AGENDA – BOARD OF DIRECTORS – SAN DIEGO COMMUNITY POWER 1 AGENDA
Regular Meeting of the Board of Directors of
San Diego Community Power (SDCP)
October 26, 2023
5:00 p.m.
City of San Diego Metropolitan Operations Complex (MOC II) Auditorium 9192 Topaz Way, San Diego, CA 92123
Alternate Location:
1122 7th Street, Sacramento, CA 96814
The meeting will be held in person at the above date, time and location. Board of Directors Members and members of the public may attend in person. Under certain circumstances, Directors may also attend and participate in the meeting virtually pursuant to the Brown Act (Gov.
Code § 54953). As a convenience to the public, SDCP provides a call-in option and internet-based option for members of the public to virtually observe and provide public comments at its meetings. Additional details on in-person and virtual public participation are below. Please note that, in the event of a technical issue causing a disruption in the call-in option or internet-based option, the meeting will continue unless otherwise required by law, such as when a Board Member is attending the meeting virtually pursuant to certain provisions of the Brown Act.
Note: Any member of the public may provide comments to the Board of Directors on any agenda item. When providing comments to the Board, it is requested that you provide your name and city of residence for the record. Commenters are requested to address their comments to the Board of Directors as a whole through the Chair. Comments may be provided in one of the following manners:
1. Providing Oral Comments During Meeting. Anyone attending in person desiring to address the Board of Directors is asked to fill out a speaker’s slip and present it to the Clerk of the Board or the Secretary. To provide remote comments during the meeting, join the Zoom meeting by computer, mobile phone, or dial-in number. On Zoom video conference by computer or mobile phone, use the “Raise Hand” feature. This will notify the moderator that you wish to speak during a specific item on the agenda or during non-agenda Public Comment. Members of the public will not be shown on video but will be able to speak when called upon. If joining the meeting using the Zoom dial-in number, you can raise your hand by pressing *9. Comments will be limited to three (3) minutes.
2. Written Comments. Written public comments must be submitted prior to the start of the meeting by using this Web Comment Form. Please indicate a specific agenda item when submitting your comment. All written comments received prior to the meeting will be provided to the Board members in writing. In the discretion of the Chair, the first ten (10) submitted AGENDA – BOARD OF DIRECTORS – SAN DIEGO COMMUNITY POWER 2 comments shall be stated into the record of the meeting. Comments read at the meeting will be limited to the first 400 words. Comments received after the start of the meeting will be collected, sent to the Board members in writing, and be part of the public record.
If you have anything that you wish to be distributed to the Board, please provide it via [email protected] and it will be distributed to the Members.
The public may participate using the following remote options:
Teleconference Meeting Webinar https://zoom.us/j/94794075133 Telephone (Audio Only) (669) 900-6833 or (346) 248-7799 | Webinar ID: 947 9407 5133
WELCOME
CALL TO ORDER
ROLL CALL
PLEDGE OF ALLEGIANCE
SPECIAL PRESENTATIONS AND INTRODUCTIONS
ITEMS TO BE ADDED, WITHDRAWN, OR REORDERED ON THE AGENDA
PUBLIC COMMENTS
Opportunity for members of the public to address the Board on any items not on the agenda but within the jurisdiction of the Board. Members of the public may provide a comment in either manner described above.
CONSENT CALENDAR
All matters are approved by one motion without discussion unless a member of the Board of Directors requests a specific item to be removed from the Consent Calendar for discussion. A member of the public may comment on any item on the Consent Calendar in either manner described above.
1. Approval of September 28, 2023 Meeting Minutes
2. Receive and File Treasurer’s Report for Period Ending August 31, 2023
3. Receive and File Update on Programs
4. Receive and File Update on Power Services
5. Receive and File Update on Human Resources
6. Receive and File Update on Customer Operations
7. Receive and File Update on Marketing and Public Relations
8. Receive and File Update on Community Advisory Committee
9. Receive and File Update on Legislative and Regulatory Affairs
10. Approval of Ascend Analytics Pilot Extension Agreement for PowerSIMM Pilot Support Services for $50,000 through December 31, 2023
AGENDA – BOARD OF DIRECTORS – SAN DIEGO COMMUNITY POWER 3 11. Approval of 10-year, 6MW Resource Adequacy Agreement with EnerSmart Alpine BESS LLC and authorize the CEO to execute the Agreement
12. Approval of SDCP New Alternate to the La Mesa Environmental Sustainability Commission
13. Approval of Amended and Restated Engagement Letter with Keyes and Fox LLP for up to $550,000 for Legal Services for Power Procurement through December 31, 2023
REGULAR AGENDA
The following items call for discussion or action by the Board of Directors. The Board may discuss and/or take action on any item listed below if the Board is so inclined.
14. Update on Fiscal Year End 2023 Financial Audit Progress Report Recommendation: Receive and File Fiscal Year End 2023 Financial Audit Progress Report
15. Update on Regional Energy Network (REN) Progress
Recommendation: Receive and File the Update on Regional Energy Network (REN) Progress
16. Approval of the Net Billing Tariff
Recommendation: Approve the Net Billing Tariff
17. Approval of Updates to the Existing Net Energy Metering (NEM) Tariff Recommendation: Approve the Updates to the Existing Net Energy Metering Tariff
18. Update on Local Distributed Infill Plan
Recommendation: Receive and File the update on Local Distributed Infill Plan
19. Approval of the NextEra Desert Sands Standalone Storage Energy Storage Services Agreement (ESSA)
Recommendation: Approve a 20-YearNextEra Desert Sands Standalone Storage Energy Storage Services Agreement (ESSA) with Desert Sands Energy Storage II, LLC for a 60 MW/480 MWh (8-hour) battery storage project.
20. Approval of the Pattern SunZia Power Purchase Agreement (PPA) Recommendation: Approve a 15-Year Pattern SunZia Power Purchase Agreement (PPA) with SunZia Wind PowerCo LLC for a 150 MW portion of an approximately 3,500 MW SunZia Wind project.
REPORTS BY CHIEF EXECUTIVE OFFICER AND GENERAL COUNSEL
SDCP Management and General Counsel may briefly provide information to the Board and the public.
The Board may engage in discussion if the specific subject matter of the report is identified below, AGENDA – BOARD OF DIRECTORS – SAN DIEGO COMMUNITY POWER 4 but the Board may not take any action other than to place the matter on a future agenda. Otherwise, there is to be no discussion or action taken unless authorized by law.
DIRECTOR COMMENTS
Board Members may briefly provide information to other members of the Board and the public, ask questions of staff, request an item to be placed on a future agenda, or report on conferences, events, or activities related to SDCP business. There is to be no discussion or action taken on comments made by Directors unless authorized by law.
ADJOURNMENT
Compliance with the Americans with Disabilities Act
SDCP Board of Directors meetings comply with the protections and prohibitions of the Americans with Disabilities Act. Individuals with a disability who require a modification or accommodation, including auxiliary aids or services, in order to participate in the public meeting may contact (888) 382-0169 or [email protected]. Requests for disability-related modifications or accommodations require different lead times and should be provided at least 72-hours in advance of the public meeting.
Availability of Board Documents
Copies of the agenda and agenda packet are available at https://sdcommunitypower.org/resources/meeting-notes/. Late-arriving documents related to a Board meeting item which are distributed to a majority of the Members prior to or during the Board meeting are available for public review as required by law. Public records, including agenda-related documents, can be requested electronically at [email protected] or by mail to SDCP, PO BOX 12716, San Diego, CA 92112. The documents may also be posted at the above website. Such public records are also available for inspection, by appointment, at San Diego Community Power, 2488 Historic Decatur Road, Suite 250, San Diego, CA 92106. Please contact [email protected] to arrange an appointment.
MINUTES – BOARD OF DIRECTORS – SAN DIEGO COMMUNITY POWER 1 SAN DIEGO COMMUNITY POWER (SDCP)
BOARD OF DIRECTORS
City of San Diego Metropolitan Operations Complex (MOC II) Auditorium 9192 Topaz Way, San Diego, CA 92123
MINUTES
September 28, 2023
The Board minutes are prepared and ordered to correspond to the Board Agenda. Agenda Items can be taken out of order during the meeting.
The Agenda Items were considered in the order presented.
WELCOME
CALL TO ORDER
Chair LaCava (City of San Diego) called the SDCP Board of Directors meeting to order at 5:02 p.m.
ROLL CALL
PRESENT: Chair LaCava (City of San Diego), Director McCann (Chula Vista), Director Hinze (Encinitas), Director Aguirre (Imperial Beach), Director Parent (La Mesa), and Director Yamane (National City)
ABSENT: Vice Chair Lawson-Remer (County of San Diego),
Also Present: Chief Executive Officer (“CEO”) Burns, General Counsel Norvell, Executive Assistant to the Chief Executive Officer/ Board Clerk Isley
PLEDGE OF ALLEGIANCE
Chair LaCava (City of San Diego) led the Pledge of Allegiance followed by a Land Acknowledgment honoring the original inhabitants of this land—the Kumeyaay.
MINUTES – BOARD OF DIRECTORS – SAN DIEGO COMMUNITY POWER 2 SPECIAL PRESENTATIONS AND INTRODUCTIONS
Chair LaCava (San Diego) provided a land acknowledgement and then introduced the following new SDCP staff members:
Adana Martinez, Public Outreach Coordinator
Jushaun Jamieson, Public Outreach Coordinator
Emily Fisher, Senior Program Manager
ITEMS TO BE ADDED, WITHDRAWN, OR REORDERED ON THE AGENDA There were no items added, withdrawn, or reordered on the agenda.
PUBLIC COMMENTS
There were no public comments.
CONSENT CALENDAR
(Items 1 through 15)
1. Approval of August 24, 2023 Meeting Minutes
Approved.
2. Receive and File Treasurer’s Report for Period Ending June 30, 2023 Received and filed.
3. Receive and File Treasurer’s Report for Period Ending July 31, 2023 Received and filed.
4. Receive and File Update on Programs
Received and filed.
5. Receive and File Update on Power Services
Received and filed.
6. Receive and File Update on Human Resources
Received and filed.
7. Receive and File Update on Customer Operations
Received and filed.
MINUTES – BOARD OF DIRECTORS – SAN DIEGO COMMUNITY POWER 3 8. Receive and File Update on Marketing and Public Relations Received and filed.
9. Receive and File Update on Community Advisory Committee Received and filed.
10. Receive and File Update on Legislative and Regulatory Affairs Received and filed.
11. Approve Resolution 2023-XX Adopting the 2024 Board Meeting Schedule Approved.
12. Approval of Updated Letter of Intent with SDEEC LLC (dba San Diego Energy Equity Campus at Valencia Park) for Potential Lease Agreement
Approved.
13. Approval of Sublease Agreement with Corelation, Inc.
Approved.
14. Approval of Third Amendment to Professional Services Agreement with Brentech Inc. for up to $112,360 for Computer and Information Technology Services through June 30, 2024.
Approved.
15. Approval of the Professional Services Agreement with San Diego Foundation for up to $450,000 for Program Administration Services for the Community Grant Program through July 30, 2027.
Approved.
Public Comment
Jim Whalen expressed his strong support on item number 5 and for SDCP's foray into infill procurement, especially the exciting possibilities for deployment of rooftop solar at scale.
ACTION: Motioned by Director McCann (Chula Vista) and seconded by Director Yamane (National City) to approve Consent Calendar Items 1 through 15. The motion carried by the following vote:
MINUTES – BOARD OF DIRECTORS – SAN DIEGO COMMUNITY POWER 4 Vote: 6-0
Yes: Chair LaCava (City of San Diego), Director McCann (Chula Vista), Director Hinze (Encinitas), Director Aguirre (Imperial Beach), Director Parent (La Mesa), and Director Yamane (National City)
No: None
Abstained: None
Absent: Vice Chair Lawson-Remer (County of San Diego)
REGULAR AGENDA
16. Approval of Recommendation of In-House General Counsel Karin Burns, CEO gave a presentation on the In-House General Counsel findings, gave an overview of the general counsel recommendation, discussed the recruiting process, gave a financial analysis, including an overview of the benefits of hiring an In-House General Counsel.
Director Hinze nominated Board Member Parent and Chair LaCava to be on the ad hoc recruitment committee.
Chair LaCava shared that Supervisor Lawson-Remer also volunteered to be on the ad hoc recruitment committee.
Board questions and comments ensued.
ACTION: Motioned by Director Yamane (National City) and seconded by Director Parent (La Mesa) to approve the recommendation of In-House General Counsel and consider appointing and ad hoc recruitment committee. The motion carried by the following vote:
Vote: 6-0
Yes: Chair LaCava (City of San Diego), Director McCann (Chula Vista), Director Hinze (Encinitas), Director Aguirre (Imperial Beach), Director Parent (La Mesa), and Director Yamane (National City)
No: None
Abstained: None
Absent: Vice Chair Lawson-Remer (County of San Diego)
Chair LaCava appointed Board Member Parent, Vice Chair Lawson-Remer, and himself to the ad hoc recruitment committee.
17. Approval of Resource Adequacy Agreement with EnerSmart MINUTES – BOARD OF DIRECTORS – SAN DIEGO COMMUNITY POWER 5 Kenny Key, Senior Contract Manager provided a PowerPoint presentation on EnerSmart, a local developer and gave an overview on the EnerSmart resource adequacy agreements, key terms, staff analysis, workforce development and community benefits.
ACTION: Motioned by Director McCann (Chula Vista) and seconded by Director Parent (La Mesa) to approve the five proposed 10-year Resource Adequacy Agreements with EnerSmart’s subsidiaries.
The motion carried by the following vote:
Vote: 6-0
Yes: Chair LaCava (City of San Diego), Director McCann (Chula Vista) , Director Hinze (Encinitas), Director Aguirre (Imperial Beach), Director Parent (La Mesa), and Director Yamane (National City)
No: None
Abstained: None
Absent: Vice Chair Lawson-Remer (County of San Diego)
REPORTS BY CHIEF EXECUTIVE OFFICER AND GENERAL COUNSEL
CEO Burns reported on SDCP’s ongoing efforts, open positions at SDCP, and shared about recent activities and events. There were no reports from general counsel.
DIRECTOR COMMENTS
Directors shared upcoming events and thanked SDCP employees for their great work.
ADJOURNMENT
Chair LaCava (City of San Diego) adjourned the meeting at 5:32 p.m.
Kimberly Isley, Clerk of the Board
Prepared by:
Sandra Vences, Deputy Clerk
SAN DIEGO COMMUNITY POWER
Staff Report – Item 2
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Eric W. Washington, Chief Financial Officer
Via: Karin Burns, Chief Executive Officer
Subject: Review of Treasurer’s Report for Period Ending 8/31/23 Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Receive and File Treasurer’s Report for Period Ending 8/31/23.
BACKGROUND
San Diego Community Power (SDCP) maintains its accounting records on a full accrual basis in accordance with Generally Accepted Accounting Principles (GAAP) as applicable to governmental enterprise funds.
SDCP has prepared its preliminary year-to-date financial statements for the period ended August 31, 2023, along with budgetary comparisons. Audited financials for the period ending June 30, 2023 are expected to be available for review in the November 2023 meeting of the Financial and Risk Management Committee (FRMC).
SDCP additionally reports monthly metrics during its Board meetings as part of its Update on Back-Office Operations. As part of the Treasurer’s Report, certain key metrics related to risk are to be presented during Financial and Risk Management Committee (FRMC) meetings.
ANALYSIS AND DISCUSSION
Actual financial results for the period ended 08/31/23: $345.32 million in net operating revenues were reported compared to $342.88 million budgeted for the period. $214.07 million in total expenses were reported (including $208.79 million in energy costs) compared to $194.24 million budgeted for the period (including $183.43 million budgeted for energy costs). After expenses, SDCP’s change in net position of $131.25 million was reported for Fiscal Year 2023. The following is a summary of the actual results compared to the Fiscal Year 2023 Budget.
Table 1: Budget Comparison Versus Actual Results
• Net operating revenues finished $2.44 million (or 1.0 percentage points) over the budget and met expected projections.
• Operating expenses finished $19.84 million (or 10.0 percentage points) over the budget primarily due to higher-than-expected energy costs related to resource adequacy and renewables.
Financial results for the period underperformed the projections presented in the year-to-date proforma. SDCP’s change in net position was -12% under the projection primarily due to actual energy costs being higher than projected.
The following is a summary to actual results compared to the fiscal year-to-date proforma.
Table 2: Proforma Comparison Versus Actual Results
Budget Comparison
YTD FY24 as of
08/31/23 (2 mos) FY24 YTD Budget Budget
Variance ($) Budget (%)
Net Operating Revenues $ 345,321,525 $ 342,884,273 $ 2,437,252 101% Total Expenses $ 214,073,840 $ 194,238,450 $ 19,835,390 110% Change in Net Position $ 131,247,685 $ 148,645,823 $ (17,398,138) -12% Proforma Comparison
YTD FY24 as of
08/31/23 (2 mos)
FY24 YTD
ProForma
ProForma
Variance ($)
Proforma
(%)
Net Operating Revenues $ 345,321,525 $ 342,884,273 $ 2,437,252 1% Total Expenses $ 214,073,840 $ 193,931,678 $ 20,142,162 10% Change in Net Position $ 131,247,685 $ 148,952,595 $ (17,704,910) -12% Figure 1: Proforma versus Actual Results
For the period ending 08/31/23, SDCP contributed $131,247,685 to its reserves but was expected to gain $148,645,823 per the FY 2023-24 adopted budget. Total SDCP reserves at the end of the period were $314,723,952 and total available liquidity (including lines of credit) was $443,993,952. SDCP has a total FY 2023-24 year-end reserve target of $491,079,452, which is equivalent to 180-days of total operating expenses as set in SDCP’s Reserve Policy and Strategic Goals.
Figure 2: Participation Rates
Phase 4 mass enrollment process in National City and Unincorporated County of San Diego for Non-Net Energy Metering (NEM) customers is officially completed as of May, 2023. The participation rate for this new phase is fluid and will change as we continue with our enrollment of Net Energy Metering (NEM) customers from April 2023 through March 2024. In the interim, we are reporting on the opt outs and eligible accounts associated with the phase based on those accounts that we have noticed for enrollment on a rolling basis as of the reporting month.
Staff are also presenting State of SDCP Arrearages directly related to financial risk for FRMC consideration and for regular review. Additional metrics can be added by request.
Below arrearage data is SDCP’s Receivables aged 120+ Days as of 10/12/2023.
Figure 3: State of SDCP Arrearages
Figure 4: State of SDCP Arrearages Residential vs Commercial
COMMITTEE REVIEW
The report was reviewed by the Finance and Risk Management Committee (FRMC) on October 19, 2023.
FISCAL IMPACT
N/A
ATTACHMENTS
Attachment A: 2023 Year-to-Date Period Ended 08/31/23 Financial Statements 1 ACCOUNTANTS’ COMPILATION REPORT
Management
San Diego Community Power
Management is responsible for the accompanying financial statements of San Diego Community Power (a California Joint Powers Authority) which comprise the statement of net position as of August 31, 2023, and the related statement of revenues, expenses, and changes in net position, and the statement of cash flows 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 note disclosures required by accounting principles generally accepted in the United States of America in these interim financial statements. San Diego Community Power’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 the Authority’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 Authority because we performed certain accounting services that impaired our independence.
Maher Accountancy
San Rafael, CA
October 5, 2023
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com Current assets
Cash and cash equivalents - unrestricted 194,382,236 $
Cash and cash equivalents - restricted 500,000
Accounts receivable, net of allowance 167,334,495
Accrued revenue 100,825,173
Prepaid expenses 16,905,151
Other receivables 19,320
Deposits 17,486,014
Total current assets 497,452,389
Noncurrent assets
Lease asset, net of amortization 810,877
Capital assets, net of depreciation 153,200
Cash and cash equivalents - restricted 1,897,129
Deposits 2,330,000
Total noncurrent assets 5,191,206
Total assets 502,643,595
Current liabilities
Accrued cost of electricity 156,842,865
Accounts payable 536,629
Other accrued liabilities 4,200,563
State surcharges payable 439,175
Deposits - energy suppliers 1,005,000
Interest payable 180,205
Lease liability 369,076
Total current liabilities 163,573,513
Noncurrent liabilities
Bank note payable 20,730,000
Supplier security deposits 624,000
Lease liability 458,523
Total noncurrent liabilities 21,812,523
Total liabilities 185,386,036
Net investment in capital assets 136,478
Restricted for collateral 2,397,129
Unrestricted 314,723,952
Total net position 317,257,559 $
NET POSITION
SAN DIEGO COMMUNITY POWER
STATEMENT OF NET POSITION
As of August 31, 2023
ASSETS
LIABILITIES
See accountants' compilation report. 2
OPERATING REVENUES
Electricity sales, net 344,848,275 $
Grant revenue 473,250
Total operating revenues 345,321,525
OPERATING EXPENSES
Cost of electricity 208,786,044
Contract services 3,052,657
Staff compensation 1,480,751
Other operating expenses 475,346
Depreciation and amortization 68,257
Total operating expenses 213,863,055
Operating income 131,458,470
NON-OPERATING REVENUES (EXPENSES)
Investment income 224,595
Interest and financing expense (437,837)
Nonoperating revenues (expenses), net (213,242)
CHANGE IN NET POSITION 131,245,228
Net position at beginning of year 186,012,331
Net position at end of year 317,257,559 $
SAN DIEGO COMMUNITY POWER
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
Two Months Ended August 31, 2023
See accountants' compilation report. 3
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 266,434,298 $
Receipts of supplier security deposits 2,315,863
Other operating receipts 3,075,203
Payments to suppliers for electricity (119,653,208)
Payments for goods and services (2,911,329)
Payments of staff compensation and benefits (1,490,195) Payments for deposits and collateral (2,605,000)
Payments of state surcharges (500,589)
Net cash provided by operating activities 144,665,043
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Principal payments - bank note (15,000,000)
Interest and related expense payments (803,142)
Net cash provided (used) by non-capital
financing activities (15,803,142)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments of lease liability (66,461)
Payments to acquire capital assets (71,550)
Net cash (used) by capital and related financing activities (138,011)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment income received 224,595
Net change in cash and cash equivalents 128,948,485
Cash and cash equivalents at beginning of year 67,830,880 Cash and cash equivalents at end of year 196,779,365 $
Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) 194,382,236 $
Restricted cash - current 500,000
Restricted cash - noncurrent 1,897,129
Cash and cash equivalents 196,779,365 $
SAN DIEGO COMMUNITY POWER
STATEMENT OF CASH FLOWS
Two Months Ended August 31, 2023
See accountants' compilation report. 4
Operating income 131,458,470 $
Adjustments to reconcile operating income to net
cash provided by operating activities
Depreciation and amortization expense 68,257
(Increase) decrease in:
Accounts receivable, net (56,820,764)
Accrued revenue (22,032,389)
Prepaid expenses 13,622,347
Other receivables 214,395
Deposits (2,159,664)
Increase (decrease) in:
Accrued cost of electricity 79,497,522
Accounts payable 97,367
Other accrued liabilities 405,916
State surcharges payable (61,414)
Supplier security deposits 375,000
Net cash provided by operating activities 144,665,043 $
SAN DIEGO COMMUNITY POWER
STATEMENT OF CASH FLOWS (continued)
Two Months Ended August 31, 2023
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
See accountants' compilation report. 5
1 ACCOUNTANTS’ COMPILATION REPORT
Board of Directors
San Diego Community Power
Management is responsible for the accompanying special purpose operating fund budgetary comparison schedule of San Diego Community Power (SDCP), a California Joint Powers Authority, for the period ended August 31, 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 SDCP.
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.
SDCP’s annual audited financial statements will 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 the Authority’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 SDCP because we performed certain accounting services that impaired our independence.
Maher Accountancy
San Rafael, CA
October 5, 2023
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com 2023/24 YTD
Budget
2023/24 YTD
Actual
2023/24 YTD
Budget
Variance
(Under) Over
2023/24
YTD
Actual/
Budget %
2023/24 Annual
Budget
2023/24 Budget
Remaining
REVENUES AND OTHER SOURCES Gross Ratepayer Revenues 357,171,118 359,216,953 $ 2,045,835 101% 1,346,325,552 $ 987,108,599 $ Less Uncollectible Customer Accounts (14,286,845) (14,368,678) (81,833) 101% (53,853,022) (39,484,344) Grant revenue - 473,250 473,250 - (473,250)
Total Revenues and Other Sources 342,884,273 345,321,525 2,437,252 1,292,472,530 947,151,005 OPERATING EXPENSES Cost of Energy 183,426,530 208,786,044 25,359,514 114% 948,529,425 739,743,381 Professional Services and Consultants 4,732,268 2,969,370 (1,762,898) 63% 22,939,626 19,970,256 Personnel Costs 2,482,078 1,480,751 (1,001,327) 60% 13,178,031 11,697,280 Marketing and Outreach 613,647 314,450 (299,197) 51% 2,973,829 2,659,379 General and Administration 1,880,248 316,528 (1,563,720) 17% 7,861,973 7,545,445 Programs 57,417 - (57,417) 0% 278,250 278,250
Total Operating Expenses 193,192,188 213,867,143 20,674,955 995,761,134 781,893,991 Operating Income (Loss) 149,692,085 131,454,382 (18,237,703) 296,711,396 165,257,014 NON-OPERATING REVENUES (EXPENSES) Investment income - 224,595 224,595 - (224,595) Interest and related expenses (406,262) (431,292) (25,030) 106% (2,437,574) (2,006,282) Transfer to Capital Investment Program (640,000) - 640,000 0% (3,840,002) (3,840,002) Total Non-Operating Revenues (Expenses) (1,046,262) (206,697) 839,565 (6,277,576) (6,070,879) NET INCREASE (DECREASE) $ 131,247,685 148,645,823 $ (17,398,138) $ 290,433,820 $ 159,186,135 $
SAN DIEGO COMMUNITY POWER
BUDGETARY COMPARISON SCHEDULE
Two Months Ended August 31, 2023
OPERATING FUND
See accountants' compilation report.
SAN DIEGO COMMUNITY POWER
Staff Report – Item 3
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Colin Santulli, Director of Programs
Via: Jack Clark, Chief Operating Officer
Subject: Update on Programs
Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATIONS
Receive and file update on customer energy programs.
BACKGROUND
Staff will provide regular updates to the Board of Directors (Board) regarding SDCP’s customer energy programs.
ANALYSIS AND DISCUSSION
Program Updates
Net Energy Metering (NEM) Updates and Net Billing Tariff (NBT) Proposal Status: Staff is providing detailed presentations to summarize the proposed updates to NEM and recommendations to adopt NBT proposal at the October 26, 2023 Board Meeting.
Next Steps: If the Board adopts the staff recommendations, staff will work with Calpine Energy Solutions to implement the tariff for new onsite generation customers and NBT customers currently being served on NEM 2.0 on an interim basis. Staff will work with Calpine and SDG&E to ensure proper testing and validation of data communications and billing mechanics following adoption. Additionally, Staff will work to create a new webpage on the SDCP website with information on NBT.
Regional Energy Network (REN) Formation
Status: Staff is providing a detailed update on the progress of the REN Formation at the October 26, 2023 Board Meeting.
Next Steps: SDCP Staff will continue to develop the Business Plan Application and supporting documents. Staff will request approval of the final application from the SDCP Board of Directors at the December meeting, prior to CPUC submittal. Staff expects to submit the completed Business Plan Application to the CPUC in December 2023.
Grant Programs
Status: Staff are currently working on administering/launching two grant programs—one for community-based organizations/nonprofits and another for SDCP’s member agencies. SDCP’s Community Grant Program aims to support clean energy projects that provide economic, environmental, and health benefits to SDCP’s communities. The Board approved the contract for the Program Administrator, The San Diego Foundation, at the September Board meeting.
SDCP’s Member Agency Grant Program will aim to support SDCP member agencies’ climate action goals and initiatives such as projects or programs that promote clean energy, reduce carbon emissions, support climate equity, and advance local economic development. SDCP’s FY 2023-24 budget included funds to create a member agency grant program as a component of the Programs Department budget. The Member Agency Grant Program Policy was approved at the August Board meeting and Staff are currently undergoing a procurement process to establish program administration support.
Next Steps: Staff plan to provide an update on Grant Programs at the November CAC meeting. Staff plan on launching the FY 2023-24 Community Grant Program in Q1 2024 and the inaugural Member Agency Grant Program in Q4 2023.
Energy Education Website
Status: Staff designed and launched a webpage to provide education on electrification, various technologies, and an option for customers to take action through a to-be-launched online marketplace. Staff have engaged with two online marketplace vendors to integrate with the webpage. The initial marketplace will be made available in November to include rooftop solar, battery storage, and water heaters. This marketplace will allow customers to obtain competitive bids from reputable installers and be connected to an energy advisor to receive support and assistance to complete a project. Staff provided an overview of the energy education webpage at the October CAC Programs Ad-Hoc Committee meeting.
Next Steps: Staff will provide an update on the Energy Education initiative at the November CAC Meeting. Q1 2024, Staff plan to deploy the second online marketplace to include additional household appliances.
CPUC Green Tariff Programs
Status: On October 18, 2023, Staff hosted a dedicated RFO webinar for potential bidders to learn more about the technical elements and submittal requirements.
Next Steps: Staff will continue to engage in targeted outreach to key stakeholders, particularly in CPUC-defined disadvantaged communities to increase overall program awareness among residents, enrollment in CARE and FERA rates, and stimulate a healthy bid response prior to the RFO response deadline of February 24, 2024.
AD-HOC COMMITTEE AND/OR SUBCOMITTEE REVIEW
Staff meet monthly with the CAC Ad-Hoc Programs Committee to discuss ongoing Programs Department activities.
FISCAL IMPACT
N/A
ATTACHMENTS
N/A
SAN DIEGO COMMUNITY POWER
Staff Report – Item 4
--------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Byron Vosburg, Managing Director of Power Services Via: Karin Burns, Chief Executive Officer
Subject: Update on Power Resources
Date: October 26, 2023
---------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Recommendation: Receive and file update on Power Resources
BACKGROUND
Staff provides the updates below to the Board of Directors regarding SDCP’s power energy procurement activities.
ANALYSIS AND DISCUSSION
Power Services Staffing
Building out a team of experienced, knowledgeable energy professionals has long been a top priority and allows SDCP not only to solicit, negotiate, and administer contracts for energy supply effectively, but also to monitor market activity, manage risk, bring in-house a number of activities that have historically been completed by consultants, and to dedicate additional resources to local and distributed energy procurement and development efforts. The SDCP Power Services team is now 8 people strong. Recently, SDCP posted two additional roles for the Power Services team, for a compliance analyst and a contract management analyst. The compliance analyst role has been filled and staff is currently interviewing for the contract management analyst.
Long-term Renewable Energy RFPs
As SDCP strives to meet its environmental, financial, and regulatory compliance goals and requirements, long-term power purchase agreements (PPAs) are becoming integral components of its energy supply portfolio. Long-term PPAs provide renewable generation facility developers with the certain revenue stream against which they can finance up-front capital requirements, so each long-term PPA that SDCP signs with a developing facility will underpin a new, incremental renewable energy project. In addition, long-term PPAs lock in renewable energy supply around which SDCP can build its power supply portfolio while also providing power supply cost certainty around which SDCP can develop its pro forma financial model. Moreover, the California Renewable Portfolio Standard (RPS), as modified in 2015 by Senate Bill 350, requires that SDCP provide 65% of its RPS-required renewable energy from contracts of at least ten years in length.
Finally, in D.21-06-025, the California Public Utilities Commission (CPUC) required each Load Serving Entity (LSE) in California to make significant long-term purchase commitments for resource adequacy from new, incremental generation facilities that will achieve commercial operation during 2023 through 2026 for purposes of “Mid Term Reliability” (MTR). These requirements have been augmented and extended into 2026 and 2027 via D.23-02-040.
In pursuit of long-term contracts for renewable energy, staff have released two RFPs for eligible Renewable Energy resources in the past 12 months. Staff are deep in negotiations with several respondents for resources that are expected to be online between 2025 and 2028. Staff and the Energy Contracts Working Group (ECWG) evaluate all RFP submissions prior to entering negotiations with selected participants.
Assuming that Staff and shortlisted developer(s) are able to agree to mutually agreeable contracts consistent with terms authorized by the ECWG, Staff then review draft agreements with the SDCP Board for approval and authorization to execute the relevant documents.
In addition to RFPs issued by SDCP, the power service team also closely monitors market offers from the IOUs in California to secure contracts for short-term and long-term renewable projects.
Stand-Alone Energy Storage RFP
In addition to the two aforementioned Renewable Energy RFPs, staff have also launched an RFP for stand-alone energy storage resources, which will allow SDCP to meet resource adequacy requirements and protect against market price volatility with clean, reliable storage capacity that can be contracted for 10-20 years. SDCP is pursuing stand-alone energy storage resources of at least 10 MW in capacity, at least 4-hours of duration, and which are expected to be online between 2024 and 2028. Staff have shortlisted and waitlisted select projects after review with the ECWG. Staff are now in negotiations with several respondents for resources that are expected to be online between 2025 and 2028.
Local Development
SDCP’s rolling Local RFI remains open and has already brought in multiple projects under negotiation and contract, including the 35 MW Arrowleaf Solar+Storage facility (Imperial County, executed June 2023) and 19.5MW of long-term agreements recently executed with EnerSmart for Local RA from battery storage facilities in San Diego County. SDCP is also releasing an RFO for distributed renewable energy resources (DERs) the week of October 23rd which will focus on a broad range of distribution-level renewable projects within San Diego County. SDCP expects to bring a handful of resulting PPAs to the Board in Q1 for consideration. Additional ongoing local initiatives include a Feed-in-Tariff Program revamp and expansion, expected in Q1, and continued collaboration with member agency staff to identify strategic opportunities to further infill development in 2024. SDCP is briefing the Board this month with its proposed infill development plan updates.
As Program Administrators of the CPUC’s Disadvantaged Communities Green Tariff (DAC-GT) and Community Solar Green Tariff (CSGT) programs, SDCP launched the RFP solicitation for respective program resources on August 26th, proposals for which will be due in late February 2024. SDCP is hosting two webinars this month to aid bidders with the solicitation process.
SDCP’s Local RFI and Feed-in Tariff remain open. More information is available about each at the links below.
• https://sdcommunitypower.org/resources/solicitations/ • https://sdcommunitypower.org/programs/feed-in-tariff/ RPS Procurement
SDCP staff continues to actively manage its environmental portfolios and to closely monitor the market for renewable and carbon-free energy sources, procuring RPS in the bi-lateral market, and continuing procurement efforts as market opportunities become available. These procurement efforts will serve to help meet SDCP’s near-term environmental goals as long-term projects in development come online.
Market Update
Due to lingering effects of the COVID-19 pandemic, namely inflation and heavily impacted commodity supply chains that have delayed development of new-build energy resources expected to be online over the last two years, the market for renewable energy and resource adequacy (RA) resources continues to be exceptionally tight and expensive.
Staff are working with developers, industry groups, the CPUC, and CA Governor’s Office and legislators to brainstorm near-term solutions while also actively procuring short-term energy and capacity products and long-term energy resources i) to meet SDCP's portfolio needs practically and cost-effectively and ii) to establish a portfolio of resources that will provide value to SDCP and California's clean, reliable energy needs into the future.
COMMITTEE REVIEW
N/A
FISCAL IMPACT
N/A
ATTACHMENTS
N/A
SAN DIEGO COMMUNITY POWER
Staff Report – Item 5
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Chandra Pugh, Director of People
Via: Karin Burns, Chief Executive Officer
Subject: Update on Human Resources
Date: October 26, 2023
---------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Receive and File the Update on Human Resources.
BACKGROUND
Human Resources (HR) has been working on the following priorities:
Implementing Career Ladders in Lattice: Our new performance management system helps managers and HR manage productivity, performance, and feedback. We are currently on track with designing career tracks in Lattice inclusive of role competencies for each of our staff members.
We have also begun the next phase of our efforts to ensure transparent pay practices by partnering with Mercer on our second salary survey. We are also participating in a larger labor benchmarking survey that includes representative CCA organizations across the state.
Hiring: This month, SDCP welcomes several new employees:
Aaron Lu, Rates and Strategy Analyst
Brynn Gallahue, Account Services Analyst
Current open positions include:
General Counsel
Key Accounts
Legislative or Sr. Legislative Manager
Senior Executive Assistant
Our Employee Handbook has been finalized and was shared out with all employees.
It remains up-to-date and complies with current federal, state, and local employment laws.
DISCUSSION AND ANALYSIS
N/A
COMMITTEE REVIEW
N/A
FISCAL IMPACT
N/A
ATTACHMENTS:
N/A
SAN DIEGO COMMUNITY POWER
Staff Report – Item 6
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Lucas Utouh, Director of Data Analytics and Account Services Via: Karin Burns, Chief Executive Officer
Subject: Update on Customer Operations
Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Receive and file an update on various customer operations.
BACKGROUND
Staff will provide regular updates to the Community Advisory Committee centered around tracking opt actions (i.e., opt outs, opt ups and opt downs) as well as customer engagement metrics. The following is a brief overview of items pertaining to customer operations.
ANALYSIS AND DISCUSSION
A) Mass Enrollment Update
Phase 4:
Mass enrollment for our Non-Net Energy Metering (NEM) customers in National City and Unincorporated County of San Diego is officially complete as of May 3, 2023. As of October 5, 2023, SDCP is serving a cumulative total count of 922,306 active accounts correlating to 1,083,478 meters. There are 146,401 active accounts already enrolled in Unincorporated County of San Diego and 18,327 in National City.
Accounts on Net Energy Metering (NEM) within Phase 4 in National City and County of San Diego began enrollment into SDCP service in April 2023 and will continue for the next twelve months, coinciding with their true up month through March 2024. Enrolled customers will receive 2 post enrollment notices through the mail at their mailing address on file within 60 days of their account switching over to SDCP service.
B) 2023 California Climate Credit
San Diego Community Power’s Residential and Small Business customers will receive the California Climate Credit this month (i.e., October 2023) in the amount of $60.70.
The California Climate Credit is part of California’s efforts to fight climate change and provides ratepayers with their share of the benefits of California’s Cap-and-Trade Program. This credit will be automatically applied to these customers’ bills and customers do not have to do anything to receive it. However, it should be noted that since customer billing cycles vary, not every customer will see the bill credit at the same time in October.
Our website currently denotes a banner under our Billing & Rates webpage reminding customers of this credit being applied on their October bills per the snippet below:
C) Customer Participation Tracking
Staff and Calpine have worked together to create a reporting summary of customer actions to opt out of SDCP service, opt up to Power100, or opt down from Power100 to PowerOn. The below charts summarize these actions accordingly as of October 2nd, 2023:
*Historical opt outs including inactive accounts as of 10/02/2023.
Phase 4 mass enrollment process in National City and Unincorporated County of San Diego for Non-Net Energy Metering (NEM) customers is officially completed as of May 2023. The participation rate for this new phase is fluid and will change as we continue with our enrollment of Net Energy Metering (NEM) customers from April 2023 through March 2024. In the interim, we are reporting on the opt outs and eligible accounts associated with the phase based on those accounts that we have noticed for enrollment on a rolling basis as of the reporting month.
D) Contact Center Metrics
As anticipated, call volumes began to noticeably increase in August, which was expected as customers started noticing bills with summer rates. Consistent with the seasonal transition to summer rates as of June 1 where generation rates are generally higher than those in Winter, more customer inquiries around higher bills have been fielded and a modest uptick in opt outs ensued. With the transition to winter rates effective as of November 1st, call volumes are expected to go down.
The chart below summarizes contact made by customers into our Contact Center broken down by month through October 2nd, 2023:
Similar to other CCAs’ service territories, we are anticipating the trend of our customers calling into our Contact Center’s Interactive Voice Response (IVR) system tree and being able to self-serve their opt actions using the recorded prompts as well as utilizing our website for processing opt actions to continue accounting for over 65% of all instances.
The remaining portion of customer calls are connected to our Customer Service Representatives to answer additional questions, assist with account support, or submit opt actions.
E) Customer Service Email Trends
As of this latest reporting month, we still have a total of 13 Dedicated Customer Service Representatives staffed at our Contact Center and 2 Supervisors. Our robust Quality Assurance (QA) procedures are firmly in place to ensure that our customers are getting a world-class customer experience when they contact us.
AD-HOC COMMITTEE AND/OR SUBCOMITTEE REVIEW
N/A
FISCAL IMPACT
N/A
ATTACHMENTS
N/A
SAN DIEGO COMMUNITY POWER
Staff Report – Item 7
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Jen Lebron, Director of Public Affairs
Via: Karin Burns, Chief Executive Officer
Subject: Update on Marketing and Public Relations
Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Receive and file update on marketing and public relations activities for San Diego Community Power.
BACKGROUND
San Diego Community Power (SDCP) has engaged in a variety of public relations, marketing, and community outreach activities to drive awareness, spark community engagement, and maintain high customer enrollment.
ANALYSIS AND DISCUSSION
The Public Affairs team had a very busy September as it ramped up its in-person engagement efforts with the expansion of its Community Engagement division and prepared a variety of SDCP representatives for speaking engagements that reached thousands of people in San Diego and beyond.
Recent and Upcoming Public Engagement Events
Sept. 9, 2023 – Clairemont Family Day
Sept. 9, 2023 - Environmental Health Coalition Semillas “Planting Seeds for the Future” Community Celebration
Sept. 14, 2023 – Cause Conference San Diego
Sept. 14, 2023 – Innovation Day 2023
Sept. 15, 2023 – NEXUS Climate Action Summit
Sept. 16, 2023 – Green Summit
Sept. 16, 2023 – San Diego Wave Fútbol Club game
Sept. 23, 2023 – Coastal Cleanup Day
Sept. 27, 2023 – San Diego Regional Chamber of Commerce Circle of Influence Mixer Sept. 28, 2023 – Women’s Venture Summit
Oct. 1, 2023 – Paddle for Clean Water
Oct. 3, 2023 – Cleantech San Diego: Holding Power
Oct. 4, 2023 – California Clean Air Day with Power100 Champion Illumina Oct. 5, 2023 – Encinitas Small Business Resource Fair
Oct. 7, 2023 – Casa Fest 2023: Casa Familiar’s 50th Anniversary Celebration Oct. 11, 2023 – North San Diego County Chamber of Commerce Regional Connect Oct. 14, 2023 – Environmental Health Coalition’s Clean Air Congreso Oct. 15, 2023 – San Diego Wave Fútbol Club game
Oct. 17, 2023 – San Diego Regional Chamber of Commerce October Meeting Oct. 21, 2023 – Imperial Beach Sun Coast Farmers Market Oct. 21, 2023 – Beautify Chula Vista
Oct. 25 and Oct. 26, 2023 – Tribal EPA & U.S. EPA Region 9 Conference Oct. 27, 2023 – 2023 San Diego Green Building Conference & Expo Nov. 3, 2023 – Lesley K. McAllister Symposium on Climate and Energy Law at the University of San Diego
Nov. 4, 2023 – La Mesa Parks Appreciation Day
Marketing, Communications and Outreach
The Public Affairs team has been working diligently behind the scenes to support programmatic efforts including the launch of “Solar for Our Communities” green tariff programs, an electrification education hub, and the rollout for the Net Billing Tariff, pending approval from the SDCP Board of Directors. The Public Affairs team is working closely with internal and external stakeholders to encourage participation in programs and leveraging relationships with community partners to amplify our marketing and outreach efforts.
As the weather began to heat up in August, SDCP launched a “Stay Cool & Save This Summer” campaign that ran through mid-September. The digital ads will direct viewers to visit the SDCP website and teach them energy-saving tips such as the best time of day to use appliances and how to find “Cool Zones” that offer free, air-conditioned settings across the county.
Our social media efforts had direct interactions with more than 26,000 accounts in September, largely due to the “Stay Cool and Save” campaign. Contributing to the reach included our top-performing post, which was an Instagram Reel that gave an easy-to-understand overview of SDCP. The post was seen more than 1,200 times with a total watch time of over four hours.
SDCP is in regular communication with regional media in the spirit of transparency and openness with the goal of providing factual, timely information to the public at large. Over the past two months, SDCP has engaged with reporters to provide background on stories about the greater energy landscape in California and update them on our organization’s activities.
On Oct. 5, the Public Affairs team welcomed Ashley Rodriguez as the agency’s first Local Government Affairs Manager. This new role sits in the Public Affairs Department’s Strategic Initiatives Division and is responsible for strengthening SDCP’s relationships with member agencies at every level. The goal is to provide member agencies with a point of contact who is focused on their needs. The Local Government Affairs Manager hire concludes the Public Affairs Department’s hiring plan for the 2023-2024 fiscal year, barring a mid-year budget adjustment that would require approval from the SDCP Board of Directors.
The Public Affairs team will continue to develop new strategies, processes and capacity over the next several months to conduct more community outreach, expand marketing and brand awareness efforts, and provide timely, factual information across multiple channels.
AD-HOC COMMITTEE AND/OR SUBCOMITTEE REVIEW
N/A
FISCAL IMPACT
N/A
ATTACHMENTS
N/A
SAN DIEGO COMMUNITY POWER
Staff Report – Item 8
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Xiomalys Crespo, Community Engagement Manager
Via: Karin Burns, Chief Executive Officer
Subject: Receive and File Community Advisory Committee Monthly Report Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Receive and file Community Advisory Committee (CAC) monthly report.
BACKGROUND
Per Section 5.10.3 of the San Diego Community Power (SDCP) Joint Powers Authority (JPA) Agreement:
The Board shall establish a Community Advisory Committee comprised of non-Board members. The primary purpose of the Community Advisory Committee shall be to advise the Board of Directors and provide for a venue for ongoing citizen support and engagement in the strategic direction, goals, and programs of the Authority.
At the direction of the Chief Executive Officer (CEO), the CAC provides quarterly presentations to the Board of Directors in the regular agenda, and monthly reports in the consent agenda.
ANALYSIS AND DISCUSSION
During the October 12, 2023 regular CAC meeting:
• Vice-Chair Harris (La Mesa) chaired the meeting and Chair Vasilakis (City of San Diego) participated virtually under AB 2449.
• CAC members welcomed the following new staff members:
• Ashley Rodriguez, Local Government Affairs Manager
• Emily Fisher, Sr. Program Manager
• Timothy Treadwell, Sr. Program Manager
• Christopher Stephens, Procurement Manager
• The CAC approved the consent agenda, including September meeting minutes and updates on Marketing and Public Relations, Customer Operations, and Regulatory and Legislative Affairs. Members received staff reports and briefings for all items.
• The Power Services team updated members on its revisions to the Energy Proposal Evaluation Criteria. Members had questions around Community Benefits and Workforce Development. This item was discussed at a previous Community & Equity Ad-Hoc Committee meeting.
• The Programs and Account Services teams provided updates on Net Billing Tariff (NBT) and the existing Net Energy Metering (NEM) policy. Members were offered opportunities to receive item-specific briefings outlining a detailed analysis of estimated savings and avoided cost calculator rates, generation adders, Net Surplus Compensation (NSC), stakeholder engagement, and SDCP’s proposed Battery Energy Storage Pilot Program. During the meeting, members asked clarifying questions and suggested conducting outreach to environmental justice groups, commending staff’s excellence in leading the charge implementing a progressive and comprehensive program.
• The CAC heard updates on the October activity of its Ad-Hoc Committees. The Programs Ad-Hoc Committee discussed and provided feedback to staff on several customer programs, including the budget allocation of the Regional Energy Network (REN), which was requested at the September regular CAC meeting, the upcoming Energy Education and Online Marketplace, and NBT. Staff also provided the group with an overview of the October outreach and events schedule. The Community & Equity Ad-Hoc Committee did not meet in October, as members are working with staff to arrive at a recurring date and time that works best for all participants to attend.
• The CAC Fiscal Year 2022-2023 Work Plan will be updated later this year. No potential agenda items were suggested for Board of Directors meetings.
Committee members also provided announcements on upcoming events and volunteering opportunities with SDCP.
As of October 19, 2023, the CAC has one vacancy representing the County of San Diego.
The vacancy for the City of Imperial Beach is expected to be filled in the coming weeks.
Members of the public must be residents, community leaders, and/or business owners of the respective jurisdictions and may submit their applications electronically.
COMMITTEE REVIEW
N/A
FISCAL IMPACT
N/A
ATTACHMENTS
N/A
SAN DIEGO COMMUNITY POWER
Staff Report – Item 9
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Laura Fernandez, Director of Regulatory & Legislative Affairs Aisha Cissna, Senior Policy Manager
Stephen Gunther, Senior Regulatory Analyst
Via: Karin Burns, Chief Executive Officer
Subject: Update on Regulatory and Legislative Affairs
Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATIONS
Receive and file update on regulatory and legislative affairs.
BACKGROUND
Staff will provide regular updates to the Board of Directors regarding SDCP’s regulatory and legislative engagement.
ANALYSIS AND DISCUSSION
A) Regulatory Updates
Remote Grid Protest
On September 6, 2023, San Diego Gas and Electric (SDG&E) submitted an advice letter (“AL”) seeking approval by the CPUC of their Remote Grid Standalone Power System Addendum Agreement. Remote grids are standalone energy resources and infrastructure for permanent energy delivery to customers who would no longer be part of the larger distribution grid. Remote grids are intended to serve small loads in remote locations where distribution lines are expensive and/or difficult to maintain. They can be fueled by renewable resources such as solar arrays, non-renewable sources such as propane, or a mixture of both renewable and non-renewable resources.
SDCP and CEA (“Joint CCAs”) raised several concerns with the remote grid initiative as proposed in the AL by filing a protest to the AL on September 26, 2023.
The concerns and requests expressed in the protest are as follows:
• There is no explicit requirement for SDG&E to inform CCAs when they are pursuing a remote grid, or any mention of how they will address remote grids in CCA service areas. The CCAs requested that SDG&E secure written concurrence from CCAs prior to deploying a remote grid in a CCA service area. • SDG&E does not explicitly state that this initiative is a pilot but describes the remote grid program as a “proof-of-concept". The CCAs recommended that the AL be revised to clarify that the initiative is a pilot and, if future program expansion is pursued, that SDG&E be required to file a formal application to allow for more robust stakeholder input and Commission review.
• The number of proposed remote grids and expected size of the customer loads to be served do not clearly align with the proposed remote grid initiative load cap.
The AL should be revised to provide clarification, so the capped size of the pilot is unambiguous.
• SDG&E is proposing to use renewable and/or non-renewable fuels for the remote grid initiative at its discretion. To stay on track with meeting state renewable energy and climate goals, the CCAs recommended that the remote grid be composed of 70% renewable energy.
• The CCAs recommended that SDG&E should clarify that participation in the remote grid initiative is based on customer agreement and consent. • The CCAs recommended that SDG&E clarify that they will remit generation revenues from CCA customers served by remote grids to the CCAs. • The CCAs recommended that SDG&E should submit a public report within two years of the first remote grid coming online that captures renewables utilized, costs, rate impacts, performance, customer participation, and other important details.
• The CCAs recommended that SDG&E should adopt a proactive approach to planning for increases in remote grid customer load so that customers do not face barriers to electrification or EV adoption.
SDG&E replied to the Joint CCA protest on October 3, 2023, contesting several points. The next step in the process is for the CPUC to issue a draft resolution which will afford another opportunity for stakeholder comment prior to the CPUC adopting a final resolution on the initiative. A draft resolution is expected to be released sometime in Q1 2024; however, that is subject to change at the CPUC’s discretion.
Net Billing Tariff Update: Meeting with CPUC President Alice Reynolds’ Office to Discuss CCA Customer Billing Presentment Issues Background
As presented in the Update on Regulatory and Legislative Affairs during the September 14, 2023, meeting of the Community Advisory Committee (see Item 4 in the agenda packet), on August 2nd, 2023, the CPUC released a proposed decision in the net energy metering (NEM) proceeding. This proposed decision speaks to several remaining issues including consumer protections, prevailing wage requirements for contractors, evaluation principles for the net billing tariff (NBT), successor tariffs for the Virtual Net Energy Metering and Net Energy Metering Aggregation tariffs, and customer billing presentment issues. The CPUC initially planned to vote on the proposed decision on September 21, 2023, but has delayed the vote to November 2, 2023.
Engagement on Customer Billing Presentment Issues
The proposed decision acknowledges that customers have historically experienced challenges with understanding their net energy metering bills and proposed public workshops to review these difficulties for NBT customers.
SDCP and other CCAs submitted opening comments in response to the proposed decision, requesting language be added to the decision that would require unbundled customer billing issues be explicitly addressed in CPUC-ordered NBT billing presentment discussions, as unbundled customer issues are distinct from those experienced by IOU customers. To underscore the need for adding this language, the Joint CCAs noted that they have successfully collaborated with IOUs to develop NEM billing presentment solutions in the past, but one such CPUC-approved proposal was never implemented. Additionally, the proposed decision posits closing the proceeding once the final decision is adopted. In response, the Joint CCAs requested that the proceeding remain open to "expediently address billing presentment questions that arise during implementation.” The Joint IOUs opposed the Joint CCAs’ proposals in reply comments, mischaracterizing several points that were made.
Subsequently, to further advocate for unbundled NBT customer billing presentment needs, SDCP and several other CCAs met with President Alice Reynolds’ office on October 3, 2023. In this meeting, the Joint CCAs further described unbundled customer billing issues and reiterated the need for adopting the Joint CCAs’ proposed decision language. The President’s Office appeared to be receptive and connected the CCAs with Energy Division staff to continue discussing the issues at hand. The Joint CCAs met with Energy Division on October 17, 2023, and may have further meetings to continue resolving issues.
Resource Adequacy (RA)
CalCCA Resource Adequacy Stack Analysis
The Resource Adequacy (RA) program in California is critical for ensuring load serving entities (LSE) have sufficient capacity to maintain reliable electric service.
However, recent market conditions and programmatic challenges have made it increasingly difficult for LSEs, including SDCP, to meet their RA obligations and as a result face financial penalties that impact ratepayers.
CalCCA recently examined the RA problem and potential solutions in a stack analysis paper entitled, California’s Constrained RA Market: Ratepayers Left Standing in a Game of Musical Chairs. The stack analysis is a helpful tool in understanding and communicating the challenges LSEs face under the realities of the current RA framework and market conditions. In short, the analysis finds that, “the demand for RA in California exceeds the available supply, even after accounting for imports and expected additions of resources.” This market scarcity and imbalance in supply and demand has resulted in skyrocketing RA prices.
CalCCA Stack Analysis: System RA demand and supply for peak months in 2023 CalCCA Stack Analysis: RA supply and prices
CalCCA’s stack analysis offers seven interim actions for CPUC consideration to help alleviate the current RA problems. SDCP staff will continue to leverage CalCCA’s analysis to educate policymakers on the challenges and potential solutions within the RA framework.
New Order Instituting Rulemaking (OIR) to Oversee the RA Program On October 12, 2023, the CPUC voted to open a new Order Instituting Rulemaking Oversee the Resource Adequacy Program, Consider Program Reforms and Refinements, and Establish Forward Resource Adequacy Procurement Obligations. This proceeding is the successor to Rulemaking 21-10-002, which addressed RA topics and reforms over the past two years, and will also address forward RA procurement obligations beginning with the 2025 compliance year. The following issues are included in the preliminary scope:
• Adoption of Local Capacity Requirements
• Adoption of Flexible Capacity Requirements
• Loss of Load Expectation Study and Planning Reserve Margin • 24-Hour Slice-of-Day Framework
• Unforced Capacity Methodology (UCAP)
• Qualifying Capacity (QC) Counting Conventions
• Resource Adequacy Compliance and Penalties
• Coordination with the Integrated Resource Planning (IRP) Proceeding • Refinements to the Resource Adequacy Program
A prehearing conference is scheduled for November 17, 2023, and a Scoping Memo outlining the issues and proceeding schedule is expected in December 2023. SDCP staff will work closely with CalCCA to track and engage in this new proceeding.
ERRA Forecast Proceeding Update
On October 4, SDCP and CEA jointly filed an opening brief in the ERRA forecast to make the following three points:
1. The CPUC should require SDG&E to adopt a forecasted 2024 RA sales volume equal to the average of actual RA sales recorded between January and June 2023 (567 MW).
2. For future ERRA Forecast proceedings, the CPUC should direct SDG&E to evaluate RA market conditions and historical RA sales to develop a forecast of Sold RA.
3. The CPUC should order SDG&E to revert back to past confidentiality designation processes that allow for the publication of current and proposed class average bundled rates.
SDG&E’s refusal to forecast RA sales artificially raises the total PCIA portfolio cost forecast, meaning that all customers, CCA and SDG&E bundled customers alike, will pay more upfront in PCIA costs that will ultimately be refunded later. SDCP and CEA argue that SDG&E should more accurately forecast PCIA portfolio costs to save customers money in the short term and also reduce rate volatility. SDCP filed a reply brief on October 11, 2023 requesting that the CPUC require SDG&E to adopt the recommendations set forth above from the Opening Brief. A proposed decision in this proceeding is expected on November 28, 2023, with a final decision expected to be adopted by December 14, 2023.
B) Legislative Update
During the 2023 Legislative Session, SDCP took positions on seven bills. SDCP supported each of these bills, other than AB 1373, which SDCP initially opposed and ultimately moved to neutral on. The following is a list of these bills, a brief description of the bill, and its current status:
1. AB 50 (Signed by Governor): Requires timely interconnection of customer load.
Requires IOUs that energized less than 35% of customers with completed applications exceeding 12 months in duration by January 31, 2023, to submit a report to the CPUC on or before December 1, 2024, demonstrating that the IOU has energized 80% of customers with applications deemed complete as of January 31, 2023. The bill also requires each IOU to evaluate and update its existing distribution planning processes.
To inform the CPUC’s determination of criteria for timely service, the bill requires the CPUC to annually collect certain information from each IOU until new reporting requirements are established.
2. AB 643 (Not Active – 2 Year Bill): Would have required the CPUC to submit a report to the Legislature on timelines for the interconnection of customer-sited energy generation and storage resources.
3. AB 1373 (Signed by Governor): Establishes a central procurement entity for long lead time resources, among other provisions, which have been detailed in past SDCP staff reports.
4. SB 233 (Not Active - 2 Year Bill): This bill would have required the CEC to convene a stakeholder workgroup to examine challenges and opportunities associated with using an EV as a mobile battery to power a home or building or provide electricity to the electrical grid, and required the CEC to submit a report to the Governor and Legislature that includes specified information related to the bidirectional capability of EVs and electric vehicle service equipment. This bill would have required that, beginning in model year 2030, all new electric vehicles sold in California be bidirectional capable, including light-duty motor vehicles and school busses, except as exempted by the state board.
5. SB 411 (Signed by Governor): This bill would permit use of alternate teleconferencing provisions similar to the emergency provisions used during the coronavirus state of emergency indefinitely and without regard to a state of emergency. This bill originally would have applied to SDCP, however, it was subsequently amended to be inapplicable to SDCP and would only apply in a narrow set of circumstances.
