Pioneer Community Energy Board of Directors
January 18, 2024

Board of Directors
Chair: Alice Dowdin Calvillo
Vice Chair: John Hidahl
City of Auburn
Alice Dowdin Calvillo
Rachel Radell-Harris, Alternate
City of Colfax
Sean Lomen
Kim Douglass, Alternate

County of El Dorado
John Hidahl
Lori Parlin, Alternate
City of Grass Valley
Tom Ivy
Jan Arbuckle, Alternate
City of Lincoln
Holly Andreatta
Dan Karleskint, Alternate
Town of Loomis
Amanda Cortez
Danny Cartwright, Alternate
Nevada City
Gary Petersen
vacant, Alternate
County of Placer
Jim Holmes
Suzanne Jones
Bonnie Gore, Alternate
City of Placerville
David Yarbrough
John Clerici, Alternate
City of Rocklin
Greg Janda
David Bass, Alternate

Pioneer Community Energy
Board of Directors
January 18, 2024
2:30 PM CLOSED SESSION
3:00 PM REGULAR SESSION
Pioneer Community Energy Board Room
2510 Warren Drive, Suite B, Rocklin, CA 95677
This regular meeting will convene in person at the address printed above, be accessible on the Zoom platform at the following link:
https://us06web.zoom.us/j/89967227073;
and live streamed for viewing on the Pioneer website:
https://pioneercommunityenergy.org/about-us/meetings-and-agendas/.

Members of the public may participate in person or by remote audio/visual access. Those who participated remotely and wish to comment should be prepared to use the Zoom platform via computer or telephone. Public comment will be opened for each agenda item in sequence.

How to Participate Using Zoom
You can join the meeting using the following link:
https://us06web.zoom.us/j/89967227073.

When you join the meeting, you will be muted by default. To inform the Clerk that you would like to make a public comment, you will use the “Raise Hand” feature.

Public Comment via Computer or Smartphone
If you would like to make a comment, you will use the “Raise Your Hand” feature. Please note that you should only raise your hand during the item to which you will comment. Instructions for using the “Raise Hand” feature when using a computer or mobile device can be found at the link:
https://support.zoom.us/hc/en-us/articles/205566129-Raising-your-hand-in-a-webinar Public Comment via telephone (Audio Only Option)

1. Dial 1 (699) 900-6833

2. When asked for the meeting ID, enter 899 6722 7073#

3. When asked for your participant ID, press # to continue.

You will be muted by default. To inform the Clerk that you would like to make a comment, during each agenda item, dial *9 to “Raise your hand.” When it is your turn to speak, the Clerk will identify you by the last three digits of your phone number; at that time, dial *6 to unmute yourself and state your name and comment for the record. Please note that you should only raise your hand during the item to which you will comment.

CLOSED SESSION
2:30 PM - CALL TO ORDER
1) Public Employee Performance Evaluation - GC §54957
Title: Executive Director
2) Conference with Labor Negotiators - GC §54957.6
Agency Negotiator: Board Chair
Unrepresented Employee: Executive Director

REGULAR SESSION
3:00 PM - CALL TO ORDER
I. GENERAL ADMINISTRATIVE FUNCTION – PART 1
A. CALL TO ORDER

1. Roll Call
B. PUBLIC REPORT OF CLOSED SESSION
C. ANNUAL SELECTION OF OFFICERS

1. Elect a Chair and Vice Chair of the Pioneer Governing Board to for 2024 i. Selection of Chair of the Pioneer Governing Board for 2024 ii. Selection of Vice Chair of the Pioneer Governing Board for 2024 D. AGENDA REVIEW
E. PRESENTATIONS BY THE PUBLIC ON MATTERS NOT ON THE AGENDA WITHIN THE

JURISDICTION OF THE BOARD
Persons may address the Board on items not this agenda. Please limit comments to 3 minutes per person. According to State Law (the Brown Act), items must first be noticed on the agenda before any discussion or action. The Board is prohibited from discussing issues not on the agenda brought to them at this time.

II. CONSENT AGENDA
1) APPROVAL OF THE CONSENT AGENDA
All items on the Consent Agenda have been recommended for approval by the Executive Director. All Consent items will be approved by a single vote. Anyone may ask to address Consent items prior to the Board acting, and the item may be moved for discussion. a) FINANCE & ADMINISTRATION
Receive Fiscal Year 2023-24 Draft Financial Reports through November 2023. (KOEHN) III. REGULAR AGENDA
2) FINANCE & ADMINISTRATION
Receive Financial Audit Report from Pisenti & Brinker, LLP (ACTION – KOEHN) Recommendation: Receive the Year-End Financial Statements and the Independent Auditor’s Report for Fiscal Year 2022-23.
3) ADMINISTRATION
Adopt Resolution Approving the Second Amended and Restated Joint Powers Agreement for Pioneer Community Energy with Any Changes Requested by the Governing Board (ACTION -

ECKERT)
Recommendation: Adopt Resolution approving the Second Amended and Restated Joint Powers Agreement for Pioneer Community Energy with any changes requested by the Governing Board. 4) PROGRAMS
Receive Update on Upcoming Programs (DISCUSSION – STASSI-VANACORE) Recommendation: Receive update on upcoming programs.
5) ADMINISTRATION
Adopt Resolution Approving the 2024 Governing Board Meeting Schedule (ACTION – ECKERT) Recommendation: Adopt Resolution approving the 2024 Governing Board Meeting Schedule. 6) FINANCE & ADMINISTRATION
Adopt Resolution to approve and authorize the Executive Director to execute all documents deemed necessary to consummate the following modifications to the Line of Credit and Letter of Credit agreements with Umpqua Bank: (1) Increase existing Line of Credit limit from $20 million up to $30 million. (2) Expand the Line of Credit purpose to include Working Capital if a meaningful credit rating improvement can be realized. (ACTION - KOEHN) Recommendation: Adopt Resolution approving and authorizing the Executive Director to execute all documents deemed necessary to consummate the following modifications to the Line of Credit and Letter of Credit agreements with Umpqua Bank: (1) Increase existing Line of Credit limit from $20 million up to $30 million. (2) Expand the Line of Credit purpose to include Working Capital if a meaningful credit rating improvement can be realized.

IV. GENERAL ADMINISTRATIVE FUNCTION – PART 2
A. BOARD MEMBER COMMUNICATIONS
B. EXECUTIVE DIRECTOR COMMUNICATIONS
C. ITEMS FOR INFORMATION

1. Glossary of Terms
D. ADJOURNMENT
Upcoming Meeting of the Board:

February 15, 2024 at 3:00 PM
Accommodations
Pioneer Community Energy is committed to ensuring that persons with disabilities are provided with the resources to participate fully in its public meetings. If you are hearing impaired, we have listening devices available. If you require additional disability-related modifications or accommodations, including auxiliary aids or services, please contact the Clerk of the Board. If requested, the agenda shall be provided in appropriate alternative formats for persons with disabilities. All requests must be in writing and must be received by the Clerk five business days prior to the scheduled meeting for which you are requesting accommodation. Requests received after such time will be accommodated only if time permits.

Affidavit of Posting
I, Eric Acedo, Acting Board Secretary, declare under penalty of perjury that the foregoing agenda for the January 18, 2024 regular meeting of the Pioneer Community Energy Governing Board was posted and available for public review on January 11, 2024 at the offices of Pioneer Community Energy, 2510 Warren Drive, Suite B, Rocklin, CA 95677; and, was available for viewing on the Pioneer website at:
https://pioneercommunityenergy.org/about-us/meetings-and-agendas/. All public materials related to an item on this agenda submitted to the Governing Board after distribution of the agenda packet are also made available for public inspection on Pioneer’s website at: https://pioneercommunityenergy.org/about-us/meetings-and- agendas/. Any document provided at the meeting by staff or by the public will be provided by the Board Clerk upon request by phone at (916) 758-8946, or by email at: [email protected].

Staff Report – Item 1a
To: The Governing Board
From: Eric Acedo, Sr. Financial Analyst
Item 1a: Receive Fiscal Year 2023-24 Draft Financial Reports Through November 2023 Date: 1/18/2024

RECOMMENDATION
Receive Fiscal Year 2023-24 Draft Financial Reports through November 2023.

BACKGROUND
The Year-To-Date (YTD) financial reports are produced by Maher Accountancy for Board member and management review. Although these reports are unaudited, they provide the most up-to-date financial data for Pioneer Community Energy. The mPOWER program accepted its last application August 2021 and mPOWER activity is now limited to the administering the outstanding mPOWER Bonds. Financials for the mPOWER program will be included in the audited year end reports. For November 2023, the financial reporting package includes the following reports for the CCA Fund only:
• Statement of Net Position (Balance Sheet) – Accounting of Assets, Liabilities and Net Position as of the reporting period end date for the CCA program. • Statement of Revenues, Expenses, and Changes in Net Position (P&L) – Accounting of all revenues, expenses, and changes in net position on a YTD basis through the reporting period end date for the CCA program.
• Budgetary Comparison Schedule (Budget to Actuals) – Comparison of budget to actuals on a YTD basis through the reporting period end date for the CCA program.

STRATEGIC PLAN
Strategic Priority 5: Financial Stability & Strategic Growth

FISCAL IMPACT
The YTD change in net position through five months of the fiscal year is $22.5 million.

ATTACHMENTS

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

Management has elected to omit substantially all of the disclosures and the statement of cash flows required by accounting principles generally accepted in the United States of America in these interim financial statements. Pioneer Community Energy’s annual audited financial statements include the note disclosures and statement of cash flows omitted from these interim statements. If the omitted disclosures and the statement of cash flows were included in these financial statements, they might influence the user’s conclusions about Pioneer Community Energy’s financial position, results of operations, and cash flows. Accordingly, these financial statements are not designed for those who are not informed about such matters.

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

Maher Accountancy
San Rafael, CA
December 29, 2023
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com CCA Fund
ASSETS
Current assets
Cash and cash equivalents 23,822,718 $
Investments 60,325,319
Accounts receivable, net of allowance 17,717,437
Accrued revenue 7,786,659
Other receivables 1,641,062
Interest receivable 280,000
Prepaid expenses 35,914
Deposits 9,176,166
Total current assets 120,785,275
Noncurrent assets
Capital assets, net of depreciation 182,335
Lease asset, net of amortization 1,401,902
Total noncurrent assets 1,584,237
Total assets 122,369,512

LIABILITIES
Current liabilities
Accrued cost of electricity 17,464,276
Accounts payable 471,558
Other accrued liabilities 676,816
Interest payable 22,425
Deposits 693,756
Note payable 665,741
Lease liability 78,560
Total current liabilities 20,073,132
Noncurrent liabilities
Note payable 6,323,886
Lease liability 1,532,330
Total noncurrent liabilities 7,856,216
Total liabilities 27,929,348

NET POSITION
Net investment (deficit) in capital assets (26,653)
Unrestricted net position 94,466,817
Total net position 94,440,164 $

PIONEER COMMUNITY ENERGY

STATEMENT OF NET POSITION
As of November 30, 2023

CCA FUND
See accountants' compilation report. 2
CCA Fund

OPERATING REVENUES
Electricity sales, net 92,242,011 $
Other income 15,000
Total operating revenues 92,257,011

OPERATING EXPENSES
Cost of electricity 65,790,977
Contract services 2,447,465
Staff compensation 1,451,143
Other operating expenses 374,377
Total operating expenses 70,063,962
Operating income (loss) 22,193,049

NONOPERATING REVENUES (EXPENSES)
Interest and investment returns 768,422
Interest and financing expense (506,714)
Nonoperating revenues (expenses), net 261,708
CHANGE IN NET POSITION 22,454,757
Net position at beginning of period 71,985,407
Net position at end of period 94,440,164 $

PIONEER COMMUNITY ENERGY
Five Months Ended November 30, 2023

AND CHANGES IN NET POSITION

STATEMENT OF REVENUES, EXPENSES

CCA FUND
See accountants' compilation report. 3
Participation Rates – November 2023
Participation Rate September 2023 October 2023 November 2023 AUBURN INC 85.51% 85.53% 85.66%
COLFAX INC 88.26% 88.49% 88.39%
LINCOLN INC 82.76% 82.82% 82.86%
LOOMIS INC 88.13% 88.08% 87.99%
PLACERVILLE INC 86.97% 86.95% 86.63%
ROCKLIN INC 90.85% 90.79% 90.86%
UNINC EL DORADO CO 80.90% 80.84% 80.70%
UNINC PLACER CO 85.08% 84.96% 85.02%
Grand Total 84.28% 84.23% 84.20%
4 5
ACCOUNTANTS’ COMPILATION REPORT
Board of Directors
Pioneer Community Energy
Management is responsible for the accompanying special purpose budgetary comparison schedule for the CCA Program of Pioneer Community Energy, a California Joint Powers Authority, for the period ended November 30, 2023, and for determining that the budgetary basis of accounting is an acceptable financial reporting framework. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the accompanying statement nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any assurance on this special purpose budgetary comparison statement.

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

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

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

We are not independent with respect to Pioneer Community Energy because we performed certain accounting services that impaired our independence.

Maher Accountancy
San Rafael, CA
December 29, 2023
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com 2023/24 YTD
Amended
Budget
2023/24 YTD
Actual
2023/24 YTD
Variance
(Under) Over
2023/24
YTD
Actual/
Budget %
2023/24
Amended
Budget
2023/24
Amended
Budget
Remaining

ENERGY REVENUES
Energy Sales $ 105,545,723 $ 93,492,092 $ (12,053,631) 89% 225,938,000 $ $ 132,445,908 Green100 Sales 13,395 12,227 91% (1,167) 30,000 17,773
Congestion Revenue Rights 6,822,394 2,232,468 4,589,926 306% 5,000,000 (1,822,394) Less Uncollectible Accounts (1,425,048) (1,262,308) 162,740 89% (3,050,568) (1,788,260) Total Operating Revenues 99,064,406 106,366,538 (7,302,132) 227,917,432 128,853,026

ENERGY EXPENSES
Power Supply 72,613,371 80,414,000 (7,800,629) 90% 183,919,000 111,305,629 OPERATING MARGIN 25,952,538 26,451,035 498,497 43,998,432 17,547,397

OPERATING EXPENSES
Administration
Compensation 266,875 362,711 (95,837) 74% 870,507 603,632 Contract services 196,802 27,635 (169,167) 14% 353,690 381,325 Operating expenses 390,897 285,543 (105,354) 73% 791,126 505,583 Total Administration expenses 950,410 580,052 (370,358) 61% 2,042,958 1,462,906 Finance
Compensation 343,488 345,778 (2,289) 99% 829,866 486,378 Contract services 218,841 90,555 (128,286) 41% 501,063 591,618 Operating expenses 120,293 74,268 62% (46,025) 256,103 181,835 Total Finance expenses 684,911 508,312 (176,600) 74% 1,677,587 1,169,275 Power Procurement
Compensation 240,026 374,682 (134,657) 64% 899,237 659,211 Contract services 523,773 569,648 45,875 109% 1,880,341 1,310,693 Operating expenses 17,917 3,168 18% (14,749) 43,000 39,832 Total Power Procurement expenses 812,841 916,372 (103,530) 89% 2,822,578 2,009,737 Customer Care
Compensation 245,163 302,323 (57,161) 81% 725,576 480,413 Contract services 1,217,238 1,090,049 (127,189) 90% 2,921,370 1,831,321 Operating expenses 7,604 379 5% (7,225) 18,250 17,871
Total Customer Care expenses 1,335,590 1,527,165 (191,575) 87% 3,665,196 2,329,606 Marketing & Communications
Compensation 80,801 49,091 61% (31,710) 193,922 144,831 Contract services 460,983 441,123 96% (19,860) 1,106,360 665,237 Operating expenses 272,684 193,152 71% (79,531) 361,600 168,448 Total Marketing expenses 814,468 683,367 (131,101) 84% 1,661,882 978,515 Legislative & Regulatory
Compensation 226,400 240,722 (14,321) 94% 577,732 351,332 Contract services 134,713 59,547 44% (75,166) 317,275 257,728 Operating expenses 2,625 921 35% (1,704) 6,300 5,379
Total Legislative expenses 286,868 378,059 (91,191) 76% 901,307 614,439 Programs
Compensation 87,618 74,522 85% (13,096) 210,283 135,761 Contract services 25,833 - (25,833) 0% 62,000 62,000
Operating expenses 719,882 - (719,882) 0% 1,727,717 1,727,717 Total Programs expenses 833,333 74,522 (758,811) 9% 2,000,000 1,925,478 Total Operating Expenses 6,104,718 4,281,552 (1,823,166) 70% 14,771,508 10,489,956

NON-OPERATING REVENUES (EXPENSES)
Investment gains (losses) 187,500 768,421 580,921 750,000 (18,421) Term Loan Debt Service (395,833) (747,966) (352,133) 189% (950,000) (202,034) Additional Term Loan Principal - - - (2,100,000) (2,100,000) Line/Letter of Credit Fees (175,000) - 175,000 0% (350,000) (350,000) Financial Security Requirement - - - (360,000) (360,000) Nonoperating revenues (expenses), net (383,333) 35,455 418,789 (3,010,000) (3,045,455) Total Expenses (Energy, Operating, Non-Operating) 86,902,052 76,859,468 (10,042,584) 201,700,508 124,841,040 Contribution to/(from) Reserves $ 19,464,486 $ 22,204,938 $ 2,740,452 $ 26,216,924 $ 4,011,986

BUDGETARY COMPARISON SCHEDULE
Five Months Ended November 30, 2023

PIONEER COMMUNITY ENERGY

CCA FUND

Staff Report – Item 2
To: The Governing Board
From: Brad Koehn, Director of Finance and Administration Item 2: Receive Financial Audit Report from Pisenti & Brinker, LLP Date: 1/18/2024

RECOMMENDATION
Receive the Year-End Financial Statements and the Independent Auditor’s Report for the Fiscal Year 2022-23.

AUDIT COMMITTEE
At the January 3, 2024, meeting of the Audit Committee, committee members received a presentation from the Independent Auditor and discussed the status of the audit and the auditor’s opinion.

BACKGROUND
The annual audit of the financial statements has been completed and the report prepared by Pisenti & Brinker, LLP has been issued to the Agency. The auditors have rendered a clean opinion and “found the financial statements referred to above present fairly, in all material respects, the financial position of Pioneer as of June 30, 2023 and 2022 and the changes in financial position and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.” The Statements described below are for the entirety of Pioneer and include both the Community Choice Aggregation and mPOWER program components.

Basic Financial Statements
The Statement of Net Position presents information about assets and liabilities and the difference between the two are reported as net position. The change in net position over time is an indicator of whether the financial position of Pioneer is improving or deteriorating.

The Statement of Revenues, Expenses and Changes in Net Position reports how the net position changed during the year and presents a comparison between operating and non-operating revenues and operating and non-operating expenses.

The Statement of Cash Flows reports the cash provided and used by operating activities, as well as other sources and uses, such as financing and investing activities.

Notes to the Financial Statements
Various notes provide additional information that is essential to a full understanding of the information provided in the basic financial statements. They are found immediately following the financial statements to which they refer.

ANALYSIS & DISCUSSION
The following are highlights of the financial statement as of June 30, 2023:
 Total assets were $103 million with current assets comprised of $97 million. Current assets are mostly comprised of cash and cash equivalents of $18.3 million; investments (LAIF) of $41.2 million; Agenda Item: 2 Agenda Date: 1/18/2024

accounts receivable of $18.9 million, and accrued revenue of $9.8 million. Current assets have increased each year since Pioneer’s launch as a result of operating surpluses.  Total liabilities were $30.7 million of which current liabilities totaled $17.3 million. Current liabilities primarily consist of cost of electricity that has been delivered to customers, but not yet paid to Pioneer. Other liabilities include interest and bonds payable. Noncurrent liabilities include Bonds and Notes Payable due in more than a year.
 Total operating revenues were $200 million which is almost exclusively generated from electricity sales.
 Total operating expenses were $164.2 million which was primarily the cost of electricity $154.8 million, contract services $5.7 million, and staffing cost of $3 million.

FISCAL IMPACT
During Fiscal Year 2022-23, Pioneer’s total revenues exceeded total expenses which resulted in the Net Position of increase of $35.9 million to total Net Position of $72.3 million.

ATTACHMENTS

1. Audited Financials for the fiscal year ended June 30, 2023 Financial Statements
Fiscal Years Ended June 30, 2023 and 2022
with Report of Independent Auditors

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

Statements of Net Position

...

...11
Statements of Revenues, Expenses and Changes in Net Position ................. .................12
Statements of Cash Flows

. .................13
Notes to the Basic Financial Statements

. .................15
Supplementary Information:

Combining Financial Statements

...

.............32

PIONEER COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
4 The Management’s Discussion and Analysis provides an overview of Pioneer Community Energy’s (Pioneer) financial activities as of and for the years ended June 30, 2023 and 2022. The information presented here should be considered in conjunction with the audited financial statements.

BACKGROUND
The formation of Pioneer was made possible in 2002 by the passage of California Assembly Bill 117, enabling communities to purchase power on behalf of their residents and businesses and creating competition in power generation.

Pioneer was created as a California Joint Powers Authority (JPA) in August 2015. Pioneer was established to provide electric power at competitive cost as well as to provide other benefits within Placer County, including reducing greenhouse gas emissions related to the use of power, procuring energy with a priority on stimulating local job creation through various programs and development, promoting long-term electric rate stability and energy reliability for residents and business, the use and development of local renewable resources, as well as promoting personal and community ownership of renewable resources.

Pioneer currently services eight jurisdictions located in El Dorado and Placer counties, including the cities and towns of Auburn, Colfax, Loomis, Lincoln, Placerville, and Rocklin, and the unincorporated areas of El Dorado and Placer Counties. Service to the cities of Grass Valley and Nevada City is scheduled to begin in January 2024. Governed by a Board of Directors (Board) consisting of elected representatives from each jurisdiction, Pioneer is responsible for the acquisition of electric power for its service area. Pioneer has the rights and powers to set rates for the services it furnishes, incur indebtedness, and issue bonds or other obligations.

PIONEER COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
5 Financial Reporting
Pioneer presents its financial statements as an enterprise fund under the economic resources measurement focus and the accrual basis of accounting, in accordance with generally accepted accounting principles (GAAP) for proprietary funds, as prescribed by the Governmental Accounting Standards Board (GASB).

Contents of this report
This report is divided into the following sections:

Management’s Discussion and Analysis.

The basic financial statements:
o The Statements of Net Position include all of Pioneer’s assets, liabilities, and net position and provide information about the nature and amount of resources and obligations at a specific point in time.
o The Statements of Revenues, Expenses and Changes in Net Position report all of Pioneer’s revenues 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 debt financing. o The Notes to the Basic Financial Statements, which provide additional details and information related to the basic financial statements.

PIONEER COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
6 FINANCIAL HIGHLIGHTS
The following table is a summary of Pioneer’s assets, liabilities, and net position and a discussion of significant changes for the years ended of June 30:
2023 2022 2021
Assets
Current assets 97,006,292 $ 63,926,086 $ 43,877,431 $
Noncurrent assets 6,005,204 7,127,240 10,399,115 Total assets 103,011,496 71,053,326 54,276,546 Liabilities
Current liabilities 17,298,224 17,195,547 9,250,662
Noncurrent liabilities 13,388,282 17,392,289 20,924,501 Total liabilities 30,686,506 34,587,836 30,175,163 Net position
Net investment (deficit) in capital assets (191,411) (133,169) - Unrestricted 72,516,401 36,598,659 24,101,383 Total net position 72,324,990 $ 36,465,490 $ 24,101,383 $ Current Assets
Current assets increased each year as a result of Pioneer’s operating surpluses. The surpluses were the result of rate increases and territorial expansion into the City of Placerville and unincorporated El Dorado County that began in January 2022. Pioneer’s current assets are mostly comprised of cash and cash equivalents, investments, accounts receivable, accrued revenue, and prepaid expenses and deposits. Accrued revenue differs from accounts receivable in that it represents electricity provided to Pioneer customers that had not yet been invoiced as of the statement of net position date.

Noncurrent Assets
Other noncurrent assets consist of the long-term portion of the outstanding principal balance on Property Assessed Clean Energy (PACE) program loans and a leased asset that is presented in accordance with Governmental Accounting Standards Board No. 87 – Leases (GASB 87).

The balance in the PACE program has been declining as loans continue to be paid down. The PACE program ceased to take new applications after August 2021 and is no longer making new loans.

PIONEER COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
7 Current Liabilities
The largest component of current liabilities is the unpaid cost of electricity delivered to customers, which remained stable from year to year. Other components of current liabilities include accounts payable for services, the current portion of bonds and note payable, taxes and surcharges due to other governments and other accrued liabilities. The increase in current liabilities from 2021 to 2022 is a result of the increased costs associated with the expansion into the City of Placerville and unincorporated El Dorado County that began in 2022.

Noncurrent Liabilities
Noncurrent liabilities include the portion of bonds and note payable principal due after one year.

The decrease in bonds and note payable reflects debt payments made.

Revenues and Expenses
The following table is a summary of Pioneer’s results of operations and a discussion of significant changes for the years ended June 30:
2023 2022 2021
Operating revenues 199,600,868 $ 115,635,810 $ 82,597,443 $ Grant revenue 1,041,957 1,396,552 - Interest and investment returns 247,223 (142,111) (69,041) Total income 200,890,048 116,890,251 82,528,402 Operating expenses 164,224,209 103,735,929 79,688,391 Interest and financing expense 806,339 790,215 749,068 Total expenses 165,030,548 104,526,144 80,437,459 Change in net position 35,859,500 $ 12,364,107 $ 2,090,943 $ Operating Revenues
Pioneer’s operating revenues are derived from the sale of electricity to commercial and residential customers throughout its territory. Pioneer began providing electricity to the City of Placerville and unincorporated El Dorado County in January 2022. This is the main driver of revenues from 2021 to 2022, as this enrollment occurred in the middle of the fiscal year 2022. This also accounts for the revenue increase from 2022 to 2023 as fiscal year 2023 was the first full year that included these additional customers. In addition to customer expansion, rate increases also provided for revenue increases each year.

PIONEER COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
8 Grant Revenue and Investment Returns
Grant revenue increased from 2021 to 2022 primarily the result of a grant from the California Arrearage Payment Program (CAPP) to provide relief to customers with past-due accounts arising during the COVID-19 pandemic. CAPP grant income declined from 2022 to 2023.

Investment losses were recognized in 2021 and 2022 due to market value changes for investments held. Increases in the general interest rate climate in 2023 contributed to increased investment returns.

Operating Expenses
Pioneer’s largest expense each year was the purchase of electricity delivered to retail customers.

Pioneer procures energy from a variety of sources and focuses on maintaining a balanced power portfolio at competitive costs. Electricity costs increased each year from 2021 to 2023. While the cost of electricity rose due to market pressures, the main cause of the increase was the expansion to the City of Placerville and unincorporated area of El Dorado County that required additional electricity purchases.

Expenses for staff compensation, contract services and other operating expenses increased each year as the organization continued to grow to support its customer demands.

ECONOMIC OUTLOOK
Pioneer Background
Pioneer serves approximately 85% of all eligible customers in its service territory and this has remained relatively stable since launch. Service to the cities of Grass Valley and Nevada City will begin January 2024 and is expected to result in about a 5.5% increase in revenue. Pioneer staff expects a successful expansion due to our focus on pre-launch outreach and education throughout 2023 combined with prudent energy procurement to ensure that the expansion cities can participate in the same generation rate as current ratepayers.1
Pioneer’s mission is to provide competitive electric rates, reliable service, and a choice in energy options. Since launching in February 2018, actual and projected customer electricity generation savings through December 2023 is estimated to be almost $85 million compared to Pacific Gas & Electric (“PG&E”). Pioneer’s customers currently pay 15%-20% less than PG&E’s generation rates. PG&E’s most recent Energy Resource Recovery Account filing has indicated (not finalized) that the Power Charge Indifference Adjustment (PCIA) (i.e., exit fee) that is charged to Pioneer customers will be minimal or even negative for all of Pioneer’s customer vintages (2017, 2021, and 2023) which would contribute to an ongoing Pioneer discount, reinforcing Pioneer’s generation rate competitive advantage when compared to PG&E. 1 Pioneer has already secured the required energy, renewable energy certificates, and resource adequacy for the expansion into Grass Valley and Nevada City.

PIONEER COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
9 ECONOMIC OUTLOOK (continued)
Pioneer Energy Procurement
Pioneer procures energy consistent with its Board-approved Energy Risk Management Policy that aligns customer load with procurement consisting of California Independent System Operator (“CAISO”) energy, renewable energy certificates (“RECs”), and resource adequacy (“RA”), varying in tenor from 1 month to 20 years. California’s Renewables Portfolio Standard (“RPS”) requires load-serving entities (“LSEs”), such as Pioneer, to supply their retail sales with minimum quantities of eligible renewable energy both on an annual basis in increasing amounts up to 60% in 2030 and through long-term commitments greater than ten years. The State has also directed LSEs to procure 100% of their retail sales from greenhouse gas (“GHG”) free and/or other eligible renewable resources by 2045. Pioneer’s standard product offering complies with the state laws for renewable and GHG-free energy. Pioneer also offers a “Green100” product that consists of 100% renewable energy. The RA resources support grid reliability by ensuring there will be enough supply in the right locations and with sufficient ramping capability to meet load in the CAISO market. Pioneer is 100% hedged for CAISO energy in 2024, 100% procured for its 2024 and compliance period 4 renewable energy requirements, and fully compliant for its 2024 year-ahead RA requirements.

Starting in 2021, there has been a significant runup in energy, REC, and RA prices, mainly due to scarcity in the market for the latter two. Increased PG&E Citygate gas prices drove energy prices higher, while supply constraints led to delays in renewable energy and storage projects that in turn drove REC and RA prices higher. Pioneer has been able to weather the price increases through its laddered hedging strategy (i.e., purchasing percentages of energy, REC, and RA on a scheduled basis similar to “dollar cost averaging”).

Of all the renewable energy resources, Pioneer puts a high priority on procuring biomass energy due to the abundance of biomass in the region and the resulting benefits of local investment, job creation, reduction of wildfire risk, and serving as a baseload renewable energy resource that provides grid resiliency in an otherwise intermittent renewable energy space. The issue has always been its higher associated cost, and in order to help lower the cost of biomass energy procurement and level the playing field with the investor-owned utilities (“IOUs”), Pioneer led the effort to get Assembly Bill (“AB”) 843 passed on a unanimous, bipartisan basis in 2021. This bill enabled community choice aggregators like Pioneer to participate in the Bioenergy Market Adjusting Tariff (“BioMAT”) program (subsidized biomass energy) that the IOUs have had exclusive access to.

The California Public Utilities Commission has offered a Proposed Decision on the implementation process for AB 843, and a Final Decision is expected at the end of November 2023. Pioneer has at least one project in advanced stages to contract with and intends to secure more. In addition to the implementation of the BioMAT program, Pioneer adopted in November 2023 a feed-in tariff program that offers local biomass and small hydroelectric projects above market prices to further bolster biomass energy procurement efforts.

PIONEER COMMUNITY ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED JUNE 30, 2023 AND 2022
10 ECONOMIC OUTLOOK (continued)
Programs
Due to Pioneer’s stable financial condition, the Board approved funding for energy efficiency programs. The budget is capped at 1% of operating revenues. Staff will be working collaboratively with the Advisory Committee in developing programs to launch in 2024.

Green Prepay Bond Transaction
In order to lower the cost of its renewable energy power purchase agreements, Pioneer entered into a 30-year green prepay bond transaction during fiscal year 2022-23 that bundles the renewable power purchase agreements as a long-term financial transaction. These types of transactions are available for municipal utilities and tax-exempt entities such as Pioneer that enable a meaningful power procurement cost savings opportunity. This prepay structure has historically been utilized for natural gas procurement but has recently been expanded to include renewable energy that is received through a long-term power purchase agreement. The first discounted energy month was June 2023 and the expected energy savings for the first five years of the bond transaction is over $13 million. This is a financing tool that is not available to Pioneer’s competitor and will contribute to continued rate stability and rate competitiveness.

Financial Strength
Pioneer has a strong focus on continuing to build credit capacity through increased cash reserves and entering favorable energy purchase commitments. Pioneer’s rate adjustment in January 2023 provided a lower cost to customers compared to PG&E and also provided Pioneer the opportunity to strengthen its reserves. The Board has adopted an increased reserve target of 160 days of liquidity and is anticipated to reach that target during fiscal year 2024-25. The progress towards the reserve target provides an opportunity for credit rating discussions with a national rating agency during Fiscal Year 2023-24. Management intends to continue its conservative use of financial resources and expects ongoing operating surpluses that will build the reserves.

REQUEST FOR INFORMATION
This financial report is designed to provide Pioneer’s customers and creditors with a general overview of the organization’s finances and to demonstrate Pioneer’s accountability for the funds under its stewardship.

Please address any questions about this report or requests for additional financial information to 2510 Warren Dr., Suite B, Rocklin, CA 95677.

