M-S-R ENERGY AUTHORITY MEMORANDUMmsrea.msrpower.org/Portals/3/Public Documents/M-S-R...M-S-R ENERGY AUTHORITY MEMORANDUM Date: September 3, 2014 To: M-S-R EA Technical Committee From:

M-S-R ENERGY AUTHORITY

MEMORANDUM Date: September 3, 2014 To: M-S-R EA Technical Committee From: Martin R. Hopper, General Manager Subject: Wednesday, September 10, 2014, M-S-R EA Technical Committee Meeting

Agenda Please find enclosed the agenda for the Wednesday, September 10, 2014, 2013, M-S-R EA Technical Committee Special Meeting to be held in Truckee, CA. Please post as required for Brown Act compliance. Distribution: Alan Hockenson – NCI Dave Arthur – KBT Rin Helzerman – NCI Steve Gross – General Counsel Toxie Burriss – MID Roger van Hoy – MID David Olivares – MID Greg Salyer – MID Ed Oborn, – MID James McFall – MID Michelle Coffman – MID Regina Cox – MID Scott van Vuren – MID Joy Warren – MID Cindy Worley – MID Steve Hance – SVP Ann Hatcher – SVP Joyce Kinnear – SVP Ken Sims – SVP Jan Pepper – SVP Elizabeth Hadley – Redding Steve Handy – Redding Daniel Beans – Redding Barry Tippin – Redding

M-S-R Energy Authority

MEETING

OF THE TECHNICAL COMMITTEE

Wednesday, September 10, 2014, 9:30 AM

Porter Simon Law Offices 40200 Truckee Airport Road, Suite 1

Truckee, CA 96161

AGENDA Any member of the public who desires to address the Committee on any item considered by the Committee at this meeting before or during the Committee’s consideration of that item shall so advise the Chair and shall thereupon be given an opportunity to do so. 1. Call to Order

2. Roll Call 3. Approval of Minutes of July 10, 2014 (attached)

4. General Manager Report (Martin Hopper) 5. Bi-Monthly Budget v. Actual Reporting (attached, Martin Hopper)

6. Discussion and Possible Action Regarding M-S-R EA 2015 Strategic Plan (attached, Martin Hopper)

7. Discussion and Possible Action Regarding Renewal of Administrative and Accounting Services Agreement with Modesto Irrigation District (attached, Martin Hopper)

8. Discussion and Possible Action Regarding Renewal of Administrative and Technical Services Agreement with M-S-R Public Power Agency (attached, Martin Hopper)

9. Discussion and Possible Action Regarding 2014 Update to M-S-R EA Policies and Procedures Manual (attached, Martin Hopper)

10. Public Comment

11. Confirm date and time of next meeting

12. Adjourn

ALTERNATE FORMATS OF THIS AGENDA WILL BE MADE AVAILABLE UPON REQUEST TO QUALIFIED INDIVIDUALS WITH DISABILITIES.

Page 1 of 3

DRAFT MINUTES OF THE

M-S-R ENERGY AUTHORITY TECHNICAL COMMITTEE

JULY 10, 2014

The M-S-R Public Power Agency (M-S-R EA) Technical Committee held a regular

meeting on July 10, 2014 at the offices of Navigant Consulting in Folsom, California. A

list of the attendees is provided as Attachment 1. Mr. Hopper chaired the meeting.

Roll Call/Call to Order

The following M-S-R Members were represented: Modesto Irrigation District – James

McFall, City of Santa Clara – Joyce Kinnear, City of Redding – Steven Handy. The

meeting was called to order at 2:25 p.m.

Approval of Minutes

Upon a motion by Mr. Handy, seconded by Ms. Kinnear, the minutes of the meeting held

on March 6, 2014 were unanimously approved.

Manager’s Report

Mr. Hopper indicated it was the time of year to review the M-S-R EA Strategic Plan and

Policies and Procedures Manual. Mr. Hopper asked for comments from the Members on

the documents prior to the end of August such that modifications can be made and

documents distributed prior to the Technical Committee meeting scheduled for

September 10, 2014.

Monthly Budget v. Actual Reporting

Mr. Hopper noted that although the auditor services appear substantially over-budget, this

is a timing issue only due to the lumpiness of the services provided and that because no

further work is required on the 2013 audit; end-of-year values should be on target.

Public Comment

Page 2 of 3

Mr. Hopper solicited comment from the Public and received none.

Next Meeting

There being to further business, the next meeting date of the Technical Committee is

scheduled for 10:30 a.m. September 10, 2014 to be held at Porter Simon Offices in

Truckee, CA. The meeting was adjourned at 2:28 p.m.

Respectfully submitted,

Martin R. Hopper

General Manager

Page 3 of 3

Attachment 1 ATTENDANCE LIST

M-S-R ENERGY AUTHORITY TECHNICAL COMMITTEE

REGULAR MEETING

July 10, 2014 2:25 PM

NAME STATUS ORGANIZATION Dan Beans Guest Redding (Telephonic) Martin Cabellero Member Guest Steve Gross Guest General Counsel Steven Handy Member Redding Alan Hockenson Guest Consultant Martin Hopper Chair General Manager Joyce Kinnear Member Santa Clara James McFall Member Modesto

Page 1 of 1


Staff Report Date: September 3, 2014 From: Martin R. Hopper, General Manager To: M-S-R EA Commission Subject: September 2014 General Manager’s Report Investment of Debt Service Funds

The Debt Service Funds for the Natural Gas Project Series 2009 A & B Bonds are

invested through a Debt Service Deposit Agreement with Citi and for the Series 2009 C

Bonds are directly managed by Redding. The agreement with Citi has a ten-year-term and

has an optional termination available any time after September 10, 2014. The Authority

received unsolicited proposals from Barclays to replace the Citi agreement on either a

current or delayed funding basis and to provide an agreement for the Series 2009C Debt

Service Fund to match the term selected for the Series 2009 A & B Debt Service Funds.

The proposals were reviewed by the Authority’s Financial Advisor Montague DeRose

and discussed by the Financial Management Committee who concluded that because the

option to terminate the existing agreement remains open, that the Authority continue to

monitor the market and not act until such time as interest rates improve substantially.

Macintosh HD:Users:martinhopper:My Laptop Documents:M-S-R Energy Authority:Administrative:General Manager:September 2014 MSR EA General Manager's Report.doc


Staff Report Date: September 3, 2014 From: Martin R. Hopper, General Manager To: M-S-R EA Commission Subject: September 2014 Outside Services Budget versus Actual Report Major Providers Reporting Are:

General Manager: Through: July 31, 2014

Porter Simon: Through July 31, 2014

KBT LLC: Through July 31, 2014

Modesto Irrigation District: Through July 31, 2014

Baker Tilly: Through July 31, 2014

Orrick Herrington: Through July 31, 2014

Detailed charts of monthly budget versus actual cost comparisons for each provider are

attached in their usual format.

I recommend the Commission note and file this report.

