TO: HONORABLE MAYOR FROM: Lori Mitchell
AND CITY COUNCIL
SUBJECT: LONG-TERM RENEWABLE DATE: April 24, 2023
ENERGY AGREEMENT WITH
PACIFIC GAS AND ELECTRIC
COMPANY
Approved Date
5/2/23
RECOMMENDATION
Adopt a resolution authorizing the Director of the Community Energy Department or the Director’s designee to negotiate and execute a long-term agreement with Pacific Gas and Electric Company to buy renewable energy for a term of no more than 20 years, from 2023 through 2043, in an amount not to exceed $7,500,000 annually and $150,000,000 in aggregate, to be paid solely from the San José Clean Energy Operating Fund and subject to the annual appropriation of funds.
SUMMARY AND OUTCOME
This memorandum requests authority to negotiate and execute a long-term agreement with Pacific Gas and Electric Company (PG&E) for renewable energy. Approving the resolution will contribute towards the Community Energy Department (Department) achieving the City of San José’s clean power goals and complying with the California Renewable Portfolio Standard (RPS) program in calendar years 2023 through 2043.
BACKGROUND
San José Clean Energy Renewable Content Goal, Requirements, and Progress to Date
On December 6, 2022, City Council adopted a resolution amending San José Clean Energy’s (SJCE) rate-setting methodology and service options to maintain the renewable energy content for GreenSource at 60 percent renewable and for TotalGreen at 100 percent renewable.
Department staff estimate that the renewable energy bought to date will provide GreenSource customers with 48 percent renewable energy in 2023 and 54 percent in 2024. (TotalGreen will continue to be 100 percent renewable energy.) Thus, the Community Energy Department will have to buy significant additional renewable energy to meet the City Council-approved goals for SJCE renewable energy content.
COUNCIL AGENDA: 5/16/23
FILE: 23-695
ITEM: 6.1
HONORABLE MAYOR AND CITY COUNCIL
April 24, 2023
Subject: Long-Term Renewable Energy Agreement with Pacific Gas and Electric Company
California law requires SJCE to use long-term agreements (over 10 years) for 65 percent of the renewable energy needed to meet the State RPS requirement.1 For example, if the State RPS is 60 percent, 65 percent of the 60 percent requirement must be bought pursuant to long-term agreements. As the State RPS requirement increases to 60 percent in 20302, SJCE requires additional long-term agreements for renewable energy to meet this requirement.
The Department issued a solicitation to buy additional renewable energy that can be delivered in 2023 and 2024, but did not receive bids for 2023 and only received one high-priced bid for limited supply in 2024. The Department has continued to monitor offers to sell renewable energy for 2023 and 2024, but supply is limited and prices have continued to increase.
The Department issued a solicitation with East Bay Community Energy to buy long-term renewable energy from new renewable energy projects and has issued another similar solicitation recently. These projects will likely come online in 2025 or 2026 as the new projects must be constructed.
Sales of Renewable Energy by California Investor-Owned Utilities
In 2019 through 2022, the Department bought substantial amounts of renewable energy from the investor-owned utilities (IOUs), as the Department has been building up its portfolio of long- term agreements with new renewable projects. The IOUs have excess renewable energy that they bought for customers that are now customers of community choice aggregators like SJCE. For 2023, the opportunities to buy renewable energy from the IOUs have changed pursuant to a California Public Utilities Commission (CPUC) 2021 decision
3. On May 24, 2021, the CPUC required the three IOUs in California4 to implement a voluntary allocation process. This process requires the IOUs to offer to load serving entities (LSEs), including community choice aggregators like SJCE, their proportional share of renewable energy owned by the IOUs at a cost-based market value of this energy determined through a CPUC process. Community choice aggregators’ customers pay for above-market costs of these resources through the Power Charge Indifference Adjustment. The CPUC required the IOUs to sell any renewable energy not accepted in the voluntary allocation process through a competitive market offer process. In 2022, SJCE accepted a large portion of the renewable energy available through the voluntary allocation.
Consistent with the CPUC’s direction, the three IOUs each released a solicitation on March 7, 2023 to sell the renewable energy that was not accepted by LSEs through the voluntary allocation process. Participants bid to receive a percent of the IOU’s renewable energy portfolio; the amount of renewable energy will thus vary depending on how much the IOUs’ portfolios produce each year.
1 California Public Utilities Code, Section 399.13(b).
2 California Public Utilities Code, Section 399.15(b).
3 Decision 21-05-030; https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M385/K738/385738144.PDF 4 PG&E; Southern California Edison; San Diego Gas & Electric
HONORABLE MAYOR AND CITY COUNCIL
April 24, 2023
Subject: Long-Term Renewable Energy Agreement with Pacific Gas and Electric Company
The Department participated in the solicitations of all three IOUs and was awarded both the short-term and long-term bids it submitted to PG&E. The Department accepted only the long- term award subject to City Council approval. SJCE has not yet been informed of the outcome of its bids into the solicitations of Southern California Edison and San Diego Gas & Electric.
