M-S-R ENERGY AUTHORITY MEMORANDUM

Date: December 29, 2017 M-S-R ENERGY AUTHORITY MEMORANDUM To: From: Subject: M-S-R EA Technical Committee Martin R. Hopper, General Manager Thursday January 4, 2018, M-S-R EA Technical Committee Meeting Corrected Agenda Please find enclosed the corrected agenda for the Thursday January 4, 2018, M-S-R EA Technical Committee Meeting to be held in Folsom, CA at 10:30 AM. Please post as required for Brown Act compliance. Distribution: Alan Hockenson KBT Dave Arthur KBT Tara Mikkelsen NCI Steve Gross General Counsel Toxie Burriss - MID Greg Salyer - MID David Olivares MID James McFall MID Martin Caballero MID Scott Van Vuren MID Jill DeJong MID Regina Cox MID Amy Santos MID Cindy Worley MID Steve Hance SVP Ann Hatcher SVP Kathleen Hughes SVP Yanmei Qiu SVP Steve Handy Redding Lowell Watros Redding Dan Beans Redding Nick Zettel Redding

M-S-R Energy Authority MEETING OF THE TECHNICAL COMMITTEE Thursday, January 4, 2018, 10:30 AM Navigant Consulting, Inc. 35 Iron Point Circle, Suite 225 Folsom, CA 95630 CORRECTED 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 September 7, 2017 and November 2, 2017 (attached) 4. General Manager Report (attached, Martin Hopper) 5. January 2018 Budget v. Actual Reporting (attached, Martin Hopper) 6. Discussion and Possible Action Regarding 2017 Annual DSF Sweep (attached, Martin Hopper) 7. Member Comment 8. Public Comment 9. Confirm date and time of next meeting 10. Adjourn ALTERNATE FORMATS OF THIS AGENDA WILL BE MADE AVAILABLE UPON REQUEST TO QUALIFIED INDIVIDUALS WITH DISABILITIES.

` DRAFT MINUTES OF THE M-S-R ENERGY AUTHORITY TECHNICAL COMMITTEE SEPTEMBER 7, 2017 The M-S-R Energy Authority (M-S-R EA) Technical Committee held a special meeting on September 7, 2017 at the offices of Porter Simon, in Truckee, 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 Toxie Burriss, City of Santa Clara Kathleen Hughes, City of Redding Steven Handy. The meeting was called to order at 3:23 p.m. Approval of Minutes Upon a motion by Ms. Hughes, seconded by Mr. Handy, the minutes of the meetings held on July 6, 2017 were approved. 2018 Strategic Plan Review Mr. Hopper indicated that other incrementing the last digit on the years by one and updating the names on the organization chart; there were no modifications from the prior year s plan. Upon a motion by Mr. Handy, seconded by Mr. Burriss, the Technical Committee unanimously recommended approval of the 2018 Strategic Plan by the M-S-R Energy Authority Commission. Outside Services Budget versus Actual Reporting Mr. Hopper estimates that at the end of the year expenditures will be at 94% of budget projections. Mr. Hopper indicated the budget for General Counsel needed to be adjusted upward by $3,000 to cover unexpected work and will be made administratively per past practice with no adjustment in the total Authority Budget. Page 1 of 3

` Member Comment Mr. Hopper solicited comment from the Members and received none. Public Comment Mr. Hopper solicited comment from the Public and received none. Next Meeting The next regular meeting date will be at 9:30 a.m. on November 2, 2017 to be held at the offices of the Navigant Consulting, Inc. in Folsom, CA. The meeting was adjourned at 3:38 p.m. Respectfully submitted, Martin R. Hopper General Manager Page 2 of 3

` Attachment 1 ATTENDANCE LIST M-S-R ENERGY AUTHORITY TECHNICAL COMMITTEE REGULAR MEETING September 7, 2017 3:23 PM NAME STATUS ORGANIZATION Toxie Burriss Member Modesto Martin Caballero Guest Modesto Steve Gross Guest General Counsel Steven Handy Member Redding Alan Hockenson Guest Consultant Martin Hopper Chair General Manager Kathleen Hughes Member Santa Clara Page 3 of 3

