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2576 ORDINANCE NO. 2 6 AN ORDINANCE APPROVING AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AN AMENDMENT TO THE POWER SUPPLY AGREEMENT WITH NEXTERA ENERGY MARKETING, LLC FOR ADDITIONAL LONG-TERM CAPACITY, DECLARING AN EMERGENCY, AND FOR OTHER PURPOSES. WHEREAS,on or about May 21, 2020, the City Council of the City of West Memphis,Arkansas ("City") approved a power supply agreement ("PSA") with NextEra Energy Marketing, LLC ("NEM") through the adoption of Ordinance No. 2549; and WHEREAS, the PSA provides for five years of energy and ancillary services, along with three years of capacity needed to meet the needs of utility customers; and WHEREAS, the City Council recently approved a separate agreement to purchase solar power from a facility that is being built near the City by a subsidiary of NEM known as Big Cypress; and WHEREAS,the City has negotiated to purchase additional capacity from the Big Cypress facility at advantageous prices that will serve the long-term needs of the City; and WHEREAS, the proximity of the proposed solar project offers distinct and special value to the City by mitigating basis risk,encouraging economic development, and projecting a positive environmental message about the City and WMUC; and WHEREAS, the procurement of capacity through a large local solar development is a unique transaction that causes bidding to be neither feasible nor practical; and WHEREAS, Arkansas law codified at A.C.A. §14-58-303(b)(2)(B) allows City Council to waive traditional bidding in favor of a better procurement process in exceptional situations where traditional bidding is deemed not feasible or practical; and WHEREAS,the purchase of wholesale capacity for the City and its citizens is an exceptional event and procurement through traditional bidding processes have been proven to render suboptimal results; and WHEREAS,WMUC recommends approval of the amendment attached hereto as Exhibit A; and WHEREAS, Arkansas law codified at A.C.A. 14-203-115(b) allows for cities to enter wholesale power contracts that are payable by and from the rates collected by the City's electric utility, and include covenants that rates will be adequate to meet the City's obligations under the contract,to wit: "Por so long as any contract for the purchase of electric power and energy is in effect, the rates, fees, and charges for electric power and energy charged and collected by a municipality may be fixed to provide sufficient revenues to secure payments of amounts due under the contract and to comply with the terms of the contract. Any contract shall be approved by ordinance of the governing body of the purchasing municipality, and the ordinance shall be published one (1) time in a newspaper of general circulation in the municipality. Any contest of the ordinance shall be barred at the end of thirty (30) days after the ordinance is published." A.C.A. § 14-203-115(b). and WHEREAS, the City Council hereby finds that: • the procurement of capacity from a large solar development located in direct proximity of the City is a unique transaction that renders bidding impractical; and • execution of the PSA amendment attached hereto as Exhibit A is in the best interest of the City and its citizens. NOW,THEREFORE,BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF WEST MEMPHIS,ARKANSAS: SECTION I.That the Amendment to Power Supply Agreement attached hereto and incorporated herein as Exhibit A is hereby approved. The Mayor and the City Clerk are hereby authorized to execute the Amendment to Power Supply Agreement on behalf of the City. Further, the Mayor is also hereby authorized to approve any modifications, amendments or changes that may be necessary in the ongoing process of finalization of the contract terms. SECTION 2.That traditional bidding is impractical and unlikely to produce advantageous prices for long-term capacity for the City, particularly capacity originating from a large solar development located in proximity with the City. Thus, traditional bidding is hereby waived in lieu of the negotiated process that was used to procure the Amendment to Power Supply Agreement attached hereto as Exhibit A. SECTION 3. That this Ordinance is passed in full accordance and compliance with Title 14 Chapter 203 of the Arkansas Code Annotated, codified at A.C.A. § 14-203-101, et seq., and accordingly is to be published one (1) time in a newspaper of general circulation in the municipality. By law, any contest of the ordinance shall be barred at the end of thirty(30)days after the Ordinance is published, in accordance with Ark. Code Ann.