ASSETS

LIABILITIES

CENTRAL COAST COMMUNITY ENERGY
The accompanying notes are an integral part of these financial statements. 12

STATEMENTS OF REVENUES, EXPENSES

AND CHANGES IN NET POSITION
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
2022 2021

OPERATING REVENUES
Electricity sales, net 399,149,960 $ 287,931,441 $
Liquidated damages 2,548,875 -
Total operating revenues 401,698,835 287,931,441

OPERATING EXPENSES
Cost of electricity 366,610,134 241,714,336
Contract services 9,288,170 7,125,240
Staff compensation 6,089,226 5,875,005
Other general and administration 6,200,745 2,565,883
Depreciation 88,680 103,204
Total operating expenses 388,276,955 257,383,668
Operating income 13,421,880 30,547,773

NONOPERATING REVENUES
Interest and investment income 1,040,759 702,036
Grant revenue 2,759,460 -
Nonoperating revenues 3,800,219 702,036
CHANGE IN NET POSITION 31,249,809 17,222,099
Net position at beginning of year 189,988,459 158,738,650 Net position at end of year 207,210,558 $ 189,988,459 $

CENTRAL COAST COMMUNITY ENERGY
The accompanying notes are an integral part of these financial statements. 13

STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
2022 2021

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 398,416,283 $ 281,231,391 $
Receipts from liquidated damages 2,401,875 -
Receipts from suppliers 11,219,952 16,752,388
Payments to suppliers for electricity (265,819,342) (362,585,390) Payments for other goods and services (15,119,128) (9,339,942) Payments for staff compensation (6,178,169) (5,559,337) Payments of taxes and energy surcharges to other governments (6,812,737) (5,997,661) Net cash provided by operating activities 21,342,686 11,267,497

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Receipts from grantor 2,759,460 -

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Payments to acquire capital assets (1,113) (131,575)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest income received 970,035 702,036
Purchase of investments (32,418,822) -
Loan issued (2,000,000) -
Net cash provided (used) by investing activities (33,448,787) 702,036 Net change in cash and cash equivalents (9,347,754) 11,837,958 Cash and cash equivalents at beginning of year 159,738,623 147,900,665 Cash and cash equivalents at end of year 150,390,869 $ 159,738,623 $ Reconciliation to the Statements of Net Position
Cash and cash equivalents (unrestricted) 150,096,869 $ 159,444,623 $ Restricted cash 294,000 294,000
Cash and cash equivalents 150,390,869 $ 159,738,623 $

CENTRAL COAST COMMUNITY ENERGY
The accompanying notes are an integral part of these financial statements. 14

STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
2022 2021
Operating income 13,421,880 $ 30,547,773
Adjustments to reconcile operating income to net
cash provided by operating activities:

Depreciation expense 88,680 103,204
Provision for uncollectible accounts 2,309,127 2,108,070 (Increase) decrease in:

Accounts receivable, net (12,040,428) (11,904,775)
Accrued revenue 1,849,150 (2,852,851)
Energy settlements receivable 7,856,108 (7,845,717)
Other receivables (1,069,449) (684,024)
Prepaid expenses 1,251,830 (677,133)
Deposits (6,575,149) (484,973)
Increase (decrease) in:

Accrued cost of electricity 11,425,158 (3,474,002)
Accounts payable 357,493 767,293
Other accrued liabilities (115,044) (141,393)
User taxes and energy surcharges due to other governments 483,330 (38,725) Security deposits - energy suppliers 2,100,000 5,844,750 Net cash provided by operating activities 21,342,686 $ 11,267,497 $

RECONCILIATION OF OPERATING INCOME TO NET

CASH PROVIDED BY OPERATING ACTIVITIES

CENTRAL COAST COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
15 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY
Central Coast Community Energy (3CE) is a Joint Powers Authority created on February 21, 2017, and its jurisdictions consist of the following local governments as of September 30, 2022:

Counties Cities and Towns
Monterey Arroyo Grande Morro Bay
San Benito Atascadero Pacific Grove
Santa Barbara Buellton Paso Robles
Santa Cruz Capitola Pismo Beach
Carpinteria Salinas
Carmel-by-the-Sea San Juan Bautista
Del Rey Oaks San Luis Obispo
Goleta Sand City
Gonzales Santa Cruz
Greenfield Santa Maria
Grover Beach Scotts Valley
Guadalupe Seaside
Hollister Soledad
Marina Solvang
Monterey Watsonville
3CE is separate from and derives no financial support from its members. 3CE is governed by two Boards, a Policy Board and an Operations Board. Each Board is comprised of 17 members with 17 alternates representing the participating communities. Some of the 17 members represent more than one jurisdiction. Policy Board Members are elected officials from 3CE member communities. Operations Board Members are executives leading the member cities and counties. 3CE was formed to acquire retail electricity for the residents and businesses within its members’ jurisdictions, study, promote, conduct, operate, and manage energy and energy-related climate change programs, and to exercise all other powers necessary and incidental to accomplishing these objectives. A core function of 3CE 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.
3CE began its energy delivery operations in March 2018. Electricity is acquired from commercial suppliers and delivered through existing physical infrastructure and equipment managed by Pacific Gas and Electric Company (PG&E) and Southern California Edison (SCE).

CENTRAL COAST COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
16 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

BASIS OF ACCOUNTING
3CE’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. 3CE’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 3CE’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, 3CE defines cash and cash equivalents to include cash on hand, demand deposits and short-term investments with an original maturity of three months or more. 3CE has cash that is restricted under various security agreements. This is reported as restricted cash on the Statements of Net Position and is included in cash and cash equivalents for the purpose of the Statements of Cash Flows.

PREPAID EXPENSES AND DEPOSITS
Contracts to purchase energy may require 3CE 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.

Also included are prepaid expenses and deposits for regulatory and other operating purposes.

CAPITAL ASSETS AND DEPRECIATION
3CE’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 and seven years for furniture and leasehold improvements. 3CE does not own any electric generation, transmission or distribution assets.

CENTRAL COAST COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
17 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

NET POSITION
Net position is presented in the following components:

Investment in capital assets: This component of net position consists of capital assets, net of accumulated depreciation and reduced by outstanding borrowings that are attributable to the acquisition, construction, or improvement of those assets. 3CE did not have any outstanding borrowings as of September 30, 2022 or 2021.

Restricted for security collateral: 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 for security collateral.”

OPERATING AND NONOPERATING REVENUES
Operating revenues include revenue derived from the provision of energy to customers. Interest and investment income are considered nonoperating revenues.

REVENUE RECOGNITION
3CE 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 billed.

Management estimates that a portion of the billed amounts will be uncollectible. Accordingly, an allowance for uncollectible accounts has been recorded and revenues are reported net of this allowance.

OPERATING AND NONOPERATING EXPENSES
Operating expenses include the costs of electricity and services. Expenses not meeting this definition are reported as nonoperating expenses.

CENTRAL COAST COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
18 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ELECTRICAL POWER PURCHASED
During the normal course of business, 3CE purchases electrical power from numerous suppliers. Electricity costs include the cost of energy and capacity arising from contracts with energy suppliers as well as generation credits, and load and other charges arising from 3CE’s participation in the California Independent System Operator’s (CAISO) centralized market. The cost of 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), 3CE acquires RPS eligible renewable energy evidenced by Renewable Energy Certificates (Certificates) recognized by the Western Renewable Energy Generation Information System. 3CE obtains Certificates with the intent to retire them and does not sell or build surpluses of Certificates with a profit motive. An expense is recognized at the point that the cost of the Certificate is due and payable to the supplier.
3CE purchases capacity commitments from qualifying generators to comply with the California Public Utility Commission’s Resource Adequacy Program. The goals of the Resource Adequacy Program are to provide sufficient resources to the CAISO to ensure the safe and reliable operation of the 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
3CE pays employees semi-monthly and fully pays its obligation for health benefits and contributions to its defined contribution retirement plan each month. 3CE is not obligated to provide post-employment healthcare or other fringe benefits, and accordingly, no related liability is recorded in these financial statements. 3CE provides compensated time off, and the related liability is recorded in these financial statements.

CENTRAL COAST COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
19 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

INCOME TAXES
3CE 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.

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 previously reported net position or change in net position.

2. CASH AND CASH EQUIVALENTS
3CE maintains its cash in both interest-bearing and non-interest-bearing deposit accounts in several banks. 3CE’s deposits are subject to California Government Code Section 16521, which requires banks to collateralize public funds in excess of the Federal Deposit Insurance Corporation (FDIC) limit of $250,000 by 110%. Certain short-term investments with original maturities of less than three months are classified as cash and cash equivalents, which are not subject to the collateral requirement or FDIC coverage previously mentioned. Accordingly, the amount of risk is not disclosed. 3CE monitors its risk exposure on an ongoing basis.

CENTRAL COAST COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
20 3. RECEIVABLES AND DEPOSITS

ACCOUNTS RECEIVABLE
Accounts receivable was as follows as of September 30:
2022 2021
Accounts receivable from customers 55,979,470 $ 43,825,791 $ Allowance for uncollectible accounts (8,871,870) (6,449,492) Net accounts receivable 47,107,600 $ 37,376,299 $
The majority of account collections occur within the first few months following customer invoicing. 3CE estimates that a portion of the billed accounts will not be collected. 3CE 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, 3CE continues to have success in 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 2022, 3CE recorded an increase of approximately $2,422,000 in its reserve for uncollectible balance. This account is affected by accounts receivable write-offs, increases to its allowance for uncollectible accounts on current year revenue, and California Arrearage Payment Program (CAPP) funds applied. In 2022, 3CE received CAPP funds (see Note 6) that helped recover for previously written off accounts receivable.

ENERGY SETTLEMENTS RECEIVABLE
3CE receives generation scheduling and other services from a scheduling coordinator registered with the CAISO. Energy settlements due from the scheduling coordinator for the years ended September 30, 2022 and 2021 were approximately $0 and $7,856,000, respectively.

OTHER RECEIVABLES
Other receivables of $10,609,000 consists primarily of amounts due from energy suppliers, either for liquidated damages from non-performance, or as a result of certain wholesale transactions for energy products.

DEPOSITS
Current and noncurrent deposits were approximately $8,317,000 and $1,742,000 as of September 30, 2022 and 2021, respectively. The majority of current deposits relate to collateral posted with the CAISO, which is determined based on 3CE’s market exposure at a given time. Also included in current assets are funds provided to an energy program implementer to issue customer incentive payments.

CENTRAL COAST COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
21 4. INVESTMENTS
During the year ended September 30, 2022, 3CE purchased investments with original maturities of three months or more. As of September 30, the fair value of investments were as follows:
2022 2021
Current Investments:

Certificate of deposits 12,551,681 $ - $
Commercial paper 2,435,226 -
U.S. government & agency obligations 14,584,200 -
Municipal obligations 3,863,262 -
Total investments 33,434,369 $ - $

FAIR VALUE MEASUREMENT
GASB Statement No. 72, Fair Value Measurement and Application, sets forth the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are significant other observable inputs, and Level 3 inputs are significant unobservable inputs.

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. 3CE’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

As of September 30, 2022 and 2021, 3CE’s investments are considered Level 1 inputs.

CUSTODIAL CREDIT RISK
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, 3CE would not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in 3CE’s name, and are held by the counterparty.

CENTRAL COAST COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
22 4. INVESTMENTS (continued)

INTEREST RATE RISK
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Duration is a measure of the price sensitivity of a fixed income portfolio to changes in interest rates. It is calculated as the weighted average time to receive a bond’s coupon and principal payments. The longer the duration of a portfolio, the greater its price sensitivity to changes in interest rates. 3CE manages its exposure to declines in fair values by limiting the weighted average maturity of its investments.

All investments had a maturity of less than one year as of September 30, 2022.

5. CAPITAL ASSETS
Capital asset activity for the years ended September 30, 2022 and 2021 was as follows:

Balances at:

Furniture &
Equipment
Leasehold
Improvements
Accumulated
Depreciation Total
September 30, 2020 488,637 $ 73,269 $ (247,029) $ 314,877 $ Additions 109,795 7,474 (103,204) 14,065
September 30, 2021 598,432 80,743 (350,233) 328,942
Additions 1,113 - (88,680) (87,567)
Dispositions - (22,056) - (22,056)
September 30, 2022 599,545 $ 58,687 $ (438,913) $ 219,319 $

6. GRANT REVENUE
3CE administers a grant from CAPP that offers financial assistance for California energy utility customers to help reduce past due energy account balances that increased during the COVID-19 pandemic. This program is funded through the federal American Rescue Plan Act (ARPA) with Coronavirus State and Local Fiscal Recovery Funds. Grant revenue recognized for the year ended September 30, 2022 was $2,759,460.

CENTRAL COAST COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
23 7. DEFINED CONTRIBUTION RETIREMENT PLAN
3CE provides retirement benefits to eligible employees through a 401(a) Retirement Plan (Plan).

The Plan is a defined contribution (Internal Revenue Code 401(a)) retirement plan established to provide benefits at retirement to employees of certain qualified employers admitted by the Plan.

The Plan is administered by the Public Agency Retirement System (PARS). As of September 30, 2022, there were 34 plan participants. 3CE is required to contribute 10% of covered payroll as a match to required employee contributions. 3CE contributed approximately $462,000 and $439,000 for the years ended September 30, 2022 and 2021, respectively. Plan provisions and contribution requirements as they apply to 3CE are established and may be amended by the Board of Directors. 3CE has elected out of the Social Security system for employees eligible for the Plan. 3CE also provides a 457(b) Retirement Plan where employees can make tax deferred contributions.

8. RISK MANAGEMENT
3CE is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; and errors and omissions. During the year, 3CE 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. 3CE has general liability coverage of $1,000,000, with a deductible of $1,000. 3CE 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, 3CE enters into netting arrangements whenever possible and, where appropriate, obtains collateral and other performance assurances from counterparties.

CENTRAL COAST COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
24 9. PURCHASE COMMITMENTS

POWER AND ELECTRIC CAPACITY
In the ordinary course of business, 3CE enters into power purchase agreements to acquire energy and electric capacity. The price and volume of purchased power is largely fixed. Variable priced power, which is a small part of 3CE’s portfolio, is generally linked to the market price of either natural gas or power at the date of delivery. Variable volume is generally associated with contracts to purchase energy from resources with varying availability and production, such as solar, wind and hydroelectric facilities.
3CE enters into long-term power purchase agreements to ensure stable competitive rates for its customers and to comply with state law and voluntary targets for renewable and greenhouse gas (GHG) free products.

The following table represents the expected, undiscounted, contractual obligations outstanding as of September 30, 2022:

Year ending September 30,
2023 304,000,000 $
2024 236,000,000
2025 156,000,000
2026 141,000,000
2027 136,000,000
2028-2053 2,280,000,000
Total 3,253,000,000 $

CENTRAL COAST COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2022 AND 2021
25 10.FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for years ending after September 30, 2022:

GASB has approved GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, GASB Statement No. 96, Subscription-Based Information Technology Arrangements, GASB Statement No. 97, Certain Component Unit Criteria and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, GASB Statement No. 99, Omnibus 2022, GASB Statement No. 100, Accounting Changes and Error Corrections – An Amendment of GASB Statement No. 62, and GASB Statement No. 101, Compensated Absences. Management is evaluating the effect of implementation of these statements.

SUPPLEMENTARY INFORMATION

CENTRAL COAST COMMUNITY ENERGY

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED SEPTEMBER 30, 2022
26 Federal Grantor/Pass-Through Grantor/Program or Cluster Title Federal
Assistance
Listing Number
Pass-Through
Entity Identifying
Number
Total Federal
Expenditures
U.S. Department of the Treasury
California Department of Community
Services and Development (CSD)
COVID-19 American Rescue Plan Act (ARPA)
Coronavirus State and Local Fiscal Recovery Funds
California Arrearage Payment Program (CAPP) 21.027 68-0283471 2,759,460 $ Total U.S. Department of the Treasury 2,759,460
Total expenditures of federal awards 2,759,460 $
See accompanying Notes to Schedule of Expenditures of Federal Awards 27 CENTRAL COAST COMMUNITY ENERGY

NOTES TO SCHEDULE OF EXPENDITURES

OF FEDERAL AWARDS
YEAR ENDED SEPTEMBER 30, 2022

1. BASIS OF PRESENTATION
The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal grant activity of Central Coast Community Energy (3CE) under programs of the federal government for the year ended September 30, 2022. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

Because the Schedule presents only a selected portion of the operations of 3CE, it is not intended to and does not present the financial position, changes in the net position or cash flows of 3CE.

All federal awards received directly from federal agencies, as well as federal awards passed through nonfederal agencies and organizations are included in the Schedule. Pass-through entity identifying numbers are presented when available.

The reporting entity for 3CE is based upon criteria established by the Governmental Accounting Standards Board.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR FEDERAL AWARDS Expenditures on the accompanying Schedule are reported on an accrual basis of accounting.

Expenditures are recognized when incurred. Expenditures for federal awards are recognized following the cost principles contained in the Uniform Guidance. Under these cost principles certain types of expenditures are not allowable or are limited as to reimbursement.

3. SUB-RECIPIENTS
Of the federal expenditures presented in the Schedule, 3CE did not provide federal awards to sub-recipients for the year ended September 30, 2022.

4. INDIRECT COSTS
3CE did not elect to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.

SANTA ROSA      PETALUMA
RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. 3562 Round Barn Circle, Suite 200
Santa Rosa, CA 95403
(707) 542‐3343    Office
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pbllp.com
Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit
of Financial Statements Performed in Accordance with
Government Auditing Standards
Independent Auditor's Report
Board of Directors
Central Coast Community Energy
Monterey, California
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Central Coast Community Energy (3CE), as of and for the year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise 3CE's basic financial statements, and have issued our report thereon dated April 17, 2023.

Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered 3CE's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of 3CE’s internal control. Accordingly, we do not express an opinion on the effectiveness of 3CE’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of 3CE's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit
of Financial Statements Performed in Accordance with
Government Auditing Standards (continued)
Independent Auditor's Report (continued)
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether 3CE’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of 3CE's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering 3CE's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Santa Rosa, California
April 17, 2023
SANTA ROSA      PETALUMA

RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. 3562 Round Barn Circle, Suite 200
Santa Rosa, CA 95403
(707) 542‐3343   Office
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Report on Compliance for Each Major Federal Program
and Report on Internal Control Over Compliance
Required by the Uniform Guidance
Independent Auditor's Report
Board of Directors
Central Coast Community Energy
Monterey, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited Central Coast Community Energy’s (3CE) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of 3CE’s major federal programs for the year ended September 30, 2022. 3CE’s major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

In our opinion, 3CE complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30, 2022.

Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of 3CE and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program.

Our audit does not provide a legal determination of 3CE’s compliance with the compliance requirements referred to above.

Report on Compliance for Each Major Federal Program
and Report on Internal Control Over Compliance
Required by the Uniform Guidance (continued)
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to 3CE’s federal programs.

Auditor's Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on 3CE’s compliance based on our audit. 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, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about 3CE‘s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we:
 exercise professional judgment and maintain professional skepticism throughout the audit.  identify and assess the risks of material noncompliance, 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 3CE’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
 obtain an understanding of 3CE’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of 3CE’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Report on Compliance for Each Major Federal Program
and Report on Internal Control Over Compliance
Required by the Uniform Guidance (continued)
Report on Internal Control Over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness over internal control over compliance. Accordingly, no such opinion is expressed.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Santa Rosa, California
April 17, 2023
Central Coast Community Energy
Schedule of Findings and Questioned Costs
Year Ended September 30, 2022
33 I. Summary of Auditor's Results
Financial Statements
Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified

Internal control over financial reporting:

Material weaknesses identified? No
Significant deficiencies identified? None reported
Noncompliance material to financial statements noted? No Federal Awards
Internal control over major programs:

Material weaknesses identified? No
Significant deficiencies identified? None reported
Type of auditor's report issued on compliance for major federal programs: Unmodified Any audit findings disclosed that are required to be
reported in accordance with 2 CFR 200.516(a)? No
Identification of major federal programs:

Assistance Listing Number (s) Name of Federal Program or Cluster

21.027 Coronavirus State and Local Fiscal Recovery Funds Dollar threshold used to distinguish between type A and type B programs: $750,000 Auditee qualified as low-risk auditee? No
Central Coast Community Energy
Schedule of Findings and Questioned Costs (continued)
Year Ended September 30, 2022
34 II. Financial Statement Findings
No matters are reportable
III. Federal Award Findings and Questioned Costs
No matters are reportable
Central Coast Community Energy
Summary Schedule of Prior Audit Findings
Year Ended September 30, 2022
35 No Uniform Guidance audit performed in prior year.

Central Coast Community Energy
Report to the Audit & Finance Committee
April 26, 2023
Introduction
• Brett Bradford, CPA
• Audit Partner
• 18 years in public accounting and performing audits of government entities
• Currently working with several CCA’s throughout California • Jenna Blanchard
• Engagement Supervisor
• 7 years in public accounting and performing audits of governments (CCA’s)
Results of Current Year Audit:
• The audit is complete. We reported the following:
• Unmodified opinion – Based on our audit, the financial statements are materially accurate.
• No material weaknesses in internal control have been
identified.

Audits of the Years Ended September 30, 2022 and
2021 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
Risk Assessment for the Years Ended
September 30, 2022 and 2021
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.

Audit Procedures
Significant areas of focus
• Revenue recognition
• Accounts receivable and revenue
• Test a sample of customer billings
• Look at cash received subsequent to year-end and relate to A/R • Relate total cash received during the year to revenue • Review revenue recognition through year-end and the method for determining (accrued revenue)
• Cash and Investments
• Confirmations sent to financial institutions
Audit Procedures
Significant areas of focus
• Accrued Cost of Electricity
• Review subsequent bills from electricity providers and cash payments • Other Liabilities
• Reviewed contracts and other support to determine completeness of amounts recorded. • Financial Statement Note Disclosures – Complete and without bias Audit Procedures – Single Audit
• Single Audit – New for Fiscal Year 2022
• 3CE subject to Single Audit due to expending over $750k of federal funds • California Arrearage Payment Program (CAPP)
• 21.027 Coronavirus State and Local Fiscal Recovery Funds • This grant is for the public health emergency, COVID-19 or its negative economic impacts, including providing assistance to households, small businesses, nonprofits, and impacted industries…
• Schedule of Expenditures of Federal Awards (SEFA) included in the financial statements • Additional testing of controls and review of compliance requirements as determined by the Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance)
Required Board Communications
• The significant accounting policies
adopted by 3CE throughout the
period audited appear appropriate
and consistently applied.
• No alternative treatments of
accounting principles for material
items in the financial statements
have been discussed with
management.

Required Board Communications (continued)
• We did not propose any
adjustments to the financial
statements.
• We did not identify any significant or
unusual transactions or applications
of accounting principles where a lack
of authoritative guidance exists.

Other required communications with those charged with governance:

Required Board Communications (continued)
• There were no disagreements with
management concerning the scope of
our audit, the application of
accounting principles, or the basis for
management’s judgements on any
significant matters.
• We did not encounter any difficulties
in dealing with management during
the performance of our audit.

Other required communications with those charged with governance:

Brett Bradford: 707-577-1582
Jenna Blanchard: 707-577-1596
Questions?
Staff Report Item 4
TO: 3CE Policy Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Dewayne Woods, Interim Chief Financial Officer SUBJECT: Receive an Update of the Fiscal Year 2022-23 Mid-Year Budget Estimate and authorize the Chief Financial Officer to increase appropriations
DATE: 6/21/2023
RECOMMENDATION:

It is recommended the Policy Board: a.) Receive a Mid-Year Budget Estimate; and b.) Authorize the Chief Financial Officer to increase Fiscal Year (FY) 2022-23 adopted appropriations and revenue by $25,100,496 for a revised operating budget of $443,250,557.

BACKGROUND:

At its September 22, 2022, regular meeting, the Policy Board approved 3CE’s FY 2022-23 Operating Budget which estimated adjustments to the electric generation rates in the Pacific Gas & Electric (“PG&E”) service area. That final electric generation rate adjustment was effective January 1, 2023, and resulted in an overall reduction of 1.3 c/kWh.

At its April 26, 2023, meeting, the Audit and Finance Committee received the Mid-Year Budget forecast and supported staff’s recommendation to increase appropriations.

DISCUSSION/ANALYSIS:

The original adopted FY 2022-23 Operating Budget (“Adopted Budget”) approved appropriations of $425.7 million financed by $435.2 million in revenue with positive change in net position of $17.0 million. The current requested increase is net of a $408,078 reduction from non-energy operations and exclusion of $7.5 million in appropriated provisions for bad debt which do not require expenditure authority. Therefore, the total appropriations requested is $443,250,557.

Since adoption, increased regulatory compliance, a highly volatile energy market, and an unusually cold winter have resulted in a significant increase in 3CE’s cost of energy (“COE”) of $19.6 million. The Adopted Budget was built on an expected reduction in the electric generation rate of 2.3 c/kWh beginning in January; however, the final Policy Board approved reduction was a 1.3 c/kWh reduction.

The lower than budgeted reduction and increases in rates is estimated to result in higher than budgeted revenues of $26.6 million, which provides adequate financing to cover the increased COE of $19.6 million. Since presentation to the Audit & Finance Committee the agency has committed an additional $5.8 million to advance towards Resource Adequacy (“RA”) compliance. This additional RA commitment was not previously included in the Mid-Year Budget forecast and has now been added to the requested appropriation increase. The net result of increases in COE, RA and revenue is estimated to add an additional $1.5 million to net position over the original adopted budget, barring additional sustained hot weather events or other unanticipated costs.

The additional positive change in net position will provide 3CE with a small amount of additional flexibility to withstand potential weather or other market events that could deteriorate expected year-end results. Attachment 2 provides a graphical depiction of the financial impacts prior weather events have caused and the potential reductions to net position that may occur this year. As the attachment reveals, a weather event lasting over one week (or several smaller events) could consume the expected FY 2022-23 income possibly requiring use of reserves.

Assisting in achieving an increased net position is the inclusion of interest earnings of $6.2 million. With the Federal Reserve increasing interest rates, investment income is providing substantial financing sources which were not included in the Adopted Budget. Staff has included investment earnings in both the budget column and the forecast column to present the committee with a Mid-Year estimate isolating the main operational impact of COE, RA, and Energy Revenue, and the rate reduction variance from September 2022 to January 2023. While additional energy and investment revenue is estimated as available, this report only seeks approval of increasing appropriations by $25.1 million to sufficiently provide expenditure authority for the increased COE and RA expenditures.

FISCAL IMPACT:

Year End results estimate increased revenue by $26.6 million or 6.1%, a corresponding increase of expense by $25.1 million or 6.0%, resulting in a net positive bottom-line increase of $1.5 million. It is estimated that the agency will have an end of year positive net position increase of $18.5 million, however it must be cautioned that regulatory and energy market volatility could have a negative fiscal impact, especially in the summer months.

CONCLUSION:

Supporting the Policy Board’s approval of an additional appropriation of $25.5 million (anticipated to be funded from additional revenues) enables 3CE to cover additional costs associated with increased energy costs. Given the unpredictability of the energy market and increased regulatory risk. 3CE is preparing to complete an analysis of the current cost of service rate structure (in PG&E territory) and the design of Southern California Edison cost of service rates to ensure the fiscal stability of 3CE beyond the current fiscal year.

ATTACHMENT(S):

1. FY 2022-23 Mid-Year Budget Reforecast Recap

2. Energy Market Volatility Impact Scenario

ORIGINAL REVISED ORIGINAL REVISED

BUDGET FORECAST FORECAST VARIANCE VARIANCE
TOTAL REVENUE 435,185,913 461,797,031 461,797,031 26,611,118 26,611,118 COST OF ENERGY 377,918,807 397,557,631 403,427,381 19,638,824 25,508,574 OPERATING EXPENSES 40,231,255 39,823,177 39,823,177 (408,078) (408,078) TOTAL EXPENSES 418,150,061 437,380,808 443,250,557 19,230,747 25,100,496 SURPLUS/(DEFICIT) 17,035,852 24,416,223 18,546,474 7,380,371 1,510,622

MID YEAR BUDGET RE-FORECAST RECAP
FISCAL YEAR 2022-2023

ENERGY MARKET VOLATILITY IMPACT
Staff Report Item 5
TO: 3CE Policy Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Heather Vowell, Board Clerk
SUBJECT: Appoint Dewayne Woods as Treasurer for Central Coast Community Energy DATE: June 21, 2023
RECOMMENDATION:

This recommends the Policy Board appoint Dewayne Woods, Interim Chief Financial Officer, to serve as Treasurer for Central Coast Community Energy (“3CE”).

BACKGROUND:
3CE’s Policy Board is responsible for appointing a Treasurer to organize, manage, and oversee the depository, custody, treasury, and financial matters of 3CE pursuant to CA Government Code Section 6505 and section 3.3.3(h) of 3CE’s JPA.

DISCUSSION/ANALYSIS:

Mr. Woods spent over 20 years working for the County of Monterey, most recently as the Assistant County Administrative officer. Mr. Woods is experienced in all aspects of managing a medium-sized California county including operating a public hospital, public health, public safety, and public benefit programs. Mr. Woods has a master’s in public administration and is a Certified Governmental Finance Manager.

FISCAL IMPACT:

There is no fiscal impact associated with this appointment.

CONCLUSION:

The Board’s appointment of Mr. Woods as Treasurer allows the Interim CFO to carry out the requisite duties of the Treasurer on behalf of 3CE.

Staff Report Item 6
TO: 3CE Policy Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Heather Vowell, Board Clerk
SUBJECT: Appoint Charles McKee as General Counsel for Central Coast Community Energy DATE: June 21, 2023
RECOMMENDATION:

This recommends the Policy Board appoint Charles McKee to serve as General Counsel for Central Coast Community Energy (“3CE”).

BACKGROUND:

Upon its formation, 3CE relied on the County of Santa Cruz staff and consultants to lead the effort of launching the agency. On June 6, 2018, the Policy Board approved the addition of a full-time position to serve as General Counsel.

Section 3.3.3(h) of the 3CE JPA requires the Policy Board appoint General Counsel for the Agency.

DISCUSSION/ANALYSIS:

Mr. McKee has previously served as County Counsel for Nevada and Monterey Counties, County Administrative Officer for the County of Monterey, and currently serves as County Counsel for the County of Alpine under a contract arrangement.

Mr. McKee served on 3CE’s Operations Board and Energy Risk Management Committee and is familiar with the agency’s business, risk practices, and contract status. As General Counsel Mr. McKee will be responsible for oversight of the agency’s legal needs including public agency counsel, regulatory issues, contract negotiations, and dispute resolution.
3CE uses other contract special counsel for specific legal engagements such as power purchase negotiations, regulatory compliance, and litigation. 3CE’s general counsel would assist in coordinating and overseeing these functions but not be directly handling these efforts. Mr. McKee will also coordinate with the CEO to recruit a permanent full-time General Counsel.

FISCAL IMPACT:

There is no FY2022-23 financial impact related to the appointment of Mr. McKee as 3CE General Counsel. Costs for the agreement with Mr. McKee are offset by salary savings from the in-house General Counsel position.

CONCLUSION:

Appointment of Mr. McKee as 3CE General Counsel assures excellent legal support for the agency while we recruit a full-time general counsel.

Staff Report Item 7
TO: 3CE Policy Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY Jon Griesser, Director of Energy Programs
SUBJECT: Receive Update on FY 2022-23 Energy Programs
DATE: June 21, 2023
RECOMMENDATION:

This recommends that the Policy Board receive an update on FY 2022-23 Energy Programs BACKGROUND:

The 3CE Policy Board of Directors adopted the FY 2022-23 Operating Budget that includes approximately $16M for the FY 2022-23 Energy Programs Portfolio. FY 2022-23 is 3CE’s fifth year of administering and implementing energy programs.

DISCUSSION/ANALYSIS:

Staff is actively implementing 3CE’s FY 2022-23 portfolio of Energy Programs, serving a broad range of customers to advance building electrification, transportation electrification, and agricultural electrification. Provided as attachments to this report are updates on community energy programs and Member Agency Services program implementation activities.

FISCAL IMPACT:

There is no fiscal impact associated with this update.

CONCLUSION:
3CE’s Energy Programs support local economic stimulation by providing the community and Member Agencies with funding and services to accelerate regional electrification as well as enhanced incentives for underserved customers to reduce GHG emissions throughout the 3CE service area.

ATTACHMENT(S):

1. Community Energy Programs Update

2. Member Agency Services Update
FY 22-23 3CE Community Energy Programs
Provided in this report is an update on FY 22-23 Community Energy Programs implementation activities.

Electric Bus Program
On March 1, 2023, 3CE launched the Electric Bus Program. The Electric Bus Program provides 3CE customers with incentives for the purchase or lease of all-electric school buses and agricultural worker transport buses. The Electric Bus Program is intended to reduce GHG emissions from buses, as well as eliminate harmful pollutants emitted by traditional diesel buses in close proximity to people. This program has an incentive budget of $1.4 million.

As of May 23, 2023, 3CE has approved one application for a total of $200,000 for an electric school bus that will go toward a Title 1 school in Santa Barbara County. A second application is under review for a school bus in Monterey County.

Electrify Your Home Program
On October 3, 2022, 3CE staff launched the Electrify Your Home Program (EYH) with implementation support from a consultant, Energy Solutions. This residential electrification program provides incentives “midstream” to enrolled contractors who recommend and switch out gas-powered appliances in existing single and multi-family buildings with all-electric heat pump water heating and HVAC technologies. These incentives directly reduce the upfront cost for 3CE customers who make the switch to all-electric heat pump technology. In FY 22/23, 3CE budgeted $1.6 million for EYH.

Contractors enrolled in the statewide TECH Clean California (TECH) program also have access to no-cost workforce education and training focused on electrification design and specification, heat pump installation, building science, and soft skills in sales and marketing. There are 75 licensed contractors enrolled in the TECH program that each serve a portion of 3CE’s service area.

The following table summarizes program performance to date:

Approved & Paid Submitted Reserved Total Allocated
Single-family $380,900 $78,900 $120,700 $580,500
Multifamily $0 $0 $45,000 $45,000
Total $380,900 $78,900 $165,700 $625,500
New Construction Electrification Program
On October 3, 2022, 3CE staff launched the New Construction Electrification Program (NCEP). This year’s iteration of NCEP provides affordable and farmworker housing developers, and homeowners building Accessory Dwelling Units (ADU), with incentives to build all-electric housing. Housing projects must be built to all-electric standards for all energy utility needs including but not limited to water heating, space heating, and cooking appliances. Incentives will be provided on a per-unit basis and will be provided “downstream” to developers and homeowners upon successful completion of the project. In FY 22/23, 3CE has budgeted $1.5 million for NCEP.

As of May 23, 2023, staff has received and approved five (5) multi-unit projects totaling $320,000 in funding reservations for a total of 128 affordable housing units. 3CE has also received and approved thirteen (13) applications for ADU projects for a total of $65,000. See Figure 1 below for the total program funds reserved by County in FY 22/23. For a full list of all NCEP funds reserved since FY 19/20, please see Appendix A, attached to this document.

Figure 1 (above): Shows NCEP funds distributed by County in FY 22/23.

Electrify Your Ride Program
On November 1, 2022, 3CE staff launched the third iteration of the Electrify Your Ride (EYR) Program.

Building off last year’s program, the Electrify Your Ride Program provides rebates to 3CE customers who purchase or lease an electric vehicle (EV). This program also incorporates rebates for Level 2 EV Chargers, as well as related home electrical upgrades - such as panel upgrades and wiring – to support “EV Readiness”.

Residential, commercial/agricultural, and public agency customers are welcome to apply. Higher incentive amounts are available through this program for income-qualified customers to promote greater adoption of transportation electrification in disadvantaged and low-income communities. In FY 21/22, 3CE budgeted a total of $2 million for EVs, Level 2 EV chargers, and EV Readiness incentives.

The following figures summarize program performance based on over 700 approved applications received to date:

Figure 2 (above): Shows Electrify Your Ride funds distributed by County in FY 22/23.

Figure 3 (above): Shows Electrify Your Ride Program funds distributed by Measure type in FY 22/23.

Figure 4 (above): Shows a breakdown of funds distributed to income-qualified applicants. Tier 1 = 201 - 400% FPL; Tier 2 = <200% FPL; N/A = Non-Income Qualified applicants Ag Electrification Program
On December 8, 2022, staff launched the fourth iteration of the Agricultural Electrification Program (“Ag Program”). The Ag Program provides incentives to 3CE customers for the replacement of fossil fuel-powered agricultural equipment with new electric equipment including irrigation pumps, farm tools, tractors, utility vehicles, and other equipment. Incentives are provided “downstream” directly to the customer after proof of purchase and/or installation of equipment.

Like last year, applications for projects with the greatest estimated GHG emissions reduction as well as those submitted by small to medium-sized businesses will be supported by the highest incentive levels.

The following figures summarize program performance based on approved applications received to date:

Figure 5 (above): Shows total funds reserved or distributed by County for the FY 22/23 AG Electrification program Figure 6 (above): Shows Ag Electrification Program funds distributed by equipment type in FY 22/23.

Appendix A – NCEP Approved Housing Developments, by City Installation City Development Name
Estimated Project
Completion Date
Total Reserved
Funds
Total # of
Housing
Units
(Final) Status
Buellton Village Senior Apartments 8/31/2024 $122,500.00 49 Funds Reserved Goleta Heritage Ridge 12/31/2022 $102,500.00 41 Funds Reserved Goleta Hollister Lofts 12/31/2023 $90,000.00 36 Funds Reserved Guadalupe Escalante Meadows 6/1/2023 $200,000.00 80 Funds Reserved Hollister Riverview Estates II 4/12/2023 $60,000.00 24 Project Complete Hollister Santana Ranch Apartments 3/1/2023 $139,250.00 56 Funds Reserved Hollister Phase 1 of Santana Ranch Apartments 3/1/2023 $37,500.00 16 Funds Reserved Hollister The Apartments at Santana Ranch, Phase 2 12/31/2023 $137,500.00 55 Funds Reserved Lompac (Unincorporated SB
County) Brisa Encina 10/1/2022 $122,500.00 49 Funds Reserved Lompoc (Unincorporated SB
County) Plaza de la Bandera 10/15/2025 $110,000.00 44 Funds Reserved New Cuyama Perkins Place 9/30/2022 $82,500.00 33 Funds Reserved Pismo Beach Shell Beach Senior Apartments 5/1/2024 $62,500.00 25 Funds Reserved Pismo Beach Pismo Terrace 7/31/2023 $125,000.00 50 Funds Reserved Salinas 467, 479 E. Market Street 1/31/2025 $156,750.00 84 Funds Reserved San Luis Obispo
Presidio WH SLR 80 Towns, LLC (Williams Homes)
Fig at the Orchard- Tract 3150 2/16/2022 $141,500.00 80 Funds Reserved San Luis Obispo
Presidio WH SLR 120 Lofts Efficiency Units at the
Orchard -Tract 3150 6/15/2022 $214,500.00 120 Funds Reserved San Luis Obispo Tiburon Place 10/1/2024 $170,000.00 68 Funds Reserved San Luis Obispo Broad Street 10/24/2022 $100,000.00 40 Funds Reserved San Luis Obispo Vinifera 10/10/2022 $76,000.00 40 Project Complete San Luis Obispo Iron & Oak 12/31/2022 $29,750.00 17 Project Complete San Luis Obispo Harvest Lofts 3/31/2023 $213,500.00 122 Funds Reserved San Luis Obispo Harvest Vistas 6/30/2023 $26,250.00 15 Funds Reserved San Luis Obispo Avila Ranch - $35,000.00 14 Funds Reserved Santa Babrara (Unincorporated
SB County) Patterson Point 5/15/2025 $60,000.00 24 Funds Reserved Santa Cruz 180 Permanent Supportive Housing Project 7/12/2023 $240,000.00 121 Funds Reserved Santa Cruz Pacific Station North 4/30/2025 $237,500.00 95 Funds Reserved Santa Cruz Jessie Street Apartments- $123,500.00 50 Funds Reserved Santa Cruz 1500 Capitola Road Family Housing 6/30/2023 $142,500.00 57 Funds Reserved Santa Cruz Downtown Library Apartments 3/31/2025 $240,000.00 105 Funds Reserved Santa Cruz Calypso 9/30/2024 $87,500.00 35 Funds Reserved Santa Cruz, CA Natural Bridges Apartments 1/5/2025 $50,000.00 20 Funds Reserved Santa Ynez Harry's House 5/26/2023 $150,000.00 60 Funds Reserved Seaside Lower Stilwell Privatized Military Housing 8/31/2022 $240,000.00 96 Project Complete Soledad San Vicente Rentals 6/30/2021 $20,000.008 Project Complete Unincorporated Monterey
County East Garrison Apartments 10/31/2022 $165,000.00 66 Funds Reserved Watsonville Miles Lane Family Housing 12/7/2023 $180,000.00 72 Funds Reserved Watsonville Pippin Phase II Apartments 7/9/2024 $200,000.00 80 Funds Reserved Watsonville 1482 Freedom Blvd 11/30/2023 $131,750.00 53 Funds Reserved FY 22-23 Member Agency Services
Provided in this report is an update on FY 22-23 Member Agency Services implementation activities.

Reach Code Program
On October 3, 2022, 3CE staff launched the Reach Code Program with program implementation support from a consultant, TRC Engineers. This redesigned program offers stakeholder outreach support and provides no-cost technical assistance to help Member Agencies adopt and implement reach codes.

Support includes presenting to key stakeholders, answering technical questions, attending meetings, developing customized ordinances, reviewing staff presentations and reports, and developing implementation tools to help Member Agencies enforce their reach codes. The Reach Code Program includes recommended model codes for new construction electrification, electric vehicle charging infrastructure, and existing building electrification.

Since its launch, four Member Agencies have engaged in the program: the City of Watsonville, the City of San Luis Obispo, the County of Monterey, and the City of San Juan Bautista. 3CE is also supporting a regional reach code working group effort including the County of Santa Barbara and the Cities of Carpinteria and Goleta, which is being led by 3C-REN with support from Southern California Edison.

The following table summarizes program performance based on engagement and the type of reach code being pursued:

Member Agency Type of Reach Code (NC, EB, EV)
County of Monterey New Construction and Electric Vehicle City of Watsonville New Construction and Electric Vehicle City of San Luis Obispo Existing Buildings
City of San Juan Bautista New Construction and Electric Vehicle On April 17, 2023, the US Court of Appeals for the Ninth Circuit overturned a District Court ruling allowing the City of Berkeley’s adoption of municipal codes that prohibit natural gas infrastructure in newly constructed buildings. Working closely with its partners, 3CE is investigating the implications of the Ninth Circuit Court’s ruling to determine what actions, if any, should be taken.

Electrify Your Fleet Program
On December 15, 2022, 3CE staff launched the Electrify Your Fleet (EYF) program. EYF provides incentives to Member Agencies to offset the cost of the purchase/lease of light-duty, medium-duty, and heavy-duty battery electric vehicles. These incentives are available as a post-purchase rebate or as a pre-purchase reservation.

The following figures summarize program performance based on applications received as of May 23, 2023.

Figure 1 (above): Shows Electrify Your Fleet funds distributed by Organization in FY 22/23 Figure 2 (above): Shows Electrify Your Fleet Program funds distributed by Vehicle Class in FY 22/23.

Charge Your Fleet Program
On December 15, 2022, 3CE staff launched the Charge Your Fleet (CYF) program. CYF complements EYF and provides incentives to Member Agencies to offset the cost of the purchase and construction/installation of electric vehicle charging infrastructure. Charging stations may be either public-facing or designated for fleets and include Level 2 and/or Level 3 chargers. These incentives are available as a post-purchase rebate or as a pre-purchase reservation.

The following figures summarize program performance based on applications received as of May 23, 2023.

Figure 3 (above): Shows Charge Your Fleet funds distributed by Organization in FY 22/23 Figure 4 (above): Shows Charge Your Fleet Program funds distributed by equipment type in FY 22/23.

Plan Your Fleet Program
On June 1, 2023, 3CE launched the Plan Your Fleet Program, available to 3CE Member Agencies. Under the Program, 3CE has partnered with Optony to provide planning, design, and engineering consultation for Member Agencies to accelerate fleet electrification and the development of electric vehicle charging infrastructure. These services come at no cost to the Member Agency.

Member Agency Building and Transportation Electrification Working Groups 3CE has established and is facilitating working groups focused on building and transportation electrification to drive participation in existing programs and inform future program design; identify common needs, barriers, and scalable solutions for regional electrification; and identify and share resources between Member Agencies and 3CE.

The Building Electrification Working Group (BEWG) met on April 27, 2023, and received a presentation from the Building Decarbonization Coalition regarding state and federal incentives for building electrification and energy efficiency incentives, and technical assistance programs. The presenter also discussed the recent Ninth Circuit Court of Appeals decision invalidating the City of Berkeley’s reach code prohibiting natural gas in new buildings. The BEWG will continue to meet quarterly in 2023.

The next Transportation Electrification Working Group (TEWG) meeting was held on June 1, 2023, and featured a presentation on 3CE’s new Plan Your Fleet program. The TEWG will continue to meet quarterly in 2023.

BEWG TEWG
None February 23
April 27 June 1
July 27 August 24
October 26 November 16
FY 22/23 Member Agency Services and Initiatives Launch Schedule Member Agency Services and Initiatives Proposed Launch
Plan Your Fleet Program FY Q3
Broadband Access Initiatives FY Q3
FY 22/23 Programs To be Launched
Broadband Access Initiative
Through the Broadband Access Initiative, 3CE is collaborating with Member Agencies, Regional Broadband Consortia, economic development agencies, and community-based organizations to support two regional broadband projects. 3CE will provide funding to Member Agencies via Memorandums of Understanding to support work that (1) addresses economic development, employment opportunities, and digital equity and (2) enhances 3CE customer engagement and enables customer participation in programs. Member Agencies will, in turn, coordinate with economic development agencies and community-based organizations to conduct projects working with underserved customers across 3CE’s service area, particularly in rural regions, disadvantaged communities, and areas impacted by flooding.

An Ad Hoc Committee (Broadband AHC) has been formed including Community Advisory Council members Heather Allen and Wayne Norton to provide recommendations and feedback to staff. Staff and Broadband AHC members have met four times, including most recently on May 25, 2023.

Quarterly Regulatory and Legislative Update
June 21, 2023
2 Table of Contents
REGULATORY UPDATE......................................................................................................................................................... 3 Resource Adequacy (RA)................................................................................................................................................. 3 Provider of Last Resort (POLR) and Emergency Transition Planning ......................................................... 3 Load Management Standards and Real-Time Pricing at the California Energy Commission ............. 4 Demand Flexibility at the CPUC.................................................................................................................................... 4 Preventing Disconnections............................................................................................................................................. 5 Bioenergy Market Adjustment Tariff (BioMAT).................................................................................................... 5 Power Charge Indifference Adjustment (PCIA)..................................................................................................... 6 LEGISLATIVE UPDATE.......................................................................................................................................................... 6 Energy Budget Trailer Bill............................................................................................................................................... 6 Interconnection Delays .................................................................................................................................................... 7 3 REGULATORY UPDATE
Resource Adequacy (RA)
Issue
The Resource Adequacy (RA) program is California’s main grid reliability program. A combination of increasing demand and decreasing supply of eligible RA capacity over the past five years has resulted in sharply increased prices and unprecedented difficulty procuring sufficient RA to achieve compliance.

Over the past year the CPUC has also sought to tie RA compliance to other, unrelated functions such as CCA expansion into new communities.

Status
After a year and a half of reform that completely restructured the RA program, the California Public Utilities Commission (CPUC) issued a Proposed Decision on May 25th containing a final set of program changes before the proceeding closes. Many of these are concerning, including prohibiting expansion for CCAs with an RA deficiency in the past two calendar years, increasing penalties for RA noncompliance, and further restrictions on RA capacity imported from outside California.

Next Steps
3CE, CalCCA, and other stakeholders filed comments on the Proposed Decision opposing the CCA expansion limitation and other concerning elements. The CPUC is set to vote on the Proposed Decision on June 29th, after which the proceeding will close and there will be no new RA policymaking until at least early 2024. In the meantime, focus will shift to implementation of the new slice-of-day RA framework approved in this proceeding in 2022, with the next round of RA reform likely focused on issues with this framework that emerge during implementation.

Provider of Last Resort (POLR) and Emergency Transition Planning Issue
The Provider of Last Resort (POLR) is the backstop entity that provides electric service to customers of a load serving entity (LSE) if that LSE fails suddenly. This role has historically been held by the Investor Owned Utilities (IOUs, namely PG&E, Southern California Edison, and San Diego Gas & Electric), but this proceeding is establishing rules and processes that would allow CCAs and other non-IOU LSEs to become POLR in their service areas. This proceeding is also considering rules designed to prevent LSE failures that have various implications for 3CE finances and operations, including changes to how much money LSEs must post as insurance against their own failure (called the Financial Security Requirement or FSR).

Status
The proceeding is in a lull following several months of discussion over a set of stakeholder and CPUC staff proposals released in March. The proposed changes to how the FSR is calculated are likely to raise 3CE‘s future FSR postings above the $147,000 3CE has been required to post in the past. One of 3CE’s main points in this proceeding has been that an investment-grade credit rating should reduce an LSE’s FSR requirement due to the financial health and thus reduced risk of failure such a rating signifies.

Next Steps
Stakeholders are waiting for a CPUC Ruling laying out the next steps and schedule for the rest of the proceeding. A final Decision on these issues, including the FSR methodology, is expected in early 2024. 4 Load Management Standards and Real-Time Pricing at the California Energy Commission Issue
Apart from the CPUC, the California Energy Commission (CEC) is the other state regulatory agency involved in energy policy and planning. On October 12, 2022, the CEC updated the Load Management Standard (LMS) regulations that it uses to promote demand flexibility in California. They now require IOUs, municipal utilities, and CCAs with load greater than 700 GWh/year to upload time-dependent rates to their Market Informed Demand Automation Server (MIDAS) platform and present to their governing bodies, for approval by the CEC, hourly marginal cost-based rates by 2025.

Status
On May 10th, 2023, 3CE’s Operations Board approved a Resolution requesting an extension from the CEC for uploads to the MIDAS platform due to delays receiving the uploading instructions from the CEC and ongoing development of the MIDAS platform. On May 19th, the CEC’s response provided one month of additional time for uploads rather than the nine requested, and further declared that CCAs do not have the regulatory authority to request any extensions for MIDAS uploads. The Large CCAs filed a joint reply to the CEC’s response rebutting this declaration and requesting clarification on the language of the Proposed Order (PO). The CEC nonetheless adopted the PO as written on May 31st.

Next Steps
3CE will be able to meet the new proposed compliance date, August 1st, for initial uploads to MIDAS by working with 3CE’s data vendor Calpine. Staff will now move ahead with those uploads while continuing to advocate for the interests of 3CE customers and CCA jurisdictional authority.

Demand Flexibility at the CPUC
Issue
This is a large proceeding opened in 2022 to promote demand flexibility in California for the purpose of improving grid reliability and reducing the cost of grid stress events. While this proceeding does not directly govern CCA rate setting, it is a relevant forum for addressing issues around Load Management Standard (LMS) compliance and could hold implications for CCA ratemaking in the future. 3CE is participating to ensure CCA ratemaking authority is preserved, monitor changes to IOU transmission and distribution rates, address data access issues between IOUs and CCAs that hinder time-dependent rate design, and advocate for rate structures that promote equity for bundled and unbundled customers.

Status
Most recently this proceeding has been implementing one of the requirements created by the 2022 omnibus energy bill, AB 205. AB 205 required the CPUC to design and approve an income-graduated fixed charge (IGFC) for all residential electric utility customers by July 1, 2024. The goal is to reduce energy costs for low-income Californians by creating a monthly fixed charge that increases with income, allowing the volumetric charge to be lower. CalCCA submitted reply testimony on June 2nd advocating that the IGFC should not include any volumetric generation charges and that IOUs should coordinate with CCAs in their service area around the transition and implementation of the IGFC.

Next Steps
In future comments, 3CE, via CalCCA, will be advocating that the Federal Poverty Level (FPL) is not an accurate representation of poverty in California and should not be used to create the income brackets of the IGFC. Instead, comments will support using Average Median Income (AMI) by county. Although AMI is not perfect it does provide a more granular representation of poverty within California communities. 5 Preventing Disconnections
Issue
This proceeding is exploring ways to reduce disconnections due to nonpayment, which often affect Californians who are already vulnerable in other ways. One of the tools to come out of this proceeding is the Arrearage Management Program (AMP), which the CPUC created in June 2020. The CPUC established at that point that the program would sunset after four years unless the Commission issued another Decision extending, reauthorizing, or modifying the program. On April 10, 2023, a Ruling requested comments on the next steps for the Arrearage Management Plan (AMP).

Impacts
3CE has participated in AMP to provide relief for customers who accrued debt during the COVID-19 pandemic. Three years later many customers are still facing financial hardship post-pandemic. On April 26th CalCCA filed comments supporting reauthorization of AMP for four more years while concurrently evaluating the the program’s performance in its first three years.

Next Steps
Stakeholders await a Proposed Decision on next steps for the AMP program. In comments stakeholders have generally agreed that AMP should be evaluated by a third party and that the program should be extended, though various extension timelines have been proposed.