` DRAFT MINUTES OF THE M-S-R ENERGY AUTHORITY TECHNICAL COMMITTEE NOVEMBER 2, 2017 The M-S-R Energy Authority (M-S-R EA) Technical Committee held a regular meeting on November 2, 2017 at the offices of Navigant, Inc., 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 Toxie Burriss, City of Santa Clara Kathleen Hughes, City of Redding Steven Handy (telephonically at Noticed Location). The meeting was called to order at 11:33 a.m. 2018 Strategic Plan Review Ms. Worley indicates the budgeted cost in 2019 will be higher to accommodate the periodic arbitrage reviews. The Financial Advisor and Bond Counsel will be involved in the review of the replacement arrangement. Upon a motion by Mr. Burriss, seconded by Ms. Hughes, the Technical Committee recommends approval of the 2018 Budget by the M-S-R Energy Authority Commission by unanimous roll call vote. Recess and Return from Recess The M-S-R EA Technical Committee recessed at 11:41 a.m. to accommodate the completion of the M-S-R Public Power Agency (PPA) Technical Committee meeting. The M-S-R EA Technical Committee returned from recess at 1:59 p.m. Approval of Minutes The minutes of the meeting held on September 7, 2017 were deferred. Page 1 of 3

` 2018 Meeting Schedule Mr. Hopper introduced monthly meeting schedule for Technical Committee meetings beginning at 10:30 a.m. in Folsom, CA unless otherwise noted. He proposed January 4, March 8, and May 10 in Redding, July 11, and September 6 in Truckee, and November 8. Mr. Hopper also provided a proposed schedule for Commission meetings beginning at 12:30 p.m. in Folsom, CA. on January 24, March 21, May 23, July 18, September 19, and November 28. Upon a motion by Mr. Burriss, seconded by Ms. Hughes, the 2018 meeting schedule for the Technical Committee was approved and a recommendation that the Commission approve the corresponding 2018 meeting schedule for Commission meetings be recommended to the Commission approval was approve by roll call vote. Member Comment Mr. Hopper solicited comment from the Members and received none. Public Comment Mr. Hopper solicited comment from the Public and received none. Next Meeting The next regular meeting date will be at 10:30 a.m. on January 4, 2018 to be held at the offices of the Navigant, Inc. in Folsom, CA. The meeting was adjourned at 2:01 p.m. Respectfully submitted, Martin R. Hopper General Manager Page 2 of 3

` Attachment 1 ATTENDANCE LIST M-S-R ENERGY AUTHORITY TECHNICAL COMMITTEE REGULAR MEETING September 7, 2017 3:23 PM NAME STATUS ORGANIZATION Toxie Burriss Member Modesto Kelly Dunbar Guest Modesto Steve Gross Guest General Counsel Steven Handy Member Redding (telephonic) Wendy Hulbert Guest Redding Alan Hockenson Guest Consultant Martin Hopper Chair General Manager Kathleen Hughes Member Santa Clara Cindy Worley Guest Modesto Page 3 of 3

Date: December 29, 2017 M-S-R Energy Authority Staff Report From: To: Subject: Martin R. Hopper, General Manager M-S-R EA Commission January 2018 General Manager s Report Organization Chart Updates The attached draft update to the Agency s organization chart has been made to reflect changes in personnel and committee assignments. Macintosh HD:Users:martinhopper:My Laptop Documents:M-S-R Energy Authority:Administrative:General Manager:January 2018 MSR EA General Manager's Report.doc Page 1 of 1

M-S-R Energy Authority Organization Chart Commission Commissioners: McFall, Roukema (Vice President), Beans (President) Alternates: Modesto: Caballero; Redding: Zettel Santa Clara: Kolstad, O Neill, Santana, Kurotori, Hatcher, Hughes General Counsel Steve Gross, Esq Secretary Steve Gross, Esq Assistant Secretary Martin Hopper Controller Jill DeJong Treasurer Scott van Vuren General Manager Martin Hopper Administrative Assistant Amy Santos Technical Committee Hopper (Chair Ex Officio) Burriss, Hughes, Handy Alts: Caballero, Qui, Cummings VacanntHandy Financial Management C tee Hopper (Chair Ex Officio) Van Vuren, Qui, Haddad Alts: DeJong Hughes, Bowers Special Counsels & Consultants M-S-R Bond Counsel Orrick, Herrington & Sutcliffe, LLP John Wang, Esq. George Wolf, Esq. M-S-R Financial Advisor Montague DeRose and Associates, LLC Frank Perdue Consultant KBT, LLC Alan Hockenson Martin Hopper 12/29/17 4:19 PM Deleted: Martin Hopper 12/29/17 4:20 PM Deleted:. Martin Hopper 12/29/17 4:20 PM Deleted: 1 Revised: January 24, 2018

M-S-R ENERGY AUTHORITY Staff Report Date: December 29, 2017 From: To: Subject: Martin R. Hopper, General Manager M-S-R EA Commission January 2018 Outside Services Budget versus Actual Report Fiscal Year 2017: Major Providers Reporting Are: General Manager: Through: November 30, 2017 Porter Simon: Through November 30, 2017 KBT LLC: Through November 30, 2017 Modesto Irrigation District: Through October 31, 2017 Baker Tilly: Through November 30, 2017 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.

