Board of Directors of the
Clean Power Alliance of Southern California
Regular Meeting
Thursday, July 2, 2026
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
Closed Session Room
100 Civic Center Way
Calabasas, CA 91301
Ventura County Government Center
CEO Point Mugu Meeting Room
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
357 Van Ness Way, Suite 90
Torrance, CA 90501
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 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.
Agenda Page 1
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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 June 4, 2026, Board of Directors Meeting
2. Approve and Authorize the Chief Executive Officer to Execute a Memorandum of Understanding with the U.S. Green Building Council California to Continue to Provide Sustainable Wildfire Recovery Resources and a Training Program for Building Contractors and Construction Workers in the Amount of $70,000 using Community Benefit Funds from Executed Power Purchase Agreements
3. Approve and Authorize the Chief Executive Officer to Execute an Amendment to the Professional Services Agreement with Bloom Ads Global Media Group to Increase the Contract Value by $1,088,876 for a Total Not to Exceed Amount of $3,744,203 for the Final Renewal Term (FY 2026/27) for Media Buying and Related Services
4. Approve and Authorize the Chief Executive Officer to Execute an Amendment to Increase the Contract Value of the Professional Service Agreement with Pastilla, Inc. by $2,251,707 for a Total Not to Exceed Amount of $4,106,137 for the Final Renewal Term (FY 2026/27) for Creative, Web Development, and Web Maintenance Services
5. Adopt Resolution No. 26-07-109 to Approve Proposed Energy Risk Management Policy Amendments as Recommended by the Energy Planning & Resources Committee
6. Receive and File June 2026 Bill Positions Monthly Report
7. Receive and File Monthly Community Advisory Committee Report Agenda Page 2
REGULAR AGENDA
Action Items
8. Approve and Authorize the Chief Executive Officer to Execute a 20- Year 200 MW Solar + 200 MW Storage Renewable Power Purchase Agreement with 22SV 8me LLC for the Rexford II Project
9. (A) Adopt Resolution No. 26-07-110 Approving the Customer Contract Pricing Policy; and,
(B) Approve and Authorize the Chief Executive Officer to Execute an Electricity Services Agreement with The Claremont Colleges, Inc., Consistent with the Policy
10.Receive Presentation on the 2026 Integrated Resources Plan (IRP) and Provide Feedback; and, Delegate Authority to the Energy Planning & Resources Committee to Approve the 2026 IRP for Filing with the California Public Utilities Commission
COMMITTEE CHAIR UPDATES
Director Cedric Hicks, Chair, Legislative & Regulatory Committee Director Susan Santangelo, Chair, Finance Committee
Director Jeff Maloney, Chair, Energy Planning & Resources Committee
MANAGEMENT REPORT
BOARD MEMBER COMMENTS
ADJOURN – NO MEETING IN AUGUST 2026. NEXT REGULAR MEETING SEPTEMBER 3, 2026
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 3
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 4
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 5
Staff Report – Agenda Item 1
To: Board of Directors
Subject: Approve Minutes from the June 4, 2026, Board of Directors Meeting
Date: July 2, 2026
RECOMMENDATION
Approve.
ATTACHMENT
1. Minutes
Agenda Page 6
Board of Directors Item 1
MINUTES
Board of Directors of the
Clean Power Alliance of Southern California
Regular Meeting
Thursday, June 4, 2026, 2:00 p.m.
Meeting videos are available on CPA's YouTube Channel.
http://www.youtube.com/@CPApublicmeetings
Board members participated from the following locations:
Calabasas City Hall
Council Conference Room
100 Civic Center Way
Calabasas, CA 91301
Clean Power Alliance
Diana Mahmud Board Room
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Whittier City Hall
Admin Conference Room
13230 Penn Street
Whittier, CA 90602
Ventura County Government Center
Point Mugu Conference Room, 4th Floor
Hall of Administration
800 South Victoria Avenue
Ventura, CA 93009
South Bay Cities Council of Governments
Conference Room
357 Van Ness Way, Suite 110
Torrance, CA 90501
The William Smith Inn
600 Castle Street
Geneva, NY 14456
CALL TO ORDER & PLEDGE OF ALLEGIANCE
Chair Klein Lopez called the meeting to order at 2:09 p.m. and Ted Bardacke, Chief Executive Officer, led the Pledge of Allegiance.
ROLL CALL
Gabriela Monzon, Clerk of the Board, conducted roll call.
Roll Call
1 Agoura Hills Deborah Klein Lopez Chair Present
2 Alhambra Jeff Maloney Director Present
3 Arcadia Absent
4 Beverly Hills Julian Gold Alternate Present
5 Calabasas Ed Albrecht Director Remote
6 Camarillo Susan Santangelo Director Remote
7 Carson Cedric Hicks Director Remote
8 Claremont Corey Calaycay Director Present
9 Culver City Yasmine-Imani McMorrin Director Present
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Board of Directors Item 1
10 Downey Mario Trujillo Director Remote
11 Hawaiian Gardens Absent
12 Hawthorne Alex Monteiro Director Present
13 Hermosa Beach Ray Jackson Director Remote
14 La Cañada Flintridge Stephanie Fossan Director Present 15 Los Angeles County Rita Kampalath Alternate Present
16 Lynwood Juan Muñoz-Guevara Director Present
17 Malibu Marianne Riggins Director Remote
18 Manhattan Beach David Lesser Alternate Remote
19 Monrovia Edward Belden Director Remote
20 Moorpark Chris Barrett Director Remote
21 Ojai Michelle Ellison Alternate Remote
22 Oxnard Bert Perello Director Remote
23 Paramount Michelle Muller Alternate Remote
24 Port Hueneme Absent
25 Redondo Beach Brad Waller Director Present
26 Rolling Hills Estates Debby Stegura Director Remote
27 Santa Monica Gleam Davis Alternate Present
28 Santa Paula Jenny Crosswhite Director Present
29 Sierra Madre Robert Parkhurst Director Present
30 Simi Valley Rocky Rhodes Director Present
31 South Pasadena Omari Ferguson Director Present
32 Temple City Ed Chen Director Present
33 Thousand Oaks David Newman Director Remote
34 City of Ventura Absent
35 Ventura County Vianey Lopez Vice
Chair Present
36 West Hollywood Chelsea Byers Alternate Present
37 Westlake Village Kristopher Galvez Alternate Remote
38 Whittier Mary Ann Pacheco Director Remote
All votes are unanimous unless otherwise stated.
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Board of Directors Item 1
GENERAL PUBLIC COMMENT
There was no public comment.
CONSENT AGENDA
1. Approve Minutes from the May 14, 2026, Board of Directors Meeting
2. Approve and Authorize the Chief Executive Officer to Execute Amendments to:
A. The 20-year Renewable Power Purchase Agreement with Fillmore Sun Farms LLC for the 2.46 MW Fillmore Project
B. The 20-year PPA with Saticoy Sun Farms LLC for the 4 MW Saticoy Project
3. Approve and Authorize the Chief Executive Officer to Execute a Letter Agreement Extending the Guaranteed Construction Start Date Under the 20-year 140 MW Energy Storage Agreement with Desert Sands Energy II, LLC from June 1, 2026 to December 15, 2026
4. Receive and File Fiscal Year (FY) Q3 Financial Report
5. Receive and File Q1 2026 Risk Management Team Report January 1, 2026, through March 31, 2026
6. Receive and File Quarterly Customer Programs and Member Agency Programs Reports
7. Receive and File Quarterly Communications Report (February – April 2026)
8. Receive and File Monthly Bill Positions Report
9. Receive and File Monthly Community Advisory Committee Report Motion: Director Calaycay, Claremont
Second: Director Rhodes, Simi Valley
Vote: The consent agenda was approved by roll call vote.
REGULAR AGENDA
10. Adopt Resolution 26-06-107 to Approve New Rates for Phase 1-7 Customers to Implement New CPA Rates Effective on July 1, 2026, According to the FY 2026/27 Rate Approach Adopted by the CPA Board on May 14, 2026
Ted Bardacke, Chief Executive Officer, introduced the item and noted that the proposed rates implement the FY 2026/27 rate-setting approach previously adopted by the Board. The proposed rates maintain CPA’s commitment to competitive rates while preserving financial stability and reserves in a rapidly changing energy market. Mr. Bardacke reviewed the proposed rates, projected customer bill impacts, and explained that the rates would result in lower generation charges for most customers. Staff noted that this represents CPA’s fifth rate reduction in approximately two years.
Director Gold commented that CPA continues to face challenges communicating the difference between generation charges and utility delivery charges; improving public understanding should remain a communications priority. Director Lesser agreed and requested the information slide so member agencies could use it to explain customer bills and CPA's rate reductions. Mr. Bardacke agreed and stated that staff would distribute informational material; noted that staff continue to emphasize that utility delivery charges, rather than CPA generation rates, are the primary driver of recent increases in customer bills.
Agenda Page 9
Board of Directors Item 1
Director Belden commented that Southern California Edison (SCE) bills remain difficult for customers to understand; encouraged continued efforts to improve bill presentation and customer understanding. In response to a comment from Chair Klein Lopez about the limitations on bill presentation, Mr. Bardacke explained that CPA has limited space on SCE bills. CPA can use only one line on the face of the bill and a single informational page later in the billing statement, limiting CPA's ability to communicate directly through the utility bill.
Vice Chair Lopez expressed support for the previous comments and suggested that member agencies invite CPA staff to present at council meetings to improve public understanding of its services and customer bills. Mr. Bardacke noted that expanding customer education and communications has been identified as a budget priority and remains a focus of both the Board and staff. Director Hicks requested that CPA prepare communication materials and press information that Board Members could share with their respective member agencies and communities. He also requested an update regarding CPA's efforts to pursue transmission legislation. Mr. Bardacke responded that the legislation did not advance during the current legislative session. Staff is evaluating the feasibility of creating a separate joint powers authority to pursue transmission opportunities and expects to provide an update in the fall. CPA may also revisit legislative options during the next session. Mr. Bardacke also encouraged member agencies to invite CPA staff to present at council meetings and noted that the proposed FY 2026/27 budget includes additional funding for customer education, community outreach, and an additional community engagement staff position to expand those efforts.
Director Ferguson asked how utility delivery charges are reviewed and validated through the California Public Utilities Commission regulatory process and expressed concern regarding oversight of utility infrastructure investments and customer costs. Matt Langer, Chief Operating Officer, explained the utility rate approval process at the CPUC; CPA routinely participates in regulatory proceedings and has identified errors during those reviews but acknowledged that oversight responsibilities are shared among multiple parties and CPUC staff have limited resources. Director Ferguson commented that additional accountability may be warranted to address gaps when projected infrastructure investments do not result in the anticipated improvements for customers. Staff acknowledged those concerns and offered to continue the discussion.
Motion: Director Hicks, Carson
Second: Director Ferguson, South Pasadena
Vote: Item 10 was approved by roll call vote.
11. Adopt Resolution 26-06-108 to Approve the Budget Policy and Approve Proposed FY 26/27 and FY 27/28 Budgets, as Recommended by the Finance Committee David McNeil, Chief Financial Officer, presented the proposed Budget Policy and Fiscal Years 2026/27 and 2027/28 budgets. Mr. McNeil reviewed major budget assumptions, revenue and expenditure projections, reserve targets, staffing plans, customer programs, communications initiatives, technology investments, and operational priorities. Mr. McNeil noted that the proposed budget continues CPA’s focus on customer education, community programs, technology modernization, and operational efficiency while maintaining strong financial reserves. Staff also discussed investments related to cybersecurity, software systems, reporting
Agenda Page 10
Board of Directors Item 1
capabilities, and customer engagement efforts. Mr. McNeil thanked the Finance Committee for its work throughout the budget development process, recognizing the Committee's review of CPA's reserve policy, fiscal stabilization fund policy, investment policy, banking agreements, auditor selection, and proposed two-year budget. Chair Klein Lopez echoed those comments and recognized the significant time commitment required of the Finance Committee.
Finance Committee Chair Santangelo stated that the Committee reviewed and unanimously recommended approval of the policy and budgets.
Director Parkhurst confirmed that CPA would maintain a reserve level of approximately 57% despite utilizing $54 million from the Fiscal Stabilization Fund and commented that the organization's financial position was impressive. Director Albrecht thanked Mr. McNeil and staff for their work in developing the proposed budgets. He stated that the thorough presentations and supporting materials allowed the Committee to carefully evaluate the proposed budgets and policy recommendations.
Motion: Director Albrecht, Calabasas
Second: Director Newman, Thousand Oaks
Vote: Item 11 was approved by roll call vote.
12. A) Elect two Regular Directors to the Executive Committee At-Large Positions Representing Jurisdictions in Los Angeles County for Terms Starting July 2026 Through June 2028; and B) Elect one Regular Director to the Executive Committee At-Large Position Representing Jurisdictions in Ventura County for a Term Starting July 2026 Through June 2028
Los Angeles County Directors elected Director Edward Belden, City of Monrovia, and reelected Director Alex Montiero, City of Hawthorne, as at-large Los Angeles County representatives on the Executive Committee.
Ventura County Regular Directors unanimously elected Director Jenny Crosswhite, City of Santa Paula, as an at-large Ventura County representative on the Executive Committee.
Chair Klein Lopez congratulated the elected Directors and thanked all nominees for their willingness to serve.
COMMITTEE CHAIR UPDATES
Director Parkhurst, Energy Planning & Resources Committee Chair, reported that the Committee discussed CPA's upcoming Integrated Resource Plan filing, which would be presented to the Board at the July 2 meeting, then returned to the Committee for final review before the filing deadline.
MANAGEMENT REPORT
Mr. Bardacke announced that the SunZia Wind Project achieved commercial operations on May 20, and the project's operation has contributed to record levels of overnight renewable energy generation in California, with renewable resources supplying approximately 60% of the state's nighttime electricity demand. Mr. Bardacke also discussed CPA's continued investment in geothermal resources and noted recent federal
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Board of Directors Item 1
legislative support for expanding geothermal development. Mr. Bardacke also announced that CPA had been certified as a "Great Place to Work" for the third consecutive year. Mr.
Bardacke reminded Directors of the September 18 Board retreat and the July 2 Board meeting.
OUTGOING BOARD CHAIR RECOGNITION
Mr. Bardacke recognized Chair Klein Lopez for her leadership and service as Board Chair and unveiled a new plaque recognizing past Board Chairs. Mr. Bardacke also recognized Director Gold for his many years of service to CPA as he concludes his Board service at the end of June.
Vice Chair Lopez and Director Kampalath presented Chair Klein Lopez with commendations in recognition of her service. Directors Monteiro, Maloney, and Parkhurst echoed appreciation for Chair Klein Lopez’s thoughtful approach to leadership and commitment to advancing CPA's mission. Director Gold expressed appreciation for Chair Klein Lopez's collaborative leadership and reflected on his work at CPA and the collegial atmosphere of the Board. Chair Klein Lopez thanked the Board and staff for their partnership and reflected on the organization's accomplishments during her tenure as Chair.
BOARD MEMBER COMMENTS
Director Calaycay commented on CPA’s accomplishments, expressed appreciation for Chair Klein Lopez's leadership and Director Gold's years of service, and introduced exchange students participating in internships with local organizations.
REPORT FROM THE CHAIR
None.
ADJOURN
Chair Klein Lopez adjourned the meeting at 3:53 p.m.
Agenda Page 12
Staff Report – Agenda Item 2
To: Board of Directors
From: Xico Manarolla, Program Manager, Electrification
Reviewed by: Joanne O’Neill, Senior Director, Customer Programs Matt Langer, Chief Operating Officer
Francis Choi, Assistant General Counsel
Approved By: Ted Bardacke, Chief Executive Officer
Subject: USGBC-CA MOU to Expand Contractor Wildfire Training Date: July 2, 2026
RECOMMENDATION
Approve and authorize the Chief Executive Officer to execute a Memorandum of Understanding (MOU) with the U.S. Green Building Council California (USGBC-CA) to continue to provide sustainable wildfire recovery resources and a training program for building contractors and construction workers in the amount of $70,000 using Community Benefit funds from executed Power Purchase Agreements (PPAs).
BACKGROUND
A series of devastating wildfires occurred in January 2025 causing extensive damage and loss of life. The Eaton Fire impacted CPA customers in the unincorporated Los Angeles County community of Altadena and the city of Sierra Madre and the Palisades Fire impacted CPA customers in Malibu and the Pacific Palisades. In total, the two fires destroyed the homes and businesses of at least 7,240 CPA customers. CPA is committed to helping our customers and communities become more resilient to future fires and to recover and rebuild from this devastation.
Agenda Page 13
Board of Directors Item 2
In April 2025, the Board approved a group of fire response initiatives, which included providing a $50,000 grant to USGBC-CA for sustainable wildfire recovery resources and training programs for building contractors and construction workers. CPA subsequently entered into a Memorandum of Understanding with USGBC-CA to expand the number of architecture, engineering, and construction professionals certified under USGBC-CA’s Wildfire Rebuilding Certificate by providing in-person, hybrid, and online trainings. Over the course of one year, CPA’s grant provided training for 190 contractors through eight separate trainings. Of these trainings, two were virtual, and six were in-person/hybrid in Pacific Palisades and Altadena. Two in-person trainings were conducted in Spanish and the other six were in English.
Since 2018, USGBC-CA has trained over 2,000 construction professionals through these Wildfire Defense Certificate Training courses.
DISCUSSION
Staff propose providing $70,000 in grant funding for USGBC-CA for two years to provide additional workforce development for sustainable wildfire recovery resources and training programs for contractors. With CPA‘s funding, USGBC-CA would host ten 2½ hour in-person or hybrid trainings within CPA’s service territory, which will be available in either English or Spanish. CPA’s funding will also allow USGBC-CA to update online educational content and the creation of on-demand online courses in Spanish to allow for ongoing access for construction professionals in both languages.
These trainings increase the number of architecture, engineering, and construction industry members trained in wildfire defense to improve the quality and long-term impacts of rebuilding with resiliency and sustainability in mind.
Community Benefit funds secured from previously executed PPAs would be used to fund the grant to USGBC-CA.
Agenda Page 14
Board of Directors Item 2
USGBC-CA will provide quarterly reporting of key metrics and participant survey results as detailed in the MOU. USGBC-CA will collaborate with CPA to develop and implement outreach strategies that focus on recruiting and enrolling contractors that serve CPA member communities.
FISCAL IMPACT
Since the funding under this MOU will come from Community Benefits funds, it will not have an impact on CPA’s Fiscal Year 2026/27 budget. If this allocation is approved, $960,000 will remain in unallocated Community Benefits funds.
ATTACHMENT
1. Memorandum of Understanding with U.S. Green Building Council California
Agenda Page 15
1 MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding (“MOU”), made as of the last date signed below (the “Effective Date”), by and between California Green Building Council (doing business as: USGBC California, “USGBC-CA”) and Clean Power Alliance of Southern California (“CPA”), referred to individually or collectively as “Party” or “Parties,” is to begin workforce development for sustainable wildfire recovery resources and training programs for contractors, as described in more detail below.
RECITALS
WHEREAS, CPA desires to support clean energy, sustainability, and resilience workforce development efforts in its service territory;
WHEREAS, CPA is operating a Workforce Development grant program that supports union and non-union training programs that give workers the skills necessary to facilitate building and transportation electrification, and USGBC-CA has been selected to be a grantee; WHEREAS, CPA and USGBC-CA entered into a Memorandum of Understanding, dated as of April 15, 2025, whereby CPA agreed to provide a grant to USGBC-CA to develop materials and train and certify students; and
WHEREAS, CPA desires to provide USGBC-CA with additional funds from CPA’s Workforce Development grant program to conduct the trainings and related activities, as stated within this MOU.
NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein, it is mutually understood and agreed by and between the Parties as follows:
1. Term. This MOU shall begin on the Effective Date and terminate (a) on July 31, 2028; or (b) in accordance with CPA’s termination for convenience rights as provided in Section 2 (“Term”).
2. Termination. CPA may terminate this MOU for convenience and without liability to USGBC-CA upon giving USGBC-CA 90 days prior written notice.
3. CPA Grant. CPA shall pay to USGBC-CA the amount of $70,000 in total in consideration of USBGC-CA’s obligations, as specified in Section 4 below, over the Term of this MOU (the “Grant”); provided that, CPA shall make no Grant payments subsequent to a termination for convenience of this MOU as provided in Section 2. The Grant shall be paid in the following increments:
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2 a. $10,000 to be paid within 30 days of the Effective Date for updated development of rebuilding transition period resources for homeowners, tenants, and multifamily resources and materials, including USGBC-CA's “Wildfire Rebuilding Guide,” USGBC-CA’s wildfire defense website (“Website”) , USGBC-CA’s online webinar platform that trains industry professionals on home hardening and defensible space (“ Learning Management System”), training content, marketing materials, and other items subject to CPA’s prior written approval. b. $5,000 paid upon completion of each in-person and hybrid wildfire rebuilding contractor training (“Training”) to provide architecture, engineering, and construction professionals with a USGBC-CA wildfire rebuilding certificate (“Wildfire Rebuilding Certificate”), as described further in Section 4 below. No more than ten (10) classes of the Training shall be funded by the Grant, which shall amount to a total of no greater than $50,000.
c. $10,000 paid upon the completion of the development and launch of an online, on-demand version of USGBC-CAs wildfire rebuilding contractor training (“Asynchronous Learning Module”) in Spanish that will allow contractors to obtain a Wildfire Rebuilding Certificate from the comfort of their homes at hours that better fit in their workdays.
d. Additional expenses with CPA’s prior written approval, subject to CPA’s sole discretion.
4. USGBC-CA Obligations. In consideration of the Grant payments set forth in this MOU, USGBC-CA shall apply Grant payments in accordance with the terms, conditions, and specifications set forth herein, including as follows:
a. Updates to USGBC-CA’s Professional Directory (“Professional Directory”), a searchable online database of contractors who have completed USGBC-CAs certificate programs and registered for directory. Updates to the directory will include improved searchability, badges for training, and easier content updates for professionals.
b. Updates to the Website and Wildfire Rebuilding Guide, including updates to marketing language in both English and Spanish.
c. Perform community engagement activities as described below, including ongoing adjustments to the Website and Learning Management System to improve equitable access to resources for residents and industry professionals in CPA’s service territory throughout the duration of the Term. i. Conduct ten (10) Trainings, which shall include in-person and virtual trainings, where approximately 4 of the Trainings will be offered in Spanish, or as mutually agreed upon by both parties. Trainings will be held in areas affected by the Palisades Fire and Eaton Fire, as mutually agreed upon by both parties. Materials and communications will be provided in English and Spanish.
Agenda Page 17
3 ii. Ongoing development and launch of the Spanish Asynchronous Learning Module and content updates to the existing English Asynchronous Learning Module, providing on-demand training for those who cannot attend in person or live virtual training.
1. Content updates to the existing English Asynchronous Learning Module
2. Development of the Spanish Asynchronous Learning Module
3. Piloting and soft launch of both modules in 2026; whereas the English Asynchronous Learning Module is projected for Summer 2026 and the Spanish Asynchronous Learning Module for Fall 2026.
4. Both the English and Spanish Asynchronous Learning Modules will be provided at no cost to users in the Los Angeles County and Ventura County regions for the duration of the MOU Term. iii. Marketing of all events, Trainings, Asynchronous Learning Modules, and Professional Directory will be conducted in a collaborative fashion with CPA, other local community-based organizations, local municipalities, trade and professional groups, chambers of commerce, and more. d. Provide CPA with a quarterly report within 30 days of the conclusion of each quarter through March 31st, 2028. Each quarterly report will reflect updates on the Training and Asynchronous Learning Modules to report on students that attend, how many obtain certification, and metrics defined below:
i. Number of students enrolled in each cohort of the program ii. Number of students per cohort who successfully complete the Training iii. Number of students who take and pass the associated exam after completing the live Trainings (virtual attendees, and in-person attendees) (Certification Rate)
iv. Number of students who successfully complete the English and Spanish Asynchronous Learning Modules
v. Number of students who take and pass the associated exams for the English and Spanish Asynchronous Training Modules
vi. Number of students who upload a profile into USGBC-CA's Professional Directory, a searchable database of businesses and professionals maintained by USGBC-CA (Listing Conversion Rate)
vii. If currently employed, current job title, field/industry, and city where the participant’s business/company is located for each student who participates in the Training and the English and Spanish Asynchronous Learning Modules
e. Ongoing updates to the survey to collect feedback from participants and reflections from students and educators during Trainings and Asynchronous Learning Modules.
Agenda Page 18
4 f. Collaborate with CPA to develop and implement outreach strategies that focus on CPA member communities, as well as marketing strategies to reach target audiences and vulnerable communities who face barriers accessing key resources.
g. USGBC-CA agrees to provide CPA with a final report at the conclusion of the Term that aggregates metrics across all Trainings and Asynchronous Learning Modules provided under this MOU and summarizes lessons learned and changes made to the program as a result of CPA’s funding.
5. Indemnification. USGBC-CA agrees to indemnify, defend, and hold harmless CPA and its employees, officers, and agents, from and against any liability for, and shall assume full responsibility for, payment of all wages, state or federal payroll, social security, income, or self-employment taxes, with respect to USGBC-CA’s performance of this MOU.
USGBC-CA further agrees to indemnify, defend, 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 arising from USGBC-CA’s performance of the terms and conditions of the MOU, except for such loss or damage arising from the sole negligence or willful misconduct of CPA.
6. Insurance.
a. USGBC-CA agrees to provide and maintain throughout the Term of this MOU, at its own expense, a program of insurance, or self-insurance, covering the activities and operations of their respective officers, agents, employees, and contractors for the Term of this MOU. This insurance shall include general liability insurance with coverage limits of $1,000,000 per occurrence and $2,000,000 aggregate (unless the aggregate is on a per-policy basis, in which case the aggregate shall be a minimum of $2,000,000). This insurance shall be endorsed to include the following: (a) CPA, its Board, Officers, Officials, Employees, Agents, Servants, and Volunteers are covered as additional insureds on USGBC-CA’s commercial general liability policy; and (b) written notice to be mailed to CPA 30 days prior to the effective date of cancellation or non-renewal of such insurance.
b. USGBC-CA agrees to maintain throughout the Term of this MOU, at its own expense, a workers’ compensation policy as required by the State of California, with Statutory Limits and Employer’s Liability Insurance of no less than $1,000,000 per occurrence for bodily injury or disease. c. Nothing herein shall be construed as a limitation on USGBC-CA’s obligation under Paragraph 3 of this MOU to indemnify, defend, and hold CPA harmless
Agenda Page 19
5 from any and all liabilities arising from USGBC-CA’s performance of this MOU.
CPA agrees to timely notify USGBC-CA of any claim. Failure to provide and maintain the insurance required by this MOU will constitute a material breach of the MOU. In addition to any other available remedies, CPA may suspend payment to USGBC-CA for any services provided during any time that insurance was not in effect, and until such time USGBC-CA provides adequate evidence that USGBC-CA has obtained the required coverage.
7. Publicity. Any publicity generated by USGBC-CA related to the performance of this MOU must reference both Parties’ contributions. The words “Clean Power Alliance” must be displayed in all pieces of publicity, including flyers, press releases, posters, brochures, public service announcements, interviews, and newspaper articles (to the extent possible). Any piece of USGBC-CA publicity with respect to the Grant, including those mentioned above, must be reviewed and approved by CPA before issuing such materials. USGBC-CA agrees to provide CPA with reasonable time for review before such issuance.
Where CPA and USGBC-CA logos are used on any signage or documentation arising from this partnership, the logos of each Party will be of equal size. No signs may be posted, exhibited, or displayed on or about either Party’s property, except signage required by law or contemplated under this MOU, without prior written approval from each of the Parties.
8. General Provisions.
a. Entire Agreement. This MOU represents the full and complete understanding between the Parties as to the subject matter of this MOU and supersedes any other agreement(s) and understanding(s), either oral or written, between the Parties related to the subject matter of the MOU.
b. Amendment. Any amendment to or modification of this MOU will be effective only if in writing and signed by each Party’s authorized representative. No verbal agreement or implied covenant will be valid to amend or abridge this MOU. c. Governing Law and Venue. This MOU is governed by the laws of the State of California. Any lawsuits related to this MOU must be filed with the Superior Court of California, County of Los Angeles.
d. Third Party Beneficiaries. There are no intended third-party beneficiaries of this MOU.
e. 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 MOU. USGBC-CA shall not have any rights and shall not make
Agenda Page 20
6 any claims, take any actions, or assert any remedies against any of CPA’s constituent members in connection with this MOU.
f. Independent Parties. Each Party shall perform its responsibilities and activities described herein separately and not as an officer, agent, employee, or volunteer of the other Party hereto. Each Party shall be solely responsible for the acts and omissions of its officers, agents, and employees. Nothing herein shall be considered as creating a partnership or joint venture between the parties. g. Confidential Information.
i. Duty to Maintain Confidentiality. USGBC-CA agrees that USGBC-CA 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,
8.g.3, and 8.g.4, below.
ii. 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 MOU; (b) information, in whatever form, that CPA shares with USGBC-CA in the course and scope of this MOU; or (c) information that USGBC-CA or CPA stamps or otherwise identifies as “confidential” or “proprietary” before disclosing it to USGBC-CA.
iii. Confidential Information shall not include: (a) information that is generally available to the public or in the public domain at the time of disclosure; (b) information that becomes publicly known other than through any breach of this MOU by USGBC-CA or its representatives; (c) information which is subsequently lawfully and in good faith obtained by USGBC-CA 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 that the disclosure of such information by such third party is not known by USGBC-CA or its representatives to be in breach of a confidentiality agreement or other similar obligation of confidentiality; (d) information that USGBC-CA or its representatives develop independently without use of or reference to Confidential Information provided by USGBC-CA; or (e) information that is approved for release in writing by USGBC-CA.
iv. California Public Records Act. The Parties acknowledge and agree that the MOU, 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 7920.000 et seq.). In order to designate
Agenda Page 21
7 information as confidential, the party disclosing Confidential Information 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.
v. 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 USGBC-CA in writing via email that such request has been made. CPA will be solely responsible at its sole expense for taking whatever legal steps are necessary to prevent the release of the Confidential Information designated by USGBC-CA to the third party.
If USGBC-CA 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 USGBC-CA does take or attempt to take such action, USGBC-CA 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 USGBC-CA’s attempt to prevent disclosure or CPA’s refusal to disclose any Confidential Information.
h. Headings. The headings in this MOU are for convenience only, are not a part of the MOU, and in no way affect, limit, or amplify the terms or provisions of this MOU.
i. Severability / Partial Invalidity. If any term or provision of this MOU, or its application to a particular situation, is found by the court to be void, invalid, illegal, or unenforceable, such term or provision shall remain in force and effect to the extent allowed by such ruling. All other terms and provisions of this MOU or their application to specific situations shall remain in full force and effect. The Parties agree to work in good faith to amend this MOU to carry out its intent. j. Survival. All provisions which by their nature must continue after the MOU expires or is terminated shall survive the MOU and remain in full force and effect.
k. Notices. All notices, requests, and approvals must be sent in writing to the persons below, which will be considered effective on the date of personal delivery; or the date confirmed by the reputable overnight delivery service; or on
Agenda Page 22
8 the fifth calendar day after deposit in the United States Mail, postage prepaid; or the next business day following submission by electronic mail:
To CPA:
Joanne O’Neill
Director, Customer Programs
801 S. Grand Ave., Ste. 400
Los Angeles, CA 90017
[email protected]
With a copy, which shall not serve as notice as required or specified herein, to:
Francis Choi
Assistant General Counsel
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
[email protected]
To USGBC-CA:
Ben Stapleton
Executive Director
525 Hewitt St.
Los Angeles, CA 90013
[email protected]
l. Electronic Signatures. This MOU may be executed by electronic signature(s) and transmitted either by facsimile or in a portable document format (“pdf”) version by email and such electronic signature(s) shall be deemed as original for purposes of this MOU and shall have the same force and effect as a manually executed original.
m. Execution in Counterparts. This MOU may be executed in two or more counterpart copies, each of which shall be deemed as an original and all of which, when taken together, shall constitute one and the same instrument. [Signatures on the following page]
Agenda Page 23
9 IN WITNESS WHEREOF, the parties have executed this MOU on the latest date of execution set forth below.
Ted Bardacke
Clean Power Alliance of Southern California
Title: Chief Executive Officer
Date:
Ben Stapleton
USGBC-CA
Title: Executive Director
Date:
Agenda Page 24
Staff Report – Agenda Item 3
To: Board of Directors
From: Cara Rene, Senior Director, Communications and Marketing Reviewed by: Nancy Whang, General Counsel
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Bloom Ads Global Media Group PSA Amendment
Date: July 2, 2026
RECOMMENDATION
Approve and authorize the Chief Executive Officer to execute an amendment to the professional services agreement (PSA) with Bloom Ads Global Media Group (Bloom Ads) to increase the contract value by $1,088,876 for a total Not to Exceed (NTE) amount of $3,744,203 for the final Renewal Term (FY 2026/27) for media buying and related services.
BACKGROUND
CPA uses a variety of consultants to assist with communications and marketing activities, including a media buyer that identifies and purchases advertising space and time across digital and traditional channels to ensure that CPA’s messages reach our target audiences. A media buyer negotiates advertising rates on CPA’s behalf for cost optimization and also provides campaign strategies to meet audience objectives in the advertising space.
Bloom Ads was selected in 2023 through a competitive process for their expertise, strong relationships in the advertising market, and ability to successfully execute the needed paid media services. The professional services agreement was approved by the Board Agenda Page 25
Board of Directors Item 3
and executed on October 5, 2023, for an initial contract term through June 2025 ("Initial Term”) with the opportunity to renew for up to two additional one-year contract terms (each one-year term is referred as a ”Renewal Term”). The agreement was amended July 11, 2024 to update the term of the agreement to align with budgeting cycles and was amended again July 20, 2025 to update the compensation to align with the new board-approved budget for that year.
In the Initial Term of the agreement (October 2023-June 2025), CPA contracted with Bloom Ads for a NTE amount of $2,059,000 for media buying, partnerships and research and planning to support program marketing, customer recruitment, and growth of CPA’s brand awareness. CPA then renewed Bloom’s contract for July 2025-June 2026 (e.g. first Renewal Term) – aligning term dates with budget cycles - with the same scope of work at a NTE amount of $2,655,327 which included enhanced media buying, including experiential events, to extend CPA visibility to connect with customers and build trust and loyalty.
DISCUSSION
Staff is requesting approval of an amendment for the final Renewal Term to increase the NTE to $3,744,203 million to align with the approved 2026/27 marketing budget, which accounts for planned expansion of targeted advertising in our service area and anticipated increased costs in paid media due to media market impacts from high profile events such as the World Cup and the 2026 general election.
CPA is preparing for increased program marketing and brand awareness activities in line with the FY 2026/27 Communications and Marketing budget with a particular emphasis on the growth of CPA programs and heightening understanding of what CPA does.
Paid media tactics for visibility and customer engagement may include:
• TV streaming advertising through geotargeting CPA zip codes • Digital outreach through lifestyle platforms such as home search or ride share • Multilingual messaging through TV, radio, print and digital • Participation in smaller more localized community events Agenda Page 26
Board of Directors Item 3
• Out of home such as billboards, transportation and stores • Radio remotes and live community activations
• Sports-aligned marketing
FISCAL IMPACT
Funds for the proposed contract amendment are included in the Board-approved FY2026/27 Budget.
ATTACHMENT
1. Bloom Ads Global Media Group PSA Amendment
Agenda Page 27
AMENDMENT NUMBER FOUR TO
BLOOM ADS GLOBAL MEDIA GROUP
PROFESSIONAL SERVICES AGREEMENT
This Amendment Number Four (“AMENDMENT FOUR”) to the Professional Services Agreement is made by and between Clean Power Alliance of Southern California (“CPA”) and Bloom Ads Global Media Group (“CONTRACTOR”) on June 4, 2026. CPA and CONTRACTOR may individually be referred to herein as a “Party,” or collectively as the “Parties.”
RECITALS
WHEREAS, a Professional Services Agreement (“AGREEMENT”) was executed on October 5, 2023, between CPA and CONTRACTOR to provide professional services for paid media services;
WHEREAS, on April 4, 2024, CPA and CONTRACTOR executed Amendment Number One (“AMENDMENT ONE”) in order to update the compensation set forth in Exhibit C;
WHEREAS, on July 11, 2024, CPA and CONTRACTOR executed Amendment Number Two (“AMENDMENT TWO”) in order to update the term of the AGREEMENT and the compensation set forth in Exhibit C;
WHEREAS, on July 10, 2025, CPA and CONTRACTOR executed Amendment Number Three (“AMENDMENT THREE”) in order to update the compensation set forth in Exhibit C;
WHEREAS, CPA desires to further amend the AGREEMENT in order to update the compensation set forth in Exhibit C for the Second Renewal Term; WHEREAS, CONTRACTOR has the competence and expertise to provide the professional services, described above; and,
WHEREAS, CONTRACTOR desires to continue providing and performing these professional services.
NOW, THEREFORE, it is mutually agreed by and between the Parties hereto to amend the AGREEMENT as follows:
1. Exhibit C of the AGREEMENT is deleted in its entirety and replaced with Exhibit C (Compensation), attached hereto.
2. Except as specifically amended hereby, all other terms and conditions of the AGREEMENT shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT FOUR to be executed as of the date first above written.
Agenda Page 28
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
By
______________________________________
Theodore Bardacke
Chief Executive Officer
CONTRACTOR: Bloom Ads Global Media Group
By
_______________________________________
Kathe Bloom
President/CEO
Agenda Page 29
Exhibit C – Compensation
Contractor shall satisfactorily provide all the contemplated Services detailed in Exhibit A at the fixed price per deliverable specified in the table below and in compliance with the terms and conditions of this Agreement.
Initial Term (April 4, 2024 – June 30, 2025)
Task Description Estimated Due Date Not to Exceed
Amount
1 Research and Planning Completed Strategic Media
Plan by December 31, 2023 $17,000
2 Media Buying
(Includes hard costs of media)
Ongoing over the duration of
the Agreement $1,982,000
3 Partnerships
(Includes talent fees and associated
sponsorship direct costs)
Ongoing over the duration of
the Agreement $55,000
4 Ad Tagging, Trafficking, and Serving Ongoing over the duration of the Agreement $5,000
5 Dashboard and Reporting Ongoing over the duration of
the Agreement Included
Expenses, if approved in advance, in writing, by CPA $0 Initial Term: TOTAL Program Costs $2,059,000
First Renewal Term (July 1, 2025 – June 30, 2026)
Task Description Estimated Due Date Not to Exceed
Amount
1 Research and Planning Completed Strategic Media
Plan by July 31, 2025 $26,140
2 Media Buying
(Includes hard costs of media)
Ongoing over the duration of
the Agreement
$2,622,652
3 Partnerships
(Includes talent fees and associated
sponsorship direct costs)
Ongoing over the duration of
the Agreement
4 Ad Tagging, Trafficking, and Serving Ongoing over the duration of the Agreement $6,535
5 Dashboard and Reporting Ongoing over the duration of
the Agreement Included
Expenses, if approved in advance, in writing, by CPA $0 First Renewal Term: TOTAL Program Costs $2,655,327
Agenda Page 30
Second Renewal Term (July 1, 2026 – June 30, 2027)
Task Description Estimated Due Date Not to Exceed
Amount
1 Research and Planning Completed Strategic Media
Plan by July 31, 2026
$3,744,203
2 Media Buying
(Includes hard costs of media)
Ongoing over the duration of
the Agreement
3 Partnerships
(Includes talent fees and associated
sponsorship direct costs)
Ongoing over the duration of
the Agreement
4 Ad Tagging, Trafficking, and Serving Ongoing over the duration of the Agreement
5 Dashboard and Reporting Ongoing over the duration of
the Agreement Included
Expenses, if approved in advance, in writing, by CPA $0 Second Renewal Term: TOTAL Program Costs $3,744,203
All hard media costs, talent fees, and associated sponsorship direct costs as set forth in Task 2 and Task 3 above will be billed in the amount incurred by Contractor for actual out-of-pocket cost (hereinafter, “Media Fees”), with a maximum additional mark-up by Contractor of fifteen percent (15%) of the gross Media Fees. Any Media Fees incurred shall be billed for the month in which the Media Fees are incurred. Reports detailing all Media Fees, along with receipts, shall be presented to CPA. All Media Fees must be approved by CPA in advance writing before they are incurred.
Any travel, administrative expenses, and materials (hereinafter, “Expenses”) will be billed in the amount incurred by Contractor for actual out-of-pocket cost, without any additional mark-up by Contractor. Any Expenses incurred shall be billed for the month in which the Expenses are incurred. Expense reports detailing all Expenses, along with receipts, shall be presented to CPA for reimbursement. All expenses must be approved by CPA in advance writing before they are incurred.
The Total Maximum Amount that CPA shall pay Contractor, including any subcontractor that the Contractor may retain, for all Services and Expenses to be provided under this Professional Services Agreement shall not exceed Two Million Fifty-Nine Thousand Dollars ($2,059,000) ("Not-to-Exceed" or "NTE") during the Initial Term.
The Total Maximum Amount that CPA shall pay Contractor, including any subcontractor that the Contractor may retain, for all Services and Expenses to be provided under this Professional Services Agreement shall not exceed Two Million Six Hundred Fifty-Five Thousand Three Hundred Twenty-Seven Dollars ($2,655,327) ("Not-to-Exceed" or "NTE") during the First Renewal Term.
The Total Maximum Amount that CPA shall pay Contractor, including any subcontractor that the Contractor may retain, for all Services and Expenses to be provided under this Professional Services Agreement shall not exceed Three Million Seven Hundred Forty-Four Thousand Two Hundred Three Dollars ($3,744,203) ("Not-to-Exceed" or "NTE") during the Second Renewal Term.
Agenda Page 31
Contractor shall satisfactorily perform and complete, in the judgement of CPA, all required Services in accordance with Exhibit A notwithstanding the fact that total payment from CPA shall not exceed the NTE.