Respectfully submitted,
Donald Eckert Jr, Executive Director

BASIC FINANCIAL STATEMENTS

PIONEER COMMUNITY ENERGY

STATEMENTS OF NET POSITION
AS OF JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 11 2023 2022
ASSETS
Current assets
Cash and cash equivalents 18,318,638 $ 13,762,144 $
Investments 41,205,891 14,830,290 Accounts receivable, net of allowance 18,853,246 17,465,041 Accrued revenue 9,787,087 9,527,730 Other receivables 2,361,347 - Interest receivable 286,831 105,318 Contractual assessments receivable 540,445 244,636 Prepaid expenses 41,041 2,056,036 Deposits 5,611,766 5,934,891 Total current assets 97,006,292 63,926,086 Noncurrent assets Contractual assessments receivable 4,554,962 5,560,981 Lease asset, net of amortization 1,450,242 1,566,259 Total noncurrent assets 6,005,204 7,127,240
Total assets 103,011,496 71,053,326 LIABILITIES
Current liabilities
Accrued cost of energy 14,974,963 15,357,098 Accounts payable 474,783 390,414 Other accrued liabilities 406,504 490,276 Interest payable 95,767 119,595
Deposits - energy suppliers 393,756 21,857 Bonds payable 221,666 208,542 Note payable 655,164 549,991 Lease liability 75,621 57,774 Total current liabilities 17,298,224 17,195,547 Noncurrent liabilities Bonds payable 5,220,393 6,368,628 Note payable 6,601,857 9,382,007 Lease liability 1,566,032 1,641,654
Total noncurrent liabilities 13,388,282 17,392,289 Total liabilities 30,686,506 34,587,836

NET POSITION
Net investment (deficit) in capital assets (191,411) (133,169) Unrestricted net position 72,516,401 36,598,659 Total net position 72,324,990 $ 36,465,490 $

PIONEER COMMUNITY ENERGY

STATEMENTS OF REVENUES, EXPENSES

AND CHANGES IN NET POSITION
YEARS ENDED JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 12 2023 2022

OPERATING REVENUES
Electricity sales, net 199,266,165 $ 114,994,421 $
Service charges 334,703 641,389 Total operating revenues 199,600,868 115,635,810 OPERATING EXPENSES Cost of electricity 154,793,109 96,395,324 Contract services 5,675,881 4,429,183 Staff compensation 2,987,978 2,338,563 Other operating expenses 767,241 572,859 Total operating expenses 164,224,209 103,735,929 Operating income 35,376,659 11,899,881 NONOPERATING REVENUES (EXPENSES) Grant revenue 1,041,957 1,396,552 Interest and investment returns 247,223 (142,111) Interest and financing expense (806,339) (790,215) Nonoperating revenues (expenses), net 482,841 464,226 CHANGE IN NET POSITION 12,364,107 35,859,500 Net position of year 36,465,490 24,101,383 Net position at end of year 72,324,990 $ 36,465,490 $

PIONEER COMMUNITY ENERGY

STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 13 2023 2022

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 198,140,056 $ 100,771,369 $
Other operating receipts 616,957 151,935
Contractual assessments received, net 999,913 2,523,468 Payments to suppliers for electricity (155,236,471) (92,485,640) Payments for goods and services (6,584,112) (4,783,162) Payments for staff compensation (2,895,943) (2,285,829) Payments of taxes and surcharges to other governments (517,943) (447,129) Net cash provided by operating activities 34,522,457 3,445,012 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Grant revenue received 1,041,957 1,396,552 Bond proceeds - 1,013,989 Principal paid on bonds and note (3,810,089) (4,531,565) Interest and related expense payments (765,615) (740,959) Net cash used by non-capital financing activities (3,533,747) (2,861,983) CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Payments of lease liabilities (122,325) (118,762) CASH FLOWS FROM INVESTING ACTIVITIES Sale of investments 13,500,000 - Investment income 190,109 24,968 Purchase of investments (40,000,000) (15,000,000) Net cash used by investing activities (26,309,891) (14,975,032) Net change in cash and cash equivalents 4,556,494 (14,510,765) Cash and cash equivalents at beginning of year 13,762,144 28,272,909 Cash and cash equivalents at end of year 18,318,638 $ 13,762,144 $

PIONEER COMMUNITY ENERGY

STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 14 2023 2022
Operating income 35,376,659 $ 11,899,881 $
Adjustments to reconcile operating income to net
cash provided by operating activities
Amortization expense 116,017 - (Increase) decrease in:

Accounts receivable, net (1,388,205) (8,952,708) Accrued revenue (259,357) (5,658,686) Other receivables (2,361,347) 301,254 Prepaid expenses 2,014,995 (1,580,450) Deposits 323,125 (2,562,132) Contractual assessments receivable 710,210 1,882,079 Increase (decrease) in:

Accrued cost of electricity (382,136) 7,931,563
Accounts payable 84,369 45,366 Other accrued liabilities (296,338) 175,775 Energy surcharges due to other governments 3,509 (58,787) Supplier security deposits 580,956 21,857
Net cash provided by operating activities 34,522,457 $ 3,445,012 $

RECONCILIATION OF OPERATING INCOME TO NET

CASH PROVIDED BY OPERATING ACTIVITIES

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
15 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY
Pioneer Community Energy (Pioneer) is a California joint powers authority created in August of 2015. As of June 30, 2023, parties to its Joint Powers Agreement consist of the following local governments:

Counties Cities and Towns
El Dorado Auburn Lincoln
Placer Colfax Nevada City
Grass Valley Placerville
Loomis Rocklin
Pioneer is separate from and derives no financial support from its members. Pioneer is governed by a Board of Directors whose membership is composed of elected officials representing the member governments.

A core function of Pioneer is to provide electric service that includes providing electric energy at competitive rates and it operates as a Community Choice Aggregation (CCA) subject to California Public Utilities Code Section 366.2.

Pioneer operates two programs, the CCA Program and the mPOWER Program.

CCA Program – Pioneer began providing electric generation services to its customers in February of 2018 and began providing services to the unincorporated area of El Dorado County and the City of Placerville in January 2022. Pioneer supplies electric energy to retail customers through its CCA Program. Pioneer participates in the wholesale energy market to acquire its energy and related products (resource adequacy and renewable energy) from a variety of wholesale energy suppliers. Pioneer’s energy is delivered through existing physical infrastructure and equipment owned and operated by the incumbent utility. mPOWER Program – The mPOWER Program provides assessment financing to property owners for the installation of energy efficiency, water conservation and distributed generation improvements. The mPOWER Program is supported from revenues derived from assessments attached to and collected on participating property owners’ property tax bills. Pioneer stopped accepting new applications for the mPOWER program after August 31, 2021.

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
16 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

BASIS OF ACCOUNTING
Pioneer’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.

Pioneer’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, if applicable – net investment in capital assets, restricted and unrestricted.

When both restricted and unrestricted resources are available for use, it is Pioneer’s policy to use restricted resources first, and then unrestricted resources as they are needed.

CASH AND CASH EQUIVALENTS
For the purpose of the Statements of Cash Flows, Pioneer 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.

INVESTMENTS
Investments are stated at fair value based on information from the State of California’s Local Agency Investment Fund (LAIF). Investments with a maturity of less than one year are shown as current assets in the Statement of Net Position.

Pioneer’s Investment Policy permits the investment of funds in United States Treasury obligations, LAIF, commercial paper, certificates of deposits, and money market mutual funds.

PREPAID EXPENSES AND DEPOSITS
Contracts to purchase energy may require Pioneer 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.

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
17 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

LEASE ASSET AND LEASE LIABILITY
Pioneer recognizes an asset and liability when it enters into certain leasing arrangements. The leased asset is amortized over the term of the lease. The lease liability is the present value of payments expected to be paid to the lessor during the lease term. Pioneer’s only leased asset and liability relate to its office premises.

DEPOSITS – ENERGY SUPPLIERS
Various energy contracts entered into by Pioneer require the supplier to provide Pioneer 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 time the deposits will be held.

NET POSITION
Net position is presented in the following components:

Net 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, constructions, or improvement of those assets. Pioneer’s only component in this category relates to its leased asset.

Restricted: This component of net position consists of constraints placed on net asset use primarily imposed by creditors (such as through debt or credit covenants), grantors, contributors, or laws or regulations of other governments, or constraints imposed by law through constitutional provisions or enabling legislation. Pioneer did not have any restricted net position as of June 30, 2023 or 2022.

Unrestricted: This component of net position consists of net position that does not meet the definition of “net investment in capital assets” or “restricted.”

OPERATING AND NON-OPERATING REVENUES
Operating revenues include revenue from the sale of electricity to customers for the CCA Program, and assessments and fees for the mPOWER program.

Investment income is considered non-operating revenue.

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
18 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

REVENUE RECOGNITION
Pioneer recognizes revenue according to the accrual basis of accounting. 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 NONOPERATING EXPENSES
Operating expenses include the costs of electricity and services, administrative expenses and amortization of right-to-use assets. Expenses not meeting this definition are reported as nonoperating expenses.

ELECTRIC POWER PURCHASED
During the normal course of business, Pioneer purchases electric power from numerous suppliers.

Electricity costs include the cost of electricity and capacity arising from bilateral contracts with energy suppliers as well as generation credits, and load and other charges arising from Pioneer’s participation in the California Independent System Operator’s (CAISO) centralized market. The cost of electricity and capacity is recognized as “Cost of Electricity” in the Statements of Revenues, Expenses and Changes in Net Position.

To comply with the State of California’s Renewable Portfolio Standards (RPS) and self-imposed benchmarks, Pioneer acquires RPS eligible renewable energy evidenced by Renewable Energy Certificates (Certificates) recognized by the Western Renewable Energy Generation Information System (WREGIS). Pioneer obtains Certificates with the intent to retire them and does not sell or build surpluses of Certificates with a profit motive. Pioneer recognizes an expense on a monthly basis that corresponds to the volume of electricity sold to its customers. This expense recognition increases accrued cost of electricity reported on the Statements of Net Position. Payments made to suppliers reduce the accrued cost of electricity.

Pioneer purchases capacity commitments from qualifying generators to comply with the California Public Utilities Commission’s Resource Adequacy Program. The goals of the Resource Adequacy Program are to provide sufficient resources to CAISO to ensure the safe and reliable operation of the grid in real-time and to provide appropriate incentives for the siting and construction of new resources needed for reliability in the future.

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
19 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

STAFFING COSTS
Pioneer pays employees bi-weekly and fully pays its obligation for health benefits and contributions to its defined contribution retirement plan each month. Pioneer is not obligated to provide post-employment healthcare or other post-employment benefits (OPEB), and, accordingly, no related liability is reported in these financial statements. Pioneer provides compensated time off, and the related liability is reported in these financial statements.

INCOME TAXES
Pioneer is a joint powers authority under the provision of the California Government Code and is not subject to federal or state income or franchise taxes.

ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

RECLASSIFICATIONS
Certain amounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation of the current-year financial statements. These reclassifications did not result in any change in the previously reported net position or change in net position.

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
20 2. CASH AND CASH EQUIVALENTS
Pioneer maintains its cash in both interest-bearing and non-interest-bearing deposit accounts at Umpqua Bank and the Placer County Treasurer. Pioneer’s bank deposits are subject to California Government Code Section 16521, which requires banks to collateralize public funds in excess of the Federal Deposit Insurance Corporation (FDIC) limit of $250,000 by 110%. Certain short-term investments with original maturities of less than three months are classified as cash and cash equivalents, which are not subject to the collateral requirement or FDIC coverage previously mentioned.

3. INVESTMENTS
As of June 30, the fair value of investments was as follows:
2023 2022
Local Agency Investment Fund 41,205,891 $ 14,830,290 $
Revenue earned in the California Local Agency Investment Fund (LAIF) are allocated quarterly to the participating funds using the daily cash balance of each fund. Participants in LAIF include voluntary and involuntary participants. Pioneer is a voluntary participant. LAIF is not registered with the Securities and Exchange Commission as an investment company.

LAIF information can be obtained from the California State Treasurer.

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

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. Pioneer’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. Deposits and withdrawals from LAIF are made on the basis of $1 which is substantially equal to fair value. Pioneer’s proportionate share of investments at LAIF as of June 30, 2023 and 2022 of approximately $41,206,000 and $14,830,000, respectively, are not required to be categorized under the fair value hierarchy.

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
21 3. INVESTMENTS (Continued)

CREDIT RISK
Credit risk is the risk an issuer or other counterparty to an investment will not fulfill its obligations. As of June 30, 2023 and 2022, Pioneer’s investments were rated as follows:
2023 2022
Local Agency Investment Fund Not rated Not rated
Pioneer’s investment policy addresses this risk. Pioneer limits investments to those allowed by Section 53601 of the California Government Code that addresses this risk allowed 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, Pioneer’s deposits may not be returned to Pioneer. Pioneer’s deposits are subject to California Government Code Section 16521, which requires banks to collateralize public funds in excess of the Federal Deposit Insurance Corporation (FDIC) limit of $250,000 by 110%.

As of June 30, 2023 and 2022, none of Pioneer’s bank balances are known to be individually exposed to credit risk.

CUSTODIAL CREDIT RISK – INVESTMENTS
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, Pioneer 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 Pioneer’s investments are exposed to custodial credit risk.

Pioneer’s investment policy addresses this risk. All investments owned by Pioneer shall be held in safekeeping by a third-party custodian, acting as an agent for Pioneer under the terms of a custody agreement.

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
22 3. 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. Pioneer 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 June 30, 2023:

Investment type Fair value Less than 1 Year 1-5 years
Local Agency Investment Fund 41,205,891 $ 29,631,156 $ 11,574,735 $ Following is a summary of investment maturities as of June 30, 2022:

Investment type Fair value Less than 1 Year 1-5 years
Local Agency Investment Fund 14,830,290 $ 10,136,503 $ 4,693,787 $

4. ACCOUNTS RECEIVABLE
Accounts receivable were as follows as of June 30:
2023 2022
Accounts receivable from customers 22,965,272 $ 20,056,061 $ Allowance for uncollectible accounts (4,112,026) (2,591,020) Net accounts receivable 18,853,246 $ 17,465,041 $

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
23 4. ACCOUNTS RECEIVABLE (CONTINUED)
The majority of account collections occur within the first few months following customer invoicing. Pioneer estimates that a portion of the billed accounts will not be collected. Pioneer continues collection efforts on accounts in excess of de minimis balances regardless of the age of the account. Although collection success generally decreases with the age of the receivable, Pioneer continues to have success in collecting older accounts. The allowance for uncollectible accounts at the end of a period includes amounts billed during the current and prior fiscal years.

During 2023 and 2022, Pioneer recorded $1,521,000 and $217,000, respectively, as a net increase to the allowance for uncollectible accounts due to bad debt expense and write offs. In 2023 and 2022, Pioneer received CAPP funds that helped recover previously written off accounts receivable. Bad debt expense is reported as a reduction in electricity sales on the Statement of Revenues, Expenses and Changes in Net Position.

5. DEBT

BONDS PAYABLE
mPOWER PROGRAM REVENUE BONDS
On January 26, 2017, the Pioneer Board authorized the issuance of revenue bonds to provide the capital necessary for financing residential property energy efficiency improvements of $25 million and $25 million for non-residential property improvements for the mPower program.

Pioneer uses the designation “R” in its bond series naming system to signify bonds financing residential improvements and “NR” to signify bonds financing non-residential improvements.

During the fiscal year ended June 30, 2022, Pioneer issued revenue bonds Series R 2021-22 in the amount of $1.0 million. All mPOWER Program series bonds are classified as direct borrowings and are payable solely from assessments and fees from participating property owners.

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
24 5. DEBT (Continued)
The following is a summary of Pioneer’s bonds outstanding as of June 30, 2023:

Maturity
Interest
Rates
Issuance
Amount
Outstanding
Balance June
30, 2023
Type of indebtedness
Revenue bonds
(mPOWER Program)
Series R 2016-17 9/2/2037 3.00% 492,589 $ 63,093 $
Series R 2017-18 9/2/2038 3.00% 5,380,276 1,442,876 Series NR 2017-18 9/2/2038 3.00% 138,323 121,873 Series R 2018-19 9/2/2039 4.50% 5,656,485 1,071,482 Series NR 2018-19 9/2/2039 4.50% 418,152 290,577 Series R 2019-20 9/2/2040 4.50% 2,730,091 842,662 Series NR 2019-20 9/2/2040 4.50% 544,507 - Series R 2020-21 9/2/2041 4.50% 1,544,622 776,264 Series NR 2020-21 9/2/2031 4.50% 128,249 - Series R 2021-22 9/2/2042 4.50% 1,013,989 833,232 Total (mPOWER Program) 18,047,283 $ 5,442,059 Less: Amounts due within one year 221,666 Amounts due after one year 5,220,393 $

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
25 5. DEBT (Continued)

NOTE PAYABLE
In May 2021, Pioneer borrowed $10,500,000 from Umpqua Bank at an interest rate of 3.85% per annum. The monthly payment of principal and interest is $76,880 and the loan is scheduled to be paid off in November 2032. Pioneer has pledged net revenues to secure payment of the note.

The following is a summary of changes in bonds and note payable for the year ended June 30, 2023:

Balance July
1, 2022 Additions
Principal
Repayments
Balance June
30, 2023
Due Within
One Year
Bond Title, Series Number
Series R 2016-17 (mPOWER) 69,439 $ - $ (6,346) $ 63,093 $ 3,244 $ Series R 2017-18 (mPOWER) 1,746,262 - (303,386) 1,442,876 64,212 Series NR 2017-18 (mPOWER) 126,351 - (4,478) 121,873 4,747 Series R 2018-19 (mPOWER) 1,375,811 - (304,329) 1,071,482 49,130 Series NR 2018-19 (mPOWER) 304,295 - (13,718) 290,577 14,541 Series R 2019-20 (mPOWER) 1,111,353 - (268,691) 842,662 28,334 Series NR 2019-20 (mPOWER) - - - - - Series R 2020-21 (mPOWER) 890,568 - (114,304) 776,264 24,449 Series NR 2020-21 (mPOWER) - - - - - Series R 2021-22 (mPOWER) 953,091 - (119,859) 833,232 33,009 Total 6,577,170 $ - $ (1,135,111) $ 5,442,059 $ 221,666 $ Balance July
1, 2022 Additions
Principal
Repayments
Balance June
30, 2023
Due Within
One Year
Note Payable
Umpqua Bank 9,931,998 $ - $ (2,674,977) $ 7,257,021 $ 655,164 $

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
26 5. DEBT (Continued)

CHANGES IN BONDS AND NOTES PAYABLE
The following is a summary of changes in bonds and note payable for the year ended June 30, 2022:

Balance July
1, 2021 Additions
Principal
Repayments
Balance June
30, 2022
Due Within
One Year
Bond Title, Series Number
Series R 2016-17 (mPOWER) 190,701 $ - $ (121,262) $ 69,439 $ 3,531 $ Series R 2017-18 (mPOWER) 2,396,687 - (650,425) 1,746,262 69,838 Series NR 2017-18 (mPOWER) 130,576 - (4,225) 126,351 4,479 Series R 2018-19 (mPOWER) 2,615,291 - (1,239,480) 1,375,811 56,093 Series NR 2018-19 (mPOWER) 322,617 - (18,322) 304,295 13,718 Series R 2019-20 (mPOWER) 2,183,975 - (1,072,622) 1,111,353 33,897 Series NR 2019-20 (mPOWER) 58,342 - (58,342) - - Series R 2020-21 (mPOWER) 1,544,622 - (654,054) 890,568 26,986 Series NR 2020-21 (mPOWER) 128,249 - (128,249) - - Series R 2021-22 (mPOWER) - 1,013,988 (60,897) 953,091 - Total 9,571,060 $ 1,013,988 $ (4,007,878) $ 6,577,170 $ 208,542 $ Balance July
1, 2021 Additions
Principal
Repayments
Balance June
30, 2022
Due Within
One Year
Note Payable
Umpqua Bank 10,455,684 $ - $ (523,686) $ 9,931,998 $ 549,991 $

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
27 5. DEBT (Continued)

MINIMUM FUTURE OBLIGATIONS
Minimum future obligations for the outstanding mPOWER Program Revenue Bonds and the note payable are as follows:

Principal Interest Total
Years ended June 30,
2024 221,666 $ 215,688 $ 437,354 $
2025 232,081 206,572 438,653 2026 243,299 197,014 440,313 2027 257,897 186,943 444,840
2028 273,370 176,268 449,639
2029-2033 1,562,727 701,815 2,264,542 2034-2038 1,741,033 367,686 2,108,720 2039-2043 909,985 65,920 975,906 Total 5,442,059 $ 2,117,908 $ 7,559,967 $ Principal Interest Total
Years ended June 30,
2024 655,164 $ 267,400 $ 922,564 $
2025 623,096 241,727 864,823 2026 765,258 215,047 980,305 2027 735,242 187,322 922,564
2028 764,054 158,510 922,564
2029-2033 3,714,206 325,482 4,039,688 Total 7,257,021 $ 1,395,487 $ 8,652,508 $ mPOWER Program Revenue Bonds
Note Payable

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
28 6. GRANT REVENUE
Pioneer administered 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 is funded through the federal American Rescue Plan Act (ARPA) with Coronavirus State and Local Fiscal Recovery Funds. The program was funded by the State of California in 2023. Grant revenue recognized for the years ended June 30, 2023 and 2022 was $1,041,957 and $1,396,552, respectively.

7. DEFINED CONTRIBUTION RETIREMENT PLAN
Pioneer established the Pioneer Community Energy defined contribution retirement plan under Internal Revenue Code Section 401(a) and 457(b), to provide retirement benefits for its employees. The Plan is administered by a third-party retirement plan administrator. As of June 30, 2023, there were 16 active plan members. Pioneer contributes a minimum of $1,000 per employee per month to the Plan and contributed amounts of $256,000 and $193,000 in total during the fiscal years ended June 30, 2023 and 2022, respectively. Plan provisions and contribution levels were established by and may be amended by the Pioneer Board at any time.

The Plan does not create long-term liabilities such as those associated with defined benefit pension plans.

8. RISK MANAGEMENT
Pioneer is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; and errors and omissions. During the years ended June 30, 2023 and 2022, Pioneer purchased liability and property insurance from commercial carriers. Coverage includes property, general liability, errors and omissions and non-owned automobile. Pioneer has general liability coverage of $4,000,000 and $10,000,000 of cyber liability coverage. Deductibles on the various policies range from $0 to $10,000.

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
29 9. PURCHASE COMMITMENTS
In the ordinary course of business, Pioneer enters into various power purchase agreements in order 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.

The following table details the obligations to purchase existing energy, renewable, and resource adequacy (RA) contracts as of June 30, 2023:

Years ending June 30,
2024 168,700,000 $
2025 157,500,000 2026 126,300,000
2027 79,700,000 2028 58,400,000
2029-2046 436,500,000 Total 1,027,100,000 $

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
30 10. LEASE
A lease asset is reported in accordance with Governmental Accounting Standards Board No. 87 (GASB 87) which requires reporting of certain lease assets and liabilities in the statement of net position.

In May 2018, Pioneer entered into an 88-month non-cancelable lease for office space in Rocklin.

The lease includes an option to renew for two consecutive terms of five years each.

Payments under this lease were $122,000 and $119,000 for the years ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, future minimum lease payments under this lease were projected as follows:

Principal Interest Total
Years ending June 30,
2024 75,621 $ 61,889 $ 137,510 $
2025 82,783 58,853 141,635 2026 92,198 55,526 147,724
2027 101,455 51,799 153,255
2028 110,110 47,742 157,852
2029-2033 697,979 165,222 863,201
2034-2036 481,507 25,786 507,293
Total 1,641,653 $ 466,817 $ 2,108,470 $

11. FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for years ending after June 30, 2023:

GASB has approved GASB Statement No. 100, Accounting Changes and Error Corrections – An Amendment of GASB Statement No. 62; and GASB Statement No. 101, Compensated Absences. When they become effective, application of these standards may restate portions of these financial statements.

PIONEER COMMUNITY ENERGY

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
31 12. JOINT VENTURE
Pioneer 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 January 2023, CCCFA issued bonds in the amount of $459,640,000, excluding original issue premium, the proceeds of which to be used to finance energy purchases that will be delivered to Pioneer. No debt, liability, or obligation of CCCFA is a debt, liability, or obligation of Pioneer.

Pioneer will purchase energy from CCCFA in the same manner as it purchases energy from other suppliers. Pioneer purchased approximately $326,000 from CCCFA during fiscal year 2023. The outstanding purchase commitments related to these financing facilities are included in Note 9.

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 June 30 2023, and 2022, Pioneer contributed approximately $68,000 and $0, 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. 1 . SUBSEQUENT EVENT
The Cities of Grass Valley and Nevada City became members of Pioneer during fiscal year 2023 with Board representatives beginning April 2023. Service will begin to be provided to the two cities beginning January 2024.

Pioneer entered into an amended lease agreement that is expected to take effect during the fiscal year 2024. The effective date is contingent upon completion of certain tenant improvements subsequent to June 30, 2023.

PIONEER COMMUNITY ENERGY

SUPPLEMENTARY INFORMATION

COMBINING STATEMENTS OF NET POSITION
AS OF JUNE 30, 2023 AND 2022
32 2023 2022
CCA
Program
mPOWER
Program
Total CCA
Program
mPOWER
Program
Total
ASSETS
Current assets
Cash and cash equivalents 17,570,066 $ 748,572 $ 18,318,638 $ 12,637,495 $ 1,124,649 $ 13,762,144 $ Investments 41,205,891 - 41,205,891 14,830,290 - 14,830,290 Accounts receivable, net of allowance - 18,853,246 18,853,246 17,465,041 - 17,465,041 Accrued revenue 9,787,087 - 9,787,087 9,527,730 - 9,527,730 Other receivables 2,361,347 - 2,361,347 - - - Interest receivable 275,053 11,778 286,831 28,128 77,190 105,318 Contractual assessments receivable - 540,445 540,445 - 244,636 244,636 Prepaid expenses 41,041 - 41,041 2,056,036 - 2,056,036 Deposits 5,611,766 - 5,611,766 5,934,891 - 5,934,891 Total current assets 95,705,497 1,300,795 97,006,292 62,479,611 1,446,475 63,926,086 Noncurrent assets Contractual assessments receivable - 4,554,962 4,554,962 - 5,560,981 5,560,981 Lease asset, net of amortization 1,450,242 - 1,450,242 1,566,259 - 1,566,259 Total noncurrent assets 1,450,242 4,554,962 6,005,204 1,566,259 5,560,981 7,127,240 Total assets 97,155,739 5,855,757 103,011,496 64,045,870 7,007,456 71,053,326 LIABILITIES Current liabilities
Accrued cost of energy 14,974,963 - 14,974,963 15,357,098 - 15,357,098 Accounts payable 474,783 - 474,783 390,414 - 390,414 Other accrued liabilities 404,873 1,631 406,504 456,573 33,703 490,276 Interest payable 23,283 72,484 95,767 31,865 87,730 119,595 Deposits - energy suppliers 393,756 - 393,756 21,857 - 21,857 Bonds payable - 221,666 221,666 - 208,542 208,542 Note payable 655,164 - 655,164 549,991 - 549,991 Lease liability 75,621 - 75,621 57,774 - 57,774 Total current liabilities 17,002,443 295,781 17,298,224 16,865,572 329,975 17,195,547 Noncurrent liabilities Bonds payable - 5,220,393 5,220,393 - 6,368,628 6,368,628 Note payable 6,601,857 - 6,601,857 9,382,007 - 9,382,007 Lease liability 1,566,032 - 1,566,032 1,641,654 - 1,641,654 Total noncurrent liabilities 8,167,889 5,220,393 13,388,282 11,023,661 6,368,628 17,392,289 Total liabilities 25,170,332 5,516,174 30,686,506 27,889,233 6,698,603 34,587,836 NET POSITION Net investment (deficit) in capital assets (191,411) - (191,411) (133,169) - (133,169) Unrestricted net position 72,176,818 339,583 72,516,401 36,289,806 308,853 36,598,659 Total net position 71,985,407 $ 339,583 $ 72,324,990 $ 36,156,637 $ 308,853 $ 36,465,490 $

PIONEER COMMUNITY ENERGY

SUPPLEMENTARY INFORMATION

COMBINING STATEMENTS OF REVENUES, EXPENSES

AND CHANGES IN NET POSITION
YEARS ENDED JUNE 30, 2023 AND 2022
33 2023 2022
CCA
Program
mPOWER
Program
Total CCA
Program
mPOWER
Program
Total

OPERATING REVENUES
Electricity sales, net 199,266,165 $ - $ 199,266,165 $ 114,994,421 $ - $ 114,994,421 $ Service charges 45,000 289,703 334,703 182,816 458,573 641,389 Total operating revenues 199,311,165 289,703 199,600,868 115,177,237 458,573 115,635,810 OPERATING EXPENSES Cost of electricity 154,793,109 - 154,793,109 96,395,324 - 96,395,324 Contract services 5,624,070 51,811 5,675,881 4,320,370 108,813 4,429,183 Staff compensation 2,987,978 - 2,987,978 2,324,055 14,508 2,338,563 Other operating expenses 766,843 398 767,241 569,479 3,380 572,859 Total operating expenses 164,172,000 52,209 164,224,209 103,609,228 126,701 103,735,929 Operating income 35,139,165 237,494 35,376,659 11,568,009 331,872 11,899,881 NONOPERATING REVENUES (EXPENSES) Grant revenue 1,041,957 - 1,041,957 1,396,552 - 1,396,552 Investment gains (losses) 222,492 24,731 247,223 (100,342) (41,769) (142,111) Interest and financing expense (574,844) (231,495) (806,339) (463,851) (326,364) (790,215) Nonoperating revenues (expenses), net 689,605 (206,764) 482,841 832,359 (368,133) 464,226 CHANGE IN NET POSITION 30,730 35,828,770 35,859,500 12,400,368 (36,261) 12,364,107 Net position at beginning of year 36,156,637 308,853 36,465,490 23,756,269 345,114 24,101,383 Net position at end of year 71,985,407 $ 339,583 $ 72,324,990 $ 36,156,637 $ 308,853 $ 36,465,490 $

PIONEER COMMUNITY ENERGY

SUPPLEMENTARY INFORMATION

COMBINING STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2023 AND 2022
34 2023 2022
CCA
Program
mPOWER
Program
Total CCA
Program
mPOWER
Program
Total

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 198,140,056 $ - $ 198,140,056 $ 100,771,369 $ - $ 100,771,369 $ Other operating receipts 616,957 - 616,957 151,935 - 151,935 Contractual assessments received, net - 999,913 999,913 - 2,523,468 2,523,468 Payments to suppliers for electricity (155,236,471) - (155,236,471) (92,485,640) - (92,485,640) Payments for goods and services (6,499,835) (84,277) (6,584,112) (4,662,693) (120,469) (4,783,162) Payments for staff compensation (2,895,943) - (2,895,943) (2,271,321) (14,508) (2,285,829) Payments of taxes and surcharges to other governments (517,943) - (517,943) (447,129) - (447,129) Net cash provided by operating activities 33,606,821 915,636 34,522,457 1,056,521 2,388,491 3,445,012 CASH FLOWS FROM NON-CAPITAL

FINANCING ACTIVITIES
Grant revenue received 1,041,957 - 1,041,957 1,396,552 - 1,396,552 Bond proceeds - - - - 1,013,989 1,013,989 Principal paid on bonds and note (2,674,978) (1,135,111) (3,810,089) (1,537,675) (2,993,890) (4,531,565) Interest and related expense payments (518,874) (246,741) (765,615) (398,878) (342,081) (740,959) Net cash used by non-capital financing activities (2,151,895) (1,381,852) (3,533,747) (540,001) (2,321,982) (2,861,983) CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Payments of lease liabilities (122,325) - (122,325) (118,762) - (118,762) CASH FLOWS FROM INVESTING ACTIVITIES Sale of investments 13,500,000 - 13,500,000 - - - Investment income 99,970 90,139 190,109 41,253 (16,285) 24,968 Purchase of investments (40,000,000) - (40,000,000) (15,000,000) - (15,000,000) Net cash provided (used) by investing activities (26,400,030) 90,139 (26,309,891) (14,958,747) (16,285) (14,975,032) Net change in cash and cash equivalents 4,932,571 (376,077) 4,556,494 (14,560,989) 50,224 (14,510,765) Cash and cash equivalents at beginning of year 12,637,495 1,124,649 13,762,144 27,198,484 1,074,425 28,272,909 Cash and cash equivalents at end of year 17,570,066 $ 748,572 $ 18,318,638 $ 12,637,495 $ 1,124,649 $ 13,762,144 $ Reconciliation of Operating Income to Net Cash Provided by Operating Activities
2023 2022
CCA
Program
mPOWER
Program
Total CCA
Program
mPOWER
Program
Total
Operating income 35,139,165 $ 237,494 $ 35,376,659 $ 11,568,009 $ 331,872 $ 11,899,881 $ Adjustments to reconcile operating income to net
cash provided by operating activities
Amortization expense 116,017 - 116,017 - - - (Increase) decrease in:

Accounts receivable, net (1,388,205) - (1,388,205) (8,952,708) - (8,952,708) Accrued revenue (259,357) - (259,357) (5,658,686) - (5,658,686) Other receivables (2,361,347) - (2,361,347) 118,438 - 301,254 Prepaid expenses 2,014,995 - 2,014,995 (1,580,450) - (1,580,450) Deposits 323,125 - 323,125 (2,562,132) - (2,562,132) Contractual assessments receivable - 710,210 710,210 - 2,064,895 1,882,079 Increase (decrease) in:

Accrued cost of electricity (382,136) - (382,136) 7,931,563 - 7,931,563 Accounts payable 84,369 - 84,369 45,366 - 45,366 Other accrued liabilities (264,270) (32,068) (296,338) 184,051 (8,276) 175,775 Energy surcharges due to other governments 3,509 - 3,509 (58,787) - (58,787) Supplier security deposits 580,956 - 580,956 21,857 - 21,857 Net cash provided by operating activities 33,606,821 $ 915,636 $ 34,522,457 $ 1,056,521 $ 2,388,491 $ 3,445,012 $

Staff Report – Item 3
To: The Governing Board
From: Inder Khalsa, General Counsel
Don Eckert, Executive Director
Item 3:

Date:

Adopt Resolution Approving the Second Amended and Restated Joint Powers Agreement for Pioneer Community Energy with any changes requested by the Governing Board
1/18/2024

RECOMMENDATION
Adopt a Resolution approving the Second Amended and Restated Joint Powers Agreement for Pioneer Community Energy with any changes requested by the Governing Board.