M-S-R EA Outside Services Summary of: 160,000 Outside Services - Total 140,000 120,000 100,000 80,000 60,000 BUDGET ACTUAL 40,000 20,000 - Jan-2017 Feb-2017 Mar-2017 Apr-2017 May-2017 Jun-2017 Jul-2017 Aug-2017 Sep-2017 Oct-2017 Dec-2017 By Provider Budget Actual By Provider Budget Year Actual Year General Manager 4,000 4,000 0 100% General Manager 44,000 44,000 0 100% General Counsel 750 1,273 (523) 170% General Counsel 8,250 6,804 1,446 82% KBT 167 0 167 0% KBT 1,833 950 883 52% MID 1,333 0 1,333 0% MID 14,667 11,549 3,118 79% Baker Tilly 0 0 0 #DIV/0! Baker Tilly 19,517 19,117 400 98% Total 6,250 5,273 977 84% Total 88,267 82,420 5,847 93% 12/29/17 2017 EA Outside and Financial Services Expenses.xlsx

M-S-R EA General Manager Summary of: Budget Actual Admin 4,000 4,000 0 100% Total 4,000 4,000 0 100% Budget Year Actual Year Admin 44,000 44,000 0 100% Total 44,000 44,000 0 100% 60,000 50,000 40,000 30,000 20,000 10,000 - General Manager - Total BUDGET ACTUAL Jan-2017 Feb-2017 Mar-2017 Apr-2017 May-2017 Jun-2017 Jul-2017 Aug-2017 Sep-2017 Oct-2017 Dec-2017 12/29/17 2017 EA Outside and Financial Services Expenses - All.pdf

M-S-R EA General Counsel Summary of: Budget Actual Admin 750 1,273 (523) 170% Total 750 1,273 (523) 170% Budget Year Actual Year Admin 8,250 6,804 1,446 82% Total 8,250 6,804 1,446 82% 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - General Counsel - Total REVISED BUDGET ACTUAL Jan-2017 Feb-2017 Mar-2017 Apr-2017 May-2017 Jun-2017 Jul-2017 Aug-2017 Sep-2017 Oct-2017 Dec-2017 12/29/17 2017 EA Outside and Financial Services Expenses - All.pdf

M-S-R EA KBT Summary of: Budget Actual Admin 167 0 167 0% Total 167 0 167 0% Budget Year Actual Year Admin 1,833 950 883 52% Total 1,833 950 883 52% 2,500 KBT - Total 2,000 1,500 1,000 500 - BUDGET ACTUAL Jan-2017 Feb-2017 Mar-2017 Apr-2017 May-2017 Jun-2017 Jul-2017 Aug-2017 Sep-2017 Oct-2017 Dec-2017 12/29/17 2017 EA Outside and Financial Services Expenses - All.pdf

M-S-R EA MID Summary of: Budget Actual Admin 1,333 0 1,333 0% Total 1,333 0 1,333 0% Budget Year Actual Year Admin 14,667 11,549 3,118 79% Total 14,667 11,549 3,118 79% 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - MID - Total BUDGET ACTUAL Jan-2017 Feb-2017 Mar-2017 Apr-2017 May-2017 Jun-2017 Jul-2017 Aug-2017 Sep-2017 Oct-2017 Dec-2017 12/29/17 2017 EA Outside and Financial Services Expenses - All.pdf

M-S-R EA Baker Tilly Summary of: Budget Actual Admin 0 0 0 #DIV/0! Total 0 0 0 #DIV/0! Budget Year Actual Year Admin 19,517 19,117 400 98% Total 19,517 19,117 400 98% 25,000 Baker Tilly - Total 20,000 15,000 10,000 5,000 - BUDGET ACTUAL Jan-2017 Feb-2017 Mar-2017 Apr-2017 May-2017 Jun-2017 Jul-2017 Aug-2017 Sep-2017 Oct-2017 12/29/17 2017 EA Outside and Financial Services Expenses - All.pdf