Agenda Page 32
Staff Report – Agenda Item 4
To: Board of Directors
From: Cara Rene, Senior Director, Communications and Marketing Reviewed by: Nancy Whang, General Counsel
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Amendment to Pastilla, Inc Professional Services Agreement Date: July 2, 2026
RECOMMENDATION
Approve and authorize the Chief Executive Officer to execute an amendment to increase the contract value of the professional service agreement (PSA) with Pastilla, Inc. (Pastilla) by $2,251,707 for a total Not to Exceed (NTE) amount of $4,106,137 for the final Renewal Term (FY 2026/27) for creative, web development, and web maintenance services.
BACKGROUND
CPA uses a variety of consultants to assist with communications and marketing activities, including Pastilla, Inc, for digital marketing, website development and maintenance, social media support, and creative design services.
Pastilla was selected in 2024 through a competitive process for their expertise and ability to successfully execute the needed services. The Board approved the PSA on June 6, 2024 for a one-year contract term (“Initial Term”) with the opportunity to renew for up to two additional one- year terms (each one-year term referred to as a “Renewal Term”).
The PSA was amended November 7, 2024 to update the NTE to support growing marketing needs, and was amended again July 10, 2025 to align the contract with the new board-approved budget for FY 2026/27.
Agenda Page 33
Board of Directors Item 4
In the Initial Term (June 2024 - June 2025) contained an NTE amount of $1,020,822 for website development and maintenance, development of brand strategy and creative content, marketing strategies for customer program recruitment, video production services and social media support. CPA then renewed Pastilla’s contract for the first Renewal Term (June 2025 - June 2026) for the same scope of work with an NTE amount of $1,854,430 which included an expansion in web development projects to connect customers to program opportunities and more robust creative development to refresh brand assets.
DISCUSSION
Staff is requesting approval of an amendment to the final Renewal Term to increase the NTE amount by $2,251,707 for a total NTE of $4,106,137. This NTE adjustment aligns with the approved FY2026/27 Communications and Marketing budget to continue brand growth and expansion, including additional video production services and marketing strategies to help customers better understand CPA and the services and programs we provide.
Work planned for this fiscal year for Pastilla includes:
• Continued expansion of the CPA brand and customer understanding of our offerings and impact
• Program campaign video to engage customers and increase awareness of overall offerings to grow program enrollment
• Educational videos for customer programs such as Instant AC Savings, EV SmartCharge, Sun Storage Rebate, and new programs for multifamily properties and commercial customers
• Implement ADA-compliant updates to the website
• Development support for interactive online newsroom to engage news media • Social media creative content
• Homepage redesign and other website enhancements
• Adding expanded languages/translations feature to increase equitable access
Agenda Page 34
Board of Directors Item 4
FISCAL IMPACT
Funds for the proposed contract amendment are included in the Board-approved FY2026/27 Budget.
ATTACHMENT
1. Pastilla, Inc. PSA Amendment
Agenda Page 35
AMENDMENT NUMBER THREE TO
PASTILLA, INC.
PROFESSIONAL SERVICES AGREEMENT
This Amendment Number Three (“AMENDMENT THREE”) to the Professional Services Agreement is made by and between Clean Power Alliance of Southern California (“CPA”) and Pastilla, Inc. (“CONTRACTOR”) on June 4, 2026. CPA and CONTRACTOR may individually be referred to herein as a “Party,” or collectively as the “Parties.”
RECITALS
WHEREAS, a Professional Services Agreement (“AGREEMENT”) was executed on June 7, 2024, between CPA and CONTRACTOR to provide professional services for digital marketing, website, social media support, and creative design services; WHEREAS, on November 7, 2024, CPA executed AMENDMENT ONE to the AGREEMENT in order to update the compensation set forth in Exhibit C; WHEREAS, on July 10, 2025, CPA executed AMENDMENT TWO to the AGREEMENT in order to update the compensation set forth in Exhibit C; WHEREAS, CPA desires to further amend the AGREEMENT in order to update the compensation set forth in Exhibit C for the Second Renewal Term; WHEREAS, CONTRACTOR has the competence and expertise to provide the professional services, described above; and,
WHEREAS, CONTRACTOR desires to continue providing and performing these professional services.
NOW, THEREFORE, it is mutually agreed by and between the Parties hereto to amend the AGREEMENT as follows:
1. Exhibit C of the AGREEMENT is deleted in its entirety and replaced with Exhibit C (Compensation), attached hereto.
2. Except as specifically amended hereby, all other terms and conditions of the AGREEMENT shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT THREE to be executed as of the date first above written. [Signature Page Follows]
Agenda Page 36
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
By
______________________________________
Theodore Bardacke
Chief Executive Officer
CONTRACTOR: PASTILLA, INC.
By
_______________________________________
Name:
Title:
Agenda Page 37
Exhibit C – Compensation
Contractor shall satisfactorily provide all the contemplated Services detailed in Exhibit A at the following hourly rates specified in the table below and in compliance with the terms and conditions of this Agreement:
Description Hourly Rate
T1: Strategy $250
T2: Development $198
T3: Execution $165
T4: Support $125
The hourly rates set forth above shall not increase by more than 3% during any authorized Renewal Term.
Maximum Authorized Fees per Task: Initial Term (June 7, 2024 – June 6, 2025) Contract (Task) Item Estimated Due Date
Maximum
Authorized
Fees
Task #1: Website Support Ongoing over the duration
of the Agreement $225,000
Task #2: CPA Brand Growth: Creative
Development Ongoing over the duration
of the Agreement $63,647
Task #3: CPA Brand Growth: Creative Content
Task #4: Marketing Strategies for CPA Program
Recruitment
Ongoing over the duration
of the Agreement $649,683
Task #5: Video Production Services Ongoing over the duration of the Agreement Task #6: Social Media Support $82,492
Task #7: As-Needed Services
Initial Term: Maximum Authorized Fees $1,020,822
Maximum Authorized Fees per Task: First Renewal Term (June 7, 2025 – June 6, 2026) Contract (Task) Item Estimated Due Date
Maximum
Authorized
Fees
Task #1: Website Support Ongoing over the duration
of the Agreement $436,605
Task #2: CPA Brand Growth: Creative
Development Ongoing over the duration
of the Agreement $145,000
Task #3: CPA Brand Growth: Creative Content
Task #4: Marketing Strategies for CPA
Program Recruitment
Ongoing over the duration
of the Agreement $755,296
Task #5: Video Production Services Ongoing over the duration of the Agreement Task #6: Social Media Support $517,529 Task #7: As-Needed Services
First Renewal Term: Maximum Authorized Fees $1,854,430
Agenda Page 38
Maximum Authorized Fees per Task: Second Renewal Term (June 7, 2026 – June 6, 2027)
Contract (Task) Item Estimated Due Date
Maximum
Authorized
Fees
Task #1: Website Support Ongoing over the duration
of the Agreement $609,600
Task #2: CPA Brand Growth: Creative
Development Ongoing over the duration
of the Agreement $430,000
Task #3: CPA Brand Growth: Creative Content
Task #4: Marketing Strategies for CPA
Program Recruitment
Ongoing over the duration
of the Agreement
$3,066,537 Task #5: Video Production Services Ongoing over the duration of the Agreement Task #6: Social Media Support
Task #7: As-Needed Services
Second Renewal Term: Maximum Authorized Fees $4,106,137 Any travel, administrative expenses, and materials (hereinafter, “Expenses”) will be billed in the amount incurred by Contractor for actual out-of-pocket cost, without any additional mark-up by Contractor. Any Expenses incurred shall be billed for the month in which the Expenses are incurred. Expense reports detailing all Expenses, along with receipts, shall be presented to CPA for reimbursement. All expenses must be approved by CPA in advance writing before they are incurred.
Maximum Authorized Expenses $0
A project budget shall be presented and approved by CPA for each task before any work commences. CPA reserves the right to reject and to not pay costs that were not approved in compliance with this provision.
The Total Maximum Amount that CPA shall pay Contractor, including any subcontractor that the Contractor may retain, for all Services and Expenses to be provided under this Professional Services Agreement shall not exceed One Million Twenty Thousand Eight Hundred Twenty-Two Dollars ($1,020,822) ("Not-to-Exceed" or "NTE") during the Initial Term.
Initial Term:
Maximum Amount Up to and Not to Exceed $1,020,822
The Total Maximum Amount that CPA shall pay Contractor, including any subcontractor that the Contractor may retain, for all Services and Expenses to be provided under this Professional Services Agreement shall not exceed One Million Eight Hundred Fifty-Four Thousand Four Hundred Thirty Dollars ($1,854,430) ("Not-to-Exceed" or "NTE") during the First Renewal Term.
First Renewal Term:
Maximum Amount Up to and Not to Exceed $1,854,430
Agenda Page 39
The Total Maximum Amount that CPA shall pay Contractor, including any subcontractor that the Contractor may retain, for all Services and Expenses to be provided under this Professional Services Agreement shall not exceed Four Million One Hundred Six Thousand One Hundred Thirty-Seven Dollars ($4,106,137) ("Not-to-Exceed" or "NTE") during the Second Renewal Term.
Second Renewal Term:
Maximum Amount Up to and Not to Exceed $4,106,137
Contractor shall satisfactorily perform and complete, in the judgement of CPA, all required Services in accordance with Exhibit A notwithstanding the fact that total payment from CPA shall not exceed the NTE.
Agenda Page 40
Staff Report – Agenda Item 5
To: Board of Directors
From: Lyon Hardgrave, Director, Energy Risk Management
Reviewed By: David McNeil, Chief Financial Officer
Matt Langer, Chief Operating Officer
Lindsay Descagnia, VP Power Supply
Nancy Whang, General Counsel
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Energy Risk Management Policy (ERMP) Amendments Date: July 2, 2026
RECOMMENDATION
Adopt Resolution No. 26-07-109 (Attachment 1) to approve proposed ERMP amendments (Attachment 2) as recommended by the Energy Planning & Resources Committee (Energy Committee).
BACKGROUND
The ERMP governs the framework by which the Board, staff, and consultants conduct power procurement and related business activities for CPA. Nearly all Load Serving Entities (LSEs) nationwide have a similar governing document. CPA’s ERMP is based on industry best practices and includes a description of the major risks CPA faces and measures to mitigate those risks, acceptable business practices and authorized transaction types, segregation of duties and delegations of authority, counterparty credit risk management procedures, and CPA’s Energy Risk Hedging Strategy, which sets the minimum and maximum energy product volumes CPA will procure to meet its mission, risk management objectives, and regulatory requirements.
An overarching goal of the ERMP and associated hedging strategy is to prudently manage CPA’s power supply costs so that it can offer stable and competitive customer
Agenda Page 41
Board of Directors Item 5
rates within a dynamic commodity market. As such, the ERMP evolves as CPA develops further operational insight, its energy portfolio grows, additional risks emerge, and/or new market and regulatory conditions unfold.
The ERMP establishes a staff-level Risk Management Team (RMT). Pursuant to Section 8 of the ERMP, the Chief Executive Officer (CEO) in consultation with the RMT is required to review the ERMP and associated procedures on an annual basis to determine if they should be amended, supplemented, or updated to account for changing business conditions, regulatory requirements, or to make other administrative revisions. If ERMP amendments are warranted, they are reviewed by the Energy Committee and submitted to the Board for approval.
Following extensive research by staff and consultation with the Board, the ERMP was adopted by the Board in July 2018. The Board subsequently approved amendments to the ERMP in July of 2019 and in July every year thereafter pursuant to the process described in Section 8.
This year’s proposed amendments to the ERMP appear as a redline to the current ERMP and are described herein. The proposed amendments reflect the recommendations of staff and incorporate refinements provided by the Energy Committee at its June 24, 2026 meeting, when it unanimously recommended approval by the full Board of Directors.
SUMMARY OF PROPOSED ERMP AMENDMENTS
Proposed amendments to the ERMP include the following:
1. Hedging Measurement Clarifications
a. Summary of proposed amendments
Amend Appendix B, Section 4.1.1 to:
i. Confirm that the minimum and maximum hedge percentages apply to each month within a quarter, rather than to the quarterly average.
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ii. Update outdated example values in illustrative language to reflect the current hedge targets table.
iii. Replace “projected energy requirements” with “projected load” throughout the section to reflect the prior removal of battery storage from hedge position calculations.
b. Discussion
The proposed changes to Section 4.1.1 are administrative in nature and ensure that the ERMP language accurately reflects current hedging practice and policy.
The change in (i) confirms that hedge limits apply on a monthly basis rather than as a quarterly average. This has been CPA’s practice since the hedge limits were established but had not been explicitly stated in the ERMP.
The change in (ii) updates illustrative examples.
The change in (iii) amends the description of hedge targets by replacing “Projected energy requirements” with “Projected load”. “Projected energy requirements,” includes storage charging. As storage charging is no longer included in the hedging requirement, “projected load” more accurately describes the hedge target.
2. Aligning Resource Adequacy Hedge Measurement with the Slice-of-Day Framework Adopted by the California Public Utilities Commission (CPUC) a. Summary of proposed amendments
Amend Appendix B, Section 4.1.4 to replace the existing Resource Adequacy (RA) Net Peak Hour methodology with a Baseload Equivalent Position methodology for measuring system Resource Adequacy hedge compliance.
b. Discussion
The CPUC has adopted a Slice-of-Day (SoD) framework for RA compliance, which requires LSEs to demonstrate that they hold sufficient capacity to meet hourly load obligations in each hour of CAISO’s defined “worst day” of each month. This is a
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significant departure from the prior approach, which measured RA compliance against a single peak hour (the “RA Net Peak Hour”).
Under the SoD framework, the binding constraint on RA position is no longer a single hour but rather the full 24-hour profile of hourly net positions. To accurately measure CPA’s compliance against this new framework, staff propose replacing the RA Net Peak Hour methodology in the ERMP with a Baseload Equivalent Position methodology. The Baseload Equivalent Position consolidates the 24-hour hourly position into a single MW value — the volume of continuous 24x7 RA needed to fulfill CPA’s hourly RA position across the calendar year. This single-value measure is consistent with the way the existing hedge limits in Section 4.1.4 are expressed (as percentages of an overall procurement target) while reflecting the underlying hourly granularity required by SoD compliance.
The existing minimum and maximum hedge limit percentages in Section 4.1.4 are appropriate for Baseload Equivalent Position and no changes to the minimum and maximum hedge limits are proposed.
3. Clarifying CEO Delegation of Transaction Execution Authority a. Summary of proposed amendments
Revise Section 5.1.2 to clarify that the Chief Executive Officer's delegation of transaction execution authority (to the Chief Operating Officer or Vice President, Power Supply) may be documented either by the standard signing-authority form in Appendix G or by a written delegation containing substantially similar information, as set out in the new Appendix G (CEO Signing Authority Delegation Form). The language in the form in Appendix G was also revised to establish a minimum price which would apply in instances in which the delegation of signing authority facilitates the sale of a product. b. Discussion
Current Section 5.1.2 authorizes the Chief Executive Officer to delegate transaction execution authority to the Chief Operating Officer or Vice President, Power Supply. The proposed amendment clarifies and adds flexibility to how such a delegation is
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documented — permitting a written delegation containing substantially similar information in addition to Appendix G. The substance of the delegation authority is unchanged.
4. Clarifying Material Change Criteria for Guaranteed Commercial Operation Date (GCOD) Extensions
a. Summary of proposed amendments
Amend Section 5.1.3 to clarify the language governing Material Changes to Board-approved long-term contracts, specifically with respect to extensions of the GCOD. The amended language distinguishes more clearly between extensions that are administrative in nature (those covered by liquidated damages or by delays already contemplated in the original contract) and those that require Board approval. b. Discussion
Section 5.1.3 of the ERMP enumerates Material Changes to Board-approved long-term contracts that require Board approval. One category of Material Change is the extension of a project’s GCOD.
The prior language was ambiguous in two respects: first, whether the three-month and twelve-month thresholds were inclusive or exclusive of delays that exist for the counterparty by right such as 90-day development cure periods and delays covered by liquidated damages; and second, if a 12-month extension of the GCOD constitutes a Material Change even if liquidated damages are paid.
The proposed amendment clarifies that a GCOD extension is a Material Change requiring Board approval when the extension is greater than three months and liquidated damages have not been paid, or when the extension exceeds twelve months regardless of whether liquidated damages are paid. The proposed amendment also clarifies that the by-right 90- day development cure is excluded from the Material Change threshold.
This clarification reflects current practice and reduces the prospect of unnecessary Board action on extensions that the Board has already approved as part of the underlying contract.
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5. Clarifying Authority for CAISO Commercial Interest Point Allocations and Related Right of First Offer (ROFO) Agreements
a. Summary of proposed amendments
Amend Section 5.1.3 to clarify that the allocation of CAISO Commercial Interest Points, and the associated Right of First Offer agreement, do not require Energy Committee approval. Corresponding definitions of CAISO Commercial Interest Points (CIPs) and Right of First Offer (ROFO) Agreement are added to Appendix A. b. Discussion
The ERMP already authorizes staff to enter into Exigent Exclusivity Agreements in time-sensitive situations, recognizing that delays while awaiting committee approval can cause CPA to lose an early-stage opportunity. This amendment does not change that existing authority.
The 2026 amendment addresses CAISO CIPs. CAISO assigns these points to LSEs such as CPA, and LSEs can then allocate these CIPs to early-stage renewable projects in order to prioritize them in the CAISO interconnection study process. The amendment clarifies that allocating these points and entering into the associated ROFO agreement does not require separate Energy Committee approval, as receiving a ROFO from a developer does not create any obligation on the part of CPA. The timing of CIP allocations is driven by CAISO's interconnection study timetable rather than CPA's procurement calendar and the window for action is brief; waiting for approval by the Energy Committee could cause CPA to miss an opportunity to receive a no-obligation ROFO from a commercially promising project, similar to an Exigent Exclusivity Agreement.
This ERMP Amendment retains Energy Committee and Board oversight of all substantive long-term procurement decisions, including contract terms, pricing, and final project selection.
6. Expanding the List of Authorized Transaction Types
a. Summary of proposed amendments
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Amend Appendix C to add the following transaction types:
i. California Air Resource Board Allowances, with an expanded description reflecting CPA’s procurement obligation as an importer of non-GHG-free energy into the CAISO balancing authority area.
ii. Ancillary Services (including Regulation Up, Regulation Down, Spinning Reserve, and Non-Spinning Reserve).
iii. Imbalance Reserve and Reliability Capacity (collectively, the CAISO Day-Ahead Market Enhancement, or DAME, products).
iv. A general provision clarifying that products subsequently introduced by CAISO that are required of or available to Load-Serving Entities are deemed included as authorized transaction types under the ERMP but must be explicitly added as new products during subsequent ERMP Amendment process.
b. Discussion
Appendix C of the ERMP enumerates the transaction types CPA is authorized to engage in. As California energy markets continue to evolve, CAISO has created several products and procurement obligations that warrant explicit inclusion. California's Cap-and-Trade program requires CPA to procure and surrender California Carbon Allowances in the very limited instances when it is the importer of record for non-GHG-free energy. CPA is eligible to bid Ancillary Services into the CAISO market to improve grid reliability. CAISO's Day-Ahead Market Enhancement (DAME) has introduced Imbalance Reserve and Reliability Capacity as new day-ahead products that LSEs must transact.
The following transaction types are proposed to be authorized:
• California Carbon Allowances are tradeable permits issued by the California Air Resources Board under the Cap-and-Trade Program. CPA is required to procure and surrender allowances when it is the importer of record for non-GHG-free energy delivered into the CAISO balancing authority area. Adding California Carbon Allowances to Appendix C reflects this compliance obligation. • Ancillary Services — Regulation Up, Regulation Down, Spinning Reserve, and Non-Spinning Reserve — are products procured by CAISO to maintain real-time
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grid reliability. These services are performed by storage assets, and CPA offers these services through CAISO market activity.
• Imbalance Reserve and Reliability Capacity are new day-ahead capacity products procured by CAISO under the Day-Ahead Market Enhancements (DAME).
Imbalance Reserve addresses forecast uncertainty between day-ahead schedules and real-time conditions. Reliability Capacity addresses reliability needs that are not met by existing RA.
These CAISO products are all short-term in nature (day-ahead and real-time) and exist to help CAISO maintain the health of the grid. They are not traded by CPA on a forward basis.
In addition, staff recommend adding a general provision because CAISO has indicated that it will continue to develop new market products as the energy grid evolves. Instead of amending the ERMP each time CAISO introduces a new product available to or required of LSEs, the general provision finds such products to be authorized transaction types thereby allowing CPA to continue to participate in CAISO markets without needing to propose interim changes to the ERMP outside of the standard annual review process.
The proposed ERMP amendments contain a requirement that any new CAISO products added to the authorized transactions list will be explicitly listed and described in Appendix C during the annual ERMP Amendment process.
7. Other Administrative Cleanups
a. Summary of proposed amendments
Amend Appendix A to add new definitions for:
i. Baseload Equivalent Position
ii. CAISO Commercial Interest Points
iii. ROFO Agreement
iv. California Carbon Allowance
Update the membership disclosure to reflect three new communities (La Cañada Flintridge, Lynwood, and Port Hueneme).
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Make minor wording corrections throughout the document. b. Discussion
The new definitions — CAISO Commercial Interest Points, ROFO Agreement, and California Carbon Allowance — clarify terms used in connection with the Section 5.1.2 and 5.1.3 amendments and the expanded Appendix C transaction types described above.
The membership disclosure is also updated to reflect the three communities that joined CPA in October 2025.
ERMP Acknowledgements
The ERMP requires CPA representatives, including the Board, participating in any activity or transaction within the scope of the ERMP to sign, on an annual basis or upon any revision, an acknowledgment of their responsibilities, duties, obligations, and compliance under the ERMP. In tandem with the amendment to the ERMP, staff will be asking the Board to complete their annual acknowledgment forms in July, which will be emailed to the Directors in subsequent communication from the Clerk of the Board.
ATTACHMENTS
1. Resolution No. 26-07-109
2. Proposed ERMP Amendments (redline)
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RESO NO. 26-07-109
RESOLUTION NO. 26-07-109
RESOLUTION OF THE BOARD OF DIRECTORS OF CLEAN
POWER ALLIANCE OF SOUTHERN CALIFORNIA
ADOPTING AND APPROVING THE AMENDED ENERGY
RISK MANAGEMENT POLICY
THE BOARD OF DIRECTORS OF CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA HEREBY RESOLVES AS FOLLOWS:
WHEREAS, Clean Power Alliance of Southern California (formerly known as Los Angeles Community Choice Energy Authority) (“Clean Power Alliance” or “CPA”) was formed on June 27, 2017;
WHEREAS, on April 5, 2018, the CPA Board of Directors (“Board”) adopted Resolution 18-005 delegating authority to the Executive Director for certain activities related to power procurement;
WHEREAS, on July 12, 2018, the Board adopted Resolution 18-006 approving the Energy Risk Management Policy ("ERMP") which establishes a framework by which the Board, staff, and consultants conduct power procurement and related business activities that may impact the risk profile of CPA;
WHEREAS, the ERMP specifies that CPA will review the policy on an annual basis in order to determine if the ERMP should be amended, supplemented, or updated to account for changing business conditions and/or regulatory requirements; WHEREAS, since July 12, 2018, the Board has approved amendments to the ERMP on an annual basis to account for changing business or regulatory conditions as well as administrative adjustments;
WHEREAS, on June 24, 2026, CPA’s Energy Committee considered the proposed amendments to the ERMP and recommended approval of these amendments to the Board; and,
WHEREAS, CPA has considered the prevailing business conditions and regulatory environment and determined that refinements or updates to certain functions or activities are necessary or beneficial.
NOW, THEREFORE, BE IT DETERMINED, AFFIRMED, AND ORDERED BY
THE BOARD OF DIRECTORS OF THE CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA that the attached ERMP, presented as Exhibit A, as amended therein, is hereby approved as of July 2, 2026;
IT IS FURTHER DETERMINED, AFFIRMED, AND ORDERED, any power procurement activity that falls outside the parameters of the ERMP, as amended herein, shall be brought to the Board for consideration;
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RESO NO. 26-07-109
IT IS FURTHER DETERMINED, AFFIRMED, AND ORDERED that any and all acts authorized pursuant to this Resolution and performed prior to the passage of this Resolution are hereby ratified and approved;
IT IS FURTHER DETERMINED, AFFIRMED, AND ORDERED that this Resolution shall be continuing and remain in full force and effect; and, IT IS FURTHER DETERMINED, AFFIRMED, AND ORDERED that the approval of the ERMP is not a “project” under Section 21065 of the Public Resources Code and under California Environmental Quality Act (“CEQA”) Guidelines Sections 15378(a) and is exempt under CEQA Guidelines Section 15061(b)(3).
ADOPTED AND APPROVED this 2nd day of July 2026.
____________________________
Robert Parkhurst, Chair
ATTEST:
_________________________
Gabriela Monzon, Secretary
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RESO NO. 26-07-109
EXHIBIT A
ENERGY RISK MANAGEMENT POLICY
(see attached)
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Energy Risk
Management Policy
July 10, 2025July 2, 2026
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1 Table of Contents
Section 1: ENERGY RISK MANAGEMENT POLICY OVERVIEW .............................................................................. 4
1.1 Background and Purpose .......................................................................................................................... 4
1.2 Scope ......................................................................................................................................................... 5
1.3 Energy Risk Management Objective ......................................................................................................... 5
1.4 ERMP Administration .............................................................................................................................. 65 Section 2: GOALS AND RISK EXPOSURES ........................................................................................................ 776
2.1 ERMP Goals ........................................................................................................................................... 776
2.2 Risk Exposures ....................................................................................................................................... 776
2.2.1 Customer Opt-Out Risk .................................................................................................................. 887
2.2.2 Market Risk .................................................................................................................................... 887
2.2.3 Regulatory and Legislative Risk ...................................................................................................... 998
2.2.4 Volumetric Risk .............................................................................................................................. 998
2.2.5 Model Risk ...................................................................................................................................... 998
2.2.6 Operational Risk ......................................................................................................................... 10109
2.2.7 Counterparty Credit Risk ............................................................................................................ 10109
2.2.8 Reputation Risk .......................................................................................................................... 10109 Section 3: BUSINESS PRACTICES ................................................................... ................................................1110
3.1 General Conduct ............................................................................................................................. 111110
3.2 Trading for Personal Accounts ........................................................................................................ 111110
3.3 Adherence to Statutory Requirements ........................................................................................... 111110
3.4 Transaction Type ............................................................................................................................. 121211
3.4.1 Exceptions ................................................................................................................................ 121211
3.5 Counterparty Suitability .................................................................................................................. 131312
3.6 System of Record ............................................................................................................................ 131312
3.7 Transaction Valuation ..................................................................................................................... 131312
3.8 Stress Testing .................................................................................................................................. 141413
3.9 Trading Practices ............................................................................................................................. 141413
3.10 Training ......................................................................................................................................... 151514 Agenda Page 54
2 Section 4: ORGANIZATIONAL STRUCTURE AND RESPONSIBILITIES .......................................................... 161615
4.1 Board of Directors Responsibilities ................................................................................................. 161615
4.2 Risk Management Team ................................................................................................................. 161615
4.3 Segregation of Duties ...................................................................................................................... 171716
4.3.1 Front Office .............................................................................................................................. 171716
4.3.2 Middle Office ............................................................................................................................ 181817
4.3.3 Back Office ............................................................................................................................... 181817 Section 5: DELEGATION OF AUTHORITY ................................................................................................... 202019
5.1 Risk Limits........................................................................................................................................ 202019
5.1.2 Delegation Authority ................................................................................................................ 202019
5.1.3 Long-Term Procurement .......................................................................................................... 202019
5.1.4 Volume Limits .......................................................................................................................... 222220
5.1.5 Locational Limits ...................................................................................................................... 222220
5.1.6 CAISO Submission Limits .......................................................................................................... 222221
5.2 Monitoring, Reporting and Instances of Exceeding Risk Limits ...................................................... 222221 Section 6: CREDIT POLICY AND COUNTERPARTY SUITABILITY .................................................................. 232322
6.1 Master Enabling Agreements and Confirmations ........................................................................... 232322
6.1.1 Exceptions ................................................................................................................................ 232322
6.2 Counterparty Suitability .................................................................................................................. 232322
6.3 Maximum Credit Limit .................................................................................................................... 242423
6.4 Credit Review Exceptions ................................................................................................................ 242423
6.5 Credit Limit and Monitoring ............................................................................................................ 242423
6.6 CPA Credit Support ......................................................................................................................... 242423 Section 7: POSITION TRACKING AND MANAGEMENT REPORTING .......................................................... 252524 Section 8: ERMP REVISION PROCESS ........................................................................................................ 262625
8.1 Acknowledgement of ERMP ........................................................................................................... 262625
8.2 ERMP Interpretations ..................................................................................................................... 262625 Appendix A: DEFINITIONS ......................................................................................................................... 272726 Appendix B: ENERGY RISK HEDGING STRATEGY ....................................................................................... 303029 Agenda Page 55
3 1.1 Introduction .................................................................................................................................... 303029
2.1 Governance ..................................................................................................................................... 303029
3.1 Hedging Program Goals .................................................................................................................. 303029
4.1 Hedging Targets and Strategies ...................................................................................................... 313130
5.1 Hedge Program Metrics .................................................................................................................. 363634
6.1 Reporting Requirements ................................................................................................................. 363634 Appendix C: AUTHORIZED TRANSACTION TYPES ...................................................................................... 373735 Appendix D: NEW TRANSACTION TYPE APPROVAL FORM ....................................................................... 393937 Appendix E: NOTICE OF CONFLICT OF INTEREST ...................................................................................... 404038 Appendix F: CODE OF MARKETING AND TRADING PRACTICES ................................................................. 414139 See next page. ................................................................................................................................... 414139 Agenda Page 56
4 Section 1: ENERGY RISK MANAGEMENT POLICY OVERVIEW
1.1 Background and Purpose
The Clean Power Alliance of Southern California (CPA) is a Joint Powers Authority (JPA) administering a Community Choice Aggregation (CCA) program in Southern California. CPA service territory currently includes 32 38 jurisdictions – 30 36 cities and the unincorporated parts of Los Angeles and Ventura Counties. CPA members presently include the following:
Counties:
Los Angeles
Ventura
Cities:
CPA will begin service to the cities of Cudahy and Fillmore in October 2027.
CCA, authorized in California under AB 117 and SB 790, allows local governments, including counties and cities, to purchase wholesale power supplies for resale to their residents and businesses as an alternative to electricity provided by an Investor Owned Utility (IOU). For CPA members, that IOU is Southern Agoura Hills Hermosa Beach Rolling Hills Estates
Alhambra La Cañada Flintridge Santa Monica
Arcadia Lynwood Santa Paula
Beverly Hills Manhattan Beach Sierra Madre
Calabasas Malibu Simi Valley
Camarillo Monrovia South Pasadena
Carson Moorpark Temple City
Claremont Ojai Thousand Oaks
Culver City Oxnard Ventura
Downey Paramount West Hollywood
Hawaiian Gardens Port Hueneme Westlake Village
Hawthorne Redondo Beach Whittier
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5 California Edison (SCE). Electricity procured by CPA to serve customers is delivered over SCE’s transmission and distribution system.
CPA exists to serve its local government members, and the residences and businesses located within their respective communities. CPA’s specific objectives are to provide its customers with a reliable supply of electricity, at competitive electric rates, sourced from a generation portfolio with lower greenhouse gas (GHG) emissions and higher renewable content than the incumbent utility, SCE. CPA also has goals to be a catalyst for local economic development and give its member agencies greater choice in the energy procured for their residents.
To meet these commitments, CPA must procure electric power supplies and operate in the wholesale energy market which exposes CPA, and ultimately the customers that it serves, to various risks. The intent of the Energy Risk Management Policy (ERMP) is to provide CPA, and by extension its customers, with a framework to identify, monitor and manage risks associated with procuring power supplies and operating in wholesale energy markets.
The Energy Risk Management Policy (ERMP), including its appendices, establishes CPA’s Energy Risk Program.
1.2 Scope
Unless otherwise explicitly stated in the ERMP or other policies approved by the CPA Board of Directors (Board), the ERMP applies to all power procurement and related business activities that may impact the risk profile of CPA. The ERMP documents the framework by which CPA staff and consultants will:
Identify and quantify risk
Develop and execute procurement strategies
Develop controls and oversight
Monitor, measure and report on the effectiveness of the ERMP To ensure its successful operation, CPA has partnered with experienced consultants to provide power supply services. Specific to power procurement, CPA has partnered with a third-party Scheduling Coordinator that augments CPA’s internal Front (scheduling), Middle (monitoring) and Back (settlement) Office related activities as discussed at Section 4.3. The Scheduling Coordinator supporting CPA’s power procurement activities will adhere to and be governed by the ERMP in providing these services to CPA. In addition, the Scheduling Coordinator’s activities executed on CPA’s behalf will be governed by its own risk management policies and procedures, and prudent industry practices.
1.3 Energy Risk Management Objective
The objective of the ERMP is to provide a framework for conducting procurement activities that maximize the probability of CPA meeting the goals listed in Section 2.1.
Pursuant to the ERMP, CPA will identify and measure the magnitude of the risks to which it is exposed and that contribute to the potential for not meeting identified goals.
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6 1.4 ERMP Administration
The ERMP has been reviewed and approved by the Board. The Chief Executive Officer in consultation with the Risk Management Team (collectively, the “RMT”), as defined in Section 4.2, and the Board must approve amendments to the ERMP, except for appendices D, E, and F, which may be amended with approval of the Chief Executive Officer, in consultation with the RMT. The Chief Executive Officer must give notice to the Board of any amendment it makes to an appendix or a reference policy or procedure document.
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7 Section 2: GOALS AND RISK EXPOSURES
2.1 ERMP Goals
To help ensure its long-term success, CPA has outlined the following goals:
Build a portfolio of resources with lower GHG emissions and higher renewable content than SCE; Meet reliability requirements established by the State of California, and operate in a manner consistent with Prudent Utility Practice (defined as the practices generally accepted in the utility industry to ensure safe, reliable, compliant and expeditious operations); Maintain competitive retail rates with SCE after adjusting for exit fees (currently the Power Charge Indifference Adjustment or PCIA) and Franchise Fees paid by CPA customers; Emphasize during the initial years of operation the funding of financial reserves to meet the following long-term business objectives:
o Stabilize rates by dampening year-to-year variability in power supply costs; o Maintain an investment-grade credit rating to maximize the ability of CPA to engage in long-term acquisition or development of generation supplies consistent with ERMP goals; and
o Provide a source of equity capital for investment in generation.
The goals outlined above are incorporated into the financial models and metrics that are used to monitor and measure risk and ERMP success. It is important to note that the goals listed above are not intended to be a comprehensive list of goals for CPA. Rather, the above reflect the overarching goals critical to CPA’s long-term financial success and that will guide the ERMP.
2.2 Risk Exposures
For the purpose of the ERMP, risk exposure is assessed on all transactions (energy, environmental attributes, and capacity) as well as the risk exposure of open positions and the impacts of these uncertainties on CPA’s load obligations.
CPA faces a range of risks during launch and ongoing operation including:
Customer opt-out risk
Market risk
Regulatory risk
Volumetric risk
Model risk
Operational risk
Counterparty credit risk
Reputation risk
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8 2.2.1 Customer Opt‐Out Risk
Customer opt-out risk may be realized by any condition or event that creates uncertainty within, or a diminution of, CPA’s customer base. Customer opt-out risk is manifested in two separate ways.
First, the ability of customers to return to bundled service from SCE creates uncertainty in CPA’s revenue stream, which is critical for funding ERMP goals and achieving the investment grade credit rating needed to successfully operate over the long-term.
Second, customer opt-out risk can potentially challenge the ability of CPA to prudently plan for, and cost-effectively implement, long-term resource commitments made on behalf of its member communities and the customers it serves.
CPA will manage customer opt-out risk through the following means:
Implement a key accounts program and maintain strong relationships with the local community including elected leaders, stakeholders and all of the customers CPA serves; Actively monitor and advocate for the interests of CPA and its customers in SCE ratemaking proceedings, California Public Utilities Commission (CPUC) proceedings that potentially affect exit fees paid by CPA customers, as well as all regulatory and legislative proceedings where an adverse outcome may challenge the ability of CPA to deliver on customer commitments; Regularly monitor and report actual and projected financial results including probability-based and stress-tested financial results assuming a range of possible future outcomes with respect to:
o Future SCE generation and PCIA rates;
o Future market costs for energy, environmental attributes and capacity; and o Anticipated or threatened regulatory actions, when appropriate. Adopt, implement and update, as needed, a formal Energy Risk Hedging Strategy (Appendix B) describing the strategy that CPA will follow for engaging in procurement activities; and Evaluate expansion of CPA’s customers base through incorporation of other eligible communities into the CCA.
2.2.2 Market Risk
Market risk is the uncertainty of CPA’s financial performance due to variable commodity market prices (market price risk) and uncertain price relationships (basis risk). Variability in market prices creates uncertainty in CPA’s procurement costs, which has a direct impact on customer rates. CPA will manage market risk through:
Regular measurement;
Execution of approved procurement;
Hedging and Congestion Revenue Right strategies; and
Use of the Limit Structure set forth in the ERMP (see limits in Section 5.1.2 and Appendix B).
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9 2.2.3 Regulatory and Legislative Risk
CPA and other CCAs are subject to an evolving legal and regulatory landscape. Additionally, CCAs are in direct competition with California’s IOUs in supplying retail electricity and the IOUs face the risk of stranded investments in generating assets and power purchase agreements procured in the past to serve now departing CCA loads. The manner in which such stranded costs of these legacy power supplies are allocated to departing CCA loads is subject to change based on various proceedings at the CPUC. The outcome of such proceedings will directly affect the cost of power for CPA’s customers, as well as impact the rate competitiveness of CPA.
In addition to exit fees, potential regulatory and/or legislative changes could affect the ability of CPA to exercise local control over the manner and means of procuring power supplies to serve its customers.
CPA will manage regulatory and legislative risks by:
• Regularly monitor and analyze legislative and regulatory proceedings impacting CCAs; and Actively participate in, and advocate for, the interests of CPA and its customers during regulatory and legislative proceedings.
2.2.4 Volumetric Risk
Volumetric risk reflects the potential uncertainty in the quantity of different power supply products (e.g., renewable energy, Carbon Free Energy and capacity) required to meet the needs of CPA customers. This uncertainty can lead to adverse financial outcomes, as well as create potential for CPA to fail to meet reliability or renewable energy compliance requirements established by the State of California and/or the CPA Board. Customer load is subject to fluctuation due to customer opt-outs or departures, temperature deviation from normal, unforeseen changes in the growth of behind the meter generation by CPA customers, unanticipated energy efficiency gains, new or improved technologies, as well as local, state and national economic conditions. CPA will manage volumetric risk by taking steps to:
Implement robust short- and long-term load and generation supply forecast methodologies, including regular monitoring of forecast accuracy through time and refining such forecasts, including by incorporating CPA’s actual load data into forecasts as such data becomes available; Account for volumetric uncertainty in load and/or generation supply in in the Energy Risk Hedging Strategy;
Monitor trends in customer onsite generation, economic shifts, and other factors that affect electricity customer consumption and composition; and
Proactively engage with customers in developing distributed energy resources and behind-the-meter generation and energy efficiency programs so as to better forecast changes in load.
2.2.5 Model Risk
Model risk has potential for an inaccurate or incomplete representation of CPA’s actual or forecast financial performance due to deficiencies in models and/or information systems used to capture all transactions. CPA will manage model risk by:
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10 RMT ratification of models used to forecast financial performance, net positions and/or measure risk;
Ongoing review of model outputs;
A requirement to record all procurement transactions in a single Ttrade Ccapture system; and Ongoing update and improvement of models as additional information and expertise is acquired and industry best practices evolve.
2.2.6 Operational Risk
Operational risk is the uncertainty of CPA’s financial performance due to weaknesses in the quality, scope, content, or execution of human resources, technical resources, and/or operating procedures within CPA.
Operational risk can also be exacerbated by fraudulent actions by employees or third parties or inadequate or ineffective controls. CPA will manage operational risk through:
The controls set forth in the ERMP;
RMT oversight of procurement activity;
Timely and effective reporting to the Chief Executive Officer in consultation with the RMT, and the Board;
Implementation of a compliance training program for CPA staff; Ongoing CPA and Scheduling Coordinator staff education/training and participation in industry forums; and
Annual audits to test compliance with the ERMP.
2.2.7 Counterparty Credit Risk
Counterparty credit risk is the potential that a counterparty will fail to perform or meet its obligations in accordance with terms agreed to under contract. CPA’s exposure to counterparty credit risk is controlled by the limit controls set forth in the Credit Policy described in Section 6.
2.2.8 Reputation Risk
Reputation risk is the potential that CPA’s reputation is harmed, causing customers to opt-out of CPA service and migrate back to SCE. Reputational risk is also the potential that energy market participants view CPA as an untrustworthy business partner, thus reducing the pool of potential counterparties and/or having counterparties apply a CPA-specific risk premium to pricing. Reputational risk is managed through:
Implementation of and adherence to the ERMP;
Engaging in ethical, transparent and honest business practices during trading activities; and Establishment and adherence to industry best practices including both those adopted by other CCAs, as well as those adopted by traditional municipal electric utilities.
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11 Section 3: BUSINESS PRACTICES
3.1 General Conduct
It is the policy of CPA that all Board members, staff, and consultants (collectively referred to “CPA Representatives”), adhere to standards of integrity, ethics, conflicts of interest, compliance with statutory law and regulations and other applicable CPA standards of personal conduct while employed by or affiliated with CPA. Towards this end, all persons performing marketing and trading functions on behalf of CPA shall be subject to, read, understand, and abide by the provisions contained in the CPA Code of Marketing and Trading Practices (see Appendix F).
