regular meeting of the operations board of directors wednesday ... · ii. future rate setting will...

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REGULAR MEETING of the Operations Board of Directors

Wednesday, February 7, 2018 9:00 am

City of Watsonville City Council Chambers 275 Main Street, 4th Floor

Watsonville, CA 95076 Meetings are accessible to people 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 Bren Lehr, Board Clerk, at 831-641-7203 or [email protected]. If you have anything that you wish to be distributed to the Board please hand it to a member of MBCP staff who will distribute the information to the Board members and other staff.

1. Welcome & Roll Call 2. Consideration of Late Additions and/or Deletions to Consent and Regular Agendas 3. Oral Communications For Items Not on the Agenda

CONSENT AGENDA 4. Approval of Minutes from January 3, 2018 Operations Board Meeting (Action Item)

5. Approval of Minutes from January 20, 2018 Joint Operations and Policy Board Meeting

(Action Item)

6. Approve Administrative Policies and Procedures Related to Finance, Information Technology, and Human Resources (Action Item)

7. Authorize CEO to Execute Orders with the Del Gavio Group and the Appropriate Vendors to Furnish MBCP Office (Action Item)

8. Ratify and Affirm the Action Undertaken by the CEO to Execute a Congestion Revenue Rights Entity Agreement and Fund the Required Deposit of $500,000 with the California Independent System Operator (Action Item)

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9. Approval of Confirmation Agreement with PowerEx for Acquisition of Carbon Free and Type One Renewable Resources (Action Item)

REGULAR AGENDA

10. CEO’s Report (Discussion Item)

o Community Advisory Council, Next Steps o Enrollment Update o Short-Term Power Supply (Round 2) o Long-Term Renewable Acquisition Update o Formation of Energy Risk Management (ERM) o Marketing Update o Media/Press Protocols

11. Approval of Energy Risk Management Policy and Procedures (Action Item)

12. Forward Staff Recommendation to the Policy Board to Adopt Retirement Plan (Action

Item)

13. Approve Amendment to MBCP Initial Organization Chart, Hiring and Salary Schedule (Action Item)

14. Forward Staff Recommendation to the Policy Board to Adopt Rate Schedule to Compensate Net Energy Metering Customers for Excess Generation (Action Item)

15. Adjournment to Next Operations Board Meeting on April 4, 2018

Public records that relate to any item on the open session agenda for a regular board meeting are available for public inspection. Those records that are distributed less than 72 hours prior to the meeting are available for public inspection at the same time they are distributed to all members, or a majority of the members of the Board. Until MBCP has offices, the Board has designated the County of Santa Cruz General Services Department, located at 701 Ocean Street, Room 330, Santa Cruz, CA 95060 for the purpose of making those public records available for inspection. The documents are also available on the MBCP website located at: MBCommunityPower.org.

Monterey Bay Community Power [email protected]

Meeting of the Operations Board of Directors

Wednesday, January 3, 2018 at 9:00 a.m. City of Watsonville, Council Chambers

275 Main Street, Watsonville, CA 95076

MINUTES

1. The meeting was called to order at 9:07 a.m., with 8 members present and quorum established. Board members Present: Palacios, Dettle, Montoya, Goldstein, Bauman,

Long (arrived at 9:31 a.m.); Vice Chair Corpuz, Chair Mendez (arrived at 9:12 a.m.)

Board members Absent: McCarthy, Harvey, Espinosa Board member disqualified: None

2. There were no revisions added to the agenda. Board Clerk Bren Lehr announced that the first of four notification postcards were mailed this week to customers.

3. 2 people spoke during Oral Communications

CONSENT AGENDA

4. APPROVED the minutes from the December 6, 2017 Operations Board meeting, by unanimous vote. Motion: Bauman Second: Montoya

REGULAR AGENDA

5. CEO Tom Habashi discussed the latest updates on staffing and administration,

review of the Q1-Q3 board calendar, customer outreach and enrollment, CPUC Draft Resolution No. E-4907, and the December marketing activities. Discussion only – no vote

6. ADOPTED resolution approving MBCP’s Customer Confidentiality Policy “Notice for Accessing, Collecting, Storing, Using and Disclosing Energy Usage Information’ as articulated in the Policy document, by unanimous vote. Motion: Vice Chair Corpuz Second: Goldstein

7. CEO Tom Habashi and Shawn Marshall discussed and reviewed with board members the DRAFT January 20, 2018 workshop agenda. Discussion only – no vote

8. ADJOURNED at 10:02 am to next Operations Board meeting on February 7, 2018.


Special Joint Meeting of the Operations and Policy Board of Directors

January 20, 2018 - 8:30 am City of Watsonville, Community Room

275 Main Street, 4th Floor, Watsonville, CA 95076

MINUTES

1. The meeting was called to order at 8:37 a.m., with 7 members present on Operations Board and 9 members present on Policy board, and quorums established. Operations Board members Present: Palacios, Bernal, Montoya,

Bauman, Long; Vice Chair Corpuz; Chair Mendez

Operations Board members Absent: Goldstein, Harvey, Espinosa Operations Board member disqualified: None Policy Board members Present: Coffman-Gomez, Termini,

Parker, Haffa, Delgado, Orozco, De La Cruz; Vice Chair McShane, Chair McPherson

Policy Board members Absent: Brown, Friend Policy Board member disqualified: None

2. Guy Petraborg spoke during Oral Communications

CONSENT AGENDA

3. POLICY BOARD APPROVED the Contract with Estriatus Law PC for General Counsel Services, by unanimous vote. Motion: De La Cruz Second: Coffman-Gomez

4. OPERATIONS BOARD APPROVED the PG&E-MBCP EEI Master Cover Sheet & Collateral Annex, by unanimous vote. Motion: Vice Chair Corpuz Second: Montoya

REGULAR AGENDA

5. Kirby Dusel, Pacific Energy Advisors, Inc. discussed the California Energy Market including Basic Operation & Oversight, Generating & Delivering Electric Power, Energy Products & Services, Power Portfolio Accounting, Key Market Considerations & Statistics, and AB1110 Implementation & Greenhouse Gas (GHG) Accounting.

6. Tom Habashi, CEO and Shawn Marshall, Executive Director, Lean Energy

discussed the MBCP Strategic Plan including setting the context for the vision and budget, as well as goals and strategies to maximize GHG reduction, lower customer bills/costs, and invest in local energy programs.

7. Tom Habashi and Shawn Marshall, discussed the Community Advisory Group

and Key Customers Stakeholder Group.

6. ADJOURNED at 1:36 pm to the next Operations Board meeting on February 7, 2018 and the next Policy Board meeting on March 7, 2018.

Monterey Bay Community Power 70 Garden Court, Suite 300, Monterey, CA 93940 [email protected]

Staff Report Item 6

TO: MBCP Operations Board of Directors FROM: Tom Habashi, Chief Executive Officer SUBJECT: Approve Administrative Policies and Procedures Related to Finance and Information

Technology

DATE: February 7, 2018

RECOMMENDATION Staff recommends Operations Board approval of the following administrative policies and procedures: Administrative / Operations Policies 1. AD4 - Records Retention 2. AD5 - Delinquent Accounts and Collections 3. AD6 - Customer Generation Rates 4. AD7 - Prohibition Against Dissemination of Untrue or Misleading Information Financial Policies 1. FP1 - Reserve 2. FP2 - Debt Limitations 3. FP3 - Accounting 4. FP4 - Budget 5. FP5 - Capital Projects 6. FP6 - Purchasing Card 7. FP7 - Capitalization Information Technology 1. IT1 - Information Technology Security Board approval of these policies should guide the Authority’s in its conduct of day-to-day business operations. The Board may re-visit and amend these policies at its discretion.

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DISCUSSION Administrative / Operations Policies: AD4 – Records Retention The purpose of this policy is to provide guidelines for records retention and document control.

AD5 – Delinquent Accounts and Collections

The purpose of this policy is to provide guidelines for the determination of delinquent accounts. The table below illustrates the timeline PG&E currently uses for determining past due accounts, and taking the appropriate action:

All MBCP accounts (Residential, Commercial and Industrial) identified in the monthly aging accounts receivable report, as provided by PG&E, with outstanding balances of 60 days or more are eligible to be returned to PG&E. Closed accounts may be written-off.

AD6 – Customer Generation Rates The purpose of this policy is to establish a process for rate setting. i. Customer Generation Rates will be lower than the generation rates charged by Pacific Gas &

Electric (PG&E) to offset the inclusion of surcharges and Power Charge Indifference Adjustment exit fees.

ii. Future rate setting will include consideration of recovering full cost of operations, debt service, equity funding of capital investment, funding of reserve accounts, and any other current obligations.

iii. Rate adequacy review shall be conducted annually.

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Administrative / Operations Policies (continued): AD7 – Prohibition Against Dissemination of Untrue or Misleading Information The purpose of this policy is to provide guidelines to prohibit against dissemination of any statement related to MBCP’s CCA program that is known to be untrue or misleading. Financial Policies:

FP1 – Reserve

It is recommended that the Authority will retain its operating surplus (less cash rebates to customers and local programs) in calendar years 2018 and 2019 for the following primary purposes: 1) fund a rate stabilization reserve equivalent to 50% of year 2020 total expenditures; 2) retire all debt and lines of credit; and 3) fund a rate stabilization reserve.

FP2 – Debt Limitations

The purpose of this policy is to establish a process for consideration of long-term debt. i. Long-term debt will not be used to support operating expenses. ii. A ceiling of 10% of operating revenues is set against annual debt service expense.

FP3 – Accounting

The purpose of this policy is to document MBCP’s method of accounting, audit schedule and standards of internal controls. i. The policy defines that an independent firm of Certified Public Accountant (CPAs) shall

perform an annual financial audit and an official comprehensive financial report (CAFR) will be issued no later than 6 months following the fiscal year-end.

ii. Audit contracts shall be competitively bid every five years or sooner if desired by the Board. iii. Staff will establish internal controls procedures to protect the assets of MBCP and ensure

accurate financial reporting. iv. The Board of Directors may form a five-member advisory committee to serve as the Finance

and Audit Committee. The Committee shall provide an oversight function regarding MBCP’s financial reporting and effectiveness over internal controls.

v. Staff will present quarterly financial updates to the Board. FP4 – Budget

The purpose of this policy is to establish guidelines for the compilation, implementing, and monitoring of MBCP’s budget. i. Staff will prepare and submit to the Board of Directors a proposed budget for the following fiscal

year two months prior to the end of each fiscal year. ii. Staff is required to present a balanced budget that supports the strategic plan.

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Financial Policies (continued):

iii. The Board will engage in a Mid-Year review of the budget to evaluate any unanticipated revenues or expenses.

iv. As part of the budget process, staff will prepare a five-year forecast. FP5 - Capital Projects The purpose of this policy is to establish a process for approving capital projects. i. The Capital Project process will be integrated into the budget process and presented to the Board

for approval. ii. Staff will present semi-annual reports describing the status of ongoing capital projects. FP6 – Purchasing Card The purpose of the policy is to establish processes for the proper use of purchasing cards. FP7 – Capitalization The purpose of the policy is to providing guidelines for the proper recording of asset acquisitions greater than $1,000 with a useful life greater than one year. Information Technology: IT1 – Information Technology Security The purpose of this policy is to establish risk exposure and control guidelines for proper management of data and information that is required to support regulatory compliance, minimize legal liability, reduce the risk of criminal activity, and sustain stakeholder and customer satisfaction. ATTACHMENTS 1. AD4 - Records Retention 2. AD5 - Delinquent Accounts and Collections 3. AD6 - Customer Generation Rates 4. AD7 - Prohibition Against Dissemination of Untrue or Misleading Information 5. FP1 - Reserve 6. FP2 – Debt Limitations 7. FP3 - Accounting 8. FP4 - Budget 9. FP5 - Capital Projects 10. FP6 - Purchasing Card 11. FP7 – Capitalization 12. IT1 - Information Technology Security

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AD4 Category: ADMINISTRATIVE/OPERATIONS

RECORDS RETENTION POLICY

I. PURPOSE

The Agency will retain records in an orderly fashion for time periods that comply with legal and governmental requirements and as needed for general business requirements; to outline the methods for filing, retaining, and disposing of business records necessary to support our work (including opinions, resolution of differences, conclusions and research utilized in analysis), our correspondence with customers/clients, our work product and items of continuing significance.

II. SCOPE

This Policy applies to all business documentation generated by the Agency. However, this does not necessarily cover internal or certain day-to-day business correspondence. Drafts or other documents not utilized should not be retained. Documents and records transmitted as attachments via email should be considered separately from the email messages to which they are attached.

III. POLICY

A. FILING SYSTEM• To ensure efficient access, filing centers will be established at OneDrive – Monterey Bay

Community Power. To reduce the amount of duplicate and unnecessary recordretention, individual desk files should be avoided unless they are used in dailyoperations. All other departmental or agency records should be filed in thedepartmental central filing areas.

• The following filing guidelines should be adhered to optimize filing efficiency andrecords access:o All file cabinets and files should follow recognized rules of order, such as Left to

Right, Top to Bottom, Front to Back, and in the case of chronological records,Newest to Oldest.

ATTACHMENT 1

2 AD4

o Alphabetical files should always be filed under broad topical categories. Files shouldnever be filed under individual employee names (except Human Resources records)to avoid confusion and re-filing in the event of turnover. Files should always be filedunder the “proper” or agency names whenever appropriate. In the case ofindividuals, files should be maintained according to the person’s last name, then firstname and middle initial.

o Alphanumeric codes should be attached to colored end tabs of all file sets to showtype of file by subject area and sub-category. For instance, all files dealing withAccounting will have a green end tab on the lateral file folder with the alpha code ofAC followed by a three digit numeric code to designate the category (i.e. FinancialPlanning is AC-200, General Accounting is AC-300, Payroll is AC-340, etc.).

o Extra care should be used for sensitive or private information. Agency financial dataor personnel records that contain performance reviews, salary information, or anyhealth-related information should be kept in a secure area with limited access toonly those that have a “need to know”.

o Documents attached to and transmitted by email should be stored in machinereadable format in the Agency’s electronic document management system withinthe appropriate client folders.

B. RECORD RETENTION AND LONG-TERM STORAGE• Non-permanent files will be stored in cardboard file boxes. Each file box will be labeled

on the front with the contents, dates covered, and destruction date if applicable.Permanent records will be maintained in metal fire-resistant file cabinets.

• Files should be stored only in boxes with similar items, dates and retention periods. Thiswill allow easier access and purging of records. A general rule to keep in mind is that it isbetter to only half-fill a file box than to file dissimilar types of files in the same box.

• The Administrative Assistant will be responsible for categorizing and maintaining alisting of records maintained and the location.

• Maintain all files for as long as is necessary but only to the extent they serve a usefulpurpose or satisfy business or legal requirements. “Records Retention Periods” providesa guide.

C. RECORD DESTRUCTION• The Administrative Assistant will circulate a listing of file categories to be destroyed to

all employees 30 days prior to destruction, for review and comment. The actual listing ofrecords destroyed will be maintained permanently for future reference.

• 3 to 6 months after each year-end, the Administrative Assistant will proceed withdestruction of all files that have exceeded their recognized holding period.

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• Destruction of the files will be performed by an independent, outside service forshredding and disposal. Any paper with a social security number, a federal ID number,confidential information or sensitive data, or a client name on it must be destroyed inthis manner.

• Disposal of records into the Agency’s general trash service is not allowed• Electronic documents are destroyed by deleting them from the medium on which they

are stored, and then purging the medium itself.

IV. ATTACHMENTS1. Master File Guide Index2. Records Retention Periods

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MASTER FILE GUIDE INDEX

AC ACCOUNTING AC-100 Accounts Administration AC-200 Financial Planning AC-300 General Accounting AC-310 Checking Account Register AC-320 Accounts Payable AC-330 Accounts Receivable AC-340 Payroll AC-350 Local, State, Federal taxes AC-360 Banking Services AC-370 Fixed Assets AC-400 Employee Benefit Programs AC-500 Employee Expense Accounts AC-600 Agency Loan Management AC-700 Grants Account Management AC-800 Purchasing AC-900 Open

AD ADMINISTRATION AD-100 General AD-200 Organizational Manual AD-300 Organizational Charts AD-400 Agency Correspondence Manual AD-500 Policies and Procedures AD-600 Records Management and Retrieval AD-700 Chief Executive Officer Administrative Memorandums AD-800 Interoffice Staff Administrative Memorandums AD-900 Open

BU BUSINESS BU-100 Feasibility Study BU-200 Project Management BU-300 Business Executive Summaries

CS COMPUTER INFORMATION SYSTEMS CS-100 General CS-200 Equipment CS-300 Operation and Maintenance CS-400 Training in Systems Operation CS-500 Open

PS POWER SUPPLY PS-100 General

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PS-200 Contracts PS-300 Power Purchase Agreements PS-400 Risk Management PS-500 Request for Information PS-600 Request for Quote/Price PS-700 Open PS-800 Open

IN INSURANCE IN-100 General Administration of Insurance IN-200 Plant and Equipment Policies IN-300 Agency Officer Policies IN-400 Agency Vehicles Policies IN-500 Health Program Policies IN-600 Life Insurance Programs for Employees IN-700 Employment Coverage IN-800 Data Breach Coverage IN-900 Open

LG LEGAL LG-100 General LG-200 Reports LG-300 Contracts LG-400 Litigation LG-500 Disputes LG-600 Legal Personnel Issues LG-700 Agreements/Partnerships LG-800 Open

MA MARKETING MA-100 General MA-200 Reports/Studies MA-300 Marketing Plans MA-400 Customer Relations MA-500 Programs

OF OFFICE MANAGEMENT OF-100 General

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OF-200 Procedures OF-300 Equipment/Furnishings/Telecommunications OF-400 Information Processing/Communications Procedure OF-500 Property Lease/Management Agreement OF-600 Fax/Reproduction/Printing Procedures OF-700 Protocol to Visitors OF-800 Building Maintenance OF-900 Open

PE PERSONNEL PE-100 General PE-200 Reports PE-300 Employee Records PE-400 Organizational Charts PE-500 Recruiting PE-600 Training PE-700 Benefit Programs PE-800 Open PE-900 Open

PP PERMITS AND PLANS PP-100 Permits PP-200 Reports PP-300 Open PP-400 Open PP-500 Open

PR PUBLIC RELATIONS PR-100 General PR-200 Reports and Studies PR-300 Agency Releases PR-400 List of Industry Contacts PR-500 Open

RG REGULATORY DATA RG-100 General RG-200 Reports RG-300 Correspondence

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RG-400 Acts/Laws/Bills RG-500 Regulations RG-600 Agreements RG-700 Guidelines/Policies/Resolutions RG-800 Open

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RECORDS RETENTION PERIODS

Accident reports and claims (settled cases) 7 years

Accounts payable ledgers, schedules, and trial balances 7 years Accounts receivable ledgers, schedules, and trial balances 7 years Assignments 3 years Audit reports of accountants Permanently Bank reconciliations 2 years Bank statements, cancelled checks, and deposit slips 7 years Cash books Permanently Cash receipts and disbursements 7 years Chart of accounts Permanently Checks (cancelled, all other) 7 years Checks (cancelled, for important payments, i.e. taxes, property purchases, special contracts, etc. File checks with the transaction papers)

Permanently

Contracts and leases (expired) 7 years Contracts and leases still in effect Expiration +7 years Agency records and minutes Permanently Correspondence (legal and important matters only) Permanently Correspondence general 3 years CPE records 7 years Credit Applications (Business) 1 year (after notification) Depreciation schedules 7 years Duplicate deposit slips 1 year Electronic fund transfer documents 7 years Employee personnel records (after termination) 7 years Employment applications 3 years Equipment records & invoices 5 years (after disp) Expense reports, analyses and distribution schedules 7 years Expired contracts and notes receivable 7 years Expired purchase contracts 7 years Federal, state and local tax returns Permanently Financial statements (end-of-year trial balances) Permanently Fixed asset records and appraisals Permanently Forecasts & projections 7 years Forms W-4 7 years Garnishments 3 years General Ledgers (end-of-year trial balances) Permanently I-9s (after termination) 2 years Insurance records, current accident reports, claims, policies, etc. Permanently Interim and year-end financial statements and trial balances Permanently

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Invoices 7 years Journals Permanently Licenses Permanently Litigation support files 3 years Loan documents, notes Permanently Marketing publications, promotional brochures, newsletters & alerts 7 years Minute books of directors, including bylaws and charter Permanently Monthly trial balances Permanently Paid bills and vouchers 7 years Payroll journals 7 years Payroll records and summaries 7 years Payroll reports (federal & state) 7 years Physical inventory records 7 years Physical inventory tags 7 years Property records including costs, depreciation schedules, blueprints, plans

Permanently

Property titles and mortgages Permanently Purchase journals 7 years Purchase orders 7 years Receiving sheets 2 years Retirement plan (401 (a) plan info) Permanently Requisitions 7 years Sales journals 7 years Sales records 7 years Subsidiary ledgers 7 years Tax exemption documents, including application for exemptions Permanently Uncollectible accounts and write offs 7 years Vendors’ invoices & paid bills 7 years Voucher for payments to vendors, employees, etc. 7 years (includes all allowances and reimbursement of employees, officers) W-4 forms 4 years W-2 or 1099 forms 7 years Workman’s comp documents 11 years

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AD5

Category: ADMINISTRATIVE/OPERATIONS

DELINQUENT ACCOUNTS & COLLECTIONS POLICY I. PURPOSE To provide guidelines for the determination of delinquent accounts. II. BACKGROUND Pacific Gas & Electric (PG&E) issues bills to customers. Accounts become “past due” 18-22 days after the bill is issued. For residential customers, a 15-day notice is sent with the next bill, and the account becomes eligible for disconnection within 50-56 days from original bill issuance. For commercial customers, a 7-day notice is sent, and the account becomes eligible for disconnection after 32 days from when the bill was issued. III. POLICY All MBCP accounts (Residential, Commercial and Industrial) identified in the monthly aging accounts receivable report, as provided by PG&E, with outstanding balances of 60 days or more are eligible to be returned to PG&E. Closed accounts may be written-off.

