SOFR Index Rate. The SOFR Index Rate is a daily variable interest rate equal to the sum of (a) the product of the SOFR Index and the Applicable Factor plus (b) the Applicable Spread on each day of a SOFR Effective Period not to exceed the Maximum Rate.
Applicable Factor. The Applicable Factor is the percentage of the SOFR Index shown on the inside cover page of this Official Statement for the Series 2022[B]-3 Bonds. The Applicable Factor will remain constant for the duration of the SOFR Index Rate Period.
Applicable Spread. The Applicable Spread for the Series 2022[B]-3 Bonds is the margin added to the product of the SOFR Index and the Applicable Factor shown on the inside cover page of this Official Statement. The Applicable Spread will remain constant for the duration of the SOFR Index Rate Period.
Business Day. For purposes of determining the SOFR Index Rate, “Business Day” means any day other than (a) Saturday or Sunday, (b) a day on which commercial banks in New York, New York are authorized by law or executive order to close, (c) a day on which the New York Stock Exchange, Inc. is closed, (d) a day on which the payment system of the Federal Reserve System is not operational, or (e) any day that the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the purposes of trading United States government securities.
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35 Index Rate Reset Date. The Index Rate Reset Date for the Series 2022[B]-3 Bonds is each SOFR Effective Date.
NY Federal Reserve’s Website is the website of the NY Federal Reserve currently at http://www.newyorkfed.org, or any successor website of the NY Federal Reserve.
SOFR Accrual Period. The SOFR Accrual Period is the number of actual days from, and including, (a) the Initial Issue Date or the preceding Interest Payment Date, whichever is most recent, to (but not including) (b) the next succeeding Interest Payment Date regardless of the actual number of calendar days in any Month.
SOFR Effective Date. The SOFR Effective Date is each Business Day.
SOFR Effective Period. The SOFR Effective Period is the number of actual days from a SOFR Effective Date to the next SOFR Effective Date.
SOFR Index. The SOFR Index is the “Secured Overnight Financing Rate” reported on the NY Federal Reserve’s Website, or reported by any successor to the NY Federal Reserve as administrator of such Secured Overnight Financing Rate, as of 3:00 p.m. on each SOFR Publish Date representing the SOFR Index as of the SOFR Lookback Date, which will be used to calculate interest for the SOFR Effective Period beginning on the SOFR Effective Date. [For example, for purposes of determining the SOFR Index for a SOFR Effective Date of Thursday, February 17, 2022, the Calculation Agent uses SOFR published on the SOFR Publish Date of Tuesday, February 15, 2022, which is the SOFR Index for the SOFR Lookback Date of Monday, February 14, 2022. SOFR is published every Business Day at 8:00 a.m. and may be revised until 2:30 p.m., as described herein. If the SOFR Index is not available as of any Index Rate Reset Date, the interest rate for such Index Rate Reset Date will be determined using a comparable substitute or replacement index for such Index Rate Reset Date designated by CCCFA in writing (with notice to, and which is available to, the Calculation Agent) in compliance with the Indenture. Any substitute or replacement Index Rate is required to be consistent with any corresponding substitute or replacement index rate designated pursuant to the Interest Rate Swap.
SOFR Interest Calculation Date. The SOFR Interest Calculation Date is the last Business Day of each month.
SOFR Lookback Date. The SOFR Lookback Date is the third Business Day immediately preceding each SOFR Effective Date.
SOFR Publish Date. The SOFR Publish Date is the second Business Day immediately preceding each SOFR Effective Date.
Additional Information Regarding SOFR. The Secured Overnight Financing Rate (or SOFR) is published by the Federal Reserve Bank of New York (the “Federal Reserve”) and is intended to be a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities. The Federal Reserve reports that the Secured Overnight Financing Rate includes all trades in the Broad General Collateral Rate (as defined on the Federal Reserve’s Website), plus bilateral Treasury repurchase agreement transactions cleared through the delivery-versus-payment service offered by the Fixed Income Clearing Corporation Agenda Page 1003
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36 (the “FICC”), a subsidiary of the Depository Trust and Clearing Corporation (“DTCC”). The Secured Overnight Financing Rate is filtered by the Federal Reserve to remove a portion of the foregoing transactions considered to be “specials” (as defined on the Federal Reserve’s Website).
The Federal Reserve reports that the Secured Overnight Financing Rate is calculated as a volume-weighted median of transaction-level tri-party repo data collected from The Bank of New York Mellon as well as General Collateral Finance repurchase agreement transaction data and data on bilateral Treasury repurchase transactions cleared through the FICC’s delivery-versus-payment service. The Federal Reserve notes that it obtains information from DTCC Solutions LLC, an affiliate of DTCC. The Federal Reserve notes on its publication page for the Secured Overnight Financing Rate that use of the Secured Overnight Financing Rate is subject to important limitations and disclaimers, including that the Federal Reserve may alter the methods of calculation, publication schedule, rate revision practices or availability of the Secured Overnight Financing Rate at any time without notice. Secured Overnight Financing Rate rates are subject to revision until 2:30 p.m. on any date on which the Secured Overnight Financing Rate is published. The description of the Secured Overnight Financing Rate herein is not and does not purport to be exhaustive.
For a more complete description of the Secured Overnight Financing Rate, see the Federal Reserve’s Website at https://apps.newyorkfed.org/markets/autorates/sofr. Such website is not incorporated by reference herein.
For a summary of certain risks relating to SOFR Index Rate Bonds, see “INVESTMENT CONSIDERATIONS - Certain Risks of SOFR Index Rate Bonds” above.
Calculation Agent
[_________________] will be appointed by CCCFA as Calculation Agent for any Series 2022[B]- 2 Bonds and any Series 2022[B]-3 Bonds that are issued pursuant to the Indenture and a Calculation Agent Agreement between the parties.
General
After the Initial Interest Rate Period, the Outstanding Bonds may be remarketed or converted to another Term Rate Period, or a Daily Interest Rate Period, a Weekly Interest Rate Period, a Commercial Paper Interest Rate Period, another Index Rate Period, or a combination of Interest Rate Periods. This Official Statement describes the terms of the Bonds only during the Initial Interest Rate Period and must not be relied upon after the Bonds have been converted to another Interest Rate Period.
Interest on any Bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date, shall be paid to the Person in whose name that Bond is registered, with respect to the Series 2022[B]-1 Bonds, at the close of business on the 15th day of the Month immediately preceding the Month in which such Interest Payment Date falls, or, with respect to the Series 2022[B]-2 Bonds and Series 2022[B]-3 Bonds, the Business Day immediately preceding such Interest Payment Date (the “Regular Record Date”).
Any interest on any Bond which is payable, but is not punctually paid or duly provided for on any Interest Payment Date (“Defaulted Interest”), shall forthwith cease to be payable to the Person who was the registered owner on the relevant Regular Record Date; and such Defaulted Interest shall be paid by CCCFA to the Persons in whose names the Bonds are registered at the close of business on a date (the “Special Record Date”) for the payment of such Defaulted Interest, which shall be fixed in the following Agenda Page 1004
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37 manner: CCCFA shall notify the Bond Registrar in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment, and at the same time CCCFA shall deposit with the Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Paying Agent for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in the Indenture. Thereupon the Bond Registrar will fix a Special Record Date for the payment of such Defaulted Interest which will be not more than 15 days nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Bond Registrar of notice of the proposed payment. The Bond Registrar shall promptly notify CCCFA of such Special Record Date and, in the name and at the expense of CCCFA, will cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Bondholder at its address as it appears upon the registry books, not less than 10 days prior to such Special Record Date.
Increased Interest Rate Upon Ledger Event
Pursuant to the Electricity Purchase, Sale and Service Agreement, if a Ledger Event occurs, J. Aron will be obligated to pay the Electricity Supplier, and pursuant to the Master Power Supply Agreement, the Electricity Supplier will be obligated to pay CCCFA, scheduled Additional Payments calculated to provide a sum sufficient (together with the interest component of the Scheduled Debt Service Deposits and any Interest Rate Swap Receipts) to enable CCCFA to pay the Increased Interest Rate on the Series 2022[B]-1 Bonds at a rate of 8.00% per annum, and to pay the Increased Interest Rate on the Index Rate Bonds at the applicable Index Rate plus ___%. The Indenture provides that, subject to CCCFA’s receipt of such Additional Payments from the Electricity Supplier, interest on each Series of Bonds will be paid at each Increased Interest Rate after the occurrence of a Ledger Event.
See “THE MASTER POWER SUPPLY AGREEMENT — Ledger Event” below for a description of the provisions of the Master Power Supply Agreement relating to a Ledger Event and the amounts payable by the Electricity Supplier to CCCFA following a Ledger Event. See “THE ELECTRICITY PURCHASE, SALE AND SERVICE AGREEMENT — Additional Amounts Payable Following a Ledger Event” below for a description of the provisions of the Electricity Purchase Sale and Service Agreement relating to the amounts payable by J. Aron to the Electricity Supplier following a Ledger Event.
The Bonds will bear interest at the Increased Interest Rate from and including the day on which a Ledger Event occurs to but not including the earlier of (a) the date on which a Termination Payment Event occurs under the Master Power Supply Agreement, (b) the Mandatory Purchase Date or any prior redemption date with respect to the Bonds, and (c) the Interest Payment Date with respect to such series of Bonds immediately succeeding the last date on which J. Aron paid the Additional Payments.
Interest on the Bonds at the Increased Interest Rate will be payable on each regular Interest Payment Date, any redemption date and the Mandatory Purchase Date. CCCFA will give prompt written notice to the Trustee of (i) the occurrence and date of a Ledger Event (which shall be the first day of the related Increased Interest Rate Period), and (ii) the occurrence and date of any Termination Payment Event (which shall be the last day of the related Increased Interest Rate Period). Interest on the Bonds at an Increased Interest Rate will be computed on the basis of a 360-day year consisting of twelve 30-day months and will be payable in the same manner as the interest borne by the Bonds on the Initial Issue Date.
For purposes of the Indenture:
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38 (a) any Additional Payments received by CCCFA from the Electricity Supplier in respect of a Ledger Event shall not constitute an item of “Revenues” and shall be deposited directly into the Debt Service Account; and
(b) The Scheduled Debt Service Deposits required by the Indenture shall be computed on the basis of the interest rates borne by the Bonds on the Initial Issue Date and shall not be increased in the event that any series of Bonds bears interest at the Increased Interest Rate.
Tender
Mandatory Tender. The Bonds maturing on [_____________] 1, 20[__] * are required to be tendered for purchase on [_____________] 1, 20[__]* (the “Mandatory Purchase Date”), which is the day following the last day of the Initial Interest Rate Period. The Purchase Price of the Bonds on the Mandatory Purchase Date is equal to 100% of the principal amount thereof and is payable in immediately available funds first from amounts on deposit in the Remarketing Proceeds Account established by the Indenture and second from amounts on deposit in the Issuer Purchase Account established by the Indenture. Accrued interest due on any Bonds to be purchased on the Mandatory Purchase Date, which is an Interest Payment Date, shall be paid from amounts on deposit in the Debt Service Account.
The Purchase Price of any Bond on the Mandatory Purchase Date shall be payable only upon surrender of such Bond to the Trustee at its designated corporate office, accompanied by an instrument of transfer thereof in form satisfactory to the Trustee, executed in blank by the Owner thereof or by the Owner’s duly-authorized attorney, with such signature guaranteed by a commercial bank, trust company or member firm of the New York Stock Exchange at or prior to 10:00 a.m., New York City time on the date specified for such delivery. Notice of a mandatory tender is to be given no less than 30 days prior to the applicable Mandatory Purchase Date. In the event that any Owner of a Bond so subject to mandatory tender for purchase shall not surrender such Bond to the Trustee for purchase on the Mandatory Purchase Date, then such Bond shall be deemed to be an Undelivered Bond, and that no interest shall accrue thereon on and after such mandatory purchase date and that the Owner thereof shall have no rights under the Indenture other than to receive payment of the Purchase Price thereof.
Failed Remarketing. Under the Indenture, “Failed Remarketing” means the failure (i) of the Trustee to receive the Purchase Price, or to have on deposit in the Bond Purchase Fund amounts sufficient and available to pay the Purchase Price, of any Bond required to be purchased on a Mandatory Purchase Date by 12:00 noon, New York City time, on the fifth Business Day preceding such Mandatory Purchase Date or (ii) to purchase or redeem such Bond in whole by such Mandatory Purchase Date (including from any funds on deposit in the Assignment Payment Fund and required to be used for such redemption). A Failed Remarketing is a Termination Payment Event, and will result in an Early Termination Payment Date, under the Master Power Supply Agreement, and the extraordinary redemption of the Bonds on the Mandatory Purchase Date. Such an extraordinary redemption of the Bonds has the same economic effect on Bondholders as a mandatory tender of the Bonds on the Mandatory Purchase Date.
No Optional Tender. The Bonds are notsubject to optional tender by Bondholders during the Initial Interest Rate Period.
Redemption*
Optional Redemption of Series 2022[B]-1. The Series 2022[B]-1 Bonds are subject to redemption at the option of CCCFA in whole or in part (in such amounts and by such maturities as may be specified by * Preliminary, subject to change.
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39 CCCFA and by lot within a maturity) on any date at a Redemption Price, calculated by a quotation agent selected by CCCFA, equal to the greater of:
(a) the sum of the present values of the remaining unpaid payments of principal and interest to be paid on the Series 2022[B]-1 Bonds to be redeemed from and including the date of redemption (not including any portion of the interest accrued and unpaid as of the redemption date) to the earlier of (a) the stated maturity date of such Series 2022[B]-1 Bonds, or (b) the Mandatory Purchase Date, discounted to the date of redemption on a semiannual basis at a discount rate equal to the Applicable Tax-Exempt Municipal Bond Rate (as defined in APPENDIX C) for such Series 2022[B]-1 Bonds minus 0.25% per annum; and
(b) the Amortized Value thereof (defined below);
in each case plus accrued and unpaid interest to the date of redemption.
The Series 2022[B]-1 Bonds maturing after the Mandatory Purchase Date are also subject to redemption at the option of CCCFA in whole or in part on and after the first Business Day of the third month preceding the Mandatory Purchase Date at a Redemption Price, calculated by a quotation agent selected by CCCFA, equal to the Amortized Value thereof (as of the first Business Day of the month of redemption), plus $0.__ per $1,000 of the principal amount thereof and accrued and unpaid interest to the date of redemption. In lieu of redeeming Series 2022[B]-1 Bonds pursuant to this provision, the Trustee may, upon the Written Direction of CCCFA, use such funds as may be available by CCCFA or as are otherwise available under the Indenture to purchase such Series 2022[B]-1 Bonds on the applicable redemption date at a Purchase Price equal to the applicable Redemption Price of such Series 2022[B]-1 Bonds described above. Any Series 2022[B]-1 Bonds so purchased may be remarketed in a new Interest Rate Period or may be cancelled by the Trustee, in either case as set forth in the Written Direction of CCCFA.
“Amortized Value” means, with respect to any Series 2022[B]-1 Bond to be redeemed during the Initial Interest Rate Period, the principal amount of such Series 2022[B]-1 Bond multiplied by the price of such Series 2022[B]-1 Bond expressed as a percentage, calculated by a major market maker in municipal securities, as the quotation agent, selected by CCCFA, based on the industry standard method of calculating bond prices (as such industry standard prevailed on the date such Series 2022[B]-1 Bond began to bear interest at its current Term Rate), with a delivery date equal to the date of redemption of such Series 2022[B]-1 Bond, a maturity date equal to the earlier of (a) the stated maturity date of such Series 2022[B]- 1 Bond, or (b) the Mandatory Purchase Date, and a yield equal to such Series 2022[B]-1 Bond’s original reoffering yield (as set forth on the inside cover page of this Official Statement) on the date such Series 2022[B]-1 Bond began to bear interest at its current Term Rate. The Amortized Value of the Series 2022[B]-1 as of certain dates during the Initial Interest Rate Period is shown on APPENDIX H.
Optional Redemption of Index Rate Bonds. The Series 2022[B]-2 Bonds and Series 2022[B]-3 Bonds are subject to optional redemption by CCCFA in whole or in part (in such amounts and by such maturities as may be specified by CCCFA and at random within a maturity), on any day on or after the first day of the third month preceding the Initial Mandatory Purchase Date for the Series 2022[B]-2 Bonds and Series 2022[B]-3 Bonds, as applicable, at a Redemption Price equal to 100% of the principal amount thereof to be redeemed, plus accrued and unpaid interest to the date of redemption. In lieu of redeeming the Series 2022[B]-2 Bonds or Series 2022[B]-3 Bonds pursuant to this provision, the Trustee may, upon the Written Direction of CCCFA, use such funds as may be available by CCCFA or as are otherwise available under the Indenture to purchase such Series 2022[B]-2 Bonds or Series 2022[B]-3 Bonds on the applicable redemption date at a Purchase Price equal to the applicable Redemption Price of such Series 2022[B]-2 Agenda Page 1007
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40 Bonds or Series 2022[B]-3 Bonds, as applicable. Any Series 2022[B]-2 Bonds and Series 2022[B]-3 Bonds so purchased may be remarketed in a new Interest Rate Period.
Extraordinary Mandatory Redemption. The Bonds are subject to mandatory redemption prior to maturity in whole, and not in part, (1) except in the case of a Failed Remarketing, on the first day of the Month following the Early Termination Payment Date and (2) in the case of a Failed Remarketing, on the Mandatory Purchase Date following such Failed Remarketing, at a Redemption Price equal to the Amortized Value thereof plus accrued and unpaid interest to the redemption date. See APPENDIX I for a schedule showing the Redemption Price (excluding accrued interest) of all of the Bonds upon an extraordinary mandatory redemption following an Early Termination Payment Date that occurs during the Initial Interest Rate Period.
CCCFA shall provide the Trustee with Written Notice of the Early Termination Payment Date (x) on the date on which a Failed Remarketing occurs, and (y) in all other cases, not more than five Business Days after such date is determined.
The Bonds shall be subject to redemption for remediation at the direction of CCCFA prior to maturity, in whole or in part, on any date, at the then-applicable optional Redemption Price for the Bonds to be redeemed as set forth in APPENDIX I hereto, plus accrued interest to the redemption date, to the extent provided in the Clean Energy Purchase Contract. The CCCFA shall provide the Trustee with Written Notice of the requirement for any such redemption not more than five (5) Business Days after determining that such redemption will be required.
Notice of Redemption. In the case of every redemption of Bonds, the Trustee is to give notice of such redemption, in the name of CCCFA, of the redemption of the Bonds, by first-class mail, postage prepaid, not less than 20 days (15 days in the case of an extraordinary mandatory redemption described above) (or such shorter time as may be permitted by the securities depository) and not more than 45 days (30 days in the case of an extraordinary mandatory redemption described above) prior to the redemption date.
Each notice of redemption must identify the Bonds to be redeemed and is to state: (i) the redemption date, (ii) the Redemption Price or the manner in which it will be calculated, (iii) that the Bonds called for redemption must be surrendered to collect the Redemption Price, (iv) the address or addresses of the Trustee at which the Bonds redeemed must be surrendered, and (v) that interest on the Bonds called for redemption ceases to accrue on the redemption date. Failure of the registered owner of any Bonds which are to be redeemed to receive any such notice, or any defect in such notice, shall not affect the validity of the proceedings for the redemption of any Bonds.
In the event that the Bonds may be subject to extraordinary redemption as a result of a Failed Remarketing that could occur if the Trustee has not received the Purchase Price of the Bonds by 12:00 noon New York City time on the fifth Business Day preceding a Mandatory Purchase Date, a notice of extraordinary redemption of the Bonds may be a conditional notice of redemption, delivered in each case not less than 15 days prior to such Mandatory Purchase Date, stating that: (a) such redemption shall be conditioned upon the Trustee’s failure to receive, by 12:00 noon New York City time on the fifth Business Day preceding such Mandatory Purchase Date, the Purchase Price of the Bonds required to be purchased on such Mandatory Purchase Date, and (b) if the full amount of the Purchase Price has been received by the Trustee by 12:00 noon New York City time on the fifth Business Day preceding such Mandatory Purchase Date, the Bonds shall be purchased pursuant to a mandatory tender on such Mandatory Purchase Date rather than redeemed. If the full amount of the Purchase Price has been received by the Trustee by 12:00 noon New York City time on the fifth Business Day preceding such Mandatory Purchase Date, the Trustee shall withdraw such conditional notice of redemption prior to such Mandatory Purchase Date and Agenda Page 1008
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41 the Bonds will be purchased pursuant to a mandatory tender on such Mandatory Purchase Date rather than redeemed.
With respect to any notice of optional redemption of Bonds, unless upon the giving of such notice such Bonds will be deemed to have been paid under the Indenture, such notice must state that such redemption will be conditioned upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the Redemption Price of and interest on the Bonds to be redeemed, and that if such moneys shall not have been so received said notice will be of no force and effect, and CCCFA will not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition, and such money is not so received, the redemption will not be made and the Trustee must within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such money was not so received and that such redemption was not made.
Effect of Redemption. Notice having been given in the manner provided in the Indenture, and, in the case of optional redemption of Bonds, sufficient moneys for payment of the Redemption Price of, together with interest accrued to the redemption date on such Bonds being held by the Trustee, the Bonds or portions thereof so called for redemption will become due and payable on the redemption date so designated at the applicable Redemption Price, and, upon presentation and surrender thereof at the office specified in such notice, such Bonds, or portions thereof, will be paid at the Redemption Price. If, on the redemption date, moneys for the redemption of all the Bonds or portions thereof of any like series, maturity and tenor to be redeemed, together with interest to the redemption date, are held by the Paying Agent so as to be available therefor on said date and if notice of redemption shall have been given as aforesaid, then, from and after the redemption date interest on the Bonds or portions thereof of so called for redemption will cease to accrue and become payable. If said moneys shall not be so available on the redemption date, such Bonds or portions thereof shall continue to bear interest until paid at the same rate as they would have borne had they not been called for redemption. Upon the payment of the Redemption Price of the Bonds or portions thereof being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
Selection of Bonds to be Redeemed. If less than all of the Bonds of like maturity, tenor and series are called for redemption, the particular Bonds or portions of Bonds of such series, maturity and tenor to be redeemed must be selected by lot in such manner as the Trustee determines , in its sole discretion, from Bonds of such series, maturity and tenor not previously called for redemption; provided, however, that the portion of any Bond of a denomination of more than a minimum Authorized Denomination to be redeemed shall be in the principal amount of such minimum Authorized Denomination or a multiple thereof, and that, in selecting portions of such Bonds for redemption, the Trustee must treat each such Bond as representing that number of Bonds of a minimum Authorized Denomination which is obtained by dividing by such minimum Authorized Denomination the principal amount of such Bond to be redeemed in part. Upon surrender of a Bond redeemed in part, CCCFA must execute and the Trustee must authenticate and deliver to the Holder thereof a new Bond or Bonds of the same series, maturity and tenor in Authorized Denominations equal in principal amount to the unredeemed portion of the Bond surrendered.
Book-Entry System
The Bonds will be initially issued in book-entry only form through the facilities of DTC. The Bonds will be transferable and exchangeable as set forth in the Indenture and, when issued, will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository for the Bonds. So long as Cede & Co. is the registered owner of the Bonds, principal of and premium, if any, and interest on the Bonds are payable by wire transfer by the Trustee to Cede & Co., as nominee for DTC, Agenda Page 1009
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42 which, in turn, will remit such amounts to DTC participants for subsequent disbursement to the Beneficial Owners. See APPENDIX G — “BOOK-ENTRY SYSTEM.”
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43 REVENUES AND DEBT SERVICE REQUIREMENTS
The following table shows for each bond year during the Initial Interest Rate Period (a) the expected Revenues of the Clean Energy Project (net of receipts and payments under the CCCFA Commodity Swaps), (b) the Debt Service requirements on the Bonds (giving effect to the fixed interest rate payable by CCCFA under the Interest Rate Swap) and (c) the resulting surplus funds to CCCFA.
YEAR
ENDING
[___], 1*
ESTIMATED REVENUES DEBT SERVICE
ELECTRICITY
SALES1
INTEREST
EARNINGS2
OTHER
AMOUNTS3 TOTAL PRINCIPAL4 INTEREST TOTAL SURPLUS
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
TOTAL
____________________
1 Electricity Sales includes payments received by CCCFA under the Clean Energy Purchase Contract and net receipts/payments under the CCCFA Commodity Swaps.
2 Interest earnings under the Investment Agreements at a rate of _____% per annum. 3 Other Amounts consists of capitalized interest, total reserve amounts, remaining Electricity value (i.e., amount of Termination Payment due upon a Failed Remarketing), and required balances in the Debt Service Account. 4 Principal due on [________] 1, 20[__]* includes principal amount payable pursuant to mandatory tender on the Mandatory Purchase Date.
DESIGNATION OF BONDS AS [GREEN BONDS – CLIMATE CERTIFIED] [To come]
THE MASTER POWER SUPPLY AGREEMENT
Set forth below is a summary of certain provisions of the Master Power Supply Agreement relating to the purchase and sale of Electricity during the Delivery Period. This summary does not purport to be a complete description of the terms and conditions of the Master Power Supply Agreement and accordingly is qualified by reference to the full text thereof.