Risk Oversight Committee Review
On April 6, 2023, the City Manager’s Risk Oversight Committee approved SJCE’s recommendation to procure renewable energy on a long-term basis from the IOUs through the market offer process, up to a total annual amount for long-term purchases from all three IOUs combined of no more than $25 million a year. PG&E is not an approved Department counterparty due to its financial condition. Thus, the Department required and obtained approval by the City Manager’s Risk Oversight Committee of its recommendation to allow the Department to buy renewable power specifically from PG&E up to a total amount of $7.5 million per year and a total $150 million over the 20-year term of the agreement.
ANALYSIS
The California renewable energy market has tightened significantly in recent months. Delays in long-term renewable project in-service dates due to supply chain disruptions, forced labor prevention
5, and interconnection to the transmission system are causing shortages and high prices for renewable energy. At the same time, many LSEs, including SJCE, are striving to achieve aggressive renewable energy targets beyond the State RPS mandated minimum procurement. The increased demand and reduced supply have driven up the cost of renewable energy and renewable energy credits, as demonstrated in Figure 1 below.
Figure 1.
5 Many solar panels are manufactured outside the U.S. and are being held at ports by the U.S. Customs and Border Patrol as part of its enforcement of the Uyghur Forced Labor Prevention Act. Suppliers must demonstrate the panels do not contain materials obtained via forced labor and the document requirements are not transparent. $0
$10
$20
$30
$40
$50
$60
Recent Renewable Energy Credits (PCC1) Prices
HONORABLE MAYOR AND CITY COUNCIL
April 24, 2023
Subject: Long-Term Renewable Energy Agreement with Pacific Gas and Electric Company
SJCE recommends accepting the PG&E award for a slice of its portfolio pursuant to a long-term agreement. SJCE’s bid for renewable energy pursuant to a long-term agreement was substantially lower than its bid for a short-term agreement since prices for 2023 and 2024 are particularly high. A long-term agreement will assist SJCE in meeting its compliance with the State long-term renewable contracting requirement and it should reduce the Power Charge Indifference Adjustment that community choice aggregators customers pay.
If City Council adopts the resolution, the Department will contract with PG&E for a percent of the output of PG&E’s long-term renewable portfolio at the Department’s bid price for the next 20 years. The final agreement will be based on PG&E’s pro-forma agreement (see Attachment - Master Power Purchase and Sale Agreement – Renewables Portfolio Standard Energy Market Offer Confirmation Letter.) The proposed contract will be paid solely from the San José Clean Energy Operating Fund and subject to the annual appropriation of funds. PG&E has accepted similar language in other agreements.
Signing this agreement would moderately increase the GreenSource renewable energy mix in 2023 as the agreement will begin delivery potentially as late as the fourth quarter after required CPUC approval. In 2024 and beyond, the agreement will materially increase the renewable content in GreenSource. Final numbers will depend on the actual generation from the projects contracted with PG&E.
Climate Smart San José Analysis
The recommendation in this memorandum aligns with one or more Climate Smart San José energy, water, or mobility goals, as it would support achieving City Council goals for SJCE renewable power content.
EVALUATION AND FOLLOW-UP
No additional follow-up is expected at this time.
COST SUMMARY/IMPLICATIONS
Entering into the new agreement with PG&E would cost up to $7,500,000 annually beginning in 2023 (Fiscal Year 2023-2024) for 20 years and would cost up to $150,000,000 through 2043.
Funding for the long-term renewable energy agreement will be subject to City Council-approved appropriation of funds in the SJCE Operating Fund each fiscal year. The San José Municipal Code requires that SJCE customer rates be set on an annual basis sufficient to meet SJCE’s costs, including power costs, considering all its agreements. In addition, the Department will bring forward funding recommendations sufficient to support the anticipated annual costs of the agreements as part of the budget planning process for future fiscal years.
HONORABLE MAYOR AND CITY COUNCIL
April 24, 2023
Subject: Long-Term Renewable Energy Agreement with Pacific Gas and Electric Company
COORDINATION
This memorandum has been coordinated with the City Attorney’s Office and the City Manager’s Budget Office.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the May 16, 2023 City Council meeting.
COMMISSION RECOMMENDATION/INPUT
No commission recommendation or input is associated with this action.
CEQA
Not a Project, File No. PP17-003, Agreements/Contracts (New or Amended) resulting in no physical changes to the environment.
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
/s/
Lori Mitchell
Director, Community Energy
For questions, please contact Lori Mitchell, Director of Community Energy, at (408) 535-4880.
