VCE 7/14/2022 Board Meeting Agenda Page 1 of 3
Regular Meeting of the Valley Clean Energy Alliance
Board of Directors
Thursday, July 14, 2022 at 5 p.m.
Via Video/Teleconference
Pursuant to Assembly Bill 361 (AB 361), legislative bodies may meet remotely without listing the location of each remote attendee, posting agendas at each remote location, or allowing the public to access each location, with the adoption of certain findings. The Board of Directors found that the local health official recommended measures to promote social distancing and authorized the continuation of remote meetings for the foreseeable future. Any interested member of the public who wishes to listen in should join this meeting via teleconferencing as set forth below.
Please note that the numerical order of items is for convenience of reference. Items may be taken out of order on the request of any Board member with the concurrence of the Board. Staff recommendations are advisory to the Board. The Board may take any action it deems appropriate on any item on the agenda even if it varies from the staff recommendation.
Members of the public who wish to listen to the Board of Director’s meeting may do so with the video/teleconferencing call-in number and meeting ID code. Video/teleconference information below to join meeting:
Join meeting via Zoom:
a. From a PC, Mac, iPad, iPhone, or Android device with high-speed internet. (If your device does not have audio, please also join by phone.) https://us02web.zoom.us/j/81055788107
Meeting ID: 810 5578 8107
b. By phone
One tap mobile:
+1-669-900-9128,, 81055788107# US
+1-669-444-9171,, 81055788107# US
Dial:
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Meeting ID: 810 5578 8107
Public comments may be submitted electronically or during the meeting. Instructions on how to submit your public comments can be found in the PUBLIC PARTICIPATION note at the end of this agenda.
Board Members: Jesse Loren, (Chair/City of Winters), Tom Stallard (Vice Chair/City Woodland), Don Saylor (Yolo County), Dan Carson (City of Davis), Wade Cowan (City of Winters), Mayra Vega (City of Woodland), Gary Sandy (Yolo County), and Lucas Frerichs (City of Davis) 1 VCE 7/14/2022 Board Meeting Agenda Page 2 of 3
5:00 p.m. Call to Order
1. Welcome
2. Public Comment: This item is reserved for persons wishing to address the Board on any VCE-related matters that are not otherwise on this meeting agenda, or are listed on the Consent portion of the agenda, or on Closed Session item(s). Public comments on matters listed on the regular agenda shall be heard at the time the matter is called. As with all public comment, members of the public who wish to address the Board are customarily limited to two minutes per speaker, electronically submitted comments should be limited to approximately 300 words.
Comments that are longer than 300 words will only be read for two minutes. All electronically submitted comments, whether read in their entirety or not, will be posted to the VCE website within 24 hours of the conclusion of the meeting. See below under PUBLIC PARTICIPATION on how to provide your public comment.
CLOSED SESSION
Public comment on the closed session items only will be read at this time.
3. CONFERENCE WITH LEGAL COUNSEL – Potential Litigation Pursuant to paragraph (4) of subdivision (d) of Section 54956.9
4. Report out from Closed Session.
CONSENT AGENDA
5. Renew authorization of remote public meetings as authorized by Assembly Bill 361.
6. Approve June 9, 2022 Board meeting Minutes.
7. Receive 2022 Long Range Calendar.
8. Receive Financial Updates – May 31, 2022 (unaudited) financial statements.
9. Receive July 6, 2022 Regulatory update provided by Keyes & Fox.
10. Receive Community Advisory Committee June 23, 2022 meeting summary.
11. Receive quarterly (April – June) Customer Enrollment update.
12. Update on SACOG Grant – Electrify Yolo Project.
13. Receive memorandum on Donald Dame agreement for consulting services approving a 6 month extension and increasing the not to exceed amount.
14. Receive copy of signed Amendment 4 to agreement with Jim Parks Consulting extending the contract to expire on December 31, 2022 and increasing the not to exceed amount.
15. Ratify signed agreement with First Principles Advisory for Integrated Resource Planning portfolio modeling services for a not to exceed amount of $33,750 terminating on December 1, 2022. (Action)
16. Approve Amendment 5 to Keyes & Fox agreement to extend 18 months through December 31, 2023 and increase the not to exceed amount. (Action)
17. Adopt VCE Debt Policy. (Action)
18. Reappointment/Appointment of members to Community Advisory Committee. (Action)
REGULAR AGENDA
19. Approve Amendment 1 to the Power Purchase Agreement (PPA) with Resurgence Solar I, LLC related to price and terms. (Action)
20. Consider participating in California Community Power Join Powers Authority (CC Power) geothermal projects: A) Ormat Nevada Inc. and B) Open Mountain Energy, LLC. (Action)
21. Consider proposed three-tiered Customer Rate Structure / Product options. (Action)
22. Receive mid-year financials update. (Information)
23. Approve Amendment 2 to VCE’s Joint Exercise of Powers Agreement (JPA) updating Exhibits. (Action)
2 VCE 7/14/2022 Board Meeting Agenda Page 3 of 3
24. Board Member and Staff Announcements: Action items and reports from members of the Board, including announcements, AB1234 reporting of meetings attended by Board Members of VCEA expense, questions to be referred to staff, future agenda items, and reports on meetings and information which would be of interest to the Board or the public.
25. Adjournment: The August 11, 2022 regular meeting has been cancelled. The next regular meeting is scheduled for Thursday, September 8, 2022 at 5 p.m.
PUBLIC PARTICIPATION INSTRUCTIONS FOR VALLEY CLEAN ENERGY BOARD OF DIRECTORS SPECIAL MEETING ON THURSDAY, JULY 14, 2022 AT 5:00 P.M.:
PUBLIC PARTICIPATION. Public participation for this meeting will be done electronically via e-mail and during the meeting as described below.
Public participation via e-mail: If you have anything that you wish to be distributed to the Board and included in the official record, please e-mail it to VCE staff at [email protected]. If information is received by 3:00 p.m. on the day of the Board meeting it will be e-mailed to the Board members and other staff prior to the meeting. If it is received after 3:00 p.m. the information will be distributed after the meeting, but within 24 hours of the conclusion of the meeting.
Verbal public participation during the meeting: If participating during the meeting, there are two (2) ways for the public to provide verbal comments:
1) If you are attending by computer, activate the “participants” icon at the bottom of your screen, then raise your hand (hand clap icon) under “reactions”. 2) If you are attending by phone only, you will need to press *9 to raise your hand. When called upon, please press *6 to unmute your microphone.
VCE staff will acknowledge that you have a public comment to make during the item and will call upon you to make your verbal comment.
Public Comments: If you wish to make a public comment at this meeting, please e-mail your public comment to [email protected] or notifying the host as described above. Written public comments that do not exceed 300 words will be read by the VCE Board Clerk, or other assigned VCE staff, to the Committee and the public during the meeting subject to the usual time limit for public comments [two (2) minutes]. General written public comments will be read during Item 3, Public Comment. Written public comment on individual agenda items should include the item number in the “Subject” line for the e-mail and the Clerk will read the comment during the item. Items read cannot exceed 300 words or approximately two (2) minutes in length. All written comments received will be posted to the VCE website. E-mail comments received after the item is called will be distributed to the Board and posted on the VCE website so long as they are received by the end of the meeting.
Public records that relate to any item on the open session agenda for a regular or special Board meeting are available for public review on the VCE website. Records that are distributed to the Board by VCE staff less than 72 hours prior to the meeting will be posted to the VCE website at the same time they are distributed to all members, or a majority of the members of the Board. Questions regarding VCE public records related to the meeting should be directed to Board Clerk Alisa Lembke at (530) 446-2750 or [email protected]. The Valley Clean Energy website is located at: https://valleycleanenergy.org/board-meetings/.
Accommodations for Persons with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact Alisa Lembke, VCE Board Clerk/Administrative Analyst, as soon as possible and preferably at least two (2) working days before the meeting at (530) 446-2754 or [email protected]. 3 Item 5
VALLEY CLEAN ENERGY ALLIANCE
Staff Report - Item 5
____________________________________________________________________________________ TO: Board of Directors
FROM: Mitch Sears, Executive Officer
Alisa Lembke, Board Clerk/Administrative Analyst
SUBJECT: Renew Authorization to continue Remote Public Meetings as authorized by Assembly Bill 361
DATE: July 14, 2022
Recommendation
VCE Board renew authorization for remote (video/teleconference) meetings, including any standing or future committee(s) meetings and Community Advisory Committee meetings, by finding:
1. Pursuant to Assembly Bill 361 (AB 361), that the COVID-19 pandemic state of emergency is ongoing.
Background/Summary of AB 361
Pursuant to Government Code Section 54953(b)(3) legislative bodies may meet by “teleconference” only if the agenda lists each location a member remotely accesses a meeting from, the agenda is posted at all remote locations, and the public may access any of the remote locations. Additionally, a quorum of the legislative body must be within the legislative body’s jurisdiction.
Due to the COVID-19 pandemic, the Governor issued Executive Order N-29-20, suspending certain sections of the Brown Act. Pursuant to the Executive Order, legislative bodies no longer needed to list the location of each remote attendee, post agendas at each remote locations, or allow the public to access each location. Further, a quorum of the legislative body does not need to be within the legislative body’s jurisdiction. After several extensions, Executive Order N-29-20 expired on September 30, 2021.
On September 16, 2021, the Governor signed AB 361, which kept some of the provisions of Executive Order N-29-20. Pursuant to Government Code Section 54953(e), legislative bodies may meet remotely and do not need to list the location of each remote attendee, post agendas at each remote locations, or allow the public to access each location.
4 However, legislative bodies must first find either that: (1) the legislative body is meeting during a state of emergency and determine by majority vote that meeting in person would present an imminent risk to the health or safety of attendees; or (2) state or local health officials impose or recommend social distancing measures. Government Code Section 54953(e)(1). The legislative body must make the required findings every 30 days, until the end of the state of emergency or recommended or required social distancing. Government Code Section 54953(e)(3). On January 1, 2024, Government Code Section 54953(e) is repealed.
The recommended action is required by AB 361 to continue meeting remotely during a declared state of emergency. Since March 1, 2022, the Yolo County Health Officer is no longer expressly recommending social distancing, although she still encourages the use of facial coverings/masks indoors. The VCE Board retains discretion under AB 361 to independently determine that remote meetings should continue because meeting in person would present imminent risks to the health and safety of attendees. Staff recommends that the Board make a finding that holding meetings in person would present an imminent risk to the public for the following reasons:
• The facilities in which the VCE Board meet were not designed to prevent the spread of infection by promoting mask usage, social distancing (including between Board members), or by use of increased ventilation/air filtration or other sanitary measures. • Some staff, Board members, and community members who would otherwise participate in VCE meetings to participate in Board meetings, and some of these community members are likely at high risk for serious illness from COVID-19 and/or live with someone who is high risk.
Staff continues to monitor the situation as part of our emergency operations efforts and will return to the Board every thirty (30) days or as needed with additional recommendations related to the conduct of public meetings.
5 Item 6
1 VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 6
TO: Board of Directors
FROM: Alisa Lembke, Board Clerk / Administrative Analyst SUBJECT: Approval of Minutes from June 9, 2022 meeting
DATE: July 14, 2022
RECOMMENDATION
Receive, review and approve the attached June 9, 2022 meeting Minutes.
6 VCEA Minutes June 9, 2022 Board Meeting via Webinar Page 1 of 5
MINUTES OF THE VALLEY CLEAN ENERGY ALLIANCE
BOARD OF DIRECTORS REGULAR MEETING
THURSDAY, JUNE 9, 2022
The Board of Directors of the Valley Clean Energy Alliance duly noticed their regular meeting scheduled for Thursday, June 9, 2022 at 5:00 p.m., to be held via Zoom webinar. Chair Loren established that there was a quorum present and began the meeting at 5:01 p.m.
Board Members Present: Jesse Loren, Tom Stallard, Dan Carson, Don Saylor, Lucas Frerichs, Mayra Vega
Members Absent: Gary Sandy, Wade Cowan
Welcome Chair Loren welcomed everyone.
Public Comment
– General and
Consent
Board Clerk informed those present that there were no verbal or written public comments on general items or those on consent.
Approval of
Consent Agenda /
Resolution 2022-
015 through
Resolution 2022-
017
Motion made by Director Dan Carson to approve the consent agenda items, seconded by Director Tom Stallard. Motion passed with Directors Gary Sandy and Wade Cowan absent. The following items were:
3. Authorized to continue remote public meetings as authorized by Assembly Bill 361;
4. Approved May 12, 2022 Board meeting Minutes;
5. 2022 Long Range Calendar;
6. Received April 30, 2022 (unaudited) financial statement;
7. Received Legislative update provided by Pacific Policy Group;
8. Received June 2, 2022 Regulatory update provided by Keyes & Fox;
9. Received Community Advisory Committee May 26, 2022 meeting summary;
10. Approved Amendment 4 of Pacific Policy Group agreement to extend through December 31, 2022 and increase the not to exceed amount via Resolution 2022-015;
11. Approved Amendment 2 to Automate Mailing agreement to extend 18 months through December 31, 2023 and increased the not to exceed amount via Resolution 2022-016;
12. Received report on resumption of Customer Opt-Out Fees;
13. Received progress update on VCE 3-Year Programs Plan; and, 7 VCEA Minutes June 9, 2022 Board Meeting via Webinar Page 2 of 5
14. Approved updated VCE Legislative and Regulatory Policy and Procedure via Resolution 2022-017.
As mentioned above, there were no verbal or written public comments.
Item 15: Receive
Net Energy
Metering (NEM)
3.0 update.
(Information)
VCE Executive Officer Mitch Sears introduced this item and VCE Staff Rebecca Boyles provided an update on Net Energy Metering (NEM) 3.0.
Director Carson mentioned that the City of Davis Council adopted a resolution numerous months ago asking that the California Public Utilities Commission (CPUC) to slow down the proceeding and take a closer look at the issues. There were a couple of items in the City’s resolution that possibly VCE should mimic in its language and submit to the CPUC, such as: 1) before the CPUC made a proposed decision that there be “clear and unbiased expert analysis available” to demonstrate how the proposed components of the proposal would affect typical NEM and non-NEM residential customers with different levels of income and who reside in the different IOU jurisdictions; 2) that there be a full cost accounting made of all of the benefits for our local communities in the statewide electricity grid from the current ending policies that encouraged the rapid adoption of residential solar; and, 3) urge the CPUC to look at alternative approaches that strike a different balance between NEM and non-NEM customers that pose lower risks to our solar initiatives to address climate challenges and that make needed changes in a less abruptive and disruptive method.
Director Tom Stallard commented that it is a complicated subject, with many economic issues. Battery technology is progressing rapidly and the future of utilities will look different than it looks today. There are many factors that go into this issue and he would like to suggest that VCE watch and track what other CCAs are doing in order to develop a position later.
There were no written public comments.
Verbal Public Comment: George Galamba informed those present that he has solar and is a member of the Solar Rights Alliance. He thanked Director Stallard for his thoughtful insights. He and others recognize the issue as more people buy less electricity that leaves less money available to maintain the grid which has to be made up by someone. He does not agree with punishing somebody for the commitment to solar panels. If this is passed, it will eliminate any incentive going forward to install solar 8 VCEA Minutes June 9, 2022 Board Meeting via Webinar Page 3 of 5 panels. Most solar residential homes do contribute to supporting the grid. The current proposal punishes people who have solar panels but does not punish those who are using little to none because their home is vacant or are using efficient appliances. The problem needs to be dealt with but they need to go back to the drawing board and look at different ways to support the grid. He hopes that VCE will keep this mind.
Chair Loren expressed that VCE should continue to watch. No further comments by the Board.
Item 16: Receive
presentation on
VCE Electricity
Load and
Financial
Forecasting.
(Information)
Mr. Sears introduced this item informing those present that this is a summary of 3 presentations provided to the Community Advisory Committee (CAC) on load and financial forecasting. VCE Staff Gordon Samuels provided an overview of the role of load and power costs forecasting. He focused on the role of load, providing information on retail load by customer class, VCE territory historical temperature data, and impact of electric vehicle (EV) adoption and electrification. VCE Staff Edward Burnham presented a summary of the role of power costs in forecasting, focusing on total power costs, revenue and budget risks and corrective actions taken; and, the source of information used in forecasting and how it is related.
The Board asked a few questions about the information presented. There were no verbal or written public comments.
Item 17: Receive
report and
provided
feedback on
updated draft
Customer
Rate/Product
options.
(Information/Disc
ussion)
Mr. Sears reminded those present that the purpose of this item is to re-introduce the possible expansion of customer rates options, gather input from the Board and suggest next steps. He noted that the CAC has received several presentations on this item and Staff have received their feedback which is incorporated into the Staff Report. Mr. Burnham reviewed the policy drivers for this item, primary rate setting considerations, the addition of a customer rate option, CCA/PG&E comparison chart, current customer rate/product options and analysis, CAC initial feedback, reserves timeline, and initial findings.
The Board asked questions and discussions occurred on financial stability; bond rating; providing low generation rates to customers – lower than PG&E’s offering; the percentage of customers that would be eligible for the 3rd option; the opt out rate of other CCAs who have a similar rate option; scenario analysis of opt outs and opt downs; how to best address equity of rates to customers; and, rate cost sensitivity. Staff received 9 VCEA Minutes June 9, 2022 Board Meeting via Webinar Page 4 of 5 input from the Board and were asked to come back with some additional information. There were no verbal or written public comments.
Item 18: Board
Member and
Staff
Announcements
Chair Loren congratulated Lucas Frerichs for being Yolo County’s newest Board Supervisor.
Director Don Saylor informed those present that the Yolo County Climate Action Commission has been given a charge to assist with some work, which includes among other things, to identify some early action investments. The Yolo County Board of Supervisors allocated one million dollars from the ARP (American Rescue Plan) accounts for the Commission to address specific things that might make a difference. A few concepts have been identified of which two were submitted by VCE: 1) energy retrofit outreach and 2) 100% renewable for Yolo County accounts.
There were no other Board announcements.
Mr. Sears informed those present that the Biden Administration took action on solar tariffs setting them aside for two (2) years for those 4 countries that were subject to the tariffs. One of VCE’s larger projects was directly impacted by those potential tariffs and investigation by the Department of Commerce. This action partially addresses some of the issues we are seeing in the utility scale - solar plus battery storage sectors.
VCE has been in contact with one of VCE’s project developers and as a result, Staff will most likely be back to the Board with contract adjustments.
He briefed those present on Provider of Last Resort (POLR), which is a back stop to load serving entities, like a CCA, when the entity goes out of business, what happens to those customers within their service territory.
In this situation, the customers are returned to the Investor Owned Utility (IOU). The CPUC has directed investigation about what could be the framework for creating that type of back stop for POLR. VCE is engaged with CalCCA in that CPUC proceeding.
Mr. Sears informed those present that VCE has received initial 2023 PCIA and PG&E rate forecast which is historically fluid. Staff’s initial assessment is that our net forecast of rates and PCIA are relatively accurate. The AgFIT program is moving forward on full implementation.
VCE submitted a petition to modify the CPUC’s decision on administrative costs for this project, said petition to modify was approved. 10 VCEA Minutes June 9, 2022 Board Meeting via Webinar Page 5 of 5 Lastly, VCE had a booth at the Celebrate Davis event which had a good turnout. Staff and CAC members assisted answering questions and giving out bike lights and stickers to those who visited the booth. VCE is in the the process of assisting Yuba County in their investigation and assessment of their CCA options. Staff will come back to the Board as that conversation develops.
Chair Loren announced that the Board’s August 11, 2022 regular meeting has been cancelled. The next regular meeting is scheduled for Thursday, July 14, 2022 at 5 p.m.
Adjournment Chair Loren adjourned the regular Board meeting at 6:18 p.m.
Alisa M. Lembke
VCEA Board Secretary
11 Item 7
VALLEY CLEAN ENERGY ALLIANCE
Staff Report - Item 7
____________________________________________________________________________________ TO: Board of Directors
FROM: Alisa Lembke, Board Clerk/Administrative Analyst
SUBJECT: Board and Community Advisory Committee 2022 Long-Range Calendar DATE: July 14, 2022
Recommendation
Receive and file the 2022 Board and Community Advisory Committee long-range calendar listing proposed meeting topics.
12 6/13/22
VALLEY CLEAN ENERGY
2022 Meeting Dates and Proposed Topics
Board and Community Advisory Committee (CAC)
(CAC: Topics and Discussion Dates may change as needed)
MEETING DATE TOPICS ACTION
January 13, 2022
Special Meeting
scheduled for
January 27, 2022
Board • Election of Officers for 2022 (Annual)
• Near-term Procurement Directives and Delegations for 2022 Power Procurement Activities
• Calendar Year Budget and 2022 VCE customer rates
• GHG Free Attributes
• 2022 Legislative Platform
• Receive CAC 2021 Calendar Year End Report (Annual)
• 2021 Year End Review: Customer Care and Marketing
• Action
• Action
• Action
• Action
• Action
• Information
• Information
January 27, 2022
January 20, 2022
Advisory
Committee
• 2022 Task Groups Tasks/Charge (Annual)
• Update on 2022 Power Charge Indifference Adjustment (PCIA) and Rates
• Carbon Neutral by 2030 Study
• CC Power long duration storage
• Draft Collections Policy
• Update on customer programs development (draft Heat Pump Pilot Program)
• Action
• Discussion/Action
• Discussion/Action
• Information
• Information/Discussion
• Information
February 10, 2022 Board • CC Power long duration storage • Update on customer programs development
• Update on 2022 PCIA and Rates
• Update on Time of Use (TOU)
• Update on SACOG Grant – Electrify Yolo
• Strategic Plan Update (Annual)
• Carbon Neutral Report
• Action
• Information
• Information
• Information
• Information
• Information
• Information/Discussion
February 24, 2022 Advisory
Committee
• Power Procurement / Renewable Portfolio Standard Update • Time of Use (TOU) and Bill Protection
• Final Draft Collections Policy
• Customer program concept (Heat Pump Pilot Program)
• 2022 Task Group – energy resiliency
• Information
• Discussion/Action
• Action
• Discussion/Action
• Discussion/Action
13 March 10, 2022 Board • Receive Enterprise Risk Management Report (Bi-Annual) • Collections Policy
• Presentment of customer program concept (Heat Pump Pilot Program)
• Time of Use (TOU) Bill Protection
• Ag FIT (Flexible Irrigation Technology) pilot program • Information
• Discussion/Action
• Action
• Discussion/Action
• Discussion/Action
March 24, 2022 Advisory
Committee
WOODLAND
• Customer program concept (draft EV Rebates Program)
• CC Power long duration storage project
• Overview of VCE Forecasting
• Information
• Information
• Information/Discussion
April 14, 2022 Board • Update on SACOG Grant – Electrify Yolo • 7/1/21 thru 12/31/21 Audited Financial Statements (James Marta & Co.)
• CC Power long duration storage project
• Information
• Action
• Discussion/Action
April 28, 2022 Advisory
Committee
• Program Concepts Development (EV Rebates Program)
• Update on Customer Dividend and Programs Allocation
• Forecasting – load and power costs
•
• Discussion/Action
• Information
• Information
• Discussion
May 12, 2022 Board • Update on Customer Dividend and Programs Allocation • Presentment of customer program concept (EV Rebates Program) • Appointment of At-Large Members to the CAC
• Information
• Action
• Action
May 26, 2022 Advisory
Committee
• Forecasting – financial modeling
• Draft Rate Structure
• Net Energy Metering (NEM) 3.0 Update
• Information
• Information/Discussion
• Information
June 9, 2022 Board • Opt-Out Fees
• Update on 3-Year Programs Plan
• Forecasting
• Draft Rate Structure
• Net Energy Metering (NEM) 3.0 Update
• Information
• Information
• Information
• Information/Discussion
• Information
June 23, 2022 Advisory
Committee
• Draft Rate Structure
• Update 3-Year Programs Plan
• Review CAC Charge (Annual)
• Discussion/Action
• Information/Discussion
• Discussion
July 14, 2022 Board • Re/Appointment of Members to Community Advisory Committee (Annual)
• Update on SACOG Grant – Electrify Yolo
• Action
• Information
14 • Draft Rate Structure
• Quarterly Customer Enrollment Update
• Discussion/Action
• Information
July 28, 2022
NO MEETING
Advisory
Committee
This meeting has been cancelled.
August 11, 2022
NO MEETING
Board This meeting has been cancelled.
August 25, 2022 Advisory
Committee
• 2022 Operating Budget / Renewable Portfolio Standard update • Mid-year rate update
• Power Procurement / Renewable Portfolio Standard update • Quarterly Customer Enrollment Update
• Information
• Information/Discussion
• Information
• Information
September 8, 2022 Board • 2022 Operating Budget / Renewable Portfolio Standard update • Certification of Standard and UltraGreen Products (Annual) • Enterprise Risk Management Report (Bi-Annual)
• Mid-year 2022 rates review
• Information
• Action
• Information
• Information/Discussion
September 22, 2022 Advisory
Committee
• Legislative End of Session Update
• 2023 Draft Operating Budget
• Mid-year 2022 rates review
• Information
• Information
• Information
October 13, 2022 Board • Update on SACOG Grant – Electrify Yolo • Update on 2023 draft Operating Budget
• Quarterly Customer Enrollment Update
• Information
• Information
• Information
October 27, 2022 Advisory
Committee
• Update on Power Content Label Customer Mailer
• Review Draft CAC Evaluation of Calendar Year End (Annual) • Review 2023 customer rate study/information
• Quarterly Customer Enrollment Update
• Information
• Information/Discussion
• Information/Discussion
• Information
November 10, 2022 Board • Certification of Power Content Label (Annual) • Preliminary 2023 customer rate options
• Preliminary 2023 Operating Budget (Annual)
• Action
• Information/Discussion
• Information
15 November 17, 2022
(rescheduled
November 24th
meeting due to the
Thanksgiving holiday)
Advisory
Committee
• Finalize CAC Evaluation of Calendar Year End (Annual) • Review Procurement Directives and Delegations (Annual) • GHG Free attributes
• Power Procurement / Renewable Portfolio Standard Update • ERRA Filings Update (PCIA and bundled rates) (Annual) • Preliminary 2023 customer rate options
• Discussion/Action
• Information
• Information
• Information
• Discussion
• Information/Discussion
December 8, 2022 Board • Approve 2023 Operating Budget (Annual) • 2023 Customer Rate Adoption
• Receive Enterprise Risk Management Report (Annual)
• Approve Procurement Directives and Delegations (Annual) • GHG Free attributes
• Update on SACOG Grant – Electrify Yolo
• Receive CAC 2022 Calendar Year End Report (Annual)
• Election of Officers for 2023 (Annual)
• Action
• Action
• Information
• Action
• Action
• Information
• Information
• Nominations
December 15, 2022
(rescheduled
December 22nd
meeting due to the
Christmas holiday)
Advisory
Committee
• 2023 CAC Task Group(s) formation (Annual)
• Review draft 2023 Legislative Platform
• Strategic Plan update (Annual)
• 2023 Customer Rates
• Election of Officers for 2023 (Annual)
• Discussion/Action
• Discussion/Action
• Information
• Information
• Nominations
January 12, 2023 Board • Oaths of Office for Board Members (Annual if new Members) • Update on SACOG Grant – Electrify Yolo
• Strategic Plan Update (Annual)
• 2023 Legislative Platform
• Approve Updated CAC Charge (tentative) (Annual)
• Quarterly Customer Enrollment Update
• Action
• Information
• Action
• Action
• Action
• Information
January 26, 2023 Advisory
Committee
• Quarterly Customer Enrollment Update • Information
Notes: 1. CalCCA Annual Meeting typically scheduled in November.
2. Currently all meetings are held remotely via Zoom video/teleconference, “location” is subject to change.
CAC PROPOSED FUTURE TOPICS
Topics and Discussion dates may change as needed
ESTIMATED MEETING DATE(S)
Net Energy Metering (NEM) 3.0 (Information/Discussion/Action) As needed Carbon Neutral by 2030 (types of energy, where procured, BTM, FOM, policy) (Discussion/Action) 2022 Quarter 3 16 Integrated Resource Plan / Public Workshop (IRP – update due 11/1/2022) (Discussion/Action) August/September 2022 Self Generation Incentive Program (SGIP) TBD
Legislative Items (as needed)
Strategic Plan additional updates (as needed)
Time of Use (TOU) (as needed)
SACOG Update (as needed)
17 Item 9
1 VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 9
To: Board of Directors
From: Keyes & Fox, Regulatory Consultant
Subject: Regulatory Monitoring Report – Keyes & Fox
Date: July 14, 2022
______________________________________________________________________________ Please find attached Keyes & Fox’s June 2022 Regulatory Memorandum dated July 6, 2022, an informational summary of the key California regulatory and compliance-related updates from the California Public Utilities Commission (CPUC).
Attachment: Keyes & Fox Regulatory Memorandum dated July 6, 2022. 18 1
Valley Clean Energy Alliance
Regulatory Monitoring Report
To: Valley Clean Energy Alliance (VCE) Board of Directors From:
Sheridan Pauker, Partner, Keyes & Fox LLP
Tim Lindl, Partner, Keyes & Fox LLP
Jason Hoyle, Principal Analyst, EQ Research, LLC
Subject: Regulatory Update
Date: July 6, 2022
Summary
Keyes & Fox LLP and EQ Research, LLC, are pleased to provide VCE’s Board of Directors with this monthly informational memo describing key California regulatory and compliance-related updates from the California Public Utilities Commission (CPUC). A Glossary of Acronyms used is provided at the end of this memo.
In summary, this month’s report includes regulatory updates on the following priority issues:
• Ensuring Summer 2021 Reliability: On June 3, the CPUC issued D.22-06-005 which partially granted VCE, TeMix Inc., and Polaris Energy Services’ (collectively, the Pilot Partners) Petition for Modification, approving an increase to the budget for VCE’s agricultural irrigation pumping dynamic rates pilot (AgFIT Pilot) by an additional $690,000 to cover VCE’s expenses in carrying out the pilot program.
• IRP Rulemaking: On June 15, the ALJ issued a Ruling finalizing the load forecasts and greenhouse gas emission benchmarks for use in 2022 IRP filings. • RPS Rulemaking: On June 24, the Commission issued D.22-06-034 establishing rules for the PCC classification of resources obtained through the VAMO process. On July 1, VCE filed its draft RPS Procurement Plan.
• PCIA Rulemaking: On June 10, the ALJ issued a Proposed Decision that would, if adopted, resolve Phase 2 issues related to data access and voluntary allocations in market price benchmark (MPB) calculations. The PD may be heard by the Commission as early as July 14. A June 24 Ruling defined the scope for the next part of the proceeding. • PG&E Phase 1 GRC: On June 13, intervenors submitted direct testimony in the proceeding. On June 24, the CPUC issued D.22-06-033 establishing the effective date of PG&E’s 2023 test year revenue requirement as January 1, 2023.
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• RA Rulemaking (2023-2024): On June 24, the CPUC issued D.22-06-050 adopting 2023-2025 Local Capacity Requirements (LCR), 2023 Flexible Capacity Requirements (FCR), and RA program refinements under the RA Reform Track of this proceeding. • PG&E Regionalization Plan: On June 24, the CPUC issued D.22-06-028 approving and modifying settlement agreements relating to PG&E’s updated regionalization plan and closing the proceeding. In response to comments by VCE and other parties, the Decision incorporated revisions to the proposed decision that require PG&E’s regional leadership to hold quarterly “town hall” meetings with stakeholders in each region through at least the end of 2024, allow non-parties to participate in a stakeholder working group and clarified that recovery of regionalization costs from ratepayers is not guaranteed.
• PG&E Phase 2 GRC: On June 22, the CPUC issued a Proposed Decision that, if approved, would direct PG&E to implement the settlement agreement provisions for a real-time pricing pilot, adopt the methodology outlined in the marginal generation capacity cost study for use in real-time pricing rate designs, and close this proceeding. The PD may be heard as soon as the August 4 Commission meeting.
• Provider of Last Resort Rulemaking: No updates this month. • PG&E 2023 ERRA Forecast: On May 31, PG&E filed its 2023 ERRA Forecast application and supporting testimony. PG&E filed supplemental testimony to its application on June 22. • PG&E 2021 ERRA Compliance: A prehearing conference was held on June 8. A scoping ruling establishing a procedural schedule has not been issued. • PG&E 2019 ERRA Compliance: No updates this month.
• Utility Safety Culture Assessments: No updates this month. • 2022-2023 Wildfire Fund Nonbypassable Charge Rulemaking: No updates this month.
Ensuring Summer 2021 Reliability
On June 3, the CPUC issued D.22-06-005 which partially granted VCE, TeMix Inc., and Polaris Energy Services’ (collectively, the Pilot Partners) Petition for Modification, approving an increase to the budget for VCE’s agricultural irrigation pumping dynamic rates pilot (AgFIT Pilot or Pilot) by an additional $690,000 to cover VCE’s expenses in carrying out the Pilot.
Background: CAISO experienced rolling blackouts (Stage 3 Emergency) on August 14, 2020, and August 15, 2020, when a heatwave struck the Western U.S. and there was insufficient available supply to meet high demand. The OIR was issued to ensure reliable electric service in the event that an extreme heat storm occurs in the summer of 2021.
D.21-03-056 instituted modifications to the planning reserve margin (PRM), effectively increasing the PRM beginning summer 2021 from 15% to 17.5%. For 2021, this results in a minimum target of incremental procurement of 450 MW for PG&E, 450 MW for SCE, and 100 MW for SDG&E. The net costs associated with this incremental procurement would be shared by all customers (including CCA customers) in each IOU’s service territory. It also authorized the IOUs to implement a Flex Alert paid media campaign program to encourage ratepayers to voluntarily reduce demand during moments of a stressed grid, adopts modifications and expansions to the Critical Peak Pricing (CPP) program, and established an emergency load reduction program. 20 3
D.21-12-015 approved VCE’s AgFIT Pilot for three years (2022-2024) and directed that it start no later than May 1. VCE’s Pilot will test whether agricultural irrigation pumping customers, which consume on average 18% of VCE’s total annual load, can shift load to more optimal times of the day, thereby saving money, reducing the burden to the grid and reducing GHG impacts. Customers participating in VCE’s Pilot will receive a “shadow bill.” PG&E will continue to bill participating customers based on existing tariffs, but the shadow bill will show the customer savings under the Pilot dynamic rate, and VCE will pay customers for the difference between the shadow bill and the customer’s usage under the otherwise applicable tariff. The Pilot scale will be limited to 5 MW of peak load. PG&E will provide funds to or reimburse VCE for crediting any savings realized by the customers with respect to the delivery component of the VCE dynamic rate Pilot in the customers’ shadow bills. D.21-12-015 authorized new funding of $3.25 million for the pumping automation technology, pricing platform and vendor fees and PG&E’s administration of the three-year Pilot.
On January 5, VCE submitted Advice Letter 11-E in accordance with D.21-12-015. Advice Letter 11- E was approved by the Energy Division via nonstandard disposition mailed April 11.
On January 31, the Pilot Partners filed a Petition for Modification (PFM) of D.21-12-015 to increase the budget for this Pilot to cover VCE’s administrative costs.
On February 4, PG&E submitted Advice Letter 6495-E, which the Pilot Partners Protested on February 24. PG&E filed Supplemental Advice Letter 6495-E-A on April 7, 2022. The Energy Division approved PG&E’s advice letters via nonstandard disposition letter issued April 26.
D.21-12-015 also created an additional procurement mandate of 2,000 MW-3,000 MW for 2023, allocated exclusively to the three large IOUs (900 MW-1,350 MW each for PG&E and SCE, and 200 MW-300 MW for SDG&E). It required all incremental resources procured as a result of this proceeding to be available during the net peak. It adopted numerous additional demand-side and supply-side changes aimed at ensuring sufficient resource availability to meet the summer net peak load.
Details: The Decision granted VCE's request for an incremental $690,000 in funding to reimburse VCE for its administrative costs in carrying out the Pilot. In light of the Energy Division’s subsequent resolution of other issues raised in the PFM, the Decision took no further action.
Analysis: After a conflicted and procedurally complex set of interactions with PG&E regarding the Pilot, most of VCE’s concerns have been resolved via the Energy Division’s Advice Letter dispositions. The Decision will enable VCE to be reimbursed through distribution funds for its administrative expenses in running the Pilot.
Next Steps: VCE has launched the AgFIT Pilot and is required to submit its expenses to the Energy Division for approval of reimbursement. The first report evaluating the Pilot mid-way through its term is due December 31, 2023 and is to be prepared by an independent evaluator hired by PG&E, in consultation with VCE.
Additional Information: D.22-06-005 granting PFM (June 3, 2022); Ruling denying Pilot Partners Motion to shorten time (May 3, 2022); Proposed Decision on PFM (April 29, 2022); Energy Division’s Non-Standard Disposition Letter approving PG&E AL 6495-E and PG&E AL 6495-E-A (April 27, 2002); PG&E AL 6495-E-A (April 7, 2022); Energy Division’s Non-Standard Disposition Letter approving VCE AL 11-E (April 11, 2022); PG&E AL 6495-E (February 4, 2022) and Substitute Sheets for AL 6495-E (March 29, 2022); VCE, TeMix and Polaris Petition for Modification (January 31, 2022); Motion to Shorten Time (January 31, 2022); VCE AL 11-E on Ag Pumping Pilot (January 2, 2022); D.21-12-069 correcting errors in D.21-12-014 (December 27, 2021); D.21-12-015 (December 6, 2021); D.21-02-028 directing IOUs to seek additional capacity for summer 2021 (February 17, 2021); Scoping Memo and Ruling (December 21, 2020); Order Instituting Rulemaking (November 20, 2020); Docket No. R.20-11-003.
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IRP Rulemaking
On June 15, the ALJ issued a Ruling finalizing the load forecasts and greenhouse gas emission benchmarks for use in 2022 IRP filings.
Background: D.20-12-044 established a backstop procurement process that would apply to LSEs that did not opt-out of self-procuring their capacity obligations under D.19-11-016. It requires LSEs to file bi-annual (due February 1 and August 1) updates on their procurement progress relative to the contractual and procurement milestones defined in the decision.
D.21-06-035 established a new “Mid-Term Reliability” (MTR) procurement mandate of 11,500 MW of additional zero-emitting or RPS-eligible net qualifying capacity to be procured by 2026 by LSEs through long-term (10 or more years) contracts. VCE’s incremental obligations, identified in Table 6, are 8 MW by 2023, 23 MW by 2024, 6 MW by 2025, 4 MW of long-duration storage and 4 MW of zero-emitting resources by 2026. In addition, 10 MW out of its 2023-2025 procurement requirements must be met through zero-emitting generating capacity that is available from 5-10pm daily.
While each LSE is responsible for meeting procurement obligations to serve its own customers, D.19-11-016 directed IOU procurement on behalf of LSEs that either a) opt out of self-procurement or b) failed to acquire their share of required capacity after electing to do so, i.e. deficient LSEs.
Similarly, D.21-06-035, while not allowing for LSEs to opt out of self-procurement, directed the IOUs to procure capacity on behalf of LSEs that failed to deliver their share of required energy or capacity, called backstop procurement.
D.22-02-004 adopted a 2021 Preferred System Plan (PSP) and certified VCE’s 2020 IRP. VCE’s next IRP is due November 1.
D.22-05-015 adopted Modified Cost Allocation Mechanism (MCAM) principles and methodologies that only apply to any future backstop procurement authorized in the IRP process, but not other cost allocation situations such as those related to a central procurement entity. IOUs must file Tier 2 advice letters on MCAM implementation by July 18. The MCAM is based on the original Cost Allocation Mechanism (CAM) adopted in D.06-07-029 but applies specifically to opt-out and backstop procurement conducted by IOUs on behalf of LSEs. It provides a mechanism for recovery of the net costs of electric resource procurement obligations mandated in D.19-11-016 (3,300 MW) and D.21- 06-035 (11,500 MW) through nonbypassable charges (NBCs) levied against customers of non-utility LSEs.
The MCAM adjusts the traditional CAM to account for the fact that procurement costs will only be recovered from customers of LSEs that have opted-out of such procurement and customers of deficient LSEs, rather than all customers in an IOU’s service territory. Backstop procurement costs are charged directly to customers of the deficient LSE, as a separate line item on the bill.
Administrative costs are charged over a 10-year period and contract costs are charged over the life of the contract (generally 10 or more years), and Commission staff will allocate the resource adequacy (RA) value of backstop procurement annually to the LSE over the life of the contract(s), but backstop procurement does not convey any RPS attributes associated with the procured resources, although LSEs may obtain those RPS attributes through voluntary allocation.
One-time Option for LSEs Gaining New Load Since 2019
Because the MCAM development process was extended over several years during which LSEs were making procurement decisions, the CPUC provided a one-time procurement option for LSEs that have gained new load since 2019 as a result of customer migration from IOU service. The one-time option allows LSEs with newly migrated load to enter into bilateral agreements with the relevant IOUs to acquire resource adequacy capacity at the System RA Market Price Benchmark (MPB) as determined in the PCIA context pursuant to D.19-10-001. 22 5
Details: On June 15, the ALJ issued a Ruling finalizing the load forecasts and greenhouse gas emission benchmarks for use in 2022 IRP filings. IRP filing requirements, templates and calculators are available on the CPUC’s 2022 IRP website. VCE’s final energy forecast is provided in the Load Forecasts and GHG Benchmarks spreadsheet and its confidential final load forecast was provided by the Commission on July 1.
This ruling adopts planning targets for 2035, namely 30 MMT and 25 MMT. These targets are in addition to the requirements in D.22-02-004, which requires LSEs to meet their proportional share of the 2030 target of 38 MMT, and plan for a 2030 target of 30 MMT. Each LSE will have four benchmarks and must show how it intends to reach each of the benchmarks. The four benchmarks are as follows:
• For 2030: VCE’s proportional share of 38 MMT = 0.112 MMT • For 2035: VCE’s proportional share of 30 MMT = 0.088 MMT • For 2030: VCE’s proportional share of 30 MMT = 0.085 MMT • For 2035: VCE’s proportional share of 25 MMT = 0.070 MMT LSEs that intend to reduce GHG emissions below their proportional share of both the 2030 30 MMT benchmark and the 2035 25 MMT benchmark are only required to submit one preferred portfolio.
However, LSEs submitting one preferred portfolio will still be required to submit that portfolio in each of the two sets of Resource Data Templates (RDTs) and Clean System Power (CSP) calculators required for each 2035 GHG target. Otherwise, each LSE must show two conforming portfolios that meet its proportional share of all four benchmarks.
Analysis: The 2022 IRP emphasizes the increasingly integrated nature of planning and procurement activities and requires LSEs to present connections among its procurement obligations for RA, reliability, energy and capacity, and the RPS. Under the MCAM Decision, a deficiency in fulfilling RA and reliability procurement obligations results in additional, likely higher, costs to the LSEs customers for at least the next decade, and the lengthy duration of both backstop procurement costs and allocation of backstop procurement resources could easily result in unnecessary and inefficient overprocurement of resources if triggered.
Next Steps: IOUs file Tier 2 Advice Letters on MCAM implementation on July 18. VCE’s next IRP is due November 1.
Additional Information: Ruling on final load forecasts and GHG benchmarks (June 15, 2022); D.22- 05-015 on Modified Cost Allocation Mechanism (May 23, 2022); Ruling establishing process for load forecasts and GHG benchmarks for 2022 IRP (April 20, 2022); D.22-02-004 adopting 2021 Preferred System Plan (December 22, 2021); D.21-06-035 establishing a 11,500 MW by 2026 procurement mandate (June 24, 2021); D.21-02-028 recommending portfolios for CAISO’s 2021-2022 TPP (February 17, 2021); D.20-12-044 establishing a backstop procurement process (December 22, 2020); Scoping Memo and Ruling (September 24, 2020); Resolution E-5080 (August 7, 2020); Order Instituting Rulemaking (May 14, 2020); Docket No. R.20-05-003.
RPS Rulemaking
On June 24, the Commission issued D.22-06-034 establishing rules for the PCC classification of resources obtained through the VAMO process. On July 1, VCE filed its draft RPS Procurement Plan.
Background: This proceeding addresses ongoing RPS issues. VCE submitted its Final 2020 RPS Procurement Plan on February 19, 2021, and its 2020 RPS Compliance Report on August 2, 2021.
In addition, ongoing implementation issues of the Voluntary Allocation and Market Offer process (VAMO) ordered in the PCIA proceeding are considered here in the RPS proceeding. Under VAMO, 23 6
LSEs are first offered an election to take up to their load share percentage of the IOUs’ PCIA-eligible RPS portfolio as a direct allocation from the IOU. In the second part of the process, called the Market Offer (MO), the IOUs will offer for sale the remaining portions of their RPS portfolios that were not claimed by LSEs in the Voluntary Allocations.
An April 11 Ruling identified requirements for 2022 RPS Procurement Plans and established two parallel tracks in the proceeding. Track 1 addresses the IOU’s proposed Market Offer process and Track 2 addresses retail electricity sellers’ 2022 RPS Plans.
An April 21 Ruling established revised dates for the submission of the Market Offer Process document. Pursuant thereto, the Joint IOUs submitted the Market Offer Process document on May 2, and each IOU filed a confidential sales strategy on May 16 to complete the Market Offer Process documentation.
Track 1: Market Offer Process
The Joint IOUs filed their proposed Market Offer process on May 2. The IOUs proposed that in the first step, the Joint IOUs offer Voluntary Allocations at the Market Price Benchmark (MPB) in 10% increments of each LSE’s forecasted annual load share. The Joint IOUs proposed to have LSEs indicate the amounts they are taking under the Voluntary Allocation and sign pro forma Voluntary Allocation Contracts in July 2022. Then, in the second step, the Joint IOUs proposed that remaining RPS energy not claimed by LSEs in the Voluntary Allocation will be offered to all market participants through the Market Offer process.
On May 23, PG&E submitted modifications (AL 6551-E-A) to its pro forma Market Offer Contract (AL 6551-E) in response to Protests filed by the Alliance for Retail Energy Markets and CalCCA. PG&E modified the Market Offer contract to differentiate the offered products based on whether the resource is eligible for RPS compliance.
Track 2: RPS Plans
Under the April 11 Assigned Commissioner’s Ruling, 2022 RPS Plans must be forward looking through 2032 and should inform the Commission of the Retail Seller’s activities and plans to procure 65% of RPS resources from long-term contracts of 10 or more years for all compliance periods beginning with the current compliance period that started on January 1, 2021. The Plans must describe procurement of RPS resources that achieve the RPS targets while minimizing cost and maximizing customer value; and discuss any plans for building retail seller-owned resources, investing in third party-owned renewable resources, and engaging in the sales of RPS-eligible resources.
Details:
Track 1: On June 24, the Commission issued D.22-06-034 establishing rules for the PCC classification of resources obtained through the VAMO process. The Decision draws a clear distinction between RPS resources procured through Voluntary Allocation versus those procured through the Market Offer mechanism. Even though an LSE procures a “slice” of the IOU’s RPS resource portfolio through each mechanism, the PCC classification of RPS resources procured through Voluntary Allocation does not change, while RPS resources procured through the Market Offer mechanism, particularly those with PCC-0 classification, will be treated as if they were a newly contracted resource and will not necessarily retain their original PCC classification. The CPUC also adopted the following rules related to RPS resources procured through the Voluntary Allocation process:
• Subsequent transfer/sale of Voluntary Allocation RECs after the Voluntary Allocations will be considered a resale, and the REC PCC classification will change pursuant to D.11-12-052 and other applicable Renewables Portfolio Standard (RPS) law and policy. 24 7
• The Voluntary Allocation price based on the Market Price Benchmark methodology adopted in D.21-05-030 is retained without modification.
• The IOUs are not required to submit advice letter filings for Commission approval of executed pro forma Voluntary Allocation contracts. However, the IOUs must obtain Commission approval of executed pro forma Voluntary Allocation contracts if the contract deviates from the pro forma contract via a Tier 1 advice letter filing.
This Decision also clarifies that LSEs are only expected to include Voluntary Allocation information in the July 1 Draft RPS Plan filings to the extent an LSE has information available and may include the Voluntary Allocation information in the RPS Plan Motion to Update due on August 15. In response to comments filed by CalCCA, the Decision clarified that LSEs who choose not to claim Voluntary Allocations must provide an explanation for that decision in their RPS Plans. On June 29, the CPUC issued Resolution E-5216 approving the Joint IOUs’ Voluntary Allocation Pro Forma Contracts (PG&E AL 6517-E and AL 6517-E-A).
Track 2: VCE filed its Draft 2022 RPS Procurement Plan on July 1, 2022. VCE’s Draft Plan demonstrates that VCE is well positioned to meet or exceed all RPS requirements in the current RPS Compliance Period 4 (2021-2024), as well as in RPS Compliance Period 5 (2025-2027) and beyond.
VCE indicated in its Draft 2022 RPS Procurement Plan that it does not plan to participate in VAMO.
Analysis: 2022 RPS Procurement Plan requirements have a greater focus on long-term planning, not only maintaining the target of procuring 65% of RPS resources from long-term contracts of 10 or more years, but also aligning the RPS plan with IRP requirements in D.21-03-010. The new Voluntary Allocation mechanism has an outsized role in 2022 RPS Plans, providing LSEs an opportunity to claim a slice of an IOU’s portfolio of RPS resources prior to entering a competitive bidding process, potentially with the added incentive of obtaining PCC-0 RECs that would otherwise be unavailable. Voluntary Allocation essentially provides LSEs a right of first refusal, accelerates and streamlines the procurement process, and enables RPS procurement at the MPB without competitive bidding while providing all LSEs with equal access to a representative share of an IOU’s portfolio of RPS resources. The PCIA will be reduced to the extent allocations and purchases are elected under VAMO.
Next Steps:
Track 1: VAMO
• July 29, 2022: LSEs complete the process of determining interest in Voluntary Allocation elections and sign contracts (previous deadline was May 2022) • September 16, 2022: IOUs Issue Market Offer Solicitation • Week of September 19-23, 2022: Participants’ Webinar
• September 30, 2022: Bids Due
• October 14, 2022: IOUs Notify Qualified Participants
• October-November 2022: Agreements Executed
• November 2022: IOU Submits Agreement for CPUC Approval • 3Q 2022: Proposed Decision on Market Offer process
• 3Q 2022: Disposition on Tier 2 Market Offer Pro Forma Contract Advice Letters Track 2: 2022 RPS Plans
• August 1, 2022: Opening Comments on LSEs’ draft RPS Procurement Plans due 25 8
• August 1, 2022: Motions requesting evidentiary hearing due • August 15, 2022: LSEs’ motion to update draft RPS Procurement Plans due • August 15, 2022: Reply Comments on LSEs’ draft RPS Procurement Plans due • 4Q 2022: Proposed Decision on LSEs’ draft RPS Procurement Plans • 1Q 2023: LSEs file final 2022 RPS Plans
Additional Information: VCE’s 2022 Draft RPS Procurement Plan (July 1, 2022); D.22-06-034 establishing rules for PCC classification (June 24, 2022); Resolution E-5216 approving Joint IOUs’ Voluntary Allocation Pro Forma Contracts (June 29, 2022); PG&E AL 6551-E-A (May 23, 2022); Ruling on Procedural Schedule (May 20, 2022); Market Offer Process proposal by Joint IOUs (May 2, 2022); Ruling on RPS Track 1 schedule (April 21, 2022); Ruling seeking comments on Voluntary Allocations and PCC issues (April 18, 2022); PG&E AL 6517-E-A (April 11, 2022); Ruling identifying RPS Plan requirements (April 11, 2022); Amended Scoping Ruling expanding scope (April 6, 2022); PG&E AL 6551-E (April 4, 2022); Joint Motion by IOUs Concerning Review of Market Offer Process (March 10, 2022); PG&E AL 6517-E (February 28, 2022); VCE’s Final 2021 RPS Procurement Plan (February 17, 2022); D.22-01-004 on draft 2021 RPS Procurement Plans (January 18, 2022); Docket No. R.18-07-003.
PCIA Rulemaking
On June 10, the ALJ issued a Proposed Decision that would, if adopted, resolve Phase 2 issues related to data access and voluntary allocations in market price benchmark (MPB) calculations. The PD may be heard by the Commission as early as July 14. A June 24 Ruling defined the scope for the next part of the proceeding.
Background: D.18-10-019 was issued on October 19, 2018, in Phase 1 of this proceeding and left the current Power Charge Indifference Adjustment (PCIA) in place, maintained the current brown power index, and adopted revised inputs to the benchmarks used to calculate the PCIA for energy RPS-eligible resources and resource adequacy capacity.
In Phase 2, D.20-08-004 following the work of Working Group 2, the Commission adopted a framework for PCIA prepayment agreements.
D.21-05-030, the Phase 2 Decision removed the cap and trigger for PCIA rate increases, authorized new Voluntary Allocation, Market Offer, and Request for Information processes for RPS contracts subject to the PCIA, and approved a process for increasing transparency of IOU resource adequacy (RA) resources. However, it did not provide unbundled customers proportional access to system and flexible RA products through the RA voluntary allocation and market offer process proposed by PCIA Working Group 3. Likewise, it declined to provide unbundled customers any access to GHG-free energy on a permanent basis. The CCA Parties’ Application for Rehearing of D.21-05-030 was denied.
The most recent step in the PCIA proceeding is D.22-01-023, which modified the PCIA market price benchmark release date to October 1 and the deadline for ERRA forecast applications to May 15 to enable the Commission to timely issue decisions on ERRA forecast applications.
Details: On June 10, the ALJ issued a Proposed Decision that would, if adopted, resolve Phase 2 issues related to data access and voluntary allocations in market price benchmark (MPB) calculations. The PD may be heard by the Commission as early as July 14. The PD includes the following Orders:
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• CalCCA may organize a meeting by October 3 to discuss the proposed format and content of the non-confidential analyses of PCIA forecasts that reviewing representatives may disclose to CCAs under this Decision, and the meeting must include the three large IOUs and representatives of any interested CCA.
• One member of CalCCA may file a joint Tier 2 Advice Letter by December 1 on behalf of all CCAs that seek PCIA forecasting data access. The AL must include a standard template for conveying PCIA information reviewed by CCA representatives to their clients, a public appendix with example analysis using dummy data, a proposed non-disclosure agreement (NDA) based on ERRA forecast NDA, and a list of all CCAs that seek forecasting data access and their reviewing representatives.
• CCAs’ reviewing representatives must simultaneously serve the Commission and the relevant IOU all information disclosed to their clients.
