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HomeMy WebLinkAbout2021-05-27; Clean Energy Alliance JPA; ; Approve Entering into a Long-Term Renewable Energy Agreement with Shell Energy North America0111111Pw- CLEAN ENERGY ALLIANCE Staff Report DATE: May 27, 2021 TO: Clean Energy Alliance Board of Directors FROM: Barbara Boswell, Interim Chief Executive Officer ITEM 8: Approve Entering into a Long-Term Renewable Energy Agreement with Shell Energy North America RECOMMENDATION Approve entering into a long-term renewable energy agreement with Shell Energy North America for Portfolio Category 1 renewable energy and authorize the Interim Chief Executive Officer to execute Transaction Confirmation, for an amount not to exceed $6,000,000, in a form substantially as attached, subject to Transactions Attorney approval. BACKGROUND AND DISCUSSION In October 2015, the State of California enacted Senate Bill 350, also known as The Clean Energy and Pollution Reduction Act of 2015 (the Act). The Act established new clean energy, clean air, and greenhouse gas reduction goals for the state. Specifically, the Act requires that all load serving entities, including Community Choice Aggregators (CCAs), enter into long-term renewable energy contracts, defined as 10-years or longer. As a load serving entity in 2021, Solana Energy Alliance (SEA) was required to comply with the long-term renewable contracting requirements, irrespective of the short time SEA was serving customers in 2021 (January — April). SEA's team completed a solicitation process to select an energy supplier to fulfill the long-term renewable energy contracting requirements. The successful supplier from that solicitation was Shell Energy North America, With the transition of SEA customers to CEA, the long-term renewable contracting requirement related to those customers also transfers to CEA. The agreement with Shell Energy North America ensures compliance with the long-term renewable contracting for the transferred SEA customers. FISCAL IMPACT Funds for the long-term renewal power purchase agreement will come from revenue generated from Solana Beach customers and costs are within the assumed costs in the CEA pro forma that was used to set CEA rates. ATTACHMENTS Draft Shell Energy North America Transaction Confirmation DocuSign Envelope ID: 40064980-892D-4459-86EB-87902B1B635A Shell Energy North America (US), L.P. Clean Energy Alliance - Shell Energy North America (US), L.P. Contract ID: Contract ID: Deal Maker: Brian Goldstein Deal Maker: Vince Velasquez Phone: (916) 936-3303 Phone: (858) 320-1507 Email: brianApacificea.com Email: vince.velasquez@shell.eom TRANSACTION CONFIRMATION Resource Contingent Bundled Renewable Eneigy ("PCCI") Resale This Transaction Confirmation (this "Confirmation") is entered into this 1st day of June, 2021 ("Effective Date), by and between Clean Energy. Alliance, a California joint powers authority ("CEA" or "Buyer") and Shell Energy North America (US), L.P. ("Shell Energy" or "Seller"), each referred to herein individually as a "Party" and collectively as the "Parties", regarding the purchase and sale of the Product (as defined below) under the terms and conditions herein. Capitalized terms used in this Confirmation and not defined herein have the meaning assigned thereto in the Master Agreement (each as defined below). The Master Agreement and this Confirmation shall be collectively referred to herein as the "Agreement." Seller: Shell Energy Buyer: Clean Energy Alliance (Buyer's WREGIS Account Holder Name: TBD, Account ID TBD) -•• Master Agreement: This Confirmation shall be governed by the terms and conditions of...the EEI Master Agreement, dated effective March 16, 2021, (as amended from time to time, the "Master AgreeMent"). Terms not defined in this Confirmation shall have the meaning set forth in the Master Agreement. Product: As used herein, "Product" shall consist of energy produced hourly by the Projects that is simultaneously bundled with the associated Renewable Energy Credits ("RECs") generated therefrom, which qualifies as Portfolio Content Category 1 ("PCC1") (as further defined below) as defined under the California Renewables Portfolio Standard ("BPS"). • Environmental Attributes: The only Environmental Attributes conveyed under this Confirmation as part of the Product are Program Attributes under the Applicable Program, which for purposes of this Confirmation is the California Renewables Portfolio Standard (as defined in the Definitions section hereof). The Parties agree that the Product will be sourced only from the specific Projects identified in Exhibit A with no substitutions. Project: As used herein "Project" shall mean the generating facilities listed in Exhibit A attached hereto and incorporated herein, each of which is: (i) certified as an ERR. for the California RPS and registered with WREGIS, and (ii) from which Seller is entitled, pursuant to its agreements, to the output of the Energy and associated RECs, and such output is used to source the Product delivered hereunder during the Delivery Term (each, a "Project" and collectively, the 'Projects"). In addition, each Project either: (i)has a first point of interconnection with a California balancing authority; or (ii)has its first point of interconnection with distribution facilities used to serve end users within a California balancing authority area; or (iii)the generation from the Project is scheduled into a California balancing authority without substituting electricity from any other source, provided that, if another source provides real-time ancillary services required to maintain an hourly or subhourly import schedule into the California balancing authority only the fraction of the schedule actually generated by the Project from which the electricity is procured may count toward this Product; or (iv)the generation from the Project is scheduled into a California balancing authority pursuant to a 1 DocuSign Envelope ID: CB99FF76-3D8A-42C4-8C85-1ECBC110C3BA dynamic transfer agreement between the balancing authority where the Generating Facility is located and the California balancing authority into which the generation is scheduled. Additional resource(s) that qualify as ERRs may be added by Seller to Exhibit A prior to generation of Energy and associated RECs, subject to Buyer's prior written consent, which shall not be unreasonably withheld if such resource meets the RPS compliance requirements for PCC1 and Seller demonstrates to Buyer's reasonable satisfaction that the addition of such resource(s) complies with the California Long Term Contracting Requirements. Contract Quantity: Per the Table below: Delivery Year 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Quantity (MWh) 0 Contract Price: Delivery Term: The price for each MWh of Energy delivered at the Delivery Point (the "Energy Price") shall be determined in accordance with the procedures and rules of the California ISO. The price for each REC delivered to Buyer (the "REC Price") is . Together, the Energy Price and the REC Price constitute the "Contract Price". Commencing January 1, 2025, through December 31, 2034. The RECs attributable to the Energy generated during the Delivery Term but created after the Delivery Term shall be transferred to and paid for by Buyer in accordance with the terms of this Confirmation. Delivery Point: CA180 or California balancing authority Scheduling: REC Transfer: Seller will perform all scheduling and tagging requirements as may be applicable to the Transadtion contemplated hereunder. These services will be performed consistent with all applicable California ISO and WECC Scheduling Protocols. Subject to receipt of Buyer's payment in accordance with this Confirmation, Seller will transfer the RECs purchased and sold hereunder to Buyer's WREGIS account no later than May lst of the year following the year in which the Energy to which such RECs are attributable was generated. Settlements and Payment: Seller shall deliver the REC portion of the Product by transferring the RECs, with associated NERC e-Tags (if any) through WREGIS, to Buyer's (or Buyer's Designee's) designated WREGIS account(s). California ISO shall pay Seller directly the Energy Price for the Energy portion of the Product in accordance with the California ISO requirements and procedures and Buyer shall not be required to pay any additional amount to Seller in respect of such Energy or the Energy Price. Seller shall invoice Buyer for the REC Price once the RECs associated with the delivered Energy portion of the Product are available in Seller's WREGIS account for transfer to Buyer, provided that Seller shall not invoice Buyer for delivered Product amounts greater than the Maximum Monthly Invoice Quantity amount in any calendar month. If Seller transfers Product in an amount greater than the Maximum Monthly Invoice Quantity during any month, Seller may submit an invoice for payment of such excess monthly Product delivery in a subsequent monthly invoice. Buyer shall pay undisputed invoice amounts on or before the twenty-third (23m) day of the month after the month in which the invoice was received. If such due date falls on a weekend or legal holiday, such due date shall be the next Business Day. Seller shall have no obligation to deliver the REC portion of the Product until it receives the REC Price. Notwithstanding any other provision in the Agreement to the contrary, Seller shall transfer the RECs to Buyer's (or Buyer's Designee's) designated WREGIS account(s), within five (5) Business Days following receipt of full payment of the REC Price. "Maximum Monthly Invoice Ouantitv" means the amount equal to twenty-five percent (25%) times the applicable annual Contract Quantity. Supporting Data: In the event that the Product being transferred ftom Seller to Buyer originates from a Project(s) from outside of the state of California, and in addition to any other documentation requirements under this Confirmation, 2 DocuSign Envelope ID: CB99FF76-3D8A-42C4-8C85-1ECBC110C3BA Seller shall provide Buyer all requested supporting documentation and reconciliation data required for the California RPS