ARTICLE 8
INVOICING AND PAYMENT; CREDIT
8.1 Invoicing. Seller shall use commercially reasonable efforts to deliver an invoice to Buyer for Product no later than the tenth (10th) day of each month for the previous calendar month.
Each invoice shall reflect (a) records of metered data, including, to the extent the available, (i) CAISO metering and transaction data reflecting the amount of Product delivered by the Facility for any Settlement Period during the preceding month, including the amount of Charging Energy and the amount of Discharging Energy, in each case as read by the Facility Meter, and the amount of Replacement RA delivered to Buyer (if any) and (ii) Seller’s records of metered data, including data showing a calculation of the Monthly Capacity Payment and other relevant data for the prior month; and (b) be in a format reasonably specified by Buyer, covering the Product provided in the preceding month determined in accordance with the applicable provisions of this Agreement.
Beginning on the Commercial Operation Date, Buyer shall, and shall cause its Scheduling Coordinator to, provide Seller with all reasonable access (including, in real time, to the maximum extent reasonably possible) to any records, including invoices or settlement data from the CAISO, forecast data and other information, all as may be necessary from time to time for Seller to prepare and verify the accuracy of all invoices; provided, however, that the Parties acknowledge and agree that CAISO metering and transaction data showing the amount of Product delivered by the Facility for any Settlement Period during the prior month may not be available or be final at the time each monthly invoice is delivered pursuant to this Section 8.1 and that the monthly invoice will be based on such data as are available at the time. When CAISO metering and transaction data showing the amount of Product delivered by the Facility for any Settlement Period during the applicable month, including the amount of Charging Energy and the amount of Discharging Energy, in each case as read by the Facility Meter, and the amount of Replacement RA delivered to Buyer (if any) becomes available, Seller will true up such invoices to reflect any differences between Seller’s records and the data received from CAISO, and an appropriate credit or charge will be added to the next monthly invoice.
8.2 Payment. Buyer shall make payment to Seller of Monthly Capacity Payments for Product (and any other amounts due) by wire transfer or ACH payment to the bank account 239
38 provided on each monthly invoice. Buyer shall pay undisputed invoice amounts within (30) days of Buyer’s receipt of Seller’s invoices; provided, if such due date falls on a weekend or legal holiday, such due date shall be the next Business Day. Payments made after the due date will be considered late and will bear interest on the unpaid balance. If the amount due is not paid on or before the due date or if any other payment that is due and owing from one Party to another is not paid on or before its applicable due date, a late payment charge shall be applied to the unpaid balance and shall be added to the next billing statement. Such late payment charge shall be calculated based on an annual Interest Rate equal to the prime rate published on the date of the invoice in The Wall Street Journal (or, if The Wall Street Journal is not published on that day, the next succeeding date of publication), plus two percent (2%) (the “Interest Rate”). If the due date occurs on a day that is not a Business Day, the late payment charge shall begin to accrue on the next succeeding Business Day.
8.3 Books and Records. To facilitate payment and verification, each Party shall maintain all books and records necessary for billing and payments, including copies of all invoices under this Agreement, for a period of at least two (2) years or as otherwise required by Law. Upon fifteen (15) days’ Notice to the other Party, either Party shall be granted reasonable access to the accounting books and records within the possession or control of the other Party pertaining to all invoices generated pursuant to this Agreement. Seller acknowledges that in accordance with California Government Code Section 8546.7, Seller may be subject to audit by the California State Auditor with regard to Seller’s performance of this Agreement because the compensation under this Agreement exceeds $10,000.
8.4 Payment Adjustments; Billing Errors. Payment adjustments shall be made if Buyer or Seller discovers there have been good faith inaccuracies in invoicing that are not otherwise disputed under Section 8.5 or an adjustment to an amount previously invoiced or paid is required due to a correction of data by the CAISO, or there is determined to have been a Facility Meter inaccuracy sufficient to require a payment adjustment. If the required adjustment is in favor of Buyer, Buyer’s next monthly payment shall be credited in an amount equal to the adjustment.
If the required adjustment is in favor of Seller, Seller shall add the adjustment amount to Buyer’s next monthly invoice. Adjustments in favor of either Buyer or Seller shall bear interest, until settled in full, in accordance with Section 8.2, accruing from the date on which the adjusted amount should have been due.
8.5 Billing Disputes. A Party may, in good faith, dispute the correctness of any invoice or any adjustment to an invoice rendered under this Agreement or adjust any invoice for any arithmetic or computational error within twelve (12) months of the date the invoice, or adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be required to be made when due. Any invoice dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment. Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of the dispute, any required payment shall be made within five (5) Business Days of such resolution along with interest accrued at the Interest Rate from and including the original due date to but excluding the date paid. Inadvertent overpayments shall be returned via adjustments in accordance with Section 8.4. Any dispute with respect to an invoice is waived if the other Party is not notified in accordance with this Section 8.5 within twelve (12) months after the invoice is rendered or subsequently adjusted, except to the 240
39 extent any misinformation was from a third party not affiliated with any Party and such third party corrects its information after the twelve-month period. If an invoice is not rendered within twelve (12) months after the close of the month during which performance occurred, the right to payment for such performance is waived.
8.6 Netting of Payments. The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other on the same date through netting, in which case all amounts owed by each Party to the other Party for the purchase and sale of Product during the monthly billing period under this Agreement or otherwise arising out of this Agreement, including any related damages calculated pursuant to Exhibits B and P, interest, and payments or credits, shall be netted so that only the excess amount remaining due shall be paid by the Party who owes it.
8.7 Seller’s Development Security. To secure its obligations under this Agreement, Seller shall deliver the Development Security to Buyer within thirty (30) days after receipt of Project Participant Approval. Seller shall maintain the Development Security in full force and effect. Within five (5) Business Days following any draw by Buyer on the Development Security, Seller shall replenish the amount drawn such that the Development Security is restored to the applicable amount. Upon the earlier of (a) Seller’s delivery of the Performance Security, or (b) sixty (60) days after termination of this Agreement, Buyer shall return the Development Security to Seller, less the amounts drawn in accordance with this Agreement.
8.8 Seller’s Performance Security. To secure its obligations under this Agreement, Seller shall deliver Performance Security to Buyer on or before the Commercial Operation Date.
Seller shall maintain the Performance Security in full force and effect, and Seller shall within five (5) Business Days after any draw thereon replenish the Performance Security in the event Buyer collects or draws down any portion of the Performance Security for any reason permitted under this Agreement other than to satisfy a Termination Payment, until the following have occurred: (a) the Delivery Term has expired or terminated early; and (b) all payment obligations of Seller due and payable under this Agreement, including compensation for penalties, Termination Payment, indemnification payments or other damages are paid in full (whether directly or indirectly such as through set-off or netting). Following the occurrence of both events, Buyer shall promptly return to Seller the unused portion of the Performance Security.
8.9 First Priority Security Interest in Cash or Cash Equivalent Collateral. To secure its obligations under this Agreement, and until released as provided herein, Seller hereby grants to Buyer a present and continuing first-priority security interest (“Security Interest”) in, and lien on (and right to net against), and assignment of the Development Security, Performance Security, any other cash collateral and cash equivalent collateral posted pursuant to Sections 8.7 and 8.8 and any and all interest thereon or proceeds resulting therefrom or from the liquidation thereof, whether now or hereafter held by, on behalf of, or for the benefit of Buyer, and Seller agrees to take all action as Buyer reasonably requires in order to perfect Buyer’s Security Interest in, and lien on (and right to net against), such collateral and any and all proceeds resulting therefrom or from the liquidation thereof.
Upon or any time after the occurrence of an Event of Default caused by Seller, an Early Termination Date resulting from an Event of Default caused by Seller, or an occasion provided for 241
40 in this Agreement where Buyer is authorized to retain all or a portion of the Development Security or Performance Security, Buyer may do any one or more of the following (in each case subject to the final sentence of this Section 8.9):
(a) Exercise any of its rights and remedies with respect to the Development Security and Performance Security, including any such rights and remedies under Law then in effect;
(b) Draw on any outstanding Letter of Credit issued for its benefit and retain any cash held by Buyer as Development Security or Performance Security; and (c) Liquidate all Development Security or Performance Security (as applicable) then held by or for the benefit of Buyer free from any claim or right of any nature whatsoever of Seller, including any equity or right of purchase or redemption by Seller.
Buyer shall apply the proceeds of the collateral realized upon the exercise of any such rights or remedies to reduce Seller’s obligations under this Agreement (Seller remains liable for any amounts owing to Buyer after such application), subject to Buyer’s obligation to return any surplus proceeds remaining after such obligations are satisfied in full.
8.10 Buyer Credit Arrangements.
(a) To secure its obligations under this Agreement, Buyer shall deliver to Seller, within ninety (90) days after the Effective Date, Buyer Liability Pass Through Agreements from the Project Participants with Liability Shares as set forth on Exhibit V. Seller shall countersign each Buyer Liability Pass Through Agreement within ten (10) days of receipt of Buyer’s delivery of each such Buyer Liability Pass Through Agreement executed by Buyer and the applicable Project Participant; provided that no delay in countersigning any such Buyer Liability Pass Through Agreement shall affect Seller’s, Buyer’s or the Project Participant’s rights or obligations thereunder. Buyer shall maintain such Buyer Liability Pass Through Agreements in full force and effect until both of the following have occurred: (a) the Delivery Term has expired or terminated early; and (b) all payment obligations of Buyer due and payable under this Agreement are paid in full (whether directly or indirectly such as through set-off or netting). Buyer may propose amendments to Exhibit V, including with respect to the identity of Project Participants and the amount of each Project Participant’s Liability Share. Seller shall have ten (10) Business Days to evaluate any such proposed amendments to Exhibit V in its sole but good faith discretion. If Seller approves such proposed amendments to Exhibit V, Buyer shall have thirty (30) days to provide Seller with replacement Buyer Liability Pass Through Agreements with Liability Shares executed by Buyer and the applicable Project Participants that incorporate the Liability Shares set forth in the amended Exhibit V. Seller shall countersign each such Buyer Liability Pass Through Agreement executed by Buyer and the applicable Project Participant within ten (10) Business Days after Buyer’s delivery of such Buyer Liability Pass Through Agreements to Seller; provided that no delay in countersigning any such Buyer Liability Pass Through Agreement shall affect Seller’s, Buyer’s or the Project Participant’s rights or obligations thereunder. (b) Within thirty (30) days following a Step-Up Event, (A) Buyer shall provide Seller with replacement Buyer Liability Pass Through Agreements from all Compliant Project 242
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42 ARTICLE 10
FORCE MAJEURE
10.1 Definition.
(a) “Force Majeure Event” means any act or event that delays or prevents a Party from timely performing all or a portion of its obligations under this Agreement or from complying with all or a portion of the conditions under this Agreement if such act or event, despite the exercise of commercially reasonable efforts, cannot be avoided by and is beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance, or noncompliance. (b) Without limiting the generality of the foregoing, so long as the following events, despite the exercise of reasonable efforts, cannot be avoided by, and are beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance or noncompliance, a Force Majeure Event may include an act of God or the elements, such as flooding, lightning, hurricanes, tornadoes, or ice storms; explosion; fire; volcanic eruption; flood; epidemic or pandemic (excluding impacts of the disease designated COVID-19 or the related virus designated SARS-CoV-2 impacts actually known by the Party claiming the Force Majeure Event as of the Effective Date); landslide; mudslide; sabotage; terrorism; earthquake; or other cataclysmic events; an act of public enemy; war; blockade; civil insurrection; riot; civil disturbance; or strikes or other labor difficulties caused or suffered by a Party or any third party except as set forth below. (c) Notwithstanding the foregoing, the term “Force Majeure Event” does not include (i) economic conditions or changes in Law that render a Party’s performance of this Agreement at the Contract Price unprofitable or otherwise uneconomic (including an increase in component or compliance costs for any reason, including foreign or domestic tariffs, Buyer’s ability to buy Product at a lower price, or Seller’s ability to sell the Product, or any component thereof, at a higher price, than under this Agreement); (ii) Seller’s inability to obtain permits or approvals of any type for the construction, operation, or maintenance of the Facility, except to the extent such inability is caused by a Force Majeure Event; (iii) the inability of a Party to make payments when due under this Agreement, unless the cause of such inability is an event that would otherwise constitute a Force Majeure Event as described above that disables physical or electronic facilities necessary to transfer funds to the payee Party; (iv) a Curtailment Order, except to the extent such Curtailment Order is caused by a Force Majeure Event; (v) Seller’s inability to obtain sufficient labor, equipment, materials, or other resources to build or operate the Facility, including the lack of wind, sun or other fuel source of an inherently intermittent nature, except to the extent such inability is caused by a Force Majeure Event; (vi) a strike, work stoppage or labor dispute limited only to any one or more of Seller, Seller’s Affiliates, Seller’s contractors, their subcontractors thereof or any other third party employed by Seller to work on the Facility; (vii) any equipment failure except if such equipment failure is caused by a Force Majeure Event; (viii) events otherwise constituting a Force Majeure Event that prevents Seller from achieving Construction Start or Commercial Operation of the Facility, except to the extent expressly permitted as an extension under this Agreement; or (ix) any action or inaction by any third party, including Transmission Provider, that delays or prevents the approval, construction or placement 244
43 in service of any Interconnection Facilities or Network Upgrades, except to the extent caused by a Force Majeure Event.
10.2 No Liability If a Force Majeure Event Occurs. Except as provided in Section 4 of Exhibit B, neither Seller nor Buyer shall be liable to the other Party in the event it is prevented from performing its obligations hereunder in whole or in part due to a Force Majeure Event. The Party rendered unable to fulfill any obligation by reason of a Force Majeure Event shall take reasonable actions necessary to remove such inability with due speed and diligence. Nothing herein shall be construed as permitting that Party to continue to fail to perform after said cause has been removed. The obligation to use due speed and diligence shall not be interpreted to require resolution of labor disputes by acceding to demands of the opposition when such course is inadvisable in the discretion of the Party having such difficulty. Neither Party shall be considered in breach or default of this Agreement if and to the extent that any failure or delay in the Party’s performance of one or more of its obligations hereunder is caused by a Force Majeure Event.
Notwithstanding the foregoing, the occurrence and continuation of a Force Majeure Event shall not (a) suspend or excuse the obligation of a Party to make any payments due hereunder except as provided above, (b) suspend or excuse the obligation of Seller to achieve the Guaranteed Construction Start Date or the Guaranteed Commercial Operation Date beyond the extensions provided in Section 4 of Exhibit B, or (c) limit Buyer’s right to declare an Event of Default pursuant to Section 11.1(b)(ii) after all applicable extensions of the Guaranteed Construction Start Date and the Guaranteed Commercial Operation Date and receive a Damage Payment upon exercise of Buyer’s remedies pursuant to Section 11.2.
10.3 Notice. In the event of any delay or nonperformance resulting from a Force Majeure Event, the Party suffering the Force Majeure Event shall (a) promptly notify the other Party in writing of the nature, cause, estimated date of commencement thereof, and the anticipated extent of any delay or interruption in performance, and (b) promptly notify the other Party in writing of the cessation or termination of such Force Majeure Event, all as known or estimated in good faith by the affected Party; provided, a Party’s failure to give timely Notice shall not affect such Party’s ability to assert that a Force Majeure Event has occurred unless the delay in giving Notice materially prejudices the other Party.
10.4 Termination Following Force Majeure Event. If a Force Majeure Event has occurred after the Commercial Operation Date that has caused either Party to be wholly or substantially unable to perform its obligations hereunder, and the impacted Party has claimed and received relief from performance of its obligations for a consecutive twelve (12) month period, then the non-claiming Party may terminate this Agreement upon Notice to the other Party. Upon any such termination, neither Party shall have any further liability to the other Party, save and except for those obligations specified in Section 2.1(c), and Buyer shall promptly return to Seller any Performance Security then held by Buyer, less any amounts drawn in accordance with this Agreement.
ARTICLE 11
DEFAULTS; REMEDIES; TERMINATION
11.1 Events of Default. An “Event of Default” shall mean, 245
44 (a) with respect to a Party (the “Defaulting Party”) that is subject to the Event of Default the occurrence of any of the following:
(i) the failure by such Party to make, when due, any payment required pursuant to this Agreement and such failure is not remedied within ten (10) Business Days after Notice thereof;
(ii) any representation or warranty made by such Party herein is false or misleading in any material respect when made or when deemed made or repeated, and such default is not remedied within thirty (30) days after Notice thereof (or such longer additional period, not to exceed an additional sixty (60) days, if the Defaulting Party is unable to remedy such default within such initial thirty (30)-day period despite exercising commercially reasonable efforts); (iii) the failure by such Party to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default set forth in this Section 11.1; and except for (A) failure to provide Capacity Attributes, the exclusive remedies for which are set forth in Section 3.5, (B) failures related to the Monthly Capacity Availability that do not trigger the provisions of Section 11.1(b)(iii), the exclusive remedies for which are set forth in Exhibit C and Exhibit P, and (C) failure to maintain the Guaranteed Efficiency Rate, the exclusive remedies for which are set forth in Exhibit C), and such failure is not remedied within thirty (30) days after Notice thereof (or such longer additional period, not to exceed an additional ninety (90) days, if the Defaulting Party is unable to remedy such default within such initial thirty (30)-day period despite exercising commercially reasonable efforts);
(iv) such Party becomes Bankrupt;
(v) such Party assigns this Agreement or any of its rights hereunder other than in compliance with Article 14, if applicable; or (vi) such Party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer, the resulting, surviving or transferee entity fails to assume all the obligations of such Party under this Agreement to which it or its predecessor was a party by operation of Law or pursuant to an agreement reasonably satisfactory to the other Party. (b) with respect to Seller as the Defaulting Party, the occurrence of any of the following:
(i) if at any time, Seller delivers or attempts to deliver Energy to the Delivery Point for sale under this Agreement that was not discharged by the Facility; (ii) the failure by Seller to (A) achieve Construction Start on or before the Guaranteed Construction Start Date, as such date may be extended by Seller’s payment of Daily Delay Damages pursuant to Section 1(b) of Exhibit B and/or a Development Cure Period pursuant to Section 4 of Exhibit B, or (B) achieve Commercial Operation on or before the Guaranteed Commercial Operation Date, as such date may be extended 246
45 by Seller’s payment of Commercial Operation Delay Damages pursuant to Section 2(b) of Exhibit B and/or a Development Cure Period pursuant to Section 4 of Exhibit B; (iii) if, in any Contract Year, the simple average of the Monthly Capacity Availability calculations for such Contract Year is not equal to at least of the Guaranteed Availability, and Seller fails to (x) deliver to Buyer within ten (10) Business Days after Notice from Buyer a plan or report developed by Seller that describes the cause of the failure of the simple average of the Monthly Capacity Availability calculations for such Contract Year to equal at least of the Guaranteed Availability, and the actions that Seller has taken, is taking, or proposes to take in an effort to cure such condition along with the written confirmation of a Licensed Professional Engineer that such plan or report is in accordance with Prudent Operating Practices and capable of cure within a reasonable period of time, not to exceed (“Cure Plan”) and (y) complete such Cure Plan in all material respects as set forth therein, including within the timeframe set forth therein; (iv) failure by Seller to satisfy the collateral requirements pursuant to Sections 8.7 or 8.8 within five (5) Business Days after Notice from Buyer, including the failure to replenish the Performance Security amount in accordance with this Agreement in the event Buyer draws against it for any reason other than to satisfy a Termination Payment; (v) with respect to any outstanding Letter of Credit provided for the benefit of Buyer that is not then required under this Agreement to be canceled or returned, the failure by Seller to provide for the benefit of Buyer either (1) cash, or (2) a Letter of Credit from a different issuer meeting the criteria set forth in the definition of Letter of Credit, in each case, in the amount required hereunder within ten (10) Business Days (thirty (30) days in the case of subsection (A)) after Seller receives Notice of the occurrence of any of the following events:
(A) the issuer of the outstanding Letter of Credit shall fail to maintain a Credit Rating of at least A- by S&P or A3 by Moody’s; (B) the issuer of such Letter of Credit becomes Bankrupt; (C) the issuer of the outstanding Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit and such failure shall be continuing after the lapse of any applicable grace period permitted under such Letter of Credit;
(D) the issuer of the outstanding Letter of Credit shall fail to honor a properly documented request to draw on such Letter of Credit; (E) the issuer of the outstanding Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit;
(F) such Letter of Credit fails or ceases to be in full force and effect at any time; or
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50 OF WARRANTY PROVIDED IN THIS AGREEMENT ARE DEEMED TO “FAIL OF THEIR ESSENTIAL PURPOSE” OR ARE OTHERWISE HELD TO BE INVALID OR UNENFORCEABLE.
FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS AND EXCLUSIVE
REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR
MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED.
IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR’S LIABILITY SHALL BE LIMITED TO DIRECT DAMAGES ONLY. TO THE
EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, INCLUDING UNDER SECTIONS 3.5, 11.2 AND 11.3, AND AS PROVIDED IN EXHIBIT B,
EXHIBIT C, AND EXHIBIT P, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES
ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, THAT OTHERWISE OBTAINING AN
ADEQUATE REMEDY IS INCONVENIENT, AND THAT THE LIQUIDATED DAMAGES
CONSTITUTE A REASONABLE APPROXIMATION OF THE ANTICIPATED HARM OR LOSS. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED
ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE
CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY
PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. THE PARTIES HEREBY WAIVE ANY RIGHT TO CONTEST SUCH PAYMENTS AS AN UNREASONABLE PENALTY.
THE PARTIES ACKNOWLEDGE AND AGREE THAT MONEY DAMAGES AND THE
EXPRESS REMEDIES PROVIDED FOR HEREIN ARE AN ADEQUATE REMEDY FOR THE
BREACH BY THE OTHER OF THE TERMS OF THIS AGREEMENT, AND EACH PARTY
WAIVES ANY RIGHT IT MAY HAVE TO SPECIFIC PERFORMANCE WITH RESPECT TO ANY OBLIGATION OF THE OTHER PARTY UNDER THIS AGREEMENT.
12.3 Limitation on Pre-COD Liability. Notwithstanding anything in this Agreement to the contrary, unless and until the Facility has achieved Commercial Operation, Seller’s aggregate liability under this Agreement for any and all reasons, including liabilities for payment of Delay Damages, Commercial Operation Delay Damages and the Damage Payment, shall not exceed of the amount of the Development Security. For avoidance of doubt, this Section 12.3 shall not be applicable once the Facility has achieved Commercial Operation.
ARTICLE 13
REPRESENTATIONS AND WARRANTIES; COVENANTS
13.1 Seller’s Representations and Warranties. As of the Effective Date, Seller represents and warrants as follows:
(a) Seller is a limited liability company, duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and is qualified to conduct 252
51 business in each jurisdiction where the failure to so qualify would have a material adverse effect on the business or financial condition of Seller.
(b) Seller has the power and authority to enter into and perform this Agreement and is not prohibited from entering into this Agreement or discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement, except where such failure does not have a material adverse effect on Seller’s performance under this Agreement. The execution, delivery and performance of this Agreement by Seller has been duly authorized by all necessary limited liability company action on the part of Seller and does not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Seller or any other party to any other agreement with Seller. (c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Seller with the provisions of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Seller, subject to any permits that have not yet been obtained by Seller, the documents of formation of Seller or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Seller is a party or by which any of its property is bound. (d) This Agreement has been duly executed and delivered by Seller. This Agreement is a legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as limited by laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity. (e) Neither Seller nor its Affiliates have received notice from or been advised by any existing or potential supplier or service provider that the disease designated COVID-19 or the related virus designated SARS-CoV-2 have caused, or are reasonably likely to cause, a delay in the construction of the Facility or the delivery of materials necessary to complete the Facility, in each case that would cause the Commercial Operation Date to be later than the Guaranteed Commercial Operation Date.
13.2 Buyer’s Representations and Warranties. As of the Effective Date, Buyer represents and warrants as follows:
(a) Buyer is a joint powers authority, duly organized, validly existing and in good standing under the laws of the State of California and the rules, regulations and orders of the California Public Utilities Commission, and is qualified to conduct business in each jurisdiction of the Joint Powers Agreement members. All Persons making up the governing body of Buyer are the elected or appointed incumbents in their positions and hold their positions in good standing in accordance with the Joint Powers Agreement and other Law. (b) Buyer has the power and authority to enter into and perform this Agreement and is not prohibited from entering into this Agreement or discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement, except where such failure does not have a material adverse effect on Buyer’s performance under this Agreement. The execution, delivery and performance of this Agreement by Buyer has been duly 253
52 authorized by all necessary action on the part of Buyer and does not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Buyer or any other party to any other agreement with Buyer.
(c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Buyer with the provisions of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Buyer, including but not limited to community choice aggregation, the Joint Powers Act, competitive bidding, public notice, open meetings, election, referendum, or prior appropriation requirements, the documents of formation of Buyer or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Buyer is a party or by which any of its property is bound.
(d) This Agreement has been duly executed and delivered by Buyer. This Agreement is a legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as limited by laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity. (e) Buyer is a “local public entity” as defined in Section 900.4 of the Government Code of the State of California.
13.3 General Covenants. Each Party covenants that commencing on the Effective Date and continuing throughout the Contract Term:
(a) It shall continue to be duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and to be qualified to conduct business in each jurisdiction where the failure to so qualify would have a material adverse effect on its business or financial condition;
(b) It shall maintain (or obtain from time to time as required) all regulatory authorizations necessary for it to legally perform its obligations under this Agreement; and (c) It shall perform its obligations under this Agreement in compliance with all terms and conditions in its governing documents and in material compliance with any Law.
13.4 Seller’s Covenants. Seller covenants that commencing on the Effective Date and continuing throughout the Contract Term:
(a) Compliance with Laws. To the extent applicable to Seller or the Facility, Seller shall comply with all federal, state and local laws, statutes, ordinances, rules and regulations, and the orders and decrees of any courts or administrative bodies or tribunals, including, without limitation those related to employment discrimination and prevailing wage, non-discrimination and non-preference; conflict of interest; environmentally preferable procurement; single serving bottled water; gifts; and disqualification of former employees. Seller shall not discriminate against any employee or applicant for employment on the basis of the fact or perception of that person's race, color, religion, ancestry, national origin, age, sex (including pregnancy, childbirth or related medical conditions), legally protected medical condition, family care status, veteran status, sexual 254
53 orientation, gender identity, transgender status, domestic partner status, marital status, physical or mental disability, or AIDS/HIV status.
(b) Workforce Development. Seller shall comply with all applicable federal, state and local laws, statutes, ordinances, rules, regulations and orders and decrees of any courts or administrative bodies or tribunals, including, without limitation, employment discrimination and prevailing wage laws. Although the Facility is not a public work as defined by California Labor Code section 1720, any construction work contracted by Seller in furtherance of this Agreement shall (i) comply with California prevailing wage provisions applicable to public works projects, including but not limited to those set forth in California Labor Code sections 1770, 1771, 1771.1, 1772, 1773, 1773.1, 1774, 1775, 1776, 1777.5, and 1777.6, as they may be amended from time to time (“Prevailing Wage Requirement”); and (ii) be conducted using a project labor agreement, community workforce agreement, work site agreement, collective bargaining agreement, or similar agreement providing for terms and conditions of employment with applicable labor organizations (“Project Labor Agreement”). Seller will request that the following or similar language be included in any Project Labor Agreement executed after the Effective Date: “Union members agree not to make any written or verbal statements about CC Power or its members that are disparaging, untrue or inaccurate.” (c) Prohibition Against Forced Labor. Seller represents and warrants that it has not and will not knowingly utilize equipment or resources for the construction, operation or maintenance of the Facility that rely on work or services exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily (“Forced Labor”). Consistent with the business advisory jointly issued by the U.S. Departments of State, Treasury, Commerce and Homeland Security on July 1, 2020, equipment or resources sourced from the Xinjiang region of China are presumed to involve Forced Labor. (d) Permits. Seller shall obtain and maintain any and all permits and approvals necessary for the construction and operation of the Facility, including without limitation, environmental clearance under CEQA or other environmental law, as applicable, from the local jurisdiction where the Facility is or will be constructed. (e) Site Control. Seller shall maintain Site Control throughout the Delivery Term.
ARTICLE 14
ASSIGNMENT
14.1 General Prohibition on Assignments. Except as provided below in this Article 14, neither Party may assign this Agreement or its rights or obligations under this Agreement, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed. Any Change of Control of Seller (whether voluntary or by operation of law) will be deemed an assignment and will require the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed; provided, a Change of Control of Seller shall not require Buyer’s consent if the assignee or transferee is a Permitted Transferee. Any assignment made without the required written consent, or in violation of the conditions to assignment set out below, shall be null and void. The assigning Party shall pay the 255
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55 Financing, Buyer, Seller, Portfolio Financing Entity (if any), and Lender shall execute and deliver such further consents, approvals and acknowledgments as may be reasonable and necessary to facilitate such transactions; provided, Buyer shall not be required to agree to any terms or conditions which are reasonably expected to have a material adverse effect on Buyer and all reasonable attorney’s fees incurred by Buyer in connection therewith shall be borne by Seller.