On June 24, Assigned Commissioner Reynolds issued a Revised Scoping Memo and Ruling that extends the statutory deadline to June 30, 2023 to address the following issues:
• Whether greenhouse gas-free resources are under-valued in the Power Charge Indifference Adjustment (PCIA), and if so, whether to adopt an adder or allocation mechanism; • Whether to adopt a new method to include long-term fixed-price transactions in calculating the Renewables Portfolio Standard adder;
• Whether to modify the calculation of the PCIA energy index market price benchmark; and • Whether to modify or clarify the calculation of the PCIA for Voluntary Allocation or Market Offer transactions.
Analysis: The MPB calculation is used as the basis for the pricing RPS resources under the Voluntary Allocation process, and the MPB benchmark price is used in Energy Resource and Recovery Account (ERRA) forecasts to determine PG&E’s PCIA-related revenue requirement. The April 18 ALJ ruling seeks a response to a series of questions regarding approaches to modifying the manner in which the MPB is calculated, in part, to address the potential misrepresentation of current market activity resulting from use of the prior year’s MPB to value RPS resources in the Voluntary Allocation process. Changes to the MPB calculation will influence resource procurement decisions and potentially customer costs.
Next Steps:
• July 22, 2022: Parties may file reply comments on Energy Index MPB Proposals • July/August 2022: Ruling regarding method to include long-term fixed-price transactions in RPS MPB and the value of GHG-free resources
• August/September 2022: Workshop on long-term fixed-price transactions in RPS MPB • November 2022: Workshop on value of GHG-free resources Additional Information: Revised Scoping Memo and Ruling (June 24, 2022); Proposed Decision on data access and MPB benchmarks (June 10, 2022); Ruling Regarding Market Price Benchmarks (April 18, 2022); Resolution E-5134 approving PCIA pre-payment framework ALs (March 21, 2022); D.22-01-023 on Phase 2 (approved January 27, 2021); Ruling requesting comments on PCIA forecasting data access (November 5, 2021); Ruling requesting comments (September 17, 2021); PG&E AL 5973-E-A PCIA pre-payment framework (August 13, 2021); CalCCA Application for Rehearing of D.21-05-030 (June 23, 2021); D.21-05-030 on PCIA Cap and Portfolio Optimization (May 24, 2021); D.21-03-051 granting petition to modify D.17-08-026 (March 26, 2021); Amended Scoping Memo and Ruling (December 16, 2020); PG&E AL 5973-E PCIA pre-payment framework 27 10
(October 12, 2020); Joint IOUs PFM of D.18-10-019 (August 7, 2020); D.20-08-004 on Working Group 2 PCIA Prepayment (August 6, 2020); D.20-06-032 denying PFM of D.18-07-009 (July 3, 2020); D.20-03-019 on departing load forecast and presentation of the PCIA (April 6, 2020); D.20-01- 030 denying rehearing of D.18-10-019 as modified (January 21, 2020); D.19-10-001 (October 17, 2019); D.18-10-019 Track 2 Decisions adopting the Alternate Proposed Decision (October 19, 2018); D.18-09-013 Track 1 Decision approving PG&E Settlement Agreement (September 20, 2018); Docket No. R.17-06-026.
PG&E Phase 1 GRC
On June 13, intervenors submitted direct testimony in the proceeding. On June 24, the CPUC issued D.22-06-033 establishing the effective date of PG&E’s 2023 test year revenue requirement as January 1, 2023.
Background: Phase 1 GRC applications cover the revenue requirement, including the functionalization of costs into categories such as electric distribution or generation, and impacts which customers (bundled, unbundled, or both) pay for the costs through rates. Phase 2 GRC applications cover cost allocation (i.e., assigning costs to customer classes, such as Residential) and rate design issues. PG&E proposes to have a second and third track of this Phase 1 GRC to request reasonableness review of certain memorandum and balancing account costs to be recorded in 2021 and 2022.
On August 25, 2021, the CPUC Executive Director granted PG&E’s request to delay filing its next Phase 2 GRC application until September 30, 2024.
In their Protest of PG&E’s Application, the Joint CCA parties identified the following list of preliminary issues they plan to examine or address in this proceeding:
• Compliance with the Commission’s Cost Allocation Directives in D.20-12-005 (PG&E’s most recently decided Phase 1 GRC decision), including PG&E’s cost functionalization methodology, wildfire costs, and allocation of Customer Care costs. • Reinvestments in and Recovery of Legacy Owned Generation Costs, including solar contract renewals or the decommissioning of legacy owned assets, which impact Joint CCAs’ customers through the PCIA and related vintaging of costs. • Other Issues that May Require Further Investigation and Analysis, including how costs related to PSPS Events should be tracked and allocated; whether and how any funds that PG&E receives as credits (such as Department of Energy settlement funds) should be allocated to departing load customers; and how PG&E’s regionalization proposal impacts its relationship and dealings with CCAs and their customers.
The October 1, 2021 Scoping Memo and Ruling divided the proceeding into two tracks. Track 1 addresses most matters, including PG&E’s requested revenue requirement together with safety and environmental and social justice issues. Track 2 addresses the narrower matters of the reasonableness of the 2019-2021 actual costs recorded in the named memorandum accounts and balancing accounts and, to the extent relevant, safety and environmental and social justice.
PG&E’s November 5, 2021 Motion requested extending the turn-around time for filing rebuttal testimony from 30 days to 45 days; delaying the start of evidentiary hearings by three weeks to accommodate the proposed rebuttal testimony timeline; and requested an earlier resolution than Q4 2022 as indicated in the Scoping Memo and Ruling on PG&E’s July 16, 2021 Motion for a January 1, 2023 effective date for its 2023 revenue requirement.
On March 9, PG&E submitted its recorded expense and capital data testimony for 2021. 28 11
On March 10, PG&E filed an Amended Application and submitted supplemental testimony on wildfire mitigation programs. Also on March 10, the ALJ issued a Ruling on the February 25 Motion filed by TURN, PG&E, and PAO denying their request to shorten time for responses to PG&E’s Amended Application and supplementary testimony on wildfire mitigation programs and suspending the March 30 submission date for intervenor testimony pending a ruling on the February 16 Motion to Modify the Schedule filed by TURN, PG&E, and the PAO.
PG&E and Caltrain submitted a joint report on the status of the third-party audit of costs that PG&E will incur to upgrade the East Grand and FMC substations in connection with Caltrain’s project to electrify its commuter rail system between San Jose and San Francisco. PG&E and Caltrain also requested to move consideration of PG&E’s proposal for cost recovery of Caltrain Project costs from Track 1 to Track 2 of PG&E’s 2023 GRC and proposed a schedule for the submission of testimony reporting on the Audit.
The April 12 email Ruling denied the February 16 Motion to adopt a final date for discovery regarding the earlier submitted testimony and adopted a revised procedural schedule for both Track 1 and Track 2.
On April 20, PG&E filed an application to modify its cost of capital that requests an overall rate of return of 7.78% and a $69.3 million increase in its revenue requirement. The company proposed a capital structure with 47.5% debt at a cost of 4.27%, 0.5% preferred equity at a cost of 5.52%, and 52% common equity at a cost of 11%.
Details: On June 13, intervenors submitted direct testimony in the proceeding. The Joint CCAs submitted testimony regarding recovery of PG&E’s proposed generation revenue requirement from bundled and unbundled customers, a Utility-Owned Generation vintaging framework to be used in future GRC proceedings to properly track and account for generation revenue requirements, and proper functionalization of costs associated with batteries on PG&E’s electric distribution system.
On June 24, the CPUC issued D.22-06-033 establishing the effective date of PG&E’s 2023 test year revenue requirement as January 1, 2023. A June 24 Email Ruling noticed an August 9 status conference, directed PG&E to prepare a case management statement, provided instructions for the August 15-26 hearings, requested testimony summaries in table format by July 11, and set forth a proposal for the uniform formatting of briefs.
On June 27, PG&E filed two motions: (1) a motion for modification of the email ruling noticing August 9 status conference (requesting an extension of the July 11 due date for parties to submit their Summary of Requests, as well as modifications to hearing exhibit and briefing requirements), and (2) a motion to shorten time for responses to PG&E’s motions. On June 29, the ALJs granted PG&E’s motions for shortened time, requiring parties to file responses to PG&E’s June 27 motions by July 6.
Analysis: This proceeding will set the revenue requirement, and thereby ultimately impact PG&E’s rates for 2023-2026. It will establish how the revenue requirement components will be functionalized, which impacts whether the ultimately approved costs will be borne by PG&E bundled customers, unbundled customers like VCE customers, or both. It will also address numerous other issues raised in PG&E’s application that could impact rates, policies, and programs implemented by PG&E.
The resolution of the issues covered in the Joint CCAs’ direct testimony will impact how certain generation-related costs in PG&E’s current and future applications will be vintaged for purposes of PCIA cost recovery. It will also impact how the costs associated with an energy storage project are functionalized.
Next Steps:
The Track 1 schedule, as modified in the April 12 Ruling is:
• July 11, 2022: Rebuttal Testimony
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• July 12 – August 15, 2022: Meet & Confer (minimum of four times) • August 9, 2022: Status Conference
• August 15 – August 26, 2022: Evidentiary Hearings
• November 4, 2022: Opening Briefs
• December 9, 2022: Reply Briefs
• March 24, 2023: Proceeding Submitted
• Q3 2022: Proposed Decision on PG&E
• Q2 2023: Proposed Decision on A.21-06-021
The Track 2 schedule, as modified in the April 12 ruling is:
• July 22, 2022: PG&E Testimony
• November 14, 2022: Intervenor Opening Testimony
• December 14, 2022: Concurrent Rebuttal Testimony
• December 15, 2022: January 20, 2023 – Meet & Confer (minimum of two times) • TBD (prior to Evidentiary Hearings): Status Conference • January 23 – January 27, 2023: Evidentiary Hearings
• February 24, 2023: Opening Briefs
• March 24, 2023: Reply Briefs
• March 24, 2023: Proceeding Submitted
• 2Q 2023: Proposed Decision on A.21-06-021
Additional Information: D.22-06-033 on Effective Date of 2023 Revenue Requirement (June 24, 2022); PG&E Application to establish 2023 Cost of Capital (April 20, 2022); Ruling on Motions and Request to Modify Schedule (April 12, 2022); ALJ Ruling denying Motion to Shorten Time, accepting PG&E’s Amended Application, and suspending intervenor testimony deadline (March 10, 2022); PG&E’s Amended Application (March 10, 2022); PG&E Affordability Metrics Report (February 23, 2022); ALJ Ruling on Public Participation Hearings (February 2, 2022); PG&E/Caltrain Report (February 1, 2022); Ruling denying PG&E Motion to submit supplemental testimony (November 12, 2021); Motion of PG&E to modify procedural schedule (November 5, 2021); Scoping Memo and Ruling (October 1, 2021); PG&E Application (June 30, 2021); Docket No. A.22-04-008; Docket No.
A.21-06-021.
RA Rulemaking (2023-2024)
On June 24, the CPUC issued D.22-06-050 adopting 2023-2025 Local Capacity Requirements (LCR), 2023 Flexible Capacity Requirements (FCR), and RA program refinements under the RA Reform Track of this proceeding.
Background: In Track 3B.2 of the 2021-2022 RA Rulemaking (R.19-11-009), D.21-07-014 rejected CalCCA/SCE's proposal for restructuring the Resource Adequacy (RA) program, and instead found that PG&E’s "slice-of-day" proposal best addresses the identified principles and the concerns with the current RA framework and if further developed, is best positioned to be implemented in 2023 for 30 13
the 2024 compliance year. The Decision directed parties to collaborate to develop a final restructuring proposal based on PG&E’s slice-of-day proposal through a series of workshops.
The December 2, 2021, Scoping Memo and Ruling divided the proceeding into an Implementation Track and Reform Track. The Reform Track encompasses consideration of a final proposed framework and the slice-of-day workshop report.
The Implementation Track is sub-divided into Phases 1, 2, and 3:
• Phase 1 of the Implementation Track considered critical modifications to the Central Procurement Entity (CPE) structure and concluded in March 2022 with issuance of D.22-03- 034.
• Phase 2 consists of the Commission’s consideration of flexible capacity requirements for the following year, local capacity requirements for the next three years, and the highest-priority refinements to the RA program including modifications to the Planning Reserve Margin Qualifying Capacity Counting Conventions, which, along with other proposals, will consider the Energy Division's biennial update to the Effective Load Carrying Capability values for wind and solar resources. Phase 2 proposals were submitted in January 2022. Neither CalCCA nor any CCAs individually filed a Phase 2 proposal. • Phase 3 will consider the 2024 program year requirements for flexible RA, and the 2024-2026 local RA requirements. Other modifications and refinements to the RA program, as identified in proposals by parties or by the Energy Division may also be considered. Phase 3 is expected to conclude by June 2023.
D.22-03-034: This Decision established that in the event of a non-performing self-shown resource, an LSE may substitute another local resource on a like-for-like basis, and that if the CAISO makes a local Capacity Procurement Mechanism (CPM) designation for an individual deficiency then the CPE will be charged any backstop procurement costs and those costs will be allocated to all LSEs on a load ratio share basis. It also requires LSEs that either decline to self-show a local resource to the CPE or fail to bid a local resource into the CPE’s solicitation process to file a justification statement in its year-ahead Resource Adequacy filing explaining why the LSE declined to self-show or bid the local resource to the CPE. An LSE’s self-shown commitment must be firm for Years 1 and 2, but self-shown local resources for year 3 may be replaced like-for-like with other local resources.
Details: On June 1, an ALJ Ruling provided the Energy Division’s Regional Wind Effective Load Carrying Capability (ELCC) study, and a revised version of the study was released on June 9.
On June 8, an ALJ Ruling provided the Energy Commission’s Notice of Availability for Mid-Term Reliability (MTR) Analysis Supporting Data (Docket No. 21-ESR-01).
On June 22, the Energy Division released its white paper on Advanced Strategies for Demand Flexibility Management and Customer DER Compensation that addresses challenges towards reaching 100% renewables, increased electrification in buildings and of vehicles, and deployment of behind-the-meter resources.
On June 24, the CPUC issued D.22-06-050 adopting 2023-2025 Local Capacity Requirements (LCR), 2023 Flexible Capacity Requirements (FCR), and RA program refinements under the RA Reform Track of this proceeding. Among other things, with respect to RA Reform, it would adopt SCE's 24-hour "slice of day" framework, with modifications (see Appendix A), pending further development of certain implementation details. The Decision is summarized below, broken into the broad categories for the Implementation Track Phase 2 and the RA Reform Track, and the various sub-topics within each.
Implementation Track
2023-2025 LCR: The Decision adopts the LCR values from the CAISO's study without modification. 31 14
2023 FCR: The Decision adopts the FCR values contained in the CAISO's FCR report as well as CAISO's proposal to change the availability assessment hours (AAH) during which RA resources must be available for dispatch for March and April.
Planning Reserve Margin: For summers 2022 and 2023, an “effective PRM” of 20% to 22.5% was adopted in D.21-12-015 which established supply and demand-side measures to ensure reliability during extreme weather events for Summer 2022 and 2023. This Decision adopts a PRM of 16% for the 2023 RA year and a minimum of 17% for the 2024 RA year, and notes that the PRM for the 2024 RA year may be further revised in a June 2023 decision after additional review of LOLE modeling.
Only amounts above the PRM are to be charged to all customers via the CAM.
Reform Track Issues
Slice of Day RA Framework: This Decision adopts a 24-hour slice-of-day framework based on a SCE proposal, which requires each LSE to demonstrate that it has enough capacity to satisfy its specific gross load profile, including PRM, in all 24 hours on CAISO’s “worst day” in that month. The “worst day” is defined as the “day of the month that contains the hour with the highest coincident peak load forecast.” For an LSE that uses energy storage to meet requirements, the LSE must demonstrate it has excess capacity that offsets the storage usage plus efficiency losses. An LSE could combine the capabilities of its resource mix to cover all 24 hours. The Decision eliminates the flexible RA requirement and the MCC buckets but requires additional development prior to doing so.
Additionally, the Commission will maintain a public RA Resource Master Database of resources eligible to sell RA, including available MW of RA capacity, hours available for production, other use limitations, hourly profile (for solar and wind) and other details. The Decision defines three workstreams to further develop aspects of the slice of day framework.
Counting for Dispatchable Resources and Storage: The Decision directs the parties to develop an Unforced Capacity- (UCAP)-"light" mechanism to account for the effect of ambient temperature on dispatchable resources, but the Pmax values will continue to be used in the meantime.
Compliance Penalties: The Decision determines that retaining the existing RA penalty structure, as well as basing RA compliance penalties on the largest hour deficiency, is an appropriate penalty mechanism that does not double-penalize LSEs for multiple hour deficiencies under the 24-hour framework.
Analysis: The CPE framework is one of several new components added as the CPUC works toward integrating reliability, RA, and RPS obligations into the Integrated Resource Planning framework.
These shifts placing greater responsibility on LSEs also add additional risk to procurement activities, particularly in the event of a delay or underperformance by a counterparty to a resource procurement contract. The Decision establishes SCE’s proposed new 24-hour based RA requirements applied to day of the month with the highest coincident peak load on a monthly basis.
Next Steps: The procedural schedule for the ongoing tracks and working groups are as follows:
Reform Track Phase 2
• July – October 2022: Workstreams 1-3 to resolve remaining implementation details and methodologies
• November 15, 2022: Final proposals from Workstreams 1- 3 filed and served • December 1, 2022: Opening comments on final proposals due • December 12, 2022: Reply comments on final proposals due • Q1 2023: Proposed decision on Reform Track Phase 2 issued CPE Procurement Timeline
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• July 2022: LSEs receive initial RA allocations, including Cost Allocation Mechanism (CAM) credits from CPE-procured system and flexible capacity from the prior year and any bilateral contracts.
• Mid-August 2022: CPE makes local RA showing to the Commission. • End of August 2022: LSEs in the SCE and PG&E TAC areas receive updated CAM credits for multi-year system/flexible capacity that was procured by the CPE as a result of the CPE’s multi-year local RA showing to the Commission in Mid-August. • September 2022: LSEs are allocated final year-ahead system and flexible RA allocations, including CAM credits from CPE-procured system and flexible RA capacity based on revised year-ahead load forecast load ratios.
• End of October: LSEs make year-ahead system and flexible showings, and provide justification statements, if applicable, for local resources not self-shown or bid to the CPE.
Additional Information: D.22-06-050 on LCR and FCR Requirements and Modifications to the RA Framework (June 24, 2022); Ruling on availability of MTR analysis supporting data (June 8, 2022); Ruling on Regional Wind ELCC study (June 1, 2022); Final 2023 FCR Report (May 17, 2022); Notice of Final 2023 LCR Report (April 29, 2022); Ruling modifying schedule (April 29, 2022); CAISO Local Capacity Technical Analysis (April 7, 2022); D.22-03-034 on Phase 1 of Implementation Track Modifications (March 18, 2022); Ruling modifying Phase 2 schedule and providing LOLE study and CEC Working Group Report (February 18, 2022); Proposed Decision on CPE revisions (February 10, 2022); Scoping Memo and Ruling (December 2, 2021); Order Instituting Rulemaking (October 11, 2021); Docket No. R.21-10-002.
PG&E Regionalization Plan
On June 24, the CPUC issued D.22-06-028 approving and modifying settlement agreements relating to PG&E’s updated regionalization plan and closing the proceeding.
Background: D.20-05-051 approved PG&E’s reorganization following bankruptcy and directed PG&E to file a regionalization proposal (I.19-09-016). On June 30, 2020, PG&E filed its regionalization proposal, which described how it plans to reorganize operations into new regions.
PG&E proposed to divide its service area into five new regions, each led by a Regional Vice President, and each with a Regional Safety Director to lead its safety efforts. The new regions would include five functional groups that report to the Regional Vice President encompassing various functions including: (1) Customer Field Operations, (2) Local Electric Maintenance and Construction, (3) Local Gas Maintenance and Construction, (4) Regional Planning and Coordination, and (5) Community and Customer Engagement. Other functions will remain centralized, such as electric and gas operations, risk management, enterprise health and safety, the majority of existing Customer Care and regulatory and external affairs, supply, power generation, human resources, finance, and general counsel.
In August 2020, parties filed protests and responses to PG&E’s application. Of note, South San Joaquin Irrigation District filed a Protest arguing that PG&E’s regionalization effort should not create a moratorium or interfere with municipalization efforts.
In February 2021, PG&E submitted its updated regionalization proposal (“Updated Proposal”). In response to feedback, PG&E modified its five regions (renamed North Coast, North Valley & Sierra, Bay Area, South Bay & Central Coast, and Central Valley), including moving Yolo County from Region 1 to Region 2 (North Valley & Sierra), where it would be grouped with the following counties:
Colusa, El Dorado, Glenn, Lassen, Nevada, Placer, Plumas, Sacramento, Shasta, Sierra, Solano, Sutter, Tehama, and Yuba.
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On August 31, 2021, PG&E, the California Farm Bureau Federation, the California Large Energy Consumers Association, the Center for Accessible Technology, the Coalition of California Utility Employees, the Public Advocates Office at the California Public Utilities Commission (Cal Advocates), the Small Business Utility Advocates, and William B. Abrams filed a Motion for approval of their settlement agreement (Multi-Party Settlement Agreement, or MPSA). The MPSA provides that PG&E will facilitate a stakeholder engagement process to provide updates on PG&E’s regionalization and a non-binding forum for input from stakeholders. The proposed settlement would have restricted participation in the Regionalization Stakeholder Group to Parties to the proceeding.
In the separate PG&E/SSJID Settlement Agreement, PG&E clarified and confirmed that its implementation of regionalization will not include any work to oppose SSJID’s municipalization efforts. The settlement provided that PG&E may continue to respond to SSJID’s municipalization efforts in other forums and proceedings separate from the regionalization proceeding and/or implementation of the Updated Regionalization Proposal.
VCE filed comments on the Motion for approval of the settlement jointly with Pioneer Community Energy that were critical of PG&E’s Updated Proposal and the settlement. VCE and Pioneer recommended that the CPUC reject the settlement and require changes to PG&E’s Updated Proposal, including alignment with the boundaries of regional councils of governments (COGs) and requirements to coordinate with COGs, the development of metrics to measure PG&E’s progress on key safety and customer relations issues, greater coordination between PG&E and CCAs, and improvements to the Regionalization Stakeholder Group to expand its access and efficacy and not limit it to Parties to the proceeding.
On May 9, VCE and Pioneer filed comments on the Proposed Decision to approve the MPSA, recommending that the MPSA be rejected by the Commission because PG&E’s Updated Proposal is highly unlikely to lead to meaningful safety, customer responsiveness or accountability improvements at PG&E. VCE and Pioneer requested that, at a minimum, the Commission keep the proceeding open to address issues arising from the stakeholder group, require PG&E to propose reasonable metrics for measuring the utility’s safety performance and responsiveness to local communities, and to remove unreasonable restrictions on the scope and participation requirements in the stakeholder group.
Details: D.22-06-028 approved the MPSA but contained some modifications to the Proposed Decision with clarifications that:
• There is no guarantee of eventual recovery of costs recorded by PG&E in the memorandum account (established October 2, 2020);
• That PG&E must hold quarterly “town hall” meetings in each region until the later of Phase III completion or the end of 2024, as suggested by VCE and Pioneer; and • In response to comments from VCE and other parties, required PG&E to submit a Tier 1 advice letter within 90 days of the final decision describing regionalization implementation activities already undertaken and planned.
• Expanded participation in the Regionalization Stakeholder Group (RSG) by any interested party rather than just parties to the proceeding, as suggested in comments by VCE and other parties. The Decision did not broaden the scope of the RSGs.
The Decision did not require PG&E to propose metrics by which to measure the success of its regionalization efforts and declined the request of all parties that filed comments, including the settling parties, to keep the proceeding open. The Decision approved the PG&E/SSJID Settlement Agreement.
Analysis: The implications of PG&E’s regionalization plan on CCA operations, customers, and costs remain largely unclear. As part of Region 2, VCE would be grouped with Butte, Colusa, El Dorado, 34 17
Glenn, Lassen, Nevada, Placer, Plumas, Sacramento, Shasta, Sierra, Solano, Sutter, Tehama, Yolo, and Yuba Counties. The Decision did not address most of the comments made by VCE and Pioneer regarding the inefficacy of the Updated Proposal, the need for the Commission to adopt and utilize metrics to measure the efficacy of PG&E’s regionalization, suggestions for greater transparency and responsiveness, or alignment of regional boundaries with existing councils of governments.
Next Steps: PG&E’s Tier 1 advice letter on regionalization implementation actions is due September 21, 2022. PG&E is required to submit a report on its quarterly town hall meetings in each region within 45 days following the end of each quarter, and the first report is due August 16.
Additional Information: D.22-06-028 on Regionalization (June 24, 2022); Joint Motion for approval of Settlement Agreements (August 31, 2021); Amended Scoping Memo and Ruling (June 29, 2021); PG&E Updated Regionalization Proposal (February 26, 2021); Application (June 30, 2020); A.20-06- 011.
PG&E Phase 2 GRC
On June 22, the CPUC issued a Proposed Decision that, if approved, would direct PG&E to implement the settlement agreement provisions for a real-time pricing pilot, adopt the methodology outlined in the marginal generation capacity cost study for use in real-time pricing rate designs, and close this proceeding. The PD may be heard as soon as the August 4 Commission meeting.
Background: PG&E’s 2020 Phase 2 General Rate Case (GRC) addresses marginal cost, revenue allocation and rate design issues covering the next three years. D.21-11-016 largely adopted PG&E’s proposed marginal costs and methodologies for deriving them but adopted marginal connection equipment costs proposed by the Agricultural Energy Consumers Association and marginal transmission capacity costs proposed by the Solar Energy Industries Association. It also adopted, without modification, several uncontested settlements on rate design issues (residential rate design settlement; settlement on streetlight rate design issues; Economic Development Rate (EDR) settlement; agricultural rate design; C&I rate design) and revenue allocation.
On January 18, parties filed a Settlement Agreement that includes the following terms of the Stage 1 RTP Pilot:
Eligibility: PG&E’s bundled customers who are eligible for the B-20, B-6 and E-ELEC rates may participate on an opt-in basis. CCAs will need to affirmatively decide to participate in the Stage 1 Pilots for their customers to be eligible. PG&E agrees to work with its twelve CCAs to seek agreement from one or two of them to participate in the Stage 1 Pilots, if possible.
Duration: Stage 1 Pilots shall have a duration of 24 months, subject to potential extension.
Enrollment: PG&E will make its best efforts to program and make available for enrollment the three Stage 1 RTP rates by October 1, 2023.
Pricing: The RTP element of the Stage 1 Pilot RTP rates will replace the generation component of the customer’s otherwise applicable rate schedule. The remaining transmission, distribution, Public Purpose Program and other charges and taxes remain the same as the otherwise applicable underlying rate. The generation component to be used in the Stage 1 Pilots’ RTP rates will include:
(1) a Marginal Energy Charge, (2) a Marginal Generation Capacity Cost, and (3) a Revenue Neutral Adder (designed to make the forecasted annual generation revenue collected under the three Stage 1 Pilot RTP rates revenue neutral to the base schedule). Residential customers would have 1 year of bill protection. There would be a limited amount of participation incentives as well.
All development, implementation, and operating costs for the Stage 1 Pilots, as well as for the separate Customer Research Study for residential, agricultural, and small commercial customers, will be recovered in distribution rates from all customers. 35 18
D.22-03-012 (March 18) adopted the Joint Stipulation resolving the single carryover issue of material fact about the MGCC Property Tax Adder and established a property tax factor of 1.25% for the 2021-2026 marginal generation capacity cost (MGCC) for new customer rates effective June 1. A corrected version of PG&E’s MGCC Report was filed on March 17.
On March 24, PG&E proposed an export compensation mechanism for non-NEM customers enrolled in the Day-Ahead Hourly Real Time Pricing (DAHRTP) rate. The proposed Business Electric Vehicle (BEV) Pilot will include customers on any BEV rate and not only customers on the DAHRTP Commercial Electric Vehicle (CEV) rate. Compensation for energy will come from the CAISO market participation entity, and to the extent available will include compensation for Resource Adequacy.
PG&E has not yet proposed a budget for the Pilot but has proposed a cost-effectiveness evaluation and a report on lessons learned to be issued two years after implementation. The proposal includes a market participation option instead of a tariff rate to allow all BEV customers in the PG&E service territory (including customers of CCAs or direct access providers) to participate without requiring each retail LSE to offer its own tariff rate. Some key considerations that PG&E has requested be addressed through a stakeholder process include interconnection jurisdiction, resource adequacy compensation methodology, and managing and monitoring customer revenue generation.
PG&E served the required supplemental testimony (March 24) for its proposed export compensation mechanism for customers enrolled in the day-ahead real-time pricing (DAHRTP-CEV) rate that do not participate in net metering but provide behind-the-meter resources. The Vehicle Grid Integration Council (VGIC) was the only party to file responsive testimony, and rebuttal testimony was scheduled to be served on April 29. PG&E’s Motion for Evidentiary Hearing in A.20-10-011 (filed April 22) requested the Commission grant evidentiary hearings on several disputed questions related to the export compensation mechanism for customers enrolled in the DAHRTP-CEV rate that do not participate in net metering but provide behind-the-meter resources. The disputed issues raised by VGIC, as identified in PG&E’s Motion, are:
• Whether PG&E’s market participation approach belongs in this proceeding; • PG&E’s consideration of resource adequacy valuation and compensation; • PG&E’s proposed use of a “complex and lengthy approach” that includes a cost-benefit analysis for export valuation;
• Potential use of the same compensation mechanism for DAHRTP-CEV Non-NEM as DAHRTPCEV NEM customers; and
• Dual participation in ELRP.
Details: On June 2, the CPUC issued a disposition letter accepting PG&E’s AL 6563-E, which replaced fixed-price hourly rates charged for CCA services with charges based on labor costs, pursuant to D.21-11-016.
On June 7, the CPUC issued a disposition letter accepting PG&E’s AL 6566-E, which provides electric rate changes pursuant to D.21-11-016. The final system average PCIA rate for 2022 vintage is $0.02456/kWh.
On June 22, the CPUC issued a Proposed Decision that, if approved, would direct PG&E to implement the provisions of the January 18 settlement on real-time pricing issues, adopt the methodology outlined in the marginal generation capacity cost study for use in real-time pricing rate designs approved in D.21-11-017, order that the marginal generation capacity cost study working group be reconvened after initial evaluation of PG&E’s real-time pricing rates is complete but no later than October 1, 2025 to consider whether any revisions should be made to the marginal generation capacity cost hourly price signal methodology, and close A.20-11-019 (A.20-10-011 would remain open).
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Analysis: This phase of the proceeding could impact real-time pricing rate design issues for PG&E customers. If the settlement agreement is adopted, VCE could elect to allow its customers to participate in the Stage 1 RTP Pilot. The Settlement Agreement provides that cost recovery of development, implementation, and operating costs for the Stage 1 Pilots, as well as for the separate Customer Research Study, would be recovered in distribution rates that both bundled PG&E and VCE customers pay.
Next Steps: The PD may be heard no earlier than the August 4 Commission meeting. Comments on the PD are due July 12.
Additional Information: PD on RTP Pilot (June 22, 2022); PG&E Motion for Evidentiary Hearing (April 22, 2022); PG&E AL 6566-E on Illustrative Electric Rate Changes (April 18, 2022); PG&E AL 6563-E for CCA Service Fees (April 15, 2022); PG&E Proposal for non-NEM export compensation (March 24, 2022); PG&E MGCC Report (corrected) (March 17, 2022); D.22-03-012 on property tax adder (March 18, 2022); Ruling on timing to respond to PG&E/CLECA Motion (January 25, 2022); Motion by PG&E/CLECA to establish a separate expedited schedule (January 21, 2022); PG&E Motion on MGCC Study (January 18, 2022); PG&E Motion (January 18, 2022); Motion to Adopt Settlement Agreement (January 18, 2022); D.21-11-016 on revenue allocation and rate design (November 19, 2021); Amended Scoping Memo and Ruling (August 25, 2021); Ruling bifurcating RTP issues into separate track (February 2, 2021); D.20-09-021 on EUS budget (September 28, 2020); Exhibit (PG&E-5) (May 15, 2020); Scoping Memo and Ruling (February 10, 2020); Application, Exhibit (PG&E-1): Overview and Policy, Exhibit (PG&E-2): Cost of Service, Exhibit (PG&E-3): Revenue Allocation, Rate Design and Rate Programs, and Exhibit (PG&E-4): Appendices (November 22, 2019); RTP Pilot Docket No. A.20-10-011; Phase 2 GRC Docket No. A.19-11-019.
Provider of Last Resort Rulemaking
No updates this month.
Background: A Provider of Last Resort (POLR) is the utility or other entity that has the obligation to serve all customers (e.g., PG&E is currently the POLR in VCE's territory).
The Scoping Memo and Ruling issued September 16, 2021, provides that Phase 1 of this OIR will address POLR service requirements, cost recovery, and options to maintain GHG emission reductions in the event of an unplanned customer migration to the POLR. Phase 2 will build on the Phase 1 decision to set the requirements and application process for other non-IOU entities (i.e., a CCA, Energy Service Provider, or third-party) to be designated as the POLR in place of an existing POLR. Phase 3 will address specific outstanding issues not resolved in Phase 1 and 2 of this proceeding.
A workshop was held on October 29, 2021, for the purpose of reviewing the operation and expectation of Provider of Last Resort service, registration, and financial security requirements, and a second workshop was held on March 7 for the purpose of developing a framework to consider the issues and recommendations of the previous workshop.
Party comments on the first workshop were filed on March 28. CalCCA’s comments urged a more pragmatic approach based on recent actual experience of customer returns and an evidence-based examination of the actual risks of customer returns to addressing POLR issues. Some of CalCCA’s proposals include maintaining the six-month runway to prepare for the return of customers, refining the Financial Service Requirements (FSRs) to reflect the current Market Price Benchmarks (MPBs) for Resource Adequacy (RA) and RPS products, maintaining the existing right to an RA waiver, not requiring resource procurement in advance of customer returns, providing for recovery of financing costs if the POLR must pay for costs prior to receipt of revenues from customer returns, refining the implementation planning process for new CCAs, and implementing a three-tiered reporting rubric calibrated to the operating CCA’s circumstances.
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PG&E’s comments on the first workshop included a proposal for an insurance pool to ensure liquidity equal to about two months incremental energy procurement costs for the POLR with each CCA posting its annual contribution to the insurance pool in the form of either cash or a letter of credit, and a proposed initial set of metrics for monitoring the financial health of CCAs that the company recommended be further developed and refined through a workshop process or with other stakeholder feedback.
The primary issues raised in comments to Workshop 2 were:
• Applicability of POLR to Electric Service Providers (ESPs): Both CalCCA and TURN argue that there is no basis for excluding ESPs from any POLR obligations adopted by the Commission since ESPs are subject to the same market conditions that cause CCA defaults. • Upfront Liquidity: PG&E expressed the need for upfront liquidity equal to two months of POLR costs and estimated the cost of providing energy-only service for two months to CCA customers in its territory at between $200 and $400 million. CalCCA estimated the costs for two months of CAISO service if all CCA customers statewide returned their load to POLR service to be about $800 million, and recommended that risks be defined not only by their costs but also by their probability of occurrence since it is very unlikely that all or even a majority of CCAs would fail simultaneously and “failing to account for the probability of an event will significantly over-securitize the risk at the expense of customers.” • Right of First Refusal (ROFR) or Novation: There are differences among the parties regarding both the need for the costs and benefits of resources procured by a failing LSE to follow those customers returned to POLR service, and the mechanism by which those resources might follow customers.
Other topics discussed include the mechanism of the FSR, mechanisms for financial monitoring, and the possibility of a statewide not-for-profit central entity to manage POLR.
On May 10, PG&E submitted AL 6589-E with calculated financial security requirements for CCAs, followed by submission of supplemental AL 6589-E-A on May 17.
Details: On May 31, CalCCA filed a protest of PG&E ALs 6589-E and 6589-E-A requesting that the Commission require PG&E to correct the period for determination of “peak load” in applying the applicable resource adequacy (RA) cost based on PG&E’s own tariff by updating the proposed FSR amount using a peak demand based on the most recent 12 months of historical peaks.
Analysis: This proceeding is addressing aspects of financial security requirements that will apply to VCE when finalized. The amount, methods of compliance (i.e., cash deposit, letter of credit, etc.), and organization of FSR management will impose a financial obligation on VCE at some future time of a currently unknown nature and amount. Additionally, this proceeding could impact VCE operations in a couple of ways. First, in establishing rules for existing POLRs, it will address POLR service requirements, cost allocation, and cost recovery issues should a CCA or other LSE discontinue supplying customers resulting in the need for the POLR to step in to serve those customers. Second, in setting the requirements and application process for another entity to be designated as the POLR, it could create a pathway for a CCA or other retail provider to elect to become a POLR for its service area.
Next Steps:
• July 19, 2022: Reply Comments on questions presented in May 2 Ruling • August 2022: Energy Division Staff Proposal on Phase 1 Issues • September 2022: Workshop on Energy Division Staff Proposal • September 2022: Workshop on Potential/Example Changes to FSR Calculator 38 21
• October 2022: Opening Comments Filed and Served on Energy Division Staff Proposal/Potential Changes to FSR Calculator
• October 2022: Reply Comments Filed and Served on Energy Division Staff Proposal/Potential Changes to FSR Calculator
• Q1 2023 – Q2 2023: Phase 1 Proposed Decision
Additional Information: CalCCA Protest of AL 6589-E (May 31, 2022); Ruling granting extension of time and modifying procedural schedule (May 24, 2022); PG&E’s AL 6589-E-A on FSR Requirements (May 17, 2022); PG&E’s AL 6589-E on FSR Requirements (May 10, 2022); Ruling Requesting Comments (May 2, 2022); POLR webpage with workshop presentations and videos; Golden State Power Cooperative Motion to remove cooperatives as respondents (October 28, 2021); Scoping Memo and Ruling (September 16, 2021); Order Instituting Rulemaking (March 25, 2021); Docket No. R.21-03-011.
PG&E 2023 ERRA Forecast
On June 22, PG&E filed supplemental testimony in support of its 2023 ERRA Forecast application.
Background: Energy Resource and Recovery Account (ERRA) forecast proceedings establish the amount of the Power Charge Indifference Adjustment (PCIA) and other nonbypassable charges (NBCs) for the following year, as well as fuel and purchased power costs associated with serving bundled customers that utilities may recover in rates.
On May 31, PG&E filed its 2023 ERRA Forecast application, requesting a 2023 ERRA forecast revenue requirement for ratesetting purposes of $4.736 billion. After accounting for $2.479 billion of Utility Owned Generation (UOG)-Related Costs and amounts related to capped 2020 departing load PCIA rates addressed in D.20-12-038, PG&E requested a revenue requirement in this application of $2.263 billion.
D.22-02-002 approved a 2022 forecast of electric sales and energy procurement revenue requirements of $2.4 billion, effective in rates on March 1. It found the December Update, updated again with the actual year-end ERRA main account balance, provided the most accurate forecast for 2022 revenue requirements, and approved the 12-month amortization that was supported by CCAs.
Under the December Update adopted in D.22-02-002, the 2022 total PCIA rate for 2017-vintaged customers (i.e., most VCE customers) will fall 59% relative to 2021 to $0.01969/kWh for residential customers and to $0.01897/kWh on a system-average basis. The Decision also found that all customers who were financially responsible for the ERRA-PCIA Financing Subaccount (ERRA-PFS) balance should be entitled to the appropriate credit and directed PG&E to transfer the $95 million ERRA-PFS credit for 2022 to the 2020 vintage subaccount. It approved a request by CCAs and directed PG&E to include the confidential workpapers supporting the PCIA rates from the prior year’s ERRA Forecast proceeding as part of the Master Data Request it will provide in each subsequent ERRA Forecast proceeding. D.22-02-002 denied without prejudice the CCA’s request to direct PG&E to provide data demonstrating its future role as a CPE in future ERRA forecast proceedings.
On March 14, the California Large Energy Consumers Association and Agricultural Energy Consumers Association filed an Application for Rehearing (AFR) of D.22-02-002. The AFR argues that the Commission should have adopted a 24-month amortization period for the undercollected ERRA balance. PG&E filed its response to the AFR on March 29, defending the use of a 12-month amortization period. The Commission has not yet acted on the AFR.
Details: N/A
39 22
Analysis: D.22-02-002 results in a 59% reduction to VCE’s PCIA rates in 2022 compared to 2021.
While the PCIA rate will fall substantially in 2022 for VCE customers, the non-RPS benchmarks that contributed to the reduction in the PCIA in 2022 could result in the opposite effect in 2023. That is, the same high benchmarks that helped reduce the 2022 forecast case may be too high compared to next year’s actuals, which would create large Portfolio Allocation Balancing Account (PABA) undercollection balances for 2023 rates. The change in the PCIA rate from the December Update will help mitigate such a swing in rates in 2023. D.22-02-002 also improves transparency by requiring PG&E to provide confidential workpapers supporting the PCIA rates from the prior year’s ERRA Forecast proceeding as part of the Master Data Request it will provide in each subsequent ERRA Forecast proceeding.
Next Steps: No procedural schedule has been issued in this proceeding, however, protests to PG&E’s Application are due on July 6, and replies are due on July 16.
Additional Information: Application (May 31, 2022); Docket No. A.22-05-029.
PG&E 2021 ERRA Compliance
A prehearing conference was held on June 8. At that conference, the Administrative Law Judge indicated that she would establish an eighteen-month schedule for this proceeding, and issue a procedural schedule consistent with that timeline. A scoping ruling has not been issued.
Background: PG&E’s application requested that the CPUC find that during 2021:
• It complied with its CPUC-approved Bundled Procurement Plan (BPP) in the areas of fuel procurement, administration of power purchase contracts, greenhouse gas compliance instrument procurement, resource adequacy sales, and least-cost dispatch of electric generation resources.
• It managed its utility-owned generation (UOG) facilities reasonably. • Its expenditures in the Green Tariff Shared Renewables Memorandum Account (GTSRMA) were reasonable.
• Its entries in the Portfolio Allocation Balancing Account (PABA), Energy Resource Recovery Account (ERRA), Green Tariff Shared Renewables Balancing Account (GTSRBA), Disadvantaged Community – Single-Family Affordable Solar Homes (DAC SASH) balancing account (DACSASHBA), Disadvantaged Community - Green Tariff Balancing Account (DACGTBA), and Community Solar Green Tariff Balancing Account (CSGTBA) were consistent with applicable tariffs and CPUC directives.
PG&E also presents its Central Procurement Entity’s administrative costs recorded to the Centralized Local Procurement Sub-Account (CLPSA) in the New System Generation Balancing Account (NSGBA).
PSPS Impacts: PG&E states that since the CPUC is currently considering the utilities’ proposed common methodology for calculating unrealized volumetric sales and unrealized revenues resulting from Public Safety Power Shutoff (PSPS) events in the consolidated Phase II 2019 ERRA Compliance proceeding, it has not included with this 2021 ERRA Compliance application any testimony addressing the calculation of unrealized volumetric sales or unrealized revenues. PG&E plans to send an email to the assigned ALJ requesting direction regarding whether and in what format PSPS information should be presented as part of this Application once the Commission has resolved the issue in the Phase II 2019 ERRA Compliance proceeding.
Issues: PG&E proposes the following issues be considered in this proceeding:
40 23
• Whether PG&E, during the record period, prudently administered and managed the following, in compliance with all applicable rules, regulations, and Commission decisions, including but not limited to Standard of Conduct No. 4 (SOC 4):
o Utility-Owned Generation Facilities
o Qualifying Facilities (QF) Contracts and Non-QF Contracts. If not, what adjustments, if any, should be made to account for imprudently managed or administered resources? • Whether PG&E achieved least-cost dispatch of its energy resources and economically triggered demand response programs pursuant to SOC 4;
• Whether the entries recorded in the Energy Resource Recovery Account and the Portfolio Allocation Balancing Account are reasonable, appropriate, accurate, and in compliance with Commission decisions;
• Whether PG&E’s greenhouse gas instrument procurement complied with its Bundled Procurement Plan;
• Whether PG&E administered resource adequacy procurement and sales consistent with its Bundled Procurement Plan;
• Whether the costs incurred and recorded in the following accounts are reasonable and in compliance with the applicable tariffs and Commission directives:
o Green Tariff Shared Renewables Memorandum Account;
o Green Tariff Shared Renewables Balancing Account;
o Disadvantaged Community - Single Family Solar Affordable Homes Balancing Account; o Disadvantaged Community - Green Tariff Balancing Account; o Community Solar Green Tariff Balancing Account; and
o Centralized Local Procurement Sub-Account.
• Whether there are any safety considerations raised by this Application.
Details: Protests of PG&E’s application were filed by three parties including CalCCA and the Cal Advocates office. At the prehearing conference on June 8, the Administrative Law Judge indicated that she would establish an eighteen-month schedule for this proceeding and issue a procedural schedule consistent with that timeline. A scoping ruling has not been issued.
Analysis: The proceeding has just begun, and its full scope is yet to be determined. A CPUC determination in the Phase II 2019 ERRA Compliance proceeding on the utilities’ proposed common methodology for calculating unrealized volumetric sales and unrealized revenues resulting from PSPS events could expand the scope of this proceeding.
Next Steps: PG&E, in agreement with parties filing protests, proposed the following timeline:
• August 24, 2022: Cal Advocates and Intervenor Testimony • October 1, 2022: PG&E Rebuttal Testimony
• October - November 2022: Settlement Discussions
• November 14-16, 2022: Evidentiary Hearings
• December 2, 2022: Opening Briefs
• December 19, 2022: Reply Briefs
41 24
Additional Information: Notice rescheduling prehearing conference (May 3, 2022); PG&E 2021 ERRA Compliance Application (February 28, 2022); Docket No. A.22-02-015.
PG&E’s 2019 ERRA Compliance
No updates this month.
Background: Phase 1 has been resolved. The September 7, 2021, Ruling consolidated the Phase 2 ERRA compliance proceedings of PG&E, SCE, and SDG&E. The issues scoped for Phase 2 are:
• What is the appropriate methodology for calculating a utility’s unrealized volumetric sales and unrealized revenues resulting from PSPS events in any given record year? Based on this methodology, what are the utilities’ (PG&E, SCE, and SDG&E) unrealized volumetric sales and unrealized revenues resulting from 2019 Public Safety Power Shutoff (PSPS) events? • Whether it is appropriate for the utilities to return the revenue requirement equal to the unrealized volumetric sales and unrealized revenue resulting from the PSPS events in 2019.
At the October 26, 2021, workshop hosted by Energy Division, the IOUs (PG&E, SCE, and SDG&E) made a joint presentation of their proposal for a methodology to calculate the revenue requirement of the estimated unrealized volumetric sales and unrealized revenue resulting from PSPS events.
The Joint CCAs filed a Motion on November 4, 2021, requesting the CPUC clarify the scope of issues in this proceeding. The November 12, 2021, Ruling clarified the CPUC’s intent to consider a range of PSPS methodologies, which may be proposed by both the IOUs and other parties. It provided that parties may conduct additional discovery to support their proposal of a reasonable alternative PSPS methodology. The CPUC will consider a PSPS methodology that includes unrealized generation-related volumetric sales and revenues, along with the joint IOU proposal and potentially other PSPS methodologies
Details: The Joint IOUs’ recommendations to adopt their common methodology for calculating unrealized revenue from end-use customers de-energized during PSPS events were determined to be reasonable and approval was recommended in the Joint Case Management Statement.
Previously, the CCA Parties’ testimony identified all retail rate components that should be considered to provide a full accounting of the unrealized retail revenue during PSPS events. The testimony also described how, absent a ratemaking remedy, the IOUs will fully recover their authorized revenue requirement from all customers, including those receiving no electricity service during PSPS events, through pre-established balancing account mechanisms. The CCA Parties also explained the potential impact of PSPS events on wholesale generation revenue and the need to account any such reductions if generation resources are forced offline due to PSPS events.
The CCA Parties made recommendations on the following issues which remain in dispute per the Joint Case Management Statement:
• The calculation of unrealized retail revenue during PSPS events should include additional CPUC-jurisdictional rate components tied to balancing accounts that record IOU costs incurred despite lost sales to end use customers.
• Each IOU should make a full accounting of the balancing accounts implicated by the total unrealized retail revenue.
• Unrealized wholesale generation revenue should be quantified if utility-owned generation resources, or contracts with take-or-pay provisions, are forced out of service due to a PSPS event.
42 25
• Each IOU should record adjusting entries to affected balancing accounts, equal to the unrealized retail and wholesale generation revenue as applicable, to comply with the Commission’s directive to “forgo collection in rates from customers of all authorized revenue requirement equal to estimated unrealized volumetric sales and unrealized revenue resulting from PSPS events.”
TURN also filed testimony recommending that all revenue requirements from retail sales be disallowed.
Analysis: Phase 2 of the proceeding is assessing whether PG&E should be required to return its revenue requirement associated with unrealized sales associated with its 2019 PSPS events, and the methodology and inputs for calculating such a disallowance. VCE’s customers could benefit from such a CPUC-determined disallowance, e.g., via a bill credit or reduced PG&E charges.
Next Steps: There is no current procedural schedule for the proceeding.
Additional Information: Amended Procedural Schedule (April 6, 2022); Joint Case Management Statement (February 25, 2022); Order Denying Rehearing of D.21-07-018 and PG&E’s application for rehearing of D.21-07-013 (December 3, 2021); Ruling consolidating ERRA compliance proceedings (September 7, 2021); PG&E Application for Rehearing of D.21-07-013 (August 16, 2021); D.21-07-013 resolving Phase 1 (July 16, 2021); Joint Motion to Adopt Settlement Agreement (October 22, 2020); Amended Scoping Memo and Ruling (August 14, 2020); Scoping Memo and Ruling (June 19, 2020); PG&E’s Application and Testimony (February 28, 2020); Docket No. A.20- 02-009.
Utility Safety Culture Assessments
No updates this month.
Background: IOU safety culture assessments are required as part of AB 1054 and SB 901. AB 1054 directed the CPUC’s Wildfire Safety Division, now the Office of Energy Infrastructure Safety, to conduct annual safety culture assessments of each electrical corporation that are specific to wildfire safety efforts and include a workforce survey, organizational self-assessment, supporting documentation, and interviews. SB 901 directed the CPUC to establish a safety culture assessment for each electrical corporation that is conducted by an independent third-party evaluator at least every five years. This proceeding will implement the statutory requirements of SB 901 relating to the Commission’s assessment of safety culture for regulated utilities, examine what methodologies should be employed in the safety culture assessments to ensure results are comparable across IOUs and can measure changes in IOU safety culture over time, consider requiring that IOUs implement specific safety management practices to improve safety culture through adoption of a Safety Management System standard, consider adopting a maturity model to use in safety culture assessments, and determine accountability metrics.
The April 28 Scoping Ruling divided the proceeding into multiple phases and established the scope for Phase 1 to focus on developing safety culture assessments for the large investor-owned electric and natural gas corporations, while Phase 2 will focus on developing safety culture assessments for the small multi-jurisdiction utilities and the gas storage operators.
Phase 1 issues to be determined or considered include defining “safety culture”, the design of an inclusive and collaborative framework for conducting safety culture assessments focused on actual safety improvement, creating metrics and methodologies to evaluate the efficacy of the safety culture assessment process, and procedural matters related to the Phase 1 process timeframe, management, and coordination with other ongoing safety-related initiatives. 43 26
Details: N/A
Analysis: This rulemaking will assess the safety culture of PG&E and other IOUs in California. It could impact VCE and its customers to the extent it succeeds or fails to influence PG&E’s safety culture and hence the safety of VCE customers. It could also impact the rates VCE customers pay to PG&E to mitigate or address safety issues (e.g., wildfires caused by PG&E transmission equipment; explosions from PG&E natural gas infrastructure, etc.).
Next Steps: A series of Technical Working Group meetings will be held in July 2022, followed by a Staff Proposal in August 2022.
• July 2022: Safety Policy Division Technical Working Group Meetings #3 and #4 • TBD: All Party Consensus Workshop on Technical Working Group Topics • August 2022: ALJ Ruling issuing Safety Policy Division Staff Proposal for Conducting Safety Culture Assessments and the Maturity Model for the Large Investor-Owned Electric and Natural Gas Corporations
• September 2022: Safety Policy Division Workshop on Staff Proposal • October 2022: Opening Comments on Staff Proposal
• November 2022: Reply Comments on Staff Proposal
Additional Information: CPUC Safety Culture and Governance webpage; Scoping Ruling with procedural schedule (April 28, 2022); Webinar recording of the workshop (March 11, 2022); Order Instituting Rulemaking (October 7, 2021); Docket No. R.21-10-001. 2022-2023 Wildfire Fund Nonbypassable Charge Rulemaking No updates this month.
Next Steps: The Department of Water Resources will issue a notice in September 2022 identifying the amount they calculate will be needed for the 2023 Wildfire Fund NBC.
Glossary of Acronyms
AB Assembly Bill
AET Annual Electric True-up
ALJ Administrative Law Judge
BEV Business Electric Vehicle
BTM Behind the Meter
CAISO California Independent System Operator
CAM Cost Allocation Mechanism
CARB California Air Resources Board
CEC California Energy Commission
CPE Central Procurement Entity
CPUC California Public Utilities Commission
44 27
CPCN Certificate of Public Convenience and Necessity
DA Direct Access
ELCC Effective Load Carrying Capacity
ERRA Energy Resource and Recovery Account
GRC General Rate Case
IEPR Integrated Energy Policy Report
IFOM In Front of the Meter
IRP Integrated Resource Plan
IOU Investor-Owned Utility
LSE Load-Serving Entity
MCC Maximum Cumulative Capacity
OII Order Instituting Investigation
OIR Order Instituting Rulemaking
PABA Portfolio Allocation Balancing Account
PFM Petition for Modification
PCIA Power Charge Indifference Adjustment
POLR Provider of Last Resort
PSPS Public Safety Power Shutoff
PUBA PCIA Undercollection Balancing Account
PURPA Public Utility Regulatory Policies Act of 1978 (federal) QC Qualifying Capacity
QF Qualifying Facility under PURPA
RA Resource Adequacy
ReMAT Renewable Market Adjusting Tariff
RPS Renewables Portfolio Standard
TOU Time of Use
TURN The Utility Reform Network
UOG Utility-Owned Generation
WMP Wildfire Mitigation Plan
WSD Wildfire Safety Division (CPUC)
45 Item 10
VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 10
TO: Board of Directors
FROM: Alisa Lembke, Board Clerk / Administrative Analyst SUBJECT: Community Advisory Committee June 23, 2022 Meeting Summary DATE: July 14, 2022
This report summarizes the Community Advisory Committee’s meeting held via Zoom webinar on Thursday, June 23, 2022.