$14-203-115(b). SECTION 4. EMERGENCY CLAUSE.That the West Memphis City Council hereby finds that capacity prices are unpredictable,currently favorable,and that time is of the essence to finalize the attached Amendment to Power Supply Agreement, and that an emergency is declared to exist and this Ordinance being immediately necessary for the preservation of the public peace, health and safety of the population and therefore this Ordinance shall be in full force and effect from and after its passage and approval. PASSED AND APPROVED this/5 day of May, 2021. MAIRCO MCCL NDON, MAYOR ATTEST: JA S PULLI TY CLERK SPONSORED BY: 1 REcEMo ` "I a/ In May of 2020, the city approved a Power Supply Agreement with NextEra Energy Marketing a subsidiary of NextEra Energy Resources for 5 years of Energy and 3 years of Capacity. This contract starts June 151 2021, so the Capacity is taken care of until May 31st 2024 and the Energy is taken care of until May 31st 2026. In April of 2021, the city approved a Power Purchase Agreement with Big Cypress Solar a subsidiary of NextEra Energy Resources for 20 MW. This contract starts June 1' 2026 and ends May 31st 2056. The City will receive the capacity, energy, and renewable energy credits that are produced from its share of the 20 MW's. I am asking you to approve an amendment to the Power Supply Agreement with NextEra Energy Marketing for the capacity credits that are generated from 120 MW's out of Big Cypress Solar. This contract starts lune 15t 2024 and ends May 31st 2039. AMENDMENT TO POWER SUPPLY AGREEMENT dated as of May 6,2021 NextEra Energy Marketing,LLC and City of West Memphis,Arkansas have previously entered into that certain Power Supply Agreement, dated as of May 21, 2020 (the "Agreement"), which Agreement contemplated the sale of additional Capacity from Seller to Buyer thereunder. The parties have now agreed to amend the Agreement by this Amendment (this "Amendment"). Accordingly, in consideration of the mutual agreements contained in this Amendment, the parties agree as follows:-- 1. Amendment of the Agreement (a) Condition Precedent: This Amendment shall automatically terminate, without any further payment or delivery obligation on the part of either Party with respect to the Additional Capacity if the Project,as described in Exhibit 5 to the Agreement as set forth herein has not achieved a Commercial Operation Date on or before March 31,2024. "Commercial Operation Outc" shall mean the date on which the installed and in-service capacity of the Project is equal to or greater than 108 M Ws. (b) The cover sheet to the Agreement is hereby amended be deleting the word "Three" and inserting the word"Eighteen" in lieu thereof. (c) The second paragraph on page 4 of the Agreement is hereby amended by deleting the date "May 31,2026"and inserting the date"May 31,2039"in lieu thereof. (d) Insert the following definition in Article I in alphabetical order: "Additional Capacity -means the Capacity sold by Seller to Buyer pursuant to Section TA(c) of this Agreement" (e) The definition of Capacity Net Quantity on page 6 of the Agreement is hereby amended by adding the phrase",other than the Additional Capacity sold by Seller to Buyer under Section 4.4(c)," immediately after the phrase"the amount of Capacity". (f) Section 4.4(c)of the Agreement is hereby deleted,and the following shall be inserted in lieu thereof: "(c) With respect to the period commencing June I,2024 through May 31,2039(such period,the"Capacity Gap Period"), Buyer will purchase additional Capacity("Additional Capacity")from Seller to meet Buyer's Resource Adequacy Obligations pursuant to the terms and conditions specific to the Additional Capacity set forth in Exhibit attached hereto. To Tim extent there are any conflicts between the terms ofthis Agreement and the terns set forth in Exhibit 5 relating to the Additional Capacity the terms of Exhibit 5 shall control." (g) The attached Exhibit 5 shall replace and supersede the prior Exhibit 5 that had been reserved. As used in the Agreement, as amended by this Amendment, the terms "Power Supply Agreement", "Agreement","this Agreement","herein","hereinafter","hereof',"hereto"and other words of similar import shall mean the Agreement as amended hereby, unless the context otherwise specifically requires. 2. Representations Each party represents to the other party that all representations contained in the Agreement(including any representations set forth in Exhibit 5 to the Agreement)are true and accurate as ofthe date ofthis Amendment and that such representations are deemed to be given or repeated by each party, as the case may be,on the date of this Amendment. 3. Miscellaneous (a) Definitions. Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings specified for such terms in the Agreement. (b) Entire Agreement. This Amendment constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings (except as otherwise provided herein)with respect thereto. (e) Counterparts. This Amendment may be executed and delivered in counterparts (including by facsimile transmission),each of which will be deemed an original. (d) Headings. The headings used in this Amendment are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Amendment. (e) Governing Law. 