Purchase and Sale
Under the Master Power Supply Agreement, CCCFA has agreed to make a lump sum advance payment to the Electricity Supplier for all of the cost of the Prepaid Electricity (which does not include Assigned PAYGO Electricity) to be delivered during the Delivery Period. The total quantity of expected Prepaid Electricity to be delivered by the Electricity Supplier during the Initial Interest Rate Period is approximately [___]* million MWh.
CCCFA will pay the Electricity Supplier the APC Contract Price then in effect under the applicable Assigned PPAs for any Assigned PAYGO Electricity delivered under the Master Power Supply Agreement.
See “GSG, J. ARON AND THE ELECTRICITY SUPPLIER — The Electricity Supplier — Master Electricity * Preliminary, subject to change.
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44 Supplier Custodial Agreement.” Such payments made for Assigned PAYGO Electricity are not included in the Trust Estate or pledged to the repayment of the Bonds.
Delivery of Electricity
Assigned Electricity. Assigned Electricity delivered under the Master Power Supply Agreement shall be Scheduled for delivery to and receipt at the delivery point specified in the applicable Assignment Schedule (an “Assigned Delivery Point”). Scheduling and transmission of Assigned Electricity shall be in accordance with the applicable Assignment Schedule. At the start of the Delivery Period, the Project Participant will assign, pursuant to limited assignment agreements, [two (2)] power purchase agreements to J. Aron for delivery beginning [_____] 1, 202[_]*
, as described under “– Assignment of Power Purchase
Agreements” below.
All future Assigned Electricity will be delivered pursuant to the terms of such Assignment Agreement.
Base Quantities. If there is insufficient Assigned Prepay Value (defined below), the Electricity Supplier is required to deliver Base Quantities to a delivery point specified in the Master Power Supply Agreement, or to an alternate delivery point mutually agreed to by the Electricity Supplier, CCCFA and the Project Participant (the “Base Delivery Point.”) Base Quantities are not expected to be delivered during the Initial Interest Rate Period.
Title. Title to and risk of loss of the Energy delivered under the Master Power Supply Agreement shall pass from the Electricity Supplier to CCCFA at the applicable Delivery Point. The transfer of title and risk of loss for all Assigned Electricity shall be set forth in the applicable Assignment Agreement.
Aggregate Quantity. The aggregate quantity of Electricity to be delivered during the term of the Delivery Period varies based on the quantities of Electricity CCCFA has agreed to deliver to the Project Participant under the Clean Energy Purchase Contract. The approximate aggregate monthly quantities of Assigned Prepay Quantities to be delivered under the Master Power Supply Agreement during the Initial Interest Rate Period range from a high of approximately [__________]* MWh in some months to a low of
[________]* MWh in other months.
Assignment of Power Purchase Agreements
The Project Participant will assign, pursuant to limited assignment agreements, [two (2)] power purchase agreements to J. Aron for delivery beginning [________] 1, 202[_]* . The Assigned PPAs pursuant
to which the Initial Assigned Rights and Obligations are anticipated to be assigned to J. Aron are described as follows:
Name of Project Location
Term of
PPA
Type of
Project
Commercial
Operation
Date Capacity
Annual Assigned
Prepaid Quantity*
MWh
([__/__/202_-
__/__/202_])
Geysers Sonoma
and Lake
Counties,
CA
15 years Geothermal 01/01/2022 50 MW
* Preliminary, subject to change.
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45 White Hills White
Hills, AZ
20 years Wind 12/15/2020 300 MW
Adjustments to Base Quantities and Assigned Quantities. The Master Power Supply Agreement and the Clean Energy Purchase Contract are designed to manage future assignments of PPAs and potential delivery of Base Quantities, if ever required, while ensuring there are sufficient scheduled cashflows to meet CCCFA’s payment obligations. Upon any assignments terminating, expiring, or being entered into, the Master Power Supply Agreement and Clean Energy Purchase Contract include provisions to recalculate Assigned Prepay Quantities and Base Quantities. In all cases, the total aggregate prepaid value (consisting of the amount of monthly Assigned Prepaid Quantities multiplied by the APC Contract Price for Assigned Electricity, and the Base Quantities multiplied by the fixed swap price for such Base Quantities) remains the same.
As such, upon a replacement of the Assigned Rights and Obligations under an Assigned PPA, or J.
Aron’s procurement of Energy which can be purchased in compliance with applicable EPS standards (“EPS Compliant Energy”), the Base Quantities will be reduced as provided in the Clean Energy Purchase Contract. To the extent Base Quantities were previously being delivered, the Commodity Swaps will be revised in connection with the commencement or termination of any Assignment Period such that the notional quantities under such swaps will be consistent with any changes to Base Quantities. Base Quantities may also be revised (a “Base Quantity Reduction”) to reflect any Replacement Assigned Rights and Obligations, with such calculation reflecting the same methodology as used to determine the Initial Assigned Rights and Obligation. The Base Quantity Reductions may also be revised in the case of any other commencement of a subsequent Assignment Period or a delivery period for any EPS Compliant Energy procured by J. Aron (a “J. Aron EPS Energy Period”, and together with an Assignment Period, an “EPS Energy Period”).
When determining the Assigned Prepay Quantities related to an Assigned PPA that has quantities of Electricity that are deliverable on an as-available basis (an “Applicable Project”), such Assigned Quantity may not exceed the amount which J. Aron determines with a high degree of certainty that such Applicable Project will be able to generate in each Month during the Assignment Period.
Reconciling Assigned Delivered Value. For any month, the value of the Assigned Electricity that is delivered during such month pursuant to such Assigned PPA is determined using the applicable APC Contract Price for such Assigned Electricity multiplied by the quantity of Electricity delivered. (the “Assigned Delivered Value”). For any Month and each Assignment Schedule, the Assigned Quantity for such Month multiplied by the applicable APC Contract Price is referred to as the “Assigned Prepay Value.” To the extent the Assigned Delivered Value is less than the Assigned Prepay Value, the Electricity Supplier must sell the Assigned Electricity not delivered in a private business use sale at the APC Contract Price and shall pay CCCFA the different between the Assigned Prepay Value and the Assigned Delivered Value.
PPA Payment Custodial Agreement. The Project Participant, J. Aron, the Electricity Supplier, the CCCFA and [________________], as custodian (in such capacity, the “Custodian”) have entered into a custodial agreement (the “PPA Payment Custodial Agreement”) to administer payments to be received by the sellers of Assigned Electricity pursuant to the Assigned PPAs (the “PPA Sellers”). The PPA Payment Custodial Agreement is not pledged as part of the Trust Estate.
Failure to Deliver or Receive Electricity
Assigned Quantities. Neither CCCFA nor the Electricity Supplier shall have any liability or other obligation to one another for any failure to Schedule, receive, or deliver Assigned Quantities, except as Agenda Page 1013
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46 described under the subheadings “— Assignment of Power Purchase Agreements” and “THE CLEAN ENERGY PURCHASE CONTRACT — Pricing Provisions – CPA Monthly Payments” herein.
Base Quantities. Because CCCFA will have prepaid for all Electricity (other than Assigned PAYGO Electricity) to be delivered under the Master Power Supply Agreement, the Electricity Supplier will be required to pay CCCFA for all Base Quantities that the Electricity Supplier fails to deliver or CCCFA fails to receive for any reason, including events of force majeure. The amount the Electricity Supplier is required to pay is equal to the quantity that was not delivered or received multiplied by a price that is determined in a manner depending upon the reason for such failure:
• If the Electricity Supplier fails to deliver Base Quantities for reasons other than force majeure or action or inaction by CCCFA and CCCFA, such quantity is referred to herein as a “Shortfall Quantity,” and the Electricity Supplier is required to pay the higher of (a) the replacement price paid by CCCFA, or (b) the Day-Ahead Market Price applicable to the Hour and the Delivery Point for which the Shortfall Quantity arose, plus in either case an administrative fee of $0.50/MWh. In such event, CCCFA will cause the Project Participant to exercise Commercially Reasonable Efforts to mitigate damages paid by the Electricity Supplier under the Master Power Supply Agreement.
• If CCCFA fails to receive all or any portion of Base Quantities for reasons other than force majeure, for which CCCFA has previously issued a Remarketing Notice in accordance with the Master Power Supply Agreement, CCCFA shall be deemed to have issued a Deemed Remarketing Notice with respect to such portion. • If either the Electricity Supplier fails to deliver all or any portion of Base Quantities or CCCFA fails to receive all or any portion of Base Quantities due to events of force majeure, the Electricity Supplier is required to pay the applicable Day-Ahead Market Price for such portion of Base Quantities.
The “Day-Ahead Market Price” is the day-ahead market price for the delivery point specified in the Master Power Supply Agreement. See “THE CLEAN ENERGY PURCHASE CONTRACT — Pricing Provisions.” Base Quantities are not expected to be delivered during the Initial Interest Rate Period.
Electricity Remarketing
Assigned Electricity. If CCCFA requests remarketing of any Assigned Quantities as a result of (a) decreased demand by Project Participant’s retail customers, (b) the quantity of Assigned Electricity delivered in any Month during an Assignment Period is less than the Assigned Prepay Quantity for any reason, (c) a change in law, or (d) an inability to assign EPS Compliant Energy and at such time Base Quantities are not deemed EPS Compliant Energy, the Electricity Supplier has the right to terminate the Assignment Period applicable to such Assigned Quantities effective as of the first Hour to which such remarketing applies. If the Electricity Supplier does not elect to terminate the Assignment Period, CCCFA and the Electricity Supplier shall negotiate in good faith to modify the Master Power Supply Agreement to reflect pricing, delivery and other terms related to such Assigned Quantities, and the Electricity Supplier shall have no obligation to remarket such Assigned Quantities unless and until Buyer and Seller have mutually agreed to such adjustments.
Base Quantities. If the Project Participant is in default under its Clean Energy Purchase Contract or is unable to receive all or any portion of the Base Quantities purchased by CCCFA during the Delivery Period under the Master Power Supply Agreement as a result of (a) decreased demand by Project Participant’s retail customers, (b) the quantity of Assigned Electricity delivered in any Month during an Agenda Page 1014
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47 Assignment Period is less than the Assigned Prepay Quantity for any reason, (c) a change in law, or (d) an inability to assign EPS Compliant Energy, and at such time Base Quantities are not deemed EPS Compliant Energy, and requests that such Base Quantities be remarketed, CCCFA agrees to request the Electricity Supplier to remarket to other purchasers all or a specified portion of the Base Quantities to be delivered under the Master Power Supply Agreement by delivering Monthly Remarketing Notices or Daily Remarketing Notices as provided in the Master Power Supply Agreement. Under current law, the Project Participant is unable to receive Base Quantities, and as such, Base Quantities which are delivered, if any, are expected to be remarketed.
Delegation of Authority. J. Aron has agreed to provide all services necessary for the Electricity Supplier to meet its Electricity Remarketing obligations under the Master Power Supply Agreement. See “THE ELECTRICITY PURCHASE, SALE AND SERVICE AGREEMENT — J. Aron as Agent.” Remarketing for Qualifying Use. There are three types of potential remarketing sales when proper notice has been tendered: qualified sales to Municipal Utilities, non-private business use sales and private business use sales. The Electricity Supplier is required to use Commercially Reasonable Efforts to remarket Electricity first in qualified sales and next in non-private business use sales. If the Electricity Supplier is unable to remarket the Electricity designated in a remarketing notice in qualified sales or in non-private business use sales, it will purchase the Electricity.
The amounts payable by the Electricity Supplier for Electricity remarketed are the actual sale proceeds or the amounts based on the Day-Ahead Market Price applicable to such Electricity and Hour (if pursuant to a Monthly Remarketing Notice) or the Real-Time Market Price applicable to such Electricity and Hour (if pursuant to a Daily Remarketing Notice), less specified remarketing fees.
Ledger Entries. The Electricity Supplier must track in dollar and electric quantity ledgers information relating to the remarketing proceeds and the quantities of Electricity remarketed, including sales made to the Project Participant and other Municipal Utilities, to non-private business users and to private business users.
Remediation. The Electricity Supplier and CCCFA will seek to make additional qualified sales to reduce the ledger amounts associated with non-private and private business use sales. In addition, the Project Participant has covenanted under the Clean Energy Purchase Contract to exercise commercially reasonable efforts to reduce such ledger amounts by applying the proceeds thereon toward future Electricity Purchases made by the Project Participant that would qualify to remediate such entries, and for any Month the Project Participant remediates such ledger amounts, the Issuer shall pay the Project Participant on or before the last Business Day of such Month any portion of the Monthly Discount Percentage associated with such ledger amounts that is available under the Indenture. Any ledger entries remediated by the Electricity Supplier, CCCFA or the Project Participant would be removed from the relevant ledgers. In the event that J. Aron, as agent of the Electricity Supplier, fails to remediate any non-complying remarketing sales of Electricity within one year, the Electricity Supplier (acting at the direction of the director appointed by CCCFA) may, subject to certain requirements, supplement J. Aron with a third-party remarketing agent to remediate the non-complying sales. See “THE ELECTRICITY PURCHASE, SALE AND SERVICE AGREEMENT—J. Aron as Agent—Replacement of J. Aron.”
Ledger Event
As described previously, the Electricity Supplier will maintain ledgers that account for private business use and non-qualified use remarketing sales of Electricity. If the Electricity Supplier, CCCFA, and the Project Participant remediate such sales such that there is a remaining balance on any particular Agenda Page 1015
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48 ledger two years after any private business use or non-qualified remarketing sale of Electricity, such balance will count against:
(a) in the case of private business use sales, a limit equal to the lesser of (i) $15 million (based on a quantity of Electricity determined by reference to the fixed price per Electricity under the Master Power Supply Agreement) or (ii) 10% of the original quantity of Electricity purchased under the Master Power Supply Agreement, and
(b) in the case of sales to non-qualified users, a limit of 10% of the original quantity of Electricity purchased under the Master Power Supply Agreement (or such higher amount as may be set forth in an Opinion of Bond Counsel),
in each case, subject to any higher amount as may be set forth in an Opinion of Bond Counsel. Both limits apply in the aggregate over the term of the Master Power Supply Agreement. In the event that either limit is exceeded, a “Ledger Event” will occur under the Master Power Supply Agreement, unless CCCFA receives an Opinion of Bond Counsel to the effect that such event will not adversely affect the exclusion from gross income for U.S. federal income tax purposes of interest on the Bonds. Any such Tax Opinion may take into account, among other things, any changes in tax requirements and any remedial actions taken with respect to the Bonds by CCCFA.
CCCFA has agreed in its Continuing Disclosure Undertaking for the Bonds to provide notices of (a) private business use sales and non-qualifying sales of Electricity that are not remediated within twelve months and (b) the occurrence of Ledger Events. See “CONTINUING DISCLOSURE UNDERTAKING” below.
The occurrence of a Ledger Event could cause interest on the Bonds to become subject to federal income taxation, possibly retroactive to the Initial Issue Date of the Bonds. A Ledger Event provides the Electricity Supplier with the option, but not an obligation, to designate an Electricity Delivery Termination Date under the Master Power Supply Agreement. [If the Electricity Supplier designates an Electricity Delivery Termination Date due to a Ledger Event, the Electricity Supplier will also have the option, but not an obligation, to provide the Funding Recipient with the option, but not an obligation, to pay the Final Payment Amount under the Funding Agreement. A Ledger Event does not, by itself, result in an Early Termination Payment Date under the Master Power Supply Agreement.] See “INVESTMENT CONSIDERATIONS — Loss of Tax Exemption.”
Following the occurrence of a Ledger Event, the Electricity Supplier agrees to pay to CCCFA any amounts that become payable by J. Aron to the Electricity Supplier pursuant to the Electricity Purchase, Sale and Service Agreement as a result of such Ledger Event. See “THE ELECTRICITY PURCHASE, SALE AND SERVICE AGREEMENT — Additional Amounts Payable Following a Ledger Event” and “THE BONDS — Increased Interest Rate Upon Ledger Event.”
Payment Provisions
The prepayment from CCCFA to the Electricity Supplier will be due prior to the inception of the term of the Master Power Supply Agreement. To the extent amounts become payable to CCCFA thereunder (for example, as a result of remarketing or failure to deliver by the Electricity Supplier), such amounts are due on the [23rd] day of the month or the preceding business day following the month in which such amount accrues. Amounts payable by CCCFA are due on the [24]th day of the month or the following business day following the month in which such amounts accrue.
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49 Force Majeure
Each of CCCFA and the Electricity Supplier are excused from their respective obligations to receive and deliver Electricity under the Master Power Supply Agreement to the extent prevented by force majeure, defined generally as an event or circumstance not anticipated and not within the reasonable control of, or the result of negligence of, the party claiming force majeure. This includes such events as riot, insurrection, war, labor dispute, natural disaster, vandalism, terrorism, and sabotage. The declaration of force majeure by an APC Party under a PPA or by the Project Participant under the Clean Energy Purchase Contract constitutes force majeure under the Master Power Supply Agreement.
Assignment
Neither party may assign its rights under the Master Power Supply Agreement without the other party’s consent except:
(a) pursuant to the Indenture, CCCFA may transfer, sell, pledge, encumber or assign the Master Power Supply Agreement to the Trustee in connection with a financing arrangement; provided that CCCFA may not assign its rights under the Master Power Supply Agreement unless, contemporaneously with the effectiveness of such assignment, CCCFA also assigns the CCCFA Commodity Swaps and the CCCFA Custodial Agreements to the same assignees; and (b) the Electricity Supplier may assign the Master Power Supply Agreement to an affiliate of the Electricity Supplier, which assignment shall constitute a novation; provided that the assignee agrees to be bound by the terms and conditions of the Master Power Supply Agreement and (i) the Electricity Supplier delivers a Rating Confirmation with respect to such assignment, (ii) contemporaneously with the effectiveness of such assignment, the Electricity Supplier also assigns the Electricity Supplier Commodity Swaps, the Electricity Supplier Custodial Agreements and the Master Electricity Supplier Custodial Agreement to the same assignee and either (a) the Electricity Supplier assigns the Funding Agreement and the Electricity Purchase, Sale and Service Agreement to the same assignee or (b) the assignee provides to CCCFA a guarantee of its obligations by GSG and GSG continues to guarantee the payment obligations of J. Aron under the Electricity Purchase, Sale and Service Agreement, and (iii) the assignee is a special purpose entity approved by CCCFA or its obligations under the Master Power Supply Agreement are guaranteed by GSG (or its successors to or permitted assignees of the Funding Agreement) to the satisfaction of CCCFA.
Early Termination
An Electricity Delivery Termination Date will occur automatically under the Master Power Supply Agreement upon the occurrence of a Termination Payment Event (which includes a Failed Remarketing with respect to the Bonds) or an Automatic Electricity Delivery Termination Event (as such terms are described below). Upon the occurrence of an Optional Electricity Delivery Termination Event (as described below), an Electricity Delivery Termination Date may be designated by the Electricity Supplier, as described below. If an Electricity Delivery Termination Date occurs, the Delivery Period under the Master Power Supply Agreement will end and the Electricity Supplier will be required to make the payment or payments described under “Remedies and Termination” below.
Termination Payment Event. A Termination Payment Event will occur under the Master Power Supply Agreement if:
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50 • the Electricity Supplier fails to make a payment because of a failure by [the Funding Recipient] to pay when due any amounts owed to the Electricity Supplier pursuant to the Funding Agreement and such failure continues for 30 days after receipt by the Electricity Supplier of notice thereof;
• as of one week prior to the beginning of the first Month following a Reset Period, either (a) CCCFA has not entered into a bond purchase agreement, firm remarketing agreement or similar agreement with respect to the remarketing or refunding of the Bonds or (b) the Funding Recipient (or its successor) and the Electricity Supplier are unable to replace, refinance or re-price the Funding Agreement for a subsequent Reset Period; • J. Aron exercises its option to designate a EPSSA Early Termination Date under the Electricity Purchase, Sale and Service Agreement due to the Project Participant making a Remarketing Election for any Reset Period;
• a Failed Remarketing occurs;
• [Electricity Supplier acceleration of Funding Agreement upon ledger event]; or • both (a) an Electricity Delivery Termination Date occurs under the Master Power Supply Agreement and (b) [the Funding Recipient] exercises its option to prepay the Final Payment Amount under the Funding Agreement. See “Remedies and Termination Payment — Electricity Delivery Termination Date” and “THE FUNDING AGREEMENT — Prepayment Option” below.
Optional Electricity Delivery Termination Events. The Electricity Supplier will have the right to designate an Electricity Delivery Termination Date under the Master Power Supply Agreement under the following circumstances:
• except in the case where an Automatic Electricity Delivery Termination Event has occurred, both (a) a CCCFA Commodity Swap is terminated by a Commodity Swap Counterparty or termination occurs automatically as a result of an event of default where CCCFA is the defaulting party or a termination event where CCCFA is the sole affected party and (b) either a CCCFA Commodity Swap or an Electricity Supplier Commodity Swap is not replaced within the Swap Replacement Period; or • a Ledger Event occurs.
[CCCFA will have the right to designate an Electricity Delivery Termination Date under the Master Power Supply Agreement if it designates an early termination date under the Interest Rate Swap based upon an event of default thereunder where J. Aron is the defaulting party.] Automatic Electricity Delivery Termination Events. An Electricity Delivery Termination Date will occur automatically under the Master Power Supply Agreement under the following circumstances:
• a CCCFA Commodity Swap is terminated by a Commodity Swap Counterparty as a result of an event of default due to CCCFA’s insolvency or bankruptcy; • both (a) an Electricity Supplier Commodity Swap is terminated by a Commodity Swap Counterparty based on an event of default where the Electricity Supplier is the defaulting party or a termination event where the Electricity Supplier is the sole affected party, or Agenda Page 1018
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51 otherwise occurs automatically and, except for certain events of default and termination events for which the Swap Replacement Period does not apply, (b) either an Electricity Supplier Commodity Swap or the CCCFA Commodity Swap is not replaced within the Swap Replacement Period;
• following receipt of an offer by the Trustee to sell Swap Deficiency Call Receivables under the Receivables Purchase Provisions, the Electricity Supplier does not exercise (or is deemed not to have exercised) its related option to purchase the identified Swap Deficiency Call Receivables within the timeline set forth in the Receivables Purchase Provisions; • Designation by J. Aron of an early termination date under the Interest Rate Swap; • both (a) a EPSSA Early Termination Date occurs under the Electricity Purchase, Sale and Service Agreement, and (b) the Electricity Supplier is unable to enter into a replacement Electricity Purchase, Sale and Service Agreement with substantially the same terms or terms approved by the CCCFA by the date that is 120 days following such early termination date. The Electricity Supplier may enter into a replacement Electricity Purchase, Sale and Service Agreement only if (a) the EPSSA Guaranty applies to the obligations of the replacement seller thereunder or (b) the Electricity Supplier delivers a Rating Confirmation with respect to its entry into such replacement Electricity Purchase, Sale and Service Agreement; or
• bankruptcy or insolvency of CCCFA.
Replacement of Commodity Swaps
CCCFA and the Electricity Supplier agree in the Master Power Supply Agreement that if any Commodity Swap terminates, is being terminated or is expected to be terminated, in each case for any reason other than the insolvency of CCCFA or the Electricity Supplier or the failure of the Electricity Supplier to make payments due under the Electricity Supplier Commodity Swap, then:
(a) if a CCCFA Commodity Swap and an Electricity Supplier Commodity Swap are in effect and otherwise not subject to termination, (i) CCCFA and the Electricity Supplier shall exercise any rights they may have to increase their notional quantities under such Commodity Swaps in order to replace the Commodity Swap affected by the events described above, and (ii) subsequent to such a replacement, CCCFA and the Electricity Supplier shall cooperate in good faith to locate replacement agreements with a second Commodity Swap Counterparty and, upon locating a second Commodity Swap Counterparty, reduce their notional quantities under the remaining Commodity Swaps to their original levels and enter into replacement Commodity Swaps with the replacement Commodity Swap Counterparty for the remaining notional quantities; or (b) if CCCFA and the Electricity Supplier cannot increase their notional quantities as described in (a) above, they will cooperate in good faith to locate replacement agreements with an alternate Swap Counterparty to replace the Commodity Swaps during the Swap Replacement Period.
The Swap Replacement Period begins when any Commodity Swap terminates and ends 120 days after termination of such Commodity Swap during which time CCCFA and the Electricity Supplier will make payments to each other under the Custodial Agreements, unless the Commodity Swaps are dormant due to Base Quantities being zero under the Master Power Supply Agreement. If the Commodity Swaps are dormant, the Swap Replacement Period continues until 120 days after the Commodity Swaps cease to Agenda Page 1019
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52 be dormant during which time CCCFA and the Electricity Supplier will make payments to each other under the Custodial Agreements.
Remedies and Termination Payment
Electricity Delivery Termination Date. An Electricity Delivery Termination Date will occur automatically upon the occurrence of a Termination Payment Event or an Automatic Electricity Delivery Termination Event; provided that an Electricity Delivery Termination Date will occur as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence of an Automatic Electricity Delivery Termination Event relating to the dissolution or bankruptcy of CCCFA. If an Optional Electricity Delivery Termination Event has occurred and is continuing, then the Electricity Supplier, as described above, may designate an Electricity Delivery Termination Date.
End of Delivery Period. As of the Electricity Delivery Termination Date:
(a) the Delivery Period will end;
(b) the obligation of the Electricity Supplier to make any further deliveries of Electricity to CCCFA will terminate and be replaced with a continuing obligation of the Electricity Supplier to pay scheduled monthly amounts to CCCFA until the earlier of (i) the month in which a Termination Payment Event occurs and (ii) the last due date for such scheduled payments; and (c) the obligation of CCCFA to receive deliveries of Electricity from the Electricity Supplier will terminate.