program, including, without limitation, hourly meter data, tag data and associated calculations of the lesser of each by hour for each vintage month of the RECs associated with Product delivered to Buyer under this Confirmation. Seller represents and warrants to Buyer that the purchase and sale of Product pursuant to this Confirmation is a resale and meets the following additional requirements: (I) The original upstream third-party contract(s) meets the criteria of California Public Utilities Code Section 399.16(b)(1); (ii)this Confirmation transfers only Energy and RECs that have not yet been generated prior to the effective date of this Confirmation; (iii)in connection with the transfer of the Energy and associated RECs that comprise the Product purchased and sold under this Confirmation, the Energy transferred by this Confirmation is transferred to Buyer in real-time via sale by Seller to, and purchase by Buyer from, the California ISO; and - (iv) if applicable, the California Renewables Portfolio Standard-eligible energy is scheduled from one or more eligible renewable energy resources that are not interconnected to a California balancing authority into a California balancing authority without .substituting electricity from another source, and the .original hourly or subhourly schedule is maintained. Compliance With RPS: Change in Law Provisions:. In.the event that: (i)the RPS program is superseded by any successor or substantially similar renewable portfolio standard, including without limitation a federal renewable portfolio standard or substantially similar program: (each of the foregoing, a "Successor Program"), or (ii)the PCC1 Product. is superseded by any successor or substantially similar product, or the like (the foregoing a "Successor PCC1 Product"), and the Successor Program and/or Successor PCC1 Product permits the transfer of the PCC1 Product that is substantially equivalent to the PCC1 Product purchased before the change described in (i) or (ii) above, then such PCC I Product sold and transferred hereunder from Seller to Buyer shall be deemed "Successor Product". The Parties will in good faith amend the terms of this Confirmation solely to comply with the requirements for delivery of such Successor Product to Buyer under such Successor Program and/or Successor PCC I Product in order to effect the intent of this Confirmation; provided, however, that Seller will take commercially reasonable actions to meet the qualifications of the Successor PCC1 Product, but will not be required to incur any costs in excess of an aggregate amount equal to $250,000.00 (the "Compliance Cap") in order to comply with the Successor Program and the Successor PCC1 Product, collectively. If, after Seller has taken commercially reasonable efforts up to the Compliance Cap, the product generated by the Project is unable to qualify under Successor Program and/or Successor PCC1 Product, then either Seller or Buyer shall have the right but not the obligation to incur costs above the Compliance Cap to qualify for the Successor Program or Successor PCC1 Product. If after the foregoing, the product generated by the Project is unable to qualify as Successor PCC I Product, then either Party shall have the right to terminate this Confirmation within sixty (60) days of such event. So long as no Event of Default shall have occurred and be continuing, neither Party shall be liable to the other Party for any damages or costs for such early termination. In the event that the qualifications or requirements of the RPS program, PCC I or the California Long Term Contracting Requirements change, Seller shall take commercially reasonable actions to meet the amended qualifications or requirements of the RPS program, PCC1 or the California Long Term Contracting Requirements but will not be required to incur any costs in excess of the Compliance Cap to comply with the RPS program, PCC1 or the California Long Term Contracting Requirements, collectively. If, after Seller has taken commercially reasonable efforts up to the Compliance Cap, the product generated by the Project is unable to qualify under the RPS Program, PCC I and/or the California Long Term Contracting Requirements, then either Seller or Buyer shall have the right but not the obligation to incur costs above the Compliance Cap to qualify for the RPS program, PCC I or the California Long Term Contracting Requirements. If after the foregoing, the product generated by the Project is unable to qualify for the RPS program, PCC I or the 3 DocuSign Envelope ID: CB99FF76-308A-42C4-8C85-1ECBC110C3BA California Long Term Contracting Requirements, then either Party has the right to terminate the Confirmation within thirty (30) days of such event. So long as no Event of Default shall have occurred and be continuing, neither Party shall be liable to the other Party for any damages or costs for such early termination. SPECIAL PROVISIONS: A. Non-Modifiable Standard Terms and Conditions (1)Eligibility. Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) the Project qualifies and is certified by the CEC as an Eligible Renewable Energy Resource ("ERR") as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Project's output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC 6, Non-Modifiable. (Source: D.07-11-025, Attachment A.) D.08-04- 0091 (2)Governing Law. This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced and performed in accordance with the laws of the state of California, without regard to principles of conflicts of law. To the extent enforceable at such time, each Party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this Agreement. [STC 17, Non-Modifiable. (Source: D.07-11-025, Attachment A) D.08-04-009] (3)Transfer of Renewable Energy Credits. Seller and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement the renewable energy credits transferred to Buyer conform to the definition and attributes required for compliance with the California Renewables Portfolio Standard, as set forth in California Public Utilities Commission Decision 08-08- 028, and as may be modified by subsequent decision of the California Public Utilities Commission or by subsequent legislation. To the extent a change in law occurs. after execution of this Agreement that causes this, representation and warranty to be- materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. I STC REC-1, Non-modifiable. D.11-01-02fl (4)Tracking of RECs in WREGIS. Seller warrants that all necessary steps to allow the Renewable Energy Credits transferred to Buyer to be tracked in the Western Renewable Energy Generation Information System will be taken prior to the first delivery under the contract. [STC REC-2, Non-modifiable. D.11-01-0251 B. Additional Terms and Conditions (1) Seller Representations and Warranties. Seller represents and warrants: (a)The Product supplied to Buyer under this Confirmation will be sourced solely from Projects, as defined above, including any additional resources added after the Effective Date in accordance with the requirements of this Agreement; (b)Seller has the right to sell the Product from the Projects; (c)Seller has not sold the Product, or the REC associated with the Product, to be transferred to Buyer to any other third party; (d)the Energy component of the Product produced by a Project and purchased by Seller for resale to Buyer hereunder is not being sold by Seller back to the Project or Project owner; (e)The Energy and RECs to be purchased and sold pursuant to this Confirmation are not commifted to another party; (f)the Product is free and clear of all liens or other encumbrances; (g)Seller will deliver to Buyer all Energy and associated RECs generated by the Project pursuant to this Confirmation in compliance with the California Long Term Contracting Requirements; and (h)the Product meets the requirements set forth in PUC Code 399.16(b)(1)(A) and the RPS compliance requirements for Portfolio Content Category 1 in a manner consistent with Section 3203(a) of the Enforcement Procedures for the Renewables Portfolio Standard for Local Publicly Owned Electric Utilities (CEC- 300- 2013- 002- CAE), as adopted by the California Energy Commission effective April 12, 2016, and, upon request of Buyer, Seller will cooperate and work with Buyer, the CEC, and/or the CPUC to provide any documentation required by the CPUC or CEC to support the Product's classification as a Portfolio Content Category 1 or compliance with the RPS or the California Long Term Contracting Requirements. 4 DocuSign Envelope ID: CB99FF76-3D8A-42C4-8C85-1ECBC110C3BA (2) Buyer Representations and Warranties. Buyer represents and warrants that Buyer has taken all necessary steps to establish a WREGIS account to receive the RECs to be transferred from Seller to Buyer prior to the first delivery under this Confirmation. (3) Mutual Representations and Warranties. (a)This Confirmation is subject to the Security Documents and all obligations hereunder are Obligations as defined in such Security Documents. (b)The Parties wee this Confirmation constitutes a sale of a nonfinancial commodity for deferred shipment or delivery that the Parties intend to be physically settled and is excluded from the term "swap" as defined in the Conunodity Exchange Act under 7 U.S.0 § la (47) and related rules. During the Delivery Period, each Party represents and warrants to the other that: it is an "eligible commercial entity" and an "eligible contract participant" within the meaning of United States Commodity Exchange Act §§ la (47) and la (18), respectively, and this Transaction has been subject to individual negotiations by the Parties. (4) Data Privacy. The Parties may provide each other with information related to an identified or identifiable individual ("Personal Data?), the processing and transfer of which will be done in accordance with applicable data protection law. C. Amendments to the Master Agreement Confidentiality. Section 10.11, Confidentiality, of the Master Agreement is amended for purposes of this Confirmation by inserting after the word "proceeding" prior to the semicolon the following: "or to Deliver RECs pursuant to the requirements of WRECiTS". D. FERC Standard of Review; Mobile-Sierra Waiver (A)Absent the agreement of all Parties to the proposed change, the standard of review for changes to any rate, charge, classification, tumor condition ofibis Agreement, whether proposed by a Party (to the extent that any waiver in subsection (B) below is unenforceable or ineffective as to such Party), a non-party or FERC acting sua sponte, shall solely be the "public interest': application of the "just and reasonable" 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) and clarified by Morgan Stanley Capital Group, Inc. v. Public Util. Dist. No. I of Snohomish, 554 U.S. 527 (2008), and NRG Power Marketing LLC v. Maine Public Utility Commission, 558 U.S. 527 (2010). (B)In addition, and notwithstanding the foregoing subsection (A), to the fullest extent permitted by applicable law, each Party, for itself and its successors and assigns, hereby expressly and irrevocably waives any rights it can or may have, now or in the future, whether under §§ 205 and/or 206 of the Federal Power Act or otherwise, to seek to obtain from FERC by any means, directly or indirectly (through complaint, investigation or otherwise), and each hereby covenants and agrees not at any time to seek to so obtain, an order from FERC changing any section of this Agreement specifying the rate, charge, classification, or other term or condition agreed to by the Parties, it being the express intent of the Parties that, to the fullest extent permitted by applicable law, neither Party shall unilaterally seek to obtain from FERC any relief changing the rate, charge, classification, or other term or condition of this Agreement, notwithstanding any subsequent changes in applicable law or market conditions that may occur. In the event it were to be determined that applicable law precludes the Parties from waiving their rights to seek changes from FERC to their market-based power sales contracts (including entering into covenants not to do so) then this subsection (B) shall not apply, provided that, consistent with the foregoing subsection (A), neither Party shall seek any such changes except solely under the "public interest" application of the "just and reasonable" standard of review and otherwise as set forth in the foregoing section (A). E. Definitions/Interpretations For purposes of this Confirmation, the following definitions shall apply: "California Long Term Contracting Requirements" means the long-term contracting requirement set forth in the Clean Energy and Pollution Reduction Act of 2015 (SB 350), California Public Utilities Code section 399.13(b), and CPUC Decision 17-06-026 and CPUC Decision 18-05-026, as may be modified by subsequent decision of the California Public Utilities Commission or by subsequent legislation. "California Renewables Portfolio Standard" means the renewable energy program and policies, codified in California Public Utilities Code Sections 399.11 through 399.32 and California Public Resources Code Sections 25740 through 25751, as such provisions are amended or supplemented from time to time. "CEC" means the California Energy Commission or its regulatory successor. "CPUC" means the California Public Utilities Commission or its regulatory successor. 5 Nam:: UONIU ICI I Shell EnergyAorth America (US), LP. DocuSigned by: B qa Y. DOC1.222,11COACT11.41, -2 DocuSign Envelope ID: CB99FF76-3D8A-42C4-8C85-1ECBC110C3BA "FERC" means the Federal Energy Regulatory Commission or its regulatory successor. "Product Content Category I" means electric energy as set forth in CPUC Code 399.16(b)( I )(A) and the RPS compliance requirements for Portfolio Content Category 1 as set forth in CPUC Decision Ii-12-052 and in a manner consistent with Section 3203(a) of the Enforcement Procedures for the Renewables Portfolio Standard for Local Publicly Owned Electric Utilities (CEC- 300- 2013- 002- CMT), as adopted by the California Energy Commission effective April 12, 2016. "Security Documents" has the meaning set forth in the Master Agreement. "$TC" stands for Standard Terms and Conditions of the CPUC relating to purchase and sales of the Product. "WECC" means the Western Electricity Coordinating Council or its successor organizations. "WREGIS" means the Western Renewable Energy Generation Information System or its successor systems. This Confirmation shall only be effective when executed by both Parties. IN WITNESS WHEREOF, the Parties have signed this Confirmation effective as of the Effective Date. Clean Energy Alliance e—DocuSigned by: 73cars4es rooesvoa Name: Barbara Boswell Title: Interim Chief Executive Officer Title: Attorney in Fact 528/2021 6 DocuSign Envelope ID: CB99FF76-3D8A.42C4-8C85-1ECBC110C3BA EXHIBIT A Eligible Renewable Resources 2025-2034 No. Name of Facility Fuel Source Location CEC ID WREGIS ID Technology Sub-type (e.g., PV or thermal, storage or no storage, fixed or tracking) I Wind California No Storage 2 Wind California No Storage 3 Solar California No Storage, PV 4 Solar Cal ifornia No Storage, PV 5 Solar California No Storage, PV 6 Solar Arizona (CAISO) No Storage, PV 7