AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit E - 1
EXHIBIT E
PROGRESS REPORTING FORM
Each Progress Report must include the following items:
1. Executive Summary.
2. Facility description.
3. Site plan of the Facility.
4. Description of any material planned changes to the Facility or the site.
5. Gantt chart schedule showing progress on achieving each of the Milestones.
6. Summary of activities during the previous calendar quarter, including any OSHA labor hour reports.
7. Forecast of activities scheduled for the current calendar quarter or month as applicable.
8. Written description about the progress relative to Seller’s Milestones, including whether Seller has met or is on target to meet the Milestones.
9. List of issues that are likely to potentially affect Seller’s Milestones.
10. A status report of start-up activities including a forecast of activities ongoing and after start-up, a report on Facility performance including performance projections for the next twelve (12) months.
11. The utilization of union labor by Seller’s principal EPC contractor.
12. Progress and schedule of all major agreements, contracts, permits, approvals, technical studies, financing agreements and major equipment purchase orders showing the start dates, completion dates, and completion percentages.
13. 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.
14. Any other documentation reasonably requested by Buyer.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit F - 1
EXHIBIT F
[RESERVED]
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit G - 1
EXHIBIT G
[RESERVED]
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC 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 Marin Clean Energy, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Service Agreement dated [Date] by and between [Entity name, state of formation, type of entity] (“Seller”) and Buyer (“Agreement”). 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:
(a) The Facility is fully operational, and interconnected, fully integrated and synchronized with the Transmission System.
(b) Seller has installed equipment for the Facility with a nameplate capacity of no less than of the Storage Contract Capacity.
(c) Seller has commissioned all Facility equipment in accordance with its respective manufacturer’s specifications.
(d) Seller has demonstrated functionality of the Facility’s communication systems and automatic generation control (AGC) interface to operate the Facility as necessary to respond and follow instructions, including an electronic signal conveying real time and intra-day instructions, directed by the Buyer in accordance with the Agreement and the CAISO. (e) The Facility is fully capable of charging, storing and discharging energy up to no less than of the Storage Contract Capacity and receiving instructions to charge, store and discharge energy, all within the operational constraints and subject to the applicable Operating Restrictions.
(f) Authorization to parallel the Facility was obtained from the Participating Transmission Owner.
(g) The Transmission Provider has provided documentation supporting full unrestricted release for Commercial Operation.
(h) The CAISO has provided notification supporting Commercial Operation of the Facility (which for avoidance of doubt shall not require certification including CAISO certification of ancillary services with respect to the Facility), in accordance with the CAISO Tariff. (i) Seller shall have caused the Facility to be included in the Full Network Model and has the ability to offer Bids into the CAISO Day-Ahead Market and Real-Time Market in respect of the Facility.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit H - 2
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Printed Name:
Title:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit I - 1
EXHIBIT I
FORM OF INSTALLED BATTERY CAPACITY CERTIFICATE
This certification (“Certification”) of Installed Battery Capacity is delivered by [licensed professional engineer] (“Engineer”) to Marin Clean Energy, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Service Agreement dated [Date] by and between [Entity name, state of formation, type of entity] (“Seller”) and Buyer (“Agreement”). 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:
The Storage Capacity Test demonstrated a maximum operating capability that can be sustained for eight (8) consecutive hours to discharge electric energy of __ MWAC to the Delivery Point, in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit O (the “Installed Battery Capacity”).
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Printed Name:
Title:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit J - 1
EXHIBIT J
FORM OF CONSTRUCTION START DATE CERTIFICATE
This certification of Construction Start Date (“Certification”) is delivered by [Entity name, state of formation, type of entity] (“Seller”) to Marin Clean Energy, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Service Agreement dated [Date] by and between Seller and Buyer (“Agreement”). 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:
Printed Name:
Title:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit K - 1
EXHIBIT K
FORM OF LETTER OF CREDIT
BBVA
IRREVOCABLE STANDBY LETTER OF CREDIT
DATE OF ISSUANCE:
_____, 2023
BENEFICIARY:
MARIN CLEAN ENERGY
1125 TAMALPAIS AVENUE
SAN RAFAEL, CA 94901
ATTENTION: CHIEF FINANCIAL OFFICER
EMAIL: [email protected]
APPLICANT:
NEXTERA ENERGY CAPITAL HOLDINGS, INC.
ON BEHALF OF KEY ENERGY STORAGE, LLC
700 UNIVERSE BLVD
JUNO BEACH, FLORIDA 33408
ATTENTION: TREASURY
Re: BANCO BILBAO VIZCAYA ARGENTARIA, S.A. NEW YORK BRANCH Irrevocable Standby Letter of Credit No.________
Sirs/Mesdames:
We hereby establish in favor of Beneficiary (sometimes alternatively referred to herein as “you”) this Irrevocable Standby Letter of Credit No. _______ (the “Letter of Credit”) for the account of NextEra Energy Capital Holdings, Inc. on behalf of Key Energy Storage, LLC, located at 700 Universe Boulevard, Juno Beach, Florida 33408 (“Account Parties”), effective immediately and expiring on the date determined as specified in numbered paragraph 5 below.
We have been informed that this Letter of Credit is issued pursuant to the terms of that certain Energy Storage Service Agreement dated ___________.
1. Stated Amount. The maximum amount available for drawing by you under this Letter of Credit shall be ___________ (US$___________) (such maximum amount referred to as the “Stated Amount”).
2. Drawings. A drawing hereunder may be made by you on any Business Day on or prior to the date this Letter of Credit expires by delivering to [ISSUING BANK], at any time during its business hours on such Business Day, at [bank address] (or at such other address as may be designated by written notice AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit K - 2
delivered to you as contemplated by numbered paragraph 8 hereof), a copy of this Letter of Credit together with (i) a Draw Certificate executed by an authorized person substantially in the form of Attachment A hereto (the “Draw Certificate”), appropriately completed and signed by your authorized officer (signing as such) and (ii) your draft substantially in the form of Attachment B hereto (the “Draft”), appropriately completed and signed by your authorized officer (signed as such). Partial drawings and multiple presentations may be made under this Letter of Credit. Draw Certificates and Drafts under this Letter of Credit may be presented by Beneficiary by overnight delivery or courier to [ISSUING BANK] at our address set forth above, Attention: ___________ (or at such other address as may be designated by written notice delivered to you as contemplated by numbered paragraph 8 below), or as a PDF attachment to an email to [bank email address]. Transmittal by email shall be deemed delivered when received. The original of this Letter of Credit (and all amendments, if any) is not required to be presented in connection with any presentment of a Draw Certificate and Draft by Beneficiary hereunder in order to receive payment.
3. Time and Method for Payment. We hereby agree to honor a drawing hereunder made in compliance with this Letter of Credit by transferring in immediately available funds the amount specified in the Draft delivered to us in connection with such drawing to such account at such bank in the United States as you may specify in your Draw Certificate. If the Draw Certificate is presented to us at such address by 12:00 noon, (Eastern Standard Time) time on any Business Day, payment will be made not later than our close of business on third succeeding business day and if such Draw Certificate is so presented to us after 12:00 noon, (Eastern Standard Time) time on any Business Day, payment will be made on the fourth succeeding Business Day. In clarification, we agree to honor the Draw Certificate as specified in the preceding sentences, without regard to the truth or falsity of the assertions made therein.
4. Non-Conforming Demands. If a demand for payment made by you hereunder does not, in any instance, conform to the terms and conditions of this Letter of Credit, we shall give you prompt notice not later than two Business Days that the demand for payment was not effectuated in accordance with the terms and conditions of this Letter of Credit, stating the reasons therefor and that we will upon your instructions hold any documents at your disposal or return the same to you. Upon being notified that the demand for payment was not effectuated in conformity with this Letter of Credit, you may correct any such non-conforming demand and re-submit on or before the then current expiry date.
5. Expiration, Initial Period and Automatic Extension. The initial period of this Letter of Credit shall terminate on [the date which is one day prior to the first anniversary of this Letter of Credit’s Date of Issuance] (the “Initial Expiration Date”). The Letter of Credit shall be automatically extended without amendment for one (1) year periods from the Initial Expiration Date or any future expiration date, unless at least sixty (60) days prior to any such expiration date we send you notice by registered mail or courier at your address first shown (or such other address as may be designated by you as contemplated by numbered paragraph 8) that we elect not to consider this Letter of Credit extended for any such additional one year period. Notwithstanding the foregoing extension provision, this Letter of Credit shall automatically expire at the close of business on the date on which we receive a Cancellation Certificate in the form of Attachment C hereto executed by your authorized officer and sent along with the original of this Letter of Credit and all amendments (if any). Upon receipt by you of such notice of non-extension, you may draw hereunder up to the available amount, on or before the then current expiry date, against presentation to us of your draft substantially in the form of Attachment B hereto (the “Draft”), appropriately completed and signed by your authorized officer (signed as such).
6. Business Day. As used herein, “Business Day” shall mean any day on which commercial banks are not authorized or required to close in the State of New York, and inter-bank payments can be effected on the Fedwire system.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit K - 3
7. Governing Law. THIS LETTER OF CREDIT IS GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNATIONAL STANDBY PRACTICES, ICC PUBLICATION NO. 590 (THE “ISP98”), AND AS TO MATTERS NOT ADDRESSED IN ISP98, BY THE LAWS OF THE STATE OF NEW YORK. WE ARE SUBJECT TO VARIOUS LAWS, REGULATIONS AND
EXECUTIVE AND JUDICIAL ORDERS (INCLUDING ECONOMIC SANCTIONS,
EMBARGOES, ANTI-BOYCOTT, ANTI-MONEY LAUNDERING, ANTI-TERRORISM, AND ANTI-DRUG TRAFFICKING LAWS AND REGULATIONS) OF THE U.S. AND OTHER COUNTRIES THAT ARE ENFORCEABLE UNDER APPLICABLE LAW. WE WILL NOT BE
LIABLE FOR OUR FAILURE TO MAKE, OR OUR DELAY IN MAKING, PAYMENT UNDER
THIS LETTER OF CREDIT OR FOR ANY OTHER ACTION WE TAKE OR DO NOT TAKE, OR
ANY DISCLOSURE WE MAKE, UNDER OR IN CONNECTION WITH THIS LETTER OF CREDIT THAT IS REQUIRED BY SUCH LAWS, REGULATIONS, OR ORDER.
8. Notices. All notices to Beneficiary shall be via email to [email protected] followed up in writing and are required to be sent by certified letter, overnight courier, or delivered in person to:
Marin Clean Energy, Attn: Chief Financial Officer, 1125 Tamalpais Avenue, San Rafael, CA 94901. 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. All documents to be presented to us hereunder and all other communications to us in respect of this Letter of Credit, which other communications shall be in writing, shall be delivered to the address for us indicated above, or such other address as may from time to time be designated by us in a written notice to you.
9. Irrevocability. This Letter of Credit is irrevocable.
10. Complete Agreement. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein, except for the ISP98 and Attachment A, Attachment B and Attachment C hereto and the notices referred to herein and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement except as set forth above. * * *
SINCERELY,
[ISSUING BANK]
____________________________
By: ________________________
Title: _______________________
Address:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit K - 4
ATTACHMENT A
FORM OF DRAW CERTIFICATE
TO: [ISSUING BANK]
[Address]
The undersigned hereby certifies to [ISSUING BANK] (“Issuer”), with reference to Irrevocable Letter of Credit No. ________________ (the “Letter of Credit”) issued by Issuer in favor of the undersigned (“Beneficiary”), as follows:
(1) The undersigned is the ____________ of Beneficiary and is duly authorized by Beneficiary to execute and deliver this Certificate on behalf of Beneficiary. (2) Beneficiary hereby makes demand against the Letter of Credit by Beneficiary’s presentation of the draft accompanying this Certificate, for payment of _______________________ U.S. dollars (US$__________), which amount, when aggregated together with any additional amount that has not been drawn under the Letter of Credit, is not in excess of the Stated Amount (as in effect of the date hereof).
(3) The reasons for a drawing by Beneficiary are pursuant to that certain Energy Storage Service Agreement dated __________.
(4) You are hereby directed to make payment of the requested drawing to: (insert wire instructions) Beneficiary Name and Address:
By:
Title:
Date:
(5) Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Letter of Credit.
MARIN CLEAN ENERGY
By:
Title:
Date:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit K - 5
ATTACHMENT B
DRAWING UNDER IRREVOCABLE LETTER OF CREDIT NO. _________________ TO: [ISSUING BANK]
[Address]
Date:
PAY TO: MARIN CLEAN ENERGY
U.S.$ ___________________
FOR VALUE RECEIVED AND CHARGE TO THE ACCOUNT OF LETTER OF CREDIT NO. __________________.
MARIN CLEAN ENERGY
By:
Title:
Date:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit K - 6
ATTACHMENT C
CANCELLATION CERTIFICATE
TO: [ISSUING BANK]
[Address]
Irrevocable Letter of Credit No. _______________
The undersigned, being authorized by the undersigned (“Beneficiary”), hereby certifies on behalf of Beneficiary to [ISSUING BANK] (“Issuer”), with reference to Irrevocable Letter of Credit No. ______________ issued by Issuer to Beneficiary (the “Letter of Credit”), that all obligations of Key Energy Storage, LLC, under the Energy Storage Service Agreement dated ___________ have been fulfilled.
Pursuant to Section 5 thereof, the Letter of Credit shall expire upon Issuer’s receipt of this certificate.
Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Letter of Credit.
MARIN CLEAN ENERGY
By:
Title:
Date:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit L - 1
EXHIBIT L
FORM OF GUARANTY
This Guaranty (this “Guaranty”) is entered into as of [_____] (the “Effective Date”) by and between [Entity name, state of formation, type of entity] (“Guarantor”), and Marin Clean Energy (together with its successors and permitted assigns, “Buyer”).
Recitals
A. Buyer and [Entity name, state of formation, type of entity] (“Seller”), entered into that certain Energy Storage Service Agreement (as amended, restated or otherwise modified from time to time, the “ESSA”) dated as of [____], 20___.
B. Guarantor is entering into this Guaranty as Performance Security to secure Seller’s obligations under the ESSA, as required by Section 8.8 of the ESSA.
C. It is in the best interest of Guarantor to execute this Guaranty inasmuch as Guarantor will derive substantial direct and indirect benefits from the execution and delivery of the ESSA.
D. Initially capitalized terms used but not defined herein have the meaning set forth in the ESSA.
Agreement
1. Guaranty. For value received and subject to the terms and conditions hereof, Guarantor does hereby unconditionally, absolutely and irrevocably guarantee, as primary obligor and not as a surety, to Buyer the prompt payment by Seller of any and all amounts and payment obligations now or hereafter owing from Seller to Buyer under the ESSA (the “Obligations”), including, without limitation, compensation for penalties, the Termination Payment, indemnification payments or other damages, as and when required pursuant to the terms of the ESSA; provided, that Guarantor’s aggregate liability under or arising out of this Guaranty for payment of the Obligations shall not exceed _______________ Dollars ($_______________) (the “Guaranteed Amount”). The Parties understand and agree that any payment by Guarantor or Seller of any portion of the Guaranteed Amount shall thereafter reduce Guarantor’s maximum aggregate liability hereunder on a dollar-for-dollar basis. This Guaranty is an irrevocable, absolute, unconditional and continuing guarantee of the full and punctual payment, and not of collection, of the Guaranteed Amount and, except as otherwise expressly addressed herein, is in no way conditioned upon any requirement that Buyer first attempt to collect the payment of the Guaranteed Amount from Seller, any other guarantor of the Guaranteed Amount or any other Person or entity or resort to any other means of obtaining payment of the Guaranteed Amount. In the event Seller shall fail to duly, completely or punctually pay any Guaranteed Amount as required pursuant to the ESSA, Guarantor shall promptly pay such amount as required herein.
2. Demand Notice. For avoidance of doubt, a payment shall be due for purposes of this Guaranty only when and if a payment is due and payable by Seller to Buyer under the terms and conditions of the ESSA. If Seller fails to pay any Guaranteed Amount as required pursuant to the AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit L - 2
ESSA for five (5) Business Days following Seller’s receipt of Buyer’s written notice of such failure (the “Demand Notice”), then Buyer may elect to exercise its rights under this Guaranty and may make a demand upon Guarantor (a “Payment Demand”) for such unpaid Guaranteed Amount. A Payment Demand shall be in writing and shall reasonably specify in what manner and what amount Seller has failed to pay and an explanation of why such payment is due and owing, with a specific statement that Buyer is requesting that Guarantor pay under this Guaranty. Guarantor shall, within five (5) Business Days following its receipt of the Payment Demand, pay the Guaranteed Amount to Buyer.
3. Scope and Duration of Guaranty. This Guaranty applies only to the Guaranteed Amount.
This Guaranty shall continue in full force and effect from the Effective Date until the earlier of the following: (x) all Guaranteed Amounts have been paid in full (whether directly or indirectly through set-off or netting of amounts owed by Buyer to Seller), (y) replacement Performance Security is provided in an amount and form required by the terms of the ESSA or (z) the sixteenth anniversary of the Effective Date. Further, this Guaranty (a) shall remain in full force and effect without regard to, and shall not be affected or impaired by any invalidity, irregularity or unenforceability in whole or in part of this Guaranty, and (b) subject to the preceding sentence, shall be discharged only by complete performance of the undertakings herein. Without limiting the generality of the foregoing, the obligations of the Guarantor hereunder shall not be released, discharged, or otherwise affected and this Guaranty shall not be invalidated or impaired or otherwise affected for the following reasons:
(i) the extension of time for the payment of any Guaranteed Amount, or (ii) any amendment, modification or other alteration of the ESSA, or (iii) any indemnity agreement Seller may have from any party, or (iv) any insurance that may be available to cover any loss, except to the extent insurance proceeds are used to satisfy the Guaranteed Amount, or
(v) any voluntary or involuntary liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceeding affecting, Seller or any of its assets, including but not limited to any rejection or other discharge of Seller’s obligations under the ESSA imposed by any court, trustee or custodian or any similar official or imposed by any law, statue or regulation, in each such event in any such proceeding, or
(vi) the release, modification, waiver or failure to pursue or seek relief with respect to any other guaranty, pledge or security device whatsoever, or (vii) any payment to Buyer by Seller that Buyer subsequently returns to Seller pursuant to court order in any bankruptcy or other debtor-relief proceeding, or (viii) those defenses based upon (A) the legal incapacity or lack of power or authority of any Person, including Seller and any representative of Seller to enter into the ESSA or perform its obligations thereunder, (B) lack of due execution, delivery, validity or enforceability, including of AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit L - 3
the ESSA, or (C) Seller’s inability to pay any Guaranteed Amount or perform its obligations under the ESSA, or
(ix) any other event or circumstance that may now or hereafter constitute a defense to payment of the Guaranteed Amount, including, without limitation, statute of frauds and accord and satisfaction;
provided that, Guarantor reserves the right to assert for itself any defenses, setoffs or counterclaims that Seller is or may be entitled to assert against Buyer (except for such defenses, setoffs or counterclaims that may be asserted by Seller with respect to the ESSA, but that are expressly waived under any provision of this Guaranty).