BACKGROUND
In 2015, Placer County and the City of Colfax entered into a Joint Powers Agreement (JPA) for the purpose of establishing the Sierra Valley Energy Authority to operate a PACE program. In 2017, the JPA was amended and restated to rename the agency Pioneer Community Energy, create a community choice aggregation program and add the cities of Auburn, Lincoln, Rocklin, and the Town of Loomis as member agencies. Since then, that First Amended and Restated JPA has been amended five times to make minor text changes and add new members.

At the October 19, 2023 Board meeting, the General Counsel provided a presentation to the Governing Board regarding the desirability of adopting a Second Amended and Restated JPA. The Governing Board directed General Counsel to prepare a draft Second Amended and Restated JPA for Board consideration and discussion. At the November 16, 2023 Board meeting, the Governing Board considered a revised draft of the Second Amended and Restated JPA and authorized staff to notice member agencies and proceed with the formal amendment process.

In accordance with Section 19, Amendments, of the First Amended and Restated Agreement, Pioneer Staff sent 30-days advanced notice to all member agencies of a proposed vote by the Pioneer Board to adopt the Second Amended and Restated JPA on January 18, 2024.

The General Counsel now seeks final approval of the Second Amended and Restated JPA by the Governing Board.

Following the Pioneer Board vote of approval on January 18th, each member agency will then need to individually approve resolutions adopting the Second Amended and Restated JPA.

ANALYSIS & DISCUSSION
As shown in the attached redline showing changes proposed to the First Amended and Restated Agreement, the proposed Second Amended and Restated JPA would make the following revisions and changes to the JPA:
• Name. Change name of agency to Pioneer Community Energy throughout (this was legally effectuated by a resolution adopted in 2017 but references to Sierra Valley Energy Authority remained in the First Amended and Restated); likewise changed references to “the Authority” to “Pioneer” for ease of reading.
• Recitals. Update recitals to reflect history of Pioneer and subsequent amendments. • Effective date. Revise effective date to reflect Second Amended and Restated.

Agenda Item: 3 Agenda Date: 1/18/2024

• Exhibit A for List of Members. Remove references to specific member agencies in Sections 2 and 5 and of the JPA, moving the list of the members to a new Exhibit A for easier reference and updating.
• Special Voting Requirements. Revise Section 8 to separate the discussion of involuntary termination of a member from the discussion of general amendments to the JPA. We moved but did not change the requirement that amendments of the JPA require a 2/3 vote of the Governing Board.
• Amendments. Revise Section 19, Amendments, to specify that only amendments to Section 4, Powers, and the addition of new member agencies requires approval by separate resolutions of each of the member agencies and to make other changes to streamline the amendment process.
• Satisfied/completed obligations. Revise sections that have now been completed to indicate they are satisfied (for example, Section 9E, which describes the provision of start-up funding by Placer County). • Clean-up. Fix incorrect cross references, revise confusing references and typos.

The bulk of the changes proposed are clarifying or clerical in nature. Adopting a clearer Second Amended and Restated JPA will provide the public, staff, and legal counsel with a clearer reference document for questions of governance, eliminating the need to check amendments (at least in the near term). It also provides an opportunity to correct or eliminate outdated references, resulting in a document that is easier to understand.

The primary substantive proposed change to the JPA is to Section 19, Amendment. Currently, notice of a proposed amendments must be sent to each member agency 30 days in advance of the Board considering the amendment. A two-thirds majority of the Board is required to approve an amendment. Further, the amendment must be approved by separate resolution of each of the member agencies, and finally, notice must be provided to members after the amendment is final.

Staff recommends that the amendment process be simplified for amendments that do not directly impact the member agencies or change the nature of Pioneer or its powers. Based on direction received at the October 19 Governing Board meeting, the attached draft would provide a different amendment process for amendments to Section 4 (Powers) and amendments to add a new party to the JPA. For those amendments, separate resolutions of each member agency would be required.

All other amendments could be approved by the Board with a two-thirds vote, with notice provided to the member agencies 30 days prior and after the action. Individual member agency approval by resolution would not be required. This is intended to allow amendments that are more internal in nature (affecting board membership, basic governance, etc.) to proceed with solely a Board vote. That said, member agencies would be given notice and opportunity to object to any proposed amendment.

FISCAL IMPACT
The proposed Second Amended and Restated JPA will not have any direct fiscal impact beyond the time of staff and General Counsel to process the amendment.

ATTACHMENTS

1. Resolution approving the Second Amended and Restated Joint Powers Agreement for Pioneer Community Energy

2. Redline showing changes made between the First and Second Amended and Restated JPA (as amended by Amendments 1-5).

Before the Governing Board of
Pioneer Community Energy
Resolution No.: ____________
The following Resolution was duly passed by the Pioneer Community Energy Board at a regular meeting held January 18, 2024, by the following vote on roll call:

Ayes:

Noes:

Absent:

Signed and approved by me after its passage.
_________________________
Chair
Attest:
_______________________
Secretary
WHEREAS, the Sierra Valley Energy Authority was established on September 9, 2015, between the County of Placer and the City of Colfax; and WHEREAS, the Sierra Valley Energy Authority was originally created for the purpose of providing a financing conduit and program expansion platform for the mPOWER Program; and WHEREAS, counties and cities have the power under California law to aggregate electric load, to purchase and supply electricity for themselves and customers within their jurisdictions, by providing a Community Choice Aggregation Program, pursuant to California Public Utilities Code Sections 331.1 and 366.2; and
WHEREAS, the Amended and Restated Joint Exercise of Power Agreement for the Sierra Valley Energy Authority (the “Amended and Restated JPA”) became effective on February 22, 2017; and
WHEREAS, the Amended and Restated JPA allowed for the establishment of a Community Choice Aggregation Program (the “CCA”) within the jurisdictions of the Voting Members and authorized the Cities of Auburn, Lincoln, Rocklin, and the Town of Loomis to become Voting Members; and
In the matter of: A RESOLUTION APPROVING THE

SECOND AMENDED AND RESTATED JOINT

EXERCISE OF POWERS AGREEMENT

WHEREAS, on July 17, 2017 the Governing Board of the Sierra Valley Energy Authority took action to rename and brand Sierra Valley Energy Authority as Pioneer Community Energy (“Pioneer”); and
WHEREAS, Amendment No. 1 to the Amended and Restated JPA, which was approved by the Governing Board on December 27, 2020 and became effective March 9, 2021, authorized the County of El Dorado and the City of Placerville to become Voting Members; and WHEREAS, Amendment No. 2 to the Amended and Restated JPA, which was approved by the Governing Board on January 21, 2021 and became effective January 27, 2021, eliminated the provision allowing for a weighted vote based on calculated voting shares and related references to a weighted vote; and
WHEREAS, Amendment No. 3 to the Amended and Restated JPA, which was approved by the Governing Board on April 15, 2021 and became effective April 22, 2021, removed the requirement that the Placer County Treasurer and Placer County Auditor-Controller serve as the Treasurer and Auditor-Controller for Pioneer and allowed the Governing Board to appoint the Treasurer and the Auditor-Controller for Pioneer, including the authority to combine the offices to be held by one officer or employee;
WHEREAS, Amendment No. 4 to the Amended and Restated JPA, which was approved on January 20, 2022 and became effective January 25, 2022, provided that for purposes of Government Code Section 6509, the powers of Pioneer shall be exercised subject to the restrictions upon the manner of exercising such powers as are imposed on the City of Colfax, rather than the County of Placer;
WHEREAS, Amendment No. 5 to the Amended and Restated JPA, which was approved by the Governing Board on October 25, 2022 and became effective February 27, 2023, authorized the City of Nevada City and the City of Grass Valley as Voting Members; and WHEREAS, pursuant to Section 19 of the Amended and Restated JPA, the governing body of each Voting Member must individually approve amendments to the Amended and Restated JPA and thereafter the Governing Board of Pioneer ratifies the amendment; WHEREAS, individual approval of amendments by each Voting Member results in logistical complications and delays, which can be remedied by eliminating this requirement for certain amendments and allowing the Governing Board of Pioneer to approve such amendments to the JPA with a two thirds vote after providing notice to Voting Members; and WHEREAS, to these ends, the Pioneer Board desires to approve the execution of the Second Amended and Restated Joint Exercise of Powers Agreement to incorporate the changes made by the previous amendments to the Amended and Restated JPA, clarify language, correct clerical errors, and streamline adoption of amendments to the JPA that do not directly impact the member agencies or change the nature of Pioneer or its powers conditioned on approval of the Second Amended and Restated Joint Exercise of Powers Agreement by each Voting Member; and
WHEREAS, Section 19 of the Amended and Restated JPA also requires Pioneer to provide written notice to each Voting Member 30 days prior to the date the Governing Board intends to vote on an amendment; and
WHEREAS, Pioneer provided written notice to each Voting Member 30 days prior to the date the Pioneer Board intended to vote on the Second Amended and Restated JPA as required by section 19 of the Amended and Restated JPA.

BE IT RESOLVED, the Board of Pioneer Community Energy, State of California, hereby finds, declares, and resolves as follows:

1. The above recitals are true and correct.

2. This Second Amended and Restated Joint Exercise of Powers Agreement for Pioneer Community Energy incorporates changes made by previous amendments to the Amended and Restate JPA, clarifies language, corrects clerical errors, and streamlines the procedure for adoption of amendments to the JPA that do not directly impact the member agencies or change the nature of Pioneer or its powers.

3. The Board hereby approves the Second Amended and Restated Joint Powers Agreement for Pioneer Community Energy under the Joint Powers Law, in the form attached hereto as Exhibit A.

4. Upon adoption of the Second Amended and Restated Joint Powers Agreement by each Voting Member, the Chair is hereby authorized and directed to execute the Second Amended and Restated Joint Powers Agreement for Pioneer Community Energy in the name and on behalf of the Board and Pioneer Staff is authorized to file the Second Amended and Restated Joint Powers Agreement for Pioneer Community Energy with the Secretary of State, LAFCOs with jurisdiction over Pioneer’s service territory, and to take all other necessary steps to implement the Second Amended and Restated Joint Powers Agreement.

5. This Resolution shall take effect immediately upon its adoption.

Exhibit A: The Second Amended and Restated Joint Powers Agreement for Pioneer Community Energy
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SECOND AMENDED AND RESTATED JOINT EXERCISE OF POWERS

AGREEMENT FOR PIONEER COMMUNITY ENERGY
This Second Amended and Restated Joint Exercise of Powers Agreement (hereafter “Agreement”) amends and restates the Amended and Restated Joint Exercise of Powers Agreement (“Amended and Restated JPA”), with the effective date of February 22, 2017, for PIONEER COMMUNITY ENERGY, (hereafter “Pioneer”), as amended and executed pursuant to Amendments No. 1 through 5, by and among the Voting Members (including the New Voting Members) and the Associate Members listed in Exhibit A to this Agreement, all public entities of the State of California who become signatories to this Agreement, and relates to the joint exercise of powers among all of the signatories hereto either as Voting Members or Associate Members (hereafter collectively referred to as the “Members”).

RECITALS:

A. Whereas, each of the Members has a vested interest in the economic well-being of its respective jurisdiction and the region as a whole as well as energy efficiency and clean energy growth and development;
B. Whereas, the Members desire to enter into this Agreement to provide for local control of energy resources, the adoption of programs to foster economic development, energy efficiency, and resource conservation, and to further define and describe the scope of powers to be exercised by Pioneer; C. Whereas, the Members share various powers under California law, including but not limited to the power to aggregate electric load, to purchase and supply electricity for themselves and customers within their jurisdictions, and the power to enter into voluntary contractual assessments with property owners to provide financing for the installation of public and private improvements authorized within their jurisdictions;
D. Whereas, the purposes for entering into this restated Agreement include, but are not limited to:
1) Providing electric power and other forms of energy to customers at a competitive cost;
2) Promoting long-term electric rate stability and energy security and reliability for residents through local control of electric generation resources and the overall power supply portfolio.
3) Carrying out programs to reduce energy consumption;
4) Stimulating and sustaining the local economy by developing local jobs in renewable energy; and
5) Reducing greenhouse gas emissions related to the use of electric power and other forms of energy in Placer County and neighboring regions; -2-
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E. Whereas, it is the intent of this Agreement to promote the development and use of a wide range of energy sources and energy efficiency programs, including but not limited to hydroelectric, biomass, landfill gas, conversion of waste-to-energy, solar, and wind energy production;
F. Whereas, Pacific Gas and Electric and Liberty Energy are the investor owned providers of retail electric service throughout the Voting Member jurisdictions and a Community Choice Aggregator is authorized to aggregate electrical load served by such investor owned providers within its members’ jurisdiction. Each of the Voting Members must adopt an ordinance electing to implement through Pioneer a common Community Choice Aggregation pursuant to California Public Utilities Code Sections 331.1(b) and 366.2(12)(A).

G. Whereas, on September 9, 2015 the County of Placer and the City of Colfax entered into the original Joint Exercise of Powers Agreement for the purpose of establishing the Sierra Valley Energy Authority as a joint powers authority under the Joint Exercise of Powers Act, Government Code Section 6500, et seq.; and H. Whereas, the Amended and Restated JPA became effective on February 22, 2017 and authorized the Cities of Auburn, Lincoln, Rocklin, and the Town of Loomis to become Voting Members of the Joint Exercise of Powers Agreement and established a Community Aggregation Program within the jurisdictions of the Voting Members; and
I. Whereas, Resolution No. 2017-3 of the Sierra Valley Energy Authority approved a name change from Sierra Valley Energy Authority to Pioneer Community Energy, as it is known today; and
J. Whereas, Amendment No. 1 to the Amended and Restated JPA, which was approved by the Governing Board on December 27, 2020 and became effective March 9, 2021, authorized the County of El Dorado and the City of Placerville to become Voting Members; and
K. Whereas, Amendments No. 2 through 4 to the Amended and Restated JPA made certain changes to the Amended and Restated JPA; and
L. Whereas, Amendment No. 5 to the Amended and Restated JPA, which was approved by the Governing Board on October 25, 2022 and became effective February 27, 2023, authorized the City of Nevada City and the City of Grass Valley as Voting Members; and
M. Whereas, the Voting Members wish to amend and restate the Amended and Restated JPA to clean up and streamline the Agreement.

NOW THEREFORE, in consideration of the mutual promises, covenants and conditions herein, the Members hereto agree to establish a joint powers authority as follows:
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Section 1. Authority for this Joint Exercise of Powers Agreement This Agreement is made pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (commencing with Section 6500) relating to the joint exercise of power common to the counties and public agencies and other powers specified therein (hereinafter the “Act”). Under Sections 6505 and 6507 of the Act, Pioneer is a public agency separate from its Members. As provided by Section 6508.1 of the Act, and Section 12 hereof the debts, liabilities or obligations of Pioneer shall not be the debts, liabilities or obligations of the individual Members, unless the governing body of a Member agrees in writing to assume any of those debts, liabilities or obligations.

The Members are each empowered by the laws of the State of California to exercise, in their respective jurisdictions, the powers set forth herein, including but not limited to the power to aggregate electric load, to purchase and supply electricity for themselves and customers within their jurisdictions, and the power to enter into voluntary contractual assessments with properties owners for authorized improvements within their jurisdictions.

Section 2. Purpose of Agreement
The purpose of this Agreement is to establish an independent public agency in order to exercise powers common to the Members and other powers granted to Pioneer under the Act, to study, promote, develop, conduct, operate, and manage energy, energy efficiency and conservation, and other energy-related programs, to exercise all other powers necessary and incidental to accomplishing these purposes, and to provide a Community Choice Aggregation (hereinafter “CCA”) Program, pursuant to California Public Utilities Code Sections 331.1 and 366.2, and as further described in Section 10.

Without limiting the generality of the foregoing, the Members also intend for this Agreement to be used as a mechanism by which Voting Members and non-voting Associate Members may authorize Pioneer to provide Property Assessed Clean Energy (“PACE”) Programs pursuant to Chapter 29 of the Improvement Bond Act of 1911, Division 7 of the California Streets and Highways Code (“Chapter 29”). Pioneer may provide PACE Programs pursuant to Chapter 29 within the boundaries of each Voting Member as set forth in Section 10(C) herein, and within the boundaries of each non-voting Associate Member as set forth in Sections 16 herein. The Members intend that other agreements with Associate Members shall define the terms and conditions associated with the implementation of the CCA Program, the PACE Program, and any other energy programs approved by Pioneer within the territorial jurisdiction of such Associate Members.

Section 3. Effective Date and Term
This Agreement shall be effective as a second amendment and restatement of the Original Agreement, and Pioneer shall continue to exist as a separate public agency under the terms of this Agreement after approval and signature of the Second Amended and Restated Agreement by the New Members and after the California Public Utilities Commission certifies the Implementation Plan filed by Pioneer to include the New Members. This Agreement shall be in -4-
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full force and effect until terminated in the manner herein provided, subject to the rights of the Members to withdraw from Pioneer.

Section 4. Powers
Pioneer shall have all powers common to the Members, and such additional powers accorded to it by law, including the power to develop and implement comprehensive energy and resource development and conservation programs, as described herein. Unless state or federal law provides otherwise, any facilities, buildings or structures located, constructed, or caused to be constructed by Pioneer within the territory of Pioneer shall comply with the General Plan, zoning and building laws of the local jurisdiction within which the facilities, buildings or structures are constructed and comply with the California Environmental Quality Act (CEQA). As required by Government Code Section 6509, the power of Pioneer is subject to the restrictions upon the manner of exercising power possessed by the City of Colfax.

Pioneer is authorized, in its own name, to exercise all powers and do all acts necessary and proper to carry out the provisions of this Agreement and fulfill its purposes, including, but not limited to, each of the following powers, subject to the voting requirements set forth in Section 5C and Section 8:

A. to make and enter into contracts;
B. to employ agents and employees, including but not limited to an Executive Director;
C. to acquire, contract, manage, maintain, and operate ally buildings, infrastructure, works, or improvements;
D. to acquire property by eminent domain, or otherwise, except as limited under Section 6508 of the Act, and to hold or dispose of any property; E. to lease any property;
F. to sue and be sued in its own name;
G. to incur debts, liabilities, obligations and to issue bonds, and to make and enter into agreements and other documents of any nature whatsoever as may be necessary or convenient in the exercise of the powers provided under the Marks-Roos Local Bond Pooling Act of 1985, as amended, and other provisions of California law that authorize public agencies to issue bonds and incur indebtedness, including but not limited to loans from private lending sources pursuant to its temporary borrowing powers such as Government Code Sections 53850 et. seq.;
H. to form subsidiary or independent corporations or entities, if necessary to carry out energy supply and energy conservation programs and to take advantage of legislative or regulatory changes;
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I. to deposit its money pursuant to Section 6505.5 of the Act and to invest its money which is not required for the immediate use of Pioneer, as Pioneer determines is advisable in the same manner and upon the same conditions as local agencies, pursuant to Section 53635 of the California Government Code; J. to apply for, accept, and receive all licenses, permits, grants, loans or other aids from any federal, state, or local public agency;
K. to submit documentation and notices, register, and comply with orders, tariffs and agreements for the establishment and implementation of the CCA Program and other energy programs;
L. to adopt rules, regulations, policies, bylaws and procedures governing the operation of Pioneer (“Operating Rules and Regulations”); M. to establish and operate a CCA program, and make and enter into service agreements relating to the provision of services necessary to plan, implement, operate and administer the CCA Program, including the acquisition of electric power supply and the provision of retail and regulatory support services; N. to establish and operate one or more PACE programs pursuant to Chapter 29, and to enter into one or more agreements, including without limitation, participation agreements, implementation agreements and joint powers agreements and amendments thereto to fulfill such programs both within and outside the jurisdictional boundaries of Pioneer;
O. to establish a non-voting “Associate Member” status that provides membership in Pioneer to jurisdictions that are outside jurisdictional boundaries of Pioneer’s Voting Members, but within whose boundaries a PACE, CCA, or other energy program is established and implemented by Pioneer on behalf of the Associate Member. Said jurisdictions shall adopt one or more agreements (a “PACE Agreement”, “CCA Agreement”, or other energy program agreement, as applicable) on terms and conditions established by Pioneer. The rights of Associate Members shall be limited solely to those terms and conditions expressly set forth in the PACE Agreement, CCA Agreement or other energy program agreement for the purposes of implementing the PACE Program, CCA Program or other energy program, respectively, within the jurisdictional boundaries of the Associate Member. Except as expressly provided for by the PACE Agreement, CCA Agreement or other energy program agreement, Associate Members shall not have any rights otherwise granted to Pioneer Members by this Agreement, including but not limited to the right to vote, the right to amend this Agreement and the right to sit on committees or boards established under this Agreement; P. to execute agreements for the purpose of authorizing Pioneer to implement, manage and administer area-wide and regional programs in the interest of providing energy supply, development of energy generation, energy efficiency, resource conservation, local public welfare and other economically related energy -6-
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programs. The costs incurred by Pioneer in implementing a program, including indirect costs, shall be costs of Pioneer and shall not be assessed to the Members, unless approved by the Governing Body of the Member.

Section 5. Governance and Internal Organization
A. Governing Board. The governing body of Pioneer shall consist of two (2) members of the Placer County Board of Supervisors, and one (1) member each for all other Voting Members, appointed respectively by each Voting Member that is or becomes a signatory to this Agreement (“Board Member”). The total number of Board Members shall equal the total number of Voting Members listed in Exhibit A plus one (1).

The Boards of Supervisors, City Councils and Town Councils of the Voting Members listed in Exhibit A shall respectively appoint such member(s) set out above and not less than one alternate member per Board Member. The term of office of each Board Member and respective alternate may be terminated at any time by the appointing Board of Supervisors, City Council or Town Council. The designated alternate shall have authority to attend, participate, and vote at any meeting of the Board whenever the regular member, for whom they are designated to act as an alternate, is absent from the meeting.

B. Quorum. The majority of the members of the Board shall constitute a quorum.

No action may be taken by the Board unless a quorum is present, except that less than a quorum may adjourn a meeting from time to time.

C. Powers and Function of Board. The Board will exercise governance, policy guidance and oversight over the business and activities of Pioneer, consistent with this Agreement and applicable law. Unless otherwise specified in Section 8, action by Pioneer Board will be taken by majority vote of the Board Members present.

D. Chairperson. The Chairperson and Vice Chairperson of the Board shall be selected by the Board from its members. The term of office of the Chairperson and Vice Chairperson shall each be one calendar year.

E. Secretary. The Board shall appoint a Secretary to the Board who need not be a member of the Board, who shall be responsible for keeping the minutes of all meetings of the Board and all other official records of Pioneer.

F. Meetings. All meetings of the Board shall be held subject to the provisions of the Ralph M. Brown Act, Division 2, Chapter 9 of the California Government Code (hereafter, the “Brown Act”). The Board shall hold at least four regular meetings per year, but the Board may provide for the holding of regular meetings at more frequent intervals. The date, hour and place of each regular meeting shall be fixed by resolution or ordinance of the Board. Regular meetings may be adjourned to another meeting time. Special meetings of the Board may be called in accordance -7-
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with the provisions of California Government Code Section 54956. Directors may participate in meetings telephonically, with full voting rights, only to the extent permitted by law.

G. Bylaws. The Board shall adopt bylaws for the conduct of business that shall not be inconsistent with the provisions of this Agreement, and the laws of the State of California.

H. Board Member Compensation. Board Members shall serve without compensation from Pioneer. However, Board Members may be compensated by their respective appointing authorities. The Board, however, may adopt by resolution a policy relating to the reimbursement by Pioneer of expenses incurred by Board Members.

Section 6. Executive Director and Other Staff
A. Executive Director. The Board shall appoint an Executive Director for Pioneer, who shall be responsible for the day-to-clay operation and management of Pioneer. The Executive Director may exercise all powers of Pioneer, except the powers specifically set forth in Section 4, or those powers that by law must be exercised by the Board. The Executive Director shall hire and supervise any Pioneer employees or consultants.

B. Executive Director Reports to the Board. The Executive Director shall prepare, no later than the 20th day of each first month of each fiscal quarter, a report to the Board on the operations of Pioneer during the preceding fiscal quarter. The Bylaws shall specify the information to be included in the Executive Director’s reports.

C. Services Providers. The Executive Director may appoint one or more services providers to serve as Pioneer’s agent(s) for planning, implementing, operating and administering the PACE Program, the CCA Program, and any other program approved by the Board, in accordance with the provisions of a written agreement between Pioneer and the appointed administrative services provider or providers (a “Services Agreement”). The appointed services provider may be one of the Voting Members. A Services Agreement shall set forth the terms and conditions by which the appointed administrative services provider shall perform or cause to be performed all tasks necessary for planning, implementing, operating and administering the PACE Program, the CCA Program and other approved programs. The Services Agreement shall set forth the term of the Agreement and the circumstances under which the Services Agreement may be terminated by Pioneer. This section shall not in any way be construed to limit the discretion of Pioneer to hire its own employees to administer the PACE Program, the CCA Program or any other program.
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D. Independent Monitor. The Board may appoint or contract for the services of an independent monitor to review programs operated by Pioneer and to report to the Board.

E. Advisory Commissions, Boards or Committees. The Board may establish any advisory commissions, boards, and committees as the Board deems appropriate to assist the Board in carrying out its functions and implementing the CCA Program, other energy programs and the provisions of this Agreement which shall comply with the requirements of the Brown Act. The Board may establish rules, regulations, policies, bylaws or procedures to govern any such commissions, boards, or committees.

Section 7. Treasurer and Auditor-Controller
The Governing Board shall appoint a Treasurer for Pioneer. The Treasurer shall be the depository of Pioneer and shall have all of the duties and responsibilities specified in Section 6505.5 of the Act. The duties and obligations of the Treasurer are further specified in Section 9.

The Governing Body shall appoint an Auditor-Controller for Pioneer in compliance with the Act.

The Auditor-Controller of Pioneer shall make or contract with a certified public accountant to cause an annual audit in compliance with Section 6506 of the Act. Pioneer of the Board to appoint a Treasurer and Auditor/Controller shall include Pioneer to combine both offices to be held by one officer or employee pursuant to section 6505.6 of the Act.

Section 8. Special Voting Requirements and Voting Shares A. Involuntary Termination. Action of the Board on matters set forth in Section 15A (involuntary termination of a Member) shall require the affirmative vote of at least two-thirds of the Board Members; provided, however, the Member subject to involuntary termination may not vote, and the number of Board Members constituting two-thirds of all Board Members shall be recalculated as if the Voting Member subject to possible termination were not a Voting Member.

B. Amendment. Action of the Board on matters set forth in Section 19 (amendment of this Agreement) shall require an affirmative vote of at least two-thirds of the Board members.

C. Eminent Domain. A decision to exercise the power of eminent domain on behalf of Pioneer to acquire any property interest other than an easement, right-of-way, or temporary construction easement shall require a vote of at least two-thirds of all Board Members.

D. Contributions by Members. The imposition on any Member of any obligation to make contributions or pledge assets as a condition of continued participation in the PACE Program, the CCA Program, or other energy programs shall require a vote of at least two-thirds of all Board Members and the approval of the governing boards of the Members and Associate Members who are being asked to make such contribution or pledge.
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Section 9. Financial Provisions
A. Fiscal Year. For the purposes of this Agreement, Pioneer shall have such fiscal year from July 1 to and including the following June 30.

B. Depository. All funds of Pioneer shall be held in separate accounts in the name of Pioneer and not commingled with funds of any Member or any other person or entity. All funds of Pioneer shall be strictly and separately accounted for, and regular reports shall be rendered of all receipts and disbursements, at least quarterly during the fiscal year. The books and records of Pioneer shall be open to inspection by the Members at all reasonable times, The Board shall contract with a certified public accountant to make an annual audit of the accounts and records of Pioneer, which shall be conducted in accordance with the requirements of Section 6505 of the Act.

C. Expenditures. All expenditures shall be made in accordance with the approved budget and upon the approval of any officer so authorized by the Board in accordance with its Operating Rules and Regulations. The Treasurer shall draw checks or warrants or make payments by other means for claims or disbursements not within an applicable budget only upon the prior approval of the Board.

D. Budget. The initial budget shall be approved by the Board. The Board may revise the budget from time to time through an Pioneer Document as may be reasonably necessary to address contingencies and unexpected expenses. All subsequent budgets of Pioneer shall be approved by the Board in accordance with the Operating Rules and Regulations.

E. Funding of Initial Costs. The County of Placer funded certain activities necessary to implement the CCA Program. These costs were repaid in full when the CCAP Program became operational.

F. CCA Program Costs. The Members desire that all costs incurred by Pioneer that are directly or indirectly attributable to the provision of electric, conservation, efficiency, incentives, financing, or other services provided under the CCA Program, including but limited to the establishment and maintenance of various reserves and performance funds and administrative, accounting, legal, consulting, and other similar costs, shall be recovered through charges to CCA customers receiving such electric services, or from revenues from grants or other third-party sources.

Section 10. Implementation Action and Pioneer Documents A. Each Member shall adopt an ordinance or resolution in accordance with Public Utilities Code Section 366.2(c)(12) for the purpose of specifying that the Member intends to implement a CCA Program by and through its participation in Pioneer.

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intention to have the territory of the Member’s jurisdiction included in the service territory of the CCA.

C. Each New Voting Member that wishes to participate in the PACE Program shall adopt a resolution authorizing it to become a Voting Member under this Agreement. Execution by such New Voting Member of this Agreement shall constitute consent to Pioneer undertaking contractual assessment proceedings under Chapter 29 for all of the properties in such New Voting Member’s incorporated area and to the contractual assessment financing of certain improvements (as enumerated from time to time in Chapter 29, “Improvements”) by Pioneer, upon the request by and voluntary agreement of owners of such properties, in compliance with the laws, rules and regulations applicable to Pioneer’s PACE Program, and to the assumption of jurisdiction thereover by Pioneer for the purposes thereof. Execution by such New Voting Member of this Agreement shall also serve to authorize Pioneer to take each step required for it to provide contractual assessment financing for the Improvements, including the levying, collecting and enforcement of contractual assessments to finance the Improvements and the issuance and enforcement of bonds and other financing instruments to represent and be secured by such contractual assessments. The New Voting Members shall not be required to adopt a PACE Agreement and shall not be subject to the rights and obligations set forth therein, but shall instead, upon becoming Voting Members hereunder, be subject to the rights and obligations expressly set forth herein.

Pioneer may additionally provide PACE Programs pursuant to Chapter 29 within the boundaries of non-voting Associate Members, as described further in Section 16 herein.

D. Implementation Plan and Statement of Intent. Pioneer shall cause to be prepared an Implementation Plan and Statement of Intent meeting the requirements of California Public Utilities Code Section 366.2 and any applicable California Public Utilities Commission regulations. The Implementation Plan and Statement of Intent shall specify the service territory of the CCA to be within the boundaries of the Member jurisdictions that have taken the actions specified in A and B above. The Implementation Plan and Statement of Intent shall not be filed with the California Public Utilities Commission until it is approved by the Board in the manner provided by Section 5.

If a City or County adopts an ordinance and resolution pursuant to A and B above, expressing its desire to become a Member to this Agreement subsequent to the filing of the then most recently filed Implementation Plan and Statement of Intent, the Board shall direct the preparation and filing of a new or amended Implementation Plan and Statement of Intent to include the territory of the County or City as soon as reasonably practicable. The Board may require the County or City to pay the cost of preparation and submission of the Implementation Plan and Statement of Intent. Upon California Public Utilities Commission certification of the new or amended Implementation Plan and Statement of Intent, the Board shall -11-
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take an action to approve the membership of the County or City. The County or City shall then be entitled to all rights under this Agreement, including a seat on the Board and voting rights pursuant to Section 5.A and Section 8.