A. Reviewed and considered recommendation on draft Customer Rate structure. This item was brought to the CAC after feedback was provided to Staff on a draft rate structure. Staff were seeking additional feedback, comments and a recommendation to the Board. Staff provided a brief background and highlighted updates made to the draft customer rate / product options. Staff incorporated into the updated rate/product options information on product differentiation, highlights of base green option, marketing framework and organizational cost/benefits. Staff and the CAC discussed the carbon free percentage and the benefits of the Base Green option, talking points and messaging about the options to customers, rate setting, maintenance of renewable content and low greenhouse gas (Ghg), and rate options for Net Energy Metering (NEM) customers. The CAC recommended that the Board adopt the following:
1. adopt a new rate structure with three customer options starting in 2023: (1) Standard Green (default) and (2) UltraGreen (100% renewable) with rates based on cost-recovery and (3) Base Green option with rates at or below PG&E rates on a total bill comparison; and,
2. automatically enroll California Alternative Rates for Energy (CARE) and Family Electric Rates Assistance (FERA) customers in the Base Green option as described in the staff report. CARE/FERA customers will not have access to the Customer Dividend program but will retain access to all other programs. (10-0-0) B. Received and considered recommendation to the Board to participate in California Community Power Joint Powers Authority (CC Power) geothermal projects: A) Ormat Nevada Inc. and B) Open Mountain Energy, LLC. Staff provided an overview of two CC Power geothermal projects. After a brief discussion, the CAC recommended that VCE participate in the CC Power geothermal projects: A) Ormat Nevada Inc. (Ormat) Portfolio of Geothermal Projects and B) Open Mountain Energy LLC., Fish Lake Geothermal (OME). (10-0-0)
C. Long Range Calendar update. The CAC have cancelled their July 28, 2022 meeting and will resume their regular meeting schedule on Thursday, August 25, 2022. 46 1
Item 12
VALLEY CLEAN ENERGY ALLIANCE
Staff Report - Item 12
TO: Board of Directors
FROM: Mitch Sears, Executive Officer
Rebecca Boyles, Director of Customer Care and Marketing SUBJECT: SACOG Grant - Electrify Yolo Update
DATE: July 14, 2022
RECOMMENDATION
Informational item. The purpose of this report is to give an update on the status of the Electrify Yolo (SACOG grant) project.
BACKGROUND
In December 2018, the Sacramento Area Council of Governments (SACOG) authorized the award of a Green Region grant in the amount of $2,912,000, representing the regional “Electrify Yolo” project, with the purpose of installing publicly accessible electric vehicle (EV) charging stations. The City of Davis distributed funds to each entity once the Memoranda of Understanding (MOUs) were approved by each jurisdiction. All projects are to be finished by December 31, 2023.
UPDATE
As shown in the attached progress reports each jurisdiction is making progress toward meeting its obligations under the grant. All MOUs were signed (Davis, VCE/Winters, Woodland, unincorporated Yolo County) as of April 2021, and some EV charger installation projects have begun, and some are finished. Staff does note that EV charger installations have been subject to some delays including impacts from the COVID-19 pandemic and staffing shortages, as well as materials prices rising more than anticipated.
VCE Staff is working with each jurisdiction to design banners to be hung at each charging station with logos of all project partners, as well as permanent aluminum signs. Temporary banners will inform members of the public that there will be EV chargers coming soon in that location and aim to increase the public’s brand association with VCE and electric vehicles. Banners have been hung in Winters at the Community Center charging stations, as well as a permanent aluminum sign.
ATTACHMENTS:
1. Annual Report on SACOG Green Region Grant July 2022
2. VCE SACOG Progress Report Winters - June 2022
3. VCE SACOG Progress Report Yolo - June 2022
4. VCE SACOG Progress Report Woodland – June 2022
47 Status Report
DATE: June 29, 2022
TO: Sacramento Area Council of Governments (SACOG)
FROM: Stan Gryczko, Director, Public Works Utilities and Operations SUBJECT: Annual Reporting for the Electrify Yolo Project (FY 21/22) - SACOG 2018 Green Region Grant
Background
The City of Davis as the lead agency, per the fund exchange agreement between SACOG and the City of Davis City Council, is providing the following update on behalf of the regional partners, Valley Clean Energy (VCE), City of Woodland, and Yolo County.
The total award of $2,912,000 is divided among the Cities/Partners as follows:
• City of Davis $1,912,000
• Yolo County $700,000
• City of Woodland $150,000
• City of Winters/VCE $150,000
The project goals include:
• 15-40 Level 2 chargers
• 2-5 DC Fast Chargers
• 2-10 Mobile Chargers
• Purchase or Lease of One or More Electric Vehicles
Partner Updates
City of Davis:
Work completed:
As reported previously, the City entered into an agreement with Frontier Energy, Inc. to provide analysis and design of the City’s portion of the EV Charging project. Over the past year the analysis and drafting of the report included multiple discussions with the Natural Resources Commission and community input. The report was approved by the Davis City Council on June 28. Immediate next steps include design and construction of electrical improvements to install chargers intended to meet the fund exchange agreement commitments. Five sites have been chosen for the initial installations. 48 Included in the report are additional sites with potential for installation of chargers. The City will continue to study these additional locations, with community input, and pursue additional infrastructure after implementation of this initial effort. The sites under design now should be in construction by the end of 2022.
Valley Clean Energy/City of Winters:
Work completed:
• Two level 2 chargers installed at the community center. Became operational September 2021.
• One level 2 and one DC charger purchased for the parking lot at First/Abbey.
Installation is pending coordination with PGE associated with Rule 20A.
Anticipated completion by August 2022.
City of Woodland:
Work completed:
Woodland has completed site selection and received information from PG&E regarding necessary supply upgrades. Design, permitting, and material ordering should begin shortly with an anticipated installation by the end of 2022.
Yolo County:
Work completed:
Three sites have been selected for charger installation with two sites in Woodland and one in Davis. Currently, the two sites in Woodland are being designed and permitted. The site in Davis requires coordination with the property owner and should begin the process of installation in the near future.
In addition to the traditional sites, County staff continues to look at deploying mobile chargers. The mobile chargers are solar powered and can be placed in the rural parts of the county to help understand the need and utilization. Being mobile, the mobile charges can be moved around to the various communities and see where the County may have need for a more permanent solution.
Overall Project Status
It is anticipated that the projects will be completed by each partner agency and the fund exchange agreement terms will be met prior to the deadline of December 31, 2023. 49 318 First Street
Winters, CA 95694
Phone.530.795.4910
Fax. 530.795.4935
COU NCIL ME MBERS
Ha ro ld Anderso n
J esse Lo ren
Pierre Neu
MAYO R
Wa de Co wa n
MAYO R PR O TEM
Bill Biasi
CITY CLERK
Ashley Bussa r t
CITY TRE AS URER
Shelly Gun by
CITY M AN AGER
Ka thleen Sa lg uero Trepa
1. Project Summary - Install car charging stations at Community Center and City parking lot.
2. Project Manager – Eric Lucero
3. Site (s) Description – Winter Community Center and city parking lot at First and Abbey.
4. Site information (Maps, Pictures, Etc.) Attached
5. Description of any material planned changes to the Project. - None
6. Table schedule showing progress on achieving each of the Milestones. – See below
7. Summary of activities during the previous calendar quarter or month. - No activities this quarter
8. Forecast of activities scheduled for the current calendar quarter. - No activities planned
9. Written descriptions about the progress relative to Milestones, including whether the milestone has been met or is on target to meet the Milestones
10. List of issues that are reasonably likely to affect Milestones. – PG&E Rule 20A utility project
11. A status report of activities, including a forecast of ongoing activities, information on project performance, and projections for the next twelve (12) months. Attached
12. Progress and schedule of all material agreements, contracts, permits, approvals, technical studies, financing agreements, and purchase orders showing the start dates, completion dates, and completion percentages. Attached
Dashboard
Site Selection Contract
Award Permits Installation Testing Go Live
Completed Completed Completed In Progress 50% 50%
TABLE 1
Milestone
Description Status % Completion
Estimated
Completion
Date
Notes
Community
Center charging
stations are
complete and in
operation
Complete 100% 9-23-2021 Chargers have
been in
operation since
September
First & Abbey
Street charging
stations are on
hold waiting for
On Hold 10% 7-21-2022 Chargers and
materials have
been purchased
50 318 First Street
Winters, CA 95694
Phone.530.795.4910
Fax. 530.795.4935
COU NCIL ME MBERS
Ha ro ld Anderso n
J esse Lo ren
Pierre Neu
MAYO R
Wa de Co wa n
MAYO R PR O TEM
Bill Biasi
CITY CLERK
Ashley Bussa r t
CITY TRE AS URER
Shelly Gun by
CITY M AN AGER
Ka thleen Sa lg uero Trepa
PG&E Rule 20A
project to
underground
power.
Overview of Charger Locations
Winters Community Center Operational Chargers with permanent aluminum sign and temporary banner
51 318 First Street
Winters, CA 95694
Phone.530.795.4910
Fax. 530.795.4935
COU NCIL ME MBERS
Ha ro ld Anderso n
J esse Lo ren
Pierre Neu
MAYO R
Wa de Co wa n
MAYO R PR O TEM
Bill Biasi
CITY CLERK
Ashley Bussa r t
CITY TRE AS URER
Shelly Gun by
CITY M AN AGER
Ka thleen Sa lg uero Trepa
Photo of 1st & Abbey Parking Lot Charger Locations
52 VALLEY CLEAN ENERGY
SACOG GRANT
JUNE 2022 PROGRESS REPORT FOR CITY OF WOODLAND
1. Project Summary
The City of Woodland was apportioned $150,000 to install at minimum two Level 2 EV charging stations in Woodland that are accessible to the public.
2. Project Manager
Rosie Ledesma, Environmental Resource Analyst, Community Development Department
3. Site (s) Description
City of Woodland public parking lot near 430-434 College St, Woodland CA 95695.
4. Site information (Maps, Pictures, Etc.)
June: See updated site map.
5. Description of any material planned changes to the Project.
N/A
6. Table schedule showing progress on achieving each of the Milestones See Table 1 below.
7. Summary of activities during the previous calendar quarter or month.
June: Received response from PG&E regarding supply upgrade and location. Finalized installation locations and updated budget. Re-appropriated funds to special energy account.
Researched alternative charging stations.
8. Forecast of activities scheduled for the current calendar quarter June: Continue designing engineering plan and submitting permit requirements. Order supplies for initial groundwork. Potentially begin ground work and EV charging station orders via the City’s Electrical Division of Public Works.
9. Written descriptions about the progress relative to Milestones, including whether the milestone has been met or is on target to meet the Milestones
June: We are currently making progress on the milestones that we can control. Meeting our target for the installation and finalization will depend on PG&E’s progress on the power supply upgrade.
10. List of issues that are reasonably likely to affect Milestones June: We continue to see increased costs for materials. In addition, much of our work is based on PG&E’s schedule for the power supply upgrade.
53 VALLEY CLEAN ENERGY
SACOG GRANT
JUNE 2022 PROGRESS REPORT FOR CITY OF WOODLAND
11. A status report of activities, including a forecast of ongoing activities, information on project performance, and projections for the next twelve (12) months.
N/A
12. Progress and schedule of all material agreements, contracts, permits, approvals, technical studies, financing agreements, and purchase orders showing the start dates, completion dates, and completion percentages.
N/A
13. Pictures, in sufficient quantity and of appropriate detail, document the Project's progress.
N/A
14. Workforce Development or Supplier Diversity Reporting (if applicable) N/A
15. Any other documentation to be included for Board Update Dashboard
Site Selection Contract
Award Permits Installation Testing Go Live
In progress N/A In Progress
DASHBOARD KEY
Completed IN PROGRESS DELAYED ON HOLD
TABLE 1
Milestone
Description Status % Completion
Estimated
Completion
Date
Notes
Site selection and
feasibility
Completed 95% June 2022
Power supply
upgrade
In progress 30% Fall 2022
Charging station
orders
In progress 10% Summer 2022
Groundwork prep
and installation
In progress 5% Summer 2022
54 VALLEY CLEAN ENERGY
SACOG GRANT
JUNE 2022 PROGRESS REPORT FOR CITY OF WOODLAND
Charging station
installation
0% Fall 2022
Charging station
payment policy
0% Fall 2022
55 VALLEY CLEAN ENERGY
SACOG GRANT
PROGRESS REPORT – YOLO COUNTY JUNE 2022
• Project Summary
Install EV charging stations throught Yolo County that are accessible to the pubic • Project Manager
Mike Martinez, IT & Projects Manager, County Of Yolo General Services Department • Site (s) Description
Various County owned properties in the cities of Woodland, Davis, and Winters • Site 1: 137 N Cottonwood St, Woodland, California 95695 Bauer Building 2-Dual Charging Stations
• Site 2: 25 N. Cottonwood Street Woodland, CA 95695 Gonzalez Building 2-Dual Charging Stations
• Site 3: 315 E 14th St, Davis, CA 95616 Mary L. Stephens Davis Branch Library 1-Dual Charging Station
• Summary of activities during the previous calendar quarter or month. • Finishing up the design process for the station at 137 N Cottonwood St. and 25 N Cottonwood St. in Woodland.
o Next steps: permitting and installation
• Delay on the stations at the Davis Branch Library (315 E 14th St, Davis) due to question about land ownership
o Next step: reach out to landowner to secure permission to install chargers • Forecast of activities scheduled for the current calendar quarter • Start conversation with Contractor and Department of Community Services for permitting • Follow-up on 600A and Winters Community Library site
• List of issues that are reasonably likely to affect Milestones Design and permitting issues may cause delays
Dashboard
Site Selection Contract
Award Permits Installation Testing Go Live
Completed Completed –
for 3 sites
IN PROGRESS
DASHBOARD KEY
Completed IN PROGRESS DELAYED ON HOLD
56 Item 13
VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 13
______________________________________________________________________________ TO: Board of Directors
FROM: Mitch Sears, Executive Officer
Edward Burnham, Finance and Operations Director
SUBJECT: Consultant Donald Dame Contract extension and increase not to exceed amount
DATE: July 14, 2022
RECOMMENDATION
Approve a contract extension of consulting services of Donald Dame for the time period of July 1, 2022 through December 31, 2022 and increase the not to exceed amount by $5,000 for a new not to exceed amount of $25,000.
BACKGROUND & DISCUSSION
Donald Dame has provided professional consulting services for VCE since pre-launch in 2018. He continues to provide consulting services related to enterprise risk management, electric utility analysis, and program implementation assistance among other related activities. In addition, during 2020/21 and most recently in the new budget year (2022), Mr. Dame assisted VCE with the analysis of the potential acquisition of PG&E’s local electricity distribution system and related PG&E bankruptcy matters.
In April 2021, the Board extended Don Dame’s contract through June 30, 2022 with a not to exceed amount of $20,000. As of May 2022, approximately $6,612 remains in the $20,000 not to exceed amount. Average spending on this contract over the past 13 months is $719 per month. Due to his experience in the utility sector and deep knowledge of VCE, staff is recommending a six month contract extension until December 31, 2022 and increase the not to exceed amount by $5,000 for a new not to exceed amount of $25,000.
57 Item 14
1 VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 14
To: Board of Directors
From: Rebecca Boyles, Director of Customer Care & Marketing Subject: Receive signed Amendment 4 to Jim Parks Agreement for Consultant Services extending contract six (6) months and increasing the not to exceed amount Date: July 22, 2022
______________________________________________________________________________
RECOMMENDATION
Receive copy of signed Amendment 4 to Jim Parks Agreement for Consultant Services extending the contract six (6) months for a new expiration date of December 31, 2022 and increase the not to exceed amount by $28,750 for a new not to exceed amount of $46,750.
BACKGROUND
On June 29, 2020, VCE entered into an agreement for consultant services with James Parks to provide transitional director duties, including SACOG grant and other program activities, with the new Director of Customer Care and Marketing Rebecca Boyles. The agreement was for a not to exceed amount of $10,000 and was set to expire on December 31, 2020.
In December 2020, Amendment 1 to the agreement was signed expanding the tasks to include key account services and extending the contract through December 31, 2021. In July 2021, Amendment 2 to the agreement was signed to increase the not to exceed amount by $8,000 for a new not to exceed amount of $18,000. In December 2021, Amendment 3 extended the expiration date to June 30, 2022.
Mr. Parks continues to provide assistance to Staff with key account services for designated commercial, industrial, and agricultural customer outreach and programmatic work for the SACOG grant. Additionally, staff may rely on Mr. Parks for programmatic support for two newly approved programs – the Heat Pump Pilot Program, and the EV Rebate Program.
Through March 2022, a total of $12,275 has been expended of the not to exceed amount of $18,000 leaving $5,725 remaining. Amendment 4 extends the expiration date of June 30, 2022 by six (6) months for a new expiration date of December 31, 2022 and increases the not to exceed amount by $28,750 for a new not to exceed amount of $46,750.
Attachments
1. Amendment 4 to the Jim Parks Agreement for Consultant Services
2. Exhibit C – Schedule of Services
3. Exhibit D - Payment
58 VCE —#4 Amendment - Jim Parks
FOURTH AMENDMENT
TO THE AGREEMENT FOR CONSULTANT SERVICES
BETWEEN
VALLEY CLEAN ENERGY ALLIANCE
AND
JIM PARKS
1. Parties and Date.
This Fourth Amendment to the Consultant Services Agreement (“#3 Amendment”), is made and entered into as of this 14th day of June 2022, by and between Valley Clean Energy Alliance, a Joint Powers Agency, existing under the laws of the State of California with its principal place of business at 604 2nd Street, Davis, California 95616 (“VCE”) and Consultant, Jim Parks, with its principal place of business at 4478 G Street, Sacramento, California 95819 (“Jim Parks”). VCE and Jim Parks are sometimes individually referred to as “Party” and collectively as “Parties.” Recitals.
1. On June 29, 2020 VCE and Jim Parks entered into an “Agreement for Consultant Services”, for the purpose of retaining Jim Parks to provide the services described in Exhibit A of the Agreement. The Agreement was for a term of six (6) months and a total amount not to exceed $10,000.
2. On December 28, 2021 Interim General Manager signed Amendment One (1), extending the term for one year, for a new expiration date of December 31, 2021, and expanding tasks to include key account services. On June 29, 2021 Interim General Manager signed Amendment Two (2), increasing the not to exceed amount by $8,000 for a new not to exceed amount of $18,000.
On December 29, 2021, Interim General Manager signed Amendment Three (3), extending the term for six (6) months, for a new expiration date of June 30, 2022.
3. VCE and Jim Parks now desire to further amend the Agreement to extend the term by six (6) months, through December 31, 2022, and increase the not to exceed amount by $28,750 for a total amount not to exceed $46,750.
Now therefore, for good and valuable consideration, the amount and sufficiency of which is hereby acknowledged, the Parties agree as follows:
59 VCE —#4 Amendment - Jim Parks
3.1 Section 1.4 Term of the Agreement is hereby amended in its entirety to read as follows:
1.4 Term. The term of this Agreement, which began on June 29, 2020, shall end on December 31, 2022 unless amended as provided in this Agreement, or when terminated as provided in Article 5.
3.2 Section 4.1 Compensation of the Agreement is hereby amended in its entirety to read as follows:
4.1 Compensation. This is a “time and materials” based agreement. Consultant shall receive compensation, including authorized reimbursements, for Services rendered under this Agreement at the rates, in the amounts and at the times set forth in Exhibit D. Notwithstanding the provisions of Exhibit D, Amendment Four (4) will add Twenty-eight Thousand Seven Hundred Fifty Dollars ($28,750) to Amendment Two (2) not to exceed amount of Eighteen Thousand Dollars ($18,000) total compensation for a new not to exceed amount of Forty-six Thousand Seven Hundred Fifty Dollars ($46,750) without written approval of VCE. Extra Work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this Agreement.
2. Exhibit C – Schedule of Services is hereby replaced in its entirety by Exhibit C – Schedule of Services and Exhibit D – Payment is hereby replaced in its entirety by Exhibit D – Payment attached hereto.
3. Except as amended by this #4 Amendment, all other provisions of the Agreement will remain in full force and effect.
4. If any portion of this #4 Amendment is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.
[Signatures on Next Page]
60 61
EXHIBIT C
SCHEDULE OF SERVICES
The scope of this contract commences on June 29, 2020 to expire on December 31, 2022. The Agreement and the schedule may be extended by mutual agreement in writing by both parties. 62 83588.00003\32367974.1
EXHIBIT D
PAYMENT
The Scope of Work shall be performed on an individual task, consulting time, travel time, materials, and actual direct expense basis with work assigned as needed.
Designated Employees and Rates:
Professional/Title Hourly Consulting Rate
James Parks $100.00 per hour
Other Applicable Reimbursement Rates:
Particulars Rate
Air Travel Time $50.00 / hour
Auto Travel Time (one hour or more) $50.00 / hour
Auto Mileage Rate (or current IRS reimbursement rate) $0.58 / mile Actual Direct Expenses (Receipts required above $25.00) Actual Expense Phone/postage/printing/office materials No Charge
Amendment Two (2) to the agreement will add $8,000 to the $10,000 (original agreement amount) for a new “Total Not to Exceed Amount” of: $18,000.00 unless amended by written agreement of both parties.
Amendment Four (4) to the agreement will $28,750 to the $18,000 not to exceed amount, for a new “Total Not To Exceed Amount” of $46,750 unless amended by written agreement of both parties.
63 Item 15
VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 15
____________________________________________________________________________________ TO: Board of Directors
FROM: Gordon Samuel, Assistant General Manager & Director of Power Services SUBJECT: Ratify services agreement with First Principles Advisory, LLC for Integrated Resource Planning Portfolio Modeling
DATE: July 14, 2022
RECOMMENDATION
Ratify signed agreement with First Principles Advisory for Integrated Resource Planning (IRP) portfolio modeling services for an amount not to exceed $33,750 for a term July 1, 2022 expiring December 1, 2022.
BACKGROUND
VCE was required by the California Public Utilities Commission (CPUC) to prepare an IRP for the supply of energy in the period from 2020 to 2030. The objective of the IRP is to provide guidance for VCEA’s Board, executive management, and the public regarding the expected power supply cost and the resources needed for meeting electric demand in the 2020-2030 period. VCE submitted VCE’s first IRP and associated Action Plan to the CPUC on August 1, 2018. The IRP process calls for an update every two years with the update originally due May 1, 2020; however, due to the COVID-19 pandemic, the CPUC extended the due date twice with a final due date of September 1, 2020. VCE submitted their update to the CPUC on September 1, 2020. The next two year update of the IRP is due to the CPUC on November 1, 2022.
Historically, SMUD has assisted VCE by performing portfolio modeling to be included in VCE’s two year IRP update with the assistance of VCE’s regulatory legal counsel Keyes & Fox who finalizes and submits the update to the CPUC. Assistance elsewhere was needed to prepare portfolio modeling. As a result, VCE advertised a Request for Proposal for IRP portfolio modeling services on May 5, 2022 with a due date of May 27, 2022. Proposals were received and negotiations with First Principles Advisory to perform the work occurred. After review by VCE’s general legal counsel Richards, Watson, & Gershon, Executive Officer Mitch Sears signed the agreement attached.
NEXT STEPS
The scope of work is to take place over the next five (5) months with periodic updates being provided to both the Board and the Community Advisory Committee (CAC). The final report is anticipated to be available and presented in late quarter 3 or early quarter 4 of 2022. 64 2
CONCLUSION
Staff is recommending that the Board ratify via resolution agreement with First Principles Advisory for Integrated Resource Planning (IRP) portfolio modeling services for an amount not to exceed $33,750 for a term July 1, 2022 expiring December 1, 2022.
ATTACHMENTS
1. RFP for consulting services
2. Agreement between VCE and First Principles Advisory, LLC
3. Resolution 2022-XXX
65 VALLEY CLEAN ENERGY RFP NO. 2022IRP
RFP 2022IRP 1
Valley Clean Energy Alliance
604 2nd Street, Davis, California 95616
Phone: (530) 446-2750
REQUEST FOR PROPOSALS
FOR
2022 Integrated Resource Plan Portfolio Modeling
PROPOSALS ARE DUE:
Friday, May 27, 2022 BY 4:00 P.M. (Pacific Daylight Time) Proposals must be e-mailed in PDF form to [email protected] with any preliminary redlines to VCE Sample Agreement
Valley Clean Energy Alliance is a Joint Powers Authority consisting of the Cities of Davis, Woodland, and Winters and the County of Yolo. 66 VALLEY CLEAN ENERGY RFP NO. 2022IRP
RFP 2022IRP 2
Scope of Services
2022 IRP Modeling
I. INTRODUCTION
Valley Clean Energy (VCE) is seeking a qualified consultant (Contractor) to provide system modeling and technical support that will be used in the 2022 Integrated Resource Plan (IRP) process at the California Public Utilities Commission (CPUC).
The successful proposal submittal must demonstrate that the Contractor has the appropriate professional and technical background to fulfill the scope of work. The contractor must have expertise in electric system modeling and a proven ability to update, maintain, and run such models.
The chief use of this production cost modeling is in the context of the CPUC’s IRP proceeding, although VCE reserves the right to request modeling for other proceedings where modeling is relevant, such as Resource Adequacy (RA).
II. BACKGROUND
2.1 VCE is a joint powers authority providing a state-authorized Community Choice Energy (CCE) program. Participating VCE governments include the City of Davis, the City of Woodland, the City of Winters and the unincorporated areas of Yolo County. PG&E continues to deliver the electricity procured by VCE and to perform billing, metering, and other electric distribution utility functions and services. Customers within the participating jurisdictions have the choice not to participate in the VCE program.
2.2 Since VCE started serving load in June 2018, VCE has added resources under long term contracts and is gradually building up a portfolio of short and long term assets in line with its vision and the demand of its customers. To date, VCE has relied mainly on market purchases of energy, RA, and Renewable Energy Credits (RECs) in order to serve its electric demand and meet regulatory requirements with respect to RA and renewable energy. VCE has since contracted for solar, solar plus energy storage, standalone energy storage, and demand response resources.
III. DETAILED SCOPE OF WORK
The scope of work for this project includes the following:
• Compile and maintain electric system model database from public sources where possible, including:
o Generator list and specifications, including heat rates, outages, retirement dates, etc.
o Transmission constraints
o Load Data
o Weather Data
67 VALLEY CLEAN ENERGY RFP NO. 2022IRP
RFP 2022IRP 3
• Provide and update written documentation of model assumptions and logic as requested
• Integrate CPUC’s Preferred System Portfolios (PSPs) into system model once they become available on or around June 15, 2022, along with other modeling requirements known as Inputs & Assumptions (I&A) such as Effective Load Carrying Capacity (ELCC) values for different resources
• Integrate VCE’s load from the CEC’s 2021 IEPR forecast (Mid Baseline – [Additional Achievable Energy Efficiency] AAEE Scenario 3, [Additional Achievable Fuel Substitution] AAFS Scenario 3) Form 1.1c as modified by VCE (if applicable) into system model • Integrate VCE’s existing and planned portfolio into system model • Integrate Inputs & Assumptions to be determined by Astrape, E3, and CPUC Staff • Run system model to develop reliability assessment, decarbonization metrics, and cost analysis
o Compare PSPs to VCE’s existing and planned resources portfolio o Perform sensitivities and scenario analysis to identify possible emissions or cost savings
• Provide relevant data cleaning and analysis scripts to VCE staff as requested for review • Develop charts and graphs summarizing outputs to be used in the IRP Narrative as requested by VCE staff for use by VCE’s other consultants who will be writing the Narrative
• Coordinate and Timely Provide necessary graphs, charts, and data points with VCE staff and its other consultants for the purpose of completing all required IRP compliance files such as the Narrative, Resource Data Template, and Clean System Power Calculator • By July 11, 2022, Enter Data into Templates by filling out the Clean System Power Calculator and the Resource Data Template with data on RA, energy, load, criteria pollutants, energy contract information, and all other information from the model and from VCE staff to meet the compliance requirements of the PSPs and any requested alternative VCE portfolio (if applicable) and provide the templates to VCE staff and its other consultants for review, editing, and Narrative development • Develop Outline for the Reliability Section of the Narrative based on model outputs • Ensure Timely Preparation of all requirements for the November 1, 2022 due date IV. FEE SCHEDULE
Contractor shall provide a not to exceed lump sum price. If VCE modifies the scope and additional study work needs to be performed, Contractor shall provide a change order price before initiating the work.
V. PROPOSAL REQUIREMENTS
In order to be considered, all proposals must be submitted by the deadlines listed in the RFP schedule included herein. When completing the Contractor’s RFP response, Contractor must include the following detail:
• Background and experience of all staff involved in modeling, including:
68 VALLEY CLEAN ENERGY RFP NO. 2022IRP
RFP 2022IRP 4
o Name, position, and short biography of employee(s) responsible for providing this service
o Hourly rate
o Modeling / quantitative analysis expertise
• Description of the modeling tools used, including:
o Scope (CAISO/California/WECC)
o Time horizon (full year, multiple years, etc.).
o Granularity (daily, hourly, sub-hourly)
o Runtime (hours per model run, including min/max ranges depending on number of scenarios and any performance improvements that can be realized through running multiple scenarios in parallel)
o Any data or cloud services (AWS, etc.) used for storing data or improving performance.
o List and detailed description of model outputs (cost, emissions, reliability metrics, etc.), providing samples where relevant
o Granularity of outputs (generator level / balancing authority level) o System requirements for the model (Mac / Windows, which OS, RAM, etc.) o A description of how the model stores data for, and handles analysis of, multiple scenarios—i.e., how a user can run different scenarios without having to manually change the database every time
• Reports or presentations summarizing model results
• Experience with CPUC proceedings, especially an understanding of CPUC-jurisdictional load-serving entity IRP requirements, familiarity with the RESOLVE model, and the Clean System Power tool and Resource Data Template developed by E3 • The Contractor should affirm whether the model’s database is already “in-model,” or would have to be purchased separately, and provide relevant pricing data for access and maintenance
• Describe how the Contractor will adhere to anti-trust and collusion laws while providing this service to VCE
• Describe how the Contractor will avoid conflicts of interest with other power providers and/or regulatory bodies while providing this service to VCE • The Contractor should provide a project management plan with proposed dates and milestones
• Any preliminary redlines to the VCE Sample Contract should be provided with RFP response
VI. PROPOSAL EVALUATION
VCE will evaluate all proposals based on the following criteria:
• Experience with production cost models
• Staff qualifications
• Model specs
• Fee Schedule
• Project management plan with proposed dates and milestones 69 VALLEY CLEAN ENERGY RFP NO. 2022IRP
RFP 2022IRP 5
• Compliance with VCE Sample Contract
VCE may, or may not, negotiate contract terms with selected Contractor(s) prior to award, and expressly reserves the right to negotiate with several Contractors simultaneously and, thereafter, to award a contract to the Contractor(s) offering the most favorable terms.
Proposals submitted, therefore, should contain the Contractor’s most favorable terms and conditions, as the selection and tentative award may be made without further discussion with any Contractor.
VCE reserves the right to accept or reject any and all submitted proposals, to waive minor irregularities, modify services, and to request additional information or revisions to offers, and to negotiate with any or all Contractors at any stage of the evaluation.
VCE will not make a final contract award unless it is approved by its Board of Directors.
VII. CONTRACTOR MINIMUM QUALIFICATIONS
The proposals submitted in response to this RFP shall be evaluated for award based on the following criteria and weighting.
Item Criteria Description Weighting
Experience and Qualifications
1. Experience of firm
2. Resumes of staff designated to support this scope
3. CCA/Public Power/Energy experience
40%
Compliance with VCE Sample Contract 20%
Price 40%
Total 100%
7.1 Proposal Submittal Requirements
1. Ten pages maximum submitted electronically. Executive Summary with brief description of company including Firm or individual name and contact information, including e‐mail and website addresses, year organized, principals with the firm, types of work performed, number of employees.
2. Resumes of key staff that would work on VCE projects.
3. Information on any previous experience or services provided, including CCA experience. 70 VALLEY CLEAN ENERGY RFP NO. 2022IRP
RFP 2022IRP 6
4. Other factors or special considerations you feel would influence the selection of your proposal.
5. List of references and contact information.
6. Preliminary redlines to VCE Sample Contract (if any).
7.2 Miscellaneous
1. Additional Information
Scope of Services may be revised upon mutual agreement between the Contractor and VCE.
2. Ownership of Work Products
All notes, documents, and final products in all native formats (e.g., Word, Excel, PowerPoint, databases, handwritten notes) produced in the performance of this agreement shall be the property of VCE and shall not be shared with other entities without permission from VCE staff.
VIII. RFP Timeline
8.4 Instructions to Proposers
1. Time and Manner of Submission
The Proposal shall be submitted electronically to and received by VCE's office no later than 4:00 p.m. PDT on Friday, May 27, 2022.
Submit to:
Gordon Samuel, Assistant General Manager
Email: [email protected]
Use the subject line: “IRP Modeling Consulting Services” • Each proposal shall include the full business legal name, DBA, and address and shall be signed by an authorized official of the company. The name of each person signing the proposal shall be typed or printed below the signature. • All proposals submitted become the property of VCE.
2. Explanations to Proposers
All requests, questions or other communications regarding this RFP shall be made in writing to VCE via email no later than 4:00 p.m. PDT on Friday, May 20, 2022. Address all communications to Gordon Samuel ([email protected]). To ensure that written requests are received and answered in a timely manner, email correspondence is required. An FAQ response document will be posted on VCE’s RFP Website at https://valleycleanenergy.org/solicitations-rfp the week responses are due.
VCE will not be bound by any oral interpretation of the Request for Proposal, which may be made by any of its representatives or employees, unless such interpretations are subsequently issued in the form of an addendum to this Request for Proposal. 71 VALLEY CLEAN ENERGY RFP NO. 2022IRP
RFP 2022IRP 7
3. Withdrawal or Modification of Proposals
Proposals may be modified or withdrawn only by an electronic request received by VCE prior to the Request for Proposal due date.
4. Revisions and Supplements
Addenda: If it becomes necessary to revise or supplement any part of this Request for Proposal an addendum will be provided.
5. Proposal Evaluation and Selection Process
The proposals submitted shall be evaluated for award based on the criteria described in the “Proposal Requirements” section of this RFP.
VCE may request additional information from any or all Proposers after the initial evaluation of the proposals to clarify terms and conditions.
Based on VCE's review of the proposals received, a “short listed” group of Proposers may be selected. The “short listed’ firms may be required to make verbal presentations of their qualification to VCE. If a presentation is determined to be required, the presentation will be considered in the overall technical rating.
The contract will be awarded to the best-qualified Proposer, after price and other factors have been considered, provided that the proposal is reasonable and is in the best interests of VCE to accept it.
The right is reserved, as the interest of VCE may require, to reject any or all proposals and to waive any irregularity in the proposals received.
Within fourteen (14) calendar days after notice of award, the successful Proposer shall deliver to VCE the required insurance certificates as per section 3.10 of the sample contract and the signed copies of the contract. The contract forms will be forwarded to the Proposer with the award notification.
6. Duration of Contract
This contract shall be for one year, subject to approval by VCE's Board of Directors of the corresponding annual budget, unless otherwise mutually agreed upon in writing.
The Budget is subject to the approval of VCE's Board of Directors.
7. Qualifications of Proposers
VCE expressly reserves the right to reject any proposal if it determines that the business and technical organization, financial and other resources, or experience of the Proposer, compared to the work proposed justifies such rejection. 72 VALLEY CLEAN ENERGY RFP NO. 2022IRP
RFP 2022IRP 8
8. Proposal Preparation Costs
The costs of developing proposals are entirely the responsibility of the Proposer and shall not be charged in any manner to VCE.
9. Conflicts
If conflicts exist between the contract and the other elements of this Request for Proposal, the contract prevails. If conflict exists within the contract itself, the Terms and Conditions govern, followed by Scope of Services. If conflict exists between the contract and applicable Federal or State law, rule, regulation, order, or code; the law, rule, regulation, order, or code shall control. Varying levels of control between the Terms and Conditions, drawings and documents, laws, rules, regulations, orders, or codes are not deemed conflicts, and the most stringent requirement(s) shall control.
10. Manner and Time of Payment
Billing shall be submitted monthly with a detailed, itemized billing on a monthly basis in order to avoid any confusion of services provided.
11. Subcontractors
The Proposers must describe in their proposals the areas that they anticipate subcontracting to specialty firms. Identify the firms and describe how Proposer will manage these subcontracts.
Contractor will pay subcontractors in a timely manner.
Nothing contained in the Contract shall create any contractual relation between any subcontractor and VCE.
12. Notice Related to Proprietary/Confidential Data
Proposers are advised that the California Public Records Act (the “Act”, Government Code §§ 6250 et seq.) provides that any person may inspect or be provided a copy of any identifiable public record or document that is not exempted from disclosure by the express provisions of the Act. Each Proposer shall clearly identify any information within its submission that it intends to ask VCE to withhold as exempt under the Act.
Any information contained in a Proposer’s submission which the Proposer believes qualifies for exemption from public disclosure as "proprietary” or “confidential” must be identified as such at the time of first submission of the Proposer’s response to this RFP.
A failure to identify information contained in a Proposer’s submission to this RFP as "proprietary” or “confidential” shall constitute a waiver of Proposer’s right to object to the release of such information upon request under the Act. VCE favors full and open disclosure of all such records. VCE will not expend public funds defending claims for access to, inspection of, or to be provided copies of any such records. 73 VALLEY CLEAN ENERGY RFP NO. 2022IRP
RFP 2022IRP 9
13. Contract
VCE’s standard contract (Attachment A – sample contract) is included in the Sample Contract section of this Request for Proposal. VCE may reject proposals that contain exceptions to the Terms and Conditions included in the sample contract.
5.5 Performance Requirements
Performance Requirements/Acceptance Criteria
a. All Milestones shall be completed in accordance with approved schedule. b. Deliverable items must be complete, legible, comprehensible, and satisfy all requirements set forth in the scope of work.
5.6 Reference Documents
VCE will provide reference documents to aid in the preparation of RFP responses after execution of the non-disclosure agreement (NDA) – a sample NDA is attached as Attachment B.
5.7 Resource and Submittal Requirements
Contractor shall provide all resources required to complete the work described herein, including but not limited to skills, services, supervision, tools, documents, information, labor, materials, equipment, computing capability, transportation, and any other necessary item or expense to fulfill the work requirements.
74 VALLEY CLEAN ENERGY RFP NO. 2022IRP
RFP 2022IRP 10
ATTACHMENT A - SAMPLE CONTRACT
A SAMPLE CONTRACT IS ATTACHED HERETO.
SAMPLE CONTRACT INTENTIONALLY REMOVED
75 VALLEY CLEAN ENERGY RFP NO. 2022IRP
RFP 2022IRP 11
ATTACHMENT B – SAMPLE NON-DISCLOSURE AGREEMENT
A SAMPLE NON-DISCLOSURE AGREEMENT IS ATTACHED HERETO.
SAMPLE NON-DISCLOSURE AGREEMENT
INTENTIONALLY REMOVED
76 77
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86 July 6, 2022
87 88
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93 Item 15
1 VALLEY CLEAN ENERGY ALLIANCE
RESOLUTION NO. 2022- _______
A RESOLUTION OF THE BOARD OF DIRECTORS OF VALLEY CLEAN ENERGY ALLIANCE
RATIFYING AN AGREEMENT WITH FIRST PRINCIPLES ADVISORY, LLC FOR INTEGRATED
RESOURCE PLANNING PORTFOLIO MODELING SERVICES
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, WHEREAS, on May 5, 2022, a Request for Proposal (RFP) was released by VCE seeking proposals for Integrated Resource Planning (IRP) portfolio modeling services to assist in the two year update of the IRP to be submitted to the California Public Utilities Commission (CPUC); and, WHEREAS, VCE staff reviewed and evaluated the RFP responses; and WHEREAS, staff recommended to VCE’s Executive Officer that VCE enter into an agreement with First Principles Advisory, LLC (FPA) to prepare portfolio modeling services; and, WHEREAS, the Executive Officer signed the agreement with FPA effective July 1, 2022.
NOW, THEREFORE, the Board of Directors of the Valley Clean Energy Alliance resolves as follows:
1. Ratifies VCE entering into a services agreement with First Principles Advisory, LLC to prepare portfolio modeling services for VCE’s two year update of the Integrated Resource Plan, for an amount not to exceed $33,750 effective July 1, 2022 terminating December 1, 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, VCE Board Secretary
Attachment A: First Principles Advisory, LLC agreement
94 Item 15
2 ATTACHMENT A
INTEGRATED RESOURCE PLAN PORTFOLIO MODELING SERVICES AGREEMENT
WITH FIRST PRINCIPLES ADVISORY, LLC
95 Item 16
VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 16
To: Board of Directors
From: Mitch Sears, Executive Officer
Subject: Keyes & Fox – Fifth (5th) Amendment to Agreement extending contract and increase not to exceed amount
Date: July 14, 2022
______________________________________________________________________________
RECOMMENDATION
Adopt a resolution authorizing the Executive Officer, in consultation with VCE Legal Counsel, to execute an amendment extending VCE’s existing contract with Keyes & Fox LLP for regulatory compliance and advocacy legal services for 18 months and in an amount not to exceed $262,500.
BACKGROUND & DISCUSSION
The VCE Board has previously authorized the Executive Officer to execute a contract and subsequent contract extensions with Keyes & Fox LLP for legal services related to regulatory compliance and regulatory advocacy. The original contract expired December 31, 2018 with a not to exceed amount of $66,667. Subsequently, the following amendments were approved by the Board:
• Amendment 1: on January 23, 2019 (Resolution 2019-001) provided for a term starting January 1, 2019 expiring December 31, 2019 increasing the total amount not to exceed by an additional $142,600;
• Amendment 2: on February 13, 2020 (Resolution 2020-002) provided for a term starting January 1, 2020 expiring June 30, 2020 increasing the total amount not to exceed by an additional $88,300;
• Amendment 3: on June 11, 2020 (Resolution 2020-017) provided a term starting July 1, 2020 expiring June 30, 2021 increasing the total amount not to exceed by an additional $180,800; • Amendment 4: on June 10, 2021 (Resolution 2021-013) provided a term starting July 1, 2021 expiring June 30, 2022 increasing the total amount not to exceed by an additional $177,000. • Cumulatively, the Agreement to date (up to and including Amendment No. 4) provides that the total amount not to exceed is $655,367.
The Keyes & Fox contract provides the following scope of services: 1) determine and review regulatory compliance obligations, 2) support VCE staff as its expert regulatory resource and 3) review contracts between VCE and third parties.
In addition to services provided to VCE, Keyes & Fox provides regulatory counsel support to CalCCA and other CCA joint CPUC filings. Since a majority of VCE’s advocacy in proceedings before regulators has been through CalCCA since program launch in 2018, the need for substantial amount of regulatory advocacy for VCE by Keyes & Fox is anticipated to be limited 96 Item 16
at this time. However, VCE requires continued regulatory counsel support for CPUC filings and regulatory activities specific to VCE (e.g. Resource Adequacy filings, Integrated Resource Plan submissions, etc). The scope of Keyes & Fox work for VCE is similar to regulatory counsel work required by all individual CCA’s.
The recommended Fifth Amendment will extend the Keyes & Fox contract eighteen (18) months covering the time period of July 1, 2022 through December 31, 2023 and increase the not to exceed amount by an additional $287,500, for a total cumulative amount not to exceed of $942,867. Accordingly, Exhibits A – Scope of Services, C – Schedule of Services, and D – Payment have been updated. All other provisions remain unchanged.
FISCAL IMPACT
The costs associated with the Keyes & Fox contract extension are accounted for in VCE’s Calendar Year (CY) 2022 Budget and will be included in the proposed CY 2023 budget.
Costs for the Keyes & Fox contract extension is not to exceed $287,500 for the time period of July 1, 2022 through December 31, 2023 and is a time and materials-based agreement.
ATTACHMENTS
1. Resolution including the following exhibits:
a. Fifth (5
th) Amendment
b. Amended Exhibit A – Scope of Services
c. Amended Exhibit C – Schedule of Services
d. Amended Exhibit D - Payment
97 VALLEY CLEAN ENERGY ALLIANCE
RESOLUTION NO. 2022- ____
A RESOLUTION OF THE VALLEY CLEAN ENERGY ALLIANCE APPROVING FIFTH (5TH)
AMENDMENT TO THE KEYES & FOX LLP AGREEMENT FOR REGULATORY COMPLIANCE AND ADVOCACY LEGAL SERVICES AND AUTHORIZING VCE’S EXECUTIVE OFFICER TO
EXECUTE THE AMENDMENT
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,
WHEREAS, on June 26, 2018 an agreement was entered into between Valley Clean Energy and Keyes & Fox LLP to provide legal services related to regulatory compliance and regulatory advocacy in the amount not to exceed $66,667, expiring December 31, 2018; and WHEREAS, Keyes & Fox LLP also provides regulatory counsel support to CalCCA and other Community Choice Aggregators on joint California Public Utilities Commission filings; and WHEREAS, on January 23, 2019 Amendment One (1) to the Keyes & Fox LLP agreement was approved extending the term through December 31, 2019, refining the previous scope of services and budget for 2019, and increasing the total amount not to exceed by an additional $142,600; and,
WHEREAS, on February 13, 2020 Amendment Two (2) to the Keyes & Fox LLP agreement was approved extending the term through June 30, 2020 to align the contract from a calendar year to a fiscal year (July – June), increasing the total amount not to exceed by an additional $88,300, and updating the scope of work and budget consistent with the contract extension; and,
WHEREAS, on June 11, 2020 Amendment Three (3) to the Keys & Fox LLP agreement was approved extending the term through June 30, 2021, revising the scope of service, and increasing the total amount not to exceed by an additional $180,800; and, WHEREAS, on June 30, 2021 Amendment Four (4) to the Keyes & Fox LLP agreement was approved extending the term through June 30, 2022, revising the scope of services, and increasing the total amount not to exceed by an additional $177,000; and, 98 WHEREAS, Amendment Five (5) extends the Agreement for eighteen (18) months to expire on December 31, 2023 to align with the Budget Calendar Year 2023, revises the scope of services, and increases the total amount not to exceed by an additional $287,500, or a total cumulative amount not to exceed of $942,867.
NOW, THEREFORE, the Board of Directors of the Valley Clean Energy Alliance resolves as follows:
1. Authorizes the VCE Executive Officer, in consultation with VCE Legal General Counsel, to finalize, approve and execute on behalf of VCE the Fifth (5th) Amendment to the Keyes & Fox LLC Agreement for regulatory compliance and advocacy legal services attached hereto and incorporated herein extending agreement term for eighteen (18) months effective July 1, 2022 terminating December 31, 2023, and increasing the total amount not to exceed by an additional $287,500, for a total cumulative not to exceed amount of $942,867, and updating the Exhibits, as set forth in Attachment A – Fifth Amendment to Keys & Fox LLC Agreement.
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, VCE Board Secretary
Attachment A: Fifth (5th) Amendment to Keyes & Fox LLC Agreement 99 ATTACHMENT A
FIFTH (5TH) AMENDMENT TO KEYES & FOX LLC AGREEMENT
100
VCE —#5 AMENDMENT (Keyes & Fox, LLP)
FIFTH AMENDMENT
TO THE AGREEMENT FOR CONSULTANT SERVICES
BETWEEN
VALLEY CLEAN ENERGY ALLIANCE
AND
KEYES & FOX LLP
1. Parties and Date.
This Fifth Amendment to the Consultant Services Agreement (“5 th Amendment”), is made
and entered into as of this 1
st day of July 2022, by and between Valley Clean Energy Alliance, a Joint Powers Agency, existing under the laws of the State of California with its principal place of business at 604 2nd Street, Davis, California 95616 (“VCE”) and Consultant, Keyes & Fox LLP, a Limited Liability Partnership, with its principal place of business at 580 California Street, 12th Floor, San Francisco, California 94104 (“K&F”). VCE and K&F are sometimes individually referred to as “Party” and collectively as “Parties.”
Recitals.
1. On June 26, 2018 VCE and K&F entered into an “Agreement for Consultant Services,” for the purpose of retaining K&F to provide services described in the Agreement. The Agreement was for a term starting May 1, 2018 expiring December 31, 2018 for a total amount not to exceed $66,667.
2. On January 23, 2019 the VCE Board of Directors (“Board”) approved Resolution 2019- 001 approving Amendment No. One to that Agreement, which provides for a term starting January 1, 2019 expiring December 31, 2019 increasing the total amount not to exceed by an additional $142,600; on February 13, 2020 the Board approved Resolution 2020-002 approving Amendment No. Two to that Agreement, which provides for a term starting January 1, 2020 expiring June 30, 2020 increasing the total amount not to exceed by an additional $88,300; on June 11, 2020, the Board approved Resolution 2020-017 approving Amendment No. Three to that Agreement, which provides for a term starting July 1, 2020 expiring June 30, 2021 increasing the total amount not to exceed by an additional $180,800; and, on June 10, 2021 the Board approved Resolution 2021-013 approving Amendment No. Four to that Agreement, which provides for a term starting July 1, 2021 expiring June 30, 2022 increasing the total amount not to exceed by an additional $177,000 (collectively referred to as “Agreement”). Cumulatively, the Agreement to date (up to and including Amendment No. 4) provides that the total amount not to exceed is $655,367. 101
VCE —#5 AMENDMENT (Keyes & Fox, LLP)
3. VCE and K&F now desire to further amend the Agreement to extend the term by eighteen (18) months for an expiration date of December 31, 2023 and increase the not to exceed amount by an additional $287,500, for a total cumulative amount not to exceed of $942,867.
Now therefore, for good and valuable consideration, the amount and sufficiency of which is hereby acknowledged, the Parties agree as follows:
3.1. Amendment. Section 1.4 of the Agreement is hereby amended in its entirety to read as follows:
1.4 Term. The term of this Agreement, which began on May 1, 2018 shall end on December 31, 2023, unless amendment as provided in this Agreement, or when terminated as provided in Article 5.
3.2 Amendment. Section 4.1 of the Agreement is hereby amended in its entirety to read as follows:
4.1 Compensation This is a “time and materials” based agreement. Consultant shall receive compensation, including authorized
reimbursements, for Services rendered under this Agreement at the rates, in the amounts and at the times set forth in Exhibit D. Notwithstanding the provisions of Exhibit D, the total compensation shall not exceed an additional two hundred eighty-seven thousand five hundred and no/100 dollars
($287,500), or a total cumulative amount of nine hundred forty-two thousand eight hundred sixty-seven and no/100 dollars ($942,867) without written approval of VCE. Extra Work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this
Agreement.
3.3 Amendment. Exhibits A, C and D of the Agreement are hereby replaced in their entirety by the Exhibits A, C and D attached hereto, which are incorporated herein.
4. Except as amended by this Fifth Amendment, all other provisions of the Agreement will remain in full force and effect.
5. If any portion of this Fifth Amendment is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.
[Signatures on Next Page]
102
VCE —#5 AMENDMENT (Keyes & Fox, LLP)
SIGNATURE PAGE FOR FIFTH AMENDMENT TO THE AGREEMENT FOR CONSULTANT SERVICES
BETWEEN VALLEY CLEAN ENERGY ALLIANCE
AND KEYES & FOX LLP
IN WITNESS WHEREOF, the Parties have entered into this Fifth Amendment as of the day of , 2022.
VALLEY CLEAN ENERGY ALLIANCE KEYES & FOX LLP
By: By:
Mitch Sears
Executive Officer Its: Partner__________________
Printed Name: Sheridan Pauker__
APPROVED AS TO FORM:
By:
Inder Khalsa
VCE Attorney
103
1 EXHIBIT A
SCOPE OF SERVICES
Services Keyes & Fox LLP Will Provide
Task 1: Maintain a calendar of regulatory compliance filing obligations and deadlines and provide a weekly snapshot highlighting upcoming filing dates and responsibilities. The weekly snapshot includes CPUC, CAISO, CEC, CARB, and U.S. EIA compliance deliverables.
Task 2: Review compliance filings after they are prepared by SMUD to ensure they are complete and correct prior to filing. A compliance review will be conducted for the following filings: (1) 2020 RPS Compliance Report; (2) 2021 and 2022 RPS Procurement Plans; (3) D.19-11-016 and additional mid-term procurement compliance requirements and reporting; (4) 2022 IRP preparation; (5) Month-Ahead Resource Adequacy (RA) templates (12 templates total); (6) Monthly Load Migration Forecast (12 templates total); (7) Year-Ahead System, Local and Flexible RAR compliance showing (6 templates total); (8) Power Content Label Audit (October 2021); (9) Energy Storage Procurement Tier 2 Advice Letter (January 2022); (10) Emission Performance Standard Advice Letter (February 2022); (11) Supplier Diversity Report (March 2022); and (12) Annual report on vehicle-grid integration strategies pursuant to D.20-12-029 (March 2022). Once complete, K&F will submit the above-referenced filings and complete required service, as well as filing and serving the Annual Data Privacy Report (April 2022) 1 to appropriate
regulatory authorities on behalf of VCE.
Task 3: Support VCE staff team as its expert regulatory resource by (i) monitoring key regulatory proceedings (initial list in Exhibit A), notifying VCE in a timely manner of issues arising in those proceedings that will critically impact VCE, and attending monthly Board Meetings to explain such issues, if necessary, and (ii) drafting monthly informational memos for the Board of Directors covering the key regulatory proceedings and additional proceedings that may have an impact on VCE’s compliance obligations.
Task 4: Review contracts entered between VCE and SMUD and VCE and third parties.
K&F understands many of the key contracts between VCE and SMUD have already been executed and that the need for additional contracting with SMUD and third parties will be limited, so K&F proposes setting aside a small portion of the total budget for this item.