4. Waivers by Guarantor. Guarantor hereby unconditionally waives as a condition precedent to the performance of its obligations hereunder, with the exception of the requirements in Paragraph 2, (a) notice of acceptance, presentment or protest with respect to the Guaranteed Amounts and this Guaranty, (b) notice of any action taken or omitted to be taken by Buyer in reliance hereon, (c) any requirement that Buyer exhaust any right, power or remedy or proceed against Seller under the ESSA, and (d) any event, occurrence or other circumstance which might otherwise constitute a legal or equitable discharge of a surety. Without limiting the generality of the foregoing waiver of surety defenses, it is agreed that the occurrence of any one or more of the following shall not affect the liability of Guarantor hereunder:
(i) at any time or from time to time, without notice to Guarantor, the time for payment of any Guaranteed Amount shall be extended, or such performance or compliance shall be waived; (ii) the obligation to pay any Guaranteed Amount shall be modified, supplemented or amended in any respect in accordance with the terms of the ESSA; (iii) subject to Section 9, any (a) sale, transfer or consolidation of Seller into or with any other entity, (b) sale of substantial assets by, or restructuring of the corporate existence of, Seller or (c) change in ownership of any membership interests of, or other ownership interests in, Seller; or
(iv) the failure by Buyer or any other Person to create, preserve, validate, perfect or protect any security interest granted to, or in favor of, Buyer or any Person.
5. Subrogation. Notwithstanding any payments that may be made hereunder by the Guarantor, Guarantor hereby agrees that until the earlier of payment in full of all Guaranteed Amounts or expiration of the Guaranty in accordance with Section 3, it shall not be entitled to, nor shall it seek to, exercise any right or remedy arising by reason of its payment of any Guaranteed Amount under this Guaranty, whether by subrogation or otherwise, against Seller or seek contribution or reimbursement of such payments from Seller.
6. Representations and Warranties. Guarantor hereby represents and warrants that (a) it has all necessary and appropriate [limited liability company][corporate] powers and authority and the legal right to execute and deliver, and perform its obligations under, this Guaranty, (b) this Guaranty constitutes its legal, valid and binding obligations enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium and AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit L - 4
other similar laws affecting enforcement of creditors’ rights or general principles of equity, (c) the execution, delivery and performance of this Guaranty does not and will not contravene Guarantor’s organizational documents, any applicable Law or any contractual provisions binding on or affecting Guarantor, which would invalidate or materially impair Guarantor’s ability to perform its obligations under this Guaranty, (d) there are no actions, suits or proceedings pending before any court, governmental agency or arbitrator, or, to the knowledge of the Guarantor, threatened, against or affecting Guarantor or any of its properties or revenues which may, in any one case or in the aggregate, materially adversely affect the ability of Guarantor to enter into or perform its obligations under this Guaranty, and (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority, and no consent of any other Person (including, any stockholder or creditor of the Guarantor), that has not heretofore been obtained is required in connection with the execution, delivery, performance, validity or enforceability of this Guaranty by Guarantor.
7. Notices. Notices under this Guaranty shall be deemed received if sent to the address specified below: (i) on the day received if served by overnight express delivery, and (ii) four Business Days after mailing if sent by certified, first class mail, return receipt requested. Any party may change its address or facsimile to which notice is given hereunder by providing notice of the same in accordance with this Paragraph 7.
If delivered to Buyer, to it at [____]
Attn: [____]
If delivered to Guarantor, to it at [____]
Attn: [____]
8. Governing Law and Forum Selection. This Guaranty shall be governed by, and interpreted and construed in accordance with, the laws of the United States and the State of New York, excluding choice of law rules. The Parties agree that any suit, action or other legal proceeding by or against any party (or its affiliates or designees) with respect to or arising out of this Guaranty shall be brought in the federal courts of the United States or the courts of the State of California sitting in the County of San Francisco, California.
9. Miscellaneous. This Guaranty shall be binding upon Guarantor and its successors and assigns and shall inure to the benefit of Buyer and its successors and permitted assigns pursuant to the ESSA. No provision of this Guaranty may be amended or waived except by a written instrument executed by Guarantor and Buyer. This Guaranty is not assignable by Guarantor without the prior written consent of Buyer, which consent shall not be unreasonably withheld. This Guaranty is not assignable by Buyer except (i) with the prior written consent of Guarantor, which consent shall not be unreasonably withheld or (ii) to an assignee of the ESSA in conjunction with an assignment of the ESSA in its entirety accomplished in accordance with the terms thereof. No provision of this Guaranty confers, nor is any provision intended to confer, upon any third party (other than Buyer’s successors and permitted assigns) any benefit or right enforceable at the option of that third party.
This Guaranty embodies the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements and understandings of the parties hereto, verbal or written, relating to the subject matter hereof. If any provision of this Guaranty is determined to be illegal or unenforceable (i) such provision shall be deemed restated in AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit L - 5
accordance with applicable Laws to reflect, as nearly as possible, the original intention of the parties hereto and (ii) such determination shall not affect any other provision of this Guaranty and all other provisions shall remain in full force and effect. This Guaranty may be executed in any number of separate counterparts, each of which when so executed shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Guaranty may be executed and delivered by electronic means with the same force and effect as if the same was a fully executed and delivered original manual counterpart.
10. Waiver of Jury Trial. BUYER (BY ITS ACCEPTANCE OF THIS GUARANTY) AND
GUARANTOR EACH HEREBY IRREVOCABLY, INTENTIONALLY AND VOLUNTARILY
WAIVES THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL
PROCEEDING BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH,
THIS GUARANTY OR THE AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON RELATING HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO GUARANTOR’S EXECUTION AND DELIVERY OF THIS GUARANTY. [Signature on next page]
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit L - 6
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed and delivered by its duly authorized representative on the date first above written.
GUARANTOR:
[_______]
By:______________________________
Printed Name:__________________
Title:____________________________
BUYER:
[_______]
By:______________________________
Printed Name:__________________
Title:____________________________
By:______________________________
Printed Name:__________________
Title:____________________________
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit M - 1
EXHIBIT M
FORM OF REPLACEMENT RA NOTICE
This Replacement RA Notice (this “Notice”) is delivered by [Entity name, state of formation, type of entity] (“Seller”) to Marin Clean Energy, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Service Agreement dated [Date] by and between Seller and Buyer (“Agreement”). 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 3.3(b) of the Agreement, Seller hereby provides the below Replacement RA product information:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit M - 2
[SELLER ENTITY]
By:
Its:
Date:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit N - 1
EXHIBIT N
NOTICES
Key Energy Storage, LLC Marin Clean Energy
All Notices:
700 Universe Blvd Juno Beach, FL 33408
Attn: Business Management
Phone: (561) 691-3062
Email: [email protected]
All Notices:
Marin Clean Energy
1125 Tamalpais Avenue
San Rafael, CA 94901
Attn: Contract Administration
Phone: (415) 464-6010
Email: [email protected]
Reference Numbers:
Duns:
Federal Tax ID Number:
Reference Numbers:
Duns:
Federal Tax ID Number:
Invoices:
Attn: Business Management
Phone: (561) 691-3062
Facsimile: (561) 304-5161
Email: [email protected] Invoices:
Attn: Power Settlements and Analytics
Phone: (415) 464-6683
Email: [email protected]
Scheduling:
Attn: NextEra Energy Marketing, LLC
Phone: (561) 304-5215
Facsimile: (561) 625-7604
Email: [email protected]
Scheduling:
Attn: ZGlobal
Phone: (916) 458-4080
Email: [email protected]
Confirmations:
Attn: Business Management
Phone: (561) 691-3062
Facsimile: (561) 304-5161
Email: [email protected] Confirmations:
Attn: Director of Power Resources
Phone: (415) 464-6685
Email: [email protected]
Payments:
Attn: Business Management
Phone: (561) 691-3062
Facsimile: (561) 304-5161
Email: [email protected] Payments:
Attn: Power Settlements and Analytics
Phone: (415) 464-6683
Email: [email protected]
Wire Transfer:
Wire Transfer:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit N - 2
Key Energy Storage, LLC Marin Clean Energy
Credit and Collections:
Attn: Brantley Pierce
Phone: 561-694-3296
Facsimile: 561-304-5849
Email: [email protected]
Credit and Collections:
Attn: Chief Financial Officer
Phone: (415) 464-6037
Email: [email protected]
With additional Notices of an Event of Default
to:
Attn: General Counsel
Email: [email protected]
With additional Notices of an Event of
Default to:
Hall Energy Law PC
Attn: Stephen Hall
Phone: (503) 313-0755
Email: [email protected]
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit O - 1
EXHIBIT O
STORAGE CAPACITY TESTS
Storage Capacity Test Notice and Frequency
A. Commercial Operation Date Storage Capacity Test. Upon no less than five (5) Business Days prior Notice to Buyer, Seller shall schedule and complete a Storage Capacity Test prior to the Commercial Operation Date. Such initial Storage Capacity Test shall be performed in accordance with this Exhibit O and shall establish the initial Storage Contract Capacity hereunder based on the actual capacity of the Facility and the initial Efficiency Rate determined by such Storage Capacity Test.
B. Subsequent Storage Capacity Tests. Following the Commercial Operation Date, once each Contract Year Seller will perform a Storage Capacity Test and will give Buyer ten (10) Business Days prior Notice of such test. Buyer shall have the right (i) once per Contract Year, to require Seller to schedule and complete a Storage Capacity Test upon no less than five (5) Business Days prior written Notice and (ii) to require a test or retest of the Storage Capacity Test at any time upon no less than five (5) Business Days prior written Notice to Seller if Buyer provides data with such Notice reasonably indicating that the Storage Capacity has varied materially from the results of the most recent Storage Capacity Test (any such test, a “Buyer Initiated Test”).
Buyer shall be responsible for all costs and entitled to all revenues associated with any such Buyer-requested Storage Capacity Tests. Seller shall have the right to run a retest of any Storage Capacity Test upon five (5) Business Days’ prior written Notice to Buyer (or any shorter period reasonably acceptable to Buyer consistent with Prudent Operating Practice).
C. Test Results and Re-Setting of Storage Contract Capacity and Efficiency Rate. No later than ten (10) days following any Storage Capacity Test, Seller shall submit a testing report detailing results and findings of the test. The report shall include Facility Meter readings and plant log sheets verifying the operating conditions and output of the Facility. In accordance with Section
4.9(c) of the Agreement and Part II(I) below, the actual Efficiency Rate and Storage Capacity determined pursuant to a Storage Capacity Test (up to, but not in excess of, the original Storage Contract Capacity set forth on the Cover Sheet, as such original Storage Contract Capacity on the Cover Sheet may have been adjusted (if at all) pursuant to Exhibit B) shall become the new Storage Contract Capacity and Efficiency Rate at the beginning of the day following the completion of the test for calculating the Contract Price and all other purposes under this Agreement.
Storage Capacity Test Procedures
PART I. GENERAL.
Each Storage Capacity Test (including the initial Storage Capacity Test and all re-performances thereof) shall be conducted in accordance with Prudent Operating Practices and the provisions of this Exhibit O. For ease of reference, a Storage Capacity Test is sometimes referred to in this Exhibit O as a “SCT”. Buyer or its representative may be present for the SCT and may, for informational purposes only, use its own metering equipment (at Buyer’s sole cost).
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit O - 2
PART II. REQUIREMENTS APPLICABLE TO ALL STORAGE CAPACITY TESTS.
Note: Seller shall have the right and option in its sole discretion to install storage capacity (including but not limited to additional inverters and batteries) in excess of the initially installed Storage Contract Capacity identified on the cover sheet; provided, for all purposes of this Agreement, the amount of Installed Battery Capacity shall never be deemed to exceed the Storage Contract Capacity, and all SOC measurements associated with a Storage Capacity Test shall be based on the Storage Contract Capacity without taking into account any capacity that exceeds the Storage Contract Capacity amount listed on the cover sheet. (a) Purpose of Test. Each SCT shall:
a. Determine an updated Storage Contract Capacity;
b. Determine the amount of Energy required to fully charge the Facility; c. Determine the Facility charge ramp rate;
d. Determine the Facility discharge ramp rate;
e. Determine an updated Efficiency Rate.
(b) Test Elements. Each SCT shall include the following test elements:
(a) The measurement of charging energy exclusive of Station Use and Electrical Losses, as measured by the Facility Meter or other mutually agreed meter, that is required to charge the Facility up to the Maximum Stored Energy Level not to exceed the Storage Contract Output (MWh) (“Energy In”);
(b) The measurement of discharging energy exclusive of Station Use and Electrical Losses, as measured by the Facility Meter or other mutually agreed meter, that is discharged from the Facility to the Delivery Point until the Stored Energy Level reaches zero MWh as indicated by the battery management system (“Energy Out”);
(c) Electrical output at Maximum Discharging Capacity (as defined in Exhibit A) at the Facility Meter (MW);
(d) Electrical input at Maximum Charging Capacity (as defined in Exhibit A) at the Facility Meter ((MW);
(e) Amount of time between the Facility’s electrical output going from 0 to Maximum Discharging Capacity;
(f) Amount of time between the Facility’s electrical input going from 0 to Maximum Charging Capacity;
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit O - 3
(g) Amount of energy required to go from 0% Stored Energy Level to 100% Stored Energy Level charging at a rate equal to the Maximum Charging Capacity.
(c) Parameters. During each SCT, the following parameters shall be measured and recorded simultaneously for the Facility, at ten (10) minute intervals:
(1) discharge time (minutes);
(2) charging energy (MWh);
(3) discharging energy (MWh);
(4) Stored Energy Level (MWh).
(d) Test Showing. Each SCT must demonstrate that the Facility:
(1) successfully started;
(2) operated for at least eight (8) consecutive hours at Maximum Discharging Capacity;
(3) operated for at least eight (8) consecutive hours at Maximum Charging Capacity; and
(4) is able to deliver Discharging Energy to the Delivery Point as measured by the Facility Meter for eight (8) consecutive hours at a rate equal to the Maximum Discharging Capacity;
(e) Test Conditions.
(a) General. At all times during a SCT, the Facility shall be operated in compliance with Prudent Operating Practices and all operating protocols recommended, required or established by the manufacturer for operation at Maximum Discharging Capacity and Maximum Charging Capacity (as each is defined in Exhibit A).
(b) Abnormal Conditions. If abnormal operating conditions that prevent the recordation of any required parameter occur during a SCT, Seller may postpone or reschedule all or part of such SCT in accordance with Part II.G below.
(c) Instrumentation and Metering. Seller shall provide all instrumentation, metering and data collection equipment required to perform the SCT. The instrumentation, metering and data collection equipment electrical meters shall be calibrated in accordance with Prudent Operating Practice. (f) Incomplete Test. If any SCT is not completed in accordance herewith, Buyer may in its sole discretion: (i) accept the results up to the time the SCT stopped; (ii) require that the portion of the SCT not completed, be completed within a reasonable specified time period; or (iii) require that the SCT be entirely repeated. Notwithstanding the above, if AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit O - 4
Seller is unable to complete a SCT due to a Force Majeure Event or the actions or inactions of Buyer or the CAISO or the PTO or the Transmission Provider, Seller shall be permitted to reconduct such SCT on dates and at times reasonably acceptable to the Parties; provided, that if Seller is unable to complete an SCT within ten (10) Business Days of a Force Majeure Event, the Storage Capacity shall be deemed to be zero (0) until such time as Seller completes a SCT demonstrating a Storage Capacity greater than 0 MW.
(g) Final Report. Within fifteen (15) Business Days after the completion of any SCT, Seller shall prepare and submit to Buyer a written report of the results of the SCT, which report shall include:
(1) a record of the personnel present during the SCT that served in an operating, testing, monitoring or other such participatory role;
(2) the measured data for each parameter set forth in Part II.A through C, including copies of the raw data taken during the test; (3) the level of Storage Contract Capacity, Energy In, Energy Out, Efficiency Rate, Maximum Charging Capacity, the current charge and discharge ramp rate, and Stored Energy Level determined by the SCT, including supporting calculations; and
(4) Seller’s statement of either Seller’s acceptance of the SCT or Seller’s rejection of the SCT results and reason(s) therefor.
Within ten (10) Business Days after receipt of such report, Buyer shall notify Seller in writing of either Buyer’s acceptance of the SCT results or Buyer’s rejection of the SCT and reason(s) therefor.
If either Party rejects the results of any SCT, such SCT shall be repeated in accordance with Part II.G.
(h) Supplementary Storage Capacity Test Protocol. No later than sixty (60) days prior to conducting the initial Commercial Operation Date Storage Capacity Test, Seller shall deliver to Buyer for its review and approval (such approval not to be unreasonably delayed or withheld) an updated supplement to this Exhibit O with additional and supplementary details, procedures and requirements applicable to Storage Capacity Tests based on the then current design of the Facility (“Supplementary Storage 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) any Seller recommended updates to the then current Supplementary Storage Capacity Test Protocol. The initial Supplementary Storage Capacity Test Protocol (and each update thereto), once approved by Buyer, shall be deemed an amendment to this Exhibit O.