Bioenergy Market Adjustment Tariff (BioMAT)
Issue
BioMAT is a procurement program opened in 2015 to encourage the development of small bioenergy projects. The program is unique in that allows load serving entities (LSEs) contracting with these projects to recover the costs from all California electricity users through the Public Purpose Programs (PPP) charge. When BioMAT was created by SB 1122 in 2014 CCAs were not eligible to participate. 3CE and other CCAs lobbied successfully lobbied legislators to reverse this exclusion with the passage of AB 843 in 2021. The CPUC began implementation of AB 843 in October 2022 by opening of a new proceeding to work through the details of CCA participation.

Status
Before AB 843, CCAs did not have access to the cost recovery mechanism used in BioMAT even though all electricity users including CCA customers pay the Public Purpose Programs charge. AB 843 thus set a valuable policy precedent in addition to making small bioenergy projects a more viable option for CCAs.

This proceeding will determine the approval process for CCA BioMAT standard contract terms, the BioMAT cost recovery process, and management of the BioMAT contract queue to track procurement progress for participating CCAs.

Next Steps
3CE is working with CalCCA on a proposal for how the BioMAT program should function for CCAs regarding contract structure, project queue management, and cost recovery. This effort sets an important precedent because it could be the first time that CCAs will be able to recoup administrative costs associated with the management of a program through the Public Purpose Programs charge.

These issues are slated to be decided at the CPUC by the end of 2023. 6 Power Charge Indifference Adjustment (PCIA)
Issue
The Power Charge Indifference Adjustment (PCIA) is a fee all CCA customers pay to cover the above-market costs of resources the Investor Owned Utility (IOU; PG&E or Southern California Edison for 3CE customers) bought to serve their load before the CCA’s formation. The PCIA has been the focus of years of advocacy by CCAs and CalCCA to ensure that only costs truly attributable to CCA customers are collected through the PCIA. The PCIA equals the cost of the eligible resource contracts minus a Market Price Benchmark (MPB) that estimates how much eligible resources are worth on the current market. All else being equal, the higher the MPB the lower the PCIA.

Status
The CPUC passed a Decision on May 8th that will help reduce the PCIA by adding a new component to the MPB. The MPB previously consisted of three components valuing different resource attributes:
energy, Resource Adequacy, and Renewable Portfolio Standard (RPS) credit. This Decision adds a fourth component to capture the premium value of large hydroelectric resources. Large hydro is GHG-free and thus sought after at a premium by many LSEs, but is not RPS-eligible and thus was valued the same as fossil resources under the PCIA methodology. This new component captures that market premium for non-RPS GHG-free hydro for the first time, improving the accuracy of the PCIA calculation and reducing the PCIA for CCA customers. Every three years, the IOUs will have the choice of whether to capture the value of their large hydroelectric resources through this new MPB component or offer a voluntary allocation of the resources to CCAs instead. CalCCA filed supportive comments when the Proposed Decision came out.

Next Steps
None. This final Decision closes the proceeding, which at six years old is the longest-running proceeding CCAs have been engaged with. For the first time since 2018 there are no further significant PCIA reforms on the horizon. In the long run, the PCIA for 3CE customers is expected to decrease as the resource contracts for which costs are being recovered through the PCIA mature and expire.

LEGISLATIVE UPDATE
Energy Budget Trailer Bill
Issue
The biggest issue in the first half of the legislative session has been a package of energy policies introduced in Governor Newsom’s budget proposal. The energy budget trailer bill language included four concerning components: 1) increased CPUC authority over CCAs, 2) a new centralized resource procurement function at the Department of Water Resources, 3) a new financial penalty for Resource Adequacy (RA) deficiencies on top of the CPUC’s penalties, and 4) the potential exclusion of the Diablo Canyon Power Plant from the RA program.

Status
Significant positive amendments were made to the bill on the Assembly side, but it remains to be seen whether the Senate will accept the Assembly’s version or start over from the governor’s original proposed language.
7 Impact
3CE staff and leadership have been working with 3CE’s legislative delegation and other CCAs from around CA to address these concerns as the trailer bill moves forward. Substantial progress has been made and staff will update the Board as necessary through the remainder of the legislative session.

Interconnection Delays
Issue
3CE is monitoring the progress of a slate of bills targeting the interconnection delays affecting both new load and new generation across California. The bills largely target three routes for reducing delays:
ordering the CPUC to establish maximum interconnection timelines and penalties for noncompliance, streamlining CEQA permitting for new interconnection infrastructure, and improving coordination among state agencies involved in interconnection.

Status
All bills had to pass through their house of origin by June 2, 2023. Those that did have now moved on to policy committees in the second house, which will continue until summer recess begins on July 14, 2023.

Next Steps
While not backing any one specific bill, 3CE has been working with other CCAs to impart the urgency of reducing these delays to legislators and track emerging opportunities to accelerate interconnection of 3CE resources and customer load.

Compiled Financial Statements 1
Compiled Budgetary Comparison Schedule 6
Budget Variance Commentary 10
Financial Dashboard 11
Investment Summary 12
Table of Contents

TREASURER REPORT
Fiscal Year to Date
As of April 30, 2023
1 ACCOUNTANTS’ COMPILATION REPORT
Board of Directors
Central Coast Community Energy
Management is responsible for the accompanying financial statements of Central Coast Community Energy (a California Joint Powers Authority) which comprise the statement of net position as of April 30, 2023, and the related statement of revenues, expenses, and changes in net position, and the statement of cash flows for the period then ended in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the accompanying statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, conclusion, nor provide any assurance on these financial statements.

Management has elected to omit substantially all of the note disclosures required by accounting principles generally accepted in the United States of America in these interim financial statements.

Central Coast Community Energy’s annual audited financial statements include the note disclosures omitted from these interim statements. If the omitted disclosures were included in these financial statements, they might influence the user’s conclusions about the Authority’s financial position, results of operations, and cash flows. Accordingly, these financial statements are not designed for those who are not informed about such matters.

We are not independent with respect to the Authority because we performed certain accounting services that impaired our independence.

Maher Accountancy
San Rafael, CA
May 25, 2023
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com Current assets
Cash and cash equivalents
Held for working capital reserves 32,300,000 $
Held for reserves - other 109,012,764
Held for program commitments 6,500,000
Cash and cash equivalents 147,812,764
Accounts receivable, net of allowance 33,853,424
Accrued revenue 21,132,020
Other receivables 1,432,852
Loan receivable 185,467
Prepaid expenses 2,301,571
Deposits 3,810,530
Restricted cash 294,000
Investments - held for reserves 79,371,368
Total current assets 290,193,996
Noncurrent assets
Deposits 23,182
Loan receivable 1,614,833
Lease asset, net of amortization 1,566,317
Capital assets, net of depreciation 221,323
Total noncurrent assets 3,425,655
Total assets 293,619,651
Current liabilities
Accrued cost of electricity 31,297,355
Accounts payable 1,028,721
Other accrued liabilities 1,201,908
User taxes and energy surcharges due to other governments 1,410,466 Lease liability 290,497
Security deposits - energy suppliers 6,501,030
Total current liabilities 41,729,977
Noncurrent liabilities
Security deposits - energy suppliers 9,131,250
Lease liability 1,294,878
Total noncurrent liabilities 10,426,128
Total liabilities 52,156,105
Investment in capital assets 202,265
Restricted for security collateral 294,000
Unrestricted 240,967,281
Total net position 241,463,546 $

NET POSITION
As of April 30, 2023

STATEMENT OF NET POSITION

CENTRAL COAST COMMUNITY ENERGY
ASSETS

LIABILITIES
See accountants' compilation report. 2

OPERATING REVENUES
Electricity sales, net 256,591,337 $
Other income 45,180
Total operating revenues 256,636,517

OPERATING EXPENSES
Cost of electricity 214,283,820
Contract services 5,046,341
Staff compensation 3,620,052
Other operating expenses 4,836,489
Depreciation 170,655
Total operating expenses 227,957,357
Operating income (loss) 28,679,160

NONOPERATING REVENUES (EXPENSES)
Interest and investment income 4,147,512
Grant revenue 1,450,969
Interest and related expense (24,653)
Nonoperating revenues (expenses) 5,573,828
CHANGE IN NET POSITION 34,252,988
Net position at beginning of period 207,210,558
Net position at end of period 241,463,546 $
Seven Months Ended April 30, 2023

AND CHANGES IN NET POSITION

STATEMENT OF REVENUES, EXPENSES

CENTRAL COAST COMMUNITY ENERGY
See accountants' compilation report. 3

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 271,612,570 $
Receipts from liquidated damages 147,000
Receipts from suppliers 3,819,573
Other operating receipts 45,180
Payments to suppliers for electricity (217,294,299)
Payments for other goods and services (9,904,202)
Payments for staff compensation (3,902,989)
Payments of taxes and energy surcharges to other governments (5,425,085) Net cash provided by operating activities 39,097,748

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Principal payments received on loan receivable 199,700
Receipts from grantor 1,450,969
Net cash provided by non-capital
financing activities 1,650,669

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Payments of lease liability (117,475)
Payments to acquire capital assets (60,779)
(178,254)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment income received 3,608,331
Proceeds from investment sales 46,476,266
Purchase of investments (92,938,865)
Net cash provided (used) by investing activities (42,854,268) Net change in cash and cash equivalents (2,284,105)
Cash and cash equivalents at beginning of year 150,390,869 Cash and cash equivalents at end of period 148,106,764 $ Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) 147,812,764 $
Restricted cash 294,000
Cash and cash equivalents 148,106,764 $
Seven Months Ended April 30, 2023

STATEMENT OF CASH FLOWS

CENTRAL COAST COMMUNITY ENERGY
See accountants' compilation report. 4
Operating income (loss) 28,679,160 $
Adjustments to reconcile operating income (loss) to net cash provided by operating activities
Depreciation expense 170,655
Provision for uncollectible accounts 2,456,513
(Increase) decrease in:

Accounts receivable, net 10,797,663
Accrued revenue (2,970,074)
Other receivables 675,884
Prepaid expenses (1,993,152)
Deposits 4,483,400
Increase (decrease) in:

Accrued cost of electricity (8,777,227)
Accounts payable (560,490)
Other accrued liabilities 165,884
User taxes and energy surcharges due to other governments (531,498) Security deposits - energy suppliers 6,501,030
Net cash provided by operating activities 39,097,748 $

CENTRAL COAST COMMUNITY ENERGY
STATEMENT OF CASH FLOWS (continued)
Seven Months Ended April 30, 2023

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET

CASH PROVIDED BY OPERATING ACTIVITIES
See accountants' compilation report. 5
6 ACCOUNTANTS’ COMPILATION REPORT
Board of Directors
Central Coast Community Energy
Management is responsible for the accompanying special purpose statements of Central Coast Community Energy (a California Joint Powers Authority) which comprise the budgetary comparison schedule and a supplemental budgetary comparison schedule for the period ended April 30, 2023, and for determining that the budgetary basis of accounting is an acceptable financial reporting framework. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the accompanying statement nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any assurance on this special purpose budgetary comparison statement.

The special purpose statement is prepared in accordance with the budgetary basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. This report is intended for the information of the Board of Directors of the Authority.

Management has elected to omit substantially all of the note disclosures required by accounting principles generally accepted in the United States of America in these interim financial statements.

Central Coast Community Energy’s annual audited financial statements include the note disclosures omitted from these interim statements. If the omitted disclosures were included in these financial statements, they might influence the user’s conclusions about the Authority’s financial position, results of operations, and cash flows. Accordingly, these financial statements are not designed for those who are not informed about such matters.

We are not independent with respect to the Authority because we performed certain accounting services that impaired our independence.

Maher Accountancy
San Rafael, CA
May 25, 2023
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com 2022/23 YTD
Budget
2022/23 YTD
Actual
2022/23 YTD
Budget Variance
(Under) Over
2022/23 YTD
Actual / Budget %
2022/23 Annual
Budget
2022/23 Budget
Less Actual
2022/23 Budget
Remaining /
Budget %

REVENUES AND OTHER SOURCES
Electricity sales 257,436,000 $ 261,949,788 $ 4,513,788 $ 102% 436,500,000 $ 174,550,212 $ 40% Less uncollectible accounts (4,375,000) (3,907,482) 467,518 89% (7,500,000) (3,592,518) 48% Net revenue - electricity 253,061,000 258,042,306 4,981,306 102% 429,000,000 170,957,694 40% Investment and miscellaneous income - 4,192,692 4,192,692 n/a - (4,192,692) n/a Total revenues and other sources 253,061,000 262,234,998 9,173,998 104% 429,000,000 166,765,002 39% EXPENDITURES AND OTHER USESCurrent Expenditures
Cost of energy 214,554,901 206,437,000 8,117,901 104% 377,919,000 163,364,099 43% Energy programs (incentives and grants) 9,329,000 3,955,271 (5,373,729) 42% 15,992,000 12,036,729 75% Data manager 1,316,823 1,143,000 173,823 115% 2,793,000 1,476,177 53% Utility service fees 1,225,000 1,015,672 (209,328) 83% 2,100,000 1,084,328 52% Staffing 5,390,000 3,620,052 (1,769,948) 67% 9,244,000 5,623,948 61% Professional services 2,320,000 1,302,265 (1,017,735) 56% 3,397,000 2,094,735 62% Legal services 1,146,000 676,731 (469,269) 59% 1,965,000 1,288,269 66% Marketing and customer enrollment 580,000 185,429 (394,571) 32% 994,000 808,571 81% Other general & administration 2,456,000 1,277,033 (1,178,967) 52% 3,746,000 2,468,967 66% Total current expenditures 230,026,000 227,904,177 (2,121,823) 99% 418,150,000 190,245,823 45% Other Uses
Capital outlay - 60,779 60,779 n/a - (60,779) n/a
Total other uses - 60,779 60,779 n/a - (60,779)
Total Expenditures and Other Uses 230,026,000 227,964,956 (2,061,044) 99% 418,150,000 190,185,044 45% Surplus (Deficit) $ 23,035,000 $ 34,270,042 $ 11,235,042 $ 10,850,000 $ (23,420,042) -216% Reserves at end of reporting period: Held for Working Capital 32,300,000 $ Held for Reserves - Cash and Cash Equivalents 109,012,764 Held for Reserves - Investments 79,371,368 Total 220,684,132 $

CENTRAL COAST COMMUNITY ENERGY

SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE
Seven Months Ended April 30, 2023
See accountants' compilation report. 7
CCA Program Surplus/(Deficit)
per budgetary comparison schedule: 34,270,042 $
Adjustments needed to reconcile to the
changes in net position in the
Statement of Revenues, Expenses
and Changes in Net Position:

Add back GASB 87 expenses not in operating budget 92,822 Subtract depreciation expense (170,655)
Add back capital asset acquisitions 60,779
Change in Net Position 34,252,988 $

REVENUES, EXPENSES AND CHANGES IN NET POSITION

CENTRAL COAST COMMUNITY ENERGY

BUDGET RECONCILIATION TO STATEMENT OF
Seven Months Ended April 30, 2023
See accountants' compilation report. 8
Budget Item YTD Variance Comment
Electric Sales Revenue 1.8% Sales revenue includes revenues actually billed to customers as well as estimated customer usage during the reporting period that is not yet billed.

Cost of Energy 3.9% Variances in this category are typically due to (1) timing difference between projected and actual REC deliveries, (2) variance from actual to anticipated market prices, and (3) variance from actual to expected volume used by customers. Cost of energy includes scheduling coordinator fees for budget purposes only.

Staffing (32.8%) Staffing expenses are under budget due to the timing of new hires.

Professional Services (43.9%) This category includes accounting, IT, technical and other consultants.

Legal Costs (40.9%) This category includes outside legal costs for regulatory and energy procurement needs.

Marketing and customer enrollment (68.0%) Variance is mostly due to the lower than anticipated costs of recent customer enrollments.

Data Management Services 15.2% These fees non-discretionary and are charged on a per customer basis.

Utility Service Fees (17.1%) These are PG&E and SCE fees charged on a per customer basis.

Other General & Administrative (48.0%) This category includes occupancy costs, industry membership dues, and other general and administrative costs.

Energy and Related Programs (57.6%) Programs expenses have generally been delayed until future periods Budget Commentary for significant items

CENTRAL COAST COMMUNITY ENERGY
October 1, 2022 through April 30, 2023
9 $6.0
$5.4
Act
Bud
$43.5
$46.6
$51.1
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Actual
Budget
$258.0
$253.1
$429.0
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Actual
Budget
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Actual (T48/T8) 415 407 429 406 370 386 357
Budget 453 425 424 431 393 418 424 426 450 474 481 444
0 100
200
300
400
500
600

CUSTOMERS

SALES VOLUME
357 GWh

STD MARGIN
$6.0M (18%)
Δ in NET ASSETS
$4.9M

REVENUE
$34.2M
Cumulative YTD Electricity Sales
Cumulative YTD Direct Margin
(Electricity Sales less Cost of Energy)
Data Definitions:

CUSTOMERS: Count of active customers from Calpine.

REPORTED / SALES VOLUME: Best available estimate of actual meter volume. Currently based on T+8 SQMD Report and T+48 when available.

REVENUE: Total Operating Revenue, net of uncollectible, (excludes Miscellaneous and Interest income).

NON-OP REV: Other uses, primarily Interest Income
ELECTRICITY SALES: Sales from electricity (net of uncollectible).

STD MARGIN: Electricity Sales less cost of energy (Forecasting & scheduling included in Cost of Energy to match budget) ACTUAL: Same as sales volume above
BUDGET: Volumes from FY22/23 budget
Monthly Sales Volume (GWh)
Financial Dashboard: April 2023
Margin %

CUSTOMERS
445,000
ACTIVE
April revenue of $34M accounts for 357
GWh in net retail consumption. This comes
in 67Gwh below budgeted volume.

Year-to-date electricity revenue is $258M
compared to a budget of $253M. YTD Direct
Margin (defined as Electricity Sales less Cost
of Energy) of $43.5M is behind budget by
$3.1M.

The chart to the right shows volume
comparison to budgeted volume.

The charts below display cumulative
revenue and margin $ vs budget.
37%
45%
14%
36%
42%
13%
Res
Com
Ag
YTD Month
39%
43%
12%
38%
40%
12%
Res
Com
Ag
YTD Month
Revenue $34.2
C.O.E. $26.9
OpEx $2.3
Net Income $4.9 18.3%

16.1%
Act
Bud
Margin $
10 Return of Investments YTD Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep CASH AND CASH EQUIVALENTSRiver City Bank - Money Market and other Interest Earning AccountsFunds Invested - Average Balance $ 68,793,882 $ 70,230,463 $ 70,636,473 $ 68,570,477 $ 76,819,998 $ 92,274,506 $ - 104,647,869 $ $ - $ - $ - $ -Gains/Losses/Interest $ 1,005,714 $ 85,008 $ 94,651 $ 119,286 $ 123,533 $ 137,627 $ 205,218 $ 240,392 Average APY 1.48% 1.62% 2.03% 2.16% 2.15% 2.67% 2.76%INVESTMENTSRiver City Bank - Treasury-indexed productsFunds Invested - Average Balance $ 40,162,814 $ 45,259,882 $ 55,127,902 $ 47,699,367 $ 47,828,254 $ 42,893,075 $ 42,856,284 -$ $ - $ - $ - $ - Gains/Losses/Interest $ 1,137,789 67,213.37 146,549.22 207,805 214,163 186,551 167,504 148,003 - - - Average APY 2.01% 3.89% 4.52% 5.39% 4.68% 4.69% 4.14%RBC GAM / Principal Financal Funds Invested - Average Balance $ 75,380,564 $ 75,641,706 $ 75,948,593 $ 76,212,285 $ 76,458,827 $ 76,851,697 $ 77,101,019 -$ $ - $ - $ - $ - Gains/Losses/Interest $ 1,869,985 143,733.97 261,142.30 306,886.17 266,301.86 246,542.46 392,869.54 252,509.11 - - - Average APY 2.29% 4.14% 4.85% 4.19% 3.87% 6.13% 3.93%

CENTRAL COAST COMMUNITY ENERGY
Investment Summary
October 1, 2022 through April 30, 2023
11 Staff Report Item 11
TO: 3CE Policy Board of Directors
FROM: Seth Capron, Community Advisory Council Chair
SUBJECT: Community Advisory Council Report
DATE: June 21, 2023
Community Advisory Council Report to Policy Board on the April 5, 2023 Meeting COO Report – Discussion Item
COO Shaw provided updates on:
 Staffing Updates
 San Luis Obispo County Supervisors’ vote to join CCCE!!  Energy Program Update
o Launch of consultant supported program to provide technical assistance to jurisdictions to electrify fleets, with special emphasis on smaller jurisdictions that lack staff to carry out a program
o Working on future demand response program (FY23/24)
 Recommended by CAC for future programing
 Has significant potential to shave peak demand and lower energy costs  Bills Addressing Interconnection Delays – Both load and generation o Numerous bills in the legislature
o Critical need to address this issue to meet CCCE’s electrification goals o Staff will come back at future CAC meetings to keep us updated on which bills offer the greatest opportunity to address the grid connection delays Regional Transportation Electrification Action Plan Presentation and Panel Discussion – Electric Vehicle Infrastructure Trade Associations
Representatives from EVgo, Environmental and Energy Consulting, and the Electrification Coalition  Presentation on available federal incentives for EVs and EVSEs in IRA o Requirements for new EVSEs to qualify – size, maintenance/reliability, data capable, ADA compliance, open data standards
o Available for individuals and businesses
o Includes passenger vehicles, medium duty and heavy-duty chargers and vehicles  Review of CA state funding for EVs and EVSEs
o Over 70 bills proposed in the current legislative session o Plans for “Resources Bond” in 2024 to raise funds for EVs and EVSEs o Funding being proposed for EVSEs at multi-family projects, light duty fleets, low income and disadvantaged communities, and single-family homes
FY 21 – 22 Energy Programs Portfolio Evaluation and Report Valuable ongoing review of prior year program impacts and success  Criteria for evaluation
o Customer participation
o Equity
o GHG emissions reductions
 Detailed analysis of performance against criteria
 80% of budgeted incentives spent or reserved is good, but staff could look for opportunities to reallocate funding mid-year with the goal of utilizing all budgeted funds.

Energy Programs Update
Now offering a robust variety of electrification incentives  Community Programs
o Electric Bus Program
 Launched March 1, 2023
 Now includes ag worker transportation
o Ag electrification
o New Construction Electrification Program
 Now includes ADUs
o Electrify Your Ride Program
o Electrify Your Home Program
 Member Agency Services
o Reach Code Program
 Higher level of service provided through new contract with consultant  Working with one county, four cities and a regional working group in Santa Barbara
o Electrify Your Fleet Program
o Charge Your Fleet Program
o Plan Your Fleet Program
 With extensive agency support from consultant
 Launch Q2
o Broadband Access Initiate – Launch Q2
Annual Supplier Diversity Report
o Received report on CCCE’s continuing efforts to increase use of small and medium sized local vendors.

Staff Report Item 12
TO: 3CE Policy Board of Directors
FROM: Derek Johnson, Operations Board Chair
SUBJECT: Operations Board Report
DATE: June 21, 2023
March 8, 2023 Regular Meeting of the Operations Board
The following action was taken by the Board:

Authorized the CEO to Execute the Edison Electric Institute Master Power Purchase and Sale Agreement with Citadel Energy Marketing LLC.

April 12, 2023 Regular Meeting of the Operations Board
The following actions were taken by the Board:

Authorized CEO to Execute an Agreement with Optony, Inc. to Provide Member Agency Fleet Electrification Services for a Total Not to Exceed Amount of $450,000 and a Term ending on September 30, 2024.

Delegated Authority to the CEO to Participate in Pacific Gas & Electric’s and Southern California Edison’s Spring 2023 PCIA Market Offer for Long-Term Renewable Energy Credit Products; and to Execute Agreements for up to the Awarded Volumes in Amounts Not-to-Exceed a total of $177,000,0000 with Terms of at Least 10 Years.

May 10, 20023 Regular Meeting of the Operations Board
The following actions were taken by the Board:

Approved the CEO to Submit an Interim Load Management Standards Compliance Plan that Extends Deadlines for Loading Rate Information Into the California Energy Commission’s Market Informed Demand Automation Server As Permitted Under CCR Title 20, Section 1623.1(a)(2).

Authorized the CEO to Execute Amendment No. 2 to the Standard Services Agreement with AIQUEOUS, LLC to Add $39,000 For a Total Not to Exceed Amount of $503,250 and No Additional Time.

Received an Update on a Prepay Financing Transaction and Recommend the Policy Board's Approval and Authorization of the CEO to Execute a Clean Energy.

Received an Update of the Fiscal Year 2022-23 Mid-Year Budget Re-forecast and Support Seeking Policy Board Approval to Increase Appropriations.

Authorized the CEO to Execute a Resource Adequacy Confirmation for Capacity with Long Beach Generation LLC, with a Term of 7 Years in an Amount Not to Exceed $55,146,000, Inclusive of Any Associated Broker Fees.

The next regular meeting of the Operations Board will be August 9, 2023.

Staff Report Item 13
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
SUBJECT: CEO Report
DATE: June 21, 2023

STAFFING UPDATE
Dewayne Woods joins 3CE as Interim Chief Financial Officer. Previously, Dewayne worked for the County of Monterey since 2000, focused on County-wide financial management as the Assistant County Administrative Officer for finance and budgeting. Under Dewayne’s management, the County enjoyed upgraded credit ratings, allowing the County to undertake major facility improvement projects including remodeling of the historic Salinas Courthouse and acquisition and retrofitting of the Schilling Complex.

Dewayne is experienced in all aspects of managing a medium size California county including operating a public hospital, and public health, public safety, and public benefit programs. Dewayne has a master’s in public administration and is a Certified Governmental Finance Manager.

Fernanda Ocaña- Customer Accounts. Fernanda brings extensive experience in community outreach work, having managed programs for the City of Salinas, and Building Healthy Communities for East Salinas.

Fernanda co-founded the first-ever, youth-led non-profit to serve the needs of LGBTQ foster youth in Monterey County. Her skills in leading community meetings, awareness raising, and facilitating workshops, as well as her network of relationships having served on multiple City committees and as a board member and volunteer for local non-profits, brings an important and much-needed skill set to 3CE.

MARKET AND REGULATORY IMPACTS ON COST OF ENERGY
Despite the benefits of a significant water year on hydroelectric generation, the industry continues to see high wholesale energy prices spurred by delays and supply chain constraints continuing to hamper renewable energy and storage construction, as well as, high natural gas price forwards that anticipate another wet winter, storage constraints, and a continued war in Ukraine. While hydroelectric generation is depressing prices for 2023, wholesale energy prices are forecasted to increase through 2025.

Since the February Policy Board meeting, where staff detailed a nearly 400% increase in the cost of Resource Adequacy (a non-energy compliance product frequently referred to as “insurance”) the CPUC has moved to destabilize the market by ordering additional procurement of limited available resources and further restrict qualifying imports. As a result of the CPUC’s actions, its “comply at any cost” mandate to load serving entities, and profit maximizing behavior by generators; the Resource Adequacy market is now trading at another increase of another 150% above where it was in February. Resource Adequacy now accounts for nearly 30% of 3CE’s projected Cost of Energy, compared to roughly 7% in 2020.

In January 2023, 3CE lowered its Pacific Gas & Electric territory rates by 1.3 c/kWh. Since January the Southern California Edison and Pacific Gas & Electric have both implemented several rate changes with still more projected. To date, 3CE has weathered the higher energy prices by layering energy hedges across fixed price PPAs and low-cost purchases in the early years of operation. 3CE continues to stabilize and bring additional PPA projects online and has shortlisted several additional projects towards meeting our 100% Clean and Renewable Goal by 2030 – which will add additional price certainty to our portfolio.

In addition, we are implementing a more strategic approach toward Resource Adequacy compliance to stabilize and reduce cost. We will focus on new generation PPAs that value baseload renewables, hedge our RA risk with layered long-term RA deals (7-10 years), continue energy storage investments, and explore dispatchable energy hedges that reduce greenhouse gas emissions.

CAISO INTERCONNECTION ENHANCEMENTS INITIATIVE
Governor Newsom ordered this new initiative, which is to investigate the increasing amount of time it takes for generating resources to get connected to the grid, and to identify and recommend methods to reduce the amount of time needed. The sharp increase in new interconnection requests in recent years has turned a 2-to-3-year process into a 4-to-6-year process. This delayed process is putting stress on the state’s ability to meet its RPS and reliability goals. Recent CPUC procurement mandates provide some relief reflecting these interconnection delays but fail to account for the ongoing extended timelines when issuing additional procurement targets. Compliance with these procurement mandates becomes increasingly infeasible given the extended amount of time it takes to get new projects online. 3CE will actively participate in this initiative, expected to continue through the end of 2023. We are cautiously optimistic this will result in shortening the interconnection process, allowing us to procure clean and renewable projects that can come online as soon as possible.

GEOTHERMAL PROJECT COMES ONLINE
On June 9, 3CE joined state dignitaries for a ribbon-cutting ceremony in Mammoth Lakes, to celebrate the start of operations for Casa Diablo-IV (CD4), a 30 MW geothermal power plant developed by Ormat Technologies. The project is the first geothermal plant to be built within the California Independent System Operator (CAISO) balancing authority in the last 30 years. Under a joint 10-year power purchase agreement with Silicon Valley Clean Energy, 3CE will receive 7 MW of the plant’s output annually.

Geothermal power is critical for the transition to 100% renewable power, as it provides a steady, emission-free supply at all hours of the day, helping to offset the intermittent availability of solar and wind generation. 3CE spoke at the event alongside California Energy Commissioner Noemí Otilia Osuna Gallardo, CAISO Vice President Joanne Serina, Bureau of Land Management California State Director Karen Mouritsen, Inyo National Forest Supervisor Lesley Yen, and Ormat CEO Doron Blachar.

ATTACHMENT(S):

1. 2023 April Customer Enrollment and Engagement Report

2. 3CE Contracts < $100K
Customer Enrollment and Engagement Report
Central Coast Community Energy
Communications and Outreach
March 2023
I. Member Agency Services Meetings:
3CE staff presented before the Cities of Pacific Grove, Scotts Valley, Seaside, Gonzales, Soledad, Hollister, Paso Robles & Capitola to share accomplishments, programs, and goals as well as agency-specific data about 3CE investment in each community.

II. Enrollment/Opt-Outs: Total Opt-Out requests for March 2023: 222 Concerns about
Government-Run
Power Agency
12%
Decline to
Provide
15%
Dislike being
automatically
enrolled
Other 23%
10%
Rate or Cost
Concerns
35%
Service or Billing
Concerns
5%

90.47%

96.83%

87.99%

94.09%

96.28%

98.11%

94.89%

96.37%

95.39%

92.69%

96.60%

90.89%

90.44%

89.51%

95.72%

92.31%

96.67%

96.88%

95.63%

92.62%

93.52%

88.56%

97.97%

96.62%

87.56%

86.87%

95.84%

95.75%

95.75%

97.75%

95.49%

97.03%

95.06%

80.00% 82.00% 84.00% 86.00% 88.00% 90.00% 92.00% 94.00% 96.00% 98.00% 100.00%

WATSONVILLE INC

SOLVANG INC

SOLEDAD INC

SEASIDE INC

SCOTTS VALLEY

SANTA MARIA

SANTA CRUZ CO

SANTA CRUZ

SANTA BARBARA CO

SAND CITY

SAN LUIS OBISPO

SAN JUAN BAUTISTA

SAN BENITO CO

SALINAS

PISMO BEACH

PASO ROBLES

PACIFIC GROVE

MORRO BAY

MONTEREY CO

MONTEREY
MARINA

HOLLISTER

GUADALUPE

GROVER BEACH

GREENFIELD

GONZALES
GOLETA

DEL REY OAKS

CARPINTERIA
CARMEL

CAPITOLA

BUELLTON

ARROYO GRANDE
Percentage of Eligible Enrollment as of April 1, 2023

93.91%

96.32%

93.46%

95.94%

94.54%

91.00%

94.80%

96.37%

95.25%

68.02%

97.31%

91.91%

94.11%

92.72%

95.95%

89.66%

96.51%

95.57%

93.39%

93.69%

93.10%

91.25%

99.06%

96.10%

94.84%

96.12%

85.39%

97.09%

95.30%

97.53%

97.44%

94.64%

93.18%

0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00%

WATSONVILLE

SOLVANG

SOLEDAD

SEASIDE

SCOTTS VALLEY

SANTA MARIA

SANTA CRUZ CO

SANTA CRUZ

SANTA BARBARA CO

SAND CITY

SAN LUIS OBISPO

SAN JUAN BAUTISTA

SAN BENITO CO

SALINAS

PISMO BEACH

PASO ROBLES

PACIFIC GROVE

MORRO BAY

MONTEREY CO

MONTEREY
MARINA

HOLLISTER

GUADALUPE

GROVER BEACH

GREENFIELD

GONZALES
GOLETA

DEL REY OAKS

CARPINTERIA
CARMEL

CAPITOLA

BUELLTON

ARROYO GRANDE
Percentage of eligible load as of April 1, 2023
III. Media Outreach
March 2023
Facebook
Followers: 1.8K
Post Reach: 2.1K
Page Reach: 218K
Post engagement: 34,
New page followers: 8
Link Clicks: 13
Top Performing Content: East Garrison Apartments
Construction Progress
Facebook En Espanol
Followers: 182
Post Reach: 31
Post engagement: 1
New page followers: 1
Link Clicks: 0
Top Performing Content: Ag Electrification
Testimonial
Instagram
Followers: 911
Post Engagement: 190
Reach: 2.7K
Top Performing Content: SLO County Board of
Supervisors voted 3-2 on March 21 to join 3CE
New Followers: 182
Twitter
Followers: 1.1K
Top Performing Content: SLO County Board of
Supervisors voted 3-2 on March 21 to join 3CE
LinkedIn
Followers: 1,750
Page engagement: 277
Top Performing Content: NEWS: We're excited to share that the San Luis Obispo County Board of Supervisors voted 3-2 on March 21 to join 3CE as a member agency.

Earned media:

SLO County Votes to Join 3CE
- SLO County to enroll in Central Coast Community Energy | News | San Luis Obispo | New Times San Luis Obispo (newtimesslo.com)
- Supervisor Meeting This Morning 03.07.2023 - KPRL Radio 1230AM & 99.3FM - Regional | mdjonline.com
- Supervisors & 3CE - 03.10.2023 - KPRL Radio 1230AM & 99.3FM - SLO County may finally provide an alternative to PG&E. Here’s what took so long | Opinion (yahoo.com)
- The ol' college cry | Shredder | San Luis Obispo | New Times San Luis Obispo (newtimesslo.com) Paso Robles City Council Meeting
- Paso Robles City Council Meeting 03.22.2023 - KPRL Radio 1230AM & 99.3FM - Council approves budget for July 4th celebration - Paso Robles Daily News Earth Day
- Seaside Earth Day Celebration & Electric Vehicle Fair : Indybay

CCCE Contracts < $100k
Vendor Total Engagement Amount From To Service Scope Remarks 1 Liebert Cassidy Whitmore $ 4,455 1/1/2023 12/31/2023 Training and consulting services to assist 3CE in the workforce management and employee relations 2 Futura Energy Group $ 96,000 5/1/2023 9/30/2023 Recruitment services to assist in filling open positions 3 Collaborating Learning Inc $ 10,000 4/20/2023 9/30/2023 Facilation services for the CEO lead all staff working session in the support of organizations alignment work
4 Collaborating Learning Inc $ 35,000 5/31/2023 9/30/2023 Continual facilitation and consulting services in supporting culture and teamwork building 5 Lucid Sound and Picture $ 90,000 3/15/2023 9/30/2023 Video production services in assistance with Energy Programs and brand awareness 6 Yellow Bus LLC $ 83,250 3/27/2023 9/30/2023 Advertising, creative, and graphics design services Staff Report Item 14
TO: 3CE Policy Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
SUBJECT: Consider and Approve 3CE’s Project Selection Criteria DATE: June 21, 2023
RECOMMENDATION:

This recommends that the Policy Board of Directors consider and approve the 3CE Project Selection Criteria.

BACKGROUND:
3CE’s primary function is the provision of clean and renewable energy to customers at stable and competitive rates, primarily through the construction of new generation and storage facilities. To date, 3CE has committed over $2 billion toward nearly 900MW of new generation projects and 400 MW of new storage facilities.

A 2022 California Air Resources Board Scoping Plan projected the need for 120,000 MW of new renewable resources by 2030 to meet the State’s greenhouse gas reduction targets. Over several years, stakeholders, community members, and board members sought solutions and direction regarding how to leverage this massive need for additional resource buildout with 3CE’s other strategic goals of stimulating and sustaining the local economy, in part, through the creation of local jobs.

The signing of the Inflation Reduction Act into law in August 2022 dramatically changed the landscape for renewable energy investment by restructuring the investment tax credit and production tax credits to a scaled that incentives developers to commit to apprenticeship programs, prevailing wage, and pairing projects sited in low-income communities with a local skilled workforce.

At the State level, Governor Newsom’s climate package, consolidated into AB 205 (2022) is projected to create an additional 4 million new jobs over the next two decades to support the transition to clean and renewable energy resources.

In exploring potential workforce development and investment opportunities, staff reviewed community feedback from previous public meetings, public input provided to other CCAs, as well as CCA industry policy frameworks. Staff has also engaged directly with stakeholders like IBEW (including representation for IBEW Local 234, 639, and 413), the Monterey/Santa Cruz Building and Construction Trades Council, Associated Builders and Contractors of Northern California, local contractors, renewable energy developers, financiers, and the CCA Workforce & Environmental Justice Alliance (a consortium of labor, environmental, and environmental justice organizations).

While the community and stakeholder feedback often diverged, there were several common takeaways that formed the basis of the staff’s proposed 3CE Project Selection Criteria. First, that any policy should enhance 3CE’s core mission of building new renewable resources. Next, that policy and market commitments to future projects demonstrate sustained demand for a skilled workforce and directly ties to the number of training and apprenticeship positions. Finally, that local workers, historically marginalized workers, and disadvantaged communities should be prioritized.

DISCUSSION/ANALYSIS:

The adoption of 3CE’s Project Selection Methodology reemphasizes 3CE’s existing commitment to a strong local workforce, establishes a clear market signal in support of a skilled and trained workforce, encourages developers to directly engage with communities in which they propose to do business, and still retains’ 3CE’s ability to contract for and develop cost-competitive renewable energy projects that benefit our local community.
3CE’s Existing Commitment to Local Economy and Workforce 3CE’s commitment to our local workforce and sustaining our local economy is demonstrated through our existing power purchase agreements and energy storage agreements (PPAs and ESAs); our local-only request for offers; our Front of the Meter Energy Storage effort, our Local Purchasing Preference Policy, and our Energy Programs.
3CE has executed a total of 19 PPAs and ESAs, totaling over $2 Billion in commitments for energy. Most of these agreements include a contractual requirement that developers pay prevailing wages as required by law or commit to a project labor agreement with local trades. To date, each of 3CE’s PPAs has project labor agreements in place, except where projects are delayed or the developer operated as their own general contractor, and in those cases subcontractor work was performed by union labor. To date, six of these projects are online and have generated over 3,000 construction jobs and over one hundred on-going operation and maintenance jobs.
3CE intends, on a roughly annual basis, to issue a local-only RFO seeking renewable energy generation and storage projects within our service area. To encourage local development, these local-only projects differ slightly from the typical 3CE agreement structure by requiring developers to make a good-faith effort toward local hiring. The local-only RFO has resulted in four ESAs (included in the 19 ESA total), including three by a local Salinas developer.
3CE’s innovative Front of the Meter Storage effort seeks to provide small (up to 5MW) distributed storage projects located at member agency critical operations. Some of these projects will be owned by 3CE and subject to public contracting requirements including prevailing wage, apprenticeship requirements, and reporting. The first round of distributed storage projects is being developed with the help of a local grid interconnection consultant.

In the non-energy procurement area, 3CE’s purchases are subject to our Local Purchasing Preference Policy. The Policy provides that regardless of the service, small, local, and disadvantaged businesses receive a 5% price consideration or scoring credit that reflects the added value of local investment.

Finally, 3CE’s Energy Programs provide residents, businesses, and member agencies with incentives for installing electric car charging stations, electrifying existing businesses, developing all-electric affordable housing projects, and passing reach codes. Each of these efforts encourages local investment in electrification, which provides reinvestment in our local community and supports qualified local contractors.
3CE’s Proposed Project Selection Methodology
The proposed Project Selection Methodology creates a structure through which 3CE will holistically evaluate, prioritize, and select projects that meet 3CE’s core goal of providing clean renewable energy at competitive rates while also maximizing the positive impacts of new generation and storage resources.

The proposed project selection criteria will evaluate projects: 1) ability to cost effectively meet 3CE’s regulatory obligations and 100% clean and renewable energy goal; 2) commitment to workforce development; 3) potential for innovation; 4) location; 5) environmental impacts, and 6) benefits accruing to underserved communities.

Contributions to 3CE’s Mission of 100% Clean and Renewable Under the proposed criteria, 3CE’s commitment to ensuring economically advantageous contracting on behalf of customers does not change. 3CE will review and aggressively analyze both the proposed project and the developer.

With respect to the project, 3CE will utilize quantitative analytics and market projections to evaluate project economics, market operations, revenues, as well as ancillary benefits. 3CE will evaluate the wherewithal of the developer team (including equity partners and financers) as well as the likelihood of project delivery.

Workforce Development
The proposed project criteria set a clear commitment to local workforce through commitments to skilled and trained workforce as well as local and targeted hiring goals.

Those goals set 30% of all project labor hours to be hired by local hires (locals near the project, then the home county, and 3CE’s service area) and 10% (inclusive to the 30% goal) of all labor hours performed by targeted hires from historically marginalized populations.

For PPA and ESA agreements where 3CE does not develop, own, construct, or operate projects, 3CE cannot mandate or require private developers to enter project labor agreements or commit to a skilled and trained workforce. For these projects, 3CE will evaluate the developer’s submission and prioritize projects on the following scale:

High  Commits to a project labor agreement that incorporates Local and Targeted Hire Medium  Commits to a Skilled and Trained Workforce with electrical work performed by Journeypersons and Apprentices
 Commits to Prevailing Wage and Benefits
 Commits to Local and Targeted Hires
Low  Lacks commitments identified above but demonstrates other commitments to local workforce development
For generation and energy storage projects that 3CE constructs, the proposed Project Selection Methodology considers the size projects. First, for projects requiring a Large Generator Interconnection Agreement with CAISO (currently 20MW and above), 3CE will require the contractor to negotiate a project labor agreement that incorporates local and targeted hiring.

Next, for projects requiring a Small Generator Interconnection Agreement with CAISO (currently up to 20 MW) 3CE will require the utilization of a Skilled and Trained Workforce with all electrical work performed by Journeypersons and Apprentices. These smaller projects are more likely to be constructed by smaller contractors and to be located within our local service area. To provide a financial incentive to local and targeted hiring, 3CE will negotiate a bonus structure for contractors that can reach 60% local hires and 30% (included within the 60% target) targeted hires. This negotiated contract incentive eclipses the common “Good Faith Effort” by encouraging contractors to invest in local communities to develop a local, trained workforce.

Innovation
The Board has long supported cost-competitive innovative and creative solutions that accelerate decarbonization, provide 3CE a competitive advantage, and/or reduce costs for 3CE customers. The proposed project selection criteria recognize innovation in feasible projects that: 1) include new or improved technologies; 2) achieve scale for existing technologies, and 3) reduce or eliminate barriers to adoption of scaled technologies.

Location
Consistent with current practice, the proposed Project Selection Methodology prioritizes projects with CAISO deliverability and located as follows: 1) within the 3CE service area; 2) within California; 3) grid-tied or pseudo-tied to CAISO, and 4) dynamically scheduled into CAISO.

Environmental Stewardship
Local control is a key tenant to the CCA industry and 3CE. Therefore, in recognition of the essential role of local permitting authorities, such as City Councils and Boards of Supervisors, in evaluating the potential benefits and impacts of projects within their local jurisdiction, the proposed Project Selection Methodology does not seek to condition or interfere with local siting authority.

In furtherance of 3CE’s commitment to energy projects that provide environmental benefit while avoiding impacts to important lands, species, and waters, 3CE will prioritize projects as follows:

High  Avoid sensitive habitats for endangered plant or animal species or other environmentally sensitive areas
Medium  Developer and local land use authority establish an enforceable development agreement which, in part, establish mitigation measure to reduce impacts on sensitive habitat, species, or environmentally sensitive areas Low  Developer commits to measurable offset efforts within the vicinity of the proposed project
Benefits Accruing to Underserved Communities
3CE remains committed to helping communities engage with the public process and access resources, education, and information about energy service and policy. The Policy Board adopted the Underserved Communities Outreach Plan in 2021 which addressed how 3CE would engage around policy and outreach. The proposed Project Selection Methodology would extend that same commitment to 3CE energy and storage project development. The proposed criteria would prioritize projects as follows:

High  Developer has established contacts with local community organizations representing a broad diversity of demographics and interests with which the developer will collaborate to ensure project benefits are communicated and accessible to the local community
Medium  Developer has not yet established contacts, but is committed to meaningful engagement with local communities throughout the entitlement and construction process to ensure project benefits are communicated and accessible to the local community
Low  Developer fails to demonstrate contacts or commitment to meaningful engagement with the local community by can demonstrate a comprehensive outreach plan
Reporting
As part of its request for approval of any agreement for a renewable energy or storage facility, 3CE will report the quantitative and qualitative assessment of the recommended projects to the Operations Board. Further, impacts, including solicitation participation, the number of construction and on-going jobs created, percentages of local and targeted hires, as well as developer engagement efforts will be incorporated into 3CE’s Annual Report.

Effective Date
If approved, the Project Selection Criteria will be incorporated into 3CE’s next solicitation for a renewable energy or storage facility. 3CE has several projects currently shortlisted from its spring 2023 RFO to which the Project Selection Criteria would not be strictly applied.

FISCAL IMPACT:

The Inflation Reduction Act’s change to the investment tax credit (to incent the use of a skilled workforce, apprenticeships, and prevailing wage) and the public agency direct pay mechanism make the financial impact of the proposed Project Selection Criteria uncertain.

Typical cost concerns, such as less competitive solicitations and more expensive workforce, have not materialized on other 3CE projects where labor agreements are overwhelmingly the norm.

CONCLUSION:

The Board’s approval of the Project Selection Criteria will formalize an evaluation process for renewable energy and storage project solicitations that furthers 3CE’s core mission of delivering competitively priced clean and renewable energy to customers while committing to a skilled workforce, local and targeted hiring, and meaningful community engagement.

ATTACHMENT:

1. 3CE Project Selection Criteria

PROJECT SELECTION METHODOLOGY
I. DEFINITIONS
A. Regulatory Value: The project’s anticipated ability to satisfy 3CE’s regulatory compliance requirements such as Resource Adequacy, Renewable Portfolio Standard, integrated resource planning, and other binding orders or directives received from regulatory bodies.

B. Market Value: The project’s projected revenues across all relevant day-ahead real-time and ancillary markets. Market Value shall also assess a project’s ability to manage, shift, or arbitrage existing 3CE generation to maximize revenue and renewable energy generation on behalf of 3CE and its customers.

C. Counterparty Risk: The risk that a counterparty will fail to perform, or adequately remedy, its obligations. Counterparty Risk is inclusive of Development Risk.

D. Development Risk: The risk that the project is unable to obtain interconnection, deliverability, site control, entitlements, financing, or other necessary development milestones required to deliver the project on or ahead of the anticipated online date.

E. Energy Offtake Agreement: Includes Power Purchase Agreements, Energy Storage Agreements, or Resource Adequacy Only Agreements where 3CE does not own, develop, or construct the generation or storage facility. Instead, 3CE’s participation in the Project is limited to receiving energy and any applicable attributes at a set price and term.

F. Journeyperson: Is a worker who either:

1. Graduated from a California state-approved apprenticeship program for the applicable occupation or, when located outside California, approved for federal purposes pursuant to apprenticeship regulations adopted by the Secretary of Labor, or

2. Has at least as many hours of on-the-job experience in an applicable occupation as would be required to graduate from an apprenticeship program for the applicable occupation that is approved by the California Division of Apprenticeship Standards.

G. Local Hire: Is a worker who satisfies one of the following categories in descending priority:

1. Is a resident within the nearest city, town, or census-designated location within a determined proximity of the project, by radius as reasonably determined on a project-by-project basis;
a) Additional preference shall be given, where the radius includes a city, town, or census-designated location within Monterey, San Benito, San Luis Obispo, Santa Barbara, and Santa Cruz counties (“3CE Service Territory Counties”), to the workers within those portions of the Service Territory Counties;

2. Is a resident within the County where the project is being constructed;

3. Is a resident of the 3CE Service Territory Counties; H. Skilled and Trained Workforce: means a workforce in which:

1. All workers performing work in apprentice-able occupations in the building and construction trades are either skilled journeypersons or apprentices registered in an apprentice program approved by the chief of the Division of Apprenticeship Standards, as defined in Chapter 2.9 of Part 1 of Division 2 of the California Public Contracts Code.

I. Targeted Hire: means an individual who qualifies at least one of the following under-represented or under-employed populations:

1. experiencing homeless;

2. being a custodial single parent;

3. currently receiving public assistance;

4. lacking a GED or high school diploma;

5. has been continuously unemployed for 6 months;

6. has been emancipated from the foster care system;

7. is a veteran of the United States military;

8. residing in an area that falls in the top 20th percentile of the CalEnviroscreen 4.0 score;

9. is a member of a tribal community.

J. Low-Income Communities: means a zip code that includes a census tract or portion thereof in which the median annual household income is less than 50% of the California Median Family Income for the County in which the individual resides as reported by the Department of Housing and Urban Development (HUD).

II. PROJECT SELECTION METHODOLOGY
Projects will be evaluated based on 3CE’s evaluation of several criteria as set forth below.

A. Contributions to 3CE’s mission of 100% Clean and Renewable

1. Assessment and evaluation of proposed projects’ operational performance and market economics to ensure selected projects maximize regulatory and market value to 3CE and its customers.

2. Assessment and evaluation of Counterparty and Development Risk.

B. Workforce and Local Workforce Development
3CE is committed to stimulating our local economy through, among other measures, supporting Projects committing to applying prevailing wage rates as required by law, and supporting a local Skilled and Trained Workforce.

1. 3CE will prioritize Energy Offtake Agreements where the developer is committed to:
a) Highest priority projects will commit to:
(1) a multi-trade project labor agreement that incorporates 3CE’s Local and Targeted Hire objectives as follows:
(a) A goal of 30% of all project labor hours performed by Local Hires, and;
(b) A goal of 10% of all project labor hours performed by Targeted Hires.
b) Medium-priority projects will commit to:
(1) Utilization of a Skilled and Trained Workforce and commitment that all electrical work will be performed by appropriate Journeypersons and apprentices from a state-approved
apprenticeship training program; and
(2) Utilization of prevailing hourly wage and benefit rates as determined by the California Department of Industrial Relations; (3) Demonstrated commitment to Local and Targeted Hires c) Low-priority projects would fail to meet II.B.1.a or II.B.1.b above but may demonstrate other commitments to local workforce development.

2. When considering contractors or developers for 3CE-owned generation or storage projects requiring a Large Generator Interconnection Agreement from the California Independent System Operator (currently 20MW and above, but subject to change from time to time), 3CE will commit to:
a) Negotiating a multi-trade project labor agreement incorporating 3CE’s local and targeted hire objectives as follows:
(1) A goal of 30% of all project labor hours performed by Local Hires, and;
(2) A goal of 10% of all project labor hours performed by Targeted Hires.

3. When considering contractors or developers for 3CE-owned generation or storage projects requiring a Small Generator Interconnection Agreement from the California Independent System Operator (currently applies to projects under 20MW, but subject to change from time to time), 3CE will commit to:
a) Utilization of a Skilled and Trained Workforce and commitment that the majority of all electrical work will be performed by appropriate Journeypersons and Apprentices from a state-approved apprenticeship training program.
b) A goal of 30% of all project labor hours performed by Local Hires while incenting, through a negotiated contract structure, the contractor or developer to achieve a minimum of 60% of all project labor hours performed by Local Hires, and;
c) A goal of 10% of all labor hours performed by Targeted Hires while incenting, through a negotiated contract structure, the contractor or developer to achieve a minimum of 30% of all project labor hours performed by Targeted Hires.

C. Innovation
3CE recognizes that reaching 100% Clean and Renewable will require significant improvements and innovation in battery technologies, renewable baseload, dispatchable renewable resources, and renewable generation technologies, among other opportunities.

1. 3CE will prioritize projects that accelerate decarbonization, provide 3CE a competitive advantage, and/or reduce costs for 3CE customers while remaining cost competitive with established market alternatives. Innovation will be recognized among projects that:
a) Include new or improved technologies or methodologies with a demonstrated potential feasibility;
b) Achieve scale for existing technologies to benefit 3CE customers; or c) Reduce or eliminate barriers to the adoption of scaled technologies.

D. Location
3CE prioritizes projects with California Independent System Operator-certified deliverability in accordance with the following:

1. Projects located within Monterey, San Benito, San Luis Obispo, Santa Barbara, and Santa Cruz counties.

2. Projects located within California.

3. Projects Grid-tied or Psuedo-tied to the California Independent System Operator wholesale power market.

4. Projects dynamically scheduled into the California Independent System Operator wholesale power market.

E. Environmental Stewardship
3CE is committed to leading by providing customers with energy that delivers benefits for air, water, and the natural environment while avoiding impacts to important lands, species, and waters.

1. Without diminishing or interfering with permitting, planning land use, or development requirements of any authority having jurisdiction, including local governmental agencies, 3CE prioritizes projects that:
a) Avoid sensitive habitats for any endangered plant or animal species or other environmentally sensitive areas;
b) The developer and local land use authority have established an enforceable development agreement which, in part, sets forth measures to mitigate impacts to sensitive habitats or environmentally sensitive areas;
c) The developer commits to measurable offset efforts within the vicinity of the proposed project.