Macintosh HD:Users:martinhopper:My Laptop Documents:M-S-R Energy Authority:Budgets:2014:September 2014 EA Outside Services Budget v Actual Report.doc

M-S-R EAOutside Services Summary

9/3/14 2014 EA Outside and Financial Services Expenses.xlsx

Month of: Jul-2014

By ProviderBudget Current Month

Actual Current Month

Positive Variance

Actual v. Budget % By Provider Budget Year

to DateActual Year

to DatePositive Variance

Actual v. Budget %

General Manager 4,000 4,000 0 100% General Manager 28,000 28,000 0 100%General Counsel 750 980 (230) 131% General Counsel 5,250 3,480 1,770 66%KBT 250 0 250 0% KBT 1,750 0 1,750 0%MID 1,833 995 838 54% MID 12,833 7,293 5,540 57%Baker Tilly 1,667 0 1,667 0% Baker Tilly 11,667 15,428 (3,761) 132%Orrick 0 0 0 #DIV/0! Orrick 30,000 0 30,000 0%Total 8,500 5,975 2,525 70% Total 89,500 54,201 35,299 61%

-‐

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Jan-‐2014 Feb-‐2014 Mar-‐2014 Apr-‐2014 May-‐2014 Jun-‐2014 Jul-‐2014 Aug-‐2014 Sep-‐2014 Oct-‐2014 Nov-‐2014 Dec-‐2014

Outside Services -‐ Total

CUMMULATIVE BUDGET

CUMMULATIVE ACTUAL

M-S-R EAGeneral Manager Summary


Month of: Jul-2014

Budget Current Month


Positive Variance

Actual v. Budget %

Admin 4,000 4,000 0 100%Total 4,000 4,000 0 100%

Budget Year to Date

Actual Year to Date

Positive Variance

Actual v. Budget %

Admin 28,000 28,000 0 100%Total 28,000 28,000 0 100%

-‐

10,000

20,000

30,000

40,000

50,000

60,000

Jan-‐2014

Feb-‐2014

Mar-‐2014

Apr-‐2014

May-‐2014

Jun-‐2014

Jul-‐2

014

Aug-‐2014

Sep-‐2014

Oct-‐201

4

Nov-‐2014

Dec-‐201

4

General Manager -‐ Total

CUMMULATIVE BUDGET

CUMMULATIVE ACTUAL

M-S-R EAGeneral Counsel Summary


Month of: Jul-2014



Positive Variance

Actual v. Budget %

Admin 750 980 (230) 131%Total 750 980 (230) 131%

Budget Year to Date

Actual Year to Date

Positive Variance

Actual v. Budget %

Admin 5,250 3,480 1,770 66%Total 5,250 3,480 1,770 66%

-‐ 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

Jan-‐2014

Feb-‐2014

Mar-‐2014

Apr-‐2014

May-‐2014

Jun-‐2014

Jul-‐2

014

Aug-‐2014

Sep-‐2014

Oct-‐201

4

Nov-‐2014

Dec-‐201

4

General Counsel -‐ Total

CUMMULATIVE BUDGET

CUMMULATIVE ACTUAL

M-S-R EAKBT Summary


Month of: Jul-2014



Positive Variance

Actual v. Budget %

Admin 250 0 250 0%Total 250 0 250 0%

Budget Year to Date

Actual Year to Date

Positive Variance

Actual v. Budget %

Admin 1,750 0 1,750 0%Total 1,750 0 1,750 0%

-‐

500

1,000

1,500

2,000

2,500

3,000

3,500

Jan-‐2014

Feb-‐2014

Mar-‐2014

Apr-‐2014

May-‐2014

Jun-‐2014

Jul-‐2

014

Aug-‐2014

Sep-‐2014

Oct-‐201

4

Nov-‐2014

Dec-‐201

4

KBT -‐ Total

CUMMULATIVE BUDGET

CUMMULATIVE ACTUAL

M-S-R EAMID Summary


Month of: Jul-2014



Positive Variance

Actual v. Budget %

Admin 1,833 995 838 54%Total 1,833 995 838 54%

Budget Year to Date

Actual Year to Date

Positive Variance

Actual v. Budget %

Admin 12,833 7,293 5,540 57%Total 12,833 7,293 5,540 57%

-‐

5,000

10,000

15,000

20,000

25,000

Jan-‐2014

Feb-‐2014

Mar-‐2014

Apr-‐2014

May-‐2014

Jun-‐2014

Jul-‐2

014

Aug-‐2014

Sep-‐2014

Oct-‐201

4

Nov-‐2014

Dec-‐201

4

MID -‐ Total

CUMMULATIVE BUDGET

CUMMULATIVE ACTUAL

M-S-R EABaker Tilly Summary


Month of: Jul-2014



Positive Variance

Actual v. Budget %

Admin 1,667 0 1,667 0%Total 1,667 0 1,667 0%

Budget Year to Date

Actual Year to Date

Positive Variance

Actual v. Budget %

Admin 11,667 15,428 (3,761) 132%Total 11,667 15,428 (3,761) 132%

-‐

5,000

10,000

15,000

20,000

25,000

Jan-‐2014

Feb-‐2014

Mar-‐2014

Apr-‐2014

May-‐2014

Jun-‐2014

Jul-‐2

014

Aug-‐2014

Sep-‐2014

Oct-‐201

4

Nov-‐2014

Dec-‐201

4

Baker Tilly -‐ Total

CUMMULATIVE BUDGET

CUMMULATIVE ACTUAL

M-S-R EAOrrick Summary


Month of: Jun-2014



Positive Variance

Actual v. Budget %

Admin 0 0 0 #DIV/0!Total 0 0 0 #DIV/0!

Budget Year to Date

Actual Year to Date

Positive Variance

Actual v. Budget %

Admin 30,000 0 30,000 0%Total 30,000 0 30,000 0%

-‐

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Jan-‐2014

Feb-‐2014

Mar-‐2014

Apr-‐2014

May-‐2014

Jun-‐2014

Jul-‐2

014

Aug-‐2014

Sep-‐2014

Oct-‐201

4

Nov-‐2014

Dec-‐201

4

Orrick-‐ Total

CUMMULATIVE BUDGET

CUMMULATIVE ACTUAL

9/3/14 2014 Input 2014 EA Outside and Financial Services Expenses.xlsx

Authority Admin - 2014 2014 Budget Jan-2014 Feb-2014 Mar-2014 Apr-2014 May-2014 Jun-2014 Jul-2014 Aug-2014 Sep-2014 Oct-2014 Nov-2014 Dec-2014 Total Average Year-End Notes 12/31/128.33% 16.67% 25.00% 33.33% 41.67% 50.00% 58.33% 66.67% 75.00% 83.33% 91.67% 100.00% Projection

General ManagerAdmin 48,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 28,000 4,000 48,000 48,000

48,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 - - - - - 28,000 4,000 48,000 8.33% 16.67% 25.00% 33.33% 41.67% 50.00% 58.33% 58.33% 58.33% 58.33% 58.33% 58.33% 100%

General CounselAdmin 9,000 1,090 66 738 - 606 - 980 3,480 497 5,966 4,062

9,000 1,090 66 738 - 606 - 980 - - - - - 3,480 497 5,966 12.11% 12.84% 21.04% 21.04% 27.78% 27.78% 38.67% 38.67% 38.67% 38.67% 38.67% 38.67% 66%

KBTAdmin 3,000 - - - - - - - - - -

3,000 - - - - - - - - - - - - - - - 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0%

MIDAdmin 22,000 812 886 1,073 1,073 1,383 1,073 995 7,293 1,042 12,503 20,248

22,000 812 886 1,073 1,073 1,383 1,073 995 - - - - - 7,293 1,042 12,503 3.69% 7.72% 12.59% 17.47% 23.75% 28.63% 33.15% 33.15% 33.15% 33.15% 33.15% 33.15% 57%