E. Termination of CCA and PACE Program. Nothing contained in this Article or this Agreement shall be construed to limit the discretion of Pioneer to terminate the implementation or operation of the CCA or the PACE Program at any time in accordance with any applicable requirements of state law.

F. Pioneer Documents. The Members acknowledge and agree that the affairs of Pioneer will be implemented through various documents duly adopted by the Board through Board resolution. The Members agree to abide by and comply with the terms and conditions of all such documents that may be adopted by the Board, subject to the Members’ right to withdraw from Pioneer as described in Section 14.

Section 11. Records and Reports
The Board shall establish reporting requirements and direct staff to maintain such reports, including, but not limited to, funds and accounts as may be required by good accounting practice or by law. All books and records of Pioneer shall be open to inspection at all reasonable times by any Member to this Agreement or its representatives. Annual audits of Pioneer’s accounts and records shall be made by an independent CPA firm, and reports shall be filed in the manner provided in Section 6505 of the California Government Code.

Section 12. Debts, Liabilities and Obligations
Pioneer is a public agency separate from the Members. Pursuant to Sections 6508.1 of the Act, the debts, liabilities or obligations of Pioneer shall not be debts, liabilities or obligations of the individual Members unless the governing board of a Member agrees in writing to assume any of the debts, liabilities or obligations of Pioneer. A Member who has not agreed to assume a Pioneer debt, liability or obligation shall not be responsible in any way for such debt, liability or obligation even if a majority of the Members agree to assume the debt, liability or obligation of Pioneer. Should any debt, liability or obligation of Pioneer not be waived or allowed payable through assets of Pioneer, none of the County or City members shall be liable, except as provided by Government Code sections 895 through 895.8.

Section 13. Insurance and Indemnity
Pioneer shall acquire and maintain such insurance coverage as is necessary to protect the interests of Pioneer, the Members, and the public. The insurance shall also contain a written endorsement to such policy or policies, which names each of the Voting Members as additional insureds. Pioneer shall defend, indemnify, and hold harmless the Members, and each of their respective Board or Council members, officers, agents and employees, from any and all claims, losses, damages, costs, injuries, and liabilities of every kind arising directly or indirectly from the conduct, activities, operations, acts, and omissions of Pioneer under this Agreement. -12-
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Section 14. Withdrawal
A. Right to Withdraw by Voting Member. A Voting Member may withdraw its participation in the CCA Program, effective as of the beginning of Pioneer’s fiscal year, by giving no less than 12 months advance written notice of its election to do so, which notice shall be given to Pioneer and each Voting Member. Withdrawal of a Voting Member shall require an affirmative vote of its governing board.

B. Right to Withdraw By Voting Member After Amendment. Notwithstanding Section 14A, a Voting Member may withdraw its membership in Pioneer following an amendment to this Agreement adopted by the Board which the Board Member appointed as the representative of a Voting Member voted against provided such notice is given in writing within thirty (30) days following the date of the vote. Withdrawal of a Member shall require an affirmative vote of its governing board and shall not be subject to the twelve month advance notice provided in Section 14A. In the event of such withdrawal, the Member shall be subject to the provisions of Section 15B.

C. Continuing Liability; Further Assurances. A Voting Member that withdraws its participation in the CCA Program may be subject to certain continuing liabilities, as described in Section 15B. The withdrawing Voting Member and Pioneer shall execute and deliver all further instruments and documents, and take any further action that may be reasonably necessary, as determined by the Board, to effectuate the orderly withdrawal of such Voting Member from participation in the CCA Program.

D. Withdrawal of Associate Member. The rights of an Associate Member to withdraw from Pioneer shall be governed by the applicable PACE Agreement or CCC Agreement.

Section 15. Termination
A. Involuntary Termination of a Member. Participation of a Member in the CCA program may be terminated for material non-compliance with provisions of this Agreement or any other agreement relating to the Member’s participation in the CCA Program upon a vote of Board Members as provided in Section 8A. Prior to any vote to terminate participation with respect to a Member, written notice of the proposed termination and the reason(s) for such termination shall be delivered to the Member whose termination is proposed at least 30 days prior to the regular Board meeting at which such matter shall first be discussed as an agenda item.

The written notice of proposed termination shall specify the particular provisions of this Agreement or other agreement that the Member has allegedly violated.

The Member subject to possible termination shall have the opportunity at the next regular Board meeting to respond to any reasons and allegations that may be cited as a basis for termination prior to a vote regarding termination. A Member that has had its participation in the CCA Program terminated may be subject to certain continuing liabilities, as described in Section 15B.
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B. Continuing Liability; Refund. Upon a withdrawal or involuntary termination of a Member, the Member shall remain responsible for any claims, demands, damages, or liabilities arising from the Member’s membership or participation in the CCA Program through the date of its withdrawal or involuntary termination, it being agreed that the Member shall not be responsible for any liabilities arising after the date of the Member’s withdrawal or involuntary termination. Claims, demands, damages, or liabilities for which a withdrawing or terminated Member may remain liable include, but are not limited to, losses from the resale of power contracted for by Pioneer to serve the Member’s load. With respect to such liability, upon notice by an Member that it wishes to withdraw from the program, Pioneer shall notify the Member of the minimum waiting period under which the Member would have no costs for withdrawal if the Member agrees to stay in the CCA Program for such period. The waiting period will be set to the minimum duration such that there are no costs transferred to remaining ratepayers. If the Member elects to withdraw before the end of the minimum waiting period, the charge for exiting shall be set at a dollar amount that would offset actual costs to the remaining ratepayers, and may not include punitive charges that exceed actual costs. In addition, such Member also shall be responsible for any costs or obligations associated with the Member’s participation in any program in accordance with the provisions of any agreements relating to such program provided such costs or obligations were incurred prior to the withdrawal of the Member. Pioneer may withhold funds otherwise owing to the Member or may require the Member to deposit sufficient funds with Pioneer, as reasonably determined by Pioneer and approved by a vote of the Board, to cover the Member’s liability for the costs described above. Any amount of the Member’s funds held on deposit with Pioneer above amounts not required to pay any liabilities or obligations shall be returned to the Member. The liability of any Member under this section 15B is subject and subordinate to the provisions of Section 12, and nothing in this section 15B shall reduce, impair, or eliminate any immunity from liability provided by Section 12.

C. Mutual Termination. This Agreement may be terminated by mutual agreement of all the Voting Members; provided, however, the foregoing shall not be construed as limiting the rights of a Voting Member to withdraw its participation in the CCA Program, as described in Section 14A.

D. Disposition of Property upon Termination of Pioneer. Upon termination of this Agreement, any surplus money or assets in possession of Pioneer for use under this Agreement, after payment of all liabilities, costs, expenses, and charges incurred under this Agreement and under any program documents, shall be returned to the then-existing Voting Members in proportion to the contributions made by each. If no such contributions have been made, then such surplus after payment of all liabilities, costs, expenses, and charges shall be distributed to each Voting Member based on Annual Energy Use Divided by Total Annual Energy, multiplied by 100. “Annual Energy Use” means the annual electricity usage, expressed in kilowatt hours (“kWh”) within the Voting Member’s respective jurisdiction, and “Total Annual Energy” means the sum of all the Members -14-
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Annual Energy Use. All measures of kilowatt hours shall be set using the electric load forecast upon which the current annual budget was based. If a Member has more than one Board Member, the distribution will be made pursuant to the above calculation as it relates to the respective jurisdiction.

E. Negotiations with Associate Members. If the Voting Members wish to terminate this Agreement, or if the Voting Members elect to withdraw from the CCA Program following an amendment to this Agreement as provided in Section 14B, but two or more Associate Members wish to continue to participate in the CCA Program, the Voting Members will negotiate in good faith with such Associate Members to allow the Associate Members to become the Voting Members to this Agreement or to effect a transfer of CCA Program operations to another entity.

Section 16. Associate Members
A. With the approval of the Board, any qualified public agency (as defined by Section 6500 of the JPA law) may become a non-voting Associate Member of this Agreement for purposes of participating in the CCA Program. A public agency requesting such membership may apply by presenting to Pioneer a resolution of the public agency approving of this form of participation.

B. Any qualified public agency (as defined by Section 6500 of the JPA law) may become a non-voting Associate Member of this Agreement for purposes of participating in the PACE Program upon (i) such qualified public agency (a) adopting a resolution expressing its desire to become a non-voting Associate Member to this Agreement and authorizing the implementation of a PACE Program within the boundaries of its jurisdiction and (b) executing a PACE Agreement and (ii) the Board approving the qualified public agency as a non-voting Associate Member.

C. The date and terms upon which the applying public agency will become a non-voting Associate Member will be determined by the Board and set forth in a CCA Agreement or PACE Agreement, as applicable.

Section 17. Termination of Powers
Pioneer shall continue to exercise the powers herein conferred upon it until termination of this Agreement, and thereafter shall continue to exercise only such powers as to enable it to pay and discharge all costs, expenses, and charges legally incurred hereunder, and to dispose of, divide and distribute any property required as a result of the joint exercise of such powers.

Section 18. Disposition of Assets; Property and Money
Upon termination of this Agreement under Section 15, all costs, expenses, and charges legally incurred by Pioneer shall be paid and discharged; and Pioneer shall sell such property as may be necessary and shall distribute to the federal or State government such property and funds as are lawfully required; the balance of such property and any surplus money on hand shall be -15-
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distributed or returned in proportion to contributions made by the affected Members except to the extent otherwise agreed upon by the affected Members.

Section 19. Amendments
This Agreement may only be amended by a written amendment approved by a vote of Board Members as provided in Section 8. Amendments to Section 4 of this Agreement, and the addition of new Voting Members shall also be separately approved by a duly adopted resolution of the governing board of each Member. Pioneer shall provide written notice to all Members of amendments to this Agreement at least 30 days prior to the date upon which the proposed amendment is being considered by the Board. If the proposed amendment is adopted by the Board, the Authority shall provide prompt written notice to all Members of the effective date of such amendment along with a copy of the amendment.

Section 20. Severability
Should any part, term or provision of this Agreement be decided by a court of competent jurisdiction to be illegal or in conflict with any law of the State of California, or otherwise be rendered unenforceable or ineffectual, the validity of the remaining portions of provisions shall not be affected thereby.

Section 21. Entire Agreement
This Agreement contains the entire agreement between the Members and supersedes all prior understanding between them with respect to the subject matter of this Agreement. There are no promises, terms, conditions or obligations, oral or written, between or among the Members relating to the subject matter of this Agreement that are not fully expressed in this Agreement.

This Agreement may not be modified, changed, supplemented or terminated, nor may any obligation under this Agreement be waived, except as provided in Section 19.

Section 22. Counterparts and Effective Date
This Agreement may be executed in counterparts and be as valid and binding as if each Member signed the same copy. A faxed copy of the executed signature page shall be sufficient to cause the terms of this Agreement to become fully operative. The effective date of the Agreement shall be the date the second member has executed the Agreement, WITNESS THE AGREEMENT HEREOF the date set opposite our respective entities:
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Exhibit A
Voting Members and Associate Members
Section A.1 Voting Members
City of Auburn
City of Colfax
City of Grass Valley
City of Lincoln
City of Nevada City
City of Placerville
City of Rocklin
County of El Dorado
County of Placer
Town of Loomis
Section A.2 Associate Members
City of Folsom
County of Sacramento
Town of Truckee
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SECOND AMENDED AND RESTATED JOINT EXERCISE OF POWERS

AGREEMENT FOR THE SIERRA VALLEYPIONEER COMMUNITY ENERGY

AUTHORITY
THISThis Second Amended and Restated Joint Exercise of Powers Agreement (hereafter “Agreement”) amends and restates the Amended and Restated Joint Exercise of Powers Agreement for the SIERRA VALLEY(“Amended and Restated JPA”), with the effective date of February 22, 2017, for PIONEER COMMUNITY ENERGY AUTHORITY, (hereafter “Authority”) originally entered as of September 9, 2015, (the “Original Agreement”) which was by and between the COUNTY OF PLACER, and the CITY OF COLFAX, bothPioneer”), as amended and executed pursuant to Amendments No. 1 through 5, by and among the Voting Members (including the New Voting Members) and the Associate Members listed in Exhibit A to this Agreement, all public entities of the State of California. By this amendment and restatement it becomes a Joint Exercise of Powers Agreement by and between the COUNTY OF PLACER, the CITY OF COLFAX and the cities of Rocklin, Lincoln and Auburn and the town of Loomis within the County of Placer who become signatories to this Agreement (the “New Voting Members”, and together with the County of Placer and the City of Colfax, the “Voting Members”), as well as those local agencies that become signatories to this Agreement as Associate Members, and relates to the joint exercise of powers among all of the signatories hereto either as Voting Members or Associate Members (hereafter collectively referred to as the “Members”).

RECITALS:

A. Whereas, each of the Members has a vested interest in the economic well-being of its respective jurisdiction and the region as a whole as well as energy efficiency and clean energy growth and development;
B. Whereas, the Members desire to enter into this Agreement to provide for local control of energy resources, the adoption of programs to foster economic development, energy efficiency, and resource conservation, and to further define and describe the scope of powers to be exercised by the AuthorityPioneer; C. Whereas, the Members share various powers under California law, including but not limited to the power to aggregate electric load, to purchase and supply electricity for themselves and customers within their jurisdictions, and the power to enter into voluntary contractual assessments with property owners to provide financing for the installation of public and private improvements authorized within their jurisdictions;
D. Whereas, the purposes for entering into this restated Agreement include, but are not limited to:
1) Providing electric power and other forms of energy to customers at a competitive cost;
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2) Promoting long-term electric rate stability and energy security and reliability for residents through local control of electric generation resources and the overall power supply portfolio.
3) Carrying out programs to reduce energy consumption;
4) Stimulating and sustaining the local economy by developing local jobs in renewable energy; and
5) Reducing greenhouse gas emissions related to the use of electric power and other forms of energy in Placer County and neighboring regions; E. Whereas, it is the intent of this Agreement to promote the development and use of a wide range of energy sources and energy efficiency programs, including but not limited to hydroelectric, biomass, landfill gas, conversion of waste-to-energy, solar, and wind energy production;
F. Whereas, Pacific Gas and Electric and Liberty Energy are the investor owned providers of retail electric service throughout the Voting Member jurisdictions and a Community Choice Aggregator is authorized to aggregate electrical load served by such investor owned providers within its members’ jurisdiction. Each of the Voting Members must adopt an ordinance electing to implement through the AuthorityPioneer a common Community Choice Aggregation pursuant to California Public Utilities Code Sections 331.1(b) and 366.2(12)(A).¶ G. Whereas, on September 9, 2015 the County of Placer and the City of Colfax entered into the original Joint Exercise of Powers Agreement for the purpose of establishing the Sierra Valley Energy Authority as a joint powers authority under the Joint Exercise of Powers Act, Government Code Section 6500, et seq.; and ¶ H. Whereas, the Amended and Restated JPA became effective on February 22, 2017 and authorized the Cities of Auburn, Lincoln, Rocklin, and the Town of Loomis to become Voting Members of the Joint Exercise of Powers Agreement and established a Community Aggregation Program within the jurisdictions of the Voting Members; and¶
I. Whereas, Resolution No. 2017-3 of the Sierra Valley Energy Authority approved a name change from Sierra Valley Energy Authority to Pioneer Community Energy, as it is known today; and ¶
J. Whereas, Amendment No. 1 to the Amended and Restated JPA, which was approved by the Governing Board on December 27, 2020 and became effective March 9, 2021, authorized the County of El Dorado and the City of Placerville to become Voting Members; and ¶
K. Whereas, Amendments No. 2 through 4 to the Amended and Restated JPA made certain changes to the Amended and Restated JPA; and¶
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L. Whereas, Amendment No. 5 to the Amended and Restated JPA, which was approved by the Governing Board on October 25, 2022 and became effective February 27, 2023, authorized the City of Nevada City and the City of Grass Valley as Voting Members; and ¶
M. Whereas, the Voting Members wish to amend and restate the Amended and Restated JPA to clean up and streamline the Agreement.

NOW THEREFORE, in consideration of the mutual promises, covenants and conditions herein, the Members hereto agree to establish a joint powers authority as follows:

Section 1. Authority for this Joint Exercise of Powers Agreement This Agreement is made pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (commencing with Section 6500) relating to the joint exercise of power common to the counties and public agencies and other powers specified therein (hereinafter the “Act”). Under Sections 6505 and 6507 of the Act, the AuthorityPioneer is a public agency separate from its Members. As provided by Section 6508.1 of the Act, and Section 12 hereof the debts, liabilities or obligations of the AuthorityPioneer shall not be the debts, liabilities or obligations of the individual Members, unless the governing body of a Member agrees in writing to assume any of those debts, liabilities or obligations.

The Members are each empowered by the laws of the State of California to exercise, in their respective jurisdictions, the powers set forth herein, including but not limited to the power to aggregate electric load, to purchase and supply electricity for themselves and customers within their jurisdictions, and the power to enter into voluntary contractual assessments with properties owners for authorized improvements within their jurisdictions.

Section 2. Purpose of Agreement
The purpose of this Agreement is to establish an independent public agency in order to exercise powers common to the Members and other powers granted to the AuthorityPioneer under the Act, to study, promote, develop, conduct, operate, and manage energy, energy efficiency and conservation, and other energy-related programs, to exercise all other powers necessary and incidental to accomplishing these purposes, and to provide a Community Choice Aggregation (hereinafter “CCA”) Program, pursuant to California Public Utilities Code Sections 331.1 and 366.2, and as further described in Section 10.

Without limiting the generality of the foregoing, the Members also intend for this Agreement to be used as a mechanism by which Voting Members and non-voting Associate Members may authorize the AuthorityPioneer to provide Property Assessed Clean Energy (“PACE”) Programs pursuant to Chapter 29 of the Improvement Bond Act of 1911, Division 7 of the California Streets and Highways Code (“Chapter 29”). The AuthorityPioneer may provide PACE Programs pursuant to Chapter 29 within the boundaries of each Voting Member as set forth in Section 10(C) herein, and within the boundaries of each non-voting Associate Member as set forth in Sections 16 herein. The Members intend that other agreements with Associate Members shall define the terms and conditions associated with the implementation of the CCA Program, the PACE Program, and any other energy programs approved by the AuthorityPioneer within the -4-
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territorial jurisdiction of such Associate Members. As of the Effective Date of this Agreement, the Associate Members include the County of Nevada, County of Sacramento, City of Grass Valley, City of Folsom, City of Nevada City and Town of Truckee.

Section 3. Effective Date and Term
This Agreement shall be effective as ana second amendment and restatement of the Original Agreement, and the AuthorityPioneer shall continue to exist as a separate public agency under the terms of this Agreement upon executionafter approval and signature of the Second Amended and Restated Agreement by the County of PlacerNew Members and after the City of ColfaxCalifornia Public Utilities Commission certifies the Implementation Plan filed by Pioneer to include the New Members. This Agreement shall be in full force and effect until terminated in the manner herein provided, subject to the rights of the Members to withdraw from the AuthorityPioneer.

Section 4. Powers
The AuthorityPioneer shall have all powers common to the Members, and such additional powers accorded to it by law, including the power to develop and implement comprehensive energy and resource development and conservation programs, as described herein. Unless state or federal law provides otherwise, any facilities, buildings or structures located, constructed, or caused to be constructed by the AuthorityPioneer within the territory of the AuthorityPioneer shall comply with the General Plan, zoning and building laws of the local jurisdiction within which the facilities, buildings or structures are constructed and comply with the California Environmental Quality Act (CEQA). As required by Government Code Section 6509, the power of the AuthorityPioneer is subject to the restrictions upon the manner of exercising power possessed by the City of Colfax.

The AuthorityPioneer is authorized, in its own name, to exercise all powers and do all acts necessary and proper to carry out the provisions of this Agreement and fulfill its purposes, including, but not limited to, each of the following powers, subject to the voting requirements set forth in Section SC5C and Section 8:

A. to make and enter into contracts;
B. to employ agents and employees, including but not limited to an Executive Director;
C. to acquire, contract, manage, maintain, and operate ally buildings, infrastructure, works, or improvements;
D. to acquire property by eminent domain, or otherwise, except as limited under Section 6508 of the Act, and to hold or dispose of any property; E. to lease any property;
F. to sue and be sued in its own name;
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G. to incur debts, liabilities, obligations and to issue bonds, and to make and enter into agreements and other documents of any nature whatsoever as may be necessary or convenient in the exercise of the powers provided under the Marks-Roos Local Bond Pooling Act of 1985, as amended, and other provisions of California law that authorize public agencies to issue bonds and incur indebtedness, including but not limited to loans from private lending sources pursuant to its temporary borrowing powers such as Government Code Sections 53850 et. seq.;
H. to form subsidiary or independent corporations or entities, if necessary to carry out energy supply and energy conservation programs and to take advantage of legislative or regulatory changes;
I. to deposit its money pursuant to Section 6505.5 of the Act and to invest its money which is not required for the immediate use of the AuthorityPioneer, as the AuthorityPioneer determines is advisable in the same manner and upon the same conditions as local agencies, pursuant to Section 53635 of the California Government Code;
J. to apply for, accept, and receive all licenses, permits, grants, loans or other aids from any federal, state, or local public agency;
K. to submit documentation and notices, register, and comply with orders, tariffs and agreements for the establishment and implementation of the CCA Program and other energy programs;
L. to adopt rules, regulations, policies, bylaws and procedures governing the operation of the AuthorityPioneer (“Operating Rules and Regulations”); M. to establish and operate a CCA program, and make and enter into service agreements relating to the provision of services necessary to plan, implement, operate and administer the CCA Program, including the acquisition of electric power supply and the provision of retail and regulatory support services; N. to establish and operate one or more PACE programs pursuant to Chapter 29, and to enter into one or more agreements, including without limitation, participation agreements, implementation agreements and joint powers agreements and amendments thereto to fulfill such programs both within and outside the jurisdictional boundaries of the AuthorityPioneer;
O. O to establish a non-voting “Associate Member” status that provides membership in the AuthorityPioneer to jurisdictions that are outside jurisdictional boundaries of the AuthorityPioneer’s Voting Members, but within whose boundaries a PACE, CCA, or other energy program is established and implemented by the AuthorityPioneer on behalf of the Associate Member. Said jurisdictions shall adopt one or more agreements (a “PACE Agreement”, “CCA Agreement”, or other energy program agreement, as applicable) on terms and conditions established by the AuthorityPioneer. The rights of Associate Members -6-
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shall be limited solely to those terms and conditions expressly set forth in the PACE Agreement, CCA Agreement or other energy program agreement for the purposes of implementing the PACE Program, CCA Program or other energy program, respectively, within the jurisdictional boundaries of the Associate Member. Except as expressly provided for by the PACE Agreement, CCA Agreement or other energy program agreement, Associate Members shall not have any rights otherwise granted to AuthorityPioneer Members by this Agreement, including but not limited to the right to vote, the right to amend this Agreement and the right to sit on committees or boards established under this Agreement;
P. to execute agreements for the purpose of authorizing the AuthorityPioneer to implement, manage and administer area-wide and regional programs in the interest of providing energy supply, development of energy generation, energy efficiency, resource conservation, local public welfare and other economically related energy programs. The costs incurred by the AuthorityPioneer in implementing a program, including indirect costs, shall be costs of the AuthorityPioneer and shall not be assessed to the Members, unless approved by the Governing Body of the Member.

Section 5. Governance and Internal Organization
A. Governing Board. The governing body of the AuthorityPioneer shall consist of up to a eleven (11) person Board, consisting of two (2) members of the Placer County Board of Supervisors, and one (1) member each for all other Voting Members, appointed respectively by the El Dorado County Board of Supervisors, the Cities of Auburn, Colfax, Grass Valley, Rocklin, Lincoln, Nevada City, Placerville and the Town of Loomiseach Voting Member that is or becomes a signatory to this Agreement (“Board Member”). The total number of Board Members shall equal the total number of Voting Members listed in Exhibit A plus one (1).

The BoardBoards of Supervisors from Placer County, the Board of Supervisors from El Dorado County, and the City/, City Councils and Town Councils set out aboveof the Voting Members listed in Exhibit A shall respectively appoint such member(s) set out above and not less than one alternate member per Board Member. The term of office of each Board Member and respective alternate may be terminated at any time by the appointing Board of Supervisors or, City/ Council or Town Council. The designated alternate shall have authority to attend, participate, and vote at any meeting of the Board whenever the regular member, for whom they are designated to act as an alternate, is absent from the meeting.

B. Quorum. The majority of the members of the Board shall constitute a quorum.

No action may be taken by the Board unless a quorum is present, except that less than a quorum may adjourn a meeting from time to time.
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C. Powers and Function of Board. The Board will exercise governance, policy guidance and oversight over the business and activities of the AuthorityPioneer, consistent with this Agreement and applicable law. Action by the AuthorityUnless otherwise specified in Section 8, action by Pioneer Board will be taken by majority vote of the Board Members present.

D. Chairperson. The Chairperson and Vice Chairperson of the Board shall be selected by the Board from its members. The term of office of the Chairperson and Vice Chairperson shall each be one calendar year.

E. Secretary. The Board shall appoint a Secretary to the Board who need not be a member of the Board, who shall be responsible for keeping the minutes of all meetings of the Board and all other official records of the AuthorityPioneer.

F. Meetings. All meetings of the Board shall be held subject to the provisions of the Ralph M. Brown Act, Division 2, Chapter 9 of the California Government Code (hereafter, the “Brown Act”). The Board shall hold at least four regular meetings per year, but the Board may provide for the holding of regular meetings at more frequent intervals. The date, hour and place of each regular meeting shall be fixed by resolution or ordinance of the Board. Regular meetings may be adjourned to another meeting time. Special meetings of the Board may be called in accordance with the provisions of California Government Code Section 54956. Directors may participate in meetings telephonically, with full voting rights, only to the extent permitted by law.

G. Bylaws. The Board shall adopt bylaws for the conduct of business that shall not be inconsistent with the provisions of this Agreement, and the laws of the State of California.

H. Board Member Compensation. Board Members shall serve without compensation from the AuthorityPioneer. However, Board Members may be compensated by their respective appointing authorities. The Board, however, may adopt by resolution a policy relating to the reimbursement by the AuthorityPioneer of expenses incurred by Board Members.

Section 6. Executive Director and Other Staff
A. Executive Director. The Board shall appoint an Executive Director for the AuthorityPioneer, who shall be responsible for the day-to-clay operation and management of the AuthorityPioneer. The Executive Director may exercise all powers of the AuthorityPioneer, except the powers specifically set forth in Section 4, or those powers that by law must be exercised by the Board. The Executive Director shall hire and supervise any AuthorityPioneer employees or consultants.

B. Executive Director Reports to the Board. The Executive Director shall prepare, no later than the 20th day of each first month of each fiscal quarter, a report to the Board on the operations of the AuthorityPioneer during the preceding fiscal -8-
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quarter. The Bylaws shall specify the information to be included in the Executive Director’s reports.¶
C. Services Providers. The Executive Director may appoint one or more services providers to serve as the AuthorityPioneer’s agent(s) for planning, implementing, operating and administering the PACE Program, the CCA Program, and any other program approved by the Board, in accordance with the provisions of a written agreement between the AuthorityPioneer and the appointed administrative services provider or providers (a “Services Agreement”). The appointed services provider may be one of the Voting Members. A Services Agreement shall set forth the terms and conditions by which the appointed administrative services provider shall perform or cause to be performed all tasks necessary for planning, implementing, operating and administering the PACE Program, the CCA Program and other approved programs. The Services Agreement shall set forth the term of the Agreement and the circumstances under which the Services Agreement may be terminated by the AuthorityPioneer. This section shall not in any way be construed to limit the discretion of the AuthorityPioneer to hire its own employees to administer the PACE Program, the CCA Program or any other program.

D. Independent Monitor. The Board may appoint or contract for the services of an independent monitor to review programs operated by the AuthorityPioneer and to report to the Board.

E. Advisory Commissions, Boards or Committees. The Board may establish any advisory commissions, boards, and committees as the Board deems appropriate to assist the Board in carrying out its functions and implementing the CCA Program, other energy programs and the provisions of this Agreement which shall comply with the requirements of the Brown Act. The Board may establish rules, regulations, policies, bylaws or procedures to govern any such commissions, boards, or committees.

Section 7. Treasurer and Auditor-Controller
The Governing Board shall appoint a Treasurer for the AuthorityPioneer. The Treasurer shall be the depository of the AuthorityPioneer and shall have all of the duties and responsibilities specified in Section 6505.5 of the Act. The duties and obligations of the Treasurer are further specified in Section 9. The Governing Body shall appoint an Auditor-Controller for the AuthorityPioneer in compliance with the Act. The Auditor-Controller of the AuthorityPioneer shall make or contract with a certified public accountant to cause an annual audit in compliance with Section 6506 of the Act. The authorityPioneer of the Board to appoint a Treasurer and Auditor/Controller shall include the authorityPioneer to combine both offices to be held by one officer or employee pursuant to section 6505.6 of the Act. -9-
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Section 8. Special Voting Requirements and Voting Shares A. Involuntary Termination or Amendment. Action of the Board on the matters set forth in Section 1415A (involuntary termination of a Member), or Section 18 (amendment of this Agreement) shall require the affirmative vote of at least two-thirds of the Board Members; provided, however, that for votes to involuntarily terminate a Member under Section 14A, the Board Member(s) for the Member subject to involuntary termination may not vote, and the number of Board Members constituting two-thirds of all Board Members shall be recalculated as if the Voting Member subject to possible termination were not a Voting Member.¶
B. Amendment. Action of the Board on matters set forth in Section 19 (amendment of this Agreement) shall require an affirmative vote of at least two-thirds of the Board members.

C. B. Eminent Domain. A decision to exercise the power of eminent domain on behalf of the AuthorityPioneer to acquire any property interest other than an easement, right-of-way, or temporary construction easement shall require a vote of at least two-thirds of all Board Members.

D. C. Contributions by Members. The imposition on any Member of any obligation to make contributions or pledge assets as a condition of continued participation in the PACE Program, the CCA Program, or other energy programs shall require a vote of at least two-thirds of all Board Members and the approval of the governing boards of the Members and Associate Members who are being asked to make such contribution or pledge.

Section 9. Financial Provisions
A. Fiscal Year. For the purposes of this Agreement, the AuthorityPioneer shall have such fiscal year from July 1 to and including the following June 30.

B. Depository. All funds of the AuthorityPioneer shall be held in separate accounts in the name of the AuthorityPioneer and not commingled with funds of any Member or any other person or entity. All funds of the AuthorityPioneer shall be strictly and separately accounted for, and regular reports shall be rendered of all receipts and disbursements, at least quarterly during the fiscal year. The books and records of the AuthorityPioneer shall be open to inspection by the Members at all reasonable times, The Board shall contract with a certified public accountant to make an annual audit of the accounts and records of the AuthorityPioneer, which shall be conducted in accordance with the requirements of Section 6505 of the Act.

C. Expenditures. All expenditures shall be made in accordance with the approved budget and upon the approval of any officer so authorized by the Board in accordance with its Operating Rules and Regulations. The Treasurer shall draw -10-
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checks or warrants or make payments by other means for claims or disbursements not within an applicable budget only upon the prior approval of the Board.

D. Budget. The initial budget shall be approved by the Board. The Board may revise the budget from time to time through an AuthorityPioneer Document as may be reasonably necessary to address contingencies and unexpected expenses.

All subsequent budgets of the AuthorityPioneer shall be approved by the Board in accordance with the Operating Rules and Regulations.

E. Funding of Initial Costs. The County of Placer has funded certain activities necessary to implement the CCA Program. If the CCA Program becomes operational, these initial costs paid by the County of Placer shall be included in the customer charges for electric services as provided by Section 14 to the extent permitted by law, and the County of Placer shall be reimbursed from the payment of such charges by customers of the Authority. Prior to such reimbursement, the County of Placer shall provide such documentation of costs paid as the Board may request. In the event that the CCAThese costs were repaid in full when the CCAP Program does not becomebecame operational, the County of Placer shall not be entitled to any reimbursement of the initial costs it has paid from the Authority or any Member.

F. CCA Program Costs. The Members desire that all costs incurred by the AuthorityPioneer that are directly or indirectly attributable to the provision of electric, conservation, efficiency, incentives, financing, or other services provided under the CCA Program, including but limited to the establishment and maintenance of various reserves and performance funds and administrative, accounting, legal, consulting, and other similar costs, shall be recovered through charges to CCA customers receiving such electric services, or from revenues from grants or other third-party sources.

Section 10. Implementation Action and AuthorityPioneer Documents A. Each Member shall adopt an ordinance or resolution in accordance with Public Utilities Code Section 366.2(c)(12) for the purpose of specifying that the Member intends to implement a CCA Program by and through its participation in the AuthorityPioneer.