14.5 Buyer Financing Assignment. Buyer may assign this Agreement to a financing entity that will pre-pay all of Buyer’s payment obligations under this Agreement with Seller’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned; provided that Seller reasonably determines that the terms and conditions of such pre-payment arrangements are satisfactory to Seller and its Lenders and do not adversely affect Seller or its arrangements with Lenders in any respect and that Seller is reimbursed for all costs and expenses incurred by Seller and its Lenders in connection with such transaction.
ARTICLE 15
DISPUTE RESOLUTION
15.1 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. The Parties agree that any suit, action or other legal proceeding by or against any Party with respect to or arising out of this Agreement shall be brought in the federal or state courts located in the State of California in a location to be mutually chosen by Buyer and Seller, or in the absence of mutual agreement, the County of San Francisco.
15.2 Dispute Resolution. In the event of any dispute arising under this Agreement, within ten (10) days following the receipt of a Notice from either Party identifying such dispute, the Parties shall meet, negotiate and attempt, in good faith, to resolve the dispute quickly and informally without significant legal costs. If the Parties are unable to resolve a dispute arising hereunder within thirty (30) days after Notice of the dispute, the Parties may pursue all remedies available to them at Law in or equity.
15.3 Attorneys’ Fees. In any proceeding brought to enforce this Agreement or because of the breach by any Party of any covenant or condition herein contained, the prevailing Party shall be entitled to reasonable attorneys’ fees (including reasonably allocated fees of in-house counsel) in addition to court costs and any and all other costs recoverable in said action.
ARTICLE 16
INDEMNIFICATION
16.1 Indemnification.
(a) Seller agrees to indemnify, defend and hold harmless Buyer and its Affiliates, directors, officers, attorneys, employees, representatives and agents (collectively, the “Buyer’s Indemnified Parties”) from and against all third-party claims, demands, losses, liabilities, penalties, and expenses (including reasonable attorneys’ fees and expert witness fees), howsoever described, to the extent arising out of, resulting from, or caused by (i) Seller’s breach 257
56 of this Agreement (including inaccuracy of any Seller representation of warranty made hereunder), (ii) a violation of applicable Laws by Seller or its Affiliates, including but not limited to violations of any laws in constructing or operating the Facility, or (iii) negligent or willful misconduct by Seller or its Affiliates, directors, officers, employees, or agents. (b) Buyer agrees to indemnify, defend and hold harmless Seller and its Affiliates, directors, officers, attorneys, employees, representatives and agents (collectively, the “Seller’s Indemnified Parties”) from and against all third-party claims, demands, losses, liabilities, penalties, and expenses (including reasonable attorneys’ fees and expert witness fees), howsoever described, to the extent arising out of, resulting from, or caused by (i) Buyer’s breach of this Agreement (including inaccuracy of any representation of warranty made hereunder), (ii) a violation of applicable Laws by Buyer or its Affiliates, or (iii) negligent or willful misconduct of Buyer or its Affiliates, its directors, officers, employees, or agents. (c) Seller shall indemnify, defend, and hold harmless Buyer’s Indemnified Parties, from any claim, liability, loss, injury or damage arising out of, or in connection with Environmental Costs and any environmental matters associated with the Facility, including the storage, disposal and transportation of Hazardous Substances, or the contamination of land, including but not limited to the Site, with any Hazardous Substances by or on behalf of the Seller or at the Seller’s direction or agreement.
(d) Nothing in this Section 16.1 shall enlarge or relieve Seller or Buyer of any liability to the other for any breach of this Agreement. Neither Party shall be indemnified for its damages resulting solely from its own negligence, intentional acts or willful misconduct. These indemnity provisions shall not be construed to relieve any insurer of its obligation to pay claims consistent with the provisions of a valid insurance policy.
16.2 Claims. Promptly after receipt by a Party of any claim or Notice of the commencement of any action, administrative, or legal proceeding, or investigation as to which an indemnity provided for in this Article 16 may apply, the Indemnified Party shall notify the Indemnifying Party in writing of such fact. The Indemnifying Party shall assume the defense thereof with counsel designated by the Indemnifying Party and satisfactory to the Indemnified Party, provided, if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it which are different from or additional to, or inconsistent with, those available to the Indemnifying Party, the Indemnified Party shall have the right to select and be represented by separate counsel, at the Indemnifying Party’s expense, unless a liability insurer is willing to pay such costs. If the Indemnifying Party fails to assume the defense of a claim meriting indemnification, the Indemnified Party may at the expense of the Indemnifying Party contest, settle, or pay such claim; provided, settlement or full payment of any such claim may be made only following consent of the Indemnifying Party or, absent such consent, written opinion of the Indemnified Party’s counsel that such claim is meritorious or warrants settlement. Except as otherwise provided in this Article 16, in the event that a Party is obligated to indemnify and hold the other Party and its successors and assigns harmless under this Article 16, the amount owing to the Indemnified Party will be the amount of the Indemnified Party’s damages net of any insurance proceeds received by the Indemnified Party following a reasonable effort by the Indemnified Party to obtain such insurance proceeds.
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57 ARTICLE 17
INSURANCE
17.1 Insurance.
(a) General Liability. Seller shall maintain, or cause to be maintained at its sole expense, commercial general liability insurance, including products and completed operations and personal injury insurance, in a minimum amount of One Million Dollars ($1,000,000) per occurrence, and an annual aggregate of not less than Two Million Dollars ($2,000,000), endorsed to provide contractual liability in said amount, specifically covering Seller’s obligations under this Agreement and including Buyer as an additional insured. Defense costs shall be provided as an additional benefit and not included within the limits of liability. Such insurance shall name Buyer as an additional insured and contain standard cross-liability and severability of interest provisions. (b) Employer’s Liability Insurance. Seller, if it has employees, shall maintain Employers’ Liability insurance with limits of not less than One Million Dollars ($1,000,000.00) for injury or death occurring as a result of each accident. With regard to bodily injury by disease, the One Million Dollar ($1,000,000) policy limit will apply to each employee. (c) Workers Compensation Insurance. Seller, if it has employees, shall also maintain at all times during the Contract Term workers’ compensation and employers’ liability insurance coverage in accordance with statutory amounts, with employer’s liability limits of not less than One Million Dollars ($1,000,000.00) for each accident, injury, or illness; and include a blanket waiver of subrogation.
(d) Business Auto Insurance. Seller shall maintain at all times during the Contract Term business auto insurance for bodily injury and property damage with limits of One Million Dollars ($1,000,000) per occurrence. Such insurance shall cover liability arising out of Seller’s use of all owned (if any), non-owned and hired vehicles, including trailers or semi-trailers in the performance of the Agreement and shall name Buyer as an additional insured and contain standard cross-liability and severability of interest provisions. (e) Pollution Liability. Seller shall maintain or cause to be maintained during the construction of the Facility prior to the Commercial Operation Date, Pollution Insurance in the amount of Two Million Dollars ($2,000,000) per occurrence and in the aggregate, including Seller (and Lender, if any) as additional named insureds.
(f) Umbrella Liability Insurance. Seller shall maintain or cause to be maintained an umbrella liability policy with a limit of liability of per occurrence and in the aggregate. Such insurance shall be in excess of the General Liability, Employer’s Liability, and Business Auto Insurance coverages. Seller may choose any combination of primary, excess or umbrella liability policies to meet the insurance limits required under Sections 17.1(a), 17.1(b) and 17.1(d) above. (g) Construction All-Risk Insurance. Seller shall maintain or cause to be maintained during the construction of the Facility prior to the Commercial Operation Date, construction all-risk form property insurance covering the Facility during such construction periods.
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58 (h) Property Insurance. On and after the Commercial Operation Date, Seller shall maintain or cause to be maintained insurance against loss or damage from all causes under standard “all risk” property insurance coverage in amounts that are not less than the actual replacement value of the Facility; provided, however, with respect to property insurance for natural catastrophes, Seller shall maintain limits equivalent to a probable maximum loss amount determined by a firm with experience providing such determinations. Such insurance shall include business interruption coverage in an amount equal to twelve (12) months of expected revenue from this Agreement.
(i) Subcontractor Insurance. Seller shall require all of its subcontractors to carry: (i) comprehensive general liability insurance with a combined single limit of coverage not less than One Million Dollars ($1,000,000); (ii) workers’ compensation insurance and employers’ liability coverage in accordance with applicable requirements of Law; and (iii) business auto insurance for bodily injury and property damage with limits of one million dollars ($1,000,000) per occurrence. All subcontractors shall name Seller as an additional insured to insurance carried pursuant to clauses (f)(i) and (f)(iii). All subcontractors shall provide a primary endorsement and a waiver of subrogation to Seller for the required coverage pursuant to this Section 17.1(i). (j) Evidence of Insurance. Within ten (10) days after execution of the Agreement, and upon annual renewal thereafter, Seller shall deliver to Buyer certificates of insurance evidencing such coverage with insurers with ratings comparable to A-VII or higher, and that are authorized to do business in the State of California, in form evidencing all coverages set forth above. Such certificates shall specify that Buyer shall be given at least thirty (30) days prior Notice by Seller in the event of cancellation or termination of coverage. Such insurance shall be primary coverage without right of contribution from any insurance of Buyer. Any other insurance maintained by Seller is for the exclusive benefit of Seller and shall not in any manner inure to the benefit of Buyer. The general liability, auto liability and worker’s compensation policies shall be endorsed with a waiver of subrogation in favor of Buyer for all work performed by Seller, its employees, agents and sub-contractors.
ARTICLE 18
CONFIDENTIAL INFORMATION
18.1 Definition of Confidential Information. The following constitutes “Confidential Information,” whether oral or written which is delivered by Seller to Buyer or by Buyer to Seller including: (a) the terms and conditions of, and proposals and negotiations related to, this Agreement, and (b) information that either Seller or Buyer stamps or otherwise identifies as “confidential” or “proprietary” before disclosing it to the other. Confidential Information does not include (i) information that was publicly available at the time of the disclosure, other than as a result of a disclosure in breach of this Agreement; (ii) information that becomes publicly available through no fault of the recipient after the time of the delivery; (iii) information that was rightfully in the possession of the recipient (without confidential or proprietary restriction) at the time of delivery or that becomes available to the recipient from a source not subject to any restriction against disclosing such information to the recipient; and (iv) information that the recipient independently developed without a violation of this Agreement.
18.2 Duty to Maintain Confidentiality. The Party receiving Confidential Information 260
59 (the “Receiving Party”) from the other Party (the “Disclosing Party”) shall not disclose Confidential Information to a third party (other than the Party’s members, employees, lenders, counsel, accountants, directors or advisors, or any such representatives of a Party’s Affiliates, who have a need to know such information and have agreed to keep such terms confidential) except in order to comply with any applicable Law, regulation, or any exchange, control area or independent system operator rule or in connection with any court or regulatory proceeding applicable to such Party or any of its Affiliates; provided, each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure. The Parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with, this confidentiality obligation. The Parties agree and acknowledge that nothing in this Section 18.2 prohibits a Party from disclosing any one or more of the commercial terms of a transaction (other than the name of the other Party unless otherwise agreed to in writing by the Parties) to any industry price source for the purpose of aggregating and reporting such information in the form of a published energy price index.
The Parties acknowledge and agree that the Agreement and any transactions entered into in connection herewith are subject to the requirements of the California Public Records Act (Government Code Section 6250 et seq.). In order to designate information as confidential, the Disclosing Party must clearly stamp and identify the specific portion of the material designated with the word “Confidential.” The Parties agree not to over-designate material as Confidential Information. Over-designation includes stamping whole agreements, entire pages or series of pages as “Confidential” that clearly contain information that is not Confidential Information.
Upon request or demand of any third person or entity not a Party hereto to Buyer pursuant to the California Public Records Act for production, inspection and/or copying of Confidential Information (“Requested Confidential Information”), Buyer shall as soon as practical notify Seller in writing via email that such request has been made. Seller shall be solely responsible for taking at its sole expense whatever legal steps are necessary to prevent release of the Requested Confidential Information to the third party by Buyer. If Seller takes no such action after receiving the foregoing notice from Buyer, Buyer shall, at its discretion, be permitted to comply with the third party’s request or demand and is not required to defend against it. If Seller does take or attempt to take such action, Buyer shall provide timely and reasonable cooperation to Seller, if requested by Seller, and Seller agrees to indemnify and hold harmless Buyer and Buyer’s Indemnified Parties from any claims, liability, award of attorneys’ fees, or damages, and to defend any action, claim or lawsuit brought against any of Buyer or Buyer’s Indemnified Parties for Buyer’s refusal to disclose any Requested Confidential Information.
18.3 Irreparable Injury; Remedies. Receiving Party acknowledges that its obligations hereunder are necessary and reasonable in order to protect Disclosing Party and the business of Disclosing Party, and expressly acknowledges that monetary damages would be inadequate to compensate Disclosing Party for any breach or threatened breach by Receiving Party of any covenants and agreements set forth herein. Accordingly, Receiving Party acknowledges that any such breach or threatened breach will cause irreparable injury to Disclosing Party and that, in addition to any other remedies that may be available, in law, in equity or otherwise, Disclosing Party will be entitled to obtain injunctive relief against the threatened breach of this Agreement or the continuation of any such breach, without the necessity of proving actual damages. 261
60 18.4 Further Permitted Disclosure. Notwithstanding anything to the contrary in this Article 18, Confidential Information may be disclosed by the Receiving Party to any of its agents, consultants, contractors, trustees, or actual or potential financing parties (including, in the case of Seller, its Lender(s)), so long as such Person to whom Confidential Information is disclosed agrees in writing to be bound by confidentiality provisions that are at least as restrictive as this Article 18 to the same extent as if it were a Party.
18.5 Press Releases. Neither Party shall issue (or cause its Affiliates to issue) a press release regarding the transactions contemplated by this Agreement unless both Parties have agreed upon the contents of any such public statement.
ARTICLE 19
MISCELLANEOUS
19.1 Entire Agreement; Integration; Exhibits. This Agreement, together with the Cover Sheet and Exhibits attached hereto constitutes the entire agreement and understanding between Seller and Buyer with respect to the subject matter hereof and supersedes all prior agreements relating to the subject matter hereof, which are of no further force or effect. The Exhibits attached hereto are integral parts hereof and are made a part of this Agreement by reference. The headings used herein are for convenience and reference purposes only. In the event of a conflict between the provisions of this Agreement and those of the Cover Sheet or any Exhibit, the provisions of first the Cover Sheet, and then this Agreement shall prevail, and such Exhibit shall be corrected accordingly. This Agreement shall be considered for all purposes as prepared through the joint efforts of the Parties and shall not be construed against one Party or the other as a result of the preparation, substitution, submission or other event of negotiation, drafting or execution hereof.
19.2 Amendments. This Agreement may only be amended, modified or supplemented by an instrument in writing executed by duly authorized representatives of Seller and Buyer; provided, this Agreement may not be amended by electronic mail communications.
19.3 No Waiver. Waiver by a Party of any default by the other Party shall not be construed as a waiver of any other default.
19.4 No Agency, Partnership, Joint Venture or Lease. Seller and the agents and employees of Seller shall, in the performance of this Agreement, act in an independent capacity and not as officers or employees or agents of Buyer. Under this Agreement, Seller and Buyer intend to act as energy seller and energy purchaser, respectively, and do not intend to be treated as, and shall not act as, partners in, co-venturers in or lessor/lessee with respect to the Facility or any business related to the Facility. This Agreement shall not impart any rights enforceable by any third party (other than a permitted successor or assignee bound to this Agreement) and/or, to the extent set forth herein, any Lender and/or Indemnified Party.
19.5 Severability. In the event that any provision of this Agreement is unenforceable or held to be unenforceable, the Parties agree that all other provisions of this Agreement have force and effect and shall not be affected thereby. The Parties shall, however, use their best endeavors to agree on the replacement of the void, illegal or unenforceable provision(s) with legally 262
61 acceptable clauses which correspond as closely as possible to the sense and purpose of the affected provision and this Agreement as a whole.
19.6 Mobile-Sierra. Notwithstanding any other provision of this Agreement, neither Party shall seek, nor shall they support any third party seeking, to prospectively or retroactively revise the rates, terms or conditions of service of this Agreement through application or complaint to FERC pursuant to the provisions of Section 205, 206 or 306 of the Federal Power Act, or any other provisions of the Federal Power Act, absent prior written agreement of the Parties. Further, absent the prior written agreement in writing by both Parties, the standard of review for changes to the rates, terms or conditions of service of this Agreement proposed by a Party shall be the “public interest” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956). Changes proposed by a non-Party or FERC acting sua sponte shall be subject to the most stringent standard permissible under applicable Law.
19.7 Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument and each of which shall be deemed an original.
19.8 Electronic Delivery. This Agreement may be duly executed and delivered by a Party by electronic format (including portable document format (.pdf)). Delivery of an executed counterpart in .pdf electronic version shall be binding as if delivered in the original. The words “execution,” “signed,” “signature,” and words of like import in this Agreement shall be deemed to include electronic signatures or electronic records, each of which shall be of the same legal effect, validity, or enforceability as a manually executed signature or the use of a paper-based record keeping system, as the case may be, to the extent and as provided for in any applicable law.
19.9 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.
19.10 No Recourse to Members of Buyer. Buyer is organized as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) pursuant to its Joint Powers Agreement and is a public entity separate from its constituent members. Except as set forth in Section 11.9 and any Buyer Liability Pass Through Agreements issued by one or more Project Participants pursuant to Section
8.10, Buyer shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this Agreement, and Seller shall have no rights and shall not make any claims, take any actions or assert any remedies against any of Buyer’s constituent members, or the officers, directors, advisors, contractors, consultants or employees of Buyer or its constituent members, in connection with this Agreement.
19.11 Forward Contract. The Parties acknowledge and agree that this Agreement constitutes a “forward contract” within the meaning of the U.S. Bankruptcy Code, and Buyer and Seller are “forward contract merchants” within the meaning of the U.S. Bankruptcy Code. Each Party further agrees that, for all purposes of this Agreement, each Party waives and agrees not to assert the applicability of the provisions of 11 U.S.C. § 366 in any Bankruptcy proceeding wherein such Party is a debtor. In any such proceeding, each Party further waives the right to assert that the 263
62 other Party is a provider of last resort to the extent such term relates to 11 U.S.C. §366 or another provision of 11 U.S.C. § 101-1532.
19.12 Change in Electric Market Design. If a change in the CAISO Tariff renders this Agreement or any provisions hereof incapable of being performed or administered, then any Party may request that Buyer and Seller enter into negotiations to make the minimum changes to this Agreement necessary to make this Agreement capable of being performed and administered, while attempting to preserve to the maximum extent possible the benefits, burdens, and obligations set forth in this Agreement as of the Effective Date. Upon delivery of such a request, Buyer and Seller shall engage in such negotiations in good faith. If Buyer and Seller are unable, within sixty (60) days after delivery of such request, to agree upon changes to this Agreement or to resolve issues relating to changes to this Agreement, then any Party may submit issues pertaining to changes to this Agreement to the dispute resolution process set forth in Article 15. Notwithstanding the foregoing, (i) a change in cost shall not in and of itself be deemed to render this Agreement or any of the provisions hereof incapable of being performed or administered, and (ii) all of the unaffected provisions of this Agreement shall remain in full force and effect during any period of such negotiation or dispute resolution.
19.13 Further Assurances. Each of the Parties hereto agrees to provide such information, execute and deliver any instruments and documents and to take such other actions as may be necessary or reasonably requested by the other Party which are not inconsistent with the provisions of this Agreement and which do not involve the assumption of obligations other than those provided for in this Agreement, to give full effect to this Agreement and to carry out the intent of this Agreement.
[Signatures on following page]
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Exhibit A - 1
EXHIBIT A
FACILITY DESCRIPTION
Site Name: Tumbleweed Energy Storage (75 MW) (CAISO Queue 1217) Site includes all or some of the following APNs:
City: near Rosamond, CA
County: Kern
Zip Code: 93560
Latitude and Longitude:
Facility Description: 69 MW/552 MWh grid-connected battery energy storage facility, as depicted on the following page.
Interconnection Point: The Project shall interconnect to Whirlwind Substation 230 kV Facility Meter: See Exhibit R
Facility Metering Points: See Exhibit R
P-node:
Transmission Provider: Southern California Edison (SCE) Additional Information: The Facility may include a co-located 1 MW solar generation system which will only serve onsite load.
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Exhibit B - 1
EXHIBIT B
FACILITY CONSTRUCTION AND COMMERCIAL OPERATION
1. Construction of the Facility.
a. “Construction Start” will occur upon Seller’s acquisition of the conditional use permit and other applicable discretionary permits for the construction of the Facility, and once Seller has engaged one or more contractors, and ordered all long lead time equipment as, in each case, can reasonably be considered necessary so that physical construction of the Facility may begin, and has executed one or more engineering, procurement, and construction contract and issued a notice to proceed under the applicable contract that authorizes the contractor to mobilize to Site and begin physical construction (including, at a minimum, excavation for foundations) at the Site. The date of Construction Start will be evidenced by and subject to Seller’s delivery to Buyer of a certificate substantially in the form attached as Exhibit J hereto, and the date certified therein shall be the “Construction Start Date.” Seller shall cause Construction Start to occur no later than the Guaranteed Construction Start Date.
b. In addition to extensions pursuant to a Development Cure Period, Seller may extend the Guaranteed Construction Start Date for all purposes hereunder, including Section 11.1(b)(ii), by paying Daily Delay Damages to Buyer for each day Seller desires to extend the Guaranteed Construction Start Date, not to exceed a total of one hundred twenty (120) days of extensions by such payment of Daily Delay Damages. On or before the date that is ten (10) days prior to the then-current (including any previous extensions) Guaranteed Construction Start Date, Seller may provide notice and payment to Buyer of the Daily Delay Damages for the number of days of extension to the Guaranteed Construction Start Date. If Seller achieves Construction Start prior to the Guaranteed Construction Start Date, as extended by the payment of Daily Delay Damages, Buyer shall refund to Seller the Daily Delay Damages for each day Seller achieves Construction Start prior to the Guaranteed Construction Start Date times the Daily Delay Damages, not to exceed the total amount of Daily Delay Damages paid by Seller pursuant to this Section 1(b). If Seller achieves Commercial Operation on or before the Guaranteed Commercial Operation Date (not including any extensions to such date resulting from Seller’s payment of Commercial Operation Delay Damages, but as may be extended pursuant to a Development Cure Period), then Buyer shall refund to Seller all Daily Delay Damages paid by Seller and not previously refunded by Buyer.
2. Commercial Operation of the Facility.
a. Seller shall cause Commercial Operation for the Facility to occur by the Guaranteed Commercial Operation Date.
b. In addition to extensions pursuant to a Development Cure Period, Seller may extend the Guaranteed Commercial Operation Date for all purposes hereunder, including 268
Exhibit B - 2
Section 11.1(b)(ii), by paying Commercial Operation Delay Damages to Buyer for each day Seller desires to extend the Guaranteed Commercial Operation Date, not to exceed a total of ninety (90) days of extensions by such payment of Commercial Operation Delay Damages. On or before the date that is ten (10) days prior to the then-current (including any previous extensions) Guaranteed Commercial Operation Date, Seller may provide Notice and payment to Buyer of the Commercial Operation Delay Damages for the number of days of extension to the Guaranteed Commercial Operation Date. If Seller achieves Commercial Operation prior to the Guaranteed Commercial Operation Date, as extended by the payment of Commercial Operation Delay Damages, Buyer shall refund to Seller the Commercial Operation Delay Damages for each day Seller achieves Commercial Operation prior to the Guaranteed Commercial Operation Date times the Commercial Operation Delay Damages, not to exceed the total amount of Commercial Operation Delay Damages paid by Seller pursuant to this Section 2(b).
3. Termination for Failure to Achieve Commercial Operation. If the Facility has not achieved Commercial Operation on or before the Guaranteed Commercial Operation Date (as may be extended hereunder), Buyer may elect to terminate this Agreement in accordance with Sections 11.1(b)(ii) and 11.2.
4. Extension of the Guaranteed Dates. The Guaranteed Construction Start Date and the Guaranteed Commercial Operation Date shall, subject to notice and documentation requirements set forth below, both be automatically extended on a day-for-day basis (the “Development Cure Period”) for the duration of any and all delays arising out of the following circumstances to the extent the following circumstances are not the result of Seller’s failure to take all commercially reasonable actions to meet its requirements and deadlines:
a. Seller has not acquired the Material Permits by the Guaranteed Construction Start Date despite the exercise of diligent and commercially reasonable efforts by Seller; or
b. a Force Majeure Event occurs; or
c. the Interconnection Facilities or Reliability Network Upgrades are not complete and ready for the Facility to connect and sell Product at the Delivery Point by the Guaranteed Commercial Operation Date despite the exercise of diligent and commercially reasonable efforts by Seller; or
d. Buyer has not made all necessary arrangements to receive the Discharging Energy at the Delivery Point by the Guaranteed Commercial Operation Date.
Notwithstanding anything in this Agreement to the contrary, the cumulative extensions granted under the Development Cure Period (other than the extensions granted pursuant to clause 4(d) above) shall not exceed one hundred twenty (120) days, for any reason, including a Force Majeure Event, and the cumulative extensions granted to the Guaranteed Commercial Operation Date by the payment of Commercial Operation Delay Damages and 269
Exhibit B - 3
any Development Cure Period(s) (other than the extensions granted pursuant to clause 4(d) above) shall not exceed one hundred eighty (180) days. Upon request from Buyer, Seller shall provide documentation reasonably demonstrating that the delays described in subsections (a) and (c) above did not result from Seller’s actions or failure to take commercially reasonable actions.
5. Failure to Reach Guaranteed Capacity. If, at Commercial Operation, the Installed Capacity is less than one hundred percent (100%) of the Guaranteed Capacity, Seller shall have ninety (90) days after the Commercial Operation Date to install additional capacity and/or Network Upgrades such that the Installed Capacity is equal to (but not greater than) the Guaranteed Capacity, and Seller shall provide to Buyer a new certificate substantially in the form attached as Exhibit I hereto specifying the new Installed Capacity. If Seller fails to construct the Guaranteed Capacity by such date, Seller shall pay “Capacity Damages” to Buyer, in an amount equal to for each
MW that the Guaranteed Capacity exceeds the Installed Capacity, and the Guaranteed Capacity and other applicable portions of the Agreement shall be adjusted accordingly.
Capacity Damages shall not be offset or reduced by the payment of Development Security, Performance Security, Daily Delay Damages, Commercial Operation Delay Damages, or any other form of liquidated damages under this Agreement.
6. Buyer’s Right to Draw on Development Security. If Seller fails to timely pay any Daily Delay Damages or Commercial Operation Delay Damages, Buyer may draw upon the Development Security to satisfy Seller’s payment obligation thereof. 270
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Exhibit D - 1
EXHIBIT D
SCHEDULING COORDINATOR RESPONSIBILITIES
(a) Buyer as Scheduling Coordinator for the Facility. Unless Buyer agrees in its absolute discretion to provide Scheduling Coordinator services prior to the Commercial Operation Date, beginning on the Commercial Operation Date, Buyer shall be the Scheduling Coordinator or designate a qualified third party to provide Scheduling Coordinator services with the CAISO for the Facility for both the delivery and the receipt (as applicable) of Charging Energy, Discharging Energy and the Product at the Delivery Point. At least thirty (30) days prior to the Commercial Operation Date, (i) Seller shall take all actions and execute and deliver to Buyer and the CAISO all documents necessary to authorize or designate Buyer (or Buyer’s designee) as the Scheduling Coordinator for the Facility effective as of the Commercial Operation Date, and (ii) Buyer shall, and shall cause its designee to, take all actions and execute and deliver to Seller and the CAISO all documents necessary to authorize or designate Buyer or its designee as the Scheduling Coordinator for the Facility effective as of the Commercial Operation Date. On and after the Commercial Operation Date, Seller shall not authorize or designate any other party to act as the Facility’s Scheduling Coordinator, nor shall Seller perform for its own benefit the duties of Scheduling Coordinator, and Seller shall not revoke Buyer’s authorization to act as the Facility’s Scheduling Coordinator unless agreed to by Buyer. Buyer (as the Facility’s SC) shall submit Schedules to the CAISO in accordance with this Agreement and the applicable CAISO Tariff, protocols and Scheduling practices for Product on a day-ahead, hour-ahead, fifteen-minute market, real time or other CAISO market basis that may develop after the Effective Date, as determined by Buyer.