- - Baker Tilly

Admin 20,000 - - 4,555 5,631 5,242 - - 15,428 2,204 26,448 17,503 20,000 - - 4,555 5,631 5,242 - - - - - - - 15,428 2,204 26,448

0.00% 0.00% 22.78% 50.93% 77.14% 77.14% 77.14% 77.14% 77.14% 77.14% 77.14% 77.14% 132%

Bank Fees 1,050 - - - - 4,081 1,050 - - - - - - - - - - - - - - -

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0%

Total Agency Admin 103,050 5,902 4,952 10,366 10,704 11,231 5,073 5,975 - - - - - 54,201 7,743 92,916 5.73% 10.53% 20.59% 30.98% 41.88% 46.80% 52.60% 52.60% 52.60% 52.60% 52.60% 52.60% 90%

Debt Admin - 2014

Bond Counsel Orrick 30,000 - - - - - - - - 30,000 - - - - - - - - - - - - - - -

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0%

- Financial Services Montague 11,750 - - - - - - -

Fitch 10,000 - - - - - - - Standard & Poors 15,000 - - - - - - -

36,750 - - - - - - - - - - - - - - - 27,749 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0%

Trustee 14,100 - - - - - - - 13,800 14,100 - - - - - - - - - - - - - - -

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0%

Total Debt Admin 80,850 - - - - - - - - - - - - - - - 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0%


Staff Report Date: September 3, 2014 From: Martin R. Hopper, General Manager To: M-S-R EA Commission Subject: 2015 M-S-R EA Strategic Plan Each year the M-S-R EA Commission considers an update to the M-S-R EA Strategic Plan to

provide guidance for the preparation of the M-S-R EA Budget and for the operations of the

Agency. The proposed update continues to reflect the status quo structure of M-S-R EA

operations and other than updated editing is substantially similar to last year’s Strategic Plan.

The discussions and analysis of issues within the M-S-R EA (and M-S-R PPA) Strategic Plans

have also been reviewed by General Counsel for conformity with disclosure requirements and

applicable legislative and regulatory obligations of the Authority and the Agency. The M-S-R EA

Technical Committee reviewed and revised the draft plans in a workshop held September 10,

2014.

A copy of the proposed 2015 M-S-R EA Strategic Plan red-lined to show changes from last year’s

report is attached.

I recommend the Commission adopt the 2015 M-S-R EA Strategic Plan.

M-S-R ENERGY AUTHORITY STRATEGIC PLAN

Effective January 1, 2015 Joyce Kinnear� 7/16/14 7:42 AMDeleted: 4

Tech C’tee Review Draft 9-10, 2014 1

Martin Hopper� 8/31/14 5:34 PM

Joyce Kinnear� 7/16/14 7:42 AM


M-S-R ENERGY AUTHORITY STRATEGIC PLAN Effective January 1, 2015

Each year the M-S-R Energy Authority Commission will develop and adopt a strategic plan to address the issues faced by the Authority in the ensuing five-year period. The plan is updated and reviewed by the M-S-R Energy Authority Commission in September of each ensuing year prior to the development of the annual M-S-R Energy Authority Budget. The issues of Organizational Structure and Philosophy; Managing and Maintaining Assets; Financial Matters; and Joint Action Opportunities presented below characterize the Authority’s strategic vision through 2020.

INDEX

I. Introduction . . . . . . . . . . 2 II. Organizational Structure And Philosophy . . . . . . 2 III. Manage And Maintain Assets . . . . . . . . 3 Natural Gas Project . . . . . . . . . 3 IV. Financial Matters . . . . . . . . . . 4 V. Joint Action Opportunities . . . . . . . . 4

Background . . . . . . . . . . 4 Big Horn Wind Energy Project . . . . . 5

VI. Strategic Risks And Exposures . . . . . . . . 5

Exhibit “A” M-S-R EA Organization Chart .. . . . . . 6



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Deleted: 2019

Deleted: Adopted by Commission

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M-S-R ENERGY AUTHORITY STRATEGIC PLAN Effective January 1, 2015

I. INTRODUCTION The M-S-R Energy Authority (M-S-R EA) was created on July 15, 2008, through a Joint Exercise of Powers Agreement among Modesto Irrigation District (Modesto), the City of Santa Clara (Santa Clara), and the City of Redding (Redding) to acquire, construct, maintain, operate and finance Projects, including but not limited to:

(a) the purchase, generation, transmission or distribution of energy; (b) the purchase, sale, exchange, storage, construction, maintenance and operation of natural gas, natural gas facilities and natural gas transportation facilities, output, reserves and capacity; (c) the acquisition and sale of environmental commodities, including but not limited to:

(1) renewable energy credits; (2) emissions reduction credits; and (3) other interests in environmental attributes or benefits of renewable energy projects or rights to offset the environmental impacts of conventional energy use; and

(d) any other project, facility, improvement, asset, commodity or interest therein related to the generation, transmission or distribution of energy as may be designated by the M-S-R EA Commission.

Unless otherwise noted the participation in M-S-R EA Projects is Modesto 1/3, Santa Clara 1/3, and Redding 1/3. M-S-R EA’s purpose is to maximize the value of its existing assets for the benefit of the Members and to respond to Member needs where joint action rather than individual action is deemed to be in the Member’s best interests. M-S-R EA is also intended to provide more responsive services to its members than may be possible from larger or state-wide agencies or associations.

II. ORGANIZATIONAL STRUCTURE AND PHILOSOPHY

Since its formation, M-S-R EA has been a member-directed, member-supported organization. Policy direction is provided to M-S-R EA through its Commission. Management, legal, administrative and operational support is provided through agreements with the M-S-R Public Power Agency, the Modesto Irrigation District, and other third parties. General and technical (project management, engineering and analytical) support is

Joyce Kinnear� 7/16/14 7:41 AMDeleted: 4


Deleted: 18-13

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provided by the M-S-R Public Power Agency and under open-ended agreements with unrelated third-parties. Accounting and administrative support services are provided by Modesto Irrigation District. General Manager, General Counsel, Bond Counsel, and Financial Advisor services are provided under open-ended agreements with unrelated third-parties. A member-staffed committee structure currently provides financial, risk management, technical and operational input. A copy of the Agency’s current organization chart is attached as Exhibit “A.” Recommendations:

1. M-S-R EA should continue to be member-directed and member-supported.

2. M-S-R EA should continue to conduct its Technical Committee, Natural Gas Program Committee, and Financial Management Committee in noticed Public and Closed Sessions.

3. M-S-R EA should continue to contract for the provision of management,

administrative, technical, and legal services and when needed, provide timely succession plans for the replacement of incumbent candidates.

4. M-S-R EA should periodically appraise its management and administrative

processes and policies.

III. MANAGE AND MAINTAIN ASSETS

Natural Gas Project:

M-S-R EA has entered into a series of transactions with Citigroup Inc and related entities for a thirty-year “pre-pay” purchase of up to 22,500 MMBTU per day of natural gas as delivered to the Members pursuant to a pre-defined schedule. The benefit of the transaction is to provide a guaranteed discount of about $0.86/MMBTU from a specified index-price of natural gas in return for the Member’s take-and-pay obligation to purchase specified natural gas volumes.

Natural Gas Project Operations: The Members will take and use or remarket gas pursuant to the remediation requirements of the gas purchase agreements to maintain the tax-exempt status of the bonds which support the transaction. On July 28, 2010, M-S-R EA approved Resolution 2010-04 Adopting Gas Project Operating Procedures to guide the implementation of the project.