PPA negotiations will be billed to separate matters and are not included within this task. 1 There is a 3-year audit due in April 2022, however, EQ/K&F’s involvement would likely be restricted to filing/service only. This audit requires IT specialization that EQ/K&F does not have. 104
2 An initial list of the key regulatory proceedings at the California Public Utilities Commission discussed above is as follows:
Docket Number Subject Matter
I.15-08-019 Investigation into PG&E Organization, Culture & Governance R.16-02-007 and R.20-
05-003
Integrated Resource Planning Rulemakings
R.17-06-026 Power Charge Indifference Adjustment Rulemaking R.20-11-003 Ensuring Summer 2021 Reliability Rulemaking R.11-05-005, R.15-02-
020, and R.18-07-003
RPS Rulemakings
A.19-11-019 PG&E 2020 Phase II GRC
A.21-06-021 PG&E Test Year 2023 Phase I GRC
A.XX-XX-XXX PG&E 2023 Phase II GRC (filing date TBD)
R.19-03-009 Direct Access Rulemaking
R.19-07-017 and R.21-
03-001
Wildfire Fund Non-Bypassable Charge (AB 1054) Rulemakings R.19-11-009, R.21-10-
002 and R23-XX-XXX
Resource Adequacy Rulemakings (2021-2022, 2023-2024, and 2025-2026 or equivalent)
A.20-06-011 PG&E Regionalization Application
A.22-05-XXX and A.23-
05-XXX
PG&E Energy Resource and Recovery Account Forecast
Proceeding (2023-2024)
A.20-02-009, A.22-02-
015, and A.23-02-XXX
PG&E Energy Resource and Recovery Account Compliance
Proceeding (2019-2022)
R.21-03-011 Provider of Last Resort Rulemaking
R.21-10-001 Safety Culture Assessments
A.20-10-011 RTP Pilot
R.18-12-006 Transportation Electrification
R.19-01-011 Building Decarbonization OIR
A.22-05-002 et al PG&E DR Programs, Pilots, and Budgets for 2023-2027 R.19-09-009 Microgrids OIR
105
3 Note re Regulatory Advocacy: Since the vast majority of VCE’s advocacy in proceedings before regulators is anticipated to be through CalCCA and others during 2022-23, the need for drafting of motions for party status, pleadings, discovery requests or responses thereto, comments related to compliance filings, or Advice Letters; conducting significant legal or policy research; reviewing or providing feedback to VCE on CalCCA or other CCA joint filings; attending CalCCA-related calls other than the monthly regulatory call; or attending hearings, workshops or meetings with regulators is anticipated to be very limited at this time. To the extent VCE requires such work, that work, and any associated expenses, travel, and time spent filing and serving documents, shall be considered “Extra Work” pursuant to Section 4.5 of this Agreement and invoiced at the hourly rates listed in Exhibit D.
106
EXHIBIT C
82503.01000\7922616.3
EXHIBIT C
SCHEDULE OF SERVICES
The scope of this contract commences on July 1, 2022 and terminates December 31, 2023. The schedule may be extended by mutual agreement in writing by both parties. 107
1 EXHIBIT D
PAYMENT
Subject to adjustments necessary for the do-not-exceed levels related to Tasks 1-4 (“Do-Not-Exceed”) below, all work in 2022 will be performed at the hourly billing rates set forth below as “Keyes & Fox LLP 2022 Hourly Rates”. Historically, rate increases have been between 5-8% per year. Work performed in 2023 will be at the Keyes & Fox and EQ Research 2023 hourly rates, which will be provided to VCE in late 2022.
Keyes & Fox LLP (“K&F”) will invoice Valley Clean Energy Alliance (“VCE”) monthly. K&F will keep an hourly total of any time spent on VCE matters. K&F invoices will list the matter worked on and provide information on the dates of service, time involved, attorney or other personnel responsible and activity undertaken. Any unpaid amounts after forty-five (45) days will accrue interest at a rate of nine percent (9%) per annum.
All fees for services will be earned as of the time of invoicing.
Expenses, travel time, and time for filing and service are included in the fee structure outlined below unless they are associated with “Extra Work” pursuant to Section 4.5 of this Agreement and, in that case, will be billed at cost (for expenses) or at the billable rates below (for time spent travelling, filing and serving). 108
2 Services Keyes & Fox LLP Will Provide Fee Structure
Task 1: Maintain a calendar of regulatory compliance filing obligations and deadlines and provide a weekly snapshot highlighting upcoming filing dates and responsibilities. The weekly snapshot includes CPUC, CAISO, CEC, CARB, and U.S.
EIA compliance deliverables.
Billed hourly with a
Do-Not-Exceed of
$7,500
Task 2: Review compliance filings to ensure they are complete and correct prior to filing. A compliance review will be conducted for the following filings: (1) 2021 and 2022 RPS Compliance Reports; (2) Draft and Final 2022 and 2023 RPS Procurement Plans; (3) D.19-11-016, D.20-12-044, D.21-06- 035, and additional reliability procurement compliance
requirements and reporting; (4) 2022 IRP development,
drafting, legal review and filing; (5) Month-Ahead Resource Adequacy (RA) templates (18 templates total); (6) Monthly Load Migration Forecast (18 templates total); (7) Year-Ahead System, Local and Flexible RAR compliance showing (9
templates total); (8) Power Content Label Review (October 2022, October 2023); (9) Energy Storage Procurement Tier 2 Advice Letter (January 2023); (10) Emission Performance Standard Advice Letter (February 2023); (11) Supplier Diversity Report (March 2023); (12) Annual report on vehicle-grid integration strategies pursuant to D.20-12-029 (March 2023), (13) Annual Data Privacy Report (April 2023), (14) SB 255/GO 156 Supplier Diversity Report (March 2023), (15) 2022
Integrated Energy Policy Report Electricity Resource Planning Forms (September 2022), (16) 2023 Integrated Energy Policy Report Electricity Resource Planning Forms (September 2023) and Demand Forecast Forms (June 2023). Once complete, K&F will submit the above-referenced filings and complete
required service to appropriate regulatory authorities on behalf of VCE.
Billed hourly with a
Do-Not-Exceed of
$163,000
109
3 Services Keyes & Fox LLP Will Provide Fee Structure
Task 3: Support VCE staff team as its expert regulatory resource by (i) monitoring key regulatory proceedings (initial list in Exhibit A), notifying VCE in a timely manner of issues arising in those proceedings that will critically impact VCE, and attending monthly Board Meetings to explain such issues, if necessary, and (ii) drafting monthly informational memos for the Board of Directors covering the key regulatory proceedings and additional proceedings that may have an impact on VCE’s compliance obligations.
Billed hourly with an
annual Do-Not-Exceed of $100,000
Task 4: Review contracts entered between VCE and third
parties. PPA negotiations will be billed to separate matters and are not included within this task.
Billed hourly with a
Do-Not-Exceed of
$17,000
Note re Regulatory Advocacy: Since the vast majority of VCE’s advocacy in proceedings before regulators is anticipated to be through CalCCA and others, the need for drafting of motions for party status, pleadings, discovery requests or responses thereto, comments related to compliance filings, or Advice Letters; conducting significant legal or policy research; reviewing or providing feedback to VCE on CalCCA or other CCA joint filings; attending CalCCA-related calls other than the monthly regulatory call; or attending hearings, workshops or meetings with regulators is anticipated to be very limited at this time. To the extent VCE requires such work, that work, and any associated expenses, travel, and time spent filing and serving documents, shall be considered “Extra Work” pursuant to Section 4.5 of this Agreement and invoiced at the hourly rates listed herein.
K&F and VCE will review the Do-Not-Exceed amounts set forth above upon a request from either VCE or K&F for such a review. Any changes to the Do-Not-Exceed amounts resulting from such review shall not affect the amount of any fees already earned. 110
4 Keyes & Fox LLP 2022 Hourly Rate Sheet
Attorneys
Kevin Fox, Partner 445
Sheridan Pauker, Partner
Tim Lindl, Partner
Mark Valentine, Partner
395/420+
385
350
Jake Schlesinger, Partner 340
Scott Dunbar, Partner
Beren Argetsinger, Partner
Ann Springgate, Of Counsel
Caryn Lai, Counsel
Nikhil Vijaykar, Associate
305
285
350
380
315
Julia Kantor, Associate
Lee Ewing, Associate
280
260
Non-Attorneys
Justin Barnes 190/280*
Miriam Makhyoun 210/255*
Jason Hoyle 170
Blake Elder 170
Alicia Zaloga 120
+ Rates with a plus sign are transactional/compliance rates * Rates with an asterisk are expert witness rates
Travel Policy: Unless special arrangements are made, travel time is billed at the full hourly rate. Every effort will made to work productively on PCE matters during travel. If work is performed for another client during travel, PCE will not be billed for that time.
All reasonable travel expenses are billable – hotel, airfare, car rental, meals, taxi, public transit, etc.
Work Policy: Reasonable time for filing and service is billed at regular billable rates.
Miscellaneous Expenses Policy: Expenses for postage, photocopying, printing, faxing and other minor expenses directly related to a matter are billable at cost to PCE. 111
Item 17
1 VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 17
TO: Board of Directors
FROM: Edward Burnham, Director of Finance & Internal Operations Mitch Sears, Executive Officer
SUBJECT: Adopt VCE Debt Policy
DATE: July 14, 2022
RECOMMENDATION
Adopt a resolution approving a Debt Policy for VCE.
BACKGROUND AND ANALYSIS
In order to achieve its strategic goals, VCE must maintain liquidity for day-to-day operations.
VCE's ability to access capital markets to fund short-term and long-term objectives remains a fundamental role in financial stability.
The California Legislature created the California Debt and Investment Advisory Commission (CDIAC) in 1981 for the primary purpose of collecting, maintaining, and providing comprehensive information on all State and local debt obligations. The statutes, particularly California Government Code sections 8855(i) and 8855(j) provide a framework and authority for this work.
Effective January 1, 2017, the CDIAC requires that issuers of government debt recognize their responsibility to maintain fiscally prudent policies. Adoption of this type of policy will help formalize VCE’s current fiscal practices that are designed to maintain a sound financial position with sufficient flexibility to respond to changes in future service priorities, revenue levels, and operating expenses in order to protect both current and future VCE customers.
The attached policy is intended to comply with these CDIAC recommendations and may be amended by the Board of Directors, from time to time, as necessary.
CONCLUSION
Staff recommends that the Board adopt the attached Debt Policy.
Attachments
1. VCE Debt Policy
2. Resolution 2022-XXX
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4815-8209-0710.2 // Adopted July ___, 2022
1 VALLEY CLEAN ENERGY ALLIANCE
DEBT POLICY
I. Purpose
The purpose of this Debt Policy (the “Debt Policy”) is to establish comprehensive guidelines for the issuance and management of debt (herein referred as “Debt”) issued by the Valley Clean Energy Alliance (the “Issuer”). This Debt Policy is intended to help ensure that: (i) the Issuer, the governing body of the Issuer (the “Board of Directors” or the “Board”), and Issuer management and staff adhere to sound debt issuance and management practices; (ii) the Issuer achieves the most advantageous cost of capital within prudent risk parameters; (iii) the Issuer preserves future financial flexibility; and (iii) the Issuer preserves and enhances the credit ratings assigned to its debt.
II. Scope of Debt Policy
This Debt Policy shall provide guidance for the issuance and management of bonds and other forms of indebtedness of the Issuer, together with any credit, liquidity and other ancillary instruments and agreements secured or executed in connection with such transactions. While adherence to this Debt Policy is recommended in applicable circumstances, the Issuer recognizes that changes in the capital markets, Issuer programs and other unforeseen circumstances may produce situations that are not covered by the Debt Policy or require modifications or exceptions to achieve Debt Policy goals. In these cases, management flexibility is appropriate, provided specific authorization from the Board is obtained. The Issuer may approve Debt and other related agreements the terms or provisions of which deviate from this Debt Policy, upon the recommendation and approval of the Director of Finance of the Issuer (the “Director of Finance”) as circumstances warrant. The failure by the Issuer to comply with any provision of this Debt Policy shall not affect the validity of any Debt that is otherwise duly authorized and executed.
The Director of Finance is the designated administrator of the Debt Policy. The Director of Finance has the day-to-day responsibility and authority for structuring, implementing and managing the Issuer's debt and financing program. The Debt Policy requires that each debt issuance be specifically authorized by the Board of Directors.
III. Legal Authority; Compliance with Laws, Resolutions, Debt Documents and Contracts
A) Legal Authority
The Issuer has exclusive authority to plan and issue Debt for Issuer related purposes, subject to approval by the Board of Directors.
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2 B) Compliance with Law
All Debt of the Issuer shall be issued in accordance with applicable Federal and State laws, rules and regulations, including without limitation the Internal Revenue Code of 1986 (the “Code”) with respect to the issuance of tax-exempt Debt, the Securities Act of 1933 and the Securities Exchange Act of 1934, in each case as supplemented and amended, and regulations promulgated pursuant to such laws.
C) Compliance with Issuer Resolutions and Debt Documents Debt of the Issuer shall be issued in accordance with applicable resolutions and debt documents of the Issuer, in each case as supplemented and amended.
D) Compliance with Other Agreements
Debt of the Issuer shall be issued in compliance with any other agreements of the Issuer with credit or liquidity providers, bond insurers or other third parties.
E) Compliance with SB 1029
This Debt Policy complies with California Senate Bill 1029 (2016). As amended by Senate Bill 1029, California Government Code Section 8855(i) requires issuers to adopt debt policies addressing each of the five items below:
1) The purposes for which the debt proceeds may be used.
Section V (Purposes for Debt) and Section VI (Types of and Limitations on Debt) address the purposes for which debt proceeds may be used. 2) The types of debt that may be issued.
Section VI (Types of and Limitations on Debt) provides information regarding the types of debt that may be issued.
3) The relationship of the debt to, and integration with, the issuer's capital improvement program or budget, if applicable.
Section XV (Budgeting and Capital Planning) provides information regarding the relationship between the Issuer’s debt and budgeting process, including its budgeting process for capital expenditures.
4) Policy goals related to the issuer's planning goals and objectives.
As described in Section I (Purpose), Section XVI (Credit Rating Objectives), Section XVII (Debt Affordability), and other sections, this Policy has been adopted to assist with the Issuer’s goals of adhering to sound debt issuance and management practices, achieving the most advantageous cost of capital within prudent risk parameters, 114
4815-8209-0710.2 // Adopted July ___, 2022
3 preserving future financial flexibility, and preserving and enhancing the credit ratings assigned to its debt.
5) The internal control procedures that the issuer has implemented, or will implement, to ensure that the proceeds of the proposed debt issuance will be directed to the intended use.
Section IVA.6 (Administration of Debt Policy) provides information regarding the Issuer’s internal control procedures designed to ensure that the proceeds of its debt issues are spent as intended.
IV. Administration of Debt Policy
A) Issuer
The Issuer shall be responsible for:
1) Approval of the issuance of all Debt and the terms and provisions thereof; 2) Appointment of municipal advisors, bond counsel, disclosure counsel, Issuer consultants, underwriters, feasibility consultants, trustee and other professionals retained in connection with the issuance of Debt;
3) Approval of this Debt Policy and any supplements or amendments; 4) Periodic approval of the Issuer's expenditure plans; 5) Periodic approval of proposed Issuer annual and supplemental budgets for submission to the Board of Directors, including without limitation provisions for the timely payment of principal of and interest on all Debt; and
6) Maintaining internal control procedures with respect to Debt proceeds. Debt proceeds will be held either by a third-party trustee, which will disburse such proceeds to the Issuer upon the submission of one or more written requisitions, or by the Issuer to be held and accounted for in a separate fund or account, the expenditure of which will be carefully documented by the Issuer.
B) Director of Finance
The Director of Finance shall have responsibility and authority for the structure, issuance and management of the Issuer's Debt and financing programs. These responsibilities shall include, but not be limited to, the following:
1) Determining the appropriate structure and terms for all proposed debt transactions; 2) Undertaking to issue Debt at the most advantageous interest and other costs consistent with prudent levels of risk;
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4 3) Ensuring compliance of any proposed Debt with any applicable additional debt limitations under State law, or the Issuer's Debt Policy, resolutions and debt documents; 4) Seeking approval from the Board of Directors for the issuance of Debt or other debt obligations;
5) Coordinating with other public agencies in connection with necessary approvals associated with Debt issuance;
6) Recommending to the Board of Directors the manner of sale of any Debt or other debt transactions;
7) Monitoring opportunities to refund outstanding Debt to achieve debt service savings, and recommending such refunding to the Board, as appropriate; 8) Providing for and participating in the preparation and review of all legal and disclosure documents in connection with the issuance of any Debt by the Issuer; 9) Recommending the appointment of municipal advisors, bond counsel, disclosure counsel, Issuer consultants, underwriters, feasibility consultants and other professionals retained in connection with the Issuer's debt issuance as necessary or appropriate; 10) Distributing information regarding the business operations and financial condition of the Issuer to appropriate bodies on a timely basis in compliance with any applicable continuing disclosure requirements;
11) Communicating regularly with the rating agencies, bond insurers, investment providers, institutional investors and other market participants related to the Issuer's Debt; and 12) Maintaining a database with summary information regarding all of the Issuer's outstanding Debt and other debt obligations.
C) Procedures for Approval of Debt
Any proposed issuance of Debt by the Issuer shall be submitted to and subject to authorization and approval by the Board of Directors.
D) Considerations in Approving Issuance of Debt
The Issuer may take into consideration any or all of the following factors, as appropriate, prior to approving the proposed issuance of Debt:
1) Whether the proposed issuance complies with this Debt Policy; 2) Source(s) of payment and security for the Debt;
3) Projected revenues and other benefits from the projects proposed to be funded; 116
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5 4) Projected operating costs and other costs related to the proposed projects; 5) Impacts, if any, on Issuer and Debt credit ratings;
6) Period, if any, over which interest on the Debt should be capitalized; 7) Extent to which debt service on the Debt should be level or non-level; 8) Appropriate lien priority of the Debt; and
9) Adequacy of the proposed disclosure document.
V. Purposes for Debt
The Issuer may issue Debt for the purposes of financing and refinancing the costs of capital projects undertaken by the Issuer. The Issuer may also issue Debt for working capital purposes/startup related costs and expenses and to pay other extraordinary unfunded costs, including, but not limited to, termination or other similar payments due in connection with interest rate swaps (if any) and investment agreements entered into in connection with Debt. Proceeds of Debt may be applied to pay costs of issuance, to fund capitalized interest and debt service reserves and to pay costs incurred in connection with securing credit enhancement, including, but not limited to, premiums payable for bond insurance and reserve fund sureties.
A) New Money Debt
New money issues are typically those financings that generate additional funding to be available for expenditure on capital projects. New money proceeds may not be used to fund non-capital operational activities other than working capital or startup related costs. Working capital or startup related costs may be financed by short term Debt, as provided in Section VI.B.
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6 B) Refunding Debt
The Issuer may issue Debt to refund the principal of and interest on outstanding Debt of the Issuer in order to (i) achieve debt service savings; (ii) restructure scheduled debt service; (iii) convert from or to a variable or fixed interest rate structure; (iv) change or modify the source or sources of payment and security for the refunded Debt; or (v) modify covenants otherwise binding upon the Issuer. Refunding Debt may be issued either on a current or advance basis, as permitted by applicable Federal tax laws. The Issuer may also utilize a tender offer process to refund Debt that is not otherwise subject to optional call by the Issuer.
Refunding Debt should be issued to achieve debt service savings in most cases.
Refundings which do not produce savings are permitted if justified based on the need for restructuring to remove covenants/pledges that are restrictive and/or no longer required by the market and/or to make other changes in debt documents that would benefit the current, short-term, or long term capital cost of the Issuer.
VI. Types of and Limitations on Debt
A) Long-Term Debt
The Issuer may issue Debt with longer-term maturities to amortize Issuer capital or other costs over a period commensurate with the expected life, use or benefit provided by the project, program or facilities financed from such Debt. Long-term Debt will generally have a final maturity of five (5) years or more. Long-term debt is appropriate for financing essential capital projects and certain capital equipment where the project being financed will provide benefit over multiple years and the Issuer considers the project to be of vital, time-sensitive need and there are no plausible alternative financing sources after considering other alternatives, such as pay-as-you-go funding or existing funds on hand.
B) Short-Term Debt
The Issuer may issue Debt with shorter-term maturities to provide interim funding for capital projects and expenditures that will ultimately be funded from another source such as a grant, a long-term Debt issue, or the receipt of Federal or State grants, other revenues, and/or for cash flow management (including but not limited to working capital or startup related costs). Short-term Debt generally shall consist of Debt of an issue with a final maturity of five (5) years or less and may include, but is not limited to, Debt in the form of Tax and Revenue Anticipation Notes, Bond Anticipation Notes, Grant Anticipation Notes, and/or Commercial Paper.
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7 C) Power Revenue Debt
If and to the extent authorized in accordance with applicable provisions of State law, the Issuer may issue Debt payable in whole or in part from power revenues. It is expected that power revenue debt will represent the principal form of Debt of the Issuer.
D) Other Revenue Debt
If and to the extent authorized in accordance with applicable provisions of State law, the Issuer may issue Debt payable in whole or in part from other types of revenues.
E) Other Federally Supported Programs
The Issuer may also participate in federal loans administered or provided by the United States as well as federally subsidized taxable and tax-exempt bond programs, and may secure credit enhancement and/or credit support provided under Federal programs, provided such loans, bonds or programs provide an attractive funding cost or other desirable features such as, but not limited to, deep subordination of the repayment obligation, an unusually long repayment term, or no payment due until a certain period after substantial project completion.
F) Fixed-Rate Debt
The Issuer may issue Debt that bears a fixed-rate rate of interest.
G) Variable Rate Debt
The Issuer may also issue Debt that bears a variable rate of interest, including, but not limited to, variable rate demand obligations, commercial paper and floating rate notes.
VII. Terms and Provisions of Debt
A) Debt Service Structure
The Issuer shall design the financing schedule and repayment of debt so as to take best advantage of market conditions, provide flexibility and, as practical, to recapture or maximize its debt capacity for future use. Annual debt service payments will generally be structured on a level basis; however, principal amortization may occur more quickly or slowly where permissible, to mirror debt repayment streams and/or provide future financing flexibility.
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8 B) Amortization of Principal
Long-term Debt of the Issuer shall be issued with maturities that amortize the principal of such Debt over a period commensurate with the expected life, use or benefit (measured in years) provided by the projects, programs and/or facilities financed from the proceeds of such Debt. The weighted average maturity of such Debt (if issued as tax-exempt Debt) should not exceed one hundred and twenty percent (120%) of the reasonably estimated weighted average life, use or benefit (measured in years) of the projects, programs and/or facilities financed from the proceeds of such Debt.
Amortization of principal may be achieved either through serial maturities and/or through term Debt subject to mandatory sinking fund payments and/or optional redemptions.
C) Capitalized Interest
The Issuer may fund interest on Debt from proceeds of Debt for legal, budgeting or structuring purposes.
D) Call Provisions for Debt
1) Optional Call Provisions. The Issuer shall seek to include the shortest practicable optional call rights, with and/or without a call premium, consistent with optimal pricing of such Debt. Call premiums, if any, should not be in excess of then prevailing market standards and to the extent consistent with the most advantageous borrowing cost for the Issuer. Non-callable maturities may be considered and used to accommodate market requirements or other advantageous benefits to the Issuer.
2) Extraordinary Call Provisions. The Issuer, at its option, may include extraordinary call provisions, including for example with respect to unspent proceeds, damage to or destruction of the project or facilities financed, or other matters, as the Issuer may determine is necessary or desirable.
E) Payment of Interest
1) Current Interest Debt may be issued. It is anticipated that the interest on most, if not all, Debt issued will be paid on a current interest basis.
2) Deferred Interest Debt may also be issued. Debt of the Issuer may be issued with the payment of actual or effective interest deferred in whole or in part to the maturity or redemption date of each debt instrument, or the conversion of such debt instrument to a current interest-paying debt instrument (known, respectively, as capital appreciation bonds, zero coupon bonds and convertible capital appreciation bonds). Deferred Interest Debt may be issued to achieve optimal sizing, debt service structuring, pricing or other purposes.
F) Determination of Variable Interest Rates on Debt
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9 The interest rate from time to time on Debt the interest of which is not fixed to maturity may be determined in such manner that the Issuer determines, including without limitation on a daily, weekly, monthly or other periodic basis, by reference to an index, prevailing market rates or other measures, and by or through an auction or other method.
G) Tender Options on Debt
The Issuer may issue Debt subject to the right or obligation of the holder to tender the Debt back to the Issuer for purchase, including, for example, to enable the holder to liquidate their position, or upon the occurrence of specified credit events, interest rate mode changes or other circumstances. The obligation of the Issuer to make payments to the holder upon any such tender may be secured by (i) a credit or liquidity facility from a financial institution in an amount at least equal to the principal amount of the Debt subject to tender, (ii) a liquidity or similar account into which the Issuer shall deposit and maintain an amount at least equal to the principal amount of the Debt subject to tender, or (iii) other means of self-liquidity that the Issuer deems prudent.
H) Multi-Modal Debt
The Issuer may issue Debt that may be converted between two or more interest rate modes without the necessity of a refunding. Such interest rate modes may include, without limitation: daily interest rates, weekly interest rates, other periodically variable interest rates, commercial paper rates, auction rates, fixed rates for a term and fixed rates to maturity (in each case with or without tender options).
I) Debt Service Reserve Funds
The Issuer may issue Debt that is secured by amounts on deposit in or credited to a debt service reserve fund or account in order to minimize the net cost of borrowing and/or to provide additional reserves for debt service or other purposes. Debt service reserve funds may secure one or more issues of Debt, and may be funded by proceeds of Debt, other available moneys of the Issuer, and/or by surety policies, letters or lines of credit or other similar instruments. Surety policies, letters or lines of credit or other similar instruments may be substituted for amounts on deposit in a debt service reserve fund if such amounts are needed for capital projects or other purposes.
Amounts in the debt service reserve funds shall be invested in accordance with the requirements of the applicable Debt documents in order to (i) maximize the rate of return on such amounts; (ii) minimize the risk of loss; (iii) minimize volatility in the value of such investments; and (iv) maximize liquidity so that such amounts will be available if it is necessary to draw upon them.
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10 J) Lien Levels
The Issuer may create senior and junior lien pledges, as well as pledges at various lien priority levels, for each fund source which secures Debt repayment in order to optimize financing capacity.
VIII. Maintenance of Liquidity; Reserves
The Issuer may maintain unencumbered reserves in amounts sufficient in the determination of the Issuer to cover unexpected revenue losses, extraordinary payments and other contingencies, and to provide liquidity in connection with the Issuer’s outstanding Debt.
IX. Investment of Debt Proceeds and Related Moneys
Proceeds of Debt and amounts in the Issuer's debt service, project fund and debt service reserve funds with respect to outstanding Debt shall be invested in accordance with the terms of the applicable Debt documents and other applicable agreements of the Issuer.
X. Third Party Credit Enhancement
The Issuer may secure credit enhancement for its Debt from third-party credit providers to the extent such credit enhancement is available upon reasonable, competitive and cost-effective terms. Such credit enhancement may include municipal bond insurance (“Bond Insurance”), letters of credit and lines of credit (collectively and individually, “Credit Facilities”), as well as other similar instruments.
A) Bond Insurance
All or any portion of an issue of Debt may be secured by Bond Insurance provided by municipal bond insurers (“Bond Insurers”) if it is economically advantageous to do so, or if it is otherwise deemed necessary or desirable in connection with a particular issue of Debt. The relative cost or benefit of Bond Insurance may be determined by comparing the amount of the Bond Insurance premium to the present value of the estimated interest savings to be derived as a result of the insurance.
B) Credit Facilities
The issuance of certain types of Debt requires a letter of credit or line of credit (a “Credit Facility”) from a commercial bank or other qualified financial institution to provide liquidity and/or credit support. The types of Debt where a Credit Facility may be necessary include commercial paper, variable rate Debt with a tender option and Debt that could not receive an investment grade credit rating in the absence of such a facility.
The criteria for selection of a Credit Facility provider shall include the following:
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11 1) Long-term ratings from at least two nationally recognized credit rating agencies (“Rating Agencies”) preferably to be equal to or better than those of the Issuer, if any; 2) Short-term ratings as appropriate for the type of Debt being issued; 3) Experience providing such facilities to state and local government issuers; 4) Fees, including without limitation initial and ongoing costs of the Credit Facility; draw, transfer and related fees; counsel fees; termination fees and any trading differential; and 5) Willingness to agree to the terms and conditions proposed or required by the Issuer.
XI. Use of Derivatives
Derivative products include but are not limited to interest rate swaps, interest rates caps and collars and forward or other hedging agreements. Derivative products will be considered in the issuance or management of debt only in instances where it has been demonstrated that the derivative product will either provide a hedge that reduces risk of fluctuations in expense or revenue, or, alternatively, where it will reduce total debt service cost in a manner that exceed the risks. Derivative products will only be utilized following the adoption of derivative product policy and with prior Board approval. In addition, an analysis of early termination costs and other conditional terms must be completed by the Issuer’s municipal advisor prior to the approval of any derivative product by the Board.
Such analysis will document the risks and benefits associated with the use of the particular derivative product.
XII. Methods of Sale and Pricing of Debt
There are three principal methods for the sale of Debt: (i) competitive; (ii) negotiated and (iii) private placement. In addition, Debt may be incurred as a direct loan. The Issuer shall utilize the method of sale that (a) is reasonably expected to produce the most advantageous interest cost with respect to the Debt and (b) provides the Issuer with the flexibility most desirable in connection with the structuring, timing or terms of such Debt. The Issuer shall utilize such method that is likely to provide the most advantageous borrowing costs and execution on behalf of the Issuer.
Debt may be sold at such prices, including at par, a premium or a discount, as the Issuer, in consultation with its municipal advisor, may determine is likely to produce the most advantageous interest cost under then prevailing market conditions, subject to compliance with applicable State law and Federal securities laws.
A) Competitive Sale
The competitive method of sale is appropriate when:
1) Bond prices are stable and/or there is strong demand for the bonds; 123
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12 2) Market timing and interest rate sensitivity are not critical to the pricing; 3) Issuer has a strong credit rating and is well known to investors; 4) The Issuer has straightforward political and organizational structure, and the project, funding, and credit quality are easy to understand and market to potential investors; and 5) The Debt type and structure are conventional and the transaction size is manageable.
B) Negotiated Sale
A negotiated sale is appropriate when:
1) There is market volatility and/or weak demand and high supply of competing financings; 2) The Debt structure is complex;
3) Issuer has lower or weakening credit rating and is not well known to investors; 4) The Debt has non-standard structural features, such as a forward delivery, issuance of variable rate bonds, use of derivative products, or possesses a specific structuring feature that benefits from a negotiated sale;
5) Early structuring and market participation by underwriters are desired and there is strong projected retail demand for the Debt; and
6) The Debt size is significantly larger and would limit competition.
For a negotiated bond sale, the Issuer, with the assistance of its municipal advisor, will conduct a competitive underwriter selection process for either a specific Debt issue or through the establishment of an underwriter pool from which to choose over a defined period of time.
C) Private Placement
A private placement is structured for one purchaser or a group of purchasers, who are typically qualified institutional buyers, in a non-public offering conducted by an underwriting firm serving as placement agent. Since no public offering is involved, securities disclosure requirements are not as heavy. If a private placement is considered as the optimal sale method for the Issuer, the municipal advisor will conduct a competitive selection process to recommend the placement agent.
D) Direct Purchase; Direct Loan; Revolving Obligations
A direct purchase or direct loan is structured specifically for one bank (or a syndicate of banks), putting the Issuer and bank in a bilateral borrower-lender relationship.
Examples include a direct purchase agreement or revolving credit facility. Securities 124
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13 disclosure requirements are the least burdensome for this structure. A direct purchase or direct loan may be advisable if the Issuer is unable to access the municipal capital markets or for other reasons. If a direct purchase or direct loan is contemplated, a municipal advisor, if any, should conduct a competitive selection process to recommend the bank. Selection criteria will include:
1) A term sheet to be provided along with the request for qualifications, with any requested modifications to be highlighted by the bank and taken into consideration in the evaluation process; 2) A representative list of clients for whom the bank has provided similar agreements; and 3) Evaluation of fees, specifically, cost of the agreement including index, spread, and other administrative charges. The evaluation of fees, terms and conditions will be compared to other alternative financing methods.
XIII. Debt Redemption Programs
The Issuer may establish from time-to-time a plan or program for the payment and/or redemption of outstanding Debt and/or interest thereon from revenues and/or other available funds pursuant to a recommendation from the Director of Finance. Such plan or program may be for the purposes of reducing outstanding Debt, managing the amount of debt service payable in any year, or other suitable purposes, as determined by the Issuer.
XIV. Professional Services
The Issuer may retain professional services providers as necessary or desirable in connection with: (i) the structuring, issuance and sale of its Debt; (ii) monitoring of and advice regarding its outstanding Debt; and (iii) the negotiation, execution and monitoring of related agreements, including without limitation Bond Insurance, Credit Facilities, Derivatives and investment agreements; and (iv) other similar or related matters.
Professional service providers may include municipal advisors, bond counsel, disclosure counsel, Issuer consultants, bond trustees and Federal arbitrage rebate services providers, and may include, as appropriate, underwriters, feasibility consultants, remarketing agents, auction agents, broker-dealers, escrow agents, verification agents and other similar parties.
The Issuer shall require that its Municipal Advisors, bond and disclosure counsel and other Issuer consultants be free of any conflicts of interest, or that any necessary or appropriate waivers or consents are obtained.
A) Municipal Advisors
The Issuer may utilize one or more municipal advisors to provide ongoing advisory services with respect to the Issuer's outstanding and proposed Debt and related agreements, including without limitation Bond Insurance, Credit Facilities, Derivatives, investment agreements and other similar matters. Municipal advisors must be registered with the Municipal Securities Rulemaking Board and as a municipal 125
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14 advisor as such term is defined in the Securities Exchange Act of 1934 and shall be required to disclose any conflicts of interest.
B) Bond Counsel, Disclosure Counsel and Other Legal Counsel 1) Bond Counsel. The Issuer may utilize one or more bond counsel firms to provide ongoing legal advisory services with respect to the Issuer's outstanding and proposed Debt and related agreements, including without limitation Credit Facilities, Derivatives, investment agreements and other similar matters. All Debt issued by the Issuer shall require a written opinion from the Issuer's bond counsel, as appropriate, regarding (i) the validity and binding effect of the Debt, and (ii) the exemption of interest from Federal and State income taxes. 2) Disclosure Counsel. The Issuer may utilize a disclosure counsel firm to provide ongoing legal advisory services with respect to initial and continuing disclosure in connection with the Issuer's outstanding and proposed Debt. Such firm may be one of the Issuer's bond counsel firms. 3) Other Legal Counsel. The Issuer may encourage or require, as appropriate, the retention and use of legal counsel by other parties involved in the issuance of Debt and the execution of related agreements which are approved by the Issuer.
C) Issuer Consultant
The Issuer may utilize one or more outside Issuer consultants to provide ongoing advisory services with respect to the Issuer's outstanding and proposed Debt, Issuer fares, strategic business and financial decisions and such other matters as the Issuer requires.
D) Trustees and Fiscal Agents
The Issuer may engage bond trustees and/or fiscal agents, paying agents and tender agents, as necessary or appropriate, in connection with the issuance of its Debt.
E) Underwriters/Remarketing Agents/Broker-Dealers
The Issuer may engage an underwriter or a team of underwriters, including a senior managing underwriter, in connection with the negotiated sale of its Debt. The Issuer also may engage one or more underwriters, as necessary or appropriate, to serve as remarketing agents, broker-dealers or in other similar capacities with respect to variable rate, auction, tender option, commercial paper and other similar types of Debt issued by the Issuer.
F) Feasibility Consultants
The Issuer may retain feasibility consultants in connection with proposed project, programs, facilities or activities to be financed in whole or in part from proceeds of Debt. The criteria for the selection of such feasibility consultants, in addition to those 126
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15 set forth above, shall include their expertise and experience with projects, programs, facilities or activities similar to those proposed to be undertaken by the Issuer.
G) Arbitrage Rebate Services Providers
Because of the complexity of the Federal arbitrage rebate statutes and regulations, and the severity of potential penalties for non-compliance, the Issuer may retain an arbitrage rebate services provider in connection with its outstanding and proposed Debt, and may also solicit related legal and tax advice from its bond counsel or separate tax counsel.
The responsibilities of the arbitrage rebate services provider shall include: (i) the periodic calculation of any accrued arbitrage rebate liability and of any rebate payments due under and in accordance with the Code and the related rebate regulations; (ii) advice regarding strategies for minimizing arbitrage rebate liability; (iii) the preparation and filing of periodic forms and information required to be submitted to the Internal Revenue Service; (iv) the preparation and filing of requests for reimbursement of any prior overpayments; and (v) other related matters as requested by the Issuer.
The Issuer shall maintain necessary and appropriate records regarding (i) the expenditure of proceeds of Debt, including the individual projects and facilities financed and the amounts expended thereon, and (ii) investment earnings on such Debt proceeds. The Issuer shall maintain such records for such period of time as shall be required by the Code.
H) Other Professional Services
The Issuer may retain such other professional services providers, including without limitation verification agents, escrow agents, auction agents, as may be necessary or appropriate in connection with its Debt.
XV. Budgeting and Capital Planning
The Issuer's budgeting process, including its budgeting process for capital expenditures, shall provide a framework for evaluating proposed Debt issuances.
XVI. Credit Rating Objectives
The Issuer shall seek to preserve and enhance the credit ratings with respect to its outstanding Debt, if any, to the extent consistent with the Issuer's current and anticipated business operations and financial condition, strategic plans and goals and other objectives, and in accordance with any developed credit strategies.
XVII. Debt Affordability
The Issuer shall periodically review its debt affordability levels and capacity for the undertaking of new financing obligations to fund its expenditure plans. Debt affordability 127
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16 measures shall be based upon the credit objectives of the Issuer, criteria identified by rating agencies, comparison of industry peers and other internal factors of the Issuer.
XVIII.Relationships with Market Participants
The Issuer shall seek to preserve and enhance its relationships with the various participants in the municipal bond market, including without limitation, the Rating Agencies, Bond Insurers, credit/liquidity providers and current and prospective investors, including through periodic communication with such participants.
The Issuer shall prepare or cause to be prepared appropriate disclosures as required by the Securities and Exchange Commission Rule 15c2-12, the federal government, the State of California, rating agencies and other persons or entities entitled to disclosure to ensure compliance with applicable laws and regulations and agreements to provide ongoing disclosure.
XIX. Periodic Review
The Director of Finance shall review this Debt Policy on a periodic basis, and recommend any changes to the Board for consideration.
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Item 17
VALLEY CLEAN ENERGY ALLIANCE
RESOLUTION NO. 2022- ___
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE VALLEY CLEAN ENERGY
ALLIANCE ADOPTING A DEBT POLICY
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, WHEREAS, the California Legislature created the California Debt and Investment Advisory Commission (CDIAC) to collect, maintain, and provide comprehensive information on all State and local debt obligations; and,
WHEREAS, effective January 1, 2017, the CDIAC requires that issuers of government debt recognize their responsibility to maintain fiscally prudent policies that will help maintain a sound financial position with sufficient flexibility to respond to changes in future service priorities, revenue levels, and operating expense in order to protect both current and future customers; and,
WHEREAS, in order to achieve its strategic goals, VCE must maintain liquidity for day-to-day operations, which includes the ability to access capital markets to fund short-term and long-term objectives; and,
WHEREAS, a Debt Policy is necessary to comply with CDIAC’s recommendations and to maintain VCE’s financial stability.
NOW, THEREFORE, the Board of Directors of the Valley Clean Energy Alliance resolves as follows:
1. The Board of Directors hereby adopts the attached Debt Policy.
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, VCE Board Secretary
Attachment: Exhibit A – Valley Clean Energy Alliance Debt Policy 129
Item 17
EXHIBIT A
VALLEY CLEAN ENERGY DEBT POLICY
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Item 18
1 VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 18
TO: Board of Directors
FROM: Mitch Sears, Executive Officer
Alisa Lembke, VCE Board Clerk/Administrative Analyst
SUBJECT: Consider Reappointment(s)/Appointments to jurisdictional seats on Community Advisory Committee
DATE: July 14, 2022
RECOMMENDATION
1. Reappoint the following Community Advisory Committee (CAC) Members for a three (3) year term to expire 2025:
a. City of Winters – David Springer
b. City of Woodland – Mark Aulman
c. County of Yolo – Cynthia Rodriquez
2. Based on City of Davis jurisdictional Board member recommendation, appoint Rahul Athalye to fill a City of Davis jurisdictional seat for a three (3) year term to expire 2025.
BACKGROUND/ANALYSIS
The Board at their September 9, 2021 meeting, adopted a revised Community Advisory Committee (CAC) structure with eleven total members: eight jurisdictional members (two per jurisdiction) and three additional seats for At-large members intended to fill specific subject matter expertise/experience areas. As part of the newly adopted CAC structure, the Board adopted Item 15 on October 14, 2021, which included nonbinding recruitment/selection guidelines for recruiting and considering CAC applicants for At-Large seats and reappointed CAC Member Lorenzo Kristov to fill one of the three At-Large seats. On May 12, 2022, the Board appointed Keith Taylor and Kristin Jacobs to the two (2) vacant CAC At-Large seats, leaving two (2) applications on file.
Currently, several Members’ terms expired in June 2022 (Class 1) and have agreed to stay on until the Board reappoints and/or appoints new applicants to fill each jurisdiction seat: Davis, Woodland, Winters and unincorporated Yolo County. Staff advertised on VCE’s website, through local newspapers and jurisdiction partners seeking applicants for jurisdiction seats. In addition, CAC members sought out applicants. In response, Staff received two (2) new applications from City of Davis residents. No other applications were received.
As noted two (2) applications were on file from residents of the City of Davis who had previously applied for consideration for the two vacant At-Large seats: Mark Braly and Maris Samsel. 131
Item 18
2 Staff reviewed the two new applications from City of Davis residents: Eugen Dunlap and Rahul Athalye.
Eugen Dunlap is interested in encouraging and educating others on the usage of electric vehicles and solar; he has 20 years experience in the promotion of electric vehicles, including participating in Sac-EVA; experience and a supporter of solar; knowledge of his community; and owned an environmental building material business.
Rahul Athalye is interested in providing renewable energy to households of all incomes in the community; has over 15-years experience working with building codes and standards, bringing technical and analytical perspective to the CAC and local communities; and, experience in building energy modeling and simulation, including source energy and energy costs.
Consistent with past practice, staff provided the four (4) applications to the jurisdiction Board Members (City of Davis), who after careful review and consideration recommend appointing Rahul Athalye to the Community Advisory Committee to the City of Davis seat for a three (3) year term to expire 2025.
Reappointment Applications of Existing CAC Members
Those Members whose term expired in June 2022 (Class 1) have submitted their interest to be reappointed for an additional three-year term ending in 2025.
CLASS 1 - term expired in June 2022:
Winters Rep. – David Springer
Woodland Rep. – Mark Aulman
Yolo County Rep. – Cynthia Rodriguez
All but Yvonne Hunter (City of Davis) are seeking reappointment.
If those mentioned above are reappointed/appointed, below is a listing of the other “classes” and expiration terms:
CLASS 2 – term expiring June 2023
Yolo Rep.– Marsha Baird
Woodland Rep. – Christine Shewmaker
Davis Rep.– Gerry Braun
Winters Rep. – Jennifer Rindahl
CLASS 3 – term expiring June 2024
At-Large – Lorenzo Kristov
At-Large – Keith Taylor
At-Large – Kristin Jacobs
132
Item 18
3 CONCLUSION
Staff recommends the Board consider reappointing/appointing the following to the Community Advisory Committee (CAC) for a three (3) year term to expire 2025:
a. City of Winters – David Springer
b. City of Woodland – Mark Aulman
c. County of Yolo – Cynthia Rodriquez
d. City of Davis - Rahul Athalye
Attachments:
1. City of Davis applications:
a. Mark Braly
b. Maris Samsel
c. Eugen Dunlap
d. Rahul Athalye
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136
6/29/2023
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Return to:
VALLEY CLEAN ENERGY
Valley Clean Energy COMMUNITY ADVISORY COMMITTEE
604 Second Street APPLICATION
Davis, CA 95616
PERSONAL DATA SHEET
Received on:
Name: Are you at least 18 years old?
First Middle
Home Address:
Number/Street City/State/Zip
Email Address:
Daytime Phone Evening/Weekend Phone
Business Title or Occupation:
Company/Organization:
Address:
Street Address City, State and Zip
Which Valley Clean Energy jurisdiction do you reside in? City of Davis City of Woodland County of Yolo (Unincorporated) If you do not reside in Valley Clean Energy's jurisdictions, please include a separate statement to address why you are applying for this committee.
Are you seeking to fill an At-Large Seat? Yes No
Background Information:
Why do you wish to serve as a member of the VCE Community Advisory Committee? Last
City of Winters
3/6/2022 AML
138
What experience/perspective would you bring to the committee? Please reference the professional sector and related professional experience below for At-Large member applications in this section.
Please list your previous and present governmental and civic experience. Indicate when, position and duties:
List any special training or experience you have that you feel would benefit your committee service:
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Do you have any interests or associations which might present a conflict of interest? If yes, please explain:
What do you feel are your most important qualifications? What do you see as some of the significant issues facing the community in the next few years that might pertain to Valley Clean Energy's Community Advisory Committee? 140
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Item 19
1 VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 19
TO: Board of Directors
FROM: Mitch Sears, Executive Officer
Gordon Samuel, Assistant General Manager & Director of Power Services SUBJECT: Approve Amendment 1 to Resurgence Solar I, LLC Power Purchase Agreement DATE: July 14, 2022
RECOMMENDATION
Adopt a resolution authorizing the Executive Officer to (1) execute Amendment 1 to the Resurgence Solar 1 Power Purchase Agreement (PPA) substantially in the form attached and (2) authorizes the Executive Officer, in consultation with General Counsel, to make minor changes to the PPA Amendment 1 so long as the term and price are not changed.
BACKGROUND
In January 2021, the VCE Board approved the Resurgence Solar I PPA which is a 90 MW PV field combined with a 75 MW (300 MWhs) lithium-ion battery storage system project located in San Bernadino County, California. The project has received all necessary permits and commenced construction in March 2022.
In May 2022, the counterparty approached VCE identifying numerous challenges facing the project and the broader renewable industry. Unprecedented global cost pressures, the U.S.
Department of Commerce’s investigation into circumvention of Anti-Dumping/Countervailing Duties of photovoltaic modules (“Circumvention Investigation”), Uyghur Forced Labor Prevention Act, etc. have put undo schedule and cost pressures on the project.
Based on anecdotal evidence, staff has confirmed that these factors are present and effecting PPA’s of a similar vintage across the renewable energy landscape.
VCE agreed to consider the request of the counterparty to amend the PPA and staff has been working on an amendment that is amenable to both parties.
COUNTERPARTY
NextEra Energy Inc. subsidiary, NextEra Energy Resources is the world’s largest developer of renewable energy from wind and solar. NextEra has a proven record of success and extensive experience in developing, constructing and operating wind, solar, and battery storage projects across North America. The company has been generating clean energy for more than 35 years and is the largest generator of wind and solar power in North America. Through its subsidiaries, 150
Item 19
2 NextEra owns and operates 124 wind facilities with a total generating capacity of 16,280 MW, as well as 34 utility-scale solar facilities with a generating capacity of 3,156 MW. NextEra has constructed dozens of renewable projects as big or larger than the Resurgence Solar I project and has developed and constructed some of the largest storage projects in the industry.
NextEra is a large scale generator of renewable energy and is a major developer in energy storage. In the U.S. and Canada, NextEra has approximately 164 MW of energy storage projects in operation and over 2 GW of energy storage projects with signed long-term contracts currently under development.
In the state of California, NextEra owns and operates wind, solar, battery energy storage facilities and transmission assets in 20 counties. NextEra has executed long-term contracts for renewable energy supply with several California Community Choice Aggregators (CCAs) including Silicon Valley Clean Energy, Marin Clean Energy, CleanPowerSF, Sonoma Clean Power Authority, Clean Power Alliance of Southern California, and Central Coast Community Energy for solar, storage, and wind.
NextEra will develop, own and operate the Resurgence Solar I project.
PROJECT DESCRIPTION / PORTFOLIO
The Resurgence Solar I project will consist of a 90 MW PV field combined with a 75 MW (300 MWhs) lithium-ion battery storage system. The project will be part of a larger project that could be up to a 138 MWs. The existing “brownfield” site is the home of the SEGS project which was one of the original solar thermal sites built in the 1980’s. The legacy project ceased operation in 2019. NextEra plans to repurpose the site and decommission the SEGS assets and replace with PV + storage. The development plan required a conditional use permit from San Bernadino County as well as an approved decommissioning plan from the California Energy Commission (CEC), both of which have been received. Environmentally, the site is disturbed land with no wetlands, biological or cultural issues. NextEra is using the existing transmission infrastructure.
VCE will receive approximately 1/3rd of its annual needs from the renewable facility for 20 years. The competitively priced energy and capacity will allow VCE to secure stable pricing for both energy and resource adequacy. As illustrated in the below chart, the Resurgence project plays a critical role in VCE’s portfolio. The project provides a large portion of renewable energy which supports the Renewable Portfolio Standard (RPS) mandate, has a significant storage component supplying valuable resource adequacy (RA), and has operational flexibility allowing VCE’s customers to benefit economically.
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Item 19
3 AMENDMENT
The amendment addresses adjustments to the PPA pricing, schedule, development security as well as an increase to the workforce development and local sustainability funds. As shown in the attached Amendment, the project continues to provide a large portion of renewable energy which supports VCE’s strategic goals and helps satisfy the RPS and other regulatory mandates.
The amended agreement also continues to provide a significant storage component which supplies valuable resource RA. Overall, based on staff’s assessment of market conditions, the amended agreement continues to supply economic power and RA to VCE and its customers.
CONCLUSION
Staff believes the terms of the amendment supports VCE’s policy objectives, help meet regulatory requirements, and are competitively priced. Staff recognizes the unique energy market conditions and has developed an amendment that is in the best interest of VCE’s customers for the near and long term.
Attachments
1. Amendment 1 to Resurgence Solar I LLC Power Purchase Agreement (redacted)
2. Resurgence Solar I LLC Power Purchase Agreement (redacted)
3. Resolution 2022-XXX – Amendment 1 to Resurgence Solar I LLC Power Purchase Agreement 0 100000
00000
300000
00000
00000
00000
00000
800000
900000
1000000
0 1 0 0 3 0 0 0 0 0 8 0 9 030
MWh
Annual RPS Posi on
aseload
Willow Springs Solar Storage
Gibson Solar Storage
Resurgence Solar Storage
Putah Creek Solar Storage
A uamarine Solar
Indian Valley ydro
Short Term RECs
VCE Retail Load
RPS Re uirement
Renewable 13 18 1 8 83 9 9
39 renewable during compliance
period ( 0 re uirement)
152
AMENDMENT NO. 1 TO RENEWABLE POWER PURCHASE AGREEMENT
This Amendment No. 1 (the “Amendment”) to the Agreement (as defined below), is dated as of July __, 2022 (the “Amendment Effective Date”), between Valley Clean Energy Alliance, a California joint powers authority (“Buyer”), and Resurgence Solar I, LLC, a Delaware limited liability company (“Seller”). Seller and Buyer are each a “Party” and together the “Parties”.
RECITALS
A. The Parties entered into that certain Renewable Power Purchase Agreement, dated as of January 21, 2021 (the “Agreement”).
B. Seller has claimed significant cost increases and associated delays in achieving Commercial Operation on or before the Guaranteed Commercial Operation Date.
C. The Parties intend to resolve all matters with respect to Seller’s cost increases and Commercial Operation delays on the terms set forth herein.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Definitions. Capitalized terms used and not defined in this Amendment have the respective meanings assigned to them in the Agreement.
2. Amendments to the Agreement.
(a) The date set forth for the Milestone for “Expected Commercial Operation Date” of “12/31/2022” on the Cover Sheet of the Agreement shall be deleted and replaced with “5/15/2023”.
(b) The date set forth for the Milestone for “Guaranteed Commercial Operation Date” of “12/31/2022” on the Cover Sheet of the Agreement shall be deleted and replaced with “5/15/2023”.
(c) The date set forth for the “RA Guarantee Date” on the Cover Sheet shall be deleted and replaced with “the later of (i) July 1, 2023 or (ii) the first day of the first Showing Month that commences at least thirty (30) days after the Commercial Operation Date”.
(d) The “Renewable Rate” portion of the “Contract Price” on the Cover Sheet of the Agreement shall be deleted and replaced with the following table:
Contract Year Renewable Rate
1 – 20
153
2 (e) The “Development Security” portion of “Security” on the Cover Sheet of the Agreement,
Development Security required hereby pursuant to Section 3 of this Amendment.
(f) A new Section 4.10(h) is added to the Agreement as follows:
Seller and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement the Renewable Energy Credits transferred to Buyer conform to the definition and attributes required for compliance with the California Renewables Portfolio Standard, as set forth in California Public Utilities Commission Decision 08-08-028, and as may be modified by subsequent decision of the California Public Utilities Commission or by subsequent legislation. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law.
(g) Section 11.6 of the Agreement, regarding “Limitation on Seller’s Ability to Make or Agree to Third-Party Sales from the Facility after Early Termination Date”, shall be amended by replacing .
(h) Section 11.9 of the Agreement, regarding “Seller Pre-COD Termination”, shall be deleted in its entirety and replaced with the following:
At any time prior to the Commercial Operation Date, Seller may for any reason, by Notice to Buyer pursuant to this Section 11.9, terminate this Agreement. As Buyer’s sole right and remedy (and Seller’s sole liability and obligation) arising out of any such termination under this Section 11.9, Buyer shall be entitled (A) to liquidate and retain all Development Security and (B) to collect from Seller (and Seller shall be obligated to pay to Buyer) the total amount of all Delay Damages accrued and unpaid as of the Agreement termination date; provided, in no event shall the sum of (A) and (B) exceed an amount equal to
(i) Section 13.4 of the Agreement, regarding “Workforce Development”, shall be amended by (i) replacing “twenty thousand dollars ($20,000)” with “thirty thousand dollars ($30,000), and (ii) replacing “two hundred thousand dollars ($200,000)” with “three hundred thousand dollars ($300,000)”. 154
3 (j) Section 13.5 of the Agreement, regarding “Local Sustainability”, shall be amended by (i) replacing “ten thousand dollars ($10,000)” with “fifteen thousand dollars ($15,000), and (ii) replacing “one hundred thousand dollars ($100,000)” with “one hundred fifty thousand dollars ($150,000)”.
