Board of Directors of the
Clean Power Alliance of Southern California
Regular Meeting
Thursday, May 2, 2024
2:00 p.m.
Visit CPA’s YouTube Channel to view a Live Stream of the Meeting www.youtube.com/@CPApublicmeetings
*There may be a streaming delay of up to 90 seconds. This is a view-only live stream.
Clean Power Alliance
Diana Mahmud Board Room
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Members of the public may also participate in this meeting at the following locations:
Calabasas City Hall
Council Conference Room
100 Civic Center Way
Calabasas, CA 91302
Ventura County Government Center
Point Mugu Conference Room, 4th Floor
Hall of Administration
800 South Victoria Avenue
Ventura, CA 93009
Whittier City Hall
Admin Conference Room
13230 Penn Street
Whittier, CA 90602
South Bay Cities Council of Governments
Conference Room
2355 Crenshaw Blvd., Suite 125
Torrance, CA 90501
JW Marriot Desert Springs at SCAG Conference
Director 1 Conference Room
74-855 Country Club Drive
Palm Desert, CA 92260
PUBLIC COMMENT: Members of the public may submit their comments by one of the following options:
• Email Public Comment: Members of the public are encouraged to submit written comments on any agenda item to [email protected] up to four hours before the meeting. Written public comments will be announced at the meeting and become part of the meeting record. Public comments received in writing will not be read aloud at the meeting. • Provide Public Comment During the Meeting: The General Public Comment item is reserved for persons wishing to address the Board on any Clean Power Alliance-related matters not on today’s agenda. Public comments on matters on today’s Consent Agenda and Regular Agenda shall be heard at the time the matter is called. Comments on items on the Consent Agenda are consolidated into one public comment period. Members of the public who wish to address the Board at CPA’s Office are requested to complete a comment card and provide it to staff. If you are attending from a remote location, please identify yourself to a CPA representative when your item is called. Each speaker is limited to two (2) minutes (in whole-minute increments) per agenda item with a Agenda Page 1
cumulative total of five 5 minutes to be allocated between the General Public Comment, the entire Consent Agenda, or individual items in the Regular Agenda. Please refer to Policy No. 8 – Public Comment for additional information.
NAVIGATING OUR AGENDA PACKETS: The meeting agenda packets are bookmarked PDFs, which display a list of agenda items to the left of the page and allow you to click to view specific items within the packet. If viewing in your browser, click the "document outline" button in the upper left corner of the screen.
If the PDF is downloaded, the bookmark panel (ribbon icon) appears on the left side of the screen.
ACCESSIBILITY: Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least two (2) working days before the meeting at [email protected] or (213) 713- 5995. Notification in advance of the meeting, while not required, will enable us to make reasonable arrangements to ensure accessibility to this meeting and the materials related to it.
CALL TO ORDER AND PLEDGE OF ALLEGIANCE
ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from the March 7, 2024 Board of Directors Meeting
2. Re-appoint 9 Current Community Advisory Committee Members for the May 2024 – April 2026 Term and Appoint 1 New Member to the Open Position in West/Unincorporated Ventura County Region for a May 2024 – April 2026 Term.
3. (a) Approve Professional Services Agreement with Municipal Capital Markets Group, Inc. with a Per-Transaction Fee of $281,500 and a Total Not-to-Exceed Amount of $844,500 to be Paid from Bond Proceeds for Municipal Financial Advisory, Guaranteed Investment Contract Broker, and Qualified Independent Representative Services on One or More Future Prepay Transactions (b) Approve Legal Services Agreement with Chapman and Cutler, LLP with a Per-Transaction Fee of $175,000 and a total Not-to-Exceed Amount of $525,000 to be Paid from Bond Proceeds for Prepay Counsel Services on One or More Future Prepay Transactions
4. Authorize the Chief Executive Officer to Execute Task Order No. 6 with Ascend Analytics for 2024 Clean Energy and Reliability RFO Support Services for a Not-to-Exceed Amount of $210,000
5. Approve a Support Position on Assembly Bill 1176, as Recommended by the Legislative & Regulatory Committee at its March 27, 2024 Meeting
6. Receive and File Bill Positions March 2024 Monthly Report
7. Receive and File Monthly Community Advisory Committee Report Agenda Page 2
REGULAR AGENDA
Election Item
8. Election of Executive Committee At-Large Positions for Two-Year Terms from July 1, 2024 to June 30, 2026
Action Items
9. Approve a Rate Setting Approach for FY 2024/25:
a. Select an option establishing a reserve percentage target and resulting total bill comparison levels for residential and small business rates using SCE’s June 1, 2024 rates:
i. Option 1 – Low Reserve Scenario with a reserve percentage target of 34-38%: Target 100% Green Power rates to provide a 3% premium with Clean Power at a 1% discount and Lean Power at a 2% discount;
ii. Option 2 (Recommended by Executive Committee) – Medium Reserve Scenario with a reserve percentage target of 38-41%:
Target 100% Green Power rates to provide a 5% premium with Clean Power at a 0% discount and Lean Power at a 1% discount; iii. Option 3 – High Reserve Scenario with a reserve percentage target of 38-42%: Target 100% Green Power rates to provide a 5% premium with Clean Power at a 1% premium and Lean Power at a 0% discount;
b. Update rates for large commercial, industrial, pumping and agriculture, and streetlighting rate classes to reflect CPA’s current cost of service (COS) and based on the selected reserve option;
c. Set total bill comparisons for customers in the cities of Hermosa Beach, Monrovia, and Santa Paula at the same total bill comparison levels as customers that began to receive service in 2018-2020 at the selected reserve option.
10. Approve and Authorize the Chief Executive Officer to Execute the Following Long-Term Energy Storage Agreements:
a. 20-Year Energy Storage Agreement with Key Energy Storage, LLC for the 190 MW Key Project
b. 20-Year Energy Storage Agreement with Desert Sands II Energy Storage, LLC for the 140 MW Desert Sands Project
c. 20-Year Energy Storage Agreement with VESI 17 LLC for the 93 MW Denali Project
Information Item
11. Review FY 2024/25 Budget Priorities and Operating Expense Highlights Agenda Page 3
COMMITTEE CHAIR UPDATES
Director Deborah Klein Lopez, Chair, Legislative & Regulatory Committee Director Susan Santangelo, Chair, Finance Committee
Director Robert Parkhurst, Chair, Energy Planning & Resources Committee
MANAGEMENT REPORT
BOARD MEMBER COMMENTS
REPORT FROM THE CHAIR
ADJOURN – NEXT REGULAR MEETING ON JUNE 6, 2024
Public Records: Public records that relate to any item on the open session agenda for a regular Board Meeting are available for public inspection. Those records that are distributed less than 72 hours prior to the meeting are available for public inspection at the same time they are distributed to all, or a majority of, the members of the Board. Public records are available for inspection at CPA’s Office at 801 S. Grand Ave., Suite 400, Los Angeles, CA 90017, or online at www.cleanpoweralliance.org/agendas.
Agenda Page 4
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 5
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 6
Staff Report – Agenda Item 1
To: Board of Directors
Subject: Approve Minutes from the April 4, 2024 Board of Directors Meeting Date: May 2, 2024
RECOMMENDATION
Approve.
ATTACHMENT
1. Minutes
Agenda Page 7
Board of Directors Item 1
MINUTES
Board of Directors of the
Clean Power Alliance of Southern California
Regular Meeting
Thursday, April 4, 2024, 2:00 p.m.
Meeting videos are available on CPA's YouTube Channel.
http://www.youtube.com/@CPApublicmeetings
Clean Power Alliance
Diana Mahmud Board Room
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Board members participated from the following locations:
Calabasas City Hall
Council Conference Room
100 Civic Center Way
Calabasas, CA 91301
Ventura County Government Center
Channel Islands Conference Room, 4th Floor
Hall of Administration
800 South Victoria Avenue
Ventura, CA 93009
Whittier City Hall
Admin Conference Room
13230 Penn Street
Whittier, CA 90602
South Bay Cities Council of Governments
Conference Room
2355 Crenshaw Blvd., Suite 125
Torrance, CA 90501
CALL TO ORDER & ROLL CALL
Chair Klein Lopez called the meeting to order at 2:00 p.m. and Gabriela Monzon, Clerk of the Board, conducted roll call.
PLEDGE OF ALLEGIANCE
Director Gold led the pledge of allegiance.
Roll Call
1 Agoura Hills Deborah Klein Lopez Chair Present
2 Alhambra Jeff Maloney Director Present
3 Arcadia Dominic Lazzaretto Alternate Present
4 Beverly Hills Julian Gold Alternate Present
5 Calabasas Ed Albrecht Alternate Present
6 Camarillo Susan Santangelo Director Remote
7 Carson Cedric Hicks Director Present
8 Claremont Corey Calaycay Director Present
9 Culver City Yasmine-Imani
McMorrin Director Present
Agenda Page 8
Board of Directors Item 1
10 Downey Dorothy Pemberton Alternate Remote
11 Hawaiian Gardens Ramie L. Torres Alternate Remote
12 Hawthorne Alex Monteiro Director Present
13 Hermosa Beach Absent
14 Los Angeles County Lindsey Horvath Vice Chair Present 15 Malibu Marianne Riggins Director Remote
16 Manhattan Beach Amy Howorth Director Remote
17 Monrovia Dylan Feik Alternate Remote
18 Moorpark Renee Delgado Director Remote
19 Ojai Betsy Stix Director Remote
20 Oxnard Bert Perello Director Remote
21 Paramount Absent
22 Redondo Beach Absent
23 Rolling Hills Estates Steve Zuckerman Alternate Remote 24 Santa Monica Gleam Davis Director Present
25 Santa Paula Jenny Crosswhite Director Present
26 Sierra Madre Robert Parkhurst Director Present
27 Simi Valley Rocky Rhodes Director Present
28 South Pasadena Diana Mahmud Alternate Present
29 Temple City Absent
30 Thousand Oaks David Newman Director Remote
31 City of Ventura Liz Campos Director Remote
32 Ventura County Vianey Lopez Vice Chair Remote
33 West Hollywood John Erickson Director Present
34 Westlake Village Brad Halpern Director Remote
35 Whittier Leon Vasquez Alternate Remote
All votes are unanimous unless otherwise stated.
GENERAL PUBLIC COMMENT
There was no public comment.
Agenda Page 9
Board of Directors Item 1
CONSENT AGENDA
1. Approve Minutes from the March 7, 2024 Board of Directors Meeting
2. Appoint One New Member to the Community Advisory Committee for An Open Position in the West/Unincorporated Ventura County Region for the May 2024 – April 2026 Term
3. Approve a Professional Services Agreement with Langan Engineering and Environmental Services, Inc. for Software Development and Information Technology Consulting Services with a Total Not-To-Exceed Amount of $280,000
4. Approve and Authorize the Following Actions in Connection with Ongoing Support for CPA’s Regulatory Affairs Efforts:
a. Approve a Special Assessment for Southern California Edison’s (SCE) Energy Resource Recovery Account Proceeding Management Services from the California Community Choice Association (CalCCA) for Contracts with (i) NewGen Strategies & Solutions (“NewGen”) with a Not-to-Exceed (“NTE”) Amount of $79,881, and (ii) Keyes & Fox LLP (“K&F”) with an NTE Amount of $76,380;
b. Approve an Amended Special Assessment for SCE 2025 General Rate Case Proceeding Management Services from CalCCA for Contracts with (i) NewGen with an Additional NTE Amount of $6,750, (ii) MRW & Associates with an Additional NTE Amount of $9,000, and (iii) K&F with an Additional NTE Amount of $22,500;
c. Authorize the Chief Executive Officer to Execute the Professional Services Agreement Between CPA and NewGen for an Initial One-Year Term and Up to a Three-Year Term with an NTE Amount of $25,000 to Provide Specialized Services Regarding Green Tariff Shared Renewables Issues in the Green Access Programs Proceeding and General Regulatory Support
5. Approve and Authorize the Chief Executive Officer to Execute an Amendment to the FY 2023/24 Professional Services Agreement with Bloom Ads Global Media Group for an Additional $100,000 in Media Buying and Increase the PSA from $250,000 to an NTE Amount of $350,000.
6. Approve and Authorize the Chief Executive Officer to Execute the Following Amendments to Renewable Power Purchase Agreements (PPAs) to Serve CPA's Power Share Program:
a. Amendment No. 1 to the Renewable PPA with Prologis – Wilmington1, LLC; and,
b. Amendment No. 1 to the Renewable PPA with Prologis – El Segundo LLC
7. Approve a Support Position on Assembly Bill 1176, as Recommended by the Legislative & Regulatory Committee at its March 27, 2024 Meeting
8. Receive and File Bill Positions March 2024 Monthly Report
9. Receive and File Monthly Community Advisory Committee Report Item 7 was pulled for a separate discussion; however, due to time constraints, Item 7 was moved to the next meeting.
Motion: Director Rhodes, Simi Valley
Second: Director Hicks, Carson
Vote: The consent agenda, with the exception of Item 7, was approved by a roll call vote with abstentions from Directors Newman and Halpern.
REGULAR AGENDA
10. Receive Presentation on FY 2024/2025 Rates Outlook
Agenda Page 10
Board of Directors Item 1
Ted Bardacke, Chief Executive Officer, presented the item. CPA will be able to maintain competitive rates, build reserves and fund local programs in the coming year. Mr. Bardacke reviewed the rate and budget schedule, provided a refresher on renewable and carbon-free energy, and discussed CPA’s approach and regulatory framework. CPA has set ambitious targets to secure 95% of its renewable energy demand via long-term contracts by 2029. However, CPA is still dependent on short-term renewable energy purchases until new projects come online. Mr. Bardacke reviewed product content scenarios; all scenarios assume 100% Green remains 100% renewable energy. Price differentials between each of CPA’s rate products are based on cost of service and highly dependent on renewable energy prices and secondarily, carbon-free energy prices. CPA has been able to mitigate that impact because of its' long-term contracting. Matt Langer, Chief Operating Officer, discussed CPA’s competitive landscape, noting that SCE’s delivery rates are rapidly rising, causing an increase in bills that CPA has little control over. Mr. Langer also discussed rate comparisons for previous years, reviewed reserves, financial targets, and summarized next steps.
Director Mahmud noted the importance of communicating to customers that CPA has been able to maintain stable rates and energy bill increases are primarily due to SCE’s increasing transmission and distribution rates. Director Mahmud asked how the GHG-free component of the Lean product compares to SCE. Mr.
Bardacke explained it is comparable with their base product; their GHG-free component fluctuates based on rainfall. Director Rhodes expressed concern regarding CPA’s ability to supply the increasing demand for the 100% Green product; suggested that CPA does not enroll new cities until additional long-term contracts come online and expressed support for Scenario 4. Director Rhodes asked what percentage of long-term contracts are with suppliers that are not yet able to produce what they are contracted for. Staff approximated that about 25% of CPA’s demand either under construction or in preconstruction currently and that about half to 60% of CPA’s renewable energy supply is from long-term contracts. Vice Chair Horvath expressed support for Scenario 3 in that it preserves CPA’s 100% Green rate; recognized that although CPA’s bills are still competitive with SCE, bill increases can significantly impact CPA customers. Vice Chair Horvath asked how the credit rating is providing value for customers, given the supply challenges; and if there are tangible benefits such as customer programs that can benefit customers despite bill increases. Staff explained that for the long-term projects, it makes CPA more attractive to developers. The credit rating also increased CPA’s credit line in which hundreds of thousands of dollars of cost savings materialized because the bank lowered the interest rate. The new budget will include an increase in customer programs to help people save money.
Director Crosswhite asked how an income graduated fixed charge would impact customer bills and CPA’s competitiveness. Mr. Bardacke expressed that overall competitiveness will not be impacted; if the fixed charge is approved by the CPUC, it will go on the delivery side of the bill and the volumetric rates on the delivery side of the bill will also go down; it will not affect CPA’s generation rates.
Director Maloney expressed support for Scenario 3 and the fact that CPA continues to support its 100% Green product. Director Gold expressed support for Scenario 3 and noted the importance of preserving the 100% Green product using flexibility with the other products; discussed the importance of maintaining reserves; asked if any of CPA’s projects that may come online faster. Mr.
Bardacke indicated yes, but progress is mostly measured in weeks and months,
Agenda Page 11
Board of Directors Item 1
not years. Mr. Bardacke also clarified that CPA will not pursue expansion efforts for 2026 and that the overall expansion strategy will be a topic at the Board retreat.
Director Lazzaretto asked if taking risks now, improves CPA’s chances of meeting 90% renewables requirements in 10 years; Mr. Bardacke replied that it is his view that not all load serving entities will meet that 90% target by 2035, but CPA will; taking some risk now is setting CPA up to meet those targets.
CLOSED SESSION
11. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION Exposure to litigation pursuant to paragraph (2) or (3) of subdivision (d) of Section: 54956.9: 1
Nancy Whang, General Counsel, noted that no reportable action was taken and direction was provided by the Board.
REGULAR AGENDA (Continued)
12. Open Nomination Period for Executive Committee At-Large Positions for the July 2024 – June 2026 Term
Chair Klein Lopez announced Committee Chair appointments for the next fiscal year and opened the nomination period for the Executive Committee At-Large positions. Nomination period remained open until April 19, 2024.
The following nominations were received at the meeting:
• Jeff Maloney, Alhambra (Los Angeles County)
• Betsy Stix, Ojai (Ventura County)
COMMITTEE CHAIR UPDATES
Legislative & Regulatory Committee Acting Chair Hicks reported that the Committee discussed AB 1176 and the 2024 California legislative update, wherein 2,144 new bills were introduced; roughly 60 to 70 of these are energy bills that can impact CPA.
The Energy and Finance Committees did not meet in the previous month and did not provide a report.
MANAGEMENT REPORT
Mr. Bardacke reminded the Board to save the date for the Board retreat on June 21 and invited feedback on the Board retreat agenda. CPA also received approval for an October 2025 expansion in La Cañada Flintridge, Lynwood, and Port Hueneme.
BOARD MEMBER COMMENTS
Director Mahmud thanked Chair Klein Lopez for an effective first meeting.
REPORT FROM THE CHAIR
None.
ADJOURN
Chair Klein Lopez adjourned the meeting at 4:16 p.m.
Agenda Page 12
Staff Report – Agenda Item 2
To: Board of Directors
From: Christian Cruz, Senior Community Outreach Manager Approved by: Gina Goodhill, Senior Director, Government Affairs Ted Bardacke, Chief Executive Officer
Subject: Appointment of Community Advisory Committee Members for the 2024-2026 Term
Date: May 2, 2024
RECOMMENDATION
Re-appoint nine current Community Advisory Committee (CAC) Members for the May 2024 – April 2026 term and appoint one new member to the CAC for the open position in West/Unincorporated Ventura County Region for a May 2024 – April 2026 term.
BACKGROUND
On June 7, 2018, the Board of Directors approved a structure for the CAC to provide input on various policy and planning issues and be a voice for CPA in the community. As per the CPA Bylaws (Article 8, Section 5), the two-year term of service for current CAC members expires at the end of April. Staff reached out to all current CAC members, notifying them of the term expirations, and inquired if they would like to be considered for re-appointment to the CAC. All CAC members responded, and nine of the eleven current CAC members requested to be re-appointed. Two representatives (one from the Ventura/West L.A. County Region and one from the Gateway Cities Region) are unable to continue on the CAC.
Recommended CAC Appointments
Staff worked with member jurisdictions and stakeholders to identify suitable applicants for the West/Unincorporated Ventura County Region open seat. Based on feedback from the regional Board representatives, staff recommends that the Board appoint Daniel Mora to
Agenda Page 13
Board of Directors Item 2
the West/Unincorporated Ventura County Region. The applicant summary for the recommended appointee is attached.
RECOMMENDED RE-APPOINTMENTS AND APPOINTMENTS
East Ventura/West LA County
(Agoura Hills, Camarillo, Calabasas, Moorpark,
Simi Valley, Thousand Oaks)
Proposed re-appointments:
• Angus Simmons
• Debbie West
• Vacant
San Gabriel Valley
(Alhambra, Arcadia, Claremont, Monrovia, Sierra
Madre, South Pasadena, Temple City)
Proposed re-appointments:
• Richard Tom
• Vacant
West/Unincorporated Ventura County
(Ojai, Oxnard, Santa Paula, Ventura,
Unincorporated Ventura County)
Appointed (April 2024 Board meeting)
• Sofia Magallon
Proposed new appointment:
• Daniel Mora
South Bay
(Carson, Hermosa Beach, Hawthorne, Manhattan
Beach, Redondo Beach, Rolling Hills Estates)
Proposed re-appointments:
• Cort Cassady
• Diane Wallace
Gateway Cities
(Downey, Hawaiian Gardens, Paramount,
Whittier)
Proposed re-appointments:
• Genaro Bugarin
• Vacant
Westside
(Beverly Hills, Culver City, Malibu, Santa Monica,
West Hollywood)
Proposed re-appointments:
• Cris Gutierrez
• David Haake
Unincorporated LA County
Proposed re-appointments:
• Neil Fromer
• Vacant
ATTACHMENT
1. CAC New Applicant Summary
Agenda Page 14
Board of Directors Item 2
2024 Community Advisory Committee New Applicant Summary Candidate: Daniel Mora Subregion: West/Unincorporated Ventura County Eligible Yes Section 1: Personal Information
A. Home Address: Ojai, CA
B. Occupation: Business Agent, LiUNA
Section 2: Qualifications
A. Experience serving on advisory committees / public commissions / similar bodies:
• I've spent time on various boards, coalitions, and committees in the past, including with non-profit organizations like the League of Latin American Citizens in Oxnard, and the Economic Justice Coalition in Santa Barbara, and I'm currently an Executive Board member of the Laborers International Union of North America, Local 585
B. Experience with outreach or community leadership:
• I have worked on behalf of organizations with various regional partners to help bring renewable energy infrastructure to Ventura County. We are advocating for climate action plans that accelerate the decarbonization of the port of Hueneme, moving it closer to net zero, as well as the economic expansion of green jobs.
C. Experience or expertise in energy field:
• For the last 8 years, I've worked with various partners as a part of the Central Coast Labor Council and the Laborers Union for solutions on environmental sustainability and the workforce solutions needed for the future green economy.
For the last 2 years, I have worked on getting offshore wind energy jobs in Ventura County. We have advocated and worked on bringing offshore wind energy and EV charging stations to the region.
D. Other skills / knowledge / experience to bring to Committee:
• I have over 15 years of experience working with labor unions, nonprofit organizations, businesses, and elected officials regarding various foundational worker issues, rights, economic justice, and environmental sustainability.
Section 3: Additional Information
A. Why you are interested / what you hope to achieve:
• I would like to bring expertise from the workers' viewpoint that will benefit from affordable and sustainable power, along with advocating for the training and expansion of the green workforce that will be building future projects.
B. List other languages / ability to support non-English speaking communities:
• n/a
C. Anything else you would like CPA to know:
• I am excited to potentially help the CPA board move forward in building a future led by clean energy in southern California while helping us grow economically so our community can sustain working families.
Agenda Page 15
Board of Directors Item 2
Section 4: Commitment
A. can make the commitment to the board to attend meetings through the two-year term B. Signed to certify electric holder in CPA service territory and meet eligibility requirements? Yes.
Agenda Page 16
Staff Report – Agenda Item 3
To: Board of Directors
From: Kate Freeman, Strategic Finance Manager
David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Approve Professional Services Agreement with Municipal Capital Markets Group, Inc. (”MCM”) and Legal Services Agreement with Chapman and Cutler, LLP (”Chapman”)
Date: May 2, 2024
RECOMMENDATION
a) Approve Professional Services Agreement with Municipal Capital Markets Group, Inc. (“MCM”) with a per-transaction fee of $281,500 and a total Not-to-Exceed Amount of $844,500, to be paid from Bond Proceeds, for municipal financial advisory, guaranteed investment contract (GIC) broker, and Qualified Independent Representative (QIR) services on one or more future energy prepayment bond transactions.
b) Approve Legal Services Agreement with Chapman and Cutler, LLP (“Chapman”) with a per-transaction fee of $175,000 and a total Not-to-Exceed Amount of $525,000, to be paid from Bond Proceeds, for prepay counsel services on one or more future prepayment bond transactions.
At its April 24th, 2024 meeting, the Finance Committee recommended that the Board select MCM and Chapman to support future energy prepay bond transactions.
Agenda Page 17
Board of Directors Item 3
BACKGROUND
In the first half of 2022, the Board selected Goldman Sachs, MCM, and Chapman to support the issuance of two energy prepayment bonds by California Community Choice Financing Authority (“CCCFA”). The first bond transaction was completed in February 2023 in the par amount of $998.8 million and is expected to provide CPA with energy cost savings of $66 million over the initial eight-year period of the bond. The second bond issuance was completed in June 2023 in the par amount of $958.3 million and is expected to provide CPA with energy cost savings of $32 million over the initial five-year period of the bond. In aggregate, the $98 million of expected savings from the two prepay transactions represent a 13% savings on CPA’s prepaid energy cash flows.
Beginning in Fall 2023, Staff engaged in discussions with a range of parties including tax counsel, municipal financial advisors (“MFAs”), and four Underwriters & Prepaid Suppliers to evaluate prepay transaction structures that CPA may elect to utilize in future prepay transactions. Based on its long-term PPA portfolio and assuming favorable market conditions, staff believe CPA can complete one to three new prepay transactions before the end of Q1 2025.
In March 2024, staff issued solicitations for MFA services and Underwriter & Prepaid Supplier services to help structure and execute one or more future CPA prepay transactions. Staff received proposals from two MFAs and from three Underwriters & Prepaid Suppliers. Staff also spoke with legal service providers regarding the role of Prepay Counsel.
On April 24, 2024, the Finance Committee received an update from Staff regarding proposed future prepay transactions and recommend that the Board of Directors select MCM and Chapman to provide MFA and Prepay Counsel services, respectively.
DISCUSSION
Specialized service providers and legal counsel are required to support CPA through the process of structuring and executing prepay bond transactions. The service providers,
Agenda Page 18
Board of Directors Item 3
including a municipal financial advisor (“MFA”) and prepay counsel (“Prepay Counsel”), will help support the evaluation of potential Underwriters & Prepaid Suppliers and engage in ongoing deliberations with the Underwriter & Prepaid Supplier(s) and their related counsel (including bond and tax counsel) to negotiate and structure one or more prepay transactions. The MFA will provide expert knowledge and input regarding bond market conditions and bond pricing. Staff expect that its proposed MFA and Prepay Counsel will become part of CPA’s team of advisors to support CPA’s interests in the prepay transaction(s).
MCM and Chapman served as the MFA and Prepay Counsel, respectively, in each of CPA’s first two prepay transactions. Staff had a positive experience working with both parties. MCM and Chapman offer industry-leading expertise and each firm has supported the completion of over 60 prepay transactions since 2016.
The proposed contracts with MCM and Chapman are substantially similar to those approved by the Board in April 2023 to support the second prepay transaction. MCM and Chapman have both offered competitive pricing at a discount to the pricing offered on CPA’s first two prepays.
• The Transaction Fee payable to MCM upon the successful completion of each prepay transaction is $200,000, a 30% reduction from the Not-To-Exceed Transaction Fee payable under the services agreement pertaining to CPA’s second prepay transaction. As in the first two agreements with MCM, in the event CPA terminates the Agreement for convenience sixty or fewer days prior to the closing date of the prepay transaction, MCM shall be paid 75% of the Transaction Fee from bond proceeds. In the event the prepay transaction is not successfully closed, no compensation is owed to MCM.
• The total per-transaction compensation to MCM, inclusive of the Report Fee and the GIC broker services Transaction Fee, shall not exceed $281,500. The total compensation payable to MCM under the Agreement shall not exceed $844,500 (reflecting a maximum of three prepay transactions)
Agenda Page 19
Board of Directors Item 3
• The total per-transaction compensation to Chapman shall not exceed $175,000, a
12.5% reduction from the NTE payable under the legal services agreement pertaining to CPA’s second prepay transaction. The total compensation payable to Chapman under the legal services shall not exceed $525,000 (reflecting a maximum of three prepay transactions)
As with the prior prepay transactions, payments to MCM and Chapman are contingent upon the successful completion of each prepay transaction and are payable by CCCFA out of bond proceeds.
NEXT STEPS
Following approval of contracts with MCM and Chapman, Staff will continue due diligence on and negotiations with Underwriters & Prepaid Suppliers to prepare and structure one or more prepay transactions. Subject to the outcome of due diligence and negotiations, Staff anticipates that it will prepare prepay contracts for approval by the Board at its July and/or September 2024 meetings and will request authorization to execute up to three prepay transactions with one or more banks, subject to the achievement of minimum savings and other conditions.
FISCAL IMPACT
No fees are payable by CPA to MCM or Chapman.
ATTACHMENTS
1. Professional Services Agreement with MCM
2. Legal Services Agreement with Chapman
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1 Clean Power Alliance of Southern California
This Professional Services Agreement (this “Agreement”), dated and effective as of May 3, 2024 (the “Effective Date”), is made by and between:
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA (“CPA”), and MUNICIPAL CAPITAL MARKETS GROUP, INC. (“Contractor”).
CPA and Contractor are sometimes collectively referred to herein as the “Parties” and each individually as a “Party.” In consideration of the terms of this Agreement, and for other good and valuable consideration, the Parties make the following acknowledgments and agreements:
RECITALS
WHEREAS, CPA may contract with a provider for municipal advisory services and guaranteed investment contract (“GIC”) brokerage services as a Specialized Service; WHEREAS, CPA selected Contractor because Contractor has the expertise and specialized experience to provide the services to CPA and offered CPA the Best Value;
WHEREAS, Contractor desires to provide the municipal advisory and GIC brokerage Specialized Services to CPA;
WHEREAS, the purpose of this Agreement is to set forth the terms and conditions upon which Contractor shall provide services to CPA; NOW, THEREFORE, it is agreed based on the consideration set forth below by the Parties to this Agreement as follows:
AGREEMENT
1. Definitions
a. The definition of “Confidential Information” is set forth in paragraph 10.b. of this Agreement.
b. “CPA Data” shall mean all data gathered or created by Contractor in the performance of the Services pursuant to this Agreement, including any customer or customer-related data.
c. “CPA Information” shall mean all confidential, proprietary, or sensitive information provided by CPA to Contractor in connection with this Agreement. d. “CPA Materials” shall mean all finished or unfinished content, writing and design of materials but not limited to messaging, design, personalization, or other materials, reports, plans, studies, documents and other writings prepared by
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2 Contractor, its officers, employees and agents for CPA for the performance of, the purpose of, or in the course of implementing this Agreement. e. “CPA Product” includes collectively CPA Data, CPA Information, and CPA Materials.
f. “Services” shall mean the scope of work Contractor provides to CPA as specified in Exhibit A.
2. Exhibits and Attachments
The following exhibits and attachments are attached to this Agreement and incorporated into this Agreement by this reference:
Exhibit A – Scope of Work
Exhibit B – Reserved
Exhibit C – Compensation
Exhibit D – Required Disclosure of Violations of Compliance Policies and Procedures Exhibit E – G-42 Conflicts Disclosure
Should a conflict arise between language in the body of this Agreement and any exhibit or attachment to this Agreement, the language in the body of this Agreement controls, followed by Exhibit A, B, C, D, and E, in that order.
3. Services to be Performed by Contractor
In consideration of the payments set forth in this Agreement and in Exhibit C, Contractor shall perform services for CPA in accordance with the terms, conditions, and specifications set forth in this Agreement and in Exhibit A (“Services”).
4. Compensation
CPA agrees to compensate Contractor as specified in Exhibit C:
a. In consideration of the Services provided by Contractor in accordance with all terms, conditions and specifications set forth in this Agreement and Exhibit A, Contractor shall be paid on a contingency basis and from investment agreement proceeds in the manner specified in Exhibit C. b. Unless otherwise indicated in Exhibit C, Contractor shall invoice CPA monthly to [email protected] for all compensation related to Services performed during the previous month. Payments shall be due within fifteen (15) calendar days after the date the invoice is submitted to CPA at the specified email address. All payments must be made in U.S. dollars.
5. Term
Subject to compliance with all terms and conditions of this Agreement, the term of this Agreement shall extend until the earlier of (i) completion of municipal advisory and GIC brokerage work associated with the issuance of the prepayment bonds, whether in one (1) or more transactions, or (ii) two (2) years from the date of the Agreement (“Term”).
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3 6. Termination
a. Termination for Convenience. CPA may terminate the Agreement in accordance with this paragraph in whole, or from time to time in part, whenever CPA determines, at its sole discretion, that termination is in CPA’s best interests. A termination for convenience, in part or in whole, shall take effect by CPA delivering to Contractor, at least thirty (30) calendar days prior to the effective date of the termination or prior to a Notice of Termination specifying the extent to which performance of the Services under the Agreement is terminated.
If the termination for convenience is partial, Contractor may submit to CPA a request in writing for equitable adjustment of price or prices specified in the Agreement relating to the portion of this Agreement which is not terminated. CPA may, but shall not be required to, agree on any such equitable adjustment.
Nothing contained herein shall limit the right of CPA and Contractor to agree upon amount or amounts to be paid to Contractor for completing the continued portion of the Agreement when the Agreement does not contain an established price for the continued portion. Nothing contained herein shall limit CPA’s rights and remedies at law.
b. Termination for Default. If Contractor fails to provide in any manner the Services required under this Agreement, otherwise fails to comply with the terms of this Agreement, or violates any ordinance, regulation or law which applies to its performance herein and such default continues uncured for thirty (30) calendar days after written notice is given to Contractor, CPA may terminate this Agreement by giving five (5) business days' written notice. If Contractor requires more than thirty (30) calendar days to cure, then CPA may, at its sole discretion, authorize additional time as may reasonably be required to effect such cure provided that Contractor diligently and continuously pursues such cure.
c. Termination for Lack of Third-Party Funding. CPA may terminate this Agreement if funding for this Agreement is reduced or eliminated by a third-party funding source. d. Effect of Termination. Upon the effective date of expiration or termination of this Agreement: (i) Contractor may immediately cease providing Services in its entirety or if a termination to a part of the Agreement, cease providing the Services that have been terminated; (ii) any and all payment obligations of CPA under this Agreement will become due immediately except any equitable adjustment pursuant to Paragraph 5(a); (iii) promptly transfer title and deliver to CPA all CPA Product or any work in progress pursuant to this Agreement; and (iv) each Party will promptly either return or destroy (as directed by the other Party) all Confidential Information of the other Party in its possession as well as any other materials or information of the other Party in its possession.
Upon such expiration or termination, and upon request of CPA, Contractor shall reasonably cooperate with CPA to ensure a prompt and efficient transfer of all
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4 data, documents and other materials to CPA in a manner such as to minimize the impact of expiration or termination on CPA’s customers.
7. Contract Materials
CPA owns all right, title, and interest in and to all CPA Materials and CPA Data. Upon the expiration of this Agreement, or in the event of termination, CPA Materials and all CPA Information, in whatever form and in any state of completion, shall remain the property of CPA and shall be promptly returned to CPA. Upon termination, Contractor may make and retain a copy of such Contract Materials if required by law or pursuant to the Contractor’s reasonable document retention or destruction policies.
8. Payments of Permits/Licenses
Contractor bears responsibility to obtain any license, permit, or approval required for it to provide the Services to be performed under this Agreement at Contractor’s own expense prior to commencement of the Services.
9. No Recourse against Constituent Members
CPA is organized as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) pursuant to the Joint Powers Agreement and is a public entity separate from its constituent members. CPA shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this Agreement. Contractor shall have no rights and shall not make any claims, take any actions or assert any remedies against any of CPA’s constituent members in connection with this Agreement.
10. Confidential Information
a. Duty to Maintain Confidentiality. Contractor agrees that Contractor will hold all Confidential Information in confidence, and will not divulge, disclose, or directly or indirectly use, copy, digest, or summarize, any Confidential Information unless necessary to comply with any applicable law, regulation, or in connection with any court or regulatory proceeding applicable in which case, any disclosure shall be subject to this paragraph 10.c. and d., below
b. Definition of “Confidential Information”. The following constitutes “Confidential Information,” whether oral or written: (a) the terms and conditions of, and proposals and negotiations related to, this Agreement, (b) information, in whatever form, that CPA shares with Contractor in the course and scope of this Agreement, or (c) information that either Contractor stamps or otherwise identifies as “confidential” or “proprietary” before disclosing it to the other.
Confidential Information shall not include: (l) information that is generally available to the public or in the public domain at the time of disclosure; (2) information that becomes publicly known other than through any breach of this Agreement by Contractor or its representatives; (3) information which is subsequently lawfully and in good faith obtained by Contractor or its Representatives from a third party, as shown by documentation sufficient to establish the third party as the source of the Confidential Information; provided
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5 that the disclosure of such information by such third party is not known by Contractor or its Representatives to be in breach of a confidentiality agreement or other similar obligation of confidentiality; (4) information that Contractor or its Representatives develop independently without use of or reference to Confidential Information provided by Contractor; or (5) information that is approved for release in writing by Contractor.
c. California Public Records Act. The Parties acknowledge and agree that the Agreement including but not limited to any communication or information exchanged between the Parties, any deliverable, or work product are subject to the requirements of the California Public Records Act (Government Code Section 6250 et seq.). In order to designate information as confidential, the Disclosing Party must clearly stamp and identify the specific portion of the material designated with the word “Confidential.” The Parties agree not to over-designate material as Confidential Information. Over-designation includes stamping whole agreements, entire pages or series of pages as “Confidential” that clearly contain information that is not Confidential Information. d. Third Party Request for Confidential Information. Upon request or demand of any third person or entity not a Party hereto pursuant to the California Public Records Act for production, inspection and/or copying of Confidential Information (“Requested Confidential Information”), CPA will as soon as practical notify Contractor in writing via email that such request has been made.
CPA will be solely responsible for taking at its sole expense whatever legal steps are necessary to prevent release to the third party of the Confidential Information designated by Contractor. If Contractor takes no such action after receiving the foregoing notice from CPA, CPA shall, at its discretion, be permitted to comply with the third party’s request or demand and is not required to defend against it. If Contractor does take or attempt to take such action, Contractor agrees to indemnify and hold harmless CPA, its officers, directors, employees and agents (“CPA Indemnified Parties”), from any claims, liability, award of attorneys’ fees, or damages, and to defend any action, claim or lawsuit brought against any of CPA Indemnified Parties for Contractor’s attempt to prevent disclosure or CPA’s refusal to disclose any Confidential Information.
11. Insurance
All required insurance coverages shall be substantiated with a certificate of insurance and must be signed by the insurer or its representative evidencing such insurance to CPA within 10 business days after the Agreement is fully executed. The general liability policy shall be endorsed naming Clean Power Alliance of Southern California and its employees, officers and agents as additional insureds. The certificate(s) of insurance and required endorsement shall be furnished to CPA prior to commencement of work and maintained throughout the Term and any Renewal Term. Each certificate shall provide for thirty (30) days advance written notice to CPA of any cancellation or reduction in coverage. Said policies shall remain in force through the life of this Agreement and shall be payable on a per occurrence basis only, except those required by paragraph (d) below which may be provided on a claims-made basis consistent with the criteria noted therein.
Nothing herein shall be construed as a limitation on Contractor’s obligation under paragraph 12 of this Agreement to indemnify, defend, and hold CPA harmless from any
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6 and all liabilities arising from the Contractor’s negligence, recklessness or willful misconduct in the performance of this Agreement. CPA agrees to timely notify the Contractor of any negligence claim.
Failure to provide and maintain the insurance required by this Agreement will constitute a material breach of the Agreement. In addition to any other available remedies, CPA may suspend payment to the Contractor for any services provided during any time that insurance was not in effect and until such time as the Contractor provides adequate evidence that Contractor has obtained the required coverage. a. General Liability
The Contractor shall maintain a commercial general liability insurance policy in an amount of no less than one million ($1,000,000.00) with a two million dollar ($2,000,000.00) aggregate limit. CPA shall be named as an additional insured on the commercial general liability policy and the Certificate of Insurance shall include an additional endorsement page.
b. Auto Liability (Paragraph 11.b Not Applicable)
Where the services to be provided under this Agreement involve or require the use of any type of vehicle by Contractor in order to perform said services, Contractor shall also provide comprehensive business or commercial automobile liability coverage including non-owned and hired automobile liability in the amount of one million dollars combined single limit ($1,000,000.00).
c. Workers’ Compensation
The Contractor acknowledges the State of California requires every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of the Labor Code. If Contractor has employees, a copy of the certificate evidencing such insurance or a copy of the Certificate of Consent to Self-Insure shall be provided to CPA prior to commencement of work. d. Professional Liability Insurance
Coverages required by this paragraph may be provided on a claims-made basis with a “Retroactive Date” either prior to the date of the Agreement or the beginning of the contract work. If the policy is on a claims-made basis, coverage must extend to a minimum of twelve (12) months beyond completion of contract work. If coverage is cancelled or non-renewed, and not replaced with another claims made policy form with a “retroactive date” prior to the Agreement effective date, the Contractor must purchase “extended reporting” coverage for a minimum of twelve (12) months after completion of contract work.
Contractor shall maintain a policy limit of not less than $1,000,000.00 per incident. If the deductible or self-insured retention amount exceeds $100,000.00, CPA may ask for evidence that Contractor has segregated amounts in a special insurance reserve fund or Contractor’s general insurance reserves are adequate to provide the necessary coverage and CPA may conclusively rely thereon.
Contractor shall be responsible for initiating, maintaining and supervising all safety precautions and programs in connection with the performance of the Agreement.
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7 Contractor shall monitor the safety of the job site(s) during the project to comply with all applicable federal, state, and local laws, and to follow safe work practices.
12. Indemnification
Contractor agrees to indemnify, defend, and hold harmless CPA, its employees, officers, and agents, from and against, and shall assume full responsibility for payment of all wages, state or federal payroll, social security, income or self-employment taxes, with respect to Contractor’s performance of this Agreement. Contractor further agrees to indemnify, and hold harmless CPA from and against any and all third- party claims, liabilities, penalties, forfeitures, suits, costs and expenses incident thereto (including costs of defense, settlement, and reasonable attorney’s fees), which CPA may hereafter incur, become responsible for, or pay out, as a result of death or bodily injuries to any person, destruction or physical damage to tangible property, or any violation of governmental laws, regulations or orders, to the extent caused by Contractor’s negligent acts, errors or omissions, or the negligent acts, errors or omissions of Contractor’s employees, agents, or subcontractors while in the performance of the terms and conditions of the Agreement, except for such loss or damage arising from the sole negligence or willful misconduct of CPA, elected and appointed officers, employees, agents and volunteers.
13. Independent Contractor
a. Contractor acknowledges that Contractor, its officers, employees, or agents will not be deemed to be an employee of CPA for any purpose whatsoever, including, but not limited to: (i) eligibility for inclusion in any retirement or pension plan that may be provided to employees of Contractor; (ii) sick pay; (iii) paid non-working holidays; (iv) paid vacations or personal leave days; (v) participation in any plan or program offering life, accident, or health insurance for employees of Contractor; (vi) participation in any medical reimbursement plan; or (vii) any other fringe benefit plan that may be provided for employees of Contractor.
b. Contractor declares that Contractor will comply with all federal, state, and local laws regarding registrations, authorizations, reports, business permits, and licenses that may be required to carry out the work to be performed under this Agreement. Contractor agrees to provide CPA with copies of any registrations or filings made in connection with the work to be performed under this Agreement.
14. Compliance with Applicable Laws
The Contractor shall comply with any and all applicable federal, state and local laws and resolutions affecting Services covered by this Agreement. Specifically, Contractor is a registered Municipal Advisor as defined in Section 15B of the Securities Exchange Act of 1934 and as amended by Section 975 of the Dodd Frank Wall Street Reform and Consumer Protection Act.
For purposes of the Services, Contractor affirms that it is registered as a Municipal Advisor in good standing with both the Securities and Exchange Commission (registration # 8-53038) and the Municipal Securities Rulemaking Board (registration # A-5738).
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8 Contractor also agrees to comply with the industry rules and regulations related to investment contract fees including the IRS Safe Harbor regulations (26 CFR part 1 section 148 of the Internal Revenue Code).
Contractor further agrees to maintain written compliance policies, written supervisory procedures, systems, processes, or guidelines reasonably designed to achieve compliance with industry best practice and professional standards, applicable laws, regulations, rules, or other legal requirements (“Compliance Policies and Procedures”).
Contractor acknowledges and agrees that any failure by Contractor’s personnel, including but not limited to, employees, traders, or agents to comply with Compliance Policies and Procedures shall constitute cause for disciplinary action by Contractor management, including written reprimands, docking of wages, loss of bonus eligibility, suspension, and/or termination of employment.
Contractor shall report to CPA any violation by Contractor personnel, employees, traders, or agents of Compliance Policies and Procedures within 10 business days of the identification of such violation together with a description of the actions taken by Contractor to identify and correct the violation.
15. Nondiscriminatory Employment
Contractor and/or any permitted subcontractor, shall not unlawfully discriminate against any individual based on race, color, religion, nationality, sex, sexual orientation, age, protected veteran status, or condition of disability. Contractor and/or any permitted subcontractor understands and agrees that Contractor and/or any permitted subcontractor is bound by and will comply with the nondiscrimination mandates of all federal, state and local statutes, regulations and ordinances.
16. Work Product.
All finished and unfinished reports, plans, studies, documents and other writings prepared by and for Contractor, its officers, employees and agents in the course of implementing this Agreement shall become the sole property of CPA upon payment to Contractor for such work. CPA shall have the exclusive right to use such materials in its sole discretion without further compensation to Contractor or to any other party. Contractor shall, at CPA’s expense, provide such reports, plans, studies, documents and writings to CPA or any party CPA may designate, upon written request. Contractor may keep file reference copies of all documents prepared for CPA.
17. Notices
Any notice, request, demand, or other communication required or permitted under this Agreement shall be deemed to be properly given when both: (1) transmitted via email to the email address listed below; and (2) sent to the physical address listed below by either being deposited in the United States mail, postage prepaid, or deposited for overnight delivery, charges prepaid, with an established overnight courier that provides a tracking number showing confirmation of receipt.
In the case of CPA, to:
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9 Name/Title: Theodore Bardacke, Chief Executive Officer Address: 801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Telephone: (213) 269-5890
Email: [email protected]
In the case of Contractor, to:
Name/Title: John E. Norman, Managing Director
Address: 8400 E. Prentice Ave., Suite 500
Greenwood Village, CO 80011
Telephone: (303) 779-4900
Email: [email protected]
18. Assignment
Neither this Agreement nor any of the Parties’ rights or obligations hereunder may be transferred or assigned without the prior written consent of the other Party. Subject to the preceding sentence, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.
19. Subcontracting
Contractor may not subcontract Services to be performed under this Agreement without the prior written consent of CPA. If the CPA’s written consent to a subcontract is not obtained, Contractor acknowledges and agrees that CPA will not be responsible for any fees or expenses claimed by such subcontractor.
20. Retention of Records and Audit Provision
Contractor and any subcontractors authorized by the terms of this Agreement shall keep and maintain on a current basis full and complete documentation and accounting records, employees’ time sheets, and correspondence pertaining to this Agreement. Such records shall include, but not be limited to, documents supporting all income and all expenditures.
CPA shall have the right, during regular business hours, to review and audit all records relating to this Agreement during the Agreement period and for at least five (5) years from the date of the completion or termination of this Agreement. Any review or audit may be conducted on Contractor’s premises, or, at CPA’s option, Contractor shall provide all records within a maximum of fifteen (15) days upon receipt of written notice from CPA.
Contractor shall refund any monies erroneously charged. Contractor shall have an opportunity to review and respond to or refute any report or summary of audit findings and shall promptly refund any overpayments made by CPAbased on undisputed audit findings.
21. Conflict of Interest
a. No CPA employee whose position with the CPA enables such employee to influence the award of this Agreement or any competing Agreement, and no spouse or economic dependent of such employee, shall be employed in any capacity by the contractor or have any other direct or indirect financial interest in this Agreement. No officer or employee of the Contractor who may financially
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10 benefit from the performance of work hereunder shall in any way participate in the CPA’s approval, or ongoing evaluation, of such work, or in any way attempt to unlawfully influence the CPA’s approval or ongoing evaluation of such work. b. The Contractor shall comply with all conflict of interest laws, ordinances, and regulations now in effect or hereafter to be enacted during the term of this Agreement as well as Exhibit E during the term of this Agreement and any extensions thereto. The Contractor warrants that it is not now aware of any facts that create a conflict of interest. If the Contractor hereafter becomes aware of any facts that might reasonably be expected to create a conflict of interest, it shall immediately make full written disclosure of such facts to CPA. Full written disclosure shall include, but is not limited to, identification of all persons implicated and a complete description of all relevant circumstances. Failure to comply with the provisions of this paragraph, including Exhibit E shall be a material breach of this Agreement.
c. While the payment of Contractor’s fees for the Services by the winning bidder(s) creates the appearance of a conflict of interest on Contractor’s part, we note that (a) this is standard practice for competitively bid investments of bond proceeds, (b) the bid specifications provided to prospective bidders will clearly identify that Contractor is acting only as Municipal Advisor to CPA, and (c) in no event will the payment of Contractor’s fees by the winning bidder(s) modify, reduce or affect Contractor’s fiduciary duty to CPA.
22. Publicity
Contractor shall not issue a press release or any public statement regarding the Agreement, Services contemplated by this Agreement, or any other related transaction unless CPA has agreed in writing the contents of any such public statement.
23. Governing Law, Jurisdiction, and Venue
This Agreement shall be governed by, and construed in accordance with, the laws of the State of California. The Contractor agrees and consents to the exclusive jurisdiction of the courts of the State of California for all purposes regarding this Agreement and further agrees and consents that venue of any action brought hereunder shall be exclusively in the County of Los Angeles.
24. Amendments
None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Parties.
25. Severability
Should any provision of this Agreement be held invalid or unenforceable by a court of competent jurisdiction, such invalidity will not invalidate the whole of this Agreement, but rather, the remainder of the Agreement which can be given effect without the invalid provisions, will continue in full force and effect and will in no way be impaired or invalidated.
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11 26. Complete Agreement
This Agreement constitutes the entire Agreement between the parties. No modification or amendment shall be valid unless made in writing and signed by each party. Failure of either party to enforce any provision or provisions of this Agreement will not waive any enforcement of any continuing breach of the same provision or provisions or any breach of any provision or provisions of this Agreement.
27. Counterparts
This Agreement may be executed in one or more counterparts, including facsimile(s), emails, or electronic signatures, each of which shall be deemed an original and all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.
Municipal Capital Markets Group, Inc. Clean Power Alliance of Southern California By: John E. Norman By: Theodore Bardacke
Title: Managing Director Title: Chief Executive Officer
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12 Exhibit A – Scope of Work
PROJECT TASKS AND DELIVERABLES
Contractor shall be responsible for providing:
• A full range of municipal advisory services necessary for CPA to evaluate, structure, and execute one or more prepay transactions.
• Guaranteed investment contract (“GIC”) brokerage services in order to solicit bids from investment agreement providers and investment agreements that, in each case, meet the requirements of the Trust Indenture under which the Bonds are issued and the related transaction documents.
Contractor will not bid on nor offer to provide any investment agreement or other investment.
Contractor must account for the following tasks and all tasks must be completed according to the timelines set forth below:
Municipal Advisory Services:
Task #1: Project Management Support
Provide project management support, including:
a. Review and comment on all documentation through attendance (in person or as necessary by virtual meetings) at all working group/document sessions with CPA’s staff, consultants, and other professionals.
Deliverables for Task #1:
• Ongoing coordination with CPA staff to plan and manage timely completion of activities within the Scope of Work detailed in Exhibit A.
Timeline for Task #1:
• Ongoing tasks to be completed by Contractor over the Term of the engagement, with anticipated end by Q2 2025.
Task #2: Prepay Transaction Management, Technical Support and Analysis Provide the following services to support each prepay bond transaction:
• Conduct financial modeling/analytics and related consulting, as directed by CPA. • Provide independent pricing and structuring recommendations for the bonds. • Analyze and provide recommendations concerning the acceptance of any underwriting offer.
• Analyze and provide recommendations concerning the acceptance of any third-party funding recipient.
• Review and comment on supplemental investor material (the “investor roadshow”) supporting the marketing of prepay bonds.
• Monitor order flow during the retail and institutional order periods. • Collect and consolidate all anticipated costs of issuance for inclusion in the prepay bond sizing.
• Provide an exhibit to the tax certificate supporting the reasonable expectation that
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13 the prepay bonds will run to term assuming at least one successful repricing (the “MCM Tax Certificate Exhibit”).
• Assist in RFP for reserve fund and debt service fund investment. • Verbal recommendation of acceptance of any commodity swap pricing to be supplemented by transaction report.
• Verbal recommendation of acceptance of GIC award to be supplemented by transaction report.
• Verbal recommendation of acceptance of any interest rate swap pricing to be supplemented by transaction report.
• Verbal recommendation of acceptance of funding recipient selection. • Review all prepay documentation. Identify risks to CPA and recommend risk mitigants.
Deliverables for Task #2:
• For each prepay transaction, transaction modeling as requested by CPA and in conjunction with any modeling by the underwriter.
• For each prepay transaction, verbal recommendation of acceptance of underwriting offer, commercial terms of prepay contracts and agreements, funding recipient selection, commodity / interest rate swap pricing, and GIC award to be supplemented by the transaction report.
• For each prepay transaction, the MCM Tax Certificate Exhibit.
Timeline for Task #2:
• For each prepay transaction, verbal recommendation of acceptance of underwriting offer, commodity / interest rate swap pricing, and GIC award provided on the bond pricing date.
• For each prepay transaction, delivery of the MCM Tax Certificate Exhibit at closing. • For each prepay transaction, estimation of Costs of Issuance throughout and finalized on bond pricing date.
Task #3: Swap/Hedge Advisory Services
Provide the following swap/hedge advisory services as needed to support each prepay bond transaction:
• Serve as designated qualified independent representative (“QIR”) in the provision of general swap advisory services related to any swap-related communication, interaction, or other discussion (“Swap Communication”) between conduit issuer and swap dealers (as defined by the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”).
• Analyze and model alternative hedge structures and provide price indications. • Review and comment on all hedge documentation and business terms. • Coordinate with prepaid supplier on behalf of CPA in counterparty selection. • Verbal recommendation of acceptance of swap pricing to be supplemented by transaction report.
• Negotiate the pricing terms and structure with the counterparty(s). • Review and comment on swap documents in conjunction with CPA staff and counsel.
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14 Deliverables for Task #3:
• For each prepay transaction, verbal recommendation of acceptance of swap pricing to be supplemented by transaction report.
• Successful closing of swap transaction for each prepay transaction.
Timeline for Task #3:
• Deadline for completion of swap transaction(s) will be determined as needed.
Task #4: Post-Pricing Activities
Provide the following post-pricing services for each prepay transaction:
• Coordinate post-closing activities to ensure the timing and accurate transfer of funds, including distribution of the flow of funds memorandum prepared by bond underwriter. • Collect invoices for all costs of issuance and prepare Costs of Issuance Distribution and Wire Instruction for use by bond trustee.
• Prepare a transaction report summarizing the executed prepay transaction, which may include fairness opinions, fair market value certifications, and analyses and evaluations of one or more aspects of the transaction including the MCM Tax Certification, commodity swap and any interest rate swap pricing, bond pricing, GIC pricing, supplier’s initial term discount factor, Termination Payment Schedule sufficiency, etc.
Deliverables for Task #4:
• For each prepay transaction, a Transaction report documenting the executed transaction.
Timeline for Task #4:
• For each prepay transaction, a Transaction report to be provided within thirty (30) days following the close of the transaction.
Communications with and Assistance to Issuer:
CPA and Contractor acknowledge and agree that CPA may determine to have bonds issued on its behalf by a potential conduit issuer(s) (“Issuer”). In the course of providing services under the Agreement:
a. It may be necessary or desirable for Contractor to communicate with Issuer regarding certain limited matters with respect to the bonds.
b. It may be necessary or desirable for Contractor to provide assistance to Issuer with respect to certain administrative matters in connection with the bonds and the transaction documents (such as assistance with on-boarding and “know your customer” paperwork). c. The sole purpose of such communications and assistance shall be to implement CPA’s directions to Contractor such that CPA and Issuer may act in a coordinated manner. d. All such communications and assistance shall be non-advisory and shall be in furtherance of, and shall be deemed not to conflict with, the municipal advisory services provided by Contractor to CPA, and shall not cause Contractor to be deemed to be a municipal advisor to Issuer.
GIC Brokerage Services:
Task #5: Conduct Solicitation for Investment Provider
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15 Provide the following services to support each prepay bond transaction:
• Identify the types of investment agreements and those investment agreement providers that meet the requirements of the Trust Indenture(s) and the related transaction documents.
• Review certain transaction documents for the structured prepayment(s) being financed by the Bonds—the Official Statement, the Trust Indenture, and the Clean Energy Purchase Contract—to inform preparation of the bid specifications. • Prepare bid specifications (“RFQ”) and review with the working group(s). • Identify appropriate bidders.
• Send the RFQ to bidders and contact bidders to discuss investment(s) and answer any questions.
• Review bidder conditions and requirements and discuss as appropriate with CPA, the Issuer, Financial Advisor, and Bond Counsel.
• Accept bids at specified time via e-mail.
Deliverables for Task #5:
• For each prepay transaction, completion and distribution of RFQ package to candidate investment agreement providers and investment agreements.
Timeline for Task #5:
• For each prepay transaction, distribution of RFQ to bidders at least two (2) days prior to Bond Pricing Date.
Task #6: Support Evaluation and Selection of Investment Provider Provide the following services to support each prepay bond transaction:
• Prepare bid results and discuss the results with the CPA, Issuer, Financial Advisor, and Bond Counsel to determine which bid(s) best meet the investment objectives for the invested accounts. Upon Issuer approval, notify the winning bidder(s).
Deliverables for Task #6:
• For each prepay transaction, an evaluation of bid results with supporting memorandum.