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Recommendations

1. M-S-R EA will continue to administer the pre-pay agreements and will monitor each

Member’s compliance with private-use and remediation requirements. 2. M-S-R EA will continue to monitor Citigroup Inc. and related entity financial

conditions and advise Members thereof.

IV. FINANCIAL MATTERS

M-S-R EA has about $902 million of outstanding debt on the various bond issues sold to finance the Natural Gas Project. M-S-R EA maintains operating funds and restricted and un-restricted reserves as required by Bond Indentures, to fund contingent liabilities, and to manage member cash call requirements. Recommendations

1. The Financial Management Committee should continue its efforts to evaluate the use of new financial products and market opportunities to lower the effective costs and maximize the benefits of the Natural Gas Project.

2. M-S-R EA should continue the evaluation process regarding additional prepay

options and upon Commission and Member approval, consummate transactions beneficial to the Members.

3. M-S-R EA should periodically evaluate and recommend debt-limit guidelines for use

in the strategic evaluation and prioritization of future projects, including consideration of the use of prepay transactions.

V. JOINT ACTION OPPORTUNITIES

Background

Although each of the members has developed its own power and fuel supply strategies through a combination of owned and purchased resources and has developed the infrastructure and a level of sophistication to perform their needed functions, the authority is a viable vehicle for future joint opportunities. Activities previously examined by M-S-R EA members have included joint natural gas operations and wind-energy storage and shaping projects. Opportunities for greater utilization or improvement of existing member or related joint resources may occur from time to time. M-S-R EA also may have opportunities to participate in renewable resource or non-renewable resource generation projects as described below and is uniquely structured for the more beneficial use of “pre-pay” transactions than the members or other joint agencies.

Joyce Kinnear� 8/31/14 5:36 PM

Joyce Kinnear� 8/31/14 5:38 PM

Comment: Need updated figure as of June 30, 2014 - No principal was retired in 2014

Comment: Are we really looking for additional opportunities for M-S-R EA at this point in time? – No active opportunities being explored at this time due to other priorities by Members and M-S-R PPA at this time. Note the requirement for a specific request in the first recommendation. This section remains as a reminder to the Members that the vehicle is available if needed.


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Recommendations

1. Upon the specific request of the members, M-S-R should identify and evaluate future opportunities such as: a. Specific fuel or power supply alternatives (renewable or non-renewable

resources); b. “Pre-Pay” energy or fuel-supply arrangements; c. Other risk reduction/mitigation measures; or d. Other supply/reliability enhancements.

Big Horn Wind Energy Project: On June 1, 2005, and December 2, 2009, M-S-R Public Power Agency (M-S-R PPA) entered into a series of agreements with PPM Energy (now Iberdrola Renewables, LLC.) to purchase wind power energy as firmed, shaped, and delivered to the California-Oregon Border (COB) from the Big Horn I and II Wind Energy Projects. From time-to-time, Iberdrola Renewables Inc. and others have or may offer to either M-S-R EA or M-S-R PPA opportunities for potential energy pre-pay contracts to reduce the cost of delivered power and M-S-R EA may be the more appropriate vehicle for such contracts. Recommendations

1. At the direction of the Members, M-S-R EA may continue discussions with

Iberdrola Renewables, Inc. or others regarding a prepay option to reduce the effective delivered costs of energy provided, however, that sufficient benefits and adequate security for M-S-R EA’s investment can be achieved. M-S-R EA should also develop specific economic criteria by which such proposals may be evaluated.

VI. STRATEGIC RISKS AND EXPOSURES M-S-R EA has developed an initial portfolio of fuel supply resource assets, consisting of the Natural Gas Project, in which there are inherent risks which could have potential adverse impacts to M-S-R EA and its Members. There are three broad categories of risk: Operational, Contractual, and Institutional. Individually and collectively they can affect the useful life and cost-effectiveness of M-S-R EA’s assets. Recommendations 1. M-S-R EA shall regularly review risks to M-S-R EA and its Members with respect to

their participation in M-S-R EA and develop mitigation plans as appropriate.

Joyce Kinnear� 8/31/14 5:40 PMComment: Has this been completed? No – interest rate spreads are not currently favorable but Iberdrola cost of debt is expected to increase in future. However, there may not be sufficient remaining term on our contracts to make this viable.


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Exhibit “A” M-S-R Energy Authority Organization Chart

(As of September 24, 2014)

Commissioners: Salyer (President) Tippen (Vice President), Roukema

Alternates: Modesto: McFall; Redding: Beans Santa Clara: Kolstad, Matthews, Fuentes, Hatcher, Kinnear

General Counsel Steve Gross, Esq

Controller Ed Oborn

Treasurer Scott van Vuren

Secretary Steve Gross, Esq

Assistant Secretary Martin Hopper

General Manager Martin Hopper

Administrative Assistant Regina Cox

Technical Committee Hopper (Chair – Ex Officio) McFall,

Kinnear, Beans Alts: Burriss, Pepper, Handy

Financial Management Committee

Hopper (Chair – Ex Officio) Scott van Vuren, Pepper, Haddad

Alts: Oborn, Hulbert, Kinnear

M-S-R EA Bond Counsel Orrick, Herrington & Sutcliffe

John Wang, Esq. George Wolf, Esq.

M-S-R EA Financial Advisor Montague – DeRose

Frank Perdue Natalie Perkins

Consultant KBT, LLC.

Alan Hockenson Dave Arthur

Special Counsels & Consultants










Deleted: 18, 2013

Deleted: Roukema

Deleted: Van Hoy

Deleted: Tippin

Deleted: Salyer

Deleted: Pepper

Deleted: Vacant

Deleted: Salyer

Deleted: Vacant


Deleted: 18-13

Deleted: 24

Macintosh HD:Users:martinhopper:My Laptop Documents:M-S-R Energy Authority:Administrative:Staff Reports:Admin and Accounting Extension Staff Report.doc


Staff Report Date: September 24, 2014 From: Martin R. Hopper, General Manager To: M-S-R EA Commission Subject: Administrative and Accounting Services Agreement Extension Pursuant to an “Agreement For Administrative and Accounting Services Between M-S-R

Energy Authority and Modesto Irrigation District,” MID provides services to account and

report all financial transactions for the Authority including but not limited to general

accounting, financial reporting, regulatory reporting, portfolio management, debt accounting,

audit preparation and management, accounts payable and receivable services, and other related

administrative services. The agreement was effective July 23, 2008, for a three-year term

followed by optional one-year extensions and was subsequently extended through 2014.

I recommend the M-S-R EA Commission approve a one-year extension of the Agreement For

Administrative and Accounting Services Between M-S-R Energy Authority and Modesto

Irrigation District, for the period July 24, 2014, through July 31, 2015.

Macintosh HD:Users:martinhopper:My Laptop Documents:M-S-R Energy Authority:Administrative:Staff Reports:Admin and Technical Services Extension Staff Report.doc


Staff Report Date: September 24, 2014 From: Martin R. Hopper, General Manager To: M-S-R EA Commission Subject: Administrative and Technical Services Agreement Extension Pursuant to an “Agreement For Administrative and Technical Services Between M-S-R Energy

Authority and M-S-R Public Power Agency,” as amended, M-S-R PPA provides services

provide technical services to M-S-R EA, including but not limited to: engineering; economic

evaluation; feasibility studies; gas procurement, balancing or management services. The

agreement was effective July 23, 2008, for a three-year term followed by optional one-year

extensions and was subsequently extended through 2014.