The Master Power Supply Agreement will continue in effect after the Electricity Delivery Termination Date occurs. The occurrence of an Electricity Delivery Termination Date will not prevent the contemporaneous or subsequent occurrence of a Termination Payment Event. Upon the occurrence of any Automatic Electricity Delivery Termination Event, an Electricity Delivery Termination Date shall be deemed to be designated as of the end of the month in which such Automatic Electricity Delivery Termination Event occurs.
Termination Payment; Early Termination Payment Date. Following a Termination Payment Event, the Electricity Supplier is required to pay the Termination Payment to the Trustee on the Early Termination Payment Date. The “Early Termination Payment Date” is the last Business Day of the Month that commences after a Termination Payment Event occurs. In the case of a Termination Payment Event that results from a Failed Remarketing, the Early Termination Payment Date will be the last Business Day of the current Interest Rate Period. The obligation of the Electricity Supplier to pay the Termination Payment on the Early Termination Payment Date and, if applicable, the Additional Termination Payment, is unconditional, and the Electricity Supplier waives all rights to set-off, counterclaim, recoupment and any other defenses that might otherwise be available with regard to its obligation to pay the Termination Payment and, if applicable, the Additional Termination Payment, on the Early Termination Payment Date.
The amount of the Termination Payment is set forth on a schedule to the Master Power Supply Agreement. The Termination Payment schedule approximately matches the Final Payment Amount attached to the Funding Agreement. The Termination Payment, together with the amounts required to be on deposit in certain Funds and Accounts held by the Trustee, has been calculated to provide a sum at least sufficient to pay the Redemption Price of the Bonds, assuming that the Electricity Supplier, the Project Participant (or if the Project Participant were to fail to pay, the performance of the Project Participant Credit Enhancement) and the Investment Agreement Providers pay and perform their respective contract Agenda Page 1020
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53 obligations when due. See APPENDIX I for a schedule of Termination Payments under the Master Power Supply Agreement.
Additional Termination Payment. In addition to the scheduled Termination Payment, if an Electricity Delivery Termination Date occurs as a result of certain events, the Electricity Supplier will be required to pay CCCFA an amount equal to the net present value of the quantity of Electricity that would have been delivered over the remaining term of the then-current Reset Period absent such early termination, multiplied by a fixed price per MWh (the “Additional Termination Payment”). The Additional Termination Payment is not part of the Trust Estate and is not pledged to secure the payment of the Bonds.
Receivables Purchase Provisions
General. Under certain circumstances, the Electricity Supplier has agreed to purchase from the Trustee the rights to payment of net amounts owed by the Project Participant under the Clean Energy Purchase Contract (“Put Receivables”). The Trustee can put these Put Receivables to the Electricity Supplier under the circumstances described below under “Put Option.” In addition, under certain circumstances described below under “Swap Deficiency Call Option” and “Elective Call Option,” the Electricity Supplier has the right to purchase from the Trustee CCCFA’s rights to payment of net amounts owed by the Project Participant under its Clean Energy Purchase Contract (“Call Receivables” and, collectively with Put Receivables, “Receivables”).
Put Option. If an Early Termination Payment Date is established under the Electricity Purchase Agreement, or upon the final scheduled maturity of the Bonds, the Trustee may put to the Electricity Supplier, and the Electricity Supplier then has an obligation to purchase, Put Receivables with a face value up to an amount (the “Put Receivables Amount”) equal to the sum of the Minimum Amount (less any amounts on deposit in the Commodity Reserve Account) plus the Debt Service Reserve Requirement (less any amounts on deposit in the Debt Service Reserve Account).
The maximum amount payable by the Electricity Supplier for such Put Receivables is limited to $____________ in the aggregate, which equals the sum of the Debt Service Reserve Requirement and the Minimum Amount required to be on deposit in the Commodity Reserve Account, and such amount will be reduced by any amounts on deposit in the Commodity Reserve Account or the Debt Service Reserve Account, respectively. The Electricity Supplier’s obligation to purchase such Put Receivables is subject to the condition that the representations and warranties made by CCCFA regarding its title to and the validity of the Put Receivables be true and correct on each day that the Electricity Supplier is required to purchase Put Receivables.
Under the Electricity Purchase, Sale and Service Agreement, J. Aron has agreed to purchase any Put Receivables purchased by the Electricity Supplier under the Receivables Purchase Provisions. See “THE ELECTRICITY PURCHASE, SALE AND SERVICE AGREEMENT.” Swap Deficiency Call Option. If the Project Participant defaults on its obligation to make any payment under its Clean Energy Purchase Contract with CCCFA and such payment default results in a Swap Payment Deficiency, then on such Business Day, the Trustee shall deliver a written offer (a “Swap Deficiency Call Receivables Offer”) to sell to the Electricity Supplier sufficient Swap Deficiency Call Receivables (such amount, less any undisputed amounts owed by CCCFA to the Project Participant, the “Swap Deficiency Call Receivables Amount”) to fund any Swap Payment Deficiency (defined in APPENDIX C) resulting from such default. No later than the Business Day following the Electricity Supplier’s receipt of a Swap Deficiency Call Receivables Offer, the Electricity Supplier may elect, in its discretion, to purchase the Swap Deficiency Call Receivables referenced in the Swap Deficiency Call Receivables Offer by delivering a written notice (a “Swap Deficiency Call Option Notice”) to the Trustee of the Electricity Agenda Page 1021
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54 Supplier’s intent to purchase such Swap Deficiency Call Receivables. If the Electricity Supplier does not deliver a Swap Deficiency Call Option Notice to CCCFA and the Trustee on or before the Business Day following the Electricity Supplier’s receipt of a Swap Deficiency Call Receivables Offer, the Electricity Supplier will be deemed to have elected not to purchase the referenced Swap Deficiency Call Receivables, which constitutes an Automatic Electricity Delivery Termination Event under the Master Power Supply Agreement.
The Trustee’s obligation to offer to sell such Swap Deficiency Call Receivables is subject to the condition that all of the representations and warranties made by the Electricity Supplier at the time of execution and delivery of the Receivables Purchase Provisions be true and correct on each day that the Trustee is required to offer to sell Swap Deficiency Call Receivables.
Under the Electricity Purchase, Sale and Service Agreement, J. Aron has agreed to purchase any Swap Deficiency Call Receivable purchased by the Electricity Supplier under the Receivables Purchase Provisions, provided that J. Aron’s obligation to purchase Swap Deficiency Call Receivables is subject to it having provided its prior written consent to the purchase of such Swap Deficiency Call Receivables by the Electricity Supplier. See “THE ELECTRICITY PURCHASE, SALE AND SERVICE AGREEMENT.” Elective Call Option. If the Project Participant defaults on its obligation to make any payment under its Clean Energy Purchase Contract with CCCFA and such payment default does not result in a Swap Payment Deficiency, the Trustee shall deliver a written offer (an “Elective Call Receivables Offer”) to sell to the Electricity Supplier sufficient Elective Call Receivables (such amount, less any undisputed amounts owed by CCCFA to the Project Participant, the “Elective Call Receivables Amount”) to fund any Swap Payment Deficiency (defined in APPENDIX C) resulting from such default. No later than the Business Day following the Electricity Supplier’s receipt of an Elective Call Receivables Offer, the Electricity Supplier may elect, in its discretion, to purchase the Elective Call Receivables referenced in the Elective Call Receivables Offer by delivering a written notice (a “Elective Call Option Notice”) to the Trustee of the Electricity Supplier’s intent to purchase such Elective Call Receivables. If the Electricity Supplier does not deliver an Elective Call Option Notice to CCCFA and the Trustee on or before the Business Day following the Electricity Supplier’s receipt of an Elective Call Receivables Offer, the Electricity Supplier will be deemed to have elected not to purchase the referenced Elective Call Receivables, which does not constitute an Automatic Electricity Delivery Termination Event under the Master Power Supply Agreement.
The Trustee’s obligation to offer to sell such Elective Call Receivables is subject to the condition that all of the representations and warranties made by the Electricity Supplier at the time of execution and delivery of the Receivables Purchase Provisions be true and correct on each day that the Trustee is required to offer to sell Elective Call Receivables.
Under the Electricity Sale and Service Agreement, J. Aron has agreed to purchase any Elective Call Receivable purchased by the Electricity Supplier under the Receivables Purchase Provisions, provided that J. Aron’s obligation to purchase Elective Call Receivables is subject to it having provided its prior written consent to the purchase of such Elective Call Receivables by the Electricity Supplier. See “THE ELECTRICITY PURCHASE, SALE AND SERVICE AGREEMENT.”
THE RE-PRICING AGREEMENT
Set forth below is a summary of certain provisions of the Re-Pricing Agreement. This summary does not purport to be a complete description of the terms and conditions of the Re-Pricing Agreement and accordingly is qualified by reference to the full text thereof.
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55 General
On the Initial Issue Date of the Bonds, CCCFA and the Electricity Supplier will enter into a Re-Pricing Agreement (the “Re-Pricing Agreement”), which provides for (a) the determination of Electricity Delivery periods subsequent to the initial Delivery Period that corresponds to the Initial Interest Rate Period on the Bonds (“Reset Periods”) and (b) the calculation of the amount of the discount (as a percentage) that is available (the “Available Discount Percentage”) for sales of Electricity to the Project Participant during each Reset Period.
The initial delivery period under the Master Power Supply Agreement begins on the first day of [________] 202[_]* and ends on the last day of [____________] 20[__]* and the first Reset Period is expected to begin on the first day of ____________ 20__.
Remarketing Election
In the event that the Available Discount Percentage for any Reset Period is less than the minimum discount percentage specified in the Clean Energy Purchase Contract, the Project Participant may elect not to take Electricity during the Reset Period and to have such Electricity remarketed for the duration of the Reset Period (a “Remarketing Election”) by giving notice of such election to CCCFA, the Electricity Supplier and the Trustee. Any Base Quantities that are covered by a Remarketing Election will be remarketed in accordance with the provisions of the Indenture and the Master Power Supply Agreement.
In the event that the Project Participant makes a Remarketing Election with respect to any Reset Period, J. Aron will have the option to terminate the Electricity Purchase, Sale and Service Agreement. If J. Aron exercises this option, a Termination Payment Event and an Early Payment Termination Date will occur under the Master Power Supply Agreement. See “THE MASTER POWER SUPPLY AGREEMENT — Remarketing” and “— Early Termination.”
Replacement of Funding Agreement
The Re-Pricing Agreement includes provisions that enable the Electricity Supplier to obtain proposals from [the Funding Recipient] and other qualified funding recipients for funding agreements to replace the Funding Agreement upon its Maturity Date (which coincides with the end of the Initial Interest Rate Period). CCCFA agrees to cooperate in good faith with the Electricity Supplier and to take all steps reasonably within its control to cause the Bonds to be remarketed or refunded for the Interest Rate Period that corresponds to each Reset Period.
THE ELECTRICITY PURCHASE, SALE AND SERVICE AGREEMENT
Set forth below is a summary of certain provisions of the Electricity Purchase, Sale and Service Agreement during the Delivery Period. This summary does not purport to be a complete description of the terms and conditions of the Electricity Purchase, Sale and Service Agreement and accordingly is qualified by reference to the full text thereof.
General
Under the Electricity Purchase, Sale and Service Agreement, J. Aron has agreed to sell and deliver during the Delivery Period the Electricity in exchange for payment from the Electricity Supplier. For Assigned Prepay Quantities, the Electricity Supplier will pay J. Aron an amount equal to the APC Contract Price, plus a fee calculated on the Assigned Electricity Value (the “J. Aron Electricity Fee”), regardless of * Preliminary, subject to change.
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56 whether or not the Electricity is delivered pursuant to the terms and conditions of the Electricity Purchase, Sale and Service Agreement. For Base Quantities, the Electricity Supplier will pay J. Aron an amount equal to the Day-Ahead Market Price, plus a fee calculated on the Base Quantities multiplied by the fixed swap price. In addition, the Electricity Supplier will pay J. Aron an upfront structuring fee.
With respect to Assigned PAYGO Electricity, payment shall equal the quantity of such Assigned PAYGO Electricity multiplied by the applicable contract price(s) then in effect with respect to Electricity under the applicable Assigned PPAs.
The quantities of Electricity, delivery point provisions and delivery period under the Electricity Purchase, Sale and Service Agreement match the corresponding provisions of the Master Power Supply Agreement and, in turn, the corresponding provisions of the Clean Energy Purchase Contract.
J. Aron as Agent
General. Under the Electricity Purchase, Sale and Service Agreement, the Electricity Supplier appoints and directs J. Aron as its agent and J. Aron agrees to issue notices and other communications, billing statements and to take any other actions that the Electricity Supplier is required or permitted to take under (a) the Master Power Supply Agreement, (b) the Electricity Supplier Commodity Swaps, (c) the Re-Pricing Agreement, and (d) the Electricity Purchase, Sale and Service Agreement (collectively, the “Energy Documents”); provided that J. Aron’s agency role with respect to the Electricity Purchase, Sale and Service Agreement shall be limited to ordinary course actions required in connection with the Clean Energy Project and J. Aron shall have no right to waive, modify or amend the terms of the Electricity Purchase, Sale and Service Agreement on the Electricity Supplier’s behalf or to act on the Electricity Supplier’s behalf with respect to any dispute thereunder. In exercising this agency power, J. Aron shall have the authority to take any such actions as it deems necessary under the Energy Documents.
Standard of Care. In the conduct and performance of its agency role, J. Aron shall conduct itself consistent with and observe the same standard of care as it has in similar transactions in which J. Aron has acted as the seller under prepaid commodities agreements, and the Electricity Supplier acknowledges and agrees that J. Aron shall have no obligation to observe a standard of care greater than it has in such similar transactions or to take any actions or measures beyond those it typically takes in connection with such transactions. J. Aron shall not be liable for any action taken or omitted by it in acting as agent on behalf of the Electricity Supplier, except as expressly set forth in the Electricity Purchase, Sale and Service Agreement.
Electricity Remarketing. Under the Electricity Purchase, Sale and Service Agreement, the Electricity Supplier delegates, and J. Aron assumes, all of the Electricity Supplier’s Electricity Remarketing obligations under the remarketing provisions of the Master Power Supply Agreement, and J. Aron agrees to comply with such provisions. Pursuant to this delegation, all Electricity Remarketing notices, directions and other actions will be given to or by, and will be performed by, J. Aron, except as described below.
Third Party. In the event that there are entries for private business use sales or non-qualifying sales on any ledger set that have not been remediated within 12 months, the Electricity Supplier (acting at the direction of the director appointed by CCCFA) may hire a third party remarketing agent to remediate the outstanding ledger entries; provided that any such third party remarketing agent (or its guarantor) must:
(a) have (i) an outstanding long-term senior, unsecured, unenhanced debt rating equivalent to or higher than the ratings assigned to the Bonds, (ii) capital stock, surplus and undivided earnings aggregating at least $100,000,000, and (iii) satisfy the Member’s internal requirements relating to “know your customer” rules and similar rules and regulations, unless such requirements are waived by the Member; and (b) agree to (i) remediate such ledger entries consistent with the terms of the Master Power Supply Agreement, and Agenda Page 1024
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57 (ii) exercise commercially reasonable efforts to enter into remarketing sales to the extent that CCCFA, the Electricity Supplier or J. Aron locate opportunities for remarketing sales.
Receivables Purchase. J. Aron agrees in the Electricity Sale and Service Agreement to purchase any Receivables purchased by the Electricity Supplier under the Receivables Purchase Provisions; provided that J. Aron’s obligation to purchase Swap Deficiency Call Receivables and Elective Call Receivables is subject to it having provided its prior written consent to the purchase thereof by the Electricity Supplier. J.
Aron agrees to accept the transfer of Receivables as a credit against amounts owed by the Electricity Supplier under the Electricity Sale and Service Agreement and, to the extent that the amount of such Receivables exceeds the amount so owed by the Electricity Supplier in any Month, J. Aron will pay the difference to the Electricity Supplier. J. Aron agrees to pay the purchase price for such Receivables not later than the applicable purchase date specified in the Receivables Purchase Provisions by wire transfer of immediately available funds.
Failure to Deliver or Receive Base Quantities
J. Aron will be required to pay the Electricity Supplier for all Base Quantities that J. Aron fails to deliver or the Electricity Supplier fails to receive for any reason, including events of force majeure. The amount J. Aron is required to pay the Electricity Supplier is equal to the amount the Electricity Supplier is required to pay CCCFA for Base Quantities not delivered or received under the Master Power Supply Agreement, if such failure to deliver or receive Base Quantities is due to force majeure. If a failure of J.
Aron to deliver Base Quantities is not due to force majeure, J. Aron shall pay the higher of the replacement price or the day-ahead market price applicable for such Shortfall Quantity. If there is a failure of the Electricity Supplier to take Base Quantities not due to force majeure, J. Aron shall pay an amount based on the price of remarketed Base Quantities, plus certain fees.
Payment Provisions
Amounts due from J. Aron to the Electricity Supplier under the Electricity Purchase, Sale and Service Agreement (for example, as a result of remarketing or failure to deliver by J. Aron) will be due on or before the 23rd day of the month following the month in which such amount accrues; provided that the purchase price of any Receivables purchased by J. Aron shall be paid on the applicable due date under the Receivables Purchase Provisions. Amounts due from the Electricity Supplier to J. Aron will be due on or before the 26th day of the month following the month in which such amount accrued. J. Aron is not entitled to net amounts due and owing by it thereunder, but the Electricity Supplier is entitled to net any amounts due and owing by J. Aron against its monthly payments due to J. Aron.
Force Majeure
Each of J. Aron and the Electricity Supplier are excused from their respective obligations to receive and deliver Electricity under the Electricity Purchase, Sale and Service Agreement to the extent prevented by force majeure, defined generally as an event or circumstance not anticipated and not within the reasonable control of, or the result of negligence of, the party claiming force majeure. This includes such events as riot, insurrection, war, labor dispute, natural disaster, vandalism, terrorism, and sabotage. The declaration of force majeure by an APC Party under a PPA, by the Project Participant under the Clean Energy Purchase Contract, or by CCCFA under the Master Power Supply Agreement, constitutes force majeure under the Electricity Purchase, Sale and Service Agreement.
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58 Additional Amounts Payable Following a Ledger Event
If a Ledger Event occurs under the Master Power Supply Agreement and an Early Termination Payment Date has not been designated thereunder, J. Aron agrees to pay to the Electricity Supplier scheduled Additional Payments calculated to provide a sum sufficient (together with the interest component of the Scheduled Debt Service Deposits and any Interest Rate Swap Receipts) to enable CCCFA to pay interest on the Bonds at the Increased Interest Rate. Such payments are due to the Electricity Supplier on (a) the Business Day preceding each Interest Payment Date and the Mandatory Purchase Date, and (b) any Early Termination Payment Date under the Master Power Supply Agreement. See “THE MASTER POWER SUPPLY AGREEMENT — Ledger Event” and “THE BONDS — Increased Interest Rate Upon Ledger Event.” Assignment
Neither party may assign its rights or obligations under the Electricity Purchase, Sale and Service Agreement without the other party’s consent, except that J. Aron may assign the Electricity Purchase, Sale and Service Agreement to an affiliate of J. Aron, which assignment will constitute a novation; provided that the assignee assumes the obligations of J. Aron under the Electricity Purchase, Sale and Service Agreement and either (a) the EPSSA Guaranty continues to apply to the obligations of such assignee under the Electricity Purchase, Sale and Service Agreement or (b) assignee provides to the Electricity Supplier a replacement EPSSA Guaranty and a Rating Confirmation with respect to such assignment.
Defaults and Termination Events
J. Aron Default. Each of the following events constitutes a “J. Aron Default” under the Electricity Purchase, Sale and Service Agreement:
(a) J. Aron fails to pay when due any amounts owed to the Electricity Supplier pursuant to the Electricity Purchase, Sale and Service Agreement and such failure continues for five days after receipt by J. Aron of notice thereof, unless GSG has made such payment under the EPSSA Guaranty;
(b) certain bankruptcy or insolvency events with respect to J. Aron; or (c) the EPSSA Guaranty ceases to be in full force and effect or is declared to be null and void, or GSG contests the validity or enforceability of the EPSSA Guaranty; provided that no such event will occur as a consequence of GSG becoming subject to a receivership, insolvency, liquidation, resolution or similar proceeding.
Electricity Supplier Default. Each of the following events constitutes a “Electricity Supplier Default” under the Electricity Purchase, Sale and Service Agreement:
(a) the Electricity Supplier fails to pay when due any amounts owed to J. Aron pursuant to the Electricity Purchase, Sale and Service Agreement and such failure continues for thirty Business Days after receipt by the Electricity Supplier of notice thereof; or (b) certain bankruptcy or insolvency events with respect to the Electricity Supplier.
Optional Non-Default Termination Event. An “Optional Non–Default Termination Event” under the Electricity Purchase, Sale and Service Agreement will occur if the Project Participant makes a Remarketing Election with respect to any Reset Period under the Clean Energy Purchase Contract.
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59 Automatic Non-Default Termination Event. The occurrence of an Electricity Delivery Termination Date under the Master Power Supply Agreement constitutes an “Automatic Non-Default Termination Event” under the Electricity Purchase, Sale and Service Agreement.
Remedies and Termination
Upon the occurrence of a J. Aron Default or an Electricity Supplier Default, the non-defaulting party may designate an early termination date under the Electricity Purchase, Sale and Service Agreement (a “EPSSA Early Termination Date”). Upon the occurrence of an Optional Non–Default Termination Event, the Electricity Supplier may designate a EPSSA Early Termination Date. A EPSSA Early Termination Date will occur automatically upon the occurrence of an Automatic Non-Default Termination Event.
If an Electricity Delivery Termination Date occurs, the Delivery Period for Electricity under the Electricity Purchase, Sale and Service Agreement will end and the obligations of the parties to deliver and receive Electricity will terminate.
Security
GSG has provided to the Electricity Supplier the EPSSA Guaranty, which guarantees J. Aron’s payment obligations under the Electricity Purchase, Sale and Service Agreement. None of CCCFA, the Trustee nor the Bondholders have rights to enforce the EPSSA Guaranty.
THE FUNDING AGREEMENT
Set forth below is a summary of certain provisions of the Funding Agreement. This summary does not purport to be a complete description of the terms and conditions of the Funding Agreement and accordingly is qualified by reference to the full text thereof. See Appendix K for a description of the Funding Recipient.
Amount and Term
Upon its receipt of the prepayment amount under the Master Power Supply Agreement, the Electricity Supplier (as lender) will [make a term loan] in an approximately equal amount to [the Funding Recipient] (as borrower and Funding Recipient) under the Funding Agreement.
The term of the Funding Agreement will end on the second to last Business Day of the Initial Interest Rate Period for the Bonds (the “Maturity Date”).
Repayment
The Funding Recipient is required to repay the loan in the Scheduled Amounts which reflect a fixed interest rate. In the case of an acceleration of the Funding Agreement due to a Loan Event of Default (described below), the Funding Recipient’s sole remaining obligation under the Funding Agreement will be to pay a scheduled liquidation amount (the “Final Payment Amount”) on the last Business Day of the calendar month following the calendar month in which the Loan Event of Default occurs. [Extension of Term
At any time commencing on the date that is 180 days prior to the Maturity Date, the Electricity Supplier may request that the Funding Recipient provide pricing proposals for an extension of the Funding Agenda Page 1027
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60 Agreement. The Funding Recipient agrees to propose pricing terms for two or more different extension lengths of the term of the Funding Agreement, which extension may not be less than the minimum length permitted for a Reset Period under and defined in the Re-Pricing Agreement. Such proposals shall indicate a fixed interest rate that would apply throughout each offered length of extension.
Prepayment Option
Commencing six months after the date of the Funding Agreement, the Funding Recipient has the right, but not the obligation, to prepay the loan in full by payment of the Final Payment Amount on any date on or after an Electricity Delivery Termination Date is designated under the Master Power Supply Agreement. The date for payment of the Final Payment Amount will be the last Business Day of the calendar month following the calendar month in which the Funding Recipient delivers notice to Electricity Supplier electing to prepay the loan.]
Amendments
The Electricity Supplier agrees in the Master Power Supply Agreement that it will not agree to any amendment, alteration, assignment or modification to the Funding Agreement without receipt of (a) a Rating Confirmation and (b) the prior written consent of CCCFA, except to (i) cure or correct any ambiguity, omission, defect or inconsistent provision, (ii) insert clarifying provisions that are not contrary to or inconsistent with the provisions of the Funding Agreement, or (ii) to convert or supplement any provision in a manner consistent with the intent of the Funding Agreement, the Master Power Supply Agreement, the Re-Pricing Agreement and the Electricity Supplier Commodity Swaps; provided that CCCFA’s consent is not required in connection with (a) the replacement, refinancing or re-pricing of the Funding Agreement at the end of any Interest Rate Period or (b) the Electricity Supplier’s assignment of its interest in the Funding Agreement or consent to Funding Recipient’s assignment of its interest in the Funding Agreement to the extent if a Rating Confirmation is provided with respect to any such assignment.