ATTACHMENT:
Master Power Purchase and Sale Agreement – Renewables Portfolio Standard Energy Market Offer Confirmation Letter
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ATTACHMENT
MASTER POWER PURCHASE AND SALE AGREEMENT
RENEWABLES PORTFOLIO STANDARD ENERGY MARKET OFFER
CONFIRMATION LETTER
BETWEEN
PARTICIPANT FULL NAME (ALL CAPS)
AND
(“PARTY A”)
PACIFIC GAS AND ELECTRIC COMPANY (“PARTY B”)
This confirmation letter (“Confirmation”) confirms the Transaction between Name, place of formation, and type of entity
(“Party A” or “Buyer”), and Pacific Gas and Electric Company, a California corporation, (“Party B” or “Seller”), each individually a “Party” and together the “Parties”, which becomes effective on the date fully executed by both Parties (the “Confirmation Effective Date”), in which Seller agrees to provide to Buyer Product, as such term is defined in this Confirmation. This Transaction is governed by the Master Power Purchase and Sale Agreement between the Parties, effective as of Date of EEI Master between Parties , together with the Cover Sheet, [the Collateral Annex and Paragraph 10 to the Collateral Annex,] and any other annexes thereto (collectively, as amended, restated, supplemented, or otherwise modified from time to time, the “Master Agreement”). The Master Agreement and this Confirmation are collectively referred to herein as the “Agreement”. Capitalized terms used but not otherwise defined in this Confirmation, have the meanings specified for such terms in the Master Agreement, the RPS (defined herein) or the Tariff (defined herein), as applicable. If there is a conflict between the terms in this Confirmation and those in the Master Agreement, this Confirmation shall control.
Section references herein are to this Confirmation unless otherwise noted.
[Standard contract terms and conditions shown in shaded text are those that “may not be modified” per CPUC Decisions (“D.”) 07- 11-025; D.10-03-021, as modified by D.11- 01-025; and D.13-11-024.]
ARTICLE 1
PRODUCT
1.1 Product. “Product” means, following Voluntary Allocation, all remaining RPS Energy and Green Attributes generated and associated with Resources in the Long-Term Resource Pool. Seller shall provide Buyer Product equal to the Total Amount.
1.2 Buyer’s Exclusive Right. Buyer has exclusive right to Product for the Total Amount, including the right to account for or report Product equal to the Total Amount to a Governmental Entity.
ARTICLE 2
TOTAL AMOUNT AND GREEN ATTRIBUTES PRICE
2.1 Total Amount. The “Total Amount” is the sum of all Monthly Amounts in the Delivery Period. For every month in the Delivery Period, the “Monthly Amount” is the product of (i) the Election for the applicable calendar year, multiplied by (ii) following Voluntary -2-
Allocation, the total remaining RPS Energy for that month for every Resource in the Long-Term Resource Pool.
2.2 Election.
(a) For Products to be delivered in every year over the Delivery Period, the “Election” is XX %.
2.3 Green Attributes Price.
(a) For Products to be delivered in every year over the Delivery Period, the “Green Attributes Price” is $ XX /MWh.
2.4 Change in Long-Term Resource Pool. Seller may add or remove a Resource from the Long-Term Resource Pool as allowed under Voluntary Allocation, and as soon as practicable, Seller will provide Notice to Buyer of any changes to the Long-Term Resource Pool. Seller shall retain the sole discretion to modify Appendix B after CPUC Approval to ensure that the Long- Term Resource Pool only includes Resources with terms greater than 10 years as of the start of the Delivery Period. Seller shall retain the sole and absolute discretion to modify, enforce, or terminate its power purchase agreements for Resources during the Delivery Period. Buyer shall not have any right to or discretion to request changes to the Resources or the Long-Term Resource Pool during the Delivery Period.
ARTICLE 3
DELIVERY
3.1 Delivery. Throughout the Delivery Period, Seller shall deliver, and Buyer shall receive, Product in accordance with the Confirmation. Seller, or a qualified third-party designated by Seller, will act as Scheduling Coordinator to deliver Product in each hour to the CAISO at the Delivery Point. Buyer shall take title and risk of loss of Product at the applicable Delivery Point selected by Seller.
3.2 Delivery Point. The “Delivery Point” is and shall mean where Seller, or a qualified third-party designated by Seller, shall deliver to, and Buyer shall take possession of, Product, which shall be NP 15, SP 15, and/or ZP 26, as selected by Seller.
3.3 Delivery Period. Subject to the satisfaction of the Conditions Precedent, the “Delivery Period” shall commence as of the date upon which CPUC approval occurs and last through and until the date upon which the amount of Green Attributes conveyed to the buyer meets the Total Amount following the Long-Term End Date. -3-
ARTICLE 4
CONDITIONS PRECEDENT
4.1 Conditions Precedent. Notwithstanding any other provision of this Confirmation to the contrary, all of the Parties’ obligations are conditioned upon (a) CPUC Approval; and (b) Seller’s receipt of the Performance Assurance described in Article 7 as applicable from Buyer no later than five (5) Business Days following Seller’s Notice to Buyer of CPUC Approval (collectively, “Conditions Precedent”).
ARTICLE 5
CONVEYANCE OF GREEN ATTRIBUTES
5.1 Green Attributes. Seller represents and warrants that Seller holds the rights to such Green Attributes from the Resources in the Long-Term Resource Pool and Seller agrees to convey such Green Attributes to Buyer as included in the delivery of Product from the Resources in the Long-Term Resource Pool subject to the terms and conditions of this Agreement.
5.2 Conveyance of Green Attributes. Seller shall convey to Buyer the Green Attributes associated with Product no later than twenty-five (25) Business Days once the following have occurred: (a) Seller has obtained the WREGIS Certificates for the Green Attributes for the applicable Calculation Period or calendar year and (b) Seller has received Buyer’s payment of the Monthly Cash Settlement Amount in accordance with Article 6 herein.