I recommend the M-S-R EA Commission approve a one-year extension of the Agreement For

Administrative and Technical Services Between M-S-R Energy Authority and M-S-R Public

Power Agency, for the period July 24, 2014, through July 31, 2014.

M-S-R ENERGY AUTHORITY Staff Report

Date: September 3, 2014 From: Martin R. Hopper, General Manager To: M-S-R EA Commission Subject: Annual Review of M-S-R EA Policy and Procedures Manual At its May 22, 2013 meeting, the M-S-R EA Commission through the adoption of Resolution

2013-04 approved the Authority’s first comprehensive Policies and Procedures Manual. The

Manual provides that commencing in 2014, following the original adoption of this Policies And

Procedures Manual, the General Manager is to annually review the manual and recommend updates

or amendments for consideration by the Commission at its September meeting. The proposed

update includes general status updates and miscellaneous clarifications. The proposed updates were

also reviewed by the Technical Committee at its September 10, 2014 meeting.

The proposed 2015 updated Policies and Procedures Manual is attached in redline format to show

the changes from the originally adopted Policies and Procedures Manual.

I recommend the Commission adopt the proposed 2014 updates to the M-S-R Energy Authority

Policies and Procedures Manual.

Martin Hopper� 9/3/14 11:53 AMComment: As the Manual was adopted by Resolution, should we also adopt the updates or Updated Manual by Resolution also?


ORGANIZATION, AUTHORIZATIONS, POLICIES, & PROCEDURES

MANUAL

Technical Committee Review DRAFT

September 10, 2014

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Deleted:

Deleted: Adopted by M-S-R EA CommissionMay 22, 2013

Technical Committee Review Draft - 1 - September 10,2014

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Table of Contents

I. Introduction . . . . . . . . . . 2 A. Purpose . . . . . . . . . 2 B. Responsibility . . . . . . . . 3 C. Management . . . . . . . . 3

II. Organization and Authorities . .. . . . . . . 7

A. M-S-R EA President . . . . . . . . 7 B. M-S-R EA Vice President . . . . . . . 7

C. General Manager . . . . . . . . 7 D. Secretary . . . . . . . . . 8

E. M-S-R EA Committees . . . . . . . 8 F. Fiscal Authorization . . . . . . . . 9

III. Treasurer/Controller Functions, Budget Development, Invoice Approval Process, Expense

and Investment Policies . . . . . . . . 11 A. Treasurer and Controller . . . . . . . 11 B. Working Capital and Member Payments . . . . . 11 C. M-S-R EA Annual Budgets . . . . . . . 12 D. M-S-R EA Annual Strategic Plan . . . . . . 12 E. Invoice Approval Process. . . . . . . . 12 F. Expense Policies . . . . . . . . 12

G. Investment Policies . . . . . . . . 13

H. Review Of Policies And Procedures Manual . . . . . 13 IV. Other M-S-R EA Policies & Procedures . . . . . . 14

A. Gas Project Operating Procedures . . . . . . 14

B. M-S-R EA Legislative program . . . . . . 14

C. Website Access, Public Records Request, Photocopy Policy, and Posting of Public

Documents . . . . . . . . . 14 D. Document Retention Policy . . . . . . . 15

List of Exhibits . . . . . . . . . 16 Deleted: Adopted by M-S-R EA Commission

Deleted: May 22, 2013


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I. INTRODUCTION

The M-S-R Energy Authority (M-S-R EA or Authority) is a joint powers agency created in 2008

pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of

the State of California and is governed by a Commission consisting of one representative from

each M-S-R EA Member. Members of M-S-R EA include the Modesto Irrigation District and the

Cities of Redding and Santa Clara, California. The Governing Bodies of the Members appoint M-

S-R EA Commissioners and any Alternates.1

A. PURPOSE

The M-S-R EA is empowered to acquire, construct, maintain, operate and finance Projects,

including but not limited to:

(a) the purchase, generation, transmission or distribution of energy;

(b) the purchase, sale, exchange, storage, construction, maintenance and operation of

natural gas, natural gas facilities and natural gas transportation facilities, output, reserves

and capacity; or

(c) the acquisition and sale of environmental commodities.

M-S-R EA’s purpose is to maximize the value of its existing assets for the benefit of the

Members and to respond to Member needs where joint action, rather than individual action, is

deemed to be in the Members’ best interests. M-S-R EA is also intended to provide more

responsive services to its Members than may be possible from larger or state-wide agencies or

associations.

The primary project of M-S-R EA to date was the creation and approval of Prepaid Natural Gas

Agreements with Citigroup Energy Inc., in September 2009 (Gas Project) which provide each of

the M-S-R EA Members with access to discounted natural gas supplies through the issuance of

M-S-R Energy Authority Gas Revenue Bonds, Series 2009A, 2009B, and 2009C; each series of

which is dedicated to a different Member and each Member has been authorized to transact

1 Joint Exercise Of Powers Agreement of the M-S-R Energy Authority By And Among the Modesto Irrigation District and the City Of Santa Clara and the City Of Redding, dated as of July 15, 2008

Deleted: Adopted by M-S-R EA Commission



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business associated with its series of bonds.

B. RESPONSIBILITY

M-S-R EA is governed by its Commission. The Commission meetings are chaired by its

President, a Commissioner who is subject to annual election by the Commission. Minutes of

Commission meetings are taken by the Secretary, who is subject to annual appointment by the

Commission. The Commission may or may not choose to elect a Vice-President.2 The Authority

is a California joint powers agency created pursuant to the California Government Code and is

subject to California laws generally applicable to public agencies, including, but not limited to,

the Ralph M. Brown Act, Public Records Act, Political Reform Act and other conflict of interest

laws. The Authority and its officials must abide by the Conflict of Interest Code adopted by the

California Fair Political Practices Commission for the Authority.

C. MANAGEMENT

M-S-R EA’s General Manager directs Authority activities and reports directly to the M-S-R EA

Commission. The General Manager oversees the contracts and performance of consultants and

advisors, and coordinates the activities of M-S-R EA’s standing and any Ad Hoc Committees.

The current M-S-R EA standing committees are the Technical Committee and the Financial

Management Committee.

In July 2008, M-S-R EA entered into an agreement with the M-S-R Public Power Agency (PPA)

for the purpose of securing Administrative and Technical Services.3 This agreement was

amended in December 2009 (effective January 2010) to exclude certain services which were

subsequently to be performed by the General Manager. The Administrative and Technical

Services Agreement was for a three-year term with optional annual renewals. M-S-R EA has

currently renewed this agreement through July 2015.

In July 2008, M-S-R EA entered into an agreement with the Modesto Irrigation District

2 Resolution 2013 – 01 Adopted March 20, 2013 Regarding Election and Duties of Officers 3 Agreement For Administrative And Technical Services By And Between M-S-R Energy Authority And M-S-R Public Power Agency, Dated As Of July 23, 2008

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(Modesto) for the purpose of securing Financial and Administrative Services.4 Under this

agreement, Modesto’s Treasurer and Controller provide similar roles for the Authority, including

depository and paying agent, as they do for Modesto. Further, the Controller shall make or

contract for an annual financial audit (or special audit covering a 2-year period.) In addition,

insurance coverage for the Authority is procured and provided through this agreement. The

Financial and Administrative Services Agreement was entered into for a three-year term with

optional annual renewals. M-S-R EA has currently renewed this agreement through July 2015.

