MEMORANDUM OF UNDERSTANDING
The undersigned:
1. THE CITY OF POMONA, a California municipal corporation, with its registered office at 505 South Garey Avenue, Pomona, CA 91767, hereinafter referred to as “City”; and
2. DISTRO ENERGY LLC, a California limited liability company, with its registered office at 506 S Spring St #13308, SMB#23751, Los Angeles, CA 90013, hereinafter referred to as “Distro”; WHEREAS:
A. The City’s Community Choice Aggregator, Pomona Choice Energy, is an alternative to the local investor-owned utility. Pomona Choice Energy’s program is locally-managed, not-for-profit and offers clean energy at low, competitive rates.
B. Distro is a provider of a software platform to facilitate peer-to-peer (p2p) transactive energy trading between energy generators, consumers, and storage operators.
C. City and Distro (collectively the “Parties”) wish to collaborate on the development and deployment of a local transactive energy marketplaces in Pomona, California.
D. The Parties will share relevant data on the set-up and operation of a first deployment; and during its operation, City and Distro will evaluate a further partnership including but not limited to a further deployment of the marketplace. The scope of the first deployment is outlined below.
E. The Parties hereby wish to express their mutual understanding thus far in writing in this Memorandum of Understanding (“MoU”).
THE PARTIES HEREBY AGREE AS FOLLOWS:
Distro is a p2p marketplace which enables local trades between energy generators, consumers, and storage operators (collectively the “Participants”).
Distro allows for the aggregated surpluses and shortfalls of energy to be transacted in real-time, via short term forward trades with the Independent System Operator (in this case, California Independent System Operator, CAISO) and/or the energy supplier. Distro does not assume grid independence, rather it relies on the ongoing supply and offtake of energy via CAISO, an electricity aggregator, or a load serving entity (LSE), albeit with different contractual, pricing and operating mechanics.
This MoU seeks to establish a framework for the Parties’ collaboration on the first deployment with City (executing certain responsibilities to provide necessary data and market insights) and Distro performing a simulation of the energy, carbon and customer bill savings impacts, as well as potentially operating the p2p marketplace as deemed feasible per California Public Utility Code and applicable regulations permit.
Should Pomona Choice Energy agree to act as the buyer and seller of last resort in the first deployment, it is understood that Pomona Choice Energy may earn commission on energy trades between themselves and the Participants, but not on the p2p trades between Participants. The p2p marketplace fees will accrue to Distro as the operator of the p2p marketplace. Other financial benefits may accrue to the Participants and Pomona Choice Energy.
It is understood that Distro will keep a transaction log of all trades, and if required will perform all reconciled billing in the marketplace. All p2p trades are reconciled, any aggregate and individual trades between peers (Participants) and Pomona Choice Energy are compiled by Distro at an interval which is mutually agreed upon (the level of granularity in tracking may be in real time, or up to monthly cadence).
Should the first deployment demonstrate successful outcomes mutually agreed upon by City and Distro, the Parties agree to explore the extension of their collaboration by expanding the scope of deployment in Pomona. This includes scaling the number of Participants within Pomona Choice Energy’s footprint and/or the expected quantity of electric power to be traded through the Distro marketplace.
During this initial deployment period, there is no cost to the City or Pomona Choice Energy, and no compensation will be due to Distro other than to enact arrangements to enable Pomona to act as buyer and seller of last resort (as detailed in point 4). These arrangements may be made by separate agreement with the involvement of all parties should this option be deemed favorable.
The first deployment is to include:
At minimum, five to fifteen (5–15) Pomona Choice Energy consumers, generators, and storage operators (“Participants”), to be served exclusively (regarding all power purchase) with the Distro power marketplace whereby the Participants are to be mutually agreed upon by both parties.
The enhancement of community involvement with Participants and potential strategic partnerships with other agencies, educational institutions, and non-profit organizations.
And is to be run for a period of 24 months, commencing at a mutually agreed go-live date and with the option to terminate at any time for either party. It will have the effect of varying the pricing terms to a mutually agreed mechanism and levels and should all Parties consent will replace the existing energy supplier contract(s) at the Participants identified above.
