Pursuant to the Americans with Disabilities Act, if you need special assistance in this meeting, please contact the Clerk for the Authority at (408) 721-5301 x1005. Notification 48 hours prior to the meeting will enable the Authority to make reasonable arrangements to ensure accessibility to this meeting. (28 CFR 35.105 ADA Title II).
Liz Gibbons, Chair
City of Campbell
George Tyson, Vice Chair
Town of Los Altos Hills
Jon Robert Willey
City of Cupertino
Zach Hilton
City of Gilroy
Neysa Fligor
City of Los Altos
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Javed Ellahie
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Margaret Abe-Koga
City of Mountain View
Tina Walia
City of Saratoga
Larry Klein
City of Sunnyvale
Otto Lee
County of Santa Clara
svcleanenergy.org
333 W El Camino Real
Suite 330
Sunnyvale, CA 94087
Silicon Valley Clean Energy Authority
Board of Directors Meeting
Wednesday, November 9, 2022
7:00 pm
Cupertino Community Hall
10350 Torre Avenue
Cupertino, CA
Teleconference Meeting
Webinar:
https://cityofcupertino.zoom.us/j/94163712123
Telephone (Audio Only):
US: +1 669-900-6833
Webinar ID: 941 6371 2123
In accordance with California Government Code Section 54953(e), in consideration of the Coronavirus (COVID-19), members of the Silicon Valley Clean Energy Board of Directors and staff have the option to participate in this meeting by teleconference.
Members of the public may also attend this meeting in person, or observe this meeting electronically by accessing the meeting via instructions above. Public Comments can be sent in advance of the meeting via email up to three hours before the meeting begins to Board Clerk Andrea Pizano at [email protected] and will be distributed to the Board of Directors. The public will also have an opportunity to provide comments during the meeting. Members of the public participating remotely and using Zoom may comment during public comment or the applicable agenda item by using the Raise Hand feature and you will be recognized by the Chair. Those using the telephone (audio only) feature should press star 9 on your phones to initiate the “Raise Hand” function in Zoom. You will then be announced, unmuted, and your time to speak will begin.
The public may provide comments on any matter listed on the Agenda. Speakers are customarily limited to 3 minutes each, however, the Board Chair may increase or decrease the time allotted to each speaker based on the number of speakers, the length of the agenda and the complexity of the subject matter. Speaking time will not be decreased to less than one minute.
If you are an individual with a disability and need a reasonable modification or accommodation pursuant to the Americans with Disabilities Act (“ADA”) please contact Board Clerk Andrea Pizano at [email protected] prior to the meeting for assistance.
rA'\ s1ucoN vALLEY ~ CLEAN ENERGY
Pursuant to the Americans with Disabilities Act, if you need special assistance in this meeting, please contact the Clerk for the Authority at (408) 721-5301 x1005. Notification 48 hours prior to the meeting will enable the Authority to make reasonable arrangements to ensure accessibility to this meeting. (28 CFR 35.105 ADA Title II).
Liz Gibbons, Chair
City of Campbell
George Tyson, Vice Chair
Town of Los Altos Hills
Jon Robert Willey
City of Cupertino
Zach Hilton
City of Gilroy
Neysa Fligor
City of Los Altos
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Javed Ellahie
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Margaret Abe-Koga
City of Mountain View
Tina Walia
City of Saratoga
Larry Klein
City of Sunnyvale
Otto Lee
County of Santa Clara
svcleanenergy.org
333 W El Camino Real
Suite 330
Sunnyvale, CA 94087
AGENDA
Call to Order
Roll Call
Public Comment on Matters Not Listed on the Agenda
The public may provide comments on any matter not listed on the Agenda provided that it is within the subject matter jurisdiction of SVCE. Speakers are customarily limited to 3 minutes each, however, the Board Chair may increase or decrease the time allotted to each speaker based on the number of speakers, the length of the agenda and the complexity of the subject matter. Speaking time will not be decreased to less than one minute.
Consent Calendar (Action)
1a) Approve Minutes of the October 12, 2022, Board of Directors Meeting 1b) Receive September 2022 Treasurer Report
1c) Adopt Resolution Authorizing Public Meetings to Continue to Be Held Via Teleconferencing Pursuant to Government Code Section 54953(e) and Making Findings
1d) Approve Fleet Electrification Planning Agreement with Optony Inc. for SVCE Fleet Electrification Technical Assistance Program 1e) Amending Program for SVCE Support of Electric Vehicle Charging in Affordable Housing Developments
1f) Approve Scholarship Funds for 2023 Empower SV Short-Film Competition
1g) Adopt Resolution Approving SVCE Complimentary Ticket or Pass Distribution Policy Pursuant to FPPC Regulation 18944.1 1h) Adopt Resolution Authorizing the Chief Executive Officer to Negotiate and Execute Contracts up to $300,000 for Recruiting Purposes for 180 Days
1i) Executive Committee Report
1j) Finance and Administration Committee Report
1k) Audit Committee Report
rA'\ s1ucoN vALLEY ~ CLEAN ENERGY
Pursuant to the Americans with Disabilities Act, if you need special assistance in this meeting, please contact the Clerk for the Authority at (408) 721-5301 x1005. Notification 48 hours prior to the meeting will enable the Authority to make reasonable arrangements to ensure accessibility to this meeting. (28 CFR 35.105 ADA Title II).
Liz Gibbons, Chair
City of Campbell
George Tyson, Vice Chair
Town of Los Altos Hills
Jon Robert Willey
City of Cupertino
Zach Hilton
City of Gilroy
Neysa Fligor
City of Los Altos
Rob Rennie
Town of Los Gatos
Evelyn Chua
City of Milpitas
Javed Ellahie
City of Monte Sereno
Yvonne Martinez Beltran
City of Morgan Hill
Margaret Abe-Koga
City of Mountain View
Tina Walia
City of Saratoga
Larry Klein
City of Sunnyvale
Otto Lee
County of Santa Clara
svcleanenergy.org
333 W El Camino Real
Suite 330
Sunnyvale, CA 94087
1l) Legislative and Regulatory Response to Industry Transition 2022 Ad Hoc Committee Report
1m) California Community Power Report
Regular Calendar
2) CEO Report (Discussion)
3) Adopt Resolution Authorizing the Chief Executive Officer to Execute the Power Supply Contract with the California Community Choice Financing Authority and Related Supporting Agreements (Action)
4) Community Resilience Program Update (Presentation)
5) New Construction Reach Code Update (Presentation)
Board Member Announcements and Direction on Future Agenda Items Adjourn
rA'\ s1ucoN vALLEY ~ CLEAN ENERGY
Silicon Valley Clean Energy Authority
Board of Directors Meeting
Wednesday, October 12, 2022
7:00 pm
Cupertino Community Hall
10350 Torre Avenue
Cupertino, CA
Pursuant to State of California Gov’t Code Section 54953 (e) the meeting was conducted via teleconference with an option for members of the Board of Directors and staff to participate in person.
DRAFT MINUTES
Call to Order:
Chair Gibbons called the meeting to order at 7:01 p.m.
Roll Call
Present:
Liz Gibbons (Chair), Campbell
George Tyson (Vice Chair), Los Altos Hills
Jon Robert Willey, Cupertino
Zach Hilton, Gilroy
Neysa Fligor, Los Altos
Rob Rennie, Los Gatos
Evelyn Chua, Milpitas
Bryan Mekechuk, Monte Sereno
Yvonne Martinez Beltran, Morgan Hill (arrived during Item 3) Margaret Abe-Koga, Mountain View
Tina Walia, Saratoga
Larry Klein, Sunnyvale
Otto Lee, Santa Clara County
Absent:
Chair Gibbons, Vice Chair Tyson, Alternate Director Mekechuk and Director Willey attended in person; all other Directors attended via teleconference.
Public Comment on Matters Not Listed on the Agenda
No speakers.
Consent Calendar
There were no questions or comments from the Board; there were no requests from the public to speak on any matter on the Consent Calendar.
1a) Approve Minutes of the September 14, 2022, Board of Directors Meeting Item 1a Draft Minutes of the Oct. 12, 2022 Board of Directors Meeting r,, SILICON VALLEY \:!,,/ CLEAN ENERGY
1b) Approve Minutes of the September 14, 2022, Board of Directors Special Meeting 1c) Receive August 2022 Treasurer Report
1d) Adopt Resolution Authorizing Public Meetings to Continue to Be Held Via Teleconferencing Pursuant to Government Code Section 54953(e) and Making Findings 1e) Adopt FY23 SVCE Strategic Work Plan
1f) Authorize the Chief Executive Officer to Negotiate and Enter into a New Engagement with Meyers | Nave for Legal Services
1g) Review and Approve Updates to SVCE Customer Confidentiality Policy 1h) Approve Audit Committee Membership of Three Members 1i) Receive Q3 2022 Decarbonization Strategy and Programs Roadmap Update 1j) Executive Committee Report
1k) Finance and Administration Committee Report
1l) Audit Committee Report
1m) Legislative and Regulatory Response to Industry Transition 2022 Ad Hoc Committee Report 1n) California Community Power Report
MOTION: Vice Chair Tyson moved and Alternate Director Mekechuk seconded the motion to approve the Consent Calendar, Items 1a through 1n.
The motion carried unanimously by verbal roll call vote with Director Martinez Beltran absent.
Regular Calendar
2) CEO Report (Discussion)
CEO Girish Balachandran addressed the following in his CEO report:
• Introduction of new Director of Energy Services and Community Relations Adam Selvin, who provided brief welcome comments;
• Reintroduction of Don Bray, transitioning to a different role with SVCE as Director of Strategic Development, who provided brief comments.
Board members welcomed Director of Energy Services and Community Relations Selvin and congratulated Director of Strategic Development Bray.
3) Approve SVCE 2022 Integrated Resource Plan (Action)
Director Martinez Beltran joined the meeting during Item 3.
Maren Wenzel, Senior Manager of Energy Policy and Regulatory Analysis, presented a PowerPoint presentation on SVCE’s 2022 Integrated Resource Plan. The presentation included background, core goals of SVCE, portfolio results, key themes for the narrative, and staff’s proposal of adoption of 100% CF/65% RPS case.
Senior Manager of Energy Policy and Regulatory Analysis Wenzel outlined staff’s request for approval:
• File the 100% CF/65% RPS by 2030 plan as its Preferred Conforming Plan; • File the 100% CF/ 75% RPS by 2030 plan and 100% CF/ 100% RPS by 2035 plan as Conforming Plans;
• In the narrative staff will highlight:
o Portfolios are illustrative and may not be realized
Item 1a Draft Minutes of the Oct. 12, 2022 Board of Directors Meeting
o CPUC must vet the “IRP compliance” proposal fully with stakeholder input before holding LSEs to their IRP filings
• Delegate authority of the CEO to provide final approval of the 2022 SVCE IRP to be filed on November 1st, 2022.
It was noted SVCE would provide board members a copy of the final IRP once prepared.
Senior Manager of Energy Policy and Regulatory Analysis Wenzel responded to board member questions.
Chair Gibbons opened Public Comment.
Bruce Karney thanked staff for the analysis and asked two questions related to 1) Diablo Canyon and 2) the possibility of a carbon tax, carbon fee and dividend.
Chair Gibbons closed Public Comment.
Senior Manager of Energy Policy and Regulatory Analysis Wenzel responded to Mr. Karney’s inquiries.
MOTION: Alternate Director Mekechuk moved and Director Willey seconded the motion to delegate authority to the Chief Executive Officer to provide final approval of the 2022 IRP to be filed on November 1, 2022.
The motion carried unanimously by verbal roll call vote. 4) Authorize the Chief Executive Officer to Approve or Execute Agreements with Firms Providing Services to Initiate SVCE to Execute Its Second Prepay (Action) Amrit Singh, CFO and Director of Administrative Services, introduced the item and presented a PowerPoint presentation which addressed an overview of the request to authorize agreements to initiate the second prepay transaction, information on leveraging the first prepay structure and fiscal impact of the second prepay, and next steps.
CFO and Director of Administrative Services Singh provided the proposed firms and costs for the second prepay, noting staff was requesting approval for $1,000,000 to allow for a 10% contingency that may be needed:
* For the first Prepay, SVCE worked with Orrick, Herrington & Sutcliffe as the bond and tax counsel at a higher cost of $425,000.
CFO and Director of Administrative Services Singh responded to questions from board members regarding the anticipated lower costs of the second prepay and economic uncertainty.
Item 1a Draft Minutes of the Oct. 12, 2022 Board of Directors Meeting Firms
Public Financial
Management (PFM)
Chapman & Cutler
Ballard Spahr*
Moody's Investor
Service Inc
Total
Role
Municipal Advisor: Advises prepay buyer in
negotiations; required by Municipal Securities
Rulemaking Board (MSRB)
Disclosure and Issuer's Counsel: Provides legal
counsel and prepares official statement and
prospectus
Bond and Tax Counsel: Represent bondholders
and provide tax opinion on the transaction
Rating Agency: Provides the credit rating for the
bonds
First Prepay
Cost
$250,000
$310,000
$425,000*
$315,000
$1,300,000
Proposed Cost for
the Second Prepay
$175,000
$200,000
$300,000
$230,000
$905,000
Chair Gibbons opened Public Comment.
No speakers.
Chair Gibbons closed Public Comment.
MOTION: Director Chua moved and Director Klein seconded the motion to adopt Resolution 2022- 23 to authorize the Chief Executive Officer to approve or execute agreements with firms providing services to initiate SVCE to execute the second prepay transaction.
Board Clerk Andrea Pizano clarified with the maker of the motion and seconder that the motion would also include approving engagement with Morgan Stanley as the Prepay Supplier; Director Chua and Director Klein concurred.
Director Chua added approval of the total cost requested for the agreements with firms providing services in the amount of $1,000,000.
The motion carried unanimously by verbal roll call vote. 5) Updating SVCE’s Investment Policy and Directing PFM Asset Management to Implement full Scope of work as SVCE’s Investment Advisor (Action)
Amrit Singh, CFO and Director of Administrative Services, introduced the item and Monique Spyke of PFM Asset Management (PFMAM); both presented PowerPoint presentations on the item.
The objective and timeline, cashflow analysis, investment policy revision and investment recommendations, and next steps were included in the presentations.
Ms. Spyke responded to a question from Vice Chair Tyson regarding municipal bonds; Chair Gibbons confirmed the work performed by PFMAM to date had not yet had a cost to SVCE, the contracts incorporated had been reviewed by legal counsel, and that our audit reviewers or financial consultants had reviewed the contracts as well. CFO Singh noted the contracts had been reviewed by legal counsel and would be incorporated into SVCE’s regular auditing procedures.
Chair Gibbons opened Public Comment.
No speakers.
Chair Gibbons closed Public Comment.
MOTION: Director Fligor moved and Vice Chair Tyson seconded the motion to adopt Resolution 2022-24 to revise SVCE’s investment policy and to direct PFM Asset Management to implement the full scope of work as SVCE’s Investment Advisor, Adopt Resolution 2022-25 to join as Shareholder of the California Asset Management Trust, and Adopt Resolution 2022-26 to join the State’s Local Agency Investment Fund.
The motion carried unanimously by verbal roll call vote. 6) New Construction Reach Code Update (Presentation)
Anthony Eulo, Senior Manager of Public Sector Services, presented a PowerPoint presentation providing a status update on reach code efforts.
Board members shared their thanks to staff for assisting in the reach codes process.
Chair Gibbons opened Public Comment.
No speakers.
Chair Gibbons closed Public Comment.
Item 1a Draft Minutes of the Oct. 12, 2022 Board of Directors Meeting
Board Member Announcements and Future Agenda Items
Director Fligor announced the City of Los Altos welcomed a new Sustainability Coordinator and was hopeful they could step in with leading the reach codes process.
Director Lee announced the annual Day on the Bay event occurred October 8, 2022 and thanked SVCE for sponsoring the event with a solar stage.
Director Klein announced the City of Sunnyvale received the Silicon Valley Business Journal’s 2022 Best Public City Project for the City of Sunnyvale’s new city hall and noted it will be the first Net Zero Energy LEED platinum city hall in the U.S., and thanked SVCE for grant funds in helping to make it possible.
Chair Gibbons announced and recommended a webinar she attended on a report from Next 10 and the Energy Institute at the UC Berkeley Haas School of Business, “Paying for Electricity in California: How Residential Rate Design Impacts Equity and Electrification.” Chair Gibbons encouraged board members to get on the mailing list for future webinars hosted by the Energy Institute at the UC Berkeley Haas School of Business.
Public Comment on Closed Session
No speakers.
Chair Gibbons announced the Board of Directors would meet in Closed Session at 8:54 p.m.
Convene to Closed Session
Conference with Legal Counsel – Anticipated Litigation
Initiation of litigation pursuant to paragraph (4) of subdivision (d) of Section 54956.9: (one potential case) The Board of Directors returned from Closed Session at 9:22 p.m.
Board Clerk Andrea Pizano confirmed a quorum of the Board of Directors was present.
Report from Closed Session
Chair Gibbons announced there was nothing to report.
Adjourn
Chair Gibbons adjourned the meeting at 9:23 p.m.
ATTEST:
_____________________________
Andrea Pizano, Board Secretary
Item 1a Draft Minutes of the Oct. 12, 2022 Board of Directors Meeting 1 TREASURER REPORT
Fiscal Year to Date
As of September 30, 2022
(Preliminary & Unaudited)
Issue Date: November 9, 2022
Table of Contents
Page
Summary 2
Statement of Net Position 4
Statement of Revenues, Expenses & Changes in Net Position 5 Statement of Cash Flows 6-7
Actuals to Budget Report 8-10
Monthly Change in Net Position 11
Investments Report 12
Customer Accounts 13
Accounts Receivable Aging Report 14
Item 1b September Treasurer Report
2 Financial Highlights for the month of September 2022:
> SVCE operations resulted in a change in net position for the month of $2.7 million and fiscal-year-to-date (FYTD) change in net position of $46.9 million. > Retail GWh sales for the month landed -4.2% below budget. > FYTD operating margin of $67 million or ~18.3% is below budget expectations of 28.7% operating margin for the fiscal year to date. > FYTD Power Supply costs are 8.7% above budget.
> SVCE is investing ~93.2% of available funds generating FYTD investment income of $0.25 million.
Change in Net Position Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Total Amended
Budget
Actual 1,532 (4,526) (2,237) (6,275) (5,774) 1,734 10,904 6,764 13,067 15,819 13,165 2,694 46,866 61,611 Power Supply Costs Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Total Amended
Budget
Energy & REC's 11,938 15,483 13,478 17,209 15,665 20,556 11,419 14,537 15,435 17,504 17,603 18,647 189,475 Wholesale Sales (195) - (15) (82) (182) (208) (236) (23) (56) (18) (18) (18) (1,048) Capacity 2,890 2,207 2,324 3,281 3,557 3,544 3,923 4,236 4,965 5,550 7,046 6,964 50,486 CAISO Charges (1,301) 205 2,286 1,116 1,004 (328) (1,124) (2,066) 1,721 2,130 1,030 2,046 6,721 NEM Expense 3 152 (187) (200) (30) 151 39 617 897 761 674 100 2,979 Charge/Credit (IST/Net Rev) 1,189 (125) 759 1,855 2,020 3,029 4,966 5,864 7,316 3,955 6,621 12,913 50,363 Net Power Costs 14,525 17,908 18,660 23,179 22,035 26,744 18,989 23,166 30,279 29,882 32,957 40,653 298,976 274,979 Other Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Total Amended
Budget
Capital Expenditures 4 13 10 - 5 18 - 21 - 56 4 9 141 150 Energy Programs 68 123 116 220 114 134 121 172 112 179 163 161 1,682 8,582 Load Statistics - GWh Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Total Amended
Budget
Retail Sales Actual 302 288 327 322 286 306 284 294 322 347 343 325 3,746 Retail Sales Budget 302 288 327 322 296 311 297 313 337 350 362 339 3,844 3,844 * The financial results in this report are preliminary and subject to change pending closing of the books for the fiscal year. Any potential changes are not expected to be significant.
Financial Statement Highlights* ($ in 000's)
SILICON VALLEY CLEAN ENERGY AUTHORITY
Item 1b September Treasurer Report
3 Working Capital $219,414,611
Current Ratio 5.4
Operating Margin 17.5%
Expense Coverage Days 215
Long-Term Debt $0
Total Accounts 277,658
Opt-Out Accounts (Month) 88
Opt-Out Accounts (FYTD) 620
Opt-Up Accounts (Month) (11)
Opt-Up Accounts (FYTD) 200
Other Statistics and Ratios
Item 1b September Treasurer Report
YTD EXPENSES
Retail Sales -Month
60.0 50.4
50.0 ~ 40.0
C:
0 : 30.0
~ 20.0
10.0 0.0
Actual Amended Budget
Controllable O&M - Month
50.0 42.3
40.0 30.8
~ 30.0
.2
~ 20.0
10.0 0.0
Actual Amended Budget
Personnel
2.1%
ontractServices
2.9%
24.6 I
FY20/21
22.7 I
FY20/21
G&A
0.7%
Retail Sales -YTD
500.0
362.6 385.5
400.0
~
-~ 300.0 243.7
~ 200.0 I 100.0
0.0 Actual Amended Budget FY20/21
Controllable O&M -YTD
350.0 317.2 296.7
300.0
~
250.0
C: .2 200.0
~ 150.0
100.0
50.0 0.0
Actual Amended Budget FY20/21
4 Current Assets
Cash & Cash Equivalents $ 167,673,752
Accounts Receivable, net of allowance 55,663,227
Accrued Revenue 24,311,804
Other Receivables 81,713
Prepaid Expenses 977,927
Deposits 20,565,121
Restricted cash 162,014
Total Current Assets 269,435,558
Noncurrent assets
Capital assets, net of depreciation 357,746
Deposits 45,330
Total Noncurrent Assets 403,076
Total Assets 269,838,634
Current Liabilities
Accounts Payable 801,930
Accrued Cost of Electricity 34,736,430
Other accrued liabilities 1,226,576
User Taxes and Energy Surcharges due to other gov'ts 1,693,997 Supplier securit deposits 11,400,000
Total Current Liabilities 49,858,933
Noncurrent Liabilities
Supplier security deposits 7,031,250
Total noncurrent liabilities 7,031,250
Total Liabilities 56,890,183
Net investment in capital assets 357,746
Restricted for security collateral 162,014
Unrestricted (deficit) 212,428,691
Total Net Position $ 212,948,451
NET POSITION
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENT OF NET POSITION
As of September 30, 2022
ASSETS
LIABILITIES
Item 1b September Treasurer Report
5 OPERATING REVENUES
Electricity Sales, Net $ 358,428,001
GreenPrime electricity premium 1,741,939
Other income 34,548
Liquidated damages 2,371,250
TOTAL OPERATING REVENUES 362,575,738
OPERATING EXPENSES
Cost of Electricity 298,971,624
Contract services 9,058,789
Staff compensation and benefits 6,744,553
General & Administrative 2,319,983
Depreciation 100,428
TOTAL OPERATING EXPENSES 317,195,377
OPERATING INCOME(LOSS) 45,380,361
NONOPERATING REVENUES (EXPENSES)
Grant Income 1,294,077
Interest Income 325,782
Financing costs (134,255)
TOTAL NONOPERATING REVENUES (EXPENSES) 1,485,604
CHANGE IN NET POSITION 46,865,965
Net Position at beginning of period 166,082,486
Net Position at end of period $212,948,451
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENT OF REVENUES, EXPENSES
October 1, 2021 through September 30, 2022
AND CHANGES IN NET POSITION
Item 1b September Treasurer Report
6 CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 326,971,086
Receipts from liquidated damages $ 2,371,250
Other operating receipts 11,512,299
Payments to suppliers for electricity (313,073,540)
Payments for other goods and services (12,071,873)
Payments for staff compensation and benefits (6,554,946) Tax and surcharge payments to other governments (5,469,828) Net cash provided (used) by operating activities 3,684,448
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Grant revenue received 1,294,077
Finance costs paid (135,697)
Net cash provided (used) by financing activities 1,158,380
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets (141,408)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income received 325,782
Net change in cash and cash equivalents 5,027,202
Cash and cash equivalents at beginning of year 162,808,564 Cash and cash equivalents at end of period $167,835,766 Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) $ 167,673,752
Restricted cash 162,014
Cash and cash equivalents $ 167,835,766
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENT OF CASH FLOWS
October 1, 2021 through September 30, 2022
Item 1b September Treasurer Report
7 Operating Income (loss) $ 45,380,361
Adjustments to reconcile operating income to net cash
provided (used) by operating activities
Depreciation expense 100,428
Provision for uncollectible accounts 2,052,448
(Increase) decrease in net accounts receivable (31,725,493) (Increase) decrease in energy settlements receivable 269,012 (Increase) decrease in other receivables 148,772
(Increase) decrease in accrued revenue (9,901,184)
(Increase) decrease in prepaid expenses 1,400,309
(Increase) decrease in current deposits (19,839,037)
Increase (decrease) in accounts payable (735,446)
Increase (decrease) in accrued cost of electricity 3,821,789 Increase (decrease) in accrued liabilities 585,975
Increase (decrease) in energy settlements payable 87,550 Increase (decrease) in taxes and surcharges due to other governments 638,962 Increase (decrease) in supplier security deposits 11,400,000 Net cash provided (used) by operating activities $ 3,684,446
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENT OF CASH FLOWS (Continued)
October 1, 2021 through September 30, 2022
Item 1b September Treasurer Report
8 FYTD FYTD FY 2021-22 FY 2021-22
OPERATING REVENUES Actual Amended Budget $ % Amended Budget Remaining Budget Energy Sales $361,857,141 $384,498,000 -$22,640,859 -6% $384,498,000 $22,640,859 Green Prime Premium 1,741,939 1,005,000 736,939 73% 1,005,000 (736,939) Liquidated damages 2,371,250 2,371,250
TOTAL OPERATING REVENUES 365,970,330 385,503,000 (19,532,670) -5% 385,503,000 21,903,920
ENERGY EXPENSES
Power Supply 298,971,624 274,979,000 23,992,624 8.7% 274,979,000 (23,992,624) Operating Margin 66,998,706 110,524,000 (43,525,294) -39% 110,524,000
OPERATING EXPENSES
Data Management 3,179,145 3,249,000 (69,855) -2% 3,249,000 69,855 PG&E Fees 1,182,912 1,450,000 (267,088) -18% 1,450,000 267,088 Salaries & Benefits 6,744,553 8,535,000 (1,790,447) -21% 8,535,000 1,790,447 Professional Services 2,854,585 5,669,000 (2,814,415) -50% 5,669,000 2,814,415 Marketing & Promotions 597,865 908,000 (310,135) -34% 908,000 310,135 Notifications 136,469 131,000 5,469 4% 131,000 (5,469)
Lease 500,642 525,000 (24,358) -5% 525,000 24,358
General & Administrative 1,237,349 1,225,000 12,349 1% 1,225,000 (12,349) TOTAL OPERATING EXPENSES 16,433,520 21,692,000 (5,258,480) -24% 21,692,000 5,258,480 OPERATING INCOME/(LOSS) 50,565,186 88,832,000 (38,266,814) -43% 88,832,000 38,266,814
NON-OPERATING REVENUES
Other Income 34,548 50,000 (15,452) -31% 50,000 15,452
Investment Income 325,782 300,000 25,782 9% 300,000 (25,782) TOTAL NON-OPERATING REVENUES 360,330 350,000 10,330 3% 350,000 (10,330)
NON-OPERATING EXPENSES
Financing 134,255 40,000 94,255 236% 40,000 (94,255)
CAPITAL EXPENDITURES, TRANSFERS,
& OTHER
Capital Outlay 141,499 150,000 (8,501) -6% 150,000 8,501 Transfer to Programs Fund 6,781,000 6,781,000 - 0% 6,781,000 - Nuclear Allocation 600,000 600,000 - 0% 600,000 -
Double Down Programs Allocation 17,000,000 17,000,000 - 0% 17,000,000 - Customer Bill Relief 2,135,063 3,000,000 (864,937) -29% 3,000,000 864,937 TOTAL OTHER USES 26,657,562 27,531,000 (873,438) -3% 27,531,000 873,438
NET INCREASE(DECREASE) IN AVAILABLE
FUND BALANCE $24,133,699 $61,611,000 -$37,477,301 -61% $61,611,000 Variance
SILICON VALLEY CLEAN ENERGY AUTHORITY
BUDGETARY COMPARISON SCHEDULE
October 1, 2021 through September 30, 2022
Item 1b September Treasurer Report
l
9 ADOPTED ACTUAL/
Amended BUDGET ADOPTED
REVENUE & OTHER SOURCES: BUDGET ACTUAL REMAINING BUDGET Transfer from Operating Fund $ 24,381,000 $ 24,381,000 $ - 100.0% EXPENDITURES & OTHER USES:
Program expenditures 8,581,851 1,682,483 6,899,368 19.6% Net increase (decrease) in fund balance $ 15,799,149 $22,698,517 Fund balance at beginning of period 5,837,711
Fund balance at end of period $28,536,228
ADOPTED ACTUAL/
Amended BUDGET ADOPTED
REVENUE & OTHER SOURCES: BUDGET ACTUAL REMAINING BUDGET Transfer from Operating Fund * $ - $ - $ -
EXPENDITURES & OTHER USES:
Program expenditures * 2,850,000 7,322 2,842,678 0.3%
Net increase (decrease) in fund balance $ (2,850,000) (7,322) Fund balance at beginning of period 7,990,315
Fund balance at end of period $7,982,993
SILICON VALLEY CLEAN ENERGY AUTHORITY
BUDGETARY COMPARISON SCHEDULE
October 1, 2021 through September 30, 2022
CUSTOMER RELIEF & COMMUNITY RESILIENCY FUND
PROGRAM FUND
BUDGETARY COMPARISON SCHEDULE
October 1, 2021 through September 30, 2022
Item 1b September Treasurer Report
,. ,.
10 Net Increase (decrease) in available fund balance
per budgetary comparison schedule $ 24,133,699
Adjustments needed to reconcile to the changes
in net position in the Statement of Revenues,
Expenses and Changes in Net Position
Subtract depreciation expense (100,428)
Subract program expense not in operating budget (1,682,483) Subract CRCR expense not in operating budget (7,322)
Add back transfer to Program fund 24,381,000
Add back capital asset acquisition 141,499
Change in Net Position 46,865,965
SILICON VALLEY CLEAN ENERGY AUTHORITY
BUDGET RECONCILIATION TO STATEMENT OF
REVENUES, EXPENSES AND CHANGES IN NET POSITION
October 1, 2021 through September 30, 2022
OPERATING FUND
Item 1b September Treasurer Report
,..
11 October November December January February March April May June July August September YTD
OPERATING REVENUES
Electricity sales, net $ 17,365,080 $ 14,621,707 $ 17,815,729 $ 17,228,581 $ 16,277,554 $ 29,781,167 $ 31,256,974 $ 31,334,686 $ 44,768,429 $ 45,749,089 $ 47,477,127 $ 44,751,878 $ 358,428,001 Green electricity premium 80,961 $ 60,556 $ 95,594 $ 462,687 $ 103,634 $ 131,601 $ 116,747 $ 141,505 $ 131,322 $ 132,086 $ 140,430 $ 144,816 1,741,939 Other Income 1,000 $ 2,500 $ 1,000 $ 3,500 $ 2,250 $ 5,251 $ 1,000 $ 2,000 $ 1,000 $ 1,000 $ 2,249 $ 11,798 34,548 Liquidated damages 922,250 $ 1,302,000 $ - $ - $ - $ - $ - $ 147,000 $ - 2,371,250 Total operating revenues 17,447,041 14,684,763 17,912,323 18,617,018 17,685,438 29,918,019 31,374,721 31,478,191 44,900,751 45,882,175 47,766,806 44,908,492 362,575,738
OPERATING EXPENSES
Cost of electricity 14,524,607 17,907,845 18,660,060 23,179,137 22,034,894 26,743,821 18,988,683 23,163,741 30,278,708 29,881,798 32,956,745 40,651,585 298,971,624 Staff compensation and benefits 448,844 465,162 593,320 572,350 538,861 551,232 540,655 555,023 630,611 555,633 632,345 660,517 6,744,553 Data manager 263,759 263,759 262,863 263,514 264,092 264,817 265,002 - 531,059 266,835 267,264 266,181 3,179,145 Service fees - PG&E 97,254 96,768 104,341 97,053 97,084 97,331 97,671 - 199,269 98,199 98,182 99,760 1,182,912 Consultants and other professional fees 370,413 341,404 376,273 473,924 393,452 363,558 395,856 744,189 28,855 318,955 489,093 400,760 4,696,732 General and administration 209,985 134,289 152,437 306,490 129,063 161,762 179,349 247,909 175,222 255,408 186,506 181,563 2,319,983 Depreciation 7,289 8,162 7,774 7,716 7,853 8,168 8,169 8,558 8,558 9,230 9,351 9,600 100,428 Total operating expenses 15,922,151 19,217,389 20,157,068 24,900,184 23,465,299 28,190,689 20,475,385 24,719,420 31,852,282 31,386,058 34,639,486 42,269,966 317,195,377 Operating income (loss) 1,524,890 (4,532,626) (2,244,745) (6,283,166) (5,779,861) 1,727,330 10,899,336 6,758,771 13,048,469 14,496,117 13,127,320 2,638,526 45,380,361
NONOPERATING REVENUES (EXPENSES)
Grant Income 1,294,077 - - 1,294,077
Interest income 18,545 18,382 19,370 18,957 16,791 17,596 15,861 16,059 29,596 39,531 48,479 66,615 325,782 Financing costs (11,042) (11,626) (12,027) (11,042) (11,226) (11,042) (11,042) (11,041) (11,042) (11,042) (11,041) (11,042) (134,255) Total nonoperating revenues (expenses) 7,503 6,756 7,343 7,915 5,565 6,554 4,819 5,018 18,554 1,322,566 37,438 55,573 1,485,604 CHANGE IN NET POSITION $ 1,532,393 $ (4,525,870) $ (2,237,402) $ (6,275,251) $ (5,774,296) $ 1,733,884 $ 10,904,155 $ 6,763,789 $ 13,067,023 $ 15,818,683 $ 13,164,758 $ 2,694,099 $ 46,865,965
SILICON VALLEY CLEAN ENERGY AUTHORITY
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
October 1, 2021 through September 30, 2022
Item 1b September Treasurer Report
12 YTD
Return on Investments Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Total $18,545 $18,382 $19,370 $18,957 $16,791 $17,596 $15,861 $16,059 $29,596 $39,531 $48,479 $66,615 $325,782 Portfolio Invested
Average daily portfolio available to invest* 152,976,979 155,897,345 155,743,105 157,270,808 153,138,549 145,837,752 137,341,613 133,261,734 132,574,141 145,457,337 153,975,169 157,084,581 Average daily portfolio invested 141,994,910 145,456,026 148,530,962 147,297,741 145,363,213 137,891,490 128,040,211 122,422,665 125,005,246 132,803,050 141,713,500 146,382,513 % of average daily portfolio invested 92.8% 93.3% 95.4% 93.7% 94.9% 94.6% 93.2% 91.9% 94.3% 91.3% 92.0% 93.2% Detail of Portfolio
Opening Rate Current Rate
Carrying
Value
Interest
Earned
Money Market - River City Bank 1.26% 0.47% $153,006,041 $56,861 * Note: Balance available to invest does not include lockbox funds. -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SILICON VALLEY CLEAN ENERGY AUTHORITY
INVESTMENTS SUMMARY
October 1, 2021 through September 30, 2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Item 1b September Treasurer Report
13 CUSTOMER ACCOUNTS
Item 1b September Treasurer Report
RESIDENTIAL ACCOUNTS
f/j 300
"C
C: 246.9 247.2 247.4 247.5 248.1 248.3 248.5 249.0 249.3 249.6 249.9 250.1 ell 250 f/j ::J
0 .r:. 200 I-150
100
50 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
- Actual - Budget
NON-RESIDENTIAL ACCOUNTS
30 f/j 27.7 27.6 27.6 27.4 27.4 27.4 27.4 27.4 27.5 27.5 27.5 27.5 "C C:
ell
f/j 25 ::J
0 .r:.
I-20
15 10
5 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
- Actual - Budget
14 SILICON VALLEY CLEAN ENERGY AUTHORITY
ACCOUNTS RECEIVABLE AGING REPORT
October November December January February March April May June July August September 0 to 30 days 74.6% 66.6% 67.7% 70.4% 73.9% 77.7% 83.0% 80.6% 81.6% 84.6% 83.5% 78.2% 31 to 60 days 8.3% 11.6% 9.1% 5.4% 6.9% 6.7% 4.5% 7.6% 7.6% 5.6% 7.7% 10.6% 61 to 90 days 3.1% 3.7% 5.1% 3.9% 2.7% 2.7% 2.2% 2.0% 2.4% 2.4% 2.0% 5.0% 91 to 120 days 2.0% 2.9% 3.0% 3.2% 2.5% 1.7% 1.7% 1.6% 1.3% 1.6% 1.6% 1.3% Over 120 days 12.0% 15.1% 15.0% 17.1% 14.1% 11.1% 8.6% 8.1% 7.1% 5.9% 5.3% 5.0%
TOTAL DUE
Bad Debt % (Budget)
1%
Accounts Receivable Days
54 Days
$57,304,851
Item 1b September Treasurer Report
AGE SUMMARY
$50,000,000
$45,000,000
$44,788,506
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$6,083,845
$5,000,000 $2,851,822 $2,843,441
-
$737,237
- $0
<30 days <60 days <90 days <120 - days Older
Staff Report – Item 1c
Item 1c: Adopt Resolution Authorizing Public Meetings to Continue to Be Held Via Teleconferencing Pursuant to Government Code Section 54953(e) and Making Findings
From: Trisha Ortiz, General Counsel
Prepared by: Trisha Ortiz, General Counsel
Date: 11/9/2022
RECOMMENDATION
To continue meetings to be held via teleconferencing pursuant to Government Code Section 54953(e), adopt the attached Resolution 2022-27 making the findings required by Section 54953(e)(3).
BACKGROUND
Pursuant to Government Code Section 54953(b)(3) legislative bodies may meet by “teleconference” only if the agenda lists each location a member remotely accesses a meeting from, the agenda is posted at all remote locations, and the public may access any of the remote locations. Additionally, a quorum of the legislative body must be within the legislative body’s jurisdiction.
Due to the COVID-19 pandemic, the Governor issued Executive Order N-29-20, suspending certain sections of the Brown Act. Pursuant to the Executive Order, legislative bodies no longer needed to list the location of each remote attendee, post agendas at each remote location, or allow the public to access each location. Further, a quorum of the legislative body does not need to be within the legislative body’s jurisdiction. After several extensions, Executive Order N-29-20 expired on September 30, 2021.
On September 16, 2021 Governor Newsom signed AB 361, new legislation that amends the Brown Act to allow local agencies to meet remotely during Governor declared emergencies under certain conditions. AB 361 authorizes local agencies to continue meeting remotely without following the Brown Act’s standard teleconferencing provisions if the meeting is held during a state of emergency proclaimed by the Governor and either of the following applies: (1) state or local officials have imposed or recommended measures to promote social distancing; or (2) the agency has already determined or is determining whether, as a result of the emergency, meeting in person would present imminent risks to the health or safety of attendees.
Due to the rise in COVID-19 cases caused by the Delta Variant, on September 21, 2021, the Santa Clara County Health Officer issued a recommendation that public bodies meet remotely due to the increased protection provided by social distancing. The Health Officer cited “unique characteristics” of government meetings that lead to increased risk of transmission, including the gathering of people from across communities, the need for everybody to participate (including those who are immunocompromised or unvaccinated), and difficulty ensuring compliance with vaccination and safety recommendations. In addition, the Health Officer has described the new Omicron variant as significantly more transmissible than prior variants of the virus.
On October 13, 2021, the Board adopted its Resolution 2021-23 to authorize public meetings to be held via teleconferencing pursuant to Government Code section 54953(e).
Item 1c
/ A"\ SILICON VALLEY
~CLEAN ENERGY
Agenda Item: 1c Agenda Date: 11/9/2022
Within thirty days after the first teleconferenced meeting held under AB 361, and every thirty days thereafter, in order to continue meeting by teleconference, the local agency’s legislative body must find that it has reconsidered the circumstances of the state of emergency and that either: (1) The state of emergency continues to directly impact the ability of the members to meet safely in person; or (2) State or local officials continue to impose or recommend measures to promote social distancing.
The list below identifies the board meeting dates and corresponding resolutions authorizing public meetings to continue to be held via teleconferencing pursuant to Government Code Section 54953(e) and directing staff to return with a resolution to make the findings necessary to continue meeting pursuant to Government Code section 54953(e):
November 10, 2021: 2021-26;
December 8, 2021: 2021-27;
January 12, 2022: 2022-02;
February 9, 2022: 2022-03;
March 9, 2022: 2022-07;
April 13, 2022: 2022-11;
May 11, 2022: 2022-13;
June 8, 2022: 2022-14, and
August 10, 2022: 2022-18;
September 14, 2022: 2022-19; and
October 12, 2022: 2022-22.
STRATEGIC PLAN
SVCE’s Board-adopted Strategic Plan identifies engaging the public as a goal of SVCE and remote meetings will better engage the public as long as COVID-19 is a threat to public health.
FISCAL IMPACT
Continuing to conduct remote public Board of Directors and Standing Committee meetings will not increase the cost of meetings.
ANALYSIS & DISCUSSION
The attached Resolution makes the periodic findings necessary to continue holding meetings under Government Code Section 54953(e). Specifically, the attached Resolution makes findings that the Board has reconsidered the circumstances of the COVID-19 state of emergency and that local officials continue to recommend measures to promote social distancing. As required by Government Code Section 54953(e)(3), the resolution makes the findings and provides that the findings will cover the period of time until the next regular meeting of the Board.
The resolution applies to both the Board of Directors and its Committees.
Staff will continue to monitor the situation and will return to the Board every 30 days or as needed with additional recommendations related to the conduct of public meetings.
ATTACHMENTS
1. Resolution 2022-27 Reconsidering Circumstances Of The COVID-19 State Of Emergency And Making Findings In Connection Therewith To Authorize Public Meetings To Be Held Via Teleconferencing Pursuant To Government Code Section 54953(e)
Item 1c
1 RESOLUTION 2022-27
SILICON VALLEY CLEAN ENERGY AUTHORITY
RESOLUTION NO. 2022-27
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE SILICON
VALLEY CLEAN ENERGY AUTHORITY RECONSIDERING
CIRCUMSTANCES OF THE COVID-19 STATE OF EMERGENCY
AND MAKING FINDINGS IN CONNECTION THEREWITH TO
AUTHORIZE PUBLIC MEETINGS TO BE HELD VIA
TELECONFERENCING PURSUANT TO GOVERNMENT CODE
SECTION 54953(e)
WHEREAS, the Silicon Valley Clean Energy Authority (“Authority”) was formed on March 31, 2016 pursuant to a Joint Powers Agreement to study, promote, develop, conduct, operate, and manage energy programs in Santa Clara County; and WHEREAS, the Board of Directors (“the Board”) of Silicon Valley Clean Energy (“SVCE”) is committed to public access and participation in its meetings while balancing the need to conduct public meetings in a manner that reduces the likelihood of exposure to COVID-19; and
WHEREAS, all meetings of the Board of Directors and the other legislative bodies of SVCE are open and public, as required by the Ralph M. Brown Act (Cal. Gov.
Code 54950 – 54963), so that any member of the public may attend, participate, and watch the Board and other legislative bodies conduct their business; and WHEREAS, pursuant to Assembly Bill 361 legislative bodies of local agencies may hold public meetings via teleconferencing pursuant to Government Code Section 54953(e), without complying with the requirements of Government Code Section 54953(b)(3), if the legislative body complies with certain enumerated requirements in any of the following circumstances:
1. The legislative body holds a meeting during a proclaimed state of emergency, and state or local officials have imposed or recommended measures to promote social distancing.
2. The legislative body holds a meeting during a proclaimed state of emergency for the purpose of determining, by majority vote, whether as a result of the emergency, meeting in person would present imminent risks to the health or safety of attendees.
3. The legislative body holds a meeting during a proclaimed state of emergency and has determined, by majority vote, that, as a result of the emergency, meeting in person would present imminent risks to the health or safety of attendees; and WHEREAS, on March 4, 2020, Governor Newsom declared a State of Item 1c
Attachment 1
2 RESOLUTION 2022-27
Emergency in response to the COVID-19 pandemic (the “Emergency”) which remains in effect; and
WHEREAS, the Santa Clara Public Health Officer recommends that public bodies meet remotely to the extent possible, specifically including use of newly enacted AB 361.
WHEREAS, due to the ongoing COVID-19 pandemic and the need to promote social distancing to reduce the likelihood of exposure to COVID-19, the Board determined that meetings of the SVCE legislative bodies may be held via teleconferencing pursuant to Government Code Section 54953(e).
WHEREAS, to continue meeting pursuant to Government Code Section 54953(e), an agency must make periodic findings that: (1) the body has reconsidered the circumstances of the declared emergency; and (2) that any of the following circumstances exist: (a) the state of emergency continues to directly impact the ability of the members to meet safely in person, or (b) state or local officials continue to impose or recommend measures to promote social distancing.
NOW THEREFORE, the Board of Directors of the Silicon Valley Clean Energy Authority does hereby resolve, determine, and order as follows:
Section 1. The Recitals provided above are true and correct and are hereby incorporated by reference.
Section 2. The Board has reconsidered the circumstances of the COVID-19 state of emergency and local officials continue to recommend measures to promote social distancing.
Section 3. The Board and other legislative bodies of SVCE may continue to conduct their meetings pursuant to Government Code section 54953(e).
Section 4. Staff is hereby authorized and directed to take all actions necessary to carry out the intent and purpose of this Resolution. Such action includes returning to the Board within 30 days and every 30 days thereafter to make the findings required by Section 54953(e)(3).
