Green Attributes include but are not limited to Renewable Energy Credits, as well as: (1) any avoided emission of pollutants to the air, soil or water such as sulfur oxides (Sox), nitrogen oxides (Nox), carbon monoxide (CO) and other pollutants; (2) any avoided emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and other greenhouse gases (GHGs) that have been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere; (3) the reporting rights to these avoided emissions, such as Green Tag Reporting Rights. Green Tag Reporting Rights are the right of a Green Tag Purchaser to report the ownership of accumulated Green Tags in compliance with federal or state law, if applicable, and to a federal or state agency or any other party at the Green Tag Purchaser’s discretion, and include without limitation those Green Tag Reporting Rights accruing under Section 1605(b) of The Energy Policy Act of 1992 and any present or future federal, state, or local law, regulation or bill, and international or foreign emissions trading Exhibit D - 3
program. Green Tags are accumulated on a MWh basis and one Green Tag represents the Green Attributes associated with one (1) MWh of Energy. Green Attributes do not include (i) any energy, capacity, reliability or other power attributes from the Project, (ii) production tax credits associated with the construction or operation of the Project and other financial incentives in the form of credits, reductions, or allowances associated with the project that are applicable to a state or federal income taxation obligation, (iii) fuel-related subsidies or “tipping fees” that may be paid to Seller to accept certain fuels, or local subsidies received by the generator for the destruction of particular preexisting pollutants or the promotion of local environmental benefits, or (iv) emission reduction credits encumbered or used by the Project for compliance with local, state, or federal operating and/or air quality permits. If the Project is a biomass or biogas facility and Seller receives any tradable Green Attributes based on the greenhouse gas reduction benefits or other emission offsets attributed to its fuel usage, it shall provide Buyer with sufficient Green Attributes to ensure that there are zero net emissions associated with the production of electricity from the Project. [STC 2]
“Incremental Energy” means WSPP Service Schedule C Firm Energy on Firm Transmission on the last segment immediately preceding the CAISO balancing authority area, sourced in the WECC outside of the state of California, which was not in the portfolio of Buyer prior to the Effective Date of this Confirmation and scheduled into the CAISO Balancing Authority in accordance with Section 1.1(h), during the same calendar year in which the Project Energy was produced by the Project(s) as documented by the NERC e-Tags containing the Project(s) RPS IDs. “LMP Index” means, for any day of delivery, the day-ahead hourly Locational Marginal Price (“LMP”) at TH_SP15_GEN-APND (or any successor Aggregated Pricing Node for SP 15) (“SP 15 Trading Hub”) for the applicable hours of delivery as published by the CAISO. In the event the CAISO fails to publish the LMP for the SP 15 Trading Hub, such failure shall be addressed by the Parties in a manner consistent with the Master Agreement provisions applicable to Market Disruption Events. In the event the CAISO subsequently corrects the LMP for the SP15 Trading Hub, such correction shall be addressed by the Parties in a manner consistent with the Master Agreement provisions applicable to price corrections.
Notwithstanding any other provision of this Confirmation or the Master Agreement, the LMP Index shall not be revised as a result of a correction to the LMP for the SP 15 Trading Hub made any time after 6 months from the end of the Delivery Term.
“NERC Holiday” means any day designated as a holiday by NERC. “Off-Peak” means HE 0100 through HE 0600 and HE 2300 through HE 2400 PPT and all hours on (i) Sundays or (ii) any NERC Holiday.
“On-Peak” means HE 0700 through HE 2200 (16 hours per day) PPT, Monday through Saturday (6 days per week), excluding NERC Holidays.
“Project” means the Designated Facility which generated the Green Attributes delivered to Buyer associated with the Project Energy during the Delivery Term.
“Project Energy” means energy bundled with Green Attributes (including, associated RECs), which (a) is simultaneously generated by the Project(s) during the Generation Period, (b) the Seller has purchased or agreed to purchase prior to the date of this Agreement, and (c) is equivalent in amount to the Incremental Energy delivered under this Agreement.
“PSD Regulations” means the Power Source Disclosure Program regulations (California Code of Regulations Title 20, Division 2, Chapter 3, Article 5, Sections 1390 through 1394).
Exhibit D - 4
“RA Requirements” means the resource adequacy requirements established for CPUC jurisdictional load serving entities by the CPUC pursuant to the CPUC’s currently effective or future decisions, resolutions, or rulings related to resource adequacy as applicable only to system resource adequacy and the availability, eligibility and use of non-resource specific energy import for system resource adequacy, including CPUC Decision 23-04-010 and any CPUC interpretation thereof solely for the purposes of the eligibility of Product as a non-resource specific energy import for satisfying system resource adequacy requirements, including requirements related to delivering, Bidding, and Self-Scheduling such energy imports during required hours.
“RA Termination Event” means, for any Availability Assessment Hour in the Delivery Term, (i) Seller fails to (x) satisfy the Bidding Requirement, (y) deliver the Incremental Energy to the Delivery Point in accordance with the Hourly Contract Quantity and Delivery Profile, and in either case such failure is not excused pursuant to the terms hereof or subject to liquidated damages, and (ii) such unexcused failure by Seller is likely to cause Buyer to not (or no longer) be able to count the Product towards its RA Requirements.
“Renewable Energy Credit” or “REC” has the meaning set forth in California Public Utilities Code Section 399.12(h) and CPUC Decision D.08-08-028
“Scheduling Coordinator” has the meaning given in the CAISO Tariff. “Self-Schedule” has the meaning given in the CAISO Tariff. “Seller Eligibility Default” means any failure by Seller to meet or satisfy any Eligibility Requirement or element or component thereof which is in the direct control of Seller to meet or satisfy and which arises as a result of or is caused by or attributable to an act or omission of Seller, including (i) a failure to transfer the Product to Buyer using WREGIS or such similar generation information or attributes tracking system as may be approved by or other method of transfer acceptable to the Energy Commission; (ii) a failure to match in WREGIS RECs with e-tags created in accordance with this Transaction to the extent required by the CEC for the purpose of verifying the Product; (iii) a failure to have the Project(s) certified (or certified for the Delivery Term) as an ERR for the California RPS Program; (iv) simultaneously purchasing the Project Energy and associated Green Attributes generated by the Project during the REC Generation Period and selling the Project Energy back to the generator; (v) not scheduling Incremental Energy into the CAISO Balancing Authority in an amount equal to the Project Energy during the Generation Period; or (vi) committing or selling to a third party the Incremental Energy to be delivered under this Transaction. “Sink” means the final point of delivery for the energy, which shall be a point within the CAISO Balancing Authority Area.
“Specified Source Facility” means a power source registered by an electric power entity with CARB that is intended to be claimed in an Emissions Data Report pursuant to section 95111(g)(1) of the Regulation for the Mandatory Reporting of Greenhouse Gas Emissions in the state of California. “WREGIS” means the Western Renewable Energy Generation Information System or any successor renewable energy tracking
“WREGIS Certificate” means a “Certificate” as defined by WREGIS in the WREGIS Operating Rules and designated by law as eligible for complying with the California Renewables Portfolio Standard and for evidencing the Green Attributes associated with the Product.
Exhibit D - 5
“WREGIS Operating Rules” means the operating rules and requirement adopted by WREGIS, as amended from time to time.
EXECUTION VERSION
1 CONFIRMATION
BUNDLED RENEWABLE ENERGY (PCC2)
This confirmation (“Confirmation”) confirms the Transaction between Morgan Stanley Capital Group Inc., a Delaware Corporation (“Party A”) and San Diego Community Power, a California joint powers authority (“Party B”), each individually a “Party” and together the “Parties”, dated as of November 20, 2024 (the “Effective Date”). This Transaction is governed by, constitutes part of, and is subject to the terms and provisions of the Edison Electric Institute Master Power Purchase and Sale Agreement dated January 21, 2021, as amended by that First Amendment to Master Power Purchase and Sale Agreement dated as of February 8, 2021 between the Parties (the “Master Agreement”). This Confirmation and the Master Agreement, including any appendices, exhibits or amendments thereto, shall collectively be referred to as the “Agreement” for the purposes of this Transaction and shall constitute a “Transaction” for the purposes of the Master Agreement. Capitalized terms used but not defined herein have the meanings ascribed to them in the Master Agreement. If any term or definition in this Confirmation conflicts with the Master Agreement, the terms and definitions set forth in this Confirmation shall govern. §1 Buyer San Diego Community Power, a California Joint Power Authority (“Buyer”)
§2 Seller Morgan Stanley Capital Group Inc. (“Seller”)
§3 Product RPS Portfolio Content Category 2 (PCC2) – Bundled Renewable Energy:
“Product” means Portfolio Content Category 2. “Portfolio Content Category 2” or “PCC2” means Project Energy and
associated Green Attributes (including, RECs produced by the Project(s)), which is shaped and firmed with substitute energy to provide Incremental Energy that is delivered by the Seller to the Buyer at the Delivery Point in accordance with the terms of this Confirmation. This Product satisfies the requirements of Section 399.16(b)(2) of the California Public Utilities Code, as applicable to the Incremental Energy and RECs transferred hereunder. In addition, the following provisions are applicable to the PCC2 Product:
(a) The Project Energy is shaped and firmed with substitute energy to provide Incremental Energy that will be scheduled into a California balancing authority after the Start Date, but within the same calendar year the Project Energy is
generated.
(b) The Project Energy generated by the Project is not being sold back to the Project(s) at the same time, is available to Buyer, and is not in practice already committed to another party. (c) The initial contract for Incremental Energy is acquired no earlier than the date this Confirmation is executed and no later
EXECUTION VERSION
2 than before the initial date of generation of the Project Energy.
(d) The Incremental Energy is sourced and scheduled outside all the metered boundaries of all California balancing authority areas and is not in the portfolio of Buyer prior to the Effective Date of this Confirmation.
“Project Energy” means energy and bundled with Green Attributes (including, associated RECs) which (a) is simultaneously generated by the Project during the Generation Period up to the Contract Quantity, (b) the Seller has purchased or agreed to purchase prior to the date of this Agreement, and (c) is equivalent in amount to the Incremental Energy delivered under this Agreement.
“Incremental Energy” means WSPP Service Schedule C Firm Energy on firm or non-firm transmission, or energy tagged as generation firm, sourced in the WECC outside of the state of California, which was not in the portfolio of Buyer prior to the Effective Date of this Confirmation and scheduled into the CAISO Balancing Authority in accordance with §12, Scheduling, during the same calendar year in which the Project Energy was produced by the Project(s) as documented by the NERC e-Tags containing the Project(s) RPS IDs.
§4 Delivery Term /
Transfer Date
The delivery term for the Product begins on January 1, 2025 (“Start Date”) and continues through the date that all RECs transacted under this Confirmation have been delivered from Seller to Buyer in accordance with this Confirmation; provided, however, Seller shall deliver Incremental Energy associated with the Product no later than October 31, 2026 (“Energy Transfer Date”); Seller shall deliver WREGIS Certificates associated with 2025 Project Energy deliveries no later than April 15, 2026; and Seller shall deliver WREGIS Certificates associated with 2026 Project Energy deliveries no later than February 28, 2027 (or for WREGIS Certificates associated with 2025 Project Energy deliveries and 2026 Project Energy deliveries such later date which is ten (10) Business Days after WREGIS Certificates associated with the Contract Quantity of the Product have been created in Seller’s WREGIS account) (“REC Transfer Date”) (the Start Date through to the REC Transfer Date, the “Delivery Term”).
§5 Generation Period The generation period for Project Energy begins no earlier than January 1, 2025 and continues through the date that all Project Energy to be firmed and shaped under this Confirmation has been generated, but in any case no later than no later than June 30, 2026 (the “Generation Period”).
EXECUTION VERSION
3 §6 Eligibility
Requirements
Buyer shall only be required to purchase the Product(s) pursuant to this Transaction if and to the extent that the Project Energy meets the Eligibility Requirements at the time of delivery. If these Eligibility Requirements are not met at any time, it shall not be an Event of Default and the Parties will have no liability to each other for any failure to deliver or purchase the Product(s), except in the event and to the extent that there is a Buyer Eligibility Default or a Seller Eligibility Default as provided in this Agreement.
If an applicable governmental or regulatory authority having jurisdiction determines that Product delivered or to be delivered under and in accordance with the terms of this Transaction does not or will not meet or satisfy the Eligibility Requirements, then (a) if the determination is prior to delivery of any Product hereunder, the Parties will have no liability to each other for any failure to deliver or purchase the Product that is not then delivered except in the event and to the extent that the failure to meet or satisfy the Eligibility Requirements is a result of a Buyer Eligibility Default or a Seller Eligibility Default; or
EXECUTION VERSION
4 (b) if the determination is after delivery of any Product hereunder, the Parties will have no liability to each other for any prior delivery of Product except in the event and to the extent that the failure to meet or satisfy the
Eligibility Requirements is a result of a Buyer Eligibility Default or a Seller Eligibility Default, provided however, that Buyer shall return and re-convey the REC associated with such Product along with the Green Attributes
attributable to the Incremental Energy to Seller without retiring such RECs, and without any encumbrance of any
nature and kind whatsoever, and Seller shall refund to
Buyer any REC Price previously paid therefore and
attributable to the RECs and Green Attributes associated with such Product, in either case within ten (10) Business Days after Buyer has delivered written notice of such
failure to meet or satisfy the Eligibility Requirements and re-conveyed the REC associated with the Product.
(c) Each Party will use commercially reasonable efforts to do or cause or permit to be done, everything in its direct control which would or would reasonably be expected to
cause each of the Eligibility Requirements or elements or components thereof to be met or satisfied, and neither
Party will do or omit to do, or cause or permit to be done, anything in its direct control which would or would
reasonably be expected to cause any one or more of the
Eligibility Requirements or elements or components
thereof not to be met or satisfied.
§7 Reserved
Reserved
§8 Renewable
Energy Facility
Project - Eligible
Renewable
Resources
(“ERRs”)
“Designated Facility” means any facility listed in Appendix A which is certified as an ERR (as defined in § 18) and which Seller is entitled to Project Energy and associated Green Attributes during Delivery Term.
“Project” means the Designated Facility which generated the Green Attributes delivered to Buyer associated with the Project Energy during the Delivery Term.
§9 Contract Quantity 350,400 MWh of Product in 2025
173,720 MWh of Product in 2026
The Contract Quantity amounts are firm and delivery is excused only to the extent that, and for the period during which, such delivery is prevented by Force Majeure.
Buyer and Seller agree that Seller’s obligation to deliver and sell and Buyer’s obligation to receive and purchase the Contract
EXECUTION VERSION
5 Quantity of the Product during any year of the Delivery Term shall be reduced and satisfied to the extent and by the same amount that, in the same year, Product (as defined in the PCC2 & Import Energy Confirmation) is delivered and sold by Seller and received and purchased by Buyer pursuant to that certain Confirmation dated November 20, 2024 between Buyer and
Seller (the “PCC2 & Import Energy Confirmation”).
§10 Delivery Point CAISO
§11 Contract Price For each MWh of Product delivered to Buyer, Buyer shall pay for the Energy and Green Attributes as follows:
1. Energy Price: For each MWh of Incremental Energy, the price shall be the Locational Marginal Price for the
Delivery Point as published by the CAISO for the
applicable hours of delivery (the “Incremental Energy
Price”). Seller shall be entitled to retain all CAISO
revenues associated with such Incremental Energy
delivery and such CAISO payments shall be deemed full
satisfaction of Buyer’s payment obligation for the
Incremental Energy Price associated with Incremental
Energy.
2. REC Price: For each MWh of Green Attributes
(including RECs) of the Contract Quantity generated by
the Project(s) and delivered to Buyer pursuant to this
Transaction, the price (“REC Price”) shall be:
$55.00/MWh in 2025 and 2026
§12 Scheduling Incremental Energy:
All Incremental Energy shall be scheduled into the CAISO Balancing Authority in compliance with 399.16(b)(2) of the Public Utilities Code and in accordance with this Transaction shall be sourced and scheduled from outside of all California Balancing Authorities. Incremental Energy shall be scheduled into a California Balancing Authority within the same calendar year as the Project Energy is generated.
Seller will perform all scheduling and tagging requirements for Incremental Energy scheduled under this Transaction. These services will be performed consistent with all applicable CAISO and WECC scheduling protocols. Buyer will take title to Energy at the Delivery Point and authorizes Seller to deliver Incremental Energy to CAISO at the Delivery Point as agent on Buyer’s behalf. Seller will be importer of record of the Incremental Energy into California and must include on the e-tag the Project(s) CEC RPS identification number or numbers, when possible, as
EXECUTION VERSION
6 described in WREGIS Operating Rules and Training Documents, updated from time to time so that Seller is able to receive e-tags in WREGIS. Seller shall match RECs with e-tags in WREGIS before transferring to Buyer whenever possible. Seller represents and warrants to Buyer that for each hour during the Delivery Term, Seller will have sufficiently reliable transmission rights to deliver the Incremental Energy into the CAISO balancing authority.
§13 Reserved
§14 Settlement and
Payment
Seller shall invoice Buyer for Incremental Energy and RECs separately upon Delivery of Product in accordance with the Master Agreement. The Parties acknowledge that delivery and invoicing for the Energy and the RECs may each occur at different times.
“Delivery” of RECs means the initiation of the transfer from Seller to Buyer of RECs with associated e-Tags in accordance with WREGIS and recognition by any applicable WREGIS
Administrator that such initiation has been completed. Buyer shall pay the REC Price no later than ten (10) days following receipt of Seller’s invoice subsequent to the transfer of RECs for the applicable Product.
§15 Reserved
§16 Reserved
§17 Governing Law This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced and performed in accordance with the laws of the state of California, without regard to principles of conflicts of law. To the extent enforceable at such time, each party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this Agreement. [STC 17]
EXECUTION VERSION
7 §18 Representations and
Warranties
Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) Seller has the right to sell the Product, (ii) the Product meets the requirements set forth in California Public Utilities Code 399.16(b)(2) and the California RPS compliance requirements for Portfolio Content Category 2 as set forth in CPUC Decision 11- 12-052, (iii)the Product is free and clear of all liens and encumbrances, (iv) Seller has not sold the PCC2 Product or the RECs associated with the Product to any other person or entity; and (v) Seller will cooperate and work with Buyer, to provide any documentation required by the CPUC or CEC to support the Product’s classification as Portfolio Content Category 2 Product as set forth in California Public Utilities Code Section 399.16(b)(2).
Seller further represents and warrants to Buyer that, to the extent that the Product sold by Seller is a resale of part or all of a contract between Seller and one or more third parties, Seller represents, warrants and covenants that the resale complies with the following conditions in (i) through (v) below as of the Effective Date and throughout the Generation Period: (i) the original upstream third-party contract(s) meets the criteria of California Public Utilities Code Section 399.16(b)(2), (ii) this Confirmation transfers only electricity and RECs that have not yet been generated prior to the Effective Date, (iii) this Confirmation transfers the original arrangement for substitute electricity (e.g., source and quantity), (iv) this Confirmation retains the scheduling of the substitute electricity into a California balancing authority as set out in the original firming and shaping transaction; and (v) this Confirmation continues to provide incremental electricity scheduled into a California balancing authority.
Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement: (i) the Project qualifies and is certified by the CEC as an Eligible Renewable Energy Resource (“ERR”) as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Project’s output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC 6]
Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement the
EXECUTION VERSION
8 Renewable Energy Credits transferred to Buyer conform to the definition and attributes required for compliance with the California Renewables Portfolio Standard, as set forth in California Public Utilities Commission Decision 08-08-028, and as may be modified by subsequent decision of the California Public Utilities Commission or by subsequent legislation. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC REC - 1]
Seller hereby provides and conveys all Green Attributes associated with all electricity generation from the Project to Buyer as part of the Product being delivered. Seller represents and warrants that Seller holds the rights to all Green Attributes from the Project, and Seller agrees to convey and hereby conveys all such Green Attributes to Buyer as included in the delivery of the Product from the Project.
For the purposes of STC REC-1 and STC 6, “commercially
reasonable efforts” shall not require Seller to incur more than $10,000 in aggregate direct or indirect costs, including lost profits and out-of-pocket costs and expenses to comply with such change in law. Where any other section of this Confirmation requires a Party to use “commercially reasonable efforts”, such efforts shall likewise not require Seller to expend more than $10,000 in aggregate direct or indirect costs, including lost profits and out-of-pocket costs and expenses to comply with such “commercially reasonable efforts” obligation.
EXECUTION VERSION
9 §19 RECs Tracking
Obligations
Seller shall use WREGIS to transfer RECs to Buyer and conform to the definition and attributes required for compliance with the RPS, as set forth in CPUC D.08-08-028, and as may be modified by subsequent decision of the CPUC or by subsequent legislation, but in no event shall RECs be transferred that do not contain the California RPS Certification Number. Throughout the Delivery Term, following generation of the Project Energy, Seller shall, at its sole cost and expense, take all actions and execute all documents or instruments necessary to ensure that all WREGIS Certificates associated with the Contract Quantity are issued and tracked for purposes of satisfying the requirements of the California Renewable Portfolio Standard for Buyer. Seller shall comply with all Applicable Law, including, without limitation, the WREGIS Operating Rules, regarding the certification and transfer of such WREGIS Certificates to Buyer and Buyer shall be given sole title to all such WREGIS Certificates.
Seller warrants that all necessary steps to allow the Renewable Energy Credits transferred to Buyer to be tracked in the Western Renewable Energy Generation Information System, will be taken prior to the first delivery under the contract. [STC REC-2] The transfer of RECs to Buyer under WREGIS shall be deemed to transfer all of the Green Attributes associated with the Project Energy hereunder. In the event a future edition of the CEC Eligibility Guidebook or WREGIS Operating Rules establishes or eliminates a delivery, matching and/or transfer process for the RECs or their attributes, such as e-tags and the WREGIS e-Tag Summary report, Seller shall be responsible for meeting such requirements so that the transferred RECs contain all attributes of the Product before being transferred to Buyer.
Upon either Party’s receipt of notice from WREGIS that a transfer of WREGIS Certificates was not recognized, that Party will immediately notify the other Party, providing a copy of such notice, and both Parties will cooperate in taking such actions as are necessary and commercially reasonable to cause such transfer to be recognized and completed. Each Party agrees to provide copies of its applicable reports to the extent reasonably necessary for WREGIS to verify the accuracy of any fact, statement, charge or computation made pursuant hereto if requested by the other Party.
EXECUTION VERSION
10 §20 RPS Adjustment After Seller completes delivery of RECs under this Confirmation, if required by the California Air Resources Board (“CARB”) for Seller to claim RPS Adjustment for the Incremental Energy delivered into the CAISO Balancing Authority under this Confirmation and upon timely request by Seller, Buyer agrees to provide a written attestation that the RECs received from Seller under this Confirmation have been placed in Buyer’s WREGIS retirement subaccount in accordance with California RPS Program requirements. Buyer shall retire such RECs by the deadline specified in the effective CARB’s Cap and Trade regulations for the same year the RPS Adjustment is claimed by Seller for compliance with the CARB Cap and Trade regulations. Buyer agrees to perform other administrative actions reasonably necessary to allow Seller to claim the RPS Adjustment, which do not impact Buyer’s use of the RECs for Buyer’s RPS compliance requirements. §21 Force Majeure For purposes of this Transaction, the Product shall be subject to Force Majeure (as defined in the Master Agreement) such that either Party will be relieved of its obligations to sell and deliver or purchase and receive the Product without liability to the extent that, and for the period during which, such performance is prevented by Force Majeure. For greater certainty and without limiting the foregoing, in the event and to the extent that the Incremental Energy associated with the Project Energy does not meet or satisfy the Eligibility Requirements as a result of an unforeseen or unanticipated determination, decision, application of or change in law or policy by or of the CEC or the California Public Utilities Commission, or other applicable regulatory authority or third party having authority or jurisdiction, or as a result of any other event or circumstance which otherwise meets the definition of “Force Majeure” in the Master Agreement, that will be considered a Force Majeure for the purposes of this Agreement, and any Product quantities applicable to the Incremental Energy provided for in this Agreement shall be reduced to the extent of and by the amount affected by such event of Force Majeure.
§22 Good Faith
Negotiations
In the event that any Incremental Energy associated with the Project Energy does not meet or satisfy the Eligibility Requirements as a result of an Force Majeure or for any other reason except a Buyer Eligibility Default or a Seller Eligibility Default, the Parties will negotiate in good faith to revise or amend this Agreement as appropriate to meet applicable requirements so that such Incremental Energy would meet or satisfy the Eligibility Requirements, in a manner consistent with the intent of the Parties as set out in this Agreement. Further, in the event that any Incremental Energy to be delivered pursuant to this Agreement is not eligible or does not qualify for the California RPS program in force and effect as of the
EXECUTION VERSION
11 date of delivery (or such replacement thereof or successor thereto as may be adopted and implemented by the Energy Commission or the California Public Utilities Commission from time to time) or does not satisfy any applicable eligibility criteria or requirements thereof in force and effect at the time of delivery which are not already Eligibility Requirements pursuant to this Agreement, then the Parties will negotiate in good faith to revise or amend this Agreement as appropriate to meet applicable requirements so that such Incremental Energy would be eligible and qualify for the California RPS program (or such replacement thereof or successor thereto as may be adopted and implemented by the Energy Commission or the California Public Utilities Commission from time to time) as of the time of delivery; however, if the Parties are unable to agree to any such revisions or amendments to this Agreement, it will remain in full force and effect in accordance with its terms.