(b) Notices. Beginning on the Commercial Operation Date, Buyer (as the Facility’s SC) shall provide Seller with access to a web-based system through which Seller shall submit to Buyer and the CAISO all notices and updates required under the CAISO Tariff regarding the Facility’s status, including, but not limited to, all outage requests, forced outages, forced outage reports, clearance requests, or must offer waiver forms. Seller shall cooperate with Buyer to provide such notices and updates. If the web-based system is not available, Seller shall promptly submit such information to Buyer and the CAISO (in order of preference) telephonically, by electronic mail, or transmission to the personnel designated to receive such information. (c) CAISO Costs and Revenues. Beginning on the Commercial Operation Date, Buyer (as Scheduling Coordinator for the Facility) shall be responsible for CAISO costs (including Charging Energy, penalties, Imbalance Energy costs or revenues, and other charges) and shall be entitled to all CAISO revenues (including Discharging Energy, credits, Imbalance Energy revenues or costs, and other payments), including revenues associated with CAISO dispatches, bid cost recovery, Inter-SC Trade credits, or other credits in respect of the Product Scheduled or delivered from the Delivery Point; provided, however, Seller shall assume all liability and reimburse Buyer for any and all costs or charges (i) incurred by Buyer because of Seller’s default, breach or other failure to perform as required by this Agreement, (ii) incurred by Buyer resulting from any failure by Seller to abide by the CAISO Tariff requirements imposed on it as Facility owner (but not in connection with obligations of Buyer hereunder) or the outage notification requirements set forth in this Agreement (except to the extent such non-compliance is caused by Buyer’s failure to perform its duties as Scheduling Coordinator for the Facility), or (iii) to the 273
Exhibit D - 2
extent arising as a result of Seller’s failure to comply with a timely Curtailment Order if such failure results in incremental costs to Buyer. The Parties agree that any Availability Incentive Payments (as defined in the CAISO Tariff) are for the benefit of Seller and for Seller’s account and that any Non-Availability Charges (as defined in the CAISO Tariff) are the responsibility of Seller and for Seller’s account. In addition, if during the Delivery Term, the CAISO implements or has implemented any sanction or penalty related to scheduling, outage reporting, or generator operation, and any such sanctions or penalties are imposed upon the Facility or to Buyer as Scheduling Coordinator due to failure by Seller to abide by the CAISO Tariff or the outage notification requirements set forth in this Agreement, the cost of the sanctions or penalties shall be Seller’s responsibility.
(d) CAISO Settlements. Beginning on the Commercial Operation Date, Buyer (as the Facility’s SC) shall be responsible for all settlement functions with the CAISO related to the Facility. Buyer shall render a separate invoice to Seller for any CAISO payments, charges or penalties (“CAISO Charges Invoice”) for which Seller is responsible under this Agreement.
CAISO Charges Invoices shall be rendered after settlement information becomes available from the CAISO that identifies any CAISO charges. Notwithstanding the foregoing, Seller acknowledges that the CAISO will issue additional invoices reflecting CAISO adjustments to such CAISO charges. Buyer shall review, validate, and if requested by Seller under paragraph (e) below, dispute any charges that are the responsibility of Seller in a timely manner and consistent with Buyer’s existing settlement processes for charges that are Buyer’s responsibilities. Subject to Seller’s right to dispute and to have Buyer pursue the dispute of any such invoices, Seller shall pay the amount of CAISO Charges Invoices within ten (10) Business Days of Seller’s receipt of the CAISO Charges Invoice. If Seller fails to pay such CAISO Charges Invoice within that period, Buyer may net or offset any amounts owing to it for such CAISO Charges Invoices against any future amounts it may owe to Seller under this Agreement. The obligations under this Section with respect to payment of CAISO Charges Invoices in respect of performance prior to the expiration or termination of this Agreement shall survive the expiration or termination of this Agreement. (e) Dispute Costs. Beginning on the Commercial Operation Date, Buyer (as the Facility’s SC) may be required by Seller to dispute CAISO settlements in respect of the Facility.
Seller agrees to pay Buyer’s costs and expenses (including reasonable attorneys’ fees) associated with its involvement with such CAISO disputes to the extent they relate to CAISO charges payable by Seller with respect to the Facility that Seller has directed Buyer to dispute. (f) Terminating Buyer’s Designation as Scheduling Coordinator. At least thirty (30) days prior to expiration of this Agreement or as soon as reasonably practicable upon an earlier termination of this Agreement, the Parties will take all actions necessary to terminate the designation of Buyer as Scheduling Coordinator for the Facility as of 11:59 p.m. on such expiration date.
(g) Master Data File and Resource Data Template. Seller shall provide the data to the CAISO (and to Buyer) that is required for the CAISO’s Master Data File and Resource Data Template (or successor data systems) for the Facility consistent with this Agreement. Neither Party shall change such data without the other Party’s prior written consent. (h) NERC Reliability Standards. Beginning on the Commercial Operation Date, Buyer 274
Exhibit D - 3
(as Scheduling Coordinator) shall cooperate reasonably with Seller to the extent necessary to enable Seller to comply, and for Seller to demonstrate Seller’s compliance with, NERC reliability standards. This cooperation shall include the provision of information in Buyer’s possession that Buyer (as Scheduling Coordinator) has provided to the CAISO related to the Facility or actions taken by Buyer (as Scheduling Coordinator) related to Seller’s compliance with NERC reliability standards.
275
Exhibit E - 1
EXHIBIT E
PROGRESS REPORTING FORM
Each Progress Report must include the following items:
1. Executive Summary.
2. Facility description.
3. Site plan of the Facility.
4. Description of any material planned changes to the Facility or the Site.
5. Gantt chart schedule showing progress on achieving each of the Milestones.
6. Summary of activities during the previous calendar quarter or month, as applicable, including any OSHA labor hour reports.
7. Forecast of activities scheduled for the current calendar quarter.
8. Written description about the progress relative to Seller’s Milestones, including whether Seller has met or is on target to meet the Milestones.
9. List of issues that are reasonably likely to affect Seller’s Milestones.
10. A status report of start-up activities including a forecast of activities ongoing and after start-up, a report on Facility performance including performance projections for the next twelve (12) months.
11. Progress and schedule of all material agreements, contracts, permits (including Material Permits), approvals, technical studies, financing agreements and major equipment purchase orders showing the start dates, completion dates, and completion percentages.
12. Pictures, in sufficient quantity and of appropriate detail, in order to document construction and startup progress of the Facility, the interconnection into the Transmission System and all other interconnection utility services.
13. Workforce Development or Supplier Diversity Reporting (if applicable). Format to be provided by Buyer.
14. Any other documentation reasonably requested by Buyer. 276
Exhibit F - 1
EXHIBIT F
FORM OF MONTHLY EXPECTED AVAILABLE CAPACITY REPORT
[Available Capacity, MW Per Hour] – [Insert Month]
1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00 Day 1
Day 2
Day 3
Day 4
Day 5
[insert additional rows for each day in the month]
Day
29 Day
30 Day
31 The foregoing table is provided for informational purposes only, and it shall not constitute, or be deemed to constitute, an obligation of any of the Parties to this Agreement.
277
Exhibit G - 1
EXHIBIT G
FORM OF DAILY AVAILABILITY NOTICE
Trading Day:
Station: Issued By:
Unit: Issued At:
Unit 100% Available No Restrictions:
Hour Ending Available Capacity Comments
(MW)
1:00
2:00
3:00
4:00
5:00
6:00
7:00
8:00
9:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
0:00
Comments:
278
Exhibit H - 1
EXHIBIT H
FORM OF COMMERCIAL OPERATION DATE CERTIFICATE
This certification (“Certification”) of Commercial Operation is delivered by _______ [licensed professional engineer] (“Engineer”) to California Community Power, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Service Agreement dated _______ (“Agreement”) by and between [Seller] and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
As of _______[DATE]_____, Engineer hereby certifies and represents to Buyer the following:
1. The Facility is fully operational, interconnected, and synchronized with the Transmission System in accordance with the Interconnection Agreement.
2. The Facility has met all Interconnection Agreement requirements and is capable of receiving Charging Energy from, and delivering Discharging Energy to, the CAISO Balancing Authority.
3. The commissioning of the equipment has been completed in accordance with the applicable material requirements of the manufacturers’ specifications.
4. The Facility’s Installed Capacity is no less than ninety-five percent (95%) of the Guaranteed Capacity and the Facility is capable of charging, storing and discharging Energy, all within the operational constraints and subject to the applicable Operating Restrictions.
5. Authorization to parallel the Facility was obtained by the Transmission Provider, [Name of Transmission Provider as appropriate] on___[DATE]____.
6. The Transmission Provider has provided documentation supporting full unrestricted release for Commercial Operation by [Name of Transmission Provider as appropriate] on _______[DATE]_____.
7. The CAISO has provided notification supporting Commercial Operation, in accordance with the CAISO Tariff on _______[DATE]_____.
8. Seller has segregated and separately metered Station Use to the extent reasonably possible in accordance with Prudent Operating Practice, and any such meter(s) have the same or greater level of accuracy as is required for CAISO certified meters used for settlement purposes.
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Its:
Date:
279
Exhibit I - 1
EXHIBIT I
FORM OF CAPACITY AND EFFICIENCY RATE TEST CERTIFICATE
This certification (“Certification”) of Capacity and Efficiency Rate Test results is delivered by [licensed professional engineer] (“Engineer”) to California Community Power, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Service Agreement dated __________ (“Agreement”) by and between [SELLER ENTITY] and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
I hereby certify that a Capacity and Efficiency Rate Test conducted on [Date] demonstrated (i) an [Installed or Effective] Capacity of __ MW AC to the Delivery Point at eight (8) hours of continuous discharge, (ii) a Battery Charging Factor of __%, (iii) a Battery Discharging Factor of __%, and (iv) an Efficiency Rate of __%, all in accordance with the testing procedures, requirements and protocols set forth in Section 4.4 and Exhibit O.
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Its:
Date:
280
Exhibit J - 1
EXHIBIT J
FORM OF CONSTRUCTION START DATE CERTIFICATE
This certification of Construction Start Date (“Certification”) is delivered by [SELLER ENTITY] (“Seller”) to California Community Power, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Service Agreement dated __________ (“Agreement”) by and between Seller and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
Seller hereby certifies and represents to Buyer the following:
(1) Construction Start (as defined in Exhibit B of the Agreement) has occurred, and a copy of the notice to proceed that Seller issued to its contractor as part of Construction Start is attached hereto.
(2) the Construction Start Date occurred on _____________ (the “Construction Start Date”); and
(3) the precise Site on which the Facility is located is, which must be within the boundaries of the previously identified Site:
_____________________________________________________________________ (such description shall amend the description of the Site in Exhibit A of the Agreement.) IN WITNESS WHEREOF, the undersigned has executed this Certification on behalf of Seller as of the ___ day of ________.
[SELLER ENTITY]
By:
Its:
Date:
281
Exhibit K - 1
EXHIBIT K
FORM OF LETTER OF CREDIT
[Issuing Bank Letterhead and Address]
IRREVOCABLE STANDBY LETTER OF CREDIT NO. [XXXXXXX]
Date:
Bank Ref.:
Amount: US$[XXXXXXXX]
Beneficiary:
California Community Power,
a California joint powers authority
[Address]
Ladies and Gentlemen:
By the order of __________ (“Applicant”), we, [insert bank name and address] (“Issuer”) hereby issue our Irrevocable Standby Letter of Credit No. [XXXXXXX] (the “Letter of Credit”) in favor of California Community Power, a California joint powers authority (“Beneficiary”), [Address], for an amount not to exceed the aggregate sum of U.S. $[XXXXXX] (United States Dollars [XXXXX] and 00/100) (the “Available Amount”), pursuant to that certain Energy Storage [Service] Agreement dated as of ______ and as amended (the “Agreement”) between Applicant and Beneficiary. This Letter of Credit shall become effective immediately and shall be of no further force or effect at 5:00 p.m., California time, on [Date] or, if such day is not a Business Day (as hereinafter defined), on the next Business Day (as may be extended pursuant to the terms of this Letter of Credit, the “Expiration Date”).
For the purposes hereof, “Business Day” shall mean any day on which commercial banks are not authorized or required to close in San Francisco, California.
Funds under this Letter of Credit are available to Beneficiary by valid presentation on or before 5:00 p.m. California time, on or before the Expiration Date of a copy of this Letter of Credit No. [XXXXXXX] and all amendments accompanied by Beneficiary’s dated statement purportedly signed by Beneficiary’s duly authorized representative, in the form attached hereto as Exhibit A, containing one of the two alternative paragraphs set forth in paragraph 2 therein.
Any full or partial drawing hereunder may be requested by transmitting copies of the requisite documents as described above to the Issuer by facsimile at [facsimile number for draws] or such other number as specified from time-to-time by the Issuer. 282
Exhibit K - 2
The facsimile transmittal shall be deemed delivered when received. Drawings made by facsimile transmittal are deemed to be the operative instrument without the need of originally signed documents.
Issuer hereby agrees that all drafts drawn under and in compliance with the terms of this Letter of Credit will be duly honored if presented to the Issuer before the Expiration Date. All correspondence and any drawings (other than those made by facsimile) hereunder are to be directed to [Issuer address/contact]. Issuer undertakes to make payment to Beneficiary under this Standby Letter of Credit within three (3) business days of receipt by Issuer of a properly presented Drawing Certificate. The Beneficiary shall receive payment from Issuer by wire transfer to the bank account of the Beneficiary designated in the Drawing Certificate.
Partial draws are permitted under this Letter of Credit, and this Letter of Credit shall remain in full force and effect with respect to any continuing balance; provided, the Available Amount shall be reduced by the amount of each such drawing.
It is a condition of this Letter of Credit that it shall be deemed automatically extended without an amendment for a one year period (or, if such period ends on a day that is not a Business Day, until the next Business Day thereafter) beginning on the present Expiration Date hereof and upon each anniversary for such date (or, if such period ends on a day that is not a Business Day, until the next Business Day thereafter), unless at least ninety (90) days prior to any such Expiration Date Issuer has sent Beneficiary written notice by overnight courier service at the address provided below that Issuer elects not to extend this Letter of Credit, in which case it will expire on its then current Expiration Date. No presentation made under this Letter of Credit after such Expiration Date will be honored.
Notwithstanding any reference in this Letter of Credit to any other documents, instruments or agreements, this Letter of Credit contains the entire agreement between Beneficiary and Issuer relating to the obligations of Issuer hereunder.
Except so far as otherwise stated, this Letter of Credit is subject to the International Standby Practices ISP98 (also known as ICC Publication No. 590), or revision currently in effect (the “ISP”). As to matters not covered by the ISP, the laws of the State of California, without regard to the principles of conflicts of laws thereunder, shall govern all matters with respect to this Letter of Credit.
Please address all correspondence regarding this Letter of Credit to the attention of the Letter of Credit Department at [insert bank address information], referring specifically to Issuer’s Letter of Credit No. [XXXXXXX]. For telephone assistance, please contact Issuer’s Standby Letter of Credit Department at [XXX-XXX-XXXX] and have this Letter of Credit available.
All notices to Beneficiary shall be in writing and are required to be sent by certified letter, overnight courier, or delivered in person to: California Community Power, a California joint powers authority, [Title], [Address]. Only notices to Beneficiary meeting the requirements of this paragraph shall be considered valid. Any notice to Beneficiary which is not in accordance with this paragraph shall be void and of no force or effect. 283
Exhibit K - 3
[Bank Name]
___________________________
[Insert officer name]
[Insert officer title]
284
Exhibit K - 4
EXHIBIT A
(DRAW REQUEST SHOULD BE ON BENEFICIARY’S LETTERHEAD)
Drawing Certificate
[Insert Bank Name and Address]
Ladies and Gentlemen:
The undersigned, a duly authorized representative of California Community Power, [ADDRESS], as beneficiary (the “Beneficiary”) of the Irrevocable Letter of Credit No. [XXXXXXX] (the “Letter of Credit”) issued by [insert bank name] (the “Bank”) by order of __________ (the “Applicant”), hereby certifies to the Bank as follows:
1. Applicant and Beneficiary are party to that certain Energy Storage Service Agreement dated as of ___________, 20__ (the “Agreement”).
2. Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________ because a Seller Event of Default (as such term is defined in the Agreement) has occurred.
or
Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________, which equals the full available amount under the Letter of Credit, because Applicant is required to maintain the Letter of Credit in force and effect beyond the expiration date of the Letter of Credit but has failed to provide Beneficiary with a replacement Letter of Credit or other acceptable instrument within thirty (30) days prior to such expiration date.
3. The undersigned is a duly authorized representative of [ ] and is authorized to execute and deliver this Drawing Certificate on behalf of Beneficiary.
You are hereby directed to make payment of the requested amount to [ ] by wire transfer in immediately available funds to the following account:
[Specify account information]
[ ]
_______________________________
Name and Title of Authorized Representative
Date___________________________
285
Exhibit L -1
EXHIBIT L
FORM OF BUYER LIABILITY PASS THROUGH AGREMENT
This Buyer Liability Pass Through Agreement (this “BLPTA”) is entered into as of [______], 20__ (the “BLPTA Effective Date”) by and between [______], a [______] (together with its successors and permitted assigns “Project Participant”), California Community Power, a California joint powers authority (“CC Power”), and [_____], a [______] (together with its successors and permitted assigns “Seller”). Seller, CC Power, and Project Participant are sometimes referred to herein individually as a “Party” and jointly as the “Parties.”
RECITALS
WHEREAS, CC Power and Seller have entered into that certain Energy Storage Service Agreement (as amended, restated or otherwise modified from time to time, the “ESSA”) dated as of [_____], 20__;
WHEREAS, Project Participant is entering into this BLPTA to secure, in part, California Community Power’s obligations under the ESSA;
WHEREAS, Project Participant is named as a Project Participant under the ESSA and will derive substantial direct and indirect benefits from the execution and delivery of the ESSA; WHEREAS, Seller and CC Power will derive substantial and direct benefits from the execution and delivery of this BLPTA; and
WHEREAS, initially capitalized terms used but not defined herein have the meaning set forth in the ESSA.
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the sufficiency and adequacy of which are hereby acknowledged, the Parties agree to the following:
AGREEMENT
1. Project Participant Covenants. For value received, Project Participant does hereby unconditionally, absolutely, and irrevocably guarantee, as obligor and not as a surety, to Seller the complete and prompt payment of [X%] (the “Liability Share”), as the same may be adjusted pursuant to Section 4, [Note: Insert percentage from Exhibit V] of all obligations and liabilities for payment now or hereafter owing from CC Power to Seller under the ESSA, including liabilities for Monthly Capacity Payments, the Damage Payment or Termination Payment, as applicable, and any other damage payments or reimbursement amounts (each such obligation or liability of CC Power under the ESSA, a “Guaranteed Amount”). Any payment made directly from CC Power to Seller under the ESSA shall reduce Project Participant’s liability hereunder by reducing the total amount that is used to calculate the Guaranteed Amount pursuant to the preceding sentence. This BLPTA is an irrevocable, absolute, unconditional, and continuing guarantee of the punctual payment and performance, and not of collection, of Project Participant’s 286
Exhibit L -2
Liability Share of the Guaranteed Amount. In the event CC Power shall fail to duly, completely, or punctually pay any amount owed by Buyer pursuant to the terms and conditions of the ESSA, and such failure is not remedied within ten (10) Business Days after Notice thereof pursuant to Sections 11.1 or 11.4, as applicable, Project Participant shall promptly pay Project Participant’s Liability Share of the Guaranteed Amount, as required herein.
2. Seller Waiver. In consideration of the foregoing, Seller unconditionally waives:
a) all right to recover directly from CC Power any Damage Payment or Termination Payment that is not paid by CC Power pursuant to Sections 11.3 and 11.4 of the ESSA, but the foregoing waiver does not apply to any other right or remedy of Seller under the ESSA, including the right to recover accrued Monthly Capacity Payments, other amounts payable or reimbursable under the ESSA or any other amounts incurred or accrued prior to termination of the ESSA and the right to terminate the ESSA as the result of an Event of Default by Buyer
3. Demand Notice. For avoidance of doubt, Seller may demand payment from Project Participant for purposes of this BLPTA only when and if a payment is not duly, completely, or punctually paid by CC Power pursuant to the terms and conditions of the ESSA and such failure is not remedied by CC Power within ten (10) Business Days after Notice thereof is issued pursuant to Sections 11.1 or 11.4, as applicable. If CC Power fails to pay any amount when due pursuant to the ESSA, and such failure is not remedied by CC Power within ten (10) Business Days after Notice thereof, then Seller may exercise its rights under this BLPTA and make a payment demand upon Project Participant to pay Project Participant’s Liability Share of the unpaid Guaranteed Amount (a “Payment Demand”). A Payment Demand shall be in writing and shall reasonably specify (a) in what manner and what amount CC Power has failed to pay, (b) an explanation of why such payment is due and owing, (c) a calculation of the Guaranteed Amount due from Project Participant, and (d) a specific statement that Seller is requesting that Project Participant pay its Guaranteed Liability Share of the unpaid Guaranteed Amount under this BLPTA. Project Participant shall, within fifteen (15) Business Days following its receipt of the Payment Demand, pay to Seller Project Participant’s Liability Share of the unpaid Guaranteed Amount.
4. Step-Up Events. Within thirty (30) days after the occurrence of a Step-Up Event, Project Participant and CC Power will tender to Seller a duly executed and binding replacement Buyer Liability Pass Through Agreement in the same form as this Agreement, but for a Liability Share equal to the Project Participant’s Revised Liability Share. Upon receipt of such executed replacement Buyer Liability Pass Through Agreement, Seller will cancel this Buyer Liability Pass Through Agreement, effective upon the effectiveness of the replacement Buyer Liability Pass Through Agreement. For the avoidance of doubt, the cancellation of an existing Buyer Liability Pass Through Agreement shall not be effective unless and until the replacement Buyer Liability Pass Through Agreement has become effective and binding. Following delivery of such replacement Buyer Liability Pass Through Agreement and cancellation of this Buyer Liability Pass Through Agreement, Exhibit V to the ESSA will be deemed amended to reflect the Project Participant’s Revised Liability Share; provided that the Project Participant’s Revised Liability Share shall not exceed one hundred twenty-five percent (125%) of the Project Participant’s Initial Liability Share.
5. Scope and Duration of BLPTA. The obligations under this BLPTA are 287
Exhibit L -3
independent of the obligations of CC Power under the ESSA, and an action may be brought to enforce this BLPTA whether or not action is brought against CC Power under the ESSA. This BLPTA shall continue in full force and effect from the BLPTA Effective Date until both of the following have occurred: (a) the Delivery Term of the ESSA has expired or terminated early, and (b) either (i) all payment obligations of CC Power due and payable under the ESSA are paid in full (whether directly or indirectly such as through set-off or netting) or (ii) Project Participant has paid the maximum Guaranteed Amount (i.e. based on its maximum Revised Liability Share as provided in Section 4) in full. This BLPTA shall also continue to be effective or be reinstated, as the case may be, if at any time any payment of any Guaranteed Amount by CC Power is rescinded or must otherwise be returned by Seller upon the insolvency, bankruptcy or reorganization of CC Power or similar proceeding, all as though such payment had not been made, and Project Participant’s Liability Share of such Guaranteed Amount shall be subject to payment following a Payment Demand issued pursuant to this BLPTA. Without limiting the generality of the foregoing, and to the extent that the Project Participant has not paid its maximum Guaranteed Amount in full, the obligations of the Project Participant hereunder shall not be released, discharged, or otherwise affected, and this BLPTA shall not be invalidated or impaired or otherwise affected for the following reasons:
a) The extension of time for the payment of any Guaranteed Amount; or b) Any amendment, modification or other alteration of the ESSA; or c) Any insurance that may be available to cover any loss, except to the extent insurance proceeds are used to satisfy the Guaranteed Amount; or d) Any voluntary or involuntary liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceeding affecting CC Power, including but not limited to any rejection or other discharge of CC Power’s obligations under the ESSA imposed by any court, trustee or custodian or any similar official or imposed by any law, statue or regulation, in each such event in any such proceeding; or
e) Any reorganization of CC Power or Project Participant, or any merger or consolidation of CC Power or Project Participant into or with any other Person; or f) The receipt, release, modification or waiver of, or failure to pursue or seek relief under or with respect to, any other BLPTA, guaranty, collateral, pledge or security device whatsoever; or
g) CC Power’s inability to pay any Guaranteed Amount or perform its obligations under the ESSA; or
h) Any other event or circumstance that may now or hereafter constitute a defense to payment of the Guaranteed Amount, including, without limitation, statute of frauds and accord and satisfaction; provided that Project Participant reserves the right to assert for itself any defenses, setoffs or counterclaims that CC Power is or may be entitled to assert against Seller, including with respect to disputes regarding the calculation of a Guaranteed Amount. 288
Exhibit L -4
6. Waivers by Project Participant. Project Participant hereby unconditionally waives as a condition precedent to the performance of its obligations hereunder, with the exception of the requirements in Paragraphs 2 and 3, (a) notice of acceptance, presentment or protest, notice of any of the events described in Paragraph 5, or any other notice or demand of any kind with respect to the Guaranteed Amounts and this BLPTA, (b) any requirement that Seller pursue or exhaust any right, power or remedy or proceed against California Community Power under the ESSA or against any other Person, including any obligation to pursue any other BLPTAs, or to marshal assets, (c) any defense based on any of the matters described in Paragraph 4, (d) all rights of subrogation or other rights to pursue CC Power for payments made under this BLPTA until all amounts owing under the ESSA have been paid in full, and (e) any duty of Seller to disclose any information or other matters relating to the business, operations or finances or other condition of CC Power or any other Person who has provided a BLPTA or other security or guaranty with respect to the ESSA now or hereafter known to Seller. Project Participant further acknowledges and agrees that it is and will be bound by actions taken and elections made by CC Power under the ESSA and waives any defense based on CC Power’s authority or lack thereof or the validity, regularity or advisability of the actions taken or elections made.
7. Project Participant Representations and Warranties. Project Participant hereby represents and warrants that (a) it has all necessary and appropriate powers and authority and the legal right to execute and deliver, and perform its obligations under, this BLPTA, (b) this BLPTA constitutes its legal, valid and binding obligations enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting enforcement of creditors’ rights or general principles of equity, (c) the execution, delivery and performance of this BLPTA does not and will not contravene Project Participant’s organizational documents, any applicable Law or any contractual provisions binding on or affecting Project Participant, (d) there are no actions, suits or proceedings pending before any court, governmental agency or arbitrator, or, to the knowledge of the Project Participant, threatened, against or affecting Project Participant or any of its properties or revenues which may, in any one case or in the aggregate, adversely affect the ability of Project Participant to enter into or perform its obligations under this BLPTA, and (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority, and no consent of any other Person (including, any member of the Project Participant), that has not heretofore been obtained is required in connection with the execution, delivery, performance, validity or enforceability of this BLPTA by Project Participant.
8. Seller Representations and Warranties. Seller hereby represents and warrants that (a) it has all necessary and appropriate powers and authority and the legal right to execute and deliver, and perform its obligations under, this BLPTA, (b) this BLPTA constitutes its legal, valid and binding obligations enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting enforcement of creditors’ rights or general principles of equity, (c) the execution, delivery and performance of this BLPTA does not and will not contravene Seller’s organizational documents, any applicable Law or any contractual provisions binding on or affecting Seller, (d) there are no actions, suits or proceedings pending before any court, governmental agency or arbitrator, or, to the knowledge of the Seller, threatened, against or affecting Seller or any of its properties or revenues which may, in any one case or in the aggregate, adversely affect the ability of Seller to enter into or perform its obligations under this BLPTA, and (e) no consent or authorization of, 289
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filing with, or other act by or in respect of, any arbitrator or Governmental Authority, and no consent of any other Person (including, any stockholder or creditor of the Seller), that has not heretofore been obtained is required in connection with the execution, delivery, performance, validity or enforceability of this BLPTA by Seller.
9. California Community Power Representations and Warranties. California Community Power hereby represents and warrants that (a) it has all necessary and appropriate powers and authority and the legal right to execute and deliver, and perform its obligations under, this BLPTA, (b) this BLPTA constitutes its legal, valid and binding obligations enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting enforcement of creditors’ rights or general principles of equity, (c) the execution, delivery and performance of this BLPTA does not and will not contravene California Community Power’s organizational documents, any applicable Law or any contractual provisions binding on or affecting California Community Power, (d) there are no actions, suits or proceedings pending before any court, governmental agency or arbitrator, or, to the knowledge of the California Community Power, threatened, against or affecting California Community Power or any of its properties or revenues which may, in any one case or in the aggregate, adversely affect the ability of California Community Power to enter into or perform its obligations under this BLPTA, and (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority, and no consent of any other Person (including, any member of California Community Power), that has not heretofore been obtained is required in connection with the execution, delivery, performance, validity or enforceability of this BLPTA by California Community Power.
10. Notices. Notices under this BLPTA shall be deemed received if sent to the address specified below: (i) on the day received if served by overnight express delivery, and (ii) four (4) Business Days after mailing if sent by certified, first-class mail, return receipt requested. Any Party may change its address or facsimile to which notice is given hereunder by providing notice of the same in accordance with this Paragraph 8.
If delivered to Seller, to it at:
[____]
Attn: [____]
Fax: [____]
If delivered to Project Participant, to it at:
[____]
Attn: [____]
Fax: [____]
If delivered to CC Power, to it at:
[____]
Attn: [____]
Fax: [____]
11. Governing Law and Forum Selection. This BLPTA shall be governed by, and 290
Exhibit L -6
interpreted and construed in accordance with, the laws of the United States and the State of California, excluding choice of law rules. The Parties agree that any suit, action or other legal proceeding by or against any Party (or its affiliates or designees) with respect to or arising out of this BLPTA shall be brought in the federal courts of the United States or the courts of the State of California sitting in the county of ________.
