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Resolution No. 100741 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 KPA 23 24 25 26 27 28 RESOLUTION NO. 10,074 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A CONSULTING SERVICES AGREEMENT BY AND BETWEEN THE CITY OF VERNON AND VENTYX ENERGY, LLC REGARDING THE TEHACHAPI RENEWABLE ENERGY PROJECT WHEREAS, the City of Vernon ("City") is a chartered municipal corporation of the State of California that owns and operates a system for the generation, purchase, transmission, distribution and sale of electric capacity and energy; and WHEREAS, the City desires to retain the services of a consultant to provide the City with advisory services for the evaluation of the City's Tehachapi Renewable Energy project sites (the "Project"); and WHEREAS, the Director of Light & Power has determined that Ventyx Energy, LLC ("Ventyx") is qualified and capable of furnishing the labor, materials and expertise necessary to perform the services that the City requires for the Project; and WHEREAS, by memo dated September 24, 2009, the Director of Light & Power recommends the City enter into a Consulting Services Agreement setting forth the terms and conditions under which Ventyx will perform the required advisory services; and WHEREAS, the City Council of the City of Vernon has determined that, pursuant to the provisions of subsection (a) of Section 2.27 of the Vernon City Code, it is in the public interest and necessity to enter into an agreement with. Ventyx to provide these specialized advisory services. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECTION 1: The City Council of the"City of Vernon does hereby find and determine that the recitals contained hereinabove are true and correct. SECTION 2: The City Council of the City of Vernon hereby approves the Consulting Services Agreement with Ventyx, a copy of which is attached hereto as Exhibit A and incorporated by reference. SECTION 3: The City Council of the City of Vernon hereby authorizes the Mayor or Mayor Pro-Tem to execute said Agreement for, and on behalf of, the City of Vernon and the City Clerk, or Deputy City Clerk, is hereby authorized to attest thereto. SECTION 4: The City Council hereby approves and authorizes the allocation of funds to the capital budget in an amount not -to - exceed $30,000.00 to provide for the expenditures made under the Ventyx Agreement. SECTION 5: The City Council of the City of Vernon hereby authorizes the City Administrator, or his designee, to take whatever actions are deemed necessary or desirable for the purpose of implementing and carrying out the purposes of this Resolution and the transactions herein approved or authorized. SECTION 6: The City Council of the City of Vernon hereby directs the City Clerk, or her designee, to send a fully executed Agreement to: Ventyx Energy, LLC Attention: Deane S. Price 3301 Windy Ridge Parkway, Suite 200 Atlanta, Georgia 30339 - 2 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECTION 7: The City Clerk of the City of Vernon shall certify to the passage, approval and adoption of this resolution, and the City Clerk of the City of Vernon shall cause this resolution and her certification to be entered in the Book of Resolutions of the Council of this City. APPROVED AND ADOPTED this 5th day of October, 2009. ATTEST: MANUELA GIRON, Cit Clerk Name: Hilario Gonzales Title: Mayor Tom"' e Dr mom� - 3 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 10,074, was duly passed, approved and adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Monday, October 5, 2009, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this u( day of October, 2009, at Vernon, California. (SEAL) N MANUELA GIRON, City Clerk - 4 - EXHIBIT A Ventyx Consulting Agreement This Consulting Agreement ("Agreement") is by and between Ventyx Energy, LLC ("Ventyx") and City of Vernon ("Client" or "City"), effective , 2009 ("Effective Date"). Ventyx will provide the services set forth herein: Consulting Services. Ventyx will make available the services of Ventyx personnel to perform certain short-term consulting services as generally described in Exhibit A attached hereto ("Services"). 2. Pa ents. Client will pay Ventyx for the Services as set forth in Exhibit A. In addition, Client will pay, or reimburse Ventyx for, (i) all taxes based upon the charges in this Agreement or the services or materials provided under this Agreement, including state and local sales, privilege, or excise taxes but excluding Ventyx's federal, state and local income taxes, (ii) all reasonable travel and travel -related expenses incurred by Ventyx in connection with performing the Services. Travel expenses shall be approved in writing by the City before such expense is incurred. Ventyx will invoice Client on a monthly basis for all charges payable hereunder. Any sum or charge due under this Agreement will be due and payable within thirty (30) days following receipt of the invoice therefor. Any sum not paid when due will bear interest until paid at a rate of interest equal to the lesser of (i) the prime rate established from time to time by Citibank N.A., New York, plus two percent (2%), and (ii) the maximum rate of interest allowed by applicable law. 3. Term. Ventyx will perform Tasks I through 3 in the attached Exhibit A and provide the Client with deliverables no later than three weeks from the Effective Date of this Agreement. 4. Confidentiality. The parties recognize that in the course of performing the Services, both parties may have access to confidential or proprietary information belonging to the other and each agrees, that to the extent allowed by law, any such confidential and proprietary information shall remain confidential and shall not be disclosed to any third party. Each party agrees that, for a period of two (2) years from receipt of information from the other party hereunder, such party will use the same means it uses to protect its own confidential proprietary information, but in any event not less than reasonable means, to prevent the disclosure and to protect the confidentiality of both (i) written information received from the other party which is marked or identified as confidential, and (ii) oral or visual information ("Confidential Information"). The foregoing will not prevent either party from disclosing Confidential Information which belongs to such party or is (i) already known by the recipient party without an obligation of confidentiality, (ii) publicly known or becomes publicly known through no unauthorized act of the recipient party, (iii) rightfully received from a third party without breaching any confidentiality or non -disclosure obligations to any third party, (iv) independently developed by the recipient party without use of the other party's Confidential Information, (v) disclosed without similar restrictions to a third party by the party owning Confidential Information, (vi) approved by the other party for disclosure, or (vii) required to be disclosed pursuant to a requirement of the California Public Records Act (the "CPRA"), the Ralph M. Brown Act, the Freedom of Information Act, a subpoena, a discovery request, a court order, or any other such requirement to produce the information pursuant to any legal process, administrative process, law, regulation or legal duty Consulting Agreement Proprietary and Confidential Business Information Page 1 ("Disclosure Requirement'), so long as the disclosing party provides the other party with notice of the impending disclosure and sufficient opportunity to seek judicial relief; provided, however, the disclosing party shall not be required to delay its compliance beyond the deadlines imposed by law for compliance with a Disclosure Requirement. 5. Proprietary Rights. The parties acknowledge and agree that: (a) Ventyx owns all right, title and interest in and to all Ventyx Confidential Information (and the media containing such Confidential Information) including, without limitation, the Work Product (as that term is defined in Exhibit A) and all patent, trademark, copyright, trade secret, and other intellectual property rights related thereto; and (b) Client owns all right, title and interest in and to all of Client's Confidential Information (and the media containing such Confidential Information) including, without limitation, the patent, trademark, copyright, trade secret, and other intellectual property rights related thereto. All Work Product, and all patent, trademark, copyright, trade secret, and other intellectual property rights related thereto, is the property of Ventyx and is licensed nonexclusively to Client, at no additional license fee, pursuant to the terms of the license for software contained in a License Agreement and subject to the terms of this Agreement. To the extent Client acquires any rights in the Work Product Client hereby assigns such rights to Ventyx. Client shall give Ventyx all reasonable assistance and execute all documents necessary to assist or enable Ventyx to perfect, preserve, register and/or record such assignment and Ventyx's rights in any Work Product. 6. Termination. Either party may terminate this Agreement in whole, but not in part, for any reason upon providing thirty days prior written notice to the other party. Upon termination of this Agreement for any reason, Ventyx will cease to perform the Services hereunder for Client and upon termination of this Agreement by Client without cause, Client will pay to Ventyx: (a) for Services performed on a time and materials basis, all sums due including reimbursable expenses to Ventyx as a result of Services performed prior to such termination; or (b) for Services performed on a fixed fee basis and completed in accordance with all of the terms and provisions of this Agreement, Ventyx shall be paid an amount equal to the amount of services performed prior to the effective date of termination or cancellation. 7. Warranty Disclaimer and Limitation on Liability. VENTYX MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND HEREBY EXPRESSLY DISCLAIMS ANY AND ALL SUCH WARRANTIES, REGARDING ANY MATTER INCLUDING THE MERCHANTABILITY, SUITABILITY ORIGINALITY, FITNESS FOR A PARTICULAR USE OR PURPOSE, OR RESULTS TO BE DERIVED FROM THE USE OF ANY MATERIALS OR SERVICES PROVIDED UNDER THIS AGREEMENT. IN NO EVENT SHALL VENTYX BE LIABLE FOR ANY LOST PROFITS, LOSS OF GOODWILL, OR FOR SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR ANY OTHER DAMAGES NOT SPECIFIED AND FOR WHICH VENTYX HAS NOT ACCEPTED RESPONSIBILITY. CLIENT ACKNOWLEDGES THAT THE SERVICES PROVIDED BY VENTYX ARE NOT CONSIDERED ACCOUNTING SERVICES. THE PARTIES AGREE THAT VENTYX SHALL HAVE NO LIABILITY WHATSOEVER FOR CLIENT'S USE OF THE SERVICES. SUBJECT TO THE FOREGOING LIMITATION OF LIABILITY, FOR ALL OTHER MATTERS IN WHICH VENTYX MAY BE LIABLE TO CLIENT UNDER THIS AGREEMENT, VENTYX'S AGGREGATE LIABILITY FOR ALL CLAIMS DURING THE TERM OF THIS AGREEMENT SHALL NOT EXCEED Consulting Agreement Page 2 THE AGGREGATE AMOUNT PAID BY CLIENT UNDER THIS AGREEMENT TO VENTYX (EXCLUSIVE OF AMOUNTS PAID TO VENTYX IN REIMBURSEMENT OF EXPENSES). 8. Relationship of Parties. Ventyx in furnishing the Services to Client under this Agreement is acting only as an independent contractor. Ventyx does not undertake by this Agreement or otherwise to perform any obligation of Client whether regulatory or contractual or to assume any responsibility for Client's business or operations. Each party has the sole right and obligation to supervise, manage, contract, procure, perform or cause to be performed all work to be performed by that party pursuant to this Agreement. The Ventyx personnel performing the Services will be and will remain the employees of Ventyx, and Ventyx will provide for and will pay the compensation and other benefits of such employees including, but not limited to, salary, health, accident and workers' compensation benefits and all taxes and contributions which an employer is required to pay relating to the employment of employee. 9. Indemnification. Ventyx agrees to defend, indemnify, protect and hold harmless the City, its officers, officials, employees, agents, and volunteers from and against any and all claims, demands, losses, defensive costs or expenses, including without limitation, attorney fees and expert witness fees, or liability of any kind or nature, other than claims for professional liability, which the City, its officers, officials, employees, agents, or volunteers may sustain or incur or which may be imposed upon them for injury to or death of persons, or damage to property arising out of the intentional, reckless, negligent, or otherwise wrongful acts or omissions of Ventyx, or Ventyx's officers, employees, or agents arising out of or in any way related to the performance or non-performance of this Agreement, excepting only liability arising out of the sole negligence of the City. 10. Insurance. (a) Ventyx shall at all times during the term of this Agreement carry, maintain, and keep in full force and effect, a policy or policies of Comprehensive General Liability Insurance, with minimum limits of Two Million Dollars ($2,000,000) for each occurrence, combined single limit, against any personal injury, death, loss or damage resulting from the wrongful or negligent acts by Ventyx or Ventyx's officers, employees, or agents. (b) Ventyx shall at all times during the term of this Agreement carry, maintain, and keep in full force and effect, a policy or policies of Professional Liability Insurance, with minimum limits of One Million Dollars ($1,000,000) on a claims made basis, to protect Client from any losses sustained through any errors or omissions committed by Ventyx or Ventyx's officers, employees, or agents. (c) Ventyx agrees to maintain in force at all times during the performance of work under this Agreement workers compensation as required by law. (d) The policy or policies required by this Agreement shall be issued by an insurer admitted in the State of California and with a rating of at least a B+; VII in the latest edition of Best's Insurance Guide. Consulting Agreement Page 3 (e) Ventyx agrees, that if it does not keep the aforesaid insurance in full force and effect City may either immediately terminate this Agreement. (f) At all times during the term of this Agreement, Ventyx shall maintain on file with the Risk Manager a certificate or certificates of insurance, showing that the aforesaid policies are in effect in the required amounts. Ventyx shall, prior to commencement of work under this Agreement, file with the Risk Manager such certificate or certificates. General Liability and Automobile Liability shall name the City as additional ensured. All of the policies required under this Agreement shall contain an endorsement providing that the policies cannot be canceled except on thirty (30) days prior written notice to City, and specifically stating that the coverage contained in the policies affords insurance pursuant to the terms and conditions as set forth in this Agreement. (g) The insurance provided by Ventyx shall be primary to any coverage available to City, and any insurance or self-insurance maintained by City, its officers, officials, employees, agents or volunteers shall be excess of Ventyx's insurance and shall not contribute with it. The policies of insurance required by this Agreement shall include provisions for waiver of subrogation. Ventyx hereby waives all rights of subrogation against City. 11. Agreement. This Agreement constitutes the entire agreement between the parties. There are no representations, understandings or agreements which are not fully expressed in this Agreement. No change, waiver or discharge will be valid unless in writing and signed by an authorized representative of the party against whom such change, waiver or discharge is sought to be enforced. This Agreement will be governed by and construed in accordance with the laws, other than choice of law rules, of the State of California. 