The first deployment may be expanded to include more market Participants within Pomona Choice Energy’s footprint. Any such expansion should be mutually agreed upon by the Parties. The Parties recognize that the scope above is a starting point to develop and test the p2p marketplace for the City and to inform any potential future deployments, and for City to better understand Distro in practice.
Roles and responsibilities – design and integration phase The first deployment will require close collaboration between City and Distro to design and iterate an implementation plan, to ensure the deployment of Distro’s platform is compatible with Pomona Choice Energy’s existing processes for the City, for example managing customer billing.
As such City will:
Consent to meter data being made available to the Parties for the scope of the first deployment; Act as an ecosystem ambassador as appropriate, introducing or facilitating the introduction of Distro to the relevant City Participants and other relevant partners, helping the Parties to gather feedback to shape design and implementation; Provide expectations of Distro for the first deployment; Provide success metrics for the first deployment;
Decide, based on analysis provided by Distro or other sources, the pricing structure/mechanism on the Distro platform in the first deployment (for example, considering dynamic/floating prices based on one or more of CAISO markets, and/or existing tariffs).
Distro will:
Provide recommendations and analysis on the pricing structure/mechanism and price levels (price floor and ceiling levels) on the Distro platform for the first deployment; Work with City and relevant stakeholders, to ensure smart meter integration onto the Distro platform and their reliability to support p2p trading; Make available its software engineering team for the design and implementation of API or other necessary data feeds to City in the necessary formats and frequency; Make available its Artificial Intelligence (AI) and data science team to understand Distro p2p processes and outputs where helpful; Provide insights within the bounds of commercial sensitivity to the design and implementation of p2p energy trading solution including for example its smart contract management, market surveillance and matching engine.
The design and integration phase is expected to be highly collaborative, and fast moving, with experts made available to ensure rapid progress and execution. The processes will be governed by a Non Disclosure Agreement (NDA), and well documented throughout with results of the collaboration made available to the Parties on an ongoing basis.
Roles and Responsibilities – Operating the First Deployment City will:
Provide feedback as a user of the Distro p2p marketplace.
Provide feedback and evaluation related to the outcomes of the first deployment.
Distro will:
Drive the onboarding of peers to the p2p marketplace;
Guarantee the execution of p2p trade including the forward commitments and settlements between Participants; Ensure the legal compliance of p2p trade through best endeavors drafting terms and conditions, and retaining legal advice, making these documents available upon request to the Parties; Adhere to mutually agreed expectations for deployments with the Parties and the Participants (for example for market uptime, dispute resolution and audit rights); Provide suitable customer and technical support to Participants; Provide all necessary data feeds to support relevant processes, such as customer management processes; Provide all applicable data to provide a complete insight and understanding of the economics of the first deployment to City for City to be able to evaluate a further partnership; Provide and/or integrate billing and customer fulfilment processes compatible with existing arrangements, and as needed.
9. Internet Protocal (IP) rights/proprietary information: Distro retains IP from code and business logic contained in the p2p marketplace and related activities. City retains any proprietary information created or shared during the collaboration.
10. The NDA in place, signed on Effective Date __________, covers the Parties for the duration of the first deployment and in perpetuity unless otherwise mutually agreed.
11. Parties shall continue to negotiate with the required reasonableness and fairness about the further elaboration of the arrangements made in this MoU. Parties cannot derive any right(s) on this MoU with respect to the (realization of the) arrangements to be made.
12. Term: The term of this MoU shall commence at 12:00 a.m. on the Commencement Date of 11:59 p.m. on ______, 2022 and shall expire at 11:59 p.m. on the Expiration Date of ________, 2023 unless extended by written agreement of the Parties or terminated in accordance with Clause 13 below.
13. Termination: Each Party shall have the right to terminate this MoU for any reason on thirty (30) calendar days’ written notice to the other Party. The effective date of termination shall be upon the date specified in the notice of termination. Each Party agrees to cease all work (as defined under “Roles and responsibilities” sections above) on or before the effective date of any notice of termination. at _________on __June 6, 2022
at _______ on ___June 6, 2022
___________________________________ _________________________ city of pomona
Distro Energy LLC
Signed by: James Makshanoff
Signed by: James Rilett
Position: City Manager
Position: Chief Executive Officer
Attachment No. 1