F. Benefits Accruing to Underserved and Low-Income Communities 3CE is committed to helping communities overcome barriers to their access to public investments, resources, education, and information about energy service and policy. 3CE will prioritize projects that:

1. Demonstrate having established contacts with local community organizations and stakeholder groups representing a broad diversity of demographics and interests with which it intends to collaborate with to identify and address benefits and impacts of projects and ensure project benefits are communicated and accessible to the local community.

2. Commit to meaningful engagement with local communities throughout the entitlement and construction processes to identify and address the impacts of projects and ensure project benefits are communicated and accessible to the local community.

III. REPORTING
A. 3CE will assess project proposals in accordance with this Project Selection Methodology and report the results of such assessment at the time of the project approval.

B. 3CE’s annual report will compile and report information regarding the impact of the Project Selection Methodology.

IV. RESERVATION OF AUTHORITY TO WAIVE PROJECT SELECTION METHODOLOGY A. The Policy Board may, by majority vote, waive this Project Selection Methodology, or any portion thereof, to:

1. Address an emergency situation that jeopardizes the safety or feasibility of a project, or;

2. Comply with a California State or Federal executive or regulatory order.

Staff Report Item 15
TO: 3CE Policy Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Dewayne Woods, Interim Chief Financial Officer SUBJECT: Adopt Resolution PB-2023-05 Authorizing CEO to Execute a Clean Energy Purchase Contract with California Community Choice Financing Authority and Ancillary Documents and Agreements to Effectuate the Prepay Financing Transaction DATE: 6/21/2023
RECOMMENDATION:

This recommends that the Policy Board adopt Resolution PB-2023-05 authorizing the CEO to execute a Clean Energy Purchase Contract with California Community Choice Financing Authority and ancillary documents and agreements to effectuate the prepay financing transaction.

BACKGROUND:

Staff has previously presented the proposed prepay transaction structure to the Executive Committee, Operations Board, and Policy Boards. The Operations Board at its November 9, 2022, meeting directed staff to return with additional details of the proposed transaction’s parameters.

At its April 26, 2023, meeting, the Audit & Finance Committee received this update and recommended that the Operations Board support the Policy Board’s approval of the transaction.

At its May 10, 2023, meeting, the Operations Board received this update and recommended that the Policy Board support the approval of the transaction.

DISCUSSION:

The recommendation for Policy Board approval and authorization of the prepay transaction enables 3CE to move forward with a financial transaction that can reduce 3CE energy costs by realizing a discount on long-term energy purchases through leveraging the issuance of tax-exempt bonds. 3CE has engaged an expert professional team to advise and guide negotiations to establish the transaction structure in a manner that minimizes risk to 3CE or its customers.

FIRM ROLE
PFM Financial Advisors LLC (PFM) Municipal Finance Advisor (“FA”): Advise 3CE in negotiations; required by Municipal Securities Rulemaking Board
Nixon Peabody Bond, Disclosure, Issuer, and Tax Counsel: Represent 3CE and CCCFA; provide tax opinion on the transaction
Hall Energy Law Special Counsel to 3CE; review and negotiate primary and ancillary documents
Stradling Yocca Carlson & Rauth Special Counsel to 3CE; review and negotiate primary and ancillary documents
The Financial Advisor and primary Counsel fees are contingent upon the execution of the transaction and will be financed from the bond proceeds. These fees, excluding underwriting fees, are estimated to be approximately $1 million. Special Counsel fees are estimated at $50,000.

Prepay Deal Structure:

If approved, 3CE will become the fifth CCA to execute a prepay transaction for the benefit of its customers. Following nearly a year of negotiations, 3CE’s proposed prepay transaction involves a series of agreements between 3CE, a set of its PPA seller partners, a facilitating banking partner (J. Aron), the California Community Choice Financing Authority (“CCCFA”) (a JPA founded by 3CE, East Bay Community Energy, Marin Clean Energy, Silicon Valley Clean Energy, and Clean Power Alliance), and a funding recipient to be selected by 3CE through a competitive process.

CCCFA issues non-recourse, tax-exempt bonds, the proceeds of which are used to prepay for electric power delivered under assigned PPAs at the terms originally negotiated by 3CE. CCCFA provides the bond proceeds to J. Aron, who provides them to the funding recipient, then uses debt service of that funding to make regular payments to the PPA sellers and deliver the power to CCCFA. CCCFA provides that power to 3CE at a discount from the original PPA price and uses those payments to service the bonds.

A simplified diagram of the flow of funds and power is presented below:

While the bonds issued will feature a nominal 30-year term, the prepay structure will have an initial pricing period of 5-10 years. 3CE will not execute the transaction unless we can realize financial savings with a minimum discount of ten percent during the initial period. The actual discount will depend on the spread between taxable and tax-exempt rates. At the end of the initial period, the structure will be re-priced, and the terms of the discount will be set per the attached Repricing Agreement. The Repricing Agreement will have a minimum energy savings threshold for future reset periods set, currently anticipated to be ten percent for the first repricing. As the transaction moves forward across re-pricing periods, the remaining shorter tenor of the deal will place downward pressure on future discounts.

Subject to Board direction and bond market activity when this transaction goes to market, staff estimates the total contract value of the assignments to be $300-500MM. Historically, energy prepays have yielded savings of 7-12%.

Staff currently anticipates assigning an average of 80% of four on-line PPAs to this prepay transaction, representing approximately 15 percent of 3CE’s total load.

Risk:

The proposed deal structure, utilizing CCCFA to issue non-recourse municipal bonds, significantly minimizes the risks to 3CE. Potential remaining risks, including volumetric, market, counterparty/financial, and regulatory are low and managed through the deal structure.

Volumetric risk is the risk that the PPA Seller fails to provide the required energy volumes to sustain the transaction. This risk is sufficiently managed in three ways. First, 3CE is proactively scheduling only 80% of the contract volumes of the assigned PPAs into the prepay to hedge against potential under-generation. Next, the deal structure allows 3CE to substitute or add additional PPAs to the prepay to sustain the required volumes of delivered energy. Finally, the attached Master Supply Agreement provides a mechanism to back stop under-generating developers in the event of an outage or other unplanned event.

Market risk, in the form of lack of materialized savings, may occur at some point in the life of the deal if re-pricing fails to meet the targeted savings for 3CE or if the structure should fail for any other reason.

In either case, the deal structure unwinds, and the energy contracts assigned to the prepay will revert to 3CE. The loss to 3CE will be the staff time spent on the project and the future savings expected to be generated by the prepayment transaction.

Counterparty/financial risk exists should the banking counterparty or funding recipient experience distress and fail to service its loan. Through a rigorous RFI process, 3CE has selected Goldman Sachs as its banking counterparty, a seasoned investment bank with demonstrated experience in the commodity business and prepay transactions. Credit rating will be a key factor in selecting the funding recipient.

Should any issue arise, bondholders would be most impacted, as the debt is non-recourse to 3CE or its member agencies. In the event of any failure, the structure would fully return the PPAs to 3CE resulting only in a loss of staff time spent on the project and the future discount no longer realized through the transaction.

Regulatory risk, though low, may materialize should the IRS change its guidance for the treatment of energy prepay transactions. Since the IRS issued rules informing the structure of these transactions 30 years ago, well over 100 such bond issuances have successfully delivered savings to their communities.

Tax-exempt energy prepayments were codified by Congress in the National Energy Policy Act of 2005; Section 1327. If regulations do change, 3CE would assess the continuing viability of the structure and if necessary, withdraw. Under those circumstances, 3CE would continue under the original terms of its PPAs with only the downside unmaterialized savings.

Key Transaction Documents:

The agreements are presented here in near-final form, with all parties having discussed and settled on language addressing the major elements of the transaction. Certain terms, such as minimum discount, will be finalized based on market conditions at the time the transaction is presented to the Policy Board.

Staff recommends a target discount of 10%. Work on Limited Assignment Agreements are ongoing and will be fully completed prior to going to market for the bonds.

Clean Energy Purchase Contract (“CEPC”) - Agreement between 3CE and CCCFA, detailing delivery obligations, assignment provisions of the PPAs, and minimum percentage discount that 3CE will require.

Form of Limited Assignment Agreement – Agreement between 3CE, PPA seller, and J. Aron, detailing the limited assignment of the PPA from 3CE to J. Aron.

Letter Agreement re: Limited Assignment Agreements – Details additional terms between 3CE, CCCFA, and J. Aron related to the assigned PPAs.

Master Power Supply Agreement (“MPSA”) – Agreement between CCCFA and J. Aron, detailing performance requirements and termination provisions.

Electricity Purchase, Sale, and Service Agreement – Agreement between J. Aron and the created LLC for J. Aron to provide administrative functions and services to meet its energy delivery obligations.

Limited Liability Company Agreement – Dictating the functions and governance of the LLC to be created by J. Aron for the purpose of supplying this prepay structure. Most decisions are governed by the CEPC and MPSA. Of the three board members, one is appointed by J. Aron, one by CCCFA, and one independent director who may only vote on a declaration of bankruptcy.

SPE Master Custodial Agreement – Agreement between the created LLC and a bank governing the LLC’s cashflows to handle payments and investments of cash on hand.

PPA Payment Custodial Agreement – Stipulates that all funds coming from 3CE, CCCFA, and J. Aron are deposited into one account from which a custodian directs payments to the PPA seller.

Repricing Agreement - Bonds will be sold with a mandatory tender for 5-10 years. This agreement stipulates the mechanics for pricing during future reset periods, including discount rate and savings.

GSG Guaranty to Prepay LLC and Guaranty Side Letter – Agreement between the created LLC, J. Aron, and Goldman Sachs Group guaranteeing J. Aron’s payment obligations under the Electricity Purchase, Sale, and Service Agreement.

Front-End ISDA Schedule – Governs commodity swap credit terms ensuring that payments are sufficient to allow the created LLC to provide power to CCCFA in the event PPA assignments are not in effect.

FISCAL IMPACT:

There is no additional fiscal impact if the transaction does not close except costs associated with rating agency fees. Once executed, all fees would be paid through bond proceeds and the discount on power received through the prepay structure would be reflected in 3CE’s monthly financial results.

CONCLUSION:

The Policy Board’s approval and authorization to execute the transaction, under certain market conditions to meet the minimum discount, will provide 3CE an opportunity to reduce energy costs through tax-free municipal bonds.

ATTACHMENTS:

1. Resolution PB-2023-05

2. Clean Energy Purchase Contract

3. Form of Limited Assignment Agreement

4. Letter Agreement re Limited Assignment Agreements

5. Master Power Supply Agreement

6. Electricity Purchase Sale and Service Agreement

7. Limited Liability Company Agreement

8. SPE Master Custodial Agreement

9. PPA Payment Custodial Agreement

10. Re-Pricing Agreement

11. GSG Guaranty to Prepay LLC

12. GSG-Prepay LLC Guaranty Side Letter

13. Front-End ISDA Schedule

14. Trust Indenture

15. Preliminary Official Statement

16. Appendix A
RESOLUTION NO. PB-2023-05

A RESOLUTION OF THE CENTRAL COAST COMMUNITY ENERGY POLICY BOARD OF DIRECTORS

AUTHORIZING THE CHIEF EXECUTIVE OFFICER TO EXECUTE A CLEAN ENERGY PURCHASE CONTRACT

WITH CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY AND ANCILLARY DOCUMENTS AND

AGREEMENTS TO EFFECTUATE THE PREPAY FINANCING TRANSACTION WHEREAS, Central Coast Community Energy (“3CE”) desires to enter into a prepaid electricity transaction (the “Project”) whereby bonds (the “Bonds”) will be issued by California Community Choice Financing Authority (the “Issuer”), the proceeds of which will be used to prepay electricity deliveries; and WHEREAS, 3CE has determined to authorize the Authorized Officers (as defined herein) to take all actions necessary or desirable to accomplish the purchase of clean energy from the Issuer and to assist the Issuer in the issuance, sale and delivery of the Bonds; and WHEREAS, there have been made available to the Policy Board of Directors of 3CE for approval forms of the following agreements (collectively, the “Project Documents”):

1. Clean Energy Purchase Contract between 3CE and the Issuer;

2. Custodial Agreement by and among 3CE, J. Aron & Company LLC, a New York limited liability company (“J. Aron”), Aron Energy Prepay 22 LLC, a Delaware limited liability company (“Prepay LLC”), the Issuer, and U.S. Bank Trust Company, National Association, as custodian;

3. Form of Limited Assignment Agreement, by and among 3CE, the counterparty to the power purchase agreement described therein, and J. Aron;

4. Letter Agreement between 3CE and J. Aron regarding matters relating to Limited Assignment Agreements; and

5. Operational Services Agreement relating to the Project, by and between 3CE and the Issuer; and

6. Trust Indenture (the “Indenture”) between the Issuer and U.S. Bank Trust Company, National Association as trustee, providing for, among other things, the issuance of and security for the Bonds;

7. Master Power Supply Agreement (the “Master Power Supply Agreement”) between the Issuer and the Prepay LLC, providing for the delivery of the Prepaid Energy Supply to the Issuer; and

8. Preliminary Official Statement (the “Preliminary Official Statement”), to be used in connection with the offering and sale of the Bonds, including the information relating to 3CE included as Appendix A thereto, and a form of continuing disclosure undertaking included as Appendix E thereto (the “Continuing Disclosure Undertaking”);
NOW THEREFORE, BE IT RESOLVED by the 3CE Policy Board of Directors, as follows:

SECTION 1. The proposed forms of the Project Documents, as made available to the Policy Board of Directors for this meeting, are hereby approved. The form of Limited Assignment Agreement may be used, in substantially the same form, for assignments of the initial or any additional 3CE power purchase agreements, as needed to maintain the transactions approved hereby, and any such Limited -2-
Assignment Agreements shall be included in the Project Documents hereby approved. Subject to the parameters set forth in Section 4 of this Resolution, any of the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, or the designees of any of them (each, an “Authorized Officer”), are hereby authorized and directed, for and on behalf of 3CE, to execute and deliver the Project Documents in substantially said form, with such changes, additions, insertions, or corrections as the Authorized Officer executing the same may approve, in his or her discretion, in consultation with Nixon Peabody LLP, as bond counsel (“Bond Counsel”) and PFM Financial Advisors LLC (the “Municipal Advisor”) as being in the best interests of 3CE or necessary and advisable for the issuance of the Bonds, such approval to be conclusively evidenced by the execution and delivery thereof.

SECTION 2. The proposed form of the Preliminary Official Statement, as made available to the Policy Board of Directors for this meeting, is hereby approved. Any Authorized Officer is hereby authorized and directed, for and on behalf of 3CE, to execute and deliver a certificate as to the information regarding 3CE contained therein and in the final version of the Official Statement, and in any supplement or amendment to either of the Preliminary Official Statement or the final Official Statement, in each case with such changes and insertions therein as the Authorized Officer approving the same may deem necessary or appropriate. Subject to approval by the Issuer, 3CE hereby authorizes the distribution of the Preliminary Official Statement to persons who may be interested in the purchase of the Bonds, and the delivery of the Official Statement in final form to the purchasers of the Bonds, in each case with such changes as may be approved as aforesaid.

SECTION 3. The Authorized Officers, each acting alone, are hereby authorized and directed, for and in the name and on behalf of 3CE, to execute and deliver any and all certificates, disclosures, and other documents, including, without limitation, any tax certificate relating to its expected use of the energy to be purchased by it from the Project, any agreement required for the offering or sale of the Bonds, and any and all closing certificates to be executed in connection with the issuance of the Bonds, and to take any and all actions which may be necessary or advisable, in the discretion of such Authorized Officer in consultation with Bond Counsel and the Municipal Advisor, to effectuate the actions which 3CE has approved in this Resolution, for the issuance, sale and delivery of the Bonds, and to consummate by 3CE the transactions contemplated by the Project Documents presented to the Board herewith, including any subsequent amendments, waivers or consents entered into or given under or in accordance with such documents.

SECTION 4. The approvals provided for herein shall be subject to the following parameters:
(a) the Bonds will not be obligations of 3CE, but will be limited obligations of the Issuer payable solely from the revenues and other amounts pledged therefor under the Indenture, including amounts payable by 3CE under the Clean Energy Purchase Contract; (b) the aggregate principal amount of the Bonds shall not exceed $900,000,000; (c) the “Monthly Discount Percentage” as provided for in the Clean Energy Purchase Contract shall result in at least 9% savings on an annual basis; and (d) the total cost of issuance, including all underwriting, legal and consultant fees, will not exceed 1.25% of the amount of the bond proceeds.

SECTION 5. Execution and delivery of the Project Documents by an Authorized Officer or Officers shall be conclusive evidence that the parameters set forth in Section 4 have been met, and all -3-
actions heretofore taken by the Authorized Officers with respect to the issuance of the Bonds are hereby ratified, confirmed and approved.

SECTION 6. This Resolution shall take effect immediately.

PASSED AND ADOPTED at a regular meeting of the Policy Board of Directors of Central Coast Community Energy on this 21st day of June 2023, held in Monterey, California, at a location freely accessible to the public, and at which a quorum was present and acting throughout, by the following roll-call vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:
________________________
Chair, Steve McShane
Attest:
________________________
Board Clerk, Heather Vowell
SM Draft 17 April 2023

CLEAN ENERGY PURCHASE CONTRACT
between

CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
and

CENTRAL COAST COMMUNITY ENERGY
Dated as of [____], 2023
-i-TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS ........................................................................................................2 Section 1.1 Defined Terms ................................................................................................2 Section 1.2 Definitions; Interpretation.............................................................................12 ARTICLE II. DELIVERY PERIOD; NATURE OF CLEAN ENERGY PROJECT; CONDITION PRECEDENT ........................................................................13 Section 2.1 Delivery Period .............................................................................................13 Section 2.2 Nature of Clean Energy Project ....................................................................13 Section 2.3 Condition Precedent......................................................................................13 Section 2.4 Pledge of this Agreement..............................................................................13 ARTICLE III. SALE AND PURCHASE; PRICING...............................................................13 Section 3.1 Sale and Purchase of Product........................................................................13 Section 3.2 Payments.......................................................................................................13 Section 3.3 Limited Obligation to Take Base Quantities ................................................14 Section 3.4 Annual Refund..............................................................................................14 Section 3.5 Reset Period Remarketing.............................................................................14 ARTICLE IV. FAILURE TO SCHEDULE PRODUCT .........................................................16 Section 4.1 Issuer’s Failure to Schedule Base Quantity (Not Due to Force Majeure)........................................................................................................16 Section 4.2 Purchaser’s Failure to Schedule or Take Base Quantities (Not Due to Force Majeure)..............................................................................................16 Section 4.3 Failure to Deliver or Take Due to Force Majeure.........................................17 Section 4.4 Assigned Product ..........................................................................................17 Section 4.5 Sole Remedies...............................................................................................17 ARTICLE V. DELIVERY POINTS; SCHEDULING .............................................................17 Section 5.1 Delivery Points..............................................................................................17 Section 5.2 Transmission and Scheduling .......................................................................18 Section 5.3 Title and Risk of Loss...................................................................................18 Section 5.4 PCC1 Product and.........................................................................................18 -ii-Section 5.5 Communications Protocol.............................................................................21 Section 5.6 Deliveries within CAISO or another Balancing Authority...........................21 Section 5.7 Assigned Products.........................................................................................21 ARTICLE VI. ASSIGNMENT OF POWER PURCHASE AGREEMENTS........................21 Section 6.1 Assignments Generally .................................................................................21 Section 6.2 Failure to Obtain ...........................................................................................23 Section 6.3 Adjustments to Base Quantities....................................................................23 Section 6.4 J. Aron Non-Payment to APC Party. ............................................................23 ARTICLE VII. USE OF PRODUCT .........................................................................................23 Section 7.1 Tax Exempt Status of the Bonds...................................................................24 Section 7.2 Priority Products ...........................................................................................24 Section 7.3 Assistance with Sales to Third Parties..........................................................24 Section 7.4 Qualifying Use ..............................................................................................24 Section 7.5 Remediation ..................................................................................................24 Section 7.6 Remediation; Ledger Entries; Redemption...................................................25 ARTICLE VIII. REPRESENTATIONS AND WARRANTIES; ADDITIONAL COVENANTS ................................................................................................26 Section 8.1 Representations and Warranties....................................................................26 Section 8.2 Warranty of Title...........................................................................................27 Section 8.3 Disclaimer of Warranties..............................................................................28 Section 8.4 Continuing Disclosure ..................................................................................28 ARTICLE IX. TAXES.................................................................................................................28 ARTICLE X. JURISDICTION; WAIVER OF JURY TRIAL ...............................................28 Section 10.1 Consent to Jurisdiction..................................................................................28 Section 10.2 Waiver of Jury Trial......................................................................................29 ARTICLE XI. FORCE MAJEURE...........................................................................................29 Section 11.1 Applicability of Force Majeure.....................................................................29 Section 11.2 Settlement of Labor Disputes........................................................................29 -iii-ARTICLE XII. GOVERNMENTAL RULES AND REGULATIONS...................................30 Section 12.1 Compliance with Laws .................................................................................30 Section 12.2 Contests.........................................................................................................30 Section 12.3 Defense of Agreement ..................................................................................30 ARTICLE XIII. ASSIGNMENT................................................................................................30 ARTICLE XIV. PAYMENTS.....................................................................................................31 Section 14.1 Monthly Statements......................................................................................31 Section 14.2 Payments.......................................................................................................32 Section 14.3 Payment of Disputed Amounts.....................................................................32 Section 14.4 Late Payment ................................................................................................33 Section 14.5 Audit; Adjustments.......................................................................................33 Section 14.6 Netting; No Set-Off.......................................................................................33 Section 14.7 Rate Covenant...............................................................................................33 ARTICLE XV. [RESERVED]....................................................................................................34 ARTICLE XVI. NOTICES.........................................................................................................34 ARTICLE XVII. DEFAULT; REMEDIES; TERMINATION...............................................34 Section 17.1 Issuer Default................................................................................................34 Section 17.2 Purchaser Default..........................................................................................35 Section 17.3 Remedies Upon Default................................................................................36 Section 17.4 Termination of Master Power Supply Agreement........................................37 Section 17.5 Limitation on Damages.................................................................................37 ARTICLE XVIII. MISCELLANEOUS.....................................................................................38 Section 18.1 Indemnification Procedure............................................................................38 Section 18.2 Deliveries......................................................................................................38 Section 18.3 Entirety; Amendments..................................................................................38 Section 18.4 Governing Law .............................................................................................39 Section 18.5 Non-Waiver...................................................................................................39 Section 18.6 Severability ...................................................................................................39 Section 18.7 Exhibits.........................................................................................................39 -iv-Section 18.8 Winding Up Arrangements...........................................................................39 Section 18.9 Relationship of Parties..................................................................................39 Section 18.10 Immunity.......................................................................................................39 Section 18.11 Rates and Indices ..........................................................................................40 Section 18.12 Limitation of Liability...................................................................................40 Section 18.13 Counterparts..................................................................................................40 Section 18.14 Third Party Beneficiaries; Rights of Trustee ................................................40 Section 18.15 No Recourse to Members of Purchaser ........................................................41 Section 18.16 Waiver of Defenses.......................................................................................41 Section 18.17 Rate Changes ................................................................................................41 Exhibit A-1 — Base Quantities; Base Delivery Point; Commodity Reference Prices Exhibit A-2 — Initial Assigned Rights and Obligations
Exhibit B — Notices
Exhibit C — Remarketing Election Notice
Exhibit D — Federal Tax Certificate
Exhibit E — Purchaser’s Legal Opinion
Exhibit F — Assignment of Assignable Power Contracts
Exhibit G — Communications Protocol
Exhibit H — Pricing and Other Terms
Exhibit I — Closing Certificate
-1-

CLEAN ENERGY PURCHASE CONTRACT
This Clean Energy Purchase Contract (this “Agreement”) is made and entered into as of [____], 2023 (the “Execution Date”), by and between California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended) (“Issuer”) and Central Coast Community Energy, a California joint powers authority (“Purchaser”).

W I T N E S S E T H:

WHEREAS, Issuer has planned and developed a project to acquire long-term supplies of Product from Aron Energy Prepay 16 LLC, a Delaware limited liability company (“Prepay LLC”) and a wholly-owned subsidiary of The Goldman Sachs Group, Inc., pursuant to a Master Power Supply Agreement, dated as of [____], 2023 (the “Master Power Supply Agreement”), to meet a portion of the Product supply requirements of Purchaser through a discounted clean energy purchase product (the “Clean Energy Project”); WHEREAS, Purchaser desires to enter into an agreement with Issuer for the purchase of Product acquired by the Issuer under the Clean Energy Project; WHEREAS, Issuer will finance its payment for Product under, and the other costs of, the Clean Energy Project by issuing Bonds;
WHEREAS, Purchaser is a joint powers authority and a 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 for the transmission, distribution, sale, and delivery of Product to retail electric consumers within its service area;
WHEREAS, Purchaser is agreeable to purchasing a portion of its Product requirements from Issuer under the terms and conditions set forth in this Agreement and Issuer is agreeable to selling to Purchaser such supplies of Product under the terms and conditions set forth in this Agreement;
WHEREAS, concurrently herewith, Purchaser has assigned to J. Aron (as defined below) certain Assigned Rights and Obligations (as defined below), including the right to receive Assigned Product (as defined below), which Assigned Product will be resold to Prepay LLC under the Electricity Sale and Service Agreement, then resold to Issuer under the Master Power Supply Agreement and then resold to Purchaser hereunder; and
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WHEREAS, as a condition precedent to the effectiveness of the Parties’ obligations under this Agreement, Issuer shall have entered into the Master Power Supply Agreement and shall have issued the Bonds.

NOW, THEREFORE, in consideration of the premises above and the mutual covenants and agreements herein set forth, Issuer and Purchaser (the “Parties” hereto; each is a “Party”) agree as follows:

ARTICLE I.

DEFINITIONS
Section 1.1 Defined Terms. The following terms, when used in this Agreement (including the preamble or recitals to this Agreement) and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires:
“Administrative Fee” means the amount per MWh specified as such in Exhibit H. “Affiliate” means, with respect to either Party, any entity which is a direct or indirect parent or subsidiary of such Party or which directly or indirectly (i) owns or controls such Party, (ii) is owned or controlled by such Party, or (iii) is under common ownership or control with such Party. For purposes of this definition, “control” of an entity means the power, directly or indirectly, either to (a) vote 50% or more of the securities having ordinary voting power for the election of directors or Persons performing similar functions or (b) direct or cause the direction of the management and policies, whether by contract or otherwise. “Agreement” has the meaning specified in the preamble and shall include exhibits, recitals and attachments referenced herein and attached hereto. “Alternate Delivery Point” has the meaning specified in Section 5.1(a). “Annual Refund” means the annual refund, if any, to be provided to the Purchaser and calculated pursuant to the procedures specified in Section 3.4. “APC Contract Price” has the meaning specified in Exhibit F. “APC Party” has the meaning specified in Exhibit F.
“Applicable Project” has the meaning specified in Exhibit F. “Assignable Power Contract” has the meaning specified in Section 6.1. “Assigned Delivery Point” means, with respect to any Assigned Energy, the Assigned Delivery Point as set forth in the applicable Assignment Schedule for such Assigned Energy.
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“Assigned Discounted Product” means, for any Month, the lesser of (i) the total quantity of Assigned Product delivered hereunder in such Month and (ii) the aggregate Assigned Prepay Quantities for such Month.
“Assigned Energy” means any Energy, including Energy associated with PCC1 Product and Long-Term PCC1 Product, to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
“Assigned PAYGO Product” means, for any Month, the amount, if any, by which the total quantity of Assigned Product delivered hereunder in such Month exceeds the aggregate Assigned Discounted Product for such Month.
“Assigned PPA” means any power purchase agreement under which Assigned Rights and Obligations are assigned pursuant to an Assignment Agreement in accordance with the terms of this Agreement.
“Assigned Prepay Quantity” has the meaning specified in Exhibit F. “Assigned Prepay Value” means, for any Month and each Assignment Schedule, the Assigned Prepay Quantity for such Month multiplied by the applicable APC Contract Price. “Assigned Product” means, as applicable, PCC1 Product, Long-Term PCC1 Product, Assigned Energy, Assigned RECs and any other Product included on an Assignment Schedule, subject to the limitations for such other Product set forth in Exhibit F. “Assigned Quantity” means, with respect to each Month during an Assignment Period, the quantity of Assigned Energy delivered in connection with the Assigned Product during such Month.
“Assigned RECs” means any RECs associated with PCC1 Product or Long-Term PCC1 Product to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
“Assigned Rights and Obligations” has the meaning specified in Section 6.1. “Assignment Agreement” means, for any Assigned Rights and Obligations, an agreement among Purchaser, J. Aron and the APC Party, approved by Issuer, in the form attached hereto as Annex II to Exhibit F (with such changes thereto as may be mutually agreed upon by Purchaser, J. Aron, the APC Party, and Issuer, each in its sole discretion). “Assignment Period” for any Assigned Rights and Obligations has the meaning specified in the applicable Assignment Agreement.
“Assignment Schedule” has the meaning specified in Exhibit F. “Available Discount Percentage” has the meaning specified in the Re-Pricing Agreement. For the avoidance of doubt, the “Available Discount Percentage” under the Re-Pricing -4-
Agreement includes the Monthly Discount Percentage, as well as additional discounting expected to be made available through the Annual Refund.
“Balancing Authority” has the meaning specified in the CAISO Tariff. “Base Delivery Point” has the meaning specified in Section 5.1(a). “Base Product” means Firm (LD) Energy delivered to the Base Delivery Point. “Base Quantity” means, with respect to each Delivery Hour during the Delivery Period, the Base Unadjusted Quantity for such Delivery Hour less the Base Quantity Reduction for such Delivery Hour, each as set forth on Exhibit A-1, as Exhibit A-1 may be revised pursuant to Article VI.
“Base Quantity Reduction” means, with respect to each Delivery Hour during the Delivery Period, the “Base Quantity Reduction” of Base Product (in MWh) set forth for such Delivery Hour on Exhibit A-1, as Exhibit A-1 may be revised pursuant to Article VI. “Base Unadjusted Quantity” means, with respect to each Delivery Hour during the Delivery Period, the “Base Unadjusted Quantity” (in MWh) set forth for such Delivery Hour on Exhibit A-1.
“Billing Statement” has the meaning specified in Section 14.1(b). “Bond Closing Date” means the date on which Bonds are first issued pursuant to the Bond Indenture.
“Bond Indenture” means (i) the Trust Indenture to be entered into prior to the commencement of the Delivery Period between Issuer and the Trustee, as supplemented and amended from time to time in accordance with its terms, and (ii) any trust indenture entered into in connection with the commencement of any Interest Rate Period after the initial Interest Rate Period between Issuer and the Trustee containing substantially the same terms as the indenture described in clause (i) and which is intended to replace the indenture described in clause (i) as of the commencement of such Interest Rate Period.
“Bonds” means the bonds issued pursuant to the Bond Indenture. “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a Federal Reserve Bank Holiday, (iii) any other day on which commercial banks generally in either New York, New York or the State of California are authorized or required by Law to close, or (iv) any day excluded from “Business Day” as therein defined, pursuant to the Bond Indenture. “CAISO” means California Independent System Operator or its successor. “CAISO Tariff” means CAISO’s FERC-approved tariff, as modified, amended or supplemented from time to time
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“Calculation Agent” has the meaning specified in the Re-Pricing Agreement. “California Long-Term Contracting Requirements” means the long-term contracting requirement set forth in the Clean Energy and Pollution Reduction Act of 2015 (SB 350), California Public Utilities Code Section 399.13(b), and CPUC Decision 17-06-026 and CPUC Decision 18-05-026, as may be modified by subsequent decision of the California Public Utilities Commission or by other Law.
“CEC” means California’s State Energy Resources Conservation and Development Commission, also known as the California Energy Commission, and any successor agency thereto. “Claiming Party” has the meaning specified in Section 11.1. “Claims” means all claims or actions, threatened or filed, that directly or indirectly relate to the indemnities provided herein, and the resulting losses, damages, expenses, attorneys’ fees, experts’ fees, and court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement. “Clean Energy Project” has the meaning specified in the recitals. “Code” means the Internal Revenue Code of 1986, as amended. “Commercially Reasonable” or “Commercially Reasonable Efforts” means, with respect to any purchase or sale or other action required to be made, attempted or taken by a Party under this Agreement, such efforts as a reasonably prudent Person would undertake for the protection of its own interest under the conditions affecting such purchase or sale or other action, including without limitation, the amount of notice of the need to take such action, the duration and type of the purchase or sale or other action, the competitive environment in which such purchase or sale or other action occurs, and the risk to the Party required to take such action. “Commodity Reference Price” means either (i) the Day-Ahead Market Price, or (ii) the Real-Time Market Price, as applicable.
“Contract Price” means (i) with respect to the Base Product and any Delivery Hour, (A) the Day-Ahead Market Price for such Delivery Hour at the Base Delivery Point less (B) the product of the Fixed Price multiplied by the Monthly Discount Percentage, (ii) with respect to Assigned Discounted Product, (A) the applicable APC Contract Price(s) multiplied by (B) the result of 100% less the Monthly Discount Percentage, and (iii) with respect to Assigned PAYGO Product, the applicable APC Contract Price(s).
“CCCE Custodial Agreement” means that certain Custodial Agreement, dated as of [____], by and among Purchaser, Issuer, J. Aron, Prepay LLC and the CCCE Custodian. “CCCE Custodian” means [____], a [____].
“Day” means each period of 24 consecutive Hours commencing at the Hour ending at 01:00 (LPT) through the Hour ending at 24:00 (LPT).
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“Day-Ahead Market Price” has the meaning specified on Exhibit A-1 for each Delivery Point.
“Default Rate” means, as of any date of determination, the lesser of (a) the sum of (i) the rate of interest per annum quoted in The Wall Street Journal (Eastern Edition) under the “Money Rates” section as the “Prime Rate” for such date of determination, plus (ii) one percent per annum, or (b) if a lower maximum rate is imposed by applicable Law, such maximum lawful rate.
“Delivery Hour” has the meaning specified in Exhibit A-1. “Delivery Period” has the meaning specified in Exhibit H. “Delivery Point” means the Base Delivery Point or an Assigned Delivery Point, as applicable.
“Disqualified Sale Proceeds” has the meaning specified in Section 7.6. “Disqualified Sale Units” has the meaning specified in Section 7.6. “Electricity Sale and Service Agreement” has the meaning specified in the Master Power Supply Agreement.
“Eligible Renewable Energy Resource” has the meaning set forth in California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25741(a), as either code provision is amended or supplemented from time to time. “Energy” means three-phase, 60-cycle alternating current electric energy, expressed in megawatt hours.
“EPS” means California’s Emissions Performance Standards, as set forth in Sections 8340 and 8341 of the California Public Utilities Code, as implemented and amended from time to time, and any successor Law.
“EPS Compliant Energy” means Energy that Purchaser can contract for and purchase in compliance with EPS requirements that are applicable to Purchaser. “EPS Energy Period” means any Assignment Period or J. Aron EPS Energy Period. “Execution Date” has the meaning specified in the preamble. “Federal Tax Certificate” means the executed Federal Tax Certificate delivered by Purchaser in the form attached as Exhibit D.
“FERC” means the Federal Energy Regulatory Commission or any successor thereto.
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“Firm (LD)” means, with respect to a Party’s obligation to sell and deliver or purchase and receive, that such Party’s liability for the failure to meet such obligation shall only be excused to the extent that, and for the period during which, such performance is prevented by Force Majeure, and that in the absence of Force Majeure, the Party to which performance of such obligation is owed shall be entitled to receive from the Party which failed to deliver/receive an amount determined pursuant to Article IV.
“Fixed Price” means $[____]/MWh, which is the fixed price under the Buyer Swaps (as defined in the Master Power Supply Agreement).
“Force Majeure” means an event or circumstance which prevents one Party from performing its obligations under this Agreement, which event or circumstance was not anticipated as of the date this Agreement was executed, which is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided; provided that, for the avoidance of doubt, the declaration of “Force Majeure” by an APC Party under a PPA (as defined in an Assignment Agreement) shall constitute Force Majeure hereunder. Force Majeure shall include, provided the criteria in the first sentence are met, riot, insurrection, war, labor dispute, natural disaster, vandalism, terrorism and sabotage. Force Majeure shall not be based on (i) the loss of Purchaser’s markets; (ii) Purchaser’s inability economically to use or resell the Product purchased hereunder; (iii) the delay, loss or failure of Issuer’s supply; or (iv) Issuer’s ability to sell the Product at a higher price. Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a Transmission Provider unless (x) such Party has contracted for firm transmission with a Transmission Provider for the Product to be delivered to or received at the applicable Delivery Point and (y) such curtailment is due to “force majeure” or “uncontrollable force” or a similar term as defined under the Transmission Provider’s tariff; provided, however, that existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of a Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that a Force Majeure as defined in the first sentence hereof has occurred. Force Majeure invoked by Prepay LLC under the Master Power Supply Agreement shall constitute Force Majeure in respect of Issuer hereunder to the extent the conditions set forth above have been satisfied with respect to Prepay LLC. Notwithstanding the foregoing or anything to the contrary herein, to the extent that an Assignment Agreement is terminated early, such termination shall constitute Force Majeure with respect to Issuer hereunder until the earlier of (I) the commencement of an “Assignment Period” under a replacement Assignment Agreement, (II) the commencement of a J. Aron EPS Energy Period or (III) the end of the first Month following the Month in which such early termination occurs. “Government Agency” means the United States of America, any state thereof, any municipality, or any local jurisdiction, or any political subdivision of any of the foregoing, including, but not limited to, courts, administrative bodies, departments, commissions, boards, bureaus, agencies, or instrumentalities.
“Governmental Approval” means any authorization, consent, approval, license, ruling, permit, exemption, variance, order, judgment, registration, filing, giving of notice to, decree, declaration of or regulation by any Government Agency relating to the valid execution, -8-
delivery or performance of this Agreement or the consummation of any of the transactions contemplated hereby.
“Hour” means the 60-minute period commencing at 00:00 (LPT) on first Day of the Delivery Period and ending at 01:00 (LPT) on the first Day of the Delivery Period, and each 60-minute interval thereafter.
“Initial Assigned Rights and Obligations” means the Assigned Rights and Obligations set forth in Exhibit A-2 hereto as of the date hereof. “Initial Reset Period” has the meaning specified in Exhibit H. “Interest Rate Period” has the meaning specified in the Bond Indenture. “Issuer” has the meaning specified in the preamble.
“Issuer Default” has the meaning specified in Section 17.1. “ISTs” has the meaning specified in Section 5.1(a).
“J. Aron” means J. Aron & Company LLC, a New York limited liability company, and its permitted successors and assigns under an Assignment Agreement. “J. Aron EPS Energy Period” has the meaning specified in Section 6.1(c). “J. Aron Fixed Payment” has the meaning specified in the CCCE Custodial Agreement.
“J. Aron Prepay Payment” has the meaning specified in the CCCE Custodial Agreement.
“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 19, 2008, as amended from time to time, under which Purchaser is organized as a Joint Powers Authority in accordance with the Joint Powers Act. “Law” means any statute, law, rule or regulation or any written judicial or administrative decision, ruling or interpretation with respect thereto or thereof having the effect of the foregoing enacted, promulgated, or issued by a Government Agency whether in effect as of the Execution Date or at any time during the term of this Agreement. “Long-Term PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1, and the California Long-Term Contracting Requirements, to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
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“LPT” means the local prevailing time then in effect in the State of California. “Mandatory Purchase Date” has the meaning specified in the Bond Indenture. “Master Power Supply Agreement” has the meaning specified in the recitals. “Minimum Discount Percentage” has the meaning specified in Exhibit H. “Month” means a period beginning on the first Day of a calendar month and ending immediately prior to the commencement of the first Day of the next calendar month. The term “Monthly” shall be construed accordingly.
“Monthly Discount Percentage” has the meaning specified in Exhibit H. “Municipal Utility” means any Person that (i) is a “governmental person” as defined in the implementing regulations under Section 141 of the Code and any successor provision, (ii) owns either or both a gas distribution utility or an electric distribution utility (or provides natural gas or electricity at wholesale to, or that is sold to entities that provide natural gas or electricity at wholesale to, governmental Persons that own such utilities), and (iii) agrees in writing to use the gas or electricity purchased by it (or cause such gas or electricity to be used) for a qualifying use as defined in U.S. Treas. Reg. § 1.148-1(e)(2)(iii). “MWh” means megawatt-hour.
“Non-Priority Products” means any Products that are not Priority Products. “Party” has the meaning specified in the preamble.
“PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1 to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
“Person” means any individual, corporation, partnership, joint venture, trust, unincorporated organization, or Government Agency.
“Portfolio Content Category 1” or “PCC1” means any Renewable Energy Credit associated with the generation of electricity from an Eligible Renewable Energy Resource consisting of the portfolio content set forth in California Public Utilities Code Section 399.16(b)(1), as may be amended from time to time or as further defined or supplemented by Law.
“Potential Remarketing Event” has the meaning specified in Section 3.5(b). “Prepay LLC” has the meaning stated in the recitals.
“Primary Delivery Point” has the meaning specified in Section 5.1(a). -10-
“Priority Products” means the Base Quantity and Assigned Products to be purchased by Purchaser under this Agreement, together with Products that (i) Purchaser is obligated to take under a long-term agreement, which Products either have been purchased by Purchaser or a joint action agency pursuant to a long-term prepaid power purchase agreement using the proceeds of bonds, notes, or other obligations, the interest on which is excluded from income for federal income tax purposes, or (ii) with respect to Energy, Energy that is generated using capacity that was constructed using the proceeds of bonds, notes, or other obligations, the interest on which is excluded from income for federal income tax purposes (provided that, for the avoidance of doubt, Priority Products shall not include Energy that is generated using capacity that was wholly or partially financed through the monetization of renewable tax credits other than to the extent such energy was generated with capacity financed with tax-exempt bonds, whether such monetization is accomplished through a tax equity investment or otherwise, or that is generated from federally owned and operated hydroelectric facilities, including through the United States Army Corps of Engineers and the United States Bureau of Reclamation, and marketed by the Bonneville Power Administration or the Western Area Power Administration). “Product” means Energy and, to the extent included on an Assignment Schedule, associated RECs, capacity or other products related to the foregoing; provided that the inclusion of any Product on an Assignment Schedule is subject to the limitation set forth in Exhibit F. “Purchaser” has the meaning specified in the preamble.
“Purchaser Default” has the meaning specified in Section 17.2. “Qualifying Use Requirements” means, with respect to any Product delivered under this Agreement, such Product is used (i) for a “qualifying use” as defined in U.S. Treas.

Reg. § 1.148-1(e)(2)(iii), (ii) in a manner that will not result in any “private business use” within the meaning of Section 141 of the Code, and (iii) in a manner that is consistent with the Federal Tax Certificate attached as Exhibit D.
“Re-Pricing Agreement” means the Re-Pricing Agreement, dated as of the Bond Closing Date (as defined in the Master Power Supply Agreement), by and between Prepay LLC and Issuer.
“Real-Time Market Price” has the meaning specified on Exhibit A-1 for each Delivery Point.
“Remarketing Election Deadline” means, for any Reset Period, the last date and time by which the Purchaser may provide a Remarketing Election Notice, which shall be 4:00 p.m.

PPT on the 10th day of the Month (or, if such day is not a Business Day, the next succeeding Business Day) prior to the first Month of such Reset Period. “Remarketing Election Notice” has the meaning specified in Section 3.5(b). -11-
“Renewable Energy Credit” or “REC” has the meaning specified for “Renewable Energy Credit” in California Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by Law. “Replacement Assigned Rights and Obligations” means any Assigned Rights and Obligations other than the Initial Assigned Rights and Obligations. “Replacement Price” means, with respect to any Shortfall Quantity of Base Quantities, the price at which Purchaser, acting in a Commercially Reasonable manner, purchases at the applicable Delivery Point Replacement Product for such Shortfall Quantity, plus (i) costs reasonably incurred by Purchaser in purchasing Replacement Product, and (ii) additional transmission charges, if any, reasonably incurred by Purchaser to the applicable Delivery Point, or at Purchaser’s option, the market price at the Delivery Point for such Product not delivered as determined by Purchaser in a Commercially Reasonable manner. The Replacement Price for any Shortfall Quantity shall not include any administrative or other internal costs incurred by Purchaser and shall be limited to a price that is Commercially Reasonable with respect to the timing and manner of purchase. In no event shall the Replacement Price include any penalties, ratcheted demand or similar charges, nor shall Purchaser be required to utilize or change its utilization of its owned or controlled assets or market positions to minimize Issuer’s liability. “Replacement Product” means any Energy purchased by Purchaser to replace any Shortfall Quantity at the Delivery Point where such Shortfall Quantity occurred; provided that such Energy is purchased for delivery in the Delivery Hour to which such Shortfall Quantity relates.
“Reset Period” means each “Reset Period” under the Re-Pricing Agreement. “Reset Period Notice” has the meaning specified in Section 3.5(a). “RPS Law” means the California Renewable Energy Resources Act, including the California Renewables Portfolio Standard Program, Article 16 of Chapter 2.3, Division 1 of the California Public Utilities Code, as implemented and amended from time to time, and any successor Law.
“Schedule”, “Scheduled” or “Scheduling” means the actions of Issuer, Purchaser and/or their designated representatives, including each Party’s Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity and type of Product to be delivered during any given portion of the Delivery Period at a specified Delivery Point. “Shortfall Quantity” has the meaning specified in Section 4.1(a). “Transmission Provider” means any entity or entities transmitting or transporting the Product on behalf of Issuer or Purchaser to or from the Delivery Point. “Trustee” means U.S. Bank Trust Company, National Association, a national banking association, and its successors as trustee under the Bond Indenture. -12-
“Utility Revenues” means all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of Purchaser’s community choice aggregation program, including, without limiting the generality of the foregoing, (1) all income, rents, rates, fees, charges, or other moneys derived by the Purchaser from the sale, furnishing and supplying of the electric capacity or energy or other services, facilities, and commodities sold, furnished or supplied through the facilities of or in the conduct or operation of the business of the Purchaser’s community choice aggregation program, (2) the earnings on and income derived from the investment of such income, rents, rates, fees, charges, or other moneys to the extent that the use of such earnings and income is limited to Purchaser’s community choice aggregation program by or pursuant to law, (3) deferred revenues and moneys maintained in the Purchaser’s operating reserve fund and (4) such other income, charges, revenue or moneys maintained in reserves as the Purchaser may specify in a written order of the Purchaser filed with the Issuer, but excluding (A) in all cases customers’ deposits or any other deposits or advances subject to refund until such deposits or advances have become the property of the Purchaser; and (B) such other income, charges, revenue or moneys as the Purchaser may specify in a written order of the Purchaser filed with the Issuer, provided that such written order of the Purchaser confirms that, following the filing of such written order of the Purchaser, (i) the requirements of Section 14.7 shall be satisfied; and (ii) the income, charges, revenue or moneys specified in such written order of the Purchaser shall be accounted for separately from the “Utility Revenues” as defined herein. “Voided Remarketing Election Notice” has the meaning specified in Section 3.5(b). “Western EIM” has the meaning ascribed to “Energy Imbalance Market (EIM)” under the CAISO Tariff.
“WREGIS” means the Western Renewable Energy Generation Information System or its successor.

Section 1.2 Definitions; Interpretation. References to “Articles,” “Sections,” “Schedules” and “Exhibits” shall be to Articles, Sections, Schedules and Exhibits, as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest scope of such general statement, term or matter.

Except where expressly provided otherwise, any reference herein to any agreement or document includes all amendments, supplements or restatements to and of such agreement or document as may occur from time to time in accordance with its terms and the terms hereof, and any reference to a party to any such agreement includes all successors and assigns of such party thereunder permitted by the terms hereof and thereof.
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ARTICLE II.

DELIVERY PERIOD; NATURE OF CLEAN ENERGY PROJECT; CONDITION

PRECEDENT
Section 2.1 Delivery Period. Subject to Section 2.3, delivery of Product by Issuer to Purchaser shall commence at the beginning of the Delivery Period and, except for any Reset Period for which a Remarketing Election Notice is in effect as provided in Section 3.5(b), shall continue throughout the Delivery Period.

Section 2.2 Nature of Clean Energy Project. Purchaser acknowledges and agrees that Issuer will meet its obligations to provide Product to Purchaser under this Agreement exclusively through its purchase of Product from Prepay LLC pursuant to the Master Power Supply Agreement and that Issuer is financing its purchase of such supplies through the issuance of the Bonds.

Section 2.3 Condition Precedent. Notwithstanding anything to the contrary herein, commencement of deliveries and the rights and obligations of Issuer and Purchaser hereunder are subject to the condition precedent that Issuer shall have entered into the Master Power Supply Agreement and shall have issued the Bonds.

Section 2.4 Pledge of this Agreement. Purchaser acknowledges and agrees that Issuer will pledge its right, title and interest under this Agreement and the revenues to be received under this Agreement to secure Issuer’s obligations under the Bond Indenture.

ARTICLE III.

SALE AND PURCHASE; PRICING
Section 3.1 Sale and Purchase of Product. Issuer shall sell and deliver or cause to be delivered to Purchaser, and Purchaser shall purchase and receive from Issuer, the applicable Product in the quantities and at the times and subject to the terms and conditions set forth in this Agreement. The quantities of Product to be sold and purchased and delivered and received pursuant to the terms and conditions set forth in this Agreement shall be equal to (a) the Base Quantity, if any, for each Delivery Hour and (b) the Assigned Quantity delivered to J. Aron in each Month of the Delivery Period pursuant to the Assignment Agreements.

Section 3.2 Payments.
(a) For each Month for which an EPS Energy Period is in effect at the start of such Month:
(i) Purchaser shall pay Issuer the Contract Price multiplied by the Assigned Prepay Quantities actually delivered for such Month; and (ii) Pursuant to the terms of the CCCE Custodial Agreement Purchaser shall owe a separate CCCE Gross Payment for each Assigned -14-
PPA consistent with the terms of the CCCE Custodial Agreement, and, upon satisfying its obligations under the CCCE Custodial Agreement in respect of such amount (after taking into consideration any PPA Seller Payment Obligation (as such term is defined in the CCCE Custodial Agreement) credited to CCCE in respect thereof), any portion of such amount attributable to Assigned PAYGO Product shall be deemed to be paid by Purchaser to the applicable APC Party on behalf of J. Aron and shall satisfy the obligations of the respective parties under each of the Electricity Sale and Service Agreement, the Master Power Supply Agreement, this Agreement and the applicable Assignment Agreement for such Assigned PAYGO Product.
1 (b) To the extent that Base Quantities are delivered hereunder in any Month, Purchaser shall pay Issuer the Contract Price multiplied by the Base Quantities actually delivered. (c) The Contract Price for Assigned Energy is inclusive of any amounts due in respect of other Assigned Products.

Section 3.3 Limited Obligation to Take Base Quantities. Notwithstanding anything to the contrary in this Agreement, Purchaser shall not be required to purchase and receive any Base Quantities hereunder, and Issuer, with respect to any Base Quantities that otherwise would be delivered hereunder, shall cause Prepay LLC to remarket such Base Quantities pursuant to the provisions of Exhibit C to the Master Power Supply Agreement.

Section 3.4 Annual Refund. In addition to any Monthly Discount Percentage applied to Energy Scheduled hereunder, Issuer shall credit such Annual Refund to Purchaser as may be available for distribution by Issuer pursuant to [Section 5.12 of the Bond Indenture], subject to the provisions of this Section 3.4. Such Annual Refund, if any, shall be credited to the next amount due from Purchaser following the release of funds for such purpose to Issuer under the terms of the Bond Indenture. In determining the amount of such Annual Refund, if any, to be credited to Purchaser, Issuer may reserve such funds (i) as may be required under the terms of the Bond Indenture or (ii) with the prior written consent of Purchaser (a) to fund or maintain the Minimum Discount Percentage for any future Reset Period, (b) to fund or maintain any rate stabilization or working capital reserve, (c) to reserve or account for unfunded liabilities and expenses or (d) for other costs of the Clean Energy Project.

Section 3.5 Reset Period Remarketing.