3.2 Trading for Personal Accounts
All CPA Representatives participating in any transaction or activity within the coverage of the ERMP are required to comply with the CPA Conflict of Interest Code approved by the Fair Political Practices Commission and are obligated to give notice in writing to CPA of any legal, financial or personal interest such person has in any counterparty that seeks to do business with CPA, and to identify any real or potential conflict of interest such person has or may have with regard to any existing or potential contract or transaction with CPA, within 48-hours of becoming aware of the conflict of interest. Written notice should be submitted to the Chief Executive Officer substantially in the form of the letter notification shown in Appendix E. This written notice obligation shall be in addition to the regulations or requirements of the Fair Political Practices Commission (e.g., Statement of Economic Interests, Form 700) and any policy adopted by the CPA Board of Directors, including but not limited to the Vendor Communication Policy No. 2019-10.
Further, all persons are prohibited from personally participating in any transaction or similar activity that is within the coverage of the ERMP, or prohibited by California Government Code Section 1090, and that is directly or indirectly related to the trading of electricity and/or environmental attributes as a commodity.
If there is any doubt as to whether a prohibited condition exists, then it is the CPA Representative’s responsibility to discuss the possible prohibited condition with CPA General Counsel.
3.3 Adherence to Statutory Requirements
All CPA Representatives are required to comply with rules promulgated by the State of California, CPUC, California Energy Commission, Federal Energy Regulatory Commission (FERC), Commodity Futures Trading Commission (CFTC), and other regulatory agencies.
Congress, FERC and CFTC have enacted laws and regulations that prohibit, among other things, any action or course of conduct that actually or potentially operates as a fraud or deceit upon any person in connection with the purchase or sale of electric energy or transmission services. These laws also prohibit any person or entity from making any untrue statement of fact or omitting a material fact where the omission would make a statement misleading. Violation of these laws can lead to both civil and criminal actions against the individual involved, as well as CPA. The ERMP is intended to comply with these laws, regulations and rules and to avoid improper conduct on the part of anyone employed by CPA. These
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12 procedures may be modified from time to time based on legal requirements, auditor recommendations, and other considerations.
In the event of an investigation or inquiry by a regulatory agency, CPA will provide legal counsel to employees provided the subject of the investigation is within the employee’s course and scope of employment. However, CPA reserves the right to refrain from providing legal counsel if it reasonably appears to the CPA General Counsel and Chief Executive Officer that the employee was either not acting in good faith or was acting outside the course and scope of his or her employment.
CPA employees are prohibited from working for another power supplier, CCA or utility while they are simultaneously employed by CPA unless an exception is authorized by the Board.
3.4 Transaction Type
Authorized transaction types are listed in Appendix C. Each approved transaction type that is listed is included to either meet a mandatory procurement obligation required of all Load Serving Entities (LSE) serving retail loads in California; and/or alternatively, the approved product is needed for CPA to meet an identified ERMP goal. Major transaction types include:
Resource Adequacy Capacity is a mandatory procurement obligation that ensures adequate generation supplies are available on a planning basis to reliably meet the requirements of electric consumers in the California Independent System Operator (CAISO) balance authority; Portfolio Content Category 1 (PCC1) and Portfolio Content Category 2 (PCC2) renewable energy must be procured by CPA to comply with the state of California’s Renewable Portfolio Standard, as required by SB 350. CPA has made a voluntary decision to purchase incremental quantities of PCC1 and/or PCC2 renewable energy to exceed the renewable portfolio content of the incumbent utility;
Carbon Free Energy is a voluntary purchase of specified source energy from large hydroelectric generation than enables CPA to provide its customers with electricity sourced from generators producing low GHG emissions so that member agencies can meet their climate action plans and CPA can contribute to combatting climate change;
Physical Energy products are a voluntary purchase made by CPA to provide cost certainty and rate stability for customers; and
The CAISO is the largest grid operator in the state of California and CPA members lie within its balancing area. CAISO operates Day-Ahead, Fifteen Minute and Real-Time Markets and other ancillary markets necessary for reliable operation of the grid. CPA is required to participate in CAISO markets. Acquisition of the CAISO products listed in Appendix C either result from mandatory participation in CAISO’s markets, or are useful for managing short-term market risks associated with CAISO’s markets.
The strategy for using and procuring the approved products is described in further detail in the Energy Risk Hedging Strategy.
3.4.1 Exceptions
New transaction types may provide CPA with additional flexibility and opportunity but may also introduce
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13 new risks. Therefore, transaction types not included in Appendix C must be approved by the RMT and the Board prior to execution using the process defined below.
When seeking approval for a new transaction type, a New Transaction Type Approval Form, as shown in Appendix D, is to be drafted describing all significant elements of the proposed transaction. The proposal write-up will, at a minimum, include:
A description of the benefit to CPA, including the purpose, function and expected impact on costs (i.e.; decrease costs, manage volatility, control variances, etc.); Identification of the in-house and/or external expertise that will manage and support the new or non-standard transaction type;
Assessment of the transaction’s risks, including any material legal, tax or regulatory issues; How the exposures to the risks above will be managed by the Limit Structure; Proposed valuation methodology (including pricing model, where appropriate); Proposed reporting requirements, including any changes to existing procedures and system requirements necessary to support the new transaction type; Proposed accounting methodology; and
Proposed work flows/methodology (including systems).
It is the responsibility of the Middle Office to ensure that relevant departments have reviewed the proposed transaction type and that material issues are resolved prior to submittal to the Board for approval. If the transaction type is approved, Appendix C to the ERMP will be updated to reflect its addition.
3.5 Counterparty Suitability
All counterparties with whom CPA transacts must be reviewed for creditworthiness and assigned a Credit Limit as described in Section 6.
3.6 System of Record
Since information systems play a vital role for CPA’s trading and risk management abilities, CPA shall maintain and secure a System of Record. CPA’s transaction and contract data are also stored in its Scheduling Coordinator’s energy trading and risk management system.
CPA’s Technology and Data and Systems group supports the security, integrity, and recoverability of the System of Record. The Scheduling Coordinator has assigned a Database Administrator (DBA) that is charged with database security and maintenance for the Scheduling Coordinator’s transaction database.
For data recoverability, transaction data stored in the System of Record is replicated daily to ensure data redundancy and is backed-up via cloud-based applications.
All transaction records will be maintained in US dollars and will be separately recorded and categorized by type of transaction and other characteristics, in line with standard industry practice. This System of Record shall be auditable and audited as appropriate.
3.7 Transaction Valuation
Transaction valuation and mark-to-market (valuing of an asset based on its current market price) reporting
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14 of positions shall be based on independent, publicly available, market-observed prices (replacement costs) whenever possible. In the event there are not market-observed prices, the value of CPA’s transactions shall follow a notional value calculation (the total nominal dollar value of a transaction over its full duration) or other methodology approved as part of the new product approval process.
All transactions and open positions will be valued daily.
3.8 Stress Testing
In addition to limiting and measuring risk using the methods described herein, stress testing shall also be used to examine performance of the CPA portfolio under potential adverse conditions. Stress testing is used to understand the potential variability in CPA’s projected procurement costs and resulting impacts on customer rates and CPA’s competitive positioning associated with low probability events. The Middle Office will perform stress-testing of the portfolio as directed by the RMT.
3.9 Trading Practices
As previously noted, CPA exists to serve its customers. The scope of its wholesale market operations is limited to that which is required to meet the power supply obligations of its customers consistent with ERMP goals. It is the expressed intent of the ERMP to prohibit wholesale market activities that result in procurement of any power supply product beyond that which is required to meet an identifiable need of CPA customers. The purchase or sale of any power supply product beyond what is reasonably anticipated to be needed to meet the requirements of CPA customers is a speculative transaction and is prohibited.
In the course of developing operating plans and conducting procurement activities, CPA recognizes that staff must employ reasonable expertise and judgment, and it is not the intent of the ERMP to restrain the legitimate application of analysis and market expertise in executing procurement strategies intended to minimize costs or maximize the value of generation within the constraints of the ERMP. If any questions arise as to whether a proposed transaction(s) constitutes speculation, the RMT shall review the transaction(s) to determine whether the transaction(s) would constitute speculation and shall document its findings. As used here, “speculation” means the act of trading an asset with the expectation of realizing financial gain resulting from a change in price in the asset being transacted.
Staff and consultants engaged in procurement activities will also observe the following practices:
Persons shall conduct business in good faith and in accordance with all applicable laws, regulations, tariffs and rules;
Persons shall not arrange or execute wash trades (i.e., offsetting transactions where no financial risk is taken);
Persons shall not disseminate known false or misleading information or engage in transactions to exploit such information;
Persons shall not game or otherwise interfere with the operation of a well-functioning competitive market;
Persons shall not collude with other market participants; and Persons shall immediately report any known or suspected violation of the ERMP.
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15 3.10 Training
CPA recognizes the importance of ongoing education to manage risk and to contribute to ERMP success.
Towards this end, CPA will observe the following practices:
All employees executing procurement transactions on behalf of CPA must receive appropriate training in the attributes of each product type that they transact, how the product furthers the portfolio objectives of CPA, and how the risk profile of CPA is impacted by procurement of each product;
All employees executing procurement activities shall complete required and available energy market compliance training as determined by the Chief Operating Officer once per calendar year and acknowledge receipt of said training in writing;
The Human Resources Department shall maintain records of each employee’s training status.
3.11 Trade Capture and Quality Assurance
To manage operational risk related to Ttrade Ccapture and execution, the Risk Management Team (RMT) shall develop and implement internal Ttrade Ccapture procedures. These procedures will ensure that all transactions are accurately recorded in the System of Record in a timely manner and independently confirmed by the Middle Office.
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16 Section 4: ORGANIZATIONAL STRUCTURE AND RESPONSIBILITIES
4.1 Board of Directors Responsibilities
The Board has the responsibility to review and approve the ERMP. With this approval, the Board acknowledges responsibility for understanding the risks CPA is exposed to through its CCA activity and how the policies outlined in the ERMP help CPA manage the associated risks. The Board is also responsible to:
Provide strategic direction to CPA;
Consider transactions beyond authorities delegated to the Chief Executive Officer in consultation with the RMT;
Consider changes to the Energy Risk Hedging Strategy (see Appendix B); and Consider new transaction types not currently listed in the ERMP (see Appendix C).
4.2 Risk Management Team
The RMT is responsible for implementing, maintaining and overseeing compliance with the ERMP and for maintaining the Energy Risk Hedging Strategy. The members of the RMT consist of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, and the Vice President of Power Supply. A minimum of three (3) RMT members are required in order for an action or approval to be effective. In the event of any Vacancy, the RMT may (i) appoint interim RMT member(s) or (ii) operate the RMT with the remaining RMT member(s), until such time as the Vacancy is filled or the reason for the Vacancy no longer exists.
The primary goal of the RMT is to ensure that the procurement activities of CPA are executed within the guidelines of the ERMP and are consistent with Board directives. The RMT shall consider and propose changes to the ERMP when conditions dictate.
Pursuant to direction and delegation from the Board of Directors and the limitations specified by this ERMP, the Chief Executive Officer, in consultation with the RMT, maintains authority over procurement activities for CPA. This authority includes, but is not limited to, taking any or all actions necessary to ensure compliance with the ERMP.
The RMT responsibilities may include, but are not limited to:
Maintain the Energy Risk Hedging Strategy and ensure that all procurement strategies and related protocols are consistent with the ERMP;
Review financial and risk models and subsequent changes; Establish counterparty Credit Limits;
Review initial counterparty credit review models and methods for setting and monitoring Credit Limits and subsequent changes;
Review reports as described in the ERMP;
Meet to review actual and projected financial results and potential risks; Keep apprised of any change in the environment in which CPA operates that has a material effect upon the risk profile of CPA;
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17 Review summaries of limit violations and recommend corrective actions, if necessary; and Review the effectiveness of CPA’s energy risk measurement methods.
4.3 Segregation of Duties
CPA shall work to maintain a segregation of duties, also referred to as “separation of function,” to help manage and control the risks outlined in the ERMP. Individuals responsible for legally binding CPA to a transaction will not also perform confirmation or settlement functions without supplemental, transparent, and auditable controls. CPA also will leverage the organizational structure of the Scheduling Coordinator’s Middle and Back offices to help maintain a segregation of duties. The Front, Middle and Back Office responsibilities for CPA are described below.
4.3.1 Front Office
The Front Office is headed by the Vice President, Power Supply. The Front Office has overall responsibility for (1) managing all activities related to procuring and delivering resources needed to serve CPA load, (2) analyzing fundamentals affecting load and supply factors that determine CPA’s net position, and (3) transacting within the limits of the ERMP and associated policies to balance loads and resources and maximize the value of CPA assets through the exercise of approved optimization strategies. Other duties associated with these responsibilities include:
Assist in the development and analysis of risk management hedging products and strategies, and bring recommendations to the RMT;
Prepare a monthly operating plan for the prompt month (the month following the current month) that gives direction to the Day-Ahead and Real-Time Market trading and scheduling staff regarding the bidding and scheduling of CPA’s resource portfolio in the CAISO market; Calculate and maintain the net forward positions (a forecast of the anticipated electric demands compared to existing resource commitments) of CPA for all power products (energy, renewable energy, Carbon Free Energy and Resource Adequacy Capacity); Develop, price and negotiate hedging products;
Oversee scheduling of load and resources into CAISO;
Keep accurate records of all executed transactions;
Manage and facilitate the transaction execution process for power supply transactions through coordination of the following activities:
o Notify Front Office personnel of any anticipated unique physical delivery or scheduling issues;
o Work with Middle Office personnel and legal counsel to establish a contract, evaluate counterparty creditworthiness and secure additional credit from the counterparty, if necessary;
o Work with Middle Office, as needed, to perform an analysis of the potential transaction to evaluate the effect on CPA’s portfolio risks;
o Notify Back Office of terms and conditions affecting settlement to ensure that the necessary settlement procedures are in place.
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18 4.3.2 Middle Office
The Middle Office functions are the responsibility of the Chief Financial Officer. The Middle Office provides market and credit risk oversight, has responsibility for development of risk management policies and procedures, monitors compliance with the same, and keeps management and the Board informed on risk management issues. CPA will maintain its Middle Office functions independent from the front and back office functions.
Middle Office responsibilities include the following:
Create and ensure compliance with policies outlining standard procedures for conducting business;
Oversee short-term and long-term load forecasting;
Estimate and publish daily forward monthly power curves and weekly publish natural gas price curves for a minimum of the balance of the current year through the next calendar year; Verify the net forward positions of CPA for all power products; Ensure that CPA adheres to all risk policies and procedures; Implement and enforce credit policies and limits;
Confirm all transactions conform to commercial terms and alert Front Office to discrepancies;
Ensure all trades have been entered into the System of Record as well as the Scheduling Coordinator’s transaction data management system;
Ensure that all CAISO Day-Ahead, Fifteen Minute and Real-Time Market delivery volumes and prices are entered into a transaction database;
Review models and methodologies and recommend RMT approval, as needed; Mark unrealized and realized gains and losses associated with CPA hedge activity. Development and maintain financial and energy risk management models as directed by the RMT Develop and maintain load forecasting models and perform long term load forecasts as directed by RMT
4.3.3 Back Office
The Back Office functions are the responsibility of the Chief Financial Officer. It provides support with a wide range of administrative activities necessary to execute and settle transactions and to support the risk control efforts (e.g., transaction entry and/or checking, data collection, billing, etc.) consistent with the ERMP. Through its partnership with the Scheduling Coordinator, CPA will maintain its Back Office functions independent from the Front and Middle Office functions.
Back Office responsibilities include the following:
Ensuring timely and accurate financial reporting;
Maintaining a system of financial controls and business processes that control financial risk; Maintaining the overall financial security of transactions undertaken on behalf of CPA;
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19 Carrying out month-end checkout of all transactions each month; and Validation and prompt payment of energy related invoices payable by CPA and resolving disputes with counterparties;
Generation and prompt collection of energy related invoices payable by counterparties
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20 Section 5: DELEGATION OF AUTHORITY
5.1 Risk Limits
The following limits apply to all CPA procurement activities. These limits are Board-approved and define the limits that CPA must operate within. The metrics and management of risk within these limits is further described in the Energy Risk Hedging Strategy.
5.1.2 Delegation Authority
Through its approval of the ERMP, the Board has delegated operations and oversight to the Chief Executive Officer, in consultation with the RMT, as outlined through the ERMP. Specifically, to facilitate daily operations of the CCA, the Board has delegated transaction execution authorities shown in the table below.
Table 5.1.2.*
Position Transaction Type Term
Limit
Maturity
Limit
Counterparty
Limit
Notional
Value Limit
(per
transaction)
Notional
Value
Limit
(annual)
Chief Executive
Officer in
consultation
with the RMT
Tolling Agreements 3 years 3 years
Pursuant to
Credit Policy
in Section 6
of this Policy
Within hedge limits
approved in the Energy
Risk Hedging Strategy in
Appendix B of this Policy.
New Build 5 years 7 years
Any transactions
other than Tolling
Agreements or New
Build
10 years 10 years
*
See Appendix A for definitions of “Tolling Agreement,” Term Limit,” “Maturity Limit,” and “New Build.” For operational flexibility, the Chief Executive Officer will have the authority to delegate transaction execution authority to either the Chief Operating Officer, or Vice President, Power Supply, as needed. Any delegation will be documented in writing using the form in Appendix G or a written delegation containing substantially similar information as provided in Appendix G.
For a transaction to be valid, it must conform to each of the limits specified in Table 5.1.2, above.
These limits will be applied to wholesale power procurement outside of transactions directly executed with the CAISO. These limits provide CPA the needed authority to manage risks as they arise. Transactions falling outside the delegations above require Board approval prior to execution.
Transactions with CAISO and CAISO administrative fees are excluded from this table. CAISO transactions are limited to those required for scheduling contracts in the CAISO market and for balancing CPA’s load and resources.
5.1.3 Long‐Term Procurement
Long-term procurement, defined as transactions greater than the Limits specified in Table 5.1.2 will be subject to Board approval. Long-term contracts are procured through solicitations, bilateral negotiations,
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21 or regulatory proceedings, with oversight including shortlist approvals or procurement recommendations, provided by the Energy Resources & Planning Committee of the Board.
All long-term contracts are evaluated using standard evaluation criteria, including economic value over the life of the contract and any additional evaluation criteria established by the Energy Resources & Planning Committee and consistent with Board policy directives. Proposals received in solicitations, including all pricing and other confidential submission information, are reviewed by an RFO Review Team comprised of the Chief Executive Officer, additional Staff members as determined by the Chief Executive Officer, and a subset of Board members serving on the Energy Resources and Planning Committee, unless otherwise determined appropriate by the Chief Executive Officer and General Counsel in consultation with the Board Chair and Chair of the Energy Resources and Planning Committee. Proposals, either from solicitations, bilateral negotiations, or regulatory proceedings, are evaluated by the Energy Resources & Planning Committee and approved for shortlist to enter into contract negotiations, which includes but is not limited to entering into Eexclusivity Aagreements. In the event of exigent circumstances, such as fast-track negotiations, staff are authorized to enter into Exigent Exclusivity Agreements for up to a total of 90 days prior to the Energy Resources & Planning Committee’s approval to enter into contract negotiations.
On or before the conclusion of the term of the Exigent Exclusivity Agreement a project subject to an Exigent Exclusivitysuch Aagreement may either (i) be brought to the Energy Committee for approval to enter into contract negotiations or (ii) terminate pursuant to the provisions of the Exigent Exclusivity Aagreement, whichever is earliest. Final awards are then presented for Board consideration in accordance with applicable law.1
The allocation of CAISO Commercial Interest Points and associated Right of First Offer agreement do not require approval by the Energy Resources & Planning Committee.
Any amendments to a Board-approved long-term contract that make material changes to the terms of the contract including, but not limited to, (a) price increase, (b) volume change greater than 10%, (c) capacity change greater than 10%, (d) extension of the guaranteed commercial operation date not permitted under the contract that is (i) greater than 3 months or (ii) whenwithout the payment of liquidated damages are not paid for the length of an extension up to 12 months, or (ii) 12 months or greater with or without the payment of liquidated damages, (e) changes to counterparty security requirements, or (f) other amendments that would result in a downgrade of impactto the evaluation criteria upon which a project was approved (collectively “Material Changes”) must be also approved the Board.
Any changes that are not Material Changes are minor, non-core and administrative in nature, or arising from the counterparties effectuating or clarifying their understanding of the obligations related to the project under normal course of business, including but not limited to guaranteed commercial operation date extension of 3 months or less, or 12 months or less when liquidated damages are paid for the length of the extension, implementing project financing, consent to collateral assignment, assignments, changes to progress reporting forms, insurance obligations, or termination, may be approved and executed by the Chief Executive Officer or Chief Operating Officer. The Chief Executive Officer will provide a monthly report to the Board on any agreements or amendments executed pursuant to this delegation. 1 Awards will be presented without market sensitive information (i.e., pricing or other sensitive commercial terms) for Board consideration in accordance with applicable law.
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22 All procurement executed under the delegation above must align with CPA’s underlying risk exposure (i.e., load requirements, locational and temporal) that is being hedged consistent with the Energy Risk Hedging Strategy. The RMT will consider risks associated with executed or planned long-term procurement within its evaluation of overall portfolio risk and procurement decision-making.
5.1.4 Volume Limits
Transactions should not be executed that exceed CPA’s energy, capacity, or renewable or Carbon Free Energy requirements. If there is an adjustment to CPA requirements resulting in the volume of existing transactions exceeding CPA’s requirements, the RMT will determine the most favorable strategy to appropriately rebalance the portfolio.
An exception to the above limits may be made by the RMT if executing a transaction exceeding load will minimize costs or is necessary to ensure compliance. For example, procuring RA for the entire year could cause CPA to hold excess RA in certain months. Such a transaction would be acceptable if a lower cost alternative transaction or set of transactions that more closely matches monthly needs is unavailable.
5.1.5 Locational Limits
The delivery location for all transactions must support the requirements of CPA’s source or sink locations.
5.1.6 CAISO Submission Limits
CPA shall bid at least 80% of its forecast load requirements in the Day-Ahead Market and bids shall not exceed 100% of forecast load requirements.
CPA shall offer no more than 100% of the forecasted generation capability in the Day-Ahead Market. CPA shall follow CAISO protocols for all activity within CAISO.
5.2 Monitoring, Reporting and Instances of Exceeding Risk Limits The Middle Office is responsible for monitoring and reporting compliance with all limits within the ERMP.
If a limit or control is violated, the Middle Office will send notification to the trader responsible for the violation and the RMT. The RMT will discuss the cause and potential remediation of the exceedance to determine next steps for curing the exceedance.
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23 Section 6: CREDIT POLICY AND COUNTERPARTY SUITABILITY Prior to execution of any transaction other than for long term procurement transactions governed by Section 5.1.3, the Front Office will verify that CPA has executed a master agreement with the counterparty, that the counterparty has been evaluated for creditworthiness, and that an approved Credit Limit has been established. No transactions described in this section may be executed without first ensuring the transaction falls within the unutilized Credit Limit for the counterparty or has been approved on an exception basis by the Chief Financial Officer.
6.1 Master Enabling Agreements and Confirmations
Transactions are governed by master agreements, the forms of which must be prepared by CPA General Counsel and approved by the Board. No transactions may be executed without a fully executed master agreement being on file. Written confirmations of each transaction will contain standard commercial terms and provisions. Material modifications or additions to standard commercial terms in confirmations require approval by legal counsel. Modifications to standard credit terms in confirmations or enabling agreements require approval by CFO.
It is CPA’s policy to confirm all transactions in writing. All confirmations received from counterparties will be matched against trades in the System of Record. Any discrepancies between a confirmation and the System of Record may be handled by the Front Office representative that executed the transaction, or if necessary, a Middle Office representative will seek resolution with the counterparty. All confirmations will be kept on file.
6.1.1 Exceptions
It is standard industry practice to not provide written confirmation of certain short-term transactions with a term of one day or less. Additionally, CPA may agree with certain counterparties to alternative methods for confirming certain transactions. Transactions executed in a recorded telephone conversation or recorded instant message in which the offer and acceptance shall constitute the agreement of the parties must be confirmed in writing after-the-fact, with notice being provided to the counterparty within 72 hours.
6.2 Counterparty Suitability
All counterparties shall be evaluated for creditworthiness by the Middle Office prior to execution of any transaction and no less than annually thereafter. Additionally, counterparties shall be reviewed if a change has occurred, or is perceived to have occurred, in market conditions or in a company’s management or financial condition. This evaluation, including any recommended increase or decrease to a Credit Limit, shall be documented in writing and include all information supporting such evaluation in a credit file for the counterparty.
Counterparty Credit Limits, and credit and payment terms will be recommended by the Middle Office for approval by the RMT consistent with CPA’s Credit Protocols. The Middle Office will undertake credit analysis that shall include, at a minimum, an evaluation of current audited financial statements or other supplementary data and consider factors such as:
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24 Liquidity
Leverage (debt)
Profitability
Net worth
Cash flow
Proposed collateral and other contract terms
Counterparty’s senior unsecured or corporate credit rating will be obtained from one of the nationally recognized rating agencies (S&P, Moody’s, and/or Fitch) if available. Trade and banking references, and any other pertinent information, may also be used in the review process.
When establishing credit and payment terms, RMT will consider the Credit Limit of the counterparty, current exposure to the counterparty, the product type and tenor of existing and/or future transactions, notional value of proposed or future transactions with the counterparty and the availability/scarcity and commercial significance of the product being traded. A counterparty may choose to provide a guarantee from a third party, provided the third party satisfies the criteria for a Credit Limit as outlined herein.
6.3 Maximum Credit Limit
Each new counterparty Credit Limit or increase to an existing limit will be reviewed by the RMT. The maximum amount of any Credit Limit extended to a counterparty shall not exceed $50,000,000 unless approved in writing by the Board.
6.4 Credit Review Exceptions
Counterparties not subject to the above credit review criteria include those associated with Day-Ahead and current day purchases where risks associated with market movements are minimal.
6.5 Credit Limit and Monitoring
The Middle Office will monitor the current credit exposure for each counterparty with whom CPA transacts and include such information in the Current Counterparty Credit Risk Report. This report will be submitted to the RMT for review pursuant to the reporting requirements outlined in Section 7.
Current credit exposure is a measure of the known exposures and composed of two primary exposures – (1) realized exposure, and (2) forward exposure. Realized exposure, a payable or receivable amount owed between counterparties, is a measurement of cash flow for billed and unbilled transactions. Forward exposure is a measure of current unrealized exposure and includes the measure of a counterparty’s incentive to fulfill contractual obligations. Forward exposure measures the risk associated with having a payment default or the need to replace a transaction in the event of delivery default.
6.6 CPA Credit Support
Counterparties may require CPA to post a form of credit support, such as cash or a letter of credit. The Middle Office will ensure that any CPA credit support requirements are evaluated and approved within the context of the overall transaction approval as specified herein.
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25 Section 7: POSITION TRACKING AND MANAGEMENT REPORTING A vital element in the ERMP is the regular identification, measurement and communication of risk. To effectively communicate risk, all risk management activities must be monitored on a frequent basis using risk measurement methodologies that quantify the risks associated with CPA’s procurement-related business activities and performance relative to identified goals.
Minimum reporting requirements are shown below. The reports outlined below will be presented to the RMT, except reports to the Board. Reports will be generated weekly unless otherwise noted. Financial Model Forecast
Latest projected financial performance, marked to current market prices, and shown relative to CPA’s financial goals.
Net Position Report
Latest forward net position report, by product type (energy, PCC1, PCC2, Carbon Free Energy and RA capacity) for the current and prompt year.
Counterparty Credit Exposure
Current counterparty credit exposure compared against limits approved by CPA, as well as the limit assigned to CPA by the counterparty.
Monthly Risk Analysis
Cash flow forecasting and stress testing of financial forecasts relative to financial goals. Gross margin at risk reporting. Additional discussion of the specific gross margin at risk reporting and its application is provided in the Energy Risk Hedging Strategy. Monthly Transaction Reporting
The following transactions executed under the authority delegated in Section 5.1.2 will be reported monthly to the Board: (i) Any Tolling Agreement; (ii) any transaction with a Term greater than five years.
Quarterly Board Reporting
Update on activities, projected financial performance, and general market outlook to be presented quarterly at Board meetings, communicated in a way to ensure CPA confidentiality and market sensitive data is not released.
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26 Section 8: ERMP REVISION PROCESS
The ERMP will evolve over time as market and business factors change. At least on an annual basis, the Chief Executive Officer, in consultation with the RMT, will review the ERMP and associated procedures to determine if they should be amended, supplemented, or updated to account for changing business conditions and/or regulatory requirements. If an amendment is warranted, the ERMP amendment will be submitted to the Board for approval. Changes to ERMP appendices may be approved and implemented by the Chief Executive Officer, in consultation with the RMT, with the exception of Appendices B and C, which will require Board approval.
8.1 Acknowledgement of ERMP
All CPA Representatives participating in any activity or transaction within the scope of the ERMP or in the case of a consultant, an executive of the consultant or a delegated representative authorized to bind the consultant with regard to ERMP obligations shall sign, on an annual basis or upon any revision, a statement approved by the Chief Executive Officer, in consultation with RMT, that such CPA Representative has:
Read the ERMP;
Understands the terms and agreements of said ERMP;
Will comply with said ERMP;
If an employee, understands that any violation of said ERMP shall subject the employee to discipline up to and including termination of employment; If a consultant, understands that any violation of said ERMP may be grounds for consultant contract termination; and
If a Board member, understands that any violation of said ERMP shall subject the Board member to action by the Board.
8.2 ERMP Interpretations
Questions about the interpretation of any matters of the ERMP should be referred to the Director, Energy Market Risk Management.
All legal matters stemming from the ERMP will be referred to CPA counsel.
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27 Appendix A: DEFINITIONS
Back Office: That part of a trading organization which handles transaction accounting, confirmations, management reporting, and working capital management.
Baseload Equivalent Position: A measure of Resource Adequacy (RA) position that consolidates CPA's multi-hour (hourly) RA requirement into a single MW value by equating it to an equivalent amount of continuous, 24-hour (24×7) capacity. It represents the volume of 24×7 RA required to close out CPA's hourly RA short position, or the maximum volume of 24×7 RA that may be sold from a long position.
CAISO: California Independent System Operator. CAISO operates a California bulk power transmission grid, administers the State’s wholesale electricity markets, and provides reliability planning and generation dispatch.
CAISO Commercial Interest Points: CAISO Commercial Interest Points are assigned by the California Independent System Operator (CAISO) to Load Serving Entities like CPA and can be allocated to early-stage renewable energy projects. These points help prioritize projects in CAISO’s interconnection study process and increase the likelihood of projects being studied for interconnection.
Calendar Quarter: A three-month period that commences on January 1, April 1, July 1 or October 1 and ends on March 31, June 30, September 30 or December 31, respectively.
Calendar Year: A 12-month period that commences on January 1 and ends on December 31.
California Carbon Allowance: Compliance instrument that a covered electricity importer/first deliverer must surrender to CARB to cover the greenhouse gas emissions attributed to electricity imported into California, based on the emissions reported under CARB’s Mandatory Reporting Regulation.
Carbon Free Energy: Energy that is generated from a specific zero carbon emitting generating asset that does not qualify as an RPS- eligible generation source. It is commonly used to note energy from large hydroelectric or nuclear generation that while non-carbon emitting, is not and RPS-eligible generation source. is Sosometimes referred to as specified source energy.
CCA: Community Choice Aggregator. CCAs allow local government agencies such as cities and/or counties to purchase and/or develop generation supplies on behalf of their residents, businesses and municipal accounts.
CFTC: Commodity Futures Trading Commission. The CFTC is a U.S. federal agency that is responsible for regulating commodity futures and swap markets. Its goals include the promotion of competitive and efficient futures markets and the protection of investors and market participants against manipulation, abusive trade practices and fraud.
Congestion Revenue Right: A point-to-point financial instrument in the Day-Ahead Energy Market that entitles the holder to receive compensation for or requires the holder to pay certain congestion related transmission charges that arise when the transmission system is congested.
Credit Limit: The maximum amount of financial exposure one party is willing to extend to another.
Day-Ahead Market: The short-term forward market conducted by an Organized Market prior to the operating day. It is intended to efficiently allocate transmission capacity and facilitate purchases and sales of energy and scheduling of bilateral transactions.
Exclusivity Agreements: An agreement between CPA and a proposer approved by Energy Resources & Planning Committee to enter into contract negotiations, which secures the obligations of the proposer during an established negotiating period
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28 Exigent Exclusivity Agreements: An agreement between CPA and a proposer entered into prior to the Energy Resources & Planning Committee’s contract negotiations approval due to exigent circumstances, such as fast-track negotiations. This agreement secures the obligations of the proposer during an established negotiating period
FERC: Federal Energy Regulatory Commission. FERC is a federal agency that regulates the interstate transmission of electricity, natural gas and oil. FERC also reviews proposals to build liquefied natural gas terminals, interstate natural gas pipelines, as well as licenses hydroelectric generation projects.
Front Office: That part of a trading organization which solicits customer business, services existing customers, executes trades and ensures the physical delivery of commodities.
Franchise Fee: A franchise fee is a percentage of gross receipts that an IOU pays cities and counties for the right to use public streets to provide gas and electric service. The franchise fee surcharge is a percentage of the transmission (transportation) and generation costs to customers choosing to buy their energy from third parties. IOUs collect the surcharges and pass them through to cities and counties.
IOU: An Investor Owned Utility (IOU) is a business organization providing electrical and/or natural gas services to both retail and wholesale consumers and is managed as a private enterprise.
Limit Structure: A set of constraints that are intended to limit procurement activities.
Maturity Limit: The maximum time period between transaction execution date and the date of the final delivery of the contracted product.
Middle Office: That part of a trading organization that measures and reports on market risks, develops risk management policies and monitors compliance with those policies, manages contract administration and credit, and keeps management and the Board informed on risk management issues.
New Build: The development and construction of a new generating or storage facility or an expansion, upgrade, or redevelopment of an existing facility where incremental capacity is offered.
PCIA: Power Cost Indifference Adjustment or successor. The PCIA is intended to compensate IOUs for their stranded costs when a bundled customer departs and begins taking generation services from a CCA.
Portfolio Content Category 1 (PCC1) Renewable Energy: Energy and bundled Renewable Energy Credits that is simultaneously procured from an RPS-Eligible Facility that is directly interconnected to the distribution or transmission grid within a California balancing authority area (CBA); or that is not directly interconnected to a CBA but is delivered to a CBA without substituting electricity from another source.
Portfolio Content Category 2 (PCC2) Renewable Energy: Energy and bundled Renewable Energy Credits that is simultaneously purchased from an RPS-Eligible Facility, but the energy is firmed and shaped with substitute electricity scheduled into a CBA within the same calendar year as the renewable energy is generated.
Portfolio Content Category 3 (PCC3) Renewable Energy: Renewable Energy Credits from RPS-eligible facilities that do not meet the definition of PCC1 or PCC2.
Prompt Quarter (PQ): The Calendar Quarter beginning immediately after the current Calendar Quarter.
PQ + n is the nth Calendar Quarter following Prompt Quarter.
Prompt Year (PY): The Calendar Year beginning immediately after the current Calendar Year.. PY + n is the nth Calendar Year following Prompt Year.
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29 Real-Time Market: The real-time market is a spot market in which LSEs can buy power to meet the last few increments of demand not covered in their day ahead schedules, up to 75 minutes before the start of the trading hour.
Resource Adequacy Capacity: A capacity product whereby a Seller commits to a must offer obligation of its generator in the CAISO market and on behalf of a specified Load Serving Entity.
Right of First Offer (ROFO) Agreement: An agreement resulting from CPA’s CAISO Commercial Interest Point allocation process under which a developer or counterparty commits to offer a project, or its capacity or output, to CPA before offering the same opportunity to any other party, for a defined period.
RPS-Eligible Facility: Defined under CA Public Utilities Code § 399.11 et seq. and CA Public Resources Code § 25740 et seq. as an electrical generating facility using technologies such as biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells using renewable fuels, small hydroelectric generation of 30 megawatts or less, ocean wave, ocean thermal, or tidal current.
Settlement: Settlement is the process by which counterparties agree on the dollar value and quantity of a commodity exchanged between them during a particular time interval.
Stress testing: Stress testing is the process of simulating different financial outcomes to assess potential impacts on projected financial results. Stress testing typically evaluates the effect of negative events to help inform what actions may be taken to lessen the negative consequences should such an event occur.
System of Record (SOR): An information storage system that is the authoritative data source for a given data element or piece of information.
Term Limit: The total duration of the contract counted as the maximum time period between the beginning flow date of contracted product deliveries and the ending flow date of contracted product deliveries, inclusive.
Tolling Agreement: An agreement between a power buyer and a power generator, under which the buyer supplies the fuel, either physically or financially, and receives an amount of power generated based on an assumed conversion rate at an agreed cost. Typically used for generation facilities powered by natural gas and excludes battery storage.
Trade Capture: mMeans tThe process of updating the System of Record with new contract data.
Vacancy: A vacancy exists in the case of death, incapacity, illness, an excused absence, family emergency, jury duty, religious observance, vacation, resignation or termination of employment from CPA, a material change in a member’s job duties or responsibilities, conflict of interest, or an unavoidable absence.
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30 Appendix B: ENERGY RISK HEDGING STRATEGY
1.1 Introduction
CPA is routinely exposed to commodity price risk and volume variability risk in the normal conduct of serving the power supply requirements of its customers.
This Energy Risk Hedging Strategy (ERHS) describes the strategy and framework that CPA will use to hedge the power supply requirements of its customers. Specific focus is on procurement of the following market-based products:
Fixed Priced Energy
Portfolio Content Category 1 Renewable Energy
Portfolio Content Category 2 Renewable Energy
Carbon Free Energy
Resource Adequacy Capacity
In addition to market-based transactions entered into pursuant to this ERHS, CPA will also enter into longer-term power purchase agreements (PPAs) pursuant to statutory requirements (e.g., SB 350 mandate to, by 2021, procure a minimum of 65 percent of RPS requirements under a 10-year or longer power purchase agreement), as well as voluntary long-term resource acquisition decisions made independently by CPA pursuant to its Integrated Resource Plan or other approved Board-approved strategies. Long-term Power Purchase Agreements (PPAs) will count as hedges as described later in this ERHS.
2.1 Governance
This ERHS shall be updated, as necessary, from time to time and governed by the Energy Risk Management Policy (ERMP) approved by the CPA Board of Directors.
3.1 Hedging Program Goals
The overall goal of the ERHS is to identify exposure to commodity prices, quantify the financial impact variability in commodity prices, load requirements and generation output may have on the ability of CPA to meet its financial program goals, and manage the associated risk.
The primary goals that guide this ERHS are:
Acquire a portfolio of resources with lower greenhouse gas emissions and higher renewable content than SCE;
Meet reliability requirements established by the state of California, and operate in a manner consistent with prudent utility practice;
Maintain competitive retail rates with SCE after adjusting for exit fees (currently the Power Charge Indifference Adjustment or PCIA) and Franchise Fees paid by CPA customers; Build financial reserves to ensure the CPA’s long-term financial objectives are achieved.
All hedging activities will be conducted to achieve results consistent with the above goals and to meet the
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31 power supply requirements of CPA’s customers. Any transaction that cannot be directly linked to a requirement of serving CPA’s customers, or that serves to reduce risk is prohibited.
4.1Hedging Targets and Strategies
4.1.1 Fixed Price Energy
Fixed Price Energy purchases allow for suppliers to deliver energy – for which CPA will receive energy market revenues – to CPA at a fixed price. They are used to manage the electricity commodity price risk that the CPA faces as a Load Serving Entity. Specific to CPA’s customers, Fixed Price Energy hedges are used to provide cost certainty and rate stability.
When assessing its requirements for Fixed Price Energy, CPA will use an econometric model to forecast hourly energy requirements and monthly peak demand by customer load class. The model will use historical data to estimate relationships between energy consumption and economic, demographic and/or weather variables. The model will be refined through time as additional load and other data is acquired. CPA employs Fixed Price Block Energy contracts, which provide for suppliers to deliver a predetermined volume of energy at a constant delivery rate. As CPA enters into long- term, fixed price contracts for renewable and/or carbon-free energy, these will likewise hedge CPA’s market risk and, subsequently, reduce the required volume of Fixed Price Block Energy purchases. Long term contracting has the further effect of increasing the hedge percentage in the second calendar quarter of the year above the hedge percentage in other quarters because energy consumption is lowest in the second quarter. Adjustments to the Maximum Hedge percentage in the second quarter, as described in the following paragraph, addresses this dynamic.
CPA will observe the following schedule when hedging its Fixed Price Energy Requirements for the first, third and fourth calendar quarters of each calendar year. The following schedule will also apply to the second calendar quarter, provided that 20% is added to the Maximum Hedge Percentage in prompt quarters +10-39, raising the limit from 70% to 90%. The Minimum and Maximum Hedge Percentage represent the Fixed Price Energy planned or under contract divided by forecasted load.
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32 Quarter
Minimum
Hedge %
Maximum Hedge
%
Prompt Q (PQ) 75% 110%*
PQ + 1 72% 110%*
PQ + 2 68% 110%*
PQ + 3 66% 110%*
PQ + 4 63% 105%*
PQ + 5 58% 99%
PQ + 6 52% 93%
PQ + 7 47% 90%
PQ + 8 41% 90%
PQ + 9 36% 90
PQ + 10 – 39 (Q1) 30% 70%
PQ + 10 – 39 (Q2) 30% 90%
PQ + 10 – 39 (Q3) 30% 70%
PQ + 10 – 39 (Q4) 30% 70%
* Maximum hedge percentages allow for a planning margin to accommodate volumetric uncertainty associated with electric consumption and generation Energy hedging compliance will be measured within 5 days prior to the first day of each quarter for each month within the applicable quarter (e.g., on a date between September 26th and September 30th , 20246, CPA will have hedged 8575 to 110 percent of its projected energy requirements forload for each month of Q4 20246 and 8072 to 110 percent of requirementsprojected load for Q1 20257).
The minimum hedge level will be achieved by implementing a time-driven programmatic strategy. Time- driven programmatic hedges are executed at a predetermined rate pursuant to a time schedule and without regard for market conditions. The purpose of these hedging transactions is to achieve a reduction in variability in power supply costs by gradually increasing the amount of energy hedged as the actual date of consumption approaches. Time-driven strategies avoid the inherent impossibility of trying to consistently and accurately “time the market” to purchase energy at least cost when making hedging decisions. Additionally, a load serving entity the size of CPA needs to spread its procurement efforts over time to effectively manage the potential negative price impacts of procuring a large volume of energy, over a short period of time, in an illiquid market.
Hedging decisions to reach targets between the minimum and maximum hedge levels will be based on price-driven or opportunistic strategies. The purpose of price-driven or opportunistic strategies is to capitalize on market opportunities when conditions are favorable. CPA will base its decision to execute opportunistic hedges on the anticipated impact to projected power supply costs and the resulting reduction in risk.
Opportunistic hedges may be executed when energy price levels are favorable to lowering the cost of
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33 power relative to established program goals and financial projections; alternatively, opportunistic hedges can be executed in adverse market conditions relative to financial goals in order to reduce the potential negative impact of continued upward trending commodity prices relative to established goals.
In executing this ERHS, Fixed-Price Energy hedges may be modified, repositioned, sold or unwound for the purpose of maintaining hedge coverage that matches changes in forecast electric load. This includes the ability of the CPA to use liquid market products to hedge average loads over a defined time period and then later modify its hedges to more precisely match load.
4.1.2 Renewable Energy
In order to cost-effectively meet its GHG-reduction and renewable energy goals, CPA intends to meet a growing share of its energy supply requirements with renewable energy, a large portion of which will be Product Content Category 1 (PCC1) renewable energy. PCC1 renewable energy is sourced from a renewable generator that is either directly interconnected to the California Independent System Operator (CAISO) or another California Balancing Authority or directly scheduled into CAISO without use of substitute energy. CPA shall diversify its renewable energy portfolio further by incorporating Portfolio Content Category 2 (PCC2) renewable energy purchases. PCC2 renewable energy is sourced from renewable generators located outside the state of California- where that generation is “firmed and shaped” for delivery into California. PCC2 purchases are typically less expensive and shorter in term than PCC1, so they provide a cost-effective and flexible method of augmenting CPA’s renewable energy purchases to meet renewable portfolio content commitments to customers. However, not all PCC2 renewable energy is emissions-free; therefore, CPA must assess the value of PCC2s against its respective emissions intensity. In addition, RPS compliance rules set minimum requirements for PCC1 and PCC2 as a percentage of the total RPS compliance portfolio, which CPA will abide by in its procurement of both products.
In order to manage price risk of long-term renewable energy, and to allow CPA to prudently and methodically build a portfolio of long-term assets, CPA intends to meet its renewable energy targets with a blend of short and long-term contracts. CPA intends to fully comply with long-term contracting requirements mandated by SB 350; therefore, executed and planned long-term renewable contracts will be reflected in CPA’s renewable energy positions.
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34 CPA shall observe the following schedule while hedging its renewable energy requirements. This hedge schedule shall be measured within 5 days prior to the first day of each quarter for the Current Calendar Year, and within 5 days prior to December 1 of each year for the following ten Calendar Years.
Time Period Minimum Hedge % Maximum Hedge %
Current Calendar Year 90 110*
Prompt Calendar Year 80 110*
PY + 1 50 105*
PY + 2 50 100
PY + 3 50 95
PY + 4 – 9 50 95
* Maximum hedge percentages allow for a planning margin to accommodate volumetric uncertainty associated with electric consumption and generation
4.1.3 Carbon Free Energy
In pursuit of its GHG-reduction objections, CPA shall augment its renewable energy purchases outlined above with energy purchases from carbon-free energy generating facilities, which are typically hydro-electric resources located in California that are too large to qualify as Eligible Renewable Resources (30 MW or greater) or located outside of California. Similar to PCC2 renewable energy contracts, carbon-free energy purchases are typically short-term, most frequently one to three years in length.
CPA may have the opportunity to receive free carbon free allocations from SCE. Hedging activity should consider these allocations and expected allocations should be included in the hedging percentage.
CPA will observe the following schedule when hedging its Carbon-Free renewable energy requirements.
This hedge schedule shall be measured within 5 days prior to the first day of each quarter for the Current Calendar Year, and within 5 days prior to December 1 of each year for the following ten Calendar Years.
Time Period Minimum Hedge % Maximum Hedge %
Current Calendar Year 85 110*
Prompt Calendar Year 75 110*
PY + 1 50 110*
PY + 2 0 100
PY + 3 0 75
PY + 4 – 9 0 75
* Maximum hedge percentages allow for a planning margin to accommodate volumetric uncertainty associated with electric consumption and generation In setting the above targets, it is important to note that the purchase of Carbon Free Energy is a voluntary requirement set by the CPA Board to exceed SCE’s GHG emissions goals. In determining the total volume
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35 of Carbon Free Energy to be hedged, the CPA Board may elect to increase or reduce the total quantity of Carbon Free Energy included in CPA’s portfolio as it seeks to balance multiple program objectives, including financial goals such as targets for financial reserves and retail rates.
4.1.4Resource Adequacy Capacity
As a Load-Serving Entity (LSE) in California, CPA is required to demonstrate both annually and monthly that it has secured sufficient energy capacity to provide for its share of California’s energy load; this capacity is referred to as Resource Adequacy (RA). CPA has RA requirements, a portion of which must be Flexible RA Flexible RA requirements ensure resources are available on the grid to provide ancillary services such as ramping and regulation.
RA is typically transacted via contracts that vary in length, and it is currently bought and sold via a bilateral market, which not only provides cost-effective contracting opportunities but also proves at times to be fragmented and volatile. It is the goal of CPA to meet all RA requirements, including flex, and system products.
CPA will observe the following schedule when hedging its RA requirements. The hedge schedule shall be measured using CPA’s Baseload Equivalent Position for the system RA product for the RA Net Peak Hour that CPA is required to procure within 5 days prior to December 1 of each year for the Prompt Calendar year and the nine subsequent calendar years. Baseload Equivalent Position is a metric that consolidates multi-hour requirements into a single value by equating them to an equivalent amount of continuous, 24- hour capacity. It represents the volume of 24x7 RA required to close out an hourly short position or the maximum volume of 24x7 RA available that can be sold from a long position. where the RA Net Peak Hour represents the hour of the calendar year in which the CPA’s hourly RA under contract minus its RA requirement is the smallest measured in MW.
Time Period Minimum Hedge %
(applicable to all hoursmonths)
Maximum Hedge %
(applicable to RA Net Peak
Hourpeak month only)2
Prompt Calendar Year 90 105*
PY + 1 50 95
PY + 2 35 90
PY + 3 35 90
PY + 4 35 90
PY + 5 – 9 35 80
* Maximum hedge percentages allow for a planning margin to accommodate volumetric uncertainty associated with electric consumption and generation For the purposes of calculating compliance with the minimum hedge target in years beyond the prompt year, 2 Due to the variable nature of CPA’s RA requirements, hours other than the RA Net Peak Hours may exceed the applicable Maximum Hedge %.
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36 CPA may consider standalone storage resources for which sufficient hourly surplus RA has not yet been procured for the portfolio during the battery’s expected charging window.
4.1.5 Congestion Revenue Rights (CRRs)
As a CAISO market participant, CPA has congestion risk associated with serving its customer load. CPA manages congestion risks by preferring day ahead scheduling of energy delivered at SP-15, and by resource assessment and selection consistent with this Policy. Once energy is procured, CPA manages congestion risk through the prudent management of CRRs, which are financial instruments used to hedge against transmission congestion costs encountered in the CAISO day-ahead market. The RMT is responsible for overseeing the management of CRRs and CRR trading. The CRR portfolio will be managed by CPA's Front Office with support from CPA’s Scheduling Coordinator. CRRs are transacted to effectively manage portfolio congestion risk. Trading of CRRs for speculative purposes is not permitted.
5.1Hedge Program Metrics
The success of the Energy Risk Hedging Strategy will be measured by realizing power supply costs in line with the budgeted power supply costs used to set customer rates, as well as by reducing CPA’s exposure to commodity price risk.
Current projected power supply costs will be compared to budgeted power supply costs where budgeted costs will be based on the assumptions used at the time customer generation rates are set. Current power supply costs shall use all fixed priced contracts executed as of the date of the report. All open positions will be marked to market and compared to the budgeted power supply costs.
The Front and Middle Office will use a variety of industry standard metrics to evaluate open positions and potential hedge transactions. RMT will review these metrics when making price-driven or opportunistic hedging decisions to ensure that the transactions are consistent with the goals of the Energy Risk Hedging Strategy. These metrics will be updated and reported on a monthly basis.
6.1Reporting Requirements
The following reporting is required to manage the hedge program and to ensure its success:
Net position report for each product
Current projected power supply costs compared to budget Gross margin at Risk
GHG intensity
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37 Appendix C: AUTHORIZED TRANSACTION TYPES
All transaction types listed below must be executed within the limits set forth in the ERMP. Definitions for each product are provided in Appendix A.
CAISO Market Products
CPA is authorized to transact in CAISO market products including but not limited to those listed below. Products subsequently introduced by CAISO that are required or available to Load-Serving Entities are deemed included within CPA's authorized transaction types under this Appendix; any such products will be expressly added to the list below as part of the next annual review and amendment of the ERMP.
o Day-Ahead Market Energy (Energy purchased from the CAISO Day-Ahead Market.) o Real-Time Market Energy (Energy purchased from the CAISO in the Real-Time Market) o Congestion Revenue Rights (A point-to-point financial instrument in the Day-Ahead Energy Market that entitles the holder to receive compensation for or requires the holder to pay certain congestion related transmission charges that arise when the transmission system is congested.)
o Convergence Bids (Financial positions, either demand or supply, taken in the Day-ahead Market and liquidated in the Real-Time Market.)
o Inter-Scheduling Coordinator Trades (A trade between two Scheduling Coordinators that is a settlement service that CAISO offers to parties of a bilateral contract as a means of offsetting CAISO settlement charges against bilateral contractual payment responsibilities.) o Ancillary Services (Reserve and regulation products procured through CAISO markets to maintain real-time grid reliability. Ancillary Services are comprised of Regulation Up, Regulation Down, Spinning Reserve, and Non-Spinning Reserve.) o Imbalance Reserve (A day-ahead capacity product procured by CAISO under the Day-Ahead Market Enhancements [DAME] to address forecast uncertainty between day-ahead schedules and real-time conditions. Procured in both Imbalance Reserve Up and Imbalance Reserve Down directions.)
o Reliability Capacity (A day-ahead capacity product procured by CAISO under the Day-Ahead Market Enhancements [DAME] to address reliability needs not met by existing Resource Adequacy or other capacity products, particularly under tight system conditions. Procured in both Reliability Capacity Up and Reliability Capacity Down directions.) Physical Energy Products
o Short-Term Energy (Energy traded in the CAISO market or bilaterally for a duration less than one year.)
o Long-Term Energy (Energy traded in the CAISO market or bilaterally for a duration greater than one year.)
o Physical Over-the-Counter (OTC) Options (Call options that give the buyer the right, but not the obligation, to buy an underlying power product at agreed upon terms as detailed in a confirmation agreement; or put options that give the seller the right, but not the obligation, to sell an underlying power product at agreed upon terms as detailed in a confirmation letter.) Resource Adequacy Capacity (A capacity product whereby a Seller commits to a must offer obligation of its generator in the CAISO market and on behalf of a specified Load Serving Entity.)
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38 Import Capability Rights (Entitles an LSE to count Resource Adequacy products at a specified import location toward its Resource Adequacy Requirements.) Physical Environmental Products
o PCC1, PCC2 and PCC3 Renewable Energy (see definition in Appendix A)3 o Carbon Free Energy (see definition in Appendix A)
o California Air Resource Board Allowances (An allowance is aA tradeable permit issued by the California Air Resource Board to emit one metric ton of a carbon dioxide equivalent greenhouse gas emissions.). CPA is required to procure and surrender compliance instruments, including allowances, when it is the importer of record for non-GHG-free energy delivered into the CAISO balancing authority area. CPA may procure allowances at CARB auction or on the secondary market to fulfill this compliance obligation. Financial Hedging Products
o Futures Contracts (A contract to buy or sell a commodity (electricity) at a predetermined price at a specified time in the future. Futures Contracts are standardized for quality and quantity to facilitate trading on a futures exchange (e.g., Intercontinental Exchange).) o Swaps (Financial contracts in which one party agrees to pay a cash flow calculated by multiplying a fixed volume by a fixed price (fixed price payer) and the other party agrees to pay a cash flow calculated by multiplying the same fixed volume times a market reference index price (floating price payer). At settlement, the party owing the higher amount pays the net difference. Swaps are transacted in over-the-counter markets.) o Call and Put Options (Call options give the buyer the right, but not the obligation, to purchase energy or other instruments. Put options give the buyer the right, but not the obligation, to sell energy or other instruments.)
o Options on Swaps (Swaptions) (call options give the buyer the right, but not the obligation, to enter into a swap transaction as the fixed price payer. A put option gives the buyer the right, but not the obligation, to enter into a swap transaction as the floating priced payer.) Transmission (The reservation and transmission of capacity and energy between two points on a transmission provider’s system.)
Tolling Agreements An agreement between a power buyer and a power generator, under which the buyer supplies the fuel, either physically or financially, and receives an amount of power generated based on an assumed conversion rate at an agreed cost. Typically used for generation facilities powered by natural gas and excludes battery storage. 3 Clean Power Alliance’s Joint Power’s Agreement discourages the purchase and use of PCC3 products. PCC3 products will only be acquired under exceptional circumstances requiring the use of this product to achieve the agency’s environmental and financial goals.
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39 Appendix D: NEW TRANSACTION TYPE APPROVAL FORM
New Transaction Type Approval Form
Prepared By:
Date:
New Transaction Type Name:
Business Rationale and Risk Assessment:
Product description – including the purpose, function, expected impact on net revenues (i.e., increase, manage volatility, control variances, etc.) and/or benefit to CPA Identification of the in-house or external expertise that will be relied upon to manage and support the new or non-standard transaction
Assessment of the transaction’s risks, including any material legal, tax or regulatory issues How the exposures to the risks above will be managed by the limit structure Proposed valuation methodology (including pricing model, where appropriate) Proposed reporting requirements, including any changes to existing procedures and system requirements necessary to support the new product
Proposed accounting methodology
Proposed Middle Office work flows/methodology, including systems Brief description of the responsibilities of various departments within CPA who will have any manner of contact with the new or non-standard transaction Reviewed by:
Vice President, Power Supply Date
Chief Operating Officer Date
Chief Executive Officer Date
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Appendix E: NOTICE OF CONFLICT OF INTEREST
To: [insert title]
Declaration of Conflict of Interest
I understand that I am obligated to give notice in writing to Clean Power Alliance of any interest or relationship that I may have in any counterparty that seeks to do business with Clean Power Alliance, and to identify any real or potential conflict of interest such counterparty has or may have with regard to any existing or potential contract or transaction with Clean Power Alliance, within 48-hours of becoming aware of the conflict of interest.
I would like to declare the following existing/potential conflict of interest situation arising from the discharge of my duties concerning Clean Power Alliance activities covered by the scope of the ERMP:
a) Persons/companies with whom/which I have official dealings and/or private interests:
b) Brief description of my duties which involved the persons/companies mentioned in item a) above.
Position and Name:
Signature:
Date:
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Appendix F: CODE OF MARKETING AND TRADING PRACTICES
See next page.
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CPA Code of Marketing and Trading Practices, Version 1.1 (updated July 18, 2019)
Clean Power Alliance of
Southern California
Code of Marketing and Trading Practices
July 12, 2018
Definitions
Marketing and Trading Employee – Any employee, contractor, consultant, or agent of CPA who engages in procurement activity.
Scope of Code
This Code of Marketing and Trading Practices (the “Code”) applies to all CPA Marketing and Trading Employees.
Each person subject to this Code is required to read, understand, and abide by the provisions contained in this Code.
Purpose
In addition to demonstrating CPA’s commitment to ethical business practices, this Code is designed to ensure that CPA complies with its obligations under state and federal laws, rules and regulations promulgated by various governmental agencies, and applicable policies adopted by CPA. This Code defines and affirms the values and principles that CPA’s Marketing and Trading Employees must follow in conducting their business activities. The Code is intended to complement the other policies, procedures and processes of CPA and to guide traders and marketers as they negotiate transactions, arrange for transmission, and manage risk.
Compliance with the Code allows CPA to assure its counterparties, potential customers, regulators, and the public that its business activities are, and will continue to be, conducted with integrity and unlawful/unethical trading practices will not be tolerated.
Questions about compliance with industry and company regulations as well as with this Code should be referred to CPA’s General Counsel.
Policy
CPA’s Marketing and Trading Employees shall:
1. Conduct business in good faith and in accordance with all applicable laws, regulations, tariffs and rules.
2. Endeavor to always act in the best interests of CPA’s customers.
3. Not disseminate, cause to be disseminated or facilitate the dissemination of known false or misleading information, or engage in transactions in order to exploit known false or misleading information.
4. Engage only in transactions with legitimate business purposes.
5. Not knowingly arrange or execute wash trades.
6. Not engage in any activity with the intent to alter any market price or otherwise interfere with the normal operation of a well -functioning competitive market.
7. Not engage in price reporting or furnishing transaction prices to any entity that collects prices to be used in the calculation of a price index or for distribution to subscribers, without prior written approval of CPA’s General Counsel.
8. Not collude with other market participants to: (i) affect the price of any commodity; (ii) allocate territories, customers or products; or (iii) otherwise restrain competition.
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CPA Code of Marketing and Trading Practices, Version 1.1 (updated July 18, 2019)
9. Not engage in transactions for commodities or services without the intention of providing those specific commodities or services.
10. Not reserve service, attempt to reserve service, access information, or attempt to access information from any transmission service provider except through means available to all eligible customers.
11. Successfully complete yearly CPA compliance training.
12. Comply with requirements that trading and marketing activities are recorded and retained.
13. Cooperate with any audit or investigation into trading and marketing activities.
Duty to Report Violations and Non-Retaliation Clause
A Marketing and Trading Employee who believes that a violation of the Code has occurred is required to promptly notify CPA’s Chief Operating Officer. CPA shall make every effort to ensure the confidentiality of the reporting Marketing and Trading Employee. If the reporting Marketing and Trading Employee is a CPA employee, CPA shall not discharge, suspend, demote, harass, layoff, deny a promotion, or take any other retaliatory action against that employee solely as a result of the act of reporting a suspected violation of the code. This in no way affects CPA’s rights as an employer with respect to all other issues. CPA will monitor and follow up to ensure that employees who have reported alleged violations have not been subject to retaliation.
Disciplinary Action
Any failure to abide by this Code, including the Duty to Report Violations, will result in disciplinary action. All potential violations are handled on a case-by-case basis and will result in a full review by, at minimum, the following individuals: the CPA employee’s immediate supervisor and CPA’s General Counsel. Factors that are considered in setting the disciplinary action plan include but are not limited to: source of violation discovery (self-reported, peer-reported, reported by a third party, via internal procedures, or the result of an audit), intent (accidental or intentional), type and magnitude of risk that the CPA employee exposed CPA to (financial, reputation, etc.), and frequency of the violation (first offense or history of multiple offenses).The disciplinary actions taken may involve demotion, loss of compensation (suspension without pay), and termination of employment.
I have read CPA’s Code of Marketing and Trading Practices, understand its requirements, and agree to abide by its provisions.
Signature Printed Name Date
Agenda Page 96
CPA Code of Marketing and Trading Practices, Version 1.1 (updated July 18, 2019)
Appendix G: CEO SIGNING AUTHORITY DELEGATION FORM
Signing Authority Delegated To:
Effective Date:
Expiration Date:
Product:
CPA Buys/Sells
Delivery and Maturity Term:
Maximum Volume (per transaction):
Maximum/Minimum Price:
Maximum Notional (cumulative):
CEO and RMT Reporting – specify
intended date of report, data to be
reported, and frequency (required):
Other Notes/Guidelines:
Chief Executive Officer approval signature:
Agenda Page 97
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 June 2026 Bill Positions Report Date: July 2, 2026
RECOMMENDATION
Receive and file.
ATTACHMENT
1. 2026 Legislative and Regulatory Policy Platform
Agenda Page 98
Board of Directors Item 6
Bill Number &
Author
Title & Summary Status CPA Position Alignment
with CPA
Policy
Platform
Notes
AB 2396
Assemblymember Jacqui
Irwin
Community choice
aggregators: electric
transmission lines Would
authorize a CCA to
develop, finance, construct,
operate, lease purchase
and maintain electric
transmission lines as part
of the State’s newly
created Transmission
Accelerator.
5/14/26
Held in Assembly
Appropriations
Committee
Sponsor 1g Stemming from direction at
the 2025 Board retreat, this
CPA sponsored bill would
allow CCAs to take advantage
of tax-exempt debt to bring
down the cost of transmission
lines via a new state-backed
Transmission Accelerator,
with savings that would be
passed on to ratepayers.
AB 1761
Assemblymember Chris
Rogers
Electricity: calculation
methodology: data
disclosure
Would require the CPUC or
IOUs to share all data
underlying the Power
Charge Indifference
Adjustment (PCIA) with
CCAs.
6/10/26
Referred to Senate
Committee on Energy,
Utilities and
Communications
Support 1a, 4a This California Community
Choice Association (CalCCA)
sponsored bill would allow
CCAs to ensure PCIA
calculations are accurate and
CCA customers are not
overcharged.
SB 1138
Senator Steve Padilla
Load-serving entities:
resource adequacy
6/15/26 Support 2a This CalCCA sponsored bill
would correct a mismatch
Agenda Page 99
Board of Directors Item 6
requirements. Would give
CCAs and other load-serving entities (LSEs)
flexibility to transact
Resource Adequacy (RA)
load obligations at the
hourly level.
Amended and Re-Referred to Assembly
Appropriations
between how LSE’s RA
obligations are calculated and
how LSEs buy and sell RA. It
could annually save millions of
dollars on unnecessary costs
for ratepayers.
AB 2313
Assemblymember Marc
Berman
Gas corporations: gas
distribution service line
replacements:
alternatives
Would require gas utilities
to offer a Gas Distribution
Service Line Replacement
Alternative Program.
6/18/26
Amended and Re-Referred to Senate
Committee on Utilities,
Energy and
Communications
Support 3b, 5a Also known as the Home
Energy Choice Act, this bill
would allow a residential gas
customer facing a planned or
forecasted gas service line
replacement to their home to
discontinue gas service and
instead choose a voluntary
incentive to electrify their
home.
SB 868
Assemblymember Scott
Wiener
Electricity: portable solar
generation devices.
Would exempt portable
solar devices from state
law and electric utility rules
regarding interconnection
requirements
6/15/26
Amended and Re-Referred to Assembly
Appropriations
Watch 3a, 5c This bill would exempt plug-in
solar panels, also known as
balcony solar, from typical
interconnection requirements
from a utility, electrician or a
building code official. While
popular in many parts of
Europe, balcony solar is
typically not allowed in the US
Agenda Page 100
Board of Directors Item 6
without utility approval, and
therefore not as prevalent.
AB 2383
Assemblymember Rick
Chavez Zbur
Electricity: large energy
use facilities
Would require the CPUC to
establish a retail electricity
classification and schedule
for large energy use
facilities, as well as a
standard contract overseen
by the CPUC.
6/15/26
Amended and Re-Referred to Senate
Committee on Utilities,
Energy and
Communications
Watch 1b, 1e, 1f, 2a,
2b
One of several bills focused
on data centers, CCAs
support the general goals of
ensuring that data centers
cover their costs without
burdening other ratepayers.
CPA’s trade association
CalCCA helped to secure
recent amendments that
ensured these goals could be
met without giving the CPUC
new authorities over CCA
rates and customer contracts.
AB 2111
Assemblymember Diane
Papan
Electricity: transmission
planning and
transmission facilities
Would require the CEC,
CPUC, and CAISO to
update transmission
planning in-line with FERC
guidance.
6/16/26
Amended and Re-Referred to Senate
Appropriations
Watch 2a, 2b Would modernize California’s
transmission planning
framework by requiring
planners to evaluate multiple
future eventualities instead of
relying on a single load
forecast to drive transmission
investments.
SB 1329
Senator Jerry McNerney
Real property tax:
valuation: active solar
energy system
6/22/26
Amended and Re-Referred to Assembly
Watch 2b This bill would establish
uniform valuation for a solar
energy system and that the
Agenda Page 101
Board of Directors Item 6
Would establish uniform
rules regarding the method
of valuation of an active
solar energy system.
Committee on Revenue
and Tax
valuation of such a system is
limited to only the tangible
property comprising the active
solar energy system and does
not include intangible assets
and rights of the system.
AB 1975
Assemblymember Nick
Schultz
Electric corporations:
distribution grid
utilization metric
Would require the CPUC to
establish a grid utilization
metric to encourage load
shifting.
5/14/26
Held in Assembly
Appropriations
Committee
Watch 3a This bill aims to manage
distribution costs and reduce
the need for infrastructure
upgrades by providing
financial incentives to IOUs to
encourage load shifting and
more efficient use of existing
grid technology. Ensuring
CCAs are not put at a
competitive disadvantage will
be key.
AB 2369
Assemblymember Chris
Rogers
Electricity: resource
adequacy requirements:
transmission facility
planning
Would modify the resource
adequacy (RA) program to
value “energy-only”
resources and maximize
their interconnection
6/10/26
Referred to Senate
Committee on Energy,
Utilities and
Communications
Watch 2a, 2b, 2d This bill would change the
current approach to grid
management by allowing new
energy resources to
interconnect to the grid (above
and beyond the current
resources) even if they cannot
deliver RA on a 24/7 basis.
Agenda Page 102
Board of Directors Item 6
AB 2266
Assemblymember Nick
Schultz
Electricity: load-serving
entities
Would streamline
regulations between
compliance reports for the
Integrated Resource Plan
(IRP), Renewable Portfolio
Standard (RPS), and RA
obligations.
6/22/26
Amended and Re-Referred to Senate
Appropriations
Support 2a, 2b, 2c LSEs spend significant
resources tracking and
compiling compliance reports,
and any changes to provide
more certainty and reduce
duplicate work could benefit
all LSEs.
AB 1934
Assemblymember Steve
Bennett
State Fire Marshal: home
hardening certification
Would require the Office of
the State Fire Marshal’s
Wildfire Mitigation Advisory
Committee to develop an
implementation plan for a
home hardening
certification program.
6/17/26
Amended and Re-Referred to Senate
Natural Resources
Committee.
Support 3c, 5a One of several bills proposed
in response to wildfire
destruction, this bill would
develop a voluntary, home
hardened certification
program that state incentives
could then be tied to.
AB 1960
Assemblymember Steve
Bennett
Wildfire Prevention Grant
Program: identified
cohesive fire
communities
Would allow CAL FIRE to
disperse Wildfire
Prevention Grant funding
to communities that have
6/3/26
Referred to Senate
Natural Resources and
Emergency
Management
Committees
Support 3c, 5a One of several bills proposed
in response to wildfire
destruction, this bill
approaches wildfire resilience
on a community level by
incentivizing communities to
reduce risk together rather
than one at a time.
Agenda Page 103
Board of Directors Item 6
reached at least 50% of
homes hardened.
AB 1964
Assemblymember Steve
Bennett
State Fire Marshal: Home
Hardening
Would strengthen
statewide standards for
home hardening in fire-prone areas by directing
the State Fire Marshal to
expand and update
requirements for ember-resistant construction and
retrofit measures.
6/3/26
Referred to Senate
Committee on
Emergency
Management
Support 3c, 5a One of several bills proposed
in response to wildfire
destruction, this bill
approaches wildfire resilience
on a community level by
establishing a more robust,
science-based home
hardening standards for new
and existing homes.
SB 894
Senator Ben Allen
Wildfire resiliency:
financial assistance
Would establish the
California Wildfire
Resilience Loan Program
to provide financial
assistance for projects and
activities that reduce
wildfire-related risks and
losses
6/4/26
Referred to Assembly
Natural Resources and
Emergency
Management
Committees
Support 3c, 5a One of several bills proposed
in response to wildfire
destruction, this bill would
connect borrowers with low
interest financing options,
backed by the state, to
finance home hardening
improvements.
AB 710
Assembly Member Jaqui
Irwin
Microgrid Projects
Would establish mandatory
collaborative frameworks
6/15/26
Referred to Senate
Committees on
Watch 3a,3c Has potential to increase
transparency and data for
CCAs that would allow them
Agenda Page 104
Board of Directors Item 6
and strict data-sharing
protocols between IOUs
and local public agencies.
Judiciary and Energy,
Utilities and
Communications
to more easily develop
microgrid projects by requiring
technical data from IOUs.
AB 1787
Assembly Member Jaqui
Irwin
Smart meter
infrastructure: dynamic
rate option
Would require large IOUs
to offer customers an
optional dynamic rate tariff
tied to upgraded smart
meter infrastructure and
real-time grid conditions.
6/15/26
Double referred to
Senate Committees on
Judiciary and Energy
Utilities and
Communications
Watch 2b, 4a, 4c While the measure advances
California’s broader demand
flexibility and electrification
goals, it raises key concerns
for CPA and CCAs,
particularly around rate parity,
data access, cost shifting, and
CCA program autonomy.
CalCCA is actively working to
try to resolve these issues.
Agenda Page 105
2026 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 directly 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. Pursuing power resource planning and procurement that promotes the growth in renewable energy capacity at the local, state, and regional level and reduces fossil fuel dependency, with the goal of combating climate change.
3. Developing and administering customer programs that encourage clean energy adoption by CPA customers and the use of that clean energy in an efficient and managed way to support cost reduction and grid reliability.
Agenda Page 106
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 platform below.
Policy Platform
1. Affordability and Local Control
a. Cost allocation: CPA will pursue administrative and legislative initiatives that will ensure that non-bypassable charges for CPA customers, including any income-based fixed charges, are assessed fairly compared to bundled customers. b. Fair rates: CPA will engage in legislative initiatives that seek to ensure that rates are reasonable and transparent, and that balance evolving wildfire and grid hardening needs with affordability.
c. 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 is not disparately impacted by new regulations. d. CCA Expansion: CPA will pursue administrative and legislative initiatives to protect CPA’s ability to expand its service to new member agencies. e. Customer Acquisition: CPA will pursue administrative and legislative initiatives that preserve the CCA model as the default service provider for all eligible customers in its service territory.
f. 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.
g. Infrastructure Financing: CPA will pursue administrative and legislative initiatives that support alternative approaches to financing energy infrastructure that reduce costs for all customers.
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
Agenda Page 107
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. Renewable and Carbon-Free Resources: CPA will pursue administrative and legislative initiatives that will maximize CPA’s ability to procure eligible Renewable Portfolio Standard (RPS) and carbon-free 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, as well as providing CPA adequate and equal access to transmission capacity. c. 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.
d. Customer Interconnection: 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. e. 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.
f. Grid Reliability: CPA will pursue administrative and legislative initiatives that support the expansion of a regional Western energy grid that improves reliability; accelerates decarbonization; improves transmission planning; reduces costs for ratepayers 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 and its customers
Agenda Page 108
to develop and participate in programs that promote the use of clean energy in an efficient and managed way to support cost reduction, grid reliability, and lower greenhouse gas emissions.
b. Building and vehicle decarbonization: CPA will pursue administrative and legislative initiatives that support the ability of CPA to promote statewide building and vehicle decarbonization, primarily through electrification. c. Local Grid Management and Resiliency: CPA will pursue administrative and legislative initiatives that support 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. d. 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, inform the development and implementation of customer programs, and properly plan for procurement needs.
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, potential technological improvements, and other factors. c. Billing Transparency: CPA will pursue administrative and legislative initiatives that increase customer understanding of electricity bill components and display electricity charges in a clear and consistent manner for both bundled and unbundled customers.
5. Diversity, Equity, Inclusion
a. Protecting vulnerable customers: CPA will pursue administrative and legislative initiatives that support healthy communities, particularly environmental and social justice communities in CPA’s service territory.
b. Supplier Diversity: CPA will pursue administrative and legislative initiatives that support supplier diversity in CPA’s contracting activities and through women-
Agenda Page 109
owned, minority-owned, disabled-veteran-owned, and lesbian, gay, bisexual, and/or transgender owned business enterprises.
c. Energy Equity: CPA will pursue administrative and legislative initiatives that support increased access to clean energy technologies, workforce development initiatives that support the clean energy industry, and clean energy opportunities for environmental and social justice communities in CPA’s service territory.
Agenda Page 110
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: July 2, 2026
RECOMMENDATION
Receive and file.
MEETING REPORT
The Community Advisory Committee did not meet in June.
Agenda Page 111
Staff Report – Agenda Item 8
To: Board of Directors
From: Alexandra Caryotakis, Senior Advisor, Structured Contracts Reviewed by: John McNamara, Director, Structured Contracts Lindsay Descagnia, Vice President, Power Supply
Matt Langer, Chief Operating Officer
Nancy Whang, General Counsel
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Renewable Power Purchase Agreement with 22SV 8me LLC for the Rexford II Project
Date: July 2, 2026
RECOMMENDATION
Approve and authorize the Chief Executive Officer to execute a 20-year 200 MW Solar + 200 MW Storage Renewable Power Purchase Agreement (PPA) with 22SV 8me LLC for the Rexford II project.
BACKGROUND
CPA launched its 2025 Clean Energy and Reliability Request for Offers (RFO) on May 20, 2025, with bids due on June 30, 2025. The goal of the RFO was to solicit and evaluate offers for renewable energy generation, energy storage, and other resources with reduced GHG emissions in order to meet CPA’s energy and Resource Adequacy procurement obligations, its environmental objectives, and to offer its customers cost-competitive, clean energy options.
The RFO sought offers in the following product categories:
1. Renewable Portfolio Standard (RPS) Generation Only
2. RPS Generation Plus Storage
Agenda Page 112
Board of Directors Item 8
1 3
5 2
3. Standalone Storage
4. Resource Adequacy (RA) Only
5. Portfolio Content Category 1 (PCC1) Energy Only Fixed Price or Index Plus
6. Dispatchable Thermal Energy with RA
CPA received a robust response with 106 proposals. Of those proposals, 25 proposals withdrew for various reasons leaving 81 available proposals. The majority of proposals received were for Standalone Storage followed by RPS Generation Plus Storage. On September 12, 2025, a Review Team consisting of four members of the Board’s Energy Committee as well as senior staff consisting of the Chief Executive Officer, Chief Operating Officer, and the Vice President, Power Supply, met to analyze the submitted projects. These Review Team members evaluated confidential terms and conditions, including pricing, and selected a shortlist and waitlist of projects to recommend to the Energy Committee. On September 24, 2025, the Energy Committee reviewed and approved the recommended shortlist and waitlist, authorizing staff to proceed with contract negotiations. The Rexford II project was on the shortlist that the Energy Committee approved.
Rexford II is a new-build project. Per CPA’s Energy Risk Management Policy, any transactions for new-build projects with greater than a 5-year term or 7-year maturity limit are required to be approved by the Board.
CPA retained Kevin Fox with Keyes and Fox to represent CPA and its interests in the negotiation of the Rexford II agreement. The work of Keyes and Fox was overseen by CPA’s General Counsel.
Agenda Page 113
Board of Directors Item 8
1 3
5 2
OVERVIEW OF PROJECT
Project Technology Capacity
(MW) Online Date Term Location Developer
Rexford
II
Solar plus
Storage
200 MW
Solar + 200
MW
Storage
05/01/2029 20 Tulare
County Avantus
The project is described in detail in the attached Project Description.
RATIONALE
The Rexford II PPA will help CPA meet its long-term renewable energy and RA obligations and reduce the need to procure these products in a volatile short-term market. The execution of this agreement will provide a total of 200 MW of RPS-qualified energy generation and 200 MW of RA beginning on May 1, 2029. The project has an executed interconnection agreement and has secured Full Capacity Deliverability Status (FCDS) for the storage facility. The project is one of the last remaining opportunities for CPA to secure renewable energy supply before federal tax credits are phased out, as tax credit-eligible renewable energy projects bidding into CPA’s 2026 Clean Energy and Reliability RFO may be scarce.
ENVIRONMENTAL REVIEW
This PPA for the purchase of energy does not fall under the definition of “project” under Section 21065 of the Public Resources Code and under California Environmental Quality Act (CEQA) Guidelines Section 15378(a). In addition, the PPA is exempt under CEQA Guidelines Section 15061(b)(3). The project developer of the Rexford II project, Avantus, has acquired the necessary California Environmental Quality Act (CEQA) approvals and land use permits with relevant lead agencies in Tulare County. The project has completed its Environmental Impact Report and received its Special Use Permit from Tulare County in 2022.
CPA has no role, jurisdiction, or authority whatsoever with respect to permit review or project approval for the project.
Agenda Page 114
Board of Directors Item 8
1 3
5 2
ATTACHMENTS
1. Project Description: Rexford II
2. Rexford II Power Purchase Agreement Presentation
3. Renewable Power Purchase Agreement with 20SV 8me LLC for the Rexford II project1
1 Consistent with industry practice, portions of the agreement have been redacted to protect market sensitive information and CPA’s ratepayers, as revealing market sensitive information could set a floor thereby weakening CPA’s competitive position on subsequent projects presented to CPA. Board members who wish to review the redacted terms should contact Chief Operating Officer Matt Langer ([email protected]) to arrange a briefing.
Agenda Page 115
Board of Directors Item 8
1 3
5 2
PROJECT DESCRIPTION: Rexford II
Project Overview
Rexford II is a 200 MW solar plus 200 MW / 800 MWh lithium-ion battery storage facility located in Tulare County. Rexford II is another phase of the larger Rexford complex; CPA is an offtaker from the neighboring Rexford I facility. The commercial operation date is May 1, 2029.
Under the proposed agreement, CPA would contract for 200 MW of solar and 200 MW of storage from the facility. CPA pays a fixed-price per MWh for renewable energy from the solar and a fixed price per kW-month for capacity from the storage project, with no escalation for the full term of the proposed 20 year contract. The storage facility will provide 200 MW of RA. CPA is entitled to all product attributes from the facility, including energy, ancillary services, and RA.
Developer
Avantus is an established renewable energy developer which has developed over two dozen large-scale projects now operating or under construction, totaling approximately 6,500 MW of solar and 8,000 MWh of storage across the Western United States and Texas. Avantus is one of California’s leading clean energy companies and has contracted approximately 500 MW of solar and 1,400 MWh of storage with the state’s Community Choice Aggregators (CCAs). CPA and Avantus have contracted in the past for the Rexford I project, which is still in CPA’s portfolio but which was transferred to a new owner, AES.
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 seven other evaluation criteria categories (Development Score, Workforce Development, Environmental Stewardship, Benefits to Disadvantaged Communities, Project Location, Tax Credit Price Adjuster and Tariff Price Adjuster). Below is the ranking assigned to this project in each of those categories.
Agenda Page 116
Board of Directors Item 8
1 3
5 2
Value
The Rexford II offer fell within the second quartile (Q2) of the 22 RPS + Storage submissions ranked by NPV and was the third-ranked RPS Plus Storage offer when excluding projects with low environmental scores and/or had not secured FCDS. The project’s price is guaranteed and will not be subject to any adjustment, a quality which may be difficult to procure in the future as renewable energy tax credits begin to phase out.
The solar portion of the contract is priced competitively compared to current market prices as reflected in LevelTen’s Q1 PPA 2026 Price Index, which provides a “P25”3 solar PPA price based on recently offered solar projects in CAISO. A similar benchmark for the storage portion of the project does not exist.
Development Score
The project ranks High as it is in late-stage development and substantially de-risked. The project has secured full site control. All interconnection studies have been completed, and the interconnection agreement is executed. The project has received key local permits including a Special Use Permit.
3 LevelTen is an advisory firm and marketplace that enables buyers and sellers to transact renewable energy power purchase agreements (PPAs) and compiles market-condition statistics and reports based on actual transactions. “P25” represents the most competitive 25th percentile offer price.
Agenda Page 117
Board of Directors Item 8
1 3
5 2
Workforce Development
The project ranks High as construction for the project will be done under a Project Labor Agreement. The developer estimates that the project will create 500 new direct construction jobs and 10 permanent jobs.
Environmental Stewardship
The project ranks High because it is located on former agricultural lands that were taken out of cultivation due to low productivity and in an area with existing solar photovoltaic development. The project demonstrates additional water saving benefits beyond the climate and GHG reduction benefits of renewable energy.
Benefits to Disadvantaged Communities
The project ranks High as it is located within a Disadvantaged Community (DAC) and will provide job and workforce development opportunities to DACs within the region.
Project Location
The project ranks Medium because it is located within California but is not within Los Angeles or Ventura counties.
Tax Credit Price Adjuster
This category is not applicable as the project is offering a fixed price which does not include a price adjuster based on tax credit availability.
Tariff Price Adjuster
This category is not applicable as the project does not require tariff price adjusters.
Agenda Page 118
Rexford II Power
Purchase Agreement
July 2, 2026
Agenda Page 119
Executive Summary
2 CPA launched its 2025 Clean Energy and Reliability Request for Offers (RFO) on May 20, 2025, with proposals due on June 30, 2025. The goal of this RFO was to solicit and evaluate offers for renewable energy generation, energy storage and other energy resources with reduced GHG emissions in order to meet CPA’s energy and Resource Adequacy procurement obligations, its environmental objectives, and to offer its customers cost-competitive, clean energy options.
CPA received a robust response to the RFO from 106 proposals. 25 proposals withdrew for various reasons leaving 81 available proposals. The majority of proposals received were for Standalone Storage followed by Renewable Generation Plus Storage.
On September 12, 2025, a Review Team consisting of four members of the Energy Committee as well as senior staff consisting of the Chief Executive Officer, Chief Operating Officer, and the Vice President, Power Supply, met to analyze the submitted projects and recommend a shortlist. On September 24, 2025, the Energy Committee approved the recommended shortlist and authorized staff to proceed with negotiations.
One of the projects from the shortlist, Rexford II, has successfully completed negotiations and the Power Purchase Agreement (PPA) is presented to the Board for approval today.
Agenda Page 120
Action Requested
3 Action Requested
Approve and authorize the Chief Executive Officer to execute a 20-year 200 MW Solar + 200 MW Storage Renewable Power Purchase Agreement (PPA) with 22SV 8me LLC for the Rexford II project.
Agenda Page 121
Agenda
Background
PPA
Action Requested
Agenda Page 122
4 The purpose of the 2025 Clean Energy and Reliability RFO was to solicit competitive proposals to fill a portion
of CPA's portfolio needs with long-term contracts.
Under the RFO, four projects were shortlisted and eight projects were waitlisted.
The Rexford II project was on the shortlist.
Staff is in active negotiations with another project on the shortlist which might be brought to the Board on a future date. A second project on the shortlist has dropped out.
The last project on the shortlist is still performing
additional due diligence of the proposed site.
Staff does not anticipate shortlisting any of the waitlisted projects.
5 2025 Clean Energy RFO Shortlist
2025 Clean Energy RFO Shortlist
Project Type Project
Count
RPS
Capacity
(MW)
Storage Capacity
(MW)
Renewable Generation + Storage 2 400 400
Standalone Storage 2 500 0
Total 4 900 MW 400 MW
Agenda Page 123
Rexford II
6 Project Overview
200 MW Solar + 200 MW Storage project
Products: Renewable Energy Credits (RECs), energy, and RA Location: Unincorporated Tulare County
New build project with May 1, 2029 online date
Developer: Avantus
Term: 20 years
CPA is the offtaker on the neighboring project, Rexford I Criteria Rank
Value 2nd Quartile for RPS
+ Storage Offers
Development Score High
Workforce Development High
Environmental Stewardship High
Benefits to DACs High
Project Location Medium
Tax Credit Price Adjuster N/A
Tariff Price Adjuster N/A
Rationale
The project will help meet CPA’s renewable energy and Resource Adequacy procurement obligations.
The project was the 3rd most valuable solar + storage project when excluding projects with low environmental scores and/or which could not guarantee RA The project with has high qualitative scores and offers a procurement opportunity prior to the phase out of tax credits
The solar portion of the contract is priced competitively compared to current market prices as reflected in LevelTen’s Q1 PPA 2026 Price Index, which provides a “P25” representing the most competitive 25th percentile of solar PPA offer prices. A similar benchmark does not exist for PPA storage pricing.
Agenda Page 124
Action Requested
7 Approve and authorize the CEO to execute the 20SV 8me LLC Rexford II Renewable PPA Developer Project Name Capacity Online Date Term (years) Location Avantus Rexford II 200 MW Solar +
200 MW Storage 5/1/2029 20 Unincorporated
Tulare County
Agenda Page 125
APPENDIX:
Evaluation Scoring
for Renewable
Resources
Agenda Page 126
Evaluation Criteria
With the exception of natural gas tolls, projects are ranked using CPA’s standard criteria (see Appendix for detailed descriptions):
9 Environmental
Stewardship
Workforce
Development
Quantitative
Evaluation
Development
Risk
Project
Location
Benefits to
DACs
Tariff & Tax
Credit Price
Adjusters
Agenda Page 127
Quantitative Valuation Approach
Since long-term procurement of both RECs and RA was targeted in this RFO, projects were valued using two metrics RA Normalized NPV: Net Present Value (NPV) per MW of Resource Adequacy (RA) MW. This ranking metric is more appropriate for projects that provide capacity attributes such as standalone storage, RPS + storage, and thermal projects Energy Normalized NPV: NPV per MWh of generated energy. This ranking metric is more appropriate for generation only projects.
Offers were categorized into first through fourth quartiles based on their NPV rankings (Q1-Q4) • PPA Energy Cost ($/MWh)
Energy price CPA pays the counterparty
• Storage Only: PPA Storage Cost ($/kW-month)
Capacity price CPA pays the counterparty
Benefits Costs
• Energy Revenue ($/kWh)
Earnings from selling energy generation from facility
• Resource Adequacy ($/kW-month)
Replaces RA CPA would otherwise have to purchase
• Renewables Only: Renewable Energy Credit (REC) ($/kWh) Replaces RECs CPA would otherwise have to purchase
• Storage Only: Ancillary Services (AS) ($/kWh)
Earnings from selling ancillary services
• Storage Only: Energy Revenue ($/kWh)
Earnings from selling energy (from discharging the battery) Value (NPV) = Benefits – Costs
Agenda Page 128
10 Development Risk
Projects will be ranked from high (good) to low (bad)
The development risk metric is a composite rank based on a number of factors impacting project risk:
o Site control
o Interconnection status
o Environmental screens
o Land use and permits
o Project financing
o Developer experience
Agenda Page 129
11 Environmental Stewardship
Projects are ranked high, medium, neutral, and low based on the following prioritization:
Demonstrates multiple benefits (provides additional societal, health, economic, water saving, or environmental benefits beyond the climate and GHG reduction benefits of renewable energy)
HIGH
Located in an area designated as a preferred renewable energy zone and received required land use entitlement permits
MEDIUM
LOW Project is located in a high conflict area
NEUTRAL Project does not demonstrate either preference or avoidance criteria Agenda Page 130
12 Workforce Development
Projects are ranked high, medium, and low based on the following prioritization:
The project will use targeted-hire, union labor, or multi-trade project labor agreements (including requirements for state-apprenticeship graduates) HIGH The project does not have a labor agreement, but can demonstrate prevailing wage, union labor, and targeted hire commitments MEDIUM The project does not demonstrate prevailing wage, union labor, and targeted hire commitments
LOW
Agenda Page 131
13 Benefits to Disadvantaged Communities
Projects are ranked high, medium, neutral, and low based on the following prioritization:
Located within a DAC and demonstrates DAC workforce and community development benefits HIGH
Project not located within a DAC but can demonstrate DAC benefits and has completed community outreach MEDIUM
LOW Project is inconsistent with community priorities
NEUTRAL Project does not demonstrate DAC benefits
Agenda Page 132
14 Project Location
HIGH In Los Angeles and Ventura counties
Other counties within California
Projects located within a Federally-designated energy community or on tribal lands with demonstrated community support (including outside of California)
MEDIUM
Projects outside of California not located in a Federally-designated energy community or on tribal lands without demonstrated community support LOW
Projects are ranked high, medium, and low based on the following prioritization:
Agenda Page 133
15 Tariff and Tax Credit Price Adjusters
CPA considers the incremental reductions in contract price, identified in the Offer Form, if the Seller receives an Investment Tax Credit (ITC) or Production Tax Credit (PTC) above the proposer’s stated benchmark. Projects are ranked based on the percentage decrease relative to the Contract Price offered at the benchmark ITC/PTC rate identified by the Proposer.
Tariff Price Adjusters: CPA ranks based on projects that minimize the percentage increase in Tariff Price Adjusters relative to the Contract Price.
Agenda Page 134
16 RENEWABLE POWER PURCHASE AGREEMENT
COVER SHEET
Seller: 22SV 8me LLC, a Delaware limited liability company Buyer: Clean Power Alliance of Southern California, a California joint powers authority Description of Facility: A 200 MW solar photovoltaic Generating Facility combined with an 800 MWh (200 MW x 4 hours) battery energy Storage Facility, as more fully described herein 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
Complete.
Seller’s receipt of Phase I and Phase II Interconnection study results for Seller’s Interconnection Facilities Complete.
Executed Interconnection Agreement 10/27/2025
Financial Close
Expected Construction Start Date 7/1/2027
Initial Synchronization 2/1/2028
Network Upgrades completed (evidenced by delivery of
permission to parallel letter from the Transmission Owner) 5/15/2027 Expected Date of CAISO Commercial Operation 8/1/2028
Expected Commercial Operation Date 1/1/2029
Delivery Term: Twenty (20) Contract Years
Delivery Term Expected Energy:
Contract Year Expected Energy (MWh)
1 568,074
Agenda Page 135
2 566,375
3 564,643
4 562,871
5 561,051
6 559,189
7 557,285
8 555,331
9 553,324
10 551,270
11 549,169
12 547,016
13 544,807
14 542,526
15 540,191
16 537,797
17 535,343
18 532,829
19 530,236
20 527,563
Guaranteed Capacity: 400 MW of total Facility capacity
Guaranteed Storage Capacity: 200 MW of Installed Storage Capacity at four (4) hours of continuous discharge
Guaranteed PV Capacity: 200 MW of Installed PV Capacity Guaranteed Efficiency Rate:
Contract Year Guaranteed Efficiency Rate
Agenda Page 136
1 2
3 4
5 6
7 8
9 10
11 12
13 14
15 16
17 18
19 20
Guaranteed Construction Start Date: January 1, 2028
Guaranteed Commercial Operation Date: May 1, 2029
Agenda Page 137
Contract Price:
The Renewable Rate shall be:
Contract Year Renewable Rate
1 – 20 $ /MWh (flat) with
no escalation
The Storage Rate shall be:
Contract Year Storage Rate
1 – 20 $ /kW-mo. (flat)
with no escalation
Product:
☒ PV Energy
☒ Discharging Energy
☒ Green Attributes (if Renewable Energy Credit, please check the applicable box below):
☒ Portfolio Content Category 1
☐ Portfolio Content Category 2
☐ Portfolio Content Category 3
☒ Installed Storage Capacity and Effective Storage Capacity ☒ Ancillary Services
☒ Imbalance Reserves
☒ Capacity Attributes (select options below as applicable) ☒ Energy Only Status: for the Generating Facility
☒ Full Capacity Deliverability Status: for the Storage Facility Anticipated Flexible Capacity: Amount: 400 MW
Scheduling Coordinator: Buyer
Security Amounts:
Development Security: $125/kW of Guaranteed PV Capacity plus $125/kW of Guaranteed Storage Capacity
Performance Security: $125/kW of the lesser of Guaranteed PV Capacity and Installed PV Capacity plus $125/kW of Installed Storage Capacity
Agenda Page 138
TABLE OF CONTENTS
Page
i
ARTICLE 1 DEFINITIONS ..............................................................................................1
1.1 Contract Definitions .....................................................................................1
1.2 Rules of Interpretation ...............................................................................26 ARTICLE 2 TERM; CONDITIONS PRECEDENT........................................................27
2.1 Contract Term. ...........................................................................................27
2.2 Conditions Precedent .................................................................................28
2.3 Development; Construction; Progress Reports ..........................................29
2.4 Remedial Action Plan ................................................................................29
2.5 Pre-Commercial Operations Actions. ........................................................30 ARTICLE 3 PURCHASE AND SALE ............................................................................30
3.1 Purchase and Sale of Product .....................................................................30
3.2 Sale of Green Attributes.............................................................................30
3.3 Imbalance Energy. .....................................................................................30
3.4 Ownership of Renewable Energy Incentives. ............................................31
3.5 Future Environmental Attributes. ..............................................................31
3.6 [Intentionally Omitted]. .............................................................................31
3.7 Capacity Attributes. ...................................................................................31
3.8 Resource Adequacy Failure .......................................................................32
3.9 CEC Certification and Verification. ..........................................................33
3.10 Eligibility. ..................................................................................................33
3.11 California Renewables Portfolio Standard. ................................................34
3.12 Compliance Expenditure Cap. ...................................................................34
3.13 Project Configuration .................................................................................35 ARTICLE 4 OBLIGATIONS AND DELIVERIES .........................................................35
4.1 Delivery......................................................................................................35
4.2 Title and Risk of Loss. ...............................................................................36
4.3 Forecasting .................................................................................................36
4.4 Dispatch Down/Curtailment. .....................................................................38
4.5 Energy Management ..................................................................................39
4.6 Facility Maintenance ..................................................................................41
4.7 Guaranteed Energy Production. .................................................................42
4.8 Storage Facility Availability; Ancillary Services ......................................42
4.9 Storage Facility Testing .............................................................................43
4.10 WREGIS ....................................................................................................45
4.11 Dispatch Notices. .......................................................................................47 ARTICLE 5 TAXES ........................................................................................................47
5.1 Allocation of Taxes and Charges. ..............................................................47
5.2 Cooperation. ...............................................................................................47 ARTICLE 6 MAINTENANCE OF THE FACILITY ......................................................48
6.1 Maintenance of the Facility. ......................................................................48
Agenda Page 139
ii
6.2 Maintenance of Health and Safety. ............................................................48
6.3 Shared Facilities .........................................................................................48 ARTICLE 7 METERING .................................................................................................48
7.1 Metering. ....................................................................................................48
7.2 Meter Verification. .....................................................................................49 ARTICLE 8 INVOICING AND PAYMENT; CREDIT ..................................................49
8.1 Invoicing. ...................................................................................................49
8.2 Payment......................................................................................................50
8.3 Books and Records. ...................................................................................50
8.4 Payment Adjustments; Billing Errors. .......................................................50
8.5 Billing Disputes. ........................................................................................51
8.6 Netting of Payments. ..................................................................................51
8.7 Seller’s Development Security. .................................................................51
8.8 Seller’s Performance Security....................................................................51
8.9 First Priority Security Interest in Cash or Cash Equivalent Collateral ......52
8.10 Buyer Financial Statements .......................................................................52 ARTICLE 9 NOTICES ....................................................................................................53
9.1 Addresses for the Delivery of Notices .......................................................53
9.2 Acceptable Means of Delivering Notice ....................................................53 ARTICLE 10 FORCE MAJEURE ...................................................................................53
10.1 Definition ...................................................................................................53
10.2 No Liability If a Force Majeure Event Occurs ..........................................54
10.3 Notice .........................................................................................................54
10.4 Termination Following Force Majeure Event............................................55 ARTICLE 11 DEFAULTS; REMEDIES; TERMINATION ...........................................55
11.1 Events of Default .......................................................................................55
11.2 Remedies; Declaration of Early Termination Date. ...................................58
11.3 Damage Payment; Termination Payment. .................................................59
11.4 Notice of Payment of Termination Payment or Damage Payment. ...........60
11.5 Disputes With Respect to Termination Payment or Damage Payment. ....61
11.6 Limitation on Seller’s Ability to Make or Agree to Third-Party Sales from the Facility after Early Termination Date. .................................................61
11.7 Rights And Remedies Are Cumulative. .....................................................61
11.8 Mitigation. ..................................................................................................61 ARTICLE 12 LIMITATION OF LIABILITY .................................................................61
12.1 No Consequential Damages. ......................................................................61
12.2 Waiver and Exclusion of Other Damages. .................................................62 ARTICLE 13 REPRESENTATIONS AND WARRANTIES; AUTHORITY ................63
13.1 Seller’s Representations and Warranties. ..................................................63
13.2 Buyer’s Representations and Warranties. ..................................................64
Agenda Page 140
iii
13.3 General Covenants. ....................................................................................65
13.4 Workforce Development. ...........................................................................65 ARTICLE 14 ASSIGNMENT..........................................................................................65
14.1 General Prohibition on Assignments. ........................................................65
14.2 Collateral Assignment ................................................................................66
14.3 Permitted Assignment by Seller.................................................................66
14.4 Shared Facilities; Portfolio Financing. ......................................................66
14.5 Buyer Financing Assignment. ....................................................................66 ARTICLE 15 DISPUTE RESOLUTION .........................................................................67
15.1 Governing Law. .........................................................................................67
15.2 Dispute Resolution. ....................................................................................67
15.3 Attorneys’ Fees. .........................................................................................67
15.4 Venue. ........................................................................................................67 ARTICLE 16 INDEMNIFICATION ...............................................................................67
16.1 Indemnification. .........................................................................................67
16.2 Claims. .......................................................................................................68 ARTICLE 17 INSURANCE ............................................................................................68
17.1 Insurance ....................................................................................................68 ARTICLE 18 CONFIDENTIAL INFORMATION .........................................................70
18.1 Definition of Confidential Information. .....................................................70
18.2 Duty to Maintain Confidentiality. ..............................................................70
18.3 Irreparable Injury; Remedies. ....................................................................71
18.4 Further Permitted Disclosure. ....................................................................72
18.5 Press Releases ............................................................................................72 ARTICLE 19 MISCELLANEOUS ..................................................................................72
19.1 Entire Agreement; Integration; Exhibits. ...................................................72
19.2 Amendments. .............................................................................................72
19.3 No Waiver. .................................................................................................72
19.4 No Agency, Partnership, Joint Venture or Lease. ......................................72
19.5 Severability. ...............................................................................................73
19.6 Mobile-Sierra. ............................................................................................73
19.7 Counterparts. ..............................................................................................73
19.8 Electronic Delivery. ...................................................................................73
19.9 Binding Effect. ...........................................................................................73
19.10 No Recourse to Members of Buyer. ..........................................................73
19.11 Forward Contract. ......................................................................................73
19.12 Change in Electric Market Design. ............................................................74
19.13 Further Assurances.....................................................................................74
Agenda Page 141
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 Generating Facility Capacity Report Exhibit F-2 Form of Monthly Expected PV Energy Report
Exhibit F-3 Form of Monthly Expected Available Effective Storage Capacity Report Exhibit F-4 Form of Monthly Expected Available Storage Capability Report Exhibit G Guaranteed Energy Production Damages Calculation Exhibit H Form of Commercial Operation Date Certificate Exhibit I-1 Form of Installed Capacity Certificate
Exhibit I-2 Form of Effective Storage Capacity Certificate Exhibit J Form of Construction Start Date Certificate
Exhibit K Form of Letter of Credit
Exhibit L Form of Limited Assignment Agreement
Exhibit M Form of Replacement RA Notice
Exhibit N Notices
Exhibit O Storage Capacity Tests
Exhibit P Annual Storage Capacity Availability Calculation Exhibit Q Operating Restrictions
Exhibit R Metering Diagram
Exhibit S Form of Consent to Collateral Assignment
Exhibit T [Intentionally Omitted]
Exhibit U Supply Chain Code of Conduct
Exhibit V Material Permits
Exhibit W Force Majeure Event and/or Development Cure Period Claim Form
Agenda Page 142
RENEWABLE POWER PURCHASE AGREEMENT
This Renewable Power Purchase 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;
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 3.12(c). “Administrative NQC Reduction” means a reduction in the maximum achievable Resource Adequacy Benefits of the Storage Facility due to a reduction that has been generally applied to all resources materially similar to the Storage Facility in terms of type, market and operational characteristics (including those characteristics specified in the CPUC’s Master Resource Database), including any methodology that incorporates fleet averages or other average outage rates.
“Adjusted Energy Production” has the meaning set forth in Exhibit G. “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 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.
Agenda Page 143
2 “After-Tax Basis” means that any payment to Seller shall be increased as necessary so that, after Seller has paid all federal, state, and local income taxes attributable to such payment (taking into account any related deductions or credits), Seller retains a net amount equal to the amount that would have been received if no such taxes had been imposed. For purposes of calculating such amount, Seller shall be assumed to be subject to federal income tax at the highest applicable statutory rate for corporations for the relevant period and to state and local income taxes at the applicable statutory rates, and state and local income taxes shall be treated as deductible for federal income tax purposes.
“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, black start, voltage support, and any other ancillary services that the Facility is actually physically capable of providing consistent with the Operating Restrictions, as each is defined in the CAISO Tariff.
“Annual Storage 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.
“Approved Forecast Vendor” means any of (a) the CAISO, or (b) any other vendor reasonably acceptable to both Buyer and Seller for the purposes of providing or verifying the forecasts under Section 4.3(d).
“Assignment Agreement” has the meaning set forth in Section 14.5. “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 Storage Facility) within the Storage Facility to power the motors, temperature control systems, fire alarm control panels and systems, telecommunications equipment, battery management systems, control systems and other electrical loads that are integral to the operation of the Storage Facility, as measured by the Ancillary Meter or reported by SCADA Systems. “Availability Notice” means Seller’s availability forecasts issued pursuant to Section 4.3 with respect to the Available Effective Storage 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).
“Availability Standards” has the meaning set forth in the CAISO Tariff or such other
Agenda Page 144
3 similar term as modified and approved by FERC hereafter to be incorporated in the CAISO Tariff. “Available Effective Storage 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 and one half (5.5) hours of the charging phase of the applicable Capacity Test, as applicable, divided by (b) the Installed Storage Capacity x four (4) hours MWh, not to exceed one (1).
“Battery Discharging Factor” means the quotient (expressed as a decimal) of (a) the Discharging 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). “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 Assignee” has the meaning set forth in Section 14.5. “Buyer Bid Curtailment” means the occurrence of both of the following:
(a) the CAISO provides notice to a Party or the Scheduling Coordinator for the Generating Facility, requiring the Party to deliver less PV Energy from the Generating Facility than the full amount of Energy forecasted in accordance with Section 4.3 to be produced from the Generating Facility for a period of time; and
(b) for the same time period as referenced in (a), Buyer or the SC for the Generating Facility (i) did not submit a Self-Schedule or Energy Supply Bid for the MWh subject to the reduction, (ii) submitted an Energy Supply Bid and the CAISO notice referenced in (a) is solely a result of CAISO implementing the Energy Supply Bid, or (iii) submitted a Self-Schedule for less than the full amount of Facility Energy forecasted to be generated or discharged by or delivered from the Facility.
If the Generating Facility is subject to a Planned Outage, Forced Facility Outage, Force
Agenda Page 145
4 Majeure Event and/or a Curtailment Period during the same time period as referenced in (a), then the calculation of Deemed Delivered Energy during such period shall not include any PV Energy that was not generated or stored due to such Planned Outage, Forced Facility Outage, Force Majeure Event or Curtailment Period.
“Buyer Curtailment Order” means the instruction from Buyer to Seller to reduce PV Energy from the Generating Facility by the amount, and for the period of time set forth in such instruction, for reasons unrelated to a Planned Outage, Forced Facility Outage, Force Majeure Event affecting the Facility and/or Curtailment Order.
“Buyer Curtailment Period” means the period of time, as measured using current Settlement Intervals, during which Seller reduces PV Energy from the Generating Facility pursuant to or as a result of (a) a Buyer Bid Curtailment, (b) a Buyer Curtailment Order, or (c) a Buyer Default or breach hereunder which directly causes Seller to be unable to deliver PV Energy to the Delivery Point; provided, that the duration of any Buyer Curtailment Period shall be inclusive of the time required for the Generating Facility to ramp down and ramp up. “Buyer Default” means an Event of Default of Buyer.
“Buyer Dispatched Test” has the meaning in Section 4.9(c). “Buyer’s Indemnified Parties” has the meaning set forth in Section 18.2. “Buyer’s WREGIS Account” has the meaning set forth in Section 4.10(a). “CAISO” means the California Independent System Operator Corporation or any successor entity performing similar functions.
“CAISO-Penalized Shortfall” has the meaning set forth in Section 3.8(b)(ii). “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 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 Storage 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.
Agenda Page 146
5 “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. “California Renewables Portfolio Standard” or “RPS” means the renewable energy program and policies established by California State Senate Bills 1038 (2002), 1078 (2002), 107 (2008), X-1 2 (2011), 350 (2015), and 100 (2018) as codified in, inter alia, California Public Utilities Code Sections 399.11 through 399.31 and California Public Resources Code Sections 25740 through 25751, as such provisions are amended or supplemented from time to time. “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 generate 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 Damages” means collectively Storage Capacity Damages and PV Capacity Damages.
“Capacity Test” or “CT” means the Commercial Operation Storage Capacity Test, Storage Capacity Test, or any other test conducted pursuant to Exhibit O. “CEC” means the California Energy Commission or its successor agency. “CEC Certification and Verification” means that the CEC has certified (or, with respect to periods before the date that is one hundred eighty (180) days following the Commercial Operation Date, that the CEC has pre-certified) that the Generating Facility is an Eligible Renewable Energy Resource for purposes of the California Renewables Portfolio Standard and that all PV Energy delivered to the Delivery Point qualifies as generation from an Eligible Renewable Energy Resource.
“CEC Precertification” means that the CEC has issued a precertification for the Facility indicating that the planned operations of the Facility would comply with applicable CEC requirements for CEC Certification and Verification.
“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, that in calculating ownership percentages for all purposes of the foregoing:
(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
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6 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) shall be excluded from the total outstanding equity interests in Seller.
“Charging Energy” means all Energy delivered to the Delivery Point pursuant to a Charging Notice, as measured by the Storage Facility Meter. “Charging Notice” means the operating instruction, and any subsequent updates, given by Buyer’s SC or the CAISO to Seller, directing the Storage 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 and the CAISO Tariff. Any instruction to charge the Storage Facility pursuant to a Buyer Dispatched Test shall be considered a Charging Notice, and any Charging Notice shall not constitute a Buyer Bid Curtailment, Buyer Curtailment Order or Curtailment Order.
“COD Certificate” has the meaning set forth in Exhibit B. “Commercial Operation” has the meaning set forth in Exhibit B. “Commercial Operation Date” means the later of (a) the Expected Commercial Operation Date, and (b) 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). “Commercial Operation Storage Capacity Test” means the Storage Capacity Test conducted in connection with Commercial Operation of the Storage Facility, including any additional Storage Capacity Test for additional Storage Facility capacity installed after the Commercial Operation Date pursuant to Section 5 of Exhibit B. “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 Storage Facility pursuant to this Agreement. “Compliance Actions” has the meaning set forth in Section 3.12(a). “Compliance Expenditure Cap” has the meaning set forth in Section 3.12. “Confidential Information” has the meaning set forth in Section 18.1. “Consent to Collateral Assignment” has the meaning set forth in Section 14.2. “Construction Start” has the meaning set forth in Exhibit B. “Construction Start Date” has the meaning set forth in Exhibit B.
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7 “Contract Price” has the meaning set forth on the Cover Sheet. For clarity, the Contract Price is each of the Renewable Rate and the Storage Rate. “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.
“CPUC” means the California Public Utilities Commission, or successor entity. “CPUC-Penalized Shortfall” has the meaning set forth in Section 3.8(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 S&P or Moody’s. If ratings by 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 Charging Energy or 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 or the SC for the Facility submitted a Self-Schedule for the MWhs curtailed corresponding to the MWhs in the VER forecast for the Generating Facility during the relevant time period;
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8 (b) a curtailment ordered by CAISO or the Transmission Owner 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 CAISO’s or the Transmission Owner’s electric system integrity or the integrity of other systems to which the CAISO or Transmission Owner is connected;
(c) a curtailment ordered by CAISO or the Transmission Owner due to a Transmission System Outage; or
(d) a curtailment in accordance with Seller’s obligations under its Interconnection Agreement with the Transmission Owner or distribution operator. “Curtailment Period” means the period of time, as measured using current Settlement Intervals, during which Seller reduces generation from the Generating Facility pursuant to a Curtailment Order; provided, the Curtailment Period shall be inclusive of the time required for the Facility to ramp down and ramp up.
“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 as set forth in Section 11.3(a). “Day-Ahead Forecast” has the meaning set forth in Section 4.3(c). “Day-Ahead Market” has the meaning set forth in the CAISO Tariff. “Day-Ahead Schedule” has the meaning set forth in the CAISO Tariff. “Deemed Delivered Energy” means the amount of PV Energy expressed in MWh that the Generating Facility would have produced and delivered to the Generating Facility Meter, but that is not produced by the Generating Facility during a Buyer Curtailment Period, which amount shall be equal to the Real-Time Forecast (of the hourly expected PV Energy produced by the Generating Facility) provided pursuant to Section 4.3(d) for the period of time during the Buyer Curtailment Period (or other relevant period), less the amount of PV Energy delivered to the Delivery Point directly from the Generating Facility, during the Buyer Curtailment Period (or other relevant period); provided, if the applicable difference is negative, the Deemed Delivered Energy shall be zero (0).
“Defaulting Party” has the meaning set forth in Section 11.1(a). “Deficient Month” has the meaning set forth in Section 4.10(e). “Delay Damages” means Daily Delay Damages and Commercial Operation Delay Damages.
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9 “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 Energy” means all Energy delivered to the Delivery Point from the Storage Facility pursuant to a Discharging Notice, as measured by the Storage Facility Meter, net of Electrical Losses and Station Use. All Discharging Energy shall have originally been delivered to the Storage Facility as Charging Energy.
“Discharging Notice” means the operating instruction, and any subsequent updates, given by Buyer’s SC or the CAISO to the Facility, directing the Storage Facility to discharge Discharging Energy at a specific MW rate for a specified period of time or to an amount of MWh; provided, (a) any such operating instruction or updates shall be in accordance with the Operating Restrictions and the CAISO Tariff, and (b) subject to Section 7.1(b), if, during a period when the Storage Facility is instructed by Buyer’s SC or the CAISO to be discharging, the sum of PV Energy and Discharging Energy would exceed the Interconnection Capacity Limit, such “Discharging Notice” shall be deemed to be automatically adjusted to reduce the amount of Discharging Energy so that the sum of Discharging Energy and PV Energy does not exceed the Interconnection Capacity Limit, until such time as Buyer’s SC or the CAISO issues a further modified Discharging Notice.
Any instruction to discharge the Storage Facility pursuant to a Buyer Dispatched Test shall be considered a Discharging Notice, and any Discharging Notice shall not constitute a Buyer Bid Curtailment, Buyer Curtailment Order or Curtailment Order. “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 Storage Facility to charge or discharge Discharging Energy at a specific MWh rate to a specified Stored Energy Level; provided, any such operating instruction or updates shall be in accordance with the Operating Restrictions. 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 4.11.
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 Date” has the meaning set forth on the Preamble.
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10 “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. “Effective Storage Capacity” means the lesser of (a) PMAX, and (b) the maximum dependable operating capacity of the Storage Facility to discharge Energy for four (4) hours of continuous discharge, as measured in MW AC at the Delivery Point (i.e., measured at the Storage Facility Meter and adjusted for Electrical Losses to the Delivery Point) pursuant to the most recent Storage Capacity Test (including the Commercial Operation Storage Capacity Test), as evidenced by a certificate substantially in the form attached as Exhibit I-2 hereto, in either case (a) or (b) up to but not in excess of (i) the Guaranteed Storage Capacity (with respect to a Commercial Operation Storage Capacity Test) or (ii) the Installed Storage Capacity (with respect to any other Storage Capacity Test).
“Efficiency Rate” means the rate calculated for each month of the Delivery Period as the quotient of (a) the sum of (i) Discharging Energy plus (ii) Idle Period Auxiliary Use for which Seller is required to reimburse Buyer, divided by (b) Energy In, based on actual Storage Facility operations for each applicable month.
“Efficiency Rate Factor” has the meaning set forth in Exhibit C. “Electrical Losses” means all transmission or transformation losses (a) between the Generating Facility and the Delivery Point associated with delivery of PV Energy, (b) between the Storage Facility and the Delivery Point associated with delivery of Discharging Energy, and (c) between the Delivery Point and the Storage Facility associated with delivery of Charging Energy to the Storage Facility, in each case as applicable.
“Eligible Renewable Energy Resource” has the meaning set forth in California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25741(a), as either code provision is amended or supplemented from time to time. “Energy” means electrical energy, measured in kilowatt-hours, megawatt-hours, or multiple units thereof.
“Energy In” means the total energy (in MWh) delivered by Buyer to the Storage Facility pursuant to a Charging Notice as measured at the Storage Facility Meter (without adjusting for Electrical Losses or Station Use).
“Energy Management System” or “EMS” means the Storage Facility’s energy management system.
“Energy Replacement Damages” has the meaning set forth in Section 4.7. “Energy Supply Bid” has the meaning set forth in the CAISO Tariff. “Event of Default” has the meaning set forth in Section 11.1. “Excess MWh” has the meaning set forth in Exhibit C.
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11 “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. “Expected Energy” means the quantity of PV Energy that Seller expects to be able to deliver to Buyer from the Generating Facility during each Contract Year, which for each Contract Year is the quantity specified on the Cover Sheet, which amount shall be adjusted proportionately to the reduction from Guaranteed PV Capacity to Installed PV Capacity pursuant to Section 5(a) of Exhibit B, if applicable.
“Facility” means the combined Generating Facility and the Storage Facility. “Facility Energy” means PV Energy and/or Discharging Energy, as applicable, during any Settlement Interval or Settlement Period as measured by the Storage Facility Meter and/or Generating Facility Meter, as applicable, as such meter readings are adjusted by the CAISO for any applicable Electrical Losses or Station Use.
“FERC” means the Federal Energy Regulatory Commission or any successor government agency.
“Financial Close” means Seller and/or one of its Affiliates has obtained debt and/or equity financing commitments from one or more Lenders sufficient to construct the Facility, including such financing commitments from Seller’s owner(s).
“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. “Forced Facility Outage” means an unexpected failure of one or more components of the Facility that prevents Seller from generating Energy or making Facility Energy available at the Delivery Point and that is not the result of a Force Majeure Event. “Forecasted Product” has the meaning set forth in Section 4.3(b). “Forecasting Penalty” has the meaning set forth in Section 4.3(f). “Full Capacity Deliverability Status” or “FCDS” has the meaning set forth in the CAISO Tariff.
“Future Environmental Attributes” means any and all Green Attributes that become recognized under applicable Law after the Effective Date (and not before the Effective Date),
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12 notwithstanding the last sentence of the definition of “Green Attributes” herein. Future Environmental Attributes do not include Tax Credits associated with the construction or operation of the Facility, or other financial incentives in the form of credits, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation. “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.
“Generating Facility” means the solar photovoltaic generating facility described on the Cover Sheet and in Exhibit A, located at the Site and including mechanical equipment and associated facilities and equipment required to deliver PV Energy to the Delivery Point; provided, the “Generating Facility” does not include the Storage Facility or the Shared Facilities. “Generating Facility Meter” means the CAISO approved revenue quality meter or meters (with a 0.3 accuracy class), along with a compatible data processing gateway or remote intelligence gateway, telemetering equipment and data acquisition services sufficient for monitoring, recording and reporting, in real time, the amount of PV Energy delivered to the Delivery Point for the purpose of invoicing in accordance with Section 8.1. For clarity, the Generating Facility may contain multiple measurement devices that will make up the Generating Facility Meter, and, unless otherwise indicated, references to the Generating Facility Meter shall mean all such measurement devices and the aggregated data of all such measurement devices, taken together. “Governmental Authority” means any federal, state, provincial, local or municipal government, any political subdivision thereof or any other governmental, congressional or parliamentary, regulatory, or judicial instrumentality, authority, body, agency, department, bureau, or entity with authority to bind a Party at law, including CAISO and the CPUC; provided, “Governmental Authority” shall not in any event include any Party. “Green Attributes” means any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled (including under the RPS regulations and/or under any and all other international, federal, regional, state or other law, rule, regulation, bylaw, treaty or other intergovernmental compact, decision, administrative decision, program (including any voluntary compliance or membership program), competitive market or business method (including all credits, certificates, benefits, and emission measurements, reductions, offsets and allowances related thereto)), attributable to the generation from the Facility and its displacement of conventional energy generation. Green Attributes include but are not limited to Renewable Energy Credits, as well as: (1) any avoided emissions of pollutants to the air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO) and other pollutants; (2) any avoided
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13 emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and other greenhouse gases (GHGs) that have been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere; and (3) the reporting rights to such avoided emissions, such as Green Tag Reporting Rights. Green Attributes do not include (i) any energy, capacity, reliability or other power attributes from the Facility, (ii) Tax Credits associated with the construction or operation of the Facility and other financial incentives in the form of credits, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation, or (iii) emission reduction credits encumbered or used by the Facility for compliance with local, state, or federal operating and/or air quality permits. Green Attributes under the preceding definition are limited to Green Attributes that exist under applicable Law as of the Effective Date. “Green Tag Reporting Rights” means the right of a purchaser of renewable energy to report ownership of accumulated Green Tags in compliance with and to the extent permitted by applicable Law and include, without limitation, rights under Section 1605(b) of the Energy Policy Act of 1992, and any present or future federal, state or local certification program or emissions trading program, including pursuant to the WREGIS Operating Rules. “Green Tags” means a unit accumulated on a MWh basis where one (1) represents the Green Attributes associated with one (1) MWh of PV Energy. “Green-e Certified” means the Green Attributes provided to Buyer pursuant to this Agreement are certified under the Green-e Energy National Standard. “Green-e Energy National Standard” means the Green-e Renewable Energy Standard for Canada and the United States (formerly Green-e Energy National Standard) version 3.4, updated April 27, 2023, as may be further amended from time to time. “Guaranteed Capacity” means the sum of (a) the Guaranteed PV Capacity and (b) the Guaranteed Storage Capacity.
“Guaranteed Commercial Operation Date” has the meaning set forth on the Cover Sheet, subject to extension pursuant to Exhibit B.
“Guaranteed Construction Start Date” has the meaning set forth on the Cover Sheet, subject to extension pursuant to Exhibit B.
“Guaranteed Efficiency Rate” means the minimum guaranteed Efficiency Rate of the Storage Facility throughout the Delivery Term, as set forth on the Cover Sheet. “Guaranteed Energy Production” has the meaning set forth in Section 4.7. “Guaranteed PV Capacity” means the generating capacity of the Generating Facility, as measured in MW AC at the Delivery Point (i.e., measured at the Generating Facility Meter and adjusted for Electrical Losses to the Delivery Point), that Seller commits to install pursuant to this Agreement as set forth on the Cover Sheet.
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14 “Guaranteed Storage Availability” has the meaning set forth in Section 4.8. “Guaranteed Storage Capacity” means the maximum dependable operating capability of the Storage Facility to discharge Energy, as measured in MW AC at the Delivery Point (i.e., measured at the Storage Facility Meter and adjusted for Electrical Losses to the Delivery Point) for four (4) hours of continuous discharge, that Seller commits to install pursuant to this Agreement as set forth on the Cover Sheet.
“High Operating Limit” or “HOL” means a real-time calculated number representing the instantaneous maximum power level at which the Storage Facility can discharge Energy to the Delivery Point, as communicated via the EMS.
“Idle Period” means any period in which the Storage Facility is not charging or discharging pursuant to a Charging Notice or Discharging Notice. “Idle Period Auxiliary Use” means Auxiliary Use consumed by the Storage Facility during any Idle Period for which Seller does not either (a) pay retail rates to its retail electric utility provider, or (b) reimburse Buyer for Imbalance Energy pursuant to Section 4.5(j)(iv). Idle Period Auxiliary Use is to be metered, or, if the equipment at the Storage Facility does not allow for Idle Period Auxiliary Use to be measured by an external meter, then Storage Facility Auxiliary Load will be calculated in accordance with the datapoint provided by the Storage Facility’s SCADA system for such Auxiliary Use.
“Imbalance Energy” means the amount of Energy in MWh, in any given Settlement Period or Settlement Interval, by which the amount of PV Energy, Charging Energy or Discharging Energy deviates from the amount of Scheduled Energy.
“Imbalance Reserves” has the meaning set forth in the CAISO Tariff. “Indemnified Party” has the meaning set forth in Section 16.1. “Indemnifying Party” has the meaning set forth in Section 16.1. “Initial Synchronization” means the commencement of Trial Operations (as defined in the CAISO Tariff).
“Installed Capacity” means the sum of (a) the Installed PV Capacity and (b) the Installed Storage Capacity.
“Installed PV Capacity” means the actual generating capacity of the Generating Facility, as measured in MW AC at the Delivery Point (i.e., measured at the Generating Facility Meter and adjusted for Electrical Losses to the Delivery Point), that achieves Commercial Operation, as evidenced by a certificate substantially in the form attached as Exhibit I-1 hereto. “Installed Storage Capacity” means the lesser of (a) PMAX, and (b) maximum dependable operating capacity of the Storage Facility to discharge Energy for four (4) hours of continuous discharge, as measured in MW at the Delivery Point by the Storage Facility Meter and adjusted for Electrical Losses to the Delivery Point, that achieves Commercial Operation, as
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15 evidenced by a certificate substantially in the form attached as Exhibit I-1 hereto, as such capacity may be adjusted pursuant to Section 5 of Exhibit B. It is acknowledged that Seller shall have the right and option in its sole discretion to install Storage Facility capacity in excess of the Guaranteed Storage Capacity; provided, for all purposes of this Agreement the amount of Installed Storage Capacity shall never be deemed to exceed the Guaranteed Storage Capacity, and (for the avoidance of doubt) Buyer shall have no rights to instruct Seller to (i) charge or discharge the Storage Facility at an instantaneous rate (in MW) in excess of the Effective Storage Capacity or (ii) discharge the Storage Facility to a level (in MWh) in excess of the Effective Storage Capacity times four (4) hours.
“Inter-SC Trade” has the meaning set forth in the CAISO Tariff. “Interconnection Agreement” means the interconnection agreement entered into by Seller or an Affiliate pursuant to which the Facility will be interconnected with the Transmission System, and pursuant to which Seller’s Interconnection Facilities and any other Interconnection Facilities will be constructed, operated and maintained during the Contract Term. “Interconnection Capacity Limit” means the maximum instantaneous amount of Energy that is permitted to be delivered to the Delivery Point under Seller’s Interconnection Agreement, in the amount of two hundred (200) MW.
“Interconnection Facilities” means the Transmission Owner-owned interconnection facilities, control and protective devices and metering facilities required to connect the Facility with the Transmission System in accordance with the Interconnection Agreement. “Interest Rate” has the meaning set forth in Section 8.2. “Interim Deliverability Status” has the meaning set forth in the CAISO Tariff. “IP Indemnity Claim” has the meaning set forth in Section 16.1(b). “ITC” means the investment tax credit established pursuant to Section 48 and 48E of the United States Internal Revenue Code of 1986 as in effect from time-to-time throughout the Contract Term or any successor or other provision providing for a similar federal tax credit for which Seller, as the owner of the Facility, is eligible. “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.