12. Miscellaneous. This BLPTA shall be binding upon the Parties and their respective successors and assigns and shall inure to the benefit of the Parties and their successors and permitted assigns. No provision of this BLPTA may be amended or waived except by a written instrument executed by Seller, CC Power, and Project Participant. No provision of this BLPTA confers, nor is any provision intended to confer, upon any third party (other than the Parties’ successors and permitted assigns) any benefit or right enforceable at the option of that third party.
This BLPTA embodies the entire agreement and understanding of the Parties hereto with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements and understandings of the Parties hereto, verbal or written, relating to the subject matter hereof. If any provision of this BLPTA is determined to be illegal or unenforceable (i) such provision shall be deemed restated in accordance with applicable Laws to reflect, as nearly as possible, the original intention of the Parties hereto, and (ii) such determination shall not affect any other provision of this BLPTA and all other provisions shall remain in full force and effect. This BLPTA may be executed in any number of separate counterparts, each of which when so executed shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This BLPTA may be executed and delivered by electronic means with the same force and effect as if the same was a fully executed and delivered original manual counterpart.
13. Assignment. Except as provided below in this Paragraph 12, no Party may assign this BLPTA or its rights or obligations under this BLPTA, without the prior written consent of the other Parties, which consent shall not be unreasonably withheld, conditioned or delayed. Seller may, without the prior written consent of Project Participant and CC Power, transfer or assign this BLPTA to any Person to whom Seller may assign its rights or obligations under the ESSA, including assignments for financing purposes, including a Portfolio Financing; provided, Seller shall give Project Participant and CC Power Notice at least fifteen (15) Business Days before the date of such proposed assignment and, except in the case of a collateral assignment or other assignment for financing purposes, provide Project Participant and CC Power a written agreement signed by the Person to which Seller wishes to assign its interests that provides that such Person will fully assume all of Seller’s obligations and liabilities under this BLPTA, including obligations and liabilities that arose prior to the date of transfer or assignment, upon such transfer or assignment. Project Participant may, without the prior written consent of Seller and CC Power, transfer or assign this BLPTA to any member of CC Power that (A) has a Credit Rating of at least BBB- from S&P or Baa3 from Moody’s, and (B) is a load serving entity; provided, Project Participant shall give Seller and CC Power Notice at least fifteen (15) Business Days before the date of such proposed assignment and provide to Seller and CC Power a written agreement signed by the Person to which Project Participant wishes to assign its interests that provides that such Person will fully assume all of Project Participant’s obligations and liabilities, including obligations and liabilities that arose prior to the date of transfer or assignment, under this BLPTA upon such transfer or assignment.
14. No Recourse to Members of Project Participant. Project Participant is organized 291
Exhibit L -7
as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) pursuant to its joint powers agreement and is a public entity separate from its constituent members. Project Participant shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this BLPTA. Seller and CC Power shall have no rights and shall not make any claims, take any actions or assert any remedies against any of Project Participant’s constituent members, or the officers, directors, advisors, contractors, consultants or employees of Project Participant or its constituent members, in connection with this BLPTA.
15. No Recourse to Members of CC Power. CC Power is organized as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) pursuant to its Joint Powers Agreement and is a public entity separate from its constituent members. Except as expressly set forth in the ESSA and this BLPTA, CC Power shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this BLPTA, and as such, Seller and Project Participant shall have no rights and shall not make any claims, take any actions or assert any remedies against any of CC Power’s constituent members, or the officers, directors, advisors, contractors, consultants or employees of Project Participant or its constituent members, in connection with this BLPTA.
16. CleanPowerSF as Project Participant. Paragraph 14 shall not apply if CleanPowerSF is the Project Participant, but the following shall apply:
a) Designated Fund. CleanPowerSF payment obligations under this BLPTA are special limited obligations of CleanPowerSF payable solely from the revenues of CleanPowerSF. CleanPowerSF’s payment obligations under this BLPTA are not a charge upon the revenues or general fund of the San Francisco Public Utility Commission (“SFPUC”) or the City and County of San Francisco or upon any non- CleanPowerSF moneys or other property of the SFPUC or the City and County of San Francisco.
b) Controller Certification. CleanPowerSF’s obligations hereunder shall not at any time exceed the amount certified by the Controller for the purpose and period stated in such certification. Except as may be provided by laws governing emergency procedures, officers and employees of CleanPowerSF are not authorized to request, and CleanPowerSF is not required to reimburse Seller for, commodities or services beyond the agreed upon contract scope unless the changed scope is authorized by amendment and approved as required by law. Officers and employees of CleanPowerSF are not authorized to offer or promise, nor is CleanPowerSF required to honor, any offered or promised additional funding in excess of the maximum amount of funding for which the contract is certified without certification of the additional amount by the Controller.
The Controller is not authorized to make payments on any contract for which funds have not been certified as available in the budget or by supplemental appropriation. c) Biennial Budget Process. For each City and County of San Francisco biennial budget cycle during the term of this BLPTA, CleanPowerSF agrees to take all necessary action to include the maximum amount of its annual payment obligations under this BLPTA in its budget submitted to the City and County of San Francisco’s Board of Supervisors for each year of that budget cycle.
292
Exhibit L -8
d) Compliance with Laws. Each Party shall keep itself fully informed of all applicable federal, state, and local laws in any manner affecting the performance of its obligations under this BLPTA, and must at all times materially comply with such applicable laws as they may be amended from time to time.
e) Prohibition on Political Activity with City Funds. In performing any services required under this BLPTA, Seller shall comply with San Francisco Administrative Code Chapter 12G, which prohibits funds appropriated by the City for this BLPTA from being expended to participate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure in San Francisco.
f) Non-discrimination in Contracts. Seller shall comply with the provisions of Chapters 12B and 12C of the San Francisco Administrative Code. Seller shall incorporate by reference in all subcontracts the provisions of Sections12B.2(a), 12B.2(c)-(k), and 12C.3 of the San Francisco Administrative Code and shall require all subcontractors to comply with such provisions. Seller is subject to the enforcement and penalty provisions in Chapters 12B and 12C. g) Non-discrimination in the Provision of Employee Benefits. San Francisco Administrative Code 12B.2. Seller does not as of the date of this BLPTA, and will not during the term of this BLPTA, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the City elsewhere in the United States, discriminate in the provision of employee benefits between employees with domestic partners and employees with spouses and/or between the domestic partners and spouses of such employees, subject to the conditions set forth in San Francisco Administrative Code Section 12B.2. h) Submitting False Claims. Pursuant to San Francisco Administrative Code §21.35, any contractor or subcontractor who submits a false claim shall be liable to the City for the statutory penalties set forth in that section. A contractor or subcontractor will be deemed to have submitted a false claim to the City if the contractor or subcontractor: (1) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or approval; (2) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (3) conspires to defraud the City by getting a false claim allowed or paid by the City; (4) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (5) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim. i) Consideration of Salary History. Seller shall comply with San Francisco Administrative Code Chapter 12K, the Consideration of Salary History Ordinance or “Pay Parity Act.” Seller is prohibited from considering current or past salary of an applicant in determining whether to hire the applicant or what salary to offer the applicant to the extent that such applicant is applying for employment to be performed on this BLPTA or in furtherance of this BLPTA, and whose application, in whole or part, will be solicited, received, processed or considered, whether or not through an interview, in the City or on City property. j) Consideration of Criminal History in Hiring and Employment Decisions. 293
Exhibit L -9
Seller agrees to comply fully with and be bound by all of the provisions of Chapter 12T, “City Contractor/Subcontractor Consideration of Criminal History in Hiring and Employment Decisions,” of the San Francisco Administrative Code, including the remedies provided, and implementing regulations, as may be amended from time to time. The requirements of Chapter 12T shall only apply to Seller’s operations to the extent those operations are in furtherance of the performance of this BLPTA, shall apply only to applicants and employees who would be or are performing work in furtherance of this BLPTA, and shall apply when the physical location of the employment or prospective employment of an individual is wholly or substantially within the City.
Chapter 12T shall not apply when the application in a particular context would conflict with federal or state law or with a requirement of a government agency implementing federal or state law. k) Conflict of Interest. By executing this BLPTA, Seller certifies that it does not know of any fact which constitutes a violation of Section 15.103 of the City’s Charter; Article III, Chapter 2 of City’s Campaign and Governmental Conduct Code; Title 9, Chapter 7 of the California Government Code (Section 87100 et seq.), or Title 1, Division 4, Chapter 1, Article 4 of the California Government Code (Section 1090 et seq.), and further agrees promptly to notify the City if it becomes aware of any such fact during the term of this BLPTA. l) Campaign Contributions. By executing this BLPTA, Seller acknowledges its obligations under Section 1.126 of the City’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with, or is seeking a contract with, any department of the City for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, for a grant, loan or loan guarantee, or for a development agreement, from making any campaign contribution to (i) a City elected official if the contract must be approved by that official, a board on which that official serves, or the board of a state agency on which an appointee of that official serves, (ii) a candidate for that City elective office, or (iii) a committee controlled by such elected official or a candidate for that office, at any time from the submission of a proposal for the contract until the later of either the termination of negotiations for such contract or twelve months after the date the City approves the contract. The prohibition on contributions applies to each prospective party to the contract; each member of Seller’s board of directors; Seller’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than ten percent (10%) in Seller; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by Seller. Seller shall inform the relevant persons of the limitation on contributions imposed by Section 1.126.
m) MacBride Principles – Northern Ireland. Pursuant to San Francisco Administrative Code § 12F.5, the City and County of San Francisco urges companies doing business in Northern Ireland to move towards resolving employment inequities, and encourages such companies to abide by the MacBride Principles. The City and County of San Francisco urges San Francisco companies to do business with corporations that abide by the MacBride principles. n) Tropical Hardwood and Virgin Redwood Ban. The City and County of San Francisco urges contractors not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood product, virgin redwood or virgin redwood product. If this order is for wood products or a service involving wood products: (a) Chapter 8 of the Environment Code is incorporated herein and by reference made a part hereof as though fully set forth. (b) Except as 294
Exhibit L -10
expressly permitted by the application of Sections 802(B), 803(B), and 804(B) of the Environment Code, Seller shall not provide any items to the City in performance of this BLPTA which are tropical hardwoods, tropical hardwood products, virgin redwood or virgin redwood products. (c) Failure of Seller to comply with any of the requirements of Chapter 8 of the Environment Code shall be deemed a material breach of contract.
o) Effect on Payment Obligations. The Parties agree that, although breach of an obligation set forth in Sections 16(d) through 16(n) may result in Seller incurring liability for such breach, any such liability will be independent of Project Participant’s liability hereunder, and no breach of or default by Seller under Sections 16(d) through 16(n) will relieve Project Participant of its liability for its Liability Share of all Guaranteed Amounts, nor may any such breach or default, or claim of breach or default, be permitted or asserted as a defense to or offset against payment of any amounts owed by Project Participant to Seller hereunder.
17. City of San José (San José Clean Energy) as Project Participant. Paragraph 14 shall not apply if the City of San José, as administrator of San José Clean Energy (“SJCE”) is the Project Participant, but the following shall apply:
a) Designated Fund. The City of San José is a municipal corporation and is precluded under the California State Constitution and applicable law from entering into obligations that financially bind future governing bodies without an appropriation for such obligation, and, therefore, nothing in the Agreement shall constitute an obligation of future legislative bodies of the City to appropriate funds for purposes of the Agreement; provided, however, that the City of San José has created and set aside a designated fund (being the San Jose Energy Operating Fund established pursuant to City of San Jose Municipal Code, Title 4, Part 63, Section 4.80.4050 et. seq.) (“Designated Fund”) for payment of its obligations under this BLPTA. Subject to the requirements and limitations of applicable law and taking into account other available money specifically authorized by the San José City Council and allocated and appropriated to the SJCE’s obligations, SJCE agrees to establish rates and charges that are sufficient to maintain revenues in the Designated Fund necessary to pay its obligations under this BLPTA. b) Limited Obligations. SJCE’s payment obligations under this BLPTA are special limited obligations of the SJCE payable solely from the Designated Fund and are not a charge upon the revenues or general fund of the City of San José or upon any non- San José Clean Energy moneys or other property of the Community Energy Department or the City of San José. c) Nondiscrimination/Non-Preference. In performing its obligations under this BLPTA, Seller shall not, and shall not cause or allow its subcontractors to, discriminate against or grant preferential treatment to any person on the basis of race, sex, color, age, religion, sexual orientation, actual or perceived gender identity, disability, ethnicity or national origin. This prohibition applies to recruiting, hiring, demotion, layoff, termination, compensation, fringe benefits, advancement, training, apprenticeship and other terms, conditions, or privileges of employment, subcontracting and purchasing. Seller will inform all subcontractors of these obligations. This prohibition is subject to the following conditions: (i) the prohibition is not intended to preclude Seller from providing a reasonable accommodation to a person with a disability; (ii) the City’s Compliance Officer may require Seller to file, and cause any Seller’s subcontractor to file, reports demonstrating compliance with this section. Any such reports shall 295
Exhibit L -11
be filed in the form and at such times as the City’s Compliance Officer designates. They shall contain such information, data and/or records as the City’s Compliance Officer determines is needed to show compliance with this provision.
d) Conflict of Interest. Seller represents that it is familiar with the local and state conflict of interest laws and agrees to comply with those laws in performing this BLPTA.
Seller certifies that, as of the Effective Date, it was unaware of any facts constituting a conflict of interest or creating an appearance of a conflict of interest. Seller shall avoid all conflicts of interest or appearances of conflicts of interest in performing this BLPTA. Seller has the obligation of determining if the manner in which it performs any part of this BLPTA results in a conflict of interest or an appearance of a conflict of interest and shall immediately notify SJCE in writing if it becomes aware of any facts giving rise to a conflict of interest or the appearance of a conflict of interest. Seller’s violation of this subsection (ii) is a material breach. e) Environmentally Preferable Procurement Policy. Seller shall perform its obligations under this BLPTA in conformance with San José City Council Policy 1-19, entitled “Prohibition of City Funding for Purchase of Single serving Bottled Water,” and San José City Council Policy 4-6, entitled “Environmentally Preferable Procurement Policy,” as those policies may be amended from time to time. The Parties acknowledge and agree that in no event shall a breach of this Section 13.1(g) be a material breach of this BLPTA or otherwise give rise to an Event of Default or entitle SJCE to terminate this BLPTA. f) Gifts Prohibited. Seller represents that it is familiar with Chapter 12.08 of the San José Municipal Code, which generally prohibits a City of San José officer or designated employee from accepting any gift. Seller shall not offer any City of San José officer or designated employee any gift prohibited by Chapter 12.08. Seller’s violation of this subsection (iv) is a material breach.
g) Disqualification of Former Employees. Seller represents that it is familiar with Chapter 12.10 of the San José Municipal Code, which generally prohibits a former City of San José officer and former designated employee from providing services to the City of San José connected with his/her former duties or official responsibilities. Seller shall not use either directly or indirectly any officer, employee or agent to perform any services if doing so would violate Chapter 12.10.
h) Effect on Payment Obligations. The Parties agree that, although breach of an obligation set forth in Sections 17(d) through 17(g) may result in Seller incurring liability for such breach, any such liability will be independent of Project Participant’s liability hereunder, and no breach of or default by Seller under Sections 17(c) through 17(h) will relieve Project Participant of its liability for its Liability Share of all Guaranteed Amounts, nor may any such breach or default, or claim of breach or default, be permitted or asserted as a defense to or offset against payment of any amounts owed by Project Participant to Seller hereunder.
IN WITNESS WHEREOF, the Parties have caused this BLPTA to be duly executed and delivered by their duly authorized representatives on the date first above written. 296
Exhibit L -12
[PROJECT PARTICIPANT]:
By:______________________________
Printed Name:__________________
Title:____________________________
CALIFORNIA COMMUNITY POWER, a
California joint powers authority:
By:______________________________
Printed Name:__________________
Title:____________________________
[SELLER]:
By:______________________________
Printed Name:__________________
Title:____________________________
297
Exhibit M - 1
EXHIBIT M
FORM OF REPLACEMENT RA NOTICE
This Replacement RA Notice (this “Notice”) is delivered by [SELLER ENTITY] (“Seller”) to [______], a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Service Agreement dated __________ (“Agreement”) by and between Seller and Buyer. All capitalized terms used in this Notice but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
Pursuant to Section 3.5 of the Agreement, Seller hereby provides the below Replacement RA product information:
298
Exhibit M - 2
[SELLER ENTITY]
By:
Its:
Date:
299
300
Exhibit N - 2
Tumbleweed Energy Storage, LLC
(“Seller”)
California Community Power, a California
joint powers authority (“Buyer”)
With additional Notices of an Event of
Default to:
Attn: David Sass
VP & Assistant General Counsel
Street: One Tower Center, 21st Floor
City: East Brunswick, NJ 08816
Phone: 732 867-5853
Facsimile: 732 249-7290
Email: [email protected]
With additional Notices of an Event of
Default to:
Attn: Brittany Iles, Attorney
Street: 555 Capitol Mall, Ste 570
City: Sacramento, CA 95814
Phone: 916 326-5812
Facsimile: 916 330-4337
Email: [email protected]
301
Exhibit O - 1
EXHIBIT O
CAPACITY AND EFFICIENCY RATE TESTS
Capacity Test Notice and Frequency
A. Commercial Operation Capacity Test(s). Upon no less than ten (10) Business Days prior Notice to Buyer, Seller shall schedule and complete a Commercial Operation Capacity Test prior to the Commercial Operation Date. Such initial Commercial Operation Capacity Test (and any subsequent Commercial Operation Capacity Test permitted in accordance with Section 5 of Exhibit B) shall be performed in accordance with this Exhibit O and shall establish the Installed Capacity and initial Efficiency Rate hereunder based on the actual capacity and capabilities of the Facility determined by such Commercial Operation Capacity Test(s).
B. Subsequent Capacity Tests. Following the Commercial Operation Date, at least fifteen (15) days in advance of the start of each Contract Year, upon no less than ten (10) Business Days prior Notice to Buyer, Seller shall schedule and complete a Capacity Test. In addition to the annual capacity test, if Buyer has reason to believe that the Effective Capacity or the Efficiency Rate is materially less than shown by the most recent test results, Buyer shall have the right to require a Capacity Test at any time upon no less than five (5) Business Days prior Notice to Seller.
Seller shall have the right to run a retest of any Capacity Test at any time upon five (5) Business Days’ prior Notice to Buyer (or any shorter period reasonably acceptable to Buyer consistent with Prudent Operating Practice).
C. Test Results and Re-Setting of Effective Capacity and Efficiency Rate. No later than five (5) days following any Capacity Test, Seller shall submit a testing report detailing results and findings of the test. The report shall include Facility Meter readings and plant log sheets verifying the operating conditions and output of the Facility. In accordance with Section 4.4(a)(ii) of the Agreement and Part II(I) below, after the Commercial Operation Capacity Test(s), the Effective Capacity (up to, but not in excess of, the Installed Capacity) and Efficiency Rate determined pursuant to such Capacity Test shall become the new Effective Capacity and Efficiency Rate at the beginning of the day following the completion of the test for calculating the Monthly Capacity Payment and all other purposes under this Agreement.
Capacity Test Procedures
PART I. GENERAL.
A. Each Capacity Test shall be conducted in accordance with Prudent Operating Practices, the Operating Restrictions, and the provisions of this Exhibit O. For ease of reference, a Capacity Test is sometimes referred to in this Exhibit O as a “CT”.
Buyer or its representative may be present for the CT and may, for informational purposes only, use its own metering equipment (at Buyer’s sole cost).
B. Conditions Prior to Testing.
(1) EMS Functionality. The EMS shall be successfully configured to receive data from the Battery Management System (BMS), exchange DNP3 data 302
Exhibit O - 2
with the Buyer SCADA device, and transfer data to the database server for the calculation, recording and archiving of data points. (2) Communications. The Remote Terminal Unit (RTU) testing should be successfully completed prior to any testing. The interface between Buyer’s RTU and the Facility SCADA System should be fully tested and functional prior to starting any testing, including verification of the data transmission pathway between Buyer’s RTU and Seller’s EMS interface and the ability to record SCADA System data.
(3) Commissioning Checklist. Commissioning shall be successfully completed per manufacturer guidance on all applicable installed Facility equipment, including verification that all controls, set points, and instruments of the EMS are configured.
PART II. REQUIREMENTS APPLICABLE TO ALL CAPACITY TESTS.
Note: Seller shall have the right and option in its sole discretion to install storage capacity in excess of the Guaranteed Capacity; provided, for all purposes of this Agreement, the amount of Installed Capacity shall never be deemed to exceed the Guaranteed Storage Capacity, and all SOC measurements associated with a Capacity Test shall be based on the Installed Capacity without taking into account any capacity that exceeds the Guaranteed Capacity.
A. Test Elements. Each CT shall include at least the following individual test elements, which must be conducted in the order prescribed in Part III of this Exhibit O, unless the Parties mutually agree to deviations therefrom. The Parties acknowledge and agree that should Seller fall short of demonstrating one or more of the Test Elements as specified below, the Test will still be deemed “complete,” and any adjustments necessary to the Effective Capacity or to the Efficiency Rate resulting from such Test, if applicable, will be made in accordance with this Exhibit O. (1) Electrical output at maximum discharging level (MW) for eight (8) continuous hours; and
(2) Electrical input at maximum charging level at the Facility Meter (MW), as sustained until the SOC reaches at least 90%, continued by the electrical input at a rate up to the maximum charging level at the Facility Meter (MW), as sustained until the SOC reaches 100%, not to exceed ten (10) hours of total charging time.
B. Parameters. During each CT, the following parameters shall be measured and recorded simultaneously for the Facility, at two (2) second intervals:
(1) Time;
(2) The amount of Discharging Energy to the Facility Meters (kWh) (i.e., to each measurement device making up the Facility Meter);
303
Exhibit O - 3
(3) Net electrical energy input from the Facility Meters (kWh) (i.e., from each measurement device making up the Facility Meter); and
(4) Storage Level (MWh).
C. Site Conditions. During each CT, the following conditions at the Site shall be measured and recorded simultaneously at thirty (30) minute intervals:
(1) Relative humidity (%);
(2) Barometric pressure (inches Hg) near the horizontal centerline of the Facility; and
(3) Ambient air temperature (°F).
D. Test Showing. Each CT shall record and report the following datapoints:
(1) That the CT successfully started;
(2) The maximum sustained discharging level for eight (8) consecutive hours pursuant to A(1) above;
(3) The maximum sustained charging level for ten (10) consecutive hours (or such lesser time as is required to reach 100% SOC) pursuant to A(2) above; (4) Amount of time between the Facility’s electrical output going from 0 to the maximum sustained discharging level registered during the CT (for purposes of calculating the ramp rate);
(5) Amount of time between the Facility’s electrical input going from 0 to the maximum sustained charging level registered during the CT(for purposes of calculating the ramp rate);
(6) Amount of Charging Energy, registered at the Facility Meter, to go from 0% SOC to 100% SOC;
(7) Amount of Discharging Energy, registered at the Facility Meter, to go from 100% SOC to 0% SOC.
E. Test Conditions.
(1) General. At all times during a CT, the Facility shall be operated in compliance with Prudent Operating Practices, the Operating Restrictions, and all operating protocols recommended, required or established by the manufacturer for the Facility.
(2) Abnormal Conditions. If abnormal operating conditions that prevent the testing or recordation of any required parameter occur during a CT, Seller 304
Exhibit O - 4
may postpone or reschedule all or part of such CT in accordance with Part II.F below.
(3) Instrumentation and Metering. Seller shall provide all instrumentation, metering and data collection equipment required to perform the CT. The instrumentation, metering and data collection equipment electrical meters shall be calibrated in accordance with Prudent Operating Practice and, as applicable, the CAISO Tariff.
F. Incomplete Test. If any CT is not completed in accordance herewith, Buyer may in its sole discretion: (i) accept the results up to the time the CT stopped without any modification to the Effective Capacity or Efficiency Rate pursuant to Section I below; (ii) require that the portion of the CT not completed, be completed within a reasonable specified time period; or (iii) require that the CT be entirely repeated within a reasonable specified time period. Notwithstanding the above, if Seller is unable to complete a CT due to a Force Majeure Event or the actions or inactions of Buyer or the CAISO or the Transmission Provider, Seller shall be permitted to reconduct such CT on dates and at times reasonably acceptable to the Parties.
G. Test Report. Within five (5) Business Days after the completion of any CT, Seller shall prepare and submit to Buyer a written report of the results of the CT, which report shall include:
(1) A record of the personnel present during the CT that served in an operating, testing, monitoring or other such participatory role;
(2) The measured and calculated data for each parameter set forth in Part II.A through D, including copies of the raw data taken during the test; and (3) Seller’s statement of either Seller’s acceptance of the CT or Seller’s rejection of the CT results and reason(s) therefor.
Within ten (10) Business Days after receipt of such report, Buyer shall notify Seller in writing of either Buyer’s acceptance of the CT results or Buyer’s rejection of the CT and reason(s) therefor. If either Party rejects the results of any CT, such CT shall be repeated in accordance with Part II.F.
H. Supplementary Capacity Test Protocol. No later than sixty (60) days prior to commencing Facility construction, Seller shall deliver to Buyer for its review and approval (such approval not to be unreasonably delayed or withheld) a supplement to this Exhibit O with additional and supplementary details, procedures and requirements applicable to Capacity Tests based on the then current design of the Facility (“Supplementary Capacity Test Protocol”). Thereafter, from time to time, Seller may deliver to Buyer for its review and approval (such approval not to be unreasonably delayed or withheld) any Seller recommended updates to the then-current Supplementary Capacity Test Protocol. The initial Supplementary Capacity Test Protocol (and each update thereto), once approved by Buyer, shall be deemed an amendment to this Exhibit O.
305
Exhibit O - 5
I. Adjustment to Effective Capacity and Efficiency Rate. The Effective Capacity and Efficiency Rate shall be updated as follows:
(1) The total amount of Discharging Energy delivered to the Delivery Point (expressed in MWh AC) during the first eight (8) hours of discharge (up to, but not in excess of, the product of (i) (a) the Guaranteed Capacity (in the case of a Commercial Operation Capacity Test, including under Section 5 of Exhibit B) or (b) the Installed Capacity (in the case of any other Capacity Test), multiplied by (ii) eight (8) hours) shall be divided by eight (8) hours to determine the Effective Capacity, which shall be expressed in MW AC, and shall be the new Effective Capacity in accordance with Section
4.4(a)(ii) of the Agreement.
(2) The total amount of Discharging Energy (as reported under Section II.D(7) above) divided by the total amount of Charging Energy (as reported under Section II.D(6) above), and expressed as a percentage, shall be recorded as the new Efficiency Rate, and shall be used for the calculation of the Efficiency Rate Adjustment in Exhibit C until updated pursuant to a subsequent Capacity Test.
PART III. INITIAL SUPPLEMENTARY CAPACITY TEST PROTOCOL.
A. Effective Capacity and Efficiency Rate Test
• Procedure:
(1) System Starting State: The Facility will be in the on-line state at 0% SOC. (2) Record the initial value of the SOC.
(3) Command a real power charge that results in an AC power of Facility’s maximum charging level and continue charging until the earlier of (a) the Facility has reached 100% SOC or (b) ten (10) hours have elapsed since the Facility commenced charging.
(4) Record and store the SOC after the earlier of (a) the Facility has reached 100% SOC or (b) ten (10) hours of continuous charging. Such data point shall be used for purposes of calculation of the Battery Charging Factor. (5) Record and store the amount of Charging Energy, registered at the Facility Meter, to go from 0% SOC to 100% SOC.
(6) Following an agreed-upon rest period (not to exceed 5 minutes), command a real power discharge that results in an AC power output of the Facility’s maximum discharging level and maintain the discharging state until the earlier of (a) the Facility has discharged at the maximum discharging level for eight (8) consecutive hours, or (b) the Facility has reached 0% SOC. 306
Exhibit O - 6
(7) Record and store the SOC after eight (8) hours of continuous discharging.
Such data point shall be used for purposes of calculation of the Battery Discharging Factor. If the Facility SOC remains above zero percent (0%) after discharging at a rate at or above the Guaranteed Capacity (or at or above the Installed Capacity after a Commercial Operation Capacity Test) for eight (8) consecutive hours pursuant to Part III.A.6(a), the SOC will be deemed 0 for the purposes of calculating the Battery Discharging Factor. (8) Record and store the Discharging Energy as measured at the Facility Meter.
Such data point shall be used for purposes of calculation of the Effective Capacity.
(9) If the Facility has not reached 0% SOC pursuant to Section III.A.6, continue discharging the Facility until it reaches a 0% SOC.
(10) Record and store the Discharging Energy as measured at the Facility Meter from the commencement of discharging pursuant to Part III.A.6 until the Facility has reached a 0% SOC pursuant to either Part III.A.7 or Part III.A.9, as applicable.
• Test Results:
(1) The resulting Effective Capacity measurement is the sum of the total Discharging Energy at the Facility Meter divided by eight (8) hours. (2) The total amount of Discharging Energy (as reported under Section III.A(10) above) divided by the total amount of Charging Energy (as reported under Section III.A(5) above), and expressed as a percentage, shall be recorded as the new Efficiency Rate, and shall be used for the calculation of the Efficiency Rate Adjustment in Exhibit C until updated pursuant to a subsequent Capacity Test.