In July 2008, M-S-R EA entered into an agreement with Porter Simon, Professional Corporation

to provide General Counsel services to the Authority.5 The term of this agreement is open-ended.

In July 2008, M-S-R EA entered into an agreement with Orrick, Herrington & Sutcliffe, LLP for

the purpose of securing Bond Counsel Services.6 Under this agreement, Bond Counsel services

were provided in support of the issuance of Gas Revenue Bonds Series 2009A, 2009B, and

2009C. On-going Bond Counsel services related to these bonds have been provided on an as-

needed basis and on April 17, 2013, M-S-R EA entered into an Engagement Letter with Orrick,

Herrington & Sutcliffe for the continued provision of such services.7

In December 2009 M-S-R EA entered into an agreement with Montague DeRose and Associates,

LLC (Montague DeRose) for the purpose of securing Financial Advisor Services.8 Under this

agreement, Financial Advisor services are provided on an as-needed basis in support of the Gas

Revenue Bonds Series 2009A, 2009B, and 2009C. This agreement was entered into for a three-

year term with optional annual renewals. M-S-R EA currently renewed this agreement through

December 2014.

In September 2010, M-S-R EA entered into an agreement with KBT, LLC (KBT) for the purpose

4 Agreement For Administrative And Accounting Services By And Between M-S-R Energy Authority And Modesto Irrigation District, Dated As Of July 23, 2008. 5 Porter Simon Professional Corporation/M-S-R Energy Authority Agreement for Legal Representation dated as of July 23, 2008. 6 Agreement For Bond Counsel Services Between the M-S-R Energy Authority And Orrick, Herrington & Sutcliffe LLP dated as of July 1, 2008. 7 Engagement Letter with Orrick, Herrington & Sutcliffe LLP dated as of April 17, 2013 8 Consulting Agreement For Professional Financial Advisor Services by and between M-S-R Energy Authority, and Montague DeRose And Associates, LLC, effective January 1, 2010.

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Deleted: 2014

Deleted: 3




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of securing General Consulting services.9 M-S-R EA has KBT available to perform specific tasks

as assigned by the General Manager. The term of this agreement is open-ended.

9 Agreement For Professional Services By And Between M-S-R Energy Authority and KBT, LLC dated as of September 15, 2010.




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M-S-R EA Organization Chart:

Commission Commissioners: Salyer (President) Roukema, Tippin (Vice President)

Alternates: Modesto: McFall; Redding: Beans Santa Clara: Kolstad, Matthews, Fuentes, Hatcher, Kinnear

General Counsel Steve Gross, Esq

Controller Ed Oborn

Treasurer Scott van Vuren

Secretary Steve Gross, Esq

Assistant Secretary Martin Hopper

General Manager Martin Hopper

Administrative Assistant Regina Cox

Technical Committee Hopper (Chair – Ex Officio)

McFall, Kinnear, Beans Alts: Burriss, Pepper, Handy

Financial Management C’tee Hopper (Chair – Ex Officio) van Vuren, Pepper, Haddad

Alts: Oborn, Kinnear, Hulbert

M-S-R Bond Counsel Orrick, Herrington & Sutcliffe

John Wang, Esq. George Wolf, Esq.

M-S-R Financial Advisor Montague – DeRose

Frank Perdue Natalie Perkins

Consultant KBT, LLC.

Alan Hockenson

Special Counsels & Consultants

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Deleted: Roukema

Deleted: Van Hoy

Deleted: , Tippin

Deleted: Salyer

Deleted: , Pepper

Deleted: Lou Hampel

Deleted: Hampel

Deleted: Salyer




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II. ORGANIZATION AND AUTHORITIES

The M-S-R EA Commission organized the Authority as described in the previous section to

provide for governance, management, and conduct of M-S-R EA’s activities. All financial

decisions are made by the Commission, except for those specifically delegated to the General

Manager. Policy direction is provided by the M-S-R EA Commission. Policy is further provided

in the Annual Strategic Issues Paper, which is updated by the Technical Committee and adopted

by the Commission on an annual basis.

A. M-S-R EA PRESIDENT

The M-S-R EA President, as specified in Resolution 2013 – 01, Election and Duties of Officers,

shall preside at all meetings of the Commission when he or she is present, cause an agenda to be

prepared and distributed by the General Manager in advance of the meeting, which shall list each

item of business or correspondence to come before the meeting insofar as is known, may act as an

official spokesman of the Authority at the direction of the Commission, make all appointments

except as otherwise provided, execute contracts on behalf of the Authority when authorized by

the Commission and perform such other duties as are assigned to him or her from time to time by

the Commission.

B. M-S-R EA VICE PRESIDENT

The Vice-President performs the duties of the President in the absence or disability of the

President.

C. GENERAL MANAGER

Resolution 2008 - 0110 established the position of General Manager, and assigned it certain duties

to carry out on behalf of the Authority as amplified in Resolution 2013 - 01 and specified in his

Professional Services Agreement.11 The General Manager also chairs the standing committees.

The General Manager maintains the authority to act within Commission direction and policy 10 Resolution 2008 – 01 Adopted July 23, 2008, Approving Certain Provisions And Taking Certain Actions Related To The Formation Thereof 11 Management Services Agreement by and between M-S-R Energy Authority and Martin R. Hopper dba Martin Hopper Energy Consulting effective as of, January 1, 2010, as amended.




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contained within the Annual Strategic Issues Paper in carrying out his duties. The General

Manager has also been designated as a Special Agent of the Authority.

D. SECRETARY

The Secretary keeps the minutes and files of the Authority, authenticates its acts and keeps a

correct roll of each member of the Commission, and his or her alternate. The Assistant Secretary

shall perform the clerical duties of the office, and shall act as Secretary in the absence or

disability of the Secretary. The Commission appointed the General Counsel as Secretary and the

General Manager or his or her designee as Assistant Secretary. Their respective duties are also set

forth in Resolution 2013-01.

E. M-S-R EA COMMITTEES

There are presently two active standing M-S-R EA Committees:

• Technical Committee

• Financial Management Committee

In 2011, the Commission instructed the General Manager to abolish previous committees created

by the General Manager and established the Technical and Financial Management Committee.

These Committees are subject to and will comply with the Ralph M. Brown Act. The

Commission adopted Rules of Procedures for both Committees that are structured similarly.12 13

Neither Committee shall have any officers. The General Manager shall preside over and cause

minutes to be prepared of each meeting. The General Manager will coordinate the efforts of

Members providing services to the Committees and shall oversee the support provided by

General Counsel and any contractors also providing services to the Authority.

The duties of the Technical Committee include, but are not limited to: 1) annually recommend a

five-year strategic plan for the Authority; 2) review proposals for the acquisition or divesture of

resources; 3) recommend modifications of arrangements supporting the management or operation

12 Resolution 2011 – 01 Adopted January 19, 2011 Rules Of Procedure For The Technical Committee 13 Resolution 2011 – 02 Adopted January 19, 2011 Rules Of Procedure For The Financial Management Committee




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of resources; 4) review individual Member issues with the Authority brought to the attention of

the Technical Committee for discussion and potential resolution; 5) review and develop strategies

for complying with regulatory issues and other externalities; 6) review the technical aspects of

legal action, whether current, pending, or under consideration; and 7) address other issues that

may be specifically assigned by the Commission.