'Phis Amendment will be governed by and construed in accordance with the Disputes/Governing Law provision as set forth in the Agreement. IN WI INFSS WI IEREOE the parties have executed this Amendment on the respective dates specified below with effect from the date specified on the fust page of this Amendment. NextEra Energy Marketing, LLC and City of West Memphis,Arkansas (Name of Party) (Name of Party) By: .... By: ... �✓CCe7- c.0 Name. Nam 'title: Title: Date: Dale: 4 TTE.ST' C �Icrk EXHIBIT 5 Additional Capacity Terms and Conditions: Additional Capacity Buyer: West Memphis Additional Capacity Seller. NEM Additional Capacity Product: "Zonal Resource Credits" ("ZRC"), as such term is defined in (i) the Mideontinent Independent System Operator, Inc. ("MISO") Open Access Transmission, Energy and Operating Reserve Markets Tariff as may be amended from time to time(`MISO Tariff'); and/or(ii)the MISO Resource Adequacy Business Practices Manual as may be amended from time to time ("RA BPM", or together with the MISO Tariff referred to as the "MISO Rules"). All ZRCs delivered hereunder shall be sourced from the Project,as defined below, a Capacity Resource located within Local Resource Zone 8, as defined in the MISO Rules on the Trade Date. For clarification purposes, the Parties acknowledge and understand that, in accordance with the MISO Rules, one ZRC represents one megawatt ("MW") of Unforced Capacity, as such term is defined in the MISO Rules, that qualifies to satisfy the resource adequacy requirements of Module E-I, or any successor system,of the MISO Tariff for the relevant Planning Year. Project: The "Project" called will be a solar electric generating facility with an expected instal e capacity of 180 MW(AC)(the"Installed Capacity"or`ICAP" , deendin on the final layout and pemtitting plan,to be developed by or another affiliate of NextEra Energy Resources, LLC, locate m Arkansas. Replacement Additional Capacity: Subject to the Change in Solar Accreditation Methodology section below, The Parties agree that the Contract Quantity shall be sourced from the Project, however, if the amount of ZRC's available from the Project for any given Planning Year ("PY") will be less than the Contract Quantity then Seller shall replace such shortfall of ZRCs from another source (the `Replacement Quantity'). Delivery'I erm for the Additional Capacity: Each Planning Year from June I,2024 through and including May 31,2039 for the Contract Quantity. Local Resource Zone For Delivery of the Additional Capacity: Zone 8 Contract Quantity for The Additional Capacity:Subject to the change in Solar Accreditation Methodology section below,the Contract Quantity for the Additional Capacity shall mean ZRCs equal to the greater of(i) 66.667% of the Installed Capacity of the Project as of June I, 2024, rounded to the nearest MW, times the solar capacity allocation percentage calculated by MISO for the applicable Planning Year applicable to the Project (as published in the MISO Wind & Solar Capacity Credit Report for such PY, or if such report is no longer published then such solar capacity allocation percentage as published in any succeeding MISO report) (the"Capacity Allocation')and(ii)20 ZRCs; for each Planning Year. For example: (1) If the ICAP of the Project is I80MW, and the Project's Capacity Allocation for that PY is (for illustrative purposes only)set at 25%then the calculation for that PY would be: The greater of: (i) 120 x .25 or(ii)20 Which in this example equals a Contract Quantity of 30.0 ZRCs (rounded to a tenth of percent) Or: (2) If the [CAP of the Project is 180MW, and the Project's Capacity Allocation for that PY is (for illustrative purposes only) 16.3%then the calculation for that PY would be: The greater of:(i) 120 x.163 or(ii)20 Which in this example equals a Contract Quantity of 20 ZRCs (rounded to a tenth of a percent). Change in Solar Accreditation Methodology: In the event MISO changes the methodology or calculation for determining the solar capacity allocation percentage ("New Methodology") as currently contemplated under Business Practice Manual for Resource Adequacy 011 dated December 15, 2020 and the December 2018 Renewable Integration Impact Assessment(RIIA), Assumptions Document, Version 6 (together the "Currently Contemplated Methodology") and such New Methodology results in: (i)results in a capacity allocation of ZRCs that is less than 20MW of ZRCs, then the Contract Quantity shall be revised to equal the amount calculated based on the New Methodology for such planning year and the Contract Price for such planning year shall be Contract Quantity times 12,000 times -/kW-mo. (1) For example: if the New Methodology for a planning year results in a capacity allocation of 18MW of ZRCs and the Currently