Section 5. This Resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED this 9th day of November 2022, by the following vote:
JURISDICTION NAME AYE NO ABSTAIN ABSENT
City of Campbell Director Gibbons
City of Cupertino Director Willey
City of Gilroy Director Hilton
City of Los Altos Director Fligor
Item 1c
Attachment 1
3 RESOLUTION 2022-27
Town of Los Altos Hills Director Tyson
Town of Los Gatos Director Rennie
City of Milpitas Director Chua
City of Monte Sereno Director Ellahie
City of Morgan Hill Director Martinez Beltran
City of Mountain View Director Abe-Koga
County of Santa Clara Director Lee
City of Saratoga Director Walia
City of Sunnyvale Director Klein
Chair
ATTEST:
Andrea Pizano, Board Clerk
Item 1c
Attachment 1
Staff Report – Item 1d
Item 1d: Approve Fleet Electrification Planning Agreement with Optony Inc. for SVCE Fleet Electrification Technical Assistance Program
From: Girish Balachandran, CEO
Prepared by: Justin Zagunis, Director of Decarbonization Programs and Policy; Anthony Eulo, Senior Manager of Public Sector Services; Alhad Dighe, Fleet Electrification Fellow
Date: 11/9/2022
RECOMMENDATION
Staff recommends the Board authorize the CEO to execute the attached agreement, with any minor, nonsubstantive modifications also approved by the General Counsel, with Optony Inc. for a total of $300,000 over 3 years to provide fleet electrification technical assistance to ~10 local fleets.
BACKGROUND
Silicon Valley Clean Energy’s mission to reduce greenhouse gas (GHG) emissions within its jurisdiction is supported by the EVI (Electric Vehicle Infrastructure) Joint Action Plan approved in 2019 and goals of the Decarbonization Strategy & Programs Roadmap approved in 2018. The EVI Joint Action Plan assesses and prioritizes future electric vehicle (EV) charging needs across local communities. It outlines new SVCE programs focused on deployment of charging infrastructure needed to sustain and accelerate rapid adoption of electric vehicles. Part of this joint action plan calls out the need for fleet electrification and describes a general program approach to support member cities and commercial customers in evaluating options to electrify their vehicle fleets.
With transportation contributing about 50% of the GHG’s in SVCE’s service area, fleet vehicles are a prime target for decarbonization.
ANALYSIS & DISCUSSION
The Fleet Electrification Technical Assistance Program (FETA) is designed to provide technical assistance to at least 5 member agencies fleets and 5 private fleets. By providing hands-on technical assistance through a consultant along with leveraging local and federal incentives, we aim to enable fleets to replace their current vehicles with suitable EV’s. This assistance is timely for member agencies as the California Air Resources Board clean fleet regulations consider public fleets as early action market segment1 and their target 2024 clean vehicle procurement standards are fast approaching.
The Fleet Electrification Program’s technical assistance will provide public and private fleet managers with a range of tools as they prepare for an EV fleet transitions. The proposed full technical assistance package available to fleets is outlined below.
1 https://www.pge.com/pge_global/common/pdfs/solar-and-vehicles/your-options/clean-vehicles/charging-stations/ev-fleet-program/advanced-clean-fleet-rule.pdf Item 1d
/ A"\ SILICON VALLEY
~CLEAN ENERGY
Agenda Item: 1d Agenda Date: 11/9/2022
1. Fleet replacement plans: An analysis of the fleet vehicles in use along with a replacement plan that identifies suitable EV alternatives with data on the total cost of ownership and costs/benefits through electrification.
2. Charging Infrastructure Plan: Analysis of the charging needs for the selected EV fleet and project plans for the installation of EV chargers. Includes an energy needs assessment which will help fleet operators estimate what charging infrastructure will be required to fuel their EV fleet.
3. Construction Engineering: Electrical drawings and site designs to accelerate project planning and permitting.
4. Funding Plan: Recommend funding opportunities for both fleet purchases and EVI installation from various sources.
5. Charge Optimization Plan: An analysis of managed and unmanaged charging costs to provide a full overview of total cost benefits.
The participating fleet operators are welcome to employ as little as one or all the above service offerings all at no cost to the fleet operator. Once the initial fleet replacement plan is developed, staff will meet with the fleet operator to discuss their response and their interest in moving forward with the additional services. SVCE will require some form of commitment or “gate” for construction-engineering/late-stage services to ensure the projects we assist have a high likelihood of completion. All fleets are welcome to utilize fleet planning services.
There is also opportunity to employ the services of ProspectSV, for Fleet analysis and Funding plans free of cost to both participating fleets and SVCE (they are funded by the CEC to provide these services through April 2023). We foresee this synergy of technical assistance providers as an opportunity to reduce some of the costs for the initial planning services from Optony - leaving a larger budget for their other range of services.
SVCE will not be providing incentives for vehicles or EV charging as a part of this program, focusing instead on the development of plans and support for fleet operators in accessing other sources of funds.
Versions of the technical assistance packages developed for participants will be publicly posted online as resources for other similar fleet operators to access and leverage. SVCE hopes to attract a variety of fleet types to participate to help the results be scalable to many other fleets in SVCE territory.
Optony was chosen as the service provider of choice through a “piggybacking” process with Peninsula Clean Energy (PCE). PCE released an RFP in January 2022 and followed their competitive solicitation process to select Optony as the consultant for their electric vehicle transition assistance program. SVCE staff supported their procurement process by serving as a rater on their oral board. In August 2022, PCE entered into a contact with Optony and began implementation. Due to the similarities of scope of work in the PCE electrification program and confirming that their selection process meets SVCE procurement standards, piggybacking on PCE’s contract with Optony is the most effective way to proceed with this program.
STRATEGIC PLAN
Engaging in a Fleet Electrification Technical Assistance Program is aligned with the Strategic Plan Goal of “Coordinate development of decarbonization and resilience strategy, lead design of local policy and programs, and support program deployment.”
ALTERNATIVE
The Board could direct staff to proceed with a new procurement process, instead of piggybacking on PCE’s, or could direct staff to postpone or amend the proposed project.
FISCAL IMPACT
No monetary impact as the funding for this program has already been approved under the EVI Joint Action Plan.
Item 1d
Agenda Item: 1d Agenda Date: 11/9/2022
ATTACHMENTS
1. Draft Agreement with Optony Inc. for Fleet Electrification Technical Assistance Item 1d
2/2022 Version
AGREEMENT BETWEEN THE SILICON VALLEY CLEAN ENERGY AUTHORITY AND
OPTONY INC.
FOR
Fleet Electrification Technical Assistance
THIS AGREEMENT, is entered into this Click here to enter DAY. day of ENTER MONTH., ENTER YEAR., by and between the SILICON VALLEY CLEAN ENERGY AUTHORITY, an independent public agency, ("Authority"), and OPTONY INC. , a California Corporation (C- Corp) whose address is 5201 Great America Pkwy, Suite 320, Santa Clara, CA 95054 (hereinafter referred to as "Consultant") (collectively referred to as the “Parties” and individually as a “Party”).
RECITALS:
A. Authority is an independent public agency duly organized under the provisions of the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) (“Act”) with the power to conduct its business and enter into agreements.
B. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement pursuant to the terms and conditions described herein.
C. Authority and Consultant desire to enter into an agreement for Fleet Electrification Technical Assistance upon the terms and conditions herein.
NOW, THEREFORE, the Parties mutually agree as follows:
1. TERM
The term of this Agreement shall commence on December 1 2022, and shall terminate on December 1 2025, unless terminated earlier as set forth herein.
2. SERVICES TO BE PERFORMED
Consultant shall perform each and every service set forth in Exhibit "A" pursuant to the schedule of performance set forth in Exhibit "B," both of which are attached hereto and incorporated herein by this reference.
3. COMPENSATION TO CONSULTANT
Consultant shall be compensated for services performed pursuant to this Agreement in a total amount not to exceed Three Hundred Thousand dollars ($300,000.00) based on the rates and terms set forth in Exhibit "C," which is attached hereto and incorporated herein by this reference.
4. TIME IS OF THE ESSENCE
Item 1d
Attachment 1
2/2022 Version
Consultant and Authority agree that time is of the essence regarding the performance of this Agreement.
5. STANDARD OF CARE
Consultant agrees to perform all services required by this Agreement in a manner commensurate with the prevailing standards of specially trained professionals in the San Francisco Bay Area under similar circumstances and in a manner reasonably satisfactory to Authority and agrees that all services shall be performed by qualified and experienced personnel. Consultant shall be responsible to Authority for any errors or omissions in the performance of work pursuant to this Agreement. Should any errors caused by Consultant be found in such services or products, Consultant shall correct the errors at no additional charge to Authority by redoing the professional work and/or revising the work product(s) called for in the Scope of Services to eliminate the errors.
Should Consultant fail to make such correction in a reasonably timely manner, such correction may be made by Authority, and the cost thereof shall be charged to Consultant. In addition to all other available remedies, Authority may deduct the cost of such correction from any retention amount held by Authority or may withhold payment otherwise owed Consultant under this Agreement up to the amount of the cost of correction.
6. INDEPENDENT PARTIES
Authority and Consultant intend that the relationship between them created by this Agreement is that of an independent contractor. The manner and means of conducting the work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the express terms of this Agreement. No civil service status or other right of employment will be acquired by virtue of Consultant's services. None of the benefits provided by Authority to its employees, including but not limited to, unemployment insurance, workers’ compensation plans, vacation and sick leave are available from Authority to Consultant, its employees or agents. Deductions shall not be made for any state or federal taxes, FICA payments, PERS payments, or other purposes normally associated with an employer-employee relationship from any fees due Consultant. Payments of the above items, if required, are the responsibility of Consultant. Consultant shall indemnify and hold harmless Authority and its elected officials, officers, employees, servants, designated volunteers, and agents serving as independent contractors in the role of Authority officials, from any and all liability, damages, claims, costs and expenses of any nature to the extent arising from Consultant’s personnel practices. Authority shall have the right to offset against the amount of any fees due to Consultant under this Agreement any amount due to Authority from Consultant as a result of Consultant’s failure to promptly pay to Authority any reimbursement or indemnification arising under this section.
7. NO RECOURSE AGAINST CONSTITUENT MEMBERS OF AUTHORITY Authority is organized as a Joint Powers Authority in accordance with the Joint Powers Act of the State of California (Government Code Section 6500 et seq.) pursuant to a Joint Powers Agreement dated March 31, 2016, and is a public entity separate from its constituent members.
Authority shall solely be responsible for all debts, obligations and liabilities accruing and arising Item 1d
Attachment 1
2/2022 Version
out of this Agreement. Consultant shall have no rights and shall not make any claims, take any actions or assert any remedies against any of Authority’s constituent members in connection with this Agreement.
8. NON-DISCRIMINATION
In the performance of this Agreement, Consultant, and any subconsultant under the Consultant, shall not discriminate against any employee, subcontractor or applicant for employment because of race, color, religious creed, sex, gender, gender identity, gender expression, marital status, national origin, ancestry, age, physical disability, mental disability, medical condition, genetic information, sexual orientation, military or veteran status, or other basis prohibited by law, except as provided in Government Code section 12940. Consultant shall have responsibility for compliance with this Section.
9. HOLD HARMLESS AND INDEMNIFICATION
A. General Indemnification. To the fullest extent permitted by law, Consultant shall, at its sole cost and expense, defend, hold harmless and indemnify Authority and its elected officials, officers, attorneys, agents, employees, designated volunteers, successors, assigns and those Authority agents serving as independent contractors in the role of Authority officials (collectively “Indemnitees”), from and against any and all damages, costs, expenses, liabilities, claims, demands, causes of action, proceedings, expenses, judgments, penalties, liens, and losses of any nature whatsoever, including fees of accountants, attorneys, or other professionals and all costs associated therewith and the payment of all consequential damages (collectively “Liabilities”), in law or equity, whether actual, alleged or threatened, which arise out of, are claimed to arise out of, pertain to, or relate to the acts or omissions of Consultant, its officers, agents, servants, employees, subcontractors, materialmen, consultants or their officers, agents, servants or employees (or any entity or individual that Consultant shall bear the legal liability thereof) in the performance of this Agreement, including the Indemnitees’ active or passive negligence, except for Liabilities arising from the sole negligence or willful misconduct of the Indemnitees as determined by court decision or by the agreement of the Parties. Consultant shall defend the Indemnitees in any action or actions filed in connection with any Liabilities with counsel of the Indemnitees’ choice, and shall pay all costs and expenses, including all attorneys’ fees and experts’ costs actually incurred in connection with such defense. Consultant shall reimburse the Indemnitees for any and all legal expenses and costs incurred by Indemnitees in connection therewith.
B. Limits of Liability. To the fullest extent permitted by law, the total liability, in the aggregate, of Contractor, Contractor’s officers, directors, owners, partners, employees, agents, and subconsultants, to PCEA, and anyone claiming by, through, or under PCEA for any claims, losses, costs, or damages whatsoever arising out of, resulting from or in any way related to this Project or Agreement from any cause or causes, including but not limited to negligence, professional errors and omissions, strict liability, breach of contract, or breach of warranty, shall not exceed the required limits of insurance in this Contract. The liability limit in this section will not apply to any claim, damage or liability due to gross negligence or willful misconduct. Client further covenants that it will not, under any circumstances, bring a lawsuit, demand, or claim of any kind against Item 1d
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Contractor’s individual employees, officers, directors or agents and that Client’s sole remedy will be against Contractor.
B. Intellectual Property Indemnification. Consultant hereby certifies that it owns, controls, or licenses and retains all right, title, and interest in and to any intellectual property it uses in relation to this Agreement, including the design, look, feel, features, source code, content, and other technology relating to any part of the services and including all related patents, inventions, trademarks, and copyrights, all applications therefor, and all trade names, service marks, know how, and trade secrets (collectively referred to as “IP Rights”), except as otherwise expressly provided by this Agreement. Consultant warrants that the services to be provided pursuant to this Agreement do not infringe, violate, trespass, or constitute the unauthorized use or misappropriation of any IP Rights of any third party. Consultant shall indemnify, defend, and hold Indemnitees, harmless from and against any Liabilities by a third party that the services to be provided pursuant to this Agreement infringe or violate any third-party’s IP Rights, provided any such right is enforceable in the United States. Such costs and expenses shall include reasonable attorneys’ fees of counsel of Authority’s choice, expert fees and all other costs and fees of litigation.
C. The acceptance of the services by Authority shall not operate as a waiver of these rights of indemnification. The hold harmless and indemnification provisions of this Section shall apply regardless of whether or not any insurance policies are determined to be applicable to the Liability.
D. Consultant’s indemnifications and obligations under this section shall survive the expiration or termination of this Agreement.
10. INSURANCE
A. General Requirements. On or before the commencement of the term of this Agreement, Consultant shall furnish Authority with certificates showing the type, amount, class of operations covered, effective dates and dates of expiration of insurance coverage in compliance with the requirements listed in Exhibit "D," which is attached hereto and incorporated herein by this reference. Such insurance and certificates, which do not limit Consultant’s indemnification obligations under this Agreement, shall also contain substantially the following statement:
"Should any of the above insurance covered by this certificate be canceled or coverage reduced before the expiration date thereof, the insurer affording coverage shall provide thirty (30) days’ advance written notice to the Authority by certified mail, Attention: Chief Executive Officer." Consultant shall maintain in force at all times during the performance of this Agreement all appropriate coverage of insurance required by this Agreement with an insurance company that is acceptable to Authority and licensed to do insurance business in the State of California.
Endorsements naming the Authority as additional insured shall be submitted with the insurance certificates.
B. Subrogation Waiver. Consultant agrees that in the event of loss due to any of the perils for which he/she has agreed to provide comprehensive general and automotive liability insurance, Consultant shall look solely to his/her/its insurance for recovery. Consultant hereby grants to Authority, on behalf of any insurer providing comprehensive general and automotive Item 1d
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liability insurance to either Consultant or Authority with respect to the services of Consultant herein, a waiver of any right to subrogation which any such insurer of Consultant may acquire against Authority by virtue of the payment of any loss under such insurance.
C. Failure to secure or maintain insurance. If Consultant at any time during the term hereof should fail to secure or maintain the foregoing insurance, Authority shall be permitted to obtain such insurance in the Consultant's name or as an agent of the Consultant and shall be compensated by the Consultant for the costs of the insurance premiums at the maximum rate permitted by law and computed from the date written notice is received that the premiums have not been paid.
D. Additional Insured. Authority, its members, officers, employees and volunteers shall be named as additional insureds under all insurance coverages, except any professional liability insurance, required by this Agreement. The naming of an additional insured shall not affect any recovery to which such additional insured would be entitled under this policy if not named as such additional insured. An additional insured named herein shall not be held liable for any premium, deductible portion of any loss, or expense of any nature on this policy or any extension thereof. Any other insurance held by an additional insured shall not be required to contribute anything toward any loss or expense covered by the insurance provided by this policy.
E. Sufficiency of Insurance. The insurance limits required by Authority are not represented as being sufficient to protect Consultant. Consultant is advised to confer with Consultant's insurance broker to determine adequate coverage for Consultant.
F. Maximum Coverage and Limits. It shall be a requirement under this Agreement that any available insurance proceeds broader than or in excess of the specified minimum Insurance coverage requirements and/or limits shall be available to the additional insureds. Furthermore, the requirements for coverage and limits shall be the minimum coverage and limits specified in this Agreement, or the broader coverage and maximum limits of coverage of any insurance policy or proceeds available to the named insured, whichever is greater.
11. CONFLICT OF INTEREST
Consultant warrants that it, its officers, employees, associates and subcontractors, presently have no interest, and will not acquire any interest, direct or indirect, financial or otherwise, that would conflict in any way with the performance of this Agreement, and that it, its officers, employees, associates and subcontractors, will not employ any person having such an interest.
Consultant and its officers, employees, associates and subcontractors, if any, shall comply with all conflict of interest statutes of the State of California applicable to Consultant’s services under this Agreement, including the Political Reform Act (Gov. Code § 81000, et seq.) and Government Code Section 1090. During the term of this Agreement, Consultant may perform similar services for other clients, but Consultant and its officers, employees, associates and subcontractors shall not, without the Authority Representative’s prior written approval, perform work for another person or entity for whom Consultant is not currently performing work that would require Consultant or one of its officers, employees, associates or subcontractors to abstain from a decision under this Agreement pursuant to a conflict of interest statute. Consultant shall incorporate a clause substantially similar to this section into any subcontract that Consultant executes in Item 1d
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connection with the performance of this Agreement. Consultant understands that it may be required to fill out a conflict of interest form if the services provided under this Agreement require Consultant to make certain governmental decisions or serve in a staff Authority, as defined in Title 2, Division 6, Section 18700 of the California Code of Regulations.
12. PROHIBITION AGAINST TRANSFERS
Consultant shall not assign, sublease, hypothecate, or transfer this Agreement, or any interest therein, directly or indirectly, by operation of law or otherwise, without prior written consent of Authority. Any attempt to do so without such consent shall be null and void, and any assignee, sublessee, pledgee, or transferee shall acquire no right or interest by reason of such attempted assignment, hypothecation or transfer. However, claims for money by Consultant from Authority under this Agreement may be assigned to a bank, trust company or other financial institution without prior written consent. Written notice of such assignment shall be promptly furnished to Authority by Consultant.
The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant, if Consultant is a partnership or joint venture or syndicate or cotenancy, which shall result in changing the control of Consultant, shall be construed as an assignment of this Agreement. Control means fifty percent (50%) or more of the voting power of the corporation.
13. SUBCONTRACTOR APPROVAL
Unless prior written consent from Authority is obtained, only those persons and subcontractors whose names are attached to this Agreement shall be used in the performance of this Agreement.
In the event that Consultant employs subcontractors, such subcontractors shall be required to furnish proof of workers’ compensation insurance and shall also be required to carry general, automobile and professional liability insurance in substantial conformity to the insurance carried by Consultant. In addition, any work or services subcontracted hereunder shall be subject to each provision of this Agreement.
Consultant agrees to include within their subcontract(s) with any and all subcontractors the same requirements and provisions of this Agreement, including the indemnity and insurance requirements, to the extent they apply to the scope of the subcontractor’s work. Subcontractors hired by Consultant shall agree to be bound to Consultant and Authority in the same manner and to the same extent as Consultant is bound to Authority under this Agreement. Subcontractors shall agree to include these same provisions within any sub-subcontract. Consultant shall provide a copy of the Indemnity and Insurance provisions of this Agreement to any subcontractor. Consultant shall require all subcontractors to provide valid certificates of insurance and the required endorsements prior to commencement of any work and will provide proof of compliance to Authority.
14. REPORTS
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A. Each and every report, draft, work product, map, record and other document, hereinafter collectively referred to as "Report", reproduced, prepared or caused to be prepared by Consultant pursuant to or in connection with this Agreement, shall be the exclusive property of Authority. Consultant shall not copyright any Report required by this Agreement and shall execute appropriate documents to assign to Authority the copyright to Reports created pursuant to this Agreement. Any Report, information and data acquired or required by this Agreement shall become the property of Authority, and all publication rights are reserved to Authority. Consultant may retain a copy of any Report furnished to the Authority pursuant to this Agreement.
B. All Reports prepared by Consultant may be used by Authority in execution or implementation of: (1) The original project for which Consultant was hired; (2) Completion of the original project by others; (3) Subsequent additions to the original project; and/or (4) Other Authority projects as Authority deems appropriate in its sole discretion.
C. Consultant shall, at such time and in such form as Authority may require, furnish reports concerning the status of services required under this Agreement.
D. All Reports shall also be provided in electronic format, both in the original file format (e.g., Microsoft Word) and in PDF format.
E. No Report, information or other data given to or prepared or assembled by Consultant pursuant to this Agreement that has not been publicly released shall be made available to any individual or organization by Consultant without prior approval by Authority.
F. Authority shall be the owner of and shall be entitled upon request to immediate possession of accurate reproducible copies of Reports or other pertinent data and information gathered or computed by Consultant prior to termination of this Agreement or upon completion of the work pursuant to this Agreement.
15. RECORDS
Consultant shall maintain complete and accurate records with respect to costs, expenses, receipts and other such information required by Authority that relate to the performance of services under this Agreement, in sufficient detail to permit an evaluation of the services and costs. All such records shall be clearly identified and readily accessible. Consultant shall provide free access to such books and records to the representatives of Authority or its designees at all proper times, and gives Authority the right to examine and audit same, and to make transcripts therefrom as necessary, and to allow inspection of all work, data, documents, proceedings and activities related to this Agreement. Such records, together with supporting documents, shall be maintained for a minimum period of five (5) years after Consultant receives final payment from Authority for all services required under this agreement
16. PARTY REPRESENTATIVES
The Chief Executive Officer (“Authority Representative”) shall represent the Authority in all matters pertaining to the services to be performed under this Agreement. Byron Pakter Item 1d
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(Consultant Representative”) shall represent Consultant in all matters pertaining to the services to be performed under this Agreement.
17. INFORMATION AND DOCUMENTS
A. Consultant covenants that all data, reports, documents, discussion, or other information (collectively “Data”) developed or received by Consultant or provided for performance of this Agreement are deemed confidential and shall not be disclosed or released by Consultant without prior written authorization by Authority. Authority shall grant such authorization if applicable law requires disclosure. Consultant, its officers, employees, agents, or subcontractors shall not without written authorization from the Authority Representative or unless requested in writing by the Authority Attorney, voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning the work performed under this Agreement or relating to any project or property located within the Authority.
Response to a subpoena or court order shall not be considered “voluntary,” provided Consultant gives Authority notice of such court order or subpoena.
B. Consultant shall promptly notify Authority should Consultant, its officers, employees, agents or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions or other discovery request, court order or subpoena from any party regarding this Agreement and the work performed thereunder or with respect to any project or property located within the Authority. Authority may, but has no obligation to, represent Consultant or be present at any deposition, hearing or similar proceeding. Consultant agrees to cooperate fully with Authority and to provide Authority with the opportunity to review any response to discovery requests provided by Consultant. However, Authority’s right to review any such response does not imply or mean the right by Authority to control, direct or rewrite the response.
C. In the event Authority gives Consultant written notice of a “litigation hold”, then as to all data identified in such notice, Consultant shall, at no additional cost to Authority, isolate and preserve all such data pending receipt of further direction from the Authority.
D. Consultant’s covenants under this section shall survive the expiration or termination of this Agreement.
18. NOTICES
Any notice, consent, request, demand, bill, invoice, report or other communication required or permitted under this Agreement shall be in writing and conclusively deemed effective: (a) on personal delivery, (b) on confirmed delivery by courier service during Consultant’s and Authority’s regular business hours, or (c) three Business Days after deposit in the United States mail, by first class mail, postage prepaid, and addressed to the Party to be notified as set forth below:
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TO AUTHORITY:
333 W. El Camino Real
Suite 330
Sunnyvale CA 94087
Attention: Chief Executive Officer
TO CONSULTANT:
Byron Pakter
Optony Inc.
5201 Great America Pkwy, Suite 320
Santa Clara, CA 95054
19. TERMINATION
In the event Consultant fails or refuses to perform any of the provisions hereof at the time and in the manner required hereunder, Consultant shall be deemed in default in the performance of this Agreement. If Consultant fails to cure the default within the time specified (which shall be determined by the Authority but shall be not less than 10 days) and according to the requirements set forth in Authority’s written notice of default, and in addition to any other remedy available to the Authority by law, the Authority Representative may terminate the Agreement by giving Consultant written notice thereof, which shall be effective immediately. The Authority Representative shall also have the option, at its sole discretion and without cause, of terminating this Agreement by giving seven (7) calendar days' prior written notice to Consultant as provided herein. Upon receipt of any notice of termination, Consultant shall immediately discontinue performance.
In the event of Authority’s termination of this Agreement due to no fault or failure of performance by Consultant, Authority shall pay Consultant for services satisfactorily performed up to the effective date of termination. Upon termination, Consultant shall immediately deliver to the Authority any and all copies of studies, sketches, drawings, computations, and other material or products, whether or not completed, prepared by Consultant or given to Consultant, in connection with this Agreement. Such materials shall become the property of Authority.
Consultant shall have no other claim against Authority by reason of such termination, including any claim for compensation.
20. COMPLIANCE WITH LAWS
Consultant shall keep itself informed of all applicable federal, state and local laws, ordinances, codes, regulations and requirements which may, in any manner, affect those employed by it or in any way affect the performance of its services pursuant to this Agreement. Consultant shall, at all times, observe and comply with all such laws and regulations, including, but not limited to the Americans with Disabilities Act, the Stored Communications Act, 18 U.S.C. Section 2701, et seq., California Civil Code Sections 1798.80 through 1798.84, and the California Consumer Privacy Act, Civil Code Section 1798.100 et seq. Authority, and its officers and employees, shall not be liable at law or in equity by reason of the failure of the Consultant to comply with this paragraph.
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Consultant represents and agrees that all personnel engaged by Consultant in performing services are and shall be fully qualified and are authorized or permitted under state and local law to perform such services. Consultant represents and warrants to Authority that it has all licenses, permits, certificates, qualifications, and approvals required by law to provide the services and work required to perform services under this Agreement, including a business license. Consultant further represents and warrants that it shall keep in effect all such licenses, permits, and other approvals during the term of this Agreement.
21. CONFLICT OF LAW
This Agreement shall be interpreted under, and enforced by the laws of the State of California. The Agreement and obligations of the Parties are subject to all valid laws, orders, rules, and regulations of the authorities having jurisdiction over this Agreement (or the successors of those authorities). Any suits brought pursuant to this Agreement shall be filed with the Superior Court of the County of Santa Clara, State of California.
22. ADVERTISEMENT
Consultant shall not post, exhibit, display or allow to be posted, exhibited, displayed any signs, advertising, show bills, lithographs, posters or cards of any kind pertaining to the services performed under this Agreement unless prior written approval has been secured from Authority to do otherwise.
23. WAIVER
A waiver by Authority of any breach of any term, covenant, or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition contained herein, whether of the same or a different character.
24. INTEGRATED CONTRACT
This Agreement represents the full and complete understanding of every kind or nature whatsoever between the Parties, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions hereof. Any modification of this Agreement will be effective only by a written document signed by both Authority and Consultant.
25. AUTHORITY
The individual(s) executing this Agreement represent and warrant that they have the legal Authority and authority to do so on behalf of their respective legal entities.
26. INSERTED PROVISIONS
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Each provision and clause required by law to be inserted into the Agreement shall be deemed to be enacted herein, and the Agreement shall be read and enforced as though each were included herein. If through mistake or otherwise, any such provision is not inserted or is not correctly inserted, the Agreement shall be amended to make such insertion on application by either Party.
27. CAPTIONS AND TERMS
The captions in this Agreement are for convenience only, are not a part of the Agreement and in no way affect, limit or amplify the terms or provisions of this Agreement.
28. AUTHORITY’S RIGHTS TO EMPLOY OTHER CONSULTANTS
Authority reserves the right to employ other consultants in connection with the subject matter of the Scope of Services.
29. EXHIBITS
The Exhibits referenced in this Agreement are attached hereto and incorporated herein by this reference as though set forth in full in the Agreement. If any inconsistency exists or arises between a provision of this Agreement and a provision of any exhibit, or between a provision of this Agreement and a provision of Consultant’s proposal, the provisions of this Agreement shall control.
30. FORCE MAJEURE
Consultant shall not be liable for any failure to perform its obligations under this Agreement if Consultant presents acceptable evidence, in Authority’s sole judgment, that such failure was due to acts of God, embargoes, inability to obtain labor or materials or reasonable substitutes for labor or materials, governmental restrictions, governmental regulations, governmental controls, judicial orders, enemy or hostile governmental action, civil commotion, fire or other casualty, or other causes beyond Consultant’s reasonable control and not due to any act by Consultant.
31. FINAL PAYMENT ACCEPTANCE CONSTITUTES RELEASE
The acceptance by Consultant of the final payment made under this Agreement shall operate as and be a release of Authority from all claims and liabilities for compensation to Consultant for anything done, furnished or relating to Consultant’s work or services. Acceptance of payment shall be any negotiation of Authority’s check or the failure to make a written extra compensation claim within ten calendar days of the receipt of that check. However, approval or payment by Authority shall not constitute, nor be deemed, a release of the responsibility and liability of Consultant, its employees, subcontractors and agents for the accuracy and competency of the information provided and/or work performed; nor shall such approval or payment be deemed to be an assumption of such responsibility or liability by Authority for any defect or error in the work prepared by Consultant, its employees, subcontractors and agents.
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32. ATTORNEY FEES
In any litigation or other proceeding by which a Party seeks to enforce its rights under this Agreement (whether in contract, tort or both) or seeks a declaration of any rights or obligations under this Agreement, the prevailing Party shall be entitled to recover all attorneys’ fees, experts’ fees, and other costs actually incurred in connection with such litigation or other proceeding, in addition to all other relief to which that Party may be entitled.
33. SEVERABILITY
If any provision in this Agreement is held by a court of competent jurisdiction to be illegal, invalid, void, or unenforceable, the remaining provisions will nevertheless continue in full force without being impaired or invalidated in any way.
34. SUCCESSORS AND ASSIGNS
The terms and conditions of this Agreement shall be binding on the successors and assigns of the Parties to this Agreement.
35. NO THIRD PARTY BENEFICIARIES INTENDED
This Agreement is made solely for the benefit of the Parties to this Agreement and their respective successors and assigns, and no other person or entity may have or acquire a right by virtue of this Agreement.
36. COUNTERPARTS; FACSIMILE/PDF/ELECTRONIC SIGNATURE
This Agreement may be executed in multiple counterparts, all of which shall be deemed an original, and all of which will constitute one and the same instrument. The Parties agree that a facsimile, PDF or electronic signature may substitute for and have the same legal effect as the original signature.
37. DRAFTING PARTY
This Agreement shall be construed without regard to the Party that drafted it. Any ambiguity shall not be interpreted against either Party and shall, instead, be resolved in accordance with other applicable rules concerning the interpretation of contracts.
IN WITNESS WHEREOF, the Parties have caused the Agreement to be executed as of the date set forth above.
RECOMMENDED FOR APPROVAL
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_______________________________
Enter Your Name, Enter Your Title
RECOMMENDED FOR APPROVAL
__________________________________________________________ Amrit Singh, Chief Financial Officer/Director of Administrative Services
CONSULTANT NAME
Bryon Pakter
By: __________________________
Name: ________________________
Title: _________________________
Date: __________________________
SILICON VALLEY CLEAN ENERGY
AUTHORITY
A Joint Powers Authority
By: ___________________________
Name: Girish Balachandran
Title: Chief Executive Officer
Date: __________________________
APPROVED AS TO FORM:
_______________________
Counsel for Authority
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ATTEST:
_____________________
Authority Clerk
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Exhibit A
Scope of Services
Project Overview
The Fleet Electrification Technical Assistance Program (FETA) is designed to provide technical assistance to at least 5 member agencies fleets and 5 private fleets. By providing hands-on technical assistance through a consultant along with leveraging local and federal incentives, we aim to enable fleets to replace their current vehicles with suitable EV’s.
The Fleet Electrification Program’s technical assistance will provide public and private fleet managers with a range of tools as they prepare for an EV fleet transitions. The proposed full technical assistance package available to fleets is outlined below.
Objectives
1. Enable electrification for at least 10 SVCE customer fleets.
2. Prepare participating agencies to plan for and comply with upcoming state public fleet electrification targets.
3. Support non-participating agencies with fleet electrification best practices and case studies in support of upcoming state public fleet electrification targets.
4. Leverage available funding to the greatest extent practicable to minimize cost to the participating agencies while ensuring expedient project delivery.
5. Facilitate maximum operational cost savings to fleet managers and Silicon Valley Clean Energy renewable energy alignment objectives with charge management solutions.
Contractor Tasks
Administrative Tasks
1. Kickoff Meeting
Participate in a kickoff meeting with SVCE to review objectives, budget, timeline, administrative processes, and contract at a mutually determined time.
2. Monthly Progress Report and Call
Provide a short monthly progress report and associated call with the designated SVCE contract administrator. This report will outline project progress, challenges encountered, a description of additional funding or resources secured, and objectives for the following month.
3. Expense Report
Provide a monthly expense report at the beginning the month after the contract start date and Item 1d
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every month thereafter, or another schedule as mutually determined, submitted with the corresponding Monthly Progress Report, documenting expenses including labor (hours, rate, total), subcontractor expenses (with invoices), and equipment (with invoices). The expense report must include the total expenditures for the quarter and running expense total.
4. Annual Report
Provide an annual report that includes an executive summary, major accomplishments in the prior year, lessons learned and recommendations for future work, overview and assessment of fleet replacement plans and EV charging project plans delivered in the previous year, and financial summary comparing actual expenditures to the project budget. Draft reports will be submitted to Silicon Valley Clean Energy for review and approval before being finalized.
The annual report should also include key performance indicators, such as:
a. Total fleets engaged, including a status summary
b. Total fleets receiving support
c. Expected number of EVs and charging infrastructure to be deployed, by fleet d. Reduction in total ownership costs to fleets
e. Estimated fuel and emissions savings, pet fleet
5. Final Report
Provide a final report for public distribution, subject to review and approval by Silicon Valley Clean Energy, this includes an executive summary, challenges encountered, and lessons learned, best practices for other public agency fleets, case studies suitable for sharing with other fleets, summary of total program impact and key performance indicators utilized in annual reports.
Project Tasks
1. Data collection
In coordination with Silicon Valley Clean Energy staff, Contractor collects fleet and other relevant data and assist in project planning.
This engagement will include the following:
a. Organize and schedule meetings with public agency staff, in coordination with SVCE, develop agendas, circulate meeting minutes, etc.
b. Facilitate a kickoff meeting with public agency staff and SVCE and follow up meetings, as relevant, to gather:
c. Baseline information (e.g., fleet inventories, “as built,” current electrical infrastructure layout, panel schedules, and capacity, etc.)
d. Existing or proposed near-term and long-term fleet transition policies e. Other information needed to scope specific projects
f. Contractor will gather information on vehicle data, including vehicle characteristics and duty cycles and facility information (e.g., electrical capacity and other relevant details).
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g. Contractor will utilize templates for data collection that seek to minimize the level of effort needed on behalf of fleet managers.
h. Contractor will share data obtained from public agencies with SVCE.
2. Develop Vehicle Replacement and Procurement Plans and Energy Needs Assessments a. Analysis of existing fleet vehicles and current duty cycles. b. Identification of 1 for 1 electric vehicle alternative options for each vehicle in the fleet, noting market availability and when replacements are not yet available or practical due to conditions such as range, hauling capacity, or other use cases (e.g., pursuit-rated police vehicles).
Contractor will note general availability of these vehicles on cooperative purchasing contracts (e.g., Sourcewell, Drive EV Fleets, California Department of General Services, etc.,) to streamline future vehicle procurement. c. Vehicle replacement schedule that aligns with the fleet’s typical replacement cycle, but also factors in state or local electrification timing requirements such as the California Air Resources Board Advanced Clean Fleet regulations. When practical, replacement schedules should start with “low-hanging fruit” options such as pool cars, light-duty vehicles, etc. as well as agency priority replacements, before moving to more difficult use cases over time.
d. Estimated purchase price and an approximated total cost of ownership of each vehicle replacement in comparison to the internal-combustion engine equivalent over the service life of the vehicle.
e. Recommended charging infrastructure types for each vehicle, which factors in estimated daily duty cycles (e.g., Level 2, high-power Level 2, DC fast charging of various power capacities, etc.) and vehicle charging needs. Recommendations for specific charging infrastructure models for the vehicle replacements identified, including piggybacking and cooperative contract procurement options (e.g., Sourcewell, Drive EV Fleets, etc.), if available, to streamline project timelines. f. Energy Needs Assessment for the electric fleet, which includes a calculation of each vehicle replacement’s estimated annual electricity needs.
Vehicle replacement and procurement plans should note the following, when applicable:
a. Consolidation opportunities to replace multiple underutilized vehicles with a fewer number of vehicles.
b. “Right-sizing” opportunities to replace a vehicle with a smaller vehicle, if the duty cycle or use has changed.
Contractor shall make proprietary tools or software (e.g., Municipal Fleet Planning Tool) Item 1d
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available to fleet managers for the duration of the project.
Vehicle replacement and procurement plans will be reviewed by both the participating agency and SVCE and contractor will correct, edit, and amend the plans prior to being finalized.
3. Produce Charging Infrastructure Project Plans and Site Designs a. Facility assessment, including the determination of electrical infrastructure capacity to support recommended charging equipment, existing electrical service, potential connection points for EV charging infrastructure, identification of suitable locations for supporting electrical infrastructure (panels, transformers, etc.), ADA requirements as necessary, potential trenching and/or conduit run routes, identify other site-specific challenges or opportunities to the project. b. Electrical load analyses, as needed.
c. Project cost estimate.
d. Construction engineering site design documents that the agency can use in a public bid to hire contractors for installation services. These documents will include:
i. Basis of Design
1. Project summary and description
2. Engineering requirements and performance specifications
3. Identification of ADA compliant EV stalls, if required
4. Considerations for grading, if required
5. Equipment specifications and cutsheets
6. Other documents, as required by the public agency, to bid these charging station installation projects or receive permits ii. Schematic Design Documents
1. Architectural renderings (a.k.a. “as built”) of the parking areas and other facilities, as relevant
2. Electrical single-line diagrams
3. Trenching and/or conduit routes
4. Panel schedules, if required
e. Contractor shall arrange for a site walk with local agency contact to gather information to complete this task, as necessary.
f. Charging infrastructure project plans will be reviewed by both the participating agency and SVCE and contractor will correct, edit, and amend the plans prior to being finalized.
4. Funding Package Overview
For each project, Contractor shall provide a detailed Funding Package Overview, which includes:
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a. Currently available funding options for both the vehicles and charging infrastructure from relevant state and local agencies, including:
i. The Clean Vehicle Rebate Project
ii. Hybrid and Zero-Emission Truck and Bus Boucher Incentive Project iii. PG&E EV Fleets Program
iv. Bay Area Air Quality Management District
v. Others to be determined.
b. The Overview will include any requirements unique to the funding agency such as vehicle utilization, access, vehicle types or use cases, etc. c. Contractors should seek to opportunities to stack funding, as relevant and allowable, to minimize costs to public agencies.
d. Contractors shall also provide all information to the agencies to minimize effort needed by the fleet managers to apply for funding.
e. The Funding Package Overview for each participating agency shall be reviewed and approved by SVCE before being finalized.
5. Charging Schedule and Optimization Plan
For each project, Contractor will provide a Charging Schedule and Optimization Plan, in the form of a brief memo, which includes:
a. Simulated 15-minute charging load profiles based on vehicle behavior, duty cycles, and total energy needs, with and without charge optimization. b. Costs and other impacts of optimized and non-optimized charging. c. Recommended charging schedules based on maximum cost benefit to fleet, including time of use and demand charge optimization, and to the degree feasible, benefit to the grid.
SVCE will review and approve Charging Schedule and Optimization Plans before being finalized.
Contractor to provide training to public agency fleet manager on charge management basics, explanations of key concepts (demand charges, time of use rates, etc.), and benefits of charge management. Training can be incorporated into memo or delivered in another format with SVCE’s approval.
Deliverables
Public Fleet electrification packages, which each include the following elements:
1. Report summarizing baseline data collection, fleet composition or asset lists, etc.
Item 1d
Attachment 1
2/2022 Version
2. Spreadsheet-based model with vehicle replacement plan scenarios, including:
a. Total cost of ownership analysis
b. Replacement timeline
c. Identified vehicles as replacement options
3. Spreadsheet-based model with charging needs assessment, including number and types of charging stations required for an all-electric fleet
4. Memo summarizing project charging infrastructure plan for one site, including project overview, number of charging stations to be installed, determination of electrical capacity of the site to support recommended charging infrastructure, and futureproofing elements to be included
5. Basis of Design and Schematic Design construction documents for one project site per fleet
6. Memo summarizing relevant funding program opportunities and “to do” list of information needed to apply for relevant funding programs and important dates and deadlines
7. Charging optimization memo that includes charging cost scenarios for managed and unmanaged charging
Reporting
1. 3 Annual Reports
2. Monthly Progress reports (36)
3. 1 Final Report, including at least 1 case study that highlights an exemplary fleet electrification story
4. 2 Events or Webinars
Item 1d
Attachment 1
2/2022 Version
Exhibit B
Schedule of Performance
This schedule may be modified with the written approval of the Authority.
Task Begin (months
after kick off)
Complete
1. Data Collection 1
2. Vehicle Replacement & Procurement Plan and
Energy Needs Assessment
3 3. Funding package 3
4. Charging schedule and optimization plan 4
5. Charging Infrastructure Project Plan and Site
Designs
5 6.
7. 8.
9. 10.
Item 1d
Attachment 1
2/2022 Version
Exhibit C
Compensation
Authority shall compensate Consultant for professional services in accordance with the terms and conditions of this Agreement based on the rates and compensation schedule set forth below.
Compensation shall be calculated based on the hourly rates set forth below up to the not to exceed budget amount set forth below.
The compensation to be paid to Consultant under this Agreement for all services described in Exhibit “A” and reimbursable expenses shall not exceed a total of THREE HUNDRED THOUSAND DOLLARS ($300,000), as set forth below. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to Authority unless previously approved in writing by Authority.
Total SVCE Budget $300,000
Task Number and Title Small Fleet (0-
199)
Medium Fleet (200-
399)
Task 1 (Fleet Replacement Plan & Energy Needs
Assessment)
$10,000 $14,000
Task 2 (Charging Infrastructure Plan) $8,000 $10,000
Task 3 (Site Designs) $7,750 $10,000
Optony Project Administration $47,000
Deliverables Budget $128,750 $102,000
Total Deliverables $230,750
Contingency (~5%) $15,000
Remaining Budget for Custom Quotes (Large Fleets) $22,250 Invoices
Monthly Invoicing: In order to request payment, Consultant shall submit monthly invoices to the Authority describing the services performed and the applicable charges (including a summary of the work performed during that period, personnel who performed the services, hours worked, task(s) for which work was performed). Authority shall pay all undisputed invoice amounts within thirty (30) calendar days after receipt up to the maximum compensation set forth herein. Authority does not pay interest on past due amounts.
Reimbursable Expenses
Administrative, overhead, secretarial time or overtime, word processing, photocopying, in house printing, insurance and other ordinary business expenses are included within the scope of payment Item 1d
Attachment 1
2/2022 Version
for services and are not reimbursable expenses. Travel expenses must be authorized in advance in writing by Authority. In no event shall reimbursable expenses collectively exceed the total sum of _______________ ($__________).
Additional Services
Consultant shall provide additional services outside of the services identified in Exhibit A only by advance written authorization from Authority Representative prior to commencement of any additional services. Consultant shall submit, at the Authority Representative’s request, a detailed written proposal including a description of the scope of additional services, schedule, and proposed maximum compensation. Any changes mutually agreed upon by the Parties, and any increase or decrease in compensation, shall be incorporated by written amendments to this Agreement.
Item 1d
Attachment 1
2/2022 Version
Item 1d
Attachment 1
2/2022 Version
[Review insurance coverage and amounts to confirm they are appropriate for each scope of service]
Exhibit D
Insurance Requirements and Proof of Insurance
Consultant shall maintain the following minimum insurance coverage:
A. COVERAGE:
(1) Workers' Compensation:
Statutory coverage as required by the State of California. (2) Liability:
Commercial general liability coverage with minimum limits of $1,000,000 per occurrence and $2,000,000 aggregate for bodily injury and property damage.
ISO occurrence Form CG 0001 or equivalent is required.
(3) Automotive:
Comprehensive automotive liability coverage with minimum limits of $1,000,000 per accident for bodily injury and property damage. ISO Form CA 0001 or equivalent is required.
(4) Professional Liability
Professional liability insurance which includes coverage for the professional acts, errors and omissions of Consultant in the amount of at least $1,000,000. (5) Privacy and Cybersecurity Liability [May be reduced or eliminated based on scope of services]
Privacy and cybersecurity liability (including costs arising from data destruction, hacking or intentional breaches, crisis management activity related to data breaches, and legal claims for security breach, privacy violations, and notification costs of at least $5,000,000 US per occurrence.
Item 1d
Attachment 1
Staff Report – Item 1e
Item 1e: Amending Program for SVCE Support of Electric Vehicle Charging in Affordable Housing Developments
From: Girish Balachandran, CEO
Prepared by: Justin Zagunis, Director of Decarbonization Programs & Policy; Hannah Gustafson, Senior Community Programs Specialist
Date: 11/9/2022
RECOMMENDATION
Staff recommends the Silicon Valley Clean Energy (SVCE) Board of Directors approve the following amendments to the previously adopted action directing a new program for electric vehicle (EV) charging infrastructure incentives for affordable housing developments:
1. Expand the affordable housing eligibility criteria to provide broader support for charging at affordable housing, aligned with the adopted policy statement.
