Common use of DEGREE OF FAIRNESS OF PROJECT- SPECIFIC NEGOTIATIONS Clause in Contracts

DEGREE OF FAIRNESS OF PROJECT- SPECIFIC NEGOTIATIONS. Xxxxxx observed three negotiation sessions between the PG&E and Sterling Planet teams in the summer of 2013. Sterling Planet requested very few changes from the version of PG&E’s Form Agreement provided to the seller in July. Instead, most of the variances from the Form Agreement were introduced by PG&E, apparently in an effort to ensure that, in the interest of fair treatment, there were no significant disparities in treatment of Sterling Planet vs. other sellers with whom the utility was negotiating in parallel. ' ' The Sterling Planet PSA may usefully be compared to two bilaterally negotiated contracts that PG&E signed with Barclays Bank PLC in 2010, which were amended earlier in 2010. While the Barclays transactions were to sell firmed-and-shaped bundled RPS-eligible energy to PG&E for a shorter delivery term, they are somewhat analogous to the Sterling Planet PSA in the nature of benefits. The confirmation agreements with Barclays did specify particular generation projects to deliver the product; this was consistent with the nature of the deliverables as firmed bundled RPS-eligible energy. It appears that the Sterling Planet contract has stronger ratepayer protections in these specific areas than these older Barclays agreements that were recently amended. Xxxxxx did not observe PG&E providing Sterling Planet with non-public information that advantaged it against competing sellers. Overall, Sterling Planet’s treatment by PG&E during negotiations was comparable with the treatment of its competitors Iberdrola and NextEra. Because of PG&E’s effort to minimize disparate treatment of sellers whose PSAs were developed in parallel with the Sterling Planet PSA, in Xxxxxx’x opinion the negotiations with Sterling Planet were conducted fairly with respect to competitors. The remaining disparities among the NextEra, Iberdrola, and Sterling Planet PSAs do not seem sufficient in likely impact to lead Xxxxxx to regard Sterling Planet as having been competitively disadvantaged. One issue with the Sterling Planet negotiation is whether the modifications that PG&E introduced to ensure greater fairness in its treatment of Sterling Planet compared to competitors actually impeded the fairness with which ratepayers were treated. These changes amounted to concessions that Sterling Planet did not request, and which arguably reduced ratepayer protections compared to PG&E’s Form Agreement. '' ' Xxxxxx’x opinion is that PG&E’s negotiations with Sterling Planet were, overall, conducted fairly with respect to competitors, and, with the exception of dropping the requirement of specifying projects from which RECs will be delivered, with respect to ratepayers.

DEGREE OF FAIRNESS OF PROJECT- SPECIFIC NEGOTIATIONS. Xxxxxx observed three negotiation sessions between The developers of the PG&E and Sterling Planet teams in the summer of 2013. Sterling Planet Midway I project requested very few numerous changes from the revised version of PG&E’s 2012 RPS Form Agreement provided to the seller in JulyMay 2013. Instead, most The siting of the project deep within the IID grid rather than interconnected to the CAISO grid required variances from PG&E’s Form Agreement in several provisions, and posed incremental risks to the buyer, making this a complex and lengthy negotiation. Of the requested changes, PG&E granted few concessions. Xxxxxx regards the changes from the Form Agreement were introduced by PG&E, apparently in an effort to ensure thatthe 83WI 8ME contract to have minimal adverse impact on ratepayers. Most of these seem modest changes that are, in Xxxxxx’x opinion, reasonable accommodations to the interest commercial situation, such as the provision governing the Xxxxxx believes that PG&E’s refusal to grant a large number of fair treatmentrequested concessions succeeded in maintaining fairness to direct competitors of 8minutenergy Renewables and GASNA, there were no significant disparities in by avoiding disparate treatment of Sterling Planet vs. Midway I compared to other sellers with whom the utility was negotiating in parallelprojects. ' ' The Sterling Planet PSA may usefully be compared to two bilaterally negotiated contracts that PG&E signed with Barclays Bank