ATTACHMENT 2

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AD6


CUSTOMER GENERATION RATES POLICY

1. MBCP will adopt identical rates as those offered by Pacific Gas & Electric (PG&E), net of surcharges and Power Charge Indifference Adjustment (PCIA) exit fees, in January 2018. To provide customers with cost parity in their monthly electric bill relative to PG&E service, MBCP rates must be lower than the generation rates charged by PG&E to offset the inclusion of certain surcharges or “exit fees” that PG&E will apply to MBCP customer bills. While we anticipate that revisions in PG&E generation rates will take place on January 1, 2018, the new PG&E rates will not be released to the public until the very end of December. PG&E may make additional rate changes during 2018. Therefore, MBCP rates will be adjusted prior to commencement of service to customers enrolled during Phase 1 and during the balance of 2018 in order to maintain general cost parity for customers enrolled in MBCP service. 2. For rate setting beyond 2018, electric rates shall be designed to generate sufficient revenue, after consideration of interest income and miscellaneous revenue, to support:

a. The full cost of operations b. Debt service c. Equity funding of capital investments d. Funding of reserve accounts e. Any other current obligations

3. In addition to these requirements, electric rates shall be designed to generate sufficient revenue, after consideration of interest income and miscellaneous revenue, to ensure a two-times (2.0x) minimum debt service coverage ratio. 4. A rate adequacy review shall be completed every five years.

ATTACHMENT 3

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AD7


PROHIBITION AGAINST DISSEMINATION OF UNTRUE OR MISLEADING INFORMAITON

1. Pursuant to the California Public Utilities Code Section 396.5 and as per the standards set

forth by CA Senate Bill 790 (2011), the Monterey Bay Community Power prohibits the dissemination of any statement related to MBCP’s CCA program that is known to be untrue or misleading, or that by exercise of reasonable care should be known to be untrue or misleading.

2. Dissemination by Monterey Bay Community Power (i.e. Board and Committee Members, and/or MBCP Staff, and/or MBCP representatives acting under MBCP authorization) of any statement relating to MBCP’s rates or terms and conditions of service that is untrue or misleading, and that is known, or that by the exercise of reasonable care, should be known, to be untrue or misleading is strictly prohibited. Individuals who violate this Policy may be subject to corrective action.

ATTACHMENT 4

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FP1

Category: FINANCE

RESERVE POLICY

I. PURPOSE Adequate Reserves will enable the Authority to satisfy working capital requirements, procure energy at competitive rates, adhere to loan covenants, cover unanticipated expenditures, and support rate stability. II. POLICY

1. The Authority will retain its operating surplus (less cash rebates to customers and local programs) in calendar years 2018 and 2019 to:

a. Fund a Working Capital Reserve equivalent to 50% of year 2020 total expenditures, including cost of energy and operations & administrative expenses; and

b. Retire all debt and lines of credit; and c. Fund a Rate Stabilization/Contingency Reserve to mitigate rate increases due to

volatility in the power markets, Power Charge Indifference Adjustments (PCIA), and economic downturns.

2. Authority to spend from reserves must align with Board approved Budgets. 3. Staff will review the Reserve Policy annually to ensure it meets the needs of the agency.

ATTACHMENT 5

FP2

Category: FINANCE

DEBT LIMITATIONS POLICY

1. Capital projects funded through the issuance of bonds or other forms of debt instruments shall be financed for a period not to exceed the expected useful life of the project and in no event shall it exceed 30 years.

2. All professional service providers (underwriters, financial advisors, bond insurers, etc.) shall be competitively bid and will require a request for proposal process unless waived by the Board of Directors.

3. Long-term debt or bond financing shall not be used to support operating expenses.

4. Total annual debt service expense shall not exceed 10% of operating revenue. The

percentage should be reviewed annually.

5. The Board of Directors may consider the cost/benefit to the Authority of using lease purchase agreements to finance capital projects that would otherwise be financed through an annual appropriation of Authority funds.

6. Reserve accounts shall be maintained as required by bond requirements and where

deemed advisable by the MBCP Board. The Authority shall structure such debt service reserves so that they do not violate IRS arbitrage regulations.

7. Ongoing routine, preventive maintenance should be funded on a pay-as-you-go basis.

ATTACHMENT 6

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FP3

Category: FINANCE

ACCOUNTING POLICY I. PURPOSE The purpose of this policy is to document the Authority’s method of accounting, audit schedule and standards of internal controls. II. POLICY

1. The Authority will establish accounting practices that conform to Generally Accepted Accounting Principles (GAAP) for governmental entities.

2. An independent firm of Certified Public Accountant (CPAs) shall perform an annual financial audit and an official comprehensive annual financial report (CAFR) shall be issued no later than 6 months following fiscal year-end.

3. Audit contracts shall be competitively bid at least every five years, or sooner as desired

by the Board. Staff will present the process and the results of its screening and selection process of the external auditor to the MBCP Board.

4. Quarterly, the Authority’s Accounting Statements including a Balance Sheet, a Profit and

Loss Statement and a Supplementary Schedule of Capital Projects shall be submitted to the MBCP Board of Directors.

5. Internal control procedures consistent with Section 404 of Sarbanes Oxley Act, shall be

developed and routinely updated to ensure accurate financial reporting and an effective internal control structure over the assets of the Authority.

6. The MBCP Board of Directors may form a five-member advisory committee to serve as

the Finance and Audit Committee. The committee primarily will be engaged in an oversight function regarding the Authority’s financial reporting processes and the effectiveness over internal controls. The audit committee, consistent with the Sarbanes

ATTACHMENT 7

2 FP3

Oxley Act, shall have Board member representation only. The external auditor shall report results directly to the Audit Committee.

7. A management letter, the by-product of an annual audit, shall be presented to the

MBCP Board by the independent certified public accounting firm no later than 60 days from issuance of the Authority’s CAFR. The Board shall have final approval over the audit.

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FP4

Category: FINANCE

BUDGET POLICY

1. The Chief Executive Officer shall prepare and submit to the Board of Directors a proposed Budget for the following fiscal year two months prior to the end of the fiscal year. The Authority’s Budget shall be in alignment with the Strategic Plan. The Authority’s Budget reflects all activities, including operating and capital programs expenditure.

2. The Chief Executive Officer shall submit a recommended budget for adoption to the

Board of Directors in the month following the proposed budget submittal.

3. The annual budget shall be balanced. A balanced budget exists when Total Revenue is greater than or equal to Total Expenditures. Total Revenues shall include all revenues from retail and wholesale sales of electricity, return on investments and withdrawals from reserve funds. Total expenditures shall include all operating expenses and capital programs. Any increase in expenditures or decrease in revenues that would cause the budget to become imbalanced and would require a budget revision is subject to Board approval. Any year-end surplus will be used to maintain reserve levels with the balance available for capital projects, debt reduction and/or one-time-only expenditures.

4. Staff will prepare a five-year financial forecast annually projecting revenues and

expenditures for all operating funds and capital projects. The forecast shall be used as a planning tool in developing the following year’s budget.

5. The Chief Executive Officer shall submit revenue and expenditure projections to the Board of Directors on a quarterly basis unless there are changes in those projections that significantly impact the financial status of the Authority in which case, the Board of Directors will be informed at the next Regular or Special Meeting of the Board.

ATTACHMENT 8

2 FP4

6. The Board of Directors shall approve an amended appropriations resolution at the Mid-Year review period, or quarterly if necessary, to authorize the receipt and expenditure of funds unanticipated in the Authority’s Budget.

7. Any expenditure in excess of the authorized total Authority Budget shall require prior approval by the Board of Directors. The Chief Executive Officer shall establish procedures to ensure that proper controls are implemented for all Authority expenditures.

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FP5 Category: FINANCE

CAPTIAL PROJECTS POLICY

1. Capital Project Approval Authoritya. The Chief Executive Officer shall submit to the Board of Directors at the time he/shesubmits the Budget a proposed capital budget that identifies all capital projects, their scopeand amount for the Budget approval.

2. The Chief Executive Officer, in the preparation of the capital budget, shall evaluate allCapital projects based upon, but not limited to, the following criteria:a. The benefit to the Authority, including the effect on future operating costs and

revenues;b. The effect on operations and reliability;c. The life of the asset;d. The total project costs and schedule for completion;e. The consequences of not funding the Capital project;f. The sources of funding;g. The ongoing impact to the operational budget.

3. Only those operating, administrative, maintenance and interest expenses incurred prior toactual completion of the capital improvement shall be included in the capital budget. Aftercompletion of the capital project, such costs shall be included in the operating budget.

4. The Chief Executive Officer shall provide to the Board of Directors a semi-annual CapitalProjects Report during the mid-year review, describing the status of ongoing capitalprojects.

ATTACHMENT 9

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FP6

Category: FINANCE

PURCHASING CARD POLICY

1. Purchasing Cards or P-Cards, are credit cards issued to authorized employees to make purchases for the Authority. The proper use of P-Cards helps our business operate more efficiently and reduce costs.

2. Purchasing Cards will have a monthly cardholder limit of $3,000.

3. Purchasing Cards will be issued to the Chief Executive Officer, Board Clerk, MBCP Directors, and Key Account Manager.

4. Purchasing Cards may not be used to purchase temporary or contract labor which

requires 1099 reporting.

5. In every case of credit card usage, the individual charging an account will be held personally responsible in the event that the charge is deemed personal or unauthorized.

6. Authorized Card Use:

a. Only Cardholders are authorized to use P-Cards. b. P-Card authority cannot be delegated. c. Cardholders are responsible for all use of their P-Card. d. All purchases much comply with the purchasing, purchase order, travel, and

accounts payable procedures. e. Authorized purchases include:

i. The P-Card may be used for small purchases of supplies or services acquired through a purchase order or regular order or an individual order where the contract specifically allows such payment method.

ii. Designated representatives who travel on Authority business may use the P-Card for authorized travel expenses.

ATTACHMENT 10

2 FP6

7. Unauthorized P-Card Uses: a. Cash advances of any type are prohibited. b. P-Cards shall not be used for personal purchase. c. Personal or non-business expenditures of any kind are prohibited. d. Meals, entertainment, gifts or other expenditures which are prohibited by:

i. Authority budget and/or policies i. Federal, state, or local laws or regulations.

ii. Grant conditions or policies of the entities from which we receive funds. 8. Cardholder Recordkeeping:

a. Every instance of credit card or other purchase must be documented with travel authorizations, receipts, nature of business, etc., before the expense will be considered authorized and will be approved for reimbursement. b. Cardholders are responsible for retaining the documentation necessary for proof of purchase. This includes the invoice, shipping documents, and “Customer Copy” of the charge receipts.

9. Monthly Statement Review:

a. All Cardholders much check each transaction against the purchasing log and supporting documentation. The original documents shall be attached to the monthly statement. b. Any transaction with missing documentation requires a written explanation for the missing documentation. Include the vendor name, date, description of purchase, and reason for the missing documentation. c. The Finance Department will review purchasing logs for completeness and process payment upon signature from the Chief Executive Officer. The Chief Executive Officer’s purchasing log shall be reviewed and signed by the Director of Internal Operations.

10. Returns are the responsibility of the Cardholder. Returns must be noted on the P-Card log and shipping documentation attached to the monthly statement review. 11. Disputes much be noted on the P-Card log.

12. If the Card is lost or stolen, it is important for the Cardholder to immediately notify the

designated individual in the Authority.

1

FP7

Category: FINANCE

CAPITALIZATION POLICY I. PURPOSE To capitalize and depreciate MBCP assets with a useful life expectancy of greater than one year and cost greater than $1,000. II. SCOPE All acquisitions of capital assets for the Agency. III. DEFINITIONS Capitalization is the method chosen to record the purchase of fixed assets on MBCP’s accounting books. If an asset is capitalized then it is not expensed in the same year the asset is purchased. Instead, the asset is generally recorded on the balance sheet and individually on an asset schedule. Examples of capital expenditures are purchases of office equipment, furniture, and vehicles. The asset is expensed each year as depreciation. IV. POLICY

• Except for land, all assets with a useful life of greater than one year and costing more than $1,000 will be capitalized and will be recorded in the depreciation records. Any asset that does not meet the above criteria will be expensed, such as small equipment or repairs and maintenance.

• The cost basis of furniture and equipment assets will include all charges relating to the purchase of the asset including the purchase price, freight charges, and installation, if applicable.

• Leasehold improvements, including painting, are to be capitalized if they relate to the

occupancy of a new office or a major renovation of an existing office. Expenditures incurred in connection with maintaining an existing facility in good working order should be expensed as a repair.

ATTACHMENT 11

2 FP7

• The following lifespan table should be used as a guide for the following asset classifications for financial reporting and depreciation purposes:

Property Asset Description 3-year property Computer software, hardware and office machinery 5-year property Automobiles 7-year property Office furniture and fixtures

1

IT1 Category: INFORMATION TECHNOLOGY

INFORMATION TECHNOLOGY SECURITY I. BACKGROUND Information technology (“IT” or “Information”) is a critical Monterey Bay Community Power (MBCP) asset and will be managed to ensure that it remains complete, accurate, confidential, and available only for authorized business activities. Proper management of data and information is required to support regulatory compliance, minimize legal liability, reduce the risk of criminal activity, and sustain stakeholder and customer satisfaction. II. POLICY Risk Exposure and Controls: MBCP is dependent on information technology to conduct its business operations. All MBCP staff are responsible for reporting to management any non-compliance of this policy. MBCP will make information technology accessible only to authorized employees or designated vendors as needed and such information shall only be used for authorized agency purposes. To ensure protection of information technology, operational guidelines will be put in place for employees and designated vendors which adhere to the principles below: 1. Access to specific information technology is to be assigned to MBCP employees or

designated vendors with the minimum level of access necessary to perform respective responsibilities.

2. Access to information technology will be made available only to the extent necessary to support authorized business functions.

3. Security systems will be structured with multiple layers of security, including physical, network, host, and personnel security measures.

4. The degree of information security protection is to be commensurate with the impact of inadvertent or intentional misuse, improper disclosure, damage or loss.

5. Adequate controls will divide sensitive duties among more than one individual to provide checks and balances that help insure operational guidelines are followed.

6. Security is not an optional component of operations. All MBCP staff and designated vendors are required to protect information. All staff and designated vendors that use or have access to MBCP information technology are personally responsible for exercising the proper control over information according to the operational guidelines provided to them.

7. Operational guidelines for treatment of information technology are subject to change as needed to protect MBCP and its customers based on any changes in systems, threats, and practices.

ATTACHMENT 12


Staff Report Item 7

TO: MBCP Operations Board of Directors FROM: Tom Habashi, Chief Executive Officer SUBJECT: Authorize CEO to Execute Orders with the Del Gavio Group and the Appropriate Vendors

to Furnish MBCP Office DATE: February 7, 2018

RECOMMENDATION

Authorize the CEO to execute orders for goods and services with the Del Gavio Group and the appropriate vendors, not exceeding $250,000 through September 30, 2018, to furnish the MBCP offices. BACKGROUND

In November 2017, the Board authorized the lease of office space for MBCP, located at 70 Garden Court in Monterey. Tenant improvements on the space are complete, providing space for approximately 25 staff and a board room hosting approximately 60 people during monthly Board meetings. In September 2017, the Board authorized the CEO to execute agreements for goods and services up to $100,000. The cost of completing the MBCP office exceeds $100,000 and requires Board approval. ANALYSIS & DISCUSSION

Staff have begun work with the Del Gavio Group to design and furnish the MBCP office. Del Gavio was recommended by the City of Sunnyvale as they have previously done work to furnish or renovate offices for Sunnyvale. Additionally, they have relationships with various furniture manufacturers and retailers to efficiently order and install office furniture. Work completed to date includes office layout and design, furniture and appliance selection, quick ship purchase and installation of furniture for ten of the interior offices, for a total not exceeding $100,000. Furnishing the whole MBCP office is estimated to cost $250,000, including the smaller order already placed. This will include furnishings for 1 large board room, 13 offices, 2 conference

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rooms, 10 cubicle workstations, a break room, a reception and lobby area, and general filing and storage needs. This recommendation will also include purchasing of video displays, video control processing and recording equipment, audio systems, and hardware and service for furnishing the board room, which is being done concurrently through appropriate vendors. Completion of the full office is expected by the end of March 2018. The cost estimate includes design, furniture, equipment, delivery, and installation. ATTACHMENTS

1. MBCP Office Layout 2. Board Room Layout

ATTACHMENT 1

ATTACHMENT 2


Staff Report Item 8

TO: MBCP Operations Board of Directors FROM: Tom Habashi, Chief Executive Officer SUBJECT: Ratify and Affirm the Action Undertaken by the CEO to Execute a Congestion Revenue

Rights Entity Agreement and Fund the Required Deposit of $500,000 with the California Independent System Operator


RECOMMENDATION Ratify and affirm the action undertaken by the CEO to execute a Congestion Revenue Rights Entity Agreement and fund the required deposit of $500,000 with the California Independent System Operator.

BACKGROUND & DISCUSSION MBCP is entitled to receive an allocation of valuable market instruments known as Congestion Revenue Rights (CRRs) from the California Independent System Operator (CAISO). CRRs offset congestion costs associated with scheduling energy in the CAISO markets. If the congestion costs are positive along a transmission path covered by a CRR, the CRR will result in a credit to its holder; if congestion costs are negative, the CRR will result in a charge to its holder. In this way, CRRs can hedge MBCP’s congestion cost exposure. Under CAISO rules, load serving entities such as MBCP are able to request an allocation of CRRs on a monthly and annual basis based on the amount of load served. MBCP is also eligible to receive a transfer of CRRs from PG&E through the CAISO load migration process. The staff has begun the process of applying to become a CRR entity with CAISO. In order to obtain CRRs, MBCP will need to execute a CRR Entity Agreement with CAISO and meet certain minimum market participation standards, as follows:

• Financial standards: MBCP to post a $500,000 collateral deposit with CAISO until it achieves $10 million in assets or $1 million in net assets. After at least one of the asset thresholds is met, the $500,000 deposit will be refunded to MBCP. MBCP has an available non-revolving credit line with River City Bank that can be drawn upon to fund the required desposit.

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• A Risk Management Policy: This Policy has been developed by our Scheduling Coordinator and CRR management service provider (The Energy Authority).

There is a minimum 90-day lead time from when the CRR Agreement is executed and when MBCP will receive CRRs. Assuming the application is completed in Janauary, MBCP can obtain CRRs beginning in May. FISCAL IMPACT MBCP will deposit $500,000 with CASIO. That deposit will be returned once MBCP has $1 milion in net assets, expected by June 2018. CRR may render MBCP several millions of dollars annually.

CONCLUSION Ratifying and affirming the CEO authority to execute the CRR Entity Agreement and fund the required deposit, will allow MBCP to obtain these benefits at the earliest opportunity.


Staff Report Item 9 TO: MBCP Operations Board of Directors FROM: Tom Habashi, Chief Executive Officer SUBJECT: Approval of Confirmation Agreement with PowerEx for Acquisition of Carbon Free

and Type One Renewable Resources DATE: February 7, 2018

RECOMMENDATION Staff recommends that the MBCP Operations Board authorize the Chief Executive Officer to execute confirmation agreements, with terms consistent with those contained in the attached forms, with Powerex Corporation. BACKGROUND & DISCUSSION On January 19, 2018, MBCP issued a request for proposals for power supply, including conventional energy hedges, renewable energy, and carbon free energy. Powerex Corporation and MBCP entered into power supply agreements in November and December 2017 (EEI Master Agreement and confirmation agreements) as part of MBCP’s initial power supply and scheduling coordinator services solicitation process. Since the initial solicitation process, Powerex has made some structural changes to the standard form of its confirmation agreements; changes that require MBCP Operations Board approval. MBCP is utilizing the same EEI Master Agreement that was approved by the MBCP Operations Board in November 2017. Assuming the approval of the carbon free confirmation agreement and renewable energy confirmation agreement, MBCP would be able to transact with Powerex. FISCAL IMPACT Approval of these agreements has no fiscal impact, although, it may lead to savings provided that PowerEx make favorable offers for the second round of energy trades

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CONCLUSION Approval of the attached confirmation agreements will establish the ability for MBCP to execute confirmations for the purchase of carbon free and renewable energy products from Powerex going forward. ATTACHMENTS

1. MBCP-PPC-1 Confirmation – Template (2018-2021 RFP) 2. MBCP-Carbon Free Energy Confirmation – Tempalte (2018-2021 RFP)

AGREEMENT BETWEEN Powerex Corp. * and Monterey Bay Community Power Authority

Powerex Deal No. __________________

This document (“Confirmation” or “Agreement”) confirms the agreement reached on the Trade Date between Powerex Corp.* (“Powerex” or “Seller”) and Monterey Bay Community Power Authority, a California joint powers authority (“MBCPA” or “Buyer”) regarding the sale and purchase of the Product in accordance with the EEI Master Power Purchase and Sale Agreement dated as of November 28, 2017, together with any and all exhibits, schedules or supplements thereto or incorporated therein by reference, each in force and effect from time to time between the Parties and as amended and supplemented by this Confirmation (collectively, the “Master Agreement”) under the following terms and conditions. Consistent with Section 2.2 of the Master Agreement, this Confirmation, together with all other transactions, confirmations and the Master Agreement, form a single integrated agreement between the Parties and are not separate contracts.

Seller: Powerex

Buyer: MBCPA

Trade Date: [●]

Transaction: This Transaction is for Buyer to procure Bundled Renewable Energy, all in accordance with the terms and conditions of this Confirmation.

Generation Term: For the purposes of this Confirmation and the Bundled Renewable Energy to be delivered pursuant hereto, the generation term for Bundled Renewable Energy is [●], to [●], inclusive.

Product: “Bundled Renewable Energy”, which is comprised of energy generated by the Project(s) and the associated Green Attributes.

Delivery: The Parties recognize that a schedule of energy to the CAISO Balancing Authority is a delivery to the CAISO and not directly to Buyer. Scheduling Energy to the CAISO Balancing Authority shall constitute delivery of Bundled Renewable Energy to Buyer, provided the WREGIS Certificates evidencing the Green Attributes comprised in the Bundled Renewable Energy are delivered to Buyer as provided in this Confirmation.

Energy

Buyer elects to take delivery of the energy by either Delivery Method 1 (Category 1 Product) or Delivery Method 2 (Category 2 Product), or both, as specified under the “Contract Quantity” section. The Parties intend that the Product as procured by Buyer and as delivered by Seller in accordance with (i) Delivery Method 1 will meet the Category 1 Eligibility Requirements and (ii) Delivery Method 2 will meet the Category 2 Eligibility Requirements.

Restrictions on Substitute Energy

Seller will not deliver Substitute Energy to Buyer that must be reported to CARB pursuant to Section 95852(b)(1) of the Cap and Trade Regulations as imported

ATTACHMENT 1

2 electricity from a Specified Source using nuclear-powered or coal-fired generation technology.

Green Attributes

Green Attributes to be delivered to Buyer hereunder shall be represented by WREGIS Certificates. Seller shall use WREGIS to transfer title to the Green Attributes to Buyer. The transfer of WREGIS Certificates through WREGIS shall be deemed to transfer title to all of the Green Attributes associated with the Product. Due to WREGIS Timelines, completion of delivery of the Green Attributes may occur after the Generation Term or Generation Sub-term, as applicable, however such delay shall not constitute a failure to deliver the WREGIS Certificates by Seller. Seller will match WREGIS Certificates with e-Tags prior to transferring WREGIS Certificates to Buyer (unless there are no e-Tags associated with the Energy delivery).

Contract Quantity: During the Generation Term, Buyer shall procure [●] MWh of Bundled Renewable Energy from Seller (“Contract Quantity”) to be delivered by Seller in accordance with the Delivery Method Election elected by Buyer in the table below:

Delivery Method Election

Quantity (MWh)

Delivery Method / Category Product

[●] “Delivery Method 1” – (Category 1 Product) – Energy directly delivered from the Project on an hourly, sub-hourly or real-time basis to the Delivery Point without substituting electricity from another source (“Project Energy”).

[●] “Delivery Method 2” – (Category 2 Product) – Energy generated by a source other than the Project, delivered to the Delivery Point in substitution for, and in an amount matching the amount of, Project Energy (“Substitute Energy”).

If both boxes are checked, Buyer is deemed to have selected a combination of Delivery Method 1 and Delivery Method 2 as detailed above.

Energy Delivery Profile

The Energy shall be delivered by Seller in compliance with the applicable minimum and maximum amounts for each Generation Sub-term as set forth in the table below. For greater certainty, Seller’s delivery obligations shall be based on delivery of the minimum amounts specified for each Generation Sub-term and delivery of the Contract Quantity for the Generation Term.

3 Generation Sub-term Category 1 Product

(MWh) Category 2 Product

(MWh) Minimum Maximum Minimum Maximum [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●] [●]

Seller may schedule or cause to be scheduled the Energy during any or all hours in the Generation Term.

Contract Price: In this Confirmation,

“CAISO Credit” means the Energy Price paid by the CAISO for the Energy.

“Category 1 GA Price” means: $[●]/MWh for each MWh of the Category 1 Product delivered to Buyer.

“Category 2 GA Price” means: $[●]/MWh for each MWh of the Category 2 Product delivered to Buyer.

“Energy Price” means, for each MWh of Energy delivered, the applicable Locational Marginal Price, as defined in the CAISO Tariff and published by CAISO, at the CAISO Point where CAISO models the physical injection of such Energy.

“GA Price” means the Category 1 GA Price or the Category 2 GA Price, as applicable.

For each MWh of Category 1 Product or Category 2 Product delivered to Buyer, the Contract Price shall consist of the sum of the Energy Price and the applicable GA Price, less the CAISO Credit, calculated as follows:

Contract Price = (Energy Price + applicable GA Price) - CAISO Credit

Facilities: Bundled Renewable Energy procured under this Confirmation will be generated by one or more of the facilities listed in Schedule “A”. For the purposes of delivering Category 1 Product, Seller may add additional facilities from time to time by providing Buyer with an updated Schedule “A” (with additional facilities listed in Part B) which shall replace the existing Schedule “A” to this Confirmation.

Delivery Point: Seller may deliver Energy to any CAISO Point. For greater certainty, in the event

an e-Tag includes more than one CAISO Point, the Delivery Point shall be the last point of delivery (POD) or “sink” CAISO Point on such e-Tag.

Scheduling, Tagging and WREGIS Transfers:

Scheduling

Seller shall schedule or cause to be scheduled, at its sole discretion, Energy to the CAISO Balancing Authority on a day-ahead, hour-ahead, sub-hourly and/or real-time basis.

4 All Energy shall be scheduled in accordance with Generally Accepted Utility Practice.

E-tagging

Seller shall generate all e-Tags required to schedule the Energy to the Delivery Point and such e-Tags will be in accordance with generally accepted e-tagging practices and standards in the WECC region. For greater certainty, no e-Tags will be generated for deliveries from a Project within the CAISO Balancing Authority. Each e-Tag will include the following, depending on the Category Product:

E-Tag Location Category 1 Product Category 2 Product

Last CA (Control Area) under ‘Physical Path’

CAISO Balancing Authority

CAISO Balancing Authority

First ‘POR/ POD’ under ‘Physical Path’

A single Project No Requirement

Last or ‘sink’ PSE (Purchasing Selling Entity) under ‘Physical Path’

[●] [●]

Misc(Token/Value) field

RPS ID for that Project One or more, up to a maximum of ten, of the RPS ID numbers for the Projects

Comment field [Insert any requirements] [Insert any requirements]

WREGIS Transfers

WREGIS Certificates will be transferred to Buyer following applicable WREGIS Timelines. WREGIS Certificates will be transferred to the WREGIS account named [●].

Invoicing and Payment:

For the purposes of this Transaction, invoicing and payment for Energy and Green Attributes delivered to Buyer shall be in accordance with Article 6 of the Master Agreement. The CAISO Credit will be reflected in the Energy invoice. The Parties acknowledge that invoicing and payments for the Energy may not occur in the same month as invoicing and payments for the Green Attributes associated with such Energy due to the delivery of the Green Attributes following WREGIS Timelines.

Seller’s invoices may be delivered by email from Seller to Buyer.

SPECIAL CONDITIONS 1. Definitions. The defined terms in Schedule “B” shall apply to this Confirmation.

2. Eligibility Requirements. If, at any time, a Category Product does not meet the applicable Eligibility Requirements (a “Failing Category Product”), it shall not be an Event of Default for

5 the purposes of the Master Agreement. If a Failing Category Product does not meet or satisfy the Eligibility Requirements for any reason other than a Buyer Eligibility Failure, a Seller Eligibility Failure or Force Majeure, the following shall apply:

(a) the Parties will negotiate in good faith using commercially reasonable efforts to revise or amend this Confirmation as appropriate so that the Failing Category Product meets or satisfies the applicable Eligibility Requirements in a manner consistent with the intent of the Parties as set out in this Confirmation.

(b) If the Parties are unsuccessful in revising or amending the Confirmation as provided in (a) above:

(i) the Parties will have no liability to each other for any failure to schedule, deliver or purchase the Failing Category Product that is not then delivered (provided, for greater certainty, that Buyer shall remain liable for any Green Attributes associated with Energy already delivered to Buyer); and

(ii) either Party may, by written notice to the other, immediately terminate the Transaction, without penalty, termination payment or liability of either Party to the other except as provided in sub-paragraph (i) above.

3. Failure to Deliver/Receive. For purposes of this Transaction, the determination of the Replacement Price and Sales Price shall be based on the energy and Green Attributes components of the Product and damages will be calculated in a commercially reasonable manner consistent with Article 4 of the Master Agreement. For greater certainty: (i) any quantity of Category Product that does not meet or satisfy the applicable Eligibility Requirements as a result of a Seller Eligibility Failure shall be considered a failure to deliver by Seller, and (ii) Seller shall not be liable to Buyer for any quantity of Category Product that does not meet or satisfy the applicable Eligibility Requirements as a result of a Buyer Eligibility Failure.

4. Waived Shortfall – Category 2 Product. If Seller reasonably anticipates that it will be unable to deliver the required quantity of Category 2 Product with respect to any Generation Sub-term or the Generation Term, Seller may provide written notice to Buyer on or before sixty (60) days prior to the end of the applicable Generation Sub-term and, upon Buyer’s receipt of such notice, the Parties will negotiate in good faith using commercially reasonable efforts to determine whether Seller may deliver a product comparable to the Category 2 Product generated by or attributable to an Alternate Eligible Facility or Alternate Source (“Alternate Supply”). If the Parties mutually agree to such arrangements for Alternate Supply, they will enter into a separate agreement respecting same and Buyer will waive the shortfall and any related liquidated damages that may otherwise be payable pursuant to this Confirmation for the amount of such Alternate Supply.

5. Force Majeure. For purposes of this Transaction, the Products shall be subject to Force Majeure and Section 3.3 of the Master Agreement. For greater certainty, a change in law shall not be an event of Force Majeure for the purposes of this Transaction. The Master Agreement is hereby amended by editing paragraph (iii) of the definition of Force Majeure in Section 1.23 to read as follows:

“the loss or failure of Seller’s supply, except, with respect to the Green Attributes, to the extent Seller’s supply is itself subject to an event of Force Majeure;”

6. Events of Default; Remedies. For purposes of this Transaction:

(a) For the purposes of determining payments under Section 5.2 of the Master Agreement, with respect to this Transaction, the economic benefits or losses of the Non-Defaulting Party resulting from termination of this Transaction shall be based on the energy and Green Attributes components of the Product.

6 (b) The remedies for failure to deliver the Product (including Green Attributes) provided for

in the Master Agreement as amended by this Confirmation are the sole and exclusive remedies and all other remedies are waived.

7. Importer of Energy/Compliance Obligation. For any Energy imported into California, Seller will be the electricity importer into California for purposes of the Cap and Trade Regulations. The Parties acknowledge that Seller will be responsible for satisfying the Compliance Obligation under the Cap and Trade Regulations associated with the energy which Seller shall schedule and import into the CAISO Balancing Authority as part of the Product to be delivered under this Confirmation and that Seller may and shall have the right to claim that any Energy that Seller has scheduled and imported into the CAISO Balancing Authority is from a Specified Source and claim the RPS Adjustment with respect to Substitute Energy. Buyer agrees to assist Seller in making the Specified Source and RPS Adjustment claims, including agreeing as follows:

(a) Specified Source – Category 1 Product. Buyer agrees, by May 15 following the end of each calendar year in the Generation Term, to provide Seller with a written attestation providing a detailed breakdown of the total quantity of WREGIS Certificates transferred under this Confirmation associated with the Category 1 Product that have been placed in a WREGIS retirement subaccount and those that remain in a WREGIS active subaccount and the name of each such account.

(b) RPS Adjustment – Category 2 Product. Buyer agrees to provide Seller with the information required by Seller for the purpose of claiming the RPS Adjustment including, but not limited to, providing by May 15 following the end of each calendar year in the Generation Term a written attestation to Seller that the quantity of WREGIS Certificates transferred under this Confirmation associated with the immediately previous calendar year in the Generation Term as Category 2 Product have been placed in Buyer’s WREGIS retirement subaccount and that the RECs represented by such WREGIS Certificates have been designated for retirement for the purposes of Buyer’s compliance with the California RPS Program for the applicable year in the Generation Term in accordance with the Cap and Trade Regulation (and shall promptly notify Seller of any changes (e.g. subsequent withdrawal of WREGIS Certificates from Buyer’s WREGIS retirement subaccount) after delivery of the attestation with information as may be required by Seller to comply with Section 95111.g.1.M.2 of the Mandatory Reporting Rule (or any similar or successor provision)).

(i) In the event Buyer re-sells Category 2 Product, Buyer shall continue to provide the attestation provided in this Section 7(b) and references to “Buyer’s WREGIS retirement subaccount” and “Buyer’s compliance with the California RPS Program” shall be read to include the subsequent purchaser’s WREGIS retirement subaccount and compliance with the California RPS Program.

(ii) If Seller does not meet the conditions for the RPS Adjustment as a result of any act or omission of Buyer (including failure to place WREGIS Certificates in Buyer’s own WREGIS retirement subaccount and designate the RECs represented by the WREGIS Certificates for retirement for the purposes of Buyer’s own compliance with the California RPS Program), Buyer shall reimburse or pay Seller the cost of Allowances (as defined in Cap and Trade Regulation 95802(a)(8)) purchased or required by Seller as a result of Seller’s inability to claim the RPS Adjustment, at the price established at the next succeeding auction of Allowances hosted by CARB or, failing which, prevailing market prices.

This Section 7 is based on the Cap and Trade Regulations and Mandatory Reporting Rule as of the Trade Date of this Confirmation. In the event that the regulatory requirements for mitigating the Compliance Obligation change after the Trade Date, Buyer shall make commercially reasonable efforts to assist Seller in meeting such regulatory requirements. This provision shall survive expiry

7 or earlier termination of this Transaction until such time as the information contemplated herein in respect of the last year of the Generation Term is provided to Seller by Buyer.

8. Resale. In the event all or any portion of the Category Product(s) purchased or to be purchased by Buyer hereunder is re-sold by Buyer, any such resale does not affect Buyer’s obligations hereunder and Buyer remains primarily liable to Seller for all Buyer’s obligations hereunder.

9. Standard/Non-Modifiable Terms and Conditions.

(a) 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]

(b) Seller shall be responsible for ensuring that: (i) each Project is certified as an eligible renewable energy resource for the California RPS Program prior to delivery of Category 1 Product or Category 2 Product hereunder from such Project; and (ii) the Green Attributes have been or will be transferred to Seller and will be transferrable to Buyer through or using WREGIS, or such similar generation information or attributes tracking system as may be approved by or other method of transfer acceptable to the Energy Commission;

(c) 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];

(d) Seller hereby provides and conveys all Green Attributes associated with all electricity generation from the Project to Buyer as part of the Product being delivered. Seller represents and warrants that Seller holds the rights to all Green Attributes from the Project, and Seller agrees to convey and hereby conveys all such Green Attributes to Buyer as included in the delivery of the Product from the Project; and

(e) For the purposes of this Transaction:

(i) 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]; and

(ii) 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. [STC REC-1]

8 For the purposes of STC 6 above, for the Category 2 Product, the Parties acknowledge that Substitute Energy, in substitution for Project Energy, and Green Attributes are delivered to Buyer.

As used in Section 9(e) of this Confirmation, “Delivery Term” has the same meaning as “Generation Term” provided that, for the purposes of STC 6 above with respect to any facility listed in Schedule A, the Parties agree that the representation and warranty therein applies only to the portion of such Delivery Term that is after the eligibility date issued by the CEC and during which the output from that facility is being delivered to Buyer.

The Parties agree that, so long as the Seller has used commercially reasonable efforts to comply with a change in law resulting in either of the above representations and warranties becoming incorrect, Buyer shall receive and pay for any Product supplied hereunder notwithstanding any non-compliance with the California RPS Program resulting from the change in law.

10. Commercially Reasonable Efforts.

(a) A Party required to use or make “commercially reasonable efforts” pursuant to this Agreement shall not be required to incur more than $25,000 in aggregate direct or indirect costs, including lost profits, and out-of-pocket costs and expenses, to comply with such “commercially reasonable efforts”, and then only to the extent incurring such costs would be reasonably likely to achieve the desired effect.

(b) In the event an issue or circumstance requiring a Party to use or make commercially reasonable efforts similarly affects one or more other transactions between the Parties, the limit set forth in paragraph (a) above shall apply to all such transactions between the Parties and shall not be cumulative to any limits applicable to such other transactions.

This Confirmation is being provided pursuant to and in accordance with the Master Agreement, and constitutes part of and is subject to the terms and provisions of the Master Agreement. Terms used but not defined herein shall have the meanings ascribed to them in the Master Agreement.

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9 The Parties agree it is their intention that the Transaction provided for in this Confirmation is not capable of being agreed to orally and shall only become binding on the Parties when this Confirmation is executed by both Parties. ACKNOWLEDGED AND AGREED TO: POWEREX CORP.*

MONTEREY BAY COMMUNITY POWER AUTHORITY, a California joint powers authority

Name: Title: Date: *doing business in California as Powerex Energy Corp

Name: Title: Date:

Contact: Contact: Anthony Des Lauriers Tel: (604) 891-6018 Fax: (604)891-5056

Tel: ● Fax: ●

Scheduling: Tel: (604) 891-5007 (Prescheduler) Tel: (604) 891-5091 (Real Time) Tel: (604) 891-5057 (Mid-Office Agreement) Fax: (604) 891-5045 E-mail: [email protected]

Scheduling: Tel: ● (Prescheduler) Tel: ● (Real Time) Tel: ● (Mid-Office Agreement) Fax: E-mail:

10

SCHEDULE “A”

Project(s)

Part A – Initial Projects

Facility Name State / Province

Technology RPS ID Total Facility Nameplate (MW)

[●] [●] [●] [●] [●] [●] [●] [●] [●] [●]

[●] [●] [●] [●] [●]

[●] [●] [●] [●] [●]

[●] [●] [●] [●] [●]

[●] [●] [●] [●] [●]

Part B – Additional Projects for Category 1 Product [to be added under the terms of the section - “Facilities” as required]

11 SCHEDULE “B”

Additional Definitions

For the purposes of this Confirmation, the following terms shall have the following meanings: (a) “Alternate Eligible Facility” means an alternate generation facility that is certified as an eligible

renewable energy resource for the California RPS Program and from which Seller is entitled to energy and associated Green Attributes generated during the Generation Term (or portion thereof in respect of which bundled energy and associated Green Attributes to be delivered hereunder are generated by such facility).

(b) “Alternate Source” means an alternate source of supply of energy and associated Green Attributes generated by the same facility as a Project during the Generation Term and which Seller is entitled to pursuant to its purchase agreements for output from the facility.

(c) “Buyer Eligibility Failure” means a failure of a Category Product to meet or satisfy the applicable Eligibility Requirements or any element or component thereof which are in the direct control of Buyer to meet or satisfy as a result of or if caused by or attributable to an act or omission of Buyer, including use of the Product other than for its own California RPS Program compliance purposes, a failure by Buyer to accept an applicable transfer on WREGIS, to provide information and data available to Buyer (including as provided by Seller) as may be required to verify the Green Attributes comprised in the Products or failure to retire or designate for retirement the RECs for the purposes of compliance with the California RPS Program.

(d) “CAISO Balancing Authority” has the meaning set forth in the CAISO Tariff.

(e) “CAISO Point” means any Location in the CAISO Balancing Authority or CAISO Controlled Grid, including any Scheduling Point (as such terms are defined in the CAISO Tariff).

(f) “CAISO Tariff” means the applicable tariff and protocol provisions of the California Independent System Operator (“CAISO”) (as amended from time to time).

(g) “California RPS Program” or “California Renewables Portfolio Standard” means the “California Renewables Portfolio Standard” program jointly administered by the CEC, the CPUC and the California Air Resources Board, as such program exists as of the Trade Date, including without limitation all applicable eligibility criteria and requirements thereof in force and effect as of the Trade Date.

(h) “Cap and Trade Regulations” means the regulations entitled California Cap on Greenhouse Gas Emissions and Market-Based Compliance Mechanisms set forth at Article 5 of Subchapter 10 of Title 17 of the California Code of Regulations.

(i) “Category 1 Product” means the Product where Buyer has elected to have the energy delivered as Project Energy in accordance with Delivery Method 1.

(j) “Category 1 Product Eligibility Requirements” means, with respect to the Category 1 Product only, any applicable criteria or requirements of the California RPS Program in force and effect as of the Trade Date regarding the eligibility or qualification of the Category 1 Product to meet the criteria of Section 399.16(b)(1) of the California Public Utilities Code or this Confirmation or the Transaction confirmed hereby for the California RPS Program, including without limitation any eligibility criteria applicable to an out-of-state resource.

(k) “Category 2 Product” means the Product where Buyer has elected to have Substitute Energy delivered in substitution for Project Energy in accordance with Delivery Method 2.

12 (l) “Category 2 Product Eligibility Requirements” means, with respect to Category 2 Product only,

any applicable criteria or requirements of the California RPS Program in force and effect as of the Trade Date regarding the eligibility or qualification of the Category 2 Product to meet the criteria of Section 399.16(b)(2) of the California Public Utilities Code or this Confirmation or the Transaction confirmed hereby for the California RPS Program, including without limitation any eligibility criteria applicable to an out-of-state resource.

(m) “Category Product” means Category 1 Product or Category 2 Product, as applicable.

(n) “change in law” refers to any determination, decision, application of, or change in law or policy after the Trade Date by or of the CEC or the CPUC or other applicable legislative, governmental or regulatory authority or third party having authority or jurisdiction.

(o) “Compliance Obligation” has the meaning set forth by the Cap and Trade Regulations.

(p) “CPUC” means the California Public Utilities Commission.

(q) “Eligibility Requirements” means Category 1 Product Eligibility Requirements or Category 2 Product Eligibility Requirements, as applicable.

(r) “Energy” means Project Energy or Substitute Energy, as applicable.

(s) “Energy Commission” or “CEC” means the California Energy Commission.

(t) “Generally Accepted Utility Practice” means a practice established by the Western Electricity Coordinating Council (“WECC”) or any successor regional reliability council, as such practice may be revised from time to time, or if no practice is so established, means a practice otherwise generally accepted in the WECC region.

(u) “Generation Sub-term” means any sub-period within the Generation Term as specified in the Energy Delivery Profile Table under the heading “Delivery Method Quantity” (and for greater certainty means Generation Term if only one Generation Sub-term).

(v) “Green Attributes” means any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled, attributable to the generation from the Project, and its avoided emission of pollutants. Green Attributes include but are not limited to Renewable Energy Credits, as well as: (1) 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; (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;1 (3) 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, regulation 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 Project, (ii) production tax credits associated with the construction or operation of the Project and other

1 Avoided emissions may or may not have any value for GHG compliance purposes. Although avoided emissions are included in the list of Green Attributes, this inclusion does not create any right to use those avoided emissions to comply with any GHG regulatory program.

13 financial incentives in the form of credits, reductions, or allowances associated with the project 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 Project for compliance with local, state, or federal operating and/or air quality permits. If the Project 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 ensure that there are zero net emissions associated with the production of electricity from the Project.

(w) “Green Tag” and “Green Tag Reporting Rights” have the meanings set forth in the definition of “Green Attributes”, and for the purposes of this Transaction, “Green Tag Purchaser” means Buyer.

(x) “Mandatory Reporting Rule” means the regulations entitled Mandatory Greenhouse Gas Emissions Reporting set forth at Article 2 of Subchapter 10 of Title 17 of the California Code of Regulations.

(y) “Party” means Buyer or Seller, and “Parties” means both Buyer and Seller.

(z) “Project” means a facility listed in Schedule “A” provided that, for the purposes of Sections 9(d) and 9(e) of this Confirmation and the definition of Green Attributes, the term “Project” shall be read to refer to all such facilities listed in Schedule “A” but only to the extent of Seller’s contractual rights to the energy and Green Attributes produced by such facilities. Seller must be contractually entitled to all or a portion of the bundled energy and associated Green Attributes generated by the facilities listed in Schedule “A” during the Generation Term (or portion thereof in which the Product is generated by or attributed to such facility). Buyer acknowledges that Seller (i) may deliver the Product from any or all Projects, and (ii) may not have a contractual right to the entire output of such facilities.

(aa) “Renewable Energy Credit” or “REC” means a renewable energy credit as defined by and in accordance with the California Public Utilities Code.

(bb) “RPS Adjustment” means the reduction in the Compliance Obligation of an electricity importer authorized by and calculated in accordance with section 95852 (b)(4) of the Cap and Trade Regulations and section 95111(b)(5) of the Mandatory Reporting Rule.

(cc) “RPS ID” means the “California Energy Commission RPS certification number”, the “identification number” and/or the “RPS ID”, as such terms are used by the CEC to describe the identification number for an eligible renewable energy resource that has been certified (or will be certified for the period of deliveries) as such by the CEC for the purposes of the RPS. The RPS ID for each Project is set out beside the applicable facility under the column “RPS ID” in the table attached hereto as Schedule “A”.

(dd) “Scheduling Point” has the meaning set forth in the CAISO Tariff, including (without limitation) the SYLMARDC_2_N501 and MALIN_5_N101 Scheduling Points.

(ee) “Seller Eligibility Failure” means a failure of (i) Category 1 Product or Category 2 Product to meet or satisfy the applicable Eligibility Requirements as a result of any requirements set forth in Section 9(b) of this Confirmation not being satisfied, or (ii) any other Eligibility Requirements or element or component thereof applicable to a Category Product which are in the direct control of Seller to meet or satisfy as a result of or if caused or attributable to an act or omission by Seller unless, in either the case of (i) or (ii), such failure is excused by Force Majeure.

(ff) “Specified Source” means “specified source”, as such term is defined in the Mandatory Reporting Rule.

14 (gg) “WREGIS” means the Western Renewable Energy Generation Information System or any

successor renewable energy tracking program.

(hh) “WREGIS Certificate” means a “Certificate” as defined by WREGIS in the WREGIS Operating Rules and designated by law as eligible for complying with the California RPS Program and for evidencing the Green Attributes associated with the Product.

(ii) “WREGIS Operating Rules” means the operating rules and requirement adopted by WREGIS, as amended from time to time.

(jj) “WREGIS Timelines” means the time line for WREGIS Certificate creation by WREGIS in accordance with WREGIS Operating Rules as applied by WREGIS.

AGREEMENT BETWEEN Powerex Corp. * and Monterey Bay Community Power Authority

Powerex Deal No.

This document (“Confirmation” or “Agreement”) confirms the agreement reached on the Trade Date between Powerex Corp.* (“Powerex” or “Seller”) and Monterey Bay Community Power Authority, a California joint powers authority (“MBCPA” or “Buyer”) regarding the sale and purchase of the Product in accordance with the EEI Master Power Purchase and Sale Agreement dated as of November 28, 2017, together with any and all exhibits, schedules or supplements thereto or incorporated therein by reference, each in force and effect from time to time between the Parties and as amended and supplemented by this Confirmation (collectively, the “Master Agreement”) under the following terms and conditions. Consistent with Section 2.2 of the Master Agreement, this Confirmation, together with all other transactions, confirmations and the Master Agreement, form a single integrated agreement between the Parties and are not separate contracts.

Seller: Powerex

Buyer: MBCPA

Trade Date: February [●], 2018

Transaction: This Transaction is for Buyer to procure Carbon Free Energy, all in accordance with the terms and conditions of this Confirmation.

Product: Carbon Free Energy, being energy delivered from a Carbon Free Source and scheduled to the CAISO Balancing Authority, in quantities as provided for under “Delivery Term and Contract Quantity” Section of this Confirmation.

The Parties recognize that a schedule of energy to the CAISO Balancing Authority is a delivery to the CAISO and not directly to the Buyer. Scheduling energy to the CAISO Balancing Authority shall constitute delivery of Carbon Free Energy provided such energy was delivered from a Carbon Free Source.

Contract Price: In this Confirmation,

“CAISO Credit” means the Energy Price paid by the CAISO for the Carbon Free Energy.

“CF Price” means the Energy Price plus $[●].

“Energy Price” means, for each MWh of Carbon Free Energy delivered, the applicable Locational Marginal Price, as defined in the CAISO Tariff and published by CAISO, at the CAISO Point where CAISO models the physical injection of such Carbon Free Energy.

ATTACHMENT 2

2 The Contract Price for each MWh of Carbon Free Energy delivered to Buyer in accordance herewith shall consist of the CF Price less the CAISO Credit.

Payment: Invoicing and payment for the Carbon Free Energy delivered to Buyer shall be in accordance with Article 6 of the Master Agreement and Buyer shall pay such invoices in accordance with the Master Agreement and this Confirmation. Seller’s invoices prepared in accordance with Article 6 of the Master Agreement may be delivered by email from Seller to Buyer. For greater certainty, for Carbon Free Energy delivered from Carbon Free Source within the CAISO Balancing Authority, Seller will apply the CAISO Credit as specified in the Contract Price formula even if the CAISO Credit is paid by the CAISO to the entity or person delivering the Carbon Free Energy to the CAISO rather than the Seller directly.

Change in Law: If due to (i) any action by a Governmental Authority, or (ii) any change in Applicable Law ((i) and (ii), collectively, a “Change in Law”), occurring after the Trade Date that results in material change(s) to Buyer's or Seller's obligations with regard to the Product(s) sold under this Agreement or that has the effect of changing the transfer and sale procedure set forth in this Confirmation so that the implementation of this Confirmation becomes impossible or impracticable, the Parties shall work in good faith to try and revise this Confirmation so that the Parties can perform their obligations regarding the purchase and sale of Product(s) sold hereunder in order to maintain the original intent of the Parties under this Confirmation. In the event the Parties cannot reach agreement on any such amendments to this Confirmation within 60 days following the Change in Law, to the extent practicable and lawful, Seller shall perform its obligations hereunder with regard to any Product hereunder in accordance with the Applicable Law immediately prior to the Change in Law; provided, however, that notwithstanding the foregoing or anything to the contrary herein, Seller shall not be obligated to perform any obligation hereunder to the extent that doing so would cause Seller to be materially adversely affected.

Delivery Term and Contract Quantity:

The Delivery Term for the Product is [●] through [●] inclusive (the “Delivery Term”). During the Delivery Term, Seller shall deliver to Buyer the Contract Quantity of Carbon Free Energy as specified in the table below (“Contract Quantity”):

Product Delivery Term Contract Quantity (MWh)

Carbon Free Energy [●] [●]

For greater certainty, there shall be no minimum or maximum obligation to deliver Carbon Free Energy in any hour during the Delivery Term.

3 Carbon Free Energy shall be scheduled in accordance with “Scheduling” below.

Delivery Point: Seller may deliver Carbon Free Energy to any CAISO Point. For greater

certainty, in the event an e-Tag includes more than one CAISO Point, the Delivery Point shall be the last point of delivery (POD) or “sink” CAISO Point on such e-Tag.

Title: Title to the Carbon Free Energy shall be deemed to pass from Seller to Buyer at the Delivery Point.

Scheduling: Seller will perform or cause to be performed all scheduling and tagging requirements for Carbon Free Energy. Energy deliveries shall be scheduled pursuant to WECC and CAISO requirements to the Delivery Point.

Scheduling: Seller shall schedule or cause to be scheduled, at its sole discretion, Carbon Free Energy from Carbon Free Sources to the CAISO Balancing Authority on a day-ahead, hour-ahead, sub-hourly and/or real-time basis. Without limiting the generality of the foregoing, Seller may schedule the Carbon Free Energy during any or all HLH and LLH hours during the Delivery Term until the total Contract Quantity is delivered.

All Carbon Free Energy shall be scheduled in accordance with Generally Accepted Utility Practice.

Tagging – Carbon Free Sources Outside CAISO Balancing Authority: The CARB ID(s) of the Carbon Free Source shall be entered as the “Value” in the Misc(Token/Value) field of the e-tag. Each e-Tag shall show the CAISO Balancing Authority as the last CA (Control Area) under ‘Physical Path’, and Buyer shall be designated by inserting “Monterey Bay Community Power” in the Comment section on each NERC e-Tag. For greater certainty, no e-Tags shall be generated for Carbon Free Energy delivered from a Carbon Free Source within the CAISO Balancing Authority.

Any scheduling provisions may be altered by mutual agreement of the Parties.

Seller scheduling contacts:

Phone Fax Prescheduler: (604) 891-5007 (604) 891-5045 Real-Time: (604) 891-5091 (604) 891-5045 Mid-office Agreement: (604) 891-5057 (604) 891-5045 Email: [email protected]

4

Generation Resources: Seller’s list of generation resources from which it will supply Carbon Free Energy to Buyer will be specified in Schedule A in accordance with this provision. A completed Schedule A will be provided to Buyer at least 5 Business Days prior to the initial delivery of Carbon Free Energy (which requirement may be satisfied if a completed Schedule A is attached hereto on the Trade Date) and, thereafter, Seller may update this generation resources list (including to add additional generation resources) from time to time by delivering a revised Schedule A to Buyer which shall thereupon replace the existing Schedule A. In the event Seller delivers Carbon Free Energy from a Carbon Free Source not listed in Schedule A, such delivery shall still constitute delivery of Carbon Free Energy hereunder and Seller shall use commercially reasonable efforts to update Schedule A as soon as is reasonably practicable after delivery to add the applicable generation resource(s).

Definitions Applicable to this Transaction

For the purposes of this Confirmation, the following terms used in this Confirmation shall have the following meanings: (a) “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 or guidance with respect to the foregoing, as any of them is amended or supplemented from time to time, that apply to either or both of the Parties, the Generation Resource(s), or the terms of the Agreement.

(b) “CAISO Balancing Authority” has the meaning set forth in the CAISO Tariff.

(c) “CAISO Controlled Grid” has the meaning set forth in the CAISO Tariff.

(d) “CAISO Point” means any Location in the CAISO Balancing Authority or CAISO Controlled Grid, including any Scheduling Point (as such terms are defined in the CAISO Tariff).

(e) “CAISO Tariff” means the applicable tariff and protocol provisions of the CAISO (as amended from time to time).

(f) “Cap and Trade Regulation” means the regulations entitled California Cap on Greenhouse Gas Emissions and Market-Based Compliance Mechanisms set forth at Article 5 of Subchapter 10 of Title 17 of the California Code of Regulations.

5 (g) “CARB” means the California Air Resources Board of the

California Environmental Protection Agency.

(h) “Carbon Free Source” means any energy source, except for nuclear-powered generation assets, that is located within the Western Energy Coordinating Council (“WECC”) area and that is considered by the State of California to have zero Greenhouse Gas emissions in accordance with the Mandatory Reporting Rule and the Cap and Trade Regulation. Carbon Free Source does not include any Category 3 Renewables, “asset controlling supplier” (ACS) resources (as such term is used in the Mandatory Reporting Rule) or any energy source with an e-tag with a source point associated with a nuclear or coal-fired generating facility.

(i) “Category 3 Renewable” means renewable energy credits that satisfy the requirements of Section 399.16(b)(3) of the California Public Utilities Code.

(j) “Governmental Authority” means any federal, provincial, state, local or municipal government, governmental department, commission, board, bureau, agency, or instrumentality, or any judicial, regulatory or administrative body, or any applicable transmission authority, having or asserting jurisdiction over a Party or this Transaction.

(k) “HLH” means hours ending (“HE”) 0700-2200 PPT Mondays through Saturdays, excluding Holidays.

(l) “Holiday” means any day designated as a holiday by NERC.

(m) “LLH” means Mondays through Saturdays HE 0100-0600 and HE 2300-2400 PPT, and all day Sundays and Holidays.

(n) “Generally Accepted Utility Practice” means a practice established by WECC or any successor regional reliability council, as such practice may be revised from time to time, or if no practice is so established, means a practice otherwise generally accepted in the WECC region.

(o) “Mandatory Reporting Rule” means the regulations entitled Mandatory Greenhouse Gas Emissions Reporting set forth at Article 2 of Subchapter 10 of Title 17 of the California Code of Regulations.

Special Conditions

1. Events of Default; Remedies. For purposes of this Transaction:

(a) For the purposes of determining payments under Section 5.2 of the Master Agreement, with respect to this Transaction, the economic benefits or losses of the Non-Defaulting Party resulting from termination of this Transaction shall be based on energy delivered from a Carbon Free Source.

6 (b) The remedies for failure to deliver the Product provided for in the Master

Agreement as amended by this Confirmation are the sole and exclusive remedies and all other remedies are waived.

2. Failure to Deliver/Receive. The maximum liability of either Party pursuant to Section 4.1 or 4.2 of the Master Agreement for any failure to schedule, deliver or receive all or a portion of the Product shall not exceed and shall be limited to $[●]/MWh for the amount of the Product that was not scheduled, delivered or received, as the case may be, and in no event will the liability of a Party pursuant to Section 4.1 or 4.2 of the Master Agreement for any failure to schedule, deliver or receive all or a portion of the Product include any liability in respect of penalties, ratcheted demand or similar charges.

3. Importer/Compliance Obligation. For Carbon Free Energy imported from an out-of-state Carbon Free Source, Seller will be the electricity importer into California for purposes of the Cap and Trade Regulations. The Parties acknowledge that Seller will be responsible for satisfying the Compliance Obligation (as such term is defined in the Cap and Trade Regulations) under the Cap and Trade Regulations associated with any Carbon Free Energy that Seller schedules and delivers into the CAISO Balancing Authority and that they will work together such that Seller may claim that such Carbon Free Energy is from a “specified source” (as such term is defined in the Mandatory Reporting Rule) to mitigate such Compliance Obligation. This provision is based on the Cap and Trade Regulations and Mandatory Reporting Rule as of the Trade Date of this Confirmation. In the event that the regulatory requirements for mitigating the Compliance Obligation change after the Trade Date, Buyer shall make commercially reasonable efforts to assist Seller in meeting such regulatory requirements.

This Agreement is being provided pursuant to and in accordance with the Master Agreement, and constitutes part of and is subject to the terms and provisions of the Master Agreement. Terms used but not defined herein shall have the meanings ascribed to them in the Master Agreement.

[Remainder of this page intentionally left blank]

7

The Parties agree it is their intention that the Transaction provided for in this Agreement is not capable of being agreed to orally and shall only become binding on the Parties when this Agreement is executed by both Parties. ACKNOWLEDGED AND AGREED TO: Powerex Corp. * Monterey Bay Community Power Authority, a

California joint powers authority By: By: Name: Name: Title: Title: Date: Date: * Powerex Corp., doing business in California as Powerex Energy Corp. Contacts: Powerex: MBCPA: Anthony Des Lauriers Tom Habashi Tel: (604) 891-6018 Tel: (831) 313-5557 Fax: (604) 891-5056

SCHEDULE A

Generation Resources

[**To be completed in accordance with the Confirmation**]

Generation Resource Name

NERC Source

State / Province

Technology CARB ID

E-tag Misc. Value Emissions Factor (MT CO2e per MWh)

Delivery Point (In-State Carbon Free Sources Only)

0


Staff Report Item 10

TO: MBCP Operations Board of Directors FROM: Tom Habashi, Chief Executive Officer SUBJECT: CEO’s Report DATE: February 7, 2018

Community Advisory Council, Next Steps At the Special Joint Meeting of the Operations and Policy Boards on January 20, 2018, staff recommended the formation of two Stakeholder Groups; a Community Advisory Group to meet for a period of six months, and a large commercial, industrial and agricultural group to host ongoing meetings focused on the needs and issues of those customer classes. The Community Advisory Group as proposed would focus on the value-added, complementary energy programs to be implemented by MBCP over the next several years targeting electrification and GHG reduction. The large commercial, industrial and agriculture group would host an ongoing series of workshops that combine technical information and roundtable discussions to address the evolving needs of large customers that make up roughly 50% of MBCP’s electric demand. At the joint Board workshop, several community groups spoke in support of an ongoing Community Advisory Council (CAC) representing all customers that would provide insight on complementary energy programs and also oversight over many aspects of MBCP operations. Several Board members spoke in favor of an ongoing CAC but did not comment on its specific scope. In the next month, staff will draft a report addressing several variables to consider in forming a standing Community Advisory Council, including the group size, composition, selection process, scope, resource needs, meeting frequency, etc. Staff will present an outline of the options associated with these variables, discussing the pros and cons of each and offer a number of alternatives and a recommendation for consideration by the Policy Board at its March 7 meeting.

Enrollment Update Customer Notifications: The 1st round of notifications was completed on January 9, 2019 with a total of 20,111 notifications mailed. The 2nd round of notifications will also be sent out in two batches: Batch 1 on February 2, 2018 with 10,544 notifications; and Batch 2 on February 9, 2018 with 9,567 notifications. Opt-Outs: As of January 29, 2018, fifteen potential customers have opted-out. This represents a total load of 17.94 GWh’s, less than 1% of total Non-residential load. Three of the customers were agricultural. The other 12 were commercial, and 3 Large Customers represented 97% of the opt-out load. Customers used both the online process and call center to opt-out, with larger customers preferring the online process. Short-Term Power Supply (Round 2) On January 2, 2018, staff, working with Pacific Energy Advisors reviewed offers for energy and renewable and carbon free attributes to fill the position that was left open after the first round of trades which was conducted in November 2017. Staff acquired sufficient hedge to meet the 2018 demand. Future portfolio adjustments for 2018 will be conducted monthly by MBCP’s scheduling coordinator, The Energy Authority. Long-Term Renewable Acquisition Update MBCP staff, along with staff from Silicon Valley Clean Energy, are in negotiations with three developers, simultaneously, to acquire long-term rights to the output of three projects. Because neither MBCP, nor SVCE has credit rating or surplus to offer as collateral, credit issues have taken a longer time to negotiate, however, we are near addressing developers’ concerns and should conclude negotiations in March 2018.

Formation of Energy Risk Management (ERM) Short-term power supply and resource adequacy capacity acquisitions must be conducted routinely to buy short (or sell long) positions. Market price and other risks necessitates that trades for price and quantity are done without Board deliberations or careful review. Therefore, staff recommends the formation of an Energy Risk Oversight Committee, chaired by MBCP’s CEO, to review staff’s plans to address the risks associated with short-term energy trading. Marketing and Outreach Update Update on marketing and outreach efforts by MBCP team, highlighting areas of focus, timeline and special considerations around March 1 Non-Residential Launch and July 1 Residential Launch. MBCP Media/Press Protocols With our March 1 launch date right around the corner, interest from media will be growing. We encourage you to let Peter Berridge (Marketing and Communications Mgr) know when you are in contact with media. Even an informal conversation with a reporter could be an opportunity for the Marketing and Communications team to; continue building relationships with media; broaden our outreach; refine or improve a story. Please find a copy of MBCP media protocols attached to the CEO report for reference, along with Peter’s contact information. ATTACHMENTS:

1. Marking and Outreach Update 2. MBCP Media Protocols

MARKETING AND COMMUNITY OUTREACH UPDATE – FEBRUARY 7, 2018

Phase 1/Non-Residential Customers

Newsletter Content - Pushing info out through business orgs and associations

o Using feedback from key accounts team to deliver message that addresses questions/concerns- Focusing on content that is relevant and specific to biz, ag, tourism, etc- Trickle down to employees indirectly informing residents in advance of residential launch

Press/Media Outreach - Media/Communications Coordinator connecting with media- Building media kit in preparation for concerted effort for earned media- Researching paid media opportunities

General Community Outreach - Community Outreach Coordinator booking events and presentation opportunities- Focus beginning to shift away from businesses and closer to residents- MBCP Internship program in building phase for March/April activation

Strategic Partnerships - Progress with colleges and universities- Identifying customer-businesses with sizeable network and co-promotional potential

March 1 Launch - Press Conference at Monterey City Hall (Press Release/Invites go out week of Feb 5)- Board members, key supporters, partners encouraged to speak (Details/Invites TBD)- “Turning Power On” ceremony (working message)

Building Communications Assets - Customer Took Kit

o Newsletter content, sticker, digital badge, packaging claim- MBCP Tool Kit

o Poster and digital postcard to promote presentations, workshops, public forumso MBCP Outreach ‘Event Experience’; booth activities, giveaways, raffle, promo partners, PR spin

Phase 2 – Residential Customers

Tri-County Public Forum Series - Position as “Public Forum” to earn media beyond calendar/event listings (April – June)- Leverage strategic partner network- Pair with increased effort to grow online/social community

July 1 Launch - “1st Annual Community Energy Festival” @ Monterey Plaza and pilot for Tri-County CEF Series in 2019- Concept: Celebration of green energy/sustainability, community organizations, and education

ATTACHMENT 1

Monterey Bay Community Power 70 Garden Court, Suite 300, Monterey, CA 93940 [email protected] (888) 909-MBCP (6227)

Media/Press Protocols

Overview As a non-profit, public agency that is open and responsive to the residents of Santa Cruz, Monterey and San Benito Counties, Monterey Bay Community Power is active in engaging with residents, customers and partners. We succeed in doing so by embracing every media/press opportunity and by making the most of these opportunities for all parties involved. MBCP is a local, community-driven organization and we recognize the value in forming positive relations with local and regional media/press and their constituents.

Each inquiry will be vetted with the intent that MBCP Media Response Team will collaborate with the appropriate MBCP team members to ensure that the information provided is current and accurate.

Purpose The Purpose of the MBCP Media/Press Protocols document is to guide the MBCP team in being organized, proactive, forthcoming, accurate, and consistent with all media/press opportunities. This includes all types of media and press, including earned and paid media, such as TV, radio, print, blogs, websites, e-newsletters, etc.

Procedure Whenever a reporter calls, please follow these procedures:

1) Ask the reporter for the following information:a. Name, publication/network, deadlineb. General description of story and whether the reporter is pursuing a particular

angle? (Knowing this will help us to involve appropriate MBCP team members, etc..)c. Contact information

2) Let the caller know that an authorized spokesperson will return their call shortly(within 24 hours). Please DO NOT transfer the reporter to a member of the Response Team.

3) Add the above information to the MBCP media/press log (Located in shared PR Folder)4) Forward information to Peter Berridge via email w/cc to Shelly Whitworth5) Confirm email with a phone call to Peter and/or Shelly6) If the reporter asks you any questions or otherwise attempts to initiate an interview with

you, please tell them you are not an authorized spokesperson and you will immediatelycontact Peter

If a reporter contacts you via email, please DO NOT respond to the reporter. Instead, immediately forward the email to Peter, w/cc to Shelly. If a reporter shows up at the office or other public location, let the reporter know you are not an authorized spokesperson and immediately call and/or text the members of the media response team to connect them.

MBCP Media Response Team Peter Berridge, Marketing & Communications Manager: (415) 309-8813 mobile, (831) 641-7204 office, [email protected]

Shelly Whitworth, Media & Communications Coordinator: (831) 229-0277 mobile, (831) 641-7206 office, [email protected]

Bill Maxfield, Miller Maxfield: (831) 227-6469, [email protected]

Julia Selker, Miller Maxfield: (831) 216-5659, [email protected] Updated 1/6/18

ATTACHMENT 2

mailto:[email protected]






TO: MBCP Operations Board of Directors FROM: Tom Habashi, Chief Executive Officer SUBJECT: Approval of Energy Risk Management Policy and Procedures


RECOMMENDATION Staff recommends the Operations Board adopt the attached Energy Risk Management Policy. BACKGROUND Providing retail electric generation service to customers enrolled in MBCP requires effective management of a variety of risks related to power procurement. Industry best practice includes adoption of a formal risk management policy that documents risk management functions and procedures for managing the risks associated with power procurement activities. Additionally, adoption of a risk management policy is one of the requirements of participating in the California Independent System Operator’s (“CAISO”) markets. The attached Energy Risk Management Policy (“ERMP”) was developed by MBCP’s Scheduling Coordinator, who has responsibility for interfacing with the CAISO on MBCP’s behalf. DISCUSSION The objective of the ERMP is to provide a framework for conducting procurement activities that will manage risks to support MBCP meeting its stated objectives. The ERMP describes how MBCP will identify and measure the magnitude of the risks to which it is exposed and that contribute to the potential for not meeting identified goals. It also defines business practices, segregation of responsibilities related to risk management and electricity procurement activity, reporting requirements, credit policies, the organizational structure relating to risk oversight, and limits applicable to delegated electricity procurement authority. The ERMP must be approved by the Board. A Risk Management Committee (“RMC”), chaired by the CEO will be responsible for implementation, maintaining and overseeing compliance with the ERMP. The RMC and Board must approve amendments to the ERMP, except for appendices, which may be amended with approval of the RMC alone.

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CONCLUSION The ERMP provides a comprehensive framework for managing risk associated with providing retail electric service to MBCP customers and allows MBCP to follow industry best practices for minimizing risks associate with its electric procurement activities. ATTACHMENTS 1. ERM Policy

Energy Risk Management Policy

February 7, 2018 – MBCP Board Approved

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Table of Contents

Section 1: POLICY OVERVIEW ....................................................................................................................... 3

1.1 Background and Purpose .................................................................................................................... 3

1.2 Scope ................................................................................................................................................... 4

1.3 Energy Risk Management Objective ................................................................................................... 4

1.4 Policy Administration .......................................................................................................................... 4

Section 2: GOALS AND RISK EXPOSURES ...................................................................................................... 5

2.1 Policy Goals ......................................................................................................................................... 5

2.2 Risk Exposures ..................................................................................................................................... 5

2.3.1 Market Risk .................................................................................................................................. 6

2.3.2 Regulatory Risk ............................................................................................................................. 6

2.3.3 Volumetric Risk .......................................................................................................................... 6

2.3.4 Model Risk .................................................................................................................................... 7

2.3.5 Operational Risk ........................................................................................................................... 7

2.3.6 Counterparty Credit Risk .............................................................................................................. 7

2.3.7 Reputation Risk ............................................................................................................................ 7

2.4 Risk Measurement Methodology ....................................................................................................... 8

Section 3: BUSINESS PRACTICES................................................................................................................... 9

3.1 General Conduct ................................................................................................................................. 9

3.2 Trading for Personal Accounts ............................................................................................................ 9

3.3 Adherence to Statutory Requirements ............................................................................................... 9

3.4 Transaction Type, Regions and Markets ............................................................................................. 9

3.5 Counterparty Suitability .................................................................................................................... 10

3.6 System of Record .............................................................................................................................. 10

3.7 Transaction Valuation ....................................................................................................................... 10

3.8 Stress Testing .................................................................................................................................... 11

3.9 Trading Practices ............................................................................................................................... 11

3.10 Policy Compliance ........................................................................................................................... 11

Section 4: ORGANIZATIONAL STRUCTURE AND RESPONSIBILITIES ........................................................... 12

4.1 Risk Management Organizational Structure ..................................................................................... 12

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4.2 Board of Directors ............................................................................................................................. 12

4.3 Risk Management Committee (RMC) ............................................................................................... 12

4.4 Segregation of Duties ........................................................................................................................ 13

4.4.1 Front Office ......................................................................................................................... 14

4.4.2 Middle/Back Office ............................................................................................................. 14

Section 5: DELEGATION OF AUTHORITY .................................................................................................... 15

5.2 Monitoring, Reporting and Instances of Exceeding Risk Limits ........................................................ 15

Section 6: CREDIT POLICY ........................................................................................................................... 16

6.1 Counterparty Concentration ............................................................................................................. 16

6.2 Increases to Counterparty Credit Limits .............................................. Error! Bookmark not defined.

6.3 Credit Review Exceptions .................................................................................................................. 16

6.4 Credit Limit and Monitoring .............................................................................................................. 17

Section 7: POSITION TRACKING AND MANAGEMENT REPORTING ........................................................... 18

Section 8: POLICY REVISION PROCESS ....................................................................................................... 19

8.1 Acknowledgement of Policy .............................................................................................................. 19

8.2 Policy Interpretations ........................................................................................................................ 19

Appendix A: AUTHORIZED TRANSACTION TYPES, REGIONS AND MARKETS .............................................. 20

Appendix B: NEW TRANSACTION APPROVAL FORM ................................................................................. 21

Appendix C: DEFINITIONS .......................................................................................................................... 22

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Section 1: POLICY OVERVIEW

1.1 Background and Purpose

The Monterey Bay Community Power (“MBCP”) is a public joint powers agency located within the geographic boundaries of Monterey, Santa Cruz and San Benito Counties. Member agencies of MBCP include the Counties of Monterey, Santa Cruz and San Benito, and sixteen (16) incorporated cities located within the three counties. Presently, MBCP’s CCA Members include the following local government entities:

County of Santa Cruz County of Monterey County of San Benito

City of Santa Cruz City of Salinas City Hollister

City of Watsonville City of Monterey City of San Juan Bautista

City of Capitola City of Pacific Grove

City of Scotts Valley City of Carmel

City of Seaside

City of Marina

Sand City

Soledad

Greenfield

Gonzales

MBCP members desire to implement and administer a community choice aggregation (“CCA”) program for members that elect to become participants. The CCA program will give its members an opportunity to procure electricity supplies and implement local programs that meet the goals of the local communities. Electricity procured to serve customers will continue to be delivered over PG&E’s transmission and distribution system.

Providing retail electric generation service to customers enrolled in the CCA program exposes MBCP to risks such as customer opt-out risk, market risk, regulatory risk, volumetric risk, model risk, operational risk, counterparty credit risk and reputation risk.

This Energy Risk Management Policy (“Policy”) establishes MBCP’s Energy Risk Management Program (“Program”) including risk management functions and procedures to manage the risks associated with power procurement activities.

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The ultimate purpose of this Policy is to help MBCP manage its risks by specifying management responsibilities, organizational structures, risk management standards, and operating controls and limits necessary to properly identify and manage MBCP’s exposure to risk.

1.2 Scope Unless otherwise explicitly stated in this Policy, or other policies approved by the Board, this Policy applies to all power procurement and related business activities that may impact the risk profile of MBCP. This Policy documents the framework by which management and staff will:

• Identify and quantify risk • Develop and execute procurement strategies • Create a framework of controls and oversight • Monitor, measure and report on the effectiveness of the Program

1.3 Energy Risk Management Objective The objective of the Energy Risk Management Policy is to provide a framework for conducting procurement activities that will manage risks to support MBCP meeting the goals listed in Section 2.1.

Pursuant to this Policy, MBCP will identify and measure the magnitude of the risks to which it is exposed and that contribute to the potential for not meeting identified goals.

1.4 Policy Administration This Policy document shall be routinely reviewed and approved by the MBCP Operations Board of Directors (“Board”). The Risk Management Committee (“RMC”) and Operations Board must approve amendments to this Policy, except for the appendices, which may be amended with approval of only the RMC. The RMC must give notice to the Board of any amendment it makes to an appendix or a reference policy or procedure document.

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Section 2: GOALS AND RISK EXPOSURES

2.1 Policy Goals

To help ensure long term viability for the CCA, MBCP has outlined the following Policy Goals. MBCP will establish metrics for modeling and measuring risk exposures of the CCA and for tracking performance relative to these goals.

• MBCP will target to maintain competitive retail rates with PG&E after adjusting for the PCIA and Franchise Fee.

• MBCP will strive to obtain electricity from sources with minimum carbon emissions

• MBCP will fund financial reserves with the following objectives:

o Establish long-term business sustainability

o Build collateral for power procurement activities

o Establish an investment grade credit rating

o Develop a source of funds for investment in generation and other local programs

o Stabilize rates and dampen year-to-year variability in procurement costs

The goals outlined above are incorporated into the financial models that are used in modeling and measuring risk exposures. It is important to note that the goals listed above are not intended to be a comprehensive list of goals for the CCA. Rather, the above reflect a subset of program goals that are critical to long-term business viability for the CCA.

2.2 Risk Exposures The Program faces a range of risks during launch and ongoing operation:

• Customer Opt-Out risk • Market risk • Regulatory risk • Volumetric risk • Model risk • Operational risk • Counterparty credit risk • Reputation risk

Customer Opt-Out Risk

Customer opt-out risk is the primary risk the CCA faces. Customer opt-out risk includes any condition or event that creates the potential for significant reductions in the CCA’s customer base, thereby increasing the potential for the CCA to not meet its Policy goals. A CCA faces other risks, but the ultimate concern is often how these other risks will affect customer opt-outs. This Policy addresses this paramount risk and secondary risk types listed below. These risks are not all inclusive but are identified as the risk factors driving the success of the CCA.

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The most relevant measures of the success of this Policy include:

• Retail rate competitiveness with PG&E • Financial reserve level

For this Policy, risk exposure is assessed on all the transactions (energy, environmental attributes, capacity, etc.) executed by MBCP, as well as the risk exposure of open positions and the impacts of these uncertainties on the CCA’s load obligations. The following are components of MBCP’s energy risk that will be assessed, monitored and managed.

2.3.1 Market Risk

Market risk is the uncertainty of MBCP’s financial performance due to variable commodity market prices (market price risk) and uncertain price relationships (basis risk). Variability in market prices creates uncertainty in MBCP’s procurement costs and can materially impact MBCP’s financial position. Market risk is managed by regular measurement, an active hedging program, execution of approved procurement and Congestion Revenue Right strategies and the limit structure set forth in this Policy.

2.3.2 Regulatory Risk

CCAs remain a comparatively new legal entity in the state of California and are subject to an evolving legal and regulatory landscape. Additionally, CCA’s are in direct competition with California’s Investor Owned Utilities (“IOUs”), which face the risk of stranded investments in generating assets and power purchase agreements procured in the past to serve now departing CCA loads. The manner in which the stranded costs of these legacy power supplies is allocated to departing CCA loads is the subject of regulatory proceedings at the CPUC. The competitive and regulatory landscape results in retail rate competitiveness risks that are unique to CCAs. MBCP will manage regulatory risk by:

• Regular monitoring and analysis of legislative and regulatory proceedings impacting CCAs; • Regular monitoring and reporting of actual and projected financial results including stressed

financial results assuming a range of market and retail rate scenarios (both MBCP and PG&E); • Structuring procurement strategies with the objective function of maintaining a favorable retail

rate savings relative to PG&E; • Actively participating in and representing CCA customer interests during regulatory and legislative

proceedings.

2.3.3 Volumetric Risk

Volumetric risk is the uncertainty of MBCP’s financial performance due to variability in the quantity of retail load served by MBCP. Retail load uncertainty results from customer opt-outs, temperature deviation from normal, unforeseen adoption of behind the meter generation by MBCP customers, as well as local, state and national economic conditions. Volume risk is managed by taking steps to:

• Quantify anticipated PG&E generation and PCIA rates, and variability therein; • Quantify variability in procurement costs; • Monitor and adjust for non-regulatory factors driving volumetric uncertainty (e.g. weather);

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• Adopt a formal procurement strategy; • Implement a key accounts program and maintain strong relationships with the local community; • Monitor trends in customer onsite generation, economic shifts, and other factors that affect

electricity customer volume and composition; • Expand the customer base of the CCA, including seeking to add direct access loads.

2.3.4 Model Risk

Model risk is the uncertainty of MBCP’s financial performance due to potentially inaccurate or incomplete characterization of a transaction or power supply portfolio elements due to fundamental deficiencies in models and/or information systems. Model risk is managed by:

• MBCP Risk Management Committee approval of financial and risk models; • Ongoing review of model outputs as part of controls framework; • Ongoing MBCP staff education and participation in CCA industry forums; • Ongoing update and improvement of models as additional information and expertise is acquired

2.3.5 Operational Risk

Operational risk is the uncertainty of MBCP’s financial performance due to weaknesses in the quality, scope, content, or execution of human resources, technical resources, and/or operating procedures within MBCP. Operational risk can also be exacerbated by fraudulent actions by employees or third parties or inadequate or ineffective controls. Operational risk is managed through:

• The controls set forth in this Policy • RMC oversight of procurement activity • Timely and effective management reporting • Staff resources, expertise and/or training reinforcing a culture of compliance • Ongoing and timely internal and external audits

2.3.6 Counterparty Credit Risk

Counterparty credit risk is the potential that a Counterparty will fail to perform or meet its obligations in accordance with terms agreed to under contract. MBCP’s exposure to counterparty credit risk is controlled by the limit controls set forth in the Credit Policy described in Section 6.

2.3.7 Reputation Risk

Reputation risk is the potential that the CCA’s reputation is harmed, causing customers to opt-out of the CCA’s service and return to PG&E. Reputational risk is managed through:

• Implementation and adherence to this Energy Risk Management Policy • Establishment and adherence to industry best practices including both those adopted by other

CCAs, as well as those adopted by traditional municipal electric utilities.

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2.4 Risk Measurement Methodology A vital element in MBCP’s Energy Risk Management Policy is the regular identification, measurement and communication of risk. To effectively communicate risk, all risk management activities must be monitored on a frequent basis using risk measurement methodologies that quantify the risks associated with MBCP’s procurement-related business activities and performance relative to goals.

Risk measurement of MBCP’s position will be performed using a method that calculates projected procurement costs on an annual basis and that further provides a comparison of projected MBCP retail rates to those of PG&E under expected and stressed scenarios. The rate comparison will be adjusted for actual and projected PCIA and Franchise Fee charges. Risk measurement methodologies shall be re-evaluated on a periodic basis to ensure MBCP adjusts its methods to reflect the evolving regulatory and competitive landscape. The implementation of these methods shall be overseen and ratified by the RMC.

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Section 3: BUSINESS PRACTICES

3.1 General Conduct It is the policy of MBCP that all personnel, including the Board, management, and agents, adhere to standards of integrity, ethics, conflicts of interest, compliance with statutory law and regulations and other applicable MBCP standards of personal conduct while employed by or affiliated with MBCP.

3.2 Trading for Personal Accounts All MBCP Directors, management, employees and agents participating in any transaction or activity within the coverage of this Policy are obligated to give notice in writing to MBCP of any interest such person has in any counterparty that seeks to do business with MBCP, and to identify any real or potential conflict of interest such person has or may have regarding any contract or transaction with MBCP.

If there is any doubt as to whether a prohibited condition exists, then it is the employee’s responsibility to discuss the possible prohibited condition with her/his manager or supervisor.

3.3 Adherence to Statutory Requirements Compliance is required with rules promulgated by the state of California, California Public Utilities Commission, California Energy Commission, Federal Energy Regulatory Commission (FERC), Commodity Futures Trading Commission (CFTC), and other regulatory agencies.

Congress, FERC and CFTC have enacted laws, regulations and rules that prohibit, among other things, any action or course of conduct that actually or potentially operates as a fraud or deceit upon any person in connection with the purchase or sale of electric energy or transmission services. These laws also prohibit any person or entity from making any untrue statement of fact or omitting to state a material fact where the omission would make a statement misleading. Violation of these laws can lead to both civil and criminal actions against the individual involved, as well as MBCP. This Policy is intended to comply with these laws, regulations and rules and to avoid improper conduct on the part of anyone employed by MBCP. These procedures may be modified from time to time by legal requirements, auditor recommendations, RMC requests and other considerations.

In the event of an investigation or inquiry by a regulatory agency, MBCP will provide legal counsel to employees. However, MBCP will not appoint legal counsel to an employee if MBCP’s General Counsel and Chief Executive Officer determine that the employee was not acting in good faith within the scope of employment.

MBCP employees are prohibited from working for another power supplier, CCA or utility in a related position while they are simultaneously employed by MBCP unless an exception is authorized by the Board. For clarity, this prohibition is not intended to prevent MBCP staff from performing non-CCA activities on behalf MBCP in the normal course of its business.

3.4 Transaction Type, Regions and Markets Authorized transaction types, regions and markets are listed in Appendix B to this Policy. These transaction types, regions and markets are and shall continue to be focused on supporting MBCP’s

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financial policies, including approved procurement strategies. New or non-standard transaction types may provide MBCP with additional flexibility and opportunity but may also introduce new risks. Therefore, transaction types, regions and markets not included in Appendix B, or transactions within already approved transaction types that are substantially different from any prior transaction executed by MBCP, must be approved by the RMC prior to execution using the process defined below.

When seeking approval for a new or non-standard transaction type, region, and/or market, a New Transaction Approval Form, as shown in Appendix C, should be drafted describing all significant elements of the proposed transaction. The proposal write-up should, at a minimum, include:

• A description of the benefit to MBCP, including the purpose, function and expected impact on costs (i.e.; decrease costs, manage volatility, control variances, etc.);

• Identification of the in-house or external expertise that will manage and support the new or non-standard transaction type;

• Assessment of the transaction’s risks, including any material legal, tax or regulatory issues; • How the exposures to the risks above will be managed by the limit structure; • Proposed valuation methodology (including pricing model, where appropriate); • Proposed reporting requirements, including any changes to existing procedures and system

requirements necessary to support the new transaction type; • Proposed accounting methodology; • Proposed work flows/methodology (including systems).

It is the responsibility of [MBCP’s CEO or his designee to ensure that relevant departments have reviewed the proposed transaction and that material issues are resolved prior to submittal to the RMC for approval. If approved, Appendix B to the Policy will be updated to reflect the new transaction type.

3.5 Counterparty Suitability MBCP’s counterparty credit limits and approval processes will govern counterparty suitability for all transactions executed by MBCP, consistent with the credit policies described in Section 6. Credit limits should be approved prior to execution of contracts.

3.6 System of Record MBCP will maintain a set of records for all transactions executed in association with MBCP procurement activities. The records will be maintained in US dollars and transactions will be separately recorded and categorized by type of transaction. This system of record shall be auditable.

3.7 Transaction Valuation Transaction valuation and reporting of positions shall be based on objective, market-observed prices. Open positions should be valued (marked-to-market) daily, based on consistent valuation methods and data sources. Whenever possible, mark-to-market valuations should be based on independent, publicly available market information and data sources.

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3.8 Stress Testing In addition to limiting and measuring risk using the methods described herein, stress testing shall also be used to examine performance of the MBCP portfolio under adverse conditions. Stress testing is used to understand the potential variability in MBCP’s projected procurement costs, and resulting retail rate impacts and competitive positioning, associated with low probability events.

3.9 Trading Practices It is the expressed intent of this Policy to prohibit the acquisition of risk beyond that encountered in the efficient optimization of MBCP’s generation portfolio and execution of procurement strategies. As such, speculative transactions are prohibited. During developing operating plans and conducting procurement activities, MBCP recognizes that expertise must be employed by staff, and it is not the intent of this Policy to restrain the legitimate application of analysis and market expertise in executing procurement strategies intended to minimize costs within the constraints of this Policy. If any questions arise as to whether a transaction constitutes speculation, the RMC shall review the transaction(s) to determine whether the transaction would constitute speculation and document its finding in the meeting minutes.

3.10 Policy Compliance MBCP’s Director of Internal Operations will provide a monthly report monitoring compliance with the limits established by this Policy.

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Section 4: ORGANIZATIONAL STRUCTURE AND RESPONSIBILITIES

4.1 Risk Management Organizational Structure

Below is a high-level organization chart describing MBCP’s risk management governance.

4.2 Operations Board of Directors The MBCP Operations Board of Directors has the responsibility to review and approve this Policy. With this approval, the Board assumes responsibility for understanding the risks MBCP is exposed to due to CCA Program activity and how the policies outlined in this document help MBCP manage the associated risks. The Board of Directors is also responsible to:

• Determine MBCP strategic direction • Understand the procurement strategy employed • Approve risk exposures beyond the RMC’s authority

4.3 Risk Management Committee (RMC) The RMC is responsible for implementing, maintaining and overseeing compliance of this Policy. The members of the RMC shall be selected by MBCP’s CEO and comprise of members of the Policy and Operations Boards as well as MBCP staff members. Each voting member will be assigned one vote. The current voting members of the RMC are:

• • Director of Power Services • Director of Internal Services • Energy Trading Manager

Operations Board

Risk Management

Comittee

CEO

MBCP Staff & Support

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• Three members of the Operations Committee • Three members of Policy Board

The Chief Executive Officer will serve as the RMC Chairperson. The primary goal of the RMC is to ensure that the procurement activities of MBCP are executed within the guidelines of this Policy and are consistent with Board directives. The RMC is also responsible to consider and propose recommendations to this Policy when conditions dictate.

Pursuant to direction from the Operations Board of Directors and the limitations specified by this Policy, the RMC and the Chief Executive Officer maintain full authority over all procurement activities for MBCP. This authority includes, but is not limited to, taking any or all actions necessary to ensure compliance with this Policy.

The RMC is responsible for overseeing implementation of this Policy, procurement strategies, and the adoption of new product types. The RMC is also responsible for ensuring procurement strategies are consistent with MBCP’s strategic objectives and for reviewing financial results. The RMC shall meet at least quarterly and record business in meeting minutes that will be approved by the RMC. No decision of the RMC is valid unless majority of voting members has stated approval with a quorum of voting members participating in the vote. All decisions by the RMC, other than those made by common consent, shall be made by simple majority vote of the RMC.

The RMC maintains the authority and responsibility to:

• Approve and ensure that all procurement strategies are consistent with this Policy; • Determine if changes in procurement strategies are warranted; • Approve new transaction types, regions, markets and delivery points; • Understand financial and risk models; • Understand counterparty credit review models and methods for setting and monitoring credit

limits; • Receive and review reports as described in this Policy; • Meet to review actual and projected financial results and potential risks; • Escalate to the Board of Directors with any risks beyond the RMC’s authority; • Review summaries of limit violations; • Review the effectiveness of MBCP's energy risk measurement methods; • Maintain this Policy; • Monitor regulatory and legislative activities

4.4 Segregation of Duties

MBCP shall maintain a segregation of duties, also referred to as "separation of function", to the extent practicable to help manage and control the risks outlined in this Policy. Individuals responsible for legally binding the CCA to a transaction will not also perform confirmation, clearing or settlement functions. MBCP staff roles and responsibilities are divided into front-middle-back office activities, as described below. In executing these functions, MBCP may rely on third-parties to assist in performing various functions. In doing so, MBCP will preserve the intent of the separation of functions described herein.

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4.4.1 Front Office The Front Office is headed by the Director of Power Services. The Front Office has overall responsibility for (1) managing all commodity and transmission activities related to procuring and delivering resources needed to serve CCA's load, (2) the analysis of fundamentals affecting load and supply factors that determine CCA's net position, and (3) transacting within the limits of this Policy, and associated policies, to balance loads and resources, and maximize the value of CCA's assets through the exercise of approved optimization strategies. Other duties associated with these responsibilities include:

a. Develop and analyze hedging products and procurement strategies, and bring recommendations to the RMC;

b. Prepare each month a monthly operating plan for the prompt months that gives direction to the day-ahead and real-time trading and scheduling staff regarding the bidding and scheduling of CCA's resource portfolio in the CAISO market;

c. Develop, price and negotiate purchase and/or sale transactions for energy, Resource Adequacy, renewable and green-house gas free energy;

d. Forecast loads;

e. Keep accurate records of all transactions they enter

4.4.2 Middle/Back Office

Middle and Back Office functions will be the responsibility of the Director of Internal Operations. The Middle Office provides independent market and credit risk oversight and is functionally and organizationally separate from the Front Office. The Back Office provides support with a wide range of administrative activities necessary to execute and settle transactions and to support the risk control efforts (e.g. transaction entry and/or checking, data collection, billing, etc.) consistent with this Policy. The Back Office is functionally and organizationally separate from the Front Office.

The Middle and Back Offices have primary responsibility for trading controls and for ensuring agreement with counterparties regarding the terms of all trades, including forward trading. Primary responsibilities include:

a. Estimating and publishing daily forward monthly power and natural price curves for a minimum of the balance of the current year through the next calendar year

b. Calculating and maintaining the net forward power positions of CCA

c. Ensuring that CCA adheres to all risk policies and procedures of the CCA in letter and in intent

d. Maintaining the overall financial security of transactions undertaken on behalf of CCA

e. Implementing and enforcing credit policies and limits

f. Handling confirmation of all transactions (physical and financial) and reconciling differences with the trading counterparties

g. Reviewing transaction confirmations for adherence to approved limits

h. Ensuring all trades have been entered into the appropriate system of record

i. Carrying out month-end checkout of all physical and financial transactions each month

j. Reviewing models and methodologies and recommending RMC approval

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Section 5: DELEGATION OF AUTHORITY

With the approval of the Policy, the MBCP Board is explicitly delegating operational control and oversight to the RMC and MBCP staff, as outlined through this Policy. Specifically, to facilitate daily operations of the CCA, the Board is delegating transaction execution authorities shown in the table below.

Position Maturity Limit Term Limit Volume Limit

(MWh)1 Value Limit

($)2

Risk Management Committee 60 Months 60 Months 7,500,000 60,000,000

Chief Executive Officer 36 Months 36 Months 4,500,000 40,000,000

Director of Power Supply Services 24 months 24 Months 3,000,000 30,000,000

1Volume limit applies only to energy purchases per single contract, including renewable energy and GHG-free energy purchases. 2Value limits apply to non-energy product transactions (e.g., Resource Adequacy and Renewable Energy Credits).

These authorities will be applied to wholesale power activity executed outside of the California Independent System Operator (“CAISO”) markets. These limits provide MBCP needed authorities to manage risks as they arise. Transactions falling outside the delegations above require Board approval prior to execution. Activity with CAISO is excluded from this table due to the nature of the market, where prices for activity may not be known until after transactions are committed.

All procurement executed under the delegation above, must align with the MBCP’s underlying risk exposure (locational, volume and temporal) that is being hedged consistent with the approved Procurement Strategy.

The point of delivery for all products must be at a location on the CAISO transmission grid.

5.2 Monitoring, Reporting and Instances of Exceeding Risk Limits

The Middle Office is responsible for monitoring, and reporting compliance with, all limits within this Policy. If a limit or control is violated, the Middle Office will send notification to the Director of Power Services and the RMC. The RMC will discuss the cause and potential remediation of the exceedance to determine next steps for curing the exceedance.

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Section 6: CREDIT POLICY

All Counterparties shall be evaluated for creditworthiness by the Middle Office prior to execution of any transaction and no less than annually thereafter. Additionally, Counterparties shall be reviewed if a change has occurred, or perceived to have occurred, in market conditions or in a company’s management or financial condition. This evaluation, including any recommended increase or decrease to a credit limit, shall be documented in writing and includes all information supporting such evaluation in a credit file for the counterparty. A credit limit for a Counterparty will not be recommended, or approved without first confirming the Counterparty’s senior unsecured or corporate credit rating from one of the nationally recognized rating agencies (S&P, Moody’s, and/or Fitch) and/or performing a credit review or analysis of the Counterparty’s or guarantor’s financial statements. The credit analysis shall include, at a minimum, current audited financial statements or other supplementary data that indicates financial strength commensurate with an investment grade rating. Trade and banking references, and any other pertinent information, may also be used in the review process.

Once a counterparty has been determined to be creditworthy, a credit limit will be proposed. Although a counterparty may qualify for a certain maximum credit limit, anticipated transaction volumes and other business factors may prompt MBCP to select a lower limit that is considered more appropriate.

Counterparties that do not qualify for an unsecured Credit Limit must post an acceptable form of credit support or Prepayment prior to the execution of any transaction, unless otherwise approved by the CEO. A Counterparty may choose to provide a guarantee from a third party, provided the third party satisfies the criteria for a Credit Limit as outlined herein.

6.1 Maximum Credit Limit Each new Counterparty Credit Limit or increase to an existing limit will approved by the RMC. The maximum amount of any Credit Limit extended to a counterparty shall not exceed [$50,000,000] unless approved in writing by the MBCP Board.

6.2 Counterparty Concentration In addition to maintaining credit limits, MBCP staff shall strive to diversify transactions among counterparties. MBCP staff shall document the business reasons (e.g., differences in offer price, lacked of qualified suppliers, etc.) for awarding contracts to counterparties with high concentrations of credit exposure.

6.3 Credit Review Exceptions Counterparties not subject to the above credit review criteria include those associated with day-ahead and current day purchases or market index based contracts where risks associated with market movements is minimal.

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6.4 Credit Limit and Monitoring The Middle Office will monitor the current credit exposure for each Counterparty with whom MBCP transacts and include such information in the Current Counterparty Credit Risk Report. This report will be made available, reviewed and communicated to the RMC pursuant to the reporting requirements outlined in Section 7.

Current credit exposure is a measure of the known exposures and composed of two primary exposures – (1) realized exposure and, (2) forward exposure. Realized exposure, a payable or receivable amount owed between counterparties, is a measurement of cash flow for billed and unbilled transactions. Forward exposure is a measure of current unrealized exposure and includes the measure of a counterparty’s incentive to fulfill contractual obligations. Forward exposure measures the risk associated with having a payment default or the need to replace a transaction in the event of delivery default.

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Section 7: POSITION TRACKING AND MANAGEMENT REPORTING

Minimum reporting requirements are shown below. The reports outlined below will be made available to RMC members:

• Monthly Financial Model Forecast

Latest projected financial performance, marked to current market prices, and shown relative to financial goals.

• Monthly Net Position Report

Prepare a forward net position report, not less frequently than monthly, and report the results to the RMC.

• Weekly Counterparty Credit Exposure

This report will show credit exposures for transactions executed by MBCP.

• Monthly Risk Analysis

This will include a stress test of financial forecast relative to financial goals.

• Quarterly Board Report

Update on activities and projected financial performance to be presented quarterly at MBCP Board meetings.

19

Section 8: POLICY REVISION PROCESS

MBCP’s Energy Risk Management Policy will evolve over time as market and business factors change. At least on an annual basis, the RMC will review this Policy and associated procedures to determine if they should be amended, supplemented, or updated to account for changing business and/or regulatory requirements. If an amendment is warranted, the Policy amendment will be submitted to the MBCP Board for approval. Changes to appendices to this Policy may be approved and implemented by the RMC.

8.1 Acknowledgement of Policy Any MBCP employee participating in any activity or transaction within the scope of this Policy shall sign, on an annual basis or upon any revision, a statement approved by the RMC that such employee has:

• Read MBCP’s Energy Risk Management Policy • Understands the terms and agreements of said Policy • Will comply with said Policy • Understands that any violation of said Policy shall be subject to employee discipline up to and

including termination of employment.

8.2 Policy Interpretations

Questions about the interpretation of any matters of this Policy should be referred to the RMC.

All legal matters stemming from this Policy will be referred to General Counsel.

20

Appendix A: AUTHORIZED TRANSACTION TYPES, REGIONS AND MARKETS

All transaction types listed below must be executed within the limits set forth in this Policy. (The following transaction types can be ‘nonstandard’ at MBCP subject to RMC approval)

Over the Counter Products

• CAISO Market Products o Day-ahead and Real-time Energy o Congestion Revenue Rights o Convergence bids o Inter Scheduling Coordinator Transactions o Tagging into and out of CAISO

• Physical Power Products o Power o Physical Over-the-counter Options o Physical Resource Adequacy Capacity

• Physical Environmental Products o Renewable Energy Credits o Specified Source Power o Carbon Allowances and Obligations

21

Appendix B: NEW TRANSACTION APPROVAL FORM

New or Non-Standard Transaction Approval Form

Prepared By:

Date:

New or Non-Standard Transaction Name:

Business Rationale and Risk Assessment:

• Product description – including the purpose, function, expected impact on net revenues (i.e. increase, manage volatility, control variances, etc.) and/or benefit to MBCP

• Identification of the in-house or external expertise that will be relied upon to manage and support the new or non-standard transaction

• Assessment of the transaction’s risks, including any material legal, tax or regulatory issues • How the exposures to the risks above will be managed by the limit structure • Proposed valuation methodology (including pricing model, where appropriate) • Proposed reporting requirements, including any changes to existing procedures and system

requirements necessary to support the new product • Proposed accounting methodology • Proposed Middle Office work flows/methodology, including systems • Brief description of the responsibilities of various departments within MBCP who will have any

manner of contact with the new or non-standard transaction

Reviewed by:

Director of Power Services

Date

Director of Internal Operations

Date

Chief Executive Officer Date

22

Appendix C: DEFINITIONS

Back Office: That part of a trading organization which handles transaction accounting, confirmations, management reporting, and working capital management.

Bilateral Transaction: Any physical or financial transaction between two counterparties, neither of whom is an Exchange or market entity such as CAISO.

Cash Flow at Risk: A measure of the potential shortfall in cash flow from a specified level during a specified period of time at a specified confidence level.

CAISO: California Independent System Operator. CAISO operates a California bulk power transmission grid, administers the State’s wholesale electricity markets, and provides reliability planning and generation dispatch.

CCA: Community Choice Aggregator. CCAs allow local government agencies such as cities and/or counties to purchase and/or develop generation supplies on behalf of their residents, businesses and municipal accounts.

CFTC: Commodity Futures Trading Commission. The CFTC is a U.S. federal agency that is responsible for regulating commodity futures and swap markets. It goals include the promotion of competitive and efficient futures markets and the protection of investors against manipulation, abusive trade practices and fraud.

Clearing: Clearing is the process of reconciling purchases and sales of a commodity, as well as the direct transfer of funds from one financial institution to another. The process validates the availability of funds, records the transfer, and in the case of financial securities, ensure the delivery to the buyer.

Commodity: A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.

Confirmation Letter: A letter agreement between two counterparties that details the specific commercial terms (e.g., price, quantity and point of delivery) of a transaction.

Congestion Revenue Right: A point-to-point financial instrument in the Day-Ahead Energy Market that entitles the holder to receive compensation for or requires the holder to pay certain congestion related transmission charges that arise when the transmission system is congested.

Counterparty Credit Risk: The risk of financial loss resulting from a counterparty to a transaction failing to fulfill its obligations.

Day-ahead Market: The short-term forward market for efficiently allocating transmission capacity and facilitating purchases and sales of energy and scheduled bilateral transactions; conducted by CAISO prior to the operating day.

Delivery point: the point at which a commodity will be delivered and received.

FERC: Federal Energy Regulatory Commission. FERC is a federal agency that regulates the interstate transmission of electricity, natural gas and oil. FERC also reviews proposals to build liquefied natural gas terminals, interstate natural gas pipelines, as well as licenses hydroelectric generation projects.

23

Front Office: That part of a trading organization which solicits customer business, services existing customers, executes trades and ensures the physical delivery of commodities.

Hedging products: Hedging products means capacity, energy, renewable energy credits or other products related to a specific transaction.

Hedging Transaction: A transaction designed to reduce the financial exposure of a specific outstanding position or portfolio; “fully hedged” equates to complete elimination of the targeted risk and “partially hedged” implies a risk reduction of less than 100%.

IOU: An Investor Owned Utility (IOU) is a business organization providing electrical and/or natural gas services to both retail and wholesale consumers and is management as a private enterprise.

Middle Office: That part of a trading organization that measures and reports on market risks, develops risk management policies and monitors compliance with those policies, manages contract administration and credit, and keeps management and the Board informed on risk management issues.

Speculation: Speculation is the act of trading an asset with the expectation of realizing financial gain resulting from a change in price in the asset being transacted.


Staff Report Item 12 TO: MBCP Operations Board of Directors FROM: Tom Habashi, Chief Executive Officer SUBJECT: MBCP Retirement Plan DATE: February 7, 2018

RECOMMENDATION

Forward recommendation to the Policy Board to approve:

• Adoption of participation in 401(a) retirement plan for MBCP instead of the conventional social security or CalPERS systems;

• Direct MBCP CEO to negotiate an agreement with Public Agency Retirement Services (PARS) to administer retirement plan for MBCP employees.

BACKGROUND

As a California governmental agency, MBCP has the option to opt out of social security as its primary retirement system. There are three other options available to MBCP: California Employee Retirement System (CalPERS), Public Agency Retirement Services (PARS) or a private plan. ANALYSIS & DISCUSSION

The CalPERS plan is a variable contribution, defined benefit plan that has gone through some major overhaul in the past few years, making it less attractive to prospective employees. In addition, the variability of the contribution increases uncertainty of its cost to MBCP.

Public Agency Retirement Services is a consulting group that specializes in providing

of 3

retirement services for public agencies. PARS’ largest client is Los Angeles Unified School District with over 80,000 participants. PARS work directly with over 150 cities, 300 school districts and 20 counties in California on various retirement plan services. PARS offer plans that combine many of the attractive features of social security and CalPERS. It’s a defined mandatory contribution 401(a) plan that allows individuals to elect how to invest their retirement fund. Upon retirement, employees will be able to collect their retirement funds as a lump sum or annuities.

A private plan, while offering the maximum flexibility to the employees in terms of how to invest their retirement funds, also carries the most risk to the agency and likely the highest administrative cost.

PARS offer a clear advantage over the social security system, given that employees in high cost of living areas such as Monterey Peninsula are likely to make substantial contribution to the Social Security Program and eventually reap little in return. In addition, Congress is studying methods to prolong the solvency of the social security system such as “means testing” which would more likely further reduce retirement pay for MBCP employees.

Prior to considering PARS, staff participated in the Social Security System and 401(a) plans to supplement the employee retirement fund, funded at a matching contribution of 5 percent. Continuing to move forward with this plan, the total contribution toward each employee’s retirement fund would be 22.4% of the employee salary (11.2% for employee and MBCP, each).

Therefore, staff recommends that MBCP offer a defined, mandatory contribution matching plan of 10% each (total 20%) for prospective employees, saving both MBCP and the employee 2.4% of the employee’s pay, while providing the employees with better option for retirement savings.

MBCP has a one-time option to choose a retirement plan to secure the future of its prospective employees. Staff believes that choosing 401(a) mandatory defined contribution is the best option to attract and keep the best talent in the industry and that PARS is best suited to administer that plan for MBCP.

of 3

FISCAL IMPACT

MBCP will realize reduction in contribution to the employee’s retirement plans ranging from $35,000 to $60,000 annually for the next several years.

CONCLUSION

Opting out of social Security and participating in PARS’ retirement plan should be beneficial to both MBCP and its employees ATTACHMENTS

1. PARS Summary of Services 2. PARS Defined Contribution Program 3. CalPERS LA Times Editorial

Summary of Services

Pension Rate Stabilization Program (PRSP)The PARS Pension Rate Stabilization Program (PRSP) is based on a first-of-its-kind IRS-approved Section 115 irrevocable trust designed for agencies to prefund pension costs and address rising retirement system contribution rates and their growing pension liabilities. The PARS PRSP allows your agency to securely set aside funds, separately and apart from your retirement system, in a tax-exempt funding vehicle to mitigate long-term contribution rate volatility. Participating agencies maintain local control over assets held in the trust and can determine the appropriate investment goals and risk tolerance level with specially designed low-cost investment pools.

GASB 45/75 OPEB Trust ProgramPARS (Public Agency Retirement Services) has established an IRS-approved Section 115 trust structure to meet the prefunding obligations of public agencies. An irrevocable trust allows agencies to choose diversified investments with the potential for a higher rate of return than traditional general fund approaches. As a result, an agency can reduce their Net OPEB Liabilities (NOL) by as much as 30 to 50 percent. The PARS OPEB Trust Program provides agencies with flexibility and a broad array of investment opportunities to meet risk tolerance, budgeting requirements and agency investment policies. PARS provides a cost-effective means of measuring, managing and funding a benefit that will only continue to grow in liabilities and importance with the retirement of the Baby Boom generation.

Alternate Retirement System (ARS)Since 1991, PARS (Public Agency Retirement Services) has been providing public agencies a qualifying alternative plan called the Alternate Retirement System (ARS) for Part-time, Seasonal and Temporary (PST) employees in lieu of Social Security. According to federal law (OBRA 90), all employees who are not members of CalPERS, CalSTRS or another local retirement plan must be covered by either Social Security or an alternate plan. The PARS ARS program is a qualifying alternative plan that is designed to save money on payroll costs while providing significant benefits for the participating employees such as 100% immediate vesting, pre-tax contributions, and portability to rollover to Individual Retirement Accounts (IRAs) and other retirement plans, thereby creating a win-win for both the agency and its employees.

Defined Benefit and Defined contribution plans (SDB/SDC)PARS can create primary employee retirement benefit Defined Benefit and Defined Contribution Plans for your agency or Defined Contribution Plans to supplement an existing retirement system, for an added layer of benefits to your employees. We tailor plans to the specific needs of your agency, whether it be to help you attract, retain and reward employees or to reduce pension and labor costs.

For more information, Please contact:

Visist us online at www.pars.org

Mitch Barker Executive Vice [email protected] or (800) 540-6369 ext. 116

Dennis yuExecutive Vice [email protected] or (800) 540-6369 ext. 104

Kevin O’Rourke Senior [email protected] or (707) 249-5356

Rachael Sanders Manager, Retirement [email protected] or (800) 540-6369 ext. 121

Jennifer Meza Supervisor, Client [email protected] or (800) 540-6369 ext. 141

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of in

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men

t te

rms

rele

vant

to

the

inve

stm

ent

opti

ons

unde

r th

is p

lan.

o

f 8In

vest

men

t Opt

ions

as

of S

ep/2

6/20

17

IMPO

RTA

NT

NO

TES

The

perfo

rman

ce d

ata

for a

sub

-acc

ount

for a

ny p

erio

d pr

ior t

o th

e su

b-ac

coun

t Inc

eptio

n Da

te is

hyp

othe

tical

bas

ed o

n th

e pe

rform

ance

of t

heun

derly

ing

inve

stm

ent s

ince

ince

ptio

n of

the

unde

rlyin

g in

vest

men

t. Al

lot

her p

erfo

rman

ce d

ata

is ac

tual

(exc

ept a

s ot

herw

ise in

dica

ted)

. Ret

urns

for

any

perio

d gr

eate

r tha

n on

e ye

ar a

re a

nnua

lized

. Per

form

ance

dat

a re

flect

sch

ange

s in

the

price

s of

a s

ub-a

ccou

nt's

inve

stm

ents

(inc

ludi

ng th

e sh

ares

of a

n un

derly

ing

mut

ual f

und

or c

olle

ctiv

e tru

st),

rein

vest

men

t of d

ivid

ends

and

capi

tal g

ains

and

ded

uctio

ns fo

r the

exp

ense

ratio

.

* Your

com

pany

's q

ualif

ied

retir

emen

t pla

n of

fers

par

ticip

ants

the

oppo

rtuni

tyto

con

tribu

te to

inve

stm

ent o

ptio

ns a

vaila

ble

unde

r a g

roup

ann

uity

con

tract

with

John

Han

cock

Life

Insu

ranc

e Co

mpa

ny (U

.S.A

.) (Jo

hn H

anco

ck U

SA).

Thes

e in

vest

men

t opt

ions

may

be

sub-

acco

unts

(poo

led

fund

s) in

vest

ing

dire

ctly

in u

nder

lying

mut

ual f

unds

, or t

hey

may

be

Gua

rant

eed

Inte

rest

Acco

unts

.

The

Fund

s of

fere

d on

the

JH S

igna

ture

pla

tform

are

cla

ssifi

ed in

to fi

ve ri

skca

tego

ries.

The

risk

cate

gory

in w

hich

a F

und

is pl

aced

is d

eter

min

ed b

ased

on w

here

the

5 ye

ar S

tand

ard

Devi

atio

n (d

efin

ed b

elow

) of t

he u

nder

lying

fund

's M

orni

ngst

ar a

sset

cla

ss fa

lls o

n th

e fo

llow

ing

scal

e: if

the

5 ye

arSt

anda

rd D

evia

tion

of th

e un

derly

ing

fund

's M

orni

ngst

ar a

sset

cla

ss is

15.

00or

hig

her,

the

Fund

is c

lass

ified

as

"Agg

ress

ive;

" be

twee

n 12

.00

and

14.9

9as

"G

row

th;"

bet

wee

n 7.

00 a

nd 1

1.99

as

"Gro

wth

& In

com

e;"

betw

een

2.00

and

6.9

9 as

"In

com

e;"

and

1.99

and

bel

ow a

s "C

onse

rvat

ive.

" (If

a 5

year

Sta

ndar

d De

viat

ion

is no

t ava

ilabl

e fo

r a M

orni

ngst

ar a

sset

cla

ss, t

hen

the

3 ye

ar S

tand

ard

Devi

atio

n of

the

unde

rlyin

g fu

nd's

Mor

ning

star

ass

etcla

ss is

use

d to

det

erm

ine

the

Fund

's ri

sk c

ateg

ory.

If a

3 Ye

ar S

tand

ard

Devi

atio

n is

not a

vaila

ble

for a

Mor

ning

star

ass

et c

lass

, the

n th

e av

erag

e of

the

Stan

dard

Dev

iatio

n of

the

fund

s w

ithin

the

Mor

ning

star

ass

et c

lass

isus

ed to

det

erm

ine

the

Fund

's ri

sk c

ateg

ory.

Stan

dard

Dev

iatio

n is

defin

ed b

yM

orni

ngst

ar a

s a

stat

istica

l mea

sure

men

t of d

isper

sion

abou

t an

aver

age,

whi

ch, f

or a

mut

ual f

und,

dep

icts

how

wid

ely

the

retu

rns

varie

d ov

er a

certa

in p

erio

d of

tim

e.

† Inde

x Pe

rform

ance

: Ind

ex p

erfo

rman

ce s

how

n is

for a

bro

ad-b

ased

secu

ritie

s m

arke

t ind

ex. I

ndice

s ar

e un

man

aged

and

can

not b

e in

vest

edin

dire

ctly.

Inde

x re

turn

s w

ere

prep

ared

usin

g M

orni

ngst

ar, I

nc. s

oftw

are

and

data

. The

per

form

ance

of a

n In

dex

does

not

inclu

de a

ny p

ortfo

lio o

rin

sura

nce-

rela

ted

char

ges.

If th

ese

char

ges

wer

e re

flect

ed, p

erfo

rman

cew

ould

be

low

er. P

ast p

erfo

rman

ce is

not

a g

uara

ntee

of f

utur

e re

sults

.

9 Acco

unt b

alan

ce re

porte

d m

ay in

clude

ass

ets

trans

ferre

d fro

m a

noth

erFu

nd, w

hich

was

per

man

ently

clo

sed

on o

r abo

ut A

pril

30, 2

007.

Con

tact

your

John

Han

cock

repr

esen

tativ

e fo

r mor

e in

form

atio

n.

13Th

e to

tal r

even

ue Jo

hn H

anco

ck re

ceiv

es o

n th

is Fu

nd is

hig

her t

han

thos

ead

vise

d or

sub

-adv

ised

exclu

sivel

y by

una

ffilia

ted

entit

ies.

John

Han

cock

and

its a

ffilia

tes

prov

ide

exclu

sive

advi

sory

and

sub

-adv

isory

ser

vice

s fo

r the

unde

rlyin

g fu

nd. F

or th

ese

serv

ices,

John

Han

cock

and

its

affil

iate

s re

ceiv

ead

ditio

nal f

ees

whi

ch a

re in

clude

d in

the

unde

rlyin

g fu

nd e

xpen

se ra

tio (i

.e.

Fund

Exp

ense

Rat

io o

r FER

).

15Ac

coun

t bal

ance

repo

rted

for t

his

Fund

may

inclu

de a

sset

s tra

nsfe

rred

from

ano

ther

Fun

d, w

hich

will

be

perm

anen

tly c

lose

d on

or a

bout

Apr

il 26

,20

10. C

onsu

lt yo

ur Jo

hn H

anco

ck re

pres

enta

tive

for m

ore

info

rmat

ion.

22Th

e un

derly

ing

fund

cha

nged

its

nam

e ef

fect

ive

on o

r abo

ut M

ay 9

, 201

1.Pe

rform

ance

sho

wn

for p

erio

ds p

rior t

o th

at d

ate

refle

ct th

e re

sults

und

er it

sfo

rmer

nam

e.

31Ac

coun

t bal

ance

repo

rted

may

inclu

de a

sset

s tra

nsfe

rred

from

ano

ther

Fund

, whi

ch w

as p

erm

anen

tly c

lose

d on

or a

bout

Apr

il 27

, 200

9. C

onta

ctyo

ur Jo

hn H

anco

ck re

pres

enta

tive

for m

ore

info

rmat

ion.

34Th

is su

b-ac

coun

t was

intro

duce

d Se

ptem

ber 6

, 200

2.

36Th

is su

b-ac

coun

t pre

viou

sly in

vest

ed in

a d

iffer

ent s

hare

cla

ss o

f the

sam

eun

derly

ing

portf

olio

. It b

egan

inve

stin

g in

the

curre

nt s

hare

cla

ss e

ffect

ive

onor

abo

ut M

ay 1

0, 2

010.

Per

form

ance

sho

wn

for p

erio

ds p

rior t

o th

at d

ate

isba

sed

on th

e pe

rform

ance

of t

he c

urre

nt s

hare

cla

ss.

38Th

is su

b-ac

coun

t was

intro

duce

d M

ay 2

, 200

3.

39Th

is su

b-ac

coun

t was

intro

duce

d M

ay 1

4, 2

004.

40Th

is su

b-ac

coun

t pre

viou

sly in

vest

ed in

a d

iffer

ent s

hare

cla

ss o

f the

sam

eun

derly

ing

portf

olio

. It b

egan

inve

stin

g in

the

curre

nt s

hare

cla

ss e

ffect

ive

onor

abo

ut Ju

ly 28

, 200

8. P

erfo

rman

ce s

how

n fo

r per

iods

prio

r to

that

dat

e is

base

d on

the

perfo

rman

ce o

f the

cur

rent

sha

re c

lass

.

41Ac

coun

t bal

ance

repo

rted

may

inclu

de a

sset

s tra

nsfe

rred

from

ano

ther

Fund

, whi

ch w

as p

erm

anen

tly c

lose

d on

or a

bout

Oct

ober

27,

200

8.Co

ntac

t you

r Joh

n Ha

ncoc

k re

pres

enta

tive

for m

ore

info

rmat

ion.

48Ac

coun

t bal

ance

repo

rted

may

inclu

de a

sset

s tra

nsfe

rred

from

ano

ther

Fund

, whi

ch w

as p

erm

anen

tly c

lose

d on

or a

bout

Oct

ober

25,

201

0. P

leas

eco

ntac

t you

r Joh

n Ha

ncoc

k re

pres

enta

tive

for m

ore

info

rmat

ion.

53Th

is su

b-ac

coun

t was

intro

duce

d on

or a

bout

May

6, 2

005.

54Ac

coun

t bal

ance

repo

rted

may

inclu

de a

sset

s tra

nsfe

rred

from

ano

ther

Fund

, whi

ch w

as p

erm

anen

tly c

lose

d on

or a

bout

Apr

il 18

, 201

1. P

leas

eco

ntac

t you

r Joh

n Ha

ncoc

k re

pres

enta

tive

for m

ore

info

rmat

ion.

57Ac

coun

t bal

ance

repo

rted

may

inclu

de a

sset

s tra

nsfe

rred

from

ano

ther

Fund

, whi

ch w

as p

erm

anen

tly c

lose

d on

or a

bout

Oct

ober

26,

200

9.Co

ntac

t you

r Joh

n Ha

ncoc

k re

pres

enta

tive

for m

ore

info

rmat

ion.

61Th

is su

b-ac

coun

t pre

viou

sly in

vest

ed in

a d

iffer

ent s

hare

cla

ss o

f the

sam

eun

derly

ing

portf

olio

. It b

egan

inve

stin

g in

the

curre

nt s

hare

cla

ss e

ffect

ive

on o

r abo

ut N

ovem

ber 9

, 200

9. P

erfo

rman

ce s

how

n fo

r per

iods

prio

r to

that

date

is b

ased

on

the

perfo

rman

ce o

f the

cur

rent

sha

re c

lass

.

65Th

is su

b-ac

coun

t pre

viou

sly in

vest

ed in

a d

iffer

ent s

hare

cla

ss o

f the

sam

eun

derly

ing

portf

olio

. It b

egan

inve

stin

g in

the

curre

nt s

hare

cla

ss e

ffect

ive

onor

abo

ut Ju

ne 1

, 200

9. P

erfo

rman

ce s

how

n fo

r per

iods

prio

r to

that

dat

e is

base

d on

the

perfo

rman

ce o

f the

cur

rent

sha

re c

lass

.

76N

one

of th

e In

dex

Fund

s or

the

unde

rlyin

g Jo

hn H

anco

ck T

rust

Inde

x Tr

usts

or E

TFs

are

spon

sore

d, e

ndor

sed,

man

aged

, adv

ised,

sol

d or

pro

mot

ed b

yan

y of

the

resp

ectiv

e co

mpa

nies

that

spo

nsor

the

broa

d-ba

sed

secu

ritie

sm

arke

t ind

ex, a

nd n

one

of th

ese

com

pani

es m

ake

any

repr

esen

tatio

nre

gard

ing

the

advi

sabi

lity

of in

vest

ing

in th

e In

dex

Fund

.

83Th

is in

vest

men

t opt

ion

is de

emed

a ''

Com

petin

g'' i

nves

tmen

t opt

ion

with

the

John

Han

cock

Sta

ble

Valu

e Fu

nd a

nd m

ay n

ot b

e av

aila

ble.

An

inve

stm

ent i

n th

is po

rtfol

io is

not

insu

red

or g

uara

ntee

d by

The

Fed

eral

Depo

sit In

sura

nce

Corp

orat

ion

or a

ny o

ther

gov

ernm

ent a

genc

y. Al

thou

ghth

e un

derly

ing

portf

olio

see

ks to

pre

serv

e th

e va

lue

of a

n in

vest

men

t, it

ispo

ssib

le to

lose

mon

ey b

y in

vest

ing

in th

is po

rtfol

io.

87Th

is su

b-ac

coun

t was

intro

duce

d N

ovem

ber 5

, 201

0.

91Th

e un

derly

ing

John

Han

cock

Var

iabl

e In

sura

nce

Trus

t por

tfolio

is n

ot a

reta

il m

utua

l fun

d an

d is

only

avai

labl

e un

der v

aria

ble

annu

ity c

ontra

cts,

varia

ble

life

polic

ies

or th

roug

h pa

rticip

atio

n in

tax

qual

ified

retir

emen

tpl

ans.

Alth

ough

the

portf

olio

s' in

vest

men

t adv

iser o

r sub

-adv

isers

may

man

age

reta

il m

utua

l fun

ds w

ith s

imila

r nam

es a

nd in

vest

men

t obj

ectiv

es,

no re

pres

enta

tion

is m

ade,

and

no

assu

ranc

e is

give

n, th

at a

ny p

ortfo

lio's

inve

stm

ent r

esul

ts w

ill b

e co

mpa

rabl

e to

the

inve

stm

ent r

esul

ts o

f any

oth

erfu

nd, i

nclu

ding

oth

er fu

nds

with

the

sam

e in

vest

men

t adv

iser o

r sub

-adv

iser.

Past

per

form

ance

is n

o gu

aran

tee

of fu

ture

resu

lts.

97Th

is su

b-ac

coun

t was

intro

duce

d M

ay 6

, 201

1.

99W

hile

vie

win

g th

is re

port

onlin

e, c

lick

on th

e na

me

of th

e su

b-ac

coun

t for

addi

tiona

l det

ails

abou

t the

cha

nges

. If y

ou h

ave

ques

tions

, con

tact

you

rlo

cal J

ohn

Hanc

ock

repr

esen

tativ

e.

106 Ac

coun

t bal

ance

repo

rted

may

inclu

de a

sset

s tra

nsfe

rred

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ano

ther

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, whi

ch w

as p

erm

anen

tly c

lose

d on

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bout

Apr

il 23

, 201

2. P

leas

eco

ntac

t you

r Joh

n Ha

ncoc

k re

pres

enta

tive

for m

ore

info

rmat

ion.

110 Th

is su

b-ac

coun

t pre

viou

sly in

vest

ed in

a d

iffer

ent u

nder

lying

por

tfolio

.It

bega

n in

vest

ing

in th

e cu

rrent

und

erlyi

ng p

ortfo

lio e

ffect

ive

Nov

embe

r2,

201

2. P

erfo

rman

ce s

how

n fo

r per

iods

prio

r to

that

dat

e is

base

d on

the

perfo

rman

ce o

f the

pre

viou

s un

derly

ing

portf

olio

/sub

-acc

ount

. The

nam

e of

o

f 8In

vest

men

t Opt

ions

as

of S

ep/2

6/20

17

this

sub-

acco

unt m

ay c

hang

e ef

fect

ive

on o

r abo

ut N

ovem

ber 2

, 201

2 to

mor

e ac

cura

tely

refle

ct th

e na

me

of th

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derly

ing

fund

.

111 Th

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derly

ing

fund

cha

nged

its

nam

e ef

fect

ive

on o

r abo

ut N

ovem

ber 2

,20

12. P

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how

n fo

r per

iods

prio

r to

that

dat

e re

flect

the

resu

ltsun

der i

ts fo

rmer

nam

e. T

he n

ame

of th

is su

b-ac

coun

t cha

nged

effe

ctiv

eon

or a

bout

Nov

embe

r 2, 2

012

to m

ore

accu

rate

ly re

flect

the

nam

e of

the

unde

rlyin

g fu

nd.

114 If

John

Han

cock

has

bee

n pr

ovid

ed w

ith y

our d

ate

of b

irth

and

noin

vest

men

t ins

truct

ions

at t

he ti

me

of e

nrol

lmen

t, th

en, o

n th

e da

te o

fyo

ur e

nrol

lmen

t, yo

u w

ill b

e de

faul

t enr

olle

d in

to a

Tar

get D

ate

(Life

cycle

Portf

olio

) bas

ed o

n yo

ur y

ear o

f birt

h an

d a

retir

emen

t age

of 6

7, a

ndsu

bjec

t to

the

Targ

et D

ate

then

in e

xist

ence

.

120 Th

is su

b-ac

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t pre

viou

sly in

vest

ed in

a d

iffer

ent s

hare

cla

ss o

f the

sam

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portf

olio

. It b

egan

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stin

g in

the

curre

nt s

hare

cla

ss e

ffect

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on o

r abo

ut N

ovem

ber 8

, 201

3. P

erfo

rman

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how

n fo

r per

iods

prio

r to

that

date

is b

ased

on

the

perfo

rman

ce o

f the

cur

rent

sha

re c

lass

.

123 Ac

coun

t bal

ance

repo

rted

may

inclu

de a

sset

s tra

nsfe

rred

from

ano

ther

Fund

, whi

ch w

as p

erm

anen

tly c

lose

d on

or a

bout

Apr

il 11

, 201

4. P

leas

eco

ntac

t you

r Joh

n Ha

ncoc

k re

pres

enta

tive

for m

ore

info

rmat

ion.

124 Th

is su

b-ac

coun

t pre

viou

sly in

vest

ed in

a d

iffer

ent s

hare

cla

ss o

f the

sam

eun

derly

ing

portf

olio

. It b

egan

inve

stin

g in

the

curre

nt s

hare

cla

ss e

ffect

ive

onor

abo

ut M

ay 3

, 201

4. P

erfo

rman

ce s

how

n fo

r per

iods

prio

r to

that

dat

e is

base

d on

the

perfo

rman

ce o

f the

cur

rent

sha

re c

lass

.

125 Th

e na

me

of th

is su

b-ac

coun

t cha

nged

effe

ctiv

e on

or a

bout

May

3,

2014

.

126 Th

is su

b-ac

coun

t was

intro

duce

d M

ay 3

, 201

4.

130 Th

is su

b-ac

coun

t pre

viou

sly in

vest

ed in

a d

iffer

ent s

hare

cla

ss o

f the

sam

eun

derly

ing

portf

olio

. It b

egan

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stin

g in

the

curre

nt s

hare

cla

ss e

ffect

ive

on o

r abo

ut N

ovem

ber 8

, 201

4. P

erfo

rman

ce s

how

n fo

r per

iods

prio

r to

that

date

is b

ased

on

the

perfo

rman

ce o

f the

old

sha

re c

lass

.

138 Th

is su

b-ac

coun

t was

rece

ntly

intro

duce

d on

May

8, 2

015

and

may

not

be a

vaila

ble

in a

ll st

ates

. Con

tact

you

r Joh

n Ha

ncoc

k re

pres

enta

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tode

term

ine

if th

is su

b-ac

coun

t is

avai

labl

e to

you

r pla

n.

142 Th

is in

vest

men

t opt

ion

is de

emed

a 'C

ompe

ting'

inve

stm

ent o

ptio

n w

ithth

e Re

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ust N

ew Y

ork

Life

Anc

hor A

ccou

nt a

nd m

ay n

ot b

e av

aila

ble

if th

e Re

lianc

e Tr

ust N

ew Y

ork

Life

Anc

hor A

ccou

nt is

sel

ecte

d. F

or fu

rther

deta

ils, p

leas

e re

fer t

o th

e O

fferin

g St

atem

ent a

nd D

ecla

ratio

n of

Tru

st.

Cont

act y

our J

ohn

Hanc

ock

repr

esen

tativ

e if

you

wish

to o

btai

n a

copy

.

143 Th

is in

vest

men

t opt

ion

is de

emed

a 'C

ompe

ting'

inve

stm

ent o

ptio

n w

ithth

e Fe

dera

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Capi

tal P

rese

rvat

ion

Fund

and

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not

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avai

labl

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the

Fede

rate

d Ca

pita

l Pre

serv

atio

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nd is

sel

ecte

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or fu

rther

det

ails,

ple

ase

refe

r to

the

Offe

ring

Circ

ular

and

Dec

lara

tion

of T

rust

. Con

tact

you

r Joh

nHa

ncoc

k re

pres

enta

tive

if yo

u w

ish to

obt

ain

a co

py.

147 Ac

coun

t bal

ance

repo

rted

may

inclu

de a

sset

s tra

nsfe

rred

from

ano

ther

Fund

, whi

ch w

as p

erm

anen

tly c

lose

d on

or a

bout

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ober

16,

201

5. P

leas

eco

ntac

t you

r Joh

n Ha

ncoc

k re

pres

enta

tive

for m

ore

info

rmat

ion.

154 Th

is su

b-ac

coun

t pre

viou

sly in

vest

ed in

a d

iffer

ent s

hare

cla

ss o

f the

sam

eun

derly

ing

portf

olio

. It b

egan

inve

stin

g in

the

curre

nt s

hare

cla

ss e

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onor

abo

ut Ju

ne 1

1, 2

016.

Per

form

ance

sho

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for p

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ds p

rior t

o th

at d

ate

isba

sed

on th

e pe

rform

ance

of t

he c

urre

nt s

hare

cla

ss.

157 Th

is su

b-ac

coun

t was

rece

ntly

intro

duce

d on

June

11,

201

6 an

d m

ayno

t be

avai

labl

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all

stat

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our J

ohn

Hanc

ock

repr

esen

tativ

e to

dete

rmin

e if

this

sub-

acco

unt i

s av

aila

ble

to y

our p

lan.

158 Ef

fect

ive

April

6, 2

016,

the

unde

rlyin

g ho

ldin

gs o

f the

Mon

ey M

arke

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nd w

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ified

in o

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to c

ompl

y w

ith th

e de

finiti

on o

f a G

over

nmen

tm

oney

mar

ket f

und

as s

et o

ut b

y th

e SE

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hat r

ulin

g ta

kes

effe

ct O

ctob

er14

, 201

6.

166 Th

is in

vest

men

t opt

ion

is de

emed

a 'C

ompe

ting'

inve

stm

ent o

ptio

n w

ithth

e Re

lianc

e M

etLi

fe S

tabl

e Va

lue

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and

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avai

labl

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ble

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e Fu

nd is

sel

ecte

d. F

or fu

rther

det

ails,

ple

ase

refe

r to

the

Offe

ring

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ular

and

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lara

tion

of T

rust

. Con

tact

you

r Joh

nHa

ncoc

k re

pres

enta

tive

if yo

u w

ish to

obt

ain

a co

py.

179 Th

e un

derly

ing

fund

cha

nged

its

nam

e ef

fect

ive

on o

r abo

ut F

ebru

ary

1,20

17. P

erfo

rman

ce s

how

n fo

r per

iods

prio

r to

that

dat

e re

flect

the

resu

ltsun

der i

ts fo

rmer

nam

e. T

he n

ame

of th

is su

b-ac

coun

t cha

nged

effe

ctiv

e on

or a

bout

May

6, 2

017

to m

ore

accu

rate

ly re

flect

the

nam

e of

the

unde

rlyin

gfu

nd.

§ The

Tota

l Ann

ual O

pera

ting

Expe

nses

("TA

OE"

) is

mad

e up

of J

ohn

Hanc

ock'

s (i)

"Re

venu

e fro

m S

ub-a

ccou

nt",

and

(ii)

the

expe

nses

of t

heun

derly

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fund

(bas

ed o

n ex

pens

e ra

tios

repo

rted

in th

e m

ost r

ecen

tpr

ospe

ctus

es a

vaila

ble

as o

f the

dat

e of

prin

ting;

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R").

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unde

rlyin

gfu

nd o

f thi

s su

b-ac

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t has

eith

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aive

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on o

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cap

ped,

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fees

;th

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R us

ed to

det

erm

ine

the

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sub-

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unt t

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nves

ts in

the

unde

rlyin

g fu

nd is

the

net e

xpen

se ra

tio o

f the

und

erlyi

ng fu

nd. R

efer

to th

eFu

nd S

heet

for d

etai

ls.

o

f 8In

vest

men

t Opt

ions

as

of S

ep/2

6/20

17

To o

btai

n gr

oup

annu

ity in

vest

men

t opt

ion

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she

ets

and

pros

pect

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for e

ach

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unt's

und

erly

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stm

ent v

ehic

le c

all 1

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-395

-111

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hese

doc

umen

ts c

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in c

ompl

ete

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ils o

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vest

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isks

, fee

s,ch

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d ex

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mat

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abou

t the

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stm

ent v

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ully

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side

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ase

read

thes

e do

cum

ents

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eful

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o in

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eria

l is

for i

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mat

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purp

oses

onl

y. Jo

hn H

anco

ck U

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oes

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rovi

de in

vest

men

t, ta

x, p

lan

desig

n or

lega

l adv

ice. P

leas

e co

nsul

t you

r ow

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inve

stm

ent,

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sign-

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or le

gal s

tate

men

tsm

ade

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in.

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up a

nnui

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ontra

cts

and

reco

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reem

ents

are

issu

ed b

y Jo

hn H

anco

ck L

ife In

sura

nce

Com

pany

(U.S

.A.),

Bos

ton,

MA

(not

lice

nsed

in N

ew Y

ork)

. Joh

n Ha

ncoc

k Li

fe In

sura

nce

Com

pany

(U.S

.A.)

mak

es a

vaila

ble

a pl

atfo

rm o

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men

t alte

rnat

ives

to s

pons

ors

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sura

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Com

pany

(U.S

.A.)

does

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, and

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erta

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to, p

rovi

de im

parti

al in

vest

men

t adv

ice o

r giv

e ad

vice

in a

fidu

ciary

cap

acity

.

NOT

FDI

C IN

SURE

D | M

AY L

OSE

VAL

UE |

NOT

BAN

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UARA

NTE

ED

© 2

017

All r

ight

s re

serv

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GT-

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3/17

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906

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2011

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906

Another bad year for CalPERS - LA Times Page 1 of3

Editorial Another bad year for CalPERS

Pension fund CalPERS provides benefits to 1.8 million employees and retirees of the state government, cities and other local

agencies. (Los Angeles Times)

By The Times Editorial Board

JULY 27, 2016, s-oo AM

T he $300-billion California Public Employees' Retirement System this month reported its

worst investment returns in almost a decade: o.696. Bad years come and go, just like good

years, and large pension funds count on time healing the deepest wounds. But this

particular bad year pushed CalPERS' long-term average into dangerous waters, which suggests it's

time for the fund to rethink - again - just how well it expects its investments to perform in the

coming decades.

It's not a mere accounting exercise. The assumptions CalPERS makes about its returns

affect taxpayers and beneficiaries in at least two important ways. The more conservative CalPERS'

assumptions are, the more employers and workers have to contribute to the fund to cover the

projected cost of pension benefits. (And in this case, "employers" translates to state and local

governments, or taxpayers.) But the higher the expected rate of return, the more aggressively

CalPERS has to invest to meet its goals, and thus the greater the volatility and the risk oflosses.

http://www.latimes.com/opinion/editorialsna-ed-calpers-retums-20160726-snap-story .html 9/6/2016

Item 2Attachment 1

ATTACHMENT 3

Another bad year for CalPERS - LA Times Page2of3

'' The good times almost certainly will roll again, bat the question ls whether there will

be enough ..• to flll in the craters left by years like the last two.

CalPERS' situation is not unusual. Governmental pension funds across the country are being buffeted

by poorer-than-expected investment performance. According to a national tracking service, the long

term returns for public pension funds are expected to hit their lowest mark since the service started

gathering data in 2000, the Wall Street Journal reported Tuesday.

The results, combined with trends in the global economy, point to a new normal for pension-fund

investors - one with less potential for the rapid growth of yore and more risk of wild investment

swings.

CalPERS is responsible for the retiree pension and health benefits for 1.8 million current and

former employees on the payrolls of the state and 3,000 local governments (but not those serving Los

Angeles city or county) and school districts. Its funding comes from three main sources: about 1396

from public employees, 2296 from state and local governments and 6596 from investment returns. The

employees' contributions are set by contract (and guided by state law), so the main variables are the

contributions from state and local employers and the amount earned by the fund's investments.

To determine how much state and local governments have to contribute to CalPERS - and by

extension, how much less they have available for other priorities - the fund estimates how much it

expects its investments to earn in the coming years. It's current assumption is 7.596. That didn't seem

so unreasonable last year, when the fund was averaging 7.896 a year over a 20-year period. But after

its second consecutive bust, its 20-year average is down to a little over 796, and its unfunded liability

- the gap between how much it has on hand and how much it needs to cover future retirement

benefits - is expected to be around $130 billion, an increase of nearly 4096 over the previous year.

Granted, one reason for the abysmal results this year was that the stock market plunged in response

to "Brexit" right at the end of CalPERS' fiscal year. Nevertheless, there are plenty of economists

arguing that the underpinnings of investment growth are weaker now than in past decades.

Productivity increases have slowed in the U.S., and the economy is growing about half as fast as it did

in the 1990s. Even emerging economies around the world are growing more slowly. Meanwhile,

central banks in the U.S., Europe and other industrialized nations have kept interest rates low in the

~tt-r.· //un11m lati""'""~ f'nm/nn1n1nn/Pil1tnni:t lci/h1~ti-r.i:ilnP.r~-reh1m~-7.0160726-snan-storv .html 9/6/2016

Item 2Attachment 1

Another bad year for CalPERS - LA Times Page 3of3

face of low inflation, which has dragged down returns on such safe investments as blue-chip public

bonds.

In the short term, at least, it's politically easier for CalPERS to continue counting on big returns than

investing more conservatively and requiring state and local governments to pay more of the pension

costs. In the long term, though, CalPERS may find itself digging a deeper hole, necessitating a much

sharper increase in state and local payments when the day of reckoning arrives.

The good times almost certainly will roll again, but the question is whether there will be enough of

those good years to fill in the craters left by years like the last two. It would be better for state and

local governments to start grappling with the higher cost oflower pension-fund returns now, rather

than waiting until more drastic and painful steps are forced upon them.

Follow the Opinion section on Twitter @latimesopinion and Facebook

Copyright© 2016, Los Angeles Times

http://www.latimes.com/opinion/editorials/la-ed-calpers-returns-20160726-snap-story.html 9/6/2016

Item 2Attachment 1

DENNIS YU, CEBSSenior Vice President (800) 540-6369 x [email protected]

Summary of Services

Pension Rate Stabilization Program (PRSP)The PARS Pension Rate Stabilization Program (PRSP) provides a Section 115 irrevocable trust designed for agencies to prefund pension costs and reduce GASB 68 Net Pension Liability (NPL). This cutting edge program can mitigate increases in pension rate contributions, while at the same time providing employers with greater local control of assets and investment flexibility to create a more actuarially sound retirement system.

GASB 45/75 OPEB Trust Program (OPEB)Governmental Accounting Standards Board (GASB) Statement 45/75 raises the awareness of prefunding post retiree health care benefits through a qualified funding vehicle. PARS has obtained an exclusive IRS Private Letter Ruling for their multiple-employer Section 115 irrevocable trust to help public agencies address their OPEB obligations. The PARS Trust allows agencies to choose diversified investments with a higher rate of return than traditional general fund approaches. Funds held in the trust also count as assets against OPEB liabilities, unlike funds held in the general fund. As a result, an agency can reduce their unfunded liability and Annual Required Contribution (ARC) by as much as 30 – 40 percent. Our program provides agencies with flexibility and a broad array of investment opportunities to meet risk tolerance, budgeting requirements and agency investment policies. Our full-service approach includes a dedicated Senior Portfolio Manager who provides onsite reviews, makes recommendations, takes on fiduciary responsibility, is accessible by cell phone and provides Investment Policy assistance.

Alternate Retirement System (ARS)PARS ARS is an alternative to Social Security for part-time, seasonal and temporary (PST) employees. ARS permanently reduces payroll costs with a total contribution of 7.5% of covered payroll (compared to 12.4% under Social Security) in compliance with OBRA 90. PARS ARS allows a smaller retirement contribution from the agency (79% savings or more versus Social Security), yet still delivers significant benefits to employees including 100% immediate vesting; contributions made on a pre-tax basis, which means more take home pay; and account portablility (employees can cash out or rollover when they leave), an important benefit to this employee segment.

Defined Benefit and Defined Contribution Plans (SDB/SDC)PARS can create primary employee retirement Defined Benefit and Defined Contribution Plans for your agency or Defined Contribution Plans to supplement an existing retirement system, for an added layer of benefits to your employees. We tailor plans to the specific needs of your agency, whether it be to help you attract, retain and reward employees or to reduce pension and labor costs.

Accumulated Leave Conversion Plan (ALP)With a PARS Accumulated Leave Conversion Plan, any form of leave including vacation, sick leave, compensatory time, administrative leave and floating holidays, can be converted to pension throughout active employment years of the employee into a 401(a) Defined Contribution Retirement Plan. This program gives agencies local control of the plan design along with the ability to set eligibility, vesting requirements and other variables. There is an added benefit of reduced costs as a result of contributions being made over time and according to the pay rate at the time of the contribution instead of at the end of employment. This program also offers valuable benefits to employees by providing a supplement to their PERS/County Act system retirement benefit and deferred taxation at retirement.

For more information please contact: MITCH BARKERExecutive Vice President (800) 540-6369 x 116 [email protected]

Item 2Attachment 2



TO: MBCP Operations Board of Directors FROM: Tom Habashi, Chief Executive Officer SUBJECT: Approve Amendment to MBCP Initial Organization Chart, Hiring and Salary

Schedule DATE: February 7, 2018

RECOMMENDATION Approval of Amendment to MBCP Initial Organization Chart, Hiring and Salary Schedule. The proposed amendments are as the following: 1. Addition of a new Financial Analyst position under the Director of Internal Operations 2. Addition of a new Power Supply Analyst I/II position under the Director of Power Services 3. Addition of a Business Development Manager position under the Director of Power Services 4. Addition of three Intern/Temporary Staff Support in the Communications and External

Affairs group 5. Retitle Marketing Manager to Marketing and Communications Manager 6. Retitle Key Account Manager to Strategic Account Manager 7. Reclassify the Government and External Affairs Manager position to Government and

External Affairs Coordinator 8. Reclassify the Regulatory/Legislative Analyst position to Regulatory/Legislative Manager BACKGROUND In September 2017, the MBCP Board approved the attached proposed job classifications, initial organization chart, hiring and salary schedule. MBCP is currently staffed through a combination of 7 full-time employees and consultant support under contract to MBCP and directed by the CEO. As MBCP achieves critical milestones and nears the first enrollment phase, there is a need to update the initial organization chart to sustainably meet the core needs of the operations.

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ANALYSIS & DISCUSSION AND BUDGET IMPACT 1. The addition of the Financial Analyst will provide high level administrative, project

coordination, and analytical finance support to the Director of Internal Operations. This proposed new position will result in an average monthly increase of $7,300.

2. The addition of the Power Supply Analyst I/II will provide the Power Resources and Energy team with data related to acquiring power suppliers, risk mitigation, deal structuring, contract negotiations, and project development to support the goals of supplying carbon free power. This proposed new position will result in an average monthly increase of $6,700.

3. In December 2017, MBCP executed a consulting service agreement with Mr. James Mark through May 2018. Mr. Mark performs the duties of the Business Development Manager, focusing on agricultural and industrial accounts, and resources management. The earlier change from a contract basis to a new full-time position after March 2018 will provide support for MBCP business development; resulting in an average monthly saving of $5,400 from April to May 2018. This proposed new position will result in an average monthly increase of $8,600 after May 2018.

4. The addition of the three interns/temporary staff will provide support for the

Communications and External Affairs group, during the enrollment phases in March and July 2018 respectively. These proposed new positions will result in an average monthly increase of $6,900.

5. The retitling of Marketing Manager to Marketing and Communications Manager will accurately reflect the nature of the job and the duties being performed. No budgetary impact.

6. The retitling of Key Account Manager to Strategic Account Manager will accurately reflect

the nature of the job and the duties being performed. No budgetary impact.

7. The Government and External Affairs Coordinator position will provide support to implement MBCP’s strategy in customer service and business and community development. This reclassification will result in an average monthly saving of $1,700.

8. The Regular/Legislation Manager position will provide support for a wide range of MBCP’s

regulatory and legislative matters, with emphasis on representation of MBCP’s interests at the California Public Utilities Commission (CPUC). The reclassification will result in an average monthly increase of $1,700.

FISCAL/BUDGETARY IMPACT The overall average monthly budgetary impact is $24,100.

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ATTACHMENTS

1. Approved Job Classifications, Initial Organization Chart, Hiring and Salary Schedule 2. Revised MBCP Organization Chart, Hiring Schedule and Salary Schedule

1

Proposed Job Classifications, Hiring and Salary Schedule

Job Classifications:

Job classifications/positions have been categorized to reflect the nature of the duties and the role

within the organization. Job descriptions will be drafted for each position, including a description of the

duties, minimum education and experience qualifications, and skills and abilities required to perform

the functions of each position. Specific positions and their corresponding job descriptions are proposed

to be updated by the HR Manager and CEO as needed. Material changes in job titles/classifications

and/or roles will be provided to the Board for approval as needed.

ATTACHMENT 1

2

Proposed Hiring Schedule:

The following is a proposed hiring schedule based on the previous experience of MBCP’s interim CEO.

It is subject to change as may be needed to fulfill each position with qualified candidates.

Position Group 1

Sep 01 2017 Group 2

Jan 1, 2018 Group 3

Mar 1 , 2018

Chief Executive Officer Complete

Board Clerk/Executive Assistant X

General Counsel (contract position) X

Regulatory Counsel (contract position) X

Director of Internal Operations X

Finance Manager X

IT/ Data Manager X

HR Manager X

Administrative Assistant X

Director of Power Services X

Energy Trading Manager X

Energy Planning Manager X

Contract & Compliance Manager X

Key Account Manager X

Director of Communications & External Affairs X

Marketing Manager X

Media and Communications Coordinator X

Community Outreach & Events Coordinator X

Government and External Affairs Manager X

Programs Coordinator X

Regulatory/Legislative Analyst X

Proposed Salary Schedule:

These proposed salary ranges are based on salary surveys of similar positions conducted in 2016 for

Silicon Valley Clean Energy and on current (June 2017) salary information received from Marin Clean

Energy; where there was great divergence, judgment was applied. These numbers do not include

MBCP benefits which are estimated to be valued at an additional 35%‐40% of the total salary.

Position/Title Minimum Salary

(Annual $) Maximum Salary

(Annual $)

Board Clerk/Executive Assistant $75,000 $120,000

General Counsel (contract) $120,000

Regulatory Counsel (contract) $120,000

Director of Internal Operations $120,000 $180,000

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Finance Manager $90,000 $150,000

IT Manager $75,000 $120,000

HR Manager $75,000 $120,000

Administrative Assistant $50,000 $75,000

Director of Power Services $150,000 $240,000

Energy Trading Manager $120,000 $180,000

Energy Planning Manager $120,000 $180,000

Contract & Compliance Manager $100,000 $150,000

Key Account Manager $80,000 $125,000

Director of Communications & External Affairs $120,000 $180,000

Marketing Manager $80,000 $120,000

Media and Communications Coordinator $60,000 $90,000

Community Outreach & Events Coordinator $50,000 $75,000

Government and External Affairs Manager $80,000 $120,000

Programs Coordinator $60,000 $90,000

Regulatory/Legislative Analyst $60,000 $100,000

The chart below represents a market salary survey done by SVCE in 2016 (collecting data from five

electric utilities, including MCE and SCP).

4

The chart below represents salary ranges for Marin Clean Energy Positions

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tATTACHMENT 2

Revised Hiring Schedule:

PositionGroup 1

By Dec 2017Group 2

Jan/Feb 2018Group 3

Mar 2018Group 4

After Mar 2018

Chief Executive Officer CompleteBoard Clerk/Executive Assistant Complete

Administrative Assistant CompleteGeneral Counsel (contract position) CompleteDirector of Internal Operations Complete

Finance Manager (contract position) CompleteHR Manager (contract position) CompleteIT/Data Manager (contract position) CompleteFinancial Analyst X

Director of Power Services XEnergy Trading Manager XEnergy Planning Manager XContract & Compliance Manager XBusiness Development Manager CompletePower Supply Analyst I/II X

Director of Communications & External Affairs XMarketing and Communications Manager Complete Media and Communications Coordinator Complete Community Outreach & Events Coordinator CompleteStrategic Account Manager CompletePrograms Coordinator CompleteIntern/Temp Staff Support (3) X

Regulatory/Legislative Manager XGovernment and External Affairs Coordinator X

ATTACHMENT 2

Revised Salary Schedule:

Position/TitleMinimum Salary

(Annual $)Maximum Salary

(Annual $)

Board Clerk/Executive Assistant $75,000 $120,000Administrative Assistant $50,000 $75,000

General Counsel (contract position) $120,000Director of Internal Operations $120,000 $180,000

Finance Manager (contract position) $90,000 $150,000HR Manager (contract position) $75,000 $120,000IT/ Data Manager (contract position) $75,000 $120,000Financial Analyst $75,000 $100,000

Director of Power Services $150,000 $240,000Energy Trading Manager $120,000 $180,000Energy Planning Manager $120,000 $180,000Contract & Compliance Manager $100,000 $150,000Business Development Manager $80,000 $125,000Power Supply Analyst I/II $60,000 $100,000

Director of Communications & External Affairs $120,000 $180,000Marketing and Communications Manager $80,000 $120,000 Media and Communications Coordinator $60,000 $90,000 Community Outreach & Events Coordinator $50,000 $75,000Strategic Account Manager $80,000 $125,000Programs Coordinator $60,000 $90,000Intern/Temp Staff Support (3) $15/hour $20/hour

Regulatory/Legislative Manager $80,000 $120,000Government and External Affairs Coordinator $60,000 $100,000

ATTACHMENT 2



TO: MBCP Operations Board of Directors FROM: Mark Bachman, Key Accounts Manager SUBJECT: Recommend adoption of a Net Surplus Compensation rate DATE: February 7, 2018

RECOMMENDATION: Forward staff recommendation to the policy board to adopt a Net Surplus Compensation (NSC) rate to compensate qualifying Net Energy Metered (NEM) customers for excess net generation. BACKGROUND: To complete its overall Net Energy Metering policy, MBCP is recommending the adoption of a Net Surplus Compensation rate to pay NEM customers that are also Net Surplus Generators for the excess power they generate and export to the grid. Community members supportive of the solar industry have asked MBCP to establish a Net Surplus Compensation rate more generous than the rate set by PG&E. DISCUSSION/ANALYSIS: Net Surplus Compensation is a mechanism that applies to a subset of Net Energy Metered customers that are Net Surplus Generators, meaning the total amount of energy they exported to the grid is greater than the total amount of energy they imported from the grid over the relevant period between true-ups (usually one year). NSC is a related but separate compensation mechanism from NEM, and most NEM customers do not qualify for NSC, because they are net importers of energy. PG&E’s NSC rate is defined as the simple rolling average of PG&E’s default load aggregation point (DLAP) price from 7 a.m. to 5 p.m., for a 12-month period (i.e. the wholesale rate). PG&E

calculates the NSC rate monthly, and the customer is compensated based on the rate established for the month in which their true-up occurs. As of January 2018, PG&E’s NSC rate is $.02822 per kWh. MBCP staff, recognizing that many NEM customers have made substantial investment in solar rooftop systems, anticipating higher compensation for the surplus energy produced by these systems, recommends establishing a different formula to compensate NEM customers with surplus compensation. Specifically, staff recommends that rate for NSC would be at the midpoint of average wholesale and retail rates.

For 2018 PG&E NSC rate $.02822 MBCP average wholesale rate $0.0459 MBCP average retail rate $0.0768 Proposed MBCP NSC Rate of $.06135

MBCP recommends setting its NSC rate for 2018 at $.06135. FISCAL IMPACT: Based on the most recent data provided by PG&E, there were approximately 8,740,337 kWh’s of energy that were exported to the grid by net surplus generators and would qualify for NSC over a 12-month period in MBCP service territory. Offering a rate of $0.06135 instead of matching PG&E’s rate of $0.02822 will increase operation cost for 2018 by roughly $290,000 CONCLUSION: MBCP staff believes that this Net Surplus Compensation rate is a significant improvement over that offered by the traditional utility and will better compensate net surplus generators for the excess power they export to the grid.