2. Allow for flexibility in incentive design based on stakeholder feedback.
BACKGROUND
On August 10, 2022, the SVCE Board of Directors approved a policy statement and action to authorize funding for SVCE support of electric vehicle charging in affordable housing developments (Item 1g): SVCE Board of Directors Meeting, August 10, 2022. The core component of the policy statement was:
“Consistent with the SVCE Equity Framework, SVCE is committed to ensuring that residents in new affordable housing developments have equitable electric vehicle charging access.” In support of that concept, the Board approved SVCE to spend up to $7.5M to cover incremental EV charging infrastructure costs associated with the SVCE model code in new very low income and low income developments. These incentives were to be applicable to projects entitled from 2023-2025 under new reach codes to be adopted by SVCE member agencies.
As staff began to design this program, additional stakeholder feedback revealed that restricting eligibility to new affordable housing developments approved under the 2022-2025 reach code cycle would limit the potential reach of this program and miss an opportunity to support residents in other new affordable housing.
In the spirit of the policy statement, staff proposes adjustments to the previously approved action.
AMENDMENT DETAILS AND DISCUSSION
1. Expand affordable housing eligibility criteria to provide broader support for charging at affordable housing, aligned with the adopted policy statement.
As written, the program approved by the Board in August 2022 allocates funds for EV charging to new affordable housing developments built to 2022 reach code standards. Staff recommends adjusting eligibility to now include new affordable units that:
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Agenda Item: 1e Agenda Date: 11/9/2022
• Are in a jurisdiction that has adopted 2022 EVI reach code that applies to multifamily buildings, or
• [NEW] Are in a jurisdiction that has adopted 2019 EV charging reach code that applies to multifamily buildings, or
• [NEW] Are built to meet SVCE’s applicable model EV charging code standards, even if located in a jurisdiction without an EV charging reach code.
If none of the above three conditions are met, but the project is built to exceed the EV charging requirements in the State’s Base CALGreen Code under which they are entitled, then eligibility for incentives would be at SVCE’s discretion.
Reasoning
Increase fairness and participation. Broadening the scope allows more affordable developments to access these funds regardless of a jurisdiction’s EV reach code status. Affordable housing in jurisdictions that do not have a reach code may now choose to exceed State code. Jurisdictions remain incentivized to adopt a 2022 EV charging reach code to ensure every future development takes advantage of SVCE’s funds, but now incentives will be available even if they choose not to do so. This change will allow SVCE to help more new affordable housing residents get access to EV charging.
Accelerate program uptake. Affordable housing development construction is a multiyear process, and staff identified that there are affordable housing projects ongoing that this program may be able to influence if eligibility is expanded. Allowing new construction projects approved under the 2019 code cycle to be eligible will enable more affordable housing developments to install EV chargers quickly and at a greatly reduced cost. Opening funds to these housing developments meets the policy intent of the program, which is to provide support for the incremental costs of additional EVI installed above State code, reduces the likelihood of a jurisdiction granting a waiver that exempts developments from meeting the reach code, and provides greater EV charging access for residents of affordable housing.
Flexibility is necessary. Allowing flexible program eligibility is important considering the difficult development and financing environment for affordable housing. This program should allow flexibility in cases where costs to meet full SVCE model code would be cost-prohibitive (for example, if meeting the SVCE model code requirements would trigger an additional transformer installation or other similar high infrastructure cost not covered by this program) but the project is still exceeding the State’s Base CALGreen Code.
2. Allow flexibility in incentive design based on stakeholder feedback.
As originally written, the program used an incremental cost estimate of $1,000 per eligible unit of affordable housing. Staff recommends allowing for flexible incentive design based on ongoing stakeholder feedback. This includes updating the incentive structure to provide a set rebate amount per EV port or outlet, instead of per unit, to better align with similar EVI incentive programs.
Depending on the equipment incentivized, the optimal rebate per port or outlet may end up being greater or less than $1,000. Once the program incentive levels are finalized, and if incentive levels are adjusted in the future, staff will share an update via the CEO Report.
Reasoning
Aligns with similar incentive structures. Regulations on parking requirements are changing across the State, and this incentive should be based on the number of EV chargers installed rather than number of residential units to be consistent with other incentive programs and the code language.
Stakeholder feedback. Additional stakeholder input will help inform the best incentive structure to provide funding that meets the needs of the developments, is easy to access, and reflects fluctuating market costs.
Item 1e
Agenda Item: 1e Agenda Date: 11/9/2022
STRATEGIC PLAN
The proposed changes to the program align with the board-adopted strategic plan for the following goals:
• Goal #11: Engage a full range of public, private and nonprofit stakeholders to leverage our decarbonization efforts
• Goal #12: Enact competitive service offerings and programs that deliver measurable environmental and economic benefits
ALTERNATIVE
The Board may choose to amend the proposed program requirements prior to adoption or take no action.
FISCAL IMPACT
No budgetary changes are anticipated with the approval of these amendments, as the overall funding level is not changing from $7.5M as previously approved. The amendments may increase the number of projects that participate in the program and therefore utilize more of the $7.5M budget. If so much affordable housing is constructed that the program approaches $7.5M in incentives paid before the end of the 2022-2025 code cycle, then staff will return to the Board with an additional budget ask.
Item 1e
Staff Report – Item 1f
Item 1f: Approve Scholarship Funds for 2023 Empower SV Short-Film Competition From: Girish Balachandran, CEO
Prepared by: Juliette Pascual, Community Outreach Fellow Adam Selvin, Director of Energy Services and Community Relations Date: 11/9/2022
RECOMMENDATION
Approve the allocation of $20,000 from the marketing budget for scholarship prizes to be awarded to students in the proposed ‘2023 Empower SV Short-Film Competition’.
BACKGROUND
SVCE hosts a yearly scholarship competition to engage high school students in the agency’s mission and to explore local solutions to climate change. For the first two scholarship competitions, SVCE hosted an electric bike building contest. To meet the challenges of the COVID-19 pandemic, SVCE shifted gears and hosted a short-film competition in recent years.
The short-film contest was created to meet the same goals of the annual scholarship competition, and the new format greatly expanded participation from students interested in a broader range of topics. For the inaugural film competition in 2021, SVCE received short films from 10 teams of students with varying subjects and formats. These submissions were judged by a panel of community members, including SVCE board members and industry experts. In 2022, the number of film submissions increased to 27, and the winning short films are highlighted on Empower SV webpage at SVCleanEnergy.org/empower-sv.
With the success of past short-film competitions, especially in engaging a diverse range of students and their interests, we propose to host another iteration of the contest. We hope to further increase the number of student participants by offering 2-3 prompts about clean energy and climate solutions.
ANALYSIS & DISCUSSION
In the proposed 2023 competition, high school students in the SVCE service territory, as individuals or teams, will submit a short-film (3-6 minutes) incorporating SVCE’s mission to build a clean energy future by reducing greenhouse gas emissions and advancing climate solutions. This competition will not only introduce students to concepts such as clean energy technologies and real-world climate solutions, but it will allow SVCE to uplift our communities’ strengths, interests, and concerns in clean energy and climate change.
The proposed Empower SV Short-Film Competition would be administered from February 2023 to May 2023.
The competition would begin with a virtual kick-off event, in which staff will introduce participants to the community’s climate goals and core themes of clean energy. After students work on and submit their short films, a panel of judges will select the main prize and honorable mention winners. All submissions and winners would be showcased on the SVCE website and promoted in conjunction with a virtual (or hybrid, COVID-19 concerns allowing) ‘film festival’ event to be held at the conclusion of the competition.
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Agenda Item: 1f Agenda Date: 11/9/2022
Staff recommends an allocation of $20,000 for scholarships under this program. Rather than ranking top winners, designating four categories of equal scholarship amounts of $3,000 each would reward different contributions and skillsets encouraged by the competition. Adding four honorable mention prizes of $2,000 each will increase the number and diversity of solutions awarded. Staff anticipates that these scholarship prizes will be successful in incentivizing student participation and acknowledging the time and creative effort spent on developing the short films. Main prizes will include the following:
• The Energy Impact Award, one $3,000 prize, will honor the film that describes a solution likely to have a high impact in clean energy adoption at the local community level. An emphasis will be placed on solutions that are both implementable and replicable. • The Energy Innovation Award, one $3,000 prize, will recognize a creative and unique approach to clean energy. This award recognizes innovative solutions that deal with clean energy, including those that may go beyond the purely technological. Such solutions may consider social effects, like policy or human wellbeing, or other effects of clean energy in addition to the underlying science. • The Creative Presentation Award, one $3,000 prize, rewards creative storytelling and communication of a clean energy solution. This award encourages creative artistic expression and a diversity of approaches to film production, such as a music video or animated film. • The Community Enthusiasm Award, one $3,000 prize, will denote achievement in showcasing widespread and meaningful participation from the community. This award will incentivize solutions that receive broad support or implementation, such as school- or neighborhood-wide projects.
The Honorable Mention Awards, four at $2,000 each, would recognize short-films that did not win any of the main prize categories, but nevertheless demonstrated strong clean energy solutions and/or creative communications.
The event and scholarship awards are a great opportunity to communicate SVCE’s dedication to reinvesting in the community, encourage Silicon Valley’s youth to reflect creatively on clean energy and climate change, and reach residential customers.
STRATEGIC PLAN
This event aligns with customer and community goals in SVCE’s board-adopted Strategic Plan, specifically with Goal 10 – Empower customers with the awareness, knowledge and resources needed to make effective clean energy choices. The competition will build grassroots awareness and knowledge about clean energy’s role in decarbonization and community development.
ALTERNATIVE
Approve a general allocation of $20,000 for a 2023 scholarship program. If the Empower SV Short-Film Competition is not approved by the SVCE Board as a scholarship program for 2023, staff will explore other prize options, modify award categories, or explore alternative student scholarship competition ideas.
FISCAL IMPACT
No incremental fiscal impact. The $20,000 in scholarship funds will be allocated from the board-approved Account Services & Community Relations marketing budget.
Item 1f
Staff Report – Item 1g
Item 1g: Adopt Resolution Approving SVCE Complimentary Ticket or Pass Distribution Policy Pursuant to FPPC Regulation 18944.1
From: Girish Balachandran, CEO
Prepared by: Andrea Pizano, Board Clerk/Executive Assistant Date: 11/9/2022
RECOMMENDATION
Staff recommends the SVCE Board of Directors adopt Resolution 2022-28 adopting GAP08 – Complimentary Ticket or Pass Distribution Policy Pursuant to FPPC Regulation 18944.1.
BACKGROUND
SVCE is a government agency subject to the Political Reform Act (Cal. Gov. Code §§ 81000 et. seq.), including reporting requirements for gifts and income received by the Board of Directors, officials, and employees. The Fair Political Practices Commission (FPPC) promulgates regulations pertaining to the receipt of gifts, which exempt tickets and passes to events provided those tickets and passes are distributed in accordance with a written policy adopted by the agency. In order to establish a best practice for a fair and equitable process for the distribution of complimentary tickets or passes acquired by SVCE, SVCE’s general counsel has drafted the proposed policy which would apply to SVCE officials, employees, and consultants who are required to file a Statement of Economic Interests (Form 700). Without such a policy in place, SVCE officials, employees, and consultants must report the value of tickets and passes received as gifts or as income on their Form 700s.
ANALYSIS & DISCUSSION
Pursuant to California FPPC regulation section 18944.1, tickets and passes are not considered gifts under the Political Reform Act when the following criteria are satisfied: (i) the ticket or pass is distributed and used consistent with a written policy adopted by the agency’s governing body; (ii) the distribution of the ticket or pass is reported on FPPC Form 802; (iii) the ticket or pass is not earmarked by an outside source for use by a specific agency official; and (iv) the ticket or pass is distributed in the sole discretion of the agency. The proposed policy is consistent with the requirements of section 18944.1 and, if approved, would exempt tickets and passes distributed under the policy from the gift and income reporting requirements under the Political Reform Act.
SVCE staff will post and disclose ticket distribution using FPPC Form 802 as outlined in Section 9 Posting and Disclosure Requirements of the proposed policy.
STRATEGIC PLAN
N/A
FISCAL IMPACT
No fiscal impact to the agency as a result of adopting the proposed policy.
ATTACHMENTS
1. Resolution 2022-28 Adopting GAP08 - Complimentary Ticket or Pass Distribution Policy Pursuant to FPPC Regulation 18944.1
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Resolution 2022-28 -1-
SILICON VALLEY CLEAN ENERGY AUTHORITY
RESOLUTION NO. 2022-28
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE SILICON VALLEY
CLEAN ENERGY AUTHORITY ADOPTING A COMPLIMENTARY TICKET OR PASS DISTRIBUTION POLICY PURSUANT TO FPPC REGULATION 18944.1
THE BOARD OF DIRECTORS OF THE SILICON VALLEY CLEAN ENERGY AUTHORITY HEREBY RESOLVES AS FOLLOWS:
WHEREAS, the Silicon Valley Clean Energy Authority (“SVCE”) was formed on March 31, 2016, pursuant to a Joint Powers Agreement to promote, develop, conduct, operate, and manage energy programs in Santa Clara County; WHEREAS, SVCE obtains or receives tickets and passes that are distributed on a complimentary basis to SVCE officials, employees, and consultants who are required to file a Statement of Economic interests pursuant to the Political Reform Act or the SVCE Conflict of Interest Code.
WHEREAS, pursuant to California Fair Political Practices Commission (FPPC) regulation section 18944.1, these tickets and passes are not considered gifts under the Political Reform Act when the following criteria are satisfied: (i) the ticket or pass is distributed and used consistent with a written policy adopted by the agency’s governing body; (ii) the distribution of the ticket or pass is reported on FPPC Form 802; (iii) the ticket or pass is not earmarked by an outside source for use by a specific agency official; and (iv) the ticket or pass is distributed in the sole discretion of the agency.
WHEREAS, SVCE desires to adopt a complimentary ticket and pass distribution policy in accordance with the Political Reform Act and the FPPC regulations.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE SILICON
VALLEY CLEAN ENERGY AUTHORITY DOES HEREBY RESOLVE, DETERMINE, AND ORDER AS FOLLOWS:
Section 1. The Board hereby adopts the Complimentary Ticket or Pass Distribution Policy Pursuant to FPPC Regulation 18944.1, attached hereto as Exhibit A.
Section 2. The Board directs SVCE staff to post the policy on SVCE’s website within 30 days of adoption and email a link to the policy to the FPPC.
Item 1g
Attachment 1
Resolution 2022-28 -2-
ADOPTED AND APPROVED this 9th day of November 2022, by the following vote:
JURISDICTION NAME AYE NO ABSTAIN ABSENT
City of Campbell Director Gibbons
City of Cupertino Director Willey
City of Gilroy Director Hilton
City of Los Altos Director Fligor
Town of Los Altos Hills Director Tyson
Town of Los Gatos Director Rennie
City of Milpitas Director Chua
City of Monte Sereno Director Ellahie
City of Morgan Hill Director Martinez Beltran
City of Mountain View Director Abe-Koga
County of Santa Clara Director Lee
City of Saratoga Director Walia
City of Sunnyvale Director Klein
________________________________
Chair
ATTEST:
__________________________________
Clerk
Item 1g
Attachment 1
GAP8
Category: GENERAL & ADMINISTRATIVE
Page | 1 Proposed: 11/9/2022
COMPLIMENTARY TICKET OR PASS DISTRIBUTION POLICY
PURSUANT TO FPPC REGULATION 18944.1
Section 1. Purpose of Policy
The purpose of this Policy is to establish a fair and equitable process for the distribution of complimentary tickets or passes to Silicon Valley Clean Energy (“SVCE”) officials, employees, and their guests in compliance with the requirements of Section 18944.1 of the Fair Political Practices Commission (FPPC) Regulations. This Policy is subject to all applicable FPPC Regulations and the Political Reform Act, as now exist or may hereafter be added or amended.
Section 2. Definitions
Unless otherwise expressly provided herein, words and terms used in this Policy shall have the same meaning as that ascribed to such words and terms in the FPPC Regulations and the Political Reform Act.
A. “SVCE” shall mean the Silicon Valley Clean Energy Authority, and any departments, boards, committees, and commissions thereof.
B. “SVCE Official” shall mean every official, officer, agent and employee of SVCE who is obligated to file an annual Statement of Economic Interests (FPPC Form 700) under the Political Reform Act or SVCE’s current conflict of interest code.
C. “SVCE Venue” shall mean and refer to any facility owned, controlled or operated by SVCE.
D. “FPPC” shall mean and refer to the California Fair Political Practices Commission.
E. “FPPC Regulations” shall mean the Fair Political Practices Commission regulations contained in Title 2, Division 6 of the California Code of Regulations, Sections 18110 et seq., as the same may be amended from time to time.
F. “Immediate Family” shall mean the spouse and dependent children of the SVCE Official.
The term spouse includes registered domestic partners recognized by state law. The term dependent children shall mean a child, including an adoptive child or stepchild, of a SVCE Official who is under 18 years old and who the SVCE Official is entitled to claim as a dependent on his or her federal tax return.
G. “Pass” shall mean a Ticket that provides repeated access, entry, or admission to a facility or series of events and for which similar passes are sold to the public.
H. “Policy” shall mean and refer to this Complimentary Ticket or Pass Distribution Policy Pursuant to FPPC Regulation 18944.1
Item 1g
Attachment 1
GAP8
Category: GENERAL & ADMINISTRATIVE
Page | 2 Proposed: 11/9/2022
I. “Political Reform Act” shall mean California Political Reform Act of 1974 (Government Code Sections 81000, et seq., as the same may be amended from time to time) and the FPPC Regulations.
J. “Ticket” shall mean anything that provides access, entry, or admission to a specific future event or function, and for which similar tickets are sold to the public to view, listen to, or otherwise take advantage of the attraction or activity for which the ticket is sold and includes any benefits that the ticket provides.
Section 3. Application of Policy
A. This Policy shall be applicable to every officer, agent and employee of SVCE who is obligated to file an annual Statement of Economic Interests (Form 700) under the Political Reform Act or SVCE’s current conflict of interest code.
B. This Policy governs the distribution of Tickets or Passes by SVCE to a SVCE Official, or at the behest of a SVCE Official, that are either:
1. Gratuitously provided to SVCE by an outside source;
2. Acquired by SVCE by purchase;
3. Acquired by SVCE as consideration pursuant to the terms of a contract for the use of a SVCE Venue; or
4. Acquired and distributed by SVCE in any other manner.
C. This Policy does not apply to the following:
1. Other items of value. Any other item of value provided to SVCE or any SVCE Official such as food, beverages, or other items, regardless of whether received gratuitously or for which consideration is provided.
2. Sources other than SVCE. Tickets or Passes provided by sources other than SVCE.
3. Taxable Income. A Ticket or Pass received by a SVCE Official from SVCE where both the SVCE Official and SVCE treat and report the value of the Ticket or Pass as taxable income consistent with applicable state and federal income tax laws and the Ticket is reported as income.
4. Reimbursement. A Ticket or Pass distributed by SVCE to a SVCE Official if such SVCE Official pays to SVCE the fair value of the ticket within 30 days of receipt.
5. Ceremonial Roles. A Ticket provided to a SVCE Official so that the SVCE Official may perform a ceremonial role on behalf of SVCE or as part of his or her job duties Item 1g
Attachment 2
GAP8
Category: GENERAL & ADMINISTRATIVE
Page | 3 Proposed: 11/9/2022
to assist the official performing the ceremonial role, is not a gift as provided by Section 18942(a)(13) of the FPPC Regulations.
Section 4. General Provisions.
A. No Right to Tickets or Passes: The use of complimentary Tickets or Passes is a privilege extended by SVCE and not the right of any person to which the privilege may from time to time be extended.
B. Limitation on Transfer of Tickets or Passes: Tickets or Passes distributed to a SVCE Official pursuant to this Policy shall not be transferred to any other person, except to members of such SVCE Official’s Immediate Family or no more than one guest solely for their attendance at the event. If a SVCE Official transfers a Ticket or Pass he or she has received from SVCE to another person, as opposed to returning the Ticket or Pass to SVCE for redistribution, then the value of the Ticket or Pass he or she transfers shall constitute a gift to him or her and shall be reportable as provided by the FPPC Regulations.
C. Prohibition Against Sale of or Receiving Reimbursement for Tickets or Passes: No person who receives a Ticket or Pass pursuant to this Policy shall sell or receive reimbursement for the value of such Ticket or Pass.
D. No Disproportionate Use. There shall be no disproportionate use of Tickets or Passes by any SVCE Board member, Chief Executive Officer (“CEO”), political appointee or any department head.
Section 5. Ticket Administrator
A. The SVCE Board delegates the authority to the CEO or their designee to be the Ticket Administrator for purposes of implementing the provisions of this Policy.
B. The Ticket Administrator shall have the authority, in their sole discretion, to establish procedures for the distribution of Tickets or Passes in accordance with this Policy. All requests for Tickets or Passes that fall within the scope of this Policy shall be made in accordance with the procedures established by the Ticket Administrator.
C. The Ticket Administrator shall determine the fair value of Tickets or Passes distributed by SVCE for purposes of reporting pursuant to Section 9 of this Policy.
D. The Ticket Administrator, in their sole discretion, may revoke or suspend the Ticket privileges of any person who violates any provision of this Policy or the procedures established by the Ticket Administrator for the distribution of Tickets or Passes.
E. For the purpose of implementing this Policy, and completing and posting the FPPC California Form 802, the Ticket Administrator shall be the “Agency Head.” The SVCE Secretary is delegated responsibility for completing and posting the FPPC Form 802.
Item 1g
Attachment 2
GAP8
Category: GENERAL & ADMINISTRATIVE
Page | 4 Proposed: 11/9/2022
Section 6. Conditions Under Which Tickets or Passes Distributed to SVCE Officials are not considered a Gift under the Political Reform Act
A. The Ticket Administrator must distribute complimentary Tickets or Passes to SVCE Officials only pursuant to this Policy.
B. The Ticket or Pass is not earmarked by an outside source for use by specific SVCE Official(s). The Ticket Administrator must determine, in its sole discretion, who uses the Ticket or Pass.
C. The Ticket or Pass must be reported pursuant to Section 9 of this Policy.
D. The distribution of the Ticket(s) to, or at the behest of, the SVCE Official must accomplish or further one or more of the following governmental and/or public purposes:
1. Facilitating the performance of a ceremonial role or function by a SVCE Official on behalf of SVCE at an event, for which the SVCE Official may receive enough Tickets or Passes for the SVCE Official and each member of his or her Immediate Family.
2. Facilitating the attendance of a SVCE Official at an event where the job duties of the SVCE Official require his or her attendance at the event, for which the SVCE Official may receive enough Tickets or Passes for each member of the SVCE Official’s Immediate Family.
3. Promotion of intergovernmental relations and/or cooperation and coordination of resources with other governmental agencies, including, but not limited to, attendance at an event with or by elected or appointed public officials from other jurisdictions, their staff members and their guests.
4. Meeting and greeting individuals in SVCE’s service area to gain feedback on and make observations of the quality and awareness of SVCE services or to gain insight into what SVCE services that individuals would like to see SVCE make available;
5. Economic or business development purposes on behalf of SVCE.
6. Promotion of SVCE resources and/or facilities available to SVCE customers.
7. Promotion of SVCE-run, sponsored or supported community events, activities, or programs.
8. To monitor and evaluate the value of SVCE-run, sponsored, or supported community events, activities or programs, including, but not limited to, evaluation of the venue, quality of performances and compliance with SVCE policies, agreements and other requirements.
Item 1g
Attachment 2
GAP8
Category: GENERAL & ADMINISTRATIVE
Page | 5 Proposed: 11/9/2022
9. Promotion and evaluation of events, activities or programs at SVCE venues, including but not limited to evaluation of the venue, quality of performances and compliance with SVCE policies, agreements and other requirements.
10. Promoting, supporting and/or showing appreciation for programs or services rendered by charitable and non-profit organizations benefiting SVCE customers.
11. Promotion of SVCE brand recognition, visibility, and/or profile on a local, state, national or worldwide scale.
12. Encouraging SVCE customer support for and attendance at local events.
13. Encouraging participants in SVCE sponsored programs to attend local events.
14. Attracting or rewarding volunteer public service.
15. Encouraging or rewarding significant achievements of SVCE customers.
16. Attracting and retaining highly qualified employees to SVCE.
17. Recognizing or rewarding meritorious service by a SVCE employee.
18. Promoting enhanced SVCE employee performance or morale.
19. Furthering any other public purpose that SVCE is required or authorized by law to pursue, any public purpose similar to those listed herein, any public purpose identified in any SVCE contract or as may be determined by resolution of the Board of Directors.
20. As an incident to the above public purposes, allowing for the Immediate Family of the SVCE Official to accompany the SVCE Official to events to accomplish any of the purposes listed in this Resolution.
E. The SVCE Official receiving a Ticket or Pass shall prepare a written inspection report of findings and recommendations if part of the public purpose for which the Ticket or Pass was received was for the public oversight or inspection of facilities.
Section 7. Tickets or Passes Distributed at the Behest of a SVCE Official.
A. Only the following SVCE Officials shall have authority to behest Tickets or Passes:
SVCE Board Members and the CEO.
B. Tickets or Passes shall be distributed at the behest of a SVCE Official only for one or more public purposes set forth in Section 6.D. above.
Item 1g
Attachment 2
GAP8
Category: GENERAL & ADMINISTRATIVE
Page | 6 Proposed: 11/9/2022
C. If Tickets or Passes are distributed at the behest of a SVCE Official, such SVCE Official shall not use one of the Tickets or Passes so distributed to attend the event.
Section 8. Other Benefits
A. The distribution of Tickets or Passes pursuant to this Policy shall not constitute a "gift" to the SVCE Official receiving the Ticket, however, other benefits, such as food or beverage or other gifts provided to the SVCE Official that are not given to the general public as part of the Ticket or Pass admission, will need to be accounted for as gifts.
B. If SVCE receives complimentary Tickets or Passes that are earmarked for particular SVCE Officials, then the Tickets or Passes are considered gifts to that particular SVCE Official. If these Tickets or Passes are not returned unused to the provider within thirty (30) days of receipt, then the SVCE Official must comply with the applicable FPPC gift limit regulations and reporting regulations.
Section 9. Posting and Disclosure Requirements
A. Within 30 days of adoption or amendment of this Policy, the Policy shall be posted on SVCE’s website and a link to the website that displays SVCE’s Policy shall be e-mailed to the FPPC in order for the FPPC to post the link on its website.
B. Within 45 days of distribution of a Ticket or Pass, SVCE must report the distribution on FPPC Form 802 containing the information required to be reported under Regulation 18944.1(d), and post the Form 802 on SVCE’s website and a link to the website that displays SVCE’s Form 802s shall be e-mailed to the FPPC in order for the FPPC to post the link on its website.
C. This Policy and SVCE’s Form 802s are public records and are subject to inspection and copying under Government Code Section 81008.
Item 1g
Attachment 2
Staff Report – Item 1h
Item 1h: Adopt Resolution Authorizing the Chief Executive Officer to Negotiate and Execute Contracts up to $300,000 for Recruiting Purposes for 180 Days From: Girish Balachandran, CEO
Prepared by: Amrit Singh, CFO and Director of Administrative Services Kevin Armstrong, Deputy Director of Administrative Services Date: 11/9/2022
RECOMMENDATION
Staff recommends the Board of Directors adopt Resolution 2022-29 authorizing an increase in the Chief Executive Officer’s authority to negotiate and execute contracts for 180 days to respond to the staffing vacancies that SVCE is currently experiencing.
BACKGROUND
SVCE has a number of new and vacant positions that staff believes would benefit from the extra attention and active effort outside recruiters would provide over standard recruitment processes. In this most recent FY22- 23 budget, SVCE requested, and the Board approved, ten new positions, and staff believes filling many of these quickly is important to the organization’s success. The Board previously granted similar authority during mid-2021, when SVCE was faced with significant staff turnover.
ANALYSIS & DISCUSSION
To maintain service levels and expand program offerings, SVCE needs to fill numerous positions quickly. Given the continuing tight labor market, it is taking significant time to fill vacant positions, and staff believes that engaging with one or more recruiting firms to provide intensive, high-touch capacity to find and evaluate candidates represents the most effective path forward to meeting these needs.
SVCE has initiated conversations with various recruiters to address the vacancy situation, and management believes that negotiating and executing one or more recruiting contracts will provide the necessary support to fill positions quickly.
Industry-standard costs for technical recruiting of roles like those on our teams are 25 - 33% of first-year compensation, so staff is conservatively estimating $60k each based on traditional recruitment costs, and is aiming to fill up to nine positions under this authority, across multiple recruiters. Notably, staff has negotiated with one recruiting firm to potentially offer a discounted fee structure, based on months engaged, rather than initial salaries, which staff believes will provide some headroom in the authorization request and incentive for hiring managers to work actively with recruiters to fill positions. Included in these recruiting contracts are positions spanning the organization, with roles on the 4PRO, Decarbonization Programs & Policy, Energy Services and Community Relations, and Finance & Administration teams.
Staff is requesting increases to this authority for a 180-day period to address these needs, but as the situation is fluid, further recommendations may be forthcoming to the Board.
Item 1h
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Agenda Item: 1h Agenda Date: 11/9/2022
STRATEGIC PLAN
The recommendation supports the “Build and Maintain a high performing team” goal of the strategic plan.
ALTERNATIVE
Staff is open to suggestions from the Board.
FISCAL IMPACT
This recommendation will have a minimal fiscal impact to the agency, as funds are available in the FY22-23 budget from both allocations for professional services and vacancy savings from the personnel budget.
ATTACHMENT
1. Resolution 2022-29 Authorizing the Chief Executive Officer to Negotiate and Execute Contracts up to $300,000 for 180 days for staffing purposes.
Item 1h
1 RESOLUTION 2022-29
SILICON VALLEY CLEAN ENERGY AUTHORITY
RESOLUTION NO. 2022-29
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE SILICON
VALLEY CLEAN ENERGY AUTHORITY AUTHORIZING THE CHIEF
EXECUTIVE OFFICER FOR ONE HUNDRED EIGHTY (180) DAYS
TO NEGOTIATE AND EXECUTE CONTRACTS UP TO $300,000 FOR
RECRUITING PURPOSES
WHEREAS, the Silicon Valley Clean Energy Authority (“Authority”) was formed on March 31, 2016 pursuant to a Joint Powers Agreement to study, promote, develop, conduct, operate, and manage energy programs in Santa Clara County; and WHEREAS, to provide such services, Silicon Valley Clean Energy seeks to fill multiple vacant full-time staff positions; and
WHEREAS, Silicon Valley Clean Energy desires additional support to aid staff in filling existing vacancies and newly-created positions amidst a challenging labor market by entering into agreements with firms for the purposes of recruiting new staff; and NOW THEREFORE, the Board of Directors of the Silicon Valley Clean Energy Authority hereby resolves:
In response to the impact on the Authority and its services due to the current number of vacant positions and the challenging labor market, the Board hereby authorizes the Chief Executive Officer for the next one hundred eighty (180) days to negotiate and execute contracts up to $300,000 with firms for the purposes of recruiting and filling critical staffing vacancies.
PASSED AND ADOPTED this 9th day of November, 2022, by the following vote:
JURISDICTION NAME AYE NO ABSTAIN ABSENT
City of Campbell Director Gibbons
City of Cupertino Director Willey
City of Gilroy Director Hilton
City of Los Altos Director Fligor
Town of Los Altos Hills Director Tyson
Town of Los Gatos Director Rennie
City of Milpitas Director Chua
Item 1h
Attachment 1
2 RESOLUTION 2022-29
City of Monte Sereno Director Ellahie
City of Morgan Hill Director Martinez Beltran
City of Mountain View Director Abe-Koga
County of Santa Clara Director Ellenberg
City of Saratoga Director Walia
City of Sunnyvale Director Larsson
Chair
ATTEST:
Andrea Pizano, Board Secretary
Item 1h
Attachment 1
Staff Report – Item 1i
Item 1i: Executive Committee Report
To: Silicon Valley Clean Energy Board of Directors
Prepared by: Andrea Pizano, Board Clerk/Executive Assistant Date: 11/9/2022
No report as the Executive Committee has not met since August 26, 2022.
The next meeting of the Executive Committee is scheduled for November 14, 2022 at 1:00 p.m.; materials will be posted no later than 72 hours in advance of the meeting.
Item 1i
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Staff Report – Item 1j
Item 1j: Finance and Administration Committee Report
To: Silicon Valley Clean Energy Board of Directors
Prepared by: Andrea Pizano, Board Clerk/Executive Assistant Date: 11/9/2022
No report as the Finance and Administration Committee has not met since October 5, 2022.
The next meeting of the Finance and Administration Committee is to be determined; materials will be posted no later than 72 hours prior to the meeting date.
Item 1j
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Staff Report – Item 1k
Item 1k: Audit Committee Report
To: Silicon Valley Clean Energy Board of Directors
Prepared by: Andrea Pizano, Board Clerk/Executive Assistant Date: 11/9/2022
No report as the Audit Committee has not met since September 30, 2022.
The next meeting of the Audit Committee will be scheduled based on member availability but will likely take place in January and/or February 2023; materials will be posted no later than 72 hours in advance of the meeting.
Item 1k
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Staff Report – Item 1l
Item 1l: Legislative and Regulatory Response to Industry Transition 2022 Ad Hoc Committee Report
To: Silicon Valley Clean Energy Board of Directors
Prepared by: Andrea Pizano, Board Clerk/Executive Assistant Date: 11/9/2022
No report as the Legislative and Regulatory Response to Industry Transition 2022 Ad Hoc Committee has not met since June 14, 2022.
The next meeting of the Committee will be held in November 2022.
Item 1l
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Staff Report – Item 1m
Item 1m: California Community Power Report
To: Silicon Valley Clean Energy Board of Directors
From: Girish Balachandran, CEO
Date: 11/9/2022
Per direction from the SVCE Board on December 9, 2020 for the CEO to provide a report of the ongoing activities of California Community Power (CC Power) after each of its meetings, this is to report CC Power held a regular board meeting on Wednesday, October 19, 2022.
Attached is a summary report from Interim General Manager Timothy Haines; materials from the October board meeting can be found here on the CC Power website: CC Power Meeting, 10/19/22 The next meeting of the board will be November 16, 2022 at 1:00 p.m.; meeting materials can be found on the CC Power website: https://cacommunitypower.org/meetings/ ATTACHMENTS:
CA Community Power Board Meeting Summary from Interim General Manager Timothy Haines, October 19, 2022
Item 1m
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California Community Power
70 Garden Court, Suite 300, Monterey, CA 93940 | cacommunitypower.org A Joint Powers Agency whose members are:
Central Coast Community Energy | CleanPowerSF | East Bay Community Energy | MCE | Peninsula Clean Energy | Redwood Coast Energy Authority | San José Clean Energy | Silicon Valley Clean Energy | Sonoma Clean Power | Valley Clean Energy
TO: CC Power Board of Directors and Alternates DATE: 10/21/2022 FROM: Tim Haines – Interim General Manager
SUBJECT: Report on CC Power Regular Board of Directors Meeting – October 19, 2022 The CC Power Board of Directors held its regularly scheduled meeting on Wednesday, October 19, 2022, via Zoom. Details on the Board packet, presentation materials, and public comment letters can be found under the Meetings tab at the CC Power website: https://cacommunitypower.org Highlights of the meeting included the following:
• Matters subsequent to posting the Agenda. None.
• Public Comment. None.
• Consent Calendar - The Board unanimously approved the following items:
o Minutes of the Regular Board Meeting held on September 21, 2022. o Resolution 22-10-01 Determination that Meeting in Person Would Present Imminent Risks to the Health or Safety of Attendees as a Result of the Proclaimed State of Emergency
o Resolution 22-10-02 Acceptance of CC Power 2021 Audited Financials • Update from Strategic Business Plan ad hoc Committee
o Presentation from Independent System Operator CEO Elliot Mainzer. Chair Syphers welcomed Mr. Mainzer and introduced the Board Members. The Chair described the purpose of CC Power, the contracts that it has entered and the intent to engage with CAISO on transmission and market issues related to its projects. He also explained that CAISO should continue to look to CalCCA for matters that are of interest to the broader CCA community. The CAISO President and CEO focused his comments on reforms to Resource Adequacy, transmission planning and efforts to streamline the interconnection queue and responded to Board Member comments and questions.
He and Chair Syphers expressed interest in continued discussions. o Update from Strategic Business Plan ad hoc Committee. The update to the Strategic Business Plan was provided by Committee lead Sears and CC Power consultant Phyllis Currie. Mr. Sears provided an overview of the process and schedule. Ms.
Currie reviewed continuing feedback that she has received from Board members, the key priorities that have been identified to date, provided a list of future programs and services that CC Power will consider and her thoughts on the ordering of priorities in the three-year plan. The Board provided feedback on the preliminary findings and confirmed that the ad hoc Committee should continue as planned. The board took no action.
Item 1m
Attachment 1
2 o Resolution 22-10-03 Approval of the 2023 Budget and Cash Call and Update the Fiscal Year. Interim General Manager presented the proposed CC Power budget for the first six months of 2023. The $555,102 budget includes funding for a full-time GM and a staff person. The Board discussed the budget and provided direction to the Interim GM. The Board adopted the budget unanimously. o Resolution 22-10-04 Approval of General Manager Authority to Extend and Execute Consulting Contracts in Accordance with CC Power Budgets. The General Counsel presented the Board resolution. The Board directed the Interim General Manager to keep it informed on the contract extension. The Board approved the resolution unanimously.
o General Manager Search Update/Next Steps. The General Manager informed the Board that Members Chaset, Mitchell and he will be on the GM search committee.
The GM Search ad hoc Committee will report back to the Board on its initial thoughts at the November Board meeting.
Item 1m
Attachment 1
Staff Report – Item 2
Item 2: CEO Report
To: Silicon Valley Clean Energy Board of Directors
Prepared by: Girish Balachandran, CEO
Date: 11/9/2022
REPORT
SVCE Staff Update
Citlalli Sandoval joined the SVCE team on October 31, 2022 as our new Senior Regulatory Advisor. She will be assisting SVCE on regulatory issues at the CPUC and CEC. She joins us from CleanPowerSF where she covered both Regulatory and Legislative Affairs; prior to her time at CleanPowerSF she worked at the CPUC.
Personnel Officer Update
SVCE has confirmed an offer to a Decarbonization Data Engineer, who will be joining SVCE at the beginning of December. In addition, SVCE continues to recruit for open positions across all teams, in order to fill both vacancies, and a number of the new positions approved by the Board in the FY22-23 budget. Staff benefit enhancements have begun to roll out, with increased premium contributions, in-lieu payments, and paid parental leave underway, and additional enhancements in development for deployment soon.
CEO Agreements Executed
The following agreements have been executed by the CEO, consistent with the authority delegated by the Board:
1) Aaron Reed &N Associates, Agreement: Lobbyist Services, not to exceed $96,000, 12/1/22 – 11/30/23 2) Buro Happold, Agreement: City of Mountain View Resilience Support, not to exceed $22,250 3) Adapt2, Agreement: Software as a service, not to exceed $3,296,405, 10/5/22 – 10/4/23 4) Buro Happold, Agreement:City of Los Altos Grants Research Proposal, not to exceed $24,920 5) Buro Happold, Amendment: extension of date to 6/30/23 6) SMUD, Amendment: GHG Models and Methods Scoping Support, not to exceed $128,793 Item 2
IA'\ SILICON VALLEY ~ CLEAN ENERGY
CEO Power Supply Agreements Executed
Counterparty Name Execution/Effective Date Transaction Type Product Start Date End Date Notional Value Calpine 9/26/2022 Purchase Resource Adequacy 8/1/2023 10/31/2023 $3,600,000 Calpine 9/26/2022 Purchase Resource Adequacy 3/1/2023 3/31/2023 $68,000 Calpine 9/26/2022 Sale Resource Adequacy 3/1/2023 3/31/2023 $85,000 Calpine 9/26/2022 Sale Resource Adequacy 3/1/2023 4/30/2023 $515,000 Bald Mesa Solar, LLC 9/26/2022 Purchase Resource Adequacy 8/1/2023 7/31/2033 $74,070,000 PG&E 10/25/2022 Purchase Resource Adequacy 1/1/2023 11/30/2023 $1,404,310 These agreements are included in the Board packet as Appendix A.
Item 2
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Presentations & Relevant Meetings Attended by CEO
- Participated in CalCCA Monthly board, executive, and legislative meetings; - CC Power Board Meeting, October 19, 2022, report included on the Consent Calendar - Participated in California Community Choice Financing Authority Board of Directors Special Meeting, October 21, 2022 (Zak Liske, Sr. Manager of Power Operations)
Presentations from SVCE Staff
- 10/27, Monica Padilla, COO and Director of Power Resources: VERGE Conference panelist, Accelerating the Future of Energy Through Innovation, Together
ATTACHMENTS
1. Clean Power Update, November 2022
2. Decarb Programs & Policy Update, November 2022
3. Energy Services & Community Relations Update, November 2022
4. Legislative and Regulatory Update, November 2022
5. Agenda Look Ahead, November 2022 – March 2023
Item 2
IA'\ SILICON VALLEY ~ CLEAN ENERGY
1 • Subtitle
New SV Clean Energy
PowerPoint Template
CEO Report
Clean Power Update
SVCE Board Meeting
November 9, 2022
Item 2
Attachment 1
Clean Power Update, November 2022
2 Clean Long-term Power Agreements
• $1.9B+ in commitments
• 16 PPAs signed
• 13 new build projects
• 676 MW of Renewable Power
• 151 MW lithium-ion storage paired with
445 MW of Solar PV
• 29 MW of Long-duration storage
5 Projects now delivering to SVCE
meeting ~23% energy needs:
• COSO geothermal - January 2022
• Slate Solar + Storage – January 2022
• Casa Diablo geothermal – September 2022
• Mountain View wind – July 2022
• Rabbitbrush Solar + Storage – October 2022
Item 2
Attachment 1
Clean Power Update, November 2022
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3 SVCE Long-Term Clean Energy Contracts
Seller Project Name Technology Generation MW
Storage
MW
Approximate %
of Annual load
in 2025 Term (years)
Lifetime Not
to Exceed
Authority
(MM$)
SVCE
Board
Approval Status
1 MN8 Slate Solar + Storage 93.0 46.5 6.7% 17 $198 Oct-18 Online 2 Ormat Casa Diablo Geothermal 7.0 1.4% 10 $43 Feb-20 Online 3 Atlantica Coso Geothermal 43.8 9.6% 15 $331 Mar-20 Online 4 Leeward Rabbitbrush Solar + Storage 40.0 8 3.0% 15 $64 Apr-20 Online 5 NextEra Yellow Pine Solar + Storage 50.0 26 4.1% 20 $128 May-20 Construction 6 Avantus Aratina Solar + Storage 80.0 20 6.6% 20 $174 Jun-20 Pre-construction 7 174 Power Global Atlas Solar 50.0 0 3.8% 10 $27 Jan-21 Pre-construction 8 SB Energy Angela Solar + Storage 20.0 10 1.4% 15 $35 Mar-21 Pre-construction 9 AES Mountain View Wind 62.5 15.625 3% 20 $128 Apr-21 Online 10 Origis San Luis West Solar + Storage 33.5 4% 15 $74 Apr-21 Pre-construction 11 Clearway Victory Pass Solar + Storage 100.0 25 8% 15 $149 May-21 Pre-construction 12 Terra-Gen Cameron Crest Wind 77.7 5% 15 $150 May-21 Existing 13 Rev Renewables Tumbleweed Long Duration Storage 14.6 n/a 15 $100 Feb-22 Pre-construction 14 Onward Goal Line Long Duration Storage 14.2 n/a 15 $100 Mar-22 Pre-construction 15 Ormat Geothermal Portfolio Geothermal 16.75 3.3% 20 $256 Jun-22 Pre-construction 16 OME Fish Lake Geothermal 1.82 0.4% 20 $30 Jun-22 In-development Item 2
Attachment 1
Clean Power Update, November 2022
4 Clean Energy Resources On-line Progress
• Rabbitbrush Solar + Storage – Achieved COD on 10/18/2022 2022 – Q4 • Atlas Solar – Pre-Construction - delayed
2023 – Q1 • Cameron Crest Wind – Existing project
• Yellow Pine Solar + Storage – Construction mode - delayed • Angela Solar + Storage – Pre-construction - delayed 2023 – Q2, Q3 • Aratina Solar + Storage – Pre-construction - delayed • Victory Pass Solar + Storage – Pre-construction - delayed 2023 – Q3, Q4 • San Luis West Solar + Storage - Pre-construction - delayed • FCR: Ormat and Fish Lake - Pre-construction 2024+ • LDS: Goal Line and Tumbleweed - Pre-construction Item 2
Attachment 1
Clean Power Update, November 2022
5 Project Construction Updates
Rabbitbrush Solar +
Storage 40 MW
COD October 18, 2022
2nd Solar + Storage
Project in SVCE’s
portfolio to achieve
COD
Ribbon cutting
scheduled for late
November.
Item 2
Attachment 1
Clean Power Update, November 2022
6 Project Construction Updates
Yellow Pine Solar
+ Storage 50 MW
COD June 2023
Item 2
Attachment 1
Clean Power Update, November 2022
7 THANK YOU!
Item 2
Attachment 1
Clean Power Update, November 2022
New FutureFit Homes Program Launches
SVCE now offers up to $8,000 in rebates to help single-family residents to electrify their homes. Launched on October 21, the FutureFit Homes program provides rebates for heat pump water heaters and heat pump space heating and cooling. Additional incentives are available to upgrade electric panels, pre-wire circuits for future electrification, and even remove the gas meter.
This suite of rebates aims to support whole-home electrification, and, in the future, the program will offer more resources to help customers leverage forthcoming state and federal incentives.
Program details can be found on the FutureFit Homes rebate page.