1 SM NTD: Parties to discuss monthly billing mechanics and the distinction between Assigned Prepay Quantities and Assigned PAYGO Product.
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(a) Reset Period Notice. For each Reset Period, Issuer shall provide to Purchaser, at least ten (10) days prior to the Remarketing Election Deadline, written notice (a “Reset Period Notice”) setting forth (i) the duration of such Reset Period, (ii) the estimated Available Discount Percentage for such Reset Period, and (iii) the applicable Remarketing Election Deadline. Issuer may thereafter update such notice at any time prior to the Remarketing Election Deadline and in any such update may extend the Remarketing Election Deadline in its sole discretion.
(b) Remarketing Election. If the Reset Period Notice (or any update thereto) for any Reset Period indicates that the estimated Available Discount Percentage specified in such notice is not at least equal to the Minimum Discount Percentage for such Reset Period, then: (i) a “Potential Remarketing Event” shall be deemed to exist, and (ii) Purchaser may, not later than the Remarketing Election Deadline, issue a written notice in the form attached hereto as Exhibit C (a “Remarketing Election Notice”) to Issuer, Prepay LLC and the Trustee electing for the Assignment Agreements to be terminated and all Base Quantities with respect to such Reset Period to be remarketed; provided, however, if the actual Available Discount Percentage, as finally determined under the Re-Pricing Agreement, is equal to or greater than the Minimum Discount Percentage, then Issuer shall elect by written notice (a “Voided Remarketing Election Notice”) to Purchaser to treat such Remarketing Election Notice as void, unless Prepay LLC has contracted to remarket the related Product for the applicable Reset Period. If Purchaser issues a valid Remarketing Election Notice (other than a Voided Remarketing Election Notice) in accordance with this Section 3.5(b) for any Reset Period, then Purchaser shall have no rights or obligations to receive any Product hereunder during such Reset Period or to receive any Annual Refund attributable to such Reset Period.
(c) Final Determination of Available Discount Percentage. The Parties acknowledge and agree that the final Available Discount Percentage for any Reset Period following the Initial Reset Period will be determined on the Re-Pricing Date (as defined in the Re-Pricing Agreement) for such Reset Period, and that such Available Discount Percentage may differ from the estimate or estimates of such Available Discount Percentage last provided to Purchaser prior to the Remarketing Election Deadline for such Reset Period; provided that the Available Discount Percentage for any Reset Period will not be less than the lower of (i) the last estimated Available Discount Percentage set forth in the Reset Period Notice for such Reset Period (or any update thereof) sent to Purchaser by Issuer and (ii) the Minimum Discount Percentage for Reset Period.
(d) Obligations Following a Remarketing Election. Notwithstanding the issuance of any Remarketing Election Notice for a Reset Period, Purchaser shall not make any new commitment to purchase Priority Products during such Reset Period to the extent any such commitment could reasonably be expected to cause, during any portion of the Delivery Period after such Reset Period, Purchaser’s aggregate obligations to purchase Priority Products (including its obligation to purchase Priority Products hereunder) to exceed Purchaser’s expected aggregate requirements for Products that will be used (i) for a “qualifying use” as defined in U.S. Treas. Reg. § 1.148-1(e)(2)(iii) and (ii) in a manner that will not result in any “private business use” within the meaning of Section 141 of the Code. Unless Purchaser issues a new Remarketing Election Notice -16-
(other than a Voided Remarketing Election Notice) for any subsequent Reset Period in accordance with this Section 3.5, Purchaser and J. Aron will cooperate in good faith and exercise Commercially Reasonable Efforts to locate EPS Compliant Energy for redelivery hereunder in any such Reset Period.

ARTICLE IV.

FAILURE TO SCHEDULE PRODUCT
Section 4.1 Issuer’s Failure to Schedule Base Quantity (Not Due to Force Majeure). (a) Shortfall Quantity. If, for any Delivery Hour during the Delivery Period, Issuer breaches its obligation to Schedule or deliver all or any portion of the Base Quantity, after giving effect to reductions for Assigned Energy at any Delivery Point pursuant to the terms of this Agreement, then the portion of the Base Quantity that Issuer failed to Schedule or deliver shall be a “Shortfall Quantity”.
(b) Issuer Cover Damage Payments. To the extent Purchaser actually purchases Replacement Product with respect to any Shortfall Quantity, then Issuer shall pay to Purchaser the result determined by the following formula:

P = Q x (RP - CP + AF)
Where:

P = The amount payable by Issuer under this Section 4.1(b); Q = The quantity of Replacement Product purchased;
RP = The Replacement Price;
CP = The Contract Price that would have applied to such Product; and AF = The Administrative Fee.
(c) Purchaser Obligation to Mitigate. Purchaser shall exercise Commercially Reasonable Efforts to mitigate Issuer’s damages paid by Issuer hereunder.

Section 4.2 Purchaser’s Failure to Schedule or Take Base Quantities (Not Due to Force Majeure). If, for any Delivery Hour during the Delivery Period, Purchaser breaches its obligation to Schedule or take all or any portion of the Base Quantity at any Delivery Point pursuant to the terms of this Agreement, then Purchaser shall remain obligated to pay Issuer the Contract Price for such Base Quantity. Issuer shall credit to Purchaser’s account any net revenues Issuer may receive from Prepay LLC under the Master Power Supply Agreement in connection with the ultimate sale -17-
of any such Product by Prepay LLC to Municipal Utilities or, if necessary, other purchasers, up to the Contract Price.

Section 4.3 Failure to Deliver or Take Due to Force Majeure. If with respect to all or any portion of Base Quantities or Assigned Prepay Quantities:
(a) Purchaser fails to take or Issuer fails to deliver all or any portion of such quantities at any Delivery Point pursuant to the terms of this Agreement; and (b) such failure is due to Force Majeure claimed by either Party, then the Parties shall have no payment obligations with respect to such quantities hereunder.

Section 4.4 Assigned Product. Notwithstanding anything herein to the contrary, neither Purchaser nor Issuer shall have any liability or other obligation to one another for any failure to Schedule, take, or deliver Assigned Product.

Section 4.5 Sole Remedies. Except with respect to the termination of this Agreement pursuant to Article XVII, the remedies set forth in this Article IV shall be each Party’s sole and exclusive remedies for any failure by the other Party to Schedule, deliver or take Product, as applicable, pursuant to this Agreement.

ARTICLE V.

DELIVERY POINTS; SCHEDULING
Section 5.1 Delivery Points.
(a) Base Delivery Points. All Base Product delivered under this Agreement shall be Scheduled for delivery and receipt at (i) the Delivery Point set forth in Exhibit A-1 (the “Primary Delivery Point”) or (ii) any other point (an “Alternate Delivery Point”) that has been mutually agreed by Issuer, Purchaser and Prepay LLC (the Primary Delivery Point or, to the extent specified, any Alternate Delivery Point being the “Base Delivery Point”). Delivery of Energy to Purchaser at the Primary Delivery Point shall be facilitated through submission of Inter-SC Trades, as defined in the CAISO Tariff (“ISTs”). Purchaser shall designate a scheduling coordinator in the CAISO market for this purpose as specified in Exhibit G. (b) Alternate Base Market Prices. The Day-Ahead Market Price and Real-Time Market Price for each Alternate Delivery Point, as applicable, shall be the price mutually agreed and identified by the Parties, or if no such price is identified for such Alternate Delivery Point, the Day-Ahead Market Price and Real-Time Market Price, as applicable, specified on Exhibit A-1 for the Primary Delivery Point from which quantities are being shifted to such Alternate Delivery Point.
(c) Assigned Energy Delivery Points. Assigned Energy delivered under this Agreement shall be Scheduled for delivery and receipt at the applicable Assigned Delivery Point -18-
specified in the applicable Assignment Schedule. All other Assigned Product shall be delivered consistent with the terms of the applicable Assignment Agreement Section 5.2 Transmission and Scheduling. Issuer shall Schedule or arrange for Scheduling services with CAISO in accordance with the CAISO Tariff, to deliver the Base Product to the Base Delivery Point. Purchaser shall Schedule or arrange for Scheduling services with CAISO in accordance with CAISO Tariff, to receive the Base Product at the Base Delivery Point.

If Prepay LLC Schedules or arranges for Scheduling services, to deliver Base Product to the Base Delivery Point, then Issuer’s obligations under this Section shall be relieved pro tanto. Scheduling of Assigned Energy shall be in accordance with the applicable Assignment Schedule.

Section 5.3 Title and Risk of Loss. Title to and risk of loss of the Energy delivered under this Agreement shall pass from Issuer to Purchaser at the applicable Delivery Point. The transfer of title and risk of loss for all Assigned Product shall be in accordance with the applicable Assignment Agreement; provided that all Assignment Agreements shall provide for the transfer of Renewable Energy Credits in accordance with WREGIS. Subject to Section 18.1, each Party shall indemnify, defend and hold harmless the other Party from and against any Claims made by a third party arising from or out of any event, circumstance, act or incident related to the Product delivered hereunder first occurring or existing during the period when control and title to Base Product is vested in the indemnifying Party as provided in this Section; provided that, notwithstanding the foregoing, (a) Issuer shall have no obligations to indemnify, defend or hold harmless Purchaser for any such Claims relating to replacement costs, cover damages or similar liabilities that are payable to any Person because of Purchaser’s failure to deliver any Product to such Person and (b) no obligation to indemnify, defend or hold harmless shall supplant or control the provisions of this Agreement relating to Force Majeure. Notwithstanding anything to the contrary herein, no Party shall have any obligations to indemnify, defend or hold harmless the other Party in respect of any Claims relating to any Assigned Product.

Section 5.4 PCC1 Product and Long-Term PCC1 Product. Notwithstanding any other provision of this Agreement to the contrary, to the extent that any Assigned Product is PCC1 Product or Long-Term PCC1 Product, the following provisions apply:
(a) Eligibility. Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) the Project qualifies and is certified by the CEC as an Eligible Renewable Energy Resource (“ERR”) as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Project’s output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC 6, Non-Modifiable. (Source: D.07-11-025, Attachment A.) D.08-04-009].
(b) Transfer of Renewable Energy Credits. Seller and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this -19-
Agreement the Renewable Energy Credits transferred to Buyer conform to the definition and attributes required for compliance with the California Renewables Portfolio Standard, as set forth in California Public Utilities Commission Decision 08-08-028, and as may be modified by subsequent decision of the California Public Utilities Commission or by subsequent legislation. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC REC-1, Non-modifiable. D.11-01-025].
(c) Tracking of RECs in WREGIS. Seller warrants that all necessary steps to allow the Renewable Energy Credits transferred to Buyer to be tracked in the Western Renewable Energy Generation Information System will be taken prior to the first delivery under the contract. [STC REC-2, Non-modifiable. D.11-01- 025]. With respect to Sections 5.4(a) through (c), “Seller” means “Issuer”, Buyer means “Purchaser”, and any other capitalized terms not otherwise defined therein shall have the meaning specified in the Assigned PPA.
(d) Governing Law. This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced, and performed in accordance with the laws of the state of California, without regard to principles of conflicts of law. To the extent enforceable at such time, each Party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this Agreement. [STC 17, Non-Modifiable. (Source: D.07-11- 025, Attachment A) D.08-04-009]
(e) Issuer Representations and Warranties.

Issuer represents and warrants:
(i) Issuer has the right to sell the Assigned Product from the Applicable Project;
(ii) Issuer has not sold the Assigned Product or any REC or other attributes of the Assigned Product to be transferred to Purchaser to any other person or entity;
(iii) The Energy component of the Assigned Product produced by the Applicable Project and purchased by Issuer for resale to Purchaser hereunder is not being sold by Issuer back to the Applicable Project or APC Party;
(iv) Assigned Product to be purchased and sold pursuant to this Agreement has not been committed to another party;
(v) The Assigned Product is free and clear of all liens or other encumbrances;
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(vi) Issuer will deliver to Purchaser all Assigned Energy and associated RECs generated by the Applicable Project for Long-Term PCC1 Product in compliance with the California Long-Term Contracting Requirements, if applicable;
(vii) The Assigned Product supplied to Purchaser under this Agreement that is Long-Term PCC1 Product will be sourced solely from Applicable Projects that have an Assignment Period of ten years or more in length, or otherwise in compliance with the California Long Term Contracting Requirements; and
(viii) Issuer will cooperate and work with Purchaser, the CEC, and/or the CPUC to provide any documentation required by the CPUC or CEC to support the Product’s classification as a Portfolio Content Category 1 Product as set forth in California Public Utilities Code Section 399.16(b)(1) or, if applicable, or compliance with the California Long-Term Contracting Requirements.

Issuer further represents and warrants to Purchaser that, to the extent that the Product sold by Issuer is a resale of part or all of a contract between Issuer and one or more third parties, Issuer represents, warrants and covenants that the resale complies with the following conditions in (i) through (iv) below during the Assignment Period and throughout the generation period:
(i) The original upstream third-party contract(s) meets the criteria of California Public Utilities Code Section 399.16(b)(1);
(ii) This Agreement transfers only electricity and RECs that have not yet been generated prior to the Assignment Period;
(iii) The electricity transferred by this Agreement is transferred to Purchaser in real time; and
(iv) If the Applicable Project has an agreement to dynamically transfer electricity to a California balancing authority, the transactions implemented under this Agreement are not contrary to any condition imposed by a balancing authority participating in the dynamic transfer arrangement.
(f) Subsequent Changes in Law. In the event that the qualifications or requirements of the RPS program, PCC1 Product or the California Long-Term Contracting Requirements change, Issuer shall take commercially reasonable actions to meet the amended qualifications or requirements of the RPS Law, PCC1 Product or the California Long-Term Contracting Requirements but will not be required to incur any unreimbursed costs to comply with the RPS Law, PCC1 or the California Long- Term Contracting Requirements, collectively. -21-
(g) Limitations. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge and agree as follows:
(i) Issuer has relied exclusively upon the representations and warranties of each respective APC Party set forth in the Assigned PPAs in making the representations and warranties set forth in this Section 5.4 and has not performed any independent investigation with respect thereto; (ii) J. Aron has agreed pursuant to the Electricity Sale and Service Agreement to terminate the applicable Assignment Period in the event that any representation or warranty in this Section 5.4 proves to be incorrect in any respect; and
(iii) Purchaser agrees that its sole recourse for any breach of the provisions of this Section 5.4 shall be the termination of the applicable Assignment Period and Purchaser shall have no other recourse against Issuer or remedies under this Agreement.

Section 5.5 Communications Protocol. With respect to the Scheduling and delivery of Base Quantities, Issuer and Purchaser shall comply with the communications protocol set forth in Exhibit G. Scheduling and transmission of Assigned Energy shall be in accordance with the applicable Assignment Agreement pursuant to which the Project Participant shall act as scheduling agent for each of J. Aron, Prepay LLC and Issuer.

Section 5.6 Deliveries within CAISO or another Balancing Authority. The Parties acknowledge that Energy delivered by Issuer at a Delivery Point within CAISO or another Balancing Authority (including a Balancing Authority operating within the Western EIM) will be delivered in accordance with the CAISO Tariff and rules of the Balancing Authority as applicable.

Scheduling such Energy in accordance with the requirements of the applicable Product into the applicable Balancing Authority shall constitute delivery of such Product to Purchaser hereunder, provided that any associated Renewable Energy Credits and other Assigned Product are also delivered to Purchaser.

Section 5.7 Assigned Products. Notwithstanding anything to the contrary herein, except as provided in Section 6.4, Issuer shall have no liability under this Article V with respect to any Assigned Products.

ARTICLE VI.

ASSIGNMENT OF POWER PURCHASE AGREEMENTS
Section 6.1 Assignments Generally.
(a) Initial Assigned Rights and Obligations. Prior to the commencement of the Delivery Period, Purchaser agrees to exercise Commercially Reasonable Efforts to assign the Initial Assigned Rights and Obligations to J. Aron. -22-
(b) Assignments of Replacement Assigned Rights and Obligations.

Commencing (i) one year prior to the expiration of any EPS Energy Period or (ii) otherwise immediately upon the early termination or anticipated early termination of a EPS Energy Period or a failure to assign any portion of the Initial Assigned Rights and Obligations, Purchaser shall exercise Commercially Reasonable Efforts and cooperate with J. Aron in good faith to assign a portion of Purchaser’s rights and obligations (the “Assigned Rights and Obligations”) under one or more power purchase agreements (each such agreement, an “Assignable Power Contract”) pursuant to which Purchaser is purchasing EPS Compliant Energy, RECs and other products that may be assigned pursuant to Exhibit F. The Parties recognize that, in the case of such an assignment, J. Aron will be obligated to sell and deliver Assigned Product it receives under all Assigned Rights and Obligations to Prepay LLC under the terms of the Electricity Sale and Service Agreement, and Prepay LLC will be obligated to deliver such Product to Issuer under the terms of the Master Power Supply Agreement. To be effective hereunder, any assignment of Replacement Assigned Rights and Obligations must be proposed, agreed and consented to in accordance with Exhibit F and the Master Power Supply Agreement.
(c) J. Aron Procurement of EPS Compliant Energy. Under certain circumstances specified in Section 6.1(c) of the Electricity Sale and Service Agreement, J. Aron is obligated to exercise Commercially Reasonable Efforts to obtain EPS Compliant Energy for ultimate redelivery to Purchaser hereunder, and, in such case, Purchaser shall cooperate in good faith with J. Aron in connection therewith, provided that:
(i) J. Aron’s procurement of any such EPS Compliant Energy for ultimate redelivery hereunder shall be subject to Purchaser’s prior written consent, with such consent not to be unreasonably withheld, provided, for the avoidance of doubt, that it shall be reasonable for Purchaser to withhold its consent based on the requirements of the EPS or other regulatory requirements;
(ii) Issuer and Purchaser shall act in good faith and in a Commercially Reasonable manner to negotiate appropriate amendments to this Agreement to facilitate the delivery of such EPS Compliant Energy, including with respect to the Delivery Point, consequences of failing to deliver or receive and scheduling matters;
(iii) the period of delivery for any such EPS Compliant Energy (any such period, a “J. Aron EPS Energy Period”) shall not exceed the length, as applicable, of (A) the then-current Reset Period if such EPS Compliant Energy is obtained for delivery for the remainder of a Reset Period and (B) the length of the next succeeding Reset Period if such EPS Compliant Energy is obtained for delivery commencing in such succeeding Reset Period; and
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(iv) during a J. Aron EPS Energy Period, if requested by J. Aron, Purchaser shall continue to exercise Commercially Reasonable Efforts and cooperate with J. Aron in good faith to assign Assigned Rights and Obligations to J. Aron under an Assignable Power Contract. (d) Amendments. Purchaser and Issuer agree to seek the written consent of J. Aron prior to any amendment to this Article VI or Exhibit F hereto.

Section 6.2 Failure to Obtain EPS Compliant Energy. To the extent an EPS Energy Period terminates or expires and Purchaser and J. Aron have been unable to obtain EPS Compliant Energy for delivery hereunder pursuant to the provisions of Section 6.1, then, until EPS Compliant Energy is obtained for delivery hereunder, Prepay LLC shall remarket Purchaser’s Base Quantities pursuant to the provisions of Exhibit C to the Master Power Supply Agreement, subject to the following:
(a) Purchaser’s and J. Aron’s obligations set forth in Section 6.1 shall continue to apply; and
(b) Purchaser shall not make any new commitment to purchase Priority Products during such a remarketing.

Section 6.3 Adjustments to Base Quantities. The Base Quantity Reductions set forth on Exhibit A-1 hereto have been calculated to reflect the Initial Assigned Rights and Obligations using the same methodology that would apply to determine such Base Quantity Reductions in connection with the assignment of any Replacement Assigned Rights and Obligations as provided in Exhibit F hereto. Effective upon the first day of the Month following the termination or expiration of an EPS Energy Period for any reason, Issuer shall revise Exhibit A-1 to (i) update the Base Quantity Reductions as provided in Exhibit F to the extent a subsequent EPS Energy Period will commence immediately following such termination or expiration or (ii) reverse such Base Quantity Reductions associated with the EPS Energy Period that terminated or expired for all remaining Hours in the Delivery Period to the extent a replacement EPS Energy Period will not commence immediately following such termination or expiration. In the case of any other commencement of a subsequent EPS Energy Period, Issuer shall revise the Base Quantity Reductions in Exhibit A-1 as provided by Exhibit F hereto.

Section 6.4 J. Aron Non-Payment to APC Party. To the extent that (a) J. Aron fails to pay when due any J. Aron Prepay Payment and (b) Purchaser makes a payment for such amounts to the applicable APC Party, Purchaser shall provide notice thereof to Issuer upon Purchaser’s payment to the applicable APC Party and Issuer shall within one Business Day make a payment to Purchaser in the amount of such non-payment.

ARTICLE VII.

USE OF PRODUCT
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Section 7.1 Tax Exempt Status of the Bonds. Purchaser acknowledges that the Bonds will be issued with the intention that the interest thereon will be exempt from federal taxes under Section 103 of the Code. Accordingly, Purchaser agrees that it will (a) provide such information with respect to its community choice aggregation program as may be requested by Issuer in order to establish the tax-exempt status of the Bonds, and (b) act in accordance with such written instructions as Issuer may provide from time to time in order to maintain the tax-exempt status of the Bonds. Purchaser further agrees that it will not at any time take any action, or fail to take any action, that, if taken or omitted, respectively, would adversely affect the tax-exempt status of the Bonds.

Section 7.2 Priority Products. Purchaser agrees to purchase and receive the Products to be delivered under this Agreement (a) in priority over and in preference to all other Products available to Purchaser that are not Priority Products; and (b) on at least a pari passu and non-discriminatory basis with other Priority Products.

Section 7.3 Assistance with Sales to Third Parties. If (a) (i) a quantity of Assigned Energy less than the Assigned Prepay Quantity is delivered hereunder in any Month during an Assignment Period for any reason other than Force Majeure or (ii) an [Assigned PPA FM Remarketing Event] has occurred and is in effect (as defined in Exhibit F to the Master Power Supply Agreement), (b) Issuer is required under Section 3.3 to cause Base Quantities that otherwise would be delivered hereunder to be remarketed or (c) notwithstanding Purchaser’s compliance with Section 7.1 and Section 7.2, Purchaser does not require all or any portion of the Assigned Prepay Quantity to meet its requirements for Energy that it is obligated to purchase under this Agreement as a result of (i) insufficient demand by Purchaser’s retail customers or (ii) a change in Law, Purchaser may, with reasonable notice issued in the form of a remarketing notice in accordance with Exhibit G, request (and, in the case of clauses (a) and (b), shall be deemed to request) that Prepay LLC remarket such portion of such Base Quantities or Assigned Energy pursuant to the provisions of Exhibit C to the Master Power Supply Agreement. Any remarketing notice issued under clause (c)(ii) above shall constitute a Structural Remarketing Notice (as defined in the Master Power Supply Agreement) and shall be subject to the requirements set forth in the Master Power Supply Agreement. If Prepay LLC makes such a sale under Exhibit C to the Master Power Supply Agreement, Issuer shall credit against the amount owed by Purchaser to Issuer hereunder the amount received by Issuer from Prepay LLC for such sales less all reasonable costs and expenses directly incurred by Issuer, including but not limited to remarketing administrative charges paid by it to Prepay LLC under the Master Power Supply Agreement, but in no event shall the amount of such credit be more than the Contract Price for the Energy so sold.

Section 7.4 Qualifying Use. Without limiting Purchaser’s other obligations under this Article VII, Purchaser agrees that, subject to Section 7.5, it will use all of the Product purchased under this Agreement in compliance with the Qualifying Use Requirements. Purchaser agrees that it will provide such additional information, records and certificates as Issuer may reasonably request to confirm Purchaser’s compliance with this Section 7.4.

Section 7.5 Remediation.
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(a) The Parties acknowledge that Purchaser may at times inadvertently remarket Products received hereunder in a manner that does not comply with Qualifying Use Requirements due to daily and hourly fluctuations in Purchaser’s Product needs. To the extent Purchaser does so, Purchaser shall (a) exercise Commercially Reasonable Efforts to use any Disqualified Sale Proceeds of such remarketing to purchase Products (other than Priority Products) that Purchaser then uses in compliance with the Qualifying Use Requirements and (b) reserve funds in an amount equal to any Disqualified Sale Proceeds until such Disqualified Sale Proceeds are remediated or transferred to the Trustee pursuant to Section 7.6(b) below.
(b) To the extent that all or any portion of Assigned Quantities or Base Quantities are remarketed under Section 3.3 or under Section 7.3, as applicable, and any such remarketing results in a Ledger Entry (as defined in the Master Power Supply Agreement), Purchaser agrees that it shall (i) exercise Commercially Reasonable Efforts to use an amount equivalent to the remarketing proceeds associated with such Ledger Entry to purchase Non-Priority Products and use such Non-Priority Products in compliance with the Qualifying Use Requirements in order to remediate such Ledger Entries; and (ii) apply its purchases of Non-Priority Products to remediate any such proceeds under the Master Power Supply Agreement prior to remediating such proceeds under any other contract that provides for the purchase of Priority Products. To track compliance with Purchaser’s obligations under this Section 7.5(b), Purchaser shall deliver a remediation certificate to Issuer and Prepay LLC by the tenth day of the Month subsequent to any relevant Non-Priority Products purchases (which may include purchases of Energy from CAISO to the extent such Energy is used in compliance with the Qualifying Use Requirements); provided that the Parties acknowledge and agree that any purchases of Assigned PAYGO Products (commencing with purchases of Assigned PAYGO Products in the Month in which any such Ledger Entry occurs) shall be applied to remediate any such Ledger Entries and no remediation certificate shall be required with respect to purchases of Assigned PAYGO Products. For Ledger Entries remediated under this Section 7.5(b) that have not otherwise been remediated by Prepay LLC pursuant to the remarketing provisions of the Master Power Supply Agreement, Issuer shall pay Purchaser any portion of the Monthly Discount Percentage associated with such Ledger Entries that is available under the Bond Indenture on or before the last Business Day of the Month in which Purchaser provides a certificate under this Section 7.5(b) evidencing such remediation.

Section 7.6 Remediation; Ledger Entries; Redemption.
(a) Remediation. To track compliance with the requirements of Section 7.5(a), Purchaser will provide a quarterly report to Issuer (delivered not later than the 15th day of each April, July, October and January until the end of the Delivery Period) showing the following: the total quantity of proceeds from sales of Products received hereunder that (i) were sold by Purchaser -26-
to any Person in a transaction that does not comply with the Qualifying Use Requirements and (ii) have not been remediated by Purchaser by applying such proceeds to purchase Products that are used in compliance with the Qualifying Use Requirements (the quantities of Product producing such proceeds, “Disqualified Sale Units” and such proceeds received, “Disqualified Sale Proceeds”).
(b) Ledger Entries. Issuer shall report such unremediated Disqualified Sale Proceeds and the associated Disqualified Sale Units to Prepay LLC for addition to the remarketing ledgers maintained by Prepay LLC under the Master Power Supply Agreement, with the ledger entries to be dated as of the end of the first month of the relevant quarter. (c) Transfers to Trustee. Purchaser shall transfer (to the extent such unremediated Disqualified Sales Proceeds and associated Disqualified Sale Units remain reflected on the remarketing ledger described under Section 7.6(b) at the time such transfer is required by this Section 7.6(c)) any such unremediated Disqualified Sale Proceeds and any other required funds (i.e., all additional funds necessary for redemption of the Bonds referred to in this Section

7.6(c)) to the Trustee at least 95 days prior to the second anniversary of the date on which such unremediated Disqualified Sale Proceeds and the associated Disqualified Sale Units were first reflected on the remarketing ledgers in accordance with Section 7.6(b), with such funds to be deposited in the Debt Service Account (as defined in the Bond Indenture) and applied to the redemption of Bonds as directed by Issuer and approved by Special Tax Counsel (as defined in the Bond Indenture) as preserving the tax-exempt status of the Bonds.

ARTICLE VIII.

REPRESENTATIONS AND WARRANTIES; ADDITIONAL COVENANTS
Section 8.1 Representations and Warranties. As a material inducement to entering into this Agreement, each Party, with respect to itself, hereby represents and warrants to the other Party as of the Execution Date as follows:
(a) in the case of Issuer as the representing Party, Issuer is a joint powers authority, duly organized and validly existing under the Laws of the State of California, (b) in the case of Purchaser as the representing Party, Purchaser is a joint powers authority, duly organized and validly existing under the Laws of the State of California; (c) it has all requisite power and authority, corporate or otherwise, to own its material properties, carry on its material business as now being conducted, enter into, deliver and to perform its obligations under this Agreement and to carry out the terms and conditions hereof and the transactions contemplated hereby;
(d) there is no litigation, action, suit, proceeding with service of process accomplished with respect to such Party or investigation pending or, to the best of such Party’s knowledge, threatened, in each case before or by any Government Agency and, in each case, which could reasonably be anticipated to materially and adversely affect such Party’s ability to perform -27-
its obligations under this Agreement or that questions the validity, binding effect or enforceability hereof, any action taken or to be taken by such Party pursuant hereto, or any of the transactions contemplated hereby;
(e) the execution, delivery and performance of this Agreement by such Party have been duly authorized by all necessary action on the part of such Party and its governing body and do not require any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party; (f) this Agreement has been duly executed and delivered on behalf of such Party by an appropriate officer or authorized Person of such Party and constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally and by general principles of equity; (g) the execution, delivery and performance of this Agreement by such Party shall not violate any provision of any Law, order, writ, judgment, decree or other legal or regulatory determination applicable to it in any manner that could adversely affect the validity of, or the ability of such Party to perform its obligations under this Agreement; (h) the execution, delivery and performance by such Party of this Agreement, and the consummation of the transactions contemplated hereby, including the incurrence by such Party of its financial obligations under this Agreement, shall not result in any violation of any term of any material contract or agreement applicable to it, or any of its charter or bylaws or of any license, permit, franchise, ordinance, rule or regulation applicable to it or any of its properties or to any obligations incurred by it or by which it or any of its properties or obligations are bound or affected, or of any determination or award of any arbitrator applicable to it, and shall not conflict with, or cause a material breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets, except with respect to Issuer, the lien of the Bond Indenture;
(i) to the best of the knowledge and belief of such Party, no Governmental Approval is required in connection with the valid authorization, execution, delivery and performance by such Party of this Agreement or the consummation of any of the transactions contemplated hereby other than those Governmental Approvals that have been obtained; and (j) it enters this Agreement as a bona-fide, arms-length transaction involving the mutual exchange of consideration and, once executed by both Parties, considers this Agreement a legally enforceable contract.

Section 8.2 Warranty of Title. Issuer warrants that it will deliver to Purchaser (a) all Base Product free and clear of all liens, security interests, claims and encumbrances or any interest therein or thereto by any Person arising prior to the Delivery Point, and (b) all Assigned Product free and clear of all liens, security interests, claims and encumbrances or any interest therein or thereto by any Person that are imposed on such Assigned Product solely as a result of Issuer’s or Prepay LLC’s actions.
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Section 8.3 Disclaimer of Warranties. EXCEPT FOR THE WARRANTIES EXPRESSLY MADE BY ISSUER IN THIS Article VIII, ISSUER HEREBY DISCLAIMS ALL

WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

Section 8.4 Continuing Disclosure. Purchaser agrees to provide to Issuer: (a) such financial and operating information as may be requested by Issuer, including Purchaser’s most recent audited financial statements, for use in Issuer’s offering documents for the Bonds; and (b) annual updates to such information and statements to enable Issuer to comply with its undertakings to enable the underwriters of the offerings of the Bonds to comply with the continuing disclosure provisions of Rule 15(c)2-12 of the United States Securities and Exchange Commission. Failure by Purchaser to comply with its agreement to provide such annual updates shall not be a default under this Agreement, but any such failure shall entitle Issuer to take such actions and to initiate such proceedings as may be necessary and appropriate to cause Purchaser to comply with such agreement, including without limitation the remedies of mandamus and specific performance.

ARTICLE IX.

TAXES
As between Issuer and Purchaser, Issuershall (i) be responsible for and pay or cause to be paid all ad valorem, excise, severance, production and other taxes assessed with respect to Product (other than any Assigned Product) delivered pursuant to this Agreement arising prior to the applicable Delivery Point and (ii) indemnify Purchaser and its Affiliates for any such taxes paid by Purchaser or its Affiliates. As between Issuer and Purchaser, Purchaser shall (i) be responsible for all taxes with respect to Product received pursuant to this Agreement assessed at or from the applicable Delivery Point, and (ii) indemnify Issuer and its Affiliates for any such taxes paid by Issuer or its Affiliates. Nothing shall obligate or cause a Party to pay or be liable for any tax for which it is exempt under Law.

ARTICLE X.

JURISDICTION; WAIVER OF JURY TRIAL
Section 10.1 Consent to Jurisdiction. ALL JUDICIAL PROCEEDINGS BROUGHT

AGAINST EITHER PARTY ARISING OUT OF OR RELATING HERETO SHALL BE

BROUGHT EXCLUSIVELY IN (A) THE COURTS OF THE STATE OF CALIFORNIA

LOCATED IN THE CITY OF SAN FRANCISCO, (B) THE FEDERAL COURTS OF THE

UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF CALIFORNIA SITTING IN THE CITY AND COUNTY OF SAN FRANCISCO. BY EXECUTING AND

DELIVERING THIS AGREEMENT, EACH PARTY AGREES THAT SERVICE OF ALL

PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY

REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH Article XVI; AND AGREES THAT

SERVICE AS PROVIDED ABOVE IS SUFFICIENT TO CONFER PERSONAL

JURISDICTION OVER THE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, -29-

AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.

Section 10.2 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, EACH

OF THE PARTIES HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY

TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING UNDER THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT

AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING

CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY ACKNOWLEDGES THAT

THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS

RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING

INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS

AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL

COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS

IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN

WRITING (OTHER THAN BY MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS Section 10.2 AND EXECUTED BY EACH OF THE PARTIES), AND THIS WAIVER

SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY A COURT.

ARTICLE XI.

FORCE MAJEURE
Section 11.1 Applicability of Force Majeure. To the extent either Party is prevented by Force Majeure from carrying out, in whole or part, its obligations under this Agreement and such Party (the “Claiming Party”) gives notice and details of the Force Majeure to the other Party as soon as practicable, then the Claiming Party shall be excused from the performance of its obligations with respect to this Agreement (other than the obligation to make payments then due or becoming due with respect to performance prior to the Force Majeure). The Claiming Party shall remedy the Force Majeure with all reasonable dispatch. For the duration of the Claiming Party’s non-performance (and only for such period), the non-Claiming Party shall not be required to perform or resume performance of its obligations to the Claiming Party corresponding to the obligations of the Claiming Party excused by Force Majeure.

Section 11.2 Settlement of Labor Disputes. Notwithstanding anything to the contrary herein, the Parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the Party experiencing such disturbance, and the failure of a Party to settle such strikes, lockouts or other industrial disturbances shall not prevent the existence of Force Majeure or of reasonable dispatch to remedy the same. -30-
ARTICLE XII.

GOVERNMENTAL RULES AND REGULATIONS
Section 12.1 Compliance with Laws. This Agreement shall be subject to all present and future Laws of any Government Agency having jurisdiction over this Agreement or the transactions to be undertaken hereunder, and neither Party has knowingly undertaken or will knowingly undertake or knowingly cause to be undertaken any activity that would conflict with such Laws; provided, however, that nothing herein shall be construed to restrict or limit either Party’s right to object to or contest any such Law, or its application to this Agreement or the transactions undertaken hereunder, and neither acquiescence therein or compliance therewith for any period of time shall be construed as a waiver of such right.

Section 12.2 Contests. Excluding all matters involving a contractual dispute between the Parties, no Party shall contest, cause to be contested or in any way actively support the contest of the equity, fairness, reasonableness or lawfulness of any terms or conditions set forth or established pursuant to this Agreement, as those terms or conditions may be at issue before any Government Agency in any proceeding, if the successful result of such contest would be to preclude or excuse the performance by either Party of this Agreement or any provision hereunder.

Section 12.3 Defense of Agreement. Excluding all matters involving a contractual dispute between the Parties, each Party shall hereafter exercise Commercially Reasonable Efforts to defend and support this Agreement before any Government Agency in any proceeding, if the substance, validity or enforceability of all or any part of this Agreement is hereafter directly challenged or if any proposed changes in regulatory practices or procedures would have the effect of making this Agreement invalid or unenforceable or would subject either Party to any greater or different regulation or jurisdiction that materially affects the rights or obligations of the Parties under this Agreement.

ARTICLE XIII.

ASSIGNMENT
The terms and provisions of this Agreement shall extend to and be binding upon the Parties and their respective successors, assigns, and legal representatives; provided, however, that, subject to Section 18.14, neither Party may assign this Agreement or its rights and interests, in whole or in part, under this Agreement without the prior written consent of the other Party; provided furthermore that, for the avoidance of doubt, any applicable Assignment Agreement shall terminate concurrent with the assignment of this Agreement. Prior to assigning this Agreement, Purchaser shall deliver to Issuer written confirmation from each Rating Agency (as defined in the Bond Indenture) then rating the Bonds, provided that such agency has rated and continues to rate the Bonds, that the assignment will not result in a reduction, qualification, or withdrawal of the then-current ratings assigned by such Rating Agency to the Bonds. Whenever an assignment or a transfer of a Party’s interest in this Agreement is requested to be made with the written consent of the other Party, the assigning or transferring Party’s assignee or transferee shall expressly assume, in writing, the duties and obligations under this Agreement of the assigning or transferring Party. -31-
Upon the agreement of a Party to any such assignment or transfer, the assigning or transferring Party shall furnish or cause to be furnished to the other Party a true and correct copy of such assignment or transfer and assumption of duties and obligations ARTICLE XIV.

PAYMENTS
Section 14.1 Monthly Statements.
(a) Purchaser’s Statements. No later than the 5th day of each Month during the Delivery Period (excluding the first Month of the Delivery Period) and the first Month following the end of the Delivery Period, Purchaser shall deliver to Issuer a statement (a “Purchaser’s Statement”) listing (i) in respect of the prior Month, if Base Quantities were required to be delivered in such Month and there is a Shortfall Quantity for such Month, the Replacement Price applicable to such Shortfall Quantity, and (ii) any other amounts due to Purchaser in connection with this Agreement with respect to prior Months.
(b) Billing Statements.
(i) No later than the [___] day of each Month during the Delivery Period (excluding the first Month of the Delivery Period) and the first Month following the end of the Delivery Period (the “Billing Date”), Issuer shall deliver a statement (a “Billing Statement”) to Purchaser indicating (i) the total amount due to Issuer for Product delivered in the prior Month, (ii) any other amounts due to Issuer or Purchaser in connection with this Agreement with respect to the prior Months, and (iii) the net amount due to Issuer or Purchaser; provided that Prepay LLC’s delivery of a Billing Statement to Issuer and Purchaser pursuant to and as defined in the Master Power Supply Agreement shall be deemed to satisfy Issuer’s obligation to deliver a Billing Statement hereunder; provided furthermore that invoicing for all Assigned PAYGO Products shall occur under the CCCE Custodial Agreement.
(ii) If a Monthly Statement (as defined in the CCCE Custodial Agreement) for an Assigned PPA has not been delivered by the [___] day of the Month following deliveries, Issuer shall provisionally prepare or cause to be prepared a Billing Statement for this Agreement that assumes all of the Assigned Prepay Quantities were delivered under the applicable Assigned PPA for such Month. In such case, to the extent that a Monthly Statement subsequently delivered under the CCCE Custodial Agreement reflects that less than the Assigned Prepay Quantities were actually delivered under any such Assigned PPA, then (A) the previously delivered Billing Statement shall be deemed to be updated in accordance with such Monthly Statement, (B) Prepay LLC shall be deemed under the remarketing provisions of the Master Power Supply Agreement to remarket and purchase such undelivered portion of the Assigned Prepay Quantities for its own account resulting in a Ledger Entry (as defined in the Master Power Supply -32-
Agreement) and (C) Issuer shall owe a resettlement payment to Purchaser in an amount equal to the product of (x) the applicable APC Contract Price multiplied by (y) the portion of the Assigned Prepay Quantities not delivered in such Month. The Parties acknowledge and agree that J. Aron shall have a separate resettlement payment obligation with respect to the amounts described in the clause (C) of the preceding sentence under the Electricity Sale and Service Agreement, and J. Aron’s payment of the [J. Aron Resettlement Payment] as defined in and pursuant to the CCCE Custodial Agreement shall satisfy the corresponding obligations of the respective parties under each of the Electricity Sale and Service Agreement, the Master Power Supply Agreement and this Agreement.
2 (c) Supporting Documentation. Upon request by either Party, the other Party shall deliver such supporting documentation of the foregoing statements and information described in this Section 14.1 as such requesting Party may reasonably request.

Section 14.2 Payments.
(a) Payments Due. If the Billing Statement indicates an amount due from Purchaser, then Purchaser shall remit such amount to Issuer by wire transfer (pursuant to the Trustee’s instructions), in immediately available funds, on or before the 23rd day of the Month following the most recent Month to which such Billing Statement relates, or if such day is not a Business Day, the preceding Business Day. If the Billing Statement indicates an amount due from Issuer, then Issuer shall remit such amount to Purchaser by wire transfer (pursuant to Purchaser’s instructions), in immediately available funds, on or before the 28th day of the Month following the most recent Month to which such Billing Statement relates, or if such day is not a Business Day, the following Business Day. Notwithstanding the foregoing, payments due from Purchaser for Assigned PAYGO Product shall be satisfied by Purchaser’s compliance with Section 3.2(a)(ii) in respect of such Assigned PAYGO Product.
(b) No Duty to Estimate. If Purchaser fails to issue a Purchaser’s Statement with respect to any Month, Issuer shall not be required to estimate any amounts due to Purchaser for such Month, provided that Purchaser may include any such amount on subsequent Purchaser’s Statements issued within the next sixty (60) days. The sixty (60)-day deadline in this subsection (b) replaces the two (2) year deadline in Section 14.5 with respect to any claim by any non-delivering Party of inaccuracy in any estimated invoice issued or payment made pursuant to this subsection (b).

Section 14.3 Payment of Disputed Amounts. If Purchaser disputes any amounts included in a Billing Statement, Purchaser shall (except in the case of manifest error) nonetheless pay any amount required by the Billing Statement in accordance with Section 14.2 without regard to any

2 SM NTD: Parties to discuss resettlement payment mechanics. -33-
right of set-off, counterclaim, recoupment or other defenses to payment that Purchaser may have; provided, however, that Purchaser shall have the right, after payment, to dispute any amounts included in a Billing Statement or otherwise used to calculate payments due under this Agreement pursuant to Section 14.5. If Issuer disputes any amounts included in the Purchaser’s Statement, Issuer may withhold payment to the extent of the disputed amount; provided, however, that interest shall be due to Purchaser at the Default Rate for any withheld amount later found to have been properly due.

Section 14.4 Late Payment. If Purchaser fails to remit within one Business Day the full amount payable when due, interest on the unpaid portion shall accrue from the date due until the date of payment at the Default Rate.

Section 14.5 Audit; Adjustments.
(a) Right to Audit. A Party shall have the right, at its own expense, upon reasonable notice to the other Party and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books and records of the other Party to the extent reasonably necessary, but only to such extent, to verify the accuracy of any statement, charge, payment, or computation made under this Agreement. This right to examine, audit, and obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Agreement.
(b) Deadline for Objections. Each Purchaser’s Statement and each Billing Statement shall be conclusively presumed final and accurate and all associated claims for under-or overpayments shall be deemed waived unless such Purchaser’s Statement or Billing Statement is objected to in writing, with adequate explanation and/or documentation, within two (2) years after the applicable Month of Product delivery.
(c) Payment of Adjustments. All retroactive adjustments shall be paid in full by the Party owing payment within 30 days of notice and substantiation of such inaccuracy. If the Parties are unable to agree upon any retroactive adjustments requested by either Party within the time period specified in Section 14.5(b), then either Party may pursue any remedies available with respect to such adjustments at law or in equity. Retroactive adjustments for payments made based on an incorrect Purchaser’s Statement or Billing Statement shall bear interest at the Default Rate from the date such payment was made.

Section 14.6 Netting; No Set-Off. The Parties shall net all amounts due and owing, including any past due amounts (which, for the avoidance of doubt, shall include any accrued interest), arising under this Agreement such that the Party owing the greater amount shall make a single payment of the net amount to the other Party in accordance with this Article XIV.

Notwithstanding the foregoing, no Party shall be entitled to net any amounts that are in dispute and payment for all amounts set forth in a Billing Statement provided to Purchaser shall be made without set-off or counterclaim of any kind.

Section 14.7 Rate Covenant. The obligations of the Purchaser under this Agreement shall be a special and limited obligation and shall only be payable from Utility Revenues. The -34-
Purchaser hereby covenants and agrees that it will, subject to the jurisdiction of any applicable regulatory authority, use its best efforts to establish, maintain, set, and collect, rates and charges so as to provide Utility Revenues sufficient, together with all other reserves, revenues and amounts available to make payments under this Agreement, to enable the Purchaser to pay to the Issuer all amounts payable under this Agreement. The Purchaser covenants that any resolution or indenture pursuant to which the Purchaser issues bonds or other indebtedness and which establishes the lien and priority of payments of such bonds and indebtedness will, under its terms, provide that the Purchaser’s obligations under this Agreement to purchase electricity will be operating expenses or otherwise such that such obligations will be, as to any date on which application of monies is made, payable before debt service on any such bonds or indebtedness.

ARTICLE XV.
[RESERVED]
ARTICLE XVI.

NOTICES
Any notice, demand, statement, or request required or authorized by this Agreement to be given by one Party to the other Party (or to any third party) shall be in writing and shall either be sent by email transmission, courier, or personal delivery (including overnight delivery service) to each of the notice recipients and addresses specified in Exhibit B for the receiving Party. Any such notice, demand, or request shall be deemed to be given (i) when delivered by email transmission, or (ii) when actually received if delivered by courier or personal delivery (including overnight delivery service). Each Party shall have the right, upon 10 days’ prior written notice to the other Party, to change its list of notice recipients and addresses in Exhibit B. The Parties may mutually agree in writing at any time to deliver notices, demands or requests through alternate or additional methods. Notwithstanding the foregoing, either Party may at any time notify the other that any notice, demand, statement, or request to it must be provided by email transmission for a specified period of time or until further notice, and any communications delivered by means other than email transmission during the specified period of time shall be ineffective.

ARTICLE XVII.

DEFAULT; REMEDIES; TERMINATION
Section 17.1 Issuer Default. Each of the following events shall constitute a “Issuer Default” under this Agreement:
(a) any representation or warranty made by Issuer in this Agreement shall prove to have been incorrect in any material respect when made; or (b) Issuer shall have failed to perform, observe, or comply with any covenant, agreement or term contained in this Agreement, and such failure continues for more than thirty (30) days following receipt by Issuer of written notice thereof. -35-
Section 17.2 Purchaser Default. Each of the following events shall constitute a “Purchaser Default” under this Agreement:
(a) Purchaser fails to pay when due any amounts owed to Issuer pursuant to this Agreement and such failure continues for [three]3 Days following receipt by Purchaser of written notice thereof;
(b) Purchaser (i) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (iv) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency Law or other similar Law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained, in each case within 30 days of the institution or presentation thereof; (v) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all of its assets; or (vii) has a secured party take possession of all or substantially all of its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its of assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;
(c) any representation or warranty made by Purchaser in this Agreement proves to have been incorrect in any material respect when made, and such default is not remedied within thirty (30) days after receipt by Purchaser of written notice thereof; (d) Purchaser shall have failed to perform, observe or comply with any material covenant, agreement or term contained in this Agreement, and such failure continues for more than 30 days following the earlier of receipt by Purchaser of notice thereof; or (e) Purchaser shall have failed to establish, maintain, or collect rates or charges adequate to provide Utility Revenues sufficient to enable Purchaser to pay all amounts due to Issuer under this Agreement in accordance with Section 14.7 (Rate Covenant), and such failure continues for more than 30 days following the earlier of receipt by Purchaser of notice thereof.

3 Subject to CCCE further review.
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Section 17.3 Remedies Upon Default.
(a) Termination. If at any time a Issuer Default or a Purchaser Default has occurred and is continuing, then the non-defaulting Party may do any or all of the following (i) by notice to the defaulting Party specifying the relevant Issuer Default or Purchaser Default, as applicable, terminate this Agreement effective as of a day not earlier than the day such notice is deemed given under Article XVI and/or (ii) declare all amounts due to the non-defaulting Party under this Agreement or any part thereof immediately due and payable, and the same shall thereupon become immediately due and payable, without notice, demand, presentment, notice of dishonor, notice of intent to demand, protest or other formalities of any kind, all of which are hereby expressly waived by the defaulting Party; provided, however, this Agreement shall automatically terminate and all amounts due to the non-defaulting Party hereunder shall immediately become due and payable as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition giving rise to a Purchaser Default specified in Section

17.2(b)(iv) or, to the extent analogous thereto, Section 17.2(b)(viii). In addition, during the existence of an Issuer Default or a Purchaser Default, as applicable, the non-defaulting Party may exercise all other rights and remedies available to it at Law or in equity, including without limitation mandamus, injunction and action for specific performance, to enforce any covenant, agreement or term of this Agreement.
(b) Additional Remedies. In addition to the remedies set forth in Section

17.3(a) (and without limiting any other provisions of this Agreement), during the existence of any Purchaser Default, Issuer may suspend its performance hereunder and discontinue the supply of all or any portion of the Product otherwise to be delivered to Purchaser by it under this Agreement. If Issuer exercises its right to suspend performance under this Section 17.3(b), Purchaser shall remain fully liable for payment of all amounts in default and shall not be relieved of any of its payment obligations under this Agreement. Deliveries of Product may only be reinstated, at a time to be determined by Issuer, upon (i) payment in full by Purchaser of all amounts then due and payable under this Agreement and (ii) unless otherwise agreed by Issuer, payment in advance by Purchaser at the beginning of each Month of amounts estimated by Issuer to be due to Issuer for the future delivery of Product under this Agreement for such Month. Issuer may continue to require payment in advance from Purchaser after the reinstatement of Issuer’s supply services under this Agreement for such period of time not to exceed one year from the date of reinstatement of deliveries as Issuer in its sole discretion may determine is appropriate. In addition, and without limiting any other provisions of or remedies available under this Agreement, if Purchaser fails to accept from Issuer any Product tendered for delivery that Purchaser is obligated to take and receive under this Agreement, Issuer shall have the right to sell such Product to third parties on any terms that Issuer, in its sole discretion, determines are appropriate.
(c) Effect of Early Termination. As of the effectiveness of any termination date in accordance with clause (i) of Section 17.3(a), (i) the Delivery Period shall end, (ii) the obligation of Issuer to make any further sales and deliveries of Product to Purchaser under this Agreement shall terminate, and (iii) the obligation of Purchaser to purchase and receive deliveries of Product from Issuer under this Agreement will terminate. Neither this Agreement nor the Delivery Period may be terminated for any reason except as specified in this Article XVII. Without prejudice to -37-
any payment obligation in respect of periods prior to termination, no payments will be due from either Party in respect of periods occurring after the effective termination date of this Agreement.

Section 17.4 Termination of Master Power Supply Agreement. Purchaser acknowledges and agrees that (i) in the event the Master Power Supply Agreement terminates prior to the end of the primary term of this Agreement, this Agreement shall terminate on the effective date of early termination of the Master Power Supply Agreement (which date shall be the last date upon which deliveries are required thereunder, subject to all winding up arrangements), (ii) Issuer’s obligation to deliver Product under this Agreement shall terminate upon the termination of deliveries of Product to Issuer under the Master Power Supply Agreement and (iii) in either such event, Purchaser shall exercise its right to terminate any Assignment Agreements in effect. Issuer shall provide notice to Purchaser of any early termination date of the Master Power Supply Agreement.

The Parties recognize and agree that, in the event that the Master Power Supply Agreement terminates because of a Failed Remarketing (as defined in the Bond Indenture) of the Bonds that occurs in the first Month of a Reset Period, Issuer shall deliver Product under this Agreement for the remainder of such first Month, and, notwithstanding anything in this Agreement to the contrary, no Monthly Discount Percentage or Annual Refunds shall be associated with such deliveries and the Contract Price shall be adjusted accordingly.

Section 17.5 Limitation on Damages. THE PARTIES CONFIRM THAT THE

EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY

PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS

HEREIN PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE

LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. NEITHER PARTY SHALL BE

LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY, OR INDIRECT

DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY

STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION, OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN

IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD

TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING WITHOUT LIMITATION

THE NEGLIGENCE OF EITHER PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES

REQUIRED TO BE PAID UNDER THIS AGREEMENT ARE LIQUIDATED, THE PARTIES

ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO

DETERMINE, OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT,

AND THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. IN DETERMINING THE APPROPRIATE MEASURE OF

DAMAGES THAT WOULD MAKE THE PARTIES WHOLE, THE PARTIES HAVE

THOROUGHLY CONSIDERED, INTER ALIA, THE UNCERTAINTY OF FLUCTUATIONS

IN PRODUCT PRICES, THE ABILITY AND INTENTION OF THE PARTIES TO HEDGE

SUCH FLUCTUATIONS, THE BARGAINED-FOR ALLOCATION OF RISK, THE

KNOWLEDGE, SOPHISTICATION AND EQUAL BARGAINING POWER OF THE -38-

PARTIES, THE ARMS-LENGTH NATURE OF THE NEGOTIATIONS, THE SPECIAL

CIRCUMSTANCES OF THIS TRANSACTION, THE ACCOUNTING AND TAX

TREATMENT OF THE TRANSACTION BY THE PARTIES, AND THE ENTERING INTO OF

OTHER TRANSACTIONS IN RELIANCE ON THE ENFORCEABILITY OF THE LIQUIDATED DAMAGES PROVISIONS CONTAINED HEREIN.

ARTICLE XVIII.

MISCELLANEOUS
Section 18.1 Indemnification Procedure. With respect to each indemnification included in this Agreement, the indemnity is given to the fullest extent permitted by applicable Law and the following provisions shall be applicable. The indemnified Party shall promptly notify the indemnifying Party in writing of any Claim and the indemnifying Party shall have the right to assume its investigation and defense, including employment of counsel, and shall be obligated to pay related court costs, attorneys’ fees and experts’ fees and to post any appeals bonds; provided, however, that the indemnified Party shall have the right to employ at its expense separate counsel and participate in the defense of any Claim. The indemnifying Party shall not be liable for any settlement of a Claim without its express written consent thereto. In order to prevent double recovery, the indemnified Party shall reimburse the indemnifying Party for payments or costs incurred in respect of an indemnity with the proceeds of any judgment, insurance, bond, surety or other recovery made by the indemnified Party with respect to a covered event.