EXECUTION VERSION
12 §23 Definitions Capitalized terms not otherwise defined in this §23 shall have the meaning set forth in the Master Agreement unless otherwise noted herein. The following words and terms used in this Confirmation shall have the following meanings:
“Applicable Law” means any statute, law, treaty, rule, tariff, regulation, ordinance, code, permit, enactment, injunction, order, writ, decision, authorization, judgment, decree or other legal or regulatory determination or restriction by a court or
Governmental Authority of competent jurisdiction, or any binding interpretation of the foregoing, as any of them is amended or supplemented from time to time, that apply to either or both of the Parties, the Projects, or the terms of the Agreement.
“Buyer Eligibility Default” means the failure of any Incremental Energy to meet or satisfy any Eligibility Requirement or element or component thereof which is in the direct control of Buyer to meet or satisfy and which arises as a result of or is caused by or attributable to an act or omission of Buyer, including a failure to accept the transfer on WREGIS, provide information and data available to Buyer (including as provided by Seller) as may be required to verify the Green Attributes comprised in the Incremental Energy, or schedule in accordance with §12, Scheduling, of this Confirmation.
“CAISO Balancing Authority” means the CAISO Balancing
Authority as identified in section 3.5.1.1.1. of CPUC Decision 11-12-052.
“CAISO Tariff” means the applicable tariff and protocol provisions of the CAISO (as amended from time to time). “California Balancing Authorities” means all of the California Balancing Authorities as identified in section 3.5.1.1.1 of CPUC Decision 11-12-052.
“California RPS Program” means the “California Renewables Portfolio Standard” program jointly administered by the CEC, the California Public Utilities Commission and the California Air Resources Board, as such program exists as of the Effective Date, including without limitation all applicable eligibility criteria and requirements thereof in force and effect as of the Effective Date.
“Eligibility Requirements” means any applicable criteria or requirements of the California RPS Program in force and effect as of the Effective Date respecting the eligibility or qualification of the Product, this Agreement or the Transaction confirmed hereby for the California RPS Program, including without limitation any eligibility criteria applicable to an out-of-
EXECUTION VERSION
13 state resource.
“Energy” means electrical energy, measured in MWh.
“Energy Commission” or “CEC” means the California Energy Resources Conservation and Development Commission.
“Governmental Authority” means any national, state, provincial, local, tribal or municipal government, any political subdivision thereof or any other governmental, regulatory, quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, department, bureau, or entity with authority to bind Buyer or Seller at law.
“Green Attributes” means any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled, attributable to the generation from the Project, and its avoided emission of pollutants. Green Attributes include but are not limited to Renewable Energy Credits, as well as: (1) any avoided emission of pollutants to the air, soil or water such as sulfur oxides (Sox), nitrogen oxides (Nox), carbon monoxide (CO) and other pollutants; (2) any avoided emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide, hydrofluorocarbons,
perfluorocarbons, sulfur hexafluoride and other greenhouse gases (GHGs) that have been determined by the United Nations
Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere; (3) the reporting rights to these avoided emissions, such as Green Tag Reporting Rights.
Green Tag Reporting Rights are the right of a Green Tag Purchaser to report the ownership of accumulated Green Tags in compliance with federal or state law, if applicable, and to a federal or state agency or any other party at the Green Tag Purchaser’s discretion, and include without limitation those Green Tag Reporting Rights accruing under Section 1605(b) of The Energy Policy Act of 1992 and any present or future federal, state, or local law, regulation or bill, and international or foreign emissions trading program.
Green Tags are accumulated on a MWh basis and one Green Tag represents the Green Attributes associated with one (1) MWh of Energy. Green Attributes do not include (i) any energy, capacity, reliability or other power attributes from the Project, (ii) production tax credits associated with the construction or operation of the Project and other financial incentives in the form of credits, reductions, or allowances associated with the project that are applicable to a state or federal income taxation obligation, (iii) fuel-related subsidies or “tipping fees” that may be paid to Seller to accept certain fuels, or local subsidies received by the generator for the destruction of particular preexisting pollutants or
EXECUTION VERSION
14 the promotion of local environmental benefits, or (iv) emission reduction credits
EXECUTION VERSION
15 encumbered or used by the Project for compliance with local, state, or federal operating and/or air quality permits. If the Project is a biomass or biogas facility and Seller receives any tradable Green Attributes based on the greenhouse gas reduction benefits or other emission offsets attributed to its fuel usage, it shall provide Buyer with sufficient Green Attributes to ensure that there are zero net emissions associated with the production of electricity from the Project. [STC 2]
“Green Tag” and “Green Tag Reporting Rights” have the
meanings set forth in the definition of “Green Attributes”, and for the purposes of this Transaction, “Green Tag Purchaser” means Buyer.
“Renewable Energy Credit” or “REC” has the meaning set forth in California Public Utilities Code Section 399.12(h) and CPUC Decision D.08-08-028
“Seller Eligibility Default” means any failure by Seller to meet or satisfy any Eligibility Requirement or element or component thereof which is in the direct control of Seller to meet or satisfy and which arises as a result of or is caused by or attributable to an act or omission of Seller, including (i) a failure to transfer the Product to Buyer using WREGIS or such similar generation information or attributes tracking system as may be approved by or other method of transfer acceptable to the Energy Commission; (ii) a failure to have the Designated Facility certified (or certified for the Delivery Term) as an ERR; (iii) simultaneously purchasing the Project Energy and associated Green Attributes generated by the Project during the Generation Period and selling the Project Energy back to the generator; (iv) not scheduling Incremental Energy into the CAISO Balancing Authority in an amount equal to the Contract Quantity during the Generation Period; or (v) committing or selling to a third party the Incremental Energy to be delivered under this Transaction. It shall not be a Seller Eligibility Default if an applicable Governmental Authority having
jurisdiction determines that Product delivered or to be delivered under and in accordance with the terms of this Transaction does not or will not meet or satisfy the Eligibility Requirements. “WREGIS” means the Western Renewable Energy Generation
Information System or any successor renewable energy tracking
EXECUTION VERSION
16 program.
“WREGIS Certificate” means a “Certificate” as defined by WREGIS in the WREGIS Operating Rules and designated by law as eligible for complying with the California Renewables Portfolio Standard and for evidencing the Green Attributes associated with the Product.
“WREGIS Operating Rules” means the operating rules and
requirement adopted by WREGIS, as amended from time to time.
ACKNOWLEDGED AND AGREED BY THE PARTIES AS OF THE EFFECTIVE DATE MORGAN STANLEY CAPITAL GROUP INC.
Signature: ___________________________________
Name: __________________________________
Title: ___________________________________
SAN DIEGO COMMUNITY POWER
Signature: ___________________________________
Name: ___________________________________
Title: ___________________________________
Brent Masucci
Vice President
EXECUTION VERSION
16 program.
WREGIS Certificate
WREGIS in the WREGIS Operating Rules and designated by law as eligible for complying with the California Renewables Portfolio Standard and for evidencing the Green Attributes associated with the Product.
WREGIS Operating Rules
requirement adopted by WREGIS, as amended from time to time.
ACKNOWLEDGED AND AGREED BY THE PARTIES AS OF THE EFFECTIVE DATE MORGAN STANLEY CAPITAL GROUP INC.
Signature: ___________________________________
Name: __________________________________
Title: ___________________________________
SAN DIEGO COMMUNITY POWER
Signature: ___________________________________
Name: ___________________________________
Title: ___________________________________
Karin Burns
Chief Executive Officer
APPENDIX A
DESIGNATED FACILITY(S)
ITEM 11
ATTACHMENT D
Execution Version
LETTER AGREEMENT
November 5, 2024
Eric Washington
Chief Financial Officer & Treasurer
815 E Street, Suite 12716
San Diego, CA 92112
Email: [email protected]
California Community Choice Financing Authority
1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [email protected]
Re: PPA Assignments for Delivery under Prepay Energy Agreements Ladies and Gentlemen:
This Letter Agreement (this “Letter Agreement”) confirms our mutual agreement with respect to the matters set forth below and relates to (i) that certain Power Supply Contract (the “Power Supply Contract”), dated as of the date hereof, by and between California Community Choice Financing Authority (“Issuer”) and San Diego Community Power (“Project Participant”), (ii) that certain Prepaid Energy Sales Agreement (the “Prepaid Agreement”), dated as of the date hereof, by and between Energy Prepay IV, LLC, a Delaware limited liability company (“Prepay LLC”) and Issuer, and (iii) that certain Energy Management Agreement (the “Energy Management Agreement”) (together with the Power Supply Contract and the Prepaid Agreement, the “Prepay Energy Agreements”), dated as of the date hereof, by and between Morgan Stanley Capital Group Inc. (“MSCG”) and Prepay LLC. Any capitalized term used in this Letter Agreement and not otherwise defined herein shall have the meaning assigned to such term in the Power Supply Contract. In consideration of each party’s execution of the respective Prepay Energy Agreements, as well as the premises above and the mutual covenants and agreements set forth herein, Issuer, Project Participant, Prepay LLC and MSCG (collectively, the “Parties”) agree as follows:
1. PPA Assignments for Delivery under Prepay Energy Agreements. (a) Initial Assignment. Concurrently with the execution of the Prepay Energy Agreements, Project Participant has assigned and Prepay LLC has agreed to assume a portion of Project Participant’s rights and obligations under the Initial Assigned PPA. (b) Replacement Assignments. Commencing (i) six months prior to the expiration of any EPS Energy Period or the resumption of deliveries in a new Reset Period following Participant’s issuance of a Remarketing Election Notice pursuant to Section 3.4 of the Power Supply Contract or (ii) otherwise immediately upon the early termination or anticipated early termination of an EPS Energy Period, Project Participant shall exercise Commercially Reasonable Efforts to assign a portion of Project Participant’s rights and obligations (the “Assigned Rights and Obligations”) under one or more power purchase 2 agreements under which Project Participant is purchasing EPS Compliant Energy pursuant to an Assignment Agreement substantially in the form of (A) the Limited Assignment Agreement set forth as Exhibit A hereto if the PPA Supplier is an unrelated third party or (B) the Limited Assignment Agreement set forth as Exhibit B hereto if the PPA Supplier is MSCG (each, an “Assignment Agreement”), and the Parties shall cooperate in good faith with respect to any proposed assignments; provided that (1) any subsequent Assignment Agreement shall provide (I) for the assignment by Project Participant to either (a) Prepay LLC if MSCG is the PPA Supplier or (b) MSCG if the PPA Supplier is an unrelated third party of its right to receive all of the Energy (and any associated products set forth in the Assignment Agreement) delivered under the applicable power purchase agreement for each Month of the applicable EPS Energy Period and (II) for payment by Prepay LLC or MSCG as applicable to the PPA Supplier under such subsequent power purchase agreement of the Day-Ahead Average Price for each Month of the applicable EPS Energy Period, with such amounts to be credited in the PPA Supplier’s monthly invoice to Project Participant against other amounts owed by Project Participant under the Assigned PPA during the EPS Energy Period;
(2) any third party PPA Supplier must satisfy MSCG’s internal credit and approval requirements and other requirements applied on a nondiscriminatory basis, including any “know your customer” rules, policies and procedures, anti-money laundering rules and regulations, Dodd-Frank Act, Commodity Exchange Act, Patriot Act and similar rules, regulations, requirements and corresponding policies; (3) any such assignment must be agreed and consented to by Project Participant, Prepay LLC and MSCG in their reasonable discretion; and
(4) the Parties recognize that MSCG will be obligated to sell and deliver Assigned Product it receives from a third-party PPA Supplier to Prepay LLC under the Energy Management Agreement; Prepay LLC will be obligated to deliver Assigned Product that it acquires to Issuer under the terms of the Prepaid Agreement; and Issuer will be obligated to deliver Assigned Product that it acquires to Project Participant under the terms of the Power Supply Contract. (c) MSCG Procurement of EPS Compliant Energy. To the extent that (i) Project Participant, Prepay LLC and MSCG have not agreed upon a replacement assignment of a power purchase agreement by the date that is seventy-five (75) days prior to (A) the end of any EPS Energy Period or (B) the resumption of deliveries in a new Reset Period following Participant’s issuance of a Remarketing Election Notice pursuant to Section 3.4 of the Power Supply Contract, or (ii) an early termination of an EPS Energy Period has occurred and Project Participant, Prepay LLC and MSCG have not agreed upon a replacement assignment of a power purchase agreement, then MSCG shall exercise Commercially Reasonable Efforts to obtain EPS Compliant Energy for ultimate redelivery to Project Participant, provided that:
3 (1) Project Participant must consent to MSCG’s procurement of any such EPS Compliant Energy for ultimate redelivery to Project Participant, with such consent not to be unreasonably withheld;
(2) the Parties shall act in good faith and in a Commercially Reasonable manner to negotiate any necessary amendments to the Prepay Energy Agreements to facilitate the delivery of such EPS Compliant Energy; and
(3) the period of delivery for any such EPS Compliant Energy (any such period, a “MSCG EPS Energy Period”) shall not exceed the length, as applicable, of (A) the then-current Reset Period if such EPS Compliant Energy is obtained for delivery for the remainder of a Reset Period and (B) the length of the next succeeding Reset Period if such EPS Compliant Energy is obtained for delivery commencing in a subsequent Reset Period.
(d) Tax Opinion. The Parties acknowledge and agree that their ability to enter into a new Reset Period will be contingent on obtaining an Opinion of Bond Counsel (as defined in the Bond Indenture), which will be dependent on the availability of EPS Compliant Energy for delivery in such Reset Period.
2. Failure to Obtain EPS Compliant Energy. To the extent an EPS Energy Period terminates or expires and Project Participant and MSCG have been unable to obtain EPS Compliant Energy for delivery under the Prepay Energy Agreements pursuant to the provisions of Paragraph 1, then Prepay LLC shall remarket the Base Energy pursuant to the provisions of Exhibit C to the Prepaid Agreement, subject to the following:
(a) the Parties’ obligations set forth in Paragraph 1 shall continue to apply; (b) Project Participant shall not make any new commitment to purchase Priority Energy during such a remarketing; and
(c) consistent with Section 7.5 of the Power Supply Contract, Project Participant shall exercise Commercially Reasonable Efforts to remediate any Disqualifed Remarketing Proceeds resulting from Prepay LLC’s remarketing.
3. Assignment Early Termination. With respect to any Assignment Agreement entered into among MSCG, Project Participant and a PPA Seller (as defined in the form of Assignment Agreement set forth as Exhibit A hereto), each of MSCG and Project Participant agree that it shall only exercise its right under an at will termination provision of an Assignment Agreement (as set forth in Section 5(b)(i) of Exhibit A hereto) to deliver a written notice of termination of the Assignment Period under the Assignment Agreement consistent with the following:
(a) either MSCG or Project Participant may deliver a notice of termination under the Assignment Agreement if any of the following occur:
4 i. the assignment of the Prepay Power Supply Contract by Project Participant or Issuer pursuant to Article XIII thereof, with respect to which the Assignment Early Termination Date shall occur immediately as of the time of such assignment; ii. termination or suspension of deliveries for any reason other than force majeure under the Prepaid Agreement or Prepay Power Supply Contract, with respect to which the Assignment Early Termination Date shall occur immediately as of the time of the last deliveries under the relevant contract following such suspension or termination; or
iii. to the extent that MSCG and Project Participant have mutually agreed upon a replacement Assignment Agreement (as defined in the Prepay Power Supply Contract) that will replace the Assigned Rights and Obligations under the Assignment Agreement immediately following the termination thereof, with respect to which the Assignment Early Termination Date shall occur effective as of the end of the Month preceding the commencement of the “Assignment Period” under the replacement Assignment Agreement as specified in the notice from MSCG or Project Participant to the PPA Seller and the other Party hereto; (b) MSCG may, in its sole discretion, deliver a notice of termination of the Assignment Agreement if any of the following occur:
i. the suspension, expiration, or termination of performance of the PPA by either Project Participant or PPA Seller for any reason other than the occurrence of a Force Majeure Event under and as defined in the PPA, with respect to which the Assignment Early Termination Date shall occur immediately as of the time of PPA Seller’s or Project Participant’s (as applicable) last performance under the PPA following such suspension, expiration, or termination;
ii. (A) any event or circumstance occurs that would either give either Project Participant or PPA Seller the right to terminate or suspend performance under the PPA (regardless of whether Project Participant or PPA Seller exercises such right), or (B) the execution of an amendment, waiver, supplement, modification or other change to the PPA that adversely affects the Assigned Rights and Obligations or MSCG’s rights or obligations under the Assignment Agreement (provided that MSCG shall not have a right to terminate under this clause (B) to the extent that MSCG (I) receives prior notice of such change and (II) provides its written consent thereto), with respect to which the Assignment Early Termination Date shall occur upon the date set forth in a written notice of such election as determined by MSCG; (c) Project Participant may, in its sole discretion, deliver a notice of termination of the Assignment Agreement if any of the following occur:
i. if MSCG fails to pay when due any amounts owed under the Assignment Agreement in respect of any Delivered Product Payment Obligation and such failure continues for three (3) Business Days following receipt by MSCG of written notice thereof, with respect to which the Assignment Early Termination Date shall 5 occur upon the date set forth in a written notice of such election delivered by Project Participant;
ii. if any change, event or effect occurs, including but not limited a change in applicable laws or regulations, any issues with PPA Seller or the PPA, a dispute under the PPA or other similar circumstance, that individually or collectively have or are reasonably expected by Project Participant to have a material adverse effect upon (A) Project Participant, (B) its rights and obligations under the Assignment Agreement, the Prepay Power Supply Contract, or the PPA, or (C) the benefit Project Participant is receiving by assigning the Assigned Rights and Obligations, with respect to which the Assignment Early Termination Date shall be the date set forth in a written notice delivered by Project Participant to the PPA Seller and MSCG; provided that (x) Project Participant will provide notice to the PPA Seller and MSCG as soon as is reasonably possible that Project Participant anticipates exercising this termination right, and (y) Project Participant shall exercise commercially reasonable efforts to propose and agree with MSCG upon a replacement Assignment Agreement prior to exercising this termination right.
Any such notice sent in accordance with the foregoing provisions of this Section 3 shall specify therein the Assignment Early Termination Date.
For the avoidance of doubt, each of the Parties agrees that it shall not terminate an Assignment Agreement pursuant to the at will termination provision thereof (as set forth in Section 5(b)(i) of Exhibit A hereto) except as set forth immediately above.
4. Representations. Each Party represents to each of the other Parties:
(a) Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing.
(b) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and has taken all necessary action to authorize such execution, delivery and performance. (c) No Violation or Conflict. Such execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the incurrence by such Party of its obligations under this Agreement, will not result in any violation of, or conflict with: (i) any term of any material contract or agreement applicable to it; (ii) any of its charter, bylaws, or other constitutional documents; (iii) any determination or award of any arbitrator applicable to it; or (iv) any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, law, ordinance, rule or regulation of any Government Agency, applicable to it or any of its assets or properties or to any obligations incurred by it or by which it or any of its assets or properties 6 or obligations are bound or affected, and shall not cause a breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets. (d) Consents. All consents, approvals, orders or authorizations of, registrations, declarations, filings or giving of notice to, obtaining of any licenses or permits from, or taking of any other action with respect to, any Person or Government Agency that are required to have been obtained by such Party with respect to this Agreement and the transactions contemplated hereby, including the due authorization of such Party and its governing body and any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party, have been obtained and are in full force and effect and all conditions of any such consents have been complied with. (e) Obligations Binding. Its obligations under this Agreement constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
(f) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other Parties as investment advice or as a recommendation to enter into this Agreement; it being understood that information and explanations related to the terms and conditions of this Agreement shall not be considered investment advice or a recommendation to enter into this Agreement. It is entering into this Agreement as a bona-fide, arm’s-length transaction involving the mutual exchange of consideration and, once executed by all Parties, considers this Agreement a legally enforceable contract. No communication (written or oral) received from any of the other Parties shall be deemed to be an assurance or guarantee as to the expected results of this Agreement. (g) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement. It is also capable of assuming, and assumes, the risks of this Agreement. (h) Status of Parties. None of the other Parties is acting as a fiduciary for or an adviser to it in respect of this Agreement.
5. Counterparts. This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile or electronic transmission), each of which will be deemed an original. 7 6. Costs and Expenses. The Parties will each pay their own costs and expenses (including legal fees) incurred in connection with this Agreement and as a result of the negotiation, preparation, and execution of this Agreement.
7. Amendments. No amendment, modification, or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile or electronic transmission) and executed by each of the Parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system.
8. Notices. Any notice, demand, statement or request required or authorized by this Agreement to be given by one Party to another shall be in writing, except as otherwise expressly provided herein. It shall be sent by email transmission, courier, or personal delivery (including overnight delivery service) to each of the notice recipients and addresses for each of the other Parties designated in Appendix 2 hereto. Any such notice, demand, or request shall be deemed to be given (i) when delivered by email transmission, or (ii) when actually received if delivered by courier or personal delivery (including overnight delivery service). Each Party shall have the right, upon written 10 days’ prior written notice to the other Parties, to change its address at any time, and to designate that copies of all such notices be directed to another person at another address.
The Parties may mutually agree in writing at any time to deliver notices, demands or requests through alternate or additional methods. Notwithstanding the foregoing, any Party may at any time notify the other Parties that any notice, demand, statement or request to it must be provided by email transmission for a specified period of time or until further notice, and any communications delivered by means other than email transmission during such time shall be ineffective.
9. Dispute Resolution.
(a) Governing Law. This Agreement and the rights and duties of the Parties under this Agreement will be governed by and construed, enforced and performed in accordance with the laws of the state of New York, without reference to any conflicts of laws provisions that would direct the application of another jurisdiction’s laws; provided, however, that the authority of Project Participant and Issuer to enter into and perform their obligations under this Agreement shall be determined in accordance with the laws of the State of California. (b) Arbitration. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope of this agreement to arbitrate, shall be determined by final, non-appealable binding arbitration in San Francisco, California before three (3) arbitrators. The arbitration shall be administered by Judicial Arbitration and Mediation Services, Inc. (“JAMS”) pursuant to its Comprehensive Arbitration Rules and Procedures. Within fifteen (15) days after the commencement of arbitration, each of MSCG and Project Participant shall select one person to act as arbitrator, and the two so-selected arbitrators shall select a third arbitrator (the “chairperson”) within thirty (30) days of the commencement of the arbitration. If either MSCG or Project Participant is unable or fails to select one person to act as arbitrator, such arbitrator shall be appointed by JAMS. If MSCG and Project Participant-selected arbitrators are unable or fail to agree upon a chairperson, the chairperson shall be appointed by JAMS. The chairperson shall be a person who has experience in renewable energy-related transactions, and none of the arbitrators 8 shall have been previously employed by any Party or have any direct pecuniary interest in any Party or the subject matter of the arbitration, unless such conflict is expressly acknowledged and waived in writing by all of the Parties. The Parties shall maintain the confidential nature of the arbitration proceeding and any award, including any hearing(s), except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as necessary in connection with a court application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise required by law or judicial decision. Any arbitration proceedings, decision or award rendered hereunder and the validity, effect and interpretation of this arbitration provision shall be governed by the Federal Arbitration Act. The arbitrator(s) shall have no authority to award consequential, treble, exemplary, or punitive damages of any type or kind regardless of whether such damages may be available under any law or right, with the Parties hereby affirmatively waiving their rights, if any, to recover or claim such damages. In any arbitration arising out of or related to this Agreement, the arbitrators shall award to the prevailing Party or Parties, if any, the costs and attorneys’ fees reasonably incurred in seeking to enforce the application of this Section 9(b)1(b) and by the prevailing party in connection with the arbitration.
Notwithstanding the foregoing provisions of this Section 9(b), any costs incurred by a Party in seeking judicial enforcement of any written decision of the arbitrators shall be chargeable to and borne exclusively by the Party against whom such court order is obtained. The award shall be final and binding on the Parties and judgment upon any award may be entered in any court of competent jurisdiction.