(k) Section 2(b) of Exhibit B of the Agreement shall be deleted in its entirety and replaced with the following:
Seller may extend the Guaranteed Commercial Operation Date by paying Commercial Operation Delay Damages in advance to Buyer for each day Seller desires to extend the Guaranteed Commercial Operation Date. On or before the date that is ten (10) days prior to the then-current Guaranteed Commercial Operation Date Seller shall provide Notice and payment to Buyer of the Commercial Operation Delay Damages for the number of days Seller wishes to extend the Guaranteed Commercial Operation Date. If Seller extends the Guaranteed Commercial Operation Date through the payment of Commercial Operation Delay Damages and Seller achieves Commercial Operation prior to the Guaranteed Commercial Operation Date as extended by the payment of such Commercial Operation Delay Damages, Buyer shall refund to Seller the Commercial Operation Delay Damages for each day that 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). To the extent a Development Cure Period overlaps with any days for which Seller has paid to Buyer Commercial Operation Delay Damages to extend the Guaranteed Commercial Operation Date, then Buyer shall refund to Seller the Commercial Operation Delay Damages for each day that is covered by such Development Cure Period, not to exceed the total amount of Commercial Operation Delay Damages paid by Seller pursuant to this Section 2(b). For avoidance of doubt, this Section 2(b) does not limit Seller’s right to claim a Development Cure Period pursuant to Section 4 of this Exhibit B that would extend the Guaranteed Commercial Operation Date past the period of time for which Seller previously paid Commercial Operation Delay Damages to extend the Guaranteed Commercial Operation Date; nor does this Section 2(b) limit Seller’s right to pay additional Commercial Operation Delay Damages to further extend the Guaranteed Commercial Operation Date past the date on which a Development Cure Period has concluded.
(l) Section 4(a) of Exhibit B of the Agreement, regarding “Extension of the Guaranteed Dates”, shall be deleted in its entirety and replaced with the following: “Reserved”. (m) Section 4(b) of Exhibit B of the Agreement, regarding “Extension of the Guaranteed Dates”, shall be deleted in its entirety and replaced with the following:
a Force Majeure Event occurs, provided, however, that Seller may not claim a Force Majeure Event due to any circumstance known by Seller at the time of the Amendment Effective Date, including any of the circumstances identified in 155
4 Attachment 1 to the Amendment, which is incorporated into the Agreement by this reference; or
(n) Section I.(C.) of Exhibit Q of the Agreement, regarding “Charge and Discharge Rates”, shall be amended by replacing each of the listed “75 MW/s” amounts under the “Ramp Rate (MW/s) Description” with “16 MW/s”.
3. To secure its obligations under the
Agreement, as amended hereby, Seller shall deliver to Buyer the Development Security required hereunder within ten (10) days after the Amendment Effective Date.
4. Limited Effect. Except as expressly provided in this Amendment, all of the terms and provisions of the Agreement are and will remain in full force and effect and are hereby ratified and confirmed by the Parties. Without limiting the generality of the foregoing, the amendments contained herein will not be construed as an amendment to or waiver of any other provision of the Agreement or as a waiver of or consent to any further or future action on the part of either Party that would require the waiver or consent of the other Party. On and after the Effective Date of this Amendment, each reference in the Agreement to “this Agreement,” “the Agreement,” “hereunder,” “hereof,” “herein” or words of like import will mean and be a reference to the Agreement as amended by this Amendment.
5. Miscellaneous.
(a) This Amendment is governed by and construed in accordance with, the laws of the State of California, without regard to the conflict of laws provisions of such State. (b) This Amendment shall inure to the benefit of and be binding upon each of the Parties and each of their respective successors and permitted assigns. (c) The headings in this Amendment are for reference only and do not affect the interpretation of this Amendment.
(d) This Amendment may be executed in counterparts, each of which is deemed an original, but all of which constitutes one and the same agreement. Delivery of an executed counterpart of this Amendment electronically or by facsimile shall be effective as delivery of an original executed counterpart of this Amendment. (e) This Amendment constitutes the sole and entire agreement between the Parties with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.
(f) Each Party shall pay its own costs and expenses in connection with this Amendment (including the fees and expenses of its advisors, accounts and legal counsel). 156
5 [Signature Page Follows]
157
6 IN WITNESS WHEREOF, the Parties have executed this Amendment effective as of the date first written above.
“SELLER:”
RESURGENCE SOLAR I, LLC
By:
Printed Name:
Title:
“BUYER:”
VALLEY CLEAN ENERGY ALLIANCE
By:
Printed Name:
Title:
158
7 ATTACHMENT 1
CIRCUMSTANCES FOR WHICH FORCE MAJEURE NOT ALLOWED
Seller’s inability to obtain sufficient equipment, materials or other resources to build or operate the Facility resulting in delays and/or inability to timely achieve the Guaranteed Commercial Operation Date arising from the decision of the U.S. Department of Commerce issued on March 28, 2022, to initiate an anti-circumvention investigation in Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled into Modules, from the People's Republic of China, Petition filed February 8, 2022 by Auxin Solar, Inc. in four separate DOC dockets: A-570-979 Malaysia; Thailand; Cambodia; and Vietnam.
Seller is aware of (i) rulemaking in connection with the Uyghur Forced Labor Prevention Act enacted on December 23, 2021, or (ii) the Hoshine Silicon Industry Withhold Release Order, which could ultimately have a negative impact on Seller and the Facility/project. 159
EXECUTION VERSION
RENEWABLE POWER PURCHASE AGREEMENT
COVER SHEET
Seller: Resurgence Solar I, LLC
Buyer: Valley Clean Energy Alliance, a California joint powers authority Description of Facility: A solar photovoltaic electric generating facility with a net nameplate capacity of 90 MW AC coupled with a lithium ion (Li-Ion) battery storage facility with a net nameplate capacity of 75 MW AC / 300 MWh located near the City of Boron within San Bernardino County, California, as described further in Exhibit A.
Milestones:
Milestone Expected Date for
Completion
Execute Interconnection Agreement
Procure major equipment
Obtain federal and state discretionary permits
Expected Construction Start Date
Guaranteed Construction Start Date
Expected Commercial Operation Date
Guaranteed Commercial Operation Date 12/31/2022
Delivery Term: Twenty (20) Contract Years
Delivery Term Expected Energy:
Contract Year Expected Energy (MWh)
1 2
3 4
160
5 6
7 8
9 10
11 12
13 14
15 16
17 18
19 20
Guaranteed Capacity: 165 MW of total Facility capacity
Guaranteed Storage Capacity: 75 MW of Installed Storage Capacity at four (4) hours of continuous discharge
Guaranteed PV Capacity: 90 MW of Installed PV Capacity
Guaranteed Efficiency Rate:
Contract Year Guaranteed Efficiency Rate
1 2
161
3 4
5 6
7 8
9 10
11 12
13 14
15 16
17 18
19 20
RA Guarantee Date: Commercial Operation Date
Contract Price:
The Renewable Rate shall be:
Contract Year Renewable Rate
1 – 20
162
The Storage Rate shall be:
Contract Year Storage Rate
1 – 20
Product:
☒ PV Energy
☒ Discharging Energy
☒ Green Attributes
☒ Installed Storage Capacity and Effective Storage Capacity ☒ Ancillary Services
☒ Capacity Attributes
Scheduling Coordinator: Buyer
Security:
Development Security:
Performance Security:
Guarantor:
163
TABLE OF CONTENTS
Page
i
ARTICLE 1 DEFINITIONS ........................................................................................................ 1
1.1 Contract Definitions............................................................................................... 1
1.2 Rules of Interpretation ......................................................................................... 25 ARTICLE 2 TERM; CONDITIONS PRECEDENT.................................................................. 26
2.1 Contract Term. ..................................................................................................... 26
2.2 Conditions Precedent ........................................................................................... 26
2.3 Development; Construction; Progress Reports.................................................... 27
2.4 Remedial Action Plan .......................................................................................... 27 ARTICLE 3 PURCHASE AND SALE...................................................................................... 28
3.1 Purchase and Sale of Product............................................................................... 28
3.2 Sale of Green Attributes....................................................................................... 28
3.3 Imbalance Energy. ............................................................................................... 28
3.4 Ownership of Renewable Energy Incentives....................................................... 28
3.5 Future Environmental Attributes. ........................................................................ 29
3.6 Test Energy. ......................................................................................................... 29
3.7 Capacity Attributes. ............................................................................................. 29
3.8 Resource Adequacy Failure ................................................................................. 30
3.9 CEC Certification and Verification. .................................................................... 30
3.10 Eligibility. ............................................................................................................ 31
3.11 California Renewables Portfolio Standard........................................................... 31
3.12 Compliance Expenditure Cap. ............................................................................. 31
3.13 Project Configuration........................................................................................... 32 ARTICLE 4 OBLIGATIONS AND DELIVERIES................................................................... 32
4.1 Delivery................................................................................................................ 32
4.2 Title and Risk of Loss.......................................................................................... 33
4.3 Forecasting........................................................................................................... 33
4.4 Dispatch Down/Curtailment. ............................................................................... 34
4.5 Energy Management ............................................................................................ 35
4.6 Reduction in Delivery Obligation........................................................................ 37
4.7 Guaranteed Energy Production............................................................................ 38
4.8 Storage Facility Availability; Ancillary Services................................................ 39
4.9 Storage Facility Testing ....................................................................................... 40
4.10 WREGIS .............................................................................................................. 41 ARTICLE 5 TAXES .................................................................................................................. 43
5.1 Allocation of Taxes and Charges......................................................................... 43
5.2 Cooperation.......................................................................................................... 43 ARTICLE 6 MAINTENANCE OF THE FACILITY................................................................ 43
6.1 Maintenance of the Facility. ................................................................................ 43
6.2 Maintenance of Health and Safety....................................................................... 43
6.3 Shared Facilities................................................................................................... 44 164
ii
ARTICLE 7 METERING........................................................................................................... 44
7.1 Metering............................................................................................................... 44
7.2 Meter Verification................................................................................................ 45 ARTICLE 8 INVOICING AND PAYMENT; CREDIT............................................................ 45
8.1 Invoicing. ............................................................................................................. 45
8.2 Payment................................................................................................................ 45
8.3 Books and Records. ............................................................................................. 46
8.4 Payment Adjustments; Billing Errors. ................................................................. 46
8.5 Billing Disputes. .................................................................................................. 46
8.6 Netting of Payments............................................................................................. 47
8.7 Seller’s Development Security. ........................................................................... 47
8.8 Seller’s Performance Security.............................................................................. 47
8.9 First Priority Security Interest in Cash or Cash Equivalent Collateral ................ 47
8.10 Buyer’s Financial Covenants............................................................................... 48 ARTICLE 9 NOTICES .............................................................................................................. 49
9.1 Addresses for the Delivery of Notices................................................................. 49
9.2 Acceptable Means of Delivering Notice.............................................................. 50 ARTICLE 10 FORCE MAJEURE............................................................................................. 50
10.1 Definition ............................................................................................................. 50
10.2 No Liability If a Force Majeure Event Occurs .................................................... 51
10.3 Notice................................................................................................................... 51
10.4 Termination Following Force Majeure Event...................................................... 51 ARTICLE 11 DEFAULTS; REMEDIES; TERMINATION..................................................... 52
11.1 Events of Default ................................................................................................. 52
11.2 Remedies; Declaration of Early Termination Date.............................................. 55
11.3 Damage Payment; Termination Payment ............................................................ 55
11.4 Notice of Payment of Termination Payment or Damage Payment...................... 56
11.5 Disputes with Respect to Termination Payment or Damage Payment ................ 57
11.6 Limitation on Seller’s Ability to Make or Agree to Third-Party Sales from the Facility after Early Termination Date. ........................................................... 57
11.7 Rights and Remedies Are Cumulative................................................................. 57
11.8 Mitigation............................................................................................................. 57
11.9 Seller Pre-COD Termination. .............................................................................. 58 ARTICLE 12 LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES ........ 58
12.1 No Consequential Damages................................................................................. 58
12.2 Waiver and Exclusion of Other Damages............................................................ 58 ARTICLE 13 REPRESENTATIONS AND WARRANTIES; AUTHORITY.......................... 59
13.1 Seller’s Representations and Warranties. ............................................................ 59
13.2 Buyer’s Representations and Warranties. ............................................................ 60
13.3 General Covenants. .............................................................................................. 61
13.4 Workforce Development...................................................................................... 61 165
iii
13.5 Local Sustainability. ............................................................................................ 61 ARTICLE 14 ASSIGNMENT.................................................................................................... 62
14.1 General Prohibition on Assignments. .................................................................. 62
14.2 Collateral Assignment.......................................................................................... 62
14.3 Permitted Assignment by Seller........................................................................... 62
14.4 Permitted Transfer by Seller................................................................................ 63
14.5 Shared Facilities; Portfolio Financing. ................................................................ 63 ARTICLE 15 DISPUTE RESOLUTION................................................................................... 63
15.1 Governing Law. ................................................................................................... 63
15.2 Dispute Resolution............................................................................................... 63
15.3 Attorneys’ Fees. ................................................................................................... 63 ARTICLE 16 INDEMNIFICATION ......................................................................................... 64
16.1 Indemnification. ................................................................................................... 64
16.2 Claims. ................................................................................................................. 64 ARTICLE 17 INSURANCE ...................................................................................................... 65
17.1 Insurance .............................................................................................................. 65 ARTICLE 18 CONFIDENTIAL INFORMATION................................................................... 66
18.1 Definition of Confidential Information................................................................ 66
18.2 Duty to Maintain Confidentiality......................................................................... 66
18.3 Irreparable Injury; Remedies. .............................................................................. 67
18.4 Further Permitted Disclosure. .............................................................................. 67
18.5 Press Releases...................................................................................................... 68 ARTICLE 19 MISCELLANEOUS............................................................................................ 68
19.1 Entire Agreement; Integration; Exhibits.............................................................. 68
19.2 Amendments. ....................................................................................................... 68
19.3 No Waiver............................................................................................................ 68
19.4 No Agency, Partnership, Joint Venture or Lease................................................. 68
19.5 Severability. ......................................................................................................... 69
19.6 Mobile-Sierra. ...................................................................................................... 69
19.7 Counterparts......................................................................................................... 69
19.8 Electronic Delivery. ............................................................................................. 69
19.9 Binding Effect...................................................................................................... 69
19.10 No Recourse to Members of Buyer. .................................................................... 69
19.11 Forward Contract. ................................................................................................ 70
19.12 Change in Electric Market Design....................................................................... 70
19.13 Further Assurances............................................................................................... 70 Exhibits:
Exhibit A Facility Description
Exhibit B Facility Construction and Commercial Operation Exhibit C Compensation
166
iv
Exhibit D Scheduling Coordinator Responsibilities
Exhibit E Progress Reporting Form
Exhibit F-1 Form of Monthly Expected Available Generating Facility Capacity Report Exhibit F-2 Form of Monthly Expected PV Energy Report
Exhibit F-3 Form of Monthly Expected Available Effective Storage Capacity Report Exhibit F-4 Form of Monthly Expected Available Storage Capability Report Exhibit G Guaranteed Energy Production Damages Calculation Exhibit H Form of Commercial Operation Date Certificate Exhibit I-1 Form of Installed Capacity Certificate
Exhibit I-2 Form of Effective Storage Capacity Certificate Exhibit J Form of Construction Start Date Certificate
Exhibit K Form of Letter of Credit
Exhibit L Form of Guaranty
Exhibit M Form of Replacement RA Notice
Exhibit N Notices
Exhibit O Storage Capacity Tests
Exhibit P Annual Storage Capacity Availability Calculation Exhibit Q Operating Restrictions
Exhibit R Metering Diagram
Exhibit S Form of Collateral Assignment Agreement
167
RENEWABLE POWER PURCHASE AGREEMENT
This Renewable Power Purchase Agreement (“Agreement”) is entered into as of January 21, 2021 (the “Effective Date”), between Buyer and Seller. Buyer and Seller are sometimes referred to herein individually as a “Party” and jointly as the “Parties.” All capitalized terms used in this Agreement are used with the meanings ascribed to them in Article 1 to this Agreement.
RECITALS
WHEREAS, Seller intends to develop, design, construct, own, and operate the Facility; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the terms and conditions set forth in this Agreement, the Product;
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the sufficiency and adequacy of which are hereby acknowledged, the Parties agree to the following:
ARTICLE 1
DEFINITIONS
1.1 Contract Definitions.
The following terms, when used herein with initial capitalization, shall have the meanings set forth below:
“AC” means alternating current.
“Accepted Compliance Costs” has the meaning set forth in Section 3.12(c). “Adjusted Energy Production” has the meaning set forth in Exhibit G. “Affiliate” means, with respect to any Person, each Person that directly or indirectly controls, is controlled by, or is under common control with such designated Person. For purposes of this definition and the definition of “Permitted Transferee”, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean (a) the direct or indirect right to cast at least fifty percent (50%) of the votes exercisable at an annual general meeting (or its equivalent) of such Person or, if there are no such rights, ownership of at least fifty percent (50%) of the equity or other ownership interest in such Person, or (b) the right to direct the policies or operations of such Person.
Notwithstanding the foregoing, with respect to Seller, Affiliate shall include NextEra Energy Operating Partners, LP and NextEra Energy Partners, LP, and their respective direct or indirect Affiliate subsidiaries.
168
2 “After-Tax Basis” means, with respect to any payment received, or deemed to have been received, by any Person, the amount of such payment (the “Base Payment”), supplemented by a further payment (the “Additional Payment”) to such Person so that the sum of the Base Payment plus the Additional Payment will be equal to the Base Payment, after deduction of the amount of all taxes required to be paid by such Person in respect of the receipt or accrual of the Base Payment and the Additional Payment (taking into account any current or previous credits or deductions arising from the underlying event giving rise to the payment, the Base Payment and the Additional Payment). Such calculations shall be made on the assumption that the recipient is subject to Federal income taxation at the statutory rate applicable to corporations under subchapter C of the Internal Revenue Code of 1986, as amended, and subject to the highest state and local income tax rate then in effect for corporations in the states in which the Person is subject to taxation during the applicable fiscal year, and shall take into account the deductibility, if applicable (for Federal income tax purposes), of state and local income taxes.
“Agreement” has the meaning set forth in the Preamble and includes any Exhibits, schedules and any written supplements hereto, the Cover Sheet, and any designated collateral, credit support or similar arrangement between the Parties. “Ancillary Services” means spinning reserve, non-spinning reserve, regulation up, regulation down, black start, voltage support, and any other ancillary services that the Facility is capable of providing consistent with the Operating Restrictions, as each is defined in the CAISO Tariff.
“Annual Storage Capacity Availability” has the meaning set forth in Exhibit P. “Approved Forecast Vendor” means (x) any of CAISO or (y) any other vendor reasonably acceptable to both Buyer and Seller for the purposes of providing or verifying the forecasts under Section 4.3(d).
“Assignment Agreement” has the meaning set forth in Section 14.5. “Automated Dispatch System” or “ADS” has the meaning set forth in the CAISO Tariff. “Automatic Generation Control” or “AGC” has the meaning set forth in the CAISO Tariff.
“Availability Notice” means Seller’s availability forecasts issued pursuant to Section 4.3 with respect to the available Effective Storage Capacity and available Storage Capability. “Availability Standards” has the meaning set forth in the CAISO Tariff or such other similar term as modified and approved by FERC hereafter to be incorporated in the CAISO Tariff. “Bankrupt” or “Bankruptcy” means with respect to any entity, such entity that (a) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Law, (b) has any such petition filed or commenced against it which remains unstayed or undismissed for a period of ninety (90) days, (c) makes an assignment or any general arrangement for the benefit of creditors, (d) otherwise becomes bankrupt or insolvent (however evidenced), (e) has a liquidator, 169
3 administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (f) is generally unable to pay its debts as they fall due.
“Battery Charging Factor” means the percentage SOC of the Storage Facility after the first five (5) hours of the charging phase of the applicable Storage Capacity Test. “Battery Discharging Factor” means one (1) minus the percentage SOC of the Storage Facility after the first four (4) hours of the discharging phase of the applicable Storage Capacity Test.
“Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday in California. A Business Day begins at 8:00 a.m. and ends at 5:00 p.m. local time for the Party sending a Notice, or payment, or performing a specified action. “Buyer” has the meaning set forth on the Cover Sheet.
“Buyer Assignee” has the meaning set forth in Section 14.5. “Buyer Bid Curtailment” means the occurrence of both of the following:
(a) the CAISO provides notice to a Party or the Scheduling Coordinator for the Generating Facility, requiring the Party to deliver less PV Energy from the Generating Facility than the full amount of Energy forecasted in accordance with Section 4.3 to be produced from the Generating Facility for a period of time; and
(b) for the same time period as referenced in (a), the notice referenced in (a) results from Buyer or the SC for the Generating Facility:
(i) not having submitted a Self-Schedule or Energy Supply Bid for the MW subject to the reduction;
(ii) having submitted an Energy Supply Bid and the MW subject to the reduction were not awarded a schedule in connection with such Energy Supply Bid; or
(iii) having submitted a Self-Schedule for less than the full amount of Facility Energy forecasted to be generated by or delivered from the Facility.
If the Generating Facility is subject to a Planned Outage, Forced Facility Outage, Force Majeure Event and/or a Curtailment Period during the same time period as referenced in (a), then the calculation of Deemed Delivered Energy during such period shall not include any PV Energy that was not generated or stored due to such Planned Outage, Forced Facility Outage, Force Majeure Event or Curtailment Period.
170
4 “Buyer Curtailment Order” means the instruction from Buyer to Seller to reduce PV Energy from the Generating Facility by the amount, and for the period of time set forth in such instruction, for reasons unrelated to a Planned Outage, Forced Facility Outage, Force Majeure Event affecting the Facility and/or Curtailment Order.
“Buyer Curtailment Period” means the period of time, as measured using current Settlement Intervals, during which Seller reduces PV Energy from the Generating Facility pursuant to or as a result of (a) Buyer Bid Curtailment, (b) a Buyer Curtailment Order or (c) a Buyer Event of Default hereunder which directly causes Seller to be unable to deliver PV Energy to the Delivery Point; provided, that the duration of any Buyer Curtailment Period shall be inclusive of the time required for the Generating Facility to ramp down and ramp up. “Buyer Default” means an Event of Default of Buyer.
“Buyer Dispatched Test” has the meaning in Section 4.9(c). “Buyer’s Indemnified Parties” has the meaning set forth in Section 18.2. “Buyer’s WREGIS Account” has the meaning set forth in Section 4.10(a). “CAISO” means the California Independent System Operator Corporation or any successor entity performing similar functions.
“CAISO Certification” means the certification and testing requirements for a storage unit set forth in the CAISO Tariff that are applicable to the Facility, including certification and testing for all Ancillary Services, PMAX, and PMIN associated with such storage units, that are applicable to the Facility.
“CAISO Charges Invoice” has the meaning set forth in Exhibit D. “CAISO Dispatch” means any Charging Notice or Discharging Notice given by the CAISO to the Facility, whether through ADS, AGC or any successor communication protocol, communicating an Ancillary Service Award (as defined in the CAISO Tariff) or directing the Storage Facility to charge or discharge at a specific MW rate for a specified period of time or amount of MWh.
“CAISO Grid” has the same meaning as “CAISO Controlled Grid” as defined in the CAISO Tariff.
“CAISO Tariff” means the California Independent System Operator Corporation Agreement and Tariff, Business Practice Manuals (BPMs), and Operating Procedures, including the rules, protocols, procedures and standards attached thereto, as the same may be amended or modified from time to time and approved by FERC.
“Calculation Interval” has the meaning set forth in Exhibit P. “California Renewables Portfolio Standard” or “RPS” means the renewable energy program and policies established by California State Senate Bills 1038 (2002), 1078 (2002), 107 171
5 (2008), X-1 2 (2011), 350 (2015), and 100 (2018) as codified in, inter alia, California Public Utilities Code Sections 399.11 through 399.31 and California Public Resources Code Sections 25740 through 25751, as such provisions are amended or supplemented from time to time. “Capacity Attribute” means any current or future defined characteristic, certificate, tag, credit, or accounting construct associated with the amount of power that the Facility can generate and deliver to the Delivery Point at a particular moment and that can be purchased and sold under CAISO market rules, including Resource Adequacy Benefits. “Capacity Availability Factor” has the meaning set forth in Exhibit C. “Capacity Damages” means collectively Storage Capacity Damages and PV Capacity Damages.
“Capacity Test” or “CT” means the Commercial Operation Storage Capacity Test, Storage Capacity Test, or any other test conducted pursuant to Exhibit O. “CEC” means the California Energy Commission or its successor agency. “CEC Certification and Verification” means that the CEC has certified (or, with respect to periods before the date that is one hundred eighty (180) days following the Commercial Operation Date, that the CEC has pre-certified) that the Generating Facility is an Eligible Renewable Energy Resource for purposes of the California Renewables Portfolio Standard and that all PV Energy delivered to the Delivery Point qualifies as generation from an Eligible Renewable Energy Resource.
“CEC Precertification” means that the CEC has issued a precertification for the Facility indicating that the planned operations of the Facility would comply with applicable CEC requirements for CEC Certification and Verification.
“Change of Control” means, except in connection with public market transactions of equity interests or capital stock of Seller’s Ultimate Parent, any circumstance in which Ultimate Parent ceases to own, directly or indirectly through one or more intermediate entities, more than fifty percent (50%) of the outstanding equity interests in Seller; provided that in calculating ownership percentages for all purposes of the foregoing:
(a) any ownership interest in Seller held by Ultimate Parent indirectly through one or more intermediate entities shall not be counted towards Ultimate Parent’s ownership interest in Seller unless Ultimate Parent directly or indirectly owns more than fifty percent (50%) of the outstanding equity interests in each such intermediate entity; and (b) ownership interests in Seller owned directly or indirectly by any Lender (including any tax equity provider) shall be excluded from the total outstanding equity interests in Seller. “Charging Energy” means all PV Energy produced by the Generating Facility and delivered to the Storage Facility (including pursuant to a Charging Notice), as measured at the Storage Facility Metering Point by the Storage Facility Meter, as such meter readings are adjusted by the CAISO for any applicable Electrical Losses or Station Use. All Charging Energy shall be 172
6 used solely to charge the Storage Facility, and all Charging Energy shall be generated solely by the Generating Facility.
“Charging Notice” means the operating instruction, and any subsequent updates, given by Buyer’s SC or the CAISO to Seller, directing the Storage Facility to charge at a specific MW rate for a specified period of time or amount of MWh; provided, (a) any such operating instruction shall be in accordance with the Operating Restrictions, and (b) if, during a period when the Storage Facility is instructed by Buyer’s SC or the CAISO to be charging, the actual power output level of the Generating Facility is less than the power level set forth in an applicable “Charging Notice”, such “Charging Notice” shall be deemed to be automatically adjusted to be equal to the actual power level of the Generating Facility. Any Buyer Dispatched Test shall be considered a Charging Notice, and any Charging Notice shall not constitute a Buyer Bid Curtailment, Buyer Curtailment Order or Curtailment Order.
“COD Certificate” has the meaning set forth in Exhibit B. “Collateral Assignment Agreement” has the meaning set forth in Section 14.2. “Commercial Operation” has the meaning set forth in Exhibit B. “Commercial Operation Date” means the date Commercial Operation is achieved. “Commercial Operation Delay Damages” means an amount equal to (a) the Development Security amount required hereunder, divided by (b) “Commercial Operation Storage Capacity Test” means the Storage Capacity Test conducted in connection with Commercial Operation of the Storage Facility, including any additional Storage Capacity Test for additional Storage Facility capacity installed after the Commercial Operation Date pursuant to Section 5 of Exhibit B. “Communications Protocols” means certain Operating Restrictions developed by the Parties pursuant to Exhibit Q that involve procedures and protocols regarding communication with respect to the operation of the Storage Facility pursuant to this Agreement. “Compliance Actions” has the meaning set forth in Section 3.12(a). “Compliance Expenditure Cap” has the meaning set forth in Section 3.12. “Confidential Information” has the meaning set forth in Section 18.1. “Construction Start” has the meaning set forth in Exhibit B. “Construction Start Date” has the meaning set forth in Exhibit B. “Contract Price” has the meaning set forth on the Cover Sheet. For clarity, the Contract Price is each of the Renewable Rate and the Storage Rate. “Contract Term” has the meaning set forth in Section 2.1. 173
7 “Contract Year” means a period of twelve (12) consecutive months. The first Contract Year shall commence on the Commercial Operation Date and each subsequent Contract Year shall commence on the anniversary of the Commercial Operation Date. “Costs” means, with respect to the Non-Defaulting Party, brokerage fees, commissions and other similar third-party transaction costs and expenses reasonably incurred by such Party either in terminating any arrangement pursuant to which it has hedged or financed its obligations or entering into new arrangements which replace the Agreement; and all reasonable attorneys’ fees and expenses incurred by the Non-Defaulting Party in connection with terminating the Agreement. “Cover Sheet” means the cover sheet to this Agreement, which is incorporated into this Agreement.
“COVID-19” means the epidemic disease designated COVID-19 and the related virus designated SARS-CoV-2 and any mutations thereof, and the efforts of a Governmental Authority to combat such disease.
“CPUC” means the California Public Utilities Commission, or successor entity. “Credit Notice” has the meaning set forth in Section 8.10. “Credit Rating” means, with respect to any entity, the rating then assigned to such entity’s unsecured, senior long-term debt obligations (not supported by third party credit enhancements) or if such entity does not have a rating for its senior unsecured long-term debt, then the rating then assigned to such entity as an issuer rating by S&P, Fitch, or Moody’s. If ratings by S&P, Fitch, and Moody’s are not equivalent, the lower rating shall apply. “Cure Plan” has the meaning set forth in Section 11.1(b)(iii). “Curtailment Order” means any of the following:
(a) CAISO orders, directs, alerts, or provides notice to a Party, including a CAISO Operating Order, to curtail deliveries of Facility Energy for the following reasons: (i) any System Emergency, (ii) any warning of an anticipated System Emergency, or warning of an imminent condition or situation, which jeopardizes CAISO’s electric system integrity or the integrity of other systems to which CAISO is connected, or (iii) in response to an Energy oversupply or potential Energy oversupply, and Buyer or the SC for the Facility submitted a Self-Schedule for the MWhs curtailed corresponding to the MWhs in the VER forecast for the Generating Facility during the relevant time period;
(b) a curtailment ordered by the Transmission Provider for reasons including, but not limited to, (i) any situation that affects normal function of the electric system including, but not limited to, any abnormal condition that requires action to prevent circumstances such as equipment damage, loss of load, or abnormal voltage conditions, or (ii) any warning, forecast or anticipation of conditions or situations that jeopardize the Transmission Provider’s electric system integrity or the integrity of other systems to which the Transmission Provider is connected; 174
8 (c) a curtailment ordered by CAISO or the Transmission Provider due to a Transmission System Outage; or
(d) a curtailment in accordance with Seller’s obligations under its Interconnection Agreement with the Transmission Provider or distribution operator.
To the extent permitted by CAISO, Buyer shall use commercially reasonable efforts to deliver Charging Energy to the Storage Facility during such Curtailment Order. “Curtailment Period” means the period of time, as measured using current Settlement Intervals, during which Seller reduces generation from the Generating Facility pursuant to a Curtailment Order; provided that the Curtailment Period shall be inclusive of the time required for the Facility to ramp down and ramp up.
“Cycles” means, at any point in time during any Contract Year, the number of equivalent charge/discharge cycles of the Storage Facility, which shall be deemed to be equal to (a) the total cumulative amount of Discharging Energy from the Storage Facility at such point in time during such Contract Year (expressed in MWh) divided by (b) four (4) times the weighted average Effective Storage Capacity for such Contract Year to date. “Daily Delay Damages” means an amount equal to (a) the Development Security amount required hereunder, divided by (b)
“Damage Payment” means the amount to be paid by the Defaulting Party to the Non-Defaulting Party after a Terminated Transaction occurring prior to the Commercial Operation Date, in a dollar amount as set forth in Section 11.3(a). “Day-Ahead Forecast” has the meaning set forth in Section 4.3(c). “Day-Ahead Market” has the meaning set forth in the CAISO Tariff. “Day-Ahead Schedule” has the meaning set forth in the CAISO Tariff. “Deemed Delivered Energy” means the amount of PV Energy expressed in MWh that the Generating Facility would have produced and delivered to the Generating Facility Meter, but that is not produced by the Generating Facility during a Buyer Curtailment Period, which amount shall be equal to the Real-Time Forecast (of the hourly expected PV Energy produced by the Generating Facility) provided pursuant to Section 4.3(d) for the period of time during the Buyer Curtailment Period (or other relevant period), less the amount of PV Energy delivered to the Storage Facility, or to the Delivery Point directly from the Generating Facility, during the Buyer Curtailment Period (or other relevant period); provided that, if the applicable difference is negative, the Deemed Delivered Energy shall be zero (0). If the LMP for the Facility’s PNode during any Settlement Interval was less than zero, Deemed Delivered Energy shall be reduced in such Settlement Interval by the amount of any Charging Energy that was not able to be delivered to the Storage Facility during such Settlement Interval due to the unavailability of the Storage Facility due to a Forced Facility Outage.
“Defaulting Party” has the meaning set forth in Section 11.1(a). 175
9 “Deficient Month” has the meaning set forth in Section 4.10(e). “Delay Damages” means Daily Delay Damages and Commercial Operation Delay Damages.
“Delivery Point” has the meaning set forth in Exhibit A. “Delivery Term” shall mean the period of Contract Years set forth on the Cover Sheet beginning on the Commercial Operation Date, unless terminated earlier in accordance with the terms and conditions of this Agreement.
“Development Cure Period” has the meaning set forth in Exhibit B. “Development Security” means (a) cash or (b) a Letter of Credit in the amount set forth on the Cover Sheet.
“Discharging Energy” means all Energy delivered to the Delivery Point from the Storage Facility, as measured at the Storage Facility Metering Point by the Storage Facility Meter, as such meter readings are adjusted by the CAISO for any applicable Electrical Losses or Station Use. All Discharging Energy will have originally been delivered to the Storage Facility as Charging Energy. “Discharging Notice” means the operating instruction, and any subsequent updates, given by Buyer’s SC or the CAISO to Seller, directing the Storage Facility to discharge Discharging Energy at a specific MW rate for a specified period of time or to an amount of MWh; provided, (a) any such operating instruction or updates shall be in accordance with the Operating Restrictions, and (b) if, during a period when the Storage Facility is instructed by Buyer’s SC or the CAISO to be discharging, the sum of PV Energy and Discharging Energy would exceed the Interconnection Capacity Limit, such “Discharging Notice” shall be deemed to be automatically adjusted to reduce the amount of Discharging Energy so that the sum of Discharging Energy and PV Energy does not exceed the Interconnection Capacity Limit, until such time as Buyer’s SC or the CAISO issues a further modified Discharging Notice. Any Discharging Notice shall not constitute a Buyer Bid Curtailment, Buyer Curtailment Order or Curtailment Order. “Disclosing Party” has the meaning set forth in Section 18.2. “Early Termination Date” has the meaning set forth in Section 11.2(a). “Effective Date” has the meaning set forth on the Preamble. “Effective FCDS Date” means the date identified in Seller’s Notice to Buyer (along with a Full Capacity Deliverability Status Finding from CAISO) as the date that the Storage Facility has attained Full Capacity Deliverability Status.
“Effective Storage Capacity” means the lesser of (a) PMAX, and (b) the maximum dependable operating capacity of the Storage Facility to discharge Energy for four (4) hours of continuous discharge, as measured in MW AC at the Delivery Point (i.e., measured at the Storage 176
10 Facility Meter and adjusted for Electrical Losses to the Delivery Point) pursuant to the most recent Storage Capacity Test (including the Commercial Operation Storage Capacity Test), as evidenced by a certificate substantially in the form attached as Exhibit I-2 hereto, in either case (a) or (b) up to but not in excess of (i) the Guaranteed Storage Capacity (with respect to a Commercial Operation Storage Capacity Test) or (ii) the Installed Storage Capacity (with respect to any other Storage Capacity Test).
“Efficiency Rate” means the rate of converting Energy In into Energy Out, as calculated by dividing Energy Out in the applicable month of the Delivery Term by Energy In in the same month of the Delivery Term, expressed as a percentage.
“Electrical Losses” means all transmission or transformation losses (a) between the Generating Facility Metering Point and the Delivery Point associated with delivery of PV Energy, (b) between the Storage Facility Metering Point and the Delivery Point associated with delivery of Discharging Energy, and (c) between the Delivery Point and/or Generating Facility and the Storage Facility Metering Point, as applicable, associated with delivery of Charging Energy to the Storage Facility.
“Eligible Intermittent Resource Protocol” or “EIRP” has the meaning set forth in the CAISO Tariff or a successor CAISO program for intermittent resources. “Eligible Renewable Energy Resource” has the meaning set forth in California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25741(a), as either code provision is amended or supplemented from time to time. “Energy” means electrical energy, measured in kilowatt-hours or multiple units thereof.
Energy shall include without limitation, reactive power and any other electrical energy products that may be developed or evolve from time to time during the Contract Term. “Energy In” means all Energy delivered into the Storage Facility (not including Energy metered into the Storage Facility when not subject to a Charging Notice) measured at the Storage Facility Metering Point by the Storage Facility Meter.
“Energy Management System” or “EMS” means the Facility’s energy management system.
“Energy Out” means all Energy output from the Storage Facility as measured at the Storage Facility Metering Point by the Storage Facility Meter. “Event of Default” has the meaning set forth in Section 11.1. “Excess MWh” has the meaning set forth in Exhibit C.
“Expected Commercial Operation Date” has the meaning set forth on the Cover Sheet. “Expected Construction Start Date” has the meaning set forth on the Cover Sheet. 177
11 “Expected Energy” means the quantity of PV Energy that Seller expects to be able to deliver to Buyer from the Generating Facility during each Contract Year, which for each Contract Year is the quantity specified on the Cover Sheet, which amount shall be adjusted proportionately to the reduction from Guaranteed PV Capacity to Installed PV Capacity pursuant to Section 5(a) of Exhibit B, if applicable.
“Facility” means the combined Generating Facility and the Storage Facility. “Facility Energy” means the sum of PV Energy and Discharging Energy, as applicable, during any Settlement Interval or Settlement Period, as measured by the Storage Facility Meter and/or Storage Facility Meter, as applicable, as such meter readings are adjusted by the CAISO for any applicable Electrical Losses or Station Use.
“FERC” means the Federal Energy Regulatory Commission or any successor government agency.
“Fitch” means Fitch Ratings Ltd., or its successor.
“Force Majeure Event” has the meaning set forth in Section 10.1. “Forced Facility Outage” means an unexpected failure of one or more components of the Facility that prevents Seller from generating Energy or making Facility Energy available at the Delivery Point and that is not the result of a Force Majeure Event. “Forecasted Product” has the meaning set forth in Section 4.3(b). “Forecasting Penalty” has the meaning set forth in Section 4.3(f). “Forward Certificate Transfers” has the meaning set forth in Section 4.10(a). “Full Capacity Deliverability Status” or “FCDS” has the meaning set forth in the CAISO Tariff.
“Full Capacity Deliverability Status Finding” means a written confirmation from the CAISO that the Storage Facility is eligible for Full Capacity Deliverability Status. “Future Environmental Attributes” means any and all Green Attributes that become recognized under applicable Law after the Effective Date (and not before the Effective Date), notwithstanding the last sentence of the definition of “Green Attributes” herein. Future Environmental Attributes do not include Tax Credits associated with the construction or operation of the Facility, or other financial incentives in the form of credits, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation. “Gains” means, with respect to any Party, an amount equal to the present value of the economic benefit to it, if any (exclusive of Costs), resulting from the termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining the economic benefit to a Party may include, without limitation, reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-178 12 Defaulting Party, including without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., SP-15), all of which should be calculated for the remaining Contract Term, and include the value of Green Attributes and Capacity Attributes.
“Generating Facility” means the solar photovoltaic generating facility described on the Cover Sheet and in Exhibit A, located at the Site and including mechanical equipment and associated facilities and equipment required to deliver (a) PV Energy to the Delivery Point, and (b) Charging Energy to the Storage Facility; provided, that the “Generating Facility” does not include the Storage Facility or the Shared Facilities.
“Generating Facility Meter” means the CAISO approved revenue quality meter or meters (with a 0.3 accuracy class), along with a compatible data processing gateway or remote intelligence gateway, telemetering equipment and data acquisition services sufficient for monitoring, recording and reporting, in real time, the amount of PV Energy delivered to the Generating Facility Metering Point for the purpose of invoicing in accordance with Section 8.1. For clarity, the Generating Facility may contain multiple measurement devices that will make up the Generating Facility Meter, and, unless otherwise indicated, references to the Generating Facility Meter shall mean all such measurement devices and the aggregated data of all such measurement devices, taken together.
“Generating Facility Metering Point” means the location(s) of the Generating Facility Meter(s) shown in Exhibit R.
“Governmental Authority” means any federal, state, provincial, local or municipal government, any political subdivision thereof or any other governmental, congressional or parliamentary, regulatory, or judicial instrumentality, authority, body, agency, department, bureau, or entity with authority to bind a Party at law, including CAISO; provided, “Governmental Authority” shall not in any event include any Party.
“Green Attributes” means any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled (including under the RPS regulations and/or under any and all other international, federal, regional, state or other law, rule, regulation, bylaw, treaty or other intergovernmental compact, decision, administrative decision, program (including any voluntary compliance or membership program), competitive market or business method (including all credits, certificates, benefits, and emission measurements, reductions, offsets and allowances related thereto)), attributable to the generation from the Facility and its displacement of conventional energy generation. Green Attributes include but are not limited to Renewable Energy Credits, as well as: (1) any avoided emissions of pollutants to the air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO) and other pollutants; (2) any avoided emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and other greenhouse gases (GHGs) that have been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere; (3) the reporting rights to such avoided emissions, such as Green Tag Reporting 179
13 Rights. Green Attributes do not include (i) any energy, capacity, reliability or other power attributes from the Facility, (ii) Tax Credits associated with the construction or operation of the Facility and other financial incentives in the form of credits, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation, or (iii) emission reduction credits encumbered or used by the Facility for compliance with local, state, or federal operating and/or air quality permits. Green Attributes under the preceding definition are limited to Green Attributes that exist under applicable Law as of the Effective Date. “Green Tag Reporting Rights” means the right of a purchaser of renewable energy to report ownership of accumulated “green tags” in compliance with and to the extent permitted by applicable Law and include, without limitation, rights under Section 1605(b) of the Energy Policy Act of 1992, and any present or future federal, state or local certification program or emissions trading program, including pursuant to the WREGIS Operating Rules. “Green Tags” means a unit accumulated on a MWh basis where one (1) represents the Green Attributes associated with one (1) MWh of PV Energy. “Green-e Certified” means the Green Attributes provided to Buyer pursuant to this Agreement are certified under the Green-e Energy National Standard by Buyer after delivery by Seller of such Green Attributes to Buyer.
“Green-e Energy National Standard” means the Green-e Renewable Energy Standard for Canada and the United States (formerly Green-e Energy National Standard) version 3.4, updated November 12, 2019, as may be further amended from time to time. “Guaranteed Capacity” means the sum of (x) the Guaranteed PV Capacity and (y) the Guaranteed Storage Capacity.
“Guaranteed Commercial Operation Date” has the meaning set forth on the Cover Sheet, subject to extension pursuant to Exhibit B.
“Guaranteed Construction Start Date” has the meaning set forth on the Cover Sheet, subject to extension pursuant to Exhibit B.
“Guaranteed Efficiency Rate” means the minimum guaranteed Efficiency Rate of the Storage Facility throughout the Delivery Term, as set forth on the Cover Sheet. “Guaranteed Energy Production” has the meaning set forth in Section 4.7. “Guaranteed PV Capacity” means the generating capacity of the Generating Facility, as measured in MW AC at the Delivery Point (i.e., measured at the Generating Facility Meter and adjusted for Electrical Losses to the Delivery Point), that Seller commits to install pursuant to this Agreement as set forth on the Cover Sheet.
“Guaranteed Storage Availability” has the meaning set forth in Section 4.8. “Guaranteed Storage Capacity” means the maximum dependable operating capability of the Storage Facility to discharge Energy, as measured in MW AC at the Delivery Point (i.e., 180
14 measured at the Storage Facility Meter and adjusted for Electrical Losses to the Delivery Point) for four (4) hours of continuous discharge, that Seller commits to install pursuant to this Agreement as set forth on the Cover Sheet.
“Guarantor” means, with respect to Seller, any Person that (a) , (b) has a Credit Rating of
from S&P or Fitch, or a Credit Rating of Baa3 or better from Moody’s, (c) is incorporated or organized in a jurisdiction of the United States and is in good standing in such jurisdiction, and (d) executes and delivers a Guaranty for the benefit of Buyer. “Guaranty” means a guaranty from a Guarantor provided for the benefit of Buyer substantially in the form attached as Exhibit L, or as reasonably acceptable to Buyer. “Imbalance Energy” means the amount of Energy in MWh, in any given Settlement Period or Settlement Interval, by which the amount of PV Energy, Charging Energy or Discharging Energy deviates from the amount of Scheduled Energy.
“Indemnified Party” has the meaning set forth in Section 16.1. “Indemnifying Party” has the meaning set forth in Section 16.1. “Initial Synchronization” means the initial delivery of Energy from the Facility to the Delivery Point.
“Installed Capacity” means the sum of (x) the Installed PV Capacity and (y) the Installed Storage Capacity.
“Installed PV Capacity” means the actual generating capacity of the Generating Facility, as measured in MW AC at the Delivery Point, that achieves Commercial Operation, as evidenced by a certificate substantially in the form attached as Exhibit I-1 hereto. “Installed Storage Capacity” means the lesser of (a) PMAX, and (b) maximum dependable operating capacity of the Storage Facility to discharge Energy for four (4) hours of continuous discharge, as measured in MW AC at the Storage Facility Meter Point by the Storage Facility Meter and adjusted for Electrical Losses to the Delivery Point, that achieves Commercial Operation, as evidenced by a certificate substantially in the form attached as Exhibit I-1 hereto, as such capacity may be adjusted pursuant to Section 5 of Exhibit B. “Inter-SC Trade” or “IST” has the meaning set forth in the CAISO Tariff. “Interconnection Agreement” means the interconnection agreement entered into by Seller pursuant to which the Facility will be interconnected with the Transmission System, and pursuant to which Seller’s Interconnection Facilities and any other Interconnection Facilities will be constructed, operated and maintained during the Contract Term. “Interconnection Capacity Limit” means the maximum instantaneous amount of Energy that is permitted to be delivered to the Delivery Point in the amount of 90 MW. 181
15 “Interconnection Facilities” means the interconnection facilities, control and protective devices and metering facilities required to connect the Facility with the Transmission System in accordance with the Interconnection Agreement.
“Interest Rate” has the meaning set forth in Section 8.2. “Interim Deliverability Status” has the meaning set forth in the CAISO Tariff. “ITC” means the investment tax credit established pursuant to Section 48 of the United States Internal Revenue Code of 1986.
“Joint Powers Act” means the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.).
“Joint Powers Agreement” means that certain Joint Powers Agreement dated June 27, 2017, as amended from time to time, under which Buyer is organized as a Joint Powers Authority in accordance with the Joint Powers Act.
“kWh” means a kilowatt-hour measured in alternating current, unless expressly stated in terms of direct current.
“Law” means any applicable law, statute, rule, regulation, decision, writ, order, decree or judgment, permit or any interpretation thereof, promulgated or issued by a Governmental Authority.
“Lender” means, collectively, any Person (a) providing senior or subordinated construction, interim, back leverage or long-term debt, equity or tax equity financing or refinancing for or in connection with the development, construction, purchase, installation or operation of the Facility, whether that financing or refinancing takes the form of private debt (including back-leverage debt), equity (including tax equity), public debt or any other form (including financing or refinancing provided to a member or other direct or indirect owner of Seller), including any equity or tax equity investor directly or indirectly providing financing or refinancing for the Facility or purchasing equity ownership interests of Seller and/or its Affiliates, and any trustee or agent or similar representative acting on their behalf, (b) providing interest rate or commodity protection under an agreement hedging or otherwise mitigating the cost of any of the foregoing obligations and/or (c) participating in a lease financing (including a sale leaseback or leveraged leasing structure) with respect to the Facility. “Letter(s) of Credit” means one or more irrevocable, standby letters of credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such bank having a Credit Rating of at least A- S&P or A3 from Moody’s, in a form substantially similar to the letter of credit set forth in Exhibit K.
“Licensed Professional Engineer” means an independent, professional engineer selected by Seller and reasonably acceptable to Buyer, licensed in the State of California. “Local Capacity Area Resource” has the meaning set forth in the CAISO Tariff. 182
16 “Local RAR” means the local Resource Adequacy Requirements established for load-serving entities by the CAISO pursuant to the CAISO Tariff, the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority. “Local RAR” may also be known as local area reliability, local resource adequacy, local resource adequacy procurement requirements, or local capacity requirement in other regulatory proceedings or legislative actions. “Locational Marginal Price” or “LMP” has the meaning set forth in the CAISO Tariff. “Losses” means, with respect to any Party, an amount equal to the present value of the economic loss to it, if any (exclusive of Costs), resulting from termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining economic loss to a Party may include, without limitation, reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-Defaulting Party, including without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., SP-15), all of which should be calculated for the remaining Contract Term and must include the value of Green Attributes, Capacity Attributes, and Renewable Energy Incentives.
“Lost Output” has the meaning set forth in Section 4.7. “Milestones” means the development activities for significant permitting, interconnection, financing and construction milestones set forth on the Cover Sheet. “Monthly Capacity Payment” means the payment required to be made by Buyer to Seller each month of the Delivery Term as compensation for the provision of Effective Storage Capacity and Capacity Attributes associated with the Storage Facility, as calculated in accordance with Exhibit C.
“Monthly Forecast” has the meaning set forth in Section 4.3(b). “Moody’s” means Moody’s Investors Service, Inc., or its successor. “MW” means megawatts in alternating current, unless expressly stated in terms of direct current.
“MWh” means megawatt-hour measured in alternating current, unless expressly stated in terms of direct current.
“NEER” means NextEra Energy Resources, LLC.
“Negative LMP” means, in any Settlement Period or Settlement Interval, the LMP at the Facility’s PNode is less than zero dollars ($0).
“NERC” means the North American Electric Reliability Corporation. “Net Qualifying Capacity” has the meaning set forth in the CAISO Tariff. 183
17 “Network Upgrades” has the meaning set forth in the CAISO Tariff. “Non-Defaulting Party” has the meaning set forth in Section 11.2. “Notice” shall, unless otherwise specified in the Agreement, mean written communications by a Party to be delivered by hand delivery, United States mail, overnight courier service, or electronic messaging (e-mail).
“Operating Restrictions” means those rules, requirements, and procedures set forth in Exhibit Q.
“Party” has the meaning set forth in the Preamble.
“Performance Measurement Period” means each two (2) consecutive Contract Years commencing with the first Contract Year so that the first Performance Measurement Period shall include Contract Years 1 and 2. Performance Measurement Periods shall overlap, so that if the first Performance Measurement Period is comprised of Contract Years 1 and 2, the second Performance Measurement Period shall be comprised of Contract Years 2 and 3, the third Performance Measurement Period shall be comprised of Contract Years 3 and 4, and so on; provided, a new Performance Measurement Period shall begin following any Performance Measurement Period for which Seller pays any liquidated damages or provides any Replacement Product under Section 4.7. Thus, for example, if Seller pays any liquidated damages or provides any Replacement Product under Section 4.7 for the Performance Measurement Period that is comprised of Contract Years 4 and 5, the next Performance Measurement Period shall be comprised of Contract Years 6 and 7.
“Performance Security” means (a) cash, (b) a Letter of Credit or (c) a Guaranty in the amount set forth on the Cover Sheet.
“Permitted Transfer” means any of the following:
(a) transactions among Affiliates of Seller, including any corporate reorganization, merger, combination or similar transaction or transfer of assets or ownership interests involving Seller or any of its Affiliates; provided, that (i) Ultimate Parent retains the authority, directly or indirectly, to control such Party, or (ii) a wholly-owned, indirect subsidiary of Ultimate Parent operates the Facility;
(b) (i) the direct or indirect transfer of shares of, or equity interests in, Seller to a Lender, (ii) any exercise by a Lender of its rights and remedies under the Financing Documents, and (iii) any change of economic and voting rights triggered in Seller’s organization documents arising from the financing of the Facility which does not result in the transfer of ownership, economic or voting rights in any entity that had no such rights immediately prior to the change; (c) a Change of Control of Ultimate Parent;
(d) the direct or indirect transfer of shares of, or equity interests in, Seller to a Person; provided, following the transfer (i) an Affiliate of NEER continues to hold an economic interest 184
18 in the Facility, (ii) the entity that operates the Facility is, or contracts with, a Permitted Transferee, and (iii) Seller, or such Person, maintains the applicable performance assurance requirements; or (f) a transfer of the Facility to a Person pursuant to any of the following (i) all or substantially all of the assets of Ultimate Parent, (ii) all or substantially all of Ultimate Parent’s renewable energy generation portfolio, or (iii) all or substantially all of Ultimate Parent’s solar generation portfolio; provided, that in the case of each of (i), (ii) and (iii), following such transfer the entity that operates the Facility is, or contracts with, a Permitted Transferee and Seller, or such Person, maintains the applicable performance assurance requirements. “Permitted Transferee” means (a) any Affiliate of Seller or (b) any entity that satisfies, or is controlled by another Person that satisfies the following requirements:
(a) A tangible net worth of not less than
or a Credit Rating of at least BBB- from S&P, BBB- from Fitch, or Baa3 from Moody’s; and
(b) At least two (2) years of experience in the ownership and operations of power generation and energy storage facilities similar to the Facility or has retained a third-party with such experience to operate the Facility.
“Person” means any individual, sole proprietorship, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, incorporated organization, institution, public benefit corporation, unincorporated organization, government entity or other entity.
“Planned Outage” means a period during which the Facility is either in whole or in part not capable of providing service due to planned maintenance that has been scheduled in advance in accordance with Section 4.6(a).
