* SMUDm. Sacramento. Cogeneration Authority. Special Meeting. (Procter & Gamble Cogeneration Project)

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1 Sacramento Cogeneration Authority Special Meeting (Procter & Gamble Cogeneration Project) Date: December 20, 2018 Time.- Immediately following the SMUD Board meeting scheduled at 6:00 p.m. Location: SMUD Customer Service Center, Rubicon Room 6301 S Street, Sacramento, CA Powering forward. Together. * SMUDm

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3 Members of the public wishing to address the Commission are requested to complete a signup slip at the lobby information center. Statements shall not exceed three minutes unless the President grants special permission. SACRAMENTO COGENERATION AUTHORITY (Procter & Gamble Cogeneration Project) 6301 S Street, Sacramento, CA NOTICE OF SPECIAL MEETING AND AGENDA To- Commissioners Brandon D. Rose, Nancy Bui-Thompson, Genevieve Shiroma, Rob Kerth, Dave Tamayo, and Bill Slaton Pursuant to Section of the California Government Code, a SPECIAL MEETING of the Commissioners of the Sacramento Cogeneration Authority (SCA) is called to be held on Thursday, December 20, 2018, at 6:00 p.m., or immediately following adjournment of the regular meeting of the Board of Directors of the Sacramento Municipal Utility District (SMUD), in the Rubicon Room of the SMUD Customer Service Center at 6301 S Street, Sacramento, California, to review, discuss and act upon, as appropriate, the following items: Approve agenda. 2. Approve minutes of April 19, 2018, annual meeting. Item 3 was reviewed by the Finance and Audit Commiffee on November 7, Comments from the public are welcome when this agenda item is called CONSENT CALENDAR: 3. Approve the proposed 2019 SCA Budget. Finance and Audit Commiftee 11/7. (Frankie McDermott)

4 4. Statements from the public (non-agenda items) 5. Summary of Commission Direction. Dated: December 14, 2018 regg Fis~ "man, President Sacramento Cogeneration Authority The Rubicon Room is located on the first floor of SMUD Customer Service Center, 6301 S Street, Sacramento, CA. Members of the public shall have three (3) minutes to provide public comment on items on the agenda or items not on the agenda, but within thejurisdiction of SCA. The total time allotted to any individual speaker shall not exceed nine (9) minutes. Members of the public wishing to inspect public documents related to agenda items may call to arrange for inspection of the documents at the SMUD Customer Service Center, 6301 S Street, Sacramento, Califomia. NOTE: Accommodations are available for the disabled public. If you need a hearing assistance device or other aid, please call in advance of this Commission Meeting.

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6 Sacramento, California April 19, 2018 The annual meetings of the Commissioners of the Central Valley Financing Authority (CVFA), the Northern California Gas Authority Number 1 (NCGAl), the Sacramento Cogeneration Authority (SCA), the Sacramento Municipal Utility District Financing Authority (SFA), and the Sacramento Power Authority (SPA) were held in the Rubicon Room of the Sacramento Municipal Utility District (SMUD) Customer Service Center, 6301 S Street, Sacramento, California, at a.m. Roll Call: Presiding: Present: Absent: President Fishman Commissioners Rose, Bui-Thompson, Shiroma, Kerth, Tamayo, and Slaton Mr. Somavarapu Present also were Arlen Orchard, Chief Executive Officer and General Manager; Laura Lewis, Chief Legal Officer and General Counsel; members of SMUD's executive management; and SMUD employees and visitors. At the request of President Fishman, Laura Lewis briefly reviewed the purpose, organization and responsibilities of the CVFA, which currently owns and operates the Carson Ice-Gen Project; the NCGA1, which is authorized to acquire, construct, and operate natural gas related facilities and engage in the purchase and sale of natural gas; SCA, which currently owns and operates the Procter & Gamble Cogeneration Project-, the SFA, which currently owns and operates the Cosumnes

7 Power Plant-, and SPA, which currently owns and operates the cogeneration plant at the Capital Commerce facility in Sacramento. As required by state law, the Chief Legal Officer and General Counsel notified the public that the Commissioners of CVFA, NCGA1, SCA, SFA and SPA were not receiving additional compensation as a result of the Commission meetings. President Fishman called for approval of the agendas of all five agencies. Commissioner Ker-th moved for approval, Commissioner Slaton seconded, and the JPA agendas were unanimously approved. President Fishman then called for approval of the minutes of the March 15, 2018, special meetings for the following agencies - CVFA, NCGA1, SCA, SFA, and SPA. Commissioner Tamayo moved for approval, Commissioner Shiroma seconded, and the minutes were unanimously approved. Eric Poff, Manager of Thermal Generation, presented highlights of this past year's operations for CVFA, SCA, SPA, and SFA. Copies of the slides used in his presentation are attached to these minutes. Commissioner Shiroma commented that the cogeneration units are the crown jewels of the power generation array because they provide immense reliability. She thanked staff for their work. President Fishman thanked staff and noted the fact that the units were running so well with no injuries spoke volumes. Sandra Moorman, Controller, presented the financial reports for the year ending December 31, 2017 for CVFA, NCGA1, SFA, SCA, and SPA. Copies of the slides used in her presentation are attached to these minutes.

8 Commissioner Rose asked whether the interest expense was related to bond repayments. Ms. Moorman confirmed it is the additional interest on the outstanding bonds. President Fishman then called for statements from the public, but he had not received any cards. No further business appearing, the meetings were adjourned at a.m. Approved: President Secretary

9 2017 Annual Joint Powers Authority (JPA) Report Central Valley Financing Authority (CVFA) Sacramento Cogeneration Authority (SCA) Sacramento Power Authority (SPA) SMUD Financing Authority (SFA) JPA Commission Meetinas April 19 ) 2018, directly following the SMUD Board Meeting Powering forward. Together. * SMUDm

10 2017 SMUD Load by Resource (GWh) 2017 SMUD Load 2017 GWh Thermal (Gross) 4,747 UARP 2,462 Additional Renewable 201 Contracts & Market Purchases 4,189 Total Load 11,599 1% Thermal 21% UARP Additional Renewable Contracts & Market Purchases smu u

11 2017 JPA Total Net Generation (GWh) 2017 Total Net Generation GWh 6% 2017 CVFA SCA SPA & McClellan SFA Total Generation MWh GWh 287, , , ,193,350 3,193 4,612,178 4,612 12% CVFA SCA SPA & McClellan SFA (00 SMUD

12 SCA Cogen 11 (Procter & Gamble Cogen) C* SMUD

13 SCA Cogen 11 (Procter & Gamble Cogen) 184 MW Total Capacity (164.3MW original NDC): 134MW Cogeneration 50MW Simple Cycle Peaking Unit GE Aero Derivative Gas Turbines (LM6000) Operated by EthosEnergy Power Plant Services Steam Host: o Procter & Gamble Oleo-chemicals Factory converts palm kernel and coconut oils into alcohol esters Installed and commissioned a new Auxiliary Boiler in 2017 to supply Procter & Gamble with steam when the Combined Cycle unit is dispatched offline for economics I *W S M U D s',

14 SCA Cogen 11 (Procter & Gamble Cogen) Operational Performance Data: Equivalent Forced Outage Factor (EFOF) 6.50% 0.09% IEEE Equivalent Availability (on line or ready to run) 90.51% 89.36% Overall Capacity Factor (based on MW) 50.70% 41.40% Combined Cycle Capacity Factor (based on MW) 68.00% 56.00% Peaker Capacity Factor (based on 44 MW) 9.00% 7.00% Generation Compared to Budget % % LJ There were no lost time or OSHA recordable injuries at the SCA Cogeneration Project during LJ The SCA peaker starting reliability was 99.0% in 2017 (110 successful starts out of 111 attempts). LJ All permit & regulatory requirements were satisfactorily met during LJ Lower Availability due to the scheduled Steam Turbine Major Overhaul in (00 S M U D"'

15 Sacramento Cogeneration Authority P.O.Box 15830, Siicrae itetilo, CA S(-.A cogemoration Proleci Statements of Revenues, Expenses and Changes in Net Position Year Ended December 31, 2017 (in millions) Actual Budget Operating Revenues: Power Sales to Member $ 47.4 $ 50.7 Steam Sales Total Operating Expenses: Fuel Operations Maintenance Administrative & General Depreciation Total Operating Income Net Interest Expense (1.2) (1.4) Change in Net Assets before MemberActivity 5.1 Net Member Distributions Change in Net Assets

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17 SSS No. SCA Please use a separate sheet if vou have any comments. TO SCA COMMISSION AGENDA ITEM Sacramento Cogeneration Authority STAFFING SUMMARY SHEET 1 Eric Poff 7. Jennifer Davidson 2. Ross Gould 8. Stephen Clemons 3. Sandra Moorman 9. Gary King 4. Ron Jelicich Russell Mills 11. Legal Commiftee Meeting & Date Finance November 7, 2018 Board Meeting Date December 20, Frankie McDermott 2. CEO & General Manager Consent No If no, schedule a dry run No (If no, explain in CostIBudgeted x Yes Budgeted Calendar presentation. section.) FROM (IPR) DEPARTMENT EXT DATE SENT Laurie Johnson Power Generation/Thermal Generation EA405 ~ /18/18 NARRATIVE: Requested Approve the proposed 2019 Sacramento Cogeneration Authority (SCA) Budget Resolution. Action: Summary: The 2019 SCA Budget covers costs to be incurred by SCA in operating and maintaining the SCA Cogeneration Plant and providing for debt service on SCA Bonds. The budget amount is per the attached Resolution and is based on the operations expected during the normal water year for SMUD. TO MAIL STOP Board Policy~ (Number & Title) Benefits~ SD - 2 Competitive Rates, SD - 3 Access to Credit Markets, SD - 4, Reliability GP - 3 Board Job Description - (f) adopt budget on annual basis. Approval of the SCA Budget Resolution will authorize spending within the limits prescribed to maintain operations of the SCA Cogeneration Plant and provide for the payment of the SCA Debt Service. Cost/Budgeted: Approval of the Budget Resolution will authorize spending within the limits prescribed. Expenditures authorized under this action should offset expenditures under purchased power. Alternatives: Approval of a budget is required or SCA will not have the authority to make purchases or pay bills. Affected Parties: Budget Office, Accounting, Treasury, Power Generation, and Legal Presenter: Frankie McDermott Additional Links: SUBJECT: ITEM NO. (FOR LEGAL USE ONLY) 2019 SCA BUDGET ITEMS SUBMITTED AFTER DEADLINE WILL BE POSTPONED UNTIL NEXT MEETING

18 SACRAMENTO COGENERATION AUTHORITY 2019 BUDGET SUMMARY NET CHANGE BUDGET BUDGET PERCENT GENERATION (MWh) 842, ,778-10% FUEL Combined Cycle Gas Fxpenses $24,759,598 $21,738,361-12% Peaker Plant Gas Expenses $2,557,723 $1,977,979-23% Natural Gas Commodity ($ IMMBtu) $308 $2.86 Auxiliary Boiler Fuel Costs $971,113 $1,842,054 90% TOTAL FUEL EXPENSES $28,288,435 $25.558,393-10% PLANT OPERATION & MAINTENANCE Station Service Energy Costs $349,454 $359,938 3% Operator Fixed Fees $2.456,361 $ % Operator Reimbursable Expenses $2,773,890 $2,453,588-12% Operator Availability Bonus $728,606 $746,820 2% Lease Engine Program $ $175,792 3% JPA Administrative and Other Expenses $422,351 $433,673 3% Engine Overhaul Expense $5,410,000 $175,000-97% TOTAL PLANT OPERATION & MAINTENANCE $12,311,334 $6,862,581-44% ITOTAL O&M COSTS $40,699,769 $32,420,974-20% ADMINISTRATIVE & GENERAL SMUD Labor $ $442,400 6% SMUD Administrative & General $63,670 $74,470 17% Insurance $930,728 $1,061,378 14% ITOTAL ADMINISTRATIVE & GENERAL $1,410,752 $1,578, % INTEREST EXPENSE Interest on SCA Bonds $1,123,838 $829~838-26% DEBT SERVICE PRINCIPAL REPAYMENT SCA Bond Principal Repayment $5,880,000 $ % PLANNED CAPITAL EXPENSES $ $0-100% TOTAL PRINCIPAL, INTEREST & CAPITAL EXPENDITURES $7,253,838 $6,992,338-4%

19 111; RESOLUTION NO. BE IT RESOLVED BY THE COMMISSIONERS OF THE SACRAMENTO COGENERATION AUTHORITY: Section 1. This resolution may be referred to as the 2019 SCA budget resolution. Section 2. There is hereby appropriated from the Revenue Fund, Operating Fund, Debt Service Fund, and other funds as appropriate, sufficient monies for the payment of demands against the Authority which relate to obligations incurred for the purposes and within the amount specified for such purposes in the following projection of the Authority's programs for the period January 1, 2019 through December 31,2019. Operation and Maintenance $32,420,974 Administrative & General $ 1,578,248 Principal, Interest & Capital Expenditures $ 6,992,338 There shall be deemed added to the O&M line item a +20% increase with no limit to a decrease in the Operations and Maintenance Expense line item, plus an additional $1 million applicable to the overall budget. Section 3. Demands against the Authority may be paid without the prior specific approval of this Commission, if they relate to obligations incurred for the purpose and within the amounts specified in Section 2, provided such demands are approved by the General Manager of the Authority, or his designee. It is the purpose and intent of this paragraph to delegate to the General Manager, or his designee,

20 authority to make purchases, to negotiate and execute contracts, and expend funds in any manner necessary or appropriate to the administration of the business affairs of the Authority, within the amounts and for the purposes set forth above, subject to duly adopted delegations of authority.