6. SB 547 (Not Active - 2 Year Bill): This bill would have permitted use of alternate teleconferencing provisions similar to the emergency provisions used during the coronavirus state of emergency indefinitely and without regard to a state of emergency.
7. SB 619 (Vetoed By Governor): This bill would have given utilities the option to get CEQA reviews for transmission projects from the CEC instead of the CPUC and limited the reviews to 270 days.
AD-HOC COMMITTEE AND/OR SUBCOMITTEE REVIEW
N/A
FISCAL IMPACT
N/A
ATTACHMENTS
N/A
SAN DIEGO COMMUNITY POWER
Staff Report – Item 10
--------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Byron Vosburg, Managing Director, Power Services; and Andrea Torres, Sr. Portfolio Manager, Power Services
Via: Karin Burns, Chief Executive Officer
Subject: Approval of Ascend Analytics Pilot Extension Agreement through December 31, 2023
Date: October 26, 2023
---------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Approve the Ascend Analytics Pilot Extension Agreement to extend SDCP’s utilization of Ascend Analytics’ PowerSimm portfolio management platform.
BACKGROUND
In preparation for the SDCP’s 2023 Standalone Storage RFO issued in April 2023, SDCP reached out to five vendors to receive quotes for bid analysis services. After confirming which vendors offered the scope SDCP was interested in, three vendors provided bids including Ascend Analytics, cQuant and ZGlobal. After evaluating each provider, we selected Ascend Analytics based on competitive pricing and their scope of services, which included pilot access to Ascend’s PowerSimm portfolio management platform.
SDCP is still exploring the capability of PowerSimm and utilizing the platform as an additional tool to gain insights on SDCP’s portfolio. SDCP contracted with Ascend Analytics (Ascend) on the RFO evaluation and PowerSimm pilot on April 5, 2023.
ANALYSIS AND DISCUSSION
Staff recommends executing this Ascend Analytics Pilot Extension Agreement (Extension Agreement) to allow SDCP to continue use and evaluation of PowerSimm’s portfolio management capability, which includes modeling SDCP’s load, hedging and generation contracts. The pilot period will allow staff to run ad hoc studies as new projects are contracted or evaluated for contracting, monitor market price impacts, and measure portfolio changes. Staff expect to solicit proposals for longer term portfolio modeling services via solicitation in the coming months; this extension of the current PowerSimm services agreement will ensure that staff retain access to portfolio modeling software consistently until any new service resulting from the upcoming RFP is implemented.
FISCAL IMPACT
The cost of this Pilot Extension Agreement through December 31, 2023 is $50,000. The Pilot Extension Agreement also allows for a $10,000 per month extension.
ATTACHMENTS
A. Ascend Analytics Pilot Extension Agreement through December 31, 2023 1877 Broadway, Suite 706, Boulder, CO 80302 | 303 415 1400 | ascendanalytics.com San Diego Community Power
PowerSIMM Pilot
Pilot Extension Agreement
(Through December 31, 2023)
October 17, 2023
Ascend Analytics | Analytics to Power the Energy Transitio n 1 Contents
1. Project Description............................................................................................................................... 2
1.1 Pilot Extension through December 31, 2023............................................................................................................ 2
1.2 Item 2: Consultative Risk Assessment for forward periods 2023 Through 2028 ..................................................... 3
1.3 Item 3: PowerSIMM SaaS Solution (with Ascend Market Intelligence) .................................................................... 3
1.4 Item 4: ‘+Service’ Ongoing Collaborative and Consultative Support........................................................................ 4
1.5 Reporting Output: Value, Positions & at-Risk Metrics.............................................................................................. 4
1.6 Ascend Platform Service Price .................................................................................................................................. 6
1.7 Delivery Schedule on Portfolio Valuation................................................................................................................. 7
2. Appendix A: Ascend Approach & Market Intelligence......................................................................... 9
3. Appendix B: Platform Description...................................................................................................... 10
4. Appendix C: Validation Criteria for PowerSIMM Implementation..................................................... 12
5. Appendix D: Ascend Staffing .............................................................................................................. 14
6. Appendix E: I – ISO Reports and Hub Price Forecasts........................................................................ 15
7. APPENDIX F: PowerSIMM SaaS License Agreement General Terms and Conditions ........................ 16 Ascend Analytics | Analytics to Power the Energy Transitio n 2
1. Project Description
1.1 PILOT EXTENSION THROUGH DECEMBER 31, 2023
Ascend is pleased to permit San Diego Community Power to enjoy PowerSIMM and relevant works developed through the initial Pilot Period as contracted for on April 5, 2023, per the terms of this extension, per the terms of this extension agreement.
Duration: Through December 31, 2023
Users: 4 active PowerSIMM users
Benefits/Scope: Portfolio analysis of future cash flows and optimization of hedge contracts to mitigate the uncertainty in these cash flows across a 5-year horizon of SDCP’s portfolio in Ascend’s PowerSIMM framework involving:
• Set-up and configuration for CAISO modeling
• SDCP’s portfolio and prospective transactions
• Portfolio Management reporting
• What-if scenario analysis with RFO projects
Intro Period Cost: $50,0001 (Pilot Extension)
Monthly Additional: $10,000 per additional month
Support Includes: 100 hours of support credit (unused hours may be added to a full license term) Markets Covered: CAISO; including update to Ascend Market Intelligence CAISO 4.2 Release Resource Types: Load, Renewable PPAs & Transactions
Transaction Types: Hedge instruments and spot market purchases/sales Study Durations: 2023-2044, 100 iteration stochastic studies Reporting: PowerCube via Excel, PowerSIMM PowerBI Embedded Reports 1 Pilot Extension invoiced in full upon execution of agreement and inclusive of 100 hours of Ascend staff support. Ascend may request SDCP’s pre-approval for purchase of additional support in the event SDCP requires support in excess of 100 hours. Intro Period cost of $50,000 covers the four-month extension period.
Ascend Analytics | Analytics to Power the Energy Transitio n 3
1.2 ITEM 2: FINAL DELIVERY OF CONSULTATIVE RISK ASSESSMENT FOR FORWARD PERIODS 2023 THROUGH 2028
Ascend will complete the originally scoped risk assessment pending SDCP provision of outstanding document Q&A for formation of observations and recommendations.
Figure 1. Example Stochastic Retail Portfolio Analysis Identification of an Optimal Portfolio
1.3 ITEM 3: POWERSIMM SAAS SOLUTION (WITH ASCEND MARKET
INTELLIGENCE)
Ascend will use the pilot efforts in Item 2 to provide SDCP a full PowerSIMM SaaS production environment solution for (a) portfolio management and (b) resource planning (see Figure 3). Ascend will extend three user accounts for PowerSIMM with the ability to change portfolios, run ad hoc studies, perform retail price structuring, and hedge analysis, monitor market price impacts, and measure the portfolio changes. PowerSIMM will provide SDCP with the ability to extend its risk management operations to include robust stochastic analysis. Ascend will include (c) Ascend Market Intelligence fundamentals for changing market dynamics and long-term CAISO fundamentals as part of the SaaS Solution and accompanied by semi-annual CAISO Market Intelligence written reports (see Appendix A).
Figure 2. PowerSIMM V New User Interface
Ascend Analytics | Analytics to Power the Energy Transitio n 4 Figure 3. PowerSIMM Modeling Framework
1.4 ITEM 4: ‘+SERVICE’ ONGOING COLLABORATIVE AND CONSULTATIVE
SUPPORT
A full PowerSIMM license will include 500 to 1,500+ hours per year (subject to scoping) of subject matter expert and analyst time for assistance with model runs, weekly reporting, risk consulting, IRPs, and/or other related activity each year. This ‘+Service’ level arrangement allows SDCP to draw on Ascend to augment its team with extra support in the portfolio risk management and resource planning disciplines. Ascend views this level of service as a distinct way to collaboratively partner with SDCP.
1.5 REPORTING OUTPUT: VALUE, POSITIONS & AT-RISK METRICS Ascend will deliver standard PowerCube output in .xls format with summarized portfolio performance, financial risk metrics and positions across the stochastic simulation set. These metrics will contemplate the value of the supply power at hourly LMP energy prices from each price location. The expected portfolio value will be the mean of the simulation result by month. Further statistical at-risk metrics will provide the uncertainty as the mean result less the 5th percentile, also known as Gross Margin @ Risk, an industry best practice flow metric. Ascend will produce flexible output in a similar fashion to Figures 5 and 6 below. This sort of model output analysis tool will allow for portfolio alterations and hypothetical hedges for what-if analysis.
Ascend Analytics | Analytics to Power the Energy Transitio n 5 Figure 4. Example Portfolio Risk Metric Reporting from PowerSIMM Output Figure 5. Example Position Reports & Cost at Risk
[2020]
Load Renewable &
Battery
Current
Hedges
Total
Net
Position
Current
Hedge %
Optimal
Forward
Hedge
Optimal
Adjusted
Position
Optimal
Hedge % Load Renewable & Battery
Current
Hedges
Total
Net
Position
Current
Hedge %
Optimal
Forward
Hedge
Optimal
Adjusted
Position
Optimal
Hedge % Load Renewable & Battery
Current
Hedges
Total Net
Position
Current
Hedge %
Optimal
Forward
Hedge
Optimal
Adjusted
Position
Optimal
Hedge %
Mean
Margin
Unhedged
GM@R
Current
GM@R
GM@R after
Optimal
Forward
Hedge
Current
Return |
Risk Ratio
Optimal
Return |
Risk
Ratio
[BFY 2022] (240) 141 137 (16) 106% 4 (12) 117% (264) 165 130 (32) 112% 9 (24) 115% (209) 111 145 5 123% (1) 4 122% $63.0 $14.131 $2.163 $1.250 29.1 50.4 [FY 2023] (239) 162 85 (53) 93% 12 (42) 108% (262) 199 73 (65) 104% 14 (51) 109% (209) 114 100 (38) 102% 5 (34) 104% $80.0 $29.484 $7.318 $1.481 10.9 54.0 [FY 2024] (240) 221 36 (66) 97% 16 (50) 114% (264) 289 32 (51) 122% 13 (38) 127% (211) 134 41 (85) 83% 10 (75) 88% $76.4 $38.581 $10.106 $2.246 7.6 34.0 [FY 2025] (242) 222 6 (97) 84% 23 (74) 104% (266) 287 6 (80) 110% 19 (61) 118% (212) 138 6 (119) 68% 14 (105) 75% $76.8 $42.621 $19.340 $2.297 4.0 33.4 [FY 2026] (243) 221 4 (105) 83% 24 (80) 103% (267) 286 78 (88) 136% 20 (68) 144% (212) 137 122 (127) 122% 15 300 129% $74.6 $30.690 $15.105 $2.061 4.9 36.2 0 0 0
[2022-06] (251) 154 127 (28) 102% 6 (22) 114% (277) 182 118 (46) 108% 11 (35) 112% (216) 117 140 (3) 119% (1) (4) 118% $13.9 $2.391 $0.800 $0.686 17.4 20.3 [2022-07] (252) 150 143 (15) 106% 4 (11) 118% (281) 178 136 (33) 112% 10 (24) 115% (219) 118 151 6 123% (1) 5 122% $12.2 $3.497 $0.542 $0.325 22.6 37.6 [2022-08] (261) 148 149 (19) 104% 4 (16) 115% (289) 175 143 (36) 110% 7 (29) 113% (221) 110 156 4 120% (1) 3 120% $11.4 $4.340 $0.490 $0.279 23.3 40.9 [2022-09] (252) 155 147 (9) 109% 2 (7) 120% (279) 186 140 (23) 117% 5 (18) 118% (219) 116 154 8 124% (1) 7 123% $11.1 $3.501 $0.390 $0.315 28.5 35.2 [2022-10] (234) 144 141 (3) 112% 2 (1) 123% (257) 169 138 (14) 119% 6 (9) 121% (203) 113 145 12 127% (1) 11 126% $6.6 $2.830 $0.279 $0.185 23.7 35.6 [2022-11] (235) 131 153 (0) 111% 0 0 121% (257) 148 155 (9) 118% 3 (7) 119% (206) 109 150 11 125% (1) 10 125% $6.3 $2.789 $0.195 $0.152 32.1 41.3 [2022-12] (243) 132 158 (2) 110% 0 (2) 120% (264) 148 163 (9) 118% 2 (8) 118% (216) 112 153 7 123% (1) 6 122% $6.9 $3.492 $0.181 $0.170 37.9 40.3 [2023-01] (237) 100 91 (84) 71% 18 (66) 88% (259) 118 85 (101) 78% 19 (82) 86% (211) 79 98 (64) 84% 8 (56) 88% $2.6 $3.798 $1.294 $0.192 2.0 13.3 [2023-02] (233) 115 80 (82) 74% 18 (64) 91% (258) 138 70 (102) 81% 19 (83) 88% (201) 85 93 (55) 88% 8 (47) 92% $2.8 $3.784 $1.257 $0.191 2.2 14.8 [2023-03] (224) 139 60 (77) 79% 17 (60) 97% (242) 172 43 (92) 89% 21 (71) 97% (199) 94 85 (56) 90% 6 (50) 93% $3.0 $3.748 $1.300 $0.177 2.3 16.8 [2023-04] (221) 168 52 (64) 89% 15 (50) 106% (241) 206 38 (75) 101% 17 (58) 108% (196) 120 70 (51) 97% 6 (45) 100% $3.7 $2.256 $0.815 $0.203 4.6 18.4 [2023-05] (225) 178 51 (63) 91% 15 (48) 108% (243) 216 38 (71) 104% 17 (54) 111% (202) 130 68 (54) 97% 7 (47) 101% $4.0 $1.745 $0.717 $0.195 5.6 20.7 [2023-06] (251) 205 55 (67) 94% 19 (49) 111% (277) 256 38 (79) 106% 25 (54) 115% (215) 135 80 (51) 100% 5 (46) 102% $11.2 $2.988 $1.051 $0.636 10.6 17.5 [2023-07] (252) 220 56 (59) 99% 11 (48) 114% (280) 282 38 (66) 114% 9 (57) 117% (220) 148 78 (50) 103% 7 (43) 106% $11.4 $4.027 $0.747 $0.447 15.3 25.6 [2023-08] (260) 211 60 (69) 94% 13 (56) 109% (289) 273 38 (80) 108% 14 (66) 113% (221) 125 90 (53) 97% 6 (47) 100% $11.6 $3.726 $0.906 $0.443 12.8 26.3 [2023-09] (252) 194 59 (72) 90% 13 (59) 105% (278) 254 38 (82) 105% 13 (69) 110% (219) 119 85 (60) 93% 6 (54) 96% $9.9 $3.353 $0.785 $0.341 12.7 29.1 Position - Margin - Risk Dashboard
Current Position ATC Current Position On-Peak Current Off-Peak Position Gross Margin & GM@R (400)
(200)
0 200
400
[BFY 2022] [FY 2023] [FY 2024] [FY 2025] [FY 2026]
Avg MW
On-Peak Position by Year
Load Renewable & Battery Current Hedges Total Net Position (400)
(200)
0 200
400
[BFY 2022] [FY 2023] [FY 2024] [FY 2025] [FY 2026]
Avg MW
Off-Peak Position by Year
Load Renewable & Battery Current Hedges Total Net Position $0
$5
$10
$15
$20
$25
[BFY
2022]
[FY 2023] [FY 2024] [FY 2025] [FY 2026]
GM@R
Current Cost @ Risk [calendar year]
Current GM@R
(400)
(200)
0 200
400
[BFY 2022] [FY 2023] [FY 2024] [FY 2025] [FY 2026]
Avg MW
ATC Position by Year
Load Renewable & Battery Current Hedges Total Net Position Ascend Analytics | Analytics to Power the Energy Transitio n 6
1.6 ASCEND PLATFORM SERVICE PRICE
Please see the pricing details below and a general description of the offer. The signature section of this proposal is for the Pilot Extension engagement only.
After the Pilot Extension period, SDCP may upgrade to a 3-Year SaaS+Service solution. This structure is similar to an approach agreed upon about a year ago between Ascend and Central Coast Community Energy and has long been the arrangement between Ascend and Silicon Valley Clean Energy. For this indicative pricing, we have listed two options (Silver and Gold) which vary in nature only in the number of activity units3 provided for each. Please note that the chart shows the cost of all four items as standalone for comparison purposes.
Service Offering
Example
Stand-Alone
Cost
Total Cost
For 4 Month Pilot Extension
Item 1: PowerSIMM Pilot
Extension through December
31st
$50,000
$50,000
Item 2: Consultative Risk
Assessment for 2023 - 2028
Paid for during
initial pilot phase,
Acsend will honor
ongoing efforts
Item 3: 100 Support Hours
for ongoing analytic support
of resource valuation and
portfolio assessment, along
with weekly risk reporting.
Any unused hours will be
added to the PowerSIMM
License full implementation.
Included
ETRM Manual Data Load
Support (One time, data in
Ascend template format
only)
Included
Indicative Bundled Indicative Bundled
Ascend Analytics | Analytics to Power the Energy Transitio n 7 PowerSIMM
SaaS + Service
3-Year Subscription
Example – SILVER2
PowerSIMM
SaaS + Service
3-Year Subscription
Example - GOLD3
Item 3a: PowerSIMM
Portfolio Manager $140,000
Annual Activity Units: 700
Year 1 Cost: $290,000
Annual Activity Units: 1,200
Year 1 Cost: $390,000
Item 3b: PowerSIMM
Planner $ 50,000
Item 3c: Market Intelligence $25,000
Item 4: ‘+Service’ Ongoing
Collaborative and
Consultative Support (cost
per year)4 $250,000
Ascend Valuation Platform
Total $475,000
1.7 DELIVERY SCHEDULE ON PORTFOLIO VALUATION
Ascend will provide continued access to the pilot environment for this extension. Additionally, Ascend will provide weekly reporting support and consultation or any other support as requested by SDCP.
Please do not hesitate to contact me or Scott Wrigglesworth at any time with any comments and/or suggestions to our proposal. My direct contact information is [email protected] or (303) 415-0311, and Scott Wrigglesworth can be reached at [email protected] or (937) 701-7205. We look forward to collaborating with you to provide this package of portfolio risk management modeling and services.
Best regards,
2 Indicative and subject to scoping with SDCP. Costs for years 2 and 3 escalated per CPI. 3 Indicative and subject to scoping with SDCP. Costs for years 2 and 3 escalated per CPI. 4 Subject to scoping of SDCP requirements for various service including but not limited to portfolio management, risk management, resource planning, RFO valuation, RFO administration.
Ascend Analytics | Analytics to Power the Energy Transitio n 8 Gary W. Dorris, PhD
CEO
By signing below, San Diego Community Power enters into an Agreement with Ascend Analytics to proceed with the scope of work and respective compensation outlined in this proposal, as mutually agreed upon between Ascend and San Diego Community Power. The only terms and conditions applicable to this Agreement are those contained herein. Any other terms and conditions applied to this Agreement shall be mutually agreed upon between San Diego Community Power and Ascend Analytics and shall be expressly made in writing and duly signed by both parties. The party signing below warrants that they are duly authorized to sign on behalf of their respective organization:
San Diego Community Power (SDCP)
(Signing for PowerSIMM Pilot Extension Only)
By:
Name:
Title:
Ascend Analytics | Analytics to Power the Energy Transitio n 9
2. Appendix A: Ascend Approach & Market Intelligence
Price and Revenue Forecast Methodology
Ascend Analytics provides sub-hourly price level forecasts driven by the modeling of market fundamentals of supply and demand through our PowerSIMM modeling framework. PowerSIMM is an industry leading production cost and market simulation model used by leading utilities all over the US to make critical resource and portfolio management decisions. Unfortunately, traditional
models were built to plan for the grid of the past,
where renewables were a tiny part of the supply stack
and dispatchable gas and coal dominated. They relied
on load duration curves or at best chronological
dispatch according to weather normalized shapes for load, renewables and prices. Now we are entering an era
where renewables are becoming the new baseload with weather as the new fuel. As a result, market dynamics are changing as renewable intermittency drives increased volatility in energy prices and drives down market implied heat rates when zero variable cost renewables increasingly often serve the marginal system megawatt-hour. Energy prices now follow the net-load shape (load minus renewables), causing the so called “duck curve” as solar grows to dominate the grid.
An overview of the Ascend modeling
framework is shown in Figure 7. Policy
assumptions and macro variables drive
fundamental variables to the PowerSIMM
production cost model and these in turn
determine the simulation parameter inputs to
the PowerSIMM price simulation engine that
produces hourly and sub-hourly prices.
Because the PowerSIMM framework
includes the new drivers for variability in
price at the hourly and sub-hourly level, we
provide price projections with both average
price and the variability in price evolving
forward with changes in the supply stack.
Thus, key drivers like renewable penetration rates and the amount of flexible generation are important determinants to the variability in prices.
Market Forecasts are accompanied by 20-year Hub price forecasts inclusive of Day Ahead Energy, Real Time Energy, Ancillary Services, Resource Adequacy/Capacity, in 5-minute and 15-minute intervals.
Changing times call for more advanced
modeling to support robust and resilient
decisions in an increasingly uncertain world.
Figure 6. Overview of macro assumptions and market
fundamentals used to generate hourly and sub-hourly price Ascend Analytics | Analytics to Power the Energy Transitio n 10
3. Appendix B: Platform Description
Table 1. Ascend Platform Description
Platform Service Description Use
Valuation and Risk
Analysis Service for
CAISO
Ascend’s valuation and risk analysis
platform (PowerSIMM) analyzes
and manages market and
generation risk from approximately
1 month to 10 years out. The
Ascend platform determines the
future revenue streams and their
risks on a project specific basis
inclusive of adverse market
conditions.
Simulation Engine
• Forecasted Monthly
Forward Prices for Energy
• Weather
• Load
• Spot Prices
• Renewables (Wind & Solar)
Simulation of wind and solar
production based on weather to
align volumetric uncertainty of
production with load and market
prices.
Price Forecasts
Price forecasts for CAISO. Includes:
• Hub DA and RT energy prices
up to 20 years
• Ancillary services prices
• Capacity prices
• Basis DA and RT prices
Portfolio Management
Output of PowerSIMM portfolio
variables for term analytics:
• Generation Modeling
(thermal, hydro, pumped
hydro, batteries, renewables,
etc.)
• Fuel Modeling
• Cost of Supply
Analysis
• Load with Renewable and Storage
• Long Term portfolio management
(defined as simulations horizon
from prompt month to 5 years)
• Model cost to serve load with
market interactions
• Integrated portfolio modeling for
physical assets, power purchase
agreements, loads, and contracts
Commodities Modeled
• Power
• Natural Gas
• Oil
• Coal
• Emissions (CO2, NOx, SO2)
• RECs
• Ancillaries
• Other Asset Related Components
Instruments Modeled
• Swaps
• Shaped fixed-price swaps
• Futures
• Call/Put options
• Daily call/put options
• CRRs
Assets Modeled
• Thermal
• Renewables
• Hydro
• Batteries
• Contracts
• Transmission
Spot & Forward/Forecast Prices
• Markets for energy and ancillaries
• Ascend will harvest ISO and market
prices, use Ascend CAISO Market
Forecasts for 5+ years
Ascend Analytics | Analytics to Power the Energy Transitio n 11 • Hourly marginal cost of
supply
• Ancillary service modeling
• Transmission modeling,
inclusive of losses and fees.
PowerSIMM Portfolio Manager
provides insight into the impact to
both physical operations and
system costs.
Analytic Framework
• Dispatch optimization
• Validation reporting
• Job management system
Platform Service Description Use
Reporting and
Detailed Results Drill
Down with the
PowerCube
Portfolio Planning Output
• OLAP cube reporting to Excel
• OLAP cube export to the
PowerBI Dashboard
Complete relational data cube
which is seamlessly integrated into
Microsoft Excel and Microsoft
PowerBI.
Analysis
• Output reporting for distribution of
standard reports, generation of ad-hoc reports, summarized at monthly volumes and values, with ability to
drill down to examine individual
portfolio components to hourly
level.
• Ascend can support the
development of custom risk metric
variables & custom reporting.
• Ability to extract hourly and sub-hourly model results for individual cases/scenarios.
Subscription Service Description Use
Heat Maps of
historical and
forecasted nodal
prices, basis, and
volatility for DA and
RT
• Access to Ascend Heat Maps
Overlay areas of high/low solar
weighted basis to assess project
potential, assess market price
volatility through congestion
persistence.
• Identify nodes that are more/less
promising for Battery valuation as a
screening tool.
Determine optimal siting for potential
future investments
Ascend Analytics | Analytics to Power the Energy Transitio n 12
4. Appendix C: Validation Criteria for PowerSIMM Implementation Ascend will use the following criteria for validating the features included in this proposed license, and SDCP shall use the same criteria during User Acceptance Testing (UAT). The tests will include only the functionality in the approved functional specifications. The tests will be conducted by SDCP business users, who have attended training sessions and participated as members of the project team. Any additional criteria and/or tests not included in this Appendix must be approved by both Ascend and SDCP prior to use in User Acceptance Testing.
Table 2. PowerSIMM Validation Criteria
Module Attribute Information Used to
Evaluate Expectation
Load Loads to be validated will be identified prior to implementation. •
Model Fit Model is not
Overfitted/Underfitted
Model fit will be assigned by load
class and zone both defined above
(i.e., not individual loads). Will use
training period of historical data
defined above. Model demonstrates
minimization of mean absolute error
(MAE) and thus demonstrates
negligible bias and low variance. To
verify this, the testing period
prediction should converge to testing
period actual within 15% (between
0.85 and 1.15) of testing period for
90% of load items, excluding
historical anomalies (i.e. hurricanes,
outages, etc.) and the mean monthly
value will converge within 1%.
Mean model fit: (Actual Total
Monthly Load – Simulated Total
Monthly Load)/Actual Total Monthly
Load <= 1%
Seasonal load profile Confidence intervals
for daily average load
by month
Simulated confidence intervals at
percentiles 5 and 95 match historical
confidence intervals within 10% on
an around the clock basis (ATC).
Hourly load profile Confidence intervals
for hourly load
Simulated confidence intervals at
percentiles 5 and 95 match historical
load shapes and are within 10% at
the monthly level, ATC.
Expected load (MWh) Mean simulated load
by month
Simulated mean monthly values
match forecasted monthly values for
expected energy within 1%.
Expected Peak
Demand
Mean simulated peak
demand by month
Simulated mean monthly values
match forecasted monthly values for
peak demand within 1%.
Ascend Analytics | Analytics to Power the Energy Transitio n 13 Forward
Price
Forward prices to be validated will be identified prior to implementation.
Uncertainty in future
prices
Confidence intervals
by delivery month
Simulated forward price monthly
volatility matches input monthly
volatility values.
Correlation of related
commodities
Simulated correlation
matrix
Positive semi-definite input matrix
matches simulated positive semi-definite output matrix using a PCA-based similarity test with a 0.9 similarity on average (including
confidence intervals of estimation).
Correlation of related
commodities
Simulated correlation
matrix
If non positive semi-definite input
matrix is provided, simulated output
matrix will match input matrix with
0.9 similarity on average (including
confidence intervals of estimation)
No arbitrage Mean simulated
forward price by
delivery month
Mean simulated monthly price equals
current market expectation for each
delivery month within 1%.
Sampling of Forward
Simulations
Gross Margin at Risk
(or other appropriate
metric)
Ascend will simulate xx forward sims
to achieve +/- 10% confidence
interval for Gross Margin at Risk [or
other appropriate metric] at the
annual level.
Spot Price Spot/basis prices to be validated will be identified prior to implementation.
Model Fit Kolmogorov-Smirnov
Test
Simulated spot prices achieve a p-value of 5% on average, by month and peak period ([client defined peak
periods, 7x24, 5x16, etc.]), for 90% of
peak period-month combinations.
Seasonal spot price
profile
Expected profile
converges to input
profile (either
historical profile or
user-defined) by
month
Will use a defined training period of
historical data. Model demonstrates
no bias and testing period prediction
should converge to testing period
actual within 2% of profile values at
mean by month.
Seasonal change in
correlation of related
commodities.
Simulated hourly heat
rate confidence
intervals by month.
Simulated confidence intervals at
percentiles 5 and 95 match historical
confidence intervals on average
within 10%.
No arbitrage Mean simulated spot
price by delivery
month
Mean monthly simulated spot price
equals the mean simulated forward
price of the same commodity for all
months within 1%.
Ascend Analytics | Analytics to Power the Energy Transitio n 14
5. Appendix D: Ascend Staffing
The following table lists Ascend staff for this project. Staff bios with qualifications and experience are available upon request.
Table 3. Select Ascend Staff
Name Title Role
Dr. Gary Dorris President, CEO Engagement Director
Dr. Allison Weis VP Battery Storage Optimization Lead
Dr. Carlos Blanco Managing Director,
Analytic Solutions
Risk Management Lead
Scott Wrigglesworth Vice President, Operations
& Strategy
Portfolio Management Lead
Michael Ballow Director, Strategy &
Analytics
Strategic Advisor / Modeling, Portfolio & Risk
Management
Dr. Brent Nelson Director, Forecasting and
Market Fundamentals
Forecasting Lead
Dr. Brandon Mauch Director, Resource
Planning Analytics
Resource Planning Modeling
Devin Gaby Sr. Manager, Software
Services
Implementation Manager & Ongoing Services
Anthony Boukarim Sr. Manager, Resource
Valuation & Valuation
Modeling and analysis support, Planning
Arran Blattel Manager, Model Support Technical model support Valerie Katz Manager, Client
Operations
Modeling and analysis support, Planning
Zach Brode Manager, Analytics Modeling and analysis support, Forecasting Dr. Anand Govindarajan Technical Product
Manager
Modeling and analysis support, Portfolio
Management
Logan Riber Senior Energy Analyst Modeling and reporting, Portfolio Management
Scott Fiedler Senior Energy Analyst Market Information and Data Management Trevor Rehm Senior Energy Analyst Modeling and reporting, Portfolio Management
Ken Knoll Senior Energy Analyst Modeling and analysis, Portfolio Management
Scott Nicholson Senior Energy Analyst Modeling and analysis support, Planning Quinn Borders Energy Analyst II Modeling and analysis support, QA Alex Nesnidal Renewable Energy Analyst Modeling and reporting, Portfolio Management
Sameera Gudladona Energy Analyst Modeling and analysis support, Planning Rebecca Guilfoyle Energy Analyst Modeling and analysis support, Planning Ascend Analytics | Analytics to Power the Energy Transitio n 15 Tamar Moss Energy Analyst Modeling and analysis support, Client Services
CJ Coglizer PowerBI Specialist Analysis support, Reporting Sid Matthew Energy Analyst Modeling and analysis support, Planning
6. Budget Tracker
Add On feature to help establish ease of reporting and clarity around monthly results for SDCP to track monthly portfolio performance against budget and proforma forecast studies. Ascend can deliver a budget variance in the form of the difference between actual and forecast via PowerBI reports. Additionally, Budget Tracker can track commercial financial results with ease to understand variance from expectation, advise promptly on year-to-date variance, and continuously report changes in year-to-go forecast period budget variance.
7. Appendix E: I – ISO Reports and Hub Price Forecasts
Table 4. ISO Reports and Hub Price Forecasts
Hub/Zone Description ISO-NENY ISO CAISO ERCOT MISO PJM SPP Count of Primary
Hubs/Zones
1 4 Hubs
10 zones
4 4 6 Hubs 6 Hubs 2 Hub
Combined Hubs/zones
(homogenous regions)
1 4 4 4 6 6 2
Assumed Combinations Mass Zone A
Zone G
Zone J
Zone K
SP-15
NP-15
MidC
Palo Verde
North
South
Houston
West
Illinois
Indiana
MN
MS
LA
Michig
an
Dom
East
N. IL
West
New
Jersey
AEP
Dayton
South
North
Nodal ✓ ✓ ✓ ✓ ✓ ✓ ✓
Underlying input
assumptions
✓ ✓ ✓ ✓ ✓ ✓ ✓
Contemplated Update
schedule
✓ ✓ ✓ ✓ ✓ ✓ ✓
Version number ✓ ✓ ✓ ✓ ✓ ✓ ✓
Day Ahead Energy ✓ ✓ ✓ ✓ ✓ ✓ ✓
Real Time Energy ✓ ✓ ✓ ✓ ✓ ✓ ✓
Ascend Analytics | Analytics to Power the Energy Transitio n 16 Ancillary Services5 ✓ ✓ ✓ ✓ ✓ ✓ ✓
Resource
Adequacy/Capacity
✓ ✓ ✓ N/A ✓ ✓ ✓
5-minute ✓ ✓ ✓ ✓ ✓ ✓ ✓
15-minute N/A N/A ✓ ✓ N/A N/A N/A
Nodal Count ̴1,300 ̴600 ̴14,000 ̴15,000 ̴2,800 ̴11,000 ̴13,500 Est. Next Forecast
Vintage
July
2022
July
2022
Nov 2022 Nov
2022
Oct
2022
Aug 2022 Aug
2022
1ISO-NE: Reg is ISO-wide, spin and non-spin are zonally priced. All ancillaries are real-time only.
NYISO: Zonal ancillaries with rules supporting sub-hourly repurchases of ancillaries and moves to serve RT energy.
CAISO: ISO-wide plus zonal adders (every location has the same base price, but zones will occasionally receive price adders for higher zonal demand for ancillaries.) Ancillaries are DA and RT, but standard rules preclude sub-hourly flipping to energy. Regulation Up and Down in CAISO.
ERCOT: DA regulation up, regulation down, spin, and non-spin and RT regulation up, regulation down, and spin MISO: Ancillary prices are nodal with DA and RT.
PJM: ISO-wide ancillaries for RT only.
SPP: Zonal DA and RT prices with Regulation Up and Down.
8. APPENDIX F: PowerSIMM SaaS License Agreement General Terms and Conditions
I. Independent Relationship
In the performance of the work and services hereunder, Ascend Analytics shall act solely as an independent private contractor and nothing contained herein or implied shall construe the relationship as that of an employer/employee, partnership or principal and agent.
II. Conflicts of Interest
Ascend Analytics warrants that there is no conflict of interest or potential conflict of interest between Ascend Analytics’ other agreements, if any, and the activities to be performed hereunder, and Ascend Analytics shall notify San Diego Community Power if a conflict of interest arises.
Ascend Analytics | Analytics to Power the Energy Transitio n 17 III. Consideration, Invoicing, Payment, and Term
As compensation to Ascend for the performance of all Services described in this Licensing Agreement (the “Agreement”), San Diego Community Power shall pay Ascend the fees outlined in Table 1. of the proposal.
Invoices payments shall be due within 30 calendar days after San Diego Community Power’s receipt of such invoice. Unpaid invoices shall accrue late fee payments of 1.5%/month commenced upon overdue notification (net-30).
This Agreement shall commence upon the Effective Date (defined as the date of signature as effected by San Diego Community Power) and will have an initial expiration date equal to one year from the commencement date. The license may be renewed on an annual basis by payment of the annual fee (“Annual Fee”) on or before the license expiration date. Annual Fees shall be invoiced prior to license expiration and shall be subject to an increase equal to the percentage increase in the Consumer Price Index (CPI) for all urban consumers (CPI-U) as published 90 days prior to the anniversary date for the preceding 12 month period by the U.S. Department of Labor, Bureau of Labor Statistics. In the event the CPI reflects a negative adjustment, the annual contract rate will remain flat.
IV. Insurance and Taxes
Insurance. Both parties are responsible for maintaining their own insurance coverage, including, but not limited to health and medical, automobile, homeowners/renters (if any), and comprehensive insurance, which may be required by law in the jurisdictions where Ascend Analytics does business or performs services to this Agreement.
1.1. Terms and Provisions of Policies. All policies of insurance that this Agreement requires Ascend to maintain shall:
1.1.1. provide that, without thirty (30) days’ prior written notice sent to San Diego Community Power, they may not be canceled, or non-renewed;
1.1.2. with the exception of worker’s compensation/employer liability insurance and any professional liability insurance/errors and omissions insurance that may be required, be primary to and not excess to or on a contributing basis with any insurance or self-insurance maintained by any additional insured(s);
1.1.3. with the exception of worker’s compensation/employer liability insurance and any professional liability insurance/errors and omissions insurance that may be required, be endorsed to name the following as additional insureds: San Diego Community Power and its subsidiaries and affiliates; the directors, officers, employees, and agents of San Diego Community Power and its subsidiaries and affiliates; and the successors and assigns of all of the foregoing (the “Additional Insureds”); Ascend Analytics | Analytics to Power the Energy Transitio n 18
1.1.4. as to policies required by this Agreement to name additional insureds, provide for severability of interests or cross liability as to all insureds (whether named or otherwise); and
1.1.5. be written on an occurrence basis (except that any professional liability insurance that may be required may be written on a claims-made basis) and issued by insurance carriers reasonably acceptable to San Diego Community Power.
1.2. Specific Coverages. Ascend shall maintain the following insurance policies:
1.2.1. Commercial General Liability, on an occurrence basis, with a combined single limit of One Million Dollars ($1,000,000) per occurrence and an annual aggregate limit of Two Million Dollars ($2,000,000). Such policy shall contain a waiver of subrogation endorsement in favor of the Additional Insureds;
1.2.2. Comprehensive Automobile Liability, with a combined single limit of One Million Dollars ($1,000,000). Such policy shall contain a waiver of subrogation endorsement in favor of the Additional Insureds;
1.2.3. Workers’ Compensation, in statutorily required amount(s), and employer’s liability insurance of not less than One Million Dollars ($1,000,000) for each instance; provided, that if Ascend is not required by law to, and does not, carry Workers’ Compensation Insurance, Ascend shall execute and deliver to San Diego Community Power a Worker’s Compensation Insurance waiver provided by San Diego Community Power. Such policies shall contain a waiver of subrogation; and
1.2.4. Umbrella Excess Liability, of not less than Two Million Dollars ($2,000,000). Such coverage shall be on a per “occurrence” basis and shall contain a waiver of subrogation endorsement in favor of the Additional Insureds.
1.3. Insurance Coverage; Miscellaneous. Notwithstanding anything to the contrary in this Agreement, the liabilities of Ascend under this Agreement shall not be terminated, reduced, or otherwise limited by any expiration or termination of insurance coverages.
1.4. Subrogation Waiver. Except as otherwise provided in this Article IV, San Diego Community Power and Ascend waive all subrogation rights against (1) each other, and (2) any of the other’s subsidiaries, affiliates, subcontractors (of any tier), agents, and employees for damages caused by fire or other causes of loss to the extent covered by property insurance applicable to the Services.
Taxes and Levies. As independent entities, both parties are responsible for their own local, state, federal or other taxes or levies that may be due on the fees paid under this Agreement, including Social Security, value added (VAT) and payroll taxes. Such taxes will not be reimbursed by San Diego Community Power, nor does San Diego Community Power accept any responsibility with respect to non-payment of any such taxes which may be due.
VI. Security, Safety and Health Regulations
Ascend Analytics | Analytics to Power the Energy Transitio n 19 Ascend Analytics agrees to comply with all applicable institutional, local, state and national health and safety regulations when performing any work or services hereunder.
VII. Indemnification
To the fullest extent permitted by law, each Party (an “Indemnitor”) shall defend, indemnify and hold harmless the other Party, its affiliates, members, partners, contractors, subcontractors and agents, and the directors, shareholders, officers, agents and employees of each of them, from and against all losses, damages, liabilities, and expenses (including court costs and reasonable attorneys' fees) which are caused by or arise out of the fault or negligent acts or omissions, whether active or passive, of the Indemnitor in connection with activities or Services under this Agreement, or result from any breach by the Indemnitor of any provision of this Agreement.
Notwithstanding the forgoing, no such indemnification shall be provided by San Diego Community Power to Ascend for fraudulent or illegal acts or acts of willful misconduct of Ascend in connection with activities or Services provided pursuant to this Agreement.
VIII. Limitation of Liability
In no event shall either Party, or an officer, director, member, partner, shareholder, employee, agent or affiliate of either Party, be liable for special, indirect, exemplary, punitive or consequential damages of any nature whatsoever arising out of this Agreement, including damages or claims in the nature of lost revenue, income or profits, loss of use, or cost of capital, irrespective of whether such damages are reasonably foreseeable and irrespective of whether such claims are based upon negligence, strict liability, contract, operation of law or otherwise; provided, that the limitation of liability imposed by this Article VII shall not apply to (a) Ascend’s indemnity obligations set forth in this Agreement as they relate to claims by third parties or (b) losses which arise or result from fraud, willful misconduct, or gross negligence of Ascend or any subcontractor or vendor of Ascend.
IX. Confidential Matters and Proprietary Information
Confidential Information. Ascend acknowledges that as a result of Ascend's retention by San Diego Community Power, Ascend will become informed of, and have access to information deemed to be confidential by San Diego Community Power. It is hereby agreed that all information provided to Ascend whether orally or in writing in relation to (i) San Diego Community Power and its business, (ii) specific projects or entities owned (in whole or in part) by San Diego Community Power, and (iii) the business plans and activities of San Diego Community Power and its affiliates shall be "Confidential Information". Notwithstanding the above, information shall not be considered confidential under this Agreement if (a) it is or becomes publicly available through no act or omission of Ascend or its employees or agents, or (b) was already known to Ascend at the time of disclosure, or (c) is required to be disclosed by a court or regulatory agency acting within its authority; provided, however, that Ascend shall first inform San Diego Community Power of the disclosure requirement to allow San Diego Community Power to challenge the disclosure requirement should San Diego Community Power wish to do so.
Use and Disclosure. All Confidential Information provided by or on behalf of San Diego Community Power remains the sole property of San Diego Community Power. Ascend shall hold and maintain such Confidential Information Ascend Analytics | Analytics to Power the Energy Transitio n 20 in strictest confidence and in trust and shall use such Confidential Information only for the specific purpose for which it was disclosed or delivered to Ascend. For a period of three (3) years after the date of this Agreement, Ascend shall not disclose such Confidential Information to any person or entity (except as permitted under this Article VIII). Ascend shall, at Ascend's sole cost and expense, take all necessary actions and precautions to protect the confidentiality of such Confidential Information and any documents or other materials containing any Confidential Information, and shall immediately notify San Diego Community Power in writing upon its discovery of any such unauthorized use or disclosure of such Confidential Information.
Disclosure to Employees. Ascend shall restrict access to Confidential Information only to employees of Ascend who clearly need such access in order to participate in Ascend's business relationship with San Diego Community Power and who have been instructed to comply with the terms of this Agreement.
Remedies. Ascend acknowledges that the use or disclosure of Confidential Information in violation of this Agreement may cause substantial and irreparable injury to San Diego Community Power and that San Diego Community Power may obtain injunctive or other equitable relief to prevent such use or disclosure.
Delivery upon Request. Immediately upon the termination or expiration of Ascend's use of Confidential Information, and upon San Diego Community Power 's request, Ascend will delete, destroy or return all records, notes, analyses, memoranda, drawings and other written or tangible materials, documents or media containing any Confidential Information of San Diego Community Power, including all copies and reproductions thereof, except as may be present on computerized backup systems, provided such Confidential Information is deleted from local hard drives and no attempt is made to recover such Confidential Information from servers or back-up sources, and provided any such retained Confidential Information shall remain subject to the disclosure and use restrictions set forth herein, notwithstanding any termination or expiration of this Agreement.
Data Retention within PowerSIMM. San Diego Community Power recognizes that output files, modeling case studies, and case input assumptions informing San Diego Community Power’s modeling results will be available for access for no longer than two (2) years from the date upon which the studies were generated within PowerSIMM.
X. Ownership of Deliverables
San Diego Community Power will have exclusive rights to use the analytical deliverables, but will not have rights to resell or redistribute the delivered analytical products.
San Diego Community Power agrees that all rights, title, and interest in and to all models, tools, systems, or processes used or developed by Ascend in the course of providing Services pursuant to this Agreement, including, Ascend Analytics | Analytics to Power the Energy Transitio n 21 but not limited to, patent rights, trade secrets, mask works, and copyrights, shall remain exclusively with Ascend without further consideration; provided that {Client} may retain and use a copy of any studies, reports, and analyses for its sole use.
XI. Termination of Agreement
San Diego Community Power shall have the right to terminate this Agreement at any time by providing seven (7) days prior written notice to Ascend Analytics. Ascend Analytics will be reimbursed for documented costs to date, at the agreed rates, plus reasonable costs necessary to terminate the project, and will not be required to refund any prepaid licensing fees. Ascend has the right to withdraw services at any time by providing seven (7) days prior written notice to San Diego Community Power, and refund any additional amounts paid by San Diego Community Power for services due but not rendered by Ascend Analytics under this Agreement.
XII. Notices
Any notice required to be given hereunder shall be deemed to have been sufficiently given either when served personally, sent by first class mail addressed to the Parties at the addresses set forth in this Agreement, or transmitted via email to the other Party at its address indicated below or at such other address as either Party may designate for itself in a written notice to the other Party.
If to Ascend: If to San Diego Community Power:
Ascend Analytics LLC
1877 Broadway
Suite 706
Boulder, CO 80302
San Diego Community Power
PO BOX 12716
San Diego, CA 92101
Attention: Gary Dorris
Telephone: 303-415-1400
[email protected]
Attention:
Andrea Torres
[email protected]
XIII. Waiver and Governing Law
Ascend Analytics | Analytics to Power the Energy Transitio n 22 Failure of either party to enforce any of its rights hereunder shall not constitute a waiver of such rights, or of any other rights hereunder. This Agreement shall be interpreted in accordance with the laws of Colorado without regard to the choice of law rules thereof.
IVX. Intellectual Property Indemnity
During the term of the Agreement, Ascend shall release, defend, indemnify, and hold harmless San Diego Community Power from and against any and all causes of action, claims, damages, liabilities, judgments, settlements, losses, costs, or expenses of any kind, including reasonable attorneys’ fees, arising out of or related to Ascend’s infringement upon or misuse of the intellectual property rights of any third party. In addition, if the use of the Services infringes or is enjoined, or Ascend believes it is likely to infringe or be enjoined, Ascend may, at its sole option: (a) procure for San Diego Community Power the right to continue use of the Services as furnished; or (b) modify the Services to make them non- infringing, provided that they still substantially conform to their original intended use. The intellectual property indemnity provided herein does not apply to the extent (where, but for the following, there would be no infringement) (a) the alleged infringement arises from any use of the Services not in accordance with this Agreement or (b) any unauthorized modification of the Services. This section states Ascend’s sole and exclusive liability and San Diego Community Power’s sole remedies for any threatened or actual infringement of proprietary rights.
XIV. Force Majeure
Neither party shall be liable to the other for failure or delay in the performance of any of its obligations under this Agreement for the time and to the extent such failure or delay is caused by force majeure such as, but not limited to, riots, civil commotions, wars, freight embargo, lock-outs, hostilities between nations, governmental laws, orders or regulations, actions by the government or any agency thereof, storms, fires, sabotages, explosions or any other contingencies beyond the reasonable control of the respective party and of its sub-contractors (“Force Majeure”). If such Force Majeure events affects a party’s ability to perform an obligation under the Contract, the affected party shall immediately inform the other party of such circumstances together with documents of proof, no later than ten (10) business days after having knowledge of the Force Majeure. A party will be deemed to have invoked Force Majeure from the date when that party gives written notice of the event of Force Majeure in accordance with this clause. The affected party shall provide to the other Party reports with respect to the Force Majeure at such intervals as the other party may reasonably request while the Force Majeure continues and the performance of obligations hereunder shall be suspended during, but not longer than, the period of existence of such cause and the period reasonably required to perform the obligations in such cases.
The affected party shall take commercially reasonable steps to mitigate damages, including sourcing products and services from alternative suppliers or using alternative methods, arising out of the force majeure event. The parties shall have the right to terminate a contract with written notice should the force majeure event last more than 6 months.
Ascend Analytics | Analytics to Power the Energy Transitio n 23
SAN DIEGO COMMUNITY POWER
Staff Report – Item 11
--------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Byron Vosburg, Managing Director and Kenny Key, Sr. Contracts Manager
Via: Karin Burns, Chief Executive Officer
Subject: Long-Term Resource Adequacy Agreement with EnerSmart Date: October 26, 2023
---------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Approve 10-year, 6MW Resource Adequacy Agreement with EnerSmart Alpine BESS LLC and authorize the CEO to execute the Agreement
BACKGROUND
As San Diego Community Power (SDCP) strives to meet its environmental, financial, and regulatory compliance goals and requirements, long-term agreements of at least 10 years in duration are integral components of its portfolio. Long-term resource adequacy agreements provide facility developers with the certain revenue stream against which they can finance up-front capital requirements, so each long-term agreement that SDCP signs with a developing facility will underpin a new, incremental project.
In D.21-06-025, the California Public Utilities Commission (CPUC) required each Load Serving Entity (LSE) in California to make significant long-term purchase commitments for resource adequacy from new, incremental generation facilities that will achieve commercial operation during 2023 through 2026. Additionally, SDCP has set internal targets to procure 600MW of capacity from local wholesale projects by 2035.
The agreement proposed originated from an offer SDCP received in 2022 via its Local RFI Solicitation. SDCP engaged with EnerSmart after short-listing the projects and has reached terms mutually agreeable to both parties. SDCP’s board of directors approved an agreement with EnerSmart Alpine BESS LLC at the board meeting on September 28th, 2023. However, that contract incorrectly had the project classified as a 2-hour battery system, which would only provide 3 MW of resource adequacy. The project will be a 4- hour battery system providing 6 MW of resource adequacy. The agreement has been revised to correct all reference to 3 MW of resource adequacy to 6 MW.
ANALYSIS AND DISCUSSION
Staff negotiated the attached Long-Term Resource Adequacy Agreement for the purchase of resource adequacy from a stand-alone battery-storage project being developed by EnerSmart in San Diego County.
Resource Adequacy would help with SDCP’s internal Local Procurement targets as well as external resource adequacy and mid-term reliability compliance requirements. This project would help with local resource adequacy obligations.
Below is additional information regarding EnerSmart and the draft agreements.
Background on EnerSmart:
• EnerSmart is a local developer and has a management team with decades of experience in project development
• EnerSmart is planning to develop over 160 MW of stand-alone storage in San Diego across 10 projects
Contract Overview for the Alpine project:
• Product: Local Resource Adequacy, 6 MW
• Projects: 6 MW/ 24 MWh 4-hour lithium-ion battery energy system • Project location: Alpine
• Guaranteed Initial Resource Adequacy Delivery Date: 2/15/25 • Contract term: 10 years
• Pricing:
• BESS – Fixed price for resource adequacy
• SDCP receives financial compensation if EnerSmart fails to meet certain performance requirements
Community Benefits:
• EnerSmart plans to use local labor when possible and union labor on portions of the project
• EnerSmart commits to prevailing wage for the project
• The project benefits the community by providing clean energy to the grid when it's needed the most, helping to reduce the local risk of brownouts and blackouts. • The project provides local storage reducing the need for additional transmission to import energy
COMMITTEE REVIEW
N/A
FISCAL IMPACT
The competitive resource adequacy pricing of the agreement is confidential, but the long-term purchase of resource adequacy will provide SDCP with significant value and cost certainty over the term of this agreement.
ATTACHMENTS
A. Long-Term Resource Adequacy Agreement with EnerSmart Alpine BESS, LLC (redacted version for commercially sensitive information) CONFIDENTIAL: EXECUTION VERSION
1 RESOURCE ADEQUACY AGREEMENT
COVER SHEET
A. Parties
Seller: EnerSmart Alpine BESS LLC, a California limited liability company Buyer: San Diego Community Power, a California joint powers authority B. Unit Information
Unit Name: EnerSmart Alpine
Location: 2436 Alpine Blvd Alpine, CA
91901
CAISO Resource ID: Forthcoming
Unit SCID: ASMT
Unit NQC: 6 MW
Unit EFC: 6 MW
Resource Type: Battery Energy Storage System
Resource Category (1, 2, 3 or 4): 4
FCR Category (1, 2 or 3): 2
Path 26 (North or South): SP26
Local Capacity Area (if any, as of Effective Date): SDGE Deliverability restrictions, if any, as described in
most recent CAISO deliverability assessment: TBD
Run Hour Restrictions N/A
C. RA Product and Attributes
Throughout the Delivery Term, Seller shall provide Buyer with the Designated RA Capacity having the following attributes:
☒ RAR Attributes
☐ RAR Attributes with FCR Attributes
☐ LAR Attributes
CONFIDENTIAL: EXECUTION VERSION
2 ☒ LAR Attributes with FCR Attributes
☐ FCR Attributes
D. Delivery Term
The Delivery Term is ten (10) Contract Years.
E. Contract Quantities
The Contract Quantities for each Showing Month of the Delivery Term shall be:
RAR Attributes:
LAR Attributes:
FCR Attributes:
F. Contract Price
The Contract Price shall be:
G. Seller’s Security Amounts
Performance Security:
H. Milestones
Milestone Date for
Completion
Site Control obtained April 2022
Interconnection Agreement executed forthcoming
Expected Construction Start Date March 2024
Full Capacity Deliverability Status obtained July 2024
Guaranteed Initial Delivery Date February 15, 2025
CONFIDENTIAL: EXECUTION VERSION
3 TABLE OF CONTENTS
COVER SHEET ..........................................................................................................................................................1 PREAMBLE ................................................................................................................................................................6 ARTICLE 1: DEFINITIONS .....................................................................................................................................6 ARTICLE 2: TERM; DELIVERY TERM; CONDITIONS PRECEDENT ........................................................16
2.1 Term...........................................................................................................................................................16
2.2 Conditions Precedent to Initial Delivery Date. ..........................................................................................16 ARTICLE 3: TRANSACTION, DELIVERY AND PAYMENT...........................................................................17
3.1 Resource Adequacy Capacity Product.......................................................................................................17
3.2 Seller’s and Buyer’s Obligations. ..............................................................................................................17
3.3 [Reserved]..................................................................................................................................................18
3.4 Delivery Point............................................................................................................................................18
3.5 Planned Outages. .......................................................................................................................................18
3.6 Alternate Capacity and Replacement Units. ..............................................................................................18
3.7 Delivery of Product....................................................................................................................................18
3.8 Damages for Failure to Provide Designated RA Capacity.........................................................................19
3.9 Indemnities for Failure to Deliver Contract Quantity................................................................................20
3.10 Monthly RA Capacity Payment.................................................................................................................20
3.11 Allocation of Other Payments and Costs. ..................................................................................................20
3.12 Force Majeure............................................................................................................................................21 ARTICLE 4: CAISO OFFER REQUIREMENTS.................................................................................................22 ARTICLE 5: EVENTS OF DEFAULT; REMEDIES............................................................................................22
5.1 Events of Default. ......................................................................................................................................22
5.2 Declaration of an Early Termination Date and Calculation of Settlement Amounts. ................................23
5.3 Net Out of Settlement Amounts.................................................................................................................24
5.4 Notice of Payment of Termination Payment..............................................................................................24
5.5 Disputes with Respect to Termination Payment........................................................................................24
5.6 Closeout Setoffs.........................................................................................................................................25 ARTICLE 6: PAYMENT AND NETTING.............................................................................................................25
6.1 Billing Period.............................................................................................................................................25
6.2 Timeliness of Payment...............................................................................................................................25
6.3 Disputes and Adjustments of Invoices.......................................................................................................25
6.4 Netting of Payments. .................................................................................................................................26
6.5 Payment Obligation Absent Netting. .........................................................................................................26
6.6 Security......................................................................................................................................................26 ARTICLE 7: LIMITATIONS ..................................................................................................................................26
7.1 Limitation of Remedies, Liability and Damages. ......................................................................................26 ARTICLE 8: GOVERNMENTAL CHARGES ......................................................................................................27
8.1 Cooperation. ..............................................................................................................................................27 CONFIDENTIAL: EXECUTION VERSION
4 8.2 Governmental Charges. .............................................................................................................................27 ARTICLE 9: [RESERVED] .....................................................................................................................................27 ARTICLE 10: REPRESENTATIONS; WARRANTIES; COVENANTS............................................................27
10.1 Mutual Representations and Warranties. ...................................................................................................27
10.2 Buyer and Seller Covenants.......................................................................................................................28
10.3 Seller Representations, Warranties and Covenants....................................................................................29
10.4 Buyer Representations, Warranties and Covenants. ..................................................................................30 ARTICLE 11: CONFIDENTIALITY......................................................................................................................30 ARTICLE 12: BUYER’S RE-SALE OF PRODUCT.............................................................................................31 ARTICLE 13: COMPLIANCE OBLIGATION.....................................................................................................32 ARTICLE 14: COLLATERAL REQUIREMENTS ..............................................................................................32
14.1 [Reserved]..................................................................................................................................................32
14.2 Performance Security.................................................................................................................................32
14.3 First Priority Security Interest in Cash or Cash Equivalent Collateral.......................................................32 ARTICLE 15: INSURANCE....................................................................................................................................33
15.1 Insurance....................................................................................................................................................33
15.2 Evidence of Insurance................................................................................................................................35 ARTICLE 16: UNIT CONSTRUCTION AND INITIAL DELIVERY DATE....................................................35
16.1 Construction of the Unit. ...........................................................................................................................35
16.2 Initial Delivery Date. .................................................................................................................................35 ARTICLE 17: MISCELLANEOUS.........................................................................................................................37
17.1 Title and Risk of Loss................................................................................................................................37
17.2 Indemnity...................................................................................................................................................37
17.3 Assignment. ...............................................................................................................................................38
17.4 Governing Law and Venue........................................................................................................................38
17.5 Notices.......................................................................................................................................................39
17.6 Mobile-Sierra.............................................................................................................................................39
17.7 General.......................................................................................................................................................39
17.8 Audit. .........................................................................................................................................................40
17.9 Forward Contract.......................................................................................................................................40
17.10 Dispute Resolution.....................................................................................................................................40
17.11 Execution...................................................................................................................................................41
17.12 Joint Powers Authority. .............................................................................................................................41 EXHIBIT A: FORM OF LETTER OF CREDIT.....................................................................................................1 EXHIBIT B: FORM OF CONSTRUCTION START DATE CERTIFICATE.....................................................1 EXHIBIT C: FORM OF INITIAL DELIVER DATE CERTIFICATE.................................................................1 EXHIBIT D: DESCRIPTION OF UNIT...................................................................................................................1 EXHIBIT E: [RESERVED]........................................................................................................................................1 CONFIDENTIAL: EXECUTION VERSION
5 EXHIBIT F: PROGRESS REPORTING FORM.....................................................................................................1 EXHIBIT G: NOTICES..............................................................................................................................................1 CONFIDENTIAL: EXECUTION VERSION
6 PREAMBLE
This Resource Adequacy Agreement (“Agreement”) is entered into between EnerSmart Alpine BESS LLC, a California limited liability company (“Seller”) and San Diego Community Power, a California joint powers authority (“Buyer”), each individually a “Party” and together the “Parties,” as of [ ] (the “Effective Date”). All capitalized terms used in this Agreement are used with the meanings ascribed to them in Article 1 to this Agreement.
RECITALS
WHEREAS, Seller intends to develop, design, construct, own, and operate the Unit; and WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the terms and conditions set forth in this Agreement, the Product;
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the sufficiency and adequacy of which are hereby acknowledged, the Parties agree to the following:
ARTICLE 1: DEFINITIONS
1.1 “Affiliate” means, with respect to any person, any other person (other than an individual) that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such person. For this purpose, “control” means the direct or indirect ownership of fifty percent (50%) or more of the outstanding capital stock or other equity interests having ordinary voting power.
1.2 “Agreement” has the meaning set forth in the Preamble.
1.3 “Alternate Capacity” means any replacement RA Capacity having at least equivalent RAR Attributes, LAR Attributes and/or FCR Attributes as the Product provided by the Unit; provided, if any portion of the Designated RA Capacity that Seller is seeking to replace is Designated RA Capacity having RAR Attributes and no LAR Attributes, and no such RAR capacity is available (such capacity shall also include FCR Attributes if this is a Flexible RA Product), then Seller may replace such portion of the Designated RA Capacity with capacity having RAR Attributes and LAR Attributes (as well as FCR Attributes if this is a Flexible RA Product).
1.4 “Applicable Laws” means any law, rule, regulation, order, decision, judgment, or other legal or regulatory determination by any Governmental Body having jurisdiction over one or both Parties or this Agreement, including without limitation, the Tariff.
1.5 “Availability Incentive Payments” means Availability Incentive Payments as defined in the Tariff.
1.6 “Availability Standards” means Availability Standards as defined in the Tariff.
1.7 “Bankrupt” means with respect to any entity, such entity (a) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of CONFIDENTIAL: EXECUTION VERSION
7 action under any bankruptcy, insolvency, reorganization or similar law, or has any such petition filed or commenced against it and such petition filed or commenced against it is not stayed or dismissed within ninety (90) days thereafter, (b) makes an assignment or any general arrangement for the benefit of creditors, (c) otherwise becomes bankrupt or insolvent (however evidenced), (d) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (e) is generally unable to pay its debts as they fall due.
1.8 “Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday in California.
1.9 “Buyer” has the meaning set forth in the Preamble.
1.10 “CAISO” means the California Independent System Operator or its successor.
1.11 “CAISO Control Area” means the Control Area (as defined in the Tariff) that is operated by the CAISO.
1.12 “CAISO Controlled Grid” has the meaning set forth in the Tariff.
1.13 “CAISO Offer Requirements” has the meaning set forth in Article 4.
1.14 “Capacity Replacement Price”
1.15 “CIRA Tool” means the CAISO Customer Interface for Resource Adequacy.
1.16 “Claiming Party” has the meaning set forth in Section 3.12.
1.17 “Claims” means all third party claims or actions, threatened or filed and, whether groundless, false, fraudulent or otherwise, that directly or indirectly relate to the subject matter of an indemnity, and the resulting losses, damages, expenses, attorneys’ fees and court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement.
1.18 “Compliance Issue” has the meaning set forth in Article 13.
1.19 “Compliance Obligation” means the RAR, Local RAR, FCR, and any other resource adequacy or capacity procurement requirements imposed on LSEs by the CPUC pursuant to the Resource Adequacy Rulings, by the CAISO, by the WECC, or by any other Governmental Body having jurisdiction.
CONFIDENTIAL: EXECUTION VERSION
8 1.20 “Confidential Information” has the meaning set forth in Article 11.
1.21 “Construction Start” has the meaning set forth in Section 16.1(a).
1.22 “Construction Start Date” has the meaning set forth in Section 16.1(a).
1.23 “Contract Price” has the meaning set forth in Section F of the Cover Sheet.
1.24 “Contract Quantity” means, with respect to any particular Showing Month of the Delivery Term, the amount of Product (in MWs) set forth in Section E of the Cover Sheet, which Seller has agreed to provide to Buyer from the Unit for such Showing Month, which amount may be amended in accordance with Section 16.2(b).
1.25 “Contract Year” means a period of twelve (12) consecutive months; the first Contract Year shall commence on the Initial Delivery Date; and each subsequent Contract Year shall commence on the anniversary of the Initial Delivery Date.
1.26 “Costs” means, with respect to the Non-Defaulting Party, brokerage fees, commissions and other similar third party transaction costs and expenses reasonably incurred by such Party either in terminating any arrangement pursuant to which it has hedged its obligations or entering into new arrangements which replace a Terminated Transaction; and all reasonable attorneys’ fees and expenses incurred by the Non-Defaulting Party in connection with the Terminated Transaction.
1.27 “CPUC” means the California Public Utilities Commission or its successor.
1.28 “CPUC Decisions” means CPUC Decisions 04-01-050, 04-10-035, 05-10-042, 06-04-040, 06-06-064, 06-07-031, 07-06-029, 08-06-031, 09-06-028, 10-06-036, 11-06-022, 12-06-025, 13-06-024, 14-06-050, 15-06-063, 16-06-045, 17-06-027, 18-06-030, 18-06- 031, 19-02-022, 19-06-026, 19-10-021, 20-01-004, 20-03-016, 20-06-002, 20-06-031, 20- 06-028, 20-12-006 and any other existing or subsequent ruling or decision related to resource adequacy, as may be amended from time to time by the CPUC.
1.29 “CPUC Filing Guide” means the annual document issued by the CPUC which sets forth the guidelines, requirements and instructions for LSE’s to demonstrate compliance with the CPUC’s resource adequacy program.
1.30 “Credit Rating” means, with respect to any entity, the rating then assigned to such entity’s unsecured, senior long-term debt obligations (not supported by third party credit enhancements) or if such entity does not have a rating for its senior unsecured long-term debt, then the rating then assigned to such entity as an issuer rating by S&P or Moody’s.
1.31 “Defaulting Party” has the meaning set forth in Section 5.1.
1.32 “Delivery Point” has the meaning set forth in Section 3.4.
CONFIDENTIAL: EXECUTION VERSION
9 1.33 “Delivery Term” means the period of Contract Years set forth on the Cover Sheet beginning on the Initial Delivery Date, unless terminated earlier in accordance with the terms and conditions of this Agreement.
1.34 “Designated RA Capacity” shall be equal to, with respect to each Showing Month of the Delivery Term, the Contract Quantity of Product for such Showing Month, including the amount of Contract Quantity that Seller has elected to provide as Alternate Capacity from one or more Replacement Units in accordance with Section 3.6.
1.35 “Development Cure Period” has the meaning set forth in Section 16.2(c).
1.36 “Dispute” has the meaning set forth in Section 17.10(a).
1.37 “Dispute Notice” has the meaning set forth in Section 17.10(a).
1.38 “Early Termination Date” has the meaning set forth in Section 5.2.
1.39 “Effective Date” is the date set forth in the Preamble.
1.40 “Effective Flexible Capacity” or “EFC” means the capacity of a resource that can be counted towards an LSE’s Flexible Capacity Requirements, as identified from time to time by the Tariff, the Resource Adequacy Rulings, LRA, or other Governmental Body having jurisdiction.
1.41 “EPC Contract” means the Seller’s engineering, procurement and construction contract with the EPC Contractor.
1.42 “EPC Contractor” means Seller’s engineering, procurement and construction contractor or such Person performing those functions.
1.43 “Equitable Defenses” means any bankruptcy, insolvency, reorganization and other laws affecting creditors’ rights generally, and with regard to equitable remedies, the discretion of the court before which proceedings to obtain same may be pending.
1.44 “Event of Default” has the meaning set forth in Section 5.1.
1.45 “FCR Attributes” means, with respect to a Resource Adequacy Resource, any and all flexible resource adequacy attributes that can be counted toward an LSE’s FCR, as they are identified from time to time by the Resource Adequacy Rulings, the Tariff, an LRA, or other Governmental Body having jurisdiction, exclusive of any LAR Attributes and any RAR Attributes.
1.46 “FCR Showings” means the FCR compliance showings (or similar or successor showings) an LSE is required to make to the CPUC (and, to the extent authorized by the CPUC, to the CAISO) pursuant to the Resource Adequacy Rulings and the Tariff, or to an LRA having jurisdiction over the LSE.
CONFIDENTIAL: EXECUTION VERSION
10 1.47 “FERC” means the Federal Energy Regulatory Commission or any successor government agency.
1.48 “Flexible Capacity Category” has the meaning set forth in the Resource Adequacy Resource.
1.49 “Flexible Capacity Requirements” or “FCR” means the flexible capacity requirements established for LSEs by the CPUC pursuant to the Resource Adequacy Rulings, or by an LRA or other Governmental Body having jurisdiction.
1.50 “Flexible RA Product” means that the Product includes FCR Attributes, if applicable, as specified in Sections C and E of the Cover Sheet.
1.51 “Force Majeure” means an event or circumstance which prevents one Party from performing its obligations under the Agreement, which event or circumstance was not anticipated as of the Effective Date, which is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure shall not be based on (i) the loss of Buyer’s markets; (ii) Buyer’s inability economically to use or resell the Product purchased hereunder; (iii) the loss or failure of Seller’s supply (except to the extent due to a Force Majeure); or (iv) Seller’s ability to sell the Product at a price greater than the Contract Price. Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a Transmission Provider (i) unless such Party has contracted for firm transmission with a Transmission Provider for the Product to be delivered to or received at the Delivery Point and (ii) except to the extent such curtailment is due to Transmission Provider; provided, however, that existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of a Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that a Force Majeure as defined in the first sentence hereof has occurred.
1.52 “Full Capacity Deliverability Status” or “FCDS” has the meaning set forth in the Tariff.
1.53 “Gains” means, with respect to any Party, an amount equal to the present value of the economic benefit to it, if any (exclusive of Costs), resulting from a Terminated Transaction, determined in a commercially reasonable manner.
1.54 “Governmental Approvals” means all authorizations, consents, approvals, waivers, exceptions, variances, filings, permits, orders, licenses, exemptions, notices to and declarations of or with any Governmental Body and shall include those siting and operating permits and licenses, and any of the foregoing under any applicable environmental law, that are required for the use and operation of the Unit.
1.55 “Governmental Body” means (a) any federal, state, local, municipal or other government; (b) any governmental, regulatory or administrative agency, commission or other authority lawfully exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; (c) any court or governmental tribunal, but in all cases, excludes both Parties; and (d) CAISO.
CONFIDENTIAL: EXECUTION VERSION
11 1.56 “Governmental Charges” has the meaning set forth in Section 8.2.
1.57 “Guaranteed Initial Delivery Date” is the date set forth in Section H of the Cover Sheet, subject to extension pursuant to Section 16.2(c), but as limited by Section 16.2(d).
1.58 “Initial Delivery” has the meaning set forth in Section 16.2(a).
1.59 “Initial Delivery Date” means the date on which Initial Delivery is achieved.
1.60 “Interconnection Agreement” means the interconnection agreement entered into by Seller pursuant to which the Unit and Seller’s Interconnection Facilities will be interconnected with the Transmission System during the Delivery Term.
1.61 “Interconnection Facilities” means the interconnection facilities, control and protective devices and metering facilities required to connect the Unit with the Transmission System in accordance with the Interconnection Agreement.
1.62 “Interest Rate” means, for any date, the lesser of (a) the per annum rate of interest equal to the prime lending rate as may from time to time be published in The Wall Street Journal under “Money Rates” on such day (or if not published on such day on the most recent preceding day on which published), plus two percent (2%) and (b) the maximum rate permitted by applicable law.
1.63 “Investment Grade” means a Credit Rating of at least from Moody’s (or, if such entities cease to provide Credit Ratings, from another comparable rating agency that is reasonably acceptable to the Parties).
1.64 “Joint Powers Act” means the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.).
1.65 “Joint Powers Agreement” means that certain Joint Powers Agreement dated October 1, 2019, as amended from time to time, under which Buyer is organized as a Joint Powers Authority in accordance with the Joint Powers Act.
1.66 “LAR” means local area reliability, which is any program of localized resource adequacy requirements established for jurisdictional LSEs by the CPUC pursuant to the Resource Adequacy Rulings, or by another LRA having jurisdiction over the LSE, as implemented in the Tariff. LAR may also be known as local resource adequacy, local RAR, or local capacity requirement in other regulatory proceedings or legislative actions.
1.67 “LAR Attributes” means, with respect to a Unit, any and all resource adequacy attributes (or other locational attributes related to system reliability), as they are identified from time to time by the Resource Adequacy Rulings, CAISO, LRA, or other Governmental Body having jurisdiction, associated with the physical location or point of electrical interconnection of the Unit within the CAISO Control Area, that can be counted toward LAR, but exclusive of any RAR Attributes which are not associated with where in the CAISO Control Area the Unit is physically located or electrically interconnected. For clarity, it should be understood that if the CAISO, LRA, or other Governmental Body, CONFIDENTIAL: EXECUTION VERSION
12 defines new or re-defines existing local areas, then such change will not result in a change in payments made pursuant to this Agreement.
1.68 “LAR Showings” means the LAR compliance showings (or similar or successor showings) an LSE is required to make to the CPUC (and, to the extent authorized by the CPUC, to the CAISO) pursuant to the Resource Adequacy Rulings and the Tariff, or to an LRA having jurisdiction over the LSE.
1.69 “Letter(s) of Credit” means one or more irrevocable, standby letters of credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such bank having a Credit Rating of at least with an outlook designation of with an outlook designation of from Moody’s, in a form as set forth in Exhibit A or as otherwise acceptable to Buyer.
1.70 “Losses” means, with respect to any Party, an amount equal to the present value of the economic loss to it, if any (exclusive of Costs), resulting from a Terminated Transaction, determined in a commercially reasonable manner.
1.71 “LRA” has the meaning set forth in the Tariff.
1.72 “LSE” means load-serving entity. LSEs may be an investor-owned utility, an electric service provider, a community aggregator or community choice aggregator, or a municipality serving load in the CAISO Control Area (excluding exports).
1.73 “Milestones” has the meaning set forth in Section H of the Cover Sheet.
1.74 “Monthly RA Capacity Payment” has the meaning specified in Section 3.10(a) hereof.
1.75 “Moody’s” means Moody’s Investor Services, Inc. or its successor.
1.76 “NERC” means the North American Electric Reliability Corporation, or its successor.
1.77 “Net Qualifying Capacity” or “NQC” has the meaning set forth in the Tariff.
1.78 “Non-Availability Charges” has the meaning set forth in the Tariff.
1.79 “Non-Defaulting Party” has the meaning set forth in Section 5.2.
1.80 “Notification Deadline” has the meaning set forth in Section 3.6.
1.81 “Notifying Party” has the meaning set forth in Section 17.10(a).
1.82 “Outage” means any CAISO approved disconnection, separation, or reduction in the capacity of any Unit that relieves all or part of the obligations of the Unit under the CAISO Offer Requirements consistent with the Tariff. For the avoidance of doubt, Outage shall be deemed to include Planned Outage.
1.83 “Participating Transmission Owner” means an entity that (a) owns, operates and maintains transmission lines and associated facilities and/or has entitlements to use certain CONFIDENTIAL: EXECUTION VERSION
13 transmission lines and associated facilities and (b) has transferred to the CAISO operational control of such facilities and/or entitlements to be made part of the CAISO Grid. The Participating Transmission Owner for purposes of this Agreement is San Diego Gas & Electric.
1.84 “Performance Security” means collateral in the form of cash or a Letter of Credit in an amount set forth in Section G of the Cover Sheet.
1.85 “Planned Outage” means, subject to and as further described in the Tariff, a CAISO-approved planned or scheduled disconnection, separation or reduction in capacity of the Unit that is conducted for the purposes of carrying out routine repair or maintenance of such Unit, or for the purposes of new construction work for such Unit.
1.86 “Product” has the meaning set forth in Section 3.1.
1.87 “Progress Report” means a report substantially in the form set forth in Exhibit F, the requirements for which are further set forth in Section 16.1(c).
1.88 “RA Capacity” means the qualifying and deliverable capacity of the Unit for RAR, LAR, and FCR purposes, as applicable, for the Delivery Term, as determined by the CPUC, CAISO, or other Governmental Body authorized to make such determination under Applicable Laws, including the Resource Adequacy Rulings. RA Capacity encompasses the applicable RAR Attributes, LAR Attributes and FCR Attributes of the capacity provided by a Unit.
1.89 “RAR” means the resource adequacy requirements, exclusive of LAR and FCR, established for LSEs by the CPUC pursuant to the Resource Adequacy Rulings, or by an LRA or other Governmental Body having jurisdiction.
1.90 “RAR Attributes” means, with respect to a Resource Adequacy Resource, any and all resource adequacy attributes, as they are identified from time to time by the Tariff, Resource Adequacy Rulings, LRA, or any Governmental Body having jurisdiction that can be counted toward RAR, exclusive of any LAR Attributes and FCR Attributes.
1.91 “RAR Showings” means the RAR compliance showings (or similar or successor showings) an LSE is required to make to the CPUC (and/or, to the extent authorized by the CPUC, to the CAISO), pursuant to the Tariff or Resource Adequacy Rulings, or to an LRA having jurisdiction.
1.92 “Recipient Party” has the meaning set forth in Section 17.10(a).
1.93 “Regulatory Event” has the meaning set forth in Section 17.7.
1.94 “Reliability Compensation Services Tariff” has the meaning set forth in the Tariff.
1.95 “Replacement Capacity” has the meaning specified in Section 3.8 hereof.
CONFIDENTIAL: EXECUTION VERSION
14 1.96 “Replacement Unit” means a unit meeting the requirements specified in Section 3.6 hereof that is located within the CAISO Control Area and that is capable of providing Alternate Capacity. A Replacement Unit may not be a coal-fired or nuclear generating resource.
1.97 “Required TPD Allocation” means an allocation of TP Deliverability from the CAISO that is sufficient for the Unit to obtain Full Capacity Deliverability Status for at least the Contract Quantity.
1.98 “Residual Unit Commitment” has the meaning set forth in the Tariff.
1.99 “Resource Adequacy Plan” has the meaning specified in the Tariff.
1.100 “Resource Adequacy Rulings” means CPUC Decisions 04-01-050, 04-10-035, 05-10-042, 06-04-040, 06-06-064, 06-07-031, 07-06-029, 08-06-031, 09-06-028, 10-06-036, 11-06-022, 12-06-025, 13-06-024, 14-06-050, 15-06-063, 16-06-045, 17-06-027, 18-06- 030, 18-06-031, 19-02-022, 19-06-026, 19-10-021, 20-01-004, 20-03-016, 20-06-002, 20- 06-028, 20-12-006 and any other existing or subsequent ruling or decision, or any other resource adequacy Law, however described, as such decisions, rulings, Laws, rules or regulations may be amended or modified from time-to-time throughout the Delivery Term.
1.101 “Resold Product” has the meaning set forth in Article 12.
1.102 “Resource Adequacy Resource” has the meaning set forth in the Tariff.
1.103 “Resource Category” shall be as described in the CPUC Filing Guide, as such may be modified, amended, supplemented or updated from time to time.
1.104 “RMR Contracts” has the meaning set forth in the Tariff.
1.105 “S&P” means the Standard & Poor’s Rating Group (a division of McGraw-Hill, Inc.) or its successor.
1.106 “Schedule” or “Scheduling” means the actions of Seller, Buyer and/or their designated representatives, including each Party’s Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity and type of Product to be delivered on any given day or days during the Delivery Term at a specified Delivery Point.
1.107 “Scheduling Coordinator” has the same meaning as in the Tariff.
1.108 “Security Interest” has the meaning set forth in Section 14.3(a).
1.109 “Seller” has the meaning set forth in the Preamble.
1.110 “Settlement Amount” means, with respect to the Non-Defaulting Party, the aggregate Losses or Gains, and Costs, expressed in U.S. Dollars, which such party incurs as a result of a Terminated Transaction pursuant to Section 5.2.
CONFIDENTIAL: EXECUTION VERSION
15 1.111 “Showing Month” shall be the calendar month during the Delivery Term that is the subject of the RAR Showing, LAR Showing, and/or FCR Showing, as applicable, as set forth in the Resource Adequacy Rulings or Tariff. For illustrative purposes only, pursuant to the Resource Adequacy Rulings in effect as of the Effective Date, the monthly RAR Showing made in June is for the Showing Month of August.
1.112 “Site” means the real property on which the Unit is located as identified in Appendix D.
1.113 “Site Control” means that, for the Term, Seller (or, prior to the Delivery Term, its Affiliate):
(a) owns or has the option to purchase the Site; (b) is the lessee or has the option to lease the Site; or (c) is the holder of an easement or an option for an easement, right-of-way grant, or similar instrument with respect to the Site.
1.114 “Substitution Rules” has the meaning specified in the Tariff.
1.115 “Supply Plan” means the supply plans, or similar or successor filings, that each Scheduling Coordinator representing RA Capacity submits to the CAISO, LRA, or other Governmental Body, pursuant to Applicable Laws, in order for that RA Capacity to count, as applicable, for RAR Attributes, LAR Attributes, and/or FCR Attributes.
1.116 “Tariff” means the tariff and protocol provisions of the CAISO, including associated rules, procedures and business practice manuals, as amended or supplemented from time to time.
1.117 “Term” has the meaning set forth in Section 2.1(a).
1.118 “Terminated Transaction” has the meaning set forth in Section 5.2.
1.119 “Termination Payment” has the meaning set forth in Section 5.3.
1.120 “TP Deliverability” has the meaning set forth in the CAISO Tariff.
1.121 “Transmission Provider” means the CAISO.
1.122 “Transmission System” means the transmission facilities operated by the CAISO, which provide energy transmission service within the CAISO grid from the Delivery Point.
1.123 “Unit” shall mean the storage asset described in Section B of the Cover Sheet and Exhibit D hereof and any Replacement Units, from which Product is provided by Seller to Buyer.
A Unit may not include a coal-fired or nuclear generating resource.
1.124 “Work” means (a) work or operations performed by a Party or on a Party’s behalf; and (b) materials, parts or equipment furnished in connection with such work or operations; including (i) warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of “a Party’s work”; and (ii) the providing of or failure to provide warnings or instructions.
CONFIDENTIAL: EXECUTION VERSION
16 ARTICLE 2: TERM; DELIVERY TERM; CONDITIONS PRECEDENT
2.1 Term.
The term of this Agreement shall commence upon the Effective Date and shall continue until the expiration of the Delivery Term, provided that this Agreement shall thereafter remain in effect until the Parties have fulfilled all obligations arising under this Agreement, including any compensation for the Product, Termination Payment, then-owing indemnification payments or other damages, are paid in full (whether directly or indirectly, such as through set-off or netting) and the Performance Security is released and/or returned (the “Term”). Upon Seller’s request, Buyer will promptly confirm in writing the Initial Delivery Date following Seller’s completion of all conditions precedent hereto. All provisions relating to invoicing, payment, delivery, settlement of other liabilities incurred pursuant to this Agreement and dispute resolution survive for the period necessary to effectuate the rights of the Party benefited by such provision except as otherwise specified herein. Notwithstanding anything to the contrary in this Agreement, (i) all rights under Sections 17.2 (Indemnities) and any other indemnity rights survive the end of the Delivery Term for an additional twelve (12) months; (ii) all rights and obligations under Article 11 (Confidentiality) survive the end of the Delivery Term for an additional two (2) years; (iii) all rights and obligations under Section 16.2(f) (Limitation on Seller’s Ability to Make or Agree to Third-Party Sales from the Unit after Early Termination Date ) survive early termination of this Agreement for an additional two (2) years; and (iv) all provisions relating to limitations of liability survive without limit.
2.2 Conditions Precedent to Initial Delivery Date.
Seller shall provide notice of expected Initial Delivery Date to Buyer no less than sixty (60) days in advance of such date. The Delivery Term shall not commence until Seller completes to Buyer’s reasonable satisfaction each of the following conditions:
(a) Seller shall have secured all CAISO and Governmental Approvals as are necessary for the safe and lawful operation and maintenance of the Unit and to enable Seller to deliver the Product to Buyer.
(d) Seller shall have provided to Buyer a certification of Seller and a licensed professional engineer, substantially in the form attached hereto as Exhibit C, demonstrating that the Initial Delivery Date has occurred.
(e) Seller shall have provided Performance Security to Buyer as required by Section
14.2. (f) As of the Initial Delivery Date, no Event of Default on the part of Seller shall have occurred and be continuing.
(g) Seller shall have obtained Full Capacity Deliverability Status. (h) Subject to Section 16.2(b), Seller shall have obtained an NQC for the Unit of at least 6 MW.
CONFIDENTIAL: EXECUTION VERSION
17 (i) In accordance with Section 3.7(a), Seller shall have (i) submitted, or caused the Unit’s SC to submit, a notice to Buyer including Seller’s proposed Supply Plan for the first Showing Month of the Delivery Term and (ii) submitted, or caused the Unit’s SC to submit, a Supply Plan to CAISO for the first Showing Month of the Delivery Term. (j) Seller shall have delivered to Buyer all insurance documents required under Article
15. (k) As of the Initial Delivery Date, Seller shall have paid Buyer for all amounts owing under this Agreement, if any.
ARTICLE 3: TRANSACTION, DELIVERY AND PAYMENT
3.1 Resource Adequacy Capacity Product.
During the Delivery Term, Seller shall provide Buyer with RA Capacity from the Unit in the amount of the Contract Quantity of (i) RAR Attributes and, if applicable, LAR Attributes, and (ii) FCR Attributes, if Flexible RA Product is specified in Sections C and E of the Cover Sheet to this Agreement with respect to each Showing Month (the “Product”). Seller’s obligation to deliver the Contract Quantity of Product for each day of the Delivery Term is firm and will not be excused for any reason other than Force Majeure.
If the Unit is not available to provide the full amount of the Contract Quantity with respect to an applicable Showing Month for any reason other than Force Majeure, including, without limitation, any Outage or any adjustment of the RA Capacity of any Unit, then, Seller shall provide Buyer with Designated RA Capacity from one or more Replacement Units pursuant to Section 3.6 hereof.
If Sellerfailsto provide Buyer with replacement Designated RA Capacity from Replacement Units pursuant to Section 3.6, then Seller shall be liable for damages and/or be required to indemnify Buyer for costs, penalties or fines pursuant to the terms of Sections 3.8 and 3.9 hereof.
Notwithstanding anything to the contrary herein, no energy or ancillary services associated with the Unit is required to be made available to Buyer as part of this Agreement and Buyer shall not be responsible for compensating Seller for Seller’s commitments to the CAISO required by this Agreement. Seller retains the right to sell, pursuant to the Tariff, any RA Capacity that is in excess of the Unit’s Contract Quantity and any RAR Attributes, LAR Attributes, or FCR Attributes not otherwise transferred, conveyed, or sold to Buyer under this Agreement.
3.2 Seller’s and Buyer’s Obligations.
Seller shall sell and deliver, or cause to be delivered, and Buyer shall purchase and receive, or cause to be received, the Designated RA Capacity of the Product at the Delivery Point, and Buyer shall pay Seller the Contract Price for the Designated RA Capacity. Seller shall be responsible for any costs or charges imposed on or associated with the Product or its delivery of the Product up to the Delivery Point. Buyer shall be responsible for any costs or charges imposed on or associated with the Product or its receipt at and from the Delivery Point.
CONFIDENTIAL: EXECUTION VERSION
18 3.3 [Reserved].
3.4 Delivery Point.
The “Delivery Point” for the Unit shall be the CAISO Control Area, and if applicable, the LAR region in which the Unit is electrically interconnected.
3.5 Planned Outages.
Seller shall schedule all Planned Outages within the time period determined by the CAISO for the Unit as a Resource Adequacy Resource that is subject to the Availability Standards to qualify for an “Approved Maintenance Outage” under the CAISO Tariff. Seller shall reimburse Buyer for any cost Buyer incurs to provide Replacement RA, as required by the CAISO, during any Planned Outages (including the cost of procuring Replacement RA for a full calendar month during any month in which a Planned Outage is planned or scheduled). Notwithstanding anything in this Agreement to the contrary, no Planned Outages of the Unit shall be scheduled or planned from each June 1 through October 31 during the Delivery Term, unless approved by Buyer in writing in its sole discretion.
3.6 Alternate Capacity and Replacement Units.
(a) The “Notification Deadline” for a given Showing Month shall be fifteen (15) Business Days before the earlier of the relevant deadlines for (a) the corresponding CPUC RAR Showings, LAR Showings and/or FCR Showings, as applicable for that Showing Month, or (b) submission of the CAISO Supply Plan filings applicable to that Showing Month. (b) If Seller is unable to provide the full Contract Quantity for any Showing Month for any reason, or if Seller desires to provide the Contract Quantity for any Showing Month from a Replacement Unit, then Seller may, at no additional cost to Buyer, provide Buyer with Alternate Capacity from one or more Replacement Units, with the total amount of Product provided to Buyer from the Unit and any Replacement Unit(s) up to an amount equal to the Contract Quantity for the applicable Showing Month; provided, in each case, Seller shall notify Buyer of the amount of Product that Seller will not be able to deliver from the Unit and the portion of the Contract Quantity for which Seller intends to provide Buyer with Alternate Capacity from identified Replacement Unit(s) no later than the Notification Deadline.
(c) If Seller fails to provide Buyer the Contract Quantity of Product from the Unit or a Replacement Unit for a given Showing Month during the Delivery Term, then Buyer may, but shall not be required to, purchase replacement Product from a third party.
3.7 Delivery of Product.
Seller shall provide Buyer with the Designated RA Capacity of Product for each Showing Month consistent with the following:
(a) No later than the Notification Deadline corresponding to each Showing Month of the Delivery Term, Seller shall submit, or cause the Unit’s Scheduling Coordinator to submit, Supply Plans to identify and confirm the Designated RA Capacity provided to Buyer for each CONFIDENTIAL: EXECUTION VERSION
19 Showing Month so that the total amount of Designated RA Capacity identified and confirmed for such Showing Month equals the Designated RA Capacity, unless specifically requested not to do so by the Buyer.
(b) The Designated RA Capacity is delivered and received when the CIRA Tool shows that the Supply Plan submitted in compliance with Buyer’s instructions, including Buyer’s instructions to withhold all or part of the Designated RA Capacity from Seller’s Supply Plan for any Showing Month during the Delivery Term, has been accepted by the CAISO. If CAISO rejects either the Supply Plan or Buyer’s Resource Adequacy Plan with respect to any part of the Designated RA Capacity in any Showing Month, the Parties will confer, make such corrections as are necessary for acceptance, and resubmit the corrected Supply Plan or Resource Adequacy Plan for validation before the applicable Notification Deadline for the relevant Showing Month. (c) Consistent with the Substitution Rules, take all action, or cause each Unit’s Scheduling Coordinator to take all action, to allow Buyer or a subsequent purchaser under Article 12 to utilize the Contract Quantity during each Showing Month under the Substitution Rules, including, but not limited to, ensuring that the Designated RA Capacity being provided in the pertinent Showing Month will qualify for substitution under the Substitution Rules and providing Buyer or subsequent purchaser under Article 12 with all information needed to utilize the Substitution Rules.
3.8 Damages for Failure to Provide Designated RA Capacity.
If Seller fails to provide Buyer with the Designated RA Capacity of Product for any Showing Month, and such failure is not excused under the terms of this Agreement, then the following shall apply:
(a) Buyer may, but shall not be required to, replace any portion of the Designated RA Capacity not provided by Seller with capacity having equivalent RAR Attributes, LAR Attributes and/or FCR Attributes as the Designated RA Capacity not provided by Seller; provided, if any portion of the Designated RA Capacity that Buyer is seeking to replace is Designated RA Capacity having RAR Attributes and no LAR Attributes, and no such RAR capacity is available (such capacity shall also include FCR Attributes if this is a Flexible RA Product), then Buyer may replace such portion of the Designated RA Capacity with capacity having RAR Attributes and LAR Attributes (as well as FCR Attributes if this is a Flexible RA Product) (“Replacement Capacity”), in either case, by entering into purchase transactions with one or more third parties, including, without limitation, third parties who have purchased capacity from Buyer, so long as such transactions are done at prevailing market prices. Buyer shall use commercially reasonable efforts to minimize damages when procuring any Replacement Capacity. (b) Seller shall pay to Buyer, on the date payment would otherwise be due in respect of the Showing Month for which the failure occurred, an amount equal to the positive difference, if any, between (A) the product of the Capacity Replacement Price times the amount of the Designated RA Capacity not provided by Seller and (B) the product of the Contract Price times the amount of the Designated RA Capacity not provided by Seller. If Seller fails to pay these damages, then Buyer may offset those damages owed it against any future amounts it may owe to Seller pursuant to Article 6 of this Agreement.
CONFIDENTIAL: EXECUTION VERSION
20 3.9 Indemnities for Failure to Deliver Contract Quantity.
Seller agrees to indemnify, defend and hold harmless Buyer from any penalties, fines or costs assessed against Buyer by the CPUC or the CAISO, resulting from any of the following:
(a) Seller’s failure to provide any portion of the Designated RA Capacity for the respective Showing Month for the Delivery Term; or
(b) A Unit Scheduling Coordinator’s failure to submit accurate Supply Plans that identify Buyer’s right, or a subsequent purchaser’s right, to the Designated RA Capacity purchased hereunder.
With respect to the foregoing, the Parties shall use commercially reasonable efforts to minimize such penalties, fines and costs; provided, in no event shall Buyer be required to use or change its utilization of its owned or controlled assets or market positions to minimize these costs, penalties and fines. If Seller fails to pay the foregoing penalties, fines or costs, or fails to reimburse Buyer for those penalties, fines or costs, then Buyer may offset those penalties, fines or costs against any future amounts it may owe to Seller under this Agreement.
3.10 Monthly RA Capacity Payment.
Buyer shall make a Monthly RA Capacity Payment to Seller for the Unit, in arrears, after the applicable Showing Month. The Parties agree that all invoices under this Agreement shall be due and payable on the twentieth (20th) day of the month after the Showing Month; provided, if such day is not a Business Day, then such invoice will be due and payable on the next Business Day.
The Unit’s “Monthly RA Capacity Payment” shall be equal to the product of (i) the applicable Contract Price for that Showing Month, (ii) the Designated RA Capacity of the Product actually delivered by Seller to Buyer for the Showing Month and (iii) 1,000. The final product of this Monthly RA Capacity Payment calculation shall be rounded to the nearest penny (i.e., two decimal places).
3.11 Allocation of Other Payments and Costs.
(a) Seller may retain any revenues it may receive from, and shall pay all costs charged by, the CAISO or any other third party with respect to any Unit for (i) start-up, shut-down, and minimum load costs, (ii) capacity revenue for ancillary services, (iii) energy sales, (iv) any revenues for black start or reactive power services, or (v) the sale of the unit-contingent call rights on the storage capacity of the Unit to provide energy to a third party, so long as such rights do not confer on such third party the right to claim any portion of the RA Capacity sold hereunder in order to make an RAR Showing, LAR Showing, FCR Showing, or any similar capacity or resource adequacy showing with the CAISO or CPUC.
(b) Buyer shall be entitled to receive and retain all revenues associated with the Designated RA Capacity of the Unit during the Delivery Term (including any capacity or availability revenues from RMR Contracts for any Unit, Reliability Compensation Services Tariff, and Residual Unit Commitment capacity payments, but excluding payments described in Section
3.11(a) above).
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21 (c) In accordance with Section 3.10 of this Agreement:
(i) all such Buyer revenues described in Section 3.11(b) received by Seller, or a Unit’s Scheduling Coordinator, owner, or operator shall be remitted to Buyer, and Seller shall pay such revenues to Buyer if the Unit’s Scheduling Coordinator, owner, or operator fails to remit those revenues to Buyer (and upon any such payment by Seller, Seller shall be subrogated to all rights of Buyer against such Unit’s Scheduling Coordinator, owner, or operator for the amount of such revenues paid). If Seller fails to pay such revenues to Buyer, Buyer may offset any amounts owing to it for such revenues against any future amounts it may owe to Seller under this Agreement.
(ii) all such Seller, or a Unit’s Scheduling Coordinator, owner, or operator revenues described in Section 3.11(a)(i)-(v), but received by Buyer shall be remitted to Seller, and Buyer shall pay such revenues to Seller if the Unit’s Scheduling Coordinator, owner, or operator fails to remit those revenues to Seller (and upon any such payment by Buyer, Buyer shall be subrogated to all rights of Seller against such Unit’s Scheduling Coordinator, owner, or operator for the amount of such revenues paid). If Buyer fails to pay such revenues to Seller, Seller may offset any amounts owing to it for such revenues against any future amounts it may owe to Buyer under this Agreement. (d) If a centralized capacity market develops within the CAISO or WECC region, Buyer will have exclusive rights to offer, bid, or otherwise submit Designated RA Capacity provided to Buyer pursuant to this Agreement for re-sale in such market, and retain and receive any and all related revenues. Buyer shall be responsible for any material, incremental costs of offering, bidding, submitting, or re-selling Designated RA Capacity in such centralized capacity market.
(e) Buyer acknowledges and agrees that all Availability Incentive Payments are for the benefit of Seller and for Seller’s account, and that Seller shall receive, retain, or be entitled to receive all credits, payments, and revenues, if any, resulting from Seller achieving or exceeding Availability Standards. The Parties acknowledge and agree that any Non-Availability Charges are the responsibility of Seller, and for Seller’s account and Seller shall be responsible for all fees, charges, or penalties, if any, resulting from Seller failing to achieve Availability Standards.
3.12 Force Majeure.
To the extent either Party is prevented by Force Majeure from carrying out, in whole or part, its obligations under this Agreement and such Party (the “Claiming Party”) gives notice and details of the Force Majeure to the other Party as soon as practicable, then, unless the terms of the Product specify otherwise, the Claiming Party shall be excused from the performance of its obligations with respect to this Agreement (other than the obligation to make payments then due or becoming due with respect to performance prior to the Force Majeure). The Claiming Party shall resume performance of its obligations under this Agreement as soon as reasonably practicable. The non-Claiming Party shall not be required to perform or resume performance of its obligations to the Claiming Party corresponding to the obligations of the Claiming Party excused by Force Majeure.
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22 ARTICLE 4: CAISO OFFER REQUIREMENTS
During the Delivery Term, except to the extent the Unit is in an Outage, or is affected by an event of Force Majeure that results in a partial or full Outage of the Unit, Seller shall either schedule or cause the Unit’s Scheduling Coordinator to schedule with, or make available to, the CAISO the Unit’s Designated RA Capacity in compliance with the Tariff, including compliance with Minimum State of Charge, Day-Ahead Availability, Real-Time Availability, Must Offer Obligation, and Default Energy Bid requirements established in Article 40 of the Tariff and Seller shall perform all, or cause the Unit’s Scheduling Coordinator, owner, or operator, as applicable, to perform all obligations under the Tariff that are associated with the sale of Product hereunder. (the “CAISO Offer Requirements”). Buyer shall have no liability for the failure of Seller or the failure of any Unit’s Scheduling Coordinator, owner, or operator to comply with such Tariff provisions, including any penalties or fines imposed on Seller or the Unit’s Scheduling Coordinator, owner, or operator for such noncompliance.
ARTICLE 5: EVENTS OF DEFAULT; REMEDIES
5.1 Events of Default.
An “Event of Default” shall mean, with respect to a Party (a “Defaulting Party”), the occurrence of any of the following:
(a) the failure to make, when due, any payment required pursuant to this Agreement if such failure is not remedied within ten (10) Business Days after written notice; (b) any representation or warranty made by such Party herein is false or misleading in any material respect when made or when deemed made or repeated and such Party does not fully mitigate the adverse consequences as reasonably determined by the other Party of such incorrect representation or warranty to the other Party within thirty (30) days after written notice thereof; (c) the failure to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default, and except for such Party’s obligations to deliver or receive the Product, the exclusive remedy for which is provided in Section 3.8 and 3.9) if such failure is not remedied within thirty (30) Business Days after written notice;
(d) if at any time, Seller delivers or attempts to deliver Product to the Delivery Point for sale under this Agreement that was not generated by the Unit, except for Alternate Capacity; (e) Seller sells, assigns, or otherwise transfers, or commits to sell, assign, or otherwise transfer, the Product, or any portion thereof, during the Term to any party other than Buyer except as expressly permitted under this Agreement;
(f) such Party becomes Bankrupt;
(g) such Party assigns this Agreement or any of its rights hereunder other than in compliance with Section 17.3, if applicable;
CONFIDENTIAL: EXECUTION VERSION
23 (h) the failure of such Party to satisfy the creditworthiness/collateral requirements agreed to pursuant to Article 14 hereof if such failure is not remedied within ten (10) Business Days after written notice;
(i) such Party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer, the resulting, surviving or transferee entity fails to assume all the obligations of such Party under this Agreement to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other Party; or (j) with respect to any outstanding Letter of Credit provided for the benefit of Buyer that is not then required under this Agreement to be canceled or returned, the failure by Seller to provide for the benefit of Buyer either (1) cash, or (2) a substitute Letter of Credit from a different issuer meeting the criteria set forth in the definition of Letter of Credit, in each case, in the amount required hereunder within ten (10) Business Days after Seller receives Notice of the occurrence of any of the following events:
(i) the issuer of the outstanding Letter of Credit shall fail to maintain a Credit Rating of at least by Moody’s;
(ii) the issuer of such Letter of Credit becomes Bankrupt; (iii) the issuer of the outstanding Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit and such failure shall be continuing after the lapse of any applicable grace period permitted under such Letter of Credit; (iv) the issuer of the outstanding Letter of Credit shall fail to honor a properly documented request to draw on such Letter of Credit;
(v) the issuer of the outstanding Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; (vi) such Letter of Credit fails or ceases to be in full force and effect at any time; or
(vii) Seller shall fail to renew or cause the renewal of each outstanding Letter of Credit on a timely basis as provided in the relevant Letter of Credit and as provided in accordance with this Agreement.
5.2 Declaration of an Early Termination Date and Calculation of Settlement Amounts.
If an Event of Default with respect to a Defaulting Party shall have occurred and be continuing, the other Party (the “Non-Defaulting Party”) shall have the right to (i) designate a day, no earlier than the day such notice is effective and no later than twenty (20) days after such notice is effective, as an early termination date (“Early Termination Date”) to accelerate all amounts owing between the Parties and to liquidate and terminate this Agreement (referred to herein as a “Terminated Transaction”) between the Parties, (ii) withhold any payments due to the Defaulting Party under this Agreement; and (iii) suspend performance. If the Early Termination Date occurs before the CONFIDENTIAL: EXECUTION VERSION
24 Initial Delivery Date, then no Settlement Amount shall be owed by either Party. If the Early Termination Date occurs after the Initial Delivery Date, then as soon as reasonably practicable, the Non-Defaulting Party shall calculate, in a commercially reasonable manner, a Settlement Amount for such Terminated Transaction as of the Early Termination Date (or, to the extent that in the reasonable opinion of the Non-Defaulting Party certain of such Terminated Transaction are commercially impracticable to liquidate and terminate or may not be liquidated and terminated under applicable law on the Early Termination Date, as soon thereafter as is reasonably practicable). The Gains and Losses for a Terminated Transaction shall be determined by calculating the amount that would be incurred or realized to replace or to provide the economic equivalent of the remaining payments or deliveries in respect of the Terminated Transaction. The Non-Defaulting Party (or its agent) may determine its Gains and Losses by reference to information either available to it internally or supplied by one or more third parties including, without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets. Third parties supplying such information may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors and other sources of market information. If the Non-Defaulting Party’s Costs and Losses exceed its Gains, then the Settlement Amount shall be an amount owing to the Non-Defaulting Party. If the Non-Defaulting Party’s Gains exceed its Costs and Losses, then the Settlement Amount shall be zero dollars ($0).
5.3 Net Out of Settlement Amounts.
The Non-Defaulting Party shall net out (a) any Settlement Amount that is due to the Non-Defaulting Party, plus, (b) at the option of the Non-Defaulting Party, any cash or other form of security then available to the Non-Defaulting Party pursuant to Article 14, plus (c) any or all other amounts due to the Non-Defaulting Party under this Agreement against (d) all amounts that are due to the Defaulting Party, so that all such amounts shall be netted out to a single liquidated amount (the “Termination Payment”) payable by one Party to the other. The Termination Payment shall be due to or due from the Non-Defaulting Party as appropriate.
5.4 Notice of Payment of Termination Payment.
As soon as practicable after a liquidation, notice shall be given by the Non-Defaulting Party to the Defaulting Party of the amount of the Termination Payment and whether the Termination Payment is due to or due from the Non-Defaulting Party. The notice shall include a written statement explaining in reasonable detail the calculation of such amount. The Termination Payment shall be made by the Party that owes it within ten (10) days after such notice is effective.
5.5 Disputes with Respect to Termination Payment.
If the Defaulting Party disputes the Non-Defaulting Party’s calculation of the Termination Payment, in whole or in part, the Defaulting Party shall, within ten (10) days of receipt of Non-Defaulting Party’s calculation of the Termination Payment, provide to the Non-Defaulting Party a detailed written explanation of the basis for such dispute; provided, however, that if the Termination Payment is due from the Defaulting Party, the Defaulting Party shall first transfer Performance Security to the Non-Defaulting Party in an amount equal to the Termination Payment.
CONFIDENTIAL: EXECUTION VERSION
25 5.6 Closeout Setoffs.
After calculation of a Termination Payment in accordance with Section 5.3, if the Defaulting Party would be owed the Termination Payment, the Non-Defaulting Party shall be entitled, at its option and in its discretion, to (i) set off against such Termination Payment any amounts due and owing by the Defaulting Party to the Non-Defaulting Party under any other agreements, instruments or undertakings between the Defaulting Party and the Non-Defaulting Party and/or (ii) to the extent the Agreement is not yet liquidated in accordance with Section 5.2, withhold payment of the Termination Payment to the Defaulting Party. The remedy provided for in this Section 5.6 shall be without prejudice and in addition to any right of setoff, combination of accounts, lien or other right to which any Party is at any time otherwise entitled (whether by operation of law, contract or otherwise).
ARTICLE 6: PAYMENT AND NETTING
6.1 Billing Period.
The calendar month shall be the standard period for all payments under this Agreement (other than Termination Payments). As soon as practicable after the end of each month, each Party will render to the other Party an invoice for the payment obligations, if any, incurred hereunder during the preceding month.
6.2 Timeliness of Payment.
Unless otherwise agreed by the Parties, all invoices under this Agreement shall be due and payable in accordance with each Party’s invoice instructions on or before the later of the twentieth (20th) day of each month, or tenth (10th) day after receipt of the invoice or, if such day is not a Business Day, then on the next Business Day. Each Party will make payments by electronic funds transfer, or by other mutually agreeable method(s), to the account designated by the other Party. Any amounts not paid by the due date will be deemed delinquent and will accrue interest at the Interest Rate, such interest to be calculated from and including the due date to but excluding the date the delinquent amount is paid in full.
6.3 Disputes and Adjustments of Invoices.
A Party may, in good faith, dispute the correctness of any invoice or any adjustment to an invoice, rendered under this Agreement or adjust any invoice for any arithmetic or computational error within twelve (12) months of the date the invoice, or adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be required to be made when due, with notice of the objection given to the other Party. Any invoice dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment. Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of the dispute, any required payment shall be made within five (5) Business Days of such resolution along with interest accrued at the Interest Rate from and including the due date to but excluding the date paid.
Inadvertent overpayments shall be returned upon request or deducted by the Party receiving such overpayment from subsequent payments, with interest accrued at the Interest Rate from and including the date of such overpayment to but excluding the date repaid or deducted by the Party CONFIDENTIAL: EXECUTION VERSION
26 receiving such overpayment. Any dispute with respect to an invoice is waived unless the other Party is notified in accordance with this Section 6.3 within twelve (12) months after the invoice is rendered or any specific adjustment to the invoice is made. If an invoice is not rendered within twelve (12) months after the close of the month during which performance occurred, the right to payment for such performance is waived.
6.4 Netting of Payments.
The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other under this Agreement on the same date through netting, in which case all amounts owed by each Party to the other Party for the purchase and sale of Product during the monthly billing period under this Agreement, including any related damages calculated pursuant to Sections 3.8 or 3.9, interest, and payments or credits, shall be netted so that only the excess amount remaining due shall be paid by the Party who owes it.
6.5 Payment Obligation Absent Netting.
If no mutual debts or payment obligations exist and only one Party owes a debt or obligation to the other during the monthly billing period, including, but not limited to, any related damage amounts calculated pursuant to Sections 3.8 or 3.9, interest, and payments or credits, that Party shall pay such sum in full when due.
6.6 Security.
Unless the Party benefiting from Performance Security notifies the other Party in writing, and except in connection with a liquidation and termination in accordance with Article 5, all amounts netted pursuant to this Article 6 shall not take into account or include any Performance Security which may be in effect to secure a Party’s performance under this Agreement.
ARTICLE 7: LIMITATIONS
7.1 Limitation of Remedies, Liability and Damages.
EXCEPT AS SET FORTH HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM THAT THE EXPRESS
REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY PROVISION FOR WHICH
AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS
REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH
PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL
DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY
SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR CONFIDENTIAL: EXECUTION VERSION
27 INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION
DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE
LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES
BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING
THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES
REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO
DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS
INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS.
ARTICLE 8: GOVERNMENTAL CHARGES
8.1 Cooperation.
Each Party shall use reasonable efforts to implement the provisions of and to administer this Agreement in accordance with the intent of the parties to minimize all taxes, so long as neither Party is materially adversely affected by such efforts.
8.2 Governmental Charges.
Seller shall pay or cause to be paid all taxes imposed by any government authority (“Governmental Charges”) on or with respect to the Product or a transaction arising prior to the Delivery Point.
Buyer shall pay or cause to be paid all Governmental Charges on or with respect to the Product or a transaction at and from the Delivery Point (other than ad valorem, franchise or income taxes which are related to the sale of the Product and are, therefore, the responsibility of the Seller). In the event Seller is required by law or regulation to remit or pay Governmental Charges which are Buyer’s responsibility hereunder, Buyer shall promptly reimburse Seller for such Governmental Charges. If Buyer is required by law or regulation to remit or pay Governmental Charges which are Seller’s responsibility hereunder, Buyer may deduct the amount of any such Governmental Charges from the sums due to Seller under Article 6 of this Agreement. Nothing shall obligate or cause a Party to pay or be liable to pay any Governmental Charges for which it is exempt under the law.
ARTICLE 9: [RESERVED]
ARTICLE 10: REPRESENTATIONS; WARRANTIES; COVENANTS
10.1 Mutual Representations and Warranties.
On the Effective Date, each Party represents and warrants to the other Party that:
CONFIDENTIAL: EXECUTION VERSION
28 (a) it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation;
(b) it has all regulatory authorizations necessary for it to legally perform its obligations under this Agreement, except all permits necessary to construct, operate and maintain the Unit and sell the Product therefrom in the case of Seller;
(c) the execution, delivery and performance of this Agreement are within its powers, have been duly authorized by all necessary action and do not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or any law, rule, regulation, order or the like applicable to it;
(d) this Agreement and each other document executed and delivered in accordance with this Agreement constitutes its legally valid and binding obligation enforceable against it in accordance with its terms; subject to any Equitable Defenses. (e) it is not Bankrupt and there are no proceedings pending or being contemplated by it or, to its knowledge, threatened against it which would result in it being or becoming Bankrupt; (f) there is not pending or, to its knowledge, threatened against it or any of its Affiliates any legal proceedings that could materially adversely affect its ability to perform its obligations under this Agreement;
(g) it is a “forward contract merchant” within the meaning of the United States Bankruptcy Code; and
(h) it has entered into this Agreement in connection with the conduct of its business and it has the capacity or ability to make or take delivery of Product.
10.2 Buyer and Seller Covenants.
Buyer and Seller shall, throughout the Delivery Term, take all commercially reasonable actions and execute any and all documents or instruments reasonably necessary to ensure Buyer’s right to the use of the Contract Quantity for the sole benefit of Buyer or any subsequent purchaser under Article 12. Such commercially reasonable actions shall include, without limitation:
(a) Cooperating with and providing, and in the case of Seller causing the Unit’s Scheduling Coordinator, owner, or operator to cooperate with and provide requested supporting documentation to the CAISO, the CPUC, or any other Governmental Body responsible for administering RAR, LAR, and/or FCR under Applicable Laws, to certify or qualify the Contract Quantity as RA Capacity and Designated RA Capacity. Such actions shall include, without limitation, providing information requested by the CAISO, CPUC, or by an LRA having jurisdiction, to demonstrate for each month of the Delivery Term the ability to deliver the Contract Quantity from the Unit to the CAISO Controlled Grid for the minimum hours required to qualify as RA Capacity, and providing information requested by the CPUC, CAISO or other Governmental Body having jurisdiction to administer RAR, LAR, or FCR to demonstrate that the Contract Quantity can be delivered to the CAISO Controlled Grid, pursuant to “deliverability” CONFIDENTIAL: EXECUTION VERSION
29 standards established by the CAISO, or other Governmental Body having jurisdiction to administer RAR, LAR and/or FCR; and
(b) Negotiating in good faith to make necessary amendments, if any, to this Agreement to conform it to subsequent clarifications, revisions, or decisions rendered by the CAISO, CPUC, FERC, or other Governmental Body having jurisdiction to administer RAR, LAR, or FCR so as to maintain the benefits of the bargain struck by the Parties on the Effective Date; provided, however, that such commercially reasonable actions shall not include any obligation that the owner or operator of the Unit undertake capital improvements, Unit enhancements, or the construction of new facilities nor in any way limit the Parties with respect to advocacy for any regulatory policies or market changes before any entity.
10.3 Seller Representations, Warranties and Covenants.
Seller represents, warrants and covenants to Buyer that:
(a) Throughout the Delivery Term, the Unit qualifies as a Resource Adequacy Resource that is eligible to provide the Product pursuant to the Tariff and the Resource Adequacy Rulings;
(b) Throughout the Delivery Term, Seller owns or has the exclusive right to the RA Capacity sold under this Agreement, and shall furnish Buyer, CAISO, CPUC or other jurisdictional LRA, or other Governmental Body with such evidence as may reasonably be requested to demonstrate such ownership or exclusive right;
(c) Throughout the Delivery Term, no portion of the Contract Quantity has been committed by Seller to any third party in order to satisfy RAR, LAR, FCR or analogous obligations in CAISO markets, other than pursuant to an RMR Contract between the CAISO and either Seller or the Unit’s owner or operator;
(d) Throughout the Delivery Term, no portion of the Contract Quantity has been committed by Seller in order to satisfy RAR, LAR, FCR, or analogous obligations in any non-CAISO market; (e) The Unit is within the CAISO Control Area and Seller shall maintain Site Control throughout the Delivery Term;
(f) Throughout the Delivery Term, the owner or operator of the Unit is obligated to comply with Applicable Laws, including the Tariff, relating to RA Capacity, RAR, LAR, and FCR;
(g) Throughout the Delivery Term, the respective cumulative amounts of LAR Attributes, RAR Attributes, and FCR Attributes that Seller has sold, assigned or transferred from the Unit does not exceed that Unit’s RA Capacity;
(h) Throughout the Delivery Term, with respect to the RA Capacity provided under this Agreement, Seller shall, and the Unit’s Scheduling Coordinator is obligated to, comply with Applicable Laws, including the Tariff, relating to RAR, LAR, and FCR; CONFIDENTIAL: EXECUTION VERSION
30 (i) Seller has notified the Scheduling Coordinator of the Unit that, throughout the Delivery Term, has transferred the Designated RA Capacity to Buyer, and the Scheduling Coordinator is obligated to deliver the Supply Plans in accordance with this Agreement and the Tariff;
(j) Seller has notified the Scheduling Coordinator of the Unit that Seller is obligated, throughout the Delivery Term, to cause the Unit’s Scheduling Coordinator to provide to the Buyer, at least fifteen (15) Business Days before the Notification Deadline, the Designated RA Capacity of the Unit that is to be submitted in the Supply Plan associated with this Agreement for the applicable period; and
(k) Seller has notified the Unit’s Scheduling Coordinator that, throughout the Delivery Term, Buyer is entitled to the revenues set forth in Section 3.11 of this Agreement and that such Scheduling Coordinator is obligated to promptly deliver those revenues to Buyer, along with appropriate documentation supporting the amount of those revenues.
10.4 Buyer Representations, Warranties and Covenants.
(a) Buyer warrants and covenants that with respect to its contractual obligations under this Agreement, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (1) suit, (2) jurisdiction of court (provided that such court is limited within a venue permitted in law and under the Agreement), (3) relief by way of injunction, order for specific performance or recovery of property, (4) attachment of assets, or (5) execution or enforcement of any judgment; provided, however, that nothing in this Agreement shall waive the obligations or rights set forth in the California Tort Claims Act (Government Code Section 810 et seq.).
ARTICLE 11: CONFIDENTIALITY
(a) Neither Party shall disclose the terms or conditions of this Agreement or information exchanged between the Parties pursuant to this Agreement (“Confidential Information”) to a third party (other than the Party’s or its Affiliates’ employees, lenders or potential lenders, investors or potential investors, counsel, accountants or advisors who have a need to know such information and have agreed to keep such terms confidential) except in order to fulfill such Party’s obligations under this Agreement or to comply with any applicable law, regulation, or any exchange, control area or independent system operator rule or in connection with any court or regulatory proceeding; provided, however, each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure. The Parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with, this confidentiality obligation.
(b) Notwithstanding the foregoing, the Parties agree that Buyer may disclose the information pertaining to this Agreement to any Governmental Body, the CPUC, the CAISO or any LRA having jurisdiction in order to support its LAR Showings, RAR Showings and/or FCR Showings, as applicable, and Seller may disclose the transfer of the Designated RA Capacity under this Agreement to the Scheduling Coordinator of the Unit in order for such Scheduling Coordinator to timely submit accurate Supply Plans; provided, each disclosing Party shall use reasonable CONFIDENTIAL: EXECUTION VERSION
31 efforts to limit, to the extent possible, the ability of any such applicable Governmental Body, CAISO, or Scheduling Coordinator to further disclose such information. In addition, in the event Buyer resells all or any portion of the Designated RA Capacity to another party, Buyer shall be permitted to disclose to the other party to such resale transaction all such information to the extent such disclosure is necessary to affect such resale transaction; provided, such other party agrees to keep such information confidential.
(c) Seller acknowledges that Buyer is subject to the California Constitution Article 1, Section 3, and the California Public Records Act, Cal. Gov. Code § 6250 et seq. (“Public Records Act”) in regard to the documents comprising this Agreement, which items may constitute public records subject to inspection and copying by the public under the authority of the California Constitution and the Public Records Act. Buyer shall, consistent with those laws, use reasonable efforts to provide Seller with notice of any third-party request to inspect or copy any of the documents that comprise this Agreement, which Seller might deem confidential and exempt from disclosure, in order that Seller may timely seek to protect those documents from disclosure to the third party. Seller acknowledges and agrees that Buyer shall not be liable to Seller if Buyer makes disclosure in accordance with the California Constitution and/or the Public Records Act before Seller has timely obtained an order to prevent Buyer from making the requested disclosure to the third party.