12. Notices. Any notices which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by a reputable document delivery service, such as but not "limited to, Federal Express, that provides a receipt showing date and time of delivery, or (iii) mailing in the United States Mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below or at any other address as that party may later designate by Notice. Notice shall be effective upon delivery to the addresses specified below or on the third business day following deposit with the United States Mail as provided above. To City: City of Vernon 4305 Santa Fe Avenue Vernon, CA 90058 Attention: City Administrator To Contractor: Ventyx Energy, LLC 3301 Windy Ridge Parkway Suite 200 Atlanta, Georgia 30339 Attention: Deane S Price Consulting Agreement Page 4 13. Standard of Care. Ventyx will perform all Services under this Agreement in accordance with the standard of care generally exercised by like professionals under similar circumstances and in a manner reasonably satisfactory to Client. 14. Compliance with Applicable Law. In performing this Agreement, Ventyx must comply with all applicable provisions of federal, state, and local law. 15. Venue. Any disputes arising out of this Agreement will be adjudicated in a court of law in the County of Los Angeles. 16. Assi ent. Ventyx shall not assign or transfer any interest in this Agreement whether by assignment or novation, without the prior written consent of Client. Any purported assignment without such consent shall be void and without effect. 17. Expiration of Offer. This Agreement and the offer contained herein shall expire if the City of Vernon has not signed and returned this Agreement to Ventyx Energy, LLC on or before October 30, 2009. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above and further represent and warrant that the individuals signing below have the corporate power and authority to enter into this Agreement and to carry out the transactions contemplated in this Agreement. ACCEPTED: Ventyx Energy, LLC 3301 Windy Ridge Parkway Suite 200 Atlanta, Georgia 30339 Signature: Name: Lp Q e, s Fri q Title: (`„ F O Date: C1 0 q REVIEWED AND APPROVED AS TO FORM ACCEPTED: City of Vernon 4305 S. Santa Fe Avenue Vernon, CA 90058 Mayor / Mayor Pro-Tem ATTEST: Manuela Giron, City Clerk APPROVED AS TO FORM: Laurence S. Wiener, City Attorney Consulting Agreement Page 5 EXHIBIT A - SCOPE OF SERVICES Ventyx understands that Vernon is currently in the planning process for the development of a wind facility in the Tehachapi area of California (the Project). Vernon expects the Project to interconnect with a future transmission line that will increase the transmission capacity from the Tehachapi area into Southern California. The location of the Project is such that Vernon plans to sell power into the Southern California market. The relative value of delivering power in these markets is driven in the long term by the fundamentals of the market structure and generation fleet, along with possible Renewable Energy Credits. There are many factors that will affect the value of the Project including construction cost, overall market prices, volatility of market prices, transmission congestion, and renewable market access. A long term analysis will be performed to address the fundamental value of the Project based on wind resources, expected Southern California Zonal prices and REC revenue. The objective of this assignment is to develop revenue forecasts and a pro forma to reflect the long term view of the value of the Project. Ventyx will undertake the following actions: • evaluate the Project revenue through zonal price analysis; • evaluate other revenues to the Projects from renewable markets; • provide data for the Vernon Pro Forma; • provide a summary report The details of this study are presented below in Tasks 1 through 6, which tasks shall be understood as the "Work Product" under this Agreement. The summation of this analysis will provide Vernon with a valuation of its Tehachapi -area wind Project. This project will not include a nodal analysis to evaluate congestion risks. However, in Ventyx's experience, as wind projects advance forward, transmission and congestion may be important considerations. Ventyx includes an option to perform a nodal analysis to evaluate the congestion risks for transmission interconnection alternatives. Task 1 - Zonal Price Forecast and Revenue Analysis The analysis of Vernon's Project site (the Project) will utilize Ventyx's Spring 2009 WECC Power Market Advisory Service report, which includes our Reference Case forecast for the markets relevant to this Project. The Spring 2009 WECC price forecast became available for client use on March 31, 2009. The Fall 2009 WECC report will be available at the end of October, 2009, and, if necessary, this analysis will be updated with the Fall 2009 forecast results when available at an additional fee. The Project site is located in the Tehachapi area of California, in the WECC. For this analysis, the Project will be evaluated against the Zonal Market Clearing Price (MCP) for the zone where the Project output will be sold. Ventyx's market configuration for its WECC analysis is presented in Figure 1. [MAP — FIGURE 1— WECC MARKET CONFIGURATION] Consulting Agreement Page 6 Ventyx will run its Planning and Risk (PAR) dispatch model to evaluate the Project under the Spring 2009 WECC Reference Case price forecasts. Ventyx will use Project characteristic assumptions provided by Vernon or its Independent Engineer, to simulate the operation of the Project in a profit maximization mode relative to Ventyx's forecasted market conditions. These assumptions include: the Project's actual plant -specific performance and cost characteristics and location specific wind power generation, by hour, to be used in the analysis. Our results will include quarterly data for: • Energy dispatch (MWh); • Capacity factor; • Annual hours of operation; • Energy and capacity market revenue; • Variable costs; and • Gross energy margin. Results will be reported in constant dollars. Task 2 - Renewable Energy Credit Price Analysis It is important for Vernon to understand the potential interconnection implications for the sale of Renewable Energy Credits (RECs). While Renewable Portfolio Standards (RPS) tend to be state specific, we are beginning to see the development of more regionally focused REC trading mechanisms, such as the Western Renewable Energy Generation Information System (WREGIS). Under this task, Ventyx will fully investigate current renewable policies, estimate prices for the relevant trading systems, and be able to advise Vernon on ways to fully maximize the benefit of renewable trading. This task will include the development of REC prices for California, revenue to the Project from the sale of RECs, and a report on the California RPS. The REC prices will be developed using the Spring 2009 WECC Reference Case Forecast if this task is executed prior to the release of the Fall 2009 WECC Reference Case Forecast. A synopsis of the current renewable energy standards, generation, and potential for California will be prepared. This will include evaluation of the RPS targets, current available renewable energy sold into the state, and review of state RPS policies concerning out-of-state generation. Our REC pricing methodology uses a long -run marginal return assumption. The price will be set by the revenues required to supplement energy and capacity revenues by the most efficient technology within the state. Ventyx will provide the annual REC price and the corresponding revenue to the Project. Task 3 - Summary Report and Pro Forma Development Ventyx will document the analyses performed in Tasks I and 2, describing the study approach, key results and insights. Ventyx will prepare a set of financial pro forma projections to provide detailed Consulting Agreement Page 7 cost and revenue projections to be used in the project development and due diligence analysis for the wind project. Ventyx will work in conjunction with the City of Vernon's engineering consultant in developing pro forma operating and capital cost projections for the project. Ventyx will also work with other members of the project team in developing pro forma financial projections that include merchant plant wind energy sales, and that reflect likely or negotiated power sales contract terms and revenue streams. Task 4 Nodal LMP Price Forecast and Congestion Analysis for 2014 (optional) Ventyx will utilize the PROMOD Transmission Analysis Module (TAM) to perform a detailed simulation of the WECC market for 2014 focusing on forecasted nodal prices and congestion affecting the Project. A detailed analysis will be performed to quantify the relative benefits based on nodal revenue projections and deliverability. This effort will include the identification of specific congested transmission elements impacting operation of the Project. Final study deliverables will include hourly wind farm operational results and nodal market prices, as well as summarized monthly and annual totals for all simulations. Data assumptions for the price forecast and congestion study will be based on Ventyx's WECC Spring 2009 Reference Case. The transmission system data will be taken from the 2014 summer peak powerflow cases published by NERC. Significant near -term transmission expansion projects will be captured, as well as potential upgrades PROMOD TAM provides valuable information on the dynamics of the marketplace through its ability to determine the effects of transmission congestion, fuel costs, emissions costs, generator availability, bidding behavior, and load growth on nodal market prices. PROMOD TAM performs an 8760-hourly commitment and dispatch recognizing both generation and transmission impacts at the nodal level. PROMOD TAM forecasts hourly energy prices, unit generation, revenues; and fuel consumption, external market transactions, transmission flows, congestion, and LMP price components. The heart of PROMOD is an hourly chronological dispatch algorithm that minimizes costs (or bids) while simultaneously adhering to a wide variety of operating constraints, including generating unit characteristics, transmission limits, fuel and environmental considerations, transactions, and customer demand. The results of this nodal analysis would include: • Forecasted monthly On-Peak/Off-Peak Locational Marginal Prices (LMP) for selected buses near each Project, including the Project wind site and commercial trading hubs for 2014; • Hourly LMPs for the Project based on the specific injection bus for 2014; • Projected hourly generation and revenue for the Project; • List of significant congested transmission lines and their individual impacts on the LMPs at the Project' wind site(s); and • Wind energy curtailment for the Project in annual, monthly and hourly format for 2014. Consulting Agreement Page 8 Task 5 - Draft Lender Report (Optional) If a Project goes to financing and a formal report is required under lender requirements, Ventyx will prepare a Draft Lender Report, including a summary of the applicable regional market characteristics; underlying assumptions, analyses performed in Tasks 1, 2 (and 4, if performed), and overall results. Preparation of subsequent drafts and a Final report will be conducted as part of Task 6. Task 6 - Continuing Support (Optional) Ventyx can also provide additional services subsequent to the analysis process. In Ventyx's experience the exact nature and timing of such tasks is difficult to predict. However, these tasks may include: Providing additional draft and final reports by editing text or preparing additional charts or tables; Performing additional quantitative analyses, such as testing alternate assumptions for an investor's Base Case or preparing additional "High" or "Low" scenarios; • Discussing analyses and reports with potential investors, banks and ratings agencies, either in person or by conference call; and Any tasks not explicitly included in Tasks 1-5 above are also included in this Task 6. Ventyx will not undertake any Task 6 effort unless specifically so instructed by Vernon. Schedule Ventyx proposes providing the services pursuant to the following schedule: Task 1. The dispatch analysis, for the Project, using the Reference Case forecast can be delivered within two weeks of commencement of effort, assuming prior receipt of written authorization to proceed and receipt of the unit operating and cost data for the Project. Task 2. The REC prices for the Project can be delivered within three weeks of commencement of effort, assuming prior receipt of written authorization to proceed and receipt of the unit operating and cost data for the Project. Task 3. The Summary Report will be delivered within two weeks of completion of Tasks 1 and 2. Task 4 (Optional). The nodal analysis for each Project can be delivered within five weeks of commencement of effort, assuming prior receipt of written authorization to proceed and receipt of the unit operating and cost data for the Project. Task 5 (Optional). A Draft Lender Report can be provided within two weeks of notification of need or two weeks after completion of Tasks I through 4. Consulting Agreement Page 9 Task 6 (Optional). Sensitivity cases for a single zonal run can usually be completed within one week from commencement of the sensitivity case effort, depending on the specific content and resource availability. Pricing Ventyx will perform this project on a time and materials basis on a with a estimated budgets shown below. Task & Description Estimated Fee Base Analysis Task 1 - Zonal Price Analysis $10,000 Task 2 - REC Price Analysis $10,000 Task 3 - Summary Report and Pro Forma $10,000 Sub Total for Base Analysis $30,000 Optional Analyses Task 4 - Nodal Price Analysis (Optional) $40,000 Task 5 - Draft Lender Report (Optional) $15,000 Continuing Support Task 6 - Continuing Support Time and Materials Special Note Pertaining to Task 6 - Continuing Support In Ventyx's experience it is difficult to define a "reasonable and customary" level of continuing support. In some cases the support has been minimal, while in many other cases there has been a wide range of support costs based upon the circumstances of the individual engagement. Ventyx will provide these Task 6 services on a time -and -materials basis pursuant to its then -current Consulting Rate Schedule. Ventyx's Rate Schedule for the year 2009 is attached. Ventyx will invoice these fees on a monthly basis, with the net amount due in 30 days. Consulting Agreement Page 10 2009 RATE SCHEDULE — VENTYX CONSULTING SERVICES Rate Group Hourly Fee US$ Executive, Practice Leaders/Subject Matter Expert/ Expert Witness 380 Director 350 Principal Consultant 300 Lead Consultant 285 Project Manager 250 Senior Consultant 225 Consultant 200 Associate Consultant 175 Technical and Administrative Professionals 140 15% Adder for Work for Litigation /Regulatory Proceedings Support Service Char -es. In addition to payment for professional services, all reasonable and necessary expenses incurred in connection with the performance of professional services will be billed at cost plus 10%. Such expenses include, but are not limited to, outside reproduction costs, artwork, airline travel, meals, lodging, postage, freight, telephone, and travel related expenses. Mileage is charged at the prevailing Standard Mileage Rate as determined by the Internal Revenue Service. Insurance Provisions. Where a Client requires that it or other entities be named as additional insured with regard to company insurance policies, any cost to Ventyx of such provisions shall be billed to the Client. Fee Schedule Revision. This schedule is effective commencing January 1, 2009, and may be revised periodically by Ventyx. The fee schedule for this contract may not be revised without prior approval by the City. Consulting Agreement Page 11 -.A OFFICE OF THE CITY CLERK 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 583-8811 October 27, 2009 Ventyx Energy, LLC Attn: Deane S. Price 3301 Windy Ridge Parkway, Suite 200 Atlanta, GA 30339 Re: Consulting Services Agreement Dear Ms. Price: The insurance requirements have been met. Transmitted herewith is a fully executed agreement, as referenced above, approved by City Council on October 5, 2009, through Resolution No. 10,074. If you have any questions regarding this matter, please call Mr. Donal O'Callaghan at 323/583-8811 ext. 834. Very truly yours, el y Gi n City Clerk NG : dj c: D. O'Callaghan Purchasing Department Resolution No. 10,074 Agreement File No. 09-121 Exclusivefy Industriaf Ventyx Consulting Agreement This Consulting Agreement ("Agreement") is by and between Ventyx Energy, LLC ("Ventyx") and City of Vernon ("Client" or "City"), effective 2009 ("Effective Date"). Ventyx will provide the services set forth herein: 1. Consulting _ Services. Ventyx will make available the services of Ventyx personnel to perform certain short-term consulting services as generally described in Exhibit A attached hereto ("Services"). 