The duties of the Financial Committee include, but are not limited to: 1) review and

consideration of candidates for Financial Advisor; 2) review and consideration of candidates for

Bond Counsel; 3) coordinate with the Financial Advisor and Bond Counsel to the extent

necessary; 4) review of proposals for the financial products that may be solicited or unsolicited

that may be beneficial to the financial management of the Authority; 5) recommend modifications

of arrangements supporting the financial management of assets; 6) provide review and oversight

of pre-paid commodity contracts; 7) review individual member issues with the Authority brought

to the attention of the Financial Management Committee for discussion and potential resolution;

8) review and develop strategies for complying with financial management issues and other

externalities; 9) review the financial aspects of legal action, whether current, pending, or under

consideration; and 10) address other issues that may be specifically assigned by the Commission.

In 2013, the Commission directed the General Manager to review the Authority’s policies and

procedures and to coordinate with the Technical Committee in reviewing the authorities and

responsibilities of the Authority. This document is intended to meet the Commission’s directive.

F. FISCAL AUTHORIZATION

The M-S-R EA Commission approval of the annual budget and strategic plan for a fiscal year is

the authorization for the conduct of all activities included in the annual budget. Pursuant to

Section 2.2 of the Joint Exercise of Powers Agreement of the M-S-R Energy Authority, the

Members pay for the costs associated with the operation of the Authority and are entitled to all

rights and property of the Authority in the following portions: Modesto one-third; Santa Clara

one-third; and Redding one-third. Project Agreements or unanimously adopted resolutions may

provide for differing allocations of costs. Typically, all work for the Authority is routine in

nature. If additional outside assistance is required of legal counsel or consultants, particularly if

such work is outside the annual budget limits, the General Manager will consult with the

appropriate standing committee to assess support for a Task Order to complete such work and




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will seek authorization from the Commission if the level of effort is deemed by the General

Manager to be of significant magnitude to warrant a budget modification.

Work elements are defined in the annual strategic plan that accompanies the approved budget.

Most activities are described, known ahead of time, and are repetitive (e.g. preparation for and

support of the meetings of M-S-R EA Committees and the Commission). Thus, no additional

authorization is required to perform such activities.




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III. TREASURER/CONTROLLER FUNCTIONS, BUDGET DEVELOPMENT, THE

INVOICE APPROVAL PROCESS, EXPENSE AND INVESTMENT POLICIES.

This section of the manual outlines various actions and activities undertaken by EA’s

Treasurer/Controller. Also discussed herein are authorities related to the annual budget and

strategic plan development processes, as well as invoice approval controls used by Controller

staff and Authority expense policies.

A. TREASURER AND CONTROLLER

The positions of Treasurer and Controller are designated by M-S-R EA as those persons

responsible for the financial management of the Authority, as well as all other property the

Authority may own or control. The M-S-R EA Commission has appointed the Treasurer and

Controller of the Modesto Irrigation District to serve as Treasurer and Controller for the

Authority. The Treasurer and Controller, and Assistant Treasurer(s) and Assistant Controller(s)

remain until a future designation by the M-S-R EA Commission.

The Treasurer and Controller are responsible for the payment of Commission and/or General

Manager-approved expenditures and payments in accordance with the Authority’s Invoice

Approval Procedure described below. The Treasurer and Controller are also authorized to

withdraw moneys from the Authority’s funds and accounts.14 The Treasurer and Controller cause

the preparation of the Agency’s accounts and records in accordance with the latest accounting

rules promulgated by the Government Accounting Standards Board (GASB) for recording

financial transactions by government agencies. In the absence of GASB accounting rules, the

Agency is required to follow Financial Accounting Standards Board (FASB) accounting rules to

record accounting transactions.

B. WORKING CAPITAL AND MEMBER PAYMENTS

The Authority cash calls the Members biannually pursuant to the Annual Budget and hence

maintains a nominal 180-day working capital reserve. This amount was selected to minimize the

frequency of cash calls upon the Members and was based on the relatively small annual 14 Resolution No. 2008 -02 Adopted July 23, 2008 Regarding The Establishment of Necessary Bank Accounts and Financials Services.




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operations budget. Natural Gas Project payments are made directly by the Members, obviating

the need for working capital support of those activities. Working capital requirements are

reviewed on an annual basis as part of the preparation of the Annual Budget. Member payments

are made by wire transfer or electronic equivalent in a corresponding manner to a policy

previously implemented for M-S-R PPA on the basis of administrative efficiency.15

C. M-S-R EA ANNUAL BUDGETS

The fiscal year for both M-S-R EA and Modesto budgets are January 1 through December 31.

However, the fiscal year for both the Cities of Santa Clara and Redding budgets are July 1

through June 30. To meet the needs of all Members, two-year rolling budgets for the Authority

are prepared annually. The second year budget is to assist Members with planning and is non-

binding. As discussed in Section II, the M-S-R EA Annual Budget is the authorization for the

conduct of all Authority activities.

D. ANNUAL STRATEGIC PLAN

Each year the Authority prepares a Strategic Issues Paper, also referred to as the annual Strategic

Plan16, for consideration by the Commission at its September meeting and to provide input for the

consideration and adoption of the M-S-R EA Annual Budget in November of each year. The

Strategic Issues paper is prepared by the General Manager pursuant to Sections 1 (c) and (e) of

his Management Services Agreement.

E. INVOICE APPROVAL PROCESS

As specified in Resolution 2009 – 01,17 all invoices, bills, demands, and claims upon the

Authority are paid by the Treasurer on the recommendation of the General Manager or President

or their respective designees and on the review of the Controller or his respective designees. At

each regular meeting of the Commission of the M-S-R Energy Authority, the Treasurer makes a

report of all invoices, bills, demands, and claims paid since the prior regular meeting of the

15 M-S-R PPA Director’s administrative directive dated June 8, 2007. 16 M-S-R Energy Authority Strategic Plan effective January 1, 2015 (approved by Commission November 19, 2014.) 17 Resolution No. 2009 – 01 Adopted May 20, 2009 Regarding The Timely Payment Of Invoices And Making Certain Delegations Of Authority

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Deleted: September 18, 2013




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Commission.

F. EXPENSE POLICIES

As specified in Resolution 2013 – 02,18 M-S-R EA adopted a policy by which the Authority

reimburses its Members for actual costs incurred when they provide support services to the

Authority at the direction of the General Manager.

G. INVESTMENT POLICIES

M-S-R EA maintains an Investment Policy pertaining to the funds of the Authority in

conformance with Title 5, Division 2, Part 1, Chapter 4 of the California Government Code,

commencing with Section 53600, which is annually reviewed and adopted by motion of the

Commission.19

At the September 30, 2009 Commission meeting, Resolution 2009-0420 was approved authorizing

the General Manager to execute and deliver with reasonable discretion investment instructions in

accordance with the terms and conditions of the Indentures for the Series 2009A, 2009B, and

2009C Bonds, and in accordance with the instructions received from the Bond Series Participant.

Subsequently on December 2, 2009, the Commission authorized the General Manager, the

Treasurer, and the Controller of the Authority and Modesto’s Pricing/Risk Management

Administrator to execute and deliver instructions and directions to the Trustee, in the form

required by the Trustee, authorizing the Trustee to pay to or receive from the Swap Counterparty

any settlement amounts required to be paid with respect to the Swaps.21

H. REVIEW OF POLICIES AND PROCEDURES MANUAL

18 Resolution 2013 – 03, Adopted on May 22, 2013, Regarding the Reimbursement of Costs of Support Services Provided By Member Agencies. 19 Investment Policy Guidelines of the M-S-R Energy Authority 2014 (approved by Commission March 19, 2014) 20 Resolution No. 2009 – 04 Adopted on September 30, 2009 Authorizing The Execution And Delivery Of Documents Concerning The Investment Of Funds Related To M-S-R Energy Authority Gas Revenue Bonds, Series 2009A, Series 2009B And Series 2009C; And Authorizing Certain Other Actions In Connection Therewith. 21 Resolution No. 2009 – 05 Adopted on December 2, 2009 Authorizing Individuals To Instruct And Direct The Payment Of Settlement Amounts Owing On Swap Transactions Related To The Gas Project.