(c) Judicial Reference. Without limiting the provisions in Section 9(b), if Section 9(b) is deemed ineffective or unenforceable in any respect, any dispute between the Parties arising out of or in connection with this Agreement or its performance, breach, or termination (including the existence, validity and interpretation of this Agreement and the applicability of any statute of limitation period) (each, a “Dispute”) shall be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections (a “Reference Proceeding”), which shall constitute the exclusive remedy for the resolution of any Dispute. As a condition precedent to initiating a Reference Proceeding with respect to any Dispute, the Parties shall comply with the provisions of Section 9(c)i.
i. Notice of Dispute. Prior to initiating the Reference Proceeding, a Party (the “Disputing Party”) shall provide the other Parties (the “Responding Parties”) with a written notice of each issue in dispute, a proposed means for resolving each such issue, and support for such position (the “Notice of Dispute”). Within ten (10) Days after receiving the Notice of Dispute, the Responding Parties shall provide the Disputing Party with a written Notice of each additional issue (if any) with respect to the dispute raised by the Notice of Dispute, a proposed means for resolving every issue in dispute, and support for such position (the “Dispute Response”). Thereafter, the Parties shall meet to discuss the matter and attempt in good faith to reach a negotiated resolution of the dispute. If the Parties do not resolve the dispute by unanimous agreement within sixty (60) Days after receipt of the Dispute Response, (the “Negotiation Period”), then any Party may provide to the other Parties written notice of intent for judicial reference (the “Impasse Notice”) in accordance with the further provisions of this Section 9(c). ii. Applicability; Selection of Referees.
9 (A) Within ten days of the delivery of an Impasse Notice, each of MSCG and Project Participant shall nominate one (1) referee. The two (2) referees (the “Party-Appointed Referees”) shall appoint a third referee (the “Third Referee”).
The Party-Appointed Referees shall be competent and experienced in matters involving the electric energy business in the United States, with at least ten (10) years of electric industry experience as a practicing attorney. The Third Referee shall be an active or retired California state or federal judge. Each of the Party-Appointed Referees and the Third Referee shall be impartial and independent of each of the Parties and of the other referees and not employed by any of the Parties in any prior matter.
(B) If the Party-Appointed Referees are unable to agree on the Third Referee within forty-five (45) Days from delivery of the Impasse Notice, then the Third Referee shall be appointed pursuant to CCP Section 640(b) in an action filed in the Superior Court of California, County of San Francisco (the “Court”), and with due regard given to the selection criteria above. A request for appointment of a referee may be heard on an ex parte or expedited basis, and the Parties agree that irreparable harm would result if ex parte relief is not granted. Pursuant to CCP Section 170.6, each of Project Participant and MSCG shall have one (1) peremptory challenge to the referee selected by the Court.
iii. Discovery; Proceedings.
(A) The Parties agree that time is of the essence in conducting the Reference Proceeding. Accordingly, the referees shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting conference within twenty (20) days after the date of selection of the Third Referee, (ii) if practicable, try all issues of law or fact within one hundred eighty (180) days after the date of the conference, and (iii) report a statement of decision within twenty (20) days after the matter has been submitted for decision.
(B) Discovery and other pre-hearing procedures shall be conducted as agreed to by the Parties, or if they cannot agree, as determined by the Third Referee after discussion with the Parties regarding the need for discovery and other pre-hearing procedures. (C) Except as expressly set forth herein, the Third Referee shall determine the manner in which the Reference Proceeding is conducted, including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the Reference Proceeding. The Reference Proceeding, including the trial, shall be conducted at a neutral location selected by the Parties, or if not agreed by the Parties, by the Third Referee, in San Francisco, California.
(D) All proceedings and hearings conducted before the referees, except for trial, shall be conducted without a court reporter, except that when any Party so 10 requests, a court reporter will be used at any hearing conducted before the referees, and the referees will be provided a courtesy copy of the transcript. The Party making such a request shall have the obligation to arrange for and pay the court reporter.
iv. Decision. The referees shall render a written statement of decision setting forth findings of fact and conclusions of law. The decision shall be entered as a judgment in the court in accordance with the provisions of CCP Sections 644 and 645. The decision shall be appealable to the same extent and in the same manner that such decision would be appealable if rendered by a judge of the Court. The Parties intend this general reference agreement to be specifically enforceable in accordance with the CCP. v. Expenses. Each of MSCG and Project Participant shall bear the compensation and expenses of its respective Party-Appointed Referee, own counsel, witnesses, consultants and employees. All other expenses of judicial reference shall be split equally between MSCG and Project Participant.
10. Limitation of Liability. Notwithstanding anything to the contrary herein, all obligations of Issuer under this Agreement, including without limitation all obligations to make payments of any kind whatsoever, are special, limited obligations of Issuer, payable solely from the Trust Estate (as such term is defined in the Bond Indenture) as and to the extent provided in the Bond Indenture, including with respect to Operating Expenses (as such term is defined in the Bond Indenture). Issuer shall not be required to advance any moneys derived from any source other than the Revenues (as such term is defined in the Bond Indenture) and other assets pledged under the Bond Indenture for any of the purposes in this Agreement mentioned. Neither the faith and credit of Issuer nor the taxing power of the State of California or any political subdivision thereof is pledged to payments pursuant to this Agreement. Issuer shall not be directly, indirectly, contingently or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reasons of or in connection with this Agreement, except solely to the extent Revenues (as such term is defined in the Bond Indenture) are received for the payment thereof and may be applied therefor pursuant to the terms of the Bond Indenture.
[Signature Pages to Follow]
Signature Page to Letter Agreement
Very truly yours,
PREPAY LLC
ENERGY PREPAY IV, LLC
By: Morgan Stanley Capital Group Inc., its Manager
By:
Name:
Title:
MSCG
MORGAN STANLEY CAPITAL GROUP INC.
By:
Name:
Title:
ACKNOWLEDGED, ACCEPTED AND AGREED TO as of the date first set forth above:
PARTICIPANT
SAN DIEGO COMMUNITY POWER
By:
Name:
Title:
ISSUER
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By:
Name:
Title:
Kevin Collins
Authorized Signatory
Brent Masucci
Vice President
Very truly yours,
PREPAY LLC
ENERGY PREPAY IV, LLC
By: Morgan Stanley Capital Group Inc., its Manager
By:
Name:
Title:
MSCG
MORGAN STANLEY CAPITAL GROUP INC.
By:
Name:
Title:
ACKNOWLEDGED, ACCEPTED AND AGREED TO as of the date first set forth above:
PARTICIPANT
SAN DIEGO COMMUNITY POWER
Name: Eric W. Washington
Title: Chief Financial Officer/Treasurer
ISSUER
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By:
Name:
Title:
Signature Page to Letter Agreement
Signature Page to Letter Agreement
Very truly yours,
PREPAY LLC
ENERGY PREPAY IV, LLC
By: Morgan Stanley Capital Group Inc., its Manager
By:
Name:
Title:
MSCG
MORGAN STANLEY CAPITAL GROUP INC.
By:
Name:
Title:
ACKNOWLEDGED, ACCEPTED AND AGREED TO as of the date first set forth above:
PARTICIPANT
SAN DIEGO COMMUNITY POWER
By:
Name:
Title:
ISSUER
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By:
Name:
Title:
Garth Salisbury
Treasurer/Controller
Form
EXHIBIT A
FORM OF LIMITED ASSIGNMENT AGREEMENT
LIMITED ASSIGNMENT AGREEMENT
This Limited Assignment Agreement (this “Agreement”) is entered into as of [____] (the “Assignment Agreement Effective Date”) by and among [PPA SELLER], a [____] limited liability company (“PPA Seller”), San Diego Community Power, a California joint powers authority (“PPA Buyer”), and Morgan Stanley Capital Group Inc., a Delaware corporation (“MSCG”).
RECITALS
WHEREAS, PPA Buyer and PPA Seller are parties to that certain PPA identified on Appendix 1 hereto;
WHEREAS, in connection with a prepaid electricity transaction between California Community Choice Financing Authority (“Issuer”) and Energy Prepay IV, LLC (“Prepay LLC”), and with effect from and including the Assignment Period Start Date (as defined below), PPA Buyer wishes to transfer by limited assignment to MSCG, and MSCG wishes to accept the transfer by limited assignment of, the Assigned Rights and Obligations (as defined below) for the duration of the Assignment Period (as defined below);
WHEREAS, pursuant to this Agreement, during the Assignment Period, MSCG will receive the Assigned Product and MSCG will deliver such Assigned Product to Prepay LLC, which will redeliver such Assigned Product to Issuer for ultimate redelivery to PPA Buyer; and WHEREAS, pursuant to this Agreement, during the Assignment Period, MSCG will assume responsibility for the Delivered Product Payment Obligation.
THEREFORE, in consideration of the premises above and the mutual covenants and agreements herein set forth, PPA Seller, PPA Buyer and MSCG (the “Parties” hereto; each is a “Party”) agree as follows:
AGREEMENT
1. Definitions.
Unless the context otherwise specifies or requires, or defined below, capitalized terms used but not defined in this Agreement have the meanings set forth in the PPA. The following terms, when used in this Agreement and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires:
“Agreement” has the meaning specified in the first paragraph above. 2 “Assigned Product” means (i) [PV Energy] and (ii) [Green Attributes (PCC1)], as each is defined in the PPA.
“Assigned Rights and Obligations” means (i) the rights of PPA Buyer under the PPA to receive the Assigned Product in each Month during the Assignment Period, as such rights may be limited or further described in the “Further Information” section on Appendix 1, and (ii) the Delivered Product Payment Obligation, which right and obligation are transferred and conveyed to MSCG hereunder, but which shall not relieve PPA Buyer of its obligations under the PPA in any respects.
“Assignment Early Termination Date” has the meaning specified in Section 5(b). “Assignment Period” has the meaning specified in Section 5(a). “Assignment Period End Date” means 11:59:59 p.m. pacific prevailing time on [____]. “Assignment Period Start Date” means [_____].
“Claims” means all claims or actions, threatened or filed, and the resulting losses, damages, expenses, attorneys’ fees, experts’ 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, in each case arising under, in respect of or related in any way to the PPA or any transaction thereunder, except for the Delivered Product Payment Obligation. “Custodian” means U.S. Bank Trust Company, National Assocation. “Delivered Product Payment Obligation” has the meaning specified in Section 3(a). “Issuer” means California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended).
“Month” means a calendar month.
“Monthly Gross Amount” has the meaning specified in Section 3(c). “MSCG” has the meaning specified in the first paragraph of this Agreement. “PPA Buyer” has the meaning specified in the first paragraph of this Agreement. “PPA Seller” has the meaning specified in the first paragraph of this Agreement. “Prepaid Agreement” means that certain Prepaid Energy Sales Agreement dated as of November 5, 2024 by and between Prepay LLC and Issuer as amended from time to time. 3 “Prepay LLC” has the meaning specified in the first paragraph of this Agreement. “Prepay Power Supply Contract” means that certain Power Supply Contract dated November 5, 2024 by and between PPA Buyer and Issuer as amended from time to time. “Receivables” has the meaning given to such term in Section 3(f). “Retained Rights and Obligations” has the meaning specified in Section 3.
2. Transfer and Undertakings.
(a) PPA Buyer hereby assigns, transfers and conveys to MSCG all right, title and interest in and to the rights of PPA Buyer under the PPA to receive delivery of the Assigned Product during the Assignment Period. In connection with this assignment, PPA Buyer hereby delegates to MSCG the Assigned Rights and Obligations during the Assignment Period. (b) PPA Seller hereby consents and agrees to PPA Buyer’s assignment, transfer and conveyance of all right, title and interest in and to the Assigned Product and, subject to Section 3, the delegation of the Assigned Rights and Obligations to MSCG and the exercise and performance by MSCG of the Assigned Rights and Obligations during the Assignment Period. (c) MSCG hereby accepts such assignment, transfer and conveyance of PPA Buyer’s right, title and interest in and to the Assigned Products during the Assignment Period, and PPA Buyer’s delegation of the Assigned Rights and Obligations during the Assignment Period and agrees to perform any such Assigned Rights and Obligations due from it during the Assignment Period to the extent expressly set forth in this Agreement.
3. Limited Assignment.
The Parties acknowledge and agree that (i) the Assigned Rights and Obligations include only a portion of PPA Buyer’s rights and obligations under the PPA, and that all rights and obligations (including without limitation obligations with respect to payment for any Product not included in the Assigned Product and any other amounts owed under the PPA) arising under the PPA that are not expressly included in the Assigned Rights and Obligations shall be “Retained Rights and Obligations” that are retained solely by PPA Buyer, and (ii) the Retained Rights and Obligations include all rights and obligations of PPA Buyer arising during the Assignment Period except the rights and obligations expressly included in the Assigned Rights and Obligations. In this regard:
(a) Limited to Delivered Product Payment Obligation. MSCG’s sole payment obligation hereunder will be to pay the Floating Price Payments into the Custodial Account as such terms are defined in and described on Appendix 1 (the “Delivered Product Payment Obligation”). MSCG and PPA Buyer each agree to instruct the Custodian in accordance with Section 3(c) hereof to pay PPA Seller for the Assigned Product delivered during each Month of the Assignment Period on each applicable payment date under Section [_] of the PPA. PPA Buyer shall remain responsible for any payment obligations under the PPA during the Assignment Period, 4 including in the event that either (i) MSCG does not make the payments into the Custodial Account as described above or (ii) the Custodian does not make the payments to the PPA Seller from the Custodial Account as described above.
(b) Retained Rights and Obligations. Any Claims (other than the Delivered Product Payment Obligation or a failure to perform the same) arising or existing in connection with or related to the PPA, whether related to performance by PPA Seller, PPA Buyer or MSCG, and whether arising before, during or after the Assignment Period, in each case excluding the Delivered Product Payment Obligation, will be included in the Retained Rights and Obligations, and any such Claims will be resolved exclusively between PPA Seller and PPA Buyer in accordance with the PPA.
(c) Invoicing. During the Assignment Period, PPA Seller shall continue to provide PPA Buyer a monthly invoice of amounts owing under the PPA, which invoice shall show the total amount due to PPA Seller under the PPA for such Month (the “Monthly Gross Amount”).
Promptly following PPA Buyer’s receipt of each monthly invoice from PPA Seller during the Assignment Period and, in any event, no later than seven (7) days thereafter, PPA Buyer shall deliver (i) a copy of such monthly invoice and the related supporting data to MSCG and (ii) a statement to each of MSCG and the Custodian indicating (A) the Monthly Gross Amount; (B) the Delivered Product Payment Obligation; and (C) the “Retained Payment Obligation”, which shall be an amount equal to the Monthly Gross Amount minus the Delivered Product Payment Obligation. PPA Buyer and MSCG covenant and agree to instruct the Custodian to pay the Monthly Gross Amount to PPA Seller on or before the applicable payment date in the PPA, provided, that the liability of MSCG hereunder to PPA Seller is limited as described on Appendix
1. PPA Buyer and MSCG may agree in a separate writing as to the allocation of the Monthly Gross Amount between PPA Buyer and MSCG of amounts paid by the Custodian to PPA Seller hereunder. At all times, PPA Buyer remains liable to PPA Seller for all amounts due and owing under the PPA. For the avoidance of doubt, the Parties acknowledge and agree that any invoice adjustments or reconciliations occurring after the initial settlement of amounts due under a monthly invoice shall be resolved exclusively between PPA Seller and PPA Buyer pursuant to the terms of the PPA.
(d) Scheduling. All scheduling of Energy associated with the Assigned Product and other communications related to the PPA shall take place between PPA Buyer and PPA Seller pursuant to the terms of the PPA; provided that during the Assignment Period (i) title to Assigned Product will pass to MSCG upon delivery by PPA Seller at the Delivery Point in accordance with the PPA; (ii) immediately thereafter, title to such Assigned Product will pass to Prepay LLC, Issuer and then to PPA Buyer upon delivery by MSCG at the same point where title is passed to MSCG pursuant to clause (i) above; (iii) PPA Buyer will be deemed to be acting as MSCG’s agent with regard to scheduling Assigned Product; and (iv) PPA Buyer will provide copies to MSCG of (A) any notice of a Force Majeure Event delivered under the PPA, (B) any notice of a default or of a breach or other event that, if not cured within an applicable grace period, could result in an Event of Default, (C) annual forecasts and monthly forecasts with respect to the Assigned Product delivered by PPA Seller under [Section __] of the PPA, (D) invoices delivered by PPA Seller under [Section __ of the PPA] (with a copy to the Custodian if and to the extent retained by PPA Buyer 5 and MSCG), and (E) any other information reasonably requested by MSCG relating to Assigned Product.
(e) Amendments. PPA Buyer will provide written notice (including copies thereof) of any amendment, waiver, supplement, modification, or other changes to the PPA to MSCG relating to the Assigned Rights and Obligations, and the Parties hereby acknowledge and agree that an amendment, waiver, supplement, modification or other change will not have any effect on MSCG’s rights or obligations under this Agreement unless and until MSCG receives written notice thereof. No amendment, modification, or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile or electronic transmission) and executed by each of the Parties.
(f) Setoff of Receivables. Pursuant to the Prepaid Agreement, Prepay LLC has agreed to purchase the rights to payment of the net amounts owed by PPA Buyer under the Prepay Power Supply Contract (“Receivables”) in the case of non-payment by PPA Buyer. To the extent any such Receivables relate to Assigned Product purchased by MSCG pursuant to the Assigned Rights and Obligations, Prepay LLC may sell such Receivables to MSCG and, provided that MSCG has notified PPA Seller in writing (with a copy to PPA Buyer) (a “Receivables Setoff Notice”) that the amount of any such Receivables is true and accurate, MSCG may transfer such Receivables (excluding any penalties, late payment fees, late payment interest or other fees, costs or interest included in such Receivables) to PPA Seller and apply the face amount of such Receivables (excluding any penalties, late payment fees, late payment interest or other fees, costs or interest included in such Receivables) as a reduction to any Delivered Product Payment Obligations; provided, however, that (1) at no time shall PPA Seller be required to pay MSCG for any amounts by which such Receivables exceed any Delivered Product Payment Obligations, and (2) at all times, PPA Buyer remains liable to PPA Seller for all amounts due and owing under the PPA including the Monthly Gross Amount under each invoice. The amount of any Receivables set forth in a Receivables Setoff Notice shall be final and binding unless PPA Buyer shall have provided PPA Seller and MSCG a written notice within two (2) Business Days of its receipt of a Receivables Setoff Notice containing conclusive evidence that such amount is incorrect and asserting what PPA Buyer has determined is the correct amount of Receivables. If any dispute arises therefrom, MSCG shall still be entitled to set-off the amount of Receivables set forth in its Receivables Setoff Notice as provided above, and any such dispute as to the correct amount of Receivables shall be settled exclusively between PPA Buyer and PPA Seller with no liability to MSCG, provided that at all times, PPA Buyer remains liable to PPA Seller for all amounts due and owing under the PPA including the Monthly Gross Amount under each invoice.
4. Forward Contract.
The Parties acknowledge and agree that this Agreement is intended to constitute a “forward contract” and that the Parties is intended to constitute “forward contract merchants” within the meaning of the United States Bankruptcy Code.
5. Assignment Period; Assignment Early Termination.
(a) Assignment Period. The “Assignment Period” shall begin on the Assignment Period Start Date and extend until the Assignment Period End Date; provided that in no event shall 6 the Assignment Period extend past an Assignment Early Termination Date; and further provided that the Assignment Period will automatically terminate upon the expiration or early termination of either the Delivery Term or the PPA.
(b) Early Termination. An “Assignment Early Termination Date” will occur under the following circumstances and as of the dates specified below:
i. delivery of a written notice of termination by either MSCG or PPA Buyer to each of the other Parties hereto;
ii. delivery of a written notice of termination by PPA Seller to each of MSCG and PPA Buyer following MSCG’s failure to pay when due any amounts owed to PPA Seller in respect of any Delivered Product Payment Obligation and such failure continues for five (5) Business Days following receipt by MSCG of written notice thereof; iii. delivery of a written notice by PPA Seller if any of the events described in [Section 1.1, definition of “Bankrupt” of the PPA], occurs with respect to MSCG; or iv. delivery of a written notice by MSCG if any of the events described in [Section 1.1, definition of “Bankrupt” of the PPA], occurs with respect to PPA Seller. (c) Reversion of Assigned Rights and Obligations. The Assignment Period will end at the end of the last delivery hour on the date specified in any termination notice provided pursuant to Section 5(b). The Parties acknowledge and agree that upon the occurrence of an Assignment Early Termination Date, early termination pursuant to Sections 5(d) and at the expiration of the Assignment Period the Assigned Rights and Obligations will revert from MSCG to PPA Buyer.
Any Assigned Rights and Obligations that would become due for payment or performance on or after such Assignment Early Termination Date or early termination pursuant to Section 5(d) shall immediately and automatically revert from MSCG to PPA Buyer, provided that (i) MSCG shall remain responsible for the Delivered Product Payment Obligation with respect to any Assigned Product delivered to MSCG prior to the Assignment Early Termination Date or prior to the expiration of the Assignment Period, and (ii) any legal restrictions on the effectiveness of such reversion (whether arising under bankruptcy law or otherwise) shall not affect the occurrence of the Assignment Early Termination Date or the expiration of the Assignment Period. (d) Early Termination for PPA Termination. The Assignment Period will automatically terminate upon the expiration or early termination of the PPA.
6. Representations and Warranties.
(a) Copy of PPA. As of the Assignment Agreement Effective Date, each of PPA Seller and PPA Buyer represents and warrants to MSCG that a true, complete, and correct copy of the PPA as of such date is attached hereto as Appendix 3.
(b) No Default. As of the Assignment Agreement Effective Date, each of PPA Seller and PPA Buyer represents and warrants to MSCG that no event or circumstance exists (or would 7 exist with the passage of time or the giving of notice) that, to its knowledge, would give either of them the right to terminate the PPA or suspend performance thereunder. (c) Other. Each of PPA Buyer and PPA Seller represents and warrants to each other and to MSCG that:
i. It has made no prior transfer (whether by way of security or otherwise) of any interest in the Assigned Rights and Obligations; and ii. To its knowledge, all obligations of PPA Buyer and PPA Seller under the PPA required to be performed on or before the Assignment Period Start Date have been fulfilled.
(d) Representations. Each Party represents to each of the other Parties as of the Assignment Agreement Effective Date:
i. Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing.
ii. Powers. It has the power to execute, this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and has taken all necessary action to authorize such execution, delivery and performance. iii. No Violation or Conflict. Such execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the incurrence by such Party of its obligations under this Agreement, will not result in any violation of, or conflict with: (i) any term of any material contract or agreement applicable to it; (ii) any of its charter, bylaws, or other constitutional documents; (iii) any determination or award of any arbitrator applicable to it; or (iv) any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, law, ordinance, rule or regulation of any Government Agency presently in effect, applicable to it or any of its assets or properties or to any obligations incurred by it or by which it or any of its assets or properties or obligations are bound or affected, and shall not cause a breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets. iv. Consents. All consents, approvals, orders or authorizations of, registrations, declarations, filings or giving of notice to, obtaining of any licenses or permits from, or taking of any other action with respect to, any Person or Government Agency that are required to have been obtained by such Party with respect to this Agreement and the transactions contemplated hereby, including the due authorization of such Party and its governing body and any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party, have been obtained and are in full force and effect and all conditions of any such consents have been complied with. 8 v. Obligations Binding. Its obligations under this Agreement constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
vi. Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other Parties as investment advice or as a recommendation to enter into this Agreement; it being understood that information and explanations related to the terms and conditions of this Agreement shall not be considered investment advice or a recommendation to enter into this Agreement. It is entering into this Agreement as a bona-fide, arm’s-length transaction involving the mutual exchange of consideration and, once executed by all Parties, considers this Agreement a legally enforceable contract. No communication (written or oral) received from any of the other Parties shall be deemed to be an assurance or guarantee as to the expected results of this Agreement. vii. Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement. It is also capable of assuming, and assumes, the risks of this Agreement. viii. Status of Parties. None of the other Parties is acting as a fiduciary for or an adviser to it in respect of this Agreement.
7. Miscellaneous.
Article [__] (Confidential Information), [__] (No Consequential Damages), [__] (Amendments), [__] (No Agency, Partnership, Joint Venture or Lease), Sections [__] (Severability), [__] (Electronic Delivery), [__] (Counterparts), Section [__] (Binding Effect) and [__] (Forward Contract) of the PPA are incorporated by reference into this Agreement, mutatis mutandis, as if fully set forth herein.
8. Costs and Expenses.
The Parties shall each pay their own costs and expenses (including legal fees) incurred in connection with this Agreement and as a result of the negotiation, preparation, and execution of this Agreement.
9. Notices.
Any notice, demand, or request required or authorized by this Agreement to be given by one Party to another Party shall be delivered in accordance with [Section ___] of the PPA and to 9 the addresses of each of PPA Seller and PPA Buyer specified in the PPA. PPA Buyer agrees to notify MSCG of any updates to such notice information, including any updates provided by PPA Seller to PPA Buyer. Notices to MSCG shall be provided to the address set forth in Appendix 2.
Each Party may update its address from time to time by notice to the other Parties.