Since WREGIS Certificates will only be created for whole MWh amounts of RPS 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. During the Delivery Period, Seller shall transfer all right, title, and interest in and to the WREGIS Certificates to Buyer’s WREGIS account in an aggregate amount equivalent to the Total Amount.
5.3 WREGIS Certificate True-Up. A “WREGIS Certificate True-Up” means any deficit or surplus in WREGIS Certificates delivered to Buyer for a calendar month as compared to the Monthly Amount for the same calendar month (“True-Up Month”). Any adjustments to resolve a WREGIS Certificate True-Up will be made as an adjustment on Seller’s monthly invoice to Buyer in accordance with Article 6, provided that no adjustments will be made for any WREGIS Certificate True-Up after twenty-four (24) months from the True-Up Month.
ARTICLE 6
COMPENSATION
6.1 Calculation Period. The “Calculation Period” shall be each calendar month or portion thereof that Delivery was conveyed to Buyer.
6.2 Monthly Cash Settlement Amount. Buyer shall pay Seller the Monthly Cash Settlement Amount, in arrears, for each Calculation Period.
The “Monthly Cash Settlement Amount” for a particular Calculation Period shall be equal to (a) plus (b) minus (c), where:
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Monthly Amount; and
(a) equals the product of (i) the Index Price multiplied by (ii) the
(b) equals the product of (i) the Green Attributes Price, multiplied by (ii) the Monthly Amount; and
(c) equals the product of (i) the Index Price multiplied by (ii) the Monthly Amount.
6.3 Payment. Notwithstanding anything to the contrary in Article Six of the Master Agreement, Buyer shall pay Seller the Monthly Cash Settlement Amount four (4) calendar months following the applicable Calculation Period and on or before the later of: (a) the twenty- fifth (25th) day of the month in which Buyer receives from Seller an invoice for the Calculation Period to which the Monthly Cash Settlement Amount pertains, or (b) within fifteen (15) days following receipt of an invoice issued by Seller for such applicable Calculation Period, provided that if such payment due date is not a Business Day, then on the next Business Day. This provision shall survive termination or expiration of the Agreement for all amounts due prior to such termination or expiration.
ARTICLE 7
CREDIT TERMS
7.1 This Confirmation’s credit requirements for the RPS Energy portion of the Product shall be governed by the Master Agreement
7.2 This Confirmation’s credit requirements for the Green Attributes portion of the Product shall apply as specified below:
(a) If the Master Agreement has a Collateral Annex, then the Exposure Amount for the Green Attributes portion of Product shall be equal to the lesser of (1) the product of the following: (i) five percent (5%), multiplied by (ii) the volume of the undelivered Green Attributes for Product, multiplied by (iii) the Green Attributes Price or (2) the highest consecutive six (6) months of expected payments.
(b) In the event the Master Agreement does not have a Collateral Annex and Section 8.2(c), entitled “Collateral Threshold” with respect to “Party B Credit Protection”, of the Master Agreement applies, then for the Green Attributes portion of the Product to be delivered to Party B, the definition of Termination Payment in Section 8.2(c) of the Master Agreement will be the lesser of (1) product of the following: (i) five percent (5%), multiplied by (ii) the volume of the undelivered Green Attributes for applicable Product(s) multiplied by (iii) the Green Attributes Price or (2) the highest consecutive six (6) months of expected payments.
7.3 Section 8.1 of the Master Agreement, entitled “Party A Credit Protection”, and all corresponding provisions of (i) the Cover Sheet to Section 8.1 of the Master Agreement and (ii) the Collateral Annex with respect to such Section 8.1 and the applicable provisions thereto of Paragraph 10 to the Collateral Annex do not apply to this Confirmation. -5-
ARTICLE 8
SELLER’S REPRESENTATIONS, WARRANTIES, AND COVENANTS
8.1 Seller Representations and Warranties. Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) the Project qualifies and is certified by the CEC as an Eligible Renewable Energy Resource (“ERR”) as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Project’s output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law.
(a) For the avoidance of doubt, the term “Project” as used in the immediately preceding paragraph means Resources in the Long-Term Resource Pool, and the phrase “Delivery Term” means the Delivery Period.
8.2 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.
(a) For the avoidance of doubt, the phrase “Delivery Term” as used in the immediately preceding paragraph means the Delivery Period.
8.3 Seller warrants that all necessary steps to allow the Renewable Energy Credits transferred to Buyer to be tracked in the Western Renewable Energy Generation Information System will be taken prior to the first delivery under the contract.
(a) For the avoidance of doubt, the term “contract” as used in the immediately preceding paragraph means this Confirmation, and the phrase “first delivery” means the first date of the Delivery Period.
8.4 In addition to the foregoing, Seller warrants, represents and covenants, as of the Confirmation Effective Date and throughout the Delivery Period, that:
(a) Seller has the contractual rights to sell all right, title, and interest in Product required to be delivered hereunder;
(b) at the time of delivery, all rights, title, and interest in Product required to be delivered hereunder are free and clear of all liens, taxes, claims, security interests, or other encumbrances of any kind whatsoever; -6-
(c) Seller shall not substitute or purchase any Product from any generating resource other than the Resource(s) in the Long-Term Resource Pool hereunder;
(d) the facility(s) designated by Seller as the Resource(s) in the Long-Term Resource Pool and all electrical output from the facility(s) designated as the Resource(s) in the Long-Term Resource Pool are, or will be, by the first date of the Delivery Period, registered with WREGIS as RPS-eligible.
