Appendix E
2015 GHG Offset Credit RFO
FORM OF OFFSET CREDIT CONFIRMATION
This Confirmation confirms a Transaction under the Master Agreement by and between Pacific Gas and
Electric Company (“PG&E” or “Party A” “or “Buyer”) and [_______________________] (“Party B” or
“Seller”), dated ________________ (the “Master Agreement”) pursuant to which Buyer shall purchase
and Seller shall sell Product to Buyer on the Delivery Dates on the terms set forth in the Master
Agreement, Credit Support Addendum and this Confirmation (collectively the “Transaction Documents”).
All capitalized terms are defined in the Master Agreement or the Credit Support Addendum, and if not
therein, in the Cap-and-Trade Regulations, unless otherwise defined in this Confirmation.
Product: Offset Credit
Transaction Date: ___________________________________
Seller: _______________________________________
Buyer: Pacific Gas and Electric Company
Quantity: _____________________________________
Contract Price (dollars per Offset Credit): $__________/Offset Credit
Delivery Date of Offset Credit: ________________________________
Deadline for Shortened Invalidation Period: _________________________
Fixed Differential (dollars per Offset Credit): For purposes of this Confirmation, the Fixed Differential
shall be $___.__/Offset Credit.
[Offset Project and Vintage Year fields below are optional if Seller has investment-grade credit rating
pursuant to PG&E’s 2015 Protocol.]
[Offset Project: __________________________________
Vintage Year: ____________________]
[If Seller is delivering more than one set of Offset Credits, please use the chart below and delete
duplicate provisions above. Please delete the chart below if not applicable for this Transaction]
[Optional information if
investment grade pursuant to
PG&E’s 2015Protocol]
[Required information]
Quantity
Contract
Price
Delivery
Date of
Offset
Credit
Deadline for
Shortened
Invalidation
Period
Fixed
Differential
Offset Project
Vintage
Year
1
Exhibit B - Offset Credit Confirmation to
PG&E and ______________________________
2015 Master Allowance/Offset Credit Purchase Agreement
Appendix E
2015 GHG Offset Credit RFO
SPECIAL PROVISIONS
1.
Confirmation Effective Date and Confirmation Term. The “Confirmation Effective
Date” shall be the same as the Transaction Date, specified above. This Confirmation shall be effective
upon execution by the authorized representatives of each of Buyer and Seller and shall remain in effect
until the end of the Invalidation Term and each Party’s obligations for payment and return of collateral
have been satisfied; provided that any termination shall not affect or excuse the performance of either
Party under any provision hereof that by its terms survives termination (the “Confirmation Term”).
2.
Offset Credits and Transfer.
(a)
Offset Credits. Seller shall sell and Deliver, and Buyer shall purchase and
receive, or cause to be received, the Offset Credits as set forth in this Confirmation. Seller shall cause all
such Offset Credits to result from the Compliance Offset Protocol or Early Action Offset Program
(pursuant to the Cap-and-Trade Regulations).
(b)
Ongoing Compliance and Transfer of Offset Credits. Seller covenants that it
shall comply, and shall cause the relevant Offset Project Operator to comply, with all Laws and the
Compliance Offset Protocols (as defined in the Cap-and-Trade Regulations), to ensure that the Offset
Credits and the transfer of Offset Credits hereunder comply therewith and with all Cap-and-Trade
Regulations. If Seller receives notice of an initial determination by CARB of possible grounds for
invalidation of Offset Credits in accordance with the Cap-and-Trade Regulations, then Seller shall
provide a copy of such notice to Buyer immediately. In addition to the Parties’ obligations under Section
3.3 of the Master Agreement (“Transfer of Product”), the Parties shall work in good faith to provide one
another with the information provided in the “Compliance Instrument Transfer Worksheet” template
attached hereto as Attachment III, at least ten (10) days prior to [the][each] Delivery Date; provided that
such worksheet may be modified by either Party with Notice to reflect modifications to the Tracking
System requirements or Cap-and-Trade Regulations or for clarification purposes. For sake of certainty,
failure of either Party to complete the “Compliance Instrument Transfer Worksheet” shall not relieve
either Party of its obligations under Section 3.3 of the Master Agreement.
3.
Representations and Warranties. Each Party represents and warrants that the
representations set forth in Article 7 of the Master Agreement are true and correct.
(a)
Further Seller Representations and Warranties. Without limiting any other
representation or warranty made by Seller, Seller further represents and warrants to Buyer that:
(i)
the Offset Credits will result from the Offset Project(s) and Vintage
Year(s) set forth herein. [This provision is optional if Seller is investment-grade pursuant to PG&E’s
2015Protocol.]
(ii)
Seller has not sold or attempted to sell the Offset Credits or GHG
Emission Reductions relating to the Offset Credits or any part thereof (by natural gas agreement or
otherwise) to any other person or entity, including any Governmental Authority.
(iii)
Seller has obtained written evidence, satisfactory to Buyer, in Buyer’s
reasonable opinion, establishing Seller’s right, title and ownership to the GHG Emissions Reductions
2
Exhibit B - Offset Credit Confirmation to
PG&E and ______________________________
2015 Master Allowance/Offset Credit Purchase Agreement
Appendix E
2015 GHG Offset Credit RFO
from each Offset Project and the Offset Credits. Neither Seller, nor any of its Affiliates or its customers,
have claimed any Offset Credits to be sold or Delivered to Buyer hereunder, from any of the Offset
Projects or any part thereof, including the GHG Emission Reductions, as part of its own carbon inventory,
footprint, or other carbon statement or declaration.
(iv)
having made due inquiries, the Offset Credits have not been issued in
another program with the same Offset Project Boundary for the same Reporting Period in which the
Offset Credits were issued for GHG Emission Reductions; or as required pursuant to the Cap-and-Trade
Regulations.
(v)
having made due inquiries, the Offset Project Data Report for the Offset
Credits does not contain errors that overstate the amount of GHG Reductions by more than five percent
(5%).
(vi)
having made due inquiries, Seller has no knowledge that the Offset
Project activity and implementation of the Offset Project was not in accordance with Law during the
Reporting Period for which the Offset Credits were issued.
(vii)
having made due inquiries, the Offset Project Operator has complied
with all Laws and the Compliance Offset Protocols (and the Early Action Offset Program if applicable) to
ensure that the Product qualifies as an Offset Credit pursuant to the Cap-and-Trade Regulations and the
Product and the transfer of Product hereunder complies with all Cap-and-Trade Regulations
(viii)
No Invalidation Event has occurred with respect to the Offset Credits.
(b)
Continuing Nature of Representations and Warranties. Seller makes the
representations and warranties set forth in this Special Provision 3 as of the Confirmation Effective Date
and on each Delivery Date and shall notify Buyer immediately in the event that any of these
representations or warranties becomes untrue, incorrect, or incomplete in all respects.
4.
Seller Obligations and Covenants.
(a)
Shortened Invalidation Period. If the Offset Credit is subject to an Invalidation
Period longer than the minimum period permitted under the Cap-and-Trade Regulations, then on or
before the date set forth in this Confirmation for the “Deadline for Shortened Invalidation Period”, Seller
shall obtain a Second Verification and take any other action required under the Cap-and-Trade
Regulations in order to reduce the Invalidation Period to the minimum applicable to the Offset Credit
under the Cap-and-Trade Regulations (“Shortened Invalidation Period”).
(b)
Progress Report. To the extent that at the time of the Confirmation Effective
Date Offset Credits as set forth in this Confirmation have not yet been issued by CARB, then within
fifteen (15) days after the close of each month from the first month following the Confirmation Effective
Date until the Offset Credits are issued by CARB, Seller shall provide to Buyer a Progress Report. Seller
shall not be excused from its Delivery obligations under this Agreement due to failure to obtain Offset
Credits prior to the Delivery Date.[This provision is optional if Seller is investment-grade pursuant to
PG&E’s 2015 Protocol.]
(c)
Costs and Expenses. During the Invalidation Term, Seller shall, in relation to the
Buyer, bear all costs and expenses of the Offset Project maintenance and operation, including all CARB
and Verifier fees and expenses, royalties, license fees or other charges for licenses and intellectual
3
Exhibit B - Offset Credit Confirmation to
PG&E and ______________________________
2015 Master Allowance/Offset Credit Purchase Agreement
Appendix E
2015 GHG Offset Credit RFO
property for designs, processes, equipment, technology, published or unpublished data, information or
materials in connection with the Offset Project or the Delivery or sale of the Offset Credits.
(d)
Double Selling. During the Invalidation Term, Seller shall not attempt, or enable
another, to sell the Offset Credits or GHG Emission Reductions relating to the Offset Credits or any part
thereof (by natural gas agreement or otherwise) to any other person or entity, including any Governmental
Authority.
(e)
Supplier Diversity. Seller shall comply with the terms of Buyer’s Supplier
Diversity Program, in accordance with Attachment II hereto.
5.
Seller Events of Default and Early Transaction Termination.
(a)
In addition to the events constituting an Event of Default in the Master
Agreement, the occurrence of any of the following shall constitute an Event of Default by Seller:
(i)
any representation, warranty, or covenant made under this Confirmation
by Seller is not true and complete in any material respect, if such failure is not remedied within five (5)
Business Days after Notice of such failure is given by Buyer;
(ii)
an Invalidation Event occurs and Seller does not Deliver Replacement
Product in accordance with Special Provision 5(b) below following the Invalidation Event (“Invalidation
Default”); or
(iii)
Seller fails to obtain a Shortened Invalidation Period consistent with the
requirement set forth in Special Provision 4(a) of this Confirmation on or before the Deadline for
Shortened Invalidation Period set forth in this Confirmation
(b)
Replacement Product due to Invalidation Notice. If CARB issues written notice
of an Invalidation Event with respect to an Offset Credit (“Invalidation Event Notice”), then Seller shall
cause Buyer to be provided a copy of such notice immediately. Seller shall have a one-time right to cure
the Invalidation Event by replacing the quantity of Offset Credits subject to the Invalidation Event with
one of the product or payment options set forth in subsections (i) through (iv) below (“Replacement
Product”) within fifteen (15) days of the date set forth in the Invalidation Event Notice:
(i)
Offset Credits, that are not designated for sale to Buyer or any other
entity, [from Offset Projects and Vintage Years that are acceptable to Buyer in its sole discretion ] [This
provision is optional if Seller is investment-grade pursuant to PG&E’s 2015 Protocol.] provided that
(A) such Offset Credits have not been affected by an Invalidation Event, and (B) the remaining
Invalidation Term for such Offset Credits is equivalent to or shorter than the Invalidation Term for those
Offset Credits subject to the Invalidation Event under this Transaction; or
(ii)
Offset Credits for which the Invalidation Term has expired; or
(iii)
Allowances, of the same or earlier Vintage Year [(or, in the case of pre2014 Vintage Year Offset Credits, 2013 Vintage Year Allowances)]; or
(iv)
financial compensation at the Replacement Price multiplied by the
quantity of Offset Credits invalidated pursuant to such Invalidation Event.
4
Exhibit B - Offset Credit Confirmation to
PG&E and ______________________________
2015 Master Allowance/Offset Credit Purchase Agreement
Appendix E
2015 GHG Offset Credit RFO
(c)
Early Transaction Termination.
(i)
If an Event of Default has occurred pursuant to Special Provision 5(a)(i)
or 5(a)(iii), (each an “Offset Credit Default”), the terms and conditions of Sections 9.3 and 9.4 of the
Master Agreement shall apply to such Events of Default, except that the Parties agree that Buyer may
elect to terminate this Transaction only or all Transactions under the Master Agreement as of the Early
Termination Date.
(ii) If an Event of Default has occurred due to an Invalidation Default, pursuant
to Special Provision 5(a)(ii), then, Buyer may terminate this Transaction only and neither Party shall have
the right to accelerate any amounts owing between the Parties nor liquidate or terminate any other
Transactions under Section 9.3 of the Master Agreement unless there is a separate Event of Default under
the Master Agreement.
(iii)
If Buyer terminates this Transaction only pursuant to Section 5(c)(i) or
(ii) above , then Buyer shall calculate a “Termination Payment” which for purposes of the Confirmation
means the Settlement Amount for this Transaction only; provided that if the Event of Default is pursuant
to Special Provision 5(a)(ii) above, the Seller shall also be liable to pay Buyer for the Invalidation
Payment Amount (defined below). Buyer shall give Notice to Seller of the Termination Payment amount
due, as soon as practicable following the termination, and Seller shall pay such amounts within ten (10)
Business Days after such Notice is given by Buyer. As used in this Special Provision 5(c), “Invalidation
Payment Amount” shall mean the amount resulting from the termination of this Transaction based on the
(A) quantity of Offset Credits subject to the Invalidation Default multiplied by the Contract Price for such
Offsets Credit plus (B) the sum of the Gains, Losses, and Costs for the quantity of Offset Credits subject
to the Invalidation Default, each calculated in accordance with Section 9.4 of the Master Agreement.
6.
Dispute Resolution. Without limiting Article 13 of the Master Agreement, any disputes
relating to the compliance with the Protocols must be arbitrated with a report delivered by an individual
selected from CARB Verifiers or Verification Bodies, with such individual to be selected by the arbitrator
selected pursuant to the AAA’s Commercial Arbitration Rules.
7.
Definitions.
“Compliance Offset Protocol” is defined in the Cap-and-Trade Regulations and which is
applicable to the Offset Project.
“Confirmation Effective Date” is defined in Special Provision 1.
“Confirmation Term” is defined in Special Provision 1.
“Early Action Offset Credit” is defined in the Cap-and-Trade Regulations.
“Early Action Offset Program” is defined in the Cap-and-Trade Regulations.
“GHG Emission Reduction” is defined in the Cap-and-Trade Regulations, and for purposes of
this Confirmation, includes GHG reductions, GHG Removal Enhancement, Direct GHG Removal
Enhancements, and Direct GHG Emission Reductions as those terms are used in the Cap-and-Trade
Regulations.
“Invalidation Event” is a final determination by CARB to invalidate Offset Credits in accordance
with the Cap-and-Trade Regulations.
5
Exhibit B - Offset Credit Confirmation to
PG&E and ______________________________
2015 Master Allowance/Offset Credit Purchase Agreement
Appendix E
2015 GHG Offset Credit RFO
“Invalidation Period” means the period of time during which CARB may invalidate an Offset
Credit under the Cap-and-Trade Regulations.
“Invalidation Term” means (a) the period from the Transaction Date through the later of (i) the
last day of the Invalidation Period or (ii) the last day of the Delivery Term; or (b) for Replacement
Product, the period from the date of Delivery of Offset Credits provided in accordance with Special
Provision 5(b) (Replacement Product) through and including the last day of the period during which the
Offset Credit may be invalidated pursuant to the Cap-and-Trade Regulations.
“Offset Project” is defined in the Cap-and-Trade Regulations.
“Offset Project Data Report” is defined in the Cap-and-Trade Regulations.
“Offset Project Operator” is defined in the Cap-and-Trade Regulations.
“Offset Verification Statement” is defined in the Cap-and-Trade Regulations.
[“Progress Report” means a report to Buyer in the form of Attachment I.] [This definition is
optional if Seller is investment-grade pursuant to PG&E’s 2015 Protocol.]
“Second Verification” means (i) a subsequent Offset Project Data Report, or (ii) the reverification of the initial Offset Project Data Report, in each case by a different offset verification body,
within three (3) years of CARB’s issuance of the Offset Credit pursuant to the requirements set forth in
Section 95985 of the Cap-and-Trade Regulations, as such requirements are amended, supplemented or
replaced (in whole or in part) from time to time.
“Shortened Invalidation Period” has the meaning set forth in Special Provision 4(a) of this
Confirmation.
“Verifier” is defined in the Cap-and-Trade Regulations.
Pacific Gas and Electric Company, a
California corporation
____[Seller]_____, a[include place of formation
and business type)]
Signature:
Signature:
Name:
Name:
Title:
Title:
Date:
Date:
6
Exhibit B - Offset Credit Confirmation to
PG&E and ______________________________
2015 Master Allowance/Offset Credit Purchase Agreement
ATTACHMENT I to OFFSET CREDIT CONFIRMATION
FORM OF PROGRESS REPORT
[This Attachment I is optional if Seller is investment-grade pursuant to PG&E’s 2015 Protocol.]
This Progress Report is presented pursuant to that certain Offset Credit Confirmation dated ___ entered
into pursuant to that certain Master Allowance/Offset Credit Purchase Agreement by and between Pacific
Gas and Electric Company, a California corporation (“PG&E” or “Party A” or “Buyer”) and
[_______________], (“Seller” or “Party B”). Seller attests that the information contained herein is true
and correct.
The Progress Report shall identify the key activities required for the creation of Product qualifying as an
Offset Credit under the Agreement (”Milestones”), including but not limited to detailing the efforts being
made to convert any Early Action Offset Credits to Offset Credits (if applicable), and indicate whether
Seller has met or is currently scheduled to meet such Milestones prior to the Delivery Date.
[Seller to suggest appropriate form for PG&E review]
The Progress Report shall be delivered in accordance with the Notice provision of the Master Agreement,
to Buyer’s Portfolio Management department and Contract Management department, below:
Portfolio Management Contact
Attn: Andrew Lee
A4L2@pge.com
415-973-0660
Contract Management Contact
Attn: Marcus Keller
M2kh@pge.com
415-973-6759
1
Exhibit B - Offset Credit Confirmation to
PG&E and ______________________________
2015 Master Allowance/Offset Credit Purchase Agreement
ATTACHMENT II to OFFSET CREDIT CONFIRMATION
SUPPLIER DIVERSITY PROGRAM
1. Women-, Minority-, and service Disabled Veteran-owned Business Enterprises, (“WMDVBE”)
and Lesbian-, Gay-, Bisexual- and Transgender-owned Business Enterprises (“LGBTBE”), as
verified pursuant to the procedures prescribed in Section 2 of CPUC General Order 156
(collectively, Diverse Business Enterprise or “DBE”), shall have the maximum practicable
opportunity to participate in the performance of work supporting Seller’s fulfillment of this
Transaction.
2. Upon request from Buyer, Seller shall provide a separate “Supplier Plan” consisting of a specific
list of suppliers that may participate in the performance of the work supporting fulfillment of this
Transaction, and a statement setting forth any additional efforts Seller will employ to increase the
participation of DBE suppliers supporting fulfillment of this Transaction.
3. Upon request from Buyer, but no less than once per 365 day period of time after the execution of
the Confirmation, Seller shall report its spend with DBE-owned suppliers per instructions to be
provided by Buyer.
4. Seller’s supplier diversity spend target for work supporting the Transaction is ____%, calculated
as targeted spend on DBE suppliers divided by the Notional Value of this Transaction.
[Bracketed language applicable to WMDVBE Sellers only]
5. Seller is a WMDVBE, as certified by _____________ [please identify the certifying agency].
1
Exhibit B - Offset Credit Confirmation to
PG&E and ______________________________
2015 Master Allowance/Offset Credit Purchase Agreement
ATTACHMENT III to OFFSET CREDIT CONFIRMATION
COMPLIANCE INSTRUMENT TRANSFER WORKSHEET
To initiate and complete transfers in the Compliance Instrument Tracking System Service, the following
information must be completed and provided to Pacific Gas and Electric Company in accordance with
Special Provision 2(b) of the Confirmation for this Transaction.
Transferring Account Detail as Registered with CARB
ARB Legal Name
ARB Operating Name
CITSS Account Number
Entity Reference Code
Vintage Year
Project Code
Quantity
Price ($/Offset Credit)
Expected Transfer Date
Agreement Date
PAR or AAR Contact Name
PAR or AAR Contact Phone
PAR or AAR Contact E-mail
Date on which CARB issued
the Offset Credit per the Capand-Trade Regulations
Receiving Account Information
ARB Legal Name
ARB Operating Name
Entity Reference Code
CITSS Account Number
PAR or AAR Contact Name
PAR or AAR Contact Phone
PAR or AAR Contact E-mail
1
Exhibit B - Offset Credit Confirmation to
PG&E and ______________________________
2015 Master Allowance/Offset Credit Purchase Agreement