B. Each Member that wishes to participate in the CCA Program shall adopt a resolution expressing its desire to become a Member to this Agreement, and its intention to have the territory of the Member’s jurisdiction included in the service territory of the CCA.

C. Each New Voting Member that wishes to participate in the PACE Program shall adopt a resolution authorizing it to become a Voting Member under this Agreement. Execution by such New Voting Member of this Agreement shall constitute consent to AuthorityPioneer undertaking contractual assessment proceedings under Chapter 29 for all of the properties in such New Voting -11-
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Member’s incorporated area and to the contractual assessment financing of certain improvements (as enumerated from time to time in Chapter 29, “Improvements”) by AuthorityPioneer, upon the request by and voluntary agreement of owners of such properties, in compliance with the laws, rules and regulations applicable to the AuthorityPioneer’s PACE Program, and to the assumption of jurisdiction thereover by AuthorityPioneer for the purposes thereof.

Execution by such New Voting Member of this Agreement shall also serve to authorize AuthorityPioneer to take each step required for it to provide contractual assessment financing for the Improvements, including the levying, collecting and enforcement of contractual assessments to finance the Improvements and the issuance and enforcement of bonds and other financing instruments to represent and be secured by such contractual assessments. The New Voting Members shall not be required to adopt a PACE Agreement and shall not be subject to the rights and obligations set forth therein, but shall instead, upon becoming Voting Members hereunder, be subject to the rights and obligations expressly set forth herein.

The AuthorityPioneer may additionally provide PACE Programs pursuant to Chapter 29 within the boundaries of non-voting Associate Members, as described further in Section 16 herein.

D. Implementation Plan and Statement of Intent. The AuthorityPioneer shall cause to be prepared an Implementation Plan and Statement of Intent meeting the requirements of California Public Utilities Code Section 366.2 and any applicable California Public Utilities Commission regulations. The Implementation Plan and Statement of Intent shall specify the service territory of the CCA to be within the boundaries of the Member jurisdictions that have taken the actions specified in A and B above. The Implementation Plan and Statement of Intent shall not be filed with the California Public Utilities Commission until it is approved by the Board in the manner provided by Section 5.

If a City or County adopts an ordinance and resolution pursuant to A and B above, expressing its desire to become a Member to this Agreement subsequent to the filing of the then most recently filed Implementation Plan and Statement of Intent, the Board shall direct the preparation and filing of a new or amended Implementation Plan and Statement of Intent to include the territory of the County or City as soon as reasonably practicable. The Board may require the County or City to pay the cost of preparation and submission of the Implementation Plan and Statement of Intent. Upon California Public Utilities Commission certification of the new or amended Implementation Plan and Statement of Intent, the Board shall take an action to approve the membership of the County or City. The County or City shall then be entitled to all rights under this Agreement, including a seat on the Board and voting rights pursuant to Section 5.A and Section 8.

E. Termination of CCA and PACE Program. Nothing contained in this Article or this Agreement shall be construed to limit the discretion of the AuthorityPioneer -12-
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to terminate the implementation or operation of the CCA or the PACE Program at any time in accordance with any applicable requirements of state law.

F. AuthorityPioneer Documents. The Members acknowledge and agree that the affairs of the AuthorityPioneer will be implemented through various documents duly adopted by the Board through Board resolution. The Members agree to abide by and comply with the terms and conditions of all such documents that may be adopted by the Board, subject to the Members’ right to withdraw from the AuthorityPioneer as described in Section 14.

Section 11. Records and Reports
The Board shall establish reporting requirements and direct staff to maintain such reports, including, but not limited to, funds and accounts as may be required by good accounting practice or by law. All books and records of the AuthorityPioneer shall be open to inspection at all reasonable times by any Member to this Agreement or its representatives. Annual audits of the AuthorityPioneer’s accounts and records shall be made by an independent CPA firm, and reports shall be filed in the manner provided in Section 6505 of the California Government Code.

Section 12. Debts, Liabilities and Obligations
The AuthorityPioneer is a public agency separate from the Members. Pursuant to Sections 6508.1 of the Act, the debts, liabilities or obligations of the AuthorityPioneer shall not be debts, liabilities or obligations of the individual Members unless the governing board of a Member agrees in writing to assume any of the debts, liabilities or obligations of the AuthorityPioneer. A Member who has not agreed to assume an Authoritya Pioneer debt, liability or obligation shall not be responsible in any way for such debt, liability or obligation even if a majority of the Members agree to assume the debt, liability or obligation of the AuthorityPioneer. Should any debt, liability or obligation of the AuthorityPioneer not be waived or allowed payable through assets of the AuthorityPioneer, none of the County or City members shall be liable, except as provided by Government Code sections 895 through 895.8.

Section 13. Insurance and Indemnity
The AuthorityPioneer shall acquire and maintain such insurance coverage as is necessary to protect the interests of the AuthorityPioneer, the Members, and the public. The insurance shall also contain a written endorsement to such policy or policies, which names each of the [Voting Members] as additional insureds. The AuthorityPioneer shall defend, indemnify, and hold harmless the Members, and each of their respective Board or Council members, officers, agents and employees, from any and all claims, losses, damages, costs, injuries, and liabilities of every kind arising directly or indirectly from the conduct, activities, operations, acts, and omissions of the AuthorityPioneer under this Agreement.

Section 14. Withdrawal
A. Right to Withdraw by Voting Member. A Voting Member may withdraw its participation in the CCA Program, effective as of the beginning of the AuthorityPioneer’s fiscal year, by giving no less than 12 months advance written -13-
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notice of its election to do so, which notice shall be given to the AuthorityPioneer and each Voting Member. Withdrawal of a Voting Member shall require an affirmative vote of its governing board.

B. Right to Withdraw By Voting Member After Amendment. Notwithstanding Section 14A, a Voting Member may withdraw its membership in the AuthorityPioneer following an amendment to this Agreement adopted by the Board which the Board Member appointed as the representative of a Voting Member voted against provided such notice is given in writing within thirty (30) days following the date of the vote. Withdrawal of a Member shall require an affirmative vote of its governing board and shall not be subject to the twelve month advance notice provided in Section 14A. In the event of such withdrawal, the Member shall be subject to the provisions of Section 15B.

C. Continuing Liability; Further Assurances. A Voting Member that withdraws its participation in the CCA Program may be subject to certain continuing liabilities, as described in Section 15B. The withdrawing Voting Member and the AuthorityPioneer shall execute and deliver all further instruments and documents, and take any further action that may be reasonably necessary, as determined by the Board, to effectuate the orderly withdrawal of such Voting Member from participation in the CCA Program.

D. Withdrawal of Associate Member. The rights of an Associate Member to withdraw from the AuthorityPioneer shall be governed by the applicable PACE Agreement or CCC Agreement.

Section 15. Termination
A. Involuntary Termination of a Member. Participation of a Member in the CCA program may be terminated for material non-compliance with provisions of this Agreement or any other agreement relating to the Member’s participation in the CCA Program upon a vote of Board Members as provided in Section 8A. Prior to any vote to terminate participation with respect to a Member, written notice of the proposed termination and the reason(s) for such termination shall be delivered to the Member whose termination is proposed at least 30 days prior to the regular Board meeting at which such matter shall first be discussed as an agenda item.

The written notice of proposed termination shall specify the particular provisions of this Agreement or other agreement that the Member has allegedly violated.

The Member subject to possible termination shall have the opportunity at the next regular Board meeting to respond to any reasons and allegations that may be cited as a basis for termination prior to a vote regarding termination. A Member that has had its participation in the CCA Program terminated may be subject to certain continuing liabilities, as described in Section 15B.

B. Continuing Liability; Refund. Upon a withdrawal or involuntary termination of a Member, the Member shall remain responsible for any claims, demands, damages, or liabilities arising from the Member’s membership or participation in -14-
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the CCA Program through the date of its withdrawal or involuntary termination, it being agreed that the Member shall not be responsible for any liabilities arising after the date of the Member’s withdrawal or involuntary termination. Claims, demands, damages, or liabilities for which a withdrawing or terminated Member may remain liable include, but are not limited to, losses from the resale of power contracted for by the AuthorityPioneer to serve the Member’s load. With respect to such liability, upon notice by an Member that it wishes to withdraw from the program, the AuthorityPioneer shall notify the Member of the minimum waiting period under which the Member would have no costs for withdrawal if the Member agrees to stay in the CCA Program for such period. The waiting period will be set to the minimum duration such that there are no costs transferred to remaining ratepayers. If the Member elects to withdraw before the end of the minimum waiting period, the charge for exiting shall be set at a dollar amount that would offset actual costs to the remaining ratepayers, and may not include punitive charges that exceed actual costs. In addition, such Member also shall be responsible for any costs or obligations associated with the Member’s participation in any program in accordance with the provisions of any agreements relating to such program provided such costs or obligations were incurred prior to the withdrawal of the Member. The AuthorityPioneer may withhold funds otherwise owing to the Member or may require the Member to deposit sufficient funds with the AuthorityPioneer, as reasonably determined by the AuthorityPioneer and approved by a vote of the Board, to cover the Member’s liability for the costs described above. Any amount of the Member’s funds held on deposit with the AuthorityPioneer above amounts not required to pay any liabilities or obligations shall be returned to the Member. The liability of any Member under this section 15B is subject and subordinate to the provisions of Section 12, and nothing in this section 15B shall reduce, impair, or eliminate any immunity from liability provided by Section 12.

C. Mutual Termination. This Agreement may be terminated by mutual agreement of all the Voting Members; provided, however, the foregoing shall not be construed as limiting the rights of a AssociateVoting Member to withdraw its participation in the CCA Program, as described in Section 14A.

D. Disposition of Property upon Termination of AuthorityPioneer. Upon termination of this Agreement, any surplus money or assets in possession of the AuthorityPioneer for use under this Agreement, after payment of all liabilities, costs, expenses, and charges incurred under this Agreement and under any program documents, shall be returned to the then-existing Voting Members in proportion to the contributions made by each. If no such contributions have been made, then such surplus after payment of all liabilities, costs, expenses, and charges shall be distributed to each Voting Member based on Annual Energy Use Divided by Total Annual Energy, multiplied by 100. “Annual Energy Use” means the annual electricity usage, expressed in kilowatt hours (“kWh”) within the Voting Member’s respective jurisdiction, and “Total Annual Energy” means the sum of all the Members Annual Energy Use. All measures of kilowatt hours shall be set using the electric load forecast upon which the current annual budget was -15-
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based. If a Member has more than one Board Member, the distribution will be made pursuant to the above calculation as it relates to the respective jurisdiction.

E. Negotiations with Associate Members. If the Voting Members wish to terminate this Agreement, or if the Voting Members elect to withdraw from the CCA Program following an amendment to this Agreement as provided in Section 14B, but two or more Associate Members wish to continue to participate in the CCA Program, the Voting Members will negotiate in good faith with such Associate Members to allow the Associate Members to become the Voting Members to this Agreement or to effect a transfer of CCA Program operations to another entity.

Section 16. Associate Members
A. With the approval of the Board, any qualified public agency (as defined by Section 6500 of the JPA law) may become a non-voting Associate Member of this Agreement for purposes of participating in the CCA Program. A public agency requesting such membership may apply by presenting to the AuthorityPioneer a resolution of the public agency approving of this form of participation.

B. Any qualified public agency (as defined by Section 6500 of the JPA law) may become a non-voting Associate Member of this Agreement for purposes of participating in the PACE Program upon (i) such qualified public agency (a) adopting a resolution expressing its desire to become a non-voting Associate Member to this Agreement and authorizing the implementation of a PACE Program within the boundaries of its jurisdiction and (b) executing a PACE Agreement and (ii) the Board approving the qualified public agency as a non-voting Associate Member.

C. The date and terms upon which the applying public agency will become a non-voting Associate Member will be determined by the Board and set forth in a CCA Agreement or PACE Agreement, as applicable.

Section 17. Termination of Powers
The AuthorityPioneer shall continue to exercise the powers herein conferred upon it until termination of this Agreement, and thereafter shall continue to exercise only such powers as to enable it to pay and discharge all costs, expenses, and charges legally incurred hereunder, and to dispose of, divide and distribute any property required as a result of the joint exercise of such powers.

Section 18. Disposition of Assets; Property and Money
Upon termination of this Agreement under Section 1415, all costs, expenses, and charges legally incurred by the AuthorityPioneer shall be paid and discharged; and the AuthorityPioneer shall sell such property as may be necessary and shall distribute to the federal or State government such property and funds as are lawfully required; the balance of such property and any surplus -16-
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money on hand shall be distributed or returned in proportion to contributions made by the affected Members except to the extent otherwise agreed upon by the affected Members.

Section 19. Amendments
This Agreement may notonly be amended except by a written amendment approved by a vote of Board membersMembers as provided in Section 8. The AuthorityAmendments to Section 4 of this Agreement, and the addition of new Voting Members shall also be separately approved by a duly adopted resolution of the governing board of each Member. Pioneer shall provide written notice to all Members of amendments to this Agreement, including the effective date of such amendments, at least 30 days prior to the date upon which the proposed amendment is being considered by the Board votes on such amendments. Any. If the proposed amendment required to add a new Voting Member shall only be executed by the Voting Members. Any amendment required to add a new Associate Member shall only be executedis adopted by the new Associate Member andBoard, the Authority shall provide prompt written notice to all Members of the effective date of such amendment along with a copy of the amendment.

Section 20. Severability
Should any part, term or provision of this Agreement be decided by a court of competent jurisdiction to be illegal or in conflict with any law of the State of California, or otherwise be rendered unenforceable or ineffectual, the validity of the remaining portions of provisions shall not be affected thereby.

Section 21. Entire Agreement
This Agreement contains the entire agreement between the Members and supersedes all prior understanding between them with respect to the subject matter of this Agreement. There are no promises, terms, conditions or obligations, oral or written, between or among the Members relating to the subject matter of this Agreement that are not fully expressed in this Agreement.

This Agreement may not be modified, changed, supplemented or terminated, nor may any obligation under this Agreement be waived, except as provided in Section 19.

Section 22. Counterparts and Effective Date
This Agreement may be executed in counterparts and be as valid and binding as if each Member signed the same copy. A faxed copy of the executed signature page shall be sufficient to cause the terms of this Agreement to become fully operative. The effective date of the Agreement shall be the date the second member has executed the Agreement, WITNESS THE AGREEMENT HEREOF the date set opposite our respective entities:¶ -17
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-18-
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¶
CITY OF ROCKLIN, a Municipal Corporation¶
¶
EXECUTED ON ¶
By: ¶
Mayor, ¶
¶
Exhibit A¶
Voting Members and Associate Members¶
¶
Section A.1 Voting Members ¶
City Councilof Auburn¶
¶
And approved as to form:¶
¶
City Attorneyof Colfax¶
¶
ATTEST:¶
¶
City Clerkof Grass Valley ¶
¶
-19-
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¶
TOWN OF LOOMIS, a Municipal Corporation¶
¶
EXECUTED ON ¶
By: ¶
Mayor, ¶
City of Lincoln¶
City of Nevada City¶
City of Placerville¶
City of Rocklin¶
County of El Dorado¶
County of Placer¶
Town of Loomis¶
¶
And approved as to form:¶
¶
¶
Town Attorney¶
¶
ATTEST:¶
¶
¶
Town Clerk¶
¶
-20-
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¶
CITY OF LINCOLN, a Municipal Corporation¶
¶
EXECUTED ON ¶
By: ¶
Peter Gilbert, Mayor¶
¶
And approved as to form:¶
¶
¶
Mona Ebrahirni, ¶
Section A.2 Associate Members¶
City Attorneyof Folsom¶
¶
ATTEST:¶
¶
¶
Gwen Scanlon, City Clerk¶
County of Sacramento¶
Town of Truckee
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Staff Report – Item 4
To: The Governing Board
From: Paige Garcia, Programs Manager
Gina Stassi-Vanacore, Director of Public Affairs, Marketing & Programs Item 4: Receive Update on Upcoming Programs
Date: 1/18/2024

RECOMMENDATION
Receive an update on upcoming programs.

BACKGROUND
The Board provided direction on future programs at the June 15, 2023 Board meeting. With a focus on the residential sector and with input from the Community Advisory Committee, Pioneer staff began reviewing potential program designs and program partnerships.

At the July 20, 2023 Board meeting, the Board approved the contract between Electrum and Pioneer to create an online solar and renewable energy marketplace. The contract was finalized November 20, 2023.

At the September 28, 2023 Board meeting, the Board approved the contract with Greenlite to partner with Pioneer to implement a discounted LED program with local hardware stores. The contract was finalized on October 16, 2023.

At the October 19, 2023 Board meeting, the Board received a presentation on Participate.Energy and gave staff direction to move forward with additional analysis and data review with Participate.Energy and to return to the Board with additional information.

ANALYSIS & DISCUSSION
Greenlite
The Greenlite program will launch at the end of January 2024. There are currently six stores enrolled to participate in the program with orders to carry discounted LED products and display point-of-sale information.

Greenlite is continuing to recruit other retailers in Pioneer service territory and working with the retailers to place orders and participate in the program. Pioneer will support Greenlite’s recruitment efforts through targeted outreach to eligible retailers. The goal is to have at least one store in each member community.

Pioneer will have a page on the website dedicated to the program and will provide customers with a list of participating stores so they know where they can go to take advantage of the discounted products. We also plan to send geographically targeted emails to customers and run geo-targeted digital advertising to raise awareness of the program. The current stores with orders placed for items are as follows:

STORE NAME STREET ADDRESS CITY STATE ZIP CODE
GARDEN VALLEY FEED & HARDWARE 4702 MARSHALL ROAD GARDEN VALLEY CA 95633 HABITAT RESTORE 6168 PLEASANT VALLEY RD EL DORADO CA 95623 HABITAT FOR HUMANITY RESTORE 12359 LOMA RICA DR GRASS VALLEY CA 95945 HILLS FLAT LUMBER CO. 380 RAILROAD AVE GRASS VALLEY CA 95945 SWEET LIFE THRIFT 144 HUGHES RD STE E GRASS VALLEY CA 95945 HILLS FLAT LUMBER CO. 1000 SOUTH CANYON WAY COLFAX CA 95713 Agenda Item: 4 Agenda Date: 1/18/2024

Electrum
Since the approval of the Electrum contract in November, Pioneer has been working with the Electrum staff to develop specific program elements and prepare the website and marketing materials to launch the program.

The Electrum and Pioneer webpages are being finalized, and the Electrum website content is being prepped for integration with our website. Staff is expecting the marketplace to go live in Q1 of 2024.

Participate.Energy
The Participate.Energy programs remain in development. Pioneer staff is working closely with Participate.Energy to determine specific program details, secure needed data, and develop next steps. Staff will bring the program offerings back to the Board at the February 2024 Board meeting.

STRATEGIC PLAN
The upcoming programs support local engagement and quality in service priorities.

FISCAL IMPACT
There is no fiscal impact with this report.

ATTACHMENTS
None

Staff Report – Item 5
To: The Governing Board
From: Donald Eckert Jr., Executive Director
Item 5: Adopt Resolution Approving the 2024 Governing Board Meeting Schedule Date: 1/18/2024

RECOMMENDATION
Adopt a Resolution approving the February 2024 Governing Board Meeting Schedule through January 2025.

BACKGROUND
Pursuant to Section 54954 of the Brown Act and the Pioneer Community Energy Joint Powers Agreement, the Board must fix the date, hour, and place of regular meetings by resolution or ordinance. On November 6, 2017, the Governing Board adopted Resolution 2017-10, establishing the regular meeting times of the Pioneer Governing Board to normally be held on Monday of each calendar week, except for state or federal holidays, commencing at 3:00 PM, and subject to Board approval of an annual schedule of meetings. Resolution 2017-10 further provided that the meetings would normally be held in the Placer County Board of Supervisors’ Chamber, provided, however, that the Governing Board may, in its discretion, hold any such regular meeting at any other location within the County of Placer.

On June 10, 2020, the Governing Board adopted Resolution 2020-5, rescinding Resolution 2017-10 and changing the regular meetings of the Pioneer Community Energy Governing Board to Thursdays. Resolution 2020-5 also changed the meeting location to the Pioneer Community Energy office located at 2510 Warren Drive, Suite B, Rocklin, CA 95677, provided however, that the Governing Board may, in its discretion, hold any such regular meeting at any other location within the County of Placer.

On February 18, 2021, the Governing Board approved the 2021 schedule of meetings through January 20, 2022, pursuant to Resolution 2020-5.

For the inclusion of current and any future Member Agencies of Pioneer Community Energy, on December 16, 2021, the Pioneer Community Energy Board of Directors adopted Resolution 2021-45 rescinding Resolution 2020-5. Regular meetings of the Governing Board shall normally be held on the third Thursday of each month, with the exception of state or federal holidays, commencing at 3:00 PM, subject to Board approval on an annual schedule of meetings. Such regular meetings shall be held at the Pioneer Community Energy office located at 2510 Warren Drive, Suite B, Rocklin, California 95677, provided however, that the Governing Board may, in its discretion, hold any such regular meeting at any other location within the boundaries of any Pioneer Community Energy member agency; and approved the 2022 Governing Board Meeting Schedule.

Since that time, the regular schedule of meetings has followed the approved schedule; and pursuant to State of California Executive Order N-29-20, dated March 17, 2020, meetings had been conducted via live stream accessed by the Directors, Pioneer staff, and the public on the Zoom webinar platform.

Agenda Item: 5 Agenda Date: 1/18/2024

On October 4, 2021, the Pioneer Community Energy Governing Board determined that as a result of the COVID-19 state of emergency, meeting in person would present imminent risks to the health or safety of attendees at the meetings of the Governing Board of Directors and all other legislative bodies of Pioneer Community Energy which includes all of its Board appointed Committees; directed that the meetings of the Governing Board of Directors and all other legislative bodies of Pioneer Community Energy be conducted pursuant to Government Code section 54953(e) (AB 361) and other applicable provisions of the Brown Act; and that every 30 days the Pioneer Community Energy Governing Board (1) reconsiders the circumstances of the state of emergency created by the COVID-19 pandemic and (2) determines if the state of emergency continues to directly impact the ability of the members to meet safely in person.

On February 17, 2022, the Pioneer Community Energy Governing Board authorized the Executive Director to move forward with development of hybrid in-person meetings. Since April 21, 2022, the Pioneer Community Energy Governing Board directed that the meetings of the Governing Board of Directors and all other legislative bodies of Pioneer Community Energy be conducted by teleconferencing, pursuant to Government Code Section 54953€, with an option for in-person attendance of up to five Directors.

ANALYSIS & DISCUSSION
Staff recommends that the Board adopt the proposed 2023 Pioneer Community Energy Governing Board Meeting Schedule for February 15, 2024, through January 16, 2025. The proposed schedule continues to follow the current schedule of meetings to be held on the third Thursday of each month, commencing at 3:00 PM; including alternate meeting dates to accommodate attendance for CalCCA Annual Conference and League of Cities Annual Conference; and allowing for a recess during the month of August.

Staff has reviewed the meeting schedule for potential conflicts with holidays or other known reasons which could affect the achievement of a quorum.

STRATEGIC PLAN
Strategic Priority 4: Operational Excellence

FISCAL IMPACT
There is no direct budget or cost impact associated with this item.

ATTACHMENTS

1. Resolution approving the 2024 Governing Board Meeting Schedule.

Before the Governing Board of
Pioneer Community Energy
Resolution No.: ____________
The following Resolution was duly passed by the Governing Board of Pioneer Community Energy at a regular meeting held January 18, 2024, by the following vote on roll call:

Ayes:

Noes:

Absent:

Signed and approved by me after its passage.
______________________________
Chair of the Governing Board
Attest:
_______________________
Secretary
WHEREAS, on November 6, 2017, the Governing Board adopted Resolution 2017-10, providing that regular meetings would be held on Monday of each calendar week, with the exception of state or federal holidays, commencing at 3:00 p.m., subject to Board approval of an annual schedule of meetings; and further providing that regular meetings would normally be held in the Placer County Board of Supervisors’ Chamber, but that the Board could in its discretion hold any such regular meeting at any other location within the County of Placer; and WHEREAS, on June 10, 2020, the Governing Board adopted Resolution 2020-5, rescinding Resolution 2017-10 and changing the date for regular meetings of the Pioneer Community Energy Governing Board to be held on Thursdays, with the exception of state or federal holidays, commencing at 3:00 PM, subject to Board approval of an annual schedule of meetings; and WHEREAS, on February 18, 2021, the Governing Board approved the 2021 schedule of meetings through January 20, 2022, pursuant to Resolution 2020-5; and WHEREAS, on December 16, 2021, the Governing Board approved the 2022 schedule of meetings through January 19, 2023, pursuant to Resolution 2021-45, rescinding Resolution 2020- 5, updating the regular meeting location for the Pioneer Community Energy Governing Board to be at the Pioneer Community Energy office located at 2510 Warren Drive, Suite B, Rocklin, California, 95677, provided however, that the Governing Board may, in its discretion, hold any such regular meeting at any other location within the boundaries of any Pioneer Community Energy member agency; and
WHEREAS, on December 15, 2022, the Governing Board approved the 2023 Pioneer Community Energy Governing Board Meeting Schedule for February 16, 2023 through January 18, 2024, following follow the prior schedule of meetings to be held In the matter of: Resolution Approving the 2024
Governing Board Meeting Schedule
2 on the third Thursday of each month, commencing at 3:00 PM, including an alternate meeting date accommodating holidays during the month of December, and allowing for a recess during the month of August; and
WHEREAS, on April 20, 2023, the Governing Board amended the 2023 schedule of meetings to adjust the May 18, 2023 meeting to May 25, 2023.

BE IT RESOLVED, the Governing Board of Pioneer Community Energy, State of California, hereby finds, declares, and resolves as follows:

1. The above recitals are true and correct.

2. The Governing Board does hereby approve the 2024 Pioneer Community Energy Governing Board Meeting Schedule for February 15, 2024 through January 16, 2024. The proposed schedule continue to follow the current schedule of meetings to be held on the third Thursday of each month, commencing at 3:00 PM; including alternate meeting dates accommodating CalCCA annual conference during the month of April, League of Cities annual conference during the month of October; and allowing for a recess during the month of August.

3. This Resolution shall take effect immediately upon its adoption.

Exhibit A: Pioneer Community Energy 2024 Governing Board Meeting Schedule Resolution 2024-xx
January 18, 2024
January 18, 2024
Resolution 2024-xx
Exhibit A

PIONEER COMMUNITY ENERGY
FEBRUARY 2024 - JANUARY 2025 GOVERNING BOARD MEETING SCHEDULE (Meetings are subject to cancellation/change based upon need) February 15, 2024
March 21, 2024
April 25, 2024
May 16, 2024
June 20, 2024
July 18, 2024
September 19, 2024
October 24, 2024
November 21, 2024
December 19, 2024
January 16, 2025
Regular meetings of the Committee are scheduled for the third Thursday of each month, commencing at 3:00 PM with proposed alternate meeting dates accommodating the annual CalCCA conference and League of Cities conference (highlighted in bold red); and allowing for an August recess.

Such regular meetings shall be held at the Pioneer Community Energy office located at:

Pioneer Community Energy Offices
2510 Warren Drive, Suite B
Rocklin, CA 95677
Provided however, that the Governing Board may, in its discretion, hold any such regular meeting at any other location within the boundaries of any Pioneer Community Energy member agency.

Staff Report – Item 6
To: The Governing Board
From: Brad Koehn, Director of Finance and Administration Item 6: Adopt Resolution to Modify Line of Credit and Letter(s) of Credit Agreements with Umpqua Bank
Date: 1/18/2024

RECOMMENDATION
Adopt Resolution to approve and authorize the Executive Director to execute all documents deemed necessary to consummate the following modifications to the Line of Credit and Letter(s) of Credit agreements with Umpqua Bank:

1. Increase existing Line of Credit limit from $20 million up to $30 million.

2. Expand the Line of Credit purpose to include Working Capital if a meaningful credit rating improvement can be realized.

BACKGROUND
Pioneer routinely and regularly solicits energy bids that are in accordance with the Energy Risk Management Policy. Over time, staff has observed that fewer energy suppliers are providing bid responses to the energy solicitations. It is to Pioneer’s advantage that multiple suppliers bid on Pioneer’s energy solicitations to ensure that Pioneer is receiving the benefit of a competitive market pricing. In response, at the May 2022 Board meeting, the Board authorized Pioneer to execute a Line of Credit with Umpqua Bank for up to $20 million.

ANALYSIS & DISCUSSION
The Line of Credit has been a valuable financial tool for Pioneer to maintain and improve its cash position by preserving cash or reclaiming cash held as collateral. To date, Letters of Credit valued close to $10 million have been issued. However, as the cost of energy continues to increase, so do the negotiated contract values per routine solicitations resulting in the likelihood of higher collateral requirements. To meet these increased collateral requirements, Pioneer could benefit from a deeper Line of Credit reserve. The benefit of an increased Line of Credit allows the Letters of Credit to be timely and promptly issued instead of posting cash collateral first and then begin negotiating with the Bank an increased Line of Credit. The Bank approval process and the timing of Board meetings to obtain Board approval may delay the use of this important financial tool for weeks or even months.

Line of Credit and Letter of Credit
The finance structure that Pioneer and Umpqua Bank (Pioneer’s current banking partner) currently have in place is a Line of Credit of $20 million that would be used as security for issued Letter(s) of Credit that are provided to energy suppliers in case of default. Pioneer has initiated discussions with Umpqua Bank to increase the Line of Credit to as high as $30 million. The not to exceed costs are listed below and are unchanged compared to the resolution that approved the $20 million Line of Credit.

Line of Credit – Annual stand by fee of 0.75%
Line of Credit - Prime + 0.5% would only be applicable if Pioneer defaults on a Letter of Credit and the Line of Credit is used to support the Letter of Credit
Letter(s) of Credit – 2.0% per annum
1/18/2024
Agenda Item: 6 Agenda Date: 1/18/2024

The final terms with Umpqua have not been approved as of yet by the banks credit department and the fee(s) are still subject to change. Understanding that the fee(s) are not final as of yet, the Resolution authorizes the Executive Director to execute the necessary documents to increase the Line of Credit and Letter(s) of Credit to $30 million and provides a not-to-exceed fee authority.

FISCAL IMPACT
Pioneer will pay a Line of Credit fee and, if/when Letter(s) of Credit are issued, a fee based on the amount of the Letter(s) of Credit. The Fiscal Year 2023-24 budget did anticipate annual cost of these fees, but the active utilization of these financial instruments that is resulting in increased liquidity will need another review with the midyear budget review to ascertain if any adjustments may be needed. Although this financial tool has a cost, that resulting preserved cash is able to generate interest earnings that can be viewed as offsetting at least a portion of those Line of Credit and Letter of Credit fees.

ATTACHMENTS

1. Resolution Approving and Authorizing the Executive Director to Execute any and all documents and agreements to modify Line of Credit and Letter of Credit Agreements with Umpqua Bank

2. Credit Agreement dated October 24, 2022
Before the Governing Board of
Pioneer Community Energy
Resolution No. ____________
The following Resolution was duly passed by the Governing Board of Pioneer Community Energy at a regular meeting held January 18, 2024, by the following vote on roll call:

Ayes:

Noes:

Absent:

Signed and approved by me after its passage.
______________________________
Chair of the Governing Board
Attest:
_______________________
Secretary
WHEREAS, Pioneer Community Energy (“Pioneer”) obtains energy provided by energy suppliers for its customers; and
WHEREAS, Pioneer routinely executes energy contracts and an energy supplier may require collateral either in the form of cash or a Letter of Credit in order to agree to an energy contract with Pioneer; and
WHEREAS, past indicative pricing for suppliers that require collateral have demonstrated cost of energy savings even after accounting for the cost of collateral; and WHEREAS, on May 19, 2022, the Governing Board authorized Pioneer to execute a Line of Credit agreement with Umpqua Bank for $20 million to allow Pioneer to offer collateral via Letter of Credit to potential power suppliers as a tool in negotiating favorable pricing and attract more creditworthy suppliers; and
WHEREAS, the use of a Line of Credit for collateral posting preserves Pioneer’s cash for liquidity purposes and for achieving the minimum Board-approved Reserves target; and WHEREAS, Pioneer has been able to reclaim cash collateral of almost $7 million to date by the issuance of Letters of Credit backed by the Line of Credit; and In the matter of: A Resolution Approving and
Authorizing the Executive Director to Execute any
and all documents and agreements to modify
Line of Credit and Letter of Credit Agreements
with Umpqua Bank
Resolution No. ___

2 WHEREAS, an increased limit of the Line of Credit and Letter of Credit Agreement(s) by an additional $10 million (for a total of up to $30 million) would allow Pioneer additional collateral capacity for future energy contracts; and
WHEREAS, expanding the purpose of the Line of Credit to include a working capital purposes may be viewed favorably by a national rating agency; and WHEREAS, Umpqua Bank is offering the same cost structure and terms for a Line of Credit and Letter(s) of Credit financial instruments as was approved by the Board in May 2022; and WHEREAS, Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California Legislature) (“SB 450”) requires that the Board of Directors (the “Board”) obtain from an underwriter, municipal advisor or private lender and disclose, prior to authorization of the issuance of bonds, including debt instruments such as the Loan Agreement, with a term of greater than 13 months, good faith estimates of the following information in a meeting open to the public: (a) the true interest cost of the loan payments made pursuant to the Loan Agreement (the “Loan Payments”), (b) the sum of all fees and charges paid to third parties with respect to the Loan Agreement, (c) the amount of proceeds of the Loan Agreement expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Loan Agreement, and (d) the sum total of all Loan Payments with respect to the Loan Agreement calculated to the final Loan Payment Date under the Loan Agreement plus the fees and charges paid to third parties not paid with the proceeds of the Loan Agreement; and
WHEREAS, In accordance with SB 450, good faith estimates of the following have been obtained from Umpqua Bank and are set forth on Exhibit A attached hereto: (a) the true interest cost of the Loan Payments, (b) the sum of all fees and charges paid to third parties with respect to the Loan Agreement, (c) the amount of proceeds of the Loan Agreement expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Loan Agreement, and (d) the sum total of all Loan Payments calculated to the final Loan Payment Date under the Loan Agreement plus the fees and charges paid to third parties not paid with the proceeds of the Loan Agreement.

NOW THEREFORE, BE IT RESOLVED, the Governing Board of Pioneer Community Energy hereby finds, declares, and resolves as follows:

1. The above recitals are true and correct.

2. The Governing Board hereby approves and authorizes the Executive Director to execute an amended and restated Line of Credit agreement up to $30 million to provide for the issuance Letter(s) of Credit and other purposes with Umpqua Bank, provided that the term does not extend beyond 5 years, interest costs does not exceed Prime + 1%, and the annual Line of Credit fee does not exceed 1%, and the Letter(s) of Credit Fee does not exceed 3% per annum on the required credit amount.

3. The Governing Board hereby approves and authorizes the Line of Credit purpose to include working capital if a meaningful credit rating improvement can be realized.

Resolution No. ___

3 4. The Governing Board hereby authorizes the Executive Director to execute all documents deemed necessary to consummate the Line of Credit and Letter(s) of Credit with Umpqua Bank.

5. This Resolution shall take effect immediately upon its adoption.

Exhibit A: Good Faith Estimate
Resolution No. ___

4 Exhibit A

GOOD FAITH ESTIMATES
The following information was obtained from the Pioneer Community Energy’s (Pioneer) placement agent (Umpqua Bank) and is provided in compliance with Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California Legislature) with respect to the Loan Agreement:

1. True Interest Cost of the Loan Agreement. A good faith estimate of the true interest cost of the loan payments made pursuant to the Loan Agreement (the “Loan Payments”), which means the rate necessary to discount the amounts allocable as principal and interest components and payable on the respective Loan Payment Dates, as described under the Loan Agreement to the purchase price received for Loan Agreement, is a variable rate of interest equal to the Prime Rate plus 0.50% per annum when the line is drawn on and so long as an event of default has not occurred.

2. Finance Charge of the Loan Agreement. A good faith estimate of the Pioneer’s finance charge of the Loan Agreement, which means the sum of all fees and charges paid to third parties (or costs associated with the Loan Agreement), is estimated at $745,000 (Includes attorney fee estimate, annual loan fee of 0.75% and Letter of Credit Fee of 2% per annum on the required credit amount.)

3. Amount of Proceeds to be Received by Pioneer. A good faith estimate of the amount of proceeds expected to be received by Pioneer for sale of the Loan Agreement less the finance charge of the Loan Agreement described in paragraph 2 above, will be $-0- unless disbursements are required.

4. Total Payment Amount. A good faith estimate of the total payment amount, which means the sum total of all Loan Payments Pioneer will make to pay its obligations on the Loan Agreement plus the finance charge of the Loan Agreement described in paragraph 2 above not paid with the proceeds of the Loan Agreement, calculated to the final Loan Payment Date under the Loan Agreement, is estimated at $-0- unless the line is drawn on. The line primary purpose is collateral posting for Standby Letters of Credit.

CREDIT AGREEMENT
Dated October 24, 2022
by and between

PIONEER COMMUNITY ENERGY,
as Borrower
and

UMPQUA BANK,
as Lender

TABLE OF CONTENTS
Page
(i)
SECTION 1. DEFINITIONS AND INTERPRETATION............................................................1 Section 1.1 Definitions.................................................................................................1 Section 1.2 Other Interpretive Provisions....................................................................8 Section 1.3 Accounting Principles...............................................................................9 SECTION 2. THE REVOLVING LINE OF CREDIT. ................................................................9 Section 2.1 Revolving Credit .......................................................................................9 Section 2.2 Advances.................................................................................................10 Section 2.3 Promissory Note......................................................................................10 Section 2.4 Repayment...............................................................................................10 Section 2.5 Extension of the Revolving Credit Termination Date.............................10 SECTION 3. INTEREST, LATE FEES, PREPAYMENTS AND APPLICATIONS................10 Section 3.1 Interest Payments....................................................................................10 Section 3.2 Computation of Interest; Minimum and Maximum Interest Rates.........11 Section 3.3 Reserved..................................................................................................11 Section 3.4 Place and Application of Payments and Collections...............................11 Section 3.5 Notations.................................................................................................11 SECTION 4. LETTERS OF CREDIT.........................................................................................11 Section 4.1 Letter of Credit Commitment..................................................................11 Section 4.2 Issuance of Letters of Credit ...................................................................13 Section 4.3 Drawings and Reimbursements of Letters of Credit...............................13 Section 4.4 Unexpired Letters of Credit ....................................................................13 Section 4.5 Obligations Absolute...............................................................................14 Section 4.6 Role of Lender as Letter of Credit Issuer................................................15 Section 4.7 Applicability of ISP, Limitation of Liability...........................................15 Section 4.8 Letter of Credit Fees................................................................................16 SECTION 5. FEES. .................................................................................................................16 SECTION 6. CONDITIONS PRECEDENT TO CREDIT AGREEMENT. ..............................16 Section 6.1 Conditions to Closing..............................................................................16 SECTION 7. COLLATERAL.....................................................................................................17 Section 7.1 Pledge and Security.................................................................................17 Section 7.2 Receipt and Deposit of Revenues ...........................................................18 Section 7.3 Maintenance of Accounts for Revenues; Use and Withdrawal of Revenues.................................................................................................18 Section 7.4 Payments Due Hereunder........................................................................19 SECTION 8. REPRESENTATIONS AND WARRANTIES. ....................................................19 Section 8.1 Organization and Qualification; Authority; Consents.............................19 Section 8.2 Legal Effect.............................................................................................20 Section 8.3 Subsidiaries.............................................................................................20 Table of Contents (continued)
Page
(ii)
Section 8.4 Use of Proceeds.......................................................................................20 Section 8.5 Financial Reports ....................................................................................20 Section 8.6 Full Disclosure ........................................................................................20 Section 8.7 Litigation .................................................................................................20 Section 8.8 Good Title ...............................................................................................20 Section 8.9 Members..................................................................................................20 Section 8.10 Compliance with Laws............................................................................21 Section 8.11 Environmental Matters............................................................................21 Section 8.12 Other Agreements ...................................................................................21 Section 8.13 No Default...............................................................................................21 Section 8.14 Sovereign Immunity................................................................................21 Section 8.15 Anti-Terrorism and Anti-Corruption Laws.............................................21 Section 8.16 Incorporation of Representations and Warranties...................................22 Section 8.17 No Proposed Legal Changes...................................................................22 Section 8.18 Regulation U ...........................................................................................22 Section 8.19 Usury .......................................................................................................22 Section 8.20 Insurance .................................................................................................22 Section 8.21 ERISA .....................................................................................................22 SECTION 9. CONDITIONS PRECEDENT TO ADVANCES..................................................22 Section 9.1 All Advances...........................................................................................22 SECTION 10. COVENANTS.......................................................................................................23 Section 10.1 Maintenance of Business.........................................................................23 Section 10.2 Reports ....................................................................................................23 Section 10.3 Debt Ratio ...............................................................................................24 Section 10.4 Deposit Relationship ...............................................................................24 Section 10.5 Cash on Hand to Revolving Credit Commitment ...................................24 Section 10.6 Eminent Domain Proceeds......................................................................24 Section 10.7 Further Assurances..................................................................................24 Section 10.8 Protection of Security and Rights of Lender...........................................25 Section 10.9 Inspection ................................................................................................25 Section 10.10 Liens........................................................................................................25 Section 10.11 Investments, Acquisitions, Loans, Advances and Guaranties.................25 Section 10.12 Compliance with Laws............................................................................25 Section 10.13 Contracts With Members ........................................................................26 Section 10.14 Notices of Claims and Litigation ............................................................26 Section 10.15 Other Agreements ...................................................................................26 Section 10.16 Performance ............................................................................................26 Section 10.17 Compliance Certificates..........................................................................26 Section 10.18 Fiscal Year ..............................................................................................27 Section 10.19 No Priority for Additional Obligations; Parity Debt and Subordinate Debt.........................................................................................................27 Section 10.20 Against Sale or Disposition of Property..................................................27 Section 10.21 Operation of the System, Rate Covenant ................................................27 Section 10.22 Against Competitive Facilities................................................................28 Table of Contents (continued)
Page
(iii)
Section 10.23 Maintenance and Operation of the System .............................................28 Section 10.24 Payment of Claims..................................................................................28 Section 10.25 Insurance .................................................................................................29 Section 10.26 Covenant to Obtain Take-Out Financing ................................................29 SECTION 11. EVENTS OF DEFAULT AND REMEDIES........................................................29 Section 11.1 Events of Default.....................................................................................29 Section 11.2 Remedies on Default...............................................................................31 SECTION 12. MISCELLANEOUS..............................................................................................31 Section 12.1 Holidays ..................................................................................................31 Section 12.2 No Waiver, Cumulative Remedies..........................................................31 Section 12.3 Amendments, Etc ....................................................................................32 Section 12.4 Costs and Expenses.................................................................................32 Section 12.5 Indemnity ................................................................................................32 Section 12.6 Right of Set Off.......................................................................................33 Section 12.7 Survival of Representations ....................................................................33 Section 12.8 Notices.....................................................................................................33 Section 12.9 Headings..................................................................................................34 Section 12.10 Severability of Provisions.......................................................................34 Section 12.11 Counterparts............................................................................................34 Section 12.12 Assignments, Binding Nature, Governing Law, Etc...............................34 Section 12.13 Submission to Jurisdiction; Venue..........................................................34 Section 12.14 Judicial Reference ...................................................................................34 Section 12.15 Time is of the Essence.............................................................................35 Section 12.16 Consent to Loan Participation.................................................................35 Section 12.17 No Recourse Against Constituent Members of Borrower ......................35 Section 12.18 Arm’s Length Transaction ......................................................................35 Section 12.19 Assignment to Federal Reserve Bank .....................................................36

CREDIT AGREEMENT
This CREDIT AGREEMENT (this “Agreement”) is entered into on October 24, 2022, between UMPQUA BANK, an Oregon state charted bank, as lender (including its successors and assigns, the “Lender”), and PIONEER COMMUNITY ENERGY (including its permitted successors and assigns, the “Borrower”), a joint exercise of powers agency formed and existing under the provisions of the Joint Exercise of Powers Act of the State of California, Government Code Section 6500 et. seq. (the “Act”).

W I T N E S S E T H:

WHEREAS, pursuant to an Amended and Restated Joint Exercise of Powers Agreement for the Sierra Valley Energy Authority, which became effective February 22, 2017 (as may be amended and restated hereafter, the “JPA Agreement”) by and among the County of Placer (the “County”), the County of El Dorado, the Cities of Colfax, Rocklin, Lincoln, Auburn and Placerville, and the Town of Loomis, the Borrower was established as a Joint Exercise of Powers authority in order to exercise powers common to the Members and other powers granted to the Authority under the Act, to study, promote, develop, conduct, operate, and manage energy, energy efficiency and conservation, and other energy-related programs, and to provide a Community Choice Aggregation Program, pursuant to California Public Utilities Code Sections 331.1 and 366.2; and
WHEREAS, pursuant to Resolution No. 2017-3, adopted by the governing body of the Borrower on July 17, 2017, the name of the Borrower was changed from Sierra Valley Energy Authority to “Pioneer Community Energy;” and
WHEREAS, the County provided a loan or loans to the Borrower (the “Prior Loan”) for the purpose of funding initial costs and related matters; and WHEREAS, Borrower and Lender have previously entered into that certain Term Loan Agreement dated as of May 3, 2021, pursuant to which the Lender provided funds to the Borrower to, among other things, repay the Prior Loan; and
WHEREAS, the Borrower has requested, and the Lender has agreed to make available to Borrower a revolving credit facility for the purpose of allowing the Borrower to provide collateral postings as required for future energy supply contracts or any other collateral posting approved by the Lender, subject to the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows:

SECTION 1. DEFINITIONS AND INTERPRETATION.

Section 1.1 Definitions. All terms defined in this Section 1.1 have the meanings herein specified for all purposes of this Agreement.
“Act” has the meaning set forth in the preamble hereof. 2 “Advance” is defined in Section 2.1.
“Agreement” means this Credit Agreement, as the same may be amended, modified or restated from time to time in accordance with the terms hereof. “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower from time to time concerning or relating to bribery or corruption.
“Anti-Terrorism Laws” means any of the Laws relating to terrorism or money laundering, including Executive Order No. 13224, the PATRIOT Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by OFAC. “Applicable Rate” means the higher of (a) a variable rate of interest equal to the Prime Rate plus 0.50% per annum, and (b) four percent (4.00%) per annum, subject to increase as provided in Section 10.4.
“Authorized Representative” means those persons shown on the list of officers provided by Borrower pursuant to Section 9.1(c), or on any update of any such list provided by Borrower to Lender, or any further or different officer of Borrower so named by any Authorized Representative of Borrower in a written notice to Lender. “Availability” means the difference between $20,000,000.00 and the sum of all outstanding Advances at the close of business each day. “Available Cash” means money categorized as Cash and Cash Equivalents and including unrestricted investments in the statement of net position in the Borrower’s audited financial statements and unaudited quarterly financial statements. “Bank Secrecy Act” means the Bank Secrecy Act of 1970 as codified in 31 U.S.C. 5311-5314e, as now and hereafter in effect, or any successor statute. “Borrower” is defined in the introductory paragraph.
“Business Day” means a day (other than a Saturday or Sunday) on which banks are not authorized or required to be closed in Sacramento, California. “Capital Lease” means at any date any lease of Property which in accordance with GAAP is required to be capitalized on the balance sheet of the lessee. “Capitalized Lease Obligation” means the amount of liability as shown on the balance sheet of any Person in respect of a Capital Lease as determined at any date in accordance with GAAP.
“Cash and Cash Equivalents” has the meaning set forth in the Borrower’s financial statements.
“Cash Collateral” means Available Cash used as collateral to secure obligations 3 due and owing to the Lender.
“Days Cash On Hand” means, as of any date of determination, the quotient, in number of days, obtained by dividing Available Cash as shown on the Borrower’s financial statements on such date of determination by the product of (A), the sum of Total Operating Expenses (including Interest Expense and Debt Service) and (B) 1/365. “Debt” of any Person means, at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts (including power purchases) payable arising in the ordinary course of business, (d) all obligations of such Person as lessee under capital leases, (e) all debt of others secured by a lien on any asset of such Person, whether or not such debt is assumed by such Person, (f) all guarantees by such Person of debt of other Persons, and (g) all obligations of such Person to reimburse or repay any bank or other Person in respect of amounts paid or advanced under a letter of credit, credit agreement, liquidity facility or other instrument; provided, however, that, with respect to the Borrower, all amounts due and owing under the “mPower Program” shall not be considered “Debt” of the Borrower.
“Debt Ratio” means the ratio derived as follows: Total Operating Revenues – (Total Operating Expenses – Debt Service) / Debt Service. The Debt Ratio shall be determined from Borrower’s audited financial statements.
“Debt Service” means the principal and interest made by Borrower to Lender under this Agreement and with respect to any Parity Debt (if any) during the Fiscal Year for which the Debt Ratio is being calculated.
“Debtor Relief Laws” means the United States Bankruptcy Code and all other liquidation, conservatorship, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“Default” means any event or condition the occurrence of which would, with the passage of time or the giving of notice, or both, constitute an Event of Default. “Default Rate” means the Applicable Rate plus three percent (3.0%). “Dollars and $” mean lawful money of the United States. “Environmental Laws” means any and all federal, state and local statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, 4 treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the clean-up or other remediation thereof.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute thereto.
“Event of Default” is defined in Section 11.1.
“Fiscal Quarter” means any of the quarterly accounting periods of Borrower, specifically ending March 31, June 30, September 30, and December 31 of each year. “Fiscal Year End” means June 30.
“GAAP” means generally accepted accounting principles as established and interpreted by the Governmental Accounting Standards Board (GASB) and as applied by Borrower.
“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank, or other entity exercising executive, legislative, judicial taxing, regulatory or administrative powers or functions of or pertaining to government.
“Honor Date” is defined in Section 4.3.
“Indemnified Liabilities” is defined in Section 12.5.
“Indemnified Person” is defined in Section 12.5.
“Independent Consultant” means any engineering, rate study, consulting or similar individual or firm appointed and paid by the Borrower, and which (a) is in fact independent and not under domination of the Borrower; (b) does not have any substantial interest, direct or indirect, with the Borrower other than the work being performed; and (c) is not connected with the Borrower as an officer or employee of the Borrower, but who may be regularly retained by the Borrower.
“Interest Expense” means, for any period, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense under capitalized leases that is treated as interest in accordance with GAAP, in each case, of or by the Borrower for such period.
“ISP” is defined in Section 4.5.
5 “JPA Members” means the County of Placer, the County of El Dorado, the Cities of Colfax, Rocklin, Lincoln, Auburn and Placerville, and the Town of Loomis. “Joint Powers Agreement” or “JPA Agreement” means the Joint Powers Agreement of Borrower dated February 22, 2017, and as further amended from time to time.
“Lender” is defined in the introductory paragraph.
“Lien” means any mortgage, lien, security interest, pledge, charge or encumbrance of any kind in respect of any Property, including the interests of a vendor or lessor under any conditional sale, Capital Lease or other title retention arrangement. “Loan Documents” means this Agreement, the Notes, the Term Loan Agreement and all other documents, certificates, instruments and agreements relating to the foregoing or otherwise executed by Borrower in connection with the Revolving Credit or the Term Loan.
“Material Adverse Effect” means an event or occurrence which adversely affects in a material manner (a) the System or the other assets, liabilities, condition (financial or otherwise), business, facilities or operations of the Borrower, (b) the ability of the Borrower to carry out its business in the manner conducted as of the date of this Agreement or to meet or perform its obligations under this Agreement on a timely basis, or (c) the validity or enforceability of this Agreement.
“Net Revenues” means, for any period and as of any date of determination, the Revenues less Power Supply Costs for such period as of such date. “Note” means the Note issued hereunder to evidence Advances made to issue Letters of Credit and the Term Note, as applicable.
“Note Payments” means the payments of interest and principal to be paid by the Borrower on the Note on each Payment Date, as set forth herein. “Obligations” means and includes all loans, advances, debts, liabilities and obligations of Borrower to Lender, of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter owed by Borrower to Lender, whether in connection with the Loan Documents or otherwise, including without limitation all interest, fees, charges, expenses, attorneys’ fees and accountants’ fees chargeable to Borrower or payable by Borrower thereunder. “OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control, and any successor thereto.
“OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224 and/or any other 6 list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable executive orders. “Operating and Maintenance Costs” means and shall be determined in accordance with the accrual basis of accounting in accordance with GAAP and shall mean the reasonable and necessary costs paid or incurred by Borrower for maintaining and operating the System in excess of Priority Administration Costs, including costs of salaries and wages of employees, overhead, insurance, taxes (if any) and insurance premiums, and including all other reasonable and necessary costs of Borrower such as fees and expenses of an independent certified public accountant, and including Borrower’s share of the foregoing types of costs of any electric properties co-owned with others, excluding in all cases depreciation, replacement and obsolescence charges or reserves therefore and amortization of intangibles and extraordinary items computed in accordance with GAAP or other bookkeeping entries of a similar nature.
“Parity Debt” means all Debt of the Borrower payable from and secured by a pledge of and lien upon any of the Net Revenues incurred on a parity with the payment of principal and interest payments on Advances and other amounts due to the Lender hereunder, which currently consists of the Term Loan Agreement. “Payment Date” means, other than the Revolving Credit Termination Date or a Reimbursement Date, the 15th day of each calendar month. “PCIA Costs” means any and all exit fees charged by utilities in the State on entities that choose to depart from bundled service of the utility and choose another provider of electricity generation service possible through direct access and community choice. For example, PG&E sets the PCIA annually to be billed by the Borrower to customers and the fees go directly to PG&E.
“Person” means an individual, partnership, corporation, company, limited liability company, association, trust, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof. “Power Supply Costs” means (a) cost of energy and capacity arising from bilateral contracts with energy suppliers as well as wholesale sales and generation credits, load, and other charges arising from Borrower’s participation in the CAISO’s centralized market, including all costs related to procurement, scheduling, transmission and receipt of power supply, (b) PCIA Costs, and (c) Priority Administration Costs. “Prime Rate” means the fluctuating rate per annum announced from time to time by the Lender as its “prime rate”. The Prime Rate is a rate set by the Lender based on various factors including the Lender’s costs and desired return, general economic conditions and other factors and is used as a reference point for pricing some loans, which may be priced at, below or above the Prime Rate.
“Principal Amount” means the then outstanding principal amount of the Note. 7 “Priority Administration Costs” means salaries and wages of employees, overhead, insurance, taxes (if any) and insurance premiums, and including all other reasonable and necessary costs of Borrower such as fees and expenses of an independent certified public accountant, and including Borrower’s share of the foregoing types of costs of any electric properties co-owned with others, excluding in all cases depreciation, replacement and obsolescence charges or reserves therefore and amortization of intangibles and extraordinary items computed in accordance with GAAP or other bookkeeping entries of a similar nature; provided, that Priority Administration Costs in each Fiscal Year shall not exceed 12% of Revenues in such Fiscal Year.
“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
“Reimbursement Date” is defined in Section 4.3.
“Related Parties” means, with respect to any Person, such Person’s affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s affiliates. “Resolution” means the resolution of the Borrower adopted May 19, 2022 authorizing the transaction contemplated by this Agreement. “Revenues” means the revenues of Borrower, as determined in accordance with GAAP; but excluding (i) any unrealized gain or loss resulting from changes in the value of investment securities, (ii) any gains on the sale or other disposition of fixed or capital assets not in the ordinary course of business and (iii) earnings resulting from any reappraisal, revaluation or write-up of fixed or capital assets.
“Revolving Credit” is defined in Section 2.1.
“Revolving Credit Commitment” means $20,000,000.00.
“Revolving Credit Termination Date” means, initially, October 23, 2023, subject to annual extensions as set forth in Section 2.5 hereof; provided, however, that if the terms of this Agreement expire before such dates as a result of early termination by the Lender or by the Borrower pursuant to the terms hereof, such termination date shall be the “Revolving Credit Termination Date.”
“Subordinate Debt” means all Debt of the Borrower payable from and secured by a pledge of and lien upon any of the Net Revenues incurred on a subordinate basis to the payment of principal and interest due hereunder.
“SWIFT” is defined in Section 4.6.
“System” means all facilities, works, properties, structures and contractual rights to distribution, metering and billing services, electric power, scheduling and coordination, 8 transmission capacity, and fuel supply of Borrower for the generation, transmission and distribution of electric power used to carry out any lawful purpose of Borrower. “Term Loan” means the loan evidenced by the Term Note.
“Term Loan Agreement” means the Loan Agreement dated as of May 3, 2021 (as amended and supplemented) between the Borrower and the Lender. “Term Note” means that certain Term Note dated as of May 3, 2021, made by Borrower and payable to the order of Lender issued pursuant to the Term Loan Agreement. “Total Operating Revenues” means the Total Operating Revenues value as referenced in Borrower’s Statement of Revenues, Expenses and Changes in Net Position financial statement for the twelve (12) month fiscal year for which the Debt Ratio is being calculated.
“Total Operating Expenses” means the Total Operating Expenses value as referenced in Borrower’s Statement of Revenues, Expenses and Changes in Net Position financial statement for the twelve (12) month fiscal year for which the Debt Ratio is being calculated.
“Treasurer” means the Treasurer of the Borrower.
“UCC” means the Uniform Commercial Code as enacted in the State of California. “UCP” is defined in Section 4.5.
“Unreimbursed Amount” is defined in Section 2.3.
“Winding-Up” means, in relation to a Person, a voluntary or involuntary case or other proceeding or petition seeking dissolution, liquidation, reorganization, administration, assignment for the benefit of creditors or other relief under any federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect, or seeking the appointment of a custodian, trustee, receiver, liquidator or other similar official over that Person or any substantial part of that Person’s Properties.

Section 1.2 Other Interpretive Provisions.
(a) Defined Terms. Unless otherwise specified herein or therein, all terms defined in this Agreement will have the same defined meanings when used in any certificate or other document made or delivered pursuant hereto. The meaning of defined terms is equally applicable to the singular and plural forms of the defined terms. (b) References. The words “hereof”, “herein”, “hereunder” and words of similar import when used in this Agreement will refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, section, schedule and exhibit references are to this Agreement unless otherwise specified.
9 (c) Certain Common Terms. The term “documents” includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. The term “including” is not limiting and means “including without limitation.” (d) Performance; Time. Whenever any performance obligation hereunder is stated to be due or required to be satisfied on a day other than a Business Day, such performance may be made or satisfied on the next succeeding Business Day. In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including.” If any provision of this Agreement refers to any action taken or to be taken by any Person, or which such Person is prohibited from taking, such provision will be interpreted to encompass any and all means, direct or indirect, of taking, or not taking, such action. (e) Contracts. Unless otherwise expressly provided herein, references to agreements and other contractual instruments, including this Agreement and the other Loan Documents, will be deemed to include all subsequent amendments thereto, restatements thereof and other modifications and supplements thereto which are in effect from time to time, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document.
(f) Laws. References to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (g) Dollars and $. All references to “dollars” or “$” refer to United States dollars.

Section 1.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein will be construed, and all financial computations required under this Agreement will be made, in accordance with GAAP, consistently applied. (b) References herein to “fiscal year”, “fiscal quarter” and “fiscal month” refer to such fiscal periods of Borrower.
(c) If any change in GAAP results in a change in the calculation of the financial covenants or interpretation of related provisions of this Agreement or any other Loan Document, then Borrower and Lender agree to amend such provisions of this Agreement so as to equitably reflect such changes in GAAP with the desired result that the criteria for evaluating Borrower’s financial condition will be the same after such change in GAAP as if such change had not been made.

SECTION 2. THE REVOLVING LINE OF CREDIT.

Section 2.1 Revolving Credit. Subject to the terms and conditions of this Agreement, Lender agrees to make a revolving credit facility (the “Revolving Credit”) available to Borrower for the purpose of supporting the issuance of Letters of Credit in one or more advances (each an 10 “Advance”) in accordance with Section 4, provided that the conditions precedent to Advances specified in Section 9 are satisfied. Subject to the Revolving Credit Commitment and the other terms and conditions of this Agreement, Borrower may periodically request Advances; provided, however, that Lender shall have no obligation to make Advances on or after the Revolving Credit Termination Date.

Section 2.2 Advances. Advances under this Agreement may be requested in writing by Borrower or any Authorized Representative appointed by Borrower. Borrower agrees that Lender may rely upon any written notice given by any person Lender in good faith believes is an Authorized Representative without the necessity of independent investigation.

Section 2.3 Promissory Note. The Revolving Credit will be evidenced by a Revolving Credit Note (the “Note”) dated as of the date hereof, made, executed and delivered by Borrower and payable to the order of Lender in the original principal amount of $20,000,000.00 in the form attached hereto as Exhibit B. Each Advance for a Letter of Credit in the full stated principal amount thereof will used for purposes of determining availability under the Revolving Credit Commitment. Furthermore, the Note shall also evidence Borrower’s obligation to repay the lesser of the stated principal amount thereof or the unreimbursed amount (the “Unreimbursed Amount”) of any drawing actually paid by Lender to a beneficiary under a Letter of Credit, in accordance with Section 4.3.

Section 2.4 Repayment. All outstanding Advances shall be repaid as provided in Section 4 herein and in the Note.

Section 2.5 Extension of the Revolving Credit Termination Date. On the date hereof, the Revolving Credit Termination Date shall be October 23, 2023. The Revolving Credit Termination Date shall automatically extend for successive one (1) year periods unless the Lender shall provide written notice of non-extension to the Borrower no later than one hundred twenty (120) days prior to then current Revolving Credit Termination Date; provided, however that such date shall not automatically extend beyond October 23, 2025. Lender and Borrower may mutually agree to extend the Revolving Credit Termination Date beyond October 23, 2025 upon terms and fees to be determined at a later date, with the understanding that each shall use their best efforts to use existing documentation to simplify the process and lower costs and related fees.

SECTION 3. INTEREST, LATE FEES, PREPAYMENTS AND APPLICATIONS.

Section 3.1 Interest Payments.
(a) Advances. The outstanding principal balance of Advances will bear interest prior to maturity (whether by lapse of time, acceleration or otherwise) at the Applicable Rate, until paid in full. After the occurrence of an Event of Default, including after maturity (whether by lapse of time, acceleration or otherwise), the outstanding principal balance of Advances will bear interest at the Default Rate, until paid in full. The determination of the Applicable Rate by Lender shall be conclusive and binding on Borrower in the absence of demonstrable error. (b) Interest Payment Dates. Borrower shall pay regular monthly payments of all accrued but unpaid interest on Advances as of each Payment Date. Interest on Advances will 11 be payable monthly in arrears on each Payment Date. Borrower shall make all payments at the address specified in Section 3.4.
(c) Late Fees. If Borrower fails to make any payment of principal or interest under any Note or any other sum payable hereunder or under any other Loan Document within five (5) calendar days after its due date, Lender will be entitled at its option to impose a late charge in an amount equal to six percent (6.00%) of the amount of such past due payment, which charge, if imposed by Lender, shall be due and payable by Borrower immediately upon receipt of written notice thereof.

Section 3.2 Computation of Interest; Minimum and Maximum Interest Rates. All interest on the Advances will be calculated on the basis of a year of 360 days for the actual number of days elapsed. In no event shall the applicable interest rate exceed the maximum rate allowed by law (including Government Code Section 53854).

Section 3.3 Reserved.

Section 3.4 Place and Application of Payments and Collections. All payments of principal, interest, fees and all other Obligations payable hereunder will be made to Lender at the following address no later than 2:00 p.m. (Pacific Standard Time) on the date any such payment is due and payable:

Umpqua Bank
2998 Douglas Boulevard, Suite 100
Roseville, CA 95661
So long as any Event of Default has occurred and is continuing, Borrower agrees that Lender, in its sole and absolute discretion, may apply any payments or collections received by Lender from Borrower to any of the Obligations in any manner or order as Lender desires.

Lender’s receipt and application of payments or collections shall not constitute a waiver or cure of any Default.

Section 3.5 Notations. All Advances made and evidenced by a Note and the rates of interest applicable thereto will be recorded by Lender on its books and records or, at its option in any instance, endorsed on a schedule to such Note, and the unpaid principal balance and interest rates so recorded or endorsed by Lender will be prima facie evidence in any court or other proceeding brought to enforce such Note of the principal amount remaining unpaid, the status of the Advances evidenced by such Note and the applicable interest rates; provided, however, that the failure of Lender to record any of the foregoing will not limit or otherwise affect the obligation of Borrower to repay the principal amount of such Note together with accrued interest thereon.

Prior to any negotiation of any Note, Lender will record on a schedule thereto the status of all amounts evidenced by such Note and the rates of interest applicable thereto.

SECTION 4. LETTERS OF CREDIT.

Section 4.1 Letter of Credit Commitment.
12 (a) Subject to the terms and conditions of this Agreement, Lender agrees upon the request of Borrower (1) to issue Letters of Credit, for the purpose of allowing the Borrower to provide collateral postings as required for future energy supply contracts or any other collateral posting approved by the Lender, in Dollars for the account of Borrower, and (2) to honor drawings under the Letters of Credit; provided that after giving effect to any Advance, the aggregate principal amount of all Advances shall not exceed the Revolving Credit Commitment. Each request by Borrower for the issuance of a Letter of Credit shall be deemed to be a representation by Borrower that the Advance so requested complies with the conditions set forth in the proviso to the preceding sentence and the other terms and conditions of this Agreement. (b) Lender shall have no obligation to issue any Letter of Credit if:
(i) The initial expiry date of the requested Letter of Credit is more than one year after the date of issuance;
(ii) The initial expiry date of the requested Letter of Credit would occur more than one year after the Revolving Credit Termination Date; (iii) The expiry date of the requested Letter of Credit, after giving effect to any auto-renewal feature, would occur more than seven (7) years after the date of issuance; provided, however, that this condition shall not apply if (1) the Letter of Credit is secured by Cash Collateral, or (2) Lender’s Chief Executive Officer or Chief Credit Officer approves a waiver of this condition in writing; (iv) The requested Letter of Credit requires Lender to provide a notice of non-renewal, if any, earlier than sixty (60) days before the expiration of the Letter of Credit;
(v) The requested Letter of Credit contains terms and conditions required by the beneficiary that are deemed unacceptable to Lender; (vi) Any order, judgment or decree of any Governmental Authority or arbitrator shall by it terms purport to enjoin Lender from issuing such Letter of Credit, or any law applicable to Lender or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over Lender shall prohibit, or request that Lender refrain from, the issuance of letters of credit generally, or such Letter of Credit in particular or shall impose upon Lender with respect to such Letter of Credit any restriction, reserve or capital requirement (for which Lender is not otherwise compensated hereunder) not in effect on the date of this Agreement, or shall impose upon Lender any unreimbursed loss, cost or expense which was not applicable as of the date of this Agreement and which Lender in good faith deems material to it; (vii) The issuance of such Letter of Credit would violate one or more policies of Lender generally applicable to the issuance of letters of credit; (viii) The Letter of Credit is to be denominated in a currency other than Dollars;
13 (ix) The Letter of Credit provides for automatic reinstatement or renewal of the stated amount after any drawing thereunder; or
(x) The issuance of the Letter of Credit would cause the aggregate outstanding amount of Advances to exceed the Revolving Credit Commitment at the time of issuance.

Section 4.2 Issuance of Letters of Credit.
(a) Each Letter of Credit shall be in the form of Exhibit A hereto (with such changes as needed by the Lender) and issued upon the request of Borrower delivered to Lender in the form of Lender’s standard Letter of Credit Application completed to the satisfaction of Lender and signed by an Authorized Representative of Borrower. Such Letter of Credit Application may be sent via electronic image or other electronic format, by US mail, overnight courier, or by any other means acceptable to Lender and must be received by Lender not later than ten (10) Business Days (or such later date as Lender may agree in its sole discretion) before the proposed issuance date. Such Letter of Credit Application shall specify in form and detail satisfactory to Lender: (i) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (ii) the amount thereof; (iii) the expiry date thereof; (iv) the name and address of the beneficiary thereof; (v) the documents to be presented by such beneficiary in the case of any drawing thereunder; (vi) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (vii) the purpose and nature of the requested Letter of Credit, which shall be to pay for power purchases or to provide collateral security for power purchases; and (viii) such other matters as Lender may reasonably require. Additionally, Borrower shall furnish to Lender such other documents and information pertaining to such requested Letter of Credit issuance as Lender may request. (b) Subject to the terms and conditions hereof, Lender shall, on the requested date, issue a Letter of Credit for the account of Borrower in such form as may be approved from time to time by Lender and in accordance with Lender’s usual and customary business practices. (c) Promptly after its delivery of any Letter of Credit to the beneficiary thereof, Lender will also deliver to Borrower a true and complete copy of such Letter of Credit.

Section 4.3 Drawings and Reimbursements of Letters of Credit. Upon the presentment of any notice of drawing under any Letter of Credit by the beneficiary thereof which Lender determines to be in compliance with the conditions for payment thereunder, Lender will notify Borrower of the intended date of honor of such drawing. Not later than 5:00 p.m. (Pacific Standard Time) on the date (the “Reimbursement Date”) that is three (3) Business Days after any payment by Lender under a Letter of Credit (each such date, an “Honor Date”), Borrower shall reimburse Lender by making payment to Lender in an amount equal to the amount of such payment.

Borrower’s failure to so reimburse Lender on or before the Reimbursement Date shall constitute an Event of Default under this Agreement.

Section 4.4 Unexpired Letters of Credit. Borrower agrees that, if (i) any Letter of Credit has been issued and remains unexpired on the Revolving Credit Termination Date, or (ii) the Revolving Credit Commitment terminates for any reason before the surrender of any outstanding 14 Letter of Credit, then Borrower shall, within three (3) days after written notice from Lender, provide Cash Collateral to Lender with a value of not less than 110% of the aggregate principal amount of all outstanding Advances, to be held by Lender as security until all Obligations with respect to outstanding Letters of Credit shall have been fully and finally discharged, or Borrower may void or cancel any outstanding Letter of Credit, provided that any Disbursements that are outstanding thereunder shall have been paid by Borrower to Lender.

Section 4.5 Obligations Absolute.
(a) The obligation of Borrower to reimburse Lender for any drawing under a Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this Agreement or any other Loan Document;
(ii) the existence of any claim, counterclaim, setoff, defense or other right that Borrower may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction; (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
(iv) any waiver by Lender of any requirement that exists for Lender’s protection and not the protection of Borrower or any waiver by Lender that does not in fact materially prejudice Borrower;
(v) any honor of a demand for payment presented electronically, even if such Letter of Credit requires that demand be in the form of a draft; (vi) any payment made by Lender in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under such Letter of Credit if presentation after such date is authorized by the UCC, the International Standby Practices (“ISP”) or the Uniform Customs and Practice for Documentary Credits (“UCP”), as applicable; (vii) any payment by Lender under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by Lender under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or 15 any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or
(viii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or discharge of, any party to the Loan Documents. (b) Borrower shall promptly examine a copy of each Letter of Credit that is delivered to it, and, in the event of any claim of noncompliance with Borrower’s instructions or other irregularity, Borrower shall immediately notify Lender of such claim in writing. Borrower shall be conclusively deemed to have waived any such claim it would have against Lender and its correspondents unless such notice is given.

Section 4.6 Role of Lender as Letter of Credit Issuer. Borrower agrees that, in paying any drawing under a Letter of Credit, Lender or its correspondent shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by such Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering such document. None of Lender, any of its Related Parties nor any correspondent, participant or assignee of Lender shall be liable to Borrower for (i) any action taken or omitted in connection herewith at the request of Borrower; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit. Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude Borrower from pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. Neither Lender, nor any correspondent, participant or assignee of Lender shall be liable or responsible for any of the matters described in Section 4.2; provided, however, that anything in such clauses to the contrary notwithstanding, Borrower may have a claim against the Lender to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by Borrower which Borrower proves were caused by Lender’s willful misconduct or gross negligence or Lender’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) complying with the terms and conditions of such Letter of Credit. In furtherance and not in limitation of the foregoing, Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and Lender shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunications (“SWIFT”) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.

Section 4.7 Applicability of ISP, Limitation of Liability. Unless otherwise expressly agreed by Lender and Borrower when a Letter of Credit is issued, the rules of the ISP shall apply to each Letter of Credit. Notwithstanding the foregoing, Lender shall not be responsible to Borrower for, and Lender’s rights and remedies against Borrower shall not be impaired by, any 16 action or inaction of Lender required or permitted under any law, order or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the law of any jurisdiction where Lender or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade – International Finance Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

Section 4.8 Letter of Credit Fees. Borrower shall pay to Lender fees upon the issuance, amendment, or any other activity with respect to any Letter of Credit (including the transfer or cancellation of any Letter of Credit), including an issuance fee based on the face amount thereof over the applicable expiration period, a documentation fee, and any reasonable and customary out-of-pocket costs and expenses incurred by Lender in connection with such activity. All such fees and expenses will be due and payable in full upon request by Lender. Borrower acknowledges and agrees that the fees will be determined by Lender at the time of issuance or other activity with respect to each Letter of Credit based on the then-current fee schedule of Lender and its correspondent banks, which are subject to change from time to time.

SECTION 5. FEES.

Section 5.1 The Borrower shall pay to the Lender or on its behalf fees for this Agreement as follows:
(a) Annual Line of Credit Renewal Fee. On the date of execution of this Agreement, the Borrower agrees to pay to Lender a fee of $150,000.00 (calculated as 0.75% of the Revolving Credit Commitment) (the “Annual Line of Credit Renewal Fee”), and such Annual Line of Credit Renewal Fee shall be due annually on each anniversary date of this Agreement for each year the Revolving Credit is outstanding and renewed pursuant to Section 2.5 hereof. (b) Legal Fees. Legal fees of counsel to the Lender, Nixon Peabody LLP, in the amount of $45,000.00 pursuant to an invoice provided by such counsel. (c) Letter of Credit Fee. Borrower agrees to pay Lender a fee due annually on each October 24th during the term of this Agreement, or on the Revolving Credit Termination Date, in the amount 2.0% of the aggregate Advances issued since the preceding October 24th.
(d) Other Fees; Accrued Interest. Borrower shall be subject to and agrees to pay any and all other reasonable out-of-pocket fees and expenses incurred by Lender associated with the underwriting, documentation and administration of this Agreement, including UCC fees, if any, and all accrued but unpaid interest on outstanding Advances, as set forth on the invoice delivered to Borrower pursuant to this Agreement.

SECTION 6. CONDITIONS PRECEDENT TO CREDIT AGREEMENT.

Section 6.1 Conditions to Closing. The obligation of the Lender to establish this revolving credit facility shall be subject to the satisfaction of the conditions precedent that:
17 (a) Lender shall have received properly completed and executed originals of the following in form and substance satisfactory to Lender:
(i) this Agreement, the Note, and all other applicable Loan Documents; (ii) a favorable written legal opinion from Borrower’s special counsel and its general counsel as to the formation, existence and good standing of Borrower; the power and authority of Borrower to enter into this Agreement and perform its Obligations hereunder; matters relating to the Resolution and litigation; and the due execution, validity and enforceability of this Agreement and the Note; (iii) the Resolution adopted by the Board of Directors of Borrower with respect to this Agreement and the other Loan Documents, certified by an Authorized Representative;
(iv) an incumbency certificate containing the name, title and genuine signatures of each of Borrower’s Authorized Representatives; (v) payment by Borrower of the fees described in Section 5.1 and all other amounts required to be paid by Borrower pursuant to the terms of this Agreement;
(vi) copies (executed and certified, as may be appropriate) of the organizational documents of Borrower and all legal documents or proceedings (including minutes of board meetings) taken in connection with the execution and delivery of this Agreement to the extent Lender or its counsel may reasonably request;
(vii) customer verification information for officers of Borrower and signers of the Loan Documents as Lender may require; and (viii) evidence of liability insurance in form and substance satisfactory to Lender; and
(ix)any other documents that the Lender or its counsel may require. (b) Any legal matters incident to the execution and delivery of this Agreement and the other Loan Documents and to the transactions contemplated hereby and thereby shall be reasonably satisfactory to Lender and its counsel.

SECTION 7. COLLATERAL.

Section 7.1 Pledge and Security. The Net Revenues and Available Cash are hereby pledged by the Borrower to the payment of principal and interest on Advances and other amounts owed to the Lender hereunder, on a parity basis with any Parity Debt that may be issued in the future in compliance with the terms of this Agreement. The pledge of Net Revenues and Available Cash is valid and binding in accordance with the terms of the Act, the JPA Agreement and the 18 Resolution, and the Net Revenues and Available Cash shall be immediately subject to the pledge, and the pledge shall constitute a lien and security interest which shall immediately attach to the Net Revenues and Available Cash and be effective, binding, and enforceable against the Borrower, its successors, creditors, and all others asserting the rights therein, to the extent set forth in this Agreement, and in accordance with the Act, the JPA Agreement and the Resolution, irrespective of whether those parties have notice of the pledge and without the need for any physical delivery, recordation, filing, or further act. The pledge of Net Revenues and Available Cash herein made shall be irrevocable until the principal of and interest on Advances hereunder and all fees payable hereunder shall have been paid in full and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated, in each case, without any pending draw, and all Disbursements shall have been reimbursed; provided, that out of the Revenues and Net Revenues and Available Cash the Borrower shall make the payments in the priority and in the amounts set forth in Section 7.2 and Section 7.3 hereunder.

Section 7.2 Receipt and Deposit of Revenues. The Borrower covenants and agrees that all Revenues, when and as received, will be received and held by the Borrower in trust hereunder and will be deposited by the Borrower with the Treasurer in the Revenue Fund and will be accounted for through and held in trust in the Revenue Fund; provided, that the Borrower may withdraw such amounts in the Revenue Fund (which may be comprised of one or more accounts) as may be necessary to make refunds for amounts paid in advance for services provided by the System, which such service was not thereafter made available or provided, and to pay Power Supply Costs and other costs and expenses as set forth in Section 7.3. All Net Revenues shall nevertheless be disbursed, allocated and applied solely to the uses and purposes hereinafter set forth, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the Borrower.

Section 7.3 Maintenance of Accounts for Revenues; Use and Withdrawal of Revenues.

For each calendar month, all Revenues in the Revenue Fund shall be set aside by the Treasurer, as follows and in the following order of priority:
(a) Power Supply Costs. The Power Supply Costs (including Priority Administration Costs) shall be paid or set-aside out of the Revenues (including amounts reasonably required to be set aside in contingency reserves for Power Supply Costs, the payment of which is not then immediately required).
(b) Debt Service Payments. The Note Payments, and of all other payments with respect to Parity Debt, shall be paid in accordance with the terms hereof and of such Parity Debt, without preference or priority, and in the event of any insufficiency of such moneys, ratably without any discrimination or preference.
(c) Operation and Maintenance Costs. The Operation and Maintenance Costs of the System (including amounts reasonably required to be set aside in contingency reserves for Operation and Maintenance Costs of the System, the payment of which is not then immediately required) from the Revenue Fund as they become due and payable. 19 (d) Subordinate Debt. Amounts due with respect to Subordinate Debt shall be paid in accordance with the terms thereof, without preference or priority, and in the event of any insufficiency of such moneys, ratably without any discrimination or preference. (e) General Expenditures. All Net Revenues remaining after paying all of the sums required to be paid hereunder by the Treasurer may be withdrawn by the Treasurer for expenditure for any lawful purpose of the Borrower.

Section 7.4 Payments Due Hereunder. The obligation of the Borrower to make the payment of principal and interest on Advances and other amounts owed to the Lender hereunder is absolute and unconditional, and until such time as all amounts shall have been fully paid and the Note is no longer Outstanding, the Borrower shall not, under any circumstances, discontinue, abate or suspend any amounts required to be made by it hereunder when due, whether or not the System or any part thereof is operating or operable or has been completed, or whether or not the System is condemned, damaged, destroyed or seized or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such payments shall not be subject to reduction whether by offset, counterclaim, defense, recoupment, abatement, suspension, deferment or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement or covenant contained herein for any cause whatsoever. Lender acknowledges that the Obligations of Borrower hereunder are solely obligations of Borrower and are not debts, liabilities or obligations of any JPA Members and no taxing power is pledged therefor. Borrower has no taxing powers.

SECTION 8. REPRESENTATIONS AND WARRANTIES.

The Borrower represents and warrants to the Lender that, as of the date of this Agreement, as of the date of each Advance, and at all times any Obligations remain outstanding to the Lender:

Section 8.1 Organization and Qualification; Authority; Consents. The Borrower (a) is a public agency formed under the provisions of the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) that is qualified to be a community choice aggregator pursuant to California Public Utilities Code Section 366.2 and (b) has full and adequate power to own its Property and conduct its business as now conducted, and is duly licensed or qualified in each jurisdiction in which the nature of the business conducted by it or the nature of the Property owned or leased by it requires such licensing or qualifying unless the failure to be so licensed or qualified would not have a Material Adverse Effect on its business, operations or assets.

Borrower has the agency power to enter into this Agreement and the other Loan Documents to which it is a party, to request the Advances and incur the Obligations provided for herein, to execute the Notes in evidence thereof, to pledge and encumber assets as security therefor, and to perform each and all of the promises herein and therein. This Agreement and the other Loan Documents to which Borrower is a party do not, nor does the performance or observance by Borrower of any of the matters or things herein or therein provided for, contravene any provision of law or the Joint Powers Agreement or any covenant, indenture or agreement of or affecting Borrower or any of its Properties, including any power purchase agreements. The execution, delivery, performance and observance by Borrower of this Agreement and the other Loan Documents do not and, at the time of delivery hereof, will not require any consent or approval of any other Person, other than such consents and approvals that have been given or obtained. 20 Section 8.2 Legal Effect. This Agreement and the other Loan Documents to which Borrower is a party constitute legal, valid and binding agreements of the Borrower, enforceable in accordance with their respective terms, subject to laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and the application of equitable remedies if equitable remedies are sought.

Section 8.3 Subsidiaries. The Borrower has no subsidiaries (as that term is commonly understood).

Section 8.4 Use of Proceeds. The Borrower shall use the proceeds of the Advances as provided herein and solely for purposes consistent with the purpose of Borrower as set forth in the Joint Powers Agreement, including for purposes consistent with the community choice aggregation program established by Borrower pursuant to California Public Utilities Code Section 366.2.

Section 8.5 Financial Reports. The statements of financial condition of Borrower, when delivered to Lender, fairly present the financial condition of Borrower and the results of its operations and cash flows for the periods then ended in conformity with GAAP applied on a consistent basis, subject (in the case of unaudited statements) to year-end audit adjustments.

Borrower has no Contingent Liabilities which are material to it other than, with respect to any financial statements delivered to Lender, as indicated on said financial statements.

Section 8.6 Full Disclosure. The Loan Documents and all certificates, financial statements, documents and other written information furnished to the Lender by or on behalf of the Borrower in connection with the transactions contemplated hereby were, as of their respective dates, complete and correct in all material respects to the extent necessary to give the Lender true and accurate knowledge of the subject matter thereof and did not contain any untrue statement of a material fact.

Section 8.7 Litigation. There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, arbitrator or governmental or other board, body or official pending or, to the best knowledge of the Borrower, threatened against or affecting the Borrower questioning the validity of the JPA Agreement, the execution, delivery and performance by the Borrower of the Loan Documents or any proceeding taken or to be taken by the Borrower or the Board of Directors of the Borrower in connection therewith, or seeking to prohibit, restrain or enjoin the execution, delivery and performance by the Borrower of the Loan Documents, or which could reasonably be expected to result in any Material Adverse Effect, or wherein an unfavorable decision, ruling or finding would in any way materially adversely affect the transactions contemplated by the Loan Documents (any such action or proceeding being herein referred to as “Material Litigation”).

Section 8.8 Good Title. The Borrower has good and defensible title to its Properties as reflected on the most recent balance sheet of Borrower furnished to Lender, subject to Liens as otherwise limited by applicable law.

Section 8.9 Members. The Borrower is not a party to any contract or agreement with any of its members on terms and conditions which are less favorable to Borrower than would be 21 usual and customary in similar contracts or agreements between Persons not affiliated with each other.

Section 8.10 Compliance with Laws. The Borrower is in compliance with its investment policy and all laws applicable to the Borrower, non-compliance with which could reasonably be expected to have a Material Adverse Effect. In addition, no benefit plan maintained by the Borrower for its employees is subject to the provisions of ERISA, and the Borrower is in compliance with all Laws in respect of each such benefit plan.

Section 8.11 Environmental Matters. In the ordinary course of its business, the Borrower conducts an ongoing review of Environmental Laws on the business, operations and the condition of its property, in the course of which it identifies and evaluates associated liabilities and costs (including, but not limited to, any capital or operating expenditures required for clean-up or closure of properties currently or previously owned or operated, any capital or operating expenditures required to achieve or maintain compliance with environmental protection standards imposed by law or as a condition of any license, permit or contract, any related constraints on operating activities, including any periodic or permanent shutdown of any facility or reduction in the level of or change in the nature of operations conducted thereat and any actual or potential liabilities to third parties, including employees, and any related costs and expenses). On the basis of such review, the Borrower does not believe that Environmental Laws are likely to have a Material Adverse Effect.

Section 8.12 Other Agreements. Borrower is not in default under the terms of any agreement affecting Borrower or any of its Properties, which default if uncured would have a Material Adverse Effect on the financial condition, Properties, business or operations of Borrower.

Section 8.13 No Default. No Default or Event of Default has occurred or is continuing.

Section 8.14 Sovereign Immunity. The Borrower is not entitled to claim immunity on the grounds of sovereignty or other similar grounds (including, without limitation, governmental immunity) with respect to itself or its revenues (irrespective of their use or intended use) from (i) any action, suit or other proceeding arising under or relating to this Agreement or any other Loan Document, (ii) relief by way of injunction, order for specific performance or writ of mandamus or for recovery of property or (iii) execution or enforcement of any judgment to which it or its revenues might otherwise be made subject in any action, suit or proceeding relating to this Agreement or any other Loan Document, and no such immunity (whether or not claimed) may be attributed to the Borrower or its revenues.

Section 8.15 Anti-Terrorism and Anti-Corruption Laws.
(a) Borrower is not in violation of any law relating to terrorism or money laundering, including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 and the Patriot Act.
(b) The Borrower and its respective officers and directors and to the knowledge of the Borrower, its employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Borrower, any of its directors or officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower that 22 will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. The transaction contemplated by this Agreement does not violate Anti-Corruption Laws or applicable Sanctions.

Section 8.16 Incorporation of Representations and Warranties. The representations and warranties of the Borrower set forth in the Loan Documents (other than this Agreement) are true and accurate in all material respects on the date of this Agreement, as fully as though made on the date of this Agreement. The Borrower makes, as of the date of this Agreement, each of such representations and warranties to, and for the benefit of, the Lender, as if the same were set forth at length in this Section 8.15 together with all applicable definitions thereto. No amendment, modification or termination of any such representations, warranties or definitions contained in the Loan Documents (other than this Agreement) will be effective to amend, modify or terminate the representations, warranties and definitions incorporated in this Section 8.15 by this reference, without the prior written consent of the Lender.

Section 8.17 No Proposed Legal Changes. There is no amendment or, to the knowledge of the Borrower, proposed amendment to the Constitution of the State, any State law or the JPA Agreement or any administrative interpretation of the Constitution of the State, any State law, or the JPA Agreement, or any judicial decision interpreting any of the foregoing, the effect of which could reasonably be expected to have a Material Adverse Effect.

Section 8.18 Regulation U. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System).

Section 8.19 Usury. The terms of the Loan Documents regarding the calculation and payment of interest and fees do not violate any applicable usury laws.

Section 8.20 Insurance. As of the date of this Agreement, the Borrower maintains such insurance, including self-insurance, required by this Agreement.

Section 8.21 ERISA. The Borrower does not maintain or contribute to, and has not maintained or contributed to, any Employee Plan that is subject to Title IV of ERISA.

SECTION 9. CONDITIONS PRECEDENT TO ADVANCES.

Section 9.1 All Advances. The obligation of Lender to make any Advance is subject to the satisfaction of the following conditions precedent:
(a) each of the representations and warranties set forth in Section 8 hereof and in the other Loan Documents shall be true and correct as of said time, except that the representations and warranties made under Section 8.5 shall be deemed to refer to the most recent financial statements furnished to Lender pursuant to Section 10.2; (b) Borrower shall be in full compliance with all of the material terms and conditions of this Agreement and all other Loan Documents, and no Default or Event of Default shall have occurred or be continuing;
23 (c) a completed and signed Request for Advance in the form of Exhibit C with supporting documentation; and
(d) the request is made in accordance with Section 4;
SECTION 10. COVENANTS.

Borrower covenants and agrees as follows:

Section 10.1 Maintenance of Business. Borrower shall preserve and maintain its existence. Borrower shall preserve and keep in force and effect all licenses, permits and franchises necessary to the proper conduct of its business and shall conduct its business affairs in a reasonable and prudent manner. Borrower shall maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel, and shall provide Lender with written notice of any change in executive and management personnel.

Section 10.2 Reports. Borrower shall maintain a standard system of accounting in accordance with GAAP and shall furnish to Lender and its duly authorized representatives such information respecting the business and financial condition of Borrower as Lender may reasonably request; and without any request, Borrower shall furnish to Lender:
(a) commencing with the Borrower’s fiscal year ending June 30, 2022 and annually thereafter, as soon as available, and in any event no later than two hundred seventy (270) days after each Fiscal Year End, a CPA-audited balance sheet of Borrower as of Fiscal Year End and CPA-audited statements of income, retained earnings and cash flows of Borrower for the period then ended, and accompanying notes thereto, each in reasonable detail showing in comparative form the figures for the previous fiscal year, accompanied by an unqualified opinion thereon of Borrower’s independent public accountants, to the effect that the financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the financial condition of Borrower as of the close of such fiscal year and the results of its operations and cash flows for the fiscal year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards and, accordingly, such examination included such tests of the accounting records and such other review procedures as were considered necessary under the circumstances; (b) annually/biennially, Borrower’s board-approved operating budget and updated projections for the next fiscal year, within thirty (30) days after such budget is adopted or amended;
(c) Quarterly, within sixty (60) days of the end of each Fiscal Quarter, unaudited quarterly financial statements of the Borrower including a balance sheet and income statements.
(d) promptly after knowledge thereof shall have come to the attention of any responsible officer of Borrower, written notice of any litigation threatened in writing or any pending litigation or governmental proceeding or labor controversy against Borrower which, if adversely determined, would materially adversely affect the financial condition, Properties, 24 business or operations of Borrower or result in the occurrence of any Default or Event of Default hereunder; and
(e) promptly upon request, all such other information as Lender may reasonably request.

Section 10.3 Debt Ratio. As of the end of each Fiscal Year, commencing June 30, 2022, the Borrower shall maintain an annual Debt Ratio of no less than 1.20.

Section 10.4 Deposit Relationship. The Borrower shall maintain a twelve-month average balance in the Revenue Fund held at the Lender that shall exceed ten million dollars ($10,000,000) calculated as of each Fiscal Quarter. If this covenant is not satisfied, as determined by Lender, it shall constitute an Event of Default, and the Applicable Rate on any Note will immediately increase by an additional 2.00 percentage point margin. This margin shall continue to apply to each succeeding interest rate change that may apply thereafter so long as this covenant is not satisfied.

Section 10.5 Days Cash on Hand to Revolving Credit Commitment. The Borrower shall maintain Days Cash On Hand not less than 90 days, tested at the end of each Fiscal Quarter, commencing with the first Fiscal Quarter after the closing date of this Agreement. The Borrower will provide to the Lender evidence of Days Cash On Hand in the form of a certificate documenting the calculation based on the quarterly compilation prepared by a third party.

Section 10.6 Eminent Domain Proceeds. If all or any part of the System shall be taken by eminent domain proceedings, the Net Proceeds thereof shall be applied as follows:
(a) If (1) the Borrower prepares a report showing (i) the estimated loss of annual Net Revenues, if any, suffered or to be suffered by the Borrower by reason of such eminent domain proceedings, (ii) a general description of the additions, betterments, extensions or improvements to the System proposed to be acquired by the Borrower from any Net Proceeds, and (iii) an estimate of the additional annual Net Revenues to be derived from such additions, betterments, extensions or improvements, and (2) on the basis of such certificate, the Borrower determines that the estimated additional annual Net Revenues will sufficiently offset the estimated loss of annual Net Revenues resulting from such eminent domain proceedings so that the ability of the Borrower to meet its obligations hereunder will not be substantially impaired (which determination shall be final and conclusive); then the Borrower shall promptly proceed with the acquisition of such additions, betterments, extensions or improvements substantially in accordance with such report and such Net Proceeds shall be applied for the payment of the costs of such acquisition, and any balance of such Net Proceeds not required by the Borrower for such purpose shall be applied to prepay any principal and interest due under this Agreement, and any Parity Debt, on a pro rata basis in the manner provided herein and in the instruments authorizing such Parity Debt. (b) If the foregoing conditions are not met, then such Net Proceeds shall be applied to the prepayment of principal and interest due hereunder and to repay the Term Loan Agreement.

Section 10.7 Further Assurances. The Borrower shall adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or 25 proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Lender of the rights and benefits provided to it herein.

Section 10.8 Protection of Security and Rights of Lender. The Borrower shall preserve and protect the security and the rights of the Lender to the payments of principal and interest due hereunder and will warrant and defend such rights against all claims and demands of all persons.

Section 10.9 Inspection. Borrower shall permit Lender and its duly authorized representatives and agents, at such times and intervals as Lender may designate, but in any event no more than six (6) times during any twelve (12) month period if no Default or Event of Default has occurred and is continuing: (i) to visit and inspect any of the Properties, books and financial records of Borrower and to examine and make copies of the books of accounts and other financial records of Borrower, and (ii) to discuss the affairs, finances and accounts of Borrower with, and to be advised as to the same by, the executive officers of Borrower and other officers, employees and independent public accountants of Borrower (and by this provision Borrower authorizes such accountants to discuss with Lender or its agents and representatives the finances and affairs of Borrower). Without limiting the generality of the foregoing, Borrower shall promptly provide all information and access requested by Lender as Lender determines is necessary or required in connection with the preparation of its own financial statements.

Section 10.10 Liens. The Borrower hereby covenants that there is no pledge of or lien on Net Revenues and Available Cash senior to the pledge and lien securing the principal and interest due hereunder and amounts due and owing under the Term Loan Agreement. The Borrower shall not make any further pledge of or place any lien on the Net Revenues and Available Cash, provided that the Borrower may at any time, or from time to time, pledge or encumber the Net Revenues and Available Cash in connection with Subordinate Debt and in connection with the issuance or execution of Parity Debt provided it is in compliance with Section 10.19.

Section 10.11 Investments, Acquisitions, Loans, Advances and Guaranties. Borrower shall not directly or indirectly, make, retain or have outstanding any investments (whether through purchase of stock or obligations or otherwise) in, or loans or advances (other than for travel advances and other similar cash advances made to employees in the ordinary course of business) to, any other Person, or acquire all or any substantial part of the assets or business of any other Person or division thereof, or be or become liable as endorser, guarantor, surety or otherwise for any debt, obligation or undertaking of any other Person, or otherwise agree to provide funds for payment of the obligations of another, or supply funds thereto or invest therein or otherwise assure a creditor of another against loss, or apply for or become liable to the issuer of a letter of credit which supports an obligation of another, other than as may be required by CPUC changes to financial security requirements, or subordinate any claim or demand it may have to the claim or demand of any other Person.

Section 10.12 Compliance with Laws. The Borrower shall pay and discharge all taxes, assessments and other governmental charges, if any, which may hereafter be lawfully imposed upon the System or any part thereof or upon the Revenues when the same shall become due. The Borrower shall duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the System or any part thereof, but the Borrower 26 shall not be required to comply with any regulations or requirements so long as the validity or application thereof shall be contested in good faith.

Section 10.13 Contracts With Members. Borrower shall not enter into any contract, agreement or business arrangement with any of its members on terms and conditions which are less favorable to Borrower than would be usual and customary in similar contracts, agreements or business arrangements between Persons not affiliated with each other.

Section 10.14 Notices of Claims and Litigation. Borrower shall promptly inform Lender in writing of (a) all material adverse changes in Borrower’s financial condition and/or (b) all existing or written threats of litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower which could materially affect the financial condition of Borrower.

Section 10.15 Other Agreements. The Borrower shall perform and comply with each covenant set forth in the Loan Documents and any other agreements, instruments or documents evidencing Parity Debt or Subordinate Debt. By the terms of this Agreement, the Lender is hereby made a third-party beneficiary of the covenants set forth in each of the Loan Documents (other than this Agreement), and each such covenant, together with the related definitions of terms contained therein, is incorporated by reference in this Section 10.15 with the same effect as if it were set forth herein in its entirety. The Borrower shall not amend, supplement or otherwise modify (or permit any of the foregoing), or request or agree to any consent or waiver under, or effect or permit the cancellation, acceleration or termination of, or release or permit the release of any collateral held under any of the Loan Documents in any manner without the prior written consent of the Lender, and the Borrower shall take, or cause to be taken, all such actions as may be reasonably requested by the Lender to strictly enforce the obligations of the other parties to any of the Loan Documents, as well as each of the covenants set forth therein. The Borrower shall give prior written notice to the Lender of any action referred to in this Section 10.15.

Section 10.16 Performance. The Borrower shall punctually pay all principal and interest due hereunder in strict conformity with the terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, and will not terminate this Agreement for any cause whatsoever, including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to any part of the System, condemnation of any part of the System by any governmental entity, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision of either or any failure of the Lender to observe or perform any agreement, condition, covenant or term required to be observed and performed by it contained herein, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement.

Section 10.17 Compliance Certificates. The Borrower shall provide to the Lender quarterly, together with the Borrower-prepared financial statements dated as of the end of each Fiscal Quarter, and due within sixty (60) days after the end of each quarter, a certificate in the form of Exhibit D executed by the Borrower’s Treasurer, chief financial officer, or other officer or person acceptable to the Lender, certifying that it is in compliance with Sections 10.3 and 10.5 hereof and, as of the date of the certificate, no Event of Default has occurred during the period 27 covered by such statements or, if any such Event of Default has occurred during such period, setting forth a description of such Event of Default and specifying the action, if any, taken by Borrower to remedy the same.

Section 10.18 Fiscal Year. The Borrower shall not change its fiscal year without the prior written consent of the Lender.