Timeline for Task #6:
• For each prepay transaction, an evaluation of investment provider bids by the Bond Pricing Date.
• For each prepay transaction, the delivery of supporting memorandum to CPA by the day after the Bond Pricing Date.
Task #7: Oversee Closing Process
Provide the following services to support each prepay bond transaction:
• Prepare GIC confirmation letter for Issuer.
• Send authorizing documents to winning bidder(s) and associated counsel. • Monitor document preparation (investment agreements, any guarantees, closing certificates, and opinions) prepared by the investment agreement provider(s) from first draft to close.
• Confirm that investment documents comply with bid specifications. • Review and comment on investment contract documents with Issuer, bond counsel, tax counsel, and other working group members, as appropriate.
Agenda Page 35
16 • Act as liaison between working group members and investment provider’s counsel. • Confirm final documents received and funds transferred to investment provider.
Deliverables for Task #7:
• For each prepay transaction, execution of investment contract final documents and additional documents, as applicable.
• For each prepay transaction, a written confirmation of receipt of final documents and funds transferred to investment provider(s).
Timeline for Task #7:
• For each prepay transaction, execution of all documents by Bond Settlement Date (approximately 1-2 weeks following the Bond Pricing Date). • For each prepay transaction, a written confirmation of receipt of final documents and funds transferred to investment provider(s) by Bond Settlement Date.
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17 Exhibit B – [Intentionally Left Blank]
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18 Exhibit C – Compensation
Contractor’s compensation for the Services (the “Transaction Fees”) shall be paid on a contingency basis as specified below. No compensation shall be payable to Contractor until after the Services are completed.
Municipal Advisory Services (Tasks 1-4):
The Transaction Fee for the municipal advisory services set forth in Tasks 1-4 of Exhibit A (whether by an offering or placement of debt obligations, a bank loan, or other financing arrangement), payable at closing of each transaction, is a flat fee of Two Hundred Thousand Dollars ($200,000), regardless of transaction size or timing.
In addition to the Transaction Fee, Contractor shall be paid a fee for the written report set forth in Exhibit A, Task 4 equal to Fifty Thousand Dollars ($50,000) (“Report Fee”). The written report must be submitted to CPA within thirty (30) days of the closing date of each prepay transaction as set forth in Exhibit A, Task 4, or the Report Fee will be forfeited. The Report Fee shall not be invoiced or paid until the written report is submitted to CPA.
For each prepay transaction, the total of the Transaction Fee and Report Fee shall not exceed Two Hundred Fifty Thousand Dollars ($250,000).
CPA reserves the right to terminate the Services prior to bond issuance. If CPA terminates the Agreement, for convenience or for default, more than sixty (60) days prior to the closing date of the prepayment financing, CPA shall have no obligation to pay the Transaction Fee or the Report Fee but shall be obligated to indemnify Contractor against certain liabilities.
If CPA terminates the Agreement for convenience, sixty (60) or fewer days prior to the closing date of the prepayment financing, Contractor shall be paid on the closing date of the prepayment financing seventy-five percent (75%) of the Transaction Fee from bond proceeds.
If Contractor terminates the Agreement, no Transaction Fee or Report Fee shall be payable by CPA.
Contractor shall track any requested compensation with sufficient detail and in a manner that may be audited by CPA.
Any and all proceeds disbursed as a result of bond issuance(s) resulting from the Services, less any compensation paid to Contractor, are the sole property of the bond trust estate(s).
GIC Brokerage Services (Tasks 5-7):
In the event that CPA decides, in its sole discretion, to proceed with an investment contract and the investment transaction (collectively “Investment Transaction”) successfully closes, the Transaction Fee for the GIC brokerage services as set forth in Tasks 5-7 of Exhibit A shall be a flat fee of Thirty-One Thousand Five Hundred Dollars ($31,500.00). The Transaction Fee for GIC brokerage services is payable at closing of each Investment Transaction and shall be paid exclusively from the proceeds of the Investment Transaction by the selected investment provider(s).
A description of fees paid must be included in the final documentation.
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19 Up To and Not to Exceed Figure:
The Transaction Fees for all Services and Deliverables under this Agreement shall be up to and not to exceed the “Maximum Amount” below, which is the combined total of the Transaction Fees for the municipal advisory services and GIC brokerage services for up to three (3) transactions.
Maximum Amount Up to $844,500
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20 Exhibit D – Required Disclosure of Violations of Compliance Policies and Procedures
MCM takes seriously its legal and compliance obligations and maintains written compliance policies, written supervisory procedures, systems, processes, or guidelines reasonably designed to achieve compliance with industry best practice and professional standards, applicable laws, regulations, rules, or other legal requirements (“Compliance Policies and Procedures”).
Any failure by a trader or other MCM personnel to follow Compliance Policies and Procedures will be cause for disciplinary action by MCM management, including written reprimands, docking of wages, loss of bonus eligibility, suspension, and/or termination of employment.
MCM shall report to CPA any violation by MCM staff of Compliance Policies and Procedures within 10 business days of the identification of such violation together with a description of the actions taken by MCM to identify and correct the violation.
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21 Exhibit E – G-42 Disclosure
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20 March 29, 2024
Clean Power Alliance
P.O. Box 13696
Los Angeles, CA 90013
RE: G-42 Disclosure
Our firm, Municipal Capital Markets Group, Inc. (“MCM”) is in an industry that is very tightly regulated.
We are registered and in good standing with the Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB). MCM is a member of the Financial Industry Regulatory Association (FINRA) and the Security Investors Protection Corporation (SIPC). The SEC and MSRB write the rules while the SEC and FINRA oversee firms like ours for compliance. The rules of the MSRB and SEC require us to provide this regulatory disclosure statement to you, even though many elements may not be applicable to our particular transaction.
This Disclosure Statement is provided by MCM to you as our client (“Client”) under MSRB Rule G-42 in connection with our Financial Advisory Agreement dated January 1, 2018, and as amended by the First Amendment dated December 27, 2023 (“the FA Agreement” or “Agreement”). This Disclosure Statement provides the required information regarding any possible conflicts of interest and/or legal or disciplinary events of our firm required to be disclosed to you pursuant to MSRB Rule G-42(b) and (c)(ii).
Disclosures of Conflicts of Interest
MSRB Rule G-42 requires that MCM provide you with the following disclosures of material conflicts of interest and of information regarding certain legal events and disciplinary history.
Material Conflicts of Interest – MCM makes the disclosures set forth below with respect to material conflicts of interest in connection with the Scope of Services under the Agreement, together with explanations of how MCM addresses or intends to manage or mitigate any conflicts.
General Mitigations – MCM mitigates such conflicts through our adherence to our fiduciary duty to Client, which includes a duty of loyalty to the Client in performing all municipal advisory activities for the Client.
This duty of loyalty obligates MCM to deal honestly and with the utmost good faith with Client and to act in
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21 Client’s best interest without regard to MCM’s financial or other interests. In addition, because MCM is a municipal bond broker-dealer, our success is not dependent on maximizing short-term revenue generated from individual recommendations to MCM’s advisory clients. Instead MCM is dependent on long-term profitably built on a foundation of integrity, quality of service and strict adherence to its fiduciary duty.
MCM’s municipal advisory supervisory structure, including our long-standing and comprehensive broker-dealer supervisory processes and practices, provide strong safeguards against individual representatives of MCM potentially departing from their regulatory duties due to personal interests. The disclosures below describe, as applicable, any additional mitigations that may be relevant with respect to any specific conflict disclosed below.
Disclosure Item MCM reply
in this deal.
I. Affiliate Conflict. MCM is required to advise you of any affiliates it has that may cause a conflict in our ability to serve you. We have NO AFFILIATES.
None
II. Payments to Be Retained. MCM is required to advise you if MCM has paid a municipal advisor registered under the Securities Exchange Act (the “Solicitor”), to solicit Client to obtain or retain Client’s Municipal Advisory business under this Agreement.
None
III. Payments From Third Parties for Recommendations. MCM is required to advise you if MCM has received a payment from a Third-Party to recommend the Recommended Third-Party to Client. We have NOT received such payment.
None
IV. Fee-Splitting Arrangements. MCM is required to advise you of fee-splitting arrangements.
None.
V. Compensation-Based Conflicts. MCM is required to advise you of any compensation-based conflicts.
V. Reply. The fees due under the FA Agreement will be based on the size of the Issue and the payment of such fees shall be contingent upon the delivery of the Issue. While this form of compensation is customary in the municipal securities market, this may present a conflict because it could create an incentive for MCM to recommend unnecessary financings or financings that are disadvantageous to Client, or to advise Client to increase the size of the issue. This conflict of interest is mitigated by the general mitigations described above.
For additional services where a fixed fee is agreed upon, the amount is usually based upon an analysis by Client and MCM of, among other things, the expected duration and complexity of the transaction and the Scope of Services to be performed by MCM. This form of compensation presents a potential conflict of interest because, if the transaction requires more work than originally contemplated, MCM may suffer a loss. Thus, MCM may recommend less time-consuming alternatives, or fail to do a thorough analysis of alternatives. This conflict of interest is mitigated by the general mitigations described above.
Separately, where an hourly fee structure is agreed upon, the aggregate amount equals the number of hours worked by MCM personnel times an agreed-upon hourly billing rate.
This form of compensation presents a potential conflict of interest if Client and MCM do not agree on a reasonable maximum amount at the outset of the engagement, because MCM does not have a financial incentive to recommend alternatives that would result in fewer hours worked. This conflict of interest is mitigated by the general mitigations described above.
Yes. See
Reply at
Left.
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22 Where the fee is contingent on completing a financial transaction or upon some other event, MCM may suffer a loss if the transaction is not completed, or the specified event does not occur. Thus, MCM may recommend completing a transaction or continuing through some other event. This conflict of interest is also mitigated by the general mitigation described above.
VI. Other MCM or Underwriting Relationships.
VI. Reply. MCM serves a wide variety of other clients that may, from time to time, have interests that could have a direct or indirect impact on our Client’s interests. For example, MCM serves as municipal advisor to other municipal advisory clients and, in such cases, owes a fiduciary duty to such clients just as it does to Client under this Agreement. Other clients may, from time to time and, depending on the specific circumstances, have competing interests, such as accessing the new issue market with the most advantageous timing and with limited competition at the time of the offering.
In other cases, as a broker-dealer that engages in underwritings of new issuances of municipal securities by other municipal entities, the interest of MCM in achieving a successful and profitable underwriting for its municipal entity underwriting clients could constitute a conflict of interest if as above, the municipal entities that MCM serves as underwriter or municipal advisor have competing interests in seeking to access the new issue market with the most advantageous timing and with limited competition at the time of the offering.
None of these other engagements or relationships would impair MCM’s ability to fulfill its regulatory duties to Client.
At any given time, a particular municipal advisor representative of MCM may be involved in multiple transactions in different capacities. Accordingly, these municipal advisor representatives have a conflict of interest in allocating their time and activity between clients. To mitigate this conflict, MCM has implemented policies and procedures under which supervisors must consider the relevant municipal advisor representative’s ability to devote sufficient time and attention to a transaction contemplated by a proposed municipal advisory agreement, in light of the representative’s other pending transactions, in determining whether to approve the agreement.
Yes. See
Reply at left.
VII. Broker-Dealer Business.
VII. Reply. MCM is a broker-dealer that engages in a broad range of securities-related activities to service its clients, in addition to serving as a municipal advisor or underwriter.
Such securities-related activities, which may include but are not limited to the buying and selling of new issue securities, including securities of yours, may be undertaken on behalf of, or as counterparty to you, your personnel, and current or potential investors in your securities. Any potential conflict arising from MCM effecting or otherwise assisting such other clients in connection with such transactions is mitigated by means of such activities being engaged in on customary terms through units of MCM that operate independently from MCM’s municipal advisory business, thereby reducing the likelihood that the interests of such other clients would have an impact on the services provided by MCM to Client under this Agreement.
Yes. See
Reply at left.
VIII. Secondary Market Transactions in Client’s Securities.
VIII. Reply. MCM, in connection with its sales and trading activities, may take a principal position in securities, including your securities, and therefore MCM could have interests in conflict with yours with respect to the value of your securities while held in inventory Yes. See
Reply at left.
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23 and the levels of mark-up or mark-down that may be available in connection with purchases and sales thereof. In particular, MCM may submit orders for and acquire your securities issued under the Agreement from members of the underwriting syndicate, either for its own account or for the accounts of its customers. This activity may result in a conflict of interest with you in that it could create the incentive for MCM to make recommendations that could result in more advantageous pricing of your bond in the marketplace. Any such conflict is mitigated by means of such activities being engaged in on customary terms through departments of MCM that operate independently from MCM’s municipal advisory business, thereby reducing the likelihood that such investment activities would have an impact on the services provided by MCM to Client under this Agreement.
IX. MCM Also Advising Conduit Borrower. MCM is required to advise you if MCM is also serving as an advisor to a conduit borrower with respect to an Issue under this Agreement.
None.
PART B – Disclosures of Information Regarding Legal Events and Disciplinary History
I. Material Legal or Disciplinary Event. MSRB Rule G-42 requires that municipal advisors provide to their clients certain disclosures of legal or disciplinary events material to its client’s evaluation of the municipal advisor or the integrity of the municipal advisor’s management or advisory personnel.
Reply. The only disciplinary action taken by a regulatory agency against MCM since its founding in 1989 was on March 24, 2016 when the U.S. Securities and Exchange Commission (the “SEC”) issued an order against MCM in connection with its Municipalities Continuing Disclosure Cooperation Initiative (the “MCDC” issue), described in more detail below.
Yes. See
Reply at left.
* * * * *
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24 MCDC Initiative
On March 24, 2016, the U.S. Securities and Exchange Commission (the “SEC”) issued an order against MCM pursuant to Rule 19h-1 of the Securities Act of 1934 (the “Securities Act”). This order was issued pursuant to a settlement between MCM and the SEC and was part of the SEC’s MCDC Initiative, a voluntary initiative in which the SEC encouraged municipal issuers and underwriters to self-report violations involving materially inaccurate statements relating to prior compliance with the continuing disclosure obligations specified in Rule 15c2-12 under the Exchange Act.
The SEC’s order contains findings that MCM violated Section 17(a)(2) of the Securities Act by failing to form a reasonable basis through adequate due diligence to believe the truthfulness of certain written statements made to MCM by an issuer of municipal securities regarding its compliance with previous continuing disclosure undertakings pursuant to Rule 15c2-12.
Without admitting or denying the findings in the SEC’s order, except as to the SEC’s jurisdiction over it and the subject matter of the order, MCM consented to the entry of the order. The order required that MCM comply with certain undertakings, including that it hire an independent consultant to review its policies and procedures relating to municipal securities underwriting due diligence, and to pay a civil penalty of $60,000.
MCM has complied with the undertakings and paid the penalty. Noteworthy of this event and according to the industry newspaper, the Bond Buyer, is that over 90% of Municipal Bond broker-dealers in the U.S. paid civil penalties to the SEC and entered into similar agreements. It was and is the opinion of MCM management that this last fact illustrates this was an unfair and poorly communicated transfer of responsibility by the SEC.
II. How to Access Form MA and Form MA-I Filings. MCM’s most recent Form MA and each most recent Form MA-I filed with the SEC are available on the SEC’s EDGAR system at https://www.sec.gov/edgar/browse/?CIK=1129526. The SEC permits certain items of information required on Form MA or MA-I to be provided by reference to such required information already filed by MCM in its capacity as a broker-dealer on Form BD or Form U4. Information provided by MCM on Form BD or Form U4 is publicly accessible through reports generated by BrokerCheck at http://brokercheck.finra.org. For purposes of accessing such BrokerCheck reports, MCM’s CRD number is 107353. Information is also available on the MCM’s web site at www.municapital.com.
PART C – Future Supplemental Disclosures
As required by MSRB Rule G-42, this Disclosure Statement may be supplemented or amended, from time to time as needed, to reflect changed circumstances resulting in new conflicts of interest or changes in the conflicts of interest described above, or to provide updated information with regard to any legal or disciplinary events of MCM. MCM will provide Client with any such supplement or amendment as it becomes available throughout the term of the Agreement.
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PROFESSIONAL LEGAL SERVICES AGREEMENT
BY AND BETWEEN
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
AND
CHAPMAN AND CUTLER LLP
May 3, 2024
(Date of Agreement)
Firm Address: 1270 Avenue of the Americas, 30th Fl, New York, New York, 10020 Firm Tax ID No.: 36-2153731
Firm Telephone: 212-655-6000
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i
TABLE OF CONTENTS
AGREEMENT FOR PROFESSIONAL LEGAL SERVICES
RECITALS.................................................................................................................................. 1 I. Term and Termination...................................................................................................... 1 A. Period of Performance .................................................................................................. 1 B. Termination and/or Suspension .................................................................................... 1 II. FIRM’s Services and Responsibilities.............................................................................. 2 A. Supervising Attorney .................................................................................................... 2 B. Legal Representation .................................................................................................... 3 III. CPA’s Duties and Responsibilities................................................................................... 3 A. Supervising Attorney .................................................................................................... 3 B. Duties and Responsibilities........................................................................................... 3 IV. Compensation ............................................................................................................... 4 A. CPA Counsel Billing Requirements .............................................................................. 4 B. Fees............................................................................................................................... 4 C. Expenses ....................................................................................................................... 4 V. Invoices and Payments to FIRM ..................................................................................... 5 A. Billing (E-Billing)......................................................................................................... 5 B. E-Bills........................................................................................................................... 5 C. Payments....................................................................................................................... 6 VI. Notices.......................................................................................................................... 6 A. If to FIRM..................................................................................................................... 6 B. If to CPA ....................................................................................................................... 6 VII. Assignment ................................................................................................................... 7
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ii
VIII. Standard Terms and Conditions .................................................................................... 7 A. Indemnification............................................................................................................. 7 B. Insurance ....................................................................................................................... 7 C. Independent Contractor Status...................................................................................... 8 D. Warranty Against Contingent Fees ............................................................................... 8 E. Governing Laws............................................................................................................ 8 F. Compliance with Applicable Law ................................................................................ 8 G. Record Retention and Inspection .................................................................................. 9 H. Confidentiality .............................................................................................................. 9 I. Communications With CPA ....................................................................................... 10 J. Conflict of Interest ...................................................................................................... 10 K. Ownership ................................................................................................................... 10 L. Authorization Warranty .............................................................................................. 10 M. Changes and Amendments of Terms ......................................................................... 10 N. Validity ...................................................................................................................... 11 O. Waiver......................................................................................................................... 11 P. Remedies Reserved to CPA........................................................................................ 11 Q. Complete Agreement and Interpretation..................................................................... 11
EXHIBIT A - SCOPE OF WORK AND HOURLY BILLING RATES
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1 AGREEMENT FOR PROFESSIONAL LEGAL SERVICES
(“AGREEMENT”)
RECITALS
WHEREAS, CPA desires to retain FIRM for professional legal services related to the negotiation and documentation of prepay energy transactions as well as other legal services as requested (described in Exhibit A); and,
WHEREAS, FIRM has the legal competence and specialized expertise to provide professional legal services in the areas described above and in Exhibit A (“Legal Services”); and, WHEREAS, CPA desires to retain FIRM’s services for the Legal Services; and, WHEREAS, FIRM has agreed to provide the Legal Services in accordance with this AGREEMENT.
NOW, THEREFORE, CPA and FIRM agree as follows:
I. Term and Termination:
A. Period of Performance:
This AGREEMENT shall begin on the date set forth on the cover page hereto and shall remain in effect for 12 months or a one-year term (“Initial Term”), and at the end of the Initial Term, the Parties may renew this AGREEMENT for one successive 12-month period (each, a “Renewal Term”), unless earlier terminated as set forth herein. Each 12-month period may also be referred to as a “contract year.” B. Termination and/or Suspension:
1. Termination and/or Suspension for CPA’s Convenience:
a) Services performed under this AGREEMENT may be terminated or suspended in whole or in part by CPA at any time, when CPA, in itssole discretion, deemssuch termination or suspension to be in CPA’s best interest. CPA shall terminate or suspend services by delivering to FIRM a written notice specifying the extent to which services are terminated or suspended and the effective date of the termination or suspension. The notice of termination or suspension shall be sent to the person identified in paragraph VI.A.; and, b) After receiving a notice of termination or suspension, unless otherwise directed by CPA, FIRM shall:
1) Stop services on the date and to the extent specified in the suspension or termination notice. 2) Complete services not terminated or suspended by the notice. 3) Submit a Closing Report to CPA as set forth in paragraph I.B.4., below. 4) Submit, no later than thirty (30) calendar days after the date of suspension or termination is effective, a final electronic invoice (e-bill) for all services performed prior to CPA’s notice of suspension or termination. If FIRM fails to submit a final e-bill within the time allowed, CPA may determine, on the basis of information available, the amount, if any, to be paid to FIRM. CPA’s determination shall be final.
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2 2. Termination For FIRM’s Default:
a) Services performed under this AGREEMENT may be terminated in whole or in part by CPA when FIRM:
1) Fails to perform the service(s) within the time specified or any CPA approved extension, or
2) Fails to perform any of the AGREEMENT’s other provisions or fails to make progress and endangers the performance of AGREEMENT’s terms.
b) CPA shall give written notice to FIRM of FIRM’s default. CPA, in its sole discretion, shall decide whether the default is of such a nature that the FIRM should be given a period to cure the default, and, if so, the cure period shall be specified in the notice. c) If CPA wholly or partially terminates services under this AGREEMENT, replacement services may be obtained from another law firm or any other source with terms and in a manner CPA deems appropriate.
3. Termination for Professional Conflict of Interest:
If either FIRM or CPA determines a matter of professional conflict has arisen during FIRM’s engagement which should not or cannot be postponed until the conclusion of FIRM’s representation of CPA, FIRM or CPA may immediately give written notice to terminate this AGREEMENT. FIRM shall continue to provide high quality, professional legal representation until the appropriate substitutions can be made.
4. Closing Report Upon Termination or Suspension:
a) Immediately upon the termination or suspension of this AGREEMENT for any reason, FIRM shall deliver a Closing Report to CPA. The Closing Report shall include, for each case or matter assigned to FIRM which in whole or in part is terminated or suspended, the following:
1) A brief description of the facts and current status, 2) A discussion of the applicable law, and
3) A list and description of all future scheduled court appearances, and applicable deadlines. b) Immediately upon any termination or suspension, FIRM shall, at its own cost, deliver to CPA all evidence, files, and attorney work product for each case or matter for which work under this AGREEMENT has been terminated or suspended. This includes any computerized indices, programs, and document retrieval systems created or used for the case or matter. If FIRM’s services include pending litigation, FIRM shall file the appropriate substitution of counsel with the court when instructed by CPA.
II. FIRM’s Services and Responsibilities:
A. Supervising Attorney:
1. FIRM shall appoint a Supervising Attorney, who shall serve as the lead counsel for work performed under this AGREEMENT. The person designated as FIRM’s Supervising Attorney, and any changes in this designation, shall be promptly communicated in writing to CPA.
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3 2. FIRM’s Supervising Attorney shall have full authority to act for FIRM on all daily operational matters under this AGREEMENT and shall serve as or designate lead counsel for all law and motion appearances, pretrial and trial proceeding(s), settlement conference(s), or meetings of counsel for parties, depositions, document productions, and all court and other proceedings in which substantive rights of the parties may be determined. Designation of lead counsel shall be subject to approval by CPA.
B. Legal Representation:
1. FIRM recognizes that the CPA General Counsel is the authorized legal representative for the CPA and its officers and employees. Subject to the direction and control of CPA General Counsel, FIRM shall provide CPA with high quality legal advice and representation consistent with this AGREEMENT, the Rules of Professional Conduct, and all applicable laws and court rules.
2. FIRM shall provide representation with fully qualified staff at the least costly billing category.
Consistent with this requirement, CPA may request that a particular attorney or specified attorneys work on a particular project or multiple projects specified in Exhibit A.
3. FIRM shall keep CPA informed of all significant developments in each case or matter assigned to FIRM and shall provide CPA with copies of all significant documents.
4. FIRM acknowledges that nothing in this AGREEMENT is intended, nor will be construed, as creating any exclusive arrangement between CPA and FIRM. Nothing in this AGREEMENT will restrict CPA from obtaining similar services from other firms or sources.
III. CPA’s Duties and Responsibilities:
A. Supervising Attorney:
1. CPA shall appoint its General Counsel as CPA’s Supervising Attorney for each case or matter assigned to FIRM.
2. CPA’s Supervising Attorney shall have full authority to act for CPA on all daily operational matters under this AGREEMENT and shall review and approve all FIRM’s reports, whether written or oral, and any change in FIRM’s Supervising Attorney.
B. Duties and Responsibilities:
1. CPA shall make available to FIRM all documents and other information possessed by CPA which are relevant to any case or other matter assigned to FIRM under this AGREEMENT.
2. CPA shall assist FIRM in obtaining CPA records and/or information necessary to respond to discovery and to help familiarize the FIRM with CPA operations and policies.
3. CPA shall review and approve as appropriate:
a) All reports, requests, and other services provided by FIRM under this AGREEMENT. b) Any proposed tactical maneuver or trial strategy.
c) All recommended settlement proposals. Approval of proposed settlement recommendations is subject to CPA’s settlement approval procedures.
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4 d) All billing statements in accordance with procedures referenced in this AGREEMENT.
4. CPA may review all correspondence and judicial, administrative, and other documents.
5. CPA will evaluate FIRM’s performance under this AGREEMENT and may report this evaluation to CPA’s Board of Directors. CPA reserves the right to conduct an audit of any and all aspects of FIRM’s compliance with this AGREEMENT. Any such audit may be conducted by CPA staff or a contract auditor, in CPA’s sole discretion.
IV. Compensation:
A. CPA Counsel Billing Requirements:
All charges by FIRM, whether for fees or attorney work, or for reimbursement for expenses incurred shall be in accordance with the AGREEMENT.
B. Fees:
1. FIRM shall provide legal services at the hourly billing rates for attorney(s) and if applicable, paralegals set forth in Exhibit A to this AGREEMENT, subject to the “Collar”, as defined in Exhibit A. For any amounts that exceed the Collar amount, FIRM shall obtain CPA’s prior written authority.
2. The billing rates set forth in Exhibit A may be subject to review and adjustment as agreed between CPA and FIRM. Any billing rate change shall be in writing and be executed as an amendment to Exhibit A.
C. Expenses:
1. Non-Reimbursable Expenses: Certain expenses incurred by FIRM in providing services under this AGREEMENT shall be considered FIRM overhead which shall not be reimbursed by CPA, but which shall be borne by FIRM as expenses included within the hourly billing rates set forth in Exhibit A. Expenses which will not be reimbursed and which should not be billed are the following:
a) Postage.
b) Telephone charges (both local and long distance).
c) Copy charges.
d) Mileage/Parking within the counties of Los Angeles, Orange, Riverside, San Bernardino, and Ventura.
e) On-line subscription, connection, or other costs for computerized research. (Attorney and paralegal time incurred conducting such research may be billed.) f) Document reproduction. (See below for large volume exception.) g) Staff time or overtime for performing secretarial, clerical, or word processing functions. h) Time spent complying with CPA audits or billing inquiries. i) Charges for services or expenses incurred which have not been authorized by CPA.
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5 2. Reimbursable Ordinary Expenses: CPA shall reimburse FIRM for its actual out-of-pocket expenses, but without any additional costs for having advanced the funds, for the following:
a) Deposition costs (other than videotaping unless approved as set forth below). b) Transcript fees.
c) Filing fees for which the CPA is not exempt.
d) Messenger service if specifically requested by the CPA’s Supervising Attorney, if required because of an emergency over which the FIRM has no control, or if necessary to ensure the safekeeping of sensitive documents or materials.
e) Process service fees.
3. Reimbursable Extraordinary Expenses: CPA shall reimburse FIRM for its actual out-of-pocket expenses, but without any additional costs for having advanced the funds, for the following, but only if FIRM has obtained prior written approval from CPA:
a) Outside vendor document reproductions which, because of the volume or format requirements, are impractical to complete in-house.
b) Consultants.
c) Experts.
d) Investigative services.
e) Expenses for travel outside the Counties of Los Angeles, Orange, Riverside, San Bernardino, and Ventura. Reimbursement for such travel expenses will be limited to the amount CPA’s employees may claim for such travel. Information on such limits will be made available to FIRM upon request at the time FIRM seeks permission for such travel. f) Videotaping of depositions.
g) Extraordinary computerized research requirements.
h) Other extraordinary expenses for which FIRM has obtained prior written approval from CPA.
V. Invoices and Payments to FIRM:
A. Billing (E-Billing):
The FIRM shall submit all invoices for attorney fees and reimbursable expenses to CPA at [email protected] with a copy to CPA’s General Counsel at the email address specified in paragraph VI.B.
B. E-Bills:
1. FIRM shall submit invoices for services and for reimbursable expenses monthly in arrears, or quarterly in arrears if approved by CPA.
2. Each e-bill must also include a signed dated declaration of FIRM’s Supervising Attorney with the
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6 following statement:
“I have personally examined this e-bill. All entries are in accordance with the AGREEMENT for Professional Legal Services, are correct and reasonable for the services performed and the cost incurred, and no item on this statement has been previously billed to CPA.”
3. Each e-bill shall be itemized to include:
a) Staffing level(s), hourly rates, and specific activities for each attorney and/or paralegal. 1) Each billing entry shall include a detailed description of specific activities for each attorney and/or paralegal.
2) All receipts for expenses shall be scanned and attached to the e-bill. 3) No attorney or paralegal may be utilized on a matter until an hourly billing rate for that person has been approved in writing by the CPA. All time must be billed at the approved hourly rate.
4. FIRM shall maintain in a form subject to audit, and in accordance with generally accepted accounting principles, backup documentation to support all entries included in the monthly billing statement. Such documentation shall be available to CPA upon request.
C. Payments:
1. CPA shall make payment(s) for services rendered under this AGREEMENT monthly in arrears based on the itemized billing statement(s) FIRM submits to CPA.
2. CPA’s legal and accounting staff shall review all billing statements for reasonableness of the time billed as well as full compliance with this AGREEMENT and all CPA Counsel Billing Requirements.
3. CPA shall make its best effort to process payments promptly after receiving FIRM’s e-bill.
However, CPA shall not pay interest or finance charges on any outstanding balance(s).
4. Payments to FIRM are conditioned upon FIRM’s compliance with all provisions of this AGREEMENT, including but not limited to, paragraph VIII.B.
VI. Notices:
Unless otherwise specified herein, all notices and required reports shall be in writing and transmitted by electronic mail (“email”) to the CPA or FIRM representative at the email address specified below:
A. If to FIRM:
Chapman and Cutler LLP
Attn: Douglas A. Bird
Supervising Attorney/Partner
1270 Avenue of the Americas, 30th Fl
Email: [email protected]
B. If to CPA:
Theodore Bardacke
Agenda Page 55
7 Chief Executive Officer
Clean Power Alliance of Southern California
801 S. Grand Ave., Ste. 400, Los Angeles, CA 90017
Email: [email protected]
With a copy to:
Nancy Whang
General Counsel
Clean Power Alliance of Southern California
801 S. Grand Ave., Ste. 400, Los Angeles, CA 90017
Email: [email protected]
VII. Assignment:
A. No part of this AGREEMENT or any right or obligation arising from it is assignable without CPA’s written consent.
B. Any attempt by FIRM to assign or subcontract services relating to this AGREEMENT without CPA’s consent shall constitute a material breach of this AGREEMENT.
VIII. Standard Terms and Conditions:
The following standard CPA contract terms and conditions are included herein as part of this AGREEMENT and are fully binding on the parties hereto:
A. Indemnification:
FIRM shall indemnify CPA, its agents, officers, and employees from and against any and all liability and claims for damages of any nature whatsoever, including, but not limited to, bodily injury, death, personal injury, or property damage (including FIRM’s property), any breach by FIRM of this AGREEMENT, or any negligence or willful misconduct by FIRM arising from or connected with services performed under this AGREEMENT. This provision is subject to existing and relevant laws concerning comparative and contributory fault principles. This provision shall not apply to any settlement or payment effected without prior written consent of FIRM.
B. Insurance:
Without limiting FIRM’s indemnification of CPA and its officers, agents and employees, FIRM shall provide and maintain at its own expense the following programs of insurance covering FIRM’s operations during the term of this AGREEMENT. FIRM shall use insurers satisfactory to CPA’s Chief Financial Officer and shall deliver evidence of a satisfactory insurance to CPA on or before the effective date of this AGREEMENT. Evidence shall specifically identify this AGREEMENT and FIRM shall provide CPA written notice by registered mail at least thirty (30) days in advance of any modification or termination of any program insurance.
1. Liability: Such insurance shall be primary to and not contributing with any other insurance maintained by CPA, and with respect to Comprehensive General Liability insurance shall name the Clean Power Alliance of Southern California as an additional insured, and shall include, but not be limited to:
a) Comprehensive General Liability insurance endorsed for Premises- Operations,
Agenda Page 56
8 Products/Completed Operations, Contractual, Broad Form Property Damage, and Personal Injury with a combined single limit of not less than $1,000,000 per occurrence.
If the above insurance is written on a Claims Made Form, the insurance shall be endorsed to provide an extended reporting period of not less than five years following termination of this AGREEMENT.
b) Professional liability insurance with a liability limit of at least $2,000,000 per claim.
c) Comprehensive Auto Liability endorsed for all owned, non-owned, and hired vehicles with a combined single limit of at least $300,000 per occurrence.
2. Workers’ Compensation: A program of Workers’ Compensation insurance in an amount and form to meet all applicable requirements of the Labor Code of the State of California, including Employers Liability with a $1,000,000 limit, covering all persons providing services on behalf of FIRM and all risks to such persons under this AGREEMENT.
3. Failure to Procure Insurance: Failure on the part of FIRM to procure or maintain required insurance shall constitute a material breach for which CPA may immediately terminate or suspend this AGREEMENT.
C. Independent Contractor Status:
1. This AGREEMENT is not intended and shall not be construed to create the relationship of agent, servant, employee, partnership, joint venture, or association, as between CPA and FIRM.
2. FIRM understands and agrees that all FIRM personnel furnishing services to CPA under this AGREEMENT are employees solely of FIRM and not of CPA for purposes of workers’ compensation liability.
3. FIRM shall bear the sole responsibility and liability for furnishing workers’ compensation benefits to any FIRM personnel for injuries arising from services performed under this AGREEMENT.
D. Warranty Against Contingent Fees:
1. FIRM warrants that no person or selling agency has been employed or retained to solicit or secure this AGREEMENT upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee.
2. For breach or violation of this warranty, CPA shall have the right to terminate this AGREEMENT, and in its sole discretion, to deduct from the AGREEMENT price or consideration, or otherwise recover, the full amount of any such commission, percentage, brokerage, or contingent fee.
E. Governing Laws:
This AGREEMENT shall be governed by and construed in accordance with the laws of the State of California and any action brought by either party on this AGREEMENT shall be brought in Los Angeles County.
F. Compliance with Applicable Law:
1. FIRM shall comply with all applicable Federal, State, and local laws, rules, regulations, and
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9 ordinances, and all provisions required thereby to be included in this AGREEMENT are hereby incorporated herein. FIRM shall comply with the governing Rules of Professional Responsibility in the jurisdiction in which FIRM performs the work.
2. FIRM shall indemnify and hold harmless the CPA, and its directors, officers, agents, and employees, from and against any and all liability, damages, costs, and expenses, including, but not limited to, defense costs and attorneys’ fees, arising from or related to any violation on the part of FIRM or its employees, agents, or subcontractors of any such laws, rules, regulations, ordinances, or directives.
G. Record Retention and Inspection:
FIRM will maintain records related to this engagement in formats and organization that FIRM, in its sole professional judgment, determine are efficient and appropriate for the conduct of this engagement provided that FIRM gives written notice to CPA of the formats and organization used. After the engagement ends, meaning the date of FIRM’s last bill for services in this matter, FIRM will maintain or destroy these records in accordance with FIRM’s then-existing record retention policy. A copy of FIRM’s current record retention policy and any changes to the record retention policy shall be promptly provided to CPA.
Notwithstanding the foregoing, FIRM will first give CPA written notice of its intention to destroy the records at CPA’s last known address and a copy of the notice shall be sent to CPA’s General Counsel at the email address provided herein. The notice will inform CPA that the records will be destroyed 60 days after the date of the notice unless CPA notifies FIRM in writing that CPA wants the records to be sent to CPA at your expense. If the notice is returned to FIRM as undeliverable, FIRM will destroy the records, as the lack of a correct forwarding address will indicate that CPA has abandoned them. If at any time CPA requests transfer of the records to which CPA is entitled, FIRM shall transfer such records in electronic formats and organized in a manner in which FIRM has maintained them. In that event or if CPA requests destruction of the records, FIRM reserves the right to retain, at FIRM’s expense, a copy of any part of the records to comply with legal or ethical obligations. Within ten (10) days of CPA’s written request, FIRM shall allow CPA or authorized State or Federal agencies or any duly authorized representative to have the right to access, examine, audit, excerpt, copy, or transcribe any pertinent transaction, activity, time cards, or other records relating to this AGREEMENT.
H. Confidentiality:
1. FIRM shall maintain the confidentiality of all information which it may acquire arising out of or connected with activities under this AGREEMENT in accordance with all applicable Federal, State, and CPA laws, regulations, ordinances, and directives relating to confidentiality, including the Code of Professional Responsibility. FIRM shall inform all of its principals, employees, and agents providing services hereunder of the confidentiality provisions of this AGREEMENT.
2. FIRM shall ensure that all attorneys, paralegals, and secretarial and clerical personnel having access to information relevant to FIRM’s provision of services under this AGREEMENT, are aware of and acknowledge the confidentiality requirements set forth in paragraph 1, above.
3. These confidentiality obligations shall survive this AGREEMENT’s termination or expiration.
4. FIRM is rendering legal services only to CPA and to no other person or entity in connection with the matters described above. As long as CPA keeps confidential FIRM’s advice, the attorney-client privilege and the confidential relationship will not be inadvertently waived.
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10 I. Communications With CPA:
FIRM recognizes that its communications with CPA and its agents and employees, officers and/or representatives are subject to the attorney-client privilege. FIRM warrants that it shall not disclose or use in any manner other than in the furtherance of FIRM’s representation of CPA, any privileged information obtained from CPA or its officers, agents, or employees. FIRM understands that the CPA General Counsel is the legally empowered legal representative of the CPA and its officers and employees and FIRM shall not without specific direction from CPA General Counsel communicate with, advise or represent the CPA’s Board of Directors or other CPA officers or employees.
J. Conflict of Interest: Failure to comply with the provisions of this paragraph shall be a material breach of this AGREEMENT.
1. No CPA employee whose position with CPA enables such employee to influence the award of this AGREEMENT or any competing AGREEMENT, and no spouse or economic dependent of such employee, shall be employed in any capacity by FIRM or have any other direct or indirect financial interest in this AGREEMENT. No officer or employee of FIRM who may financially benefit from the performance of work hereunder shall in any way participate in the CPA’s approval, or ongoing evaluation, of such work, or in any way attempt to unlawfully influence CPA’s approval or ongoing evaluation of such work.
2. FIRM shall comply with all conflict of interest laws, ordinances, resolution, and regulations now in effect or hereafter to be enacted during the term of this AGREEMENT. FIRM warrants and represents that it is not now aware of any facts that create a conflict of interest. If FIRM hereafter becomes aware of any facts that might reasonably be expected to create a conflict of interest, it shall immediately disclose the conflict in writing to CPA and shall resolve the issue in a manner satisfactory to CPA provided FIRM is ethically able to disclose any details. Full written disclosure shall include, but is not limited to, identification of all persons implicated and a complete description of all relevant circumstances. FIRM agrees to notify CPA of any conflicts of interest and agrees to seek CPA’s consent and waiver before representing another client adverse to CPA.
K. Ownership:
To the extent permitted by law or contract, CPA shall own, or retain all right, title and interest in and to all proprietary information provided by CPA to FIRM in connection with this AGREEMENT (“CPA Information”) and all finished or unfinished content, writing and materials including but not limited to materials, reports, plans, studies, documents and other writings prepared by FIRM, its partners, employees, contractors, and agents as deliverables for Exhibit A (“CPA Materials”).
CPA grants FIRM the right to use of CPA Information or CPA Materials during the Term of this AGREEMENT.
L. Authorization Warranty:
FIRM represents and warrantsthat the signatory to this AGREEMENT isfully authorized to obligate FIRM and that all corporate acts necessary to the execution of this AGREEMENT have been accomplished.
M. Changes and Amendments of Terms:
CPA reserves the right to change any portion of the work required under this AGREEMENT or amend its terms and conditions as may become necessary.
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11 N. Validity:
The invalidity in whole or in part of any provision of this AGREEMENT shall not void or affect the validity of any other provision.
O. Waiver:
No waiver of a breach of any provision of this AGREEMENT by either party shall constitute a waiver of any other breach of the provision or any other provision of this AGREEMENT. Failure of either party to enforce any provision of this AGREEMENT at any time shall not be construed as a waiver of that provision. CPA’s remedies as described in this AGREEMENT shall be cumulative and additional to any other remedies in law or equity.
P. Remedies Reserved to CPA:
The remedies reserved to CPA shall be cumulative and additional to any other remedies provided in law or equity.
Q. Complete Agreement and Interpretation:
This AGREEMENT supersedes all prior communications and all previous written and oral agreements and shall constitute the complete and exclusive statement of understanding between CPA and FIRM relating to the subject matter of this AGREEMENT. No provision of this AGREEMENT is to be interpreted for or against either party because that party’s legal representative drafted such provision.
Executed as of the date set forth on the cover page to this AGREEMENT:
Chapman and Cutler LLP Clean Power Alliance of Southern California ____________________________________ ____________________________________ By: Douglas A. Bird By: Theodore Bardacke
Title: Partner Title: Chief Executive Officer
Approved as to Form:
____________________________________
By: Nancy Whang
Title: General Counsel
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A-1
EXHIBIT A
SCOPE OF WORK AND COMPENSATION / HOURLY BILLING RATES
Chapman and Cutler LLP (“FIRM”)
SCOPE OF WORK
The contemplated services for the prepay transaction, including the issuance of the prepayment bonds, whether in one (1) or more transaction(s), are:
Task #1: Legal Analysis and Support
Provide legal analysis and support, including:
• Serve as a “prepay bond” legal subject matter expert, review, and provide input or other support (as directed by CPA) on all documentation related to CPA and the issuer through attendance (in person or as necessary by virtual meetings) at all working group/document sessions with CPA’s staff, consultants, and other professionals. • Negotiate execution versions of all contracts in the prepay transaction(s) and provide advice and any necessary support related to such negotiations. • Draft Resolution(s) of the Board and/or other documentation needed to authorize CPA to enter into prepay transaction(s).
• Serve in the capacity of Disclosure Counsel in the drafting of the Preliminary and Final Official Statements.
• Manage execution and filing of final prepay documents requiring approval from CPA upon transaction close.
Expected Deliverables for Task #1:
• Prepare final drafts of all prepay transaction documents requiring approval from CPA for final review, execution, and filing upon transaction close. • Prepare draft Resolution(s) of the Board or related documentation for the Board to authorize prepay transaction(s).
COMPENSATION
The total amount of fees for services shall be a fixed fee of $175,000.00 per each prepay transaction, payable exclusively from the proceeds of the prepayment transaction. In no event shall the cumulative total fees for services provided under this Exhibit A exceed $175,000.00 per each prepay transaction, unless expressly authorized in writing by CPA.
In the event that CPA decides not to proceed with a prepayment transaction for any reason and at any time, no fee will be due to FIRM unless expressly authorized in writing by CPA.
CPA and FIRM acknowledge that the not-to-exceed amounts are not estimates of the total costs required to complete this engagement.
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Staff Report – Agenda Item 4
To: Board of Directors
From: Lindsay Descagnia, Vice President, Power Supply
Approved by: Ted Bardacke, Chief Executive Officer
Subject: Task Order with Ascend Analytics for 2024 Clean Energy and Reliability RFO Support Services
Date: May 2, 2024
RECOMMENDATION
Authorize the Chief Executive Officer to execute Task Order No. 6 with Ascend Analytics for 2024 Clean Energy and Reliability RFO support services for a not-to-exceed amount of $210,000.
BACKGROUND
CPA will be launching a solicitation for long-term power purchase agreements, resource adequacy purchase agreements, and energy storage contracts (“2024 Clean Energy and Reliability RFO”) in June 2024 to procure long-term energy and energy storage resources.
Projects procured in the 2024 Clean Energy and Reliability RFO are intended to meet overall energy and Resource Adequacy portfolio needs and to comply with the California Public Utilities Commission (CPUC) procurement order for all load-serving entities to procure new reliability capacity including long-duration storage, baseload renewable energy1 and Renewable Portfolio Standard and Resource Adequacy compliance requirements. The 2024 Clean Energy and Reliability RFO process is estimated to be completed over a nine-month timeframe. Based on the responses received from previous RFOs and the project eligibility requirements from the CPUC order, CPA is anticipating a diverse set of responses to the 2024 Clean Energy and Reliability RFO from a variety of technologies and with highly complex offer structures.
1On June 24, 2021, the CPUC issued its Decision Requiring Procurement to Address Mid-Term Reliability (2023-2026), D.21-06- 035, which orders load serving entities, including CPA, to procure 11,500 MW of new capacity statewide to replace the capacity retiring from the Diablo Canyon Power Plant as well as several once-through-cooling (OTC) thermal power plants.
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Board of Directors Item 4
In support of CPA’s 2024 Clean Energy and Reliability RFO, staff issued a Task Order Solicitation. The purpose of the Task Order Solicitation was to acquire consulting services for four tasks: (1) support RFO solicitation design and offer selection criteria, (2) RFO administration, including a dedicated website and offer intake and validation, (3) assistance with valuing long-term energy proposals submitted in response to the RFO, and (4) ongoing valuation support.
Selection Process
The Task Order Solicitation was sent to all of CPA’s pre-qualified providers and there were two respondents. Ascend Analytics was selected because it offered to provide all four of the tasks being solicited and offered the Best Value to CPA. 2 Ascend Analytics is an energy consulting firm offering specialized experience and knowledge in the valuation of energy resources. Ascend Analytics’ services include a customized intake process for project submittal and a robust analytics engine for project evaluation.
Ascend Analytics previously provided long-term RFO support services to CPA in the 2019 Clean Energy RFO, 2020 Clean Energy RFO, 2021 Mid-Term Reliability RFO, 2022 Mid-Term Reliability RFO and the 2023 Clean Energy and Reliability RFO. The fees for the base services ($165,000) are the same as those paid to Ascend Analytics in 2022. For 2024, the Task Order authorizes optional services in the event that CPA needs analysis of additional alternative proposals. If CPA chooses to utilize these optional services, the amount of fees could reach the not-to-exceed amount of $210,000, depending on how many additional valuations are required.
FISCAL IMPACT
At a not-to-exceed amount of $210,000 for Tasks 1-4, the Ascend proposal is within CPA’s budgeted cost for these services. Expenditures associated with the proposed Task Order will be included in the FY2024/25 Budget proposed to the Board in June 2024.
ATTACHMENT
1. Ascend Analytics Task Order No. 6
2 The other provider did not offer to provide support for task #1 and task #2 and was more expensive than Ascend Analytics for task #3 and task #4.
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EXHIBIT C1
MASTER AGREEMENT TASK ORDER
(Fixed Price Per Deliverable Basis)
ASCEND ANALYTICS LLC
(“Contractor”)
Task Order No. 6 CPA Master Agreement No. 2018-07-30
Project Title: Long-Term RFO Support Services For 2024 Clean Energy & Reliability RFO
Period of Performance: May 3, 2024, through May 2, 2025 CPA Project Director: Theodore Bardacke
CPA Task Order
Manager: Lindsay Descagnia
1. GENERAL
1.1.Contractor shall satisfactorily perform all the tasks and provide all the deliverables detailed in the Task Order attached hereto as Exhibit C1-A, on a fixed price per deliverable basis, in compliance with the terms and conditions of Contractor’s Master Agreement.
2. PERSONNEL
2.1.Contractor shall provide the below-listed personnel:
Name Skill Category
Anthony Boukarim Director, Resource Planning & Valuation Brent Nelson Managing Director of Market Intelligence
Scott Nicholson Principal Energy Analyst
Sid Mathew Energy Analyst
Mohamed Nijad Energy Analyst
3. PAYMENT
3.1.The Total Maximum Amount that CPA shall pay Contractor for all deliverables to be provided under this Task Order is shown below:
Deliverable Maximum Amount
Pre-RFO Activities (Task Order Deliverable 1) $25,000
RFO Administration (Task Order Deliverable 2) $45,000
RFO Evaluation & Negotiation Support, including ten (10) alternative offer valuations (Task Order Deliverables 3 & 4) $90,000 Ascend Fundamental Price Curve (CAISO v. 4.3) $5,000
Each additional block of ten (10) alternative offer valuations $15,000 Total Maximum Amount: $210,000
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3.2.Contractor shall satisfactorily provide and complete all required deliverables in accordance with Exhibit C1-A notwithstanding the fact that total payment from CPA for all deliverables shall not exceed the Total Maximum Amount set forth in Section 3.1, above.
3.3.Contractor shall submit all invoices under this Task Order to:
Clean Power Alliance
Attn: Accounts Payable
801 S. Grand Ave, Ste. 400
Los Angeles, CA 90017
Email: [email protected]
4. SERVICES
4.1.In accordance with Master Agreement Section 2, Contractor may not be paid for any task, deliverable, service, or other work that is not specified in this Task Order, and/or that utilizes personnel not specified in this Task Order, and/or that exceeds the Total Maximum Amount of this Task Order, and/or that goes beyond the expiration date of this Task Order.
4.2.ALL TERMS OF THE MASTER AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT. THE TERMS OF THE MASTER AGREEMENT SHALL
GOVERN AND TAKE PRECEDENCE OVER ANY CONFLICTING TERMS
AND/OR CONDITIONS IN THIS TASK ORDER. NEITHER THE RATES NOR
ANY OTHER SPECIFICATIONS IN THIS TASK ORDER ARE VALID OR
BINDING IF THEY DO NOT COMPLY WITH THE TERMS AND CONDITIONS OF THE MASTER AGREEMENT.
4.3.Contractor’s signature on this Task Order document confirms Contractor’s awareness of the terms and conditions of the Master Agreement and specifically with the provisions of Section 2 of the Master Agreement, which establish that Contractor shall not be entitled to any compensation whatsoever for any task, deliverable, service, or other work:
4.3.1. That is not specified in this Task Order, and/or
4.3.2. That utilizes personnel not specified in this Task Order, and/or
4.3.3. That exceeds the Total Maximum Amount of this Task Order, and/or
4.3.4. That goes beyond the expiration date of this Task Order.
REGARDLESS OF ANY ORAL PROMISE MADE TO CONTRACTOR BY ANY CLEAN POWER ALLIANCE PERSONNEL WHATSOEVER.
[Signature Page Follows]
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ASCEND ANALYTICS LLC CLEAN POWER ALLIANCE
By: By:
Name: Name:
Title: Title:
Date: Date:
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EXHIBIT C1-A
ASCEND TASK ORDER DESCRIPTION
Long-Term RFO Support Services For 2024 Clean Energy & Reliability RFO
SUMMARY
Contractor shall provide support CPA’s 2024 solicitation for long-term clean energy, storage, resource adequacy (“RA”) and dispatchable thermal energy contracts including solicitation design, Requests for Offer (“RFO”) administration, and offer evaluation and selection.
CPA TASK ORDER – Scope of Work
TASKS:
Task #1: In advance of the RFO launch, support solicitation design and offer selection criteria.
1. Support CPA’s development of the solicitation scope and process design, including refinement of scope of work and schedule.
2. RFO selection criteria will incorporate the following quantitative and qualitative factors:
2.1.Energy, Ancillary Services, and Resource Adequacy value.
2.2.Development risk.
2.3.Environmental stewardship.
2.4.Workforce Development.
2.5.Benefits to Disadvantaged Communities.
2.6.Project Location.
2.7.GHG emissions.
Task #1 Deliverables:
1. Final solicitation process and schedule; framework for offer qualification and selection criteria, pre-launch notification.
Task #2: Administration of requests for offers of projects.
1. Provide input on CPA’s requested products [Note: form contracts will be provided by CPA].
2. Provide feedback on CPA’s solicitation materials and a comprehensive solicitation protocol to be issued to potential providers [Note: solicitation materials are anticipated to be similar to those used in CPA’s 2023 Clean Energy and Reliability RFO].
3. Provide a submission platform that accommodates a high volume of bidders, with multiple, differentiated offers from each bidder.
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4. Manage Q&A process to ensure conforming proposals are provided, including all communication with bidders.
5. Project management of the solicitation process to ensure key dates are met.
Task #2 Deliverables:
1. Written solicitation protocol; host website for receipt of offers; miscellaneous RFO administration services.
Task #3: Proposal evaluation and portfolio assessment.
1. Conduct initial QA/QC of offers and notify bidders of errors needing correction.
2. Build a valuation model to perform financial analysis of individual projects and portfolios of projects to assess value and assist CPA with constructing the optimal portfolio of projects for CPA. Proposals should describe in detail how the tool will function and include valuation methodology for RPS-only, RPS plus storage, RA-only, gas tolls and storage-only offers.
2.1.Unless otherwise agreed by CPA in writing prior to the start of work under this Task Order, all models shall be produced in Excel and provided to CPA in unlocked formats.
3. Longlist Summary: Analyze project developers, project characteristics, and offer details to present offers as an initial comprehensive list of qualified and conforming project offers. The longlist deliverable will include a comprehensive Excel spreadsheet summarizing all offers with key descriptive information for each offer.
The deliverable will also include a summary of RFO metrics and trends to be presented to CPA’s Board of Directors Energy Committee.
4. Valuation Ranking: perform advanced analytics on all conforming offers. Present results as a comprehensive Excel spreadsheet summarizing all conforming offers with key descriptive information and selection criteria ranking for each offer while highlighting the most attractive projects to procure. To facilitate CPA’s selection process by the RFO review team and subsequent presentation to the Energy Committee, the valuation ranking should be provided to CPA in comprehensive and easy to understand summary report along with summary of RFO metrics and trends.
4.1.The review team will include CPA’s senior management and 1-3 members of CPA’s Board of Directors.
Task #3: Deliverables:
1. Evaluation of all submitted offers and analysis of selected CPA portfolio and valuation ranking deliverables as described above.
Task #4: Ongoing valuation support for offers.
1. Valuation of individual offer variants for approximately 10 offers that may have variations to standard RFO protocol terms. For example, variations on project sizing or term length and additional bilateral offers CPA receives thought the Period of Performance.
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Task #4: Deliverables:
1. Evaluation of one-off non-conforming offer variants as compared to both the original offer and the broader longlist valuation.
PROJECT SCHEDULE AND COORDINATION
Each task listed above will be undertaken in close coordination with CPA’s project team.
Contractor will discuss initial findings or approaches for each task with CPA’s project team before developing final work products in order to avoid rework. CPA’s project team will provide timely feedback and input in developing the work product.
The key events for CPA’s 2024 Clean Energy and Reliability RFO are listed below and are subject to change. Note: rows shaded in grey are milestones related to CPA’s Board of Director’s meeting schedule:
Key Event Dates Action
May 2, 2024 CPA Board Meeting - Board approves Clean Energy RFO Services Task Order (if needed)
May 7, 2024 Task Order kick-off with consultant
May 13, 2024 Complete Task 1: Solicitation design
May 31, 2024 Complete Tasks 2.1 and 2.2: Finalize bidder materials
June 4, 2024 Complete Task 2.3: Launch RFO
June 10, 2024 Complete Task 2.4: Conduct RFO Webinar
June 26, 2024 Close Q&A bidder submission window
July 8, 2024 Complete Task 2.5: Post Q&A responses
July 17, 2024 Offers Due
July 30, 2024 Task 3.1: Complete QA/QC of RFO responses and Task 3.3: Longlist Summary
August 28, 2024 CPA Energy Committee – Review RFO Longlist trends
Late August 2024 Complete Tasks 3.3, Perform individual contract and portfolio analysis and 3.4, Valuation Ranking
Early September 2024 Shortlist selection recommendation by CPA’s RFO review team
Mid-September 2024 CPA Energy Committee – Approve shortlist September 2024 -
January 2025
Task 4: Ongoing valuation support as needed
through PPA negotiations
February 6, 2025* CPA Board meeting - Approve negotiated PPAs * February 6th is the target date for PPA approvals. PPA negotiations may extend through the first half of 2025.
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Staff Report – Agenda Item 5
To: Board of Directors
From: Gina Goodhill, Senior Director, Government Affairs Approved By: Ted Bardacke, Chief Executive Officer
Subject: Approve Support Position on AB 1176
Date: May 2, 2024
RECOMMENDATION
Approve a support position on Assembly Bill 1176, as recommended by the Legislative & Regulatory Committee at its March meeting.
BACKGROUND/DISCUSSION
AB 1176, authored by Assemblymember Rick Zbur and sponsored by ClimatePlan, would enact the Local Electrification Planning Act. This Act would require cities and counties, no later than January 1, 2028, to prepare and adopt a specific plan to identify the following goals:
1. Opportunities to expand electric vehicle charging and infrastructure, including for public fleets and heavy-duty vehicles
2. Opportunities to advance building decarbonization in new and existing buildings
3. Opportunities to expand zero-emission and renewable distributed energy resources including rooftop solar, community solar, microgrid and battery storage
4. In coordination with relevant Load Serving Entities, identification of opportunities to advance grid infrastructure upgrades where they are needed Cities or counties that have already adopted local decarbonization plans, such as a Climate Action Plan (CAP), may use their existing plan rather than creating a new one.
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Board of Directors Item 5
However, the bill would not provide funding for cities that do not have such a plan. The bill would also require that all plans include policies to address the needs of disadvantaged communities and low-income households.