Section 18.2 Deliveries. Contemporaneously with this Agreement (unless otherwise specified),
(a) each Party shall deliver to the other Party evidence reasonably satisfactory to it of (i) such Party’s authority to execute, deliver and perform its obligations under this Agreement and (ii) the appropriate individuals who are authorized to sign this Agreement on behalf of such Party;
(b) on the Bond Closing Date, Purchaser shall deliver to Issuer a fully executed Federal Tax Certificate in substantially the form attached hereto as Exhibit D; (c) on the Bond Closing Date, Purchaser shall deliver to Issuer an opinion or opinions of counsel to Purchaser covering the matters set forth in the form attached hereto as Exhibit E; and
(d) on the Bond Closing Date, Purchaser shall deliver to Issuer a Closing Certificate in substantially the form set forth hereto as Exhibit I.

Section 18.3 Entirety; Amendments. This Agreement, including the exhibits and attachments hereto, constitutes the entire agreement between the Parties and supersedes all prior discussions and agreements between the Parties with respect to the subject matter hereof. There are no prior or contemporaneous agreements or representations affecting the same subject matter other than those expressed herein. Except for any matters that, in accordance with the express provisions of this Agreement, may be resolved by oral agreement between the Parties, no -39-
amendment, modification, supplement, or change hereto shall be enforceable unless reduced to writing and executed by both Parties.

Section 18.4 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES

OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND

CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF

THE STATE OF CALIFORNIA, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLE THAT WOULD DIRECT THE APPLICATION OF ANOTHER JURISDICTION’S LAW.

Section 18.5 Non-Waiver. No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is in writing and signed by the Party against whom such waiver is claimed. No waiver of any breach or breaches shall be deemed a waiver of any other subsequent breach.

Section 18.6 Severability. If any provision of this Agreement, or the application thereof, shall for any reason be invalid or unenforceable, then to the extent of such invalidity or unenforceability, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby, but rather shall be enforced to the maximum extent permissible under applicable Law, so long as the economic and legal substance of the transactions contemplated hereby is not affected in any materially adverse manner as to either Party.

Section 18.7 Exhibits. Any and all Exhibits and attachments referenced in this Agreement are hereby incorporated herein by reference and shall be deemed to be an integral part hereof.

Section 18.8 Winding Up Arrangements. All indemnity and confidentiality obligations, audit rights, and other provisions specifically providing for survival shall survive the expiration or termination of this Agreement. The expiration or termination of this Agreement shall not relieve either Party of (a) any unfulfilled obligation or undischarged liability of such Party on the date of such termination or (b) the consequences of any breach or default of any warranty or covenant contained in this Agreement. All obligations and liabilities described in the preceding sentence of this Section 18.8, and applicable provisions of this Agreement creating or relating to such obligations and liabilities, shall survive such expiration or termination.

Section 18.9 Relationship of Parties. The Parties shall not be deemed to be in a relationship of partners or joint venturers by virtue of this Agreement, nor shall either Party be an agent, representative, trustee or fiduciary of the other. Neither Party shall have any authority to bind the other to any agreement. This Agreement is intended to secure and provide for the services of each Party as an independent contractor.

Section 18.10 Immunity. Each Party represents and covenants to and agrees with the other Party that it is not entitled to and shall not assert the defense of sovereign immunity with respect to its obligations or any Claims under this Agreement.
-40-
Section 18.11 Rates and Indices. If the source of any publication used to determine the index or other price used in the Contract Price should cease to publish the relevant prices or should cease to be published entirely, an alternative index or other price will be used based on the determinations made by Issuer and Prepay LLC under Section 18.11 of the Master Power Supply Agreement. Issuer shall provide Purchaser the opportunity to provide its recommendations and other input to Issuer for Issuer’s use, and shall act in accordance with Purchaser’s recommendations and input, in the process for selecting such alternative index or other price under Section 18.11 of the Master Power Supply Agreement.

Section 18.12 Limitation of Liability. Notwithstanding anything to the contrary herein, all obligations of Issuer under this Agreement, including without limitation all obligations to make payments of any kind whatsoever, are special, limited obligations of Issuer payable solely from Trust Estate (as such term is defined in the Bond Indenture) as and to the extent provided in the Bond Indenture, including with respect to Operating Expenses (as such term is defined in the Bond Indenture). Issuer shall not be required to advance any moneys derived from any source other than the Revenues (as such term is defined in the Bond Indenture) and other assets pledged under the Bond Indenture for any of the purposes in this Agreement mentioned. Neither the faith and credit of Issuer nor the taxing power of the State of California or any political subdivision thereof is pledged to payments pursuant to this Agreement. Issuer shall not be directly, indirectly, contingently or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reasons of or in connection with this Agreement, except solely to the extent Revenues (as such term is defined in the Bond Indenture) are received for the payment thereof and may be applied therefor pursuant to the terms of the Bond Indenture.

Section 18.13 Counterparts. This Agreement may be executed and acknowledged in multiple counterparts and by the Parties in separate counterparts, each of which shall be an original and all of which shall be and constitute one and the same instrument.

Section 18.14 Third Party Beneficiaries; Rights of Trustee. Purchaser acknowledges and agrees that (a) Issuer will pledge and assign its rights, title and interest in this Agreement and the amounts payable by Purchaser under this Agreement to secure Issuer’s obligations under the Bond Indenture, (b) the Trustee shall be a third-party beneficiary of this Agreement with the right to enforce Issuer’s rights and Purchaser’s obligations under this Agreement, (c) J. Aron shall be a third-party beneficiary of this Agreement with the right to enforce the provisions of Article VI and Exhibit F of this Agreement, (d) the Trustee or any receiver appointed under the Bond Indenture shall have the right to perform all obligations of Issuer under this Agreement, and (e) in the event of any Purchaser Default under Section 17.2(a), (i) Prepay LLC may, to the extent provided for in, and in accordance with, the Receivables Purchase Exhibit to the Master Power Supply Agreement, take assignment from Issuer of receivables owed by Purchaser to Issuer under this Agreement, and Prepay LLC or any third party transferee who purchases and takes assignment of such receivables from Prepay LLC shall thereafter have all rights of collection with respect to such receivables (provided that, if at any time an insurance provider agrees to insure Purchaser’s payment obligations hereunder, then such insurance provider shall have the same rights under this Section

18.14 as Prepay LLC), and (ii) if such receivables are not so assigned, the Swap Counterparty or -41-
Swap Counterparties (as defined in the Bond Indenture) shall have the right to pursue collection of such receivables to the extent any non-payment by Issuer to any Swap Counterparty was caused by Purchaser’s payment default. Pursuant to the terms of the Bond Indenture, Issuer has irrevocably appointed the Trustee as its agent to issue notices and, as directed under the Bond Indenture, to take any other actions that Issuer is required or permitted to take under this Agreement. Purchaser may rely on notices or other actions taken by Issuer or the Trustee and Purchaser has the right to exclusively rely on any notices delivered by the Trustee, regardless of any conflicting notices that it may receive from Issuer.

Section 18.15 No Recourse to Members of Purchaser. Purchaser is organized as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) pursuant to its Joint Powers Agreement and is a public entity separate from its constituent members. Purchaser shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this Agreement. Issuer shall have no rights and shall not make any claims, take any actions or assert any remedies against any of Purchaser’s constituent members, or the employees, directors, officers, consultants or advisors or Purchaser or its constituent members, in connection with this Agreement.

Section 18.16 Waiver of Defenses. Each Party waives all rights to set-off, counterclaim, recoupment and any other defenses that might otherwise be available to it with regard to its obligations pursuant to the terms of this Agreement.

Section 18.17 Rate Changes.
(a) Standard of Review. Absent the agreement of the Parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of this Agreement, whether proposed by a Party (to the extent that any waiver in Section 18.17(b) below is unenforceable or ineffective as to such Party), a non-party or FERC acting sua sponte, shall solely be the “public interest” application of the “just and reasonable” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) and clarified by Morgan Stanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008). (b) Waiver. In addition, and notwithstanding Section 18.17(a), to the fullest extent permitted by applicable Law, each Party, for itself and its successors and assigns, hereby expressly and irrevocably waives any rights it can or may have, now or in the future, whether under Section 205 and/or 206 of the Federal Power Act or otherwise, to seek to obtain from FERC by any means, directly or indirectly (through complaint, investigation or otherwise), and each hereby covenants and agrees not at any time to seek to so obtain, an order from FERC changing any section of this Agreement specifying the rate, charge, classification, or other term or condition agreed to by the Parties, it being the express intent of the Parties that, to the fullest extent permitted by applicable Law, neither Party shall unilaterally seek to obtain from FERC any relief changing the rate, charge, classification, or other term or condition of this Agreement, notwithstanding any subsequent changes in applicable Law or market conditions that may occur. In the event it were to be determined that applicable Law precludes the Parties from waiving their rights to seek changes from FERC to their market-based power sales contracts (including entering into covenants -42-
not to do so) then this Section 18.17(b) shall not apply, provided that, consistent with Section

18.17(a), neither Party shall seek any such changes except solely under the “public interest” application of the “just and reasonable” standard of review and otherwise as set forth in Section

18.17(a).

IN WITNESS WHEREOF, the Parties have caused this Clean Energy Purchase Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
[Separate Signature Page(s) Attached]
Signature Page to the Clean Energy Purchase Contract

CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By:____________________________________
Name:______________________________
Title:_______________________________
Signature Page to the Clean Energy Purchase Contract

CENTRAL COAST COMMUNITY ENERGY
By:____________________________________
Name:______________________________
Title:_______________________________
A-1
EXHIBIT A-1
BASE QUANTITIES; BASE DELIVERY POINTS; COMMODITY REFERENCE PRICES [To be attached.]
A-2
EXHIBIT A-2

INITIAL ASSIGNED RIGHTS AND OBLIGATIONS
[To be attached.]
B-1

EXHIBIT B

NOTICES
IF TO ISSUER: California Community Choice Financing Authority 1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [____]
IF TO PURCHASER: Central Coast Community Energy
[____]
[____]
[____]
C-1

EXHIBIT C

REMARKETING ELECTION NOTICE
California Community Choice Financing Authority
1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [____]
Aron Energy Prepay 22 LLC
c/o J. Aron & Company LLC
200 West Street
New York, NY 10282
[____]
[____]
[____]
To the Addressees:

The undersigned, duly authorized representative of [______________________] (the "Purchaser"), is providing this notice (the “Remarketing Election Notice”) pursuant to the Clean Energy Purchase Contract, dated as of [____], 2023 (the “Clean Energy Purchase Contract”), between California Community Choice Financing Authority and Purchaser. Capitalized terms used herein shall have the meanings set forth in the Clean Energy Purchase Contract.

Pursuant to Section 3.5(b) of the Clean Energy Purchase Contract, the Purchaser has elected to have its Base Quantity, for each Hour of the Reset Period commencing __________ and extending to and including ______________, remarketed beginning as of the commencement of such Reset Period. The resumption of deliveries of Base Quantities in any future Reset Period shall be in accordance with Section 3.5(d) of the Clean Energy Purchase Contract.

Given this [___] day of [_________], 20[__].

CENTRAL COAST COMMUNITY
ENERGY
By: _____________________
Printed Name:

Title:

D-1

EXHIBIT D

FORM OF FEDERAL TAX CERTIFICATE
This Federal Tax Certificate is executed in connection with the Clean Energy Purchase Contract dated as of [____], 2023 (the “Clean Energy Purchase Contract”), by and between the California Community Choice Financing Authority (“Issuer”) and Central Coast Community Energy, a California joint powers authority (“Power Purchaser”). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Clean Energy Purchase Contract, in the Tax Certificate and Agreement, or in the Bond Indenture.

WHEREAS Power Purchaser acknowledges that Issuer is issuing the Bonds to fund the prepayment price under the Master Power Supply Agreement; and WHEREAS the Bonds are intended to qualify for tax exemption under Section 103 of the Internal Revenue Code of 1986, as amended; and
WHEREAS Power Purchaser’s use of Energy acquired pursuant to the Clean Energy Purchase Contract and certain funds and accounts of Power Purchaser will affect the Bonds’ qualification for such tax exemption.

NOW, THEREFORE, POWER PURCHASER HEREBY CERTIFIES AS FOLLOWS:

Power Purchaser is a joint powers authority and a community choice aggregator created and existing pursuant to the provisions of California law, organized under the laws of the State of California. As a community choice aggregator, the Power Purchaser is a load-serving entity providing electricity to customers within the boundaries of cities and/or counties that have elected to participate in Power Purchaser’s community choice aggregation program. For purposes of this Certificate, the term “service area” of the Power Purchaser means the boundaries of the cities and/or counties that have elected to participate in the Power Purchaser’s community choice aggregation program, as well as any other area recognized as the service area of the Power Purchaser under state or federal law.

Power Purchaser will resell all of the Energy acquired pursuant to the Clean Energy Purchase Contract to its retail Energy customers within its service area, with retail sales in all cases being made pursuant to regularly established and generally applicable tariffs.

From [____, ] to [____, __], the annual average amount of Energy purchased (other than for resale) by customers of Power Purchaser who are located within the service area of Power Purchaser is [________] MWh. Over the term of the Clean Energy Purchase Contract, the Power Purchaser expects the annual average amount of Energy purchased (other than for resale) by customers of the Power Purchaser who are located within the service area of the Power Purchaser to be at least [_____] MWh. The maximum annual amount of Energy in any year being acquired pursuant to the Clean Energy Purchase Contract is [_______] MWh. The annual average amount of Energy which Power Purchaser otherwise has a right to acquire as of the Closing Date (including D-2
rights to capacity to generate electricity, whether owned, leased or otherwise contracted for) is [________] MWh. The sum of (a) the maximum amount of Energy in any year being acquired pursuant to the Clean Energy Purchase Contract, and (b) the amount of Energy that Power Purchaser otherwise has a right to acquire (including rights to capacity to generate electricity, whether owned, leased or otherwise contracted for) in the year described in the foregoing clause (a), is [________] MWh. Accordingly, the amount of Energy to be acquired under the Clean Energy Purchase Contract by Power Purchaser, supplemented by the amount of Energy otherwise available to Power Purchaser as of the Closing Date, during any year does not exceed the sum of [___]% of the expected annual average amount of Energy to be purchased (other than for resale) by customers of Power Purchaser who are located within the service area of Power Purchaser.

In the event of the expiration or termination of an EPS Energy Period, Power Purchaser agrees to comply with its obligations in the Clean Energy Purchase Contract, including but not limited to its obligations to (a) exercise Commercially Reasonable Efforts to assign a portion of Power Purchaser’s rights and obligations under a power purchase agreement under which Power Purchaser is purchasing EPS Compliant Energy to J. Aron pursuant to an Assignment Agreement and (b) cooperate in good faith with Issuer and J. Aron with respect to any proposed assignments.

Power Purchaser expects to pay for Energy acquired pursuant to the Clean Energy Purchase Contract solely from funds derived from its operations as a community choice aggregator. Power Purchaser expects to use current net revenues to pay for current Energy acquisitions. Neither the Power Purchaser nor any person who is a related party to the Purchaser will hold any funds or accounts in which monies are invested and which are reasonably expected to be used to pay for Energy acquired pursuant to the Clean Energy Purchase Contract more than one year after such monies are set aside. No portion of the proceeds of the Bonds will be used directly or indirectly to replace funds of Power Purchaser or any persons who are related Persons to Power Purchaser that are or were intended to be used for the purpose for which the Bonds were issued. _______________, 2023
By: ________________________________
[Name]
[Title]
E-1

EXHIBIT E

OPINION OF COUNSEL
California Community Choice Financing Authority
San Rafael, CA
Aron Energy Prepay 22 LLC
New York, NY
Goldman Sachs & Co. LLC
New York, NY
U.S. Bank Trust Company, National Association
Atlanta, GA
[Counterparty 1]
[____]
[Counterparty 2]
[____]
Re: Clean Energy Purchase Contract between Central Coast Community Energy and California Community Choice
Financing Authority dated as of [____], 2023
Ladies and Gentlemen:

We are Counsel to Central Coast Community Energy (“Purchaser”). Purchaser is a Purchaser in the Clean Energy Project undertaken by California Community Choice Financing Authority (“Issuer”). We are furnishing this opinion to you in connection with the Clean Energy Purchase Contract between Issuer and Purchaser dated as of [____], 2023 (the “Clean Energy Purchase Contract”).

Unless otherwise specified herein, all terms used but not defined in this opinion shall have the same meaning as is ascribed to them in the Clean Energy Purchase Contract.

In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the following:
(a) The Constitution and laws of the State of California (the “State”) including, as applicable, acts, ordinances, certificates, articles, charters, bylaws, and agreements pursuant to which Purchaser was created and by which it is governed; E-2
(b) Resolution No. [__], duly adopted by Purchaser on [___________] (the “Resolution”) and certified as true and correct by certificate and seal, authorizing Purchaser to execute and deliver the Supply Contract;
(c) A copy of the Supply Contract executed by Purchaser; and (d) All outstanding instruments relating to bonds, notes, or other indebtedness of or relating to Purchaser and Purchaser's community choice aggregation system (as defined in the Clean Energy Purchase Contract).

We have also examined and relied upon originals or copies, certified or otherwise authenticated to our satisfaction, of such records, documents, certificates, and other instruments, and made such investigations of law, as in our judgment we have deemed necessary or appropriate to enable us to render the opinions expressed below.

Based upon the foregoing, we are of the opinion that:

1. Purchaser is a joint powers authority of the State, duly organized and validly existing as a community choice aggregator under the laws of the State, and has the power and authority to own its properties, to carry on its business as now being conducted, and to enter into and to perform its obligations under the Agreement.

2. The execution, delivery, and performance by Purchaser of the Clean Energy Purchase Contract have been duly authorized by the governing body of Purchaser and do not and will not require, subsequent to the execution of the Clean Energy Purchase Contract by Purchaser, any consent or approval of the governing body or any officers of Purchaser.

3. The Clean Energy Purchase Contract is the legal, valid, and binding obligation of Purchaser, enforceable in accordance with its terms, except as such enforceability may be subject to (i) the exercise of judicial discretion in accordance with general principles of equity and (ii) bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights heretofore or hereafter enacted, to the extent constitutionally applicable.

4. No approval, consent or authorization of any governmental or public agency, authority, commission or person, or, to our knowledge, of any holder of any outstanding bonds or other indebtedness of Purchaser, is required with respect to the execution, delivery and performance by Purchaser of the Clean Energy Purchase Contract or Purchaser's participation in the transactions contemplated thereby other than those approvals, consents and/or authorizations that have already been obtained.

5. The authorization, execution and delivery of the Clean Energy Purchase Contract and compliance with the provisions thereof (a) will not conflict with or constitute a breach of, or default under, (i) any instrument relating to the organization, existence or operation of Purchaser, (ii) any ruling, regulation, ordinance, judgment, order or decree to which Purchaser (or any of its officers in their respective capacities as such) is subject or (iii) any provision of the laws of the E-3
State relating to Purchaser and its affairs, and (b) to our knowledge will not result in, or require the creation or imposition of, any lien on any of the properties or revenues of Purchaser pursuant to any of the foregoing.

6. Purchaser is not in breach of or default under any applicable constitutional provision or any law or administrative regulation of the State or the United States or any applicable judgment or decree or, to our knowledge, any loan or other agreement, resolution, indenture, bond, note, resolution, agreement or other instrument to which Purchaser is a party or to which Purchaser or any of its property or assets is otherwise subject, and to our knowledge no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument.

7. Payments to be made by Purchaser under the Clean Energy Purchase Contract shall constitute operating expenses of Purchaser’s CCA System payable solely from the revenues and other available funds of Purchaser's CCA System as a cost of purchased electricity. The application of the revenues and other available funds of Purchaser’s CCA System to make such payments is not subject to any prior lien, encumbrance or other restriction.

8. As of the date of this opinion, to the best of our knowledge after due inquiry, there is no pending or threatened action or proceeding at law or in equity or by any court, government agency, public board or body affecting or questioning the existence of Purchaser or the titles of its officers to their respective offices or affecting or questioning the legality, validity, or enforceability of the Clean Energy Purchase Contract nor to our knowledge is there any basis therefor.

This opinion is rendered solely for the use and benefit of the addressees listed above in connection with the Clean Energy Purchase Contract and may not be relied upon other than in connection with the transactions contemplated by the Clean Energy Purchase Contract, or by any other person or entity for any purpose whatsoever, nor may this opinion be quoted in whole or in part or otherwise referred to in any document or delivered to any other person or entity, without the prior written consent of the undersigned.

Very truly yours,
F-1

EXHIBIT F

ASSIGNMENT OF ASSIGNABLE POWER CONTRACTS

1. General Requirements. Assigned Rights and Obligations under an Assignable Power Contract may only be assigned under this Exhibit F if the following requirements are satisfied or waived by J. Aron and Issuer:

1.1. The seller under such Assignable Power Contract (the “APC Party”) either (i) has a long-term senior unsecured credit rating that is “Baa3” or higher from Moody’s Investor’s Service, Inc. (or any successor to its credit rating service operation), “BBB- ” or higher from Standard & Poor’s Global Ratings (or any successor to its credit rating service operation) or “BBB-” or higher from Fitch Ratings, Inc. (or any successor to its credit rating service operation), (ii) provides credit support that is reasonably satisfactory to J. Aron or (iii) otherwise provides evidence of its creditworthiness that is reasonably satisfactory to J. Aron (which, for the avoidance of doubt, may include credit support provided by such APC Party to Purchaser).

1.2. The APC Party satisfies J. Aron’s internal requirements as they relate to “know your customer” rules, policies and procedures, anti-money laundering rules and regulations, Dodd-Frank Act, Commodity Exchange Act, Patriot Act and similar rules, regulations, requirements and corresponding policies.

1.3. The APC Party is organized in the United States and in a jurisdiction that does not present adverse tax consequences to J. Aron or Issuer in connection with such proposed assignment.

1.4. J. Aron, Purchaser, and Issuer have agreed on and executed an Assignment Schedule (as defined below) for such assignment.

1.5. J. Aron, Purchaser, Issuer, and the applicable APC Party have agreed on and executed an Assignment Agreement for such assignment.

1.6. The contract price (in $/MWh) payable by Purchaser under the applicable Assignable Power Contract (the “APC Contract Price”) is a fixed price unless Issuer, Purchaser and J. Aron agree, each in their sole discretion, to appropriate changes to the relevant documents to accommodate a floating APC Contract Price. For purposes of this Exhibit F, a “fixed price” shall be deemed to include any price that is fixed but for a periodic escalation, whether pre-determined or by reference to a price index, provided that the Base Quantity Reductions required to reflect any index-based escalation shall be made promptly following the time that such index is available.

1.7. If the Assignable Power Contract is unit-contingent or for an as-generated Product, then:

1.7.1. J. Aron has determined with a high degree of certainty that the Applicable Project (as defined below) will be able to generate the Assigned Prepay Value in each Month during the proposed Assignment Period.

1.7.2. The Applicable Project has generated the Assigned Prepay Value (as defined below) in each Month since commencing commercial operation.

F-2

2. Proposed Assignment. Purchaser may propose an assignment of Assigned Rights and Obligations under Article VI of the Clean Energy Purchase Contract by delivering the following items to Issuer and to J. Aron:

2.1. A written notice of the proposed assignment signed by Purchaser.

2.2. A true and complete copy of the Assignable Power Contract under which such Assigned Rights and Obligations would arise.

2.3. Evidence reasonably satisfactory to Issuer and J. Aron that all authorizations, consents, approvals, licenses, rulings, permits, exemptions, variances, orders, judgments, decrees, declarations of or regulations by any Government Agency necessary in connection with the transactions contemplated by the Assignable Power Contract and the proposed assignment of Assigned Rights and Obligations under such Assignable Power Contract to J. Aron have been obtained and are in full force and effect. Such evidence may be provided by a closing certificate with appropriate back-up materials.

2.4. Such additional information as Issuer and J. Aron may reasonably request regarding the Assignable Power Contract and the APC Party.

2.5. If the Assignable Power Contract is unit-contingent or for an as-generated Product, then:

2.5.1. A description and information of the applicable project to which the Assignable Power Contract applies (the “Applicable Project”), including but not limited to information on the location, interconnection(s), and operating and compliance history of Applicable Project.

2.5.2. Either (i) a report from a nationally recognized consultant in the energy industry that is reasonably acceptable to Issuer and J. Aron showing the “P99” forecasted generation (“P99 Generation”) and “P50” forecasted generation (“P50 Generation”) of the Applicable Project for the entire Assignment Period, as the terms P99 and P50 are commonly used in the renewable energy industry or (ii) Monthly historical generation and meteorological data of the Applicable Project dating back to the commercial operation date.

Following Issuer’s and J. Aron’s receipt of such information, Purchaser and Issuer will and J.

Aron has agreed in the Electricity Sale and Service Agreement to (i) negotiate in good faith with one another and exercise Commercially Reasonable Efforts to agree upon an Assignment Schedule, with the initial draft of such Assignment Schedule to be developed by J. Aron, and (ii) negotiate in good faith with one another and the APC Party regarding an Assignment Agreement, in each case related to the proposed assignment. If such Assignment Schedule and Assignment Agreement are agreed to by the representative parties thereto, the applicable parties will execute such Assignment Agreement and Assignment Schedule to be effective upon the assignment of the Assigned Rights and Obligations from Purchaser to J. Aron pursuant to the Assignment Agreement. J. Aron will act in good faith in considering proposed assignments that meet the criteria set forth in this Exhibit F, in accordance with the provisions set forth in the Electricity Sale and Service Agreement. For the avoidance of doubt, Purchaser acknowledges that J. Aron will not be required to execute any Assignment Agreement or Assignment Schedule, or otherwise accept any Assigned Rights and Obligations unless the APC Party (i) satisfies J. Aron’s internal requirements as they relate to “know your customer” rules, policies and procedures, anti-money laundering rules and regulations, Dodd-Frank Act, F-3
Commodity Exchange Act, Patriot Act and similar rules, regulations, requirements and corresponding policies, (ii) is organized in the United States, and (iii) unless waived by J. Aron, satisfies all other requirements in Section 1 of this Exhibit F.

3. Assignment Schedule. In connection with each assignment, an “Assignment Schedule” will be prepared in the form attached hereto as Annex I (with such changes as agreed by the Parties in their sole discretion), must be executed by Purchaser, Issuer and J. Aron, and must include each of the following:

3.1. The term of such Assigned Rights and Obligations (an “Assignment Period”) shall have the meaning specified in each applicable Assignment Agreement and shall (i) end not later than (a) the end of the delivery period under the Assignable Power Contract and (b) the end of the Delivery Period under this Agreement, (ii) not commence any earlier than sixty (60) days after Purchaser’s original notice under Section 2.1 above, and (iii) have a primary term that is not less than 18 Months in duration (provided, for the avoidance of doubt, the primary term references the term of the applicable Assignment Period and not the term of the Assignable Power Contract).

3.2. If the Assignable Power Contract is unit-contingent or for an as-generated product, then a description of the Applicable Project.

3.3. The “Assigned Prepay Quantity” means, for each Month of an Assignment Period and each Assignment Agreement, a quantity of Energy agreed upon by J. Aron, Issuer and Purchaser, which Assigned Prepay Quantity, if the Assignable Power Contract is unit contingent or for an as-generated Product, shall not exceed an amount that J. Aron has determined with a high degree of certainty that the Applicable Project will be able to generate in each Month during the Assignment Period; provided that the Assigned Prepay Quantity for each Month may not exceed the limit expressed in the proviso to Section 3.4 below. For the avoidance of doubt, the Assigned Rights and Obligations will include all of Purchaser’s rights to receive Energy under the Assignable Power Contract even if such rights to receive Energy may exceed the Assigned Prepay Quantity.

3.4. An updated Exhibit A-1 to the Clean Energy Purchase Contract reflecting a reduction in Base Quantity for each Hour during an Assignment Period after giving effect to the Assignment Schedule (each, a “Base Quantity Reduction”), which Base Quantity Reduction for each Hour will equal (i) the Assigned Prepay Quantity for such Hour, multiplied by (ii) the result of (A) the APC Contract Price applicable for such Hour, divided by (B) the [NOTE: To list the result of the following formula as determined at pricing: Front End Fixed Price + (Active Swap Fee – Standby Swap Fee).]; provided that if the Base Quantity Reduction for any Hour would result in a Base Quantity of less than zero, then the Assigned Prepay Quantity for such Hour will be reduced to the closest whole MWh such that the Base Quantity is not reduced below zero.

3.5. The APC Contract Price, which as set forth in Section 1.6 above must be a fixed price unless Issuer, Purchaser and J. Aron agree to appropriate changes to the relevant documents to accommodate a floating APC Contract Price.

3.6. The Assigned Delivery Point for all Assigned Energy.

F-4

3.7. The Assigned Product included in the Assigned Rights and Obligations, which Assigned Product may not, unless approved by Special Tax Counsel, include any Product other than (a) Energy, (b) associated RECs, and (c) other product included within the sale of Energy and not separately delivered from Energy, provided that the APC Contract Price must be inclusive of any amounts due in respect of all Assigned Product.

F-5

ANNEX I

FORM OF ASSIGNMENT SCHEDULE
Assigned Product: [_____]
Assigned Delivery Point: [____]
Assigned Prepay Quantity: As set forth in Appendix 2; provided that all Assigned Products shall be delivered pursuant to the Limited Assignment Agreement during the Assignment Period as provided in Appendix 1.

APC Contract Price: $[____]/MWh
Assignment Period: [____]
Other Provisions:

Attachment: Updated Exhibit A-1 to Clean Energy Purchase Contract 1 ANNEX II

FORM OF LIMITED ASSIGNMENT AGREEMENT
NOTE: Purchaser may include the form included in this Annex II as an exhibit to any PPA executed by Purchaser and include the following or similar language in the PPA: “[Seller] agrees that [Buyer] may assign a portion of its rights and obligations under this Agreement to J. Aron & Company LLC (“J. Aron”) at any time upon not less than [___] days’ notice by delivering a written request for such assignment, which request must include a proposed assignment agreement in the form attached hereto as [Exhibit ___], with the blanks in such form completed in [Buyer’s] sole discretion. Provided that [Buyer] delivers a proposed assignment agreement complying with the previous sentence, [Seller] agrees to (i) comply with J. Aron’s reasonable requests for know-your-customer and similar account opening information and documentation with respect to [Seller], including but not limited to information related to forecasted generation, credit rating, and compliance with anti-money laundering rules, the Dodd-Frank Act, the Commodity Exchange Act, the Patriot Act and similar rules, regulations, requirements and corresponding policies; and (ii) promptly execute such assignment agreement and implement such assignment as contemplated thereby, subject only to the countersignature of J. Aron and Company, LLC and [Buyer].” [To be attached in the form agreed by J. Aron and CCCE.] G-1

EXHIBIT G

COMMUNICATIONS PROTOCOL FOR BASE QUANTITIES
This Exhibit G (“Communications Protocol”) addresses the Scheduling of Base Quantities to be delivered and received at the Base Delivery Point. It is intended to be attached to both the Master Power Supply Agreement and the Clean Energy Purchase Contract, each as defined below.

1. ADDITIONAL DEFINED TERMS
In addition to the terms defined in Article I of this Agreement, the following terms used in this Communications Protocol shall have the following meanings:

1.1. “Agreement” means (i) when this Communications Protocol is attached to the Master Power Supply Agreement, the Master Power Supply Agreement and (ii) when this Communications Protocol is attached to the Clean Energy Purchase Contract, the Clean Energy Purchase Contract.

1.2. “Clean Energy Purchase Contract” means that certain Clean Energy Purchase Contract dated as of [____], 2023 by and between Issuer and Project Participant.

1.3. “Delivery Scheduling Entity” means Prepay LLC or a Person designated by Prepay LLC, as set forth in Attachment 4 hereto or in a subsequent written notice to Issuer and the Project Participant.

1.4. “Issuer” means California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended).

1.5. “Master Power Supply Agreement” means that certain Master Power Supply Agreement dated as of [____], 2023 by and between Prepay LLC and Issuer that is specified as relating to the Clean Energy Purchase Contract with Project Participant.

1.6. “Operational Nomination” has the meaning specified in Section 4.1.1.

1.7. “Prepay LLC” means Aron Energy Prepay 22 LLC, a Delaware limited liability company.

1.8. “Project Participant” means Central Coast Community Energy, a California joint powers authority.

1.9. “Receipt Scheduling Entity” for any Delivery Point means the Project Participant, unless the Clean Energy Purchase Contract has been suspended or terminated, in which case the G-2
Receipt Scheduling Entity will be Issuer or a Person designated by Issuer for such Delivery Point in accordance with this Communications Protocol.

1.10. “Relevant Contract” means the Master Power Supply Agreement and the Clean Energy Purchase Contract.

1.11. “Relevant Party” means Issuer, Prepay LLC or the Project Participant.

1.12. “Relevant Third Party” means any Person that is (i) a Transmission Provider that will or is intended to transport Product to be delivered or received under the Agreement, (ii) an independent system operator or control area that coordinates the Scheduling of Product at the Base Delivery Point, (iii) Scheduling receipt of Product by Issuer or for the account of Issuer to the extent such Product has been delivered to Issuer or for the account of Issuer under the Master Power Supply Agreement, and (iv) delivering Product to Issuer or for the account of Issuer to the extent such Product is intended to be re-delivered ultimately to the Project Participant or for the account of the Project Participant under the Clean Energy Purchase Contract.

1.13. “Scheduling Entities” means the Receipt Scheduling Entity and the Delivery Scheduling Entity.

2. AGREEMENTS OF RELEVANT PARTIES
Each Relevant Party that is a party to Relevant Contract to which this Communications Protocol is attached acknowledges that this Communications Protocol sets forth certain obligations that may be delegated to other Relevant Parties that are not parties to such Relevant Contracts. In connection therewith:

2.1 Reliance on Scheduling Entity. Each Relevant Party shall be entitled to rely exclusively on any communications or directions given by a Delivery Scheduling Entity or Receipt Scheduling Entity, in each case to the extent such communications are permitted hereunder.

2.2 Performance of Communications Protocol. Each Relevant Party to a Relevant Contract shall cause its counterparty to each other Relevant Contract to comply with the provisions of this Communications Protocol as the provisions apply to such counterparty to the extent required to perform the obligations of the Relevant Party under the Relevant Contract.

2.3 Third Party Beneficiaries. To the extent this Communications Protocol purports to give any Relevant Party (a “Beneficiary”) rights vis-à-vis any other Relevant Party (a “Burdened Party”) with whom such Beneficiary does not have privity under a Relevant Contract, such Beneficiary shall be deemed to be a third party beneficiary of each Relevant Contract to which the Burdened Party is a party to the G-3
extent necessary or convenient to enforce the obligations of the Burdened Party under this Communications Protocol.

2.4 Amendment of Relevant Contracts. No Relevant Party shall amend, waive or otherwise modify any provision of any Relevant Contract to which it is a party without the consent of each other Relevant Party whose rights or obligations would be materially and adversely affected by such amendment, waiver or modification as it relates to this Communications Protocol.

2.5 Amendment of Communications Protocol. No Relevant Party shall amend any provision of this Communications Protocol in a Relevant Contract without the consent of each other Relevant Party.

2.6 Waiver of Communications Protocol. No Relevant Party shall waive any provision of this Communications Protocol in a Relevant Contract without the consent of each other Relevant Party whose rights or obligations would be materially and adversely affected by such waiver.
3 DESIGNATION AND REPLACEMENT OF SCHEDULING ENTITIES

3.1 Designation of Delivery Scheduling Entity. Prepay LLC may designate a new Delivery Scheduling Entity upon thirty (30) days written notice to Issuer substantially in the form of Attachment 4. Any Scheduling Entity designated in accordance with this Section 3.1 shall commence service at the beginning of a Month, unless mutually agreed in writing between Prepay LLC and Issuer.

3.2 Assumption by Receipt Scheduling Entity. If any Delivery Scheduling Entity (other than Prepay LLC) persistently fails to perform its obligations as contemplated under this Communications Protocol, the Receipt Scheduling Entity may, by notice to Prepay LLC, require that Prepay LLC deal directly with the Receipt Scheduling Entity until a new Delivery Scheduling Entity is designated in accordance with this Section 3.1.

3.3 Scheduling Coordinator. Project Participant shall designate a scheduling coordinator for the purposes of accepting Base Product delivery at the Base Delivery Point through the scheduling of ISTs.
4 INFORMATION EXCHANGE AND COMMUNICATION BETWEEN ISSUER AND

PREPAY LLC

4.1 Communication of Operational Nomination Details.

4.1.1 Not later than three Days prior to each Day during which Base Product is required to be delivered under the Agreement, the Receipt Scheduling Entity for such Delivery Point may deliver an operational nomination in G-4
writing (the “Operational Nomination”) indicating any inability of a Project Participant to receive all of its Base Quantities during such Day, which Operational Nomination shall be without prejudice to any party’s rights under the Relevant Contracts for failure to receive Base Quantities. If no changes to Base Quantities are so submitted, the Operational Nomination shall be deemed to nominate the full Base Quantities required to be delivered on a Day.

4.1.2 Not later than three Days prior to each Day during which Base Product is required to be delivered under the Agreement, the Delivery Scheduling Entity for such Delivery Point may revise the Operational Nomination to indicate any inability of Prepay LLC to deliver all Base Quantities during such Day, which revised Operational Nomination shall be without prejudice to any party’s rights under the Relevant Contracts for failure to deliver Base Quantities.

4.2 Event-specific Communications.

4.2.1 Remarketing Notices issued by Issuer under the Master Power Supply Agreement shall be substantially in the form of Attachment 2 hereto. Any such notices to remarket must be delivered directly to Prepay LLC and the Delivery Scheduling Entity.

4.2.2 Each Scheduling Entity shall notify Prepay LLC, Issuer and the Project Participant as soon as practicable in the event of: (i) any deficiencies in Scheduling related to such Scheduling Entity; (ii) any deficiencies in Scheduling related to the other such Scheduling Entity; and (iii) any issues with Relevant Third Parties that that would reasonably be expected to create issues related to Product Scheduling under the Relevant Contract. 5 ACCESS AND INFORMATION

5.1 Verification of Product Scheduled. In addition to the delivery of and access to the records and data required pursuant to the Agreement, each Relevant Party agrees to provide relevant records from itself and other Relevant Third Parties necessary to document and verify Product Scheduled within and after the Month as needed to facilitate the Relevant Contracts.

5.2 View Rights. To the extent requested by a Delivery Scheduling Entity or Prepay LLC, the Receipt Scheduling Entities will use Commercially Reasonable Efforts to cooperate with the Delivery Scheduling Entity and Prepay LLC to ensure that Delivery Scheduling Entity and Prepay LLC has sufficient agency view rights from each such Scheduling Entity to allow Prepay LLC to view Base Product Scheduling at the Base Delivery Point.

G-5
6 NOTICES
Any notice, demand, request or other communication required or authorized by this Communications Protocol to be given by one Relevant Party to another Relevant Party shall be in writing, except as otherwise expressly provided herein. It shall either be sent by facsimile (with receipt confirmed by telephone and electronic transmittal receipt), courier, or personally delivered (including overnight delivery service) to the representative of the other Relevant Party designated in Attachment 1 hereto. Any such notice, demand, or request shall be deemed to be given (i) when sent by facsimile confirmed by telephone and electronic transmittal receipt or (ii) when actually received if delivered by courier or personal delivery (including overnight delivery service).

Each Relevant Party shall have the right, upon written notice to the other Relevant Parties, to change its address at any time, and to designate that copies of all such notices be directed to another Person at another address.
7 NO IMPACT ON CONTRACTUAL OBLIGATIONS
Except as expressly set forth herein or in an applicable Relevant Contract, nothing in this Communications Protocol nor any Relevant Party’s actions or inactions hereunder shall have any impact on any Relevant Party’s rights or obligations under the Relevant Contracts.
8 ATTACHMENTS
Attachment 1 - Key Personnel
Attachment 2 - Remarketing Notice Form
Attachment 3 - Designation of Alternate Base Delivery Points Form Attachment 4 - Designation of Scheduling Entities Form
G-6
Attachment 1
Key Personnel
Prepay LLC Marketing Personnel:

Kenan Arkan
Sales and Trading
Telephone: (212) 357-2542
[email protected]
Prepay LLC Scheduling Personnel:

Scheduling Team
Email: [email protected]
Direct Phone: (212) 902-8148
Fax: 212.493.9847
Carly Norlander
ICE Chat: cnorlander1
Email: [email protected]
Direct Phone: (403) 233-9299
Fax: (212) 493-9847
Other Prepay LLC Personnel:

Eric Hudson
Telephone: (212) 855-0880
[email protected]
Patricia Hazel
Telephone: (212) 855-0880
[email protected]
Andres E. Aguila
Telephone: (212) 855-6008
Fax: (212) 291-2124
[email protected]
Issuer Personnel:
[email protected]
Project Participant Personnel:
[Email]
G-7
Attachment 2
Remarketing Notice Form
Date: [_____________]
To: Prepay LLC Scheduling
From: Project Participant Scheduling
This notice is being delivered pursuant to that certain Master Power Supply Agreement (the “Master Power Supply Agreement”) dated as of [____], 2023 by and between Aron Energy Prepay 22 LLC (“Prepay LLC”) and California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended) (“Issuer”) and relates to the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2023 by and between Issuer and Central Coast Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Master Power Supply Agreement.

Check the box to indicate type of Remarketing Notice (The numbers of the Primary (“P”) and Alternate (“A”) Delivery Points below correspond to those same Primary Delivery Points and Alternate Delivery Points set forth in Exhibit A-1 of the Agreement, or as may be designated by the Parties from time to time):
 Monthly Remarketing Notice:

Month(s) for which remarketing is requested: _____________________, 20__ through _______________________, 20__.

Pursuant to Section 3(b) of Exhibit C of the Master Power Supply Agreement, Project Participant requests that Prepay LLC remarket in such Month(s) the following Base Quantities of Product required to be delivered at the following Delivery Points:

Delivery Point (P/A, #) MWh/ Hour for each Hour in the Month  Daily Remarketing Notice:

G-8
Hours for which remarketing is requested: _____________________, 20__ through _______________________, 20__.

Pursuant to Section 3(c) of Exhibit C of the Master Power Supply Agreement, Project Participant requests that Prepay LLC remarket for such Hours the following Base Quantities of Product required to be delivered at the following Delivery Point:

Delivery Point (P/A, #) MWh/Hour
Submitted by Project Participant:

CENTRAL COAST COMMUNITY ENERGY
By:____________________
Name:

Title:

G-9
Attachment 3
Designation of Alternate Base Delivery Points Form
This designation is delivered pursuant to that certain Master Power Supply Agreement (the “Master Power Supply Agreement”) dated as of [____], 2023 by and between Aron Energy Prepay 22 LLC (“Prepay LLC”) and California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended) (“Issuer”) and the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2023 by and between Issuer and Central Coast Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Master Power Supply Agreement and the Clean Energy Purchase Contract. [Project Participant and/or Issuer] hereby proposes the following Alternate Delivery Points for deliveries of Energy that would otherwise be made at the specified Primary Delivery Point:

ALTERNATE

DELIVERY POINT

PRIMARY

DELIVERY POINT

AFFECTED

COMMODITY

REFERENCE PRICE

PRICING POINT

ADDITIONAL

RESTRICTIONS
1 [e.g.
2 Vol. Limit:____
3 Time Limit:]___
(etc.)
Unless otherwise agreed among Prepay LLC, Issuer and Project Participant, an Alternate Delivery Point shall utilize the same Commodity Reference Price as the Primary Delivery Point it replaces or otherwise affects. Project Participant is not required to agree or accept this designation (or any change to the Commodity Reference Price) if it is being submitted by Issuer pursuant to the Master Power Supply Agreement only.

AGREED AND

ACCEPTED BY PREPAY
LLC:
(if required) AGREED TO

AND ACCEPTED BY

PROJECT
PARTICIPANT:
(if required) AGREED TO

AND ACCEPTED BY
ISSUER:

By:

Name:

Title:

By:

Name:

Title:

By:

Name:

Title:

G-10
Attachment 4
Designation of Scheduling Entities Form
This designation is being delivered pursuant to that certain Master Power Supply Agreement (the “Master Power Supply Agreement”) dated as of [____], 2023 by and between J. Aron Energy Prepay 22 LLC (“Prepay LLC”) and California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended) (“Issuer”) and relates to the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2023 by and between Issuer and Central Coast Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Master Power Supply Agreement and Clean Energy Purchase Contract.
[If delivered by Project Participant:

Receipt Scheduling Entity:

Delivery Point: ________________________
Effective Date(s) of Service of Receipt Scheduling Entity (full Months only):
________________, ______ to ________________, ______, if applicable Notice Information for Receipt Scheduling Entity:

Name: ______________________________
Attention: ______________________________
Address: ______________________________
______________________________
Telephone: ______________________________
Fax: ______________________________]
[If delivered by Prepay LLC:

Delivery Scheduling Entity:

Delivery Point: ________________________
Effective Date(s) of Service of Delivery Scheduling Entity (full Months only):
________________, ______ to ________________, ______, if applicable G-11
Notice Information for Delivery Scheduling Entity:

Name: ______________________________
Attention: ______________________________
Address: ______________________________
______________________________
Telephone: ______________________________
Fax: ______________________________]
Submitted by:
[Project Participant or Prepay LLC]
By: _____________________________
Name: _____________________________
Title: _____________________________
H-1

EXHIBIT H

PRICING AND OTHER TERMS
Administrative Fee: $[____]/MWh
Delivery Period: The period beginning on and including [____], 2023 and ending at the end of the Day before [____], 20[__]; provided that the Delivery Period shall end immediately upon
termination of deliveries of Product under the Master Power Supply Agreement pursuant to Article XVII thereof or early termination of the Clean Energy Purchase Contract pursuant to Article XVII hereof.

Initial Reset Period: The period beginning at the beginning of the Day on [____], 2023 and ending at the end of the Day before [____], 20[__].

Minimum Discount
Percentage:

An Available Discount Percentage as determined under the Re-Pricing Agreement of [____]%.

Monthly Discount Percentage: For each Month of the Initial Reset Period, [____]%, and for each Month of any other Reset Period, the percentage
determined by the Calculation Agent as defined in and
pursuant to the Re-Pricing Agreement, exclusive of any
Annual Refund.

I-1

EXHIBIT I

FORM OF CLOSING CERTIFICATE

CLOSING CERTIFICATE OF PURCHASER
__________, 2023
Re: California Community Choice Financing Authority
[Clean Energy Project Revenue Bonds]
The undersigned _____________________________ of Central Coast Community Energy (“Purchaser”) hereby certifies as follows in connection with the Clean Energy Purchase Contract dated as of __________, 2023 (the “Agreement”) between the Purchaser and California Community Choice Financing Authority (“Issuer”) and the issuance and sale by Issuer of the above-referenced bonds (the “Bonds”) (capitalized terms used and not defined herein shall have the meanings given to them in the Agreement):

1. Purchaser is a joint powers authority and community choice aggregator, duly organized and validly existing and in good standing under the laws of the State of California (the “State”), and has the corporate power and authority to enter into and perform its obligations under the Agreement.

2. By all necessary official action on its part, Purchaser has duly authorized and approved the execution and delivery of, and the performance by Purchaser of the obligations on its part contained in, the Agreement, and such authorization and approval has not been amended, supplemented, rescinded or modified in any respect since the date thereof.

3. The Agreement constitutes the legal, valid and binding obligation of Purchaser.

4. The authorization, execution and delivery of the Agreement and compliance with the provisions on Purchaser's part contained therein (a) will not conflict with or constitute a breach of or default under (i) any instrument relating to the organization, existence or operation of Purchaser, (ii) any ruling, regulation, ordinance, judgment, order or decree to which Purchaser (or any of its officers in their respective capacities as such) is subject, or (iii) any provision of the laws of the State relating to Purchaser and its affairs, and (b) will not result in, or require the creation or imposition of, any lien on any of the properties or revenues of Purchaser pursuant to any of the foregoing.

I-2

5. To Purchaser’s knowledge, Purchaser is not in breach of or default under any applicable constitutional provision, law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which Purchaser is a party or to which Purchaser or any of its property or assets are subject, and no event has occurred and is continuing which constitutes, or with the passage of time or the giving of notice, or both, would constitute, a default or event of default by Purchaser under any of the foregoing.

6. Payments to be made by Purchaser under the Agreement shall constitute operating expenses of Purchaser's power supply system payable solely from the revenues and other available funds of Purchaser's power supply system as a cost of purchased electricity.

7. No litigation, proceeding or tax challenge is pending or, to its knowledge, threatened, against Purchaser in any court or administrative body which would (a) contest the right of the officials of Purchaser to hold and exercise their respective positions, (b) contest the due organization and valid existence of Purchaser, (c) contest the validity, due authorization and execution of the Agreement, or (d) attempt to limit, enjoin or otherwise restrict or prevent Purchaser from executing, delivering and performing the Agreement, nor to the knowledge of Purchaser is there any basis therefor.

8. All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization of, which would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by Purchaser of its obligations under the Agreement have been duly obtained.

9. The representations and warranties of Purchaser contained in the Agreement were true, complete and correct on and as of the date thereof and are true, complete and correct on and as of the date hereof.

10. The statements and information with respect to Purchaser contained in the Preliminary Official Statement dated [___________], 2023 and the Official Statement dated [_____], 2023 with respect to the Bonds, including Appendix A thereto (together, the “Official Statement”), fairly and accurately describe and summarize the financial and operating position of Purchaser for the periods shown therein, and such statements and information did not as of the respective dates of the Official Statement and do not as of the date hereof contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such statements and information, in the light of the circumstances under which they were made, not misleading.

11. To Purchaser's knowledge, no event affecting Purchaser has occurred since the date of the Official Statement which should be disclosed therein in order to make the statements and I-3
information with respect to Purchaser contained therein, in light of the circumstances under which they were made, not misleading in any material respect.

IN WITNESS WHEREOF the undersigned has executed this Certificate on and as of the date first written above.

CENTRAL COAST COMMUNITY ENERGY
By
Name:

Title:

SM Draft 17 April 2023

FORM OF ASSIGNMENT SCHEDULE
[PROJECT NAME]
Assigned Product: Energy and Green Attributes (PCC 1)
Assigned Delivery Point: [____]
Assigned Prepay Quantity: As set forth in Appendix 2; provided that (i) all Assigned Products shall be delivered pursuant to the Limited Assignment Agreement during the Assignment Period as provided in Appendix 1 and (ii) the Assigned Prepay Quantity is defined for the convenience of PPA Buyer and J. Aron and shall have no impact on the obligations of the Parties under the Limited Assignment Agreement.

APC Contract Price: $[____]/MWh
Assignment Period: [____]
1 FORM OF LIMITED ASSIGNMENT AGREEMENT
This Limited Assignment Agreement (this “Assignment Agreement” or “Agreement”) is entered into as of [____], 2023 by and among [____], [____] (“PPA Seller”), Central Coast Community Energy, a California joint powers authority (“PPA Buyer”), and J. Aron & Company LLC, a New York limited liability company (“J. Aron”), and relates to that certain power purchase agreement (the “PPA”) between PPA Buyer and PPA Seller as described on Appendix 1. Unless the context otherwise specifies or requires, capitalized terms used but not defined in this Agreement have the meanings set forth in the PPA.

In consideration of the premises above and the mutual covenants and agreements herein set forth, PPA Seller, PPA Buyer and J. Aron (the “Parties” hereto; each is a “Party”) agree as follows:

1. Limited Assignment and Delegation.
(a) PPA Buyer hereby assigns, transfers and conveys to J. Aron all right, title and interest in and to the rights of PPA Buyer under the PPA to receive delivery of the products described on Appendix 1 (the “Assigned Products”) during the Assignment Period (as defined in Appendix 1), as such rights may be limited or further described in the “Further Information” section on Appendix 1 (the “Assigned Product Rights”). All Assigned Products shall be delivered pursuant to the terms and conditions of this Agreement during the Assignment Period as provided in Appendix 1. All other rights of PPA Buyer under the PPA are expressly reserved for PPA Buyer. (b) PPA Buyer hereby delegates to J. Aron the obligation to pay for all Assigned Products that are actually delivered to J. Aron pursuant to the Assigned Product Rights during the Assignment Period (the “Delivered Product Payment Obligation” and together with the Assigned Product Rights, collectively the “Assigned Rights and Obligations”); provided that (i) all other obligations of PPA Buyer under the PPA are expressly retained by PPA Buyer and PPA Buyer shall be solely responsible for any amounts due to PPA Seller that are not directly related to Assigned Products; and (ii) the Parties acknowledge and agree that PPA Seller will only be obligated to deliver a single consolidated invoice during the Assignment Period (with a copy to J. Aron consistent with Section 10 hereof). To the extent J. Aron fails to pay the Delivered Product Payment Obligation by the due date for payment set forth in the PPA, notwithstanding anything in this Agreement to the contrary, PPA Buyer agrees that it remains responsible for such payment and that it will be an Event of Default pursuant to Section [__] if PPA Buyer does not make such payment within five (5) Business Days (as defined in the PPA) of receiving notice of such non-payment from PPA Seller. (c) J. Aron hereby accepts and PPA Seller hereby consents and agrees to the assignment, transfer, conveyance and delegation described in clauses (a) and (b) above. (d) All scheduling of Assigned Products and other communications related to the PPA shall take place pursuant to the terms of the PPA; provided that (i) title to Assigned Product will pass from PPA Seller to J. Aron upon delivery by PPA Seller of Assigned Product in accordance with the PPA; (ii) PPA Buyer will provide copies to J. Aron of any Notice (as defined in the PPA) of a Force Majeure Event or Event of Default or default, breach or other occurrence that, if not cured within the applicable grace period, could result in an Event of Default contemporaneously upon delivery thereof to PPA Seller and promptly after receipt thereof from PPA Seller; (iii) PPA Seller will provide copies to J. Aron of annual forecasts of Energy and monthly forecasts of available capacity and 2 Energy provided pursuant to Section [__] of the PPA; (iv) PPA Seller will provide copies to J. Aron of all invoices and supporting data provided to PPA Buyer pursuant to Section [__], provided that any payment adjustments or subsequent reconciliations occurring after the date that is 10 days prior to the payment due date for a monthly invoice, including pursuant to Section [__], will be resolved solely between PPA Buyer and PPA Seller and therefore PPA Seller will not be obligated to deliver copies of any communications relating thereto to J. Aron; and (v) PPA Buyer and PPA Seller, as applicable, will provide copies to J. Aron of any other information reasonably requested by J. Aron relating to Assigned Products.
(e) PPA Seller acknowledges that (i) J. Aron intends to immediately transfer title to any Assigned Products received from PPA Seller through one or more intermediaries such that all Assigned Products will be re-delivered to PPA Buyer, and (ii) J. Aron has the right to purchase receivables due from PPA Buyer for any such Assigned Products.