ARTICLE 12: BUYER’S RE-SALE OF PRODUCT
No less than fifteen (15) days prior to the Notification Deadline for any Showing Month of the Delivery Term, Buyer may provide written notice to Seller of Buyer’s intent to re-sell all or a portion of the Product and any associated rights, in each case, acquired under this Agreement. If Buyer re-sells all or a portion of the Product and any associated rights acquired under this Agreement in accordance with this Article 12 (“Resold Product”), Seller agrees, and agrees to cause the Unit’s Scheduling Coordinator, to follow Buyer’s reasonable instructions with respect to providing such Resold Product to subsequent purchasers of such Resold Product to the extent such instructions are consistent with Seller’s obligations under this Agreement. Seller further agrees, and agrees to cause the Unit’s Scheduling Coordinator, to take all commercially reasonable actions and execute any and all documents or instruments reasonably necessary to allow such subsequent purchasers to use such Resold Product in a manner consistent with Buyer’s rights under this Agreement. If Buyer incurs any liability to any purchaser of such Resold Product directly due to the failure of Seller or the Unit’s Scheduling Coordinator to comply with the terms of this Agreement, then Seller shall be liable to Buyer for any liabilities Seller would have incurred under this Agreement if Buyer had not resold the Product, including without limitation, pursuant to Sections 3.8 and 3.9.
In the event there is any Resold Product, Buyer agrees to notify Seller that such a sale has occurred and agrees to provide Seller with the information specified below promptly following such sale (and any other information reasonably requested by Seller so that Seller may perform its obligations in this Article 12) and promptly notify Seller of any subsequent changes to such information with respect to any particular sale: (i) benefitting load serving entity SC identification number (SCID), (ii) volume (in MW) of Resold Product, and (iii) subsequent sale delivery period for Resold Product.
CONFIDENTIAL: EXECUTION VERSION
32 ARTICLE 13: COMPLIANCE OBLIGATION
The Parties acknowledge and agree that a material purpose of this Agreement is to enable Buyer to satisfy its Compliance Obligation. If, at any time during the Term, the Unit is not qualified to produce Product, including RAR Attributes, LAR Attributes, and FCR Attributes, as applicable, including due to any action by the CPUC, CAISO or any Governmental Body having jurisdiction that results in any change in Applicable Law occurring after the Effective Date that changes the Resource Adequacy Requirements such that the Product can no longer be counted towards Buyer’s Compliance Obligation (a “Compliance Issue”), the Parties shall work in good faith to revise this Agreement so that the Parties can perform their obligations regarding the purchase and sale of Product sold hereunder in order to maintain the original intent; provided, however, in no event shall Seller be obligated to undertake capital improvements, Unit enhancements, or the construction of new facilities. If a Compliance Issue results in the Product not being able to be counted towards Buyer’s Compliance Obligation, and the Parties have not reached agreement on amendments within thirty (30) days after the initiation of discussions regarding the Compliance Issue that would allow the Product to be able to be counted towards Buyer’s Compliance Obligation, Buyer may terminate this Agreement upon written notice to Seller, which shall be effective the next Business Day after such notice is received, and any such termination shall be without liability to either Party, subject to payment of any amounts owing as of the effective date of such termination.
ARTICLE 14: COLLATERAL REQUIREMENTS
14.1 [Reserved].
14.2 Performance Security.
Seller shall deliver Performance Security to Buyer on or before the Initial Delivery Date. Seller shall maintain the Performance Security in full force and effect, and shall within ten (10) Business Days after any draws made by Buyer in accordance with this Agreement replenish the Performance Security, until the following have occurred: (a) the Delivery Term has expired or terminated early; and (b) all payment obligations of Seller then due and payable under thisAgreement, including compensation for penalties, termination damages, indemnification payments or other damages are paid in full (whether directly or indirectly such as through set-off or netting). Following the occurrence of both events, Buyer shall promptly return to Seller the unused portion of the Performance Security. If the Performance Security is a Letter of Credit and the issuer of such Letter of Credit (i) fails to maintain the minimum Credit Rating set forth in the definition of Letter of Credit, (ii) indicates its intent not to renew such Letter of Credit and such Letter of Credit expires prior to the end of the Delivery Term, or (iii) fails to honor Buyer’s properly documented request todraw on such Letter of Credit by such issuer, Seller shall have ten (10) Business Days to either post cash or deliver a substitute Letter of Credit that meets the requirements set forth in the definition of Performance Security.
14.3 First Priority Security Interest in Cash or Cash Equivalent Collateral. (a) To secure its obligations under this Agreement, and until released as provided herein, Seller hereby grants to Buyer a present and continuing first-priority security interest (“Security Interest”) in, and lien on (and right to net against), and assignment of the Performance CONFIDENTIAL: EXECUTION VERSION
33 Security, any other cash collateral and cash equivalent collateral posted under this Agreement, and any and all interest thereon or proceeds resulting therefrom or from the liquidation thereof, whether now or hereafter held by, on behalf of, or for the benefit of Buyer, and Seller agrees to take all action as Buyer reasonably requires in order to perfect Buyer’s Security Interest in, and lien on (and right to net against), such collateral and any and all proceeds resulting therefrom or from the liquidation thereof.
(b) Upon or any time after the occurrence of an Event of Default caused by Seller, an Early Termination Date resulting from an Event of Default caused by Seller, or an occasion provided for in this Agreement where Buyer is authorized to retain all or a portion of the Performance Security, Buyer may do any one or more of the following:
(i) Exercise any of its rights and remedies with respect to the Performance Security, as applicable, including any such rights and remedies under Applicable Law then in effect;
(ii) Draw on any outstanding Letter of Credit issued for its benefit and retain any cash held by Buyer as Performance Security; and
(iii) Liquidate Performance Security then held by or for the benefit of Buyer free from any claim or right of any nature whatsoever of Seller, including any equity or right of purchase or redemption by Seller.
Buyer shall apply the proceeds of the collateral realized upon the exercise of any such rights or remedies to reduce Seller’s obligations under this Agreement (Seller remains liable for any amounts owing to Buyer after such application), subject to Buyer’s obligation to return any surplus proceeds remaining after these obligations are satisfied in full.
ARTICLE 15: INSURANCE
15.1 Insurance.
Throughout the Term, Seller shall procure and maintain the following insurance coverage and require and cause its contractors to maintain the same levels of coverage. For the avoidance of doubt, the obligations of the Seller in this Section 15.1 constitute a material obligation of this Agreement.
(a) Workers’ Compensation and Employers’ Liability.
(i) If it has employees, workers’ compensation insurance indicating compliance with any applicable labor codes, acts, Applicable Laws or statutes, California state or federal, where Seller performs Work.
(ii) Employers’ liability insurance will not be less than for injury or death occurring as a result of each accident. With regard to bodily injury by disease, the policy limit will apply to each
employee.
CONFIDENTIAL: EXECUTION VERSION
34 (b) Commercial General Liability.
(i) Commercial general liability insurance, including products and completed operations and personal injury insurance, in a minimum amount of per occurrence, and an annual aggregate of not less than endorsed to provide contractual liability in said amount (subject to policy terms and conditions), specifically covering Seller’s insurable indemnity obligations under this Agreement and including Buyer as an additional insured but only to the extent of Seller’s insurable indemnity obligations under this Agreement. Limits may be satisfied through a combination of primary and excess policies.
(ii) An umbrella insurance policy in a minimum limit of liability of (iii) Defense costs shall be provided as an additional benefit and not included within the limits of liability. Such insurance shall contain standard cross-liability and severability of interest provisions.
(c) Business Auto.
(i) Business auto insurance for bodily injury and property damage with limits of per occurrence.
(ii) Such insurance shall cover liability arising out of Seller’s use of all owned (if any), non-owned and hired vehicles, including trailers or semi-trailers in the performance of the Agreement.
(d) Construction All-Risk Insurance.
(i) During the construction of the Unit prior to the Initial Delivery Date, construction all-risk form property insurance covering the Unit during such construction periods, and naming Seller (and Lender if any) as the loss payee. (e) Contractor’s Pollution Liability.
(i) If the scope of Work involves areas of known pollutants or contaminants, Seller shall maintain or require to be maintained, pollution liability coverage for bodily injury, property damage, including clean-up costs and defense costs resulting from sudden, and accidental conditions, including the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, hydrocarbons, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water shall be maintained.
(ii) The limit will be at least each
occurrence for bodily injury and property damage.
(iii) The policy will endorse Buyer as additional insured but only to the extent of Seller’s insurable indemnity obligations under this Agreement.
CONFIDENTIAL: EXECUTION VERSION
35 15.2 Evidence of Insurance.
Within ten (10) days after the Effective Date and upon annual renewal thereafter, Seller shall deliver to Buyer certificates of insurance evidencing the coverage required under this Agreement.
These certificates shall specify that Buyer shall be given at least thirty (30) days prior notice by Seller in the event of any cancellation or termination of coverage, except ten (10) days for nonpayment of premium. With the exception of Workers Compensation/Employers Liability, such insurance shall be primary coverage without right of contribution from any insurance of Buyer.
ARTICLE 16: UNIT CONSTRUCTION AND INITIAL DELIVERY DATE
16.1 Construction of the Unit.
(a) Construction Start. “Construction Start” will occur upon satisfaction of the following: (i) Seller has acquired the applicable regulatory authorizations, approvals and permits required for the commencement of construction of the Unit, (ii) Seller has engaged all contractors and ordered all essential equipment and supplies as, in each case, can reasonably be considered necessary so that physical construction of the Unit may begin and proceed to completion without foreseeable interruption of material duration, and (iii) Seller has executed an engineering, procurement, and construction contract (or equivalent agreements) and issued thereunder a notice to proceed or its equivalent that authorizes the contractor to mobilize to Site and begin physical construction of the Unit at the Site. The date of Construction Start will be evidenced by and subject to Seller’s delivery to Buyer of a certificate substantially in the form attached as Exhibit B hereto, and the date certified therein shall be the “Construction Start Date.” (b) Progress Reports. The Parties agree time is of the essence in regard to the Agreement. Within fifteen (15) days after the close of (i) each calendar quarter from the first calendar quarter following the Effective Date until the Construction Start Date and (ii) each calendar month from the first calendar month following the Construction Start Date until the Initial Delivery Date, Seller shall provide to Buyer a Progress Report and agree to regularly scheduled meetings between representatives of Buyer and Seller to review such monthly reports and discuss Seller’s construction progress. The form of the Progress Report is set forth in Exhibit F. Seller shall also provide Buyer with any reasonable requested documentation (subject to confidentiality restrictions) directly related to the achievement of Milestones within ten (10) Business Days of receipt of such request by Seller. Seller shall also provide Buyer with any information in Seller’s possession that is reasonably requested by Buyer for Buyer to demonstrate to the CPUC, CAISO, or other Governmental Bodies that Buyer has met its applicable resource adequacy requirements, including providing status reports to the CPUC with respect to the Unit.
16.2 Initial Delivery Date.
(a) Initial Delivery. “Initial Delivery” means the condition existing when Seller has fulfilled all of the conditions precedent in Section 2.2 of the Agreement and provided notice to Buyer substantially in the form of Exhibit C. Seller shall cause Initial Delivery for the Unit to occur by the Guaranteed Initial Delivery Date, as such date may be extended by a Development Cure Period pursuant to pursuant to Section 16.2(c) subject to the limitations in Section 16.2(d).
CONFIDENTIAL: EXECUTION VERSION
36 (b) Reduction to Contract Quantity. If, on the Initial Delivery Date, Seller shall have obtained an NQC and/or EFC, as applicable, for the Unit from the CPUC that is less than the Contract Quantity of RAR Attributes and/or FCR Attributes set forth on the Cover Sheet as of the Effective Date, as applicable, then the following sections of this Agreement shall be automatically amended: (i) the Unit NQC and/or Unit EFC in Section B of the Cover Sheet shall be revised to equal the maximum amount of NQC and/or EFC, as applicable, established for the Unit by the CPUC; (ii) the Contract Quantities in Section E of the Cover Sheet shall be revised to equal the maximum amount of NQC and/or EFC, as applicable, established for the Unit by the CPUC; (iii) the Contract Quantity of LAR Attributes, if applicable, shall equal the revised Contract Quantity of RAR Attributes; and (iv) the quantity of NQC set forth in Section 2.2(h) shall be revised to equal the maximum amount of NQC established for the Unit by the CPUC, if such amount is less than the amount set forth in Section 2.2(h) as of the Effective Date. (c)
(e) Termination for Failure to Achieve Initial Delivery Date. If the Unit has not achieved Initial Delivery on or before the Guaranteed Initial Delivery Date, as such date may be extended by a Development Cure Period pursuant to pursuant to Section 16.2(c) subject to the limitations in Section 16.2(d), then Buyer may terminate this Agreement upon written notice to Seller, which termination shall be effective the next Business Day after such notice is received, and any such termination shall be without liability to Seller, subject to payment of any amounts owing as of the effective date of such termination and provided that Seller shall be subject to Section 16.2(f).
(f) Limitation on Seller’s Ability to Make or Agree to Third-Party Sales from the Unit after Early Termination Date. If this Agreement is terminated by either Party prior to the Initial Delivery Date for any reason other than a Buyer Event of Default, neither Seller nor Seller’s Affiliates may sell, market or deliver any Product associated with or attributable to the Unit to a CONFIDENTIAL: EXECUTION VERSION
37 party other than Buyer for a period of two (2) years following such termination, unless prior to selling, marketing or delivering such Product, or entering into the agreement to sell, market or deliver such Product to a party other than Buyer, Seller or Seller’s Affiliates provide Buyer with a written offer to sell the Product on terms and conditions materially similar to the terms and conditions contained in this Agreement (including price) and Buyer fails to accept such offer within forty-five (45) days of Buyer’s receipt thereof. Neither Seller nor Seller’s Affiliates may sell or transfer the Unit, or any part thereof, or land rights or interests in the Site (including the interconnection queue position of the Unit) so long as the limitations contained in this Section
16.2(f) apply, unless the transferee agrees to be bound by the terms set forth in this Section 16.2(f) pursuant to a written agreement approved by Buyer in its reasonable discretion. Seller shall indemnify and hold Buyer harmless from all benefits lost and other damages sustained by Buyer as a result of any breach by Seller of its covenants contained within this Section 16.2(f).
ARTICLE 17: MISCELLANEOUS
17.1 Title and Risk of Loss.
Title to and risk of loss related to the Product shall transfer from Seller to Buyer at the Delivery Point. Seller warrants that it will deliver to Buyer the Designated RA Capacity free and clear of all liens, security interests, claims and encumbrances or any interest therein or thereto by any person arising prior to the Delivery Point.
17.2 Indemnity.
(a) Indemnity by Seller. Seller shall release, indemnify and hold harmless Buyer or Buyers’ respective directors, officers, agents, and representatives against and from any and all loss, Claims, actions or suits, including costs and attorney’s fees associated with damage to third parties resulting from, or arising out of or in any way connected with Seller’s operation and/or maintenance of the Unit, including without limitation any loss, Claim, action or suit, for or on account of injury to, bodily or otherwise, or death of persons, or for damage to or destruction of property belonging to such third parties, excepting only such loss, Claim, action or suit as may be caused solely by the willful misconduct or gross negligence of Buyer, its Affiliates, or Buyers’ and Affiliates’ respective agents, employees, directors, or officers. (b) Indemnity by Buyer. Buyer shall release, indemnify and hold harmless Seller, its directors, officers, agents, and representatives against and from any and all loss, Claims, actions or suits, including costs and attorney’s fees associated with damage to third parties resulting from, or arising out of or in any way connected with Buyer’s access to the Unit site, including any loss, Claim, action or suit, for or on account of injury to, bodily or otherwise, or death of persons, or for damage to or destruction of property belonging to such third parties, excepting only such loss, Claim, action or suit as may be caused solely by the willful misconduct or gross negligence of Seller, its Affiliates, or Seller’s and Affiliates’ respective agents, employees, directors or officers. (c) No Dedication. Without limitation of each Party’s obligations under Sections
17.2(a) and 17.2(b) herein, nothing in this Agreement shall be construed to create any duty to, any standard of care with reference to, or any liability to any person or entity not a Party to this Agreement. No undertaking by one Party to the other under any provision of this Agreement shall CONFIDENTIAL: EXECUTION VERSION
38 constitute the dedication of that Party’s system or any portion thereof to the other Party or the public, nor affect the status of Buyer as an independent public utility corporation or Seller as an independent individual or entity.
17.3 Assignment.
Neither Party shall assign this Agreement or its rights hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, Seller may, without the consent of Buyer (and without relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber or assign this Agreement or the accounts, revenues or proceeds hereof in connection with any financing or other financial arrangements, (ii) transfer or assign this Agreement to an affiliate of such Party which affiliate’s creditworthiness is equal to or higher than that of such Party, or (iii) transfer or assign this Agreement to any person or entity succeeding to all or substantially all of the assets whose creditworthiness is equal to or higher than that of such Party; provided, however, that in the case of any such assignment pursuant to clause (ii) or clause (iii), any such assignee shall agree in writing to be bound by the terms and conditions hereof and so long as the transferring Party delivers such tax and enforceability assurance as the non-transferring Party may reasonably request. In connection with any financing or refinancing of the Unit by Seller, Buyer shall in good faith negotiate and agree upon a consent to collateral assignment of this Agreement in a form that is commercially reasonable and customary in the industry.
17.4 Governing Law and Venue.
This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced and performed in accordance with the laws of the state of California, without regard to principles of conflicts of Law. To the extent enforceable at such time, each Party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this Agreement. Each of the Parties irrevocably and unconditionally agrees that any suit, action or other proceeding arising out of or relating to this Agreement, the transactions contemplated hereby, any provision hereof or the breach, performance, enforcement or validity or invalidity of this Agreement or any provision hereof shall be filed in either the United States District Court for the Southern District of California or the Superior Court of California, County of San Diego, as appropriate (and agrees not to commence any suit, action or proceeding relating thereto except in such courts). Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, the transactions contemplated hereby, any provision hereof or the breach, performance, enforcement or validity or invalidity of this Agreement or any provision hereof in the United States District Court for the Southern District of California or the Superior Court of California, County of San Diego, as appropriate, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, each Party agrees that a final judgment (i.e., judgment after any appeals that may be duly made) in any suit, action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment in any jurisdiction or in any other manner provided in law or in equity.
CONFIDENTIAL: EXECUTION VERSION
39 17.5 Notices.
All notices, requests, statements or payments shall be made as specified in Exhibit G. Notices (other than scheduling requests) shall, unless otherwise specified herein, be in writing and may be delivered by hand delivery, United States mail, overnight courier service or facsimile. Notice by facsimile or hand delivery shall be effective at the close of business on the day actually received, if received during business hours on a Business Day, and otherwise shall be effective at the close of business on the next Business Day. Notice by overnight United States mail or courier shall be effective on the next Business Day after it was sent. A Party may change its addresses by providing notice of same in accordance herewith.
17.6 Mobile-Sierra.
Absent the agreement of all Parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of this Agreement, whether proposed by a Party (to the extent that any waiver below is unenforceable or ineffective as to such Party), a non-party or FERC acting sua sponte, shall be the ‘public interest’ standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956), and clarified by Morgan Stanley Capital Group, Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008); NRG Power Marketing LLC v.
Maine Public Utility Commission, 558 U.S. 527 (2010.
Notwithstanding any provision of this Agreement, and absent the prior written agreement of the Parties, each Party, to the fullest extent permitted by Applicable Laws, for itself and its respective successors and assigns, hereby also expressly and irrevocably waives any rights it can or may have, now or in the future, whether under Sections 205, 206, or 306 of the Federal Power Act or otherwise, to seek to obtain from FERC by any means, directly or indirectly (through complaint, investigation, supporting a third party seeking to obtain or otherwise), and each hereby covenants and agrees not at any time to seek to so obtain, an order from FERC changing any section of this Agreement specifying any rate or other material economic terms and conditions agreed to by the Parties.
17.7 General.
This Agreement (including the exhibits, schedules and any written supplements hereto, if any) constitutes the entire agreement between the Parties relating to the subject matter.
Notwithstanding the foregoing, any collateral, credit support or margin agreement or similar arrangement between the Parties shall, upon designation by the Parties, be deemed part of this Agreement and shall be incorporated herein by reference. This Agreement shall be considered for all purposes as prepared through the joint efforts of the parties and shall not be construed against one party or the other as a result of the preparation, substitution, submission or other event of negotiation, drafting or execution hereof. Except to the extent herein provided for, no amendment or modification to this Agreement shall be enforceable unless reduced to writing and executed by both Parties. Each Party agrees if it seeks to amend any applicable wholesale power sales tariff during the term of this Agreement, such amendment will not in any way affect outstanding transactions under this Agreement without the prior written consent of the other Party. Each Party further agrees that it will not assert, or defend itself, on the basis that any applicable tariff is inconsistent with this Agreement. This Agreement shall not impart any rights enforceable by any CONFIDENTIAL: EXECUTION VERSION
40 third party (other than a permitted successor or assignee bound to this Agreement). Waiver by a Party of any default by the other Party shall not be construed as a waiver of any other default. Any provision declared or rendered unlawful by any applicable court of law or regulatory agency or deemed unlawful because of a statutory change (individually or collectively, such events referred to as “Regulatory Event”) will not otherwise affect the remaining lawful obligations that arise under this Agreement; provided, further, that if a Regulatory Event occurs, the Parties shall use commercially reasonable efforts to reform this Agreement in order to give effect to the original intention of the Parties. The term “including” when used in this Agreement shall be by way of example only and shall not be considered in any way to be in limitation. The headings used herein are for convenience and reference purposes only. All indemnity and audit rights shall survive the termination of this Agreement for twelve (12) months. This Agreement shall be binding on each Party’s successors and permitted assigns.
17.8 Audit.
Each Party has the right, at its sole expense and during normal working hours, to examine the records of the other Party to the extent reasonably necessary to verify the accuracy of any statement, charge or computation made pursuant to this Agreement. If requested, a Party shall provide to the other Party statements evidencing the Designated RA Capacity delivered hereunder.
If any such examination reveals any inaccuracy in any statement, the necessary adjustments in such statement and the payments thereof will be made promptly and shall bear interest calculated at the Interest Rate from the date the overpayment or underpayment was made until paid; provided, however, that no adjustment for any statement or payment will be made unless objection to the accuracy thereof was made prior to the lapse of twelve (12) months from the rendition thereof, and thereafter any objection shall be deemed waived.
17.9 Forward Contract.
The Parties acknowledge and agree that this Agreement constitutes a “forward contract” within the meaning of the United States Bankruptcy Code.
17.10 Dispute Resolution.
(a) In the event of any claim, controversy or dispute between the Parties arising out of or relating to or in connection with this Agreement (including any dispute concerning the validity of this Agreement or the scope and interpretation of this Section 17.10) (a “Dispute”), any Party (the “Notifying Party”) may deliver to the other Parties (the “Recipient Party”) notice of the Dispute with a detailed description of the underlying circumstances of such Dispute (a “Dispute Notice”). The Dispute Notice shall include a schedule of the availability of the Notifying Party’s senior officers (having a title of senior vice president (or its equivalent) or higher) duly authorized to settle the Dispute during the thirty (30) day period following the delivery of the Dispute Notice. (b) The Recipient Party shall, within five (5) Business Days following receipt of the Dispute Notice, provide to the Notifying Party a brief summary of the Recipient Party’s position on the Dispute and a parallel schedule of availability of the Recipient Party’s senior officers (having a title of senior vice president (or its equivalent) or higher) duly authorized to settle the Dispute. Following delivery of the respective senior officers’ schedules of availability, the senior CONFIDENTIAL: EXECUTION VERSION
41 officers of the Parties shall meet and confer as often as they deem reasonably necessary during the remainder of the thirty (30) day period in good faith negotiations to resolve the Dispute to the satisfaction of each Party.
(c) In the event a Dispute is not resolved pursuant to the procedures set forth in Sections
17.10(a) and (b) by the expiration of the thirty (30) day period set forth in Section 17.10(b), then a Party may pursue any legal remedy available to it in accordance with this Agreement.
17.11 Execution.
A signature received via facsimile or email shall have the same legal effect as an original.
17.12 Joint Powers Authority.
Seller acknowledges and agrees that Buyer is organized as a Joint Powers Authority in accordance with the Joint Powers Act of the State of California (Government Code Section 6500 et seq.) pursuant to a Joint Powers Agreement and is a public entity separate from its members. Buyer shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this Agreement and Seller agrees that it shall have no rights and shall not make any claim, take any actions or assert any remedies against any of Buyer’s members in connection with this Agreement.
17.13 Dodd-Frank Act
The Parties intend this Agreement to be a “customary commercial arrangement” as described in Section II.A.1 of Commodity Futures Trading Commission, Proposed Guidance, Certain Natural Gas andElectric Power Contracts, 81 Fed. Reg. 20583 at 20586 (Apr. 8, 2016) and a “Forward CapacityTransaction” within the meaning of Commodity Futures Trading Commission, Final Order in Response to a Petition From Certain Independent System Operators and Regional Transmission Organizations To Exempt Specified Transactions Authorized by a Tariff or Protocol Approved by the Federal Energy Regulatory Commission, 78 Fed. Reg. 19,880 (Apr. 2, 2013).
17.14 Market-Based Rate Authority.
Seller agrees, in accordance with Federal Energy Regulatory Commission (FERC) Order No. 697, to, upon request of Buyer, submit a letter of concurrence in support of any affirmative statement by Buyer that this Agreement does not transfer “ownership or control of generation capacity” from Seller to Buyer as the term “ownership or control of generation capacity” is used in 18 CFR Section
35.42. Seller also agrees that it will not, in filings, if any, made subject to Order Nos. 652 and 697, claimthat this Agreement conveys ownership or control of generation capacity from Seller to Buyer.
17.15 Rules of Interpretation.
In this Agreement, except as expressly stated otherwise or unless the context otherwise requires:
(a) headings and the rendering of text in bold and italics are for convenience and reference purposes only and do not affect the meaning or interpretation of this Agreement; (b) words importing the singular include the plural and vice versa and the masculine, feminine and neuter genders include all genders;
CONFIDENTIAL: EXECUTION VERSION
42 (c) the words “hereof”, “herein”, and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) a reference to an Article, Section, paragraph, clause, Party, or Exhibit is a reference to that Article, Section, paragraph, clause of, or that Party or Exhibit to, this Agreement unless otherwise specified;
(e) a reference to a document or agreement, including this Agreement shall mean such document, agreement or this Agreement including any amendment or supplement to, or replacement, novation or modification of this Agreement, but disregarding any amendment, supplement, replacement, novation or modification made in breach of such document, agreement or this Agreement;
(f) a reference to a Person includes that Person’s successors and permitted assigns; (g) the terms “include” and “including” mean “include or including (as applicable) without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the word or provision in respect of which such examples are provided; (h) references to any statute, code or statutory provision are to be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or reenacted, and include references to all bylaws, instruments, orders and regulations for the time being made thereunder or deriving validity therefrom unless the context otherwise requires; (i) in the event of a conflict, a mathematical formula or other precise description of a concept or a term shall prevail over words providing a more general description of a concept or a term;
(j) references to any amount of money shall mean a reference to the amount in United States Dollars;
(k) the expression “and/or” when used as a conjunction shall connote “any or all of”; (l) words, phrases or expressions not otherwise defined herein that (i) have a generally accepted meaning shall have such meaning in this Agreement or (ii) do not have well known and generally accepted meaning but that have well known and generally accepted technical or trade meanings, shall have such recognized meanings; and
(m) each Party acknowledges that it was represented by counsel in connection with this Agreement and that it or its counsel reviewed this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the Effective Date.
ENERSMART ALPINE BESS LLC, a
California limited liability company
SAN DIEGO COMMUNITY POWER,
a California joint powers authority
By: __________________________ By: __________________________ Name: __________________________ Name: __________________________ Title: __________________________ Title: __________________________ Exhibit A - 1
EXHIBIT A: FORM OF LETTER OF CREDIT
[Issuing Bank Letterhead and Address]
IRREVOCABLE STANDBY LETTER OF CREDIT NO. [XXXXXXX]
Date:
Bank Ref.:
Amount: US$[XXXXXXXX]
Expiry Date:
APPLICANT DETAILS TO BE PROVIDED
Beneficiary:
[Buyer], a California joint powers authority
[Address]
Ladies and Gentlemen:
By the order of __________ (“Applicant”), we, [insert bank name and address] (“Issuer”) hereby issue our Irrevocable Standby Letter of Credit No. [XXXXXXX] (the “Letter of Credit”) in favor of [Buyer], a California joint powers authority (“Beneficiary”), [Address], for an amount not to exceed the aggregate sum of U.S. $[XXXXXX] (United States Dollars [XXXXX] and 00/100), pursuant to that certain Agreement dated as of ___________ and as amended (the “Agreement”) between [Applicant] and Beneficiary. This Letter of Credit shall become effective immediately and shall expire on [XXXXXX] which is one year after the issue date of this Letter of Credit, or any expiration date extended in accordance with the terms hereof (the “Expiration Date”).
Funds under this Letter of Credit are available to Beneficiary by presentation on or before the Expiration Date of a dated statement purportedly signed by your duly authorized representative, in the form attached hereto as Exhibit A, containing one of the two alternative paragraphs set forth in paragraph 2 therein, referencing our Letter of Credit No. [XXXXXXX] (“Drawing Certificate”).
The Drawing Certificate may be presented by (a) physical delivery, or (b) facsimile to [bank fax number [XXX-XXX-XXXX]] confirmed by [e-mail to [bank email address]] (if presented by fax it must be followed up by a phone call to us at [XXXXXX] or [XXXXXX] to confirm receipt) with the originals to follow via courier. The drawing will be effective upon our receipt of the original documents at the above noted address.
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 Drawing Certificate by Beneficiary hereunder in order to receive payment.
CONFIDENTIAL: EXECUTION VERSION
Exhibit A - 2
We hereby agree with the Beneficiary that documents presented under and in compliance with the terms of this Letter of Credit will be duly honored upon presentation to the Issuer on or before the Expiration Date. All payments made under this Letter of Credit shall be made with Issuer’s own immediately available funds by means of wire transfer in immediately available United States dollars to Beneficiary’s account as indicated by Beneficiary in its Drawing Certificate or in a communication accompanying its Drawing Certificate.
Partial draws are permitted under this Letter of Credit, and this Letter of Credit shall remain in full force and effect with respect to any continuing balance.
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 one hundred twenty (120) days prior to any such Expiration Date we have sent to you written notice by registered mail or overnight courier service that we elect not to extend this Letter of Credit, in which case it will expire on the date specified in such notice. No presentation made under this Letter of Credit after such Expiration Date will be honored.
Notwithstanding any reference in this Letter of Credit to any other documents, instruments or agreements, this Letter of Credit contains the entire agreement between Beneficiary and Issuer relating to the obligations of Issuer hereunder.
This Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (2007 Revision) International Chamber of Commerce Publication No. 600 (the “UCP”), except to the extent that the terms hereof are inconsistent with the provisions of the UCP, including but not limited to Articles 14(b) and 36 of the UCP, in which case the terms of this Letter of Credit shall govern. In the event of an act of God, riot, civil commotion, insurrection, war or any other cause beyond Issuer’s control (as defined in Article 36 of the UCP) that interrupts Issuer’s business and causes the place for presentation of the Letter of Credit to be closed for business on the last day for presentation, the Expiration Date of the Letter of Credit will be automatically extended without amendment to a date thirty (30) calendar days after the place for presentation reopens for business.
Please address all correspondence regarding this Letter of Credit to the attention of the Letter of Credit Department at [insert bank address information], referring specifically to Issuer’s Letter of Credit No. [XXXXXXX]. For telephone assistance, please contact Issuer’s Standby Letter of Credit Department at [XXX-XXX-XXXX] and have this Letter of Credit available.
All notices to Beneficiary shall be in writing and are required to be sent by certified letter, overnight courier, or delivered in person to: [Buyer], Chief Operating Officer, [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.
[Bank Name]
___________________________
[Insert officer name]
CONFIDENTIAL: EXECUTION VERSION
Exhibit A - 3
[Insert officer title]
CONFIDENTIAL: EXECUTION VERSION
Exhibit A - 4
Exhibit A: (DRAW REQUEST SHOULD BE ON BENEFICIARY’S LETTERHEAD) Drawing Certificate
[Insert Bank Name and Address]
Ladies and Gentlemen:
The undersigned, a duly authorized representative of [Buyer], a California joint powers authority, [Buyer address], as beneficiary (the “Beneficiary”) of the Irrevocable Letter of Credit No. [XXXXXXX] (the “Letter of Credit”) issued by [insert bank name] (the “Bank”) by order of __________ (the “Applicant”), hereby certifies to the Bank as follows:
1. Applicant and Beneficiary are party to that certain Agreement dated as of ___________, (the “Agreement”).
2. Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________ because a Seller Event of Default (as such term is defined in the Agreement) or other occasion provided for in the Agreement where Beneficiary is authorized to draw on the letter of credit has occurred.
OR
Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________, which equals the full available amount under the Letter of Credit, because we have received notice from the Bank that you have elected not to extend the Expiration Date of the Letter of Credit beyond its current Expiration Date and Applicant is required to maintain the Letter of Credit in force and effect beyond the expiration date of the Letter of Credit but has failed to provide Beneficiary with a replacement Letter of Credit or other acceptable instrument within thirty (30) days prior to such expiration date.
3. The undersigned is a duly authorized representative of [Buyer], a California joint powers authority and is authorized to execute and deliver this Drawing Certificate on behalf of Beneficiary.
You are hereby directed to make payment of the requested amount to [Buyer], a California joint powers authority by wire transfer in immediately available funds to the following account:
[Specify account information]
[Buyer]
_______________________________
Name and Title of Authorized Representative
Date___________________________
CONFIDENTIAL: EXECUTION VERSION
Exhibit B - 1
EXHIBIT B: FORM OF CONSTRUCTION START DATE CERTIFICATE
This certification of Construction Start Date (“Certification”) is delivered by [Seller] (“Seller”) to San Diego Community Power, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Agreement dated [date] (“Agreement”) by and between Seller and Buyer.
All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
Seller hereby certifies and represents to Buyer that the Construction Start (as defined in the Agreement) has occurred, and a copy of the notice to proceed that Seller issued to its contractor as part of Construction Start is attached hereto.
IN WITNESS WHEREOF, the undersigned has executed this Certification on behalf of Seller as of the ___ day of ________.
[Seller]
By:
Its:
Date:
CONFIDENTIAL: EXECUTION VERSION
Exhibit C - 1
EXHIBIT C: FORM OF INITIAL DELIVER DATE CERTIFICATE
This certification (“Certification”) of Initial Delivery is delivered by [Seller] (“Seller”) to San Diego Community Power, a California joint powers authority (“Buyer”) in accordance with the terms of that Agreement dated [date] (“Agreement”) by and between Seller and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
As of _______[DATE]_____, Seller hereby certifies and represents to Buyer the following:
a) The Unit is fully operational, reliable and interconnected, fully integrated and synchronized with the Transmission System.
b) Seller has installed equipment for the Unit with a nameplate capacity of no less than 6 MW. c) The Unit is fully capable of charging, storing and discharging energy up to no less than 6 MW and receiving instructions to charge, store and discharge energy. d) Seller’s Interconnection Agreement provides for a maximum instantaneous discharge capability of no less than 6 MW.
e) Authorization to parallel the Unit was obtained by the Participating Transmission Owner, SDG&E on___[DATE]____.
SELLER:
Signature:
Name:
Title:__________________________________________
Date:__________________________________________
ENGINEER
Signature:______________________________________
Name:_________________________________________
Title:__________________________________________
Date:__________________________________________
CONFIDENTIAL: EXECUTION VERSION
Exhibit D - 1
EXHIBIT D: DESCRIPTION OF UNIT
The following describes the Unit to be constructed, operated and maintained by Seller through the Term in accordance with the Agreement.
Unit name: EnerSmart Alpine
Resource type: Battery Energy Storage
Nameplate capacity: 6MW / 24 MWh
Location: Alpine, CA
Unit physical address: 2436 Alpine Blvd Alpine, CA 91901 Unit elevation: 1,800’
Unit latitude: 32 50' 07" N
Unit longitude: -116 45' 33"W
Interconnection: SDG&E
CAISO transmission access charge area (e.g. SDG&E): SDG&E Point of interconnection:
Point of interconnection address:
Existing zone (e.g. SP-15): SP-15
PNode: ALPINE_6_N005
CAISO Resource ID: Forthcoming
Substation: Alpine
CONFIDENTIAL: EXECUTION VERSION
Exhibit E - 1
EXHIBIT E: [RESERVED]
CONFIDENTIAL: EXECUTION VERSION
Exhibit F - 1
EXHIBIT F: PROGRESS REPORTING FORM
Each Progress Report must include the following items:
1. Executive summary.
2. Unit description.
3. Site plan of the Unit.
4. Description of any material planned changes to the Unit or the Site.
5. Schedule showing progress on Unit construction generally and achieving each of the Milestones and the Initial Delivery Date.
6. Summary of activities during the previous month, including any OSHA labor hour reports.
7. Forecast of activities scheduled for the current calendar quarter.
8. Written description about the progress relative to the Milestones and the Initial Delivery Date, including whether Seller is on schedule with respect to the same.
9. List of issues that are likely to potentially affect achievement of the Milestones and the Initial Delivery Date.
10. Progress and schedule of the EPC Contract, all major equipment supply agreements, Governmental Approvals, technical studies, and financing arrangements.
11. Pictures, in sufficient quantity and of appropriate detail, in order to document construction and interconnection progress.
12. Any other documentation reasonably requested by Buyer.
Exhibit G - 1
EXHIBIT G: NOTICES
ENERSMART ALPINE BESS LLC, a
California limited liability company
(“Seller”)
SAN DIEGO COMMUNITY POWER, a
California joint powers authority (“Buyer”)
All Notices:
Street: 400 S. Sierra Ave. Suite 100
City: Solana Beach, CA. 92075
Attn: James Beach
Phone: 619-877-8444
Email: [email protected]
All Notices:
P.O. Box 12716
San Diego, CA 92112
Attn: Byron Vosburg, Director of Power
Services
Phone: (619) 880-6545
Email: [email protected]
Reference Numbers:
Duns: n/a
Federal Tax ID Number:
Reference Numbers:
Duns:
Federal Tax ID Number:
Invoices:
Attn: Eric Wheatley, VP Finance
Phone: 704-763-8642
E-mail: [email protected]
Invoices:
Attn: SDCP Settlements
Phone: (619) 880-6545
Email: [email protected]
Payments:
Attn: Eric Wheatley, VP Finance
Phone: 704-763-8642
E-mail:[email protected]
Payments:
Attn: SDCP Settlements
Phone: (619) 880-6545
Email: [email protected]
Wire Transfer:
Wire Transfer:
SAN DIEGO COMMUNITY POWER
Staff Report – Item 12
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Jen Lebron, Director of Public Affairs
Via: Karin Burns, Chief Executive Officer
Subject: Update on Marketing and Public Relations
Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Approve change in appointment of SDCP Alternate to the City of La Mesa Environmental Sustainability Commission.
BACKGROUND
The City of La Mesa’s Environmental Sustainability Commission serves as an advisory body to their City Council on how actions and policies of the city may preserve and enhance the quality of La Mesa’s environment. The Commission also serves to address the effects of climate change and assist in the identification of measures that will improve environmental sustainability in La Mesa and the region.
The Commission is made up of seven members as residents of the City of La Mesa with voting privileges and six members as advisory in nature from the business community without voting privileges. The six nonvoting members are made up of representatives from the City of La Mesa’s water utility, franchise waste and recycling hauler, electricity and gas utilities, and high school and elementary/middle school district.
Early in 2021, La Mesa staff requested that SDCP staff participate as a non-voting member of the Commission after it amended Chapter 2.85.010 of the La Mesa Municipal Code to add SDCP as a non-voting representative of the Environmental Sustainability Commission, pending an appointment from the Board of Directors of San Diego Community Power.
Doing so required a vote of the SDCP Board of Directors, so at the April 2021 regular meeting, the Board approved the first appointments of SDCP staff to serve as members.
In September 2022, the Board approved the appointments of Public Affairs Director Jen Lebron and then-Public Outreach Associate Victoria Abrenica to serve on the commission as the Regular and Alternate members, respectively.
ANALYSIS AND DISCUSSION
The Public Affairs Department of SDCP has had Community Engagement Manager Xiomalys Crespo join the team while Abrenica has moved into a Program Associate position with the Programs Department. Given these new roles, staff recommends a change in appointment from Abrenica to Crespo as the alternate.
FISCAL IMPACT
N/A
ATTACHMENTS
Attachment A: Draft Appointment Letter from SDCP
815 E Street, Suite 12716
San Diego, CA 92112
sdcommunitypower.org
October 26, 2023
City of La Mesa
Mayor and City Council
8130 Allison Avenue
La Mesa, CA 91942
RE: SDCP Alternate to the Environmental Sustainability Commission Dear Mayor and City Council,
On behalf of San Diego Community Power (SDCP), Xiomalys Crespo, Community Engagement Manager has been appointed to the La Mesa Environmental Sustainability Commission as SDCP’s alternate representative. She will replace Victoria Abrenica, who was appointed in September 2022.
Sincerely,
Karin L. Burns
Chief Executive Officer
SAN DIEGO COMMUNITY POWER
Staff Report – Item 13
--------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Byron Vosburg, Managing Director, Power Services
Via: Karin Burns, Chief Executive Officer
Subject: Approval of Amended and Restated Engagement Letter with Keyes and Fox LLP for up to $550,000 for Legal Services for Power Procurement Date: October 26, 2023
---------------------------------------------------------------------------------------------------------------------
RECOMMENDATIONS
Approve the amended and restated Engagement Letter with Keyes & Fox LLP to increase the not-to-exceed amount to $550,000 and authorize the Chief Executive Officer to execute the agreement.
BACKGROUND
Keyes & Fox LLP has extensive experience supporting community choice aggregators in energy contracting and negotiations.
On February 17th 2022, SDCP entered into a Engagement Letter with Keyes & Fox LLP (”K&F”) with respect to the procurement of wholesale electricity supply, energy storage, resource adequacy, renewable energy credits, and transmission rights to serve SDCP customers.
Subsequently, SDCP executed an amendment to the Engagement Letter on June 15th, 2022, after approval by the SDCP Board of Directors. This amendment superseded and replaced in its entirety the February 17th, 2022 Engagement Letter. This amendment had a not-to-exceed amount of $250,000.
In July 2023, Keyes and Fox amended the Engagement Letter on July 17th, 2022. After approval by the SDCP Board of Directors. This amendment superseded and replaced in its entirety the June 15th, 2022 Engagement Letter. This amendment had a not-to-exceed amount of $400,000.
ANALYSIS AND DISCUSSION
Staff recommends executing the third amendment and restated Engagement Letter with K&F. The proposed agreement would increase the combined not-to-exceed amount to $550,000 (and increase of $150,000) through Dec. 31, 2023 due to higher than expected requirements of counsel due to several ongoing procurement efforts. This will allow staff to continue working with K&F on several negotiations that are currently active and which staff expects to work on throughout 2023.
SDCP issued an RFO for legal services on September 8, 2023 related to legal services to assist SDCP with the procurement of wholesale electricity supply, energy storage, resource adequacy, renewable energy credits, and transmission rights to serve SDCP customers. That RFO will allow SDCP to select procurement counsel (and potentially backup procurement counsel) to begin engagement January 1, 2024. This amended with K&F would ensure there is not a gap in representation prior to January 1, 2024.
COMMITTEE REVIEW
N/A
FISCAL IMPACT
Cost of this action includes a total amount not-to-exceed $550,000 through December 31, 2023, which is an increase of $150,000. Funding for the increase is included in the proposed FY24 budget, which staff will revisit during the mid-year budgeting process to ensure previous expectations remain appropriate.
ATTACHMENTS
Attachment A: Engagement Letter Between Keyes & Fox LLP and San Diego Community Power
1580 Lincoln Street, Suite 1105
Denver, CO 80203
October 20, 2023
Attn: Mr. Byron Vosburg
San Diego Community Power
815 E Street, Suite 12716
San Diego, CA 92112
RE: Engagement Letter Between Keyes & Fox LLP and San Diego Community Power Keyes & Fox LLP (“K&F”) welcomes the opportunity to continue representation of San Diego Community Power, a California joint powers authority, (“SDCP”) with respect to the procurement of wholesale electricity supply, energy storage, resource adequacy, renewable energy credits, and transmission rights to serve SDCP customers (referred to herein as “Legal Services”).
This Engagement Letter excludes work that K&F is performing for SDCP under a separate joint representation agreement and replaces the engagement letter dated July 17, 2023. This Engagement Letter describes the basis of the attorney-client relationship between K&F and SDCP with respect to the Legal Services, along with an explanation of how K&F will bill for those services.
1. Scope of Engagement
Pursuant to this engagement letter, K&F agrees to represent SDCP as its client with regard to the Legal Services described above. Keyes & Fox will do its utmost to serve SDCP effectively, provide Legal Services in an efficient manner, and respond promptly to SDCP’s inquiries.
K&F has run a conflict check as it relates to the contemplated Legal Services and has not found any direct conflicts with undertaking them. If a conflict arises that may impact our ability to provide SDCP with effective representation, including with respect to negotiations that may involve current or former K&F clients as counterparties, we will promptly bring that conflict to SDCP’s attention. If you have any concerns regarding any relationship K&F may have with particular companies, organizations or individuals, please bring those concerns to our attention.
K&F will coordinate the provision of the Legal Services with Byron Vosburg as the designated representatives of SDCP, or with whomever he may specifically delegate that authority.
We understand that Mr. Vosburg have the authority to make decisions on behalf of SDCP in connection with the Legal Services, and we are relying on that understanding.
2. Confidentiality of Communications and Work Product
It is in SDCP’s interest to preserve confidentiality of all communications with K&F and such work product related to the Legal Services not intended for use with third parties. If SDCP discloses any of our communications, it jeopardizes the privileged nature of the communications or work product. Accordingly, we advise our clients to take care not to disclose privileged information or work product not intended for use with third parties to any third-party person or entity.
3. Fees, Expenses, Invoicing, and Retainer
By signing this Engagement Letter, SDCP agrees to pay K&F for all professional fees and out-of-pocket expenses related to the Legal Services, according to the terms set forth below.
Compensation under this Engagement Letter shall not exceed five hundred fifty thousand dollars ($550,000) without prior authorization by SDCP.
a. Professional Fees
K&F will keep an hourly total of time spent on the Legal Services. Work will be performed at the hourly rates set forth in the Rates for Professionals provided in Attachment A to this Engagement Letter, which is incorporated by reference herein. Attachment A lists those persons we anticipate may work on the Legal Services. In addition to the K&F attorneys listed in Attachment A, the assistance of other K&F attorneys and/or staff may be enlisted from time to time as determined necessary for the provision of the Legal Services.
It is K&F’s policy to adjust hourly rates for all attorneys and staff at the beginning of the calendar year. Historically, rate increases have been between 5-8% per year. Rates quoted in Attachment A are 2023 rates. K&F shall not increase hourly rates charged for work performed during calendar year 2023 Legal Services above those listed in Attachment A. K&F’s practice is to charge for travel time, as discussed in Attachment A.
Mr. Fox and Ms. Cho will be the lead K&F attorneys working with you in connection with the Legal Services. Mr. Fox and Ms. Cho may utilize the services of other K&F attorneys in connection with this matter. By entering into this Engagement Letter, you consent in writing to Mr. Fox and Ms. Cho serving as the lead attorneys in this matter and to Mr. Fox’s and Ms. Cho’s assignment, with authorization by SDCP, of work on this matter to the other persons listed in Attachment A.
b. Expenses
Expenses may be incurred in connection with the Legal Services. K&F will bill for all costs, disbursements, and expenses in addition to our hourly fees. Costs and expenses include messenger and other delivery fees, copying and reproduction costs, costs for travel including mileage and parking, and similar expenses. Expenses will be billed at actual cost. c. Invoices and Payments
K&F will invoice SDCP at the beginning of each month for Legal Services during the prior calendar month. Invoices will list the matter worked on and provide information on the dates of service, time involved, person responsible and activity undertaken. K&F will use best efforts to respond to requests for special invoice formats. Upon receipt of properly prepared invoicing, SDCP shall pay K&F within thirty (30) calendar days for services provided in accordance with this Engagement Letter.
4. Termination of K&F’s Representation
Either SDCP or K&F may terminate K&F’s representation of SDCP at any time and for any reason. At the time K&F’s representation of SDCP concludes, all unpaid fees and costs for work performed by K&F become due and payable. If at that time SDCP does not request the return
of files related to the Legal Services, K&F will retain such files for a period of three (3) years, after which K&F may have the files destroyed.
5. Miscellaneous
This letter is the entire agreement between SDCP and K&F concerning the Legal Services and supersedes all prior or contemporaneous agreement between SDCP and K&F, whether written or verbal, for the Legal Services. This agreement and the scope of work provided under it may be amended from time to time by mutual agreement among K&F and SDCP. California law will govern this agreement and any subsequent amendments.
6. Conclusion
If the terms of K&F’s representation as explained in this letter are satisfactory, please execute a copy of this letter as indicated and return it to me. Please feel free to contact me if you have any questions.
We look forward to our representation of SDCP.
Sincerely,
Kevin Fox, Partner
Keyes & Fox LLP
By signing this letter, the signatory affirms that he or she understands and agrees to bind his or her company to the terms set forth in this Engagement Letter. This agreement shall not take effect, and K&F shall have no obligation to provide the work described herein, until SDCP has returned a signed copy of this letter.
San Diego Community Power
I have read the foregoing letter, understand it and agree to it on behalf of SDCP.
By:______________________
[Name]
Title: ____________________
Date: ____________________
Attachment A
Rates for Professionals
Hourly Rates and Other Terms
Kevin Fox, Partner $480
Theresa Cho, Counsel $530
Alexandra Haggerty, Associate $330
Julia Kantor, Associate $300
Beren Argetsinger, Partner $310
Alicia Zaloga, Paralegal $120
Firm Travel: Travel time is billed at the one-half of the listed hourly rate. Every effort will be made to work productively on the Legal Services during travel. All reasonable travel expenses are billable – hotel, airfare, car rental, meals, taxi, public transit, etc.
SAN DIEGO COMMUNITY POWER
Staff Report – Item 14
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Eric W. Washington, Chief Financial Officer
Via: Karin Burns, Chief Executive Officer
Subject: Fiscal Year End 2023 Financial Audit Progress Report Presentation Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Receive and File Fiscal Year End 2023 Financial Audit Progress Report Presentation.
BACKGROUND
On October 1, 2019, the Founding Members of San Diego Community Power (SDCP) adopted the Joint Powers Agreement (JPA) which was amended and restated on December 16, 2021.
Section 4.6.14 of the JPA specifies the Board of Directors (Board) shall arrange for an annual independent fiscal audit.
Section 5.4 of the JPA specifies the Board shall appoint a Treasurer who shall function as the combined offices of Treasurer and Auditor and shall strictly comply with the statutes related to the duties and responsibilities specified in Section 6505.5 of the Act. The section further specifies that the Treasurer shall cause an independent audit(s) of the finances of SDCP to be made by a certified public accountant, or public accountant, in compliance with Section 6505 of the Act.
Section 7.2.2 of the JPA additionally specifies that the SDCP Board shall contract with a certified public accountant to make an annual audit of the financial statements of SDCP, which shall be conducted in accordance with the requirements of Section 6505 of the Act.
On July 1, 2021, SDCP entered into a professional services agreement with Pisenti & Brinker to perform its annual audit for FY 2020-21. On July 1, 2022, SDCP exercised an option in the professional services agreement to extend the term from June 30, 2022, to June 30, 2023, to conduct its annual audit for FY 2021-22.
Subsequently, On July 20, 2023, SDCP exercised an option in the professional services agreement to extend the term from June 30, 2023, to June 30, 2024, to conduct its annual audit for FY 2022-23. Pisenti & Brinker is a firm with extensive experience auditing CCA’s throughout California, as well as other local government entities.
ANALYSIS AND DISCUSSION
Staff prepared a presentation describing the audit process and the preliminary results.
The full financial audit report for FY 2022-23 will be presented to the FRMC on November 9, 2023, and reviewed by the Board on November 16, 2023.
COMMITTEE REVIEW
The report was reviewed by the Finance and Risk Management Committee (FRMC) on October 19, 2023.
FISCAL IMPACT
Not applicable
ATTACHMENTS
Not applicable
SAN DIEGO COMMUNITY POWER
Staff Report – Item15
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Colin Santulli, Director of Programs
Sheena Tran, Senior Program Manager
Via: Karin Burns, Chief Executive Officer
Subject: Update on Regional Energy Network Formation Progress Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Receive and file an update on Regional Energy Network (REN) formation progress.
BACKGROUND
One of the Programs Team’s FY 2023-24 annual priorities is to lead initial steps in a regional effort to develop a Regional Energy Network (REN) in San Diego. The approval of a REN in San Diego by the California Public Utilities Commission (CPUC) would allow access to funds to administer and implement energy efficiency (EE) programs focused on underserved and hard-to-reach residents, businesses, and public agencies in the region. Additionally, this effort achieves several intended goals for establishing SDCP, as stated in the Joint Powers Agreement (JPA), including ‘[pursuing] purposeful and focused investment in communities of concern, … workforce development, and policies and programs centered on economic, environmental, and social equity.’ The energy efficiency programs offered by the RENs vary and are designed to meet the needs of its region while filling gaps and focusing on hard-to-reach customers. REN programs are intended to be complementary to IOU administered programs (regional and statewide) and coordination is required among Program Administrators to avoid customer confusion. San Diego Gas & Electric currently offers a robust EE program portfolio, with a 4-year ~$330M EE portfolio approved by the CPUC in June 2023.
SDCP Staff presented and introduced the topic of a REN in San Diego at the May 26, 2022 Board of Directors meeting as an option to access CPUC funding for customer energy programs. SDCP Staff presented and identified forming a REN as one of the FY 22-23 Programs Department priorities during the New Board of Directors Orientation meeting on January 18, 2023. SDCP Staff presented an update on the progress of the REN formation at the February 2023 meetings of the Community Advisory Committee and the Board of Directors. In September 2023, SDCP Staff presented a progress update to include a description of each of the draft programs to the Community Advisory Committee.
ANALYSIS AND DISCUSSION
Progress Update
In line with the initial timeline identified when the REN formation process began, SDCP staff is on track to submit a Business Plan Application to the CPUC by December 2023.
To support this timeline, between February 2023 and September 2023, SDCP Staff conducted the following activities:
Activity Outcome
Released Request for Proposal for
professional services to support
Business Plan Application development
Selected a consultant to support Business
Plan Application development
Developed draft governance structure
and presented to regional stakeholders
for feedback
Received positive feedback from San Diego
Regional Climate Collaborative (SDRCC)
Regional Energy Resilience Working Group
members
Finalized governance structure Received confirmation via a letter of support from the County of San Diego Office of
Sustainability and Environmental Justice to
be the second public agency in the SDREN
governance
Ongoing coordination with SDG&E Collaborative discussions to identify gaps in existing programs that would be appropriate
for new REN programs to fill and programs
that are complementary to existing SDG&E
programs
Met with CPUC Energy Division (ED)
Staff
Informed CPUC of our intent to submit an
application and asked clarifying questions.
Provided updates on regional effort to submit
a Business Plan Application
Completed Market Assessment Identified sectors most in need of energy efficiency programs best served by a future
REN
Stakeholder engagement Presented to regional stakeholders for feedback on program design to ensure
program offerings will meet customer needs
Activity Outcome
Drafted an initial program list for
stakeholder feedback
Developed and presented a draft program list
for feedback to multiple regional
stakeholders
Began drafting Business Plan
Application
Developed draft foundational components of
a Business Plan Application to comply with
CPUC requirements including:
- A description of its new and unique value
to contribute to California’s energy,
climate, and/or equity goals.
- A description of its proposed governance
structure.
- A proposed set of energy savings targets.
- A proposed set of goals and metrics.
REN Governance Structure and Target Sectors
Based on the results of the initial eight months of stakeholder engagement and the consultant-led Market Assessment, SDCP Staff have identified the ideal and preferred governance structure and sectors for the San Diego REN programs to target. The Business Plan Application must include the proposed governance structure and sectors.
As with all other elements of the Business Plan Application, the governance structure is subject to CPUC approval.
When considering different options for the governance, Staff sought a structure that (1) satisfies the CPUC requirement for new RENs to represent at least two local government entities; (2) allows for the expeditious distribution of resources to underserved communities, and (3) includes a forum for ongoing regional discussions.
During the evaluation, Staff analyzed the structures of the five existing RENs and conducted interviews with Staff at the agencies involved. Recommendations included implementing a structure that enables streamlined decision-making process, leverages existing organizational processes, and limits unnecessary bureaucracy.
The proposed San Diego REN governance structure identifies several key functions as shown in the image below.
High-level roles and responsibilities for the key elements are as follows:
● Oversight and Administration (SDCP and County of San Diego): Provide portfolio-level vision and strategy; enact program changes during portfolio cycle; oversee future Business Plan development.
● Lead Program Administrator (SDCP): Responsible for all fiscal, regulatory, procurement and program management.
● Advisory Committee (TBD): Advise on program outreach and enrollment, provide feedback on program evaluation reports, and provide recommendations on program improvements. Members may include local and regional governments as well as community-based organizations.
● Program Operations Teams (TBD): Oversee day-to-day program operations; primarily consist of program managers and 3rd party implementers.
SDCP Staff oversaw the development of a market assessment to determine existing EE programs available in the region. The analysis included SDGE-managed EE and related workforce development programs as well as statewide EE programs. Based on the market assessment, the following sectors and associated target participants have been identified as most beneficial for a REN to develop programs under:
Sector Program’s Target Participants
Workforce, Education
& Training
High School students, adult workforce, and employers
Codes & Standards City and County permitting authorities Residential Homeowners, renters, property owners, tenants Commercial Small and medium businesses
Public All public agencies within San Diego County
Programs by Sector:
The following section outlines the proposed programs for each sector. Each program lists a brief description including sample offerings as well as the target program participants.
Workforce Education and Training (WE&T)
Programs to support the long-term success of the energy efficiency market by providing education and training.
• WET Program 1
o Target Participants: High school students
o Description: Provide exposure to green careers, enrollment in college courses and connections with employers
o Sample offerings: One-on-one career pathway assistance, dual enroll in STEM college courses at no cost, paid internship, wraparound services • WET Program 2
o Target Participants: Adult workforce
o Description: Provide training and connect participants with jobs in clean energy economy
o Sample offerings: Training and certification course(s) at no cost, networking opportunities, on-the-job training, wraparound services • WET Program 3
o Target Participants: Employers
o Description: Work with employers to understand career pathways and provide assistance to ensure employees move through pathways. o Sample offerings: Stipends to participate in trainings; training program development; training policy development
Commercial
Programs to assist small and medium businesses and commercial property owners access technical assistance, energy efficiency measures, and facility assessments. • Commercial Program 1
o Target Participants: Small and medium businesses (SMBs) o Description: Raise awareness and increase adoption of EE practices and measures; connect a dedicated energy coach to educate SMBs on the value of EE, support access to funding and financing, facility assessments, offer technical assistance and direct install. Incorporate California Green Business Network support.
o Sample Measures: Smart thermostats, HVAC tune-up, LED lighting, controls, behavioral, heat pumps, duct sealing, appliances, faucet aerators, auto door closers, VFDs, window film, smart plugs • Commercial Program 2
o Target Participants: Small corner stores and food donation centers o Description: Refrigeration replacement (direct install) o Sample Measures: Refrigeration and freezer units
• Commercial Program 3
o Target Participants: Commercial property owners
o Description: Work with contractors to offer customized incentives to reduce energy use at peak times
o Sample Measures: Smart thermostats, HVAC, LED lighting, controls, behavioral, heat pumps, duct sealing, appliances, VFDs, smart plugs Residential
Programs that work with multifamily and single-family tenants and owners to assist with identifying energy efficiency opportunities and to install measures leading to utility bill savings and improved indoor air quality.
• Residential Program 1
o Target Participants: Tenants, property owners/ managers o Description: Site assessments, customized technical assistance, and rebates to property owners. Kits and education to tenant (possible direct install)
o Sample Measures: Individual and central HPWH, LED lighting/bulbs, HVAC heat pumps, smart thermostats, controls, duct sealing/insulation, pool pump VSD, showerheads, aerators, recirculation pumps, heat pump clothes dryers, induction stoves
• Residential Program 2
o Target Participants: Homeowners, renters
o Description: Provide guidance to identify energy programs and upgrades through participating contractors for homeowners; provide energy saving kits and education to renters (possible direct install measures) o Sample Measures: HPWH, smart power strips, HVAC heat pumps, shower heads, aerators, LED bulbs, attic insulation, induction stoves, recirculation pumps, HP clothes dryers
Public
Programs that assist public agencies throughout San Diego County identify and implement energy efficiency projects.
• Public Program 1
o Target Participants: Public agencies (i.e., cities, County, educational agencies, special districts, tribal nations)
o Description: Customized and unbiased hands-on expert guidance and support services from EE project identification to completion for public facilities and assets including access to funding and financing. Focuses on decarbonization measures. Agency-wide benchmarking and strategic energy resilience planning.
o Sample Measures: Various EE measures (e.g., HVAC, HPWH, LED lighting, pipe insulation, window film, pumping, process optimization, RCx, controls, EMS upgrades) and high-level educational resources on DERs (e.g., solar and other distributed generation systems, battery storage, electric vehicles, demand response programs, solar hot water heating) • Public Program 2
o Target Participants: Tribal Nations
o Description: A streamlined pathway for tribal nations in the San Diego region to receive customized technical assistance to identify, develop, and implement energy-related initiatives that address unique needs within tribal communities.
o Sample Measures: Overall stakeholder engagement and
outreach; establish SDREN tribal collaborative efforts; customized program outreach; program design services
Codes & Standards
Programs that assist permitting authorities streamline the permitting process by offering customized technical assistance.
• Codes & Standards Program 1
o Target Participants: Permitting authorities
o Description: Policy and compliance support and enhancing communication and experience between permitting authorities and permit applicants
o Sample offerings: Needs assessment; tools and templates; customized one-on-one support; educational workshops
Proposed Budget:
Upon CPUC approval, SDCP will be authorized to access public purpose funds to implement energy efficiency programs in San Diego. The CPUC awards budgets based on 4-year program portfolio filings and an 8-year business plan. Accordingly, Program Administrators (PAs) develop a budget for the entire business plan period and the initial 4-year program portfolio period. The total 8-year budget proposed by SD-REN is being finalized to cover 2024-2031. The proposed budget for the first 4-year cycle (2024-2027) will include an annual budget request ranging from $25M-$35M over that initial 4-year period.
Next Steps:
SDCP Staff will continue to develop the Business Plan Application and supporting documents. Staff will request approval of the final application from the SDCP Board of Directors at the December meeting, prior to CPUC submittal. Staff expects to submit the completed Business Plan Application to the CPUC in December 2023.
COMITTEE REVIEW
Staff presented SDREN draft programs and governance at the September 14, 2023, meeting of the Community Advisory Committee (CAC). Staff discussed SDREN draft programs, governance and budget with the CAC Programs Ad-Hoc Committee on September 6, 2023, and October 5, 2023.
FISCAL IMPACT
As stated above, were it to be approved by the CPUC, all SDREN activities are cost recoverable. SDCP staff time contributing to SDREN management is reimbursable by the CPUC.
ATTACHMENTS
N/A
SAN DIEGO COMMUNITY POWER
Staff Report – Item 16
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Jack Clark, Chief Operating Officer
Colin Santulli, Director of Programs
Nelson Lomeli, Program Manager
Via: Karin Burns, Chief Executive Offer
Subject: Approval of San Diego Community Power’s Net Billing Tariff Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Approve San Diego Community Power’s (SDCP) Net Billing Tariff (NBT) for all new customers who install onsite generation on or after April 15, 2023, and existing customers transitioning out of the Net Energy Metering (NEM) Tariff following the conclusion and/or termination of their 20-year NEM legacy period.
BACKGROUND
In December 2022, the California Public Utilities Commission (CPUC) approved Decision 22-12-056, which adopted a successor tariff to NEM 2.0 called “Net Billing Tariff.” The CPUC determined through its NEM 2.0 Lookback Study that the current NEM program was not meeting the objectives of Assembly Bill 327 to:
1. Ensure sustainable growth in the market for customer-sited renewable distributed generation; and
2. Ensure that the total benefits of the successor program to all customers (including nonparticipating customers) are approximately equal to the total costs.
The study showed that NEM 2.0 was creating a cost-shift of hundreds of millions of dollars per year to non-NEM customers. The CPUC started the development of the NEM successor tariff that would eventually become known as “NBT” to alleviate the cost-shift, promote affordability across all customers, incentivize the installation of battery storage systems, and support grid reliability.
The development of NBT began in November 2020. The CPUC received 18 proposals from multiple parties for the design and structure of the successor tariff. Opening and rebuttal testimonies, evidentiary hearings, and opening and reply briefs were submitted 2 throughout the summer of 2021. SDCP filed a Joint Reply Brief1 alongside San Jose Clean Energy, recommending that the CPUC: 1) reject the Joint Investor-Owned Utilities proposal to use the Avoided Cost Calculator (ACC) for determining customer compensation, 2) reject the proposed high fixed charges, 3) adopt a reasonable glidepath for the industry, and 4) reject proposals to move NEM 1.0 and 2.0 customers to the successor tariff. In December 2021, the CPUC issued its Proposed Decision (PD) on the successor tariff. SDCP filed joint comments2 alongside East Bay Community Energy in December 2021 arguing that “cumulative changes to the standard tariff from currently approved tariffs goes too far, too quickly” and “request that the Commission reject the grid participation charge, modify the export credit rate to provide long-term stability consistent with Sierra Club’s proposal, and make other modest changes to the PD prior to its approval.”
Due to the high number of comments and sharp disagreement among parties about the PD, the CPUC held the PD and issued a “Ruling Setting Aside Submission of the Record to Take Comment on a Limited Basis” in May 2022. The CPUC ultimately withdrew the December 2021 PD in November 2022. SDCP, in coalition with Redwood Coast Energy Authority, East Bay Community Energy, San Jose Clean Energy, and Peninsula Clean Energy Authority filed joint comments3 applauding the withdrawal of the original PD and requested that the CPUC revise the new PD to ensure a smooth transition, clarify use of Public Purpose Program Charges to fund the ACC Plus Adder, consider additional incentives for low-income customers, and allow commercial customers to receive adders.
The CPUC issued a new PD in November 2022 which was revised in December 2022 and ultimately adopted by the CPUC to become NBT.
NBT cannot accurately be called “NEM 3.0” because it shifts away from the “net metering” structure entirely. Instead, it nets billing credits and charges instead of netting energy itself. Under NBT, all consumption of energy from the grid (i.e., “electricity imports”) is metered on a separate channel in real time and charged retail rates. All energy generated and exported to the grid (i.e., “electricity exports”) is metered on a separate channel in real time and billing credits are generated using the utilities’ ACC rates at each hour of the year.
The ACC provides an hourly estimate of the total grid benefits resulting from a customer’s load reduction. This includes the avoided costs of both capacity and energy, as well as the value of ancillary services, greenhouse gas emissions reductions, and avoided transmission and distribution infrastructure costs. The CPUC simplified the prices in the 8760 hours of the ACC into a single average monthly value for each hour of the day, differentiated between weekdays and weekends/holidays. The ACC values are intended to incentivize adoption of solar paired with battery storage by providing price signals to 1 https://sdcommunitypower.org/wp-content/uploads/2022/09/Joint-Reply-Brief-of-SJCE-and-SDCP_9.14.21.pdf 2 https://sdcommunitypower.org/wp-content/uploads/2022/09/R2008020-Joint-CCA-Comments-on-PD_Filed_1.7.22.pdf 3 https://sdcommunitypower.org/wp-content/uploads/2022/12/R.20-08-020-Opening-Comments-of-Joint-CCAs-on-the-NEM-Revised-PD.pdf 3 customers to export energy to the grid when energy is most valuable and needed to relieve grid stress.
All NBT customers must take service under a highly differentiated Time-of-Use (TOU) rate schedule. For the San Diego Gas & Electric (SDG&E) territory, the CPUC directed that rate schedule to be TOU-EV-5 since it has significantly different rates for on-peak and off-peak periods. Additionally, all customers must switch to monthly billing, instead of annually, and must pay the amount owed each month. The CPUC allowed the utilities to establish a successor rate schedule through a Tier 2 advice letter, a general rate case Phase 2, or a rate design window. SDCP will monitor the establishment of a successor rate schedule and may consider bringing back its own version for approval by the Board.
Recognizing the shift to decarbonization and electrification of buildings, the CPUC allowed for customers to oversize their generation systems by up to 50% more than historical loads. Customers, however, need to attest that their energy consumption will increase within 12 months.
Per the CPUC decision, SDG&E started placing new solar customers on its NBT rate schedule on April 15, 2023. SDG&E is required to implement a NBT billing system by mid-December 2023. Until the NBT billing system is operational, SDG&E will bill NBT customers under the NEM 2.0 Tariff.
DISCUSSION
Over the last several months, SDCP staff conducted significant analysis to broadly evaluate how SDCP compensates customers for the onsite generation of energy. The analysis included 1) considerations to adopt a payment structure for new onsite generation customers that aligns compensation with the needs of the grid (i.e., NBT), 2) potential programs designed to incentivize the pairing of storage with new onsite installations to support grid resilience, and 3) enhancements to the current SDCP NEM policy to improve compensation mechanisms and remove Net Surplus Compensation (NSC) caps. Comprehensively, this package of recommended actions would result in the most customer-centric, progressive onsite generation compensation strategy in California. The strategy carefully balances multiple priorities including supporting the local San Diego solar and storage industry, increasing access to distributed energy resources to Communities of Concern and low-income customers, an increasing statewide focus on grid resilience, customer fairness, and financial prudence for the agency.
This agenda item is focused on the consideration to adopt NBT recommendations for compensation for new onsite generation customers.
ANALYSIS
Current and Potential Future Onsite Generation Customer Overview SDCP currently has over 152,000 accounts enrolled in its NEM tariff, with 98% of those accounts being residential customers, and approximately 12% being customers enrolled 4 in the California Alternative Rates for Energy (CARE) program and Family Electric Rate Assistance (FERA).
The following tables show the breakdown of accounts currently enrolled in the SDCP NEM Tariff by customer type (i.e., Commercial, Residential CARE/FERA, and Residential Non-CARE/FERA) and the percentage of accounts by customer type per SDCP member agency.
Table 1: Number of Accounts Currently Enrolled in SDCP
NEM Tariff
Residential
CARE/FERA
Residential Non-CARE/FERA Commercial Total
18,616 130,761 2,796 152,173
12% 86% 2% 100%
Totals may not add up to 100% due to rounding.
Table 2: Percent of Accounts Enrolled in SDCP’s NEM Tariff by Customer Type by Member Agency
Member Agency Commercial Residential
CARE/FERA
Residential Non-CARE/FERA
City of Chula Vista 1% 16% 83%
City of Encinitas 1% 2% 96%
City of Imperial
Beach 3% 19% 78%
City of La Mesa 2% 8% 90%
City of National City 5% 46% 49%
City of San Diego 2% 12% 86%
County of San Diego 2% 12% 86%
Totals may not add up to 100% due to rounding.
Importantly, if NBT is adopted, these NEM customers would not be affected by NBT until they complete or terminate their 20-year NEM legacy period, at which point they would transition to the new tariff. Existing customers with onsite generation would remain on the SDCP NEM tariff for their generation charges and credits and on their SDG&E NEM tariff for delivery charges and credits during that period. Their NEM legacy period starts on the date they interconnected and received permission to operate.
SDCP expects 252 of these existing onsite generation NEM accounts to complete their NEM 1.0 legacy period in 2024 and switch to NBT, representing 0.2% of customers. The annual number of customers completing their NEM 1.0 legacy period is approximately fewer than 500 customers per year until 2029.
Staff needed to estimate the potential number of customers who would be served by future rates to calculate potential financial impacts of various NEM and NBT scenarios. A key input to that analysis is expected future rooftop solar adoption, the primary source of 5 onsite generation by SDCP customers. SDCP forecasted the following scenarios of solar growth over the next three years:
1. Low Growth: Assumes an adoption rate that is based on the average number of new NBT-specific setups seen in SDCP's service territory during the months of May-July 2023. May 2023 was the first full month that any new SDG&E solar interconnections were placed on NBT. This scenario assumes a dramatic decrease in the number of installations from the historical trajectory.
2. Mid Growth: Assumes a contraction in the number of historical installations by 40% in the residential market based on estimates from the Solar Energy Industries Association.4
3. High Growth: Assumes business as usual with no change in the number of installations and is based on the average number of installations per month in SDCP service territory seen in 2021, before the rush in 2022.
Based on these assumptions, the forecast shows that SDCP could see 2,000 new NBT customers in the Low Growth scenario, 30,000 in the Mid Growth scenario, or over 50,000 new NBT customers in the High Growth scenario. This includes customers who are ending their 20-year legacy NEM period and transitioning to NBT. Staff determined that the Mid Growth scenario is more likely to occur due to historic investments under the Inflation Reduction Act, a decline in rooftop solar prices, and an increasing number of incentives available for energy storage to be paired with solar systems.
Program Options
Using the Mid Growth scenario for future expected onsite generation customers, staff conducted an in-depth impact analysis of two potential policy options:
1. Extend the current NEM 2.0 Tariff to all new customers; or
2. Implement an NBT.
Option 1: Extending NEM 2.0 for All New Customers
The first option examined the possibility of keeping the current NEM 2.0 tariff for all new self-generation customers. Several factors led staff to not recommend this option.
Since SDCP represents only a portion of the total bill, new customers would still be subject to SDG&E's NBT (now called “Solar Billing Plan”) for transmission and distribution costs. Since generation rates represent 35%-45% of the total bill, extending NEM 2.0 would have a minimal impact on the billing changes imposed by NBT.
Moreover, having two different structures could cause significant customer confusion, cause potential billing issues, and further complicate estimates on the value of rooftop 4 Solar Industry Research Data | SEIA https://www.seia.org/solar-industry-research-data 6 solar for customers including system payback periods. As required by the CPUC’s NBT decision, all new NBT customers would still be required to take service under TOU-EV-5, regardless of SDCP’s NEM tariff.
Staff also analyzed the financial impact of extending the current NEM 2.0 Tariff. The analysis revealed that under the Mid Growth scenario, extending the current NEM Tariff to all new customers would result in costs to SDCP amounting to approximately $32 million over three years. All SDCP customers would have to bear these costs through rates while the benefits would be targeted to a limited number of customers.
Additionally, staff believes that this investment fails to send the proper pricing signals to promote energy storage adoption and does not contribute to grid reliability.
Option 2: Adopt a Net Billing Tariff for All New Customers The second option analyzed was the adoption of an NBT for all new customers. This is the staff recommendation based on the results of the analysis outlined below.
An initial step to analyze the adoption of NBT was to consider the appropriateness of using the SDG&E ACC rates for a potential SDCP NBT. To determine if the load curve and ACC rates for SDG&E could be used as a proxy for SDCP, SDCP and its consultant, Pacific Energy Advisors (PEA), analyzed the CPUC’s 2022 Distributed Energy Resources ACC Documentation conducted by Energy and Environmental Economics, Inc. (E3). The SDCP and PEA teams determined that the work done by E3 for the CPUC was thorough and adequate, and that SDG&E’s ACC rates for generation sufficiently reflect SDCP’s load curve. Accordingly, the analysis of adopting NBT was done assuming the usage of SDG&E’s ACC rates for SDCP’s NBT.
By design, the ACC provides customer compensation for exported energy from onsite energy systems that is more aligned with wholesale energy prices and thus incentivizes energy storage. These price signals align with grid conditions and needs, especially during the peak periods in the summer months of August and September.
As such, adopting NBT (including the ACC) is aligned with SDCP’s commitment of supporting grid reliability and encouraging energy storage adoption. Additionally, adopting NBT would align with the direction that the majority of Load Serving Entities (LSEs) are moving in, including fellow CCAs. Clean Power Alliance, the largest CCA in the state, adopted NBT for all new customers in July 2023, and the majority of CCAs in Pacific Gas & Electric (PG&E) territory are bringing NBT to their Board of Directors for consideration in the next couple of months. Additionally, aligning the generation and distribution components under a NBT structure would significantly reduce customer confusion and billing issues, and provide further clarity to the solar industry and thus allowing them to model estimates more effectively.
Staff analyzed the financial impacts of adopting NBT for all new customers. The analysis showed that under the Mid Growth scenario, adopting NBT would result in costs to SDCP amounting to approximately $8.5 million over three years. This represents a savings of approximately $23 million for all SDCP rate payers compared to extending the current NEM 2.0 tariff. This is due to the lower ACC rates paid for generation. These savings could be returned to all customers via rate savings and/or 7 reinvested back into the community via programs, such as developing an incentive program to encourage pairing battery energy storage systems with new solar installations.
Recommendations
With the conclusion of this analysis, staff is bringing three recommendations to the Board of Directors (“Board”) that relate to future onsite generation customers:
Adopt NBT for All New Customers
Based on the analysis described above and the associated savings for all ratepayers, staff will recommend to the Board adoption of a SDCP NBT that mirrors the CPUC NBT decision and is in line with portions of SDG&E’s proposed NBT. NBT would give SDCP the opportunity to meet the needs of all customers more equitably, while helping to reduce costs for all customers. This enables SDCP to leverage the savings and provide programs that encourage clean energy use and energy storage adoption with a particular focus on low-income customers that are currently underrepresented in NEM participation.
Adopting NBT would mean that new NBT customers would:
1. Have all electricity exports separately metered on a different channel than all electricity imports;
2. Be compensated based on the ACC rates;
3. All electricity imports would be charged retails rates; and
4. Be billed monthly for net charges.
Per the CPUC Decision 22-12-056, the legacy period for NBT customers is set at 9 years and is linked to the customer that originally causes the system to be installed, not to the system or premise. SDCP's tariff aligns with this legacy period.
The adoption of NBT will not affect existing NEM customers until the completion and/or termination of their 20-year NEM legacy period. Per the CPUC Provide Generation Adders for New NBT Customers
To accompany the adoption of NBT, staff will recommend to the Board including additional generation incentives or “adders” in the tariff in the form of compensation per generated kilowatt hour to be added to the ACC. Similar adders were established by the CPUC for some investor-owned utilities (IOUs) as part of NBT. The adder amounts (i.e., $/kWh) were selected to achieve a simple payback period of nine years for solar systems. The CPUC determined the nine-year payback period was reasonable and would allow the market to grow sustainably.
The CPUC adopted a generation adder for residential customers to achieve the nine-year payback period for two IOUs: PG&E and Southern California Edison (SCE). This adder is higher for customers participating in the CARE/FERA programs due to their 8 lower monthly bills. In its decision, the CPUC determined that in SDG&E territory, the simple payback period for solar systems was already below the nine-year target, in large part due to the relatively higher rates in SDG&E territory. Accordingly, no adder was included for SDG&E customers in the CPUC decision. The table below shows the adders and associated simple payback periods by IOU as determined by the decision:
Table 3: CPUC Adopted Initial ACC Plus Adders by
Utility ($/kWh)
Customer Segment SDG&E PG&E SCE
Residential Non-CARE
$0.000 $0.022 $0.040
Residential CARE $0.000 $0.090 $0.093
Commercial (not
eligible)
$0.000 $0.000 $0.000
Table 4: CPUC Simple Payback Periods for SDG&E Net
Billing Customers Stand-alone Solar Payback Period
(years)
Customer Segment SDG&E PG&E SCE
Residential Non-CARE
5.95 9.00 9.00
Residential CARE 8.43 9.00 9.00
Commercial (not
eligible)
7.50 8.17 9.38
To further support the growth of regional solar adoption, staff analyzed the possibility of providing generation adders that achieve the following goals:
• Enhance the competitiveness of SDCP’s onsite generation compensation policy and clarify the value of SDCP to customers;
• Close the generation bill credit gap and reduce the payback period to make adoption more financially attractive for customers;
• Ensure simplicity and ease of understanding of the adder; • Address and promote equity for CARE and/or FERA customers; and 9 • Support grid reliability.
In the Community Power Plan, SDCP committed to support populations historically underrepresented in energy program participation by centering communities of concern in program design to enable participation by all customers, in addition to directing more investments to communities of concern. Low-income customers are underrepresented in NEM participation; CARE/FERA customers make up 24% of all customers but account for only 12% of all NEM customers. This disparity was a key motivator for identifying an adder that would provide additional financial support to income-qualified customers to lessen the financial burden of adopting onsite generation, such as rooftop solar.
With these goals in mind, staff used the CPUC’s customer bill model5 employed during the adoption of NBT and analyzed the impact to the payback period the adder has on non-CARE/FERA customers and used it to determine the adder amount needed for CARE/FERA customers to achieve an equal simple payback period for stand-alone solar.
Staff will recommend to the Board that SDCP provide the generation adders outlined in Table 5 below to all customers, including residential non-CARE/FERA, residential CARE/FERA, and non-residential (commercial) customers. Staff will propose to the Board that all new non-CARE/FERA customers, both residential and non-residential, receive a generation adder of $0.0075/kWh for six years. This adder aligns with the premium for SDCP’s Power100 service because customers are exporting 100% renewable energy. Additionally, staff proposes an adder for residential CARE/FERA customers of $0.11/kWh for six years.
Table 5: Proposed Generation Adders
Customer
Class
Residential
(Non-CARE/FERA)
Residential
CARE/FERA Commercial
Adder
Amount $0.0075/kWh $0.11/kWh $0.0075/kWh
Staff determined that the proposed adder amounts would result in a payback period for stand-alone solar of approximately six years, including CARE/FERA customers, which is similar to the average simple payback period for NEM 2.0 customers.6 This aligned with the recommendations from GRID Alternatives to ensure that the tariff benefits income-qualified households with higher adders and shorter payback periods. 5 Net Billing Tariff (ca.gov) https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-management/customer-generation/nem-revisit/net-billing-tariff 6 NEM 3.0 – Making the Financial Case by Combining Home Electrification with Energy Storage - Schneider Electric Solar America https://solar.se.com/us/en/2023/08/22/nem-3-0-making-the-financial-case-by-combining-home-electrification-with-energy-storage/#:~:text=Now%2C%20let's%20look%20at%20some,to%20recover%20the%20initial%20investment. 10 Table 6: Simple Payback Periods for SDCP Net Billing Customers with Generation Adders (years)
Customer Class Residential
(Non-CARE/FERA)
Residential
CARE/FERA Commercial
Stand-alone
Solar Payback
Period (years)
5.83 5.91 7.33
Staff will recommend to the Board that these adders be offered to all new NBT customers that started service on or after April 15, 2023, and be offered for three years, ending on December 31, 2026. After three years, but prior to the sunset of the adder, staff would assess the general market conditions for solar and storage and evaluate the effectiveness of the adders in helping:
• Reduce the simple payback period for CARE/FERA customers; • Drive adoption of solar among CARE/FERA customers; and • Sustain the region's rooftop solar market.
Staff would come back to the CAC and Board in 2026 with recommended adjustments or updates.
Additionally, staff is evaluating the feasibility of providing an energy storage grid interactive adder that will allow SDCP to utilize the batteries for grid reliability support.
Staff will bring back an update on this adder to the Board in early 2024.
NBT Annual Net Surplus Compensation Approach
To accompany the adoption of NBT, staff will recommend to the Board a standard approach to the Net Surplus Compensation (NSC), similar to the NSC approach for NEM customers. Under the standard NSC payment procedure, the total amount of electricity export and electricity import volumes are netted to determine a net annual electricity export amount in kWh wherever applicable. This amount is then compensated based on the NSC rate for the month the customer has their true-up.
Customers are eligible to receive a check if their NSC amount is $100 or more; otherwise, the amount is carried over to the next billing cycle to offset future charges.
In the CPUC decision, utilities contend that customers may receive a double payment for the same the exports — one payment at ACC rates and another at NSC rates, which is effectively the ACC rate for the entire month. The CPUC acknowledges this potential and directed the utilities to implement the following adjustment:
1. Calculate if a customer is a net exporter of electricity over the past 12 months;
2. Calculate the average of the ACC rate of all NBT customers in the service territory for the past 12 billing cycles;
3. Calculate a NSC adjustment amount by multiplying the average ACC by the annual net electricity exported; and
11 4. Debit the NSC adjustment from the total NSC payment amount.
Staff holds a different, more customer-centric perspective than the CPUC and considers the true-up process as a demarcation between the billing credits using the ACC and the compensation of net electricity exported. For this reason, staff will recommend to the Board that SDCP should not adopt a NSC adjustment process and instead should maintain the standard process for NSC. This would further differentiate our tariff from the utility and provide a better customer experience in alignment with keeping our customers as the cornerstone of everything that we do and in concert with our strategic goal to strongly source and promote local renewable power.
Recommendation Summary
In summary, staff will recommend to the Board that they adopt the Net Billing Tariff in Attachment A, with the following key features:
• All electricity exports, as metered on a separate channel in real time, will be valued using the same methodology as SDG&E bundled customers.
• All electricity exports, as metered on a separate channel in real time, will be compensated using the same hourly ACC rates as SDG&E bundled customers. • All electricity imports, as metered on a separate channel in real time, will be charged using SDCP’s generation rates as stipulated in the EV-TOU-5 rate schedule or a successor rate schedule for residential customers. • All electricity exports, as metered on a separate channel in real time, for all customers will receive a flat generation adder of $0.0075/kWh for six years. The flat generation adder will be $0.11/kWh for six years for customers enrolled in the CARE or FERA programs.
• The generation adders will be offered for all new customers that interconnect and receive permission to operate on or after April 15, 2023, through December 31, 2026.
o Staff will evaluate the effectiveness of the adders in 2026 and return to the Board with any updates or adjustments.
• NBT customers will continue to receive NSC for total net energy exports over the course of an applicable relevant period with no NSC adjustment and be subject to SDCP’s standard terms and conditions of NSC payment.
• Customers currently served under SDCP’s NEM Tariff will not be affected by the NBT Tariff for the duration of their 20-year NEM legacy period. o Once their legacy period concludes or is terminated, they will be placed into NBT and will not be eligible for the generation adders. • The NBT will be applicable to customers who begin service on SDG&E’s NBT schedule on or after April 15, 2023.
12 • Until SDG&E and SDCP NBT billing systems are fully operational, customers who began service on SDG&E’s NBT schedule after April 15, 2023 are currently being billed under the SDCP NEM Tariff but are not eligible for the 20-year legacy period.
These NBT transitional customers will be switched to billing under the SDCP and SDG&E NBT in December 2023 or the date that SDG&E specifies the transition will occur.
Stakeholder Engagement
Staff presented the recommended proposal, or earlier iterations of the proposal, to various local and statewide stakeholders. When possible, and deemed in the best interest of SDCP customers, adjustments were made to the proposal based on stakeholder feedback. Several of the stakeholders were involved in the 2021 and 2022 NEM CPUC proceeding and Staff reviewed and incorporated, when feasible, stakeholder recommendations included in comments to the CPUC.
Stakeholder engagement was conducted with a variety of stakeholders including:
• SDCP Board of Directors
• SDCP Community Advisory
Committee Members
• Local elected officials
• California Solar & Storage
Association
• Climate Action Campaign
• GRID Alternatives
• International Brotherhood of
Electrical Workers 569
• Local chambers of commerce
and economic development
corporations
• Other Community Choice
Aggregators
• Sierra Club San Diego chapter
• Staff of local public agencies
• Utility Consumers' Action
Network
• Vote Solar
• Baker Electric
• Cleantech San Diego Energy
Working Group
NEXT STEPS
SDG&E is anticipated to implement their updated billing systems and switch customers by December 15, 2023. If the Board adopts the staff recommendations, staff will work with Calpine Energy Solutions to implement the tariff for new onsite generation customers and NBT customers currently being served on NEM 2.0 on an interim basis. Staff will work with Calpine and SDG&E to ensure proper testing and validation of data communications and billing mechanics following adoption. Additionally, Staff will work to create a new webpage on the SDCP website with information on NBT.
Additionally, SDCP recently added a new staff member to focus solely on the development of a future battery storage incentive program. Over the coming months, staff will conduct an extensive review of battery storage incentive program best practices from 13 throughout the country. Concurrently, staff will engage with the industry through informal interviews and workshops to incorporate industry feedback into program design. Staff will come back to the CAC and the Board in the first quarter of calendar year 2024 with an update on program development.
COMMITTEE REVIEW
The Community Advisory Committee (“CAC”) received an update on Staff’s proposed recommendations at their regularly scheduled October 12, 2023, meeting. The CAC had questions regarding the transition of customers onto NBT, whether current NEM customers would be impacted by this tariff, whether generation systems could be oversized, and the legacy period for NBT customers. The CAC encouraged Staff to conduct outreach and communication to educate stakeholders on the changes and proposed adders. The CAC was very interested in the battery storage pilot program and looks forward to engaging on the subject in upcoming meetings. The CAC applauded Staff for the detailed analysis that was undertaken, the collaboration between departments, and the balanced approach, while centering the customer, in the design of the tariff.
The Finance and Risk Management Committee (“FRMC”) received a report on this item at their regularly scheduled October 19, 2023 meeting. The FRMC voted unanimously to recommend Board approval of the tariff.
FISCAL IMPACT
SDCP estimates that adopting NBT would result in bill credit costs amounting to approximately $8.5 million over three years. This represents a significant savings of approximately $23.5 million over three years compared to extending the SDCP NEM tariff.
SDCP estimates that providing generation adders to all customers would result in a cost of $2.8 million over three years. This cost would be covered by the savings resulting from the adoption of NBT, reducing the savings to approximately $20.7 million over three years.
SDCP estimates that NSC payments would result in a cost of approximately $3.2 million over three years. This cost remains consistent regardless of whether NBT is adopted and is factored into SDCP’s annual operating budget.
Staff does not yet have an estimate of a potential battery energy storage pilot program.
Staff will bring back an item to the Board in early 2024 to discuss a potential program offering and include budget estimates. Staff may be able to use the savings from adopting NBT for the battery program.
ATTACHMENTS
Attachment A: San Diego Community Power Net Billing Tariff ITEM 16 – ATTACHMENT A
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San Diego Community Power
Net Billing Tariff
APPLICABILITY: San Diego Community Power (“SDCP”) Net Billing Tariff (“NBT” or “NBT Tariff”) shall be effective beginning on April 15, 2023, the day following the NEM-Successor Tariff (“NEM-ST”) eligibility sunset required by the California Public Utilities Commission (“CPUC”).
NBT Tariff shall apply to
(i) SDCP customers served under San Diego Gas & Electric Company (“SDG&E”) Solar Billing Plan (“SBP”) and/or Schedule NBT for Customer-Sited Renewable Distributed Generation1 (“SDG&E Schedule NBT”) receiving electric generation services from SDCP, including customers with battery storage, fuel cells, or as approved by the CPUC under future aggregated or virtual designs, (ii) SDCP customers who are eligible for SDG&E’s NEM Tariff and elect to switch to the SDCP NBT Tariff, and
(iii) SDCP customers who are automatically transitioned to the SDCP NBT following the conclusion and/or termination of their 20-year SDG&E Net Energy Metering (NEM) legacy period.2
SDG&E tariffs are available on SDG&E’s website3 and may be amended or replaced by SDG&E from time to time.
This tariff shall remain in effect until modified, amended, or replaced by SDCP’s Board of Directors (“Board”) at a duly noticed public meeting of the Board.4 ELIGIBILITY: SDCP’s NBT Tariff is available to customers operating a solar, wind, biomass, geothermal, or other renewable resource as defined in the California Energy Commission’s (“CEC”) Renewables Portfolio Standard (“RPS”) Eligibility Guidebook.5 Renewable Energy Generation Facilities (“REGF”) are limited to 1MW under the SDCP and SDG&E NBT tariffs.
Additionally, the customer must participate in SDG&E’s SBP (or successor) for non-generation 1 SDG&’s proposed Schedule NBT was submitted to the California Public Utilities Commission in Advice Letter 4155-E and 4155-E-A, available at https://www.sdge.com/rates-and-regulations/tariff-information/advice-letters 2 See SDG&E’s Schedule NEM and Schedule NEM-ST at https://www.sdge.com/rates-and-regulations/current-and-effective-tariffs for details on SDG&E’s NEM legacy periods.
3 Current and Effective Tariffs | San Diego Gas & Electric (sdge.com) https://www.sdge.com/rates-and-regulations/current-and-effective-tariffs 4 Board agendas are available at: https://sdcommunitypower.org/resources/meeting-notes. 5 The latest RPF Eligibility Guidebook can be found at the CEC’s website: https://www.energy.ca.gov/programs-and-topics/programs/renewables-portfolio-standard.
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services, such as transmission and distribution. SDCP customers served under SDCP’s NBT Tariff must provide SDG&E with a completed SDG&E NBT or SDG&E NEM Application and comply with all other SDG&E requirements for enrollment in the SDG&E 6 before becoming eligible for the SDCP NBT Program. No direct agreement with SDCP is necessary.
Eligible SDCP customers who begin service under the SDG&E NBT Schedule on or after April 15, 2023, are automatically enrolled in the SDCP NBT Tariff either at the time of initially enrolling with SDCP or at the time SDG&E begins serving them on the SDG&E NBT Schedule. Eligible SDCP customers who begin service under the SDG&E NEM tariff prior to April 15, 2023, will be eligible for service under the SDCP NEM Tariff7 for 20 years following their SDG&E Original PTO.
Customers served under the SDCP NEM Tariff may elect to switch to the SDCP NBT Tariff.
Customers who voluntarily switch to the SDCP NBT Tariff or who are automatically transitioned to the SDCP NBT Tariff following the conclusion and/or termination of their NEM legacy period are not eligible to return to service under the SDCP NEM Tariff.
This tariff does not apply to customer-generators with multiple meters who wish to aggregate the electrical load of the meters located on the customer’s owned, leased, or rented property where the Renewable Electrical Generation Facility is located, including existing Net Energy Metering Aggregation or Virtual Net Energy Metering tariffs.
NBT TRANSITION CUSTOMERS: Customers who submit complete applications to SDG&E on or after April 15, 2023 will interconnect under SDG&E’s Schedule NBT but will be temporarily billed on NEM-ST until SDG&E Schedule NBT is fully operationalized in SDG&E’s and SDCP’s billing systems, respectively. Once SDG&E Schedule NBT is operationalized, any customers who interconnected under SDG&E Schedule NBT but were billed temporarily on NEM-ST will complete their true up under their temporary NEM service and transition to billing on the SDG&E Schedule NBT at the beginning of their next available billing cycle, currently expected as of December 2023.
The NEM-ST 20-year legacy period is not applicable to SDG&E Schedule NBT customers taking interim service on NEM-ST.
LEGACY PERIOD: The terms of the NBT Tariff shall remain effective for a period of up to 9 years from the Permission to Operate Notice (“PTO”)8 Date from SDG&E. Per CPUC Decision 22-12- 056, the legacy period is linked to the customer that originally causes the system to be installed, not to the system or premise. Should another customer take control of (e.g., buys, leases, or pays 6 See https://www.sdge.com/solar/solar-billing-plan for more information. 7 SDCP’s NEM Schedule is available at: https://sdcommunitypower.org/key-documents/. 8 Permission to Operate Notice (PTO) is SDG&E’s written approval authorizing a customer to commence operation of a qualifying renewable electrical generating facility or approving customer’s proposed modifications of the generating facility. The date that SDG&E provides the customer with the original PTO is referred to as the Original PTO Date. See SDG&E Schedule NBT for additional information.
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a power purchase agreement for) the system (such as a new customer moves into the premise), the subsequent customer does not have a legacy period. Exceptions are made for:
• The subsequent customer is or was the legal partner (e.g., spouse or domestic partner in the case of residential customers or, in the case of nonresidential customers, the account-holding entity continues to be majority controlled by the same underlying individuals or entities from the time the legacy system was installed) of the original customer. For this latter group, the legacy period maintains its original interconnection date and length of nine years.
• When a builder/contractor constructs a new building and receives PTO before selling the unit. The new owner after the rebuild will be able to retain the 9-year legacy period.
RATES: All rates for the SDCP NBT Tariff are in accordance with the applicable customer’s otherwise applicable SDCP rate schedule (“SDCP OAS”).9 SDCP NBT residential customers are required to enroll on highly differentiated time-of-use rates currently defined as EV-TOU-5 in SDCP and SDG&E territory, or other qualified rates that SDG&E and SDCP may develop in the future, and may choose to enroll in critical peak pricing or peak day pricing rates wherever applicable. The SDCP NBT Tariff provides the mechanism for billing and crediting customers with generating facilities only. Customers served under this tariff are still responsible for all billed usage charges according to their applicable SDCP rate schedule, including volumetric usage, demand charges (if applicable), Power100 surcharges (if applicable), taxes, and all other charges owed to SDCP. Nothing in this tariff will supersede any SDG&E or SDCP authorized charges.
CHARGES, CREDITS AND BILLING: SDCP’s generation charges and credits for electricity (measured in kilowatt-hours, or “kWh”) are calculated as described below.
A) Definitions:
i. “Imported Electricity” is defined as when a customer uses any metered electricity supplied by SDCP, reflected as “positive” kWh usage, as recorded on the import channel of the customer’s SDG&E meter.
ii. “Imported Charges” is defined as the charges associated with the amount of Imported Electricity during a billing cycle within the Relevant Period based on the customer's OAS. iii. “Energy True Up” is defined as the process performed by SDG&E for the transmission and delivery service and by SDCP for the generation service, as applicable, at the end of each Relevant Period following the date the customer-generator was first eligible for schedule 9 SDCP’s residential rates can be found at https://sdcommunitypower.org/billing-rates/residential-rates and non-residential rates at https://sdcommunitypower.org/billing-rates/commercial-rates.
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NBT, or the date of SDG&E’s written approval to begin parallel operation of the REGF for purposes of participating in Schedule NBT, whichever is later, and at each anniversary date thereafter.
iv. “Exported Electricity” is defined as when a customer supplies any metered electricity to the electric grid, reflected as “negative” kWh usage, as recorded on the export channel of the customer’s SDG&E meter.
v. “Export Compensation Rate,” at times referred to as the Generation Electricity Export Credits (“EEC”)10, is defined as the rate or amount at which Exported Electricity will be compensated per kWh. The Export Compensation Rate is based on the CPUC’s most recent Avoided Cost Calculator (“ACC”), adopted as of January 1 of the calendar year of the customer’s interconnection date. The Generation EEC is based on hourly ACC values, averaged across days in a month for each hour, differentiated by weekdays and weekends/holidays. SDCP utilizes SDG&E’s Generation EEC calculated based on a weighted average of ACC values across its four different climate zones. EEC does not vary between customer classes or technology. The Generation EEC Price is posted on SDG&E’s & SDCP’s websites.
vi. “Export Credits” are defined as the appropriate credit for any Exported Electricity, based on the Export Compensation Rate multiplied by the amount of Exported Electricity, and any applicable credit surcharges.
vii. “Export Credit Balance” is defined as when a customer has excess export credits carried into the subsequent billing period, or into the SDCP true up process at the end of the relevant period.
viii. “Net Surplus Electricity” is defined as the kWh amount of excess electricity exported to the grid after netting Electricity Imports and Electricity Exports at end of the Relevant Period. ix. “Relevant Period” is defined as the billing period that consists of twelve-monthly billing cycles commencing on the date SDG&E provides Customer-Generator with SDG&E’s written approval to begin parallel operation of the REGF PTO for purposes of participating in NBT, and on every subsequent anniversary thereof.
10The EEC Price is a $/kWh value which represents the estimated value of exports to the grid. Each year, the EEC Price is calculated using the California Public Utilities Commission (CPUC) Avoided Cost Calculator (ACC) approved to be effective as of January 1 of the calculation year (the “vintage year”). For each “vintage year”, the EEC Price is calculated for each month of a 9-year horizon period, and it is differentiated by hour (24 hours) and by weekdays and weekend/holidays. In addition, each hourly EEC Price is broken down in two components: (1) the Generation EEC Price (energy, cap and trade and generation capacity) component, and (2) the Delivery Service EEC Price (transmission, distribution, greenhouse adder and methane leakage) component. The current version of the ACC is available at https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-management/energy-efficiency/idsm.
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B) Generation Electricity Charges:
As determined in each billing period, Generation Electricity Charges are calculated by multiplying the customer’s Imported Electricity (i.e., electricity consumption from the grid) in kWh by the applicable electricity (commodity) rate components ($/kWh) in the customer’s applicable SDCP OAS.
C) Export Credits:
As determined in each billing period, Export Credits are calculated by multiplying the hourly-differentiated customer’s Exported Electricity (i.e., electricity generated and sent to the grid) in kWh by the Export Compensation Rate.11 The calculated value of such net electricity exports shall be credited to the customer and applied as described in Sections (C) and (F), below.
Export Credits are calculated monthly and can be used to offset volumetric (kWh) Generation Electricity Charges (as calculated above) incurred during the billing period but at no point can they offset demand charges, taxes, or other charges or fees within the Customer’s SDCP OAS, nor will they offset any SDG&E transmission and delivery charges.
Any unused Generation Electricity Export Credits accrued in a given month can be used to offset volumetric (kWh) Generation Electricity Charges within the customer’s Relevant Period as described in Section (E). Customers on SDCP NBT will be billed based on no netting of kWh imports (consumption) and kWh exports (excess generation placed on the grid). Generation charges owed to SDCP net of any eligible credits will be paid each month and all charges and credits will be trued up at the end of the Relevant Period.
For the first five years of this NBT Tariff (“lock-in period”), the Export Compensation Rate will be set annually using a 9-year schedule from the ACC. All customers who interconnect during this five year “lock-in period” will receive a nine-year schedule of Generation ECC set in the year of interconnection as long as the SDG&E Interconnection Agreement remains valid and under the name of the original customer (or an “eligible customer-generator” as defined in SDG&E’s Schedule NBT). During the “lock-in period”, these customers will have the Export Compensation Rate derived from the ACC adopted by the CPUC to be in effect as of January 1 of the calendar year of the customer’s Original PTO Date. A new customer moving into a dwelling with an existing generating facility served under SDG&E’s Schedule NBT will not be eligible to retain the Export Compensation Rate associated with the Original PTO Date of the generating facility, with two exceptions as described in SDG&E’s Schedule NBT.
Customers may opt out of their nine-year schedule of Generation EEC and receive an 11 See https://sdcommunitypower.org/programs/net-billing-tariff.
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Export Compensation Rate that is updated annually based on the most recently adopted ACC. Customers that interconnect during the five-year lock-in period may exit their respective nine-year schedule of Generation EEC, but will not be able to opt back in.
Following the five-year lock-in period, Generation EEC for new NBT customers will be updated annually on January 1 based on the ACC adopted as of January 1 of that year.
Generation EEC will be accrued separately for Delivery under SDG&E and Generation under SDCP.
D) SDCP Generation Adders:
All new NBT customers are eligible to receive an SDCP Generation Adder. Customers that subsequently transfer into this NBT Tariff after the conclusion and/or termination of their 20-year NEM legacy period are not eligible for the SDCP Generation Adder.
The credit is calculated monthly by multiplying the Exported Electricity by the applicable $/kWh Generation Adder Rate shown in Table 1.
Table 1: Generation Adder Rates
Residential Non-CARE Residential CARE Non-Residential
$0.0075/kWh $0.11/kWh $0.0075/kWh
i. Eligibility:
a. To be eligible for the SDCP “Residential Non-CARE” and “Non-Residential” Generation Adder, customers need to (a) be served on this tariff, and (b) have an NBT effective date between April 15, 2023 and December 31, 2026.
b. To be eligible for the SDCP “Residential CARE” Generation Adder, customers need to (a) be served on this tariff, (b) have an NBT effective date between April 15, 2023 and December 31, 2026, and (c) be enrolled in either the CARE or FERA programs as of the effective date. c. A new customer moving into a dwelling with an existing Generating Facility served under this tariff on or after January 1, 2027 will not be eligible for the SDCP Generation Adder.
ii. Adder Period:
a. The SDCP Generation Adder Rates, as defined above, will be fixed during the first six (6) years (the “Adder Period”) beginning on the NBT effective date communicated by SDG&E to SDCP. Residential customers will ITEM 16 – ATTACHMENT A
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receive the SDCP Generation Adder during their Adder Period, as long as the SDG&E Interconnection Agreement remains valid and under the name of the original customer.
b. Customers receiving the Residential CARE adder will need to maintain enrollment in either the CARE or FERA programs for the duration of the Adder Period.
i. If a customer account ceases to be enrolled in either the CARE or FERA programs (as communicated to SDCP by SDG&E), the
customer will be moved to the Residential Non-CARE adder rate. ii. If a customer account enrolls in either the CARE or FERA programs (as communicated to SDCP by SDG&E), the customer will be moved to the Residential CARE adder rate.
E) Monthly Settlement of SDCP Charges/Credits:
All NBT customers will pay monthly for all applicable charges including the fixed charges within the OAS and any additional net charges due to SDCP and SDG&E. Customers will have net charges due in a given month if the sum of their Import Charges and Export Credits is greater than zero. Each customer will receive a statement as part of their monthly SDG&E bill indicating accrued SDCP Electricity Charges for Imported Electricity and/or SDCP Export Credits for Exported Electricity during the current monthly billing cycle. When a customer’s SDCP credits during the monthly billing cycle result in an accrued credit balance in excess of currently applicable SDCP Electricity Charges, the value of those credits shall be noted on the customer’s bill and carried over as a bill credit for use in a subsequent billing cycle(s).
A customer who has accrued credits during previous billing cycles will see such credits applied against currently applicable SDCP Generation Electricity Charges, reducing otherwise applicable Generation Electricity Charges by an equivalent amount to such credits. Any remaining credits reflected on the customer’s billing statement shall be carried forward to subsequent billing cycle(s) until either (i) the excess credit is used to satisfy current Generation Electricity Charges, (ii) the customer no longer receives service from SDCP, or (iii) an annual account true up is performed.
F) SDCP Annual True Up & Cash Out Processes:
i) SDCP Annual True Up: At the end of the most recent twelve (12) monthly billing cycles (“Relevant Period”) of each NBT customer, SDCP will perform a true up of all active customers. SDCP will determine whether or not each customer has produced net surplus electricity, as measured in kWh, over the most recent 12 ITEM 16 – ATTACHMENT A
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billing cycles, or the period of time extending from the customer’s commencement of participation in SDCP’s NBT Tariff through the end of their Relevant Period, whichever is shorter (“True Up Period”) and at each anniversary date thereafter. a. NBT Generation Payment Credit Refund: If the customer has an Export Credit Balance but incurred SDCP usage charges earlier within the same SDCP Annual True Up period, the credits will be applied against any of these charges still due.
If these charges were already paid during the Relevant Period being trued up, the amount will instead be carried over as a bill credit for use in the subsequent Relevant Period(s) for the benefit of the customer.
b. Electricity Export Credit Refund: At the time of the Annual True Up, if the customer has accumulated Electricity Export Credits in excess of any currently outstanding Electricity Charges, those credits will be carried over as a bill credit for use in the subsequent Relevant Period(s) for the benefit of the customer up to the total SDCP Electricity Charges paid by the customer on the same NBT account during the applicable Relevant Period (“Refundable EEC”), consistent with SDCP’s Annual Cash Out practice in Section (F)(ii). Any unused Electricity Export Credits over what is carried over as a bill credit for use in the subsequent Relevant Period (s) for the benefit of the customer up to the total SDCP Electricity Charges paid by the customer shall not be carried forward to the start of a new Relevant Period; rather, the unused Electricity Export Credits shall be zeroed out and a new Relevant Period will commence. c. Net Surplus Compensation (“NSC”): SDCP will determine at the time of Annual True Up whether each customer has produced Net Surplus Electricity over the course of the Relevant Period. If a customer has produced Net Surplus Electricity, then SDCP shall credit such customer an amount that is equal to the monthly Net Surplus Compensation rate per kWh, as defined in Section F.i.c.1, multiplied by the quantity of Net Surplus Electricity produced by the customer during the Relevant Period, consistent with SDCP’s Annual Cash Out practice in Section F.ii below. The SDCP NSC Rate is posted toSDCP’s website and updated monthly.12
1. SDCP’s NSC Rate is equal to the applicable monthly SDG&E’s NSC, which is defined by the CPUC as “a simple rolling average of each utility’s Default Load Aggregation Point (“DLAP”) price from 7 a.m. to 5 p.m.”, and “calculated monthly based on the hourly day-ahead electricity market price at each utility’s DLAP price published on the California Independent System Operator (“CAISO”) Open Access Same-Time Information System (“OASIS”), and ending the twentieth 12 SDCP Net Energy Metering (NEM) - https://sdcommunitypower.org/programs/net-energy-metering/ ITEM 16 – ATTACHMENT A
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day of each month13”, of the customer true up month plus $0.0075/kWh.
ii) SDCP Annual Cash Out: At the end of each customer’s relevant period, any current customer who has a combined Refundable EEC and Net Surplus Compensation value of $100 or more that exceeds any outstanding Electricity Charges, will be sent a payment by check via United States Postal Service Mail to the customer’s U.S. mailing address on file at the time of mailing for the credit balance on their account, as determined through SDCP’s Annual True Up process as specified in this section F(i), above. Customers receiving direct payment will have an equivalent amount removed from their NBT account balance at the time of check issuance. In the event that customers have a combined Refundable EEC and Net Surplus Compensation value that does not exceed $100, such credit balances will be carried forward into the subsequent Relevant Period(s) to offset future SDCP Electricity Charges as a Rollover. All NBT accounts will be reset to zero kWh annually as of the customer’s next monthly billing cycle and the only NBT credits carried forward on the customer’s account will be the combined Refundable EEC and Net Surplus Compensation credit balances less than $100.
Payments will be released up to 60 days after true up billing. Checks will expire 90 calendar days after issuance. If checks expire, customers may request the reissuance of a check and SDCP will make a reasonable effort to reissue the check within 30 days of a customer’s request.
iii) SDCP Cash Out for Terminations: Customers who close their electric account through SDG&E, opt out of SDCP and return to bundled service, or move outside of the SDCP service area prior to the end of their relevant period, shall be trued up according to SDCP’s Annual True Up Process. If applicable, the customer shall receive a refund payment by check via United States Postal Service mail to the customer’s U.S. mailing address on file within 60-90 days after final billing to allow for any usage revisions and/or any adjustments from SDG&E for any Export Electricity Credits on their account that exceed outstanding Electricity Charges at the time of true up, up to the total amount of Electricity Charges paid by the customer during the Relevant Period along with Net Surplus Compensation if they are determined to have produced Net Surplus Electricity.
Checks will expire 90 calendar days after issuance. If checks expire or are returned to SDCP, customers may request the one-time reissuance of a check and SDCP will make a reasonable effort to reissue the check within 30 days of a customer’s request. If the customer did not produce Net Surplus Electricity, as measured in kWh, they will not receive a direct payment. After one year, the funds will be 13 CPUC Decision 11-06-016 https://docs.cpuc.ca.gov/word_pdf/FINAL_DECISION/137431.pdf ITEM 16 – ATTACHMENT A
10 Effective Date
Originally Approved: Insert
Date
considered unclaimed property and turned over to the California State Controller’s Office.
SDCP reserves the right to work with customers on a case-by-case basis to transfer Net Surplus Electricity credits.
SDG&E NBT PROGRAM: Customers are subject to all applicable terms and conditions and billing procedures of SDG&E for SDG&E charges as described in SDG&E’s Schedule NBT (with the exception of SDCP OAS charges, which are described in SDCP’s rate schedules). SDCP may amend this NBT Tariff to align with SDG&E Schedule NBT following CPUC approval of the SDG&E Schedule NBT and any future amendments to the SDG&E Schedule NBT. SDCP calculates and applies generation charges and credits on a monthly basis. SDG&E will continue to calculate and apply charges and credits for delivery, transmission, and other services as detailed in SDG&E’s NBT Rate Schedule, and SDCP credits cannot be applied to any SDG&E charges.
Please review the SDG&E Schedule NBT14 for more information.
RETURN TO SDG&E BUNDLED SERVICE: SDCP customers participating in the SDCP NBT Program may opt out and enroll in SDG&E’s bundled service, subject to any applicable restrictions imposed by SDG&E. Customers who opt out of SDCP service are subject to SDG&E Schedule NBT.
SDCP will perform a true up of the customer’s account in accordance with Section (F)(iii) at the time of return to SDG&E bundled service, and customers will be subject to SDG&E’s then current rates, terms and conditions of service at the time of enrollment in SDG&E bundled service.
For details concerning opting out of SDCP service, please contact SDCP Customer Service by phone at 888-382-0169 or via email at [email protected].
MISCELLANEOUS: The Chief Executive Officer (“CEO”) of SDCP or their designee may, in their discretion, reserve the right to work with customers on a case-by-case basis to transfer NEM and NSC credits and/or otherwise deviate from the process specified in this policy for reasons including but not limited to cases of unforeseeable events, inconsistent receivable data from SDG&E, exigent circumstances, SDG&E bill presentment limitations or customer hardship. 14 See https://www.sdge.com/solar/solar-billing-plan
SAN DIEGO COMMUNITY POWER
Staff Report – Item 17
------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Nelson Lomeli, Program Manager
Lucas Utouh, Director of Data Analytics & Account Services Via: Karin Burns, Chief Executive Officer
Subject: Approval of updates to the existing Net Energy Metering (NEM) Tariff Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Approve the updates to the existing Net Energy Metering (NEM) tariff.
BACKGROUND
What is Net Energy Metering and How Does it Work?
Net Energy Metering (“NEM”) is a statewide program available to customers that install an onsite renewable energy generation system, like rooftop solar. This program allows customers to reduce their electricity consumption and bills.
NEM allows customers who generate their own energy ("customer-generators") to serve their energy needs directly onsite and to receive a financial credit on their electric bills for any surplus energy fed back to their utility. In technical terms, the excess energy is paid at the customer’s otherwise applicable rate schedule and time-of-use period. This credit is reflected as a negative number on the bill.
For example: if a commercial customer is on the time metered small general service rate schedule, A-TOU, and they are generating and exporting electricity in the summer during the 12:00 PM – 4:00 PM timeframe, every kWh of electricity exported would be paid at $0.2205 (the A-TOU rate for that time of use period).
Every billing period, the utility determines how much electricity was exported and how much electricity was consumed at each time-of-use period. If the generation credits exceed the usage consumption charges, a customer receives a credit on their bill which will be applied to future usage costs within the relevant period. If a customer’s consumption charges exceed the generation credits, a consumption charge is applied on the bill.
True Up and Billing
Over the course of 12 months, a period commonly referred to as the Relevant Period, the utility tracks how many generation credits or consumption charges a customer accrues 2 each month and banks them. At the end of the 12 months, the utility engages in a reconciliation process called true up where all credits, charges, minimum bill payments, and any adjustments are summed. If the customer has more consumption charges than generation credits, the customer is sent a bill for the outstanding charges. However, if the customer has more generation credits than consumption charges, the customer does not owe anything, the credits are zeroed out, and their net usage is re-set or trued up.
During the Net Usage true up process, the utility also determines how much net kWh electricity was either exported or consumed during the 12 months. They sum up all the monthly net generation kWh and monthly net consumption kWh to determine a final net kWh amount for the year. If the customer was a net consumer (i.e., they consumed more electricity from the utility than they exported and thus ended up with net positive (+) kWh) the customer does not receive any compensation. However, if the customer was a net generator (i.e., they exported more electricity than they consumed in the year and thus ended up with net negative (-) kWh) they will then get compensated using the utility’s applicable monthly Net Surplus Compensation (NSC) rate.
Net Surplus Compensation:
When a customer exports more electricity to the grid than they consumed during the relevant period, the customer is eligible to receive compensation. The amount of compensation is determined based on the utility’s applicable monthly Net Surplus Compensation (NSC) Rate, which varies every month and is based on the wholesale prices of electricity. The California Public Utilities Commission defines it as a rolling average based on the utility’s Default Load Aggregation Point (DLAP) price from 7 a.m. to 5 p.m. multiplied by the annual net usage exported by the customer. For the month of October 2023, SDG&E’s NSC rate is $0.04591/kWh.
Example:
Annual net generation = -450 kWh
October 2023 Net Surplus Compensation Rate = $0.04591 per kWh Total Compensation = $20.70
ANALYSIS AND DISCUSSION
Over the last several months, Staff undertook a significant analysis to broadly evaluate how SDCP compensates customers for the on-site generation of energy. The analysis included 1) consideration for enhancements to the current SDCP NEM policy by removing the Net Surplus Compensation (NSC) cap, 2) consideration to incentivize customers to install new on-site generation that aligns compensation with the needs of the grid (i.e.
NBT), and 3) potential programs designed to incentivize the pairing of storage with new on-site installations to support grid resilience. Comprehensively, Staff believes this package of recommended actions would result in the most customer-centric, progressive on-site generation compensation strategy in the State. The strategy carefully balances multiple priorities including supporting the local San Diego solar and storage industry, increasing access to distributed energy resources to Communities of Concern and low- 3 income customers, an increasing statewide focus on grid resilience, customer fairness, and financial prudence for the agency.
This agenda item is focused on the consideration to enhance the current SDCP NEM policy. Details on Net Billing Tariff are included in Agenda Item 6 of the October Community Advisory Committee meeting. Progress updates on a potential future solar-plus-storage incentive program will be brought to future Community Advisory Committee meetings.
Status of current NEM customers
Based on data from SDG&E as of 9/25/2023, SDCP is currently serving 152,173 NEM accounts. The table below captures the breakdown of NEM accounts currently being served across SDCP’s service territory.