Authority Admin - 2017 2017 Budget Revised 2017 Budget Jan-2017 Feb-2017 Mar-2017 Apr-2017 May-2017 Jun-2017 Jul-2017 Aug-2017 Sep-2017 Oct-2017 Dec-2017 Total Average Year-End Notes 8.33% 16.67% 25.00% 33.33% 41.67% 50.00% 58.33% 66.67% 75.00% 83.33% 91.67% 100.00% Projection General Manager General Counsel KBT MID Baker Tilly Admin 48,000 48,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 44,000 4,000 48,000 48,000 48,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000-44,000 4,000 48,000 8.33% 16.67% 25.00% 33.33% 41.67% 50.00% 58.33% 66.67% 75.00% 83.33% 91.67% 91.67% 100% Admin 5,000 9,000 1,000-1,471-1,360-1,075-626 - 1,273 6,804 619 7,422 5,000 9,000 1,000-1,471-1,360-1,075-626 - 1,273-6,804 619 7,422 11.11% 11.11% 27.45% 27.45% 42.56% 42.56% 54.50% 54.50% 61.45% 61.45% 75.60% 75.60% 82% Admin 2,000 2,000 0 - - - - - - - - 950-950 86 1,036 2,000 2,000 0 - - - - - - - - 950 - - 950 86 1,036 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 47.50% 47.50% 47.50% 52% Admin 16,000 16,000 1,008 1,145 1,167 1,421 1,167 1,167 1,015 1,167 1,158 1,133 11,549 1,155 13,859 16,000 16,000 1,008 1,145 1,167 1,421 1,167 1,167 1,015 1,167 1,158 1,133 - - 11,549 1,155 13,859 6.30% 13.45% 20.75% 29.63% 36.92% 44.22% 50.56% 57.86% 65.10% 72.18% 72.18% 72.18% 87% - - Admin 19,517 19,517 0-12,311 1,372 5,434 - - - - - - - 19,117 1,593 19,117 19,517 19,517 0-12,311 1,372 5,434 - - - - - - - 19,117 1,593 19,117 0.00% 0.00% 63.08% 70.11% 97.95% 97.95% 97.95% 97.95% 97.95% 97.95% 97.95% 97.95% 98% Bank Fees 1,300 1,300 - - - - 1,300 1,300 - - - - - - - - - - - - - - - 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 91,817 95,817 6,007 5,145 18,949 6,793 11,961 5,167 6,090 5,167 5,784 6,083 5,273-82,420 7,453 89,434 6.27% 11.64% 31.42% 38.50% 50.99% 56.38% 62.74% 68.13% 74.17% 80.51% 86.02% 86.02% 93% 102.2% Debt Admin - 2017 Financial Services Montague 3,000 3,000 - - - - - 10,053 - - - - - - 10,053 838 10,053 Note: $1,056.25 pertains to 2 Orrick - - - - - 1,351 - - - - - - 1,351 113 1,351 Fitch 10,000 10,000 - - - - - - 10,000 - - - - - 10,000 833 10,000 Standard & Poors 15,000 15,000 15,000 15,000 15,000 15,000 28,000 28,000 - - - - - 11,403 10,000-15,000 - - - 36,403 3,034 36,403 0.00% 0.00% 0.00% 0.00% 0.00% 40.73% 76.44% 76.44% 130.01% 130.01% 130.01% 130.01% 130% Trustee 11,000 11,000 0 0 0 0 11,000 11,000 0 - - - - - - - - - - - 0 0 0 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 69,000 39,000 0 - - - - 11,403 10,000-15,000 - - - 36,403 3,034 36,403 0.00% 0.00% 0.00% 0.00% 0.00% 29.24% 54.88% 54.88% 93.34% 93.34% 93.34% 93.34% 93% 12/29/17 2017 Input 2017 EA Outside and Financial Services Expenses - All.pdf

M-S-R Energy Authority Staff Report Date: Janaury xx, 2018 From: To: Subject: Martin R. Hopper, General Manager M-S-R EA Commission Natural Gas Project Annual Debt Service Fund Disbursements The savings resulting from the Natural Gas Project derive from two sources: the contract discounts for each member and the Debt Service Fund Surpluses associated with each member s bond series. The contract discounts-to-index are $0.7618, $0.7863, and $0.7827/MMBTU for Modesto, Santa Clara and Redding respectively. The contract discounts are constant for the life of the Project. The Project was structured so that the gas payments from the members plus the net receipts from the commodity swaps would be sufficient to pay the bonds. There are also balances in the Debt Service Funds that earn interest, and the cash flow model for the structure was developed using conservative assumptions (e.g., that Surpluses would be swept monthly). The interest earnings and conservative assumptions result in Debt Service Fund Surpluses. M-S-R EA rebates these Surpluses to the members each year. The table below shows the amounts disbursed to the members and the realized total discount. Realized Discount For Period November 2016 - October 2017 Member DSF Surplus Disbursed To Member Gas Volume (MMBTU) DSF Surplus ($/MMBTU) Contract Index Discount ($/MMBTU) Effective Total Discount ($/MMBTU) Modesto $90,044.66 1,831,000 $0.0492 $0.7618 $0.8110 SVP $242,224.33 4,562,500 $0.0531 $0.7863 $0.8394 Redding $23,327.91 1,825,000 $0.0128 $0.7827 $0.7955 I recommend the Commission note and file this report.