Loan Events of Default and Remedy
Each of the following events constitutes an event of default under the Funding Agreement (each, a “Loan Event of Default”):
(a) the Funding Recipient defaults in the due and punctual payment of the Scheduled Amounts and such failure continues for 30 days after receipt by the Funding Recipient of notice thereof; or
(b) an involuntary case or other proceeding is commenced against the Funding Recipient 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 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 (c) the Funding Recipient commences 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 Agenda Page 1028
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61 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 the Funding Recipient 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.
Upon the occurrence of a Loan Event of Default, without further action of either party, the Final Payment Amount (for the date that is the last Business Day of the calendar month following the calendar month in which such Event of Default occurs) will mature and become due and payable by the Funding Recipient, without the necessity of any presentment, demand, protest or further notice; provided, that upon the happening of any event described in clause (b) or (c) above, such Final Payment Amount shall automatically become immediately due and payable and the Funding Agreement shall terminate.
THE MASTER ELECTRICITY SUPPLIER CUSTODIAL AGREEMENT
Set forth below is a summary of certain provisions of the Master Electricity Supplier Custodial Agreement. This summary does not purport to be a complete description of the terms and conditions of the Master Electricity Supplier Custodial Agreement and accordingly is qualified by reference to the full text thereof.
Master Electricity Supplier Custodial Agreement. The Electricity Supplier, J. Aron, CCCFA and The Bank of New York Mellon, as custodian (in such capacity, the “Master Custodian”), will enter into a SPE Master Custodial Agreement (the “Master Electricity Supplier Custodial Agreement”) to administer:
(a) the amounts payable to the Electricity Supplier under (i) the Funding Agreement, (ii) the Electricity Purchase, Sale and Service Agreement, (iii) the Master Power Supply Agreement, (iv) the Electricity Supplier Commodity Swaps and (v) the J. Aron Subordinated Loan; and
(b) the Funding Agreement and the amounts payable by the Electricity Supplier under (i) the Master Power Supply Agreement, (ii) the Electricity Purchase, Sale and Service Agreement, (iii) the Electricity Supplier Commodity Swaps and (iv) the J. Aron Subordinated Loan.
The Master Electricity Supplier Custodial Agreement establishes a revenue account (the “Electricity Supplier Revenue Account”) and a capital account (the “Electricity Supplier Capital Account”) with the Master Custodian. The amounts payable to the Electricity Supplier under Funding Agreement, the Electricity Purchase, Sale and Service Agreement, the Master Power Supply Agreement and the Electricity Supplier Commodity Swaps are to be paid directly into the Electricity Supplier Revenue Account.
Under the Master Electricity Supplier Custodial Agreement, the Master Custodian will, to the extent of the amounts on deposit in the Electricity Supplier Revenue Account, make monthly transfers for the payment of amounts due by the Electricity Supplier under the Electricity Supplier Commodity Swaps, the Master Power Supply Agreement and the Electricity Purchase, Sale and Service Agreement. Following these monthly transfers, any remaining funds in the Electricity Supplier Revenue Account are transferred to the Electricity Supplier Capital Account. Pending their application, the amounts in the Electricity Supplier Revenue Account are held in trust for the benefit of the Electricity Supplier.
The Electricity Supplier Capital Account will be initially funded by J. Aron with a cash equity contribution, the J. Aron Subordinated Loan, and if required a contingent subordinated loan that together Agenda Page 1029
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62 equal at least three percent of the outstanding (unamortized) amount of the prepayment under the Master Power Supply Agreement (approximately $____ million as of the Initial Issue Date). Under the Master Electricity Supplier Custodial Agreement, the amounts in the Electricity Supplier Capital Account may be invested only in: direct obligations of the U.S. Treasury or obligations unconditionally guaranteed by the United States, in either case with a maturity of two years or less; certain certificates of deposit and demand deposits; and certain money market funds.
Amounts on deposit in the Electricity Supplier Capital Account shall be withdrawn by the Master Custodian pursuant to instructions provided by the Electricity Supplier and applied to: (a) meet the Electricity Supplier’s collateral posting obligations under the credit support annex to the Electricity Supplier Commodity Swap; and (b) to make up any deficiency of the amounts on deposit in the Electricity Supplier Revenue Account for the purposes described above. The Master Custodian shall have a lien, security interest and right of set-off with respect to the Electricity Supplier Capital Account for the payment of any claim by the Master Custodian for compensation, reimbursement, or indemnity under the Master Electricity Supplier Custodial Agreement. The Electricity Supplier’s repayment obligations under the J. Aron Subordinated Loan are subordinate to the Electricity Supplier’s obligations under the Electricity Supplier Commodity Swaps, the Master Power Supply Agreement and the Electricity Purchase, Sale and Service Agreement. The Master Custodian shall only withdraw amounts on deposit in the Electricity Supplier Capital Account for payment of principal and interest on the J. Aron Subordinated Loan to the extent that (a) the Electricity Supplier has satisfied its payment obligations under the Electricity Supplier Commodity Swap, the Master Power Supply Agreement and the Electricity Purchase, Sale and Service Agreement in any given month, and (b) the amounts on deposit in the Electricity Supplier Capital Account exceed a minimum amount equal to the greater of (i) $____________ and (ii) three percent of the outstanding (unamortized) amount of the prepayment under the Master Power Supply Agreement.
GSG, J. ARON AND THE ELECTRICITY SUPPLIER
Set forth below is certain information regarding GSG, J. Aron and the Electricity Supplier that has been obtained from such persons and other sources believed to be reliable. CCCFA assumes no responsibility for such information and cannot guarantee the accuracy thereof. Under no circumstance is the Electricity Supplier, J. Aron or GSG obligated to pay any amounts owed in respect of the Bonds.
GSG
GSG, together with its consolidated subsidiaries, is a leading global financial institution that delivers a broad range of financial services across investment banking, securities, investment management and consumer banking to a large and diversified client base that includes corporations, financial institutions, governments, and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.
GSG is a public company that is subject to the information requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith files reports, proxy statements and other information, including financial reports, with the Securities and Exchange Commission (the “SEC”). For further information concerning GSG and J. Aron, see
• GSG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021; • GSG’s Quarterly Reports on Form 10-Q (i) dated and filed on May 2, 2022, and (ii) dated and filed on August 4, 2022;
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63 • GSG’s Current Reports on Form 8-K (i) dated and filed on January 18, 2022, (ii) dated and filed on January 24, 2022, (iii) dated and filed on January 28, 2022, (iv) dated and filed on February 17, 2022, (v) dated and filed on March 15, 2022, (vi) dated and filed on March 21, 2022, (vii) dated and filed on March 28, 2022, (viii) dated and filed on April 14, 2022, (ix) dated and filed on April 29, 2022, (x) dated and filed on April 29, 2022, (xi) dated and filed on June 13, 2022, (xii) dated and filed on June 27, 2022, (xiii) dated and filed on July 18, 2022, (xiv) dated and filed on August 23, 2022, and (xv) dated and filed on September 22, 2022; and
• All documents filed by GSG under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 on or after the date of this Official Statement and prior to the date of the issuance of the Bonds.
These reports and other information are available for review at http://www.sec.gov, an internet site maintained by the SEC.
The senior unsecured long-term debt of GSG is rated “A” (stable outlook) by Fitch, “A2” (stable outlook) by Moody’s and “BBB+” (stable outlook) by S&P.
GSG has provided to the Electricity Supplier a guarantee of J. Aron’s payment obligations under the Electricity Purchase, Sale and Service Agreement (the “EPSSA Guaranty”). None of CCCFA, the Trustee nor the Bondholders have rights to enforce the EPSSA Guaranty. In addition, GSG has provided to CCCFA a guarantee with respect to J. Aron’s payment obligations under the Interest Rate Swap.
J. Aron
J. Aron, a participant in the commodities business for over 100 years, was acquired in 1981 by Goldman Sachs, and is the entity through which Goldman Sachs participates in Electricity markets. J. Aron is a registered swap dealer and market-maker for a wide array of commodity derivative contracts including Electricity.
J. Aron has market based rate authority from the FERC for energy, capacity and ancillary services sales at market-based rates. [Since 2006, J. Aron has executed twenty-five commodity prepayment transactions with municipal utilities and joint action agencies. Since 2018, J. Aron has enabled more than 1,500 MWs of renewable offtake transactions.]
The Electricity Supplier
Organization. The Electricity Supplier is a Delaware limited liability company organized for the sole purpose of entering into the transactions on its part with respect to the Clean Energy Project described herein. J. Aron is the sole member of the Electricity Supplier (the “Member”) and has funded the Electricity Supplier with the cash equity contribution and the subordinated loans described below (the “J. Aron Subordinated Loan”).
The Electricity Supplier is governed by a three-member board of directors. One director is appointed by J. Aron, one director is appointed by CCCFA, and the third director is an independent director appointed by J. Aron. The directors have appointed J. Aron as the manager of the Electricity Supplier.
The director appointed by CCCFA has the sole consent rights with respect to certain matters, including: the designation of a EPSSA Early Termination Date under the Electricity Purchase, Sale and Service Agreement; the designation of an Electricity Delivery Termination date under the Master Power Agenda Page 1031
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64 Supply Agreement due to the occurrence of a Ledger Event; the extension and enforcement of the Funding Agreement or the entry into a replacement thereto with a replacement Qualified Funding Recipient; under certain circumstances, the removal and replacement of J. Aron as manager; the appointment of a third-party Electricity Remarketing agent under the Master Power Supply Agreement in the event that there are private business use sales or non-qualified sales of Electricity that are not remediated within twelve Months; the removal and replacement of the Master Custodian (defined below); and certain determinations with respect to Reset Periods under the Re-Pricing Agreement. CCCFA covenants in the Indenture that, in any vote that comes before the board of directors of the Electricity Supplier regarding the Electricity Supplier Documents, it will instruct the CCCFA-appointed director to exercise its voting rights in favor of (a) the Electricity Supplier (i) observing and performing its obligations under the Master Power Supply Agreement and (ii) enforcing the provisions of the other Electricity Supplier Documents against the counterparties thereto, and (b) not permitting any assignment, rescission, amendment or waiver to or of the Electricity Supplier Documents which will in any manner materially impair or materially adversely affect the rights of CCCFA thereunder or the rights or security of the Bondholders under the Indenture.
The director appointed by J. Aron has sole consent rights with respect to other matters, including (a) the designation of an Electricity Delivery Termination Date under the Master Power Supply Agreement due to a termination of a CCCFA Commodity Swap, and (b) the termination or replacement of an Electricity Supplier Commodity Swap.
The independent director is required to consider only the interests of the Electricity Supplier and its creditors in acting or voting on certain material actions that require the unanimous consent of the directors. No resignation or removal of the independent director will be effective until a successor independent director has been appointed.
FERC Application. The Electricity Supplier has filed an application with the FERC for market based rate authority for energy, capacity and ancillary services sales at market-based rates. _____________________
Under no circumstance is the Electricity Supplier, J. Aron or GSG obligated to pay any amounts owed in respect of the Bonds.
THE CLEAN ENERGY PURCHASE CONTRACT
Set forth below is a summary of certain provisions of the Clean Energy Purchase Contract during the Delivery Period. This summary does not purport to be a complete description of the terms and conditions of the Clean Energy Purchase Contract and is qualified by reference to the full text of the Clean Energy Purchase Contract.
General
Under the Clean Energy Purchase Contract, CCCFA has agreed to sell and deliver to the Project Participant, and the Project Participant has agreed to purchase and receive from CCCFA at the delivery point, quantities of Electricity, which shall be comprised of Assigned Electricity delivered to J. Aron pursuant to the Assignment Agreements, and, if there is insufficient Assigned Prepay Value, the Electricity Supplier is required to deliver Base Quantities, as set forth in the Clean Energy Purchase Contract.
The Clean Energy Purchase Contract will remain in full force and effect for a primary term ending at the end of the Delivery Period under the Master Power Supply Agreement; provided, however, that if the Agenda Page 1032
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65 Delivery Period under the Master Power Supply Agreement is terminated, the Clean Energy Purchase Contract will terminate on the Electricity Delivery Termination Date, subject to the provisions thereof.
For information regarding the Project Participant, see APPENDIX A.
Pricing Provisions
Contract Price. For any month, the lesser of (i) the total quantity of Assigned Electricity (in MWh) delivered under the Clean Energy Purchase Contract in such month and (ii) the aggregate Assigned Prepay Quantities for such month, is referred to herein as “Assigned Discounted Energy.” For any month, the amount, if any, by which (i) the total quantity of Assigned Electricity (in MWh) under the Clean Energy Purchase Contract in such month exceeds (ii) the aggregate Assigned Discounted Energy for such month, together with any associated assigned RECs, is referred to herein as “Assigned PAYGO Electricity.”
The “Contract Price” under the Clean Energy Purchase Contract means:
(i) with respect to Base Quantities for any hour, means the (a) the Day-Ahead Market Price for such hour at the Base Delivery Point, less (b) the Electricity of a fixed price (in MWh) paid to the Electricity Supplier by CCCFA for Increased Base Quantities under the Master Power Supply Agreement, multiplied by the Monthly Discount Percentage; (ii) with respect to Assigned Discount Energy, (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 Electricity, the APC Contract Price(s), provided that Assigned PAYGO Electricity may be subject to an aggregate discount in a month in accordance with the Clean Energy Purchase Contract.
If Base Quantities are required to be remarketed pursuant to the Master Power Supply Agreement, the Electricity Supplier will remarket Base Quantities that would have otherwise been delivered as described in “THE MASTER POWER SUPPLY AGREEMENT — Electricity Remarketing.” CPA Monthly Payments. Pursuant to the Clean Energy Purchase Contract, for each Month in which an EPS Energy Period is in effect, at the start of such month, the Project Participant will pay CCCFA the Contract Price multiplied by the Assigned Electricity delivered under the Clean Energy Purchase Contract in such month.
Assignment of Power Purchase Agreements
General. The Project Participant will assign, pursuant to limited assignment agreements, [two (2)] power purchase agreements to J. Aron for delivery beginning [____] 1, 202[_]* .
Commencing one year prior to the expiration of any EPS Energy Period, or otherwise immediately upon the early termination or anticipated early termination of an EPS Energy Period, the Project Participant shall exercise commercially reasonable efforts to assign the Assigned Rights and Obligations under one or more Assigned PPAs, and J. Aron has the right to consent to, pursuant to which the Project Participant is purchasing EPS Compliant Energy and associated attributes, and J. Aron will be obligated to sell and deliver * Preliminary, subject to change.
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66 Assigned Electricity it receives under all Assigned Rights and Obligations to the Electricity Supplier pursuant to the Electricity Purchase, Sale and Service Agreement, and the Electricity Supplier will be obligated to deliver such Electricity to CCCFA pursuant to the Master Power Supply Agreement.
J. Aron is obligated to exercise commercially reasonable efforts to obtain EPS Compliant Energy for ultimate redelivery to the Project Participant pursuant to the Clean Energy Purchase Contract. The delivery period for such EPS Compliant Energy (any such period, a “J. Aron EPS Energy Period”) obtained during the Initial Interest Rate Period shall not exceed the length of the Initial Interest Rate Period.
Failure to Obtain EPS Compliant Energy. To the extent an EPS Energy Period terminates or expires and the Project Participant and J. Aron have been unable to obtain EPS Compliant Energy for delivery, then the Electricity Supplier shall remarket the Base Quantities (assuming the Base Quantities do not qualify as EPS Compliant Energy) pursuant to the Master Power Supply Agreement, the obligations of the Project Participant and J. Aron described under this heading shall continue to apply and the Project Participant may not make any new commitment to purchase Priority Electricity during such a remarketing Adjustments to Base Quantities. Base Quantity Reductions under the Clean Energy Purchase Contract have been calculated to reflect the expected Initial Assigned Rights and Obligations using the same methodology that would apply to determine Base Quantity Reductions in connection with the assignment of Replacement Assigned Rights and Obligations. Upon the termination or expiration of an EPS Energy Period, the Base Quantity Reductions will be revised as described under the heading “THE MASTER POWER SUPPLY AGREEMENT — Assignment of Power Purchase Agreements – Adjustments to Base Quantities.”
Reconciling Assigned Delivered Value. Differences between the Assigned Delivered Value for any Month and the Assigned Prepay Value for such Month will be reconciled as described under the heading “THE MASTER POWER SUPPLY AGREEMENT — Assignment of Power Purchase Agreements – Reconciling Assigned Delivered Value.”
J. Aron Non-Payment to APC Party. To the extent that J. Aron fails to pay when due any J. Aron Prepay Payment, and the Project Participant makes such payment to the applicable APC Party, CCCFA shall pay such amount to the Project Participant.
Billing and Payment
No later than the fifth 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 Project Participant shall deliver to CCCFA a statement (a “Purchaser’s Statement”) listing (i) in respect of any Shortfall Quantity in the prior month, the Replacement Price applicable to such Shortfall Quantity, and (ii) any other amounts due to Purchaser in connection with the Clean Energy Purchase Contract with respect to the prior Months.
Not later than ten days following the end of the month during the Delivery Period, and the first month following the end of the Delivery Period, CCCFA must provide a monthly billing statement (a “Billing Statement”) to the Project Participant indicating (i) the total amount due to CCCFA for Electricity delivered in the prior month, (ii) any other amounts due to CCCFA or the Project Participant in connection with the Clean Energy Purchase Contract with respect to the prior months, and (iii) the net amount due to CCCFA or the Project Participant; provided that the Electricity Supplier’s delivery of a Billing Statement to CCCFA or the Project Participant pursuant to the Master Power Supply Agreement shall be deemed to satisfy CCCFA’s obligation to deliver a Billing Statement under the Clean Energy Purchase Contract. The due date for payment by the Project Participant will be (i) the [23rd] day of the month following the month Agenda Page 1034
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67 of delivery or (ii) the 10th day following the Project Participant’s receipt of the billing statement (or if either of such days is not a business day, the preceding business day). If the Billing Statement indicates an amount due from CCCFA, then the due date for payment by CCCFA will be (i) the 28th day of the month following the most recent month to which such Billing Statement relates, or (ii) the 10th day following CCCFA’s receipt of a Purchaser’s Statement, or if either such day is not a Business Day, the following Business Day.
If the Project Participant disputes the appropriateness of any charge or calculation in any billing statement, the Project Participant, within the time provided for payment, must notify CCCFA of the existence of and basis for such dispute and must pay all amounts billed by CCCFA, including any amounts in dispute. If it is ultimately determined that the Project Participant did not owe the disputed amount, CCCFA must pay the Project Participant the disputed amount plus interest.
Annual Refunds
CCCFA has agreed to provide an annual refund, if any, to the Project Participant from amounts available for distribution pursuant to the Indenture, which amount shall be credited to the next amount due from the Project Participant following the release of funds to CCCFA under the terms of the Indenture. In determining the amount of such refund, if any, CCCFA may reserve such funds (i) as may be required under the terms of the Indenture or (ii) with the prior written consent of the Project Participant, (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.
Covenants of the Project Participant
Operating Expense. The Project Participant covenants (a) to make the payments on its part due under the Clean Energy Purchase Contract from the revenues of its electric utility system, and only from such revenues, as an item of operating expenses and a cost of purchase Electricity and (b) that in any future bond issue, swap, or other financial transaction undertaken in connection with its electric system, it will not pledge or encumber its revenues through a gross revenue pledge or in any other way which creates a prior or superior obligation to its obligation to make payments under the Clean Energy Purchase Contract.
Maintenance of Rates and Charges. The Project Participant has covenanted and agreed that it will establish, maintain, and collect rates and charges for its electric system so as to provide revenues sufficient, together with all available electric system revenues, to enable it to pay to CCCFA all amounts payable under its Clean Energy Purchase Contract, and to pay all other amounts payable from the revenues of the Project Participant’s electric system, and to maintain required reserves.
Qualifying Use. The Project Participant has agreed that it will (a) provide such information with respect to its electric utility system as may be requested by CCCFA in order to establish the tax-exempt status of the Bonds, and (b) act in accordance with such written instructions as tax counsel to CCCFA may provide from time to time that are reasonably necessary to enable CCCFA to maintain the tax-exempt status of interest on the Bonds. Without limiting the foregoing, the Project Participant has further agreed to sell or otherwise use the Electricity purchased under the Clean Energy Purchase Contract (a) in a “qualifying use” as defined in the applicable U.S. Treasury Regulation, (b) in a manner that will not result in any private business use of that Electricity within the meaning of Section 141 of the Code, and (c) consistent with its Federal Tax Certificate (collectively, the “Qualifying Use Requirements”).
In the event that the Project Participant remarkets the Electricity it receives under the Clean Energy Purchase Contract in a manner that does not comply with the Qualifying Use Requirements due to fluctuations in its commodity needs, the Project Participant agrees to exercise commercially reasonable efforts to use the proceeds of such remarketing to purchase Electricity (other than Priority Electricity, which Agenda Page 1035
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68 are described below) for use in compliance with such Requirements. The Project Participant further agrees to provide quarterly reports to CCCFA with respect to the quantity of proceeds from sales of Electricity that were sold in a transaction that does not comply with the Qualifying Use Requirements and that have not been remediated by applying such proceeds to purchase Electricity that are used in compliance with the Qualifying Use Requirements. The amount of any such unremediated proceeds will be entered on the ledger system maintained by J. Aron under the Electricity Purchase, Sale and Service Agreement.
Priority Electricity. The Project Participant agrees to purchase and receive the Base Quantities and Assigned Quantities to be delivered under the Clean Energy Purchase Contract (a) in priority over and in preference to all other Electricity available to it that are not Priority Electricity; and (b) on at least a pari passu and non-discriminatory basis with other Priority Electricity. For purposes of this covenant and during the Delivery Period, “Priority Electricity” means Base Quantities and Assigned Quantities that (a) the Project Participant is obligated to take under a long-term agreement or (b) with respect to Energy, Energy that is generated using capacity that was constructed using the proceeds of tax-exempt bonds, notes, or other obligations.
Delivery Points; Title and Risk of Loss
Assigned Electricity. Assigned Electricity delivered under the Clean Energy Purchase Contract shall be Scheduled for delivery to and receipt at the applicable Assigned Delivery Point specified in the applicable Assignment Schedule. All other Assigned Electricity will be delivered pursuant to the terms of the applicable Assignment Agreement. Scheduling and transmission of Assigned Electricity shall be in accordance with the applicable Assignment Schedule.
Base Electricity. CCCFA is required to deliver Base Electricity to the Base Delivery Points and is responsible for arranging transmission and scheduling services with its Transmission Providers to deliver Base Electricity to the Base Delivery Point. The Project Participant is responsible for arranging transmission and scheduling with its Transmission Providers in accordance with their practices, to receive the Base Electricity at the Base Delivery Point (or, if the Electricity Supplier arranges and is responsible for transmission and scheduling services, then the Project Participant’s obligations as described in this paragraph shall be relieved pro tanto).
Title. Title to and risk of loss of the Energy delivered under the Clean Energy Purchase Contract shall pass from the CCCFA to the Project Participant at the applicable Delivery Point. The transfer of title and risk of loss for Assigned Electricity shall be in accordance with the applicable Assignment Agreement.
Failure to Perform.
To the extent that the Project Participant purchases Replacement Electricity with respect to any Shortfall Quantity, CCCFA shall pay to Project Participant an amount based on the Replacement Price, less the Contract Price which would have applied to such Electricity, plus an Administrative Fee, for the quantity of Replacement Electricity purchased. The Project Participant must exercise commercially reasonable efforts to mitigate the CCCFA’s damages.
If the Project Participant fails to take all or any portion of Base Quantities at any Delivery Point for any reason not due to force majeure, the Project Participant remains obligated to pay the Contract Price for such Base Quantities. Any net revenues received by CCCFA from the Electricity Supplier in connection with the sale of such Electricity to other municipal utilities will be credited to the Project Participant, up to the Contract Price.
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69 Neither the Project Participant nor CCCFA has any liability to one another for any failure to take or deliver Assigned Electricity, except as described under the subheadings “THE MASTER POWER SUPPLY AGREEMENT — Assignment of Power Purchase Agreements” and “Pricing Provisions — CPA Monthly Payments” herein.
Remarketing of Energy
In the event (a) a quantity of Assigned Electricity less than the Assigned Prepay Quantity is delivered under the Clean Energy Purchase Contract in any Month during an Assignment Period for any reason, or (b) the Project Participant does not require all or any portion of the Base Quantities or Assigned Quantities to meet its requirements for Energy for any hour that it is obligated to purchase under its Clean Energy Purchase Contract as a result of (i) insufficient demand by its retail customers, or (ii) a change in Law, the Project Participant may request (and, in the case of clause (a), shall be deemed to request) that the Electricity Supplier sell such portion of Base Quantities or Assigned Electricity to (A) another Municipal Utility or (B) if necessary, another purchaser. Under the Master Power Supply Agreement, CCCFA arranges for sales through the Electricity Supplier in accordance with the remarketing provisions and procedures set forth in that agreement. If the Electricity Supplier successfully makes such a sale or sales, CCCFA must credit against the amount owed by the Project Participant to CCCFA the amount received from the Electricity Supplier, such credit not to exceed the Contract Price for the Energy so sold. See “THE MASTER POWER SUPPLY AGREEMENT — Energy Remarketing.”
Force Majeure
Except with regard to a party’s obligation to make payments under the Clean Energy Purchase Contract, neither party shall be liable to the other for failure to perform its obligations under the Clean Energy Purchase Contract to the extent such failure was caused by an event of “Force Majeure” (as defined in APPENDIX C).