SVCE, in partnership with other CCAs and municipal utilities, launched the Peninsula-Silicon Valley Incentive Project in 2020 to support electric vehicle infrastructure in Santa Clara and San Mateo counties. Through this program, SVCE had committed $6M in funding for L2 charging stations, in addition to $6M in funding from the California Energy Commission's (CEC) CALeVIP program for DC fast chargers. After initial delays during the pandemic, all $6M in DCFC funds are fully reserved and SVCE's Year 1 funding of $2.3M has been fully reserved. Center of Sustainable Energy (CSE), the program administrator, has dedicated additional resources to processing applications faster. As of October 2022, 130 L2 connectors and 10 DCFC stations have been installed through this program.
CALeVIP Funds EV Infrastructure
The SVCE Data Hive recently launched gas services. Users can now request authorized access to historical usage and billing data for both electricity and natural gas. Existing Data Hive authorizations will not change in scope; third parities will need to send their customer a new authorization request in order to access their gas data.
Gas Data Now Available in SVCE Data Hive
DECARBONIZATION PROGRAMS UPDATE
OCTOBER HIGHLIGHTS
Item 2
Attachment 2
Decarb Programs and Policy Update, November 2022
fa, SILICON VALLEY \.:!:.,/ CLEAN ENERGY
08/219/21
10/21
11/21
12/21
1/22
2/223/224/22
7/228/229/22
10/22
1,000
750
500
250
0 10/19
12/19
2/20
4/20
6/20
8/20
10/20
12/20
2/21 4/21 6/21 8/21
10/21
12/21 2/224/226/228/22
10/22
400
300
200
100
0 = 25 Single-Family Projects
= 1 Multi-Family Property Project
(Number of households varies)
Goal: 220 HPWH by 2022
Funding: $1.15M
ONGOING METRICS OCTOBER 2022
Heat Pump Water Heater
Provide incentives for electric heat pump water heaters and service panel upgrades to residents using gas or
electric resistance heaters
= 10 Completed Installations
Single-Family Multi-Family
Lights On Silicon Valley
Provide incentives for enrolling solar and battery
systems in the SVCE grid services program
750 Single-Family + 5
Multi-Family Projects
Completed by 2023
Goal:
Funding: ≤ $7.4M
Households Supported
= 1 CARE/FERA Installation
Cumulative HPWH Installations
Cumulative Service Panel Upgrades
= 10 Completed Installations Above
the Initial Goal
349
107
465
Item 2
Attachment 2
Decarb Programs and Policy Update, November 2022
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000,000
000,000
000,000
0 9/21
10/21
11/21
12/21
1/22
2/223/224/225/226/22
7/228/229/22
10/22
200
150
100
50 0
ONGOING METRICS
Provide incentives for electric vehicle (EV) chargers
as part of a regional program
= 25 Level 2 Installations
150 Participants Complete
the Course (Phase 1)
Goal:
Funding: $1.5M
Completions
FutureFit Fundamentals
Provide financial relief to contractors by
expanding their knowledge of electrification
technologies
1K Level 2 + 85 DC Fast
Chargers by 2023
Goal:
Funding: $11.58M
= 5 Participants Complete Course
= 5 DCFC Installations
Reserved Waitlisted
Funds Issued
(To be released
in future years)
$1.27M $5.14M
$1.5M
$615K $700K
72 $6M
$4M
$2M
Being Processed
$2.19M
$160K
OCTOBER 2022
Registrations
156
Item 2
Attachment 2
Decarb Programs and Policy Update, November 2022 • •
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Permit Simplification Effort
Building Decarb Joint Action Plan
Resilience at Community Facilities
FutureFit Homes & Buildings
Regional Coordination
Click for More Information Active In Development Complete C&I Clean Power Offerings
All-Electric Showcase Awards
FutureFit Heat Pump Water Heater
FutureFit Fundamentals
Accessible Financing
Local Policy to Decarbonize Existing Buildings
Feasibility Assessment - Natural Gas Phase Out By 2045
EV Infrastructure Strategy & Plan
CA Electric Vehicle Infrastructure Project (CALeVIP)
Priority Zone DCFC
MUD Technical Assistance & Incentives
Fleet Electrification Grants
Regional Recognition
SV Transportation Electrification Clearinghouse (SVTEC) Other Virtual Power Plant
Customer Resource Center (eHub)
Community Engagement Grants
Innovation Partners
Innovation Onramp Pilots
PROGRAMS AT A GLANCE
POWER
SUPPLY
GRID
INTEGRATION
EDUCATION &
OUTREACH
BUILT
ENVIRONMENT
MOBILITY
INNOVATION
Reach Codes
CRCR Bill Relief
Lights On Silicon Valley
GridShift EV Charging
Data Hive
Medical Baseline Battery Program
OCTOBER 2022
Building Decarbonization Demonstration Grants
Decarbonization Engagement Grants
Item 2
Attachment 2
Decarb Programs and Policy Update, November 2022
-.......... .
-
1 1. Outreach Events & Sponsorships
Date Time Description Location
November 18 6:00 p.m. Morgan Hill Community Foundation:
Philanthropy Night
Community and Cultural Center,
Morgan Hill
Silicon Valley Clean Energy will be connecting with customers at upcoming community and industry events and will be supporting communities through event sponsorship.
Item 2
Attachment 3
Energy Services & Community Relations Update, November 2022 rA, s1L1coN VALLEY ~ CLEAN ENERGY
2 Participation Rate
Overall Participation
Rate
Residential 96.42%
96.44%
Commercial 96.73%
2. Customer Participation
Item 2
Attachment 3
Energy Services & Community Relations Update, November 2022 rA, s1L1coN VALLEY ~ CLEAN ENERGY
3 3. Customer Credit Updates
CARE and FERA Rate Relief Bill
• SVCE began crediting customer bills in April, and as of October 25, 2022, has applied over 198,000 bill credits of $12.50, totaling $2.48M. These credits will continue monthly for income-qualified CARE and FERA customers through November 2022.
Item 2
Attachment 3
Energy Services & Community Relations Update, November 2022 rA, s1L1coN VALLEY ~ CLEAN ENERGY
4 4. Member Agency Working Group -
October Update
The recent MAWG meeting was held virtually on October 27, 2022 and was attended by 10 different agencies and organizations with a total of 26 participants.
The following agenda items were presented and discussed:
• Power Resources Quarterly Update
• Inflation Reduction Act (IRA) Update
• SVCE 2023 Draft Legislative Policy Platform
• SVCE Program Introduction: FutureFit Homes
• Existing Multifamily EV Charging Ordinances
• Mobile Home Park Programs
• Reach Code Update
Item 2
Attachment 3
Energy Services & Community Relations Update, November 2022 rA, s1L1coN VALLEY ~ CLEAN ENERGY
5 5. Press Releases & Media
Press Releases
• Backup Batteries at Traffic Lights Increase Safety and Energy Resilience in Saratoga, 10-04-2022 Media
• Saratoga’s backup traffic light batteries operate during power outages, The Mercury News, 10-16-22 • ev.energy partners with Smartenit to launch low-cost, smart EV charging cable to promote equitable access, ev.energy press release, 10-17-22
Item 2
Attachment 3
Energy Services & Community Relations Update, November 2022 Local ews Saratoga's backup traffic light batteries ... 00000 LOCAL NEWS • News
Saratoga's backup traffic light batteries operate during power outages Silicon Valley Clean Energy grant went toward project
1 • Subtitle
New SV Clean Energy
PowerPoint Template
SVCE Legislative and
Regulatory Update
November 9, 2022
Item 2
Attachment 4
Leg and Reg Update, November 2022
2 Policy Updates
Regulatory Update:
1. Resource Adequacy Reform (RA Reform)
2. Integrated Resource Planning (IRP)
3. Voluntary Allocation Market Offer (VAMO)
4. Net Energy Metering (NEM 3.0)
Legislative Update:
1. Bill Position Matrix
2. Legislative Timeline
Item 2
Attachment 4
Leg and Reg Update, November 2022
3 Regulatory
Update
3 Item 2
Attachment 4
Leg and Reg Update, November 2022
4 Key Regulatory Updates
Proceeding Purpose Status
Integrated
Resource Plan
(IRP)
Ensure long-term
system planning is on
track to meet state's
climate and reliability
goals.
CPUC issued a staff white paper on adjustments to the IRP process which includes enforcement of IRP plans as a means to reduce reliance on procurement orders. SVCE will file comments (solo or in coordination with CalCCA) on December 15th.
Resource
Adequacy:
Central
Procurement
Entity
CPE (IOU) procures
local RA on behalf of
service territory to
ensure local reliability
is maintained.
Following PG&E's second failure to procure sufficient resources to meet Local RA needs, Peninsula Clean Energy and Central Coast Community Energy issued a Petition for Clarification ("PFC") asking the Commission to clarify the obligations of other LSEs for RA procurement in instances where the CPE failed.SVCE sent a letter supporting this PFC on 9/26.
Resource
Adequacy:
Reform
Reform RA construct
to better ensure
system reliability
The second round of RA Reform workshops ended on October 5th. Workshop leads are finalizing a report covering the workshop findings. It is expected the CPUC will issue a proposed decision on the "Slice-of-Day"/ 24-hour RA framework in Q1 of 2023.
Item 2
Attachment 4
Leg and Reg Update, November 2022
5 Key Regulatory Proceedings
Proceeding Purpose Status
Net Energy
Metering ("NEM
3.0")
Update compensation structure
for rooftop solar owners.
On May 9, the CPUC reopened the NEM Successor Tariff proceeding (“NEM 3.0”), specifically requesting comments on aspects of the original, December 2021 Proposed Decision (PD). The ruling seeks feedback from parties on the PD’s proposed grid access charge, calculation of non-bypassable charges to NEM customers, export compensation and specific rules for low-income customers. The ruling makes no changes to the PD and SVCE’s position on the NEM
3.0 PD remains unchanged.
In mid-August the CPUC extended the statutory deadline for the proceeding to August 27, 2023. While the CPUC is unlikely to use the full extension, the new PD is unexpected in the imminent future. We will continue to develop ideas for customer program offerings for current and prospective solar customers to promote solar-plus-battery installations in alignment with whole-home electrification.
Item 2
Attachment 4
Leg and Reg Update, November 2022
6 Legislative
Update
6 Item 2
Attachment 4
Leg and Reg Update, November 2022
7 SVCE Legislative Positions Matrix
SVCE had successful legislative year – was able to stop bad legislation and make meaningful changes to bills.
Bill Summary SVCE Position
(Legislative Program
Policy)
Status
AB 1814
(Grayson)
Adds CCAs as eligible program
administrators for CPUC’s
Transportation Electrification Program
Support
(Climate Mitigation/Clean
Energy Funding)
Died
SB 833 (Dodd) Creates grant program for local
government community resiliency plans
and to expedite permitting for
distributed energy resources.
Support
(Climate Mitigation/Clean
Energy Funding)
Died
SB 1112
(Becker)
Ensures notification to tenants and
property owners for tariff on bill
decarbonization charges.
Support
(Fuel Switching and
Electrification)
Signed by
Governor
SB 1100
(Cortese)
Establishes a process for removing
individuals who are willfully interrupting
meetings
Support
(per Board direction)
Signed by
Governor
Item 2
Attachment 4
Leg and Reg Update, November 2022
8 SVCE Legislative Positions Matrix
Bill Summary SVCE Position
(Legislative Program
Policy)
Status
AB 2061 (Ting) Requires all entities that receive state or ratepayer funding to submit data on EV
station uptime, or the amount of time an EV
station is operational.
Support (Fuel Switching
and Electrification)
Signed by
Governor
SB 1158 (Becker) Requires load serving entities to report hourly electricity purchases. Requires the
CPUC to assess whether reporting
demonstrates "adequate progress" towards
GHG targets.
Support (Climate
Mitigation and Clean
Energy Technologies)
Signed by
Governor
AB 1944 (Lee) Allows legislative body members to
participate in meetings from private locations
and without publishing private addresses on
meeting notices.
Support
(per Board direction)
Died,
legislative
vehicle became
AB 2449
(Rubio)
Item 2
Attachment 4
Leg and Reg Update, November 2022
9 SVCE Legislative Positions Matrix
Bill Summary SVCE Position (Legislative
Program Policy)
Status
SB 1393
(Archuleta)
Requires CEC to develop new guidelines for
local existing building decarb ordinances.
Neutral Died
SB 881 (Min) Integrated Resources Plans compliance Opposed Unless Amended Died SB 1287
(Bradford)
Raises Financial Security Rate that CCAs must
carry to cover reentry fees for customers
involuntarily returning to a Provider of Last
Resort.
Died
SB 1020 (Laird) Establishes interim SB 100 clean energy targets and requires state agencies to use 100% zero
and renewable energy by 2030.
Signed by
Governor
AB 2204
(Boerner
Horvath)
Establishes a Deputy Secretary for Climate
within the Labor and Workforce Development
Agency to oversee clean energy workforce
training.
Support (Climate Mitigation
and Clean Energy
Technologies)
Signed by
Governor
Item 2
Attachment 4
Leg and Reg Update, November 2022
10 • 1/3: Legislature reconvenes
• 1/10: Governor submits budget
• 1/31: Deadline to move 2-year bills out of first house • 2/18: Bill introduction deadline
• 4/29: Deadline for policy committees to move fiscal bills to fiscal committees • 5/6: Deadline for nonfiscal bills to move to the floor • 5/20: Deadline for fiscal committees to move bills to floor • 5/27: Last day for bills to pass out of first house
• 6/15: Budget deadline
• 8/12: Fiscal Committees to move bills to floor
• 8/31: Last day for each house to pass bills
• 9/30: Governor’s deadline to sign bills
Key State Legislative Milestones
Item 2
Attachment 4
Leg and Reg Update, November 2022
SVCE Agenda Look Ahead
Nov. 2022 - March 2023
NOVEMBER 2022 DECEMBER 2022 JANUARY 2023 FEBRUARY 2023 MARCH 2023 Board of Directors, November 9: Board of Directors, December 14:
Consent:
Minutes
October 2022 Treasurer Report
Committee Reports
Regular Calendar:
Rate Change
Reach Code Update
FutureFit Fundamentals Presentation
Acknowledgement of outgoing members
Approve 2023 Legislative Policy
Discussion on Implementation of
Electrification-related Rates
Approval of Tariffed on bill pilot program
Chair/Vice Chair and Executive Committee
Selection Process
Board of Directors, January 11:
Consent:
Minutes
November 2022 Treasurer Report
Committee Reports
Regular Calendar:
Appointment of Chair and Vice Chair
Appointment of Executive Committee
Reach Code Update
Future Public Meetings Planning (AB
2449)
Board of Directors, February 8:
Consent:
Minutes
December 2022 Treasurer Report
Committee Reports
Regular Calendar:
Appointment of SVCE Committees
Reach Code Recap
Updates to Exhibits C and D of the
SVCE JPA
Board of Directors, March :
Consent:
Minutes
January 2022 Treasurer Report
Committee Reports
Regular Calendar:
TBD
Executive Committee, Nov. 14, 1pm:
Program Snapshots: FutureFit Homes and
Buildings
SVCE Committee membership and
selection process review
Future Public Meetings Planning (AB 2449)
Executive Committee: Cancelled
(Combined with Nov. 14th meeting)
Executive Committee, Jan. 27:
Program Snapshots
Chair and Vice Chair Appointments
Executive Committee, Date TBD:
Program Snapshots
Executive Committee, Date TBD:
Program Snapshots
Item 2
Attachment 5
Staff Report – Item 3
Item 3: Adopt Resolution Authorizing the Chief Executive Officer to Execute the Power Supply Contract with the California Community Choice Financing Authority and Related Supporting Agreements
From: Girish Balachandran, CEO
Prepared by: Amrit Singh, CFO and Director of Administrative Services Date: 11/9/2022
RECOMMENDATION
Staff recommends that the Board of Directors adopt Resolution 2022-30 authorizing the CEO to execute the Power Supply Contract with the California Community Choice Financing Authority (CCCFA) and execute or approve1the related supporting agreements to enable SVCE to enter an approximately 30-year energy prepayment transaction. These contracts and agreements are in substantially negotiated form, and staff requests the Board authorize the CEO to make any minor clarifying modifications necessary that do not change the intent or economics of the transaction.
The Board’s authorization will be subject to the following parameters.
1. The Bonds, issued by CCCFA, will not be guaranteed obligations of SVCE but will be limited obligations of CCCFA payable solely from the revenues and other amounts pledged under the Indenture as the Trust Estate, including amounts owed by SVCE under the Power Supply Contract.
2. The aggregate principal amount of the Bonds shall not exceed $1,000,000,000.
3. The energy savings to SVCE under the Power Supply Contract for the initial Bond Reset Period, including the Annual Refund (as defined in the Power Supply Contract), shall be at least 8 percent. 2 FINANCE AND ADMINISTRATION COMMITTEE AND BOARD REVIEW At its meeting on October 5, 2022, the Finance and Administration Committee voted unanimously to recommend that the Board approve the staff’s request to engage in a second Power Prepay transaction by authorizing the CEO to execute or approve contracts with firms3 providing services enabling the execution of the Prepay transaction and to engage with Morgan Stanley as the Prepay Supplier. At the October meeting, the Board of Directors approved Staff’s request.
BACKGROUND
As discussed at the October 2022 Board meeting, SVCE, along with EBCE as a coparticipant, spent over two years executing our first Prepay transaction with Morgan Stanley as the Prepay Bank Supplier (see timeline in Attachment 11 and summary of the first Prepay transaction in Attachment 12). Staff would like to leverage the two years of work put into this structure by replicating it for another Prepay with the same counterparties as 1 The CCCFA will be a counterparty to many of these agreements. 2 The 8 percent saving is relative to a fixed price for energy deliveries under the power supply contract that will be established at the time of the pricing of the bonds using available energy market prices and other information that will be reviewed and approved by SVCE’s financial advisor, PFM Financial Advisors LLC. 3 These firms were PFM Financial Advisors LLC & PFM Swap Advisors, Chapman & Cutler (Disclosure/Issuer’s Counsel), Ballard Spahr (Bond and Tax Counsel), and Moody’s Investor Service Inc (Credit Rating).
Item 3
ra, SILICON VALLEY
~CLEAN ENERGY
Agenda Item: 3 Agenda Date: 11/9/2022
the first Prepay transaction, except for now working with Ballard Spahr for Bond and Tax Counsel instead of Orrick, Herrington & Sutcliffe as discussed at the October 2022 Board meeting.
The goal of the prepayment transaction is to reduce the cost of power purchases on quantities delivered under the prepay structure with minimal risk to SVCE. The Prepay structure enables publicly owned utilities, including CCAs, to reduce their energy costs by financing the acquisition of long-term energy supplies with tax-exempt bonds. Attachment 13 provides an overview of the Prepay structure.
As summarized in the table below, SVCE has worked with a seasoned team of professionals to negotiate and structure the transaction.
Firms Role
PFM Financial
Advisors LLC (PFM)
Municipal Advisor: Advice prepay buyer in
negotiations; required by Municipal Securities
Rulemaking Board (MSRB)
Chapman & Cutler Disclosure and Issuer’s Counsel: Provide legal counsel and prepare an official statement and
prospectus
Ballard Spahr Bond and Tax Counsel: Represent bondholders and provide tax opinion on the transaction
STRATEGIC PLAN
Entering a Prepayment transaction will further Goals #2, #3, and #16 of the SVCE Strategic Plan.
Goal #2: Acquire clean and reliable electricity in a cost effective, equitable and sustainable manner.
Goal #3: Manage and optimize power supply resources to meet affordability, GHG reduction and reliability objectives.
Goal #15: Commit to maintaining a strong financial position.
ANALYSIS & DISCUSSION
The initial term of the bonds is expected to be about 5-10 years, and SVCE will not execute the transaction unless, at a minimum, we can achieve an energy savings discount of at least 8 percent during the initial bond period. The actual discount will depend on the spread between taxable and tax-exempt rates. At the end of the initial term, the bonds will be refinanced, and the terms of the discount will be set per the attached Repricing Agreement. Closer to the time of the pricing of the Bonds, the Repricing Agreement will specify a minimum energy savings threshold for the future reset periods, which is currently anticipated to be about 4 percent. As the transaction moves forward, the remaining shorter tenor of the deal will place downward pressure on future discounts.
The risks to SVCE are minimal as the debt will not be recourse to SVCE. If for any reason the structure falls apart, the energy contract(s) assigned to the Prepay will revert to SVCE, and the loss to SVCE will be the staff time spent on the project and the future savings expected to be generated by the prepayment transaction.
The initial consultant and attorney fees are all contingent upon the execution of the transaction and will be financed from the bond proceeds. These fees, excluding underwriting fees, are estimated to be about $1.05 million (see Attachment 14).
The transaction is expected to cover about 12 percent of our load.
Item 3
Agenda Item: 3 Agenda Date: 11/9/2022
SUMMARY OF THE TRANSACTION DOCUMENTS
These are the agreements that SVCE will sign once the Board authorized parameters are met:
Power Supply Contract – The agreement is between SVCE and CCCFA, and it provides for the sale of clean energy from CCCFA to SVCE for the term of the prepayment.
Letter Agreement Regarding PPA Assignments – The agreement is between SVCE, CCCFA, and Morgan Stanley, and it details the terms of assigning PPAs that SVCE has with a current or future energy supplier.
Form of Limited Assignment Agreement – This agreement is between SVCE, Morgan Stanley, and the third-party energy supplier, and it details the terms of partially assigning SVCE’s energy contracts to Morgan Stanley.
Project Administration Agreement – This agreement is between SVCE and CCCFA. The agreement sets the terms for SVCE to act on behalf of the issuer such as scheduling for the energy.
Energy Supply/PPA Custodial Agreement – This agreement is between SVCE, Morgan Stanley, and the Custodian Bank on handling cashflows among the parties and making the required payments to the energy/PPA supplier.
The following are the major agreements of the prepayment transaction that CCCFA will execute:
Prepaid Agreement – This agreement is between CCCFA and Morgan Stanley, and it details the terms of prepayment by CCCFA to Morgan Stanley and the flow of energy from Morgan Stanley to CCCFA. The terms of this agreement largely mirror those of the Power Supply Contract between SVCE and CCCFA.
Trust Indenture – This agreement is between CCCFA and the Trustee and sets forth the terms of bond issuance, rights of bondholders, and security of the cashflows of CCCFA to ensure principal and interest payments to the bondholders.
Re-pricing agreement – The agreement is between CCCFA and Morgan Stanley and sets the terms for remarketing and repricing of bonds at future bond repricing periods and the terms for calculation of future energy price discounts that will be offered to SVCE.
Also attached is the Preliminary Offering Statement (POS) that will be used to market the bonds and provides information on the energy prepayment transaction, including the key terms of the transaction. The Appendix A of this document includes background information on SVCE, including the formation of SVCE, service area, customers, sources of clean energy, and other information to inform bondholders on the financial and operational strength of the organization.
FISCAL IMPACT
The proposed prepayment transaction is expected to save SVCE about $3 to $4 million per year during the initial term of the bonds. The actual savings will depend on the spread between taxable and tax-exempt rates.
ATTACHMENTS
1. Resolution 2022-30 authorizing the execution and delivery of a power supply contract and certain other documents in connection with the issuance of the California Community Choice Financing Authority clean energy project revenue bonds; and certain other actions in connection therewith
2. Power Supply Contract
3. Letter Agreement Regarding PPA Assignments
4. Limited Assignment Agreement
5. Project Administration Agreement
6. Energy/Supply PPA Payments Custodial Agreement
Item 3
Agenda Item: 3 Agenda Date: 11/9/2022
7. Prepaid Agreement
8. Trust Indenture
9. Repricing Agreement
10. Preliminary Offering Statement
11. Timeline of SVCE’s First Prepay Transaction
12. Summary of the Details of the First Prepay Transaction and Transaction Cost Breakdown
13. Overview of the Prepay structure
14. Estimated Cost Breakdown
Item 3
Resolution 2022-30 1
SILICON VALLEY CLEAN ENERGY AUTHORITY
RESOLUTION 2022-30
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE SILICON VALLEY
CLEAN ENERGY AUTHORITY AUTHORIZING THE EXECUTION AND
DELIVERY OF A POWER SUPPLY CONTRACT AND CERTAIN OTHER
DOCUMENTS IN CONNECTION WITH THE ISSUANCE OF THE CALIFORNIA
COMMUNITY CHOICE FINANCING AUTHORITY CLEAN ENERGY PROJECT REVENUE BONDS; AND CERTAIN OTHER ACTIONS IN CONNECTION
THEREWITH
WHEREAS, The Silicon Valley Clean Energy Authority (“SVCE”) was formed as a community choice aggregation agency (“CCA”) on March 31, 2016, under the Joint Exercise of Power Act, California Government Code sections 6500 et seq. (the “Act”), among the City of Campbell, City of Cupertino, City of Gilroy, City of Los Altos, Town of Los Altos Hills, Town of Los Gatos, City of Monte Sereno, City of Morgan Hill, City of Mountain View, County of Santa Clara (Unincorporated Area), City of Saratoga and City of Sunnyvale, to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The city of Milpitas, located in Santa Clara County, was added as a member of SVCE and a party to the Joint Powers Agreement (as defined below) in June 2018;
WHEREAS, California Community Choice Financing Authority (the “Issuer”) is a joint powers authority established and organized under the Act, with the power and authority to enter into contracts and issue bonds to assist CCAs in financing the acquisition of supplies of clean energy;
WHEREAS, the Issuer is authorized by its Joint Powers Agreement to acquire supplies of clean energy by any means and to issue revenue bonds to finance the cost of acquisition of such supplies, and is vested with all powers necessary to accomplish the purposes for which it was created;
WHEREAS, SVCE has determined that it is desireable to acquire a long-term supply of clean energy from the Issuer;
WHEREAS, SVCE is requesting that the Issuer agree to purchase certain quantities of clean energy from Morgan Stanley Energy Structuring, L.L.C., a Delaware limited liability company (the “Prepaid Supplier”) on a prepaid basis (the “Project”) and to sell such clean energy to SVCE, as described herein;
WHEREAS, SVCE is requesting that the Issuer finance the costs of the Project with the proceeds of its Clean Energy Project Revenue Bonds, with such series designation(s) as is determined by CCCFA (the “Bonds”);
Item 3
Attachment 1
Resolution 2022-30 2
WHEREAS, SVCE has determined to authorize the officers of SVCE to take all necessary action to accomplish the purchase of clean energy from the Issuer and to assist the Issuer in the issuance, sale and delivery of the Bonds; and WHEREAS, there have been made available to the Board of Directors of SVCE for approval forms of the following agreements to which SVCE is a party (collectively, the “SVCE Documents”):
1. Power Supply Contract between SVCE and the Issuer;
2. Custodial Agreement by and among SVCE, Morgan Stanley Capital Group Inc., a Delaware corporation (“MSCG”), the Prepaid Supplier, and the custodian to be named therein;
3. Form of Limited Assignment Agreement, by and among SVCE, the counterparty to the power purchase agreement described therein, and MSCG;
4. Letter Agreement among SVCE, the Prepaid Supplier and MSCG regarding matters relating to Assignment Agreements; and
5. Prepaid Energy Project Administration Agreement, by and between SVCE and the Issuer; and
WHEREAS, there have also been made available to the Board of Directors of SVCE forms of the following additional documents relating to the Project:
1. Trust Indenture (the “Indenture”) between the Issuer and the trustee to be named therein, providing for, among other things, the issuance of and security for the Bonds;
2. Prepaid Energy Sales Agreement (the “Prepaid Agreement”) between the Issuer and the Prepaid Supplier, providing for the delivery of the prepaid energy supply to the Issuer;
3. Re-pricing Agreement (the “Re-pricing Agreement”) between the Issuer and the Prepaid Supplier providing for the remarketing or refunding of the Bonds from time to time and the establishment of the Monthly Discount available to SVCE under the Power Supply Agreement from time to time during the term of the transaction; and
4. Preliminary Official Statement (the “Preliminary Official Statement”), to be used in connection with the offering and sale of the Bonds, including the information relating to SVCE included in Appendix A thereto (the Indenture, the Prepaid Agreement, the Re-pricing Agreement and the Preliminary Official Statement, together with the SVCE Documents, the “Project Documents”);
NOW THEREFORE, BE IT RESOLVED by the SVCE Board of Directors, as follows:
Item 3
Attachment 1
Resolution 2022-30 3
Section 1. The proposed forms of the SVCE Documents, as made available to the Board of Directors for this meeting, are hereby approved. The form of Limited Assignment Agreement may be used, in substantially the same form, for the initial assignments of SVCE power purchase agreements, and in a similar form for additional power purchase agreements as needed to maintain the transactions approved hereby, with such changes as may be necessary to conform to the requirements of such power purchase agreement or as may be necessary to effect such assignment, and any such Limited Assignment Agreements shall be included in the SVCE Documents hereby approved. Subject to the parameters set forth in Section 4 of this Resolution, any of the Chief Executive Officer, Chief Operations Officer, Chair of the Board, the Director of Finance (each an “Authorized Officer”) is hereby authorized and directed, for and on behalf of SVCE, to execute and deliver the SVCE Documents in substantially said form, with such changes and insertions therein as the Authorized Officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.
Section 2. The proposed form of the Preliminary Official Statement, as made available to the Board of Directors for this meeting, is hereby approved. Any Authorized Officer is hereby authorized and directed, for and on behalf of SVCE, to execute and deliver a certificate as to the information regarding SVCE contained therein and in the final version of the Official Statement, with such changes and insertions therein as the Authorized Officer approving the same may deem necessary or appropriate. Subject to approval by the Issuer, SVCE hereby authorizes the distribution of the Preliminary Official Statement to persons who may be interested in the purchase of the Bonds, and the delivery of the Official Statement in final form to the purchasers of the Bonds, in each case with such changes as may be approved as aforesaid.
Section 3. Each Authorized Officer is hereby authorized and directed, for and in the name and on behalf of SVCE, to execute and deliver any and all documents, including, without limitation, any tax certificate relating to its expected use of the energy to be purchased by it from the Project, any continuing disclosure certificate or similar agreement required for the offering or sale of the Bonds, and any and all closing certificates to be executed in connection with the issuance of the Bonds and to take any and all actions which may be necessary or advisable, in the discretion of such Authorized Officers, to effectuate the actions which SVCE has approved in this Resolution, for the issuance, sale and delivery of the Bonds, and to consummate by SVCE the transactions contemplated by the SVCE Documents approved hereby and the other Project Documents presented to the Board herewith, including any subsequent amendments, waivers or consents entered into or given under or in accordance with such documents.
Section 4. The amount of the prepayment to be made under the Prepaid Agreement shall be established using the monthly quantities of energy to be delivered over an approximately 30-year term and a fixed price determined as of the time of pricing using available market prices and other information and reviewed and approved by SVCE’s financial advisor (the “Fixed Price”), discounted to present value at an agreed discount rate determined at the time of pricing. The prepaid energy will be delivered by the Issuer to SVCE under the Power Supply Contract at a floating day-ahead index price less a monthly discount stated in Item 3
Attachment 1
Resolution 2022-30 4
dollars per MWh (the “Monthly Discount”). Considering the foregoing, the approvals provided for herein shall be subject to the following parameters:
(a) the Bonds will not be obligations of SVCE, but will be limited obligations of the Issuer payable solely from the revenues and other amounts pledged therefor under the Indenture, including amounts payable by SVCE under the Power Supply Contract; (b) the aggregate principal amount of the Bonds shall not exceed $1,000,000,000; and
(c) for the initial Reset Period (as defined in the Power Supply Contract), the annual cost savings relative to the Fixed Price with respect to the energy to be delivered to SVCE under the Power Supply Contract for each annual period during the initial Reset Period, taking into account the Monthly Discount and the Annual Refund (as defined in the Power Supply Contract) for each such annual period, shall be at least eight percent (8%).
Section 5. Execution and delivery of the SVCE Documents by an Authorized Officer or Officers shall be conclusive evidence that the parameters set forth in Section 4 have been met, and all actions heretofore taken by the Authorized Officers with respect to the issuance of the Bonds are hereby ratified, confirmed and approved.
Section 6. If the conditions set forth in Section 4 have been met, an Authorized Officer may direct the payment to professionals that provided services to SVCE in connection with the Project. These professional services include legal counsel, bond counsel, tax counsel, Municipal Financial Advisor, Swap Advisor, and any other consultant needed to complete the transactions contemplated herein for SVCE. Payment to these professionals will be made from the proceeds of the sale of the Bonds and pursuant to the terms of the applicable agreement executed with SVCE.
Section 7. If the conditions set forth in Section 4 have been met, an Authorized Officer may direct the payment to additional vendors and/or parties to the SVCE Documents or other Project Documents to complete the issuance of the Bonds. These vendors, if any, will be paid pursuant to an agreement for services rendered in completing the issuance of the Bonds and from the proceeds of the sale of the Bonds.
Section 8. This Resolution shall take effect immediately.
Item 3
Attachment 1
Resolution 2022-30 5
ADOPTED AND APPROVED at a regular meeting of the SVCE Board of Directors on this 9th day of November, 2022 by the following vote:
JURISDICTION NAME AYE NO ABSTAIN ABSENT
City of Campbell Director Gibbons
City of Cupertino Director Willey
City of Gilroy Director Hilton
City of Los Altos Director Fligor
Town of Los Altos Hills Director Tyson
Town of Los Gatos Director Rennie
City of Milpitas Director Chua
City of Monte Sereno Director Ellahie
City of Morgan Hill Director Martinez Beltran
City of Mountain View Director Abe-Koga
County of Santa Clara Director Lee
City of Saratoga Director Walia
City of Sunnyvale Director Klein
______________________________________
Liz Gibbons, Chair
Attest:
___________________________________________
Andrea Pizano, Board Clerk
Item 3
Attachment 1
SM Draft 2 November 2022
POWER SUPPLY CONTRACT
between
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
and
SILICON VALLEY CLEAN ENERGY AUTHORITY
Dated as of [____], 2022
Item 3
Attachment 2
Draft Power Supply Contract
TABLE OF CONTENTS
Page
-i-Article I Definitions...................................................................................................................... 2 Section 1.1 Defined Terms ..................................................................................... 2 Section 1.2 Definitions; Interpretation .................................................................. 10 Article II Execution Date and Delivery Period; Nature of Energy Project .......................... 10 Section 2.1 Execution Date; Delivery Period ....................................................... 10 Section 2.2 Termination Due to Failure to Issue Bonds or Provide Minimum Discount ............................................................................ 10 Section 2.3 Nature of Energy Project ................................................................... 10 Section 2.4 Pledge of this Agreement ................................................................... 11 Article III Sale and Purchase .................................................................................................... 11 Section 3.1 Sale and Purchase of Energy .............................................................. 11 Section 3.2 Pricing ................................................................................................ 11 Section 3.3 No Obligation to Take Base Energy .................................................. 11 Section 3.4 Reset Period Remarketing.................................................................. 12 Article IV Failure to Deliver or Take Energy ......................................................................... 13 Article V Transmission and Delivery; Communications ....................................................... 13 Section 5.1 Delivery of Energy ............................................................................. 13 Section 5.2 Scheduling.......................................................................................... 13 Section 5.3 Title and Risk of Loss ........................................................................ 14 Section 5.4 PCC1 Product and Long-Term PCC1 Product .................................. 14 Section 5.5 Deliveries within CAISO or Another Balancing Authority ............... 16 Section 5.6 Assigned Products .............................................................................. 16 Article VI Partial Assignments of PPAs .................................................................................. 17 Section 6.1 Future PPA Assignments ................................................................... 17 Section 6.2 Updates to Exhibits A-1 and A-2 ....................................................... 17 Article VII Use of Energy .......................................................................................................... 17 Section 7.1 Tax Exempt Status of the Bonds ........................................................ 17 Section 7.2 Priority Energy ................................................................................... 17 Section 7.3 Remarketing Sales ............................................................................. 17 Section 7.4 Qualifying Use ................................................................................... 18 Section 7.5 Remediation ....................................................................................... 18 Item 3
Attachment 2
Draft Power Supply Contract
---
TABLE OF CONTENTS
(continued)
Page
-ii-Article VIII Representations and Warranties; Additional Covenants ................................. 19 Section 8.1 Representations and Warranties of the Parties ................................... 19 Section 8.2 Warranty of Title................................................................................ 20 Section 8.3 Disclaimer of Warranties ................................................................... 20 Section 8.4 Continuing Disclosure ....................................................................... 21 Article IX Taxes ......................................................................................................................... 21 Article X Dispute Resolution..................................................................................................... 21 Section 10.1 Arbitration .......................................................................................... 21 Section 10.2 Judicial Reference. ............................................................................. 22 Article XI Force Majeure .......................................................................................................... 24 Section 11.1 Applicability of Force Majeure .......................................................... 24 Section 11.2 Settlement of Labor Disputes............................................................. 24 Article XII Governmental Rules and Regulations .................................................................. 24 Section 12.1 Compliance with Laws ...................................................................... 24 Section 12.2 Contests .............................................................................................. 24 Section 12.3 Defense of Agreement ....................................................................... 24 Article XIII Assignment ............................................................................................................ 25 Article XIV Payments ................................................................................................................ 25 Section 14.1 Monthly Statements ........................................................................... 25 Section 14.2 Payment.............................................................................................. 26 Section 14.3 Payment of Disputed Amounts; Correction of Index Price ............... 26 Section 14.4 Late Payment ..................................................................................... 27 Section 14.5 Audit; Adjustments ............................................................................ 27 Section 14.6 Netting; No Set-Off............................................................................ 27 Section 14.7 Source of Purchaser’s Payments ........................................................ 27 Section 14.8 Rate Covenant .................................................................................... 27 Section 14.9 Pledge of CCA Revenues................................................................... 28 Section 14.10 Financial Responsibility..................................................................... 28 Article XV [Reserved]................................................................................................................ 28 Article XVI Notices .................................................................................................................... 28 Article XVII Default; Remedies; Termination........................................................................ 29 Item 3
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-iii-Section 17.1 Issuer Default ..................................................................................... 29 Section 17.2 Purchaser Default ............................................................................... 29 Section 17.3 Remedies Upon Default ..................................................................... 30 Section 17.4 Termination of Prepaid Agreement ................................................... 31 Section 17.5 Limitation on Damages ...................................................................... 31 Article XVIII Miscellaneous ..................................................................................................... 32 Section 18.1 Indemnification Procedure ................................................................. 32 Section 18.2 Deliveries ........................................................................................... 32 Section 18.3 Entirety; Amendments ....................................................................... 33 Section 18.4 Governing Law .................................................................................. 33 Section 18.5 Non-Waiver........................................................................................ 33 Section 18.6 Severability ........................................................................................ 33 Section 18.7 Exhibits .............................................................................................. 33 Section 18.8 Winding Up Arrangements ................................................................ 33 Section 18.9 Relationships of Parties...................................................................... 33 Section 18.10 Immunity ............................................................................................ 34 Section 18.11 Rates and Indices ............................................................................... 34 Section 18.12 Limitation of Liability........................................................................ 34 Section 18.13 Counterparts ....................................................................................... 34 Section 18.14 Third Party Beneficiaries; Rights of Trustee ..................................... 34 Section 18.15 Waiver of Defenses ............................................................................ 35 Exhibits
Exhibit A-1 - Base Energy Hourly Quantities
Exhibit A-2 - EPS Energy Period Monthly Quantity
Exhibit B - Notices
Exhibit C - Form of Remarketing Election Notice
Exhibit D - Form of Federal Tax Certificate
Exhibit E - Form of Opinion of Counsel to Purchaser
Exhibit F - Monthly Discount
Exhibit G - Form of Closing Certificate
Exhibit H - Form of Remediation Certificate
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1 POWER SUPPLY CONTRACT
This Power Supply Contract (hereinafter “Agreement”) is made and entered into as of [____], 2022 (the “Execution Date”), by and between 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) (“Issuer”) and Silicon Valley Clean Energy Authority, a joint powers authority and a community choice aggregator organized under the Laws of the State of California (“Purchaser”).
W I T N E S S E T H:
WHEREAS, Issuer has planned and developed a project to acquire long-term Energy supplies from Morgan Stanley Energy Structuring, L.L.C. (“MSES”) pursuant to a Prepaid Energy Sales Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Prepaid Agreement”) to meet a portion of the Energy supply requirements of Purchaser through an energy prepayment project (the “Energy Project”); and WHEREAS, Issuer will finance the prepayment under the Prepaid Agreement, and the other costs of, the Energy Project by issuing the Bonds; and WHEREAS, Purchaser is a joint powers authority organized pursuant to the provisions of Title 1, Division 7, Chapter 5, Article 1 (Section 6500 et seq.) of the California Government Code and a community choice aggregator pursuant to the provisions of Section 366.2 of the California Public Utilities Code with authority to sell electricity to retail electric consumers within its service area; and
WHEREAS, Purchaser is agreeable to purchasing a portion of its Energy requirements from Issuer under the terms and conditions set forth in this Agreement and Issuer is agreeable to selling to Purchaser such supplies of Energy under the terms and conditions set forth in this Agreement; and
WHEREAS, concurrently with the execution of this Agreement, Purchaser has assigned to MSES certain Assigned Rights and Obligations, including the right to receive Assigned Product, which Assigned Product will be delivered to Issuer under the Prepaid Agreement and then resold by Issuer hereunder; and
WHEREAS, as a condition precedent to the effectiveness of the Parties’ obligations under this Agreement, Issuer shall have entered into the Prepaid Agreement and shall have issued the Bonds.
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 Item 3
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2 of which are hereby acknowledged, Issuer and Purchaser (the “Parties” hereto; each is a “Party”) agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. 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:
“Affiliate” means, with respect to either Party, any entity which is a direct or indirect parent or subsidiary of such Party or which directly or indirectly (i) owns or controls such Party, (ii) is owned or controlled by such Party, or (iii) is under common ownership or control with such Party. For purposes of this definition, “control” of an entity means the power, directly or indirectly, either to (a) vote 50% or more of the securities having ordinary voting power for the election of directors or Persons performing similar functions or (b) direct or cause the direction of the management and policies, whether by contract or otherwise. “Agreement” has the meaning specified in the preamble and shall include exhibits, recitals and attachments referenced herein and attached hereto and all amendments, supplements and modifications hereto and thereto.
“Annual Refund” means the annual refund, if any, provided to Purchaser and calculated pursuant to the procedures specified in Section 3.2(c). “Applicable Rating Agencies” means, at any given time, each Rating Agency then rating the Bonds.
“Assigned Delivery Point” has the meaning specified in the applicable Assignment Agreement.
“Assigned Energy” has the meaning specified in the applicable Assignment Agreement; provided that any Assigned Energy shall be EPS Compliant Energy as set forth in the Assignment Letter Agreement.
[“Assigned Fixed Price” means $[____]/MWh.]1
“Assigned Product” means, as applicable, PCC1 Product, Long-Term PCC1 Product, Assigned Energy, Assigned RECs and any other product included in an Assignment Agreement.
“Assigned RECs” means any RECs to be delivered to MSCG or MSES pursuant to any Assigned Rights and Obligations.
1 SM NTD: Subject to confirmation of whether the Initial Assigned PPA will be fixed or floating price.
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3 “Assigned Rights and Obligations” means a portion of Purchaser’s rights and obligations under a power purchase agreement assigned pursuant to an 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” means that certain Letter Agreement, dated as of the date hereof, by and among MSCG, MSES, Issuer and Purchaser. “Available Discount” means, for each Reset Period, the amount, expressed in cents per MWh (rounded down to the nearest one-half cent), determined by the Calculation Agent pursuant to the Re-Pricing Agreement for such Reset Period. The Available Discount shall equal the sum of the Monthly Discount and any anticipated Annual Refunds for the applicable Reset Period.
“Balancing Authority” has the meaning specified in the CAISO Tariff. “Base Energy” means Firm (LD) Energy.
“Billing Date” has the meaning specified in Section 14.1(b). “Billing Statement” has the meaning specified in Section 14.1(b). “Bond Closing Date” means the first date on which the Bonds are issued pursuant to the Bond Indenture.
“Bond Indenture” means (i) the Trust Indenture to be entered into prior to the commencement of the Delivery Period between Issuer and the Trustee, as supplemented and amended from time to time in accordance with its terms, and (ii) any trust indenture entered into in connection with the commencement of any Interest Rate Period after the initial Interest Rate Period between Issuer and the Trustee containing substantially the same terms as the indenture described in clause (i) and which is intended to replace the indenture described in clause (i) as of the commencement of such Interest Rate Period.
“Bonds” means the bonds issued pursuant to the Bond Indenture. “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a Federal Reserve Bank Holiday, (iii) any other day on which commercial banks in either New York, New York or the State of California are authorized or required by Law to close, or (iv) any other day excluded pursuant to the Bond Indenture.
“CAISO” means California Independent System Operator or its successor. “CAISO Tariff” means CAISO’s FERC-approved tariff, as modified, amended or supplemented from time to time.
“Calculation Agent” has the meaning specified in the Re-Pricing Agreement.
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4 “California Long-Term Contracting Requirements” means the long-term contracting requirement set forth in the Clean Energy and Pollution Reduction Act of 2015 (SB 350), California Public Utilities Code section 399.13(b), and CPUC Decision 17-06-026 and CPUC Decision 18-05-026, as may be modified by subsequent decision of the California Public Utilities Commission or by other Law.
“CCA Revenues” means all charges received for, and all other income and receipts derived by Purchaser from, the operation of its CCA System, including income derived from the sale of electric energy by its CCA System.
“CCA System” means Purchaser’s community choice aggregation program that provides electric energy supply service to retail customers located with its service area. “Claiming Party” has the meaning specified in Section 11.1. “Claims” means all claims or actions, threatened or filed, that directly or indirectly relate to the indemnities provided herein, 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. “Code” means the Internal Revenue Code of 1986, as amended. “Commercially Reasonable” or “Commercially Reasonable Efforts” means, with respect to any purchase or sale or other action required to be made, attempted or taken by a Party under this Agreement, such efforts as a reasonably prudent Person would undertake for the protection of its own interest under the conditions affecting such purchase or sale or other action, including without limitation, the amount of notice of the need to take such action, the duration and type of the purchase or sale or other action, the competitive environment in which such purchase or sale or other action occurs, and the risk to the Party required to take such action. “Contract Price” has the meaning specified in Section 3.2(a). “Contract Quantity” means, with respect to each Month during the Delivery Period, (i) the Monthly Quantity of Assigned Energy set forth in Exhibit A-2 for such Month and (ii) the Hourly Quantity of Base Energy set forth in Exhibit A-1 for such Month, as such Exhibits A-1 and A-2 shall be updated from time to time in accordance with Section 6.2. “Day-Ahead Average Price” means, for any Assigned Energy after the Initial EPS Energy Period, (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 CAISO establishes a separate price. “Day-Ahead Market Price” means The Day Ahead Market or Locational Marginal Price for the Energy Delivery Point for each applicable hour as published by CAISO, or as such price may be corrected or revised from time to time by such independent system operator or other entity in accordance with its rules.