10. Governing Law; Dispute Resolution.
(a) Governing Law. This Agreement and the rights and duties of the Parties under this Agreement will be governed by and construed, enforced and performed in accordance with the laws of the state of New York, without reference to any conflicts of laws provisions that would direct the application of another jurisdiction’s laws; provided, however, that the authority of PPA Buyer to enter into and perform its obligations under this agreement shall be determined in accordance with the laws of the state of California.
(b) Arbitration. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope of this Agreement to arbitrate, shall be determined by final, non-appealable binding arbitration in San Francisco, California before three (3) arbitrators. The arbitration shall be administered by Judicial Arbitration and Mediation Services, Inc. (“JAMS”) pursuant to its Comprehensive Arbitration Rules and Procedures. Within fifteen (15) days after the commencement of arbitration, each of MSCG and PPA Buyer shall select one person to act as arbitrator, and the two so-selected arbitrators shall select a third arbitrator (the “chairperson”) within thirty (30) days of the commencement of the arbitration. If either MSCG or PPA Buyer is unable or fails to select one person to act as arbitrator, such arbitrator shall be appointed by JAMS.
If the MSCG and PPA Buyer-selected arbitrators are unable or fail to agree upon a chairperson, the chairperson shall be appointed by JAMS. The chairperson shall be a person who has experience in renewable energy-related transactions, and none of the arbitrators shall have been previously employed by any Party or have any direct pecuniary interest in any Party or the subject matter of the arbitration, unless such conflict is expressly acknowledged and waived in writing by all of the Parties. The Parties shall maintain the confidential nature of the arbitration proceeding and any award, including any hearing(s), except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as necessary in connection with a court application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise required by law or judicial decision. Any arbitration proceedings, decision or award rendered hereunder and the validity, effect and interpretation of this arbitration provision shall be governed by the Federal Arbitration Act. The arbitrator(s) shall have no authority to award consequential, treble, exemplary, or punitive damages of any type or kind regardless of whether such damages may be available under any law or right, with the Parties hereby affirmatively waiving their rights, if any, to recover or claim such damages. The responsibility for compensation and expenses of the three arbitrators and all other expenses charged by JAMS shall be equally split in one-third (1/3) shares by each of MSCG, PPA Buyer, and PPA Seller. In any arbitration arising out of or related to this Agreement, the arbitrators shall award to the prevailing Party or Parties, if any, the costs and attorney’s fees reasonably incurred in seeking to enforce the application of this Section 10(b) and by the prevailing party in connection with the arbitration. Notwithstanding the foregoing provisions of this Section 10(b), any costs incurred by a Party in seeking judicial enforcement of any written decision of the arbitrators shall be chargeable to and borne exclusively by the Party 10 against whom such court order is obtained. The award shall be final and binding on the Parties and judgment upon any award may be entered in any court of competent jurisdiction. (c) Judicial Reference. Without limiting the provisions in Section 10(b), if Section 10(b) is deemed ineffective or unenforceable in any respect, any dispute between the Parties arising out of or in connection with this Agreement or its performance, breach, or termination (including the existence, validity and interpretation of this Agreement and the applicability of any statute of limitation period) (each, a “Dispute”) shall be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections (a “Reference Proceeding”), which shall constitute the exclusive remedy for the resolution of any Dispute. As a condition precedent to initiating a Reference Proceeding with respect to any Dispute, the Parties shall comply with the provisions of Section 10(c)(i).
i. Notice of Dispute. Prior to initiating the Reference Proceeding, a Party (the “Disputing Party”) shall provide the other Parties (the “Responding Parties”) with a written notice of each issue in dispute, a proposed means for resolving each such issue, and support for such position (the “Notice of Dispute”). Within 10 days after receiving the Notice of Dispute, the Responding Parties shall provide the Disputing Party with a written Notice of each additional issue (if any) with respect to the dispute raised by the Notice of Dispute, a proposed means for resolving every issue in dispute, and support for such position (the “Dispute Response”). Thereafter, the Parties shall meet to discuss the matter and attempt in good faith to reach a negotiated resolution of the dispute. If the Parties do not resolve the dispute by unanimous agreement within fifteen (15) days after receipt of the Dispute Response, (the “Negotiation Period”), then any Party may provide to the other Parties written notice of intent for judicial reference (the “Impasse Notice”) in accordance with the further provisions of this Section 10(c).
ii. Applicability; Selection of Referees. Within 10 days of the delivery of an Impasse Notice, each of MSCG and PPA Buyer shall nominate one (1) referee. The two (2) referees (the “Party-Appointed Referees”) shall appoint a third referee (the “Third Referee”, together with the Party-Appointed Referees, the “Referees”). The Party-Appointed Referees shall be competent and experienced in matters involving the electric energy business in the United States, with at least ten (10) years of electric energy industry experience as a practicing attorney. The Third Referee shall be an active or retired California state or federal judge. Each of the Party-Appointed Referees and the Third Referee shall be impartial and independent of each of the Parties and of the other referees and not employed by any of the Parties in any prior matter. iii. Inability to Agree upon Third Referee. If the Party-Appointed Referees are unable to agree on the Third Referee within 45 days from delivery of the Impasse Notice, then the Third Referee shall be appointed pursuant to CCP Section 640(b) in an action filed in the Superior Court of California, County of San Francisco (the “Court”), and with due regard given to the selection criteria above. A request for appointment of a referee may be heard on an ex parte or expedited basis, and the Parties agree that irreparable harm would result if ex parte relief is not granted. Pursuant to CCP Section 170.6, each of PPA Buyer and MSCG shall have one (1) peremptory challenge to the referee selected by the Court. 11 iv. Discovery; Proceedings.
(A) The Parties agree that time is of the essence in conducting the Reference Proceeding. Accordingly, the Referees shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting conference within 20 days after the date of selection of the Third Referee, (ii) if practicable, try all issues of law or fact within 180 days after the date of the conference, and (iii) report a statement of decision within 20 days after the matter has been submitted for decision. (B) Discovery and other pre-hearing procedures shall be conducted as agreed to by the Parties, or if they cannot agree, as determined by the Third Referee after discussion with the Parties regarding the need for discovery and other pre-hearing procedures. (C) Except as expressly set forth herein, the Third Referee shall determine the manner in which the Reference Proceeding is conducted, including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the Reference Proceeding. The Reference Proceeding, including the trial, shall be conducted at a neutral location selected by the Parties, or if not agreed by the Parties, by the Third Referee, in San Francisco, California.
(D) All proceedings and hearings conducted before the Referees, except for trial, shall be conducted without a court reporter, except that when any Party so requests, a court reporter will be used at any hearing conducted before the Referees, and the Referees will be provided a courtesy copy of the transcript. The Party making such a request shall have the obligation to arrange for and pay the court reporter.
v. Decision. The Referees shall render a written statement of decision setting forth findings of fact and conclusions of law. The Referees shall have no authority to award consequential, treble, exemplary, or punitive damages of any type or kind regardless of whether such damages may be available under any law or right, with the Parties hereby affirmatively waiving their rights, if any, to recover or claim such damages. The decision shall be entered as a judgment in the court in accordance with the provisions of CCP Sections 644 and 645. The decision shall be appealable to the same extent and in the same manner that such decision would be appealable if rendered by a judge of the Court. The Parties intend this general reference agreement to be specifically enforceable in accordance with the CCP.
vi. Expenses. Each of MSCG, PPA Seller and PPA Buyer shall bear the compensation and expenses of its respective own counsel, witnesses, consultants and employees. The responsibility for compensation and expenses of the Referees and all other expenses of judicial reference shall be equally split in one-third (1/3) shares by each of MSCG, PPA Buyer, and PPA Seller
12 10. U.S. Resolution Stay Protocol. The Parties hereby confirm that they are adherents to the ISDA 2018 U.S. Resolution Stay Protocol (“ISDA U.S. Stay Protocol”), the terms of the ISDA U.S. Stay Protocol are incorporated into and form a part of this Agreement, and this Agreement shall be deemed a Protocol Covered Agreement for purposes thereof. For purposes of incorporating the ISDA U.S. Stay Protocol, MSCG shall be deemed to be a Regulated Entity, and PPA Buyer and PPA Seller each shall be deemed to be an Adhering Party. In the event of any inconsistences between this Agreement and the ISDA U.S. Stay Protocol, the ISDA U.S.
Stay Protocol will prevail.
Signature Page to Limited Assignment Agreement
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the Assignment Agreement Effective Date.
[PPA SELLER]
By: ____________________________
Name:_______________________
Title:________________________
SAN DIEGO COMMUNITY POWER
By: ____________________________
Name:_______________________
Title:________________________
MORGAN STANLEY CAPITAL GROUP INC.
By: ____________________________
Name:_______________________
Title:________________________
Appendix 1
Appendix 1
Assigned Rights and Obligations
PPA: Renewable Power Purchase Agreement dated as of [____], by and between PPA Buyer and PPA Seller, as may be amended from time to time.
Delivery Point: [____]
Further Information: PPA Seller shall transfer or, to the extent applicable, continue to transfer, to PPA Buyer the WREGIS Certificates associated with all [Renewable Energy Credits] corresponding to all [PV Energy] under the PPA pursuant to [Section ___ of the PPA], provided that the transferee of such WREGIS Certificates may be changed from time to time in accordance with the written instructions of both MSCG and PPA Buyer upon fifteen (15) Business Days’ notice, which change shall be effective as of the first day of the next calendar month after such notice period has expired, unless otherwise agreed. All Assigned Product delivered by PPA Seller to MSCG shall be a sale made at wholesale, with MSCG reselling all such Assigned Product.
Terms with initial capitalization used in this paragraph but not otherwise defined in this Agreement have the meaning set forth in the PPA.
Limitation of MSCG Liability. MSCG has separately agreed with the PPA Buyer and the Custodian (pursuant to the Custodial Agreement dated November 20, 2024, among PPA Buyer, MSCG and the Custodian (the “Custody Agreement”)) to pay into the custodial account specified in the Custody Agreement (the “Custodial Account”) for Assigned Product delivered in each Month of the Assignment Period at the “Day-Ahead Average Price” as defined below (“Floating Price Payments”). MSCG agrees for the benefit of the PPA Seller to pay the Floating Price Payments into the Custodial Account, and MSCG’s payment obligations under this Agreement are limited to making such payments into the Custodial Account, for application as provided in the Custody Agreement. PPA Buyer and PPA Seller each acknowledge and agree that the making of Floating Price Payments into the Custodial Account by MSCG shall not entitle (i) PPA Seller for payments in excess of the [Contract Price] for Assigned Product delivered hereunder or (ii) PPA Buyer to pay less than the [Contract Price] for Assigned Product delivered hereunder. PPA Buyer and MSCG each acknowledge and agree that the making of Floating Price Payments into the Custodial Account by MSCG shall not entitle (i) MSCG to any payments from PPA Seller or (ii) affect the Custodian’s obligation to pay the Monthly Gross Amount to PPA Seller on or before the applicable payment date in the PPA. At all times the PPA Buyer shall remain obligated for the payment of all amounts owing under the terms of the PPA including the Monthly Gross Amount under each invoice.
“Day-Ahead Average Price” means (x) the sum of the Day-Ahead Market Prices for each Pricing Interval in a Month divided by (y) the number of Pricing Intervals in such Month. As used in this definition, “Pricing Interval” means the unit of time for which [______] establishes a separate price. As used in this definition “Day-Ahead Market Price” means the Day Ahead Market or Locational Marginal Price for [_________________] for each applicable hour as published by [_______], or as such price may be corrected or revised from time to time by [_____] in accordance with its rules. For the avoidance of doubt, the Day-Ahead Average Price can be a negative number.
Appendix 2
Appendix 2
MSCG Notice Information
[To be completed before signing.]
Appendix 3
Copy of PPA
[To be attached.]
EXHIBIT B
FORM OF LIMITED ASSIGNMENT AGREEMENT
FOR MSCG AS PPA SUPPLIER
This Limited Assignment Agreement (this “Agreement”) is entered into as of [____], 2024 (“Assignment Agreement Effective Date”) by and among Morgan Stanley Capital Group Inc., a Delaware corporation (“PPA Seller”), San Diego Community Power, a California joint powers authority (“PPA Buyer”), and Energy Prepay IV, LLC, a Delaware limited liability company (“Prepay LLC”).
RECITALS
WHEREAS, PPA Buyer and PPA Seller are parties to that certain [Power Supply Agreement], dated as of [____] as further described in Appendix 1 (the “PPA”); and WHEREAS, in connection with a prepaid electricity transaction entered into between California Community Choice Financing Authority (“Issuer”), and Prepay LLC, and with effect from and including the Assignment Period Start Date (as defined below), PPA Buyer wishes to transfer by partial assignment to Prepay LLC, and Prepay LLC wishes to accept the transfer by partial assignment of, the Assigned Rights and Obligations (as defined below) for the duration of the Assignment Period (as defined below); and
THEREFORE, in consideration of the premises above and the mutual covenants and agreements herein set forth, PPA Seller, PPA Buyer and Prepay LLC (the “Parties” hereto; each is a “Party”) agree as follows:
AGREEMENT
1. Definitions.
The following terms, when used in this Agreement and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires:
“Agreement” has the meaning specified in the first paragraph above. “Assigned Delivery Point” has the meaning specified in Appendix 1. “Assigned Energy” means any Energy to be delivered to Prepay LLC hereunder pursuant to the Assigned Rights and Obligations.
“Assigned Monthly Quantity” means the first [___] MWhs delivered by PPA Seller in each Month during the Assignment Period.
“Assigned Rights and Obligations” means (i) the right of PPA Buyer under the PPA to receive the Assigned Monthly Quantity of Assigned Energy during the Assignment Period, as such right may be limited or further described in the “Further Information” section in Appendix 1, and 2 (ii) the Delivered Energy Payment Obligation, which right and obligation are transferred and conveyed to Prepay LLC hereunder.
“Assignment Early Termination Date” has the meaning specified in Section 5(b). “Assignment Period” has the meaning specified in Section 5(a). “Assignment Period End Date” means 11:59:59 p.m. pacific prevailing time on [____], 20[_].
“Assignment Period Start Date” means [_____], 20[_].
“Business Day” has the meaning specified in the Prepaid Agreement. “Claims” means all claims or actions, threatened or filed, and the resulting losses, damages, expenses, attorneys’ fees, experts’ 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, in each case arising under, in respect of or related in any way to the PPA or any transaction thereunder, except for the Delivered Energy Payment Obligation. “Day-Ahead Average Price” has the meaning specified in Appendix 1. “Delivered Energy Payment Obligation” has the meaning specified in Section 3(a). “Energy” means three-phase, 60-cycle alternating current electric energy, expressed in megawatt hours (MWh).
“Government Agency” means the United States of America, any state thereof, any municipality, or any local jurisdiction, or any political subdivision of any of the foregoing, including, but not limited to, courts, administrative bodies, departments, commissions, boards, bureaus, agencies, or instrumentalities.
“Issuer” has the meaning specified in the first paragraph of this Agreement. “Month” means a calendar month.
“MWh” has the meaning specified in the Prepaid Agreement. “Person” means any individual, corporation, partnership, joint venture, trust, unincorporated organization, or Government Agency.
“PPA Buyer” has the meaning specified in the first paragraph of this Agreement. “PPA Seller” has the meaning specified in the first paragraph of this Agreement. “Prepaid Agreement” means that certain Prepaid Energy Sales Agreement dated as of November 5, 2024 by and between Prepay LLC and Issuer.
3 “Prepay LLC” has the meaning specified in the first paragraph of this Agreement. “Prepay Power Supply Contract” means that certain Power Supply Contract dated November 5, 2024 by and between PPA Buyer and Issuer.
“Receivables” has the meaning given to such term in Section 3(e). “Retained Rights and Obligations” has the meaning specified in Section 3.
2. Transfer and Undertakings.
(a) PPA Buyer hereby assigns, transfers and conveys to Prepay LLC all right, title and interest in and to the rights of PPA Buyer under the PPA to receive delivery of the Assigned Energy during the Assignment Period. In connection with this assignment, PPA Buyer hereby delegates to Prepay LLC the Assigned Rights and Obligations during the Assignment Period. (b) PPA Seller hereby consents and agrees to PPA Buyer’s assignment, transfer and conveyance of all right, title and interest in and to the Assigned Energy and, subject to Section 3, the delegation of the Assigned Rights and Obligations to Prepay LLC and the exercise and performance by Prepay LLC of the Assigned Rights and Obligations during the Assignment Period.
(c) Prepay LLC hereby accepts such assignment, transfer and conveyance of PPA Buyer’s right, title and interest in and to the Assigned Products during the Assignment Period, and PPA Buyer’s delegation of the Assigned Rights and Obligations during the Assignment Period and agrees to perform any such Assigned Rights and Obligations due from it during the Assignment Period to the extent expressly set forth in this Agreement.
3. Limited Assignment.
The Parties acknowledge and agree that (i) the Assigned Rights and Obligations include only a portion of PPA Buyer’s rights and obligations under the PPA, and that all rights and obligations arising under the PPA that are not expressly included in the Assigned Rights and Obligations shall be “Retained Rights and Obligations”, and (ii) the Retained Rights and Obligations include all rights and obligations of PPA Buyer arising during the Assignment Period except the rights and obligations expressly included in the Assigned Rights and Obligations. In this regard:
(a) Limited to Delivered Energy Payment Obligation. Prepay LLC’s sole payment obligation to PPA Seller hereunder will be to pay the Day-Ahead Average Price to PPA Seller for the Assigned Monthly Quantity during each Month of the Assignment Period on each applicable payment date under Section [__] of the PPA irrespective of the amount of electricity actually delivered by PPA Seller to PPA Buyer (the “Delivered Energy Payment Obligation”); provided that, to the extent PPA Buyer uses less than the Assigned Monthly Quantity in any given Month during the Assignment Period, then PPA Seller shall (i) be deemed to remarket such quantities not taken for the economic benefit of Prepay LLC and (ii) credit against Prepay LLC’s Delivered 4 Energy Payment Obligation an amount equal to (A) any such quantities deemed remarketed multiplied by (B) the Day-Ahead Average Price.
(b) Retained Rights and Obligations. Any Claims (other than the Delivered Energy Payment Obligation or a failure to perform the same) arising or existing in connection with or related to the PPA, whether related to performance by PPA Seller, PPA Buyer or Prepay LLC, and whether arising before, during or after the Assignment Period, in each case excluding the Delivered Energy Payment Obligation, will be included in the Retained Rights and Obligations and any such Claims will be resolved exclusively between PPA Seller and PPA Buyer in accordance with the PPA.
(c) Scheduling. All scheduling of Energy (including Assigned Energy) and other communications related to the PPA shall take place between PPA Buyer and PPA Seller pursuant to the terms of the PPA; provided that (i) PPA Buyer and PPA Seller will provide copies of all billing statements and generation reports delivered during the Assignment Period to Prepay LLC and Issuer contemporaneously upon delivery of such statements and reports to the other party to the PPA; (ii) title to Assigned Energy will pass to Prepay LLC upon delivery by PPA Seller at the Assigned Delivery Point in accordance with the PPA; (iii) immediately thereafter, title to such Assigned Energy will pass to Issuer and then to PPA Buyer upon delivery by Prepay LLC at the same point where title is passed to Prepay LLC pursuant to clause (ii) above; and (iv) PPA Buyer will be deemed to be acting as Prepay LLC’s agent with regard to scheduling Assigned Energy. (d) Amendments. PPA Buyer will provide written notice (including copies thereof) of any amendment, waiver, supplement, modification, or other changes to the PPA to Prepay LLC relating to the Assigned Rights and Obligations, and the Parties hereby acknowledge and agree that an amendment, waiver, supplement, modification or other change will not have any effect on Prepay LLC’s rights or obligations under this Agreement unless and until Prepay LLC receives written notice thereof.
(e) Setoff of Receivables. Pursuant to the Prepaid Agreement, Prepay LLC has agreed to purchase the rights to payment of the net amounts owed by PPA Buyer under the Prepay Power Supply Contract (“Receivables”) in the case of non-payment by PPA Buyer. To the extent any such Receivables relate to Assigned Energy purchased by Prepay LLC pursuant to the Assigned Rights and Obligations, Prepay LLC may, provided that Prepay Seller has notified PPA Seller in writing (with a copy to PPA Buyer) (a “Receivables Setoff Notice”) that the amount of any such Receivables is true and accurate, transfer such Receivables (excluding any penalties, late payment fees, late payment interest or other fees, costs or interest included in such Receivables) to PPA Seller and apply the face amount of such Receivables (excluding any penalties, late payment fees, late payment interest or other fees, costs or interest included in such Receivables) as a reduction to any Delivered Energy Payment Obligations; provided, however, that at no time shall PPA Seller be required to pay Prepay LLC for any amounts by which such Receivables exceed any Delivered Energy Payment Obligations then due and owed to PPA Seller. The amount of any Receivables set forth in a Receivables Setoff Notice shall be final and binding unless PPA Buyer shall have provided PPA Seller and Prepay LLC a written notice within two (2) Business Days of its receipt of a Receivables Setoff Notice containing conclusive evidence that such amount is incorrect and asserting what PPA Buyer has determined is the correct amount of Receivables. If any dispute arises therefrom, Prepay LLC shall still be entitled to set-off the amount of Receivables set forth 5 in its Receivables Setoff Notice as provided above, and any such dispute as to the correct amount of Receivables shall be settled exclusively between PPA Buyer and PPA Seller with no liability to Prepay LLC, provided that at all times, PPA Buyer remains liable to PPA Seller for all amounts due and owing under the PPA.
4. Forward Contract.
The Parties acknowledge and agree that this Agreement is intended to constitute a “forward contract” and that the Parties is intended to constitute “forward contract merchants” within the meaning of the United States Bankruptcy Code.
5. Assignment Period; Assignment Early Termination.
(a) Assignment Period. The “Assignment Period” shall begin on the Assignment Period Start Date and extend until the Assignment Period End Date; provided that in no event shall the Assignment Period extend past an Assignment Early Termination Date. (b) Early Termination. An “Assignment Early Termination Date” will occur under the following circumstances and as of the dates specified below:
i. the assignment of the Prepay Power Supply Contract by PPA Buyer or Issuer pursuant to [Article XIII] thereof, which Assignment Early Termination Date shall occur immediately as of the time of such assignment;
ii. the suspension, expiration, or termination of performance of the PPA by either PPA Buyer or PPA Seller for any reason other than the occurrence of [Force Majeure] under and as defined in the PPA, which Assignment Early Termination Date shall occur immediately as of the time of PPA Seller’s last performance under the PPA following such suspension, expiration, or termination;
iii. the election of Prepay LLC in its sole discretion to declare an Assignment Early Termination Date as a result of (a) any event or circumstance that would give either PPA Buyer or PPA Seller the right to terminate or suspend performance under the PPA (regardless of whether PPA Buyer or PPA Seller exercises such right) or (b) the execution of an amendment, waiver, supplement, modification or other change to the PPA that adversely affects the Assigned Rights and Obligations or Prepay LLC’s rights or obligations under this Agreement (provided that Prepay LLC shall not have a right to terminate under this clause (b) to the extent that Prepay LLC (i) receives prior notice of such change and (ii) provides its written consent thereto), which Assignment Early Termination Date shall occur upon the date set forth in a written notice of such election delivered by Prepay LLC to PPA Buyer and PPA Seller;
iv. termination or suspension of deliveries for any reason other than force majeure under the Prepaid Agreement or Prepay Power Supply Contract, which Assignment Early Termination Date shall occur immediately as of the time of the last deliveries under the relevant contract following such suspension or termination; 6 v. the election of PPA Seller or PPA Buyer in its sole discretion to declare an Assignment Early Termination Date if Prepay LLC fails to pay when due any amounts owed to PPA Seller in respect of any Delivered Energy Payment Obligation and such failure continues for five Business Days following receipt by Prepay LLC of written notice thereof, which Assignment Early Termination Date shall occur upon the date set forth in a written notice of such election delivered by PPA Seller or PPA Buyer, as applicable, to Prepay LLC, and with a copy to PPA Buyer or PPA Seller, as applicable; and vi. the election of PPA Seller or PPA Buyer in its sole discretion to declare an Assignment Early Termination Date if either (a) an involuntary case or other proceeding is commenced against Prepay LLC seeking liquidation, reorganization or other relief with respect to it or its debts under any applicable Federal or State bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar law now or hereafter in effect or seeking the appointment of a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed, or an order or decree approving or ordering any of the foregoing is entered and continued unstayed and in effect, in any such event, for a period of 60 days, or (b) Prepay LLC commences a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar law or any other case or proceeding to be adjudicated as bankrupt or insolvent, or Prepay LLC consents to the entry of a decree or order for relief in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, files a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or consents to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of Prepay LLC or any substantial part of its property, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due, which Assignment Early Termination Date shall occur upon the earliest date set forth in a written notice of such election delivered by PPA Seller or PPA Buyer, as applicable, to Prepay LLC, and with a copy to PPA Buyer or PPA Seller, as applicable. (c) Reversion of Assigned Rights and Obligations. The Parties acknowledge and agree that upon the occurrence of an Assignment Early Termination Date the Assigned Rights and Obligations will revert from Prepay LLC to PPA Buyer. Any Assigned Rights and Obligations that would become due for payment or performance on or after such Assignment Early Termination Date shall immediately and automatically revert from Prepay LLC to PPA Buyer, provided that (i) Prepay LLC shall remain responsible for the Delivered Energy Payment Obligation with respect to any Assigned Energy delivered to Prepay LLC prior to the Assignment Early Termination Date, and (ii) any legal restrictions on the effectiveness of such reversion (whether arising under bankruptcy law or otherwise) shall not affect the occurrence of the Assignment Early Termination Date.