Contemplated Methodology would have resulted in a capacity allocation of 30M W of ZRCs then the Contract Quantity for such planning year will be deemed to be 18MW of ZRCs and the Replacement Quantity will be deemed to be OMW of ZRCs. Contract Price would be � for that planning year M/kW-mo times 12,000 times 18MW). (it) results in a capacity allocation of ZRCs that is greater than 20MW of ZRCs,then the Contract Quantity shall be revised to equal the amount that is based on amount of ZRCs that would be allocated under the New Methodology. (1) For example: if the New Methodology for a planning year results in a capacity allocation of 25MW of ZRCs and the Currently Contemplated Methodology would have resulted in a capacity allocation of IOMW of ZRCs then the Contract Quantity will be deemed to be 25MW of ZRCs instead of 20M W of ZRCs, there would be no Replacement Capacity required and the Contract Price (S)for the Contract Quantity will not change. Contract Price For the Additional Capacity: Contract Price(S)for Term the Contract Quantity, subject to any change required under the Change in Solar Accreditation Methodology section above. June 1, 2024May31, 2025 June 1, 2025—May 31,2026 June I,2026—May 31, 2027 June 1,2027 May 31, 2028 June I,2028—May 31,2029 June 1,2029—May 31, 2030 June I,2030—May 31,2031 June 1,2031 May 31, 2032 June I,2032—May 31,2033 June 1,2033—May 31,2034 June 1,2034—May 31.2035 June 1,2035—May 31,2036 June 1,2036—May 31,2037 June 1,2037—May 31,2038 June 1,2038—May 31,2039 Buyer represents to Seller that it intends to use the Product purchased hereunder to satisfy its resource adequacy obligations in Local Resource Zone 8. If Buyer chooses to use the Product sold hereunder to satisfy its resource adequacy obligations in a Local Resource Zone other than Local Resource Zone 8, then Buyer shall be solely responsible for any inter-zonal delivery charges, auction price differences,or similar charges that may be assessed pursuant to the MISO Rules in order for the Zonal Resource Credits to be used to meet the resource adequacy requirements of Buyer's load in such other Local Resource Zone. Additional Terms and Conditions Applicable to the Additional Capacitv: I.Delivery and Receipt. Seller shall accomplish delivery of the Additional Capacity Contract Quantity of ZRCs by submitting the appropriate transaction(s) in MISO's Module E-I capacity tracking system, or any successor system ("MECT") to electronically assign the Contract Quantity to Buyer. Buyer shall accomplish receipt of the Contract Quantity by confirming the appropriate transaction(s) submitted by Seller in the MECT. Seller shall deliver the Contract Quantity for all months in the applicable Planning Year, as defined in the MISO Rules,("Annual Delivery"),by the later of.(i)(a)five(5)Business Days prior to the date by which Fixed Resource Adequacy Plans (as defined in the MISO Documents) must be submitted to MISO for such applicable Planning Year, or (ii) me days after the date on which the MECT becomes available for the submission of transactions for such applicable Planning Year (the "transfer Deadline"). The submitting and confirming of the appropriate brensaction(s) in the MECT shall be conducted by the Parties in accordance with the requirements of the MISO Rules and other applicable rules adopted by the MISO regarding the MECT. 2. Payment Terms. Upon completing Annual Delivery of the Product. Seller shall provide Buyer with an invoice for the total amount due for the Product delivered by Seller to Buyer. Such invoice shall be due and payable by Buyer on or before the tenth U Oth)Business Day after Buyer's receipt of such invoice 3. Failures to Deliver and/or Receive. In the event that Seller fails to deliver all or part of the Contract Quantity, or Buyer fails to receive all or part of the Contract Quantity by the Transfer Deadline, then the following payment applies for the undelivered Contract Quantity("Non-Performance Payment"): An amount equal to the difference, obtained by subtracting the Replacement Price from the Contract Price and multiplying such difference by the undelivered Contract Quantity. "Replacement Price"means,for purposes of the Additional Capacity only,the Auction Clearing Price, (converted to a$/ZRC price (paid to the owners of local Resource Zone 8 ZRCs that cleared in the MISO capacity auction), alternate compliance rate, price quotes from other parties, or actual replacement transaction price,for the relevant Planning Year. If the Non-Performance Payment is positive, Buyer shall pay Seller such payment. If the Non- Performance Payment is negative, Seller shall pay Buyer the absolute value of such payment. The invoice from Seller to Buyer for any amount owed by Buyer to Seller, or Seller to Buyer, pursuant to this provision shall include a written statement explaining in reasonable detail the calculation of such amount.