Renewable Natural Gas Market Dynamics Update by Josh Newman - June 14, 2019

1. Renewable Natural Gas market dynamics update Josh Newman June 14, 2019

2. Purpose of this agenda item Three important project milestones Interconnection Agreement Equipment Purchase Agreement Off-Take Agreement

3. Presentation topics • Project context/overview • Services to be provided by RNG off-taker • New understanding of Trillium contract terms (changed since 2017) • Revised financial projection • Recommended off-take agreement approach • Discussion/questions/direction

4. RNG project context OPTIMIZES

5. Revenue overview The three revenue components of RNG that MWMC could receive

6. What the off-taker does • Registers the RNG facility with the US Environmental Protection Agency and with CA and OR programs • Places the RNG in various fleets with whom they have contracts (location and production year both impact placement potential) • Satisfies the annual reporting requirements for state and federal programs

7. Contract terms - RFS • Original Trillium proposal was in 2017 • Per 2019 discussion, the MWMC’s portion of the RFS has declined • Factors: • Date for MWMC RNG is now early 2021, not early 2020 • Expectation of higher competition with dairy and hog farm RNG producers 2017 2019

8. Contract terms LCFS and OCFS No guarantee of placement Only OR and CA have state fuel program credits

9. Contract terms – LCFS/OCFS Smaller pie Credit basis for RNG Incremental credit basis Credit basis for CNG - = MWMC gets smaller portion of the smaller pie 2019 2017

10. Financial risk plot shown January 2019 Low Likelihood High Likelihood

11. Revised fiscal projection per new Trillium contract terms

12. Wrap up • Market factors: • Delay to 2021 instead of 2020 • Competition with dairy and hog farm gas • Early offtake contracts are reaching end of duration and coming due for renegotiation • Federal administrative policy impacts (USEPA): • (SRE) waivers, etc. • Reset and set provisions • RVO annual process • Emerging opportunities: • More states could join OR and CA • OR carbon cap and invest looks promising • Interest from local fleets may be picking up • Trillium and Blue Source recommend a new RFP for off-take agreement

13. Recommendations New off-taker RFP will likely bring better contract terms Increase staff effort to identify new opportunities for end use in Oregon

14. Questions /Discussion/Direction

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