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16 “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 with such bank having a Credit Rating of at least A- with an outlook designation of “stable” from S&P or A3 with an outlook designation of “stable” 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 local area reliability, local resource adequacy, local resource adequacy procurement requirements, or local capacity requirement in other regulatory proceedings or legislative actions. “Locational Marginal Price” or “LMP” has the meaning set forth in the CAISO Tariff. “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 Renewable Energy Incentives. In the case of Seller as the Non-Defaulting
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17 Party, Losses shall include the value of any lost or recaptured Renewable Energy Incentives associated with the Facility, determined on an After-Tax Basis, that were a direct result of a Buyer Event of Default and for which Seller was not capable of mitigating through the use of any commercially reasonable efforts.
“Lost Output” has the meaning set forth in Section 4.7. “Low Operating Limit” or “LOL” means a real-time calculated number representing the instantaneous maximum power level at which the Storage Facility can charge Energy to the Storage Facility, as communicated via the EMS.
“Master Resource Database” means a compendium of all physically identified resources eligible to sell Resource Adequacy (RA) capacity, including both resources in the CAISO balancing area and specified imports, as published on the CPUC Resource Adequacy Compliance Materials webpage, or successor location.
“Material Permits” means all permits required for Seller to commence construction, as set forth on Exhibit V.
“Max Hourly Capacity Value” means, for any Showing Month, the highest hourly quantity of Resource Adequacy Benefits reflected in the automated settings in the CPUC’s RA Compliance Showing template or successor, which the Storage Facility is available to provide in such Showing Month.
“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 commencing on the Commercial Operation Date and continuing throughout the Delivery Term as compensation for the Product, as calculated in accordance with Exhibit C. “Monthly Forecast” has the meaning set forth in Section 4.3(b). “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.
“MWh” means megawatt-hour measured in alternating current, unless expressly stated in terms of direct current.
“Negative LMP” means, in any Settlement Period or Settlement Interval, the LMP at the Facility’s PNode is less than zero dollars ($0).
“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.
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18 “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, overnight 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. “Party” has the meaning set forth in the Preamble.
“Performance Measurement Period” means each two (2) consecutive Contract Years commencing with the first Contract Year so that the first Performance Measurement Period shall include Contract Years 1 and 2. For the avoidance of doubt, Performance Measurement Periods shall overlap, so that if the first Performance Measurement Period is comprised of Contract Years 1 and 2, the second Performance Measurement Period shall be comprised of Contract Years 2 and 3, the third Performance Measurement Period shall be comprised of Contract Years 3 and 4, and so on.
“Performance Security” means (i) cash or (ii) a Letter of Credit in the amount specified for the Performance Security on the Cover Sheet.
“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 power generation and energy storage facilities similar to the Facility, or has retained a third-party with such experience to operate the Facility. “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 4.6.
“PMAX” means the applicable CAISO-certified maximum operating level of the Storage Facility.
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19 “PMIN” means the applicable CAISO-certified minimum operating level of the Storage Facility.
“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 Content Category” means PCC1, PCC2 or PCC3, as applicable. “Portfolio Content Category 1” or “PCC1” means any Renewable Energy Credit associated with the generation of electricity from an Eligible Renewable Energy Resource consisting of the portfolio content set forth in California Public Utilities Code Section 399.16(b)(1), as may be amended from time to time or as further defined or supplemented by Law. “Portfolio Content Category 2” or “PCC2” means any Renewable Energy Credit associated with the generation of electricity from an Eligible Renewable Energy Resource consisting of the portfolio content set forth in California Public Utilities Code Section 399.16(b)(2), as may be amended from time to time or as further defined or supplemented by Law. “Portfolio Content Category 3” or “PCC3” means any Renewable Energy Credit associated with the generation of electricity from an Eligible Renewable Energy Resource consisting of the portfolio content set forth in California Public Utilities Code Section 399.16(b)(3), as may be amended from time to time or as further defined or supplemented by Law. “Portfolio Financing” means any debt incurred 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 and 45Y 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 production of renewable energy 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 generating facilities with integrated 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,
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20 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 generating facilities with integrated 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.
“PV Capacity Damages” has the meaning set forth in Section 5 of Exhibit B. “PV Energy” means all Energy delivered from the Generating Facility to the Delivery Point and measured by the Generating Facility Meter, as such meter readings are adjusted pursuant to the CAISO Tariff for any applicable Electrical Losses. “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 Storage RA Shortfall as calculated in accordance with Section 3.8(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 showings. “RA Shortfall Month” means, for purposes of calculating an RA Deficiency Amount under Section 3.8(b) (as determined fifteen (15) Business Days prior to the Showing Deadline for such Showing Month), 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 a Storage RA Shortfall. “RA Substitute Capacity” has the meaning set forth in the CAISO Tariff. “RA-Qualified Storage Capacity” means, for a given Showing Month, the amount of Installed Storage Capacity that Buyer is able to include in the applicable RA Plan, calculated as the difference of (a) the quotient of (i) the Max Hourly Capacity Value divided by (ii) the Shape Factor for the applicable hour, not to exceed the Storage Facility’s NQC, minus (b) the amount of Installed Storage Capacity that Buyer is not able to include in the applicable RA Plan due to the
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21 Storage Facility’s performance, as determined by the CPUC, CAISO, or other Government Authority, but excluding any Administrative NQC Reduction. “Real-Time Forecast” has the meaning set forth in Section 4.3(d). “Real-Time Market” has the meaning set forth in the CAISO Tariff. “Real-Time Price” means the Resource-Specific Settlement Interval LMP as defined in the CAISO Tariff. If there is more than one applicable Real-Time Price for the same period of time, Real-Time Price shall mean the price associated with the smallest time interval. “Receiving Party” has the meaning set forth in Section 18.2. “Recurring Certificate Transfers” has the meaning set forth in Section 4.10(a). “Reliability Network Upgrades” has the meaning set forth in the CAISO Tariff. “Remedial Action Plan” has the meaning set forth in Section 2.4. “Renewable Energy Credit” has the meaning set forth in California Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by Law.
“Renewable Energy Incentives” means: (a) all federal, state, or local Tax credits or other Tax benefits associated with the construction, ownership, or production of electricity from the Facility (including credits under Sections 38, 45, 46 and 48 of the Internal Revenue Code of 1986, as amended); (b) any federal, state, or local grants, subsidies or other like benefits relating in any way to the Facility, including a cash grant available under Section 1603 of Division B of the American Recovery and Reinvestment Act of 2009, in lieu of federal Tax credits or any similar or substitute payment available under subsequently enacted federal legislation; and (c) any other form of incentive relating in any way to the Facility that is not a Green Attribute, Future Environmental Attribute, or Capacity Attribute.
“Renewable Rate” has the meaning set forth on the Cover Sheet. “Replacement Energy” has the meaning set forth in Exhibit G. “Replacement Green Attributes” has the meaning set forth in Exhibit G. “Replacement Product” has the meaning set forth in Exhibit G. “Replacement RA” means resource adequacy benefits equivalent to Resource Adequacy Benefits(including satisfying the same Slice-of-Day, generation profile and related characteristics) that would have been provided by the Generating Facility and/or Storage Facility, as applicable, with respect to the applicable month in which a RA Deficiency Amount is due to Buyer, and located within SP 15 TAC Area 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.
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22 “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 PV Energy, Charging Energy or Discharging Energy that clears under the applicable CAISO market based on the final Day-Ahead Schedule, FMM Schedule (as defined in the CAISO Tariff), and/or any other financially binding Schedule, 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 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.
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23 “Self-Schedule” has the meaning set forth in the CAISO Tariff. “Seller” has the meaning set forth on the Cover Sheet.
“Seller Initiated Test” has the meaning set forth in Section 4.9(c). “Seller’s WREGIS Account” has the meaning set forth in Section 4.10(a). “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. “Settlement Interval” has the meaning set forth in the CAISO Tariff. “Settlement Period” has the meaning set forth in the CAISO Tariff. “Shape Factor” means the applicable shape factor (expressed as a decimal) determined by the CPUC for the corresponding hour of a Max Hourly Capacity Value. “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 Average High Design Temperature” means the location specific temperature rating for the Site that is based on historical climate data and represents the Max Mean Extreme Annual Temperature value as published by the professional organization, American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE).
“Site Control” means that, for the Contract Term, Seller (or, prior to the Delivery Term, its Affiliate): (a) owns or has the option to purchase the Site; (b) is the lessee or has the option to
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24 lease the Site; or (c) is the 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 Storage 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. “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 the lights, motors, temperature control systems, control systems and other electrical loads that are necessary for operation of the Facility.
“Storage Capacity Availability Payment True-Up” has the meaning set forth in Exhibit C.
“Storage Capacity Availability Payment True-Up Amount” has the meaning set forth in Exhibit C.
“Storage Capacity Damages” has the meaning set forth in Section 5 of Exhibit B. “Storage Capacity Test” means any test or retest of the Storage Facility to establish the Installed Storage Capacity or Effective Storage Capacity, conducted in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit O. “Storage Cure Plan” has the meaning set forth in Section 11.1(b)(iv). “Storage 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 Storage Product (but excluding any Shared Facilities), and as such storage facility may be expanded or otherwise modified from time to time in accordance with the terms hereof. “Storage Facility Meter” means the CAISO approved bi-directional revenue quality meter or meters (with a 0.3 accuracy class), along with a compatible data processing gateway or remote intelligence gateway, telemetering equipment and data acquisition services sufficient for monitoring, recording and reporting, in real time, the amount of Charging Energy delivered to the Storage Facility and the amount of Discharging Energy discharged from the Storage Facility to the Delivery Point for the purpose of invoicing in accordance with Section 8.1. For clarity, the Facility may contain multiple measurement devices that will make up the Storage Facility Meter, and, unless otherwise indicated, references to the Storage Facility Meter shall mean all such measurement devices and the aggregated data of all such measurement devices, taken together.
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25 “Storage Product” means (a) Discharging Energy, (b) Capacity Attributes, if any, (c) Effective Storage Capacity, and (d) Ancillary Services, if any, in each case arising from or relating to the Storage Facility.
“Storage RA Shortfall” means, for a given Showing Month, the difference, expressed in kW, of (a) the Installed Storage Capacity minus (b) the sum of (i) the RA-Qualified Storage Capacity, plus (ii) the amount of energy storage capacity associated with any Replacement RA or RA Substitute Capacity provided by Seller with respect to an expected shortfall in Resource Adequacy Benefits of the Storage Facility for such Showing Month, if applicable. “Storage Rate” has the meaning set forth on the Cover Sheet. “Stored Energy Level” means, at a particular time, the amount of Energy in the Storage Facility available to be discharged to the Delivery Point as Discharging 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 Owner, 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. “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 PTC, ITC and any other state, local and/or federal production tax credit, depreciation benefit, tax deduction and/or investment tax credit specific to the production of renewable energy and/or investments in 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(b). “Total YTD Calculation Intervals” has the meaning set forth in Exhibit P. “Transmission Owner” 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.
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26 “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 Avantus Clean Energy LLC, a Delaware limited liability company
“Unavailable Calculation Interval” has the meaning set forth in Exhibit P. “Variable Energy Resource” or “VER” has the meaning set forth in the CAISO Tariff. “WREGIS” means the Western Renewable Energy Generation Information System or any successor renewable energy tracking program.
“WREGIS Certificate Deficit” has the meaning set forth in Section 4.10(e). “WREGIS Certificates” has the same meaning as “Certificate” as defined by WREGIS in the WREGIS Operating Rules and are designated as eligible for complying with the California Renewables Portfolio Standard.
“WREGIS Operating Rules” means those operating rules and requirements adopted by WREGIS as of October 2022, as subsequently amended, supplemented or replaced (in whole or in part) from time to time.
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; (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,
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27 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.
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 3.6, 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.
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28 (b) 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 reasonable detail the basis for Buyer’s rejection thereof 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-1 setting forth the Installed PV Capacity, the Installed Storage Capacity and the Installed Capacity on the Commercial Operation Date;
(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, CAISO and the Transmission Owner 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 (including CAISO Commercial Operation) have been obtained and all conditions thereof that are required to be 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; (f) Seller has received CEC Precertification of the Facility (and reasonably expects to receive final CEC Certification and Verification for the Facility in no more than one hundred eighty (180) days after the Commercial Operation Date); (g) Seller (with the reasonable participation of Buyer) shall have completed all applicable WREGIS registration requirements, including the completion and submittal of all applicable registration forms and supporting documentation, which may include applicable interconnection agreements, informational surveys related to the Facility, QRE service agreements, and other appropriate documentation required to effect Facility registration with WREGIS and to enable Renewable Energy Credit transfers related to the Facility within the WREGIS system;
(h) The Facility is providing Resource Adequacy Benefits to Buyer for the month in which the Delivery Term commences; provided that if the Facility is unable to provide
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29 Resource Adequacy Benefits solely due to Buyer’s failure to put the Facility on its RA Plan for the month in which the Delivery Term commences, Seller is deemed to have met this requirement; (i) Seller has delivered the Performance Security to Buyer in accordance with Section 8.8;
(j) Seller has taken all actions and executed all documents and instruments, required to authorize Buyer (or its designated agent) to act as Scheduling Coordinator under this Agreement and to fully enable the Facility to be Scheduled by Buyer, and Buyer (or its designated agent) is authorized to act as Scheduling Coordinator;
(k) Seller has delivered to Buyer an officer’s certificate stating that Seller has not, to its knowledge, utilized any equipment or resources in connection with the construction, commissioning or testing of the Facility in violation of Section 2.3(b); and (l) 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 (both a clean version and a version redlined against the immediately prior 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.
(b) Seller shall ensure that to its knowledge all materials, products and components used in constructing, installing and operating the Facility throughout the Term shall be in compliance with the Supply Chain Code. Seller shall comprehensively implement due diligence procedures for its and its Affiliate’s suppliers, subcontractors and other participants in its supply chains, to comply with the Supply Chain Code. Seller shall notify Buyer as soon as it 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
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30 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 Operations Actions. The Parties agree that, in order for Buyer to dispatch the Storage 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 Storage 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 Storage 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 Purchase and Sale of Product. Subject to the terms and conditions of this Agreement, during the Delivery Term, Buyer shall purchase all the Product produced by or associated with the Facility at the Contract Price and in accordance with Exhibit C, and Seller shall supply and deliver to Buyer all the Product produced by or associated with the Facility. At its sole discretion, Buyer may during the Delivery Term re-sell or use for another purpose all or a portion of the Product; provided, no such re-sale or use shall relieve Buyer of any obligations hereunder.
During the Delivery Term, Buyer shall have exclusive rights to offer, bid, or otherwise submit the Product, and/or any component thereof, from the Facility after the Delivery Point for resale in the market, and retain and receive any and all related revenues.
3.2 Sale of Green Attributes. During the Delivery Term, Seller shall sell and deliver to Buyer, and Buyer shall purchase from Seller, all Green Attributes attributable to the PV Energy generated by the Facility. Upon request of Buyer, Seller shall use commercially reasonable efforts to (a) submit, and receive approval from the Center for Resource Solutions (or any successor that administers the Green-e Certification process), for the Green-e tracking attestations and (b) support Buyer’s efforts to qualify the Green Attributes transferred by Seller as Green-e Certified.
3.3 Imbalance Energy. Buyer and Seller recognize that in any given Settlement Period the amount of PV Energy, Charging Energy, and/or Discharging Energy delivered from the Generating Facility and/or received or delivered by the Storage Facility may deviate from the amounts thereof scheduled with the CAISO. Following the Commercial Operation Date, to the extent there are such deviations, any costs, liabilities or revenues from such imbalances shall be solely for the account of Buyer, except as expressly set forth in this Agreement.
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31 3.4 Ownership of Renewable Energy Incentives. Seller shall have all right, title and interest in and to all Renewable Energy Incentives. Buyer acknowledges that any Renewable Energy Incentives belong to Seller. If any Renewable Energy Incentives, or values representing the same, are initially credited or paid to Buyer, Buyer shall cause such Renewable Energy 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 Renewable Energy Incentives.
3.5 Future Environmental Attributes.
(a) The Parties acknowledge and agree that as of the Effective Date, environmental attributes sold under this Agreement are restricted to Green Attributes; however, Future Environmental Attributes may be created by a Governmental Authority through Laws enacted after the Effective Date. Subject to the final sentence of this Section 3.5(a) and to Section
3.5(b), in such event, Buyer shall bear all costs associated with the transfer, qualification, verification, registration and ongoing compliance for such Future Environmental Attributes, but there shall be no increase in the Contract Price. Upon Seller’s receipt of Notice from Buyer of Buyer’s intent to claim such Future Environmental Attributes, the Parties shall determine the necessary actions and additional costs associated with such Future Environmental Attributes.
Seller shall have no obligation to alter the Facility or the operation of the Facility unless the Parties have agreed on all necessary terms and conditions relating to such alteration or change in operation and Buyer has agreed to reimburse Seller for all costs, losses, and liabilities associated with such alteration or change in operation.
(b) If Buyer elects to receive Future Environmental Attributes pursuant to Section 3.5(a), the Parties agree to negotiate in good faith with respect to the development of further agreements and documentation necessary to effectuate the transfer of such Future Environmental Attributes, including agreement with respect to (i) appropriate transfer, delivery and risk of loss mechanisms, and (ii) appropriate allocation of any additional costs to Buyer, as set forth above; provided, the Parties acknowledge and agree that such terms are not intended to alter the other material terms of this Agreement.
3.6 [Intentionally Omitted].
3.7 Capacity Attributes. Seller shall diligently maintain Full Capacity Deliverability Status for the Guaranteed Storage 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 maintaining such Full Capacity Deliverability Status. (a) Throughout the Delivery Term and subject to Section 3.12, Seller grants, pledges, assigns and otherwise commits to Buyer all the Capacity Attributes from the Storage Facility.
(b) Throughout the Delivery Term and subject to Section 3.12, Seller shall use commercially reasonable efforts to maintain eligibility for Full Capacity Deliverability Status or Interim Deliverability Status for the Storage Facility from the CAISO and shall perform all actions
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32 necessary to ensure that the Storage Facility qualifies to provide all Resource Adequacy Benefits, including Flexible Capacity, to Buyer. Throughout the Delivery Term, and subject to Section 3.12, 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 3.12, 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 the amount of the expected Storage RA Shortfall with respect to such Showing Month, provided that (a) the amount of Replacement RA in any Contract Year shall not exceed twenty-five percent (25%) of the annual total amount of Resource Adequacy Benefits expected to be provided by the Generating Facility or Storage Facility, as applicable, 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.
(e) Seller shall provide RA Substitute Capacity in accordance with applicable CAISO requirements in connection with Facility outages. Seller acknowledges and agrees that any failure by Seller to provide such RA Substitute Capacity may result in CAISO rejecting or cancelling Seller’s request for CAISO to approve such Facility outage. If Seller fails to provide RA Substitute Capacity, then Buyer may elect to not include the Facility (or, if applicable, the portion of the Facility) in its RA Plan and such failure shall be deemed a “Storage RA Shortfall” and Seller’s sole liability to Buyer for such failure to provide the RA Substitute Capacity will be payment of the RA Deficiency Amount for such RA Shortfall pursuant to Section 3.8.
3.8 Resource Adequacy Failure.
(a) RA Deficiency Determination. Subject to Section 3.7(d) and Section 3.8(c), for each RA Shortfall Month Seller shall pay to Buyer the RA Deficiency Amount as liquidated damages, as set forth in Section 3.8(b), as the sole remedy for the Capacity Attributes that Seller failed to convey to Buyer.
(b) RA Deficiency Amount Calculation. The “RA Deficiency Amount” shall equal the sum of:
(i) For any portion of the Storage RA Shortfall for which Buyer incurs a CPUC System RA Penalty (“CPUC-Penalized Shortfall”), Seller’s pro rata share of the amount of such CPUC System RA Penalty for such month actually incurred by Buyer (which shall be zero (0) if Buyer does not incur any CPUC System RA Penalty), plus, (ii) For any portion of the Storage RA Shortfall for which Buyer incurs CAISO costs, charges or penalties associated with such shortfall (“CAISO-Penalized Shortfall”) Seller’s pro rata share of the amount of such CAISO costs, charges or penalties associated with the Storage RA Shortfall for such month actually incurred by Buyer (which shall be zero (0) if
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33 Buyer does not incur any CAISO costs, charges or penalties associated with the Storage RA Shortfall), plus
(iii) For any portion of the Storage RA Shortfall which is not CPUC-Penalized Shortfall and/or CAISO-Penalized Shortfall, and for which Buyer purchased replacement Resource Adequacy Benefits, the amount of Buyer’s cost of such replacement Resource Adequacy Benefits, plus
(iv) For any portion of the Storage RA Shortfall which is not CPUC-Penalized Shortfall and/or CAISO-Penalized Shortfall, and for which Buyer did not purchase replacement Resource Adequacy Benefits, the prevailing market value of such Storage RA Shortfall, calculated as the average of quotes from at least three (3) reputable and independent brokers. Seller and Buyer shall each select a broker and the two selected brokers shall appoint the third broker.
(c) RA Deficiency Amount Cap. Notwithstanding the provisions of Section
3.8(b), for any RA Deficiency Amount for a Storage RA Shortfall associated with a monthly Resource Adequacy showing, the RA Deficiency Amount shall not exceed (i) for the Showing Months of October through June, the product of the RA Shortfall multiplied by the Storage Rate; (ii) for the Showing Month of July, the product of the RA Shortfall multiplied by the Storage Rate multiplied by 2.5 (iii) for the Showing Month of August, the product of the RA Shortfall multiplied by the Storage Rate multiplied by 4.5; and (iv) for the Showing Month of September, the product of the RA Shortfall multiplied by the Storage Rate multiplied by 5.5.
3.9 CEC Certification and Verification. Subject to Section 3.12 and in accordance with the timing set forth in this Section 3.9, Seller shall take all necessary steps including, but not limited to, making or supporting timely filings with the CEC to obtain and maintain CEC Certification and Verification for the Generating Facility throughout the Delivery Term, including compliance with all applicable requirements for certified facilities set forth in the current version of the RPS Eligibility Guidebook (or its successor). Seller shall obtain CEC Precertification by the Commercial Operation Date. Within thirty (30) days after the Commercial Operation Date, Seller shall apply with the CEC for final CEC Certification and Verification. Within one hundred eighty (180) days after the Commercial Operation Date, Seller shall obtain and maintain throughout the remainder of the Delivery Term the final CEC Certification and Verification. Seller must promptly notify Buyer and the CEC of any changes to the information included in Seller’s application for CEC Certification and Verification for the Generating Facility.
3.10 Eligibility. Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) the Project qualifies and is certified by the CEC as an Eligible Renewable Energy Resource (“ERR”) as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Project’s output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC 6]
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34 3.11 California Renewables Portfolio Standard. Subject to Section 3.12, Seller shall also take all other actions necessary to ensure that the PV Energy produced from the Generating Facility is tracked for purposes of satisfying the California Renewables Portfolio Standard requirements, as may be amended or supplemented by the CPUC or CEC from time to time.
3.12 Compliance Expenditure Cap. If a change in Law occurring after the Effective Date has increased Seller’s cost to comply with Seller’s obligations under this Agreement that are made subject to this Section 3.12, including with respect to obtaining, maintaining, conveying or effectuating Buyer’s use of Green Attributes and Capacity Attributes (as applicable), then the Parties agree that the maximum aggregate amount of costs and expenses Seller shall be required to bear during the Delivery Term to comply with all of such obligations shall be capped at Twenty-Five Thousand Dollars ($25,000) per MW of Guaranteed Capacity (“Compliance Expenditure Cap”).
(a) Any actions required for Seller to comply with its obligations set forth in the first paragraph above, the cost of which will be included in the Compliance Expenditure Cap, shall be referred to collectively as the “Compliance Actions”; provided that Compliance Actions shall not require Seller to install any additional MW or MWh of energy storage or generation capacity, or otherwise alter the physical design or configuration of the Facility in any material manner as a result of any change in Law occurring after the Effective Date; and provided, further, that notwithstanding anything to the contrary hereunder, to the extent that any Compliance Actions, despite Seller’s use of commercially reasonable efforts to avoid, cause the Storage Facility to have reduced capacity for any period of time, such reduced capacity shall be excluded for purposes of calculating the Annual Storage Capacity Availability and Effective Storage Capacity.
(b) If Seller reasonably anticipates the need to incur out-of-pocket expenses in excess of the Compliance Expenditure Cap in order to take any Compliance Action, Seller shall provide Notice to Buyer of such anticipated out-of-pocket expenses. (c) Buyer will have sixty (60) days to evaluate such Notice (during which time period Seller is not obligated to take any Compliance Actions described in the Notice) and shall, within such time, either (1) agree to reimburse Seller for all or some portion of the costs that exceed the Compliance Expenditure Cap (such Buyer-agreed upon costs, the “Accepted Compliance Costs”), or (2) waive Seller’s obligation to take such Compliance Actions, or any part thereof for which Buyer has not agreed to reimburse Seller. If Buyer does not respond to a Notice given by Seller under this Section 3.12 within sixty (60) days after Buyer’s receipt of same, Buyer shall be deemed to have waived its rights to require Seller to take the Compliance Actions that are the subject of the Notice, and Seller shall have no further obligation to take, and no liability for any failure to take, such Compliance Actions until such time as Buyer agrees to pay such Accepted Compliance Costs.
(d) If Buyer agrees to reimburse Seller for the Accepted Compliance Costs, then Seller shall take such Compliance Actions covered by the Accepted Compliance Costs as agreed upon by the Parties in a commercially reasonable timeframe and Buyer shall reimburse Seller for Seller’s actual costs to effect the Compliance Actions, not to exceed the Accepted Compliance Costs, within sixty (60) days from the time that Buyer receives an invoice and
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35 documentation of such costs from Seller.
3.13 Project 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 mutually acceptable to both Parties as set forth in a written agreement.
ARTICLE 4
OBLIGATIONS AND DELIVERIES
4.1 Delivery.
(a) Energy. 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 (except for PV Energy used as Charging Energy), and Buyer shall take delivery of the Product at the Delivery Point (except for PV Energy used as Charging Energy) 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 Owner directly relating to the Facility’s operations. Except as otherwise set forth in this Agreement, Buyer shall be responsible for all costs, charges and penalties, 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 after the Delivery Point, including without limitation transmission costs and transmission line losses and imbalance charges. During the Delivery Term, the PV Energy, Charging Energy and Discharging Energy will be scheduled with the CAISO by Buyer (or Buyer’s designated Scheduling Coordinator) in accordance with Exhibit D.
(b) Green Attributes. All Green Attributes associated with the PV Energy during the Delivery Term are exclusively dedicated to and vested in Buyer. Seller represents and warrants that Seller holds the rights to all Green Attributes from the Facility, and Seller agrees to convey and hereby conveys all such Green Attributes to Buyer as included in the delivery of the Product from the Facility.
(c) Energy Products. If, at any time during the Contract Term, Buyer requests Seller to provide any new or different Energy-related products or Ancillary Services that may become recognized from time to time in the CAISO market and that are not expressly listed in Exhibit Q (including, for example, reactive power), and Seller is able to provide any such product from the Facility without material adverse effect (including any obligation to incur more than de minimis costs or liabilities) on Seller or the Facility or Seller’s obligations or liabilities under this Agreement, then Seller shall use commercially reasonable efforts to coordinate with Buyer to provide such product. If provision of any such new product would have a material adverse effect (including any obligation to incur more than de minimis costs or liabilities) on Seller or the Facility or Seller’s obligations or liabilities under this Agreement, then Seller shall be obligated to provide
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36 such product only if the Parties first execute an amendment to this Agreement with respect to such product that is mutually acceptable to both Parties.
4.2 Title and Risk of Loss.
(a) Energy. Title to and risk of loss related to the Facility Energy, shall pass and transfer from Seller to Buyer at the Delivery Point. Seller warrants that all Product delivered to Buyer is free and clear of all liens, security interests, claims and encumbrances of any kind. (b) Green Attributes. Title to and risk of loss related to the Green Attributes shall pass and transfer from Seller to Buyer upon the transfer of such Green Attributes in accordance with WREGIS.
4.3 Forecasting. Seller shall provide the forecasts described below. Seller shall use commercially reasonable efforts to forecast accurately and to transmit such information in a format reasonably acceptable to Buyer (or Buyer’s designee).
(a) Annual Forecast of Energy. No less than forty-five (45) days before (i) the first day of the first Contract Year of the Delivery Term and (ii) the beginning of each calendar year for every subsequent Contract Year during the Delivery Term, Seller shall provide to Buyer and the SC (if applicable) a non-binding forecast of each month’s average-day expected PV Energy, by hour, for the following calendar year in a form substantially similar to the table found in Exhibit F-1, or as reasonably requested by Buyer (“Annual Forecast”). (b) Monthly Forecast of PV Energy and Available Capacity. 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 (i) available capacity of the Generating Facility, (ii) PV Energy, (iii) Available Effective Storage Capacity, and (iv) Available Storage Capability (items (i)-(iv) collectively referred to as the “Forecasted Product”), for each day of the following month in a form substantially similar to Exhibits F-1, F-2, F-3 and F-4, as applicable (“Monthly Forecast”).
(c) Day-Ahead Forecast. By 5:30 AM Pacific Prevailing Time on the Business Day immediately preceding the date of delivery, or as otherwise specified by Buyer consistent with Prudent Operating Practice, Seller shall provide Buyer with a non-binding forecast of the hourly expected Forecasted Product, in each case, for each hour of the immediately succeeding day (“Day-Ahead Forecast”). A Day-Ahead Forecast provided in a day prior to any non-Business Day(s) shall include non-binding forecasts for the immediate day, each succeeding non-Business Day, and the next Business Day. Each Day-Ahead Forecast shall clearly identify, for each hour, Seller’s best estimate of the hourly expected Forecasted Product. Such Day-Ahead Forecasts shall be sent to Buyer’s on-duty Scheduling Coordinator. If Seller fails to provide Buyer with a Day-Ahead Forecast as required herein for any period, then for such unscheduled delivery period only, Buyer shall rely on any Real-Time Forecast or the Monthly Forecast or Buyer’s best estimate based on information reasonably available to Buyer.
(d) Real-Time Forecasts. During the Delivery Term, Seller shall notify Buyer of any changes from the Day-Ahead Forecast of one (1) MW / one (1) MWh or more in the hourly
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37 expected Forecasted Product (“Real-Time Forecast”), in each case, whether due to a Forced Facility Outage, Force Majeure Event or other cause, as soon as reasonably possible, but no later than one (1) hour prior to the deadline for submitting schedules to the CAISO in accordance with the rules for participation in the Real-Time Market. If the Forecasted Product changes by at least one (1) MW as of a time that is less than one (1) hour prior to the Real-Time Market deadline, but before such deadline, then Seller must notify Buyer as soon as reasonably possible. Such Real-Time Forecasts of PV Energy shall be provided by an Approved Forecast Vendor and shall contain information regarding the beginning date and time of the event resulting in the change in any Forecasted Product, as applicable, the expected end date and time of such event, and any other information required by the CAISO or reasonably requested by Buyer. With respect to any Forced Facility Outage, Seller shall use commercially reasonable efforts to notify Buyer of such outage within ten (10) minutes of the commencement of the Forced Facility Outage. Seller shall inform Buyer of any developments that are reasonably likely to affect either the duration of such outage or the availability of the Facility during or after the end of such outage. Such Real-Time Forecasts shall be communicated in a method acceptable to Buyer, provided that Buyer specifies the method no later than sixty (60) days prior to the effective date of such requirement. In the event Buyer fails to provide Notice of an acceptable method for communications under this Section 4.3(d), then Seller shall send such communications by telephone and e-mail to Buyer. For avoidance of doubt, provision of the CAISO VER forecast would meet the Seller obligations under the subsection (c) Day-Ahead Forecasts, and provision of the CAISO VER forecast along with the outage information required in the first sentence of this subsection (d) would meet the Seller obligations under the subsection (d) Real-Time Forecasts.
(e) Forced Facility Outages. Notwithstanding anything to the contrary herein, Seller shall promptly notify Buyer’s on-duty Scheduling Coordinator of Forced Facility Outages and Seller shall keep Buyer informed of any developments that will affect either the duration of the outage or the availability of the Facility during or after the end of the outage. (f) Forecasting Penalties. If Seller fails to provide the Annual Forecast or Monthly Forecast on or before the respective deadlines set forth in Sections 4.3(a) or 4.3(b), as applicable, Seller shall pay to Buyer liquidated damages in the amount of $500 per occurrence. In the event Seller does not in a given hour provide the forecast required in Section 4.3(d) and Buyer incurs a loss or penalty resulting from its scheduling activities with respect to Facility Energy during such hour, Seller shall be responsible for a “Forecasting Penalty” for each such hour equal to the product of (A) the absolute difference (if any) between (i) the expected PV Energy for such hour (which assumes no Charging Energy or Discharging Energy in such hour) set forth in the Monthly Forecast, and (ii) the actual PV Energy (absent any Charging Energy and Discharging Energy), multiplied by (B) the absolute value of the Real-Time Price in such hour. Settlement of Forecasting Penalties shall occur as set forth in Article 8 of this Agreement. (g) CAISO Tariff Requirements. Seller shall comply with all applicable obligations for Variable Energy Resources under the CAISO Tariff and the Eligible Intermittent Resource Protocol, including providing appropriate operational data and meteorological data, and will fully cooperate with Buyer, Buyer’s SC, and CAISO, in providing all data, information, and authorizations required thereunder.
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38 (h) Meteorological Data. Within ninety (90) days following the Effective Date, Seller shall provide to Buyer a copy of the historical meteorological data in Seller’s possession for the Site. Commencing on the date the meteorological stations installed at the Site are delivering data, and continuing throughout the Delivery Term, Seller shall provide to Buyer read-only access to the data from the Site’s meteorological stations, which shall be either (i) measurements on a real-time basis with instantaneous data measurements at three (3) to five (5) second intervals, which measurements shall be provided by Seller to Buyer through a distributed network protocol (DNP) connection over a business-to-business secure virtual private network (VPN), or (ii) measurements at ten (10) minute intervals, which shall be provided once per day by Seller to Buyer in a consolidated data report via flat file or FTP (provided, Buyer shall have the option to elect, no more than once per calendar year, the method of delivery as set forth in subsections (i) or (ii) above upon no less than thirty (30) days’ prior written Notice to Seller of such election), in each case including the following data points: (A) ambient air temperature, (B) precipitation (rain rate), (C) precipitation (running thirty (30)-day total), (D) barometric pressure, and (E) insolation; provided, the method of data delivery and the foregoing data points specified under this Section 4.3(h) may be updated as reasonably agreed to by the Parties. Such updates may include modifications to or additions of data points as are reasonably necessary for Buyer’s administration of this Agreement, to the extent that Seller can effectuate such updates through the use of commercially reasonable efforts.
4.4 Dispatch Down/Curtailment.
(a) General. Seller agrees to reduce the amount of PV Energy and/or Discharging Energy produced by the Facility, by the amount and for the period set forth in any Curtailment Order, Buyer Curtailment Order, or notice received from CAISO in respect of a Buyer Bid Curtailment; provided, Seller is not required to reduce such amount to the extent it is inconsistent with the limitations of the Facility set out in the Operating Restrictions. (b) Buyer Curtailment. Buyer shall have the right to order Seller to curtail deliveries of PV Energy through Buyer Curtailment Orders; provided, Buyer shall pay Seller for (i) all Deemed Delivered Energy associated with a Buyer Curtailment Period at the Renewable Rate; plus, (ii) if Seller utilizes the PTC, (A) the amount of Deemed Delivered Energy multiplied by the PTC rate determined pursuant to Section 45(b)(2) or Section 45Y(c) of the United States Internal Revenue Code of 1986, as amended (the “Code”) as in effect for such Buyer Curtailment Period (and taking into account any then-applicable PTC rate increases under Section 45 or 45Y of the Code), converted to a dollar per MWh basis, divided by (B) one (1) minus the highest then-applicable federal income tax rate applicable to Seller or its Affiliates or Lenders providing tax equity financing for the Generating Facility.
(c) Failure to Comply. If Seller fails to comply with a Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order, then, for each MWh of PV Energy that is delivered by the Generating Facility to the Delivery Point that is in excess of the Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order, Seller shall pay Buyer for each such MWh at an amount equal to the sum of (A) + (B) + (C), where: (A) is the amount, if any, paid to Seller by Buyer for delivery of such excess MWh, (B) is the sum, for all Settlement Intervals with a Negative LMP during the Buyer Curtailment Period or Curtailment Period, of the absolute value of the product of such excess MWh in each Settlement Interval and the Negative LMP for such
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39 Settlement Interval, and (C) is any penalties assessed by the CAISO or other charges assessed by the CAISO resulting from Seller’s failure to comply with the Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order.
(d) Seller Equipment Required for Operating Instruction Communications.
Seller shall acquire, install, and maintain such facilities, communications links and other equipment, and implement such protocols and practices, as necessary to respond to and follow operating instructions from the CAISO and Buyer's SC, including an electronic signal conveying real time and intra-day instructions, to operate the Facility as directed by Buyer from time to time in accordance with this Agreement and/or a Governmental Authority, including to implement a Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order in accordance with the methodologies applicable to the Facility and used to transmit such instructions. If at any time during the Delivery Term, Seller’s facilities, communications links or other equipment, protocols or practices are not in compliance with methodologies applicable to the Facility and directed by Buyer, Seller shall take the steps necessary to become compliant as soon as commercially reasonably possible. Seller shall be liable pursuant to Section 4.4(c) for failure to comply with a Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order, during the time that Seller’s facilities, communications links or other equipment, protocols or practices are not in compliance with applicable methodologies. A Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order communication via such systems and facilities shall have the same force and effect on Seller as any other form of communication.
4.5 Energy Management.
(a) Charging Generally. During the Delivery Term, upon receipt of a valid Charging Notice, Seller shall take any and all action necessary to deliver the Charging Energy to the Storage 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 Generating Facility to the Storage Facility.
Except as otherwise expressly set forth in this Agreement, including Section 4.5(c), Section 4.5(i), and Section 4.9(d)(i), Buyer shall be responsible for paying all CAISO costs and charges associated with Charging Energy.
(b) Charging Notices. During the Delivery Term, Buyer will have the right to charge the Storage 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. Each Charging Notice issued in accordance with this Agreement will be effective unless and until Buyer’s SC or the CAISO modifies such Charging Notice by providing Seller with an updated Charging Notice.
(c) No Unauthorized Charging. Seller shall not charge the Storage Facility during the Delivery Term other than in accordance with 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 Storage Capacity Test), or pursuant to a notice from the Transmission Owner or Governmental Authority.
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40 (d) No Unauthorized Discharging. Seller shall not discharge the Storage Facility during the Delivery Term other than in accordance with 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 Owner or Governmental Authority. During the Delivery Term, Buyer will have the right to discharge the Storage 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) Curtailments. Notwithstanding anything in this Agreement to the contrary, during any Settlement Interval, Curtailment Orders, Buyer Curtailment Orders, and Buyer Bid Curtailments 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
4.5 or any Dispatch Notice if and to the extent such violation is caused by Seller’s compliance with any Curtailment Order, Buyer Curtailment Order, Buyer Bid Curtailment or other instruction or direction from Buyer or its SC or a Governmental Authority or the Transmission Owner. Buyer shall have the right, but not the obligation, to provide Seller with updated Dispatch Notices during any Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order. (f) Unauthorized Charges and Discharges. During the Delivery Term, if Seller or any third party not under Buyer’s control charges, discharges or otherwise uses the Storage Facility other than as permitted hereunder, or as is expressly addressed in Section 4.5(g), then (i) 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, including all Imbalance Energy costs associated therewith, and, in the case of Seller charging the Storage Facility other than in compliance with a Charging Notice, (x) Seller shall be responsible for the cost of such Energy associated with such charging of the Storage Facility, and (y) Buyer shall be entitled to discharge such Energy and entitled to all of the CAISO revenues and benefits (including Storage Product) associated with such discharge, and (ii) it shall be a breach by Seller, 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.
(g) Requirements for Charging and Discharging Notices. Buyer shall ensure that all Charging Notices and Discharging Notices are issued in a manner consistent with all requirements of this Agreement, including all Operating Restrictions and the CAISO Tariff. (h) 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 4.5 or any Charging Notice 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 Storage Facility is capable of responding to a CAISO Dispatch, but the Storage Facility deviates from a CAISO Dispatch, Seller shall be responsible for all CAISO charges and penalties (including imbalance
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41 energy costs) resulting from such deviation (in addition to any Buyer remedy related to overcharging of the Storage Facility as set forth in Section 4.5(f)). To the extent the Storage Facility is unable to respond to ADS signals during any Calculation Interval, 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. (i) Pre-Commercial Operation Date Period. Prior to Commercial Operation Date, (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 Storage Facility, and (iii) all CAISO costs, revenues, penalties and other amounts owing to or paid by CAISO in respect of the Storage Facility shall be for Seller’s account. Upon 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 Storage Facility operations shall be for Buyer’s account, except as expressly set forth herein. (j) Station Use. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge (i) during charging and discharging of the Storage Facility pursuant to a Charging Notice or Discharging Notice, Auxiliary Use may be served by Charging Energy or Discharging Energy, (ii) 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 Station Use) except for Auxiliary Use during periods of charging or discharging pursuant to a Charging Notice or Discharging Notice, (iii) the supply of Auxiliary Use shall not be deemed a violation of this Agreement, including Sections 4.5(c), (d), and (f), (iv) if Buyer is charged for Imbalance Energy during any Idle Period, including as used to serve Station Use, Seller shall reimburse Buyer for such costs, and (v) Seller shall reimburse Buyer for all Idle Period Auxiliary Use in the manner contemplated by paragraph (d) 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).
4.6 Facility Maintenance.
(a) Seller shall provide to Buyer written schedules for Planned Outages for each Contract Year no later than thirty (30) days prior to the first day of the applicable Contract Year.
Buyer may provide comments no later than ten (10) days after receiving any such schedule, and Seller shall in good faith take into account any such comments. Seller shall deliver to Buyer the final updated schedule of Planned Outages no later than ten (10) days after receiving Buyer’s comments. Seller shall be permitted to reduce deliveries of Product during any period of such Planned Outages. Seller shall have the right during each Contract Year, on no less than sixty (60) days advance Notice to Buyer, to propose changes to each such schedule. 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.
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42 (b) If reasonably required in accordance with Prudent Operating Practices, Seller may perform maintenance at a different time than maintenance scheduled pursuant to Section 4.6(a). 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 (A) subject to the limits set forth in Section 3.8(c), reimburse Buyer for any cost Buyer incurs in connection therewith (including RA Substitute Capacity pursuant to Section 3.7(e)), and (B) limit maintenance repairs performed pursuant to this Section 4.6(b) to periods when Buyer does not reasonably believe the Facility will be dispatched. (c) Notwithstanding anything in this Agreement to the contrary, no Planned Outages of the Facility 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. 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.
4.7 Guaranteed Energy Production. During each Performance Measurement Period, Seller shall deliver to Buyer an amount of PV Energy, not including any Excess MWh, equal to no less than the Guaranteed Energy Production (as defined below). “Guaranteed Energy Production” means an amount of PV Energy, as measured in MWh, equal to one hundred sixty percent (160%) of the average annual Expected Energy for the two (2) Contract Years constituting such Performance Measurement Period. Seller shall be excused from achieving the Guaranteed Energy Production during any Performance Measurement Period only to the extent of any Buyer Default or other Buyer failure to perform that directly prevents Seller from being able to deliver PV Energy to the Delivery Point. For purposes of determining whether Seller has achieved the Guaranteed Energy Production, Seller shall be deemed to have delivered to Buyer the sum of (a) any Deemed Delivered Energy, plus (b) PV Energy in the amount it could reasonably have delivered to Buyer but was prevented from delivering to Buyer by reason of any Force Majeure Events, System Emergency, Transmission System Outage, Buyer’s Default or other failure to perform or Curtailment Periods (“Lost Output”). If Seller fails to achieve the Guaranteed Energy Production amount in any Performance Measurement Period, Seller shall pay Buyer damages calculated in accordance with Exhibit G (“Energy Replacement Damages”); provided, Seller may, as an alternative, provide Replacement Product (as defined in Exhibit G) delivered to Buyer at SP-15 under a Day-Ahead Schedule as an Inter-SC Trade within ninety (90) days after the conclusion of the applicable Performance Measurement Period (i) upon a schedule reasonably acceptable to Buyer, (ii) provided that such deliveries do not impose additional costs upon Buyer for which Seller refuses to provide reimbursement, and (iii) not to exceed ten percent (10%) of the Expected Energy for the previous Contract Year.
4.8 Storage Facility Availability; Ancillary Services.
(a) During the period commencing upon Commercial Operation Date and continuing throughout the Delivery Term, the Storage Facility shall maintain an Annual Storage Capacity Availability during each Contract Year of no less than ninety-seven percent (97%) (the “Guaranteed Storage Availability”), which Annual Storage Capacity Availability shall be calculated in accordance with Exhibit P.
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44 (i) Buyer shall have the right to send one or more representative(s) to witness all Storage Capacity Tests.
(ii) Following each Storage Capacity Test, Seller shall submit a testing report in accordance with Exhibit O. If the actual capacity determined pursuant to a Storage Capacity Test varies from the then-current Effective Storage Capacity, then the actual capacity determined pursuant to such Storage Capacity Test shall become the new Effective Storage Capacity at the beginning of the first day of the month 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, Buyer shall have the right, in its sole discretion, to retroactively apply the results of the next Storage Capacity Test once completed back to the first day of the applicable Contract Year for all purposes of this Agreement. (b) Additional Testing. Seller shall, at times and for durations reasonably agreed to by Buyer, conduct necessary testing to ensure the Storage Facility is functioning properly and the Storage Facility is able to respond to Dispatch Notices. (c) Buyer or Seller Initiated Tests. Any testing of the Storage Facility requested by Buyer after the Commercial Operation Storage Capacity Tests and all required annual tests (excluding retests, as set forth below in this Section 4.9(c)) pursuant to Section B of Exhibit O shall be deemed Buyer-instructed dispatches of the Facility (“Buyer Dispatched Test”). Any test of the Storage Facility that is not a Buyer Dispatched Test (including all tests conducted prior to Commercial Operation, any Commercial Operation Storage Capacity Tests, any Storage Capacity Test conducted if the Effective Storage Capacity immediately prior to such Storage Capacity Test is below seventy percent (70%) of the Installed Storage Capacity, any test required by CAISO (including any test required to obtain or maintain CAISO Certification), and other Seller-requested discretionary tests, Operating Restrictions (including for cell rebalancing or similar operating limitations), or dispatches, at times and for durations reasonably agreed to by Buyer, that Seller deems necessary for purposes of reliably operating or maintaining the Storage Facility or for re-performing a required test within a reasonable number of days of the initial required test (except to the extent the need for a retest was caused by Buyer’s failure in its capacity as SC to appropriately Schedule the initial Storage Capacity Test) shall be deemed a “Seller Initiated Test”.
(i) For any Seller Initiated Test, other than Storage Capacity Tests 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).
(ii) No Dispatch Notices shall be issued during any Seller Initiated Test or Buyer Dispatched Test except as reasonably requested by Seller or Buyer to implement the applicable test. Periods during which Buyer Dispatched Tests render the Storage Facility (or any portion thereof, as applicable) unavailable shall be excluded for purposes of calculating the Annual Storage Capacity Availability. The Storage Facility will be deemed unavailable during any Seller
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45 Initiated Test, and Buyer shall not dispatch or otherwise schedule the Storage Facility during such Seller Initiated Test.
(d) Testing Costs and Revenues.
(i) For all Buyer Dispatched Tests, Buyer shall direct only Charging Energy to be used to charge the Storage Facility. Buyer shall be responsible for paying all CAISO costs and charges associated with Charging Energy during a Buyer Dispatched Test and Buyer shall be entitled to all CAISO revenues associated with a Storage Facility dispatch during a Buyer Dispatched Test. For all Seller Initiated Tests, (1) Seller shall reimburse Buyer the amount of Buyer’s payment of the Charging Energy for such Seller Initiated Test, and (2) Seller shall be entitled to all CAISO revenues associated with the discharge of such Energy, but all Green Attributes associated therewith shall be for Buyer’s account at no additional cost to Buyer. Buyer shall pay to Seller, in the month following Buyer’s receipt of such CAISO revenues and otherwise in accordance with Exhibit C, all applicable CAISO revenues received by Buyer and associated with the discharge Energy associated with such Seller Initiated Test. (ii) Buyer shall be responsible for all costs, expenses and fees payable or reimbursable to its representative(s) witnessing any Facility test. (iii) Except as set forth in Sections 4.9(d)(i) and (ii), all other costs of any testing of the Storage Facility shall be borne by Seller.
4.10 WREGIS. Seller shall, at its sole expense, but subject to Section 3.12, take all actions and execute all documents or instruments necessary to ensure that all WREGIS Certificates associated with all Renewable Energy Credits corresponding to all PV Energy are issued and tracked for purposes of satisfying the requirements of the California Renewables Portfolio Standard and transferred in a timely manner to Buyer for Buyer’s sole benefit. Seller shall transfer the Renewable Energy Credits to Buyer. Seller shall comply with all Laws, including the WREGIS Operating Rules, regarding the certification and transfer of such WREGIS Certificates to Buyer and Buyer shall be given sole title to all such WREGIS Certificates. Seller shall be deemed to have satisfied the warranty in Section 4.10(h), provided that Seller fulfills its obligations under Sections
4.10(a) through (g) below. In addition:
(a) Prior to the Commercial Operation Date, Seller shall register the Facility with WREGIS and establish an account with WREGIS (“Seller’s WREGIS Account”), which Seller shall maintain until the end of the Delivery Term. Seller shall transfer the WREGIS Certificates using “Recurring Certificate Transfers” (as described in the WREGIS Operating Rules) from Seller’s WREGIS Account to the WREGIS account(s) of Buyer or the account(s) of a designee that Buyer identifies by Notice to Seller (“Buyer’s WREGIS Account”). Seller shall be responsible for all expenses associated with registering the Facility with WREGIS, establishing and maintaining Seller’s WREGIS Account, paying WREGIS Certificate issuance and transfer fees, and transferring WREGIS Certificates from Seller’s WREGIS Account to Buyer’s WREGIS Account.
(b) Seller shall cause Recurring Certificate Transfers to occur on a monthly basis in accordance with the certification procedure established by the WREGIS Operating Rules.
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46 Since WREGIS Certificates will only be created for whole MWh amounts of PV Energy generated, any fractional MWh amounts (i.e., kWh) will be carried forward until sufficient generation is accumulated for the creation of a WREGIS Certificate.
(c) Seller shall, at its sole expense, ensure that the WREGIS Certificates for a given calendar month correspond with the PV Energy for such calendar month as evidenced by the Facility’s metered data.
(d) Buyer shall make an invoice payment for a given month in accordance with Section 8.2 before the WREGIS Certificates for such month are formally transferred to Buyer in accordance with the WREGIS Operating Rules and this Section 4.10. Notwithstanding this delay, Buyer shall have all right and title to all such WREGIS Certificates upon payment to Seller in accordance with Section 8.2.
(e) A “WREGIS Certificate Deficit” means any deficit or shortfall in WREGIS Certificates delivered to Buyer for a calendar month as compared to the PV Energy for the same calendar month (“Deficient Month”) caused by an error or omission of Seller. If any WREGIS Certificate Deficit is caused by, or is the result of any action or inaction of, Seller, then the amount of PV Energy in the Deficient Month shall be reduced by three (3) times the amount of the WREGIS Certificate Deficit for purposes of calculating Buyer’s payment to Seller under Article 8 and the Guaranteed Energy Production for the applicable Contract Year; provided, such adjustment shall not apply to the extent that Seller either (x) resolves the WREGIS Certificate Deficit within ninety (90) days after the Deficient Month or (y) provides Replacement Green Attributes (as defined in Exhibit G) within ninety (90) days after the Deficient Month (i) upon a schedule reasonably acceptable to Buyer, and (ii) provided that such deliveries do not impose additional costs upon Buyer for which Seller has not reimbursed Buyer. Without limiting Seller’s obligations under this Section 4.10, if a WREGIS Certificate Deficit is caused solely by an error or omission of WREGIS, the Parties shall cooperate in good faith to cause WREGIS to correct its error or omission.
(f) If WREGIS changes the WREGIS Operating Rules after the Effective Date or applies the WREGIS Operating Rules in a manner inconsistent with this Section 4.10 after the Effective Date, the Parties promptly shall modify this Section 4.10 as reasonably required to cause and enable Seller to transfer to Buyer’s WREGIS Account a quantity of WREGIS Certificates for each given calendar month that corresponds to the PV Energy in the same calendar month. (g) Seller and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement the Renewable Energy Credits transferred to Buyer conform to the definition and attributes required for compliance with the California Renewables Portfolio Standard, as set forth in California Public Utilities Commission Decision 08-08-028, and as may be modified by subsequent decision of the California Public Utilities Commission or by subsequent legislation. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC REC-1]
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47 (h) Seller warrants that all necessary steps to allow the Renewable Energy Credits transferred to Buyer to be tracked in the Western Renewable Energy Generation Information System will be taken prior to the first delivery under the contract. [STC REC-2] (i) Seller’s obligations under Sections 3.10, 4.10(g) and 4.10(h) shall be subject to Section 3.12, the term “Project” as used in Section 3.10 shall refer to the “Facility” and/or “Generating Facility” (as appropriate) as defined herein, the term “the contract” in Section 4.10(h) shall refer to “this Agreement” as defined herein, and the term “commercially reasonable efforts” as used in Section 3.10 and Section 4.10(g) means efforts consistent with and subject to Section
3.12. 4.11 Dispatch Notices. Buyer shall have the right to direct Seller to dispatch the Storage 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.
ARTICLE 5
TAXES
5.1 Allocation of Taxes and Charges. Seller shall pay or cause to be paid all Taxes on or with respect to the Facility or on or with respect to the sale and making available of Product to Buyer, that are imposed on Product prior to its delivery to Buyer at the time and place contemplated under this Agreement. Buyer shall pay or cause to be paid all Taxes on or with respect to the delivery to and purchase by Buyer of Product that are imposed on Product at and after its delivery to Buyer at the time and place contemplated under this Agreement (other than withholding or other Taxes imposed on Seller’s income, revenue, receipts or employees). If a Party is required to remit or pay Taxes that are the other Party’s responsibility hereunder, such Party shall promptly pay the Taxes due and then seek and receive reimbursement from the other for such Taxes. In the event any sale of Product hereunder is exempt from or not subject to any particular Tax, Buyer shall provide Seller with all necessary documentation to evidence such exemption or exclusion within thirty (30) days after the date Buyer makes such claim. Buyer shall indemnify, defend, and hold Seller harmless from any liability with respect to Taxes for which Buyer is responsible hereunder and from which Buyer claims it is exempt.
5.2 Cooperation. Each Party shall use reasonable efforts to implement the provisions of and administer this Agreement in accordance with the intent of the Parties to minimize all Taxes, so long as no Party is materially adversely affected by such efforts. The Parties shall cooperate to minimize Tax exposure; provided, neither Party shall be obligated to incur any financial or operational burden to reduce Taxes for which the other Party is responsible hereunder without receiving due compensation therefor from the other Party. All Product delivered by Seller to Buyer hereunder shall be a sale made at wholesale, with Buyer reselling such Product.
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48 ARTICLE 6
MAINTENANCE OF THE FACILITY
6.1 Maintenance of the Facility. 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 and the generation and sale of Product.
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 Owner, 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; 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 IDs, and (iv) provide that in the event of any 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.
ARTICLE 7
METERING
7.1 Metering.
(a) Subject to Section 7.1(b) (with respect to the entirety of the following Section 7.1(a)), unless the Parties agree otherwise pursuant to Section 3.13, the Facility shall have a separate CAISO Resource ID for each of the Generating Facility and the Storage Facility. Seller shall measure the amount of PV Energy using the Generating Facility Meter. Seller shall measure the Charging Energy and the Discharging Energy using the Storage Facility Meters. Seller shall separately meter all Station Use and all Auxiliary Use using one or more revenue-grade meters (collectively, the “Ancillary Meter”). All meters shall be operated pursuant to applicable CAISO-
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49 approved calculation methodologies and maintained at Seller’s cost. Subject to meeting any applicable CAISO requirements, the Storage Facility Meter and Generating 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. Each Storage Facility Meter, Ancillary Meter and Generating Facility Meter shall be kept under seal, such seals to be broken only when the meters 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 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. During the Delivery Term, 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.
(b) Section 7.1(a) is based on the Parties’ mutual understanding as of the Effective Date that (i) the CAISO requires the Generating Facility Meter and the Storage 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 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, 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 if such adjustments are accepted by CAISO and WREGIS; 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 (a) reflect records of metered data, including (i) CAISO metering and transaction data sufficient to document and verify the amount of Product delivered by the Facility
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50 for any Settlement Period during the preceding month, including the amount of PV Energy, Charging Energy, Discharging Energy, Station Use, Idle Period Auxiliary Use for which Seller owes reimbursement to Buyer, Replacement RA, and Replacement Product delivered to Buyer (if any), the calculation of Deemed Delivered Energy and Adjusted Energy Production, the LMP prices at the Delivery Point for each Settlement Period, and the Contract Price applicable to such Product in accordance with Exhibit C, 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. During the Delivery Term, 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 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 “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 ten thousand dollars ($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
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51 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, G, and P, interest, and payments or 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. If requested by Seller, Buyer shall from time to time reasonably cooperate with Seller to enable Seller to exchange one permitted form of Development Security for another permitted form (i.e., cash, or Letter of Credit or Guaranty, as applicable).
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.
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,
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52 indemnification payments or other damages are paid in full (whether directly or indirectly such as through set-off or netting). Following the occurrence of both events, Buyer shall promptly return to Seller the unused portion of the Performance Security. If requested by Seller, Buyer shall from time to time reasonably cooperate with Seller to enable Seller to exchange one permitted form of Performance Security for another permitted form (i.e., cash, or Letter of Credit or Guaranty, as applicable).
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 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 Financial Statements. Buyer shall provide to Seller both upon request and as indicated below: (a) within forty-five (45) days following the end of its first, second and third fiscal quarters, unaudited quarterly financial statements of Buyer prepared in accordance with generally accepted accounting principles in the United States, consistently applied; (b) within one hundred eighty (180) days following the end of each fiscal year, annual audited financial statements of Buyer prepared in accordance with generally accepted accounting principles in the United States, consistently applied; and (c) as available, Buyer’s annual report, which will include
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53 an overview of customer rate classes and retention rate (and may include opt-out rates), procurement activities, customer programs, and a list of Buyer’s member agencies and board members; provided, should any such statements associated with (a), (b) or (c) not be available on a timely basis due to a delay in preparation or certifications, such unavailability shall not be an Event of Default so long as Buyer diligently pursues the preparation, certification, and delivery of such statements. Buyer shall be deemed to have delivered such financial statements to Seller if such statements are made publicly available.
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 overnight 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 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.
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
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56 (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 3.8, (B) failures related to the Adjusted Energy Production that do not trigger the provisions of Section 11.1(b)(iii), the exclusive remedies for which are set forth in Section 4.7; and (C) failures related to the Annual Storage Capacity Availability that do not trigger the provisions of Section 11.1(b)(iv), the exclusive remedies for which are set forth in Section 4.8) and such failure is not remedied within thirty (30) days after Notice thereof (or such longer additional period, not to exceed an additional sixty (60) days, if 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 to assume all the obligations of such Party under this Agreement to which it or its predecessor was a party by operation of Law or pursuant to an agreement reasonably satisfactory to the other Party; (b) with respect to Seller as the Defaulting Party, the occurrence of any of the following:
(i) if at any time, Seller delivers or attempts to deliver Energy to the Delivery Point for sale under this Agreement that was not generated or discharged by the Facility, except for Replacement Product;
(ii) the failure by Seller to (A) achieve Construction Start on or before the Guaranteed Construction Start Date, as such date may be extended by Seller’s payment of Daily Delay Damages pursuant to Section 1(b) of Exhibit B and/or a Development Cure Period pursuant to Section 4 of Exhibit B, or (B) achieve Commercial Operation on or before the Guaranteed Commercial Operation Date, 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;
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60 Facility contracts and matters, in each case pursuant to and provided for in agreements that are in effect as of the Early Termination Date or entered into thereafter in order to mitigate or minimize the aggregate costs and expenses hereunder, less (B) the fair market value (determined in a commercially reasonable manner by third-party independent evaluator mutually agreed by the Parties (or absent such agreement, by a third-party independent evaluator mutually agreed by two independent evaluators, one selected by each of the Parties), but at Buyer’s sole cost), net of all Facility-related liabilities and obligations (without duplication of any of the liabilities and obligations set forth in Section 11.3(a)(ii)(A)), of (A) all Seller’s assets if sold individually, or (B) the entire Facility, whichever is greater, regardless of whether or not any Seller asset or the entire Facility is actually sold or disposed of. Fair market value will be based on the value of Seller’s assets or the entire Facility as existing on the Early Termination Date and not on the value thereof at a later stage of development or construction of the Facility or at completion of the Facility.
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.
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61 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.
11.6 Limitation on Seller’s Ability to Make or Agree to Third-Party Sales from the Facility after Early Termination Date. If the Agreement is terminated prior to the Commercial Operation Date for any reason except due to Buyer’s Event of Default, neither Seller nor Seller’s Affiliates may sell, market or deliver any Product associated with or attributable to the Facility to a party other than Buyer for the longer of (a) a period of two (2) years following such early termination date, and (b) until the Guaranteed Construction Start Date, unless prior to selling, marketing or delivering such Product, or entering into the agreement to sell, market or deliver such Product to a party other than Buyer, Seller or Seller’s Affiliates provide Buyer with a written offer to sell the Product on terms and conditions materially similar to the terms and conditions contained in this Agreement (including price) and Buyer fails to accept such offer within forty-five (45) days of Buyer’s receipt thereof.
Neither Seller nor Seller’s Affiliates may sell or transfer the Facility, or any part thereof, or land rights or interests in the Site (including the interconnection queue position of the Facility) so long as the limitations contained in this Section 11.6 apply, unless the transferee agrees to be bound by the terms set forth in this Section 11.6 pursuant to a written agreement approved by Buyer, such approval not to be unreasonably withheld, delayed or conditioned.
Seller shall indemnify and hold Buyer harmless from all benefits lost and other damages sustained by Buyer as a result of any breach by Seller of its covenants contained within this Section 11.6.
11.7 Rights And Remedies Are Cumulative. Except where liquidated damages or other remedy are explicitly provided as the exclusive remedy, the rights and remedies of a Party pursuant to this Article 11 shall be cumulative and in addition to the rights of the Parties otherwise provided in this Agreement.
11.8 Mitigation. Any Non-Defaulting Party shall be obligated to use commercially reasonable efforts to mitigate its Costs, Losses and damages resulting from any Event of Default of the other Party under this Agreement.
ARTICLE 12
LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES.
12.1 No Consequential Damages. EXCEPT TO THE EXTENT PART OF (A) AN
EXPRESS REMEDY OR MEASURE OF DAMAGES HEREIN, (B) AN IP INDEMNITY CLAIM, (C) AN ARTICLE 16 INDEMNITY CLAIM, (D) INCLUDED IN A LIQUIDATED DAMAGES CALCULATION, OR (E) RESULTING FROM A PARTY’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, NEITHER PARTY SHALL BE LIABLE TO
THE OTHER OR ITS INDEMNIFIED PERSONS FOR ANY SPECIAL, PUNITIVE,
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62 EXEMPLARY, INDIRECT, OR CONSEQUENTIAL DAMAGES, OR LOSSES OR
DAMAGES FOR LOST REVENUE OR LOST PROFITS, WHETHER FORESEEABLE OR
NOT, ARISING OUT OF, OR IN CONNECTION WITH THIS AGREEMENT, BY 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 3.8, 4.7, 4.8, 11.2 AND 11.3, AND AS
PROVIDED IN EXHIBIT B, EXHIBIT C, EXHIBIT G, 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.
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63 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
WAIVES ANY RIGHT IT MAY HAVE TO SPECIFIC PERFORMANCE WITH RESPECT TO ANY OBLIGATION OF THE OTHER PARTY UNDER THIS AGREEMENT.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, PRIOR TO THE COMMERCIAL OPERATION DATE, SELLER’S AGGREGATE LIABILITY UNDER THIS AGREEMENT SHALL NOT EXCEED AN AMOUNT EQUAL TO TWO TIMES (2x) THE DEVELOPMENT SECURITY AMOUNT; PROVIDED, THIS SECTION 12.2 SHALL NOT LIMIT SELLER’S OBLIGATIONS OR LIABILITIES UNDER SECTION 11.6.
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 Delaware 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 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 Seller’s performance under this Agreement. The execution, delivery and 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.
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64 (f) Neither Seller nor its Affiliates have received notice from or been advised by any existing or potential supplier or service provider that COVID-19 has caused, or is reasonably likely to cause, a delay in the construction of the Facility or the delivery of materials necessary to complete the Facility, in each case that would cause the Construction Start Date to be later than the Guaranteed Construction Start Date or the Commercial Operation Date to be later than the Guaranteed Commercial Operation Date.
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.
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65 (f) Buyer is a “local public entity” as defined in Section 900.4 of the Government Code of the State of California.
(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 renewable 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.
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, 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, execution and delivery of documents in connection with any assignment of this Agreement by Seller, including without limitation reasonable attorneys’ fees.
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66 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 execute a consent to collateral assignment of this Agreement substantially in the form attached hereto as Exhibit S (“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 has given Buyer Notice at least fifteen (15) Business Days before the date of such proposed 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 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 or cash equity investment, and/or (2) through a Portfolio Financing or other financing or refinancing of the Facility, 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 or Portfolio Financing Entity (if any) 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.
14.5 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 thirty (30) Business Days’ notice by delivering Notice of such assignment, which Notice must include a proposed assignment agreement substantially in the form attached hereto as Exhibit L (“Assignment Agreement”), provided, 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) Baa1 from Moody’s and BBB+ from S&P. As reasonably requested by Buyer Assignee, Seller shall (i) provide Buyer Assignee with information and documentation with respect to Seller, including but not limited to account opening information, information related to
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67 forecasted generation, Credit Rating, and compliance with anti-money laundering rules, the Dodd-Frank Act, the Commodity Exchange Act, the Patriot Act and similar rules, regulations, requirements and corresponding policies, and as reasonably requested by Seller, Buyer Assignee shall provide Seller with information and documentation with respect to Buyer Assignee; and (ii) negotiate in good faith to finalize the proposed Assignment Agreement within fifteen (15) Business Days of Seller’s receipt thereof and execute such Assignment Agreement promptly following Seller’s receipt of necessary internal approvals, which Seller shall pursue as soon as reasonably possible.
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. [STC – 17]
15.2 Dispute Resolution. In the event of any dispute arising under this Agreement, within ten (10) Business 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
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68 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”). (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 provide and maintain, at its sole expense, the following types and minimum limits of insurance with a carrier rated “A- VII” or higher by A.M.
Best’s Key Rating Guide: (i) commercial general liability insurance, including products and completed operations and personal injury insurance, in a minimum amount of One Million Dollars ($1,000,000) per occurrence, and an annual aggregate of not less than Two Million Dollars
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69 ($2,000,000), 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 Five Million Dollars ($5,000,000).
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.
(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 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) combined single limit. 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) Construction All-Risk Insurance. Seller shall maintain or cause to be maintained during the construction of the Facility prior to the Commercial Operation Date, construction all-risk form property insurance covering the Facility during such construction periods, and naming Seller (and Lender if any) as the loss payee. (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 or disease 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
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70 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 or termination of coverage. All insurance required herein shall be primary coverage without right of contribution from any insurance of Buyer, and such policies shall be endorsed with a waiver of subrogation in favor of Buyer for all work performed by Seller, its employees, agents and subcontractors and any subrogation rights which may pass to Seller’s insurance carriers for the payment of any claims. 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. (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 provide insurance in accordance with the terms and conditions above. With respect to the required general liability, umbrella liability and commercial 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
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71 (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, 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 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 7920.000 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.
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72 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 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. 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. The Seller represents and warrants this Agreement to be considered as a service contract for the purposes of Section 7701(e) of the Tax Code, as amended and given this representation and warranty, Buyer agrees that it will not take the position on any tax return or in any other filings suggesting that this Agreement is anything other than a purchase of electricity from the Facility.
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73 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.
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.
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74 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 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 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 assumption 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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1 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the Effective Date.
22SV 8ME LLC, a Delaware limited liability
company
By:
Name:
Title:
CLEAN POWER ALLIANCE OF SOUTHERN
CALIFORNIA, a California joint powers authority
By:
Name:
Title:
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Exhibit A – 1 1
EXHIBIT A
FACILITY DESCRIPTION
Site Name: Rexford 2 Solar Farm
Site includes all or some of the following APNs:
PV Array Area:
321-010-002, 321-010-003, 320-360-005, 321-120-002, 321-120-004, 321-130-005, 321-140- 007,321-140-008, 321-140-010, 321-140-012, 321-140-013, 321-140-014, 321-140-015, 321- 140-011, 321-140-009
Gen-Tie:
339-070-016, 339-070-014, 339-070-015, 339-010-004, 339-060-015, 339-010-004, 339-060- 015, 321-150-008, 321-150-009, 321-150-007, 339-060-007, 339-070-026, 339-070-024, 339- 070-025
Collector Line:
321-140-016-000, 321-140-018-000
City: Unincorporated
County: Tulare County
Zip Code: 93270
Latitude and Longitude: 35°53'33.23"N, 119°4'47.29"W
Facility Description: 200 MW(AC) PV + 800 MWh (200 MW(AC) x 4 hours) storage
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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 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, 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.” Seller shall cause Construction Start to occur no later than the Guaranteed Construction Start Date. (b) Seller may extend the Guaranteed Construction Start Date 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, 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, 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.
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”); provided, Commercial Operation shall not occur prior to the Expected Commercial Operation Date set forth on the Cover Sheet.
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Exhibit B - 3
delays could not be mitigated by Seller using commercially reasonable efforts to overcome the delays, (provided, if any of the following circumstances occur concurrently, such guaranteed date(s) shall only be extended one (1) per concurrent day of delay):
(a) Seller has not acquired the Material Permits by the Guaranteed Construction Start Date, despite the exercise of diligent and commercially reasonable efforts by Seller; (b) a Force Majeure Event occurs that prevents Seller from achieving Commercial Operation on or before the Guaranteed Commercial Operation Date; (c) the Interconnection Facilities or Reliability Network Upgrades are not complete 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 deliver Charging Energy to, and receive the Facility Energy at, the Delivery Point by the Guaranteed Commercial Operation Date.
Seller shall submit any claim for Development Cure Period delays within (x) three (3) Business Days of the applicable milestone in the case of (a), (c) or (d) above, and (y) fourteen (14) days after the initial occurrence of the claimed Force Majeure Event in the case of (b) above, in substantially the form set forth in Exhibit W. Notwithstanding anything in 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 one hundred eighty (180) days, 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) (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 PV Capacity or Guaranteed Storage Capacity. (a) Guaranteed PV Capacity. If, at Commercial Operation, the Installed PV Capacity is less than one hundred percent (100%) of the Guaranteed PV Capacity, Seller shall have days after the Commercial Operation Date to
install additional capacity and/or Network Upgrades such that the Installed PV Capacity is equal to (but not greater than) the Guaranteed PV Capacity, and Seller shall provide to Buyer a new certificate substantially in the form attached as Exhibit I-1 hereto specifying the new Installed PV Capacity. If Seller fails to construct the Guaranteed PV Capacity by such date, Seller shall pay “PV Capacity Damages” to Buyer, in an amount equal to Dollars ($ ) for
each MW that the Guaranteed PV Capacity exceeds the Installed PV Capacity. (b) Guaranteed Storage Capacity. If, at Commercial Operation, the Installed Storage Capacity is less than one hundred percent (100%) of the Guaranteed Storage
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Exhibit B - 4
Capacity, Seller shall have ( ) days after the Commercial Operation Date to install additional capacity and/or Network Upgrades such that the Installed Storage Capacity is equal to (but not greater than) one hundred percent (100%) of the Guaranteed Storage Capacity, and Seller shall provide to Buyer a new certificate substantially in the form attached as Exhibit I-1 hereto specifying the new Installed Storage Capacity. If Seller fails to construct the Guaranteed Storage Capacity by such date, Seller shall pay “Storage Capacity Damages” to Buyer, in an amount equal to Dollars ($ ) for each
MW at four (4) hours of continuous discharge that the Guaranteed Storage Capacity exceeds the Installed Storage Capacity.
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.
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Exhibit C - 1
EXHIBIT C
COMPENSATION
Buyer shall compensate Seller for the Product in accordance with this Exhibit C. (a) Renewable Rate. Buyer shall pay Seller (1) the Renewable Rate for each MWh of PV Energy, plus Deemed Delivered Energy, if any, up to one hundred fifteen percent (115%) of the Expected Energy for such Contract Year.
(b) Excess Contract Year Deliveries Over 115%. Notwithstanding the foregoing, if at any point in any Contract Year, the amount of PV Energy plus Deemed Delivered Energy exceeds one hundred fifteen percent (115%) of the Expected Energy for such Contract Year, the price to be paid for additional PV Energy and/or Deemed Delivered Energy shall be $0.00/MWh. (c) Excess Settlement Interval Deliveries. If during any Settlement Interval, Seller delivers PV Energy in excess of the product of the Guaranteed PV Capacity and the duration of the Settlement Interval, expressed in hours (“Excess MWh”), then the price applicable to all such Excess MWh in such Settlement Interval shall be zero dollars ($0), and if there is a Negative LMP during such Settlement Interval, Seller shall pay to Buyer an amount equal to the absolute value of the Negative LMP times such Excess MWh.
(d) Monthly Capacity Payment.
(i) Each month from the period commencing upon Commercial Operation Date 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 Effective Storage Capacity x Efficiency Rate Factor, minus an amount calculated as (A) the monthly average cost of Charging Energy multiplied by (B) the total number of MWh of Idle Period Auxiliary Use in such month divided by (C) the Efficiency Rate. Such payment constitutes the entirety of the amount due to Seller from Buyer for the Storage Product. If the Effective Storage Capacity is adjusted pursuant to a Storage Capacity Test 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 Storage Capacity is 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 %, then:
Efficiency Rate Factor = 100% - [(Guaranteed Efficiency Rate – Efficiency Rate) x .5]
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Exhibit C - 2
(C) If the Efficiency Rate is less than %, then:
Efficiency Rate Factor = 0
(ii) Storage Capacity Availability Payment True-Up. Each month from the period commencing upon the Commercial Operation Date and continuing throughout the Delivery Term, Buyer shall calculate the year-to-date (YTD) Annual Storage Capacity Availability for the applicable Contract Year in accordance with Exhibit P. If (A) such YTD Annual Storage Capacity Availability is less than ninety percent (90%), or (B) the final Annual Storage Capacity Availability is less than the Guaranteed Storage Availability, Buyer shall (1) withhold the Storage Capacity Availability Payment True-Up Amount from the next Monthly Capacity Payment(s) (the “Storage Capacity Availability Payment True-Up”), and (2) provide Seller with a written statement of the calculation of the YTD Annual Storage Capacity Availability and the Storage Capacity Availability Payment True-Up Amount; provided, if the Storage Capacity Availability Payment True-Up Amount is a negative number for any month prior to the final year-end Storage Capacity Availability Payment True-Up calculation, Buyer shall not be obligated to reimburse Seller any previously withheld Storage Capacity Availability Payment True-Up Amount, except as set forth in the following sentence. If Buyer withholds any Storage Capacity Availability Payment True-Up Amount pursuant to this subsection (d)(ii), and if the final year-end Storage Capacity Availability Payment True-Up Amount is a negative number, Buyer shall pay to Seller the positive value of such amount together with the next Monthly Capacity Payment due to Seller. “Storage Capacity Availability Payment True-Up Amount” means an amount equal to A x B - C, where:
A = The sum of the year-to-date Monthly Capacity Payments B = The Capacity Availability Factor
C = The sum of any Storage Capacity Availability Payment True-Up Amounts previously withheld by Buyer in the applicable Contract Year. “Capacity Availability Factor” means:
(A) If the YTD Annual Storage Capacity Availability times the Effective Storage Capacity is equal to or greater than the Guaranteed Storage Availability times the Effective Storage Capacity, then:
Capacity Availability Factor = 0
(B) If the YTD Annual Storage Capacity Availability times the Effective Storage Capacity is less than the Guaranteed Storage Availability times the Effective Storage Capacity, but the product of (i) the sum of (a) the YTD Annual Storage Capacity Availability plus (b) Force Majeure Unavailability times (ii) the Effective Storage Capacity is greater than or equal to seventy percent (70%) of the Installed Storage Capacity, then:
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Exhibit C - 3
Capacity Availability Factor = Guaranteed Storage Availability – YTD Annual Storage Capacity Availability
(C) If the product of (i) the sum of (a) the YTD Annual Storage Capacity Availability plus (b) Force Majeure Unavailability times (ii) the Effective Storage Capacity is less than seventy percent (70%) of the Installed Storage Capacity, then:
Capacity Availability Factor = (Guaranteed Storage Availability – YTD Annual Storage Capacity Availability) * 1.5 – (Force Majeure Unavailability * 0.5)
“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. provided, if the result of any of the calculations in clauses (B) or (C) above is greater than 1.0, then the Capacity Availability Factor will be deemed to be equal to 1.0. (e) [Intentionally Omitted].
(f) Tax Credits. The Parties agree that neither the Renewable Rate nor the Storage Rate are 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.
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Exhibit D - 1
EXHIBIT D
SCHEDULING COORDINATOR RESPONSIBILITIES
(a) Buyer as Scheduling Coordinator for the Facility. Upon the Commercial Operation Date, 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 and the Product at the Delivery Point. At least thirty (30) days prior to the Commercial Operation Date, (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 Commercial Operation Date, 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 Commercial Operation Date. On and after the Commercial Operation Date, 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. Seller shall cooperate with Buyer to enable the grid-charging designation function with the CAISO for the Storage Facility. Buyer shall have the exclusive right to enable the grid-charging designation with respect to Scheduling the charging of the Storage Facility. (b) Notices. Following the Commercial Operation Date, 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 by electronic mail to the personnel designated to receive such information. (c) CAISO Costs and Revenues. Following the Commercial Operation Date, except as otherwise set forth below and as set forth in Section 4.5(g), Buyer (as Scheduling Coordinator for the Facility) shall be responsible for CAISO costs (including penalties, Imbalance Energy costs (except as otherwise set forth in this Agreement), 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. Following the Commercial Operation Date, Seller shall be responsible for all CAISO costs and penalties (including Imbalance Energy costs) and Buyer’s lost opportunity to obtain a share of CAISO’s allocation to non-violating Scheduling Coordinators of the penalties and/or sanctions collected from sanctioned or penalized market participants (not including Availability Incentive Payments or Non-Availability Charges (as such terms are defined in the CAISO Tariff)) resulting from any deviations from Charging Notices or Discharging Notices or otherwise charging or discharging
Agenda Page 227
Exhibit D - 2
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). Following the Commercial Operation Date, 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. Following the Commercial Operation Date, the Parties agree that any Availability 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. Following the Commercial Operation Date, Buyer (as the Facility’s SC) shall be responsible for all settlement functions with the CAISO related to the Facility. Following the Commercial Operation Date, 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. Following the Commercial Operation Date, 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. Following the Commercial Operation Date, 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.
Agenda Page 228
Exhibit D - 3
(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 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. Following the Commercial Operation Date, 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.
Agenda Page 229
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. Gantt chart schedule showing progress on achieving each of the Milestones.
5. Summary of activities during the previous calendar quarter or month, as applicable, including any OSHA labor hour reports.
6. Forecast of activities scheduled for the current calendar quarter or month, as applicable.
7. Table comparing the Milestones to Seller’s latest expected completion date of the Milestones. Written description about the progress relative to Seller’s Milestones, including whether Seller has met or is on target to meet the Milestones.
8. List of issues that are reasonably likely to affect Seller’s Milestones and describe Seller’s efforts to mitigate any delays to such Milestones, including with respect to any Remedial Action Plan.
9. 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.
10. Progress and schedule of all material agreements, contracts, permits (including Material Permits), approvals, technical studies, financing agreements and major equipment list showing the start dates, completion dates, and completion percentages.
11. 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.
12. Workforce Development or Supplier Diversity Reporting (if applicable). Format to be provided by Buyer.
13. Any other documentation reasonably requested by Buyer.
Agenda Page 230
Exhibit F-1
EXHIBIT F-1
MONTHLY EXPECTED AVAILABLE GENERATING FACILITY CAPACITY [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 JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
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 231
Exhibit F-2
EXHIBIT F-2
MONTHLY EXPECTED PV ENERGY
[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 JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
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 232
Exhibit F-3
EXHIBIT F-3
MONTHLY EXPECTED AVAILABLE EFFECTIVE STORAGE CAPACITY
[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 JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
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 233
Exhibit F-4
EXHIBIT F-4
MONTHLY EXPECTED AVAILABLE STORAGE 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 234
Exhibit G - 1
EXHIBIT G
GUARANTEED ENERGY PRODUCTION DAMAGES CALCULATION
In accordance with Section 4.7, if Seller fails to achieve the Guaranteed Energy Production during any Performance Measurement Period, a liquidated damages payment shall be due from Seller to Buyer, calculated as follows:
[(A – B) * (C – D)] – (E + F)
where:
A = the Guaranteed Energy Production amount for the Performance Measurement Period, in MWh
B = the Adjusted Energy Production amount for the Performance Measurement Period, in MWh
C = Replacement price for the Performance Measurement Period, in $/MWh, which is the sum of (a) the simple average of the Integrated Forward Market hourly price for all solar hours based on the profile set in Exhibit F-1 in the Performance Measurement Period, as published by the CAISO, for the Existing Zone Generation Trading Hub (as defined in the CAISO Tariff) for the Delivery Point, plus (b) the market value of Replacement Green Attributes
D = the Renewable Rate, in $/MWh
E = The amount of Energy Replacement Damages paid by Seller with respect to the immediately preceding Performance Measurement Period F = The product of (a) the amount of Replacement Product in MWhs delivered by Seller in the immediately preceding Contract Year and (b) the price which is (C – D)
“Adjusted Energy Production” shall mean the sum of the following: PV Energy + Deemed Delivered Energy + Lost Output + Replacement Product. “Replacement Energy” means energy produced by a facility other than the Facility, that is provided by Seller to Buyer as Replacement Product, in an amount equal to the amount of Replacement Green Attributes provided by Seller as Replacement Product for the same Performance Measurement Period.
“Replacement Green Attributes” means Renewable Energy Credits of the same Portfolio Content Category (i.e., PCC1) as the Green Attributes portion of the Product and of the same year of production as the Renewable Energy Credits that would have been generated by the Facility.
Agenda Page 235
Exhibit G - 2
“Replacement Product” means (a) Replacement Energy, and (b) Replacement Green Attributes in an amount not to exceed ten percent (10%) of the Expected Energy for the previous Contract Year.
No payment shall be due if the calculation of (a) (A - B), (b) (C - D), or (c) [(A – B) * (C – D)] – (E + F), yields a negative number. In no event will Buyer owe any payment to Seller pursuant to this Exhibit G.
Within sixty (60) days after each Contract Year, Buyer shall send Seller Notice of the amount of damages owing, if any, which shall be payable to Buyer before the later of (a) thirty (30) days of such Notice and (b) ninety (90) days after each Performance Measurement Period; provided, the amount of damages owing shall be adjusted to account for Replacement Product, if any, delivered after each applicable Performance Measurement Period.