(e) As of the Confirmation Effective Date and throughout the Delivery Period, Seller represents, warrants and covenants that the Resource(s) in the Long- Term Resource Pool meet the criteria in either (i) or (ii)
(i) The facility(s) designated by Seller as the Resource(s) in the Long-Term Resource Pool either has a first point of interconnection with a California Balancing Authority, or a first point of interconnection with distribution facilities used to serve end users within a California Balancing Authority Area; or;
(ii) The facility(s) designated by Seller as the Resource(s) in the Long-Term Resource Pool has an agreement to dynamically transfer electricity to a California Balancing Authority.
(f) If and to the extent that the Product sold by Seller is a resale of part or all of a power purchase agreement between Seller and one or more third parties, Seller represents, warrants and covenants that the resale complies with the following conditions in (i) through (iv) below as of the Confirmation Effective Date and throughout the Delivery Period:
(i) The original upstream third party contract(s) meets the criteria of California Public Utilities Code Section 399.16(b)(1)(A);
(ii) This Agreement transfers only RPS Energy and Green Attributes that have not yet been generated prior to the commencement of the Delivery Period;
(iii) The RPS Energy transferred hereunder is transferred to Buyer in real time; and
(iv) If a Resource has an agreement to dynamically transfer electricity to a California Balancing Authority, the transactions implemented under this Agreement are not contrary to any condition imposed by a Balancing Authority participating in the dynamic transfer arrangement.
ARTICLE 9
TERMINATION AND CALCULATION OF SETTLEMENT AMOUNT
In the event this Transaction becomes a Terminated Transaction pursuant to Section 5.2 of the Master Agreement, then the Settlement Amount with respect to this Transaction shall not be calculated in accordance with the Master Agreement, but instead will be calculated as follows:
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The Non-Defaulting Party shall determine its Gains and Losses by determining the Market Quotation Average Price for the Terminated Transaction. In the event the Non- Defaulting Party is not able, after commercially reasonable efforts, to obtain the Market Quotation Average Price with respect to the Terminated Transaction, then the Non-Defaulting Party shall calculate its Gains and Losses for the Terminated Transaction in a commercially reasonable manner by calculating the arithmetic mean of the quotes of at least three (3) Broker or Index Quotes base d on the offers to sell or bids to buy, as applicable, obtained for transactions substantially similar to the Terminated Transaction. Such Broker or Index Quotes must be obtained assuming that the Party obtaining the quote will provide sufficient credit support for the proposed transaction. In the event the Non-Defaulting Party is not able, after commercially reasonable efforts to obtain at least three (3) such Broker or Index Quotes with respect to the Terminated Transaction, then the Non- Defaulting Party shall calculate its Gains and Losses for such Terminated Transaction in a commercially reasonable manner by reference to information supplied to it by one or more third parties 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. Third parties supplying such information may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors and other sources of market information; provided, however, that such third parties shall not be Affiliates of either Party. Only in the event the Non-Defaulting Party is not able, after using commercially reasonable efforts, t o obtain such third-party information, then the Non- Defaulting Party shall calculate its Gains and Losses for such Terminated Transaction in a commercially reasonable manner using relevant market data it has available to it internally. If the Non-Defaulting Party’s aggregate Gains exceed its aggregate Losses and Costs, if any, resulting from the termination of this Transaction, the Settlement Amount for this Transaction will be zero.
ARTICLE 10
GENERAL PROVISIONS
10.1 Buyer Audit Rights. In addition to any audit rights provided under the Master Agreement, Seller shall, upon the Confirmation Effective Date and continuing until the end of the Delivery Period, provide documentation (which may include, for example, WREGIS reports) sufficient to demonstrate that Product has been conveyed and delivered to Buyer.
10.2 Governing Law.
(a) Notwithstanding any provision to the contrary in the Master Agreement, the Governing Law applicable to this Agreement shall be as set forth herein. This Section 9.2 does not change the Governing Law applicable to any other confirmation or transaction entered into between the Parties under the Master Agreement.
(b) 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. -8-
ACKNOWLEDGED AND AGREED TO:
Buyer, or Party A:
NAME, place of formation, and type of entity
Sign:
Print:
Title:
Date:
Seller, or Party B:
PACIFIC GAS AND ELECTRIC
COMPANY, a California corporation
Sign:
Print:
Title:
Date:
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APPENDIX A
DEFINED TERMS
Any capitalized terms used in this Confirmation but not otherwise defined below shall have the meaning ascribed to such term in the Master Agreement:
“Applicable Law” means any statute, law, treaty, rule, tariff, regulation, ordinance, code, permit, enactment, injunction, order, writ, decision, authorization, judgment, decree or other legal or regulatory determination or restriction by a court or Governmental Authority of competent jurisdiction, or any binding interpretation of the foregoing, as any of them is amended or supplemented from time to time, that apply to either or both of the Parties, the Product, or the terms of the Agreement.
“Balancing Authority” has the meaning set forth in the Tariff.