(i) Adjustment to Storage Contract Capacity. The total amount of Discharging Energy delivered to the Delivery Point (expressed in MWh-AC) during the first eight (8) hours of discharge (up to, but not in excess of, the product of (i) the original Storage Contract Capacity set forth on the Cover Sheet, as such original Storage Contract Capacity on AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit O - 5
the Cover Sheet may have been adjusted (if at all) under this Agreement, shall be divided by eight (8) hours to determine the Storage Contract Capacity, which shall be expressed in MWAC, and shall be the new Storage Contract Capacity in accordance with Section 4.9(c) of the Agreement until updated pursuant to a subsequent Storage Capacity Test.
(j) Adjustment to Efficiency Rate. The total amount of Energy Out (as reported in Part II.B above) divided by the total amount of Energy In (as reported in Part II.B above), measured at the Facility Meter location, exclusive of Electrical Losses to the Delivery Point and separately metered Station Use associated with battery cooling and other thermal management equipment, and expressed as a percentage, shall be the new Efficiency Rate, and shall be used for the calculation of liquidated damages (if any) under Exhibit C until updated pursuant to a subsequent Storage Capacity Test.
Part III. SUPPLEMENTARY STORAGE CAPACITY TEST PROTOCOL
A. Conditions Precedent to SCT
• Control System Functionality: The Facility control system shall be successfully configured to receive data from the battery system, exchange distributed network protocol 3 data with the Buyer SCADA device, and transfer data to the database server for the calculation, recording and archiving of data points. • Communications: Remote Terminal Unit (RTU) testing should be successfully completed prior to SCT. The interface between Buyer’s RTU and the Facility SCADA system should be fully tested and functional prior to starting testing. This includes verification of data transmission pathway between the Buyer’s RTU and Seller’s control system interface and the ability to record SCADA data. • Commissioning Checklist: Commissioning Checklist shall be successfully completed on all installed facility equipment, including verification that all controls, set points, and instruments of the control system are configured.
• Control System Functionality: The control system is operable within the requirements and has been successfully configured to receive data from the battery system and transfer data to the onsite servers for the calculation, recording and archiving of data points.
• The Round-Trip Efficiency Test will be repeated annually.
B. Storage Contract Capacity and Efficiency Rate Test
• Procedure:
(1) System Starting State: The Facility shall be balanced using original equipment manufacturer procedures as appropriate and will be in the on-line state at 0% SOC.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit O - 6
(2) Record the initial value of the SOC.
(3) Command a real power charge that results in an AC power of Facility’s maximum charging level and continue charging until the earlier of (a) the Facility has reached 100% SOC or (b) ten (10) hours have elapsed since the Facility commenced charging.
(4) Record and store the SOC after the earlier of (a) the Facility has reached 100% SOC or (b) ten (10) hours of continuous charging.
(5) Record and store the amount of Charging Energy, registered at the Facility Meter, to go from 0% SOC to 100% SOC.
(6) Following one (1) hour rest period, command a real power discharge that results in an AC power output of the Facility’s maximum discharging level and maintain the discharging state until the earlier of (a) the Facility has discharged at the maximum discharging level for eight (8) consecutive hours, or (b) the Facility has reached 0% SOC.
(7) Record and store the SOC after eight (8) hours of continuous discharging.
Such data point shall be used for purposes of calculation of the Storage Contract Capacity. If the Facility SOC remains above zero percent (0%) after discharging at a rate at or above the Storage Contract Capacity (or at or above the Installed Battery Capacity after a Commercial Operation Storage Capacity Test) for eight (8) consecutive hours pursuant to Part III.B.6(a), the SOC will be deemed 0 for the purposes of calculating the Storage Contract Capacity.
(8) Record and store the Discharging Energy as measured at the Facility Meter.
Such data point shall be used for purposes of calculation of the Storage Contract Capacity.
(9) If the Facility has not reached 0% SOC pursuant to Section III.B.6, continue discharging the Facility until it reaches a 0% SOC.
(10) Record and store the Discharging Energy as measured at the Facility Meter from the commencement of discharging pursuant to Part III.B.6 until the Facility has reached a 0% SOC pursuant to either Part III.B.7 or Part III.B.9, as applicable.
• Test Results:
(1) The resulting Storage Contract Capacity measurement is the sum of the total Discharging Energy as recorded pursuant to Part III.A.8 at the Facility Meter divided by eight (8) hours.
(2) The quotient of (x) the total amount of Discharging Energy (as reported under Section III.B(10) above), divided by (y) the total amount of Charging AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit O - 7
Energy (as reported under Section III.B(5) above), and expressed as a percentage, shall be recorded as the new Efficiency Rate, and shall be used for the calculation of the Efficiency Rate liquidated damages in Exhibit C until updated pursuant to a subsequent Storage Capacity Test.
C. AGC Discharge Test
• Purpose: This test will demonstrate the AGC discharge capability to achieve the Facility’s maximum discharging level within 30 seconds. • System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The EMS will be configured to follow a predefined agreed-upon active power profile. • Procedure:
(1) Record the Facility active power level at the Facility Meter. (2) Command the Facility to follow a simulated CAISO RIG signal of PMAX at .95 power factor for ten (10) minutes.
(3) Record and store the Facility active power response (in seconds). • System end state: The Facility will be in the on-line state and at a commanded active power level of 0 MW.
D. AGC Charge Test
• Purpose: This test will demonstrate the AGC charge capability to achieve the facility’s full charging level within 30 seconds.
• System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The Facility control system will be configured to follow a predefined agreed-upon active power profile.
• Procedure:
(1) Record the Facility active power level at the Facility Meter. (2) Command the Facility to follow a simulated CAISO RIG signal of PMAX at .95 power factor for ten (10) minutes.
(3) Record and store the Facility active power response (in seconds). • System end state: The Facility will be in the on-line state and at a commanded active power level of 0 MW.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit O - 8
E. Reactive Power Production Test
• Purpose: This test will demonstrate the reactive power production capability of the Facility.
• System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The EMS will be configured to follow an agreed-upon predefined reactive power profile. • Procedure:
(1) Record the Facility reactive power level at the Facility Meter. (2) Command the Facility to follow 17.5 MVAR for ten (10) minutes. (3) Record and store the Facility reactive power response. • System end state: The Facility will be in the on-line state and at a commanded reactive power level of 0 MVAR.
F. Reactive Power Consumption Test
• Purpose: This test will demonstrate the reactive power consumption capability of the facility.
• System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The Facility control system will be configured to follow an agreed-upon predefined reactive power profile.
• Procedure:
(1) Record the Facility reactive power level at the Facility Meter. (2) Command the Facility to follow 17.5 MVAR for ten (10) minutes. (3) Record and store the Facility reactive power response. • System end state: The Facility will be in the on-line state and at a commanded reactive power level of 0 MVAR.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit P - 1
EXHIBIT P
STORAGE FACILITY AVAILABILITY
Monthly Storage Availability
(a) Calculation of Monthly Storage Availability. Seller shall calculate the “Monthly Storage Availability” in a given month using the formula set forth below:
Monthly Storage Availability (%) = [MNTHHRSm - UNAVAILHRSm ] [MNTHHRSm]
where:
m = relevant month “m” in which availability is calculated; MNTHHRSm is the total number of On-Peak Hours for the month; UNAVAILHRSm, is the total number of On-Peak Hours in the month during which the Facility was unavailable to deliver Product for any reason other than the occurrence of any of the following (each, an “Excused Event”): a Force Majeure Event, Curtailments, Buyer Default, Storage Capacity Tests, System Emergencies, ,
or the Operating Restrictions in Exhibit Q; provided that notwithstanding anything to the contrary set forth above in this Exhibit P or elsewhere in this Agreement, to the extent the Facility is unable to provide Ancillary Services for any reason not excused under this Agreement during any Settlement Interval or Settlement Period that is not otherwise deemed an Excused Event, but the Facility is available to charge and discharge Energy between the Facility and the Delivery Point, then such impact on UNAVAILHRSm shall be reduced To be clear, hours of unavailability caused by any Excused Event will not be included in UNAVAILHRSm for such month. Additionally, if during any applicable hour the Facility is available, but for less than the full amount of the then effective Storage Contract Capacity, the UNAVAILHRSm for such hour shall be calculated as an equivalent percentage of such hour in proportion to the amount of available Storage Contract Capacity.
If the Facility or any component thereof was previously deemed unavailable for an hour or part of an hour, and Seller provides a revised Notice indicating the Facility is available for that hour or part of an hour by 5:00 a.m. of the morning Buyer schedules or bids the Facility in the Day-Ahead Market, the Facility will be deemed to be available to the extent set forth in the revised Notice.
If the Facility or any component thereof was previously deemed unavailable for an hour or part of an hour and Seller provides a revised Notice indicating the Facility is available for that hour or part of an hour at least sixty (60) minutes prior to the time the Buyer is required to schedule or bid the Facility in the Real-Time Market, and the Facility is dispatched in the Real-Time Market, the Facility will be deemed to be available to the extent set forth in the revised Notice.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC
Exhibit P - 2
Availability Factor
The applicable “Availability Factor” or “AF” is calculated as follows:
(i) If the Monthly Storage Availability is greater than or equal to the Guaranteed Storage Availability, then:
AF = 100%
(ii) If the Monthly Storage Availability is less than the Guaranteed Storage Availability but greater than or equal to , then:
(iii) If the Monthly Storage Availability is less than the Guaranteed Storage Availability is less than but greater than or equal to then:
(iv) If the Monthly Storage Availability is less than , then:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit Q - 1
EXHIBIT Q
OPERATING RESTRICTIONS
The Parties will develop and finalize the Operating Restrictions prior to the Commercial Operation Date, provided that the Operating Restrictions (i) may not be materially more restrictive of the operation of the Facility than as set forth below, unless agreed to by Buyer in writing, (ii) will, at a minimum, include the rules, requirements and procedures set forth in this Exhibit Q, (iii) will include protocols and parameters for Seller’s operation of the Facility in the absence of Charging Notices, Discharging Notices or other similar instructions from Buyer relating to the use of the Facility, and (iv) may include Facility Scheduling, Operating Restrictions and Communications Protocols.
Interconnection Capacity Limit: 35 MW
Maximum Stored Energy Level: 280 MWh
Minimum Stored Energy Level: 0 MWh
Maximum Charging Capacity: 35 MW
Minimum Charging Capacity: 0 MW
Maximum Discharging Capacity: 35 MW
Minimum Discharging Capacity: 0 MW
Maximum State of Charge (SOC)
during Charging:
100%
Minimum State of Charge (SOC)
during Discharging:
0%
Ramp Rate: 70 MW/minute
Annual Cycles: 365 cycles per Contract Year (maximum annual throughput of with no more than two
cycles per day; provided, however, Seller shall provide Notice to Buyer within at least 180 days prior to the
Guaranteed Commercial Operation Date the amount
payable by Buyer for each MWh of throughput (i.e.,
discharged MWh) that Buyer dispatches in excess of
during a Contract Year (the “Additional
Cycles Payment Amount”).
Within thirty (30) days after Seller’s providing such
Notice to Buyer, Buyer shall provide Notice to Seller
stating whether it accepts the Additional Cycles Payment Amount or not.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC
Exhibit Q - 2
If Buyer does not accept the Additional Cycles Payment
Amount, or fails to timely provide such a response Notice to Seller, within that thirty (30) day period, Buyer shall not be allowed to discharge the Facility in excess of 365 cycles during a Contract Year.
If Buyer provides Notice to Seller accepting the
Additional Cycles Payment Amount, Buyer shall be
allowed to discharge the Facility in excess of 365 cycles during a Contract Year subject to Buyer’s payment to
Seller of the Additional Cycles Payment Amount for any
Throughput that exceeds during a
Contract Year.
Maximum Average Annual
Stored Energy Level
. If the year-to-date average Stored Energy Level
exceeds at any time during the second half
of a Contract Year, then the Parties shall confer and
determine a mutually agreeable cure plan to achieve an
annual averaged Stored Energy Level of
for such Contract Year.
If Parties cannot reach a mutually agreeable cure plan
within a two (2) week period following initiation of
discussions, then Seller may provide Buyer upon
seventy-two (72) hours advance notice that the maximum
allowed Stored Energy Level shall be limited until the
CYTDA Stored Energy Level (“Cumulative Year-to-Date Stored Energy Level”) is less than , at which point in time the limitation shall be released.
Daily Dispatch Limits: Charging: 2 per day
Discharging: 2 per day
Grid Charging of Facility: Yes
Other Operating Limits: N/A
Ancillary Services Capability: Yes. Buyer is entitled to all Ancillary Services, products and other attributes, if any, associated with the Storage Facility, in each case as defined in the CAISO Tariff from time to time that the Facility is at the relevant time
actually physically capable of providing consistent with the terms and conditions of this Agreement, applicable
Law, the Interconnection Agreement, the Operating
Restrictions, and Prudent Operating Practice.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit R - 1
EXHIBIT R
METERING DIAGRAM
Preliminary Metering Diagram; Final Metering Diagram shall be provided by Seller at least thirty (30) days prior to the Commercial Operation Date.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC
Exhibit S - 1
EXHIBIT S
OTHER SELLER COMMITMENTS
Seller to check as applicable:
☐ Inclusion of contractors or subcontractors that are Veteran owned or from a DAC Zone ☐ At least fifty percent (50%) of labor sourced within a 50-mile radius ☐ At least [XX]% of materials sourced within a 50-mile radius ☐ US made equipment and components
☒ Pledge of community benefits (apprenticeships, scholarships, food programs, school programs, open space preservation, parks, etc.)
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit T - 1
EXHIBIT T
DIVERSITY REPORTING
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit T - 2
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit T - 3
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit T - 4
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit T - 5
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit T - 6
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit U - 1
EXHIBIT U
FORM OF COLLATERAL ASSIGNMENT AGREEMENT
FORM OF CONSENT AND AGREEMENT
([NAME OF CONTRACTING PARTY])
([NAME OF ASSIGNED AGREEMENT])
This COLLATERAL ASSIGNMENT AGREEMENT (this “Consent”), dated as of ___________, 20[ ], is executed by and among [NAME OF CONTRACTING PARTY], a [legal form of Contracting Party] organized under the laws of the State of [________] (the “Contracting Party”), [__________], a [___________] (the “Project Owner”), and [_____________], as collateral agent (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”) for various financial institutions named from time to time as Lenders under the Credit Agreement (as defined below) and any other parties (or any of their agents) who hold any other secured indebtedness permitted to be incurred under the Credit Agreement (the Collateral Agent and all such parties collectively, the “Secured Parties”).
A. The Project Owner owns, operates and maintains [_________________] (the “Project”).
B. The Contracting Party and the Project Owner have entered into the agreement specified in Schedule I hereto (as further amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the “Assigned Agreement”).
C. The Borrower, the Project Owner, the other affiliates of the Borrower as Guarantors, various financial institutions named therein from time to time as Lenders,[_________________] , as the Administrative Agent and Collateral Agent, have entered into a Credit Agreement, dated as of [________________](as amended, modified or supplemented from time to time, the “Credit Agreement”), providing for the extension of the credit facilities described therein.
D. As security for the payment and performance by the Project Owner of its obligations under the Credit Agreement and the other Financing Documents (as defined below) and for other obligations owing to the Secured Parties, the Project Owner has assigned all of its right, title and interest in, to and under, and granted a security interest in, the Assigned Agreement to the Collateral Agent pursuant to the Assignment and Security Agreement, dated as of [_____________________]between the Project Owner and the Collateral Agent (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof, the "Security Agreement", and, together with the Credit Agreement and any other financing documents relating to the issuance of the Notes, the “Financing Documents”).
E. It is a requirement under the Credit Agreement that the Project Owner cause the Contracting Party to execute and deliver this Consent.
NOW, THEREFORE as an inducement for Lenders to make the Loans, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto hereby agree as follows:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit U - 2
1. Consent to Assignment. The Contracting Party hereby acknowledges and consents to the pledge and assignment of all right , title and interest of the Project Owner in, to and under (but not its obligations, liabilities or duties with respect to) the Assigned Agreement by the Project Owner to the Collateral Agent pursuant to the Security Agreement.
2. Representations and Warranties. The Contracting Party represents and warrants the following as of the date hereof:
(a) No Amendments. [Except as described in Schedule I hereto,] there are no amendments, modifications or supplements (whether by waiver, consent or otherwise) to the Assigned Agreement, either oral or written.
(b) No Previous Assignments. The Contracting Party affirms that it has no notice of any assignment relating to the right, title and interest of the Project Owner in, to and under the Assigned Agreement other than the pledge and assignment to the Collateral Agent referred to in Section 1 above.
(c) No Termination Event: No Disputes. After giving effect to the pledge and assignment referred to in Section 1, and after giving effect to the consent to such pledge and assignment by the Contracting Party, to the actual knowledge of Contracting Party there exists no event or condition (a “Termination Event”) that would, either immediately or with the passage of time or giving of notice, or both, entitle either the Project Owner or the Contracting Party to terminate the Assigned Agreement or suspend the performance of its obligations under the Assigned Agreement. [Except as set forth on Schedule III hereto,] to the actual knowledge of Contracting Party there are no unresolved disputes between the parties under the Assigned Agreement and all amounts due under the Assigned Agreement as of the date hereof have been paid in full [, except as set forth on Schedule III hereto].
3. RIGHT TO CURE.
(a) From and after the date hereof and unless and until the Contracting Party shall have received written notice from the Collateral Agent that the lien of the Security Agreement has been released in full, the Collateral Agent shall have the right, but not the obligation, following an “event of default” or “default” (or any other similar event however defined) by the Project Owner under the Assigned Agreement, to pay all sums due under the Assigned Agreement by the Project Owner and to perform any other act, duty or obligation required of the Project Owner thereunder as described in Section 3(c) below; provided, that no such payment or performance shall be construed as an assumption by the Collateral Agent or any other Secured Party of any covenants, agreements or obligations of the Project Owner under or in respect of the Assigned Agreement.