Note: The following tests (B) through (E), or alternative tests consistent with CAISO rules, may be conducted in connection with the initial Commercial Operation Capacity Test and any subsequent Capacity Test to the extent permitted under applicable Laws, including CAISO rules, but the results of these tests will not affect the determination of whether or not the Facility has passed a Capacity Test and will only be used to determine whether the Facility is performing with operational characteristics equal to those required by the Operating Restrictions.
B. AGC Discharge Test
• Purpose: This test will demonstrate the AGC discharge capability to achieve the Facility’s maximum discharging level within 1 second.
• System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The EMS will be configured to follow a predefined agreed-upon active power profile. 307
Exhibit O - 7
• Procedure:
(1) Record the Facility active power level at the Facility Meter. (2) Command the Facility to follow a simulated CAISO RIG signal of Pmax at .95 power factor for ten (10) minutes.
(3) Record and store the Facility active power response (in seconds). • System end state: The Facility will be in the on-line state and at a commanded active power level of 0 MW.
C. AGC Charge Test
• Purpose: This test will demonstrate the AGC charge capability to achieve the facility’s full charging level within 1 second.
• System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The Facility control system will be configured to follow a predefined agreed-upon active power profile.
• Procedure:
(1) Record the Facility active power level at the Facility Meter. (2) Command the Facility to follow a simulated CAISO RIG signal of Pmax at .95 power factor for ten (10) minutes.
(3) Record and store the Facility active power response (in seconds). • System end state: The Facility will be in the on-line state and at a commanded active power level of 0 MW.
D. Reactive Power Production Test
• Purpose: This test will demonstrate the reactive power production capability of the Facility.
• System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The EMS will be configured to follow an agreed-upon predefined reactive power profile. • Procedure:
(1) Record the Facility reactive power level at the Facility Meter. (2) Command the Facility to follow 35 MW for ten (10) minutes. 308
Exhibit O - 8
(3) Record and store the Facility reactive power response. • System end state: The Facility will be in the on-line state and at a commanded reactive power level of 0 MVAR.
E. Reactive Power Consumption Test
• Purpose: This test will demonstrate the reactive power consumption capability of the facility.
• System starting state: The Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The Facility control system will be configured to follow an agreed-upon predefined reactive power profile.
• Procedure:
(1) Record the Facility reactive power level at the Facility Meter. (2) Command the Facility to follow 35 MW for ten (10) minutes. (3) Record and store the Facility reactive power response. • System end state: The Facility will be in the on-line state and at a commanded reactive power level of 0 MVAR.
309
Exhibit P - 1
EXHIBIT P
FACILITY AVAILABILITY CALCULATION
Monthly Capacity Availability Calculation. Seller shall calculate the “Monthly Capacity Availability” for a given month of the Delivery Term using the formula set forth below:
[AVAILHRSm + EXCUSEDHRSm]
Monthly Capacity Availability (%) =
[MONTHRSm]
Where:
m = relevant month “m” in which Monthly Capacity Availability is calculated; MONTHRSm is the total number of hours for the month;
AVAILHRSm is the total number of hours, or partial hours, in the month during which the Facility was available to charge and discharge Energy between the Facility and the Delivery Point and to provide Ancillary Services at the Delivery Point. If the Facility is available pursuant to the preceding sentence during any applicable hour, or partial hour, but for less than the full amount of the Effective Capacity, the AVAILHRSm for such time period shall be calculated by multiplying such AVAILHRSm by a percentage determined by dividing (a) by (b); where (a) is the lower of (i) such capacity amount reported as available by Seller’s real-time EMS data feed to Buyer for the Facility for such hours, or partial hours, and (ii) Seller’s most recent Availability Notice (as updated pursuant to Section 4.10(b)), and (b) is the Effective Capacity.
EXCUSEDHRSm is the total number of hours, or partial hours, in the month that are not included as AVAILHRSm due to Approved Maintenance Hours, Buyer Dispatched Tests, Operating Restrictions in Exhibit Q, Buyer breach or default, or any circumstances at the high-voltage side of the Delivery Point or beyond that point that may limit Seller’s delivery of Product (each, an “Excused Event”). If an Excused Event results in less than the full amount of the Effective Capacity for the Facility being unavailable during any applicable hour, or partial hour, the EXCUSEDHRSm for such time period shall be calculated by multiplying such EXCUSEDHRSm by a percentage determined by dividing (a) by (b); where (a) is the lower of such Effective Capacity amount that is not reported as available by (i) Seller’s real-time EMS data feed to Buyer for the Facility for such hours, or partial hours, and (ii) Seller’s most recent Availability Notice (as updated pursuant to Section 4.10(b)), and (b) is the Effective Capacity. For avoidance of doubt, the total of AVAILHRSm plus EXCUSEDHRSm for any hour, or partial hour, shall never exceed 1. 310
311
Exhibit R - 1
EXHIBIT R
METERING DIAGRAM
312
Exhibit S - 1
EXHIBIT S
[INTENTIONALLY OMITTED]
313
Exhibit T - 1
EXHIBIT T
FORM OF CONSENT TO COLLATERAL ASSIGNMENT
This Consent to Collateral Assignment (this “Consent”) is entered into among (i) California Community Power, a California joint powers authority (“CCP”), (ii) [Name of Seller], a [Legal Status of Seller] (the “Project Company”), and (iii) [Name of Collateral Agent], a [Legal Status of Collateral Agent], as Collateral Agent for the secured parties under the Financing Documents referred to below (such secured parties together with their successors permitted under this Consent in such capacity, the “Secured Parties”, and, such agent, together with its successors in such capacity, the “Collateral Agent”). CCP, Project Company and Collateral Agent are hereinafter sometimes referred to individually as a “Party” and jointly as the “Parties”. Capitalized terms used but not otherwise defined in this Consent shall have the meanings ascribed to them in the ESSA (as defined below).
RECITALS
The Parties enter into this Consent with reference to the following facts:
A. Project Company and CCP have entered into that certain Energy Storage Service Agreement, dated as of [Date] [List all amendments as contemplated by Section 3.4] (“ESSA”), pursuant to which Project Company will develop, construct, commission, test and operate the Storage Units (the “Project”) and sell the Product to CCP, and CCP will purchase the Product from Project Company;
B. As collateral for Project Company’s obligations under the ESSA, Project Company has agreed to provide to CCP certain collateral, which may include Performance Security and Development Security and other collateral described in the ESSA (collectively, the “ESSA Collateral”);
C. Project Company has entered into that certain [Insert description of financing arrangements with Lender], dated as of [Date], among Project Company, the Lenders party thereto and the Collateral Agent (the “Financing Agreement”), pursuant to which, among other things, the Lenders have extended commitments to make loans to Project Company; D. As collateral security for Project Company’s obligations under the Financing Agreement and related agreements (collectively, the “Financing Documents”), Project Company has, among other things, assigned all of its right, title and interest in, to and under the ESSA and Project’s Company’s owners have pledged their ownership interest in Project Company (collectively, the “Assigned Interest”) to the Collateral Agent pursuant to the Financing Documents; and
E. It is a requirement under the Financing Agreement and the ESSA that CCP and the other Parties hereto shall have executed and delivered this Consent.
AGREEMENT
314
Exhibit T - 2
In consideration of the foregoing, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the Parties hereto hereby agree as follows:
SECTION 1. CONSENT TO ASSIGNMENT, ETC.
1.1 Consent and Agreement.
CCP hereby acknowledges:
(a) Notice of and consents to the assignment as collateral security to Collateral Agent, for the benefit of the Secured Parties, of the Assigned Interest; and (b) The right (but not the obligation) of Collateral Agent in the exercise of its rights and remedies under the Financing Documents, to make all demands, give all notices, take all actions and exercise all rights of Project Company permitted under the ESSA (subject to CCP’s rights and defenses under the ESSA and the terms of this Consent) and accepts any such exercise; provided, insofar as the Collateral Agent exercises any such rights under the ESSA or makes any claims with respect to payments or other obligations under the ESSA, the terms and conditions of the ESSA applicable to such exercise of rights or claims shall apply to Collateral Agent to the same extent as to Project Company.
1.2 Project Company’s Acknowledgement.
Each of Project Company and Collateral Agent hereby acknowledges and agrees that CCP is authorized to act in accordance with Collateral Agent’s instructions, and that CCP shall bear no liability to Project Company or Collateral Agent in connection therewith, including any liability for failing to act in accordance with Project Company’s instructions.
1.3 Right to Cure.
If Project Company defaults in the performance of any of its obligations under the ESSA, or upon the occurrence or non-occurrence of any event or condition under the ESSA which would immediately or with the passage of any applicable grace period or the giving of notice, or both, enable CCP to terminate or suspend its performance under the ESSA (a “ESSA Default”), CCP will not terminate or suspend its performance under the ESSA until it first gives written notice of such ESSA Default to Collateral Agent and affords Collateral Agent the right to cure such ESSA Default within the applicable cure period under the ESSA, which cure period shall run concurrently with that afforded Project Company under the ESSA. In addition, if Collateral Agent gives CCP written notice prior to the expiration of the applicable cure period under the ESSA of Collateral Agent’s intention to cure such ESSA Default (which notice shall include a reasonable description of the time during which it anticipates to cure such ESSA Default) and is diligently proceeding to cure such ESSA Default, notwithstanding the applicable cure period under the ESSA, Collateral Agent shall have a period of ninety (90) days (or, if such ESSA Default is for failure by the Project Company to pay an amount to CCP which is due and payable under the ESSA other than to provide ESSA Collateral, thirty (30) days, or, if such ESSA Default is for failure by Project Company to provide ESSA Collateral, ten (10) Business Days) from the Collateral Agent’s receipt of the notice of such ESSA Default from CCP to cure such ESSA Default; provided, (a) if possession of the 315
Exhibit T - 3
Project is necessary to cure any such non-monetary ESSA Default and Collateral Agent has commenced foreclosure proceedings within ninety (90) days after notice of the ESSA Default and is diligently pursuing such foreclosure proceedings, Collateral Agent will be allowed a reasonable time, not to exceed two hundred seventy (270) days after the notice of the ESSA Default, to complete such proceedings and cure such ESSA Default, and (b) if Collateral Agent is prohibited from curing any such ESSA Default by any process, stay or injunction issued by any Governmental Authority or pursuant to any bankruptcy or insolvency proceeding or other similar proceeding involving Project Company, then the time periods specified herein for curing a ESSA Default shall be extended for the period of such prohibition, so long as Collateral Agent has diligently pursued removal of such process, stay or injunction. Collateral Agent shall provide CCP with reports concerning the status of efforts to cure a ESSA Default upon CCP’s reasonable request.
1.4 Substitute Owner.
Subject to Section 1.7, the Parties agree that if Collateral Agent notifies (such notice, a “Financing Document Default Notice”) CCP that an event of default has occurred and is continuing under the Financing Documents (a “Financing Document Event of Default”) then, upon a judicial foreclosure sale, non-judicial foreclosure sale, deed in lieu of foreclosure or other transfer following a Financing Document Event of Default, Collateral Agent (or its designee) shall be substituted for Project Company (the “Substitute Owner”) under the ESSA, and, subject to Sections 1.7(b) and 1.7(c) below, CCP and Substitute Owner will recognize each other as counterparties under the ESSA and will continue to perform their respective obligations (including those obligations accruing to CCP and the Project Company prior to the existence of the Substitute Owner) under the ESSA in favor of each other in accordance with the terms thereof; provided, before CCP is required to recognize the Substitute Owner, the Substitute Owner must (i) be a permitted assignee under the ESSA or (ii) have demonstrated to CCP’s reasonable satisfaction that the Substitute Owner has financial qualifications and operating experience [TBD] (a “Permitted Transferee”). For purposes of the foregoing, CCP shall be entitled to assume that any such purported exercise of rights by Collateral Agent that results in substitution of a Substitute Owner under the ESSA is in accordance with the Financing Documents without independent investigation thereof but shall have the right to require that the Collateral Agent and its designee (if applicable) provide reasonable evidence demonstrating the same.
1.5 Replacement Agreements.
Subject to Section 1.7, if the ESSA is terminated, rejected or otherwise invalidated as a result of any bankruptcy, insolvency, reorganization or similar proceeding affecting Project Company, its owner(s) or guarantor(s), and if Collateral Agent or its designee directly or indirectly takes possession of, or title to, the Project (including possession by a receiver or title by foreclosure or deed in lieu of foreclosure) (“Replacement Owner”), CCP shall, and Collateral Agent shall cause Replacement Owner to, enter into a new agreement with one another for the balance of the obligations under the ESSA remaining to be performed having terms substantially the same as the terms of the ESSA with respect to the remaining Term (“Replacement ESSA”); provided, before CCP is required to enter into a Replacement ESSA, the Replacement Owner must have demonstrated to CCP’s reasonable satisfaction that the Replacement Owner satisfies the requirements of a Permitted Transferee. For purposes of the foregoing, CCP is entitled to assume that any such purported exercise of rights by Collateral Agent that results in a Replacement Owner 316
Exhibit T - 4
is in accordance with the Financing Documents without independent investigation thereof but shall have the right to require that the Collateral Agent and its designee (if applicable) provide reasonable evidence demonstrating the same. Notwithstanding the execution and delivery of a Replacement ESSA, to the extent CCP is, or was otherwise prior to its termination as described in this Section 1.5, entitled under the ESSA, CCP may suspend performance of its obligations under such Replacement ESSA, unless and until all ESSA Defaults of Project Company under the ESSA or Replacement ESSA have been cured.
1.6 Transfer.
Subject to Section 1.7, a Substitute Owner or a Replacement Owner may assign all of its interest in the Project and the ESSA and a Replacement ESSA to a natural person, corporation, trust, business trust, joint venture, joint stock company, association, company, limited liability company, partnership, Governmental Authority or other entity (a “Person”) to which the Project is transferred; provided, the proposed transferee shall have demonstrated to CCP’s reasonable satisfaction that such proposed transferee satisfies the requirements of a Permitted Transferee.
1.7 Assumption of Obligations.
(a) Transferee.
Any transferee under Section 1.6 shall expressly assume in a writing reasonably satisfactory to CCP all of the obligations of Project Company, Substitute Owner or Replacement Owner under the ESSA or Replacement ESSA, as applicable, including posting and collateral assignment of the ESSA Collateral. Upon such assignment and the cure of any outstanding ESSA Default, and payment of all other amounts due and payable to CCP in respect of the ESSA or such Replacement ESSA, the transferor shall be released from any further liability under the ESSA or Replacement ESSA, as applicable.
(b) Substitute Owner.
Subject to Section 1.7(c), any Substitute Owner pursuant to Section 1.4 shall be required to perform Project Company’s obligations under the ESSA, including posting and collateral assignment of the ESSA Collateral; provided, the obligations of such Substitute Owner shall be no more than those of Project Company under the ESSA.
(c) No Liability.
CCP acknowledges and agrees that neither Collateral Agent nor any Secured Party shall have any liability or obligation under the ESSA as a result of this Consent (except to the extent Collateral Agent or a Secured Party is a Substitute Owner or Replacement Owner) nor shall Collateral Agent or any other Secured Party be obligated or required to (i) perform any of Project Company’s obligations under the ESSA, except as provided in Sections 1.7(a) and 1.7(b) and to the extent Collateral Agent or a Secured Party is a Substitute Owner or Replacement Owner, or (ii) take any action to collect or enforce any claim for payment assigned under the Financing Documents. If Collateral Agent becomes a Substitute Owner pursuant to Section 1.4 or enters into a Replacement ESSA, Collateral Agent shall not have any personal liability to CCP under the ESSA or Replacement ESSA and the sole recourse of CCP in seeking enforcement of such 317
Exhibit T - 5
obligations against Collateral Agent shall be to the aggregate interest of the Secured Parties in the Project; provided, such limited recourse shall not limit CCP’s right to seek equitable or injunctive relief against Collateral Agent, or CCP’s rights with respect to any offset rights expressly allowed under the ESSA, a Replacement ESSA or the ESSA Collateral.
1.8 Delivery of Notices.
CCP shall deliver to Collateral Agent, concurrently with the delivery thereof to Project Company, a copy of each notice, request or demand given by CCP to Project Company pursuant to the ESSA relating to (a) a ESSA Default by Project Company under the ESSA, (b) any claim regarding Force Majeure by CCP under the ESSA, (c) any notice of dispute under the ESSA, (d) any notice of intent to terminate or any termination notice, and (e) any matter that would require the consent of Collateral Agent pursuant to Section 1.11 or any other provision of this Consent. Collateral Agent acknowledges that delivery of such notice, request and demand shall satisfy CCP’s obligation to give Collateral Agent a notice of ESSA Default under Section 1.3. Collateral Agent shall deliver to CCP, concurrently with delivery thereof to Project Company, a copy of each notice, request or demand given by Collateral Agent to Project Company pursuant to the Financing Documents relating to a default by Project Company under the Financing Documents.
1.9 Confirmations.
CCP will, as and when reasonably requested by Collateral Agent from time to time, confirm in writing matters relating to the ESSA (including the performance of same by Project Company); provided, such confirmation may be limited to matters of which CCP is aware as of the time the confirmation is given and such confirmations shall be without prejudice to any rights of CCP under the ESSA as between CCP and Project Company.
1.10 Exclusivity of Dealings.
Except as provided in Sections 1.3, 1.4, 1.8, 1.9 and 2.1, unless and until CCP receives a Financing Document Default Notice, CCP shall deal exclusively with Project Company in connection with the performance of CCP’s obligations under the ESSA. From and after such time as CCP receives a Financing Document Default Notice and until a Substitute Owner is substituted for Project Company pursuant to Section 1.4, a Replacement ESSA is entered into or the ESSA is transferred to a Person to whom the Project is transferred pursuant to Section 1.6, CCP shall, until Collateral Agent confirms to CCP in writing that all obligations under the Financing Documents are no longer outstanding, deal exclusively with Collateral Agent in connection with the performance of CCP’s obligations under the ESSA, and CCP may irrevocably rely on instructions provided by Collateral Agent in accordance therewith to the exclusion of those provided by any other Person.
1.11 No Amendments.
To the extent permitted by Laws, CCP agrees that it will not, without the Project Company obtaining prior written consent of Collateral Agent (not to be unreasonably withheld, delayed or conditioned) (a) enter into any material supplement, restatement, novation, extension, amendment or modification of the ESSA (b) terminate or suspend its performance under the ESSA (except in accordance with Section 1.3) or (c) consent to or accept any termination or cancellation of the ESSA by Project Company.
318
Exhibit T - 6
SECTION 2. PAYMENTS UNDER THE ESSA
2.1 Payments.
Unless and until CCP receives written notice to the contrary from Collateral Agent, CCP will make all payments to be made by it to Project Company under or by reason of the ESSA directly to Project Company. CCP, Project Company, and Collateral Agent acknowledge that CCP will be deemed to be in compliance with the payment terms of the ESSA to the extent that CCP makes payments in accordance with Collateral Agent’s instructions.
2.2 No Offset, Etc.
All payments required to be made by CCP under the ESSA shall be made without any offset, recoupment, abatement, withholding, reduction or defense whatsoever, other than that expressly allowed by the terms of the ESSA.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CCP
CCP makes the following representations and warranties as of the date hereof in favor of Collateral Agent:
3.1 Organization.
CCP is a joint powers authority and community choice aggregator duly organized and validly existing under the laws of the state of California, and the rules, regulations and orders of the California Public Utilities Commission, and is qualified to conduct business in each jurisdiction of the Joint Powers Agreement members. CCP has all requisite power and authority, corporate and otherwise, to enter into and to perform its obligations hereunder and under the ESSA, and to carry out the terms hereof and thereof and the transactions contemplated hereby and thereby.
3.2 Authorization.
The execution, delivery and performance by CCP of this Consent and the ESSA have been duly authorized by all necessary corporate or other action on the part of CCP and do not require any approval or consent of any holder (or any trustee for any holder) of any indebtedness or other obligation of CCP which, if not obtained, will prevent CCP from performing its obligations hereunder or under the ESSA except approvals or consents which have previously been obtained and which are in full force and effect.
3.3 Execution and Delivery; Binding Agreements.
Each of this Consent and the ESSA is in full force and effect, have been duly executed and delivered on behalf of CCP by the appropriate officers of CCP, and constitute the legal, valid and binding obligation of CCP, enforceable against CCP in accordance with its terms, except as the enforceability thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights generally and (b) general equitable principles (whether considered in a proceeding in equity or at law). 319
Exhibit T - 7
3.4 No Default or Amendment.
Except as set forth in Schedule A attached hereto: (a) Neither CCP nor, to CCP’s actual knowledge, Project Company, is in default of any of its obligations under the ESSA; (b) CCP and, to CCP’s actual knowledge, Project Company, has complied with all conditions precedent to the effectiveness of its obligations under the ESSA; (c) to CCP’s actual knowledge, no event or condition exists which would either immediately or with the passage of any applicable grace period or giving of notice, or both, enable either CCP or Project Company to terminate or suspend its obligations under the ESSA; and (d) the ESSA has not been amended, modified or supplemented in any manner except as set forth herein and in the recitals hereto.
3.5 No Previous Assignments.
CCP has no notice of, and has not consented to, any previous assignment by Project Company of all or any part of its rights under the ESSA, except as previously disclosed in writing and consented to by CCP.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PROJECT COMPANY Project Company makes the following representations and warranties as of the date hereof in favor of the Collateral Agent and CCP:
4.1 Organization.
Project Company is a [Legal Status of Seller] duly organized and validly existing under the laws of the state of its organization, and is duly qualified, authorized to do business and in good standing in every jurisdiction in which it owns or leases real property or in which the nature of its business requires it to be so qualified, except where the failure to so qualify would not have a material adverse effect on its financial condition, its ability to own its properties or its ability to transact its business. Project Company has all requisite power and authority, corporate and otherwise, to enter into and to perform its obligations hereunder and under the ESSA, and to carry out the terms hereof and thereof and the transactions contemplated hereby and thereby.
4.2 Authorization.
The execution, delivery and performance of this Consent by Project Company, and Project Company’s assignment of its right, title and interest in, to and under the ESSA to the Collateral Agent pursuant to the Financing Documents, have been duly authorized by all necessary corporate or other action on the part of Project Company.
4.3 Execution and Delivery; Binding Agreement.
This Consent is in full force and effect, has been duly executed and delivered on behalf of Project Company by the appropriate officers of Project Company, and constitutes the legal, valid and binding obligation of Project Company, enforceable against Project Company in accordance with its terms, except as the enforceability thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application affecting the enforcement 320
Exhibit T - 8
of creditors’ rights generally and (b) general equitable principles (whether considered in a proceeding in equity or at law).
4.4 No Default or Amendment.
Except as set forth in Schedule B attached hereto: (a) neither Project Company nor, to Project Company’s actual knowledge, CCP, is in default of any of its obligations thereunder; (b) Project Company and, to Project Company’s actual knowledge, CCP, has complied with all conditions precedent to the effectiveness of its obligations under the ESSA; (c) to Project Company’s actual knowledge, no event or condition exists which would either immediately or with the passage of any applicable grace period or giving of notice, or both, enable either CCP or Project Company to terminate or suspend its obligations under the ESSA; and (d) the ESSA has not been amended, modified or supplemented in any manner except as set forth herein and in the recitals hereto.
4.5 No Previous Assignments.
Project Company has not previously assigned all or any part of its rights under the ESSA.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF COLLATERAL AGENT Collateral Agent makes the following representations and warranties as of the date hereof in favor of CCP and Project Company:
5.1 Authorization.
The execution, delivery and performance of this Consent by Collateral Agent have been duly authorized by all necessary corporate or other action on the part of Collateral Agent and Secured Parties.
5.2 Execution and Delivery; Binding Agreement.
This Consent is in full force and effect, has been duly executed and delivered on behalf of Collateral Agent by the appropriate officers of Collateral Agent, and constitutes the legal, valid and binding obligation of Collateral Agent as Collateral Agent for the Secured Parties, enforceable against Collateral Agent (and the Secured Parties to the extent applicable) in accordance with its terms, except as the enforceability thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights generally and (b) general equitable principles (whether considered in a proceeding in equity or at law).
SECTION 6. MISCELLANEOUS
6.1 Notices.
All notices and other communications hereunder shall be in writing, shall be deemed given upon receipt thereof by the Party or Parties to whom such notice is addressed, shall refer on their face to the ESSA (although failure to so refer shall not render any such notice or communication ineffective), shall be sent by first class mail, by personal delivery or by a nationally recognized 321
Exhibit T - 9
courier service, and shall be directed (a) if to CCP or Project Company, in accordance with [Notice Section of the ESSA] of the ESSA, (b) if to Collateral Agent, to [Collateral Agent Name], [Collateral Agent Address], Attn: [Collateral Agent Contact Information], Telephone: [___], Fax:
[___], and (c) to such other address or addressee as any such Party may designate by notice given pursuant hereto.
6.2 Governing Law; Submission to Jurisdiction.
(a) THIS CONSENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND
THIS CONSENT AND ALL MATTERS ARISING OUT OF THIS CONSENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF CALIFORNIA WITHOUT REGARD TO ANY CONFLICTS OF LAWS
PROVISIONS THEREOF THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION.
(b) All disputes, claims or controversies arising out of, relating to, concerning or pertaining to the terms of this Consent shall be governed by the dispute resolution provisions of the ESSA. Subject to the foregoing, any legal action or proceeding with respect to this Consent and any action for enforcement of any judgment in respect thereof may be brought in the courts of the State of California or of the United States of America for the Central District of California, and, by execution and delivery of this Consent, each Party hereby accepts for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and appellate courts from any appeal thereof. Each Party further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to its notice address provided pursuant to Section 6.1 hereof. Each Party hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Consent brought in the courts referred to above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing herein shall affect the right of any Party to serve process in any other manner permitted by law.
6.3 Headings Descriptive.
The headings of the several sections and subsections of this Consent are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Consent.
6.4 Severability.
In case any provision in or obligation under this Consent shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
6.5 Amendment, Waiver.
322
Exhibit T - 10
Neither this Consent nor any of the terms hereof may (a) be terminated, amended, supplemented or modified, except by an instrument in writing signed by CCP, Project Company and Collateral Agent or (b) waived, except by an instrument in writing signed by the waiving Party.
6.6 Termination.
Each Party’s obligations hereunder are absolute and unconditional, and no Party has any right, and shall have no right, to terminate this Consent or to be released, relieved or discharged from any obligation or liability hereunder until CCP has been notified by Collateral Agent that all of the obligations under the Financing Documents shall have been satisfied in full (other than contingent indemnification obligations) or, with respect to the ESSA or any Replacement ESSA, its obligations under such ESSA or Replacement ESSA have been fully performed.
6.7 Successors and Assigns.
This Consent shall be binding upon each Party and its successors and assigns permitted under and in accordance with this Consent, and shall inure to the benefit of the other Parties and their respective successors and assignee permitted under and in accordance with this Consent. Each reference to a Person herein shall include such Person’s successors and assigns permitted under and in accordance with this Consent.
6.8 Further Assurances.
CCP hereby agrees to execute and deliver all such instruments and take all such action as may be necessary to effectuate fully the purposes of this Consent.
6.9 Waiver of Trial by Jury.
TO THE EXTENT PERMITTED BY APPLICABLE LAWS, THE PARTIES HEREBY
IRREVOCABLY WAIVE ALL RIGHT OF TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS CONSENT OR ANY MATTER ARISING HEREUNDER. EACH PARTY FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
6.10 Entire Agreement.
This Consent and any agreement, document or instrument attached hereto or referred to herein integrate all the terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations and prior writings in respect to the subject matter hereof. In the event of any conflict between the terms, conditions and provisions of this Consent and any such agreement, document or instrument, the terms, conditions and provisions of this Consent shall prevail.
6.11 Effective Date.
This Consent shall be deemed effective as of the date upon which the last Party executes this Consent.
323
Exhibit T - 11
6.12 Counterparts; Electronic Signatures.
This Consent may be executed in one or more counterparts, each of which will be deemed to be an original of this Consent and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Consent and of signature pages by facsimile transmission, Portable Document Format (i.e., PDF), or by other electronic means shall constitute effective execution and delivery of this Consent as to the Parties and may be used in lieu of the original Consent for all purposes.
[Remainder of Page Left Intentionally Blank.]
324
Exhibit T - 12
IN WITNESS WHEREOF, the Parties hereto have caused this Consent to be duly executed and delivered by their duly authorized officers on the dates indicated below their respective signatures. [NAME OF PROJECT COMPANY],
[Legal Status of Project Company].
CALIFORNIA COMMUNITY POWER,
a California joint powers authority.
By:
___________________________________
[Name]
[Title]
Date: ___________________________
By:
___________________________________
[Name]
[Title]
Date: ___________________________
[NAME OF COLLATERAL AGENT],
[Legal Status of Collateral Agent].