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Deleted: January 30, 2013




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Commencing in the year following the original adoption of this Policies And Procedures Manual,

the General Manager shall review the Manual and recommend updates or amendments for

consideration by the Commission at its September meeting.




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IV. OTHER M-S-R EA POLICIES & PROCEDURES

A. GAS PROJECT OPERATING PROCEDURES

M-S-R EA has prepared Gas Project Operating Procedures to specify timelines for Member,

Authority, and counter-party actions as needed to implement the Gas Project.22

B. M-S-R EA LEGISLATIVE PROGRAM

The primary goal of M-S-R EA’s Legislative and Regulatory Program is to preserve and enhance

the value of M-S-R EA assets. Theses assets are expected to supply through the Natural Gas

Project more than $250 million of gas market purchase discounts to the Members over the next

two decades. M-S-R EA only takes positions on those bills and regulatory matters directly

affecting M-S-R EA resources or duties to its Members. M-S-R EA may also, by request of the

Members, take positions on bills of common interest to the entire M-S-R EA membership.

C. WEBSITE ACCESS, PUBLIC RECORDS REQUEST, PHOTOCOPY POLICY, AND POSTING

OF PUBLIC DOCUMENTS

M-S-R EA maintains a website at the URL: www.msrea.msrpower.org. The purpose of the

website is to provide basic information on the Authority and its projects, provide contact

information, and to post notices and information as required by the California Government Code

and Authority Policy. By motions of the Commission, M-S-R EA has adopted a Privacy

Statement23 and Terms of Use Agreement24 applicable to users of the website.

Through adoption of this Policy and Procedure Manual, it is the policy of M-S-R EA to comply

with all requests for public records, as required by the California Public records Act, in a

reasonable and expeditious timeframe. For regular photocopies, M-S-R EA will charge a rate of

$0.15 per page. For scanning and digitizing a document in PDF format, M-S-R EA will charge a

rate of $0.10 per page. Existing PDF format documents responsive to a public records request, if

22 Resolution 2010 – 04 Adopted July 28, 2010 Adopting Natural Gas Project Operating Procedures 23 M-S-R Energy Authority Privacy Statement Revised: July 28, 2010. 24 Terms of Use Agreement Between User and M-S-R Energy Authority Revised: July 28, 2010.

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provided electronically, will be made available at no charge to the requestor. If copies can be

made at lesser cost by an outside service provider, M-S-R EA will only charge actual fees of such

service provider for duplication. These fees were determined based upon review of actual costs

for paper, office equipment, and maintenance of said equipment.

M-S-R EA will post agendas and notices of public meetings at the following URL:

http://msrea.msrpower.org/Documents.aspx as required pursuant to the California Government

Code. M-S-R EA may also post documents relevant to the conduct of the Authority’s business

which are not mandated by the Government Code, including, but not limited to the Annual

Budget, the Annual Financial Reports, M-S-R EA Commission meeting minutes, and M-S-R EA

Committee meeting minutes.

D. DOCUMENT RETENTION POLICY

As specified in Resolution 2013 – 02,25 M-S-R EA adopted a document retention policy which

sets forth administrative practices related to the retention, distribution, and disposition of public

documents in accordance with the California Public Records Act.

25 Resolution 2013 – 02, Adopted on May 22, 2013, Regarding Retention and/or Destruction of Records.

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List of Exhibits:

1. Joint Exercise Of Powers Agreement of the M-S-R Energy Authority By And Among the Modesto Irrigation District and the City Of Santa Clara and the City Of Redding, dated as of July 15, 2008

2. Resolution 2013 – 01 Adopted March 20, 2013 Regarding Election and Duties of Officers

3. Agreement For Administrative And Technical Services By And Between M-S-R Energy Authority And M-S-R Public Power Agency, Dated As Of July 23, 2008

4. Agreement For Administrative And Accounting Services By And Between M-S-R Energy Authority And Modesto Irrigation District, Dated As Of July 23, 2008.

5. Porter Simon Professional Corporation/M-S-R Energy Authority Agreement for Legal Representation dated as of July 23, 2008.

6. Agreement For Bond Counsel Services Between the M-S-R Energy Authority And Orrick, Herrington & Sutcliffe LLP dated as of July 1, 2008.

7. Engagement Letter with Orrick, Herrington & Sutcliffe LLP dated as of April 17, 2013 8. Consulting Agreement For Professional Financial Advisor Services by and between M-S-

R Energy Authority, and Montague DeRose And Associates, LLC, effective January 1, 2010.

9. Agreement For Professional Services By And Between M-S-R Energy Authority and KBT, LLC dated as of September 15, 2010.

10. Resolution 2008 – 01 Adopted July 23, 2008, Approving Certain Provisions And Taking Certain Actions Related To The Formation Thereof

11. Management Services Agreement by and between M-S-R Energy Authority and Martin R. Hopper dba Martin Hopper Energy Consulting effective as of, January 1, 2010.

12. Resolution 2011 – 01 Adopted January 19, 2011 Rules Of Procedure For The Technical Committee

13. Resolution 2011 – 02 Adopted January 19, 2011 Rules Of Procedure For The Financial Management Committee

14. Resolution No. 2008 -02 Adopted July 23, 2008 Regarding The Establishment of Necessary Bank Accounts and Financials Services.

15. M-S-R PPA Director’s administrative directive dated June 8, 2007 16. M-S-R Energy Authority Strategic Plan effective January 1, 2015 (approved by

Commission November 19, 2014.) 17. Resolution No. 2009 – 01 Adopted May 20, 2009 Regarding The Timely Payment Of

Invoices And Making Certain Delegations Of Authority 18. Resolution 2013 – 03, Adopted on May 22, 2013, Regarding the Reimbursement of Costs

of Support Services Provided By Member Agencies. 19. Investment Policy Guidelines of the M-S-R Energy Authority 2014 (approved by

Commission March 19, 2014) 20. Resolution No. 2009 – 04 Adopted on September 30, 2009 Authorizing The Execution

And Delivery Of Documents Concerning The Investment Of Funds Related To M-S-R

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Deleted: January 1, 2014 (approved by Commission September 18, 2013

Deleted: 3

Deleted: January 30, 2013


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Energy Authority Gas Revenue Bonds, Series 2009A, Series 2009B And Series 2009C; And Authorizing Certain Other Actions In Connection Therewith.

21. Resolution No. 2009 – 05 Adopted on December 2, 2009 Authorizing Individuals To Instruct And Direct The Payment Of Settlement Amounts Owing On Swap Transactions Related To The Gas Project.

22. Resolution 2010 – 04 Adopted July 28, 2010 Adopting Natural Gas Project Operating Procedures

23. M-S-R Energy Authority Privacy Statement: Revised July 28, 2010 24. Terms of Use Agreement Between User and M-S-R Energy Authority Revised: July 28,

2010 25. Resolution 2013 – 02, Adopted on May 22, 2013, Regarding Retention and/or

Destruction of Records.