2. Pa: ents. Client will pay Ventyx for the Services as set forth in Exhibit A. In addition, Client will pay, or reimburse Ventyx for, (i) all taxes based upon the charges in this Agreement or the services or materials provided under this Agreement, including state and local sales, privilege, or excise taxes but excluding Ventyx's federal, state and local income taxes, (ii) all reasonable travel and travel -related expenses incurred by Ventyx in connection with performing the Services. Travel expenses shall be approved in writing by the City before such expense is incurred. Ventyx will invoice Client on a monthly basis for all charges payable hereunder. Any sum or charge due under this Agreement will be due and payable within thirty (30) days following receipt of the invoice therefor. Any sum not paid when due will bear interest until paid at a rate of interest equal to the lesser of (i) the prime rate established from time to time by Citibank N.A., New York, plus two percent (2%), and (ii) the maximum rate of interest allowed by applicable law. 3. Term. Ventyx will perform Tasks I through 3 in the attached Exhibit A and provide the Client with deliverables no later than three weeks from the Effective Date of this Agreement. 4. Confidentiality. The parties recognize that in the course of performing the Services, both parties may have access to confidential or proprietary information belonging to the other and each agrees, that to the extent allowed by law, any such confidential and proprietary information shall remain confidential and shall not be disclosed to any third party. Each party agrees that, for a period of two (2) years from receipt of information from the other party hereunder, such party will use the same means it uses to protect its own confidential proprietary information, but in any event not less than reasonable means, to prevent the disclosure and to protect the confidentiality of both (i) written information received from the other party which is marked or identified as confidential, and (ii) oral or visual information ("Confidential Information"). The foregoing will not prevent either party from disclosing Confidential Information which belongs to such party or is (i) already known by the recipient party without an obligation of confidentiality, (ii) publicly known or becomes publicly known through no unauthorized act of the recipient party, (iii) rightfully received from a third party without breaching any confidentiality or non -disclosure obligations to any third party, (iv) independently developed by the recipient party without use of the other party's Confidential Information, (v) disclosed without similar restrictions to a third party by the party owning Confidential Information, (vi) approved by the other party for disclosure, or (vii) required to be disclosed pursuant to a requirement of the California Public Records Act (the "CPRA"), the Ralph M. Brown Act, the Freedom of Information Act, a subpoena, a discovery request, a court order, or any other such requirement to produce the information pursuant to any legal process, administrative process, law, regulation or legal duty Consulting Agreement Proprietary and Confidential Business Information Page 1 ("Disclosure Requirement"), so long as the disclosing party provides the other party with notice of the impending disclosure and sufficient opportunity to seek judicial relief; provided, however, the disclosing party shall not be required to delay its compliance beyond the deadlines imposed by law for compliance with a Disclosure Requirement. 5. Proprietary Rights: The parties acknowledge and agree that: (a) Ventyx owns all right, title and interest in and to all Ventyx Confidential Information (and the media containing such Confidential Information) including, without limitation, the Work Product (as that term is defined in Exhibit A) and all patent, trademark, copyright,. trade secret, and other intellectual property rights related thereto; and (b) Client owns all right, title and interest in and to all of Client's Confidential Information (and the media containing such Confidential Information) including, without limitation, the patent, trademark, copyright, trade secret, and other intellectual property rights related thereto. All Work Product, and all patent, trademark, copyright, trade secret, and other intellectual property rights related thereto, is the property of Ventyx and is licensed nonexclusively to Client, at no additional license fee, pursuant to the terms of the license for software contained in a License Agreement and subject to the terms of this Agreement. To the extent Client acquires any rights in the Work Product Client hereby assigns such rights to Ventyx. Client shall give Ventyx all reasonable assistance and execute all documents necessary to assist or enable Ventyx to perfect, preserve, register and/or record such assignment and Ventyx's rights in any Work Product. 6. Termination. Either party may terminate this Agreement in whole, but not in part, for any reason upon providing thirty days prior written notice to the other party. Upon termination of this Agreement for any reason, Ventyx will cease to perform the Services hereunder for Client and upon termination of this Agreement by Client without cause, Client will pay to Ventyx: (a) for Services performed on a time and materials basis, all sums due including reimbursable expenses to Ventyx as a result of Services performed prior to such termination; or'(b) for Services performed on a fixed fee basis and completed in accordance with all of the terms and provisions of this Agreement, Ventyx shall be paid an amount equal to the amount of services performed prior to the effective date of termination or cancellation. 7. Warranty Disclaimer and Limitation on Liability. VENTYX MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND HEREBY EXPRESSLY DISCLAIMS ANY AND ALL SUCH WARRANTIES, REGARDING ANY MATTER INCLUDING THE MERCHANTABILITY, SUITABILITY ORIGINALITY, FITNESS FOR A PARTICULAR USE OR PURPOSE, OR RESULTS TO BE DERIVED FROM THE USE OF ANY MATERIALS OR SERVICES PROVIDED UNDER THIS AGREEMENT. IN NO EVENT SHALL VENTYX BE LIABLE FOR ANY LOST PROFITS, LOSS OF GOODWILL, OR FOR SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR ANY OTHER DAMAGES NOT SPECIFIED AND FOR WHICH VENTYX HAS NOT ACCEPTED RESPONSIBILITY. CLIENT ACKNOWLEDGES THAT THE SERVICES PROVIDED BY VENTYX ARE NOT CONSIDERED ACCOUNTING SERVICES. THE PARTIES AGREE THAT VENTYX SHALL HAVE NO LIABILITY WHATSOEVER FOR CLIENT'S USE OF THE SERVICES. SUBJECT TO THE FOREGOING LIMITATION OF LIABILITY, FOR ALL OTHER MATTERS IN WHICH VENTYX MAY BE LIABLE TO CLIENT UNDER THIS AGREEMENT, VENTYX'S AGGREGATE LIABILITY FOR ALL CLAIMS DURING THE TERM OF THIS AGREEMENT SHALL NOT EXCEED Consulting Agreement Page 2 THE AGGREGATE AMOUNT PAID BY CLIENT UNDER THIS AGREEMENT TO VENTYX (EXCLUSIVE OF AMOUNTS PAID TO VENTYX IN REIMBURSEMENT OF EXPENSES). 8. Relationship of Parties. Ventyx in furnishing the Services to Client under this Agreement is acting only as an independent contractor. Ventyx does not undertake by this Agreement or otherwise to perform any obligation of Client whether regulatory or contractual or to assume any responsibility for Client's business or operations. Each party has the sole right and obligation to supervise, manage, contract, procure, perform or cause to be performed all work to be performed by that party pursuant to this Agreement. The Ventyx personnel performing the Services will be and will remain the employees of Ventyx, and Ventyx will provide for and will pay the 'compensation and other benefits of such employees including, but not limited to, salary, health, accident and workers' compensation benefits and all taxes and contributions which an employer is required to pay relating to the employment of employee. 9. Indemnification. Ventyx agrees to defend, indemnify, protect and hold harmless the City, its officers, officials, employees, agents, and volunteers from and against any and all claims, demands, losses, defensive costs or expenses, including without limitation, attorney fees and expert witness fees, or liability of any kind or nature, other than claims for professional liability, which the City, its officers, officials, employees, agents, or volunteers may sustain or incur or which may be imposed upon them for injury to or death of persons, or damage to property arising out of the intentional, reckless, negligent, or otherwise wrongful acts or omissions of Ventyx, or Ventyx's officers, employees, or agents arising out of or in any way related to the performance or non-performance of this Agreement, excepting only liability arising out of the sole negligence of the City. 10. Insurance. (a) Ventyx shall at all times during the term of this Agreement carry, maintain, and keep in full force and effect, a policy or policies of Comprehensive General Liability Insurance, with minimum limits of Two Million Dollars ($2,000,000) for each occurrence, combined single limit, against any personal injury, death, loss or damage resulting from the wrongful or negligent acts by Ventyx or Ventyx's officers, employees, or agents. (b) Ventyx shall at all times during the term of this Agreement carry, maintain, and keep in full force and effect, a policy or policies of Professional Liability Insurance, with minimum limits of One Million Dollars ($1,000,000) on a claims made basis, to protect Client from any losses sustained through any errors or omissions committed by Ventyx or Ventyx's officers, employees, or agents. (c) Ventyx agrees to maintain in force at all times during the performance of work under this Agreement workers compensation as required by law. (d) The policy or policies required by this Agreement shall be issued by an insurer admitted in the State of California and with a rating of at least a B+; VII in the latest edition of Best's Insurance Guide. Consulting Agreement Page 3 (e) Ventyx agrees that if it does not keep the aforesaid insurance in full force and effect City may either immediately terminate this Agreement. (f) At all times during the term of this Agreement, Ventyx shall maintain on file with the Risk Manager a certificate or certificates of insurance, showing that the aforesaid policies are in effect in the required amounts. Ventyx shall, prior to commencement of work under this Agreement, file with the Risk Manager such certificate or certificates. General Liability and Automobile Liability shall name the City as additional ensured. All of the policies required under this Agreement shall contain an endorsement providing that the policies cannot be canceled except on thirty (30) days prior written notice to City, and specifically stating that the coverage contained in the policies affords insurance pursuant to the terms and conditions as set forth in this Agreement. (g) The insurance provided by Ventyx shall be primary to any coverage available to City, and any insurance or self-insurance maintained by City, its officers, officials, employees, agents or volunteers shall be excess of Ventyx's insurance and shall not contribute with it. The policies of insurance required by this Agreement shall include provisions for waiver of subrogation. Ventyx hereby waives all rights of subrogation against City. 11. Agreement. This Agreement constitutes the entire agreement between the parties. There are no representations, understandings or agreements which are not fully expressed in this Agreement. No change, waiver or discharge will be valid unless in writing and signed by an authorized representative of the party against whom such change, waiver or discharge is sought to be enforced. This Agreement will be governed by and construed in accordance with the laws, other than choice of law rules, of the State of California. 12. Notices. Any notices which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by a reputable document delivery service, such as but not limited to, Federal Express, that provides a receipt showing date and time of delivery, or (iii) mailing in the United States Mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below or at any other address as that party may later designate by Notice. Notice shall be effective upon delivery to the addresses specified below or on the third business day following deposit with the United States Mail as provided above. To City: City of Vernon 4305 Santa Fe Avenue Vernon, CA 90058 Attention: City Administrator To Contractor: Consulting Agreement Ventyx Energy, LLC 3301 Windy Ridge Parkway Suite 200 Atlanta, Georgia 30339 Attention: Deane S Price Page 4 13. Standard of Care. Ventyx will perform all Services under this Agreement in accordance with the standard of care generally exercised by like professionals under similar circumstances and in a manner reasonably satisfactory to Client. 14. Compliance with ApplicableLaw. In performing this Agreement, Ventyx must comply with all applicable provisions of federal, state, and local law. 15. Venue. Any disputes arising out of this Agreement will be adjudicated in a court of law in the County of Los Angeles. 16. Assi nig Went, Ventyx shall not assign or transfer any interest in this Agreement whether by assignment or novation, .without the prior written consent of Client. Any purported assignment without such consent shall be void and without effect. 17. Expiration of Offer. This Agreement and the offer contained herein shall expire if the City of Vernon has not signed and returned this Agreement to Ventyx Energy, LLC on or before October 30, 2009. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above and further represent and warrant that the individuals signing below have the corporate power and authority to enter into this Agreement and to carry out the transactions contemplated in this Agreement. ACCEPTED: Ventyx Energy, LLC 3301 Windy Ridge Parkway Suite 200 Atlanta, Georgia 30339 Signature: acq'—�� f � +-:!