Agenda Page 236
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 Renewable Power Purchase Agreement dated _______ (“Agreement”) by and between 22SV 8me LLC, a Delaware limited liability company, 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 Generating Facility with an Installed PV Capacity of no less than ninety-five percent (95%) of the Guaranteed PV Capacity.
3. Seller has installed equipment for the Storage Facility with an Installed Storage Capacity of no less than ninety-five percent (95%) of the Guaranteed Storage Capacity and is capable of receiving Charging Energy from both CAISO Grid and the Generating Facility.
4. Authorization to parallel the Facility was obtained by the Transmission Owner, [Name of Transmission Owner as appropriate] on___[DATE]____.
5. The Transmission Owner has provided documentation supporting full unrestricted release of the Facility for Commercial Operation by [Name of Transmission Owner as appropriate] on _______[DATE]_____.
6. The CAISO has provided notification supporting Commercial Operation of the Facility, in accordance with the CAISO Tariff on _______[DATE]_____.
7. Seller has segregated and separately metered Station 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 Storage Facility and its meters have been designed and installed in a manner such that all Energy used for Auxiliary Use within the Storage Facility is metered, and there is no Station Use within the Facility (other than Auxiliary Use) that is served by Energy from the Storage Facility.
9. The total rated power of the Storage Facility inverters associated with the Installed Storage Capacity as measured to the Delivery Point is at least [____] MW charging and [____] MW discharging at Site Average High Design Temperature.
Agenda Page 237
Exhibit H - 2
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Its:
Date:
Agenda Page 238
Exhibit I-1
EXHIBIT I-1
FORM OF INSTALLED CAPACITY CERTIFICATE
This certification (“Certification”) of Installed Capacity and related characteristics of the Facility 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 Renewable Power Purchase Agreement dated __________ (“Agreement”) by and between 22SV 8me LLC, a Delaware limited liability company, 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 the following:
(a) The installed nameplate capacity of the Generating Facility is __ MW AC (“Installed PV Capacity”);
(b) The Commercial Operation Storage Capacity Test conducted on [Date] demonstrated a maximum dependable operating capability to discharge electric energy of __ MW AC to the Delivery Point at four (4) hours of continuous discharge, in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit O (the “Installed Storage Capacity”);
(c) The sum of (a) and (b) is __ MW AC and shall be the “Installed Capacity”; and
(d) Such Commercial Operation Storage Capacity Test demonstrated (i) a Battery Charging Factor of __% and (ii) a Battery Discharging Factor of __%, each 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 239
Exhibit I-2
EXHIBIT I-2
FORM OF EFFECTIVE STORAGE CAPACITY CERTIFICATE
This certification (“Certification”) of Effective Storage Capacity and related characteristics of the Facility 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 Renewable Power Purchase Agreement dated __________ (“Agreement”) by and between 22SV 8me LLC, a Delaware limited liability company, 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 the following:
(a) The Storage Capacity Test conducted on [Date] demonstrated a maximum dependable operating capability to discharge electric power of __ MW AC to the Delivery Point at four (4) hours of continuous discharge, in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit O of the Agreement (the “Effective Storage Capacity”); and
(b) Such Storage Capacity Test demonstrated (i) a Battery Charging Factor of __% and (ii) a Battery Discharging Factor of __%, each 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 240
Exhibit J - 1
EXHIBIT J
FORM OF CONSTRUCTION START DATE CERTIFICATE
This certification of Construction Start Date (“Certification”) is delivered by 22SV 8me LLC, a Delaware limited liability company, (“Seller”) to Clean Power Alliance of Southern California, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Renewable Power Purchase 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 241
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 ________ (“Applicant”), we, [insert bank name and address] (“Issuer”) hereby issue this Irrevocable Standby Letter of Credit No. [XXXXX] in favor of Clean Power Alliance of Southern California, a California joint powers authority (“Beneficiary”), located at 801 S Grand, Suite 400, Los Angeles, CA 90017, for an amount not to exceed the aggregate sum of U.S. [$XXXXX] (the “Available Amount”), pursuant to that certain Agreement dated as of [Date] 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 other than a Saturday or Sunday and on which commercial banks are not authorized or required to close in New York.
Subject to the terms and conditions herein, 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. [XXXXX] and all amendments accompanied by Beneficiary’s dated statement purportedly signed by Beneficiary’s duly authorized representative, in the form attached hereto as Exhibit A, containing one of the two alternative paragraphs set forth in paragraph 2 therein (referred to herein as a “Drawing Certificate”).
Any full or partial drawing hereunder may be requested by (a) physical delivery or (b) transmitting copies of the requisite documents as described above to the Issuer as a PDF attachment to an e-mail to [XXXXX] or such other email address as specified from time-to-time by the Issuer.
The email transmittal shall be deemed delivered when received. Drawings made by email transmittal are deemed to be the operative instrument without the need of originally signed
Agenda Page 242
Exhibit K - 2
documents. In addition to the Drawing Certificate, email presentations must include Beneficiary’s contact name and telephone number for Issuer verification of such drawing request. In addition, if the presentation is made by email, Beneficiary is requested to confirm Issuer’s receipt of the drawing request under the Letter of Credit by calling Issuer at [XXXXX], provided that such requirement is not applicable if Issuer is not reachable at this number, or such contact number has been changed and Beneficiary has not been provided with notice of same in writing by Issuer in accordance with the Letter of Credit.
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 hereunder are to be directed to the Issuer at the address or email address noted herein. Issuer undertakes to make payment to Beneficiary under this 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.
Agenda Page 243
Exhibit K - 3
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, 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]
___________________________
[Insert officer name]
[Insert officer title]
Agenda Page 244
Exhibit K - 4
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 representative 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 Renewable Power Purchase 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 245
Exhibit L - 1
EXHIBIT L
FORM OF LIMITED ASSIGNMENT AGREEMENT
Agenda Page 246
Exhibit L - 2
FORM OF ASSIGNMENT SCHEDULE
[SELLER ENTITY]
Assigned Product: Energy and Green Attributes (PCC1)
Assigned Delivery Point: [__]
Assigned Prepay Quantity: As set forth in Appendix 2; provided that (i) all Assigned Products shall be delivered pursuant to the Limited Assignment Agreement during the Assignment Period as provided in Appendix 1 and (ii) the Assigned Prepay Quantity is defined for the convenience of PPA Buyer and [Financing Party] and shall have no impact on the obligations of the Parties under the Limited Assignment Agreement.
APC Contract Price: $[__]/MWh
Assignment Period: [__]
Agenda Page 247
Exhibit L - 3
ANNEX I– FORM OF LIMITED ASSIGNMENT AGREEMENT
This Limited Assignment Agreement (this “Assignment Agreement” or “Agreement”) is entered into as of [______________] by and among [PPA Seller], a [______________] (“PPA Seller”), Clean Power Alliance, a California joint powers authority (“PPA Buyer”), and [Financing Party], a [______________] (“Financing Party”), and relates to that certain power purchase agreement (the “PPA”) between PPA Buyer and PPA Seller as defined in Appendix 1 hereto. Unless the context otherwise specifies or requires, capitalized terms used but not defined in this Agreement have the meanings set forth in the PPA.
In consideration of the premises above and the mutual covenants and agreements herein set forth, PPA Seller, PPA Buyer and Financing Party (the “Parties” hereto; each is a “Party”) agree as follows:
1. Limited Assignment and Delegation.
(a) PPA Buyer hereby assigns, transfers, and conveys to Financing Party all right, title and interest in and to the rights of PPA Buyer under the PPA to receive delivery of, or have made available to it, the products described in Appendix 1 (collectively, the “Assigned Product”) during the Assignment Period (as defined in Appendix 1), as such rights may be limited or further described in the “Further Information” section on Appendix 1 (the “Assigned Product Rights”). All Assigned Product shall be delivered pursuant to the terms and conditions of this Agreement during the Assignment Period as provided in Appendix 1. All other rights of PPA Buyer under the PPA are expressly reserved for PPA Buyer.
(b) PPA Buyer hereby delegates to Financing Party the obligation to pay for all Assigned Product that is actually delivered to Financing Party pursuant to the Assigned Product Rights during the Assignment Period (the “Delivered Product Payment Obligation” and together with the Assigned Product Rights, collectively the “Assigned Rights and Obligations”); provided that (i) all other obligations of PPA Buyer under the PPA are expressly retained by PPA Buyer and PPA Buyer shall be solely responsible for any amounts due to PPA Seller that are not directly related to Assigned Product; and (ii) the Parties acknowledge and agree that PPA Seller will only be obligated to deliver a single consolidated invoice during the Assignment Period (with a copy to Financing Party consistent with Section 1(d) hereof). To the extent Financing Party fails to pay the Delivered Product Payment Obligation by the due date for payment set forth in the PPA, notwithstanding anything in this Agreement to the contrary, PPA Buyer agrees that it remains responsible for such payment, including any interest on late payments provided for under the PPA and that it will be an Event of Default pursuant to Section 11.1 if PPA Buyer does not make such payment within five (5) Business Days of receiving Notice of such non-payment from PPA Seller.
(c) Financing Party hereby accepts and PPA Seller hereby consents and agrees to the assignment, transfer, conveyance, and delegation described in clauses (a) and (b) above. (d) All scheduling of Assigned Product and other communications related to the PPA shall take place pursuant to the terms of the PPA; provided that during the Assignment Period (i) title to Assigned Product will pass from PPA Seller to Financing Party upon delivery or making available by PPA Seller of Assigned Product in accordance with the PPA; (ii) PPA Buyer will provide copies to Financing Party of any Notice of a Force Majeure Event or Event of Default or default, breach or other occurrence that, if not cured within the applicable grace period, could result in an Event of Default contemporaneously
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Exhibit L - 4
upon delivery thereof to PPA Seller and promptly after receipt thereof from PPA Seller; (iii) PPA Seller will provide copies to Financing Party of annual forecasts of Energy and monthly forecasts of available capacity and Energy provided pursuant to Section
4.3 of the PPA; (iv) PPA Seller will provide copies to Financing Party of all invoices and supporting data provided to PPA Buyer pursuant to Section 8.1, provided that any payment adjustments or subsequent reconciliations occurring after the date that is 10 days prior to the payment due date for a monthly invoice, including pursuant to Section
8.4, will be resolved solely between PPA Buyer and PPA Seller and therefore PPA Seller will not be obligated to deliver copies of any communications relating thereto to Financing Party; and (v) PPA Buyer and PPA Seller, as applicable, will provide copies to Financing Party of any other information reasonably requested by Financing Party relating to Assigned Product.
(e) PPA Seller acknowledges that (i) Financing Party intends to immediately transfer title to any Assigned Product received from PPA Seller through one or more intermediaries such that all Assigned Product will be re-delivered to PPA Buyer; and (ii) in the event that PPA Buyer fails to pay the relevant intermediary entity for any such Assigned Products, the receivables owed by PPA Buyer for such Assigned Products (“PPA Buyer Receivables”) may be transferred to Financing Party. To the extent any such PPA Buyer Receivables are transferred to Financing Party, Financing Party may transfer such PPA Buyer Receivables to PPA Seller and apply the face amount thereof as a reduction to any Delivered Product Payment Obligation. Thereafter, PPA Seller shall be entitled to pursue collection on such PPA Buyer Receivables directly against PPA Buyer. (f) On or before the commencement of the Assignment Period, [_____] (“Guarantor”) will issue, in favor of PPA Seller, a guaranty of Financing Party’s payment obligations under this Assignment Agreement substantially in the form of Appendix 3 attached hereto (“Guaranty”). PPA Seller may draw upon, apply, or make demand under the Guaranty to recover any unpaid amounts due from Financing Party and not timely paid as set forth herein; provided, however, that PPA Seller’s rights under the Guaranty and this subsection (f) shall not reduce or affect PPA Buyer’s obligation to render payments when due under the PPA or extend any deadlines in the PPA. (g) All payments due to PPA Seller in respect of Sections 3.3 of the PPA will be paid (subject to Section 1(e) above) by Financing Party into the custodial account listed in Appendix 1, and all payments due to PPA Buyer in respect of Section 3.3 of the PPA will be paid by PPA Seller into the custodial account listed in Appendix 1, which custodial account is established under that certain Custodial Agreement of even date herewith that Financing Party, PPA Buyer and [Custodian] have entered into for the administration of payments due hereunder.
(h) The Assigned Prepay Quantity set forth in Appendix 2 relates to obligations by and between Financing Party and PPA Buyer and has no impact on PPA Seller’s rights and obligations under the PPA.
(i) Except as expressly set forth in Section 1(a) of this Assignment Agreement with respect to the product delivery obligations, nothing in this Agreement modifies or amends any rights or obligations of PPA Buyer and PPA Seller under the PPA.
2. Assignment Early Termination.
(a) The Assignment Period may be terminated early upon the occurrence of any of the following:
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Exhibit L - 5
(1) delivery of a written notice of termination specifying a termination date by either Financing Party or PPA Buyer to each of the other Parties; (2) delivery of a written notice of termination specifying a termination date by PPA Seller to each of Financing Party and PPA Buyer following Financing Party’s failure to pay when due any amounts owed to PPA Seller in respect of any Delivered Product Payment Obligation and such payment is not made by Financing Party within five (5) business days following receipt by Financing Party and PPA Buyer of written notice;
(3) delivery of a written notice by PPA Seller if any of the events described in the definition of Bankrupt in the PPA occurs with respect to Financing Party or the Custodian;
(4) delivery of a written notice by Financing Party if any of the events described in the definition of Bankrupt in the PPA occurs with respect to PPA Seller; or (5) failure of the Guaranty provided by the Guarantor to PPA Seller hereunder to be in full force and effect (other than in accordance with its terms) prior to the indefeasible satisfaction of all obligations of Financing Party hereunder or if the Guarantor provides notice of termination of the Guaranty or otherwise repudiates, disaffirms, disclaims, or rejects, in whole or in part, or challenges the validity of the Guaranty.
(b) The Assignment Period will end at the end of last delivery hour on the date specified in the termination notice provided pursuant to Section 2(a), which date shall not be earlier than the end of the last day of the calendar month in which such notice is delivered if termination is pursuant to clause (a)(1) or (a)(2) above. All Assigned Rights and Obligations shall revert from Financing Party to PPA Buyer upon the expiration or early termination of the Assignment Period, provided that (i) Financing Party shall remain responsible for the Delivered Product Payment Obligation with respect to any Assigned Product delivered or made available to Financing Party prior to the end of the Assignment Period, and (ii) any legal restrictions on the effectiveness of such reversion (whether arising under bankruptcy law or otherwise) shall not affect the expiration or early termination of the Assignment Period.
(c) The Assignment Period will automatically terminate upon the expiration or early termination of the PPA. All Assigned Rights and Obligations shall revert from Financing Party to PPA Buyer upon the expiration of or early termination of the PPA, provided that (i) Financing Party shall remain responsible for the Delivered Product Payment Obligation with respect to any Assigned Product delivered to Financing Party prior to the end of the Assignment Period, and (ii) any legal restrictions on the effectiveness of such reversion (whether arising under bankruptcy law or otherwise) shall not affect the expiration or early termination of the Assignment Period.
3. Representations and Warranties. The PPA Seller and the PPA Buyer represent and warrant to Financing Party that (a) the PPA is in full force and effect; and (b) no event or circumstance exists (or would exist with the passage of time or the giving of notice) that would give either of them the right to terminate the PPA or suspend performance thereunder.
4. Notices. Any notice, demand, or request required or authorized by this Assignment Agreement to be given by one Party to another Party shall be delivered in accordance with Article 9 of the PPA and to the addresses of each of PPA Seller and PPA Buyer specified in the PPA. PPA Buyer agrees to notify Financing Party of any updates to such notice
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Exhibit L - 6
information, including any updates provided by PPA Seller to PPA Buyer. Notices to Financing Party shall be provided to the following address, as such address may be updated by Financing Party from time to time by notice to the other Parties:
Financing Party
_____________
_____________
Email: _____________
5. Miscellaneous. Section 13.2 (Buyer’s Representations and Warranties), Article 18 (Confidential Information), Sections 19.5 (Severability), 19.7 (Counterparts), 19.2 (Amendments), 19.4 (No Agency, Partnership, Joint Venture or Lease), 19.6 (Mobile-Sierra),
19.8 (Electronic Delivery), 19.9 (Binding Effect) and 19.10 (No Recourse to Members of Buyer) of the PPA are incorporated by reference into this Agreement, mutatis mutandis, as if fully set forth herein.
6. U.S. Resolution Stay Provisions. The Parties hereby confirm that they are adherents to the ISDA 2018 U.S. Resolution Stay Protocol (“ISDA U.S. Stay Protocol”), the terms of the ISDA U.S. Stay Protocol are incorporated into and form a part of this Agreement, and for the purposes of such incorporation, (i) Financing Party shall be deemed to be a Regulated Entity, (ii) each of PPA Buyer and PPA Seller shall be deemed to be an Adhering Party, and (iii) this Agreement shall be deemed a Protocol Covered Agreement. In the event of any inconsistencies between this Agreement and the ISDA U.S. Stay Protocol, the ISDA U.S. Stay Protocol will prevail.
7. Governing Law, Jurisdiction, Waiver of Jury Trial.
(a) Governing Law. This Assignment Agreement and the rights and duties of the parties under this Assignment Agreement will be governed by and construed, enforced and performed in accordance with the laws of the State of California, without reference to any conflicts of law provisions that would direct the application of another jurisdiction’s laws; provided, however, that the authority of PPA Buyer to enter into and perform its obligations under this Assignment Agreement shall be determined in accordance with the laws of the State of California.
(b) Jurisdiction. Each party submits to the exclusive jurisdiction of the federal courts of the United States of America for the Southern District of California sitting in the city and county of Los Angeles.
(c) Waiver of Right to Trial by Jury. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this assignment agreement.
[Remainder of Page Intentionally Blank]
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Exhibit L - 7
IN WITNESS WHEREOF, the Parties have executed this Assignment Agreement effective as of the date first set forth above.
22SV 8ME LLC
By:
Name:
Title:
CLEAN POWER ALLIANCE
By:
Name:
Title:
[FINANCING PARTY]
By:
Name:
Title:
Execution and delivery of the foregoing Assignment Agreement is hereby approved.
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By:
Name:
Title:
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Exhibit L – Appendix 1 – 1
Appendix 1
Assigned Rights and Obligations
PPA: “PPA” means that certain Power Purchase and Sale Agreement dated [____], by and between Clean Power Alliance and [____], a [____] limited liability company, as amended from time to time.
“Assignment Period” means the period beginning on [___________] and extending until [___________], provided that in no event shall the Assignment Period extend past the earlier of (i) the termination of the Assignment Period pursuant to Section 2 of the Assignment Agreement and (ii) the end of the Delivery Term under the PPA; provided that applicable provisions of this Agreement shall continue in effect after termination of the Assignment Period to the extent necessary to enforce or complete, duties, obligations or responsibilities of the Parties arising prior to the termination.
Assigned Product: “Assigned Product” includes (i) Energy and (ii) Green Attributes (including PCC1 RECs); and (iii) all rights and products and attributes associated with the maximum dependable operating capability of the Storage Facility to be charged with, store and discharge electric energy; provided, however, that the following are expressly excluded from the Assigned Product and any and all rights and obligations with respect to the following shall remain with Buyer: Ancillary Services; Capacity Attributes; Resource Adequacy Benefits; Discharging Energy; the right to provide Charging Notices and Discharging Notices or otherwise to charge, discharge or schedule the Storage Facility or the Storage Product; and obligations to supply Charging Energy in accordance with the PPA
Further Information: PPA Seller shall continue to transfer the WREGIS Certificates associated with all Renewable Energy Credits corresponding to all Metered Energy under the PPA pursuant to Section 4.10 of the PPA, provided that the transferee of such WREGIS Certificates may be changed from time to time in accordance with the written instructions of both Financing Party and Clean Power Alliance upon twenty (20) Business Days’ notice, which change shall be effective as of the first day of the next calendar month, unless otherwise agreed. All Assigned Product delivered by PPA Seller to Financing Party shall be a sale made at wholesale, with Financing Party reselling all such Assigned Product.
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Exhibit L – Appendix 2 – 1
Appendix 2
Assigned Prepay Quantity
[NOTE: To be set forth in a monthly volume schedule.]
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Exhibit L – Appendix 3 – 1
Appendix 3
Form of Financing Party Parent Guaranty
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Exhibit M - 1
EXHIBIT M
FORM OF REPLACEMENT RA NOTICE
This Replacement RA Notice (this “Notice”) is delivered by 22SV 8me LLC, a Delaware limited liability company (“Seller”), to Clean Power Alliance of Southern California, a California joint powers authority (“Buyer”), in accordance with the terms of that certain Renewable Power Purchase 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 3.7(d) of the Agreement, Seller hereby provides the below Replacement RA product information:
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Exhibit M - 2
[SELLER ENTITY]
By:
Its:
Date:
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Exhibit O - 1
EXHIBIT O
STORAGE CAPACITY TESTS
Storage Capacity Test Notice and Frequency
A. Commercial Operation Storage Capacity Test(s). Upon no less than ten (10) Business Days prior Notice to Buyer, Seller shall schedule and complete a Commercial Operation Storage Capacity Test prior to the Commercial Operation Date. Such initial Commercial Operation Storage Capacity Test (and any subsequent Commercial Operation Storage Capacity Test permitted in accordance with Exhibit B) shall be performed in accordance with this Exhibit O and shall establish the Installed Storage Capacity hereunder based on the actual capacity and capabilities of the Storage Facility determined by such Commercial Operation Storage Capacity Test(s).
B. Subsequent Storage Capacity Tests. Following the Commercial Operation Storage Capacity Test(s), at least fifteen (15) days in advance of the start of each Contract Year after the first Contract Year, upon no less than ten (10) Business Days prior Notice to Buyer, Seller shall schedule and complete a Storage Capacity Test. In addition, Buyer shall have the right to require a retest of the Storage 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 Storage Capacity have varied at least two (2) MW from the results of the most recent prior Storage Capacity Test. Seller shall have the right to run a retest of any Storage 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 Storage Capacity. No later than seven (7) Business Days following any Capacity Test, Seller shall submit a testing report detailing results and findings of the test. The report shall include Storage Facility Meter readings and plant log sheets verifying the operating conditions and output of the Storage Facility. In accordance with Section 4.9(a)(ii) of the Agreement and Part II(I) below, after the Commercial Operation Storage Capacity Test(s), the Effective Storage Capacity (up to, but not in excess of, the Installed Storage Capacity) determined pursuant to such Storage Capacity Test shall become the new Effective Storage Capacity at the beginning of the first day of the month 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.
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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 interface and communication between Buyer’s SCADA System and the Facility SCADA System should be fully tested and functional prior to starting any testing, including verification of the data transmission pathway between Buyer's control equipment and Seller’s EMS interface and the ability to record SCADA System data. (3) Commissioning Checklist. Commissioning shall be successfully completed per suppliers’ requirements 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 Storage 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 Storage Capacity for four (4) continuous hours;
(2) Electrical input at maximum charging level at the Storage 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 Storage Facility Meter (MW), as sustained until the SOC reaches 100%, not to exceed five and a half (5.5) hours of total charging time; and (3) The dispatch of the Storage Facility during the annual CT after the Commercial Operation Date shall only be done through the ADS signal from the CAISO to the Storage Facility.
Seller shall not interfere with or alter the Storage Facility’s response to the ADS signal during the CT or manually alter any EMS or SCADA data recorded by the Storage Facility.
B. Parameters. During each CT, the following parameters shall be measured and recorded simultaneously for the Storage Facility, at five (5) second intervals:
(1) Time;
(2) The amount of Discharging Energy;
(3) The amount of Charging Energy;
(4) The amount of Auxiliary Use;
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Exhibit O - 3
(5) Stored Energy Level (MWh);
(6) State of Charge (%).
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 Storage 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 Storage 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 Storage 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 Discharging Energy to go from 100% SOC to 0% SOC.
E. Test Conditions.
(1) General. At all times during a CT, the Storage 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 Storage Facility. (2) Abnormal Conditions. If abnormal operating or grid conditions that prevent the testing or recordation of any required parameter occur prior to or 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 shall be calibrated in accordance with Prudent
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Exhibit O - 4
Operating Practice and, as applicable, the CAISO Tariff. At Buyer’s request, Seller shall provide documentation of all equipment calibration and certification.
F. Incomplete Test. If any CT is not completed in accordance herewith, Buyer may in its sole discretion: (i) accept the results up to the time the CT stopped without any modification to the Effective Storage Capacity pursuant to Section I below; (ii) require that the portion of the CT not completed, be completed within a reasonable specified time period; or (iii) require that the CT be entirely repeated within a reasonable specified time period.
Notwithstanding the above, if Seller is unable to complete a CT due to a Force Majeure Event or the actions or inactions of Buyer or the CAISO or the Transmission Owner, Seller shall be permitted to reconduct such CT on dates and at times reasonably acceptable to the Parties.
G. Test Report. Within seven (7) Business Days after the completion of any CT, Seller shall prepare and submit to Buyer the completed Installed Capacity Certificate or Effective Storage Capacity Certificate, as applicable, together with a written report of the results of the CT, which report shall include:
(1) A record of the personnel present during the CT that served in an operating, testing, monitoring or other such participatory role;
(2) The measured and calculated data for each parameter set forth in Part II.A through D, including copies of the raw data taken during the test; and (3) Seller’s statement of either Seller’s acceptance of the CT or Seller’s rejection of the CT results and reason(s) therefor.
Seller’s CT report and any submitted capacity certificate shall be deemed invalid if not delivered to Buyer within seven (7) Business Days after the completion of any CT. Within seven (7) Business Days after receipt of such report, Buyer shall notify Seller in writing of either Buyer’s acceptance of the CT results or Buyer’s rejection of the CT and reason(s) therefor.
If either Party rejects the results of any CT, such CT shall be repeated in accordance with Part II.F.
H. Supplementary Capacity Test Protocol. No later than sixty (60) days prior to commencing Storage Facility construction, either Party may deliver to the other Party for its review and approval (such approval not to be unreasonably delayed or withheld; provided, any additional cost to Buyer or restrictions on use of the Storage Facility as a result of such proposed changes shall be a reasonable basis for Buyer’s rejection unless Seller agrees to make Buyer whole for such adverse impacts) a supplement to this Exhibit O with additional and supplementary details, procedures and requirements applicable to Capacity Tests based on the then-current design of the Storage Facility (“Supplementary Capacity Test Protocol”). Thereafter, from time to time, Seller may deliver to Buyer for its review and approval (such approval not to be unreasonably delayed or withheld; provided, any additional cost to Buyer or restrictions on use of the Storage Facility as a result of such proposed changes shall be a reasonable basis for Buyer’s rejection unless Seller agrees to
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Exhibit O - 5
make Buyer whole for such adverse impacts) any Seller recommended updates to the then-current Supplementary Capacity Test Protocol. The initial Supplementary Capacity Test Protocol (and each update thereto), once approved by Buyer, shall be deemed an amendment to this Exhibit O.
I. Adjustment to Effective Storage Capacity. The Effective Storage Capacity shall equal the quotient of (a) the total amount of Discharging Energy delivered to the Delivery Point (expressed in MWh AC) during the first four (4) hours of discharge (up to, but not in excess of, the product of (i) (A) the Guaranteed Storage Capacity (in the case of a Commercial Operation Storage Capacity Test, including under Section 5 of Exhibit B) or (B) the Installed Storage Capacity (in the case of any other Storage Capacity Test), multiplied by (ii) four (4) hours) divided by (b) four (4) hours, expressed in MW AC.
PART III. INITIAL SUPPLEMENTARY CAPACITY TEST PROTOCOL.
A. Effective Storage Capacity
• Procedure:
(1) System Starting State: The Storage Facility will be allowed to perform battery OEM recommended CT preparation procedures then brought to be in the on-line state at 0% SOC.
If such procedures require removing the Storage Facility from service for any Calculation Intervals, such Calculation Intervals shall be deemed Unavailable Calculation Intervals for purposes of calculating the YTD Annual Storage Capacity Availability. (2) Record the initial value of the Storage Facility SOC. (3) Command via ADS signal a real power charge that results in an AC power of Storage Facility’s maximum charging level, and continue charging until the earlier of (a) the Storage Facility has reached 100% SOC or (b) five and a half (5.5) hours have elapsed since the Storage Facility commenced charging.
(4) Record and store the Storage Facility SOC after the earlier of (a) the Storage Facility has reached 100% SOC or (b) five and a half (5.5) hours of continuous charging. Such data point shall be used for purposes of calculation of the Battery Charging Factor. (5) Record and store the Charging Energy.
(6) Following an agreed-upon rest period, and after sunset, command via ADS signal a real power discharge that results in an AC power output of the lesser of (i) the Storage Facility’s maximum discharging level and (ii) the Guaranteed Storage 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 Storage Facility has reached 0% SOC, or (c) the sustained discharging power level is at least 2% less than the lesser of (i) the maximum discharging power level and (ii) the Guaranteed Storage Capacity.
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Exhibit O - 6
(7) Record and store the Storage Facility SOC after four (4) hours of continuous discharging.
Such data point shall be used for purposes of calculation of the Battery Discharging Factor.
If the Storage Facility SOC remains above zero percent (0%) after discharging at a rate at or above the Guaranteed Storage Capacity (or at or above the Installed Storage Capacity after a Commercial Operation Storage 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 Discharging Energy as measured at the Storage Facility Meter. Such data point shall be used for purposes of calculating the Effective Storage Capacity. (9) If the Storage Facility has not reached 0% SOC pursuant to Section III.A.6, continue discharging the Storage Facility until it reaches a 0% SOC. Record and store the additional Discharging Energy, if applicable.
• Test Results
(1) The resulting Effective Storage Capacity measurement is the sum of the total Discharging Energy at the Storage Facility Meter divided by four (4) hours.
B. AGC Discharge Test
• Purpose: This test will demonstrate the AGC discharge capability to achieve the Storage Facility’s maximum discharging level within 1 second. Such testing shall only be performed if it is required by CAISO to verify the capability of the Storage Facility to provide certain Ancillary Services. Buyer and Seller agree to modify this test procedure if it is found to violate any terms of the Interconnection Agreement or CAISO Tariff. • System starting state: The Storage 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 Storage Facility active power level at the Storage Facility Meter. (2) Command via AGC signal the Storage Facility to follow a simulated CAISO RIG signal of Pmax at .95 power factor for ten (10) minutes.
(3) Record and store the Storage Facility active power response (in seconds). • System end state: The Storage Facility will be in the on-line state and at a commanded active power level of 0 MW.
C. AGC Charge Test
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Exhibit O - 7
• Purpose: This test will demonstrate the AGC charge capability to achieve the Storage Facility’s full charging level within 1 second. Such testing shall only be performed if it is required by CAISO to verify the capability of the Storage Facility to provide certain Ancillary Services. Buyer and Seller agree to modify this test procedure if it is found to violate any terms of the Interconnection Agreement or CAISO Tariff. • System starting state: The Storage 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 Storage Facility control system will be configured to follow a predefined agreed-upon active power profile.
• Procedure:
(1) Record the Storage Facility active power level at the Storage Facility Meter. (2) Command via AGC signal the Storage Facility to follow a simulated CAISO RIG signal of -Pmax at .95 power factor for ten (10) minutes.
(3) Record and store the Storage Facility active power response (in seconds). • System end state: The Storage 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 Storage Facility. Such testing shall only be performed if it is required by CAISO to verify the capability of the Storage Facility to provide certain Ancillary Services. Buyer and Seller agree to modify this test procedure if it is found to violate any terms of the Interconnection Agreement or CAISO Tariff.
• System starting state: The Storage 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 Storage Facility reactive power level at the Facility Meter. (2) Command via AGC signal the Storage Facility to follow 100 MVAR for ten (10) minutes. (3) Record and store the Storage Facility reactive power response. • System end state: The Storage Facility will be in the on-line state and at a commanded reactive power level of 0 MVAR.
E. Reactive Power Consumption Test
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Exhibit O - 8
• Purpose: This test will demonstrate the reactive power consumption capability of the Storage Facility.
• System starting state: The Storage 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 Storage Facility control system will be configured to follow an agreed-upon predefined reactive power profile.
• Procedure:
(1) Record the Storage Facility reactive power level at the Facility Meter. (2) Command via AGC signal the Storage Facility to follow 100 MVAR for ten (10) minutes. (3) Record and store the Storage Facility reactive power response. • System end state: The Storage Facility will be in the on-line state and at a commanded reactive power level of 0 MVAR.
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Exhibit P - 1
EXHIBIT P
ANNUAL STORAGE CAPACITY AVAILABILITY CALCULATION
(a) Following the end of each calendar month during the period commencing upon Commercial Operation Date and continuing throughout the Delivery Term, Buyer shall calculate the year-to-date (YTD) “Annual Storage Capacity Availability” for the current Contract Year using the formula set forth below:
Annual Storage 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. Calculation Interval is a positive integer number starting from 1 and ends with total YTD calculation Intervals.
“Unavailable Calculation Intervals” means the sum of year-to-date unavailable Calculation Intervals for the applicable Contract Year, where for each Calculation Interval:
where:
“A” is the “Available Effective Storage 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 the Generating Facility or CAISO Grid and deliver Discharging 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 Storage Capacity. If Seller fails to provide the HOL or LOL for any Calculation Interval, the Available Effective Storage Capacity in such Calculation Interval shall be deemed to be zero (0) MW.
“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 Storage Facility is available to be charged from the Generating Facility or CAISO Grid (calculated as the available battery charging capability (in MWh) to receive Charging Energy from the Generating Facility or CAISO Grid 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 Storage Facility is available to be discharged to the Delivery Unavailable
Calculation Interval = 1 C.I. x ( 1 – the lesser of:
A
or
B
) Effective
Storage
Capacity
Effective Storage
Capacity x 4 hrs
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Point (calculated as the available battery discharging capability (in MWh) in the applicable Calculation Interval x the Battery 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 the Generating Facility or CAISO Grid and deliver Discharging Energy to the Delivery Point, but Available Storage Capability shall never exceed the Effective Storage Capacity x four (4) hours.
“Total YTD Calculation Intervals” means, for each applicable Contract Year, 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 Storage 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 Storage Facility for such Calculation Interval, such that available Effective Storage Capacity is calculated as set forth in the definition above, and Available Storage Capability is calculated as the product of (C) the count of available system cells, multiplied by (D) the capability, in MWh, expected from each system cell under normal operating conditions pursuant to the manufacturer’s guidelines, (ii) such amounts reported by Seller’s real-time EMS data feed to CAISO for Scheduling purposes, and (iii) Seller’s most recent Availability Notice (as updated pursuant to Section 4.3), which, with respect to the Available Effective Storage 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 Storage 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 Storage Facility in the Real-Time Market. Except as otherwise expressly provided in this Agreement, the calculations of Available Effective Storage Capacity and Available Storage Capability in the foregoing sentence shall be based solely on the availability of the Storage Facility to charge or discharge Energy between the Storage 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 Storage Facility fails to maintain connectivity to the CAISO such that it cannot receive ADS or AGC signals shall be deemed an Unavailable Calculation Interval. (c) If the total rated power of the Storage Facility inverters associated with the Installed Storage Capacity as measured to the Delivery Point at Site Average High Design Temperature is less than the Installed Storage Capacity, then Buyer shall have the right, in
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its reasonable discretion, to reduce the Available Effective Storage Capacity by applying an ambient air temperature availability derate to the applicable Calculation Interval. (d) After 365 Cycles have occurred in a given Contract Year, any additional Calculation Intervals during such Contract Year shall be deemed to be fully available.
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Exhibit R – 1
EXHIBIT R
METERING DIAGRAM
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Exhibit S - 1
EXHIBIT S
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) [Name of Seller], a [Legal Status of Seller] (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 PPA (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] (“PPA”), 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 PPA, Project Company has agreed to provide to CPA certain collateral, which may include Performance Security and Development Security and other collateral described in the PPA (collectively, the “PPA 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 PPA 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 PPA 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 hereto hereby agree as follows:
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SECTION 1. CONSENT TO ASSIGNMENT, ETC.
1.1 Consent and Agreement.
CPA hereby acknowledges:
(a) Notice of and consents to the assignment as collateral security to 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 PPA (subject to CPA’s rights and defenses under the PPA and the terms of this Consent) and accepts any such exercise; provided, insofar as the Collateral Agent exercises any such rights under the PPA or makes any claims with respect to payments or other obligations under the PPA, the terms and conditions of the PPA 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 Acknowledgement.
Each of Project Company and Collateral Agent hereby acknowledges and agrees that CPA is authorized to act in accordance with Collateral Agent’s instructions, and that CPA shall bear no liability to Project Company or Collateral Agent for acting in accordance with Collateral Agent’s instructions.
1.3 Right to Cure.
If Project Company defaults in the performance of any of its obligations under the PPA, or upon the occurrence or non-occurrence of any event or condition under the PPA 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 PPA (a “PPA Default”), CPA will not terminate or suspend its performance under the PPA until it first gives written notice of such PPA Default to Collateral Agent and affords Collateral Agent the right to cure such PPA Default within the applicable cure period under the PPA, which cure period shall run concurrently with that afforded Project Company under the PPA. In addition, if Collateral Agent gives CPA written notice prior to the expiration of the applicable cure period under the PPA of Collateral Agent’s intention to cure such PPA Default (which notice shall include a reasonable description of the time during which it anticipates to cure such PPA Default) and is diligently proceeding to cure such PPA Default, notwithstanding the applicable cure period under the PPA, Collateral Agent shall have a period of sixty (60) days (or, if such PPA Default is for failure by the Project Company to pay an amount to CPA which is due and payable under the PPA other than to provide PPA Collateral, thirty (30) days, or, if such PPA Default is for failure by Project Company to provide PPA Collateral, ten (10) Business Days) from the Collateral Agent’s receipt of the notice of such PPA Default from CPA to cure such PPA Default; provided, (a) if possession of the Facility is necessary to cure any such non-monetary PPA Default and Collateral Agent has commenced foreclosure proceedings within sixty (60) days after notice of the PPA 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 PPA Default, to complete such
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proceedings and cure such PPA Default, and (b) if Collateral Agent is prohibited from curing any such PPA 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 PPA 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 PPA 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 PPA, and, subject to Sections
1.7(b) and 1.7(c) below, CPA and Substitute Owner will recognize each other as counterparties under the PPA 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 PPA 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 has financial qualifications and operating experience sufficient to satisfy the definition of 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 PPA 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 PPA 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 PPA remaining to be performed having terms substantially the same as the terms of the PPA with respect to the remaining Contract Term (“Replacement PPA”); provided, before CPA is required to enter into a Replacement PPA, the Replacement Owner must have demonstrated to CPA’s reasonable 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 PPA, to the extent CPA is, or was otherwise prior to its termination as described in
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Exhibit S - 4
this Section 1.5, entitled under the PPA, CPA may suspend performance of its obligations under such Replacement PPA, unless and until all PPA Defaults of Project Company under the PPA or Replacement PPA 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 PPA and a Replacement PPA 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 PPA or Replacement PPA, as applicable, including posting and collateral assignment of the PPA Collateral. Upon such assignment and the cure of any outstanding PPA Default, and payment of all other amounts due and payable to CPA in respect of the PPA or such Replacement PPA, the transferor shall be released from any further liability under the PPA or Replacement PPA, 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 PPA, including posting and collateral assignment of the PPA Collateral; provided, the obligations of such Substitute Owner shall be no more than those of Project Company under the PPA.
(c) No Liability.
CPA acknowledges and agrees that neither Collateral Agent nor any Secured Party shall have any liability or obligation under the PPA as a result of this Consent (except to the extent Collateral 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 PPA, 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 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 PPA, Collateral Agent shall not have any personal liability to CPA under the PPA or Replacement PPA; provided, CPA shall have the right to seek equitable or injunctive relief against Collateral Agent, and CPA shall retain any offset rights expressly allowed under the PPA, a Replacement PPA or the PPA Collateral.
1.8 Delivery of Notices.
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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 PPA relating to (a) a PPA Default by Project Company under the PPA, (b) any claim regarding a Force Majeure Event by CPA under the PPA, (c) any notice of dispute under the PPA, (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 PPA Default under Section 1.3.
1.9 Confirmations.
CPA will, as and when reasonably requested by Collateral Agent from time to time, confirm in writing matters relating to the PPA (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 PPA 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 PPA. 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 PPA is entered into or the PPA 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 PPA, 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 applicable law, CPA agrees that it will not, without the prior written consent of Collateral Agent (not to be unreasonably withheld, delayed or conditioned) (a) enter into any material supplement, restatement, novation, extension, amendment or modification of the PPA (b) terminate or suspend its performance under the PPA (except in accordance with Section
1.3) or (c) consent to or accept any termination or cancellation of the PPA by Project Company.
SECTION 2. PAYMENTS UNDER THE PPA
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 PPA 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 PPA to the extent that CPA makes payments in accordance with Collateral Agent’s instructions.
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Exhibit S - 6
2.2 No Offset, Etc.
All payments required to be made by CPA under the PPA shall be made without any offset, recoupment, abatement, withholding, reduction or defense whatsoever, other than that expressly allowed by the terms of the PPA.
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 underthe PPA, 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 PPA 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 PPA except approvals or consents which have previously been obtained and which are in full force and effect.
3.3 Execution and Delivery; Binding Agreements.
Each of this Consent and the PPA 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 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).
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 PPA; (b) CPA and, to CPA’s actual knowledge, Project Company, has complied with all conditions precedent to the effectiveness of its obligations under the PPA; (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
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Exhibit S - 7
obligations under the PPA; and (d) the PPA 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 PPA, 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 [Legal Status of Seller] 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 PPA, 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 PPA 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.
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 PPA; (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 PPA; (c) to Project
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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 PPA; and (d) the PPA 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 PPA.
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).
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 PPA (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 PPA] of the PPA, (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.
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(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 PPA. 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 several sections 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 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
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indemnification obligations) or, with respect to the PPA or any Replacement PPA, its obligations under such PPA or Replacement PPA 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 assigns 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 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.