Default
Each of the following is a default under the Clean Energy Purchase Contract:
(a) Any representation or warranty made by a party in the Clean Energy Purchase Contract shall prove to have been incorrect in any material respect when made; and (b) A party fails to perform, observe or comply with any covenant, agreement or term contained in the Clean Energy Purchase Contract, and such failure continues for more than thirty days (in the case of the CCCFA) or more than fifteen days (in the case of the Project Participant) following the receipt of written notice thereof.
In addition, each of the following is a default by the Project Participant under the Clean Energy Purchase Contract:
(a) Failure by the Project Participant to pay when due any amounts owed to CCCFA under the Clean Energy Purchase Contract, subject to certain grace periods; (b) The insolvency or bankruptcy of the Project Participant; and I The Project Participant fails to establish, maintain, or collect rates or charges adequate to provide revenues sufficient to enable the Project Participant to pay all amounts due to CCCFA under the Clean Energy Purchase Contract.
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70 Upon the occurrence of a default by the Project Participant described in (b) above, the Clean Energy Purchase Contract will automatically terminate and all amounts due to the non-defaulting party will be immediately due and payable. Upon the occurrence of the other defaults described above, the non-defaulting party may terminate the Clean Energy Purchase Contract and/or declare all amounts due to it to be immediately due and payable. During the existence of a default, 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 the Clean Energy Purchase Contract.
In addition to the remedies described above, during the existence of any default by the Project Participant, CCCFA may suspend its performance under the Clean Energy Purchase Contract and discontinue the supply of all or any portion of the Electricity otherwise to be delivered to the Project Participant under the Clean Energy Purchase Contract.
If CCCFA exercises its right to discontinue Electricity deliveries to the Project Participant, such service may only be reinstated, as determined by CCCFA, upon (a) payment in full by the Project Participant of all amounts then due and payable under its Clean Energy Purchase Contract and (b) unless otherwise agreed to by CCCFA, payment in advance by the Project Participant at the beginning of each month (for such time period as CCCFA deems appropriate) of amounts estimated by CCCFA to be due from the Project Participant for the future delivery of Electricity for such month. If the Project Participant fails to accept the Electricity tendered, CCCFA has the right to sell the Electricity to third parties.
In the event of any default, the non-defaulting party may bring any suit, action, or proceeding at law or in equity, including without limitation mandamus, injunction, and action for specific performance.
Assignment
The provisions of the Clean Energy Purchase Contract are binding on the successors and assigns of such contract. Neither party may assign the Clean Energy Purchase Contract to another party without the prior written consent of the other party, except that CCCFA may assign its interests to secure its obligations under the Indenture. Prior to assigning all or any part of its interest in the Clean Energy Purchase Contract, the Project Participant is required to deliver to CCCFA a Rating Confirmation from each rating agency then rating the Bonds. Any applicable Assignment Agreement will terminate concurrent with the assignment of the Clean Energy Purchase Contract.
Project Participant Credit Enhancement
Upon the failure of the Project Participant to make a payment under the Clean Energy Purchase Contract, the Trustee shall, on the last business day of the month, withdraw from the Debt Service Reserve Account and deposit into the Debt Service Account an amount equal to any deficiency that exists therein as a result of such nonpayment. The Debt Service Reserve Requirement is approximately equal to the two largest months of the maximum monthly Scheduled Debt Service Deposit during the Initial Interest Rate Period. Upon such a transfer, the Trustee will notify the Electricity Supplier to remarket Electricity, and the Electricity Supplier will then have the option, but not the requirement, to purchase Receivables from CCCFA.
Upon the final maturity of the Bonds or the occurrence of an Early Termination Payment Date under the Master Power Supply Agreement, the Trustee will put to the Electricity Supplier sufficient receivables, which the Electricity Supplier is required to purchase, to ensure the amounts in the Debt Service Reserve Account equal the Debt Service Reserve Requirement and the amounts in the Commodity Reserve Account equal the Minimum Amount. Pursuant to the Electricity Purchase, Sale and Service Agreement, J.
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71 Aron has undertaken these obligations of the Electricity Supplier. The provisions described in this paragraph are collectively referred to herein as “Project Participant Credit Enhancement.”
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
General
CCCFA is a joint powers authority formed pursuant to the Act and the joint powers agreement (“the JPA Agreement”) made among those public agencies which are its members. CCCFA was incorporated and organized in 2021 pursuant to by the members thereof at such time, those being Central Coast Community Energy, East Bay Community Energy, Marin Clean Energy, and Silicon Valley Clean Energy (each, a “Founding Member”).
Each Member is a community choice aggregator, and a public agency as defined in the Act, which operates a community choice aggregation program with the authority to group retail electricity customers to solicit bids, broker, and contract for electricity and energy services for those customers, and to enter into agreements for services to facilitate the sale and purchase of electricity and other related services, and to study, promote, develop, conduct, operate and manage energy-related programs.
CCCFA was formed for, among other purposes, the purpose of financing energy prepayments which can be financed with tax advantaged bonds for the benefit of its Members.
Powers and Authority
Under the provisions of the Act, CCCFA has all of the powers common to the Members, and any and all power in connection with the financing or refinancing of energy prepayments that can be financed with tax advantaged bonds and other obligations, including: (i) the purchase and sale of electric energy and associated capacity and environmental attributes, (ii) the design, acquisition, maintenance, or operation of any Public Capital Improvement (as defined in the Act) or other facility or improvement, or the leasing thereof, (iii) the provision of working capital, and (iv) any other project, program, public capital improvement or purpose authorized by the Act or other law to be undertaken, financed, or refinanced by CCCFA, in connection with the financing or refinancing of energy prepayments that can be financed with tax advantaged bonds and other obligations (a “Prepayment Project”). CCCFA shall have the power to issue, incur, sell and deliver bonds in accordance with the provisions of the Act and other applicable laws for the purpose of acquiring, undertaking, financing, or refinancing one or more Prepayment Projects.
Under the provisions of the JPA Agreement and the Act, CCCFA has (among others) the following powers:
(a) to acquire, purchase, finance, operate, maintain, utilize and/or dispose of one or more Prepayment Projects and any facilities, programs or other authorized costs relating thereto; (b) to make and enter contracts (including without limitation interest rate, commodity, basis and similar hedging contracts intended to hedge payment, rate, cost or similar exposure); (c) to employ agents and employees;
(d) to acquire, manage, maintain or operate any building, works or improvementI(e) to acquire, hold, lease or dispose of property;
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72 (f) to incur debts (including without limitation through the issuance or incurrence of bonds), liabilities or obligations (which shall not constitute debts, liabilities, or obligations of any of the Members); (g) to sue and be sued in its own name;
(h) to receive gifts, contributions and donations of real or personal property, funds, services and other forms of assistance from any source;
(i) to receive, collect, invest and disburse moneys;
(j) to apply for, accept, and receive all licenses, permits, grants, loans or other aids from any federal, state, or local public agency;
(k) to make and enter into service agreements relating to the provision of services necessary to plan, implement, operate and administer energy-related programs; (l) to defend, hold harmless, and indemnify, to the fullest extent permitted by law, each Member from any liability, claims, suits, or other actions; (m) to exercise any other power and take any other action permitted by law to accomplish the purposes of the JPA Agreement.
The JPA Agreement shall continue in full force and effect until terminated as provided in therein; provided, however, the JPA Agreement cannot be terminated while either (a) any bonds of CCCFA, including the Bonds, remain outstanding, or (b) CCCFA is the owner, lessor or lessee of any real or personal property financed from the proceeds of any bonds.
Governance and Management
Board of Directors. CCCFA is governed by a Board of Directors (the “Board”) consisting of one director for each Founding Member. The Board shall have the authority to provide for the general management and oversight of the affairs, property, and business of CCCFA. The Board may appoint a part-time or full-time General Manager, and may appoint one or more part-time or full-time Assistant General Managers. The General Manager would be responsible for the day-to-day operation and management of CCCFA.
The names of the current directors of CCCFA are listed on the roster page at the front of this Official Statement.
Management. The Board has not appointed a General Manager or Assistant General Manager.
CCCFA’s current management team consists of Garth Salisbury as Treasurer-Controller and Michael Callahan as General Counsel.
CCCFA Projects
CCCFA previously issued its bonds (a) on September 23, 2021 to purchase prepaid electricity from Morgan Stanley Energy Structuring, L.L.C. (“MSES”), which is delivered to its Members, East Bay Community Energy and Silicon Valley Clean Energy, (b) on November 24, 2021 to purchase prepaid electricity from Aron Energy Prepay 5 LLC, which is delivered to its Member, Marin Clean Energy, and (c) on July 12, 2022 to purchase prepaid electricity from MSES, which is delivered to its Member, East Bay Community Energy. Each series of bonds is secured by a separate bond indenture.
CCCFA may issue future bonds to purchase prepaid electricity supplies for sale to participating municipal utilities, with the revenues from such sales pledged to the payment of such bonds. Such revenues will not be pledged, nor may such revenues be used, to pay amounts due with respect to the Bonds.
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73 In furtherance of its corporate and public purposes, CCCFA intends to acquire and finance supplies of electricity on a prepaid basis for sale to other community choice aggregators. CCCFA is currently developing additional Clean Energy Projects under transaction and financing structures that are expected to be generally similar to the structure of the Clean Energy Project. CCCFA can give no assurance as to the timing or terms of these projects or that they will be completed. A range of factors that are outside of the control of CCCFA, including the final negotiation of transaction documents, the approval of commodity supply contracts by the prospective project participants, changes in market prices and rates, the receipt of bond ratings, and other factors could result in these transactions not being completed.
Any additional Clean Energy Projects that may be undertaken by CCCFA will be separate and distinct transactions, and the bonds issued to finance these projects will be payable solely from the commodity sales and other revenues pledged for their payment. In no event will the Revenues and Trust Estate pledged to the payment of the Bonds be used to pay any other bonds of CCCFA.
Separate Obligations
THE BONDS, ANY FUTURE BONDS THAT MAY BE ISSUED BY CCCFA AND ANY
FUTURE CONTRACTS THAT CCCFA MAY ENTER INTO TO ACQUIRE ADDITIONAL ENERGY OR ELECTRICITY ARE AND WILL BE SEPARATE AND DISTINCT OBLIGATIONS OF CCCFA.
ANY FUTURE BONDS OR CONTRACTS WILL NOT BE SECURED BY OR PAYABLE FROM THE
REVENUES PLEDGED BY THE INDENTURE TO THE PAYMENT OF THE BONDS, AND THE
BONDS WILL NOT BE SECURED BY OR PAYABLE FROM THE REVENUES DERIVED FROM ANY FUTURE PROJECT, CLEAN ENERGY PROJECT OR CONTRACT OF CCCFA.
Limited Liability
CCCFA DOES NOT HAVE THE POWER TO LEVY AD VALOREM PROPERTY TAXES.
ALL BONDS ISSUED BY CCCFA ARE PAYABLE SOLELY FROM THE REVENUES AND
RECEIPTS DERIVED FROM ITS ACTIVITIES PURSUANT TO ITS STATUTORY PURPOSES AND POWERS AND IN ACCORDANCE WITH THE APPLICABLE FINANCING DOCUMENTS. THE
BONDS ARE PAYABLE SOLELY FROM AND SECURED SOLELY BY THE TRUST ESTATE PLEDGED PURSUANT TO THE INDENTURE.
COMMUNITY CHOICE AGGREGATORS
General
Section 331.1 of the Public Utilities Code provides for the establishment of “community choice aggregators” (a “CCA”). A CCA may be established by any city, county, or city and county whose governing board elects to combine the loads of its residents, businesses, and municipal facilities in a community-wide electricity buyers’ program, and by any group of cities, counties, or cities and counties whose governing boards have elected to combine the loads of their programs, through the formation of a joint powers agency established under Joint Powers Act, provided in either case that the entity is not within the jurisdiction of a local publicly owned electric utility that provided electrical service as of January 1, 2003. “Local publicly owned electric utility” means a municipality or municipal corporation operating as a “public utility” and certain municipal utility districts, public utility districts, irrigation districts, or joint powers authorities that include one or more of these agencies and that owns generation or transmission facilities or furnishes electric services over its own or its members’ electric distribution systems.
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74 Community Choice Service Model
Once a community forms or joins a CCA, the CCA is the default energy provider in that community. The CCA procures energy for customers in that community, but the investor-owned utility for that community continues to provide transmission, distribution, and billing services to customers.
Revenues from the sale of energy by the CCA are delivered by the investor-owned utility to the CCA as they are received over the course of the billing period.
Service Contract Requirements and Registration with the Public Utilities Commission CCAs are required to have an operating service agreement with the applicable investor-owned utility prior to furnishing electric service to consumers within its jurisdiction. The service agreement must include performance standards that govern the business and operational relationship between the CCA and the investor-owned utility. CCAs are also required to register with the California Public Utilities Commission (the “PUC”), which may require additional information to ensure compliance with basic consumer protection rules and other procedural matters. Once notified of a CCA program, the applicable investor-owned utility is required to transfer all applicable accounts to the CCA within a 30-day period from the date of the close of the utility’s normally scheduled monthly metering and billing process.
Customer Participation and Opt-out Rights
Participation in a CCA is voluntary. Each local government seeking to form or join a CCA must adopt an appropriate authorizing resolution or ordinance. When a community forms or joins a CCA, customers are given advance notice and have the choice to opt-out of the CCA program prior to or after transition to the CCA, and instead receive electricity from the applicable investor-owned utility. Customers that do not opt-out are automatically enrolled in the program. Customers have the option to opt out of the program subject to a fee.
Regulatory Compliance
CCAs are “load-serving entities” and as such are required to comply with the renewable portfolio standards and reliability standards established by the PUC and the California Energy Commission (the “CEC”) and file integrated resource plans and other periodic reports with the PUC and the California Energy Commission.
Cost Recovery Related to Transfer of Customers to a CCA Although investor-owned utilities do not purchase power for CCA customers, they continue to deliver the power. Investor-owned utilities also have the obligation to provide electric service to customers that opt out of CCA service as the “provider of last resort.” In order to compensate investor-owned utilities for investments in power generation and long-term power purchase contracts associated with the loss of customers to CCAs, the PUC has established a “power charge indifference adjustment” (the “PCIA”) applicable to CCA customers. The PCIA is calculated by taking the difference between (i) the “actual portfolio cost” related to utility’s power procurement (e.g., utility-owned generation and purchased power), and (ii) the “market value of the portfolio,” which is measured by the Market Price Benchmark (the “MPB”) and the megawatt hours of generation.
The MPB is based on a PUC approved methodology for calculating the current market cost of renewables and natural gas-fueled power. If the investor-owned utility’s actual portfolio cost is above-market value, the departing load customers pay their share of the difference in the form of a PCIA based on their power consumption. The amount of the PCIA applicable to a CCA customer depends on when a Agenda Page 1042
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75 customer left the investor-owned utility and what the investor-owned utility’s portfolio was at the time.
Each departing load customer pays the assigned “vintage PCIA.” For example, a customer who departed in 2019 pays the “2019 vintage PCIA” which only includes the above market costs of pre-2020 vintage power procured by the investor-owned utility.
In addition to PCIA charges, CCA customers are required to pay certain other “non-bypassable departing load charges”, including a nuclear decommissioning charge, a public purpose charge and a cost allocation charge to pay for new resources needed for ongoing system reliability.
THE COMMODITY SWAPS
Set forth below is a summary of certain provisions of the Commodity Swaps. This summary does not purport to be a complete description of the terms and conditions of the Commodity Swaps and accordingly is qualified by reference to the full text of the Commodity Swaps.
Payments of fixed and floating amounts under the Commodity Swaps described herein are not made until and unless the Assignment Agreements terminate, the Assigned Rights and Obligations under the Assigned PPAs revert to the Project Participant, and Base Quantities are delivered by the Electricity Supplier. Base Quantities are not expected to be delivered during the Initial Interest Rate Period, and as such, payments under the Commodity Swaps are not expected to be made during the Initial Interest Rate Period.
General
CCCFA has entered into the CCCFA Commodity Swaps under which, if such Commodity Swaps become active upon the delivery of Base Quantities, CCCFA will pay a floating electricity price at a specified pricing point and will receive a fixed electricity price for notional quantities that correspond to the quantities of electricity and the related delivery point under the Master Power Supply Agreement. Under the CCCFA Commodity Swaps, if active, for each calendar month that the relevant floating price of electricity at the delivery point is greater than the fixed price specified in the CCCFA Commodity Swaps, CCCFA will be obligated to pay to the Commodity Swap Counterparties an amount equal to (x) the difference between the floating price and the fixed price multiplied by (y) a notional quantity equal to the quantity of electricity scheduled to be delivered at the delivery point during such month by the Electricity Supplier under the Master Power Supply Agreement. If the fixed price specified in the CCCFA Commodity Swaps is greater than the relevant floating price of electricity at a delivery point for a month, the Commodity Swap Counterparties will be obligated to pay CCCFA an amount equal to (x) the difference between the fixed price and floating price multiplied by (y) a notional quantity equal to the quantity of electricity scheduled to be delivered at the delivery point during such month by the Electricity Supplier under the Master Power Supply Agreement. If the relevant floating price for a calendar month is equal to the specified fixed price, no payment will be owed by either party to the other under the CCCFA Commodity Swaps.
The Electricity Supplier has entered into comparable Electricity Supplier Commodity Swaps with the same Commodity Swap Counterparties under which, if such Commodity Swaps become active upon the delivery of Base Quantities, the Electricity Supplier pays a fixed electricity price and receives a floating electricity price for the same notional quantities at the same pricing points.
Each of the Commodity Swaps has an initial term that commences on the date that deliveries begin under the Master Power Supply Agreement and extends for two calendar months. The Commodity Swaps have rolling two-month terms that renew automatically upon the payment due date of each monthly net settlement amount due thereunder through the term of the delivery period under the Master Power Supply Agenda Page 1043
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76 Agreement, unless an Electricity Delivery Termination Date occurs under the Master Power Supply Agreement.
Form of Commodity Swaps
Each of the Commodity Swaps has been entered into as a confirmation under a 2002 ISDA Master Agreement with certain amendments and elections under the Master Agreement that have been agreed to by the parties.
Payment
If such Commodity Swaps become active upon the delivery of Base Quantities, for each month of scheduled deliveries and notional amounts, each party with a net obligation under a Commodity Swap (based on the relative values of the fixed price and relevant index prices) will pay that net obligation to the other party. Payments, if any, under the Commodity Swaps are due in the calendar month following the month to which the applicable day-ahead market prices relate, on the [23rd] day of the month (or preceding business day) in the case of the Electricity Supplier Commodity Swaps and on the [24]th day of the month (or next business day) in the case of the CCCFA Commodity Swaps.
Early Termination
Each of the Commodity Swaps will be subject to early termination under certain circumstances.
Early termination can be triggered automatically or upon the election by the non-defaulting party as summarized below.
No settlement or other termination payment (other than Unpaid Amounts) will be due to any party as a result of any early termination of any Commodity Swap.
Automatic Termination of Commodity Swaps. Each of the following events would result in the automatic termination of the CCCFA Commodity Swaps and the Electricity Supplier Commodity Swaps:
• the occurrence of an Electricity Delivery Termination Date under the Master Power Supply Agreement for any reason, in which case the Commodity Swaps will terminate automatically on such date;
• a party’s failure to pay amounts when due under a CCCFA Commodity Swap (notwithstanding any payments made by the Custodian under the Custodial Agreements) that is not remedied within three business days after notice; and • delivery by CCCFA of a notice of termination of a CCCFA Commodity Swap results in the automatic termination of an Electricity Supplier Commodity Swap, and delivery by the Electricity Supplier of a notice of termination of an Electricity Supplier Commodity Swap results in the automatic termination of a CCCFA Commodity Swap.
Elective Termination of a CCCFA Commodity Swap. Each of the following events of default and termination events would provide the non-defaulting party or the affected party the right to terminate a CCCFA Commodity Swap if it is not cured within the applicable cure period:
• a party becomes subject to certain insolvency events in the manner specified in the CCCFA Commodity Swaps;
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77 • a credit support default with respect to a Commodity Swap Counterparty; • a reduction below certain specified minimum ratings in the credit rating assigned by the applicable rating agency to (a) the senior, unsecured long-term debt obligations (not supported by third party credit enhancements) of a Commodity Swap Counterparty’s Indirect Parent (defined below), or (b) if there is no such rating, then such Commodity Swap Counterparty’s Indirect Parent’s issuer rating (“[_______]’s Credit Rating”); • amendment of the Indenture in breach of a Commodity Swap Counterparty’s consent rights thereunder;
• the amendment, without a Commodity Swap Counterparty’s consent, of certain provisions of the Master Power Supply Agreement relating to the termination or assignment thereof, or that would affect terminations of the Commodity Swaps; and • CCCFA fails to promptly exercise its right to suspend all commodity deliveries under the Clean Energy Purchase Contract to the Project Participant in the event it fails to pay when due any amounts owed to CCCFA thereunder.
Elective Termination of an Electricity Supplier Commodity Swap. Each of the following events of default and termination events would provide the non-defaulting party or the affected party the right to terminate an Electricity Supplier Commodity Swap if it is not cured within the applicable cure period:
• if a party becomes subject to certain insolvency events in the manner specified in an Electricity Supplier Commodity Swap;
• a credit support default with respect to a Commodity Swap Counterparty or the Electricity Supplier;
• any reduction a Commodity Swap Counterparty’s Indirect Parent’s Credit Rating (as defined above) below certain specified minimum ratings; • the amendment, without a Commodity Swap Counterparty’s consent, of (a) certain provisions of the Master Power Supply Agreement relating to the termination or assignment thereof, or that would affect terminations of the Commodity Swaps or (b) certain provisions of the Receivables Purchase Provisions relating to the purchase of Swap Deficiency Call Receivables by the Electricity Supplier; and • a party’s failure to pay amounts when due under an Electricity Supplier Commodity Swap (notwithstanding any payments made by the Custodian under the Custodial Agreements) that is not remedied within one business day after notice.
Other Listed Events. The Commodity Swaps contain other listed events (including breach or repudiation, misrepresentation, illegality and certain tax and credit events) that do not give CCCFA, the Electricity Supplier or the Commodity Swap Counterparties the right to designate an early termination date, but which permit the non-defaulting party or the affected party to pursue such equitable remedies, including specific performance, as may be available.
Replacement of Commodity Swaps. See “THE MASTER POWER SUPPLY AGREEMENT — Replacement of Commodity Swaps” and “SECURITY FOR THE BONDS — Enforcement of Project Agreements — CCCFA Commodity Swaps” for a description of certain provisions of the Indenture and the Agenda Page 1045
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78 Master Power Supply Agreement regarding the replacement of a Commodity Swap that is terminated or subject to termination.
Custodial Agreements
The Electricity Supplier will enter into separate Custodial Agreements, dated as of the Initial Issue Date (each, a “Electricity Supplier Custodial Agreement”), with each Commodity Swap Counterparty and [______________], as Trustee and as custodian (in such capacity, the “Custodian”), to administer payments under the Electricity Supplier Commodity Swaps. CCCFA will enter into separate Custodial Agreements, dated as of the Initial Issue Date (each, a “CCCFA Custodial Agreements,” and together with the Electricity Supplier Custodial Agreements, the “Custodial Agreements”), with each Commodity Swap Counterparty and the Custodian, to administer payments under the CCCFA Commodity Swaps. The Custodial Agreements contain provisions designed to mitigate risks to CCCFA and Bondholders resulting from a failure of a Commodity Swap Counterparty to make payments to CCCFA under a CCCFA Commodity Swap, and mitigate risks to the Electricity Supplier resulting from a failure of a Commodity Swap Counterparty to make payments to the Electricity Supplier under an Electricity Supplier Commodity Swap.
Payments made by the Electricity Supplier under the Electricity Supplier Commodity Swaps, if any, will be made to custodial accounts maintained by the Custodian under the Electricity Supplier Custodial Agreements. Such amounts will not be released until the Custodian has received confirmation that the amount payable to CCCFA by a Commodity Swap Counterparty under a CCCFA Commodity Swap for such month has been paid. If a Commodity Swap Counterparty does not make a required payment under a CCCFA Commodity Swap and such payment remains unpaid after the expiration of any grace period, the Custodian will pay the amount that the Electricity Supplier paid under the corresponding Electricity Supplier Commodity Swap (which such amount is held in custody) to the Trustee for deposit in the Revenue Fund and that payment will be treated as a Commodity Swap Receipt. Additionally, if an Electricity Supplier Commodity Swap terminates, the Electricity Supplier will continue to make payments to the custodial account as if such Electricity Supplier Commodity Swap were still in effect until the earlier of (i) replacement of the affected Commodity Swap in accordance with the requirements of the Master Power Supply Agreement and (ii) termination of the Delivery Period under the Master Power Supply Agreement, and such payments will be used to ensure that CCCFA receives deposits in the Revenue Fund as described in the preceding sentence in the event that a Commodity Swap Counterparty does not make a required payment under a CCCFA Commodity Swap.
Payments made by CCCFA under the CCCFA Commodity Swaps, if any, will be made to custodial accounts maintained by the Custodian under the CCCFA Custodial Agreements. The amounts in each custodial account will not be released until the Custodian has received confirmation that the amount payable to the Electricity Supplier by a Commodity Swap Counterparty under an Electricity Supplier Commodity Swap for such month has been paid. If a Commodity Swap Counterparty does not make a required payment under an Electricity Supplier Commodity Swap and such payment remains unpaid after the expiration of any grace period, the Custodian will pay the amount that CCCFA paid under the corresponding CCCFA Commodity Swap (which such amount is held in custody) to the Electricity Supplier. Additionally, if a CCCFA Commodity Swap terminates, CCCFA will continue to make payments to the custodial account as if such CCCFA Commodity Swap were still in effect until the earlier of (i) replacement of the affected Commodity Swap in accordance with the requirements of the Master Power Supply Agreement and (ii) termination of the Delivery Period under the Master Power Supply Agreement, and such payments will be withdrawn by the Custodian and paid to the Electricity Supplier.
THE COMMODITY SWAP COUNTERPARTIES
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79 Set forth below is certain information regarding the Commodity Swap Counterparties. CCCFA assumes no responsibility for such information and cannot guarantee the accuracy thereof. Under no circumstance are the Commodity Swap Counterparties obligated to pay any amount owed in respect of the Bonds.
[TO COME]
THE INTEREST RATE SWAP
[General
CCCFA will enter into the Interest Rate Swap in order to hedge its exposure to interest rate fluctuations on the Index Rate Bonds and more closely match its payment obligations on the Index Rate Bonds with its expected Revenues from payments under the Clean Energy Purchas Contract and the CCCFA Commodity Swap[s]. The term of the Interest Rate Swap will extend for the term of the Initial Interest Rate Period.
Payments under the Interest Rate Swap
The Interest Rate Swap provides that J. Aron, as the Interest Rate Swap Counterparty, is obligated to pay CCCFA on the Business Day preceding each Interest Payment Date a floating amount equal to the amount of interest due on the Index Rate Bonds on such Interest Payment Date, and CCCFA is obligated to pay J. Aron a fixed amount semiannually calculated using a fixed rate and a notional amount equal to the principal amount of the Index Rate Bonds then Outstanding.
Interest Rate Swap Receipts received by CCCFA are deposited directly into the Debt Service Account. Interest Rate Swap Payments owed by CCCFA are payable from amounts on deposit in the Debt Service Account. Neither party will be obligated to make any payment (other than accrued and unpaid amounts) under the Interest Rate Swap upon early termination thereof.
Events of Default and Termination Events
The Interest Rate Swap contains standard Events of Default and Termination Events set forth in the form of the 2002 ISDA Master Agreement (Multicurrency-Cross Border) published by the International Swap Dealers Association, Inc. (available at www.isda.org), subject to such modifications contained in the Schedule to such ISDA Master Agreement as are generally applied to municipal counterparties.
The Schedule to the ISDA Master Agreement provides that certain of such Events of Default and Termination Events will not apply or provides for a modification to the remedies available upon the occurrence of such an event. The only Events of Default applicable to CCCFA and J. Aron are Section 5(a)(i) (Failure to Pay or Deliver) and Section 5(a)(vii) (Bankruptcy), as such Events of Default are modified in the Schedule. No Termination Events apply to CCCFA or J. Aron, other than an Additional Termination Payment if a Termination Payment Event occurs under the Clean Energy Purchase Contract.
Neither CCCFA nor the Interest Rate Swap Counterparty is required to pay any termination payment, other than unpaid amounts, due upon an early termination of the Interest Rate Swap.]
CONTINUING DISCLOSURE
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80 CCCFA. CCCFA will enter into a Continuing Disclosure Undertaking (the “Undertaking”) for the benefit of the beneficial owners of the Bonds to send certain information annually and to provide notice of certain events to the MSRB’s EMMA system for municipal securities disclosures, pursuant to the requirements of Section (b)(5) of Rule 15c2-12 (“Rule 15c2-12”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.
A failure by CCCFA to comply with the Undertaking will not constitute an event of default under the Indenture or the Bonds and Beneficial Owners of the Bonds shall only be entitled to the remedies for any such failure described in the Undertaking. A failure by CCCFA to comply with the Undertaking must be reported in accordance with Rule 15c2-12 and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market.
Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price.
The Undertaking and commitments of CCCFA described under this heading and in APPENDIX E hereto to furnish the above-described documents and information are agreements and commitments solely of CCCFA, and the Underwriter has no responsibility to ensure that CCCFA complies with any such Undertaking or commitment. In addition, the Underwriter makes no representation that any such documents or information will be furnished, or that any such documents or information so furnished will be accurate or complete, or sufficient for the purposes for which they may be used.
CCCFA has previously entered into continuing disclosure undertakings pursuant to Rule 15c2-12.
CCCFA has adopted a written policy that sets forth procedures for compliance with the federal tax and continuing disclosure requirements applicable to its bonds. The policy includes, among other things, procedures that are intended to promote CCCFA’s compliance with the Undertaking.
During the five-year period preceding the date of this Official Statement, CCCFA has determined that certain financial information relating to one of its project participants for fiscal year ending June 30, 2021, was filed late. CCCFA subsequently filed such information on the Municipal Securities Rulemaking Board Electronic Municipal Market Access System. CCCFA has engaged BLX Group to assist with its continuing disclosure obligations.
Project Participant. Pursuant to its Clean Energy Purchase Contract, the Project Participant has agreed to provide to CCCFA certain annual operating and financial information, which information will enable CCCFA to comply with the Undertaking. Failure of the Project Participant to provide such information is not a default under the Clean Energy Purchase Contract, but any such failure entitles CCCFA to take such actions and to initiate such proceedings as shall be necessary to cause the Project Participant to comply with its undertaking as set forth in the Clean Energy Purchase Contract.
LITIGATION
There are no legal proceedings pending against CCCFA relating to the issuance, sale or delivery of the Bonds which could adversely affect the Clean Energy Project. In addition, there is no litigation pending or, to the knowledge of CCCFA, threatened against or affecting CCCFA or in any way questioning or in any manner affecting the validity or enforceability against CCCFA of the Bonds, the Clean Energy Purchase Contract, the Master Power Supply Agreement, the CCCFA Commodity Swaps, the Receivables Purchase Provisions, the Investment Agreements, the Custodial Agreements, the Indenture, or the pledge of the Trust Estate under the Indenture.
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81 The Project Participant reports that there is no litigation pending or, to its knowledge, threatened against it questioning or in any manner affecting the validity or enforceability of the Clean Energy Purchase Contract.
FINANCIAL STATEMENTS
[CCCFA was formed in 2021, and consequently CCCFA has not yet produced audited financial statements. Pursuant to the Undertaking described under “CONTINUING DISCLOSURE” above, CCCFA has agreed to file its audited financial statements, commencing with its audited financial statements for its fiscal year ended December 31, 2021, on the MSRB’s EMMA system described above.] The Project Participant’s audited financial statements for fiscal year 2020-21 are attached hereto as APPENDIX B. Baker Tilly US, LLP has provided its consent for the inclusion of the audited financial statements for fiscal year 2020-21 in this Official Statement.
Pursuant to the Undertaking described under “CONTINUING DISCLOSURE” above, CCCFA has agreed to file its audited financial statements and the audited financial statements of the Project Participant, commencing with its audited financial statements for its fiscal year ended December 31, 2021, and the Project Participant’s audited financial statements for its fiscal year ended June 30, 2022, on the MSRB’s EMMA system described above.
FINANCIAL ADVISOR
Municipal Capital Markets Group, Inc., Greenwood Village, Colorado (the “Financial Advisor”), has served as financial advisor to CPA in connection with Clean Energy Project and the Bonds. Among other responsibilities, the Financial Advisor has provided advice and recommendations to CPA with respect to the structure, timing, terms of and similar matters relating to the Bonds, bond market conditions, costs of issuance and other matters relating to the Bonds and the Clean Energy Project. The Financial Advisor has also provided advice and recommendations to CPA, and has served as CPA’s “qualified independent representative,” with respect to the CCCFA Commodity Swap [and the Interest Rate Swap]. The Financial Advisor has reviewed this Official Statement, but has not audited, authenticated, or otherwise verified the information set forth herein, and makes no guaranty, warranty or representation with respect to the accuracy and completeness of the information contained in this Official Statement. The Financial Advisor’s fees are contingent upon the sale and delivery of the Bonds, and are based, in part, on the proceeds of the Bonds.
UNDERWRITING
Goldman Sachs & Co. LLC (the “Underwriter”), pursuant to the purchase contract relating to the Bonds between CCCFA and the Underwriter, has agreed, subject to certain conditions, to purchase the Bonds from CCCFA at an aggregate purchase price of $_____________ (representing the principal amount of the Bonds, plus original issue premium of $_____________, less underwriter’s discount of $___________). The obligation of the Underwriter to purchase the Bonds is subject to certain terms and conditions set forth in the purchase contract. The Underwriter is obligated to purchase all the Bonds if any are purchased. The Bonds may be offered and sold to certain dealers and others at prices lower than the initial offering prices, and such initial offering prices may be changed from time to time by the Underwriter.
The Underwriter has no obligations other than those that are set forth in the purchase contract. The payment of the Bonds is not guaranteed by the Underwriter.
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82 Goldman Sachs & Co. LLC (together with its affiliates) is a full service financial institution engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Goldman Sachs & Co. LLC and its affiliates have provided, and may in the future provide, a variety of these services to CCCFA and to persons and entities with relationships with CCCFA, for which they received or will receive customary fees and expenses.
In the ordinary course of its various business activities, Goldman Sachs & Co. LLC and its affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, Electricity, currencies, credit default swaps and other financial instruments for their own accounts and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of CCCFA (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with CCCFA.
Goldman Sachs & Co. LLC and its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities, and instruments.
CERTAIN RELATIONSHIPS
The Electricity Supplier, which is also the lender under the Funding Agreement, the Receivables Purchaser and a party to the Electricity Purchase, Sale and Service Agreement and the Electricity Supplier Commodity Swaps, is wholly owned by J. Aron. J. Aron is the sole member of the Electricity Suppler, the electricity seller under the Electricity Purchase, Sale and Service Agreement, and the Interest Rate Swap Counterparty, and is a wholly-owned subsidiary of GSG. The payment obligations of J. Aron to the Electricity Supplier under the Electricity Purchase, Sale and Service Agreement and to CCCFA and the Trustee under the Investment Agreements and the Interest Rate Swap are unconditionally guaranteed by GSG under the EPSSA Guaranty. [GSG is the borrower under the Funding Agreement with the Electricity Supplier.] The Underwriter of the Bonds, Goldman Sachs & Co. LLC, is also a wholly owned subsidiary of GSG.
None of the Electricity Supplier, J. Aron nor GSG has guaranteed or is responsible for the payment of the Bonds. The obligations of the Electricity Supplier are limited to those set forth in the Master Power Supply Agreement, the Receivables Purchase Provisions and the Electricity Supplier Commodity Swaps.
The obligations of J. Aron are limited to those set forth in the Electricity Purchase, Sale and Service Agreement and the Interest Rate Swap. None of the Electricity Supplier, J. Aron nor GSG takes any responsibility for the information set forth in this Official Statement other than the information set forth under the caption “GSG, J. ARON AND THE ELECTRICITY SUPPLIER.” RATING
Moody’s Investors Service, Inc. has assigned a municipal bond rating of “[__]” to the Bonds.
CCCFA has furnished to each rating agency that is expected to rate the Bonds certain information, including information not included in this Official Statement, about CCCFA and the Bonds. Generally, a rating agency bases its ratings on that information and on independent investigations, studies and assumptions made by each rating agency. A securities rating is not a recommendation to buy, sell or hold securities. There is no assurance that a rating, once obtained, will continue for any given period of time or that it will not be revised downward or withdrawn entirely if, in the opinion of the rating agency, circumstances so warrant. Any such downward revision or withdrawal could have an adverse effect on the Agenda Page 1050
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83 marketability or market price of the Bonds. CCCFA has not undertaken any responsibility after issuance of the Bonds to assure the maintenance of the ratings applicable thereto or to oppose any revision or withdrawal of such ratings.
TAX MATTERS
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to CCCFA, based upon an analysis of existing laws, regulations, rulings, and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. Bond Counsel observes that, for tax years beginning after December 31, 2022, interest on the Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX G hereto.
To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Beneficial Owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.
Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner’s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. CCCFA has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Bonds will not be included in federal gross income.
Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original Agenda Page 1051
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84 issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events, or matters.
Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Bonds may otherwise affect a Beneficial Owner’s federal, state, or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.
Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations, or litigation, as to which Bond Counsel expresses no opinion.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of CCCFA, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. CCCFA has covenanted, however, to comply with the requirements of the Code.
Bond Counsel’s engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend CCCFA or the Beneficial Owners regarding the tax-exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than CCCFA and its appointed counsel, such as the Beneficial Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which CCCFA legitimately disagrees may not be practicable.
Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues, may affect the market price for, or the marketability of, the Bonds, and may cause CCCFA or the Beneficial Owners to incur significant expense.
APPROVAL OF LEGAL MATTERS
The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to CCCFA. A complete copy of the proposed form of the opinion of Bond Counsel is contained in APPENDIX F to this Official Statement.
Certain legal matters will be passed upon for CCCFA by Orrick, Herrington & Sutcliffe LLP; for the Project Participant by Chapman and Cutler LLP; for the Electricity Supplier by its counsel, Sheppard, Agenda Page 1052
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85 Mullin, Richter & Hampton LLP; for GSG by its counsel, Sullivan & Cromwell LLP; for [the Funding Recipient] by its counsel, [_______________]; and for the Underwriter by Nixon Peabody LLP.
CCCFA will receive an opinion from counsel to the Project Participant on the date of original delivery of the Bonds, to the effect that the Clean Energy Purchase Contract has been duly authorized, executed and delivered by the Project Participant and constitutes the legal, valid and binding obligation of the Project Participant enforceable in accordance with its terms. The enforceability of the Clean Energy Purchase Contract may be limited by or subject to applicable bankruptcy, insolvency, moratorium, reorganization, other laws affecting creditors’ rights generally and by general principles of equity, public policy and commercial reasonableness.
MISCELLANEOUS
Any statements in this Official Statement involving matters of opinion, estimates or forecasts, whether or not expressly so stated, are intended as such and not as representations of fact. The Appendices attached hereto are an integral part of this Official Statement and must be read in conjunction with the foregoing material. This Official Statement is not to be construed as a contract or agreement between CCCFA and the purchasers or owners of the Bonds.
The delivery of this Official Statement has been duly authorized by the Board of Directors of CCCFA.
CALIFORNIA COMMUNITY CHOICE FINANCING
AUTHORITY
By: _____________
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APPENDIX A
THE PROJECT PARTICIPANT
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
General
Clean Power Alliance of Southern California (“CPA”) is a joint powers authority organized and existing pursuant to the Joint Exercise of Powers Act (constituting Chapter 5 of Division 7 of Title 1 (commencing with Section 6500), as amended or supplemented from time to time) (the “Joint Powers Act”), as a “community choice aggregator” (“CCA”) as defined in Section 331.1 of the Public Utilities Code of the State of California, as amended (the “Public Utilities Code”). For a general description of “community choice aggregators” in California, see the section “COMMUNITY CHOICE AGGREGATORS” in this Official Statement.
The parties to CPA’s Joint Powers Agreement (described below) consist of local governments whose governing bodies elect to join CPA. Pursuant to the Public Utilities Code, when new parties join CPA, all electricity customers in its jurisdiction, with the exception of customers served under California’s Direct Access Program, automatically become default customers of CPA for electric generation, provided that customers are given the option to “opt out”.
Formation and History of CPA
General. CPA, formerly known as Los Angeles Community Choice Energy, was created in 2017 pursuant to a Joint Powers Agreement, as amended, by and among the cities and counties participating in CPA and named therein. CPA was established to study, promote, develop, conduct, operate, and manage energy programs in Southern California. Governed by a Board of Directors made up of elected officials from each of its local member communities, CPA has the authority to set rates for the services it furnishes, incur indebtedness, and issue bonds or other obligations. CPA acquires electricity from commercial suppliers and delivers it through existing physical infrastructure and equipment managed by the California Independent System Operator (“CAISO”) and Southern California Edison (“SCE”).
Commencement of Service and Expansion. CPA began operations in February 2018 by serving approximately 1,800 municipal accounts. In June 2018, it enrolled approximately 28,000 municipal and commercial accounts. CPA enrolled approximately 900,000 residential customer accounts in February 2019, approximately 70,000 commercial accounts in May 2019, and approximately 4,500 residential and commercial accounts in June 2020.
Service Area
Communities Served by CPA. CPA currently serves the following communities in Los Angeles and Ventura counties as well as the unincorporated areas of Los Angeles and Ventura counties:
Agoura Hills Arcadia
Alhambra Beverly Hills
Calabasas Camarillo
Carson Claremont
Culver City Downey
Hawaiian Gardens Hawthorne
Manhattan Beach Malibu
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2 Moorpark Paramount
Ojai Oxnard
Redondo Beach Rolling Hills Estates
Santa Monica Sierra Madre
Simi Valley South Pasadena
Temple City Whittier
Thousand Oaks West Hollywood
Westlake Village Ventura
Unincorporated Los Angeles County Unincorporated Ventura County Service Area Map. The service area of CPA is shown on the map below:
Governance and Management
Board of Directors. CPA is governed by its Board of Directors. Each community that has elected to join CPA appoints a representative to the Board of Directors, who must be a member of the governing body of the local community (i.e., City Council or Board of Supervisors). Members of the Board of Directors serve at the pleasure of their respective communities’ governing body. Meetings of the full Board of Directors are scheduled every month. The Executive Committee, Community Advisory Committee, Energy Planning & Resources Committee, Finance Committee, and Legislative & Regulatory Committee, with members from the Board of Directors, review and report to the Board on various matters. An active and well-informed Board of Directors ensures that CPA’s energy procurement, risk management, rate setting, and programmatic activities are aligned with its mission.
Management.
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3 Ted Bardacke; Chief Executive Officer. Mr. Bardacke works with the Board of Directors and CPA’s experienced staff to develop and implement CPA’s strategy to rapidly decarbonize Southern California’s electricity system, provide customer choice and competitive rates, and deliver customer programs that benefit the CPA community.
Prior to CPA, he worked for Los Angeles Mayor Eric Garcetti, where he was Director of Infrastructure for the City of Los Angeles and Deputy Director of the Mayor’s Sustainability Office. Prior to that, Mr. Bardacke worked in the Green Urbanism Program at Global Green USA, and in the 1990s served as a foreign correspondent for the Financial Times of London, based in Mexico City and Bangkok.
Mr. Bardacke holds degrees from Wesleyan University and the Graduate School of Architecture at Columbia University and taught at UCLA’s Luskin School of Public Affairs for 10 years. He currently serves as Vice President of the California Community Choice Association (“CalCCA”). Founded in 2016, CalCCA’s mission is to create a legislative and regulatory environment that supports the development and long-term sustainability of locally run CCAs in California. Mr. Bardacke is also a Board Member of CCCFA.
David McNeil, Chief Financial Officer. Mr. McNeil oversees CPA’s financial and risk management operations. Prior to joining Clean Power Alliance, he served as Manager of Finance for Marin Clean Energy (“MCE”), where he led the effort to arrange for MCE to receive an investment grade credit rating (Baa2) from Moody’s, the first CCA in the country to have achieved a credit rating. Mr. McNeil has 20 years of experience in financial oversight, credit management, strategic planning and risk management and is a Chartered Financial Analyst charter holder and earned a Bachelor of Arts, History from Queen’s University, Kingston.
Matthew Langer, Chief Operating Officer. Mr. Langer is Chief Operating Officer for Clean Power Alliance, leading internal operations, strategy, regulatory affairs, and power procurement. He has broad renewable energy and utility experience, including deep expertise in renewable energy project development, contracting, and operations. Mr. Langer spent nine years at Southern California Edison where he held roles in energy procurement, corporate strategy, transmission and distribution, and customer service. Mr. Langer earned an MBA from the University of Southern California Marshall School of Business and his bachelor’s in Management from Tulane University.
Nancy Whang
[bio to be added]
Customers
General. CPA provides energy to approximately one million residential, commercial, and industrial accounts serving over 3 million residents and businesses in its service area. The current mix of CPA’s customer base is approximately 49% residential and 51% commercial & industrial by percentage of both load served and as a percentage of revenues. Residential and small and medium businesses represent 80% of CPA’s load. The largest industrial customers, receiving energy at the sub-transmission level, represent 2% of CPA’s load. No single customer represents more than 0.7% of CPA’s load.
Customer Energy Choices. CPA’s goal is to provide customers with competitively priced and affordable electricity with high renewable energy content and low greenhouse gas emissions. CPA currently offers its customers three electricity rate products to choose from: “Lean Power”, “Clean Power” and “100% Green Power”. Lean Power service provides 40% carbon free energy content, Clean Power Agenda Page 1056
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4 service provides 50% clean power (40% renewable content and 10% hydroelectricity), and 100% Green Power service provides 100% renewable energy content.
Customer Enrollment. Communities served by CPA elect to be enrolled in Lean Power, Clean Power or 100% Green Power service. The communities currently enrolled in Lean Power, Clean Power and 100% Green Power are set forth below:
Lean Power Clean Power
Arcadia* Alhambra**
Paramount* Carson**
Simi Valley* Downey**
Temple City* Hawaiian Gardens**
Westlake Village* Moorpark**
Whittier**
100% Green Power
Agoura Hills Beverly Hills
Calabasas Camarillo
Claremont Culver City
Hawthorne Manhattan Beach
Malibu Ojai
Oxnard Redondo Beach
Rolling Hills Estates Santa Monica
Sierra Madre South Pasadena
Thousand Oaks West Hollywood
Ventura Unincorporated Los Angeles County***
Unincorporated Ventura County
* Default Change to 100% Green scheduled for October 2023 ** Default Change to 100% Green scheduled for non-residential customers in October 2023.
*** Default Change to 100% Green scheduled for low-income residential customers in October 2024.
New Customers. On September 1, 2022, the CPA Board of Directors authorized the offer of membership to three cities: Hermosa Beach, Monrovia, and Santa Paula. In total, the three jurisdictions have approximately 47,000 customers with an annual load of ~440 GWh (3.7% of CPA load). Each city must pass an ordinance to join CPA’s Joint Powers Authority by November 30, 2022, in order to begin receiving CPA service in 2024. Each city may choose a default rate at that time or alternatively defer the decision to 2023.
Customer Election to Opt-out of CPA Service. Customers can “opt-out” of CPA service and receive service from SCE, prior to initial enrollment in CPA or at any time after CPA becomes their energy provider. There is no charge for a customer to opt-out of CPA service. Customers that elect to opt-out during an enrollment period return to service with SCE commencing with the next billing period.
Customers that elect to opt-out after an enrollment period must either wait for six months during which time they continue to receive service from CPA or receive service from SCE for six months at a floating market rate referred to as Transitional Bundled Pricing. Most large customers that opt-out and return to service with SCE outside an enrollment period will elect to continue receiving service from CPA for the six-month waiting period to avoid exposure to market prices.
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5 Cumulative Opt-Out Rate and Customer Retention. Since the completion of CPA’s major enrollment activities at the end of 2019, its customer participation rate (count of enrolled customers/count of eligible customers) has consistently been over 90%. Since commencement of service in 2018, CPA’s cumulative opt-out rate by load is approximately 16.6% as of July 2022. The vast majority of opt-outs occur prior to and during enrollment periods. Since the last major enrollment of customers in May 2019, opt-outs have been steady at approximately 1% per year. Customers moving into an existing CPA service area are automatically enrolled in CPA service which has contributed to an increase in participation rates and a consistent number of active customers over the past several years. Management believes that the most price sensitive customers, and customers who prefer to receive service from SCE for a variety of reasons, have already opt-outed out of service with CPA.
Service Rates
General. Rates for CPA energy service are determined by its Board of Directors and are not regulated by the California Public Utilities Commission (“CPUC”). A customer’s total cost of electric service is determined by CPA’s charges for energy and SCE charges for transmission, distribution, and other non-by-passable charges. Additionally, CPA’s customers pay a Power Charge Indifference Adjustment (“PCIA”) rate which can vary annually based upon a number of market factors including benchmarks for regional energy costs, resource adequacy, the year in which their community joined CPA and other considerations. These charges, inclusive of the PCIA, establish the all-in cost of service to CPA’s customers. At current rates, CPA’s charges for energy plus the PCIA represents on average approximately 37% of a residential customer’s total bill.
Determination of Rates for Electricity. The rates for CPA’s Lean Power, Clean Power, and 100% Green Power products are designed to ensure revenue sufficiency while providing customers with stable rates that are competitive with those offered by SCE. Pursuant to the terms of the Clean Energy Purchase Contract, CPA covenants that it will establish, maintain, and set rates and charges so as to provide revenues sufficient to enable it to pay any and all amounts payable from the revenues of its operations and to maintain any reserves as required by CPA’s reserve policies. CPA further covenants and agrees that it shall not pledge or encumber its revenues through a gross revenue pledge or in any other way which creates a prior or superior obligation to its obligation to make payments under the Clean Energy Purchase Contract.
Current and Historical Rate Information. On July 1, 2022, CPA adopted new rates for FY2022/23 under which CPA Lean rates are priced 1% lower than SCE’s rates, Clean rates are priced at parity with SCE’s rates, and 100% Green rates are priced at 3% higher than SCE’s rates.
Prior to February 2021, on a total bill basis and inclusive of the PCIA, CPA Lean rates were 1-2% lower than SCE’s charges, Clean rates were on-par with SCE’s charges, and 100% Green rates were 7-9% higher than SCE’s charges. In February 2021, SCE rate changes resulted in CPA Lean, Clean and 100% Green rates that were on average (inclusive of the PCIA and on a total bill basis) 2%, 2-3%, and 10% higher than SCE’s rates, respectively. In June 2021, CPA’s Board approved rate increases effective July 1, 2021, resulting in Lean, Clean and 100% Green rates that were on average (inclusive of the PCIA and on a total bill basis) 3-7%, 3-8%, and 4-11% higher than SCE’s rates, respectively. CPA’s competitive position improved relative to SCE beginning in March 2022, when SCE’s generation rates increased by approximately 18% while the PCIA levied on CPA customers decreased by approximately 85%. These two factors reduced CPA customers’ bills by 6-7% while CPA rates remained at their July 2021 levels.
CPA rates are designed to cover the costs of energy, resource adequacy, and operating costs, fund customer programs, and meet CPA’s reserve and liquidity goals described in its Reserve Policy.
Effects of COVID-19 on CPA Operations and Finances
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6 Remote Operations. In response to the pandemic, CPA moved to a “remote work environment” in March 2020 with no disruption in services to our customers. CPA began phasing in a return to in-person work conditions in 2021 and has maintained a hybrid in-person/remote work policy through the present.
Effects on Energy Load. Pandemic-related load reductions in the small and medium commercial sectors were offset by increases to residential usage, with no net reduction in overall load during the period.
Payment Delinquencies and Bad Debt Reserves. CPA accounts receivable are billed and collected by SCE. During the pandemic CPA experienced an increase in past due accounts receivable resulting from the recession and a moratorium on disconnections and late payment fees required by the CPUC.
Management monitor accounts receivable closely and adjust Bad Debt Reserves in response to the aging of receivables, market events and other factors. Management believes that bad debt reserves are conservatively estimated and, at the time of estimate, are the best estimate of customer non-payment.
Financial Assistance. In 2020-2021, CPA provided $2 million in immediate COVID-19 bill credits to approximately 77,000 residential and small business customers. In 2021, CPA instituted a rate freeze for CARE (low-income) customers keeping their rates at 2020 levels. That rate freeze was later extended until September 30, 2022.
CPA customers received additional financial assistance from the state of California. The State Budget Act of 2021 created and funded the California Arrearage Payment Program (“CAPP”) to provide financial assistance to active and inactive residential and commercial customer accounts reflecting delinquent balances incurred during the COVID-19 pandemic relief period (March 4, 2020 through June 15, 2021). CPA customers received $15.8 million in financial assistance through the 2021 CAPP, for which payment was applied to customer accounts in early 2022. The State Budget Act of 2022 appropriated additional funds for CAPP and extended the eligibility period to cover electric bills for active residential customers issued between March 4, 2020 and December 31, 2021. CPA’s active residential customers are expected to receive approximately $11.4 million in early 2023 through the 2022 CAPP.
California Renewable Portfolio Standards and Other Regulations General. Community choice aggregators such as CPA are “load-serving entities” (“LSEs”) and as such are required to comply with California’s Renewable Portfolio Standard (“RPS”), Resource Adequacy (“RA”) requirements and Power Source Disclosure requirements described below.
Renewable Portfolio Standard. California’s RPS requires LSEs to supply their retail sales with minimum quantities of eligible renewable energy. Senate Bill 100 directs all LSEs to procure 60% of their portfolios from RPS-eligible resources by 2030, and 100% of their retail sales from zero-carbon resources (or eligible renewable resources) by 2045. CPA has exceeded the annual RPS regulatory minimum requirements each year since its inception. In 2021, CPA met 47.3% of its total retail sales with eligible RPS resources, above the 2021 RPS percentage target of 35.75%.
Resource Adequacy. RA, a California program jointly administered by the CPUC, the California Energy Commission (“CEC”) and the CAISO, establishes RA obligations applicable to all LSEs within the CPUC’s jurisdiction, including investor-owned utilities (IOUs), energy service providers (ESPs), and CCAs. The goals of the RA 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. The RA Program is comprised of three products: System RA; Local RA; and Flexible RA. Local RA obligations will be assigned to a Central Procurement Entity starting in 2023. In addition, per CPUC Decision 19-11-016, LSEs are required to Agenda Page 1059
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7 procure “Incremental System Capacity,” which is RA capacity that is in addition to the identified resources on the CPUC’s 2022 baseline list of resources.
Power Source Disclosure. California law requires LSEs to disclose the types of power resources used to supply retail sales. This mandate, known as the Power Source Disclosure Program (“PSDP”), is a consumer information program managed by the CEC on an annual basis. A key output of the PSDP is the Power Content Label (“PCL”). The PCL is an LSE-specific document that shows the breakdown of power resource types for each of the LSE’s energy products used to serve retail load, as well as a breakdown of resource types for the overall California grid. The PCL is distributed to customers each summer.
Energy Demand
Long-term Load Forecast. CPA’s long-term load forecast is a 10-year projection of electricity that will be consumed by CPA’s customers. CPA’s long-term load forecast considers the number and types of customers that CPA expects to serve, historical electricity use patterns, temperature and other weather conditions, as well as trends in energy efficiency, behind-the-meter, rooftop solar and electric vehicle adoption, appliance electrification and other factors. The forecast is stated in terms of retail and in wholesale load, which includes an estimate of electricity losses in the distribution system.
The table below shows CPA’s long-term retail and wholesale load forecast for 2022 through 2031.
Sources of Energy
Energy Purchases. During the normal course of business, CPA purchases electrical power from numerous suppliers. Electricity costs include the cost of energy and capacity arising from bilateral contracts with energy suppliers as well as wholesale sales and generation credits, and load and other charges arising from CPA’s participation in the CAISO’s 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 RPS and other product content targets, CPA acquires RPS eligible renewable energy evidenced by Renewable Energy Certificates (“RECs”) recognized by the Western Renewable Energy Generation Information System (“WREGIS”). CPA obtains RECs with the intent to retire them and does not sell or build surpluses of RECs with a profit motive. CPA purchases capacity commitments from qualifying generators to comply with the RA Program. CPA is in compliance with external mandates and self-imposed benchmarks.
Energy Load and Supply Risk Management. Volumetric risk reflects the potential uncertainty in the quantity of different power supply products (e.g., renewable energy, Carbon Free Energy, and capacity) required to meet the needs of CPA customers. This uncertainty can lead to adverse financial outcomes, as well as create potential for CPA to fail to meet reliability or renewable energy compliance requirements established by the State of California and/or the CPA Board. Customer load is subject to fluctuation due to customer opt-outs or departures, temperature deviation from normal, unforeseen changes in the growth of behind the meter generation by CPA customers, unanticipated energy efficiency gains, new or improved technologies, as well as local, state, and national economic conditions. CPA manages volumetric risk by taking steps to:
• Implement robust short- and long-term load and generation supply forecast methodologies, including regular monitoring of forecast accuracy through time and refining such forecasts, Agenda Page 1060
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8 including by incorporating CPA’s actual load data into forecasts as such data becomes available;
• Account for volumetric uncertainty in load and/or generation supply in the Energy Risk Hedging Strategy;
• Monitor trends in customer onsite generation, economic shifts, and other factors that affect electricity customer consumption and composition; and
• Proactively engage with customers in developing distributed energy resources and behind-the- meter generation and energy efficiency programs so as to better forecast changes in load.
Procurement. CPA procures energy and RA consistent with its Energy Risk Management Policy.
Procurement is conducted through market-based transactions for products including Fixed Price Energy, Portfolio Content Category 1 (“PCC1”) Renewable Energy, PCC2 Renewable Energy, Carbon Free Energy, and RA Capacity, as well as through longer-term power purchase agreements (“PPAs”) entered into pursuant to statutory requirements as well as voluntary long-term resource acquisition decisions made independently by CPA pursuant to its Integrated Resource Plan or other Board-approved strategies. Short-term procurement is conducted through participation in the CAISO and in bilateral markets. CPA may use a variety of methods to procure long-term contracts, including competitive solicitations, bilaterally negotiated agreements, or regulatory proceedings, with oversight including shortlist approvals or procurement recommendations, provided by the Energy Resources & Planning Committee of the Board.
Long-term procurement (contract terms greater than five years) is subject to Board approval.
Planning for Extreme Weather Events. CPA’s hedging polices allow for hedging in excess of expected load during seasons and at times of the day when extreme weather events tend to occur. As described in the next section, CPA currently has 382MW of operating and dispatchable energy storage assets that can be charged during periods of lower electricity use and discharged when temperatures and usage reach extreme levels. Additional storage assets under contract are expected to come online in the coming years. CPA’s residential customers were defaulted onto Time of Use rates in early 2022. Time of Use rates incentivize customers to reduce electricity use when usage and prices are highest. CPA also administers a demand response program (Power Response) and actively supports the CAISO and other state efforts to encourage customers to reduce electricity consumption during extreme heat events.
Further descriptions of CPA’s policies and procedures addressing energy procurement and risk management can be found on the CPA website at https://www.cleanpoweralliance.org. The reference to this website address is presented herein for informational purposes only, and information on such website is not incorporated by reference to this Official Statement.
Energy Storage
General. CPA has entered into long-term Energy Storage Agreements (ESAs) for the following resources:
Project Name Location Actual /
Anticipated COD
Energy Storage
Capacity (MW / MWh)
Sanborn Kern County, CA November 2021 100 / 400
High Desert San Bernardino County,
CA December 2021 50 / 200
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9 Luna Storage Los Angeles County, CA August 2022 100 / 400 Arlington Energy
Center II Riverside County, CA August 2022 132 / 528
Resurgence Solar II San Bernardino County,
CA June 2023 40 / 160
Rexford Tulare County, CA October 2023 180 / 540
Daggett Solar
Power 2
San Bernardino County,
CA October 2023 52 / 208
Daggett Solar
Power 3
San Bernardino County,
CA November 2023 61.5 / 246
Arica Solar Riverside County, CA December 2023 71 / 284 Chalan Kern County, CA December 2023 25 / 100
Estrella Los Angeles County, CA December 2023 28 / 112
Desert Quartzite Riverside County, CA March 2024 150 / 600 Azalea Kern County, CA August 2024 38 / 152
The storage capacity procured under these contracts will allow CPA to store energy during off-peak hours while prices are low and discharge it during evening super peak hours while prices are high.
Dispatchable storage assets are expected to offset wholesale costs to serve load during the evening super peak, significantly reducing CPA’s exposure to energy price risk during these hours. ESAs also provide CPA with the opportunity to earn revenue from the sale of ancillary services to the CAISO.
Cyber Security
CPA carries cyber risk insurance coverage against liabilities resulting from potential cyber security events in the aggregate amount of $2 million.
Financial Information
Revenues from Energy Sales and Operating Expenses. CPA derives its operating revenues primarily from energy sales to its customers. Operating revenues increased over the past four years as a result of retail rate increases and enrollment of new communities. Operating expenses, which are comprised primarily of energy procurement costs, increased primarily due to increased market prices and the enrollment of new communities.
Other Sources of Revenue. CPA receives revenue from sources other than retail customer sales including funding from the CPUC to support the Power Share program and from various other sources.
Financial Statements. For financial information related to CPA, see the annual audited financial statements of CPA for the fiscal years ended June 30, 2021 and June 30, 2020 attached to this Official Statement as Appendix B.
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10 Deposit Accounts. CPA maintains its cash in both interest-bearing and non-interest-bearing demand and term deposit accounts at River City Bank of Sacramento, California. CPA’s deposits with River City Bank are subject to California Government Code Section 16521 which requires that River City Bank collateralize public funds in excess of the Federal Deposit Insurance Corporation limit of $250,000 by 110%. CPA monitors its risk exposure to River City Bank on an ongoing basis. CPA’s Investment Policy permits the investment of funds in depository accounts, certificates of deposit and the Local Agency Investment Fund program operated by the California State Treasury, United States Treasury obligations, Federal Agency Securities, commercial paper, money market funds and FDIC insured placement service deposits.
Other Liquidity Sources. In September 2021, CPA entered into a revolving credit agreement with JPMorgan Chase Bank to provide working capital and letters of credit. The available credit line under this agreement is $80,000,000. The agreement expires on October 31, 2023 and is expected to be renewed.
APPENDIX B
AUDITED FINANCIAL STATEMENTS OF THE PROJECT PARTICIPANT FOR FISCAL YEAR 2020-21 Agenda Page 1063
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APPENDIX E
FORM OF CONTINUING DISCLOSURE UNDERTAKING
FOR THE PURPOSE OF PROVIDING
CONTINUING DISCLOSURE INFORMATION
UNDER SECTION (b)(5) OF RULE 15c2-12
[closing date]
This Continuing Disclosure Undertaking (the “Agreement”) is executed and delivered by California Community Choice Financing Authority (“CCCFA”) in connection with the issuance of its $_____________ Clean Energy Project Revenue Bonds Series 2022[B]-1 [(Green Bonds – Climate Bonds Certified)] (the “Bonds”). The Bonds are being issued pursuant to a Trust Indenture, dated as of _______ 1, 2022 (the “Indenture”), between CCCFA and [______________], as trustee.
In consideration of the issuance of the Bonds by CCCFA and the purchase of such Bonds by the beneficial owners thereof, CCCFA covenants and agrees as follows:
1. Purpose of This Agreement. This Agreement is executed and delivered by CCCFA as of the date set forth below, for the benefit of the beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with the requirements of the Rule (as defined below). CCCFA represents that it will be the only “obligated person” within the meaning of the Rule with respect to the Bonds at the time the Bonds are delivered to the Participating Underwriter and that no other person is expected to become so committed at any time after the issuance of the Bonds.
2. Definitions. (a) The terms set forth below shall have the following meanings in this Agreement, unless the context clearly otherwise requires. “Annual Financial Information” means the financial information and operating data described in Exhibit I.
“Annual Financial Information Disclosure” means the dissemination of disclosure concerning Annual Financial Information and the dissemination of the Audited Financial Statements as set forth in Section 4.
“Audited Financial Statements” means collectively, the audited financial statements of CCCFA and the Project Participant, each prepared pursuant to the standards and as described in Exhibit I. “Commission” means the Securities and Exchange Commission. “Dissemination Agent” means any agent designated as such in writing by CCCFA and which has filed with CCCFA a written acceptance of such designation, and such agent’s successors and assigns. “Electricity Supplier” means Aron Energy Prepay 14 LLC and its successors and permitted assigns.
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“EMMA” means the MSRB through its Electronic Municipal Market Access system for municipal securities disclosure or through any other electronic format or system prescribed by the MSRB for purposes of the Rule.
“Exchange Act” means the Securities Exchange Act of 1934, as amended. “Final Official Statement” means the Final Official Statement dated _______, 2022, relating to the Bonds.
“Financial Obligation” means (a) a debt obligation, (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation, or (c) a guarantee of an obligation or instrument described in clause (a) or (b) of this definition; provided however, the term Financial Obligation does not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. “Ledger Event” has the meaning assigned to such term in Exhibit C to the Master Power Supply Agreement.
“Master Power Supply Agreement” means the Master Power Supply Agreement dated as of ____________, 2022 between the Electricity Supplier and CCCFA. “Monthly Ledger Report” means the copies of the ledgers maintained by the Electricity Supplier pursuant to Exhibit C of the Master Power Supply Agreement and delivered each month to CCCFA pursuant to Section 9(b)(i) of such Exhibit.
“MSRB” means the Municipal Securities Rulemaking Board. “Non-Private Business Sales Ledger” and “Private Business Sales Ledger” have the meanings assigned to such terms in Exhibit C to the Master Power Supply Agreement. “Participating Underwriter” means each broker, dealer or municipal securities dealer acting as an underwriter in the primary offering of the Bonds.
“Reportable Event” means the occurrence of any of the Events with respect to the Bonds set forth in Exhibit II.
“Reportable Events Disclosure” means dissemination of a notice of a Reportable Event as set forth in Section 5.
“Rule” means Rule 15c2-12 adopted by the Commission under the Exchange Act, as the same may be amended from time to time.
“Undertaking” means the obligations of CCCFA pursuant to Sections 4 and 5. (b) Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Indenture.
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3. CUSIP Numbers. The CUSIP Numbers of the Bonds are as follows:
MATURITY
(_________ 1)
AMOUNT CUSIP
NUMBER
CCCFA will include the CUSIP Numbers (or applicable CUSIP Number) in all disclosure described in Sections 4 and 5 of this Agreement.
4. Annual Financial Information Disclosure. Subject to Section 9 of this Agreement, CCCFA hereby covenants that it will disseminate or cause to be disseminated on its behalf its Annual Financial Information and the Audited Financial Statements (in the form and by the dates set forth in Exhibit I) to EMMA in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information and by such time so that such entities receive the information by the dates specified. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports.
If any part of the Annual Financial Information can no longer be generated because the operations to which it is related have been materially changed or discontinued, CCCFA will disseminate a statement to such effect as part of the Annual Financial Information for the year in which such event first occurs.
If any amendment or waiver is made to this Agreement, the Annual Financial Information for the year in which such amendment is made (or in any notice or supplement provided to EMMA) shall contain a narrative description of the reasons for such amendment and its impact on the type of information being provided.
5. Reportable Events Disclosure. Subject to Section 8 of this Agreement, CCCFA hereby covenants that it will disseminate in a timely manner (not in excess of ten business days after the occurrence of the Reportable Event) Reportable Events Disclosure to EMMA in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. References to “material” in Exhibit II refer to materiality as it is interpreted under the Exchange Act. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. Notwithstanding the foregoing, notice of optional or unscheduled redemption of any Bonds or defeasance of any Bonds need not be given under this Agreement any earlier than the notice (if any) of such redemption or defeasance is given to the Bondholders pursuant to the Indenture.
6. Consequences of Failure of CCCFA to Provide Information. CCCFA shall give notice in a timely manner to EMMA of any failure to provide Annual Financial Information Disclosure when the same is due hereunder.
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In the event of a failure of CCCFA to comply with any provision of this Agreement, the beneficial owner of any Bond may seek mandamus or specific performance by court order, to cause CCCFA to comply with its obligations under this Agreement. The beneficial owners of 25% or more in principal amount of the Bonds outstanding may challenge the adequacy of the information provided under this Agreement and seek specific performance by court order to cause CCCFA to provide the information as required by this Agreement. A default under this Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Agreement in the event of any failure of CCCFA to comply with this Agreement shall be an action to compel performance.
7. Amendments; Waiver. Notwithstanding any other provision of this Agreement, CCCFA by resolution authorizing such amendment or waiver, may amend this Agreement, and any provision of this Agreement may be waived, if:
(b) (i) The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, including without limitation pursuant to a “no-action” letter issued by the Commission, change in law, or change in the identity, nature, or status of CCCFA, or type of business conducted; or
(ii) This Agreement, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) The amendment or waiver does not materially impair the interests of the beneficial owners of the Bonds, as determined either by parties unaffiliated with CCCFA (such as the Trustee), or by approving vote of Bondholders pursuant to the terms of the Indenture at the time of the amendment.
In the event that the Commission, the MSRB or other regulatory authority shall approve or require Annual Financial Information Disclosure or Reportable Events Disclosure to be made to a central post office, governmental agency or similar entity other than EMMA or in lieu of EMMA, CCCFA shall, if required, make such dissemination to such central post office, governmental agency or similar entity without the necessity of amending this Agreement.
8. Termination of Undertaking. The Undertaking of CCCFA shall be terminated hereunder if CCCFA no longer has any legal liability for any obligation on or relating to repayment of the Bonds under the Indenture. CCCFA shall give notice to EMMA in a timely manner if this Section is applicable.
9. Dissemination Agent. CCCFA may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Agreement, and may discharge any such Dissemination Agent with or without appointing a successor Dissemination Agent.
10. Additional Information. Nothing in this Agreement shall be deemed to prevent CCCFA from disseminating any other information, using the means of dissemination set forth in this Agreement or any other means of communication, or including any other information in any Annual Financial Information Disclosure or notice of occurrence of a Reportable Event, in addition to that which is required by this Agreement. If CCCFA chooses to include any information from any document or notice of occurrence of a Reportable Event in addition to that which is specifically required by this Agreement, CCCFA shall have no obligation under this Agreement to update such information or include it in any future disclosure or notice of occurrence of a Reportable Event. If the name of CCCFA is changed, CCCFA shall disseminate such information to EMMA.
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11. Beneficiaries. This Agreement has been executed in order to assist the Participating Underwriter in complying with the Rule; however, this Agreement shall inure solely to the benefit of CCCFA, the Dissemination Agent, if any, and the beneficial owners of the Bonds, and shall create no rights in any other person or entity.
12. Recordkeeping. CCCFA shall maintain records of all Annual Financial Information Disclosure and Reportable Events Disclosure, including the content of such disclosure, the names of the entities with whom such disclosure was filed and the date of filing such disclosure.
13. Assignment. CCCFA shall not transfer its obligations under the Indenture unless the transferee agrees to assume all obligations of CCCFA under this Agreement or to execute an Undertaking under the Rule.
14. Governing Law. This Agreement shall be governed by the laws of the State of California.
CALIFORNIA COMMUNITY CHOICE FINANCING
AUTHORITY
By
Its
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EXHIBIT I
ANNUAL FINANCIAL INFORMATION AND TIMING AND AUDITED
FINANCIAL STATEMENTS
“Annual Financial Information” means financial information and operating data with respect to Commodity Project No. 1, including:
(b) with respect to the Project Participant updated information under the headings “Customers – General,” “Customers – Largest Customers,” “Customers – Customer Opt-Out Rate and Customer Retention,” “Rates – Current and Historical Rate Information,” “Sources of Energy – Energy Purchases,” “Results of Operations,” and “Assets, Liabilities, Deferred Inflows or Resources and Net Position” set forth APPENDIX A to the Official Statement; (c) the quantities of Electricity from the Clean Energy Project sold by CCCFA, whether to Project Participant or others; and
(d) such other information and data as CCCFA may deem necessary in order to comply with the requirements of the Rule.
“Audited Financial Statements” means the audited financial statements of CCCFA and the Project Participant, in each case for the most recent fiscal year (commencing with the fiscal year ended December 31, [2021] for CCCFA, and commencing with the fiscal year ended June 30, 2022 for the Project Participant), in each case prepared in accordance with generally accepted accounting principles as promulgated to comply with governmental entities from time to time (or such other accounting principles as may be applicable to CCCFA and the Project Participant, as the case may be, in the future pursuant to applicable law).
All or a portion of the Annual Financial Information and the Audited Financial Statements set forth above may be included by reference to other documents which have been submitted to EMMA or filed with the Commission. If the information included by reference is contained in a final official statement, the final official statement must be available on EMMA. The final official statement need not be available from the Commission. CCCFA shall clearly identify each such item of information included by reference.
Annual Financial Information with respect to the Project Participant will be submitted to EMMA by 200 days after end of the Project Participant’s fiscal year.
Annual Financial Information with respect to CCCFA (i.e., the information described in clauses (b) and (c) of the definition of Annual Financial Information) will be submitted to EMMA by 200 days after end of CCCFA’s fiscal year.
Audited Financial Statements as described above should be filed at the same times as the Annual Financial Information for the Project Participant and CCCFA. If Audited Financial Statements are not available when such Annual Financial Information is filed, unaudited financial statements shall be included.
Audited Financial Statements will be submitted to EMMA no later than 30 days after availability to CCCFA.
If any change is made to the Annual Financial Information as permitted by Section 4 of the Agreement, CCCFA will disseminate a notice of such change as required by Section 4.
Agenda Page 1069
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EXHIBIT II
EVENTS WITH RESPECT TO THE BONDS
FOR WHICH REPORTABLE EVENTS DISCLOSURE IS REQUIRED
1. Principal and interest payment delinquencies
2. Non-payment related defaults, if material
3. Unscheduled draws on debt service reserves reflecting financial difficulties
4. Unscheduled draws on credit enhancements reflecting financial difficulties
5. Substitution of credit or liquidity providers, or their failure to perform
6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security
7. Modifications to the rights of security holders, if material
8. Bond calls, if material, and tender offers
9. Defeasances
10. Release, substitution or sale of property securing repayment of the securities, if material
11. Rating changes
12. Bankruptcy, insolvency, receivership or similar event of the obligated person*
13. The consummation of a merger, consolidation, or acquisition involving the obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material
14. Appointment of a successor or additional trustee or the change of name of a trustee, if material ∗ This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.
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15. Incurrence of a Financial Obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the obligated person, any of which affect security holders, if material
16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties
17. The receipt by CCCFA of a Monthly Ledger Report that includes a credit to any Non-Private Business Sales Ledger or any Private Business Sales Ledger that has not been reversed within twelve months of the date of such credit
18. The receipt by CCCFA of a Monthly Ledger Report that shows that a Ledger Event has occurred Agenda Page 1071
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APPENDIX F
FORM OF OPINION OF BOND COUNSEL
__________, 2022
California Community Choice Financing Authority
San Rafael, California
California Community Choice Financing Authority
Clean Energy Project Revenue Bonds, Series 2022[B]-1 (Term Rate), Clean Energy Project Revenue Bonds, Series 2022[B]-2 (SIFMA Index Rate), and Clean Energy Project Revenue Bonds, Series 2022[B]-3 (SOFR Index Rate) (Final Opinion)
Ladies and Gentlemen:
We have acted as bond counsel to California Community Choice Financing Authority (the “Issuer”) in connection with issuance of $[B-1 Par] aggregate principal amount of California Community Choice Financing Authority Clean Energy Project Revenue Bonds, Series 2022[B]-1 (Term Rate) (the “Series 2022[B]-1 Bonds”), $[B-2 Par] aggregate principal amount of California Community Choice Financing Authority Clean Energy Project Revenue Bonds, Series 2022[B]-2 (SIFMA Index Rate) (the “Series 2022[B]-2 Bonds”), and $[B-3 Par] aggregate principal amount of California Community Choice Financing Authority Clean Energy Project Revenue Bonds, Series 2022[B]-3 (SOFR Index Rate) (the “Series 2022[B]-3 Bonds” and, together with the Series 2022[B]-1 Bonds and the Series 2022[B]-2 Bonds, the “Bonds”), issued pursuant to a Trust Indenture, dated as of __________ 1, 2022 (the “Indenture”), between the Issuer and [_____________], as trustee (the “Trustee”). The Indenture provides that the Bonds are issued for the purpose of financing the Cost of Acquisition of the Clean Energy Project. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture.
In such connection, we have reviewed the Indenture, the Master Power Supply Agreement, the Clean Energy Purchase Contract, the Commodity Swaps, the Seller Swaps (as defined in the Master Power Supply Agreement), the Tax Certificate, dated the date hereof (the “Tax Certificate”), opinions of counsel to the Issuer and the Trustee, certificates of the Issuer, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after original delivery of the Bonds on the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after original delivery of the Bonds on the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures provided to us and the due and legal execution and delivery thereof by, and validity against, any parties other than the Issuer. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture, the Master Power Supply Agreement, the Clean Energy Purchase Contract, the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under Agenda Page 1072
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F-2
the Bonds, the Indenture, the Master Power Supply Agreement, the Clean Energy Purchase Contract, the Commodity Swaps, the Seller Swaps, the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against governmental entities such as the Issuer in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute or to have the effect of a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the assets described in or as subject to the lien of the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. Our services did not include financial or other non-legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion or conclusion with respect thereto.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:
1. The Bonds constitute the valid and binding limited obligations of the Issuer.
2. The Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Issuer. The Indenture creates a valid pledge, to secure the payment of the principal of and interest on the Bonds, of the Trust Estate, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture, including without limitation the pledge of the Commodity Reserve Account and the amounts and investments on deposit therein in favor of the Commodity Swap Counterparties and the Project Participants,[ and the pledge of the Shortfall Termination Account] and the amounts and investments on deposit therein in favor of the Project Participants.
3. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. We observe that, for tax years beginning after December 31, 2022, interest on the Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds.
Faithfully yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
Agenda Page 1073
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APPENDIX G
BOOK-ENTRY SYSTEM
The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any maturity of the Bonds exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of such maturity.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records.
Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.
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DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity of the Bonds are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to CCCFA of securities as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts such Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds and payments of principal and interest on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from CCCFA or the Trustee on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, CCCFA or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of redemption proceeds and principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of CCCFA or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to CCCFA or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.
CCCFA may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates are required to be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that CCCFA believes to be reliable, but CCCFA takes no responsibility for the accuracy thereof.
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APPENDIX H
REDEMPTION PRICE OF THE BONDS
The following table sets forth the Redemption Price of the Bonds (being the Amortized Value of the Series 2022[B]-1 Bonds and 100% of the principal amount of the Index Rate Bonds, but excluding accrued interest which is payable from the amounts required to be on deposit in the Debt Service Account) upon an extraordinary mandatory redemption following an Early Termination Payment Date under the Master Power Supply Agreement, as of the redemption dates shown below during the Initial Interest Rate Period.
REDEMPTION DATE
REDEMPTION PRICE
FIXED RATE
BONDS(1)
INDEX RATE
BONDS(2) TOTAL
1 Amortized Value of the Series 2022[B]-1 Bonds as of each Redemption Date. 2 100% of the principal amounts of the Series 2022[B]-2 Bonds and Series 2022[B]-3 Bonds as of each Redemption Date.
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APPENDIX I
SCHEDULE OF TERMINATION PAYMENTS
The following table sets forth the Schedule of Termination Payments under the Master Power Supply Agreement as of the specified Early Termination Payment Dates during the Initial Interest Rate Period. The Early Termination Payment Date is the Business Day preceding the date listed below.
MONTH OF EARLY
TERMINATION DATE
EARLY TERMINATION
PAYMENT DATE* TERMINATION PAYMENT
*
If any Early Termination Payment Date is not a Business Day, the Early Termination Payment is due on the preceding Business Day.
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APPENDIX J
[CLIMATE BOND VERIFIER’S REPORT]
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APPENDIX K
[DISCLOSURE RE FUNDING RECIPIENT – IF NOT GSG]
Agenda Page 1079
Management Report
To: Clean Power Alliance (CPA) Board of Directors
From: Ted Bardacke, Chief Executive Officer
Subject: Management Report
Date: October 6, 2022
Grid Stress Recap
The 10-day heat wave that gripped the western United States in the beginning of September caused the California electricity grid to experience its two highest peak demand days in history. This high demand combined with a capacity shortage that has evolved over the last several years, had the state narrowly avoiding rotating outages for several days. Unlike the last heat wave of this magnitude in August of 2020, when there were rotating outages due to several infrastructure failures and CAISO market design inhibited California from accessing all available imports, this most recent episode of grid stress was more of a case of available supply barely able to meet demand.1 Indeed, on the most critical days, rotating outages were avoided by reducing customer demand rather than increasing system supply.
At an organizational level, actions and impacts by and on CPA fall into three categories:
1. Communications and Demand Reduction – CPA was active in communicating with its customers via individual emails and social media about the need to conserve electricity during peak times. Many CPA member agencies used CPA media assets to amplify this conservation message. CPA’s Power Response program called Demand Response events for customers who have signed up for that incentive program. And CPA offered tips and incentives to member agencies to reduce municipal electricity usage during peak times. 1 With a few exceptions on individual days, all major resources in early September performed well, including transmission infrastructure, solar, wind, battery energy storage and state’s fleet of gas-fired power plants.
Agenda Page 1080
BOARD OF DIRECTORS MANAGEMENT REPORT
2. Battery Energy Storage – Since 2020, CPA has brought on-line approximately 400MW of battery energy storage, part of the more than ten-fold increase in the amount of battery energy storage on the California grid in the past two years.
Over 200MW of this new capacity – enough to power 150,000 homes in Southern California for four hours – from CPA was brought online in August, just in time to make a difference in early September. Additionally, the battery energy storage helped mitigate the heat wave’s financial impact on CPA. CPA will continue to aggressively pursue battery energy storage projects for both reliability and financial reasons.
3. Financial Impact – It will take several months, after major CAISO invoices and settlements for the month of September have issued, for CPA to determine the overall financial impact of the heat wave’s elevated prices and increased demand on CPA’s first quarter financial results. CPA has sufficient liquidity to meet its cash flow needs.
CPA staff is collecting lessons learned in all three of these areas in preparation for the next couple of years, as the risk of further grid emergencies remains acute. Evidence of this heightened risk can be seen in the 2023 market for Resource Adequacy, where additional supply is difficult to secure regardless of price.
Carmen Ramirez Memorial and Scholarship Fund
A public memorial for former Ventura County Supervisor and CPA Board Member Carmen Ramirez will be held on Saturday October 15 at 3PM in the Stadium at Pacifica High School in Oxnard. Members of the CPA community are invited to attend. In conjunction with the memorial, CPA will be making a donation to the Carmen Ramirez Legacy Scholarship Fund to Support Public Service being administered by the Ventura County Community Foundation.
Default Rate Change Update
Eight CPA member agencies are undergoing complete or partial default rate changes in October. CPA, in collaboration with the affected member agencies, began full-scale outreach customer activity related to the default rate change in September, including mailing notices to each one of the approximately 300,000 potentially affected customers.
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BOARD OF DIRECTORS MANAGEMENT REPORT
As of September 26, 1,311 (0.45%) of these customers had exercised an alternative choice to their default change, split nearly equally between those choosing to opt-down and those choosing to opt-out.
Additionally, in September, the Alhambra City Council voted unanimously to change their default rate to 100% in October of 2023.
CPA Expansion Activity
On September 29, the Hermosa Beach City Council voted unanimously to join Clean Power Alliance and to choose a default rate of 100% Green when CPA begins enrolling their approximately 10,500 customers in 2024. The cities of Monrovia and Santa Paula will consider joining CPA later this month.
Monthly Financial Performance
CPA is in the process of closing its full Fiscal Year 2021/22 financial results and undergoing its annual independent audit. The Finance Committee will receive full year FY 2021/22 financial results and the auditor report in October, followed by the full Board in November. The most recent monthly financial information available is for July 2022, the first month of the new fiscal year. In that month, CPA recorded operating income of $18.5 million, $8.5 million more than the budgeted operating income of $10 million. Revenues were in line with forecast, but power prices were lower than budgeted amounts. The financial dashboard for July 2022 is provided in Attachment 1.
Customer Participation Rate and Opt Actions
As of September 26, 2022, CPA’s overall participation rate was 96%, unchanged from the past five months. CPA had a total of 1,001,719 active customers, down 1,034 customers from the previous month. Opt-out levels – 772 accounts through the fourth week of August – are lower than what CPA typically experiences in the third quarter of the year even accounting for the default changes. New accounts (“move-ins”) were higher than closed accounts (“move-outs”) by 2,156 customers in September. Attachment 2 provides participation rates and active accounts by jurisdiction.
Agenda Page 1082
BOARD OF DIRECTORS MANAGEMENT REPORT
Customer Service Center Performance
Incoming calls to CPA’s Customer Service Center increased in September due to default rate change notifications and higher summer bills. Through September 26, CPA received 3,413 calls, up from 2,971 for the entire month of August. 84% of calls were answered within 45 seconds, down from 97% in August, and average wait time was 31 seconds, up from 8 seconds in August. The higher call volumes coincided with some unexpected call center staffing issues the week of September 19; CPA expects similar high call volume in October and the staffing issues have been addressed.
Contracts Executed Under the Chief Executive Officer’s Authority A list of non-energy contracts executed under the CEO’s signing authority is provided in Attachment 3. The list includes all open contracts as well as all contracts, open or completed, executed in the past 12 months.
ATTACHMENTS
1. Monthly Financial Dashboard
2. Overall Participation Rates by Jurisdiction
3. Non-Energy Contracts Executed under CEO’s Authority
Agenda Page 1083
CUSTOMERS
Summary of Financial Results
Definitions:
Accounts: Active Accounts represent customer accounts of active customers served by CPA per Calpine Invoice.
Participation Rate %: Participation Rate r8epresent active accounts divided by eligible CPA accounts YTD Sales Volume: Year to date sales volume represents the amount of energy (in gigawatt hours) sold to retail customers Revenues: Retail energy sales less allowance for doubtful accounts Cost of energy: Cost of energy includes direct costs incurred to serve CPA’s load Operating expenses: Operating expenditures include general, administrative, consulting, payroll and other costs required to fund operations Net operating income, also known as earnings before interest, depreciation and amortization (EBIDA), represents the difference between revenues and expenditures before depreciation expense, interest income and expense, and capital expenditures Cash and Cash Equivalents: Includes cash held as bank deposits.
Year to date (YTD): Represents the fiscal period beginning July 1, 2022 YTD
July
2022
Financial Dashboard
Note: Numbers may not sum up due to rounding.
Active Accounts
1,001,956
Participation Rate
96.07%
YTD Sales Volume
1,116 GWh
July Sales Volume
1,116 GWh
Agr
2% Com-Lg
19%
Com-Sm
29%
Res
50%
118
1114
0 200
400
600
800
1000
1200
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
in 000,000's
Cumulative Revenue
Actual Budget
21 $243
0 50
100
150
200
250
300
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Net Energy Revenue
Actual Budget
0 10
20 30
40 50
60 70
80 Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Cash & Cash Equivalents
Unrestricted Resctricted
in $000,000's Actual Budget Variance % Actual Budget Variance % Energy Revenues 117.7 117.1 0.5 0% 117.7 117.1 0.5 0%
Cost of Energy 96.8 103.9 -7.1 -7% 96.8 103.9 -7.1 -7%
Net Energy Revenue 20.9 13.3 7.6 57% 20.9 13.3 7.6 57%
Operating Expenses 2.4 3.3 -0.9 -26% 2.4 3.3 -0.9 -26%
Operating Income 18.5 10.0 8.5 85% 18.5 10.0 8.5 85%
July Year-to-Date
CPA recorded operating income of $18.5 million in July 2022 which was $8.5 million more than the budgeted operating income of $10 million.
July revenue was $117.7M or $500k slightly higher than budgeted revenue. The cost of energy was $96.8M or 7% lower than budgeted mostly as a result of mild weather conditions and lower actual market prices than prices used to estimate budgeted cost of energy. Operating costs were lower than budgeted primarily as a result of lower general administration and other services costs than budgeted and the non-utilization of contingencies.
As of July 31, 2022, CPA had $67.8 million in unrestricted cash and cash equivalents, and $79.853 million available on its bank line of credit.
CPA is in sound financial health and in compliance with its bank and other credit covenants.
Agenda Page 1084
Jurisdiction Default Option Active Accounts Participation Rate Lean % Clean % 100% Green % Agoura Hills 100% Green 8,095 93.53% 1.99% 0.38% 97.63% Alhambra Clean 33,965 98.24% 1.48% 98.00% 0.52%
Arcadia Lean 22,476 98.18% 99.78% 0.09% 0.13%
Beverly Hills Clean 18,664 99.81% 1.66% 98.18% 0.16%
Calabasas 100% Green 9,728 97.61% 1.71% 0.29% 98.01%
Camarillo Lean 28,393 95.97% 99.11% 0.30% 0.60%
Carson Clean 29,204 97.67% 1.29% 97.40% 1.31%
Claremont Clean 12,595 95.09% 2.44% 96.72% 0.84%
Culver City 100% Green 19,192 98.04% 3.97% 1.10% 94.94% Downey Clean 36,712 97.71% 1.52% 98.01% 0.47%
Hawaiian Gardens Clean 3,626 96.82% 1.13% 97.55% 1.32%
Hawthorne Lean 28,455 99.49% 98.27% 0.49% 1.24%
Los Angeles County Clean 297,752 95.95% 1.79% 97.18% 1.03% Malibu 100% Green 6,959 97.74% 2.90% 0.43% 96.67%
Manhattan Beach 100% Green 15,438 98.34% 2.58% 0.19% 97.22% Moorpark Clean 11,434 90.32% 3.08% 96.35% 0.57%
Ojai 100% Green 3,494 93.12% 5.98% 1.26% 92.76%
Oxnard 100% Green 55,588 96.14% 3.98% 0.55% 95.46%
Paramount Lean 15,604 98.85% 96.89% 1.24% 1.86%
Redondo Beach Clean 33,232 99.31% 1.94% 97.63% 0.42%
Rolling Hills Estates 100% Green 3,451 94.21% 7.07% 14.66% 78.27% Santa Monica 100% Green 54,059 99.58% 3.51% 0.70% 95.79% Sierra Madre 100% Green 4,958 94.49% 5.41% 1.59% 93.00% Simi Valley Lean 43,224 93.59% 99.65% 0.12% 0.23%
South Pasadena 100% Green 11,625 98.39% 3.72% 10.86% 85.42% Temple City Lean 12,548 97.54% 99.78% 0.05% 0.17%
Thousand Oaks 100% Green 44,130 89.88% 8.08% 1.64% 90.29% Ventura 100% Green 43,706 94.93% 4.81% 1.31% 93.89%
Ventura County 100% Green 32,257 86.53% 6.51% 1.22% 92.27% West Hollywood 100% Green 26,466 97.55% 2.39% 0.37% 97.24% Westlake Village Lean 3,713 88.59% 99.57% 0.05% 0.38%
Whittier Clean 30,976 95.95% 1.85% 97.72% 0.44%
Total 1,001,719 95.91%
Default Option Participation Rate
100% Green
Clean
Lean
95.34%
96.69%
96.03%
Total 95.91%
Clean Power Alliance – Overall Customer Status Report
Default Option Active Accounts % of Active
100% Green
Clean
Lean
339,146
508,160
154,413
33.86%
50.73%
15.41%
Total 1,001,719 100.00%
Overall Participation by Default Option
Participation by City and County
September 26, 2022
Agenda Page 1085
Vendor Purpose Month NTE Amount Status Notes
Mercer Compensation and benefits study refresh September 2022 $75,000 Active Pickit Digital asset library September 2022 $2,900 Active Salesforce Stakeholder Relationship Management
application subscription August 2022 $15,300 Active
Elite Edge Consulting Accounting services August 2022 $90,000 Active Original Contract Date: September 2020
NTE $112,000
Amendment #1 - NTE for renewals
increased to $120,000 in September 2020
Amendment #2 - First renewal authorized
July 2021 - Extends through 6/30/2022
Amendment #3 - Second (final) renewal
authorized; extends through 6/30/2022
Oscar Associates Recruiting Services August 2022 N/A Active Amendment to reduce placement fees to
25% of starting salary of exclusively
referred candidate
Helpmates Temporary staffing services July 2022 N/A Active Baker Tilly Financial audit services June 2022 $50,000 Active IHS Market Subscription for CAISO forecasts June 2022 $15,000 Active MBI Marketing contract renewal June 2022 $7,687 Active 3% increase to Board approved NTE upon renewal
Fraser Marketing contract renewal June 2022 $55,647 Active 9% increase to Board approved NTE upon renewal
John Kotch IT Consulting June 2022 $3,000 Completed
AiQueous Salesforce implementation June 2022 $10,000 Active Place and Page Graphic deisgn and branding June 2022 $50,000 Active Informal Development Website development May 2022 $50,000 Active Lattice Performance management software April 2022 $9,000 Active Active San Gabriel Valley Grant for community-based outreach April 2022 $8,000 Completed MERITO Grant for community-based outreach April 2022 $8,000 Completed Davis Wright Tremaine Legal services (regulatory) March 2022 $125,000 Active LinkedIn Subscription for recruiting tools March 2022 $34,306 Active MCM Municipal advisory services March 2022 $125,000 Active Pinnacle AV maintenance/service plan March 2022 $25,273 Active Gridwell Resource adequacy training February 2022 $2,000 Completed Abbot, Stringham and Lynch IT compliance reporting for CPUC February 2022 $8,500 Active California Science Center Event space rental for Staff Retreat February 2022 $6,440 Completed Orange Grove Consulting DEI implementation planning services February 2022 $105,750 Completed Zoe Misquez Filing lobbying compliance forms January 2022 $500 Active Critical Mention, Inc. Media monitoring service January 2022 $6,000 Active Clean Power Alliance
Non-energy contracts executed under Chief Executive Officer authority Rolling 12 months -- Open contracts shown in Bold
Agenda Page 1086
Vendor Purpose Month NTE Amount Status Notes
Clean Power Alliance
Non-energy contracts executed under Chief Executive Officer authority Rolling 12 months -- Open contracts shown in Bold
Clear Language Company Minute transciption for board meetings January 2022 $0 Original Contract Date: November 2021
NTE $20,000
Amendment 1 - $0, to clarify fee structure
PR Web/Cision Media/PR wire distribution services January 2022 $3,060 Active Ironclad Contract lifecycle management platform January 2022 $22,000 Active Langan GIS services/web browser tool December 2021 $8,000 Active Original Contract Date: October 2020
NTE $120,000
Amendment 1 - NTE increased to $128,000
First Renewal Term extends through
10/20/2022
Maria Shafer Minute transciption for board meetings November 2021 $20,000 Completed Clear Language Company Minute transciption for board meetings November 2021 $20,000 Active Omni Government Relations & Pinnacle
Advocacy, LLC Lobbying Services November 2021 $125,000 Active Original Contract Date: December 2019
NTE $108,000
Amendment #1 - first renewal term
authorized November 2020, NTE $108,000
Amendment #2 - second (final) renewal
authorized, extends through December 5,
2022, new NTE $125,000
Sigma Computing, Inc. Business intelligence & analytics software tool October 2021 $10,000 Active
MRW & Associates Extension of ratemaking services contract October 2021 $35,000 Active Original Contract Date: December 2020
NTE $90,000
Amendment #1 - NTE increased to
$125,000
Extends through 12/2/2022 (renewals
authorized)
Clean Energy Counsel LLP Extension of legal services agreement September 2021 $30,000 Active Original Contract Date: November 2020
NTE $355,000
Amendment #1 - NTE increased to
$385,000 in July 2021
Extends through 11/6/2021 (renewals
authorized)
CV Resources Recruiting Services September 2021 N/A Active 20% of starting salary upon hiring an exclusively referred candidate
Agenda Page 1087
Vendor Purpose Month NTE Amount Status Notes
Clean Power Alliance
Non-energy contracts executed under Chief Executive Officer authority Rolling 12 months -- Open contracts shown in Bold
Abbot, Stringham and Lynch 2020 CEC Power Source Disclosure Audit August 2021 $16,700 Active Includes two optional renewals for years 2021 and 2022
Bradsby Group Recruiting Services August 2021 N/A Active 25% of starting salary upon hiring an exclusively referred candidate
Chapman & Cutler, LLP 2021 Legal Services (CPA's Credit Agreement) August 2021 $35,000 Active
Original Contract Date: 3/1/21
NTE $20,000
Amendment #1 - NTE increased to $55,000
Extends through 4/30/22, auto-renew
Polsinelli, LLP
Legal Service Agreement (Employment,
Compliance, General Legal Support related
to Commercial Liability, Risk, and
Mitigation issues)
April 2021 $75,000 Active Amendment #2 to original Agreement executed on March 8, 2019
AccuWeather Enterprise Solutions Professional Forecasting Weather Services April 2021 $4,800 Active Addendum to April 2020 Agreement.
Extended through March 2023 at $400/mo
Shute, Mihaly & Weinberger, LLP
Legal Service Agreement (Regulatory,
Administrative, Environmental, Energy
Procurement, Public Contracting, Public
Entity Governance Laws, Issues and/or
Proceedings)
April 2021 $65,000 Active
OpenPath
New Office Keycard Access Control
System January 2021 $1,500 Active
Prime Government Solutions, Inc. Board and committee meeting agenda management software December 2020 $16,000 Active
ProComply, Inc. Energy regulation compliance training October 2020 $5,000 Active Crown Castle Fiber LLC New Office Dedicated Internet Access Service September 2020 $ 18,600 Active
NextLevel Internet, Inc. New Office High Speed Internet Service September 2020 $ 6,936 Active Windstream Services, LLC New Office Telephone Service September 2020 $ 14,095 Active Zero Outages New Office Security, Firewall, & Wi-Fi
Service September 2020 $ 7,608 Active
Burke, Williams, Sorenson, LLP
Legal Services Agreement (Brown Act,
public entity governance issues and other
legal services)
July 2020 $ 100,000 Active
Hall Energy Law PC Energy Procurement Counsel July 2020 $ 125,000 Active Agenda Page 1088
Vendor Purpose Month NTE Amount Status Notes
Clean Power Alliance
Non-energy contracts executed under Chief Executive Officer authority Rolling 12 months -- Open contracts shown in Bold
Adobe Inc. AdobeSign Secure Electronic Signature
Service June 2020 $ 3,200 Active
Snowflake Inc. Cloud-Native Elastic Data Warehouse
Service April 2020 $ 36,000 Active
Agenda Page 1089
Commonly Used Acronyms
BESS Battery Energy Storage System
CAC Community Advisory Committee
CAISO California Independent System Operator
CALCCA California Community Choice Association
CalEVIP California Electric Vehicle Incentive Program
CARB California Air Resources Board
CARE California Alternate Rates for Energy (Low Income Discount Rate) CCA Community Choice Aggregation
CEC California Energy Commission
CPUC California Public Utilities Commission
DA Direct Access (Private Retail Energy Supplier)
DAC Disadvantaged Community (As Defined by Calenviroscreen 3.0) DER Distributed Energy Resources
DR Demand Response
ERMP Energy Risk Management Policy
ERRA Energy Resource Recovery Account (SCE Generation Rate Setting)
ESA Energy Storage Agreement
EVSE Electric Vehicle Supply Equipment (EV Charger)
FERA Family Electric Rate Assistance (Low Income Discount Rate) GHG Greenhouse Gas
IOU Investor Owned Utility
IRP Integrated Resource Plan
JPA Joint Powers Authority
Agenda Page 1090
Commonly Used Acronyms
Kwh Kilowatt-Hour (A Measure of Energy Used in A One-Hour Period) Kw Kilowatt = 1,000 Watts (Watt = A Measure of Instantaneous Power) LSE Load Serving Entity
MB Medical Baseline (Discount Rate for Medical Equipment Needs) MW Megawatt = 1,000 Kilowatts
Mwh Megawatt-Hour = 1,000 Kilowatt-Hours
NEM Net Energy Metering (Usually for Customers with Solar) OAT Other Applicable Tariffs
PCIA Power Charge Indifference Adjustment (Can Be Called “Exit Fee”) PCC1 Renewable Energy Generated Inside California
PCC2 Renewable Energy Generated Outside California
PCC3 A REC from A Renewable Resource, Delivered Without Energy PCL Power Content Label
POU Publicly Owned or Municipal Utility
PPA Power Purchase Agreement
PSPS Public Safety Power Shutoff
PV Photovoltaic (Solar) Panels
RA Resource Adequacy
REC Renewable Energy Credit
RPS Renewables Portfolio Standard
T&D Transmission and Distribution
TOU Time Of Use (Used to Refer to Rates that Differ by Time Of Day) WECC Western Electricity Coordinating Council
Agenda Page 1091