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5 “Default Rate” means, as of any date of determination, the lesser of (a) the sum of (i) the rate of interest per annum quoted in The Wall Street Journal (Eastern Edition) under the “Money Rates” section as the “Prime Rate” for such date of determination, plus (ii) one percent per annum, or (b) if a lower maximum rate is imposed by applicable Law, such maximum lawful rate.
“Delivery Hours” means each Hour commencing at 00:00 (PPT) on the first day of the Delivery Period, and each Hour thereafter during the Delivery Period. “Delivery Period” means the period beginning on [____] and ending on [____]; provided that the Delivery Period shall end immediately upon the effective termination date of the Prepaid Agreement or early termination of this Agreement pursuant to Article XVII hereof. “Delivery Point” means (i) the applicable Assigned Delivery Point(s) for Assigned Energy and (ii) the applicable Energy Delivery Point for Base Energy (as set forth in Exhibits A-1 and A-2). “Energy” means three-phase, 60-cycle alternating current electric energy, expressed in MWhs.
“Energy Delivery Point” has the meaning specified in Exhibit A-1. “Energy Project” has the meaning specified in the recitals. “EPS” means California’s Emissions Performance Standards, as set forth in Sections 8340 and 8341 of the California Public Utilities Code, as implemented and amended from time to time, and any successor Law.
“EPS Compliant Energy” means Energy that Purchaser can contract for and purchase in compliance with EPS requirements that are applicable to Purchaser. “EPS Energy Period” means the Initial EPS Energy Period and any subsequent EPS Energy Period established by a future assignment of a power purchase agreement consistent with the Assignment Letter Agreement.
“Execution Date” has the meaning specified in the preamble. “Federal Tax Certificate” means the executed Federal Tax Certificate delivered by Purchaser in the form attached as Exhibit D.
“FERC” means the Federal Energy Regulatory Commission and any successor thereto.
“Firm (LD)” means, with respect to the obligation to deliver Energy, that either Party shall be relieved of its obligations to sell and deliver or purchase and receive without liability only to the extent that, and for the period during which, such performance is prevented by Force Majeure.
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6 “Force Majeure” means an event or circumstance which prevents one Party from performing its obligations under this Agreement, which event or circumstance was not anticipated as of the Execution Date, which is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure shall not be based on (i) the loss of Purchaser’s markets; (ii) Purchaser’s inability economically to use or resell the Energy purchased hereunder; (iii) the loss or failure of Issuer’s supply except if such loss or failure results from curtailment by a Transmission Provider; or (iv) Issuer’s ability to sell the Energy at a higher price. Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a Transmission Provider unless (a) such Party has contracted for firm transmission with such Transmission Provider for the Energy to be delivered to or received at the Delivery Point and (b) such curtailment is due to “force majeure” or “uncontrollable force” or a similar term as defined under the Transmission Provider’s tariff; provided, however, that existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that Force Majeure as defined in the first sentence hereof has occurred. Notwithstanding the foregoing or anything to the contrary herein, (I) any invocation of Force Majeure by MSES under the Prepaid Agreement shall constitute Force Majeure in respect of Issuer hereunder; (II) to the extent that a PPA Supplier fails to deliver any Assigned Energy and claims force majeure with respect to such failure to deliver, then such event shall be deemed to constitute Force Majeure in respect of Issuer hereunder; and (III) to the extent that an Assignment Agreement is terminated early, such termination shall constitute Force Majeure with respect to Issuer until the earlier of (A) the commencement of an “Assignment Period” under a replacement Assignment Agreement, (B) the commencement of the delivery of EPS Compliant Energy procured by MSCG consistent with the Assignment Letter Agreement or (C) the end of the second Month following the Month in which such early termination occurs.
“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.
“Hour” means each 60-minute period commencing at 00:00 PPT during the Delivery Period. The term “Hourly” shall be construed accordingly. “Hourly Quantity” means, with respect to each Delivery Hour during the Delivery Period, the quantity (in MWh) of Base Energy set forth on Exhibit A-1 for the Month in which such Delivery Hour occurs (as such Exhibit A-1 may be updated from time to time in accordance with Section 6.2).
“Initial Assigned PPA” means that certain Master Power Purchase and Sale Agreement dated November 23, 2016 and the Amended & Restated Confirmation thereunder dated as of the date hereof between the Initial PPA Supplier and Purchaser.2 2 SM NTD: Initial Assigned PPA provisions to be updated to the extent that the Initial PPA Seller is not MS.
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7 “Initial Assignment Agreement” means that certain Limited Assignment Agreement, dated as of the date hereof, by and among Purchaser, MSES and the Initial PPA Supplier.
“Initial EPS Energy Period” means the “Assignment Period” as defined in the Initial Assignment Agreement.
“Initial PPA Supplier” means MSCG.
“Initial Reset Period” means the period beginning on [____] and ending on [____]. “Interest Rate Period” has the meaning specified in the Bond Indenture. “Issuer” has the meaning specified in the preamble.
“Issuer Default” has the meaning specified in Section 17.1. “Law” means any statute, law, rule or regulation or any judicial or administrative interpretation thereof having the effect of the foregoing enacted, promulgated, or issued by a Government Agency whether in effect as of the Execution Date or at any time in the future. “Long-Term PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1, and the California Long-Term Contracting Requirements, to be delivered to MSCG, MSES or any successors thereto pursuant to any Assigned Rights and Obligations.
“Minimum Discount” means $[___] per MWh for the Initial Rate Period and thereafter no less than $[___] per MWh. Both amounts are inclusive of any projected Annual Refund.
“Month” means, during the Delivery Period, a calendar month. The term “Monthly” shall be construed accordingly.
“Monthly Discount” means (i) for the Initial Reset Period, an amount (when taken together with any Annual Refund) that is not less than the Minimum Discount and is specified in Exhibit F, which Exhibit F shall be provided by Issuer to Purchaser on the Bond Closing Date, and (ii) for each subsequent Reset Period, a portion of the Available Discount for such Reset Period determined by the Calculation Agent pursuant to the Re-Pricing Agreement and set forth in an updated Exhibit F provided by Issuer after such determination. “Monthly Quantity” means, with respect to each Month of the Delivery Period for which, the quantity (in MWh) of Assigned Energy for such Month as set forth on Exhibit A-2 (as such Exhibit A-2 may be updated from time to time in accordance with Section 6.2). “MSCG” means Morgan Stanley Capital Group Inc., a Delaware corporation. “MSES” has the meaning specified in the recitals.
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8 “Municipal Utility” means any Person that (a)(i) is a “governmental person” as defined in the implementing regulations under Section 141 of the Code and any successor provision and owns a natural gas or electric distribution utility (or provides Energy at wholesale to, or that is sold to entities that provide natural gas or Energy at wholesale to, governmental Persons that own such utilities) or (ii) is a community choice aggregator organized under the Laws of the State of California, and (b) agrees in writing to use the Energy purchased by it (or cause such as to be used) for a qualifying use as defined in U.S. Treas. Reg. § 1.148-1(e)(2)(iii). “MWh” means megawatt-hour.
“Non-Priority Energy” means Energy that is not Priority Energy. “Party” has the meaning specified in the recitals.
“PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1 to be delivered to MSCG, MSES or any successors thereto pursuant to any Assigned Rights and Obligations. “Person” means any individual, limited liability company, corporation, partnership, joint venture, trust, unincorporated organization or Government Agency. “Portfolio Content Category 1” means any Renewable Energy Credit associated with the generation of electricity from an “Eligible Renewable Energy Resource” consisting of the portfolio content set forth in California Public Utilities Code Section 399.16(b)(1), as may be amended from time to time or as further defined or supplemented by Law. “Potential Remarketing Event” has the meaning specified in Section 3.4(b). “PPA Supplier” means the Initial PPA Supplier and any subsequent supplier who enters into an Assignment Agreement consistent with the terms of the Assignment Letter Agreement.
“PPT” means Pacific Prevailing Time.
“Prepaid Agreement” has the meaning specified in the recitals. “Priority Energy” means the Contract Quantity to be purchased by Purchaser under this Agreement, together with Energy that Purchaser is obligated to take under a long-term agreement, which Energy either (i) has been purchased by Purchaser or a joint action agency in a prepayment transaction using the proceeds of bonds, notes, or other obligations, the interest on which is excluded from gross income for federal income tax purposes, or (ii) is generated using capacity that was constructed using the proceeds of bonds, notes, or other obligations, the interest on which is excluded from gross income for federal income tax purposes (provided that, with respect to clause (ii), Priority Energy shall not include Energy that is generated using capacity that was wholly or partially financed through the monetization of renewable tax credits, whether such monetization is accomplished through a tax equity investment or otherwise, or that is generated from federally owned and operated hydroelectric facilities, including through the United States Item 3
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9 Army Corps of Engineers and the United States Bureau of Reclamation, and marketed by the Bonneville Power Administration or the Western Area Power Administration). “Project Administration Fee” means the annual fee payable by Purchaser as described in Section 3.2(b).
“Project Participant” has the meaning specified in the Bond Indenture. “Purchaser” has the meaning specified in the preamble.
“Purchaser Default” has the meaning specified in Section 17.2. “Purchaser’s Statement” has the meaning specified in Section 14.1(a). “Qualifying Use Requirements” means, with respect to any Energy delivered under this Agreement, such Energy is used (i) for a “qualifying use” as defined in U.S. Treas. Reg. §
1.148-1(e)(2)(iii), (ii) in a manner that will not result in any “private business use” within the meaning of Section 141 of the Code, and (iii) in a manner that is consistent with the Federal Tax Certificate attached as Exhibit D.
“Rating Agency” has the meaning specified in the Bond Indenture. “Re-Pricing Agreement” means the Re-Pricing Agreement, dated as of the Bond Closing Date, by and between Issuer and MSES.
“Remarketing Election Deadline” means, for any Reset Period, the last date and time by which the Purchaser may provide a Remarketing Election Notice, which shall be 4:00 p.m.
PPT on the 10th day of the Month (or, if such day is not a Business Day, the next succeeding Business Day) prior to the first delivery Month of a Reset Period with respect to which a Potential Remarketing Event has occurred.
“Remarketing Election Notice” has the meaning specified in Section 3.4(b). “Renewable Energy Credit” or “REC” has the meaning specified for “Renewable Energy Credit” in California Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by Law. “Reset Period” means each “Reset Period” under the Re-Pricing Agreement. “Reset Period Notice” has the meaning specified in Section 3.4(a). “Schedule”, “Scheduled” or “Scheduling” means the actions of Issuer, Purchaser and/or their 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. “Transmission Provider(s)” means any entity or entities transmitting or transporting Energy on behalf of Issuer or Purchaser to or from the Delivery Point.
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10 “Trustee” means The Bank of New York Mellon Trust Company, N.A., and its successors as Trustee under the Bond Indenture.
“Voided Remarketing Election Notice” has the meaning specified in Section 3.4(b). “WREGIS” means the Western Renewable Energy Generation Information System or its successor.
Section 1.2 Definitions; Interpretation. References to “Articles,” “Sections,” “Schedules” and “Exhibits” shall be to Articles, Sections, Schedules and Exhibits, as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the scope of such general statement, term or matter. Any reference herein to any agreement or document includes all amendments, supplements or restatements to and of such agreement or document as may occur from time to time, and any reference to a party to any such agreement includes all successors and assigns of such party thereunder permitted by the terms hereof and thereof.
ARTICLE II
EXECUTION DATE AND DELIVERY PERIOD; NATURE OF ENERGY PROJECT Section 2.1 Execution Date; Delivery Period. Unless this Agreement is terminated pursuant to Article XVII, delivery of Energy under this Agreement shall commence and continue for the Delivery Period.
Section 2.2 Termination Due to Failure to Issue Bonds or Provide Minimum Discount.
Each Party shall have a right to terminate this Agreement with the effect that this Agreement shall be of no further force or effect and the Parties shall have no rights or obligations hereunder if (a) the Bonds are not issued on or before [____], 2022, or (b) Issuer notifies Purchaser that the expected Available Discount for the Initial Reset Period is less than the Minimum Discount.
Section 2.3 Nature of Energy Project. Purchaser acknowledges and agrees that Issuer will meet its obligations to provide Energy to Purchaser under this Agreement exclusively through its purchase of long-term supplies of Energy from MSES pursuant to the Energy Project and that Issuer is financing its purchase of such long-term supplies through the issuance of the Bonds. [As provided in Section 3.2(a) below, Purchaser shall pay a fixed price for Energy during the Initial EPS Energy Period and thereafter shall pay a floating price, less the Monthly Discount in each case.]3
3 SM NTD: Subject to confirmation of whether the Initial Assigned PPA will be fixed or floating price.
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11 Section 2.4 Pledge of this Agreement. Purchaser acknowledges and agrees that Issuer will pledge its right, title, and interest under this Agreement and the revenues to be received under this Agreement (other than revenues attributable to the Project Administration Fee) to secure Issuer’s obligations under the Bond Indenture.
ARTICLE III
SALE AND PURCHASE
Section 3.1 Sale and Purchase of Energy. Issuer agrees to sell and deliver or cause to be delivered to Purchaser, and Purchaser agrees to purchase and take or cause to be taken from Issuer, in each case, on a Firm (LD) basis, the Contract Quantity of Energy pursuant to the terms and conditions set forth in this Agreement.
Section 3.2 Pricing.
(a) For each MWh of Energy delivered to Purchaser, Purchaser shall pay Issuer the applicable Contract Price, provided that Issuer shall owe a payment to Purchaser to the extent that the Contract Price for Energy delivered is negative. With respect to each MWh delivered under this Agreement, “Contract Price” means:
(i) for Assigned Energy during the Initial EPS Energy Period, (A) the [Assigned Fixed Price] minus (B) the Monthly Discount; and (ii) for Assigned Energy after the Initial EPS Energy Period, (A) the Day-Ahead Average Price for the Month in which Energy is delivered, minus (B) the Monthly Discount. The Contract Price for Assigned Energy is inclusive of any amounts due in respect of other Assigned Products.
(b) Issuer shall bill and Purchaser shall pay in January of each year during the Delivery Period a “Project Administration Fee” equal to the result of $[____] minus the balance of the Administrative Fee Fund (as defined in the Bond Indenture) as of January 1 of such year. (c) During the term of this Agreement, promptly following completion of the annual audit of Issuer’s financial statements at the end of each fiscal year (currently the twelve-month period ending December 31), Issuer shall compare its revenues (as determined in accordance with the Bond Indenture) and expenses under the Energy Project for that fiscal year.
If this annual comparison demonstrates that such revenues exceeded such expenses during the applicable fiscal year and there are amounts on deposit in the fund established by the Bond Indenture available for such purpose, then Issuer shall make refunds to Purchaser in the amount available after making allowances for any necessary and appropriate reserves and contingencies (including but not limited to amounts deemed reasonably necessary by Issuer to fund any working capital reserve and to reserve or account for unfunded liabilities, including future sinking fund or other principal amortization of the Bonds. As of the Execution Date, the projected Annual Refund for the Initial Rate Period is $0.[___] per MWh.
Section 3.3 No Obligation to Take Base Energy. Notwithstanding anything to the contrary in this Agreement, Purchaser shall not be required to purchase and receive any Base Item 3
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12 Energy hereunder, and Issuer shall cause MSES to remarket any portion of the Contract Quantity that is Base Energy pursuant to the provisions of Exhibit C to the Prepaid Agreement.
Section 3.4 Reset Period Remarketing.
(a) Reset Period Notice. For each Reset Period, Issuer shall provide to Purchaser, at least ten (10) days prior to the Remarketing Election Deadline, formal written notice setting forth (i) the duration of such Reset Period, (ii) the Estimated Available Discount (as defined in the Re-Pricing Agreement) for such Reset Period, and (iii) the applicable Remarketing Election Deadline (a “Reset Period Notice”). Issuer may thereafter update such notice at any time prior to the Remarketing Election Deadline and may extend the Remarketing Election Deadline in its sole discretion in any such update.
(b) Remarketing Election. If the Reset Period Notice (or any update thereto) indicates that the Available Discount in such notice is not at least equal to the Minimum Discount for that Reset Period, then: (i) a “Potential Remarketing Event” shall be deemed to exist, and (ii) Purchaser may, not later than the Remarketing Election Deadline, issue a written notice in the form attached hereto as Exhibit C (a “Remarketing Election Notice”) to Issuer, MSES and the Trustee electing for all of Purchaser’s Energy that would otherwise be delivered hereunder to be remarketed during the applicable Reset Period; provided, however, if the actual Available Discount, as finally determined under the Re-Pricing Agreement, is equal to or greater than the Minimum Discount, then Issuer may, in its sole discretion, elect by written notice to Purchaser to treat such Remarketing Election Notice as void (a “Voided Remarketing Election Notice”). For the avoidance of doubt, in the event that Purchaser issues a Remarketing Election Notice (other than a Voided Remarketing Notice), any rights and obligations assigned to MSCG under the Initial Assigned PPA or a subsequent Assignment Agreement including, without limitation, the right to receive Assigned Energy, shall revert to Purchaser as of the end of the Initial Reset Period or the then-current Reset Period, as applicable.
(c) Final Determination of Available Discount. The Parties acknowledge and agree that the final Available Discount for any Reset Period following the Initial Reset Period will be determined on the applicable Re-Pricing Date (as defined in the Re-Pricing Agreement), and that such Available Discount may differ from the estimate or estimates of such Available Discount provided to Purchaser prior to the applicable Remarketing Election Deadline. Accordingly, the Parties agree that:
(i) the Available Discount for any Reset Period will not be less than the Minimum Discount applicable to such Reset Period, unless Issuer has provided notice of a Potential Remarketing Event to Purchaser in accordance with Section 3.4(b); and (ii) if Purchaser receives notice of a Potential Remarketing Event and has not provided a Remarketing Election Notice prior to the applicable Remarketing Election Deadline, Purchaser shall be deemed to have elected to continue to purchase and receive its Contract Quantity at a Contract Price that reflects the Monthly Discount portion of the Available Discount as finally determined on the applicable Re-Pricing Date, plus Purchaser’s right to its share of Annual Refunds, if any, and all delivery and purchase Item 3
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13 obligations under this Agreement shall continue in full force and effect for the applicable Reset Period.
(d) Resumption of Deliveries. Notwithstanding the issuance of any Remarketing Election Notice for a Reset Period, Purchaser will (i) remain obligated to purchase the Contract Quantities hereunder for each subsequent Reset Period, unless Purchaser issues a new valid Remarketing Election Notice (other than a Voided Remarketing Election Notice) for any such Reset Period in accordance with Section 3.4(b) and (ii) not make any new commitment to purchase Priority Energy during such Reset Period to the extent any such commitment could reasonably be expected to cause, during any portion of the Delivery Period after such Reset Period, Purchaser’s aggregate obligations to purchase Priority Energy (including its obligation to purchase Priority Energy hereunder) to exceed Purchaser’s expected aggregate requirements for Energy that will be used (A) for a “qualifying use” as defined in U.S. Treas. Reg. § 1.148-1(e)(2)(iii) and (B) in a manner that will not result in any “private business use” within the meaning of Section 141 of the Code.
(e) Reduction of Contract Quantity. The Parties recognize and agree that the Contract Quantity may be reduced in a Reset Period pursuant to the re-pricing methodology described in the Re-Pricing Agreement if necessary to achieve a successful remarketing of the Bonds. The Parties agree further that if, pursuant to the Re-Pricing Agreement, Issuer and the Calculation Agent determine in connection with the establishment of any new Reset Period that:
(i) such Reset Period will be the final Reset Period and (ii) such Reset Period will end prior to the end of the original Delivery Period, then (A) Issuer will notify Purchaser, (B) the Delivery Period will be deemed to be modified so that it ends at the end of such Reset Period, and (C) the Contract Quantity for the last Month in such Reset Period may be reduced as provided in the Re-Pricing Agreement.
ARTICLE IV
FAILURE TO DELIVER OR TAKE ENERGY
Notwithstanding anything herein to the contrary, neither Purchaser nor Issuer shall have any liability or other obligation to one another for any failure to Schedule, take, or deliver Assigned Product.
ARTICLE V
TRANSMISSION AND DELIVERY; COMMUNICATIONS
Section 5.1 Delivery of Energy. All Assigned Energy delivered under this Agreement shall be Scheduled at the applicable Assigned Delivery Point and in accordance with the terms of the applicable Assignment Agreement. All other Assigned Product shall be delivered consistent with the terms of the applicable Assignment Agreement. Except as set forth in the two foregoing sentences, Buyer and Seller shall have no liability or obligations under this Article V with respect to Assigned Product.
Section 5.2 Scheduling. Scheduling of Assigned Energy shall be in accordance with the applicable Assignment Agreement.
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14 Section 5.3 Title and Risk of Loss. Title to the Energy delivered under this Agreement and risk of loss shall pass from Seller to Buyer at the Assigned Delivery Point. The transfer of title and risk of loss for all Assigned Product other than Assigned Energy shall be in accordance with the applicable Assignment Agreement; provided that all Assignment Agreements shall provide for the transfer of Renewable Energy Credits in accordance with WREGIS.
Section 5.4 PCC1 Product and Long-Term PCC1 Product. To the extent that any Assigned Product is PCC1 Product or Long-Term PCC1 Product, the following provisions apply:
(a) Eligibility. Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) the Project qualifies and is certified by the CEC as an Eligible Renewable Energy Resource (“ERR”) as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Project’s output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC 6, Non-Modifiable. (Source: D.07-11-025, Attachment A.) D.08-04-009]. As used above, “Seller” means “Issuer”, Buyer means “Purchaser”, and any other capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned Agreement.
(b) Transfer of Renewable Energy Credits. Seller and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement the Renewable Energy Credits transferred to Buyer conform to the definition and attributes required for compliance with the California Renewables Portfolio Standard, as set forth in California Public Utilities Commission Decision 08-08-028, and as may be modified by subsequent decision of the California Public Utilities Commission or by subsequent legislation. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC REC-1, Non-modifiable. D.11-01- 025]. As used above, “Seller” means “Issuer”, Buyer means “Purchaser”, and any other capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned Agreement. (c) Tracking of RECs in WREGIS. 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, Non-modifiable. D.11-01-025]. As used above, “Seller” means “Issuer”, Buyer means “Purchaser”, and any other capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned Agreement.
(d) 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, Non-Modifiable. (Source:
D.07-11-025, Attachment A) D.08-04-009]
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15 (e) Issuer Representations and Warranties.
Issuer represents and warrants:
(i) Issuer has the right to sell the Assigned Product from the Applicable Project;
(ii) Issuer has not sold the Assigned Product or any REC or other attributes of the Assigned Product to be transferred to Purchaser to any other person or entity;
(iii) the Energy component of the Assigned Product produced by the Applicable Project and purchased by Issuer for resale to Purchaser hereunder is not being sold by Issuer back to the Applicable Project or PPA Seller;
(iv) Assigned Energy and Assigned RECs to be purchased and sold pursuant to this Agreement are not committed to another party; (v) The Assigned Product is free and clear of all liens or other encumbrances;
(vi) Issuer will deliver to Purchaser all Assigned Energy and associated RECs generated by the Applicable Project for Long-Term PCC1 Product in compliance with the California Long-Term Contracting Requirements, if applicable
(vii) The Assigned Product supplied to Purchaser under this Agreement that is Long-Term PCC1 Product will be sourced solely from Applicable Projects that have an Assignment Period of ten years or more in length, or otherwise in compliance with the California Long Term Contracting Requirements; and
(viii) Issuer will cooperate and work with Purchaser, the CEC, and/or the CPUC to provide any documentation required by the CPUC or CEC to support the Product’s classification as a Portfolio Content Category 1 Product as set forth in California Public Utilities Code Section 399.16(b)(1) or, if applicable, or compliance with the California Long-Term Contracting Requirements.
Issuer further represents and warrants to Purchaser that, to the extent that the Product sold by Issuer is a resale of part or all of a contract between Issuer and one or more third parties, Issuer represents, warrants and covenants that the resale complies with the following conditions in (i) through (iv) below during the Assignment Period 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)(1);
(ii) This Agreement transfers only electricity and RECs that have not yet been generated prior to the Assignment Period;
(iii) The electricity transferred by this Agreement is transferred to Item 3
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16 Purchaser in real time; and
(iv) If the Applicable Project has an agreement to dynamically transfer electricity to a California balancing authority, the transactions implemented under this Agreement are not contrary to any condition imposed by a balancing authority participating in the dynamic transfer arrangement.
(f) Subsequent Changes in Law. In the event that the qualifications or requirements of the RPS program, PCC1 Product or the California Long-Term Contracting Requirements change, Issuer shall take commercially reasonable actions to meet the amended qualifications or requirements of the RPS Law, PCC1 Product or the California Long-Term Contracting Requirements but will not be required to incur any unreimbursed costs to comply with the RPS Law, PCC1 or the California Long- Term Contracting Requirements, collectively. (g) Limitations. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge and agree as follows:
(i) Issuer has relied exclusively upon the representations and warranties of each respective seller set forth in the Assigned Agreements in making the representations and warranties set forth in this Section
5.4 and has not performed any independent investigation with respect thereto;
(ii) MSES has agreed under the Prepaid Agreement to terminate or cause MSCG to terminate the applicable Assignment Period in the event that any representation or warranty in this Section 5.4 proves to be incorrect in any respect; and
(iii) Purchaser agrees that its sole recourse for any breach of the provisions of this Section 5.4 shall be the termination of the applicable Assignment Period and Purchaser shall have no other recourse against Issuer or remedies under this Agreement.
Section 5.5 Deliveries within CAISO or Another Balancing Authority. The Parties acknowledge that Energy delivered by Issuer at a Delivery Point within CAISO or another Balancing Authority will be delivered in accordance with the CAISO Tariff and rules of the Balancing Authority as applicable. Scheduling such Energy in accordance with the requirements of the applicable Energy into the applicable Balancing Authority shall constitute delivery of such Energy to Purchaser hereunder.
Section 5.6 Assigned Products. Notwithstanding anything to the contrary herein, the Parties shall have no liability under this Article V with respect to any Assigned Products.
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17 ARTICLE VI
PARTIAL ASSIGNMENTS OF PPAS
Section 6.1 Future PPA Assignments. In connection with the expiration or termination of an EPS Energy Period, each of the Parties agrees to satisfy its obligations under the Assignment Letter Agreement, including but not limited to (a) Purchaser’s obligation to exercise Commercially Reasonable Efforts to assign a portion of Purchaser’s rights and obligations under a power purchase agreement under which Project Participant is purchasing EPS Compliant Energy to MSCG or MSES pursuant to an Assignment Agreement and (b) the Parties’ obligations to cooperate in good faith with MSCG and MSES with respect to any proposed assignments.
Section 6.2 Updates to Exhibits A-1 and A-2.
(a) To the extent that an EPS Energy Period terminates or expires and Assigned Energy is not available for delivery immediately following (i) the end of the period for which Force Majeure is deemed to occur in the event of an early termination or (ii) the expiration of an EPS Energy Period, the Parties shall update (i) Exhibit A-1 to reflect an increase in the Hourly Quantities and (ii) Exhibit A-2 to reflect a decrease in the Monthly Quantities thereunder, in each case, in an amount equal to the Assigned Energy associated with the EPS Energy Period that terminated or expired.
(b) In connection with the execution of any subsequent Assignment Agreement, the Parties shall update Exhibits A-1 and A-2 to reflect any changes in the Hourly Quantities of Base Energy and Monthly Quantities of Assigned Energy and any other changes in connection therewith.
ARTICLE VII
USE OF ENERGY
Section 7.1 Tax Exempt Status of the Bonds. Purchaser acknowledges that the Bonds will be issued with the intention that the interest thereon will be exempt from federal taxes under Section 103 of the Code. Accordingly, Purchaser agrees that it will (a) provide such information with respect to its CCA System as may be requested by Issuer in order to establish the tax-exempt status of the Bonds, and (b) act in accordance with such written instructions as Issuer may provide from time to time in order to maintain the tax-exempt status of the Bonds. Purchaser further agrees that it will not at any time take any action, or fail to take any action, that would adversely affect the tax-exempt status of the Bonds.
Section 7.2 Priority Energy. Subject to Section 7.5(a), Purchaser agrees to take the Contract Quantities to be delivered under this Agreement (a) in priority over and in preference to all Non-Priority Energy; and (b) on at least a pari passu and non-discriminatory basis with other Priority Energy.
Section 7.3 Remarketing Sales .
(a) Remarketing of Assigned Energy. If notwithstanding Purchaser’s compliance with Section 7.1, a quantity of Assigned Energy less than the Monthly Quantity is delivered hereunder in any Month for any reason, then (i) MSCG shall remarket such undelivered Item 3
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18 quantity of Assigned Energy to the PPA Supplier at the Contract Price plus the Monthly Discount then in effect, and (ii) Purchaser shall remain responsible for the Project Administration Fee for such quantity of Assigned Energy not delivered hereunder. For the avoidance of doubt, Purchaser will not have any payment obligation with respect to Assigned Energy that is remarketed pursuant to the foregoing sentence.
(b) Remarketing of Base Energy. Consistent with Section 3.3, to the extent any portion of the Contract Quantity is Base Energy, Issuer shall cause MSES to remarket or purchase such Energy for the account of MSES under the remarketing provisions of the Prepaid Agreement, and Issuer shall credit against the amount owed by Purchaser for such Contract Quantities the amounts received from MSES for such remarketing services, less all directly incurred costs or expenses, including but not limited to remarketing administrative charges paid to MSES under the Prepaid Agreement, but in no event shall the amount of such credit be more than the Contract Price. For the avoidance of doubt, Purchaser will not have any payment obligation with respect to Base Energy that is remarketed pursuant to the foregoing sentence. (c) MSES Remarketing Fees. Purchaser shall not in any case have an obligation to make a payment to Issuer with respect to any Remarketing Fee (as defined in the Prepaid Agreement) charged by MSES under the Prepaid Agreement Section 7.4 Qualifying Use. Subject to Section 7.5, Purchaser agrees that, without limiting Purchaser’s other obligations under this Article VII, it will use all of the Energy purchased under this Agreement in compliance with the Qualifying Use Requirements. Purchaser agrees that it will provide such additional information, records and certificates as Issuer may reasonably request to confirm Purchaser’s compliance with this Section 7.4.
Section 7.5 Remediation. To the extent that (a) all or a portion of the Contract Quantity is remarketed under Section 7.3(a) or Section 7.3(b), (b) Purchaser has exercised Commercially Reasonable Efforts (as determined by Special Tax Counsel (as defined in the Bond Indenture)) to obtain EPS Compliant Energy for delivery hereunder consistent with the Assignment Letter Agreement and (c) Purchaser is not otherwise in default under this Agreement, then:
(a) MSES shall be obligated under the remarketing provisions of the Prepaid Agreement to purchase the remarketed Energy for its own account at the Day-Ahead Market Price (the proceeds of any such purchases, “Disqualified Remarketing Proceeds”), which Disqualified Remarketing Proceeds are for the benefit of Purchaser in that such proceeds reduce its payment obligations hereunder;
(b) Purchaser shall (i) exercise Commercially Reasonable Efforts to use an amount equivalent to such Disqualified Remarketing Proceeds to purchase Non-Priority Energy and use such Non-Priority Energy in compliance with the Qualifying Use Requirements in order to remediate such Disqualified Remarketing Proceeds and (ii) apply its purchases of Non-Priority Energy to remediate Disqualified Remarketing Proceeds under this Agreement prior to remediating such proceeds under any other contract that provides for the purchase of Priority Energy;
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19 (c) in order to track compliance with Purchaser’s obligations under Section
7.5(b) above, Purchaser shall deliver a Remediation Certificate in the form of Exhibit H hereto to Issuer and MSES by the tenth day of the Month subsequent to any relevant Non-Priority Energy purchases (which may include purchases of Energy from CAISO to the extent such Energy is used in compliance with the Qualifying Use Requirements);
(d) for Disqualified Remarketing Proceeds remediated under this Section 7.5, Issuer shall pay Purchaser the Monthly Discount associated with such Disqualified Remarketing Proceeds on the last Business Day of the Month following the Month in which Purchaser provides a certificate under clause (c) evidencing such remediation; and (e) to the extent any Disqualified Remarketing Proceeds are not remediated within twelve Months of the date on which such proceeds were received by Issuer, then MSES shall be obligated under the Prepaid Agreement to exercise Commercially Reasonable Efforts to remediate such Disqualified Remarketing Proceeds under the Prepaid Agreement and Purchaser’s ability to remediate such remarketing proceeds shall be subject to MSES’s successful remediation of such proceeds through sales to other purchaser(s);
provided that, for the avoidance of doubt, to the extent Special Tax Counsel (as defined in the Bond Indenture) determines at any time that Purchaser has failed to exercise Commercially Reasonable Efforts to obtain EPS Compliant Energy for delivery hereunder consistent with the Assignment Letter Agreement, then Purchaser shall not be entitled to remediate any Disqualified Remarketing Proceeds related to the resulting remarketing of Base Energy by MSES.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES; ADDITIONAL COVENANTS
Section 8.1 Representations and Warranties of the Parties. As a material inducement to entering into this Agreement, each Party, with respect to itself, hereby represents and warrants to the other Party as of the Execution Date as follows:
(a) For Issuer as the representing Party, Issuer is a is a joint powers authority organized pursuant to the provisions of Title 1, Division 7, Chapter 5, Article 1 (Section 6500 et seq.) of the California Government Code;
(b) For Purchaser as the representing Party, Purchaser is a joint powers authority organized pursuant to the provisions of Title 1, Division 7, Chapter 5, Article 1 (Section 6500 et seq.) of the California Government Code and a community choice aggregator pursuant to the provisions of Section 366.2 of the California Public Utilities Code, duly organized and validly existing under the Laws of the State of California;
(c) it has all requisite power and authority to conduct its business, to own its properties and to execute, deliver and perform its obligations under this Agreement; (d) there is no litigation, action, suit, proceeding or investigation pending or, to the best of such Party’s knowledge, threatened, before or by any Government Agency, which could reasonably be expected to materially and adversely affect the performance by such Party of its obligations under this Agreement or that questions the validity, binding effect or enforceability Item 3
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20 hereof, any action taken or to be taken by such Party pursuant hereto, or any of the transactions contemplated hereby;
(e) the execution, delivery and performance of this Agreement by such Party has been duly authorized by all necessary action on the part of such Party and does not require 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; (f) this Agreement has been duly executed and delivered on behalf of such Party by an appropriate officer or authorized Person of such Party and constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally and by general principles of equity; (g) the execution, delivery and performance of this Agreement by such Party shall not violate any provision of any Law, decree or other legal or regulatory determination applicable to it;
(h) the execution, delivery and performance by such Party of this Agreement, and the consummation of the transactions contemplated hereby, including the incurrence by such Party of its financial obligations under this Agreement, shall not result in any violation of any term of any material contract or agreement applicable to it, or any of its charter or bylaws or of any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, Law or ordinance applicable to it or any of its properties or to any obligations incurred by it or by which it or any of its properties or obligations are bound or affected, or of any determination or award of any arbitrator applicable to it, and shall not conflict with, or 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, except with respect to Issuer, the lien of the Bond Indenture;
(i) to the best of the knowledge and belief of such Party, no consent, approval, order or authorization of, or registration, declaration or filing with, or giving of notice to, obtaining of any license or permit from, or taking of any other action with respect to, any Government Agency is required in connection with the valid authorization, execution, delivery and performance by such Party of this Agreement or the consummation of any of the transactions contemplated hereby other than those that have been obtained; and
(j) it enters this Agreement as a bona-fide, arm’s-length transaction involving the mutual exchange of consideration and, once executed by both Parties, considers this Agreement a legally enforceable contract.
Section 8.2 Warranty of Title. Issuer warrants that it will have the right to convey and will transfer good and merchantable title to all Energy sold under this Agreement and delivered by it to Purchaser, free and clear of all liens, encumbrances, and claims.
Section 8.3 Disclaimer of Warranties. EXCEPT FOR THE WARRANTIES
EXPRESSLY MADE BY ISSUER IN THIS ARTICLE VIII, ISSUER HEREBY DISCLAIMS
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
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21 Section 8.4 Continuing Disclosure. Purchaser agrees to provide to Issuer: (a) such financial and operating information as may be requested by Issuer including its most recent audited financial statements for use in Issuer’s offering documents for the Bonds; and (b) annual updates to such information and statements to enable Issuer to comply with its continuing disclosure undertakings under Rule 15(c)2-12 of the United States Securities and Exchange Commission. Failure by Purchaser to comply with its agreement to provide such annual updates shall not be a default under this Agreement, but any such failure shall entitle Issuer or an owner of the Bonds to take such actions and to initiate such proceedings as may be necessary and appropriate to cause Purchaser to comply with such agreement, including without limitation the remedies of mandamus and specific performance.
ARTICLE IX
TAXES
Issuer shall (i) be responsible for all ad valorem, excise and other taxes assessed with respect to Energy delivered pursuant to this Agreement upstream of the Delivery Point, and (ii) indemnify Purchaser and its Affiliates for any such taxes paid by Purchaser or its Affiliates.
Purchaser shall (i) be responsible for all such taxes assessed at or downstream of the Delivery Point, and (ii) indemnify Issuer and its Affiliates for any such taxes paid by Issuer or its Affiliates.
ARTICLE X
DISPUTE RESOLUTION
Section 10.1 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 arbitrators. The arbitration shall be administered by Judicial Arbitration and Mediation Services, Inc. (“JAMS”) pursuant to its Comprehensive Arbitration Rules and Procedures. Within 15 days after the commencement of arbitration, each of the Parties shall select one person to act as arbitrator, and the two so-selected arbitrators shall select a third arbitrator (the “chairperson”) within 30 days of the commencement of the arbitration. If either Party is unable or fails to select one person to act as arbitrator, such arbitrator shall be appointed by JAMS. If the Party-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 either Party or have any direct pecuniary interest in either Party or the subject matter of the arbitration, unless such conflict is expressly acknowledged and waived in writing by each 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 Item 3
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22 damages. In any arbitration arising out of or related to this Agreement, the arbitrators shall award to the prevailing Party, if any, the costs and attorneys’ fees reasonably incurred in seeking to enforce the application of this Section 10.1 and by the prevailing party in connection with the arbitration. Notwithstanding the foregoing provisions of this Section 10.1, 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.
Section 10.2 Judicial Reference.
(a) Judicial Reference. Without limiting the provisions in Section 10.1, if Section 10.1 is ineffective or unenforceable, 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 10.2(b).
(b) Notice of Dispute. Prior to initiating the Reference Proceeding, a Party (the “Disputing Party”) shall provide the other Party (the “Responding Party”) 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 Party 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 mutual agreement within 60 days after receipt of the Dispute Response, (the “Negotiation Period”), then either Party may provide to the other Party written notice of intent for judicial reference (the “Impasse Notice”) in accordance with the further provisions of this Section 10.2.
(c) Applicability; Selection of Referees.
(i) The Party that provides the Impasse Notice shall nominate one (1) referee at the same time it provides the Impasse Notice. The other Party shall nominate one referee within 10 days of receiving the Impasse Notice. 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 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 Item 3
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23 either Party and of the other referees and not employed by any of the Parties in any prior matter.
(ii) 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 Party shall have one (1) peremptory challenge to the referee selected by the Court. (d) Discovery; Proceedings.
(i) 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.
(ii) 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.
(iii) Any matter before the Referees shall be governed by the substantive law of California, its Code of Civil Procedure, Rules of Court, and Evidence Code, except as otherwise specifically agreed by the Parties and approved by the Referees. 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.
(iv) 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. (e) 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 Item 3
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24 rendered by a judge of the Court. The Parties intend this general reference agreement to be specifically enforceable in accordance with the CCP.
(f) Expenses. Each Party 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 the Parties.
ARTICLE XI
FORCE MAJEURE
Section 11.1 Applicability of Force Majeure. To the extent either Party is prevented by Force Majeure from carrying out, in whole or part, its obligations under this Agreement and such Party (the “Claiming Party”) gives notice and details of the Force Majeure to the other Party as soon as practicable, then the Claiming Party shall be excused from the performance of its obligations with respect to this Agreement (other than the obligation to make payments then due or becoming due with respect to performance prior to the Force Majeure). The Claiming Party shall mitigate the Force Majeure with all reasonable dispatch. For the duration of the Claiming Party’s non-performance (and only for such period), the non-Claiming Party shall not be required to perform or resume performance of its obligations to the Claiming Party corresponding to the obligations of the Claiming Party excused by Force Majeure.
Section 11.2 Settlement of Labor Disputes. Notwithstanding anything to the contrary herein, the Parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the Party experiencing such disturbance, and the failure of a Party to settle such strikes, lockouts or other industrial disturbances shall not prevent the existence of Force Majeure or of reasonable dispatch to remedy the same.
ARTICLE XII
GOVERNMENTAL RULES AND REGULATIONS
Section 12.1 Compliance with Laws. This Agreement shall be subject to all present and future Laws of any Government Agency having jurisdiction, and neither Party has knowingly undertaken or will knowingly undertake or knowingly cause to be undertaken any activity that would conflict with such Laws; provided, however, that nothing herein shall be construed to restrict or limit either Party’s right to object to or contest any such Law, or its application to this Agreement or the transactions undertaken hereunder, and neither acquiescence therein or compliance therewith for any period of time shall be construed as a waiver of such right.
Section 12.2 Contests. Excluding all matters involving a contractual dispute between the Parties, no Party shall contest, cause to be contested or in any way actively support the contest of the equity, fairness, reasonableness or lawfulness of any terms or conditions set forth or established pursuant to this Agreement, as those terms or conditions may be at issue before any Government Agency in any proceeding, if the successful result of such contest would be to preclude or excuse the performance of this Agreement by either Party.
Section 12.3 Defense of Agreement. Excluding all matters involving a contractual dispute between the Parties, each Party shall hereafter defend and support this Agreement before any Government Agency in any proceeding, if the substance, validity or enforceability of all or Item 3
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25 any part of this Agreement is hereafter directly challenged or if any proposed changes in regulatory practices or procedures would have the effect of making this Agreement invalid or unenforceable or would otherwise materially affect the rights or obligations of the Parties under this Agreement.
ARTICLE XIII
ASSIGNMENT
The terms and provisions of this Agreement shall extend to and be binding upon the Parties and their respective successors, assigns, and legal representatives; provided, however, that, subject to Section 18.14, neither Party may assign this Agreement or its rights and interests, in whole or in part, under this Agreement without the prior written consent of the other Party. Prior to assigning this Agreement, Purchaser shall deliver to Issuer (i) written confirmation from each of the Applicable Rating Agencies, provided that such agency has rated and continues to rate the Bonds, that the assignment will not result in a reduction, qualification, or withdrawal of the then-current ratings assigned by the Applicable Rating Agencies to the Bonds; or (ii) written confirmation from each of the Applicable Rating Agencies, that the assignee has an outstanding long-term senior, unsecured, unenhanced debt rating equivalent to or higher than the ratings assigned by the Applicable Rating Agencies to the Bonds. Whenever an assignment or a transfer of a Party’s interest in this Agreement is requested to be made with the written consent of the other Party, the assigning or transferring Party’s assignee or transferee shall expressly agree to assume, in writing, the duties and obligations under this Agreement of the assigning or transferring Party.
Upon the agreement of a Party to any such assignment or transfer, the assigning or transferring Party shall furnish or cause to be furnished to the other Party a true and correct copy of such assignment or transfer and assumption of duties and obligations.
ARTICLE XIV
PAYMENTS
Section 14.1 Monthly Statements.
(a) No later than the 5th day of each Month during the Delivery Period (excluding the first Month of the Delivery Period) and the first Month following the end of the Delivery Period, Purchaser shall deliver to Issuer a statement (a “Purchaser’s Statement”) listing any other amounts due to Purchaser in connection with this Agreement with respect to the prior Month(s).
(b) No later than the 10th day of each Month during the Delivery Period (excluding the first Month of the Delivery Period) and the first Month following the end of the Delivery Period (the “Billing Date”), Issuer shall deliver a statement (a “Billing Statement”) to Purchaser indicating (i) the total amount due to Issuer for Energy delivered in the prior Month, (ii) any other amounts due to Issuer or Purchaser in connection with this Agreement with respect to the prior Month(s), and (iii) the net amount due to Issuer or Purchaser. If the actual quantity delivered is not known by the Billing Date, Issuer may provisionally prepare a Billing Statement based on Issuer’s best available knowledge of the quantity of Energy delivered, which shall not exceed the Monthly Quantity or the sum of the Hourly Quantities in such Month, as applicable, plus any make-up quantities delivered during such Month. The invoiced quantity and amounts Item 3
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26 paid thereon (with interest calculated on the amount overpaid or underpaid by Purchaser at the Default Rate) will then be adjusted on the following Month’s Billing Statement, as actual delivery information becomes available based on the actual quantity delivered. (c) Upon request by either Party, the other Party shall deliver such supporting documentation of the foregoing as such requesting Party may reasonably request.
Section 14.2 Payment.
(a) If the Billing Statement indicates an amount due from Purchaser, then Purchaser shall remit such amount to the Trustee for the benefit of the Issuer by wire transfer (pursuant to the Trustee’s instructions), in immediately available funds, on or before the 20th day of the Month following the most recent Month to which such Billing Statement relates, or if such day is not a Business Day, the preceding Business Day. If the Billing Statement indicates an amount due from Issuer, then Issuer shall remit such amount to Purchaser by wire transfer (pursuant to Purchaser’s instructions), in immediately available funds, on or before the 28th day of the Month following the most recent Month to which such Billing Statement relates, or if such day is not a Business Day, the following Business Day.