“PMAX” means the applicable CAISO-certified maximum operating level of the Storage Facility.
“PMIN” means the applicable CAISO-certified minimum operating level of the Storage Facility.
“PNode” has the meaning set forth in the CAISO Tariff.
“Portfolio” means the single portfolio of electrical energy generating, energy storage, or other assets and entities, including the Facility (or the interests of Seller or Seller’s Affiliates or the interests of their respective direct or indirect parent companies), that is pledged as collateral security in connection with a Portfolio Financing.
“Portfolio Content Category 1” or “PCC1” means any Renewable Energy Credit associated with the generation of electricity from an Eligible Renewable Energy Resource consisting of the portfolio content set forth in California Public Utilities Code Section 399.16(b)(1), as may be amended from time to time or as further defined or supplemented by Law.
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19 “Portfolio Financing” means any tax equity or debt transaction entered into by an Affiliate of Seller that is secured only by a Portfolio.
“Portfolio Financing Entity” means any Affiliate of Seller that incurs debt in connection with any Portfolio Financing.
“Product” has the meaning set forth on the Cover Sheet. “Progress Report” means a progress report including the items set forth in Exhibit E. “Prudent Operating Practice” means (a) the applicable practices, methods and acts required by or consistent with applicable Laws and reliability criteria, and otherwise engaged in or approved by a significant portion of the electric utility industry during the relevant time period with respect to grid-interconnected, utility-scale generating facilities with integrated energy storage in the Western United States, or (b) any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Prudent Operating Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to acceptable practices, methods or acts generally accepted in the industry with respect to grid-interconnected, utility-scale generating facilities with integrated energy storage in the Western United States. Prudent Operating Practice shall include compliance with applicable Laws, applicable reliability criteria, and the applicable criteria, rules and standards promulgated in the National Electric Safety Code and the National Electrical Code, as they may be amended or superseded from time to time, including the criteria, rules and standards of any successor organizations.
“PV Capacity Damages” has the meaning set forth in Section 5 of Exhibit B. “PV Energy” means all Energy delivered from the Generating Facility to the Generating Facility Metering Point and measured by the Generating Facility Meter, as such meter readings are adjusted by the CAISO for any applicable Electrical Losses or Station Use. “Qualifying Capacity” has the meaning set forth in the CAISO Tariff. “RA Compliance Showing” means the (a) Local RAR compliance or advisory showings (or similar or successor showings), (b) RAR compliance or advisory showings (or similar or successor showings), and (c) Flexible RAR compliance or advisory showings (or similar successor showings), in each case, an entity is required to make to the CAISO pursuant to the CAISO Tariff, to the CPUC (and, to the extent authorized by the CPUC, to the CAISO) pursuant to the Resource Adequacy Rulings, or to any Governmental Authority.
“RA Deficiency Amount” means the liquidated damages payment that Seller shall pay to Buyer for an applicable RA Shortfall Month as calculated in accordance with Section Error! Reference source not found.(b).
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20 “RA Guarantee Date” means the date set forth in the deliverability Section of the Cover Sheet which is the date the Storage Facility is expected to achieve Full Capacity Deliverability Status.
“RA Shortfall Month” means, for purposes of calculating an RA Deficiency Amount under Section Error! Reference source not found.(b), any month, commencing on the RA Guarantee Date, during which the Net Qualifying Capacity of the Storage Facility for such month was less than the Qualifying Capacity of the Storage Facility for such month (including any month during the period between the RA Guarantee Date and the Effective FCDS Date, if applicable). “Real-Time Forecast” has the meaning set forth in Section 4.3(d). “Real-Time Market” has the meaning set forth in the CAISO Tariff. “Real-Time Price” means the Resource-Specific Settlement Interval LMP as defined in the CAISO Tariff. If there is more than one applicable Real-Time Price for the same period of time, Real-Time Price shall mean the price associated with the smallest time interval. “Receiving Party” has the meaning set forth in Section 18.2. “Reliability Network Upgrades” has the meaning set forth in the CAISO Tariff. “Remedial Action Plan” has the meaning set forth in Section 2.4. “Renewable Energy Credit” has the meaning set forth in California Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by Law.
“Renewable Energy Incentives” means: (a) all federal, state, or local Tax credits or other Tax benefits associated with the construction, ownership, or production of electricity from the Facility (including credits under Sections 38, 45, 46 and 48 of the Internal Revenue Code of 1986, as amended); (b) any federal, state, or local grants, subsidies or other like benefits relating in any way to the Facility, including a cash grant available under Section 1603 of Division B of the American Recovery and Reinvestment Act of 2009, in lieu of federal Tax credits or any similar or substitute payment available under subsequently enacted federal legislation; and (c) any other form of incentive relating in any way to the Facility that is not a Green Attribute or a Future Environmental Attribute.
“Renewable Rate” has the meaning set forth on the Cover Sheet. “Replacement Energy” has the meaning set forth in Exhibit G. “Replacement Green Attributes” has the meaning set forth in Exhibit G. “Replacement Product” has the meaning set forth in Exhibit G. “Replacement RA” means Resource Adequacy Benefits, if any, equivalent to those that would have been provided by the Facility with respect to the applicable month in which a RA 187
21 Deficiency Amount is due to Buyer, and located within SP 15 TAC Area and, to the extent that the Facility would have qualified as a Local Capacity Area Resource for such month, described as a Local Capacity Area Resource.
“Requested Confidential Information” has the meaning set forth in Section 18.2. “Resource Adequacy Benefits” means the rights and privileges attached to the Facility that satisfy any entity’s resource adequacy obligations, as those obligations are set forth in any Resource Adequacy Rulings and shall include any local, zonal or otherwise locational attributes associated with the Facility.
“Resource Adequacy Requirements” or “RAR” means the resource adequacy requirements applicable to an entity as established by the CAISO pursuant to the CAISO Tariff, by the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority.
“Resource Adequacy Resource” shall have the meaning used in Resource Adequacy Rulings.
“Resource Adequacy Rulings” means CPUC Decisions 04-01-050, 04-10-035, 05-10-042, 06-04-040, 06-06-064, 06-07-031 06-07-031, 07-06-029, 08-06-031, 09-06-028, 10-06-036, 11-06-022, 12-06-025, 13-06-024 and any other existing or subsequent ruling or decision, or any other resource adequacy laws, rules or regulations enacted, adopted or promulgated by any applicable Governmental Authority, however described, as such decisions, rulings, Laws, rules or regulations may be amended or modified from time-to-time throughout the Contract Term.
“S&P” means the Standard & Poor’s Financial Services, LLC (a subsidiary of S&P Global Inc.) or its successor.
“Schedule” has the meaning set forth in the CAISO Tariff, and “Scheduled” has a corollary meaning.
“Scheduled Energy” means the PV Energy, Charging Energy or Discharging Energy that clears under the applicable CAISO market based on the final Day-Ahead Schedule, FMM Schedule (as defined in the CAISO Tariff), and/or any other financially binding Schedule, market instruction or dispatch for the Facility for a given period of time implemented in accordance with the CAISO Tariff.
“Scheduling Coordinator” or “SC” means an entity certified by the CAISO as qualifying as a Scheduling Coordinator pursuant to the CAISO Tariff for the purposes of undertaking the functions specified in “Responsibilities of a Scheduling Coordinator,” of the CAISO Tariff, as amended from time to time.
“Security Interest” has the meaning set forth in Section 8.9. “Self-Schedule” has the meaning set forth in the CAISO Tariff. 188
22 “Seller” has the meaning set forth on the Cover Sheet. “Seller Initiated Test” has the meaning set forth in Section 4.9(c). “Seller’s WREGIS Account” has the meaning set forth in Section 4.10(a). “Settlement Amount” means the Non-Defaulting Party’s Costs and Losses, on the one hand, netted against its Gains, on the other. If the Non-Defaulting Party’s Costs and Losses exceed its Gains, then the Settlement Amount shall be an amount owing to the Non-Defaulting Party. If the Non-Defaulting Party’s Gains exceed its Costs and Losses, then the Settlement Amount shall be zero dollars ($0). The Settlement Amount does not include consequential, incidental, punitive, exemplary or indirect or business interruption damages. “Settlement Interval” has the meaning set forth in the CAISO Tariff. “Settlement Period” has the meaning set forth in the CAISO Tariff. “Shared Facilities” means the gen-tie lines, transformers, substations, or other equipment, permits, contract rights, and other assets and property (real or personal), in each case, as necessary to enable delivery of Energy from the Facility (which is excluded from Shared Facilities) to the point of interconnection, including the Interconnection Agreement itself, that are used in common with third parties.
“Showing Month” shall be the calendar month of the Delivery Term that is the subject of the RA Compliance Showing, as set forth in the Resource Adequacy Rulings and outlined in the CAISO Tariff. For illustrative purposes only, pursuant to the CAISO Tariff and Resource Adequacy Rulings in effect as of the Effective Date, the monthly RA Compliance Showing made in June is for the Showing Month of August.
“Site” means the real property on which the Facility is or will be located, as further described in Exhibit A, and as shall be updated by Seller at the time Seller provides an executed Construction Start Date certificate in the form of Exhibit J to Buyer; provided, that any such update to the Site that includes real property that was not originally contained within the Site boundaries described in Exhibit A shall be subject to Buyer’s approval of such updates in its sole discretion. “SOC” or “State of Charge” means the (a) level of charge of the Storage Facility relative to (b) the Effective Storage Capacity multiplied by four (4) hours, expressed as a percentage. “SP-15” means the Existing Zone Generation Trading Hub for Existing Zone region SP-15 as set forth in the CAISO Tariff. “Station Use” means the Energy produced or discharged by the Facility (and not otherwise included in the Efficiency Rate) that is used within the Facility to power the information technology, telecommunications, lights, motors, facility control systems and other electrical loads that are necessary for operation of the Facility.
“Storage Capability” has the meaning in Exhibit P.
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23 “Storage Capacity Availability Payment True-Up” has the meaning set forth in Exhibit C.
“Storage Capacity Availability Payment True-Up Amount” has the meaning set forth in Exhibit C.
“Storage Capacity Damages” has the meaning set forth in Section 5 of Exhibit B. “Storage Capacity Test” means any test or retest of the Storage Facility to establish the Installed Storage Capacity and/or Effective Storage Capacity, conducted in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit O. “Storage Cure Plan” has the meaning set forth in Section 11.1(b)(iv). “Storage Facility” means the energy storage facility described on the Cover Sheet and in Exhibit A (including the operational requirements of the energy storage facility), located at the Site and including mechanical equipment and associated facilities and equipment required to deliver Storage Product (but excluding any Shared Facilities), and as such storage facility may be expanded or otherwise modified from time to time in accordance with the terms hereof. “Storage Facility Meter” means the CAISO approved bi-directional revenue quality meter or meters (with a 0.3 accuracy class), along with a compatible data processing gateway or remote intelligence gateway, telemetering equipment and data acquisition services sufficient for monitoring, recording and reporting, in real time, the amount of Charging Energy delivered to the Storage Facility Metering Point and the amount of Discharging Energy discharged from the Storage Facility at the Storage Facility Metering Point to the Delivery Point for the purpose of invoicing in accordance with Section 8.1. For clarity, the Facility may contain multiple measurement devices that will make up the Storage Facility Meter, and, unless otherwise indicated, references to the Storage Facility Meter shall mean all such measurement devices and the aggregated data of all such measurement devices, taken together. “Storage Facility Metering Point” means the location(s) of the Storage Facility Meter shown in Exhibit R.
“Storage Product” means (a) Discharging Energy, (b) Capacity Attributes, if any, (c) Effective Storage Capacity, and (d) Ancillary Services, if any, in each case arising from or relating to the Storage Facility.
“Storage Rate” has the meaning set forth on the Cover Sheet. “Stored Energy Level” means, at a particular time, the amount of Energy in the Storage Facility available to be discharged to the Delivery Point as Discharging Energy, expressed in MWh.
“Supplementary Capacity Test Protocol” has the meaning set forth in Exhibit O. “System Emergency” means any condition that requires, as determined and declared by CAISO or the Transmission Provider, automatic or immediate action to (a) prevent or limit harm 190
24 to or loss of life or property, (b) prevent loss of transmission facilities or generation supply in the immediate vicinity of the Facility, or (c) to preserve Transmission System reliability. “Tax” or “Taxes” means all U.S. federal, state and local and any foreign taxes, levies, assessments, surcharges, duties and other fees and charges of any nature imposed by a Governmental Authority, whether currently in effect or adopted during the Contract Term, including ad valorem, excise, franchise, gross receipts, import/export, license, property, sales and use, stamp, transfer, payroll, unemployment, income, and any and all items of withholding, deficiency, penalty, additions, interest or assessment related thereto. “Tax Credits” means the ITC and any other state, local and/or federal production tax credit, depreciation benefit, tax deduction and/or investment tax credit specific to the production of renewable energy and/or investments in renewable energy facilities or battery storage facilities. “Terminated Transaction” has the meaning set forth in Section 11.2(a). “Termination Payment” has the meaning set forth in Section 11.3(b). “Test Energy” means PV Energy delivered (a) commencing on the later of (a) the first date that the CAISO informs Seller in writing that Seller may deliver Energy to the CAISO and (b) the first date that the Transmission Provider informs Seller in writing that Seller has conditional or temporary permission to operate in parallel with the CAISO Grid, and (b) ending upon the occurrence of the Commercial Operation Date.
“Test Energy Rate” has the meaning set forth in Section 3.6. “Total YTD Calculation Intervals” has the meaning set forth in Exhibit P. “Transmission Provider” means any entity that owns, operates and maintains transmission or distribution lines and associated facilities and/or has entitlements to use certain transmission or distribution lines and associated facilities for the purpose of transmitting or transporting the Facility Energy from the Delivery Point. “Transmission System” means the transmission facilities operated by the CAISO, now or hereafter in existence, which provide energy transmission service downstream from the Delivery Point.
“Transmission System Outage” means an outage on the Transmission System, other than a System Emergency, that is not caused by Seller’s actions or inactions and that prevents Buyer or the CAISO (as applicable) from receiving Facility Energy onto the Transmission System. “Ultimate Parent” means NextEra Energy, Inc., a Delaware corporation. “Unavailable Calculation Interval” has the meaning set forth in Exhibit P. “Variable Energy Resource” or “VER” has the meaning set forth in the CAISO Tariff. 191
25 “WREGIS” means the Western Renewable Energy Generation Information System or any successor renewable energy tracking program.
“WREGIS Certificate Deficit” has the meaning set forth in Section 4.10(e). “WREGIS Certificates” has the same meaning as “Certificate” as defined by WREGIS in the WREGIS Operating Rules and are designated as eligible for complying with the California Renewables Portfolio Standard.
“WREGIS Operating Rules” means those operating rules and requirements adopted by WREGIS as of May 1, 2018, as subsequently amended, supplemented or replaced (in whole or in part) from time to time.
1.2 Rules of Interpretation.
In this Agreement, except as expressly stated otherwise or unless the context otherwise requires:
(a) headings and the rendering of text in bold and italics are for convenience and reference purposes only and do not affect the meaning or interpretation of this Agreement; (b) words importing the singular include the plural and vice versa and the masculine, feminine and neuter genders include all genders; (c) the words “hereof”, “herein”, and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) a reference to an Article, Section, paragraph, clause, Party, or Exhibit is a reference to that Article, Section, paragraph, clause of, or that Party or Exhibit to, this Agreement unless otherwise specified;
(e) a reference to a document or agreement, including this Agreement shall mean such document, agreement or this Agreement including any amendment or supplement to, or replacement, novation or modification of this Agreement, but disregarding any amendment, supplement, replacement, novation or modification made in breach of such document, agreement or this Agreement;
(f) a reference to a Person includes that Person’s successors and permitted assigns;
(g) the terms “include” and “including” mean “include or including (as applicable) without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the word or provision in respect of which such examples are provided;
(h) references to any statute, code or statutory provision are to be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or 192
26 reenacted, and include references to all bylaws, instruments, orders and regulations for the time being made thereunder or deriving validity therefrom unless the context otherwise requires; (i) in the event of a conflict, a mathematical formula or other precise description of a concept or a term shall prevail over words providing a more general description of a concept or a term;
(j) references to any amount of money shall mean a reference to the amount in United States Dollars;
(k) the expression “and/or” when used as a conjunction shall connote “any or all of”;
(l) words, phrases or expressions not otherwise defined herein that (i) have a generally accepted meaning in Prudent Operating Practice shall have such meaning in this Agreement or (ii) do not have well known and generally accepted meaning in Prudent Operating Practice but that have well known and generally accepted technical or trade meanings, shall have such recognized meanings; and
(m) each Party acknowledges that it was represented by counsel in connection with this Agreement and that it or its counsel reviewed this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
ARTICLE 2
TERM; CONDITIONS PRECEDENT
2.1 Contract Term.
(a) The term of this Agreement shall commence on the Effective Date and shall remain in full force and effect until the conclusion of the Delivery Term, subject to any early termination provisions set forth herein (“Contract Term”); provided, subject to Buyer’s obligations in Section 3.6, Buyer’s obligations to pay for or accept any Product are subject to Seller’s completion of the conditions precedent pursuant to Section 2.2. (b) Applicable provisions of this Agreement shall continue in effect after termination, including early termination, to the extent necessary to enforce or complete the duties, obligations or responsibilities of the Parties arising prior to termination. The confidentiality obligations of the Parties under Article 18 shall remain in full force and effect for two (2) years following the termination of this Agreement, and all indemnity and audit rights shall remain in full force and effect for one (1) year following the termination of this Agreement.
2.2 Conditions Precedent.
Seller shall provide Notice of expected Commercial Operation to Buyer no less than sixty (60) days in advance of such date. The Delivery Term shall not commence until Seller completes to Buyer’s reasonable satisfaction each of the following conditions:
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27 (a) Seller shall have delivered to Buyer (i) a completion certificate from a Licensed Professional Engineer substantially in the form of Exhibit H and (ii) a certificate from a Licensed Professional Engineer substantially in the form of Exhibit I-1 setting forth the Installed PV Capacity, the Installed Storage Capacity and the Installed Capacity on the Commercial Operation Date;
(b) A Participating Generator Agreement and a Meter Service Agreement between Seller and CAISO shall have been executed and delivered and be in full force and effect, and a copy of each such agreement delivered to Buyer;
(c) An Interconnection Agreement between Seller and the Transmission Provider shall have been executed and delivered and be in full force and effect and a copy of the Interconnection Agreement delivered to Buyer;
(d) All applicable regulatory authorizations, approvals and permits for the operation of the Facility that are capable of being satisfied on the Commercial Operation Date have been obtained and all conditions thereof have been satisfied and shall be in full force and effect; (e) Seller has obtained CAISO Certification for the Facility; (g) Seller has received CEC Precertification of the Facility (and reasonably expects to receive final CEC Certification and Verification for the Facility in no more than one hundred eighty (180) days from the Commercial Operation Date); (h) Seller (with the reasonable participation of Buyer) shall have completed all applicable WREGIS registration requirements, including the completion and submittal of all applicable registration forms and supporting documentation, which may include applicable interconnection agreements, informational surveys related to the Facility, QRE service agreements, and other appropriate documentation required to effect Facility registration with WREGIS and to enable Renewable Energy Credit transfers related to the Facility within the WREGIS system;
(i) Seller has delivered the Performance Security to Buyer in accordance with Section 8.8; and
(j) Seller has paid Buyer for all amounts owing under this Agreement, if any, including Delay Damages.
2.3 Development; Construction; Progress Reports.
Within fifteen (15) days after the close of (i) each calendar quarter following the Effective Date until the Construction Start Date and (ii) each calendar month from the first calendar month following the Construction Start Date and continuing through the Commercial Operation Date, Seller shall provide to Buyer a Progress Report and agree to regularly scheduled meetings between representatives of Buyer and Seller to review such reports and discuss Seller’s construction progress. The form of the Progress Report is set forth in Exhibit E. Seller shall also provide Buyer with any reasonably requested documentation (subject to confidentiality restrictions) directly related to the achievement of Milestones within ten (10) Business Days of receipt of such request 194
28 by Seller. Seller is solely responsible for the design and construction of the Facility, including the location of the Site, the Facility layout, and the selection and procurement of the equipment comprising the Facility.
2.4 Remedial Action Plan.
If Seller misses a Milestone by more than thirty (30) days, except as the result of Force Majeure Event or Buyer Default, Seller shall submit to Buyer, within ten (10) Business Days of the end of such thirty (30)-day period following the Milestone completion date, a remedial action plan (“Remedial Action Plan”), which will describe in detail any delays (actual or anticipated) beyond the scheduled Milestone dates, including the cause of the delay (e.g., governmental approvals, financing, property acquisition, design activities, equipment procurement, project construction, interconnection, or any other factor), Seller’s detailed description of its proposed course of action to achieve the missed Milestones and all subsequent Milestones by the Guaranteed Commercial Operation Date; provided, delivery of any Remedial Action Plan shall not relieve Seller of its obligation to provide Remedial Action Plans with respect to any subsequent Milestones and to achieve the Guaranteed Commercial Operation Date in accordance with the terms of this Agreement. Subject to the provisions of Exhibit B, so long as Seller complies with its obligations under this Section 2.4, Seller shall not be considered in default of its obligations under this Agreement solely as a result of missing any Milestone.
ARTICLE 3
PURCHASE AND SALE
3.1 Purchase and Sale of Product.
Subject to the terms and conditions of this Agreement, during the Delivery Term, Buyer shall purchase all the Product produced by or associated with the Facility at the Contract Price and in accordance with Exhibit C, and Seller shall supply and deliver to Buyer all the Product produced by or associated with the Facility. At its sole discretion, Buyer may during the Delivery Term re-sell or use for another purpose all or a portion of the Product, provided that no such re-sale or use shall relieve Buyer of any obligations hereunder. During the Delivery Term, Buyer shall have exclusive rights to offer, bid, or otherwise submit the Product, and/or any component thereof, from the Facility after the Delivery Point for resale in the market, and retain and receive any and all related revenues.
3.2 Sale of Green Attributes.
During the Delivery Term, Seller shall sell and deliver to Buyer, and Buyer shall purchase from Seller, all Green Attributes attributable to the PV Energy generated by the Facility. Upon request of Buyer, Seller shall use commercially reasonable efforts to (a) submit, and receive approval from the Center for Resource Solutions (or any successor that administers the Green-e Certification process), for the Green-e tracking attestations and (b) support Buyer’s efforts to qualify the Green Attributes transferred by Seller as Green-e Certified.
3.3 Imbalance Energy.
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29 Buyer and Seller recognize that in any given Settlement Period the amount of PV Energy and/or Discharging Energy delivered from the Generating Facility and/or the Storage Facility may deviate from the amounts thereof scheduled with the CAISO. To the extent there are such deviations, any costs or revenues from such imbalances shall be solely for the account of Buyer.
3.4 Ownership of Renewable Energy Incentives.
Seller shall have all right, title and interest in and to all Renewable Energy Incentives.
Buyer acknowledges that any Renewable Energy Incentives belong to Seller. If any Renewable Energy Incentives, or values representing the same, are initially credited or paid to Buyer, Buyer shall cause such Renewable Energy Incentives or values relating to same to be assigned or transferred to Seller without delay. Buyer shall reasonably cooperate with Seller, at Seller’s sole expense, in Seller’s efforts to meet the requirements for any certification, registration, or reporting program relating to Renewable Energy Incentives.
3.5 Future Environmental Attributes.
(a) The Parties acknowledge and agree that as of the Effective Date, environmental attributes sold under this Agreement are restricted to Green Attributes; however, Future Environmental Attributes may be created by a Governmental Authority through Laws enacted after the Effective Date. Subject to the final sentence of this Section 3.5(a) and Section
3.5(b), in such event, Buyer shall bear all costs associated with the transfer, qualification, verification, registration and ongoing compliance for such Future Environmental Attributes, but there shall be no increase in the Contract Price. Upon Seller’s receipt of Notice from Buyer of Buyer’s intent to claim such Future Environmental Attributes, the Parties shall determine the necessary actions and additional costs associated with such Future Environmental Attributes.
Seller shall have no obligation to alter the Facility or the operation of the Facility unless the Parties have agreed on all necessary terms and conditions relating to such alteration or change in operation and Buyer has agreed to reimburse Seller for all costs, losses, and liabilities associated with such alteration or change in operation.
(b) If Buyer elects to receive Future Environmental Attributes pursuant to Section 3.5(a), the Parties agree to negotiate in good faith with respect to the development of further agreements and documentation necessary to effectuate the transfer of such Future Environmental Attributes, including agreement with respect to (i) appropriate transfer, delivery and risk of loss mechanisms, and (ii) appropriate allocation of any additional costs to Buyer, as set forth above; provided, that the Parties acknowledge and agree that such terms are not intended to alter the other material terms of this Agreement.
3.6 Test Energy.
No less than thirty (30) days prior to the first day on which Test Energy is expected to be available from the Facility, Seller shall notify Buyer of the availability of the Test Energy. If and to the extent the Facility generates Test Energy, Seller shall sell and Buyer shall purchase from Seller all Test Energy and any associated Products on an as-available basis for up to days from the first delivery of Test Energy. As compensation for such Test Energy and associated Product, Buyer shall pay Seller an amount equal to of the Renewable 196
30 Rate (the “Test Energy Rate”). The conditions precedent in Section 2.2 are not applicable to the Parties’ obligations under this Section 3.6.
3.7 Capacity Attributes.
Seller shall request Full Capacity Deliverability Status in the CAISO generator interconnection process for the Storage Facility. As between Buyer and Seller, Seller shall be responsible for the cost and installation of any Network Upgrades associated with obtaining such Full Capacity Deliverability Status.
(a) Throughout the Delivery Term and subject to Section 3.12, Seller grants, pledges, assigns and otherwise commits to Buyer all the Capacity Attributes from the Facility. (b) Throughout the Delivery Term and subject to Section 3.12, Seller shall use commercially reasonable efforts to maintain eligibility for Full Capacity Deliverability Status for the Storage Facility from the CAISO and shall perform all actions necessary to ensure that the Facility qualifies to provide Resource Adequacy Benefits to Buyer. Throughout the Delivery Term, and subject to Section 3.12, Seller hereby covenants and agrees to transfer all Resource Adequacy Benefits from the Facility to Buyer.
(c) For the duration of the Delivery Term, and subject to Section 3.12, Seller shall take all commercially reasonable actions, including complying with all applicable registration and reporting requirements, and execute all documents or instruments necessary to enable Buyer to use all of the Capacity Attributes committed by Seller to Buyer pursuant to this Agreement.
3.8 Resource Adequacy Failure.
(a) RA Deficiency Determination. For each RA Shortfall Month Seller shall pay to Buyer the RA Deficiency Amount as liquidated damages and/or provide Replacement RA, as set forth in Section 3.8(b), as the sole remedy for the Capacity Attributes that Seller failed to convey to Buyer.
(b) RA Deficiency Amount Calculation. For each RA Shortfall Month, Seller shall pay to Buyer an amount (the “RA Deficiency Amount”) equal to provided that Seller may, as an
alternative to paying some or all of the RA Deficiency Amounts, provide Replacement RA in the 197
31 amount of (X) the Qualifying Capacity of the Storage Facility with respect to such month, minus (Y) the Net Qualifying Capacity of the Storage Facility with respect to such month, provided that any Replacement RA capacity is communicated by Seller to Buyer with Replacement RA product information in a written Notice substantially in the form of Exhibit M at least seventy-five (75) days before the applicable Showing Month for the purpose of monthly RA reporting.
3.9 CEC Certification and Verification.
Subject to Section 3.12 and in accordance with the timing set forth in this Section 3.9, Seller shall take all necessary steps including, but not limited to, making or supporting timely filings with the CEC to obtain and maintain CEC Certification and Verification for the Facility throughout the Delivery Term, including compliance with all applicable requirements for certified facilities set forth in the current version of the RPS Eligibility Guidebook (or its successor). Seller shall obtain CEC Precertification by the Commercial Operation Date. Within thirty (30) days after the Commercial Operation Date, Seller shall apply with the CEC for final CEC Certification and Verification. Within one hundred eighty (180) days after the Commercial Operation Date, Seller shall obtain and maintain throughout the remainder of the Delivery Term the final CEC Certification and Verification. Seller must promptly notify Buyer and the CEC of any changes to the information included in Seller’s application for CEC Certification and Verification for the Facility.
3.10 Eligibility.
Subject to Section 3.12, Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) the Facility qualifies and is certified by the CEC as an Eligible Renewable Energy Resource as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Facility’s output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in Law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in Law. The term “commercially reasonable efforts” as used in this Section 3.10 means efforts consistent with and subject to Section 3.12.
3.11 California Renewables Portfolio Standard.
Subject to Section 3.12, Seller shall also take all other actions necessary to ensure that the PV Energy produced from the Generating Facility is tracked for purposes of satisfying the California Renewables Portfolio Standard requirements, as may be amended or supplemented by the CPUC or CEC from time to time.
3.12 Compliance Expenditure Cap.
If a change in Law occurring after the Effective Date has increased Seller’s cost to comply with Seller’s obligations under this Agreement that are made subject to this Section 3.12, including with respect to obtaining, maintaining, conveying or effectuating Buyer’s use of Green Attributes and Capacity Attributes (as applicable), then the Parties agree that the maximum aggregate amount of costs and expenses Seller shall be required to bear during the Delivery Term to comply with all 198
32 of such obligations shall be capped at of
Guaranteed Capacity (“Compliance Expenditure Cap”).
(a) Any actions required for Seller to comply with its obligations set forth in the first paragraph above, the cost of which will be included in the Compliance Expenditure Cap, shall be referred to collectively as the “Compliance Actions.” (b) If Seller reasonably anticipates the need to incur out-of-pocket expenses in excess of the Compliance Expenditure Cap in order to take any Compliance Action Seller shall provide Notice to Buyer of such anticipated out-of-pocket expenses. (c) Buyer will have sixty (60) days to evaluate such Notice (during which time period Seller is not obligated to take any Compliance Actions described in the Notice) and shall, within such time, either (1) agree to reimburse Seller for all or some portion of the costs that exceed the Compliance Expenditure Cap (such Buyer-agreed upon costs, the “Accepted Compliance Costs”), or (2) waive Seller’s obligation to take such Compliance Actions, or any part thereof for which Buyer has not agreed to reimburse Seller. If Buyer does not respond to a Notice given by Seller under this Section 3.12 within sixty (60) days after Buyer’s receipt of same, Buyer shall be deemed to have waived its rights to require Seller to take the Compliance Actions that are the subject of the Notice, and Seller shall have no further obligation to take, and no liability for any failure to take, such Compliance Actions until such time as Buyer agrees to pay such Accepted Compliance Costs.
(d) If Buyer agrees to reimburse Seller for the Accepted Compliance Costs, then Seller shall take such Compliance Actions covered by the Accepted Compliance Costs as agreed upon by the Parties and Buyer shall reimburse Seller for Seller’s actual costs to effect the Compliance Actions, not to exceed the Accepted Compliance Costs, within sixty (60) days from the time that Buyer receives an invoice and documentation of such costs from Seller.
3.13 Project Configuration.
In order to optimize the benefits of the Facility, Buyer and Seller each agree that if requested by the other Party, then Buyer and Seller will discuss in good faith potential reconfiguration of the Facility or Interconnection Facilities, including the use of grid energy to provide Charging Energy; provided, neither Party shall be obligated to agree to any changes under this Agreement, or to incur any expense in connection with such changes, except under terms mutually acceptable to both Parties as set forth in a written agreement.
ARTICLE 4
OBLIGATIONS AND DELIVERIES
4.1 Delivery.
(a) Energy. Subject to the provisions of this Agreement, commencing on the Commercial Operation Date through the end of the Contract Term, Seller shall supply and deliver the Product to Buyer at the Delivery Point, and Buyer shall take delivery of the Product at the Delivery Point in accordance with the terms of this Agreement. Seller shall be responsible for paying or satisfying when due any costs or charges imposed in connection with the delivery of Facility Energy to the Delivery Point, including any operation and maintenance charges imposed 199
33 by the Transmission Provider directly relating to the Facility’s operations. Buyer shall be responsible for all costs, charges and penalties, if any, imposed in connection with the delivery of Facility Energy at and after the Delivery Point, including without limitation transmission costs and transmission line losses and imbalance charges. The PV Energy, Charging Energy and Discharging Energy will be scheduled with the CAISO by Buyer (or Buyer’s designated Scheduling Coordinator) in accordance with Exhibit D.
(b) Green Attributes. All Green Attributes associated with Test Energy and the PV Energy during the Delivery Term are exclusively dedicated to and vested in Buyer. Seller represents and warrants that Seller holds the rights to all Green Attributes from the Facility, and Seller agrees to convey and hereby conveys all such Green Attributes to Buyer as included in the delivery of the Product from the Facility.
4.2 Title and Risk of Loss.
(a) Energy. Title to and risk of loss related to the Facility Energy, shall pass and transfer from Seller to Buyer at the Delivery Point. Seller warrants that all Product delivered to Buyer is free and clear of all liens, security interests, claims and encumbrances of any kind. (b) Green Attributes. Title to and risk of loss related to the Green Attributes shall pass and transfer from Seller to Buyer upon the transfer of such Green Attributes in accordance with WREGIS.
4.3 Forecasting.
Seller shall provide the forecasts described below. Seller shall use commercially reasonable efforts to forecast accurately and to transmit such information in a format reasonably acceptable to Buyer (or Buyer’s designee).
(a) Annual Forecast of Energy. No less than forty-five (45) days before (i) the first day of the first Contract Year of the Delivery Term and (ii) the beginning of each calendar year for every subsequent Contract Year during the Delivery Term, Seller shall provide to Buyer and the SC (if applicable) a non-binding forecast of each month’s average-day expected PV Energy, by hour, for the following calendar year in a form substantially similar to the table found in Exhibit F-1, or as reasonably requested by Buyer.
(b) Monthly Forecast of PV Energy and Available Capacity. No less than thirty (30) days before the beginning of Commercial Operation, and thereafter ten (10) Business Days before the beginning of each month during the Delivery Term, Seller shall provide to Buyer and the SC (if applicable) a non-binding forecast of the hourly expected (i) available capacity of the Generating Facility, (ii) PV Energy, (iii) available Effective Storage Capacity, and (iv) available Storage Capability (items (i)-(iv) collectively referred to as the “Forecasted Product”), for each day of the following month in a form substantially similar to Exhibits F-1, F-2, F-3 and F-4, as applicable (“Monthly Forecast”).
(c) Day-Ahead Forecast. By 5:30 AM Pacific Prevailing Time on the Business Day immediately preceding the date of delivery, or as otherwise specified by Buyer consistent with Prudent Operating Practice, Seller shall provide Buyer with a non-binding forecast of the 200
34 hourly expected Forecasted Product, in each case, for each hour of the immediately succeeding day (“Day-Ahead Forecast”). A Day-Ahead Forecast provided in a day prior to any non-Business Day(s) shall include non-binding forecasts for the immediate day, each succeeding non-Business Day and the next Business Day. Each Day-Ahead Forecast shall clearly identify, for each hour, Seller’s best estimate of the hourly expected Forecasted Product. Such Day-Ahead Forecasts shall be sent to Buyer’s on-duty Scheduling Coordinator. If Seller fails to provide Buyer with a Day-Ahead Forecast as required herein for any period, then for such unscheduled delivery period only Buyer shall rely on any Real-Time Forecast or the Monthly Forecast or Buyer’s best estimate based on information reasonably available to Buyer.
(d) Real-Time Forecasts. During the Delivery Term, Seller shall notify Buyer of any changes from the Day-Ahead Forecast of one (1) MW or more in the hourly expected Forecasted Product (“Real-Time Forecast”), that directly result from a Forced Facility Outage, Force Majeure Event or other cause that has not been communicated or is not reasonably available to Buyer or Buyer’s SC, as soon as reasonably possible, but no later than one (1) hour prior to the deadline for submitting schedules to the CAISO in accordance with the rules for participation in the Real-Time Market. If the Forecasted Product changes by at least one (1) MW as of a time that is less than one (1) hour prior to the Real-Time Market deadline, but before such deadline, then Seller must notify Buyer as soon as reasonably possible. Such Real-Time Forecasts of PV Energy shall be provided by an Approved Forecast Vendor and shall contain information regarding the beginning date and time of the event resulting in the change in any Forecasted Product, as applicable, the expected end date and time of such event, and any other information required by the CAISO or reasonably requested by Buyer. With respect to any Forced Facility Outage, Seller shall use commercially reasonable efforts to notify Buyer of such outage within ten (10) minutes of the commencement of the Forced Facility Outage. Seller shall inform Buyer of any developments that are reasonably likely to affect either the duration of such outage or the availability of the Facility during or after the end of such outage. Such Real-Time Forecasts shall be communicated in a method acceptable to Buyer; provided that Buyer specifies the method no later than sixty (60) days prior to the effective date of such requirement. In the event Buyer fails to provide Notice of an acceptable method for communications under this Section 4.3(d), then Seller shall send such communications by telephone and e-mail to Buyer. (e) Forced Facility Outages. Notwithstanding anything to the contrary herein, Seller shall promptly notify Buyer’s on-duty Scheduling Coordinator of Forced Facility Outages and Seller shall keep Buyer informed of any developments that will affect either the duration of the outage or the availability of the Facility during or after the end of the outage. (f) Forecasting Penalties. In the event Seller does not in a given hour provide the forecast required in Section 4.3(d) and Buyer incurs a loss or penalty resulting from its scheduling activities with respect to Facility Energy during such hour, Seller shall be responsible for a “Forecasting Penalty” for each such hour equal to the product of (A) the absolute difference (if any) between (i) the expected PV Energy for such hour (which, assumes no Charging Energy or Discharging Energy in such hour) set forth in the Monthly Forecast, and (ii) the actual PV Energy (absent any Charging Energy and Discharging Energy), multiplied by (B) the absolute value of the Real-Time Price in such hour. Settlement of Forecasting Penalties shall occur as set forth in Article 8 of this Agreement.
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35 (g) CAISO Tariff Requirements. Seller will comply with all applicable obligations for Variable Energy Resources under the CAISO Tariff and the Eligible Intermittent Resource Protocol, including providing appropriate operational data and meteorological data, and will fully cooperate with Buyer, Buyer’s SC, and CAISO, in providing all data, information, and authorizations required thereunder.
4.4 Dispatch Down/Curtailment.
(a) General. Seller agrees to reduce the amount of PV Energy and/or Discharging Energy produced by the Facility, by the amount and for the period set forth in any Curtailment Order, Buyer Curtailment Order, or notice received from CAISO in respect of a Buyer Bid Curtailment; provided, Seller is not required to reduce such amount to the extent it is inconsistent with the limitations of the Facility set out in the Operating Restrictions. (b) Buyer Curtailment. Buyer shall have the right to order Seller to curtail deliveries of PV Energy through Buyer Curtailment Orders, provided that Buyer shall pay Seller for all Deemed Delivered Energy associated with a Buyer Curtailment Period at the Renewable Rate, subject to the limitations of Section (b) of Exhibit C. (c) Failure to Comply. If Seller fails to comply with a Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order, then, for each MWh of PV Energy that is delivered by the Generating Facility to the Delivery Point that is in excess of the Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order, Seller shall pay Buyer for each such MWh at an amount equal to the sum of (A) + (B) + (C), where: (A) is the amount, if any, paid to Seller by Buyer for delivery of such excess MWh and, (B) is the sum, for all Settlement Intervals with a Negative LMP during the Buyer Curtailment Period or Curtailment Period, of the absolute value of the product of such excess MWh in each Settlement Interval and the Negative LMP for such Settlement Interval, and (C) is any penalties assessed by the CAISO or other charges assessed by the CAISO resulting from Seller’s failure to comply with the Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order.
(d) Seller Equipment Required for Curtailment Instruction Communications.
Seller shall acquire, install, and maintain such facilities, communications links and other equipment, and implement such protocols and practices, as necessary to respond to and follow instructions, including an electronic signal conveying real time and intra-day instructions, to operate the Facility as directed by the Buyer in accordance with this Agreement and/or a Governmental Authority, including to implement a Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order in accordance with the then-current methodology and used to transmit such instructions. If at any time during the Delivery Term, Seller’s facilities, communications links or other equipment, protocols or practices are not in compliance with the then-current methodologies, Seller shall take the steps necessary to become compliant as soon as commercially reasonably possible. Seller shall be liable pursuant to Section 4.4(c) for failure to comply with a Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order, during the time that Seller’s facilities, communications links or other equipment, protocols or practices are not in compliance with applicable methodologies. A Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order communication via such systems and facilities shall have the same force and effect on Seller as any other form of communication. 202
36 4.5 Energy Management.
(a) Charging Generally. Upon receipt of a valid Charging Notice, Seller shall take any and all action necessary to deliver the Charging Energy to the Storage Facility in order to deliver the Storage Product in accordance with the terms of this Agreement, including maintenance, repair or replacement of equipment in Seller’s possession or control used to deliver the Charging Energy from the Generating Facility to the Storage Facility. Except as otherwise expressly set forth in this Agreement, including Section 4.5(c), Section 4.5(i), and Section
4.9(d)(i), Buyer shall be responsible for paying all CAISO costs and charges associated with Charging Energy.
(b) Charging Notices. Buyer will have the right to charge the Storage Facility seven (7) days per week and twenty-four (24) hours per day (including holidays), by causing Charging Notices to be issued, subject to the requirements and limitations set forth in this Agreement, including the Operating Restrictions. Each Charging Notice issued in accordance with this Agreement will be effective unless and until Buyer’s SC or the CAISO modifies such Charging Notice by providing Seller with an updated Charging Notice. (c) No Unauthorized Charging. Seller shall not charge the Storage Facility during the Delivery Term other than pursuant to a valid Charging Notice (it being understood that Seller may adjust a Charging Notice to the extent necessary to maintain compliance with the Operating Restrictions), or in connection with a Seller Initiated Test (including Facility maintenance or a Storage Capacity Test), or pursuant to a notice from the Transmission Provider or Governmental Authority. If, during the Delivery Term, Seller charges the Storage Facility (i) to a Stored Energy Level greater than the Stored Energy Level provided for in a Charging Notice, or (ii) in violation of the first sentence of this Section 4.5(c), then (x) Seller shall pay Buyer the cost of such Energy associated with such charging of the Storage Facility , and (y) Buyer shall be entitled to discharge such Energy and entitled to all of the CAISO revenues and benefits (including Storage Product) associated with such discharge. Notwithstanding the foregoing, during any Curtailment Period, Buyer shall use commercially reasonable efforts to cause all curtailed PV Energy to be used as Charging Energy.
(d) No Unauthorized Discharging. Seller shall not discharge the Storage Facility during the Delivery Term other than pursuant to a valid Discharging Notice (it being understood that Seller may adjust a Discharging Notice to the extent necessary to maintain compliance with the Operating Restrictions), or in connection with a Seller Initiated Test (including Facility maintenance or a Storage Capacity Test), or pursuant to a notice from the Transmission Provider or Governmental Authority. Buyer will have the right to discharge the Storage Facility seven (7) days per week and twenty-four (24) hours per day (including holidays), by causing Discharging Notices to be issued, subject to the requirements and limitations set forth in this Agreement. Each Discharging Notice issued in accordance with this Agreement will be effective unless and until Buyer’s SC or the CAISO modifies such Discharging Notice by providing Seller with an updated Discharging Notice.
(e) Curtailments. Notwithstanding anything in this Agreement to the contrary, during any Settlement Interval, Curtailment Orders, Buyer Curtailment Orders, and Buyer Bid Curtailments applicable to such Settlement Interval shall have priority over any Charging Notices 203
37 or Discharging Notices applicable to such Settlement Interval, and Seller shall have no liability for violation of this Section 4.5 or any Charging Notice or Discharging Notice if and to the extent such violation is caused by Seller’s compliance with any Curtailment Order, Buyer Curtailment Order, Buyer Bid Curtailment or other instruction or direction from Buyer or its SC or a Governmental Authority or the Transmission Provider. Buyer shall have the right, but not the obligation, to provide Seller with updated Charging Notices and Discharging Notices during any Buyer Curtailment Order, Buyer Bid Curtailment or Curtailment Order consistent with the Operating Restrictions.
(f) Unauthorized Charges and Discharges. If Seller or any third party charges, discharges or otherwise uses the Storage Facility other than as permitted hereunder or as expressly addressed in Section 4.5(g), it shall be a breach by Seller and Seller shall hold Buyer harmless from, and indemnify Buyer against, all actual costs or losses associated therewith, and be responsible to Buyer for any damages arising therefrom and, if Seller fails to implement procedures reasonably acceptable to Buyer to prevent any further occurrences of the same, then the failure to implement such procedures shall be an Event of Default under Article 11. (g) CAISO Dispatches. During the Delivery Term, CAISO Dispatches shall have priority over any Charging Notice or Discharging Notice issued by Buyer’s SC, and Seller shall have no liability for violation of this Section 4.5 or any Charging Notices or Discharging Notice if and to the extent such violation is caused by Seller’s compliance with any CAISO Dispatch. During any time interval during the Delivery Term in which the Storage Facility is capable of responding to a CAISO Dispatch, but the Storage Facility deviates from a CAISO Dispatch, Seller shall be responsible for all CAISO charges and penalties resulting from such deviation (in addition to any Buyer remedy related to overcharging of the Storage Facility as set forth in Section 4.9(c).) To the extent the Storage Facility is unable to respond to ADS signals during any Calculation Interval, then as an exclusive remedy, such Calculation Interval shall be deemed an Unavailable Calculation Interval for purposes of calculating the YTD Annual Storage Capacity Availability.
(h) Pre-Commercial Operation Date Period, etc. Prior to the Commercial Operation Date, Buyer shall have no rights to issue or cause to be issued Charging Notices or Discharging Notices, and Seller shall have exclusive rights to charge and discharge the Storage Facility; provided, prior to the Commercial Operation Date Seller shall only charge and discharge the Storage Facility in connection with installation, commissioning and testing of the Storage Facility.
(i) Station Use. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge (i) Seller is responsible for providing all Energy to serve Station Use (including paying the cost of any Energy from the grid to serve Station Use), (ii) the supply of such Station Use shall not be deemed a deviation for purposes of Section 4.5(k)(i) or a violation of this Agreement, including Sections 4.5(c), (d), and (f), and (iii) Station Use may not be supplied from PV Energy, Charging Energy or Discharging Energy.
4.6 Reduction in Delivery Obligation.
(a) Facility Maintenance.
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38 (i) Seller shall provide to Buyer written schedules for Planned Outages for each of the Generating Facility and Storage Facility for each Contract Year no later than thirty (30) days prior to the first day of the applicable Contract Year. Buyer may provide comments on the proposed Planned Outage schedule no later than ten (10) days after receiving any such schedule, and Seller shall in good faith take into account any such comments. Seller shall deliver to Buyer the final updated schedule of Planned Outages no later than ten (10) days after receiving Buyer’s comments. Seller shall be permitted to reduce deliveries of Product during any period of such Planned Outages.
(ii) If reasonably required in accordance with Prudent Operating Practices, Seller may perform maintenance at a different time than maintenance scheduled pursuant to Section 4.6(a)(i). Seller shall provide Notice to Buyer within the time period determined by the CAISO for the Facility, as a Resource Adequacy Resource that is subject to the Availability Standards, to qualify for an “Approved Maintenance Outage” under the CAISO Tariff (or such shorter period as may be reasonably acceptable to Buyer based on the likelihood of dispatch by Buyer), and Seller shall limit maintenance repairs performed pursuant to this Section
4.6(a) to periods when Buyer does not reasonably believe the Facility will be dispatched. (iii) Notwithstanding anything in this Agreement to the contrary, no Planned Outages of the Generating Facility or Storage Facility shall be scheduled or planned from each June 1 through September 30 during the Delivery Term, unless approved by Buyer in writing in its sole discretion. In the event that Seller has a previously Planned Outage that becomes coincident with a System Emergency, Seller shall make all reasonable efforts to reschedule such Planned Outage.
(b) Forced Facility Outage. Seller shall be permitted to reduce deliveries of Product during any Forced Facility Outage. Seller shall provide Buyer with Notice and expected duration (if known) of any Forced Facility Outage.
(c) System Emergencies and other Interconnection Events. Seller shall be permitted to reduce deliveries of Product during any period of System Emergency, Transmission System Outage, Buyer Curtailment Period or upon notice of a Curtailment Order pursuant to the terms of this Agreement, the Interconnection Agreement or applicable tariff. (d) Force Majeure Event. Seller shall be permitted to reduce deliveries of Product during any Force Majeure Event, so long as Seller complies with the applicable requirements of Article 10.
(e) Health and Safety. Seller shall be permitted to reduce deliveries of Product as necessary to maintain health and safety pursuant to Section 6.2.
Notwithstanding anything in this Section 4.6 to the contrary, any such reductions in Product deliveries shall not excuse (i) the Storage Facility’s unavailability for purposes of calculating the Annual Storage Capacity Availability, or (ii) in the case of Sections 4.6(a), (b) and (e), Seller’s obligation to deliver Capacity Attributes.
4.7 Guaranteed Energy Production.
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39 During each Performance Measurement Period during the Delivery Term, Seller shall deliver to Buyer an amount of PV Energy, not including any Excess MWh, equal to no less than the Guaranteed Energy Production (as defined below). “Guaranteed Energy Production” means an amount of PV Energy, as measured in MWh, equal to
constituting such Performance
Measurement Period. Seller shall be excused from achieving the Guaranteed Energy Production during any Performance Measurement Period only to the extent of any Buyer Event of Default or other Buyer failure to perform that directly prevents Seller from being able to deliver PV Energy to the Delivery Point. For purposes of determining whether Seller has achieved the Guaranteed Energy Production, Seller shall be deemed to have delivered to Buyer the sum of (a) any Deemed Delivered Energy, plus (b) PV Energy in the amount it could reasonably have delivered to Buyer but was prevented from delivering to Buyer by reason of any Force Majeure Events, System Emergency, Transmission System Outage, or Curtailment Periods (“Lost Output”). If Seller fails to achieve the Guaranteed Energy Production amount in any Performance Measurement Period, Seller shall pay Buyer damages calculated in accordance with Exhibit G; provided that Seller may, as an alternative, provide Replacement Product (as defined in Exhibit G) delivered to Buyer at SP 15 EZ Gen Hub under a Day-Ahead Schedule as an IST within ninety (90) days after the conclusion of the applicable Performance Measurement Period (i) upon a schedule reasonably acceptable to Buyer, and (ii) provided that such deliveries do not impose additional costs upon Buyer for which Seller refuses to provide reimbursement.
4.8 Storage Facility Availability; Ancillary Services.
(a) During the Delivery Term, the Storage Facility shall maintain an Annual Storage Capacity Availability during each Contract Year of no less than (the “Guaranteed Storage Availability”), which Annual Storage Capacity Availability shall be calculated in accordance with Exhibit P.
(b) During the Delivery Term, the Storage Facility shall maintain an Efficiency Rate of no less than the Guaranteed Efficiency Rate. Buyer’s sole remedy for an Efficiency Rate that is less than the Guaranteed Efficiency Rate is Seller’s payment of liquidated damages pursuant to Section (f) of Exhibit C.
(c) Buyer’s exclusive remedies for Seller’s failure to achieve the Guaranteed Storage Availability are (i) the adjustment of Seller’s payment for the Product by application of the Capacity Availability Factor (as set forth in Exhibit C), and (ii) in the case of a Seller Event of Default as set forth in Section 11.1(b)(iv), the applicable remedies set forth in Article 11. (d) Seller shall operate and maintain the Storage Facility throughout the Delivery Term so as to be able to provide the Ancillary Services in accordance with the specifications set forth in the Operating Restrictions and the Storage Facility’s initial CAISO Certification associated with the Installed Storage Capacity. To the extent the Storage Facility is unable to provide Ancillary Services for any reason not excused hereunder during any Calculation Interval that is not otherwise deemed an Unavailable Calculation Interval, then as exclusive remedies the Storage Capability for such Calculation Interval shall be deemed 206
40 (e) Upon Buyer’s reasonable request, Seller shall submit the Storage Facility for additional CAISO Certification so that the Storage Facility may provide additional Ancillary Services that the Facility is at the relevant time actually physically capable of providing consistent with the definition of Ancillary Services herein, and subject to the Operating Restrictions, provided that Buyer has agreed to reimburse Seller for any material costs Seller incurs in connection with such additional CAISO Certification.
4.9 Storage Facility Testing.
(a) Storage Capacity Tests. Prior to the Commercial Operation Date, Seller shall schedule and complete a Commercial Operation Storage Capacity Test in accordance with Exhibit O. Thereafter, Seller and Buyer shall have the right to run additional Storage Capacity Tests in accordance with Exhibit O.
(i) Buyer shall have the right to send one or more representative(s) to witness all Storage Capacity Tests.
(ii) Following each Storage Capacity Test, Seller shall submit a testing report in accordance with Exhibit O. If the actual capacity determined pursuant to a Storage Capacity Test varies from the then-current Effective Storage Capacity, then the actual capacity determined pursuant to such Storage Capacity Test shall become the new Effective Storage Capacity at the beginning of the day following the completion of the test for all purposes under this Agreement.
(b) Additional Testing. Seller shall, at times and for durations reasonably agreed to by Buyer, conduct necessary testing to ensure the Storage Facility is functioning properly and the Storage Facility is able to respond to Buyer or CAISO Dispatches. (c) Buyer or Seller Initiated Tests. Any testing of the Storage Facility requested by Buyer after the Commercial Operation Storage Capacity Tests and all required annual tests pursuant to Section B of Exhibit O shall be deemed Buyer-instructed dispatches of the Facility (“Buyer Dispatched Test”). Any test of the Storage Facility that is not a Buyer Dispatched Test (including all tests conducted prior to Commercial Operation, any Commercial Operation Storage Capacity Tests, any Storage Capacity Test conducted if the Effective Storage Capacity immediately prior to such Storage Capacity Test is below of the Installed Storage Capacity, any test required by CAISO (including any test required to obtain or maintain CAISO Certification), and other Seller-requested discretionary tests or dispatches, at times and for durations reasonably agreed to by Buyer, that Seller deems necessary for purposes of reliably operating or maintaining the Storage Facility or for re-performing a required test within a reasonable number of days of the initial required test (considering the circumstances that led to the need for a retest)) shall be deemed a “Seller Initiated Test”. (i) For any Seller Initiated Test, other than Storage Capacity Tests required by Exhibit O for which there is a stated notice requirement, Seller shall notify Buyer no later than twenty-four (24) hours prior thereto (or any shorter period reasonably acceptable to Buyer consistent with Prudent Operating Practices).