“Business Day ” means all calendar days other than those days on which the Federal Reserve member banks in New York City are authorized or required by law to be closed, and shall be between the hours of 8:00 a.m. and 5:00 p.m. Pacific Prevailing Time for the relevant Party’s principal place of business where the relevant Party, in each instance unless otherwise specified, shall be the Party from whom written communications or payment or delivery is being sent and by whom written communications or payment or delivery is to be received.
“Buyer” means Party A.
“CAISO” means the California Independent System Operator Corporation or the successor organization to the functions thereof.
“Confirmation Effective Date” means the date in which the Confirmation is fully executed by both Parties.
“CPUC” means the California Public Utilities Commission.
“CPUC Approval” means a final and non-appealable order of the CPUC, without conditions or modifications unacceptable to the Parties, or either of them, which approves this Agreement in its entirety, including payments to be made by the Buyer, subject to CPUC review of the Buyer's administration of the Agreement. CPUC Approval will be deemed to have occurred on the date that a CPUC decision containing such findings becomes final and non- appealable. For the purpose of this definition of “CPUC Approval”, a CPUC Energy Division disposition which contains such findings, or deems approved an advice letter requesting such findings, shall be deemed to satisfy the CPUC decision requirement set forth above. Also, for the purpose of this definition of “CPUC Approval” only, the references therein to “Buyer” shall mean “Seller”.
“California Renewables Portfolio Standard” or “RPS” means the California renewables portfolio standard, as set forth in Cal. Pub. Util. Code §§ 399.11 et seq. and Cal. Pub. Res. Code §§ 25740-25751, and as administered by the CEC as set forth in the CEC RPS Eligibility Guidebook (9th Ed.), as may be subsequently modified by the CEC, and the California Public A-2
Utilities Commission (“CPUC”) as set forth in CPUC Decision (“D”) 08-08-028, D.08-04-009, D.11-01-025, D.11-12-020, D.11-12-052, D.12-06-038 and D.14-12-023, and as may be modified by subsequent decision of the CPUC or by subsequent legislation, and regulations promulgated with respect thereto.
“CEC” means the California Energy Commission.
“CPUC” means the California Public Utilities Commission. “Delivery Period” has the meaning set forth in Section 3.3. “Delivery Point” has the meaning set forth in Section 3.2. “Election” has the meaning set forth in Section 2.2.
“Energy” means electrical energy, measured in MWh.
“FERC” means the Federal Energy Regulatory Commission.
“Green Attributes” means any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled, attributable to the generation from the Resource, and its avoided emission of pollutants. Green Attributes include but are not limited to Renewable Energy Credits, as well as: (a) any avoided emission of pollutants to the air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO) and other pollutants; (b) any avoided emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and other greenhouse gases (GHGs) that have b een 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 ; (c) the reporting rights to these avoided emissions, such as Green Tag Reporting Rights. Green Tag Reporting Rights are the right of a Green Tag Purchaser to report the ownership of accumulated Green Tags in compliance with federal or state Law, if applicable, and to a federal or state agency or any other party at the Green Tag Purchaser’s discretion, and include without limitation those Green Tag Reporting Rights accruing under Section 1605(b) of The Energy Policy Act of 1992 and any present or future federal, state, or local Law, regul ation or bill, and international or foreign emissions trading program. Green Tags are accumulated on a MWh basis and one Green Tag represents the Green Attributes associated with one (1) MWh of Energy. Green Attributes do not include (i) any Energy, capacity, reliability or other power attributes from the Resource, (ii) production tax credits associated with the construction or operation of the Resource and other financial incentives in the form of credits, reductions, or allowances associated with the Resource that are applicable to a state or federal income taxation obligation, (iii) fuel -related subsidies or “tipping fees” that may be paid to Seller to accept certain fuels, or local subsidies received by the generator for the destruction of particular preexisting pollutants or the promotion of local environmental benefits, or (iv) emission reduction credits encumbered or used by the Resource for compliance with local, state, or federal operating and/or air quality permits. If the Resource is a biomass or biogas facility and Seller receives any tradable Green Attributes based on the greenhouse gas reduction benefits or other emission offsets attributed to its fuel usage, it shall provide Buyer with sufficient Green Attributes to ensur e that there are zero net emissions associated with the production of electricity from the Resource.
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"Green Attributes Price” has the meaning set forth in Section 2.3.
“Governmental Authority” or “Governmental Entity ” means any federal, state, local or municipal government, governmental department, commission, board, bureau, agency, or instrumentality, or any judicial, regulatory or administrative body, or the CAISO or any other transmission authority, having or asserting jurisdiction over a Party or the Agreement.
“Index Price” means the Trading Hub price (as defined in the Tariff) measured in $/MWh, for each MWh of Product, and associated with the Product to the Delivery Point for each applicable hour as published by the CAISO on the CAISO website; or any successor thereto, unless a substitute publication and/or index is mutually agreed to by the Parties.
“Long-Term End Date” is the end date of the contract with the longest term in the Long- Term Resource Pool, excluding PG&E owned resources and resources without fixed expiration dates.