(b) If Purchaser fails to issue a Purchaser’s Statement with respect to any Month, Issuer shall not be required to estimate any amounts due to Purchaser for such Month, provided that Purchaser may include any such amount on subsequent Purchaser’s Statements issued within the next sixty (60) days. The sixty (60) day deadline in this subsection (b) replaces the two (2) year deadline in Section 14.5(b) with respect to any claim by any non-delivering Party of inaccuracy in any estimated invoice issued or payment made pursuant to this subsection (b).
Section 14.3 Payment of Disputed Amounts; Correction of Index Price. (a) If Purchaser disputes any amounts included in the Issuer’s Billing Statement, Purchaser shall (except in the case of manifest error) nonetheless pay any amount required by the Billing Statement in accordance with Section 14.2 without regard to any right of set-off, counterclaim, recoupment or other defenses to payment that Purchaser may have; provided, however, that Purchaser shall have the right, after payment, to dispute any amounts included in a Billing Statement or otherwise used to calculate payments due under this Agreement pursuant to Section 14.5. If Issuer disputes any amounts included in the Purchaser’s Statement, Issuer may withhold payment to the extent of the disputed amount; provided, however, that interest shall be due at the Default Rate for any withheld amount later found to have been properly due. (b) If a value published for any rate or index used or to be used in this Agreement is subsequently corrected and the correction is published or announced by the Person responsible for that publication or announcement within 30 days after the original publication or announcement, either Party may notify the other Party of (i) that correction and (ii) the amount (if any) that is payable as a result of that correction. If, not later than 30 days after publication or announcement of that correction, a Party gives notice that an amount is so payable, the Party that originally either received or retained such amount shall, not later than three Business Days after the effectiveness of that notice, pay, subject to any other applicable provisions of this Agreement, to the other Party that amount, together with interest on that amount at the Default Rate for the Item 3
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27 period from and including the day on which a payment originally was (or was not) made to but excluding the day of payment of the refund or payment resulting from that correction.
Section 14.4 Late Payment. If Purchaser fails to remit the full amount payable within one Business Day of when due, interest on the unpaid portion shall accrue from the date due until the date of payment at the Default Rate.
Section 14.5 Audit; Adjustments.
(a) A Party shall have the right, at its own expense, upon reasonable notice to the other Party and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other Party to the extent reasonably necessary, but only to such extent, to verify the accuracy of any statement, charge, payment, or computation made under this Agreement. This right to examine, audit, and obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Agreement.
(b) Each Purchaser’s Statement and each Billing Statement shall be conclusively presumed final and accurate and all associated claims for under- or overpayments shall be deemed waived unless such Purchaser’s Statement or Billing Statement is objected to in writing, with adequate explanation and/or documentation, within two (2) years after the applicable Month of Energy delivery.
(c) All retroactive adjustments shall be paid in full by the Party owing payment within thirty (30) days of notice and substantiation of such inaccuracy. If the Parties are unable to agree upon any retroactive adjustments requested by either Party within the time period specified in Section 14.5(b), then either Party may pursue any remedies available with respect to such adjustments at law or in equity. Retroactive adjustments for payments made based on an incorrect Billing Statement shall bear interest at the Default Rate from the date such payment was made.
Section 14.6 Netting; No Set-Off. The Parties shall net all amounts due and owing, including any past due amounts (which, for the avoidance of doubt, shall include any accrued interest), arising under this Agreement such that the Party owing the greater amount shall make a single payment of the net amount to the other Party in accordance with this Article XIV.
Notwithstanding the foregoing, payment for all amounts set forth in a Billing Statement provided to Purchaser shall be made without set-off or counterclaim of any kind.
Section 14.7 Source of Purchaser’s Payments. Purchaser covenants and agrees to make payments due hereunder from CCA Revenues, and only from such CCA Revenues, as an operating expense of its CCA System; provided, however, that Purchaser may apply any legally available monies to the payment of amounts due hereunder.
Section 14.8 Rate Covenant. Purchaser hereby covenants and agrees that it will establish, fix, prescribe, maintain, and collect rates, fees, and charges from the customers of its CCA System so as to provide CCA Revenues sufficient to enable Purchaser to pay any other amounts legally payable from CCA Revenues, and to maintain any required reserves for Purchaser’s CCA System.
Purchaser further covenants and agrees that it shall not furnish or supply Energy services free of charge to any Person, except any such service free of charge that Purchaser is supplying on the Item 3
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28 date hereof as has been specifically identified by Purchaser to Issuer in writing, and it shall promptly enforce the payment of any and all accounts owing to Purchaser for the sale of Energy to its customers. Notwithstanding anything herein to the contrary, Purchaser shall not be obligated to make any payments hereunder except from CCA Revenues.
Section 14.9 Pledge of CCA Revenues. Purchaser shall not grant any lien on or security interest in, or otherwise pledge or encumber, the CCA Revenues if the terms or effect of such lien, pledge or other encumbrance results in such lien, pledge or other encumbrance having priority over the obligations of Purchaser to pay the Contract Price, which obligations constitute operating expenses of Purchaser.
Section 14.10Financial Responsibility. In the event the Issuer receives notice from MSES pursuant to Section 2.12 of the Receivables Purchase Provisions that it requires adequate assurance of performance from the Issuer, Issuer shall provide notice thereof to Purchaser and Purchaser shall provide such adequate assurance within [72 Hours but at least two Business Days of Purchaser’s receipt of such notice]4
. Adequate assurance shall mean sufficient security in the form and for a term reasonably specified by MSES pursuant to Section 2.12 of the Receivables Purchase Provisions, including but not limited to a standby irrevocable letter of credit, a prepayment, a deposit to an escrow account, or a performance bond or guaranty by a creditworthy entity. In the event Issuer is entitled to demand adequate assurance of performance under this Section 14.10, Issuer may demand at a minimum a prepayment by Purchaser of an amount equal to (a) the amount owed by Purchaser with respect to all Energy delivered by Issuer to Purchaser as of the date of the demand for adequate assurance of performance, plus (b) the amount, as determined and adjusted from time to time by Issuer (with the input of MSES pursuant to the Receivables Purchase Provisions (as defined in the Bond Indenture)) in a Commercially Reasonable manner, expected to be owed by Purchaser with respect to the Energy to be delivered by Issuer to Purchaser during the remainder of the then-current Month and the following Month.
The Parties agree that in the event Purchaser fails to provide such adequate assurance as demanded, Issuer shall have the right to suspend its performance under this Agreement, including the making of deliveries of Energy to Purchaser, immediately upon written notice and shall not be obligated to restore such performance until the later of (i) the first day of the Month after such demand has been satisfied, and (ii) the completion of the term of deliveries to any replacement sales customer to which MSES has remarketed the Energy on behalf of Issuer.
ARTICLE XV
[RESERVED]
ARTICLE XVI
NOTICES
Any notice, demand, or request required or authorized by this Agreement to be given by one Party to the other Party (or to a third party) shall be in writing and shall either be sent by electronic means, courier, or personally delivered (including overnight delivery service) to each of the notice recipients and addresses specified in Exhibit B for the receiving Party; provided that any notice modifying payment instructions must be provided via certified mail with a contact 4 NTD: Under review by MS.
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29 person and phone number included for verification purposes. Any such notice, demand, or request shall be deemed to be given (i) on the date it is delivered by electronic means 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 Party, to change its list of notice recipients and addresses in Exhibit B. 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 Party 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 the specified period of time shall be ineffective.
ARTICLE XVII
DEFAULT; REMEDIES; TERMINATION
Section 17.1 Issuer Default. Each of the following events shall constitute an “Issuer Default” under this Agreement:
(a) any representation or warranty made by Issuer in this Agreement proves to have been incorrect in any material respect when made; or (b) Issuer fails to perform, observe or comply with any covenant, agreement or term contained in this Agreement, and such failure continues for more than thirty (30) days following the earlier of (i) receipt by Issuer of notice thereof or (ii) an officer of Issuer obtaining actual knowledge of such default.
Section 17.2 Purchaser Default. Each of the following events shall constitute a “Purchaser Default” under this Agreement:
(a) Purchaser fails to pay when due any amounts owed to Issuer pursuant to this Agreement and such failure continues for one (1) Business Day following the earlier of (i) receipt by Purchaser of notice thereof or (ii) an officer of Purchaser becoming aware of such default; (b) Purchaser (i) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (iv) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency Law or other similar Law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained, in each case within thirty (30) days of the institution or presentation thereof; (v) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all of its assets; (vii) has a secured party take possession of all or substantially Item 3
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30 all of its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its of assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within thirty (30) days thereafter; (viii) causes or is subject to any event with respect to it which, under the applicable Laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (i) through (vii); or (ix) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; (c) any representation or warranty made by Purchaser in this Agreement proves to have been incorrect in any material respect when made; or (d) Purchaser failsto perform, observe or comply with any covenant, agreement or term contained in this Agreement, and such failure continues for more than fifteen (15) days following the earlier of (i) receipt by Purchaser of notice thereof or (ii) an officer of Purchaser becoming aware of such default.
Section 17.3 Remedies Upon Default.
(a) Termination. If at any time an Issuer Default or a Purchaser Default has occurred and is continuing, then the non-defaulting Party may do any or all of the following (i) by notice to the defaulting Party specifying the relevant Issuer Default or Purchaser Default, as applicable, terminate this Agreement effective as of a day not earlier than the day such notice is deemed given under Article XVI and/or (ii) declare all amounts due to the non-defaulting Party under this Agreement or any part thereof immediately due and payable, and the same shall thereupon become immediately due and payable, without notice, demand, presentment, notice of dishonor, notice of intent to demand, protest or other formalities of any kind, all of which are hereby expressly waived by the defaulting Party; provided, however, this Agreement shall automatically terminate and all amounts due to the non-defaulting Party hereunder shall immediately become due and payable as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition that upon the occurrence of a Purchaser Default specified in Section 17.2(b)(iv) or, to the extent analogous thereto, Section
17.2(b)(viii). In addition, during the existence of an Issuer Default or a Purchaser Default, as applicable, the non-defaulting Party may exercise all other rights and remedies available to it at Law or in equity, including without limitation mandamus, injunction and action for specific performance, to enforce any covenant, agreement or term of this Agreement. (b) Additional Remedies. In addition to the remedies set forth in Section
17.3(a) (and without limiting any other provisions of this Agreement), during the existence of any Purchaser Default, Issuer may suspend its performance hereunder and discontinue the supply of all or any portion of the Energy otherwise to be delivered to Purchaser by it under this Agreement.
If Issuer exercises its right to suspend performance under this Section 17.3(b), Purchaser shall remain fully liable for payment of all amounts in default and shall not be relieved of any of its payment obligations under this Agreement. Deliveries of Energy may only be reinstated, at a time to be determined by Issuer, upon (i) payment in full by Purchaser of all amounts then due and payable under this Agreement and (ii) payment in advance by Purchaser at the beginning of each Month of amounts estimated by Issuer to be due to Issuer for the future delivery of Energy under this Agreement for such Month. Issuer may continue to require payment in advance from Item 3
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31 Purchaser after the reinstatement of Issuer’s supply services under this Agreement for such period of time as Issuer in its sole discretion may determine is appropriate. In addition, and without limiting any other provisions of or remedies available under this Agreement, if Purchaser fails to accept from Issuer any Energy tendered for delivery under this Agreement, Issuer shall have the right to sell such Energy to third parties on any terms that Issuer, in its sole discretion, determines are appropriate.
(c) Effect of Early Termination. As of the effectiveness of any termination date in accordance with clause (i) of Section 17.3(a), (i) the Delivery Period shall end, (ii) the obligation of Issuer to make any further deliveries of Energy to Purchaser under this Agreement shall terminate, and (iii) the obligation of Purchaser to receive deliveries of Energy from Issuer under this Agreement will terminate. Neither this Agreement nor the Delivery Period may be terminated for any reason except as specified in this Article XVII. Without prejudice to any payment obligation in respect of periods prior to termination, no payments will be due from either Party in respect of periods occurring after the effective termination date of this Agreement.
Section 17.4 Termination of Prepaid Agreement. Purchaser acknowledges and agrees that (i) in the event the Prepaid Agreement terminates for any reason prior to the end of the Delivery Period, this Agreement shall terminate on the effective date of early termination of the Prepaid Agreement (which date shall be the last date upon which deliveries are required thereunder, subject to all winding up arrangements) and (ii) Issuer’s obligation to deliver Energy under this Agreement shall terminate upon the termination of deliveries of Energy to Issuer under the Prepaid Agreement. Issuer shall provide notice to Purchaser of any early termination date of the Prepaid Agreement. The Parties recognize and agree that, in the event that the Prepaid Agreement terminates because of a Failed Remarketing (as defined in the Bond Indenture) of the Bonds that occurs in the first Month of a Reset Period, Issuer shall deliver Energy under this Agreement for the remainder of such first Month, and, notwithstanding anything in this Agreement to the contrary, no Monthly Discount or Annual Refunds shall be associated with such deliveries and the Contract Price shall be adjusted accordingly.
Section 17.5 Limitation on Damages. THE PARTIES CONFIRM THAT THE
EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY
PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
HEREIN PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE
LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. NEITHER PARTY SHALL BE
LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY, OR
INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION
DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION, OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE
LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES
BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING
WITHOUT LIMITATION THE NEGLIGENCE OF EITHER PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE
EXTENT ANY DAMAGES REQUIRED TO BE PAID UNDER THIS AGREEMENT ARE Item 3
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32 LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT
OR IMPOSSIBLE TO DETERMINE, OTHERWISE OBTAINING AN ADEQUATE REMEDY
IS INCONVENIENT, AND THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. IN DETERMINING THE
APPROPRIATE MEASURE OF DAMAGES THAT WOULD MAKE THE PARTIES WHOLE,
THE PARTIES HAVE THOROUGHLY CONSIDERED, INTER ALIA, THE UNCERTAINTY
OF FLUCTUATIONS IN COMMODITY PRICES, THE ABILITY AND INTENTION OF THE
PARTIES TO HEDGE SUCH FLUCTUATIONS, THE BARGAINED-FOR ALLOCATION OF
RISK, THE KNOWLEDGE, SOPHISTICATION AND EQUAL BARGAINING POWER OF
THE PARTIES, THE ARMS-LENGTH NATURE OF THE NEGOTIATIONS, THE SPECIAL
CIRCUMSTANCES OF THIS TRANSACTION, THE ACCOUNTING AND TAX
TREATMENT OF THE TRANSACTION BY THE PARTIES, AND THE ENTERING INTO
OF OTHER TRANSACTIONS IN RELIANCE ON THE ENFORCEABILITY OF THE LIQUIDATED DAMAGES PROVISIONS CONTAINED HEREIN.
ARTICLE XVIII
MISCELLANEOUS
Section 18.1 Indemnification Procedure. With respect to each indemnification included in this Agreement, the indemnity is given to the fullest extent permitted by applicable Law and the following provisions shall be applicable. The indemnified Party shall promptly notify the indemnifying Party in writing of any Claim and the indemnifying Party shall have the right to assume its investigation and defense, including employment of counsel, and shall be obligated to pay related court costs, attorneys’ fees and experts’ fees and to post any appeals bonds; provided, however, that the indemnified Party shall have the right to employ at its expense separate counsel and participate in the defense of any Claim. The indemnifying Party shall not be liable for any settlement of a Claim without its express written consent thereto. In order to prevent double recovery, the indemnified Party shall reimburse the indemnifying Party for payments or costs incurred in respect of an indemnity with the proceeds of any judgment, insurance, bond, surety or other recovery made by the indemnified Party with respect to a covered event.
Section 18.2 Deliveries. Contemporaneously with this Agreement (unless otherwise specified): Each Party shall deliver to the other Party evidence reasonably satisfactory to it of (i) such Party’s authority to execute, deliver and perform its obligations under this Agreement and (ii) the appropriate individuals who are authorized to sign this Agreement on behalf of such Party;
(a) as of the date hereof, Purchaser shall deliver to Issuer a fully executed Federal Tax Certificate in the form attached hereto as Exhibit D; (b) on the Bond Closing Date, Purchaser shall deliver to Issuer an opinion of counsel to Purchaser in the form attached hereto as Exhibit E; (c) on the Bond Closing Date, Purchaser shall deliver to Issuer a Closing Certificate in substantially the form set forth hereto as Exhibit G.
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33 Section 18.3 Entirety; Amendments. This Agreement, including the exhibits and attachments hereto, constitutes the entire agreement between the Parties and supersedes all prior discussions and agreements between the Parties with respect to the subject matter hereof. There are no prior or contemporaneous agreements or representations affecting the same subject matter other than those expressed herein. Except for any matters that, in accordance with the express provisions of this Agreement, may be resolved by oral agreement between the Parties, no amendment, modification, supplement or change hereto shall be enforceable unless reduced to writing and executed by both Parties.
Section 18.4 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA, WITHOUT REGARD TO ANY CONFLICTS OF LAW
PRINCIPLE THAT WOULD DIRECT THE APPLICATION OF ANOTHER
JURISDICTION’S LAW.
Section 18.5 Non-Waiver. No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is in writing and signed by the Party against whom such waiver is claimed. No waiver of any breach shall be deemed a waiver of any other subsequent breach.
Section 18.6 Severability. If any provision of this Agreement, or the application thereof, shall for any reason be invalid or unenforceable, then to the extent of such invalidity or unenforceability, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby, but rather shall be enforced to the maximum extent permissible under applicable Law, so long as the economic and legal substance of the transactions contemplated hereby is not affected in any materially adverse manner as to either Party.
Section 18.7 Exhibits. Any and all Exhibits referenced in this Agreement are hereby incorporated herein by reference and shall be deemed to be an integral part hereof.
Section 18.8 Winding Up Arrangements. All indemnity and confidentiality obligations, audit rights, and other provisions specifically providing for survival shall survive the expiration or termination of this Agreement. The expiration or termination of this Agreement shall not relieve either Party of (a) any unfulfilled obligation or undischarged liability of such Party on the date of such termination or (b) the consequences of any breach or default of any warranty or covenant contained in this Agreement. All obligations and liabilities described in the preceding sentence of this Section 18.8, and applicable provisions of this Agreement creating or relating to such obligations and liabilities, shall survive such expiration or termination.
Section 18.9 Relationships of Parties. The Parties shall not be deemed to be in a relationship of partners or joint venturers by virtue of this Agreement, nor shall either Party be an agent, representative, trustee or fiduciary of the other. Neither Party shall have any authority to bind the other to any agreement. This Agreement is intended to secure and provide for the services of each Party as an independent contractor.
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34 Section 18.10Immunity. Each Party represents and covenants to and agrees with the other Party that it is not entitled to and shall not assert the defense of sovereign immunity or governmental immunity with respect to its obligations or any Claims under this Agreement, and each hereby waives any such defense of sovereign or governmental immunity to the full extent permitted by Law.
Section 18.11Rates and Indices. If the source of any publication used to determine the index or other price used in the Contract Price should cease to publish the relevant prices or should cease to be published entirely, an alternative index or other price will be used based on the determinations made by Issuer and MSES under Section 18.11 of the Prepaid Agreement. Issuer shall provide Purchaser the opportunity to provide its recommendations and other input to Issuer for Issuer’s use in the process for selecting such alternative index or other price under Section
18.11 of the Prepaid Agreement.
Section 18.12Limitation 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.
Section 18.13Counterparts. 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.
Section 18.14Third Party Beneficiaries; Rights of Trustee. Purchaser acknowledges and agrees that (a) Issuer will pledge and assign its rights, title and interest in this Agreement and the amounts payable by Purchaser under this Agreement (other than amounts payable in respect of the Project Administration Fee) to secure Issuer’s obligations under the Bond Indenture, (b) the Trustee shall be a third-party beneficiary of this Agreement with the right to enforce Purchaser’s obligations under this Agreement, (c) the Trustee or any receiver appointed under the Bond Indenture shall have the right to perform all obligations of Issuer under this Agreement, and (d) in the event of any Purchaser Defaults under Section 17.2(a), (i) MSES may, to the extent provided for in, and in accordance with, the Receivables Purchase Provisions (as defined in the Bond Indenture), take assignment from Issuer of receivables owed by Purchaser to Issuer under this Agreement, and shall thereafter have all rights of collection with respect to such receivables, and (ii) if such receivables are not so assigned, the Commodity Swap Counterparty (as defined in the Bond Indenture) shall have the right to pursue collection of such receivables to the extent of Item 3
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35 any non-payment by Issuer to the Commodity Swap Counterparty that was caused by Purchaser’s payment default. Pursuant to the terms of the Bond Indenture, Issuer has irrevocably appointed the Trustee as its agent to issue notices and as directed under the Bond Indenture, to take any other actions that Issuer is required or permitted to take under this Agreement. Purchaser may rely on notices or other actions taken by Issuer or the Trustee and Purchaser has the right to exclusively rely on any notices delivered by the Trustee, regardless of any conflicting notices that it may receive from Issuer.
Section 18.15Waiver of Defenses. Purchaser waives all rights to set-off, counterclaim, recoupment and any other defenses that might otherwise be available to Purchaser with regard to Purchaser’s obligations pursuant to the terms of this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Power Supply Contract to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
[Separate Signature Page(s) Attached]
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Signature Page to Power Supply Contract
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By: _____________________________
Name: _____________________________
Title: _____________________________
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SILICON VALLEY CLEAN ENERGY AUTHORITY
By: _____________________________
Name: _____________________________
Title: _____________________________
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EXHIBIT A-1
BASE ENERGY HOURLY QUANTITIES
[To come.]
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EXHIBIT A-2
EPS ENERGY PERIOD MONTHLY QUANTITY
[To come.]
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EXHIBIT B
NOTICES
IF TO ISSUER: California Community Choice Financing Authority 1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [____]
Invoicing/Payments: [____]
IF TO PURCHASER: Silicon Valley Clean Energy Authority
333 W. El Camino Real Suite 330
Sunnyvale, CA 94087
Attention: Girish Balachandran, CEO
Phone: (408) 721-5301
Email: [email protected]
Energy Related: SVCE Power Settlements
Phone: (408) 721-5301
Email: [email protected]
Invoicing/Payments: SVCE Power Settlements
Phone: (408) 721-5301
Email: [email protected]
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EXHIBIT C
FORM OF REMARKETING ELECTION NOTICE
[_____]
Morgan Stanley Energy Structuring, L.L.C.
1585 Broadway
New York, NY 10036-8293
The Bank of New York Mellon Trust Company, N.A.
4655 Salisbury Road, Suite 300
Jacksonville, Florida 32256
To the Addressees:
The undersigned, duly authorized representative of Silicon Valley Clean Energy Authority (the "Purchaser"), is providing this notice (the “Remarketing Election Notice”) pursuant to the Power Supply Contract, dated as of [____], 2022 (the “Supply Contract”), between California Community Choice Financing Authority and Purchaser. Capitalized terms used herein shall have the meanings set forth in the Supply Contract.
Pursuant to Section 3.4(b) of the Supply Contract, the Purchaser has elected to have its Contract Quantity for the applicable Reset Period remarketed beginning as of the commencement of such Reset Period. The resumption of deliveries in any future Reset Period shall be in accordance with Section 3.4(d) of the Supply Contract.
Given this [___] day of [_________], 20[__].
Silicon Valley Clean Energy Authority
By: _____________________
Printed Name:
Title:
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EXHIBIT D
FORM OF FEDERAL TAX CERTIFICATE
This Federal Tax Certificate is executed in connection with the Power Supply Contract dated as of [____], 2022 (the “Supply Contract”), by and between California Community Choice Financing Authority (“Issuer”) and Silicon Valley Clean Energy Authority (“Purchaser”).
Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Supply Contract or in the Bond Indenture.
WHEREAS Purchaser acknowledges that Issuer is issuing the Bonds to fund the prepayment price under the Prepaid Agreement; and
WHEREAS the Bonds are intended to qualify for tax exemption under Section 103 of the Internal Revenue Code of 1986, as amended; and
WHEREAS Purchaser’s use of Energy acquired pursuant to the Supply Contract and certain funds and accounts of Purchaser will affect the Bonds’ qualification for such tax exemption.
NOW, THEREFORE, PURCHASER HEREBY CERTIFIES AS FOLLOWS:
1. Purchaser is a community choice aggregator organized as a joint powers authority under the laws of the State of California. As a community choice aggregator, the Purchaser is a load-serving entity providing electricity to customers within the boundaries of cities and/or counties that have elected to participate in Purchaser’s community choice aggregation program. For purposes of this Certificate, the term “service area” of the Purchaser means the boundaries of the cities and/or counties that have elected to participate in the Purchaser’s community choice aggregation program, as well as any other area recognized as the service area of the Purchaser under state or federal law.
2. Purchaser will resell all of the Energy acquired pursuant to the Supply Contract to its retail Energy customers within its service area, with retail sales in all cases being made pursuant to regularly established and generally applicable tariffs or under authorized requirements contracts.
3. From [___, __] to [____, 2022] the annual average amount of Energy purchased (other than for resale) by customers of Purchaser who are located within the service area of Purchaser is [________] MWh. Over the term of the Supply Contract, the Purchaser expects the annual average amount of Energy purchased (other than for resale) by customers of the Purchaser who are located within the service area of the Purchaser to be at least [_____] MWh. The maximum annual amount of Energy in any year being acquired pursuant to the Supply Contract is [_______] MWh. The annual average amount of Energy which Purchaser otherwise has a right to acquire as of the Closing Date (including rights to capacity to generate electricity, whether owned, leased or otherwise contracted for) is [________] MWh. The sum of (a) the maximum amount of Energy in any year being acquired pursuant to the Supply Contract, and (b) the amount of Energy that Purchaser otherwise has a right to acquire (including rights to capacity to generate electricity, whether owned, leased or otherwise contracted for) in the year described in the foregoing clause Item 3
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(a), is [________] MWh. Accordingly, the amount of Energy to be acquired under the Supply Contract by Purchaser, supplemented by the amount of Energy otherwise available to Purchaser as of the Closing Date, during any year does not exceed [___]% of the expected annual average amount of Energy to be purchased (other than for resale) by customers of Purchaser who are located within the service area of Purchaser.
3. In the event of the expiration or termination of an EPS Energy Period, Purchaser agrees to comply with its obligations under the Assignment Letter Agreement, including but not limited to its obligations to (a) exercise Commercially Reasonable Efforts to assign a portion of Purchaser’s rights and obligations under a power purchase agreement under which Purchaser is purchasing EPS Compliant Energy to MSCG or MSES pursuant to an Assignment Agreement and (b) cooperate in good faith with Issuer, MSCG and MSES with respect to any proposed assignments.
4. Purchaser expects to pay for Energy acquired pursuant to the Supply Contract solely from funds derived from its operations as a community choice aggregator. Purchaser expects to use current CCA Revenues of its CCA System to pay for current Energy acquisitions. Neither the Purchaser nor any person who is a related party to the Purchaser will hold any funds or accounts in which monies are set aside and invested and which are reasonably expected to be used to pay for Energy more than one year after such monies are set aside. No portion of the proceeds of the Bonds will be used directly or indirectly to replace funds of Purchaser or any persons who are related Persons to Purchaser that are or were intended to be used for the purpose for which the Bonds were issued.
_______________, 2022
By: ________________________________
[Name]
[Title]
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EXHIBIT E
FORM OF OPINION OF COUNSEL TO PURCHASER
California Community Choice Financing Authority
San Rafael, CA
Morgan Stanley Energy Structuring, L.L.C.
New York, NY
Morgan Stanley
New York, NY
The Bank of New York Mellon Trust Company, N.A., as trustee Jacksonville, FL
Royal Bank of Canada
Toronto, Ontario
Re: Power Supply Contract between Silicon Valley Clean
Energy Authority and California Community Choice
Financing Authority dated as of [____], 2022
Ladies and Gentlemen:
We are Counsel to Silicon Valley Clean Energy Authority (“Purchaser”). Purchaser is a Purchaser in the Energy Project undertaken by California Community Choice Financing Authority (“Issuer”). We are furnishing this opinion to you in connection with the Power Supply Contract between Issuer and Purchaser dated as of [____], 2022 (the “Supply Contract”).
Unless otherwise specified herein, all terms used but not defined in this opinion shall have the same meaning as is ascribed to them in the Supply Contract.
In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the following:
(a) The Constitution and laws of the State of California (the “State”) including, as applicable, acts, ordinances, certificates, articles, charters, bylaws, and agreements pursuant to which Purchaser was created and by which it is governed; (b) Resolution No. [__], duly adopted by Purchaser on [___________] (the “Resolution”) and certified as true and correct by certificate and seal, authorizing Purchaser to execute and deliver the Supply Contract;
(c) A copy of the Supply Contract executed by Purchaser; and Item 3
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(d) All outstanding instruments relating to bonds, notes, or other indebtedness of or relating to Purchaser and Purchaser's CCA System (as defined in the Supply Contract).
We have also examined and relied upon originals or copies, certified or otherwise authenticated to our satisfaction, of such records, documents, certificates, and other instruments, and made such investigations of law, as in our judgment we have deemed necessary or appropriate to enable us to render the opinions expressed below.
Based upon the foregoing, we are of the opinion that:
1. Purchaser is a joint powers authority of the State, duly organized and validly existing as a community choice aggregator under the laws of the State, and has the power and authority to own its properties, to carry on its business as now being conducted, and to enter into and to perform its obligations under the Agreement.
2. The execution, delivery, and performance by Purchaser of the Supply Contract have been duly authorized by the governing body of Purchaser and do not and will not require, subsequent to the execution of the Supply Contract by Purchaser, any consent or approval of the governing body or any officers of Purchaser.
3. The Supply Contract is the legal, valid, and binding obligation of Purchaser, enforceable in accordance with its terms, except as such enforceability may be subject to (i) the exercise of judicial discretion in accordance with general principles of equity and (ii) bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights heretofore or hereafter enacted, to the extent constitutionally applicable.
4. No approval, consent or authorization of any governmental or public agency, authority, commission or person, or, to our knowledge, of any holder of any outstanding bonds or other indebtedness of Purchaser, is required with respect to the execution, delivery and performance by Purchaser of the Supply Contract or Purchaser's participation in the transactions contemplated thereby other than those approvals, consents and/or authorizations that have already been obtained.
5. The authorization, execution and delivery of the Supply Contract and compliance with the provisions thereof (a) will not conflict with or constitute a breach of, or default under, (i) any instrument relating to the organization, existence or operation of Purchaser, (ii) any ruling, regulation, ordinance, judgment, order or decree to which Purchaser (or any of its officers in their respective capacities as such) is subject or (iii) any provision of the laws of the State relating to Purchaser and its affairs, and (b) to our knowledge will not result in, or require the creation or imposition of, any lien on any of the properties or revenues of Purchaser pursuant to any of the foregoing.
6. Purchaser is not in breach of or default under any applicable constitutional provision or any law or administrative regulation of the State or the United States or any applicable judgment or decree or, to our knowledge, any loan or other agreement, resolution, indenture, bond, note, resolution, agreement or other instrument to which Purchaser is a party or to which Purchaser or any of its property or assets is otherwise subject, and to our knowledge no event has occurred Item 3
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and is continuing which with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument.
7. Payments to be made by Purchaser under the Supply Contract shall constitute operating expenses of Purchaser's CCA System payable solely from the revenues and other available funds of Purchaser's CCA System as a cost of purchased electricity. The application of the revenues and other available funds of Purchaser's CCA System to make such payments is not subject to any prior lien, encumbrance or other restriction.
8. As of the date of this opinion, to the best of our knowledge after due inquiry, there is no pending or threatened action or proceeding at law or in equity or by any court, government agency, public board or body affecting or questioning the existence of Purchaser or the titles of its officers to their respective offices or affecting or questioning the legality, validity, or enforceability of this Supply Contract nor to our knowledge is there any basis therefor.
This opinion is rendered solely for the use and benefit of the addressees listed above in connection with the Supply Contract and may not be relied upon other than in connection with the transactions contemplated by the Supply Contract, or by any other person or entity for any purpose whatsoever, nor may this opinion be quoted in whole or in part or otherwise referred to in any document or delivered to any other person or entity, without the prior written consent of the undersigned.
Very truly yours,
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EXHIBIT F
MONTHLY DISCOUNT
Monthly Discount: $[____]/MWh
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EXHIBIT G
FORM OF CLOSING CERTIFICATE
CLOSING CERTIFICATE OF PURCHASER
__________, 2022
Re: California Community Choice Financing Authority
Clean Energy Project Revenue Bonds
The undersigned _____________________________ of Silicon Valley Clean Energy Authority (the “Purchaser”), hereby certifies as follows in connection with the Power Supply Contract dated as of __________, 2022 (the “Agreement”) between the Purchaser and California Community Choice Financing Authority (“Issuer”) and the issuance and sale by Issuer of the above-referenced bonds (the “Bonds”) (capitalized terms used and not defined herein shall have the meanings given to them in the Agreement):
1. Purchaser is a community choice aggregator, duly created and validly existing as a joint powers authority, and is in good standing, under the laws of the State of California (the “State”), and has the corporate power and authority to enter into and perform its obligations under the Agreement.
2. By all necessary official action on its part, the Purchaser has duly authorized and approved the execution and delivery of, and the performance by the Purchaser of the obligations on its part contained in the Agreement, and such authorization and approval has not been amended, supplemented, rescinded or modified in any respect since the date thereof.
3. The Agreement constitutes the legal, valid and binding obligation of the Purchaser.
4. The authorization, execution and delivery of the Agreement and compliance with the provisions on the Purchaser's part contained therein (a) will not conflict with or constitute a breach of or default under (i) any instrument relating to the organization, existence or operation of Purchaser, (ii) any ruling, regulation, ordinance, judgment, order or decree to which Purchaser (or any of its officers in their respective capacities as such) is subject or (iii) any provision of the laws of the State relating to Purchaser and its affairs, and (b) will not result in, or require the creation or imposition of, any lien on any of the properties or revenues of Purchaser pursuant to any of the foregoing.
5 The Purchaser is not in breach of or default under any applicable constitutional provision, law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Purchaser is a party or to which the Purchaser or any of its property or Item 3
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assets are subject, and no event has occurred and is continuing which constitutes or with the passage of time or the giving of notice, or both, would constitute a default or event of default by the Purchaser under any of the foregoing.
6. Payments to be made by the Purchaser under the Agreement shall constitute operating expenses of the Purchaser’s CCA System (as defined in the Agreement) payable solely from the revenues and other available funds of Purchaser’s CCA System as a cost of purchased electricity. The application of the revenues and other available funds of the Purchaser’s CCA System to make such payments is not subject to any prior lien, encumbrance or other restriction.
7. No litigation, proceeding or tax challenge is pending or, to its knowledge, threatened, against the Purchaser in any court or administrative body which would (a) contest the right of the officials of the Purchaser to hold and exercise their respective positions, (b) contest the due organization and valid existence of the Purchaser, (c) contest the validity, due authorization and execution of the Agreement or (d) attempt to limit, enjoin or otherwise restrict or prevent the Purchaser from executing, delivering and performing the Agreement, nor to the knowledge of the Purchaser is there any basis therefor.
8. All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization of, which would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the Purchaser of its obligations under the Agreement have been duly obtained.
9. The representations and warranties of the Purchaser contained in the Agreement were true, complete and correct on and as of the date thereof and are true, complete and correct on and as of the date hereof.
10. The statements and information with respect to the Purchaser contained in the Official Statement dated ___________, 2022 with respect to the Bonds, including Appendix B thereto (the “Official Statement”), fairly and accurately describe and summarize the financial and operating position of the Purchaser for the periods shown therein, and such statements and information did not as of the date of the Official Statement and do not as of the date hereof contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such statements and information, in the light of the circumstances under which they were made, not misleading.
11. No event affecting the Purchaser has occurred since the date of the Official Statement which should be disclosed therein in order to make the statements and information with respect to the Purchaser contained therein, in light of the circumstances under which they were made, not misleading in any material respect.
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IN WITNESS WHEREOF the undersigned has executed this Certificate on and as of the date first written above.
SILICON VALLEY CLEAN ENERGY
AUTHORITY
By
Name:
Title:
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EXHIBIT H
FORM OF REMEDIATION CERTIFICATE
[_____], 20__
[_____]
Morgan Stanley Energy Structuring, L.L.C.
1585 Broadway
New York, NY 10036-8293
Attn: Miscellaneous Notices
Email: [____]
Re: Power Supply Contract with California Community Choice Financing Authority: Section
7.5 Remediation
To the addressees:
The undersigned, duly authorized representative of Silicon Valley Clean Energy Authority (“Purchaser”), hereby certifies as follows in connection with the Power Supply Contract, dated as of [____], 2022 (the “Contract”), between Purchaser and California Community Choice Financing Authority and remediation of Disqualified Remarketing Proceeds pursuant to Section
7.5 of the Contract. Capitalized terms used herein shall have the meanings set forth in the Contract.
Set forth as Attachment 1 hereto is a copy of Purchaser’s invoice for the Month of [____] for purchases of Energy from [____] [NOTE: Insert reference to supplier.] pursuant that certain [____] [NOTE: Insert reference to applicable supply agreement.], and all of such Energy was used in compliance with the Qualifying Use Requirements.
In witness whereof the undersigned has executed this Certificate on and as of the date first written above.
SILICON VALLEY CLEAN ENERGY
AUTHORITY
By ___________________________________
[Name]
[Title]
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SM Draft 23 September 2022
LETTER AGREEMENT
[____], 2022
Silicon Valley Clean Energy Authority
333 W. El Camino Real Suite 330
Sunnyvale, CA 94087
Email: [email protected]
California Community Choice Financing Authority
1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [____]
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 Silicon Valley Clean Energy Authority (“Project Participant”), (ii) that certain Prepaid Energy Sales Agreement (the “Prepaid Agreement”), dated as of the date hereof, by and between Morgan Stanley Energy Structuring, L.L.C. (“MSES”) and Issuer, and (iii) that certain Energy Management Contract (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 MSES. 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, MSES 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 MSES 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 agreements under which Project Participant is purchasing EPS Compliant Energy pursuant Item 3
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2 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, 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) MSES if MSCG is the PPA Supplier or (b) MSCG if the PPA Supplier is an unrelated third party of its right to receive a portion 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 MSES 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, MSES 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 MSES under the Energy Management Agreement; MSES 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, MSES and MSCG have not agreed upon a replacement assignment of a power purchase agreement by the date that is 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, MSES 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:
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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 MSES 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 MSES’s remarketing;.
3. 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.
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4 (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 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.
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5 (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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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”) Item 3
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6 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 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 8(b) and by the prevailing party in connection with the arbitration.
Notwithstanding the foregoing provisions of this Section 8(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 8(b), if Section 8(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 8(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 Item 3
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7 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 8(c). ii. Applicability; Selection of Referees.
(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.
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8 (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.
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.
9. 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]
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Signature Page to Letter Agreement
Very truly yours,
MSES
MORGAN STANLEY ENERGY STRUCTURING,
L.L.C.
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
SILICON VALLEY CLEAN ENERGY AUTHORITY
By:
Name:
Title:
ISSUER
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By:
Name:
Title:
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EXHIBIT A
FORM OF LIMITED ASSIGNMENT AGREEMENT FOR THIRD PARTY AS PPA
SUPPLIER
This Limited Assignment Agreement (this “Agreement”) is entered into as of [____] by and among [____], a [____] (“PPA Seller”), Silicon Valley Clean Energy Authority, a joint powers authority and a community choice aggregator organized under the laws of the State of California (“PPA Buyer”), and Morgan Stanley Capital Group Inc., a Delaware corporation (“MSCG”).
RECITALS
WHEREAS, PPA Buyer and PPA Seller are parties to that certain [____], dated as of [____] (the “PPA”);
WHEREAS, in connection with a prepaid electricity transaction between [_______] (“Issuer”) and Morgan Stanley Energy Structuring, L.L.C. (“MSES”), 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); and
WHEREAS, pursuant to this Agreement, MSCG will receive the Assigned Product and MSCG will deliver the Assigned Product to MSES, which will redeliver the Assigned Product to Issuer for ultimate redelivery to PPA Buyer; and
WHEREAS, pursuant to this Agreement, 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.
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.
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2 “Assigned Energy” means any Electricity associated with the Assigned Product to be delivered to MSCG hereunder pursuant to the Assigned Rights and Obligations. “Assigned Monthly Quantity” means the first [___] MWhs delivered in accordance with the PPA by PPA Seller in each Month during the Assignment Period. “Assigned Product” includes all (i) Energy and (ii) Green Attributes (PCC1) (as defined in the PPA) produced by the Facility (as defined in the PPA) associated with the Assigned Monthly Quantity.
“Assigned Product Price” means [NOTE: To be the Day-Ahead Price averaged for each day of the prior month if the assignment occurs after the commencement of the prepay transaction or the fixed price for energy under the PPA if assigned in connection with execution of the prepay transaction.].
“Assigned Rights and Obligations” means (i) the rights of PPA Buyer under the PPA to receive the Assigned Monthly Quantity of 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 [_____].
“Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday. A Business Day begins at 8:00 a.m. and ends at 5:00 p.m. local time for the Party sending a notice, or payment, or performing a specified action. “CAISO Tariff” means the California Independent System Operator Corporation Agreement and Tariff, Business Practice Manuals (BPMs), and Operating Procedures, including the rules, protocols, procedures and standards attached thereto, as the same may be amended or modified from time-to-time and approved by the Federal Energy Regulatory Commission. “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. “Delivered Product Payment Obligation” has the meaning specified in Section 3(a).
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3 “Electricity” 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” 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).
“Inter-SC Trade” or “IST” has the meaning set forth in the CAISO Tariff. “Month” means a calendar month.
“MSCG” has the meaning specified in the first paragraph of this Agreement. “MSES” means Morgan Stanley Energy Structuring, L.L.C., a Delaware limited liability company.
“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 [____], 2022 by and between MSES and Issuer.
“Prepay Power Supply Contract” means that certain Prepay Power Supply Contract dated as of [____], 2022 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. “Scheduling Coordinator” or “SC” means an entity certified by the CAISO as qualifying as a Scheduling Coordinator pursuant to the CAISO Tariff for the purposes of undertaking the functions specified in “Responsibilities of a Scheduling Coordinator,” of the CAISO Tariff, as amended from time to time.
2. Transfer and Undertakings.
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4 (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 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 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 Product Payment Obligation; Invoicing. i. MSCG’s sole obligation to PPA Seller will be to pay the Assigned Product Price (as defined in the PPA) to PPA Seller for the Assigned Product delivered during each Month of the Assignment Period on each applicable payment date under Section [__] of the PPA for a quantity up to, but not exceeding, the Assigned Monthly Quantity (the “Delivered Product Payment Obligation”). To the extent MSCG fails to pay the Delivered Product Payment Obligation by the due date for payment set forth in the PPA, notwithstanding anything in this Agreement to the contrary, PPA Buyer agrees that it remains responsible for such payment; provided that, to the extent PPA Buyer makes a payment to PPA Seller with respect to the Delivery Product Payment Obligation because MSCG has failed to pay the Delivered Product Payment Obligation, PPA Seller will have no further claim against MSCG for such amounts, and MSCG will be obligated to pay such amounts to PPA Buyer.
ii. PPA Buyer shall remain solely responsible for any payment obligations other than the Delivered Product Payment Obligation due under the PPA during the Assignment Period (the “Retained Payment Obligation”). Any Claims 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.
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5 iii. 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 days thereafter, PPA Buyer shall deliver (i) a copy of such monthly invoice and the related supporting data to MSCG (ii) a statement to each of MSCG and the custodian described below indicating (A) the total amount due to PPA Seller under the PPA for such Month (the “Monthly Gross Amount”); (B) the Delivered Product Payment Obligation; and (C) the Retained Payment Obligation, which (I) shall be determined by subtracting the Delivered Product Payment Obligation from the Monthly Gross Amount and (II) shall reflect an amount due from PPA Buyer to the extent it is a positive number and an amount due to PPA Buyer to the extent it is a negative number. The Delivered Product Payment Obligation and Retained Payment Obligation shall be administered by a custodian who will pay (1) the Monthly Gross Amount to PPA Seller on each payment due date and (2) the absolute value of the Retained Payment Obligation to PPA Buyer to the extent such amount is negative for any given Month.
(b) Scheduling. All scheduling of Electricity associated with 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 (i) title to Assigned Product will pass to MSCG upon delivery by PPA Seller at the Assigned Delivery Point in accordance with the PPA; (ii) immediately thereafter, title to such Assigned Product will pass to MSES, 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 Energy; provided, however, that PPA Buyer shall be entitled to retain for its own account all CAISO revenues associated with delivery of the Assigned Product to CAISO, including where PPA Buyer is acting as Scheduling Coordinator for the Facility (as defined in the PPA) and through scheduling of ISTs; and (iv) (A) PPA Buyer and PPA Seller will provide copies to MSCG of (I) any notice of force majeure delivered under the PPA and (II) any notice of a default or of a breach or other event that, if not cured within an applicable grace period, could result in a default; (B) PPA Seller will provide copies to MSCG of annual forecasts and monthly forecasts and generation reports delivered under the PPA; and (C) PPA Buyer and PPA Seller, as applicable, will provide copies to MSCG of any other information reasonably requested by MSCG relating to Assigned Product.
(c) Amendments. PPA Buyer and PPA Seller 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 until and unless MSCG receives written notice thereof.
(d) Setoff of Receivables. Pursuant to the Prepaid Agreement, MSES 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, MSES may sell such Receivables to MSCG and 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 Item 3
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6 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 at no time shall PPA Seller be required to pay MSCG for any amounts by which such Receivables exceed any Delivered Product Payment Obligations then due and owed to PPA Seller.