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41 (ii) No Charging Notices or Discharging Notices shall be issued during any Seller Initiated Test or Buyer Dispatched Test except as reasonably requested by Seller or Buyer to implement the applicable test. Periods during which Buyer Dispatched Tests render the Storage Facility (or any portion thereof, as applicable) unavailable shall be excluded for purposes of calculating the Annual Storage Capacity Availability. The Storage Facility will be deemed unavailable during any Seller Initiated Test, and Buyer shall not dispatch or otherwise schedule the Storage Facility during such Seller Initiated Test. (d) Testing Costs and Revenues.
(i) For all Buyer Dispatched Tests, Buyer shall direct only Charging Energy to be used to charge the Storage Facility and Buyer shall be entitled to all CAISO revenues associated with a Storage Facility dispatch during a Buyer Dispatched Test. For all Seller Initiated Tests, (1) Seller shall reimburse Buyer for all CAISO costs and charges associated with Charging Energy used for such Seller Initiated Test, and (2) Seller shall be entitled to all CAISO revenues associated with the discharge of such Energy, but all Green Attributes associated therewith shall be for Buyer’s account at no additional cost to Buyer. Buyer shall pay to Seller, in the month following Buyer’s receipt of such CAISO revenues and otherwise in accordance with Exhibit C, all applicable CAISO revenues received by Buyer and associated with the discharge Energy associated with such Seller Initiated Test.
(ii) Buyer shall be responsible for all costs, expenses and fees payable or reimbursable to its representative(s) witnessing any Facility test. Any such representative(s) of Buyer shall adhere to the safety and security procedures of Seller, which shall be provided by Seller to Buyer in writing. Buyer shall indemnify and hold Seller harmless for any losses or claims for personal injury, death or property damage to the Facility or Site to the extent caused by Buyer, its authorized agents, employees, and inspectors, during any such access. (iii) Except as set forth in Sections 4.9(d)(i) and (ii), all other costs of any testing of the Storage Facility shall be borne by Seller.
4.10 WREGIS.
Seller shall, at its sole expense, but subject to Section 3.12, take all actions and execute all documents or instruments necessary to ensure that all WREGIS Certificates associated with all Renewable Energy Credits corresponding to all PV Energy are issued and tracked for purposes of satisfying the requirements of the California Renewables Portfolio Standard and transferred in a timely manner to Buyer for Buyer’s sole benefit. Seller shall transfer the Renewable Energy Credits to Buyer. Seller shall comply with all Laws, including the WREGIS Operating Rules, regarding the certification and transfer of such WREGIS Certificates to Buyer and Buyer shall be given sole title to all such WREGIS Certificates. Seller shall be deemed to have satisfied the warranty in Section 4.10(g), provided that Seller fulfills its obligations under Sections 4.10(a) through (g) below. In addition:
(a) Prior to the Commercial Operation Date, Seller shall register the Facility with WREGIS and establish an account with WREGIS (“Seller’s WREGIS Account”), which Seller shall maintain until the end of the Delivery Term. Seller shall transfer the WREGIS 208
42 Certificates using “Forward Certificate Transfers” (as described in the WREGIS Operating Rules) from Seller’s WREGIS Account to the WREGIS account(s) of Buyer or the account(s) of a designee that Buyer identifies by Notice to Seller (“Buyer’s WREGIS Account”). Seller shall be responsible for all expenses associated with registering the Facility with WREGIS, establishing and maintaining Seller’s WREGIS Account, paying WREGIS Certificate issuance and transfer fees, and transferring WREGIS Certificates from Seller’s WREGIS Account to Buyer’s WREGIS Account.
(b) Seller shall cause Forward Certificate Transfers to occur on a monthly basis in accordance with the certification procedure established by the WREGIS Operating Rules. Since WREGIS Certificates will only be created for whole MWh amounts of PV Energy generated, any fractional MWh amounts (i.e., kWh) will be carried forward until sufficient generation is accumulated for the creation of a WREGIS Certificate.
(c) Seller shall, at its sole expense, ensure that the WREGIS Certificates for a given calendar month correspond with the PV Energy for such calendar month as evidenced by the Facility’s metered data.
(d) Due to the ninety (90) day delay in the creation of WREGIS Certificates relative to the timing of invoice payment under Section 8.2, Buyer shall make an invoice payment for a given month in accordance with Section 8.2 before the WREGIS Certificates for such month are formally transferred to Buyer in accordance with the WREGIS Operating Rules and this Section 4.10. Notwithstanding this delay, Buyer shall have all right and title to all such WREGIS Certificates upon payment to Seller in accordance with Section 8.2. (e) A “WREGIS Certificate Deficit” means any deficit or shortfall in WREGIS Certificates delivered to Buyer for a calendar month as compared to the PV Energy for the same calendar month (“Deficient Month”) caused by an error or omission of Seller. If any WREGIS Certificate Deficit is caused by, or the result of any action or inaction of, Seller, then the amount of PV Energy in the Deficient Month shall be reduced by three (3) times the amount of the WREGIS Certificate Deficit for purposes of calculating Buyer’s payment to Seller under Article 8 and the Guaranteed Energy Production for the applicable Contract Year; provided, such adjustment shall not apply to the extent that Seller either (x) resolves the WREGIS Certificate Deficit within ninety (90) days after the Deficient Month or (y) provides Replacement Green Attributes (as defined in Exhibit G) within ninety (90) days after the Deficient Month (i) upon a schedule reasonably acceptable to Buyer and (ii) provided that such deliveries do not impose additional costs upon Buyer for which Seller refuses to provide reimbursement. Without limiting Seller’s obligations under this Section 4.10, if a WREGIS Certificate Deficit is caused solely by an error or omission of WREGIS, the Parties shall cooperate in good faith to cause WREGIS to correct its error or omission.
(f) If WREGIS changes the WREGIS Operating Rules after the Effective Date or applies the WREGIS Operating Rules in a manner inconsistent with this Section 4.10 after the Effective Date, the Parties promptly shall modify this Section 4.10 as reasonably required to cause and enable Seller to transfer to Buyer’s WREGIS Account a quantity of WREGIS Certificates for each given calendar month that corresponds to the PV Energy in the same calendar month. 209
43 (g) Seller warrants that all necessary steps to allow the Renewable Energy Credits transferred to Buyer to be tracked in WREGIS will be taken prior to the first Energy delivery under this Agreement.
ARTICLE 5
TAXES
5.1 Allocation of Taxes and Charges.
Seller shall pay or cause to be paid all Taxes on or with respect to the Facility or on or with respect to the sale and making available of Product to Buyer, that are imposed on Product prior to its delivery to Buyer at the time and place contemplated under this Agreement. Buyer shall pay or cause to be paid all Taxes on or with respect to the delivery to and purchase by Buyer of Product that are imposed on Product at and after its delivery to Buyer at the time and place contemplated under this Agreement (other than withholding or other Taxes imposed on Seller’s income, revenue, receipts or employees). If a Party is required to remit or pay Taxes that are the other Party’s responsibility hereunder, such Party shall promptly pay the Taxes due and then seek and receive reimbursement from the other for such Taxes. In the event any sale of Product hereunder is exempt from or not subject to any particular Tax, Buyer shall provide Seller with all necessary documentation to evidence such exemption or exclusion within thirty (30) days after the date Buyer makes such claim. Buyer shall indemnify, defend, and hold Seller harmless from any liability with respect to Taxes for which Buyer is responsible hereunder and from which Buyer claims it is exempt.
5.2 Cooperation.
Each Party shall use reasonable efforts to implement the provisions of and administer this Agreement in accordance with the intent of the Parties to minimize all Taxes, so long as no Party is materially adversely affected by such efforts. The Parties shall cooperate to minimize Tax exposure; provided, neither Party shall be obligated to incur any financial or operational burden to reduce Taxes for which the other Party is responsible hereunder without receiving due compensation therefor from the other Party. All Product delivered by Seller to Buyer hereunder shall be a sale made at wholesale, with Buyer reselling such Product.
ARTICLE 6
MAINTENANCE OF THE FACILITY
6.1 Maintenance of the Facility.
Seller shall, as between Seller and Buyer, be solely responsible for the operation and maintenance of the Facility and the generation and sale of Product and shall comply with Law and Prudent Operating Practice relating to the operation and maintenance of the Facility and the generation and sale of Product.
6.2 Maintenance of Health and Safety.
Seller shall take reasonable safety precautions with respect to the operation, maintenance, repair and replacement of the Facility. If Seller becomes aware of any circumstances relating to 210
44 the Facility that create an imminent risk of damage or injury to any Person or any Person’s property, Seller shall take prompt, reasonable action to prevent such damage or injury and shall give Buyer’s emergency contact identified in Exhibit N Notice of such condition. Such action may include disconnecting and removing all or a portion of the Facility or suspending the supply of Facility Energy to the Delivery Point.
6.3 Shared Facilities.
The Parties acknowledge and agree that certain of the Shared Facilities and Interconnection Facilities, and Seller’s rights and obligations under the Interconnection Agreement, may be subject to certain shared facilities and/or co-tenancy agreements to be entered into among Seller, the Transmission Provider, Seller’s Affiliates, and/or third parties pursuant to which certain Interconnection Facilities may be subject to joint ownership and shared maintenance and operation arrangements; provided, such agreements (i) shall permit Seller to perform or satisfy, and shall not purport to limit, its obligations hereunder and (ii) provide for separate metering of the Facility.
ARTICLE 7
METERING
7.1 Metering.
(a) Subject to Section 7.1(b) (with respect to the entirety of the following Section 7.1(a)), unless the Parties agree otherwise pursuant to Section 3.13, the Facility shall have a separate CAISO Resource ID for each of the Generating Facility and the Storage Facility. Seller shall measure the amount of PV Energy using the Generating Facility Meter. Seller shall measure the Charging Energy and the Discharging Energy using the Storage Facility Meter. Seller shall separately meter or account for all Station Use. All meters shall be operated pursuant to applicable CAISO-approved calculation methodologies and maintained at Seller’s cost. Subject to meeting any applicable CAISO requirements, the Storage Facility Meter and Generating Facility Meter shall be programmed to adjust for all Electrical Losses from such meters to the Delivery Point in a manner compliance with the CAISO Tariff and subject to Buyer’s prior written approval, not to be unreasonably withheld. Metering shall be consistent with the Metering Diagram set forth as Exhibit R. Each Storage Facility Meter and Generating Facility Meter shall be kept under seal, such seals to be broken only when the meters are to be tested, adjusted, modified or relocated. In the event Seller breaks a seal, Seller shall notify Buyer as soon as practicable. In addition, Seller hereby agrees to provide all meter data to Buyer in a form reasonably acceptable to Buyer, and consents to Buyer obtaining from CAISO the CAISO meter data directly relating to the Facility and all inspection, testing and calibration data and reports. Seller and Buyer, or Buyer’s Scheduling Coordinator, shall cooperate to allow both Parties to retrieve the meter reads from the CAISO Market Results Interface (MRI-S) and/or directly from the CAISO meter(s) at the Facility. (b) Section 7.1(a) is based on the Parties’ mutual understanding as of the Effective Date that (i) the CAISO requires the configuration of the Facility to include, as the sole meters for the Facility, the Generating Facility Meter and the Storage Facility Meter, (ii) the CAISO requires the Generating Facility Meter and the Storage Facility Meter to be programmed for Electrical Losses as set forth in the definition of Electrical Losses in this Agreement, and (iii) the automatic adjustments to Charging Notices and Discharging Notices as set forth in the 211
45 definitions of Charging Notice and Discharging Notice in this Agreement will not result in Seller violating, or incurring any costs, penalties or charges under, the CAISO Tariff. If any of the foregoing mutual understandings in (i), (ii), or (iii) between the Parties become incorrect during the Delivery Term, the Parties shall cooperate in good faith to make any amendments and modifications to the Facility and this Agreement as are reasonably necessary to conform this Agreement to the CAISO Tariff and avoid, to the maximum extent practicable, any CAISO charges, costs or penalties that may be imposed on either Party due to non-conformance with the CAISO Tariff, such agreement not to be unreasonably delayed, conditioned or withheld.
7.2 Meter Verification.
Annually, if Seller has reason to believe there may be a meter malfunction, or upon Buyer’s reasonable request, Seller shall test the meter. The tests shall be conducted by independent third parties qualified to conduct such tests. Buyer shall be notified seven (7) days in advance of such tests and have a right to be present during such tests. If a meter is inaccurate it shall be promptly repaired or replaced. If a meter is inaccurate by more than one percent (1%) and it is not known when the meter inaccuracy commenced (if such evidence exists such date will be used to adjust prior invoices), then the invoices covering the period of time since the last meter test shall be adjusted for the amount of the inaccuracy on the assumption that the inaccuracy persisted during one-half of such period so long as such adjustments are accepted by CAISO and WREGIS; provided, such period may not exceed twelve (12) months.
ARTICLE 8
INVOICING AND PAYMENT; CREDIT
8.1 Invoicing.
Seller shall use commercially reasonable efforts to deliver an invoice to Buyer for Product no later than the tenth (10th) day of each month for the previous calendar month. Each invoice shall (a) reflect records of metered data, including (i) CAISO metering and transaction data sufficient to document
and verify the amount of Product delivered by the Facility for any Settlement Period during the 2preceding month, including the amount of PV Energy, Charging Energy, Discharging Energy, Energy In, Energy Out, Replacement RA and Replacement Product delivered to Buyer (if any), the calculation of Deemed Delivered Energy and Adjusted Energy Production, the LMP prices at the Delivery Point for each Settlement Period, and the Contract Price applicable to such Product in accordance with Exhibit C, and (ii) data showing a calculation of the Monthly Capacity Payment and other relevant data for the prior month; and (b) be in a format reasonably specified by Buyer, covering the Product provided in the preceding month determined in accordance with the applicable provisions of this Agreement. Buyer shall, and shall cause its Scheduling Coordinator to, provide Seller with all reasonable access (including, in real time, to the maximum extent reasonably possible) to any records, including invoices or settlement data from the CAISO, forecast data and other information, all as may be necessary from time to time for Seller to prepare and verify the accuracy of all invoices.
8.2 Payment.
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46 Buyer shall make payment to Seller for Product (and any other amounts due) by wire transfer or ACH payment to the bank account provided on each monthly invoice. Buyer shall pay undisputed invoice amounts by the later of (a) ten (10) Business Days after Buyer’s receipt of the invoice from Seller, and (b) the thirtieth (30th) day of the month after the operational month for which such invoice was rendered; 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.
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 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) 213
47 Business Days of such resolution along with interest accrued at the Interest Rate from and including the original due date to but excluding the date paid. Inadvertent overpayments shall be returned via adjustments in accordance with Section 8.4. Any dispute with respect to an invoice is waived if the other Party is not notified in accordance with this Section 8.5 within twelve (12) months after the invoice is rendered or subsequently adjusted, except to the extent any misinformation was from a third party not affiliated with any Party and such third party corrects its information after the twelve-month period. If an invoice is not rendered within twelve (12) months after the close of the month during which performance occurred, the right to payment for such performance is waived.
8.6 Netting of Payments.
The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other 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 ten (10) days after the Effective Date. Seller shall maintain the Development Security in full force and effect; provided that the Development Security shall not be replenishable. 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. If the Performance Security is not in the form of cash or Letter of Credit, it shall be substantially in the form set forth in Exhibit L. 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); provided, however, that in no event shall Seller have any obligation to replenish the Performance Security to the extent that the aggregate amount of such replenishment of the Performance Security during the Delivery Term exceeds one (1) times the Performance Security requirement. 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. 214
48 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 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. 215
49 ARTICLE 9
NOTICES
9.1 Addresses for the Delivery of Notices.
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50 Any Notice required, permitted, or contemplated hereunder shall be in writing, shall be addressed to the Party to be notified at the address set forth in Exhibit N or at such other address or addresses as a Party may designate for itself from time to time by Notice hereunder.
9.2 Acceptable Means of Delivering Notice.
Each Notice required, permitted, or contemplated hereunder shall be deemed to have been validly served, given or delivered as follows: (a) if sent by United States mail with proper first class postage prepaid, three (3) Business Days following the date of the postmark on the envelope in which such Notice was deposited in the United States mail; (b) if sent by a regularly scheduled overnight delivery carrier with delivery fees either prepaid or an arrangement with such carrier made for the payment of such fees, the next Business Day after the same is delivered by the sending Party to such carrier; (c) if sent by electronic communication (including electronic mail or other electronic means) at the time indicated by the time stamp upon delivery and, if after 5 pm, on the next Business Day; or (d) if delivered in person, upon receipt by the receiving Party.
Notwithstanding the foregoing, Notices of outages or other scheduling or dispatch information or requests, may be sent by electronic communication and shall be considered delivered upon successful completion of such transmission.
ARTICLE 10
FORCE MAJEURE
10.1 Definition.
(a) “Force Majeure Event” means any act or event that delays or prevents a Party from timely performing all or a portion of its obligations under this Agreement or from complying with all or a portion of the conditions under this Agreement if such act or event, despite the exercise of reasonable efforts, cannot be avoided by and is beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance, or noncompliance. (b) Without limiting the generality of the foregoing, so long as the following events, despite the exercise of reasonable efforts, cannot be avoided by, and are beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance or noncompliance, a Force Majeure Event may include an act of God or the elements, such as flooding, lightning, hurricanes, tornadoes, or ice storms; explosion; fire; volcanic eruption; flood; epidemic; 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 217
51 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; (iv) a Curtailment Order, except to the extent such Curtailment Period 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; or (viii) any action or inaction by any third party, including Transmission Provider, that delays or prevents the approval, construction or placement 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. The occurrence and continuation of a Force Majeure Event shall not suspend or excuse the obligation of a Party to make any payments due hereunder.
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) as soon as practicable, 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) 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 partially unable to perform its obligations hereunder in any material respect, and the impacted Party has claimed and received relief from performance of its obligations for a consecutive twelve (12) month period, then either Party may terminate this Agreement upon written Notice to the other Party. Upon any such termination, neither Party shall have any liability 218
52 to the other Party, save and except for those obligations specified in Section 2.1(b), and Buyer shall promptly return to Seller any Performance Security then held by Buyer, less any amounts drawn in accordance with this Agreement.
ARTICLE 11
DEFAULTS; REMEDIES; TERMINATION
11.1 Events of Default.
An “Event of Default” shall mean:
(a) with respect to a Party (the “Defaulting Party”) that is subject to the Event of Default the occurrence of any of the following:
(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 Error! Reference source not found., (B) failures related to the Adjusted Energy Production that do not trigger the provisions of Section
11.1(b)(iii), the exclusive remedies for which are set forth in Section 4.7; and (C) failures related to the Annual Storage Capacity Availability that do not trigger the provisions of Section
11.1(b)(iv), the exclusive remedies for which are set forth in Section 4.8) 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; 219
53 (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 generated or discharged by the Facility, except for Replacement Product;
(ii) the failure by Seller to (A) achieve Construction Start the Guaranteed Construction Start Date as may be extended by Seller’s payment of Daily Delay Damages pursuant to Section 1(b) of Exhibit B and/or a Development Cure Period pursuant to Section 4 of Exhibit B, or (B) achieve Commercial Operation on or before the Guaranteed Commercial Operation Date, as such date may be extended by Seller’s payment of Commercial Operation Delay Damages pursuant to Section 2 of Exhibit B and/or a Development Cure Period pursuant to Section 4 of Exhibit B;
(iii) if, in any Contract Year beginning with the second Contract Year, the Adjusted Energy Production amount (calculated in accordance with Exhibit G) for such period is not at least of the Expected Energy for such period, 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 to meet the threshold 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 one hundred eighty (180) days (“Cure Plan”) and (y) complete such Cure Plan in all material respects as set forth therein, including within the timeframe set forth therein; (iv) if, in any two (2) consecutive Contract Years during the Delivery Term, the Annual Storage Capacity Availability multiplied by the Effective Storage Capacity of the applicable period is not at least multiplied by the Installed Storage Capacity, 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 to meet such multiplied by the Installed Storage Capacity threshold, 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 days (“Storage Cure Plan”) and (y) complete such Storage Cure Plan in all material respects as set forth therein, including within the timeframe set forth therein; (v) 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; (vi) with respect to any Guaranty provided for the benefit of Buyer, the failure by Seller to provide for the benefit of Buyer either (1) cash or (2) a replacement Letter of Credit from an issuer meeting the criteria set forth in the definition of Letter of Credit, in each 220
54 case, in the amount required hereunder within ten (10) Business Days after Seller receives Notice of the occurrence of any of the following events:
(A) if any representation or warranty made by the Guarantor in connection with this Agreement is false or misleading in any material respect when made or when deemed made or repeated, and such default is not remedied within thirty (30) days after Notice thereof; (B) the failure of the Guarantor to make any payment required or to perform any other material covenant or obligation in any Guaranty; (C) the Guarantor becomes Bankrupt;
(D) the Guarantor shall fail to meet the criteria for an acceptable Guarantor as set forth in the definition of Guarantor;
(E) the failure of the Guaranty to be in full force and effect (other than in accordance with its terms) prior to the indefeasible satisfaction of all obligations of Seller hereunder; or
(F) the Guarantor shall repudiate, disaffirm, disclaim, or reject, in whole or in part, or challenge the validity of any Guaranty; (vii) with respect to any outstanding Letter of Credit provided for the benefit of Buyer that is not then required under this Agreement to be canceled or returned, the failure by Seller to provide for the benefit of Buyer either (1) cash, or (2) a substitute Letter of Credit from a different issuer meeting the criteria set forth in the definition of Letter of Credit, in each case, in the amount required hereunder within ten (10) Business Days after Seller receives Notice of the occurrence of any of the following events:
(A) the issuer of the outstanding Letter of Credit shall fail to maintain a Credit Rating of at least A- by S&P or Fitch or A3 by Moody’s; (B) the issuer of such Letter of Credit becomes Bankrupt; (C) the issuer of the outstanding Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit and such failure shall be continuing after the lapse of any applicable grace period permitted under such Letter of Credit;
(D) the issuer of the outstanding Letter of Credit shall fail to honor a properly documented request to draw on such Letter of Credit; (E) the issuer of the outstanding Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit;
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55 (F) such Letter of Credit fails or ceases to be in full force and effect at any time; or
(G) Seller shall fail to renew or cause the renewal of each outstanding Letter of Credit on a timely basis as provided in the relevant Letter of Credit and as provided in accordance with this Agreement, and in no event less than sixty (60) days prior to the expiration of the outstanding Letter of Credit.
(c) with respect to Buyer as the Defaulting Party, the failure of Buyer to provide the Buyer Credit Support in accordance with Section 8.10(e), and such failure is not remedied within twenty (20) Business Days after Notice thereof.
11.2 Remedies; Declaration of Early Termination Date.
If an Event of Default with respect to a Defaulting Party shall have occurred and be continuing, the other Party (“Non-Defaulting Party”) shall have the following rights:
(a) to send Notice, designating a day, no earlier than the day such Notice is deemed to be received and no later than twenty (20) days after such Notice is deemed to be received, as an early termination date of this Agreement (“Early Termination Date”) that terminates this Agreement (the “Terminated Transaction”) and ends the Delivery Term effective as of the Early Termination Date;
(b) to accelerate all amounts owing between the Parties, and to collect as liquidated damages (i) the Damage Payment, or (ii) the Termination Payment, as applicable, in each case calculated in accordance with Section 11.3 below; (c) to withhold any payments due to the Defaulting Party under this Agreement; (d) to suspend performance; and
(e) to exercise any other right or remedy available at law or in equity, including specific performance or injunctive relief, except to the extent such remedies are expressly limited under this Agreement; provided, that payment by the Defaulting Party of the Damage Payment or Termination Payment, as applicable, shall constitute liquidated damages and the Non-Defaulting Party’s sole and exclusive remedy for any Terminated Transaction and the Event of Default related thereto.
11.3 Damage Payment; Termination Payment.
If an Early Termination Date has been declared, the Non-Defaulting Party shall calculate, in a commercially reasonable manner, the Damage Payment or Termination Payment, as applicable, in accordance with this Section 11.3.
(a) Damage Payment Prior to Commercial Operation Date. If the Early Termination Date occurs before the Commercial Operation Date, then the Damage Payment shall be calculated in accordance with this Section 11.3(a).
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56 (i) If Seller is the Defaulting Party, then the Damage Payment shall be owed to Buyer and shall be equal to the entire Development Security amount and any interest accrued thereon; provided, in no event shall the sum of the Damage Payment and any Delay Damages paid to date exceed an amount equal to
Buyer shall be entitled to immediately retain for its own benefit those funds held as Development Security and any interest accrued thereon, and any amount of Development Security that Seller has not yet posted with Buyer will be immediately due and payable by Seller to Buyer. There will be no amounts owed to Seller. The Parties agree that Buyer’s damages in the event of an Early Termination Date prior to the Commercial Operation Date caused by Seller’s default would be difficult or impossible to determine and that the damages set forth in this Section 11.3(a)(i) are a reasonable approximation of Buyer’s harm or loss.
(ii) If Buyer is the Defaulting Party, then the Damage Payment shall be owed to Seller and shall equal the Settlement Amount plus any or all other amounts due to or from Buyer (as of the Early Termination Date), less the fair market value (determined in a commercially reasonable manner) of the Facility, regardless of whether or not Facility is actually sold or disposed of; provided that such Damage Payment shall not exceed the amount that Seller has posted as Development Security. There will be no amount owed to Buyer. The Parties agree that Seller’s damages in the event of an Early Termination Date prior to the Commercial Operation Date caused by Buyer’s default would be difficult or impossible to determine and that the damages set forth in this Section 11.3(a)(ii) are a reasonable approximation of Seller’s harm or loss. (b) Termination Payment On or After the Commercial Operation Date. The payment owed by the Defaulting Party to the Non-Defaulting Party for a Terminated Transaction occurring after the Commercial Operation Date (“Termination Payment”) shall be the aggregate of all Settlement Amounts plus any or all other amounts due to or from the Non-Defaulting Party (as of the Early Termination Date) netted into a single amount. The Non-Defaulting Party shall calculate, in a commercially reasonable manner, a Settlement Amount for the Terminated Transaction as of the Early Termination Date. Third parties supplying information for purposes of the calculation of Gains or Losses may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors and other sources of market information.
The Settlement Amount shall not include consequential, incidental, punitive, exemplary, indirect or business interruption damages. Without prejudice to the Non-Defaulting Party’s duty to mitigate, the Non-Defaulting Party shall not have to enter into replacement transactions to establish a Settlement Amount. Each Party agrees and acknowledges that (i) the actual damages that the Non-Defaulting Party would incur in connection with a Terminated Transaction would be difficult or impossible to predict with certainty, (ii) the Termination Payment described in this Section
11.3(b) is a reasonable and appropriate approximation of such damages, and (iii) the Termination Payment described in this Section 11.3(b) is the exclusive remedy of the Non-Defaulting Party in connection with a Terminated Transaction but shall not otherwise act to limit any of the Non-Defaulting Party’s rights or remedies if the Non-Defaulting Party does not elect a Terminated Transaction as its remedy for an Event of Default by the Defaulting Party.
11.4 Notice of Payment of Termination Payment or Damage Payment.
As soon as practicable after a Terminated Transaction, but in no event later than sixty (60) days after the Early Termination Date, Notice shall be given by the Non-Defaulting Party to the 223
57 Defaulting Party of the amount of the Damage Payment or Termination Payment, as applicable, and whether the Termination Payment or Damage Payment, as applicable, is due to or from the Non-Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of such amount and the sources for such calculation. The Termination Payment or Damage Payment, as applicable, shall be made to or from the Non-Defaulting Party, as applicable, within ten (10) Business Days after such Notice is effective.
11.5 Disputes with Respect to Termination Payment or Damage Payment.
If the Defaulting Party disputes the Non-Defaulting Party’s calculation of the Termination Payment or Damage Payment, as applicable, in whole or in part, the Defaulting Party shall, within five (5) Business Days of receipt of the Non-Defaulting Party’s calculation of the Termination Payment or Damage Payment, as applicable, provide to the Non-Defaulting Party a detailed written explanation of the basis for such dispute. Disputes regarding the Termination Payment or Damage Payment, as applicable, shall be determined in accordance with Article 15.
11.6 Limitation on Seller’s Ability to Make or Agree to Third-Party Sales from the Facility after Early Termination Date.
If the Agreement is terminated by Buyer prior to the Commercial Operation Date due to Seller’s Event of Default, neither Seller nor Seller's Affiliates may sell, market or deliver any Product associated with or attributable to the Facility to a party other than Buyer for a period of two (2) years following the Early Termination Date due to Seller’s Event of Default, unless prior to selling, marketing or delivering such Product, or entering into the agreement to sell, market or deliver such Product to a party other than Buyer, Seller or Seller’s Affiliates provide Buyer with a written offer to sell the Product which provides Buyer the right to select in its sole discretion either the terms and conditions materially similar to the terms and conditions contained in this Agreement (including price) or the terms and conditions to which the third party agreed, and Buyer fails to accept such offer within forty-five (45) days of Buyer’s receipt thereof. Neither Seller nor Seller’s Affiliates may sell or transfer the Facility, or any part thereof, or land rights or interests in the Site (including the interconnection queue position of the Facility) so long as the limitations contained in this Section 11.6 apply, unless the transferee agrees to be bound by the terms set forth in this Section 11.6 pursuant to a written agreement approved by Buyer. Seller shall indemnify and hold Buyer harmless from all benefits lost and other damages sustained by Buyer as a result of any breach by Seller of its covenants contained within this Section 11.6.
11.7 Rights and Remedies Are Cumulative.
Except where liquidated damages or other remedy are explicitly provided as the exclusive remedy, the rights and remedies of a Party pursuant to this Article 11 shall be cumulative and in addition to the rights of the Parties otherwise provided in this Agreement.
11.8 Mitigation.
Any Non-Defaulting Party shall be obligated to use commercially reasonable efforts to mitigate its Costs, Losses and damages resulting from any Event of Default of the other Party under this Agreement.
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58 11.9 Seller Pre-COD Termination.
At any time prior to the Commercial Operation Date, Seller may for any reason, by Notice to Buyer pursuant to this Section 11.9, terminate this Agreement. As Buyer’s sole right and remedy (and Seller’s sole liability and obligation) arising out of any such termination under this Section 11.9, Buyer shall be entitled (A) to liquidate and retain all Development Security and (B) to collect from Seller (and Seller shall be obligated to pay to Buyer) the total amount of all Delay Damages accrued and unpaid as of the Agreement termination date; provided, in no event shall the sum of (A) and (B) exceed an amount equal to
ARTICLE 12
LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES.
12.1 No Consequential Damages.
EXCEPT TO THE EXTENT PART OF (A) AN EXPRESS REMEDY OR MEASURE OF DAMAGES HEREIN, (B) AN ARTICLE 16 INDEMNITY CLAIM, (C) INCLUDED IN A LIQUIDATED DAMAGES CALCULATION, OR (D) RESULTING FROM A PARTY’S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER OR ITS INDEMNIFIED PERSONS FOR ANY SPECIAL,
PUNITIVE, EXEMPLARY, INDIRECT, OR CONSEQUENTIAL DAMAGES, OR LOSSES OR
DAMAGES FOR LOST REVENUE OR LOST PROFITS, WHETHER FORESEEABLE OR
NOT, ARISING OUT OF, OR IN CONNECTION WITH THIS AGREEMENT, BY STATUTE, IN TORT OR CONTRACT.
12.2 Waiver and Exclusion of Other Damages.
EXCEPT AS EXPRESSLY SET FORTH HEREIN, THERE IS NO WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM THAT THE
EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. ALL LIMITATIONS OF
LIABILITY CONTAINED IN THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THOSE PERTAINING TO SELLER’S LIMITATION OF LIABILITY AND THE PARTIES’
WAIVER OF CONSEQUENTIAL DAMAGES, SHALL APPLY EVEN IF THE REMEDIES
FOR BREACH OF WARRANTY PROVIDED IN THIS AGREEMENT ARE DEEMED TO “FAIL OF THEIR ESSENTIAL PURPOSE” OR ARE OTHERWISE HELD TO BE INVALID OR UNENFORCEABLE.
FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS AND EXCLUSIVE
REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR
MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED.
IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR’S LIABILITY SHALL BE LIMITED TO DIRECT DAMAGES ONLY. THE VALUE OF ANY TAX CREDITS, DETERMINED ON AN AFTER-TAX BASIS, 225
59 LOST DUE TO BUYER’S DEFAULT (WHICH SELLER HAS NOT BEEN ABLE TO
MITIGATE AFTER USE OF REASONABLE EFFORTS) AND AMOUNTS DUE IN
CONNECTION WITH THE RECAPTURE OF ANY RENEWABLE ENERGY INCENTIVES, IF ANY, SHALL BE DEEMED TO BE DIRECT DAMAGES.
TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, INCLUDING UNDER SECTIONS Error! Reference source not found., 4.7,
4.8, 11.2 AND 11.3, AND AS PROVIDED IN EXHIBIT B, EXHIBIT C, EXHIBIT G, 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.
ARTICLE 13
REPRESENTATIONS AND WARRANTIES; AUTHORITY
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 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 226
60 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) The Facility is located in the State of California.
13.2 Buyer’s Representations and Warranties.
As of the Effective Date, Buyer represents and warrants as follows:
(a) Buyer is a joint powers authority and a validly existing community choice aggregator, duly organized, validly existing and in good standing under the laws of the State of California and the rules, regulations and orders of the 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 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. 227
61 (e) Buyer warrants and covenants that with respect to its contractual obligations under this Agreement, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (1) suit, (2) jurisdiction of court, (3) relief by way of injunction, order for specific performance or recovery of property, (4) attachment of assets, or (5) execution or enforcement of any judgment.
(f) Buyer is a “local public entity” as defined in Section 900.4 of the Government Code of the State of California.
(g) Buyer cannot assert sovereign immunity as a defense to the enforcement of its obligations under this Agreement.
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 Workforce Development.
The Parties acknowledge that in connection with Buyer’s renewable energy procurement efforts, including entering into this Agreement, Buyer is committed to creating community benefits, which includes engaging a skilled and trained workforce and targeted hires. Accordingly, on December 1st of each of the first ten (10) years in the Delivery Term, Seller shall cause twenty thousand dollars ($20,000) to be deposited, for a total of two hundred thousand dollars ($200,000), into a “Workforce Development Fund” maintained by Buyer. The investment plan for utilizing such funds shall be developed by Buyer at the discretion of Buyer’s board. 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 employment discrimination laws and prevailing wage laws. If requested by Buyer, Seller shall complete a “Supplier Diversity and Labor Practices” questionnaire, and Seller agrees to comply with similar regular reporting requirements related to diversity and labor practices.
13.5 Local Sustainability.
The Parties acknowledge that in connection with Buyer’s renewable energy procurement efforts, including entering into this Agreement, Buyer is committed to supporting local sustainability efforts. Accordingly, on December 1st of each of the first ten (10) years in the 228
62 Delivery Term, Seller shall cause ten thousand dollars ($10,000) to be deposited, for a total of one hundred thousand dollars ($100,000), into a “Local Sustainability Fund” maintained by Buyer.
The investment plan for utilizing such funds shall be developed by Buyer at the discretion of Buyer’s board.
ARTICLE 14
ASSIGNMENT
14.1 General Prohibition on Assignments.
Except as provided below in this Article 14, neither Party may voluntarily 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 or if it is a Permitted Transfer. Any assignment made without the required written consent, or in violation of the conditions to assignment set out below, shall be null and void. Seller shall be responsible for Buyer’s reasonable costs associated with the preparation, review, execution and delivery of documents in connection with any assignment of this Agreement by Seller, including without limitation reasonable attorneys’ fees.
14.2 Collateral Assignment.
Subject to the provisions of this Section 14.2, Seller has the right to assign this Agreement as collateral for any financing or refinancing of the Facility. In connection with any financing or refinancing of the Facility by Seller, Buyer shall in good faith work with Seller and Lender to agree upon a consent to collateral assignment of this Agreement in substantially the form attached as Exhibit S (“Collateral Assignment Agreement”).
14.3 Permitted Assignment by Seller.
Seller may, without the prior written consent of Buyer, transfer or assign this Agreement to: (a) an Affiliate of Seller or (b) any Person succeeding to all or substantially all of the assets of Seller (whether voluntary or by operation of law); if, and only if:
(i) the assignee is a Permitted Transferee;
(ii) Seller has given Buyer Notice at least fifteen (15) Business Days before the date of such proposed assignment; and
(iii) Seller has provided Buyer a written agreement signed by the Person to which Seller wishes to assign its interests that (x) provides that such Person will assume all of Seller’s obligations and liabilities under this Agreement upon such transfer or assignment and (y) certifies that such Person meets the definition of a Permitted Transferee. 229
63 Notwithstanding the foregoing, any assignment by Seller, its successors or assigns under this Section 14.3 shall be of no force and effect unless and until such Notice and agreement by the assignee have been received and accepted by Buyer.
14.4 Permitted Transfer by Seller.
Seller may make a Permitted Transfer, without the prior written consent of Buyer, provided that Seller gives at least thirty (30) days’ prior written notice to Buyer.
14.5 Shared Facilities; Portfolio Financing.
Buyer agrees and acknowledges that Seller may elect to finance all or any portion of the Facility or the Interconnection Facilities or the Shared Facilities (1) utilizing tax equity investment, and/or (2) through a Portfolio Financing, which may include cross-collateralization or similar arrangements. In connection with any financing or refinancing of the Facility, the Interconnection Facilities or the Shared Facilities by Seller or any Portfolio Financing, Buyer, Seller, Portfolio Financing Entity (if any), and Lender shall execute and deliver such further consents, approvals and acknowledgments as may be reasonable and necessary to facilitate such transactions; provided, Buyer shall not be required to agree to any terms or conditions which are reasonably expected to have a material adverse effect on Buyer and all reasonable attorney’s fees incurred by Buyer in connection therewith shall be borne by Seller.
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.
15.2 Dispute Resolution.
In the event of any dispute arising under this Agreement, within ten (10) days following the receipt of a written Notice from either Party identifying such dispute, the Parties shall meet, negotiate and attempt, in good faith, to resolve the dispute quickly, informally and inexpensively.
If the Parties are unable to resolve a dispute arising hereunder within the earlier of either thirty (30) days of initiating such discussions, or within forty (40) days after Notice of the dispute, either Party may seek any and all remedies available to it at law or in equity, subject to the limitations set forth in this Agreement.
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 230
64 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) Each Party (the “Indemnifying Party”) agrees to indemnify, defend and hold harmless the other Party and its Affiliates, directors, officers, employees and agents (collectively, the “Indemnified Party”) from and against all claims, demands, losses, liabilities, penalties, and expenses (including reasonable attorneys’ fees) (i) for personal injury or death to Persons and damage to the property of any third party to the extent arising out of, resulting from, or caused by the negligent or willful misconduct of the Indemnifying Party, its Affiliates, its directors, officers, employees, or agents, or (ii) for third-party claims resulting from the Indemnifying Party’s breach (including inaccuracy of any representation of warranty made hereunder), performance or non-performance of its obligations under this Agreement. (b) 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 from its sole 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 the 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 that 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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65 ARTICLE 17
INSURANCE
17.1 Insurance.
(a) General Liability. Seller shall maintain, or cause to be maintained at its sole expense, (i) commercial general liability insurance, including products and completed operations and personal injury insurance, in a minimum amount of
endorsed
to provide contractual liability in said amount, specifically covering Seller’s obligations under this Agreement and including Buyer as an additional insured; and (ii) an umbrella or excess insurance policy in a minimum limit of liability of Defense costs shall be provided as an additional benefit and not included within the limits of liability. Such insurance shall contain standard cross-liability and severability of interest provisions. (b) Employer’s Liability Insurance. Employers’ Liability insurance shall not be for injury or death occurring as a result of each
accident. With regard to bodily injury by disease, the policy limit will apply to each employee.
(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 applicable requirements of Law. (d) Business Auto Insurance. Seller shall maintain at all times during the Contract Term business auto insurance for bodily injury and property damage with a combined single limit of 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. (e) Builder’s All-Risk Insurance. Seller shall maintain or cause to be maintained during the construction of the Facility prior to the Commercial Operation Date, builder’s all-risk form property insurance covering the Facility during such construction periods, and naming Seller (and Lender if any) as the loss payee. (f) Subcontractor Insurance. Seller shall require all of its subcontractors to carry: (i) commercial general liability insurance with a combined single limit of coverage (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 per occurrence. All subcontractors shall include 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(f). (g) 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. Such certificates shall specify that Buyer shall be given at least thirty (30) days prior Notice by Seller in the event of any material modification, cancellation 232
66 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. (h) Failure to Comply with Insurance Requirements. If Seller fails to comply with any of the provisions of this Article 17, Seller, among other things and without restricting Buyer’s remedies under the Law or otherwise, shall, at its own cost and expense, act as an insurer and self-insure in accordance with the terms and conditions above. With respect to the required general liability, umbrella or excess liability and business automobile liability insurance, Seller shall provide a current, full and complete defense to Buyer, its subsidiaries and Affiliates, and their respective officers, directors, shareholders, agents, employees, assigns, and successors in interest, in response to a third-party claim in the same manner that an insurer would have, had the insurance been maintained in accordance with the terms and conditions set forth above. In addition, alleged violations of the provisions of this Article 17 means that Seller has the initial burden of proof regarding any legal justification for refusing or withholding coverage and Seller shall face the same liability and damages as an insurer for wrongfully refusing or withholding coverage in accordance with the laws of California.
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 (the “Receiving Party”) from the other Party (the “Disclosing Party”) shall not disclose Confidential Information to a third party (other than the Party’s 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, 233
67 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 will as soon as practical notify Seller in writing via email that such request has been made. Seller will 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, its officers, employees and agents (“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’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.
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 234
68 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. 235
69 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 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 the signature page of a counterpart to the other Party, and, if delivery is made by electronic format, the executing Party shall promptly deliver, via overnight delivery, a complete original counterpart that it has executed to the other Party, but this Agreement shall be binding on and enforceable against the executing Party whether or not it delivers such original counterpart.
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. Buyer shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this 236
70 Agreement. 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 employees, directors, officers, consultants or advisors 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 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 assumptions 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]
237
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the Effective Date.
RESURGENCE SOLAR I, LLC
By:
Name:
Title:
VALLEY CLEAN ENERGY ALLIANCE
By:
Name:
Title:
238
Exhibit A - 1
EXHIBIT A
FACILITY DESCRIPTION
Site Name: Resurgence Solar I
Site includes all or some of the following APNs: 0491-101-16-0000, 0491-101-17-0000, 0491- 101-18-0000, 0491-101-19-000, 0491-151-38-0000, 0491-151-39-0000, 0491-151-40-0000, 0498-171-05-0000, 0498-171-06-0000
City: Boron
County: San Bernardino, CA
Zip Code: 93516
Latitude and Longitude: 35.0131, -117.5487
Facility Description: A solar photovoltaic electric generating facility with a net nameplate capacity of 90 MW AC coupled with a lithium ion (Li-Ion) battery storage facility with a net nameplate capacity of 75 MW AC / 300 MWh located near the City of Boron within San Bernardino County, California. The Facility is a portion of a larger 138 – 150 MW solar + storage project. Seller may install additional inverter capacity to account for production and delivery losses.
Site Diagram: Attached
Delivery Point: P-node
Generating Facility Metering Points: See Exhibit R
Storage Facility Metering Points: See Exhibit R
P-node: To be established prior to the Commercial Operation Date at the Kramer Junction 115kV bus. Seller shall promptly notify Buyer following the establishment of the P-node.
Transmission Provider: Southern California Edison
Additional Information: None
239
2 Site Diagram:
240
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 all applicable regulatory authorizations, approvals and permits for the construction of the Facility, and once Seller has engaged all primary contractors and ordered all major equipment and supplies as, in each case, can reasonably be considered necessary so that physical construction of the Facility may begin and proceed to completion without foreseeable interruption of material duration, and has executed an engineering, procurement, and construction contract and issued thereunder a final notice to proceed that authorizes the contractor to mobilize to Site and begin physical construction (including, at a minimum, excavation for foundations or the installation or erection of improvements) 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. Seller may extend the Guaranteed Construction Start Date 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 of
extensions by such payment of Daily Delay Damages. On or before the tenth (10th) day of each month, Buyer shall invoice Seller for Daily Delay Damages, if any, accrued during the prior month and, within ten (10) Business Days following Seller’s receipt of such invoice, Seller shall pay Buyer the amount of the Daily Delay Damages set forth in such invoice. If Seller achieves Commercial Operation on or before the Guaranteed Commercial Operation Date (including any extensions to such date resulting from Seller’s payment of Commercial Operation Delay Damages, and as may be extended pursuant to a Development Cure Period), then Buyer shall refund to Seller all Daily Delay Damages paid by Seller.
2. Commercial Operation of the Facility. “Commercial Operation” means the condition existing when Seller has fulfilled all of the conditions precedent in Section 2.2 of the Agreement and provided Notice to Buyer substantially in the form of Exhibit H (the “COD Certificate”).
a. Seller shall cause Commercial Operation for the Facility to occur by the Guaranteed Commercial Operation Date. Seller shall notify Buyer that it intends to achieve Commercial Operation at least sixty (60) days before the anticipated Commercial Operation Date.
b. Seller may extend the Guaranteed Commercial Operation Date 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 by such payment of Commercial Operation Delay
241
Exhibit B - 2
Damages. On or before the tenth (10th) day of each month, Buyer shall invoice Seller for Commercial Operation Delay Damages, if any, accrued during the prior month. Notwithstanding anything in this Agreement to the contrary, the aggregate Delay Damages shall not exceed the amount of the Development Security.
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, 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 by the Expected Construction Start Date all material permits, consents, licenses, approvals, or authorizations from any Governmental Authority required for Seller to own, construct, interconnect, operate or maintain the Facility and to permit Seller and the Facility to make available and sell Product, 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 Facility 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 for any reason, including a Force Majeure Event; provided, however, that Seller shall be allowed additional day-for-day extensions beyond the not to exceed a total of cumulative extensions granted under Sections 4(a), 4(b) and 4(c) under the Development Cure Period of solely to the extent due to a Force Majeure Event related to COVID-19. The cumulative extensions granted to the Guaranteed Commercial Operation Date by the payment of Commercial Operation Delay Damages and any Development Cure Period(s) (other than the extensions granted pursuant to clause 4(d) above) shall not exceed (if the maximum Commercial Operation Delay Damages are paid), which may be extended up to if the Development Cure Period is extended up to due to a Force Majeure Event related to COVID-19. Upon request from Buyer, Seller shall provide 242
Exhibit B - 3
documentation demonstrating to Buyer’s reasonable satisfaction that the delays described above did not result from Seller’s actions or failure to take commercially reasonable actions.
5. Failure to Reach Guaranteed PV Capacity or Guaranteed Storage Capacity. a. Guaranteed PV Capacity. If, at Commercial Operation, the Installed PV Capacity is less than one hundred percent (100%) of the Guaranteed PV Capacity, Seller shall have ninety (90) days after the Commercial Operation Date to install additional capacity and/or Network Upgrades such that the Installed PV Capacity is equal to (but not greater than) the Guaranteed PV Capacity, and Seller shall provide to Buyer a new certificate substantially in the form attached as Exhibit I-1 hereto specifying the new Installed PV Capacity. If Seller fails to construct the Guaranteed PV Capacity by such date, Seller shall pay “PV Capacity Damages” to Buyer, in an amount equal to
for each MW that the Guaranteed PV Capacity exceeds the Installed PV Capacity, and the applicable portions of the Agreement shall be adjusted accordingly consistent with the Installed PV Capacity.
b. Guaranteed Storage Capacity. If, at Commercial Operation, the Installed Storage Capacity is less than one hundred percent (100%) of the Guaranteed Storage Capacity, Seller shall have ninety (90) days after the Commercial Operation Date to install additional capacity and/or Network Upgrades such that the Installed Storage Capacity is equal to (but not greater than) one hundred percent (100%) of the Guaranteed Storage Capacity, and Seller shall provide to Buyer a new certificate substantially in the form attached as Exhibit I-1 hereto specifying the new Installed Storage Capacity. If Seller fails to construct the Guaranteed Storage Capacity by such date, Seller shall pay “Storage Capacity Damages” to Buyer, in an amount equal to for each MW at four
hours of continuous discharge that the Guaranteed Storage Capacity exceeds the Installed Storage Capacity, and the applicable portions of the Agreement shall be adjusted accordingly consistent with the Installed Storage Capacity.
Capacity Damages shall not be offset or reduced by the payment of Development Security, Performance Security, 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. 243
Exhibit C - 1
EXHIBIT C
COMPENSATION
Buyer shall compensate Seller for the Product in accordance with this Exhibit C. (a) Renewable Rate. Buyer shall pay Seller the Renewable Rate for each MWh of PV Energy, plus Deemed Delivered Energy, if any, up to of the Expected Energy for such Contract Year.
(b) Excess Contract Year Deliveries. Notwithstanding the foregoing, if at any point in any Contract Year, the amount of PV Energy plus Deemed Delivered Energy exceeds of the Expected Energy for such Contract Year, the price to be paid for additional PV Energy and/or Deemed Delivered Energy shall be (c) Excess Settlement Interval Deliveries. If during any Settlement Interval, Seller delivers PV Energy in excess of the product of the Guaranteed PV Capacity and the duration of the Settlement Interval, expressed in hours (“Excess MWh”), then the price applicable to all such Excess MWh in such Settlement Interval shall be zero dollars ($0), and if there is a Negative LMP during such Settlement Interval, Seller shall pay to Buyer an amount equal to the absolute value of the Negative LMP times such Excess MWh.
(d) Monthly Capacity Payment.
(i) Each month of the Delivery Term (and pro-rated for the first and last month of the Delivery Term if the Delivery Term does not start on the first day of a calendar month), Buyer shall pay Seller a Monthly Capacity Payment equal to the Storage Rate x Effective Storage Capacity. Such payment constitutes the entirety of the amount due to Seller from Buyer for the Storage Product. If the Effective Storage Capacity is adjusted pursuant to a Storage Capacity Test other than the first day of calendar month, payment shall be calculated separately for each portion of the month in which the different Effective Storage Capacity is applicable. (ii) Storage Capacity Availability Payment True-Up. Each month during the Delivery Term, Buyer shall calculate the year-to-date (YTD) Annual Storage Capacity Availability for the applicable Contract Year in accordance with Exhibit P. If (A) such YTD Annual Storage Capacity Availability is less than ninety percent (90%), or (B) the final Annual Storage Capacity Availability is less than the Guaranteed Storage Availability, Buyer shall (1) withhold the Storage Capacity Availability Payment True-Up Amount from the next Monthly Capacity Payment(s) (the “Storage Capacity Availability Payment True-Up”), and (2) provide Seller with a written statement of the calculation of the YTD Annual Storage Capacity Availability and the Storage Capacity Availability Payment True-Up Amount; provided, if the Storage Capacity Availability Payment True-Up Amount is a negative number for any month prior to the final year-end Storage Capacity Availability Payment True-Up calculation, Buyer shall not be obligated to reimburse Seller any previously withheld Storage Capacity Availability Payment True-Up Amount, except as set forth in the following sentence. If Buyer withholds any Storage Capacity Availability Payment True-Up Amount pursuant to this subsection (d)(ii), and if the final year-end Storage Capacity Availability Payment True-Up Amount is a negative number, Buyer shall pay to Seller the positive value of such amount together with the next Monthly Capacity Payment due to Seller. 244
Exhibit C - 2
36370680v5
“Storage Capacity Availability Payment True-Up Amount” means an amount equal to A x B - C, where:
A = The sum of the year-to-date Monthly Capacity Payments B = The Capacity Availability Factor
C = The sum of any Storage Capacity Availability Payment True-Up Amounts previously withheld by Buyer in the applicable Contract Year. “Capacity Availability Factor” means:
(A) If the YTD Annual Storage Capacity Availability times the Effective Storage Capacity is equal to or greater than the Guaranteed Storage Availability times the Effective Storage Capacity, then:
Capacity Availability Factor = 0
(B) If the YTD Annual Storage Capacity Availability times the Effective Storage Capacity is less than the Guaranteed Storage Availability times the Effective Storage Capacity, but greater than or equal to of the
Installed Storage Capacity, then:
Capacity Availability Factor = Guaranteed Storage Availability – YTD Annual Storage Capacity Availability
(C) If the YTD Annual Storage Capacity Availability times the Effective Storage Capacity is less than of the Installed Storage Capacity, then:
Capacity Availability Factor =
provided that, if the result of any of the calculations in clauses (A) through (C) above is greater than 1.0, then the Capacity Availability Factor shall be deemed to be equal to 1.0. (e) Test Energy. Test Energy is compensated in accordance with Section 3.6.
Liquidated Damages for Failure to Achieve Guaranteed Efficiency Rate. (g) Tax Credits. The Parties agree that the neither the Renewable Rate, the Storage Rate nor the Test Energy Rate are subject to adjustment or amendment if Seller fails to receive any Tax Credits, or if any Tax Credits expire, are repealed or otherwise cease to apply to Seller or the 245
Exhibit C - 3
36370680v5
Facility in whole or in part, or Seller or its investors are unable to benefit from any Tax Credits.
Seller shall bear all risks, financial and otherwise, throughout the Contract Term, associated with Seller’s or the Facility’s eligibility to receive Tax Credits or to qualify for accelerated depreciation for Seller’s accounting, reporting or Tax purposes. The obligations of the Parties hereunder, including those obligations set forth herein regarding the purchase and price for and Seller’s obligation to deliver Facility Energy and Product, shall be effective regardless of whether construction of the Facility (or any portion thereof) or the sale of Facility Energy is eligible for, or receives Tax Credits during the Contract Term.
246
Exhibit D - 1
EXHIBIT D
SCHEDULING COORDINATOR RESPONSIBILITIES
Scheduling Coordinator Responsibilities.
(i) Buyer as Scheduling Coordinator for the Facility. Upon Initial Synchronization of the Facility to the CAISO Grid, 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 of Test Energy and the Product at the Delivery Point. At least thirty (30) days prior to the Initial Synchronization of the Facility to the CAISO Grid, (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 Initial Synchronization of the Facility to the CAISO Grid, 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 Initial Synchronization of the Facility to the CAISO Grid. On and after Initial Synchronization of the Facility to the CAISO Grid, 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 bids 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 market basis that may develop after the Effective Date, as determined by Buyer.