(b) The Contracting Party agrees that it will not (i) terminate the Assigned Agreement [(other than pursuant to Section __ of the Assigned Agreement)]1or (ii) suspend the performance of any of its obligations under the Assigned Agreement without first 1 Insert applicable provision, if any, of the Assigned Agreement giving the Contracting Party a right to terminate the Assigned Agreement other than upon a default or other event or condition curable by the Project Owner.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit U - 3
giving the Collateral Agent notice and opportunity to cure as provided below. The Contracting Party further agrees that it will not assign any obligation under the Assigned Agreement without the prior consent of the Collateral Agent, except to the extent the Contracting Party may subcontract such obligations to other parties.
(c) If a Termination Event shall occur [(other than a termination pursuant to Section __ of the Assigned Agreement)]2, and the Contracting Party shall then be entitled to and shall desire to terminate the Assigned Agreement or suspend the performance of any of its obligations under the Assigned Agreement, the Contracting Party shall, prior to exercising such remedies or taking any other action with respect to such Termination Event, give written notice to the Collateral Agent of such Termination Event. The Collateral Agent shall have the right to cure such Termination Event if Collateral Agent sends a written notice of its intention to cure to Contracting Party before the later of (i) the expiration of any cure period provided to the Project Owner and (ii) ten (10) Business Days after Collateral Agent’s receipt of notice of such default from Contracting Party. If the Collateral Agent elects to exercise its right to cure as herein provided, it shall have a period of [30]3 days after receipt by it of notice from the Contracting Party referred to in the preceding sentence in which to cure the Termination Event specified in such notice if such Termination Event consists of a payment default, or if such Termination Event is an event other than a failure to pay amounts due and owing by the Project Owner (a “Non-monetary Event”) the Collateral Agent must remedy or cure the default within ninety (90) days (or one hundred eighty (180) days in the event of bankruptcy of Project Owner or any foreclosure or similar proceeding if required by Collateral Agent to cure any default) after Contracting Party’s receipt of Collateral Agent’s notice of its intention to cure the applicable default; provided, however, that (i) if possession of the Project is necessary to cure such Non-monetary Event and the Collateral Agent has commenced foreclosure proceedings, the Collateral Agent will be allowed a reasonable time to complete such proceedings, and (ii) if the Collateral Agent is prohibited from curing any such Non-monetary Event by any process, stay or injunction issued by any governmental authority or pursuant to any bankruptcy or insolvency proceeding or other similar proceeding involving the Project Owner, then the time periods specified herein for curing a Termination Event shall be extended for the period of such prohibition. (d) Any curing of or attempt to cure any Termination Event shall not be construed as an assumption by the Collateral Agent or the other Secured Parties of any covenants, agreements or obligations of the Project Owner under or in respect of the Assigned Agreement.
4. REPLACEMENT AGREEMENTS. NOTWITHSTANDING ANY
PROVISION IN THE ASSIGNED AGREEMENT TO THE CONTRARY, IN THE EVENT
THE ASSIGNED AGREEMENT IS REJECTED OR OTHERWISE TERMINATED AS A
RESULT OF ANY BANKRUPTCY, INSOLVENCY, REORGANIZATION OR SIMILAR
PROCEEDINGS AFFECTING THE PROJECT OWNER, AT THE COLLATERAL AGENT’S REQUEST MADE WITHIN FORTY-FIVE (45) DAYS AFTER SUCH
REJECTION OR TERMINATION, THE CONTRACTING PARTY WILL ENTER INTO
A NEW AGREEMENT WITH THE COLLATERAL AGENT OR THE COLLATERAL 2 Insert applicable provision, if any, of the Assigned Agreement giving the Contracting Party a right to terminate the Assigned Agreement other than upon a default or other event or condition curable by the Project Owner.
3 Or longer cure period specified in Assigned Agreement.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit U - 4
AGENT’S DESIGNEE FOR THE REMAINDER OF THE ORIGINALLY SCHEDULED
TERM OF THE ASSIGNED AGREEMENT, EFFECTIVE AS OF THE DATE OF SUCH
REJECTION, WITH THE SAME COVENANTS, AGREEMENTS, TERMS,
PROVISIONS AND LIMITATIONS AS ARE CONTAINED IN THE ASSIGNED AGREEMENT; PROVIDED THAT CONTRACTING PARTY’S OBLIGATION TO
ENTER INTO THE NEW AGREEMENT IS SUBJECT TO THE COLLATERAL AGENT, OR THE COLLATERAL AGENT’S DESIGNEE, AS APPLICABLE, SATISFYING THE
REQUIREMENTS OF A PERMITTED TRANSFEREE SET FORTH IN THE ASSIGNED
AGREEMENT AND IS AN ENTITY THAT CONTRACTING PARTY IS PERMITTED TO CONTRACT WITH UNDER APPLICABLE LAW [IN ADDITION, IF COLLATERAL
AGENT OR ITS DESIGNEE, DIRECTLY OR INDIRECTLY, TAKES POSSESSION OF,
OR TITLE TO, THE PROJECT (INCLUDING POSSESSION BY A RECEIVER OR
TITLE BY FORECLOSURE OR DEED IN LIEU OF FORECLOSURE) AFTER ANY
SUCH REJECTION OR TERMINATION OF THE ASSIGNED AGREEMENT, PROMPTLY AFTER CONTRACTING PARTY’S WRITTEN REQUEST,
COLLATERAL AGENT MUST ITSELF OR MUST CAUSE ITS DESIGNEE TO PROMPTLY ENTER INTO A NEW AGREEMENT WITH CONTRACTING PARTY].4
5. SUBSTITUTE OWNER. THE CONTRACTING PARTY
ACKNOWLEDGES THAT IN CONNECTION WITH THE EXERCISE OF REMEDIES
FOLLOWING A DEFAULT UNDER THE FINANCING DOCUMENTS, THE
COLLATERAL AGENT MAY (BUT SHALL NOT BE OBLIGATED TO) ASSUME, OR
CAUSE ANY PURCHASER AT ANY FORECLOSURE SALE OR ANY ASSIGNEE OR
TRANSFEREE UNDER ANY INSTRUMENT OF ASSIGNMENT OR TRANSFER IN
LIEU OF FORECLOSURE TO ASSUME, ALL OF THE INTERESTS, RIGHTS AND
OBLIGATIONS OF THE PROJECT OWNER THEREAFTER ARISING UNDER THE ASSIGNED AGREEMENT; PROVIDED THAT SUCH PURCHASER, ASSIGNEE OR
TRANSFEREE MUST (I) MEET THE DEFINITION OF PERMITTED TRANSFEREE
SET FORTH IN THE ASSIGNED AGREEMENT AND (II) BE AN ENTITY THAT
CONTRACTING PARTY IS PERMITTED TO CONTRACT WITH UNDER
APPLICABLE LAW. IF THE INTEREST OF THE PROJECT OWNER IN THE
ASSIGNED AGREEMENT SHALL BE ASSUMED, SOLD OR TRANSFERRED AS
PROVIDED ABOVE, THE ASSUMING PARTY SHALL AGREE IN WRITING TO BE
BOUND BY AND TO ASSUME THE TERMS AND CONDITIONS OF THE ASSIGNED
AGREEMENT AND ANY AND ALL OBLIGATIONS TO THE CONTRACTING PARTY
ARISING OR ACCRUING THEREUNDER FROM AND AFTER THE DATE OF SUCH
ASSUMPTION, AND THE CONTRACTING PARTY SHALL CONTINUE TO
PERFORM ITS OBLIGATIONS UNDER THE ASSIGNED AGREEMENT IN FAVOR OF
THE ASSUMING PARTY AS IF SUCH PARTY HAD THEREAFTER BEEN NAMED AS THE “CUSTOMER” UNDER THE ASSIGNED AGREEMENT; PROVIDED THAT IF
THE COLLATERAL AGENT OR ITS DESIGNEE (OR ANY ENTITY ACTING ON BEHALF OF THE COLLATERAL AGENT, THE COLLATERAL AGENT’S DESIGNEE
OR ANY OF THE OTHER SECURED PARTIES) ASSUMES THE ASSIGNED
AGREEMENT AS PROVIDED ABOVE, IT SHALL NOT BE PERSONALLY LIABLE
FOR THE PERFORMANCE OF THE OBLIGATIONS THEREUNDER EXCEPT TO 4 Drafting Note: Bracketed language for consideration by and negotiation with Lenders.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit U - 5
THE EXTENT OF ALL OF ITS RIGHT, TITLE AND INTEREST IN AND TO THE PROJECT.
6. PAYMENTS. THE CONTRACTING PARTY SHALL MAKE ALL
PAYMENTS DUE TO THE PROJECT OWNER UNDER THE ASSIGNED AGREEMENT
DIRECTLY INTO THE ACCOUNT SPECIFIED ON SCHEDULE II HERETO, OR TO
SUCH OTHER PERSON OR ACCOUNT AS SHALL BE SPECIFIED FROM TIME TO
TIME BY THE COLLATERAL AGENT TO THE CONTRACTING PARTY IN WRITING
AND DELIVERED VIA CERTIFIED MAIL AND EMAIL AND SHALL INCLUDE
CONTACT INFORMATION FOR AN AUTHORIZED PERSON WHO IS AVAILABLE
BY TELEPHONE TO VERIFY THE AUTHENTICITY OF SUCH REQUESTED CHANGES. ALL PARTIES HERETO AGREE THAT EACH PAYMENT BY THE
CONTRACTING PARTY AS SPECIFIED IN THE PRECEDING SENTENCE OF
AMOUNTS DUE TO THE PROJECT OWNER FROM THE CONTRACTING PARTY
UNDER THE ASSIGNED AGREEMENT SHALL SATISFY THE CONTRACTING PARTY’S CORRESPONDING PAYMENT OBLIGATION UNDER THE ASSIGNED AGREEMENT.
7. NO AMENDMENTS. THE CONTRACTING PARTY
ACKNOWLEDGES THAT THE FINANCING DOCUMENTS RESTRICT THE RIGHT
OF THE PROJECT OWNER TO AMEND OR MODIFY THE ASSIGNED AGREEMENT,
OR TO WAIVE OR PROVIDE CONSENTS WITH RESPECT TO CERTAIN
PROVISIONS OF THE ASSIGNED AGREEMENT, UNLESS CERTAIN CONDITIONS SPECIFIED IN THE FINANCING DOCUMENTS ARE MET. THE CONTRACTING
PARTY SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COLLATERAL AGENT, AMEND OR MODIFY THE ASSIGNED AGREEMENT, OR
ACCEPT ANY WAIVER OR CONSENT WITH RESPECT TO CERTAIN PROVISIONS
OF THE ASSIGNED AGREEMENT, UNLESS THE CONTRACTING PARTY HAS
RECEIVED FROM THE PROJECT OWNER A COPY OF A CERTIFICATE
DELIVERED BY THE PROJECT OWNER TO THE COLLATERAL AGENT TO THE
EFFECT THAT SUCH AMENDMENT, MODIFICATION, WAIVER OR CONSENT HAS
BEEN MADE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE
FINANCING DOCUMENTS, WHICH MAY IN CERTAIN CIRCUMSTANCES
REQUIRE THE PRIOR WRITTEN CONSENT OF THE COLLATERAL AGENT THERETO.
8. ADDITIONAL PROVISIONS. [TO BE SPECIFIED IF NECESSARY TO CLARIFY THE ASSIGNED AGREEMENT.]
9. NOTICES. NOTICE TO ANY PARTY HERETO SHALL BE IN
WRITING AND SHALL BE DEEMED TO BE DELIVERED ON THE EARLIER OF: (A)
THE DATE OF PERSONAL DELIVERY, (B) POSTAGE PREPAID, REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR SENT BY EXPRESS
COURIER, IN EACH CASE ADDRESSED TO SUCH PARTY AT THE ADDRESS
INDICATED BELOW (OR AT SUCH OTHER ADDRESS AS SUCH PARTY MAY HAVE
THERETOFORE SPECIFIED BY WRITTEN NOTICE DELIVERED IN ACCORDANCE
HEREWITH), UPON DELIVERY OR REFUSAL TO ACCEPT DELIVERY, OR (C) IF AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit U - 6
TRANSMITTED BY FACSIMILE, THE DATE WHEN SENT AND FACSIMILE CONFIRMATION IS RECEIVED; PROVIDED THAT ANY FACSIMILE
COMMUNICATION SHALL BE FOLLOWED PROMPTLY BY A HARD COPY ORIGINAL THEREOF BY EXPRESS COURIER:
The Collateral Agent: [________________________]
[ ]
Attn: [ ]
Telephone No.: [ ]
Facsimile No.: [ ]
The Project Owner:
The Contracting Party:
10. SUCCESSORS AND ASSIGNS. THIS CONSENT SHALL BE
BINDING UPON AND SHALL INURE TO THE BENEFIT OF THE SUCCESSORS AND
ASSIGNS OF THE CONTRACTING PARTY, AND SHALL INURE TO THE BENEFIT
OF THE COLLATERAL AGENT, THE OTHER SECURED PARTIES, THE PROJECT OWNER AND THEIR RESPECTIVE SUCCESSORS, TRANSFEREES AND ASSIGNS.
11. LIABILITY. COLLATERAL AGENT AND PROJECT OWNER
HEREBY ACKNOWLEDGE AND AGREE THAT CONTRACTING PARTY IS
AUTHORIZED TO ACT IN ACCORDANCE WITH COLLATERAL AGENT’S
INSTRUCTIONS WITH RESPECT TO THIS CONSENT AND THE ASSIGNED
AGREEMENT, AND THAT CONTRACTING PARTY SHALL BEAR NO LIABILITY TO
COLLATERAL AGENT, PROJECT OWNER OR ANY OTHER PERSON UNDER THIS
CONSENT OR THE ASSIGNED AGREEMENT FOR ACTING IN ACCORDANCE WITH THIS CONSENT OR WITH COLLATERAL AGENT’S INSTRUCTIONS WITH RESPECT TO THIS CONSENT AND THE ASSIGNED AGREEMENT.
12. COUNTERPARTS. THIS CONSENT MAY BE EXECUTED IN ONE
OR MORE COUNTERPARTS WITH THE SAME EFFECT AS IF THE SIGNATURES THERETO AND HERETO WERE UPON THE SAME INSTRUMENT.
13. GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER.
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit U - 7
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Consent as of the date first written above. [NAME OF CONTRACTING PARTY]
By:
Name:
Title:
[________________________]
as Collateral Agent
By:
Name:
Title:
Acknowledged and Agreed:
[_____________________________]
By:
Name:
Title:
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit U - 8
Schedule I
Assigned Agreement
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit U - 9
Schedule II
Payment Instructions
(Section 6)
All payments due to the Project Owner pursuant to the Assigned Agreement shall be made to [INSERT REVENUE ACCOUNT INFORMATION].
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit U - 11
[Schedule III]
[Amounts Due and Unpaid under the Assigned Agreement
(Section 2(c))]
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit V - 1
EXHIBIT V
FORM OF ESTOPPEL CERTIFICATE
ESTOPPEL CERTIFICATE
(Energy Storage Service Agreement)
This ESTOPPEL CERTIFICATE (this “Estoppel Certificate”), dated as of ________ __, 202_, is provided by ___________________, a _________________ (“Buyer”).
RECITALS
A. Buyer and ______________________, a Delaware limited liability company (the “Project Company”) are parties to that certain Energy Storage Service Agreement, dated as of ______________, 202_ (the “Energy Storage Service Agreement”), in connection with the _______ storage project (“Storage Project”).
B. Pursuant to that certain [describe Lender financing agreement].
C. Pursuant to Section ____ of the [Lender financing agreement], the [Lenders] have required that this Estoppel Certificate be delivered as a condition precedent to the consummation of the transactions described therein.
NOW, THEREFORE, in consideration of the foregoing recitals, Buyer hereby certifies, agrees and acknowledges as follows as of the date hereof:
1. To Buyer’s actual knowledge, no default or event of default with respect to Buyer nor any other party has occurred under the Energy Storage Service Agreement, and there are no defaults or unsatisfied conditions presently existing (or which would exist after the passage of time and/or giving of notice) that would allow the Project Company or Buyer to terminate the Energy Storage Service Agreement.
2. To Buyer’s actual knowledge, there exists no event or condition that would, either immediately or with the passage of time or giving of notice, or both, entitle either the Project Company or Buyer to suspend the performance of its obligations under the Energy Storage Service Agreement.
3. As of the date hereof, to Buyer’s actual knowledge: (i) the Energy Storage Service Agreement is in full force and effect and has not been assigned, amended, supplemented or modified, (ii) there are no pending or threatened disputes or legal proceedings between Buyer and the Project Company, (iii) there is no pending or threatened action or proceeding involving or relating to Buyer before any court, tribunal, governmental authority or arbitrator which AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit V - 2
purports to affect the legality, validity or enforceability of the Energy Storage Service Agreement, (iv) there is no event, act, circumstance or condition constituting an event of force majeure under the Energy Storage Service Agreement, and (v) the Project Company owes no indemnity payments or other amounts to Buyer under the Energy Storage Service Agreement.
4. The execution, delivery and performance by Buyer of this Estoppel Certificate have been duly authorized by all necessary action on the part of Buyer and do not require any approval or consent of any other person or entity and do not violate any provision of any law, regulation, order, judgment, injunction or similar matters or breach any agreement presently in effect with respect to or binding on Buyer.
5. [Additional provisions to be included if necessary to clarify the Energy Storage Service Agreement.]
6. This Estoppel Certificate shall be governed by the laws of the State of California, without regard to principles of conflict of law.
[Signature page follows]
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC Exhibit V - 3
IN WITNESS WHEREOF, Buyer has caused this Estoppel Certificate to be executed by its undersigned authorized officer as of the date first set forth above.
_______________________________
By: _____________________________
Name:
Title
AI #09 Att.: Energy Storage Agreement with Key Energy Storage, LLC 1 Energy Storage Agreements with
Corby Energy Storage LLC
and Key Energy Storage LLC
MCE BOARD OF DIRECTORS| OCTOBER 19, 2023
Overview of Today’s Presentation
2 • Open Season Overview
• Corby Energy Storage, LLC – Project Overview
• Key Energy Storage, LLC – Project Overview
• Recommendation
• Q/A
What is Open Season?