Jurisdiction Number of Accounts Percent
City of Imperial Beach 836 0.5%
City of La Mesa 4,392 2.9%
City of Encinitas 5,894 3.9%
City of Chula Vista 18,792 12.3%
City of San Diego 90,559 59.5%
County of San Diego 30,846 20.3%
City of National City 854 0.6%
Total 152,173
*Please note that SDCP is currently still enrolling approximately 5,000 NEM accounts a month until March 2024 as part of Phase 4 customer enrollment in National City and Unincorporated County of San Diego.
The vast majority of NEM accounts (~98%) are residential with commercial, agricultural and industrial customers making up the remaining ~2%.
4 Customer Type Number of Accounts Percent
Non-residential 2,796 2.0%
Residential 149,377 98.0%
Total 152,173
Customers enrolled in the California Alternative Rates for Energy (CARE) program or the Family Electric Rate Assistance (FERA) program, which provides discounted rates, make up 12% of NEM accounts.
A look-back analysis conducted for usage on our NEM customers in 2022 determined that 35% of our NEM accounts are net generators with an average excess generation production of 2,122 kWh per a12-month relevant period.
Background on the existing NEM Tariff Policy
The Board of Directors approved SDCP’s original Net Energy Metering Program in December of 2020. As part of the original Net Energy Metering Program, staff provided great details around the mechanics of how SDCP’s NEM program was going to be set up and with the goal of offering a very progressive but financially prudent NEM program, updates were brought to the Board in May 2021 before the commencement of Phase 2 mass enrollment for Commercial customers in June 2021. With the May 2021 update that the Board approved, staff recommended adoption of a Net Surplus Compensation (NSC) rate that is set to match SDG&E’s monthly NSC Rate with a $0.0075/kWh adder along with establishing an SDCP Net Surplus Compensation limit of $2,500 per account per relevant period to protect SDCP and limit the financial risk. This meant that individual NEM customers would not receive more than $2,500 in compensation for excess net generation per NEM account. As part of the due diligence then, staff evaluated the compensation limits of other CCAs and found most had a $5,000 per account per year limit. Staff recommended a $2,500 per account per relevant period compensation limit due to the significantly larger number of NEM accounts served by SDCP and the growing number of rooftop solar installations in our area. This compensation limit offered protection to SDCP from volatile wholesale market prices and therefore volatile NSC rates especially at a time when we were launching service to customers for the first time and did not have any reserves.
As part of the May 2021 NEM program update, staff also recommended that the Board standardize NEM settlement and billing for all customer classes to a monthly process but offer yearly settlement and billing as an option for customers that wish to enroll into that option.
The monthly settlement and billing method allows customers that are net consumers (65% of our NEM accounts) to pay smaller monthly statements instead of one large bill for an entire year’s worth of usage charges. This avoids the bill shock that net consumers 5 can experience when they get their true up bill and will reduce the potential risk of NEM customers opting out due to the misconception of SDCP increasing their bills.
Overview of the latest staff recommended changes to the NEM Program/Tariff policy as of October 2023
With the growth of SDCP service in our region and experience gained in serving NEM customers over the past 2 years, staff has received a great deal of meaningful feedback from stakeholders in the region with regards to how best to improve the customer experience of both net consumers and net generators at the time of their annual true up.
Staff has heard from NEM customers that the transition of their electric generation service to SDCP at the conclusion of their relevant period with SDG&E has been appreciated, as this process ensures minimal inadvertent impacts to any accrued generation credits under SDG&E's bundled service and reduces customer confusion.
Customers have also provided overwhelming feedback to staff that the default monthly billing and settlement option (which was intended to assist the majority of NEM customers who end up as net consumers at the end of the relevant period to avoid large true up bills) may at times not be beneficial in terms of a customer’s ability to accrue credits and offset their charges accordingly had they been in an annual billing and settlement option.
NEM customers have also voiced their concerns on the $2,500 Net Surplus Compensation (NSC) limit for net generators per account per relevant period especially as it relates to SDCP’s commitment and strategic goal to source and promote local renewable power. It should be noted that SDG&E’s bundled NEM program/tariff does not have any Net Surplus Compensation (NSC) limit for net generators.
With our customers being the cornerstone of everything we do here at SDCP along with our commitment and strategic goal to strongly source and promote local renewable power, staff will be recommending that the Board should review and approve two critical updates to our existing NEM program/tariff:
1. Removal of the $2,500 Net Surplus Compensation (NSC) limit per account per relevant period. At the end of each customer’s relevant period, any current NEM customer who is a net generator with an accrued Net Surplus Compensation equal to or greater than $100, as determined during the applicable true up process, will be sent a direct payment by check to the customer’s mailing address on file.
2. Adoption of a NEM Generation Credit Refund whereby at the time of the annual true up, if a customer on SDCP’s default monthly settlement and billing option has accumulated any NEM generation credits in excess of any charges accrued over the relevant period, those NEM generation credits will be carried over as a bill credit for use in the subsequent relevant period(s) for the benefit of the customer up to the total SDCP charges assessed and/or paid on the NEM account during the Relevant Period being trued up.
6 Attachment A shows the proposed changes to the NEM Tariff Policy in redline for ease of tracking should the Board adopt Staff’s recommendation. Attachment B reflects the updated, clean version of the NEM Tariff Policy with all redlines accepted.
COMMITTEE AND/OR SUBCOMITTEE REVIEW
Both the Community Advisory Committee and Finance Risk Management Committee received an update on this item in their October 2023 meetings and were in support of Staff’s recommendations.
FISCAL IMPACT
Using February 2023 SDG&E’s NSC of $0.14538/kWh (the highest NSC observed in the last decade) plus the $0.0075/kWh adder and the look-back usage from 2022, staff estimates approximately $1.1 million in incremental Net Surplus Compensation; whereas looking at the 5-year average of SDG&E’s NSC of $0.04138/kWh plus our adder, staff estimates approximately $228,104 in incremental Net Surplus Compensation.
Actual compensation amount will vary depending on several factors including, number of NEM accounts, number of NEM accounts that are net generators, amount of electricity net generated, wholesale prices of electricity, month of true up, customer system size, customer behavior, and weather.
ATTACHMENTS
Attachment A: NEM Program Policy Upd. 10-26-2023
Attachment B: NEM Program Policy Upd. 10-26-2023 (Clean) SDCP Net Energy Metering Program Policy | Rev. 5/27/2021107/261/2023 1 Policy Title Net Energy Metering Program Tariff Policy
Effective Date Original:
Revision 1:
12/17/2020
5/27/2021
Revision 2: 10/26/2023
Net Energy Metering Program Tariff Policy
A. PURPOSE
The pPurpose of this Net Energy Metering (NEM) Program Tariff Policy (Policy) is to provide adescribe the process for how by which Net Energy Metering (“NEM) (commonly referred to as rooftop solar) customers are enrolled into withand served by San Diego Community Power (SDCP).
B. APPLICABILITY
Customers enrolled in San Diego Gas & Electric Company’s (SDG&E) Net Energy Metering NEM Program (SDG&E NEM) or those who submitted a complete NEM interconnection agreement to SDG&E prior to April 15, 2023 that has been approved and who have not opted out of SDCP service, will be automatically enrolled in SDCP’s NEMtake service from SDCP pursuant to the terms of this Policy Programtariff. Phase-in will occur as stated in Section D below. The Program tariffPolicy is applicable for to all NEM customers who install and use a Renewable Electrical Generation Facility (e.g., rooftop solar) as defined by and eligible under SDG&E’s Schedule NEM – Net Energy Metering tariff (i.e., NEM 1.0) or successor SDG&E’s Successor NEM tariff (i.e., NEM 2.0), which may be amended or replaced by SDG&E from time to time. A customer’s eligible Renewable Electrical Generation Facility must fall within the capacity limits described in SDG&E’s Schedule NEM or Successor NEM and must be located on the customer’s owned, leased, or rented premises, must be interconnected and operated in parallel with SDG&E’s transmission and distribution systems, and must be intended primarily to offset part or all of the customer’s own electrical requirements.
This rate schedule tariffPolicy will shall be availablegovern the terms of service of on a first-come, first-served basis to to customers that provide SDG&E with a completed SDG&E NEM application and comply with all SDG&E NEM requirements as described in SDG&E’s Schedule NEM or sSuccessor NEM tariff. This includes, but is not limited to, customers served by NEM-V (Virtual Net Energy Metering), VNM-A (Virtual Net Energy Metering for Multifamily Affordable Housing), VNEM-SOMAH (Virtual Net Energy Metering - Solar on Multifamily Affordable Housing) and Multiple Tariff facilities as described by SDG&E’s Schedule NEM.
This tariff Policy is not applicable to customers taking service under SDG&E's Net Billing Tariff/Solar Billing Plan.
C. TERRITORY
SDCP service area.
SDCP Net Energy Metering Program Policy | Rev. 5/27/2021107/261/2023 2 D. INITIAL PHASE-IN
SDCP phased its NEM customers into service on a monthly basis primarily starting in in Phase 3 of customer enrollment, which commenced in 2022. The transition into SDCP’s service occurs at the conclusion of a NEM customer’s Rrelevant Pperiod with SDG&E, as that term is defined in SDG&E’s applicable NEM tariff. This approachThe purpose of this approach is to minimize any potential impacts from when the SDG&E NEM customers’ true ups occur and when SDCP’s service begins.
E. RATES
All rates charged under this schedule Policy will be in accordance with the customer’s otherwise applicable SDCP rate schedule (OAS). A customer served under this schedule Policy is responsible for all charges from its OAS, including monthly minimum charges, customer charges, meter charges, facilities charges, demand charges and surcharges, and all other charges owed to SDCP or SDG&E. Charges for energy (kWh) supplied by SDCP will be based on the net metered usage in accordance with this Policy.
F. BILLING
1. Net Consumer and Net Generator: “Net Consumer” is defined as a customer having overall positive usage during a specific billing cycle cycle as measured in kilowatt-hours (kWh). “Net Generator” is defined as a customer having overall negative usage during a specific billing cycle as measured in kWh.
2. For a customer with Non-Time of Use (TOU) Rates: If the customer is a “Net Consumer,” the customer will be billed in accordance with the customer’s OAS. If the customer is a “Net Generator,” any net energy production shall be valued in accordance ofwith the customer’s OAS. The calculated value of any net energy production shall be credited to the customer according to the OAS.
3. For a customer with TOU Rates: If the customer is a Net Consumer during any discrete TOU period reflected within a specific billing cycle, the net kWh consumed during such TOU period shall be billed in accordance with applicable TOU period-specific rates / charges, as described in the customer’s OAS. If the customer is a Net Generator during any discrete TOU period reflected within a specific billing cycle, any net energy production shall be valued in consideration of the customer’s OAS. The calculated value of such net energy production shall be credited to the customer according to the OAS.
4. Monthly Settlement and Billing:
a. All NEM customers will receive a statement in their monthly SDG&E bill indicating any accrued charges for electric energy usage during the current billing cycle. These charges are due and payable on a monthly basis, in accordance with the OAS. A customer who has accrued credits during previous billing cycles will see such credits applied against currently applicable charges, reducing otherwise applicable charges by an equivalent amount to such credits. Any remaining balance reflected on each customer’s billing statement shall be carried forward to subsequent billing cycle(s) until either excess credit is sufficient to satisfy the charges or an account true -up is performed. When a customer’s net energy production results in an accrued credit balance in excess of currently applicable charges, the value of any net energy production during the billing SDCP Net Energy Metering Program Policy | Rev. 5/27/2021107/261/2023 3 cycle (in excess of currently applicable charges) shall be valued at the OAS and noted on the customer’s bill, including the quantity of any surplus NEM production (measured in kWh), and carried over as a bill credit for use in a subsequent billing cycle(s).
a. NEM Generation Credit Refund: At the time of the aAnnual tTrue u-Up, if the a customer on SDCP’s default monthly settlement and billing option has accumulated any NEM generation credits in excess of any currently outstanding charges, those NEM generation credits will be refundedcarried over as a bill credit for use in the subsequent Relevant Period(s) to thefor the benefit of the customer up to the total SDCP charges assessed and/or paid by the customer on the NEM account during the Relevant Period being trued up.
4.5. Optional Yearly Settlement and Billing: Residential and Non-residential customers, as determined by their OAS, NEM customers may elect to receive yearly settlement and billing by notifying SDCP. Customers electing a yearly settlement and billing option will receive a statement in their monthly SDG&E bill indicating any accrued SDCP charges or credits for electric energy usage or generation during the current billing cycle. Charges are not due and payable; rather, the charges or credits are calculated in accordance with the OAS and tracked over the course of the Rrelevant Pperiod. At the end of the Rrelevant Pperiod, any accrued charges in excess of generation credits are due and payable on the next bill. If at the end of the relevant period a customer has produced net surplus energy, defined as energy generated and exported to the grid in excess of energy consumed by the customer, as measured in kWhexcess generation credits, the customer will be paid out in accordance with the SDCP True -up & Cash -Out Process set forth at Section 65.
5.6. SDCP True -Up & Cash -Out Processes.
a. “True -Up”: At the end of each NEM customer’s Rrelevant Pperiod, SDCP will determine whether or not each customer has produced net surplus energy, defined as energy generated and exported to the grid in excess of energy consumed by the customer, as measured in kWh, over the most recent 12 billing cycles, or the period of time extending from the customer’s commencement of participation in SDCP’s NEM program through the end of their 12-month Rrelevant Pperiod, whichever is shorter (the “True -Up Period”). If the customer has not produced net surplus energy at the end of the applicable Rrelevant Pperiod during the True -Up Period, all NEM credits, if any, generated through participation in SDCP’s NEM program in excess of currently applicable SDCP charges shall be set to zero and any remaining balance will be due and payable.
However, if a customer has produced net surplus energy during their True -Up Period, then SDCP shall compensate such customer at a Net Surplus Compensation (NSC) amount equal to the SDCP NSC Rate per kWh, as defined in section 6.b, multiplied by the quantity of net surplus energy produced by the customer during the True -Up Period, consistent with SDCP’s cash -out practice.
SDCP Net Energy Metering Program Policy | Rev. 5/27/2021107/261/2023 4 b. “SDCP’s NSC Rate:” is defined as and equal to the monthly SDG&E’s NSC, which is defined by the California Public Utilities Commission as “a simple rolling average of each utility’s Default Load Aggregation Point (DLAP) price from 7 a.m. to 5 p.m.”, and “calculated monthly based on the hourly day-ahead electricity market price at each utility’s DLAP price published on the California Independent System Operator (CAISO) Open Access Same-Time Information System (OASIS,) and ending the twentieth day of each month”, of the customer true -up month plus $0.0075/kWh. c. “Cash -Out and Payment”: At the end of each customer’s relevant period, any current NEM customer who is a net generator with an accrued Nnet Ssurplus Ccompensation equal to or greater than $100, as determined during the applicable true -up process, will be sent a direct payment by check, up to $2,500 per account per relevant period. Net Ssurplus Ccompensation less than $100 will be rolled over into the next relevant period and used to offset future charges. In either scenario, customers will have an equivalent credit removed from their NEM account balance at the time of check issuance or roll-over. All NEM accounts will be reset to zero kWh upon true -up.
Payments will be released up to 30 60 days after true -up billing. Checks will expire 90 days after issuance. If checks expire or are returned to SDCP, customers may request the one-time reissuance of a check and SDCP will make a reasonable effort to reissue the check within 30 days of a customer’s request. d. “Aggregated NEM”: Pursuant to California Public Utilities Code section 2827(h)(4)(B), aggregated NEM customers are “permanently ineligible to receive net surplus electricity compensation.” Therefore, any excess accrued credits over the course of a year under an aggregated NEM account are ineligible for SDCP’s Cash - Out as described in Section 5. All other NEM rules apply to aggregated NEM accounts.
G. ACCOUNT CLOSURES
Customers who close their electric account through SDG&E, opt out of SDCP and return to bundled service, or move outside of the SDCP service area prior to the end of their Rrelevant Pperiod will be trued up according to SDCP’s NEM policy. Customers that have produced net surplus energy, will be paid out in accordance with the SDCP true -up & cash - out processes. Payments will be released within 60-90 days30 days after final billing to allow for any usage revisions and/or adjustments from SDG&E. Checks will expire 90 days after issuance. If checks expire or are returned to SDCP, customers may request the one-time reissuance of a check and SDCP will make a reasonable effort to reissue the check within 30 days of a customer’s request. If customer did not produce net surplus energy, as measured in kWh, they will not receive a direct payment.
SDCP reserves the right to work with customers on a case-by-case basis to transfer NEM credits. and/or otherwise deviate from the process specified in this policy for reasons including but not limited to cases of unforeseeable events, inconsistent receivable data from SDG&E, exigent circumstances, SDG&E bill presentment limitations or customer hardship.s.
H. SDG&E NEM SERVICES
Customers are subject to the conditions and billing procedures of SDG&E for services SDCP Net Energy Metering Program Policy | Rev. 5/27/2021107/261/2023 5 outside of electric generationtheir non-generation services, as described in SDG&E’s applicable NEM tariffs and options addressing NEM service. Customers should be advised that while SDCP may settle out balances for generation on a monthly basis, SDG&E will continue to assess charges for delivery, transmission, and other services they provide.
Customers are encouraged to review SDG&E’s most up-to-date NEM tariffs, which are available at www.sdge.com.
I. RETURN TO SDG&E BUNDLED SERVICE
Customers with NEM service may opt -out and return to SDG&E bundled service at any time. SDCP will perform a true -up of the customer’s account in accordance with Section 65, at the time of return to SDG&E bundled service, and customers will be subject to SDG&E’s then current rates, terms and conditions of service. For details, please visit www.sdge.com.
J. MISCELLANEOUS
The Chief Executive Officer (CEO) of SDCP or their designee may, in their discretion, reserve the right to work with customers on a case-by-case basis to transfer NEM and NSC credits and/or otherwise deviate from the process specified in this policy for reasons including but not limited to cases of unforeseeable events, inconsistent receivable data from SDG&E, exigent circumstances, SDG&E bill presentment limitations or customer hardship.
SDCP Net Energy Metering Program Policy | Rev. 10/26/2023 1 Policy Title Net Energy Metering Tariff Policy
Effective Date Original:
Revision 1:
12/17/2020
5/27/2021
Revision 2: 10/26/2023
Net Energy Metering Tariff Policy
A. PURPOSE
The purpose of this Net Energy Metering Tariff Policy (Policy) is to describe the process by which Net Energy Metering (NEM) customers are enrolled into and served by San Diego Community Power (SDCP).
B. APPLICABILITY
Customers enrolled in San Diego Gas & Electric Company’s (SDG&E) NEM Program (SDG&E NEM), or those who submitted a complete NEM interconnection agreement to SDG&E prior to April 15, 2023 that has been approved and who have not opted out of SDCP service, will automatically take service from SDCP pursuant to the terms of this Policy. Phase-in will occur as stated in Section D below. This Policy is applicable to all NEM customers who install and use a Renewable Electrical Generation Facility as defined by and eligible under SDG&E’s Schedule NEM – Net Energy Metering tariff (i.e., NEM 1.0), or SDG&E’s Successor NEM tariff (i.e., NEM
2.0), which may be amended or replaced by SDG&E from time to time. A customer’s eligible Renewable Electrical Generation Facility must fall within the capacity limits described in SDG&E’s Schedule NEM or Successor NEM and must be located on the customer’s owned, leased, or rented premises, must be interconnected and operated in parallel with SDG&E’s transmission and distribution systems, and must be intended primarily to offset part or all of the customer’s own electrical requirements.
This Policy shall govern the terms of service of customers that provide SDG&E with a completed SDG&E NEM application and comply with all SDG&E NEM requirements as described in SDG&E’s Schedule NEM or Successor NEM tariff. This includes, but is not limited to, customers served by NEM-V (Virtual Net Energy Metering), VNM-A (Virtual Net Energy Metering for Multifamily Affordable Housing), VNEM-SOMAH (Virtual Net Energy Metering - Solar on Multifamily Affordable Housing) and Multiple Tariff facilities as described by SDG&E’s Schedule NEM.
This Policy is not applicable to customers taking service under SDG&E's Net Billing Tariff/Solar Billing Plan.
C. TERRITORY
SDCP service area.
D. PHASE-IN
SDCP phased its NEM customers into service on a monthly basis primarily starting in Phase 3 of customer enrollment, which commenced in 2022. The transition into SDCP’s service occurs at the conclusion of a NEM customer’s Relevant Period with SDG&E, as that term is defined in SDG&E’s applicable NEM tariff. The purpose of this approach is to minimize potential impacts from when the SDG&E NEM customers’ true-ups occur and when SDCP’s service begins.
SDCP Net Energy Metering Program Policy | Rev. 10/26/2023 2 E. RATES
All rates charged under this Policy will be in accordance with the customer’s otherwise applicable SDCP rate schedule (OAS). A customer served under this Policy is responsible for all charges from its OAS, including monthly minimum charges, customer charges, meter charges, facilities charges, demand charges and surcharges, and all other charges owed to SDCP or SDG&E. Charges for energy (kWh) supplied by SDCP will be based on the net metered usage in accordance with this Policy.
F. BILLING
1. Net Consumer and Net Generator: “Net Consumer” is defined as a customer having overall positive usage during a specific billing cycle as measured in kilowatt-hours (kWh). “Net Generator” is defined as a customer having overall negative usage during a specific billing cycle as measured in kWh.
2. For a customer with Non-Time of Use (TOU) Rates: If the customer is a “Net Consumer,” the customer will be billed in accordance with the customer’s OAS. If the customer is a “Net Generator,” any net energy production shall be valued in accordance with the customer’s OAS. The calculated value of any net energy production shall be credited to the customer according to the OAS.
3. For a customer with TOU Rates: If the customer is a Net Consumer during any discrete TOU period reflected within a specific billing cycle, the net kWh consumed during such TOU period shall be billed in accordance with applicable TOU period-specific rates / charges, as described in the customer’s OAS. If the customer is a Net Generator during any discrete TOU period reflected within a specific billing cycle, any net energy production shall be valued in consideration of the customer’s OAS. The calculated value of such net energy production shall be credited to the customer according to the OAS.
4. Monthly Settlement and Billing:
a) All NEM customers will receive a statement in their monthly SDG&E bill indicating any accrued charges for electric energy usage during the current billing cycle. These charges are due and payable on a monthly basis, in accordance with the OAS. A customer who has accrued credits during previous billing cycles will see such credits applied against currently applicable charges, reducing otherwise applicable charges by an equivalent amount to such credits. Any remaining balance reflected on each customer’s billing statement shall be carried forward to subsequent billing cycle(s) until either excess credit is sufficient to satisfy the charges or an account true up is performed. When a customer’s net energy production results in an accrued credit balance in excess of currently applicable charges, the value of any net energy production during the billing cycle (in excess of currently applicable charges) shall be valued at the OAS and noted on the customer’s bill, including the quantity of any surplus NEM production (measured in kWh), and carried over as a bill credit for use in a subsequent billing cycle(s).
b) NEM Generation Credit Refund: At the time of the annual true-up, if a customer on SDCP’s default monthly settlement and billing option has accumulated any NEM generation credits in excess of any currently outstanding charges, those NEM generation credits will be carried over as a bill credit for use in the subsequent Relevant Period(s) for the benefit of the customer up to the total SDCP charges assessed and/or SDCP Net Energy Metering Program Policy | Rev. 10/26/2023 3 paid on the NEM account during the Relevant Period being trued-up.
Optional Yearly Settlement and Billing: NEM customers may elect to receive yearly settlement and billing by notifying SDCP. Customers electing a yearly settlement and billing option will receive a statement in their monthly SDG&E bill indicating any accrued SDCP charges or credits for electric energy usage or generation during the current billing cycle. Charges are not due and payable; rather, the charges or credits are calculated in accordance with the OAS and tracked over the course of the Relevant Period. At the end of the Relevant Period, any accrued charges in excess of generation credits are due and payable on the next bill. If at the end of the relevant period a customer has produced net surplus energy, defined as energy generated and exported to the grid in excess of energy consumed by the customer, as measured in kWh, the customer will be paid out in accordance with the SDCP True up & Cash Out Process set forth at Section 6.
5. SDCP True Up & Cash Out Processes.
a. “True-Up”: At the end of each NEM customer’s Relevant Period, SDCP will determine whether or not each customer has produced net surplus energy, defined as energy generated and exported to the grid in excess of energy consumed by the customer, as measured in kWh, over the most recent 12 billing cycles, or the period of time extending from the customer’s commencement of participation in SDCP’s NEM program through the end of their 12-month Relevant Period, whichever is shorter (the “True-Up Period”). If the customer has not produced net surplus energy at the end of the applicable Relevant Period during the True-Up Period, all NEM credits, if any, generated through participation in SDCP’s NEM program in excess of currently applicable SDCP charges shall be set to zero and any remaining balance will be due and payable.
However, if a customer has produced net surplus energy during their True-Up Period, then SDCP shall compensate such customer at a Net Surplus Compensation (NSC) amount equal to the SDCP NSC Rate per kWh, as defined in section 6.b, multiplied by the quantity of net surplus energy produced by the customer during the True-Up Period, consistent with SDCP’s cash out practice. b. “SDCP’s NSC Rate”: is defined as and equal to the monthly SDG&E’s NSC, which is defined by the California Public Utilities Commission as “a simple rolling average of each utility’s Default Load Aggregation Point (DLAP) price from 7 a.m. to 5 p.m.”, and “calculated monthly based on the hourly day-ahead electricity market price at each utility’s DLAP price published on the California Independent System Operator (CAISO) Open Access Same-Time Information System (OASIS,) and ending the twentieth day of each month”, of the customer true-up month plus $0.0075/kWh. c. “Cash Out and Payment”: At the end of each customer’s Relevant Period, any current NEM customer who is a net generator with an accrued Net Surplus Compensation equal to or greater than $100, as determined during the applicable true up process, will be sent a direct payment by check per account per Relevant Period. Net Surplus Compensation less than $100 will be rolled over into the next Relevant Period and used to offset future charges. In either scenario, customers will have an equivalent credit removed from their NEM account balance at the time of check issuance or rollover. All NEM accounts will be reset to zero kWh upon true-up.
SDCP Net Energy Metering Program Policy | Rev. 10/26/2023 4 Payments will be released up to 60 days after true-up billing. Checks will expire 90 days after issuance. If checks expire or are returned to SDCP, customers may request the one-time reissuance of a check and SDCP will make a reasonable effort to reissue the check within 30 days of a customer’s request. d. “Aggregated NEM”: Pursuant to California Public Utilities Code section 2827(h)(4)(B), aggregated NEM customers are “permanently ineligible to receive net surplus electricity compensation.” Therefore, any excess accrued credits over the course of a year under an aggregated NEM account are ineligible for SDCP’s Cash Out as described in Section 5. All other NEM rules apply to aggregated NEM accounts.
G. ACCOUNT CLOSURES
Customers who close their electric account through SDG&E, opt out of SDCP and return to bundled service, or move outside of the SDCP service area prior to the end of their Relevant Period will be trued up according to SDCP’s NEM policy. Customers that have produced net surplus energy, will be paid out in accordance with the SDCP true up & cash out processes.
Payments will be released within 60-90 days after final billing to allow for any usage revisions and/or adjustments from SDG&E. Checks will expire 90 days after issuance. If checks expire or are returned to SDCP, customers may request the one-time reissuance of a check and SDCP will make a reasonable effort to reissue the check within 30 days of a customer’s request. If customer did not produce net surplus energy, as measured in kWh, they will not receive a direct payment.
SDCP reserves the right to work with customers on a case-by-case basis to transfer NEM credits.
H. SDG&E NEM SERVICES
Customers are subject to the conditions and billing procedures of SDG&E for services outside of electric generation, as described in SDG&E’s applicable NEM tariffs and options addressing NEM service. Customers should be advised that while SDCP may settle out balances for generation on a monthly basis, SDG&E will continue to assess charges for delivery, transmission, and other services they provide. Customers are encouraged to review SDG&E’s most up-to-date NEM tariffs, which are available at www.sdge.com.
I. RETURN TO SDG&E BUNDLED SERVICE
Customers with NEM service may opt out and return to SDG&E bundled service at any time.
SDCP will perform a true up of the customer’s account in accordance with Section 6, at the time of return to SDG&E bundled service, and customers will be subject to SDG&E’s then current rates, terms and conditions of service. For details, please visit www.sdge.com.
J. MISCELLANEOUS
The Chief Executive Officer (CEO) of SDCP or their designee may, in their discretion, reserve the right to work with customers on a case-by-case basis to transfer NEM and NSC credits and/or otherwise deviate from the process specified in this Policy for reasons including, but not limited to, cases of unforeseeable events, inconsistent receivable data from SDG&E, exigent circumstances, SDG&E bill presentment limitations, or customer hardship
SAN DIEGO COMMUNITY POWER
Staff Report – Item 18
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Byron Vosburg, Managing Director
Morgan Adam, Senior Local Renewable Development Manager Via: Karin Burns, Chief Executive Officer
Subject: Update on Local Distributed Infill Plan
Date: October 26, 2023
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATIONS
Receive and file update on local distributed infill plan.
BACKGROUND
During the Strategic Planning Session help on April 21, 2023, Power Services presented an initial outline of a plan to meet the agency’s goal of procuring at least 15% of load capacity by new, infill resources by 2035. As part of this presentation, the Board was informed that an update to the local infill plan would be presented in Fall 2023. The intent of this update is to convey the updated local distributed infill strategy.
ANALYSIS AND DISCUSSION
Recent Infill Achievements
• SDCP’s rolling Local Request For Information (“RFI”) remains open and has already brought in multiple projects under negotiation and contract, including the 35 MW Arrowleaf Solar+Storage facility (Imperial County, executed June 2023) and 19.5MW of long-term agreements recently executed with EnerSmart for Local RA from battery storage facilities in San Diego County. • As Program Administrators of the CPUC’s Disadvantaged Communities Green Tariff (DAC-GT) and Community Solar Green Tariff (CSGT) programs, SDCP launched the RFP solicitation for respective program resources on August 26th, 2023. Proposals will be due in late February 2024. SDCP is hosting two webinars this month to aid bidders with the solicitation process.
Current and Upcoming Infill Initiatives
1. Local Distributed Request For Offers (“RFO”)
SDCP is releasing an RFO solicitation for distributed renewable energy resources (DERs) the week of October 23rd which will focus on a broad range of distribution-level renewable projects within San Diego County. The solicitation will seek offers for renewable resources as well as energy storage, both hybrid as well as stand-alone projects.
Offers will be due in December 2023 and SDCP expects to bring a handful of resulting contracts to the Energy Contract Working Group and then Board in Q1 2024 for review and consideration.
2. Feed-In-Tariff Expansion
As part of SDCP’s distributed wholesale procurement strategy, expanding and restructuring the current Feed-In-Tariff (FIT) Program will strive to increase engagement and applications so that it can become a more substantial component of SDCP’s wholesale procurement portfolio.
The proposed FIT update will include consultant feedback as well as market intel obtained through the Local Distributed RFO released this month. SDCP expects to bring recommendations for a revised tariff to the Board in late Q1 2024.
3. Ongoing Activities
In addition to the two upcoming initiatives above, several ongoing initiatives will further support SDCP’s infill goals, including:
• DAC-GT and CSGT solicitation results,
• Local, rolling Request for Information (RFI),
• Continued collaboration with member agency staff to identify opportunities for renewable development,
• Initiatives through our Program offerings, such as Net Billing Tariff, SDCP Regional Energy Network, demand response, virtual power plants, etc., • Strategic initiatives with key accounts, local & federal government, and other public agencies, and
• Monitoring of impending Community Solar program updates currently being considered by the CPUC.
AD-HOC COMMITTEE AND/OR SUBCOMITTEE REVIEW
The Local Distributed Infill plan updates were reviewed with SDCP’s Energy Contract Working Group (ECWG).
FISCAL IMPACT
There is no direct fiscal impact of this update.
ATTACHMENTS
None.
SAN DIEGO COMMUNITY POWER
Staff Report – Item 19
--------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Byron Vosburg, Managing Director, Power Services; and Andrea Torres, Sr. Portfolio Manager, Power Services
Via: Karin Burns, Chief Executive Officer
Subject: Energy Storage Service Agreement with Desert Sands Energy Storage II, LLC
Date: October 26, 2023
---------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Adopt the proposed Renewable Energy Storage Service Agreement with Desert Sands Energy Storage II, LLC and authorize the CEO to execute the agreement.
BACKGROUND
As San Diego Community Power (SDCP) strives to meet its environmental, financial, and regulatory compliance goals and requirements, long-term contracts of at least 10 years in duration are integral components of its energy supply portfolio. Long-term contracts provide renewable generation and clean energy storage facility developers with the certain revenue stream against which they can finance up-front capital requirements, so each long-term contracts that SDCP signs with a developing facility will underpin a new, incremental renewable energy project. In addition, long-term contracts lock in energy and capacity supply around which SDCP can build its power supply portfolio while also providing power supply cost certainty around which SDCP can develop its pro forma financial model.
In D.21-06-025, the California Public Utilities Commission (CPUC) required each Load Serving Entity (LSE) in California to make significant long-term purchase commitments for resource adequacy from new, incremental generation and storage facilities that will achieve commercial operation during 2023 through 2026. Further, Decision 23-02-040 allowed LSEs to contract for long-lead time resources, including long duration storage, with commercial operations out into 2028 to meet its resource adequacy requirements.
The proposed Energy Storage Service Agreement (ESSA) is for capacity, energy arbitrage and ancillary services benefits from a 60 MW/480 MWh, 8-hour battery energy storage facility (Desert Sands) with Desert Sands Energy Storage II, LLC, a subsidiary of NextEra Energy Resources Development, LLC (NextEra). The ESSA originated from an offer SDCP received in May 2023 via its 2023 Request for Offers for Standalone Storage.
SDCP engaged with NextEra after short-listing the project and has reached terms mutually agreeable to both parties.
ANALYSIS AND DISCUSSION
Staff negotiated the attached full toll ESSA for the purchase of capacity, energy arbitrage and ancillary services from the Desert Sands project, which is a standalone battery storage project to be developed in Riverside County by NextEra.
The Desert Sands project is part of a larger planned standalone storage installation.
Clean Power Alliance has executed a contract for 75 MW/600 MWh of Desert Sands capacity. As previously reviewed with the Ad Hoc Energy Contracts Working Group, the contract offered a competitive price compared to other longer duration storage offerings.
The ESSA also provides for a Guaranteed Commercial Operate date of April 1, 2027, which will provide sufficient buffer to help ensure the project meets the commercial operation date requirements under CPUC Decision 23-02-040.
Below is additional information regarding NextEra and the draft ESSA.
Background on NextEra:
• NextEra has over 33 years of experience with energy infrastructure development, predominantly renewable energy resources, in California • NextEra has developed over 4 GW in California across more than 30 projects • Notable recent projects from NextEra include:
• Desert Sunlight, 230 MW storage, 2022
• Arlington, 364 MW solar + 242 MW storage, 2022/2023
• Desert Peak, 400 MW standalone storage, 2023
• North Central Valley, 132 MW standalone storage, 2023 • Resurgence Solar, 138 MW solar + 115 MW storage, 2023 Contract Overview – Desert Sands Energy Storage II, LLC • Project: 60 MW/480 MWh (8-hour) lithium-ion battery energy system • Project location: Riverside County, California
• Guaranteed commercial operation date: April 1, 2027
• Contract term: 20 years
• Pricing: Fixed capacity price adjusted for availability and verified capacity • SDCP would receive financial compensation in the event of seller’s failure to successfully achieve certain development milestones as well as seller’s failure to meet guaranteed efficiency rates once the project is operational.
Community Benefits:
• NextEra is committed to a $250,000 contribution to a community benefits fund that is to be established to directly benefit stakeholders in SDCP’s service area. • NextEra hosts a Renewable Energy Training (RET) simulation lab at the Desert Hot Springs High School in Desert Springs, CA (very nearby the Desert Sands project)
• NextEra has a collaborative partnership with College of the Desert (which serves the Coachella Valley region in Riverside County, CA) where NextEra provides training equipment and subject matter expertise in training students for solar construction.
• NextEra established an internship program that leads to career opportunities at NextEra solar and storage sites.
COMMITTEE REVIEW
The ECWG approved the shortlisting of the Desert Sands project on June 28, 2023. On September 5, 2023 the ECWG approved key ESSA terms to move forward with the execution of this ESSA.
FISCAL IMPACT
The competitive capacity pricing of the ESSA are confidential, but the long-term purchase of capacity, energy arbitration, and ancillary services will provide SDCP with significant value and cost certainty over the term of this ESSA.
ATTACHMENTS
Attachment A: Energy Storage Service Agreement with Desert Sands Energy Storage II, LLC (redacted version for commercially sensitive information)
ENERGY STORAGE SERVICE AGREEMENT
COVER SHEET
Seller: Desert Sands Energy Storage II, LLC (“Seller”)
Buyer: San Diego Community Power, a California joint powers authority (“Buyer”) Description of Facility: A 60 MW/480 MWh battery energy storage facility, located in Riverside County in the State of California, as further described in Exhibit A.
Milestones:
Milestone Date for Completion
Evidence of Site Control Complete
Seller’s receipt of Phase I and Phase II Interconnection study results for Seller’s Interconnection Facilities Complete Executed Interconnection Agreement 4/1/2024
Procurement of Major Equipment 12/1/2025
Obtain Discretionary Federal and State Permits 6/1/2026 Guaranteed Construction Start Date 6/1/2026
Transmission Owner In-Service Date 12/1/2026
Full Capacity Deliverability Status Obtained The later of 6/1/27 or two (2) months after the Commercial
Operation Date, subject to
Section 2.3 of this Agreement
Guaranteed Commercial Operation Date 4/1/2027
Delivery Term: Twenty (20) Contract Years; provided, that such twenty (20)-year period shall commence on the Supply Plan Start Date as defined herein Guaranteed Capacity: 60 MWAC at eight (8) hours of continuous discharge Dedicated Interconnection Capacity: 60 MW
Guaranteed Seasonal Availability: A Seasonal Availability, calculated in accordance with Exhibit P to this Agreement, in a percentage amount no less than the percentages set forth in the following table for the corresponding Contract Year and Seasonal Period; provided, however that, to the extent any Contract Year includes two different Seasonal Periods, a weighted average Guaranteed Seasonal Availability shall be applied for such Contract Year:
Contract Year
Guaranteed Seasonal
Availability
Summer Season
(May through October)
Guaranteed Seasonal
Availability
Winter Season
(November through April)
1 2
3 – 20
Guaranteed Efficiency Rate:
Contract Year Guaranteed Efficiency Rate
1 2 – 20
Minimum Efficiency Rate: for all Contract Years during the Delivery Term
Contract Price:
Contract Year Contract Price
1 – 20
Product:
☒ Discharging Energy
☒ Installed Capacity and Effective Capacity
☒ Ancillary Services
☒ Capacity Attributes
Scheduling Coordinator: Buyer or Buyer’s agent
Security Amount:
Development Security:
Performance Security:
i
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS .......................................................................................................... 1
1.1 Contract Definitions ............................................................................................... 1
1.2 Rules of Interpretation ......................................................................................... 21 ARTICLE 2 TERM; CONDITIONS PRECEDENT ................................................................... 22
2.1 Contract Term. ..................................................................................................... 22
2.2 Commercial Operation; Conditions Precedent .................................................... 22
2.3 Termination for Lack of Deliverability ................................................................ 23
2.4 Development; Construction; Progress Reports .................................................... 24
2.5 Remedial Action Plan .......................................................................................... 25
2.6 Pre-Commercial Operation Actions ..................................................................... 25 ARTICLE 3 PURCHASE AND SALE ....................................................................................... 25
3.1 Product ................................................................................................................. 25
3.2 Discharging Energy ............................................................................................. 26
3.3 Capacity Attributes .............................................................................................. 26
3.4 Ancillary Services ................................................................................................ 26
3.5 Resource Adequacy Failure. ................................................................................ 27
3.6 Buyer’s Re-Sale of Product ................................................................................. 27
3.7 Compliance Expenditure Cap .............................................................................. 27 ARTICLE 4 OBLIGATIONS AND DELIVERIES .................................................................... 28
4.1 Delivery................................................................................................................ 28
4.2 Interconnection .................................................................................................... 28
4.3 Seasonal Availability and Efficiency ................................................................... 29
4.4 Facility Testing. ................................................................................................... 29
4.5 Testing Costs and Revenues. ............................................................................... 30
4.6 Facility Operations. .............................................................................................. 31
4.7 Dispatch Notices .................................................................................................. 31
4.8 Facility Unavailability to Receive Dispatch Notices ........................................... 31
4.9 Energy Management. ........................................................................................... 32
4.10 Capacity Availability Notice. ............................................................................... 34
4.11 Facility Rebalancing Dispatch ............................................................................. 34
4.12 Outages ................................................................................................................ 34 ARTICLE 5 TAXES, GOVERNMENTAL COSTS ................................................................... 36
5.1 Allocation of Taxes and Charges ......................................................................... 36
5.2 Cooperation .......................................................................................................... 36 ARTICLE 6 MAINTENANCE AND REPAIR OF THE FACILITY ........................................ 36
6.1 Maintenance of the Facility ................................................................................. 36
6.2 Maintenance of Health and Safety ....................................................................... 36
6.3 Shared Facilities ................................................................................................... 36 ii
ARTICLE 7 METERING ............................................................................................................ 37
7.1 Metering ............................................................................................................... 37
7.2 Meter Verification ................................................................................................ 37 ARTICLE 8 INVOICING AND PAYMENT; CREDIT ............................................................. 38
8.1 Invoicing .............................................................................................................. 38
8.2 Payment................................................................................................................ 38
8.3 Books and Records .............................................................................................. 38
8.4 Payment Adjustments; Billing Errors .................................................................. 39
8.5 Billing Disputes ................................................................................................... 39
8.6 Netting of Payments ............................................................................................. 39
8.7 Seller’s Development Security ............................................................................ 39
8.8 Seller’s Performance Security.............................................................................. 40
8.9 First Priority Security Interest in Cash or Cash Equivalent Collateral ................ 40
8.10 Provision of Financial Statements. ...................................................................... 41
8.11 .................................................................................. 41 ARTICLE 9 NOTICES ................................................................................................................ 43
9.1 Addresses for the Delivery of Notices ................................................................. 43
9.2 Acceptable Means of Delivering Notice .............................................................. 43 ARTICLE 10 FORCE MAJEURE .............................................................................................. 44
10.1 Definition. ............................................................................................................ 44
10.2 No Liability If a Force Majeure Event Occurs .................................................... 44
10.3 Notice ................................................................................................................... 45
10.4 Termination Following Force Majeure Event...................................................... 45 ARTICLE 11 DEFAULTS; REMEDIES; TERMINATION ...................................................... 45
11.1 Events of Default ................................................................................................. 45
11.2 Remedies; Declaration of Early Termination Date .............................................. 49
11.3 Damage Payment; Termination Payment ............................................................ 50
11.4 Notice of Payment of Termination Payment or Damage Payment ...................... 51
11.5 Disputes With Respect to Termination Payment or Damage Payment ............... 51
11.6 Seller Pre-COD Liability Limitations .................................................................. 51
11.7 Limitation on Seller’s Ability to Make or Agree to Third-Party Sales from the Facility after Early Termination Date ............................................................ 51
11.8 Rights And Remedies Are Cumulative ................................................................ 52
11.9 Mitigation ............................................................................................................. 52 ARTICLE 12 LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES.......... 52
12.1 No Consequential Damages ................................................................................. 52
12.2 Waiver and Exclusion of Other Damages. ........................................................... 52 ARTICLE 13 REPRESENTATIONS AND WARRANTIES; COVENANTS .......................... 53
13.1 Seller’s Representations and Warranties ............................................................. 53
13.2 Buyer’s Representations and Warranties ............................................................. 54 iii
13.3 General Covenants ............................................................................................... 55
13.4 Seller’s Covenants ............................................................................................... 55
13.5 Project Labor ........................................................................................................ 56
13.6 Supplier Diversity ................................................................................................ 56
13.7 Community Benefits ............................................................................................ 56 ARTICLE 14 ASSIGNMENT ..................................................................................................... 56
14.1 General Prohibition on Assignments ................................................................... 56
14.2 Collateral Assignment; Financing Cooperation ................................................... 57
14.3 Permitted Assignments ........................................................................................ 57
14.4 Portfolio Financing. ............................................................................................. 57
14.5 Permitted Assignment by Buyer .......................................................................... 58 ARTICLE 15 DISPUTE RESOLUTION .................................................................................... 58
15.1 Governing Law .................................................................................................... 58
15.2 Judicial Reference ................................................................................................ 59
15.3 Dispute Resolution ............................................................................................... 59
15.4 Attorneys’ Fees .................................................................................................... 59 ARTICLE 16 INDEMNIFICATION ........................................................................................... 59
16.1 Indemnity. ............................................................................................................ 59
16.2 Claims .................................................................................................................. 60
16.3 Defense and Settlement........................................................................................ 60 ARTICLE 17 INSURANCE ........................................................................................................ 60
17.1 Insurance. ............................................................................................................. 60 ARTICLE 18 CONFIDENTIAL INFORMATION .................................................................... 61
18.1 Definition of Confidential Information ................................................................ 61
18.2 Duty to Maintain Confidentiality ......................................................................... 62
18.3 Irreparable Injury; Remedies ............................................................................... 63
18.4 Further Permitted Disclosure ............................................................................... 63
18.5 Press Releases ...................................................................................................... 63 ARTICLE 19 MISCELLANEOUS ............................................................................................. 63
19.1 Entire Agreement; Integration; Exhibits .............................................................. 63
19.2 Amendments ........................................................................................................ 63
19.3 No Waiver ............................................................................................................ 63
19.4 No Agency, Partnership, Joint Venture or Lease. ................................................ 64
19.5 Severability .......................................................................................................... 64
19.6 Mobile-Sierra. ...................................................................................................... 64
19.7 Counterparts ......................................................................................................... 64
19.8 Electronic Delivery .............................................................................................. 64
19.9 Binding Effect ...................................................................................................... 64
19.10 No Recourse to Members of Buyer ..................................................................... 64
19.11 Forward Contract; Inapplicability/Waiver of Bankruptcy Code Section 366........................................................................................................................ 65 iv
19.12 Change in Electric Market Design ....................................................................... 65
19.13 Further Assurances............................................................................................... 66 Exhibits:
Exhibit A Facility Description
Exhibit B Facility Construction and Commercial Operation Exhibit C Compensation
Exhibit D Scheduling Coordinator Responsibilities
Exhibit E Progress Reporting Form
Exhibit F Form of Monthly Expected Available Capacity Report Exhibit G Form of Daily Availability Notice
Exhibit H Form of Commercial Operation Date Certificate Exhibit I Form of Capacity and Efficiency Rate Test Certificate Exhibit J Form of Construction Start Date Certificate
Exhibit K Form of Letter of Credit issued on behalf of Seller for Benefit of Buyer Exhibit L Form of Guaranty
Exhibit M Form of Replacement RA Notice
Exhibit N Notices
Exhibit O Capacity and Efficiency Rate Tests
Exhibit P Seasonal Availability Calculation
Exhibit Q Operating Restrictions
Exhibit R Metering Diagram
1 ENERGY STORAGE SERVICE AGREEMENT
This Energy Storage Service Agreement (“Agreement”) is entered into as of [__________], 2023 (the “Effective Date”), between Buyer and Seller. Buyer and Seller are sometimes referred to herein individually as a “Party” and jointly as the “Parties.” All capitalized terms used in this Agreement are used with the meanings ascribed to them in Article 1 to this Agreement.
RECITALS
WHEREAS, Seller intends to develop, design, construct, own, and operate the Facility; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the terms and conditions set forth in this Agreement, the Product;
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the sufficiency and adequacy of which are hereby acknowledged, the Parties agree to the following:
ARTICLE 1
DEFINITIONS
1.1 Contract Definitions. The following terms, when used herein with initial capitalization, shall have the meanings set forth below:
“AC” means alternating current.
“Accepted Compliance Costs” has the meaning set forth in Section 3.7(c). “Affiliate” means, with respect to any Person, each Person that directly or indirectly controls, is controlled by, or is under common control with such designated Person. For purposes of this definition and the definition of “Permitted Transfer” and “Permitted Transferee”, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean (a) the direct or indirect right to cast at least fifty percent (50%) of the votes exercisable at an annual general meeting (or its equivalent) of such Person or, if there are no such rights, direct or indirect ownership of at least fifty percent (50%) of the equity or other ownership interest in such Person, or (b) the right to direct the policies or operations of such Person. Notwithstanding the foregoing, the Parties hereby agree and acknowledge that with respect to Buyer the public entities designated as members or participants under the Joint Powers Agreement creating Buyer shall not constitute or otherwise be deemed an “Affiliate” for purposes of this Agreement, and with respect to Seller, Affiliate shall include any investment funds or publicly-traded vehicles for the ownership of operating power generation, 2 storage, or transmission assets (such as a “yield co”) controlled by Seller, NextEra Energy, Inc. or an Affiliate of NextEra Energy, Inc., NextEra Energy Partners, LP (“NEP”), NextEra Energy Operating Partners, LP (“NEOP”), and NextEra Energy Capital Holdings, Inc. (“NEECH”), and their respective direct or indirect subsidiaries.
“Agreement” has the meaning set forth in the Preamble and includes the Cover Sheet and all Exhibits hereto, and any schedules and written supplements hereto. “Alternative Dispatches” has the meaning set forth in Section 4.6(b). “Ancillary Services” means frequency regulation, spinning reserve, non-spinning reserve, regulation up, regulation down, voltage support, and any other ancillary services, in each case that the Facility is capable of providing consistent with the Operating Restrictions set forth in Exhibit Q, as each is defined in the CAISO Tariff, provided, for avoidance of doubt, the Ancillary Services do not include black start.
“Automated Dispatches” has the meaning set forth in Section 4.6(b). “Automated Dispatch System” or “ADS” has the meaning set forth in the CAISO Tariff. “Automatic Generation Control” or “AGC” has the meaning set forth in the CAISO Tariff.
“Availability Adjustment” has the meaning set forth in Exhibit C. “Availability Notice” has the meaning set forth in Section 4.10(b). “Availability Standards” has the meaning set forth in the CAISO Tariff or such other similar term as modified and approved by FERC hereafter to be incorporated in the CAISO Tariff. “Available Capacity” means the capacity of the Facility, expressed in whole MWs, that is mechanically available to charge and discharge Energy and provide Ancillary Services. “Bankrupt” or “Bankruptcy” means with respect to any entity, such entity that (a) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Law, (b) has any such petition filed or commenced against it which remains unstayed or undismissed for a period of ninety (90) days, (c) makes an assignment or any general arrangement for the benefit of creditors, (d) otherwise becomes bankrupt or insolvent (however evidenced), (e) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (f) is generally unable to pay its debts as they fall due.
“Battery Charging Factor” means a fraction, the numerator of which is the amount of Charging Energy absorbed by the Facility after the first ten (10) hours of the charging phase of the applicable Capacity Test, and the denominator of which is the Effective Capacity. 3 “Battery Discharging Factor” means one (1) minus a fraction, the numerator of which is the amount of Discharging Energy discharged during the first eight (8) hours of the discharging phase of the applicable Capacity Test, and the denominator of which is the Effective Capacity. “BESS Equipment” means batteries, battery modules, onboard sensors, control components, inverters, sub-inverters, transformers, or any of their components. “Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday in California. A Business Day begins at 8:00 a.m. and ends at 5:00 p.m. local time for the Party sending a Notice, or payment, or performing a specified action. “Buyer” has the meaning set forth on the Cover Sheet.
“Buyer Default” means an Event of Default of Buyer.
“Buyer Dispatched Test” has the meaning in Section 4.4(a)(ii). “Buyer’s Indemnified Parties” has the meaning set forth in Section 16.1(a). “CAISO” means the California Independent System Operator Corporation or any successor entity performing similar functions.
“CAISO Approved Meter” means a CAISO approved revenue quality meter or meters, metering scheme, CAISO approved data processing gateway or remote intelligence gateway, telemetering equipment and data acquisition services sufficient for monitoring, recording and reporting, in real time, all Charging Energy and Discharging Energy delivered to or from the Delivery Point.
“CAISO Balancing Authority Area” has the meaning set forth in the CAISO Tariff. “CAISO Certification” means the certification and testing requirements for a storage unit set forth in the CAISO Tariff that are applicable to the Facility, including certification and testing for all applicable Ancillary Services, PMAX, and PMIN.
“CAISO Charges Invoice” has the meaning set forth in Exhibit D. “CAISO Dispatch” means any Charging Notice or Discharging Notice given by the CAISO to the Facility, whether through ADS, AGC or any successor communication protocol, communicating an Ancillary Service Award (as defined in the CAISO Tariff) or directing the Facility to charge or discharge at a specific MW rate for a specified period of time or amount of MWh.
“CAISO Grid” has the same meaning as “CAISO Controlled Grid” as defined in the CAISO Tariff.
4 “CAISO Tariff” means the California Independent System Operator Corporation Agreement and Tariff, Business Practice Manuals (BPMs), and Operating Procedures, as the same may be amended or modified from time-to-time and approved by FERC. “Capacity Attribute” means any current or future defined characteristic, certificate, tag, credit, or accounting construct associated with the ability of the Facility to charge, discharge and deliver to the Delivery Point at a particular moment and that can be purchased, sold or conveyed under CAISO or CPUC market rules, including Resource Adequacy Benefits. “Capacity Damages” has the meaning set forth in Section 5 of Exhibit B. “Capacity Test” or “CT” means any test or retest of the Facility to establish the Installed Capacity, Effective Capacity, or Efficiency Rate or any other test conducted pursuant to Exhibit O. “CEQA” means the California Environmental Quality Act, as amended or supplemented from time to time.
“Change of Control” means, except in connection with public market transactions of equity interests or capital stock of Seller’s Ultimate Parent, any circumstance in which Ultimate Parent ceases to own, directly or indirectly through one or more intermediate entities, more than fifty percent (50%) of the outstanding equity interests in Seller; provided that in calculating ownership percentages for all purposes of the foregoing:
(a) any ownership interest in Seller held by Ultimate Parent indirectly through one or more intermediate entities shall not be counted towards Ultimate Parent’s ownership interest in Seller unless Ultimate Parent directly or indirectly owns more than fifty percent (50%) of the outstanding equity interests in each such intermediate entity; and (b) ownership interests in Seller owned directly or indirectly by any Lender (including any cash equity or tax equity provider) or assignee or transferee thereof shall be excluded from the total outstanding equity interests in Seller; provided further, a Change of Control shall not be deemed to have occurred as a result of a Permitted Transfer.
“Charging Energy” means the Energy delivered to the Facility pursuant to a Charging Notice, as measured at the Facility Metering Point by the Facility Meter, as such meter readings are adjusted by the CAISO for any applicable Electrical Losses. All Charging Energy shall be used solely to charge the Facility.
“Charging Notice” means the operating instruction, and any subsequent updates, given by Buyer, Buyer’s SC or the CAISO to the Facility, directing the Facility to charge at a specific MW rate for a specified period of time or amount of MWh; provided, any such operating instruction shall be in accordance with the Operating Restrictions. “Collateral Assignment Agreement” has the meaning set forth in Section 14.2. 5 “Commercial Operation” has the meaning set forth in Section 2 of Exhibit B. “Commercial Operation Capacity Test” means the Capacity Test conducted in connection with Commercial Operation of the Facility, including any additional Capacity Test for additional capacity installed after the Commercial Operation Date pursuant to Section 5 of Exhibit B.
“Commercial Operation Date” or “COD” has the meaning set forth in Section 2 of Exhibit B.
“Commercial Operation Delay Damages” means an amount equal to “Communications Protocols” means certain Operating Restrictions developed by the Parties pursuant to Exhibit Q that involve procedures and protocols regarding communication with respect to the operation of the Facility pursuant to this Agreement. “Compliance Actions” has the meaning set forth in Section 3.7(a). “Compliance Expenditure Cap” has the meaning set forth in Section 3.7. “Confidential Information” has the meaning set forth in Section 18.1. “Construction Start” has the meaning set forth in Section 1(a) of Exhibit B. “Construction Start Date” has the meaning set forth in Section 1(a) of Exhibit B. “Contract Price” has the meaning set forth on the Cover Sheet. “Contract Term” has the meaning set forth in Section 2.1(a). “Contract Year” means a period of twelve (12) consecutive months; provided, that the first Contract Year shall start on the Commercial Operation Date and end on the date that is twelve (12) months after the Supply Plan Start Date and therefore may be longer than twelve (12) months. Each subsequent Contract Year shall commence on the anniversary of the Supply Plan Start Date.
“Costs” means, with respect to the Non-Defaulting Party, brokerage fees, commissions and other similar third-party transaction costs and expenses reasonably incurred by such Non-Defaulting Party either in terminating any arrangement pursuant to which it has hedged its obligations or entering into new arrangements which replace this Agreement; and all reasonable attorneys’ fees and expenses incurred by the Non-Defaulting Party in connection with terminating this Agreement.
“Cover Sheet” means the cover sheet to this Agreement, which is incorporated into this Agreement.
6 “COVID-19” means the epidemic disease designated COVID-19 and the related virus designated SARS-CoV-2 and any mutations thereof, and the efforts of a Governmental Authority to combat such disease.
“CPM Soft Offer Cap” has the meaning set forth in the CAISO Tariff. “CPUC” means the California Public Utilities Commission, or any successor entity performing similar functions.
“CPUC System RA Penalty Price” means the penalty price (in dollars per kW-month) adopted by the CPUC for a load serving entity’s failure to procure up to the system RAR that applies to the RA Shortfall Month.
“Credit Rating” means, with respect to any entity, the rating then assigned to such entity’s unsecured, senior long-term debt obligations (not supported by third party credit enhancements) or if such entity does not have a rating for its senior unsecured long-term debt, then the rating then assigned to such entity as an issuer rating by S&P, Fitch or Moody’s. If ratings by S&P, Fitch and Moody’s are not equivalent, the lower rating shall apply. “Cure Plan” has the meaning set forth in Section 11.1(b)(iii). “Curtailment Order” means any of the following:
(a) CAISO orders, directs, alerts, or provides notice to a Party, including a CAISO Operating Order, to curtail deliveries of Facility Energy, and/or cease accepting or reduce acceptance of Charging Energy from the CAISO Grid for the following reasons: (i) any System Emergency, or (ii) any warning of an anticipated System Emergency, or warning of an imminent condition or situation, which jeopardizes CAISO’s electric system integrity or the integrity of other systems to which CAISO is connected;
(b) a curtailment ordered by the Transmission Provider for reasons including, but not limited to, (i) any situation that affects normal function of the electric system including, but not limited to, any abnormal condition that requires action to prevent circumstances such as equipment damage, loss of load, or abnormal voltage conditions, or (ii) any warning, forecast or anticipation of conditions or situations that jeopardize the Transmission Provider’s electric system integrity or the integrity of other systems to which the Transmission Provider is connected; (c) a curtailment ordered by CAISO or the Transmission Provider due to a Transmission System Outage; or
(d) a curtailment in accordance with Seller’s obligations under its Interconnection Agreement with the Transmission Provider or distribution operator. “Daily Delay Damages” means an amount equal
7 “Damage Payment” means the amount to be paid by the Defaulting Party to the Non-Defaulting Party after a termination of this Agreement under Section 11.2 occurring prior to the Commercial Operation Date, in a dollar amount set forth in Section 11.3(a). “Day-Ahead Market” has the meaning set forth in the CAISO Tariff. “Day-Ahead Schedule” has the meaning set forth in the CAISO Tariff. “Dedicated Interconnection Capacity” means the maximum instantaneous amount of Charging Energy and/or Discharging Energy, as applicable, that is permitted to be delivered from and/or to the Delivery Point under Seller’s Interconnection Agreement, in the amount of MWs as set forth on the Cover Sheet.
“Defaulting Party” has the meaning set forth in Section 11.1(a). “Deliverability Deadline” has the meaning set forth in Section 2.3. “Delivery Point” means the PNode assigned to the Facility by the CAISO. “Delivery Term” shall mean the period of Contract Years set forth on the Cover Sheet beginning on the Commercial Operation Date, unless terminated earlier in accordance with the terms and conditions of this Agreement.
“Development Cure Period” has the meaning set forth in Section 4 of Exhibit B. “Development Security” means (a) cash or (b) a Letter of Credit in the amount set forth on the Cover Sheet.
“Discharging Energy” means all Energy delivered from the Facility to the Delivery Point pursuant to a Discharging Notice during any Settlement Interval or Settlement Period, as measured at the Facility Metering Point by the Facility Meter, as such meter readings are adjusted by the CAISO for Electrical Losses to the Delivery Point.
“Discharging Notice” means the operating instruction, and any subsequent updates, given by Buyer, Buyer’s SC or the CAISO to the Facility, directing the Facility to discharge Discharging Energy at a specific MW rate or to a specified Stored Energy Level; provided, any such operating instruction or updates shall be in accordance with the Operating Restrictions. Any instruction to discharge the Facility pursuant to a Buyer Dispatched Test shall be considered a Discharging Notice.
“Disclosing Party” has the meaning set forth in Section 18.2. “Dispatch Notice” means any Charging Notice, Discharging Notice and any subsequent updates thereto, given by the CAISO, Buyer or Buyer’s SC, to Seller, directing the Facility to charge or discharge Energy at a specific MWh rate, for a specified period of time, and/or to a specified Stored Energy Level; provided, any such operating instruction or updates shall be in accordance with the Operating Restrictions.
8 “Early Termination Date” has the meaning set forth in Section 11.2(a). “Effective Capacity” means the lesser of (a) PMAX, and (b) maximum dependable operating capacity of the Facility to discharge Energy for eight (8) hours of continuous discharge, as measured in MW at the Delivery Point (i.e., measured at the Facility Meter and adjusted for Electrical Losses to the Delivery Point to the extent such Electrical Losses are not already reflected in the Facility Meter measurements) as determined pursuant to the most recent Capacity Test (including the Commercial Operation Capacity Test), and as evidenced by a certificate substantially in the form attached as Exhibit I hereto, in either case (a) or (b) up to but not in excess of (i) the Guaranteed Capacity (with respect to a Commercial Operation Capacity Test) or (ii) the Installed Capacity (with respect to any other Capacity Test). “Effective Date” has the meaning set forth on the Preamble. “Effective Flexible Capacity” or “EFC” has the meaning set forth in the CAISO Tariff. “Efficiency Rate” means the tested rate calculated pursuant to Sections II.I(2) and III(A) of Exhibit O by dividing Discharging Energy by Charging Energy. “Electrical Losses” means, subject to meeting any applicable CAISO requirements and in accordance with Section 7.1, all transmission or transformation losses (a) between the Delivery Point and the Facility Metering Point associated with delivery of Charging Energy, and (b) between the Facility Metering Point and the Delivery Point associated with delivery of Discharging Energy.
“Energy” means electrical energy, measured in kilowatt-hours, megawatt-hours, or multiple units thereof.
“Event of Default” has the meaning set forth in Section 11.1. “Excused Hour” has the meaning set forth in Exhibit P.
“Facility” means the energy storage facility described on the Cover Sheet and in Exhibit A, located at the Site and including mechanical equipment and associated facilities and equipment required to deliver Product (but excluding any Shared Facilities), as such storage facility may be expanded or otherwise modified from time to time in accordance with the terms hereof. “Facility Energy” means the Discharging Energy.
“Facility Meter” means a CAISO Approved Meter, along with a CAISO-approved data processing gateway or remote intelligence gateway, telemetering equipment and data acquisition services sufficient for monitoring, recording and reporting, in real time, the amount of Charging Energy delivered to the Facility Metering Point and the amount of Discharging Energy discharged from the Facility at the Facility Metering Point to the Delivery Point for the purpose of invoicing 9 in accordance with Section 8.1. The Facility may contain multiple measurement devices that will make up the Facility Meter, and, unless otherwise indicated, references to the Facility Meter shall mean all such measurement devices and the aggregated data of all such measurement devices, taken together.
“Facility Metering Point” means the location(s) of the Facility Meter shown in Exhibit R. “FERC” means the Federal Energy Regulatory Commission or any successor government agency.
“Flexible Capacity” has the meaning set forth in the CAISO Tariff. “Flexible RAR” means the flexible capacity requirements established for load-serving entities by the CAISO pursuant to the CAISO Tariff, the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority.
“Force Majeure Event” has the meaning set forth in Section ARTICLE 10. “Full Capacity Deliverability Status” or “FCDS” has the meaning set forth in the CAISO Tariff.
“Gains” means, with respect to the Non-Defaulting Party, an amount equal to the present value of the economic benefit to it, if any (exclusive of Costs), resulting from the termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining the economic benefit to a Party may include reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-Defaulting Party, including quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., NP-15), all of which should be calculated for the remaining Contract Term, and include the value of Capacity Attributes.
“Governmental Authority” means any federal, state, provincial, local or municipal government, any political subdivision thereof or any other governmental, congressional or parliamentary, regulatory, or judicial instrumentality, authority, body, agency, department, bureau, or entity with authority to bind a Party at law, including CAISO; provided, “Governmental Authority” shall not in any event include any Party.
“Guaranteed Capacity” means the maximum dependable operating capability of the Facility to discharge electric energy, as measured in MW AC at the Delivery Point for eight (8) hours of continuous discharge, as set forth on the Cover Sheet. “Guaranteed Commercial Operation Date” means the date set forth on the Cover Sheet, as such date may be extended pursuant to Exhibit B.
“Guaranteed Construction Start Date” means the date set forth on the Cover Sheet, as such date may be extended pursuant to Exhibit B.
10 “Guaranteed Efficiency Rate” means the minimum guaranteed Efficiency Rate of the Facility in each Contract Year of the Delivery Term, as set forth on the Cover Sheet. “Guaranteed RA Amount” means, at any point in time on or after the RA Guarantee date, the maximum Net Qualifying Capacity (in MWs) for which a storage facility with storage capacity of Installed Capacity with eight (8)-hour discharge at the Delivery Point, having achieved FCDS to the extent required under this Agreement and performing with operational characteristics equal to those required by the Guaranteed Seasonal Availability and the Guaranteed Efficiency Rate, and as limited by the Operating Restrictions, may be counted toward meeting the RAR in any given Showing Month pursuant to the then current Law, including counting conventions set forth in the Resource Adequacy Rulings and the CAISO Tariff applicable to Resource Adequacy Resources.
“Guaranteed Seasonal Availability” has the meaning set forth on the Cover Sheet. “Guarantor” means, with respect to Seller, any Person that (a) does not already have any material credit exposure to Buyer under any other agreements, guarantees, or other arrangements at the time its Guaranty is issued, (b) is an Affiliate of Seller, or other third party reasonably acceptable to Buyer, (c) has an Investment Grade Credit Rating, (e) is incorporated or organized in a
jurisdiction of the United States and is in good standing in such jurisdiction, and (f) executes and delivers a Guaranty for the benefit of Buyer. NEECH is approved as a Guarantor. “Guaranty” means a guaranty from a Guarantor provided for the benefit of Buyer substantially in the form attached as Exhibit L.
“Imbalance Energy” means the amount of Energy in MWh, in any given Settlement Period or Settlement Interval, by which the amount of Charging Energy or Discharging Energy, as applicable, deviates from the amount of Scheduled Energy.
“Indemnified Party” shall mean (i) Buyer, with respect to all third-party claims, demands, losses, liabilities, penalties, and expenses arising out of, resulting from, or caused by the circumstances described in Section 16.1(a), and (ii) Seller, with respect to all third-party claims, demands, losses, liabilities, penalties, and expenses arising out of, resulting from, or caused by the circumstances described in Section 16.1(b).
“Indemnifying Party” shall mean (i) Seller, with respect to all third-party claims, demands, losses, liabilities, penalties, and expenses arising out of, resulting from, or caused by the circumstances described in Section 16.1(a), and (ii) Buyer, with respect to all third-party claims, demands, losses, liabilities, penalties, and expenses arising out of, resulting from, or caused by the circumstances described in Section 16.1(b).
11 “Initial Synchronization” means the commencement of Trial Operations (as defined in the CAISO Tariff).
“Installed Capacity” means the lesser of (a) PMAX, and (b) maximum dependable operating capacity of the Facility to discharge Energy for eight (8) hours of continuous discharge, as measured in MW AC at the Facility Meter Point by the Facility Meter and adjusted for Electrical Losses to the Delivery Point (to the extent such Electrical Losses are not already reflected in the Facility Meter measurements), that achieves Commercial Operation, as evidenced by a certificate substantially in the form attached as Exhibit I hereto, as such capacity may be adjusted pursuant to Section 5 of Exhibit B, but in either case (a) or (b) up to but not in excess of the Guaranteed Capacity.
“Insurable Force Majeure Event” means any Force Majeure Event that results in direct, physical loss to the Facility, excluding any Force Majeure Event involving any event or circumstance occurring at any point beyond the Delivery Point. “Inter-SC Trade” has the meaning set forth in the CAISO Tariff. “Interconnection Agreement” means the interconnection agreement(s) entered into by Seller or a Seller Affiliate pursuant to which the Facility will be interconnected with the Transmission System, providing for interconnection capacity available or allocable to the Facility that is no less than the Dedicated Interconnection Capacity, and pursuant to which Seller’s Interconnection Facilities and any other Interconnection Facilities will be constructed, operated and maintained during the Delivery Term.
“Interconnection Facilities” means the interconnection facilities, control and protective devices and metering facilities required to connect the Facility with the Transmission System in accordance with the Interconnection Agreement.
“Interconnection Point” has the meaning set forth in Exhibit A. “Interest Rate” has the meaning set forth in Section 8.2. “ITC” means the investment tax credit established pursuant to Section 48, 48E, or other applicable provisions of the United States Internal Revenue Code of 1986. “Joint Powers Act” means the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.).
“Joint Powers Agreement” means that certain Joint Powers Agreement dated October 1, 2019, as amended from time to time, under which Buyer is organized as a Joint Powers Authority in accordance with the Joint Powers Act.
“kWh” means a kilowatt-hour measured in alternating current, unless expressly stated in terms of direct current.
12 “Law” means any applicable law, statute, rule, regulation, decision, writ, order, decree or judgment, permit or any interpretation thereof, promulgated or issued by a Governmental Authority.
“Lender” means, collectively, any Person (a) providing senior or subordinated construction, interim, back leverage or long-term debt, equity or tax equity financing or refinancing for or in connection with the development, construction, purchase, installation or operation of the Facility, whether that financing or refinancing takes the form of private debt (including back-leverage debt), equity (including tax equity), public debt or any other form (including financing or refinancing provided to a member or other direct or indirect owner of Seller), including any equity or tax equity investor directly or indirectly providing financing or refinancing for the Facility or purchasing equity ownership interests of Seller and/or its Affiliates, and any trustee or agent or similar representative acting on their behalf, (b) providing interest rate or commodity protection under an agreement hedging or otherwise mitigating the cost of any of the foregoing obligations and/or (c) participating in a lease financing (including a sale leaseback or leveraged leasing structure) with respect to the Facility. “Letter(s) of Credit” means one or more irrevocable, standby letters of credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such in
a form substantially similar to the letter of credit set forth in: (a) Exhibit K if issued on behalf of Seller for the benefit of Buyer;
“Licensed Professional Engineer” means an independent, professional engineer selected by Seller and reasonably acceptable to Buyer, licensed in the State of California. “Local Capacity Area Resource” has the meaning set forth in the CAISO Tariff. “Local RAR” means the local Resource Adequacy Requirements established for load-serving entities by the CAISO pursuant to the CAISO Tariff, the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority with jurisdiction over Buyer. “Local RAR” may also be known as local area reliability, local resource adequacy, local resource adequacy procurement requirements, or local capacity requirement in other regulatory proceedings or legislative actions.
“Losses” means, with respect to the Non-Defaulting Party, an amount equal to the present value of the economic loss to it, if any (exclusive of Costs), resulting from termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner.
Factors used in determining economic loss to a Party may include reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-Defaulting Party, including quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., NP-15), all of which should be calculated for the remaining Contract Term and must include the value of Capacity Attributes and Tax Credits. 13 “Master File” has the meaning set forth in the CAISO Tariff. “Maximum Charging Capacity” means the highest level at which the Facility may be charged, expressed in MW and as set forth in Exhibit Q. “Maximum Discharging Capacity” means the highest level at which the Facility may be discharged, expressed in MW and as set forth in Exhibit Q. “Milestones” means the development activities for significant permitting, interconnection, and construction milestones set forth on the Cover Sheet. “Minimum Efficiency Rate” has the meaning set forth on the Cover Sheet. “Monthly Capacity Payment” means the payment required to be made by Buyer to Seller each month of the Delivery Term as compensation for the Product, as calculated in accordance with Exhibit C.
“Monthly Forecast” has the meaning set forth in Section 4.10(a). “Moody’s” means Moody’s Investors Service, Inc., or its successor. “Must Offer Obligations” means the obligations to offer the Net Qualifying Capacity in order to satisfy Resource Adequacy Requirements, including under Section 40.6 of the CAISO Tariff.
“MW” means megawatts in alternating current, unless expressly stated in terms of direct current.
“MWh” means megawatt-hour measured in alternating current, unless expressly stated in terms of direct current.
“NEECH” has the meaning set forth in the definition of Affiliate. “NEOP” has the meaning set forth in the definition of Affiliate. “NEP” has the meaning set forth in the definition of Affiliate. “NERC” means the North American Electric Reliability Corporation, or any successor entity performing similar functions.
“Net Qualifying Capacity” or “NQC” has the meaning set forth in the CAISO Tariff. “Network Upgrades” has the meaning set forth in the CAISO Tariff.
14 “Non-Defaulting Party” has the meaning set forth in Section 11.2. “Notice” shall, unless otherwise specified in the Agreement, mean written communications by a Party to be delivered by hand delivery, United States mail, overnight courier service, or electronic messaging (e-mail).
“Notification Deadline” in respect of a Showing Month shall be fifteen (15) Business Days before the relevant deadlines for the corresponding RA Compliance Showings for such Showing Month.
“NP-15” means the Existing Zone Generation Trading Hub for Existing Zone region NP15 as set forth in the CAISO Tariff.
“Off-Peak Hour” means any hour that is not an On-Peak Hour. “On-Peak Hour” means any hour from hour-ending 0700 to hour-ending 2200 (i.e., 6:00 AM to 9:59 PM) on Monday through Saturday, Pacific Prevailing Time, excluding North American Electric Reliability Council (NERC) holidays.
“Operating Restrictions” means those restrictions, rules, requirements, and procedures set forth in Exhibit Q.
“Outage Schedule” has the meaning set forth in Section 4.12(a)(i). “Party” has the meaning set forth in the Preamble.
“Party A” has the meaning set forth in Section 8.9.
“Party B” has the meaning set forth in Section 8.9.
“Performance Security” means (i) cash or (ii) a Letter of Credit or (iii) a Guaranty in the amount set forth on the Cover Sheet.
“Permitted Transfer” means each of the following transactions:
15 (a) Transactions among Affiliates of Seller, including any corporate reorganization, merger, combination or similar transaction or transfer of assets or ownership interests involving Seller or its Affiliates; provided, that (i) the entity that is the Seller after completion of such transaction is a Permitted Transferee, (ii) Ultimate Parent retains the authority, directly or indirectly, to control Seller (or if applicable, the surviving entity), or (iii) a wholly-owned, indirect subsidiary of Ultimate Parent operates the Facility; (b) Any change of economic and voting rights triggered in Seller’s organization documents arising from the financing of the Facility and that does not result in the transfer of ownership, economic or voting rights in any entity that had no such rights immediately prior to the change;
(c) The direct or indirect transfer of shares of, or equity interests in, Seller to a Lender; or
A transfer of the Facility (or the direct or indirect ownership of equity interests in Seller) in connection with any of the following: (i) a direct or indirect transfer of all or substantially all of the assets or ownership interests of NEER, NEECH, or Ultimate Parent; (ii) a direct or indirect transfer of all or substantially all of NEER’s or Ultimate Parent’s renewable energy generation portfolio; (iii) a direct or indirect transfer of all or substantially all of NEER’s or Ultimate Parent’s solar generation and/or energy storage portfolio; or “Permitted Transferee” means (i) any Affiliate of Seller or (ii) any entity that has, or is controlled by another Person that has the following:
(a) A tangible net worth of
(b) At least three (3) years of experience in the ownership and operations of power generation facilities similar to the Facility, or has retained a third-party with such experience to operate the Facility.
Notwithstanding the foregoing, with respect to Seller, Permitted Transferee shall include its Ultimate Parent, NEER, NEECH, NEOP, and NEP, and their respective direct or indirect subsidiaries.
“Person” means any individual, sole proprietorship, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, 16 incorporated organization, institution, public benefit corporation, unincorporated organization, government entity or other entity.
“Planned Outage” means a period during which the Facility is either in whole or in part not capable of providing service due to planned maintenance that has been scheduled in advance in accordance with Section 4.12(a).
“PMAX” means the applicable CAISO-certified maximum operating level of the Facility. “PMIN” means the applicable CAISO-certified minimum operating level of the Facility. “PNode” has the meaning set forth in the CAISO Tariff.
“Portfolio” means the portfolio of electrical energy generating, electrical energy storage, or other assets and entities, including the Facility (or the interests of Seller or Seller’s Affiliates or the interests of their respective direct or indirect parent companies), that is pledged as collateral security in connection with a Portfolio Financing.
“Portfolio Financing” means any debt or equity financing incurred or entered into by an Affiliate of Seller that is secured only by a Portfolio. “Portfolio Financing Entity” means any Affiliate of Seller that incurs any debt or equity financing obligations in connection with any Portfolio Financing. “Product” has the meaning set forth on the Cover Sheet. “Progress Report” means a progress report including the items set forth in Exhibit E. “Prudent Operating Practice” means (a) the applicable practices, methods and acts required by or consistent with applicable Laws and reliability criteria, and otherwise engaged in or approved by a significant portion of the electric industry during the relevant time period with respect to grid-interconnected, utility-scale energy storage facilities in the Western United States, and (b) any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Prudent Operating Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to acceptable practices, methods or acts generally accepted in the industry with respect to grid-interconnected, utility-scale energy storage facilities in the Western United States. Prudent Operating Practice shall include compliance with applicable Laws, applicable safety and reliability criteria, and the applicable criteria, rules and standards promulgated in the National Electric Safety Code and the National Electrical Code, as they may be amended or superseded from time to time, including the criteria, rules and standards of any successor organizations.
“Qualifying Capacity” has the meaning set forth in the CAISO Tariff. “RA Compliance Showing” means the (a) System RAR compliance or advisory showings (or similar or successor showings) and (b) Flexible RAR compliance or advisory showings (or 17 similar successor showings), in each case, an entity is required to make to the CAISO pursuant to the CAISO Tariff, to the CPUC (and, to the extent authorized by the CPUC, to the CAISO) pursuant to the Resource Adequacy Rulings, or to any Governmental Authority. “RA Deficiency Amount” means the liquidated damages payment that Seller shall pay to Buyer for an applicable RA Shortfall Month, as calculated in accordance with Section 3.5(b). “RA Guarantee Date” means the later of (a) June 1, 2027, or (b) the first day of the first calendar month that is at least two (2) months after the Commercial Operation Date. For illustrative purposes, if the Commercial Operation Date is June 30, the RA Guarantee Date shall be September 1.
“RA Shortfall” has the meaning set forth in Section 3.5(b). “RA Shortfall Month” means any Showing Month during the Delivery Term, commencing with the Showing Month that contains the RA Guarantee Date, during which an RA Shortfall occurs.
“Real-Time Market” has the meaning set forth in the CAISO Tariff. “Receiving Party” has the meaning set forth in Section 18.2. “Remedial Action Plan” has the meaning in Section 2.4.
“Replacement RA” means replacement Resource Adequacy Benefits, if any, (a) equivalent to those that would have been provided by the Facility with respect to the applicable month in which a RA Deficiency Amount is due to Buyer, unless Buyer consents to accept Replacement RA from another facility that provides non-equivalent Resource Adequacy Benefits, and (b) provided by a resource located within the CAISO Balancing Authority Area. “Requested Confidential Information” has the meaning set forth in Section 18.2. “Resource Adequacy Benefits” means the rights and privileges attached to the Facility that satisfy any entity’s Resource Adequacy Requirements, as those obligations are set forth in any ruling issue by a Governmental Authority, including the Resource Adequacy Rulings, or the CAISO Tariff, and shall include Flexible Capacity and any local, zonal or otherwise locational attributes associated with the Facility.
“Resource Adequacy Capacity” or “RA Capacity” has the meaning set forth in the CAISO Tariff.
“Resource Adequacy Requirements” or “RAR” means the resource adequacy requirements applicable to an entity as established by the CAISO pursuant to the CAISO Tariff, by the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority.
“Resource Adequacy Resource” shall have the meaning used in Resource Adequacy Rulings.
18 “Resource Adequacy Rulings” means CPUC Decisions 04-01-050, 04-10-035, 05-10-042, 06-04-040, 06-06-064, 06-07-031, 07-06-029, 08-06-031, 09-06-028, 10-06-036, 11-06-022, 12-06-025, 13-06-024, 14-06-050, 15-06-063, 16-06-045, 17-06-027, 18-06-030, 18- 06-031, 19-02-022, 19-06-026, 19-10-021, 20-01-004, 20-03-016, 20-06-002, 20-06-031, 20-06- 028, 20-12-006, 22-06-050, 23,04-010 and any other existing or subsequent ruling or decision, or any other resource adequacy laws, rules or regulations enacted, adopted or promulgated by the CPUC or the CAISO, however described, as such decisions, rulings, Laws, rules or regulations may be amended or modified from time-to-time throughout the Contract Term. “S&P” means the Standard & Poor’s Financial Services, LLC (a subsidiary of S&P Global Inc.) or its successor.
“SCADA Systems” means the standard supervisory control and data acquisition systems to be installed by Seller as part of the Facility, including those system components that enable Seller to receive ADS and AGC instructions from the CAISO or similar instructions from Buyer’s SC.
“Schedule” has the meaning set forth in the CAISO Tariff, and “Scheduled” and “Scheduling” have a corollary meaning.
“Scheduled Energy” means the Charging Energy schedule or Discharging Energy schedule, as applicable, that clears under the applicable CAISO market based on the final Day-Ahead Schedule, FMM Schedule (as defined in the CAISO Tariff), and/or any other financially binding Schedule, market instruction or CAISO dispatch for the Facility for a given period of time implemented in accordance with the CAISO Tariff.
“Scheduling Coordinator” or “SC” means an entity certified by the CAISO as qualifying as a Scheduling Coordinator pursuant to the CAISO Tariff for the purposes of undertaking the functions specified in “Responsibilities of a Scheduling Coordinator,” of the CAISO Tariff, as amended from time to time.
“Seasonal Availability” has the meaning set forth in Exhibit P. “Seasonal Period” means the Summer Season or the Winter Season. “Security Interest” has the meaning set forth in Section 8.9. “Seller” has the meaning set forth on the Cover Sheet.
“Seller’s Indemnified Parties” has the meaning set forth in Section 16.1(b). “Seller Initiated Test” has the meaning set forth in Section 4.4(a)(iii). “Settlement Amount” means the Non-Defaulting Party’s Costs and Losses, on the one hand, netted against its Gains, on the other. If the Non-Defaulting Party’s Costs and Losses exceed its Gains, then the Settlement Amount shall be an amount owing to the Non-Defaulting Party. If the Non-Defaulting Party’s Gains exceed its Costs and Losses, then the Settlement Amount shall 19 be zero dollars ($0). The Settlement Amount does not include consequential, incidental, punitive, exemplary or indirect or business interruption damages. “Settlement Interval” has the meaning set forth in the CAISO Tariff. “Settlement Period” has the meaning set forth in the CAISO Tariff. “Shared Facilities” means the gen-tie lines, transformers, substations, or other equipment, permits, contract rights, and other assets and property (real or personal), in each case, as necessary to enable delivery of Charging Energy and Discharging Energy to and from the Delivery Point to the Facility (which is excluded from Shared Facilities), including the Interconnection Agreement itself, that are used in common with third parties or by Seller for electric generation or storage facilities owned by Seller other than the Facility.
“Showing Month” shall be a calendar month of the Delivery Term, commencing with the Showing Month that contains the RA Guarantee Date, that is the subject of a RA Compliance Showing, as set forth in the Resource Adequacy Rulings and outlined in the CAISO Tariff. For illustrative purposes only, pursuant to the CAISO Tariff and Resource Adequacy Rulings in effect as of the Effective Date, the monthly RA Compliance Showing made in June is for the Showing Month of August.
“Site” means the real property on which the Facility is or will be located, as further described in Exhibit A, and as shall be updated by Seller at the time Seller provides an executed Construction Start Date certificate in the form of Exhibit J to Buyer. “Site Control” means that, for the Contract Term, Seller or its Affiliate: (a) owns or has the option to purchase the Site; (b) is the lessee or has the option to lease the Site; or (c) is the holder of an easement or an option for an easement, right-of-way grant, or similar instrument with respect to the Site.
“SQMD Plan” has the meaning set forth in the CAISO Tariff. “State of Charge” or “SOC” means the ratio of (a) the Stored Energy Level of the Facility to (b) the Effective Capacity multiplied by eight (8) hours, expressed as a percentage. “Station Use” means the Energy that is used within the Facility to power certain lights, motors, temperature control systems, control systems and other ancillary electrical loads that are necessary for operation of the Facility (or as otherwise defined by the retail energy provider and CAISO Tariff) except during periods in which the Facility is charging or discharging pursuant to a Charging Notice or Discharging Notice. Seller is solely responsible for Station Use. “Stored Energy Level” means, at a particular time, the amount of electric Energy in the Facility available to be discharged as Discharging Energy, expressed in MWh. “Summer Season” means the months of May through October, inclusive. “Subsequent Purchaser” means the purchaser or recipient of Product from Buyer in any conveyance, re-sale or remarketing of Product by Buyer. 20 “Supplementary Capacity Test Protocol” has the meaning set forth in Exhibit O. “Supply Plan” has the meaning set forth in the CAISO Tariff. “Supply Plan Start Date” has the meaning set forth in Exhibit C. “System Emergency” means any condition that requires, as determined and declared by CAISO or the Transmission Provider, automatic or immediate action to (i) prevent or limit harm to or loss of life or property, (ii) prevent loss of transmission facilities or generation supply in the immediate vicinity of the Facility, or (iii) to preserve Transmission System reliability. “System RAR” means the Resource Adequacy Requirements established for load-serving entities by the CAISO pursuant to the CAISO Tariff, the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority, but excluding local and flexible Resource Adequacy Requirements. “System RAR” may also be known as system area reliability, system resource adequacy, system resource adequacy procurement requirements, or system capacity requirement in other regulatory proceedings or legislative actions. “Tax” or “Taxes” means all U.S. federal, state and local and any foreign taxes, levies, assessments, surcharges, duties and other fees and charges of any nature imposed by a Governmental Authority, whether currently in effect or adopted during the Contract Term, including ad valorem, excise, franchise, gross receipts, import/export, license, property, sales and use, stamp, transfer, payroll, unemployment, income, and any and all items of withholding, deficiency, penalty, additions, interest or assessment related thereto. “Tax Credits” means any (i) federal production tax credit, depreciation benefit, tax deduction and/or investment tax credit, including the ITC, specific to investments in renewable energy facilities and/or energy storage facilities and (ii) any refundable credit, grant, or other cash payment in lieu of an incentive described in clause (i). “Termination Payment” has the meaning set forth in Section 11.3(b). “Throughput” means, for a day or Contract Year (as the context dictates), the cumulative amount of Discharging Energy from the Facility for such time period. “Transmission Plan Deliverability” has the meaning set forth in Section 2.3. “Transmission Provider” means any entity that owns, operates and maintains transmission or distribution lines and associated facilities and/or has entitlements to use certain transmission or distribution lines and associated facilities for the purpose of transmitting or transporting the Discharging Energy from the Delivery Point. “Transmission System” means the transmission facilities operated by the CAISO, now or hereafter in existence, which provide energy transmission service downstream from the Delivery Point.
21 “Transmission System Outage” means an outage on the Transmission System, other than a System Emergency, that is not caused by Seller’s actions or inactions and that prevents Buyer or the CAISO (as applicable) from receiving Facility Energy onto the Transmission System. “Ultimate Parent” means NextEra Energy, Inc., NEER, NEP, NEOP, or NEECH, and includes any combination thereof.
“Unplanned Outage” means a period during which the Facility is not capable of providing service due to the need to maintain or repair a component thereof, which period is not a Planned Outage.
“Winter Season” means the months of November through April, inclusive.
1.2 Rules of Interpretation. In this Agreement, except as expressly stated otherwise or unless the context otherwise requires:
(a) headings and the rendering of text in bold and italics are for convenience and reference purposes only and do not affect the meaning or interpretation of this Agreement; (b) words importing the singular include the plural and vice versa and the masculine, feminine and neuter genders include all genders; (c) the words “hereof”, “herein”, and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) a reference to an Article, Section, paragraph, clause, Party, or Exhibit is a reference to that Article, Section, paragraph, clause of, or that Party or Exhibit to, this Agreement unless otherwise specified;
(e) a reference to a document or agreement, including this Agreement, shall mean such document, agreement or this Agreement including any amendment or supplement to, or replacement, novation or modification of such document, agreement or this Agreement, but disregarding any amendment, supplement, replacement, novation or modification made in breach of such document, agreement or this Agreement;
(f) a reference to a Person includes that Person’s successors and permitted assigns;
(g) the terms “include” and “including” mean “include or including (as applicable) without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the word or provision in respect of which such examples are provided;
(h) references to any statute, code or statutory provision are to be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or reenacted, and include references to all bylaws, instruments, orders and regulations for the time being made thereunder or deriving validity therefrom unless the context otherwise requires; 22 (i) in the event of a conflict, a mathematical formula or other precise description of a concept or a term shall prevail over words providing a more general description of a concept or a term;
(j) references to any amount of money shall mean a reference to the amount in United States Dollars;
(k) the expression “and/or” when used as a conjunction shall connote “any or all of”;
(l) words, phrases or expressions not otherwise defined herein that (i) have a generally accepted meaning in Prudent Operating Practice shall have such meaning in this Agreement or (ii) do not have well known and generally accepted meaning in Prudent Operating Practice but that have well known and generally accepted technical or trade meanings, shall have such recognized meanings; and
(m) each Party acknowledges that it was represented by counsel in connection with this Agreement and that it or its counsel reviewed this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in the interpretation of this Agreement.
ARTICLE 2
TERM; CONDITIONS PRECEDENT
2.1 Contract Term.
(a) The term of this Agreement shall commence on the Effective Date and shall remain in full force and effect until the conclusion of the Delivery Term, subject to any early termination provisions set forth herein (“Contract Term”); provided, Buyer’s obligations to pay for or accept any Product are subject to Seller’s completion of the conditions precedent pursuant to Section 2.2.
(b) Applicable provisions of this Agreement shall continue in effect after termination, including early termination, to the extent necessary to enforce or complete the duties, obligations or responsibilities of the Parties arising prior to termination. The confidentiality obligations of the Parties under Article 18 shall remain in full force and effect for two (2) years following the termination of this Agreement, and all indemnity and audit rights shall remain in full force and effect for three (3) years following the termination of this Agreement.
2.2 Commercial Operation; Conditions Precedent. Seller shall provide Notice to Buyer of the expected Commercial Operation Date at least sixty (60) days in advance of such date.
Seller shall provide copies of the documents set forth below to Buyer in a timely manner after receipt and shall provide Notice to Buyer when Seller believes it has provided the required documentation to Buyer and met all the conditions precedent set forth below for achieving Commercial Operation.
23 (a) Seller has delivered to Buyer (i) a completion certificate from a Licensed Professional Engineer substantially in the form of Exhibit H and (ii) a certificate from a Licensed Professional Engineer substantially in the form of Exhibit I setting forth the Installed Capacity and Efficiency Rate on the Commercial Operation Date;
(b) Seller or its Affiliate has executed an Interconnection Agreement with the Transmission Provider, which shall be in full force and effect and a copy of the Interconnection Agreement delivered to Buyer;
(c) Intentionally omitted;
(d) A Participating Generator Agreement and a Meter Service Agreement between Seller and CAISO shall have been executed and delivered and be in full force and effect, and a copy of each such agreement delivered to Buyer;
(e) Seller has obtained CAISO Certification for the Facility other than for Ancillary Services, which shall not be required to achieve the Commercial Operation Date or the start of the Delivery Term;
(f) The Facility has successfully completed all testing required by Prudent Operating Practice or any requirement of Law to operate the Facility; (g) All applicable regulatory authorizations, approvals and permits for the operation of the Facility have been obtained and all conditions thereof that are capable of being satisfied on the Commercial Operation Date have been satisfied and shall be in full force and effect;
(h) Seller or its Affiliate has Site Control;
(i) Seller has delivered the Performance Security to Buyer in accordance with Section 8.8, which may be provided in part by designating the Delivery Security as Performance Security;
(j) Insurance requirements for the Facility have been met, with evidence provided in writing to Buyer, in accordance with Section 17.1; and (f) Seller has paid Buyer for all amounts owing under this Agreement as of the Commercial Operation Date, if any, including Daily Delay Damages and Commercial Operation Delay Damages.
24 2.4 Development; Construction; Progress Reports. Within fifteen (15) days after the close of (i) each calendar quarter from the first calendar quarter following the Effective Date until the Construction Start Date, and (ii) each calendar month from the first calendar month following the Construction Start Date until the Commercial Operation Date, Seller shall provide to Buyer a
25 Progress Report and agrees to regularly scheduled meetings between representatives of Buyer and Seller to review such reports and discuss Seller’s construction progress. The form of the Progress Report is set forth in Exhibit E. Seller shall also provide Buyer with any reasonably requested documentation (subject to confidentiality restrictions) directly related to the achievement of Milestones within ten (10) Business Days of receipt of such request by Seller. Seller is solely responsible for the design and construction of the Facility, including the location of the Site, the Facility layout, and the selection and procurement of the equipment comprising the Facility.
2.5 Remedial Action Plan. If Seller misses a Milestone by more than ninety (90) days, except as the result of Force Majeure Event or Buyer Default, Seller shall submit to Buyer, within ten (10) Business Days of the end of such ninety (90)-day period following the Milestone completion date, a remedial action plan (“Remedial Action Plan”), which will describe in detail any delays (actual or anticipated) beyond the scheduled Milestone dates, including the cause of the delay (e.g., governmental approvals, financing, property acquisition, design activities, equipment procurement, project construction, interconnection, or any other factor), Seller’s detailed description of its proposed course of action to achieve the missed Milestones and all subsequent Milestones, and the potential impact of the missed Milestones on achievement of the Commercial Operation Date in relation to the Guaranteed Commercial Operation Date. Delivery of a Remedial Action Plan shall not relieve Seller of its obligation to provide Remedial Action Plans with respect to any subsequent Milestones (when required under this Section 2.5), and to achieve the Guaranteed Commercial Operation Date in accordance with the terms of this Agreement. Subject to the provisions of Exhibit B, so long as Seller complies with its obligations under this Section
2.5, Seller shall not be considered in default of its obligations under this Agreement solely as a result of missing any Milestone.
2.6 Pre-Commercial Operation Actions. The Parties agree that, in order for Buyer to dispatch the Facility for its Commercial Operation Date, the Parties will have to perform certain of their Delivery Term obligations in advance of the Commercial Operation Date, including, without limitation, Seller’s delivery of an Availability Notice for the Commercial Operation Date, and Buyer’s delivery of a Dispatch Notice and nominating and scheduling the Facility for the Commercial Operation Date, in advance of the Commercial Operation Date. The Parties shall cooperate with each other in order for Buyer to be able to dispatch the Facility for the Commercial Operation Date.
ARTICLE 3
PURCHASE AND SALE
3.1 Product. Subject to the terms and conditions of this Agreement, during the Delivery Term, Buyer shall have the exclusive right to and shall purchase the Installed Capacity and Effective Capacity, as applicable, and all Product associated therewith. Seller shall operate the Facility and make available, charge and discharge, deliver, and sell the Product therefrom to Buyer when and as the Facility is available, subject to the terms and conditions of this Agreement, including the Operating Restrictions. Seller represents and warrants that it will deliver the Product to Buyer free and clear of all liens, security interests, claims and encumbrances. Seller shall not substitute or purchase any energy storage capacity, Energy, Ancillary Services or Capacity Attributes from any other energy storage resource or the market for delivery hereunder except as otherwise provided herein, nor shall Seller sell, assign or otherwise transfer any Product, or any 26 portion thereof, to any third party other than to Buyer or the CAISO pursuant to this Agreement or as otherwise required by Law.
3.2 Discharging Energy. Subject to the terms and conditions of this Agreement, Seller commits to make available the Discharging Energy to Buyer during the Delivery Term, and Buyer shall have the exclusive rights to all such Discharging Energy, subject to the Operating Restrictions. Title to and risk of loss related to the Discharging Energy shall pass and transfer from Seller to Buyer at the Delivery Point.
3.3 Capacity Attributes. Subject to Section 2.3, Seller shall request Full Capacity Deliverability Status for the Facility’s Guaranteed Capacity in the CAISO affidavit process. As between Buyer and Seller, Seller shall be responsible for the cost and installation of any Network Upgrades associated with obtaining such Full Capacity Deliverability Status. (a) Throughout the Delivery Term, Seller grants, pledges, assigns and otherwise commits to Buyer all the Capacity Attributes from the Facility. (b) Subject to Section 2.3, throughout the Delivery Term and subject to Section 3.7, Seller shall maintain Full Capacity Deliverability Status or Interim Deliverability Status for the Facility from the CAISO and shall perform all actions necessary to ensure that the Facility qualifies to provide Resource Adequacy Benefits, including Flexible Capacity, to Buyer.
Throughout the Delivery Term and subject to Section 3.7, Seller hereby covenants and agrees to transfer all Resource Adequacy Benefits from the Facility to Buyer. (c) For the duration of the Delivery Term, and subject to Section 3.7, Seller shall take commercially reasonable administrative actions, including complying with all applicable registration and reporting requirements, and executing all documents or instruments necessary to enable Buyer to use all of the Capacity Attributes committed by Seller to Buyer pursuant to this Agreement. Seller shall promptly comply with all reasonable requests for information from the CPUC and all reasonable requests for information from Buyer necessary to demonstrate Buyer’s compliance with its RAR obligations with respect to the Facility.
3.4 Ancillary Services. Buyer shall have the exclusive rights to all Ancillary Services that the Facility is capable of providing during the Delivery Term consistent with the Operating Restrictions, with characteristics and quantities determined in accordance with the CAISO Tariff.
Seller shall operate and maintain the Facility throughout the Delivery Term so as to be able to provide Ancillary Services in accordance with the specifications set forth in the Facility’s initial CAISO Certification associated with the Installed Capacity, adjusted to reflect the Effective Capacity. Upon Buyer’s reasonable request, Seller shall submit the Facility for additional CAISO Certification so that the Facility may provide additional Ancillary Services that the Facility is, at the relevant time, actually physically capable of providing consistent with the definition of Ancillary Services herein and without modification of the Facility, provided that Buyer has agreed to reimburse Seller for any material costs Seller incurs in connection with conducting such additional CAISO Certification.
27 3.5 Resource Adequacy Failure.
(a) RA Deficiency Determination. For each RA Shortfall Month, Seller shall pay to Buyer as liquidated damages the RA Deficiency Amount, as set forth in Section 3.5(b), and/or provide Replacement RA, as set forth in Section 3.5(c), as the sole and exclusive remedy for the RA Shortfall Month and the Capacity Attributes that Seller failed to convey to Buyer. (b) RA Deficiency Amount Calculation. Commencing on the RA Guarantee Date, for each RA Shortfall Month, Seller shall pay to Buyer an amount (the “RA Deficiency Amount”) equal to the product of the difference, expressed in kW, of (i) the Guaranteed RA Amount for such Showing Month, minus (ii) the lowest amount of Net Qualifying Capacity included on the Supply Plan as RAR and, if applicable, Local RAR from the Facility by both the CPUC and CAISO for such Showing Month (such difference, the “RA Shortfall”), multiplied by provided, Seller may, as an alternative to paying
RA Deficiency Amounts, provide Replacement RA in amounts up to the RA Shortfall, provided any Replacement RA capacity is communicated by Seller to Buyer with Replacement RA product information in a written notice substantially in the form of Exhibit M to Buyer at least ten (10) Business Days before the deadline (as established by CAISO or any other Governmental Authority) that Buyer must meet to submit its Resource Adequacy Plan for the applicable Showing Month for the purpose of monthly RA reporting.
3.6 Buyer’s Re-Sale of Product. Buyer shall have the exclusive right in its sole discretion to convey, use, market, or sell the Product, or any part of the Product, to any Subsequent Purchaser; and Buyer shall have the right to all revenues generated from the conveyance, use, re-sale or remarketing of the Product, or any part of the Product provided that no such resale or use shall relieve Buyer of any obligations hereunder or modify any of Seller’s obligations hereunder.
If the CAISO or CPUC develops a centralized capacity market, Buyer shall have the exclusive right to offer, bid, or otherwise submit the Capacity Attributes for re-sale into such market, and Buyer shall retain and receive all revenues from such re-sale. Seller shall take all commercially reasonable actions and execute all documents or instruments reasonably necessary to allow Subsequent Purchasers to use such resold Product, but without increasing Seller’s obligations or liabilities under this Agreement. If Buyer incurs any liability to a Subsequent Purchaser due to the failure of Seller to comply with this Section 3.6, Seller shall be liable to Buyer for the amounts Seller would have owed Buyer under this Agreement if Buyer had not resold the Product.
3.7 Compliance Expenditure Cap. If a change in Laws occurring after the Effective Date has increased Seller’s cost to comply with Seller’s obligations under this Agreement with respect to obtaining, maintaining, conveying or effectuating Buyer’s use of Capacity Attributes, then the Parties agree that the maximum aggregate amount of costs and expenses Seller shall be required to bear during the Contract Term to comply with all of such obligations shall be capped at (“Compliance
Expenditure Cap”).
28 (a) Any actions required for Seller to comply with its obligations set forth in the first paragraph above, the cost of which will be included in the Compliance Expenditure Cap, shall be referred to collectively as the “Compliance Actions.” (b) If Seller reasonably anticipates the need to incur out-of-pocket expenses in excess of the Compliance Expenditure Cap in order to take any Compliance Action Seller shall provide Notice to Buyer of such anticipated out-of-pocket expenses. (c) Buyer will have sixty (60) days to evaluate such Notice (during which time period Seller is not obligated to take any Compliance Actions described in the Notice) and shall, within such time, either (1) agree to reimburse Seller for all or some portion of the costs that exceed the Compliance Expenditure Cap (such Buyer-agreed upon costs, the “Accepted Compliance Costs”), or (2) waive Seller’s obligation to take such Compliance Actions, or any part thereof for which Buyer has not agreed to reimburse Seller. If Buyer does not respond to a Notice given by Seller under this Section 3.7 within sixty (60) days after Buyer’s receipt of same, Buyer shall be deemed to have waived its rights to require Seller to take the Compliance Actions that are the subject of the Notice, and Seller shall have no further obligation to take, and no liability for any failure to take, these Compliance Actions for the remainder of the Contract Term. (d) If Buyer agrees to reimburse Seller for the Accepted Compliance Costs, then Seller shall take such Compliance Actions covered by the Accepted Compliance Costs as agreed upon by the Parties and Buyer shall reimburse Seller for Seller’s actual costs to effect the Compliance Actions, not to exceed the Accepted Compliance Costs, within sixty (60) days from the time that Buyer receives an invoice and documentation of such costs from Seller.
ARTICLE 4
OBLIGATIONS AND DELIVERIES
4.1 Delivery. Subject to the provisions of this Agreement, including Section 4.9(a), commencing on the Commercial Operation Date through the end of the Contract Term, Seller shall supply and deliver the Product to Buyer at the Delivery Point, and Buyer shall take delivery of the Product at the Delivery Point in accordance with the terms of this Agreement. Seller shall be responsible for paying or satisfying when due any costs or charges imposed in connection with the delivery of Discharging Energy to the Delivery Point, including any operation and maintenance charges imposed on Seller by the Transmission Provider directly relating to the Facility’s operations. Buyer shall be responsible for all costs, charges and penalties, if any, imposed in connection with the delivery of Charging Energy to the Delivery Point (including the cost of Charging Energy itself) and delivery of Discharging Energy at and after the Delivery Point, including without limitation transmission costs and transmission line losses and imbalance charges. The Charging Energy and Discharging Energy will be scheduled to the CAISO by Buyer in accordance with Exhibit D.
4.2 Interconnection. Seller shall be responsible for all costs of interconnecting the Facility to the Interconnection Point. During the Delivery Term, Seller shall have and maintain interconnection capacity available or allocable to the Facility that is no less (and no greater) than the Dedicated Interconnection Capacity throughout the Delivery Term. 29 4.3 Seasonal Availability and Efficiency
(a) During the Delivery Term, the Facility shall maintain a Seasonal Availability during each Seasonal Period of no less than the Guaranteed Seasonal Availability, which Seasonal Availability shall be calculated in accordance with Exhibit P. If the Seasonal Availability during any Seasonal Period is less than the applicable Guaranteed Seasonal Availability for such Seasonal Period, then Seller shall owe liquidated damages pursuant to Exhibit C, which, except as set forth in Section 11.1(b)(iii) and (iv), shall be Buyer’s sole and exclusive remedy in respect of Seller’s failure to achieve the Guaranteed Seasonal Availability. (b) During the Delivery Term, the Facility shall maintain an Efficiency Rate of no less than the applicable Guaranteed Efficiency Rate, which Efficiency Rate shall be calculated in accordance with a Capacity Test conducted pursuant to Exhibit O. If the Efficiency Rate during any month is less than the applicable Guaranteed Efficiency Rate, then Seller shall owe liquidated damages pursuant to Exhibit C, which, except as set forth in Section 11.1(b)(v), shall be Buyer’s sole and exclusive remedy in respect of Seller’s failure to maintain the applicable Guaranteed Efficiency Rate.
4.4 Facility Testing.
(a) Capacity Tests. Prior to the Commercial Operation Date, Seller shall schedule and complete a Commercial Operation Capacity Test in accordance with Exhibit O.
Thereafter, Seller and Buyer shall have the right to run additional Capacity Tests in accordance with Exhibit O.
(i) Buyer shall have the right to send one or more representative(s) to witness all Capacity Tests. Alternatively, to the extent that any Capacity Tests are done remotely, and no representatives are needed on site, Seller shall arrange for both Parties to have access to all data and other information arising out of such tests. Buyer shall be responsible for all costs, expenses and fees payable or reimbursable to its representative(s) witnessing any Capacity Test.
Any such representative(s) of Buyer shall adhere to the safety and security procedures of Seller.
Buyer shall indemnify and hold Seller harmless for any losses or claims for personal injury, death or property damage to the Facility or Site to the extent caused by Buyer, its authorized agents, employees, and inspectors, during any such access.
(ii) Any testing of the Facility requested by Buyer, and all required annual tests pursuant to Section B of the section headed “Capacity Test Notice and Frequency” in Exhibit O, shall be deemed Buyer-instructed dispatches of the Facility (“Buyer Dispatched Test”). For any Buyer Dispatched Test, Buyer shall (1) pay for and be responsible for providing all associated Charging Energy, (2) be liable for all CAISO costs and charged for associated Charging Energy, and (3) be entitled to any CAISO revenues associated with associated Discharging Energy.
(iii) For any Capacity Tests, or other operational tests initiated by Seller (“Seller Initiated Test”), including all tests conducted prior to Commercial Operation, any Commercial Operation Capacity Test, any Capacity Test conducted if the Effective Storage Capacity immediately prior to such Capacity Test is below of the Installed 30 Storage Capacity, any test required by CAISO, and other Seller-requested discretionary tests or dispatches, Seller shall be (A) liable for all CAISO costs and charges for associated Charging Energy, and (B) entitled to any CAISO revenues associated with Discharging Energy. (iv) No Charging Notices or Discharging Notices shall be issued during any Seller Initiated Test. Charging Notices or Discharging Notices may be issued during a Buyer Dispatched Test as reasonably necessary to implement the applicable test. The Facility shall be deemed unavailable during any Seller Initiated Test. Any hour or partial hour when a Buyer Dispatched Test occurs shall be deemed an Excused Hour for the purposes of calculating the Seasonal Availability.
(v) For any Seller Initiated Test, other than Capacity Tests required by Exhibit O for which there is a stated notice requirement, Seller shall notify Buyer no later than prior thereto (or any shorter period reasonably acceptable to Buyer consistent with Prudent Operating Practices).
(vi) Following each Capacity Test, Seller shall submit a testing report in accordance with Exhibit O. If the actual capacity or efficiency rate determined pursuant to a Capacity Test varies from the then-current Effective Capacity and/or Efficiency Rate, as applicable, then the actual capacity and/or efficiency rate determined pursuant to such Capacity Test shall become the new Effective Capacity and/or Efficiency Rate, as applicable, at the beginning of the day following the completion of the test for all purposes under this Agreement until a revised Effective Capacity and/or Efficiency Rate, as applicable, is determined pursuant to a subsequent Capacity Test.
(b) Additional Testing. Seller shall conduct such additional testing as necessary to ensure the Facility is functioning properly and the Facility is able to respond to Dispatch Notices pursuant to Section 4.6(b).
4.5 Testing Costs and Revenues.
(a) Buyer shall be responsible for paying for all Charging Energy and shall be entitled to all CAISO revenues associated with a Buyer Dispatched Test. Seller shall be responsible for paying for all Energy to charge the Facility and shall be entitled to all CAISO revenues associated with a Seller Initiated Test. Buyer shall pay to Seller, in the month following Buyer’s receipt of such CAISO revenues and otherwise in accordance with Exhibit C, all applicable CAISO revenues received by Buyer and associated with the discharge Energy associated with such Seller Initiated Test.
(b) Buyer shall be responsible for all costs, expenses and fees payable or reimbursable to its representative(s) witnessing any Facility test. (c) Except as set forth in Sections 4.5(a) and (b), all other costs of any testing of the Facility shall be borne by Seller.
31 4.6 Facility Operations.
(a) Seller shall operate the Facility in accordance with Prudent Operating Practices.
(b) During the Delivery Term, Seller shall maintain SCADA Systems, communications links, and other equipment necessary to receive automated Dispatch Notices consistent with CAISO protocols and practice (“Automated Dispatches”). In the event of the failure or inability of the Facility to receive Automated Dispatches, Seller shall use all commercially reasonable efforts to repair or replace the applicable components as soon as reasonably possible, and if there is any material delay in such repair or replacement, Seller shall provide Buyer with a written plan of all actions Seller plans to take to repair or replace such components for Buyer’s review and comment. During any period during which the Facility is not capable of receiving or implementing Automated Dispatches, Seller shall implement back-up procedures consistent with the CAISO Tariff and CAISO protocols to enable Seller to receive and implement non-automated Dispatch Notices (“Alternative Dispatches”). (c) Seller shall maintain a daily operations log for the Facility which shall include but not be limited to information on Energy charging and discharging, electricity consumption and efficiency (if applicable), availability, outages, changes in operating status, inspections and any other significant events related to the operation of the Facility. Information maintained pursuant to this Section 4.6(c) shall be provided to Buyer within fifteen (15) days of Buyer’s request.
(d) Seller shall maintain accurate records with respect to all Capacity Tests. (e) Seller shall maintain and make available to Buyer records, including logbooks, demonstrating that the Facility is operated in accordance with Prudent Operating Practices. Seller shall comply with all reporting requirements and permit on-site audits, investigations, tests and inspections permitted or required under any Prudent Operating Practices.
4.7 Dispatch Notices. Buyer shall have the right to dispatch the Facility seven (7) days per week and twenty-four (24) hours per day (including holidays), by providing Dispatch Notices, subject to availability of the Facility and the requirements and limitations set forth in this Agreement, including the Operating Restrictions. Subject to the Operating Restrictions, each Dispatch Notice shall be effective unless and until such Dispatch Notice is modified by the CAISO, Buyer or Buyer’s SC. If Automated Dispatches are not possible for reasons beyond Buyer’s control, Alternative Dispatches may be provided pursuant to Section 4.6(b).
4.8 Facility Unavailability to Receive Dispatch Notices. To the extent the Facility is unable to receive or respond to Dispatch Notices either through Automated Dispatches or Alternative Dispatches during any Settlement Interval or Settlement Period, then as an exclusive remedy, the time period corresponding to such Settlement Interval or Settlement Period shall be deemed unavailable for purposes of calculating the Seasonal Availability except to the extent that the Facility is unable to receive or respond to Dispatch Notices due to any circumstances at the high-voltage side of the Delivery Point or beyond that point, or during any Excused Hour. 32 4.9 Energy Management.
(a) Charging Generally. Upon receipt of a valid Charging Notice, Seller shall take all action necessary to deliver the Charging Energy to the Facility from the Delivery Point.
Seller shall maintain, repair or replace equipment in Seller’s possession or control used to deliver the Charging Energy from the Delivery Point to the Facility. Except as otherwise expressly set forth in this Agreement, Buyer shall be responsible for paying all costs and charges of delivering the Charging Energy to the Delivery Point, including all CAISO costs and charges associated with Charging Energy.
(b) Charging Notices. Buyer shall have the right to charge the Facility seven (7) days per week and twenty-four (24) hours per day (including holidays) during the Delivery Term, by causing Charging Notices to be issued, subject to availability of the Facility and the requirements and limitations set forth in this Agreement, including the Operating Restrictions.
Subject to compliance with the Operating Restrictions, each Charging Notice issued in accordance with this Agreement shall be effective unless and until Buyer, Buyer’s SC or CAISO modifies such Charging Notice by providing Seller with an updated Charging Notice. Buyer shall be responsible for issuing all Charging Notices necessary or required in connection with the Must Offer Obligations and all CAISO charges and penalties for failing to comply with the Must Offer Obligation.
(c) No Unauthorized Charging. Seller shall not charge the Facility during the Delivery Term other than pursuant to a valid Charging Notice (it being understood that Seller may adjust a Charging Notice to the extent necessary to maintain compliance with the Operating Restrictions), or in connection with a Buyer Initiated Test or a Seller Initiated Test (including Facility maintenance or a Capacity Test), or pursuant to a notice from the CAISO, Transmission Provider, or any Governmental Authority. If, during the Delivery Term, Seller charges the Facility (i) to a Stored Energy Level greater than the Stored Energy Level provided for in a Charging Notice, or (ii) in violation of the first sentence of this Section 4.9(c), then (i) Seller shall pay to Buyer all Energy costs associated with such charging of the Facility, and (ii) Buyer shall be entitled to discharge such Energy and shall be entitled to all of the benefits (including Product) associated with such discharge.
(d) Discharging Notices. Buyer shall have the right to discharge the Facility seven (7) days per week and twenty-four (24) hours per day (including holidays) during the Delivery Term, by causing Discharging Notices to be issued, subject to availability of the Facility and the requirements and limitations set forth in this Agreement, including the Operating Restrictions. Each Discharging Notice issued in accordance with this Agreement shall be effective unless and until Buyer, Buyer’s SC or the CAISO modifies such Discharging Notice by providing the Facility with an updated Discharging Notice. Buyer shall be responsible for issuing all Discharging Notices necessary or required in connection with the Must Offer Obligations and all CAISO charges and penalties for failing to comply with the Must Offer Obligation. (e) No Unauthorized Discharging. Seller shall not discharge the Facility during the Delivery Term other than pursuant to a valid Discharging Notice (it being understood that Seller may adjust a Discharging Notice to the extent necessary to maintain compliance with the Operating Restrictions), or in connection with a Seller Initiated Test (including Facility 33 maintenance or a Storage Capacity Test), or pursuant to a notice from the CAISO, Transmission Provider, or any Governmental Authority.
(f) Unauthorized Discharges. If, during the Contract Term, Seller (i) discharges the Facility other than as provided for in the Discharging Notice or (ii) discharges the Facility in violation of Section 4.5(e), then (i) Seller shall be responsible for two (2) times the amount of all Energy costs associated with, and shall hold Buyer harmless from, and reimburse Buyer for two (2) times the amount of all actual losses and costs that Buyer incurs as a result of , such discharging of the Facility, and (ii) Buyer shall be entitled to all of the benefits (including Product) associated with such discharge.
(g) CAISO Dispatches. During the Delivery Term, CAISO Dispatches shall have priority over any Charging Notice or Discharging Notice issued by Buyer or Buyer’s SC, and Seller shall have no liability for violation of this Section 4.9 or any Charging Notice or Discharging Notice if and to the extent such violation is caused by Seller’s compliance with any CAISO Dispatch. During any time interval during the Delivery Term in which the Facility is capable of responding to a CAISO Dispatch, but the Facility deviates from a CAISO Dispatch or Seller negligently or intentionally fails to accurately communicate to Buyer the Facility’s availability, Seller shall be responsible for all CAISO charges and penalties resulting from such deviations (in addition to any Buyer remedy related to overcharging of the Facility as set forth in Section 4.9(c)). (h) Pre-Commercial Operation Date Period. Prior to the Commercial Operation Date, Buyer shall have no rights to issue or cause to be issued Charging Notices or Discharging Notices, and Seller shall have exclusive rights to charge and discharge the Facility. (i) Curtailments. Notwithstanding anything in this Agreement to the contrary, during any Settlement Interval, Curtailment Orders applicable to such Settlement Interval shall have priority over any Dispatch Notices applicable to such Settlement Interval, and Seller shall have no liability for violation of this Agreement or any Dispatch Notice if and to the extent such violation is caused by Seller’s compliance with any Curtailment Order or other instruction or direction from a Governmental Authority or the Transmission Provider. Buyer shall have the right, but not the obligation, to provide Seller with updated Dispatch Notices during any Curtailment Order, subject to availability of the Facility and the requirements and limitations set forth in this Agreement, including the Operating Restrictions.
(j) Station Use. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge (i) Seller is responsible for providing all Energy to serve Station Use (including paying the cost of any Energy used to serve Station Use during periods in which the Facility is not charging or discharging pursuant to a Charging Notice or Discharging Notice), (ii) Energy supplied from Charging Energy or Discharging Energy during periods in which the Facility is charging or discharging pursuant to a Charging Notice or Discharging Notice shall not be considered Station Use, (iii) Station Use may be supplied over the same circuit as Charging Energy and Discharging Energy, and (iv) Seller shall indemnify and hold harmless Buyer from any and all costs, penalties or charges for Energy supplied for Station Use by any means other than retail service from the applicable utility, and shall take any additional measures to ensure Station Use (other than that supplied from Charging Energy or Discharging Energy as provided in clause (ii) or over the same circuit as Charging Energy and Discharging Energy as provided in clause (iii)) is 34 supplied by the applicable utility’s retail service if necessary to avoid any such costs, penalties or charges.
4.10 Capacity Availability Notice.
(a) No less than thirty (30) days before the beginning of Commercial Operation, and thereafter ten (10) Business Days before the beginning of each month during the Delivery Term, Seller shall provide to Buyer and the SC (if applicable) a non-binding forecast of the hourly expected Available Capacity for each day of the following month in a form substantially similar to Exhibit F (“Monthly Forecast”).
(b) During the Delivery Term, no later than two (2) Business Days before each schedule day for the Day-Ahead Market in accordance with CAISO scheduling practices, Seller shall provide Buyer and the SC (if applicable) with an hourly schedule of the Available Capacity that the Facility is expected to have for each hour of such schedule day (the “Availability Notice”).
Seller shall provide Availability Notices (including updated Availability Notices) using the form attached in Exhibit G, or other form as reasonably requested by Buyer, by (in order of preference) electronic mail or telephonically to Buyer personnel or its Scheduling Coordinator designated to receive such communications.
(c) Seller shall notify Buyer and the SC (if applicable) as soon as practicable with an updated Monthly Forecast and Availability Notice, as applicable, if the Available Capacity of the Facility changes or is expected to change one (1) MW or more after Buyer’s receipt of a Monthly Forecast or Availability Notice. Seller shall accommodate Buyer’s reasonable requests for changes in the time of delivery of Availability Notices.
4.11 Facility Rebalancing Dispatch. Seller shall have the right to charge and discharge the Facility during Off-Peak Hours to rebalance the levels of stored energy in the Facility as Seller deems necessary (“Facility Rebalancing Dispatch”); provided that: (i) Seller shall provide at least seventy-five (75) minutes prior notice to Buyer for any Facility Rebalancing Dispatch; (ii) Seller shall restore the Facility at the end of any Facility Rebalancing Dispatch to the level of stored energy (but rebalanced among inverters) as existed prior to the Facility Rebalancing Dispatch; and (iii)
each as a result of any such Facility Rebalancing
Dispatch.
4.12 Outages
(a) Planned Outages.
(i) No later than January 15, April 15, July 15 and October 15 of each Contract Year, and at least sixty (60) days prior to the Commercial Operation Date, Seller shall submit to Buyer Seller’s schedule of proposed Planned Outages (“Outage Schedule”) for the following twelve (12)-month period in a form reasonably agreed to by Buyer. Seller shall limit Planned Outages to periods of the day when Seller does not reasonably believe the Facility will be dispatched. Within twenty (20) Business Days after its receipt of an Outage Schedule, Buyer shall give Notice to Seller of any reasonable request for changes to the Outage Schedule, and Seller shall, consistent with Prudent Operating Practices, accommodate Buyer’s requests regarding the 35 timing of any Planned Outage. Seller shall deliver to Buyer the final Outage Schedule no later than ten (10) days after receiving Buyer’s comments.
(ii) If reasonably required in accordance with Prudent Operating Practices, Seller shall have the right, on no less than ninety (90) days advance Notice to Buyer, to propose changes to the Outage Schedule developed pursuant to Section 4.12(a)(i); provided, Seller shall schedule all Planned Outages within the time period determined by the CAISO for the Facility, as a Resource Adequacy Resource that is subject to the Availability Standards, to qualify for an “Approved Maintenance Outage” under the CAISO Tariff and Seller shall reimburse Buyer for any cost Buyer incurs in connection therewith (including replacement Capacity Attributes as required by the CAISO). Buyer may provide comments no later than ten (10) days after receiving Seller’s Notice of proposed changes to the Outage Schedule and shall permit any changes if doing so would not have a material adverse impact on Buyer and Seller agrees to reimburse Buyer for any costs or charges associated with such changes.
(b) No Planned Outages During Summer Months. Except as scheduled by the Parties under Section 4.12(a)(ii), during the Summer Season of each Contract Year, Seller shall not schedule any non-emergency outage or maintenance that reduces the Available Capacity of the Facility, unless (i) such outage or maintenance is required to avoid an emergency or damage to the Facility or its Interconnection Facilities, (ii) such outage or maintenance is necessary to maintain equipment warranties or is otherwise required by the equipment manufacturer and cannot be scheduled outside the Summer Season of each Contract Year, (iii) such outage or maintenance occurs in connection with any Force Majeure Event, (iv) such outage or maintenance is required by Law or by the CAISO Tariff or the tariffs of the Transmission Provider, or (v) the Parties agree to such outage or maintenance in writing.
(c) Planned Outage Timing. To the extent commercially reasonable, Seller shall schedule maintenance outages (i) within a single month, rather than across multiple months, (ii) during periods in which CAISO does not require resource substitution or replacement (if such periods are available), and (iii) otherwise in a manner to avoid reductions in the Resource Adequacy Benefits available from the Facility to Buyer. (d) Notice of Unplanned Outages Seller shall notify Buyer by telephoning Buyer’s Scheduling Coordinator no later than ten (10) minutes following the occurrence of an Unplanned Outage, or if Seller has knowledge that an Unplanned Outage will occur, within twenty (20) minutes of determining that such Unplanned Outage will occur. Seller shall relay outage information to Buyer as required by the CAISO Tariff within twenty (20) minutes of the Unplanned Outage. Seller shall communicate to Buyer the estimated time of return of the Facility as soon as practical after Seller has knowledge thereof. (e) Inspection. In the event of an Unplanned Outage, Buyer shall have the option to inspect the Facility and all records relating thereto on any Business Day reasonably convenient for Seller and at a reasonable time and Seller shall reasonably cooperate with Buyer during any such inspection. Buyer shall comply with Seller’s safety and security rules and instructions during any inspection and shall not interfere with work on or operation of the Facility. 36 (f) Reports of Outages. Seller shall promptly prepare and provide to Buyer, all reports of Unplanned Outages or Planned Outages that Buyer may reasonably require for the purpose of enabling Buyer to comply with CAISO requirements or any applicable Laws. Seller shall also report all Unplanned Outages or Planned Outages in the Daily Operating Report.
ARTICLE 5
TAXES, GOVERNMENTAL COSTS
5.1 Allocation of Taxes and Charges. Seller shall pay or cause to be paid all Taxes on or with respect to the Facility or on or with respect to the sale and making available of Product to Buyer, that are imposed on Product prior to its delivery to Buyer at the time and place contemplated under this Agreement (other than withholding or other Taxes imposed on Buyer’s income, revenue, receipts or employees). Buyer shall pay or cause to be paid all Taxes on or with respect to the delivery to and purchase by Buyer of Product that are imposed on Product at and after its delivery to Buyer at the time and place contemplated under this Agreement (other than withholding or other Taxes imposed on Seller’s income, revenue, receipts or employees) or on Charging Energy prior to its delivery to Seller. If a Party is required to remit or pay Taxes that are the other Party’s responsibility hereunder, such Party shall promptly pay the Taxes due and then seek and receive reimbursement from the other for such Taxes.
5.2 Cooperation. Each Party shall use reasonable efforts to implement the provisions of and administer this Agreement in accordance with the intent of the Parties to minimize all Taxes, so long as no Party is materially adversely affected by such efforts. The Parties shall cooperate to minimize Tax exposure; provided, neither Party shall be obligated to incur any financial or operational burden to reduce Taxes for which the other Party is responsible hereunder without receiving due compensation therefor from the other Party. All Product delivered by Seller to Buyer hereunder shall be a sale made at wholesale, with Buyer reselling such Product.
ARTICLE 6
MAINTENANCE AND REPAIR OF THE FACILITY
6.1 Maintenance of the Facility. Seller shall comply with Law and Prudent Operating Practice relating to the operation and maintenance of the Facility, the sale of Product, and the disposal or recycling of any equipment associated with the Facility, including batteries.
6.2 Maintenance of Health and Safety. Seller shall take reasonable safety precautions with respect to the operation, maintenance, repair and replacement of the Facility. If Seller becomes aware of any circumstances relating to the Facility that create an imminent risk of damage or injury to any Person or any Person’s property, Seller shall take prompt, reasonable action to prevent such damage or injury and shall give Buyer’s emergency contact identified in Exhibit N Notice of such condition. Such action may include disconnecting and removing all or a portion of the Facility or suspending the supply of Discharging Energy to the Delivery Point.
6.3 Shared Facilities. The Parties acknowledge and agree that certain of the Shared Facilities and Interconnection Facilities, and Seller’s rights and obligations under the Interconnection Agreement, may be subject to certain shared facilities and/or co-tenancy agreements to be entered into among Seller, the Participating Transmission Owner, Seller’s 37 Affiliates, and/or third parties. Seller agrees that any agreements regarding Shared Facilities (i) shall permit Seller to perform or satisfy, and shall not purport to limit, Seller’s obligations hereunder, including providing interconnection capacity for the Facility’s sole use in the amount of the Dedicated Interconnection Capacity, (ii) shall provide for separate metering and a separate CAISO Resource ID for the Facility, (iii) shall provide that any other generating or energy storage facilities not included in the Facility but using Shared Facilities shall not be included within the Facility’s CAISO Resource IDs; and (iv) shall provide that any curtailment of the full capacity of Shared Facilities that is ordered by Transmission Provider that Seller and its Affiliates have discretion to allocate across generating or energy storage facilities using the Shared Facilities shall not be allocated to the Facility in an amount that is higher than Buyer’s pro rata portion of the total capacity of all generating or energy storage facilities using the Shared Facilities.
ARTICLE 7
METERING
7.1 Metering. Seller shall measure the amount of Charging Energy and Facility Energy using the Facility Meter, which will be subject to adjustment in accordance with applicable CAISO meter requirements and Prudent Operating Practices, including to account for Electrical Losses.
The Facility Meter will be operated pursuant to applicable CAISO-approved calculation methodologies and maintained at Seller’s cost. If Seller elects to submit a SQMD Plan for the Facility, then the Facility Meter(s) will be programmed, operated and maintained pursuant to the applicable CAISO-approved SQMD Plan for the Facility, at Seller’s sole cost, throughout the period to which the SQMD Plan applies. Seller shall promptly provide to Buyer a copy of any CAISO-approved SQMD Plan and any modifications thereto and notice of any termination or withdrawal thereof. Subject to meeting any applicable CAISO requirements, the Facility Meter shall be programmed to adjust for all Electrical Losses from such meters to the Delivery Point in a manner subject to Buyer’s prior written approval, not to be unreasonably withheld. Metering shall be consistent with the Metering Diagram set forth as Exhibit R, a final version of which shall be provided to Buyer at least thirty (30) days prior to the Commercial Operation Date, as may also be revised to be consistent with any CAISO-approved SQMD Plan. Each meter shall be kept under seal, such seals to be broken only when the Facility Meters are to be tested, adjusted, modified or relocated. In the event Seller breaks a seal, Seller shall notify Buyer as soon as practicable. In addition, Seller hereby agrees to provide all Facility Meter data to Buyer in a form reasonably acceptable to Buyer, and consents to Buyer obtaining from CAISO the CAISO meter data directly relating to the Facility and all inspection, testing and calibration data and reports, to the extent such meter data and related meters are not the subject of a CAISO-approved SQMD Plan. In the event Seller breaks a seal, Seller shall notify Buyer as soon as practicable. In addition, Seller hereby agrees to provide all meter data to Buyer in a form reasonably acceptable to Buyer, and consents to Buyer obtaining from CAISO the CAISO meter data directly relating to the Facility and all inspection, testing and calibration data and reports. Seller and Buyer, or Buyer’s Scheduling Coordinator, shall cooperate to allow both Parties to retrieve the meter reads from the CAISO Market Results Interface-Settlements (MRI-S) web and/or directly from the CAISO meter(s) at the Facility, to the extent such meter data and related meters are not the subject of a CAISO-approved SQMD Plan.
7.2 Meter Verification. Seller shall test the Facility Meter at least annually and more frequently than annually if Buyer or Seller reasonably believe there may be a meter malfunction. 38 The tests shall be conducted by independent third parties qualified to conduct such tests. Buyer shall be notified seven (7) days in advance of such tests and have a right to be present during such tests. If a Facility Meter is inaccurate, it shall be promptly repaired or replaced. If a meter is inaccurate by more than and it is not known when the Facility Meter inaccuracy commenced (if such evidence exists, then such date will be used to adjust prior invoices), then the invoices covering the period of time since the last Facility Meter test shall be adjusted for the amount of the inaccuracy on the assumption that the inaccuracy persisted during one-half of such period if such adjustments are accepted by CAISO; provided, such period may not exceed twelve (12) months.
ARTICLE 8
INVOICING AND PAYMENT; CREDIT
8.1 Invoicing. Seller shall use commercially reasonable efforts to deliver an invoice to Buyer for Product within ten (10) days after the end of the prior monthly delivery period. Each invoice shall reflect (a) records of metered data, including (i) CAISO metering and transaction data sufficient to document and verify the amount of Product delivered by the Facility for any Settlement Period during the preceding month, including the amount of Charging Energy, Discharging Energy, and the amount of Replacement RA delivered to Buyer (if any) and (ii) Seller’s records of metered data, including data showing a calculation of the Monthly Capacity Payment and other relevant data for the prior month; and (b) be in a format reasonably specified by Buyer, covering the Product provided in the preceding month determined in accordance with the applicable provisions of this Agreement. Buyer shall, and shall cause its Scheduling Coordinator to, provide Seller with all reasonable access (including, in real time, to the maximum extent reasonably possible) to any records, including invoices or settlement data from the CAISO, forecast data and other information, all as may be necessary from time to time for Seller to prepare and verify the accuracy of all invoices. The invoice shall be delivered by electronic mail in accordance with Exhibit N.
8.2 Payment. Buyer shall make payment to Seller of Monthly Capacity Payments for Product by wire transfer or ACH payment to the bank account provided on each monthly invoice.
Buyer shall pay undisputed invoice amounts within thirty (30) days of Buyer’s receipt of Seller’s invoices; provided, if such due date falls on a weekend or legal holiday, such due date shall be the next Business Day. Payments made after the due date will be considered late and will bear interest on the unpaid balance. If the amount due is not paid on or before the due date or if any other payment that is due and owing from one Party to another is not paid on or before its applicable due date, a late payment charge shall be applied to the unpaid balance and shall be added to the next billing statement. Such late payment charge shall be calculated based on an annual Interest Rate equal to the prime rate published on the date of the invoice in The Wall Street Journal (or, if The Wall Street Journal is not published on that day, the next succeeding date of publication), plus (the “Interest Rate”). If the due date occurs on a day that is not a Business Day, the late payment charge shall begin to accrue on the next succeeding Business Day.
8.3 Books and Records. To facilitate payment and verification, each Party shall maintain all books and records necessary for billing and payments, including copies of all invoices under this Agreement, for a period of at least two (2) years or as otherwise required by Law. Upon fifteen (15) days’ Notice to the other Party, either Party shall be granted reasonable access to the 39 accounting books and records within the possession or control of the other Party pertaining to all invoices generated pursuant to this Agreement. Seller acknowledges that in accordance with California Government Code Section 8546.7, Seller may be subject to audit by the California State Auditor with regard to Seller’s performance of this Agreement because the compensation under this Agreement exceeds $10,000.
8.4 Payment Adjustments; Billing Errors. Payment adjustments shall be made if Buyer or Seller discovers there have been good faith inaccuracies in invoicing that are not otherwise disputed under Section 8.5 or an adjustment to an amount previously invoiced or paid is required due to a correction of data by the CAISO, or there is determined to have been a Facility Meter inaccuracy sufficient to require a payment adjustment. If the required adjustment is in favor of Buyer, Buyer’s next monthly payment shall be credited in an amount equal to the adjustment.
If the required adjustment is in favor of Seller, Seller shall add the adjustment amount to Buyer’s next monthly invoice. Adjustments in favor of either Buyer or Seller shall bear interest, until settled in full, in accordance with Section 8.2, accruing from the date on which the adjusted amount should have been due.
8.5 Billing Disputes. A Party may, in good faith, dispute the correctness of any invoice or any adjustment to an invoice rendered under this Agreement or adjust any invoice for any arithmetic or computational error within twelve (12) months of the date the invoice, or adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be required to be made when due. Any invoice dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment. Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of the dispute, any required payment shall be made within five (5) Business Days of such resolution along with interest accrued at the Interest Rate from and including the original due date to but excluding the date paid. Inadvertent overpayments shall be returned via adjustments in accordance with Section 8.4. Any dispute with respect to an invoice is waived if the other Party is not notified in accordance with this Section 8.5 within twelve (12) months after the invoice is rendered or subsequently adjusted, except to the extent any misinformation was from a third party not affiliated with any Party and such third party corrects its information after the twelve-month period. If an invoice is not rendered within twelve (12) months after the close of the month during which performance occurred, the right to payment for such performance is waived.
8.6 Netting of Payments. The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other with respect to this Agreement on the same date through netting, in which case all amounts owed by each Party to the other Party for the purchase and sale of Product during the monthly billing period under this Agreement or otherwise arising out of this Agreement, including any related damages calculated pursuant to Exhibits B and P, interest, and payments or credits, shall be netted so that only the excess amount remaining due shall be paid by the Party who owes it.
8.7 Seller’s Development Security. To secure its obligations under this Agreement, Seller shall (a) deliver the Development Security to Buyer in an amount equal to the amount set forth for the Development Security on the Cover Sheet within thirty (30) days of the Effective Date. Seller shall maintain the Development Security in full force and effect until Buyer is required 40 to return such Development Security hereunder. Upon the earlier of (a) Seller’s delivery of the Performance Security (unless Seller elects to use the Development Security to meet a portion of the Performance Security), or (b) sixty (60) days after termination of this Agreement, Buyer shall return the Development Security to Seller, less the amounts drawn in accordance with this Agreement. If the Development Security is a Letter of Credit and the issuer of such Letter of Credit (i) fails to maintain the minimum Credit Rating specified in the definition of Letter of Credit, (ii) indicates its intent not to renew such Letter of Credit and such Letter of Credit expires prior to the Commercial Operation Date, or (iii) fails to honor Buyer’s properly documented request to draw on such Letter of Credit by such issuer, Seller shall have ten (10) Business Days to either post cash or deliver a substitute Letter of Credit that meets the requirements set forth in the definition of Development Security. Notwithstanding anything to the contrary in this Section 8.7 or elsewhere in this Agreement, Seller shall have no replenishment obligation with respect to the Development Security.
8.8 Seller’s Performance Security. To secure its obligations under this Agreement, Seller shall deliver Performance Security to Buyer on or before the Commercial Operation Date.
Seller may elect to apply the Development Security toward the Performance Security. If the Performance Security is not in the form of cash or Letter of Credit, it shall be substantially in the form of Guaranty set forth in Exhibit L. Seller shall maintain the Performance Security in full force and effect, and Seller shall within ten (10) Business Days after any draw thereon replenish the Performance Security in the event Buyer collects or draws down any portion of the Performance Security for any reason permitted under this Agreement other than to satisfy a Termination Payment (provided, however, that the total amount of any replenishments shall not exceed two (2) times the amount of the original Performance Security), until the following have occurred: (a) the Delivery Term has expired or terminated early; and (b) all payment obligations of Seller due and payable under this Agreement, including compensation for penalties, Termination Payment, indemnification payments or other damages are paid in full (whether directly or indirectly such as through set-off or netting). Following the occurrence of both events, Buyer shall promptly return to Seller the unused portion of the Performance Security. If the Performance Security is a Letter of Credit and the issuer of such Letter of Credit (i) fails to maintain the minimum Credit Rating set forth in the definition of Letter of Credit, (ii) indicates its intent not to renew such Letter of Credit and such Letter of Credit expires prior to the Commercial Operation Date, or (iii) fails to honor Buyer’s properly documented request to draw on such Letter of Credit by such issuer, Seller shall have ten (10) Business Days to either post cash or deliver a substitute Letter of Credit that meets the requirements set forth in the definition of Performance Security. For avoidance of doubt, the limit on Seller’s obligation to replenish the Performance Security shall not be construed as a cap on Seller’s liabilities under this Agreement.
8.9 First Priority Security Interest in Cash or Cash Equivalent Collateral. To secure its obligations under this Agreement, and until released as provided herein, each Party (“Party A”) hereby grants to the other Party (“Party B”) a present and continuing first-priority security interest (“Security Interest”) in, and lien on (and right to net against), and assignment of, as applicable, the Development Security, Performance Security, to the extent provided in the form of cash, and any other cash collateral and cash equivalent collateral posted pursuant to Sections 0, 8.8, and any and all interest thereon or proceeds resulting therefrom or from the liquidation thereof, whether now or hereafter held by, on behalf of, or for the benefit of Party B, and Party A agrees to take all action as Party B reasonably requires in order 41 to perfect Party B’s Security Interest in, and lien on (and right to net against), such collateral and any and all proceeds resulting therefrom or from the liquidation thereof. Upon or any time after the occurrence and continuation of an Event of Default caused by Party A, an Early Termination Date resulting from an Event of Default caused by Party A, or an occasion provided for in this Agreement where Party B is authorized to retain all or a portion of the Development Security, Performance Security,
(a) Exercise any of its rights and remedies with respect to the Development Security, Performance Security, as applicable, including any such rights and remedies under Law then in effect;
(b) Draw on any outstanding Letter of Credit issued for its benefit and retain any cash held by Party B as Development Security, Performance Security, and
(c) Liquidate all Development Security, Performance Security, then held by or for the benefit of Party B free from any claim or right of any nature whatsoever of Party A, including any equity or right of purchase or redemption by Party A.
Party B shall apply the proceeds of the collateral realized upon the exercise of any such rights or remedies to reduce Party A’s obligations under this Agreement (Party A remains liable for any amounts owing to Party B after such application), subject to Party B’s obligation to return any surplus proceeds remaining after these obligations are satisfied in full.
8.10 Provision of Financial Statements.
(a) From the Effective Date, Buyer shall provide to Seller unaudited quarterly financial statements within ninety (90) days of end of each quarter and audited financial statements within one hundred eighty (180) days after the end of each fiscal year; provided, however, that this requirement shall be satisfied if such financial statements are publicly available on Buyer’s website. Buyer’s annual financial statements shall have been prepared in accordance with generally accepted accounting principles in the United States, consistently applied. (b) In the event a Guaranty is provided as Performance Security in lieu of cash or a Letter of Credit, Seller shall provide to Buyer, or cause the Guarantor to provide to Buyer, unaudited quarterly and annual audited financial statements of the Guarantor’s ultimate parent (including a balance sheet and statements of income and cash flows), all prepared in accordance with generally accepted accounting principles in the United States, consistently applied, and if applicable, as posted on the website of the Guarantor’s ultimate parent or the Securities Exchange Commission.
42 43
ARTICLE 9
NOTICES
9.1 Addresses for the Delivery of Notices. Any Notice required, permitted, or contemplated hereunder shall be in writing, shall be addressed to the Party to be notified at the address set forth in Exhibit N or at such other address or addresses as a Party may designate for itself from time to time by Notice hereunder.
9.2 Acceptable Means of Delivering Notice. Each Notice required, permitted, or contemplated hereunder shall be deemed to have been validly served, given or delivered as follows: (a) if sent by United States mail with proper first class postage prepaid, three (3) Business Days following the date of the postmark on the envelope in which such Notice was deposited in the United States mail; (b) if sent by a regularly scheduled next Business Day delivery carrier with delivery fees either prepaid or an arrangement with such carrier made for the payment of such fees, the next Business Day after the same is delivered by the sending Party to such carrier; (c) if sent by electronic communication (including electronic mail or other electronic means) and if concurrently with the transmittal of such electronic communication the sending Party provides a copy of such electronic Notice by hand delivery or next Business Day delivery carrier, at the time indicated by the time stamp upon delivery; or (d) if delivered in person, upon receipt by the receiving Party. Notwithstanding the foregoing, invoices sent pursuant to Section 8.1 and Notices of outages or other scheduling or dispatch information or requests may be sent by electronic 44 communication and shall be considered delivered upon successful completion of such transmission.
ARTICLE 10
FORCE MAJEURE
10.1 Definition.
(a) “Force Majeure Event” means any act or event that delays or prevents a Party from timely performing all or a portion of its obligations under this Agreement or from complying with all or a portion of the conditions under this Agreement if such act or event, despite the exercise of reasonable efforts, cannot be avoided by and is beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance, or noncompliance. (b) Without limiting the generality of the foregoing, so long as the following events, despite the exercise of reasonable efforts, cannot be avoided by, and are beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance or noncompliance, a Force Majeure Event may include: an act of God or the elements, such as flooding, lightning, hurricanes, tornadoes, or ice storms; hail; explosion; fire; volcanic eruption; flood; epidemic or pandemic (including COVID-19) and any quarantine related to any such epidemic or pandemic); landslide; mudslide; sabotage; terrorism; earthquake; or other cataclysmic events; an act of public enemy; war; blockade; civil insurrection; riot; civil disturbance; or strikes or other labor difficulties caused or suffered by a Party or any third party except as set forth below. (c) Notwithstanding the foregoing, the term “Force Majeure Event” does not include: (i) economic conditions that render a Party’s performance of this Agreement at the Contract Price unprofitable or otherwise uneconomic (including Buyer’s ability to buy the Product at a lower price, or Seller’s ability to sell Product at a higher price, than the Contract Price); (ii) Seller’s inability to obtain permits or approvals of any type for the construction, operation, or maintenance of the Facility; (iii) the inability of a Party to make payments when due under this Agreement, unless the cause of such inability is an event that would otherwise constitute a Force Majeure Event as described above that disables physical or electronic facilities necessary to transfer funds to the payee Party; (iv) a Curtailment Order, except to the extent such Curtailment Order is caused by a Force Majeure Event; (v) Seller’s inability to obtain sufficient labor, equipment, materials, or other resources to build or operate the Facility or the Shared Facilities except to the extent such inability is caused by a Force Majeure Event; (vi) a strike, work stoppage or labor dispute limited only to any one or more of Seller, Seller’s Affiliates, Seller’s contractors, their subcontractors, or any other third party employed by Seller to work on the Facility; or (vii) any equipment failure, except if such equipment failure is caused by a Force Majeure Event.
10.2 No Liability If a Force Majeure Event Occurs. Neither Seller nor Buyer shall be liable to the other Party in the event it is prevented from performing its obligations hereunder in whole or in part due to a Force Majeure Event. The Party rendered unable to fulfill any obligation by reason of a Force Majeure Event shall take reasonable actions necessary to remove such inability with due speed and diligence. The obligation to use due speed and diligence shall 45 not be interpreted to require resolution of labor disputes by acceding to demands of the opposition when such course is inadvisable in the discretion of the Party having such difficulty. Nothing herein shall be construed as permitting that Party to continue to fail to perform after said cause has been removed, provided the suspension of performance due to a claim of Force Majeure Event shall include any reasonable time period for mobilization/re-mobilization. Neither Party shall be considered in breach or default of this Agreement if and to the extent that any failure or delay in the Party’s performance of one or more of its obligations hereunder is caused by a Force Majeure Event. Notwithstanding the foregoing, the occurrence and continuation of a Force Majeure Event shall not (a) suspend or excuse the obligation of a Party to make any payments due hereunder, (b) suspend or excuse the obligation of Seller to achieve the Guaranteed Construction Start Date or the Guaranteed Commercial Operation Date beyond the extensions provided in Exhibit B, (c) limit Buyer’s right to declare an Event of Default pursuant to Section 11.1(b)(ii) and receive a Damage Payment as liquidated damages upon exercise of Buyer’s default rights pursuant to Section 11.2 (provided that promptly upon Buyer’s receipt of the Damage Payment, Buyer shall return to Seller the Development Security to the extent it did not comprise (i.e., was not used as) the Damage Payment), or (d) limit Buyer’s right to terminate the Agreement with respect to the Facility pursuant to Section 2 and/or Section 4 of Exhibit B and receive the Damage Payment as liquidated damages, provided that promptly upon Buyer’s receipt of the Damage Payment, Buyer shall return to Seller the Development Security to the extent it did not comprise (i.e., was not used as) the Damage Payment.
10.3 Notice. Within two (2) weeks of becoming aware of the impact of a Force Majeure Event, the non-performing Party shall provide the other Party with Notice in the form of a letter describing in detail the particulars of the occurrence giving rise to the Force Majeure claim. Failure to provide timely written Notice as described in the preceding sentence constitutes a waiver of a Force Majeure claim as to all periods prior to the delivery of a Notice. The suspension of performance due to a claim of Force Majeure must be of no greater scope and of no longer duration than is required by the Force Majeure.
10.4 Termination Following Force Majeure Event. If a Force Majeure Event has occurred after the Commercial Operation Date that has caused either Party to be wholly or partially unable to perform its obligations hereunder, and the impacted Party has claimed and received relief from performance of its obligations for a consecutive twelve (12) month period, then either Party may terminate this Agreement upon Notice to the other Party. Upon any such termination, neither Party shall have any further liability to the other Party, save and except for those obligations specified in Section 2.1(b), and Buyer shall promptly return to Seller any Performance Security then held by Buyer, less any amounts drawn in accordance with this Agreement.
ARTICLE 11
DEFAULTS; REMEDIES; TERMINATION
11.1 Events of Default. An “Event of Default” shall mean, (a) with respect to a Party (the “Defaulting Party”) that is subject to the Event of Default the occurrence of any of the following:
46 (i) the failure by such Party to make, when due, any payment required pursuant to this Agreement and such failure is not remedied within ten (10) Business Days after Notice thereof;
(ii) any representation or warranty made by such Party herein is false or misleading in any material respect when made or when deemed made or repeated, and such default is not remedied within thirty (30) days after Notice thereof (or such longer additional period, not to exceed an additional sixty (60) days, if the Defaulting Party is unable to remedy such default within such initial thirty (30)-day period despite exercising commercially reasonable efforts); (iii) the failure by such Party to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default set forth in this Section 11.1; and except for (A) failure to provide Capacity Attributes, the exclusive remedies for which are set forth in Section 3.5, (B) failures related to the Seasonal Availability that do not trigger the provisions of Section 11.1(b)(iii), the exclusive remedies for which are set forth in Exhibit C and Exhibit P, and (C) failure to maintain the Guaranteed Efficiency Rate that does not trigger the provisions of Section 11.1(b)(iv), the exclusive remedies for which are set forth in Exhibit C), and such failure is not remedied within thirty (30) days after Notice thereof (or such longer additional period, not to exceed an additional ninety (90) days, if the Defaulting Party is unable to remedy such default within such initial thirty (30)-day period despite exercising commercially reasonable efforts);
(iv) such Party becomes Bankrupt;
(v) such Party assigns this Agreement or any of its rights hereunder other than in compliance with Article 14, if applicable; or (vi) such Party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer, the resulting, surviving or transferee entity fails to assume all the obligations of such Party under this Agreement to which it or its predecessor was a party by operation of Law or pursuant to an agreement reasonably satisfactory to the other Party. (vii) failure by such Party to satisfy the collateral requirements pursuant to Section 0, Section 8.8,
(viii) with respect to any outstanding Letter of Credit provided for the benefit of the other Party that is not then required under this Agreement to be canceled or returned, the failure by such Party to provide for the benefit of such other Party either cash or a substitute Letter of Credit from a different issuer meeting the criteria set forth in the definition of Letter of Credit, or, in the case of the Performance Security required to be provided by Seller, a Guarantor meeting the requirements of this Agreement, in each case, in the amount required hereunder within ten (10) Business Days after such Party receives Notice of the occurrence of any of the following events:
47 (A) the issuer of the outstanding Letter of Credit shall fail to maintain a Credit Rating of at least A- by S&P or Fitch or A3 by Moody’s; (B) the issuer of such Letter of Credit becomes Bankrupt; (C) the issuer of the outstanding Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit and such failure shall be continuing after the lapse of any applicable grace period permitted under such Letter of Credit;
(D) the issuer of the outstanding Letter of Credit shall fail to honor a properly documented request to draw on such Letter of Credit;
(E) the issuer of the outstanding Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit;
(F) such Letter of Credit fails or ceases to be in full force and effect at any time; or
(G) such Party shall fail to renew or cause the renewal of each outstanding Letter of Credit on a timely basis as provided in the relevant Letter of Credit and as provided in accordance with this Agreement, and in no event less than sixty (60) days prior to the expiration of the outstanding Letter of Credit. (b) with respect to Seller as the Defaulting Party, the occurrence of any of the following:
(i) if at any time, Seller delivers or attempts to deliver Energy to the Delivery Point that was not discharged by the Facility; (ii) the failure by Seller to (A) achieve Construction Start on or before the Guaranteed Construction Start Date, as such date may be extended by Seller’s payment of Daily Delay Damages pursuant to Section 1(b) of Exhibit B and/or a Development Cure Period pursuant to Section 4 of Exhibit B, or (B) achieve Commercial Operation on or before the Guaranteed Commercial Operation Date, as such date may be extended by Seller’s payment of Commercial Operation Delay Damages pursuant to Section 2(b) of Exhibit B and/or a Development Cure Period pursuant to Section 4 of Exhibit B; (iii) If, during any four consecutive Seasonal Periods of the Delivery Term, the simple average of the Seasonal Availability (calculated in accordance with Exhibit P but including all Force Majeure Events as available hours) for such Seasonal Periods is not at least and Seller fails to: (x) deliver to Buyer within thirty (30) days after Notice from Buyer a plan or report developed by Seller that describes the cause of the failure and the actions that Seller has taken, is taking, or proposes to take in an effort to cure such condition along with the written confirmation of a Licensed Professional Engineer that such plan or report is in accordance with Prudent Operating Practices and capable of cure within a reasonable period of time (“Cure Plan”) not to exceed one hundred eighty (180) days; 48 If, during any two consecutive Seasonal Periods of the Delivery Term, the simple average of the Seasonal Availability (calculated in accordance with Exhibit P but including all Force Majeure Events as available hours) for such Seasonal Periods is not at least and Seller fails to: (x) deliver to Buyer within thirty (30) days after Notice from Buyer a Cure Plan to cure such failure within one hundred eighty (180) days;
(v) if, Seller fails to maintain an average Efficiency Rate equal to or greater than the Minimum Efficiency Rate over a rolling twelve (12) month period, (vi) if, Seller fails to maintain an Effective Capacity equal to at least of the Installed Capacity for more than three-hundred and sixty five (365) consecutive days,
49 (vii) Seller sells, assigns, or otherwise transfers, or commits to sell, assign, or otherwise transfer, the Product, or any portion thereof, during the Delivery Term to any party other than Buyer except as expressly permitted under this Agreement; (viii) with respect to any Guaranty provided for the benefit of Buyer, the failure by Seller to provide for the benefit of Buyer either (1) cash, (2) a replacement Guaranty from a different Guarantor meeting the criteria set forth in the definition of Guarantor, or (3) a replacement Letter of Credit from an issuer meeting the criteria set forth in the definition of Letter of Credit, in each case, in the amount required hereunder within ten (10) Business Days after Seller receives Notice of the occurrence of any of the following events:
(A) if any representation or warranty made by the Guarantor in connection with this Agreement is false or misleading in any material respect when made or when deemed made or repeated, and such default is not remedied within thirty (30) days after Notice thereof; (B) the failure of the Guarantor to make any payment required or to perform any other material covenant or obligation in any Guaranty; (C) the Guarantor becomes Bankrupt;
(D) the Guarantor shall fail to meet the criteria for an acceptable Guarantor as set forth in the definition of Guarantor;
(E) the failure of the Guaranty to be in full force and effect (other than in accordance with its terms) prior to the indefeasible satisfaction of all obligations of Seller hereunder; or
(F) the Guarantor shall repudiate, disaffirm, disclaim, or reject, in whole or in part, or challenge the validity of any Guaranty.
11.2 Remedies; Declaration of Early Termination Date. If an Event of Default with respect to a Defaulting Party shall have occurred and be continuing, the other Party (“Non-Defaulting Party”) shall have the following rights:
(a) to send Notice, designating a day, no earlier than the day such Notice is deemed to be received and no later than twenty (20) days after such Notice is deemed to be received, as an early termination date of this Agreement (“Early Termination Date”) that terminates this Agreement and ends the Delivery Term effective as of the Early Termination Date; (b) to accelerate all amounts owing between the Parties, and to collect as liquidated damages (i) the Damage Payment, or (ii) the Termination Payment, as applicable, in each case calculated in accordance with Section 11.3 below; (c) to withhold any payments due to the Defaulting Party under this Agreement; (d) to suspend performance; and
50 (e) to exercise any other right or remedy available at law or in equity, including specific performance or injunctive relief, except to the extent such remedies are expressly limited under this Agreement; provided, payment by the Defaulting Party of the Damage Payment or Termination Payment, as applicable, shall constitute liquidated damages and the Non-Defaulting Party’s sole and exclusive monetary remedy for any early termination of this Agreement under this Section 11.2 and the Event of Default related thereto.
11.3 Damage Payment; Termination Payment. If an Early Termination Date has been declared, the Non-Defaulting Party shall calculate, in a commercially reasonable manner, the Damage Payment or Termination Payment, as applicable, in accordance with this Section 11.3. (a) Damage Payment Prior to Commercial Operation Date. If the Early Termination Date occurs before the Commercial Operation Date, then the Damage Payment shall be calculated in accordance with this Section 11.3(a).
(i) If Seller is the Defaulting Party, then the Damage Payment shall be owed to Buyer and shall be
There will be no amounts owed to Seller. The Parties agree that Buyer’s damages in the event of an Early Termination Date prior to the Commercial Operation Date caused by Seller’s Event of Default would be difficult or impossible to determine and that the damages set forth in this Section 11.3(a)(i) are a reasonable approximation of Buyer’s harm or loss. (ii) If Buyer is the Defaulting Party, then a Damage Payment shall be owed to Seller and shall equal the Settlement Amount plus any and all other amounts due to or from Seller (as of the Early Termination Date) netted into a single amount. There will be no amount owed to Buyer. Seller shall calculate, in a commercially reasonable manner, a Settlement Amount as of the Early Termination Date. Third parties supplying information for purposes of the calculation of Gains or Losses may include dealers in the relevant markets, end-users of the relevant product, information vendors and other sources of market information. The Settlement Amount shall not include consequential, incidental, punitive, exemplary, indirect or business interruption damages. Without prejudice to Seller’s duty to mitigate, Seller shall not have to enter into replacement transactions to establish a Settlement Amount. The Parties agree that Seller’s damages in the event of an Early Termination Date prior to the Commercial Operation Date caused by Buyer’s Event of Default would be difficult or impossible to determine and that the damages set forth in this Section 11.3(a)(ii) are a reasonable approximation of Seller’s harm or loss. (b) Termination Payment On or After the Commercial Operation Date. The payment owed by the Defaulting Party to the Non-Defaulting Party for a termination of this Agreement under Section 11.2 occurring after the Commercial Operation Date (“Termination Payment”) shall be the Settlement Amount plus any and all other amounts due to or from the Non-Defaulting Party (as of the Early Termination Date) netted into a single amount. The Non-Defaulting Party shall calculate, in a commercially reasonable manner, a Settlement Amount as of the Early Termination Date. Third parties supplying information for purposes of the calculation of 51 Gains or Losses may include dealers in the relevant markets, end-users of the relevant product, information vendors and other sources of market information. The Settlement Amount shall not include consequential, incidental, punitive, exemplary, indirect or business interruption damages.
Without prejudice to the Non-Defaulting Party’s duty to mitigate, the Non-Defaulting Party shall not have to enter into replacement transactions to establish a Settlement Amount. Each Party agrees and acknowledges that (i) the actual damages that the Non-Defaulting Party would incur in connection with a termination of this Agreement under Section 11.2 would be difficult or impossible to predict with certainty, (ii) the Termination Payment described in this Section 11.3(b) is a reasonable and appropriate approximation of such damages, and (iii) the Termination Payment described in this Section 11.3(b) is the exclusive remedy of the Non-Defaulting Party in connection with a termination of this Agreement under Section 11.2 and the associated Event of Default.
11.4 Notice of Payment of Termination Payment or Damage Payment. As soon as practicable after a Terminated Transaction, but in no event later than sixty (60) days after the Early Termination Date (or such longer additional period, not to exceed an additional sixty (60) days, if the Non-Defaulting Party is unable, despite using commercially reasonable efforts, to calculate the Termination Payment or Damage Payment, as applicable, within such initial sixty (60)-day period despite exercising commercially reasonable efforts), Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the amount of the Damage Payment or Termination Payment, as applicable, and whether the Termination Payment or Damage Payment, as applicable, is due to or from the Non-Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of such amount and the sources for such calculation. The Termination Payment or Damage Payment, as applicable, shall be made to or from the Non-Defaulting Party, as applicable, within ten (10) Business Days after such Notice is effective.
11.5 Disputes With Respect to Termination Payment or Damage Payment. If the Defaulting Party disputes the Non-Defaulting Party’s calculation of the Termination Payment or Damage Payment, as applicable, in whole or in part, the Defaulting Party shall, within five (5) Business Days of receipt of the Non-Defaulting Party’s calculation of the Termination Payment or Damage Payment, as applicable, provide to the Non-Defaulting Party a detailed written explanation of the basis for such dispute. Disputes regarding the Termination Payment or Damage Payment, as applicable, shall be determined in accordance with Article 15.
11.6 Seller Pre-COD Liability Limitations. Notwithstanding anything to the contrary in this Agreement, Seller’s total liability prior to the Commercial Operation Date (excluding any Commercial Operation Delay Damages) shall not exceed .
11.7 Limitation on Seller’s Ability to Make or Agree to Third-Party Sales from the Facility after Early Termination Date. If this Agreement is terminated by either Party prior to the Commercial Operation Date due to Seller’s Event of Default, neither Seller nor Seller’s Affiliates may sell, market or deliver any Product associated with or attributable to the Facility to a party other than Buyer for a period of following the Early Termination Date due to Seller’s Event of Default, unless prior to selling, marketing or delivering such Product, or entering into the agreement to sell, market or deliver such Product to a party other than Buyer, Seller or Seller’s Affiliates provide Buyer with a written offer to sell the Product on terms and conditions materially similar to the terms and conditions contained in this Agreement but with an adjusted schedule, and Buyer fails to accept such offer within forty-five (45) days of 52 Buyer’s receipt thereof. Neither Seller nor Seller’s Affiliates may sell or transfer the Facility, or any part thereof, or land rights or interests in the Site (including the interconnection queue position of the Facility) each for the avoidance of doubt as and to the extent applicable to the Facility, so long as the limitations contained in this Section 11.6 apply, unless the transferee agrees to be bound by the terms set forth in this Section 11.6 pursuant to a written agreement approved by Buyer, which approval shall not be unreasonably withheld, conditioned, or delayed. Seller shall indemnify and hold Buyer harmless from all benefits lost and other damages sustained by Buyer as a result of any breach by Seller of its covenants contained within this Section 11.7.
11.8 Rights And Remedies Are Cumulative. Except where liquidated damages or other remedy are explicitly provided as the exclusive remedy herein, the rights and remedies of a Party pursuant to this Article 11 shall be cumulative and in addition to the rights of the Parties otherwise provided in this Agreement.
11.9 Mitigation. Any Non-Defaulting Party shall be obligated to use commercially reasonable efforts to mitigate its Costs, Losses and damages resulting from any Event of Default of the other Party under this Agreement.
ARTICLE 12
LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES.
12.1 No Consequential Damages. EXCEPT TO THE EXTENT (A) PART OF AN
EXPRESS REMEDY OR MEASURE OF DAMAGES HEREIN, (B) PART OF A THIRD PARTY INDEMNITY CLAIM UNDER ARTICLE 16, (C) INCLUDED IN A LIQUIDATED DAMAGES CALCULATION, OR (D) RESULTING FROM A PARTY’S WILLFUL
MISCONDUCT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER OR ITS
INDEMNIFIED PERSONS FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT, OR
CONSEQUENTIAL DAMAGES, OR LOSSES OR DAMAGES FOR LOST REVENUE OR
LOST PROFITS, WHETHER FORESEEABLE OR NOT, ARISING OUT OF, OR IN CONNECTION WITH THIS AGREEMENT, BY STATUTE, IN TORT OR CONTRACT.
12.2 Waiver and Exclusion of Other Damages. EXCEPT AS EXPRESSLY SET
FORTH HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM THAT THE EXPRESS REMEDIES AND
MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. ALL LIMITATIONS OF LIABILITY CONTAINED IN
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THOSE PERTAINING TO SELLER’S LIMITATION OF LIABILITY AND THE PARTIES’ WAIVER OF
CONSEQUENTIAL DAMAGES, SHALL APPLY EVEN IF THE REMEDIES FOR BREACH OF WARRANTY PROVIDED IN THIS AGREEMENT ARE DEEMED TO “FAIL OF THEIR ESSENTIAL PURPOSE” OR ARE OTHERWISE HELD TO BE INVALID OR UNENFORCEABLE.
FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS AND EXCLUSIVE
REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR
MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE 53 OBLIGOR’S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED.
IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR’S LIABILITY SHALL BE LIMITED TO DIRECT DAMAGES ONLY. THE
VALUE OF ANY TAX CREDITS, DETERMINED ON AN AFTER-TAX BASIS, LOST DUE TO BUYER’S DEFAULT (WHICH SELLER HAS NOT BEEN ABLE TO MITIGATE AFTER
USE OF REASONABLE EFFORTS) AND AMOUNTS DUE IN CONNECTION WITH THE
RECAPTURE OF ANY TAX BENEFITS, IF ANY, SHALL BE DEEMED TO BE DIRECT DAMAGES. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, INCLUDING UNDER SECTIONS 3.5(b), 4.3, 4.9(c), 4.9(f), 11.2, 11.3 AND 11.6, AND AS PROVIDED IN EXHIBIT B, and EXHIBIT C, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO
DETERMINE, THAT OTHERWISE OBTAINING AN ADEQUATE REMEDY IS
INCONVENIENT, AND THAT THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE ANTICIPATED HARM OR LOSS. IT IS THE
INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES
AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR
CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY,
WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. THE PARTIES HEREBY WAIVE ANY RIGHT TO CONTEST SUCH PAYMENTS AS AN UNREASONABLE PENALTY.
THE PARTIES ACKNOWLEDGE AND AGREE THAT MONEY DAMAGES AND THE
EXPRESS REMEDIES PROVIDED FOR HEREIN ARE AN ADEQUATE REMEDY FOR THE
BREACH BY THE OTHER OF THE TERMS OF THIS AGREEMENT, AND EACH PARTY
WAIVES ANY RIGHT IT MAY HAVE TO SPECIFIC PERFORMANCE WITH RESPECT TO ANY OBLIGATION OF THE OTHER PARTY UNDER THIS AGREEMENT.
ARTICLE 13
REPRESENTATIONS AND WARRANTIES; COVENANTS
13.1 Seller’s Representations and Warranties. As of the Effective Date, Seller represents and warrants as follows:
(a) Seller is a limited liability company, duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and is or will be qualified to conduct business in each jurisdiction where the failure to so qualify would have a material adverse effect on the business or financial condition of Seller. (b) Seller has the power and authority to enter into and perform this Agreement and is not prohibited from entering into this Agreement or discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement, except where such failure does not have a material adverse effect on Seller’s performance under this Agreement. The execution, delivery and performance of this Agreement by Seller has been duly authorized by all necessary limited liability company action on the part of Seller and does not and 54 will not require the consent of any trustee or holder of any indebtedness or other obligation of Seller or any other party to any other agreement with Seller. (c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Seller with the provisions of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Seller, subject to any permits that have not yet been obtained by Seller, the documents of formation of Seller or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Seller is a party or by which any of its property is bound. (d) This Agreement has been duly executed and delivered by Seller. This Agreement is a legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as limited by laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity. (e) Neither Seller nor its Affiliates have received notice from or been advised by any existing or potential supplier or service provider that the disease designated COVID-19 or the related virus designated SARS-CoV-2 have caused, or are reasonably likely to cause, a delay in the construction of the Facility or the delivery of materials necessary to complete the Facility, in each case that would cause the Commercial Operation Date to be later than the Guaranteed Commercial Operation Date. Notwithstanding anything to the contrary in this Agreement, Buyer’s only remedy for any breach of this representation by Seller shall be that Seller may not claim relief under Article 10 for a Force Majeure Event or Section 4 of Exhibit B for a Development Cure Period on the basis of such delays.
13.2 Buyer’s Representations and Warranties. As of the Effective Date, Buyer represents and warrants as follows:
(a) Buyer is a joint powers authority and a validly existing community choice aggregator, duly organized, validly existing and in good standing under the laws of the State of California and the rules, regulations and orders of the CPUC, and is qualified to conduct business in its jurisdiction. All Persons making up the governing body of Buyer are the elected or appointed incumbents in their positions and hold their positions in good standing in accordance with the Joint Powers Agreement and other Law.
(b) Buyer has the power and authority to enter into and perform this Agreement and is not prohibited from entering into this Agreement or discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement, except where such failure does not have a material adverse effect on Buyer’s performance under this Agreement. The execution, delivery and performance of this Agreement by Buyer has been duly authorized by all necessary action on the part of Buyer and does not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Buyer or any other party to any other agreement with Buyer.
(c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Buyer with the provisions 55 of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Buyer, including but not limited to community choice aggregation, the Joint Powers Act, competitive bidding, public notice, open meetings, election, referendum, or prior appropriation requirements, the documents of formation of Buyer or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Buyer is a party or by which any of its property is bound.
(d) This Agreement has been duly executed and delivered by Buyer. This Agreement is a legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as limited by laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity. (e) Buyer warrants and covenants that with respect to its contractual obligations under this Agreement, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (1) suit, (2) jurisdiction of court, (3) relief by way of injunction, order for specific performance or recovery of property, (4) attachment of assets, or (5) execution or enforcement of any judgment.
(f) Buyer cannot assert sovereign immunity as a defense to the enforcement of its obligations under this Agreement.
(g) Buyer is a “local public entity” as defined in Section 900.4 of the Government Code of the State of California.
13.3 General Covenants. Each Party covenants that commencing on the Effective Date and continuing throughout the Contract Term:
(a) It shall continue to be duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and to be qualified to conduct business in each jurisdiction where the failure to so qualify would have a material adverse effect on its business or financial condition;
(b) It shall maintain (or obtain from time to time as required) all regulatory authorizations necessary for it to legally perform its obligations under this Agreement; and (c) It shall perform its obligations under this Agreement in compliance with all terms and conditions in its governing documents and in material compliance with any Law.
13.4 Seller’s Covenants. Seller covenants that commencing on the Effective Date and continuing throughout the Contract Term:
(a) Compliance with Laws. Seller shall comply with all applicable federal, state and local laws, statutes, ordinances, rules and regulations, and the orders and decrees of any courts or administrative bodies or tribunals, including, without limitation employment discrimination laws and prevailing wage laws.
56 (b) Seller shall obtain and maintain any and all permits and approvals necessary for the construction and operation of the Facility, including without limitation, environmental clearance under CEQA or other environmental law, as applicable, from the local jurisdiction where the Facility is or will be constructed.
(c) Seller or its Affiliate shall maintain Site Control throughout the Delivery Term.
13.6 Supplier Diversity. Seller acknowledges that Buyer will request voluntary disclosure of Seller’s certification status with the CPUC Clearinghouse, and voluntary disclosure regarding Seller’s efforts to work with diverse business enterprises, including women, minority, disabled veteran, and lesbian, gay, bisexual, transgender and/or persons with disabilities business enterprises.
13.7 Community Benefits. Seller pledges to contribute two hundred fifty thousand dollars ($250,000) for community benefits initiatives that directly benefit stakeholders in Buyer’s service area and/or communities adjacent to the Site. Buyer and Seller shall identify initiatives that are of mutual interest such as housing, education, workforce training, environmental stewardship, and habitat improvement. Seller shall make this payment within sixty (60) days after the Commercial Operation Date.
ARTICLE 14
ASSIGNMENT
14.1 General Prohibition on Assignments. Except as provided below in this Article 14, neither Party may assign this Agreement or its rights or obligations under this Agreement, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed. Any Change of Control of Seller (whether voluntary or by operation of law) will be deemed an assignment and will require the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed, except as specified in Section 14.3. Any assignment made without the required written consent, or in violation of the conditions to assignment set out below, shall be null and void. The assigning Party shall pay the other Party’s reasonable expenses associated with the preparation, review, execution and delivery of documents in connection with any assignment of this Agreement by the assigning Party, including reasonable attorneys’ fees. Buyer shall cooperate with Seller or any Lender or other financing party to execute or arrange for the delivery of any consents, estoppels, and other documents reasonably requested by Seller, Lender, or such other financing party, including the Collateral Assignment Agreement provided in Section 14.2, to consummate any financing or refinancing, including in connection with a financing in which the membership interests of Seller or its direct or indirect parent are collaterally assigned in lieu of an assignment of this Agreement; provided, however, Buyer will have no obligation to provide any consent, or enter into any 57 agreement, that materially and adversely affects any of Buyer’s rights, benefits, risks or obligations under this Agreement, or to modify the Agreement, except as provided in this Article 14.
14.2 Collateral Assignment; Financing Cooperation. Subject to the provisions of this Section 14.2, Seller has the right to assign this Agreement as collateral for any financing or refinancing of the Facility without the consent of Buyer. In connection with any financing or refinancing of the Facility, Buyer shall in good faith work with Seller and Lender to agree upon a consent to collateral assignment of this Agreement (“Collateral Assignment Agreement”), which shall be substantially in the form of Exhibit T and (ii) an estoppel certificate in a form substantially similar to the estoppel certificate set forth in Exhibit U (“Estoppel Certificate”). Seller shall pay Buyer’s reasonable expenses, including attorneys’ fees, incurred to provide consents, estoppels, or other required documentation in connection with Seller’s financing of the Facility. Buyer shall have no obligation to provide any consent, or enter into any agreement, that materially and adversely affects any of Buyer’s rights, benefits, risks or obligations under this Agreement, or to modify this Agreement.
14.3 Permitted Assignments. Seller may without the prior written consent of Buyer:
(a) assign this Agreement to an Affiliate of Seller, including to NEOP, NEP and NEECH; (b) assign, collaterally assign, or pledge its interest hereunder and/or in the Facility to a Lender or any other financing party in accordance with Section 14.2; or (c) make any Permitted Transfer or otherwise assign this Agreement pursuant to or in connection with any Permitted Transfer. Any Change of Control of Seller (whether voluntary or by operation of law) will be deemed an assignment and will require the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned, or delayed; provided that, Buyer’s consent shall not be required if (i) such Change of Control is, or is a result of, a direct or indirect Change of Control of NEOP or NEP, or (ii) the entity that is the Seller at the conclusion of the Change of Control is a Permitted Transferee. For avoidance of doubt, (i) a Change of Control shall not be deemed to have occurred as a result of a Permitted Transfer, and no consent is required under this Agreement with respect to a Permitted Transfer, and (ii) Seller may, without the prior written consent of Buyer, finance all or any portion of the Facility or the Interconnection Facilities or the Shared Facilities utilizing debt financing, equity financing (including tax equity), lease financing, or any other form of financing or any combination thereof, including pursuant to a portfolio financing of multiple energy generation, storage, and transmission facilities and other assets of Seller or Seller’s Affiliates (which may include cross-collateralization or similar arrangements).
14.4 Portfolio Financing. Buyer agrees and acknowledges that Seller may elect to finance all or any portion of the Facility or the Interconnection Facilities or the Shared Facilities (1) utilizing tax equity investment, and/or (2) through a Portfolio Financing, which may include cross-collateralization or similar arrangements. In connection with any financing or refinancing of the Facility, the Interconnection Facilities or the Shared Facilities by Seller or any Portfolio Financing, Buyer, Seller, Portfolio Financing Entity (if any), and Lender shall execute and deliver such further consents, approvals and acknowledgments as may be reasonable and necessary to facilitate such transactions; provided, Buyer shall not be required to agree to any terms or conditions which are reasonably expected to have a material adverse effect on Buyer and all reasonable attorney’s fees incurred by Buyer in connection therewith shall be borne by Seller. 58 14.5 Permitted Assignment by Buyer. If a change in Law occurs after the Effective Date that allows a tax-exempt load serving entity, including Buyer, to include product purchased under an energy storage agreement with a standalone storage facility, including Product purchased under this Agreement, in a municipal prepayment transaction, then subject to the terms and conditions of this Agreement, Buyer may make a limited assignment in connection with a municipal prepayment transaction to an entity (“Limited Assignee”) that has an Investment Grade Credit Rating of Buyer’s right to receive certain Product (which shall not be for retail sale, and which shall not include any right to issue Charging Notices or Dispatch Notices or to dispatch the Facility or any portion of the Product, or any right or obligation to act as the Scheduling Coordinator for the Facility or to offer any portion of the Product into the CAISO markets) and Buyer’s obligation to make payments for such Product to the Seller (subject to the foregoing exclusions, “Assigned Product”). The limited assignment shall not introduce, or purport to convey or otherwise allege, any right of Buyer or Limited Assignee to make any prepayment to Seller under the Agreement or to file or impose any lien on the Facility, or otherwise modify any provision of this Agreement, and shall be expressly subject to the Limited Assignee’s timely payment of amounts due under this Agreement with respect to the Assigned Product. Buyer shall pay Seller for any payments not timely made by Limited Assignee, and Buyer shall remain obligated to perform all of its obligations under this Agreement notwithstanding the limited assignment, including without limitation any credit-related requirements, and payment for all amounts due and owing under this Agreement, including the total gross amount due to Seller under each invoice. Any failure by the Limited Assignee to make payments to Seller when due hereunder shall be a Buyer Event of Default if not cured within the applicable cure period specified in this Agreement. Subject to the foregoing, Buyer may make such an assignment upon not less than thirty (30) days’ advance written notice by delivering to Seller a written request for Seller’s consent to such assignment and the proposed form of limited assignment agreement in form and substance acceptable to Seller and its Lenders (if any), including that Seller shall not be required to agree to any terms or conditions which are reasonably expected to have an adverse effect on Seller or its Lenders. Notwithstanding anything to the contrary in connection with such limited assignment, if (1) the assignment, transfer or conveyance of the Assigned Product pursuant to such limited assignment, or (2) Seller’s performance of any obligation under the assignment agreement, fails to meet any requirements of this Agreement, then Seller shall not be deemed to be in breach of any obligation in this Agreement, including without limitation any representation or warranty herein.