� Name: t�e.Gl.n f'. Title: Date: REVIEWED AND APPROVED AS TO FORM Gl� .bAr� ACCEPTED: City of Vernon 4305 S. Santa Fe Avenue Vernon, CA 90058 -MayQz-/ Mayor Pro-Tem ATTEST: Manuela Giron; Cit/Clerk APP71Z =STOFO Laurence S. Wiener, City Attorney Consulting Agreement Page 5 EXHIBIT A - SCOPE OF SERVICES Ventyx understands that Vernon is currently in the planning process for the development of a wind facility in the Tehachapi area of California (the Project). Vernon expects the Project to interconnect with a future transmission line that will increase the transmission capacity from the Tehachapi area into Southern California. The location of the Project is such that Vernon plans to sell power into the Southern California market. The relative value of delivering power in these markets is driven in the long term by the fundamentals of the market structure and generation fleet, along with possible Renewable Energy Credits. There are many factors that will affect the value of the Project including construction cost, overall market prices, volatility of market prices, transmission congestion, and renewable market access. A long term analysis will be performed to address the fundamental value of the Project based on wind resources, expected Southern California Zonal prices and REC revenue. The objective of this assignment is to develop revenue forecasts and a pro forma to reflect the long term view of the value of the Project. Ventyx will undertake the following actions: • evaluate the Project revenue through zonal price analysis; evaluate other revenues to the Projects from renewable markets; • provide data for the Vernon Pro Forma; • provide a summary report The details of this study are presented below in Tasks 1 through 6, which tasks shall be understood as the "Work Product" under this Agreement. The summation of this analysis will provide Vernon with a valuation of its Tehachapi -area wind Project. This project will not include a nodal analysis to evaluate congestion risks. However, in Ventyx's experience, as wind projects advance forward, transmission and congestion may be important considerations. Ventyx includes an option to perform a nodal analysis to evaluate the congestion risks for transmission interconnection alternatives. Task 1 Zonal Price Forecast and Revenue Analysis The analysis of Vernon's Project site (the Project) will utilize Ventyx's Spring 2009 WECC Power Market Advisory Service report, which includes our Reference Case forecast for the markets relevant to this Project. The Spring 2009 WECC price forecast became available for client use on March 31, 2009. The Fall 2009 WECC report will be available at the end of October, 2009, and, if necessary, this analysis will be updated with the Fall 2009 forecast results when available at an additional fee. The Project site is located in the Tehachapi area of California, in the WECC. For this analysis, the Project will be evaluated against the Zonal Market Clearing Price (MCP) for the zone where the Project output will be sold. Ventyx's market configuration for its WECC analysis is presented in Figure 1. [MAP — FIGURE 1 — WECC MARKET CONFIGURATION] Consulting Agreement Page 6 Ventyx will run its Planning and Risk (PAR) dispatch model to evaluate the Project under the Spring 2009 WECC 'Reference -Case price forecasts. Ventyx will use Project characteristic assumptions provided by Vernon or its Independent Engineer, to simulate the operation of the Project in a profit maximization mode relative to Ventyx's forecasted; market conditions. These assumptions include: theProject's actual plant -specific performance and cost characteristics and location specific wind power generation, by hour, to be used in the analysis. Our results will include quarterly data for: • Energy dispatch (MWh); • Capacity factor; • Annual hours of operation; • Energy and capacity market revenue; • Variable costs; and • Gross energy margin. Results will be reported in constant dollars. Task 2 - Renewable Energy Credit Price Analysis It is important for Vernon to understand the potential interconnection implications for the sale of Renewable Energy Credits (RECs). While Renewable Portfolio Standards (RPS) tend to be state specific, we are beginning to see the development of more regionally focused REC trading mechanisms, such as the Western Renewable Energy Generation Information System (WREGIS). Under this task, Ventyx will fully investigate current renewable policies, estimate prices for the relevant trading systems; and be able to advise Vernon on ways to fully maximize the benefit of renewable trading. This task will include the development of REC prices for California, revenue to the Project from the sale of RECs, and a report on the California RPS. The REC prices will be developed using the Spring 2009 WECC Reference Case Forecast if this task is executed prior to the release of the Fall 2009 WECC Reference Case Forecast. A synopsis of the current renewable energy standards, generation, and potential for California will be prepared. This will include evaluation of the RPS targets, current available renewable energy sold into the state, and review of state RPS policies concerning out-of-state generation. Our REC pricing methodology uses a long -run marginal return assumption. The price will be set by the revenues required to supplement energy and capacity revenues by the most efficient technology within the state. Ventyx will provide the annual REC price and the corresponding revenue to the Proj ect. Task 3 Summary Report and Pro Forma Development Ventyx will document the analyses performed in Tasks I and 2, describing the study approach, key results and insights. Ventyx will prepare a set of financial pro forma projections to provide detailed Consulting Agreement Page 7 cost and revenue projections to be used in the project development and due diligence analysis for the wind project. Ventyx will work in conjunction with the City of Vernon's engineering consultant in developing pro forma operating and capital cost projections for the project. Ventyx will also work with other members of the project team in developing pro forma financial projections that include merchant plant wind energy sales, and that reflect likely or negotiated power sales contract terms and revenue streams. Task 4 - Nodal LMP Price Forecast and Congestion Analysis for 2014 (optional) Ventyx will utilize the PROMOD Transmission Analysis Module (TAM) to perform a detailed simulation of the. WECC market for 2014 focusing on forecasted nodal prices and congestion affecting the Project. A detailed analysis will be performed to quantify the relative benefits based on nodal revenue projections and deliverability. This effort will include the identification of specific congested transmission elements impacting operation of the Project. Final study deliverables will include hourly wind farm operational results and nodal market prices, as well as summarized monthly and annual totals for all simulations. Data assumptions for the price forecast and congestion study will be based on Ventyx's WECC Spring`2009 Reference Case. The transmission system data will be taken from the 2014 summer peak powerflow cases published by NERC. Significant near -term transmission expansion projects will be captured, as well as potential upgrades PROMOD TAM provides valuable information on the dynamics of the marketplace through its ability to determine the effects of transmission congestion, fuel costs, emissions costs, generator availability, bidding behavior, and load growth on nodal market prices. PROMOD TAM performs an 8760-hourly commitment and dispatch recognizing both generation and transmission impacts at the nodal level. PROMOD TAM forecasts hourly energy prices, unit generation, revenues; and fuel consumption, external market transactions, transmission flows, congestion, and LMP price components. The heart of PROMOD is an hourly chronological dispatch algorithm that minimizes costs (or bids) while simultaneously adhering to a wide variety of operating constraints, including generating unit characteristics, transmission limits, fuel and environmental considerations, transactions, and customer demand. The results of this nodal analysis would include: • Forecasted monthly On-Peak/Off-Peak Locational Marginal Prices (LMP) for selected buses near each Project, including the Project wind site and commercial trading hubs for 2014; • Hourly LMPs for the Project based on the specific injection bus for 2014; • Projected hourly generation and revenue for the Project; • List of significant congested transmission lines and their individual impacts on the LMPs at the Project' wind site(s); and • Wind energy curtailment for the Project in annual, monthly and hourly format for 2014. Consulting Agreement Page 8 Task 5 - Draft Lender Report (Optional) If a Project goes to financing and a formal report is required under lender requirements, Ventyx will prepare a Draft Lender Report,including a summary of the applicable regional market characteristics, underlying assumptions, analyses performed in Tasks 1, 2 (and 4, if performed), and overall results. Preparation of subsequent drafts and a Final report will be conducted as part of Task 6. Task 6 - Continuing Support (Optional) Ventyx can also provide additional services subsequent to the analysis process. In Ventyx's experience the exact nature and timing of such tasks is difficult to predict. However, these tasks may include: • Providing additional draft and final reports by editing text or preparing additional charts or tables; • Performing additional quantitative analyses, such as testing alternate assumptions for an investor's Base Case or preparing additional "High" or "Low" scenarios; • Discussing analyses and reports with potential investors, banks and ratings agencies, either in person or by conference call; and Any tasks 'not "explicitly included in Tasks 1-5 above are also included in this Task 6. Ventyx will not undertake any Task 6 effort unless specifically so instructed by Vernon. Schedule Ventyx proposes providing the services pursuant to the following schedule: Task 1. The dispatch analysis, for the Project, using the Reference Case forecast can be delivered within two weeks of commencement of effort, assuming prior receipt of written authorization to proceed and receipt of the unit operating and cost data for the Project. Task 2. The REC prices for the Project can be delivered within three weeks of commencement of effort, assuming prior receipt of written authorization to proceed and receipt of the unit operating and cost data for the Project. Task 3. The Summary Report will be delivered within two weeks of completion of Tasks 1 and 2. Task 4 (Optional). The nodal analysis for each Project can be delivered within five weeks of commencement of effort, assuming prior receipt of written authorization to proceed and receipt of the unit operating and cost data for the Project. Task 5 (Optional). A Draft Lender Report can be provided within two weeks of notification of need or two weeks after completion of Tasks I through 4. Consulting Agreement Page 9 Task 6 (Optional). Sensitivity cases for a single zonal run can usually be completed within one week from commencement of the sensitivity case effort, depending on the specific content and resource availability. Pricing Ventyx will perform this project on a time and materials basis on a with a estimated budgets shown below. Task & Description Estimated Fee Base Analysis Task 1 - Zonal Price Analysis $10,000 Task 2 - REC Price Analysis $10,000 Task 3 - Summary Report and Pro Forma $10,000 Sub Total for Base Analysis $30,000 Optional Analyses Task 4 - Nodal Price Analysis (Optional) $40,000 Task 5 - Draft Lender Report (Optional) $15,000 Continuing Support Task 6 - Continuing Support Time and Materials Special Note Pertaining to Task 6 - Continuing Support In Ventyx's experience it is difficult to define a "reasonable and customary" level of continuing support. In some cases the support has been minimal, while in many other cases there has been a wide range of support costs based upon the circumstances of the individual engagement. Ventyx will provide these Task 6 services on a time -and -materials basis pursuant to its then -current Consulting Rate Schedule. Ventyx's Rate Schedule for the year 2009 is attached. Ventyx will invoice these fees on a monthly basis, with the net amount duein 30 days. Consulting Agreement Page 10 2009 RATE SCHEDULE — VENTYX CONSULTING SERVICES Rate Group Hourly Fee US$ Executive, Practice Leaders/Subject Matter Expert/ Expert Witness 380 Director 350 Principal Consultant 300 Lead Consultant 285 Project Manager 250 Senior Consultant 225 Consultant 200 Associate Consultant 175 Technical and Administrative Professionals 140 1 S% Adder for Work for Litigation /Regulatory Proceedings Support Service Charges. In addition to payment for professional services, all reasonable and necessary expenses incurred in connection with the performance of professional services will be billed at cost plus 10% o. Such expenses include, but are not limited to, outside reproduction costs, artwork, airline travel, meals, lodging, postage, freight, telephone, and travel related expenses. Mileage is charged at the prevailing Standard Mileage Rate as determined by the Internal Revenue Service. Insurance Provisions. Where a Client requires that it or other entities be named as additional insured with regard to company insurance policies, any cost to Ventyx of such provisions shall be billed to the Client. Fee Schedule Revision. This schedule is effective commencing January 1, 2009, and may be revised periodically by Ventyx.. The fee schedule for this contract may not be revised without prior approval by the City. Consulting Agreement Page 11 Page 1 of 1 Juarez, Debbie From: Barcia, Ana Sent: Tuesday, October 27, 2009 10:1.6 AM To: Giron, Nelly Cc: Juarez, Debbie; Valdez, Javier Subject: Insurance Approval- Ventyx Energy Attachments: Ventyx Energy, LLC.pdf Hello Nelly, Please be advised that the above referenced has provided acceptable insurance coverage. Thank you, Ana Barcia City of Vernon Risk Management Department T: 323) 583-8811 ex 286 F: 323) 826-1439 ab_.arcia ci.vernon.ca.us CONFIDENTIALITY NOTICE: This e-mail transmission, and any docuinents, files or previous e-mail messages attached to it may contain confidential information that is legally privileged. If you are not the intended recipient, or a person responsible for delivering it to the intended recipient, you are hereby notified that any disclosure, copying, distribution or use of any of the information contained in or attached to this transmission is STRICTLY PROHIBITED. If you have received this transmission in error, please immediately notify the sender. Please destroy the original transmission and its attachments without reading or saving in any manner. 10/27/2009 Page 1 of 1 Juarez, Debbie From: Barcia, Ana Sent: Wednesday, October 21, 2009 9:21 AM To: Juarez, Debbie Subject: RE: Ventyx Hi Debby, No, there are some additional requirements per the agreement; I've sent Ventyx an email requesting the additional information, or at least a timeline of when we could expect the information. I have not received a response as of yet. Ana Barcia City of Vernon Risk Management Department T: 323) 583-8811 ex 286 F: 323) 826-1439 abarcia c ci.vernon.ca.us From: Juarez, Debbie Sent: Wednesday, October 21, 2009 9:19 AM To: Barcia, Ana Subject: Ventyx Hi Ana. Was the insurance paper that Javier brought in this morning adequate?. Thank you 1ne6orafii Juarez Records WanagementAssistant City of Vernon - City CCerCs Office 4305Santa TeAvenue Vernon, CA 90058 (323) 583-8811 10/21 /2009 Page 1 of 2 Juarez, Debbie From: Barcia, Ana Sent: Monday, October 19, 2009 1:24 PM To: Juarez, Debbie Subject: RE: VENTYX ENERGY, LLC - approved 10-05-09 Resolution No. 10,074 Hi Debbie, I received an update on Friday that the insurance documents will not be sent until their legal department has distributed the fully executed agreement. No documents have been received as of yet. Ana Barcia City of Vernon Risk Management Department T: 323) 5 83 -8811 ex 286 P: 323) 826-1439 ab.arcia ci_.vemon.ca.us From: Juarez, Debbie Sent: Monday, October 19, 2009 1:02 PM To: Barcia, Ana Subject: RE: VENTYX ENERGY, LLC - approved 10-05-09 Resolution No.' 10,074 Hi Ana. Any word on this one yet? Deborah Juarez Records 914anagementAssistant City of Vernon - City Cferk's Office 4305Santa EeAvenue Vernon, " 90058 (323)583-8811 From: Barcia, Ana Sent: Monday, October 05, 2009 2:01 PM To: Juarez, Debbie Subject: RE VENTYX ENERGY, LLC - approved 10-05-09 Resolution No. 10,074 Hi Debbie, I don't have record of this insured, can you send me a copy of the resolution. Thanks, Ana Barcia City of Vernon Risk Management Department T: 323) 583-8811 ex 286 F: 323) 826-1439 abarcia ci.vernon.ca.us From: Juarez, Debbie Sent: Monday, October 05, 2009 1:58 PM To: Barcia, Ana 10/19/2009 RECEIVED @k Yt'a S E PS 0 2009 c�cLERWso�FecE STAFF REPORT LIGHT & POWER DATE: September 24, 2009 TO: Honorable Mayor and City Counc� v v FROM: Donal O'Callaghan, Director of Light & Power RE: Ventyx Energy, LLC Scope of Service and Consulting Services Agreement with the City of Vernon Ventyx Energy is a leading global consulting in analytics simulation models. Ventyx Energy provides software solutions; energy markets data, advisory services, and strategic consulting that are based on a common framework to enable industry professionals in make better economic and strategic decisions. Ventyx Energy under the proposed Scope of Work will provide the City of Vernon with advisory services for the evaluation of Vernon's Tehachapi Renewable Energy project sites (the Project). These analyses will include a comparison of revenue projects for the Project cases, including zonal and REC prices in the appropriate WECC market'region. In proving that analytical support, Ventyx Energy will provide the following general task areas in the amount not -to -exceed $30,000: 1. Evaluate the Project revenue through zonal price analysis; 2. Evaluate other revenues to the Project's from renewable markets; 3. Provide data for the Vernon Pro Forma; 4. Provide a summary report The City Attorney has reviewed and approved service agreement as -to -form. Recommendation: We are recommending City Council approve the attached Consulting Services Agreement with Ventyx Energy, LLC and the amount of funds to be allocated to capital budget not -to -exceed $30,000.00. DO: jv Attachment RECEIVED S E P 3 1 2009 BY:-Zi- V.00 Valdez, Javier From: JOEL.MACK@LW.com Sent: Thursday, September 17, 2009 3:32 PM To: Carl.Huppert@ventyx.com; Valdez, Javier; Hervish, Peter Cc: LWienerc@@rwgiaw.com; DVarat@rwglaw.com (C(DPY Subject: RE: Ventyx and City of Vernon Joel From: Carl Huppert [mailto:Carl.Huppert@ventyx.com] Sent: Thursday, September 17, 2009 12:26 PM To: Valdez, Javier; Hervish, Peter; Mack, Joel (SD) Subject: Ventyx and City of Vernon Peter, Joel, Javier - We got back comments on the redline and we were able to accept most of the changes. The insurance provision goes to Ventyx's agent and our changes are attached and they are not negotiable. Our insurance is not changeable and we are amenable to provide you with our standard Accord Certificate of Insurance which provides adequate insurance. If these changes are okay, I will finalize for signature. Will we need to sign first again?? Carl Carl Huppert Director Ventyx 916.609.77531 Carl. Hupgert(@Ven .com www:venta.com From: Hervish, Peter [mailto:PHervish@ci.vemon.ca.us] Sent: Saturday, September 12, 2009 10:18 AM To: Carl Huppert Cc: JOEL.MACK@LW.com; Valdez, Javier Subject: FW: Revised Ventyx Consulting Agreement Carl, The City Attorney, Joel and myself had a conference on the subject Friday. The City attorney recommended some changes which should not pose a problem, in our opinion. Please look over and advise. Joel, and myself are open to speak with you about this early next week after your review. Joel may or may not want to tie the City Attorney in for the call. This is solely at his discretion. Peter DISCLAIMER: This email message and all attachments transmitted with it are for the sole use of the intended recipient(s) and may contain confidential and privileged information. Please DO NOT forward this email outside of the recipient's Company unless expressly authorized to do so herein. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply email and destroy all copies of the original message. Any views expressed in this email message are those of the individual sender except where the sender specifically states them to be the views of Ventyx. To comply with IRS regulations, we advise you that any discussion of Federal tax issues in this e-mail was not intended or written to be used, and cannot be used by you, (i) to avoid any penalties imposed under the Internal Revenue Code or (ii) to promote, market or recommend to another party any transaction or matter addressed herein. For more information please go to http://www.1w.com/ddcs/irs.pdf This email may contain material that is confidential, privileged and/or attorney work product for the sole use of the intended recipient. Any review, reliance or distribution by others or forwarding without express permission is strictly prohibited. If you are not the intended recipient, please contact the sender and delete all copies. Latham & Watkins LLP 2 August 21, 2009 Letter of Transmittal July 21, 2009 Peter Hervish City of Vernon 4305 S Santa Fe Avenue Vernon, CA 90058 Dear Peter, On behalf of Ventyx; I am pleased to provide Vernon with a proposal to provide advisory services for the evaluation of Vernon's Tehachapi wind project sites (the Project). These analyses will include a comparison of revenue projections for the Project cases, including zonal and REC prices in the appropriate WECC market region. Ventyx has performed numerous wind related studies encompassing site screening, project sizing, revenue projection, speed assessment, congestion and price forecasting studies. We have extensive recent experience in performing similar studies for many of the major wind developers including FPLE, Horizon Wind, Gamesa, and BP Wind Energy. Ventyx.brings a new and unique combination of assessment capabilities that we plan to leverage for Vernon on this Project. Ventyx is qualified for these types of merchant market power assessment studies and any follow-on site specific project due diligence support due to our ability to leverage Ventyx's proprietary market -leading PROMOD IV LMP software; Market Analytics solutions, and proprietary Energy Velocity data intelligence. A more detailed discussion of our Proposal, Schedule, Project Team, and Qualifications is contained in the following documents. We look forward to the opportunity to work collaboratively with Vernon to refine the scope of work and get started on the study: Please contact me at your convenience with any questions: The next step is to finalize the scope of work. Please contact me if you would like to review our proposal. Sincerely, Carl Huppert WECC Region Sales Executive (916) 609-7753 carl.huppert@ventyx.com Ventyx Confidential and Proprietary 3 n X`► August 21, 2009 Executive Summary Ventyx is honored to have this opportunity to offer our industry leading energy market advisory and consultancy services to Vernon in regards to performing critical Merchant Wind Study to assess the feasibility of Vernon's proposed asset site in California. This proposal seamlessly integrates several key analysis concepts in offering a holistic perspective to help guide Vernon in its analysis of the market potential for its Project. Ventyx feels that any analysis of a wind project must incorporate a certain sequence of activities which starts with a long-term view of market prices. Ventyx will utilize our semi-annual WECC Market Power Forecast Reference Case which is heavily leveraged within the energy industry as the key cornerstone to any market price study due to its breath, depth, accuracy and reliable unbiased results. This Reference Case forecast provides zonal market prices and also provides detailed operating characteristics that may be used in congestion analysis. By utilizing an existing off the shelf forecast, Vernon is able to utilize a detailed market price analysis without paying for development of a custom forecast as would be required with other consultants. The zonal analysis alone would normally provide all the information necessary to evaluate a new project. However, a complete analysis of the Project should also consider associated Renewal Energy Credit prices and benefits. Ventyx will analyze the REC market and provide a comprehensive view of the REC markets available to the Project and the applicable price forecasts. Though not part of this proposed scope and budget, Ventyx offers an optional detailed Nodal LMP (Local Marginal Price) and Congestion Analysis which would further assess the associated benefits and disadvantages of the Project site based on nodal revenue projections and deliverability. Included in this effort would be the identification of specific congested transmission elements - as they exist today - and their impact on operation of the Project. Final study deliverables would include hourly wind farm operational results, as well as summarized monthly and annual totals for all simulations. In having Ventyx perform this critical investment study, Vernon will be able to assure itself that it has performed comprehensive due diligence in consideration of the capital investment risk at the potential Project sites. Ventyx Confidential and Proprietary 4 Vent w- August 21, 2009 Company Profile Ventyx Energy is, in part, the combination of the former Global€nergy Decisions and NewEnergy Associates, both worldwide leading analytics simulation model vendors. Ventyx provides the energy industry with software solutions; energy markets data, advisory services, and strategic consulting that are based on a common framework and enable industry professionals to make better economic and strategic decisions. With this union of companies and expertise, Ventyx brings more than 30 years of experience to our clients. Those clients include approximately 430 US clients, including; federal and regional regulatory agencies, such as FERC, NERC, EIA, DOJ, MISO, CAISO, PJM, SPP; state regulators, such as Ohio, Wisconsin, Oregon, and Maryland; integrated utilities, independent transmission companies, merchant generators; consulting firms, and financial hedge firms; among many others. Ventyx offers a comprehensive portfolio of optimization and simulation solutions encompassing: • Electricity pricing and demand forecasting • Resource planning • Strategic studies and competitor analyses • Risk management • Assetvaluation • Generation performance optimization • Merger and acquisition decisions Energy markets data and analytic tools Privately held and headquartered in Atlanta, GA, Ventyx has regional offices in Boulder, CO; Houston, TX; Sacramento, CA; Columbus, OH; Kansas City, MO; Portland, OR; Pittsburgh, PA; Raleigh, NC; London, England; Paris, France; Richmond, BC; and Brisbane, Australia. Ventyx Confidential and Proprietary 5 + nt y xw - August 21, 2009 Scope of Work Ventyx understands that Vernon is currently in the planning process for the development of a wind facility in the Tehachapi area of California (the Project). Vernon expects the Project to interconnect with a future transmission line that will increase the transmission capacity from the Tehachapi area into Southern California. The location of the Project is such that Vernon plans to sell power into the Southern California market. The relative value of delivering power in these markets is driven in the long term by the fundamentals of the market structure and generation fleet, along with possible Renewable Energy Credits. There are many factors that will affect the value of the Project including construction cost, overall market prices, volatility of market prices, transmission congestion, and renewable market access. A longterm analysis will be performed to address the fundamental value of the Project based on wind resources, expected Southern California Zonal prices and REC revenue, The objective of this assignment is to develop revenue forecasts and a pro forma to reflect the long term view of the value of the Project. Ventyx will undertake the following actions: • evaluate the Project revenue through zonal price analysis; • -evaluate other revenues to the Projects from renewable markets; - • provide data for the Vernon Pro forma; • provide a summary report The details of this study are presented below in Tasks 1 through 3. The summation of this analysis will provide Vernon with a valuation of its Tehachapi -area wind. Project. This project will not include a nodal analysis to evaluate congestion risks. However, in Ventyx's experience, as wind projects advance forward, transmission and congestion may be important considerations. Ventyx includes an option to perform a nodal analysis to evaluate the congestion risks for transmission interconnection alternatives. Task 1 Zonal Price. Forecast and Revenue Analysis The analysis of Vernon's Project site (the Project) will utilize Ventyx's Spring 2009 WECC Power Market Advisory Service report, which includes our Reference Case forecast for the markets relevant to this Project. The Spring 2009 WECC price forecast became available for client use on March 31, 2009. The Fall 2009 WECC report will be available at the end of October, 2009, and, if necessary, this analysis will be updated with the Fall 2009 forecast results when available at an additional fee: The Project site is located in the Tehachapi area of California, in the WECC. For this analysis, the Project will be evaluated against the Zonal Market Clearing Price (MCP) for the zone where the Project output will be sold. Ventyx's market configuration for its WECC analysis is presented in Figure 1. Ventyx` Confidential and Proprietary 6 vrantyxw August 21, 2009 Figure i WECC Market Configuration �p3A 5„ BG Powe1er 12Mv MOM1nNn 2200 337 510 - - 1263 "� jg) .. 2009 356 maHO SW 400 2307 WYOMINO W 50 WYOMINO E 7 8 - 262 1434 - 2178 - - - 300 3213v 58v 500 )$' - 360 150v Evauq 9Y$ - 0NO6TH 7��yy 694v (( 370 1366 9 148 1 5400 A5 550 w- - - VrE9T 2633y UTAH a1400 _ 2199.- 1R - �}j• �� - - E 600 680- 300 gp 'e,:. cZv2s 833v 24 - 1 y 64 t -3000 .� .,,. UDWp 82 HEvnon. 25 - - cemlAOWP-215e 4000 - 4867V. 56o 650v LAVWP_IO CSCE-i65B 303 2 8 - - - 4785 ac 1800 1 24 ! M¢0Na 5 4725- 0 ME%I00. 12- .-I - Y0 - - N�a 25 2000 400 q 383 0E00Em Nf10-150U 70 N-NO mp00E-15ot i •�:•'J-- Ventyx will run its Planning and Risk (PAR) dispatch model to evaluate the Project under the Spring 2009 WECC Reference Case price forecasts: Ventyx will use Project characteristic assumptions provided by Vernon or its Independent Engineer, to simulate the operation of the Project in a profit maximization mode relative to Ventyx's forecasted market conditions. These assumptions include: the Project's actual plant - specific performance and cost characteristics and locationspecific wind power' generation, by hour, to be used in the analysis. Our results will include quarterly data for: • Energy dispatch (MWh); • Capacity factor; • Annual hours of operation; Energy and capacity market revenue; • Variable costs', and • Gross energy margin: Results will be reported in constant dollars. Ventyx Confidential and Proprietary 7 n w ` August 21, 2009 - Task 2 — Renewable Energy Credit Price Analysis It is important for Vernon to understand the potential interconnection implications for the sale of Renewable Energy Credits (RECs). While Renewable Portfolio Standards (RPS) tend to be state specific, we are beginning to seethe development of more regionally focused REC trading mechanisms, such as the Western Renewable Energy Generation Information System (WREGIS). Under this task, Ventyx will fully investigate current renewable policies, estimate prices for the relevant trading systems, and be able to advise Vernon on ways to fully maximize the benefit of renewable trading. This task will include the development of REC prices for California, revenue to the Project from the sale of RECs, and a report on the California RIPS. The REC prices will be developed using the Spring 2009 WECC Reference Case Forecast if this task is executed prior to the release of the Fall 2009 WECC Reference Case Forecast. A synopsis of the current renewable energy standards, generation, and potential for California will be prepared. This will include evaluation of the RIPS targets, current available renewable energy sold into the state, and review of state RPS policies concerning out-of-state generation. - Our REC pricing methodology uses a long -run marginal return assumption. The price will be set by the revenues required to supplement energy and capacity revenues by the most efficient technology within the state. Ventyx will provide the annual REC price and the corresponding revenue to the Project. Task 3 - Summary Report and Pro Forma Development Ventyx will document the analyses performed in Tasks 1 and 2, describing the study approach, key results and insights. Ventyx will prepare a set of financial pro forma projections to provide detailed cost and revenue projections to be used in the project development and due diligence analysis for the wind project. Ventyx will work in conjunction with the City of Vernon's engineering consultant in developing pro forma operating and capital cost projections for the project. Ventyx will also work with other members of the project team in developing pro forma financial projections that include merchant plant wind energy sales, and that reflect likely or negotiated power sales contract terms and revenue streams. Task 4 - Nodal LMP Price Forecast and Congestion Analysis for 2014 (optional) Ventyx will utilize the PROMOD Transmission Analysis Module (TAM) to perform a detailed simulation of the WECC market for 2014 focusing on forecasted nodal prices and congestion affecting the Project. A detailed analysis will be performed to quantify the relative benefits based on nodal revenue projections and deliverability. This effort will include the identification of specific congested transmission elements impacting operation of the Project. Final study deliverables will include hourly wind farm operational results and nodal market prices; as well as summarized monthly and annual totals for all simulations. Data assumptions for the price forecast and congestion study will be based on Ventyx's WECC Spring 2009 Reference Case. The transmission system data will be taken from the 2014 summer peak powerflow cases published by NERC. Significant near -term transmission expansion projects will be captured, as well as potential upgrades Ventyx Confidential and Proprietary 8 V T entvxw August 21, 2009 PROMOD TAM provides valuable information on the dynamics of the marketplace through its ability to determine the effects of transmission congestion, fuel costs, emissions costs, generator availability, bidding behavior, and load growth on nodal market prices. PROMOD TAM performs an 8760-hourly commitment and dispatch recognizing both generation and transmission impacts at the nodal level. PROMOD TAM forecasts hourly energy prices, unit generation, revenues; and fuel consumption, external market transactions, transmission flows, congestion, and LMP price components. The heart of PROMOD is an hourly chronological dispatch algorithm that minimizes costs (or bids) while simultaneously adhering to a wide variety of operating constraints, including generating unit characteristics, transmission limits, fuel and environmental considerations, transactions, and customer demand. The results of this nodal analysis would include: • Forecasted monthly On-Peak/Off-Peak Locational Marginal Prices (LMP) for selected buses near each Project, including the Project wind site and commercial trading hubs for 2014; • Hourly LMPs for the Project based on the specific injection bus for 2014; • Projected hourly generation and revenue for the Project; • List of significant congested transmission lines and their individual impacts on the LMPs at the Project' wind site(s); and • Wind energy curtailment for the Project in annual, monthly and hourly format for 2014. Task 5 Draft Lender Report (Optional) If a Project goes to financing and a formal report is required under lender requirements, Ventyx will prepare a Draft Lender Report, including a summary of the applicable regional market characteristics, underlying assumptions, analyses performed in Tasks 1, 2 (and 4, if performed), and overall results. Preparation of subsequent drafts and, a Final report will be conducted as part of Task 6. Task 6 - Continuing Support (Optional) Ventyx can also provide additional Services subsequent to the analysis process. In Ventyx's experience the exact nature and timing of such tasks is difficult to predict. However, these tasks may include: • Providing additional draft and final reports by editing text or preparing additional charts or tables; • Performing additional quantitative analyses, such as testing alternate assumptions for an investor's Base Case or preparing additional "High" or "Low" scenarios; • Discussing analyses and reports with potential investors, banks and ratings agencies, either in person or by conference call; and Any tasks not explicitly included in Tasks 1-5 above are also included in this Task 6. Ventyx will not undertake any Task 6 effort unless specifically so instructed by Vernon. Ventyx Confidential and Proprietary 9 Vlentyxw- -August 21, 2009 Schedule Ventyx proposes providing the services pursuant to the following schedule: Task 1. The dispatch analysis, for the Project, using the Reference Case forecast can be delivered within two weeks of commencement of effort, assuming prior receipt of written authorization to proceed and receipt of the unit operating and cost data for the Project. _Task 2. The REC prices for the Project can be delivered within three weeks of commencement of effort, assuming prior receipt of written authorization to proceed and receipt of the unit operating and cost data for the Project. Task 3. The Summary Report will be delivered within two weeks of completion of Tasks 1 and 2. Task 4 (Optional). The nodal analysis for each Project can be delivered within five weeks of commencement of effort, assuming prior receipt of written authorization to proceed and receipt of the unit operating and cost data for the Project. Task 5 (Optional). A Draft Lender Report can be provided within two weeks of notification of need or,two weeks after completion of Tasks 1 through 4. Task 6 (Optional). Sensitivity cases for a single zonal run can usually be completed within one week from commencementof the sensitivity case effort, depending on the Specific content and resource availability. -- Ventyx Confidential and Proprietary 10 tentyxw Special Note Pertaining to Task 6 — Continuing Support In Ventyx's experience it is difficult to define a "reasonable and customary" level of continuing support. In some cases the support has been minimal, while in many other cases there has been a wide range of support costs based upon the circumstances of the individual engagement. Ventyx will provide these Task 6 services on a time -and -materials basis pursuant to its then current Consulting Rate Schedule. Ventyx's Rate Schedule for the year 2009 is attached. Ventyx will invoice these fees on a monthly basis, with the net amount due in 30 days. Ventyx Confidential and Proprietary 11 - tentyxw EXeaU�iues P�actica�Leadetks/3upjecttl�atter Exper,t/ �x�att � �,�" `< h `� �` r � } _ UU[fness 38Q k.r ��eao Consultant � � �T � 288 l � oniorfCorisultent 'VP " } _ - -- �wt��1..,u. ,✓f,�`." _ .r,..�,.u�v^v5fi.�,> .. ,r:<�.,�;�-d�.�,'�.� t'� = a�� �.� .. a.��� r - - - � �>r ` = cad anti[ [s��a RCofessioals 5��r �14� x. a�1:">Y� Support Service Charges. In addition to payment for professional services, all reasonable and necessary expenses incurred in connection with the performance of professional services will be billed at cost plus io%. Such expenses include; but are not limited to, outside reproduction costs, artwork, airline travel, meals, lodging, postage, freight, telephone; and travel related expenses. Mileage is charged at the prevailing Standard Mileage Rate as determined by the Internal Revenue Service. Materials, Equipment, Subcontractors. Charges for the purchase of job parts and materials, specialized equipment rental or purchase, and tool rental or replacement purchase shall be charged at cost Plug 15%. Expenditures for hiring of sub -consultants or subcontractors shall be charged at cost plus 15%. Part-time employees and contract employees will. be charged at the appropriate rate from the table above. To the extent sales, use, or district taxes apply, such taxes shall be charged: Ventyx Confidential and Proprietary 12 /+G fit w -August 21, 2009 Team Experience Keith H. Durand, Vice President Career Summary Mr. Durand is the Vice President and Practice Lead for the Power Markets practice. This practice specializes in market assessments, strategy assessments, and asset valuations using Ventyx's Market Analytics tools. This practice is responsible for producing the Ventyx Reference Cases, BlueBook; and Electric Horizons products. Keith has twenty-four years experience In electric utility and energy markets including utility management consulting, project management; business development and power contract negotiation; energy marketing and trading; asset valuation; electric market assessment; regulatory testimony; economic and operational analysis; electric utility integrated resource planning; and renewable energy commercialization. Experience - Most recent expertise / project at Ventyx Vice President of Strategic Consulting, Ventyx (2007-Present) As a member of Ventyx's Advisory Services team, Mr. Durand manages the teams that produce the Reference Cases, BlueBook and Electric Power Horizons. His group also performs asset valuation and strategy assessment advisory services: • Previous projects / consulting experience / expertise Manager Power Supply, NSTAR Electric and Gas (2007) • Managed procurement and settlements of basic service power supply; • On business initiative team for retail solar deployment; • Participated in ISO New England Markets Committee; • Prepared responses for FERC filings, proposed legislation, ISO rule changes. Consultant, California Energy Resources Scheduling (2001-2006) • Supported California DWR/CERS throughout energy crisis; • Evaluated power supply offers; • Led contract negotiations and structured deals; • Economic and operational analysis to support energy contracting and trading; • On -going contract management and re -negotiations; • Interacted with the ISO on operations and market design issues; • Developed and conducted analyses of loads, resources, and purchase requirements; • Provided analytic support to optimize resource use; and Represented CERS on CPUC Procurement Review Groups. Ventyx Confidential and Proprietary 14 August 21, 2009 Principal, Navigant Consulting (1999-2001) • Advised clients on strategy, asset valuation, asset acquisition/divestiture, and power contracts; • Extensive deal valuations, contract negotiations, and dealings with power plant developers on behalf of California DWR throughout energy crisis; • Economic and operational analysis for energy trading; • Interactions with the ISO, CEC, PUC, banks/underwriters, and rating agencies; • Managed a $100+ million RFP and auction of power plant output; • Advised global energy company on marketing options and strategies; • Co-authored Solar Energy Business Models Report; • Developed investment prospectus for a start-up green power venture; and • Supervised numerous professionals on numerous projects. Senior Project Manager, Henwood Energy Services, Inc. (1998-1999) • Managed market assessment, asset valuation, and financial due diligence consulting assignments for power plant developers, independent power producers and Wall Street financial organizations; • Built financial models for divested power plants to evaluate profitability and competitiveness; • Advised clients on electricity markets (including market price forecasts, market rules and operations, regulation), power contracts, renewable energy markets; quantitative analysis of operations, and green power markets; and • Provided direct support to power plant developers (including FPLE, Calpine, CalEnergy," Caithness, PacifiCorp) for project financings valued at $1.7 billion. Banks included Lehman Bros., CSFB, JP Morgan. Supervised team of 5 professionals. Executive Consultant, Ernst & Young Consulting (1997-1998) • Global firms exploring investments in Australian utility assets and power plant projects; • Advised utility clients on marketing strategy, utility restructuring; • Advised high-level state of Victoria Energy Projects Division working groups evaluating and designing market regulations and rules for the gas market independent system operator; and Modeled Victoria electricity market, bidding strategies, and spot price curves. • As an Ernst & Young consultant assigned full time to Energy 21, a newly established electricity and gas retail company as part of the Victorian government's utility privatization process, managed the establishment of the energy trading department; • Supervised five professional staff responsible for forecasting, trading, risk management, portfolio management, and settlements: • Long-term gas supply negotiations with power plant developers; • Advised on strategies to compete in a bid -based market, new products and services for customers and energy trading IT systems; • Member of committees to design market rules and regulations; and • Lead negotiator on a $100 million+ gas pipeline contract. Ventyx Confidential and Proprietary 15 K:7n w, August 21, 2009 Managing Consultant, Logica Pty Ltd. (1996-1997) • Advised several global firms on Australian market operations and investment opportunities including power plant siting, hydro dispatch modeling and optimization, asset auctions, and market assessment; and • Managed Logica's Utility Management Consultancy practice: business development, sales, proposals, supervised team of five professionals; and advised utilities and others on regulatory and business strategies. Manager, Utility PhotoVoltaic Group (UPVG) Program managed by TTC (1995-1996) • UPVG: Managed five utility project contracts (ventures) as part of UPVG's technology commercialization program; • Participated in numerous work groups on renewable energy analysis, economic valuation, and valuation of distributed generation; • Advised the utility projects on business strategies, markets, productdevelopment, market planning, and impacts of regulatory reform; • Co -managed RFP process, contracts,technology commercialization initiatives, marketing, and business development; • As Manager of Marketing and Communications managed public information/communications program in 1995-1996 that resulted in a very positive article on front page of business section of New York Times • Edited UPVG Record; • Advised utilities on solar project development, sales and marketing strategies, market research, and identifying customer needs; and • Helped identify new technology business opportunities for electric utilities: Education Completed all course requirements of Resource Economics Master of Science degree program, University of New Hampshire (incomplete) B.S. Southern Utah University Ventyx Confidential and Proprietary 16 tentyxw August 21, 2009 Gary Moland, Vice President Career Summary Mr. Moland is Vice President, specializing in asset evaluation and LMP studies utilizing PROMOD IV and other Ventyx products. -In this role Mr. Moland provides market knowledge; Strategic analysis, modeling expertise, and project management skills to client consulting engagements. Although Mr. Moland has worked over a broad range of geographic areas and markets he has recently been heavily focused on ERCOT's transition to a nodal market and analysis within the Midwest ISO including FTR valuation, cost/benefit analysis of market participation, and LMP-based dispatch impacts. Mr. Moland was previously product manager for PowerBaseTM, which provides regional data integration in an .object oriented database for Ventyx's suite of electricity market decision support tools including PROMOD IVO, MarketPower®, and Strategist& Mr. Moland has also held management positions in product technical development and worked with clients in a product support role. He brings his extensive experience in energy production simulation and consulting to bear on his role as a consultant. His insight and experience allows Mr. Moland to add significant value in the formulation and execution of studies to address the issues of primary importance to clients. His background as PowerBase data manager also provides him with extensive knowledge of market resources and operations which are invaluable in his consulting role. Experience • Most recent expertise/ project at Ventyx Vice President, Ventyx 1990 - Present • Cost/benefit analysis of joining the Midwest ISO for a large integrated utility: • Analysis of forecasted FTR value and congestion drivers for potential MISO participant. • Analysis of expected energy curtailments for wind resources in West Texas. • Nodal price forecast and CRR/congestion analysis for ERCOT based on the current nodal market design: • Impact of MISO LMP dispatch on Fuel budgeting for a Midwestern utility. • Asset evaluation of generator in Texas including projected revenues and profits under various scenarios. • Directed the staff responsible for acquisition of regional data, data refinement and quality assurance, and multi -year release of updates. • Driving force behind the design and development of the current PowerBase product and was instrumental in establishing the product as the premiere simulation database in the marketplace. • Served as technical product manager for PROMOD IV. Directed the software engineering staff responsible for the design and implementation of all PROMO IV product maintenance and enhancement, including upgrades to transmission Ventyx Confidential and Proprietary 17 K :w.n w August 21, 2009 modeling, spinning reserve, Monte Carlo convergence techniques, transaction dispatch, and the graphical user interface. • Responsible for all aspects of quality assurance and software delivery of the product to over sixty clients throughout the world. This software application is recognized as the industry's premier electric production simulation tool and provides Ventyx's clients with the ability to examine their electric portfolio decisions using a detailed DC load flow analysis methodology, simulation of hourly chronological generator dispatch, and forecast of Locational Marginal Prices (LMP) for large regions of a power market: • Supported several clients in the use of PROMOD IV, including direct participation in client studies. Responsible for maintaining client relationship, securing product license renewals, and identifying opportunities for paid consulting or development work. • Developer for the PROMOD IV product, implemented new program features and performed maintenance updates. • Previous projects / consulting experience / expertise Prior to joining Ventyx, Mr. Moland worked briefly for Florida Power & Light Co and the Department of Energy. Education Masters of Mathematics and Computer Science from Emory University (1992) Bachelor of Nuclear Engineering from Georgia Institute of Technology (1984) Ventyx Confidential and Proprietary 18 - qentyxw- August 21, 2009 Jean Agras, Vice President Career Summary Dr. Agras is a Vice President at Ventyx and head of the firm's Environmental Markets sub - practice in the Advisors practice. In this role, she oversees the firm's activities around emission allowance markets, renewable energy markets and energy efficiency. Dr. Agras is an economist with more than 15 years of experience within the energy and environmental industries. She has helped clients understand the implications of carbon legislation and potential cap and trade regulations for their customers; she has developing Renewable Energy Credit prices for utilities and wind developers; she has been the Lead Consultant on assignments to develop stochastic integrated power supply plans for electric utilities across the United States; and been the Project Manager and Lead Investigator on assignments for Power Market Assessments for several banks, utilities, and hedge funds across all NERC regions. Prior to joining Ventyx in 2009, Dr. Agras was a Senior Economist at R.W. Beck, leading the development of electricity, fuel, emission; and risk models. She has a Ph.D. and M.S. from Cornell University in Environmental Economics. Experience • Previous Projects / Consulting Experience / Expertise Director, Energy Markets, R. W. Beck (2001-2009) • State, Regional and Federal Carbon Legislation Evaluation for Northern California Power Agency and NorthWest Public Power Association (Pacific Northwest) • Power Supply Planning / Integrated Resource Planning for American Municipal Power -Ohio (122 members), Michigan Public Power Agency (18 members), Colorado Springs Utilities, Lafayette Utilities System (Louisiana), City Water, Light and Power (Springfield, Illinois), Seminole Electric Cooperative (Florida), Gillette Municipal Power Department (Wyoming) • Renewable Energy Credit Pricing for Renewable Developers and Buyers • Economic and Financial Analysis for Acquisition, Development, Financing, or Refinancing of more than 50 U.S. and Canadian Power Plants • Risk Management / Risk Outsourcing for First Choice Power (Texas), Public Utility Board of Brownsville (Texas), Colorado River Commission (Nevada), Missouri River Energy Services (South Dakota), Minnesota Power Company, and Pioneer Companies (Nevada) -• Contract Review for hedging agreements for several wind developers (Texas and Iowa) • Independent Market Study for Mirant Trinidad Investment (Trinidad and Tobago) • Study and Report of Colorado's Electricity Future for Colorado Energy Forum Ventyx Confidential and Proprietary 19 V IC5;tYXW August 21, 2009 Senior Consultant, Stratus Consulting (1999-2001) • Energy Market Support for the New England Independent System Operator Market Monitoring Group (Massachusetts) • Ozone Control Options Evaluation for the U.S. Environmental Protection Agency (District of Columbia) • Environmental Regulation Analysis for the U.S. Environmental Protection Agency and the U.S. Department of Energy (District of Columbia) • Energy Efficiency Study for the U.S. Department of Energy (District of Columbia) • Emission Control Strategies for Environment Canada (Toronto) • Carbon. Dioxide Emission Reduction Strategy for the international Civil Aviation Organization Committee on Aviation Environmental Protection (Switzerland) • Water Quality Study for American Water Works Association (Colorado) Research Associate, Department of Applied Economics, Cornell University (1992- 1998) • Program Coordinator for One -Year Master's Program in Market Economics in Nitra (Slovakia) • Solar Case Study of United Nations Global Environmental Fund in Zimbabwe • Participated in Report on Providing Urban Environmental Services in Developing Countries for the U.S. Agency for International Development Environmental Program Action Team Education Certificate in Quantitative Finance, 7city Learning by Dr. Paul Wilmott, 2009 Ph.D., Environmental Economics, Cornell University, Ithaca, 1998. Emphasis on Econometrics and Environmental Economics M.S., Environmental Economics, Cornell University, Ithaca, 1995. Emphasis on Environmental Economics and Trade B.A., International Relations, Syracuse University, Syracuse, 1988. With a minor in Mathematics. Ventyx Confidential and Proprietary 20 \Pent w- August 21, 2009 Project Experience The following Projects are a part of the breadth and experience which Ventyx Will leverage to provide insightful market analysis for this study. This experience is not only manifested in the skills and expertise of the Project Team, but also the cohesiveness and quality of the baseline data and data systems leveraged in this study. Renewable Energy - Feasibility, Financing & Grid Impact • Western Area Power Administration Wind Hydro Feasibility Study, 2008 Ongoing Ventyx is assisting WAPA in completing a study of the economics and operation feasibility of integrating wind energy into the WAPA system in the Upper Great Plains Region. The wind energy would be supplied by new projects built on Native American lands. Under this study, Ventyx is developing detailed market simulations to examine the economic impacts of wind integration in the UGPR region, and the transmission and operational impacts of large scale wind development in the Western control area. This study is overseen by a multi -party stakeholder group, and Ventyx has direct experience in working successfully with such a group. • Horizon Wind, 2005-2006 - Bayerische Landesbank retained Ventyx Advisors to provide an Independent Market Opinion for Horizon Wind Energy's Blue Canyon 2 and Maple Ridge -wind farms located in Oklahoma and New York. The market opinion included stochastic price uncertainty estimated for both markets, as well as an analysis of day ahead, real time and LMP price conditions in New York. The $263.3 million financing closed in April 2006. This transaction was selected as Project Finance magazine's 2006. North American Renewables Deal of the Year. Horizon Wind is the successor to Zilkha Renewable Energy, and was acquired by Goldman Sachs in 2005. • Airtricity, 2006 - Ventyx Advisors was retained by this Ireland -based wind developer to prepare market studies for the McDonald Ranch wind project (324.3 MW, ERCOT) in 2005 and Flying Cloud wind project (90'MW, ERGOT) in 2006. • ERCOT Wind Analysis - UK -based Renewable Energy Systems (RES) is one of the largest wind energy companiesin Europe, with a growing presence in the U.S. market. Ventyx Advisors prepared a series of ERCOT market price forecasts for RES, investigating four different market scenarios. RES used the Ventyx Advisors market analysis to establish the market value of two Texas wind farm projects in their post-PPA period. RES successfully sold its Texas Wind Power 160 MW project in 2000, and later negotiated the sale of its 280 MW King Mountain project. • Major Wind Developer Market Analysis, 2007 - Our fuels team provided detailed analysis of the power market for wind resources for a major wind developer interested in five states. The studies included avoided cost structures of IOUs, comparative economic analysis of net energy cost between wind and gas "fuels," gas and power transmission infrastructure capacity, and the available market of public and cooperative utility buyers. • Confidential Wind Developer, 2007 - Prepared an analysis of several markets across the U.S. including the Midwest, New York, and California for future merchant wind development. Ventyx Confidential and Proprietary 21 V T entyxw August 21, 2009 The analysis consisted of providing Reference Case market prices forecast and summary market reports. • Major Wind Developer Canadian Wind Market Analysis, 2006 - Ventyx Advisors' fuels team was engaged to perform a detailed wind market analysis and wind development potential of four Canadian provinces on behalf of this major North American wind developer. • Valuation of Washington State Acreage for Wind Generation, 2006 - For the Washington Attorney General, our fuels team provided expert testimony on behalf of the State of Washington in litigation versus the U.S. Army on the availability of a Pacific Northwest market for wind power and other renewables associated with the Yakima Firing Range. The testimony included an analysis of market price of output from such a project in Eastern Washington. • Shell WindEnergy -- Italy Ventyx developed a market price forecast for the Italian market, capturing both the wholesale market and "green premium" enjoyed by wind and other renewablegenerators. The forecast took account of both current and future market developments as the Italian market liberalizes and a Green Ticket trading market matures. • Sustainable Wind Energy - Ireland Ventyx worked with the Brattle Group to assess the impact of different market structures on renewables generation in Ireland, focusing on wind generation. This project included a full locational marginal pricing (LMP) analysis of the Irish market. • UPC Mars Hill - The Mars Hill project is a 42 MW wind farm located in northern Maine and selling power into New Brunswick Canada. Ventyx Advisors prepared a market analysis and revenue forecasts under Reference Case and Low Gas Price market assumptions. • Confidential Wind Developer, 2008 - Provided assessment of transmission curtailment risk associated for seven projects totaling over 1500 MWs of Wind projects to be located in ERCOT. • Confidential Wind Developer, 2007 - Performed wind siting study for two Wind projects to be located in MISO. • Confidential Wind Battery Storage Company, 2007 - Evaluated the economic viability of adding battery storage to a wind farm located in ERGOT. • Confidential Wind Developer, 2006 - Performed study forecasting the generator revenues and estimating the level of expected curtailments of a proposed wind project located in Western Pennsylvania during the years of 2009 - 2011. • SPP Wind Asset Curtailment Projection, 2006 - Performed a nodal simulation of the SPP market with decentralized control area operation and unit commitment. Under the assumption of non -wind priority for transmission and non -economic based curtailments, the maximum potential for hourly curtailments of a specific wind project was estimated for a projected 2009 plant in-service year. Ventyx Confidential and Proprietary 22 V ent w- August 21, 2009 • Confidential Wind Developer, 2006 - Provided results of a study estimating the level of expected curtailments of your proposed wind project located in Western Kansas during 2009 and 2010. • Confidential Wind Developer, 2006 - Performed wind siting study for three Wind projects to be located in MISO. • Confidential Wind Developer, 2006 Provided assessment of transmission curtailment risk associated with a 200 MW Wind project to be located in northeast Colorado and interconnected and integrated into the Xcel Energy control area. Independent Market Opinions for Wind Financing • FPL Lone Star - The FPL Lone Star project consists of 607 MW of wind capacity located at multiple sites in ERCOT. In this engagement, Ventyx Advisors is addressing both the project's merchant energy revenue potential under a base case and several sensitivity cases, plus an assessment of the region's transmission adequacy. • SPP Price Forecast, 2007 - Performed a nodal simulation of the SPP market with decentralized control area operation and unit commitment. Under the assumption of non - wind priority for transmission and non -economic based curtailments, the maximum potential for hourly curtailments of a specific wind project was estimated for a projected 2009 plant in- service year. • ERCOT Congestion Analysis, 2007-2008 - For internal trading purposes to support Transmission Congestion Relief valuation, Ventyx Advisors was retained to assess wind energy, joint operating transfer agreements, and off system sales in ERCOT's four -zone market to assess the potential for congestion and direct -assigned transmission congestion management costs across each commercially significant constraint. Forecast hourly zonal balancing energy supply curves to illustrate the market depth of those units capable of bidding into the short-term balancing energy market were also prepared. ISO/RTO Cost -Benefit Projects • SPP Future Market Design Cost Benefit Analysis, Ongoing - Ventyx was chosen to assist SPP in evaluating various future market design proposals such as adding a DA Market, Adding an Ancillary Services Market, adding FTR market, adding Virtual Market, etc For this study, Ventyx will be quantifying the benefit between alternatives as well as providing a qualitative review of each alternative. Additionally, Ventyx will be estimating implementation costs associated with the various market designs. considered. • MISO/MAPP/SPP Participation Cost Benefit Study for NPPD, Ongoing - Performed detailed cost/benefit analysis on behalf of NPPD for decision support in joining the MISO or SPP under various market options. PROMOD IV full transmission logic and the MarketVision Ventyx Confidential and Proprietary 23 x v %�-'n W August 21, 2009 data were utilized to quantify the costs/benefits of MISO centralized dispatch versus MAPP balancing authority dispatch. Many company structured scenarios were included. • MISO/MAPP/SPP Participation Cost Benefit Study for OPPD, Dec 2007 — Jan 2008 Performed detailed cost/benefit analysis on behalf of OPPD for decision support in joining the MISO or SPP under various market options. PROMOD IV full transmission logic and the MarketVision data were utilized to quantify the costs/benefits of MISO centralized dispatch versus MAPP balancing authority dispatch. • MISO/MAPP Participation Cost Benefit Study for Muscatine Power & Water, Dec. 2007 Performed detailed cost/benefit analysis on behalf of MPW for decision support in joining the MISO under various;market options. PROMOD IV full transmission logic and the MarketVision data were utilized to quantify the costs/benefits of MISO centralized dispatch versus MAPP balancing authority dispatch. FTR and CP Node analysis was additionally provided to aid the Member's Board in their decision. • MISO/MAPP/SPP Participation Cost Benefit Study for Lincoln Electric System, 2007 Performed detailed cost/benefit analysis on behalf of LES for decision support in joining the MISO under the two proposed tariff options. PROMOD IV full transmission logic and the MarketVision data were utilized to quantify the costs/benefits of MISO centralized dispatch versus MAPP balancing authority dispatch. • Texas Nodal Market Benefit/Impact Studies, (numerous/various studies 2006-2008) Analyzed the benefits and risks associated with the upcoming Texas Nodal Market and how it differs from the existing market. Analyzed congestion patterns and their effect on CRR valuations and detailed wind operation effects and the potential economic wind curtailment. • CAISO Nodal Market Impacts, 2007 - Study examining LMP and congestion in CAISO markets using the CAISO Full Network Model to analyze the benefits or impacts of MRTU. Other Selected Projects • NPPD Pumped Storage Hydro Facility Economic Benefit Forecast, .2008 - Performed a detailed cost/benefit analysis of a potential new pumped storage hydro facility on behalf of Nebraska Public Power District. PROMOD IV zonal transmission logic, detailed hourly pumped storage dispatch process, and data was utilized to quantify the benefits to NPPD for the time period of 2015 - 2035. Various scenarios included impact on the pumped storage hydro generator benefit of some or all MAPP members joining the MISO, some MAPP members joining the SPP and others in the MISO, NPPD. independent of an ISO, as well as key underlying market drivers. such as future gas prices. • ITC - Kansas Economic Transmission Study, 2008 ongoing -Performing economic analysis of a transmission upgrade in the Nebraska/Kansas areas in 2011 and 2017. The analysis will include the production cost savings and the LMP benefits for Nebraska companies as well as the SPP members, MISO members, and MAPP member in regards to Ventyx Confidential and Proprietary 24 n` X*- August 21, 2009 the benefits that they would receive if the upgrade was made to the system. The analysis is being done by season to represent the changing in transmission limits and load. • MidAmerican FERC 890 Transmission Studies, 2008 ongoing - Performing detailed economic transmission analysis in accordance with MidAmerican's FERC 890 stakeholder process. Cost -benefits will be determined for several future transmission projects, involving stakeholders across the MEC control area. • Utilities Plus MISO Price Forecast, 2007 - Performed a forecast of Locational Marginal Prices for 2007 — 2008 in Northern MISO using PROMOD IV. The specific areas of interest were Minnesota,Iowa, and the Dakotas. The results were used to evaluate FTR values for several generation sites. • NIPSCO MISO Price Forecast, 2007 - Performed a forecast of 2007-2008 iocational marginal prices within the Indiana portion of the Midwest ISO market. Final results from PROMOD IV detailed transmission model included monthly on and off peak prices at all buses within utility service territory for use in evaluating potential generation resources. • SPP Transmission Study, 2007 - Performed economic analysis of a transmission upgrade in the SPP Region in 2011 The analysis included the production cost savings and the LMP benefits the members would receive if the upgrade was make to the system. The analysis was done by season to represent the changing in transmission limits and load distribution across the year. • SPP Price Forecast, 2007 - Performed a nodal simulation of the SPP market with decentralized control area operation and unit commitment. Under the assumption of non - wind priority for transmission and non -economic based curtailments, the maximum potential for hourly curtailments of a specific wind project was estimated for a projected 2009 plant in- service year. • PJM Market Price Forecast, 2007 - Provided PJM nodal historical price summaries and - forward FTR auction year price projections for numerous PJM nodes hubs and zones. Also calculated hedge values for pairs of sources and sinks as well as a risk metric to measure the potential for negative FTR obligations. This analysis provided the price components break -down among energy, congestion and losses. Ventyx also examined the effects produced by PJM's introduction of losses into its price calculations. • PJM 20 Year Price Forecast for Reliant - Provided Reliant Energy with an updated 20 year zonal forecast of PJM pricing using the current PowerBase database. Final results from PROMOD IV zonal model included monthly on and off peak prices for each PJM sub- region. • NY Asset Valuation and Market Price Forecast, 2007 - Performed a nodal forecast of 2007/2009 locational marginal prices within the NYISO market and 20 year zonal forecast for the same market. Analysis included transmission expansion in NYISO and surrounding markets and results included hourly energy prices, monthly on and off peak prices and generator operations details. Ventyx_Confidential and Proprietary 25 tentyxio- August 21, 2009 • ERCOT Texas Nodal Market Price Forecast, 2007 Analyzed the benefits and risks associated with the upcoming Texas Nodal Market and how it differs from the existing market. Analyzed congestion patterns and their effect on CRR valuations and detailed wind operation effects and the potential economic wind curtailment. • WECC Market Price Forecast, 2006 - Quarterly delivery of market price forecast for the WECC market. Analysis includes regular evaluation of market changes, creation of potential expansion options using Ventyx MarketPower and zonal energy price forecast from PROMOD IV in the form of hourly prices for use in regional market planning: • ERGOT - Retail Cost Component Summary, 2007 - Identified and summarize the billing determinants directly related to serving retail load in the current ERCOT Market (Zonal). The summary identified and provided calculations for all charges assessed by ERGOT, the Public Utility Commission and the Texas State Controllers office. Further, the study analyzed the cost component structure and changes of the future ERGOT Nodal Market. • NE Market Price Forecast for NERA, 2007 - Performed a market simulation of ISO New England for 2007 - 2030, including a forecast of zonal energy and capacity prices, generator operations, emission levels and costs. • CAISO Nodal Price Forecast, 2006 - Economic evaluation of transmission expansion options using a forecast of 2010 Iocational marginal prices within CAISO market. Six potential expansion options designed to provide a combined cycle power plant better access to the Southern California market were considered. Analysis and results using PROMOD IV detailed transmission model included monthly and hourly on and off peak prices and detailed losses and congestion view for the generator: • Asset Valuation support in SPP (E3), 2006 - Ventyx evaluated the present value of a combined cycle plant in SPR based on 20-yr energy and capacity price forecasts, expected revenues, and operating expenses for the plant The resulting analysis was used, in litigation between two confidential parties in support of the sale of the asset. • Wisconsin MISO Congestion Study, 2006 - Studied and analyzed market operation and congestion for a Wisconsin Utility. • Analysis of MISO Congestion for the Illinois Load Auction, 2006 -Analyzed congestion and market operation for MISO & PJM footprint hubs and client assets associated with the successful bidding in the Illinois load auction for a large mid -Atlantic utility: • Siting Study for Future Generation Facility in Northern MISO, 2006 -A study was performed using PROMOD IV Transmission Analysis Module (TAM) to evaluate alternative locations for siting a`future generation facility in northern MISO. Analysis of congestion, flow patterns, and locational marginal prices was conducted and sites were ranked based on the total impact on company asset portfolio. Ventyx Confidential and Proprietary 26 Vent xw, August 21, 2009 • PJM Asset Siting and Transmission Evaluation, 2006 - Estimated transmission congestion from a principal PJM trading Hub to client loads. Identified the transmission drivers of the congestion component of price and estimated the impact of a transmission upgrade. Evaluated the overall client market settlement position of alternative sites for location of new generation. Evaluated the impacts of multiple proposed major PJM transmission upgrades on site selection. Performed a detailed iterative loss study of the impact of PJM transition to loss modeling on client market position. • SPP Wind Asset Curtailment Projection, 2006 - Performed a nodal simulation of the SPP market with decentralized control area operation and unit commitment. Under the assumption of non -wind priority for transmission and non -economic based curtailments, the maximum potential for hourly curtailments of a specific wind project was estimated for a projected 2009 plant in-service year. • SPG MarketVision, 2007 - Produced a 20-year energy price forecast for 80 regions throughout the United States and Canada. These energy prices were used to evaluate the cost and benefit of different upgrades to power plants based on how they would respond to market conditions: • MG&E MISO.Price Forecast, 2007 - Performed analysis for a MISO client to evaluate different sites in MISO and PJM for purchase power agreement in 2016. The analysis included the impact of congestion on getting power from the generation site to the load and the impact of losses on each of the sites. The analysis also included the revenue and costs associated with the different types of generation being offered by bidders: • Study for Michigan PSC 21st Century, 2006 - Follow-up to 2005 effort where we performed the IRP study for the Michigan Capacity Needs Forum. The project entailed an update for the assessment of statewide generation capacity needs over a 20 year time horizon, and the development of resource expansion plans under 16 separate scenarios to meet those needs. Scenarios included load growth, transmission import capacity to energy markets outside the state, conservation and renewable generation resources, fuel prices, and potential CO2 tax. • Study for Michigan Capacity Needs Forum, 2005-6 - Ventyx performed an Integrated Resource Plan for the Michigan CNF group (http://www.dleg.state.mi.us/mpsc/electric/capacity/cnf/index.htm). The project entailed the assessment of statewide generation capacity needs over a 20 year time horizon, and the development of resource expansion plans under 16 separate scenarios to meet those needs. Scenarios included load growth, transmission import capacity to energy markets outside the state, conservation and renewable generation resources, fuel prices, and potential CO2 tax. Results were presented to the CNF committee and Ventyx provided some chapters of the final CNF report (available at the website). Ventyx Confidential and Proprietary 27 V1= n x*- August 21 2009 Liability Note Ventyx provides this document "as is", without warranty of any kind, either expressed or implied, including, but not limited to, the implied warranty of merchantability or fitness for a particular purpose. Ventyx may make changes or improvements in the equipment, software, or specifications described in this document at any time and without notice. Ventyx has made every reasonable effort to ensure the accuracy of this document; however, it may contain technical inaccuracies or typographical errors. Ventyx disclaims all responsibility for any labor, materials, or costs incurred by any person or party as a result of their use or reliance upon the content of this document. Ventyx and its affiliated companies shall in no event be liable for any damages (including, but not limited to, consequential, indirect or incidental, special damages or loss of profits, use or data) arising out of or in connection with this document or its use, even if such damages were foreseeable or Ventyx has been informed of their potential occurrence: © 2009 by Ventyx. All rights reserved. No part of this document, or any software included with it, may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, - including photocopying, electronic, mechanical, recording or otherwise, without prior written consent of Ventyx: This document contains the proprietary and confidential information of Ventyx. The disclosure of its contents to any third party is strictly prohibited, without the prior written consent of Ventyx. Ventyx Confidential and Proprietary 28 viun` w- !/enty,)�� nce Proven September 22, 2009 Javier Valdez City of Vernon 4305 S Santa Fe Avenue Vernon, CA 90058 Re: Consulting Agreement Dear Mr. Valdez, 3301 Windy Ridge Parkway Suite 200 Atlanta, GA 30339-5618 www.ventyx.com MAIN 770-952-8444 FAX 770-989-4231 Enclosed are two originals of the above referenced agreement. Kindly counter sign each and return one fully executed to my attention at the address listed above. Thank you, Amy Pingel Contracts Assistant r"ii;fr STP2229