“Long-Term Resource Pool” means Seller’s Resources in Appendix B reflecting all PCIA-eligible RPS resources remaining after Voluntary Allocation with power purchase agreements with terms that have greater than 10 years remaining from the start of the Delivery Period that meet the criteria of Public Utilities Code §399.16(b)(1). The actual resources included in this pool (and listed in Appendix B) may change for reasons set forth in Section 2.4.
“MWh” means megawatt-hour.
“Monthly Cash Settlement Amount” has the meaning set forth in Section 6.2. “Monthly Amount” has the meaning set forth in Section 2.1. “PG&E” means the Pacific Gas and Electric Company, its successors and assigns.
“PCIA” or “Power Charge Indifference Adjustment” is a charge to ensure that both PG&E customers and those who have left PG&E service to purchase electricity from other providers pay for the above-market costs for electric generation resources that were procured by PG&E on their behalf. “Above market” refers to expenditures for generation resources that cannot be fully recovered through sales of these resources at current market prices.
“Product” has the meaning set forth in Section 1.1.
“Renewable Energy Credits ” or “REC ” has the meaning set forth in California Public Utilities Code Section 399.12(h) and CPUC Decision 08- 08-028, as may be amended from time to time or as further defined or supplemented by Law.
“Resource(s)” means generation units owned by Seller or contracted by Seller, which corresponding costs are recovered through the PCIA.
“RPS Energy” means the Energy generated from Resources from the Long-Term Resource Pool.
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“Scheduling Coordinator (SC) ” means an entity certified by the CAISO to perform the functions as described in the Tariff.
“Seller” means Party B.
“Tariff” means the FERC -approved California Independent System Operator Tariff, including any current CAISO -published “Operating Procedures” and “Business Practice Manuals,” as may be amended, supplemented or replaced from time to time.
“Total Amount” has the meaning set forth in Section 2.1.
“Voluntary Allocation” means the 2022 process by which PG&E allocates its PCIA-eligible RPS Energy among all PCIA -eligible load -serving entities in its service territory up to their forecasted, vintaged, annual load share s and the actual, vintaged, annual RPS Energy production of PCIA-eligible RPS Energy resources, as defined in CPUC Decision D.21-05-030, or as modified by subsequent decision of the CPUC.
“WREGIS” means the Western Renewable Energy Generation Information System or any successor renewable energy tracking program.
“WREGIS Certificate” 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.
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APPENDIX B
LIST OF RESOURCES IN LONG-TERM RESOURCE POOL
Resource Name
Technology
CES RPS
ID
PCIA
Vintage
End Date
Montezuma Wind Energy Center Wind 60543A 2010 1/27/2036 High Plains Ranch II Solar PV 60603A 2008 10/30/2038
Topaz Solar Farm Solar PV 61698A 2008 10/26/2039
Ivanpah Unit 1
Solar
Thermal
62273A
2009
1/20/2039
Ivanpah Unit 3
Solar
Thermal
62275A
2009
1/26/2039
AV Solar Ranch One Solar PV 60790A 2009 11/20/2039
Agua Caliente Solar Project Solar PV 60894A 2009 6/22/2039 High Plains Ranch III Solar PV 60603A 2010 9/30/2038
Mojave Solar Project
Solar
Thermal
60848A
2009
11/20/2039
Genesis Solar Energy Project
Solar
Thermal
60605A
2009
3/6/2039
DTE Stockton Biomass 60964A 2009 2/20/2039
Alpaugh 50 Solar PV 60945A 2010 3/7/2038
Alpaugh North Solar PV 60946A 2010 3/7/2038
Atwell Island Solar PV 60947A 2010 3/11/2038
Corcoran Solar PV 60948A 2010 8/14/2038
White River Solar PV 60949A 2010 6/26/2038
Sunshine Landfill Landfill Gas 60815A 2010 8/31/2034
Potrero Hills Landfill Landfill Gas 63116A 2010 4/12/2041 Desert Center Solar Farm Solar PV 61068A 2010 12/16/2039 North Star Solar Solar PV 61198A 2010 6/19/2035
Vasco Wind Energy Center Wind 61344A 2010 3/12/2037
Montezuma II Wind Energy Center Wind 61345A 2010 3/13/2037 Westlands Solar Farms Solar PV 61755A 2011 4/30/2034
Orion Solar Solar PV 61570A 2011 6/25/2034
North Sky River Energy Center Wind 61385A 2011 12/20/2037 Copper Mountain Solar 2 Solar PV 60990A 2011 5/12/2040
Shiloh IV Wind Project Wind 61617A 2011 1/27/2038
West Antelope Solar PV 61850A 2012 2/8/2035
Western Antelope Blue Sky Ranch A Solar PV 61517A 2012 2/16/2035 SPI Biomass Portfolio Biomass 60088A 2012 9/22/2035
SPI Biomass Portfolio Biomass 61146A 2012 9/22/2035
SPI Biomass Portfolio Biomass 60087A 2012 9/22/2035
SPI Biomass Portfolio Biomass 60089A 2012 9/22/2035
B-2
SPI Biomass Portfolio Biomass 60576A 2012 9/22/2035
Kansas Solar PV 61263A 2012 12/31/2037
Lost Hills Solar Solar PV 61893A 2012 12/31/2043
Cuyama Solar Array Solar PV 61891A 2012 12/31/2043
Blackwell Solar Solar PV 61892A 2012 12/31/2043
Henrietta Solar Solar PV 61841A 2012 9/30/2036
Kent South Solar PV 61262A 2012 2/18/2035
Algonquin SKIC 20 Solar Solar PV 61558A 2012 3/30/2035
Mammoth G1 Geothermal 60306A 2012 12/25/2033
Alamo Solar, LLC Solar PV 61453A 2012 6/29/2035
CID Solar PV Project Solar PV 62285A 2012 3/19/2035
Old River One Solar PV 60853A 2013 2/8/2035
Shafter Solar Solar PV 62325A 2013 7/15/2035
Rising Tree Wind Farm II Wind 62426A 2013 8/6/2035
Kekawaka Creek Hydroelectric Facility Small Hydro 60186A 2013 5/31/2035 RE Astoria Solar PV 62284A 2013 1/2/2034
Midway Solar Farm I Solar PV 61295A 2013 5/31/2040
California Flats Solar Project Solar PV 62552A 2013 4/9/2034 Portal Ridge Solar C Project Solar PV 61684A 2014 4/20/2037 Sunray 2 Solar PV 62694A 2014 8/24/2037
Bayshore Solar A Solar PV 63133A 2015 4/17/2038
Bayshore Solar B Solar PV 63134A 2015 4/17/2038
Bayshore Solar C Solar PV 63135A 2015 4/17/2038
Java Solar Solar PV 63137C 2016 1/30/2040
RE Gaskell West 3 Solar PV 63619C 2017 3/22/2038
RE Gaskell West 4 Solar PV 63617C 2017 3/22/2038
RE Gaskell West 5 Solar PV 63618C 2017 3/22/2038
PGE Alta Small Hydro 60033 Pre-2002 N/A
PGE Centerville Small Hydro 60034 Pre-2002 N/A
PGE Coleman Small Hydro 60037 Pre-2002 N/A
PGE Cow Creek Small Hydro 60038 Pre-2002 N/A
PGE Crane Valley Small Hydro 60039 Pre-2002 N/A
PGE Deer Creek Small Hydro 60040 Pre-2002 N/A
PGE De Sabla Small Hydro 60041 Pre-2002 N/A
PGE Dutch Flat 1 Small Hydro 60042 Pre-2002 N/A
PGE Halsey Small Hydro 60043 Pre-2002 N/A
PGE Hamilton Branch Small Hydro 60044 Pre-2002 N/A
PGE Hat 1 Small Hydro 60045 Pre-2002 N/A
PGE Hat 2 Small Hydro 60046 Pre-2002 N/A
PGE Inskip Small Hydro 60047 Pre-2002 N/A
PGE Kerckhoff 1 Small Hydro 62360 Pre-2002 N/A
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PGE Kilarc Small Hydro 60049 Pre-2002 N/A
PGE Lime Saddle Small Hydro 60050 Pre-2002 N/A
PGE Newcastle Small Hydro 60053 Pre-2002 N/A
PGE Oak Flat Small Hydro 60276 Pre-2002 N/A
PGE Phoenix Small Hydro 60054 Pre-2002 N/A
PGE Potter Valley Small Hydro 60055 Pre-2002 N/A
PGE Five Points Solar PV 61432 2010 N/A
PGE Stroud Solar PV 61434 2010 N/A
PGE Westside Solar PV 61433 2010 N/A
PGE Cantua Solar PV 61823 2011 N/A
PGE Giffen Solar PV 61822 2011 N/A
PGE Huron Solar PV 61821 2011 N/A
PGE Gates Solar PV 62353 2012 N/A
PGE Guernsey Solar PV 62354 2012 N/A
PGE West Gates Solar PV 62352 2012 N/A
PGE Rock Creek RPS Small Hydro 62269 Pre-2002 N/A
PGE San Joaquin 1A Small Hydro 60056 Pre-2002 N/A
PGE San Joaquin 2 Small Hydro 60057 Pre-2002 N/A
PGE San Joaquin 3 Small Hydro 60058 Pre-2002 N/A
PGE South Small Hydro 60059 Pre-2002 N/A
PGE Spaulding 1 Small Hydro 60060 Pre-2002 N/A
PGE Spaulding 2 Small Hydro 60061 Pre-2002 N/A
PGE Spaulding 3 Small Hydro 60062 Pre-2002 N/A
PGE Spring Gap Small Hydro 60063 Pre-2002 N/A
PGE Toadtown Small Hydro 60064 Pre-2002 N/A
PGE Tule River Small Hydro 60065 Pre-2002 N/A
Vaca-Dixon Solar (PG&E) Solar PV 60966 2010 N/A
PGE Volta 1 Small Hydro 60066 Pre-2002 N/A
PGE Volta 2 Small Hydro 60067 Pre-2002 N/A
PGE West Point Small Hydro 60068 Pre-2002 N/A
PGE Wise 1 Small Hydro 60069 Pre-2002 N/A
PGE Wise 2 Small Hydro 60070 Pre-2002 N/A
PGE A.G.Wishon Small Hydro 60032 Pre-2002 N/A