By:
________________________________
[Name]
[Title]
Date: ___________________________
325
Exhibit T - 13
SCHEDULE A
[Describe any disclosures relevant to representations and warranties made in Section 3.4] 326
Exhibit U - 1
EXHIBIT U
MATERIAL PERMITS
No. Permits
1 2
327
Exhibit V - 1
EXHIBIT V
PROJECT PARTICIPANTS AND LIABILITY SHARES
Project Participant Liability Share
Clean Power San
Francisco
16.06%
Peninsula Clean
Energy
19.69%
Redwood Coast Energy
Authority
3.62%
San Jose Clean Energy 22.28%
Silicon Valley Clean
Energy
21.25%
Sonoma Clean Power 12.95%
Valley Clean Energy 4.15%
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Item 15
1 VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 15
TO: Board of Directors
FROM: Mitch Sears, Interim General Manager
Edward Burnham, Director of Finance & Internal Operations SUBJECT: VCE 2022 Customer Rates
DATE: February 10, 2022
RECOMMENDATIONS
1. Approve VCE 2022 Customer Rates:
a. Customer rates for 2022 to match PG&E 2022 generation rates for all customer classes.
b. A rate credit of 2.5% for CARE and FERA customers in 2022
2. Conduct a mid-year rates review in Q2 2022 to assess rates forecast and determine the feasibility of:
a. allocating additional funds for 2022 clean energy content procurement, b. allocating additional funds to program implementation, c. providing additional rate credits for all customer classes during peak summer months in 2022.
3. Direct Staff to continue to develop and evaluate the feasibility of a revised rate structure with three customer options: (1) Standard Green (default) and (2) UltraGreen (100% renewable) with cost-based rates and adding a (3) least-cost customer rate option.
OVERVIEW
Beginning in mid-2020, VCE began exploring the concept of cost-based rates to address financial issues associated with the power market and regulatory volatility. Steeply rising Power Charge Indifference Adjustment (PCIA) (+46% for 2021) and power market costs (+57% since May 2021), have required VCE to draw on reserves to stabilize customers rates and maintain its current rate policy of matching PG&E generation rates. In Q1 of 2021, the Board directed Staff to develop an expanded and cost-based rate structure to address these issues. In September, Staff presented a background report to the Board and CAC that included a draft outline rate structure and development/implementation schedule.
Based on updated power market forecasts and VCE financial model results that corrected an overestimation of the value of VCE's long-term renewable contracts, the Board approved an accelerated rate adjustment of approximately 2% on the average overall customer bill in mid-October. This cost-based rate adjustment decreased the draw on reserves. 329
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2 The Community Advisory Committee considered the proposed cost-based rate policy and structure at its November 28, 2021 meeting and updated the recommendation for the 2022 rates on January 20, 2022.
This report and recommendation update the customer rates consistent with recent CAC and Board direction. In addition, VCE will continue to develop rates calibrated to actual cost and reserve requirements rather than simply indexed to PG&E's generation rates for 2023.
BACKGROUND
In 2017, prior to launch, VCE adopted and registered its Implementation Plan with the California Public Utilities Commission (CPUC). The Plan included a provision that program rates must collect sufficient revenue from participating customers to fully fund VCE's budget, including the need to establish sufficient operating reserve funds. Over the past three years VCE has systematically analyzed policy options and implemented strategies to stabilize customer rates, reduce cost, and manage reserves. This is in keeping with its Strategic Plan goal to maintain financial stability while continuing to offer customer choice, competitive pricing and establishment of local programs. Several of these key financial mitigation strategies have included: discontinuing a rate discount, scaling back voluntary procurement of renewable energy credits (RECs), and signing long-term contracts for fixed price renewable/battery storage projects.
Recognizing that additional steps may be needed to achieve cost recovery objectives, in early 2020 staff began investigating rate related strategies employed by other CCAs designed to address on-going financial pressures outside of a CCAs control (e.g. PCIA, RA, power market prices). Based on general Board direction, research was conducted with input from the CAC Rates Task Group through mid-2021, resulting in a staff concept for an expanded and cost-based customer rate structure. The concept was reviewed by the CAC in September and by the Board in September and October. The staff report related to the concept is at: Item-17- Customer-Rate-Structure-Policy-9-9-21.pdf (valleycleanenergy.org).
Rate Adjustment and Policy Update
Additional forecast information on rising power markets, correction of an overestimation of the value of VCE's long-term renewable contracts, and elevated 2021 PCIA rates prompted the Board to approve a rate adjustment on October 21, 2021. The rate adjustment of approximately 2% on the average overall VCE customer bill for the remaining months of 2021 and into 2022 reduced the draw on VCE's financial reserves. This adjustment went into effect on November 1, 2021. For reference, the Board staff report related to the accelerated rate adjustment is at: Item-4-Rate-Adjustment-10-21-21.pdf (valleycleanenergy.org).
On November 10, 2021, the Board adopted the following update to the VCE rates policy:
Cost-Based Rate Policy: VCE will set customer rates to collect sufficient revenue from participating customers to fully fund VCE's budget and establish sufficient operating reserve funds.
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3 Additional Rate and Financial Factors
On November 8, 2021, PG&E completed the standard ERRA filings for PCIA and bundled rates with the CPUC with significant changes from forecasts received from the CalCCA analyst forecasts. Staff and Board recommended delaying the adoption of customer rate adjustments and the 2022 budget to include the PG&E updated filings. In mid-December, in an unusual move, the California Public Utilities Commission (CPUC) asked PG&E to submit options to spread its 2022 rate increase of over 30% over more than the standard 12-month period. PG&E filed these options in late December, resulting in a range of a 27% rate increase over 24-months to a 33% increase over the standard 12-month period. In addition, the PCIA decrease for 2022 was revised from a -75% to a -59% based on the incorporation of actual vs. projected value of PG&E's energy portfolio for October and November 2021.
According to the proposed decision by the CPUC on January 24, 2022, PG&E will be implementing the following adjustments effective March 1, 2022. • 2022 PCIA set to decrease 57%
• 2022 PG&E's average generation rates set to increase by 33% • All rate changes are inclusive of PG&E December actuals Community Advisory Committee Recommendation
On September 23, 2021, the Community Advisory Committee (CAC) received a background presentation on the rate-based concept and structure. On October 28, 2021, the CAC considered and recommended the rate-based policy adopted by the Board on November 10.
On January 20, 2022, Staff incorporated the updated PG&E filing described above. The CAC considered the updated recommendation analysis of Staff and adopted the below recommendations for 2022 customer rates.
1. Adopt customer rates for 2022 to match PG&E 2022 generation rates for all customer classes to cover VCE's FY 2022 budget expenditures and to achieve between 80-90 days cash reserves by the end of 2022;
2. Provide a 2.5% rate credit for CARE and FERA customers in 2022;
3. Conduct a mid-year rates review in Q2 2022 to assess rates forecast and determine the feasibility of:
a. allocating additional funds for 2022 clean energy content procurement, b. allocating additional funds to program implementation, c. providing additional rate credits for all customer classes during peak summer months in 2022.
ANALYSIS
As discussed at previous Board and CAC meetings, the CPUC is scheduled to adopt 2022 PG&E bundled rates inclusive of setting PCIA and generation rates at their February 10, 2022 meeting as described above. The updated analysis shown below is based on the best available information as of the writing of this report. Based on information from VCE and Calca’s Analysts, VCE has incorporated the following assumptions in its updated financial forecasts for 2022 (assuming 2022 PG&E rates/PCIA are implemented on March 1, 2022):
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4 • PCIA: 57% reduction over 2021 PCIA
o Previous Projection from PG&E’s November CPUC filing: 75% reduction • Generation rates: 33% increase in PG&E rates
o The November projection from PG&E’s filing: 36% increase o The CPUC requested from PG&E’s December update to include amortized rate increase options over 18 & 24 months
Staff has updated VCE’s financial model with the updated January base assumptions for 2022.
Consistent with previous discussions with the Board and CAC, Staff has run three budget impact scenarios to help inform the Board’s consideration of rate options for 2022, including:
1. Scenario 1 (Low Income/At-Risk* Credit): 2.5% (Approx. $750,000) rate credit for CARE/FERA customers; all other revenues directed to reserves.
2. Scenario 2 (Base Case): no modifications; all revenues directed to reserves.
3. Scenario 3 (Low Income/At-Risk* + Credit): 3.5% rate credit for CARE/FERA customers plus 1% rate credit for other customers; all other revenues directed to reserves. *Includes CARE/FERA and Medical Baseline customers
The recommended scenario 2 adjustments would not apply to CARE and FERA customers who make up approximately 25% of VCE’s total load. Taking these customers into account, the fiscal effect of the recommended rate credit is $750,000 for from March 1, 2022 through February 28, 2023.
Customer Bill Fiscal Effects (Scenario 2)
Over the past 18 months the Board has considered the volatility of inputs that impact customer rates. Economy wide disruptions, surging wholesale power markets, and regulatory actions have all contributed to an unprecedented and unstable customer rate structure. As the Board is aware, VCE has taken action to address some of that volatility by drawing on reserves to help create more stable customer rates. However, as PG&E significantly raises rates in 2022 to recover their costs, VCE must consider the need to rebuild reserves and prepare for PCIA volatility going into 2023. These rate impacts are being felt across the State with all three Investor Owned Utilities raising rates by more than 20% in 2022.
The fiscal effects on VCE customers are summarized in the table below. While the rate increases are not insignificant, the staff recommendation does include rate credits for low income and vulnerable customers (CARE, FERA, and Medical Baseline) and a mid-year review to assess revenues and possible additional rate credits. Note: CARE/FERA customers make up over 25% of VCE’s customer base and receive 20% and 18% discounts respectively on their electricity bills.
The recommended rate adjustment is forecast to increase the total average monthly residential bill by approximately $19/mo. or 10%1. Table 1 shows the estimated average monthly impact 1 The VCE generation charges plus PCIA and franchise fees are approximately 40% of the total average residential electricity bill; PG&E’s Transmission, Distribution and other charges account for the other 60% of the total electricity bill. Therefore, a 33% generation rate increase in VCE’s portion of the electricity bill equates to an approximate 10% increase in the total electricity charges for the average residential customer. 332
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5 on total bills based on key customer classes.
Table 1 - Rate Impacts (Approximate Averages)
Customer Class Residential Low Income /
At-Risk Credit
Ms
Commercial
Med
Commercial
Large
Commercial* Ag
Annual Bill $1,860/yr (18/yr) $ 4,500/yr $ 55,200/yr $ 98,400/yr $ 21,600/yr Monthly Bill $155/mo ($1.5) /mo $ 400/mo $4,600/mo $ 8,200/mo $ 1,800/mo Monthly Impact
of 33% adj.
Approx.
$19/mo
Approx.
$17.5 mo
Approx.
$48/mo
Approx.
$745/mo**
Approx.
$1,221/mo**
Approx.
$ 214/mo
Notes:
* Large Commercial does not include the less than 10 largest commercial customers (E-19 and E-20) as it would be a non-representative average for the majority of large commercial customers. The average monthly impact for E-19 and E-20 customers would be approximately $830 based on an average monthly bill of approximately $34,500. ** Medium and Large Commercial rates include the limited portion of the demand charges on the generation portion of the bill, resulting in approximate 0.5% higher increases.
VCE Fiscal Effects
Table 2 below shows the forecasted budget impacts of the three scenarios modeled by staff.
Consistent with the rate policy adopted by the Board on November 10, 2021, Staff and CAC are recommending that VCE set rates for 2022 at a level that will fully fund the 2022 budget, build back reserves that have been used over the past 18 months to stabilize customer rates, and provide a level of financial relief to VCE’s low-income customers. Based on the updated information from the CPUC proposed decision and analysis, Staff and CAC are recommending that VCE establish a target of 80-90 days cash reserve by the end of 2022. In addition, this is consistent with feedback we have received from CalCCA and financial partners. Two significant benefits from this approach: (1) increased financial stability while taking a significant step toward establishing an investment grade credit rating, and (2) preparing for future PCIA and power market volatility.
Table 2 – 2022 Revenue & Costs Update
Scenario 1 FY2019 FY2020 FY2021 FY2022 CY2022 CY2023 CY2024 CY2025 Revenue 51,035 55,249 54,657 29,677 89,750 69,500 70,750 71,050 Power Cost 38,540 41,538 54,234 30,133 66,990 52,400 47,100 48,400 Other Expenses 3,850 4,346 4,267 2,276 5,292 5,398 5,506 5,616 Net Income 8,646 9,365 (3,844) (2,732) 17,468 11,702 18,144 17,034 Scenario 2 FY2019 FY2020 FY2021 FY2022 CY2022 CY2023 CY2024 CY2025 Revenue 51,035 55,249 54,657 29,677 90,500 70,250 71,500 71,800 Power Cost 38,540 41,538 54,234 30,133 66,990 52,400 47,100 48,400 Other Expenses 3,850 4,346 4,267 2,276 5,292 5,398 5,506 5,616 Net Income 8,646 9,365 (3,844) (2,732) 18,218 12,452 18,894 17,784 Scenario 3 FY2019 FY2020 FY2021 FY2022 CY2022 CY2023 CY2024 CY2025 Revenue 51,035 55,249 54,657 29,677 89,000 68,750 70,000 70,300 Power Cost 38,540 41,538 54,234 30,133 66,990 52,400 47,100 48,400 Other Expenses 3,850 4,346 4,267 2,276 5,292 5,398 5,506 5,616 Net Income 8,646 9,365 (3,844) (2,732) 16,718 10,952 17,394 16,284 Actual YTD
(6 Month)
Budget
Actuals Scenarios Preliminary Forecast*
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6 * Notes: Revenues are highly subject to PG&E filings that impact generation rates and PCIA. Power costs are based of current forward market pricing that impact PPA values (cost reductions) and unhedged load costs. Red outline shows staff recommendation.
Customer Outreach & Communications
VCE continues a measured, transparent customer outreach strategy with an emphasis on VCE’s additional benefits such as more choice in electricity supply, local control, and community reinvestment through energy contracts and programs.
Based on VCE matching PG&E rates and other CCAs undertaking similar rate actions, staff does not anticipate significant opt-out customer activity in response to the rate changes. VCE will continue to monitor customer activity as the rates are implemented for possible adjustments.
CONCLUSION/NEXT STEPS
If approved by the Board, this rate adjustment would partially address recovering costs and building back reserves over the next twelve months. The longer-term outlook (2024+) shows increased stability and cost certainty due to VCE’s fixed price long-term renewable power purchase contracts coming fully on-line combined with a cost-recovery based rate structure.
Additional rate and financial forecasts on the longer-term outlook will be provided as part of the mid-year rates review.
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Item 16
1 VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 16
TO: Board of Directors
FROM: Mitch Sears, Interim General Manager
Edward Burnham, Director of Finance & Internal Operations SUBJECT: 2022 Operating Budget for Calendar Year
DATE: February 10, 2022
RECOMMENDATION
1. Approve 2022 Operating Budget Scenario 1 with $89.8M of operating revenues and $72.3M of operating expenses for a net income of $17.5M.
OVERVIEW
This update is the final of multiple discussions leading to Board adoption of the calendar year 2022 budget (2022 Budget) ending December 31, 2022. The purpose of this staff report is to:
(1) provide the current fiscal Year 2021-22 update on actuals (6-Months) ending December 31, 2021, and (2) an overview of key factors influencing the draft 2022 Budget and present analysis of three budget scenarios for Board consideration.
As detailed in the body of this report, the current FY 2021-22 is estimated to have a net loss of $2.7M for a total of $2.5M favorable to the adopted Budget. The three 2022 budget scenarios outlined in the analysis section of this report result in a positive net income range between $18.2M and $16.7M allowing VCE to build back reserves to a targeted 80 to 90 days.
VCE’s short-term outlook (2022 and 2023) indicates continued volatility in power market prices and PCIA with associated financial challenges, which requires action on rate-setting to ensure cost recovery and restablishment of reserves. The longer-term outlook (2024+) indicates increased stability and cost certainty due to long-term PPA’s coming on-line and a cost-based rate structure allowing VCE to rebuild reserves and achieve positive margins.
BACKGROUND
As discussed in past staff reports, VCE has seen high volatility in the energy sector and overall economy, primarily driven by the uncertainty during the COVID-19 pandemic and possible long-term recession. In addition, the increases in 2021 Power Charge Indifference Adjustment (PCIA), resource adequacy, and power market costs have required VCE to draw against reserves to stabilize customer rates and maintain its rate policy to be competitive with PG&E generation rates. As part of the budget adoption and monitoring process, VCE has taken key actions leading up to the CY2022 budget adoption. These actions are listed below and detailed in the November 10, 2021 Board Item 16 found here.
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2 • June 2020 - FY 2020-21 Budget adoption with fiscal mitigation policy adjustments • October 2020 - FY 2020-21 Mid-year budget update to monitor Pandemic Impacts • May 2021 – FY 2021-22 Budget update with load update. • June 2021 – FY 2021-22 Budget adoption with extended fiscal mitigation policy • October 2021 – Budget update with power costs and financial model corrections.
Additional recent actions taken by Board include the following:
• October 2021 – Board adopted rate increase to preserve cash reserves (Board Item 4). • November 2021 – Discussion of Customer Rate Options (Board Item 15) • November 2021 – Adopted change from fiscal year to calendar year (Board Item 12).
Long-term Fixed Price Power Purchase Agreements
Renewable power and storage resource deliveries resulting from VCE’s contracted long-term power purchase agreements (PPAs) began in 2021 and will significantly increase over 2022 and 2023. As shown in Figure 1 below, the PPAs are fixed-price contracts and are projected to cover over 80% of VCE’s annual load by 2024 to reduce VCE costs compared to current RPS and RA market costs and significantly reduce volatility as VCE moves forward. As discussed with the Board leading up to the FY 2021-22 budget adoption in June, the undesirable but necessary RPS policy adjustments and utilization of cash reserves have helped VCE stabilize customer rates and partially bridge the gap until the long-term PPAs begin full delivery in the 2021-24 timeframe.
Figure 1 - VCE Current Renewable Portfolio Trajectory
CPUC ERRA Proceeding (PG&E Rate setting - PCIA and Bundled Rates) Previous CPUC – Nov/Dec 2021
Previous budget discussions (Oct – December), have been based on PG&E’s November update for its 2022 Power Charge Indifference Adjustment (PCIA) and Generation Rates. In a typical 336
Item 16
3 year the November PG&E ERRA filing is the final update included in the CPUC proposed decision for bundled rate setting (PCIA and generation rates) which are implemented by the IOU’s in January. However, in an unusual mid-December action, the California Public Utilities Commission (CPUC) required PG&E to submit options to spread its 2022 rate increase of over 30% over more than the standard 12-month period. PG&E filed these options in late December, resulting in a range of a 27% rate increase over 24-months to a 33% increase over the standard 12-month period. In addition, the PCIA decrease for 2022 was revised from a-75% to a -59% based on the incorporation of actual vs. projected value of PG&E’s energy portfolio for October and November 2021.
Current CPUC Proposed Decision (PD) – January 2022
On January 27, 2022 the CPUC issued the proposed decision (PD) for 2022 bundled rates inclusive of setting PCIA and generation rates for PG&E. The PD did not include the option to spread PG&E’s rate increases over more than the normal 12 month period. The updated analysis and staff recommendation shown below are based on VCE’s updated rate policy to set rates to cover costs and build reserves and the best available information from the CPUC as of the writing of this report. Based on information from VCE and CalCCA’s Analysts, VCE has incorporated the following assumptions in its updated financial forecasts for 2022, including the assumption that 2022 PG&E rates/PCIA will be implemented on March 1, 2022:
Summary of CPUC ERRA Forecasts for 12 months beginning March 1, 2022 (January 2022) • PCIA: 57% reduction over 2021 PCIA
• PG&E Bundled rates (PCIA & Generation): 33% increase
ANALYSIS
This report updates the information provided to the Board in September 2021 and provides the basis for the budget scenarios outlined in Analysis Section 3 below. The sections below provide updates on: (1) the FY 2021-22 (6 Month) Operating Budget, (2) an overview of key factors influencing the operating budgets, and (3) an analysis of three budget scenarios for Board consideration.
1. Operating Budget Update – FY 2021-22 (6 Month)
As presented to the Board in September, VCE has faced financial challenges associated with power market and regulatory volatility, requiring VCE to draw on reserves to stabilize customer rates and remain competitive with PG&E rates.
FY 2021-22 (6 Month) – The unaudited financials for the six months of July-2021 to December-2021 are currently forecasted to be net favorable to Budget by $2.5M for a forecasted loss of $2.7M. The key factors that resulted in the $2.5M net difference include:
• Customer Rate Increase of 2% - The Board approved an accelerated rate adjustment of approximately 2% on the average customer bill in mid-October for $400K. • Power Prices. Average forward market power prices have increased 57% since May 2021. The increased market price compared to contracted power purchase agreements and hedged power contract prices resulted in an offset for additional load requirements during peak season.
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4 • Programs Costs, Regulatory Analyst role (Part-time), and contingency were budgeted for the entire fiscal year and not ultilized during the first six months.
The following table summarizes the FY 2021-22 (6 Month) actuals vs. approved Budget.
Table 1 – FY2021-22 Actuals vs. Budget
APPROVED
BUDGET FY
2021 (6 MO)
Actual YTD
December 31, 2021
(6 MO) FY 2021-22 Variance
Revenue $ 24,737 $ 29,677 $ 4,940
Power Cost $ 27,446 $ 30,133 $ (2,687)
Other
Expenses $ 2,509 $ 2,276 $ 233
Net Income $ (5,218) $ (2,732) $ 2,486
The FY 2021-22 (6 Month) Operating Budget interim audit is ongoing, and the final adjustments, if any, will be included in the annual report.
2. Key factors – Operating Budgets
The VCE financial outlook for CY 2022 and CY 2023 has changed significantly since the Board approved the current fiscal year budget in June 2021. PG&E’s bundled rates are expected to increase by 33%, while PCIA will decrease by 57% in 2022. The 2022 rates will offset higher power costs, rebuild reserves, and allow VCE to implement customer programs as VCE transitions into its long-term fixed-price renewable PPA’s scheduled to come on-line in 2022, 2023 and 2024. Additionally, the PCIA rates are expected to increase in 2023. Staff have factored in a 25% PCIA increase in VCE’s forcast with some stabilization beginning in 2024. The budget scenarios shown in Tables 2 through 4 in Section 3 below incorporate these factors in the short and longer-term forecasts.
Key baseline factors that influenced the development of the budget options presented in Section 3 below include:
• Power Prices. Average forward market power prices have increased by approximately 57% since the April-2021 preliminary draft budget. This impacts the Budget directly since VCE buys forward energy price hedges to manage energy price risk. Based on the Board approved procurement policy, SMUD is in the process of completing hedge purchases for 2022. Speculation in the energy markets on the potential for a repeat of the heat storm event of summer 2020 pushed forward market power prices significantly higher in 2021. Beyond 2022, a significant portion of these short-term energy costs and the associated price volatility will be mitigated by the commencement of VCE’s long-term PPA agreements. • PG&E Rate Adjustments – PG&E's current filings/CPUC January proposed decision are expected to result in a forecasted 33% rate increase and a PCIA reduction of 57% based on over and under collections by PG&E in 2021.
• Financial Power Cost Model - Total difference between adopted and corrected forecasts 338
Item 16
5 is approximately $13M over the three FYs 2022 to 2024, resulting from a modeling error that overestimated the financial benefits of VCE’s long-term renewable power purchase contracts.
• PCIA. A net 46% increase in the PCIA from 2020/21 continues to have significant revenue erosion of approximately $21M for the 6-months of the current calendar through July.
• Fiscal Year and Budget adoption timing. As described and adopted by the Board on November 10, 2021, the budget adoption process was shifted to a align with the calendar year to avoid overlap with the annual load forecast updates and the beginning of the hedging process for the following calendar year.
These factors, in combination with VCE’s fixed-rate longer-term PPA’s, indicate some moderation in financial volatility for VCE going forward. Staff will continue to monitor and update the Board should conditions change. The 2022 Budget scenarios shown below are inclusive of the above factors.
3. FY 2022 Draft Budget Scenarios
Staff has updated VCE’s financial model with these base assumptions for 2022. Based on previous discussions with the Board and CAC, Staff has run three scenarios to help inform the Board’s consideration of rate options for 2022, including:
1. Scenario 1 – Staff Reccomnedation (Low Income/At-Risk* Credit): 2.5% rate credit for CARE/FERA customers; all other revenues directed to reserves. (~85 days cash reserves by end of 2022)
2. Scenario 2 (Base Case): no modifications; all revenues directed to reserves. (~90 days cash reserves by end of 2022)
3. Scenario 3 (Low Income/At-Risk* + Credit): 3.5% rate credit for CARE/FERA customers plus 1% rate credit for other customers; all other revenues directed to reserves. (~80 days cash reserves by end of 2022)
*Includes CARE/FERA and Medical Baseline customers
Table 5 below shows the results of these three scenarios. Consistent with the adopted rate policy, Staff is recommending that VCE set rates for 2022 at a level that will fully fund the 2022 budget, build back reserves that have been used over the past 18 months to stabilize customer rates, and provide a level of financial relief to VCE’s low-income customers. Based on the updated information, Staff is recommending that VCE establish a target of 80-90 days cash reserve by the end of 2022. This would provide two key benefits: (1) increased financial stability while taking a significant step toward establishing an investment-grade credit rating, and (2) preparing for future PCIA and power market volatility.
Additional Considerations
Other Operating Expenses – Preliminary Budget Other operating expenses (not including power costs) are nearly flat compared to the 2022 budget, reflecting only a 4% increase – lower than 2021 CPI at 7%. The primary factors of increased costs in this category of expenses include:
339
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6 • Customer programs costs related to launch of AgFIT and other programs. • Additional interest expenses related to the use of credit lines resulting from the delay of the ERRA proceeding.
• 5% annual salary and contractor inflation rate based on 2021 7% inflation rate. • 5% administrative contingency rate (increased from 2.5%) for unanticipated expenses related to increase activity.
Power Costs - Other Considerations
VCE has maintained a power cost forecast as received in October for a total of ~$67M for 2022 resulting in a 2%- purchased power contingency for $1.3M. Due to additional evaluations of the power cost model resulting from the model errors, current forecasted costs on a base case are forecasted at ~$65.6M to $64.5M. Staff recommends maintaining our power costs at the base level we received in November to provide additional power cost contingency. The sensitivity of the power costs model forecasts has ranged from $61.6M to $72.2M.
Under these modeled scenarios, VCE is forecasted to reach the current reserve policy minimum and recommended targets, preserve options for customer discount and additional program funding for future periods, and position VCE for an investment-grade rating by 2024. (Space intentionally blank)
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7 2022 Budget Scenario 1 – Staff Recommendation:
Budget Scenario 1 incorporates 2.5% rate credit for CARE/FERA and Medical Baseline customers and directs all other revenues to reserves. This option includes a target of ~85 days cash reserves by the end of 2022.
Table 2 – 2022 Budget Scenario 1 (Low Income/At-Risk Credit) Staff Recommendation
VALLEY CLEAN ENERGY
DRAFT BUDGET SUMMARY
2022 - BUDGET SCENARIO 1 APPROVED ACTUAL YTD DRAFT
BUDGET Dec. 31 2022 BUDGET
FY 2021 (6 MO) FY 2021 (6 MO) CY 2022
OPERATING REVENUE $ 24,737 $ 29,677 $ 89,750
OPERATING EXPENSES:
Cost of Electricity 27,618 30,133 66,990
Contract Services 1,369 1,297 2,640
Outreach & Marketing 117 79 247
Programs 68 - 174
Staffing 580 537 1,300
General, Administration and other 382 349 840
TOTAL OPERATING EXPENSES 30,132 32,395 72,192
TOTAL OPERATING INCOME (5,395) (2,718) 17,558
NONOPERATING REVENUES (EXPENSES)
Interest income 28 9 17
Interest expense (23) (23) (107)
TOTAL NONOPERATING REV/(EXPENSES) 5 (14) (90)
NET MARGIN $ (5,390) $ (2,732) $ 17,468
NET MARGIN % -21.8% -9.2% 19.5%
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Item 16
8 2022 Budget Scenario 2:
Budget Scenario 2 no rate credit modifications, and all revenues are directed to reserves. This option includes a target of 90 days cash reserves by the end of 2022.
Table 3 – 2022 Budget Scenario 2 (Base Case)
VALLEY CLEAN ENERGY
DRAFT BUDGET SUMMARY
2022 - BUDGET SCENARIO 2 APPROVED ACTUAL YTD DRAFT
BUDGET Dec. 31 2022 BUDGET
FY 2021 (6 MO) FY 2021 (6 MO) CY 2022
OPERATING REVENUE $ 24,737 $ 29,136 $ 90,500
OPERATING EXPENSES:
Cost of Electricity 27,618 29,746 66,990
Contract Services 1,369 1,300 2,640
Outreach & Marketing 117 85 247
Programs 68 23 174
Staffing 580 601 1,300
General, Administration and other 382 336 840
TOTAL OPERATING EXPENSES 30,132 32,090 72,192
TOTAL OPERATING INCOME (5,395) (2,954) 18,308
NONOPERATING REVENUES (EXPENSES)
Interest income 28 16 17
Interest expense (23) (23) (107)
TOTAL NONOPERATING REV/(EXPENSES) 5 (7) (90)
NET MARGIN $ (5,390) $ (2,961) $ 18,218
NET MARGIN % -21.8% -10.2% 20.1%
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9 2022 Budget Scenario 3
Budget Scenario 3 incorporates a 3.5% rate credit for CARE/FERA and Medical Baseline customers plus 1% rate credit for other customers. All additional revenues are directed to reserves resulting in ~80 days by the end of 2022.