6. Representations and Warranties.
7 (a) Copy of PPA. As of the Assignment Agreement Effective Date, each of PPA Seller and PPA Buyer represents and warrants to Prepay LLC that a true, complete, and correct copy of the PPA is attached hereto as Appendix 3.
(b) No Default. As of the Assignment Agreement Effective Date, each of PPA Seller and PPA Buyer represents and warrants to Prepay LLC that no event or circumstance exists (or would exist with the passage of time or the giving of notice) that, to its knowledge, would give either of them the right to terminate the PPA or suspend performance thereunder. (c) Other. As of the Assignment Agreement Effective Date, each of PPA Buyer and PPA Seller represents and warrants to Prepay LLC that:
i. it has made no prior transfer (whether by way of security or otherwise) of any interest in the Assigned Rights and Obligations; and ii. to its knowledge, all obligations of PPA Buyer and PPA Seller under the PPA required to be performed on or before the Assignment Period Start Date have been fulfilled.
(d) Representations. Each Party represents to each of the other Parties:
i. Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing.
ii. Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and has taken all necessary action to authorize such execution, delivery and performance. iii. No Violation or Conflict. Such execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the incurrence by such Party of its obligations under this Agreement, will not result in any violation of, or conflict with: (i) any term of any material contract or agreement applicable to it; (ii) any of its charter, bylaws, or other constitutional documents; (iii) any determination or award of any arbitrator applicable to it; or (iv) any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, law, ordinance, rule or regulation of any Government Agency, applicable to it or any of its assets or properties or to any obligations incurred by it or by which it or any of its assets or properties or obligations are bound or affected, and shall not cause a breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets. iv. Consents. All consents, approvals, orders or authorizations of, registrations, declarations, filings or giving of notice to, obtaining of any licenses or permits from, or taking of any other action with respect to, any Person or Government Agency that are required to have been obtained by such Party with respect to this Agreement and the transactions contemplated hereby, including the due authorization of 8 such Party and its governing body and any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party, have been obtained and are in full force and effect and all conditions of any such consents have been complied with. v. Obligations Binding. Its obligations under this Agreement constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
vi. Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other Parties as investment advice or as a recommendation to enter into this Agreement; it being understood that information and explanations related to the terms and conditions of this Agreement shall not be considered investment advice or a recommendation to enter into this Agreement. It is entering into this Agreement as a bona-fide, arm’s-length transaction involving the mutual exchange of consideration and, once executed by all Parties, considers this Agreement a legally enforceable contract. No communication (written or oral) received from any of the other Parties shall be deemed to be an assurance or guarantee as to the expected results of this Agreement. vii. Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement. It is also capable of assuming, and assumes, the risks of this Agreement. viii. Status of Parties. None of the other Parties is acting as a fiduciary for or an adviser to it in respect of this Agreement.
7. Counterparts.
This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by email), each of which will be deemed an original.
8. Costs and Expenses.
The Parties will each pay their own costs and expenses (including legal fees) incurred in connection with this Agreement and as a result of the negotiation, preparation, and execution of this Agreement.
9. Amendments.
No amendment, modification, or waiver in respect of this Agreement will be effective unless in writing and executed by each of the Parties.
9 10. Notices.
Any notice, demand, statement or request required or authorized by this Agreement to be given by one Party to another shall be in writing, except as otherwise expressly provided herein. It shall be sent by email transmission, courier, or personal delivery (including overnight delivery service) to each of the notice recipients and addresses for each of the other Parties designated in Appendix 2 hereto. Any such notice, demand, or request shall be deemed to be given (i) when sent by email transmission, or (ii) when actually received if delivered by courier or personal delivery (including overnight delivery service). Each Party shall have the right, upon 10 days’ prior written notice to the other Parties, to change its address at any time, and to designate that copies of all such notices be directed to another Person at another address. The Parties may mutually agree in writing at any time to deliver notices, demands or requests through alternate or additional methods.
Notwithstanding the foregoing, a Party may at any time notify the other Parties that any notice, demand, statement or request to it must be provided by email transmission for a specified period of time or until further notice, and any communications delivered by means other than email transmission during such time shall be ineffective.
11. Governing Law, Waiver of Jury Trial, Arbitration.
(a) Governing Law. This Agreement and the rights and duties of the Parties under this Agreement will be governed by and construed, enforced and performed in accordance with the laws of the State of New York, without reference to any conflicts of law provisions that would direct the application of another jurisdiction’s laws; provided, however, that the authority of PPA Buyer to enter into and perform its obligations under this Agreement shall be determined in accordance with the laws of the State of California.
(b) Waiver of Right to Trial by Jury. Each Party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Agreement.
(c) Arbitration. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope of this Agreement to arbitrate, shall be determined by final, non-appealable binding arbitration in San Francisco, California before three (3) arbitrators. The arbitration shall be administered by Judicial Arbitration and Mediation Services, Inc. (“JAMS”) pursuant to its Comprehensive Arbitration Rules and Procedures. Within fifteen (15) days after the commencement of arbitration, each of Financing Party and PPA Buyer, on the one hand, and PPA Seller, on the other hand, shall select one (1) person to act as arbitrator, and JAMS shall appoint one (1) person to act as an arbitrator (for such an arbitration, Financing Party, PPA Buyer and PPA Seller are the “Arbitration Parties”), provided that if the arbitration pertains to matters and disputes solely as between PPA Buyer and Financing Party, and PPA Seller is neither asserting nor defending a claim in relation thereto, then each of Financing Party and PPA Buyer shall select one (1) person to act as arbitrator, and JAMS shall appoint one (1) person to act as an arbitrator (for such an arbitration, only Financing Party and PPA Buyer are the “Arbitration Parties”). The JAMS appointed arbitrator shall serve as the chairperson (the “chairperson”). If any of the 10 Arbitration Parties are unable or fail to select one (1) person to act as arbitrator, such arbitrator shall be appointed by JAMS. The chairperson shall be a person who has experience in renewable energy-related transactions, and none of the arbitrators shall have been previously employed by any Arbitration Party or have any direct pecuniary interest in any Arbitration Party or the subject matter of the arbitration, unless such conflict is expressly acknowledged and waived in writing by all of the Arbitration Parties. The Arbitration Parties shall maintain the confidential nature of the arbitration proceeding and any award, including any hearing(s), except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as necessary in connection with a court application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise required by law or judicial decision. Any arbitration proceedings, decision or award rendered hereunder and the validity, effect and interpretation of this arbitration provision shall be governed by the Federal Arbitration Act. The arbitrator(s) shall have no authority to award consequential, treble, exemplary, or punitive damages of any type or kind regardless of whether such damages may be available under any law or right, with the Arbitration Parties hereby affirmatively waiving their rights, if any, to recover or claim such damages. The responsibility for compensation and expenses of the three (3) arbitrators and all other expenses charged by JAMS shall be shared equally between or among the Arbitration Parties, as the case may be. In any arbitration arising out of or related to this Agreement, the arbitrators shall award to the prevailing Arbitration Party or Arbitration Parties, if any, the costs and attorney’s fees reasonably incurred in seeking to enforce the application of this Section 11(c) by the prevailing party in connection with the arbitration, and the non-prevailing Arbitration Party or Arbitration Parties shall also be liable to the prevailing Arbitration Party or Arbitration Parties for the compensation and expenses of the three arbitrators and all costs charged by JAMS.
Notwithstanding the foregoing provisions of this Section 11(c), any costs incurred by an Arbitration Party in seeking judicial enforcement of any written decision of the arbitrators shall be chargeable to and borne exclusively by the Arbitration Party against whom such court order is obtained. The award shall be final and binding on the Arbitration Parties and judgment upon any award may be entered in any court of competent jurisdiction. (d) Judicial Reference. Without limiting the provisions in Section 11(c), if Section 11(c) is deemed ineffective or unenforceable in any respect, any dispute between the Parties arising out of or in connection with this Agreement or its performance, breach, or termination (including the existence, validity and interpretation of this Agreement and the applicability of any statute of limitation period) (each, a “Dispute”) shall be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections (a “Reference Proceeding”), which shall constitute the exclusive remedy for the resolution of any Dispute. As a condition precedent to initiating a Reference Proceeding with respect to any Dispute, the Parties shall comply with the provisions of Section 11(d)i.
i. Notice of Dispute. Prior to initiating the Reference Proceeding, a Party (the “Disputing Party”) shall provide the other Parties (the “Responding Parties”; and together with the Disputing Party, the “Dispute Parties”) with a written notice of each issue in dispute, a proposed means for resolving each such issue, and support for such position (the “Notice of Dispute”). Within 10 days after receiving the Notice of Dispute, the Responding Parties shall provide the Disputing Party with a written Notice of each additional issue (if any) with respect to the dispute raised by the Notice of Dispute, a 11 proposed means for resolving every issue in dispute, and support for such position (the “Dispute Response”). If the Notice of Dispute makes no claim or assertion against one of the Responding Parties, and such Responding Party, in making its Dispute Response does not make or assert a claim against either the Disputing Party or the other Responding Party and states that it has no interest in the Dispute, then such Responding Party shall not participate in the resolution of the Dispute and shall not be a “Dispute Party” for purposes of this Section 11(d). Thereafter, the Dispute Parties shall meet to discuss the matter and attempt in good faith to reach a negotiated resolution of the dispute. If the Dispute Parties do not resolve the dispute by unanimous agreement within sixty (60) days after receipt of the Dispute Response, (the “Negotiation Period”), then any Dispute Party may provide to the other Dispute Party(ies) written notice of intent for judicial reference (the “Impasse Notice”) in accordance with the further provisions of this Section 11(d). ii. Applicability; Selection of Referees. Within 10 days of the delivery of an Impasse Notice, each of Financing Party and PPA Buyer, on the one hand, and PPA Seller, on the other hand, shall nominate one (1) referee, provided that if PPA Seller is not a Dispute Party, then each of Financing Party and PPA Buyer shall nominate (1) referee, and PPA Seller will not nominate a referee. The two (2) referees (the “Party-Appointed Referees”) shall unanimously appoint one (1) additional referee (the “Additional Referee”, together with the Party-Appointed Referees, the “Referees”). The Party-Appointed Referees shall be competent and experienced in matters involving the electric energy business in the United States, with at least ten (10) years of electric industry experience as a practicing attorney. The Additional Referee shall be an active or retired California state or federal judge (the “Head Referee”). Each of the Party-Appointed Referees and the Additional Referee shall be impartial and independent of each of the Dispute Parties and of the other referees and not employed by any of the Dispute Parties in any prior matter.
(A) If the Party-Appointed Referees are unable to agree on the Additional Referee within 45 days from delivery of the Impasse Notice, then the Additional Referee shall be appointed pursuant to CCP Section 640(b) in an action filed in the Superior Court of California, County of San Francisco (the “Court”), and with due regard given to the selection criteria above. A request for appointment of a referee may be heard on an ex parte or expedited basis, and the Dispute Parties agree that irreparable harm would result if ex parte relief is not granted. Pursuant to CCP Section 170.6, each of PPA Buyer and MSCG, on the one hand, and PPA Seller, on the other hand, shall have one (1) peremptory challenge to the referee selected by the Court, provided that if PPA Seller is not a Dispute Party, then each of Financing Party and PPA Buyer shall have one (1) peremptory challenge to the referee selected by the Court.
iii. Discovery; Proceedings.
(A) The Dispute Parties agree that time is of the essence in conducting the Reference Proceeding. Accordingly, the Referees shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting conference within 20 days after the date of 12 selection of the Head Referee, (ii) if practicable, try all issues of law or fact within 180 days after the date of the conference, and (iii) report a statement of decision within 20 days after the matter has been submitted for decision. (B) Discovery and other pre-hearing procedures shall be conducted as agreed to by the Dispute Parties, or if they cannot agree, as determined by the Head Referee after discussion with the Dispute Parties regarding the need for discovery and other pre-hearing procedures.
(C) Except as expressly set forth herein, the Head Referee shall determine the manner in which the Reference Proceeding is conducted, including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the Reference Proceeding. The Reference Proceeding, including the trial, shall be conducted at a neutral location selected by the Dispute Parties, or if not agreed by the Dispute Parties, by the Head Referee, in San Francisco, California.
(D) All proceedings and hearings conducted before the Referees, except for trial, shall be conducted without a court reporter, except that when any Dispute Party so requests, a court reporter will be used at any hearing conducted before the Referees, and the Referees will be provided a courtesy copy of the transcript. The Dispute Party making such a request shall have the obligation to arrange for and pay the court reporter.
iv. Decision. The Referees shall render a written statement of decision setting forth findings of fact and conclusions of law. The decision shall be entered as a judgment in the court in accordance with the provisions of CCP Sections 644 and 645. The decision shall be appealable to the same extent and in the same manner that such decision would be appealable if rendered by a judge of the Court. The Dispute Parties intend this general reference agreement to be specifically enforceable in accordance with the CCP. (e) Expenses. The Dispute Parties shall bear the compensation and expenses of its respective own counsel, witnesses, consultants and employees. The responsibility for compensation and expenses of the Referees and all other expenses of judicial reference shall be shared equally between or among the Dispute Parties, as the case may be.
Signature Page to Limited Assignment Agreement
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first set forth above.
MORGAN STANLEY CAPITAL GROUP INC.
By: ____________________________
Name:_______________________
Title:________________________
SAN DIEGO COMMUNITY POWER
By: ____________________________
Name:_______________________
Title:________________________
ENERGY PREPAY IV, LLC
By: Morgan Stanley Capital Group Inc., its Manager
By: ____________________________
Name:_______________________
Title:________________________
Appendix 1 - 1
Appendix 1
Assigned Rights and Obligations
PPA: Power Supply Agreement dated as of [____], by and between PPA Buyer and PPA Seller Assigned Delivery Point: [____]
Day-Ahead Average Price: [___]
Further Information: [Include, if any]
Appendix 2 - 1
Appendix 2
Notice Information
[To be completed before signing.]
Exhibit B
Appendix 3
Copy of PPA
[To be attached.]
ITEM 11
ATTACHMENT E
SDCP 2024F - Project Administration Agreement 4857-3474-8130 v7.docx Execution Copy
PREPAID ENERGY PROJECT ADMINISTRATION AGREEMENT
This Prepaid Energy Project Administration Agreement (this “Agreement”) is made and entered into as of November 20, 2024, by and between California Community Choice Financing Authority (“CCCFA”) and San Diego Community Power (“SDCP”), with respect to the Prepaid Energy Project (defined below). CCCFA and SDCP may be referred to individually herein as a “Party” and collectively as the “Parties”. Capitalized terms used herein (including in the following Recitals) have the meanings given to such terms in Section 1.
W I T N E S S E T H:
WHEREAS, SDCP is a “community choice aggregator” under the Public Utilities Code; and
WHEREAS, SDCP and certain other community choice aggregators have joined CCCFA as a joint exercise of powers authority under and pursuant to the Act and the Joint Powers Agreement; and
WHEREAS, CCCFA’s purpose is to assist its Members (as defined in the Joint Powers Agreement), including SDCP, by undertaking the financing or refinancing of energy prepayments that can be financed with tax advantaged bonds and other obligations on behalf of one or more of the Members by, among other things, issuing or incurring Bonds (as such term is defined in the Joint Powers Agreement) and entering into related contracts with Members; and WHEREAS, CCCFA and SDCP are entering into a Power Supply Contract pursuant to which CCCFA has agreed to supply Energy to SDCP under the terms set forth therein; and WHEREAS, in order to provide such Energy to SDCP under the Power Supply Contract, CCCFA is entering into the Prepaid Energy Sales Agreement with Energy Prepay IV, LLC, a Delaware limited liability company (the “Energy Supplier”), under which it will make a prepayment to the Energy Supplier for the purchase and delivery of such Energy; and WHEREAS, CCCFA will finance the prepayment under the Prepaid Energy Sales Agreement and related costs by issuing the Bonds pursuant to the Indenture; and NOW, THEREFORE, in consideration of the premises and mutual covenants set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Section 1. Defined Terms. Capitalized terms used herein shall have the meanings set forth below:
“Act” means Chapter 5 of Division 7 of Title 1 of the California Government Code, being Section 6500 and following, as amended.
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“Annual Refund” means the annual refund, if any, to be provided to SDCP pursuant to Section 3.2(b) of the Power Supply Contract. “Assigned Delivery Point” has the meaning specified in the Assignment Agreement.
“Assigned Energy” has the meaning specified in the Assignment Agreement. “Assigned Product” means Assigned Energy and associated renewable energy credits, green energy attributes and any other product included in the Assignment Agreement.
“Assignment Agreement” means the Initial Assignment Agreement and any subsequent assignment agreement entered into consistent with the Assignment Letter Agreement.
“Assignment Letter Agreement” has the meaning specified in the Power Supply Contract.
“Base Energy” means Energy to be delivered to an Energy Delivery Point. “Bonds” means the bonds issued by CCCFA pursuant to the Indenture on or about the date of this Agreement in order to finance the prepayment required to be made to the Energy Supplier under the Prepaid Energy Sales Agreement and related costs of the Prepaid Energy Project, and any bonds issued to refund such bonds. “CCCFA” means California Community Choice Financing Authority, a joint exercise of powers authority created under and pursuant to the Act and the Joint Powers Agreement.
“CCCFA Commodity Swap” means the ISDA Master Agreement, Schedule and transaction Confirmation entered into by CCCFA and the swap counterparty named therein, and any replacement swap entered into pursuant to the Prepaid Energy Sales Agreement.
“Contract Quantity” means the quantity of Base Energy or Assigned Energy, as applicable, specified in Exhibits A-1 and A-2 of the Power Supply Contract, as such Exhibits A-1 and A-2 may be updated from time to time in accordance with the terms of the Power Supply Contract.
“Energy” means three-phase, 60-cycle alternating current electric energy, expressed in megawatt-hours.
“Energy Delivery Point” means the delivery point for delivery of SDCP’s Contract Quantity as specified in the Power Supply Contract, and shall include, if applicable, any Assigned Delivery Point and any alternate Delivery Point for SDCP. “Energy Supplier” means Energy Prepay IV, LLC, a Delaware limited liability company.
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“Indenture” means the Trust Indenture, dated as of November 1, 2024, between CCCFA and the Trustee, as amended, restated, supplemented or otherwise modified from time to time.
“Initial Assignment Agreement” with respect to SDCP, the initial assignment agreement or agreements specified in the Power Supply Contract. “Joint Powers Agreement” means the Joint Powers Agreement by and among the Members of CCCFA named therein, including SDCP, providing for the creation, purposes and powers of CCCFA, as the same may be amended or supplemented from time to time in accordance with its terms.
“Power Supply Contract” means the Power Supply Contract, dated November 5, 2024, between CCCFA and SDCP relating to the purchase by SDCP of Energy acquired by CCCFA pursuant to the Prepaid Energy Sales Agreement, as amended, restated, supplemented or otherwise modified from time to time.
“Prepaid Energy Sales Agreement” means the Prepaid Energy Sales Agreement, dated November 5, 2024, between CCCFA, as buyer, and the Energy Supplier, as seller, as amended, restated, supplemented or otherwise modified from time to time. “Prepaid Energy Project” means the issuance of the Bonds by CCCFA pursuant to the Indenture, the acquisition of Energy and related undertakings of CCCFA under the Prepaid Energy Sales Agreement and the Indenture, and the sale to SDCP of such Energy and related undertakings of CCCFA under the Power Supply Contract. “Public Utilities Code” means the Public Utilities Code of the State of California, as amended.
“Qualifying Use Requirements” has the meaning set forth in Section 1.1 of the Power Supply Contract.
“Re-Pricing Agreement” means the Re-Pricing Agreement, dated as of the date of issuance of the Bonds, by and between CCCFA and Energy Supplier. “Schedule”, “Scheduled” or “Scheduling” means the actions of a Party and/or its designated representatives, including each Party’s Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity of Energy to be delivered during any given portion of the Delivery Period at a specified Delivery Point. “SDCP” means San Diego Community Power, a community choice aggregator as defined in Section 331.1 of the Public Utilities Code.
“Tax Certificate and Agreement” means the Tax Certificate and Agreement executed and delivered by CCCFA in connection with the issuance of the Bonds relating to certain federal income tax compliance requirements relating to the Prepaid Energy Project.
“Transmission Provider(s)” means any entity or entities transmitting or transporting Energy on behalf of a Party to or from an Energy Delivery Point. -4-
“Trustee” means U.S. Bank Trust Company, National Association, and its successors as Trustee under the Indenture.
Section 2. Assignment Agreements. With respect to any Assignment Agreement, the Parties acknowledge and agree as follows:
(a) as of the date of this Agreement, SDCP has entered into the Initial Assignment Agreement specified in the Power Supply Contract with respect to its entire Contract Quantity;
(b) subject to the terms of the applicable Assignment Letter Agreement, SDCP may from time to time enter into additional Assignment Agreements with respect to all or a portion of its Contract Quantity; and
(c) SDCP shall determine, independent of CCCFA, when and if any Assignment Agreement is entered into or terminated and the underlying agreement and portion of its Contract Quantity to which such Assignment Agreement relates.
Section 3. Scheduling and Delivery of Assigned Energy. Assigned Energy and any other Assigned Product delivered to CCCFA under the Prepaid Energy Sales Agreement that is attributable to an Assignment Agreement(s) entered into by SDCP shall be attributable to SDCP under the Power Supply Contract, and CCCFA shall have no responsibility for (a) any Scheduling or other operational requirements necessary for the delivery of Assigned Energy to SDCP’s Assigned Delivery Point and the transfer of other Assigned Product to SDCP, or (b) any accounting for under-deliveries or over-deliveries or other record-keeping requirements with respect to any Assigned Energy and other Assigned Product, all of which shall be the sole responsibility of SDCP pursuant to the related Assignment Agreement(s).
Section 4. Qualified Use; Remarketing of Base Energy. As provided in the Power Supply Contract, any portion of SDCP’s Contract Quantity that is not delivered as Assigned Energy is required to be delivered as Base Energy and simultaneously remarketed by Energy Supplier pursuant to the Prepaid Energy Sales Agreement. SDCP shall be responsible for accounting for any portion of SDCP’s Contract Quantity deemed delivered as Base Energy and subsequently remarketed, including accounting for any remediation of any such remarketing sales as may be required pursuant to the Qualifying Use Requirements. SDCP agrees to provide to CCCFA any information reasonably requested by it in order to comply with any reporting or record-keeping requirements related to such deemed deliveries and remarketing of Base Energy, including such information relating to compliance with the Qualifying Use Requirements, as may be required pursuant to the Prepaid Energy Sales Agreement, the Indenture or the Tax Certificate and Agreement.
Section 5. CCCFA Commodity Swap. CCCFA shall not take any action to terminate or designate the early termination of the CCCFA Commodity Swap except in accordance with written instructions of SDCP or unless otherwise required under the terms of the Prepaid Energy Sales Agreement or the Indenture.
Section 6. Directions, Consents and Waivers. CCCFA may be requested or required from time to time to provide certain directions, consents, or waivers under the terms of the Prepaid Energy Sales Agreement, the Indenture and the Re-pricing Agreement. In the event any such direction, consent or waiver relates solely to the Contract Quantity and/or Power Supply -5-
Contract of SDCP and no event of default has occurred and is continuing with respect to SDCP under the Power Supply Contract, such direction, consent or waiver shall only be provided by CCCFA in accordance with written instructions provided by SDCP.
Section 7. Re-pricing Information. CCCFA shall provide, or cause Energy Supplier to provide, to SDCP such information as is required to be provided by Energy Supplier to CCCFA in accordance the Re-pricing Agreement at such times as are required under the Re-pricing Agreement.
Section 9. Project Administration Fee; Reimbursement and Refund of Operating Expenses.