Section 10.19 No Priority for Additional Obligations; Parity Debt and Subordinate Debt. (a) The Borrower may not issue or incur any Debt which has any priority in payment of principal or interest from the Net Revenues and Available Cash compared to the payment of principal and interest due hereunder without the prior written consent of the Lender. (b) The Borrower shall not issue any Parity Debt except if the Debt Ratio projected for the Fiscal Year in which the Parity Debt is being incurred and each Fiscal Year thereafter is 1.20 or greater; provided, for purposes of this Section 10.19(b), the Borrower may calculate the Debt Ratio for the Fiscal Year in which the Parity Debt is being incurred and each Fiscal Year thereafter taking into account projected increases in Total Operating Revenues, as evidenced by a fiscal study, rate study, or other third-party analysis, study or report prepared by an Independent Consultant in connection with the incurrence of the Parity Debt. (c) For clarity, nothing in this Agreement will prevent the Borrower from issuing or incurring Subordinate Debt or entering into long-term contracts, leases and other obligations that are not secured by Net Revenues and Available Cash, it being understood and agreed that such long-term obligations are required for Borrower to operate the System.

Section 10.20 Against Sale or Disposition of Property. If and to the extent Borrower obtains physical assets that are part of the System in the future, Borrower shall not sell, lease, encumber or otherwise dispose of the System or any part thereof in excess of one-half of one percent of the book value of the System in any Fiscal Year, unless the Treasurer certifies that such sale, lease, encumbrance or disposition will not materially adversely affect the operation of the System or the Net Revenues; provided however, any real or personal property which has become nonoperative or which is not needed for the efficient and proper operation of the System, or any material or equipment which has become worn out, may be sold or exchanged at not less than the fair market value thereof and the proceeds (if any) of such sale or exchange shall be deposited in the Revenue Fund.

Section 10.21 Operation of the System, Rate Covenant. (a) The Borrower shall continue to operate the System and shall have in effect at all times, except as otherwise provided by law, rules and regulations requiring all users of the System provided by the Borrower that is provided or made available to pay the rates, fees and charges applicable to the System provided or made available to such users, and providing for the billing thereof and for a due date and a delinquency date for each bill. In each case where such bill remains unpaid in whole or in part after such bill becomes delinquent, the Borrower, in accordance with law, may refuse to provide or make available the services provided by the System to such premises until all delinquent rates, fees and charges and penalties have been paid in full.
28 (b) Except in connection with the receipt of federal or State funding, or as required by law or as a condition to the acquisition or operation of the System, the Borrower shall not permit any part of the System, or any facility thereof, to be used, or taken advantage of, free of charge by any person, firm or corporation, or by any public agency (including the United States of America, the State and any public corporation, political subdivision, city, county, district or agency of any thereof), excepting only that the Borrower may without charge use the services and facilities of the System.
(c) The Borrower shall, at all times while the Revolving Credit is outstanding, take the necessary and appropriate actions to fix, prescribe and collect rates, fees and charges in connection with the System so as to yield Revenues at least sufficient, after making reasonable allowances for contingencies and errors in the estimates and available reserves, to pay the following amounts in the order below set forth:
(1) Power Supply Costs (including Priority Administration Costs); (2) The principal and interest payments due hereunder and all payments (including payments of interest and under reimbursement agreements) with respect to related Parity Debt issued or incurred after the date hereof as they become due and payable;
(3) All Operation and Maintenance Costs of the System;
(4) All other payments required to meet any other obligations of the Borrower which are charges, liens, encumbrances upon, or which are otherwise payable from the Revenues during such Fiscal Year; and
(5) Maintain compliance with Sections 10.3 and 10.5.

Section 10.22 Against Competitive Facilities. The Borrower shall not, to the extent permitted by law, acquire, maintain or operate and will not, to the extent permitted by law and its current contractual rights and obligations and within the reasonable scope of its powers, permit any other public or private agency, corporation, district or political subdivision or any person whomsoever to acquire, maintain or operate as part of or an affiliate of the Borrower any utility system competitive with the System.

Section 10.23 Maintenance and Operation of the System. The Borrower shall pay all Power Supply Costs and Operation and Maintenance Costs of the System as they become due and payable.

Section 10.24 Payment of Claims. The Borrower shall pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien on the Net Revenues and Available Cash or any part thereof or on any funds in the control of the Borrower prior or superior to the lien of the payment of principal and interest hereunder or which might impair the security of the such payments of principal and interest. 29 Section 10.25 Insurance. The Borrower shall maintain, or cause to be maintained, at all times, insurance on and with respect to its properties with responsible and reputable insurance companies; provided, however, that the Borrower may maintain self-insurance general liability on its properties not covered by the public entity property insurance program policy, for worker’s compensation and vehicle liability and such other self-insurance as it deems prudent. Such insurance must include casualty, liability and workers’ compensation and be in amounts and with deductibles and exclusions customary and reasonable for governmental entities of similar size and with similar operations as the Borrower. The Borrower shall, upon request of the Lender, furnish evidence of such insurance to the Lender. The Borrower shall also procure and maintain at all times adequate fidelity insurance or bonds on all officers and employees handling or responsible for any Revenues or funds of the System, such insurance or bond to be in an aggregate amount at least equal to the maximum amount of such Revenues or funds at any one time in the custody of all such officers and employees or in the amount of one million dollars ($1,000,000), whichever is less. The insurance described above may be provided as part of any comprehensive fidelity and other insurance and not separately for the System. The Borrower shall pay or cause to be paid when due the premiums for all insurance policies required hereby.

Section 10.26 Covenant to Obtain Take-Out Financing. If amounts owed hereunder are not repaid on or before the Revolving Credit Termination Date, the Borrower hereby covenants and agrees to use its best efforts to complete a financing in order to repay the Lender hereunder.

SECTION 11. EVENTS OF DEFAULT AND REMEDIES.

Section 11.1 Events of Default. Any one or more of the following will constitute an “Event of Default” hereunder:
(a) Any default in the payment any amount due and owing hereunder when due at the time specified herein;
(b) Failure by the Borrower to observe and perform any covenant, condition or agreement on its part to be observed or performed hereunder, other than as referred to in the preceding clause (a) of this Section, and other than the covenant of the Borrower to provide the Lender with a copy of its annual budget and any interim updates or modifications to such budget as required by Section 10.2 hereof, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the Borrower by the Lender. However, if in the reasonable opinion of the Borrower the failure stated in the notice can be corrected, but not within such 30-day period, the Lender shall not unreasonably withhold their consent to an extension of such time (for a period not to exceed 60 days) if corrective action is instituted by the Borrower within such 30-day period and diligently pursued until the default is corrected; (c) The filing by the Borrower of a voluntary petition in bankruptcy, or failure by the Borrower promptly to lift any execution, garnishment or attachment, or adjudication of the Borrower as a bankrupt, or assignment by the Borrower for the benefit of creditors, or the entry by the Borrower into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the Borrower in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar federal or State act now existing or which may hereafter be enacted;
30 (d) Any statement, representation or warranty of a material nature made by the Borrower in or pursuant to this Agreement or its execution, delivery or performance shall have been false, incorrect, misleading or breached in any material respect on the date when made; (e) Any default occurs under any other agreement for borrowing money, lease financing of property or otherwise receiving credit under which the Borrower is an obligor, if such default (i) arises under any other agreement for borrowing money, lease financing of property or provision of credit provided by the Lender or any affiliate of the Lender, or (ii) arises under any obligation under which there is outstanding, owing or committed an aggregated amount in excess of $50,000;
(f) Any court of competent jurisdiction shall find or rule that this Agreement is not valid or binding against the Borrower;
(g) A custodian, receiver, trustee, examiner, liquidator or similar official is appointed for the Borrower or any substantial part of its Property, and such proceeding continues undischarged, undismissed and unstayed for a period of thirty (30) days; (h) A debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any Debt of the Borrower by the Borrower or any Governmental Authority with appropriate jurisdiction;
(i) Any material provision of this Agreement, the JPA Agreement or any other Loan Document at any time for any reason ceases to be valid and binding on the Borrower as a result of any legislative or administrative action by a Governmental Authority with competent jurisdiction or is declared in a final non-appealable judgment by any court with competent jurisdiction to be null and void, invalid or unenforceable, or the validity or enforceability thereof is publicly contested by the Borrower, or the Borrower publicly contests the validity or enforceability of any obligation to pay System Debt, or any Authorized Representative publicly repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any provision of this Agreement, the JPA Agreement, any other Loan Document or any operative document related to System Debt;
(j) Dissolution or termination of the existence of the Borrower; (k) The Borrower (i) defaults on the payment of the principal of or interest on any System Debt beyond the period of grace, if any, provided in the instrument or agreement under which such System Debt was created or incurred or (ii) defaults in the observance or performance of any agreement or condition relating to any System Debt, including, without limitation, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such System Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such System Debt; (l) Any final, nonappealable judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, in an aggregate amount not less 31 than $250,000 are entered or filed against the Borrower or against any of its Property and remain unpaid, unvacated, unbonded and unstayed for a period of sixty (60) days; or (m) The passage of any Law has occurred which could reasonably be expected to have a Material Adverse Effect.

Section 11.2 Remedies on Default. Upon the occurrence of any Event of Default Lender or any permitted holder of the Notes may, by notice to Borrower, take any of the following actions:
(a) terminate any obligation to extend any further credit hereunder (including but not limited to Advances) on the date (which may be the date thereof) stated in such notice; (b) declare all Advances and all indebtedness under the Notes then outstanding (including all outstanding principal and all accrued but unpaid interest), and all other Obligations of Borrower to Lender, to be immediately due and payable without further demand, presentment, protest or notice of any kind; and
(c) exercise and enforce any and all rights and remedies contained in any other Loan Document or otherwise available to Lender at law or in equity.

This provision, however, is subject to the condition that, except with respect to an Event of Default under Section 11.1(c) above, if at any time after such Principal Amount of the unpaid Note Payments and the accrued interest thereon shall have been so declared due and payable and before the acceleration date or the date of any judgment or decree for the payment of the money due shall have been obtained or entered, the Borrower shall deposit with the Lender a sum sufficient to pay such unpaid Principal Amount of the Note Payments due prior to such date and the accrued interest thereon, with any interest due on such overdue installments, and the reasonable expenses of the Lender, and any and all other defaults known to the Lender (other than in the payment of such Principal Amount of the unpaid Note Payments and the accrued interest thereon due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Lender or provision deemed by the Lender to be adequate shall have been made therefor, then and in every such case the Lender may rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default or shall impair or exhaust any right or power consequent thereon.

SECTION 12. MISCELLANEOUS.

Section 12.1 Holidays. If any payment hereunder becomes due and payable on a day which is not a Business Day, the due date of such payment will be extended to the next succeeding Business Day on which date such payment will be due and payable. In the case of any principal falling due on a day which is not a Business Day, interest on such principal amount will continue to accrue during such extension at the Applicable Rate, which accrued amount will be due and payable on the next scheduled date for the payment of interest.

Section 12.2 No Waiver, Cumulative Remedies. No delay or failure on the part of Lender or the holder of any Note in the exercise of any power or right will operate as a waiver thereof or as an acquiescence in any Default, nor will any single or partial exercise of any power or right preclude any other or further exercise thereof, or the exercise of any other power or right. All rights 32 and remedies of Lender and the holder of any Note are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have. Borrower agrees that in the event of any breach or threatened breach by Borrower of any covenant, obligation or other provision contained in this Agreement, Lender shall be entitled (in addition to any other remedy that may be available to Lender) to: (i) a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other provision; and (ii) an injunction restraining such breach or threatened breach. Borrower further agrees that neither Lender nor any other person or entity shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 12, and Borrower irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

Section 12.3 Amendments, Etc. No amendment, modification, termination or waiver of any provision of this Agreement or any other Loan Document nor consent to any departure by Borrower therefrom, will in any event be effective unless the same is in writing and signed by Lender. No notice to or demand on Borrower in any case will entitle Borrower to any other or further notice or demand in similar or other circumstances.

Section 12.4 Costs and Expenses.
(a) Borrower shall pay all reasonable out-of-pocket expenses incurred by Lender in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) including, without limitation, the fees specified in Section 5.1. (b) Borrower agrees to pay on demand all reasonable costs and expenses (including attorneys’ fees and expert witness fees), if any, incurred by Lender or any other holder of the Obligations in connection with any Event of Default or the enforcement of this Agreement, any other Loan Document or any other instrument or document to be delivered hereunder, including without limitation any action, suit or proceeding brought against Lender by any Person which arises out of the transactions contemplated hereby or out of any action or inaction by Lender hereunder or thereunder.

Section 12.5 Indemnity. The Borrower shall and hereby agrees to indemnify and save the Lender, its officers, directors, agents, employees, successors or assigns harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on, the System by the Borrower, (ii) any breach or default on the part of the Borrower in the performance of any of the Borrower’s obligations under the Agreement, (iii) any act of negligence of the Borrower or of any of its contractors, servants, employees or licensees with respect to the System, or (iv) any act of negligence of any assignee or sublessee of the Borrower, or of any agents, contractors, servants, employees or licensees of the assignee or sublessee of the Borrower with respect to the System.

The Borrower further covenants and agrees to indemnify and save the Lender harmless against any claim, loss, expense, advance, and liabilities which they may incur arising out of or in the exercise and performance of their powers and duties hereunder, including the costs and 33 expenses (including attorneys fees and disbursements) of defending against any claim of liability or enforcing any remedies, and which are not due to its negligence or willful misconduct. The Borrower further covenants and agrees to advance to the Lender the amounts requested as the costs and expenses of such defense. Any and all special obligations of the Borrower under this Section shall be and remain valid and binding special obligations of the Borrower notwithstanding the payment in full of the payment of principal and interest due hereunder and the termination of this Agreement.

Section 12.6 Right of Set Off. Without limiting any provision of this Agreement, to the extent permitted by applicable law, Lender reserves a right of setoff in all of Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.

However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. While any Event of Default has occurred and is continuing, Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums due and owing from Borrower against any and all such accounts.

Section 12.7 Survival of Representations. All representations and warranties made herein or in certificates given pursuant hereto will survive the execution and delivery of this Agreement and the other Loan Documents, and will continue in full force and effect with respect to the date as of which they were made as long as any credit is in use or available hereunder.

Section 12.8 Notices. Except as otherwise specified herein, all notices hereunder will be in writing (by hand, commercial overnight courier, or e-mail) and will be given to the relevant party at its address or e-mail address set forth below, or such other address as such party may hereafter specify by written notice to the other. Any notice of default under this Agreement will be given by hand or overnight courier in addition to e-mail. Notices hereunder will be addressed:

If to the Borrower: Pioneer Community Energy
2510 Warren Drive, Suite B
Rocklin, CA 95667
Attention: Executive Director
Telephone: 916-758-8938
If to the Lender: Umpqua Bank
2998 Douglas Boulevard, Suite 100
Roseville, CA 95661
Attention: Vanessa Ryan
Telephone: 916-724-1214
Each such notice, request or other communication will be effective (i) if given by e-mail, upon transmission, or (ii) if given by any other means, when delivered at the addresses specified in this Section 12.8; provided that any notice given pursuant to Section 2.2 hereof will be effective only upon receipt.

For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current address.
34 Section 12.9 Headings. Section headings used in this Agreement are for convenience of reference only and are not a part of this Agreement for any other purpose.

Section 12.10 Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 12.11 Counterparts. This Agreement may be executed in any number of counterparts, and by different parties hereto on separate counterparts, and all such counterparts taken together will be deemed to constitute one and the same instrument.

Section 12.12 Assignments, Binding Nature, Governing Law, Etc. This Agreement will be binding upon Borrower and its permitted successors and assigns, and will inure to the benefit of Lender and the benefit of its permitted successors and assigns, including any permitted subsequent holder of a Note. This Agreement and the rights and duties of the parties hereto will be construed and determined in accordance with the internal laws of the State of California without regard to principles of conflicts of laws. This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and any prior agreements, whether written or oral, with respect thereto are superseded hereby. Borrower may not assign its rights hereunder without the written consent of Lender. Lender may assign its rights hereunder without the consent of Borrower, but only if after any such assignment Lender acts as the lead agent or administrative agent with respect to this Agreement.

Section 12.13 Submission to Jurisdiction; Venue. Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Eastern District of California and of any California State court sitting in the County of Sacramento for purposes of all legal proceedings arising out of or relating to this Agreement, the other Loan Documents or the transactions contemplated hereby or thereby. Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court has been brought in an inconvenient forum.

Section 12.14 Judicial Reference. (a) TO THE MAXIMUM EXTENT PERMITTED BY

LAW, EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL RIGHT TO

TRIAL BY JURY IN ANY LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF

THE PARTIES FURTHER AGREES THAT, IN THE EVENT OF LITIGATION, IT WILL NOT

PERSONALLY OR THROUGH ITS AGENTS OR ATTORNEYS SEEK TO REPUDIATE THE VALIDITY OF THIS SECTION 12.14, AND IT ACKNOWLEDGES THAT IT FREELY AND

VOLUNTARILY ENTERED INTO THIS AGREEMENT TO WAIVE TRIAL BY JURY IN ORDER TO INDUCE THE BANK TO FINANCE THE PROJECT.
(b) To the extent that the foregoing waiver of a jury trial is unenforceable under applicable State of California law, the parties agree to refer, for a complete and final adjudication, any and all issues of fact or law involved in any litigation or proceeding (including all discovery and law and motion matters, pretrial motions, trial matter and post-trial motions up to and including final judgment), brought to resolve any dispute (whether based on contract, tort or otherwise) 35 between a party or the parties and the Bank arising out of, in connection with or otherwise related or incidental to this Agreement to a judicial referee who shall be appointed under a general reference pursuant to California Code of Civil Procedure Section 638, which referee’s decision will stand as the decision of the court. Such judgment will be entered on the referee’s statement of judgment in the same manner as if the action had been tried by the court. The parties shall select a single neutral referee, who shall be a retired state or federal judge with at least five years of judicial experience in civil matters; provided that the event the parties and the Bank cannot agree upon a referee, the referee will be appointed by the court. The fees and expense of any referee that is appointed in such action or proceeding shall be shared equally among the parties, but the prevailing party shall have the right to recover the portion paid by it from the non-prevailing party at the conclusion of the case.

Section 12.15 Time is of the Essence. Time is of the essence in the performance and enforcement of this Agreement and the other Loan Documents.

Section 12.16 Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or more participation interests in the Revolving Credit or the Term Loan to one or more purchasers, whether related or unrelated to Lender, provided that at all times Lender manages the Revolving Credit and the Term Loan such that Borrower may communicate exclusively with Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to this Agreement, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interest in the Notes and will have all the rights granted under the participation agreement or agreements governing the same of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s obligations under this Agreement irrespective of the failure or insolvency of any holder of any interest in the Notes. Borrower further agrees that the purchaser of any such participation interests may enforce the interests irrespective of any personal claims or defenses that Borrower may have against Lender.

Section 12.17 No Recourse Against Constituent Members of Borrower. The Borrower is organized as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) pursuant to the Joint Powers Agreement and is a public entity separate from its constituent members. Borrower shall be solely responsible for all debts, obligations and liabilities accruing and arising out of this Agreement and the Notes. Lender shall not make any claims, take any actions or assert any remedies against any of Borrower’s constituent members in connection with any payment default by Borrower under this Agreement or any other Loan Document.

Section 12.18 Arm’s Length Transaction. The transaction described in this Agreement is an arm’s length, commercial transaction between the Borrower and the Lender in which: (i) the Lender is acting solely as a principal (i.e., as a lender) and for its own interest; (ii) the Lender is 36 not acting as a municipal advisor or financial advisor to the Borrower; (iii) the Lender has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934 to the Borrower with respect to this transaction and the discussions, undertakings and procedures leading thereto (irrespective of whether the Lender or any of its affiliates has provided other services or is currently providing other services to the Borrower on other matters); (iv) the only obligations the Lender has to the Borrower with respect to this transaction are set forth in this Agreement,; and (v) the Lender is not recommending that the Borrower take an action with respect to the transaction described in this Agreement and the other Loan Documents, and before taking any action with respect to the this transaction, the Borrower should discuss the information contained herein with the Borrower’s own legal, accounting, tax, financial and other advisors, as the Borrower deems appropriate.

Section 12.19 Assignment to Federal Reserve Bank. The Lender may assign and pledge all or any portion of the obligations owing to it hereunder to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned obligations made by the Borrower to the Lender in accordance with the terms of this Agreement will satisfy the Borrower’s obligations hereunder in respect of such assigned obligation to the extent of such payment. No such assignment will release the Lender from its obligations hereunder. [Signatures appear on following page.]

IN WITNESS WHEREOF, the Lender and the Borrower have caused this Agreement to be executed in their respective names by their duly authorized officers, all as of the date first above written.

UMPQUA BANK,
an Oregon state chartered bank
By: ______________ _
Authorized Representative
Executive Director
4866-9345-3350. l 0

EXHIBIT A

FORM OF IRREVOCABLE STANDBY LETTER OF CREDIT

IRREVOCABLE STANDBY LETTER OF CREDIT PROVIDED BY PIONEER Issuing Bank: _________________

Date and Place of Issue: _________________

Letter of Credit No.: [_______]
Stated Amount: US [$ _______] ([in words] United States Dollars) Expiration Date: __________ __, 202_
Beneficiary’s Name and Address: [NAME and ADDRESS]
(“Beneficiary”)
Applicant’s Name and Address: [NAME and ADDRESS]
(“Applicant”)
To Beneficiary:

We hereby issue this irrevocable standby letter of credit no. [___________] (“Letter of Credit”) in your favor for the account of Applicant [for [____] (“Account Party”)] for payment at sight of up to the aggregate amount stated above (“Stated Amount”). Drawing(s) made in accordance with the terms and conditions of this Letter of Credit will be duly honored. This Letter of Credit is effective as of [date].

Funds under this Letter of Credit, in an amount not to exceed the Stated Amount, will be made available to you upon presentation of a statement (“Beneficiary Statement”) purportedly signed by an authorized officer of Beneficiary stating:

1. “This Letter of Credit No. [_____] will expire in twenty (20) or fewer Business Days, Beneficiary has not received an extension of said Letter of Credit or other acceptable replacement collateral as required under the [ ], dated as of [date] between [Applicant]/[Account Party] and Beneficiary, as the same may have been amended. Wherefore, Beneficiary hereby demands payment of $[amount].” Or

2. “An Event of Default (as defined in the [ ], dated as of [date] between [Applicant]/[Account Party] and Beneficiary, as the same may have been amended (the “Master Agreement”)) has occurred and is continuing with respect to [Applicant]/[Account Party] under the Master Agreement, and [Applicant’s]/[Account Party’s] payment to Beneficiary of $[amount] is due and owing.

Wherefore, Beneficiary hereby demands payment of the above referenced amount under Letter of Credit No. [____].”
Or

3. “An Early Termination Date (as defined in the [ ] dated as of [date] between [Applicant]/[Account Party] and Beneficiary, as the same may have been amended (the “Master Agreement”) has occurred and the [Applicant]/[Account Party] has failed to make all payments due and owing to Beneficiary in accordance with the terms of the Master Agreement, and [Applicant’s]/[Account Party’s] payment to Beneficiary of $[amount] is due and owing. Wherefore, Beneficiary hereby demands payment of the above referenced amount under Letter of Credit No. [____].” Terms and Conditions

1. Payment under this Letter of Credit will be effected per your instructions against a Beneficiary Statement presented at _______________________________________ (“Place for Presentation”). The Beneficiary Statement may be presented by (a) U.S. mail, (b) overnight courier or (c) as a PDF attachment to an email to [bank email address]. Transmittal by email shall be deemed delivered when received.

2. 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 Beneficiary Statement by Beneficiary hereunder in order to receive payment.

3. Partial and/or multiple drawings are permitted. Such partial drawings shall reduce the amount thereafter available for drawing under this Letter of Credit.

4. This Letter of Credit will terminate at 5:00 p.m., San Francisco time, on the earlier of (i) the Expiration Date, (ii) the date of surrender by you of this Letter of Credit for cancellation, and (iii) the date of our honoring of drawing(s) under this Letter of Credit that, in the aggregate, equal the Stated Amount.

5. It is a condition of this Letter of Credit that the Expiration Date shall be deemed automatically extended without an amendment for a one-year period beginning on the present Expiration Date hereof and upon each anniversary for such date, unless at least ninety (90) days prior to any such Expiration Date, we have sent to you written notice by overnight courier service that we elect not to extend this Letter of Credit, in which case it will expire on such Expiration Date. No presentation made under this Letter of Credit after such Expiration Date will be honored.

6. All Issuing Bank charges are for the account of Applicant.

7. This Letter of Credit shall not be amended except with the written concurrence of Beneficiary, Applicant, and Issuing Bank.

8. Any communications to us with respect to this Letter of Credit shall be addressed to the Place for Presentation and refer to “Letter of Credit No. [_______]”.

9. Unless otherwise expressly stated herein, this Letter of Credit is governed by the International Standby Practices 1998 (ISP98) (International Chamber of Commerce Publication No. 590). As to matters not governed by the ISP98, this Letter of Credit is governed by the laws of the State of California.

10. [Rule 3.14] is amended such that if the Letter of Credit expires while the Place for Presentation is closed due to events described in said [Rule], then the Expiration Date of the Letter of Credit shall be automatically extended without amendment to a date thirty (30) calendar days after the Place for Presentation reopens for business.

11. All notices to Beneficiary shall be in writing and are required to be sent by certified letter, overnight courier, or delivered in person to: [Beneficiary’s address]. 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.

Very truly yours,
EXHIBIT B – FORM OF NOTE

EXHIBIT B

FORM OF NOTE
FOR VALUE RECEIVED, PIONEER COMMUNITY ENERGY, a public agency formed under the provisions of the Joint Exercise of Powers Act of the State of California, Government Code Section 6500 et seq. (“Borrower”), promises to pay to the order of UMPQUA BANK (“Lender”) the principal sum of up to TWENTY MILLION and No/100 DOLLARS ($20,000,000.00), pursuant to the terms of that certain Credit Agreement (the “Credit Agreement”) dated October 24, 2022, between Borrower and Lender, together with interest thereon as provided herein and therein. All payments under this Note (this “Note”) shall be made to Lender at its address specified in the Credit Agreement, or at such other place as the holder of this Note may from time to time designate in writing, in accordance with the terms of this Note and the Credit Agreement. Capitalized terms used but not defined in this Note shall have the definitions provided in the Credit Agreement.

Payment Terms. Borrower agrees to pay monthly payments of interest only on the unpaid principal balance of this Note as of each Payment Date beginning on November 15, 2022, with all subsequent payments due and payable on each Payment Date thereafter as provided in Section 3 of the Credit Agreement. Interest will accrue prior to maturity (whether by lapse of time, acceleration or otherwise) at the Applicable Rate and after maturity (whether by lapse of time, acceleration or otherwise), whether before or after judgment, at the Default Rate, until paid in full.

Letters of Credit. This Note is executed in connection with Letter of Credits issued by the Lender to the applicable beneficiary specified therein (each a “Beneficiary”) pursuant to and in compliance with the terms of the Credit Agreement.

Draw or Demand Under the Letters of Credit. Borrower directs and authorizes Lender to immediately advance funds under the applicable Letter of Credit to repay in full any demand or draw request from the applicable Beneficiary under the Letter of Credit (the “Disbursement”).

Payment Terms Under the Letters of Credit. Borrower agrees to pay any Disbursement immediately upon demand from Lender and in no event less than three (3) Business Days from the date of the Disbursement (the “Demand Date”). From the date of the Disbursement to the Demand Date, Borrower shall pay interest only on the unpaid principal balance of the applicable Letter of Credit of Credit (whether by lapse of time, acceleration or otherwise) at the Applicable Rate, and after the Demand Date (whether by lapse of time, acceleration or otherwise), whether before or after judgment, at the Default Rate, until paid in full.

Credit Agreement and Cash Collateral. If (i) any Letter of Credit has been issued and remains unexpired on the Revolving Credit Termination Date, or (ii) the Revolving Credit Commitment terminates for any reason before the surrender of any outstanding Letter of Credit, then Borrower shall, within three (3) days after written notice from Lender, provide Cash Collateral to Lender with a value of not less than 110% of the aggregate principal amount of all outstanding Advances, to be held by Lender as security until all Obligations with respect to outstanding Letters of Credit shall have been fully and finally discharged, or Borrower may void EXHIBIT B – FORM OF NOTE
or cancel any outstanding Letter of Credit, provided that any Disbursements that are outstanding thereunder shall have been paid by Borrower to Lender.

Default and Acceleration. Upon the occurrence of any Event of Default described in Section 11.1 of the Credit Agreement, Lender or any permitted holder of this Note may exercise any or all of the rights and remedies set forth therein, including the exercise of Lender’s option to accelerate this Note and declare all Advances and all indebtedness under this Note then outstanding to be immediately due and payable, with or without notice to Borrower, as applicable.

Miscellaneous. This Note and the holder hereof are entitled to all of the rights and benefits provided for in the Credit Agreement. All of the terms, covenants and conditions contained in the Credit Agreement are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein. In the event of a conflict or inconsistency between the terms of this Note and the Credit Agreement, the terms and provisions of the Credit Agreement shall control.

This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

This Note will be construed in accordance with, and governed by, the internal laws of the State of California.

Borrower promises to pay all costs and expenses (including reasonable attorneys’ fees and expert witnesses’ fees) suffered or incurred by Lender or subsequent holder of this Note in the collection of this Note or the enforcement Lender’s rights and remedies under the Credit Agreement.

Borrower hereby waives presentment for payment and demand. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forego enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs or endorses this Note, to the extent allowed by law, waive any applicable statute of limitations, presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) the obligations evidenced by this Note or release any party or collateral, or impair, fail to realize upon or perfect Lender’s security interest in the collateral, if any; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify the terms of this Note without the consent of or notice to anyone other than the party with whom the modification is made.

Prior to signing this Note, Borrower read and understood all the provisions of this Note and the Credit Agreement, including the variable interest rate provisions in the Credit Agreement. Borrower agrees to the terms of this Note and the Credit Agreement. Borrower acknowledges receipt of complete copies of this Note and the Credit Agreement.

CREDIT AGREEMENT
EXHIBIT B – FORM OF NOTE

PIONEER COMMUNITY ENERGY
By:

Name:

Title:

CREDIT AGREEMENT

EXHIBIT C - REQUEST FOR ADVANCE

EXHIBIT C

FORM OF REQUEST FOR ADVANCE
LOAN NO. _____________
Borrower: Pioneer Community Energy hereby requests an Advance under the Revolving Credit in accordance with the terms of the Credit Agreement dated October 24, 2022, between Borrower and Lender, address: _______________________
Request Date:

Amount of Letter of Credit: $
Beneficiary:

Letter of Credit Expiration Date:

Interest Rate: the higher of (a) a variable rate of interest equal to the Prime Rate plus

0.50% per annum, and (b) four percent (4.00%) per annum.

PURPOSE OF ADVANCE
The Borrower is hereby requesting that the Advance is being made in connection with a request for a Letter of Credit to be issued for the purpose of [mark one]:
[ ] a collateral posting as required for future energy supply contracts; or [ ] a collateral posting [to be described by the Borrower]. Attached are copies documentation outlining the request of the beneficiary requesting the Letter of Credit in support of this request.

BORROWER CERTIFICATION
Borrower hereby certifies that:
(I) After making the requested Advance, the sum of all outstanding Advances will not exceed the Revolving Credit Commitment then in effect;
(II) As of the Request Date, the representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of such Request Date

CREDIT AGREEMENT

EXHIBIT C - REQUEST FOR ADVANCE
to the same extent as though made on and as of such date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties are true and correct in all material respects on and as of such earlier date; provided that, in each case, such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and
(III) As of the Request Date, no Event of Default has occurred and is continuing or would result from the consummation of the borrowing contemplated hereby. (IV) This Advance will be used for purposes permitted under the terms of the Credit Agreement and no portion of this Advance will be used to fund operating losses. (V) The person signing this Request for Advance is an Authorized Representative.

PIONEER COMMUNITY ENERGY
By:

Name:

Its:

APPROVED:

UMPQUA BANK,
an Oregon state chartered bank
By:

Authorized Representative

CREDIT AGREEMENT

EXHIBIT D - COMPLIANCE CERTIFICATE

EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is executed and delivered by Pioneer Community Energy (“Borrower”) pursuant to the terms of that certain Credit Agreement dated October 24, 2022, as the same may be amended from time to time (the “Credit Agreement”). All capitalized terms used in this Compliance Certificate and not otherwise defined herein shall have the same meaning given to them in the Credit Agreement.

This Compliance Certificate is delivered with respect to the period commencing on, _____ and ending on , _____.

Borrower hereby certifies, represents and warrants to Lender as follows:

As of the date of this Compliance Certificate, no Event of Default has occurred during such period. Borrower has fulfilled its obligations under the Credit Agreement and the other Loan Documents and all representations made therein continue to be true and correct in all material respects.

Borrower is in material compliance with the following covenants for such period:

Covenant Required Actual Compliance (Y/N)
Debt Ratio
Cash on Hand to Revolving
Credit Commitment
Other:
[Or, if any such Event of Default has occurred during such period, set forth a description of such Event of Default and specifying the action, if any, taken by Borrower to remedy the same.]

PIONEER COMMUNITY ENERGY
By:

Name:

Its: