Utility Committee Agenda and Packet 2020 10 13

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said he still has questions and will write them down and send them to staff. Mayor Pro Tern Councilmember Maloney asked Mr. Johnson if there are any parts of the agreement that we should be focusing on or any concerns he has. Mr. Johnson replied he has no concerns about the structure of the Allotment Contract and how the WG Firming Project Enterprise manages the various Allotments of each Allotee or how they manage the project overall. Basically it is modeled after other large multi- party projects that Northern has undertaken in the past. So it follows that structure and has worked very well. The areas he recommended focusing on is the allocation of our cash vs loan participation and how that flows into various other concepts such as the consequence of default and being subject to the step up provisions. The basic point is as a loan Allotee you have the advantage but also the obligation of several reserve funds that are set up to cover any defaults on debt or capital expenses associated with the project. Another important thing to understand is as a loan participant you are subject to those step up provisions so that you're first in line to take on a portion of the project and a portion of the financial obligation associated with the default of any other loan or Allotee that is participating in the Pool Financing. So that's the primary focus and continued describing the default and consequences that were discussed earlier. Then stated a couple other things that are important are the transfer of Allotments that Mayor Pro Tern Councilmember Maloney mentioned and the general schedule that the Allotment Contract sets up and noting that WG Firming Project Enterprise has a lot of experience with dealing with public entity participants. So the schedule and obligations that are set up to keep everyone informed of costs, expenditures, expenditures of capital fund, construction report and progress are all aimed for general physical schedules of public entities and giving enough notice of additional obligation and finance obligation well in advance to make decisions in a timely manner. Lastly, this contract is meant to govern the actual interest we will be receiving and finance obligations we take on. Not to govern the actual operation of the project. This is still being reviewed and they don't know if it will be included in the contract or a separate document. • Councilmember Lipton stated that the committee is agreeing we are needing more analysis from staff and our consultants and I hope it will be providing some solid recommendation for various financing options. VII. 2021 Utility Rates • Page 23-28 - Preliminary Utility Rates — Mr. Peterson stated these pages are routine and nothing has changed then asked to skip to Page 29. Committee agreed to skip. Page 29 — Financial Model Inputs — Mr. Peterson said this is similar to the last time we met but the two changes we added is the Cash Reserves moved from 120 days to 90 days and moved the Capital 10