(a) Under the Bond Indenture, Operating Expenses (as defined in the Indenture) relating to the Clean Energy Project are to be paid from amounts deposited monthly into the Administrative Fee Fund for each annual period ending on January 1 of each year. CCCFA agrees that amounts allocated on behalf of SDCP annually into the Administrative Fee Fund equal to $86,700 in the aggregate for each such annual period (the “Project Administration Fee”), shall be allocated to pay such Operating Expenses as the same become due and payable. In the event such allocated amounts available in the Operating Fund are not sufficient to pay such Operating Expenses when due, SDCP agrees to pay such additional amounts for deposit into the Administrative Fee Fund as are necessary to pay such Operating Expenses upon receipt of notice of the amount due from the Trustee or CCCFA.
(b) As soon as practicable following the end of each annual period referred to in paragraph (a), CCCFA agrees that the amounts received in respect of the Project Administration Fee for such annual period shall be reconciled with the Operating Expenses paid or accrued for such period. In the event that, following each such reconciliation, it is determined that the amounts received in respect of the Project Administration Fee during the applicable annual period exceed Operating Expenses paid or accrued for such period, SDCP will be provided written notice thereof and the amount of such excess will be included in its Annual Refund under the Power Supply Contract.
Section 10. Notices. Notices and other information to be provided by a Party to any other Party under this Agreement shall be provided in accordance with Article XVI of the Power Supply Contract.
Section 11. Governing Law. This Agreement and the obligations of the Parties hereunder shall be governed by and determined in accordance with the laws of the State of California.
Section 12. Counterparts. This Agreement may be executed and acknowledged in multiple counterparts and by the Parties in separate counterparts, each of which shall be an original and all of which shall be and constitute one and the same instrument. [Signature Page to Prepaid Energy Project Administration Agreement] IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
CALIFORNIA COMMUNITY CHOICE
FINANCING AUTHORITY
By: ________________________________
Name: Garth Salisbury
Title: Treasurer/Controller
SAN DIEGO COMMUNITY POWER
By: ________________________________
Name: ______________________________
Title: _______________________________
ITEM 11
ATTACHMENT F
MEMORANDUM OF UNDERSTANDING (“MOU”)
Date: October 18, 2024
To: Dr. Eric Washington
Chief Financial Officer
San Diego Community Power
[email protected]
From: Morgan Stanley & Co. LLC (“Morgan Stanley” or the “Underwriter”) Re: California Community Choice Financing Agency Prepay Transaction on behalf of San Diego Community Power
Overview
The California Community Choice Financing Agency (“CCCFA” or the “Issuer”) seeks to procure a 30-year supply of energy, through the issuance of Clean Energy Project Revenue Bonds (the "Bonds") issued by CCCFA. CCCFA will sell all of the Prepaid Energy acquired from this transaction to San Diego Community Power (“SDCP” orthe “Project Participant”).
Rating Agency Fees
Rating Agency Fees and expenses (“Rating Agency Fees”) are paid from the proceeds of the Bonds, with underwriting fees and expenses calculated as a discount on the par amount of Bonds.
All fees, including Rating Agency Fees, are payable from the Bond proceeds.
In the event that the Bonds are not issued due to the SDCP Board or CCCFA Board not passing a resolution approving the transaction and there remains a Rating Agency Fee payable to the rating agencies, Morgan Stanley will pay the Rating Agency Fees.
Morgan Stanley shall have no responsibility for any fees or expenses incurred by CCCFA or the Project Participant, or their agents, employees, advisors or counsel, in connection with the issuance of the Bonds and the purchase of the Prepaid Energy, other than Rating Agency Fees as described in this MOU and as further described in the Bond Purchase Agreement (as defined herein).
Miscellaneous
The Project Participant acknowledges and agrees that: (i) the transaction contemplated by this MOU is, in each case, an arm’s length, commercial transaction between CCCFA and the Underwriter and CCCFA and the Energy Supplier, as applicable, in which the Underwriter and the Energy Supplier are each acting solely as a principal and not acting as a municipal advisor, financial advisor or fiduciary to CCCFA or the Project Participant; and (ii) CCCFA and Project Participant will consult their own legal, accounting, tax, financial and other advisors, as applicable, to the extent each has deemed appropriate.
SDCP acknowledges and agrees that Morgan Stanley is not making a commitment to extend credit, make a loan or otherwise fund the Bonds beyond the obligations contained in a mutually satisfactory bond purchase agreement (the “Bond Purchase Agreement”). SDCP acknowledges that the services provided under this MOU involve professional judgment on Morgan Stanley’s part and that the results cannot be, and are not, guaranteed.
Nothing contained herein shall preclude the Underwriter from carrying on its customary and usual business activities. The Underwriter specifically reserves the right, but is not obligated, to bid for and maintain secondary markets on any of CCCFA’s outstanding bonds subject to appropriate information barriers. Services provided by the Underwriter in connection with this MOU shall not limit the Underwriter from providing services for CCCFA or the Project Participant in conjunction with other services requested by CCCFA or the Project Participant except as limited by rule of law or regulation.
In connection with services agreed to herein, it is understood that the Underwriter will render professional services as an independent contractor. Neither the Underwriter nor any of its agents or employees shall be deemed an employee of CCCFA or the Project Participant for any purpose.
Except as described in this paragraph, this MOU is intended to be, and shall be construed only as, a non-binding MOU, intent on summarizing and evidencing discussions between CCCFA, the Project Participant, and Morgan Stanley as of the date hereof. Except as described below, any legally binding obligation of the parties with respect to the transaction described herein shall exist only upon the execution and delivery of definitive agreements related thereto, into which this MOU and all prior discussions shall merge. It is expressly understood that this MOU is not a contract to execute any definitive agreements or to otherwise consummate the transactions described herein.
The parties will cooperate in negotiating definitive agreements providing for the transactions contemplated by this MOU, but each party reserves the right of final approval or disapproval, for any reason, of the documentation relating to such agreements. Notwithstanding the foregoing, the provisions above under the headings “Rating Agency Fees” shall be binding upon the parties.
Sincerely,
___________________________
Grant Fraunfelder, Executive Director
MORGAN STANLEY & CO. LLC
ACCEPTED AND AGREED:
San Diego Community Power
By:___________________________
Name:________________________
Date:_________________________
ITEM 11
ATTACHMENT G
A-1
APPENDIX A
SAN DIEGO COMMUNITY POWER
Introduction
San Diego Community Power (“SDCP”) is a joint powers authority organized and existing under the Joint Exercise of Powers Act (constituting Chapter 5 of Division 7 of Title 1 (commencing with Section 6500), as amended or supplemented from time to time) (the “Joint Powers Act”), as a “community choice aggregator” (“CCA”) as defined in Section 331.1 of the Public Utilities Code of the State of California, as amended (the “Public Utilities Code”). For a general description of “community choice aggregators” in California, see the section “COMMUNITY CHOICE AGGREGATORS” in this Official Statement.
Formation, History, and Purpose of SDCP
General. SDCP was created on October 1, 2019, under the name “San Diego Regional Community Choice Energy Authority” as a CCA in California under a Joint Powers Agreement, as amended, by and among the cities participating in SDCP and named therein (the “JPA”).
San Diego Community Power was established to provide electricity services at competitive rates to residents and businesses within the municipal boundaries of its member public agencies.
Pursuant to its JPA, SDCP focuses on delivering a cleaner energy portfolio and achieving energy consumption reduction goals and the following key priorities:
• Promotion of Renewable and Distributed Energy Resources: SDCP prioritizes the use and development of local, cost-effective, renewable, and distributed energy sources, supporting local power generation and storage initiatives. Currently, SDCP procures clean energy from solar, wind, geothermal, large-hydro, and biomass sources. • Exclusion of Coal and Avoidance of Nuclear Contracts: SDCP seeks to exclude coal and avoid entering into nuclear contracts as part of its overall procurement strategy. • Economic and Workforce Development: SDCP aims to benefit the region economically by supporting workforce programs and development initiatives, such as working closely and collaboratively with local and regional developers and unions. This helps promote long-term electric rate stability and energy reliability for residents and businesses, by, for example, prioritizing local long-term power purchase agreements that lock in renewable energy supply around which SDCP can build its power supply portfolio while also providing power supply cost certainty.
• Community Ownership and Energy Reliability: SDCP promotes personal and community ownership of renewable generation and energy storage resources, in order to foster a sustainable and energy-independent future.
The parties to SDCP’s JPA consist of local governments whose governing bodies elect to join SDCP. Under the Public Utilities Code, when new parties join SDCP, all electricity customers in their jurisdiction, except those served under California’s Direct Access Program, automatically become SDCP’s customers for electric generation, provided customers are allowed to “opt-out.” A-2
Commencement of Service and Expansion. SDCP began operations in March 2021 by serving approximately 600 municipal accounts. SDCP enrolled approximately 72,000 municipal and business customers in June 2021 (actual retail electricity sales in 2021 approximated 2,040,704 MWh and increased by approximately 176% to 5,624,296 MWh in 2022). SDCP enrolled approximately 700,000 residential customer accounts throughout 2022 across the city limits of San Diego, Chula Vista, La Mesa, Encinitas, and Imperial Beach. SDCP enrolled approximately 180,000 residential and non-residential customer accounts in National City and Unincorporated areas of San Diego County in 2023. As of September 30, 2024, SDCP was serving 955,488 active accounts and had about 7,689,751 MWh of retail sales for the previous 12 months.
Service Area
SDCP currently serves seven jurisdictions in the County of San Diego. These jurisdictions include six cities (including San Diego, Chula Vista, Encinitas, La Mesa, Imperial Beach, and National City) and the unincorporated communities of the County of San Diego. SDCP is responsible for acquiring electric power for its service area.
Service Area Map. The service area of SDCP is shown in blue on the map below:
MAP: COUNTY OF SAN DIEGO
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Governance and Management
Board of Directors. SDCP is governed by a seven-member board of directors (the “Board of Directors”), with a board member from each of the seven jurisdictions in the County of San Diego. SDCP’s Board of Directors has the rights and powers to set rates for the services SDCP furnishes, incur indebtedness, and issue bonds or other obligations. SDCP’s local government structure ensures public transparency. The Board of Directors meets monthly to discuss matters related to the operation of SDCP. All meetings are open to the public, and public comments are encouraged.
Management.
Karin Burns, Chief Executive Officer. As Chief Executive Officer of SDCP, Karin Burns leads the 2nd largest community choice aggregator in California with a team of mission-driven professionals providing affordable, clean electricity to approximately 955,000 customer accounts in San Diego County. In this capacity, she oversees a budget in excess of $1.0 billion, ensures sufficient and reliable clean power procurement, and develops and executes the organization’s strategic plan in collaboration with the Board and staff.
Before becoming CEO, Karin most recently served as Vice President of Corporate Development and Regional Vice President of the Pacific Region at Franklin Energy, a national provider of energy efficiency, demand response, electrification, and grid optimization solutions.
Before Franklin Energy acquired its assets, Karin served as Chief Executive Officer of Build It Green, where she oversaw a team of 40+ personnel, managed a diverse set of programs across energy efficiency, workforce development, low-income solar and energy efficiency direct installation, healthy homes and reach codes for utilities and local governments.
Previously, Karin served as Executive Director of the nonprofit Code REDD, an environmental company she built into a globally recognized brand. She spearheaded strategic planning and operations, sourced funding from USAID and the McArthur Foundation, and built the successful Stand for Trees campaign.
Before leading high-growth organizations, Karin was a Managing Director at Ambata Capital, where she managed investment and advisory projects in electric vehicles, sustainable agriculture, green buildings, and clean energy. She was previously a Vice President at Gulf Capital, where she sourced, conducted due diligence, and invested in alternative energy, new media, and energy services companies across the Gulf Cooperation Council. She has served on several boards and advisory boards of non-profits, early-stage companies and investment funds from the U.S. to Asia. She began her M&A and corporate finance career at JPMorgan Chase in Hong Kong. Karin earned a Fulbright Scholarship to India, speaks multiple languages, and spent several years overseas in emerging markets from Brazil to China. She has earned Certificates in Energy Innovation and Innovation & Entrepreneurship from Stanford School of Engineering, an M.P.A. in international development from Harvard University, an M.B.A. in finance with distinction from Edinburgh Business School, and a B.A. with Honors from Duke University.
A-4
Dr. Eric Washington, Chief Financial Officer. Dr. Eric Washington manages SDCP’s annual operating budget, capital investment plan, investment portfolio, and risk management functions. He helps SDCP balance decarbonization goals with the mandate of affordable clean energy at competitive rates. Eric led the development of strategies for SDCP that strengthened the organization’s net asset position and cash flow. He was also critical in growing SDCP’s net revenue from $15 million to over $1 billion in two years. Among his many contributions to SDCP, Eric spearheaded credit facility negotiations, increasing SDCP’s credit access from $35 million to $150 million.
At various points in his career, Eric has managed the administration and compliance of a $350 million nonprofit finance program, managed a $158 million real estate loan portfolio, including construction finance to developers and acquisition finance to real estate investors, and built and managed a diverse team of professionals who provided corporate fiscal analyses, compliance monitoring, and finance reporting in support of several loan officers at various production offices.
Before his role at SDCP, Eric served as a military leader in the U.S. Navy for 26 years, fostering collaboration among diverse teams to meet organizational objectives. Eric also has 25 years of experience in corporate banking and finance. He has served as a vice president, senior credit manager, senior portfolio manager, and senior relationship manager at several regional banking institutions (including California Bank & Trust and Torrey Pines Bank). Eric received his Doctor of Education (Ed.D.) from San Diego State University, M.B.A. from Webster University, and a Bachelor of Science from Southern Illinois University, Carbondale.
Jack Clark, Chief Operating Officer. Jack Clark oversees the day-to-day financial and operational management of SCDP. He works closely with the CEO and CFO to operationalize and execute the strategy and vision for SDCP. Jack has over twenty years of overseeing energy, environmental, and cultural programming directed at developing solutions to climate change. Jack has overseen large-scale clean energy market transformation initiatives that help stabilize the relationship between people and the environment.
Before his role at SDCP, Jack was Vice President of Partnerships for commercial vehicle electrification infrastructure at Ideanomics. He was also Senior Director of Customer Programs at Clean Power Alliance of Southern California, California’s largest community choice aggregator.
Before his time at Clean Power Alliance, Jack was Vice President of Sustainable Energy Use at DNV GL.
Before that, Jack was the Deputy Director of the Energy & Sustainability Division at the City of San Diego, where he was responsible for implementing the City’s comprehensive energy strategy, working with staff, other City departments, and community members to incorporate a broad range of energy efficiency, clean, renewable generation, and environmental quality issues into City operations and community programming. He oversaw the city operations of energy use of over 3500 accounts, billing, rates, Municipal Energy Plan, community energy and sustainability programs, compliance with the City Climate Action Plan, and Community Choice Aggregation feasibility analysis on San Diego’s goal of reaching 100% Renewable Electricity by 2035.
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Prior to his role with the City of San Diego, Jack was the Director of Programs at the Center for Sustainable Energy, where he led the organization's growth from a regional to a national non-profit focusing on strategy, development, and execution of renewable energy, energy efficiency, clean transportation, distributed generation, and advanced clean energy market transformation initiatives. Jack received a Master of Administration in Sustainable Planning and a Bachelor of Science in Anthropology and Environmental Sciences, both from Northern Arizona University.
Veera Tyagi, General Counsel. Veera Tyagi serves as the General Counsel for SDCP.
In this capacity, Veera is responsible for ensuring compliance with general governance laws, regulatory requirements, and overseeing all contracting. Veera brings nearly twenty years of legal experience, primarily as in-house counsel for regulatory agencies, to SDCP. In that capacity, Veera handled various matters, including advising and ensuring compliance with the California Environmental Quality Act, the Federal and State Clean Air Acts, and other environmental laws, and in litigating actions in both federal and state courts that are brought under those laws. Veera also has extensive experience advising on general governmental law issues, including the Public Records Act, the Brown Act, and contract laws. Veera’s background is a Bachelor’s in Environmental Earth Systems Science from Queen’s University, and a Juris Doctorate, Cum Laude from the University of La Verne College of Law. Veera is a member of the State Bar of California.
Byron Vosburg, Chief Commercial Officer. Byron Vosburg is responsible for managing SDCP’s energy portfolio. His role includes overseeing bilateral purchases and sales of electricity through short-, medium-, and long-term contracts, as well as developing wholesale energy generation and battery storage facilities to meet SDCP’s environmental and local development goals. Byron also administers requests for proposals and offers for energy projects, schedules electricity load and generation into the California Independent System Operator (“CAISO”) markets, and ensures compliance with voluntary objectives and regulatory requirements, such as the Renewables Portfolio Standard. He also participates in the CAISO-administered Congestion Revenue Rights market and manages compliance with the California Public Utilities Commission’s Resource Adequacy requirements.
Byron has thirteen years of experience in California’s electric utility and Community Choice Aggregation industries and is highly skilled in developing and executing procurement strategies for CCAs. He began his career at Pacific Gas & Electric in the Energy Procurement group, where he worked in various departments, including Energy Contract Management & Settlements, Real-Time Operations, and Renewable Solicitations. In 2016, Byron joined Marin Clean Energy and took on power supply resource planning, origination, and contract administration responsibilities. From 2018 until he joined SDCP, Byron was with The Energy Authority (“TEA”), which focused on supporting the start-up and expansion of Clean Power Alliance of Southern California. At TEA, he managed short-term procurement efforts, including solicitation-based and bilateral procurement of energy hedging products, resource adequacy, renewable and carbon-free energy, and energy storage transactions, overseeing more than $1.7 billion in transactions.
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Byron holds a Bachelor of Science in Biological Sciences and a Master of Science in Civil and Environmental Engineering with a concentration in Atmosphere and Energy Studies from Stanford University.
Customers
General. SDCP currently provides energy to approximately 955,488 municipal, residential, commercial, and industrial accounts in its service area. SDCP’s current customer base mix is approximately 40% residential, 38% medium and large commercial/industrial, 19% small commercial, and 3% agricultural and lighting-based.
Customer Energy Choices. As part of its ongoing efforts to provide clean energy at the greatest value for its customers, SDCP offers four service plans: PowerBase, PowerOn, Power100, and Power100 Green+. PowerBase is SDCP’s most affordable service plan and is currently 45% renewable and currently priced as a 2.5% discount under SDG&E rates. PowerOn is 54% renewable. Power100 and Power100 Green+ are 100% renewable, carbon-free, and the latter is Green-e® certified. PowerOn is SDCP’s default electricity service offering, and from a total annual bill perspective it is priced approximately 3% above SDG&E’s offering. Most customers within SDCP’s service territory are automatically enrolled in PowerOn, with the exception of the City of Encinitas, whereby per City Council decision, customers within its city limits are automatically enrolled in SDCP’s Power100 service, which costs $0.01/kWh more than PowerOn.
SDCP also offers Power100 and Power100 Green+, meaning that 100% of the power comes from clean, renewable sources. Customers can choose to opt- up to these options and purchase 100% renewable and carbon-free electricity at a slight premium. These options enable SDCP’s customers to take a more significant step towards reducing their carbon footprint.
Power100 Green+ provides 100% renewable, carbon-free, and Green-e® certified energy for businesses seeking LEED certification or requiring Green-e® certification to meet their corporate social responsibility goals. Power100 Green+ costs $0.02 per kWh more than the standard PowerOn service level. Power100 Green+ allows customers to meet their organization’s reliability standards. Residents and businesses that don’t require specific certification can still get 100% renewable and carbon-free power through Power100.
In 2024, the average SDCP residential customer is projected to use 334 kWh per month so that PowerOn will cost the average residential customer $6 per month above PowerBase.
Compared to SDG&E’s rates, PowerOn is expected to cost about $4.50 per month extra for a typical residential customer. Compared to SDG&E’s rates, Power100 is expected to cost about $8 per month extra for a typical residential customer.
Customer Enrollment. Most customers within SDCP’s service territory are automatically enrolled in PowerOn, except for the City of Encinitas, wherein the City Council voted to automatically enroll customers within its city limits in SDCP’s Power100 service. Once enrolled, customers may opt up to Power100 or Power100 Green+ service, opt down to PowerBase service, or opt out of SDCP’s service.
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New Customers. FY 2023-24 was SDCP’s first full year of operations, with its seven-member jurisdictions reaching full enrollment. There are no near-term plans for expansion.
Customer Election to Opt-out of Service. Customers have the right to opt out of SDCP service at any time and will not be charged any fees by SDCP if they opt out or cancel electric services. Customers who opt out before starting SDCP service or within the first 60 days of SDCP service may return to SDCP service at any time. Customers who opt out after the first 60 days of service with SDCP will be prohibited by SDG&E from returning to SDCP for one year and will be charged a one-time customer re-entry fee by SDG&E and will also be required to choose one of two options: an immediate return to SDG&E service, or a 6-month return to SDG&E service.
Cumulative Opt-Out Rate and Customer Retention. As of September 30, 2024, SDCP is serving a cumulative total count of 955,488 active accounts for a total participation rate of 95.5%.
Customers with newly established accounts or who have moved into a new service address within any of SDCP’s member jurisdictions receive two post-enrollment notices through the mail at their mailing address on file within 60 days of their account start date to notify them that they have defaulted to SDCP electric generation service.
The following graphic illustrates SDCP’s opt-out rate and customer retention data through September 30, 2024, reflected as a percentage of participation rates by jurisdiction. [Remainder of page intentionally left blank]
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Service Rates
General. SDCP electric generation rates are managed to provide cleaner electricity at competitive rates. SDCP’s Board of Directors determines rates and SDCP’s rates are not regulated by the California Public Utilities Commission (the “CPUC”). Any rate changes will be adopted at duly noticed public meetings of the SDCP Board of Directors. Under the terms of the Clean Energy Purchase Contract, SDCP covenants that it will establish, maintain, and set rates and charges to provide revenues sufficient to enable it to pay all amounts payable from the revenues of its operations and to keep any reserves as required by SDCP’s reserve policies. SDCP further covenants pursuant to the terms of the Clean Energy Purchase Contract that it will not grant any lien or security interest in, or otherwise pledge or encumber revenues if the effect of such lien, A-9
pledge or other encumbrance would result in such lien, pledge or encumbrance having priority over the obligations of SDCP under the Clean Energy Purchase Contract.
Determination of Rates for Energy. A customer’s cost of electric service is determined by SDCP’s charges for energy and SDG&E charges for transmission, distribution, and other non-by-passable charges. Changes to SDG&E or SDCP rates will impact cost comparisons between SDCP and SDG&E. SDG&E charges SDCP customers a monthly Power Charge Indifference Adjustment, which can vary annually based upon several market factors, including benchmarks for regional energy costs, resource adequacy, the year in which the community joined SDCP and other considerations, as well as a Franchise Fee Surcharge. SDCP has already accounted for these additional charges when calculating its commodity rates. Financial assistance programs like CARE (California Alternative Rates for Energy), FERA (Federal Electric Rate Assistance), and Medical Baseline Allowance remain the same for SDCP and SDG&E customers.
Current and Historical Rate Information. SDCP rates are designed to cover the costs of energy, resource adequacy, and operating costs, fund customer programs, and meet SDCP’s reserve and liquidity goals, as described in its Reserve Policy.
On January 18, 2024, the Board of Directors approved rates for SDCP that included:
• A 17.7% year-over-year average decrease, from 2023 to 2024, in SDCP electricity generation rates across all customer classes.
• A 23.2% year-over-year average decrease, from 2023 to 2024, in SDCP electricity generation winter rates and a 12.3% year-over-year average decrease in summer rates across all customer classes.
• Rates that support SDCP to maintain its current reserve levels and to allow it to work toward a 180-day cash-on-hand reserve target, with the goal of providing financial stability and support a credit rating.
Subsequently, on May 30, 2024, the Board of Directors approved the new PowerBase product offering that was effective July 1, 2024, which provided:
• A 2.5% discount for July through December 2024, compared to SDGE’s current rates as of March 1, 2024.
• A pathway for customers to return to SDCP’s standard service, PowerOn, or opt-up to Power100 more easily than if they opted out of SDCP service entirely. • Supports SDCP’s mission to provide an affordable option that is cleaner than the competition.
• 100% renewable energy by 2035 or sooner through customer retention, especially for price-sensitive customers.
On May 30, 2024, the Board of Directors approved the Power100 Green+ product offering, a stand-alone, 100% renewable, carbon-free energy service that is Green-e® certified. Power100 Green+ is priced as a $0.02/kWh adder to the PowerOn service and allows SDCP customers to earn LEED Tier 2 or 3 points in the renewable energy category. Initially, Power100 Green+ is only available to commercial and industrial customers.
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California Renewable Portfolio Standards and Other Regulations General. Community choice aggregators such as SDCP are “load-serving entities” (“LSEs”) and, as such, are required to comply with California’s Renewable Portfolio Standard, Resource Adequacy requirements, and Power Source Disclosure requirements described below.
Renewable Portfolio Standard. California’s Renewable Portfolio Standard (“RPS”) requires LSEs to supply their retail sales with minimum quantities of eligible renewable energy.