3 MCE’s annual solicitation for large-scale
renewable energy and storage projects
Open Season 2023 Overview
4 • Goals
– Meet Integrated Resource Planning (IRP) targets for renewable energy and energy storage
– Add Resource Adequacy (RA) supply to the portfolio
– Add resources to fulfill the Mid Term Reliability (MTR) obligations as outlined in the California Public Utilities Commission (CPUC) decisions D.21-06-035 and D.23-02-040
• Product Types
– Renewable Product Content Category 1 energy (PCC1)
– Paired & stand-alone energy storage
Why target energy storage resources?
5 • Ability to shift energy to
fill open positions during
critical hours
• Helps MCE meet its
resource adequacy
targets
• Valuable contribution
towards meeting MTR
compliance obligations
Simulated effect of adding energy storage projects
to MCE’s existing portfolio - 2030 Snapshot
Outstanding MTR Requirements
6 Deadline Net Qualifying
Capacity Technology
6/2026 61 4Hr Energy Storage
6/2027 61 4Hr Energy Storage
6/2028 29 8Hr Energy Storage
The Path to MTR Compliance
7 Two
Contracts
8 1. Corby Energy Storage, LLC
• Energy Storage Agreement (ESA)
• 100 MW
• 4 Hour Duration
2. Key Energy Storage, LLC
• Energy Storage Agreement (ESA)
• 35 MW
• 8 Hour Duration
Overview:
Corby Energy Storage, LLC
9 • Stand-alone battery
energy storage project
located in Solano County
• 100 MW / 4-hour
discharge capacity
• Owned and operated by
NextEra Energy Resources
Fifth Standard Energy Storage
Fresno County, CA
• Full-toll contract
includes energy, RA
capacity and ancillary
services
• On-line date: 4/1/2027
• 15-year term
• No credit/collateral
obligations for MCE
10 Corby Energy
Storage, LLC
Overview:
Key Energy Storage, LLC
11 • Stand-alone battery
energy storage project
located in Fresno County
• 35 MW / 8-hour discharge
capacity
• Owned and operated by
NextEra Energy Resources
Fifth Standard Energy Storage
Fresno County, CA
• Full-toll contract
includes energy, RA
capacity and ancillary
services
• On-line date: 4/1/2027
• 15-year term
• No credit/collateral
obligations for MCE
12 Key Energy
Storage, LLC
Notable
Terms &
Conditions
• Financial incentives for
performance
• Union labor requirement
• Security deposit to ensure
milestones are met
• Seller would make a one-time
contribution of $100,000 per project
to community benefit initiatives
• RA delivery guarantee
• Fixed price over the contract term
with no annual escalation
13 Recommendation
14 Approve:
1. Energy Storage Agreement between MCE and Corby Energy Storage, LLC
2. Energy Storage Agreement between MCE and Key Energy Storage, LLC Rationale:
• The project type, size, specifications and commercial operation date fit the requirements detailed in the CPUC MTR mandated procurement order • Projects are at a mature stage of development, and will be constructed by a sophisticated counterparty with a successful track record • Full toll battery projects provide additional benefits including portfolio balancing and flexibility for hourly accounting
• Procuring now provides certainty in an uncertain market for resource adequacy Thank You!
David Potovsky
Manager of Power Resources
[email protected]
15 October 19, 2023
TO: MCE Board of Directors
FROM: Dawn Weisz, CEO
RE: MCE Climate Action Leadership Award (Agenda Item #10) Dear Board Members:
Summary:
MCE created the Climate Action Leadership Award in 2020 to celebrate policymakers and advocates who have made significant contributions toward California’s fight against climate change through clean energy policies that benefit Community Choice Aggregation (CCA) customers.
At the August 2023 Board meeting, your Board approved staff's recommendation to present the 2023 Climate Action Leadership Award to Assemblymember Damon Connolly, who is a founding Board Member of MCE and was instrumental in building the CCA movement in California. Assemblymember Connolly continues to champion community choice and clean energy as a newly elected Assemblymember representing Marin and Sonoma counties.
Background:
Each year, MCE’s staff have recommended, and MCE’s Board has selected, an individual who has made an important impact during the past year or over an extended career in service to the public. The award is open to 1) regulators, legislators, and other government decision-makers; and 2) stakeholders who have partnered with MCE to effectively advocate for policies that benefit MCE’s communities and our planet.
In 2020, the inaugural Climate Action Leadership Award was presented to California Senator Mike McGuire (D-Healdsburg), and the 2021 Leadership Award was presented to California Assemblymember Cecilia Aguiar-Curry (D-Winters). Last year, the 2022 Leadership Award recipients included the four federal Senators and Members of Congress who secured MCE’s first-ever community-directed spending proposals:
Senator Dianne Feinstein, Senator Alex Padilla, Congressman John Garamendi, and Congressman Jared Huffman.
Assemblymember Connolly has served the North Bay in the California State Assembly since November 2022. He holds positions on key environmental and energy committees, including the Committees on Utilities and Energy, Environmental Safety and Toxic Materials, and the Budget Subcommittee on Climate Crisis, Resources, Energy, and Transportation, as well as select committees on Electric Vehicles and Charging Infrastructure and Offshore Wind Energy in California. In his first year in office, Assemblymember Connolly authored 22 bills, including Assembly Bill 998, which identifies opportunities to upgrade existing and shuttered biomass combustion plants to newer, cleaner technologies. This bill will support greenhouse gas reduction and air quality improvements in nearby communities, a key focus in Assemblymember Connolly’s advocacy.
With nearly two decades in public service, Assemblymember Connolly has served as Marin County Supervisor, Vice Mayor of San Rafael, School Board President, and California Deputy Attorney General. In his role as County Supervisor, Assemblymember Connolly set Marin County on a path toward 100 percent renewable energy without compromising the County’s fiscal house. In addition to being a founding MCE Board Member, Assemblymember Connolly served as the Chair of the Board from June 2011 to November 2014.
Always a champion of clean energy, in his first year in office Assemblymember Connolly has shown his commitment to community choice and support of MCE. His leadership has and will continue to ensure climate protection for the State in addition to money for California communities across a wide range of issue areas.
Fiscal Impacts:
None
Recommendation:
Present the 2023 Climate Action Leadership Award to Assemblymember Damon Connolly.
October 19, 2023
TO: MCE Board of Directors
FROM: Alexandra McGee, Director of Strategic Initiatives Catalina Murphy, General Counsel
RE: Proposed Resolution No. 2023-11 Accepting Award number DE-EE0010626 “Charged by Public Power - Community Voices & Community Choice” from the U.S. Department of Energy
(Agenda Item #11)
ATTACHMENTS: A. Proposed Resolution No. 2023-11 Accepting Award number DE-EE0010626 “Charged by Public Power - Community Voices & Community Choice” from the U.S. Department of Energy
B. Award Letter from the U.S. Department of Energy
Dear Board Members:
Summary:
The Proposed Resolution No. 2023-11 Accepting Award number DE-EE0010626 “Charged by Public Power – Community Voices & Community Choice” from the U.S.
Department of Energy (“Proposed Resolution”) seeks to have your Board accept the funds awarded to MCE for a community participatory budgeting process in key communities to inform clean transportation investments (the “Project”). The funds will be administered by the Energy Efficiency and Renewable Energy (EERE) Office of the U.S.
Department of Energy (“DOE”) and is for $1,000,000 (“Awarded Funds”) with a required cost share by MCE in the amount of $279,006.
The Proposed Resolution would allow MCE to accept the Awarded Funds and enter into the necessary agreements with the DOE to use the funding for the Project described above, consistent with the DOE grant requirements. Staff recommends approval of the Proposed Resolution.
Background:
The objectives of this Project are to engage and collaborate with priority community stakeholders in the planning for, installation of, and deployment of electric vehicle chargers and clean mobility solutions; and from these experiences, to develop best practices for improved future electric vehicle (“EV”) infrastructure investments in disadvantaged communities. This will expand upon MCE’s existing EV programs and infuse them with community input to allow for solutions that are more sensitive to local needs and opportunities.
The Project will be conducted in 3 phases:
Phase 1: Planning and Community Engagement. Phase 1 will commence with planning activities necessary for implementing in-person and online focus groups, as well as community surveys to guide the siting of EV chargers and implementation of mobility services. This phase will also include designing a webpage available to resident participants and gathering select partners into a Community Electric Transportation Council.
Phase 2: Implementation, Installation and Commissioning. Phase 2 includes meeting with site hosts to determine the viability of the installation and commissioning of the EV chargers at priority community sites. This includes at least 20 Level 1 EV chargers, 18 Level 2 EV chargers, and 8 DC Fast Chargers in locations benefiting underserved communities.
Phase 3: Deployment & Operations, Data Collection and Analysis, and Final Reporting.
Phase 3 will confirm successful operations of the EV chargers and engage with possible partners including public fleets and existing carshare, e-Bike and e-Scooter services, based on the findings from Phase 1. Data collection and analysis of the EV charger operations and mobility services will be included in the reporting and lessons learned.
This includes at least 4 fleet electrification plans, 12 community-driven EV Charging Deployment Reports, and the final grant report.
Fiscal Impacts:
If approved, MCE will receive $1,000,000 from the DOE to fund a community participatory budgeting process in key communities to inform clean transportation investments. MCE would also be required to provide a cost share in the amount of $279,006, making the total project cost $1,279,006. MCE’s cost share would be funded through MCE’s FY 23/24 Local Programs Fund of the Board-approved budget.
Recommendation:
Approve Proposed Resolution No. 2023-11 Accepting Award number DE-EE0010626 “Charged by Public Power - Community Voices & Community Choice” from the U.S.
Department of Energy.
RESOLUTION NO. 2023-11
A RESOLUTION OF THE BOARD OF DIRECTORS OF
MARIN CLEAN ENERGY ACCEPTING AWARD NUMBER DE-EE0010626 FROM THE U.S. DEPARTMENT OF ENERGY
WHEREAS, Marin Clean Energy (“MCE”) is a joint powers authority established on December 19, 2008, and organized under the Joint Exercise of Powers Act (Government Code Section 6500 et seq.); and
WHEREAS, MCE members include the following communities: the County of Marin, the County of Contra Costa, the County of Napa, the County of Solano, the City of American Canyon, the City of Belvedere, the City of Benicia, the City of Calistoga, the City of Concord, the Town of Corte Madera, the Town of Danville, the City of El Cerrito, the Town of Fairfax, the City of Fairfield, the City of Lafayette, the City of Larkspur, the City of Martinez, the City of Mill Valley, the Town of Moraga, the City of Napa, the City of Novato, the City of Oakley, the City of Pinole, the City of Pittsburg, the City of Pleasant Hill, the City of San Ramon, the City of Richmond, the Town of Ross, the Town of San Anselmo, the City of San Pablo, the City of San Rafael, the City of Sausalito, the City of St. Helena, the Town of Tiburon, the City of Vallejo, the City of Walnut Creek, and the Town of Yountville; and
WHEREAS, the Energy Efficiency and Renewable Energy (“EERE”) Office of the U.S. Department of Energy (“DOE”) is responsible for processing and administering an award; and
WHEREAS, MCE has been awarded a grant in the amount for $1,000,000 (“MCE Awarded Funds”) with a required cost share by MCE in the amount of $279,006 to perform a community participatory budgeting process in key communities to inform clean transportation investments. For an award that requires cost share, the DOE would provide $1,000,000, and MCE would be required to contribute $279,006 (“Match Funds”) to $1,279,006; and
WHEREAS, MCE intends to use the MCE Awarded and Match Funds in furtherance of MCE’s existing clean transportation efforts to engage and collaborate with priority community stakeholders in the planning for, installation of, and deployment of electric vehicle chargers and clean mobility solutions; and from these experiences, to develop best practices for improved future electric vehicle (“EV”) infrastructure investments in disadvantaged communities; and
WHEREAS, the DOE may approve funding allocations for the MCE Awarded Funds, subject to the terms and conditions of the award, the grant agreement, and any other any other requirements between DOE and MCE.
NOW, THEREFORE, BE IT RESOLVED, by the MCE Board of Directors:
1. If MCE receives the MCE Awarded Funds from the DOE pursuant to the above referenced award, it represents and certifies that it will use all such funds in a manner consistent and in compliance with all applicable state and federal statutes, rules, regulations, and laws, including without limitation all AI #11 Att. A: Prop. Resolution No. 2023-11 Accepting Award number DE-EE0010626 “Charged by Public Power - Comm. Voices rules and laws regarding the award, as well as the grant agreement and any other requirements between DOE and MCE.
2. The Chief Executive Officer of MCE (“CEO”) is hereby authorized and directed to receive the MCE Awarded Funds, in an amount not to exceed $1,000,000 from the DOE and provide Match Funds of $279,006 by MCE, in accordance with all applicable rules and laws.
3. The CEO hereby agrees to use the MCE Awarded and Match Funds for eligible activities as approved by DOE and in accordance with all program requirements, and other rules and laws, as well as in a manner consistent and in compliance with the grant requirements.
4. The CEO is authorized to execute the necessary grant agreements and any subsequent or modifications thereto, as well as any other documents necessary to complete the receipt of the MCE Awarded Funds, as DOE may deem appropriate.
PASSED AND ADOPTED at a regular meeting of the MCE Board of Directors on this 19th day of October 2023, by the following vote:
AYES NOES ABSTAIN ABSENT
County of Marin
Contra Costa County
County of Napa
County of Solano
City of American Canyon
City of Belvedere
City of Benicia
City of Calistoga
City of Concord
Town of Corte Madera
Town of Danville
City of El Cerrito
Town of Fairfax
City of Fairfield
City of Lafayette
City of Larkspur
City of Martinez
City of Mill Valley
Town of Moraga
City of Napa
AI #11 Att. A: Prop. Resolution No. 2023-11 Accepting Award number DE-EE0010626 “Charged by Public Power - Comm. Voices City of Novato
City of Oakley
City of Pinole
City of Pittsburg
City of Pleasant Hill
City of San Ramon
City of Richmond
Town of Ross
Town of San Anselmo
City of San Pablo
City of San Rafael
City of Sausalito
City of St. Helena
Town of Tiburon
City of Vallejo
City of Walnut Creek
Town of Yountville
______________________________________
CHAIR, MCE
Attest:
___________________________________________
SECRETARY, MCE
AI #11 Att. A: Prop. Resolution No. 2023-11 Accepting Award number DE-EE0010626 “Charged by Public Power - Comm. Voices
1. Award No. 2. Modification No. 3. Effective Date 4. CFDA No.
DE-EE0010626 10/01/2023 81.086
ASSISTANCE AGREEMENT
1125 TAMALPAIS AVE
7. Period of Performance
10/01/2023
through
12/31/2026
6. Sponsoring Office
Energy Effcy & Renewable Energy
EE-1
U.S. Department of Energy
1000 Independence Avenue, S.W.
Washington DC 20585
SAN RAFAEL CA 949013221
Attn: Catalina Murphy
MARIN CLEAN ENERGY
5. Awarded To
Other
Cooperative Agreement
Grant See Page 2 23EE003052
8. Type of Agreement 9. Authority 10. Purchase Request or Funding Document No.
X
11. Remittance Address 12. Total Amount 13. Funds Obligated
MARIN CLEAN ENERGY
Attn: Catalina Murphy
Sacramento CA 95833
Govt. Share: $1,000,000.00
Cost Share : $279,006.00
Total : $1,279,006.00
This action: $1,000,000.00
Total : $1,000,000.00 2485 Natomas Park Drive
Brett C. Aristegui
Morgantown WV 26505-2353
3610 Collins Ferry Road
NATIONAL ENERGY TECH LAB
U.S. DOE/NETL
Phone: 412-386-4641
14. Principal Investigator 15. Program Manager 16. Administrator Payment - Direct Payment See Attachment 2
from U.S. Dept of Treasury from U.S. Dept of Treasury
Payment - Direct Payment
17. Submit Payment Requests To 18. Paying Office 19. Submit Reports To
20. Accounting and Appropriation Data
05450-2023-31-232445-41999-1004893-0000000-0000000-0000000
21. Research Title and/or Description of Project
Charged by Public Power - Community Voices & Community Choice For the Recipient For the United States of America
22. Signature of Person Authorized to Sign 25. Signature of Grants/Agreements Officer
23. Name and Title 24. Date Signed 26. Name of Officer 27. Date Signed Kelly A. Haught 09/28/2023
AI #11 Att. B: Award Letter from the U.S. Department of Energy
CONTINUATION SHEET
REFERENCE NO. OF DOCUMENT BEING CONTINUED
NAME OF OFFEROR OR CONTRACTOR
ITEM NO. SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
PAGE OF
(A) (B) (C) (E) (F)
DE-EE0010626 2 3
MARIN CLEAN ENERGY
(D)
UEI: J6WWDNMWMGQ1
Period of Performance:10/1/2023 - 12/31/2026
Budget Period:10/1/2023 - 12/31/2026
Department of Energy Contract Specialist:
Ashley Dew
412-386-9423
[email protected]
Recipient Business Point of Contact:
Joy Massey
415-464-6651 ext. 321
[email protected]
Recipient Principal Investigator:
Alice Havenar Daughton
925-378-6370
[email protected]
**************************************************
Public Law (P.L.) 102-486, Energy Policy Act
(EPAct) of 1992, as amended by P.L. 109-58, EPAct
2005, Section 911, as amended (codified at 42
U.S.C. § 16191) and Sections 801 and 805, as
amended (codified at 42 U.S.C. § 16154), and P.L.
110-140, Energy Independence and Security Act of
2007 (EISA 2007), Section 131, as amended
(codified at 42 U.S.C. § 17011). Additional
citations for these authorities include the
following:
• Title VII, Subtitles B, C, D of EPACT 2005 (42
U.S.C. §§ 16061-16093)
• Sections 131-136 of EISA 2007 (42 U.S.C. §§
17011-17013)
ASAP: YES Extent Competed: COMPETED Davis-Bacon
Act: NO PI: Alice H. Daughton
Fund: 05450 Appr Year: 2023 Allottee: 31 Report
Entity: 232445 Object Class: 41999 Program:
1004893 Project: 0000000 WFO: 0000000 Local Use:
0000000
AI #11 Att. B: Award Letter from the U.S. Department of Energy JULY 2004
AI #11 Att. B: Award Letter from the U.S. Department of Energy mceCleanEnergy.org
Financial Statements
Years Ended March 31, 2023 & 2022 with Report of Independent Auditors AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
YEARS ENDED MARCH 31, 2023 AND 2022
TABLE OF CONTENTS
Independent Auditor’s Report ………………………………………………….......... 1 Management’s Discussion and Analysis (unaudited) ………………………………... 3 Basic Financial Statements:
Statements of Net Position …………………………………………………… 9
Statements of Revenues, Expenses and Changes in Net Position …................ 10 Statements of Cash Flows ……………………………………………………. 11
Notes to the Basic Financial Statements ……………………………………… 13 AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
Independent Auditors' Report
To the Board of Directors of
Marin Clean Energy
Opinion
We have audited the accompanying financial statements of Marin Clean Energy (MCE), as of and for the years ended March 31, 2023 and 2022, and the related notes to the financial statements, which collectively comprise the MCE's basic financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of MCE as of March 31, 2023 and 2022, and the changes in financial position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of MCE and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 11, MCE adopted the provisions of GASB Statement No. 87, Leases, effective April 1, 2022. Accordingly, the accounting changes have been retroactively applied to prior periods presented. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the MCE's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 1 Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020-2022 Baker Tilly US, LLP AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the MCE's internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the MCE's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that Management's Discussion and Analysis be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Madison, Wisconsin
August 30, 2023
2 AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
3 Please refer to Independent Auditors’ report.
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED MARCH 31, 2023 AND 2022
The Management’s Discussion and Analysis provides an overview of Marin Clean Energy’s (MCE) financial activities as of and for the years ended March 31, 2023, and 2022. The information presented here should be considered in conjunction with the audited financial statements.
BACKGROUND
The formation of MCE was made possible by the passage, in 2002, of California Assembly Bill 117, enabling communities to purchase power on behalf of their residents and businesses and creating competition in power generation.
MCE was created as a California Joint Powers Authority (JPA) on December 19, 2008. MCE was established to provide electric power and related benefits within MCE’s service area, including developing a wide range of renewable energy sources and energy efficiency programs. Governed by an appointed board of directors, MCE has the rights and powers to set rates and charges for electricity and services it furnishes, incur indebtedness, and issue bonds or other obligations. MCE is responsible for the acquisition of electric power for its service area.
Financial Reporting
MCE presents its financial statements as an enterprise fund under the economic resources measurement focus and accrual basis of accounting, in accordance with Generally Accepted Accounting Principles (GAAP) for proprietary funds, as prescribed by the Governmental Accounting Standards Board (GASB).
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED MARCH 31, 2023 AND 2022
(Continued)
4 Contents of this Report
This report is divided into the following sections:
Management discussion and analysis.
The Basic Financial Statements:
o The Statements of Net Position include all of MCE’s assets, liabilities, deferred inflows of resources and net position and provides information about the nature and amount of resources and obligations at a specific point in time. o The Statements of Revenues, Expenses, and Changes in Net Position report all of MCE’s revenue and expenses for the years shown.
o The Statements of Cash Flows report the cash provided and used by operating activities, as well as other sources and uses, such as capital and investing activities. o Notes to the Basic Financial Statements, which provide additional details and information related to the basic financial statements.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED MARCH 31, 2023 AND 2022
(Continued)
5 FINANCIAL HIGHLIGHTS
The following table is a summary of MCE’s assets, liabilities, deferred inflows of resources and net position and a discussion of significant changes for the years ended March 31:
2023 2022 (Restated) 2021 (Restated)
Current assets 287,116,314 $ 271,986,377 $ 252,069,094 $ Noncurrent assets
Capital and lease assets, net 1,818,709 2,049,223 3,837,126 Other noncurrent assets 75,742,193 15,969,822 15,360,190 Total noncurrent assets 77,560,902 18,019,045 19,197,316 Total assets 364,677,216 290,005,422 271,266,410
Current liabilities 89,968,725 70,434,083 64,794,643
Noncurrent liabilities 536,645 1,364,363 2,121,460
Total liabilities 90,505,370 71,798,446 66,916,103
Deferred inflows of resources 30,000,000 15,000,000 15,000,000 Net position:
Net investment in capital assets 508,444 693,493 958,569 Unrestricted 243,663,402 202,513,483 188,391,738
Total net position 244,171,846 $ 203,206,976 $ 189,350,307 $ Current assets
Current assets modestly increased from $272,000,000 at the end of 2022 to $287,000,000 at the end of 2023. Current assets at the end of 2023 and were primarily comprised of cash and investments of $173,00,000, accounts receivable of $66,000,000, and accrued revenue of $31,000,000. Accrued revenue differs from accounts receivable in that it represents electricity provided to MCE customers that has not yet been invoiced.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED MARCH 31, 2023 AND 2022
(Continued)
6 Noncurrent assets
Capital assets are reported net of depreciation. Each year, the change is mostly due to leasehold improvements at MCE’s office less depreciation expense. Capital assets held by MCE include leasehold improvements, furniture, and equipment. MCE does not own assets used for electric generation or distribution.
Leased assets are reported in accordance with Governmental Accounting Standards Board No. 87 (GASB 87) that was implemented during 2023, including a restatement back to 2021. According to GASB, the Statement aims to increase the usefulness of governments’ financial statements by requiring reporting of certain lease liabilities that previously were not reported.
Other noncurrent assets primarily include investments of $48,000,000 as well as $30,000,000 in an Operating Reserve Fund to defer revenue for later years when financial results may not be as strong or are stressed. By postponing revenue recognition to future years, MCE will be positioned to avoid sudden rate increases to address unanticipated spikes in energy costs and other unforeseen circumstances.
The increase in 2023 is a result of MCE’s operating surplus which was used to purchase various investments, primarily U.S. Treasury securities.
Current liabilities
The largest components of current liabilities is the cost of electricity delivered to customers that is not yet paid by MCE and unexpended program advances from grantors. Current liabilities increased each year due to the increased demand from new customers, as well as price increases of certain energy products, and funds received from grantors.
Noncurrent liabilities
Included in this category is the long-term portion of lease payments for MCE’s office premises.
The reduction each year relates to amortization of the liability.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED MARCH 31, 2023 AND 2022
(Continued)
7 The following table is a summary of MCE’s results of operations and a discussion of significant changes for years ended March 31:
2023 2022 (Restated) 2021 (Restated)
Operating revenues 636,588,526 $ 469,123,209 $ 439,262,151 $ Nonoperating revenues 4,226,302 6,216,069 -
Investment income 4,007,603 584,054 1,784,590
Total income 644,822,431 475,923,332 441,046,741
Operating expenses 603,621,093 461,805,695 413,306,149
Nonoperating expenses 236,468 260,968 195,825
Total expenses 603,857,561 462,066,663 413,501,974
Change in net position 40,964,870 $ 13,856,669 $ 27,544,767 $ Operating revenues
Operating revenues increased each year from 2021 to 2023, primarily from territory expansion and increases in customer rates. In 2023, an increase in the number of customer accounts by 6.5% related to the enrollment of Fairfield, produced approximately $30,000,000 in additional revenue and a 32% increase in average customer retail rates produced approximately $145,000,000 in additional revenue. MCE also receives revenues from sources other than retail customer sales.
These sources include wholesale energy sales to other suppliers, as well as grant income used to assist with various customer programs.
Nonoperating revenues
Grant income from the California Arrearage Payment Plan (CAPP) is included in nonoperating revenues. This grant first became available in 2022.
Investment income
Investment income fluctuated each year due to changes in market interest rates as well as the amount available to be invested.
Operating expenses
For all the years presented, the largest expense was the cost of electricity. Operating expenses increased each year, primarily due to increased prices for certain products in the energy markets.
MCE procures energy from a variety of sources to minimize this risk and maintain a balanced renewable power portfolio.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED MARCH 31, 2023 AND 2022
(Continued)
8 ECONOMIC OUTLOOK
In the normal course of business, MCE enters into various agreements, including for renewable energy agreements, the procurement of power and electrical capacity and other power purchase agreements. MCE enters into power purchase agreements to comply with state law and elevated voluntary targets for renewable and greenhouse gas (GHG) free products as described in its Integrated Resource Plans. California law established a Renewable Portfolio Standard (RPS) that requires load-serving entities (“LSEs”), such as MCE, to gradually increase the amount of renewable energy they deliver to their customers. Senate Bill (“SB”) 100, signed by California’s Governor in September 2018, directs LSEs to supply 60% of their retail sales with RPS-eligible resources by 2030. MCE began supplying its retail sales with 60% RPS-eligible resources in 2017, 13 years ahead of the SB 100 schedule. MCE has been supplying 90% GHG free energy since 2017 and anticipates reaching 95% in calendar year 2023 and continuing to do so into the future In addition, pursuant to California SB 350 (signed into law in October 2015), at least 65 percent of the procurement a retail seller, such as MCE, counts toward its renewables portfolio standard requirement for each compliance period shall be from contracts of ten years or more in duration (“long-term contracts”), starting with compliance period 4 (which began January 1, 2021). As of March 31, 2021, MCE has executed RPS contracts of ten years or more in duration that are projected to meet MCE’s SB 350 long-term contracting requirement through 2027, and MCE is planning to continue its long-term RPS procurement as opportunities arise.
MCE manages risks associated with these commitments by aligning purchase commitments with expected demand for electricity and by securing a diversity of technologies, geographical locations, and suppliers. Expected obligations under power purchase agreements totaled approximately $4.2 billion as of March 31, 2023 and $2.7 billion as of March 31, 2022.
Management intends to continue its conservative use of financial resources and expects ongoing operating surpluses.
REQUEST FOR INFORMATION
This financial report is designed to provide MCE’s board members, stakeholders, customers, and creditors with a general overview of MCE’s finances and to demonstrate MCE’s accountability for the funds under its stewardship.
Please address any questions about this report or requests for additional financial information to the Chief Financial Officer, 1125 Tamalpais Avenue, San Rafael, CA 94901.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
BASIC FINANCIAL STATEMENTS
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
9 The accompanying notes are an integral part of these financial statements
STATEMENTS OF NET POSITION
MARCH 31, 2023 AND 2022
2023 2022 (Restated)
Current assets
Cash and cash equivalents - unrestricted $ 73,348,263 169,627,430 Accounts receivable, net of allowance 66,401,473 46,297,848 Accrued revenue 31,180,447 20,513,811
Other receivables 1,985,508 2,317,347
Prepaid expenses 651,310 4,814,302
Restricted cash 33,782,947 16,052,232
Investments 68,841,532 -
Deposits 10,924,834 12,363,407
Total current assets 287,116,314 271,986,377
Noncurrent assets
Cash and cash equivalents - restricted 30,000,000 15,000,000 Investments 45,538,694 -
Lease assets, net of amortization 1,219,882 2,049,223
Capital assets, net of depreciation 598,827 765,730
Deposits 203,499 204,092
Total noncurrent assets 77,560,902 18,019,045
Total assets 364,677,216 290,005,422
Current liabilities
Accrued cost of electricity 45,803,423 41,701,034
Accounts payable 4,071,832 3,010,634
Other accrued liabilities 1,845,922 1,748,318
User taxes and energy surcharges due to other governments 3,112,581 2,151,268 Security deposits - energy suppliers 578,400 5,013,500
Lease liabilities 773,620 757,097
Advances from grantors - restricted 33,782,947 16,052,232 Total current liabilities 89,968,725 70,434,083
Noncurrent liabilities
Lease liabilities 536,645 1,364,363
Total liabilities 90,505,370 71,798,446
Operating Reserve Fund 30,000,000 15,000,000
Net position
Net investment in capital assets 508,444 693,493
Unrestricted 243,663,402 202,513,483
Total net position $ 244,171,846 203,206,976
NET POSITION
ASSETS
LIABILITIES
DEFERRED INFLOWS OF RESOURCES
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
10 The accompanying notes are an integral part of these financial statements
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
YEARS ENDED MARCH 31, 2023 AND 2022
2023 2022 (Restated)
OPERATING REVENUES
Electricity sales, net 633,836,160 $ 458,935,624 $
Rate stabilization (15,000,000) -
Grant revenue 10,532,421 9,830,732
Other revenue 7,219,945 356,853
Total operating revenues 636,588,526 469,123,209
OPERATING EXPENSES
Cost of electricity 559,107,368 421,522,767
Contract services 19,389,252 19,777,790
Staff compensation 17,193,096 14,263,357
Other operating expenses 6,935,136 5,204,378
Depreciation and amortization 996,241 1,037,403
Total operating expenses 603,621,093 461,805,695
Operating income 32,967,433 7,317,514
NONOPERATING REVENUES (EXPENSES)
Grant revenue 4,226,302 6,216,069
Investment income 4,007,603 584,054
Finance costs (236,468) (260,968)
Nonoperating revenues (expenses), net 7,997,437 6,539,155 CHANGE IN NET POSITION 40,964,870 13,856,669
Net position at beginning of year 203,206,976 189,350,307 Net position at end of year $ 244,171,846 $ 203,206,976 AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
11 The accompanying notes are an integral part of these financial statements
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2023 AND 2022
2023 2022 (Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 615,120,232 $ 462,539,471 $
Receipts from grantors 35,646,753 22,277,682
Other operating receipts 47,962,860 1,158,411
Payments to suppliers for electricity and collateral (594,359,829) (446,651,804) Payments for other goods and services (32,597,611) (31,732,757) Payments for staff compensation (16,961,121) (13,990,493) Payments of tax and surcharges to other governments (9,533,701) (7,180,093) Net cash provided (used) by operating activities 45,277,583 (13,579,583)
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Grant revenue 4,226,302 6,216,069
Finance costs paid (182,127) (180,910)
Net cash provided by non-capital
financing activities 4,044,175 6,035,159
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments of lease liabilities (952,165) (937,240)
Payment to acquire capital assets - (22,218)
Net cash used by capital and related
financing activities (952,165) (959,458)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment income received 2,475,425 582,529
Proceeds from investment sales 16,100,000 -
Purchase of investments (130,493,470) -
Net cash provided (used) by investing activities (111,918,045) 582,529 Net change in cash and cash equivalents (63,548,452) (7,921,353) Cash and cash equivalents at beginning of year 200,679,662 208,601,015 Cash and cash equivalents at end of year 137,131,210 200,679,662 Reconciliation to the Statement of Net Position
Current assets
Cash and cash equivalents (unrestricted) 73,348,263 169,627,430 Restricted cash 33,782,947 16,052,232
Noncurrent assets
Cash and cash equivalents (unrestricted) 30,000,000 15,000,000 Cash and cash equivalents 137,131,210 $ 200,679,662 $
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
12 The accompanying notes are an integral part of these financial statements
STATEMENTS OF CASH FLOWS
(CONTINUED)
YEARS ENDED MARCH 31, 2023 AND 2022
2023 2022 (Restated)
Operating income 32,967,433 $ 7,317,514 $
Adjustments to reconcile operating income to net
cash provided (used) by operating activities
Depreciation and amortization expense 996,241 1,037,403 Provision for uncollectible accounts 18,612,539 1,259,349 (Increase) decrease in:
Accounts receivable (38,716,164) (13,182,724)
Other receivables 1,656,337 239,002
Accrued revenue (10,666,636) (4,381,061)
Prepaid expenses 4,162,992 (3,763,177)
Deposits 1,660,093 (7,852,402)
Increase (decrease) in:
Accrued cost of electricity 4,102,389 (1,708,386)
Accounts payable 1,061,198 105,228
Other accrued liabilities 184,233 518,818
Security deposits from energy suppliers (4,435,100) 381,000 User taxes due to other governments 961,313 572,997
Operating Reserve Fund 15,000,000 -
Advances from grantor - restricted 17,730,715 5,876,856 Net cash provided (used) by operating activities 45,277,583 $ (13,579,583) $
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
13 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
Marin Clean Energy (MCE) is a California joint powers authority created on December 19, 2008. As of March 31, 2023, parties to its Joint Powers Agreement consist of the following local governments:
Contra Costa Belvedere Martinez Ross
Marin Benicia Mill Valley San Anselmo
Napa Concord Moraga San Pablo
Solano Corte Madera Napa San Rafael
Danville Novato San Ramon
El Cerrito Oakley Sausalito
Fairfax Pinole Tiburon
Fairfield Pittsburg Vallejo
Lafayette Pleasant Hill Walnut Creek
Larkspur Richmond
Cities and Towns
MCE is separate from and derives no financial support from its members. MCE is governed by a Board of Directors whose membership is composed of elected officials representing one or more of the parties.
MCE’s mission is to confront the climate crisis by eliminating fossil fuel greenhouse gas emissions, producing renewable energy, and creating equitable community. MCE provides electric service to retail customers as a Community Choice Aggregation Program (CCA) under the California Public Utilities Code Section 366.2.
Electricity is acquired from commercial suppliers and delivered through existing physical infrastructure and equipment managed by Pacific Gas and Electric Company. MCE administers energy efficiency programs that support the development, coordination, and implementation of energy efficiency projects in and around MCE’s service area. The funding for energy efficiency programs is provided from ratepayers and regulated by the California Public Utilities Commission.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
14 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
BASIS OF ACCOUNTING
MCE’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements.
MCE’s operations are accounted for as a governmental enterprise fund and are reported using the economic resources measurement focus and the accrual basis of accounting – similar to business enterprises. Accordingly, revenues are recognized when they are earned, and expenses are recognized at the time liabilities are incurred. Enterprise fund-type operating statements present increases (revenues) and decreases (expenses) in total net position. Reported net position is segregated into three categories – investment in capital assets, restricted, and unrestricted.
When both restricted and unrestricted resources are available for use, it is MCE’s policy to use restricted resources first, then unrestricted resources as they are needed.
CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, MCE defines cash and cash equivalents to include cash on hand, demand deposits, and short-term investments with an original maturity of three months or less. The Statement of Net Position presents restricted cash balances separately. Restricted cash reported on the Statements of Net Position includes funding advanced from grantors.
INVESTMENTS
Investments are stated at fair value based on prices listed on a national exchange for debt securities. Certificates of deposits are stated at cost. MCE intends to hold its securities to maturity. Investments with a maturity of less than one year are shown as current assets in the Statement of Net Position. Investments with a maturity of one year or more are shown as noncurrent assets in the Statement of Net Position.
MCE’s Investment Policy permits the investment of funds in depository accounts, Local Agency Investment Fund (LAIF) program operated by the California State Treasury, United States Treasury obligations, federal agency securities, commercial paper, certificates of deposits, money market funds, corporate bonds and collateralized mortgage obligations.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
15 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
PREPAID EXPENSES AND DEPOSITS
Contracts to purchase energy may require MCE to provide the supplier with advanced payments or security deposits. Deposits are generally held for the term of the contract and are classified as current or noncurrent assets depending on the length of time the deposits will be outstanding. Also included are prepaid expenses and deposits for regulatory and other operating purposes.
LEASE ASSETS AND LEASE LIABILITIES
MCE recognizes an asset and liability when it enters certain leasing arrangements. The leased assets are amortized over the term of the leases. The lease liabilities are established at the present value of payments expected to be paid to the lessors during the terms of the lease. MCE’s only leased assets and liabilities relate to its office premises.
CAPITAL ASSETS AND DEPRECIATION
MCE’s policy is to capitalize furniture and equipment valued over $5,000 that is expected to be in service for over one year. Depreciation is computed according to the straight-line method over estimated useful lives of three years for electronic equipment, seven years for furniture, and ten years for leasehold improvements.
SECURITY DEPOSITS FROM ENERGY SUPPLIERS
Various energy contracts entered into by MCE require the supplier to provide MCE with a security deposit. These deposits are generally held for the term of the contract or until the completion of certain benchmarks. Deposits are classified as current or noncurrent depending on the length of the time the deposits will be held.
ADVANCES FROM GRANTORS
MCE received grant funding from various grantors. The amount in this category represents funds received by MCE, but not yet expended to carry out specific goals.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
16 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
OPERATING RESERVE FUND
In March 2020, MCE created an Operating Reserve Fund to allow MCE to defer revenue in years when financial results are strong for use in future years when financial results may decline. In accordance with GASB Statement No. 62, the amount deposited into the fund is shown as a reduction of operating revenues and reported on the statements of net position as a deferred inflow of resources. Transfers to this fund were $15,000,000 and $0 in 2023 and 2022, respectively.
NET POSITION
Net position is presented in the following components:
Investment in capital assets: This component of net position consists of capital assets, lease assets, net of accumulated depreciation and amortization, and reduced by outstanding borrowings that are attributable to the acquisition, construction, or improvement of those assets.
Restricted: This component of net position consists of restraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. There was no restricted component on March 31, 2023 or 2022.
Unrestricted: This component of net position consists of net position that does not meet the definitions of “investment in capital assets” or “restricted.” GASB STATEMENT NO. 87 IMPLEMENTATION
MCE adopted GASB Statement No. 87, Leases effective April 1, 2022 for all material leases. The impact of the implementation did not affect net position, prior year balances were restated for the new standard. See Note 11 for further details.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
17 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
OPERATING AND NON-OPERATING REVENUE
Operating revenues include energy sales to retail customers, grant revenue earned from the delivery of program activities, and liquidated damages from suppliers that fail to meet delivery commitments. Operating revenues also include contributions to or distributions from the Operating Reserve Fund.
Investment income and grants that are not earned from the delivery of program activities are considered “non-operating revenues.”
REVENUE RECOGNITION
MCE recognizes revenue on the accrual basis. This includes invoices issued to customers during the reporting period and electricity estimated to have been delivered but not yet billed. Management estimates that a portion of the billed amounts will be uncollectible.
Accordingly, an allowance for uncollectible accounts has been recorded.
OPERATING AND NON-OPERATING EXPENSES
Operating expenses include the cost of sales and services, administrative expenses, depreciation of capital assets, and amortization of right-to-use assets. Expenses not meeting this definition are reported as non-operating expenses.
ELECTRICAL POWER PURCHASED
During the normal course of business MCE purchases electrical power from numerous suppliers. Electricity costs include the cost of energy and capacity arising from bilateral contracts with energy suppliers as well as generation credits, and load and other charges arising from MCE’s participation in the California Independent System Operator’s centralized market. The cost of electricity and capacity is recognized as “Cost of Electricity” in the Statements of Revenues, Expenses and Changes in Net Position.
To comply with the State of California’s Renewable Portfolio Standards (RPS) and self-imposed benchmarks, MCE acquires RPS eligible renewable energy evidenced by Renewable Energy Certificates (Certificates) recognized by the Western Renewable Energy Generation Information System. MCE obtains Certificates with the intent to retire them and does not sell or build surpluses of Certificates with a profit motive. An expense is recognized at the point that the cost of the Certificate is due and payable to the supplier.
MCE purchases capacity commitments from qualifying generators to comply with the California Energy Commission’s Resource Adequacy Program.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
18 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ELECTRICAL POWER PURCHASED (CONTINUED)
The goals of the Resource Adequacy Program are to provide sufficient resources to the California Independent System Operator to ensure the safe and reliable operation of the energy grid in real-time and to provide appropriate incentives for the siting and construction of new resources needed for reliability in the future. MCE is in compliance with external mandates and self-imposed benchmarks.
STAFFING COSTS
MCE pays employees semi-monthly and fully pays its obligation for health benefits and contributions to its defined contribution retirement plan each month. MCE is not obligated to provide post-employment healthcare or other fringe benefits and, accordingly, no related liability is recorded in these financial statements. MCE provides compensated time off, and the related liability is recorded as other accrued liabilities in these financial statements.
INCOME TAXES
MCE is a joint powers authority under the provision of the California Government Code and is not subject to federal or state income or franchise taxes.
ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation of the current-year financial statements. These reclassifications did not result in any change in previously reported net position or change in net position.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
19 2. CASH AND CASH EQUIVALENTS
MCE maintains its cash in both interest-bearing and non-interest-bearing demand and term deposit accounts at River City Bank of Sacramento, California. MCE’s deposits with River City Bank are subject to California Government Code Section 16521 which requires that River City Bank provide collateral of 110% for public funds in excess of the Federal Deposit Insurance Corporation limit of $250,000. MCE monitors its risk exposure to River City Bank on an ongoing basis.
3. ACCOUNTS RECEIVABLE
Accounts receivable were as follows as of March 31:
2023 2022
Accounts receivable from customers 93,990,987 $ $ 55,274,823 Allowance for uncollectible accounts (27,589,514) (8,976,975) Net accounts receivable 66,401,473 $ $ 46,297,848
The majority of account collections occur within the first few months following customer invoicing. MCE estimates that a portion of the billed accounts will not be collected. MCE continues collection efforts on accounts in excess of de minimis balances regardless of the age of the account. Although collection success generally decreases with the receivable’s age, MCE continues to have success collecting older accounts. The allowance for uncollectible accounts at the end of a period includes amounts billed during the current and prior fiscal years.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
20 4. INVESTMENTS
During the year ended March 31, 2023, MCE purchased investments with original maturities of three months or more. MCE did not own any investments as of March 31, 2022. As of March 31, the fair value of investments was as follows:
2023 2022
Current Investments:
U.S. Treasury Securities $ 2,840,387 $ -
Collateralized Mortgage Obligations - -
Commercial Paper 489,557 -
Corporate Bonds - -
Certificates of Deposit 65,511,588 -
Total current investments $ 68,841,532 $ -
2023 2022
Noncurrent Investments:
U.S. Treasury Securities $ 30,239,426 $ -
Collateralized Mortgage Obligations 2,627,860 -
Commercial Paper - -
Corporate Bonds 12,671,408 -
Certificates of Deposit -
Total noncurrent investments $ 45,538,694 $ -
FAIR VALUE MEASUREMENT
GASB Statement No. 72, Fair Value Measurement and Application, sets forth the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are significant other observable inputs, and Level 3 inputs are significant unobservable inputs.
In instances where inputs used to measure fair value fall into more than one level in the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. MCE’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.
As of March 31, 2023, all of MCE’s investments are based on Level 1 inputs. Quoted prices in active markets were used for determining fair value measurement.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
21 4. INVESTMENTS (CONTINUED)
CREDIT RISK
Credit risk is the risk an issuer or other counterparty to an investment will not fulfill its obligations. As of March 31, 2023 and 2022, MCE’s investments were rated as follows:
2023 2022
Commercial Paper A-1 -
Certificates of Deposit NR to A-1 -
Corporate Bonds A- to AAA -
Standard & Poors
MCE’s investment policy addresses this risk. MCE limits investments to those allowed by Section 53601 of the California Government code that addresses the risk allowable for each investment.
CUSTODIAL CREDIT RISK
Cash and cash equivalents
Custodial credit risk is the risk that in the event of a financial institution failure, MCE’s deposits my not be returned to MCE.
As of March 31. 2023 and 2022, none of MCE’s bank balances are known to be individually exposed to credit risk.
Investments
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, MCE would not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. All of MCE’s investments are exposed to credit risk.
MCE’s investment policy addresses this risk. All investments owned by MCE shall be held in safekeeping by a third-party custodian, acting as an agent for MCE under the terms of a custody agreement.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
22 4. INVESTMENTS (CONTINUED)
INTEREST RATE RISK
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Duration is a measure of the price sensitivity of a fixed income portfolio to changes in interest rates. It is calculated as the weighted average time to receive a bond’s coupon and principal payments. The longer the duration of a portfolio, the greater its price sensitivity to changes in interest rates. MCE manages its exposure to declines in fair values by limiting the weighted average maturity of its investments.
Following is a summary of investment maturities as of March 31, 2023:
Investment Type Fair Value Less Than 1 Year 1-5 Years
U.S. Treasury Securities $ 33,079,813 $ 2,840,387 $ 30,239,426 Collateralized Mortgage Obligations 2,627,860 2,627,860 - Commercial Paper 489,557 489,557 -
Corporate Bonds 12,671,408 12,671,408 -
Certificates of Deposit 65,511,588 65,511,588 -
$ 114,380,226 $ 68,841,532 $ 45,538,694
Investment Maturities
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
23 5. CAPITAL ASSETS AND LEASE ASSETS
Capital asset activity for the years ended March 31, 2023 and 2022, was as follows:
Furniture &
Equipment
Leasehold
Improvements
Accumulated
Depreciation Total
Balances at March 31, 2021 912,958 $ 1,064,385 $ (1,018,774) $ 958,569 $ Additions 7,584 7,643 (208,066) (192,839)
Balances at March 31, 2022 920,542 1,072,028 (1,226,840) 765,730 Additions - - (166,903) (166,903)
Dispositions (56,168) - 56,168 -
Balances at March 31, 2023 864,374 $ $ 1,072,028 $ (1,337,575) $ 598,827
Lease asset activity for the years ended March 31, 2023 and 2022 was as follows:
Lease Assets
Accumulated
Amortization Total
Balances at March 31, 2021 2,878,560 $ - $ 2,878,560 $
Additions - (829,337) (829,337)
Balances at March 31, 2022 2,878,560 (829,337) 2,049,223 Additions - (829,341) (829,341)
Balances at March 31, 2023 2,878,560 $ (1,658,678) $ 1,219,882 $
6. DEBT
LINE OF CREDIT AND LETTERS OF CREDIT
In November 2019, MCE entered into a revolving credit agreement with JPMorgan Chase Bank. The available credit line under this agreement is $40 million and enhances MCE’s overall liquidity for potential working capital needs, collateral requirements, and enhances MCE’s investment credit grade rating. This agreement was terminated in May 2023. In May 2023 MCE entered into a revolving credit agreement with Royal Bank of Canada for a credit line of $60 million that extents to May 2026.
MCE had no standby Letters of Credit or amounts outstanding under its lines of credit agreement as of March 31, 2023, and 2022. Any unused balance is subject to a 0.445% fee per annum. Fees related to opening and renewal of the line of credit and posting any letters of credit are reported as interest and related expenses.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
24 7. GRANTS
MCE administers various grants from the California Public Utilities Commission (CPUC), California Energy Commission and Marin Community Foundation. Grant revenues are recognized when a corresponding eligible expense is incurred.
MCE also administers a grant from the California Arrearage Payment Program (CAPP) that offers financial assistance for California energy utility customers to help reduce past due energy account balances that increased during the COVID-19 pandemic. In 2022, this program was funded through the federal American Rescue Plan Act (ARPA) with Coronavirus State and Local Fiscal Recovery Funds. In 2023, the program was funded by the State of California.
The following is a summary grant revenue for the years ended March 31:
2023 2022
CAPP $ 4,226,302 $ 6,216,069
EE 8,194,907 7,623,941
DAC 1,957,959 1,866,322
Other 379,555 340,469
Total grant revenue 14,758,723 $ $ 16,046,801
Legend
CAPP California Arrearage Payment Plan
EE Energy Efficiency - Public Purpose Program (multiple programs) DAC Disadvantaged Community - Green Access
8. DEFINED CONTRIBUTION RETIREMENT PLAN
The Marin Clean Energy Plan (Plan) is a defined contribution retirement plan established by MCE to provide benefits at retirement to its employees. The Plan is administered by Nationwide Retirement Solutions. As of March 31, 2023, there were 81 plan members.
MCE is required to contribute 10% of annual covered payroll to the Plan and contributed $1,270,000 and $1,007,000 during the years ended March 31, 2023 and 2022, respectively.
The Plan includes vesting provisions intended to encourage employee retention. Plan provisions and contribution requirements are established and may be amended by the Board of Directors.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
25 9. RISK MANAGEMENT
MCE is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; and errors and omissions. During the year, MCE purchased insurance policies from commercial carriers to mitigate risks that include those associated with earthquakes, theft, general liability, errors and omissions, and property damage. There were no significant reductions in coverage compared to the prior year. From time to time, MCE may be party to various pending claims and legal proceedings. Although the outcome of such matters cannot be forecasted with certainty, it is the opinion of management and MCE’s legal counsel that the likelihood is remote that any such claims or proceedings will have a material adverse effect on MCE’s financial position or results of operations.
MCE maintains risk management policies, procedures and systems that help mitigate credit, liquidity, market, operating, regulatory and other risks that arise from participation in the California energy market. Credit guidelines include a preference for transacting with investment-grade counterparties, evaluating counterparties’ financial condition and assigning credit limits as applicable. These credit limits are established based on risk and return considerations under terms customarily available in the industry. In addition, MCE enters into netting arrangements whenever possible and where appropriate obtains collateral and other performance assurances from counterparties.
10. PURCHASE COMMITMENTS
POWER AND ELECTRIC CAPACITY
In the ordinary course of business, MCE enters into various power purchase agreements to acquire renewable and other energy and electric capacity. The price and volume of purchased power may be fixed or variable. Variable pricing is generally based on the market price of either natural gas or electricity at the date of delivery. Variable volume is generally associated with contracts to purchase energy from as-available resources such as solar, wind and hydro-electric facilities.
MCE enters into power purchase agreements to comply with state law and voluntary targets for renewable and greenhouse gas free products and to ensure stable and competitive electric rates for its customers.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
26 10. PURCHASE COMMITMENTS (continued)
The following table represents the expected, undiscounted, contractual obligations outstanding as of March 31, 2023:
Year ended March 31,
2024 450,000,000 $
2025 360,000,000
2026 320,000,000
2027 260,000,000
2028 270,000,000
2029-47 2,550,000,000
Total $ 4,210,000,000
11. LEASE
In June 2017, GASB issued Statement No. 87, Leases. As amended, the effective date of the Statement was for fiscal years beginning after June 15, 2021. MCE implemented the Statement in these financial statements, including a restatement back to 2021. According to GASB, the Statement aims to increase the usefulness of governments’ financial statements by requiring reporting of certain lease assets and lease liabilities that previously were not reported. As a result of implementing the Statement, net position at March 31, 2022 has been reduced by approximately $72,000. Also, the following balances were restated:
As Originally Reported
(4/1/2022)
Adjustment for
GASB No. 87
As Restated
4/1/2022
Lease assets $ 2,049,223 - $ $ 2,049,223
Lease liabilities - current 757,097 - 757,097
Lease liabilities - noncurrent 1,364,363 1,364,363
On March 9, 2015, MCE entered into a ten-year non-cancelable lease for its San Rafael, California office premise. The rental agreement includes an option to renew the lease for five additional years. On December 12, 2017, MCE entered into a 68-month non-cancelable lease for its Concord, California office location. Rental payments for MCE’s office space were $886,000 and $850,000 for the years ended March 31, 2023 and 2022, respectively.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
27 11. LEASE (continued)
As of March 31, 2023, future minimum lease payments under this lease were projected as follows:
Principal Interest Total
Years ending March 31,
2024 773,620 $ 28,624 $ 802,244 $
2025 536,645 9,157 545,802
Total 1,310,265 $ 37,781 $ 1,348,046 $
12. JOINT VENTURE
MCE participates in a joint powers agreement (JPA) through the California Community Choice Financing Authority (CCCFA). CCCFA was formed as a conduit issuer to assist its members by undertaking the financing or refinancing of energy prepayments that can be financed with tax advantaged bonds on behalf of one or more of the members by, among other things, issuing or incurring bonds and entering into related contracts with its members.
Any debt or liability incurred by CCCFA on behalf of a member to prepay for renewable energy is not a debt or liability of that member. Furthermore, the assets of CCCFA in the form of prepaid energy or reserves held by the respective bond trustees for any prepayment transaction undertaken on behalf of a member does not constitute an asset or reserve of that member.
In November 2021, CCCFA issued bonds in the amount of $602,655,000 excluding original issue premium, the proceeds of which to be used to finance energy purchases that will be delivered to MCE. No debt, liability, or obligation of CCCFA is a debt, liability, or obligation of MCE. MCE will purchase energy from CCCFA in the same manner as they purchase energy from other suppliers. MCE purchased approximately $26,500,000 from CCCFA during fiscal year 2023. The outstanding purchase commitments related to these financing facilities are included in Note 10.
Each member of CCCFA is responsible for paying an equal portion of CCCFA’s general and administrative operating costs as determined by its board. During the years ended March 31, 2023, and 2022, MCE contributed approximately $18,000 and $40,000, respectively, to CCCFA to assist in its operating activities.