Table 4 – 2022 Budget Scenario 3 (Scenario 3 (Low Income/At-Risk + Credit)
VALLEY CLEAN ENERGY
DRAFT BUDGET SUMMARY
2022 - BUDGET SCENARIO 3 APPROVED ACTUAL YTD DRAFT
BUDGET Dec. 31 2022 BUDGET
FY 2021 (6 MO) FY 2021 (6 MO) CY 2022
OPERATING REVENUE $ 24,737 $ 29,136 $ 89,000
OPERATING EXPENSES:
Cost of Electricity 27,618 29,746 66,990
Contract Services 1,369 1,300 2,640
Outreach & Marketing 117 85 247
Programs 68 23 174
Staffing 580 601 1,300
General, Administration and other 382 336 840
TOTAL OPERATING EXPENSES 30,132 32,090 72,192
TOTAL OPERATING INCOME (5,395) (2,954) 16,808
NONOPERATING REVENUES (EXPENSES)
Interest income 28 16 17
Interest expense (23) (23) (107)
TOTAL NONOPERATING REV/(EXPENSES) 5 (7) (90)
NET MARGIN $ (5,390) $ (2,961) $ 16,718
NET MARGIN % -21.8% -10.2% 18.8%
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10 Table 5 – Budget Scenario Comparison
Note: 2023, 2024, and 2025 forecasted financials are based on the most current available data and assumptions, as displayed in Table 1 - Rates Scenarios. These scenarios rely on future rate adjustments, reserves, or both to mitigate future power cost volatility.
CONCLUSION
Consistent with the adopted rate policy, Staff is recommending that VCE set rates for 2022 at a level that will fully fund the 2022 budget, build back reserves that have been used over the past 18 months to stabilize customer rates, and provide a level of financial relief to VCE’s low-income and at risk customers.
ATTACHMENTS
1. 2022 Operational Budget
3. Resolution
Scenario 1 FY2019 FY2020 FY2021 FY2022 CY2022 CY2023 CY2024 CY2025 Revenue 51,035 55,249 54,657 29,677 89,750 69,500 70,750 71,050 Power Cost 38,540 41,538 54,234 30,133 66,990 52,400 47,100 48,400 Other Expenses 3,850 4,346 4,267 2,276 5,292 5,398 5,506 5,616 Net Income 8,646 9,365 (3,844) (2,732) 17,468 11,702 18,144 17,034 Scenario 2 FY2019 FY2020 FY2021 FY2022 CY2022 CY2023 CY2024 CY2025 Revenue 51,035 55,249 54,657 29,677 90,500 70,250 71,500 71,800 Power Cost 38,540 41,538 54,234 30,133 66,990 52,400 47,100 48,400 Other Expenses 3,850 4,346 4,267 2,276 5,292 5,398 5,506 5,616 Net Income 8,646 9,365 (3,844) (2,732) 18,218 12,452 18,894 17,784 Scenario 3 FY2019 FY2020 FY2021 FY2022 CY2022 CY2023 CY2024 CY2025 Revenue 51,035 55,249 54,657 29,677 89,000 68,750 70,000 70,300 Power Cost 38,540 41,538 54,234 30,133 66,990 52,400 47,100 48,400 Other Expenses 3,850 4,346 4,267 2,276 5,292 5,398 5,506 5,616 Net Income 8,646 9,365 (3,844) (2,732) 16,718 10,952 17,394 16,284 * Revenues are highly subject to PG&E filings that impact generation rates and PCIA. Power costs are based of current forward market pricing that impact PPA values (cost reductions) and unhedged load costs.
Actual YTD
(6 Month)
Budget
Actuals Scenarios Preliminary Forecast*
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VALLEY CLEAN ENERGY - OPERATING BUDGET
CALENDAR YEAR 2022
Description Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 TOTAL Electric Revenue $ 3,355,600 $ 2,599,100 $ 5,061,100 $ 4,824,200 $ 7,271,000 $ 11,734,000 $ 13,154,300 $ 12,261,000 $ 10,426,200 $ 7,124,000 $ 5,792,800 $ 6,146,700 $ 89,750,000 Interest Revenues $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 18,000 Purchased Power $ 5,480,900 $ 4,330,500 $ 4,209,200 $ 3,929,900 $ 4,900,200 $ 6,369,200 $ 8,132,700 $ 7,846,500 $ 7,047,300 $ 5,244,200 $ 4,556,100 $ 4,943,400 $ 66,990,100 Purchased Power Base $ 4,838,600 $ 3,941,700 $ 3,815,100 $ 3,652,600 $ 6,390,400 $ 6,020,300 $ 8,477,000 $ 7,999,300 $ 6,786,900 $ 4,627,800 $ 4,425,100 $ 4,694,800 $ 65,669,600 Purchased Power Contingency 2% $ 642,300 $ 388,800 $ 394,100 $ 277,300 $ (1,490,200) $ 348,900 $ (344,300) $ (152,800) $ 260,400 $ 616,400 $ 131,000 $ 248,600 $ 1,320,500 Labor & Benefits $ 109,900 $ 109,900 $ 109,900 $ 107,900 $ 107,900 $ 107,900 $ 107,900 $ 107,900 $ 107,900 $ 107,900 $ 107,900 $ 107,900 $ 1,300,800 Salaries & Wages/Benefits $ 90,800 $ 90,800 $ 90,800 $ 90,800 $ 90,800 $ 90,800 $ 90,800 $ 90,800 $ 90,800 $ 90,800 $ 90,800 $ 90,800 $ 1,089,600 Contract Labor (SMUD Staff Aug) $ 4,900 $ 4,900 $ 4,900 $ 2,900 $ 2,900 $ 2,900 $ 2,900 $ 2,900 $ 2,900 $ 2,900 $ 2,900 $ 2,900 $ 40,800 Human Resources & Payroll $ 14,200 $ 14,200 $ 14,200 $ 14,200 $ 14,200 $ 14,200 $ 14,200 $ 14,200 $ 14,200 $ 14,200 $ 14,200 $ 14,200 $ 170,400 Office Supplies & Other Expenses $ 16,400 $ 16,400 $ 16,400 $ 16,400 $ 16,400 $ 21,000 $ 16,400 $ 16,400 $ 16,400 $ 16,400 $ 16,400 $ 16,400 $ 201,400 Technology Costs $ 2,900 $ 2,900 $ 2,900 $ 2,900 $ 2,900 $ 7,500 $ 2,900 $ 2,900 $ 2,900 $ 2,900 $ 2,900 $ 2,900 $ 39,400 Office Supplies $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 2,400 Travel $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 6,000 CalCCA Dues $ 10,600 $ 10,600 $ 10,600 $ 10,600 $ 10,600 $ 10,600 $ 10,600 $ 10,600 $ 10,600 $ 10,600 $ 10,600 $ 10,600 $ 127,200 CC Power $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 24,000 Memberships $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 2,400 Contractual Services $ 209,600 $ 206,400 $ 209,500 $ 209,100 $ 201,800 $ 203,200 $ 219,200 $ 215,000 $ 228,100 $ 286,000 $ 232,300 $ 223,100 $ 2,643,300 Other Contract Services $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 25,200 Don Dame $ 800 $ 800 $ 800 $ 800 $ 800 $ 800 $ 900 $ 900 $ 900 $ 900 $ 900 $ 900 $ 10,200 SMUD - Credit Support $ 43,500 $ 40,200 $ 43,300 $ 42,900 $ 35,500 $ 36,900 $ 37,800 $ 48,000 $ 61,100 $ 70,400 $ 65,100 $ 55,900 $ 580,600 SMUD - Wholesale Energy Services $ 48,800 $ 48,800 $ 48,800 $ 48,800 $ 48,800 $ 48,800 $ 50,100 $ 50,100 $ 50,100 $ 50,100 $ 50,100 $ 50,100 $ 593,400 SMUD - Call Center $ 65,800 $ 65,900 $ 65,900 $ 65,900 $ 66,000 $ 66,000 $ 67,100 $ 67,200 $ 67,200 $ 67,300 $ 67,400 $ 67,400 $ 799,100 SMUD - Operating Services $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,100 $ 5,100 $ 5,100 $ 5,100 $ 5,100 $ 5,100 $ 60,600 Commercial Legal Support $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Legal General Counsel $ 12,900 $ 12,900 $ 12,900 $ 12,900 $ 12,900 $ 12,900 $ 12,900 $ 12,900 $ 12,900 $ 12,900 $ 12,900 $ 12,900 $ 154,800 Regulatory Counsel $ 16,600 $ 16,600 $ 16,600 $ 16,600 $ 16,600 $ 16,600 $ 16,600 $ 16,600 $ 16,600 $ 16,600 $ 16,600 $ 16,600 $ 199,200 Joint CCA Regulatory counsel $ 2,700 $ 2,700 $ 2,700 $ 2,700 $ 2,700 $ 2,700 $ 2,700 $ 2,700 $ 2,700 $ 2,700 $ 2,700 $ 2,700 $ 32,400 Legislative - (Lobbyist) $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,100 $ 5,100 $ 5,100 $ 5,100 $ 5,100 $ 5,100 $ 60,600 Accounting Services $ 2,200 $ 2,200 $ 2,200 $ 2,200 $ 2,200 $ 2,200 $ 2,200 $ 2,200 $ 2,200 $ 2,200 $ 2,200 $ 2,200 $ 26,400 Financial Consultant $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 25,200 Audit Fees $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 14,500 $ - $ - $ 48,500 $ - $ - $ 75,600 Marketing $ 20,500 $ 20,500 $ 20,500 $ 20,500 $ 20,500 $ 20,500 $ 20,500 $ 20,500 $ 20,500 $ 20,500 $ 20,500 $ 20,500 $ 246,000 Marketing Collateral $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 240,000 Community Engagement Activities & Sponsorships $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 6,000 Programs $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 174,000 Program Costs $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 14,500 $ 174,000 Rents & Leases $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 21,600 Hunt Boyer Mansion $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 1,800 $ 21,600 Other A&G $ 28,000 $ 28,000 $ 35,400 $ 28,000 $ 28,000 $ 28,000 $ 32,300 $ 32,300 $ 32,300 $ 32,300 $ 32,300 $ 32,300 $ 369,200 Development - New Members $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 25,200 Strategic Plan Implementation $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 2,100 $ 6,400 $ 6,400 $ 6,400 $ 6,400 $ 6,400 $ 6,400 $ 51,000 PG&E Data Fees $ 23,000 $ 23,000 $ 23,000 $ 23,000 $ 23,000 $ 23,000 $ 23,000 $ 23,000 $ 23,000 $ 23,000 $ 23,000 $ 23,000 $ 276,000 Insurance $ 700 $ 700 $ 700 $ 700 $ 700 $ 700 $ 700 $ 700 $ 700 $ 700 $ 700 $ 700 $ 8,400 Banking Fees $ 100 $ 100 $ 7,500 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 8,600 Miscellaneous Operating Expenses $ 600 $ 600 $ 600 $ 600 $ 600 $ 600 $ 600 $ 600 $ 600 $ 600 $ 600 $ 600 $ 7,200 Contingency $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 240,000 TOTAL OPERATING EXPENSES $ 5,902,200 $ 4,748,600 $ 4,637,800 $ 4,348,700 $ 5,311,700 $ 6,786,700 $ 8,565,900 $ 8,275,500 $ 7,489,400 $ 5,744,200 $ 5,002,400 $ 5,380,500 $ 72,193,600 Interest on RCB loan $ 3,400 $ 3,000 $ 3,200 $ 3,000 $ 3,000 $ 2,800 $ 2,800 $ 2,700 $ 2,500 $ 2,500 $ 2,400 $ 2,300 $ 33,600 Interest Expense - Bridge Loan $ - $ - $ - $ 10,400 $ 10,400 $ 10,400 $ 10,400 $ 10,400 $ 8,300 $ 6,300 $ 4,200 $ 2,100 $ 72,900 NET INCOME $ (2,548,500) $ (2,151,000) $ 421,600 $ 463,600 $ 1,947,400 $ 4,935,600 $ 4,576,700 $ 3,973,900 $ 2,927,500 $ 1,372,500 $ 785,300 $ 763,300 $ 17,467,900 345
RESOLUTION NO. 2022-____
RESOLUTION OF THE BOARD OF DIRECTORS OF THE VALLEY CLEAN ENERGY ALLIANCE ADOPTING THE OPERATING BUDGET FOR YEAR 2022
WHEREAS, the Valley Clean Energy Alliance (“VCE”) is a joint powers agency established under the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.) (“Act”), and pursuant to a Joint Exercise of Powers Agreement Relating to and Creating the Valley Clean Energy Alliance between the County of Yolo (“County”), the City of Davis (“Davis”), the City of Woodland and the City of Winters (“Cities”) (the “JPA Agreement”), to collectively study, promote, develop, conduct, operate, and manage energy programs;
WHEREAS, the VCE 2022 Operating Budget Scenario 1 for the calendar year 2022 includes Operating Revenues totaling $89.8M and purchased power and other operating expenses totaling $72.3M for a net income of $17.5M;
NOW, THEREFORE, the Board of Directors of the Valley Clean Energy Alliance hereby adopts the 2022 Budget Scenario 1 for the calendar year of 2022.
PASSED, APPROVED AND ADOPTED, at a regular meeting of the Valley Clean Energy Alliance, held on the ____ day of _______________, 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
___________________________________
Jesse Loren, VCE Chair
__________________________________
Alisa M. Lembke, VCEA Board Secretary
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Item 17
1 VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 17
To: Board of Directors
From: Mitch Sears, Interim General Manager
Edward Burnham, Director of Finance & Internal Operations Subject: Line of Credit Agreement with the County of Yolo Date: February 10, 2022
______________________________________________________________________________
RECOMMENDATION
Authorize the Interim General Manager to conduct any final negotiations and sign all necessary documents on behalf of VCE for the short-term line of credit agreement with Yolo County in an amount not to exceed $5,000,000.
BACKGROUND AND ANALYSIS
As discussed at previous Board meetings, a combination of pandemic impacts, rising PCIA, and volatile short-term power market prices have required VCE to implement cost mitigation measures and draw on reserves over the past 18 months to stabilize customer rates. As outlined in Board items 15 (2022 rate setting) and 16 (2022 budget adoption), favorable movement in projected PCIA rates and PG&E generation rates for 2022 have improved VCE’s financial outlook for 2022. However, due to a CPUC delay in approving PG&E’s 2022 rates and PCIA until March 1st, supplemental financial assistance is needed to address short-term cash requirements.
VCE staff have been in discussions with its financial, member, and business operations partners over the past several months to address these short-term cash requirements. Specifically, staff has worked with these partners to achieve the goal of an average of 30-days cash over the first half of 2022. As noted in Board item 16 (2022 budget adoption), financial projections using the most up to date information on 2022 PCIA and PG&E rates shows VCE in a healthy financial position by the end of 2022 (net position of $17M, inclusive of payback of this line of credit with Yolo County by the end of 2022).
The proposed short-term $5M line of credit with Yolo County is structured to be fully paid off by the end of 2022 while paying the County 1.5% above its current rate of return on its investment pool (total of 1.99%). This amount, in combination with access to a $2.5M VCE/SMUD restricted power purchase reserve account allows VCE to meet its short-term cash on hand reserve goal for the first half of 2022. Note: high revenue months in the second half of 2022 allow VCE to pay off the County line of credit and build back reserves. The principal terms 347
Item 17
2 of the line are listed below and included in the attached revolving credit agreement (Attachment 2).
Yolo County Line of Credit Terms
• Type of Financing: Line of Credit (maximum of 1 draw per month) • Maximum Amount: $5,000,000
• Maturity: December 31, 2022
• Collateral/Pledged Assets: VCE electric utility customer rates • Security: Rate covenant
• Interest Rate: Variable rate, simple interest, based on Yolo County Treasury Pool Quarterly Earnings Rate plus 1.50% (1.99% as of 12/31/2021)
• Late Penalty: 5% and 10% annualized until paid in full • Principal Payment Structure: Due in full on December 31, 2022 • Interest Payment Structure: Due in full on December 31, 2022 Current Financial Instrument
VCE has a revolving line of credit (RLOC) Agreement with River City Bank with a limit of $5M available for cash advances and/or letters of credit and an additional $2M credit facility available for Letters of Credit, for a total RLOC of $7M. The line of credit is scheduled to be extended through 2022 and has not been drawn on since August of 2018. This line of credit provides additional security for VCE and allows for longer-term financial flexibility.
CONCLUSION
Staff believes that the short-term cash requirement and the reduced but continued uncertainty related to the PCIA fee, resource adequacy costs, and PG&E bundled rates for 2023 justify adding the line of credit with the County of Yolo. This agreement allows VCE to build reserves by December 31, 2022, of approximately 80 to 90 days cash. Additionally, credit support from both the County and River City Bank will allow VCE to optimize borrowing costs and provide additional assurance of rate stabilization.
Staff is recommending that the Board adopt a resolution that authorizes the Interim General Manager to conduct any final negotiations and sign all necessary documents on behalf of VCE to execute a line of credit not to exceed $5,000,000 with the County of Yolo. The proposed terms are described in the attached term sheet and package that the County of Yolo Debt Committee has recommended to the Board of Supervisors for approval (scheduled for late February).
Attachments
1. Yolo Debt Committee - Item #7 - VCE Loan Request
2. Revolving Credit Agreement
3. Resolution authorizing the Interim General Manager to execute Credit Agreement with the County of Yolo
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1 Yolo County Debt Committee
Item #7 – Consider options for providing a short-term loan to the Valley Clean Energy Alliance January 20, 2022
Requesting Department/Agency: Valley Clean Energy Alliance Time Duration: Less than one year
Loan Amount Requested: Up to $10 million
Loan Amount Recommended: $5 million
Reason before Debt Committee: 1) The transaction involves an agreement with another governmental agency.
2) The Interim Chief Financial Officer determined
that the issue merits review by the Debt
Committee.
Purpose/Project
The Valley Clean Energy Alliance (VCE), like other Community Choice Aggregations throughout the state, has been negatively impacted over the last several years due to volatility in the energy sector resulting from COVID-19, sharp increases in power market costs, and increases in Power Charge Indifference Adjustment (PCIA) charges from PG&E.
California’s investor-owned utilities (IOU), such as PG&E, use the PCIA to recover above-market costs associated with long-term power contracts that were entered into many years ago. The PCIA is charged to Community Choice Aggregations (CCA) such as VCE in order to spread the cost of these contracts to customers who were formerly served by the IOUs. In 2021-22, the PCIA charged by PG&E increased by approximately 46% over the prior year. In addition, the extreme heat events that occurred in August and September 2020 increased average forward power market prices by approximately 57% due to speculation on the potential repeat events occurring in the future.
These factors resulted in significant impacts to VCE’s fiscal position over the last several years. To mitigate this impact, VCE has taken a number of actions, including drawing down reserves, scaling back near-term acquisition of renewable energy credits and power purchase agreements, and implementing an accelerated 5% increase on generation rates beginning in November 2021.
Fortunately, recent filings by PG&E to the California Public Utilities Commission (CPUC) reflect an anticipated 59% reduction in the PCIA and a 33% increase in customer rates for calendar year 20221. Since VCE’s customer rates are currently tied to PG&E rates, the anticipated customer rate increase will allow VCE to generate additional revenue, while the decrease in PCIA will reduce VCE costs. The estimated result of these rate changes substantially improves VCE’s fiscal outlook for 1 The CPUC has requested that PG&E propose options to amortize or spread this rate increase over 18 or 24 months. Based on PG&E’s filings on December 28th, 2021, these options would result in either a 29% rate increase over 18 months, or a 27% rate increase over 24 months.
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2 calendar 2022. However, despite this improvement, VCE is still projecting short-term fiscal strain beginning in March 2022.
To bridge this short-term cash flow need, VCE has requested a loan in the amount of $10 million from Yolo County. The loan would be used to fund operations and maintain cash reserves at the policy minimum of 30 days of operating expenditures. County staff met with VCE staff on several occasions to discuss the loan request, review financial projections, and explore alternatives. In addition to the loan request from the County, VCE has worked with SMUD to gain access to a $2.5 million cash reserve that is held by SMUD to be used for short-term support of power purchases and operations. VCE has also been in discussions with River City Bank on extension of their credit line for 2022. River City Bank recently extended a $7 million line of credit to the end of February 2022 and will finalize the 2022 credit line extension once PG&E rate adjustments are approved by the CPUC, currently scheduled for February 10th. VCE does not intend to use credit lines in the long-term as it moves towards establishing an investment grade credit rating.
Staff Recommendation
In light of VCE’s projected cash flow needs, the availability of other financing options, and the County’s lending capacity, staff recommend that the Debt Committee consider a $5 million loan or line of credit to VCE in accordance with the proposed loan terms outlined in Attachment A. Such a loan should be adequate to cover VCE’s short-term financing needs without imposing adverse impacts to the County. If approved, it is anticipated that this loan will be made out of the Demeter fund, which currently has an available balance of approximately $5.35 million.
Alternative Options
Other options that the Debt Committee may consider are as follows:
Provide a loan or line of credit of up to $10 million. This option reflects VCE’s original loan request and would likely satisfy VCE’s cash flow needs without requiring financing from other sources. However, in order to fund a loan of this magnitude the County would need to utilize General Fund cash balances, which may impact the fund balances that are available for appropriation in the 2022-23 budget.
Do not provide a loan or line of credit to VCE. Under this option, VCE would need to rely on alternate financing sources, such as from SMUD and River City Bank, to fund its short-term cash flow needs. If adequate financing cannot be obtained, VCE may be forced to consider short-term rate increases on its customers.
Attachment A – Proposed VCEA Loan Terms
Attachment B – VCE Funding Request Summary
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DEPARTMENT OF FINANCIAL SERVICES
625 Court Street, Room 102
PO BOX 1268
WOODLAND, CA 95776 Financial Leadership Financial Systems Oversight PHONE: (530) 666-8190 Budget & Financial Planning Accounting & Financial Reporting FAX: (530) 666-8215 Treasury & Finance Internal Audit EMAIL: [email protected] Tax & Revenue Collection Procurement
ASSURANCE OF ACCOUNTABILITY
TOM HAYNES County of Yolo Interim Chief Financial Officer www.yolocounty.org
January 14, 2022
Mitch Sears
Valley Clean Energy Alliance
604 2nd Street
Davis, CA 95616
RE: VCEA Loan Request Term Sheet
This term sheet is being submitted to you in response to your request for a loan from the County of Yolo to address short-term financing needs in order to maintain the policy minimum of 30 days operating cash.
While the request from VCE was for a $10 million loan, the terms proposed herein reflect the County’s capacity to extend financing and the recognition that VCE has other potential financing options.
This Term Sheet summarizes the terms at which the County would expect to extend financing to VCEA in order to assist you in your determination whether to pursue financing from the County or to support you in comparing to external sources. As noted below, formal approval through a loan agreement by the Board of Supervisors will be required to secure these terms.
Type of Financing: Line of Credit (maximum of 1 draw per month) Borrower: Valley Clean Energy Alliance
Lender: County of Yolo
Maximum Amount: $5,000,000
Maturity: December 31, 2022
Collateral/Pledged Assets: VCE electric utility customer rates Security: Rate covenant
Interest Rate: Variable rate, simple interest, based on Yolo County Treasury Pool Quarterly Earnings Rate plus 1.50%
(2.31% as of 09/30/2021)
Principal Payment Structure: Due in full on December 31, 2022 Interest Payment Structure: Due in full on December 31, 2022 Item #7 - Attachment A
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Prepayment Options: VCE shall have the right to prepay any amounts drawn from the Line of Credit in whole or in part without
prepayment penalty.
Fees: No fees for origination.
Documentation: The financing will require execution of a mutually agreeable financing agreement to be prepared by the
Department of Financial Services with support from
County Counsel. The form of documents would be those
normal and customary for the County of Yolo.
Loan Approval: This Term sheet and related Financing Agreement will require formal approval by the Yolo County Board of
Supervisors in a public meeting. No guarantee or
representation is provided whether the financing will
receive Board approval.
Please don’t hesitate to contact me at (530) 666-8162 or [email protected] should you have questions regarding this document. We look forward to your respond and upon receipt of your favorable response, will endeavor under good faith to complete a financing agreement reflecting the terms herein.
Sincerely,
Tom Haynes
Interim Chief Financial Officer
CC: Chad Rinde
Edward Burnham
Item #7 - Attachment A
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Item #7 – Attachment B
VCE – Interagency Loan Request
VCE Loan Request Summary – 01/06/22
Background Update
The CPUC and PG&E have updated actuals for their balancing accounts related to the PCIA and customer rates, resulting in a 59% decrease in PCIA and a 33% increase in customer rates for 2022. Both adjustments are related to power market price changes in 2021. The PCIA has been adjusted from ‐75% to ‐59% for 2022 based on the incorporation of power market price actuals for October and November. For 2022 customer energy rates, the CPUC has requested PG&E propose amortization options between 18 and 24 months on the 33% generation rate increase.
Based on PG&E’s filings on December 28, 2021, the amortizations are 29% for 18 months and 27% for 24 months. VCE understands that to maintain general parity with the other IOUs, increases approved by the CPUC for 2022 will most likely be at 24 months for 27% increase.
The CPUC is scheduled to act on its annual rate‐setting proceeding, including PG&E’s amortization proposals, on January 21, 2022. Under this schedule, 2022 PCIA and rates would go into effect on March 1, 2022.
These actions by the CPUC help provide near and mid‐term stability to VCE by spreading the rate increase over 2022 and 2023. PG&E's smoothing of rate increases by PG&E reduces rate volatility and provides VCE with additional certainty that PG&E rates will not rebound dramatically in 2023. This, in combination with VCE’s transition into its long‐term fixed‐price renewable energy contracts in 2022/2023, provides a more stable financial outlook in the future. However, the immediate short‐term cash positions remain unfavorable through the first half of 2022, making it necessary for VCE to request bridge funding for short‐term power purchases and operations. In summary, while VCE will be in a solid financial position at the close of 2022, the PCIA and rates implementation delay to March 1st makes the first half of 2022 challenging from a cash flow perspective.
VCE Request to Yolo County
Valley Clean Energy requests a loan of up to $10M of funds from Yolo County related to anticipated revenues over the calendar year 2022. This request is to maintain VCEs reserve policy of a minimum of 30 days operating cash. These funds would be limited to fund cash reserves and operating expenses. Operational expenses, including billed and owed obligations for (i) PG&E power‐related fees, if any; (ii) SMUD power purchases and related charges, including SMUD obligations to CAISO; (iii) monthly VCEA administrative overhead (based on annual budgeted amounts related to CCA activities);(iv) payment of service fees to SMUD; and (v) amounts owed to direct VCEA counterparties for energy purchases. VCE would enter into a financial agreement with the County of Yolo based on repayment of any loan funds used by the end of 2022.
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Item #7 – Attachment B
If agreed, this short‐term loan eliminates the need for substantial short‐term rate increases by VCE to fund cash reserves our customers have over‐paid in PCIA to PG&E in 2021. This short‐ term bridge funding will support VCE’s transition to its fixed long‐term PPAs (~80% of VCE’s load by 2024) and move toward an investment‐grade rating by 2024. Table 1 below shows the sensitivity of net generation rate increases beginning in March 2022. In addition, we have provided cash flow scenarios of 12‐month outlooks in the table 2 below.
TABLE 1
Additional Considerations:
VCE is expected to receive ~$820K in outstanding receivables in February. Cash flows are based on the most recent revenues (120 days) and not the total AR balance. VCE has received updated power costs forecasts based on final hedges. The current base expected costs are $65M, which is ~ 2M favorable.
VCE is currently forecasted to be ~$2.4M better than budgeted for FY2021 (6 Months), ending in October.