Senate Bill 100 directs all LSEs to procure 60% of their portfolios from RPS-eligible resources by 2030 and 100% of their retail sales from zero-carbon resources (or eligible renewable resources) by 2045. In 2022, SDCP met 59.3% of its total retail sales with eligible RPS resources, above the 2022 RPS percentage target of 38.5%.
Resource Adequacy. Resource Adequacy (“RA”), a California program jointly administered by the CPUC and CAISO, directs LSEs to secure forward capacity and offer it into the CAISO’s Day-Ahead and Real-Time markets to ensure that there will be enough supply at suitable locations and with sufficient ramping capability to meet load. The RA program is comprised of System RA, Local RA, and Flexible RA. Local RA obligations have been assigned to a Central Procurement Entity as of 2023. In addition, per CPUC Decisions 19-11-016, 21-06- 035 and 23-02-040, LSEs are required to procure “Incremental System Capacity,” which is RA capacity from non-emitting, storage, and renewable resources that are in addition to the resources identified on a baseline list respective to each Decision. SDCP has a strong track record of meeting its RA obligations, falling short only during periods of extreme resource scarcity. SDCP expects to meet its future RA obligations through its Energy Risk Management Policy to the extent that supply is available in the bilateral markets.
Power Source Disclosure. California law requires LSEs to disclose the types of power resources used to supply retail sales. This mandate, known as the Power Source Disclosure Program (“PSD”), is a consumer information program the California Energy Commission manages annually. The Power Content Label (“PCL”) is a crucial output of the PSD program. The PCL is an LSE-specific document that shows the breakdown of power resource types for each of the LSE’s energy products used to serve retail load and a breakdown of resource types for the overall California grid. The PCL is distributed to customers each year.
Energy Demand
Long-Term Load Forecast. SDCP’s long-term load forecast is a projection of the electricity that SDCP’s customers will consume. SDCP’s long-term load forecast considers the number and types of customers that SDCP expects to serve, historical electricity use patterns, temperature, and other weather conditions, as well as trends in energy efficiency, behind-the-meter, rooftop solar and electric vehicle adoption, appliance electrification, and other factors.
The table below shows SDCP’s long-term load forecast for 2024-2034 based on SDCP’s 2023 RPS Compliance Report filed with the CPUC on January 25, 2024.
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Sources of Energy
General. In its procurement of energy supplies, SDCP prioritizes using and developing local renewable resources, stimulating local job creation through various programs and development, promoting personal and community ownership of distributed renewable resources, and promoting long-term electric rate stability and energy reliability for residents and businesses.
Energy Purchases. During the ordinary course of business, SDCP purchases electrical power from numerous suppliers. Electricity costs include the cost of energy and capacity arising from bilateral contracts with energy suppliers, generation credits, load, and other charges stemming from SDCP’s participation in the CAISO’s centralized market.
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 a specific revenue stream against which they can finance upfront 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 providing cost certainty so that SDCP can develop its pro forma financial model. Moreover, the California RPS, 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. Finally, in D.21-06-025, the CPUC required each 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”. These requirements have been augmented and extended into 2026 and 2027 via CPUC’s D.23-02-040. Over the past 18 months, SDCP staff released two requests for proposals (“RFPs”) for eligible Renewable Energy resources, including an RFP for Stand Alone Storage projects in pursuit of long-term contracts for renewable energy. SDCP evaluated other contracting opportunities to meet SDCP’s procurement goals. The SDCP Board, through August 2024, has approved contracts for over 1,600 MW of renewable generation and over 1,000 MW of storage capacity. SDCP staff continues to negotiate with several other developers for additional renewable energy resources expected to be online between 2025 and 2029. Under CAISO’s revisions to their cluster study process for interconnecting future projects, SDCP staff issued an Table 1: SDCP's 2024-2034 Load Forecast (MWh)
Year Load Forecast
2024 7,962,503
2025 8,094,390
2026 8,239,804
2027 8,386,117
2028 8,428,047
2029 8,470,187
2030 8,512,538
2031 8,555,101
2032 8,597,877
2033 8,640,866
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RFP for CAISO Cluster 15 projects, which will serve to select renewable and storage projects that SDCP is most interested in getting studied by the CAISO. SDCP staff and the Energy Contracts Working Group (the “ECWG”) evaluate all RFP submissions before entering into negotiations with selected participants. Assuming that SDCP staff and shortlisted developer(s) can agree to mutually agreeable contracts consistent with terms authorized by the ECWG, SDCP staff then review the draft terms with the SDCP Board for approval and authorization for the CEO to execute the relevant documents.
SDCP also has an open request for information regarding local projects (“RFI”). The RFI has yielded eight board-approved contracts for local generation and storage facilities in the last twelve months. SDCP also released a request for offers (“RFO”) for distributed renewable energy resources (“DERs”), which focuses on a broad range of distribution-level renewable projects within San Diego County.
Energy Load and Supply Risk Management. Through SDCP’s Energy Risk Management Policy, SDCP measures and updates its risks using varioustools that model programmatic financial projections, market exposure, risk metrics, and short-term budget updates. The following items are measured, monitored, and reported:
• Mark-to-Market Valuation – marking to market determines the current value of contracted energy supply.
• Exposure Reporting – calculates the notional dollar risk exposure and value at risk of open portfolio positions at current market prices.
• Open Position Monitoring— calculates/monitors open positions for all energy and capacity products monthly. If energy open positions for the month following the then current month (prompt month) exceed 10% of the load, SDCP will solicit market energy to close open positions and make a commercial decision to close the position. • Counterparty Credit Exposure – calculates the notional and mark-to-market exposure to each SDCP counterparty by deal and in the aggregate. Counterparty exposure reporting includes contingent collateral posting risks arising from changes in market prices and other factors.
• Reserve Requirement Targets – no less than once per year, SDCP staff monitors SDCP’s financial reserves to ensure that they meet the targeted thresholds.
SDCP manages market price risk using its planning models, which define forecasted load, energy under contract, and SDCP’s open positions across various energy product types, including renewable energy (Portfolio Content Category I, II, and III), carbon-free energy, and system power relative to SDCP’s procurement targets.
Generally, SDCP manages its exposure to energy suppliers by exhibiting a preference for counterparties with investment-grade credit ratings as determined by Moody’s or S&P Global Ratings and using security requirements in the form of cash or letters of credit. SDCP measures its mark-to-market counterparty credit exposure in a way consistent with industry best practices.
SDCP manages energy delivery risks by ensuring that contracts include appropriate contractual penalties for non-delivery and acquiring energy from a geographically and A-13
technologically diverse portfolio of generating assets (with a range of generation profiles generally complementary to how SDCP’s customers use electric power). Due to known production variability and supply uncertainty related to renewable and other carbon-free energy products, SDCP includes planning margins in procuring such products to ensure that related targets/mandates are achieved.
SDCP manages load forecasting and related weather risks by contracting with qualified data management and scheduling coordinators. These coordinators independently or jointly provide the systems and data necessary to forecast and schedule load using good utility practice.
Load variability is also considered when establishing appropriate planning margins for renewable and carbon-free energy sources.
SDCP manages its regulatory and legislative risk through active participation in working groups and advocacy coalitions, such as the California Community Choice Association. SDCP also regularly participates in regulatory rulemaking proceedings and legislative affairs to protect its interests.
Procurement. All contracting for energy and energy-related products for SDCP, including but not limited to electricity, capacity, energy efficiency, distributed energy resources, demand response, and storage, are overseen by SDCP’s Power Services department. All contracts are further reviewed and approved by SDCP’s CEO and General Counsel. SDCP procures energy and RA in a way that is consistent with its Energy Risk Management Policy. Procurement is conducted through market-based transactions for products including Fixed Price Energy, Portfolio Content Category 1 Renewable Energy, Portfolio Content Category 2 Renewable Energy, Carbon-Free Energy, and RA Capacity, as well as through longer-term PPAs entered into under statutory requirements as well as voluntary long-term resource acquisition decisions made independently by SDCP under its Integrated Resource Plan or other Board or Director-approved strategies.
Short-term procurement is conducted through participation in the CAISO and bilateral markets. SDCP may use various methods to procure long-term contracts, including competitive solicitations, bilaterally negotiated agreements, or regulatory proceedings, with oversight, including shortlist approvals or procurement recommendations, provided by the ECWG of the Board. Specific long-term procurement (e.g., contract terms longer than three years) is subject to Board approval.
Long-term Contracts. SDCP has contracted for ~1,174 MW of net-qualifying capacity procured to date for renewable energy generation and energy storage projects, identified in the table below, with expected commercial operations between 2024 and 2027. [Remainder of page intentionally left blank]
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Developer/
Project
Guaranteed
Commercial
Operation
Date
Nameplate Type
Ormat / Pomona 2 Online 10 MW Storage (2-hour)
Arevon / Vikings
Energy Farm
Online 136.8 MW-AC Generating
Facility and
145.5 MW-AC / 582 MWh
Storage Facility
Solar + Storage
Pattern / Duran Mesa Online 50 MW Wind
Intersect / Oberon II Online 75 MW Solar
Ormat / Arrowleaf
Solar and Storage
4/15/25 42 MW-AC Generating
Facility and
35 MW-AC / 140 MWh
Storage Facility
Solar + Storage
NextEra / Yellow
Pine
Solar:
10/1/25
Storage: 6/1/25
35 MW-AC Generating
Facility and
35 MW-AC / 140 MWh
Storage Facility
Solar + Storage
SBE / Athos 1/1/26 30 MW Storage
Aypa / Vidal 3/1/26 160 MW (solar)
160 MW (storage)
Solar + Storage
Arevon / Avocet 4/15/26 200 MW Storage
MRP / Border 6/1/26 52 MW Storage (1-hour)
MRP / Enterprise 6/1/26 52 MW Storage (1-hour)
Wellhead / CVEC2 6/1/26 49.7 MW Storage
Baywa / JVR Energy
Park
10/31/26 90 MW-AC solar photovoltaic
Generation Facility combined
with a 70 MW-AC / 280 MWh-AC DC-coupled battery energy
storage facility
Solar + Storage
Pattern / SunZia 3/31/27 150 MW Wind
NextEra / Desert
Sands
4/1/27 60 MW Long Duration
Storage
SBE / Pelicans Jaw 4/1/27 440 MW (solar)
238.5 MW (storage)
Solar + Storage
Nobel Solar / Purple
Sage
6/30/27 400 MW (solar)
400 MW (storage)
Solar + Storage
Avantus / Big Rock 2 12/31/27 74 MW Storage
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Information Technology and Data Analytics
SDCP’s Information Technology (“IT”) and Data Analytics Department comprises professionals who handle all aspects of information technology management, cloud infrastructure, and cyber security. This department is building a secure data platform that will enable and empower SDCP staff to develop full-scale in-house data management, data engineering, data science, and analytics capabilities. SDCP’s IT and Data Analytics department initiated digital and data transformation in the second quarter of 2024 and has implemented modern tools to improve business operations and staff productivity. SDCP’s IT and data analytics teams focus on developing core operational competencies such as an Energy Trade & Risk Management application or Distributed Energy Resource Management platform to deliver efficiencies, simplifications, and cost savings for SDCP customers. Since the first quarter of 2024, SDCP’s IT and Data Analytics department has hired several staff members to provide world-class information technology and data analytics capabilities to meet SDCP’s clean energy goals.
This department also oversees and is accountable for developing additional IT policies and standards, including responsible Artificial Intelligence and Cyber Security, identifying risk areas, and helping all personnel comply with policies and standards. All SDCP staff are responsible for reporting any noncompliance to management. SDCP makes information technology accessible only to authorized employees or designated vendors as needed, and only for authorized agency purposes.
SDCP’s IT and Data Analytics department has begun a holistic cyber security program leveraging the NIST 800 framework and ISO 27001 standards. SDCP’s current and new cyber security standards work to minimize threats and exposure to its assets and information. SDCP additionally holds cybersecurity insurance coverage.
Financial Information
Revenues from Energy Sales and Operating Expenses. SDCP’s operating revenues are from selling electricity to commercial and residential customers throughout its territory. SDCP reports its revenue net of uncollectible accounts. In alignment with SDCP’s reserve policy and strategic goals, SDCP set rates in 2023 and 2024 sufficient to grow revenue and net income to reach its 180-day cash-on-hand goal. Additionally, the inclusion of the majority of customers from the City of National City and the County of San Diego for the entire year in FY 2022-23 resulted in an increase in revenue from FY 2021-22.
Other Sources of Revenue. In 2023, SDCP began receiving grant revenue from the California Public Utilities Commission Disadvantaged Communities-Green Tariff and Community Solar Green Tariff programs, which enable residential customers in disadvantaged communities who may be unable to install solar on their roof to benefit from a local solar project and receive a 20% bill discount. This funding originates from California Greenhouse Gas Auction Proceeds and Public Purpose Program funds.
In 2024, SDCP was also awarded $710,000 in grant funding from the California Department of Food and Agriculture to support its provision of technical assistance and A-16
refrigeration units to stock healthy food at stores in low income or low food-access areas throughout its service territory.
SDCP additionally derives revenue from investment income. As SDCP’s operating reserves have grown, its investment income has also grown in lockstep as SDCP invests its reserves in interest-bearing accounts consistent with SDCP’s Investment Policy approved by the SDCP Board on June 27, 2024.
Financial Statements. For financial information related to SDCP, see the annual audited financial statements of SDCP for the fiscal years that ended June 30, 2023 and June 30, 2022, which are available on the SDCP website.
Financial Reserves. SDCP maintains financial reserves, pursuant to the Financial Reserve Policy adopted by the Board of Directors, to be able to (a) meet SDCP’s strategic objectives; (b) secure, maintain, and improve a standalone investment grade credit rating; (c) secure favorable terms with vendors, including power producers; (d) satisfy working capital requirements; (e) adhere to contractual covenants; (f) provide funds to cover unanticipated expenditures and; (g) support rate stability.
Operating Reserve. SDCP maintains a reserve goal to secure 180 days of cash-on-hand held as unrestricted cash. Unrestricted cash equals total cash less cash held in accounts that are restricted from use (e.g., as collateral or by covenant). The contribution to operating reserves is determined through SDCP’s annual budget process as defined in the agency’s Budget Policy and SDCP’s rate-setting process as defined in the agency’s Rate Development Policy. To the extent that SDCP can meet operational expenses and maintain competitive rates, it will establish rates and adopt budgets to build and maintain its operating reserves at or above the 180-day cash-on-hand target level.
Risk Management. SDCP maintains a comprehensive risk management framework to identify and mitigate credit, liquidity, market, operational, regulatory, and other risks associated with participation in the California energy market. The framework employs credit risk strategies, including a preference for transacting with investment-grade counterparties, establishing credit limits, and securing collateral when necessary. SDCP utilizes hedging strategies, netting arrangements, and liquidity monitoring to address market risks. Internal controls and compliance mechanisms are in place to manage operational and regulatory risks, ensuring adherence to legal and market regulations. Risk monitoring and oversight are continuously performed through frequent reporting, with critical risks communicated promptly to stakeholders. This integrated approach enables SDCP to maintain a balanced risk profile while adapting to evolving market conditions.
SAN DIEGO COMMUNITY POWER
Staff Report – Item 12
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Joe LaCava, Chair
Subject: Updates to San Diego Community Power Board and Committee Compensation and Reimbursement Policy
Date: November 21, 2024
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Adopt Resolution No. 2024-10 amending San Diego Community Power Board and Committee Compensation and Reimbursement Policy to increase the per diem compensation for the Board of Directors, define the list of meetings eligible for compensation, and include additional clarifying edits, effective January 1, 2025.
BACKGROUND
A reimbursement policy was initially adopted by the Board of Directors on February 24, 2022, to provide per diem compensation to Directors (including Alternates) for attending Community Power Board meetings and reimbursement for actual and necessary expenses under certain circumstances. The Board has since amended the policy on three occasions. The amendments included adding reimbursement for childcare expenses in relation to Directors’ attendance at special meetings of the Board of Directors, to provide per diem compensation for Directors’ attendance at meetings of Board committees, and to include Board-appointed advisory committees, among other changes. The last amendment was on February 23, 2023.
At the August 22, 2024, meeting, the Board of Directors established an Ad Hoc Committee consisting of three (3) Board Members; Chair LaCava, Directors Aguirre and Yamane, to review and recommend possible amendments to the Community Power Board and Committee Compensation and Reimbursement Policy.
ANALYSIS
It has been over a year since the Community Power Board and Committee Compensation and Reimbursement Policy has been reviewed. During this time, Community Power has grown, and the Board of Directors are increasingly participating in Community Power meetings and activities. California Government Code section 53232.2 authorizes local public agencies to adopt written policies authorizing reimbursement for actual and 129
necessary expenses incurred in the performance of official duties and to establish reimbursement rates for the agency.
The Board and Committee Compensation and Reimbursement Policy Ad Hoc Committee met on October 3, 2024, to review whether the Board of Directors are being adequately compensated for their time spent on work related to Community Power, and considered additional changes. Pursuant to that meeting, the Committee is recommending the following amendments:
• Authorize per diem compensation of $300 for Members of the Board of Directors for attendance at meetings and other official business of Community Power. The proposed compensation amount is consistent with the amount provided to members of Orange County Power Authority.
• Provide further definition and clarity on the types of official business by Members of the Board of Directors that are eligible for per diem compensation (e.g., scheduled meetings with Community Power staff and meetings with members of the public or public agencies on behalf of Community Power). • Clarify that any additional reimbursements that do not fall within specifically identified categories require pre-approval by the Board of Directors in a public meeting.
COMMITTEE REVIEW
Board and Committee Compensation and Reimbursement Policy Ad Hoc Committee recommends approval.
FISCAL IMPACT
The likely financial impact is approximately $50,400 per year.
ATTACHMENTS
Attachment A: Resolution No. 2024-10 Amending the Board and Committee Compensation and Reimbursement Policy.
Attachment B: Proposed Amended Board and Committee Compensation and Reimbursement Policy-Redlined.
Attachment C: Proposed Amended Board and Committee Compensation and Reimbursement.
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ITEM 12
ATTACHMENT A
131
1 R2024-10
RESOLUTION NO. 2024-10
A RESOLUTION OF THE BOARD OF DIRECTORS OF SAN DIEGO
COMMUNITY POWER AMENDING THE BOARD AND COMMITTEE
COMPENSATION AND REIMBURSEMENT POLICY TO INCREASE THE
PER DIEM COMPENSATION FOR THE BOARD OF DIRECTORS,
FURTHER DEFINING OFFICIAL COMPENSABLE BUSINESS, AND
MAKING OTHER CHANGES
A. San Diego Community Power (“Community Power”) is a joint powers agency formed pursuant to the Joint Exercise of Powers Act, Cal. Gov. Code § 6500 et seq., California Public Utilities Code § 366.2, and a Joint Powers Agreement first effective on October 1, 2019 (“JPA Agreement”), as amended from time to time.
B. Section 5.10 of the JPA Agreement provides that “the Board may establish rules, regulations, policies, or procedures to govern any such commissions, boards, or committees and shall determine whether members shall be compensated or entitled to reimbursement for expenses.”
C. Government Code section 53232 et seq. provides that, when authorized by statute, local agencies may pay compensation to members of a legislative body for attendance at certain occurrences and to reimburse members of a legislative body for actual and necessary expenses incurred in the performance of official duties, including the activities described therein.
D. Pursuant to Government Code section 6509 and Section 3.4 of the JPA Agreement, Community Power’s powers are subject to the restrictions upon the manner of exercising power possessed by the City of Encinitas, a general law city which is authorized by statute to provide compensation and reimbursement for members of its legislative bodies.
E. On February 4, 2022, the Community Power Board of Directors adopted an initial Board Compensation and Reimbursement Policy effective March 1, 2022, and further renamed as the “Board and Committee Compensation and Reimbursement Policy”, and amended, on February 23, 2023, with an effective date of March 1, 2023.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of San Diego Community Power as follows:
Section 1. The Board of Directors hereby amends the Board and Committee Compensation and Reimbursement Policy as provided in Exhibit A, attached hereto and incorporated herein.
Section 2. If any provision of this resolution, the attached policy, or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the resolution or policy which can be given effect without the invalid provision or application, and to this end the provisions of this resolution 132
2 R2024-10
and the policy are severable. The Board of Directors hereby declares that it would have adopted this resolution and the attached policy irrespective of the invalidity of any particular portion thereof.
Section 3. This resolution shall take effect on January 1, 2025.
PASSED AND ADOPTED at a meeting of the Board of Directors of San Diego Community Power held on November 21, 2024.
_____________________________
Chair, Board of Directors
San Diego Community Power
ATTEST:
_______________________________
Maricela Hernandez, MMC, CPMC
Secretary, Board of Directors
San Diego Community Power
APPROVED AS TO FORM:
_______________________________
Veera Tyagi, General Counsel
San Diego Community Power
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ITEM 12
ATTACHMENT B
134
1 San Diego Community Power
Board and Committee Compensation and Reimbursement Policy Effective Date: March 1, 2023January 1, 2025
Adopted/Amended by Resolution 20232024-0210
PURPOSE
This policy (“Policy”) establishes the terms and conditions for members of the Board of Directors and Board-appointed advisory committees to receive per diem compensation and reimbursement of reasonable and necessary expenses when performing their official duties on behalf of Community PowerSDCP. This Policy is adopted pursuant to Government Code Section 53232 et seq. and must be adopted or amended by resolution.
POLICY
1. Per Diem Compensation for the Board of Directors and Advisory Committee Members. a. Directors’ Per Diem and Eligible Meetings. Members of the Board of Directors (“Directors”) shall be entitled to receive per diem compensation as follows:
i. $300150 per day for attending meetings of the Board of Directors or Board committees, including standing and ad hoc committees.
ii. $300100 per day while on official business of Community Power, not including meetings of the Board of Directors or Board committees as provided in (i) above.
Official business includes, but is not limited to:
1. Scheduled meetings with SDPD staff, including but not limited to briefings.
2. Meetings with members of the public or other public agencies regarding any pending or proposed matter within SDPD’s purview.
3. Visits of electricity generating facilities, including for purposes of attending ceremonial events, when presence is requested by Community Power staff.
4. Participation in radio, television, or other mass media, on issues within Community Power’s purview, when participation is requested by Community Power staff.
1.5. Attendance at meetings or conferences on Community Power - specific or energy-related matters, when attendance is approved by the Board Chair.
b. Alternates. An alternate director (“Alternate”) shall be entitled to receive per diem compensation where the Alternate attends a meeting in place of the regular Director and may receive reimbursement of expenses on the same terms and conditions as Directors under Section 2. Alternates shall be subject to the terms and conditions applicable to Directors in requesting and receiving per diem compensation or reimbursement under this Policy.
c. Advisory Committee Members’ Per Diem and Eligible Meetings. Members of Board-appointed advisory committees (“Advisory Committees”), including the Community Advisory Committee, shall be entitled to receive per diem compensation as follows:
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2 i. $100 per day for attending meetings of Advisory Committees. d. Claim Forms. All per diem requests must be submitted to the Secretary or their designee on a claim form provided by the Secretary within sixty (60) days of the date for which a per diem is requested.
e. Limitations.
i. Directors and Members of Advisory Committees shall not receive more than four (4) per diem payments in any calendar month.
ii. Directors to whom Community PowerSDCP would pay a per diem under this Policy shall not receive a per diem if they are otherwise eligible to receive a per diem from their respective appointing agency for attendance at Community PowerSDCP meetings under this Policy.
2. Reimbursement of Reasonable and Necessary Expenses.
a. Attendance at Meetings and Events on Behalf of Community PowerSDCP. Directors and Advisory Committee Members may receive reimbursement for actual and necessary expenses, which may include but not be limited to, travel, meals, lodging, registration, and other expenses incurred in the performance of official duties, for attendance at:
i. Each meeting of other governmental entities and public agencies at which the Director or Advisory Committee Member have been designated by the Board of Directors to represent Community PowerSDCP;
ii. A conference or organized educational activity conducted in compliance with Government Code Section 54952.2(c) at which the Director or Advisory Committee Member have been approved by the Board of Directors to attend; and iii. Other additional meetings or activities at which the Director has been designated by the Board of Directors to represent Community PowerSDCP. b. Rates of Reimbursement. Actual and necessary travel, meals, lodging, and other expenses incurred in the performance of official duties as authorized under this Policy shall be reimbursed at the rates established in Internal Revenue Service Publication 463 or any successor publication, except as limited below:
i. For mileage reimbursement using a private vehicle, a Director’s mileage costs shall not exceed the cost of coach class airfare plus costs of transportation to and from the airport at the point of departure and destination. Mileage reimbursement shall be equal to the standard rate in effect for business miles deduction by the Internal Revenue Service, as such rate is established from time to time. ii. For lodging in connection with a conference or other organized educational activity, lodging costs shall not exceed the maximum group rate published by the conference or activity sponsor, provided that lodging at the group rate is available at the time of booking. If the group rate is not available, the Director shall use comparable lodging consistent with this Policy.