PPA. To the extent J. Aron purchases any such receivables due from PPA Buyer, J.

Aron may transfer such receivables to PPA Seller and apply the face amount thereof as a reduction to any Delivered Product Payment Obligation. (f) On or before the commencement of the Assignment Period, The Goldman Sachs Group (“Guarantor”), Inc. will issue, in favor of PPA Seller, a guaranty of J. Aron’s payment obligations under this Assignment Agreement substantially in the form of Appendix 3 attached hereto (“Guaranty”).
(g) The Parties acknowledge that the PPA currently provides for net settlement between PPA Seller and PPA Buyer of (x) [CAISO Revenues] in excess of [CAISO Costs] for each Settlement Interval and (y) Buyer’s obligation to pay the Contract Price for [Delivered Energy] for each [Settlement Interval]. During the Assignment Period, the PPA will be amended to provide that such amounts are gross settled through the Custodial Agreement described below. Therefore, during the Assignment Period only, the PPA will be deemed to be amended to provide that:
[Insert appropriate amendments to remove net settlement of CAISO revenues and Contract Price.]
(h) J. Aron, PPA Seller, PPA Buyer and Aron Energy Prepay 22 LLC are entering into that certain Custodial Agreement of even date herewith (the “Custodial Agreement”). As set forth more fully therein, all payments due to PPA Seller in respect of Section [___] of the PPA will be paid (subject to Section 1(e) above) by J. Aron through the Custodial Agreement and all payments due to PPA Buyer in respect of Section [___] of the PPA will be paid by will be paid by PPA Seller through the Custodial Agreement. (i) The Assigned Prepay Quantity set forth in Appendix 2 relates to obligations by and between J. Aron and PPA Buyer and has no impact on PPA Seller’s rights and obligations under the PPA.

2. Assignment Early Termination.
(a) The Assignment Period may be terminated early upon the occurrence of any of the following:
(1) delivery of a written notice of termination by either J. Aron or PPA Buyer to each of the other Parties hereto;
3 (2) delivery of a written notice of termination by PPA Seller to each of J. Aron and PPA Buyer following J. Aron’s failure to pay when due any amounts owed to PPA Seller in respect of any Delivered Product Payment Obligation and such failure continues for one business day following receipt by J. Aron of written notice thereof;
(3) delivery of a written notice by PPA Seller if any of the events described in the definition of Bankrupt in the PPA occurs with respect to J. Aron; or (4) delivery of a written notice by J. Aron if any of the events described in in the definition of Bankrupt in the PPA occurs with respect to PPA Seller. (b) The Assignment Period will end at the end of last delivery hour on the date specified in the termination notice provided pursuant to Section 2(a), which date shall not be earlier than the end of the last day of the calendar month in which such notice is delivered if termination is pursuant to clause (a)(1) or (a)(2) above. All Assigned Rights and Obligations shall revert from J. Aron to PPA Buyer upon the early termination of the Assignment Period, provided that (i) J. Aron shall remain responsible for the Delivered Product Payment Obligation with respect to any Assigned Product delivered to J. Aron prior to the end of the Assignment Period, and (ii) any legal restrictions on the effectiveness of such reversion (whether arising under bankruptcy law or otherwise) shall not affect the expiration or early termination of the Assignment Period (c) The Assignment Period will automatically terminate upon the expiration or early termination of the PPA. All Assigned Rights and Obligations shall revert from J. Aron to PPA Buyer upon the expiration of or early termination of the PPA, provided that (i) J. Aron shall remain responsible for the Delivered Product Payment Obligation with respect to any Assigned Product delivered to J. Aron prior to the end of the Assignment Period, and (ii) any legal restrictions on the effectiveness of such reversion (whether arising under bankruptcy law or otherwise) shall not affect the expiration or early termination of the Assignment Period.
(d) The Assignment Period will automatically terminate upon delivery by Guarantor of a notice of termination of the Guaranty. All Assigned Rights and Obligations shall revert from J. Aron to PPA Buyer upon the termination of the Assignment Period, provided that (i) J. Aron shall remain responsible for the Delivered Product Payment Obligation with respect to any Assigned Product delivered to J. Aron prior to the end of the Assignment Period, and (ii) any legal restrictions on the effectiveness of such reversion (whether arising under bankruptcy law or otherwise) shall not affect the expiration or early termination of the Assignment Period.

3. Representations and Warranties. The PPA Seller and the PPA Buyer represent and warrant to J. Aron that (a) the PPA is in full force and effect; (b) no event or circumstance exists (or would exist with the passage of time or the giving of notice) that would give either of them the right to terminate the PPA or suspend performance thereunder; and (c) all of its obligations under the PPA required to be performed on or before the Assignment Period Start Date have been fulfilled.

4. Notices. Any notice, demand, or request required or authorized by this Assignment Agreement to be given by one Party to another Party shall be delivered in accordance with Section [__] of the PPA and to the addresses of each of PPA Seller and PPA Buyer specified in the PPA. PPA Buyer agrees to notify J. Aron of any updates to such notice information, including any updates provided by PPA Seller to PPA Buyer. Notices to J. Aron shall be 4 provided to the following address, as such address may be updated by J. Aron from time to time by notice to the other Parties:

J. Aron & Company LLC
200 West Street
New York, New York 10282-2198
Email: [email protected]

5. Miscellaneous. Sections [__] (Buyer’s Representations and Warranties), [__] (Confidential Information), Sections [__] (Severability), [__] (Counterparts), [__] (Amendments), [__] (No Agency, Partnership, Joint Venture or Lease), [___] (Mobile-Sierra), [__] (Electronic Delivery), Section [__] (Binding Effect) and [__] (No Recourse to Members of Buyer) of the PPA are incorporated by reference into this Agreement, mutatis mutandis, as if fully set forth herein.

6. U.S. Resolution Stay Provisions. The Parties hereby confirm that they are adherents to the ISDA 2018 U.S. Resolution Stay Protocol (“ISDA U.S. Stay Protocol”), the terms of the ISDA U.S. Stay Protocol are incorporated into and form a part of this Agreement, and for the purposes of such incorporation, (i) J. Aron shall be deemed to be a Regulated Entity, (ii) each of PPA Buyer and PPA Seller shall be deemed to be an Adhering Party, and (iii) this Agreement shall be deemed a Protocol Covered Agreement. In the event of any inconsistencies between this Agreement and the ISDA U.S. Stay Protocol, the ISDA U.S. Stay Protocol will prevail.

7. Governing Law, Jurisdiction, Waiver of Jury Trial.
(a) Governing Law. This Assignment Agreement and the rights and duties of the parties under this Assignment Agreement will be governed by and construed, enforced and performed in accordance with the laws of the State of California, without reference to any conflicts of laws provisions that would direct the application of another jurisdiction’s laws.
(b) Jurisdiction. Each party submits to the exclusive jurisdiction of the federal courts of the United States of America for the Northern District of California sitting in the city and county of San Francisco.
(c) Waiver of Right to Trial by Jury. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this assignment agreement.
[Remainder of Page Intentionally Blank]
5 IN WITNESS WHEREOF, the Parties have executed this Assignment Agreement effective as of the date first set forth above.
[PPA SELLER]
By:

Name:

Title:

CENTRAL COAST COMMUNITY ENERGY
By:

Name:

Title:

J. ARON & COMPANY LLC
By:

Name:

Title:

Execution and delivery of the foregoing Assignment Agreement is hereby approved.

CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By:

Name:

Title:
6 Appendix 1
Assigned Rights and Obligations
PPA: “PPA” means that certain Power Purchase and Sale Agreement dated [____], by and between Central Coast Community Energy and [____], as amended from time to time. “Assignment Period” means the period beginning on [___________] and extending until [___________], provided that in no event shall the Assignment Period extend past the earlier of (i) the termination of the Assignment Period pursuant to Section 2 of the Assignment Agreement and (ii) the end of the Delivery Term under the PPA; provided that applicable provisions of this Agreement shall continue in effect after termination of the Assignment Period to the extent necessary to enforce or complete, duties, obligations or responsibilities of the Parties arising prior to the termination.

Assigned Product: “Assigned Products” includes all (i) Energy and (ii) Green Attributes (PCC1) that are required to be sold to PPA Buyer under the PPA.

Further Information: PPA Seller shall continue to transfer the WREGIS Certificates associated with all Renewable Energy Credits corresponding to all Facility Energy under the PPA pursuant to Section [__] of the PPA, provided that the transferee of such WREGIS Certificates may be changed from time to time in accordance with the written instructions of both J. Aron and Central Coast Community Energy upon twenty (20) Business Days’ notice, which change shall be effective as of the first day of the next calendar month, unless otherwise agreed. All Assigned Product delivered by PPA Seller to J. Aron shall be a sale made at wholesale, with J. Aron reselling all such Assigned Product.
7 Appendix 2
Assigned Prepay Quantity
[NOTE: To be set forth in a monthly volume schedule.]
8 Appendix 3
Form of GSG Guaranty
, 2023
NAME

ADDRESS
Attention:

Ladies and Gentlemen:

For value received, The Goldman Sachs Group, Inc. (the “Guarantor”), a corporation duly organized under the laws of the State of Delaware, hereby unconditionally guarantees the prompt and complete payment when due, whether by acceleration or otherwise, of all obligations and liabilities, whether now in existence or hereafter arising, of J. Aron & Company LLC, a subsidiary of the Guarantor and a limited liability company duly organized under the laws of the State of New York (the “Company”), to COUNTERPARTY NAME (the “Counterparty”) arising out of or under the Limited Assignment Agreement among the Company, the Counterparty and Central Coast Community Energy dated as of [ ], 2023. This Guaranty is one of payment and not of collection.

The Guarantor hereby waives notice of acceptance of this Guaranty and notice of any obligation or liability to which it may apply, and waives presentment, demand for payment, protest, notice of dishonor or non-payment of any such obligation or liability, suit or the taking of other action by Counterparty against, and any other notice to, the Company, the Guarantor or others.

Counterparty may at any time and from time to time without notice to or consent of the Guarantor and without impairing or releasing the obligations of the Guarantor hereunder:
(1) agree with the Company to make any change in the terms of any obligation or liability of the Company to Counterparty, (2) take or fail to take any action of any kind in respect of any security for any obligation or liability of the Company to Counterparty, (3) exercise or refrain from exercising any rights against the Company or others, or (4) compromise or subordinate any obligation or liability of the Company to Counterparty including any security therefor. Any other suretyship defenses are hereby waived by the Guarantor.

This Guaranty shall continue in full force and effect until the opening of business on the fifth business day after Counterparty receives written notice of termination from the Guarantor. It is understood and agreed, however, that notwithstanding any such termination this Guaranty shall continue in full force and effect with respect to the obligations and liabilities set forth above which shall have been incurred prior to such termination.

The Guarantor may not assign its rights nor delegate its obligations under this Guaranty, in whole or in part, without prior written consent of the Counterparty, and any purported 9 assignment or delegation absent such consent is void, except for (i) an assignment and delegation of all of the Guarantor’s rights and obligations hereunder in whatever form the Guarantor determines may be appropriate to a partnership, corporation, trust or other organization in whatever form that succeeds to all or substantially all of the Guarantor’s assets and business and that assumes such obligations by contract, operation of law or otherwise, and (ii) the Guarantor may transfer this Guaranty or any interest or obligation of the Guarantor in or under this Guaranty, or any property securing this Guaranty, to another entity as transferee as part of the resolution, restructuring or reorganization of the Guarantor upon or following the Guarantor becoming subject to a receivership, insolvency, liquidation, resolution or similar proceeding. Upon any such delegation and assumption or transfer of obligations, the Guarantor shall be relieved of and fully discharged from all obligations hereunder, whether such obligations arose before or after such delegation and assumption or transfer.

THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN

ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

GUARANTOR AGREES TO THE EXCLUSIVE JURISDICTION OF COURTS

LOCATED IN THE STATE OF NEW YORK, UNITED STATES OF AMERICA, OVER ANY DISPUTES ARISING UNDER OR RELATING TO THIS GUARANTY.

In the event the Guarantor becomes subject to a proceeding under the Federal Deposit Insurance Act or Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together, the "U.S. Special Resolution Regimes"), the transfer of this Guaranty, and any interest and obligation in or under, and any property securing, this Guaranty, from the Guarantor will be effective to the same extent as the transfer would be effective under such U.S. Special Resolution Regime if this Guaranty, and any interest and obligation in or under this Guaranty, were governed by the laws of the United States or a state of the United States. In the event the Company or the Guarantor, or any of their affiliates, becomes subject to a U.S. Special Resolution Regime, default rights against the Company or the Guarantor with respect to this Guaranty are permitted to be exercised to no greater extent than such default rights could be exercised under such U.S. Special Resolution Regime if this Guaranty was governed by the laws of the United States or a state of the United States.

Very truly yours,
THE GOLDMAN SACHS GROUP, INC.

By: _______
Authorized Officer
SM Draft 17 April 2023

LETTER AGREEMENT
[____], 2023
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
Email: [____]
California Community Choice Financing Authority
1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [____]
Re: Prepay Limited Assignment Agreements
Ladies and Gentlemen:

This Letter Agreement (this “Letter Agreement” or this “Agreement”) confirms our mutual agreement with respect to the matters set forth below and relates to (a) those certain Limited Assignment Agreements listed on Exhibit A (the “Assignment Agreements”, which definitions shall include any new Assignment Agreements identified by J. Aron’s delivery of an updated Exhibit A consistent with Section 2), with each of the PPA Sellers identified in Exhibit A (each, individually, a “PPA Seller” and collectively the “PPA Sellers”, and which definitions shall include any new PPA Seller identified by J. Aron’s delivery of an updated Exhibit A consistent with Section 2) and (b) (i) that certain Clean Energy Purchase Contract (the “CEPC”), dated as of the date hereof, by and between California Community Choice Financing Authority (“Issuer”) and Central Coast Community Energy (“CCCE”), (ii) that certain Master Power Supply Agreement (the “MPSA”), dated as of the date hereof, by and between Aron Energy Prepay 22 LLC (“Prepay LLC”) and Issuer, and (iii) that certain Electricity Purchase, Sale and Service Agreement, dated as of the date hereof, by and between J. Aron & Company LLC (“J. Aron”) and Prepay LLC.

Any capitalized term used in this Letter Agreement and not otherwise defined herein shall have the meaning assigned to such term in the Clean Energy Purchase Contract. In consideration of each party’s execution of the Assignment Agreements, as well as the premises above and the mutual covenants and agreements set forth herein, J. Aron, Prepay LLC, CCCE and Issuer (collectively, the “Parties”) agree as follows:

1. Assignment Early Termination. Each of J. Aron and CCCE agrees that it shall only exercise its right to deliver a written notice of termination of an Assignment Period under an Assignment Agreement consistent with the following:
(a) Either J. Aron or CCCE may deliver a notice of termination in the event of (i) the suspension, expiration, or termination of performance of a PPA by either CCCE or the applicable PPA Seller; or (ii) the termination or suspension of deliveries for any reason other than force majeure under (A) that certain Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”), dated as of [____], 2023 by and between CCCE and California Community Choice 2 Financing Authority (including, for the avoidance of doubt, due to a “Remarketing Election” by CCCE under Section 3.5 of the Clean Energy Purchase Contract) or (B) that certain Electricity Purchase, Sale and Service Agreement, dated as of [____], 2023 by and between J. Aron and Aron Energy Prepay 22 LLC (the “Electricity Sale and Service Agreement”); (b) CCCE shall deliver a notice of termination contemporaneous with any assignment by CCCE of its interest in the Clean Energy Purchase Contract, provided that J. Aron in any event shall be entitled to deliver a notice of termination to the extent CCCE fails to do so in connection with the assignment of CCCE’s interest under the Clean Energy Purchase Contract; (c) J. Aron may deliver a notice of termination if (i) PPA Seller delivers less than the Assigned Prepay Quantity for any four months in the aggregate during a twelve month period, (ii) any event or circumstance occurs that would give either CCCE or a PPA Seller the right to terminate or suspend performance under a PPA (regardless of whether CCCE or the applicable PPA Seller exercises such right) or (iii) CCCE requests remarketing of the Assigned Quantities under an Assigned PPA pursuant to the terms of [Section 7.3(c)] of the Clean Energy Purchase Contract;
(d) either J. Aron or CCCE may deliver a notice of termination to the extent that the Parties have mutually agreed upon an assignment of Replacement Assigned Rights and Obligations (as defined in the Clean Energy Purchase Contract) that will replace the Assigned Rights and Obligations under the applicable Assignment Agreement immediately following the termination thereof; and
(e) either J. Aron or CCCE may deliver a notice of termination under the applicable Assignment Agreement to the extent that:
(i) any of the representations and warranties set forth in Sections 5.4 of the Electricity Sale and Service Agreement and the Clean Energy Purchase Contract, respectively, ceases to be true with respect to an Assigned PPA; (ii) the Assigned Energy being delivered pursuant to an Assignment Agreement ceases to be EPS Compliant Energy; or
(iii) any Assigned Product that constituted PCC1 Product or Long-Term PCC1 Product while being delivered directly to CCCE under an Assigned PPA ceases to qualify as PCC1 Product or Long-Term PCC1 Product when being redelivered through the Electricity Sale and Service Agreement, Master Power Supply Agreement and Clean Energy Purchase Contract.

For the avoidance of doubt, each of the Parties agrees that it shall not terminate an Assignment Agreement pursuant to the at will termination provision thereof except in the circumstances set forth immediately above. The at will termination provision referenced in the immediately preceding sentence (x) is set forth in [Section 2(a)(1)] of the form of Assignment Agreement attached to the Clean Energy Purchase Contract and (y) shall refer to any such provision forth in 3 an Assignment Agreement entered into by the Parties consistent with the terms of the Clean Energy Purchase Contract and the Electricity Sale and Service Agreement.

2. Advance to PPA Seller as Loan to J. Aron. To the extent J. Aron and the Guarantor (as defined in the Assignment Agreements) fail to pay any Delivered Product Payment Obligation (as defined in the Assignment Agreements) by the due date such for payment set forth in the relevant PPA (as defined in the Assignment Agreements), CCCE has agreed to advance an amount equal to such Delivered Product Payment Obligation on behalf of J. Aron to the relevant PPA Seller, which advance shall be made pursuant to the CCCE Custodial Agreement and shall be a loan by CCCE to J. Aron. CCCE will have a claim without duplication against J. Aron for any such amount, provided that J. Aron shall be deemed to have satisfied its repayment obligation to CCCE to the extent that either (a) J. Aron satisfies its corresponding repayment obligation under [Section 6.4] of the Electricity Sale and Service Agreement or (b) CCCE otherwise receives payment for such amount pursuant to [Section 6.4] of the Clean Energy Purchase Contract.

3. Disputes with PPA Sellers. Notwithstanding anything to the contrary in the Assignment Agreements, in the event of any invoice dispute between CCCE and a PPA Seller relating to Assigned Products previously paid for by J. Aron, CCCE agrees to provide J. Aron with copies of all communications relating thereto, and CCCE agrees to (a) provide J. Aron the opportunity to provide its recommendations and other input in the dispute and reconciliation process and (b) follow such recommendations and other input as it relates to Assigned Products previously paid for by J. Aron.

4. Exhibit A. Promptly following execution of the Assignment Agreements with respect to the Initial Assigned Rights and Obligations, J. Aron shall deliver an Exhibit A that lists such Assignment Agreements. J. Aron shall deliver an updated Exhibit A to this Agreement to reflect any changes to the information set forth therein in connection with the termination, expiration or replacement of an Assignment Agreement consistent with the terms of the Clean Energy Purchase Contract.

5. Assigned Capacity Products. With respect to any Assigned Products (as defined in the Assignment Agreements) that are capacity attributes, ancillary services or otherwise relate to resource adequacy (“Assigned Capacity Products”), Prepay LLC agrees to deliver such Assigned Capacity Products to Issuer pursuant to this Letter Agreement, which Assigned Capacity Products will be redelivered by Issuer to CCCE pursuant to the CEPC. With respect to such Assigned Capacity Products, Issuer agrees to pay Prepay LLC an amount equal to the amount due under the applicable Assigned PPA for such Assigned Capacity Products (as determined in accordance with the terms of the Assigned PPA and the related Assignment Agreement, and reflected in the Monthly Statement under and as defined in the CCCE Custodial Agreement), with such amount due from Issuer to Prepay LLC on the Monthly PPA Invoice Payment Date (as defined in the CCCE Custodial Agreement); provided that the portion of any CCCE Gross Payment paid pursuant to the CCCE Custodial Agreement and attributable to such Assigned 4 Capacity Products shall be deemed to satisfy Issuer’s payment obligation hereunder with respect to such Assigned Capacity Products.
1 6. Representations, Warranties and Covenants.
(a) CCCE agrees that it shall provide a true, complete, and correct copy to J. Aron of any PPA to be assigned pursuant to an Assignment Agreement. (b) Each Party represents to the other:
(i) Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing.
(ii) Powers. It has the power to execute, deliver and perform its obligations under this Letter Agreement and the Assignment Agreements, and it has taken all necessary action to authorize such execution, delivery and performance. (iii)No Violation or Conflict. Such execution, delivery and performance of this Letter Agreement and the Assignment Agreements and the consummation of the transactions contemplated hereby and thereby, including the incurrence by such Party of its obligations under this Letter Agreement and the Assignment Agreements, will not result in any violation of, or conflict with: (i) any term of any material contract or agreement applicable to it; (ii) any of its charter, bylaws, or other constitutional documents; (iii) any determination or award of any arbitrator applicable to it or (iv) any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, law, ordinance, rule or regulation of any government agency, applicable to it or any of its assets or properties or to any obligations incurred by it or by which it or any of its assets or properties or obligations are bound or affected, and shall not cause a material breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets; in any such case, which could adversely affect the validity of, or the ability of such Party to perform its obligations under, this Letter Agreement and the Assignment Agreements.
(iv)Consents. All consents, approvals, orders or authorizations of; registrations, declarations, filings or giving of notice to; obtaining of any licenses or permits from; or taking of any other action with respect to, any Person or Government Agency, that are required to have been obtained or made by such Party for the due authorization by such Party of, or which would constitute a condition precedent to or the absence of which would adversely affect the validity of, or the ability of such Party to perform its obligations under, this Letter Agreement and Assignment

1 SM NTD: Assigned Capacity Products are being delivered from (i) PPA Seller to J. Aron pursuant to the PPA and Limited Assignment Agreement, (ii) J. Aron to Prepay LLC pursuant to the the Electricity Sale & Service Agreement, (iii) Prepay LLC to CCCFA pursuant to this Agreement and (iv) CCCFA to CCCE pursuant to the Clean Energy Purchase Contract.
5 Agreements and the transactions contemplated hereby and thereby, including the due authorization of such Party and its governing body and any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party, have been obtained and are in full force and effect and all conditions of any such consents have been complied with.
(v) Obligations Binding. Its obligations under this Agreement and the Assignment Agreements constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
(vi)Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Agreement and the Assignment Agreements and as to whether this Agreement and the Assignment Agreements are appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other Parties as investment advice or as a recommendation to enter into this Agreement or the Assignment Agreements; it being understood that information and explanations related to the terms and conditions of this Agreement and the Assignment Agreements shall not be considered investment advice or a recommendation to enter into this Agreement. It is entering into this Agreement and the Assignment Agreements as a bona-fide, arm’s-length transaction involving the mutual exchange of consideration and, once executed by the applicable parties, considers this Agreement and the Assignment Agreements to be legally enforceable contracts. No communication (written or oral) received from any of the other Parties shall be deemed to be an assurance or guarantee as to the expected results of this Agreement or the Assignment Agreements.
(vii) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement and the Assignment Agreements. It is also capable of assuming, and assumes, the risks of this Agreement and the Assignment Agreements.
(viii) Status of Parties. Neither of Parties is acting as a fiduciary for or an adviser to the other in respect of this Agreement or the Assignment Agreements.

7. Governing Law, Jurisdiction, Waiver of Jury Trial
(a) Governing Law. This Letter Agreement and the rights and duties of the parties under this Letter Agreement will be governed by and construed, enforced and performed in accordance with the laws of the State of New York, without reference to any conflicts of laws provisions that would direct the application of another jurisdiction’s laws; provided, however, that 6 the authority of CCCE to enter into and perform its obligations under this Letter Agreement shall be determined in accordance with the laws of the State of California. (b) Jurisdiction. Each party submits to the exclusive jurisdiction of the federal courts of the United States of America for the Northern District of California sitting in the city and county of San Francisco.
(c) Waiver of Right to Trial by Jury. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Letter Agreement.
[Signature Pages to Follow]
Signature Page to Letter Agreement
Very truly yours,
J. ARON
J. ARON & COMPANY LLC
By:

Name:

Title:

PREPAY LLC
ARON ENERGY PREPAY 22 LLC
By: J. Aron & Company, LLC, its Manager
By:

Name:

Title:

ACKNOWLEDGED, ACCEPTED AND AGREED TO as of the date first set forth above:

CCCE

CENTRAL COAST COMMUNITY ENERGY
By:

Name:

Title:

CCCFA

CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By:

Name:

Title:

Exhibit A
Assignment Agreements
[To come.]
SM Draft 17 April 2023
Relates to Clean Energy Purchase Contract with Central Coast Community Energy

MASTER POWER SUPPLY AGREEMENT
between
ARON ENERGY PREPAY 22 LLC
and

CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
Dated as of [____], 2023
i

TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS ....................................................................................................... 1 Section 1.1 Defined Terms................................................................................................... 1 Section 1.2 Definitions; Interpretation ............................................................................... 13 ARTICLE II. EXECUTION DATE; DELIVERY PERIOD; J. ARON AS AGENT .......... 14 Section 2.1 Execution Date; Delivery Period..................................................................... 14 Section 2.2 Termination by Seller Prior to Prepayment..................................................... 14 ARTICLE III. SALE AND PURCHASE ................................................................................. 14 Section 3.1 Sale and Purchase of Product .......................................................................... 14 Section 3.2 Limited Obligation to Take Base Quantities................................................... 15 Section 3.3 Prepayment ...................................................................................................... 15 Section 3.4 Other Amounts Payable with Respect to Assigned Products.......................... 15 ARTICLE IV. FAILURE TO SCHEDULE PRODUCT ........................................................ 15 Section 4.1 Seller’s Failure to Schedule or Deliver Base Quantity (Not Due to Force Majeure) 15
Section 4.2 Buyer’s Failure to Schedule or Receive Base Quantities (Not Due to Force Majeure) 16
Section 4.3 Failure to Deliver or Take Due to Force Majeure ........................................... 16 Section 4.4 Assigned Product............................................................................................. 17 Section 4.5 Sole Remedies ................................................................................................. 17 ARTICLE V. DELIVERY POINTS; SCHEDULING ............................................................ 17 Section 5.1 Delivery Points................................................................................................ 17 Section 5.2 Transmission and Scheduling.......................................................................... 18 Section 5.3 Title and Risk of Loss...................................................................................... 18 Section 5.4 PCCI Product and Long-Term PCC1 Product................................................. 18 Section 5.5 Communications Protocol ............................................................................... 21 Section 5.6 Deliveries Within CAISO or Another Balancing Authority ........................... 21 Section 5.7 Assigned Products ........................................................................................... 21 ARTICLE VI. ASSIGNMENT OF POWER PURCHASE AGREEMENTS....................... 21 Section 6.1 Assignments Generally.................................................................................... 21 Section 6.2 Failure to Obtain EPS Compliant Energy........................................................ 22 Section 6.3 Adjustments to Swaps ..................................................................................... 22 ii
Section 6.4 Adjustments to Base Quantities....................................................................... 22 Section 6.5 APC Party Make-Whole.................................................................................. 22 ARTICLE VII. PRODUCT REMARKETING ....................................................................... 23 Section 7.1 Product Remarketing ....................................................................................... 23 Section 7.2 Delegation of Authority................................................................................... 23 ARTICLE VIII. REPRESENTATIONS AND WARRANTIES ............................................ 23 Section 8.1 Representations and Warranties ...................................................................... 23 Section 8.2 Additional Representations and Warranties of Buyer..................................... 25 Section 8.3 Funding Agreement ......................................................................................... 25 Section 8.4 Notice of CEPC Remarketing Election ........................................................... 25 Section 8.5 Warranty of Title ............................................................................................. 25 Section 8.6 Disclaimer of Warranties................................................................................. 26 ARTICLE IX. TAXES................................................................................................................ 26 ARTICLE X. JURISDICTION; WAIVER OF JURY TRIAL .............................................. 26 Section 10.1 Consent to Jurisdiction .................................................................................... 26 Section 10.2 Waiver of Jury Trial ........................................................................................ 26 ARTICLE XI. FORCE MAJEURE.......................................................................................... 27 Section 11.1 Applicability of Force Majeure ....................................................................... 27 Section 11.2 Settlement of Labor Disputes.......................................................................... 27 ARTICLE XII. GOVERNMENTAL RULES AND REGULATIONS.................................. 27 Section 12.1 Compliance with Laws.................................................................................... 27 Section 12.2 Contests ........................................................................................................... 28 Section 12.3 Defense of Agreement..................................................................................... 28 ARTICLE XIII. ASSIGNMENT............................................................................................... 28 ARTICLE XIV. PAYMENTS.................................................................................................... 29 Section 14.1 Monthly Statements......................................................................................... 29 Section 14.2 Payment ........................................................................................................... 30 Section 14.3 Payment of Disputed Amounts........................................................................ 31 Section 14.4 Late Payment ................................................................................................... 31 Section 14.5 Audit; Adjustments.......................................................................................... 31 Section 14.6 Netting ............................................................................................................. 32 ARTICLE XV. RECEIVABLES PURCHASES...................................................................... 32 ARTICLE XVI. NOTICES........................................................................................................ 32 ARTICLE XVII. DEFAULT; REMEDIES; TERMINATION.............................................. 32 iii
Section 17.1 Product Delivery Termination Events and Termination Payment Events....... 32 Section 17.2 Payments Following a Ledger Event............................................................... 38 Section 17.3 Reserved .......................................................................................................... 38 Section 17.4 Remedies and Termination.............................................................................. 38 Section 17.5 Replacement of Swaps..................................................................................... 39 Section 17.6 Present Assignment and Waiver of Right to Swap Termination Payments.... 42 Section 17.7 Limitation on Damages ................................................................................... 42 Section 17.8 Termination Payment Adjustment Schedule ................................................... 43 ARTICLE XVIII. MISCELLANEOUS.................................................................................... 43 Section 18.1 Indemnification Procedure .............................................................................. 43 Section 18.2 Deliveries......................................................................................................... 43 Section 18.3 Entirety; Amendments..................................................................................... 44 Section 18.4 Governing Law................................................................................................ 44 Section 18.5 Non-Waiver ..................................................................................................... 44 Section 18.6 Severability...................................................................................................... 45 Section 18.7 Exhibits............................................................................................................ 45 Section 18.8 Winding Up Arrangements.............................................................................. 45 Section 18.9 Relationships of Parties; Beneficiaries............................................................ 45 Section 18.10 Immunity ......................................................................................................... 45 Section 18.11 Rates and Indices............................................................................................. 45 Section 18.12 Limitation of Liability ..................................................................................... 46 Section 18.13 Counterparts..................................................................................................... 46 Section 18.14 Rights of Trustee ............................................................................................. 47 Section 18.15 Operational Services Agreement..................................................................... 47 Section 18.16 Waiver of Defenses ......................................................................................... 47 Section 18.17 U.S. Resolution Stay Provisions...................................................................... 47 Section 18.18 Seller Tariff...................................................................................................... 47 Section 18.19 Rate Changes................................................................................................... 47 Exhibit A-1 — Base Quantities; Base Delivery Point; Commodity Reference Prices Exhibit A-2 — Initial Assigned Rights and Obligations
Exhibit B — Notices
Exhibit C — Product Remarketing
iv
Exhibit D-1 — Termination Payment Schedule
Exhibit D-2 — Termination Payment Adjustment Schedule
Exhibit D-3 — Post-Termination Payment Schedule
Exhibit E — Receivables Purchase Exhibit
Exhibit F — Pricing and Other Terms
Exhibit G — Communications Protocol
1 MASTER POWER SUPPLY AGREEMENT
This Master Power Supply Agreement (hereinafter, this “Agreement”) is made and entered into as of [____], 2023 (the “Execution Date”), by and between Aron Energy Prepay 22 LLC, a Delaware limited liability company (“Seller”), and California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended) (“Buyer”). Each of Seller and Buyer is sometimes individually referred to herein as a “Party”, and collectively as the “Parties”.

W I T N E S S E T H:

WHEREAS, Seller desires to sell Product to Buyer, and Buyer desires to purchase Product from Seller, upon the terms and conditions hereinafter set forth; WHEREAS, in connection with the execution of this Agreement, Seller shall enter into that certain Electricity Purchase, Sale and Service Agreement, dated as of the date hereof (the “Electricity Sale and Service Agreement”), with J. Aron & Company LLC, a New York limited liability company (“J. Aron”), pursuant to which (a) Seller shall acquire Product for sale under this Agreement and (b) J. Aron shall act as Seller’s agent hereunder and the other agreements entered into by Seller in connection with the Clean Energy Project (as defined below); and WHEREAS, concurrently with Buyer’s execution of the Clean Energy Purchase Contract (as defined below), the Project Participant (as defined below) under such Clean Energy Purchase Contract shall assign to J. Aron certain Assigned Rights and Obligations, including the right to receive Assigned Product, which Assigned Product will be resold to Seller under the Electricity Sale and Service Agreement, then resold to Buyer hereunder and then resold to the Project Participant under the Clean Energy Purchase Contract.

NOW, THEREFORE, in consideration of the premises above and the mutual covenants and agreements herein set forth, the Parties agree as follows:

ARTICLE I.

DEFINITIONS
Section 1.1 Defined Terms. The following terms, when used in this Agreement (including the preamble or recitals to this Agreement) and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires:
“Additional Termination Payment” means, with respect to a Product Delivery Termination Date that results from a Termination Payment Event where the Additional Termination Payment is designated in Exhibit F as applying, the net present value sum as of such Early Termination Payment Date of a stream of Monthly values for each Month that would have remained in the then-current Reset Period had such Early Termination Payment Date not occurred, 2 with each such Monthly value equal to (A) the quantity of Energy (in MWh) that Seller would have been required to deliver during such Month if Seller was delivering only Base Quantities, multiplied by (B) $0.50/MWh. The net present value sum shall be calculated (i) assuming each such future Monthly value would have been realized on the last day of the Month, (ii) using a 30/360 day basis, and (iii) using the standard present value formula (present value = future value / (1 + i)^n) for each such Monthly value, where “i” is the SOFR Discount Rate for such Month plus the Discount Rate Spread (the sum expressed as an annual rate) and “n” is the number of years, including any fractional portion of a year, between such Month and the Early Termination Payment Date. The “SOFR Discount Rate” for each Month is the fixed interest rate determined by Seller in a Commercially Reasonable manner and in accordance with standard market practices for such Month based on otherwise receiving/paying Simple Average SOFR with a designated maturity of one Month. “Simple Average SOFR” means the simple average of SOFRs for the applicable tenor, with the determination of this rate (which will be in arrears with a lookback) being established by Seller or its designee in accordance with (a) the conventions for this rate selected or recommended by the relevant Governmental Agency for determining Simple Average SOFR; and (b) to the extent that the Seller or its designee determines that Simple Average SOFR cannot be determined in accordance with clause (a) above, then the conventions for this rate that have been selected by the Seller or its designee giving due consideration to industry-accepted market practices for U.S. dollar denominated floating rate notes at such time. 1 “Administrative Fee” means the amount per MWh specified as such in Exhibit F. “Affiliate” means, with respect to either Party, any entity which is a direct or indirect parent or subsidiary of such Party or which directly or indirectly (i) owns or controls such Party, (ii) is owned or controlled by such Party, or (iii) is under common ownership or control with such Party. For purposes of this definition, “control” of an entity means the power, directly or indirectly, either to (a) vote 50% or more of the securities having ordinary voting power for the election of directors or Persons performing similar functions or (b) direct or cause the direction of the management and policies, whether by contract or otherwise. “Agreement” has the meaning specified in the preamble and shall include exhibits, recitals and attachments referenced herein and attached hereto. “Alternate Delivery Point” has the meaning specified in Section 5.1(a). “APC Contract Price” has the meaning specified in the Clean Energy Purchase Contract.
“APC Party” means the seller under an Assignable Power Contract (as defined in the Clean Energy Purchase Contract).
“Applicable Project” has the meaning specified in the Clean Energy Purchase Contract.

1 NTD: Parties to discuss termination events for which an Additional Termination Payment would be applicable. 3 “Assigned Delivery Point” means, with respect to any Assigned Energy, the Assigned Delivery Point as set forth in the applicable Assignment Schedule for such Assigned Energy.
“Assigned Energy” means any Energy, including Energy associated with PCC1 Product and Long-Term PCC1 Product, to be delivered to J. Aron pursuant to any Assigned Rights and Obligations and re-delivered by J. Aron to Seller under the Electricity Sale and Service Agreement.
“Assigned PAYGO Product” has the meaning specified in the Clean Energy Purchase Contract.
“Assigned PPA” has the meaning specified in the Clean Energy Purchase Contract. “Assigned Prepay Quantity” has the meaning specified in the Clean Energy Purchase Contract.
“Assigned Prepay Value” means, for any Month and each Assignment Schedule, the Assigned Prepay Quantity for such Month multiplied by the applicable APC Contract Price. “Assigned Product” means, as applicable, PCC1 Product, Long-Term PCC1 Product, Assigned Energy, Assigned RECs and any other Product included on an Assignment Schedule, subject to the limitations for such other Product set forth in Exhibit F of the Clean Energy Purchase Contract; provided furthermore that any Products that are capacity attributes, ancillary services or otherwise relate to resource adequacy and are included on an Assignment Schedule shall be (x) excluded from the Assigned Products delivered under this Agreement and (y) transferred by Seller to Buyer pursuant to the Assignment Letter Agreement. “Assigned Quantity” has the meaning specified in the Clean Energy Purchase Contract.
“Assigned RECs” means any RECs associated with PCC1 Product or Long-Term PCC1 Product to be delivered to J. Aron pursuant to any Assigned Rights and Obligations and re-delivered by J. Aron to Seller under the Electricity Sale and Service Agreement. “Assigned Rights and Obligations” has the meaning specified in the Clean Energy Purchase Contract.
“Assignment Agreement” has the meaning specified in the Clean Energy Purchase Contract.
“Assignment Letter Agreement” means the Letter Agreement dated [____], 2023, entered into by and among J. Aron, Seller, Buyer and the Project Participant, relating to Assignment Agreements.
“Assignment Period” has the meaning specified in the Clean Energy Purchase Contract.
4 “Assignment Schedule” has the meaning specified in Exhibit F of the Clean Energy Purchase Contract.
“Automatic Product Delivery Termination Event” has the meaning specified in Section 17.1.
“Balancing Authority” has the meaning specified in the CAISO Tariff. “Base Delivery Point” has the meaning specified in Section 5.1(a). “Base Product” means Firm (LD) Energy delivered to the Base Delivery Point. “Base Quantity” means, with respect to each Delivery Hour during the Delivery Period, the Base Unadjusted Quantity for such Delivery Hour less the Base Quantity Reduction for such Delivery Hour, each as set forth on Exhibit A-1, as Exhibit A-1 may be revised pursuant to Article VI.
“Base Quantity Reduction” means, with respect to each Delivery Hour during the Delivery Period, the “Base Quantity Reduction” of Base Product (in MWh) set forth for such Delivery Hour on Exhibit A-1, as Exhibit A-1 may be revised pursuant to Article VI. “Base Unadjusted Quantity” means, with respect to each Delivery Hour during the Delivery Period, the “Base Unadjusted Quantity” of Base Product (in MWh) set forth for such Delivery Hour on Exhibit A-1.
“Billing Statement” has the meaning specified in Section 14.1(b). “Bond Closing Date” means the first date on which the Bonds are issued pursuant to the Bond Indenture.
“Bond Indenture” means (i) the Trust Indenture to be entered into prior to the commencement of the Delivery Period between Buyer and the Trustee, as supplemented and amended from time to time in accordance with its terms, and (ii) any trust indenture entered into in connection with the commencement of any Interest Rate Period after the initial Interest Rate Period between Buyer and the Trustee containing substantially the same terms as the indenture described in clause (i) and which is intended to replace the indenture described in clause (i) as of the commencement of such Interest Rate Period.
“Bonds” means the bonds issued pursuant to the Bond Indenture. “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a Federal Reserve Bank Holiday, (iii) any other day on which commercial banks generally in either New York, New York or the State of California are authorized or required by Law to close, or (iv) any day excluded from a “Business Day,” as therein defined, pursuant to the Bond Indenture. “Buyer” has the meaning specified in the preamble.
5 “Buyer Swap” means (i) the price holds entered into under the ISDA Master Agreements, dated as of [____], between Buyer and the Swap Counterparties, and (ii) each replacement Buyer Swap entered into pursuant to Section 17.5. “Buyer Swap Custodial Agreements” means each Custodial Agreement, dated as of the Bond Closing Date, by and among Buyer, the Trustee, the Custodian, and a Swap Counterparty, and any replacement thereof entered into in connection with Buyer’s entry into a replacement Buyer Swap pursuant to Section 17.5.
“Buyer’s Statement” has the meaning specified in Section 14.1(a). “CAISO” means California Independent System Operator or its successor. “CAISO Tariff” means CAISO’s FERC-approved tariff, as modified, amended or supplemented from time to time.
“California Long-Term Contracting Requirements” means the long-term contracting requirement set forth in the Clean Energy and Pollution Reduction Act of 2015 (SB 350), California Public Utilities Code Section 399.13(b), and CPUC Decision 17-06-026 and CPUC Decision 18-05-026, as may be modified by subsequent decision of the California Public Utilities Commission or by other Law.
“CCCE Custodial Agreement” means that certain Custodial Agreement, dated as of [____], by and among the Project Participant, Buyer, Seller, J. Aron and the CCCE Custodian. “CCCE Custodian” means [____], a [____].
“CCCE Gross Payment” has the meaning specified in the CCCE Custodial Agreement.
“CEC” means California’s State Energy Resources Conservation and Development Commission, also known as the California Energy Commission, and any successor agency thereto. “CEPC Remarketing Election” means, for any Reset Period, issuance of a Remarketing Election Notice other than a Voided Remarketing Election Notice (each as defined under the Clean Energy Purchase Contract).
“Claiming Party” has the meaning specified in Section 11.1. “Claims” means all third party claims or actions, threatened or filed and, whether groundless, false, fraudulent, or otherwise, that directly or indirectly relate to the subject matter of the indemnities provided herein, and the resulting losses, damages, expenses, attorneys’ fees, experts’ fees, and court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement. “Clean Energy Project” has the meaning specified in the Clean Energy Purchase Contract.
6 “Clean Energy Purchase Contract” means that certain Clean Energy Purchase Contract between Buyer and Project Participant to be entered into in connection with the Clean Energy Project.
“Commercially Reasonable” or “Commercially Reasonable Efforts” means, with respect to any purchase or sale or other action required to be made, attempted or taken by a Party under this Agreement, such efforts as a reasonably prudent Person would undertake for the protection of its own interest under the conditions affecting such purchase or sale or other action, including without limitation, the amount of notice of the need to take such action, the duration and type of the purchase or sale or other action, the competitive environment in which such purchase or sale or other action occurs, and the risk to the Party required to take such action. “Commodity Reference Price” means either (i) the Day-Ahead Market Price, or (ii) the Real-Time Market Price, as applicable.
“Contract Price” has the meaning specified in the Clean Energy Purchase Contract. “Custodian” means initially [____], a [____], as custodian under each of the Swap Custodial Agreements.
“Day” means each period of 24 consecutive Hours commencing at the Hour ending at 01:00 (LPT) through the Hour ending at 24:00 (LPT).
“Day-Ahead Market Price” has the meaning specified on Exhibit A-1 for each Delivery Point.
“Deemed Remarketing Notice” has the meaning specified in Exhibit C. “Default Rate” means, as of any date of determination, the lesser of (a) the sum of (i) the rate of interest per annum quoted in The Wall Street Journal (Eastern Edition) under the “Money Rates” section as the “Prime Rate” for such date of determination, plus (ii) one percent per annum, or (b) if a lower maximum rate is imposed by applicable Law, such maximum lawful rate.
“Delivery Hour” has the meaning specified in Exhibit A-1. “Delivery Period” means the period specified in Exhibit F. “Delivery Point” means the Base Delivery Point or an Assigned Delivery Point, as applicable.
“Discount Rate Spread” has the meaning specified in Exhibit F. “Early Termination Payment Date” means the last Business Day of the first Month that commences after a Termination Payment Event; provided that, in the case of a Termination Payment Event due to a Failed Remarketing, the Early Termination Payment Date shall be the last Business Day of the then-current Interest Rate Period.
7 “Electricity Sale and Service Agreement” has the meaning specified in the recitals. “Eligible Renewable Energy Resource” has the meaning set forth in California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25741(a), as either code provision is amended or supplemented from time to time. “Energy” means three-phase, 60-cycle alternating current electric energy, expressed in MWh.
“EPS” means California’s Emissions Performance Standards, as set forth in Sections 8340 and 8341 of the California Public Utilities Code, as implemented and amended from time to time, and any successor Law.
“EPS Compliant Energy” has the meaning specified in the Clean Energy Purchase Contract.
“EPS Energy Period” has the meaning specified in the Clean Energy Purchase Contract.
“Execution Date” has the meaning specified in the preamble. “Failed Remarketing” has the meaning specified in the Bond Indenture. “FERC” means the Federal Energy Regulatory Commission or any successor thereto.
“Firm (LD)” means, with respect to a Party’s obligation to sell and deliver or purchase and receive, that such Party’s liability for the failure to meet such obligation shall only be excused to the extent that, and for the period during which, such performance is prevented by Force Majeure, and that in the absence of Force Majeure, the Party to which performance of such obligation is owed shall be entitled to receive from the Party which failed to deliver/receive an amount determined pursuant to Section 4.1 or Section 4.2. “Force Majeure” means an event or circumstance which prevents one Party from performing its obligations under this Agreement, which event or circumstance was not anticipated as of the Execution Date, which is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure shall include, provided the criteria in the first sentence are met, riot, insurrection, war, labor dispute, natural disaster, vandalism, terrorism, and sabotage. Force Majeure shall not be based on (i) the loss of Buyer’s markets; (ii) Buyer’s inability economically to use or resell the Product purchased hereunder; (iii) the delay, loss or failure of Seller’s supply; or (iv) Seller’s ability to sell the Product at a higher price. Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a Transmission Provider unless (x) such Party has contracted for firm transmission with such Transmission Provider for the Product to be delivered to or received at the applicable Delivery Point and (y) such curtailment is due to “force majeure” or “uncontrollable force” or a similar term as defined under the Transmission Provider’s tariff; provided, however, that existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of 8 Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that Force Majeure as defined in the first sentence hereof has occurred. For the avoidance of doubt, and notwithstanding anything herein to the contrary, (I) the declaration of force majeure by an APC Party under a PPA (as defined in an Assignment Agreement) or the declaration of “Force Majeure” by the Project Participant under the Clean Energy Purchase Contract shall each constitute Force Majeure hereunder, and (II) to the extent that an Assignment Agreement is terminated early, such termination shall constitute Force Majeure with respect to Seller hereunder until the earlier of (A) the commencement of an “Assignment Period” under a replacement Assignment Agreement, (B) the commencement of a J. Aron EPS Energy Period (as defined in the Electricity Sale and Service Agreement) or (C) the end of the first Month following the Month in which such early termination occurs.
“Funding Agreement” means initially that certain [____], dated as of [____], by and between Seller, as lender, and the Funding Recipient, as borrower, and any replacement agreement entered into for a subsequent Reset Period.
“Funding Recipient” means initially [____], or its successors to or permitted assignees of the Funding Agreement, and any other Person that becomes counterparty to Seller under a Funding Agreement for a subsequent Reset Period. “Funding Recipient Acceleration Option” means the exercise by Funding Recipient of any right it may have to prepay the outstanding amounts on the Funding Agreement following the designation of a Product Delivery Termination Date. “Government Agency” means the United States of America, any state thereof, any municipality, or any local jurisdiction, or any political subdivision of any of the foregoing, including, but not limited to, courts, administrative bodies, departments, commissions, boards, bureaus, agencies, or instrumentalities.
“Governmental Approval” means any authorization, consent, approval, license, ruling, permit, exemption, variance, order, judgment, registration, filing, giving of notice to, decree, declaration of or regulation by any Government Agency relating to the valid execution, delivery or performance of this Agreement or the consummation of any of the transactions contemplated hereby.
“Hour” means the 60-minute period commencing at 00:00 (LPT) on the first Day of the Delivery Period and ending at 01:00 (LPT) on the first Day of the Delivery Period, and each 60-minute interval thereafter.
“Initial Assigned Rights and Obligations” means the Assigned Rights and Obligations set forth in Exhibit A-2 hereto as of the date hereof. “Interest Rate Period” has the meaning specified in the Bond Indenture. “Interest Rate Swap” means that certain ISDA Master Agreement (including the Schedule thereto), dated as of [____], between Buyer and J. Aron, as supplemented by that certain Confirmation, dated [____], between Buyer and J. Aron, pursuant to which Buyer will make payments to J. Aron at a fixed rate of interest and J. Aron will make payments to Buyer at the rate 9 of interest borne by the Bonds issued at the SOFR Index Rate (as such term is defined in the Bond Indenture), in each case in respect of a notional amount equal to the principal amount of such Bonds to remain outstanding, in each period.
“ISTs” has the meaning specified in Section 5.1(a).
“J. Aron” has the meaning specified in the recitals.
“J. Aron Fixed Payment” has the meaning specified in the CCCE Custodial Agreement.
“J. Aron Prepay Payment” has the meaning specified in the CCCE Custodial Agreement.
“Law” means any statute, law, rule or regulation or any written judicial or administrative decision, ruling or interpretation with respect thereto or thereof having the effect of the foregoing enacted, promulgated, or issued by a Government Agency whether in effect as of the Execution Date or at any time during the term of this Agreement. “Ledger Event” has the meaning specified in Exhibit C.
“Long-Term PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1, and the California Long-Term Contracting Requirements, to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
“LPT” means the local prevailing time then in effect in the State of California. “Mandatory Purchase Date” has the meaning specified in the Bond Indenture. “Minimum Discount Percentage” has the meaning specified in the Clean Energy Purchase Contract.
“Month” means a period beginning on the first Day of a calendar month and ending immediately prior to the commencement of the first Day of the next calendar month. The term “Monthly” shall be construed accordingly.
“MWh” means megawatt-hour.
“Net Participant Price” means, for any Product and Delivery Hour, the Contract Price (as defined in the Clean Energy Purchase Contract) for such Product and Delivery Hour under the Clean Energy Purchase Contract.
“Optional Product Delivery Termination Event” has the meaning specified in Section 17.1.
“Party” has the meaning specified in the preamble.
10 “PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1 to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
“Person” means any individual, corporation, partnership, joint venture, trust, unincorporated organization or Government Agency.
“Portfolio Content Category 1” or “PCC1” means any Renewable Energy Credit associated with the generation of electricity from an Eligible Renewable Energy Resource consisting of the portfolio content set forth in California Public Utilities Code Section 399.16(b)(1), as may be amended from time to time or as further defined or supplemented by Law. “Prepayment” means the amount specified as such in Exhibit F. “Prepayment Outside Date” means the date specified as such in Exhibit F. “Primary Delivery Point” has the meaning specified in Section 5.1(a). “Product” means Energy and, to the extent included on an Assignment Schedule, associated RECs or other products related to the foregoing provided that the inclusion of any Product on an Assignment Schedule is subject to the limitation set forth in Exhibit F of the Clean Energy Purchase Contract.
“Product Delivery Termination Date” means a date that occurs automatically pursuant to Section 17.1 or that is designated pursuant to Section 17.4(b) upon which the Delivery Period will end and Buyer’s and Seller’s respective obligations to receive and deliver Product under this Agreement will terminate.
“Product Delivery Termination Event” has the meaning specified in Section 17.1. “Project Participant” means Central Coast Community Energy, a public agency formed under the provisions of the Joint Exercise of Powers Act of the State of California, Government Code Section 6500 et seq.
“Rating Confirmation” has the meaning specified in the Bond Indenture. “Re-Pricing Agreement” means the Re-Pricing Agreement, dated as of the Bond Closing Date, by and between Buyer and Seller.
“Real-Time Market Price” has the meaning specified on Exhibit A-1 for each Delivery Point.
“Remarketing Fee” means the amount specified in Exhibit F. “Remarketing Notice” has the meaning specified in Section 1 of Exhibit C. 11 “Renewable Energy Credit” or “REC” has the meaning specified for “Renewable Energy Credit” in California Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by Law. “Replacement Assigned Rights and Obligations” has the meaning specified in the Clean Energy Purchase Contract.
“Replacement Price” means, with respect to any Shortfall Quantity of Base Quantities and Delivery Hour, (a) the price at which Buyer or Project Participant, acting in a Commercially Reasonable manner, purchases at the applicable Delivery Point Replacement Product for such Shortfall Quantity, plus (i) costs reasonably incurred by Buyer or Project Participant in purchasing Replacement Product for such Delivery Hour, and (ii) additional transmission charges, if any, reasonably incurred by Buyer or the Project Participant to the applicable Delivery Point, or at (b) Buyer’s option, the market price at such Delivery Point and for such Delivery Hour for Product not delivered as Replacement Product as determined by Buyer in a Commercially Reasonable manner. The Replacement Price for any Shortfall Quantity shall not include any administrative or other internal costs incurred by Buyer or the Project Participant and shall be limited to a price that is Commercially Reasonable with respect to the timing and manner of purchase. In no event shall the Replacement Price include any penalties, ratcheted demand or similar charges, nor shall Buyer or the Project Participant be required to utilize or change its utilization of its owned or controlled assets or market positions to minimize Seller’s liability. “Replacement Product” means any Energy purchased by Buyer or the Project Participant to replace any Shortfall Quantity at the Delivery Point where such Shortfall Quantity occurred; provided that such Energy is purchased for delivery in the Delivery Hour to which such Shortfall Quantity relates.
“Reset Period” means each “Reset Period” under the Re-Pricing Agreement. “RPS Law” means the California Renewable Energy Resources Act, including the California Renewables Portfolio Standard Program, Article 16 of Chapter 2.3, Division 1 of the California Public Utilities Code, as implemented and amended from time to time, and any successor Law.
“Schedule”, “Scheduled” or “Scheduling” means the actions of Seller, Buyer and/or their designated representatives, including each Party’s Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity and type of Product to be delivered during any given portion of the Delivery Period at a specified Delivery Point. “Seller” has the meaning specified in the preamble.
[“Seller Acceleration Option” means the exercise by Seller of its right to terminate the Funding Agreement at any time after the designation of a Product Delivery Termination Date due to a Ledger Event.]
2 2 SM NTD: Seller Acceleration Option to be included only if the Funding Recipient is a third party. 12 “Seller Swap Custodial Agreements” means each Custodial Agreement, dated as of the Bond Closing Date, by and among Seller, the Trustee, the Custodian, and a Swap Counterparty, and any replacement thereof entered into in connection with Seller’s entry into a replacement Seller Swap pursuant to Section 17.5.
“Seller Swap” means (i) the price holds entered into under the ISDA Master Agreements, dated as of [____], between Seller and the Swap Counterparties, and (ii) each replacement Seller Swap entered into pursuant to Section 17.5. “Seller Tariff” means the tariff that Seller has received from FERC, as may be modified, amended or supplemented from time to time.
“Shortfall Quantity” has the meaning specified in Section 4.1. “SOFR” means the Secured Overnight Financing Rate reported by the Federal Reserve Bank of New York.
“SPE Master Custodial Agreement” means that certain SPE Master Custodial Agreement, dated as of the date hereof, by and among the Seller, J. Aron, Buyer, the Trustee and the SPE Master Custodian.
“SPE Master Custodian” means initially The Bank of New York Mellon, a New York banking corporation as custodian under the SPE Master Custodial Agreement. “Special Tax Counsel” has the meaning specified in the Bond Indenture. “Specified Fixed Price” means the amount specified in Exhibit F. “Specified Investment Agreement” means a guaranteed investment contract between the Trustee and a provider concerning the investment of funds in the Commodity Swap Reserve Account, the Debt Service Reserve Account and/or the Debt Service Account (each as defined in the Bond Indenture).
“Swap Counterparties” means (i) [_____], a [_____], (ii) [_____], a [_____] and (iii) and any other Person that becomes counterparty to Buyer under a Buyer Swap or to Seller under a Seller Swap, in each case pursuant to Section 17.5. “Swap Custodial Agreements” means the Buyer Swap Custodial Agreements and the Seller Swap Custodial Agreements.
“Swap Replacement Period” has the meaning specified in Section 17.5(c). “Terminating Party” means any Party that has the right to terminate this Agreement pursuant to Article XVII.
“Termination Payment” means, with respect to any Early Termination Payment Date, the amount specified on Exhibit D-1 for the Month in which such Early Termination Payment 13 Date occurs (as increased or decreased (as applicable) by any applicable Termination Payment Adjustment Amount) without any set-off or netting of amounts then due from Buyer. “Termination Payment Adjustment Amount” means, with respect to any Early Termination Payment Date, the amount, if any, specified on Exhibit D-2 for the Month in which such Early Termination Payment Date occurs. For the avoidance of doubt, the Termination Payment Adjustment Amount is initially zero.
“Termination Payment Adjustment Schedule” means the schedule of Termination Payment Adjustment Amounts set forth in Exhibit D-2, as such exhibit may be populated and amended from time to time in accordance with Section 17.8. “Termination Payment Event” means (i) a Product Delivery Termination Event specified as a Termination Payment Event in Section 17.1, (ii) a Funding Recipient Acceleration Option [or (iii) a Seller Acceleration Option].
“Transaction Documents” has the meaning specified in Article XIII. “Transmission Provider” means any entity or entities transmitting or transporting the Product on behalf of Seller or Buyer to or from the applicable Delivery Point. “Trustee” means U.S. Bank Trust Company, National Association, a national banking association, and its successors as Trustee under the Bond Indenture. “Western EIM” has the meaning ascribed to “Energy Imbalance Market (EIM)” under the CAISO Tariff.
“WREGIS” means the Western Renewable Energy Generation Information System or its successor.

Section 1.2 Definitions; Interpretation. References to “Articles,” “Sections,” “Schedules” and “Exhibits” shall be to Articles, Sections, Schedules and Exhibits, as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest scope of such general statement, term or matter.

Except where expressly provided otherwise, any reference herein to any agreement or document includes all amendments, supplements or restatements to and of such agreement or document as may occur from time to time in accordance with its terms and the terms hereof, and any reference to a party to any such agreement includes all successors and assigns of such party thereunder permitted by the terms hereof and thereof.
14 ARTICLE II.

EXECUTION DATE; DELIVERY PERIOD; J. ARON AS AGENT
Section 2.1 Execution Date; Delivery Period. This Agreement shall become effective upon the Execution Date and, unless this Agreement is terminated early pursuant to Section 2.2, all of Seller’s and Buyer’s obligations under this Agreement shall be deemed to have been incurred upon the Execution Date. Unless this Agreement is sooner terminated pursuant to Section 2.2, the delivery of Product under this Agreement shall commence at the beginning of and continue for the Delivery Period.

Section 2.2 Termination by Seller Prior to Prepayment. Seller shall have no obligation to perform under this Agreement unless and until it has received the Prepayment from Buyer pursuant to Section 3.3. In the event Seller has not received the Prepayment prior to 24:00 LPT on the Prepayment Outside Date, Seller shall have the right, until such Prepayment has been paid, to terminate this Agreement without any further obligation or liability of either Party, it being understood and agreed that in the event Seller so terminates, such termination shall be effective as of Hour ending 24:00 LPT on the Prepayment Outside Date, regardless of whether Buyer tenders the Prepayment prior to such termination. For the avoidance of doubt, no Termination Payment or Additional Termination Payment shall be payable under any circumstances if this Agreement terminates pursuant to this Section 2.2; provided furthermore that, to the extent J. Aron designates a termination of the Electricity Sale and Service Agreement pursuant to Section 2.2 thereof, Seller shall be deemed to have designated a termination of this Agreement pursuant to this Section 2.2.

Section 2.3 J. Aron as Agent. Pursuant to the terms of the Electricity Sale and Service Agreement, Seller has irrevocably appointed J. Aron as its agent to issue notices and, as set forth therein, to take any other actions that Seller is required or permitted to take under this Agreement and the other agreements entered into by Seller in connection with the Clean Energy Project so long as the Electricity Sale and Service Agreement remains in effect. Buyer may rely on notices or other actions taken by J. Aron on Seller’s behalf; provided that, if (a) the Electricity Sale and Service Agreement is terminated and (b) Seller notifies Buyer that it has removed J. Aron as its agent, Buyer may no longer rely on notices or other actions taken by J. Aron.

ARTICLE III.

SALE AND PURCHASE
Section 3.1 Sale and Purchase of Product. Seller shall sell and deliver, or cause to be delivered, to Buyer, and Buyer hereby purchases and shall receive, or cause to be received, from Seller, the applicable Product in the quantities and at the times and subject to the terms and conditions set forth in this Agreement. The quantities of Product to be sold and purchased and delivered and received pursuant to the terms and conditions set forth in this Agreement shall be equal to (a) the Base Quantity, if any, for each Delivery Hour and (b) the Assigned Quantity delivered to J. Aron in each Month of the Delivery Period pursuant to the Assignment Agreements.

Any such sale is made pursuant to and in accordance with the Seller Tariff. 15 Section 3.2 Limited Obligation to Take Base Quantities. Notwithstanding anything to the contrary in this Agreement, Buyer shall not be required to purchase and receive any Base Quantities hereunder, and Seller will remarket any Base Quantities that otherwise would be delivered hereunder pursuant to the provisions of Exhibit C.

Section 3.3 Prepayment. Prior to the commencement of the Delivery Period and subject to Buyer’s issuance of the Bonds, Buyer shall pay an amount equal to the Prepayment as payment to Seller for all Product (other than Assigned PAYGO Product) to be delivered during the Delivery Period, and Seller shall accept the Prepayment as payment in full for all Product to be delivered hereunder. Buyer shall pay the Prepayment in a single lump sum payment by wire transfer of immediately available funds to an account designated by Seller. In no event shall Buyer be entitled to any rebate or refund of the Prepayment, but nothing in this Section 3.3 shall limit Buyer’s rights under (i) Article IV for Seller’s failure to Schedule or deliver Product (whether or not excused), (ii) Article XVII upon early termination of this Agreement or deliveries of Product or (iii) Exhibit C with respect to remarketing of Product in accordance therewith.

Section 3.4 Other Amounts Payable with Respect to Assigned Products. With respect to Assigned PAYGO Product delivered hereunder, Buyer shall pay Seller an amount equal to the quantity of such Assigned PAYGO Product multiplied by the applicable contract price(s) then in effect with respect to Energy under the applicable Assigned PPA(s); provided that the Parties acknowledge and agree that the portion of any CCCE Gross Payment paid pursuant to the CCCE Custodial Agreement and attributable to such Assigned PAYGO Product shall be deemed to satisfy Buyer’s payment obligation hereunder with respect to such Assigned PAYGO Product.

ARTICLE IV.

FAILURE TO SCHEDULE PRODUCT
Section 4.1 Seller’s Failure to Schedule or Deliver Base Quantity (Not Due to Force Majeure).
(a) If, for any Delivery Hour during the Delivery Period:
(i) Seller breaches its obligation to Schedule or deliver all or any portion of the Base Quantity at any Delivery Point pursuant to the terms of this Agreement; and
(ii) such failure is not due to either (A) the actions or inactions of Buyer (including Buyer’s breach of subsection (c) of this Section 4.1) or (B) Force Majeure, then the portion of the Base Quantity that Seller failed to Schedule or deliver shall be a “Shortfall Quantity”.
(b) Seller shall pay to Buyer for each Shortfall Quantity in each Delivery Hour the result determined by the following formula:

P = Q x (HP + AF)
16 Where:

P = The amount payable by Seller under this Section 4.1(b); Q = Such Shortfall Quantity;
HP = The higher of (i) the Replacement Price, as applicable or (ii) the Day-Ahead Market Price applicable to the Delivery Hour and the Delivery Point for which the Shortfall Quantity arose; and AF = The Administrative Fee
(c) Buyer shall cause Project Participant to comply with its obligations under Section 4.1(c) of the Clean Energy Purchase Contract to mitigate damages paid by Seller hereunder.

Section 4.2 Buyer’s Failure to Schedule or Receive Base Quantities (Not Due to Force Majeure). If, for any Delivery Hour during the Delivery Period, Buyer breaches its obligation to Schedule or receive, or cause to be Scheduled and received, all or any portion of the Base Quantity at any Delivery Point pursuant to the terms of this Agreement and such failure is not due to Force Majeure, the actions or inactions of Seller or is not with respect to any portion of the Base Quantity for which Buyer has previously issued a Remarketing Notice in accordance with Section 3 of Exhibit C, then Buyer shall be deemed to have issued a Deemed Remarketing Notice with respect to the portion not Scheduled or received.

Section 4.3 Failure to Deliver or Take Due to Force Majeure. If with respect to all or any portion of Base Quantities or Assigned Prepay Quantities and subject to Section 12 of Exhibit C:
(a) Buyer fails to Schedule or receive, or cause to be Scheduled and received, or Seller fails to Schedule or deliver, or cause to be Scheduled and delivered, all or any portion of such quantities at any Delivery Point pursuant to the terms of this Agreement; and (b) such failure is due to Force Majeure claimed by either Party, then Seller shall pay to Buyer the result determined by the following formula with respect to each such Delivery Point:

P = Q x IP
Where:

P = The amount payable by Seller under this Section 4.3; Q = The quantity of Energy described in the lead-in to this Section 4.3; and
17 IP = (i) The Day-Ahead Market Price applicable to the Delivery Hour and the Delivery Point with respect to any such Base Quantities and (ii) the applicable APC Contract Price with respect any such Assigned Prepay Quantities.

Section 4.4 Assigned Product. Notwithstanding anything herein to the contrary, neither Buyer nor Seller shall have any liability or other obligation to one another for any failure to Schedule, receive, or deliver Assigned Product, except as expressly set forth in Section 4.3 and Section 12 of Exhibit C.

Section 4.5 Sole Remedies. Except with respect to (i) termination of this Agreement pursuant to Section 17.4 and (ii) the obligations of Seller under Section 8(b) of Exhibit C, the remedies set forth in this Article IV shall be each Party’s sole and exclusive remedies for any failure by the other Party to Schedule, deliver or receive Product, as applicable, pursuant to this Agreement.

ARTICLE V.

DELIVERY POINTS; SCHEDULING
Section 5.1 Delivery Points.
(a) Base Delivery Points. All Base Product delivered under this Agreement shall be Scheduled for delivery to and receipt at (i) the CAISO delivery point set forth in Exhibit A-1 (the “Primary Delivery Point”) or (ii) any other CAISO delivery point (an “Alternate Delivery Point”) that has been mutually agreed by Buyer, the Project Participant, and Seller (the Primary Delivery Point or, to the extent specified, any Alternate Delivery Point being the “Base Delivery Point”). Delivery of Energy to Seller at the Primary Delivery Point shall be facilitated through submission of Inter-SC Trades, as defined in the CAISO Tariff (“ISTs”). Seller shall designate a scheduling coordinator in the CAISO market for this purpose as specified in Exhibit G. (b) Alternate Base Market Prices. The Day-Ahead Market Price and Real-Time Market Price for each Alternate Delivery Point, as applicable, shall be the price mutually agreed and identified by the Parties, or if no such price is identified for such Alternate Delivery Point, the price shall be the Day-Ahead Market Price and Real-Time Market Price, as applicable, specified on Exhibit A-1 for the Primary Delivery Point from which quantities are being shifted to such Alternate Delivery Point.
(c) Assigned Energy Delivery Points. Assigned Energy delivered under this Agreement shall be Scheduled for delivery to and receipt at the applicable Assigned Delivery Point specified in the applicable Assignment Schedule. All other Assigned Product shall be delivered consistent with the terms of the applicable Assignment Agreement. (d) Updates to Swap Exhibits. If the Parties at any time amend Exhibit A-1, the Parties shall promptly notify the Swap Counterparties of any such amendment and furthermore shall update the corresponding exhibits to the Buyer Swaps and the Seller Swaps in accordance with the terms thereof.
18 Section 5.2 Transmission and Scheduling. Seller shall Schedule or arrange for Scheduling services with CAISO in accordance with the CAISO Tariff, to deliver the Base Product to the Base Delivery Point. Buyer shall Schedule or arrange for Scheduling services with CAISO in accordance with the CAISO Tariff, to receive the Base Product at the Base Delivery Point. If the J. Aron Schedules or arranges for Scheduling services for the delivery of the Base Product at the Base Delivery Point, then Seller’s obligations under this Section shall be relieved pro tanto. If the Project Participant Schedules or arranges for Scheduling services to receive the Base Product at the Base Delivery Point, then Buyer’s obligations under this Section shall be relieved pro tanto.

Scheduling of Assigned Energy shall be in accordance with the applicable Assignment Schedule.

Section 5.3 Title and Risk of Loss. Title to and risk of loss of the Energy delivered under this Agreement shall pass from Seller to Buyer at the applicable Delivery Point.

The transfer of title and risk of loss for all Assigned Product shall be in accordance with the applicable Assignment Agreement; provided that all Assignment Agreements shall provide for the transfer of Renewable Energy Credits in accordance with WREGIS. Seller warrants that it will deliver to Buyer the Base Quantity of Product free and clear of all liens, security interests, claims and encumbrances or any interest therein or thereto by any person arising prior to the Delivery Point. Subject to Section 18.1, each Party shall indemnify, defend and hold harmless the other Party from and against any Claims made by a third party arising from or out of any event, circumstance, act or incident related to the Energy delivered hereunder first occurring or existing during the period when control and title to Base Product or Assigned Product is vested in the indemnifying Party as provided in this Section 5.3; provided that, notwithstanding the foregoing, (a) Seller shall have no obligations to indemnify, defend or hold harmless Buyer for any such Claims relating to replacement costs, cover damages or similar liabilities that are payable to the Project Participant or other Person because of Buyer’s failure to deliver any Product to such Project Participant or other Person through no fault of Seller and (b) no obligation to indemnify, defend or hold harmless shall supplant or control the provisions of this Agreement relating to Force Majeure. Notwithstanding anything to the contrary herein, no Party shall have any obligations to indemnify, defend or hold harmless the other Party in respect of any Claims relating to any Assigned Product.

Section 5.4 PCCI Product and Long-Term PCC1 Product. PCC1 Product and Long-Term PCC1 Product. To the extent that any Assigned Product is PCC1 Product or Long-Term PCC1 Product, the following provisions apply:
(a) Eligibility. Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) the Project qualifies and is certified by the CEC as an Eligible Renewable Energy Resource (“ERR”) as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Project’s output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC 6, Non-Modifiable. (Source: D.07-11-025, Attachment A.) D.08-04-009]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned PPA. 19 (b) Transfer of Renewable Energy Credits. Seller and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement the Renewable Energy Credits transferred to Buyer conform to the definition and attributes required for compliance with the California Renewables Portfolio Standard, as set forth in California Public Utilities Commission Decision 08-08-028, and as may be modified by subsequent decision of the California Public Utilities Commission or by subsequent legislation. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC REC-1, Non-modifiable. D.11-01-025]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned PPA.
(c) Tracking of RECs in WREGIS. Seller warrants that all necessary steps to allow the Renewable Energy Credits transferred to Buyer to be tracked in the Western Renewable Energy Generation Information System will be taken prior to the first delivery under the contract. [STC REC-2, Non-modifiable. D.11-01- 025]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned PPA.
(d) Governing Law. This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced and performed in accordance with the laws of the state of California, without regard to principles of conflicts of law. To the extent enforceable at such time, each Party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this Agreement. [STC 17, Non-Modifiable. (Source: D.07-11- 025, Attachment A) D.08-04-009]
(e) Seller Representations and Warranties.

Seller represents and warrants:
(i) Seller has the right to sell the Assigned Product from the Applicable Project;
(ii) Seller has not sold the Assigned Product or any REC or other attributes of the Assigned Product to be transferred to Buyer to any other person or entity;
(iii) The Energy component of the Assigned Product produced by the Applicable Project and purchased by Seller for resale to Buyer hereunder is not being sold by Seller back to the Applicable Project or APC Party;
(iv) Assigned Product to be purchased and sold pursuant to this Agreement has not been committed to another party;
20 (v) The Assigned Product is free and clear of all liens or other encumbrances;
(vi) Seller will deliver to Buyer all Assigned Energy and associated RECs generated by the Applicable Project for Long-Term PCC1 Product in compliance with the California Long-Term Contracting Requirements, if applicable
(vii) The Assigned Product supplied to Buyer under this Agreement that is Long-Term PCC1 Product will be sourced solely from Applicable Projects that have an Assignment Period of ten years or more in length, or otherwise in compliance with the California Long Term Contracting Requirements; and
(viii) Seller will cooperate and work with Buyer, the CEC, and/or the CPUC to provide any documentation required by the CPUC or CEC to support the Product’s classification as a Portfolio Content Category 1 Product as set forth in California Public Utilities Code Section 399.16(b)(1) or, if applicable, or compliance with the California Long-Term Contracting Requirements.

Seller further represents and warrants to Buyer that, to the extent that the Product sold by Seller is a resale of part or all of a contract between Seller and one or more third parties, Seller represents, warrants and covenants that the resale complies with the following conditions in (i) through (iv) below throughout the Assignment Period:
(i) The original upstream third-party contract(s) meets the criteria of California Public Utilities Code Section 399.16(b)(1);
(ii) This Agreement transfers only electricity and RECs that have not yet been generated prior to the Assignment Period;
(iii) The electricity transferred by this Agreement is transferred to Buyer in real time; and
(iv) If the Applicable Project has an agreement to dynamically transfer electricity to a California balancing authority, the transactions implemented under this Agreement are not contrary to any condition imposed by a balancing authority participating in the dynamic transfer arrangement.
(f) Subsequent Changes in Law. In the event that the qualifications or requirements of the RPS program, PCC1 Product or the California Long-Term Contracting Requirements change, Seller shall take commercially reasonable actions to meet the amended qualifications or requirements of the RPS Law, PCC1 Product or the California Long-Term Contracting Requirements but will not be required to incur any unreimbursed costs to comply with the RPS Law, PCC1 or the California Long- Term Contracting Requirements, collectively. 21 (g) Limitations. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge and agree as follows:
(i) Seller has relied exclusively upon the representations and warranties of each respective APC Party set forth in the Assigned PPAs in making the representations and warranties set forth in this Section 5.4 and has not performed any independent investigation with respect thereto; (ii) J. Aron has agreed under the Electricity Sale and Service Agreement to terminate the applicable Assignment Period in the event that any representation or warranty in this Section 5.4 proves to be incorrect in any respect;
(iii)Buyer agrees that its sole recourse for any breach of the provisions of this Section 5.4 shall be the termination of the applicable Assignment Period and Buyer shall have no other recourse against Seller or remedies under this Agreement; and
(iv)Section 5.4(d) shall only apply to the provisions of this Section 5.4 and all other provisions of this Agreement shall remain subject to and interpreted in accordance with Section 18.4.

Section 5.5 Communications Protocol. With respect to the Scheduling and delivery of Base Quantities, Buyer and Seller shall comply with the communications protocol set forth in Exhibit G. Scheduling and transmission of Assigned Energy shall be in accordance with the applicable Assignment Agreement pursuant to which the Project Participant shall act as scheduling agent for each of J. Aron, Seller and Buyer.

Section 5.6 Deliveries Within CAISO or Another Balancing Authority. The Parties acknowledge that Energy delivered by Seller at a Delivery Point within CAISO or another Balancing Authority (including a Balancing Authority operating within the Western EIM) will be delivered in accordance with the CAISO Tariff and rules of the Balancing Authority as applicable.

Scheduling such Energy in accordance with the requirements of the applicable Product into the applicable Balancing Authority shall constitute delivery of such Product to Buyer hereunder, provided that any associated Renewable Energy Credits and other Assigned Products associated with the Energy are also delivered to Buyer.

Section 5.7 Assigned Products. Notwithstanding anything to the contrary herein, Seller shall have no liability under this Article V with respect to any Assigned Products.

ARTICLE VI.

ASSIGNMENT OF POWER PURCHASE AGREEMENTS
Section 6.1 Assignments Generally. The Project Participant and the Buyer have agreed pursuant to Article VI of the Clean Energy Purchase Contract that (a) prior to the commencement of the Delivery Period, the Project Participant will exercise Commercially Reasonable Efforts to assign the Initial Assigned Rights and Obligations to J. Aron, and (b) in the 22 event of (i) any expiration, termination or anticipated termination of the Assignment Period for the Initial Assigned Rights and Obligations or any subsequent EPS Energy Period or (ii) a failure to assign any portion of the Initial Assigned Rights and Obligations, the Project Participant is obligated to exercise Commercially Reasonable Efforts and cooperate with J. Aron in good faith to assign certain Replacement Assigned Rights and Obligations to J. Aron and, under certain circumstances specified in the Electricity Sale and Service Agreement, J. Aron shall have the ability to procure EPS Compliant Energy for ultimate redelivery to the Project Participant under the Electricity Sale and Service Agreement. Following the effectiveness of any Assignment Agreement and Assignment Schedule executed in connection with any Replacement Assigned Rights and Obligations or J. Aron’s procurement of EPS Compliant Energy consistent with Section

6.1(c) of the Electricity Sale and Service Agreement, the Base Quantities shall be reduced as provided by Article VI and Exhibit F of the Clean Energy Purchase Contract. References to Article VI and Exhibit F of the Clean Energy Purchase Contract mean such provisions of the Clean Energy Purchase Contract (including any embedded definitions or cross-referenced provisions) as they originally exist, as modified, amended, supplemented or waived with the consent of J. Aron.

Section 6.2 Failure to Obtain EPS Compliant Energy. To the extent an EPS Energy Period terminates or expires and EPS Compliant Energy is not available for delivery hereunder upon such termination or expiration, then Seller shall remarket the Base Quantities pursuant to the provisions of Exhibit C until EPS Compliant Energy is available for delivery hereunder.

Section 6.3 Adjustments to Swaps. The Parties agree to issue appropriate notices to cause the Buyer Swaps and the Seller Swaps to be revised in connection with the commencement or termination of any Assignment Period such that the notional quantities under such swaps will be adjusted to be consistent with any changes to the Base Quantity determined pursuant to Section 6.4.

Section 6.4 Adjustments to Base Quantities. The Base Quantity Reductions set forth on Exhibit A-1 hereto have been calculated to reflect the Initial Assigned Rights and Obligations using the same methodology that would apply to determine such Base Quantity Reductions in connection with the assignment of any Replacement Assigned Rights and Obligations as provided by Article VI and Exhibit F of the Clean Energy Purchase Contract.

Effective on the first day of the Month following the termination or expiration of an EPS Energy Period for any reason, Seller shall revise the Base Quantity Reductions in Exhibit A-1 (i) as provided by Article VI and Exhibit F to the Clean Energy Purchase Contract to the extent a subsequent EPS Energy Period will commence immediately following such termination or expiration or (ii) to reverse such Base Quantity Reductions associated with the EPS Energy Period that terminated or expired for all remaining Hours in the Delivery Period to the extent a replacement EPS Energy Period will not commence immediately following such termination or expiration. In the case of any other commencement of a subsequent EPS Energy Period, Seller shall revise the Base Quantity Reductions in Exhibit A-1 as provided by Article VI and Exhibit F to the Clean Energy Purchase Contract.

Section 6.5 APC Party Make-Whole. Seller shall reimburse Buyer for any amounts owed by Buyer to the Project Participant pursuant to [Section 6.4 ]of the Clean Energy 23 Purchase Contract due to J. Aron’s failure to pay when due any J. Aron Prepay Payment under the CCCE Custodial Agreement.

ARTICLE VII.

PRODUCT REMARKETING
Section 7.1 Product Remarketing. If the Project Participant (a) is in default under the Clean Energy Purchase Contract or (b) is unable to receive all or any portion of the Product purchased by Buyer under this Agreement due to (i) decreased demand by the Project Participant’s retail customers, (ii) a quantity of Assigned Energy less than the Assigned Prepay Quantity is delivered hereunder in any Month during an Assignment Period for any reason other than Force Majeure or an Assigned PPA FM Remarketing Event (as defined in Exhibit F) occurs, (iii) a change in Law, and such Project Participant requests that such Product be remarketed in accordance with Section 7.3 of the Clean Energy Purchase Contract or (iv) the application of Section 3.2 requiring the remarketing of Base Quantities, then Buyer shall request (and in the case of clauses (b)(ii) and (b)(iv) above and Section 4.2, as applicable, shall be deemed to have requested) remarketing services from Seller pursuant to the provisions of Exhibit C; provided that any remarketing request delivered under clause (b)(iii) above shall constitute a “Structural Remarketing Notice” and any Structural Remarketing Notice (i) must be provided at least six Months in advance of the requested remarketing services and (ii) shall be subject to Seller’s consent in its reasonable discretion. If Buyer requests remarketing of any Assigned Product under any of the circumstances described in the preceding sentence other than clause (b)(ii) thereof, then J. Aron will have the right to terminate the Assignment Period applicable to such Assigned Product effective as of the first Delivery Hour to which such remarketing applies. If J. Aron does not elect to terminate the Assignment Period, Buyer and Seller shall negotiate in good faith to adjust the provisions of Exhibit C to reflect pricing, delivery and other terms related to such Assigned Product, and Seller shall have no obligation to remarket such Assigned Product unless and until Buyer and Seller have mutually agreed to such adjustments to Exhibit C. Seller shall observe and perform its obligations set forth in Exhibit C.

Section 7.2 Delegation of Authority. Buyer hereby acknowledges and agrees that Seller shall delegate its rights and obligations under Exhibit C to J. Aron pursuant to the Electricity Sale and Service Agreement subject to Section 11 of Exhibit C.

ARTICLE VIII.

REPRESENTATIONS AND WARRANTIES
Section 8.1 Representations and Warranties. As a material inducement to entering into this Agreement, each Party, with respect to itself, hereby represents and warrants to the other Party as of the Execution Date as follows:
(a) for Buyer as the representing Party, Buyer is a joint powers authority duly organized and validly existing under the laws of the State of California; 24 (b) for Seller as the representing Party, it is duly organized, validly existing and in good standing under the Laws of the state in which it is organized and in good standing in the State of California;
(c) it has all requisite power and authority, corporate or otherwise, to own its material properties, carry on its material business as now being conducted, enter into, deliver and to perform its obligations under this Agreement and to carry out the terms and conditions hereof and the transactions contemplated hereby;
(d) there is no litigation, action, suit, proceeding with service of process accomplished with respect to such Party or investigation pending or, to the best of such Party’s knowledge, threatened, in each case before or by any Government Agency and, in each case, which could reasonably be anticipated to materially and adversely affect such Party’s ability to perform its obligations under this Agreement or that questions the validity, binding effect or enforceability hereof, any action taken or to be taken by such Party pursuant hereto, or any of the transactions contemplated hereby;
(e) the execution, delivery, and performance of this Agreement by such Party have been duly authorized by all necessary action on the part of such Party and do not require any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party; (f) this Agreement has been duly executed and delivered on behalf of such Party by an appropriate officer or authorized Person of such Party and constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally and by general principles of equity; (g) the execution, delivery and performance of this Agreement by such Party shall not violate any provision of any Law, order, writ, judgment, decree or other legal or regulatory determination applicable to it;
(h) the execution, delivery and performance by such Party of this Agreement, and the consummation of the transactions contemplated hereby, including the incurrence by such Party of its financial obligations under this Agreement, shall not result in any violation of any term of any material contract or agreement applicable to it, or any of its charter or bylaws or of any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, Law or ordinance applicable to it or any of its properties or to any obligations incurred by it or by which it or any of its properties or obligations are bound or affected, or of any determination or award of any arbitrator applicable to it, and shall not conflict with, or cause a breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets, except with respect to Buyer, the lien of the Bond Indenture;
(i) to the best of the knowledge and belief of such Party, no Governmental Approval is required in connection with the valid authorization, execution, delivery and performance by such Party of this Agreement or the consummation of any of the transactions contemplated hereby other than those Governmental Approvals that have been obtained; and 25 (j) it enters this Agreement as a bona-fide, arm’s-length transaction involving the mutual exchange of consideration and, once executed by both Parties, considers this Agreement a legally enforceable contract.

Section 8.2 Additional Representations and Warranties of Buyer. As a material inducement to entering into this Agreement, Buyer hereby represents and warrants to Seller as of the Execution Date as follows:
(a) Buyer is entering into this Agreement for the purpose of acquiring Product for sale to the Project Participant pursuant to the Clean Energy Purchase Contract; and (b) any amounts payable by Buyer under this Agreement shall (i) other than the Prepayment, be payable as an item of Operating Expense under (and as defined in) the Bond Indenture, and (ii) not constitute an indebtedness or liability of Buyer within the meaning of any constitutional or statutory limitation or restriction applicable to Buyer.

Section 8.3 Funding Agreement.
(a) Except (i) to cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent provision in the Funding Agreement, (ii) to insert such provisions clarifying matters or questions arising under the Funding Agreement as are necessary or desirable and are not contrary to or inconsistent therewith or (iii) to convert or supplement any provision in a manner consistent with the intent of the Funding Agreement and the other Transaction Documents, Seller agrees that it shall not agree to any amendment, alteration, assignment or modification to the Funding Agreement or any guaranty of Funding Recipient’s obligations thereunder without receipt of (A) a Rating Confirmation and (B) the prior written consent of Buyer; provided that, for the avoidance of doubt, no such consent of Buyer shall be required in connection with (I) the replacement, refinancing or re-pricing of the Funding Agreement at the end of any Interest Rate Period in accordance with the terms of the Funding Agreement or (II) Seller’s assignment of its interest in the Funding Agreement or consent to Funding Recipient’s assignment of its interest in the Funding Agreement by Funding Recipient to the extent Seller provides a Rating Confirmation to Buyer with respect to any such assignment. (b) To the extent an Early Termination Payment Date is designated hereunder, Seller agrees that it shall promptly withdraw the Final Payment Amount under the Funding Agreement (as such term is defined therein). Additionally, Seller agrees that it shall not withdraw the Final Payment Amount under the Funding Agreement (as such term is defined therein) pursuant to [Section __ (Redemption Optional Early Termination)] thereof unless such Final Payment Amount (accounting for the deduction of any Breakage Amount (as defined in the Funding Agreement) that would be due thereunder) plus other available funds are sufficient for the early redemption of the Bonds.

Section 8.4 Notice of CEPC Remarketing Election. Seller covenants and agrees that it shall provide prompt notice to J. Aron if the Project Participant makes a CEPC Remarketing Election for any Reset Period.

Section 8.5 Warranty of Title. Seller warrants that it will deliver to Buyer (a) all Base Product free and clear of all liens, security interests, claims and encumbrances or any interest 26 therein or thereto by any Person arising prior to the Delivery Point, and (b) all Assigned Product free and clear of all liens, security interests, claims and encumbrances or any interest therein or thereto by any Person that are imposed on such Assigned Product solely as a result of Seller’s actions.

Section 8.6 Disclaimer of Warranties. EXCEPT FOR THE WARRANTIES

EXPRESSLY MADE BY SELLER IN THIS ARTICLE VIII, SELLER HEREBY DISCLAIMS

ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE IX.

TAXES
As between Seller and Buyer, Seller shall (i) be responsible for, and pay or cause to be paid, all ad valorem, excise, severance, production and other taxes assessed with respect to Product (other than any Assigned Product) delivered pursuant to this Agreement arising prior to the applicable Delivery Point and (ii) indemnify Buyer and its Affiliates for any such taxes paid by Buyer or its Affiliates. As between Seller and Buyer, Buyer shall (i) be responsible for all taxes with respect to Product received pursuant to this Agreement assessed at or from the applicable Delivery Point, and (ii) indemnify Seller and its Affiliates for any such taxes paid by Seller or its Affiliates. Nothing shall obligate or cause a Party to pay or be liable for any tax for which it is exempt under Law.

ARTICLE X.

JURISDICTION; WAIVER OF JURY TRIAL
Section 10.1 Consent to Jurisdiction. ALL JUDICIAL PROCEEDINGS

BROUGHT AGAINST EITHER PARTY ARISING OUT OF OR RELATING HERETO

SHALL BE BROUGHT EXCLUSIVELY IN THE FEDERAL COURTS OF THE UNITED

STATES OF AMERICA FOR THE NORTHERN DISTRICT OF CALIFORNIA SITTING IN THE CITY AND COUNTY OF SAN FRANCISCO. BY EXECUTING AND DELIVERING

THIS AGREEMENT, EACH PARTY AGREES THAT SERVICE OF ALL PROCESS IN ANY

SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR

CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH Article XVI; AND AGREES THAT SERVICE AS

PROVIDED ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER

THE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.

Section 10.2 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW,

EACH OF THE PARTIES HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A

JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING UNDER THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT

AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING

CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER 27 COMMON LAW AND STATUTORY CLAIMS. EACH PARTY ACKNOWLEDGES THAT

THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS

RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN

ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY FURTHER

WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS

LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS

WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER

ORALLY OR IN WRITING (OTHER THAN BY MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS Section 10.2 AND EXECUTED BY EACH OF THE

PARTIES), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO. IN THE EVENT OF

LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY A COURT.

ARTICLE XI.

FORCE MAJEURE
Section 11.1 Applicability of Force Majeure. To the extent either Party is prevented by Force Majeure from carrying out, in whole or part, its obligations under this Agreement and such Party (the “Claiming Party”) gives notice and details of the Force Majeure to the other Party as soon as practicable, then the Claiming Party shall be excused from the performance of its obligations with respect to this Agreement (other than the obligation to make payments then due or becoming due with respect to performance prior to the Force Majeure and as provided in Section 4.3 and Section 17.4). The Claiming Party shall remedy the Force Majeure with all reasonable dispatch. For the duration of the Claiming Party’s non-performance (and only for such period), the non-Claiming Party shall not be required to perform or resume performance of its obligations to the Claiming Party corresponding to the obligations of the Claiming Party excused by Force Majeure.

Section 11.2 Settlement of Labor Disputes. Notwithstanding anything to the contrary herein, the Parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the Party experiencing such disturbance, and the failure of a Party to settle such strikes, lockouts or other industrial disturbances shall not prevent the existence of Force Majeure or of reasonable dispatch to remedy the same.

ARTICLE XII.

GOVERNMENTAL RULES AND REGULATIONS
Section 12.1 Compliance with Laws. This Agreement shall be subject to all present and future Laws of any Government Agency having jurisdiction over this Agreement or the transactions to be undertaken hereunder, and neither Party has knowingly undertaken or will knowingly undertake or knowingly cause to be undertaken any activity that would conflict with such Laws; provided, however, that nothing herein shall be construed to restrict or limit either 28 Party’s right to object to or contest any such Law, or its application to this Agreement or the transactions undertaken hereunder, and neither acquiescence therein or compliance therewith for any period of time shall be construed as a waiver of such right.

Section 12.2 Contests. Excluding all matters involving a contractual dispute between the Parties, no Party shall contest, cause to be contested or in any way actively support the contest of the equity, fairness, reasonableness or lawfulness of any terms or conditions set forth or established pursuant to this Agreement, as those terms or conditions may be at issue before any Government Agency in any proceeding, if the successful result of such contest would be to preclude or excuse the performance by either Party of this Agreement or any provision hereunder.

Section 12.3 Defense of Agreement. Excluding all matters involving a contractual dispute between the Parties, each Party shall hereafter exercise Commercially Reasonable Efforts to defend and support this Agreement before any Government Agency in any proceeding, if the substance, validity or enforceability of all or any part of this Agreement is hereafter directly challenged or if any proposed changes in regulatory practices or procedures would have the effect of making this Agreement invalid or unenforceable or would subject either Party to any greater or different regulation or jurisdiction that materially affects the rights or obligations of the Parties under this Agreement.

ARTICLE XIII.

ASSIGNMENT
Neither Party shall assign this Agreement or any of its rights or obligations under this Agreement without the prior written consent of the other Party; provided, however, that:
(a) pursuant to the Bond Indenture, Buyer may, without the consent of Seller, transfer, sell, pledge, encumber or assign this Agreement to the Trustee in connection with any financing or other financial arrangements; provided that Buyer shall not assign this Agreement unless, contemporaneously with the effectiveness of such assignment, Buyer also assigns the Buyer Swaps (and the Buyer Swap Custodial Agreements) to the same assignee; (b) upon written notice to Buyer, Seller may, without Buyer’s consent, assign this Agreement to an Affiliate of Seller, which assignment shall constitute a novation; provided that the assignee shall agree in writing to be bound by the terms and conditions of this Agreement and Seller shall not assign this Agreement unless (i) Seller delivers a Rating Confirmation to Buyer with respect to such assignment, (ii) contemporaneously with the effectiveness of such assignment, Seller also assigns the Seller Swaps, the Seller Swap Custodial Agreements and the SPE Master Custodial Agreement to the same assignee and either (A) Seller assigns the Funding Agreement and Electricity Sale and Service Agreement to the same assignee or (B) the assignee provides to Buyer a guarantee of its obligations by GSG (as defined in the Electricity Sale and Service Agreement) and GSG continues to guarantee J. Aron’s performance under the Electricity Sale and Service Agreement, and (iii) the assignee is a special purpose entity approved by Buyer or its obligations under this Agreement are guaranteed by Funding Recipient to the satisfaction of Buyer; and
29 (c) if (i) Seller notifies Buyer that the Funding Agreement will not be replaced, refinanced or re-priced as of the end of any Interest Rate Period or (ii) Seller is unable to provide, under the Re-Pricing Agreement, an estimated Available Discount Percentage (as defined in the Re-Pricing Agreement) that is equal to or greater than the applicable Minimum Discount Percentage under the Clean Energy Purchase Contract, then, at the request of Buyer, Seller will reasonably cooperate with Buyer to cause Seller’s (or Seller’s Affiliate’s, if applicable) interest in this Agreement, the Re-Pricing Agreement, the Seller Swaps, the Seller Swap Custodial Agreements, the SPE Master Custodial Agreement and any Specified Investment Agreement with a term that extends past the then-current Interest Rate Period to which Seller or any Affiliate is a party and all agreements related to any of the foregoing (the “Transaction Documents”) to be novated to a replacement seller; provided that (x) a Rating Confirmation is obtained for any Bonds required to be redeemed on the first Mandatory Purchase Date following the effective date of such novation, (y) the Swap Counterparties shall have provided their prior written consent to such novation in accordance with the terms of the Seller Swaps to which it is a party, and (z) after giving effect to such novation, Seller will have no obligations (contingent or otherwise, including any obligation to make or repeat any representations or warranties other than basic representations on authority and the right to transfer its interests under this Agreement without encumbrances) or be required to make any payment under any Transaction Document or otherwise in connection with or following such novation other than any obligations that would have existed or payments that would have been required had this Agreement terminated as of the end of the last Reset Period that commenced prior to such novation.

ARTICLE XIV.

PAYMENTS
Section 14.1 Monthly Statements.
(a) Buyer’s Statements. No later than the 5th day of each Month during the Delivery Period (excluding the first Month of the Delivery Period) and the first Month following the end of the Delivery Period, Buyer shall deliver to Seller a statement (a “Buyer’s Statement”) listing (i) in respect of the prior Month, if Base Quantities were required to be delivered in such Month and there is a Shortfall Quantity for such Month, the Replacement Price applicable to such Shortfall Quantity, and (ii) any other amounts due to Buyer in connection with this Agreement with respect to the prior Months.
(b) Billing Statements.
(i) No later than the [__] day of each Month during the Delivery Period (excluding the first Month of the Delivery Period) and the first Month following the end of the Delivery Period (the “Billing Date”), Seller shall deliver a statement (a “Billing Statement”) to Buyer and the Project Participant indicating (i) the total amount due to Buyer, if any, under Article IV, Article V, Article VI, Article VII and Exhibit C with respect to the prior Months, (ii) any amounts due to Seller in connection with this Agreement with respect to the prior Months, and (iii) the net amount due to Buyer or Seller; provided that, notwithstanding the foregoing, invoicing for all Assigned PAYGO Products shall occur under the CCCE Custodial Agreement.
30 (ii) If a Monthly Statement (as defined in the CCCE Custodial Agreement) for an Assigned PPA has not been delivered by the [__] day of the Month following deliveries, Seller shall provisionally prepare or cause to be prepared a Billing Statement for this Agreement that assumes all of the Assigned Prepay Quantities were delivered under the applicable Assigned PPA for such Month. In such case, to the extent that a Monthly Statement subsequently delivered under the CCCE Custodial Agreement reflects that less than the Assigned Prepay Quantities were actually delivered under any such Assigned PPA, then (A) the previously delivered Billing Statement shall be deemed to be updated in accordance with such Monthly Statement, (B) Seller shall be deemed to remarket and purchase an amount of Product equal to such undelivered portion of the Assigned Prepay Quantities for its own account resulting in a Ledger Entry (as defined in the Master Power Supply Agreement) and (C) Seller shall owe a resettlement payment to Buyer in an amount equal to the product of (x) the applicable APC Contract Price multiplied by (y) the portion of the Assigned Prepay Quantities not delivered in such Month. The Parties acknowledge and agree that J. Aron shall have a separate resettlement payment obligation under the Electricity Sale and Service Agreement with respect to the amounts described in clause (C) of the preceding sentence, and J. Aron’s payment of the [J. Aron Resettlement Payment] as defined in and pursuant to the CCCE Custodial Agreement shall satisfy the corresponding obligations of the respective parties under each of the Electricity Sale and Service Agreement, this Agreement and the Clean Energy Purchase Contract.
(c) Supporting Documentation. Upon request by either Party, the other Party shall deliver such supporting documentation of the foregoing statements and information described in this Section 14.1 as such requesting Party may reasonably request.

Section 14.2 Payment.
(a) Payments Due. If the Billing Statement indicates an amount due from Buyer, then Buyer shall remit such amount to Seller by wire transfer (pursuant to the instructions set forth in the SPE Master Custodial Agreement), in immediately available funds, on or before the 25th day of the Month following the most recent Month to which such Billing Statement relates, or if such day is not a Business Day, the following Business Day. If the Billing Statement indicates an amount due from Seller, then Seller shall remit such amount to Buyer by wire transfer (pursuant to Buyer’s instructions), in immediately available funds, on or before the 24 th day of the Month
following the most recent Month to which such Billing Statement relates, or if such day is not a Business Day, the preceding Business Day. Notwithstanding the foregoing, payments due from Buyer for Assigned PAYGO Product shall be due two Business Days’ preceding the payment date specified in the PPA (as defined in the applicable Assignment Agreement); provided that, as set forth in Section 3.4, such payment obligation will be satisfied to the extent such amounts are paid by the Project Participant pursuant to the CCCE Custodial Agreement. (b) No Duty to Estimate. If Buyer fails to issue a Buyer’s Statement with respect to any Month, Seller shall not be required to estimate any amounts due to Buyer for such Month, provided that Buyer may include any such amount on subsequent Buyer’s Statements issued within the next sixty (60) days. The sixty (60)-day deadline in this subsection (b) replaces 31 the two (2) year deadline in Section 14.5 with respect to any claim by any non-delivering Party of inaccuracy in any estimated invoice issued or payment made pursuant to this subsection (b).

Section 14.3 Payment of Disputed Amounts. If Seller disputes any amounts included in a Buyer’s Statement, Seller shall (a) (except in the case of manifest error) nonetheless calculate the Billing Statement based on the amounts included in Buyer’s Statement and (b) pay any amount required by the Billing Statement in accordance with Section 14.2 without regard to any right of set-off, counterclaim, recoupment or other defenses to payment that Seller may have; provided, however, that Seller shall have the right, after payment, to dispute any amounts included in a Buyer’s Statement or otherwise used to calculate payments due under this Agreement pursuant to Section 14.5. If Buyer disputes any amounts included in the Billing Statement, Buyer may withhold payment to the extent of the disputed amount; provided, however, that interest shall be due at the Default Rate for any withheld amount later found to have been properly due.

Section 14.4 Late Payment. If a Party owing a net payment under Section 14.2 fails to remit the full amount payable within one Business Day of when due, interest on the unpaid portion shall accrue from the date due until the date of payment at the Default Rate.

Section 14.5 Audit; Adjustments.
(a) Right To Audit. A Party shall have the right, at its own expense, upon reasonable notice to the other Party and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other Party to the extent reasonably necessary, but only to such extent, to verify the accuracy of any statement, charge, payment, or computation made under this Agreement. This right to examine, audit, and obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Agreement; provided that, notwithstanding the foregoing, to the extent any such examination and audit reveals any material discrepancy in the other Party’s books and records, the examining Party shall have a right to be reimbursed by the other Party for costs reasonably incurred with such examination and audit.
(b) Deadline for Objections. Each Buyer’s Statement and each Billing Statement shall be conclusively presumed final and accurate and all associated claims for under-or overpayments shall be deemed waived unless such Buyer’s Statement or Billing Statement is objected to in writing, with adequate explanation and/or documentation, within two (2) years after the applicable Month of Product delivery.
(c) Payment of Adjustments. All retroactive adjustments shall be paid in full by the Party owing payment within 30 days of notice and substantiation of such inaccuracy. If the Parties are unable to agree upon any retroactive adjustments requested by either Party within the time period specified in Section 14.5(a), then either Party may pursue any remedies available with respect to such adjustments at law or in equity. Retroactive adjustments for payments made based on incorrect Buyer’s Statements or Billing Statements shall bear interest at the Default Rate from the date such payment was made. To the extent necessary to allow Seller to verify any amounts due under this Agreement, Buyer shall cause the Project Participant to comply with the provisions of Section 14.5(a) to the extent necessary to allow Seller to verify any amounts due under this Agreement.
32 Section 14.6 Netting. The Parties shall net all amounts due and owing, including any past due amounts (which, for the avoidance of doubt, shall include any accrued interest), arising under this Agreement such that the Party owing the greater amount shall make a single payment of the net amount to the other Party in accordance with this Article XIV. Notwithstanding the foregoing, no Party shall be entitled to net (i) any amounts that are in dispute or (ii) any payments due to Seller against (A) the Termination Payment if it becomes due or (B) any payments due from Seller pursuant to Article IV, Article V or Exhibit C.

ARTICLE XV.

RECEIVABLES PURCHASES
In accordance with the provisions of Exhibit E, Seller has the obligation to purchase Put Receivables (as defined in Exhibit E) and the option to purchase Elective Call Receivables and Swap Deficiency Receivables (as defined in Exhibit E). The Parties acknowledge and agree that (a) any Elective Call Receivables and Swap Deficiency Call Receivables purchased by Seller under Exhibit E shall be re-purchased by J. Aron from Seller to the extent the conditions set forth in Exhibit C of the Electricity Sale and Service Agreement are satisfied; and (b) the purchase of any Put Receivables by Seller will be funded solely from amounts available under the SPE Master Custodial Agreement for such purpose.

ARTICLE XVI.

NOTICES
Any notice, demand, statement or request required or authorized by this Agreement to be given by one Party to the other Party (or to any third party) shall be in writing and shall either be sent by email transmission, courier, or personal delivery (including overnight delivery service) to each of the notice recipients and addresses specified in Exhibit B for the receiving Party. Any such notice, demand, or request shall be deemed to be given (i) when delivered by email transmission, or (ii) when actually received if delivered by courier or personal delivery (including overnight delivery service). Each Party shall have the right, upon 10 days’ prior written notice to the other Party, to change its list of notice recipients and addresses in Exhibit B. The Parties may mutually agree in writing at any time to deliver notices, demands or requests through alternate or additional methods. Notwithstanding the foregoing, either Party may at any time notify the other that any notice, demand, statement or request to it must be provided by email transmission for a specified period of time or until further notice, and any communications delivered by means other than email transmission during the specified period of time shall be ineffective.

ARTICLE XVII.

DEFAULT; REMEDIES; TERMINATION
Section 17.1 Product Delivery Termination Events and Termination Payment Events. Each event listed on the table below constitutes a “Product Delivery Termination Event”.

This table also specifies the potential Terminating Party for each Product Delivery Termination 33 and identifies which Product Delivery Termination Events are also “Termination Payment Events” and the potential Terminating Party for each Product Delivery Termination Event. For each Product Delivery Termination Event where the potential Terminating Party is listed as “Automatic”, such event is an “Automatic Product Delivery Termination Event” and each other Product Delivery Termination Event is an “Optional Product Delivery Termination Event.” The Termination Payment Events where the Additional Termination Payment is designated as applying are set forth in Exhibit F.
[Table on following page.]
34 Event Related to:

Product Delivery
Termination Event:

Potential
Terminating
Party:

Termination
Payment
Event?
a) Failure of Seller to
pay Buyer due to
Funding Recipient
failure to pay
Seller.

Seller fails to pay when due any amounts owed to Buyer pursuant to this Agreement because of a failure by Funding Recipient to pay when due any amounts owed to Seller pursuant to the Funding Agreement and such failure continues for thirty days after receipt by Seller of notice thereof from Buyer.

Automatic Yes
b) Failure of bond
remarketing or re-pricing
As of one week prior to the beginning of the first Month following a Reset Period, either:
(i) Buyer has not entered into a bond purchase agreement, firm remarketing agreement or similar agreement with respect to the remarketing or refunding of the existing Bonds; or
(ii) The initial Funding Recipient or successor Funding Recipient and Seller are unable to replace, refinance or re-price the Funding Agreement for a subsequent Reset Period.

Automatic Yes
c) Failure to
remarket
A Failed Remarketing occurs. Automatic Yes
d) Ledger Event The occurrence of a Ledger Event. Seller No e) Failure to
purchase
Identified
Receivables (as
defined in Exhibit
E)
Both:
(i) Seller has received a Swap Deficiency Call Receivables Offer (as defined in Exhibit E) pursuant to Section 2.2(a) of the Exhibit E and
(ii) Seller has not exercised or is deemed not to have exercised its related option to purchase the Identified Receivables described in such Swap Deficiency Call Receivable Offer.

Automatic No
f) Designation of an
Early Termination
Date as defined
and under the
Electricity Sale
and Service
Agreement
J. Aron designates an Early Termination Date (as defined in the Electricity Sale and Service Agreement) under the Electricity Sale and Service Agreement due to a CEPC Remarketing Election by the Project Participant for any Reset Period.

Automatic Yes
35 Event Related to:

Product Delivery
Termination Event:

Potential
Terminating
Party:

Termination
Payment
Event?
g) Termination of
Electricity Sale
and Service
Agreement and
Failure to Replace
J. Aron
Both:
(i) an Early Termination Date occurs due to a J. Aron Default (as each such term is defined under the Electricity Sale and Service Agreement) under the Electricity Sale and Service Agreement, and
(ii) Seller is unable to enter into a replacement Electricity Sale and Service Agreement with substantially the same terms or terms approved by Buyer by the date that is 120 days following such Early Termination Date as defined and occurs under the Electricity Sale and Service Agreement.

For the avoidance of doubt, Seller may only enter into such a replacement Electricity Sale and Service Agreement if (I) the GSG Guaranty (as defined in the Electricity Sale and Service Agreement) applies to the obligations of the replacement seller thereunder or (II) Seller delivers a Rating Confirmation to Buyer with respect to its entry into such replacement Electricity Sale and Service Agreement.

Automatic No
h) Termination of
Electricity Sale
and Service
Agreement and
Failure to Replace
J. Aron
Both:
(i) an Early Termination Date (as defined under the Electricity Sale and Service Agreement) occurs under the Electricity Sale and Service Agreement for any reason other than as specified in clauses (f) and (g) above, and (ii) Seller is unable to enter into a replacement Electricity Sale and Service Agreement with substantially the same terms or terms approved by Buyer by the date that is 120 days following such Early Termination Date as defined and occurs under the Electricity Sale and Service Agreement.

Seller shall not enter into such a replacement Electricity Sale and Service Agreement unless (I) the GSG Guaranty (as defined in the Electricity Sale and Service Agreement) applies to the obligations of the replacement seller thereunder or (II) Seller delivers a Rating Confirmation to Buyer with respect to its entry into such replacement Electricity Sale and Service Agreement.

Automatic No
i) Termination of a
Buyer Swap
Except in the case where an Automatic Product Delivery Termination Event has occurred under Sections 17.1(e) [Failure to Purchase Identified Call Receivables],

17.1(f)-(h) [Termination of Electricity Sale and Service Agreement], 17.1(j) Seller No
36 Event Related to:

Product Delivery
Termination Event:

Potential
Terminating
Party:

Termination
Payment
Event?
[Termination of a Buyer Swap for Certain Buyer Defaults], 17.1(k) [Termination of Seller Swap for Seller Defaults] or 17.(l) [Dissolution or Bankruptcy of Buyer], both:
(i) an Early Termination Date (as defined in a Buyer Swap) is designated by a Swap Counterparty pursuant to the terms of a Buyer Swap or occurs automatically pursuant to the terms of a Buyer Swap based on a Termination Event where Buyer is the sole Affected Party (as each term is defined in the Buyer Swaps), and (ii) either the corresponding Seller Swap or such Buyer Swap is not replaced within the Swap Replacement Period.
j) Termination of a
Buyer Swap for
Certain Buyer
Defaults and
Termination
Events
An Early Termination Date (as defined in the Buyer Swaps) is designated by a Swap Counterparty pursuant to the terms of a Buyer Swap based on an Event of Default under Section 5(a)(vii) (Bankruptcy) of a Buyer Swap where Buyer is the Defaulting Party (as each term is defined in the Buyer Swaps).

Automatic No
k) Termination of a
Seller Swap for
Seller Defaults
and Termination
Events
Both:
(i) an Early Termination Date (as defined in the Seller Swaps) is designated by a Swap Counterparty pursuant to the terms of a Seller Swap based on an Event of Default where Seller is the Defaulting Party or a Termination Event where Seller is the sole Affected Party (as each term is defined in the Seller Swaps) or otherwise occurs automatically pursuant to the terms of a Seller Swap, but excluding any termination as a result of the termination of this Agreement based on a Product Delivery Termination Event under Section 17.1(d) [Ledger Event] or Section 17.1(h) [Termination of a Buyer Swap], and (ii) such Seller Swap or the corresponding Buyer Swap is not replaced within the Swap Replacement Period.

Automatic No
l) Dissolution or
Bankruptcy of
Buyer
If (i) an involuntary case or other proceeding shall be commenced against Buyer seeking liquidation, reorganization or other relief with respect to it or its debts under any applicable Federal or State bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar law now or hereafter in effect or seeking the appointment of a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of it or any substantial part of its property, and such involuntary case or Automatic No
37 Event Related to:

Product Delivery
Termination Event:

Potential
Terminating
Party:

Termination
Payment
Event?
other proceeding shall remain undismissed and unstayed, or an order or decree approving or ordering any of the foregoing shall be entered and continued unstayed and in effect, in any such event, for a period of 60 days; or (ii) if Buyer shall commence a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar law or any other case or proceeding to be adjudicated a bankrupt or insolvent, or shall consent to the entry of a decree or order for relief in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or if it shall file a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or consent to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of Buyer or any substantial part of its property, or shall make an assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or shall take corporate action in furtherance of any such action.
m) Termination of
Interest Rate Swap
by Buyer
Buyer designates an Early Termination Date (as defined under the Interest Rate Swap) pursuant to the terms of such Interest Rate Swap based on an Event of Default where J.

Aron is the Defaulting Party.

Buyer No
38 Section 17.2 Payments Following a Ledger Event. Following the occurrence of a Ledger Event, Seller shall pay to Buyer any amounts that become payable from J. Aron to Seller pursuant to Section 17.6 of the Electricity Sale and Service Agreement, which amounts will accrue from the date of a Ledger Event until (but not including) the date on which a Termination Payment Event occurs.

Section 17.3 Reserved.

Section 17.4 Remedies and Termination.
(a) Automatic Product Delivery Termination Event. Upon the occurrence of any Automatic Product Delivery Termination Event, a Product Delivery Termination Date shall be deemed to be designated as of the end of the Month in which such Automatic Product Delivery Termination Event occurs.
(b) Optional Product Delivery Termination Event. If at any time an Optional Product Delivery Termination Event has occurred and is continuing, then the Terminating Party, by notice to the other Party specifying the relevant Optional Product Delivery Termination Event, may designate a day not earlier than the last day of the Month in which such notice is deemed given under Article XVI as the Product Delivery Termination Date; provided, however, that with respect to an Optional Product Delivery Termination Event related to a Buyer Swap or Seller Swap, the Terminating Party may, at any time after the commencement of the Swap Replacement Period, conditionally designate a Product Delivery Termination Date, with such designation being conditioned upon (i) the termination and failure to replace either the corresponding Seller Swap or such Buyer Swap and (ii) the Product Delivery Termination Date occurring no earlier than the last day of the Month in which the Swap Replacement Period ends. (c) Effect of Product Delivery Termination Date. As of the Product Delivery Termination Date, (i) the Delivery Period shall end, (ii) the obligation of Buyer to Schedule or receive deliveries of Product from Seller under this Agreement shall terminate, and (iii) the obligation of Seller to Schedule or make any further deliveries of Product to Buyer under this Agreement shall terminate and, unless such Product Delivery Termination Date resulted from a Termination Payment Event, such obligation to deliver Product shall be replaced with a continuing obligation to make payment of the amounts set forth in Exhibit D-3 to Buyer until the earlier of (A) the Month in which a Termination Payment Event occurs and (B) the last due date for such payments under Exhibit D-3. For the avoidance of doubt, (i) except as set forth in this Section

17.4(c) and in Section 17.4(d), this Agreement will continue past a Product Delivery Termination Date, and (ii) a Termination Payment Event may arise contemporaneously with a Product Delivery Termination Date or at any time thereafter and the occurrence of a Product Delivery Termination Date shall not prevent the occurrence of a Termination Payment Event. (d) Early Termination Payment Date. Following a Termination Payment Event, Seller on the Early Termination Payment Date shall (A) pay the Termination Payment and (B) if applicable, pay the Additional Termination Payment, in each case, to the Trustee pursuant to payment instructions issued by Buyer or, in the absence of such instructions, by wire transfer.

Such amounts shall be paid together with interest thereon (before as well as after judgment) from (and including) the Early Termination Payment Date to (but excluding) the date such amount is 39 paid, at the Default Rate. The obligation of Seller to pay the Termination Payment and, if applicable, the Additional Termination Payment on the Early Termination Payment Date is unconditional, irrespective of the validity or enforceability of this Agreement or any other agreement contemplated hereby, any waiver or consent by Buyer, or any other circumstances that might otherwise constitute a legal or equitable discharge of Seller or a defense of Seller to pay the Termination Payment and, if applicable, the Additional Termination Payment. Seller waives all rights to set-off, counterclaim, recoupment and any other defenses that might otherwise be available to Seller with regard to Seller’s obligation to pay the Termination Payment and, if applicable, the Additional Termination Payment on the Early Termination Payment Date. (e) Acknowledgement of Parties. The Parties acknowledge that it is impractical and difficult to assess actual damages as a result of a termination of the Delivery Period under this Agreement, and the Parties therefore agree that the payment of the Termination Payment and any applicable Additional Termination Payment or the continued payment of amounts specified in Exhibit D-3, as applicable, is a fair and reasonable pre-estimate of the actual damages that would be incurred by Buyer as a result of termination of the Delivery Period under this Agreement for any reason and is not a penalty.
(f) Exclusive Termination Rights. Neither this Agreement nor the Delivery Period may be terminated for any reason except as specified in this Article XVII and in Section

2.2. Except with respect to amounts due for periods prior to the Product Delivery Termination Date, the continued payment of amounts required to be made under Section 17.4(c), and, as applicable, the payment of the Termination Payment and any Additional Termination Payment shall be the sole and exclusive remedy for each Party upon the termination of the Delivery Period and this Agreement for any reason, including as a result of rejection of this Agreement by either Party in any bankruptcy proceedings.
(g) Payment of Investment Agreement Breakage Costs. In the event that a payment in respect of breakage costs becomes due from Buyer under a Specified Investment Agreement due to the occurrence of an Early Termination Payment Date, Seller shall pay to Buyer an amount equal to the amount of such payment no later than the later of (A) one (1) Business Day prior to the date such payment is required to be paid by Buyer pursuant to such Specified Investment Agreement and (B) one (1) Business Day following receipt by Seller of a statement setting forth in reasonable detail the amount of such payment. In the event that a payment in respect of breakage costs becomes payable to Buyer under a Specified Investment Agreement due to the occurrence of an Early Termination Payment Date, Buyer shall pay to Seller an amount equal to the amount of such payment no later than one (1) Business Day following receipt of such payment by Buyer.

Section 17.5 Replacement of Swaps.
(a) Neither Party shall exercise any optional right it may have to terminate this Agreement as a result of the termination of any Seller Swap or any Buyer Swap without first complying with this Section 17.5. Each of Buyer and Seller agrees that it will not replace any Buyer Swap or Seller Swap, as applicable, unless the other Party is replacing its Buyer Swap or Seller Swap, as applicable, with the same replacement Swap Counterparty. 40 (b) If:
(i) any Buyer Swap or any Seller Swap terminates,
(ii) Buyer or Seller delivers a termination notice under a Buyer Swap or Seller Swap,
(iii) a Swap Counterparty delivers a termination notice under a Buyer Swap or Seller Swap, or
(iv) any Buyer Swap or any Seller Swap is otherwise reasonably anticipated to become subject to immediate termination, then each Party whose swap is affected shall notify the other Party of the existence of such circumstances and identify the affected Buyer Swap or Seller Swap (the “Affected Swap”). (c) Following receipt of a notice under Section 17.5(b), the Parties shall attempt to replace both the Affected Swap and the corresponding unaffected Seller Swap or Buyer Swap with the same Swap Counterparty (the “Unaffected Swap”) by:
(i) if a Buyer Swap and a Seller Swap with another Swap Counterparty are in effect and otherwise are not subject to termination, (A) exercise any rights they may have to increase their notional quantities under such Buyer Swap and Seller Swap in order to effect a replacement upon termination of the Affected Swap (which increase shall be deemed to be a replacement of both the Buyer Swap and Seller Swap for purposes of Section 17.5 if the full notional quantities of the Affected Swap are thereby replaced), and (B) subsequent to such a replacement, Seller and Buyer shall cooperate in good faith to locate replacement agreements with a second Swap Counterparty and, upon locating a second Swap Counterparty, Seller and Buyer shall reduce their notional quantities under the remaining Seller Swap and Buyer Swap to their original levels and enter into a replacement Seller Swap and Buyer Swap with the replacement Swap Counterparty for the remaining notional quantities; or
(ii) to the extent Seller or Buyer cannot increase their notional quantities under another Buyer Swap and Seller Swap as contemplated by clause (i), cooperate in good faith to locate replacement agreements with an alternate Swap Counterparty to replace both the relevant Seller Swap and relevant Buyer Swap within the Swap Replacement Period.
(d) The “Swap Replacement Period” is a period (i) commencing on the earlier of the date of (x) any termination of a Buyer Swap or Seller Swap designated by a Swap Counterparty, and (y) delivery of a notice of anticipated termination of a Buyer Swap or Seller Swap by a Swap Counterparty, and (ii) ending 60 days after either (A) the commencement of the Swap Replacement Period if Base Quantities are above zero MWhs upon the commencement of such period or otherwise (B) any date on which Base Quantities are increased above zero MWhs, provided that:
41 (i) the Swap Replacement Period will end immediately once it starts if such Buyer Swap or Seller Swap is subject to termination due to the insolvency or bankruptcy of Buyer or Seller;
(ii) the Swap Replacement Period will end five Business Days after it starts if such Seller Swap is subject to termination due to Seller’s failure to pay amounts due or post credit support, other than where (A) any such failure to pay or post credit support was caused solely by error or omission of an administrative or operational nature; (B) funds were available to enable Seller to make such payment when due; and (C) such payment is made within two (2) Business Days of Seller’s receipt of written notice of its failure to pay or post credit support;
(iii) if (A) the Unaffected Swap has been terminated on or prior to the last day of the Month in which the Affected Swap is terminated and (B) the Parties continue to make payments under the Swap Custodial Agreement consistent with Section 17.5(f) hereof, the Swap Replacement Period will end on the last day of the Month in which the 120th day following commencement of the Swap Replacement Period occurs; and (iv) if Buyer or Seller delivers a Reset Termination Exercise Notice or Optional Termination Notice (as each term is defined in the Buyer Swap and the Seller Swap), then the Swap Replacement Period shall be the notice period specified under the applicable Buyer Swap or Seller Swap.
(e) If during a Swap Replacement Period Seller:
(i) presents to Buyer a proposed alternate Swap Counterparty, (ii) requests in writing that Buyer enter into a replacement swap with such alternate Swap Counterparty, and
(iii) agrees to pay Buyer’s reasonable expenses in connection therewith, then, to the extent permitted by the Buyer Swap and the Bond Indenture and as requested by Seller, Buyer shall: (A) enter into a master agreement with such alternate Swap Counterparty and (B) either (1) terminate the Buyer Swap when permitted thereby and enter into a replacement transaction under such new master agreement to the same effect as the terminated Buyer Swap, or (2) cause such Buyer Swap to be novated to such replacement Swap Counterparty. (f) If a Seller Swap terminates or is no longer in effect and a Prepay LLC Payments Period (as defined in the Seller Swap Custodial Agreements) is in effect, then, during such Prepay LLC Payments Period, Seller in connection with the delivery of Product hereunder shall comply with the terms of the applicable Seller Swap Custodial Agreement and make all payments as and when required under such Seller Swap Custodial Agreement. If a Buyer Swap terminates or is no longer in effect and an Issuer Payments Period (as defined in the Buyer Swap Custodial Agreements) is in effect, then, during such Issuer Payments Period, Buyer in connection with the delivery of Product hereunder shall comply with the terms of the applicable Buyer Swap Custodial Agreement and make all payments as and when required under such Buyer Swap Custodial Agreement. The Parties agree that during any Prepay LLC Payments Period and during 42 any Issuer Payments Period, Seller shall act as calculation agent under an applicable Seller Swap Custodial Agreement or an applicable Buyer Swap Custodial Agreement with respect to any terminated Seller Swap or Buyer Swap. Seller agrees not to permit any amendment or other modification to a Seller Swap Custodial Agreement that could adversely affect the right of Buyer to receive payments pursuant such Seller Swap Custodial Agreement. Buyer agrees not to permit any amendment or other modification to a Buyer Swap Custodial Agreement that could adversely affect the right of Seller to receive payments pursuant to such Buyer Swap Custodial Agreement.

Section 17.6 Present Assignment and Waiver of Right to Swap Termination Payments.
(a) Assignment of Seller MTM Payment. The Parties hereto acknowledge that (i) the terms of the Buyer Swaps do not entitle Buyer to any payments in respect of any termination of the Buyer Swaps other than for Unpaid Amounts (as therein defined), (ii) the terms of the Seller Swaps do not entitle the Swap Counterparties to any payments in respect of any termination of a Seller Swap other than in respect of Unpaid Amounts (as defined therein), and (iii) pursuant to the terms of the Buyer Swaps, the Swap Counterparties have assigned to Buyer all rights to any payments and rights to receive payments that such Swap Counterparty receives or becomes entitled to receive in the future arising as a result of or otherwise in respect of any early termination of a Seller Swap, excluding only any right for the Swap Counterparties to receive Unpaid Amounts (as defined therein) (any such payment under clause (iii), excluding any such Unpaid Amounts, a “Seller Swap MTM Payment”). As additional consideration hereunder, Buyer hereby transfers and assigns to Seller all of Buyer’s right, title, and interest to all payments and rights to receive payments, if any, that Buyer receives or becomes entitled to receive in the future arising as a result of or otherwise in respect of a Seller Swap MTM Payment. Buyer agrees that it will not take any steps to enforce any right to receive any payments that it has assigned to Seller pursuant to this Section 17.6(a).
(b) Assignment of Swap Counterparty MTM Payment. The Parties further acknowledge that the terms of the Seller Swaps do not entitle Seller to any payments in respect of any termination of a Seller Swap other than for Unpaid Amounts (as defined therein). Nonetheless, Seller hereby presently transfers and assigns to Buyer all of Seller’s right, title and interest to any payments and rights to receive payments that Seller receives or becomes entitled to receive in the future arising as a result of or otherwise in respect of any early termination of a Seller Swap, excluding only any right for Seller to receive Unpaid Amounts thereunder.

Section 17.7 Limitation on Damages. THE PARTIES CONFIRM THAT THE

EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY

PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS

HEREIN PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE

LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. NEITHER PARTY SHALL BE

LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY, OR INDIRECT

DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY

STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION, OR 43 OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN

IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD

TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING WITHOUT LIMITATION

THE NEGLIGENCE OF EITHER PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES

REQUIRED TO BE PAID UNDER THIS AGREEMENT ARE LIQUIDATED, THE PARTIES

ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO

DETERMINE, OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT,

AND THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. IN DETERMINING THE APPROPRIATE MEASURE OF

DAMAGES THAT WOULD MAKE THE PARTIES WHOLE, THE PARTIES HAVE

THOROUGHLY CONSIDERED, INTER ALIA, THE UNCERTAINTY OF FLUCTUATIONS

IN PRODUCT PRICES, THE ABILITY AND INTENTION OF THE PARTIES TO HEDGE

SUCH FLUCTUATIONS, THE BARGAINED-FOR ALLOCATION OF RISK, THE

KNOWLEDGE, SOPHISTICATION AND EQUAL BARGAINING POWER OF THE PARTIES, THE ARM’S-LENGTH NATURE OF THE NEGOTIATIONS, THE SPECIAL

CIRCUMSTANCES OF THIS TRANSACTION, THE ACCOUNTING AND TAX

TREATMENT OF THE TRANSACTION BY THE PARTIES, AND THE ENTERING INTO OF

OTHER TRANSACTIONS IN RELIANCE ON THE ENFORCEABILITY OF THE LIQUIDATED DAMAGES PROVISIONS CONTAINED HEREIN.

Section 17.8 Termination Payment Adjustment Schedule. Seller shall prepare revisions to the then-current Exhibit D-2 (Termination Payment Adjustment Schedule) in connection with each successive Interest Rate Period pursuant to the terms of the Re-Pricing Agreement by delivering a revised Exhibit D-2 to Buyer no later than the last day of the applicable Reset Period, in which case such amendments will be effective as of the first day of the next Interest Rate Period.

ARTICLE XVIII.

MISCELLANEOUS
Section 18.1 Indemnification Procedure. With respect to each indemnification included in this Agreement, the indemnity is given to the fullest extent permitted by applicable Law and the following provisions shall be applicable. The indemnified Party shall promptly notify the indemnifying Party in writing of any Claim and the indemnifying Party shall have the right to assume its investigation and defense, including employment of counsel, and shall be obligated to pay related court costs, attorneys’ fees and experts’ fees and to post any related appeals bonds; provided, however, that the indemnified Party shall have the right to employ at its expense separate counsel and participate in the defense of any Claim. The indemnifying Party shall not be liable for any settlement of a Claim without its express written consent thereto. In order to prevent double recovery, the indemnified Party shall reimburse the indemnifying Party for payments or costs incurred in respect of an indemnity with the proceeds of any judgment, insurance, bond, surety or other recovery made by the indemnified Party with respect to a covered event.

Section 18.2 Deliveries. No later than delivery of the Prepayment, Buyer will deliver to Seller a copy of the Bond Indenture. The following documents shall be executed and 44 delivered by the Parties contemporaneously with the execution of this Agreement (unless otherwise specified):
(a) by Seller no later than the date of issuance of the Bonds, the Funding Agreement;
(b) by Buyer, a certificate of the Secretary or Assistant Secretary of Buyer setting forth (i) the resolutions of its governing body with respect to the authorization of Buyer to execute and deliver this Agreement, the Bond Indenture and the Clean Energy Purchase Contract, (ii) the appropriate individuals who are authorized to sign such agreements, (iii) specimen signatures of such authorized individuals, and (iv) the organization documents of Buyer, certified as being true and complete;
(c) by Seller, evidence reasonably satisfactory to Buyer of (i) Seller’s authority to execute and deliver this Agreement and (ii) the appropriate individuals who are authorized to sign this Agreement; and
(d) by Buyer, on or prior to the Execution Date a valid sales tax exemption certificate and any other required exemption or resale certificate in jurisdictions where sales of Product occur under this Agreement to the extent such a certificate is necessary under applicable law for exemption from any relevant state taxes that may be levied against the Parties in relation to the transactions under, or pursuant, to this Agreement.

Section 18.3 Entirety; Amendments. This Agreement and the Re-Pricing Agreement, including the exhibits and attachments hereto and thereto and the Seller Tariff, constitute the entire agreement between the Parties and supersede all prior discussions and agreements between the Parties with respect to the subject matter hereof. There are no prior or contemporaneous agreements or representations affecting the same subject matter other than those expressed herein (including the Exhibits hereto) and the Re-Pricing Agreement. Except for any matters that, in accordance with the express provisions of this Agreement, may be resolved by oral agreement between the Parties, no amendment, modification, supplement, or change hereto shall be enforceable unless reduced to writing and executed by both Parties.

Section 18.4 Governing Law. THIS AGREEMENT AND THE RIGHTS AND

DUTIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND

CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF

THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLE THAT WOULD DIRECT THE APPLICATION OF ANOTHER JURISDICTION’S LAW; PROVIDED, HOWEVER, THAT THE AUTHORITY OF BUYER TO ENTER INTO

AND PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

Section 18.5 Non-Waiver. No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is in writing and signed by the Party against whom such waiver is claimed. No waiver of any breach or breaches shall be deemed a waiver of any other subsequent breach.
45 Section 18.6 Severability. If any provision of this Agreement, or the application thereof, shall for any reason be invalid or unenforceable, then to the extent of such invalidity or unenforceability, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby, but rather shall be enforced to the maximum extent permissible under applicable Law, so long as the economic and legal substance of the transactions contemplated hereby is not affected in any materially adverse manner as to either Party.

Section 18.7 Exhibits. Any and all Exhibits referenced in this Agreement are hereby incorporated herein by reference and shall be deemed to be an integral part hereof.

Section 18.8 Winding Up Arrangements. All indemnity and confidentiality obligations, audit rights, and other provisions specifically providing for survival shall survive the expiration or termination of this Agreement. The expiration or termination of this Agreement shall not relieve either Party of (a) any unfulfilled obligation or undischarged liability of such Party on the date of such termination or (b) the consequences of any breach or default of any warranty or covenant contained in this Agreement. All obligations and liabilities described in the preceding sentence of this Section 18.8, and applicable provisions of this Agreement creating or relating to such obligations and liabilities, shall survive such expiration or termination.

Section 18.9 Relationships of Parties; Beneficiaries. The Parties shall not be deemed to be in a relationship of partners or joint venturers by virtue of this Agreement, nor shall either Party be an agent, representative, trustee or fiduciary of the other, except that Seller shall act on behalf of Buyer in remarketing Product pursuant to Exhibit C. Neither Party shall have any authority to bind the other to any agreement. This Agreement is intended to secure and provide for the services of each Party as an independent contractor. Except as provided in Section 18.14 with respect to the Trustee, this Agreement shall not impart any rights enforceable by any third party (other than a permitted successor or assignee bound to this Agreement).

Section 18.10 Immunity. Buyer represents and covenants to and agrees with Seller that it is not entitled to and shall not assert the defense of sovereign immunity with respect to its obligations or any Claims under this Agreement.

Section 18.11 Rates and Indices.
(a) Commodity Reference Prices.
(i) Price Replacement Process for Delayed Publication. If a Commodity Reference Price is not expected to be available for any period (or portion thereof) for any calculation that is required hereunder or under the Buyer Swap or the Seller Swap prior to a relevant calculation being made under any of them, then, upon notice from either Party, the Parties shall promptly endeavor to agree on an alternative source for determination of such Commodity Reference Price for the applicable periods. If such agreement is not reached by the Parties within three Business Days, the Parties shall request quotations for the applicable Commodity Reference Price from four recognized dealers in the electric energy (two selected by each Party) for the period that such Commodity Reference Price is expected to be unavailable. If four quotations are provided as requested, 46 the applicable Commodity Reference Price for the applicable days shall be the arithmetic mean of the quotations provided by each recognized dealer after disregarding the quotations having the highest and lowest values. If exactly three quotations are provided, the applicable Commodity Reference Price for the applicable days shall be the quotation provided by the relevant dealer that remains after disregarding the quotations having the highest and lowest values. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. (ii) Price Replacement Process for Non-Published Index. If a Commodity Reference Price is not available because it has permanently ceased to be published, then the Parties shall promptly endeavor to agree on an alternative source for determination of such Commodity Reference Price. If such agreement is not reached by the Parties within three Business Days, then the replacement Commodity Reference Price shall be selected by Seller, acting reasonably.
(b) Corrections. If a value published for any rate or index used or to be used in this Agreement is subsequently corrected and the correction is published or announced by the Person responsible for that publication or announcement within 30 Days after the original publication or announcement, either Party may notify the other Party of (i) that correction and (ii) the amount (if any) that is payable as a result of that correction. If, not later than 30 Days after publication or announcement of that correction, a Party gives notice that an amount is so payable, the Party that originally either received or retained such amount shall, not later than three Business Days after the effectiveness of that notice, pay, subject to any other applicable provisions of this Agreement, to the other Party that amount, together with interest on that amount at the Default Rate for the period from and including the day on which a payment originally was (or was not) made to but excluding the Day of payment of the refund or payment resulting from that correction.

Section 18.12 Limitation of Liability. Notwithstanding anything to the contrary herein, all obligations of Buyer under this Agreement, including without limitation all obligations to make payments of any kind whatsoever, are special, limited obligations of Buyer, payable solely from the Trust Estate (as such term is defined in the Bond Indenture) as and to the extent provided in the Bond Indenture, including with respect to Operating Expenses (as such term is defined in the Bond Indenture). Buyer shall not be required to advance any moneys derived from any source other than the Revenues (as such term is defined in the Bond Indenture) and other assets pledged under the Bond Indenture for any of the purposes in this Agreement mentioned. Neither the faith and credit of Buyer nor the taxing power of the State of California or any political subdivision thereof is pledged to payments pursuant to this Agreement. Buyer shall not be directly, indirectly, contingently or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reasons of or in connection with this Agreement, except solely to the extent Revenues (as such term is defined in the Bond Indenture) are received for the payment thereof and may be applied therefor pursuant to the terms of the Bond Indenture.

Section 18.13 Counterparts. This Agreement may be executed and acknowledged in multiple counterparts and by the Parties in separate counterparts, each of which shall be an original and all of which shall be and constitute one and the same instrument. 47 Section 18.14 Rights of Trustee. Pursuant to the terms of the Bond Indenture, Buyer has irrevocably appointed the Trustee as its agent to issue notices (including Remarketing Notices) and as directed under the Bond Indenture, to take any other actions that Buyer is required or permitted to take under this Agreement. Seller may rely on notices or other actions taken by Buyer or the Trustee and Seller has the right to exclusively rely on any notices delivered by the Trustee, regardless of any conflicting notices that it may receive from Buyer.

Section 18.15 Operational Services Agreement. Seller acknowledges that Buyer and the Project Participant will enter into that certain Clean Energy Project Operational Services Agreement, dated as of the Bond Closing Date, pursuant to which the Project Participant will have the right to direct Buyer with respect to any directions, consents or waivers by Buyer under this Agreement and the Re-Pricing Agreement.

Section 18.16 Waiver of Defenses. Seller waives all rights to set-off, counterclaim, recoupment and any other defenses that might otherwise be available to Seller with regard to Seller’s obligations pursuant to the terms of this Agreement.

Section 18.17 U.S. Resolution Stay Provisions. Seller and Buyer hereby confirm that they are adherents to the ISDA 2018 U.S. Resolution Stay Protocol (“ISDA U.S. Stay Protocol”), the terms of the ISDA U.S. Stay Protocol are incorporated into and form a part of this Agreement, and for the purposes of such incorporation, (i) Seller shall be deemed to be a Regulated Entity, (ii) Buyer shall be deemed to be an Adhering Party, and (iii) this Agreement shall be deemed a Protocol Covered Agreement. In the event of any inconsistences between this Agreement and the ISDA U.S. Stay Protocol, the ISDA U.S. Stay Protocol will prevail.

Section 18.18 Seller Tariff. Seller agrees that if it seeks to amend the Seller Tariff during the Delivery Period, such amendment will not in any way affect this Agreement without the prior written consent of the other Party. Seller further agrees that it will not assert, or defend itself on the basis that the Seller Tariff is inconsistent with this Agreement.

Section 18.19 Rate Changes.
(a) Standard of Review. Absent the agreement of the Parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of this Agreement, whether proposed by a Party (to the extent that any waiver in Section 18.19(b) below is unenforceable or ineffective as to such Party), a non-party or FERC acting sua sponte, shall solely be the “public interest” application of the “just and reasonable” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) and clarified by Morgan Stanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008). (b) Waiver. In addition, and notwithstanding Section 18.19(a), to the fullest extent permitted by applicable Law, each Party, for itself and its successors and assigns, hereby expressly and irrevocably waives any rights it can or may have, now or in the future, whether under Section 205 and/or 206 of the Federal Power Act or otherwise, to seek to obtain from FERC by any means, directly or indirectly (through complaint, investigation or otherwise), and each hereby covenants and agrees not at any time to seek to so obtain, an order from FERC changing any 48 section of this Agreement specifying the rate, charge, classification, or other term or condition agreed to by the Parties, it being the express intent of the Parties that, to the fullest extent permitted by applicable Law, neither Party shall unilaterally seek to obtain from FERC any relief changing the rate, charge, classification, or other term or condition of this Agreement, notwithstanding any subsequent changes in applicable Law or market conditions that may occur. In the event it were to be determined that applicable Law precludes the Parties from waiving their rights to seek changes from FERC to their market-based power sales contracts (including entering into covenants not to do so) then this Section 18.19(b) shall not apply, provided that, consistent with Section

18.19(a), neither Party shall seek any such changes except solely under the “public interest” application of the “just and reasonable” standard of review and otherwise as set forth in Section

18.19(a).

IN WITNESS WHEREOF, the Parties have caused this Master Power Supply Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
[Separate Signature Page(s) Attached]
Signature Page to the Master Power Supply Agreement
ARON ENERGY PREPAY 22 LLC
By: J. Aron & Company LLC, its Manager
By:____________________________________
Name:______________________________
Title:_______________________________
Signature Page to the Master Power Supply Agreement

CALIFORNIA COMMUNITY CHOICE

FINANCING AUTHORITY
By:____________________________________
Name:______________________________
Title:_______________________________
A-1
EXHIBIT A-1
BASE QUANTITIES; BASE DELIVERY POINTS; COMMODITY REFERENCE PRICES
[To be attached.]
A-2
EXHIBIT A-2

INITIAL ASSIGNED RIGHTS AND OBLIGATIONS
[To be attached.]
B-1

EXHIBIT B

NOTICES
IF TO SELLER: Aron Energy Prepay 22 LLC
c/o J. Aron & Company LLC
200 West Street
New York, NY 10282
Email: [email protected]
Trading: Kenan Arkan
Telephone: (212) 357-2542
[email protected]
Scheduling: Email: [email protected] Direct Phone: (212) 902-8148
Fax: (212) 493–9847
Carly Norlander
ICE Chat: cnorlander1
Email: [email protected]
Direct Phone: (403) 233-9299
Fax: (212) 493-9847
Payments/Invoicing: Lindsey McInally
Telephone: (212) 855-0880
[email protected]
Patricia Hazel
Telephone: (212) 855-0880
[email protected]
General Notices: Andres E. Aguila
Telephone: (212) 855-6008
Fax: (212) 291-2124
[email protected]
IF TO BUYER: California Community Choice Financing Authority 1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [____]
C-1

EXHIBIT C
Section 1. Defined Terms. Capitalized terms used but not otherwise defined in this Exhibit shall have the meanings given to such terms in the Agreement, unless otherwise indicated.

The following terms, when used in this Exhibit C and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires:
“Code” means the Internal Revenue Code of 1986, as amended “Daily Remarketing Notice” has the meaning specified in Section 3(c) of this Exhibit C. “Deemed Remarketing Notice” has the meaning specified in Section 3(d) of this Exhibit C. “Expired Non-Private Business Sales Ledger” has the meaning specified in Section 9(a) of this Exhibit C.
“Expired Private Business Sales Ledger” has the meaning specified in Section 9(a) of this Exhibit C.
“Initial Remarketing” has the meaning specified in Section 5 of this Exhibit C. “Ledger Entry” has the meaning specified in Section 7(b) of this Exhibit C. “Ledger Event” has the meaning specified in Section 9(c) of this Exhibit C. “Minimum Remarketing Sales Price” is, for each MWh of Base Product and Hour, an amount determined by the following formula:

MRSP = RRPP – (RRPP x (RRA/CLB))
Where:

MRSP = The Minimum Remarketing Sales Price for such MWh of Base Product and Hour
RRPP = The Remediation Remarketing Purchase Price for one MWh of Base Product and Hour
RRA = The balance of the Remarketing Reserve Fund at such time CLB = The combined cash balance of the Non-Private Business Sales Ledger and the Private Business Sales Ledger at such time “Municipal Utility” means any Person that (i) is a “governmental person” as defined in Treasury Regulations Section 1.141-1(b), and (ii) owns either or both a Base Product distribution utility or an electric distribution utility (or provides Product or natural gas at wholesale to entities described in clause (i) that own such utilities). Buyer may from time to time revise the definition of “Municipal Utility” to conform to the applicable provisions of the Code or Treasury Regulations C-2
by delivery of written notice to Seller setting forth the revised definition together with a Tax Opinion.
“Non-Private Business Remarketing Proceeds” means all proceeds received by Buyer under Section 5(c) of this Exhibit C from Seller’s remarketing of Base Product in any Non-Private Business Sale.
“Non-Private Business Sale” means a sale (other than a Qualified Sale) of Base Product to a “governmental person” as defined in Treasury Regulation Section 1.141-1(b) that in each case agrees in writing to not use any part of such Base Product for a Private Business Use. “Non-Private Business Sales Ledger” has the meaning specified in Section 7(a)(i) of this Exhibit C.
“Non-Qualifying Remarketing Limit” means a quantity of Product, in MWhs, equal to 10% of the total quantity of Base Product set forth in Exhibit A-1 to be delivered hereunder, as such Non-Qualifying Remarketing Limit may be increased from time to time upon receipt by Buyer and Seller of a Tax Opinion setting forth a higher Non-Qualifying Remarketing Limit. “Private Business Remarketing Limit” means a quantity of Product, in MWhs, equal to (a) $15,000,000, divided by (b) the Specified Fixed Price, as such Private Business Remarketing Limit may be increased from time to time upon receipt by Buyer and Seller of a Tax Opinion setting forth a higher Private Business Remarketing Limit. “Private Business Remarketing Proceeds” means all proceeds received by Buyer under Section 5(d) of this Exhibit C from Seller’s remarketing of Base Product in any Private Business Sale (including the purchase of such Base Product by Seller for its own account). “Private Business Sale” means any sale of Base Product other than in a Non-Private Business Sale or a Qualified Sale.
“Private Business Sales Ledger” has the meaning specified in Section 7(a)(ii) of this Exhibit C.
“Private Business Use” has the meaning ascribed to such term in Section 141 of the Code. “Qualified Sale” means the sale of Product or natural gas to a Municipal Utility that agrees in writing (i) to use all of such Product or natural gas for a Qualifying Use that is not a Private Business Use and (ii) not to count any purchase of such Product or natural gas towards any remediation obligations such Municipal Utility may have with respect to proceeds received from the sale of property purchased with tax-exempt financing proceeds other than the Bonds. “Qualifying Use” with respect to Product or natural gas has the meaning ascribed to such term in Treasury Regulations Section 1.148-1(e)(2)(iii)(A)(2) or (B)(2), as applicable. “Remarketing Fee” has the meaning specified in Exhibit F.

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“Remarketing Notice” means either a Daily Remarketing Notice or a Monthly Remarketing Notice, but shall not include a Deemed Remarketing Notice. “Remarketing Reserve Fund” means an account established under the Bond Indenture into which Buyer shall deposit the amounts specified in Section 5(e) of this Exhibit C. “Remediation Remarketing” means the remarketing of Product or natural gas in Qualified Sales by either of Buyer or Seller pursuant to Section 8 of this Exhibit C in an effort to reduce to zero any Ledger Entry balances in either the Non-Private Business Sales Ledger or the Private Business Sales Ledger.
“Remediation Remarketing Purchase Price” has the meaning specified in Section 8(a)(ii)(B) of this Exhibit C.
“Tax Opinion” means an Opinion of Bond Counsel (as defined in the Bond Indenture) to the effect that an action proposed to be taken or an event is not prohibited by the Bond Indenture or the Laws of the United States and will not adversely affect the exclusion from gross income for U.S. federal income tax purposes of interest on any Bonds the interest on which is intended to be excluded from such gross income under Section 103(a) of the Code. “Treasury Regulations” means the U.S. Treasury Regulations under the Code.

Section 2. Buyer’s Right and Obligation to Request Remarketing. Buyer may, and, if required to do so under the Bond Indenture or Article VII of the Agreement shall, and the Project Participant (subject to the conditions set forth in the Clean Energy Purchase Contract) may, request Seller to remarket, pursuant to this Exhibit C, all or a specified part of the applicable Quantities for any Delivery Point.

Section 3. Remarketing Notice.
(a) Generally. To request remarketing under this Exhibit C, Buyer or the Project Participant must issue a Remarketing Notice substantially in the form attached as Attachment 3 of Exhibit G to the Agreement, which Remarketing Notice must state the portion of the applicable Quantity to be remarketed in each Hour in each Day from each relevant Delivery Point.
(b) Monthly Remarketing Notice. Buyer or the Project Participant may designate a Remarketing Notice as a “Monthly Remarketing Notice” if the Remarketing Notice is delivered to Seller not later than three Business Days prior to the start of the first Month in which it applies, and applies to a period of one Month or more; provided furthermore that, in the event Seller is obligated to remarket Base Quantities under Section 3.2 of the Agreement, Buyer shall be deemed to have delivered a Monthly Remarketing Notice with respect thereto. (c) Daily Remarketing Notice. Buyer or the Project Participant may designate a Remarketing Notice as a “Daily Remarketing Notice” if the Remarketing Notice is delivered to Seller not later than three Business Days prior to the start of the first Day in which it applies.

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(d) Deemed Remarketing Notice. Any other notice to remarket Base Product given by Buyer (or deemed to be given by Buyer pursuant to Section 4.2 of the Agreement) will be a “Deemed Remarketing Notice.”
Section 4. Seller’s Remarketing Obligations Generally.
(a) Sales for Buyer’s Account. All Base Product remarketed by Seller pursuant to this Exhibit C shall be for the benefit of Buyer, meaning all remarketed Base Product shall first be sold by Seller to Buyer and then resold by or for the account of Buyer pursuant to the terms and provisions of this Exhibit C.
(b) Limitation on Seller Duties. Seller may act directly as principal to the remarketing buyer, or may cause a supplier to Seller to act directly as principal to the remarketing buyer. Neither Seller nor any Person acting on Seller’s behalf shall owe any fiduciary duties to Buyer with respect to the remarketing of any Base Product. Buyer acknowledges and agrees that Seller or a Person acting on Seller’s behalf in remarketing Base Product may have other supplies of Base Product available to sell to potential remarketing buyers, and Base Product designated for remarketing shall not be entitled to any preference over any such other supplies of Base Product. (c) Monthly Records. Seller shall prepare, maintain and provide monthly to Buyer accurate and complete records showing (i) the identity of each purchaser in a Qualified Sale, a Non-Private Business Sale, or a Private Business Sale undertaken by Seller on Buyer’s behalf, (ii) the aggregate amount of Base Product remarketed under this Agreement in Qualified Sales, (iii) the aggregate amount of Base Product remarketed under this Agreement in Non-Private Business Sales, and (iv) the aggregate amount of Base Product remarketed under this Agreement in Private Business Sales.
(d) Remission of Sales Proceeds. Any amounts due to Buyer for Base Product remarketed by Seller or purchased by Seller under this Exhibit C shall be remitted to Buyer pursuant to Section 14.2 of the Agreement in the Month following the Month in which such Base Product is remarketed or purchased, as applicable.

Section 5. Initial Remarketing. The following provisions shall apply to the initial remarketing of any Base Product to be remarketed by Seller pursuant to a Remarketing Notice (an “Initial Remarketing”):
(a) Seller’s Remarketing Duties. Seller shall use Commercially Reasonable Efforts to remarket or cause to be remarketed all Base Product specified for Initial Remarketing.

In exercising such Commercially Reasonable Efforts, Seller shall first attempt to remarket or cause to be remarketed all Base Product specified in a Remarketing Notice in Qualified Sales and then, if Seller is unable to so remarket all of such Base Product for such purposes, in Non-Private Business Sales. If Seller is unable to remarket all or any portion of the Base Product designated in a Remarketing Notice in Qualified Sales and Non-Private Business Sales, then Seller shall purchase such Base Product for its own account at the prices set forth in Section 5(d) of this Exhibit C as if such Base Product had been remarketed to it. (b) Floor Price. Seller shall not be required to remarket any Base Product in an Initial Remarketing for any Hour at a net price to Seller (after deducting all transportation costs C-5
and all other costs) that is anticipated to be less than (i) the Day-Ahead Market Price applicable to such Base Product and Hour in the case of an Initial Remarketing pursuant to a Monthly Remarketing Notice, or (ii) the Real-Time Market Price applicable to such Base Product and Hour in the case of an Initial Remarketing pursuant to a Daily Remarketing Notice. (c) Proceeds from Qualified Sales and Non-Private Business Sales. (i) For any Base Product specified in a Monthly Remarketing Notice that Seller remarkets in a Qualified Sale or Non-Private Business Sale, Seller shall deliver to Buyer the actual proceeds of such remarketing received, less the Remarketing Fee per MWh sold; provided that the aggregate amount paid by Seller under this clause (i) for any Month shall not be less than the aggregate quantity so remarketed during such Month multiplied by the Net Participant Price.
(ii) For any Base Product specified in a Daily Remarketing Notice that Seller remarkets in a Qualified Sale or Non-Private Business Sale, Seller shall deliver to Buyer the actual proceeds of such remarketing received, less the Remarketing Fee per MWh sold, provided that the aggregate amount paid by Seller under this clause (ii) for any quantity of Base Energy remarketed shall not be less than the result of (x) the quantity so remarketed multiplied by (y) the product of the Real-Time Market Price(s) for the relevant Hour(s) multiplied by the applicable Monthly Discount Percentage (as defined in the Clean Energy Purchase Contract) with respect to any Base Product specified in a Daily Remarketing Notice.
(iii) In the event the payment due date under a Qualified Sale or Non-Private Business Sale has not yet occurred prior to the date upon which payment is due under this Agreement for the applicable Month, the Parties shall nonetheless issue statements as if the full amount from such Qualified Sale or Non-Private Business Sale had been paid and, if such full payment is not received prior to the next monthly due date under this Agreement, the Parties shall issue the appropriate statements to reflect the actual proceeds received and true-up any difference.
(d) Proceeds from Private Business Sales.
(i) For any Base Product specified for any Hour of any Day in a Monthly Remarketing Notice that is not remarketed in a Qualified Sale or Non-Private Business Sale, Seller shall pay to Buyer the positive result determined by the following formula with respect to each Delivery Point to which such Monthly Remarketing Notice applied, provided that the aggregate amount paid by Seller under this clause (i) for any Month shall not be less than the aggregate quantity so remarketed during such Month multiplied by the Net Participant Price:

P = Q x (DAMP – RF)
Where:

P = The amount payable by Seller under this Section 5(d)(i) for such Day and Delivery Point
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Q = The quantity of such Base Product for such Day purchased by Seller with respect to such Delivery Point
DAMP = The Day-Ahead Market Price for such Delivery Point and Hour RF = The Remarketing Fee
(ii) For any Base Product specified for any Hour or portion thereof in a Daily Remarketing Notice that is not remarketed in a Qualified Sale or Non-Private Business Sale, Seller shall pay to Buyer the positive result determined by the following formula with respect to each Delivery Point to which such Daily Remarketing Notice applied:

P = Q x (RTMP – RF)
Where:

P = The amount payable by Seller under this Section 5(d)(ii) for such Hour or portion and Delivery Point
Q = The quantity of such Base Product for such Hour or portion remarketed with respect to such Delivery Point
RTMP = The Real-Time Market Price for such Delivery Point and Hour or portion
RF = The Remarketing Fee
(e) Deposits to Remarketing Reserve Fund. Any proceeds received by Buyer under this Section 5 for Base Product remarketed in sales other than Qualified Sales that exceed the amount Buyer would have received for the same quantity of Base Product at the Net Participant Price shall be deposited in the Remarketing Reserve Fund.

Section 6. Deemed Remarketing. For any Base Product specified or deemed to be specified for any Hour in a Deemed Remarketing Notice, Seller shall pay to Buyer the positive result determined by the following formula with respect to each Delivery Point to which such Deemed Remarketing Notice applied:

P = Q x (SP – RF– AF)
Where:

P = The amount payable by Seller under this Section 6 for such Delivery Point and Hour
Q = The quantity of such Base Product remarketed with respect to such Delivery Point and Hour
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SP = The price at which Seller, acting in a Commercially Reasonable manner, resells for delivery in such Hour at such Delivery Point any Base Product not then and there received by Buyer, deducting from such proceeds any (i) costs reasonably incurred by Seller in reselling such Base Product and (ii) additional transmission charges, if any, reasonably incurred by Seller in delivering such Base Product to the third party purchasers, or at Seller’s option, the market price for such Hour at the Delivery Point for such Product not received as determined by Seller in a Commercially Reasonable manner; provided, however, in no event shall such price include any penalties, ratcheted demand or similar charges, nor shall Seller be required to utilize or change its utilization of its owned or controlled assets, including contractual assets, or market positions to minimize Buyer’s liability. For purposes of the foregoing, Seller shall be considered to have resold such Base Product to the extent Seller shall have entered into one or more arrangements in a Commercially Reasonable manner whereby Seller repurchases its obligation to purchase and receive the Base Product from another party in such Hour at such Delivery Point RF = The Remarketing Fee
AF = Either (i) to the extent such Deemed Remarketing Notice results from Buyer’s failure to Schedule pursuant to Section 4.2 of the Agreement, the Administrative Fee, or (ii) zero.

Section 7. Tracking Remarketing Proceeds.
(a) Ledgers. Seller shall maintain four separate ledgers related to remarketing proceeds as described below:
(i) One ledger (the “Non-Private Business Sales Ledger”), to which Seller shall credit, (A) as dollar credits, the Non-Private Business Remarketing Proceeds, and (B) as MWh credits, the MWhs of Base Product purchased or remarketed to produce such Non-Private Business Remarketing Proceeds.
(ii) Another ledger (the “Private Business Sales Ledger”), to which Seller shall credit, (A) as dollar credits, Private Business Remarketing Proceeds, and (B) as MWh credits, the MWhs of Base Product purchased or remarketed to produce such Private Business Remarketing Proceeds.
(iii) The other two ledgers shall be maintained, credited, and debited as described in Section 9(a) of this Exhibit C.
(b) Date of Ledger Entries. The credits to be recorded in the ledgers described in Section 7(a)(i) and Section 7(a)(ii) of this Exhibit C (collectively, the “Ledger Entries”) shall be dated as of the first Day of the Month prior to the Month in which Buyer or the Project Participant receives the proceeds corresponding to such Ledger Entries.

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(c) Aggregation of Ledgers. The four ledgers described in Sections 7(a) and 9(a) of this Exhibit C and all debits and credits to such ledgers shall be kept on an aggregate basis for purposes of this Exhibit C.
(d) Disqualified Sales. Buyer shall provide to Seller all reports provided by the Project Participant pursuant to Section 7.5 of the Clean Energy Purchase Contract. To the extent set forth in Section 7.6(a) of the Clean Energy Purchase Contract, Seller will add “Disqualified Sale Proceeds” to the appropriate ledgers described above. Buyer agrees to cause any payment made by the Project Participant pursuant to Section 7.6(c) of the Clean Energy Purchase Contract to be deposited into the Debt Service Account (as defined in the Bond Indenture). (e) Remarketing of and Remediation with Storage Products. For any remarketing proceeds relating to Assigned Products measured in kW-month, the Parties acknowledge and agree that such proceeds shall be recorded in the applicable ledgers on a MWh basis calculated as the result of (i) the total dollar proceeds of any such remarketing divided by (ii) $[____] (which is the Fixed Price as defined in the Buyer Swap). Any Remarketing Fee relating thereto shall be calculated on a per MWh basis consistent with the result of the conversion to MWhs pursuant to the preceding sentence.

Section 8. Remediation Remarketing.
(a) Remarketing. At any time that the Ledger Entry balance of either the Non-Private Business Sales Ledger or the Private Business Sales Ledger is greater than zero:
(i) Buyer shall exercise or shall cause the Project Participant to exercise Commercially Reasonable Efforts to utilize the proceeds represented by the dollar balances of such Ledger Entries to purchase Product for resale in Qualified Sales and shall promptly notify Seller following such purchase and sale. Additionally, Seller and Buyer acknowledge and agree that any purchases of Assigned PAYGO Products by the Project Participant shall be applied to the reduction of any such Ledger Entries. (ii) Seller shall exercise Commercially Reasonable Efforts to locate opportunities for Buyer to purchase Product to sell in Qualified Sales to remediate the proceeds represented by the dollar balances of the Ledger Entries. In this regard, if Seller locates a Remediation Remarketing opportunity, then
(A) Seller shall notify Buyer of such opportunity;
(B) Buyer shall, upon receipt of such notice, purchase Product from Seller at a price determined by Seller in a Commercially Reasonable manner based upon applicable market prices at the location where the remarketing opportunity sale will occur (the “Remediation Remarketing Purchase Price”); (C) Seller shall remarket such Product on Buyer’s behalf in a Qualified Sale;
(D) Seller shall remit to Buyer the proceeds collected from such Qualified Sale, but in no event shall Seller remit less than the Minimum C-9
Remarketing Sales Price for the remarketing transaction; provided, however, that to the extent Seller does not receive the Remediation Remarketing Purchase Price from Buyer prior to the Remediation Remarketing described herein, Seller shall credit the proceeds collected from such remarketing sale against the Remediation Remarketing Purchase Price owed to Seller, and Seller shall be reimbursed from the Remarketing Reserve Fund to the extent necessary to make Seller whole for such Qualified Sale; and
(E) Seller shall issue to Buyer a confirmation notice (including the dollar price and MWhs) of each purchase of Product by or on behalf of Buyer, and each sale of Product on Buyer’s behalf, under this Section 8(a)(ii), and amounts due from or to Buyer shall be separately stated on the Billing Statement for the Month in which such remarketing transactions occur.