Net Rate Increase 5% 27% 29% 33%
Revenue (net uncollectible) 70,821 86,794 88,246 91,151 Power Costs 66,990 66,990 66,990 66,990 Gross Margin 3,831 19,804 21,256 24,161 Operating & Admin Costs 5,055 5,055 5,055 5,055 Net Income (1,224) 14,750 16,202 19,106 Gross Margin 5.41% 22.82% 24.09% 26.51%
Net Margin ‐1.73% 16.99% 18.36% 20.96%
Ending Cash 975 15,011 16,290 18,880 Loan Requirement (30 Days Cash) 8,640 6,970 6,910 6,780 Maximum Forecasted Cash 3,380 15,011 16,290 18,880 Minimum Forecasted Cash (3,240) (1,570) (1,510) (1,380) Average forecasted Cash (430) 4,830 5,310 6,290 CY 2022 Budget
Rate Scenarios
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Item #7 – Attachment B
TABLE 2 – Update with 27%
Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecAmortization Schedule (5,000) 500 500 500 500 500 500 500 500 500 500 Projected Loan Balance ‐ (5, (4,500) 000) (4,000) (3,500) (3,000) (2,500) (2,000) (1,500) (1,000) (500) ‐ Projected Cash Balance 3,400 6,220 3,540 2,430 2,010 2,460 4,850 7,710 10,570 12,950 14,370 15,020 Projected Days Cash 19 35 20 14 11 14 27 43 59 72 80 83Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecAmortization Schedule (7,500) 750 750 750 750 750 750 750 750 750 750 Projected Loan Balance ‐ (7, (6,750) 500) (6,000) (5,250) (4,500) (3,750) (3,000) (2,250) (1,500) (750) ‐ Projected Cash Balance 3,400 8,720 5,790 4,430 3,760 3,960 6,100 8,710 11,320 13,450 14,630 15,020 Projected Days Cash 19 48 32 25 21 22 34 48 63 75 81 83Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecAmortization Schedule (10,000) 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Projected Loan Balance ‐ (10, (9,000) 000) (8,000) (7,000) (6,000) (5,000) (4,000) (3,000) (2,000) (1,000) ‐ Projected Cash Balance 3,400 11,220 8,040 6,430 5,510 5,460 7,350 9,720 12,070 13,960 14,880 15,030 Projected Days Cash 19 62 45 36 31 30 41 54 67 78 83 84 12 Month Amortizations
202220222022
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13082-0001\2619967v2.doc 1
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (this "Agreement") is made and entered into as of _________, 2022, by and between COUNTY OF YOLO (the "County"), a political subdivision of the State of California, and the VALLEY CLEAN ENERGY ALLIANCE ("VCEA"), a joint exercise of powers authority established pursuant to the Joint Exercise of Powers Act of the State of California (California Government Code Section 6500 et seq.).
RECITALS
A. VCEA's Financial Reserve Policy, adopted December 14, 2017, targets an operating reserve account minimum balance of 30 days operating expenses.
B. In order to maintain this policy minimum reserve, VCEA has requested the County provide a $5,000,000 revolving line of credit to finance VCEA's operating cost shortfalls.
B. County is willing to provide such financing upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, County and VCEA agree as follows:
1. Agreement to Make Loans. Subject to the terms and conditions set forth below, the County agrees to lend to VCEA the sum of $5,000,000 (the "$5M Loan") for VCEA's 2022 operating cost requirements as needed to be evidenced by a promissory note in the form attached hereto as Exhibit A..
2. Security for Loan. To secure the performance of VCEA hereunder and the payment of all amounts due or to become due to the County, VCEA hereby grants, pledges, transfers and assign to the County, its right, title and interest in VCEA's net revenues consisting of electric utility customer charges.
3. Use of Loan Proceeds. The $5M Loan shall be used for VCEA's annual operating cost shortfalls. VCEA agrees to use the proceeds of the loans for the foregoing purposes and for no other purposes.
4. Interest on Outstanding Amount of Loan. Simple interest shall accrue on outstanding amounts of the Loan at a variable interest rate equal to Yolo County Treasury Pool Quarterly Earning Rate plus 1.50% (1.99% as of December 31, 2021).
5. Conditions to Loans. County shall make the Loan proceeds available provided that County receives the organizational copies of documents of VCEA and a copy of resolutions of VCEA authorizing the transactions and net revenues pledge described herein.
6. Revolving Credit; Loan Disbursements. County shall have no obligation to make advances of loan proceeds after the earlier of: (i) December 31, 2022; or (ii) the occurrence of an Event of Default (as defined in Section 10 below). Sums borrowed under the 356
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loans that are repaid by VCEA may be re-borrowed (i.e., each loan is a revolving credit agreement) subject to a maximum draw of one per month, but disbursements of each draw are subject to VCEA's giving to County a written request for disbursement at least five business days’ prior to the requested disbursement date in substantially the form attached hereto as Exhibit B and any additional documentation reasonably and promptly requested by County in writing.
7. Covenants, Warranties and Representations. VCEA makes the following covenants, representations and warranties as of the date of this Agreement:
(a) VCEA shall pay to County all principal and interest outstanding on the $5M Loan on or before the later of: (i) on or before December 31, 2022, or (ii) the date that is 30 days after County delivers a bill to VCEA describing the amount of the interest to be paid and the calculation thereof.
(b) VCEA has the right and power to enter into and has duly authorized the transactions and documents described herein. (c) This Agreement, and any other documents evidencing, securing or otherwise relating to the loan that are executed by VCEA, constitute legal, valid and binding obligations of VCEA which are enforceable in accordance with their terms. (d) Except as disclosed to County in writing: (A) VCEA has never defaulted under: (i) any promissory notes of the same general nature as the Note, or (ii) any of its bonds, leases or other obligations and (B) VCEA has never asserted a right to avoid liability under a lease by non-appropriation (excluding conditions precedent requiring appropriation) as a condition to the effectiveness of an obligation.
(f) To the fullest extent permitted by law, VCEA shall fix, prescribe, revise, and collect electric utility rates, fees and charges sufficient to repay the outstanding amounts under the $5M Loan and any accrued interest by December 31, 2022.
8. Prepayment. VCEA may prepay its draws under the Line of Credit without penalty at any time, in whole or in part upon three (3) business days’ written notice to the County. Prepayments shall be applied first to interest and then to principal. VCEA shall be entitled to reborrow any principal amounts under the Line of Credit that are paid, subject to the borrowing availability terms set forth in this Agreement.
9. County Reports/Statement. County shall keep an accounting of the indebtedness of VCEA resulting from draws under the Line of Credit. County shall, within five (5) business days after receipt of a written request from VCEA, provide written statements to VCEA of the outstanding balances under the $5M Loan and a description of any defaults or Events of Default by VCEA of which County then has knowledge or notice.
10. Default; Events of Default. An "Event of Default" by VCEA shall be deemed to have occurred hereunder and under the Notes if: (i) VCEA fails to pay any monetary obligation of VCEA to County when due; or (ii) VCEA fails to perform any non-monetary obligation of VCEA to County when performance is due, and VCEA fails to cure such default 357
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within 15 calendar days after written notice from County of such default (provided that if the default is such that more than 15 calendar days is required for its cure, no Event of Default shall have occurred unless VCEA fails to commence the cure within such 15 day period or thereafter fails to reasonably prosecute the cure to completion). If such an Event of Default by VCEA occurs, all sums disbursed or advanced by the County shall, at the option of County, immediately become due and payable, and County shall not be obligated to make future disbursements of loan proceeds to VCEA.
11. Late Charge; Default Interest Rate. In addition to the default provisions of Section 10, if VCEA fails to pay any payment due within 15 calendar days after the date it is due, a late charge of the greater of $100 or 5% of the late payment amount will be charged to the Loan unless the late charge is waived by the County due to good cause. If VCEA still has not paid any payment due 30 calendar days after the date it is due, interest on the outstanding balance, including late charges, shall accrue interest at an annualized rate of 10 % per annum, which shall be calculated from the due date until such amounts are paid off in full.
12. Independent Contractor. Nothing contained in this Agreement is intended to, or shall be construed in any manner, as creating or establishing a partnership, joint venture or relationship of employer/employee or principal/agent between the parties.
13. Notices. All notices and demands shall be given in writing by certified mail, postage prepaid, and return receipt requested, by personal delivery or by overnight delivery service. Notices shall be considered given upon the earlier of (a) personal delivery; (b) two (2) business days following deposit in the United States mail, postage prepaid, certified or registered, return receipt requested; or (c) one (1) business day following deposit with an overnight courier. Notices shall be addressed as provided below for the respective party; provided that if any party gives notice in writing of a change of name or address, notices to such party shall thereafter be given as demanded in that notice:
VCEA: Valley Clean Energy Alliance
604 2nd Street
Davis, CA 95616
Attn: Mitch Sears
County: County of Yolo
Department of Financial Services
625 Court Street, Room 102
Attn: Chief Financial Officer
14. Nonliability of VCEA Officials and Employees. No member, official or employee of either party shall be personally liable to the other party or its successors in interest in the event of any default or breach or for any amount which may become due.
15. No Third Party Beneficiaries. This Agreement is made for the sole benefit of County and VCEA and their respective permitted successors and assigns, and no other person or persons shall have any right of action hereon, nor should any laborer, materialman, subcontractor, or other third party rely upon the loans as a source of payment for work done or 358
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labor and/or materials supplied in respect to the improvements contemplated hereunder or otherwise, notwithstanding any representation to the contrary made by VCEA, contractor or any other person.
16. Miscellaneous / General Provisions. Time is of the essence of this Agreement and of each and every provision hereof. The waiver by either party of any breach or default herein shall not be deemed, nor shall it constitute, a waiver of any subsequent breach or breaches. Any failure or delay by either party in asserting any of its rights or remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies or deprive it of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. This Agreement, together with all exhibits hereto, constitutes the entire agreement between the parties hereto, and there shall be no other agreement regarding the subject matter hereof unless signed in writing by County and VCEA.
17. No Assignment. VCEA shall not assign any of its rights under this Agreement.
18. Agreement to Pay Attorneys' Fees and Expenses. In the event either party to this Agreement should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement of performance or observance of any obligation or agreement on the part of the defaulting party contained herein, the defaulting party agrees that it will pay on demand to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party.
IN WITNESS WHEREOF, the parties hereto have entered into this Revolving Loan Agreement as of the day and year first above written.
COUNTY OF YOLO
By: ______________________________
Print Name: _______________________
Title: _____________________________
VALLEY CLEAN ENERGY ALLIANCE
By: ______________________________
Print Name: _______________________
Title: _____________________________
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EXHIBIT A
REVOLVING CREDIT PROMISSORY NOTE
$5,000,000.00 Date:
FOR VALUE RECEIVED, VALLEY CLEAN ENERGY ALLIANCE, a public agency formed under the provisions of the Joint Exercise of Powers Act of the State of California, Government Code Section 6500 et seq. (“Borrower”), promises to pay to the order of COUNTY OF YOLO (“Lender”) the principal sum of FIVE MILLION and /100 DOLLARS ($5,000,000.00), pursuant to the terms of that certain Revolving Credit Agreement (the “Credit Agreement”) dated as of ___, 2022, between Borrower and Lender, together with interest thereon as provided herein and therein. All payments under this Revolving Credit Promissory Note (this “Note’) shall be made to Lender at its address specified in the Credit Agreement, or at such other place as the holder of this Note may from time to time designate in writing, in accordance with the terms of this Note and the Credit Agreement. Capitalized terms used but not defined in this Note shall have the definitions provided in the Credit Agreement.
Interest and Payment Terms. Simple interest shall accrue on outstanding amounts of this Note at a variable interest rate equal to Yolo County Treasury Pool Quarterly Earning Rate plus
1.50% (1.99% as of December 31, 2021). VCEA shall pay to County all outstanding principal and interest on this Note on or before the later of: (i) on or before December 31, 2022, or (ii) the date that is 30 days after County delivers a bill to VCEA describing the amount of the interest to be paid and the calculation thereof.
Default and Acceleration. Upon the occurrence of any Event of Default described in Section 10 of the Credit Agreement, Lender may exercise any or all of the rights and remedies set forth therein, including the exercise of Lender’s option to accelerate this Note and declare all advances and all indebtedness under this Note then outstanding to be immediately due and payable, with notice to Borrower.
Miscellaneous. This Note and the holder hereof arc entitled to all of the rights benefits provided for in the Credit Agreement. All of the terms, covenants and conditions contained in the Credit Agreement are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein. In the event of a conflict or inconsistency between the terms of this Note and the Credit Agreement, the terms and provisions of the Credit Agreement shall control.
This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.
This Note will be construed in accordance with, and governed by, the internal laws of the State of California.
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Borrower promises to pay all costs and expenses (including reasonable attorneys’ fees and expert witnesses’ fees) suffered or incurred by Lender or subsequent holder of this Note in the collection of this Note or the enforcement Lender’s rights and remedies under the Credit Agreement.
Borrower hereby waives presentment for payment and demand. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forego enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive any applicable statute of limitations, presentment, demand for payment, and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) the obligations evidenced by this Note or release any party or guarantor or collateral, or impair, fail to realize upon or perfect Lender’s security interest in the collateral, if any; and take any other action deemed necessary by Lender without the consent of or notice to anyone.
Prior to signing this Note, Borrower read and understood all the provisions of this Note and the Credit Agreement, including the variable interest rate provisions in the Credit Agreement. Borrower agrees to the terms of this Note and the Credit Agreement.
Borrower acknowledges receipt of complete copies of this Note and the Credit Agreement.
VALLEY CLEAN ENERGY ALLIANCE
By: _____________________________
Name: __________________________
Its: _____________________________
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EXHIBIT B
FORM OF DISBURSEMENT REQUEST
VCEA/COUNTY LOAN DISBURSEMENT REQUEST
County of Yolo
County of Yolo
Department of Financial Services
625 Court Street, Room 102
Attn: Chief Financial Officer
Re: Request for Disbursement of Loan Proceeds
Ladies and Gentleman;
The Valley Clean Energy Alliance (“VCEA”) requests that you disburse to the VCEA by wire transfer to:
Payee: Valley Clean Energy Alliance
Bank:
Routing#:
Account#:
the sum of $_________, being a portion of the loan evidenced by that certain $_________ Promissory Note executed by the VCEA.
The VCEA hereby certifies that is has incurred operating costs in excess of the cash available to pay them, and that such loan funds will be sued to pay such operating cost shortfall.
Very Truly Yours,
VALLEY CLEAN ENERGY ALLIANCE
By:_____________________________________
Print Name: ______________________________
Title:
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VALLEY CLEAN ENERGY ALLIANCE
RESOLUTION NO. 2022-XXX
RESOLUTION OF THE BOARD OF DIRECTORS OF THE VALLEY CLEAN ENERGY ALLIANCE
AUTHORIZING THE EXECUTION OF CREDIT AGREEMENT WITH THE COUNTY OF YOLO WHEREAS, The Valley Clean Energy Alliance (“VCE”) was formed as a community choice aggregation agency (“CCA”) on November 16, 2016, Under the Joint Exercise of Power Act, California Government Code sections 6500 et seq., among the County of Yolo, and the Cities of Davis and Woodland, to reduce greenhouse gas emissions, provide electricity, carry out programs to reduce energy consumption, develop local jobs in renewable energy, and promote energy security and rate stability in all of the member jurisdictions. The City of Winters, located in Yolo County, was added as a member of VCE and a party to the JPA in December of 2019; and, NOW, THEREFORE, the Board of the Valley Clean Energy Alliance resolves as follows:
1. Approves and authorizes the Interim General Manager and/or his designee to conduct any final negotiations and sign all necessary related documents on behalf of VCE for the short-term line of credit agreement with the County of Yolo as described in the term sheet recommended for approved by the County of Yolo Debt Committee to the Yolo County Board of Supervisors on January 20, 2022.
2. The Interim General Manager and/or his designee is authorized to execute and take all actions necessary to implement the line of credit substantially in the form attached hereto on behalf of VCE, and in consultation with legal counsel is authorized to approve minor changes to the line of credit agreement so long as the terms and amount are not changed.
PASSED, APPROVED AND ADOPTED, at a special meeting of the Valley Clean Energy Alliance, held on the ____ day of ________________ 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
___________________________________
Jesse Loren, VCE Chair
___________________________________
Alisa M. Lembke, VCE Board Secretary
Attachments:
1. Yolo Debt Committee - Item #7 - VCE Loan Request
2. Revolving Credit Agreement
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Item 18
VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 18
TO: Board of Directors
FROM: Mitch Sears, Interim General Manager
Edward Burnham, Director of Finance & Internal Operations SUBJECT: VCE Three-Year Strategic Plan Annual Update Report DATE: February 10, 2022
PURPOSE
The purpose of this annual report is to provide a progress update to the Board on implementation of the Strategic Plan and provide an outlook of planned activity for 2022.
BACKGROUND
The Board ratified the VCE Three-Year Strategic Plan at the November 12, 2020 meeting which incorporates the following schedule for status reporting:
• Quarterly Report to VCE Management
Staff will report quarterly to the Interim General Manager on the status of goals, objectives and metrics for which they are responsible.
• Annual Report to Board and CAC
Staff will report annually to the Board and CAC on the status of goals, objectives and metrics, and will recommend any mitigations or amendments as may be necessary for Board approval.
Staff has provided quarterly progress updates to the Interim General Manager and Community Advisory Committee (CAC). As shown in the attached strategic plan status report, staff believes notable progress is being made in each of the goal areas and that the plan is serving an overall purpose of aligning organizational activities with policy priorities. Staff is seeking feedback and direction from the Board on continuing implementation of the Strategic Plan.
ATTACHMENT
1. VCE Strategic Plan Annual Update Report - 2021
364
VCE Three-Year Strategic Plan
Annual Update Report
2021
365
VCE Three-Year Strategic Plan Update
2 Obj. 2021 - Key Accomplishments & Developments 2022 Planned Activities
1.1 1. Developed collections policy for review by CAC & Board
2. Renewed credit line with RCB through calendar 2021.
3. Received preliminary CAPP approval for funding ~$800K of COVID related receivables
1. Collections policy approval Q1 2022
2. Renew and increase credit line(s)
1.2 1. Budgeted for a financial advisor to support the process of establishment of first credit rating
1. Issue RFP for financial advisor Q1 2022
2. Recover cash reserves ~80+ Days
1.3 1. Review financial reserve, dividend, and
programs fund policy
1.4 1. Adopted cost-based rate policy
2. Implemented rate change to maintain cash reserve minimums
1. Develop an additional analytics model
for cost study and long-term rates.
Goal 1 - FINANCIAL STRENGTH
Maintain grow a strong financial foundation and manage costs to achieve long-term organizational health.
Objectives: 1.1 - Maintain consistently healthy cash reserves to fund VCE’s mission, vision, and goals.
1.2 - Achieve an investment grade credit rating by end of 2024.
1.3 - Commit to fiscal efficiencies to build a program foundation from which to deliver customer and community value.
1.4 - Manage customer rates to optimize VCE’s financial health while maintaining rate competitiveness with PG&E. 366
VCE Three-Year Strategic Plan Update
3 Obj.2021 - Key Accomplishments & Developments 2022 - Planned Activities
2.2 1. Q1 2021, executed a 90MW PV +75MW BESS 20 yr. PPA with Resurgence. (COD – Q422)
2. Q4 2021, executed a 72MW PV + 36MW BESS 15 yr PPA with Willow Springs. (COD – Q423) Note: Both PPAs bring VCE stable, low-cost power, resource adequacy, and RPS compliance.
2.3 1. Participation in RFPs with CC power (1) for (2-3) long-duration energy storage systems. (2) firm clean resources (e.g., geothermal, biomass, other new technologies.) Note: Both support CPUC mandate for additional resources – D.21-06-035
1. Finalize negotiations and bring them forward for
Board approval.
2. Evaluate firm proposals and contract awards for
Board approval.
2.5 1. Staff and Carbon neutrality task group – (1) Awarded RFP to Energeia to perform portfolio analysis for 100% carbon neutral and carbon-free hour-by-hour. (2) Provided input and reviewed results for final recommendations
1. Final report to be delivered in February 2022 to
Board to begin
2.6 1. N/A for 2021 1. Comprehensive review planned to incorporate long-term PPAs (EROC participation)
Goal 2 - PROCUREMENT & POWER SUPPLY
Manage power supply resources to consistently exceed California’s Renewable Portfolio Standard (RPS) while working toward a resource portfolio that is 100% carbon neutral by 2030.
2.1 - Continue to identify and pursue cost effective local renewable energy resources.
2.2 - Acquire sufficient bundled energy and renewable resources to achieve VCE’s greenhouse gas reduction targets.
2.3 - Deploy storage and other strategies to achieve renewable, carbon neutral, resource adequacy, and resiliency objectives.
2.4 - Identify and pursue cost effective, local distributed energy (e.g., behind the meter rooftop Solar + storage) resources to help meet reliability needs.
2.5 - Study and present options for achieving a 100% carbon neutral resource portfolio as well as 100% carbon free resource portfolio (carbon free hour by hour) by 2030.
2.6 - Optimize the hedging strategy to mitigate risk in accordance with the energy risk guidelines and procurement plan. 367
VCE Three-Year Strategic Plan Update
4 Obj. 2021 - Key Accomplishments & Developments 2022 - Planned Activities
3.1 1. Initiated a mini-campaign in partnership with Davis Food Co-op on UltraGreen opt-ups, including collateral for the campaign.
2. Rolled out an online platform for customers to easily opt up online without their PG&E account number
1. Launch, publicize, create awareness of programs
for the low-income/at-risk
2. Expand opt-up campaigns for Woodland and
Winters (w/Spanish)
3. Implement a program for opt-up sponsorship of
low-income customers
3.2 1. Followed up on cost analysis for all member jurisdictions to opt up to UltraGreen re-initiated conversations about opting up.
2. Engaged the Woodland Sustainability Committee on VCE efforts and building electrification.
3. Engaged with the County of Yolo on the Climate Action Commission.
1. Upgrade analysis of impacts for enrollment of
Member jurisdictions in support of targeted
community goals.
2. Engage Key decision-makers in emission
reduction programs.
3.3 1. AgFIT pilot (1) Approved by CPUC with launch in 2022 (2) outreach developed for key ag customers
2. Developed and Launched campaign for UltraGreen commercial customers to advertise efforts and engage additional key accounts.
1. Successful AgFIT Launch in May-22.
2. Include additional key commercial accounts to
the UltraGreen campaign.
3.4 1. Directly engaged with Mutual Housing (MH) management staff and conducted three customer centered public meetings (1 in Spanish). This resulted in much more awareness of VCE’s brand and activities.
2. Made significant improvements to the VCE website, including adding content on carbon-free vs. renewables, highlighting key UltraGreen customers on the homepage, updating FAQs, updating the financial resources page, and adding the VCE Power Contract map.
3. Staff conducted two educational presentations in elementary schools about VCE and climate change
4. Staff co-lead energy related class at the UC Davis Graduate School of Management.
1. Continue to engage and continue conversations
about partnering with MH on programs, e.g.,
multi-family EV
2. Engage with GRID Alternatives for multi-family,
EV charging, and workforce development
training.
Goal 3 - CUSTOMERS & COMMUNITY (3.1 - 3.4)
Prioritize VCE’s community benefits and increase customer satisfaction and retention.
3.1 - Develop engagement strategies to increase awareness of, and participation in, local control of VCE’s energy supply and programs with a particular focus on engaging disadvantaged and historically marginalized communities.
3.2 - Develop programs and initiatives to better support community goals, including supporting member agency achievement of energy-sector emissions reduction targets.
3.3 - Design and implement a strategy to more effectively engage local business and agricultural customers.
3.4 - Build awareness and trust of the VCE brand through direct engagement with customers, communities and organizations. 368
VCE Three-Year Strategic Plan Update
5 Obj. 2021 - Key Accomplishments & Developments 2022 - Planned Activities
3.5 1. Made significant progress on three programs in Q3-4 2021. Ag pilot approved by the CPUC; programs for both EV rebates and heat pump rebates/support are in progress.
2. Staff was invited to present on building decarbonization to the Woodland Sustainability Committee (WSC) in January 2022
1. Approve and launch heat pump and EV
rebate program; program design for
higher incentives for low-income
customers.
2. Incentivize low-income community with
programs (CARE/FERA, PIPP, and ELRP.)
3.6 1. Maintained customer participation rate of over 90%
2. Reviewed and modified Opt-out process for improvements such as live customer service representative engagement for better awareness and education prior to final customer decision.
1. Focused engagement and outreach with
communities with low participation.
3.7 1. Participating in Arrearage Management Program (AMP) and Percentage Income Payment Plan (PiPP) with PG&E and other CCAs so that customers at high risk of disconnection can get support in paying arrearages and avoid disconnection.
1. Monitor AMP and PiPP implementation
with PG&E and SMUD.
2. Continue posting in Spanish, measure
success in March 2022.
3. Continue to seek out opportunities to make
classroom presentations with the local
educational system.
Goal 4 - DECARBONIZATION & GRID INNOVATION
Promote and deploy local decarbonization and grid innovation programs to improve grid stability, reliability, community energy resilienceand safety
Goal 3 - CUSTOMERS & COMMUNITY (3.5 – 3.7)
Prioritize VCE’s community benefits and increase customer satisfaction and retention.
3.5 - Develop customer programs and initiatives that prioritize decarbonization, community resiliency and customer savings.
3.6 - Measure and increase customer satisfaction, using tools such as surveys and focus groups, while maintaining an overall participation rate of no less than 90%.
3.7 - Integrate and address the concerns and priorities of emerging and historically marginalized communities in the design and implementation of VCE's services and programs.
369
VCE Three-Year Strategic Plan Update
6 Obj. 2021 - Key Accomplishments & Developments 2022 - Planned Activities
4.1 1. Worked w/ the CAC on a building electrification statement. The Board adopted a statement supporting and encouraging the electrification of new buildings.
1. Engage with the County of Yolo planning
commission on decarbonization efforts.
4.2 1. Completed draft Carbon Neutral by 2030 Report (CNx2030).
1. Present final CNx2030 Report to Board Q1; Q3
return to Board with recommendations based on
CNx2030 Report.
2. Energy Resilience Task Group to contribute to
building local energy resilience for essential
community needs.
4.3 1. Followed up with member jurisdiction staff for UltraGreen Analysis & adoption
2. Initiated a mini-campaign in partnership with Davis Food Co-op on UltraGreen opt-ups, including collateral for the campaign.
3. Rolled out an online platform for customers to easily opt up online without their PG&E account number
1. Continue to identify opt-up solutions for member
jurisdictions
2. Analyze VCE opt-up numbers in Q2 2022
4.4 1. Applied for County of Yolo American Rescue Plan funding for downtown Winters reliability upgrade.
2. Applied for funding to CPUC under the Reliability OIR to develop and deploy an agricultural autoDR pilot. Received $3.25M in funds for the 3-year pilot.
1. Continue to identify ARP and other funding
sources with member districts, state, and federal
agencies.
2. Tier 2 advice letter to be filed Jan 5th, 2022.
Goal 5 - REGULATORY & LEGISLATIVE AFFAIRS
Strongly advocate for public policies that support VCE’s Vision/Mission.
5.1 - Work with CalCCA and other partners to proactively engage State regulators, legislators, and other State authorities in 370
VCE Three-Year Strategic Plan Update
7 Obj. 2021 - Key Accomplishments & Developments 2022 - Planned Activities
5.1 1. Actively engaged in CalCCA sponsored legislation on PCIA – SB 612 (Portantino)
2. Active support of AB 843 (Aguiar-Curry) – access for CCA’s to BioMat resources
3. CAC Leg/Reg Task Group – bi-weekly meeting
1. Ongoing engagement in support legislation
related to CCAs
5.2 1. Identify key stakeholder groups within VCE service territory – in process,
2. Attended Winters Chamber of Commerce on 4.12.21
3. Met with Cool Davis to explore formalizing a relationship to work on shared decarbonization and electrification goals.
1. Decision around a structure to formalize
relationships with community orgs (e.g., MOU
Template)
1. 5.3 Engaged with CalCCA PCIA forecasting team to make more informed forecasts of PCIA and PG&E rates.
1. Recruitment of Regulatory Staffing
Goal 6 - ORGANIZATION, WORKPLACE & TECHNOLOGY (6.1 – 6.4) Analyze and implement optimal long-term organizational, management, and information technology structure at VCE.
6.1 - Develop a roadmap to evaluate and guide future steps toward formation of a local Publicly Owned Utility (POU).
6.2 - Evaluate and pursue opportunities for shared services with other CCAs for certain functions. 371
VCE Three-Year Strategic Plan Update
8 Obj.2021 - Key Accomplishments & Developments Planned Activities
1.6.1Continuing to monitor POU formation activities in PG&E service territory.
1. Outreach to CMUA
2. Evaluate funding options for transitioning to a
POU.
1.6.2Continued Board and staff level engagement with CC Power for joint CCA procurement
1. Continued Board and staff level engagement
with CC Power for joint CCA procurement.
6.3 1. Ongoing investigation of other CCA expansion evaluation methods used in the process.
2. Participation with the City of Stockton regarding the City’s CCA feasibility study
1. Continued Board and staff level support for
expansion opportunities.
1.6.4Budgeted (1) half time regulatory Analyst and (1) Intern for Marketing and Support 1. Recruitment for Analyst & Intern for 2022.
Goal 6 - ORGANIZATION, WORKPLACE & TECHNOLOGY (6.1 – 6.4) Analyze and implement optimal long-term organizational, management, and information technology structure at VCE.
6.5 - Promote diversity, equity and inclusion in leadership, hiring, promotion, and contracting policies.
6.6 - Support health, wellness and a productive workplace.
6.7 - Create an innovation-focused culture that rewards proactive participation, problem solving, new ideas, and creative use of 372
VCE Three-Year Strategic Plan Update
9 Obj. 2021 - Key Accomplishments & Developments Planned Activities
6.5 1. Completed annual diversity report (GO 156) for CPUC
2. Actively recruited for new hire Analyst position on multiple platforms, including women in science and engineering associations.
1. Will complete annual diversity report (GO 156) for
CPUC
6.6 1. Continued remote work option to address on-going pandemic issues. 1. Will continue remote work option as necessary to address on-going pandemic issues.
6.8 1. Working with County of Yolo GIS team on VCE platform for Dashboard and GIS mapping
2. Adopted Datto as an organizational network drive 2. Implement Dashboard and GIS Mapping Q222 373