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3 iii. Directors shall use government and group rates offered by a provider of transportation or lodging services for travel and lodging whenever available. iv. If a Director chooses to incur additional costs that are above the rates established under this Policy, or are not otherwise pre-approved by the Board, then the Director may do so at their own expense.
c. Child Care Expenses During Special Board Meetings. Directors may receive reimbursement for actual and necessary child care expenses incurred during the Director’s attendance at any meetings of the Board of Directors other than regular Board meetings. Advisory Committee Members may receive reimbursement for actual and necessary child care expenses incurred during the Advisory Committee Member’s attendance at any meetings of the Advisory Committee other than regular monthly meetings. The reimbursement rate for child care expenses shall not exceed $20 per hour.
If a Director or Advisory Committee Member chooses to incur additional costs that are above this rate, or are not otherwise pre-approved by the Board, then the Director or Advisory Committee Member may do so at their own expense. d. Pre-Approval by Board of Directors. Except for reimbursements authorized under subsection (c), all AAll expenses expenses that do not fall within the rates provided in subsection (b) or (c) the rates provided therein shall be approved by the Board of Directors in a public meeting before the expense is incurred. reimbursements under this Policy shall be approved by the Board of Directors in a public meeting before the expense is incurred.
All expenses that do not fall within subsection (b) or (c) the rates provided therein shall be approved by the Board of Directors in a public meeting before the expense is incurred. e. Claim Forms. All expense reimbursement claims must be submitted to the Secretary or their designee within sixty (60) days of incurring the expense on a claim form provided by the Secretary. Claim forms for expense reimbursement shall be accompanied by the receipts documenting each expense. If no receipt is available, a written explanation and other proof of the expenditure (if available) is required. f. Reporting. Directors and Advisory Committee Members shall provide brief reports on attendance at meetings or events subject to reimbursement, excluding attendance at Community Power Board and Committee meetings or briefings, at the next regular meeting of the Board.
g. Training Requirements. Directors and Advisory Committee Members eligible to receive per diem compensation or reimbursement of expenses under this Policy shall receive ethics training and sexual harassment prevention training in accordance with Government Code sections 53234 et seq. and 53237 et seq.
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ITEM 12
ATTACHMENT C
138
1 San Diego Community Power
Board and Committee Compensation and Reimbursement Policy Effective Date: January 1, 2025
Adopted/Amended by Resolution 2024-10
PURPOSE
This policy (“Policy”) establishes the terms and conditions for members of the Board of Directors and Board-appointed advisory committees to receive per diem compensation and reimbursement of reasonable and necessary expenses when performing their official duties on behalf of Community Power.
This Policy is adopted pursuant to Government Code Section 53232 et seq. and must be adopted or amended by resolution.
POLICY
1. Per Diem Compensation for the Board of Directors and Advisory Committee Members. a. Directors’ Per Diem and Eligible Meetings. Members of the Board of Directors (“Directors”) shall be entitled to receive per diem compensation as follows:
i. $300 per day for attending meetings of the Board of Directors or Board committees, including standing and ad hoc committees.
ii. $300 per day while on official business of Community Power, not including meetings of the Board of Directors or Board committees as provided in (i) above.
Official business includes, but is not limited to:
1. Scheduled meetings with SDPD staff, including but not limited to briefings.
2. Meetings with members of the public or other public agencies regarding any pending or proposed matter within SDPD’s purview.
3. Visits of electricity generating facilities, including for purposes of attending ceremonial events, when presence is requested by Community Power staff.
4. Participation in radio, television, or other mass media, on issues within Community Power’s purview, when participation is requested by Community Power staff.
5. Attendance at meetings or conferences on Community Power -specific or energy-related matters, when attendance is approved by the Board Chair. b. Alternates. An alternate director (“Alternate”) shall be entitled to receive per diem compensation where the Alternate attends a meeting in place of the regular Director and may receive reimbursement of expenses on the same terms and conditions as Directors under Section 2. Alternates shall be subject to the terms and conditions applicable to Directors in requesting and receiving per diem compensation or reimbursement under this Policy.
c. Advisory Committee Members’ Per Diem and Eligible Meetings. Members of Board-appointed advisory committees (“Advisory Committees”), including the Community Advisory Committee, shall be entitled to receive per diem compensation as follows:
i. $100 per day for attending meetings of Advisory Committees. 139
2 d. Claim Forms. All per diem requests must be submitted to the Secretary or their designee on a claim form provided by the Secretary within sixty (60) days of the date for which a per diem is requested.
e. Limitations.
i. Directors and Members of Advisory Committees shall not receive more than four (4) per diem payments in any calendar month.
ii. Directors to whom Community Power would pay a per diem under this Policy shall not receive a per diem if they are otherwise eligible to receive a per diem from their respective appointing agency for attendance at Community Power meetings under this Policy.
2. Reimbursement of Reasonable and Necessary Expenses.
a. Attendance at Meetings and Events on Behalf of Community Power. Directors and Advisory Committee Members may receive reimbursement for actual and necessary expenses, which may include but not be limited to, travel, meals, lodging, registration, and other expenses incurred in the performance of official duties, for attendance at:
i. Each meeting of other governmental entities and public agencies at which the Director or Advisory Committee Member have been designated by the Board of Directors to represent Community Power;
ii. A conference or organized educational activity conducted in compliance with Government Code Section 54952.2(c) at which the Director or Advisory Committee Member have been approved by the Board of Directors to attend; and iii. Other additional meetings or activities at which the Director has been designated by the Board of Directors to represent Community Power. b. Rates of Reimbursement. Actual and necessary travel, meals, lodging, and other expenses incurred in the performance of official duties as authorized under this Policy shall be reimbursed at the rates established in Internal Revenue Service Publication 463 or any successor publication, except as limited below:
i. For mileage reimbursement using a private vehicle, a Director’s mileage costs shall not exceed the cost of coach class airfare plus costs of transportation to and from the airport at the point of departure and destination. Mileage reimbursement shall be equal to the standard rate in effect for business miles deduction by the Internal Revenue Service, as such rate is established from time to time. ii. For lodging in connection with a conference or other organized educational activity, lodging costs shall not exceed the maximum group rate published by the conference or activity sponsor, provided that lodging at the group rate is available at the time of booking. If the group rate is not available, the Director shall use comparable lodging consistent with this Policy.
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3 iii. Directors shall use government and group rates offered by a provider of transportation or lodging services for travel and lodging whenever available. iv. If a Director chooses to incur additional costs that are above the rates established under this Policy, or are not otherwise pre-approved by the Board, then the Director may do so at their own expense.
c. Child Care Expenses During Special Board Meetings. Directors may receive reimbursement for actual and necessary child care expenses incurred during the Director’s attendance at any meetings of the Board of Directors other than regular Board meetings. Advisory Committee Members may receive reimbursement for actual and necessary child care expenses incurred during the Advisory Committee Member’s attendance at any meetings of the Advisory Committee other than regular monthly meetings. The reimbursement rate for child care expenses shall not exceed $20 per hour.
If a Director or Advisory Committee Member chooses to incur additional costs that are above this rate, or are not otherwise pre-approved by the Board, then the Director or Advisory Committee Member may do so at their own expense. d. Pre-Approval by Board of Directors. All expenses that do not fall within the rates provided in subsection (b) or (c) shall be approved by the Board of Directors in a public meeting before the expense is incurred.
e. Claim Forms. All expense reimbursement claims must be submitted to the Secretary or their designee within sixty (60) days of incurring the expense on a claim form provided by the Secretary. Claim forms for expense reimbursement shall be accompanied by the receipts documenting each expense. If no receipt is available, a written explanation and other proof of the expenditure (if available) is required. f. Reporting. Directors and Advisory Committee Members shall provide brief reports on attendance at meetings or events subject to reimbursement, excluding attendance at Community Power Board and Committee meetings or briefings, at the next regular meeting of the Board.
g. Training Requirements. Directors and Advisory Committee Members eligible to receive per diem compensation or reimbursement of expenses under this Policy shall receive ethics training and sexual harassment prevention training in accordance with Government Code sections 53234 et seq. and 53237 et seq.
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SAN DIEGO COMMUNITY POWER
Staff Report – Item 13
--------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Byron Vosburg, Chief Commercial Officer
Via: Karin Burns, Chief Executive Officer
Subject: 2023 Power Source Disclosure Program Annual Reports and Power Content Label; and Adoption of Resolution No. 2024-11, Approving the Submission and Attesting to the Accuracy of Community Power’s 2023 Power Source Disclosure Annual Reports for PowerOn and Power100 and the 2023 Power Content Label
Date: November 21, 2024
---------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Adopt Resolution 2024-11 approving the submission and attesting to the accuracy of SDCP’s 2023 Power Source Disclosure annual reports for PowerOn and Power100 and the 2023 Power Content Label.
ANALYSIS AND DISCUSSION
The California Public Utilities Code requires all retail sellers of electric energy, including SDCP, to disclose “accurate, reliable, and simple-to-understand information on the sources of energy, and the associated emissions of greenhouse gasses, that are used to provide electric services.”1 Applicable regulations direct retail sellers to provide such communications to customers following each year of operation. The format for this communication, named the Power Content Label (PCL) by the California Energy Commission (CEC), is highly prescriptive, offering little flexibility to retail sellers when presenting such information to customers. Similar to the presentation of information on a nutritional label, the PCL informs retail electricity customers of the power sources that were procured to serve their electric energy needs. Prior to distributing the PCL to its customers, SDCP must annually submit reports to the CEC detailing specified-source power purchases for each retail service offering that was made available during the previous year. These annual reports and the PCL are required elements of California’s Power Source Disclosure Program (PSD Program); information reflected in each annual report is contributory to the PCL (with the power supply breakout reflected in each annual 1 California Public Utilities Code Section 398.1(b).
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report inserted in SDCP’s PCL template).
Information presented in the PCL includes the proportionate share of total energy supply attributable to various resource types, including both renewable and conventional fuel sources. In the event that a retail seller meets a certain percentage of its resource needs from unspecified resources/purchases, the report must identify such purchases as “unspecified sources of power.” As your Board may be aware, a few of SDCP’s power supply agreements reflect the delivery of unspecified/market power to satisfy a portion of SDCP’s energy requirements. These purchases serve to promote budgetary certainty and rate stability – such purchases, as well as electric energy provided by the California Independent System Operation for purposes of grid balancing, have been appropriately identified as “unspecified sources of power” in SDCP’s PCL.
During the 2023 calendar year, SDCP’s third year of service, SDCP successfully delivered a substantial portion of its electric energy supply from various renewable energy sources, including wind, solar, geothermal, hydroelectricity and biofuel energy sources – for SDCP customers participating in the PowerOn service option, the percentage of supply attributable to renewable energy sources was 51.1 percent of the total (with 55.4 percent of total PowerOn energy purchases sourced from zero- or low-carbon sources).
For the Power100 retail service offering, CEC-certified wind and solar resources were the exclusive sources of supply, which contributed to zero emissions for the Power100 portfolio. The following table reflects SDCP’s 2023 PCL, presented in the CEC’s required format.
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Consistent with applicable regulations, SDCP will complete requisite customer communications following your Board’s approval of pertinent information to be included in the 2023 PCL. Customers receiving 2023 PCL communications will include all those served by SDCP during the 2023 calendar year. This communication will be sent to customers no later than January 31, 2025.
While preparing SDCP’s 2023 annual PSD reports and PCL, staff performed a detailed review of all power purchases completed for the 2023 calendar year. This review included an inventory of all renewable energy credit transfers within SDCP’s Western Renewable Energy Generation Information System (WREGIS) account, related contract documents and pertinent transaction records associated with other specified energy purchases. 144
Based on staff’s review of available data, the information presented in the annual reports and PCL was determined to be accurate.
To fulfill its obligations under the PSD Program, SDCP must also provide the CEC with an attestation of its Governing Board regarding the accuracy of information included in its PSD reports and PCL for the 2023 operating year. With regard to this internally administered attestation process, applicable regulations state2:
A retail supplier that is a public agency providing electric services is not required to comply with the provisions of subdivision (a)(1) if the board of directors of the public agency submits to the Energy Commission an attestation of the veracity of each annual report and power content label for the previous year.
Evidence of SDCP’s attestation must be provided to the CEC no later than January 31, 2025.
In consideration of SDCP’s internal review and applicable regulations, staff requests that the Board accept this determination of informational accuracy and based on this staff-level determination and related recommendation, attest to the accuracy of information included in SDCP’s 2023 Power Source Disclosure reports and Power Content Label.
Should your Board endorse staff’s recommendation, a copy of: 1) this staff report; 2) Resolution 2024-11; and 3) a copy of SDCP’s completed 2023 PCL template (in both Excel and PDF formats) will be forwarded to the CEC, thereby completing SDCP’s obligations under the PSD Program for the 2023 calendar year.
Fiscal Impacts: Other than the typical cost of producing and distributing Power Content Labels to SDCP customers, there are no expected fiscal impacts.
Recommendation: Endorse the accuracy of information presented in SDCP’s 2023 Power Source Disclosure reports for PowerOn and Power100 as well as SDCP’s 2023 Power Content Label.
FISCAL IMPACT
N/A
ATTACHMENTS
A. Resolution 2024-11 approving and attesting to the veracity of the 2023 Power Source Disclosure annual reports for PowerOn and Power100 and the 2023 Power Content Label
2 Note that Section 1393.2.(a)(1), as referenced in the excerpt from applicable PSD regulations, refers to the completion of annual independent audits.
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ITEM 13
ATTACHMENT A
RESOLUTION NUMBER 2024-11
A RESOLUTION OF THE BOARD OF DIRECTORS OF
SAN DIEGO COMMUNITY POWER, APPROVING AND ATTESTING TO
THE VERACITY OF THE 2023 POWER SOURCE DISCLOSURE ANNUAL REPORTS FOR POWER ON AND POWER100 AND THE 2023 POWER
CONTENT LABEL.
A. San Diego Community Power (“SDCP”) is a joint powers authority formed pursuant to the Joint Exercise of Powers Act, Cal. Gov. Code § 6500 et seq., California Public Utilities Code § 366.2, and a Joint Powers Agreement effective on October 1, 2019 (“JPA Agreement”).
B. Senate Bill 1305 was adopted in 1997 establishing an Electricity Generation Source Disclosure Program (“Power Source Disclosure Program”), which requires retail sellers of electricity to disclose to their customers each year the sources of electricity delivered to customers in the previous year and to annually submit a Power Source Disclosure Program report to the California Energy Commission (“CEC”).
C. SDCP is a retail supplier of electricity as defined by the Power Source Disclosure Program (20 C.C.R. § 1391(r)).
D. The Power Source Disclosure Program regulations were updated effective May 4, 2020 allowing the board of directors of a public agency providing retail electric service to approve at a public meeting the submission to the CEC of an attestation of the veracity of an annual report of each product’s Power Source Disclosure Program annual report and Power Content Label.
E. SDCP staff and consultants performed a detailed review of all power purchases completed for the 2023 calendar year, including an inventory of all renewable energy transfers within SDCP’s Western Renewable Energy Generation Information System account and transaction records.
F. Pursuant to California Code of Regulations section 1394.2, the SDCP Board of Directors is required to attest to the veracity of the 2023 annual report.
G. The SDCP Board of Directors held a public meeting on October 24, 2024 to consider approval and attestation of the veracity of the 2023 Power Source Disclosure Annual Report for the PowerOn and Power100 products and the 2023 Power Content Label.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of San Diego Community Power as follows:
Section 1. Recitals. The above recitals are true and correct.
Section 2. Approval and Attestation. The SDCP Board of Directors hereby approves the submission and attests to the veracity of the 2023 Power Source Disclosure annual report for SDCP’s PowerOn and Power100 products and the 2023 Power Content Label. 146
2 R2024-11
Section 3. Effective Date. This resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED at a meeting of the Board of Directors of San Diego Community Power held on November 21, 2024.
_____________________________
Chair, Board of Directors
San Diego Community Power
ATTEST:
_______________________________
Maricela Hernandez, MMC, CPMC
Secretary, Board of Directors
San Diego Community Power
APPROVED AS TO FORM:
_______________________________
Veera Tyagi, General Counsel
San Diego Community Power
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SAN DIEGO COMMUNITY POWER
Staff Report – Item 14
-------------------------------------------------------------------------------------------------------------------- To: San Diego Community Power Board of Directors
From: Karin Burns, Chief Executive Officer
Subject: 2026 Strategic Plan Update - Process and Timeline Date: November 21, 2024
--------------------------------------------------------------------------------------------------------------------
RECOMMENDATION
Receive and file the update describing the process and timeline to develop the FY 2026- FY 2028 updated Strategic Plan.
BACKGROUND
The Strategic Plan provides a comprehensive framework that ensures priorities set by the SDCP Board are clear to all staff and that SDCP is accountable to meeting community needs by setting objectives to meet identified goals.
On June 23, 2022, the SDCP Board adopted its mission, vision, core values and goals for 2023-2027 as part of its 2023-2027 Strategic Plan. Subsequently, on April 21, 2023, the SDCP Board met to consider updates to its Strategic Plan. Board and SDCP staff met in an all-day facilitated meeting and decided to ‘stay the course’ and continue executing the original strategic plan. SDCP then developed annual work plans tied into the FY24 and FY25 operating budget as part of its annual budget cycle adopted through its Budget Policy.
Through the first Strategic Planning process, SDCP defined its overall Mission Statement as, “San Diego Community Power is a community-owned organization that provides affordable clean energy and invests in the community to create an equitable and sustainable future for the San Diego region”. Our Mission summarizes at the highest level why we are here. Everything we do contributes to our ability to achieve the mission.
Through the first Strategic Planning process, SDCP also defined its Vision Statement as, “A global leader inspiring innovative solutions to climate change by powering our communities with 100% clean affordable energy while prioritizing equity, sustainability, and high quality jobs.” Our Vision describes what we aspire to be as an organization. This is where we are going. Our vision is our commitment to making bold progress in this direction.
Through the first Strategic Planning process, SDCP further defined its Core Values as Justice, Equity, Diversity, & Inclusion (JEDI); Impact; Integrity; Innovation; Servant Leadership; and Togetherness.
ANALYSIS AND DISCUSSION
Best practices in managing the organization include updating the Strategic Plan and related goals and measures on a regular basis and/or when the organization has undergone significant changes. With the addition of several new departments, the launch of the San Diego Regional Energy Network, and a three- fold increase in both customer meters served and staff, we are entering into a new growth phase which necessitates revisiting our goals and key focus areas. SDCP’s next 3-year Strategic Plan will serve as a key document in the development of the FY26-FY28 annual budgets, work plans, individual employee and departmental goals, annual investment plans and annual staff performance reviews.
The CEO is leading the FY 2026 -2028 Strategic Plan update and is involving all staff, the Board, and the CAC in this initiative. This third strategic planning process does not seek to alter the above Mission-Vision-Values, but rather to review, reflect, and subsequently determine our next three-year course of action as we continue to grow and evolve the agency in service to the above.
The first step in updating the Strategic Plan, which is underway, is to review and evaluate current risks and opportunities. Subsequently, multiple iterations involving all staff members will be conducted to identify key priorities and departmental goals. Next, goals and key organizational priorities will be reviewed and updated by the Leadership and Executive teams through a series of retreats. An All-Hands retreat is currently scheduled to take place on January 31, 2025.
The Board of Directors and CAC will be informed throughout the process and input will be solicited and incorporated through 1:1 and small group meetings. The Board of Directors will be updated and will review draft iterations of the revised strategic plan at its January and February regular meetings. The CAC will be updated and will review draft iterations at its December and February regular meetings. Feedback from the public will also be solicited during these public meetings. During its March meetings staff will present the final Strategic Plan to the CAC on March 7 for its recommendation, and to the Board, for approval, on March 25th.
COMMITTEE REVIEW
The Community Advisory Committee will be updated and input will be solicited throughout the process.
FISCAL IMPACT
N/A
ATTACHMENTS
Attachment A: Original SDCP 2023-2027 Strategic Plan
ITEM 14
ATTACHMENT A
151
Strategic Plan
2023-2027
152
San Diego Community Power is a
community-owned organization that
provides affordable clean energy
and invests in the community to
create an equitable and sustainable
future for the San Diego region.
Mission Statement
153
A global leader inspiring innovative
solutions to climate change by
powering our communities with
100% clean affordable energy while
prioritizing equity, sustainability,
and high-quality jobs.
Vision Statement
154
Core Values
Justice, Equity, Diversity, & Inclusion (JEDI)
Impact
Integrity
Innovation
Servant Leadership
Togetherness
155
Energy Portfolio Development
(Power Procurement)
Organizational Development/Culture
(Organizational Excellence)
Community Program Delivery (Community
Projects & Programs)
Key Focus Areas and Goals
Financial Stability (Financial Sustainability)
Marketing/Branding (Trusted Brand Building)
Legislative/Regulatory (Public Policy)
Customer Service (Customer Care)
1 4
5 6
2 3
7 156
Key Focus Areas and Goals (expanded)
Financial Stability – Practice fiscal strategies to promote long-term organizational sustainability.
• Adopt financial controls and policies to meet or exceed best practices and manage risk.
• Obtain an investment grade credit rating by Nov 2025. • Adopt plan to increase reserves to $175M by 10/2023 (90 DCOH) and $360M by 10/2025 (180 DCOH).
• Develop Rate Stabilization Reserve of $70M to mitigate power cost fluctuations and economic downturns.
Energy Portfolio Development - Provide sufficient, reasonably priced, clean electricity to our customers.
• Manage portfolio to manage risk, cost and reliability objectives through risk management tools, sufficient staffing, and staff training. • Develop secure Clean Energy Portfolio with goals of: 50% RE (2022), 75% (2027), 85% (2030), and 100% (2035).
• 15% of our energy coming from new, distributed infill storage/solar+ storage resources within Member Agencies by 2035.
• Support development of innovative energy sources to improve resiliency through pilot programs, grant programs, and partnerships.
• Create high quality local jobs in renewable energy that support healthy families and vibrant communities.
Community Program Delivery - Implement energy projects and programs that reduce greenhouse gas emissions, align energy supply and demand, and provide benefits to community stakeholder groups.
• Implement CPP recommended programs through continuous community engagement and assessment of community benefits while considering technology/ market changes and changing community needs. • Invest in programs that target underserved communities (communities of concern) and are distributed throughout our Member Agencies. • Invest in programs that promote residential and commercial solar, infill solar and/ or distributed battery storage.
• Develop local support for deep decarbonization through building and transportation electrification.
• Develop workforce opportunities in the local clean energy economy (green careers).
• Support local government and state initiatives to advance decarbonization in alignment with Member Agency Climate Action Plans.
• Provide all customers with actionable clean energy education. • Maintain appropriate and sufficient data sources to support smart program design, implementation and evaluation.
2 3
1 157
Brand Building – Develop trusted brand reputation to help drive participation in programs and ensure support customer service and retention. • Identify and address gaps between perception and desired brand identity. • Translate policy issues into consumer-friendly information and communication. • Become known as leadership experts on the CCA model and the industry. • Foster relationships with city planning offices, CBOs, NGOs, and Trade Associations. • Develop relationships with industry media and influencers. • Engage community through participation in local events.
Public Policy – Advocate for public policies that advance SDCP organizational priorities.
• Proactively educate and engage policymakers to develop policies that support SDCP’s organizational priorities, including advocacy around PCIA reductions. • Sponsor and support legislation and regulation that is consistent with SDCP’s mission, vision, and goals.
• Develop annual legislative plan to advance and support SDCP objectives and share plan with local Senate and Assembly members and staff.
• Develop plan to meet more proactively with and educate key decisionmakers (e.g. CEC, CPUC commissioners).
• Coordination with Member Agency government affairs’ teams to align on legislative positions.
• Continue to be an active participant in CalCCA and develop partnerships and coalitions to advance SDCP’s policy and legislative agenda through CalCCA efforts.
Customer Service – Ensure high customer retention and satisfaction. • Ensure customer satisfaction through key relationships including back-office support and key stakeholders.
• Continually strive to offer competitive rates.
• Maintain and grow high levels of customer participation and satisfaction. • Achieve 10% of our load at the Power 100 service level by 2027. • Build a robust data ecosystem for effective procurement as well as program design, management and evaluation.
Organizational Excellence – Ensure excellence by adopting sustainable business practices and fostering a workplace culture of innovation, diversity, transparency and integrity.
• Create an organizational culture of inclusion, mutual respect, trust, innovation, and collaboration that upholds organizational core values.
• Develop an annual staffing plan that identifies and addresses resource needs and gaps. • Provide training and professional development opportunities that build new skills and abilities.
• Foster culture of innovation to yield solutions that accelerate our mission and drive toward SDCP’s vision.
• Design and implement an internship program that attracts workforce from our member cities and creates opportunities for candidates new to CCAs and the industry. • Build institutional capacity of CAC to support the mission and core goals of SDCP. 4 5
6 7
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