PLC in 2010, which were amended earlier in 2010. While the Barclays transactions were to sell firmed-and-shaped bundled RPS-eligible energy to PG&E for a shorter delivery term, they are somewhat analogous to the Sterling Planet PSA in the nature of benefits. The confirmation agreements with Barclays did specify particular generation projects to deliver the product; this was consistent with the nature of the deliverables as firmed bundled RPS-eligible energy. It appears that the Sterling Planet contract has stronger ratepayer protections in these specific areas than these older Barclays agreements that were recently amended. ' 11 ' '' ' Xxxxxx did not observe PG&E providing Sterling Planet the developers of the Midway I project with non-public information that advantaged it against competing sellers. Overall, Sterling PlanetPG&E’s treatment by PG&E of 83WI 8ME during negotiations was was, overall, comparable with the treatment of its competitors Iberdrola and NextErain the 2012 RPS RFO. Because Much of PG&E’s effort the challenge in the negotiation was to minimize arrive at terms that treat this IID-interconnected project roughly similarly to those granted to CAISO-interconnected projects while protecting ratepayers from risks that come with purchasing power from a project in a foreign balancing area. Xxxxxx believes that the parties largely succeeded in avoiding disparate treatment of sellers whose PSAs were developed in parallel with treatment, neither advantaging nor disadvantaging the Sterling Planet PSA, in Xxxxxx’x opinion the negotiations with Sterling Planet were conducted fairly with respect seller excessively compared to its competitors. The remaining disparities among the NextEra, Iberdrola, and Sterling Planet PSAs do not seem sufficient in likely impact keeping ratepayers whole when buying renewable energy from a seller whose long-term ability to lead Xxxxxx to regard Sterling Planet as having been competitively disadvantaged. One issue with the Sterling Planet negotiation is whether the modifications that PG&E introduced to ensure greater fairness in its treatment of Sterling Planet compared to competitors actually impeded the fairness with which ratepayers were treated. These changes amounted to concessions that Sterling Planet did not request, and which arguably reduced ratepayer protections compared deliver Resource Adequacy attributes to PG&E’s Form Agreementcustomers is at greater risk than a CAISO-interconnected project. '' ' Xxxxxx’x opinion is that PG&E’s negotiations with Sterling Planet were, overall, 83WI 8ME were conducted fairly with respect to ratepayers and competitors, and, with the exception of dropping the requirement of specifying projects from which RECs will be delivered, with respect to ratepayers.

DEGREE OF FAIRNESS OF PROJECT- SPECIFIC NEGOTIATIONS. Xxxxxx observed three negotiation sessions between The developers of the PG&E and Sterling Planet teams in the summer of 2013. Sterling Planet Midway I project requested very few numerous changes from the revised version of PG&E’s 2012 RPS Form Agreement provided to the seller in JulyMay 2013. Instead, most The siting of the project deep within the IID grid rather than interconnected to the CAISO grid required variances from PG&E’s Form Agreement in several provisions, and posed incremental risks to the buyer, making this a complex and lengthy negotiation. Of the requested changes, PG&E granted few concessions. Xxxxxx regards the changes from the Form Agreement were introduced by PG&E, apparently in an effort to ensure thatthe 83WI 8ME contract to have minimal adverse impact on ratepayers. Most of these seem modest changes that are, in Xxxxxx’x opinion, reasonable accommodations to the interest commercial situation, such as the provision governing the Xxxxxx believes that PG&E’s refusal to grant a large number of fair treatmentrequested concessions succeeded in maintaining fairness to direct competitors of 8minutenergy Renewables and GASNA, there were no significant disparities in by avoiding disparate treatment of Sterling Planet vs. Midway I compared to other sellers with whom the utility was negotiating in parallelprojects. ' ' The Sterling Planet PSA may usefully be compared to two bilaterally negotiated contracts that PG&E signed with Barclays Bank PLC in 2010, which were amended earlier in 2010. While the Barclays transactions were to sell firmed-and-shaped bundled RPS-eligible energy to PG&E for a shorter delivery term, they are somewhat analogous to the Sterling Planet PSA in the nature of benefits. The confirmation agreements with Barclays did specify particular generation projects to deliver the product; this was consistent with the nature of the deliverables as firmed bundled RPS-eligible energy. It appears that the Sterling Planet contract has stronger ratepayer protections in these specific areas than these older Barclays agreements that were recently amended. ' '' ' ' Xxxxxx did not observe PG&E providing Sterling Planet the developers of the Midway I project with non-public information that advantaged it against competing sellers. Overall, Sterling PlanetPG&E’s treatment by PG&E of 83WI 8ME during negotiations was was, overall, comparable with the treatment of its competitors Iberdrola and NextErain the 2012 RPS RFO. Because Much of PG&E’s effort the challenge in the negotiation was to minimize arrive at terms that treat this IID-interconnected project roughly similarly to those granted to CAISO-interconnected projects while protecting ratepayers from risks that come with purchasing power from a project in a foreign balancing area. Xxxxxx believes that the parties largely succeeded in avoiding disparate treatment of sellers whose PSAs were developed in parallel with treatment, neither advantaging nor disadvantaging the Sterling Planet PSA, in Xxxxxx’x opinion the negotiations with Sterling Planet were conducted fairly with respect seller excessively compared to its competitors. The remaining disparities among the NextEra, Iberdrola, and Sterling Planet PSAs do not seem sufficient in likely impact keeping ratepayers whole when buying renewable energy from a seller whose long-term ability to lead Xxxxxx to regard Sterling Planet as having been competitively disadvantaged. One issue with the Sterling Planet negotiation is whether the modifications that PG&E introduced to ensure greater fairness in its treatment of Sterling Planet compared to competitors actually impeded the fairness with which ratepayers were treated. These changes amounted to concessions that Sterling Planet did not request, and which arguably reduced ratepayer protections compared deliver Resource Adequacy attributes to PG&E’s Form Agreementcustomers is at greater risk than a CAISO-interconnected project. '' ' Xxxxxx’x opinion is that PG&E’s negotiations with Sterling Planet were, overall, 83WI 8ME were conducted fairly with respect to ratepayers and competitors, and, with the exception of dropping the requirement of specifying projects from which RECs will be delivered, with respect to ratepayers.

DEGREE OF FAIRNESS OF PROJECT- SPECIFIC NEGOTIATIONS. Xxxxxx observed three four negotiation sessions between the PG&E and Sterling Planet Iberdrola teams in during the summer of 2013. Sterling Planet requested very The parties agreed to a few changes from the version of the Form Agreement for REC-only sales that PG&E had developed in the first several months of 2013. In a few cases, Iberdrola acquiesced to PG&E’s Form Agreement provided to the seller in July. Instead, preferences ' other changes were proposed by Iberdrola and accepted by PG&E. Xxxxxx views most of the variances changes initiated by Iberdrola as reasonable accommodations to the business model that Iberdrola pursues as both a renewable generation owner and wholesale marketer and trader. For example, Xxxxxx agrees that an active trading desk would perceive a different risk profile for a ten-year contract that locks the seller into delivering RECs only from specific facilities, as opposed to delivering from any verified, certified, eligible renewable resource. On that basis it could have been a reasonable business choice for Iberdrola to increase the pricing of a contract that constrained deliveries to originate from compared to the less- constrained contract that was executed. Ratepayers may benefit from the Form Agreement were introduced lower pricing available when the seller is free to select from a broader array of generating plants. It appears to Xxxxxx that PG&E granted Iberdrola a valuable option by PG&Eallowing the seller to choose projects later to deliver the RECs, apparently in an effort to ensure that, in the interest of fair treatment, there were no significant disparities in treatment of Sterling Planet vs. other sellers with whom the utility was negotiating in paralleland thereby avoided a higher-priced PSA. ' ' The Sterling Planet PSA may usefully be ' ' '' '' Overall, Xxxxxx regards the concessions that PG&E provided to Iberdrola in the contract terms and conditions as changes that do not unduly disadvantage ratepayers (with the possible exception of the option for the seller to decide later what project will deliver RECs, discussed in the next chapter). In any case, Iberdrola also provided concessions to PG&E on that the utility views as advantageous compared to ' Iberdrola’s opening position. Xxxxxx agrees, for example, that benefitting ratepayers. thus One indicator of the fairness of negotiations is whether PG&E provided Iberdrola with unique and valuable concessions that were not provided to competing sellers of unbundled RECs. PG&E was negotiating two bilaterally negotiated contracts that PG&E signed other ten-year REC-only transactions with competing sellers, Sterling Planet, Inc. and NextEra Energy Power Marketing LLC, at the same time as discussions with Iberdrola. Xxxxxx does not in general have access to detailed contract terms for other REC-only transactions the utility has executed, though Xxxxxx did serve as IE for two of PG&E’s short-term purchases of RECs bundled with firm deliveries at the California-Oregon Border from Barclays Bank PLC PLC. These purchases from Barclays, originally executed in early 2010, which were amended earlier by the parties in 20102013. While In the Barclays transactions were to sell firmed-and-shaped bundled RPS-eligible energy to PG&E for a shorter delivery termcase of NextEra Energy Power Marketing and Sterling Planet, they are somewhat analogous to the Sterling Planet PSA ' ' ' Based on these comparisons it appears that Iberdrola was not materially advantaged against current competitors in the nature non-price contract terms of benefitsits PSA, though disparities that likely have little cost impact remain. The confirmation agreements with Barclays Bank executed in 2010 did specify particular generation projects to deliver the product; this was consistent with the nature of the deliverables as firmed bundled RPS-eligible energy. It appears that the Sterling Planet Iberdrola contract has stronger ratepayer protections in these specific areas than these the older Barclays agreements that were recently amended. Xxxxxx did not observe PG&E providing Sterling Planet Iberdrola with non-public information that advantaged it against competing sellers. OverallBecause PG&E approached several possible intermediaries seeking to purchase unbundled RECs on a bilateral basis, Sterling Planet’s Xxxxxx does not believe that Iberdrola was singled out for favored treatment or that other market participants were disadvantaged by PG&E during the choice to conduct bilateral negotiations was comparable with the treatment of its competitors Iberdrola and NextEraIberdrola. Because of Furthermore, any market participant could have chosen to offer Category 3 RECs into PG&E’s effort to minimize disparate treatment of sellers whose PSAs were developed in parallel with the Sterling Planet PSA, in 2012 RPS RFO ' On that basis it is Xxxxxx’x opinion the negotiations with Sterling Planet were conducted fairly with respect to competitors. The remaining disparities among the NextEra, Iberdrola, and Sterling Planet PSAs do not seem sufficient in likely impact to lead Xxxxxx to regard Sterling Planet as having been competitively disadvantaged. One issue with the Sterling Planet negotiation is whether the modifications that PG&E introduced to ensure greater fairness in its treatment of Sterling Planet compared to competitors actually impeded the fairness with which ratepayers were treated. These changes amounted to concessions that Sterling Planet did not request, and which arguably reduced ratepayer protections compared to PG&E’s Form Agreement. '' ' Xxxxxx’x opinion is that PG&E’s negotiations with Sterling Planet Iberdrola were, overall, conducted fairly with respect in regards to the treatment of competitors, and, with the exception of dropping the requirement of specifying projects from which RECs will be delivered, with respect to ratepayers.. The ratepayer impact of