The financial statements of CCCFA are available online at http://www.cccfa.org/key-documents.html.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2023 AND 2022
28 13. FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for future fiscal years ending after March 31, 2023:
GASB has approved, GASB No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, GASB 96, Subscription-Based Information Technology Arrangements, GASB No. 99, Omnibus 2022, GASB No. 100, Accounting Changes and Error Corrections – An Amendment of GASB Statement No. 62, and GASB No. 101, Compensated Absences. Management is evaluating the effect of implementation of these statements.
14. SUBSEQUENT EVENT
In May 2023 MCE entered into a revolving credit agreement with Royal Bank of Canada for a credit line of $60 million that extents to May 2026.
AI #12 Att.: Rpt. on MCE FY 2022/23 Financial Audit
October 19, 2023
TO: MCE Board of Directors
FROM: Michael Callahan, Associate General Counsel
RE: Policy Update of Regulatory and Legislative Items
ATTACHMENT: Regulatory Packet with August and September Filings Dear Board Members:
Below is a summary of the key activities at the state and federal legislatures and the California Public Utilities Commission (CPUC or Commission), the California Independent System Operator (CAISO), and the California Energy Commission impacting Community Choice Aggregation (CCA) and MCE.
I. Legislative Advocacy
a. State Legislative Advocacy
The Legislature finished the first year of its 2023-2024 session on Thursday, September
14. Bills introduced this year that did not pass out of the Legislature can be heard early next year. If a bill does not pass out of its house of origin by January 31, 2024, that bill is considered dead and will not move forward next year. Bills that were passed by the Legislature this year are awaiting signature on Governor Newsom’s desk, who can either sign or veto them no later than October 14, 2023.
This year, MCE engaged in 14 bills, and the two that passed the Legislature were both signed by the Governor. The following table summarizes the bills that MCE took a position on this year, and AB 1373 is described in detail below.
Bill Number and
Author
Subject MCE
Position
Status
SB 306 (Caballero) Equitable Building Decarb
Program
Support SIGNED
AB 1373 (Garcia) Central Procurement, RA, IRP Neutral SIGNED SB 57 (Gonzalez) Prohibit utility shutoffs during
extreme weather events
Support 2-year bill per Author’s
request
SB 233 (Skinner) Bidirectional charging in EVs Support 2-year bill per Author’s request
SB 488 (Alvarado-Gil)Bioenergy at CCAs Support 2-year bill; Reconsideration granted
after failing Senate Energy
SB 507 (Gonzalez) Equitable charging station
distribution data
Support 2-year bill; held in Senate
Appropriations
SB 511 (Blakespear) GHG emissions inventories for
cities and counties
Support 2-year bill; held in
Assembly Appropriations
SB 527 (Min) Neighborhood
Decarbonization Program
Support 2-year bill; held in Senate
Appropriations
SB 529 (Gonzalez) EV car sharing program for
affordable housing
Support 2-year bill; held in Senate
Appropriations
AB 538 (Holden) Regionalization Support 2-year bill per Author’s request
AB 593 (Haney) Carbon Neutral Buildings by
2045
Support 2-year bill; held in Senate
Appropriations
AB 625 (Aguiar-Curry)Biomass Support 2-year bill; held in Assembly Appropriations
AB 998 (Connolly) Biomass and noncombustion
technology
Support 2-year bill; held in Senate
Appropriations
AB 1538
(Muratsuchi)
Clean Energy Reliability
Program
Support 2-year bill; held in
Assembly Appropriations
Assembly Bill 1373 (Garcia)
AB 1373 was voted out of the Legislature on September 14th and was signed by the Governor on October 7th. This bill, in particular its central procurement function (described below), has been a priority for the Governor and has been branded as part of the California Climate Action agenda. While MCE originally had an Oppose Unless Amended position on the bill, we shifted to Neutral in June to acknowledge the author’s significant work with CalCCA to address concerns about impacts on CCA procurement authority, affordability, and market constraints. In its final form, the bill:
● Allows the CPUC to direct the Department of Water Resources to procure resources to meet statewide needs that are unmet through the Integrated Resources Planning (IRP) process. This centralized procurement is limited to projects that meet a discrete set of criteria, including unusually long development lead times and significant infrastructure requirements, which are intended to limit this procurement to projects like offshore wind and select new geothermal resources. Projects from which DWR procures will be held to a full suite of high-road labor commitments, and be subject to several procedural mechanisms to help control costs. Projects procured through this process cannot rely on fossil fuels and can only use combustion in very limited circumstances. Costs and benefits associated with centrally procured power will be allocated to load serving entities through future regulatory proceedings.
● Require load serving entities, including CCAs, to pay into the state’s Strategic Reliability Reserve Fund if they fall short on their resource adequacy obligations during a month when the Strategic Reliability Reserve is called on to meet shortfalls in grid capacity. If the LSE is also required to pay a penalty by the CPUC, the amount of the payment to the Strategic Reliability Reserve will be reduced in order to limit affordability impacts for customers.
● Supports workforce development and environmental monitoring for offshore wind.
● Accelerates transmission buildout and upgrades by streamlining state-level permitting requirements.
Regionalization
As noted earlier in the summer, AB 538 (Holden) was held in the Assembly and became a two-year bill. In July, a group of regulatory leaders from California, Oregon, Washington, Arizona, and New Mexico announced a multi-state working group to advance west-wide regional collaboration outside of a legislative forum. The process will begin by addressing governance for the CAISO’s existing Energy Imbalance Market (EIM) and forthcoming Enhanced Day Ahead Market (EDAM), but can also serve as the forum to explore creation of a full regional transmission operator (RTO). MCE supports this shift in venue as a promising means to make timely progress on this important issue, and has begun to engage with California’s regulators in support of this effort. There may be additional legislative activity associated with regionalization. b. Federal Legislative Advocacy
MCE signed on to a coalition letter organized by environmental, public health and electrification advocates to Senate Appropriations Chair Murray, in support of the Inflation Reduction Act and making a strong statement against funding cuts or implementation barriers. House Republicans have been unsuccessful in directly attacking the IRA but they are having some success at paring back funding for IRA programs and the agencies that administer them. This demonstration of support also increases California CCAs’ visibility at the national level.
II. California Public Utilities Commission
a. Diablo Canyon Power Plant Extension
On August 9, 2023, CalCCA requested evidentiary hearings and the opportunity for legal briefing in the Commission’s proceeding to extend operation of the Diablo Canyon Power Plant (DCPP) pursuant to SB 846 (SB 846 was passed in 2022 and authorized DCPP’s continued operations beyond its scheduled 2025 retirement date to support mid-term reliability needs). CalCCA’s request for evidentiary hearings highlights a number of material disputes of fact between the CCAs and Pacific Gas and Electric Company (PG&E) related to DCPP’s extension costs and sharing of the resource’s benefits.
On September 15, 2023 CalCCA filed its legal brief arguing that PG&E must allocate DCPP’s GHG-free and Resource Adequacy (RA) attributes to all CPUC-jurisdictional load serving entities and that the benefits of such allocations vastly outweigh any incremental implementation costs PG&E might incur. Such allocations would also be consistent with the Commission’s mandate to equitably allocate the costs and benefits of extended operations of the DCPP. Moreover, allocation of attributes would help relieve pricing and supply pressures in the RA and energy markets, which is expected to continue through mid-decade.
b. PG&E’s Application to Create Pacific Generation, LLC On September 18, 2023 and October 5, 2023, CalCCA filed legal opening and reply briefs opposing PG&E’s efforts to transfer generation assets to a new legal entity and subsidiary of PG&E, Pacific Generation, LLC (PacGen). The transfer of generation assets to PacGen is primarily a means to raise capital and bolster PG&E’s common stock. Under its proposal, PG&E would transfer substantially all its non-nuclear generation assets to PacGen - a transfer that represents approximately 7% of PG&E’s current rate base and 3,600 MW of generation capacity. PacGen would operate as a CPUC-regulated utility, but PG&E would continue to operate, maintain, and schedule the resources, in effect allowing PG&E to continue to oversee day-to-day operations of the resources and use the resources for PG&E’s integrated resource planning purposes. PG&E would also maintain a majority interest in PacGen.
CalCCA’s brief opposed CPUC approval of the transfer on the grounds that it is not in the public interest and would result in harm to ratepayers, while largely working to benefit shareholders. In the alternative, if the CPUC chooses to approve the transaction, CalCCA urged adoption of critical guardrails to better protect ratepayers and prevent against detrimental market impacts.
c. Demand Response
On August 11, 2023, the Joint CCAs filed a Reply Brief in the utilities’ Demand Response (DR) Application proceeding, supporting parties’ proposal to initiate a working group (WG) to discuss dual participation issues in demand management programs. The Joint CCAs highlighted that the Commission must direct the utilities and the CCAs to exchange program participation data in DR programs on a regular basis to enable dual enrollment prevention. The Joint CCAs also advocated for the Commission to establish a scope for the dual participation WG which must include the development of a data exchange process, as well as a customer disenrollment process if dual participation is identified. Finally, the Joint CCAs proposed a timeline for the dual participation WG to ensure that dual enrollment can be prevented during the 2024 summer season. d. Self-Generation Incentive Program
On August 1, 2023, the Joint CCAs filed Opening Comments in Response to the Assigned Commissioner’s Ruling (ACR) on the Self-Generation Incentive Program (SGIP) Heat Pump Water Heater (HPWH) program. Joint CCAs responded to the ACR’s question on how to define “qualifying” demand response programs within SGIP’s HPWH program. A previous SGIP Decision requires participants in the HPWH program to enroll in a qualifying demand response program which is defined as a CAISO-market integrated program. Joint CCAs supported redefining qualifying demand response programs to include CCA administered programs like MCE’s Peak FLEXmarket program.
On August 11, 2023, the Joint CCAs filed Reply Comments in Response to the ACR highlighting parties’ support for an updated definition of qualifying demand response programs that includes CCA administered programs. Joint CCAs specifically endorsed a modified version of the definition of qualifying demand response programs written by HPWH program administrator Energy Solutions. This definition accommodates CAISO-market integrated programs as well as load-modifying demand response programs, including event-based and daily load-shifting programs, and would apply irrespective of the program administrator. Joint CCAs requested the Commission adopt the modified definition of qualifying demand response programs and explained how doing so would support achieving SGIP HPWH’s program goals.
e. PG&E’s 2024 ERRA Forecast Application
MCE is currently engaging in PG&E’s 2024 Energy Resource Recover Account (ERRA) Forecast Proceeding with CalCCA. This proceeding will determine PG&E’s generation rates and Power Cost Indifference Adjustment (PCIA) rates for PG&E and MCE customers for 2024.
On August 1, 2023, a CPUC Administrative Law Judge (ALJ) issued a ruling requesting parties comment on the level of fixed costs that are included in PG&E’s generation rates, and whether the proceeding should address any issues with how those fixed costs are treated. On August 16, 2023 and August 23, 2023, CalCCA submitted comments in response to the ALJ Ruling, urging the Commission to not address fixed generation cost issues within the ERRA forecast proceeding. CalCCA argued that a second phase of the proceeding that included all Investor Owned Utilities (IOUs) would be the more appropriate venue to address any change in treatment of generation cost recovery, and standardize any changes across all IOUs.
On September 6, 2023 CalCCA submitted opening testimony in the proceeding aimed at ensuring that PG&E is appropriately forecasting and equitably allocating costs and applicable credits to both PG&E and CCA customers.
PG&E is expected to update its 2024 ERRA Forecast on October 15, 2023 which will provide MCE with more accurate estimates of 2024 PCIA and PG&E generation rates. f. PG&E’s 2022 ERRA Compliance Application
On September 22, 2023, CalCCA filed Opening Testimony in PG&E’s 2022 ERRA Compliance proceeding. This proceeding is meant to review and ensure that PG&E prudently managed and accounted for its generation resources and contracts according to Commission direction and relevant law. CalCCA’s testimony highlighted that in 2022, PG&E had significant amounts of excess Resource Adequacy (RA) capacity that it was able to use for its reliability requirements, in part because it did not make sufficiently reasonable attempts to sell the excess RA capacity once it was known to be available. As the market is currently constrained, and load serving entities (LSEs) face challenges in meeting their RA compliance requirements, the choice of PG&E to not make additional attempts to sell its excess RA capacity is concerning. CalCCA recommended that the Commission review and potentially adopt new policies that would ensure all available RA capacity is made available to the market. CalCCA also recommended the Commission should consider applying a monetary disallowance or other penalty to PG&E in this proceeding to account for the fact that they did not make reasonable efforts to sell its excess RA capacity.
g. Demand Flexibility
On September 25, 2023, CalCCA filed Opening Comments on an ALJ Ruling and CPUC Staff proposal to expand existing dynamic rate pilots to support near-term summer reliability. Specifically, the proposal would expand a current hourly, subscription-style rate pilot, which includes incentives for agricultural load automation technology, administered by Valley Clean Energy and PG&E to other customer classes throughout PG&E’s service area. CalCCAs Opening Comments requested the CPUC provide additional clarity on the pilots including how funding will be allocated and how implementation details such as customer enrollment, marketing, education, and outreach will work. CalCCA also highlighted that any determination to participate in CPUC rate pilots by CCAs must be made by individual CCAs and their governing Boards.
III. California Independent System Operator
a. Extended Day-Ahead Market Enhancements Initiative
CAISO’s day-ahead market is used to forecast electricity demand and commit resources on a day-ahead basis to better balance supply and demand in real time. On August 14, 2023, MCE worked with CalCCA to develop and file comments on the CAISO's Extended Day-Ahead Market Enhancements (EDAM) ISO Balancing Authority Area Participation Rules initiative, which addresses CAISO-specific rules related to the larger EDAM initiative. The purpose of this larger EDAM initiative is to develop rules and frameworks to extend and enhance participation in the CAISO's current day-ahead energy market to other entities throughout the western United States. EDAM is expected to improve market efficiencies and increase California's access to a larger pool of resources across a larger time footprint to support renewables integration and grid reliability. CalCCA’s comments focused on CAISO-specific EDAM participation rules to ensure in-state resource sufficiency.
Also, on August 22, 2023, the CAISO sought authorization from the Federal Energy Regulatory Commission to adopt tariff revisions necessary to implement EDAM. The tariff describes the CAISO’s implementation provisions and procedures to streamline the expansion of the current day-ahead market to include other participants throughout the west. The CAISO is requesting the EDAM tariff changes be effective in 2024, and EDAM is expected to launch in 2025.
b. Interconnection Process Enhancements Initiative
On August 15, 2023, MCE worked with CalCCA to develop and file comments on Track 2 of the CAISO's Interconnection Process Enhancements (IPE) initiative. This IPE initiative seeks to improve and expedite interconnection of new resources to the grid to support reliability and renewables integration. CalCCA responded to several proposals in the docket for ways to improve and speed up the CAISO's interconnection process. CalCCA refrained from supporting a specific proposal at this time, but communicated several concepts critical to any adopted proposal, including (1) increased data transparency; (2) a point system to identify viable projects for the CAISO to prioritize for interconnection study; (3) a means of removing resources from the interconnection queue that have stagnated and are not meeting project milestones; and (4) leveraging enhancements to interim deliverability options. CAISO is also looking at whether to limit interconnection requests to projects located in areas where there is sufficient existing transmission capacity or planned capacity and whether to require projects to have an executed Power Purchase Agreement in place as a prerequisite for interconnection study.
The CAISO issued a revised proposal in September to address stakeholder feedback.
Further iterations are expected through the end of the year, and the CAISO expects to take a final proposal to the CAISO Board of Governors in mid-Q1 2024.
IV. California Energy Commission
a. Contractor Training Grant Program - Inflation Reduction Act On September 25, 2023, MCE submitted comments to the California Energy Commission’s (“CEC”) Request for Information on the Contractor Training Grant program. The Contractor Training Grant program is authorized in the Inflation Reduction Act (“IRA”) and administered by the Department of Energy. The CEC may apply for these funds. The CEC, on behalf of California, may submit an application for up to an estimated $10 million dollars of funds for contractor training for residential energy rebate programs, specifically IRA’s residential energy efficiency and electrification programs. MCE submitted information on its existing residential energy contractor training program, the Green Workforce Pathways program, and how the program aligns with IRA Contractor Training Grant program goals. MCE’s comments also identified gaps in existing workforce development programs and offered Community Benefits Plan strategies and best practices for the program. Relatedly, MCE is also a member of the Bay Area High-Road to Building Decarbonization Training Partnership funded by the California Workforce Development Board and formally endorsed its comments submitted to the same docket.
Fiscal Impacts: The fiscal impacts of the bills that passed will vary. SB 306 may provide MCE access to additional funding for customer programs. AB 1373 may create procurement costs for which MCE may need to compensate DWR as well as potential additional financial exposure for not complying with resource adequacy compliance requirements. The remaining bills have become 2-years bills and may not be passed or signed into law and may have varied fiscal impacts. SB 57 may contribute to MCE’s accounts receivables, but also importantly would disallow utility shutoffs during extreme weather events. SB 488 and AB 625 would enhance MCE’s ability to access funding to reduce the cost of bioenergy projects. SB 529 may provide MCE funding for electric vehicle sharing projects at affordable housing facilities. SB 538 may reduce the need for generation and transmission projects which would reduce the costs for MCE to provide service to its communities. AB 1538 may provide incentives to MCE to develop additional clean energy resources in excess of compliance requirements. The remaining bills would not have a direct fiscal impact. MCE’s letter of support for the Inflation Reduction Act may increase the amount of funding available to MCE for customer programs. CalCCA’s advocacy on Diablo Canyon Power Plant may reduce the need and costs for MCE to serve its member communities. PG&E’s Application to create Pacific Generation, LLC will not create direct fiscal impacts for MCE, but may leave PG&E customers exposed to more financial risk due to PG&E having less assets to meet unexpected financial liabilities. The EDAM initiative may reduce procurement costs for MCE over time. The remaining issues have uncertain or no direct fiscal impacts to MCE.
Recommendation: There are no recommended actions currently.