4. Forward Contract.
The Parties acknowledge and agree that this Agreement constitutes a “forward contract” and that the Parties shall 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 MSCG 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 MSCG’s rights or obligations under this 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), which Assignment Early Termination Date shall occur upon the date set forth in a written notice of such election delivered by MSCG 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; Item 3
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7 v. the election of PPA Seller or PPA Buyer in its sole discretion to declare an Assignment Early Termination Date if MSCG fails to pay when due any amounts owed to PPA Seller in respect of any Delivered Product Payment Obligation and such failure continues for five Business Days following receipt by MSCG 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 MSCG, and with a copy to PPA Buyer or PPA Seller, as applicable; 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 MSCG 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) MSCG 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 MSCG 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 MSCG 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 MSCG, and with a copy to PPA Buyer or PPA Seller, as applicable; vii. either MSCG or PPA Buyer may designate an Assignment Early Termination Date with written notice to the other Parties to the extent that MSCG and PPA Buyer have mutually agreed upon a replacement Assignment Agreement (as defined in the Prepay Power Supply Contract) that will replace the Assigned Rights and Obligations hereunder immediately following the termination hereof, which 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 PPA Buyer to the other Parties; and viii. PPA Buyer may deliver written notice of termination to the other Parties if any change, event or effect occurs, including but not limited a change in applicable laws or regulations, any issues with the PPA Seller or the PPA, a dispute under the PPA or other similar circumstance, that individually or collectively have or are reasonably expected by Item 3
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8 PPA Buyer to have a material adverse effect upon (A) the PPA Buyer, (B) its rights and obligations under this Agreement, the Prepay Power Supply Contract, or the PPA, or (C) the benefit the PPA Buyer is receiving by assigning the Assigned Rights and Obligations, with such Assignment Early Termination Date to be the date set forth in a written notice delivered by PPA Buyer to the other Parties; provided that (x) PPA Buyer will provide notice to the other Parties as soon as is reasonably possible that PPA Buyer anticipates exercising this termination right, and (y) PPA Buyer shall exercise commercially reasonable efforts to propose and agree with MSCG upon a replacement Assignment Agreement prior to exercising this termination right.
(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 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 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, 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.
(a) Copy of PPA. PPA Seller and PPA Buyer represent and warrant to MSCG that a true, complete, and correct copy of the PPA is attached hereto as Appendix 3. (b) No Default. PPA Seller and PPA Buyer represent and warrant to MSCG that no event or circumstance exists (or would exist with the passage of time or the giving of notice) that would give either of them the right to terminate the PPA or suspend performance thereunder. (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. 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 Item 3
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9 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 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 Item 3
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10 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 facsimile or electronic transmission), 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 (including a writing evidenced by an electronic transmission) and executed by each of the Parties or confirmed by emails or electronic messages on an electronic messaging system.
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, 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.
11. Miscellaneous.
(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 Item 3
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11 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) U.S. Resolution Stay. 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.
(c) Reserved.
(d) 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. 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 11(d) and by the prevailing party in connection with the arbitration. Notwithstanding the foregoing provisions of this Section 11(d), 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.
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12 (e) Judicial Reference. Without limiting the provisions in Section 11(d), if Section 11(d) 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(e)(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 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 11.
ii. Applicability; Selection of Referees.
(A) 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 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 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.
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13 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 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.
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 PPA Buyer 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 PPA Buyer.
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Signature Page to Limited Assignment Agreement
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first set forth above.
[PPA SELLER]
By: ____________________________
Name:_______________________
Title:________________________
SILICON VALLEY CLEAN ENERGY AUTHORITY
By: ____________________________
Name:_______________________
Title:________________________
MORGAN STANLEY CAPITAL GROUP INC.
By: ____________________________
Name:_______________________
Title:________________________
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Appendix 1 - 1
Appendix 1
Assigned Rights and Obligations
PPA: Renewable Power Purchase Agreement dated as of [____], by and between PPA Buyer and PPA Seller
Assigned Delivery Point: [Facility PNode/Settlement Point (as defined in the PPA)] Further Information: PPA Seller shall continue to transfer the WREGIS Certificates associated with all Renewable Energy Credits corresponding to all Facility Energy under 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, unless otherwise agreed. Terms with initial capitalization used in this paragraph but not otherwise defined in this Agreement have the meaning set forth in the PPA. [Include additional requirements, if any]
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Appendix 2 - 1
Appendix 2
Notice Information
[To be completed before signing.]
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Appendix 3 - 1
Appendix 3
Copy of Power Sales Contract
[To be attached.]
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EXHIBIT B
FORM OF LIMITED ASSIGNMENT AGREEMENT FOR MSCG AS PPA SUPPLIER This Limited Assignment Agreement (this “Agreement”) is entered into as of [____] by and among Morgan Stanley Capital Group Inc., a Delaware corporation (“PPA Seller”), Silicon Valley Clean Energy Authority, a joint powers authority and a community choice aggregator organized under the laws of the State of California (“PPA Buyer”), 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) (“Issuer”), and Morgan Stanley Energy Structuring, L.L.C., a Delaware limited liability company (“MSES”).
RECITALS
WHEREAS, PPA Buyer and PPA Seller are parties to that certain [____], dated as of [____] (the “PPA”);
WHEREAS, in connection with a prepaid electricity transaction between Issuer and MSES, and with effect from and including the Assignment Period Start Date (as defined below), PPA Buyer wishes to transfer by limited assignment to MSES, and MSES 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); and
WHEREAS, pursuant to this Agreement, MSES will receive the Assigned Product and MSES will deliver the Assigned Product to MSES, which will redeliver the Assigned Product to Issuer for ultimate redelivery to PPA Buyer; and
WHEREAS, pursuant to this Agreement, MSES 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, Issuer, PPA Seller, PPA Buyer and MSES (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.
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2 “Assigned Energy” means any Electricity associated with the Assigned Product to be delivered to MSES hereunder pursuant to the Assigned Rights and Obligations. “Assigned Quantity” means all Assigned Product delivered in accordance with the PPA by PPA Seller in each year during the Assignment Period. “Assigned Product” includes all [Specified Source Energy]/[Carbon Free Energy] (as defined in the PPA) associated with the Assigned Quantity. “Assigned Product Price” means the [Energy Price]/[Flat Price] (as defined in the PPA and specified in Appendix 1).
“Assigned Rights and Obligations” means (i) the rights of PPA Buyer under the PPA to receive the Assigned Quantity of Assigned Product 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 MSES 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 [____]. “Assignment Period Start Date” means [_____].
“Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday. A Business Day begins at 8:00 a.m. and ends at 5:00 p.m. local time for the Party sending a notice, or payment, or performing a specified action. “CAISO Tariff” means the California Independent System Operator Corporation Agreement and Tariff, Business Practice Manuals (BPMs), and Operating Procedures, including the rules, protocols, procedures and standards attached thereto, as the same may be amended or modified from time-to-time and approved by the Federal Energy Regulatory Commission. “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. “Delivered Product Payment Obligation” has the meaning specified in Section 3(a). “Electricity” means three-phase, 60-cycle alternating current electric energy, expressed in megawatt hours (MWh).
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3 “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. “Inter-SC Trade” or “IST” has the meaning set forth in the CAISO Tariff. “Month” means a calendar month.
“MSES” has the meaning specified in the first paragraph of this 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 [____], 2022 by and between MSES and Issuer.
“Prepay Power Supply Contract” means that certain Prepay Power Supply Contract dated as of [____], 2022 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. “Scheduling Coordinator” or “SC” means an entity certified by the CAISO as qualifying as a Scheduling Coordinator pursuant to the CAISO Tariff for the purposes of undertaking the functions specified in “Responsibilities of a Scheduling Coordinator,” of the CAISO Tariff, as amended from time to time.
2. Transfer and Undertakings.
(a) PPA Buyer hereby assigns, transfers and conveys to MSES 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 MSES 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 Assigned Rights and Obligations to MSES and the exercise and performance by MSES of the Assigned Rights and Obligations during the Assignment Period.
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4 (c) MSES hereby accepts such assignment, transfer and conveyance 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 Product Payment Obligation; Invoicing. i. MSES’s sole obligation to PPA Seller will be to pay the Assigned Product Price to PPA Seller for the Assigned Product delivered during each Month of the Assignment Period on each applicable payment date under Section [4.2] of the Confirmation to the PPA for a quantity determined under this Section 3(a)i (the “Delivered Product Payment Obligation”). PPA Buyer shall remain solely responsible for any payment obligations other than the Delivered Product Payment Obligation due under the PPA during the Assignment Period (the “Retained Payment Obligation”). For purposes of determining the Delivered Product Payment Obligation and other related payment obligations during the Assignment Period, each Party acknowledges and agrees as follows:
(A) the PPA provides for the delivery of the Assigned Quantity on an annual basis, but, notwithstanding the foregoing, the Assigned Quantity shall be settled on a monthly basis by multiplying the [Hourly Quantity (as defined in the PPA)] the number CAISO Energy Delivery Hours (as defined in the PPA) in each Month (the “Settlement Monthly Quantity”), for purposes of determining amounts due under this Agreement, the Prepay Power Supply Contract and the Prepaid Agreement for each month of the Assignment Period (as futher described below); (B) regardless of the Assigned Quantity actually delivered in any month during the Assignment Period, (I) the Delivered Product Payment Obligation shall be an amount equal to the result of (x) the Settlement Monthly Quantity, multiplied by (y) the Assigned Product Price; and (II) the payment due from PPA Buyer to Issuer under the Prepay Power Supply Contract shall be an amount equal to the result of (x) the Settlement Monthly Quantity, multiplied by (y) the Contract Price (as defined in the Prepay Power Supply Contract); and
(C) to the extent that (I) an amount less than the Annual Quantity (as defined in the PPA) has been delivered as of the end of December for any year during the Assignment Period or (II) an Assignment Early Termination Date occurs and the Assigned Quantity actually delivered prior to such date is less than the Settlement Monthly Quantity through such date (any such shortfall amount under Item 3
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5 clauses (I) or (II), an “Assigned Shortfall Quantity”), then PPA Buyer will be deemed to have remarketed the Assigned Shortfall Quantity in a Private Business Sale (as defined in Exhibit C to the Prepaid Agreement), and MSES will record any such Assigned Shortfall Quantity as a Ledger Entry on the Private Business Sales Ledger (as each such term is defined in Exhibit C to the Prepaid Agreement effective as of the first day of the month of December or the month in which an Assignment Early Termination Date occurs, as applicable; provided in addition that, notwithstanding anything to the contrary in the Prepaid Agreement, MSES shall have no remarketing payment obligations with respect to any such Assigned Shortfall Quantity.
ii. PPA Seller shall deliver each monthly invoice and related supporting data during the Assignment Period to each of PPA Buyer and MSES, and each such invoice shall indicate (A) the total amount due to PPA Seller under the PPA for such Month (the “Monthly Gross Amount”); (B) the Delivered Product Payment Obligation; and (C) the Retained Payment Obligation, which (I) shall be determined by subtracting the Delivered Product Payment Obligation from the Monthly Gross Amount and (II) shall reflect an amount due from PPA Buyer to the extent it is a positive number and an amount due to PPA Buyer to the extent it is a negative number; provided in addition that any payment adjustments or subsequent reconciliations occurring after the date that is 10 days prior to the payment due date for a monthly invoice will be resolved solely between PPA Buyer and PPA Seller. The Delivered Product Payment Obligation and Retained Payment Obligation shall be administered by a custodian who will pay (1) the Monthly Gross Amount to PPA Seller on each payment due date and (2) the absolute value of the Retained Payment Obligation to PPA Buyer to the extent such amount is negative for any given Month.
(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 MSES, 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) Scheduling. All scheduling of Electricity associated with 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 (i) title to Assigned Product will pass to MSES upon delivery by PPA Seller at the Assigned Delivery Point in accordance with the PPA; (ii) immediately thereafter, title to such Assigned Product will pass to MSES, Issuer and then to PPA Buyer upon delivery by MSES at the same point where title is passed to MSES pursuant to clause (i) above; (iii) PPA Buyer will be deemed to be acting as MSES’s agent with regard to scheduling Assigned Energy; provided, however, that PPA Buyer shall be entitled to retain for its own account all CAISO revenues associated with delivery of the Assigned Product to CAISO, including where PPA Buyer is acting as Scheduling Coordinator for the Facility (as defined in the PPA) and through scheduling of ISTs; and (iv) (A) PPA Buyer and PPA Seller will provide copies to MSES of (I) any notice of force majeure delivered under the PPA and (II) any notice of a default or of a breach Item 3
Attachment 3
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6 or other event that, if not cured within an applicable grace period, could result in a default; (B) PPA Seller will provide copies to MSES of annual forecasts and monthly forecasts and generation reports delivered under the PPA; and (C) PPA Buyer and PPA Seller, as applicable, will provide copies to MSES of any other information reasonably requested by MSES relating to Assigned Product.
(d) Amendments. PPA Buyer and PPA Seller will provide written notice (including copies thereof) of any amendment, waiver, supplement, modification, or other changes to the PPA to MSES 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 MSES’s rights or obligations under this Agreement until and unless MSES receives written notice thereof.
(e) Setoff of Receivables. Pursuant to the Prepaid Agreement, MSES 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 MSES pursuant to the Assigned Rights and Obligations, MSES 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 at no time shall PPA Seller be required to pay MSES for any amounts by which such Receivables exceed any Delivered Product Payment Obligations then due and owed to PPA Seller.
(f) Joinder to Intercreditor Agreement. In connection with the execution of this Agreement and as a condition precedent to the effectiveness hereof, Issuer shall execute a joinder to the Intercreditor and Collateral Agency Agreement (as defined in the PPA), which will provide Issuer with certain rights under the Security Documents (as defined in the PPA). PPA Buyer agrees that it shall make payments with respect to the Assigned Quantity to Issuer under the Prepay Power Supply Contract on the 20th or preceding business day of the month following deliveries consistent with the terms thereof, and such payments will be made from PPA Buyer’s available funds not pledged to the Special Fund (as defined in the PPA); provided that, in the event PPA Buyer fails to make any such payment when due, PPA Buyer shall cause such payment due to Issuer to be included as Regular Charges (as defined in the Security Documents) on the first Distribution Date Certificate (as defined in the Security Documents) to be issued thereafter. If PPA Buyer fails to do so, Issuer shall dispute such Distribution Date Certificate and otherwise pursue its rights to payment thereon pursuant to the terms of the Intercreditor and Collateral Agency Agreement. To the extent Issuer receives any amounts under the Security Documents or Intercreditor and Collateral Agency Agreement in respect of any Receivables purchased by MSES, Issuer shall (i) hold such amounts in trust for the benefit of MSES, (ii) promptly notify MSES thereof and (iii) promptly remit such amounts directly to an account specified by MSES.
4. Forward Contract.
Item 3
Attachment 3
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7 The Parties acknowledge and agree that this Agreement constitutes a “forward contract” and that the Parties shall 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 MSES 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 MSES’s rights or obligations under this Agreement (provided that MSES shall not have a right to terminate under this clause (b) to the extent that MSES (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 MSES 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; v. the election of PPA Seller or PPA Buyer in its sole discretion to declare an Assignment Early Termination Date if MSES fails to pay when due any amounts owed to PPA Seller in respect of any Delivered Product Payment Obligation and such failure continues for five Business Days following receipt by MSES 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 MSES, and with a copy to PPA Buyer or PPA Seller, as applicable;
Item 3
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8 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 MSES 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) MSES 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 MSES 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 MSES 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 MSES, and with a copy to PPA Buyer or PPA Seller, as applicable;
vii. either MSES or PPA Buyer may designate an Assignment Early Termination Date with written notice to the other Parties to the extent that MSES and PPA Buyer have mutually agreed upon a replacement Assignment Agreement (as defined in the Prepay Power Supply Contract) that will replace the Assigned Rights and Obligations hereunder immediately following the termination hereof, which 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 MSES or PPA Buyer to the other Parties; and viii. PPA Buyer may deliver written notice of termination to the other Parties if any change, event or effect occurs, including but not limited a change in applicable laws or regulations, any issues with the PPA Seller or the PPA, a dispute under the PPA or other similar circumstance, that individually or collectively have or are reasonably expected by PPA Buyer to have a material adverse effect upon (A) the PPA Buyer, (B) its rights and obligations under this Agreement, the Prepay Power Supply Contract, or the PPA, or (C) the benefit the PPA Buyer is receiving by assigning the Assigned Rights and Obligations, with such Assignment Early Termination Date to be the date set forth in a written notice delivered by PPA Buyer to the other Parties; provided that (x) PPA Buyer will provide notice to the other Parties as soon as is reasonably possible that PPA Buyer anticipates exercising this termination right, and (y) PPA Buyer shall exercise commercially Item 3
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9 reasonable efforts to propose and agree with MSES upon a replacement Assignment Agreement prior to exercising this termination right.
(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 MSES 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 MSES to PPA Buyer, provided that (i) MSES shall remain responsible for the Delivered Product Payment Obligation with respect to any Assigned Product delivered to MSES 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.
(a) Copy of PPA. PPA Seller and PPA Buyer represent and warrant to MSES that a true, complete, and correct copy of the PPA is attached hereto as Appendix 3. (b) No Default. PPA Seller and PPA Buyer represent and warrant to MSES that no event or circumstance exists (or would exist with the passage of time or the giving of notice) that would give either of them the right to terminate the PPA or suspend performance thereunder. (c) Other. Each of PPA Buyer and PPA Seller represents and warrants to each other and to MSES 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. 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 Item 3
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10 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 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.
Item 3
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11 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.
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 (including a writing evidenced by an electronic transmission) and executed by each of the Parties or confirmed by emails or electronic messages on an electronic messaging system.
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, 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.
11. Miscellaneous.
(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) U.S. Resolution Stay. 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, MSES and PPA Seller shall each be deemed to be a Item 3
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Draft Letter Agreement
12 Regulated Entity, and PPA Buyer 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.
(c) Reserved.
(d) 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 PPA Seller 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 PPA Seller or PPA Buyer is unable or fails to select one person to act as arbitrator, such arbitrator shall be appointed by JAMS. If the PPA Seller 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. 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 11(d) and by the prevailing party in connection with the arbitration.
Notwithstanding the foregoing provisions of this Section 11(d), 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.
(e) Judicial Reference. Without limiting the provisions in Section 11(d), if Section 11(d) 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 Item 3
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13 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(e)(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 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 11.
ii. Applicability; Selection of Referees.
(A) Within 10 days of the delivery of an Impasse Notice, each of PPA Seller 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 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 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 PPA Seller 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 20 days after the date of Item 3
Attachment 3
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14 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.
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 PPA Seller and PPA Buyer 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 PPA Seller and PPA Buyer.
(f) 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 Item 3
Attachment 3
Draft Letter Agreement
15 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
Item 3
Attachment 3
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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:________________________
SILICON VALLEY CLEAN ENERGY AUTHORITY
By: ____________________________
Name:_______________________
Title:________________________
MORGAN STANLEY ENERGY STRUCTURING, L.L.C.
By: ____________________________
Name:_______________________
Title:________________________
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By: ____________________________
Name:_______________________
Title:________________________
Item 3
Attachment 3
Draft Letter Agreement
Appendix 1 - 1
Appendix 1
Assigned Rights and Obligations
PPA: Master Power Purchase and Sale Agreement dated as of [____] and the Confirmation thereunder dated as of [____], by and between PPA Buyer and PPA Seller Assigned Delivery Point: [NP15 EZ GEN HUB)]
Assigned Product Price: [To list applicable Energy Price or Flat Price specified in the PPA] Further Information: [Include additional requirements, if any] Item 3
Attachment 3
Draft Letter Agreement
Appendix 2 - 1
Appendix 2
Notice Information
[To be completed before signing.]
Item 3
Attachment 3
Draft Letter Agreement
Appendix 3 - 1
Appendix 3
Copy of Power Sales Contract
[To be attached.]
Item 3
Attachment 3
Draft Letter Agreement
SM Draft 4 November 2022
FORM OF LIMITED ASSIGNMENT AGREEMENT
This Limited Assignment Agreement (this “Agreement”) is entered into as of [____] by and among [____], a [____] (“PPA Seller”), Silicon Valley Clean Energy Authority, a joint powers authority and a community choice aggregator organized under the laws of the State of California (“PPA Buyer”), and Morgan Stanley Capital Group Inc., a Delaware corporation (“MSCG”).
RECITALS
WHEREAS, PPA Buyer and PPA Seller are parties to that certain [____], dated as of [____] (the “PPA”);
WHEREAS, in connection with a prepaid electricity transaction between [_______] (“Issuer”) and Morgan Stanley Energy Structuring, L.L.C. (“MSES”), 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); and
WHEREAS, pursuant to this Agreement, MSCG will receive the Assigned Product and MSCG will deliver the Assigned Product to MSES, which will redeliver the Assigned Product to Issuer for ultimate redelivery to PPA Buyer; and
WHEREAS, pursuant to this Agreement, 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.
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 Electricity associated with the Assigned Product to be delivered to MSCG hereunder pursuant to the Assigned Rights and Obligations.
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2 “Assigned Monthly Quantity” means the first [___] MWhs delivered in accordance with the PPA by PPA Seller in each Month during the Assignment Period. “Assigned Product” includes all (i) Energy and (ii) Green Attributes (PCC1) (as defined in the PPA) produced by the Facility (as defined in the PPA) associated with the Assigned Monthly Quantity.
“Assigned Product Price” means [NOTE: To be the Day-Ahead Price averaged for each day of the prior month if the assignment occurs after the commencement of the prepay transaction or the fixed price for energy under the PPA if assigned in connection with execution of the prepay transaction.].
“Assigned Rights and Obligations” means (i) the rights of PPA Buyer under the PPA to receive the Assigned Monthly Quantity of 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 [_____].
“Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday. A Business Day begins at 8:00 a.m. and ends at 5:00 p.m. local time for the Party sending a notice, or payment, or performing a specified action. “CAISO Tariff” means the California Independent System Operator Corporation Agreement and Tariff, Business Practice Manuals (BPMs), and Operating Procedures, including the rules, protocols, procedures and standards attached thereto, as the same may be amended or modified from time-to-time and approved by the Federal Energy Regulatory Commission. “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. “Delivered Product Payment Obligation” has the meaning specified in Section 3(a). “Electricity” means three-phase, 60-cycle alternating current electric energy, expressed in megawatt hours (MWh).
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3 “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” 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).
“Inter-SC Trade” or “IST” has the meaning set forth in the CAISO Tariff. “Month” means a calendar month.
“MSCG” has the meaning specified in the first paragraph of this Agreement. “MSES” means Morgan Stanley Energy Structuring, L.L.C., a Delaware limited liability company.
“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 [____], 2022 by and between MSES and Issuer.
“Prepay Power Supply Contract” means that certain Prepay Power Supply Contract dated as of [____], 2022 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. “Scheduling Coordinator” or “SC” means an entity certified by the CAISO as qualifying as a Scheduling Coordinator pursuant to the CAISO Tariff for the purposes of undertaking the functions specified in “Responsibilities of a Scheduling Coordinator,” of the CAISO Tariff, as amended from time to time.
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 Item 3
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4 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 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 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 Product Payment Obligation; Invoicing. i. MSCG’s sole obligation to PPA Seller will be to pay the Assigned Product Price (as defined in the PPA) to PPA Seller for the Assigned Product delivered during each Month of the Assignment Period on each applicable payment date under Section [__] of the PPA for a quantity up to, but not exceeding, the Assigned Monthly Quantity (the “Delivered Product Payment Obligation”). To the extent MSCG fails to pay the Delivered Product Payment Obligation by the due date for payment set forth in the PPA, notwithstanding anything in this Agreement to the contrary, PPA Buyer agrees that it remains responsible for such payment; provided that, to the extent PPA Buyer makes a payment to PPA Seller with respect to the Delivery Product Payment Obligation because MSCG has failed to pay the Delivered Product Payment Obligation, PPA Seller will have no further claim against MSCG for such amounts, and MSCG will be obligated to pay such amounts to PPA Buyer.
ii. PPA Buyer shall remain solely responsible for any payment obligations other than the Delivered Product Payment Obligation due under the PPA during the Assignment Period (the “Retained Payment Obligation”). Any Claims 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.
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5 iii. 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 days thereafter, PPA Buyer shall deliver (i) a copy of such monthly invoice and the related supporting data to MSCG (ii) a statement to each of MSCG and the custodian described below indicating (A) the total amount due to PPA Seller under the PPA for such Month (the “Monthly Gross Amount”); (B) the Delivered Product Payment Obligation; and (C) the Retained Payment Obligation, which (I) shall be determined by subtracting the Delivered Product Payment Obligation from the Monthly Gross Amount and (II) shall reflect an amount due from PPA Buyer to the extent it is a positive number and an amount due to PPA Buyer to the extent it is a negative number. The Delivered Product Payment Obligation and Retained Payment Obligation shall be administered by a custodian who will pay (1) the Monthly Gross Amount to PPA Seller on each payment due date and (2) the absolute value of the Retained Payment Obligation to PPA Buyer to the extent such amount is negative for any given Month.
(b) Scheduling. All scheduling of Electricity associated with 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 (i) title to Assigned Product will pass to MSCG upon delivery by PPA Seller at the Assigned Delivery Point in accordance with the PPA; (ii) immediately thereafter, title to such Assigned Product will pass to MSES, 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 Energy; provided, however, that PPA Buyer shall be entitled to retain for its own account all CAISO revenues associated with delivery of the Assigned Product to CAISO, including where PPA Buyer is acting as Scheduling Coordinator for the Facility (as defined in the PPA) and through scheduling of ISTs; and (iv) (A) PPA Buyer and PPA Seller will provide copies to MSCG of (I) any notice of force majeure delivered under the PPA and (II) any notice of a default or of a breach or other event that, if not cured within an applicable grace period, could result in a default; (B) PPA Seller will provide copies to MSCG of annual forecasts and monthly forecasts and generation reports delivered under the PPA; and (C) PPA Buyer and PPA Seller, as applicable, will provide copies to MSCG of any other information reasonably requested by MSCG relating to Assigned Product.
(c) Amendments. PPA Buyer and PPA Seller 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 until and unless MSCG receives written notice thereof.
(d) Setoff of Receivables. Pursuant to the Prepaid Agreement, MSES 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, MSES may sell such Receivables to MSCG and 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 Item 3
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6 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 at no time shall PPA Seller be required to pay MSCG for any amounts by which such Receivables exceed any Delivered Product Payment Obligations then due and owed to PPA Seller.
4. Forward Contract.
The Parties acknowledge and agree that this Agreement constitutes a “forward contract” and that the Parties shall 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 MSCG 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 MSCG’s rights or obligations under this 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), which Assignment Early Termination Date shall occur upon the date set forth in a written notice of such election delivered by MSCG 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; Item 3
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7 v. the election of PPA Seller or PPA Buyer in its sole discretion to declare an Assignment Early Termination Date if MSCG fails to pay when due any amounts owed to PPA Seller in respect of any Delivered Product Payment Obligation and such failure continues for five Business Days following receipt by MSCG 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 MSCG, and with a copy to PPA Buyer or PPA Seller, as applicable; 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 MSCG 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) MSCG 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 MSCG 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 MSCG 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 MSCG, and with a copy to PPA Buyer or PPA Seller, as applicable; vii. either MSCG or PPA Buyer may designate an Assignment Early Termination Date with written notice to the other Parties to the extent that MSCG and PPA Buyer have mutually agreed upon a replacement Assignment Agreement (as defined in the Prepay Power Supply Contract) that will replace the Assigned Rights and Obligations hereunder immediately following the termination hereof, which 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 PPA Buyer to the other Parties; and viii. PPA Buyer may deliver written notice of termination to the other Parties if any change, event or effect occurs, including but not limited a change in applicable laws or regulations, any issues with the PPA Seller or the PPA, a dispute under the PPA or other similar circumstance, that individually or collectively have or are reasonably expected by Item 3
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8 PPA Buyer to have a material adverse effect upon (A) the PPA Buyer, (B) its rights and obligations under this Agreement, the Prepay Power Supply Contract, or the PPA, or (C) the benefit the PPA Buyer is receiving by assigning the Assigned Rights and Obligations, with such Assignment Early Termination Date to be the date set forth in a written notice delivered by PPA Buyer to the other Parties; provided that (x) PPA Buyer will provide notice to the other Parties as soon as is reasonably possible that PPA Buyer anticipates exercising this termination right, and (y) PPA Buyer shall exercise commercially reasonable efforts to propose and agree with MSCG upon a replacement Assignment Agreement prior to exercising this termination right.
(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 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 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, 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.
(a) Copy of PPA. PPA Seller and PPA Buyer represent and warrant to MSCG that a true, complete, and correct copy of the PPA is attached hereto as Appendix 3. (b) No Default. PPA Seller and PPA Buyer represent and warrant to MSCG that no event or circumstance exists (or would exist with the passage of time or the giving of notice) that would give either of them the right to terminate the PPA or suspend performance thereunder. (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. 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 Item 3
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9 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 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 Item 3
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10 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 facsimile or electronic transmission), 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 (including a writing evidenced by an electronic transmission) and executed by each of the Parties or confirmed by emails or electronic messages on an electronic messaging system.
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, 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.
11. Miscellaneous.
(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 Item 3
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11 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) U.S. Resolution Stay. 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.
(c) Reserved.
(d) 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. 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 11(d) and by the prevailing party in connection with the arbitration. Notwithstanding the foregoing provisions of this Section 11(d), 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.
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12 (e) Judicial Reference. Without limiting the provisions in Section 11(d), if Section 11(d) 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(e)(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 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 11.
ii. Applicability; Selection of Referees.
(A) 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 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 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.
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13 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 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.
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 PPA Buyer 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 PPA Buyer.
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Signature Page to Limited Assignment Agreement
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first set forth above.
[PPA SELLER]
By: ____________________________
Name:_______________________
Title:________________________
SILICON VALLEY CLEAN ENERGY AUTHORITY
By: ____________________________
Name:_______________________
Title:________________________
MORGAN STANLEY CAPITAL GROUP INC.
By: ____________________________
Name:_______________________
Title:________________________
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Appendix 1 - 1
Appendix 1
Assigned Rights and Obligations
PPA: Renewable Power Purchase Agreement dated as of [____], by and between PPA Buyer and PPA Seller
Assigned Delivery Point: [Facility PNode/Settlement Point (as defined in the PPA)] Further Information: PPA Seller shall continue to transfer the WREGIS Certificates associated with all Renewable Energy Credits corresponding to all Facility Energy under 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, unless otherwise agreed. Terms with initial capitalization used in this paragraph but not otherwise defined in this Agreement have the meaning set forth in the PPA. [Include additional requirements, if any]
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Appendix 2 - 1
Appendix 2
Notice Information
[To be completed before signing.]
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Appendix 3 - 1
Appendix 3
Copy of Power Sales Contract
[To be attached.]
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1 C&C DRAFT: 11.2.22
PREPAID ENERGY PROJECT ADMINISTRATION AGREEMENT
This Prepaid Energy Project Administration Agreement (this “Agreement”) is made and entered into as of [_________], 2022, by and between California Community Choice Financing Authority (“CCCFA”) and Silicon Valley Clean Energy Authority (“SVCE”), with respect to the Prepaid Energy Project (defined below). CCCFA and SVCE 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, SVCE is a “community choice aggregator” under the Public Utilities Code; and WHEREAS, SVCE and certain other community choice aggregators have created 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 SVCE, 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 SVCE are entering into a Power Supply Contract pursuant to which CCCFA has agreed to supply Energy to SVCE under the terms set forth therein; and WHEREAS, in order to provide such Energy to SVCE under the Power Supply Contract, CCCFA is entering into the Prepaid Agreement with MSES, under which it will make a prepayment to MSES for the purchase and delivery of such Energy; and
WHEREAS, CCCFA will finance the prepayment under the Prepaid 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.
“Alternate Energy Delivery Point” has the meaning specified in Section 5.1(a) of the Power Supply Contract.
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2 “Annual Refund” means the annual refund, if any, to be provided to SVCE pursuant to Section 3.2(c) 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 MSES under the Prepaid 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 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 SVCE’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 SVCE. “Indenture” means the Trust Indenture, dated as of [_________], 2022, between CCCFA and the Trustee, as amended, restated, supplemented or otherwise modified from time to time. “Initial Assignment Agreement” with respect to SVCE, 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 SVCE, 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.
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3 “MSES” means Morgan Stanley Energy Structuring L.L.C., its successors and permitted assigns.
“Power Supply Contract” means the Power Supply Contract, dated [_________], 2022, between CCCFA and SVCE relating to the purchase by SVCE of Energy acquired by CCCFA pursuant to the Prepaid Agreement, as amended, restated, supplemented or otherwise modified from time to time.
“Prepaid Agreement” means the Prepaid Energy Sales Agreement, dated [_________], 2022, between CCCFA, as buyer, and MSES, 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 Agreement and the Indenture, and the sale to SVCE 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 MSES.
“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. “SVCE” means Silicon Valley Clean Energy Authority, 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. “Trustee” means The Bank of New York Mellon Trust Company, N.A., 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, SVCE has entered into the Initial Assignment Agreement specified in the Power Supply Contract with respect to its entire Contract Quantity; Item 3
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4 (b) subject to the terms of the applicable Assignment Letter Agreement, SVCE may from time to time enter into additional Assignment Agreements with respect to all or a portion of its Contract Quantity; and
(c) SVCE 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 Agreement that is attributable to an Assignment Agreement(s) entered into by SVCE shall be attributable to SVCE 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 SVCE’s Assigned Delivery Point and the transfer of other Assigned Product to SVCE, 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 SVCE 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 SVCE’s Contract Quantity that is not delivered as Assigned Energy is required to be delivered as Base Energy and simultaneously remarketed by MSES pursuant to the Prepaid Agreement. SVCE shall be responsible for accounting for any portion of SVCE’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. SVCE 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 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 SVCE or unless otherwise required under the terms of the Prepaid Agreement.
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 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 Contract of SVCE and no event of default has occurred and is continuing with respect to SVCE under the Power Supply Contract, such direction, consent or waiver shall only be provided by CCCFA in accordance with written instructions provided by SVCE.
Otherwise, any such direction, consent or waiver shall only be provided by CCCFA in accordance with written instructions of SVCE.
Section 7. Re-pricing Information. CCCFA shall provide, or cause MSES to provide, to SVCE such information as is required to be provided by MSES 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 Section 3.2(b) of the Power Supply Contract, SVCE is required to include in its payment to CCCFA in January of each year, commencing January 2024, an annual Project Administration Fee in the amount specified therein, determined by CCCFA based on the budgeted Operating Expenses Item 3
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5 of CCCFA for the next succeeding annual period. CCCFA agrees to allocate amounts received in respect of the Project Administration Fee to pay Operating Expenses (as defined in the Indenture) as the same become due and payable during such annual period. In the event amounts paid in respect of the Project Administration Fee are not sufficient to pay such Operating Expenses when due, SVCE agrees to pay such additional amounts 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 to reconcile the amounts received in respect of the Project Administrative Fee for such annual period 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, CCCFA will provide written notice thereof to SVCE and include the amount of such excess in its Annual Refund to SVCE 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.
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6 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: ______________________________
Title: _______________________________
SILICON VALLEY CLEAN ENERGY AUTHORITY
By: ________________________________
Name: ______________________________
Title: _______________________________
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SM Draft 23 September 2022
CUSTODIAL AGREEMENT
This Custodial Agreement (this “Agreement”) is made and entered into as of [____], 2022, by and among Silicon Valley Clean Energy Authority, a joint powers authority and a community choice aggregator organized under the laws of the State of California (“PPA Buyer”), Morgan Stanley Capital Group Inc., a Delaware corporation (“MSCG”), Morgan Stanley Energy Structuring, L.L.C., a Delaware limited liability company (“MSES”), and The Bank of New York Mellon Trust Company, N.A., a national banking association, (the “Custodian” and together with PPA Buyer and MSCG, the “Parties”, and each individually, a “Party”).
RECITALS:
WHEREAS, California Community Choice Financing Authority (“Issuer”) is issuing its Clean Energy Project Revenue Bonds, [Series 2022B] (the “Bonds”) pursuant to the Trust Indenture, dated as of [____], 2022 (the “Bond Indenture”) between Issuer and The Bank of New York Mellon Trust Company, N.A., in its capacity as trustee under the Bond Indenture (the “Trustee”); and
WHEREAS, MSES and Issuer are entering into that certain Prepaid Energy Sales Agreement, dated as of [____], 2022 (the “Prepaid Agreement”); and WHEREAS, in connection with the execution of the Prepaid Agreement, MSES and MSCG are entering into an Energy Management Agreement, dated as of [____], 2022 (the “Energy Management Agreement”); and
WHEREAS, in connection with the execution of the Prepaid Agreement, Issuer and PPA Buyer are entering into a Power Supply Agreement, dated as of [____], 2022 (the “Power Supply Agreement” and together with the Prepaid Agreement and the Energy Management Agreement, the “Prepay Supply Contracts”); and
WHEREAS, in connection with or subsequent to the execution of the Prepay Supply Contracts, MSCG, Issuer and PPA Buyer may enter into one or more Limited Assignment Agreements (the “Assignment Agreements”) pursuant to which PPA Buyer partially assigns its rights and obligations under its power supply contracts (“Assigned PPAs”) for redelivery of energy and other specified products pursuant to the Prepay Supply Contracts; and WHEREAS, the Parties propose to enter into this Custodial Agreement in order to administer payments to be received by the sellers under the Assigned PPAs (each, individually, a “PPA Seller” and collectively the “PPA Sellers”, and which definitions shall include any new PPA Seller identified by MSCG’s delivery of an updated Exhibit A consistent with Section 3(c)).
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
Section 1. Defined Terms. Any capitalized term used herein and not otherwise defined herein (including in the recitals) shall have the meaning assigned to such term in the Power Supply Agreement. The following additional terms, when used in this Agreement (including the preamble Item 3
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2 or recitals to this Agreement) and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires:
“Assignment Period” has the meaning specified in Exhibit A, as may be updated from time to time consistent with the terms hereof.
“Assigned Product Price” has the meaning specified in Exhibit A, as may be updated from time to time consistent with the terms hereof. “Custodial Agreement Payment Date” means the last Business Day preceding the Monthly Statement Payment Date.
“Delivered Product Payment Amount” means, in respect of each Monthly Statement, an amount equal to (a) the actual quantity of Assigned Energy reflected in such Monthly Statement multiplied by the Assigned Product Price then in effect with respect to Energy in the relevant Assigned PPA, less (b) the face amount of any purchased Receivable (as defined in the Prepaid Agreement) that is delivered by PPA Assignee to the Custodian pursuant to Section 4(e). “Issuer Negative Pricing Payment Amount” means the positive difference, if any, for any Month of an Assignment Period between (a) amounts due from Issuer to PPA Buyer under Section 3.2(a) of the Power Supply Contract with respect to negatively priced Energy and (b) amounts due from PPA Buyer to Issuer under Section 3.2(a) of the Power Supply Contract with respect to positively priced Energy.
“Monthly Gross Amount” means, in respect of each Monthly Statement, an amount equal to the total net amount due to the applicable PPA Seller in respect of such Monthly Statement and shall consist of the following components: (a) the Delivered Product Payment Amount and (b) the Retained Payment Amount (if such amount is a positive number for such Month). “Monthly Statement” means the monthly consolidated invoice delivered to PPA Assignee and PPA Buyer consistent with the terms of the applicable Assignment Agreement. “Monthly Statement Payment Date” means the last Business Day on which payment with respect to a Monthly Statement may be made before any incremental interest arises thereon or any default or breach arises under the Assigned PPA. “PPA Assignee” means MSCG or, to the extent that MSCG is a PPA Seller under the applicable Assigned PPA, MSES, in each case, in its capacity as the limited assignee under the applicable Assignment Agreement.
“Retained Payment Amount” means, in respect of each Monthly Statement, an amount equal to (a) all amounts owed to the applicable PPA Seller for such Month, less (b) the Delivered Product Payment Amount; provided that, to the extent the Retained Payment Amount is negative in any Month, then the absolute value of such amount shall represent an amount to be paid by the Custodian to PPA Buyer pursuant to Section 4(c)(ii) hereof.
Section 2. Appointment of Custodian. PPA Buyer, MSES and MSCG hereby appoint The Bank of New York Mellon Trust Company, N.A. as Custodian under this Agreement, with Item 3
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3 such rights and obligations as are specifically set forth herein. The Custodian hereby accepts such appointment under the terms and conditions set forth herein.
Section 3. Payment Instructions to Custodian; Assigned PPA Exhibits. (a) No later than seven days following PPA Buyer’s receipt of a Monthly Statement from a PPA Seller, PPA Buyer shall notify the Custodian of the Delivered Product Payment Amount, the Retained Payment Amount, the Monthly Gross Amount, the Monthly Statement Payment Date, the Custodial Agreement Payment Date as reflected in such Monthly Statement and any Issuer Negative Pricing Payment Amount for such Month. (b) PPA Assignee shall notify PPA Buyer and each other Party promptly following PPA Buyer’s delivery of a Monthly Statement if PPA Assignee believes any information included on such Monthly Statement is incorrect. Following receipt and verification of the information included in any such notice from PPA Assignee, PPA Buyer shall, to the extent appropriate and in consultation with PPA Assignee, issue a corrected Monthly Statement to all Parties. (c) Exhibit A to this Agreement sets forth certain information regarding the Assigned PPAs as of the date hereof, including the Assignment Periods and Assigned Product Prices for each Assigned PPA, the PPA Sellers thereunder and the payment instructions for payments to the PPA Sellers. MSCG shall deliver an updated Exhibit A to each of the other Parties hereto to reflect any changes to the information set forth therein, including due to the expiration, extension or termination of an Assignment Period or the commencement of a new Assignment Period.
Section 4. Assigned PPA Payments Account.
(a) Custodial Account. With respect to payments required to be made by PPA Assignee and PPA Buyer to the PPA Sellers under the Assigned PPAs, there is hereby established with the Custodian at its office located at 4655 Salisbury Road, Suite 300, Jacksonville, Florida 32256, the following custodial account: a payments account designated as the “[____]”, bearing Custodian’s Account No. [____] (the “Assigned PPA Payments Account”) and all payments made by PPA Assignee and PPA Buyer hereunder shall be wired to such Assigned PPA Payments Account:
The Bank of New York Mellon
ABA# 021000018
Account Number: [____]
Account Name: [____]
ATT: Matthew Kuper 904.645.1947
(b) PPA Assignee and PPA Buyer Monthly Payments.
(i) PPA Assignee shall make payment of the Delivered Product Payment Amount into the Assigned PPA Payments Account on the Custodial Agreement Payment Date for each Month of any Assignment Period.
(ii) For each Month of any Assignment Period for which the Retained Payment Amount is a positive number, PPA Buyer shall make payment of such amount into the Item 3
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4 Assigned PPA Payments Account on the Custodial Agreement Payment Date. For each Month of any Assignment Period for which the Retained Payment Amount is a negative number, PPA Buyer shall have no payment obligation for such Month with respect to the Retained Payment Amount and the Custodian will pay the absolute value of such amount to PPA Buyer consistent with Section 4(c)(ii).
(iii) For each Month, if any, of an Assignment Period for which there is an Issuer Negative Pricing Payment Amount, PPA Buyer shall make payment of such amount into the Assigned PPA Payments Account on the Custodial Agreement Payment Date; provided that, notwithstanding the foregoing, PPA Buyer shall have no payment obligation hereunder with respect to an Issuer Negative Pricing Payment Amount to the extent that PPA Assignee receives such amount from the PPA Seller pursuant to the terms of the applicable Assignment Agreement.
(c) Transfers by Custodian.
(i) For any Month in an Assignment Period for which the Retained Payment Amount is a positive number, the Custodian shall withdraw the amounts on deposit in the Assigned PPA Payments Account to make payment of the Monthly Gross Amount on the Monthly Statement Payment Date by separate wire transfers to applicable PPA Seller of the amounts received from each of PPA Assignee and PPA Buyer, respectively, and each wire transfer shall indicate whether the transfer is of amounts received from PPA Assignee or PPA Buyer.
(ii) For any Month in an Assignment Period for which the Retained Payment Amount is a negative number, the Custodian shall withdraw amounts on deposit in the Assigned PPA Payments Account (A) first to make payment of the Monthly Gross Amount to the applicable PPA Seller in respect of each Monthly Statement on the relevant Monthly Statement Payment Date pursuant to the payment instructions set forth on Exhibit A; and (B) immediately thereafter to make payment of the absolute value of such Retained Payment Amount to PPA Buyer pursuant to the payment instructions set forth on Exhibit B. If the amounts on deposit in the Assigned PPA Payments Account are insufficient to pay the entirety of either such amounts, the Custodian shall apply the amounts available in the order specified in the preceding sentence.
(iii) For any Month in an Assignment Period for which an Issuer Negative Pricing Payment Amount is due from PPA Buyer, the Custodian shall, after application of amounts on deposit in the Assigned PPA Payments Account pursuant to clause (i) or (ii) above, as applicable, withdraw amounts on deposit in the Assigned PPA Payments Account to make payment of the Issuer Negative Pricing Payment Amount to PPA Assignee. (d) Amounts deposited in the Assigned PPA Payments Account shall be held in trust for the benefit of PPA Buyer until applied as set forth in Section 4(c) and Section 13, as applicable, and there is hereby granted to PPA Buyer a lien on and security interest in the Assigned PPA Payments Account pending such application. Except for any amounts due and payable to PPA Buyer pursuant to Section 4(c)(ii), the Custodian shall not be required to comply with any orders, demands, or other instructions from PPA Buyer with respect to the Assigned PPA Payments Item 3
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5 Account, including, without limitation, items presented for payment, or any order or instruction directing the disposition of funds or other assets held in or credited to the Assigned PPA Payments Account, and PPA Buyer agrees that, except as set forth in Section 4(c)(ii), prior to the termination of this Agreement in accordance with the terms hereof, it shall have no right to direct the disposition of funds or other assets held in or credited to the Assigned PPA Payments Account, or to withdraw or otherwise obtain funds or other assets held in or credited to the Assigned PPA Payments Account, whether by order or instruction to the Custodian or otherwise. (e) With respect to each Monthly Statement, to the extent PPA Assignee has purchased Put Receivables (as defined in the Prepaid Agreement) for amounts owed by PPA Buyer for the Month to which such Monthly Statement relates, PPA Assignee may, at its option, (i) notify the Custodian that it intends to transfer all or any portion of such Put Receivables to the PPA Seller, and (ii) reduce the Delivered Product Payment Amount by the face amount of such Receivables to be transferred. To the extent PPA Assignee has notified the Custodian of its intent to transfer any such Put Receivables, PPA Assignee shall cause such Put Receivables to be transferred to the PPA Seller not later than the relevant Monthly Statement Payment Date.