While earlier versions of the bill were opposed by the League of California Cities (Cal Cities), the bill was amended to give local governments increased flexibility in how they can meet the bill requirements. Cal Cities has since removed their opposition and is neutral on the bill. The current version is supported by CivicWell (formally the Local Government Commission), the Electric Vehicle Charging Association, California Environmental Voters, and others, and is opposed only by the County of Kern.
The bill’s goals around vehicle and building electrification preparedness are aligned with the goals outlined 3d, 3c, 3d, 3f, and 5d in CPA’s Policy Platform, and CPA has previously supported similar bills that advance electrification through planning. However, while none of CPA’s member agencies have currently taken a position on this bill, the new requirements for local governments may be difficult for some smaller cities.
The Legislative & Regulatory Committee advised staff to take a Support position on the bill, and to connect interested CPA member agencies to organizations that assist cities and counties in writing local Climate Action Plans or electrification plans. There are multiple statewide and regional models that local governments can utilize in creating their own plan.
Locally, both Los Angeles Couty and Ventura County have robust Climate Action Plans and electrification plans that include opportunities for local adoption. Both counties are in the process of completing a Comprehensive Climate Action Plan (CCAP) that will include GHG inventories disaggregated at the city level. Once the CCAP is completed (anticipated by Fall 2025), cities would be able to draw their individual GHG inventory, and then pick and choose measures from the CCAP to create their own local plan. The county’s CCAPs’ create a relatively easy pathway for cities in CPA’s service territory to create their own CAPs.
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Board of Directors Item 5
There are also resources for local governments at various statewide agencies. The California Air Resources Board 2022 Scoping Plan, Appendix D1, is focused on actions that local governments can implement to support the state’s climate goals, including advice for local climate action plans. In the Governor’s Office of Planning and Research (OPR), the General Plan Chapter 8, Appendix A2 includes examples of energy and transportation policies and local goals that could be included in a city plan. The Integrated Climate Adaptation and Resiliency Program (ICARP)3, also within OPR, offers a variety of climate and decarbonization services to local governments, including actionable guidance, technical assistance, and grants. CPA staff can continue to monitor state and local assistance opportunities as needed.
ATTACHMENT
None.
1 https://ww2.arb.ca.gov/sites/default/files/2022-11/2022-sp-appendix-d-local-actions.pdf 2 https://opr.ca.gov/planning/general-plan/guidelines.html. 3 https://opr.ca.gov/climate/icarp/#key-resources
Agenda Page 72
Staff Report – Agenda Item 6
To: Board of Directors
From: Gina Goodhill, Senior Director, Government Affairs Approved By: Ted Bardacke, Chief Executive Officer
Subject: Receive and File May 2024 Bill Positions Report Date: May 2, 2024
RECOMMENDATION
Receive and file.
ATTACHMENT
1. 2024 Legislative & Regulatory Policy Platform
Agenda Page 73
Board of Directors Item 6
Bill Number &
Author
Title & Summary Status CPA Position Alignment with
CPA Policy
Platform
Notes
SB 1130
Senator Steven Bradford
Electricity: Family Electric
Rate Assistance: reports
Expands eligibility for the
Family Electric Rate
Assistance (FERA) utility bill
discount program to
households with fewer than
three members and requires
new reporting by the IOUs.
Placed on
Appropriations
suspense file
4/8/24
Support 5a Currently, only 12%
of low-income
customers eligible for
FERA are registered
in SCE’s territory, in
contrast to very high
penetration rates for
the CARE program.
This bill could help
increase the
penetration rate for
FERA, which would
help reduce
electricity bills for
low-income
customers who don’t
meet the CARE
customer income
thresholds.
AB 2779
Assemblymember Cottie
Petrie-Norris
Independent System
Operator: transmission
planning
Directs CAISO to report to
the Legislature and CPUC on
Referred to
Appropriations
Committee
4/18/2024
Support 2e This bill could
support efforts to
expand the capacity
of transmission
Agenda Page 74
Board of Directors Item 6
the use of new grid
enhancing technologies
(GETs). GETs encompass a
suite of technologies that can
be used to maximize the
transfer of electricity across
existing transmission lines.
systems at a lower
cost to ratepayers
AB 2329
Assemblymember Al
Muratsuchi
Energy: California
Affordable Decarbonization
Authority
Creates the Climate Equity
Trust Fund, and the
California Affordable
Decarbonization Authority to
oversee the Trust Fund, to
promote affordable electricity
rates and direct benefits to
electricity customers.
Referred to
Appropriations
Committee
4/23/2024
Support 3b, 5d Originally envisioned
in a 2022 bill, this bill
would create a
separate source of
funding for energy
and electrification
outside of ratepayer
rates and could be
used as a vehicle to
curb the ongoing
increase in electricity
bills, particularly on
the delivery side of
the bill.
AB 817
Assemblymember Blanca
Pacheco
Open meetings:
teleconferencing:
subsidiary body
Allows, until January 2026, a
subsidiary body of a local
agency to teleconference
In Senate.
Referred to Rules
Committee for
assignment
1/25/24
Support 1d, 5d A subsidiary body is
one that does not
have decision-making authority.
CPA’s Community
Advisory Committee
Agenda Page 75
Board of Directors Item 6
without meeting all the
teleconferencing
requirements of the Brown
Act.
would qualify as a
subsidiary body
under this bill
AB 1852
Assemblymember Blanca
Pacheco (Principal
coauthor Senator
Anthony Portantino)
Joint powers agencies:
Clean Power Alliance of
Southern California:
meetings
Authorizes CPA to continue
its practice of allowing
alternate board members
who are not elected officials
to participate in closed
session meetings when the
primary board member is
unavailable.
In Senate.
Referred to Rules
Committee for
assignment
4/4/24
Sponsor 1d CPA sponsored
similar legislation in
2019 (SB 355;
Portantino), which
authorized CPA to
adopt a policy to
allow alternate board
members who are
not elected officials to
participate in closed
session meetings if
the primary board
member is
unavailable. The bill
was chaptered into
law in 2019 and
sunsets on January
1, 2025. This bill
would allow CPA to
extend that practice
until January 1, 2030.
Agenda Page 76
2024 Legislative and Regulatory Policy Platform
Overview and Purpose
The Clean Power Alliance (CPA) Legislative and Regulatory Policy Platform (Platform) serves as a guide to the CPA Board of Directors and CPA staff in their advocacy efforts and engagement on policy matters of interest to CPA. The Platform allows both members of the CPA Board of Directors and CPA staff to pursue actions at the regional, state and federal legislative and regulatory levels in a consistent manner and with the understanding that they are pursuing actions in the best interest of the organization and its mission, its member agencies, and its customers.
The Platform provides direction to CPA staff on positions that should be taken on regulatory matters and legislative bill proposals. The Platform also provides guidance to the Chief Executive Officer on positions that should be taken on legislative and regulatory matters that come before the California Community Choice Association (CalCCA) Board of Directors.
CPA staff report to the Board monthly on all positions taken on legislative bills. For bills that fall outside the scope of this platform; bills that are likely to attract high-profile supporters and detractors, including bills that would modify the California Environmental Quality Act (CEQA); bills that would raise taxes; or bills that would knowingly put CPA at odds with positions that its member agencies have taken, CPA staff will seek approval of a proposed position to the Legislative & Regulatory Committee and Board of Directors before taking a position.
Policy Principles
The Legislative and Regulatory Policy Platform is centered around five basic principles:
1. Protecting CPA’s local control and competitive position, especially as it relates to rates, finances, power procurement and expansion of its service territory.
2. Pursing power resource planning and procurement that promotes the growth in renewable energy capacity at the local level and reduce fossil fuel dependency, with the goal of combating climate change.
3. Developing and administering customer programs that encourage clean energy adoption by CPA customers.
4. Ensuring fair access to data, particularly as it relates to energy usage, billing, and information needed to develop and administer customer programs.
5. Supporting CPA’s ability to set electric rates and offer programmatic services that are affordable and inclusive for all.
These principles are incorporated throughout the below platform.
Agenda Page 77
Policy Platform
1. Affordability and Local Control
a. Fair rates and cost allocation: CPA will pursue administrative and legislative initiatives that will ensure that non-bypassable charges for CPA customers, including any income-graduated fixed charges, are assessed fairly compared to unbundled customers and that CPA’s customers are not unnecessarily burdened by non-bypassable charges compared to unbundled customers. b. Finances: CPA will pursue administrative and legislative initiatives to ensure that CPA is eligible to apply and receive funding made available to the electricity sector for decarbonization, reliability, and affordability purposes, and that CPA’s financial health are not disparately impacted by new regulations.
c. CCA Expansion: CPA will pursue administrative and legislative initiatives to protect CPA’s ability to expand its service to new member agencies. d. Local Control: CPA will pursue administrative and legislative initiatives to protect CPA Board’s authority over CPA’s procurement, rate-setting, governance, and customer program development activities.
2. Power Resources Planning and Procurement
a. Resource Adequacy and Reliability: CPA will pursue administrative and legislative initiatives that will enable CPA to secure capacity resources to meet its reliability obligations, such as initiatives that evaluate the supply of capacity resources available to load serving entities (LSEs), determine the appropriate market mechanisms for LSEs to procure capacity resources, and develop a durable policy framework that encourages all LSEs to construct their fair share of new capacity resources to maintain grid reliability while pursuing decarbonization efforts. b. Carbon-Free Resources: CPA will pursue administrative and legislative initiatives that will maximize CPA’s ability to procure carbon-free resources to meet or exceed the needs of CPA’s three product offerings and its long-term carbon-free procurement goal as required by SB 100 and other statutory or regulatory obligations. c. Renewable Resources: CPA will pursue administrative and legislative initiatives that will maximize CPA’s ability to procure eligible Renewable Portfolio Standard (RPS) resources to meet the needs of CPA’s three product offerings and its long-term RPS procurement goal as required by SB 100 and other statutory or regulatory obligations.
d. Integrated Resource Plan: CPA will pursue administrative and legislative initiatives that will maximize CPA’s ability to plan and procure resources to meet various environmental and reliability goals set by state laws and by its Board of Directors, while offering affordable products and programs to serve its customers, including disadvantaged communities.
e. Transmission: CPA will pursue administrative and legislative initiatives that will expedite new transmission infrastructure needed to meet California’s climate goals, as well as initiatives that will provide CPA adequate access to transmission capacity to maximize its procurement of RPS-eligible or carbon-free resources that meet various statutory and regulatory requirements.
f. Research & Development: CPA will pursue administrative and legislative initiatives that support the research and development of new energy resources that can be procured to meet the reliability and decarbonization goals set by the State and its Board of Directors.
Agenda Page 78
g. Grid Reliability: CPA will pursue administrative and legislative initiatives that support the expansion of a regional grid that improves reliability; accelerates decarbonization; improves transmission planning; reduces costs for ratepayer and load serving entities; maintains California’s ability to set, meet and implement its own climate goals; and protects clean energy jobs within the State.
3. Customer Programs
a. Demand Response, Demand Flexibility and Energy Efficiency: CPA will pursue administrative and legislative initiatives that will enable CPA to pursue demand response programs and opportunities for its customers.
b. Zero-emission vehicles: CPA will pursue administrative and legislative initiatives to promote electrification of the transportation sector in response to state and federal goals aimed at increasing the usage of zero emission vehicles. c. Building decarbonization: CPA will pursue administrative and legislative initiatives that support the ability of CPA to promote statewide building decarbonization, primarily through electrification.
d. Local Grid Management and Resiliency: CPA will pursue administrative and legislative initiatives that supports the ability of CPA and its member agencies to offer local grid management and resiliency solutions to increase local reliability and adaptability that could protect against power outages and extreme heat. e. Distributed Energy Resources: CPA will pursue administrative and legislative initiatives that support the ability of CPA to offer and utilize distributed energy resources as part of its reliability, resiliency and community engagement strategies. f. Research and Development: CPA will pursue administrative and legislative initiatives that support the ability of CPA to explore new opportunities related to behind the meter clean energy resources.
4. Data Access
a. Timely and Accurate Access to Customer Data: CPA will pursue administrative and legislative initiatives that will enable CPA to obtain timely and accurate access to its customers’ data to improve billing accuracy and inform the development and implementation of customer programs.
b. Fair Fees for Data Management Services: CPA will pursue administrative and legislative initiatives to ensure that the fees due to Southern California Edison for data access and management are fairly assessed based on data needs and potential technological improvements.
5. Diversity, Equity, Inclusion
a. Customer Protection: CPA will pursue administrative and legislative initiatives that support the protection of all ratepayers, particularly environmental and social justice communities in CPA’s service territory.
b. Supplier Diversity: CPA will pursue administrative and legislative initiatives that supports supplier diversity in CPA’s contracting activities and through women-owned, minority-owned, disabled-veteran-owned, and lesbian, gay, bisexual, and/or transgender owned business enterprises.
c. Workforce Development: CPA will pursue administrative and legislative initiatives that support workforce development with a focus on new stable, well-paying local jobs, and participation in a just transition to a low-carbon economy.
Agenda Page 79
d. Energy Equity: CPA will pursue administrative and legislative initiatives that supports increased access to clean energy technologies, clean energy and contracting jobs, and clean energy opportunities for environmental and social justice communities in CPA’s service territory.
e. Access to the Electrical Grid: CPA will pursue administrative and legislative initiatives that support reducing timelines in interconnection and service extensions for new construction, critical services, renewable energy, building decarbonization, and other projects in CPA’s service territory.
Agenda Page 80
Staff Report – Agenda Item 7
To: Board of Directors
From: Christian Cruz, Senior Community Outreach Manager Approved by: Ted Bardacke, Chief Executive Officer
Subject: Community Advisory Committee (CAC) Report
Date: May 2, 2024
RECOMMENDATION
Receive and file.
MEETING REPORT
The Community Advisory Committee did not meet in April.
Agenda Page 81
Staff Report – Agenda Item 8
To: Board of Directors
From: Gabriela Monzon, Clerk of the Board
Nancy Whang, General Counsel
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Election of Executive Committee At-Large Positions Date: May 2, 2024
RECOMMENDATION
1. Elect two Regular Directors to the Executive Committee at-large positions representing jurisdictions in Los Angeles County for terms starting July 1, 2024 through June 30, 2026.
2. Elect one Regular Director to the Executive Committee at-large position representing jurisdictions in Ventura County for a term starting July 1, 2024 through June 30, 2026.
BACKGROUND/DISCUSSION
At the April 4th Board meeting, Board Chair Klein Lopez opened the nomination period for CPA’s three at-large Executive Committee positions, two representing L.A. County Members and one representing Ventura County members. Two-year terms will begin on July 1, 2024 and expire on June 30, 2026.
The nomination period for the at-large positions of the Executive Committee remained open until 5 p.m. on Friday, April 19th, 2024.
Agenda Page 82
Board of Directors Item 8
The following nominations were received:
Los Angeles County:
1. Jeff Maloney, Alhambra
2. Alex Monteiro, Hawthorne
Ventura County:
1. Betsy Stix, Ojai
The eligibility criteria are:
1. The potential candidate must be a Regular Director;
2. The potential candidate must have attended at least 50% of CPA’s Regular Meetings in the prior 12 months; and,
3. The potential candidate must affirm that the candidate intends to serve a full term as an Executive Committee member.
The Clerk of the Board has verified that each of these nominees meets the eligibility criteria. The L.A. County at-large positions must be elected by Regular Directors representing jurisdictions in L.A. County. The Ventura County at-large position must be elected by Regular Directors representing jurisdictions in Ventura County.
The Clerk of the Board will conduct a rollcall vote for both the Los Angeles County and Ventura County positions. The Bylaws state that the top candidates with the greatest number of votes among voting Regular Directors be elected.
ATTACHMENT
None.
Agenda Page 83
Staff Report – Agenda Item 9
To: Board of Directors
From: Karen Schmidt, Director, Rates & Strategy
Approved By: Ted Bardacke, Chief Executive Officer
Matthew Langer, Chief Operating Officer
Subject: FY 2024/25 Rate Setting Approach
Date: May 2, 2024
RECOMMENDATION
Approve a rate setting approach for FY 2024/25:
(a) Select an option establishing a reserve percentage target and resulting total bill comparison levels for residential and small business rates using SCE’s June 1, 2024 rates1:
I. Option 1 – Low Reserve Scenario with a reserve percentage target of 34- 38%: Target 100% Green Power rates to provide a 3% premium with Clean Power at a 1% discount and Lean Power at a 2% discount; II. Option 2 (Recommended by Executive Committee) – Medium Reserve Scenario with a reserve percentage target of 38-41%: Target 100% Green Power rates to provide a 5% premium with Clean Power at a 0% discount and Lean Power at a 1% discount;
III. Option 3 – High Reserve Scenario with a reserve percentage target of 38- 42%: Target 100% Green Power rates to provide a 5% premium with Clean 1 These options are all based on total bill comparisons using projected SCE rates as of June 1, 2024. Final rates will be based on actual SCE rates effective June 1, 2024 and the Board-approved total bill comparison levels.
Agenda Page 84
Board of Directors Item 9
Power at a 1% premium and Lean Power at a 0% discount;
(b) Update rates for large commercial, industrial, pumping and agriculture, and streetlighting rate classes to reflect CPA’s current cost of service (COS)2 and based on the selected reserve option;
(c) Set total bill comparisons for customers in the cities of Hermosa Beach, Monrovia, and Santa Paula at the same total bill comparison levels as customers that began to receive service in 2018-2020 at the selected reserve option.
BACKGROUND
FY 2023/24 Rates and Competitive Position
CPA’s Board set residential and small business rates for FY 2023/24 in June 2023 such that 100% Green Power was targeted to be at a 3% premium compared to SCE’s total bill, Clean Power was targeted to be at a 1% discount to SCE, and Lean Power was targeted to be at a 2% discount to SCE for most customers, based on SCE rates effective March 1, 2023.3 As a result of subsequent SCE rate changes from June 2023 through March 2024, total bills for most CPA customers have remained below these bill comparison levels since July 2023.
SCE is planning a June 1 rate change that is expected to increase delivery charges and decrease SCE generation rates. Based on SCE’s projected June 2024 rates, total bill comparisons would remain within historic competitive ranges at current CPA rates, though results would be uneven across customer classes and PCIA vintages. 2 A list of these rate classes is on page 90, below. 3 This was the “Midpoint Reserve” option among the options considered by the Board in May 2023.
Agenda Page 85
Board of Directors Item 9
Total Bill Comparisons to SCE at Current CPA Rates*
Rate Class
Comparison to SCE Rates as of
March 2024
Comparison to Projected SCE Rates,
June 2024
Lean Power Clean Power
100% Green
Power
Lean Power Clean Power
100% Green
Power
Residential -2.9% -2.0% +1.7% -0.2% +0.7% +4.4%
Residential
CARE -4.3% -2.9% -2.9% -0.3% +1.1% +1.1%
Small
Business -2.3% -1.4% +2.4% +0.7% +1.7% +5.4%
*Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for the specified rate class based on CPA rates as of July 1, 2023. Individual customer comparisons vary by specific rate schedule and customer usage.
CPA Product Content and Price Differentials
In April, the Boad discussed the following rate product content targets that maintain CPA’s overall preference for renewables, keep the 100% Green product intact, allow for competitive rates, and are the most achievable/realistic:
o 100% Green: 100% renewables
o Clean Power: 50% clean energy with 25% from renewables and 25% carbon-free from large hydropower
o Lean Power: 40% clean energy from carbon-free large hydropower Based on these product contents, CPA’s Cost of Service (COS) analysis projects a 0-1% increase in the product price differential between Lean/Clean and 100% Green Power.
Although the increasing cost of short-term renewable energy has the largest impact on the 100% Green product, this impact is offset by the impact of the rising cost of carbon-free power on the Lean and Clean products. All of the rate options being presented to the Board fall within this projected range of product differentials.
Agenda Page 86
Board of Directors Item 9
Product Price Differentials (Total Bill Compared to Lean Power*) Energy Product FY 2020-21 FY 2022-23 FY 2023-24 FY 2024/25 Projected
Lean 0% 0% 0% 0%
Clean +1% +1% +1% +0.5 – 1%
100% Green +10% +4% +5% +5 – 6%
*Product differentials based on projected CPA cost of service and average total customer bills.
Reserves and Liquidity Goals
CPA’s Board adopted a Reserve Policy to enable CPA to satisfy working capital requirements, procure energy at competitive rates, adhere to contractual covenants, obtain and maintain an investment grade credit rating, cover unanticipated expenditures, and support rate stability. The Reserve Policy sets a minimum target of 30% and maximum target of 50% of total operating budget expenses, and a goal of at least 120 days liquidity on hand (DLOH)
Consistent with the Reserve Policy, CPA has steadily grown its reserves and liquidity and expects to just pass the minimum reserve target by the end of the current fiscal year.
Progress toward the reserve target has been slower than expected but strong liquidity metrics contributed significantly to CPA’s achievement of an investment-grade credit rating in September 2023. Making progress towards the midpoint reserve target of 40% by the end of FY 24/25 would strengthen CPA’s ability to weather continued market volatility while enabling CPA to continue offering stable and competitive rates and expand customer programs.
DISCUSSION
Although the competitive environment is tightening in 2024, CPA can continue to maintain a strong competitive position and value proposition while ensuring resilience through ongoing market volatility and continuing progress towards achieving strategic financial goals in FY 2024/25.
Agenda Page 87
Board of Directors Item 9
Staff’s recommended FY 2024/25 rate approach has three components:
1. Reserve options with resulting total bill comparison levels for residential and small business customers
2. Subset rates based on the selected reserve option
3. Rate approach for newest member communities
Total Bill Comparison Levels
Staff developed a range of options for total bill comparison levels for residential and small business customers who collectively represent over 99% of CPA customer accounts. The options are informed by the Board’s operating reserve, liquidity goals, and the cost of service. Total bill comparisons will be competitive with SCE and within CPA’s historical rate comparison ranges under all scenarios based on projected SCE rates as of June 1, 2024.
The Executive Committee unanimously supported Option 2, the Medium Reserve Scenario.
FY 2024/25 Rate Scenarios
Scenario
Residential/Small Business
Total Bill Comparison to SCE* Estimated Financial Metrics at End-FY25 Lean
Power
Clean
Power
100%
Green
Power
Contribution
to Net
Position
Reserve %
Days
Liquidity
on Hand
(DLOH)
FY 23/24 Year-end
(Projected)
-0.2% -
0.7% 0.7% - 1.7% 4.4% - 5.4% $216M -$231M 34% - 35% 146 – 151
1. Low Reserve -2.0% -1.0% +3.0% $54M - $94M 34% - 38% 133 – 147
2. Medium Reserve
(Recommended by
Executive Committee)
-1.0% 0% +5.0% $111M -
$151M 38% - 41% 145 – 160
3. High Reserve 0% +1.0% +5.0% $124M -
$164M 38% - 42% 148 - 162
*Comparisons are total bill comparisons based on representative 2018 PCIA vintage rate schedules, average customer usage, and load profiles for each specified rate class, and projected SCE rates as of June 1, 2024. Individual customer comparisons vary by specific rate schedule and customer usage.
Agenda Page 88
Board of Directors Item 9
See Appendix for detailed total bill comparisons for residential and small business customers on each option.
Option 1: Low Reserve Scenario
This option would place residential and small business rates at the same total bill comparison targets the Board approved last year for the FY 2023/24 rate approach, with 100% Green Power targeted at a 3% premium to SCE, Clean Power targeted at a 1% discount to SCE, and Lean Power targeted at a 2% discount to SCE. This would result in a reduction in customer generation charges, though it would not completely offset the expected June 1 increases in SCE delivery charges. It would result in a projected $54-94 million contribution to CPA’s net position, operating reserves of 34-38%, and 133-147 DLOH as of June 30, 2025. Staff believes that this option would increase the risk of CPA falling below the Board’s minimum reserve and liquidity goals and reduce CPA’s buffer against energy market volatility.
Option 2: Medium Reserve Scenario (recommended by Executive Committee) This approach targets 100% Green Power at a 5% premium to SCE, with Clean Power targeted at parity with SCE and Lean Power targeted at a 1% discount to SCE. This would result in a decrease in generation charges for customers on Lean and Clean Power compared to current levels, while maintaining generation charges for 100% Green Power at or near current levels. Projected contribution to net position would be $111-151 million, with operating reserves at 38-41% and 145-160 DLOH projected as of June 30, 2025.
Staff believes that this option provides a reasonable buffer against market volatility and puts reserves at or near the midpoint of the Board’s reserve targets, while maintaining a strong competitive position.
Option 3: High Reserve Scenario
This approach targets 100% Green Power at a 4% premium to SCE, with Clean Power targeted at a 1% premium to SCE and Lean Power targeted at parity with SCE. This would result in total bill comparisons that are similar to current levels based on SCE’s projected June 1 rates. Although generation charges would remain relatively level, Agenda Page 89
Board of Directors Item 9
customers would still see total bill increases owing to projected increases in SCE delivery charges. Projected contribution to net position would be $124-164 million, with 38-42% operating reserve and 148-162 DLOH projected as of June 1, 2025. While this approach would increase progress toward the Board’s maximum reserve target by a small amount compared to the Medium Reserve Scenario, it would reduce CPA’s competitive position relative to projected SCE rates and not allow CPA to have at least one commonly used rate at a discount to SCE.
Subset Rates
Most large commercial and industrial, pumping and agricultural, and streetlighting rates are referred to internally as “subset” rates4. Fewer than 9,900 CPA customers, or less than 1%, are on subset rates.
Bill comparisons relative to SCE for subset rates have historically been less competitive than residential and small business rates, however they have improved over time. Under the Low and Medium Reserve Scenarios presented above, most subset customers would have at least one option that is within 1-3% of SCE rates.
FY 2024/25 Total Bill Comparison Scenarios – Subset Rates Rate
Schedule
Low Reserve Scenario Medium Reserve Scenario High Reserve Scenario Lean Clean 100%
Green Lean Clean 100% Green Lean Clean 100% Green
TOU-GS-3-D 1.3% 2.3% 6.5% 2.6% 3.6% 8.9% 3.5% 2.5% 8.7% TOU-8-D-SEC 1.3% 2.4% 6.7% 2.6% 3.7% 9.1% 3.5% 2.4% 8.9% TOU-PA-2-D -0.5% 0.6% 5.0% 0.9% 2.0% 7.5% 1.7% 0.6% 7.2% TOU-PA-3-D 0.3% 1.4% 5.9% 1.7% 2.8% 8.5% 2.6% 1.4% 8.2% LS-1 17.7% 19.0% 23.9% 19.3% 20.5% 26.8% 20.4% 19.2% 26.7% * Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for each specified rate class and SCE rates as of March 1, 2023. Individual customer comparisons vary by specific rate schedule and customer usage.
4 Subset rates include TOU-8 and TOU-GS-3 rate classes for customers in Rolling Hills Estates, South Pasadena, and unincorporated Los Angeles County. Subset rates include TOU-8, TOU-GS-3, TOU-PA-2, TOU-PA-3, and LS-1 rate classes in all other parts of CPA’s service territory. The variation is due to those customers having different PCIA vintages.
Agenda Page 90
Board of Directors Item 9
New Member Community Rate Approach
Customers in three new CPA member agencies – Hermosa Beach, Monrovia, and Santa Paula – were placed on SCE’s 2023 vintage PCIA rates5 when CPA began service in March 2024. Together these three communities represent approximately 4% of CPA’s annual electric consumption. As part of the FY 2023/24 rate setting approach adopted by the Board in May 2024, rates for the new member communities were set to provide customers in these communities with the same FY 2023/24 target bill comparisons at launch of service that the Board approved for existing communities even though the new member communities PCIA rates were higher.
PCIA rates were reset in January 2024 and are negative for both 2018 and 2023 vintages.
However, the 2023 vintage PCIA rate remains higher than the 2018 vintage rate such that only under the Medium and High Reserve options will the three new communities continue to cover their cost of service.
Staff recommends continuing to set rates for new member communities to provide the same total bill comparisons as other existing communities in FY 2024/25. If the Board selects the Low Reserve option, staff would request that the Board have a further discussion about how to set total bill comparisons for the three new communities.
The communities of La Cañada Flintridge, Lynwood and Port Hueneme will begin service in October 2025 and will be placed on SCE’s 2025 vintage PCIA rates. Staff will bring a recommended rate approach for these communities to the Board for consideration later in 2024 to help inform those communities’ selection of a preferred energy option in Q1 2025.
Other Proposed Rate Authorizations
The FY 2024/25 rates submitted for Board approval in June will include authorization or reauthorization for the following rate schedules:
5 Most CPA customers are on SCE’s 2018 PCIA vintage rate.
Agenda Page 91
Board of Directors Item 9
• Power Share: Staff will provide updated rates for the Power Share program based on proposed FY 2024/25 residential rates and SCE rates as of June 1, 2024. • Peak Management Pricing: Staff will recommend continuing the Peak Management Pricing (PMP) program for a sixth year and will propose updated PMP rates for the program.
• Wind Credits: Staff will request reauthorization of the existing legacy Wind Credits for eligible small and medium-sized agricultural customers. • TOU-D-PRIME-EV: Staff will propose a new TOU-D-PRIME rate option to promote shifting of EV charging load from overnight to daytime hours. It will be a revenue neutral variation of the existing TOU-D-PRIME rate schedule available to residential customers upon request.
Summary of Options and Recommendations
The Executive Committee supported staff recommendations as described below on subset rates and new member community rates, and recommended that the Board adopt Option 2 – Medium Reserve Scenario – for residential and small business bill comparison targets:
• Reserve percentage target and resulting total bill comparison levels: Select an option establishing a reserve percentage target and resulting total bill comparison levels for residential and small business rates o Option 1 – Low Reserve Scenario: projected 34-38% reserves; o Option 2 – (Recommended by Executive Committee) Medium Reserve Scenario: projected 38-41% reserves;
o Option 3 – High Reserve Scenario: projected 38-42% reserves; • Update subset rates: Update streetlighting, pumping and agricultural, and large commercial and industrial subset rates to reflect current COS based on the selected reserve option
• Rate approach for new member communities: Set bill comparisons for Hermosa Beach, Monrovia, and Santa Paula at the same level of customers who Agenda Page 92
Board of Directors Item 9
began to receive service in 2018-2020 at the selected reserve option.
Community Advisory Committee Input
Staff presented the product content approach options and FY 2024/25 rates outlook to the Community Advisory Committee in March. The CAC supported the Board consensus approach to product content which has been used to develop the rates options being presented to the Board. Staff will present the FY 2024/25 rate approach options and the Board’s approved rate approach at the next CAC meeting on May 16.
NEXT STEPS
At the June Board meeting, staff will present detailed rate schedules based on the approved rate setting approach and final SCE rates as of June 1, 2024.
ATTACHMENTS
1. Appendix
2. FY 2024/25 Rate Setting Approach Presentation
Agenda Page 93
Board of Directors Item 9
APPENDIX
Projected Residential Customer Total Bill Comparisons – FY 2024/25 Rate Scenarios* Scenario
Average Monthly Bill Comparison to SCE
SCE
base Lean Clean 100% Green Lean Clean 100% Green
March 2024 rates $189 $184 $186 $193 -2.9% -2.0% 1.7%
Low Reserve $191 $187 $189 $196 -2.0% -1.0% 3.0%
Medium Reserve $191 $189 $191 $200 -1.0% 0.0% 5.0%
High Reserve $191 $191 $192 $200 0.0% 1.0% 5.0%
*Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for each rate class and projected SCE rates as of June 1, 2024. Individual customer comparisons vary by specific rate schedule and customer usage.
Projected Small Business Customer Total Bill Comparisons – FY 2024/25 Rate Scenarios* Scenario
Average Monthly Bill Comparison to SCE
SCE
base Lean Clean 100% Green Lean Clean 100% Green
March 2024 rates $277 $271 $274 $284 -2.3% -1.4% 2.4%
Low Reserve $277 $272 $275 $286 -2.0% -1.0% 3.0%
Medium Reserve $277 $275 $277 $291 -1.0% 0.0% 4.0%
High Reserve $277 $277 $280 $291 0.0% 1.0% 5.0%
*Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for each specified rate class and projected SCE rates as of June 1, 2024. Individual customer comparisons vary by specific rate schedule and customer usage.
Agenda Page 94
FY 2024/25
Rate Setting Approach
May 2, 2024
Agenda Page 95
Summary
Staff requests that the Board approve a rate setting approach that will guide the FY 2024/25 rates to be adopted by the Board at its June 6 meeting
Staff recommend:
o Total bill comparison levels: Select total bill comparison levels for residential and small business rates to support competitiveness and financial goals (see options on slides 9/10 – Executive Committee recommends “Medium Reserve” Option) o Update subset rates: Update streetlighting, pumping and agriculture, and large commercial and industrial subset rates to reflect current Cost of Service (see slide 11) and based on the selected Reserve Option
o Rate approach for new member communities: Maintain total bill comparisons for member communities that began service in 2024 at the same FY 2024/25 levels as those adopted for communities that began service in 2018 through 2020 Agenda Page 96
November 2023 – May 2024 (Staff) – FY 2024/25 rate planning; cost of service analysis, energy cost projections, load forecasting, and budgeting (ongoing) November 2, 2023 (Board) – First Look at 2024 PCIA and SCE Rates April 4, 2024 (Board) – FY 2024/25 Rates Outlook
April 18, 2024 (Executive Committee) – Recommend FY 2024/25 Rates Approach to Board May 2, 2024 (Board) – Request approval of FY 2024/25 Rate Setting Approach May 16, 2024 (Community Advisory Committee) – FY 2024/25 Rate Setting Approach May 16, 2024 (Executive Committee) – Proposed FY 2024/25 Rates June 6, 2024 (Board) – Request approval of Proposed FY 2024/25 Rates 3 FY 2024/25 Rates Process
Agenda Page 97
Considerations for FY 24/25 Rates
The options presented today are based on rate product content discussed at the April Board meeting. The new product content targets maintain CPA’s overall preference for renewables, keep the 100% Green product intact, allow for competitive rates, and are the most achievable/realistic
Key considerations for the FY 24/25 rate options include:
1. Price spread between CPA’s three retail rate products (Lean, Clean, 100% Green) based on the renewable and carbon-free energy content of each, along with current market conditions/prices of that content
2. Competitiveness with SCE. SCE reduced generation rates in January 2024 and will do so again in June, putting downward pressure on CPA generation rates
3. Reserve goals aimed at maintaining and growing CPA’s financial strength and stability SCE’s June 1 rates will be finalized in late May. The rates submitted to the Board for approval in June will be based on the actual SCE rates and the rate approach the Board selects in May
Agenda Page 98
Product Differentials
CPA’s Cost of Service (COS) analysis projects a 0-1% increase in the product price differential between Lean/Clean and 100% Green Power
o The increased cost of short-term renewable energy has the largest impact on 100% Green, but the cost of carbon-free power is also rising with growing demand and supply uncertainties All of the rate options being presented to the Board fall within the projected range of product differentials, assuming the following product content:
o 100% Green: 100% renewables
o Clean Power: 50% clean energy with 25% from renewables and 25% carbon-free from large hydropower o Lean Power: 40% clean energy from carbon-free large hydropower 5 Energy Product FY 2020-21 FY 2022-23 FY 2023-24 FY 2024/25 Projected Lean 0% 0% 0% 0%
Clean +1% +1% +1% +0.5 - 1%
100% Green +10% +4% +5% +5 - 6%
Product Price Differentials (Total bill,* Compared to Lean Power) *Product differentials based on projected CPA cost of service and average total customer bills.
Agenda Page 99
FY 24/25 Reserve Target
CPA’s Board adopted a Reserve Policy to enable CPA to satisfy working capital requirements, procure energy at competitive rates, adhere to contractual covenants, obtain and maintain an investment grade credit rating, cover unanticipated expenditures, and support rate stability
The Reserve Policy sets a minimum target of 30% and maximum target of 50% of total operating budget expenses, and a goal of at least 120 days liquidity on hand (DLOH) CPA has steadily grown its reserves and liquidity and expects to just surpass the minimum reserve target by the end of the current fiscal year o Progress toward the reserve target has been slower than expected but strong liquidity metrics contributed significantly to CPA’s achievement of an investment-grade credit rating in September 2023 Making progress towards the midpoint reserve target of 40% by the end of FY 24/25 would strengthen CPA’s ability to weather continued market volatility while enabling CPA to continue offering stable and competitive rates while expanding customer and community programs
Agenda Page 100
6 FY 24/25 Rate Approach
Recommendations
• Total bill comparison
levels
• Subset rates
• Rate approach for new
communities
Agenda Page 101
7 Current bill comparisons to SCE
CPA bill comparisons to SCE have fluctuated with SCE rate changes in October, January, and March, but have consistently remained better than the competitive targets set by the Board last June
Based on SCE’s projected June 2024 rate change, total bill comparisons would remain within historic competitive ranges at current CPA rates, though results would be uneven across PCIA vintages and customer classes
8 *Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for the specified rate class based on CPA rates as of July 1, 2023. Individual customer comparisons vary by specific rate schedule and customer usage.
Rate Class
Comparison to SCE Rates as of March 2024 Comparison to Projected SCE Rates, June 2024 Lean PowerClean Power 100% Green
Power Lean Power
Clean Power 100% Green
Power
Residential -2.9% -2.0% +1.7% -0.2% +0.7% +4.4%
Residential CARE -4.3% -2.9% -2.9% -0.3% +1.1% +1.1%
Small Business -2.3% -1.4% +2.4% +0.7% +1.7% +5.4%
Total Bill Comparisons to SCE at Current CPA Rates*
Agenda Page 102
FY24/25 total bill comparison options
The options offer a range of potential outcomes for CPA’s competitiveness, financial and rate stability objectives
9 Scenario
Residential/Small Business
Rate Comparison to SCE* Estimated Financial Metrics at End-FY25 Lean Power Clean
Power
100% Green
Power
Contribution to
Net Position Reserve %
Days Liquidity
on Hand
(DLOH)
FY 23/24 Year-end
(Projected) -0.2% - 0.7% 0.7% - 1.7% 4.4% - 5.4% $216M - $231M 34% - 35% 146 – 151 Low Reserve -2.0% -1.0% +3.0% $54M - $94M 34% - 38% 133 - 147 Medium Reserve
(Recommended by
Executive Committee)
-1.0% 0% +5.0% $111M - $151M 38% - 41% 145 - 160
High Reserve 0% +1.0% +5.0% $124M - $164M 38% - 42% 148 - 162 FY 2024/25 Rate Scenarios
*Comparisons are total bill comparisons based on representative 2018 PCIA vintage rate schedules, average customer usage, and load profiles for each specified rate class, and projected SCE rates as of June 1, 2024. Individual customer comparisons vary by specific rate schedule and customer usage.
The ranges shown in the Financial Metrics columns reflect continued volatility in markets and weather extremes and the need to increase contingency in energy costs.
Agenda Page 103
Total Bill Comparison Ranges – Residential
Projected Residential Customer Total Bill Comparisons – FY 24/25 Rate Scenarios* Scenario
Average Monthly Bill Comparison to SCE
SCE base Lean Clean 100% Green Lean Clean 100% Green
March 2024 rates $189 $184 $186 $193 -2.9% -2.0% 1.7%
Low Reserve $191 $187 $189 $196 -2.0% -1.0% 3.0%
Medium Reserve
(Recommended by
Executive Committee)
$191 $189 $191 $200 -1.0% 0.0% 5.0%
High Reserve $191 $191 $192 $200 0.0% 1.0% 5.0%
Residential bill comparisons will be competitive with SCE under all scenarios based on current SCE rates
SCE’s June 1 rate change is expected to increase delivery charges and decrease SCE generation rates, putting competitive pressure on CPA generation rates *Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for each rate class and projected SCE rates as of June 1, 2024. Individual customer comparisons vary by specific rate schedule and customer usage.
Agenda Page 104
Subset Rates
Subset Rate Total Bill Comparisons – FY 24/25 Rate Scenarios* Rate Schedule
Low Reserve Scenario Medium Reserve Scenario High Reserve Scenario Lean Clean 100% Green Lean Clean 100% Green Lean Clean 100% Green TOU-GS-3-D 1.1% 2.1% 6.3% 2.4% 3.4% 8.6% 3.5% 4.6% 8.7% TOU-8-D-SEC 1.1% 2.1% 6.4% 2.4% 3.4% 8.8% 3.6% 4.6% 8.9% TOU-PA-2-D -0.9% 0.2% 4.5% 0.4% 1.5% 7.0% 1.6% 2.7% 7.0% TOU-PA-3-D -0.2% 1.0% 5.4% 1.2% 2.3% 7.9% 2.4% 3.5% 8.0% LS-1 17.5% 18.7% 23.6% 19.0% 20.3% 26.5% 20.3% 21.6% 26.6% Large commercial and industrial, pumping and ag, and streetlighting rates are referred to internally as “subset rates”
Less than 9,900 or 1% of CPA customers are on subset rates Total bill comparisons for subset rates have improved over time *Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for each specified rate class and projected SCE rates as of June 1, 2024. Individual customer comparisons vary by specific rate schedule and customer usage.
Agenda Page 105
New member community rate approach
Customers in Hermosa Beach, Monrovia, and Santa Paula were placed on SCE’s 2023 vintage PCIA rates when CPA began service in March 2024. Together these new communities represent approximately 4% of CPA’s annual electricity consumption In June 2023 the Board approved setting bill comparisons for new member communities at the same level as existing communities in FY 23/24 even though their PCIA vintage rates were slightly different
Staff recommends continuing to set total bill comparisons for the three 2024 communities at the levels set for FY 24/25 for all other communities
o PCIA rates were reset in January 2024 and remain negative. However, the 2023 vintage PCIA rate remains higher than the 2018 vintage PCIA rate such that only under the Medium and High Reserve options will the three new communities continue to cover their Cost of Service The communities of La Cañada Flintridge, Lynwood and Port Hueneme will begin service in October 2025 and will be placed on SCE’s 2025 vintage PCIA rates o Staff will bring a recommended rate approach for these communities later in 2024 to help inform those communities’ selection of a preferred energy option in Q1 2025 Agenda Page 106
12 Total Bill comparison levels: Select total bill comparison levels for residential and small business rates to support competitiveness and financial goals
Update subset rates: Update streetlighting, pumping and ag, and large commercial and industrial subset rates to reflect current COS (as reflected in slide 11) and applying the selected Reserve Option Rate approach for new member communities: Maintain total bill comparisons for member communities that began service in 2024 at the same FY 2024/25 levels as those adopted for existing communities 13 Recap: FY 24/25 Rate Approach Recommendations
Scenario Lean Power Clean Power 100% Green Power
Low Reserve -2.0% -1.0% +3.0%
Medium Reserve
(Recommended by Executive Committee) -1.0% 0% +5.0%
High Reserve 0% +1.0% +5.0%
FY 2024/25 Rate Scenarios – Residential/Small Business Total Bill Comparisons to SCE* *Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for each rate class, and projected SCE rates as of June 1, 2024. Individual customer comparisons vary by specific rate schedule and customer usage.
Agenda Page 107
Next Steps
Today staff request that the Board approve a FY 2024/25 rate setting approach Final rate setting will take place at the June Board meeting along with adoption of the FY 2024/25 budget
o This rate setting will follow the rate approach adopted at the May Board meeting based on actual SCE June 2024 rates
Agenda Page 108
Questions
Agenda Page 109
Appendix
Agenda Page 110
Total Bill Comparison Ranges –
Small Business
Projected Small Business Customer Total Bill Comparisons – FY 24/25 Rate Scenarios Scenario
Average Monthly Bill Comparison to SCE
SCE base Lean Clean 100% Green Lean Clean 100% Green
March 2024 rates $277 $271 $274 $284 -2.3% -1.4% 2.4%
Low Reserve $277 $272 $275 $286 -2.0% -1.0% 3.0%
Medium Reserve $277 $275 $277 $291 -1.0% 0.0% 4.0%
High Reserve $277 $277 $280 $291 0.0% 1.0% 5.0%
*Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for each specified rate class and projected SCE rates as of June 1, 2024. Individual customer comparisons vary by specific rate schedule and customer usage.
Agenda Page 111
Staff Report – Agenda Item 10
To: Board of Directors
From: Lindsay Descagnia, Vice President, Power Supply
John McNamara, Director, Structured Contracts
Approved By: Matthew Langer, Chief Operating Officer
Ted Bardacke, Chief Executive Officer
Subject: Approve and Authorize Chief Executive Offer to Execute Energy Storage Agreements with Key Energy Storage, LLC, Desert Sands Energy Storage II, LLC and VESI 17 LLC
Date: May 2, 2024
RECOMMENDATION
Approve and authorize the Chief Executive Officer to execute the following long-term Energy Storage Agreements:
A. 20-Year Energy Storage Agreement with Key Energy Storage, LLC (Key) for the 190 MW Key project
B. 20-Year Energy Storage Agreement with Desert Sands II Energy Storage, LLC (Desert Sands II) for the 140 MW Desert Sands project
C. 20-Year Energy Storage Agreement with VESI 17 LLC (Denali) for the 93 MW Denali project
BACKGROUND
2023 Clean Energy and Reliability RFO
CPA launched its 2023 Clean Energy and Reliability Request for Offers (RFO) on June 9, 2023, with bids due on July 19, 2023. The goal of the solicitation was to fill a larger portion of CPA’s portfolio needs with long-term contracts in order to reduce the need to procure products such as Resource Adequacy (RA) and renewable energy in short-term markets, which are often volatile.
Agenda Page 112
Board of Directors Item 10
On September 27, 2023, the Energy Committee reviewed and approved a recommended shortlist and waitlist from the RFO, authorizing staff to proceed with power purchase agreement (PPA) negotiations. The Board has previously approved three projects from the RFO, SunZia Wind, Drifter standalone storage and Sentinel RA-only. The Denali project was on the waitlist approved by the Energy Committee and was moved to the shortlist by staff on November 2, 2023.
Since the approval of the shortlist and waitlist, many of the projects were sold to other buyers, requested price increases when CPA sought to enter exclusive negotiations, and/or discontinued negotiations after entering exclusivity. Meanwhile, changing market conditions have contributed to a tight supply market – including factors such as delays to project interconnections, scarcity of projects with Full Capacity Deliverability Status (FCDS), and rising financing costs. This has increased the urgency to execute high-value and viable long-term contracts in the near term; thus, CPA is exploring more opportunities to supplement RA and renewable energy procurement through bilateral offers in additional to the annual RFO process.
On April 15, 2024, a Review Team consisting of four Board members from the Energy Committee as well as senior CPA staff including the Chief Executive Officer, Chief Operating Officer, Vice President, Power Supply, and the Director of Structured Contracts met to analyze four bilateral offers. The Key and Desert Sands II projects were among those bilateral offers recommended by the Review Team. On April 24, 2024 the Energy Committee approved entering negotiations with the Key and Desert Sands II projects.
Per CPA’s Energy Risk Management Policy, any new build power purchase transaction with greater than a 5-year term or 7-year maturity limit1 is required to be approved by the Board.
1 Maturity Limit is defined as the maximum time period between transaction execution date and the date of the final delivery of the contracted product.
Agenda Page 113
Board of Directors Item 10
CPA retained Todd Larsen with Clean Energy Counsel to represent CPA and its interests in the negotiation of the Energy Storage Agreements for the Key, Desert Sands II, and Denali projects. The work of Mr. Larsen was overseen by CPA’s General Counsel.
OVERVIEW OF PROJECTS
Project Technology Capacity
(MW) Online Date Term Developer
Key Four-hour standalone
storage 190 MW 6/1/2027 20 NextEra
Desert
Sands II
Four-hour standalone
storage 140 MW 6/1/2027 20 NextEra
Denali Four-hour standalone
storage 93 MW 12/29/2027 20 Viridity (Ormat)
The projects are described in detail in the attached Project Description.
RATIONALE
In addition to the daily operations of the batteries, which charge during times while prices are low and the grid is abundant with clean energy and then discharge when prices are high and the electricity on the grid is dirtier, the Key, Desert Sands II, and Denali projects will help CPA meet its long-term RA obligations and reduce its need to procure RA in unstable short-term markets. The execution of these three agreements will provide 423 MW of RA beginning in 2027. The Denali and Key projects have FCDS already and the execution of an ESA will ensure that the projects maintain it. The Desert Sands II project applied for FCDS in the 2024 CAISO allocation process and expects to receive results by May 31, 2024.
ENVIRONMENTAL REVIEW
The project developers are responsible for acquiring the necessary California Environmental Quality Act (CEQA) review and permits with the relevant lead agencies.
The lead agency for the Key project is Fresno County, for Desert Sands II it is the City of Palm Springs, and for Denali it is the City of Lathrop. The developer of each of the three
Agenda Page 114
Board of Directors Item 10
projects is working to secure the necessary permits and CEQA approval from the lead agency.
CPA has no role, jurisdiction, or authority whatsoever with respect to permit review or project approval for the Key, Desert Sands II, or Denali projects.
ATTACHMENTS2
1. Project Description A: Key
2. Project Description B: Desert Sands II
3. Project Description C: Denali
4. Energy Storage Agreement with Key Energy Storage, LLC
5. Energy Storage Agreement with Desert Sands Energy Storage II, LLC
6. Energy Storage Agreement with VESI 17 LLC
7. Energy Storage Agreements Presentation
2 Consistent with industry practice, portions of the attached agreements have been redacted to protect market sensitive information.
Agenda Page 115
Board of Directors Item 10
Evaluation Criteria
CPA ranks projects for economic value based on the net present value (NPV) to CPA and on a High, Medium, Neutral, and Low scale in five other evaluation criteria categories (Development Score, Workforce Development, Environmental Stewardship, Benefits to Disadvantaged Communities, and Project Location). The below includes the rankings assigned to each project in each of those categories.
PROJECT DESCRIPTION A: Key
Project Overview
Key Energy Storage is a proposed lithium-ion standalone storage project in Fresno County, California. The commercial operation date for the project is June 1, 2027.
Under the proposed agreement, CPA would contract for 190 MW of a larger 300 MW energy complex. CPA pays a fixed price per kW-month, with no escalation for the full term of the contract (20 years). CPA is entitled to all product attributes from the facility, including energy, ancillary services, and Resource Adequacy.
The project has been awarded FCDS, however, the project’s Interconnection Agreement (IA) requires an amendment in order to align the Interconnection Facilities online date with the project online date. In order to finalize this amendment to the IA and ensure the project keeps its FCDS, the project developer must demonstrate an executed contract with an buyer.
CPA executed an Energy Storage Agreement with NextEra for the Desert Sands long-duration storage project in 2023. A portion of the Key project was included in that ESA as a back-up in the event that the Desert Sands long-duration project did not obtain FCDS.
The capacity from the Key project being considered in this Staff Report is separate and additional to that back-up capacity.
Developer
NextEra Energy Resources is an experienced developer with expertise in developing, constructing, and operating wind, solar, and battery storage projects across North
Agenda Page 116
Board of Directors Item 10
America. Together with its subsidiaries, NextEra Energy Resources owns and operates a total generating capacity of approximately 37,000 MW as of year-end 2023.
CPA has four existing long-term contracts with NextEra, for a combined 581 MW of renewable generating capacity and 247 MW of storage capacity.
Value
The Key bilateral offer was compared to offers in the RFO. The Key offer fell within the second quartile (Q2) of offer submissions ranked by NPV in the RFO.
Development Score
The project ranks High as it is in late stage of development and substantially de-risked.
All land for the project is under contract and the project has an executed Interconnection Agreement. The Conditional Use Permit is expected in October 2025.
Workforce Development
The project ranks High as construction for the project will be conducted using a Project Labor Agreement. It is estimated the project will create up to 50 new construction jobs and 2 new permanent jobs.
Environmental Stewardship
The project ranks Neutral as it is located on a site zoned for agricultural use but adjacent to a substation and close to existing solar facilities.
Benefits to Disadvantaged Communities
The project ranks Medium as it is not located within a Disadvantaged Community (DAC) but will provide benefits to DACs including potential hiring form workers in neighboring communities. NextEra is also providing a $150,000 grant to CPA to be used to support community benefits.
Project Location
The project ranks Medium because it is located within California but is not within Los Angeles or Ventura counties.
Agenda Page 117
Board of Directors Item 10
PROJECT DESCRIPTION B: Desert Sands II
Project Overview
Desert Sands II is a proposed 140 MW lithium-ion battery storage facility located in Palm Springs in Riverside County, California. The commercial operation date is June 1, 2027.
Under the proposed agreement, CPA would contract for 140 MW of a larger 300 MW energy complex. CPA pays a fixed price per kW-month, with no escalation for the full term of the contract (20 years). CPA is entitled to all product attributes from the facility, including energy, ancillary services, and resource adequacy.
The project has completed its Phase II Interconnection Study and is seeking to acquire FCDS from the California Independent System Operator (CAISO) in the 2024 allocation cycle and expects to receive results by May 31, 2024. If the project does not obtain FCDS from CAISO, then CPA may terminate the agreement without penalty to either party.
CPA executed an Energy Storage Agreement with NextEra for the Desert Sands II long-duration storage project in 2023. The Desert Sands long-duration and Desert Sands II projects are located at the same site but are unique resources. The capacity from the Desert Sands II project being considered in this Staff Report is separate and additional to that long-duration capacity already under contract.
Developer
NextEra Energy Resources is an experienced developer with expertise in developing, constructing, and operating wind, solar, and battery storage projects across North America. Together with its subsidiaries, NextEra Energy Resources owns and operates a total generating capacity of approximately 37,000 MW as of year-end 2023.
CPA has four existing long-term contracts with NextEra, for a combined 581 MW of renewable generating capacity and 247 MW of storage capacity.
Value
The Desert Sands II bilateral offer was compared to offers in the RFO. The offer fell within the second quartile (Q2) of offer submissions ranked by NPV.
Agenda Page 118
Board of Directors Item 10
Development Score
The project ranks High as it is in late-stage development and substantially de-risked. All land for the project is under contract and the project’s Interconnection Agreement is executed. The Conditional Use Permit is expected in June 2025 and the Initial Study by lead agency the City of Palm Springs adopted a Mitigated Negative Declaration.
Workforce Development
The project ranks High as construction for the project will use a project labor agreement.
The developer estimates this project will create up to 50 new construction and 2 permanent jobs.
Environmental Stewardship
The project ranks High as it is located on an industrial zoned parcel with existing energy infrastructure on it.
Benefits to Disadvantaged Communities
The project ranks Medium as it is not located within a Disadvantaged Community (DAC) but will provide benefits to DACs including targeted hiring from workers in neighboring communities. NextEra is also providing a $150,000 grant to CPA to be used to support community benefits.
Project Location
The project ranks Medium as it is in California but not within Los Angeles or Ventura counties.
Agenda Page 119
Board of Directors Item 10
PROJECT DESCRIPTION C: Denali
Project Overview
Denali Energy Storage is a 93 MW / 372 MWh, lithium-ion battery storage facility located in the city of Lathrop in San Joaquin County. The commercial operation date is November 29, 2027.
Under the proposed agreement, CPA would contract for 93 MW of the project’s 101.2 MW total capacity. CAISO has awarded FCDS to 93 MW of the facility and Denali has requested FCDS for an additional 8.2 MW and expects to receive the results by May 31, 2024. Per the agreement, CPA will contract for the remaining 8.2 MW if that portion also receives FCDS from the CAISO. CPA pays a fixed-price per kW-month, with no escalation for the full term of the contract (20 years). CPA is entitled to all product attributes from the facility, including energy, ancillary services, and resource adequacy.
Developer
Viridity Energy Solutions, Inc, a subsidiary of Ormat Nevada, Inc., has 56+ years of experience in designing, manufacturing, building, owning, and operating state-of-the-art geothermal energy, recovered energy generation, solar PV, and energy storage systems.
They are a leader in energy storage, energy management services and demand response with 170 MW of battery storage systems online, 155 MW under construction and over 2,000 MW in the development pipeline.
Value
The Denali bilateral offer was compared to offers in the RFO. The offer fell within the second quartile (Q2) of offer submissions ranked by NPV.
Development Score
The project ranks Medium as the project is in mid-stage development. All land for the project is under contract and the project has completed the Phase II Interconnection Study. The Interconnection Agreement is expected to be executed by August 15, 2024.
The Conditional Use Permit is expected by September 1, 2026.
Agenda Page 120
Board of Directors Item 10
Workforce Development
The project ranks Medium as construction for the project will not use a project labor agreement. Viridity has committed to paying prevailing wages and to targeted hire commitments. It is estimated the project will create up to 10 new construction jobs and 2 new permanent jobs.
Environmental Stewardship
The project ranks Neutral as it is not located in an environmental avoidance area, but it is located on semi-disturbed land. The project site is surrounded by commercial and industrial development.
Benefits to Disadvantaged Communities
The project ranks Neutral as it is not located within a Disadvantaged Community (DAC) and does not demonstrate DAC benefits.
Project Location
The project ranks Medium because it is located in California but not within Los Angeles or Ventura counties.
Agenda Page 121
Execution Version
ENERGY STORAGE AGREEMENT
COVER SHEET
Seller: Key Energy Storage, LLC
Buyer: Clean Power Alliance of Southern California, a California joint powers authority Description of Facility: A 190 MW / 760 MWh battery energy storage system, located in Fresno County, California
Milestones:
Milestone Expected Date for
Completion
Evidence of Site Control Complete
Documentation of Conditional Use Permit if required:
CEQA [ ] Cat Ex, [ ]Neg Dec, [ ]Mitigated Neg Dec,
[X]EIR (provided CUP type subject to change)
October 1, 2025
Seller’s receipt of Phase I and Phase II Interconnection study results for Seller’s Interconnection Facilities Complete Executed Interconnection Agreement
Financial Close
Expected Construction Start Date
Initial Synchronization January 1, 2027
Network Upgrades completed (evidenced by delivery of
permission to parallel letter from the Transmission
Provider)
January 1, 2027
Expected Date of CAISO Commercial Operation April 1, 2027 Expected Commercial Operation Date June 1, 2027
Delivery Term: Twenty (20) Contract Years
Guaranteed Capacity: 190 MW of Installed Capacity at four (4) hours of continuous discharge Agenda Page 122
Agenda Page 123
Guaranteed Commercial Operation Date: June 1, 2027, as such date may be extended by Seller’s payment of Commercial Operation Delay Damages pursuant to Section 2 of Exhibit B and/or a Development Cure Period pursuant to Section 4 of Exhibit B.
Storage Rate:
Contract Year Storage Rate
1 – 20 $ /kW-mo. (flat)
with no escalation
Seller’s Assumed Tax Credits: As of the Effective Date, Seller intends to qualify for and utilize the ITC at forty percent (40%).
Product:
☒ Facility Energy
☒ Installed Capacity and Effective Capacity
☒ Ancillary Services
☒ Capacity Attributes
Anticipated Flexible Capacity: Amount: 190 (MW), subject to changes by the CPUC pursuant to the Resource Adequacy Rulings, the CAISO pursuant to the CAISO Tariff, or by any other Governmental Authority having jurisdiction.)
Scheduling Coordinator: Buyer
Security Amount:
Development Security: $105/kW of Guaranteed Capacity
Performance Security: $105/kW of Installed Capacity
Guarantor: NextEra Energy Capital Holdings, Inc. (as of the Effective Date)
Agenda Page 124
TABLE OF CONTENTS
Page
i
ARTICLE 1 DEFINITIONS ........................................................................................................ 1
1.1 Contract Definitions............................................................................................. 1
1.2 Rules of Interpretation ...................................................................................... 22 ARTICLE 2 TERM; CONDITIONS PRECEDENT.................................................................. 24
2.1 Contract Term. ................................................................................................... 24
2.2 Conditions Precedent ......................................................................................... 24
2.3 Development; Construction; Progress Reports............................................... 25
2.4 Remedial Action Plan ........................................................................................ 26
2.5 Pre-Commercial Operation Actions. ................................................................ 26 ARTICLE 3 PURCHASE AND SALE ...................................................................................... 26
3.1 Product ................................................................................................................ 26
3.2 Facility Energy. .................................................................................................. 27
3.3 Ancillary Services............................................................................................... 27
3.4 Capacity Attributes. ........................................................................................... 27
3.5 Resource Adequacy Failure. ............................................................................. 28
3.6 Compliance Expenditure Cap. .......................................................................... 29
3.7 Facility Configuration ....................................................................................... 30
3.8 Ownership of Incentives .................................................................................... 30 ARTICLE 4 OBLIGATIONS AND DELIVERIES ................................................................... 30
4.1 Delivery ............................................................................................................... 30
4.2 Station Use .......................................................................................................... 31
4.3 Performance Guarantees; Ancillary Services ................................................. 31
4.4 Facility Testing. .................................................................................................. 32
4.5 Testing Costs and Revenues. ............................................................................. 33
4.6 Facility Operations............................................................................................. 33
4.7 Dispatch Notices ................................................................................................. 34
4.8 [Intentionally Omitted] ...................................................................................... 34
4.9 Energy Management. ......................................................................................... 34
4.10 Capacity Availability Notice. ............................................................................ 36
4.11 Outages................................................................................................................ 36 ARTICLE 5 TAXES, GOVERNMENTAL AND ENVIRONMENTAL COSTS .................... 38
5.1 Allocation of Taxes and Charges. ..................................................................... 38
5.2 Cooperation. ....................................................................................................... 38
5.3 Environmental Costs. ........................................................................................ 38 ARTICLE 6 MAINTENANCE AND REPAIR OF THE FACILITY ....................................... 39
6.1 Maintenance of the Facility. .............................................................................. 39
6.2 Maintenance of Health and Safety. .................................................................. 39
6.3 Shared Facilities. ................................................................................................ 39
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ii
ARTICLE 7 METERING ........................................................................................................... 40
7.1 Metering. ............................................................................................................. 40
7.2 Meter Verification. ............................................................................................. 41 ARTICLE 8 INVOICING AND PAYMENT; CREDIT ............................................................ 41
8.1 Invoicing.............................................................................................................. 41
8.2 Payment. ............................................................................................................. 41
8.3 Books and Records. ............................................................................................ 42
8.4 Payment Adjustments; Billing Errors. ............................................................ 42
8.5 Billing Disputes................................................................................................... 42
8.6 Netting of Payments. .......................................................................................... 42
8.7 Seller’s Development Security. ......................................................................... 43
8.8 Seller’s Performance Security. ......................................................................... 43
8.9 First Priority Security Interest in Cash or Cash Equivalent Collateral ....... 43
8.10 Buyer’s Financial Statements ........................................................................... 44 ARTICLE 9 NOTICES .............................................................................................................. 44
9.1 Addresses for the Delivery of Notices............................................................... 44
9.2 Acceptable Means of Delivering Notice ........................................................... 44 ARTICLE 10 FORCE MAJEURE ............................................................................................. 45
10.1 Definition ............................................................................................................ 45
10.2 No Liability If a Force Majeure Event Occurs ............................................... 46
10.3 Notice ................................................................................................................... 46
10.4 Termination Following Force Majeure Event or Development Cure Period .................................................................................................................. 46 ARTICLE 11 DEFAULTS; REMEDIES; TERMINATION ..................................................... 47
11.1 Events of Default ................................................................................................ 47
11.2 Remedies; Declaration of Early Termination Date. ....................................... 50
11.3 Damage Payment; Termination Payment ....................................................... 50
11.4 Notice of Payment of Termination Payment or Damage Payment ............... 51
11.5 Disputes With Respect to Termination Payment or Damage Payment ........ 51
11.6 Limitation on Seller’s Ability to Make or Agree to Third-Party Sales from the Facility after Early Termination Date. ............................................. 52
11.7 Rights And Remedies Are Cumulative ............................................................ 52
11.8 Mitigation............................................................................................................ 52
11.9 Seller Pre-COD Liability Limitations .............................................................. 52 ARTICLE 12 LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES ........ 52
12.1 No Consequential Damages. .............................................................................. 52
12.2 Waiver and Exclusion of Other Damages. ....................................................... 53 ARTICLE 13 REPRESENTATIONS AND WARRANTIES; AUTHORITY .......................... 54
13.1 Seller’s Representations and Warranties. ....................................................... 54
13.2 Buyer’s Representations and Warranties. ....................................................... 55
13.3 General Covenants. ............................................................................................ 56
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13.4 Workforce Development ................................................................................... 56
13.5 Disadvantaged Communities Development.. ................................................... 56 ARTICLE 14 ASSIGNMENT.................................................................................................... 56
14.1 General Prohibition on Assignments ............................................................... 56
14.2 Collateral Assignment ....................................................................................... 57
14.3 Permitted Assignment by Seller. ...................................................................... 57
14.4 Permitted Transfers by Seller. .......................................................................... 57
14.5 Shared Facilities; Portfolio Financing ............................................................. 57
14.6 Buyer Financing Assignment ............................................................................ 57
14.7 [Intentionally Omitted]. ..................................................................................... 58
14.8 Accommodation of Tax Equity Investors. ....................................................... 58 ARTICLE 15 DISPUTE RESOLUTION ................................................................................... 59
15.1 Governing Law. .................................................................................................. 59
15.2 Dispute Resolution. ............................................................................................ 59
15.3 Attorneys’ Fees. .................................................................................................. 59
15.4 Venue. .................................................................................................................. 59 ARTICLE 16 INDEMNIFICATION ......................................................................................... 59
16.1 Indemnification. ................................................................................................. 59
16.2 Claims.................................................................................................................. 60 ARTICLE 17 INSURANCE ...................................................................................................... 60
17.1 Insurance ............................................................................................................ 60 ARTICLE 18 CONFIDENTIAL INFORMATION ................................................................... 62
18.1 Definition of Confidential Information ............................................................ 62
18.2 Duty to Maintain Confidentiality ..................................................................... 62
18.3 Irreparable Injury; Remedies. .......................................................................... 63
18.4 Further Permitted Disclosure ........................................................................... 63
18.5 Press Releases ..................................................................................................... 63 ARTICLE 19 MISCELLANEOUS ............................................................................................ 64
19.1 Entire Agreement; Integration; Exhibits......................................................... 64
19.2 Amendments.. ..................................................................................................... 64
19.3 No Waiver. .......................................................................................................... 64
19.4 No Agency, Partnership, Joint Venture or Lease. .......................................... 64
19.5 Severability ......................................................................................................... 64
19.6 Mobile-Sierra...................................................................................................... 65
19.7 Counterparts. ..................................................................................................... 65
19.8 Electronic Delivery............................................................................................. 65
19.9 Binding Effect. .................................................................................................... 65
19.10 No Recourse to Members of Buyer................................................................... 65
19.11 Forward Contract .............................................................................................. 65
19.12 Change in Electric Market Design ................................................................... 65
19.13 Further Assurances ............................................................................................ 66
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iv
Exhibits:
Exhibit A Facility Description
Exhibit B Facility Construction and Commercial Operation Exhibit C Compensation
Exhibit D Scheduling Coordinator Responsibilities
Exhibit E Progress Reporting Form
Exhibit F-1 Form of Monthly Expected Available Effective Capacity Report Exhibit F-2 Form of Monthly Expected Available Storage Capability Report Exhibit G Form of Daily Availability Notice
Exhibit H Form of Commercial Operation Date Certificate Exhibit I Form of Capacity Test Certificate
Exhibit J Form of Construction Start Date Certificate
Exhibit K Form of Letter of Credit
Exhibit L Intentionally Omitted
Exhibit M Form of Replacement RA Notice
Exhibit N Notices
Exhibit O Capacity Tests
Exhibit P Annual Capacity Availability Calculation
Exhibit Q Operating Restrictions
Exhibit R Metering Diagram
Exhibit S Form of Guaranty
Exhibit T Form of Consent to Collateral Assignment
Exhibit U Supply Chain Code of Conduct
Exhibit V Material Permits
Exhibit W Force Majeure Event and/or Development Cure Period Claim Form
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ENERGY STORAGE AGREEMENT
This Energy Storage Agreement (“Agreement”) is entered into as of _________ (the “Effective Date”), between Buyer and Seller. Buyer and Seller are sometimes referred to herein individually as a “Party” and jointly as the “Parties.” All capitalized terms used in this Agreement are used with the meanings ascribed to them in Article 1 to this Agreement.
RECITALS
WHEREAS, Seller intends to develop, design, construct, own, and operate the Facility; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the terms and conditions set forth in this Agreement, the Product;
WHEREAS, Buyer is entering into the Agreement with the intention that the Facility’s NQC will be counted toward Buyer’s clean energy mid-term reliability procurement obligations set forth in CPUC D.21-06-035 (as may be revised by further decisions); NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the sufficiency and adequacy of which are hereby acknowledged, the Parties agree to the following:
ARTICLE 1
DEFINITIONS
1.1 Contract Definitions. The following terms, when used herein with initial capitalization, shall have the meanings set forth below:
“AC” means alternating current.
“Accepted Compliance Costs” has the meaning set forth in Section 3.6(c). “Affiliate” means, with respect to any Person, each Person that directly or indirectly controls, is controlled by, or is under common control with such designated Person. For purposes of this definition and the definition of “Permitted Transfer” and “Permitted Transferee”, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean (a) the direct or indirect right to cast at least fifty percent (50%) of the votes exercisable at an annual general meeting (or its equivalent) of such Person or, if there are no such rights, ownership of at least fifty percent (50%) of the equity or other ownership interest in such Person, or (b) the right to direct the policies or operations of such Person. Notwithstanding the foregoing, with respect to Seller, Affiliate shall include NextEra Energy Partners, LP (“NEP”), NextEra Energy Operating Partners, LP (“NEOP”), and NextEra Energy Capital Holdings, Inc. (“NEECH”), and their respective direct or indirect subsidiaries. “After-Tax Basis” means, with respect to any payment received, or deemed to have been
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2 received, by any Person, the amount of such payment (the “Base Payment”), supplemented by a further payment (the “Additional Payment”) to such Person so that the sum of the Base Payment plus the Additional Payment will be equal to the Base Payment, after deduction of the amount of all taxes required to be paid by such Person in respect of the receipt or accrual of the Base Payment and the Additional Payment (taking into account any current or previous credits or deductions arising from the underlying event giving rise to the payment, the Base Payment and the Additional Payment). Such calculations shall be made on the assumption that the recipient is subject to Federal income taxation at the statutory rate applicable to corporations under subchapter C of the Internal Revenue Code of 1986, as amended, and subject to the highest state and local income tax rate then in effect for corporations in the states in which the Person is subject to taxation during the applicable fiscal year, and shall take into account the deductibility, if applicable (for Federal income tax purposes), of state and local income taxes.
“Agreement” has the meaning set forth in the Preamble and includes the Cover Sheet and any Exhibits, schedules and any written supplements hereto. “Ancillary Meter” has the meaning set forth in Section 7.1(a). “Ancillary Services” means spinning reserve, non-spinning reserve, regulation up, regulation down, voltage support, and any other ancillary services that the Facility is capable of providing consistent with the Operating Restrictions, as each is defined in the CAISO Tariff. “Annual Capacity Availability” has the meaning set forth in Exhibit P. “Anticipated Flexible Capacity” means the amount and category of Flexible Capacity identified on the Cover Sheet which Seller anticipates as of the Effective Date that the Facility will be qualified by the CAISO to provide to Buyer.
“Automated Dispatch System” or “ADS” has the meaning set forth in the CAISO Tariff. “Automatic Generation Control” or “AGC” has the meaning set forth in the CAISO Tariff.
“Auxiliary Use” means the Energy that is used (including Energy used during the charging or discharging of the Facility) within the Facility to power the motors, temperature control systems, control systems and other electrical loads that are integral to the charging or discharging of the Facility; provided, if Seller demonstrates prior to Commercial Operation to Buyer’s reasonable satisfaction that Station Use is not reasonably likely to exceed Auxiliary Use by more than two percent (2%) in each month, “Auxiliary Use” and “Station Use” shall be deemed to be interchangeable for purposes of this Agreement.
“Availability Notice” means Seller’s availability forecasts issued pursuant to Section 4.10 with respect to the Available Effective Capacity and Available Storage Capability, which shall include any updates from Seller with respect to Facility outages or availability as reported to CAISO (including as reported in OMS).
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3 “Availability Standards” has the meaning set forth in the CAISO Tariff or such other similar term as modified and approved by FERC hereafter to be incorporated in the CAISO Tariff.
“Available Effective Capacity” has the meaning in Exhibit P. “Available Storage Capability” has the meaning in Exhibit P. “Bankrupt” or “Bankruptcy” means with respect to any entity, such entity that (a) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Law, (b) has any such petition filed or commenced against it which remains unstayed or undismissed for a period of ninety (90) days, (c) makes an assignment or any general arrangement for the benefit of creditors, (d) otherwise becomes bankrupt or insolvent (however evidenced), (e) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (f) is generally unable to pay its debts as they fall due.
“Battery Charging Factor” means the quotient (expressed as a decimal) of (a) the Charging Energy after reaching 100% SOC or the first five (5) hours of the charging phase of the applicable Capacity Test, as applicable, divided by (b) the Installed Capacity x four (4) hours MWh, not to exceed one (1).
“Battery Discharging Factor” means the quotient (expressed as a decimal) of (a) the Facility Energy after the first four (4) hours of the discharging phase of the applicable Capacity Test, divided by (b) the Installed Capacity x four (4) hours MWh, not to exceed one (1). “BESS Equipment” means batteries, battery modules, onboard sensors, control components, inverters, transformers, or any of their components. “Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday in California. A Business Day begins at 8:00 a.m. and ends at 5:00 p.m. local time for the Party sending a Notice, or payment, or performing a specified action. “Buyer” has the meaning set forth on the Cover Sheet.
“Buyer Default” means an Event of Default of Buyer.
“Buyer Dispatched Test” has the meaning in Section 4.4(c). “Buyer’s Indemnified Parties” has the meaning set forth in Section 18.2. “CAISO” means the California Independent System Operator Corporation or any successor entity performing similar functions.
“CAISO Certification” means the certification and testing requirements for a storage unit set forth in the CAISO Tariff that are applicable to the Facility, including certification and testing
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4 for all Ancillary Services, PMAX, and PMIN associated with such storage units, that are applicable to the Facility.
“CAISO Charges Invoice” has the meaning set forth in Exhibit D. “CAISO Commercial Operation” has the meaning of “Commercial Operation” set forth in the CAISO Tariff.
“CAISO Dispatch” means any Charging Notice or Discharging Notice given by the CAISO to the Facility, whether through ADS, AGC or any successor communication protocol, communicating an Ancillary Service Award (as defined in the CAISO Tariff) or directing the Facility to charge or discharge at a specific MW rate for a specified period of time or amount of MWh.
“CAISO Grid” has the same meaning as “CAISO Controlled Grid” as defined in the CAISO Tariff.
“CAISO-Penalized Shortfall” has the meaning set forth in Section 3.5(b)(ii). “CAISO Tariff” means the California Independent System Operator Corporation Agreement and Tariff, Business Practice Manuals (BPMs), and Operating Procedures, including the rules, protocols, procedures and standards attached thereto, as the same may be amended or modified from time-to-time and approved by FERC.
“Calculation Interval” has the meaning set forth in Exhibit P. “Capacity Attribute” means any current or future defined characteristic, certificate, tag, credit, or accounting construct associated with the amount of power that the Facility can charge or discharge and deliver to the Delivery Point at a particular moment and that can be purchased, sold or conveyed under CAISO or CPUC market rules, including Resource Adequacy Benefits. “Capacity Availability Factor” has the meaning set forth in Exhibit C. “Capacity Availability Payment True-Up” has the meaning set forth in Exhibit C. “Capacity Availability Payment True-Up Amount” has the meaning set forth in Exhibit C.
“Capacity Damages” has the meaning set forth in Section 5 of Exhibit B. “Capacity Test” or “CT” means any test or retest of the Facility to establish the Installed Capacity, Effective Capacity or any other test conducted pursuant to Exhibit O. “Change of Control” means, except in connection with public market transactions of equity interests or capital stock of Seller’s Ultimate Parent, any circumstance in which Ultimate Parent ceases to own, directly or indirectly through one or more intermediate entities, more than fifty percent (50%) of the outstanding equity interests in Seller; provided, in calculating ownership percentages for all purposes of the foregoing:
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5 (a) any ownership interest in Seller held by Ultimate Parent indirectly through one or more intermediate entities shall not be counted towards Ultimate Parent’s ownership interest in Seller unless Ultimate Parent directly or indirectly owns more than fifty percent (50%) of the outstanding equity interests in each such intermediate entity; and (b) ownership interests in Seller owned directly or indirectly by any Lender (including any tax equity provider) or assignee or transferee thereof shall be excluded from the total outstanding equity interests in Seller;
provided further, a Change of Control shall not be deemed to have occurred as a result of a Permitted Transfer.
“Charging Energy” means all Energy delivered to the Delivery Point pursuant to a Charging Notice, as measured by the Facility Meter.
“Charging Notice” means the operating instruction, and any subsequent updates, given by Buyer’s SC or the CAISO to Seller, directing the Facility to charge at a specific MW rate for a specified period of time or amount of MWh; provided, any such operating instruction shall be in accordance with the Operating Restrictions. Any instruction to charge the Facility pursuant to a Buyer Dispatched Test shall be considered a Charging Notice. “COD Certificate” has the meaning set forth in Exhibit B. “Collateral Assignment Agreement” has the meaning set forth in Section 14.2. “Commercial Operation” has the meaning set forth in Exhibit B. “Commercial Operation Capacity Test” means the Capacity Test conducted in connection with Commercial Operation of the Facility, including any additional Capacity Test for additional capacity installed after the Commercial Operation Date pursuant to Section 5 of Exhibit B.
“Commercial Operation Date” means the date Commercial Operation is achieved. “Commercial Operation Delay Damages” means an amount equal to (a) the Development Security amount required hereunder, divided by (b) ninety (90). “Communications Protocols” means certain Operating Restrictions developed by the Parties pursuant to Exhibit Q that involve procedures and protocols regarding communication with respect to the operation of the Facility pursuant to this Agreement. “Compliance Actions” has the meaning set forth in Section 3.6(a). “Compliance Expenditure Cap” has the meaning set forth in Section 3.6. “Confidential Information” has the meaning set forth in Section 18.1. “Construction Start” has the meaning set forth in Exhibit B.
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6 “Construction Start Date” has the meaning set forth in Exhibit B. “Contract Term” has the meaning set forth in Section 2.1. “Contract Year” means a period of twelve (12) consecutive months. The first Contract Year shall commence on the Commercial Operation Date and each subsequent Contract Year shall commence on the anniversary of the Commercial Operation Date. “Costs” means, with respect to the Non-Defaulting Party, brokerage fees, commissions and other similar third-party transaction costs and expenses reasonably incurred by such Party either in terminating any arrangement pursuant to which it has hedged its obligations or entering into new arrangements which replace the Agreement; and all reasonable attorneys’ fees and expenses incurred by the Non-Defaulting Party in connection with terminating the Agreement. “Cover Sheet” means the cover sheet to this Agreement, which is incorporated into this Agreement.
“COVID-19” means the epidemic disease designated COVID-19 and the related virus designated SARS-CoV-2 and any mutations thereof, and the efforts of a Governmental Authority to combat such disease.
“CPM Price” means the CPM Soft Offer Cap (or its successor). “CPM Soft Offer Cap” has the meaning set forth in the CAISO Tariff. “CPUC” means the California Public Utilities Commission, or successor entity. “CPUC-Penalized Shortfall” has the meaning set forth in Section 3.5(b)(i). “CPUC System RA Penalty” means the penalties for “System Procurement Deficiency” adopted by the CPUC in its Decision 10-06-036, as may be updated or supplemented from time to time.
“Credit Rating” means, with respect to any entity, the rating then assigned to such entity’s unsecured, senior long-term debt obligations (not supported by third party credit enhancements) or if such entity does not have a rating for its senior unsecured long-term debt, then the rating then assigned to such entity as an issuer rating by Fitch, S&P or Moody’s. If ratings by Fitch, S&P and Moody’s are not equivalent, the lower rating shall apply. “Cure Plan” has the meaning set forth in Section 11.1(b)(iii). “Curtailment Order” means any of the following:
(a) CAISO orders, directs, alerts, or provides notice to a Party, to curtail deliveries of Facility Energy for the following reasons: (i) any System Emergency, (ii) any warning of an anticipated System Emergency, or warning of an imminent condition or situation, which jeopardizes CAISO’s electric system integrity or the integrity of other systems to which CAISO is connected, or (iii) in response to an Energy oversupply or potential Energy oversupply, and Buyer
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7 or the SC for the Facility submitted a Self-Schedule for the MWhs curtailed during the relevant time period;
(b) a curtailment ordered by the Transmission Provider for reasons including, but not limited to, (i) any situation that affects normal function of the electric system including, but not limited to, any abnormal condition that requires action to prevent circumstances such as equipment damage, loss of load, or abnormal voltage conditions, or (ii) any warning, forecast or anticipation of conditions or situations that jeopardize the Transmission Provider’s electric system integrity or the integrity of other systems to which the Transmission Provider is connected; (c) a curtailment ordered by CAISO or the Transmission Provider due to a Transmission System Outage; or
(d) a curtailment in accordance with Seller’s obligations under its Interconnection Agreement with the Transmission Provider or distribution operator. “Daily Delay Damages” means an amount equal to (a) the Development Security amount required hereunder, divided by (b) one hundred twenty (120). “Damage Payment” means the amount to be paid by the Defaulting Party to the Non-Defaulting Party after a Terminated Transaction occurring prior to the Commercial Operation Date, in a dollar amount set forth in Section 11.3(a).
“Day-Ahead Market” has the meaning set forth in the CAISO Tariff. “Day-Ahead Schedule” has the meaning set forth in the CAISO Tariff. “Defaulting Party” has the meaning set forth in Section 11.1(a). “Delay Damages” means Daily Delay Damages and Commercial Operation Delay Damages.
“Delivery Point” has the meaning set forth in Exhibit A. “Delivery Term” shall mean the period of Contract Years set forth on the Cover Sheet beginning on the Commercial Operation Date, unless terminated earlier in accordance with the terms and conditions of this Agreement.
“Development Cure Period” has the meaning set forth in Exhibit B. “Development Security” means (a) cash or (b) a Letter of Credit in the amount specified for the Development Security on the Cover Sheet.
“Discharging Notice” means the operating instruction, and any subsequent updates, given by Buyer’s SC or the CAISO to the Facility, directing the Facility to discharge Facility Energy at a specific MW rate for a specified period of time or to an amount of MWh. Any instruction to discharge the Facility pursuant to a Buyer Dispatched Test shall be considered a Discharging Notice.
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8 “Disclosing Party” has the meaning set forth in Section 18.2. “Dispatch Notice” means any Charging Notice, Discharging Notice and any subsequent updates thereto, given by the CAISO, Buyer or Buyer’s SC, to Seller, directing the Facility to charge or discharge Facility Energy at a specific MW level to a specified Stored Energy Level; provided, any such operating instruction or updates shall be in accordance with the Operating Restrictions and the CAISO Tariff. Dispatch Notices may be communicated electronically (i.e. through ADS, AGC or e-mail), or telephonically, in accordance with the procedures set forth in Section 4.7. Telephonic or other verbal communications may be documented (either recorded by tape, electronically or in writing) without further notification to, or consent being required from, either Party with respect to such Party being recorded by the other, including by Buyer’s designated Scheduling Coordinator.
“Early Termination Date” has the meaning set forth in Section 11.2(a). “Effective Capacity” means the lesser of (a) PMAX, and (b) maximum dependable operating capacity of the Facility to discharge Energy for four (4) hours of continuous discharge, as measured in MW at the Delivery Point (i.e., measured at the Facility Meter and adjusted for Electrical Losses to the Delivery Point) as determined pursuant to the most recent Capacity Test (including the Commercial Operation Capacity Test), and as evidenced by a certificate substantially in the form attached as Exhibit I hereto, in either case (a) or (b) up to but not in excess of (i) the Guaranteed Capacity (with respect to a Commercial Operation Capacity Test) or (ii) the Installed Capacity (with respect to any other Capacity Test). “Effective Date” has the meaning set forth on the Preamble. “Effective Flexible Capacity” or “EFC” means the effective flexible capacity (in MWs) of the Facility pursuant to the counting conventions set forth in the Resource Adequacy Rulings and the CAISO Tariff, which such flexible capacity may be used to satisfy Flexible RAR. “Efficiency Rate” means the rate calculated as the quotient of (a) the sum of (i) Facility Energy plus (ii) Idle Period Auxiliary Use for which Seller is required to reimburse Buyer, divided by (b) Energy In, based on actual Facility operations for each applicable month, adjusted to reflect the nearest Facility Energy and Energy In values that would have resulted in equal Stored Energy Levels at the beginning of the first Calculation Interval and the end of the last Calculation Interval of such month.
“Efficiency Rate Factor” has the meaning set forth in Exhibit C. “Electrical Losses” means all transmission or transformation losses (a) between the Delivery Point and the Facility associated with delivery of Charging Energy, and (b) between the Facility and the Delivery Point associated with delivery of Facility Energy. “Emission Reduction Credits” or “ERCs” means emission reductions that have been authorized by a local air pollution control district pursuant to California Division 26 Air Resources; Health and Safety Code Sections 40709 and 40709.5, whereby a district has established a system by which all reductions in the emission of air contaminants that are to be used to offset certain
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9 future increases in the emission of air contaminants shall be banked prior to use to offset future increases in emissions.
“Energy” means electrical energy, measured in kilowatt-hours, megawatt-hours, or multiple units thereof.
“Energy In” means the total Energy delivered by Buyer to the Delivery Point pursuant to one or more Charging Notices as measured at the Facility Meter (without adjusting for Electrical Losses or Station Use).
“Energy Management System” or “EMS” means the Facility’s energy management system.
“Energy Out” means the total Energy delivered to the Delivery Point pursuant to one or more Discharging Notices during the relevant period as recorded by the CAISO. “Environmental Costs” means costs incurred in connection with acquiring and maintaining all environmental permits and licenses for the Facility, and the Facility’s compliance with all applicable environmental laws, rules and regulations, including capital costs for pollution mitigation or installation of emissions control equipment required to permit or license the Facility, all operating and maintenance costs for operation of pollution mitigation or control equipment, costs of permit maintenance fees and emission fees as applicable, and the costs of all Emission Reduction Credits or Marketable Emission Trading Credits required by any applicable environmental laws, rules, regulations, and permits to operate, and costs associated with the disposal and clean-up of hazardous substances introduced to the Site, and the decontamination or remediation, on or off the Site, necessitated by the introduction of such hazardous substances on the Site.
“Event of Default” has the meaning set forth in Section 11.1. “Expected Commercial Operation Date” has the meaning set forth on the Cover Sheet. “Expected Construction Start Date” has the meaning set forth on the Cover Sheet. “Facility” means the energy storage facility described on the Cover Sheet and in Exhibit A (including the operational requirements of the energy storage facility), located at the Site and including mechanical equipment and associated facilities and equipment required to deliver Product (but excluding any Shared Facilities), as such storage facility may be expanded or otherwise modified from time to time in accordance with the terms hereof. “Facility Energy” means the Energy delivered from the Facility to the Delivery Point pursuant to a Discharging Notice, as measured by the Facility Meter, net of Electrical Losses and Station Use. All Facility Energy shall have originally been delivered to the Facility as Charging Energy.
“Facility Meter” means a CAISO-approved bi-directional revenue quality meter or meters (with a 0.3 accuracy class), CAISO approved metering plan including a SQMD Plan, CAISO-approved data processing gateway or remote intelligence gateway, telemetering equipment and
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10 data acquisition services sufficient for monitoring, recording and reporting, in real time, the amount of Charging Energy delivered to the Facility and the amount of Facility Energy delivered to the Delivery Point for the purpose of invoicing in accordance with Section 8.1. The Facility may contain multiple measurement devices that will make up the Facility Meter, and, unless otherwise indicated, references to the Facility Meter shall mean all such measurement devices and the aggregated data of all such measurement devices, taken together. “FERC” means the Federal Energy Regulatory Commission or any successor government agency.
“Financial Close” means Seller and/or one of its Affiliates on Seller’s behalf has obtained approval from its operating committee to commit capital sufficient for the full construction of the Facility, and Seller has delivered to Buyer documentation reasonably satisfactory to Buyer evidencing the foregoing.
“Fitch” means Fitch Ratings Ltd., or its successor.
“Flexible Capacity” means, with respect to any particular Showing Month, the number of MWs of Product which are eligible to satisfy Flexible RAR. “Flexible RAR” means the flexible capacity requirements established for load-serving entities by the CAISO pursuant to the CAISO Tariff, the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority.
“Force Majeure Event” has the meaning set forth in Section 10.1. “Force Majeure Unavailability” has the meaning set forth in Exhibit C. “Full Capacity Deliverability Status” or “FCDS” has the meaning set forth in the CAISO Tariff.
“Gains” means, with respect to any Party, an amount equal to the present value of the economic benefit to it, if any (exclusive of Costs), resulting from the termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining the economic benefit to a Party may include, without limitation, reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-Defaulting Party, including without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., SP-15), all of which should be calculated for the remaining Contract Term, and include the value of Green Attributes and Capacity Attributes.
“GHG Regulations” means Title 17, Division 3 (Air Resources), Chapter 1 (Air Resources Board), Subchapter 10 (Climate Change), Article 5 (Emissions Cap), Sections 95800 to 96023 of the California Code of Regulations, as amended or supplemented from time to time.
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13 “Investment Grade Credit Rating” means a Credit Rating of BBB- or better from S&P or Fitch, or a Credit Rating of Baa3 or better from Moody’s. “IP Indemnity Claim” has the meaning set forth in Section 16.1(b). “ITC” means the investment tax credit established pursuant to Section 48 or 48E of the United States Internal Revenue Code of 1986, as such Law may be amended or superseded. “Joint Powers Act” means the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.).
“Joint Powers Agreement” means that certain Joint Powers Agreement dated June 27, 2017, as amended from time to time, under which Buyer is organized as a Joint Powers Authority in accordance with the Joint Powers Act.
“kWh” means a kilowatt-hour measured in alternating current, unless expressly stated in terms of direct current.
“Law” means any applicable law, statute, rule, regulation, decision, writ, order, decree or judgment, permit or any interpretation thereof, promulgated or issued by a Governmental Authority.
“Lender” means, collectively, any Person (a) providing senior or subordinated construction, interim, back leverage or long-term debt, equity or tax equity financing or refinancing for or in connection with the development, construction, purchase, installation or operation of the Facility, whether that financing or refinancing takes the form of private debt (including back-leverage debt), equity (including tax equity), public debt or any other form (including financing or refinancing provided to a member or other direct or indirect owner of Seller), including any equity or tax equity investor directly or indirectly providing financing or refinancing for the Facility or purchasing equity ownership interests of Seller and/or its Affiliates, and any trustee or agent or similar representative acting on their behalf, (b) providing interest rate or commodity protection under an agreement hedging or otherwise mitigating the cost of any of the foregoing obligations and/or (c) participating in a lease financing (including a sale leaseback or leveraged leasing structure) with respect to the Facility. “Letter(s) of Credit” means one or more irrevocable, standby letters of credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch, having assets of at least $10 Billion, and with such bank having a Credit Rating of at least A- from S&P or A3 from Moody’s, in a form substantially similar to the letter of credit set forth in Exhibit K. “Licensed Professional Engineer” means an independent, professional engineer selected by Seller and reasonably acceptable to Buyer, licensed in the State of California. “Local Capacity Area Resource” has the meaning set forth in the CAISO Tariff. “Local RAR” means the local Resource Adequacy Requirements established for load-serving entities by the CAISO pursuant to the CAISO Tariff, the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority. “Local RAR” may also be known as
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14 local area reliability, local resource adequacy, local resource adequacy procurement requirements, or local capacity requirement in other regulatory proceedings or legislative actions. “Losses” means, with respect to any Party, an amount equal to the present value of the economic loss to it, if any (exclusive of Costs), resulting from termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining economic loss to a Party may include, without limitation, reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-Defaulting Party, including without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., SP-15), all of which should be calculated for the remaining Contract Term and must include the value of Green Attributes, Capacity Attributes, and Incentives.
“Low Operating Limit” or “LOL” means a real-time calculated number representing the instantaneous maximum power level at which the Facility can charge Energy to the Facility, as communicated via the EMS.
“Marketable Emission Trading Credits” means emissions trading credits or units pursuant to the requirements of California Division 26 Air Resources; Health & Safety Code Section 39616 and Section 40440.2 for market based incentive programs such as the South Coast Air Quality Management District’s Regional Clean Air Incentives Market, also known as RECLAIM, and allowances of sulfur dioxide trading credits as required under Title IV of the Federal Clean Air Act (42 U.S.C. § 7651b (a) to (f)).
“Master File” has the meaning set forth in the CAISO Tariff. “Material Permits” means all permits, consents, licenses, approvals, or authorizations from any Governmental Authority required for Seller to commence construction, as set forth on Exhibit V.
“Milestones” means the significant permitting, interconnection, financing and construction milestones set forth on the Cover Sheet.
“Monthly Capacity Payment” means the payment required to be made by Buyer to Seller each month of the Delivery Term as compensation for the Product, as calculated in accordance with Exhibit C.
“Monthly Forecast” has the meaning set forth in Section 4.10(a). “Monthly SQMD Charge” has the meaning set forth in Section 4.1(a). “Moody’s” means Moody’s Investors Service, Inc., or its successor. “MW” means megawatts in alternating current, unless expressly stated in terms of direct current.
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15 “MWh” means megawatt-hour measured in alternating current, unless expressly stated in terms of direct current.
“NEECH” has the meaning set forth in the definition of Affiliate. “NEER” means NextEra Energy Resources, LLC.
“NEOP” has the meaning set forth in the definition of Affiliate. “NEP” has the meaning set forth in the definition of Affiliate. “NERC” means the North American Electric Reliability Corporation or any successor entity.
“Net Qualifying Capacity” or “NQC” has the meaning set forth in the CAISO Tariff. “Network Upgrades” has the meaning set forth in the CAISO Tariff. “Non-Defaulting Party” has the meaning set forth in Section 11.2. “Notice” shall, unless otherwise specified in the Agreement, mean written communications by a Party to be delivered by hand delivery, United States mail, next Business Day courier service, or electronic messaging (e-mail).
“Operating Restrictions” means those restrictions, rules, requirements, and procedures set forth in Exhibit Q.
“Outage Management System” or “OMS” has the meaning set forth in the CAISO Tariff. “Outage Schedule” has the meaning set forth in Section 4.11(a)(i). “Party” has the meaning set forth in the Preamble.
“Performance Guarantees” has the meaning set forth in Section 4.3(b). “Performance Security” means (i) cash or (ii) a Letter of Credit, or (iii) a Guaranty in the amount specified for the Performance Security on the Cover Sheet. “Permitted Transfer” means each of the following transactions:
(a) Transactions among Affiliates of Seller, including any corporate reorganization, merger, combination or similar transaction or transfer of assets or ownership interests involving Seller or its Affiliates; provided (i)(A) Ultimate Parent retains the authority, directly or indirectly, to control Seller (or if applicable, the surviving entity), or (B) a wholly-owned, indirect subsidiary of Ultimate Parent operates the Facility, and (ii) if Seller is not the surviving entity, the transferee (A) executes and delivers to Buyer a written agreement under which the transferee assumes in writing all of Seller’s duties and obligations under this Agreement and otherwise agrees to be bound by all of the terms and conditions of this Agreement, and (B) meets the Seller credit security requirements;
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16 (b) A Change of Control of Ultimate Parent, NEER, NEP, NEOP, or NEECH, and includes any combination thereof;
(c) Any change of economic and voting rights triggered in Seller’s organization documents arising from the financing of the Facility and that does not result in the transfer of ownership, economic or voting rights in any entity that had no such rights immediately prior to the change;
(d) The direct or indirect transfer of shares of, or equity interests in, Seller to a Lender; or
(e) A transfer of the Facility packaged with any of the following: (i) all or substantially all of the assets of NEER or Ultimate Parent; (ii) all or substantially all of NEER’s or Ultimate Parent’s renewable energy generation portfolio; or (iii) all or substantially all of NEER’s or Ultimate Parent’s solar generation and/or energy storage portfolio; provided, that in the case of each of (i), (ii) and (iii): (A) the transferee (1) executes and delivers to Buyer a written agreement under which the transferee assumes in writing all of Seller’s duties and obligations under this Agreement and otherwise agrees to be bound by all of the terms and conditions of this Agreement, and (2) meets the Seller credit security requirements; and (B) the entity that operates the Facility following such transfer is (or contracts with) a Qualified Operator. “Permitted Transferee” means (i) any Affiliate of Seller or (ii) any entity that satisfies, or is controlled by another Person that satisfies, the following requirements:
(a) A tangible net worth of not less than one hundred fifty million dollars ($150,000,000) or a Credit Rating of at least BBB- from S&P, BBB- from Fitch, or Baa3 from Moody’s; and
(b) At least two (2) years of experience in the ownership and operations of energy storage facilities similar to the Facility, or has retained a third-party with such experience to operate the Facility.
Notwithstanding the foregoing, with respect to Seller, Permitted Transferee shall include NEP, NEOP and NEECH, and their respective direct or indirect subsidiaries. “Person” means any individual, sole proprietorship, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, incorporated organization, institution, public benefit corporation, unincorporated organization, government entity or other entity.
“Planned Outage” means a period during which the Facility is either in whole or in part not capable of providing service due to planned maintenance that has been scheduled in advance in accordance with Section 4.11(a).
“PMAX” means the applicable CAISO-certified maximum operating level of the Facility. “PMIN” means the applicable CAISO-certified minimum operating level of the Facility.
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17 “Pnode” has the meaning set forth in the CAISO Tariff. “Portfolio” means the single portfolio of electrical energy generating, energy storage, or other assets and entities, including the Facility (or the interests of Seller or Seller’s Affiliates or the interests of their respective direct or indirect parent companies), that is pledged as collateral security in connection with a Portfolio Financing.
“Portfolio Financing” means any tax equity or debt transactions entered into by an Affiliate of Seller that is secured only by a Portfolio. “Portfolio Financing Entity” means any Affiliate of Seller that incurs debt in connection with any Portfolio Financing.
“Product” has the meaning set forth on the Cover Sheet. “Production Tax Credits” or “PTCs” means production tax credit under Section 45 or 45 Y of the Internal Revenue Code as in effect from time-to-time throughout the Contract Term or any successor or other provision providing for a federal tax credit determined by reference to storage of energy resources for which Seller, as the owner of the Facility, is eligible. “Progress Report” means a progress report including the items set forth in Exhibit E. “Prudent Operating Practice” means (a) the applicable practices, methods and acts required by or consistent with applicable Laws and reliability criteria, and otherwise engaged in or approved by a significant portion of the electric industry during the relevant time period with respect to grid-interconnected, utility-scale energy storage facilities in the Western United States, and (b) any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Prudent Operating Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to acceptable practices, methods or acts generally accepted in the industry with respect to grid-interconnected, utility-scale energy storage facilities in the Western United States. Prudent Operating Practice shall include compliance with applicable Laws, applicable safety and reliability criteria, and the applicable criteria, rules and standards promulgated in the National Electric Safety Code and the National Electrical Code, as they may be amended or superseded from time to time, including the criteria, rules and standards of any successor organizations.
“Qualified Operator” means Seller or an operator of energy storage facilities that has sufficient experience and technical capability to perform for Seller’s benefit the obligations of Seller under this Agreement related to the operation and maintenance of the Facility in accordance with the applicable requirements of this Agreement, as evidenced by such operator having operated two (2) or more battery energy storage facilities having a nameplate capacity rating of ten (10) MW and/or two (20) MWh or more, for not less than two (2) years “Qualifying Capacity” has the meaning set forth in the CAISO Tariff.
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18 “RA Compliance Showing” means the (a) Local RAR compliance or advisory showings (or similar or successor showings), (b) RAR compliance or advisory showings (or similar or successor showings), and (c) Flexible RAR compliance or advisory showings (or similar successor showings), in each case, an entity is required to make to the CAISO pursuant to the CAISO Tariff, to the CPUC (and, to the extent authorized by the CPUC, to the CAISO) pursuant to the Resource Adequacy Rulings, or to any Governmental Authority. “RA Deficiency Amount” means the liquidated damages payment that Seller shall pay to Buyer for an applicable RA Shortfall as calculated in accordance with Section 3.5(b). “RA Guarantee Date” means the Commercial Operation Date. “RA Plan” has the meaning set forth for “Resource Adequacy Plan” in the CAISO Tariff with respect to Buyer’s monthly or annual Resource Adequacy Benefits showings. “RA Shortfall” means, for a given Showing Month, the positive difference, if any, expressed in kW, of (a) the product of (i) the Facility’s Qualifying Capacity minus (b) the sum of (i) the portion of the Net Qualifying Capacity of the Facility for such month which is able to be shown on Buyer’s monthly or annual RA Plan to the CAISO and CPUC plus (ii) Replacement RA provided by Seller with respect to an expected shortfall in Resource Adequacy Benefits of the Facility for such Showing Month, if applicable. “RA Shortfall Month” means, for purposes of calculating an RA Deficiency Amount under Section 3.5(b), any month shown on an RA Plan, commencing with the RA Plan for the Showing Month that includes the RA Guarantee Date (including any month during the period between the RA Guarantee Date and the first day of the first Showing Month for Buyer which actually includes the Facility’s Resource Adequacy Benefits or any Replacement RA, if applicable), for which there is an RA Shortfall.
“Real-Time Market” has the meaning set forth in the CAISO Tariff. “Receiving Party” has the meaning set forth in Section 18.2. “Reimbursable Station Use” means all Station Use, except (a) to the extent Seller has been invoiced for such Station Use by the electric utility as retail energy, and (b) Auxiliary Use that is consumed by the Facility during periods in which the Facility is not charging or discharging pursuant to a Charging Notice or Discharging Notice.
“Reliability Network Upgrades” has the meaning set forth in the CAISO Tariff. “Remedial Action Plan” has the meaning set forth in Section 2.4. “Replacement RA” means resource adequacy benefits equivalent to Resource Adequacy Benefits (including satisfying the same Slice-of-Day, battery energy storage system profile and related characteristics) that would have been provided by the Facility with respect to the applicable month in which a RA Deficiency Amount is due to Buyer, and located within SP 15 TAC Area
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19 and, to the extent that the Facility would have qualified as a Local Capacity Area Resource for such month, described as a Local Capacity Area Resource. “Requested Confidential Information” has the meaning set forth in Section 18.2. “Resource Adequacy Benefits” means the rights and privileges attached to the Facility that satisfy any entity’s resource adequacy obligations, as those obligations are set forth in any Resource Adequacy Rulings and shall include Flexible Capacity, and any local, zonal or otherwise locational attributes associated with the Facility.
“Resource Adequacy Requirements” or “RAR” means the resource adequacy requirements applicable to an entity as established by the CAISO pursuant to the CAISO Tariff, by the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority.
“Resource Adequacy Resource” shall have the meaning used in Resource Adequacy Rulings.
“Resource Adequacy Rulings” means CPUC Decisions 04-01-050, 04-10-035, 05-10-042, 06-04-040, 06-06-064, 06-07-031, 07-06-029, 08-06-031, 09-06-028, 10-06-036, 11-06-022, 12-06-025, 13-06-024, 14-06-050, 15-06-063, 16-06-045, 17-06-027, 18-06-030, 18- 06-031, 19-02-022, 19-06-026, 19-10-021, 20-01-004, 20-03-016, 20-06-002, 20-06-028, 20-06- 031, 20-12-006, 21-06-029, 21-07-014, 22-03-034, 22-06-050, 22-12-028, 22-08-039, 23-04-010 and any other existing or subsequent ruling or decision, or any other resource adequacy laws, rules or regulations enacted, adopted or promulgated by any applicable Governmental Authority, however described, as such decisions, rulings, Laws, rules or regulations may be amended or modified from time-to-time throughout the Contract Term. “S&P” means the Standard & Poor’s Financial Services, LLC (a subsidiary of S&P Global Inc.) or its successor.
“SCADA Systems” means the standard supervisory control and data acquisition systems to be installed by Seller as part of the Facility, including those system components that enable Seller to receive ADS and AGC instructions from the CAISO or similar instructions from Buyer’s SC.
“Schedule” has the meaning set forth in the CAISO Tariff, and “Scheduled” and “Scheduling” have a corollary meaning.
“Scheduled Energy” means the Charging Energy or Facility Energy that clears under the applicable CAISO market based on the final Day-Ahead Schedule(s), FMM Schedule(s) (as defined in the CAISO Tariff), and/or any other financially binding Schedule(s), market instruction or dispatch for the Facility for a given period of time implemented in accordance with the CAISO Tariff.
“Scheduling Coordinator” or “SC” means an entity certified by the CAISO as qualifying as a Scheduling Coordinator pursuant to the CAISO Tariff for the purposes of undertaking the
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20 functions specified in “Responsibilities of a Scheduling Coordinator,” of the CAISO Tariff, as amended from time to time.
“Security Interest” has the meaning set forth in Section 8.9. “Self-Schedule” has the meaning set forth in the CAISO Tariff. “Seller” has the meaning set forth on the Cover Sheet.
“Seller Board Approval” has the meaning set forth in Section 2.1(c). “Seller Board Approval Deadline” has the meaning set forth in Section 2.1(c). “Seller Initiated Test” has the meaning set forth in Section 4.4(c). “Settlement Amount” means the Non-Defaulting Party’s Costs and Losses, on the one hand, netted against its Gains, on the other. If the Non-Defaulting Party’s Costs and Losses exceed its Gains, then the Settlement Amount shall be an amount owing to the Non-Defaulting Party. If the Non-Defaulting Party’s Gains exceed its Costs and Losses, then the Settlement Amount shall be zero dollars ($0). The Settlement Amount does not include consequential, incidental, punitive, exemplary or indirect or business interruption damages; provided, the Parties agree that the value of Incentives are direct damages to be accounted for as specified in the definitions of Losses and Gains.
“Settlement Interval” has the meaning set forth in the CAISO Tariff. “Settlement Period” has the meaning set forth in the CAISO Tariff. “Shared Facilities” means the gen-tie lines, transformers, substations, or other equipment, permits, contract rights, and other assets and property (real or personal), in each case, as necessary to enable delivery of Energy from the Facility (which is excluded from Shared Facilities) to the point of interconnection, including the Interconnection Agreement itself, that are used in common with third parties.
“Showing Month” shall be the calendar month of the Delivery Term that is the subject of the RA Compliance Showing, as set forth in the Resource Adequacy Rulings and outlined in the CAISO Tariff. For illustrative purposes only, pursuant to the CAISO Tariff and Resource Adequacy Rulings in effect as of the Effective Date, the monthly RA Compliance Showing made in June is for the Showing Month of August.
“Site” means the real property on which the Facility is or will be located, as further described in Exhibit A, and as shall be updated by Seller at the time Seller provides an executed Construction Start Date certificate in the form of Exhibit J to Buyer; provided, any such update to the Site that includes real property that was not originally contained within the Site boundaries described in Exhibit A shall be subject to Buyer’s approval of such updates in its sole discretion. “Site Control” means that, for the Contract Term, Seller or its Affiliate: (a) owns or has the option to purchase the Site; (b) is the lessee or has the option to lease the Site; or (c) is the
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21 holder of an easement or an option for an easement, right-of-way grant, or similar instrument with respect to the Site.
“SOC” or “State of Charge” means (a) the Stored Energy Level relative to (b) the Effective Capacity multiplied by four (4) hours, expressed as a percentage. The “SOC” shall represent the range of Stored Energy Level reserved exclusively for Buyer’s use; provided, Seller may represent such range anywhere within the actual available capability of the Facility. “SOD” or “Slice-of-Day” has the meaning set forth in the Resource Adequacy Rulings. “SQMD Plan” has the meaning set forth in the CAISO Tariff. “SQMD Reporting” has the meaning set forth in Section 4.1(a). “SP-15” means the Existing Zone Generation Trading Hub for Existing Zone region SP15 as set forth in the CAISO Tariff.
“Station Use” means, in addition to all Auxiliary Use, the Energy (including Energy produced or discharged by the Facility) that is used within the Facility to power any other information technology, telecommunications, lights, motors, temperature control facility systems, control systems and other electrical loads that are necessary for operation of the Facility. “Storage Capability” has the meaning in Exhibit P.
“Storage Rate” has the meaning set forth on the Cover Sheet; provided, if the officer’s certificate provided by Seller pursuant to Section 2.2(i) states that the ITC rate for the Facility is higher than Seller’s assumed ITC rate as set forth on the Cover Sheet, the Storage Rate shall be reduced by per kW-mo. for each one (1) percentage point that the claimed ITC rate is above forty percent (40%); provided further, in the event of any reduction of the Storage Rate pursuant to the previous proviso, with respect to the first five (5) Contract Years, if the IRS rejects or reduces the claimed ITC applicable to the Facility above forty percent (40%) within the twelve (12)-month period following each such Contract Year, Buyer shall reimburse Seller the difference between such reduced payments for the immediately prior Contract Year (but not for any other prior Contract Years) through the date of such final adjustment by the IRS within thirty (30) days of Notice by Seller, and the Storage Rate shall immediately be modified to be based on the then-current ITC rate as approved by the IRS (but in no event higher than the original Storage Rate). “Stored Energy Level” means, at a particular time, the amount of Energy in the Facility available to be discharged to the Delivery Point as Facility Energy, expressed in MWh. “Supplementary Capacity Test Protocol” has the meaning set forth in Exhibit O. “Supply Chain Code” has the meaning in Exhibit U.
“System Emergency” means any condition that requires, as determined and declared by CAISO or the Transmission Provider, automatic or immediate action to (i) prevent or limit harm to or loss of life or property, (ii) prevent loss of transmission facilities or generation supply in the immediate vicinity of the Facility, or (iii) to preserve Transmission System reliability.
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22 “Tax” or “Taxes” means all U.S. federal, state and local and any foreign taxes, levies, assessments, surcharges, duties and other fees and charges of any nature imposed by a Governmental Authority, whether currently in effect or adopted during the Contract Term, including ad valorem, excise, franchise, gross receipts, import/export, license, property, sales and use, stamp, transfer, payroll, unemployment, income, and any and all items of withholding, deficiency, penalty, additions, interest or assessment related thereto. “Tax Credits” means the ITC, PTC, and any state, local and/or federal production tax credit, depreciation benefit, tax deduction and/or investment tax credit specific to the production of clean or renewable energy and/or investments in clean or renewable energy facilities or battery storage facilities.
“Terminated Transaction” has the meaning set forth in Section 11.2(a). “Termination Payment” has the meaning set forth in Section 11.3. “Total YTD Calculation Intervals” has the meaning set forth in Exhibit P. “Transmission Provider” means any entity that owns, operates and maintains transmission or distribution lines and associated facilities and/or has entitlements to use certain transmission or distribution lines and associated facilities for the purpose of transmitting or transporting the Facility Energy from the Delivery Point. “Transmission System” means the transmission facilities operated by the CAISO, now or hereafter in existence, which provide energy transmission service downstream from the Delivery Point.
“Transmission System Outage” means an outage on the Transmission System, other than a System Emergency, that is not caused by Seller’s actions or inactions and that prevents Buyer or the CAISO (as applicable) from receiving Facility Energy onto the Transmission System. “Ultimate Parent” means NextEra Energy, Inc., a Delaware corporation. “Unavailable Calculation Interval” has the meaning set forth in Exhibit P. “Unplanned Outage” means a period during which the Facility is unavailable to provide some or all of the Product due to the need to maintain or repair a component of the Facility, which period is not a Planned Outage.
1.2 Rules of Interpretation. In this Agreement, except as expressly stated otherwise or unless the context otherwise requires:
(a) headings and the rendering of text in bold and italics are for convenience and reference purposes only and do not affect the meaning or interpretation of this Agreement; (b) words importing the singular include the plural and vice versa and the masculine, feminine and neuter genders include all genders;
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23 (c) the words “hereof”, “herein”, and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) a reference to an Article, Section, paragraph, clause, Party, or Exhibit is a reference to that Article, Section, paragraph, clause of, or that Party or Exhibit to, this Agreement unless otherwise specified;
(e) a reference to a document or agreement, including this Agreement shall mean such document, agreement or this Agreement including any amendment or supplement to, or replacement, novation or modification of this Agreement, but disregarding any amendment, supplement, replacement, novation or modification made in breach of such document, agreement or this Agreement;
(f) a reference to a Person includes that Person’s successors and permitted assigns;
(g) the terms “include” and “including” mean “include or including (as applicable) without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the word or provision in respect of which such examples are provided;
(h) references to any statute, code or statutory provision are to be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or reenacted, and include references to all bylaws, instruments, orders and regulations for the time being made thereunder or deriving validity therefrom unless the context otherwise requires; (i) in the event of a conflict, a mathematical formula or other precise description of a concept or a term shall prevail over words providing a more general description of a concept or a term;
(j) references to any amount of money shall mean a reference to the amount in United States Dollars;
(k) the expression “and/or” when used as a conjunction shall connote “any or all of”;
(l) words, phrases or expressions not otherwise defined herein that (i) have a generally accepted meaning in Prudent Operating Practice shall have such meaning in this Agreement or (ii) do not have well known and generally accepted meaning in Prudent Operating Practice but that have well known and generally accepted technical or trade meanings, shall have such recognized meanings; and
(m) each Party acknowledges that it was represented by counsel in connection with this Agreement and that it or its counsel reviewed this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
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24 ARTICLE 2
TERM; CONDITIONS PRECEDENT
2.1 Contract Term.
(a) The term of this Agreement shall commence on the Effective Date and shall remain in full force and effect until the conclusion of the Delivery Term, subject to any early termination provisions set forth herein (“Contract Term”); provided, subject to Buyer’s obligations in Section 4.9(g), Buyer’s obligations to pay for or accept any Product are subject to Seller’s completion of the conditions precedent pursuant to Section 2.2. (b) [Intentionally Omitted].
(c) If Seller has not received all approvals of the management and board of directors (or equivalent governing body) of Seller and its Affiliates, including, if applicable, the approval of the board of directors of NextEra Energy, Inc. or a committee thereof, as Seller determines in its sole discretion are required under its and their respective constituting documents for the performance by Seller of its obligations under this Agreement (“Seller Board Approval”), on or before May 31, 2024 (the “Seller Board Approval Deadline”), then Seller may elect to terminate this Agreement by providing written notice of termination to Buyer within ten (10) Business Days after the Seller Board Approval Deadline. If this Agreement is terminated by Seller pursuant to this Section 2.1(c), then, within five (5) Business Days of the date of such notice of termination, Seller shall pay to Buyer an amount equal to of the Development Security amount, which shall be Buyer’s sole and exclusive remedy associated with such failure to obtain the Seller Board Approval and related termination. Upon such termination, neither Party shall have any liability to the other Party, save and except for those obligations specified in Section 2.1(d) and Buyer shall promptly return to Seller any Development Security then held by Buyer, less any amounts drawn in accordance with this Agreement. (d) Applicable provisions of this Agreement shall continue in effect after termination, including early termination, to the extent necessary to enforce or complete the duties, obligations or responsibilities of the Parties arising prior to termination. The confidentiality obligations of the Parties under Article 18 shall remain in full force and effect for two (2) years following the termination of this Agreement, and all indemnity and audit rights shall remain in full force and effect for one (1) year following the termination of this Agreement.
2.2 Conditions Precedent. The Delivery Term shall not commence until Seller completes to Buyer’s reasonable satisfaction each of the following conditions, which Buyer shall, if submitted by Seller within five (5) Business Days of the expected Commercial Operation Date, review and either accept or provide Notice stating in reasonably detail the basis for Buyer’s rejection thereof as soon as reasonably practicable, but in any event within five (5) Business Days of receipt thereof:
(a) Seller shall have delivered to Buyer (i) a completion certificate from a Licensed Professional Engineer substantially in the form of Exhibit H and (ii) a certificate from a Licensed Professional Engineer substantially in the form of Exhibit I setting forth the Installed Capacity on the Commercial Operation Date;
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25 (b) A Participating Generator Agreement and a Meter Service Agreement between Seller and CAISO shall have been executed and delivered and be in full force and effect, and a copy of each such agreement delivered to Buyer;
(c) An Interconnection Agreement between Seller (or Seller’s Affiliate) and the Transmission Provider shall have been executed and delivered and be in full force and effect and a copy of the Interconnection Agreement delivered to Buyer; (d) All applicable regulatory authorizations, approvals and permits for the operation of the Facility have been obtained and all conditions thereof that are capable of being satisfied on the Commercial Operation Date have been satisfied and shall be in full force and effect;
(e) Seller has obtained CAISO Certification for the Facility; The Facility is providing Resource Adequacy Benefits for the month in which Delivery Term commences; (g) Seller has delivered the Performance Security to Buyer in accordance with Section 8.8;
(h) Seller (with reasonable assistance from Buyer) has taken all actions and executed all documents and instruments to be performed and/or signed by Seller, required to authorize Buyer (or its designated agent) to act as Scheduling Coordinator under this Agreement and Seller has taken the actions required by Seller under Section 2.6 and the CAISO Tariff in order for Buyer (or its designated agent) to be able to dispatch the Facility for the Commercial Operation Date;
(i) Seller has delivered to Buyer an officer’s certificate stating (i) that Seller has complied with Section 2.3(b), and (ii) the ITC rate which Seller claims will apply for the Facility; and
(j) Seller has paid Buyer for all amounts owing under this Agreement, if any, including Delay Damages.
2.3 Development; Construction; Progress Reports.
(a) Within fifteen (15) days after the close of (i) each calendar quarter from the first calendar quarter following the Effective Date until the Construction Start Date, and (ii) each calendar month from the first calendar month following the Construction Start Date until the Commercial Operation Date, Seller shall provide to Buyer a Progress Report and agree to regularly scheduled meetings between representatives of Buyer and Seller to review such reports and discuss Seller’s construction progress. The form of the Progress Report is set forth in Exhibit E. Seller shall also provide Buyer with any reasonably requested documentation (subject to confidentiality restrictions) directly related to the achievement of Milestones within ten (10) Business Days of receipt of such request by Seller. Seller is solely responsible for the design and construction of the Facility, including the location of the Site, the Facility layout, and the selection and procurement of the equipment comprising the Facility.
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26 (b) Seller shall use commercially reasonable efforts to ensure that all materials, products and components used in the batteries and inverters for the Facility (the “Major Equipment”) comply with the Supply Chain Code. Seller shall use commercially reasonable efforts to implement reasonable due diligence procedures to verify compliance by Seller, its Affiliates and its Major Equipment suppliers with the Supply Chain Code, and Seller shall promptly notify Buyer if Seller becomes aware of any breach, or potential breach, of its obligations under this Section 2.3(b).
(c) Buyer shall have the right, at Buyer’s sole expense, to retain an independent auditor to audit Seller’s compliance with the requirements of Section 2.3(b).
2.4 Remedial Action Plan. If Seller misses a Milestone by more than thirty (30) days, except as the result of Force Majeure Event or Buyer Default, Seller shall submit to Buyer, within ten (10) Business Days of the end of such thirty (30)-day period following the Milestone completion date, a remedial action plan (“Remedial Action Plan”), which will describe in detail any delays (actual or anticipated) beyond the scheduled Milestone dates, including the cause of the delay (e.g., governmental approvals, financing, property acquisition, design activities, equipment procurement, project construction, interconnection, or any other factor), Seller’s detailed description of its proposed course of action to achieve the missed Milestones and all subsequent Milestones by the Guaranteed Commercial Operation Date; provided, delivery of any Remedial Action Plan shall not relieve Seller of its obligation to provide Remedial Action Plans with respect to any subsequent Milestones and to achieve the Guaranteed Commercial Operation Date in accordance with the terms of this Agreement. Subject to the provisions of Exhibit B, so long as Seller complies with its obligations under this Section 2.4, Seller shall not be considered in default of its obligations under this Agreement solely as a result of missing any Milestone.
2.5 Pre-Commercial Operation Actions. The Parties agree that, in order for Buyer to dispatch the Facility for its Commercial Operation Date, the Parties will have to perform certain of their Delivery Term obligations in advance of the Commercial Operation Date, including, without limitation, Seller’s delivery of an Availability Notice for the Commercial Operation Date, and delivery of a Dispatch Notice and nominating and scheduling the Facility for the Commercial Operation Date, in advance of the Commercial Operation Date. The Parties shall cooperate with each other in order for Buyer to be able to dispatch the Facility for the Commercial Operation Date. Seller shall give Buyer at least forty-five (45) days’ Notice before the Commercial Operation Date.
ARTICLE 3
PURCHASE AND SALE
3.1 Product. Subject to the terms and conditions of this Agreement, during the Delivery Term, Buyer shall have the exclusive right to the Installed Capacity and Effective Capacity, as applicable, and all Product associated therewith, including the exclusive right to use, market or sell the Product and the right to all revenues generated from the use, resale or remarketing of the Product. Seller shall operate the Facility and make available, charge and discharge, deliver, and sell the Product therefrom to Buyer, when and as the Facility is available, subject to the terms and conditions of this Agreement, including the Operating Restrictions. Seller represents and warrants that it will deliver the Product to Buyer free and clear of all liens, security
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27 interests, claims and encumbrances. Seller shall not substitute or purchase any energy storage capacity, Energy, Ancillary Services or Capacity Attributesfrom any other energy storage resource or the market for delivery hereunder except as otherwise provided herein, nor shall Seller sell, assign or otherwise transfer any Product, or any portion thereof, to any third party other than to Buyer or CAISO pursuant to this Agreement.
3.2 Facility Energy. Except for Facility Energy resulting from a Seller Initiated Test, Seller commits to make available the Facility Energy to Buyer, and Buyer shall have the exclusive rights to all Facility Energy, subject to the Operating Restrictions. Title to and risk of loss related to the Facility Energy shall pass and transfer from Seller to Buyer at the Delivery Point.
3.3 Ancillary Services. Buyer shall have the exclusive rights to all Ancillary Services and Associated Ancillary Services Energy, with characteristics and quantities determined in accordance with the CAISO Tariff. Upon a request by Buyer, the Parties shall negotiate in good faith to modify the terms of this Agreement (which may include modification of the Storage Rate and/or other financial factors) for the Facility to be able to provide Black Start (as defined in the CAISO Tariff) or any other Ancillary Services not listed Exhibit Q.
3.4 Capacity Attributes. Seller shall diligently pursue Full Capacity Deliverability Status for the Guaranteed Capacity in the CAISO generator interconnection process. As between Buyer and Seller, Seller shall be responsible for the cost and installation of any Network Upgrades associated with obtaining such Full Capacity Deliverability Status. (a) Throughout the Delivery Term and subject to Section 3.6, Seller grants, pledges, assigns and otherwise commits to Buyer all the Capacity Attributes from the Facility. (b) Throughout the Delivery Term and subject to Section 3.6, Seller shall use commercially reasonable efforts to maintain eligibility for Full Capacity Deliverability Status or Interim Deliverability Status for the Facility from the CAISO and shall perform all actions necessary to ensure that the Facility qualifies to provide Resource Adequacy Benefits, including Flexible Capacity, to Buyer. Throughout the Delivery Term, and subject to Section 3.6, Seller hereby covenants and agrees to transfer all Resource Adequacy Benefits to Buyer. (c) For the duration of the Delivery Term, and subject to Section 3.6, Seller shall take all commercially reasonable actions, including complying with all applicable registration and reporting requirements, and execute all documents or instruments necessary to enable Buyer to use all of the Capacity Attributes committed by Seller to Buyer pursuant to this Agreement. (d) If Seller anticipates that it will have any RA Deficiency Amounts in a Showing Month, Seller may provide Replacement RA in an amount up to the expected RA Shortfall (ignoring the provision of Replacement RA for purposes of quantifying such “expected RA Shortfall”) with respect to such Showing Month, provided that (a) the amount of Replacement RA in any Contract Year shall not to exceed twenty-five percent (25%) of the annual total amount of Resource Adequacy Benefits expected to be provided by the Facility, and (b) any intended Replacement RA is communicated by Seller to Buyer in a Notice substantially in the form of Exhibit M at least fifty (50) Business Days before the applicable Showing Month for the purpose of including in Buyer’s RA Compliance Showing for such Showing Month.
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30 adjusted downward to reflect the effect of the change in Law.
3.7 Facility Configuration. In order to optimize the benefits of the Facility, Buyer and Seller each agree that if requested by the other Party, then Buyer and Seller shall discuss in good faith potential reconfiguration of the Facility or Interconnection Facilities; provided, neither Party shall be obligated to agree to any changes under this Agreement, or to incur any expense in connection with such changes, except under terms (which may include modification of the Storage Rate and/or other financial factors) mutually acceptable to both Parties as set forth in a written agreement.
3.8 Ownership of Incentives. Seller shall have all right, title and interest in and to all Incentives. Buyer acknowledges that any Incentives belong to Seller. If any Incentives, or values representing the same, are initially credited or paid to Buyer, Buyer shall cause such Incentives or values relating to same to be assigned or transferred to Seller without delay. Buyer shall reasonably cooperate with Seller, at Seller’s sole expense, in Seller’s efforts to meet the requirements for any certification, registration, or reporting program relating to Incentives.
ARTICLE 4
OBLIGATIONS AND DELIVERIES
4.1 Delivery. Subject to the provisions of this Agreement, commencing on the Commercial Operation Date through the end of the Contract Term, Seller shall supply and deliver the Product to Buyer at the Delivery Point, and Buyer shall take delivery of the Product at the Delivery Point in accordance with the terms of this Agreement. Seller shall be responsible for paying or satisfying when due any costs or charges imposed in connection with the delivery of Facility Energy to the Delivery Point, including any operation and maintenance charges imposed by the Transmission Provider directly relating to the Facility’s operations. Buyer shall be responsible for all costs, charges and penalties (except as otherwise set forth in this Agreement), if any, imposed in connection with: (a) the delivery of Charging Energy to the Delivery Point (including the cost of the Charging Energy itself) and (b) the acceptance and transmission of Facility Energy at and from the Delivery Point, including without limitation, transmission costs and transmission line losses with regard to (a) and (b). The Facility Energy will be scheduled with the CAISO by Buyer (or Buyer’s designated Scheduling Coordinator) in accordance with Exhibit D. To the extent Seller elects, or the Facility is required, to be a Scheduling Coordinator Metered Entity, in consideration of Buyer’s performance of its obligation to submit Settlement Quality Meter Data for the Facility to CAISO in accordance with Exhibit D (“SQMD Reporting”), Seller shall pay or cause to be paid to Buyer Five Hundred Dollars ($500) each month for which Buyer provides SQMD Reporting (“Monthly SQMD Charge”). If (a) Seller elects to withdraw its SQMD Plan for the Facility and as a result Buyer no longer has an obligation to submit Settlement Quality Meter Data for the Facility to CAISO in accordance with Exhibit D, or (b) the Parties mutually agree in their sole discretion to allow a third party selected by Seller to submit such Settlement Quality Meter Data to CAISO, then as of the later of (i) the date Seller provides Notice of such election to Buyer, and (ii) the effective date that any such change is approved by the CAISO (to the extent required), Buyer shall no longer provide any such SQMD Reporting and the Monthly SQMD Charge will terminate.
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31 4.2 Station Use. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge (a) during charging and discharging of the Facility pursuant to a Charging Notice or Discharging Notice, Auxiliary Use may be served by Charging Energy or Facility Energy, (b) Seller is responsible for providing or obtaining all Energy to serve Station Use (including paying the cost of any Energy from the local utility to serve such Station Use) except for Auxiliary Use during periods of charging or discharging pursuant to a Charging Notice or Discharging Notice, (c) the supply of Auxiliary Use shall not be deemed a violation of this Agreement, including Sections 4.9(c), (d), and (f), and (d) Seller shall reimburse Buyer for all Reimbursable Station Use in the manner contemplated by paragraph (a) of Exhibit C. If any Energy provided by Buyer (i.e. originally delivered as Charging Energy) is used by Seller for Station Use (including Idle Period Auxiliary Use) and such use violates any CAISO rules, other applicable Laws or any applicable utility tariff, Seller (i) shall be solely responsible for (and shall reimburse Buyer, as applicable) any and all costs, penalties and charges resulting therefrom and (ii) shall take such actions as may be necessary to comply with such CAISO rules, other applicable Laws or applicable utility tariff).
4.3 Performance Guarantees; Ancillary Services.
(a) During the period commencing upon CAISO Commercial Operation and continuing throughout the Delivery Term, the Facility shall maintain an Annual Capacity Availability during each Contract Year (and during the period from CAISO Commercial Operation through the Commercial Operation Date) of no less than for each Contract Year (the “Guaranteed Capacity Availability”), which Annual Capacity Availability shall be calculated in accordance with Exhibit P.
(b) During the Delivery Term, the Facility shall maintain an Efficiency Rate of no less than Guaranteed Efficiency Rate. The Guaranteed Capacity Availability and Guaranteed Efficiency Rate are collectively the “Performance Guarantees”. (c) Buyer’sremedies for Seller’s failure to achieve the Performance Guarantees are (i) the Monthly Capacity Payment adjustment and/or Capacity Availability Payment True-Up, as applicable, as set forth in Exhibit C, and (ii) in the case of a Seller Event of Default as set forth in Section 11.1(b)(iii) with respect to the Guaranteed Capacity Availability, the applicable remedies set forth in Article 11.
(d) Seller shall operate and maintain the Facility throughout the Contract Term so as to be able to provide the Ancillary Services in accordance with the specifications set forth in the Operating Restrictions and the Facility’s CAISO Certification associated with the Effective Capacity. To the extent the Facility fails or is unable to provide Ancillary Services for any reason not excused hereunder during any Calculation Interval that is not otherwise deemed an Unavailable Calculation Interval (including by reason of failing an Ancillary Services certification test), then as exclusive remedies the Available Storage Capability for such Calculation Interval shall be deemed reduced for purposes of calculating the YTD Annual Capacity Availability to the extent of such inability or failure multiplied by
(e) Upon Buyer’s reasonable request, Seller shall submit the Facility for additional CAISO Certification so that the Facility may provide additional Ancillary Services that the Facility is, at the relevant time, actually physically capable of providing consistent with the
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32 definition of Ancillary Services herein, provided that Buyer has agreed to reimburse Seller for any material costs Seller incurs in connection with conducting such additional CAISO Certification.
4.4 Facility Testing.
(a) Capacity Tests. Prior to the Commercial Operation Date, Seller shall schedule and complete a Commercial Operation Capacity Test in accordance with Exhibit O.
Thereafter, Seller and Buyer shall have the right to run additional Capacity Tests in accordance with Exhibit O.
(i) Buyer shall have the right to send one or more representative(s) to witness all Capacity Tests.
(ii) Following each Capacity Test, Seller shall submit a testing report in accordance with Exhibit O. If the actual capacity determined pursuant to a Capacity Test varies from the then-current Effective Capacity, as applicable, then the actual capacity determined pursuant to such Capacity Test shall become the new Effective Capacity, at the beginning of the day following the completion of the test for all purposes under this Agreement. (iii) If Seller fails to conduct a Storage Capacity Test prior to the commencement of a Contract Year in accordance with Exhibit O, Buyer shall have the right, in its sole discretion, to retroactively apply, for all purposes of this Agreement, the results of the next Storage Capacity Test once completed back to the later of: (A) the first day of the applicable Contract Year, or (B) the date that is two (2) months prior to Buyer providing notice to Seller of such failure to conduct the applicable Storage Capacity Test. (b) Additional Testing. Seller shall, at times and for durations reasonably agreed to by Buyer, conduct necessary testing to ensure the Facility is functioning properly and the Facility is able to respond to Dispatch Notices.
(c) Buyer or Seller Initiated Tests. Any testing of the Facility requested by Buyer after the Commercial Operation Capacity Tests and all required annual tests pursuant to Section B of Exhibit O shall be deemed Buyer-instructed dispatches of the Facility (“Buyer Dispatched Test”). Any test of the Facility that is not a Buyer Dispatched Test (including all tests conducted prior to Commercial Operation, any Commercial Operation Capacity Tests, any Capacity Test conducted if the Effective Capacity immediately prior to such Capacity Test is below seventy percent (70%) of the Installed Capacity, any test required by CAISO (including any test required to obtain or maintain CAISO Certification), and other Seller-requested discretionary tests or dispatches, at times and for durations reasonably agreed to by Buyer, that Seller deems necessary for purposes of reliably operating or maintaining the Facility or for re-performing a required test within a reasonable number of days of the initial required test (considering the circumstances that led to the need for a retest)) shall be deemed a “Seller Initiated Test”. (i) For any Seller Initiated Test other than a Capacity Test required by Exhibit O for which there is a stated notice requirement, Seller shall notify Buyer no later than twenty-four (24) hours prior thereto (or any shorter period reasonably acceptable to Buyer consistent with Prudent Operating Practices).
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34 (e) Seller shall maintain and make available to Buyer records, including logbooks, demonstrating that the Facility is operated in accordance with Prudent Operating Practices. Seller shall comply with all reporting requirements and permit on-site audits, investigations, tests and inspections permitted or required under any Prudent Operating Practices.
4.7 Dispatch Notices. Buyer shall have the right to dispatch the Facility seven days per week and 24 hours per day (including holidays), by providing Dispatch Notices, subject to the requirements and limitations set forth in this Agreement. Subject to the Operating Restrictions, each Dispatch Notice will be effective unless and until such Dispatch Notice is modified by the CAISO, Buyer or Buyer’s SC. If an electronic submittal is not possible for reasons beyond Buyer’s control, Dispatch Notices may be provided (in order of preference) telephonically or by electronic mail to Seller’s personnel designated to receive such communications, as provided by Seller in writing. In addition to any other requirements set forth or referred to in this Agreement, all Dispatch Notices will be made in accordance with Market Notice Timelines as specified in the CAISO Tariff.
4.8 [Intentionally Omitted]
4.9 Energy Management.
(a) Charging Generally. Upon receipt of a valid Charging Notice, Seller shall take any and all action necessary to deliver the Charging Energy to the Facility in order to deliver the Storage Product in accordance with the terms of this Agreement, including maintenance, repair or replacement of equipment in Seller’s possession or control used to deliver the Charging Energy from the Delivery Point to the Facility. Except as otherwise expressly set forth in this Agreement, Buyer shall be responsible for paying all CAISO costs and charges associated with Charging Energy.
(b) Charging Notices. Buyer will have the right to charge the Facility seven (7) days per week and twenty-four (24) hours per day (including holidays), by causing Charging Notices to be issued, subject to the requirements and limitations set forth in this Agreement, including the Operating Restrictions. Each Charging Notice issued in accordance with this Agreement will be effective unless and until Buyer’s SC or CAISO modifies such Charging Notice by providing Seller with an updated Charging Notice.
(c) No Unauthorized Charging. Seller shall not charge the Facility during the Delivery Term other than pursuant to a valid Charging Notice (it being understood that Seller may adjust a Charging Notice to the extent necessary to maintain compliance with the Operating Restrictions), or in connection with a Seller Initiated Test (including Facility maintenance or a Capacity Test), or pursuant to a notice from the Transmission Provider or Governmental Authority.
If, during the Delivery Term, Seller charges the Facility (i) to a Stored Energy Level greater than the Stored Energy Level provided for in a Charging Notice, or (ii) in violation of the first sentence of this Section 4.9(c), then (x) Seller shall pay Buyer the cost of such Energy associated with such charging of the Facility, and (y) Buyer shall be entitled to discharge such Energy and entitled to all of the CAISO revenues and other benefits (including Product) associated with such discharge.
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35 (d) No Unauthorized Discharging. Seller shall not discharge the Facility during the Delivery Term other than pursuant to a valid Discharging Notice (it being understood that Seller may adjust a Discharging Notice to the extent necessary to maintain compliance with the Operating Restrictions), or in connection with a Seller Initiated Test (including Facility maintenance or a Storage Capacity Test), or pursuant to a notice from the Transmission Provider or Governmental Authority. Buyer shall have the right to discharge the Facility seven (7) days per week and twenty-four (24) hours per day (including holidays), by causing Discharging Notices to be issued, subject to the requirements and limitations set forth in this Agreement. Each Discharging Notice issued in accordance with this Agreement will be effective unless and until Buyer’s SC or the CAISO modifies such Discharging Notice by providing Seller with an updated Discharging Notice.
(e) Unauthorized Charges and Discharges. If Seller or any third party charges, discharges or otherwise uses the Facility other than as permitted hereunder or as expressly addressed in Section 4.9(f), it shall be a breach by Seller and Seller shall hold Buyer harmless from, and indemnify Buyer against, all actual costs or losses associated therewith, and be responsible to Buyer for any damages arising therefrom, and, if Seller fails to implement procedures reasonably acceptable to Buyer to prevent any further occurrences of the same, then the failure to implement such procedures shall be an Event of Default under Article 11. (f) CAISO Dispatches. During the Delivery Term, CAISO Dispatches shall have priority over any Charging Notice or Discharging Notice issued by Buyer’s SC, and Seller shall have no liability for violation of this Section 4.9 or any Charging Notices or Discharging Notice if and to the extent such violation is caused by Seller’s compliance with any CAISO Dispatch. During any time interval during the Delivery Term in which the Facility is capable of responding to a CAISO Dispatch, but the Facility deviates from a CAISO Dispatch, Seller shall be responsible for all CAISO charges and penalties (including Imbalance Energy charges) resulting from such deviation (in addition to any Buyer remedy related to overcharging of the Facility as set forth in Section 4.9(c)), except to the extent such deviation is due to incorrect information received from the CAISO or a CAISO Dispatch that conflicts with the Operating Restrictions or the Master File. To the extent the Facility is unable to respond to ADS signals during any Calculation Interval (except to the extent caused by the CAISO), then as an exclusive remedy, such Calculation Interval shall be deemed an Unavailable Calculation Interval for purposes of calculating the YTD Annual Storage Capacity Availability.
(g) Pre-Commercial Operation Date Period, etc. Prior to CAISO Commercial Operation, (i) Buyer shall have no rights to issue or cause to be issued Charging Notices or Discharging Notices, (ii) Seller shall have exclusive rights to charge and discharge the Facility (provided, Seller shall only charge and discharge the Facility in connection with installation, commissioning and testing of the Facility), (iii) Buyer and Buyer’s SC shall reasonably coordinate and cooperate with Seller with respect to Facility testing (including for Test Energy), and (iv) all CAISO costs, revenues, penalties and other amounts owing to or paid by CAISO in respect of the Facility testing shall be for Seller’s account. Upon CAISO Commercial Operation, Buyer or its designated SC shall be the Scheduling Coordinator for the Facility, and Buyer shall have exclusive rights to issue or cause to be issued Charging Notices or Discharging Notices and all CAISO costs, revenues, penalties and other amounts owing to or paid by CAISO in respect of the Facility operations shall be for Buyer’s account. For the period from CAISO Commercial Operation until
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36 the Commercial Operation Date, Buyer shall pay to Seller fifty percent (50%) of the Monthly Capacity Payment, pro-rated on a daily basis.
(h) Curtailments. Notwithstanding anything in this Agreement to the contrary, during any Settlement Interval, Curtailment Orders applicable to such Settlement Interval shall have priority over any Dispatch Notices applicable to such Settlement Interval, and Seller shall have no liability for violation of this Section 4.9 or any Dispatch Notice if and to the extent such violation is caused by Seller’s compliance with any Curtailment Order or other instruction or direction from a Governmental Authority or the Transmission Provider. Buyer shall have the right, but not the obligation, to provide Seller with updated Dispatch Notices during any Curtailment Order consistent with the operational procedures.
4.10 Capacity Availability Notice.
(a) No less than thirty (30) days before the beginning of Commercial Operation, and thereafter ten (10) Business Days before the beginning of each month during the Delivery Term, Seller shall provide to Buyer and the SC (if applicable) a non-binding forecast of the hourly expected Available Effective Capacity, and (ii) Available Storage Capability, for each day of the following month in a form substantially similar to Exhibits F-1 and F-2, as applicable (“Monthly Forecast”).
(b) During the Delivery Term, no later than two (2) Business Days before each schedule day for the Day-Ahead Market in accordance with WECC scheduling practices, Seller shall provide Buyer and the SC (if applicable) with an hourly schedule of the Available Effective Capacity that the Facility is expected to have for each hour of such schedule day (including, in each case, as such availability may be adjusted as required by the CAISO Tariff for reporting to CAISO) (the “Availability Notice”). Seller shall provide Availability Notices (including updated Availability Notices) in a mutually agreeable form, by (in order of preference) electronic mail or telephonically to Buyer personnel or its Scheduling Coordinator designated to receive such communications.
(c) Seller shall notify Buyer and the SC (if applicable) immediately with an updated Monthly Forecast and Availability Notice, as applicable, if the Available Effective Capacity of the Facility (including, in each case, as such availability may be adjusted as required by the CAISO Tariff for reporting to CAISO) changes or is expected to change after Buyer’s receipt of a Monthly Forecast or Availability Notice. Seller shall accommodate Buyer’s reasonable requests for changes in the time of delivery of Availability Notices.
4.11 Outages.
(a) Planned Outages.
(i) No later than January 15, April 15, July 15 and October 15 of each Contract Year, and at least sixty (60) days prior to the Guaranteed Commercial Operation Date, Seller shall submit to Buyer Seller’s schedule of proposed Planned Outages (“Outage Schedule”) for the following twelve (12)-month period in a form reasonably agreed to by Buyer. Within twenty (20) Business Days after its receipt of an Outage Schedule, Buyer shall give Notice to Seller of any reasonable request for changes to the Outage Schedule, and Seller shall, consistent with
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37 Prudent Operating Practices, accommodate Buyer’s requests regarding the timing of any Planned Outage. Seller may propose changes to any previously Planned Outage fifteen (15) days prior to such Planned Outage. Buyer shall review each such change and shall advise Seller within three (3) days of Buyer’s receipt thereof, in Buyer’s sole discretion but consistent with Prudent Operating Practices, whether such change is acceptable or Buyer may propose alternate dates for the requested scheduled maintenance. Seller shall cooperate with Buyer to arrange and coordinate all Planned Outages with the CAISO. Seller shall communicate to Buyer all changes to a Planned Outage and estimated time of return of the Facility as soon as practicable after the condition causing the change becomes known to Seller.
(ii) If reasonably required in accordance with Prudent Operating Practices, Seller may perform maintenance at a different time than maintenance scheduled pursuant to Section 4.11(a)(i). Seller shall provide Notice to Buyer within the time period determined by the CAISO for the Facility, as a Resource Adequacy Resource that is subject to the Availability Standards, to qualify for an “Approved Maintenance Outage” under the CAISO Tariff (or such shorter period as may be reasonably acceptable to Buyer based on the likelihood of dispatch by Buyer), and Seller shall use commercially reasonable efforts to limit maintenance repairs performed pursuant to this Section 4.11(a) to periods when Buyer does not reasonably believe the Facility will be dispatched.
(b) No Planned Outages During Summer Months. Except as scheduled by the Parties under Section 4.11(a)(ii), no outages shall be scheduled or planned from each June 1 through October 31 during the Delivery Term, unless approved by Buyer in writing in its sole discretion or required to maintain equipment warranties that could not be scheduled outside such months. In the event that Seller has a previously Planned Outage that becomes coincident with a System Emergency, Seller shall make all reasonable efforts to reschedule such Planned Outage. (c) Notice of Unplanned Outages. Seller shall notify Buyer by telephoning Buyer’s Scheduling Coordinator no later than ten (10) minutes following the occurrence of an Unplanned Outage, or if Seller has knowledge that an Unplanned Outage will occur, within twenty (20) minutes of determining that such Unplanned Outage will occur. Seller shall relay outage information to Buyer as required by the CAISO Tariff within twenty (20) minutes of the Unplanned Outage. Seller shall communicate to Buyer the estimated time of return of the Facility as soon as practical after Seller has knowledge thereof. (d) Inspection. In the event of an Unplanned Outage, Buyer shall have the option to inspect the Facility and all records relating thereto on any Business Day and at a reasonable time and Seller shall reasonably cooperate with Buyer during any such inspection.
Buyer shall comply with Seller’s safety and security rules and instructions during any inspection, Buyer shall be responsible for having provided commercially reasonable insurance for such Buyer personnel, and shall not interfere with work on or operation of the Facility. (e) Reports of Outages. Seller shall promptly prepare and provide to Buyer, all reports of Unplanned Outages or Planned Outages that Buyer may reasonably require for the purpose of enabling Buyer to comply with CAISO requirements or any applicable Laws.
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39 ARTICLE 6
MAINTENANCE AND REPAIR OF THE FACILITY
6.1 Maintenance of the Facility.
(a) Seller shall, as between Seller and Buyer, be solely responsible for the operation and maintenance of the Facility and the delivery of the Product, and shall comply with applicable Law and Prudent Operating Practices relating to the operation and maintenance of the Facility. Seller shall maintain and deliver maintenance and repair records of the Facility to Buyer’s scheduling representative upon request.
(b) Seller shall promptly make all necessary repairs to the Facility, and any portion thereof, and take all actions necessary in order to provide the Product to Buyer in accordance with the terms of this Agreement (and, at a minimum, the Performance Guarantees).
6.2 Maintenance of Health and Safety. Seller shall take reasonable safety precautions with respect to the operation, maintenance, repair and replacement of the Facility. If Seller becomes aware of any circumstances relating to the Facility that create an imminent risk of damage or injury to any Person or any Person’s property, Seller shall take prompt, reasonable action to prevent such damage or injury and shall give Buyer’s emergency contact identified in Exhibit N Notice of such condition. Such action may include disconnecting and removing all or a portion of the Facility, or suspending the supply of Facility Energy to the Delivery Point.
6.3 Shared Facilities. The Parties acknowledge and agree that certain of the Shared Facilities and Interconnection Facilities, and Seller’s rights and obligations under the Interconnection Agreement, may be subject to certain shared facilities and/or co-tenancy agreements to be entered into among Seller, the Transmission Provider, Seller’s Affiliates, and/or third parties pursuant to which certain Interconnection Facilities may be subject to joint ownership and shared maintenance and operation arrangements, including through shared ownership of, or possessing contractual right from, an Affiliate that is the interconnection customer under the Interconnection Agreement or the owner of any Shared Facilities and Interconnection Facilities; provided, such agreements shall (i) permit Seller to perform or satisfy, and shall not purport to limit, its obligations hereunder, including maintaining Shared Facility capacity equal to the Interconnection Capacity Limit for Buyer’s sole use, (ii) provide for separate metering of the Facility, (iii) provide that any other generating or energy storage facilities not included in the Facility but using Shared Facilities shall not be included within the Facility’s CAISO Resource ID, and (iv) provide that in the event of any discretionary allocation of curtailment that is not specific to one or more CAISO Resource IDs of output from generating or energy storage facilities using the Shared Facilities shall not be allocated to the Facility more than its pro rata portion of the total capacity of all generating or energy storage facilities using the Shared Facilities. Seller shall not, and shall not permit any affiliate to, allocate to other parties a share of the total interconnection capacity under the Interconnection Agreements in excess of an amount equal to the total interconnection capacity under the Interconnection Agreements minus the Interconnection Capacity Limit.
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40 ARTICLE 7
METERING
7.1 Metering.
(a) Seller shall measure the amount of Charging Energy and Facility Energy using the Facility Meter, which will be subject to adjustment in accordance with applicable CAISO meter requirements and Prudent Operating Practices, including to account for Electrical Losses.
Seller shall separately meter (i) all Station Use and (ii) to the extent Station Use is expected to be, on average over any month, more than 2% greater than Auxiliary Use, all Auxiliary Use using one or more revenue-grade meters (collectively, the “Ancillary Meter”). The Facility Meter and Ancillary Meter will be operated pursuant to applicable CAISO-approved calculation methodologies and maintained at Seller’s cost. If Seller elects to submit a SQMD Plan for the Facility, then the Facility Meter(s) will be programmed, operated and maintained pursuant to the applicable CAISO-approved SQMD Plan for the Facility, at Seller’s sole cost, throughout the period to which the SQMD Plan applies. Seller shall promptly provide to Buyer a copy of any CAISO-approved SQMD Plan and any modifications thereto and notice of any termination or withdrawal thereof. Subject to meeting any applicable CAISO requirements, the Facility Meter shall be programmed to adjust for all Electrical Losses from such meters to the Delivery Point in a manner subject to Buyer’s prior written approval, not to be unreasonably withheld. Metering shall be consistent with the Metering Diagram set forth as Exhibit R, as may be revised to be consistent with any CAISO-approved SQMD Plan. Each meter shall be kept under seal, such seals to be broken only when the Facility Meters and/or Ancillary Meter, as applicable, are to be tested, adjusted, modified or relocated. In the event Seller breaks a seal, Seller shall notify Buyer as soon as practicable. In addition, Seller hereby agrees to provide all Facility Meter and Ancillary Meter data to Buyer in a form reasonably acceptable to Buyer, and consents to Buyer obtaining from CAISO the CAISO meter data directly relating to the Facility and all inspection, testing and calibration data and reports, to the extent such meter data and related meters are not the subject of a CAISO-approved SQMD Plan. In the event Seller breaks a seal, Seller shall notify Buyer as soon as practicable. In addition, Seller hereby agrees to provide all meter data to Buyer in a form reasonably acceptable to Buyer, and consents to Buyer obtaining from CAISO the CAISO meter data directly relating to the Facility and all inspection, testing and calibration data and reports.
Seller and Buyer, or Buyer’s Scheduling Coordinator, shall cooperate to allow both Parties to retrieve the meter reads from the CAISO Market Results Interface-Settlements (MRI-S) web and/or directly from the CAISO meter(s) at the Facility, to the extent such meter data and related meters are not the subject of a CAISO-approved SQMD Plan. (b) Section 7.1(a) is based on the Parties’ mutual understanding as of the Effective Date that (i) the CAISO requires the Facility Meter to be programmed for Electrical Losses as set forth in the definition of Electrical Losses in this Agreement and (ii) the automatic adjustments to Charging Notices and Discharging Notices as set forth in the definitions of Charging Notice and Discharging Notice in this Agreement will not result in Seller violating, or incurring any costs, penalties or charges under the CAISO Tariff. If any of the foregoing mutual understandings in (i) or (ii) between the Parties become incorrect during the Delivery Term, the Parties shall cooperate in good faith to make any amendments and modifications to the Facility and this Agreement as are reasonably necessary to conform this Agreement to the CAISO Tariff and avoid, to the maximum extent practicable, any CAISO charges, costs or penalties that may be
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41 imposed on either Party due to non-conformance with the CAISO Tariff, such agreement not to be unreasonably delayed, conditioned or withheld.
7.2 Meter Verification. Annually, if Seller has reason to believe there may be a Facility Meter malfunction, or upon Buyer’s reasonable request, Seller shall test the Facility Meter.
The tests shall be conducted by independent third parties qualified to conduct such tests. Buyer shall be notified seven (7) days in advance of such tests and have a right to be present during such tests. If a Facility Meter is inaccurate it shall be promptly repaired or replaced. If a meter is inaccurate by more than one percent (1%) and it is not known when the Facility Meter inaccuracy commenced (if such evidence exists, then such date will be used to adjust prior invoices), then the invoices covering the period of time since the last Facility Meter test shall be adjusted for the amount of the inaccuracy on the assumption that the inaccuracy persisted during one-half of such period so long as such adjustments are accepted by CAISO; provided, such period may not exceed twelve (12) months.
ARTICLE 8
INVOICING AND PAYMENT; CREDIT
8.1 Invoicing. Seller shall use commercially reasonable efforts to deliver an invoice to Buyer for Product no later than the tenth (10th) day of each month for the previous calendar month.
Each invoice shall reflect (a) records of metered data, including (i) CAISO metering and transaction data sufficient to document and verify the amount of Product delivered by the Facility for any Settlement Period during the preceding month, including the amount of Charging Energy, Reimbursable Station Use and the amount of Facility Energy, in each case as read by the Facility Meter, Energy In, Energy Out, and the amount of Replacement RA delivered to Buyer (if any) and (ii) data showing a calculation of the Monthly Capacity Payment and other relevant data for the prior month; and (b) be in a format reasonably specified by Buyer, covering the Product provided in the preceding month determined in accordance with the applicable provisions of this Agreement.
Buyer shall, and shall cause its Scheduling Coordinator to, provide Seller with all reasonable access (including, in real time, to the maximum extent reasonably possible) to any records, including invoices or settlement data from the CAISO, forecast data and other information, all as may be necessary from time to time for Seller to prepare and verify the accuracy of all invoices.
8.2 Payment. Buyer shall make payment to Seller of Monthly Capacity Payments for Product (and any other amounts due) by wire transfer or ACH payment to the bank account provided on each monthly invoice. Buyer shall pay undisputed invoice amounts by the later of (a) ten (10) Business Days after Buyer’s receipt of the invoice from Seller, and (b) the thirtieth (30th) day of the month after the operational month for which such invoice was rendered; provided, if such due date falls on a weekend or legal holiday, such due date shall be the next Business Day.
Payments made after the due date will be considered late and will bear interest on the unpaid balance. If the amount due is not paid on or before the due date or if any other payment that is due and owing from one Party to another is not paid on or before its applicable due date, a late payment charge shall be applied to the unpaid balance and shall be added to the next billing statement. Such late payment charge shall be calculated based on an annual Interest Rate equal to the prime rate published on the date of the invoice in The Wall Street Journal (or, if The Wall Street Journal is not published on that day, the next succeeding date of publication), plus two percent (2%) (the
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42 “Interest Rate”). If the due date occurs on a day that is not a Business Day, the late payment charge shall begin to accrue on the next succeeding Business Day.
8.3 Books and Records. To facilitate payment and verification, each Party shall maintain all books and records necessary for billing and payments, including copies of all invoices under this Agreement, for a period of at least two (2) years or as otherwise required by Law. Upon fifteen (15) days’ Notice to the other Party, either Party shall be granted reasonable access to the accounting books and records within the possession or control of the other Party pertaining to all invoices generated pursuant to this Agreement. Seller acknowledges that in accordance with California Government Code Section 8546.7, Seller may be subject to audit by the California State Auditor with regard to Seller’s performance of this Agreement because the compensation under this Agreement exceeds $10,000.
8.4 Payment Adjustments; Billing Errors. Payment adjustments shall be made if Buyer or Seller discovers there have been good faith inaccuracies in invoicing that are not otherwise disputed under Section 8.5 or an adjustment to an amount previously invoiced or paid is required due to a correction of data by the CAISO, or there is determined to have been a meter inaccuracy sufficient to require a payment adjustment. If the required adjustment is in favor of Buyer, Buyer’s next monthly payment shall be credited in an amount equal to the adjustment. If the required adjustment is in favor of Seller, Seller shall add the adjustment amount to Buyer’s next monthly invoice. Adjustments in favor of either Buyer or Seller shall bear interest, until settled in full, in accordance with Section 8.2, accruing from the date on which the adjusted amount should have been due.
8.5 Billing Disputes. A Party may, in good faith, dispute the correctness of any invoice or any adjustment to an invoice rendered under this Agreement or adjust any invoice for any arithmetic or computational error within twelve (12) months of the date the invoice, or adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be required to be made when due. Any invoice dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment. Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of the dispute, any required payment shall be made within five (5) Business Days of such resolution along with interest accrued at the Interest Rate from and including the original due date to but excluding the date paid. Inadvertent overpayments shall be returned via adjustments in accordance with Section 8.4. Any dispute with respect to an invoice is waived if the other Party is not notified in accordance with this Section 8.5 within twelve (12) months after the invoice is rendered or subsequently adjusted, except to the extent any misinformation was from a third party not affiliated with any Party and such third party corrects its information after the twelve-month period. If an invoice is not rendered within twelve (12) months after the close of the month during which performance occurred, the right to payment for such performance is waived.
8.6 Netting of Payments. The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other on the same date through netting, in which case all amounts owed by each Party to the other Party for the purchase and sale of Product during the monthly billing period under this Agreement or otherwise arising out of this Agreement, including any related damages calculated pursuant to Exhibits B and P, interest, and payments or
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43 credits, shall be netted so that only the excess amount remaining due shall be paid by the Party who owes it.
8.7 Seller’s Development Security. To secure its obligations under this Agreement, Seller shall deliver the Development Security to Buyer within thirty (30) days after the Effective Date. Seller shall maintain the Development Security in full force and effect. Upon the earlier of (a) Seller’s delivery of the Performance Security, or (b) sixty (60) days after termination of this Agreement, Buyer shall return the Development Security to Seller, less the amounts drawn in accordance with this Agreement. Subject to this Section 8.7 and the other terms of this Agreement governing Seller’s Development Security requirements, Seller may change the type and/or issuer (as applicable) of the Development Security from time to time and at any time. For avoidance of doubt, Seller shall have no replenishment obligation with respect to the Development Security.
8.8 Seller’s Performance Security. To secure its obligations under this Agreement, Seller shall deliver Performance Security to Buyer on or before the Commercial Operation Date.
If the Performance Security is not in the form of cash or Letter of Credit, it shall be substantially in the form of Guaranty set forth in Exhibit S. Seller shall maintain the Performance Security in full force and effect, and Seller shall within ten (10) Business Days after any draw thereon replenish the Performance Security in the event Buyer collects or draws down any portion of the Performance Security for any reason permitted under this Agreement other than to satisfy a Termination Payment, until the following have occurred: (a) the Delivery Term has expired or terminated early; and (b) all payment obligations of Seller due and payable under this Agreement, including compensation for penalties, Termination Payment, indemnification payments or other damages are paid in full (whether directly or indirectly such as through set-off or netting); provided, in no event shall Seller have any obligation to replenish the Performance Security to the extent that the total aggregate amount of such replenishment of the Performance Security during the Delivery Term exceeds two (2) times the amount of the original Performance Security.
Following the occurrence of both events, Buyer shall promptly return to Seller the unused portion of the Performance Security. Subject to this Section 8.8 and the other terms of this Agreement governing Seller’s Performance Security requirements, Seller may change the type and/or issuer (as applicable) of the Performance Security from time to time and at any time.
8.9 First Priority Security Interest in Cash or Cash Equivalent Collateral. To secure its obligations under this Agreement, and until released as provided herein, Seller hereby grants to Buyer a present and continuing first-priority security interest (“Security Interest”) in, and lien on (and right to net against), and assignment of the Development Security, Performance Security, any other cash collateral and cash equivalent collateral posted pursuant to Sections 8.7 and 8.8 and any and all interest thereon or proceeds resulting therefrom or from the liquidation thereof, whether now or hereafter held by, on behalf of, or for the benefit of Buyer, and Seller agrees to take all action as Buyer reasonably requires in order to perfect Buyer’s Security Interest in, and lien on (and right to net against), such collateral and any and all proceeds resulting therefrom or from the liquidation thereof.
Upon or any time after the occurrence of an Event of Default caused by Seller, an Early Termination Date resulting from an Event of Default caused by Seller, or an occasion provided for in this Agreement where Buyer is authorized to retain all or a portion of the Development Security or Performance Security, Buyer may do any one or more of the following (in each case subject to
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44 the final sentence of this Section 8.9):
(a) Exercise any of its rights and remedies with respect to the Development Security and Performance Security, including any such rights and remedies under Law then in effect;
(b) Draw on any outstanding Letter of Credit issued for its benefit and retain any cash held by Buyer as Development Security or Performance Security; and (c) Liquidate all Development Security or Performance Security (as applicable) then held by or for the benefit of Buyer free from any claim or right of any nature whatsoever of Seller, including any equity or right of purchase or redemption by Seller.
Buyer shall apply the proceeds of the collateral realized upon the exercise of any such rights or remedies to reduce Seller’s obligations under this Agreement (Seller remains liable for any amounts owing to Buyer after such application), subject to Buyer’s obligation to return any surplus proceeds remaining after such obligations are satisfied in full.
8.10 Buyer’s Financial Statements. From the Effective Date, unless such financial statements are available on the internet at https://www.cleanpoweralliance.org/, if requested in writing by Seller, Buyer shall provide to Seller unaudited quarterly financial statements within ninety (90) days of the end of each quarter, and audited annual financial statements within one hundred eighty (180) days after the end of each fiscal year. Buyer’s financial statements shall have been prepared in accordance with GAAP, provided that Buyer’s quarterly budget-to-actual reports are not prepared in accordance with GAAP. Should any such statements not be available on a timely basis due to a delay in preparation or certification, such delay shall not be an Event of Default so long as Buyer diligently pursues the preparation, certification and delivery of the statements.
ARTICLE 9
NOTICES
9.1 Addresses for the Delivery of Notices. Any Notice required, permitted, or contemplated hereunder shall be in writing, shall be addressed to the Party to be notified at the address set forth in Exhibit N or at such other address or addresses as a Party may designate for itself from time to time by Notice hereunder.
9.2 Acceptable Means of Delivering Notice. Each Notice required, permitted, or contemplated hereunder shall be deemed to have been validly served, given or delivered as follows: (a) if sent by United States mail with proper first class postage prepaid, three (3) Business Days following the date of the postmark on the envelope in which such Notice was deposited in the United States mail; (b) if sent by a regularly scheduled next Business Day delivery carrier with delivery fees either prepaid or an arrangement with such carrier made for the payment of such fees, the next Business Day after the same is delivered by the sending Party to such carrier; (c) if sent by electronic communication (including electronic mail or other electronic means) at the time indicated by the time stamp upon delivery and, if after 5 pm, on the next Business Day; or (d) if
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45 delivered in person, upon receipt by the receiving Party. Notwithstanding the foregoing, Notices of outages or other scheduling or dispatch information or requests, may be sent by electronic communication and shall be considered delivered upon successful completion of such transmission.
ARTICLE 10
FORCE MAJEURE
10.1 Definition.
(a) “Force Majeure Event” means any act or event that delays or prevents a Party from timely performing all or a portion of its obligations under this Agreement or from complying with all or a portion of the conditions under this Agreement if such act or event, despite the exercise of commercially reasonable efforts, cannot be avoided by and is beyond the reasonable control (whether direct or indirect) of the claiming Party; provided, a Force Majeure Event shall not excuse any such delay, nonperformance, or noncompliance to the extent the claiming Party’s fault or negligence contributed thereto in scope or duration. (b) Without limiting the generality of the foregoing, so long as the following events, despite the exercise of reasonable efforts, cannot be avoided by, and are beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance or noncompliance, a Force Majeure Event may include an act of God or the elements, such as flooding, lightning, hurricanes, tornadoes, or ice storms; explosion; fire; volcanic eruption; flood; epidemic, pandemic or plague; landslide; mudslide; sabotage or vandalism; terrorism; earthquake; or other cataclysmic events; an act of public enemy; war; blockade; civil insurrection; riot; civil disturbance; strikes or other labor difficulties caused or suffered by a Party or any third party except as set forth below. (c) Notwithstanding the foregoing, the term “Force Majeure Event” does not include (i) economic conditions or changes in Law that render a Party’s performance of this Agreement at the Storage Rate unprofitable or otherwise uneconomic (including an increase in component or compliance costs for any reason, including foreign or domestic tariffs, Buyer’s ability to buy Product at a lower price, or Seller’s ability to sell the Product, or any component thereof, at a higher price, than under this Agreement); (ii) Seller’s inability to obtain permits or approvals of any type for the construction, operation, or maintenance of the Facility, except to the extent such inability is caused by a Force Majeure Event; (iii) the inability of a Party to make payments when due under this Agreement, unless the cause of such inability is an event that would otherwise constitute a Force Majeure Event as described above; (iv) a Curtailment Order; (v) Seller’s inability to obtain sufficient labor, equipment, materials, or other resources to build or operate the Facility, including the lack of wind, sun or other fuel source of an inherently intermittent nature, except to the extent such inability is caused by a Force Majeure Event; (vi) a strike, work stoppage or labor dispute limited only to any one or more of Seller, Seller’s Affiliates, Seller’s contractors, their subcontractors thereof or any other third party employed by Seller to work on the Facility; (vii) any equipment failure except if such equipment failure is caused by a Force Majeure Event; or (viii) any action or inaction by any third party, including Transmission Provider, that delays or prevents the approval, construction or placement in service of any
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46 Interconnection Facilities or Network Upgrades, except to the extent caused by a Force Majeure Event.
10.2 No Liability If a Force Majeure Event Occurs. Except as provided in Section 4 of Exhibit B, neither Seller nor Buyer shall be liable to the other Party in the event it is prevented from performing its obligations hereunder in whole or in part due to a Force Majeure Event. The Party rendered unable to fulfill any obligation by reason of a Force Majeure Event shall take reasonable actions necessary to remove such inability with due speed and diligence. Nothing herein shall be construed as permitting that Party to continue to fail to perform after said cause has been removed. The obligation to use due speed and diligence shall not be interpreted to require resolution of labor disputes by acceding to demands of the opposition when such course is inadvisable in the discretion of the Party having such difficulty. Neither Party shall be considered in breach or default of this Agreement if and to the extent that any failure or delay in the Party’s performance of one or more of its obligations hereunder is caused by a Force Majeure Event. The occurrence and continuation of a Force Majeure Event shall not suspend or excuse the obligation of a Party to make any payments due hereunder.
10.3 Notice. In order to claim a Force Majeure Event, the claiming Party, within fourteen (14) days after the date the claiming Party became (or reasonably should have become) aware of the claimed Force Majeure Event, must (a) give the other Party Notice describing the particulars of the occurrence in substantially the form set forth in Exhibit W, (b) provide information reasonably sufficient to establish that the occurrence constitutes Force Majeure as defined in this Agreement, and (c) notify the other Party in writing of the cessation or termination of such Force Majeure Event, all as known or estimated in good faith by the affected Party; provided, a Party’s failure to provide Notice within such fourteen (14)-day period constitutes a waiver of the Force Majeure Event with respect to the period starting the date after such Notice is due, and continuing until the date that the Notice is provided.
10.4 Termination Following Force Majeure Event or Development Cure Period. (a) If the cumulative extensions granted under the Development Cure Period (other than the extensions granted pursuant to clause 4(d) in Exhibit B) plus the payment of Commercial Operation Delay Damages equal or exceed two hundred seventy (270) days, and Seller has demonstrated to Buyer’s reasonable satisfaction that Seller’s failure to achieve COD by the Guaranteed Commercial Operation Date (as extended) was the result of delays that would have otherwise entitled to Seller to two hundred seventy (270) days of Development Cure Period delays but for the one hundred eighty (180)-day limitation, then Seller may terminate this Agreement upon Notice to Buyer. Upon such termination, neither Party shall have any liability to the other Party, save and except for those obligations specified in Sections 2.1(c) and 11.6, and Buyer shall promptly return to Seller any Development Security then held by Buyer plus the full amount of Commercial Operation Delay Damages paid by Seller, less any amounts drawn in accordance with this Agreement.
(b) If a Force Majeure Event has occurred after the Commercial Operation Date that has caused either Party to be wholly or partially unable to perform its obligations hereunder in any material respect, and the impacted Party has claimed and received relief from performance of its obligations for a consecutive twelve (12) month period, then the non-claiming Party may
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47 terminate this Agreement upon Notice to the other Party with respect to the Facility experiencing the Force Majeure Event. Upon any such termination, neither Party shall have any liability to the other Party, save and except for those obligations specified in Section 2.1(d) and Buyer shall promptly return to Seller any Performance Security then held by Buyer, less any amounts drawn in accordance with this Agreement.
ARTICLE 11
DEFAULTS; REMEDIES; TERMINATION
11.1 Events of Default. An “Event of Default” shall mean, (a) with respect to a Party (the “Defaulting Party”) that is subject to the Event of Default the occurrence of any of the following:
(i) the failure by such Party to make, when due, any payment required pursuant to this Agreement and such failure is not remedied within ten (10) Business Days after Notice thereof;
(ii) any representation or warranty made by such Party herein is false or misleading in any material respect when made or when deemed made or repeated, and such default is not remedied within thirty (30) days after Notice thereof (or such longer additional period, not to exceed an additional sixty (60) days, if the Defaulting Party is unable to remedy such default within such initial thirty (30)-day period despite exercising commercially reasonable efforts); (iii) the failure by such Party to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default set forth in this Section 11.1; and except for (A) failure to provide Capacity Attributes, the exclusive remedies for which are set forth in Section 3.5, and (B) failures related to the Annual Capacity Availability that do not trigger the provisions of Section 11.1(b)(iii), the exclusive remedies for which are set forth in Exhibit C and Exhibit P), (C) failures related to the Annual Capacity Availability or Guaranteed Efficiency Rate that do not trigger the provisions of Section
11.1(b)(iv), the exclusive remedies for which are set forth in Section 4.3) and (D) failures related to the timely provision of Settlement Quality Meter Data consistent with the SQMD Plan, the exclusive remedies for which are set forth in the last sentence of Exhibit D, Section (i), and such failure is not remedied within thirty (30) days after Notice thereof (or such longer additional period, not to exceed an additional ninety (90) days, if the Defaulting Party is unable to remedy such default within such initial thirty (30)-day period despite exercising commercially reasonable efforts);
(iv) such Party becomes Bankrupt;
(v) such Party assigns this Agreement or any of its rights hereunder other than in compliance with Article 14, if applicable; or (vi) such Party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer, the resulting, surviving or transferee entity fails
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49 (B) the issuer of such Letter of Credit becomes Bankrupt; (C) the issuer of the outstanding Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit and such failure shall be continuing after the lapse of any applicable grace period permitted under such Letter of Credit;
(D) the issuer of the outstanding Letter of Credit shall fail to honor a properly documented request to draw on such Letter of Credit; (E) the issuer of the outstanding Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit;
(F) such Letter of Credit fails or ceases to be in full force and effect at any time; or
(G) Seller shall fail to renew or cause the renewal of each outstanding Letter of Credit on a timely basis as provided in the relevant Letter of Credit and as provided in accordance with this Agreement, and in no event less than sixty (60) days prior to the expiration of the outstanding Letter of Credit.
(vi) with respect to any Guaranty provided for the benefit of Buyer, the failure by Seller to provide for the benefit of Buyer either (1) cash or (2) a replacement Letter of Credit from an issuer meeting the criteria set forth in the definition of Letter of Credit, in each case, in the amount required hereunder within ten (10) Business Days after Seller receives Notice of the occurrence of any of the following events:
(A) if any representation or warranty made by the Guarantor in connection with this Agreement is false or misleading in any material respect when made or when deemed made or repeated; (B) the failure of the Guarantor to make any payment required or to perform any other material covenant or obligation in any Guaranty;
(C) the Guarantor becomes Bankrupt;
(D) the Guarantor shall fail to meet the criteria for an acceptable Guarantor as set forth in the definition of Guarantor;
(E) the failure of the Guaranty to be in full force and effect (other than in accordance with its terms) prior to the indefeasible satisfaction of all obligations of Seller hereunder; or (F) the Guarantor shall repudiate, disaffirm, disclaim, or reject, in whole or in part, or challenge the validity of any Guaranty.
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50 11.2 Remedies; Declaration of Early Termination Date. If an Event of Default with respect to a Defaulting Party shall have occurred and be continuing, the other Party (“Non-Defaulting Party”) shall have the following rights:
(a) to send Notice, designating a day, no earlier than the day such Notice is deemed to be received and no later than twenty (20) days after such Notice is deemed to be received, as an early termination date of this Agreement (“Early Termination Date”) that terminates this Agreement (the “Terminated Transaction”) and ends the Delivery Term effective as of the Early Termination Date;
(b) to accelerate all amounts owing between the Parties, and to collect as liquidated damages (i) the Damage Payment or (ii) the Termination Payment, as applicable, in each case calculated in accordance with Section 11.3 below; (c) to withhold any payments due to the Defaulting Party under this Agreement; (d) to suspend performance; and
(e) to exercise any other right or remedy available at law or in equity, including specific performance or injunctive relief, except to the extent such remedies are expressly limited under this Agreement;
provided, payment by the Defaulting Party of the Damage Payment or Termination Payment, as applicable, shall constitute liquidated damages and the Non-Defaulting Party’s sole and exclusive remedy for any Terminated Transaction and the Event of Default related thereto.
11.3 Damage Payment; Termination Payment. If an Early Termination Date has been declared, the Non-Defaulting Party shall calculate, in a commercially reasonable manner, the Damage Payment or Termination Payment, as applicable, in accordance with this Section 11.3. (a) Damage Payment Prior to Commercial Operation Date. If the Early Termination Date occurs before the Commercial Operation Date, then the Damage Payment shall be calculated in accordance with this Section 11.3(a).
(i) If Seller is the Defaulting Party, then the Damage Payment shall be owed to Buyer and shall be equal to the Development Security amount plus, if the Development Security is posted as cash, any interest accrued thereon. If Seller has not paid the Damage Payment, and the amount of Development Security held by Buyer is not equal to the Damage Payment amount, then Buyer may liquidate the Development Security and the remainder of the Damage Payment shall be immediately due and payable to Buyer. There will be no amounts owed to Seller.
The Parties agree that Buyer’s damages in the event of an Early Termination Date prior to the Commercial Operation Date caused by Seller’s default would be difficult or impossible to determine and that the damages set forth in this Section 11.3(a)(i) are a reasonable approximation of Buyer’s harm or loss.
(ii) If Buyer is the Defaulting Party, then the Damage Payment shall be owed to Seller and shall equal the sum of the actual, documented and verifiable costs incurred by Seller between the Effective Date and the Early Termination Date in connection with the Facility,
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51 less the fair market value (determined in a commercially reasonable manner) of (A) all Seller’s assets individually, or (B) the entire Facility, whichever is greater on the Early Termination Date, regardless of whether or not any Seller asset or the entire Facility is actually sold or disposed of.
There will be no amount owed to Buyer. The Parties agree that Seller’s damages in the event of an Early Termination Date prior to the Commercial Operation Date caused by Buyer’s default would be difficult or impossible to determine and that the damages set forth in this Section 11.3(a)(ii) are a reasonable approximation of Seller’s harm or loss.
(b) Termination Payment On or After the Commercial Operation Date. The payment owed by the Defaulting Party to the Non-Defaulting Party for a Terminated Transaction occurring after the Commercial Operation Date (“Termination Payment”) shall be the aggregate of all Settlement Amounts plus any and all other amounts due to or from the Non-Defaulting Party (as of the Early Termination Date) netted into a single amount. The Non-Defaulting Party shall calculate, in a commercially reasonable manner, a Settlement Amount for the Terminated Transaction as of the Early Termination Date. Third parties supplying information for purposes of the calculation of Gains or Losses may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors and other sources of market information.
The Settlement Amount shall not include consequential, incidental, punitive, exemplary, indirect or business interruption damages. Without prejudice to the Non-Defaulting Party’s duty to mitigate, the Non-Defaulting Party shall not have to enter into replacement transactions to establish a Settlement Amount. Each Party agrees and acknowledges that (i) the actual damages that the Non-Defaulting Party would incur in connection with a Terminated Transaction would be difficult or impossible to predict with certainty, (ii) the Termination Payment described in this Section
11.3(b) is a reasonable and appropriate approximation of such damages, and (iii) the Termination Payment described in this Section 11.3(b) is the exclusive remedy of the Non-Defaulting Party in connection with a Terminated Transaction but shall not otherwise act to limit any of the Non-Defaulting Party’s rights or remedies if the Non-Defaulting Party does not elect a Terminated Transaction as its remedy for an Event of Default by the Defaulting Party.
11.4 Notice of Payment of Termination Payment or Damage Payment. As soon as practicable after a Terminated Transaction, but in no event later than sixty (60) days after the Early Termination Date, Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the amount of the Damage Payment or Termination Payment, as applicable, and whether the Termination Payment or Damage Payment, as applicable, is due to or from the Non-Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of such amount and the sources for such calculation. The Termination Payment or Damage Payment, as applicable, shall be made to or from the Non-Defaulting Party, as applicable, within ten (10) Business Days after such Notice is effective.
11.5 Disputes With Respect to Termination Payment or Damage Payment. If the Defaulting Party disputes the Non-Defaulting Party’s calculation of the Termination Payment or Damage Payment, as applicable, in whole or in part, the Defaulting Party shall, within five (5) Business Days of receipt of the Non-Defaulting Party’s calculation of the Termination Payment or Damage Payment, as applicable, provide to the Non-Defaulting Party a detailed written explanation of the basis for such dispute. Disputes regarding the Termination Payment or Damage Payment, as applicable, shall be determined in accordance with Article 15.
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53 NOT, ARISING OUT OF, OR IN CONNECTION WITH THIS AGREEMENT, BY STATUTE, IN TORT OR CONTRACT.
12.2 Waiver and Exclusion of Other Damages. EXCEPT AS EXPRESSLY SET
FORTH HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM THAT THE EXPRESS REMEDIES AND
MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. ALL LIMITATIONS OF LIABILITY CONTAINED IN
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THOSE PERTAINING TO SELLER’S LIMITATION OF LIABILITY AND THE PARTIES’ WAIVER OF
CONSEQUENTIAL DAMAGES, SHALL APPLY EVEN IF THE REMEDIES FOR BREACH OF WARRANTY PROVIDED IN THIS AGREEMENT ARE DEEMED TO “FAIL OF THEIR ESSENTIAL PURPOSE” OR ARE OTHERWISE HELD TO BE INVALID OR UNENFORCEABLE.
FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS AND EXCLUSIVE
REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR
MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED.
IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR’S LIABILITY SHALL BE LIMITED TO DIRECT DAMAGES ONLY. THE
VALUE OF ANY TAX CREDITS, DETERMINED ON AN AFTER-TAX BASIS, LOST DUE TO BUYER’S DEFAULT (WHICH SELLER HAS NOT BEEN ABLE TO MITIGATE AFTER
USE OF REASONABLE EFFORTS) AND AMOUNTS DUE IN CONNECTION WITH THE
RECAPTURE OF ANY RENEWABLE ENERGY INCENTIVES, IF ANY, SHALL BE DEEMED TO BE DIRECT DAMAGES.
TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, INCLUDING UNDER SECTIONS 3.5, 11.2, 11.3 AND 11.9, AND AS
PROVIDED IN EXHIBIT B, EXHIBIT C, AND EXHIBIT P THE PARTIES ACKNOWLEDGE
THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, THAT
OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT, AND THAT
THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE ANTICIPATED HARM OR LOSS. IT IS THE INTENT OF THE PARTIES THAT THE
LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES
BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING
THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. THE PARTIES HEREBY WAIVE ANY RIGHT TO CONTEST SUCH PAYMENTS AS AN UNREASONABLE PENALTY.
THE PARTIES ACKNOWLEDGE AND AGREE THAT MONEY DAMAGES AND THE
EXPRESS REMEDIES PROVIDED FOR HEREIN ARE AN ADEQUATE REMEDY FOR THE
BREACH BY THE OTHER OF THE TERMS OF THIS AGREEMENT, AND EACH PARTY
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54 WAIVES ANY RIGHT IT MAY HAVE TO SPECIFIC PERFORMANCE WITH RESPECT TO ANY OBLIGATION OF THE OTHER PARTY UNDER THIS AGREEMENT.
ARTICLE 13
REPRESENTATIONS AND WARRANTIES; AUTHORITY
13.1 Seller’s Representations and Warranties. As of the Effective Date, Seller represents and warrants as follows:
(a) Seller is a limited liability company, duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and is qualified to conduct business in each jurisdiction where the failure to so qualify would have a material adverse effect on the business or financial condition of Seller.
(b) Seller has the power and authority to enter into and, subject to the Seller Board Approval, perform this Agreement and is not prohibited from entering into this Agreement or, subject to the Seller Board Approval, discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement, except where such failure does not have a material adverse effect on Seller’s performance under this Agreement. The execution, delivery and, subject to the Seller Board Approval, performance of this Agreement by Seller has been duly authorized by all necessary limited liability company action on the part of Seller and does not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Seller or any other party to any other agreement with Seller. (c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Seller with the provisions of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Seller, subject to any permits that have not yet been obtained by Seller, the documents of formation of Seller or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Seller is a party or by which any of its property is bound. (d) This Agreement has been duly executed and delivered by Seller. This Agreement is a legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as limited by laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity. (e) The Facility is located in the State of California. (f) Seller reasonably believes that, despite Seller and/or its Affiliates having received notices or advisements from existing or potential suppliers or service providers on or prior to the Effective Date regarding delays in the delivery of materials and/or services due to COVID-19, neither Seller nor its Affiliates are aware of any conditions or circumstances evidenced in any such notice or advisement that are reasonably likely to cause a delay in (i) achieving the Construction Start by the Guaranteed Construction Start Date, or (ii) achieving Commercial Operation by the Guaranteed Commercial Operation Date. Notwithstanding anything to the contrary in this Agreement, Buyer’s only remedy for any breach of this representation by Seller
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55 shall be that Seller may not claim relief under Article 10 for a Force Majeure Event or Section 4 of Exhibit B for a Development Cure Period on the basis of such delays.
13.2 Buyer’s Representations and Warranties. As of the Effective Date, Buyer represents and warrants as follows:
(a) Buyer is a joint powers authority and a validly existing community choice aggregator, duly organized, validly existing and in good standing under the laws of the State of California and the rules, regulations and orders of the California Public Utilities Commission, and is qualified to conduct business in each jurisdiction of the Joint Powers Agreement members. All Persons making up the governing body of Buyer are the elected or appointed incumbents in their positions and hold their positions in good standing in accordance with the Joint Powers Agreement and other Law.
(b) Buyer has the power and authority to enter into and perform this Agreement and is not prohibited from entering into this Agreement or discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement, except where such failure does not have a material adverse effect on Buyer’s performance under this Agreement. The execution, delivery and performance of this Agreement by Buyer has been duly authorized by all necessary action on the part of Buyer and does not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Buyer or any other party to any other agreement with Buyer.
(c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Buyer with the provisions of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Buyer, including but not limited to community choice aggregation, the Joint Powers Act, competitive bidding, public notice, open meetings, election, referendum, or prior appropriation requirements, the documents of formation of Buyer or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Buyer is a party or by which any of its property is bound.
(d) This Agreement has been duly executed and delivered by Buyer. This Agreement is a legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as limited by laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity. (e) Buyer warrants and covenants that with respect to its contractual obligations under this Agreement, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (1) suit, (2) jurisdiction of court, (3) relief by way of injunction, order for specific performance or recovery of property, (4) attachment of assets, or (5) execution or enforcement of any judgment.
(f) Buyer is a “local public entity” as defined in Section 900.4 of the Government Code of the State of California.
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56 (g) Buyer cannot assert sovereign immunity as a defense to the enforcement of its obligations under this Agreement.
13.3 General Covenants. Each Party covenants that commencing on the Effective Date and continuing throughout the Contract Term:
(a) It shall continue to be duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and to be qualified to conduct business in each jurisdiction where the failure to so qualify would have a material adverse effect on its business or financial condition;
(b) It shall maintain (or obtain from time to time as required) all regulatory authorizations necessary for it to legally perform its obligations under this Agreement; and (c) It shall perform its obligations under this Agreement in compliance with all terms and conditions in its governing documents and in material compliance with any Law.
13.4 Workforce Development. The Parties acknowledge that in connection with Buyer’s energy procurement efforts, including entering into this Agreement, Buyer is committed to creating community benefits, which includes engaging a skilled and trained workforce and targeted hires. Accordingly, prior to the Guaranteed Construction Start Date, Seller shall ensure that work performed in connection with construction of the Facility will be conducted using a project labor agreement, community workforce agreement, work site agreement, collective bargaining agreement, or similar agreement providing for terms and conditions of employment with applicable labor organizations, and shall remain compliant with such agreement in accordance with the terms thereof. Seller shall provide documentation reasonably satisfactory to Buyer demonstrating Seller’s compliance with the requirements of this Section 13.4; provided, a Seller’s officer’s certificate certifying Seller’s full compliance with the requirements of this Section 13.4 shall be deemed documentation reasonably satisfactory to Buyer for purposes of the foregoing sentence.
13.5 Disadvantaged Communities Development. Within thirty (30) days after the Effective Date, Seller shall pay to Buyer one hundred fifty thousand dollars ($150,000) for Buyer to use for community benefits as determined by Buyer in its sole discretion.
ARTICLE 14
ASSIGNMENT
14.1 General Prohibition on Assignments. Except as provided below in this Article 14, neither Party may voluntarily assign this Agreement or its rights or obligations under this Agreement, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed. Any Change of Control of Seller (whether voluntary or by operation of law) will be deemed an assignment and will require the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed; provided, a Change of Control of Seller shall not require Buyer’s consent if the assignee or transferee is a Permitted Transferee. Any assignment made without the required written consent (if applicable), or in violation of the conditions to assignment set out below, shall be null and void.
Seller shall be responsible for Buyer’s reasonable costs associated with the preparation, review,
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57 execution and delivery of documents in connection with any assignment of this Agreement by Seller, including without limitation reasonable attorneys’ fees.
14.2 Collateral Assignment. Subject to the provisions of this Section 14.2, Seller has the right to assign this Agreement as collateral for any financing or refinancing of the Facility. In connection with any financing or refinancing of the Facility by Seller, Buyer shall in good faith work with Seller and Lender to agree upon a consent to collateral assignment of this Agreement in substantially the form attached as Exhibit T (“Consent to Collateral Assignment”).
14.3 Permitted Assignment by Seller. Seller may, without the prior written consent of Buyer, transfer or assign this Agreement to: (a) an Affiliate of Seller or (b) any Person succeeding to all or substantially all of the assets of Seller (whether voluntary or by operation of law); if, and only if:
(a) the assignee is a Permitted Transferee;
(b) Seller gives Buyer Notice of such transfer or assignment within fifteen (15) Business Days before the date of such proposed transfer or assignment; and (c) Seller has provided Buyer a written agreement signed by the Person to which Seller wishes to assign its interests that (x) provides that such Person will assume all of Seller’s obligations and liabilities under this Agreement upon such transfer or assignment and (y) certifies that such Person meets the definition of a Permitted Transferee.
Notwithstanding the foregoing, any assignment by Seller, its successors or assigns under this Section 14.3 shall be of no force and effect unless and until such Notice and agreement by the assignee have been received and accepted by Buyer.
14.4 Permitted Transfers by Seller. Seller may make a Permitted Transfer, without the prior written consent of Buyer, provided that Seller has given Buyer Notice at least fifteen (15) Business Days before the date of such Permitted Transfer.
14.5 Shared Facilities; Portfolio Financing. Buyer agrees and acknowledges that Seller may elect to finance all or any portion of the Facility or the Interconnection Facilities or the Shared Facilities (1) utilizing tax equity investment, and/or (2) through a Portfolio Financing, which may include cross-collateralization or similar arrangements. In connection with any financing or refinancing of the Facility, the Interconnection Facilities or the Shared Facilities by Seller or any Portfolio Financing, Buyer, Seller, Portfolio Financing Entity (if any), and Lender shall execute and deliver such further consents, approvals and acknowledgments as may be reasonable and necessary to facilitate such transactions; provided, Buyer shall not be required to agree to any terms or conditions which are reasonably expected to have a material adverse effect on Buyer and all reasonable attorney’s fees incurred by Buyer in connection therewith shall be borne by Seller.
14.6 Buyer Financing Assignment. Seller agrees that Buyer may assign a portion of its rights and obligations under this Agreement to a Person in connection with a municipal prepayment financing transaction (“Buyer Assignee”) at any time upon not less than fifteen (15) Business Days’ notice by delivering Notice of such assignment, which notice must include a
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58 proposed assignment agreement (the “Limited Assignment Agreement”), the form of which Limited Assignment Agreement the Parties will work together in good faith to agree upon if/when Buyer in good faith believes the Facility may qualify for a municipal prepayment financing transaction and provides a Notice to Seller requesting that the Parties work together with respect to the preparation and agreement to such a form, which form shall be subject to the provisions set forth in the remainder of this Section 14.6 unless otherwise agreed to in writing by each of the Parties. At the time of such assignment, such Buyer Assignee has a Credit Rating equal to the higher of (a) Buyer’s Credit Rating at the time of such assignment (if applicable), and (b) Baa3 from Moody’s and BBB- from S&P (the “Required Credit Rating”). As reasonably requested by each of Buyer Assignee and Seller, each shall (i) provide the other with information and documentation with respect to it, including but not limited to Credit Rating, and compliance with anti-money laundering rules, the Dodd-Frank Act, the Commodity Exchange Act, the Patriot Act and similar rules, regulations, requirements and corresponding policies, and in the case of Seller, account opening information and information related to the forecasting requirements set forth in this Agreement; and (ii) Seller shall promptly execute such Assignment Agreement and implement such assignment as contemplated thereby, subject only to the countersignature of Buyer Assignee and Buyer and the requirements of this Section 14.6 and the form of the Limited Assignment Agreement; provided, (i) nothing in the Assignment Agreement shall modify any provision of this Agreement; (ii) PPA Buyer remains obligated to perform all its obligations under this Agreement notwithstanding the limited assignment under the Assignment Agreement (including without limitation any such obligations not timely performed by Buyer Assignee under the Assignment Agreement) and any failure by Buyer Assignee to make payments to Seller when due under the Agreement shall be a Buyer Event of Default if not cured within the applicable cure period specified herein; (iii) the Assignment Agreement shall not purport to convey or otherwise allege any right of Buyer or Buyer Assignee to make any prepayment to Seller under this Agreement or to file or impose any lien on the Facility; (iv) neither Limited Assignee nor Buyer shall make any assignment of its rights or delegation of its obligations under the Assignment Agreement without the prior written consent of Seller; (v) Seller shall not be required to agree to any terms or conditions which are reasonably expected to have a material adverse effect on Seller or its financing parties; (vi) Buyer shall reimburse Seller for all out-of-pocket expenses reasonably incurred by Seller in excess of five thousand dollars ($5,000) (but not to exceed ten thousand dollars ($10,000) of reimbursable expenses) as a result of such assignment by Buyer; and (vii) Buyer Assignee and PPA Buyer shall comply with all reasonable requests from any Lender in connection with the Limited Assignment Agreement, including in connection with any Consent to Collateral Assignment Agreement.
14.7 [Intentionally Omitted].
14.8 Accommodation of Tax Equity Investors. Buyer will, as soon as reasonably practicable after request, cooperate reasonably with Seller and any tax equity investor of Seller or a parent of Seller involving the Facility or this Agreement to provide such consents to assignments, estoppels, certifications, representations, information or other documents as may be reasonably requested by Seller or such tax equity investor in connection with any financing or assignment involving the Facility or this Agreement.
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59 ARTICLE 15
DISPUTE RESOLUTION
15.1 Governing Law. This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced and performed in accordance with the laws of the state of California, without regard to principles of conflicts of Law. To the extent enforceable at such time, each Party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this Agreement.
15.2 Dispute Resolution. In the event of any dispute arising under this Agreement, within ten (10) days following the receipt of a Notice from either Party identifying such dispute, the Parties shall meet, negotiate and attempt, in good faith, to resolve the dispute quickly, informally and inexpensively. If the Parties are unable to resolve a dispute arising hereunder within the earlier of either forty-five (45) days of initiating such discussions, or within sixty (60) days after Notice of the dispute, either Party may seek any and all remedies available to it at law or in equity, subject to the limitations set forth in this Agreement.
15.3 Attorneys’ Fees. In any proceeding brought to enforce this Agreement or because of the breach by any Party of any covenant or condition herein contained, each Party shall bear its own respective costs, expenses and attorneys’ fees in connection with said action.
15.4 Venue. In the event of any legal action to enforce or interpret this Agreement, the sole and exclusive venue shall be a court of competent jurisdiction located in Los Angeles County, California, and the Parties hereto agree to and do hereby submit to the jurisdiction of such court, and waive any claim or defense that such forum is not convenient or proper.
ARTICLE 16
INDEMNIFICATION
16.1 Indemnification.
(a) Each Party (the “Indemnifying Party”) agrees to indemnify, defend and hold harmless the other Party and its Affiliates, directors, officers, employees and agents (collectively, the “Indemnified Party”) from and against all claims, demands, losses, liabilities, penalties, and expenses (including reasonable attorneys’ fees) (i) for personal injury or death to Persons and damage to the property of any third party to the extent arising out of, resulting from, or caused by the negligent or willful misconduct of the Indemnifying Party, its Affiliates, its directors, officers, employees, or agents, or (ii) for third-party claims resulting from the Indemnifying Party’s breach (including inaccuracy of any representation of warranty made hereunder), performance or non-performance of its obligations under this Agreement. (b) Seller shall indemnify, defend and hold harmless Buyer and its Affiliates, directors, officers, employees from and against all claims, demands, losses, liabilities, penalties, and expenses (including reasonable attorneys’ fees) in connection with any claims of infringement upon or violation of any trade secret, trademark, trade name, copyright, patent, or other intellectual property rights of any third party by equipment, software, applications or programs (or any portion of same) used in connection with the Facility (an “IP Indemnity Claim”).
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60 (c) Nothing in this Section 16.1 shall enlarge or relieve Seller or Buyer of any liability to the other for any breach of this Agreement. Neither Party shall be indemnified for its damages resulting from its sole negligence, intentional acts or willful misconduct. These indemnity provisions shall not be construed to relieve any insurer of its obligation to pay claims consistent with the provisions of a valid insurance policy.
16.2 Claims. Promptly after receipt by a Party of any claim or Notice of the commencement of any action, administrative, or legal proceeding, or investigation as to which the indemnity provided for in this Article 16 may apply, the Indemnified Party shall notify the Indemnifying Party in writing of such fact. The Indemnifying Party shall assume the defense thereof with counsel designated by the Indemnifying Party and satisfactory to the Indemnified Party, provided, if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it which are different from or additional to, or inconsistent with, those available to the Indemnifying Party, the Indemnified Party shall have the right to select and be represented by separate counsel, at the Indemnifying Party’s expense, unless a liability insurer is willing to pay such costs. If the Indemnifying Party fails to assume the defense of a claim meriting indemnification, the Indemnified Party may at the expense of the Indemnifying Party contest, settle, or pay such claim; provided, settlement or full payment of any such claim may be made only following consent of the Indemnifying Party or, absent such consent, written opinion of the Indemnified Party’s counsel that such claim is meritorious or warrants settlement. Except as otherwise provided in this Article 16, in the event that a Party is obligated to indemnify and hold the other Party and its successors and assigns harmless under this Article 16, the amount owing to the Indemnified Party will be the amount of the Indemnified Party’s damages net of any insurance proceeds received by the Indemnified Party following a reasonable effort by the Indemnified Party to obtain such insurance proceeds.
ARTICLE 17
INSURANCE
17.1 Insurance.
(a) General Liability. Seller shall maintain, or cause to be maintained at its sole expense, (i) commercial general liability insurance, including products and completed operations and personal injury insurance, in a minimum amount of Ten Million Dollars ($10,000,000) per occurrence, and an annual aggregate of not less than Ten Million Dollars ($10,000,000), endorsed to provide contractual liability in said amount, specifically covering Seller’s obligations under this Agreement and including Buyer as an additional insured; and (ii) an umbrella insurance policy in a minimum limit of liability of Ten Million Dollars ($10,000,000) per occurrence and in aggregate.
Defense costs shall be provided as an additional benefit and not included within the limits of liability. Such insurance shall contain standard cross-liability and severability of interest provisions. The amount of insurance required above may be satisfied by any combination of primary and excess insurance.
(b) Employer’s Liability Insurance. Employers’ Liability insurance shall not be less than One Million Dollars ($1,000,000.00) for injury or death occurring as a result of each
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61 accident. With regard to bodily injury by disease, the One Million Dollar ($1,000,000) policy limit will apply to each employee.
(c) Workers Compensation Insurance. Seller, if it has employees, shall also maintain at all times during the Contract Term workers’ compensation and employers’ liability insurance coverage in accordance with applicable requirements of Law. (d) Business Auto Insurance. Seller shall maintain at all times during the Contract Term business auto insurance for bodily injury and property damage with limits of One Million Dollars ($1,000,000) per occurrence. Such insurance shall cover liability arising out of Seller’s use of all owned (if any), non-owned and hired vehicles, including trailers or semi-trailers in the performance of the Agreement.
(e) Builder’s All-Risk Insurance. Seller shall maintain or cause to be maintained during the construction of the Facility prior to the Commercial Operation Date, builder’s all-risk insurance covering the Facility during such construction periods. (f) Property Damage Insurance. Seller shall maintain or cause to be maintained during the Delivery Term, property damage insurance with a policy limit of not less than the full replacement cost of the Facility on a per occurrence basis. (g) Pollution Liability Insurance. Seller shall maintain or cause to be maintained during the Contract Term, pollution liability insurance in an amount not less than Two Million Dollars ($2,000,000) each occurrence covering losses involving hazardous material(s) and caused by pollution incidents or conditions that arise from any subcontractor’s performance or lack of performance of work under this Agreement, or might be required by federal, state, regional, municipal, and local laws, including coverage for bodily injury, sickness, disease, mental anguish or shock sustained by any person, including death, property damage including the resulting loss of use thereof, clean-up costs, and the loss of use of tangible property that has not been physically damaged or destroyed, and defense costs. If such coverage is on a “claims made” policy form, any applicable “retroactive date” shall be no later than the Effective Date and shall be maintained for at least two (2) years beyond the termination of this Agreement, to allow for a reasonable extended reporting period.
(h) Subcontractor Insurance. Seller shall require all of its subcontractors to carry: (i) comprehensive general liability insurance with a combined single limit of coverage not less than One Million Dollars ($1,000,000); (ii) workers’ compensation insurance and employers’ liability coverage in accordance with applicable requirements of Law; and (iii) business auto insurance for bodily injury and property damage with limits of one million dollars ($1,000,000) per occurrence. All subcontractors shall name Seller as an additional insured to insurance carried pursuant to clauses (h)(i) and (h)(iii). All subcontractors shall provide a primary endorsement and a waiver of subrogation to Seller for the required coverage pursuant to this Section 17.1(h). (i) Evidence of Insurance. Within ten (10) days after execution of the Agreement and upon annual renewal thereafter, Seller shall deliver to Buyer certificates of insurance evidencing such coverage. Such certificates shall specify that Buyer shall be given at least thirty (30) days prior Notice by Seller in the event of any material modification, cancellation
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62 or termination of coverage. Such insurance shall be primary coverage without right of contribution from any insurance of Buyer. Any other insurance maintained by Seller is for the exclusive benefit of Seller and shall not in any manner inure to the benefit of Buyer. The general liability, auto liability and worker’s compensation policies shall be endorsed with a waiver of subrogation in favor of Buyer for all work performed by Seller, its employees, agents and sub-contractors. (j) Failure to Comply with Insurance Requirements. If Seller fails to comply with any of the provisions of this Article 17, Seller, among other things and without restricting Buyer’s remedies under the Law or otherwise, shall, at its own cost and expense, act as an insurer and self-insure in accordance with the terms and conditions above. With respect to the required general liability, umbrella liability and business automobile liability insurance, Seller shall provide a current, full and complete defense to Buyer, its subsidiaries and Affiliates, and their respective officers, directors, shareholders, agents, employees, assigns, and successors in interest, in response to a third-party claim in the same manner that an insurer would have, had the insurance been maintained in accordance with the terms and conditions set forth above. In addition, alleged violations of the provisions of this Article 17 means that Seller has the initial burden of proof regarding any legal justification for refusing or withholding coverage and Seller shall face the same liability and damages as an insurer for wrongfully refusing or withholding coverage in accordance with the laws of California.
ARTICLE 18
CONFIDENTIAL INFORMATION
18.1 Definition of Confidential Information. The following constitutes “Confidential Information,” whether oral or written which is delivered by Seller to Buyer or by Buyer to Seller including: (a) the terms and conditions of, and proposals and negotiations related to, this Agreement, and (b) information that either Seller or Buyer stamps or otherwise identifies as “confidential” or “proprietary” before disclosing it to the other. Confidential Information does not include (i) information that was publicly available at the time of the disclosure, other than as a result of a disclosure in breach of this Agreement; (ii) information that becomes publicly available through no fault of the recipient after the time of the delivery; (iii) information that was rightfully in the possession of the recipient (without confidential or proprietary restriction) at the time of delivery or that becomes available to the recipient from a source not subject to any restriction against disclosing such information to the recipient; and (iv) information that the recipient independently developed without a violation of this Agreement.
18.2 Duty to Maintain Confidentiality. The Party receiving Confidential Information (the “Receiving Party”) from the other Party (the “Disclosing Party”) shall not disclose Confidential Information to a third party (other than the Party’s employees, lenders (including bona fide prospective lenders), counsel, accountants, directors or advisors, or any such representatives of a Party’s Affiliates, who have a need to know such information and have agreed to keep such terms confidential) except in order to comply with any applicable Law, regulation, or any exchange, control area or independent system operator rule or in connection with any court or regulatory proceeding applicable to such Party or any of its Affiliates; provided, each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure. The Parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with, this confidentiality obligation. The Parties agree and acknowledge that nothing in this Section 18.2
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63 prohibits a Party from disclosing any one or more of the commercial terms of a transaction (other than the name of the other Party unless otherwise agreed to in writing by the Parties) to any industry price source for the purpose of aggregating and reporting such information in the form of a published energy price index.
The Parties acknowledge and agree that the Agreement and any transactions entered into in connection herewith are subject to the requirements of the California Public Records Act (Government Code Section 6250 et seq.). In order to designate information as confidential, the Disclosing Party must clearly stamp and identify the specific portion of the material designated with the word “Confidential.” The Parties agree not to over-designate material as Confidential Information. Over-designation includes stamping whole agreements, entire pages or series of pages as “Confidential” that clearly contain information that is not Confidential Information.
Upon request or demand of any third person or entity not a Party hereto to Buyer pursuant to the California Public Records Act for production, inspection and/or copying of Confidential Information (“Requested Confidential Information”), Buyer shall as soon as practical notify Seller in writing via email that such request has been made. Seller shall be solely responsible for taking at its sole expense whatever legal steps are necessary to prevent release of the Requested Confidential Information to the third party by Buyer. If Seller takes no such action after receiving the foregoing notice from Buyer, Buyer shall, at its discretion, be permitted to comply with the third party’s request or demand and is not required to defend against it. If Seller does take or attempt to take such action, Buyer shall provide timely and reasonable cooperation to Seller, if requested by Seller, and Seller agrees to indemnify and hold harmless Buyer, its officers, employees and agents (“Buyer’s Indemnified Parties”), from any claims, liability, award of attorneys’ fees, or damages, and to defend any action, claim or lawsuit brought against any of Buyer’s Indemnified Parties for Buyer’s refusal to disclose any Requested Confidential Information.
18.3 Irreparable Injury; Remedies. Receiving Party acknowledges that its obligations hereunder are necessary and reasonable in order to protect Disclosing Party and the business of Disclosing Party, and expressly acknowledges that monetary damages would be inadequate to compensate Disclosing Party for any breach or threatened breach by Receiving Party of any covenants and agreements set forth herein. Accordingly, Receiving Party acknowledges that any such breach or threatened breach will cause irreparable injury to Disclosing Party and that, in addition to any other remedies that may be available, in law, in equity or otherwise, Disclosing Party will be entitled to obtain injunctive relief against the threatened breach of this Agreement or the continuation of any such breach, without the necessity of proving actual damages.
18.4 Further Permitted Disclosure. Notwithstanding anything to the contrary in this Article 18, Confidential Information may be disclosed by the Receiving Party to any of its agents, consultants, contractors, trustees, or actual or potential financing parties (including, in the case of Seller, its Lender(s)), so long as such Person to whom Confidential Information is disclosed agrees in writing to be bound by confidentiality provisions that are at least as restrictive as this Article 18 to the same extent as if it were a Party.
18.5 Press Releases. Neither Party shall issue (or cause its Affiliates to issue) a press release regarding the transactions contemplated by this Agreement unless both Parties have agreed
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64 upon the contents of any such public statement.
ARTICLE 19
MISCELLANEOUS
19.1 Entire Agreement; Integration; Exhibits. This Agreement, together with the Cover Sheet and Exhibits attached hereto constitutes the entire agreement and understanding between Seller and Buyer with respect to the subject matter hereof and supersedes all prior agreements relating to the subject matter hereof, which are of no further force or effect.
Notwithstanding the foregoing, and for clarification purposes, the Parties acknowledge that Buyer and on or more Affiliates of Seller are parties to separate power purchase agreements, for different facilities, and this Agreement is separate and distinct from those other agreements, and nothing in this Agreement shall have any effect on, including without limitation for collateral estoppel, admission, waiver, or any other purpose, those other agreements or any issues within those other agreements. Similarly, to the extent of any open issues under those other agreements, each of the Parties to this Agreement expressly reserves and retains its rights with respect to such open issues under this Agreement. The Exhibits attached hereto are integral parts hereof and are made a part of this Agreement by reference. The headings used herein are for convenience and reference purposes only. In the event of a conflict between the provisions of this Agreement and those of the Cover Sheet or any Exhibit, the provisions of first the Cover Sheet, and then this Agreement shall prevail, and such Exhibit shall be corrected accordingly. This Agreement shall be considered for all purposes as prepared through the joint efforts of the Parties and shall not be construed against one Party or the other as a result of the preparation, substitution, submission or other event of negotiation, drafting or execution hereof.
19.2 Amendments. This Agreement may only be amended, modified or supplemented by an instrument in writing executed by duly authorized representatives of Seller and Buyer; provided, this Agreement may not be amended by electronic mail communications.
19.3 No Waiver. Waiver by a Party of any default by the other Party shall not be construed as a waiver of any other default.
19.4 No Agency, Partnership, Joint Venture or Lease. Seller and the agents and employees of Seller shall, in the performance of this Agreement, act in an independent capacity and not as officers or employees or agents of Buyer. Under this Agreement, Seller and Buyer intend to act as energy seller and energy purchaser, respectively, and do not intend to be treated as, and shall not act as, partners in, co-venturers in or lessor/lessee with respect to the Facility or any business related to the Facility. This Agreement shall not impart any rights enforceable by any third party (other than a permitted successor or assignee bound to this Agreement) and/or, to the extent set forth herein, any Lender and/or Indemnified Party.
19.5 Severability. In the event that any provision of this Agreement is unenforceable or held to be unenforceable, the Parties agree that all other provisions of this Agreement have force and effect and shall not be affected thereby. The Parties shall, however, use their best endeavors to agree on the replacement of the void, illegal or unenforceable provision(s) with legally acceptable clauses which correspond as closely as possible to the sense and purpose of the affected provision and this Agreement as a whole.
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65 19.6 Mobile-Sierra. Notwithstanding any other provision of this Agreement, neither Party shall seek, nor shall they support any third party seeking, to prospectively or retroactively revise the rates, terms or conditions of service of this Agreement through application or complaint to FERC pursuant to the provisions of Section 205, 206 or 306 of the Federal Power Act, or any other provisions of the Federal Power Act, absent prior written agreement of the Parties. Further, absent the prior written agreement in writing by both Parties, the standard of review for changes to the rates, terms or conditions of service of this Agreement proposed by a Party shall be the “public interest” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956). Changes proposed by a non-Party or FERC acting sua sponte shall be subject to the most stringent standard permissible under applicable Law.
19.7 Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument and each of which shall be deemed an original.
19.8 Electronic Delivery. This Agreement may be duly executed and delivered by a Party by electronic format (including portable document format (.pdf)) delivery of the signature page of a counterpart to the other Party.
19.9 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.
19.10 No Recourse to Members of Buyer. Buyer is organized as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) pursuant to its Joint Powers Agreement and is a public entity separate from its constituent members. Buyer shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this Agreement. Seller shall have no rights and shall not make any claims, take any actions or assert any remedies against any of Buyer’s constituent members, or the employees, directors, officers, consultants or advisors of Buyer or its constituent members, in connection with this Agreement.
19.11 Forward Contract. The Parties acknowledge and agree that this Agreement constitutes a “forward contract” within the meaning of the U.S. Bankruptcy Code, and Buyer and Seller are “forward contract merchants” within the meaning of the U.S. Bankruptcy Code. Each Party further agrees that, for all purposes of this Agreement, each Party waives and agrees not to assert the applicability of the provisions of 11 U.S.C. § 366 in any Bankruptcy proceeding wherein such Party is a debtor. In any such proceeding, each Party further waives the right to assert that the other Party is a provider of last resort to the extent such term relates to 11 U.S.C. §366 or another provision of 11 U.S.C. § 101-1532.
19.12 Change in Electric Market Design. If a change in the CAISO Tariff renders this Agreement or any provisions hereof incapable of being performed or administered, then any Party may request that Buyer and Seller enter into negotiations to make the minimum changes to this Agreement necessary to make this Agreement capable of being performed and administered, while attempting to preserve to the maximum extent possible the benefits, burdens, and obligations set forth in this Agreement as of the Effective Date. Upon delivery of such a request, Buyer and Seller
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66 shall engage in such negotiations in good faith. If Buyer and Seller are unable, within sixty (60) days after delivery of such request, to agree upon changes to this Agreement or to resolve issues relating to changes to this Agreement, then any Party may submit issues pertaining to changes to this Agreement to the dispute resolution process set forth in Article 15. Notwithstanding the foregoing, (i) a change in cost shall not in and of itself be deemed to render this Agreement or any of the provisions hereof incapable of being performed or administered, and (ii) all of the unaffected provisions of this Agreement shall remain in full force and effect during any period of such negotiation or dispute resolution.
19.13 o Further Assurances. Each of the Parties hereto agrees to provide such information, execute and deliver any instruments and documents and to take such other actions as may be necessary or reasonably requested by the other Party which are not inconsistent with the provisions of this Agreement and which do not involve the assumptions of obligations other than those provided for in this Agreement, to give full effect to this Agreement and to carry out the intent of this Agreement.
[Signatures on following page]
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[Signature Page to Energy Storage Agreement]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the Effective Date.
KEY ENERGY STORAGE, LLC
By:
Name:
Title:
CLEAN POWER ALLIANCE OF
SOUTHERN CALIFORNIA, a California
joint powers authority
By:
Name:
Title:
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Exhibit A - 1
EXHIBIT A
FACILITY DESCRIPTION
Site Name: Key Energy Storage
Site includes all or some of the following APNs: 085-040-58S, 085-040-36S, 085-040-37S City: N/A (Unincorporated Fresno County)
County: Fresno
Zip Code: 93210
Latitude and Longitude: 36.136214, -120.132172
Facility Description: A standalone battery energy storage facility with a net nameplate capacity of 190 MW / 760 MWh located in unincorporated Fresno County, California. The Facility is a portion of a larger 300 MW (mixed 4-hour and 8-hour) energy complex (i.e., the Facility comprises 190 MW/300 MW of the energy complex). Seller may install additional inverter capacity to account for production and delivery losses.
Delivery Point: The P-node for the Facility (as defined below) Facility Meter: See Exhibit R
Facility Metering Points: See Exhibit R
P-node: To be established prior to the Commercial Operation Date at the Gates 500 kV bus.
Seller shall promptly notify Buyer following the establishment of the P-node.
Transmission Provider: Pacific Gas and Electric
Additional Information: None
* Seller represents the APNs identified above are sufficient for Seller to build the Facility. Seller may add additional APNs without the consent of Buyer.
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Exhibit B - 1
EXHIBIT B
FACILITY CONSTRUCTION AND COMMERCIAL OPERATION
1. Construction of the Facility.
(a) “Construction Start” will occur upon Seller’s acquisition of all applicable regulatory authorizations, approvals and permits for the construction of the Facility, and once Seller has engaged all primary contractors, and ordered all essential equipment and supplies as, in each case, can reasonably be considered necessary so that physical construction of the Facility may begin and proceed to completion without foreseeable interruption of material duration, and has executed an engineering, procurement, and construction contract and issued thereunder a final notice to proceed that authorizes the contractor to mobilize to Site and begin physical construction (including, at a minimum, beginning of either the excavation for foundations or the installation or erection of improvements) at the Site. The date of Construction Start will be evidenced by and subject to Seller’s delivery to Buyer of a certificate substantially in the form attached as Exhibit J hereto, and the date certified therein shall be the “Construction Start Date.” Subject to the other terms of this Agreement, Seller shall cause Construction Start to occur no later than the Guaranteed Construction Start Date.
(b) Seller may extend the Guaranteed Construction Start Date (in addition to any extensions pursuant to a Development Cure Period) by paying Daily Delay Damages to Buyer for each day Seller desires to extend the Guaranteed Construction Start Date, not to exceed a total of one hundred twenty (120) days of extensions by such payment of Daily Delay Damages. On or before the date that is ten (10) days prior to the then-current Guaranteed Construction Start Date (which may have already been extended due to a Development Cure Period, or a prior payment of Daily Delay Damages), Seller shall provide notice and payment to Buyer of the Daily Delay Damages for the number of days of extension to the Guaranteed Construction Start Date. If Seller achieves Construction Start prior to the Guaranteed Construction Start Date, as extended by the payment of Daily Delay Damages (and as may have been further extended by a Development Cure Period), Buyer shall refund to Seller the Daily Delay Damages for each day Seller achieves Construction Start prior to the Guaranteed Construction Start Date times the Daily Delay Damages, not to exceed the total amount of Daily Delay Damages paid by Seller pursuant to this Section 1(b). Additionally, if Seller achieves Commercial Operation on or before the Guaranteed Commercial Operation Date (not including any extensions to such date resulting from Seller’s payment of Commercial Operation Delay Damages, but as may be extended pursuant to a Development Cure Period), then Buyer shall refund to Seller all Daily Delay Damages paid by Seller and not previously refunded by Buyer. If Seller achieves Commercial Operation after the Guaranteed Commercial Operation Date (not including any extensions to such date resulting from Seller’s payment of Commercial Operation Delay Damages, but as may be extended pursuant to a Development Cure Period), but in fewer days than the number of days by which Seller missed the Guaranteed
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Exhibit B - 2
Construction Start Date (not including any extensions to such date resulting from Seller’s payment of Daily Delay Damages, but as may be extended pursuant to any Development Cure Period), then Buyer shall refund to Seller an amount equal to fifty percent (50%) of the Daily Delay Damages for the difference between (i) the number of days by which Seller missed the Guaranteed Construction Start Date (not including any extensions to such date resulting from Seller’s payment of Daily Delay Damages, but as may be extended pursuant to any Development Cure Period), minus (ii) the number of days by which Seller missed the Guaranteed Commercial Operation Date (not including any extensions to such date resulting from Seller’s payment of Commercial Operation Delay Damages, but as may be extended pursuant to any Development Cure Period). For illustrative purposes only, if Seller misses the Guaranteed Construction Start Date (not including any extensions to such date resulting from Seller’s payment of Daily Delay Damages, but as may be extended pursuant to any Development Cure Period) by ten (10) days, but only misses the Guaranteed Commercial Operation Date (not including any extensions to such date resulting from Seller’s payment of Commercial Operation Delay Damages, but accounting for any extensions to such date pursuant to any Development Cure Period) by four (4) days, then Buyer shall refund to Seller an amount equal to fifty percent (50%) of six (6) days’ worth of Daily Delay Damages.
2. Commercial Operation of the Facility. “Commercial Operation” means the condition existing when Seller has fulfilled all of the conditions precedent in Section 2.2 of the Agreement and provided Notice to Buyer substantially in the form of Exhibit H (the “COD Certificate”).
(a) Subject to the other terms of this Agreement, Seller shall cause Commercial Operation for the Facility to occur by the Guaranteed Commercial Operation Date.
Seller shall notify Buyer that it intends to achieve Commercial Operation at least sixty (60) days before the anticipated Commercial Operation Date. (b) In addition to any extensions pursuant to any Development Cure Period, Seller may extend the Guaranteed Commercial Operation Date by paying Commercial Operation Delay Damages to Buyer for each day Seller desires to extend the Guaranteed Commercial Operation Date, not to exceed a total of ninety (90) days of extensions by such payment of Commercial Operation Delay Damages. On or before the date that is ten (10) days prior to the then-current Guaranteed Commercial Operation Date (which may have already been extended due to a Development Cure Period or a prior payment of Daily Delay Damages), Seller shall provide Notice and payment to Buyer of the Commercial Operation Delay Damages for the number of days of extension to the Guaranteed Commercial Operation Date.
If Seller achieves Commercial Operation prior to the Guaranteed Commercial Operation Date as extended by the payment of Commercial Operation Delay Damages (and as may have been further extended by a Development Cure Period), Buyer shall refund to Seller the Commercial Operation Delay Damages for each day Seller achieves Commercial Operation prior to the Guaranteed Commercial Operation Date times the Commercial Operation Delay Damages, not to exceed the
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Exhibit B - 3
total amount of Commercial Operation Delay Damages paid by Seller pursuant to this Section 2(b).
3. Termination for Failure to Achieve Commercial Operation. If the Facility has not achieved Commercial Operation on or before the Guaranteed Commercial Operation Date (as may be extended hereunder), Buyer may elect to terminate this Agreement in accordance with Sections 11.1(b)(ii) and 11.2 (subject, however, to Buyer’s and/or Seller’s ability to terminate this Agreement in accordance with the provisions of Section 10.4(a)).
4. Extension of the Guaranteed Dates. The Guaranteed Construction Start Date and the Guaranteed Commercial Operation Date shall, subject to notice and documentation requirements set forth below, both be extended on a day-for-day basis (the “Development Cure Period”) (provided, the Guaranteed Construction Start Date shall not be adjusted retroactively if the Construction Start Date has already occurred) for the duration of any and all delays arising out of the following circumstances to the extent the following circumstances are not the result of Seller’s failure to take all commercially reasonable actions to meet its requirements and deadlines including commercially reasonable efforts to make up time from any such delays; provided, Seller shall not be entitled to more than one (1) day of Development Cure Period delay for a single day on which more than one of the conditions in (a)-(c) below occur concurrently:
(a) Seller has not acquired (i) the conditional use permit by the Expected Construction Start Date, or (ii) all other Material Permits within sixty (60) days following the Expected Construction Start Date, despite the exercise of diligent and commercially reasonable efforts by Seller; or
(b) a Force Majeure Event occurs; or
(c) the Interconnection Facilities or Reliability Network Upgrades are not complete and ready for the Facility to connect and sell Product at the Delivery Point by the Guaranteed Commercial Operation Date, despite the exercise of diligent and commercially reasonable efforts by Seller; or
(d) Buyer has not made all necessary arrangements to receive the Facility Energy at the Delivery Point by the Guaranteed Commercial Operation Date.
Seller shall submit any claim for Development Cure Period delays (x) within five (5) Business Days of (i) missing the applicable milestone date in the case of Sections 4(a) or (c) above or (ii) Seller becoming aware of the delays pursuant to Section 4(d) above, (y) concurrently with Seller’s claim of a Force Majeure Event in the case of (b) above, and (z) within fourteen (14) days after Seller becomes aware of any provided, Seller’s failure to submit such Development Cure Period claim within such applicable period constitutes a waiver of such Development Cure Period starting the date after such notice is due, and continuing until the date that the submission is provided in substantially the form set forth in Exhibit W; provided further, Seller shall be entitled to revise any such claim to, among other things, reflect additional days of Development Cure Period which occur after the submission of any such claims. Notwithstanding anything in
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Exhibit B - 4
this Agreement to the contrary, the cumulative extensions granted under the Development Cure Period (other than the extensions granted pursuant to clause 4(d) above) shall not exceed (i) one hundred eighty (180) days with respect to the Guaranteed Construction Start Date, and (ii) one hundred eighty (180) days with respect to the Guaranteed Commercial Operation Date, for any reason, including a Force Majeure Event, and the cumulative extensions granted to the Guaranteed Commercial Operation Date by the payment of Commercial Operation Delay Damages and any Development Cure Period(s) with respect to the Guaranteed Commercial Operation Date (other than the extensions granted pursuant to clause 4(d) above) shall not exceed two hundred seventy (270) days. Upon request from Buyer, Seller shall provide documentation demonstrating to Buyer’s reasonable satisfaction that the delays described above did not result from Seller’s actions or failure to take commercially reasonable actions.
5. Failure to Reach Guaranteed Capacity. If, at Commercial Operation, the Installed Capacity is less than one hundred percent (100%) of the Guaranteed Capacity, Seller shall have ninety (90) days after the Commercial Operation Date to install additional capacity and/or Network Upgrades such that the Installed Capacity is equal to (but not greater than) the Guaranteed Capacity, and Seller shall provide to Buyer a new certificate substantially in the form attached as Exhibit I hereto specifying the new Installed Capacity. If Seller fails to construct the Guaranteed Capacity by such date, Seller shall pay “Capacity Damages” to Buyer, in an amount equal to
for each MW that the Guaranteed Capacity exceeds the Installed Capacity, and the Guaranteed Capacity and other applicable portions of the Agreement shall be adjusted accordingly. Capacity Damages shall not be offset or reduced by the payment of Development Security, Performance Security, Delay Damages, or any other form of liquidated damages under this Agreement.
6. Buyer’s Right to Draw on Development Security. If Seller fails to timely pay any Daily Delay Damages or Commercial Operation Delay Damages, Buyer may draw upon the Development Security to satisfy Seller’s payment obligation thereof, subject to the limitation set forth in Section 11.9.
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Exhibit C - 1
EXHIBIT C
COMPENSATION
(a) Monthly Compensation.
(i) Each month from the period commencing upon CAISO
Commercial Operation and continuing throughout the Delivery Term (and pro-rated for the first and last month of the Delivery Term if the Delivery Term does not start on the first day of a calendar month), Buyer shall pay Seller a Monthly Capacity Payment equal to the Storage Rate x one thousand (1,000) x Effective Capacity x Efficiency Rate Factor minus an amount equal to Buyer’s monthly average cost for Charging Energy multiplied by the total number of MWhs of Reimbursable Station Use in such month, divided by the Efficiency Rate. Such payment constitutes the entirety of the amount due to Seller from Buyer for the Product. If the Effective Capacity is adjusted pursuant to a Capacity Test effective as of a day other than the first day of a calendar month, payment shall be calculated separately for each portion of the month in which the different Effective Capacity and/or Efficiency Rate are applicable. “Efficiency Rate Factor” means:
(A) If the Efficiency Rate is greater than or equal to the Guaranteed Efficiency Rate, then:
Efficiency Rate Factor = 100%
(B) If the Efficiency Rate is less than the Guaranteed Efficiency Rate, but greater than or equal to 75%, then:
Efficiency Rate Factor = 100% - [(Guaranteed Efficiency Rate – Efficiency Rate) x .5]
(C) If the Efficiency Rate is less than 75%, then:
Efficiency Rate Factor = 0
(ii) Capacity Availability Payment True-Up. Each month from the period commencing upon CAISO Commercial Operation and continuing throughout the Delivery Term, Buyer shall calculate the year-to-date (YTD) Annual Capacity Availability for the applicable Contract Year (and during the period from CAISO Commercial Operation through the Commercial Operation Date) in accordance with Exhibit P. If (A) such YTD Annual Capacity Availability is less than ninety percent (90%), or (B) the final Annual Capacity Availability is less than the Guaranteed Capacity Availability, Buyer shall (1) withhold the Capacity Availability Payment True-Up Amount from the next Monthly Capacity Payment(s) (the “Capacity Availability Payment True-Up”), and (2) provide Seller with a written statement of the calculation of the YTD Annual Capacity Availability and the Capacity Availability Payment True-Up Amount; provided, if the Capacity Availability Payment True-Up Amount is a negative number for any month prior to the final year-end Capacity Availability Payment True-Up calculation (and following the Commercial Operation Date for the period from CAISO
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Exhibit C - 3
provided, if the result of any of the calculations in clauses (i) through (iii) above is greater than
1.0, then the Capacity Availability Factor shall be deemed to be equal to 1.0. “Force Majeure Unavailability” means total YTD Unavailable Calculation Intervals that resulted from a Force Majeure Event for which Seller is the claiming party divided by the total YTD Calculation Intervals. (b) Tax Credits. The Parties agree that except as set forth in the definition of the term “Storage Rate”, the following sentences of this subsection (c) shall apply. The Parties agree that the Storage Rate is not subject to adjustment or amendment if Seller fails to receive any Tax Credits, or if any Tax Credits expire, are repealed or otherwise cease to apply to Seller or the Facility in whole or in part, or Seller or its investors are unable to benefit from any Tax Credits.
Seller shall bear all risks, financial and otherwise, throughout the Contract Term, associated with Seller’s or the Facility’s eligibility to receive Tax Credits or to qualify for accelerated depreciation for Seller’s accounting, reporting or Tax purposes. The obligations of the Parties hereunder, including those obligations set forth herein regarding the purchase and price for and Seller’s obligation to deliver Facility Energy and Product, shall be effective regardless of whether construction of the Facility (or any portion thereof) or the sale of Facility Energy is eligible for, or receives Tax Credits during the Contract Term. Buyer shall reimburse Seller within thirty (30) days of Notice from Seller any reimbursement amounts owed by Buyer to Seller as set forth in the definition of Storage Rate.
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Exhibit D - 1
EXHIBIT D
SCHEDULING COORDINATOR RESPONSIBILITIES
(a) Buyer as Scheduling Coordinator for the Facility. Upon Initial Synchronization of the Facility to the CAISO Grid, Buyer shall be the Scheduling Coordinator or designate a qualified third party to provide Scheduling Coordinator services with the CAISO for the Facility for both the delivery and the receipt of Charging Energy, Facility Energy and the Product at the Delivery Point. At least thirty (30) days prior to the Initial Synchronization of the Facility to the CAISO Grid, (i) Seller shall take all actions and execute and deliver to Buyer and the CAISO all documents necessary to authorize or designate Buyer (or Buyer’s designee) as the Scheduling Coordinator for the Facility effective as of the Initial Synchronization of the Facility to the CAISO Grid, and (ii) Buyer shall, and shall cause its designee to, take all actions and execute and deliver to Seller and the CAISO all documents necessary to authorize or designate Buyer or its designee as the Scheduling Coordinator for the Facility effective as of the Initial Synchronization of the Facility to the CAISO Grid. On and after Initial Synchronization of the Facility to the CAISO Grid, Seller shall not authorize or designate any other party to act as the Facility’s Scheduling Coordinator, nor shall Seller perform for its own benefit the duties of Scheduling Coordinator, and Seller shall not revoke Buyer’s authorization to act as the Facility’s Scheduling Coordinator unless agreed to by Buyer. Buyer (as the Facility’s SC) shall submit bids to the CAISO in accordance with this Agreement and the applicable CAISO Tariff, protocols and Scheduling practices for Product on a day-ahead, hour-ahead, fifteen-minute market, real time or other market basis that may develop after the Effective Date, as determined by Buyer.
(b) Notices. Buyer (as the Facility’s SC) shall provide Seller with access to a web-based system through which Seller shall submit to Buyer and the CAISO all notices and updates required under the CAISO Tariff regarding the Facility’s status, including, but not limited to, all outage requests, forced outages, forced outage reports, clearance requests, or must offer waiver forms. Seller shall cooperate with Buyer to provide such notices and updates. If the web-based system is not available, Seller shall promptly submit such information to Buyer and the CAISO (in order of preference) telephonically or electronic mail to the personnel designated to receive such information.
(c) CAISO Costs and Revenues. Except as otherwise set forth below, Buyer (as Scheduling Coordinator for the Facility) shall be responsible for CAISO costs (including penalties and other charges) and shall be entitled to all CAISO revenues (including credits, Imbalance Energy revenues, and other payments), including revenues associated with CAISO dispatches, bid cost recovery, Inter-SC Trade credits, or other credits in respect of the Product Scheduled or delivered from the Facility. Seller shall be responsible for all CAISO costs and penalties (including associated with Imbalance Energy costs) resulting from any deviations from Charging Notices or Discharging Notices or otherwise charging or discharging the Facility when not subject to a Charging Notice or Discharging Notice, or any failure by Seller to abide by the CAISO Tariff, the terms of this Agreement or the outage notification requirements set forth in this Agreement (except to the extent such non-compliance is caused by Buyer’s failure to perform its duties as Scheduling Coordinator for the Facility). Buyer or its designated SC shall make commercially reasonable efforts to cooperate with Seller to allow Seller to make Resource Adequacy substitutions with respect to such outages as permitted by the CAISO Tariff. The Parties agree that any Availability
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Exhibit D - 2
Incentive Payments (as defined in the CAISO Tariff) are for the benefit of Seller and for Seller’s account and that any Non-Availability Charges (as defined in the CAISO Tariff) are the responsibility of Seller and for Seller’s account. In addition, if during the Delivery Term, the CAISO implements or has implemented any sanction or penalty related to scheduling, outage reporting, or generator operation, and any such sanctions or penalties are imposed upon the Facility or to Buyer as Scheduling Coordinator due to failure by Seller to abide by the CAISO Tariff or the outage notification requirements set forth in this Agreement, the cost of the sanctions or penalties shall be Seller’s responsibility.
(d) CAISO Settlements. Buyer (as the Facility’s SC) shall be responsible for all settlement functions with the CAISO related to the Facility. Buyer shall render a separate invoice to Seller for any CAISO payments, charges or penalties (“CAISO Charges Invoice”) for which Seller is responsible under this Agreement. CAISO Charges Invoices shall be rendered after settlement information becomes available from the CAISO that identifies any CAISO charges.
Notwithstanding the foregoing, Seller acknowledges that the CAISO will issue additional invoices reflecting CAISO adjustments to such CAISO charges. Buyer shall review, validate, and if requested by Seller under paragraph (e) below, dispute any charges that are the responsibility of Seller in a timely manner and consistent with Buyer’s existing settlement processes for charges that are Buyer’s responsibilities. Subject to Seller’s right to dispute and to have Buyer pursue the dispute of any such invoices, Seller shall pay the amount of CAISO Charges Invoices within ten (10) Business Days of Seller’s receipt of the CAISO Charges Invoice. If Seller fails to pay such CAISO Charges Invoice within that period, Buyer may net or offset any amounts owing to it for such CAISO Charges Invoices against any future amounts it may owe to Seller under this Agreement. The obligations under this Section with respect to payment of CAISO Charges Invoices shall survive the expiration or termination of this Agreement. (e) Dispute Costs. Buyer (as the Facility’s SC) may be required by Seller to dispute CAISO settlements in respect of the Facility. Seller agrees to pay Buyer’s costs and expenses (including reasonable attorneys’ fees) associated with its involvement with such CAISO disputes to the extent they relate to CAISO charges payable by Seller with respect to the Facility that Seller has directed Buyer to dispute.
(f) Terminating Buyer’s Designation as Scheduling Coordinator. At least thirty (30) days prior to expiration of this Agreement or as soon as reasonably practicable upon an earlier termination of this Agreement, the Parties will take all actions necessary to terminate the designation of Buyer as Scheduling Coordinator for the Facility as of 11:59 p.m. on such expiration date.
(g) Master Data File and Resource Data Template. The Parties will cooperate to comply with the applicable deadlines for filing and updating the information for the Facility in the Master Resource Database and Master Data File. Seller shall provide the data to the CAISO (and to Buyer) that is required for the CAISO’s Master Data File and Resource Data Template (or successor data systems) for the Facility consistent with this Agreement at least five (5) Business Days before the deadline for submission to CAISO and Buyer (as SC) shall promptly provide such data to CAISO. Seller shall provide the data that is required for the CPUC’s Master Resource Database for the Facility consistent with this Agreement to Buyer for review and approval at least five (5) Business Days before the deadline for submission of such to the CPUC. Neither Party shall
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Exhibit D - 3
change such data without the other Party’s prior written consent. At least once per Contract Year, Seller shall cooperate with Buyer to review and confirm that the data provided for the CAISO’s Master Data File and Resource Data Template (or successor data systems) and CPUC’s Master Resource Database for this Facility remains consistent with the actual operating characteristics of the Facility and provide such information and any additional supporting documentation to Buyer for review at least five (5) Business Days prior to submission to the CAISO or CPUC as applicable. (h) NERC Reliability Standards. Buyer (as Scheduling Coordinator) shall cooperate reasonably with Seller to the extent necessary to enable Seller to comply, and for Seller to demonstrate Seller’s compliance with, NERC reliability standards. This cooperation shall include the provision of information in Buyer’s possession that Buyer (as Scheduling Coordinator) has provided to the CAISO related to the Facility or actions taken by Buyer (as Scheduling Coordinator) related to Seller’s compliance with NERC reliability standards. (i) SQMD Reporting. If Seller elects to submit a SQMD Plan for the Facility, then for any time period covered by the CAISO-approved SQMD Plan, Seller shall provide or cause to be provided to Buyer (or Buyer’s designee including any Buyer Scheduling Coordinator) with respect to the Facility Meters, Settlement Quality Meter Data no later than six (6) Business Days after the relevant flow date. In connection with any SQMD Plan or designation of the Facility as a Scheduling Coordinator Metered Entity (as defined in the CAISO Tariff), Buyer (as Scheduling Coordinator) shall reasonably cooperate with Seller in the SQMD Plan submission and approval process and perform the obligations required by the SQMD Plan or the CAISO applicable to Scheduling Coordinators with respect to submitting Settlement Quality Meter Data to the CAISO including without limitation submitting required affirmations and attestations (if any). Buyer (as Scheduling Coordinator) shall be responsible for submitting Settlement Quality Meter Data to the CAISO using the MRI-S System (or any alternate system designated by the CAISO) in accordance with the SQMD Plan and the CAISO Tariff; provided, Seller shall indemnify Buyer against any costs or penalties imposed on Buyer as a result of Seller’s failure to provide or have provided Settlement Quality Meter Data consistent with the SQMD Plan to Buyer (or Buyer’s designee including any Buyer Scheduling Coordinator), with respect to the Facility Meters within the timeframe required by this Section (i).
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Exhibit E - 1
EXHIBIT E
PROGRESS REPORTING FORM
Each Progress Report must include the following items:
1. Executive Summary.
2. Facility description.
3. Site plan of the Facility.
4. Description of any material planned changes to the Facility or the Site.
5. Gantt chart schedule showing progress on achieving each of the Milestones.
6. Summary of activities during the previous calendar quarter or month, as applicable, including any OSHA labor hour reports.
7. Forecast of activities scheduled for the current calendar quarter.
8. Written description about the progress relative to Seller’s Milestones, including whether Seller has met or is on target to meet the Milestones.
9. List of issues that are reasonably likely to affect Seller’s Milestones.
10. A status report of start-up activities including a forecast of activities ongoing and after start-up, a report on Facility performance including performance projections for the next twelve (12) months.
11. Progress and schedule of all material agreements, contracts, permits (including Material Permits), approvals, technical studies, financing agreements and major equipment purchase orders showing the start dates, completion dates, and completion percentages.
12. Pictures, in sufficient quantity and of appropriate detail, in order to document construction and startup progress of the Facility, the interconnection into the Transmission System and all other interconnection utility services.
13. Workforce Development or Supplier Diversity Reporting (if applicable). Format to be provided by Buyer.
14. Any other documentation reasonably requested by Buyer.
Agenda Page 207
Exhibit F - 1
EXHIBIT F-1
FORM OF MONTHLY EXPECTED AVAILABLE EFFECTIVE CAPACITY REPORT [MW Per Hour] – [Insert Month]
1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00 Day 1
Day 2
Day 3
Day 4
Day 5
[insert additional rows for each day in the month]
Day
29 Day
30 Day
31 The foregoing table is provided for informational purposes only, and it shall not constitute, or be deemed to constitute, an obligation of any of the Parties to this Agreement.
Agenda Page 208
Exhibit F - 2
EXHIBIT F-2
FORM OF MONTHLY EXPECTED AVAILABLE STORAGE CAPABILITY REPORT [Stored Energy Capability, MWh Per Hour] – [Insert Month] 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00 Day 1
Day 2
Day 3
Day 4
Day 5
[insert additional rows for each day in the month]
Day
29 Day
30 Day
31 The foregoing table is provided for informational purposes only, and it shall not constitute, or be deemed to constitute, an obligation of any of the Parties to this Agreement.
Agenda Page 209
Exhibit G - 1
EXHIBIT G
FORM OF DAILY AVAILABILITY NOTICE
Trading Day:
Station: Issued By:
Unit: Issued At:
Unit 100% Available No Restrictions:
Hour Ending Available Effective Capacity Available Storage Capability
Comments
(MW) (MWh)
1:00
2:00
3:00
4:00
5:00
6:00
7:00
8:00
9:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
0:00
Comments:
Agenda Page 210
Exhibit H - 1
EXHIBIT H
FORM OF COMMERCIAL OPERATION DATE CERTIFICATE
This certification (“Certification”) of Commercial Operation is delivered by _______[licensed professional engineer] (“Engineer”) to Clean Power Alliance of Southern California, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Agreement dated _______ (“Agreement”) by and between [Seller] and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
As of _______[DATE]_____, Engineer hereby certifies and represents to Buyer the following:
1. The Facility is fully operational, reliable and interconnected, fully integrated and synchronized with the Transmission System.
2. Seller has installed equipment for the Facility with an Installed Capacity of no less than ninety-five percent (95%) of the Guaranteed Capacity.
3. The Facility’s Installed Capacity is no less than ninety-five percent (95%) of the Guaranteed Capacity and the Facility is capable of charging, storing and discharging Energy, all within the operational constraints and subject to the applicable Operating Restrictions.
4. Authorization to parallel the Facility was obtained by the Transmission Provider, [Name of Transmission Provider as appropriate] on___[DATE]____.
5. The Transmission Provider has provided documentation supporting full unrestricted release of the Facility for Commercial Operation by [Name of Transmission Provider as appropriate] on _______[DATE]_____.
6. The CAISO has provided notification supporting Commercial Operation, in accordance with the CAISO Tariff on _______[DATE]_____.
7. Seller has segregated and separately metered Station Use (and, if applicable pursuant to the Agreement, Auxiliary Use) to the extent reasonably possible in accordance with Prudent Operating Practice, and any such meter(s) have the same or greater level of accuracy as is required for CAISO certified meters used for settlement purposes.
8. The Facility and its meters have been designed and installed in a manner such that all Energy used for Station Use (and, if applicable pursuant to the Agreement, Auxiliary Use) within the Facility is metered, and there is no material Station Use within the Facility (other than Auxiliary Use) that is served by Energy from the Facility.
9. The temperature derate curve for the Facility inverters associated with the Installed Capacity is rated for a temperature derate beginning at [__]° C.
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
Agenda Page 211
Exhibit H - 2
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Its:
Date:
Agenda Page 212
Exhibit I - 1
EXHIBIT I
FORM OF CAPACITY TEST CERTIFICATE
This certification (“Certification”) of Capacity Test results is delivered by [licensed professional engineer] (“Engineer”) to Clean Power Alliance of Southern California, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Agreement dated __________ (“Agreement”) by and between [SELLER ENTITY] and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
I hereby certify that a Capacity Test conducted on [Date] demonstrated (i) an [Installed or Effective] Capacity of __ MW to the Delivery Point at four (4) hours of continuous discharge, (ii) a Battery Charging Factor of __%, and (iii) a Battery Discharging Factor of __%, all in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit O.
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Its:
Date:
Agenda Page 213
Exhibit J - 1
EXHIBIT J
FORM OF CONSTRUCTION START DATE CERTIFICATE
This certification of Construction Start Date (“Certification”) is delivered by [SELLER ENTITY] (“Seller”) to Clean Power Alliance of Southern California, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Agreement dated __________ (“Agreement”) by and between Seller and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
Seller hereby certifies and represents to Buyer the following:
(1) Construction Start (as defined in Exhibit B of the Agreement) has occurred, and a copy of the notice to proceed that Seller issued to its contractor as part of Construction Start is attached hereto.
(2) the Construction Start Date occurred on _____________ (the “Construction Start Date”); and
(3) the precise Site on which the Facility is located is, which must be within the boundaries of the previously identified Site:
_____________________________________________________________________ (such description shall amend the description of the Site in Exhibit A of the Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Certification on behalf of Seller as of the ___ day of ________.
[SELLER ENTITY]
By:
Its:
Date:
Agenda Page 214
Exhibit K - 1
EXHIBIT K
FORM OF LETTER OF CREDIT
[Issuing Bank Letterhead and Address]
IRREVOCABLE STANDBY LETTER OF CREDIT NO. [XXXXXXX]
Date:
Bank Ref.:
Amount: US$[XXXXXXXX]
Beneficiary:
Clean Power Alliance of Southern California,
a California joint powers authority
801 S Grand, Suite 400
Los Angeles, CA 90017
Ladies and Gentlemen:
By the order of NextEra Energy Capital Holdings, Inc. on behalf of [name of NextEra project company], 700 Universe Blvd, Juno Beach, Florida 33408 (“Applicant”), we, [insert bank name and address] (“Issuer”) hereby issue our Irrevocable Standby Letter of Credit No. [XXXXXXX] (the “Letter of Credit”) in favor of Clean Power Alliance of Southern California, a California joint powers authority (“Beneficiary”), 801 S Grand, Suite 400, Los Angeles, CA 90017, for an amount not to exceed the aggregate sum of U.S. $[XXXXXX] (United States Dollars [XXXXX] and 00/100) (the “Available Amount”), pursuant to that certain Energy Storage Agreement dated as of ______ and as amended (the “Agreement”) between Applicant and Beneficiary. This Letter of Credit shall become effective immediately and shall be of no further force or effect at 5:00 p.m., New York time, on [Date] or, if such day is not a Business Day (as hereinafter defined), on the next Business Day (as may be extended pursuant to the terms of this Letter of Credit, the “Expiration Date”).
For the purposes hereof, “Business Day” shall mean any day on which commercial banks are not authorized or required to close in New York, New York.
Funds under this Letter of Credit are available to Beneficiary by valid presentation on or before 5:00 p.m. New York time, on or before the Expiration Date of a copy of this Letter of Credit No. [XXXXXXX] and all amendments accompanied by Beneficiary’s dated statement purportedly signed by Beneficiary’s duly authorized officer, in the form attached hereto as Exhibit A, containing one of the two alternative paragraphs set forth in paragraph 2 therein.
Any full or partial drawing hereunder may be requested by transmitting copies of the requisite
Agenda Page 215
documents as described above to the Issuer by facsimile at [facsimile number for draws] or such other number as specified from time-to-time by the Issuer.
The facsimile transmittal shall be deemed delivered when received. Drawings made by facsimile transmittal are deemed to be the operative instrument without the need of originally signed documents.
Issuer hereby agrees that all drafts drawn under and in compliance with the terms of this Letter of Credit will be duly honored if presented to the Issuer before the Expiration Date. All correspondence and any drawings (other than those made by facsimile) hereunder are to be directed to [Issuer address/contact]. Issuer undertakes to make payment to Beneficiary under this Standby Letter of Credit within three (3) business days of receipt by Issuer of a properly presented Drawing Certificate. The Beneficiary shall receive payment from Issuer by wire transfer to the bank account of the Beneficiary designated in the Drawing Certificate.
Partial draws are permitted under this Letter of Credit, and this Letter of Credit shall remain in full force and effect with respect to any continuing balance; provided, the Available Amount shall be reduced by the amount of each such drawing.
It is a condition of this Letter of Credit that it shall be deemed automatically extended without an amendment for a one year period (or, if such period ends on a day that is not a Business Day, until the next Business Day thereafter) beginning on the present Expiration Date hereof and upon each anniversary for such date (or, if such period ends on a day that is not a Business Day, until the next Business Day thereafter), unless at least one hundred twenty (120) days prior to any such Expiration Date Issuer has sent Beneficiary written notice by overnight courier service at the address provided below that Issuer elects not to extend this Letter of Credit, in which case it will expire on its then current Expiration Date. No presentation made under this Letter of Credit after such Expiration Date will be honored.
Notwithstanding any reference in this Letter of Credit to any other documents, instruments or agreements, this Letter of Credit contains the entire agreement between Beneficiary and Issuer relating to the obligations of Issuer hereunder.
Except so far as otherwise stated, this Letter of Credit is subject to the International Standby Practices ISP98 (also known as ICC Publication No. 590), or revision currently in effect (the “ISP”). As to matters not covered by the ISP, the laws of the State of New York, without regard to the principles of conflicts of laws thereunder, shall govern all matters with respect to this Letter of Credit.
Please address all correspondence regarding this Letter of Credit to the attention of the Letter of Credit Department at [insert bank address information], referring specifically to Issuer’s Letter of Credit No. [XXXXXXX]. For telephone assistance, please contact Issuer’s Standby Letter of Credit Department at [XXX-XXX-XXXX] and have this Letter of Credit available.
All notices to Beneficiary shall be in writing and are required to be sent by certified letter, overnight courier, or delivered in person to: Clean Power Alliance of Southern California, a California joint powers authority, Chief Financial Officer, 801 S Grand, Suite 400, Los Angeles,
Agenda Page 216
CA 90017. Only notices to Beneficiary meeting the requirements of this paragraph shall be considered valid. Any notice to Beneficiary which is not in accordance with this paragraph shall be void and of no force or effect.
[Bank Name]
___________________________
[Insert officer name]
[Insert officer title]
Agenda Page 217
EXHIBIT A
(DRAW REQUEST SHOULD BE ON BENEFICIARY’S LETTERHEAD)
Drawing Certificate
[Insert Bank Name and Address]
Ladies and Gentlemen:
The undersigned, a duly authorized officer of [ ], [ADDRESS], as beneficiary (the “Beneficiary”) of the Irrevocable Letter of Credit No. [XXXXXXX] (the “Letter of Credit”) issued by [insert bank name] (the “Bank”) by order of __________ (the “Applicant”), hereby certifies to the Bank as follows:
1. Applicant and Beneficiary are party to that certain Energy Storage Agreement dated as of ___________, 20__ (the “Agreement”).
2. Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________ because a Seller Event of Default (as such term is defined in the Agreement) has occurred.
or
Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________, which equals the full available amount under the Letter of Credit, because Applicant is required to maintain the Letter of Credit in force and effect beyond the expiration date of the Letter of Credit but has failed to provide Beneficiary with a replacement Letter of Credit or other acceptable instrument within thirty (30) days prior to such expiration date.
3. The undersigned is a duly authorized representative of [ ] and is authorized to execute and deliver this Drawing Certificate on behalf of Beneficiary.
You are hereby directed to make payment of the requested amount to [ ] by wire transfer in immediately available funds to the following account:
[Specify account information]
[ ]
_______________________________
Name and Title of Authorized Representative
Date___________________________
Agenda Page 218
Exhibit K - 5
EXHIBIT L
INTENTIONALLY OMITTED
Agenda Page 219
Exhibit M - 1
EXHIBIT M
FORM OF REPLACEMENT RA NOTICE
This Replacement RA Notice (this “Notice”) is delivered by [SELLER ENTITY] (“Seller”) to Clean Power Alliance of Southern California, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Agreement dated __________ (“Agreement”) by and between Seller and Buyer. All capitalized terms used in this Notice but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
Pursuant to Section 3.5 of the Agreement, Seller hereby provides the below Replacement RA product information:
Agenda Page 220
Exhibit M - 2
[SELLER ENTITY]
By:
Its:
Date:
Agenda Page 221
Exhibit N - 1
EXHIBIT N
NOTICES
Key Energy Storage, LLC
(“Seller”)
CLEAN POWER ALLIANCE OF
SOUTHERN CALIFORNIA, a California
joint powers authority (“Buyer”)
All Notices:
Street: 700 Universe Blvd.
City: Juno Beach, FL 33408
Attn: Business Management
Phone: (561) 691-2816
Facsimile:
Email: [email protected]
All Notices:
Street: 801 S Grand, Suite 400
City: Los Angeles, CA 90017
Attn: Chief Executive Officer
Phone: (213) 269-5870
E-mail: [email protected]
Reference Numbers:
Duns:
Federal Tax ID Number:
Reference Numbers:
Duns:
Federal Tax ID Number:
Invoices:
Attn: Business Management
Phone: (561) 691-2816
Facsimile:
E-mail: [email protected]
Invoices:
Attn: CPA Settlements
Phone: (213) 269-5870
E-mail: [email protected]
Scheduling: [TBD]
Attn:
Phone:
Facsimile:
Email:
Scheduling:
Attn: Day Ahead Scheduling
Phone: (817) 303-1104
Email: [email protected]
Confirmations: [TBD]
Attn:
Phone:
Facsimile:
Email:
Confirmations:
Attn: Vice President, Power Supply
Email:[email protected]
g
Payments:
Attn: Business Management
Phone: (561) 691-2816
Facsimile:
E-mail: [email protected]
Payments:
Attn: Vice President, Power Supply
E-mail: [email protected]
Agenda Page 222
Exhibit N - 2
Key Energy Storage, LLC
(“Seller”)
CLEAN POWER ALLIANCE OF
SOUTHERN CALIFORNIA, a California
joint powers authority (“Buyer”)
Wire Transfer:
BNK: [TBD]
ABA: [TBD]
ACCT:[TBD]
Wire Transfer:
BNK: River City Bank
ABA: 121133416
ACCT: XXXXXX8042
Agenda Page 223
Exhibit O - 1
EXHIBIT O
CAPACITY TESTS
Capacity Test Notice and Frequency
A. Commercial Operation Capacity Test(s). Upon no less than ten (10) Business Days prior Notice to Buyer, Seller shall schedule and complete a Commercial Operation Capacity Test prior to the Commercial Operation Date. Such initial Commercial Operation Capacity Test (and any subsequent Commercial Operation Capacity Test permitted in accordance with Exhibit B) shall be performed in accordance with this Exhibit O and shall establish the Installed Capacity hereunder based on the actual capacity and capabilities of the Facility determined by such Commercial Operation Capacity Test(s).
B. Subsequent Capacity Tests. Following the Commercial Operation Capacity Test(s), at least fifteen (15) days in advance of the start of each Contract Year, upon no less than ten (10) Business Days prior Notice to Buyer, Seller shall schedule and complete a Capacity Test. In addition, Buyer shall have the right to require a retest of the Capacity Test at any time upon no less than five (5) Business Days prior Notice to Seller if Buyer provides data with such Notice reasonably indicating that the then-current Effective Capacity has varied materially from the results of the most recent prior Capacity Test. Seller shall have the right to run a retest of any Capacity Test at any time upon five (5) Business Days’ prior Notice to Buyer (or any shorter period reasonably acceptable to Buyer consistent with Prudent Operating Practice).
C. Test Results and Re-Setting of Effective Capacity. No later than five (5) days following any Capacity Test, Seller shall submit a testing report detailing results and findings of the test. The report shall include Facility Meter readings and plant log sheets verifying the operating conditions and output of the Facility. In accordance with Section 4.4(a)(ii) of the Agreement and Part II(I) below, after the Commercial Operation Capacity Test(s), the Effective Capacity (up to, but not in excess of, the Installed Capacity) determined pursuant to such Capacity Test shall become the new Effective Capacity at the beginning of the day following the completion of the test for calculating the Monthly Capacity Payment and all other purposes under this Agreement.
Capacity Test Procedures
PART I. GENERAL.
A. Each Capacity Test shall be conducted in accordance with Prudent Operating Practices, the Operating Restrictions, and the provisions of this Exhibit O. For ease of reference, a Capacity Test is sometimes referred to in this Exhibit O as a “CT”.
Buyer or its representative may be present for the CT and may, for informational purposes only, use its own metering equipment (at Buyer’s sole cost).
B. Conditions Prior to Testing.
Agenda Page 224
Exhibit O - 2
(1) EMS Functionality. The EMS shall be successfully configured to receive data from the Battery Management System (BMS), exchange DNP3 data with the Buyer SCADA device, and transfer data to the database server for the calculation, recording and archiving of data points. (2) Communications. The Remote Terminal Unit (RTU) testing should be successfully completed prior to any testing. The interface between Seller’s RTU and the SCADA System should be fully tested and functional prior to starting any testing, including verification of the data transmission pathway between Seller’s RTU and Seller’s EMS interface and the ability to record SCADA System data.
(3) Commissioning Checklist. Commissioning shall be successfully completed per manufacturer guidance on all applicable installed Facility equipment, including verification that all controls, set points, and instruments of the EMS are configured.
PART II. REQUIREMENTS APPLICABLE TO ALL CAPACITY TESTS.
A. Test Elements. Each CT shall include at least the following individual test elements, which must be conducted in the order prescribed in Part III of this Exhibit O, unless the Parties mutually agree to deviations therefrom. The Parties acknowledge and agree that should Seller fall short of demonstrating one or more of the Test Elements as specified below, the Test will still be deemed “complete,” and any adjustments necessary to the Effective Capacity resulting from such Test, if applicable, will be made in accordance with this Exhibit O. (1) Electrical output at the lesser of maximum discharging level (MW) and Guaranteed Capacity for four (4) continuous hours; and
(2) Electrical input at maximum charging level at the Facility Meter (MW), as sustained until the SOC reaches at least 90%, continued by the electrical input at a rate up to the maximum charging level at the Facility Meter (MW), as sustained until the SOC reaches 100%, not to exceed five (5) hours of total charging time.
B. Parameters. During each CT, the following parameters shall be measured and recorded simultaneously for the Facility, at six (6) second intervals:
(1) Time;
(2) The amount of Facility Energy;
(3) The amount of Charging Energy;
(4) The amount of Station Use;
(5) Stored Energy Level (MWh).
Agenda Page 225
Exhibit O - 3
C. Site Conditions. During each CT, the following conditions at the Site shall be measured and recorded simultaneously at thirty (30) minute intervals:
(1) Relative humidity (%);
(2) Barometric pressure (inches Hg) near the horizontal centerline of the Facility; and
(3) Ambient air temperature (°F).
D. Test Showing. Each CT shall record and report the following datapoints:
(1) That the CT successfully started;
(2) The maximum sustained discharging level for four (4) consecutive hours pursuant to A(1) above;
(3) The maximum sustained charging level for four (4) consecutive hours pursuant to A(2) above;
(4) Amount of time between the Facility’s electrical output going from 0 to the maximum sustained discharging level registered during the CT (for purposes of calculating the ramp rate);
(5) Amount of time between the Facility’s electrical input going from 0 to the maximum sustained charging level registered during the CT (for purposes of calculating the ramp rate);
(6) Amount of Charging Energy to go from 0% SOC to 100% SOC; (7) Amount of Facility Energy to go from 100% SOC to 0% SOC.
E. Test Conditions.
(1) General. At all times during a CT, the Facility shall be operated in compliance with Prudent Operating Practices, the Operating Restrictions, and all operating protocols recommended, required or established by the manufacturer for the Facility.
(2) Abnormal Conditions. If abnormal operating conditions that prevent the testing or recordation of any required parameter occur during a CT, Seller may postpone or reschedule all or part of such CT in accordance with Part II.F below.
(3) Instrumentation and Metering. Seller shall provide all instrumentation, metering and data collection equipment required to perform the CT. The instrumentation, metering and data collection equipment electrical meters
Agenda Page 226
Agenda Page 227
Exhibit O - 5
approved by Buyer, shall be deemed an amendment to this Exhibit O.
I. Adjustment to Effective Capacity. The Effective Capacity shall be updated as follows:
(1) The total amount of Facility Energy delivered to the Delivery Point (expressed in MWh AC) during the four (4) hours of maximum sustained discharge pursuant to Section D(2) above (up to, but not in excess of, the product of (i) (a) the Guaranteed Capacity (in the case of a Commercial Operation Capacity Test, including under Section 5 of Exhibit B) or (b) the Installed Capacity (in the case of any other Capacity Test), multiplied by (ii) four (4) hours) shall be divided by four (4) hours to determine the Effective Capacity, which shall be expressed in MW, and shall be the new Effective Capacity in accordance with Section 4.4(a)(ii) of the Agreement.
PART III. INITIAL SUPPLEMENTARY CAPACITY TEST PROTOCOL.
A. Effective Capacity Test
• Procedure:
(1) System Starting State: The Facility will be in the on-line state at 0% SOC. (2) Record the initial value of the SOC.
(3) Command a real power charge that results in an AC power of Facility’s maximum charging level, and continue charging until the earlier of (a) the Facility has reached 100% SOC or (b) five (5) hours have elapsed since the Facility commenced charging.
(4) Record and store the SOC after the earlier of (a) the Facility has reached 100% SOC or (b) five (5) hours of continuous charging.
(5) Record and store the Charging Energy, which shall be used to determine the Battery Charging Factor.
(6) Following an agreed-upon rest period, command a real power discharge that results in an AC power output of the lesser of (i) the Facility’s maximum discharging level and (ii) the Guaranteed Capacity, and maintain the discharging state until the earlier of (a) the Facility has discharged at the maximum discharging level for four (4) consecutive hours, (b) the Facility has reached 0% SOC, or (c) the sustained discharging level is at least five percent (5%) less than the lesser of (i) the maximum discharging level and (ii) the Guaranteed Capacity for more than five (5) consecutive minutes.
(7) Record and store the SOC after four (4) hours of continuous discharging.
If the Facility SOC remains above zero percent (0%) after discharging at a
Agenda Page 228
Exhibit O - 6
rate at or above the Guaranteed Capacity (or at or above the Installed Capacity after a Commercial Operation Capacity Test) for four (4) consecutive hours pursuant to Part III.A.6(a), the SOC will be deemed 0 for the purposes of calculating the Battery Discharging Factor. (8) Record and store the Facility Energy as measured at the Facility Meter.
Such data point shall be used for purposes of calculation of the Effective Capacity and the Battery Discharging Factor.
(9) If the Facility has not reached 0% SOC pursuant to Section III.A.6, continue discharging the Facility until it reaches a 0% SOC. Record and store the additional Facility Energy, if applicable.
• Test Results
(1) The resulting Effective Capacity measurement is the sum of the total Facility Energy at the Facility Meter divided by four (4) hours.
B. AGC Discharge Test
• Purpose: This test will demonstrate the AGC discharge capability to achieve the Facility’s maximum discharging level within 25 seconds. • System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The EMS will be configured to follow a predefined agreed-upon active power profile. • Procedure:
(1) Record the Facility active power level at the Facility Meter. (2) Command the Facility to follow a simulated CAISO RIG signal of Pmax at .95 power factor for ten (10) minutes.
(3) Record and store the Facility active power response (in seconds). • System end state: The Facility will be in the on-line state and at a commanded active power level of 0 MW.
C. AGC Charge Test
• Purpose: This test will demonstrate the AGC charge capability to achieve the Facility’s full charging level within 25 seconds.
• System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The Facility control system will be configured to follow a predefined agreed-upon active power profile.
• Procedure:
(1) Record the Facility active power level at the Facility Meter.
Agenda Page 229
Exhibit O - 7
(2) Command the Facility to follow a simulated CAISO RIG signal of -Pmax at .95 power factor for ten (10) minutes.
(3) Record and store the Facility active power response (in seconds). • System end state: The Facility will be in the on-line state and at a commanded active power level of 0 MW.
D. Reactive Power Production Test
• Purpose: This test will demonstrate the reactive power production capability of the Facility.
• System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The EMS will be configured to follow an agreed-upon predefined reactive power profile. • Procedure:
(1) Record the Facility reactive power level at the Facility Meter. (2) Command the Facility to follow __ 62 MVAR for ten (10) minutes. (3) Record and store the Facility reactive power response. • System end state: The Facility will be in the on-line state and at a commanded reactive power level of 0 MVAR.
E. Reactive Power Consumption Test
• Purpose: This test will demonstrate the reactive power consumption capability of the facility.
• System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The Facility control system will be configured to follow an agreed-upon predefined reactive power profile.
• Procedure:
(1) Record the Facility reactive power level at the Facility Meter. (2) Command the Facility to follow -__62 MVAR for ten (10) minutes. (3) Record and store the Facility reactive power response.
System end state: The Facility will be in the on-line state and at a commanded reactive power level of 0 MVAR.
Agenda Page 230
Exhibit P - 1
EXHIBIT P
ANNUAL CAPACITY AVAILABILITY CALCULATION
(a) Following the end of each calendar month during the period commencing upon CAISO Commercial Operation and continuing throughout the Delivery Term Buyer shall calculate the year-to-date (YTD) “Annual Capacity Availability” for the current Contract Year (and for the period from CAISO Commercial Operation through the Commercial Operation Date) using the formula set forth below:
Annual Capacity Availability (%) = 1 –
Unavailable Calculation Intervals
Total YTD Calculation Intervals
“Calculation Interval” or “C.I.” means each successive five-minute interval, but excluding all such intervals which by the express terms of the Agreement are disregarded or excluded.
“Unavailable Calculation Intervals” means the sum of year-to-date unavailable Calculation Intervals for the applicable Contract Year (and for the period from CAISO Commercial Operation through the Commercial Operation Date), where for each Calculation Interval:
“A” is the “Available Effective Capacity”, which shall equal the greater of the HOL and the absolute value of the LOL, considering the conditions of the Facility in total to receive Charging Energy from and deliver Facility Energy to the Delivery Point, in such Calculation Interval (based on normal operating conditions pursuant to the manufacturer’s guidelines), but “A” shall never exceed the Effective Capacity. “B” is the “Available Storage Capability”, which shall be calculated as the sum of the following (taking into account the SOC at the time of calculation): (i) the energy throughput capability (in MWhs) in the applicable Calculation Interval that the Facility is available to be charged (calculated as the available battery capability (in MWh) to receive Charging Energy from the Delivery Point in the applicable Calculation Interval x the Battery Charging Factor) and (ii) the energy throughput capability in MWhs in the applicable Calculation Interval that the Facility is available to be discharged to the Delivery Point (calculated as the available battery discharging capability (in MWh) to delivery Facility Energy to the Delivery Point in the applicable Calculation Interval x the Battery Unavailable
Calculation Interval = 1 C.I. x ( 1 – the lesser of:
A
or
B
Effective ) CapacityEffective
Capacity x 4 hrs
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Exhibit P - 2
Discharging Factor). In calculating Available Storage Capability, the “available battery charging capability” and “available battery discharging capability” are calculated as the product of (1) the count of available system cells in such Calculation Interval, multiplied by (2) the capability, in MWh, expected from each such system cell (based on normal operating conditions pursuant to the manufacturer’s guidelines) that are able (considering the conditions of the Facility in total) to receive Charging Energy from and deliver Facility Energy to the Delivery Point, but Available Storage Capability shall never exceed the Effective Capacity x four (4) hours.
“Total YTD Calculation Intervals” means, for each applicable Contract Year (and for the period from CAISO Commercial Operation through the Commercial Operation Date), the total number of Calculation Intervals year-to-date up through and including the month for which the Annual Storage Capacity Availability is being calculated. (b) The Available Effective Capacity and Available Storage Capability in the above calculations shall be the lower of (i) such amounts reported by Seller’s real-time EMS data feed to Buyer for the Facility for such Calculation Interval, such that available Effective Capacity is calculated as set forth in the definition above, and available Storage Capability is calculated as the product of (A) the count of available system cells, multiplied by (B) the capability, in MWh, expected from each system cell under normal operating conditions pursuant to the manufacturer’s guidelines, and (ii) the amounts reported by Seller’s most recent Availability Notice (as updated pursuant to Section 4.10), which, with respect to the Available Effective Capacity, shall be calculated as the average of the “Gen Max” and “Load Max” (or equivalent successor terms which may be used by the SC or CAISO from time to time) amounts reported in Seller’s Availability Notice and recorded in OMS for such Calculation Interval, and with respect to the Available Storage Capability, shall be calculated as “Max Energy” minus “Min Energy” (or equivalent successor terms which may be used by the SC or CAISO from time to time) amounts reported in Seller’s Availability Notice and recorded in OMS for such Calculation Interval and for which calculation the Battery Charging Factor and Battery Discharging Factor shall not be applied, provided that any such revised Availability Notice indicating an increase in the Facility’s availability for the applicable Calculation Interval is submitted by Seller at least sixty (60) minutes prior to the time the Buyer is required to schedule or bid the Facility in the Real-Time Market.
Except as otherwise expressly provided in this Agreement, the calculations of Available Effective Capacity and Available Storage Capability in the foregoing sentence shall be based solely on the availability of the Facility to charge or discharge Energy between the Facility and the Delivery Point, as applicable (excluding for reasons at the high-voltage side of the Delivery Point or beyond). Any Calculation Interval in which the Facility fails to maintain connectivity to the CAISO (except to the extent caused by the CAISO) such that it cannot receive ADS or AGC signals shall be deemed an Unavailable Calculation Interval; provided, if such failure to maintain connectivity only affects the availability of Ancillary Services and not Energy, then such Calculation Interval shall be deemed an Unavailable Calculation Interval on account of such failure only to the extent set forth in Section 4.3(d); provided further, any such Calculation Interval shall not be deemed an Unavailable Calculation Interval if the Facility responds with respect to such
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Exhibit P - 2
Calculation Interval as directed by Buyer, Buyer’s Scheduling Coordinator or the CAISO via telephone, email, or some other means.
(c) If the total rated power of the Facility inverters is less than the Installed Capacity charging and discharging expressed in kVA at 45°C, then Buyer shall have the right, in its reasonable discretion, to apply an ambient air temperature availability derate to the applicable Calculation Interval in a commercially reasonable manner consistent with Prudent Operating Practice.
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Exhibit R - 1
EXHIBIT R
METERING DIAGRAM
[NTD: Seller to provide preliminary metering diagram, subject to SQMD plan update] To be updated by Seller prior to Commercial Operation Date
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Exhibit S - 1
EXHIBIT S
FORM OF GUARANTY
This Guaranty (this “Guaranty”) is entered into as of [_____] (the “Effective Date”) by and between NextEra Energy Capital Holdings, Inc., a Delaware corporation (“Guarantor”), and Clean Power Alliance of Southern California, a California joint powers authority (together with its successors and permitted assigns, “Buyer”).
Recitals
A. Buyer and [SELLER ENTITY], a Delaware limited liability company (“Seller”), entered into that certain Energy Storage Agreement (as amended, restated or otherwise modified from time to time, the “ESA”) dated as of [____], 2023.
B. Guarantor is entering into this Guaranty as Performance Security to secure Seller’s obligations under the ESA, as required by Section 8.8 of the ESA.
C. It is in the best interest of Guarantor to execute this Guaranty inasmuch as Guarantor will derive substantial direct and indirect benefits from the execution and delivery of the ESA.
D. Initially capitalized terms used but not defined herein have the meaning set forth in the ESA.
Agreement
1. Guaranty. For value received, and subject to the terms and conditions hereof, Guarantor does hereby unconditionally, absolutely and irrevocably guarantee, as primary obligor and not as a surety, to Buyer the prompt payment by Seller of any and all amounts and payment obligations now or hereafter owing from Seller to Buyer under the ESA, including, without limitation, compensation for penalties, the Termination Payment, indemnification payments or other damages, as and when required pursuant to the terms of the ESA (the “Guaranteed Amount”), provided, that Guarantor’s aggregate liability under or arising out of this Guaranty shall not exceed ________ Dollars ($___________). The Parties understand and agree that any payment by Guarantor or Seller of any portion of the Guaranteed Amount shall thereafter reduce Guarantor’s maximum aggregate liability hereunder on a dollar-for-dollar basis. This Guaranty is an irrevocable, absolute, unconditional and continuing guarantee of the full and punctual payment, and not of collection, of the Guaranteed Amount and, except as otherwise expressly addressed herein, is in no way conditioned upon any requirement that Buyer first attempt to collect the payment of the Guaranteed Amount from Seller, any other guarantor of the Guaranteed Amount or any other Person or entity or resort to any other means of obtaining payment of the Guaranteed Amount. In the event Seller shall fail to duly, completely or punctually pay any Guaranteed Amount as required pursuant to the ESA, Guarantor shall promptly pay such amount as required herein.
2. Demand Notice. For avoidance of doubt, a payment shall be due for purposes of this Guaranty only when and if a payment is due and payable by Seller to Buyer under the terms and conditions of the Agreement. If Seller fails to pay any Guaranteed Amount as required pursuant to the ESA for five (5) Business Days following Seller’s receipt of Buyer’s written notice of such failure (the “Demand Notice”), then Buyer may elect to exercise its rights under this Guaranty and may make a demand upon Guarantor (a “Payment Demand”) for such unpaid Guaranteed Amount. A Payment Demand shall be in writing and shall reasonably specify in what manner and what amount Seller has failed to pay and an explanation of why such payment is due and owing, with a specific statement that Buyer is requesting that Guarantor pay under this Guaranty. Guarantor shall, within five (5) Business Days following
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Exhibit S – 2
its receipt of the Payment Demand, pay the Guaranteed Amount to Buyer.
3. Scope and Duration of Guaranty. This Guaranty applies only to the Guaranteed Amount.
This Guaranty shall continue in full force and effect from the Effective Date until the earlier of the following: (x) all Guaranteed Amounts have been paid in full (whether directly or indirectly through set-off or netting of amounts owed by Buyer to Seller), and the Delivery Term has expired or terminated early, (y) the date that is twelve (12) months after the last day of the Delivery Term, or (z) replacement Performance Security is provided in an amount and form required by the terms of the ESA. Further, this Guaranty (a) shall remain in full force and effect without regard to, and shall not be affected or impaired by any invalidity, irregularity or unenforceability in whole or in part of this Guaranty, and (b) subject to the preceding sentence, shall be discharged only by complete performance of the undertakings herein. Without limiting the generality of the foregoing, the obligations of the Guarantor hereunder shall not be released, discharged, or otherwise affected and this Guaranty shall not be invalidated or impaired or otherwise affected for the following reasons:
(i) the extension of time for the payment of any Guaranteed Amount, or (ii) any amendment, modification or other alteration of the ESA, or (iii)any indemnity agreement Seller may have from any party, or (iv)any insurance that may be available to cover any loss, except to the extent insurance proceeds are used to satisfy the Guaranteed Amount, or (v) any voluntary or involuntary liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceeding affecting, Seller or any of its assets, including but not limited to any rejection or other discharge of Seller’s obligations under the ESA imposed by any court, trustee or custodian or any similar official or imposed by any law, statue or regulation, in each such event in any such proceeding, or (vi)the release, modification, waiver or failure to pursue or seek relief with respect to any other guaranty, pledge or security device whatsoever, or (vii) any payment to Buyer by Seller that Buyer subsequently returns to Seller pursuant to court order in any bankruptcy or other debtor-relief proceeding, or (viii) those defenses based upon (A) the legal incapacity or lack of power or authority of any Person, including Seller and any representative of Seller to enter into the ESA or perform its obligations thereunder, (B) lack of due execution, delivery, validity or enforceability, including of the ESA, or (C) Seller’s inability to pay any Guaranteed Amount or perform its obligations under the ESA, or
(ix) any other event or circumstance that may now or hereafter constitute a defense to payment of the Guaranteed Amount, including, without limitation, statute of frauds and accord and satisfaction;
provided that Guarantor reserves the right to assert for itself any defenses, setoffs or counterclaims that Seller is or may be entitled to assert against Buyer (except for such defenses, setoffs or counterclaims that are expressly waived under any provision of this Guaranty) in a subsequent action for recoupment, restitution, or reimbursement.
4. Waivers by Guarantor. Guarantor hereby unconditionally waives as a condition precedent to
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Exhibit S – 3
the performance of its obligations hereunder, with the exception of the requirements in Paragraph 2, (a) notice of acceptance, presentment or protest with respect to the Guaranteed Amounts and this Guaranty, (b) notice of any action taken or omitted to be taken by Buyer in reliance hereon, (c) any requirement that Buyer exhaust any right, power or remedy or proceed against Seller under the ESA, and (d) any event, occurrence or other circumstance which might otherwise constitute a legal or equitable discharge of a surety. Without limiting the generality of the foregoing waiver of surety defenses, it is agreed that the occurrence of any one or more of the following shall not affect the liability of Guarantor hereunder:
(i) at any time or from time to time, without notice to Guarantor, the time for payment of any Guaranteed Amount shall be extended, or such performance or compliance shall be waived;
(ii) the obligation to pay any Guaranteed Amount shall be modified, supplemented or amended in any respect in accordance with the terms of the ESA; (iii) subject to Section 10, any (a) sale, transfer or consolidation of Seller into or with any other entity, (b) sale of substantial assets by, or restructuring of the corporate existence of, Seller or (c) change in ownership of any membership interests of, or other ownership interests in, Seller; or
(iv) the failure by Buyer or any other Person to create, preserve, validate, perfect or protect any security interest granted to, or in favor of, Buyer or any Person.
5. Subrogation. Notwithstanding any payments that may be made hereunder by the Guarantor, Guarantor hereby agrees that until the earlier of payment in full of all Guaranteed Amounts or expiration of the Guaranty in accordance with Section 3, it shall not be entitled to, nor shall it seek to, exercise any right or remedy arising by reason of its payment of any Guaranteed Amount under this Guaranty, whether by subrogation or otherwise, against Seller or seek contribution or reimbursement of such payments from Seller.
6. Representations and Warranties. Guarantor hereby represents and warrants that (a) it has all necessary and appropriate corporate or limited liability company powers and authority and the legal right to execute and deliver, and perform its obligations under, this Guaranty, (b) this Guaranty constitutes its legal, valid and binding obligations enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting enforcement of creditors’ rights or general principles of equity, (c) the execution, delivery and performance of this Guaranty does not and will not contravene Guarantor’s organizational documents, any applicable Law or any contractual provisions binding on or affecting Guarantor, which would invalidate or materially impair Guarantor’s ability to perform its obligations under this Guaranty, (d) except as disclosed in reports filed with the Securities and Exchange Commission by Guarantor’s parent, NextEra Energy, Inc., there are no actions, suits or proceedings pending before any court, governmental agency or arbitrator, or, to the knowledge of the Guarantor, threatened, against or affecting Guarantor or any of its properties or revenues which may, in any one case or in the aggregate, adversely affect the ability of Guarantor to enter into or perform its obligations under this Guaranty, and (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority, and no consent of any other Person (including, any stockholder or creditor of the Guarantor), that has not heretofore been obtained is required in connection with the execution, delivery, performance, validity or enforceability of this Guaranty by Guarantor.
7. Notices. Notices under this Guaranty shall be deemed received if sent to the address specified below: (i) on the day received if served by overnight express delivery, and (ii) four Business Days
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Exhibit S – 4
after mailing if sent by certified, first class mail, return receipt requested. Any party may change its address to which notice is given hereunder by providing notice of the same in accordance with this Paragraph 8.
If delivered to Buyer, to it at [____]
Attn: [____]
If delivered to Guarantor, to it at [____]
Attn: [____]
8. Governing Law and Forum Selection. This Guaranty shall be governed by, and interpreted and construed in accordance with, the laws of the United States and the State of New York, excluding choice of law rules (other than Section 5-1401 and 5-1402 of the New York General Obligations Law), provided that, notwithstanding the foregoing, in no event shall such governing law prevent Buyer from complying with any obligations or from exercising any joint powers authority arising under the laws of the State of California. The Parties agree that any suit, action or other legal proceeding by or against any party (or its affiliates or designees) with respect to or arising out of this Guaranty shall be brought in the federal courts of the United States or the courts of the State of California sitting in the City and County of Los Angeles, California.
9. Miscellaneous. This Guaranty shall be binding upon Guarantor and its successors and assigns and shall inure to the benefit of Buyer and its successors and permitted assigns pursuant to the ESA. No provision of this Guaranty may be amended or waived except by a written instrument executed by Guarantor and Buyer. This Guaranty is not assignable by Guarantor without the prior written consent of Buyer, which consent shall not be unreasonably withheld. This Guaranty is not assignable by Buyer without the prior written consent of Guarantor, which consent shall not be unreasonably withheld, except to the extent that the ESA is assigned in accordance with the terms thereof. No provision of this Guaranty confers, nor is any provision intended to confer, upon any third party (other than Buyer’s successors and permitted assigns) any benefit or right enforceable at the option of that third party. This Guaranty embodies the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements and understandings of the parties hereto, verbal or written, relating to the subject matter hereof. If any provision of this Guaranty is determined to be illegal or unenforceable (i) such provision shall be deemed restated in accordance with applicable Laws to reflect, as nearly as possible, the original intention of the parties hereto and (ii) such determination shall not affect any other provision of this Guaranty and all other provisions shall remain in full force and effect. This Guaranty may be executed in any number of separate counterparts, each of which when so executed shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Guaranty may be executed and delivered by electronic means with the same force and effect as if the same was a fully executed and delivered original manual counterpart.
10. WAIVER OF JURY TRIAL; JUDICIAL REFERENCE.
(a) JURY WAIVER. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
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Exhibit S – 5
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
(b) JUDICIAL REFERENCE. IN THE EVENT ANY LEGAL
PROCEEDING IS FILED IN A FEDERAL COURT OF THE STATE OF
CALIFORNIA, OR, TO THE EXTENT SUCH FEDERAL COURT LACKS
SUBJECT MATTER JURISDICTION, IN A STATE COURT OF THE STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN
CONNECTION WITH ANY CONTROVERSY, DISPUTE OR CLAIM
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY)
(EACH, A “CLAIM”) AND THE WAIVER SET FORTH IN THE PRECEDING
PARAGRAPH IS NOT ENFORCEABLE IN SUCH ACTION OR PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:
(i) ANY CLAIM (INCLUDING BUT NOT LIMITED TO ALL DISCOVERY AND
LAW AND MOTION MATTERS, PRETRIAL MOTIONS, TRIAL MATTERS
AND POST-TRIAL MOTIONS) WILL BE DETERMINED BY A GENERAL
REFERENCE PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1. THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT
TO BE SPECIFICALLY ENFORCEABLE IN ACCORDANCE WITH
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638.
(ii) UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL
SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN (10) DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY MAY
REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B).
(iii) THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED
IN A GENERAL REFERENCE PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.
[Signature on next page]
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Exhibit S – 6
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed and delivered by its duly authorized representative on the date first above written.
GUARANTOR:
NEXTERA ENERGY CAPITAL HOLDINGS,
INC.
By:______________________________
Printed Name:__________________
Title:____________________________
BUYER:
[_______]
By:______________________________
Printed Name:__________________
Title:____________________________
By:______________________________
Printed Name:__________________
Title:____________________________
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Exhibit T - 1
EXHIBIT T
FORM OF CONSENT TO COLLATERAL ASSIGNMENT
This Consent to Collateral Assignment (this “Consent”) is entered into among (i) Clean Power Alliance of Southern California, a California joint powers authority (“CPA”), (ii) [NextEra Entity], a Delaware limited liability company (the “Project Company”), and (iii) [Name of Collateral Agent], a [Legal Status of Collateral Agent], as Collateral Agent for the secured parties under the Financing Documents referred to below (such secured parties together with their successors permitted under this Consent in such capacity, the “Secured Parties”, and, such agent, together with its successors in such capacity, the “Collateral Agent”). CPA, Project Company and Collateral Agent are hereinafter sometimes referred to individually as a “Party” and jointly as the “Parties”.
Capitalized terms used but not otherwise defined in this Consent shall have the meanings ascribed to them in the ESA (as defined below).
RECITALS
The Parties enter into this Consent with reference to the following facts:
A. Project Company and CPA have entered into that certain Renewable Power Purchase Agreement, dated as of [Date] [List all amendments as contemplated by Section 3.4] (“ESA”), pursuant to which Project Company will develop, construct, commission, test and operate the Facility and sell the Product to CPA, and CPA will purchase the Product from Project Company;
B. As collateral for Project Company’s obligations under the ESA, Project Company has agreed to provide to CPA certain collateral, which may include Performance Security and Development Security and other collateral described in the ESA (collectively, the “ESA Collateral”);
C. Project Company has entered into that certain [Insert description of financing arrangements with Lender], dated as of [Date], among Project Company, the Lenders party thereto and the Collateral Agent (the “Financing Agreement”), pursuant to which, among other things, the Lenders have extended commitments to make loans to Project Company; D. As collateral security for Project Company’s obligations under the Financing Agreement and related agreements (collectively, the “Financing Documents”), Project Company has, among other things, assigned all of its right, title and interest in, to and under the ESA and Project’s Company’s owners have pledged their ownership interest in Project Company (collectively, the “Assigned Interest”) to the Collateral Agent pursuant to the Financing Documents; and E. It is a requirement under the Financing Agreement and the ESA that CPA and the other Parties hereto shall have executed and delivered this Consent.
AGREEMENT
In consideration of the foregoing, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the Parties
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Exhibit T - 2
hereto hereby agree as follows:
SECTION 1. CONSENT TO ASSIGNMENT, ETC.
1.1 Consent and Agreement.
CPA hereby acknowledges:
(a) Notice of and consents to the assignment as collateral securityto Collateral Agent, for the benefit of the Secured Parties, of the Assigned Interest; and (b) The right (but not the obligation) of Collateral Agent in the exercise of its rights and remedies under the Financing Documents, to make all demands, give all notices, take all actions and exercise all rights of Project Company permitted under the ESA (subject to CPA’s rights and defenses under the ESA and the terms of this Consent) and accepts any such exercise; provided, insofar as the Collateral Agent exercises any such rights under the ESA or makes any claims with respect to payments or other obligations under the ESA, the terms and conditions of the ESA applicable to such exercise of rights or claims shall apply to Collateral Agent to the same extent as to Project Company.
1.2 Project Company’s and Collateral Agent’s Acknowledgement.
Each of Project Company and Collateral Agent hereby acknowledges and agrees that, following the occurrence of a default by Project Company under the ESA, CPA is authorized to act in accordance with Collateral Agent’s instructions and the terms of this Agreement, and that, other than arising due to the negligence or willful misconduct of CPA, CPA shall bear no liability to Project Company or Collateral Agent under such situation for failing to act in accordance with Project Company’s instructions.
1.3 Right to Cure.
If Project Company defaults in the performance of any of its obligations under the ESA, or upon the occurrence or non-occurrence of any event or condition under the ESA which would immediately or with the passage of any applicable grace period or the giving of notice, or both, enable CPA to terminate or suspend its performance under the ESA (a “ESA Default”), CPA will not terminate or suspend its performance under the ESA until it first gives written notice of such ESA Default to Collateral Agent and affords Collateral Agent the right to cure such ESA Default within the applicable cure period under the ESA, which cure period shall run concurrently with that afforded Project Company under the ESA. In addition, if Collateral Agent gives CPA written notice prior to the expiration of the applicable cure period under the ESA of Collateral Agent’s intention to cure such ESA Default (which notice shall include a reasonable description of the time during which it anticipates to cure such ESA Default) and is diligently proceeding to cure such ESA Default, notwithstanding the applicable cure period under the ESA, Collateral Agent shall have a period of sixty (60) days (or, if such ESA Default is for failure by the Project Company to pay an amount to CPA which is due and payable under the ESA other than to provide ESA Collateral, thirty (30) days, or, if such ESA Default is for failure by Project Company to provide ESA Collateral, ten (10)
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Exhibit T - 3
Business Days) from the Collateral Agent’s receipt of the notice of such ESA Default from CPA to cure such ESA Default; provided, (a) if possession of the Facility is necessary to cure any such non-monetary ESA Default and Collateral Agent has commenced foreclosure proceedings within sixty (60) days after notice of the ESA Default and is diligently pursuing such foreclosure proceedings, Collateral Agent will be allowed a reasonable time, not to exceed one hundred eighty (180) days after the notice of the ESA Default, to complete such proceedings and cure such ESA Default, and (b) if Collateral Agent is prohibited from curing any such ESA Default by any process, stay or injunction issued by any Governmental Authority or pursuant to any bankruptcy or insolvency proceeding or other similar proceeding involving Project Company, then the time periods specified herein for curing a ESA Default shall be extended for the period of such prohibition, so long as Collateral Agent has diligently pursued removal of such process, stay or injunction. Collateral Agent shall provide CPA with reports concerning the status of efforts to cure a ESA Default upon CPA’s reasonable request.
1.4 Substitute Owner.
Subject to Section 1.7, the Parties agree that if Collateral Agent notifies (such notice, a “Financing Document Default Notice”) CPA that an event of default has occurred and is continuing under the Financing Documents (a “Financing Document Event of Default”) then, upon a judicial foreclosure sale, non-judicial foreclosure sale, deed in lieu of foreclosure or other transfer following a Financing Document Event of Default, Collateral Agent (or its designee) shall be substituted for Project Company (the “Substitute Owner”) under the ESA, and, subject to Sections 1.7(b) and 1.7(c) below, CPA and Substitute Owner will recognize each other as counterparties under the ESA and will continue to perform their respective obligations (including those obligations accruing to CPA and the Project Company prior to the existence of the Substitute Owner) under the ESA in favor of each other in accordance with the terms thereof; provided, before CPA is required to recognize the Substitute Owner, the Substitute Owner must have demonstrated to CPA’s reasonable satisfaction that the Substitute Owner meets the qualifications of a Permitted Transferee under the ESA (a “Permitted Transferee”). For purposes of the foregoing, CPA shall be entitled to assume that any such purported exercise of rights by Collateral Agent that results in substitution of a Substitute Owner under the ESA is in accordance with the Financing Documents without independent investigation thereof but shall have the right to require that the Collateral Agent and its designee (if applicable) provide reasonable evidence demonstrating the same.
1.5 Replacement Agreements.
Subject to Section 1.7, if the ESA is terminated, rejected or otherwise invalidated as a result of any bankruptcy, insolvency, reorganization or similar proceeding affecting Project Company, its owner(s) or guarantor(s), and if Collateral Agent or its designee directly or indirectly takes possession of, or title to, the Facility (including possession by a receiver or title by foreclosure or deed in lieu of foreclosure) (“Replacement Owner”), CPA shall, and Collateral Agent shall cause Replacement Owner to, enter into a new agreement with one another for the balance of the obligations under the ESA remaining to be performed having terms substantially the same as the terms of the ESA with respect to the remaining Contract Term (“Replacement ESA”); provided, before CPA is required to enter into a Replacement ESA, the Replacement Owner must have demonstrated to CPA’s reasonable
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Exhibit T - 4
satisfaction that the Replacement Owner satisfies the requirements of a Permitted Transferee. For purposes of the foregoing, CPA is entitled to assume that any such purported exercise of rights by Collateral Agent that results in a Replacement Owner is in accordance with the Financing Documents without independent investigation thereof but shall have the right to require that the Collateral Agent and its designee (if applicable) provide reasonable evidence demonstrating the same.
Notwithstanding the execution and delivery of a Replacement ESA, to the extent CPA is, or was otherwise prior to its termination as described in this Section 1.5, entitled under the ESA, CPA may suspend performance of its obligations under such Replacement ESA, unless and until all ESA Defaults of Project Company under the ESA or Replacement ESA have been cured.
1.6 Transfer.
Subject to Section 1.7, a Substitute Owner or a Replacement Owner may assign all of its interest in the Facility and the ESA and a Replacement ESA to a natural person, corporation, trust, business trust, joint venture, joint stock company, association, company, limited liability company, partnership, Governmental Authority or other entity (a “Person”) to which the Facility is transferred; provided, the proposed transferee shall have demonstrated to CPA’s reasonable satisfaction that such proposed transferee satisfies the requirements of a Permitted Transferee.
1.7 Assumption of Obligations.
(a) Transferee.
Any transferee under Section 1.6 shall expressly assume in a writing reasonably satisfactory to CPA all of the obligations of Project Company, Substitute Owner or Replacement Owner under the ESA or Replacement ESA, as applicable, including posting and collateral assignment of the ESA Collateral. Upon such assignment and the cure of any outstanding ESA Default, and payment of all other amounts due and payable to CPA in respect of the ESA or such Replacement ESA, the transferor shall be released from any further liability under the ESA or Replacement ESA, as applicable.
(b) Substitute Owner.
Subject to Section 1.7(c), any Substitute Owner pursuant to Section 1.4 shall be required to perform Project Company’s obligations under the ESA, including posting and collateral assignment of the ESA Collateral; provided, the obligations of such Substitute Owner shall be no more than those of Project Company under the ESA.
(c) No Liability.
CPA acknowledges and agrees that neither Collateral Agent nor any Secured Party shall have any liability or obligation under the ESAas a result of this Consent (except to the extentCollateral Agent or a Secured Party is a Substitute Owner or Replacement Owner) nor shall Collateral Agent or any other Secured Party be obligated or required to (i) perform any of Project Company’s obligations under the ESA, except as provided in Sections 1.7(a) and 1.7(b) and to the extent Collateral Agent or a Secured Party is a Substitute Owner or Replacement Owner, or (ii) take any action to collect or
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Exhibit T - 5
enforce any claim for payment assigned under the Financing Documents. If Collateral Agent becomes a Substitute Owner pursuant to Section 1.4 or enters into a Replacement ESA, Collateral Agent shall not have any personal liability to CPA under the ESA or Replacement ESA and the sole recourse of CPA in seeking enforcement of such obligations against Collateral Agent shall be to the aggregate interest of the Secured Parties in the Facility; provided, such limited recourse shall not limit CPA’s right to seek equitable or injunctive relief against Collateral Agent, or CPA’s rights with respect to any offset rights expressly allowed under the ESA, a Replacement ESA or the ESA Collateral.
1.8 Delivery of Notices.
CPA shall deliver to Collateral Agent, concurrently with the delivery thereof to Project Company, a copy of each notice, request or demand given by CPA to Project Company pursuant to the ESA relating to (a) a ESA Default by Project Company under the ESA, (b) any claim regarding a Force Majeure Event by CPA under the ESA, (c) any notice of dispute under the ESA, (d) any notice of intent to terminate or any termination notice, and (e) any matter that would require the consent of Collateral Agent pursuant to Section 1.11 or any other provision of this Consent. Collateral Agent acknowledges that delivery of such notice, request and demand shall satisfy CPA’s obligation to give Collateral Agent a notice of ESA Default under Section 1.3. Collateral Agent shall deliver to CPA, concurrently with delivery thereof to Project Company, a copy of each notice, request or demand given by Collateral Agent to Project Company pursuant to the Financing Documents relating to a default by Project Company under the Financing Documents.
1.9 Confirmations.
CPA will, as and when reasonably requested by Collateral Agent from time to time, confirm in writing matters relating to the ESA (including the performance of same by Project Company); provided, such confirmation may be limited to matters of which CPA is aware as of the time the confirmation is given and such confirmations shall be without prejudice to any rights of CPA under the ESA as between CPA and Project Company.
1.10 Exclusivity of Dealings.
Except as provided in Sections 1.3, 1.4, 1.8, 1.9 and 2.1, unless and until CPA receives a Financing Document Default Notice, CPA shall deal exclusively with Project Company in connection with the performance of CPA’s obligations under the ESA. From and after such time as CPA receives a Financing Document Default Notice and until a Substitute Owner is substituted for Project Company pursuant to Section 1.4, a Replacement ESA is entered into or the ESA is transferred to a Person to whom the Facility is transferred pursuant to Section 1.6, CPA shall, until Collateral Agent confirms to CPA in writing that all obligations under the Financing Documents are no longer outstanding, deal exclusively with Collateral Agent in connection with the performance of CPA’s obligations under the ESA, and CPA may irrevocably rely on instructions provided by Collateral Agent in accordance therewith to the exclusion of those provided by any other Person.
1.11 No Amendments.
To the extent permitted by Laws, CPA agrees that it will not, without the prior written consent of
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Exhibit T - 6
Collateral Agent (not to be unreasonably withheld, delayed or conditioned) (a) enter into any material supplement, restatement, novation, extension, amendment or modification of the ESA (b) terminate or suspend its performance under the ESA (except in accordance with Section 1.3) or (c) consent to or accept any termination or cancellation of the ESA by Project Company.
SECTION 2. PAYMENTS UNDER THE ESA
2.1 Payments.
Unless and until CPA receives written notice to the contrary from Collateral Agent, CPA will make all payments to be made by it to Project Company under or by reason of the ESA directly to Project Company. CPA, Project Company, and Collateral Agent acknowledge that CPA will be deemed to be in compliance with the payment terms of the ESA to the extent that CPA makes payments in accordance with Collateral Agent’s instructions.
2.2 No Offset, Etc.
All payments required to be made by CPA under the ESA shall be made without any offset, recoupment, abatement, withholding, reduction or defense whatsoever, other than that expressly allowed by the terms of the ESA.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CPA
CPA makes the following representations and warranties as of the date hereof in favor of Collateral Agent:
3.1 Organization.
CPA is a joint powers authority and community choice aggregator duly organized and validly existing under the laws of the state of California, and the rules, regulations and orders of the California Public Utilities Commission, and is qualified to conduct business in each jurisdiction of the Joint Powers Agreement members. CPA has all requisite power and authority, corporate and otherwise, to enter into and to perform its obligations hereunder and under the ESA, and to carry out the terms hereof and thereof and the transactions contemplated hereby and thereby.
3.2 Authorization.
The execution, delivery and performance by CPA of this Consent and the ESA have been duly authorized by all necessary corporate or other action on the part of CPA and do not require any approval or consent of any holder (or any trustee for any holder) of any indebtedness or other obligation of CPA which, if not obtained, will prevent CPA from performing its obligations hereunder or under the ESA except approvals or consents which have previously been obtained and which are in full force and effect.
3.3 Execution and Delivery; Binding Agreements.
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Exhibit T - 7
Each of this Consent and the ESA is in full force and effect, has been duly executed and delivered on behalf of CPA by the appropriate officers of CPA, and constitutes the legal, valid and binding obligation of CPA, enforceable against CPA in accordance with itsterms, except as the enforceability thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights generally and (b) general equitable principles (whether considered in a proceeding in equity or at law).
3.4 No Default or Amendment.
Except as set forth in Schedule A attached hereto: (a) Neither CPA nor, to CPA’s actual knowledge, Project Company, is in default of any of its obligations under the ESA; (b) CPA and, to CPA’s actual knowledge, Project Company, has complied with all conditions precedent to the effectiveness of its obligations under the ESA; (c) to CPA’s actual knowledge, no event or condition exists which would either immediately or with the passage of any applicable grace period or giving of notice, or both, enable either CPA or Project Company to terminate or suspend its obligations under the ESA; and (d) the ESA has not been amended, modified or supplemented in any manner except as set forth herein and in the recitals hereto.
3.5 No Previous Assignments.
CPA has no notice of, and has not consented to, any previous assignment by Project Company of all or any part of its rights under the ESA, except as previously disclosed in writing and consented to by CPA.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PROJECT COMPANY Project Company makes the following representations and warranties as of the date hereof in favor of the Collateral Agent and CPA:
4.1 Organization.
Project Company is a limited liability company duly organized and validly existing under the laws of the state of its organization, and is duly qualified, authorized to do business and in good standing in every jurisdiction in which it owns or leases real property or in which the nature of its business requires it to be so qualified, except where the failure to so qualify would not have a material adverse effect on its financial condition, its ability to own its properties or its ability to transact its business.
Project Company has all requisite power and authority, corporate and otherwise, to enter into and to perform its obligations hereunder and under the ESA, and to carry out the terms hereof and thereof and the transactions contemplated hereby and thereby.
4.2 Authorization.
The execution, delivery and performance of this Consent by Project Company, and Project Company’s assignment of its right, title and interest in, to and under the ESA to the Collateral Agent pursuant to the Financing Documents, have been duly authorized by all necessary corporate or other action on the part of Project Company.
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Exhibit T - 8
4.3 Execution and Delivery; Binding Agreement.
This Consent is in full force and effect, has been duly executed and delivered on behalf of Project Company by the appropriate officers of Project Company, and constitutes the legal, valid and binding obligation of Project Company, enforceable against Project Company in accordance with its terms, except as the enforceability thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights generally and (b) general equitable principles (whether considered in a proceeding in equity or at law).
4.4 No Default or Amendment.
Except as set forth in Schedule B attached hereto: (a) neither Project Company nor, to Project Company’s actual knowledge, CPA, is in default of any of its obligations under the ESA; (b) Project Company and, to Project Company’s actual knowledge, CPA, has complied with all conditions precedent to the effectiveness of its obligations under the ESA; (c) to Project Company’s actual knowledge, no event or condition exists which would either immediately or with the passage of any applicable grace period or giving of notice, or both, enable either CPA or Project Company to terminate or suspend its obligations under the ESA; and (d) the ESA has not been amended, modified or supplemented in any manner except as set forth herein and in the recitals hereto.
4.5 No Previous Assignments.
Project Company has not previously assigned all or any part of its rights under the ESA.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF COLLATERAL AGENT Collateral Agent makes the following representations and warranties as of the date hereof in favor of CPA and Project Company:
5.1 Authorization.
The execution, delivery and performance of this Consent by Collateral Agent have been duly authorized by all necessary corporate or other action on the part of Collateral Agent and Secured Parties.
5.2 Execution and Delivery; Binding Agreement.
This Consent is in full force and effect, has been duly executed and delivered on behalf of Collateral Agent by the appropriate officers of Collateral Agent, and constitutes the legal, valid and binding obligation of Collateral Agent as Collateral Agent for the Secured Parties, enforceable against Collateral Agent (and the Secured Parties to the extent applicable) in accordance with its terms, except as the enforceability thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights generally and (b) general equitable principles (whether considered in a proceeding in equity or at law).
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Exhibit T - 9
SECTION 6. MISCELLANEOUS
6.1 Notices.
All notices and other communications hereunder shall be in writing, shall be deemed given upon receipt thereof by the Party or Parties to whom such notice is addressed, shall refer on their face to the ESA (although failure to so refer shall not render any such notice or communication ineffective), shall be sent by first class mail, by personal delivery or by a nationally recognized courier service, and shall be directed (a) if to CPA or Project Company, in accordance with [Notice Section of the ESA] of the ESA, (b) if to Collateral Agent, to [Collateral Agent Name], [Collateral Agent Address], Attn: [Collateral Agent Contact Information], Telephone: [___], Fax: [___], and (c) to such other address or addressee as any such Party may designate by notice given pursuant hereto.
6.2 Governing Law; Submission to Jurisdiction.
(a) THIS CONSENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND THIS
CONSENT AND ALL MATTERS ARISING OUT OF THIS CONSENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY SHALL BE GOVERNED BY, THE LAW OF THE STATE OF
CALIFORNIA WITHOUT REGARD TO ANY CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION. (b) All disputes, claims or controversies arising out of, relating to, concerning or pertaining to the terms of this Consent shall be governed by the dispute resolution provisions of the ESA. Subject to the foregoing, any legal action or proceeding with respect to this Consent and any action for enforcement of any judgment in respect thereof may be brought in the courts of the State of California or of the United States of America for the Central District of California, and, by execution and delivery of this Consent, each Party hereby accepts for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and appellate courts from any appeal thereof. Each Party further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to its notice address provided pursuant to Section 6.1 hereof. Each Party hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Consent brought in the courts referred to above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing herein shall affect the right of any Party to serve process in any other manner permitted by law.
6.3 Headings Descriptive.
The headings of the severalsections and subsections of this Consent are insertedfor convenience only and shall not in any way affect the meaning or construction of any provision of this Consent.
6.4 Severability.
In case any provision in or obligation under this Consent shall be invalid, illegal or unenforceable in
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Exhibit T - 10
any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
6.5 Amendment, Waiver.
Neither this Consent nor any of the terms hereof may (a) be terminated, amended, supplemented or modified, except by an instrument in writing signed by CPA, Project Company and Collateral Agent or (b) waived, except by an instrument in writing signed by the waiving Party.
6.6 Termination.
Each Party’s obligations hereunder are absolute and unconditional, and no Party has any right, and shall have no right, to terminate this Consent or to be released, relieved or discharged from any obligation or liability hereunder until CPA has been notified by Collateral Agent that all of the obligations under the Financing Documents shall have been satisfied in full (other than contingent indemnification obligations) or, with respect to the ESA or any Replacement ESA, its obligations under such ESA or Replacement ESA have been fully performed.
6.7 Successors and Assigns.
This Consent shall be binding upon each Party and its successors and assigns permitted under and in accordance with this Consent, and shall inure to the benefit of the other Parties and their respective successors and assignee permitted under and in accordance with this Consent. Each reference to a Person herein shall include such Person’s successors and assigns permitted under and in accordance with this Consent.
6.8 Further Assurances.
CPA hereby agrees to execute and deliver all such instruments and take all such action as may be necessary to effectuate fully the purposes of this Consent.
6.9 Waiver of Trial by Jury.
TO THE EXTENT PERMITTED BY APPLICABLE LAWS, THE PARTIES HEREBY
IRREVOCABLY WAIVE ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS CONSENT OR ANY MATTER ARISING HEREUNDER. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND
THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
6.10 Entire Agreement.
This Consent and any agreement, document or instrument attached hereto or referred to herein integrate all the terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations and prior writings in respect to the subject matter hereof. In the event of any conflict
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Exhibit T - 11
between the terms, conditions and provisions of this Consent and any such agreement, document or instrument, the terms, conditions and provisions of this Consent shall prevail.
6.11 Effective Date.
This Consent shall be deemed effective as of the date upon which the last Party executes this Consent.
6.12 Counterparts; Electronic Signatures.
This Consent may be executed in one or more counterparts, each of which will be deemed to be an original of this Consent and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Consent and of signature pages by facsimile transmission, Portable Document Format (i.e., PDF), or by other electronic means shall constitute effective execution and delivery of this Consent as to the Parties and may be used in lieu of the original Consent for all purposes.
[Remainder of Page Left Intentionally Blank.]
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Exhibit T - 12
IN WITNESS WHEREOF, the Parties hereto have caused this Consent to be duly executed and delivered by their duly authorized officers on the dates indicated below their respective signatures. [NEXTERA ENTITY],
a Delaware limited liability company.
CLEAN POWER ALLIANCE OF SOUTHERN
CALIFORNIA,
a California joint powers authority.
By:
[Name]
[Title]
Date:
By:
[Name]
[Title]
Date:
[NAME OF COLLATERAL AGENT],
[Legal Status of Collateral Agent].
By:
[Name]
[Title]
Date:
Agenda Page 253
Exhibit T - 13
SCHEDULE A
[Describe any disclosures relevant to representations and warranties made in Section 3.4]
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Exhibit U - 1
EXHIBIT U
Supply Chain Code of Conduct
Buyer is committed to ensuring that the fundamental human rights of workers are protected, including addressing the potential risks of forced labor, child labor, servitude, human trafficking and slavery across our portfolio.
Our requirements and expectations with respect to any Major Equipment are set forth in Sections 1 – 8 below (“Supply Chain Code”).
These standards are derived from the United Nations Guiding Principles on Business and Human Rights, the Core Conventions of the International Labour Organization (“ILO”), including the ILO Declaration on Fundamental Principles and Rights at Work, the Solar Energy Industries Association Solar Industry Commitment to Environmental & Social Responsibility, and the Responsible Business Alliance Code of Conduct.
1. Freely Chosen Employment
Forced, bonded (including debt bondage) or indentured labor, involuntary or exploitative prison labor, slavery or trafficking of persons is not permitted. This includes transporting, harboring, recruiting, transferring, or receiving persons by means of threat, force, coercion, abduction or fraud for labor or services. There shall be no unreasonable restrictions on workers’ freedom of movement in any work-related facility in addition to unreasonable restrictions on entering or exiting work-related facilities including, if applicable, workers’ dormitories or living quarters. All work must be voluntary, and workers shall be free to leave work at any time or terminate their employment without penalty if reasonable notice is given as per worker’s contract. Employers, agents, and sub-agents may not hold or otherwise destroy, conceal, or confiscate identity or immigration documents, such as government-issued identification, passports, or work permits. Employers can only hold documentation if such holdings are required by law. In this case, at no time should workers be denied access to their documents. Workers shall not be required to pay employers’ agents’ or sub-agents’ recruitment fees or other related fees for their employment. If any such fees are found to have been paid by workers, such fees shall be repaid to the worker.
2. Young Workers
Child labor is not to be used in any stage of manufacturing Major Equipment or BOP Services. The term “child” refers to any person under the age of 15, or under the age for completing compulsory education, or under the minimum age for employment in the country, whichever is greatest. Suppliers shall implement an appropriate mechanism to verify the age of workers. The use of legitimate workplace learning programs, which comply with all laws and regulations, is supported. Workers under the age of 18 shall not perform work that is likely to jeopardize their health or safety, including night shifts and overtime. Suppliers of Major Equipment shall ensure proper management of student workers through proper maintenance of student records, rigorous due diligence of educational partners, and protection of students’ rights in accordance with applicable laws and regulations. Suppliers of Major Equipment shall ensure appropriate support and training is provided to all student workers. In the absence of local law, the wage rate for
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Exhibit U - 2
student workers, interns, and apprentices shall be at least the same wage rate as other entry-level workers performing equal or similar tasks. If child labor is identified, assistance/remediation is provided.
3. Working Hours
Studies of business practices clearly link worker strain to reduced productivity, increased turnover, and increased injury and illness. Working hours are not to exceed the maximum set by local law. Further, a workweek should not be more than 60 hours per week, including overtime, except in emergency or unusual situations. All overtime must be voluntary.
Workers shall be allowed at least one day off every seven days.
4. Wages and Benefits
Compensation paid to workers shall comply with all applicable wage laws, including those relating to minimum wages, overtime hours and legally mandated benefits. In compliance with local laws, workers shall be compensated for overtime at pay rates greater than regular hourly rates. Deductions from wages as a disciplinary measure shall not be permitted. For each pay period, workers shall be provided with a timely and understandable wage statement that includes sufficient information to verify accurate compensation for work performed. All use of temporary, dispatch and outsourced labor will be within the limits of the local law.
5. Humane Treatment
There is to be no harsh or inhumane treatment including violence, gender-based violence, sexual harassment, sexual abuse, corporal punishment, mental or physical coercion, bullying, public shaming, or verbal abuse of workers; nor is there to be the threat of any such treatment. Disciplinary policies and procedures in support of these requirements shall be clearly defined and communicated to workers.
6. Non-Discrimination/Non-Harassment
Suppliers should be committed to a workplace free of harassment and unlawful discrimination. Companies shall not engage in discrimination or harassment based on race, color, age, gender, sexual orientation, gender identity and expression, ethnicity or national origin, disability, pregnancy, religion, political affiliation, union membership, covered veteran status, protected genetic information or marital status in hiring and employment practices such as wages, promotions, rewards, and access to training. Workers shall be provided with reasonable accommodation for religious practices. In addition, workers or potential workers should not be subjected to medical tests that could be used in a discriminatory way or otherwise in violation of applicable law. This was drafted in consideration of ILO Discrimination (Employment and Occupation) Convention (No.111).
7. Freedom of Association
In conformance with local law, Suppliers shall respect the right of all workers to form and join trade unions of their own choosing, to bargain collectively, and to engage in peaceful assembly as well as respect the right of workers to refrain from such activities. Workers and/or their representatives shall be able to openly communicate and share ideas and concerns with management regarding working conditions and management practices without fear of discrimination, reprisal, intimidation, or harassment.
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Exhibit U - 3
8. Restricted Jurisdictions
No Major Equipment may include any components or materials mined, manufactured or produced in the Xinjiang Uyghur Autonomous Region of China.
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Exhibit V - 1
EXHIBIT V
MATERIAL PERMITS
No. Permits
1 Conditional Use Permit (including modifications)
Agenda Page 258
Exhibit W - 1
EXHIBIT W
Force Majeure and/or Development Cure Period Claim Form Instructions
A. Please review Article 10 and Exhibit B (if applicable) of the Power Purchase Agreement prior to filling out the form.
B. Fill out the form completely and return to your assigned Contract Manager at CPA.
Seller: [Name] Project: [Name]
Current Guaranteed Construction Start Date: [Date]
New Guaranteed Construction Start Date (if Seller’s claims are validated in full): [Date] Guaranteed Commercial Operation Date: [Date]
New Guaranteed Commercial Operation Date (if Seller’s claims are validated in full): [Date]
1. Please describe the claimed Force Majeure Event or other event giving rise to the claimed Development Cure Period delay(s) (the “Claimed Event”), including its cause, date of commencement and date it ended or is anticipated to end.
2. Please specify the extent of the delay or prevented performance caused by the Claimed Event, including the relief claimed thereby. Describe how the claimed relief was calculated/determined, accounting for individual developments causing such delay or prevented performance.
3. With respect to a Claimed Event other than a Force Majeure Event, please describe the commercially reasonable efforts taken by Seller to prevent such event.
4. Please describe the commercially reasonable efforts taken to mitigate the delays or nonperformance caused by the Claimed Event and specify how such efforts reduced the delay days or nonperformance that would otherwise have occurred absent such mitigation.
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Exhibit W - 2
5. Please attach supporting documentation, including without limitation:
• Force Majeure notices or other correspondence received from suppliers and/or contractors that describe the basis for and extent of the Claimed Event. • Documentation, contracts, and/or correspondence with suppliers and/or contractors evidencing the claiming Party’s mitigation efforts.
• Project schedule and/or GANTT charts that demonstrate the effect of the Claimed Event on the Guaranteed commercial Operation Date.
By signing this Claim form, I attest and affirm that I am authorized to sign this form on behalf of the Seller, that I have reviewed this Claim, including any attached documentation, and that the facts and statements made in this Claim are true and correct to the best of my knowledge.
Signed:
Name:
Title:
Date:
Agenda Page 260
Execution Version
ENERGY STORAGE AGREEMENT
COVER SHEET
Seller: Desert Sands Energy Storage II, LLC
Buyer: Clean Power Alliance of Southern California, a California joint powers authority Description of Facility: A 140 MW / 560 MWh battery energy storage system, located in Riverside County, California
Milestones:
Milestone Expected Date for
Completion
Evidence of Site Control Complete
Documentation of Conditional Use Permit if required:
CEQA [ ] Cat Ex, [ ]Neg Dec, [x]Mitigated Neg Dec,
[ ]EIR (provided CUP type subject to change)
June 1, 2025
Seller’s receipt of Phase I and Phase II Interconnection study results for Seller’s Interconnection Facilities Complete Executed Interconnection Agreement
Financial Close
Expected Construction Start Date
Initial Synchronization January 1, 2027
Network Upgrades completed (evidenced by delivery of
permission to parallel letter from the Transmission
Provider)
January 1, 2027
Expected Date of CAISO Commercial Operation April 1, 2027 Expected Commercial Operation Date June 1, 2027
Delivery Term: Twenty (20) Contract Years
Guaranteed Capacity: 140 MW of Installed Capacity at four (4) hours of continuous discharge Agenda Page 261
Agenda Page 262
Guaranteed Commercial Operation Date: June 1, 2027, as such date may be extended by Seller’s payment of Commercial Operation Delay Damages pursuant to Section 2 of Exhibit B and/or a Development Cure Period pursuant to Section 4 of Exhibit B.
Storage Rate:
Contract Year Storage Rate
1 – 20 $ /kW-mo. (flat)
with no escalation
Seller’s Assumed Tax Credits: As of the Effective Date, Seller intends to qualify for and utilize the ITC at forty percent (40%).
Product:
☒ Facility Energy
☒ Installed Capacity and Effective Capacity
☒ Ancillary Services
☒ Capacity Attributes
Anticipated Flexible Capacity: Amount: 140 (MW), subject to changes by the CPUC pursuant to the Resource Adequacy Rulings, the CAISO pursuant to the CAISO Tariff, or by any other Governmental Authority having jurisdiction.)
Scheduling Coordinator: Buyer
Security Amount:
Development Security: $105/kW of Guaranteed Capacity
Performance Security: $105/kW of Installed Capacity
Guarantor: NextEra Energy Capital Holdings, Inc. (as of the Effective Date)
Agenda Page 263
TABLE OF CONTENTS
Page
i
ARTICLE 1 DEFINITIONS ........................................................................................................ 1
1.1 Contract Definitions............................................................................................. 1
1.2 Rules of Interpretation ...................................................................................... 22 ARTICLE 2 TERM; CONDITIONS PRECEDENT.................................................................. 24
2.1 Contract Term. ................................................................................................... 24
2.2 Conditions Precedent ......................................................................................... 24
2.3 Development; Construction; Progress Reports............................................... 25
2.4 Remedial Action Plan ........................................................................................ 26
2.5 Pre-Commercial Operation Actions. ................................................................ 26 ARTICLE 3 PURCHASE AND SALE ...................................................................................... 27
3.1 Product ................................................................................................................ 27
3.2 Facility Energy ................................................................................................... 27
3.3 Ancillary Services............................................................................................... 27
3.4 Capacity Attributes. ........................................................................................... 27
3.5 Resource Adequacy Failure. ............................................................................. 28
3.6 Compliance Expenditure Cap. .......................................................................... 29
3.7 Facility Configuration ....................................................................................... 30
3.8 Ownership of Incentives .................................................................................... 30 ARTICLE 4 OBLIGATIONS AND DELIVERIES ................................................................... 30
4.1 Delivery ............................................................................................................... 30
4.2 Station Use .......................................................................................................... 31
4.3 Performance Guarantees; Ancillary Services ................................................. 31
4.4 Facility Testing. .................................................................................................. 32
4.5 Testing Costs and Revenues. ............................................................................. 33
4.6 Facility Operations............................................................................................. 33
4.7 Dispatch Notices. ................................................................................................ 34
4.8 [Intentionally Omitted] ...................................................................................... 34
4.9 Energy Management. ......................................................................................... 34
4.10 Capacity Availability Notice. ............................................................................ 36
4.11 Outages................................................................................................................ 37 ARTICLE 5 TAXES, GOVERNMENTAL AND ENVIRONMENTAL COSTS .................... 38
5.1 Allocation of Taxes and Charges. ..................................................................... 38
5.2 Cooperation. ....................................................................................................... 38
5.3 Environmental Costs. ........................................................................................ 38 ARTICLE 6 MAINTENANCE AND REPAIR OF THE FACILITY ....................................... 39
6.1 Maintenance of the Facility. .............................................................................. 39
6.2 Maintenance of Health and Safety. .................................................................. 39
6.3 Shared Facilities. ................................................................................................ 39
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ii
ARTICLE 7 METERING ........................................................................................................... 40
7.1 Metering. ............................................................................................................. 40
7.2 Meter Verification. ............................................................................................. 41 ARTICLE 8 INVOICING AND PAYMENT; CREDIT ............................................................ 41
8.1 Invoicing.............................................................................................................. 41
8.2 Payment. ............................................................................................................. 41
8.3 Books and Records. ............................................................................................ 42
8.4 Payment Adjustments; Billing Errors. ............................................................ 42
8.5 Billing Disputes................................................................................................... 42
8.6 Netting of Payments. .......................................................................................... 43
8.7 Seller’s Development Security. ......................................................................... 43
8.8 Seller’s Performance Security. ......................................................................... 43
8.9 First Priority Security Interest in Cash or Cash Equivalent Collateral ....... 43
8.10 Buyer’s Financial Statements. .......................................................................... 44 ARTICLE 9 NOTICES .............................................................................................................. 44
9.1 Addresses for the Delivery of Notices............................................................... 44
9.2 Acceptable Means of Delivering Notice ........................................................... 45 ARTICLE 10 FORCE MAJEURE ............................................................................................. 45
10.1 Definition ............................................................................................................ 45
10.2 No Liability If a Force Majeure Event Occurs ............................................... 46
10.3 Notice ................................................................................................................... 46
10.4 Termination Following Force Majeure Event or Development Cure Period .................................................................................................................. 46 ARTICLE 11 DEFAULTS; REMEDIES; TERMINATION ..................................................... 47
11.1 Events of Default ................................................................................................ 47
11.2 Remedies; Declaration of Early Termination Date. ....................................... 50
11.3 Damage Payment; Termination Payment ....................................................... 50
11.4 Notice of Payment of Termination Payment or Damage Payment ............... 51
11.5 Disputes With Respect to Termination Payment or Damage Payment ........ 52
11.6 Limitation on Seller’s Ability to Make or Agree to Third-Party Sales from the Facility after Early Termination Date. ............................................. 52
11.7 Rights And Remedies Are Cumulative ............................................................ 52
11.8 Mitigation............................................................................................................ 52
11.9 Seller Pre-COD Liability Limitations .............................................................. 52 ARTICLE 12 LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES ........ 53
12.1 No Consequential Damages. .............................................................................. 53
12.2 Waiver and Exclusion of Other Damages. ....................................................... 53 ARTICLE 13 REPRESENTATIONS AND WARRANTIES; AUTHORITY .......................... 54
13.1 Seller’s Representations and Warranties. ....................................................... 54
13.2 Buyer’s Representations and Warranties ........................................................ 55
13.3 General Covenants ............................................................................................. 56
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iii
13.4 Workforce Development ................................................................................... 56
13.5 Disadvantaged Communities Development.. ................................................... 56 ARTICLE 14 ASSIGNMENT.................................................................................................... 57
14.1 General Prohibition on Assignments ............................................................... 57
14.2 Collateral Assignment ....................................................................................... 57
14.3 Permitted Assignment by Seller: ...................................................................... 57
14.4 Permitted Transfers by Seller ........................................................................... 57
14.5 Shared Facilities; Portfolio Financing ............................................................. 57
14.6 Buyer Financing Assignment ............................................................................ 58
14.7 [Intentionally Omitted]. ..................................................................................... 59
14.8 Accommodation of Tax Equity Investors. ....................................................... 59 ARTICLE 15 DISPUTE RESOLUTION ................................................................................... 59
15.1 Governing Law. .................................................................................................. 59
15.2 Dispute Resolution. ............................................................................................ 59
15.3 Attorneys’ Fees. .................................................................................................. 59
15.4 Venue ................................................................................................................... 59 ARTICLE 16 INDEMNIFICATION ......................................................................................... 59
16.1 Indemnification. ................................................................................................. 59
16.2 Claims.................................................................................................................. 60 ARTICLE 17 INSURANCE ...................................................................................................... 60
17.1 Insurance ............................................................................................................ 60 ARTICLE 18 CONFIDENTIAL INFORMATION ................................................................... 62
18.1 Definition of Confidential Information ............................................................ 62
18.2 Duty to Maintain Confidentiality ..................................................................... 63
18.3 Irreparable Injury; Remedies ........................................................................... 63
18.4 Further Permitted Disclosure. .......................................................................... 64
18.5 Press Releases ..................................................................................................... 64 ARTICLE 19 MISCELLANEOUS ............................................................................................ 64
19.1 Entire Agreement; Integration; Exhibits......................................................... 64
19.2 Amendments. ...................................................................................................... 64
19.3 No Waiver ........................................................................................................... 64
19.4 No Agency, Partnership, Joint Venture or Lease. .......................................... 64
19.5 Severability ......................................................................................................... 65
19.6 Mobile-Sierra...................................................................................................... 65
19.7 Counterparts. ..................................................................................................... 65
19.8 Electronic Delivery............................................................................................. 65
19.9 Binding Effect. .................................................................................................... 65
19.10 No Recourse to Members of Buyer................................................................... 65
19.11 Forward Contract .............................................................................................. 65
19.12 Change in Electric Market Design ................................................................... 66
19.13 Further Assurances ............................................................................................ 66
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iv
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v
Exhibits:
Exhibit A Facility Description
Exhibit B Facility Construction and Commercial Operation Exhibit C Compensation
Exhibit D Scheduling Coordinator Responsibilities
Exhibit E Progress Reporting Form
Exhibit F-1 Form of Monthly Expected Available Effective Capacity Report Exhibit F-2 Form of Monthly Expected Available Storage Capability Report Exhibit G Form of Daily Availability Notice
Exhibit H Form of Commercial Operation Date Certificate Exhibit I Form of Capacity Test Certificate
Exhibit J Form of Construction Start Date Certificate
Exhibit K Form of Letter of Credit
Exhibit L Intentionally Omitted
Exhibit M Form of Replacement RA Notice
Exhibit N Notices
Exhibit O Capacity Tests
Exhibit P Annual Capacity Availability Calculation
Exhibit Q Operating Restrictions
Exhibit R Metering Diagram
Exhibit S Form of Guaranty
Exhibit T Form of Consent to Collateral Assignment
Exhibit U Supply Chain Code of Conduct
Exhibit V Material Permits
Exhibit W Force Majeure Event and/or Development Cure Period Claim Form
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ENERGY STORAGE AGREEMENT
This Energy Storage Agreement (“Agreement”) is entered into as of _________ (the “Effective Date”), between Buyer and Seller. Buyer and Seller are sometimes referred to herein individually as a “Party” and jointly as the “Parties.” All capitalized terms used in this Agreement are used with the meanings ascribed to them in Article 1 to this Agreement.
RECITALS
WHEREAS, Seller intends to develop, design, construct, own, and operate the Facility; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the terms and conditions set forth in this Agreement, the Product;
WHEREAS, Buyer is entering into the Agreement with the intention that the Facility’s NQC will be counted toward Buyer’s clean energy mid-term reliability procurement obligations set forth in CPUC D.21-06-035 (as may be revised by further decisions); NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the sufficiency and adequacy of which are hereby acknowledged, the Parties agree to the following:
ARTICLE 1
DEFINITIONS
1.1 Contract Definitions. The following terms, when used herein with initial capitalization, shall have the meanings set forth below:
“AC” means alternating current.
“Accepted Compliance Costs” has the meaning set forth in Section 3.6(c). “Affiliate” means, with respect to any Person, each Person that directly or indirectly controls, is controlled by, or is under common control with such designated Person. For purposes of this definition and the definition of “Permitted Transfer” and “Permitted Transferee”, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean (a) the direct or indirect right to cast at least fifty percent (50%) of the votes exercisable at an annual general meeting (or its equivalent) of such Person or, if there are no such rights, ownership of at least fifty percent (50%) of the equity or other ownership interest in such Person, or (b) the right to direct the policies or operations of such Person. Notwithstanding the foregoing, with respect to Seller, Affiliate shall include NextEra Energy Partners, LP (“NEP”), NextEra Energy Operating Partners, LP (“NEOP”), and NextEra Energy Capital Holdings, Inc. (“NEECH”), and their respective direct or indirect subsidiaries. “After-Tax Basis” means, with respect to any payment received, or deemed to have been
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2 received, by any Person, the amount of such payment (the “Base Payment”), supplemented by a further payment (the “Additional Payment”) to such Person so that the sum of the Base Payment plus the Additional Payment will be equal to the Base Payment, after deduction of the amount of all taxes required to be paid by such Person in respect of the receipt or accrual of the Base Payment and the Additional Payment (taking into account any current or previous credits or deductions arising from the underlying event giving rise to the payment, the Base Payment and the Additional Payment). Such calculations shall be made on the assumption that the recipient is subject to Federal income taxation at the statutory rate applicable to corporations under subchapter C of the Internal Revenue Code of 1986, as amended, and subject to the highest state and local income tax rate then in effect for corporations in the states in which the Person is subject to taxation during the applicable fiscal year, and shall take into account the deductibility, if applicable (for Federal income tax purposes), of state and local income taxes.
“Agreement” has the meaning set forth in the Preamble and includes the Cover Sheet and any Exhibits, schedules and any written supplements hereto. “Ancillary Meter” has the meaning set forth in Section 7.1(a). “Ancillary Services” means spinning reserve, non-spinning reserve, regulation up, regulation down, voltage support, and any other ancillary services that the Facility is capable of providing consistent with the Operating Restrictions, as each is defined in the CAISO Tariff. “Annual Capacity Availability” has the meaning set forth in Exhibit P. “Anticipated Flexible Capacity” means the amount and category of Flexible Capacity identified on the Cover Sheet which Seller anticipates as of the Effective Date that the Facility will be qualified by the CAISO to provide to Buyer.
“Automated Dispatch System” or “ADS” has the meaning set forth in the CAISO Tariff. “Automatic Generation Control” or “AGC” has the meaning set forth in the CAISO Tariff.
“Auxiliary Use” means the Energy that is used (including Energy used during the charging or discharging of the Facility) within the Facility to power the motors, temperature control systems, control systems and other electrical loads that are integral to the charging or discharging of the Facility; provided, if Seller demonstrates prior to Commercial Operation to Buyer’s reasonable satisfaction that Station Use is not reasonably likely to exceed Auxiliary Use by more than two percent (2%) in each month, “Auxiliary Use” and “Station Use” shall be deemed to be interchangeable for purposes of this Agreement.
“Availability Notice” means Seller’s availability forecasts issued pursuant to Section 4.10 with respect to the Available Effective Capacity and Available Storage Capability, which shall include any updates from Seller with respect to Facility outages or availability as reported to CAISO (including as reported in OMS).
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3 “Availability Standards” has the meaning set forth in the CAISO Tariff or such other similar term as modified and approved by FERC hereafter to be incorporated in the CAISO Tariff.
“Available Effective Capacity” has the meaning in Exhibit P. “Available Storage Capability” has the meaning in Exhibit P. “Bankrupt” or “Bankruptcy” means with respect to any entity, such entity that (a) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Law, (b) has any such petition filed or commenced against it which remains unstayed or undismissed for a period of ninety (90) days, (c) makes an assignment or any general arrangement for the benefit of creditors, (d) otherwise becomes bankrupt or insolvent (however evidenced), (e) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (f) is generally unable to pay its debts as they fall due.
“Battery Charging Factor” means the quotient (expressed as a decimal) of (a) the Charging Energy after reaching 100% SOC or the first five (5) hours of the charging phase of the applicable Capacity Test, as applicable, divided by (b) the Installed Capacity x four (4) hours MWh, not to exceed one (1).
“Battery Discharging Factor” means the quotient (expressed as a decimal) of (a) the Facility Energy after the first four (4) hours of the discharging phase of the applicable Capacity Test, divided by (b) the Installed Capacity x four (4) hours MWh, not to exceed one (1). “BESS Equipment” means batteries, battery modules, onboard sensors, control components, inverters, transformers, or any of their components. “Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday in California. A Business Day begins at 8:00 a.m. and ends at 5:00 p.m. local time for the Party sending a Notice, or payment, or performing a specified action. “Buyer” has the meaning set forth on the Cover Sheet.
“Buyer Default” means an Event of Default of Buyer.
“Buyer Dispatched Test” has the meaning in Section 4.4(c). “Buyer’s Indemnified Parties” has the meaning set forth in Section 18.2. “CAISO” means the California Independent System Operator Corporation or any successor entity performing similar functions.
“CAISO Certification” means the certification and testing requirements for a storage unit set forth in the CAISO Tariff that are applicable to the Facility, including certification and testing
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4 for all Ancillary Services, PMAX, and PMIN associated with such storage units, that are applicable to the Facility.
“CAISO Charges Invoice” has the meaning set forth in Exhibit D. “CAISO Commercial Operation” has the meaning of “Commercial Operation” set forth in the CAISO Tariff.
“CAISO Dispatch” means any Charging Notice or Discharging Notice given by the CAISO to the Facility, whether through ADS, AGC or any successor communication protocol, communicating an Ancillary Service Award (as defined in the CAISO Tariff) or directing the Facility to charge or discharge at a specific MW rate for a specified period of time or amount of MWh.
“CAISO Grid” has the same meaning as “CAISO Controlled Grid” as defined in the CAISO Tariff.
“CAISO-Penalized Shortfall” has the meaning set forth in Section 3.5(b)(ii). “CAISO Tariff” means the California Independent System Operator Corporation Agreement and Tariff, Business Practice Manuals (BPMs), and Operating Procedures, including the rules, protocols, procedures and standards attached thereto, as the same may be amended or modified from time-to-time and approved by FERC.
“Calculation Interval” has the meaning set forth in Exhibit P. “Capacity Attribute” means any current or future defined characteristic, certificate, tag, credit, or accounting construct associated with the amount of power that the Facility can charge or discharge and deliver to the Delivery Point at a particular moment and that can be purchased, sold or conveyed under CAISO or CPUC market rules, including Resource Adequacy Benefits. “Capacity Availability Factor” has the meaning set forth in Exhibit C. “Capacity Availability Payment True-Up” has the meaning set forth in Exhibit C. “Capacity Availability Payment True-Up Amount” has the meaning set forth in Exhibit C.
“Capacity Damages” has the meaning set forth in Section 5 of Exhibit B. “Capacity Test” or “CT” means any test or retest of the Facility to establish the Installed Capacity, Effective Capacity or any other test conducted pursuant to Exhibit O. “Change of Control” means, except in connection with public market transactions of equity interests or capital stock of Seller’s Ultimate Parent, any circumstance in which Ultimate Parent ceases to own, directly or indirectly through one or more intermediate entities, more than fifty percent (50%) of the outstanding equity interests in Seller; provided, in calculating ownership percentages for all purposes of the foregoing:
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5 (a) any ownership interest in Seller held by Ultimate Parent indirectly through one or more intermediate entities shall not be counted towards Ultimate Parent’s ownership interest in Seller unless Ultimate Parent directly or indirectly owns more than fifty percent (50%) of the outstanding equity interests in each such intermediate entity; and (b) ownership interests in Seller owned directly or indirectly by any Lender (including any tax equity provider) or assignee or transferee thereof shall be excluded from the total outstanding equity interests in Seller;
provided further, a Change of Control shall not be deemed to have occurred as a result of a Permitted Transfer.
“Charging Energy” means all Energy delivered to the Delivery Point pursuant to a Charging Notice, as measured by the Facility Meter.
“Charging Notice” means the operating instruction, and any subsequent updates, given by Buyer’s SC or the CAISO to Seller, directing the Facility to charge at a specific MW rate for a specified period of time or amount of MWh; provided, any such operating instruction shall be in accordance with the Operating Restrictions. Any instruction to charge the Facility pursuant to a Buyer Dispatched Test shall be considered a Charging Notice. “COD Certificate” has the meaning set forth in Exhibit B. “Collateral Assignment Agreement” has the meaning set forth in Section 14.2. “Commercial Operation” has the meaning set forth in Exhibit B. “Commercial Operation Capacity Test” means the Capacity Test conducted in connection with Commercial Operation of the Facility, including any additional Capacity Test for additional capacity installed after the Commercial Operation Date pursuant to Section 5 of Exhibit B.
“Commercial Operation Date” means the date Commercial Operation is achieved. “Commercial Operation Delay Damages” means an amount equal to (a) the Development Security amount required hereunder, divided by (b) ninety (90). “Communications Protocols” means certain Operating Restrictions developed by the Parties pursuant to Exhibit Q that involve procedures and protocols regarding communication with respect to the operation of the Facility pursuant to this Agreement. “Compliance Actions” has the meaning set forth in Section 3.6(a). “Compliance Expenditure Cap” has the meaning set forth in Section 3.6. “Confidential Information” has the meaning set forth in Section 18.1. “Construction Start” has the meaning set forth in Exhibit B.
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6 “Construction Start Date” has the meaning set forth in Exhibit B. “Contract Term” has the meaning set forth in Section 2.1. “Contract Year” means a period of twelve (12) consecutive months. The first Contract Year shall commence on the Commercial Operation Date and each subsequent Contract Year shall commence on the anniversary of the Commercial Operation Date. “Costs” means, with respect to the Non-Defaulting Party, brokerage fees, commissions and other similar third-party transaction costs and expenses reasonably incurred by such Party either in terminating any arrangement pursuant to which it has hedged its obligations or entering into new arrangements which replace the Agreement; and all reasonable attorneys’ fees and expenses incurred by the Non-Defaulting Party in connection with terminating the Agreement. “Cover Sheet” means the cover sheet to this Agreement, which is incorporated into this Agreement.
“COVID-19” means the epidemic disease designated COVID-19 and the related virus designated SARS-CoV-2 and any mutations thereof, and the efforts of a Governmental Authority to combat such disease.
“CPM Price” means the CPM Soft Offer Cap (or its successor). “CPM Soft Offer Cap” has the meaning set forth in the CAISO Tariff. “CPUC” means the California Public Utilities Commission, or successor entity. “CPUC-Penalized Shortfall” has the meaning set forth in Section 3.5(b)(i). “CPUC System RA Penalty” means the penalties for “System Procurement Deficiency” adopted by the CPUC in its Decision 10-06-036, as may be updated or supplemented from time to time.
“Credit Rating” means, with respect to any entity, the rating then assigned to such entity’s unsecured, senior long-term debt obligations (not supported by third party credit enhancements) or if such entity does not have a rating for its senior unsecured long-term debt, then the rating then assigned to such entity as an issuer rating by Fitch, S&P or Moody’s. If ratings by Fitch, S&P and Moody’s are not equivalent, the lower rating shall apply. “Cure Plan” has the meaning set forth in Section 11.1(b)(iii). “Curtailment Order” means any of the following:
(a) CAISO orders, directs, alerts, or provides notice to a Party, to curtail deliveries of Facility Energy for the following reasons: (i) any System Emergency, (ii) any warning of an anticipated System Emergency, or warning of an imminent condition or situation, which jeopardizes CAISO’s electric system integrity or the integrity of other systems to which CAISO is connected, or (iii) in response to an Energy oversupply or potential Energy oversupply, and Buyer
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7 or the SC for the Facility submitted a Self-Schedule for the MWhs curtailed during the relevant time period;
(b) a curtailment ordered by the Transmission Provider for reasons including, but not limited to, (i) any situation that affects normal function of the electric system including, but not limited to, any abnormal condition that requires action to prevent circumstances such as equipment damage, loss of load, or abnormal voltage conditions, or (ii) any warning, forecast or anticipation of conditions or situations that jeopardize the Transmission Provider’s electric system integrity or the integrity of other systems to which the Transmission Provider is connected; (c) a curtailment ordered by CAISO or the Transmission Provider due to a Transmission System Outage; or
(d) a curtailment in accordance with Seller’s obligations under its Interconnection Agreement with the Transmission Provider or distribution operator. “Daily Delay Damages” means an amount equal to (a) the Development Security amount required hereunder, divided by (b) one hundred twenty (120). “Damage Payment” means the amount to be paid by the Defaulting Party to the Non-Defaulting Party after a Terminated Transaction occurring prior to the Commercial Operation Date, in a dollar amount set forth in Section 11.3(a).
“Day-Ahead Market” has the meaning set forth in the CAISO Tariff. “Day-Ahead Schedule” has the meaning set forth in the CAISO Tariff. “Defaulting Party” has the meaning set forth in Section 11.1(a). “Delay Damages” means Daily Delay Damages and Commercial Operation Delay Damages.
“Delivery Point” has the meaning set forth in Exhibit A. “Delivery Term” shall mean the period of Contract Years set forth on the Cover Sheet beginning on the Commercial Operation Date, unless terminated earlier in accordance with the terms and conditions of this Agreement.
“Development Cure Period” has the meaning set forth in Exhibit B. “Development Security” means (a) cash or (b) a Letter of Credit in the amount specified for the Development Security on the Cover Sheet.
“Discharging Notice” means the operating instruction, and any subsequent updates, given by Buyer’s SC or the CAISO to the Facility, directing the Facility to discharge Facility Energy at a specific MW rate for a specified period of time or to an amount of MWh. Any instruction to discharge the Facility pursuant to a Buyer Dispatched Test shall be considered a Discharging Notice.
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8 “Disclosing Party” has the meaning set forth in Section 18.2. “Dispatch Notice” means any Charging Notice, Discharging Notice and any subsequent updates thereto, given by the CAISO, Buyer or Buyer’s SC, to Seller, directing the Facility to charge or discharge Facility Energy at a specific MW level to a specified Stored Energy Level; provided, any such operating instruction or updates shall be in accordance with the Operating Restrictions and the CAISO Tariff. Dispatch Notices may be communicated electronically (i.e. through ADS, AGC or e-mail), or telephonically, in accordance with the procedures set forth in Section 4.7. Telephonic or other verbal communications may be documented (either recorded by tape, electronically or in writing) without further notification to, or consent being required from, either Party with respect to such Party being recorded by the other, including by Buyer’s designated Scheduling Coordinator.
“Early Termination Date” has the meaning set forth in Section 11.2(a). “Effective Capacity” means the lesser of (a) PMAX, and (b) maximum dependable operating capacity of the Facility to discharge Energy for four (4) hours of continuous discharge, as measured in MW at the Delivery Point (i.e., measured at the Facility Meter and adjusted for Electrical Losses to the Delivery Point) as determined pursuant to the most recent Capacity Test (including the Commercial Operation Capacity Test), and as evidenced by a certificate substantially in the form attached as Exhibit I hereto, in either case (a) or (b) up to but not in excess of (i) the Guaranteed Capacity (with respect to a Commercial Operation Capacity Test) or (ii) the Installed Capacity (with respect to any other Capacity Test). “Effective Date” has the meaning set forth on the Preamble. “Effective Flexible Capacity” or “EFC” means the effective flexible capacity (in MWs) of the Facility pursuant to the counting conventions set forth in the Resource Adequacy Rulings and the CAISO Tariff, which such flexible capacity may be used to satisfy Flexible RAR. “Efficiency Rate” means the rate calculated as the quotient of (a) the sum of (i) Facility Energy plus (ii) Idle Period Auxiliary Use for which Seller is required to reimburse Buyer, divided by (b) Energy In, based on actual Facility operations for each applicable month, adjusted to reflect the nearest Facility Energy and Energy In values that would have resulted in equal Stored Energy Levels at the beginning of the first Calculation Interval and the end of the last Calculation Interval of such month.
“Efficiency Rate Factor” has the meaning set forth in Exhibit C. “Electrical Losses” means all transmission or transformation losses (a) between the Delivery Point and the Facility associated with delivery of Charging Energy, and (b) between the Facility and the Delivery Point associated with delivery of Facility Energy. “Emission Reduction Credits” or “ERCs” means emission reductions that have been authorized by a local air pollution control district pursuant to California Division 26 Air Resources; Health and Safety Code Sections 40709 and 40709.5, whereby a district has established a system by which all reductions in the emission of air contaminants that are to be used to offset certain
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9 future increases in the emission of air contaminants shall be banked prior to use to offset future increases in emissions.
“Energy” means electrical energy, measured in kilowatt-hours, megawatt-hours, or multiple units thereof.
“Energy In” means the total Energy delivered by Buyer to the Delivery Point pursuant to one or more Charging Notices as measured at the Facility Meter (without adjusting for Electrical Losses or Station Use).
“Energy Management System” or “EMS” means the Facility’s energy management system.
“Energy Out” means the total Energy delivered to the Delivery Point pursuant to one or more Discharging Notices during the relevant period as recorded by the CAISO. “Environmental Costs” means costs incurred in connection with acquiring and maintaining all environmental permits and licenses for the Facility, and the Facility’s compliance with all applicable environmental laws, rules and regulations, including capital costs for pollution mitigation or installation of emissions control equipment required to permit or license the Facility, all operating and maintenance costs for operation of pollution mitigation or control equipment, costs of permit maintenance fees and emission fees as applicable, and the costs of all Emission Reduction Credits or Marketable Emission Trading Credits required by any applicable environmental laws, rules, regulations, and permits to operate, and costs associated with the disposal and clean-up of hazardous substances introduced to the Site, and the decontamination or remediation, on or off the Site, necessitated by the introduction of such hazardous substances on the Site.
“Event of Default” has the meaning set forth in Section 11.1. “Expected Commercial Operation Date” has the meaning set forth on the Cover Sheet. “Expected Construction Start Date” has the meaning set forth on the Cover Sheet. “Facility” means the energy storage facility described on the Cover Sheet and in Exhibit A (including the operational requirements of the energy storage facility), located at the Site and including mechanical equipment and associated facilities and equipment required to deliver Product (but excluding any Shared Facilities), as such storage facility may be expanded or otherwise modified from time to time in accordance with the terms hereof. “Facility Energy” means the Energy delivered from the Facility to the Delivery Point pursuant to a Discharging Notice, as measured by the Facility Meter, net of Electrical Losses and Station Use. All Facility Energy shall have originally been delivered to the Facility as Charging Energy.
“Facility Meter” means a CAISO-approved bi-directional revenue quality meter or meters (with a 0.3 accuracy class), CAISO approved metering plan including a SQMD Plan, CAISO-approved data processing gateway or remote intelligence gateway, telemetering equipment and
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10 data acquisition services sufficient for monitoring, recording and reporting, in real time, the amount of Charging Energy delivered to the Facility and the amount of Facility Energy delivered to the Delivery Point for the purpose of invoicing in accordance with Section 8.1. The Facility may contain multiple measurement devices that will make up the Facility Meter, and, unless otherwise indicated, references to the Facility Meter shall mean all such measurement devices and the aggregated data of all such measurement devices, taken together. “FCDS Notice” has the meaning set forth in Section 2.1(b). “FERC” means the Federal Energy Regulatory Commission or any successor government agency.
“Financial Close” means Seller and/or one of its Affiliates on Seller’s behalf has obtained approval from its operating committee to commit capital sufficient for the full construction of the Facility, and Seller has delivered to Buyer documentation reasonably satisfactory to Buyer evidencing the foregoing.
“Fitch” means Fitch Ratings Ltd., or its successor.
“Flexible Capacity” means, with respect to any particular Showing Month, the number of MWs of Product which are eligible to satisfy Flexible RAR. “Flexible RAR” means the flexible capacity requirements established for load-serving entities by the CAISO pursuant to the CAISO Tariff, the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority.
“Force Majeure Event” has the meaning set forth in Section 10.1. “Force Majeure Unavailability” has the meaning set forth in Exhibit C. “Full Capacity Deliverability Status” or “FCDS” has the meaning set forth in the CAISO Tariff.
“Gains” means, with respect to any Party, an amount equal to the present value of the economic benefit to it, if any (exclusive of Costs), resulting from the termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining the economic benefit to a Party may include, without limitation, reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-Defaulting Party, including without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., SP-15), all of which should be calculated for the remaining Contract Term, and include the value of Green Attributes and Capacity Attributes.
“GHG Regulations” means Title 17, Division 3 (Air Resources), Chapter 1 (Air Resources Board), Subchapter 10 (Climate Change), Article 5 (Emissions Cap), Sections 95800 to 96023 of the California Code of Regulations, as amended or supplemented from time to time.
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13 “Investment Grade Credit Rating” means a Credit Rating of BBB- or better from S&P or Fitch, or a Credit Rating of Baa3 or better from Moody’s. “IP Indemnity Claim” has the meaning set forth in Section 16.1(b). “ITC” means the investment tax credit established pursuant to Section 48 or 48E of the United States Internal Revenue Code of 1986, as such Law may be amended or superseded. “Joint Powers Act” means the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.).
“Joint Powers Agreement” means that certain Joint Powers Agreement dated June 27, 2017, as amended from time to time, under which Buyer is organized as a Joint Powers Authority in accordance with the Joint Powers Act.
“kWh” means a kilowatt-hour measured in alternating current, unless expressly stated in terms of direct current.
“Law” means any applicable law, statute, rule, regulation, decision, writ, order, decree or judgment, permit or any interpretation thereof, promulgated or issued by a Governmental Authority.
“Lender” means, collectively, any Person (a) providing senior or subordinated construction, interim, back leverage or long-term debt, equity or tax equity financing or refinancing for or in connection with the development, construction, purchase, installation or operation of the Facility, whether that financing or refinancing takes the form of private debt (including back-leverage debt), equity (including tax equity), public debt or any other form (including financing or refinancing provided to a member or other direct or indirect owner of Seller), including any equity or tax equity investor directly or indirectly providing financing or refinancing for the Facility or purchasing equity ownership interests of Seller and/or its Affiliates, and any trustee or agent or similar representative acting on their behalf, (b) providing interest rate or commodity protection under an agreement hedging or otherwise mitigating the cost of any of the foregoing obligations and/or (c) participating in a lease financing (including a sale leaseback or leveraged leasing structure) with respect to the Facility. “Letter(s) of Credit” means one or more irrevocable, standby letters of credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch, having assets of at least $10 Billion, and with such bank having a Credit Rating of at least A- from S&P or A3 from Moody’s, in a form substantially similar to the letter of credit set forth in Exhibit K. “Licensed Professional Engineer” means an independent, professional engineer selected by Seller and reasonably acceptable to Buyer, licensed in the State of California. “Local Capacity Area Resource” has the meaning set forth in the CAISO Tariff. “Local RAR” means the local Resource Adequacy Requirements established for load-serving entities by the CAISO pursuant to the CAISO Tariff, the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority. “Local RAR” may also be known as
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14 local area reliability, local resource adequacy, local resource adequacy procurement requirements, or local capacity requirement in other regulatory proceedings or legislative actions. “Losses” means, with respect to any Party, an amount equal to the present value of the economic loss to it, if any (exclusive of Costs), resulting from termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining economic loss to a Party may include, without limitation, reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-Defaulting Party, including without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., SP-15), all of which should be calculated for the remaining Contract Term and must include the value of Green Attributes, Capacity Attributes, and Incentives.
“Low Operating Limit” or “LOL” means a real-time calculated number representing the instantaneous maximum power level at which the Facility can charge Energy to the Facility, as communicated via the EMS.
“Marketable Emission Trading Credits” means emissions trading credits or units pursuant to the requirements of California Division 26 Air Resources; Health & Safety Code Section 39616 and Section 40440.2 for market based incentive programs such as the South Coast Air Quality Management District’s Regional Clean Air Incentives Market, also known as RECLAIM, and allowances of sulfur dioxide trading credits as required under Title IV of the Federal Clean Air Act (42 U.S.C. § 7651b (a) to (f)).
“Master File” has the meaning set forth in the CAISO Tariff. “Material Permits” means all permits, consents, licenses, approvals, or authorizations from any Governmental Authority required for Seller to commence construction, as set forth on Exhibit V.
“Milestones” means the significant permitting, interconnection, financing and construction milestones set forth on the Cover Sheet.
“Monthly Capacity Payment” means the payment required to be made by Buyer to Seller each month of the Delivery Term as compensation for the Product, as calculated in accordance with Exhibit C.
“Monthly Forecast” has the meaning set forth in Section 4.10(a). “Monthly SQMD Charge” has the meaning set forth in Section 4.1(a). “Moody’s” means Moody’s Investors Service, Inc., or its successor. “MW” means megawatts in alternating current, unless expressly stated in terms of direct current.
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15 “MWh” means megawatt-hour measured in alternating current, unless expressly stated in terms of direct current.
“NEECH” has the meaning set forth in the definition of Affiliate. “NEER” means NextEra Energy Resources, LLC.
“NEOP” has the meaning set forth in the definition of Affiliate. “NEP” has the meaning set forth in the definition of Affiliate. “NERC” means the North American Electric Reliability Corporation or any successor entity.
“Net Qualifying Capacity” or “NQC” has the meaning set forth in the CAISO Tariff. “Network Upgrades” has the meaning set forth in the CAISO Tariff. “Non-Defaulting Party” has the meaning set forth in Section 11.2. “Notice” shall, unless otherwise specified in the Agreement, mean written communications by a Party to be delivered by hand delivery, United States mail, next Business Day courier service, or electronic messaging (e-mail).
“Operating Restrictions” means those restrictions, rules, requirements, and procedures set forth in Exhibit Q.
“Outage Management System” or “OMS” has the meaning set forth in the CAISO Tariff. “Outage Schedule” has the meaning set forth in Section 4.11(a)(i). “Party” has the meaning set forth in the Preamble.
“Performance Guarantees” has the meaning set forth in Section 4.3(b). “Performance Security” means (i) cash or (ii) a Letter of Credit, or (iii) a Guaranty in the amount specified for the Performance Security on the Cover Sheet. “Permitted Transfer” means each of the following transactions:
(a) Transactions among Affiliates of Seller, including any corporate reorganization, merger, combination or similar transaction or transfer of assets or ownership interests involving Seller or its Affiliates; provided (i)(A) Ultimate Parent retains the authority, directly or indirectly, to control Seller (or if applicable, the surviving entity), or (B) a wholly-owned, indirect subsidiary of Ultimate Parent operates the Facility, and (ii) if Seller is not the surviving entity, the transferee (A) executes and delivers to Buyer a written agreement under which the transferee assumes in writing all of Seller’s duties and obligations under this Agreement and otherwise agrees to be bound by all of the terms and conditions of this Agreement, and (B) meets the Seller credit security requirements;