(ii) Notices. 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 will 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 by (in order of preference) telephonically or electronic mail to the personnel designated to receive such information.
(iii) CAISO Costs and Revenues. Except as otherwise set forth below, Buyer (as Scheduling Coordinator for the Facility) shall be responsible for CAISO costs (including penalties, Imbalance Energy costs or revenues, and other charges) and shall be entitled to all CAISO revenues (including 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 Facility. Seller shall be responsible for all CAISO penalties resulting from any failure by Seller to abide by the CAISO Tariff 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). 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 247
Exhibit D - 2
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. (iv) CAISO Settlements. 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 will 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 shall survive the expiration or termination of this Agreement. (v) Dispute Costs. 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.
(vi) 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.
(vii) 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. (viii) NERC Reliability Standards. Buyer (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. 248
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, 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. 249
Exhibit F-1
EXHIBIT F-1
MONTHLY EXPECTED AVAILABLE GENERATING FACILITY 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 JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
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.
250
Exhibit F-2
EXHIBIT F-2
MONTHLY EXPECTED PV ENERGY
[MWh 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 JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
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.
251
Exhibit F-3
EXHIBIT F-3
MONTHLY EXPECTED AVAILABLE EFFECTIVE STORAGE 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 JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
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.
252
Exhibit F-4
EXHIBIT F-4
MONTHLY AVAILABLE STORAGE CAPABILITY
[MWh 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.
253
Exhibit G - 1
EXHIBIT G
GUARANTEED ENERGY PRODUCTION DAMAGES CALCULATION
In accordance with Section 4.7, if Seller fails to achieve the Guaranteed Energy Production during any Performance Measurement Period, a liquidated damages payment shall be due from Seller to Buyer, calculated as follows:
[(A – B) * (C – D)]
where:
A = the Guaranteed Energy Production amount for the Performance Measurement Period, in MWh
B = the Adjusted Energy Production amount for the Performance Measurement Period, in MWh
C =
D = the Renewable Rate, in $/MWh
“Adjusted Energy Production” shall mean the sum of the following: PV Energy + Deemed Delivered Energy + Lost Output + Replacement Product. “Replacement Energy” means energy produced by a facility other than the Facility, that is provided by Seller to Buyer as Replacement Product, in an amount equal to the amount of Replacement Green Attributes provided by Seller as Replacement Product for the same Performance Measurement Period.
“Replacement Green Attributes” means PCC1 Renewable Energy Credits with the same year of production as the Renewable Energy Credits that would have been generated by the Facility.
“Replacement Product” means (a) Replacement Energy, and (b) Replacement Green Attributes in an amount not to exceed ten percent (10%) of the Expected Energy for the previous Contract Year.
No payment shall be due if the calculation of (A - B) or (C - D) yields a negative number.
Within sixty (60) days after each Contract Year, Buyer will send Seller Notice of the amount of damages owing, if any, which shall be payable to Buyer before the later of (a) thirty (30) days of such Notice and (b) ninety (90) days after each Performance Measurement Period, 254
Exhibit G - 2
provided that the amount of damages owing shall be adjusted to account for Replacement Product, if any, delivered after each applicable Performance Measurement Period. 255
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 Valley Clean Energy Alliance, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Renewable Power Purchase 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 Generating Facility is fully operational, reliable and interconnected, fully integrated and synchronized with the Transmission System.
2. Seller has installed equipment for the Generating Facility with an Installed PV Capacity of no less than ninety-five percent (95%) of the Guaranteed PV Capacity.
3. Seller has installed equipment for the Storage Facility with an Installed Storage Capacity of no less than ninety-five percent (95%) of the Guaranteed Storage Capacity.
4. Authorization to parallel the Facility was obtained by the Transmission Provider, [Name of Transmission Provider as appropriate] on___[DATE]____.
5. The Transmission Provider has provided documentation supporting full unrestricted release for Commercial Operation by [Name of Transmission Provider as appropriate] on _______[DATE]_____.
6. The CAISO has provided notification supporting Commercial Operation, in accordance with the CAISO Tariff on _______[DATE]_____.
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Its:
Date:
256
Exhibit I - 1
EXHIBIT I-1
FORM OF INSTALLED CAPACITY CERTIFICATE
This certification (“Certification”) of Installed Capacity and related characteristics of the Facility is delivered by [licensed professional engineer] (“Engineer”) to Valley Clean Energy Alliance, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Renewable Power Purchase 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 the following:
(a) The installed nameplate capacity of the Generating Facility is __ MW AC (“Installed PV Capacity”);
(b) The Commercial Operation Storage Capacity Test demonstrated a maximum dependable operating capability to discharge electric energy of __ MW AC to the Delivery Point at four (4) hours of continuous discharge, in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit O (the “Installed Storage Capacity”);
(c) The sum of (a) and (b) is __ MW AC and shall be the “Installed Capacity”; and
(d) The Commercial Operation Storage Capacity Test demonstrated (i) a Battery Charging Factor of __%, and (ii) a Battery Discharging Factor of __%, each in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit O.
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Its:
Date:
257
Exhibit I - 2
EXHIBIT I-2
FORM OF EFFECTIVE STORAGE CAPACITY CERTIFICATE
This certification (“Certification”) of Effective Storage Capacity and related characteristics of the Facility is delivered by [licensed professional engineer] (“Engineer”) to Valley Clean Energy Alliance, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Renewable Power Purchase 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 the following:
(a) The Storage Capacity Test demonstrated a maximum dependable operating capability to discharge electric energy of __ MW AC to the Delivery Point at four (4) hours of continuous discharge, in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit O of the Agreement (the “Effective Storage Capacity”); and (b) The Storage Capacity Test demonstrated (i) a Battery Charging Factor of __%, and (ii) a Battery Discharging Factor of __%, each in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit O.
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Its:
Date:
258
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 Valley Clean Energy Alliance, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Renewable Power Purchase 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:
259
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]
Expiry Date:
APPLICANT DETAILS TO BE PROVIDED
Beneficiary:
Valley Clean Energy Alliance, 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 Valley Clean Energy Alliance, a California joint powers authority (“Beneficiary”), [Address], for an amount not to exceed the aggregate sum of U.S. $[XXXXXX] (United States Dollars [XXXXX] and 00/100), pursuant to that certain Agreement dated as of___________ and as amended (the “Agreement”) between [Applicant] and Beneficiary. This Letter of Credit shall become effective immediately and shall expire on [XXXXXX] which is one year after the issue date of this Letter of Credit, or any expiration date extended in accordance with the terms hereof (the “Expiration Date”).
Funds under this Letter of Credit are available to Beneficiary by presentation on or before the Expiration Date of a dated statement purportedly signed by your duly authorized representative, in the form attached hereto as Exhibit A, containing one of the two alternative paragraphs set forth in paragraph 2 therein, referencing our Letter of Credit No. [XXXXXXX] (“Drawing Certificate”).
The Drawing Certificate may be presented by (a) physical delivery, or (b) facsimile to [bank fax number [XXX-XXX-XXXX]] confirmed by [e-mail to [bank email address]] (if presented by fax it must be followed up by a phone call to us at [XXXXXX] or [XXXXXX] to confirm receipt)with the originals to follow via courier. The drawing will be effective upon our receipt of the original documents at the above noted address.
260
Exhibit K - 2
The original of this Letter of Credit (and all amendments, if any) is not required to be presented in connection with any presentment of a Drawing Certificate by Beneficiary hereunder in order to receive payment.
We hereby agree with the Beneficiary that documents presented under and in compliance with the terms of this Letter of Credit will be duly honored upon presentation to the Issuer on or before the Expiration Date. All payments made under this Letter of Credit shall be made with Issuer’s own immediately available funds by means of wire transfer in immediately available United States dollars to Beneficiary’s account as indicated by Beneficiary in its Drawing Certificate or in a communication accompanying its Drawing Certificate.
Partial draws are permitted under this Letter of Credit, and this Letter of Credit shall remain in full force and effect with respect to any continuing balance.
It is a condition of this Letter of Credit that the Expiration Date shall be deemed automatically extended without an amendment for a one year period beginning on the present Expiration Date hereof and upon each anniversary for such date, unless at least one hundred twenty (120) days prior to any such Expiration Date we have sent to you written notice by registered mail or overnight courier service that we elect not to extend this Letter of Credit, in which case it will expire on the date specified in such notice. No presentation made under this Letter of Credit after such Expiration Date will be honored.
Notwithstanding any reference in this Letter of Credit to any other documents, instruments or agreements, this Letter of Credit contains the entire agreement between Beneficiary and Issuer relating to the obligations of Issuer hereunder.
This Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (2007 Revision) International Chamber of Commerce Publication No. 600 (the “UCP”), except to the extent that the terms hereof are inconsistent with the provisions of the UCP, including but not limited to Articles 14(b) and 36 of the UCP, in which case the terms of this Letter of Credit shall govern. In the event of an act of God, riot, civil commotion, insurrection, war or any other cause beyond Issuer’s control (as defined in Article 36 of the UCP) that interrupts Issuer’s business and causes the place for presentation of the Letter of Credit to be closed for business on the last day for presentation, the Expiration Date of the Letter of Credit will be automatically extended without amendment to a date thirty (30) calendar days after the place for presentation reopens for business.
Please address all correspondence regarding this Letter of Credit to the attention of the Letter of Credit Department at [insert bank address information], referring specifically to Issuer’s Letter of Credit No. [XXXXXXX]. For telephone assistance, please contact Issuer’s Standby Letter of Credit Department at [XXX-XXX-XXXX] and have this Letter of Credit available.
All notices to Beneficiary shall be in writing and are required to be sent by certified letter, overnight courier, or delivered in person to: Valley Clean Energy Alliance, Chief Operating Officer, [Address]. Only notices to Beneficiary meeting the requirements of this paragraph shall be considered valid. Any notice to Beneficiary which is not in accordance with this paragraph shall be void and of no force or effect.
261
Exhibit K - 3
[Bank Name]
___________________________
[Insert officer name]
[Insert officer title]
262
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 Valley Clean Energy Alliance, a California joint powers authority, [Buyer address], as beneficiary (the “Beneficiary”) of the Irrevocable Letter of Credit No. [XXXXXXX] (the “Letter of Credit”) issued by [insert bank name] (the “Bank”) by order of __________ (the “Applicant”), hereby certifies to the Bank as follows:
1. Applicant and Beneficiary are party to that certain Agreement dated as of ___________, (the “Agreement”).
2. Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________ because a Seller Event of Default (as such term is defined in the Agreement) or other occasion provided for in the Agreement where Beneficiary is authorized to draw on the letter of credit has occurred.
OR
Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________, which equals the full available amount under the Letter of Credit, because we have received notice from the Bank that you have elected not to extend the Expiration Date of the Letter of Credit beyond its current Expiration Date and Applicant is required to maintain the Letter of Credit in force and effect beyond the expiration date of the Letter of Credit but has failed to provide Beneficiary with a replacement Letter of Credit or other acceptable instrument within thirty (30) days prior to such expiration date.
3. The undersigned is a duly authorized representative of Valley Clean Energy Alliance, a California joint powers authority and is authorized to execute and deliver this Drawing Certificate on behalf of Beneficiary.
You are hereby directed to make payment of the requested amount to Valley Clean Energy Alliance, a California joint powers authority by wire transfer in immediately available funds to the following account:
[Specify account information]
Valley Clean Energy Alliance
_______________________________
Name and Title of Authorized Representative
Date___________________________
263
Exhibit L - 1
EXHIBIT L
FORM OF GUARANTY
THIS GUARANTY (this “Guaranty”), dated as of _____, ____ (the “Effective Date”), is made by (“Guarantor”), in favor of
[__________________________] (“Counterparty”).
RECITALS:
A. WHEREAS, Counterparty and Guarantor’s indirect, wholly-owned subsidiary [____________________________] (“Obligor”) have entered into, or concurrently herewith are entering into, that certain [Insert Name of Agreement] [dated/made/entered into/effective as of] ______, 20__ (the “Agreement”); and B. WHEREAS, Guarantor will directly or indirectly benefit from the Agreement between Obligor and Counterparty;
NOW THEREFORE, in consideration of the foregoing premises and as an inducement for Counterparty’s execution, delivery and performance of the Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Guarantor hereby agrees for the benefit of Counterparty as follows:
* * *
1. GUARANTY. Subject to the terms and provisions hereof, Guarantor hereby absolutely and irrevocably guarantees the timely payment when due of all obligations owing by Obligor to Counterparty arising pursuant to the Agreement on or after the Effective Date (the “Obligations”).
This Guaranty shall constitute a guarantee of payment and not of collection. The liability of Guarantor under this Guaranty shall be subject to the following limitations:
(a) Notwithstanding anything herein or in the Agreement to the contrary, the maximum aggregate obligation and liability of Guarantor under this Guaranty, and the maximum recovery from Guarantor under this Guaranty, shall in no event exceed __________________ [spell out the dollar amount] U.S. Dollars (U.S. $__________) (the “Maximum Recovery Amount”).
(b) The obligation and liability of Guarantor under this Guaranty is specifically limited to payments expressly required to be made under the Agreement, as well as costs of collection and enforcement of this Guaranty (including attorney’s fees) to the extent reasonably and actually incurred by the Counterparty (subject in all instances, to the limitations imposed by the Maximum Recovery Amount as specified in Section 1(a) above). In no event, however, shall Guarantor be liable for or obligated to pay any consequential, indirect, incidental, lost profit, special, exemplary, punitive, equitable or tort damages, unless such damages are owed by Obligor to Counterparty pursuant to the Agreement.
2. DEMANDS AND PAYMENT.
264
Exhibit L - 2
(a) If Obligor fails to pay any Obligation to Counterparty when such Obligation is due and owing under the Agreement (an “Overdue Obligation”), Counterparty may present a written demand to Guarantor calling for Guarantor’s payment of such Overdue Obligation pursuant to this Guaranty (a “Payment Demand”).
(b) Guarantor’s obligation hereunder to pay any particular Overdue Obligation(s) to Counterparty is conditioned upon Guarantor’s receipt of a Payment Demand from Counterparty satisfying the following requirements: (i) such Payment Demand must identify the specific Overdue Obligation(s) covered by such demand, the specific date(s) upon which such Overdue Obligation(s) became due and owing under the Agreement, and the specific provision(s) of the Agreement pursuant to which such Overdue Obligation(s) became due and owing; (ii) such Payment Demand must be delivered to Guarantor in accordance with Section 9 below; and (iii) the specific Overdue Obligation(s) addressed by such Payment Demand must remain due and unpaid at the time of such delivery to Guarantor.
(c) After issuing a Payment Demand in accordance with the requirements specified in Section 2(b) above, Counterparty shall not be required to issue any further notices or make any further demands with respect to the Overdue Obligation(s) specified in that Payment Demand, and Guarantor shall be required to make payment with respect to the Overdue Obligation(s) specified in that Payment Demand within five (5) Business Days after Guarantor receives such demand. As used herein, the term “Business Day” shall mean all weekdays (i.e., Monday through Friday) other than any weekdays during which commercial banks or financial institutions are authorized to be closed to the public in the State of Florida or the State of New York.
3. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants that:
(a) it is a corporation duly organized and validly existing under the laws of the State of Florida and has the corporate power and authority to execute, deliver and carry out the terms and provisions of the Guaranty;
(b) no authorization, approval, consent or order of, or registration or filing with, any court or other governmental body having jurisdiction over Guarantor is required on the part of Guarantor for the execution and delivery of this Guaranty; and (c) this Guaranty constitutes a valid and legally binding agreement of Guarantor, enforceable against Guarantor in accordance with the terms hereof, except as the enforceability thereof may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and by general principles of equity.
4. RESERVATION OF CERTAIN DEFENSES. Without limiting Guarantor’s own defenses and rights hereunder, Guarantor reserves to itself all rights, setoffs, counterclaims and other defenses to which Obligor is or may be entitled arising from or out of the Agreement, except for defenses (if any) based upon the bankruptcy, insolvency, dissolution or liquidation of Obligor or any lack of power or authority of Obligor to enter into and/or perform the Agreement. 265
Exhibit L - 3
5. AMENDMENT OF GUARANTY. No term or provision of this Guaranty shall be amended, modified, altered, waived or supplemented except in a writing signed by Guarantor and Counterparty.
6. WAIVERS AND CONSENTS. Subject to and in accordance with the terms and provisions of this Guaranty:
(a) Except as required in Section 2 above, Guarantor hereby waives (i) notice of acceptance of this Guaranty; (ii) presentment and demand concerning the liabilities of Guarantor; and (iii) any right to require that any action or proceeding be brought against Obligor or any other person, or to require that Counterparty seek enforcement of any performance against Obligor or any other person, prior to any action against Guarantor under the terms hereof. (b) No delay by Counterparty in the exercise of (or failure by Counterparty to exercise) any rights hereunder shall operate as a waiver of such rights, a waiver of any other rights or a release of Guarantor from its obligations hereunder (with the understanding, however, that the foregoing shall not be deemed to constitute a waiver by Guarantor of any rights or defenses which Guarantor may at any time have pursuant to or in connection with any applicable statutes of limitation).
(c) Without notice to or the consent of Guarantor, and without impairing or releasing Guarantor’s obligations under this Guaranty, Counterparty may: (i) change the manner, place or terms for payment of all or any of the Obligations (including renewals, extensions or other alterations of the Obligations); (ii) release any person (other than Obligor or Guarantor) from liability for payment of all or any of the Obligations; or (iii) receive, substitute, surrender, exchange or release any collateral or other security for any or all of the Obligations.
7. REINSTATEMENT. Guarantor agrees that this Guaranty shall continue to be effective or shall be reinstated, as the case may be, if all or any part of any payment made hereunder is at any time avoided or rescinded or must otherwise be restored or repaid by Counterparty as a result of the bankruptcy or insolvency of Obligor, all as though such payments had not been made.
8. TERMINATION. This Guaranty and the Guarantor’s obligations hereunder will terminate automatically and immediately upon the earlier of (i) the termination or expiration of the Agreement or (ii) 11:59:59 Eastern Prevailing Time [_______, _____]; provided, however, that no such termination shall affect Guarantor's liability with respect to any Obligation incurred prior to the time the termination is effective, which Obligation shall remain subject to this Guaranty.
9. NOTICE. Any Payment Demand, notice, request, instruction, correspondence or other document to be given hereunder (herein collectively called “Notice”) by Counterparty to Guarantor, or by Guarantor to Counterparty, as applicable, shall be in writing and may be delivered either by (i) U.S. certified mail with postage prepaid and return receipt requested, or (ii) recognized nationwide courier service with delivery receipt requested, in either case to be delivered to the following address (or to such other U.S. address as may be specified via Notice provided by Guarantor or Counterparty, as applicable, to the other in accordance with the requirements of this Section 9):
266
Exhibit L - 4
TO GUARANTOR: * TO COUNTERPARTY:
Attn: Treasurer
__________________
__________________
__________________
Attn: _________
[Tel: -- for use in
connection with courier deliveries]
[Tel: (___) ___-___ -- for use in
connection with courier deliveries]
* (NOTE: Copies of any Notices to Guarantor under this Guaranty shall also be sent via facsimile to ATTN: Contracts Group, Legal, Fax No. and ATTN: Credit Department, Fax No. . However, such facsimile transmissions shall not be deemed effective for delivery purposes under this Guaranty.)
Any Notice given in accordance with this Section 9 will (i) if delivered during the recipient's normal business hours on any given Business Day, be deemed received by the designated recipient on such date, and (ii) if not delivered during the recipient's normal business hours on any given Business Day, be deemed received by the designated recipient at the start of the recipient's normal business hours on the next Business Day after such delivery.
10. MISCELLANEOUS.
(a) This Guaranty shall in all respects be governed by, and construed in accordance with, the law of the State of New York, without regard to principles of conflicts of laws thereunder (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law). (b) This Guaranty shall be binding upon Guarantor and its successors and permitted assigns and inure to the benefit of and be enforceable by Counterparty and its successors and permitted assigns. Guarantor may not assign this Guaranty in part or in whole without the prior written consent of Counterparty. Counterparty may not assign its rights or benefits under this Guaranty in part or in whole without the prior written consent of Guarantor. (c) This Guaranty embodies the entire agreement and understanding between Guarantor and Counterparty and supersedes all prior agreements and understandings relating to the subject matter hereof.
(d) The headings in this Guaranty are for purposes of reference only, and shall not affect the meaning hereof. Words importing the singular number hereunder shall include the plural number and vice versa, and any pronouns used herein shall be deemed to cover all genders.
The term "person" as used herein means any individual, corporation, partnership, joint 267
Exhibit L - 5
venture, limited liability company, association, joint-stock company, trust, unincorporated association, or government (or any agency or political subdivision thereof). (e) Wherever possible, any provision in this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any one jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. (f) Counterparty (by its acceptance of this Guaranty) and Guarantor each hereby irrevocably:
(i) consents and submits to the exclusive jurisdiction of the United States District Court for the Southern District of New York, or if that court does not have subject matter jurisdiction, to the exclusive jurisdiction of the Supreme Court of the State of New York, New York County (without prejudice to the right of any party to remove to the United States District Court for the Southern District of New York) for the purposes of any suit, action or other proceeding arising out of this Guaranty or the subject matter hereof or any of the transactions contemplated hereby brought by Counterparty, Guarantor or their respective successors or assigns; and (ii) waives (to the fullest extent permitted by applicable law) and agrees not to assert any claim that it is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Guaranty or the subject matter hereof may not be enforced in or by such court. (g) COUNTERPARTY (BY ITS ACCEPTANCE OF THIS GUARANTY) AND
GUARANTOR EACH HEREBY IRREVOCABLY, INTENTIONALLY AND
VOLUNTARILY WAIVES THE RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY LEGAL PROCEEDING BASED ON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH, THIS GUARANTY OR THE AGREEMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON RELATING HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO GUARANTOR’S EXECUTION AND DELIVERY OF THIS GUARANTY.
* * *
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty on _____________, 20__, but it is effective as of the Effective Date.
By:
Name:
Title:
268
Exhibit M - 1
EXHIBIT M
FORM OF REPLACEMENT RA NOTICE
This Replacement RA Notice (this “Notice”) is delivered by [SELLER ENTITY] (“Seller”) to Valley Clean Energy Alliance, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Renewable Power Purchase 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 3.8 of the Agreement, Seller hereby provides the below Replacement RA product information:
269
Exhibit M - 2
[SELLER ENTITY]
By:
Its:
Date:
270
Exhibit N - 1
36370680v5
EXHIBIT N
NOTICES
[SELLER’S NAME]
(“Seller”)
VALLEY CLEAN ENERGY ALLIANCE
(“Buyer”)
All Notices:
Street: 700 Universe Blvd.
City: Juno Beach, FL 33408
Attn: Business Management
Phone:
Email:
All Notices:
Street: 604 2Nd Street
City: Davis, CA 95616
Attn:
Phone:
Email:
Reference Numbers:
Duns:
Federal Tax ID Number:
Reference Numbers:
Duns:
Federal Tax ID Number:
Invoices:
Attn: Business Management
Phone:
E-mail:
Invoices:
Attn:
Phone:
E-mail:
Scheduling:
Attn:
Phone:
Email:
Scheduling:
Attn: Day Ahead Trading, Real Time Trading
Phone:
Email:
Confirmations:
Attn:
Phone:
Email:
Confirmations:
Attn:
Phone:
Email:
Payments:
Attn: Business Management
Phone:
E-mail:
Payments:
Attn:
Phone:
E-mail:
Wire Transfer: Seller shall provide to
Buyer the information below at least 60 days
prior to the Commercial Operation Date.
BNK:
ABA:
ACCT:
Wire Transfer:
BNK:
ABA:
ACCT:
271
Exhibit O - 1
EXHIBIT O
STORAGE CAPACITY TESTS
Storage Capacity Test Notice and Frequency
A. Commercial Operation Storage Capacity Test(s). Upon no less than ten (10) Business Days prior Notice to Buyer, Seller shall schedule and complete a Commercial Operation Storage Capacity Test prior to the Commercial Operation Date. Such initial Commercial Operation Storage Capacity Test (and any subsequent Commercial Operation Storage Capacity Test permitted in accordance with Exhibit B) shall be performed in accordance with this Exhibit O and shall establish the Installed Storage Capacity hereunder based on the actual capacity and capabilities of the Storage Facility determined by such Commercial Operation Storage Capacity Test(s).
B. Subsequent Storage Capacity Tests. Following the Commercial Operation Storage Capacity Test(s), 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 Storage Capacity Test. In addition, Buyer shall have the right to require a retest of the Storage Capacity Test at any time upon no less than five (5) Business Days prior written Notice to Seller if Buyer provides data with such Notice reasonably indicating that the then-current Effective Storage Capacity has varied materially from the results of the most recent prior Storage Capacity Test. Seller shall have the right to run a retest of any Storage Capacity Test at any time upon five (5) Business Days’ prior written Notice to Buyer (or any shorter period reasonably acceptable to Buyer consistent with Prudent Operating Practice).
C. Test Results and Re-Setting of Effective Storage Capacity. 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 Storage Facility Meter readings and plant log sheets verifying the operating conditions and output of the Storage Facility. In accordance with Section 4.9(a)(ii) of the Agreement and Part II(I) below, after the Commercial Operation Storage Capacity Test(s), the Effective Storage Capacity (up to, but not in excess of, the Installed Storage Capacity) determined pursuant to such Storage Capacity Test shall become the new Effective Storage Capacity at the beginning of the day following the completion of the test for calculating the Contract Price and all other purposes under this Agreement.
Capacity Test Procedures
PART I. GENERAL.
(1) 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). (2) Conditions Prior to Testing.
272
Exhibit O - 2
(1) EMS Functionality. The EMS shall be successfully configured to receive data from the Battery Management System (BMS), exchange DNP3 data 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 the Buyer’s RTU and Seller’s EMS interface and the ability to record SCADA data.
(3) Commissioning Checklist. Commissioning shall be successfully completed per manufacturer guidance on all installed Facility equipment, including verification that all controls, set points, and instruments of the EMS are configured.
(4) Generating Facility Conditions. Any CTs requiring the availability of Charging Energy shall be conducted when the Generating Facility is producing at a rate equal to or above the Effective Storage Capacity continuously for a five (5)-hour period, provided that Seller may waive such conditions at its sole discretion. Any CTs that are required or allowed to occur under this Exhibit O that take place in the absence of the above condition being satisfied shall be subject to a mutually agreed upon adjustment (such agreement not to be unreasonably withheld) between Seller and Buyer with respect to the allowed charging time for such CT and/or the Battery Charging Factor definition, which adjustment(s) shall be commensurate with then-existing irradiance limitations.
PART II. REQUIREMENTS APPLICABLE TO ALL CAPACITY TESTS.
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 Storage Capacity resulting from such Test, if applicable, will be made in accordance with this Exhibit O. (1) Electrical output at maximum discharging level (MW) for four (4) continuous hours; and
(2) Electrical input at maximum charging level at the Storage 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 Storage Facility Meter (MW), as sustained until the SOC reaches 100%, not to exceed five (5) hours of total charging time.
273
Exhibit O - 3
B. Parameters. During each CT, the following parameters shall be measured and recorded simultaneously for the Storage Facility, at two (2) second intervals:
(1) Time;
(2) The amount of Discharging Energy delivered to the Storage Facility Meter (kWh) (i.e., to each measurement device making up the Storage Facility Meter);
(3) Net electrical energy input from the Storage Facility Meter (kWh) (i.e., from each measurement device making up the Storage Facility Meter); (4) Stored Energy 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 Storage 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 four (4) consecutive hours pursuant to A(1) above;
(3) The maximum sustained charging level for four (4) consecutive hours pursuant to A(2) above;
(4) Amount of time between the Storage Facility’s electrical output going from 0 to the maximum sustained discharging level registered during the Test (for purposes of calculating the Ramp Rate);
(5) Amount of time between the Storage Facility’s electrical input going from 0 to the maximum sustained charging level registered during the Test (for purposes of calculating the Ramp Rate);
(6) Amount of Charging Energy, registered at the Storage Facility Meter, to go from 0% SOC to 100% SOC;
(7) Amount of Discharging Energy, registered at the Storage Facility Meter, to go from 100% SOC to 0% SOC.
E. Test Conditions.
274
Exhibit O - 4
(1) General. At all times during a CT, the Storage 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 Storage Facility.
(2) Abnormal Conditions. If abnormal operating conditions that prevent the testing or recordation of any required parameter occur during a CT, Seller 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 Storage Capacity 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.
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 five (5) 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 Storage Facility construction, Seller shall deliver to Buyer for its 275
Exhibit O - 5
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 Storage 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.
I. Adjustment to Effective Storage Capacity. The Effective Storage Capacity shall be updated as follows:
(1) The total amount of Discharging Energy delivered to the Delivery Point (expressed in MWh AC) during the first four (4) hours of discharge (up to, but not in excess of, the product of (i) (a) the Guaranteed Storage Capacity (in the case of a Commercial Operation Storage Capacity Test, including under Section 5 of Exhibit B) or (b) the Installed Storage Capacity (in the case of any other Storage Capacity Test), multiplied by (ii) four (4) hours) shall be divided by four (4) hours to determine the Effective Storage Capacity, which shall be expressed in MW AC, and shall be the new Effective Storage Capacity in accordance with Section 4.9(a)(ii) of the Agreement.
PART III. INITIAL SUPPLEMENTARY CAPACITY TEST PROTOCOL.
A. Effective Storage Capacity Test
• Procedure:
(1) System Starting State: The Storage Facility will be in the on-line state at 0% SOC.
(2) Record the initial value of the Storage Facility SOC. (3) Command a real power charge that results in an AC power of Storage Facility’s maximum charging level and continue charging until the earlier of (a) the Storage Facility has reached 100% SOC or (b) five (5) hours have lapsed since the Storage Facility commenced charging.
(4) Record and store the Storage Facility SOC after the earlier of (a) the Storage Facility has reached 100% SOC or (b) five (5) hours of continuous charging.
Such data point shall be used for purposes of calculation of the Battery Charging Factor.
(5) Record and store the AC energy charged to the Storage Facility as measured at the Storage Facility Meter.
276
Exhibit O - 6
(6) Following an agreed-upon rest period, command a real power discharge that results in an AC power output of the Storage 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 four (4) consecutive hours, (b) the Storage Facility has reached 0% SOC, or (c) the sustained discharging level is at least 2% less than the maximum discharging level.
(7) Record and store the Storage Facility SOC after four (4) hours of continuous discharging. Such data point shall be used for purposes of calculation of the Battery Discharging Factor.
(8) Record and store the Discharging Energy as measured at the Storage Facility Meter. Such data point shall be used for purposes of calculation the Effective Storage Capacity.
(9) If the Storage Facility has not reached 0% SOC pursuant to Section III.A.6, continue discharging the Storage Facility until it reaches a 0% SOC. (10) Record and store the Discharging Energy (in MWh) as measured at the Storage Facility Meter, if applicable.
• Test Results
(1) The resulting Effective Storage Capacity measurement is the sum of the total Discharging Energy at the Storage Facility Meter divided by four (4) hours.
B. AGC Discharge Test
• Purpose: This test will demonstrate the AGC discharge capability to achieve the Storage Facility’s maximum discharging level within 1 second. • System starting state: The Storage 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. • Procedure:
(1) Record the Storage Facility active power level at the Storage Facility Meter. (2) Command the Storage Facility to follow a simulated CAISO RIG signal of 75 MW for ten (10) minutes.
(3) Record and store the Storage Facility active power response (in seconds). • System end state: The Storage Facility will be in the on-line state and at a commanded active power level of 0 MW.
277
Exhibit O - 7
C. AGC Charge Test
• Purpose: This test will demonstrate the AGC charge capability to achieve the Storage Facility’s full charging level within 1 second.
• System starting state: The Storage 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 Storage Facility control system will be configured to follow a predefined agreed-upon active power profile.
• Procedure:
(1) Record the Storage Facility active power level at the Storage Facility Meter. (2) Command the Storage Facility to follow a simulated CAISO RIG signal of -100 MW for ten (10) minutes.
(3) Record and store the Storage Facility active power response (in seconds). • System end state: The Storage Facility will be in the on-line state and at a commanded active power level of 0 MW.
278
Exhibit P - 1
EXHIBIT P
ANNUAL STORAGE CAPACITY AVAILABILITY CALCULATION
(a) Following the end of each calendar month during the Delivery Term, Buyer shall calculate the year-to-date (YTD) “Annual Storage Capacity Availability” for the current Contract Year using the formula set forth below:
Annual Storage Capacity Availability (%) = 1 –
Unavailable Calculation Intervals
Total YTD Calculation Intervals
“Calculation Interval” or “C.I.” means each successive five-minute interval but excluding all such intervals which by the express terms of the Agreement are disregarded or excluded.
“Unavailable Calculation Intervals” means the sum of year-to-date unavailable Calculation Intervals for the applicable Contract Year, where for each Calculation Interval:
“A” is the “Available Effective Storage Capacity,” which shall be the sum of the capacity, in MW AC, expected from each system inverter in such Calculation Interval (based on normal operating conditions pursuant to the manufacturer’s guidelines), but “A” shall never exceed the Effective Storage Capacity.
“Storage Capability” means the sum of the following (taking into account the SOC at the time of calculation): (i) the energy throughput capability in MWhs in the applicable Calculation Interval that the Storage Facility is available to be charged (calculated as the available battery charging capability (in MWh) at the applicable Calculation Interval x the Battery Charging Factor) and (ii) the energy throughput capability in MWhs at the applicable Calculation Interval that the Storage Facility is available to be discharged (calculated as the available battery discharging capability (in MWh) at the applicable Calculation Interval x the Battery Discharging Factor). In calculating Storage Capability, the “available battery charging capability” and “available battery discharging capability” are calculated assuming normal operating conditions pursuant to the manufacturer’s guidelines.
(b) “Total YTD Calculation Intervals” means, for each applicable Contract Year, the total number of Calculation Intervals year-to-date up through and including the month for which the Annual Storage Capacity Availability is being calculated. The “available Effective Storage Capacity” and “Storage Capability” in the above calculations shall be the lower of (i) such amounts reported by Seller’s real-time EMS data feed to Buyer for the Storage Facility for such Calculation Unavailable
Calculation Interval = 1 C.I. x (
1 – the lesser of: Aor
Storage
Capability
(MWh)
Effe
Storage
ctive )
Capacity
Effective Storage
Capacity x 4 hrs
279
Exhibit P - 2
Interval, and (ii) Seller’s most recent Availability Notice (as updated pursuant to Section 4.3).
Except as otherwise expressly provided in this Agreement, the calculations of “available Effective Storage Capacity” and “Storage Capability” in the foregoing shall be based solely on the availability of the Storage Facility to charge or discharge Energy between the Storage Facility and the Generating Facility or Delivery Point, as applicable (excluding for reasons at the high-voltage side of the Delivery Point or beyond).
(c) In the first and second Contract Year, for the final year-end Storage Capacity Availability Payment True-Up Amount, the YTD Annual Storage Capacity Availability shall be increased by an amount equal to the ratio of Planned Outage hours as defined in Section 4.6 divided by 8760 hours, not to exceed . For the purposes of this calculation, if the Planned Outage is for less than a full hour, the Planned Outage will be counted as an equivalent percentage of the applicable hour. If, during any applicable hour, the Planned Outage is for less than the Effective Storage Capacity, the Planned Outage shall be counted as an equivalent percentage of such hour. 280
Exhibit Q - 1
EXHIBIT Q
OPERATING RESTRICTIONS
The Parties will develop and finalize the Operating Restrictions prior to the Commercial Operation Date; provided, the Operating Restrictions (i) may not be materially more restrictive of the operation of the Storage Facility than as set forth below, unless agreed to by Buyer in writing, (ii) will, at a minimum, include the rules, requirements and procedures set forth in this Exhibit Q, (iii) will include protocols and parameters for Seller’s operation of the Storage Facility in the absence of Charging Notices, Discharging Notices or other similar instructions from Buyer relating to the use of the Storage Facility, and (iv) may include Storage Facility Scheduling, Operating Restrictions and Communications Protocols.
I. STORAGE FACILITY OPERATING RESTRICTIONS
File Update Date: [XX/XX/20XX]
Technology: Lithium Ion Batteries
Storage Unit Name: [Unit Name and Number]
A. Contract Capacity
Guaranteed Storage Capacity (MW): 75
Effective Storage Capacity (MW): 75
B. Total Unit Dispatchable Range Information
Interconnect Voltage (kV) 115
Maximum Storage Level (MWh): 300
Minimum Storage Level (MWh): 0
Stored energy capability (MWh): 300
Maximum Discharge (MW): 75
Maximum Charge (MW): 75
Guaranteed Efficiency Rate: See Cover Sheet
Maximum energy throughput (BET) (MWh/year):
C. Charge and Discharge Rates
Mode Maximum
(MW)
Ramp Rate (MW/s) Description
Energy (Charge) 75 75 MW/s
Energy (Discharge) 75 75 MW/s
D. Ancillary Services
Frequency regulation is included: Yes
Spin is included: Yes
II. GENERATING FACILITY OPERATING RESTRICTIONS
1. Maximum energy throughput of MWh/year
2. Maximum annual average State of Charge (SOC) of less than 281
Exhibit R - 1
EXHIBIT R
METERING DIAGRAM
282
Exhibit S - 1
EXHIBIT S
FORM OF COLLATERAL ASSIGNMENT AGREEMENT
This CONSENT AND AGREEMENT (this “Consent”), dated as of ___________, 20[ ], is executed by and among [BUYER], a [legal form of Contracting Party] organized under the laws of the State of California (the “Contracting Party”), [__________], a [___________] (the “Project Owner”), and [_____________], as collateral agent (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”) for various financial institutions named from time to time as Lenders under the Credit Agreement (as defined below) and any other parties (or any of their agents) who hold any other secured indebtedness permitted to be incurred under the Credit Agreement (the Collateral Agent and all such parties collectively, the “Secured Parties”).
A. The Project Owner owns, operates and maintains [_________________] (the “Project”).
B. The Contracting Party and the Project Owner have entered into the agreement specified in Schedule I hereto (as further amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the “Assigned Agreement”).
C. The Borrower, the Project Owner, the other affiliates of the Borrower as Guarantors, various financial institutions named therein from time to time as Lenders, [_________________], as the Administrative Agent and Collateral Agent, have entered into a Credit Agreement, dated as of [________________](as amended, modified or supplemented from time to time, the “Credit Agreement”), providing for the extension of the credit facilities described therein.
D. As security for the payment and performance by the Project Owner of its obligations under the Credit Agreement and the other Financing Documents (as defined below) and for other obligations owing to the Secured Parties, the Project Owner has assigned all of its right, title and interest in, to and under, and granted a security interest in, the Assigned Agreement to the Collateral Agent pursuant to the Assignment and Security Agreement, dated as of [_____________________]between the Project Owner and the Collateral Agent (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof, the "Security Agreement", and, together with the Credit Agreement and any other financing documents relating to the issuance of the Notes, the “Financing Documents”).
E. It is a requirement under the Credit Agreement that the Project Owner cause the Contracting Party to execute and deliver this Consent.
NOW, THEREFORE as an inducement for Lenders to make the Loans, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto hereby agree as follows:
283
Exhibit S - 2
1. Consent to Assignment. The Contracting Party hereby acknowledges and consents to the pledge and assignment of all right, title and interest of the Project Owner in, to and under (but not its obligations, liabilities or duties with respect to) the Assigned Agreement by the Project Owner to the Collateral Agent pursuant to the Security Agreement.
2. Representations and Warranties. The Contracting Party represents and warrants as follows:
(a) No Amendments. [Except as described in Schedule I hereto,] there are no amendments, modifications or supplements (whether by waiver, consent or otherwise) to the Assigned Agreement, either oral or written.
(b) No Previous Assignments. The Contracting Party affirms that it has no notice of any assignment relating to the right, title and interest of the Project Owner in, to and under the Assigned Agreement other than the pledge and assignment to the Collateral Agent referred to in Section 1 above.
(c) No Termination Event: No Disputes. After giving effect to the pledge and assignment referred to in Section 1, and after giving effect to the consent to such pledge and assignment by the Contracting Party, there exists no event or condition (a “Termination Event”) that would, either immediately or with the passage of time or giving of notice, or both, entitle either the Project Owner or the Contracting Party to terminate the Assigned Agreement or suspend the performance of its obligations under the Assigned Agreement. [Except as set forth on Schedule III hereto,] there are no unresolved disputes between the parties under the Assigned Agreement. All amounts due under the Assigned Agreement as of the date hereof have been paid in full [, except as set forth on Schedule III hereto].
3. Right to Cure.
(a) From and after the date hereof and unless and until the Contracting Party shall have received written notice from the Collateral Agent that the lien of the Security Agreement has been released in full, the Collateral Agent shall have the right, but not the obligation, following an “event of default” or “default” (or any other similar event however defined) by the Project Owner under the Assigned Agreement, to pay all sums due under the Assigned Agreement by the Project Owner and to perform any other act, duty or obligation required of the Project Owner thereunder as described in Section 3(c) below; provided, that no such payment or performance shall be construed as an assumption by the Collateral Agent or any other Secured Party of any covenants, agreements or obligations of the Project Owner under or in respect of the Assigned Agreement. (b) The Contracting Party agrees that it will not (i) terminate the Assigned Agreement or (ii) suspend the performance of any of its obligations under the Assigned Agreement without first giving the Collateral Agent notice and opportunity to cure as provided below. The Contracting Party further agrees that it will not assign any obligation under the Assigned Agreement without the prior consent of the Collateral Agent, which consent shall not be unreasonably withheld, delayed or conditioned, except to the extent the Contracting Party may subcontract such obligations to other parties. 284
Exhibit S - 3
(c) If a Termination Event shall occur, and the Contracting Party shall then be entitled to and shall desire to terminate the Assigned Agreement or suspend the performance of any of its obligations under the Assigned Agreement, the Contracting Party shall, prior to exercising such remedies or taking any other action with respect to such Termination Event, give written notice to the Collateral Agent of such Termination Event.
Collateral Agent will have the right, but not the obligation, to cure a Termination Event on behalf of Project Owner, only if Collateral Agent sends a written notice to Contracting Party before the later of (i) the expiration of any cure period under this Agreement, and (ii) fifteen (15) Business Days after Collateral Agent’s receipt of notice of such Termination Event from Contracting Party, indicating Collateral Agent’s intention to cure. If the Collateral Agent elects to exercise its right to cure as herein provided by providing a written notice to the Contracting Party, it shall have a period of (1) thirty (30) days after receipt by it of notice from the Contracting Party referred to in the preceding sentence in which to cure the Termination Event specified in such notice if such Termination Event consists of a payment default, or (2) if such Termination Event is an event other than a failure to pay amounts due and owing by the Project Owner (a “Non-monetary Event”), the Collateral Agent shall have sixty (60) days to cure such Termination Event so long as the Collateral Agent has commenced and is diligently pursuing appropriate action to cure such Termination Event; provided, however, that (i) if possession of the Project is necessary to cure such Non-monetary Event and the Collateral Agent has commenced foreclosure proceedings, the Collateral Agent will be allowed a reasonable time to complete such proceedings, and (ii) if the Collateral Agent is prohibited from curing any such Non-monetary Event by any process, stay or injunction issued by any governmental authority or pursuant to any bankruptcy or insolvency proceeding or other similar proceeding involving the Project Owner, then the time periods specified herein for curing a Termination Event shall be extended for the period of such prohibition; provided, further, that in the event of items (i) or (ii) above, such time period shall not exceed one hundred eighty (180) days. Any cure period for the Collateral Agent shall not commence until the later of (i) the end of the cure period of the Project Owner under the Assigned Agreement and (ii) written notice from the Contracting Party to the Collateral Agent of a Termination Event.
(d) Any curing of or attempt to cure any Termination Event shall not be construed as an assumption by the Collateral Agent or the other Secured Parties of any covenants, agreements or obligations of the Project Owner under or in respect of the Assigned Agreement.
(e) Following a Termination Event by the Project Entity under the Assigned Agreement, the Contracting Party may require the Collateral Agent, if the Collateral Agent has provided the notice set forth in subsection (c) above, to provide to Contracting Party a report concerning:
(i) The status of efforts by Collateral Agent to develop a plan to cure the Termination Event;
(ii) Impediments to the cure plan or its development;
285
Exhibit S - 4
(iii) If a cure plan has been adopted, the status of the cure plan’s implementation (including any modifications to the plan as well as the expected timeframe within which any cure is expected to be implemented); and (iv) Any other information which Contracting Party may reasonably require related to the development, implementation and timetable of the cure plan.
Collateral Agent must provide the report to Contracting Party within twenty (20) Business Days after Notice from Contracting Party requesting the report. Contracting Party will have no further right to require the report with respect to a particular Termination Event after that Termination Event has been cured.
4. Replacement Agreements. Notwithstanding any provision in the Assigned Agreement to the contrary, in the event (i) the Assigned Agreement is rejected or otherwise terminated as a result of any bankruptcy, insolvency, reorganization or similar proceedings affecting the Project Owner, at the Collateral Agent’s request within forty-five (45) days after such rejection or termination, the Contracting Party will enter into a new agreement with the Collateral Agent or the Collateral Agent’s designee for the remainder of the originally scheduled term of the Assigned Agreement, effective as of the date of such rejection, with the same covenants, agreements, terms, provisions and limitations as are contained in the Assigned Agreement, or (ii) if the 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) after any such rejection or termination of the Assigned Agreement, promptly after the Contracting Party’s written request, the Collateral Agent must itself or must cause its designee to promptly enter into a new agreement with the Contracting Party having substantially the same terms as the Assigned Agreement for the remaining term thereof, provided that in the event a designee of the Collateral Agent, 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), such designee shall be approved by the Contracting Party, not to be unreasonably withheld.
5. Substitute Owner. If the Collateral Agent elects to sell or transfer the Project (after the Collateral Agent directly or indirectly, takes possession of, or title to the Project), or sale of the Project occurs through the actions of the Collateral Agent (for example, a foreclosure sale where a third party is the buyer, or otherwise), then the Collateral Agent must cause the transferee or buyer to assume all of the Project Entity’s obligations arising under the Assigned Agreement and all related agreements as a condition of the sale or transfer. Such sale or transfer may be made only to an entity that (i) meets the definition of “Permitted Transferee” as defined in the Assigned Agreement and (ii) is an entity that the Contracting Party is permitted to contract with under applicable law.
6. Payments. The Contracting Party shall make all payments due to the Project Owner under the Assigned Agreement directly into the account specified on Schedule II hereto, or to such other person or account as shall be specified from time to time by the Collateral Agent to the Contracting Party in writing. All parties hereto agree that each payment by the Contracting Party as specified in the preceding sentence of amounts due to the Project Owner from the Contracting Party under the Assigned Agreement shall satisfy the Contracting Party’s corresponding payment obligation under the Assigned Agreement. 286
Exhibit S - 5
7. No Amendments. The Contracting Party acknowledges that the Financing Documents restrict the right of the Project Owner to amend or modify the Assigned Agreement, or to waive or provide consents with respect to certain provisions of the Assigned Agreement, unless certain conditions specified in the Financing Documents are met. The Contracting Party shall not, without the prior written consent of the Collateral Agent which consent shall not be unreasonably withheld, delayed or conditioned, amend or modify the Assigned Agreement in any material respect, or accept any waiver or consent with respect to certain provisions of the Assigned Agreement. The Collateral Agent shall have the right to consent before any termination of the Assigned Agreement which does not arise out of a Termination Event.
8. Notices. Notice to any party hereto shall be in writing and shall be deemed to be delivered on the earlier of: (a) the date of personal delivery, (b) postage prepaid, registered or certified mail, return receipt requested, or sent by express courier, in each case addressed to such party at the address indicated below (or at such other address as such party may have theretofore specified by written notice delivered in accordance herewith), upon delivery or refusal to accept delivery, or (c) if transmitted by facsimile, the date when sent and facsimile confirmation is received; provided that any facsimile communication shall be followed promptly by a hard copy original thereof by express courier:
The Collateral Agent: [________________________]
[ ]
Attn: [ ]
Telephone No.: [ ]
Facsimile No.: [ ]
The Project Owner:
The Contracting Party:
9. Successors and Assigns. This Consent shall be binding upon and shall inure to the benefit of the successors and assigns of the Contracting Party, and shall inure to the benefit of the Collateral Agent, the other Secured Parties, the Project Owner and their respective successors, transferees and assigns.
10. Counterparts. This Consent may be executed in one or more counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. 287
Exhibit S - 6
11. Governing Law. This Consent shall be governed by and construed in accordance with the laws of the State of [__________].
[Signature page follows on next page.]
288
Exhibit S - 7
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Consent as of the date first written above. [NAME OF CONTRACTING PARTY]
By:
Name:
Title:
[________________________]
as Collateral Agent
By:
Name:
Title:
Acknowledged and Agreed:
[_____________________________]
By:
Name:
Title:
289
Exhibit S - 8
Schedule I
Assigned Agreement
290
Exhibit S - 9
Schedule II
Payment Instructions
(Section 6)
All payments due to the Project Owner pursuant to the Assigned Agreement shall be made to [INSERT REVENUE ACCOUNT INFORMATION].
291
Exhibit S - 10
[Schedule III]
[Amounts Due and Unpaid under the Assigned Agreement
(Section 2(c))]
292
Item 19
1 VALLEY CLEAN ENERGY ALLIANCE
RESOLUTION NO. 2022-___
RESOLUTION OF THE BOARD OF DIRECTORS OF THE VALLEY CLEAN ENERGY ALLIANCE (VCE) APPROVING A POWER PURCHASE AGREEMENT (PPA) AMENDMENT 1 WITH RESURGENCE
SOLAR I, LLC AND AUTHORIZING THE EXECUTIVE OFFICER IN CONSULTATION WITH LEGAL
COUNSEL TO FINALIZE AND EXECUTE THE POWER PURCHASE AGREEMENT AMENDMENT 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,
WHEREAS, on January 21, 2021, VCE and Resurgence Solar 1 LLC entered into a PPA for the output from the Resurgence renewable resource for a term of 20 years; and WHEREAS, NextEra Energy Resources is developing and constructing the Resurgence project consisting of a 90-MW AC solar photovoltaic facility coupled with a 75-MW/300MWh (4-hour) lithium-ion battery energy storage system, near the city of Boron in San Bernardino County, California; and
WHEREAS, Resurgence Solar I, LLC is a wholly owned subsidiary of NextEra Energy Resources; and
WHEREAS, NextEra Energy Resources has claimed significant cost increases and associated delays due to events outside of the developer’s control; and WHEREAS, VCE and Resurgence Solar 1 LLC resolved the matters related to cost increases and associated delays as outlined in the terms of Amendment 1.
NOW, THEREFORE, the Board of Directors of the Valley Clean Energy Alliance resolves as follows:
1. The Executive Officer is authorized to execute the PPA Amendment 1 substantially in the form attached hereto as Attachment A on behalf of VCE, and, in consultation with legal counsel, is authorized to approve minor changes to the PPA Amendment so long as the term and price are not changed.
293
Item 19
2 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, VCE Board Secretary
Attachment A: Amendment 1 to Resurgence Solar I LLC Power Purchase Agreement (redacted) Attachment B: Resurgence Solar I LLC Power Purchase Agreement (redacted) 294
Item 19
3 ATTACHMENT A
AMENDMENT 1 TO RESURGENCE SOLAR I, LLC POWER PURCHASE AGREEMENT (REDACTED)
295
Item 19
4 ATTACHMENT B
RESURGENCE SOLAR I, LLC POWER PURCHASE AGREEMENT
(REDACTED)
296
Item 20
VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 20
____________________________________________________________________________________ TO: Board of Directors
FROM: Gordon Samuel, Assistant General Manager & Director of Power Services SUBJECT: CC Power participation in geothermal projects from Ormat Nevada Inc. and Open Mountain Energy, LLC
DATE: July 14, 2022
Recommendation
Authorize the Executive Officer to execute on behalf of Valley Clean Energy as a member of CC Power the following agreements and any necessary ancillary documents for the geothermal projects with a delivery term of 20 years:
a. Ormat Nevada Inc. (Ormat) Portfolio of Geothermal Projects b. Open Mountain Energy LLC., Fish Lake Geothermal (OME) Background
Through the 2020 Integrated Resource Planning (IRP) proceeding, the California Public Utilities Commission (CPUC) had identified the need for additional clean energy resources and capacity including firm and/or baseload clean resources and storage resources. These additional resources are designed to enable grid integration of a larger fleet of intermittent resources (e.g. solar, wind) to meet California’s greenhouse gas emission reduction goals. These clean resources would replace several methane gas once-through-cooling (OTC) power plants that are scheduled to be shut down and the Diablo Canyon Nuclear Power Plant (DCNPP) slated to retire between in 2024 and 2025.
Subsequently, in June 2021, as part of the 2020 IRP the CPUC issued the Mid-term Reliability Procurement Order (“MTR Order” D.21-06-035), requiring jurisdictional load serving entities (LSEs), such as VCE, to procure and/or develop a collective 11,500 MW of new capacity by 2026.
VCE’s share of the MTR Order is 44 MW which is determined based on VCE’s load ratio to the CPUC’s jurisdictional load.
Included within the MTR Order is an identified need of 1,000 MW of new incremental capacity from firm clean resources (FCR) delivered from geothermal and/or biomass resources with an on-line date by August 2026. VCE’s share of the FCR requirement is approximately 4 MW.
In October 2021, CC Power, which VCE joined in early 2021, issued the Firm Clean Energy Resources RFO for resources that meet the CPUC’s requirements set forth in (D.21-06-035). In summary, the CPUC Order required procurement of new resources by 2026 with at least 80% capacity factor that must not be subject to use limitations or be weather dependent. Offers were due December 13, 2021, and CC Power received bids from 6 bidders and 16 projects (5 of the 297
2 projects were located in California). Two bidders were shortlisted: (1) one project from OME and (2) a portfolio of projects from Ormat. On May 31, 2022 CC Power board of directors (“Board”) unanimously approved participation in these projects and authorized the CC Power General Manager to execute PPAs with Ormat and OME. Finally, staff presented the geothermal projects to the Community Advisory Committee (CAC) in June and the CAC unanimously supports VCE’s participation in these projects.