Section 5. Custodian. The Custodian shall have (a) no liability under any agreement other than this Agreement and (b) no duty to inquire as to the provisions of any agreement other than this Agreement and the Assigned PPAs. The Custodian may rely upon and shall not be liable for acting or refraining from acting upon any written notice, document, instruction or request furnished to it hereunder in accordance with the terms hereof and believed by it to be genuine and to have been signed or presented by the proper Party or Parties. The Custodian shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document, notice, instruction or request. The Custodian shall have no duty to solicit any payments which may be due to it, or to take any action to compel PPA Assignee or PPA Buyer to make the deposits required under Section 4. The Custodian shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction determines that the Custodian’s gross negligence or willful misconduct was the primary cause of any loss to any other Party hereto.
In connection with the execution of any of its powers or the performance of any of its duties hereunder, the Custodian may consult with counsel, accountants and other skilled persons selected and retained by it. The Custodian shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons, provided the Custodian exercised due care and good faith in the selection of such person. The permissive rights of the Custodian to take actions enumerated under this Agreement shall not be construed as duties. In the event that the Custodian shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any Party hereto which, in its opinion, conflict with any of the provisions of this Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed otherwise in writing by all of the other Parties hereto or by a final order or judgment of a court of competent jurisdiction. The Custodian may interplead all of the assets held hereunder into a court of competent jurisdiction or may seek a declaratory judgment with respect to certain circumstances, and thereafter be fully relieved from any and all liability or obligation with respect to such interpleaded assets or any action or non-action based on such declaratory judgment. Anything in this Agreement to the contrary notwithstanding, in no event shall the Custodian be liable for special, indirect, incidental or consequential damages, losses or penalties of any kind whatsoever (including but not limited to lost profits), regardless of the form Item 3
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6 of action. The Custodian shall be responsible only for funds actually received by it for deposit into the Assigned PPA Payments Account, and the Custodian shall not be obliged to advance or risk its own funds to make any payments required hereunder. The Custodian shall have only those duties expressly set forth in this Agreement and no implied duties shall be read into this Agreement against the Custodian. The Parties hereto acknowledge and agree that the Custodian is not a fiduciary by virtue of accepting and carrying out its obligations under this Agreement and has not accepted any fiduciary duties, responsibilities or liabilities with respect to its services hereunder.
Section 6. Succession. The Custodian may resign and be discharged from its duties or obligations hereunder by giving not less than 30 days’ advance notice in writing of such resignation to the other Parties hereto specifying a date when such resignation shall take effect; and such resignation shall take effect upon the day specified in such notice unless a successor shall not have been appointed by the other Parties hereto on such date, in which event such resignation shall not take effect until a successor is appointed. The other Parties hereto shall use their commercially reasonable efforts to make such appointment in a timely fashion, provided that any custodian appointed in succession to the Custodian shall be a bank or trust company organized under the laws of any state or a national banking association and shall have capital stock, surplus and undivided earnings aggregating at least $50,000,000 and shall be a bank with trust powers or trust company willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by this Agreement. Any corporation or association into which the Custodian may be merged or converted or with which it may be consolidated, or any corporation or association to which all or substantially all of the Custodian’s corporate trust line of business may be transferred, shall be the Custodian under this Agreement without further act. Notwithstanding the foregoing, if no appointment of a successor Custodian shall be made pursuant to the foregoing provisions of this Section 6 within 30 days after the Custodian has given written notice to the other Parties of its resignation as provided in this Section 6, the Custodian may, in its sole discretion, apply to any court of competent jurisdiction to appoint a successor Custodian. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Custodian.
Section 7. Fees. MSES agrees to pay the Custodian reasonable compensation for the services to be rendered hereunder, which compensation shall be $[____] for each year that this Agreement is in effect. The parties hereto acknowledge that this provision shall survive the resignation or removal of the Custodian or the termination of this Agreement.
Section 8. Reimbursement. MSCG, MSES and PPA Buyer agree, jointly and severally (subject to the second proviso of this Section 8), to reimburse the Custodian and its directors, officers, agents and employees for any and all loss, liability or expense (including the fees and expenses of in-house or outside counsel and experts and their staffs and all expense of document location, duplication and shipment) arising out of or in connection with (a) its acting as the Custodian under this Agreement, except to the extent that such loss, liability or expense is finally adjudicated to have been caused primarily by the gross negligence or willful misconduct of the Custodian or such director, officer, agent or employee seeking reimbursement, or (b) its following any instructions or other directions from MSCG, MSES or PPA Buyer, except to the extent that its following any such instruction or direction is expressly forbidden by the terms hereof; provided, however, that any amounts due under this Section 8 shall not duplicate any other amounts due under this Agreement, including without limitation amounts due under Section 14 hereof; provided Item 3
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7 further, however, that, notwithstanding the joint and several nature of the obligations under this Section 8, any amounts due under clause (b) of this sentence resulting from instructions or directions that are not expressly provided for in this Agreement and are given to the Custodian by only one Party shall be the sole obligation of such Party. The Parties hereto acknowledge that this provision shall survive the resignation or removal of the Custodian or the termination of this Agreement.
Section 9. Taxpayer Identification Numbers; Tax Matters. MSCG, MSES and PPA Buyer represent that their correct taxpayer identification numbers assigned by the Internal Revenue Service or any other taxing authority is set forth on the signature page hereof. Any tax returns or reports required to be prepared and filed in connection with the Assigned PPA Payments Account will be prepared and filed by PPA Buyer, and the Custodian shall have no responsibility for the preparation and/or filing of any tax return with respect to any income earned on the Assigned PPA Payments Account. In addition, any tax or other payments required to be made pursuant to such tax return or filing shall be paid by PPA Buyer. The Custodian shall have no responsibility for making such payment unless directed to do so by the appropriate authorized Party.
Section 10. Notices.
(a) Any notice, demand, statement or request required or authorized by this Agreement to be given by one Party to another Party shall be in writing and shall either be sent by email transmission, courier, or personal delivery (including overnight delivery service) to each of the notice recipients and addresses specified in Exhibit B for the receiving Party. 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); provided that, if a Party delivers a notice, demand or request by any means other than email transmission, such notice shall not be effective unless and until the Party also delivers a copy thereof to the other Parties’ email address specified in Exhibit B. Each Party shall have the right, upon 10 days’ prior written notice to the other Parties, to change its list of notice recipients and addresses in Exhibit B. The Parties may mutually agree in writing at any time to deliver notices, demands or requests through alternate or additional methods, such as electronic mail.
Notwithstanding the foregoing, any Party may at any time notify the others that any notice, demand, statement or request to it must be provided by email transmissions for a specified period of time or until further notice, and any communications delivered by means other than email transmission during the specified period of time shall be ineffective. (b) Exhibit A shall include each PPA Seller’s notice and payment information as set forth in the Assigned PPAs, and MSCG and PPA Buyer promptly shall cause such information to be updated to the extent there are any changes to such information under the Assigned PPAs.
Section 11. Miscellaneous.
(a) The provisions of this Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed by all of the Parties hereto.
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8 (b) Neither this Agreement nor any right or interest hereunder may be assigned in whole or in part by any Party, except as provided in Section 6, without the prior written consent of the other Parties.
(c) 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 NEW YORK,
WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLE THAT WOULD DIRECT THE APPLICATION OF THE LAWS ANOTHER JURISDICTION; 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.
(d) EACH PARTY HERETO IRREVOCABLY WAIVES ANY OBJECTION ON
THE GROUNDS OF VENUE, FORUM NON-CONVENIENS OR ANY SIMILAR GROUNDS
AND IRREVOCABLY CONSENTS TO SERVICE OF PROCESS BY MAIL OR IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW AND CONSENTS TO THE
EXCLUSIVE JURISDICTION OF (A) THE COURTS OF THE STATE OF NEW YORK
LOCATED IN THE BOROUGH OF MANHATTAN, (B) THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK OR (C)
THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA IN ANY OTHER STATE. THE PARTIES FURTHER HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY
WITH RESPECT TO ANY LAWSUIT OR JUDICIAL PROCEEDING ARISING OR RELATING TO THIS AGREEMENT.
(e) No Party to this Agreement shall be liable to any other Party hereto for losses due to, or if it is unable to perform its obligations under the terms of this Agreement because of, acts of God, fire, war, terrorism, floods, strikes, electrical outages, equipment or transmission failure, or other causes reasonably beyond its control; provided that a Party affected by any such event shall exercise commercially reasonable efforts to resume performance as quickly as possible. (f) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. All signatures of the Parties to this Agreement may be transmitted by facsimile or by digital pdf transmission, and such facsimile or pdf will, for all purposes, be deemed to be the original signature of such Party whose signature it reproduces, and will be binding upon such Party. (g) The Custodian shall not be under any obligation to invest or pay interest on amounts held in the Assigned PPA Payments Account from time to time. (h) Issuer shall have only such duties under this Agreement as are expressly set forth herein as duties on its part to be performed, and no implied duties shall be read into this Agreement against Issuer.
Section 12. Compliance with Court Orders. In the event that any amount held by the Custodian hereunder shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall Item 3
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9 be made or entered by any court affecting the property deposited under this Agreement, the Custodian is hereby expressly authorized, in its sole discretion, to obey and comply with all writs, orders or decrees so entered or issued, which it is advised by legal counsel of its own choosing are binding upon it, whether with or without jurisdiction, and in the event that the Custodian obeys or complies with any such writ, order or decree it shall not be liable to any of the Parties hereto or to any other person, firm or corporation, by reason of such compliance notwithstanding that such writ, order or decree may be subsequently reversed, modified, annulled, set aside or vacated.
Section 13. Term; Winding Up. This Agreement will expire concurrently with the receipt of written notice from PPA Buyer, with a copy to the other Parties, that the Power Supply Agreement has terminated in accordance with its terms. Following the Custodian’s payment of any Monthly Gross Amount due in respect of the final Month of power deliveries prior to such a termination, any remaining balance in the Assigned PPA Payments Account shall be paid to PPA Buyer.
Section 14. Indemnification. MSCG, MSES and PPA Buyer, jointly and severally, agree to protect, indemnify, defend and hold harmless, the Custodian, and affiliates, and each person who controls the Custodian (and each of their respective directors, officers, agents and employees) from and against all claims, losses, liabilities, actions, suits, costs, judgments and expenses (including court costs and reasonable attorneys’ fees) arising from its acting as Custodian hereunder (including, for the avoidance of doubt, any costs, expenses and reasonable attorneys’ fees incurred in enforcing any payment obligation of an indemnifying Party), except for any claim, damage or loss resulting from the gross negligence or willful misconduct of the Custodian; provided, however, that any amounts due under this Section 14 shall not duplicate any other amounts due under this Agreement, including without limitation amounts due under Section 8 hereof. The obligations of this Section 14 shall survive any resignation or removal of the Custodian and the termination of this Agreement. In addition, notwithstanding anything herein to the contrary, the Custodian and Issuer shall have all of the rights (including the indemnification rights), benefits, privileges and immunities under this Agreement as are granted to Issuer under the Bond Indenture, all of which are incorporated, mutatis mutandis, into this Agreement.
Section 15. Patriot Act. MSCG, MSES and PPA Buyer acknowledge that the Custodian is subject to federal laws, including the Customer Identification Program (“CIP”) requirements under the USA PATRIOT Act and its implementing regulations, pursuant to which the Custodian must obtain, verify and record information that allows the Custodian to identify MSCG, MSES and PPA Buyer. Accordingly, prior to opening the Assigned PPA Payments Account described in Section 4 of this Agreement, the Custodian will ask MSCG, MSES and PPA Buyer to provide certain information including but not limited to name, physical address, tax identification number and other information that will help the Custodian identify and verify MSCG’s, MSES’s and PPA Buyer’s identities, such as organizational documents, certificate of good standing, license to do business, or other pertinent identifying information. MSCG, MSES and PPA Buyer agree that the Custodian cannot open any account hereunder unless and until the Custodian verifies MSCG’s, MSES’s and PPA Buyer’s identities in accordance with its CIP. [Signature Pages Follow]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered by their respective duly authorized officers as of the date first written above.
SILICON VALLEY CLEAN ENERGY
AUTHORITY
By:___________________________________
Name: _____________________________
Title: ______________________________
Taxpayer ID Number:_________________
MORGAN STANLEY CAPITAL GROUP
INC.
By:___________________________________
Name: _____________________________
Title: ______________________________
Taxpayer ID Number: _________________
MORGAN STANLEY ENERGY
STRUCTURING, L.L.C.
By:___________________________________
Name: ________________________________
Title: _________________________________
Taxpayer ID Number:____________________
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.
By:___________________________________
Name: _____________________________
Title: ______________________________
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EXHIBIT A
ASSIGNED PPAS
1. [Description to come.]
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EXHIBIT B
NOTICE INFORMATION
PPA Buyer:
Silicon Valley Clean Energy Authority
333 W. El Camino Real Suite 330
Sunnyvale, CA 94087
Email: [email protected]
SVCE Payment Information:
Bank Name: River City Bank
Bank Routing Number: 121133416
Account Number: 6042313416
FBO: Silicon Valley Clean Energy Authority
MSCG:
Morgan Stanley Capital Group Inc.
1585 Broadway
New York, NY 10036-8293
Email: [_____]
MSES:
Morgan Stanley Energy Structuring, L.L.C.
1585 Broadway
New York, NY 10036-8293
Email: [_____]
Custodian:
The Bank of New York Mellon Trust Company, N.A.
4655 Salisbury Road, Suite 300
Jacksonville, Florida 32256
Attention: Corporate Trust
Fax: 904.645.1998
Email: [email protected]
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SM Draft 23 September 2022
PREPAID ENERGY SALES AGREEMENT
between
MORGAN STANLEY ENERGY STRUCTURING, L.L.C.
and
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
Dated as of [____], 2022
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TABLE OF CONTENTS
Page
-i-Article I. Definitions..................................................................................................................... 1 Section 1.1 Defined Terms ..................................................................................... 1 Section 1.2 Definitions; Interpretation .................................................................. 10 Article II. Execution Date and Delivery Period ...................................................................... 10 Section 2.1 Execution Date; Delivery Period ....................................................... 10 Section 2.2 Termination by Seller Prior to Prepayment ....................................... 10 Article III. Sale And Purchase .................................................................................................. 11 Section 3.1 Sale and Purchase of Energy .............................................................. 11 Section 3.2 Prepayment ........................................................................................ 11 Section 3.3 No Obligation to Take Base Energy .................................................. 11 Section 3.4 Reduction of Contract Quantity ......................................................... 11 Article IV. Failure to Deliver or Take Energy ........................................................................ 12 Section 4.1 Assigned Product ............................................................................... 12 Section 4.2 Failure to Deliver or Take Due to Force Majeure.............................. 12 Article V. Transmission and Delivery; Communications ...................................................... 12 Section 5.1 Delivery of Energy ............................................................................. 12 Section 5.2 Scheduling.......................................................................................... 13 Section 5.3 Title and Risk of Loss ........................................................................ 13 Section 5.4 PCC1 Product and Long-Term PCC1 Product .................................. 13 Section 5.5 Deliveries within CAISO or Another Balancing Authority ............... 16 Section 5.6 Assigned Products .............................................................................. 16 Article VI. Partial Assignments of PPAs ................................................................................. 16 Section 6.1 Future PPA Assignments ................................................................... 16 Section 6.2 Updates to Exhibits A-1 and A-2 ....................................................... 16 Article VII. Energy Remarketing ............................................................................................. 16 Article VIII. Representations and Warranties ........................................................................ 17 Section 8.1 Representations and Warranties ......................................................... 17 Section 8.2 Additional Representations and Warranties of Buyer ....................... 18 Section 8.3 Warranty of Title................................................................................ 19 Article IX. Taxes ........................................................................................................................ 19 Item 3
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TABLE OF CONTENTS
(continued)
Page
-ii-Article X. Dispute Resolution.................................................................................................... 20 Section 10.1 Arbitration .......................................................................................... 20 Section 10.2 Dispute Resolution. ............................................................................ 20 Article XI. Force Majeure ......................................................................................................... 22 Section 11.1 Applicability of Force Majeure .......................................................... 22 Section 11.2 Settlement of Labor Disputes............................................................. 23 Article XII. Governmental Rules and Regulations ................................................................. 23 Section 12.1 Compliance with Laws ...................................................................... 23 Section 12.2 Contests .............................................................................................. 23 Section 12.3 Defense of Agreement ....................................................................... 23 Article XIII. Assignment ........................................................................................................... 23 Article XIV. Payments ............................................................................................................... 24 Section 14.1 Monthly Statements ........................................................................... 24 Section 14.2 Payment.............................................................................................. 25 Section 14.3 Payment of Disputed Amounts .......................................................... 25 Section 14.4 Late Payment ..................................................................................... 25 Section 14.5 Audit; Adjustments ............................................................................ 25 Section 14.6 Netting................................................................................................ 26 Article XV. Receivables Purchases ........................................................................................... 26 Article XVI. Notices ................................................................................................................... 26 Article XVII. Default; Remedies; Termination ....................................................................... 27 Section 17.1 Seller Default ..................................................................................... 27 Section 17.2 Buyer Default ..................................................................................... 27 Section 17.3 Non-Default Termination Events ....................................................... 28 Section 17.4 Remedies and Termination ................................................................ 30 Section 17.5 Replacement of Swaps ....................................................................... 32 Section 17.6 Limitation on Damages ...................................................................... 33 Section 17.7 Option to Purchase Bonds .................................................................. 34 Section 17.8 Termination Payment Adjustment Schedule ..................................... 34 Article XVIII. Miscellaneous .................................................................................................... 34 Item 3
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TABLE OF CONTENTS
(continued)
Page
-iii-Section 18.1 Indemnification Procedure ................................................................. 34 Section 18.2 Deliveries ........................................................................................... 35 Section 18.3 Entirety; Amendments ....................................................................... 35 Section 18.4 Governing Law .................................................................................. 36 Section 18.5 Non-Waiver........................................................................................ 36 Section 18.6 Severability ........................................................................................ 37 Section 18.7 Exhibits .............................................................................................. 37 Section 18.8 Winding Up Arrangements ................................................................ 37 Section 18.9 Relationships of Parties...................................................................... 37 Section 18.10 Immunity ............................................................................................ 37 Section 18.11 Rates and Indices ............................................................................... 37 Section 18.12 Limitation of Liability........................................................................ 39 Section 18.13 Counterparts ....................................................................................... 39 Section 18.14 Rights of Trustee ................................................................................ 39 Section 18.15 Waiver of Defenses ............................................................................ 39 Section 18.16 U.S. Resolution Stay. ......................................................................... 39 Section 18.17 Rate Changes ..................................................................................... 40 Exhibit A-1 - Base Energy Hourly Quantities
Exhibit A-2 - EPS Energy Period Monthly Quantity
Exhibit B - Notices
Exhibit C - Energy Remarketing
Exhibit D - Termination Payment Schedule
Exhibit D-1 - Termination Payment Adjustment Schedule
Exhibit E - Form of Morgan Stanley Guarantee
Exhibit F - Pricing and Other Terms
Exhibit G - Receivables Purchases
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1 PREPAID ENERGY SALES AGREEMENT
This Prepaid Energy Sales Agreement (hereinafter “Agreement”) is made and entered into as of [____], 2022 (the “Execution Date”), by and between Morgan Stanley Energy Structuring, L.L.C., a Delaware limited liability company (“Seller”), and 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) (“Buyer”).
W I T N E S S E T H:
WHEREAS, Seller desires to sell electricity to Buyer, and Buyer desires to purchase electricity from Seller, upon the terms and conditions hereinafter set forth; and WHEREAS, concurrently with Buyer’s execution of the Power Supply Contract (as defined below), the Project Participant (as defined below) under such Power Supply Contract will assign to Seller certain Assigned Rights and Obligations, including the right to receive Assigned Product, which Assigned Product will be resold to Buyer hereunder and then resold to the Project Participant under the Power Supply Contract.
NOW, THEREFORE, in consideration of the premises above and the mutual covenants and agreements herein set forth, Buyer and Seller (the “Parties” hereto; each is a “Party”) agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Defined Terms. 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:
“Affiliate” means, with respect to either Party, any entity which is a direct or indirect parent or subsidiary of such Party or which directly or indirectly (i) owns or controls such Party, (ii) is owned or controlled by such Party, or (iii) is under common ownership or control with such Party. For purposes of this definition, “control” of an entity means the power, directly or indirectly, either to (a) vote 50% or more of the securities having ordinary voting power for the election of directors or Persons performing similar functions or (b) direct or cause the direction of the management and policies, whether by contract or otherwise. “Agreement” has the meaning specified in the preamble and shall include exhibits, recitals and attachments referenced herein and attached hereto and all amendments, supplements and modifications hereto and thereto.
“Assigned Delivery Point” has the meaning specified in the applicable Assignment Agreement.
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2 “Assigned Energy” has the meaning specified in the applicable Assignment Agreement; provided that any Assigned Energy shall be EPS Compliant Energy as set forth in the Assignment Letter Agreement.
“Assigned Product” means, as applicable, PCC1 Product, Long-Term PCC1 Product, Assigned Energy, Assigned RECs and any other product included in an Assignment Agreement.
“Assigned RECs” means any RECs to be delivered to MSCG or Seller pursuant to any Assigned Rights and Obligations.
“Assigned Rights and Obligations” means a portion of the Project Participant’s rights and obligations under a power purchase agreement assigned pursuant to an 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” means that certain Letter Agreement, dated as of the date hereof, by and among MSCG, Seller, Buyer and Project Participant. “Automatic Non-Default Termination Event” has the meaning specified in Section
17.3(b).
“Available Discount” has the meaning specified in the Re-Pricing Agreement. “Balancing Authority” has the meaning specified in the CAISO Tariff. “Base Energy” means Firm (LD) Energy to be delivered to an Energy Delivery Point.
“Billing Statement” has the meaning specified in Section 14.1(b). “Bond Closing Date” means the first date on which the Bonds are issued pursuant to the Bond Indenture.
“Bond Documents” means this Agreement, the Power Supply Contract, the Bond Indenture and all other documents, agreements and instruments entered into or delivered by Buyer in connection with any of the foregoing or the transactions thereunder. “Bond Indenture” means (i) the Trust Indenture to be entered into prior to the commencement of the Delivery Period between Buyer and the Trustee, as supplemented and amended from time to time in accordance with its terms, and (ii) any trust indenture entered into in connection with the commencement of any Interest Rate Period after the initial Interest Rate Period between Buyer and the Trustee containing substantially the same terms as the indenture described in clause (i) and which is intended to replace the indenture described in clause (i) as of the commencement of such Interest Rate Period.
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3 “Bonds” means the bonds issued pursuant to the Bond Indenture. “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a Federal Reserve Bank Holiday, (iii) any other day on which commercial banks in either New York, New York or the State of California are authorized or required by Law to close, or (iv) any other day excluded pursuant to the Bond Indenture.
“Buyer” has the meaning specified in the preamble.
“Buyer Custodial Agreement” means that certain Custodial Agreement, dated as of the Bond Closing Date, by and among the Swap Counterparty, Buyer, the Trustee and The Bank of New York Mellon Trust Company, N.A., as custodian, as the same may be amended, modified or supplemented from time to time.
“Buyer Default” has the meaning specified in Section 17.2. “Buyer Swap” means (i) the transaction confirmation entered into under the ISDA Master Agreement, dated as of the date hereof, by Buyer and the Swap Counterparty, and (ii) each replacement Buyer Swap entered into pursuant to Section 17.5. “Buyer’s Statement” has the meaning specified in Section 14.1(a). “CAISO” means California Independent System Operator or its successor. “CAISO Tariff” means CAISO’s FERC-approved tariff, as modified, amended or supplemented from time to time
“California Long-Term Contracting Requirements” means the long-term contracting requirement set forth in the Clean Energy and Pollution Reduction Act of 2015 (SB 350), California Public Utilities Code section 399.13(b), and CPUC Decision 17-06-026 and CPUC Decision 18-05-026, as may be modified by subsequent decision of the California Public Utilities Commission or by other Law.
“Call Option Notice” has the meaning specified in Exhibit G. “Claiming Party” has the meaning specified in Section 11.1. “Claims” means all claims or actions, threatened or filed, that directly or indirectly relate to the indemnities provided herein, 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. “Commercially Reasonable” or “Commercially Reasonable Efforts” means, with respect to any purchase or sale or other action required to be made, attempted or taken by a Party under this Agreement, such efforts as a reasonably prudent Person would undertake for the protection of its own interest under the conditions affecting such purchase or sale or other action, including without limitation, the amount of notice of the need to take such action, the duration and Item 3
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4 type of the purchase or sale or other action, the competitive environment in which such purchase or sale or other action occurs, and the risk to the Party required to take such action. [“Contract Fixed Price” means the fixed price set forth in the Initial Assignment Agreement between Buyer and the Project Participant.]1
“Contract Index Price” means the index price specified on Exhibit A-1 with respect to the Hourly Quantity of Energy (which index prices may be Day-Ahead Market Price or Real-Time Market Price). “Contract Quantity” means, with respect to each Month during the Delivery Period, (i) the Monthly Quantity of Assigned Energy set forth in Exhibit A-2 for such Month and (ii) the Hourly Quantity of Base Energy set forth in Exhibit A-1 for such Month, as such Exhibits A-1 and A-2 shall be updated from time to time in accordance with Section 6.2. “Custodial Agreements” means the Buyer Custodial Agreement and the Seller Custodial Agreement.
“Daily Basis Differential” has the meaning specified in Section 18.11(a)(ii). “Daily Commodity Reference Price” means (A) the Day-Ahead Market Price, (B) the Day-Ahead Average Price or (C) the Real-Time Market Price. “Daily Replacement Index” has the meaning specified in Section 18.11(a)(ii). “Day-Ahead Average Price” means, for any Assigned Energy after the Initial EPS Energy Period, (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 CAISO establishes a separate price. “Day-Ahead Market Price” means the Day Ahead Market or Locational Marginal Price for the Energy Delivery Point for each applicable hour as published by CAISO, or as such price may be corrected or revised from time to time by such independent system operator or other entity in accordance with its rules.
“Default Rate” means, as of any date of determination, the lesser of (a) the sum of (i) the rate of interest per annum quoted in The Wall Street Journal (Eastern Edition) under the “Money Rates” section as the “Prime Rate” for such date of determination, plus (ii) one percent per annum, or (b) if a lower maximum rate is imposed by applicable Law, such maximum lawful rate.
“Delivery Hours” means each Hour commencing at 00:00 (PPT) on the first day of the Delivery Period, and each Hour thereafter during the Delivery Period. “Delivery Period” has the meaning specified in Exhibit F. 1 SM NTD: Subject to confirmation of whether the Initial Assigned PPA will be fixed or floating price.
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5 “Delivery Point” means (i) the applicable Assigned Delivery Point(s) for Assigned Energy and (ii) the applicable Energy Delivery Point for Base Energy (as set forth in Exhibits A-1 and A-2). “Early Termination Date” means a date designated pursuant to Section 17.4(a) or Section 17.4(b) upon which the Delivery Period will end and Buyer’s and Seller’s respective obligations to receive and deliver Energy under this Agreement will terminate. “Early Termination Payment Date” has the meaning specified in Section 17.4(d). “Energy” means three-phase, 60-cycle alternating current electric energy, expressed in MWhs.
“Energy Delivery Point” has the meaning specified in Exhibit A-1. “Energy Project” has the meaning specified in the Bond Indenture. “EPS” means California’s Emissions Performance Standards, as set forth in Sections 8340 and 8341 of the California Public Utilities Code, as implemented and amended from time to time, and any successor Law.
“EPS Compliant Energy” means Energy that the Project Participant can contract for and purchase in compliance with EPS requirements that are applicable to such Project Participant.
“EPS Energy Period” means the Initial EPS Energy Period and any subsequent EPS Energy Period established by future assignments of power purchase agreements consistent with the Assignment Letter Agreement.
“Execution Date” has the meaning specified in the preamble. “Failed Remarketing” has the meaning specified in the Bond Indenture. “FERC” means the Federal Energy Regulatory Commission and any successor thereto.
“Firm (LD)” means, with respect to the obligation to deliver Energy, that either Party shall be relieved of its obligations to sell and deliver or purchase and receive without liability only to the extent that, and for the period during which, such performance is prevented by Force Majeure. In the absence of Force Majeure, the Party to which performance is owed shall be entitled to receive from the Party which failed to deliver/receive an amount determined pursuant to Article IV.
“Force Majeure” means an event or circumstance which prevents one Party from performing its obligations under this Agreement, which event or circumstance was not anticipated as of the Execution Date, which is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure shall not be based on (i) the Item 3
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6 loss of Buyer’s markets; (ii) Buyer’s inability economically to use or resell any Energy purchased hereunder; (iii) the loss or failure of Seller’s supply except if such loss or failure results from curtailment by a Transmission Provider; or (iv) Seller’s ability to sell the Energy at a higher price.
Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a Transmission Provider unless (a) such Party (or an upstream supplier with respect to Seller or the Project Participant with respect to Buyer) has contracted for firm transmission with such Transmission Provider for the Energy to be delivered to or received at the Energy Delivery Point and (b) such curtailment is due to “force majeure” or “uncontrollable force” or a similar term as defined under the Transmission Provider’s tariff; provided, however, that existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that Force Majeure as defined in the first sentence hereof has occurred.
Notwithstanding the foregoing or anything to the contrary herein, (I) to the extent that a PPA Supplier fails to deliver any Assigned Energy and claims force majeure with respect to such failure to deliver, then such event shall be deemed to constitute Force Majeure in respect of Seller hereunder; and (II) to the extent that an Assignment Agreement is terminated early, such termination shall constitute Force Majeure with respect to Seller until the earlier of (A) the commencement of an “Assignment Period” under a replacement Assignment Agreement, (B) the commencement of the delivery of EPS Compliant Energy procured by MSCG consistent with the Assignment Letter Agreement or (C) the end of the second Month following the Month in which such early termination occurs.
“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.
“Governmental Approval” means any authorization, consent, approval, license, ruling, permit, exemption, variance, order, judgment, decree, or similar action by any Government Agency relating to the execution, delivery or performance of this Agreement as any of the foregoing are in effect as of the Execution Date.
“Hour” means each 60-minute period commencing at 00:00 (PPT) on the first day of the Delivery Period. The term “Hourly” shall be construed accordingly. “Hourly Quantity” means, with respect to each Delivery Hour during the Delivery Period, the quantity (in MWh) of Base Energy set forth on Exhibit A-1 for the Month in which such Delivery Hour occurs (as such Exhibit A-1 may be updated from time to time in accordance with Section 6.2).
“Initial Assignment Agreement” means that certain Limited Assignment Agreement, dated as of the date hereof, by and among the Project Participant, MSCG, Seller and Buyer.
“Initial EPS Energy Period” means the “Assignment Period” as defined in the Initial Assignment Agreement.
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7 [“Initial PPA Supplier” means MSCG.]2
“Interest Rate Period” has the meaning specified in the Bond Indenture, provided that if the Bonds are outstanding in two or more series with separate, concurrent and co-terminus Interest Rate Periods, “Interest Rate Period” shall mean all such Interest Rate Periods collectively. “Interest Rate Swap” has the meaning specified in the Bond Indenture. “Law” means any statute, law, rule or regulation or any judicial or administrative interpretation thereof having the effect of the foregoing enacted, promulgated, or issued by a Government Agency whether in effect as of the Execution Date or at any time in the future. “Long-Term PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1, and the California Long-Term Contracting Requirements, to be delivered to MSCG, Seller or any successors thereto pursuant to any Assigned Rights and Obligations.
“Mandatory Purchase Date” has the meaning specified in the Bond Indenture. “Minimum Discount” has the meaning specified in the Power Supply Contract. “Month” means a calendar month. The term “Monthly” shall be construed accordingly.
“Monthly Quantity” means, with respect to each Month of the Delivery Period for which, the quantity (in MWh) of Assigned Energy for such Month as set forth on Exhibit A-2 (as such Exhibit A-2 may be updated from time to time in accordance with Section 6.2). “Morgan Stanley” means Morgan Stanley, a Delaware corporation. “Morgan Stanley Guarantee” means a guarantee of Morgan Stanley of Seller’s payment obligations under this Agreement in the form attached hereto as Exhibit E. “MSCG” means Morgan Stanley Capital Group Inc., a Delaware corporation. “MWh” means megawatt-hour.
“Optional Non-Default Termination Event” has the meaning specified in Section
17.3(a).
“Party” has the meaning specified in the recitals.
“PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1 to be delivered to MSCG, Seller or any successors thereto pursuant to any Assigned Rights and Obligations. 2 SM NTD: Subject to change depending SVCE’s RFP process.
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8 “Person” means any individual, limited liability company, corporation, partnership, joint venture, trust, unincorporated organization or Government Agency. “Portfolio Content Category 1” means any Renewable Energy Credit associated with the generation of electricity from an “Eligible Renewable Energy Resource” consisting of the portfolio content set forth in California Public Utilities Code Section 399.16(b)(1), as may be amended from time to time or as further defined or supplemented by Law. “Power Supply Contract” has the meaning specified in the Bond Indenture. “PPA Supplier” means the Initial PPA Supplier and any subsequent supplier who enters into an Assignment Agreement consistent with the Assignment Letter Agreement. “PPT” means Pacific Prevailing Time.
“Prepayment” means the amount specified in Exhibit F.
“Prepayment Outside Date” means the date specified in Exhibit F. “Project Participant” means Silicon Valley Clean Energy Authority, a joint powers authority organized pursuant to the provisions of Title 1, Division 7, Chapter 5, Article 1 (Section 6500 et seq.) of the California Government Code.
“PSC Remarketing Election” means, with respect to the Power Supply Contract, that the Project Participant delivered a Remarketing Election Notice (as defined thereunder) for any Reset Period.
“Put Option Notice” has the meaning specified in Exhibit G. “Re-Pricing Agreement” means the Re-Pricing Agreement, dated as of the Bond Closing Date, by and between Buyer and Seller.
“Real-Time Market Price” means The Five Minute Market (FMM) Locational Marginal Price for the Energy Delivery Point for each applicable interval as published by CAISO, or as such price may be corrected or revised from time to time by such independent system operator or other entity in accordance with its rules.
“Remarketing Non-Default Termination Event” has the meaning specified in Exhibit C.
“Remarketing Notice” has the meaning specified in Exhibit C. “Renewable Energy Credit” or “REC” has the meaning specified for “Renewable Energy Credit” in California Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by Law. “Repurchase Offer” has the meaning specified in Exhibit G. “Reset Period” means each “Reset Period” under the Re-Pricing Agreement.
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9 “Schedule”, “Scheduled” or “Scheduling” means the actions of Seller, Buyer and/or their designated representatives, including each Party’s Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity of Energy to be delivered during any given portion of the Delivery Period at a specified Delivery Point. “Seller” has the meaning specified in the preamble.
“Seller Custodial Agreement” means that certain Custodial Agreement, dated as of the Bond Closing Date, by and among the Swap Counterparty, Seller, the Trustee and The Bank of New York Mellon Trust Company, N.A., as custodian, as the same may be amended, modified or supplemented from time to time.
“Seller Default” has the meaning specified in Section 17.1. “Seller Specified Termination” has the meaning specified in Section 17.5. “Seller Swap” means (i) the transaction confirmation entered into under the ISDA Master Agreement, dated as of the date hereof, by Seller and the Swap Counterparty, and (ii) each replacement Seller Swap entered into pursuant to Section 17.5. “Specified Discount” means the amount specified in Exhibit F. “Specified Fixed Price” means the amount specified in Exhibit F. “Specified Investment Agreement” means a guaranteed investment contract between the Trustee and a provider concerning the investment of funds in the Debt Service Account (as defined in the Bond Indenture).
“Swap Counterparty” means Royal Bank of Canada, a bank organized under the laws of Canada, and any other Person that becomes counterparty to Buyer under a Buyer Swap or to Seller under a Seller Swap, in each case pursuant to Section 17.5. “Swap Replacement Period” has the meaning specified in Section 17.5(a). “Terminating Party” means any Party that has the right to terminate this Agreement pursuant to Article XVII.
“Termination Payment” means, with respect to any Early Termination Payment Date, the amount specified on Exhibit D for the calendar month in which such Early Termination Payment Date occurs (as adjusted by any applicable Termination Payment Adjustment Amount) without any set-off or netting of amounts then due from Buyer. “Termination Payment Adjustment Amount” means, with respect to any Early Termination Payment Date, the amount specified on Exhibit D-1 for the calendar month in which such Early Termination Payment Date occurs. For the avoidance of doubt, the Termination Payment Adjustment Amount for the period commencing on the Execution Date is zero (0).
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10 “Termination Payment Adjustment Schedule” means the schedule of Termination Payment Adjustment Amounts set forth in Exhibit D-1, as such exhibit may be populated and amended from time to time in accordance with Section 17.8. “Transaction Documents” has the meaning specified in Article XIII. “Transmission Provider(s)” means any entity or entities transmitting or transporting Energy on behalf of Seller or Buyer to or from an Energy Delivery Point. “Trustee” means The Bank of New York Mellon Trust Company, N.A., and its successors as Trustee under the Bond Indenture.
“WREGIS” means the Western Renewable Energy Generation Information System or its successor.
Section 1.2 Definitions; Interpretation. References to “Articles,” “Sections,” “Schedules” and “Exhibits” shall be to Articles, Sections, Schedules and Exhibits, as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the scope of such general statement, term or matter. Any reference herein to any agreement or document includes all amendments, supplements or restatements to and of such agreement or document as may occur from time to time, and any reference to a party to any such agreement includes all successors and assigns of such party thereunder permitted by the terms hereof and thereof.
ARTICLE II.
EXECUTION DATE AND DELIVERY PERIOD
Section 2.1 Execution Date; Delivery Period. This Agreement shall become effective upon the Execution Date and, unless this Agreement is terminated early pursuant to Section 2.2, all of Seller’s and Buyer’s obligations under this Agreement shall be deemed to have been incurred upon the Execution Date. Unless this Agreement is terminated pursuant to Section
2.2, then, upon receipt of the Prepayment, the delivery of Energy under this Agreement shall commence and continue for the Delivery Period, unless an Early Termination Date occurs.
Section 2.2 Termination by Seller Prior to Prepayment. Seller shall have no obligation to perform under this Agreement unless and until it has received the Prepayment from Buyer pursuant to Section 3.2. In the event Seller has not received the Prepayment prior to noon local time in New York, New York on the Prepayment Outside Date, Seller shall have the right, until such Prepayment has been paid, to terminate this Agreement without any further obligation or liability of either Party; provided that, for the avoidance of doubt, in the event Seller so Item 3
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11 terminates, such termination shall be effective upon the Prepayment Outside Date regardless of whether Buyer tenders the Prepayment after Seller’s notice of termination but prior to the Prepayment Outside Date. For the avoidance of doubt, no Termination Payment shall be payable by Seller under any circumstances if this Agreement terminates pursuant to this Section 2.2.
ARTICLE III.
SALE AND PURCHASE
Section 3.1 Sale and Purchase of Energy.
(a) Seller agrees to sell and deliver or cause to be delivered to Buyer, and Buyer agrees to take or cause to be taken from Seller, in each case, on a Firm (LD) basis, the Contract Quantity pursuant to the terms and conditions set forth in this Agreement. Energy delivered to Buyer under this Agreement shall be re-delivered to the Project Participant [on a fixed price basis during the Initial EPS Energy Period and thereafter on a floating price basis]3. (b) In recognition that Seller will have increased floating price payment obligations to the Swap Counterparty under the Seller Swap with respect to negatively priced Energy and the Swap Counterparty will have increased floating price payment obligations to Buyer under the Buyer Swap with respect to negatively priced Energy, the Parties acknowledge and agree that Seller shall have no payment obligations to Buyer under this Agreement with respect to negatively priced Energy. Furthermore, with respect to any negatively priced Energy remarketed pursuant to this Agreement, Seller’s payment obligations under Exhibit C shall be reduced to the extent that such Energy is negatively priced.
Section 3.2 Prepayment. Prior to the commencement of the Delivery Period, Buyer shall pay Seller for all Energy to be delivered during the Delivery Period in an amount equal to the Prepayment, and Seller shall accept the Prepayment as payment in full for all Energy to be delivered hereunder. Buyer shall pay the Prepayment in a single lump sum payment by wire transfer of immediately available funds to an account designated by Seller. In no event shall Buyer be entitled to any rebate or refund of the Prepayment, but nothing in this Section 3.2 shall limit Buyer’s rights under (i) Article IV for Seller’s failure to deliver Energy (whether or not excused), (ii) Article XVII upon early termination of this Agreement or (iii) Exhibit C with respect to remarketing of Energy in accordance therewith. In no event shall Buyer be required to pay the Prepayment unless and until the Bonds are issued in exchange for a purchase price sufficient to pay costs of issuance, to fund required reserves under the Bond Indenture (or purchase surety bonds or enter into any similar arrangements in lieu of funding such reserves), and to pay the Prepayment.
Section 3.3 No Obligation to Take Base Energy. Notwithstanding anything to the contrary in this Agreement, Buyer shall not be required to purchase and receive any Base Energy hereunder, and Seller shall remarket any portion of the Contract Quantity that is Base Energy pursuant to the provisions of Exhibit C.
Section 3.4 Reduction of Contract Quantity. The Parties recognize and agree that the Contract Quantity may be reduced in a Reset Period pursuant to the re-pricing 3 SM NTD: Subject to confirmation of whether the Initial Assigned PPA will be fixed or floating price.
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12 methodology described in the Re-Pricing Agreement if necessary to achieve a successful remarketing of the Bonds. The Parties agree further that if, pursuant to the Re-Pricing Agreement, Buyer and the Calculation Agent (as defined in the Bond Indenture) determine in connection with the establishment of any new Reset Period that: (i) such Reset Period will be the final Reset Period and (ii) such Reset Period will end prior to the end of the original Delivery Period, then (A) the Delivery Period will be deemed to be modified so that it ends at the end of such Reset Period, and (B) the Contract Quantity for the last Month in such Reset Period may be reduced as provided in the Re-Pricing Agreement.
ARTICLE IV.
FAILURE TO DELIVER OR TAKE ENERGY
Section 4.1 Assigned Product. Notwithstanding anything herein to the contrary, neither Seller nor Buyer shall have any liability or other obligation to one another under this Agreement for any failure to Schedule, take, or deliver Assigned Product other than as set forth in (a) Section 5(a) of Exhibit C for any failure to Schedule, take or deliver not due to Force Majeure and (b) Section 4.2 regarding a failure to Schedule, take or deliver due to Force Majeure.
Section 4.2 Failure to Deliver or Take Due to Force Majeure. If with respect to all or any portion of the Contract Quantity (including any Base Energy or Assigned Energy):
(a) Buyer fails to take or Seller fails to deliver all or any portion of the Contract Quantity at any Delivery Point pursuant to the terms of this Agreement; and (b) such failure is due to Force Majeure claimed by either Party, then Seller shall pay to Buyer the result determined by the following formula with respect to each such Delivery Point:
P = Q x IP
Where:
P = The amount payable by Seller under this Section 4.2; Q = The quantity of Energy described in the lead-in to this Section 4.2; and
IP = (i) With respect to Base Energy, the Contract Index Price applicable to such Delivery Hour and Energy Delivery Point for Base Energy; and (ii) with respect to Assigned Energy, (A) the Contract Fixed Price during the Initial EPS Energy Period, and (B) the Day-Ahead Average Price with respect to any other EPS Energy Period.
ARTICLE V.
TRANSMISSION AND DELIVERY; COMMUNICATIONS
Section 5.1 Delivery of Energy.
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13 (a) Assigned Product. All Assigned Energy delivered under this Agreement shall be Scheduled at the applicable Assigned Delivery Point and in accordance with the terms of the applicable Assignment Agreement. All other Assigned Product shall be delivered consistent with the terms of the applicable Assignment Agreement. Except as set forth in the two foregoing sentences, Buyer and Seller shall have no liability or obligations under this Article V with respect to Assigned Product.
(b) Updates to Exhibits. Buyer and Seller may, upon mutual agreement, update Exhibit A-1 to modify the Delivery Points thereunder, provided that the Parties shall promptly notify any Swap Counterparty of any such updates and furthermore shall update the corresponding exhibits to any Buyer Swap and any Seller Swap in accordance with the terms thereof.
Furthermore, following the Initial EPS Energy Period and thereafter in connection with the establishment, expiration or termination of any subsequent EPS Energy Period, the Parties shall update (i) the exhibits hereto in accordance with Section 6.2 and (ii) the exhibits to any Buyer Swap and any Seller Swap in accordance with the terms thereof. For the avoidance doubt, such updates will reflect that deliveries will be made to (A) the Energy Delivery Point at the Day-Ahead Market Price for any Base Energy and (B) an Assigned Delivery Point at the Day-Ahead Average Price for any Assigned Energy.
Section 5.2 Scheduling. Scheduling of Assigned Energy shall be in accordance with the applicable Assignment Schedule.
Section 5.3 Title and Risk of Loss. The transfer of title and risk of loss for all Assigned Product other than Assigned Energy shall be in accordance with the applicable Assignment Agreement; provided that all Assignment Agreements shall provide for the transfer of Renewable Energy Credits in accordance with WREGIS.
Section 5.4 PCC1 Product and Long-Term PCC1 Product. To the extent that any Assigned Product is PCC1 Product or Long-Term PCC1 Product, the following provisions apply:
(a) Eligibility. Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) the Project qualifies and is certified by the CEC as an Eligible Renewable Energy Resource (“ERR”) as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Project’s output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC 6, Non-Modifiable. (Source: D.07-11-025, Attachment A.) D.08-04-009]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned Agreement. (b) Transfer of Renewable Energy Credits. Seller and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement the Renewable Energy Credits transferred to Buyer conform to the definition and attributes required for compliance with the California Renewables Portfolio Standard, as set forth in California Public Utilities Commission Decision 08-08-028, and as may be modified by subsequent decision of the Item 3
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14 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, Non-modifiable. D.11-01- 025]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned Agreement.
(c) Tracking of RECs in WREGIS. 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, Non-modifiable. D.11-01-025]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned Agreement. (d) 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, Non-Modifiable. (Source: