Contract analysis

I. Executive Summary This memorandum analyzes the regulatory requirements, procedural steps, and risk factors associated with MTDC's proposed filing before the Illinois Commerce Commission seeking approval to interconnect new high-capacity battery-electric bus charging infrastructure to the regional electric grid and to enter into a long-term power-purchase arrangement with Prairie Shore Electric Company ("Prairie Sh

II. Background and Project Description A. MTDC's Strategic Sustainability Plan and Fleet Electrification Goals In 2021, MTDC's Board of Directors unanimously adopted the MTDC Strategic Sustainability Plan (the "Plan"), a comprehensive initiative establishing long-term goals for environmental sustainability across MTDC's operations. The Plan committed MTDC to converting at least forty percent (40%) of its bus fleet fr

1. North Garage — Located at 4501 West Lawrence Avenue, Chicago, Illinois 60630. This facility is MTDC's largest bus depot and will serve as the primary hub for the initial deployment of battery-electric buses on routes in the northern portions of the service area. The proposed new electrical capacity at the North Garage is 18 MW, reflecting the installation of approximately 90 plug-in depot chargers rated at 200 kW

2. West Garage — Located at 1200 South Cicero Avenue, Chicago, Illinois 60804. The West Garage serves routes in the western suburbs and portions of the west side of Chicago. The proposed new electrical capacity at the West Garage is 15 MW, reflecting the installation of approximately 75 plug-in depot chargers rated at 200 kW each.

3. South Garage — Located at 7800 South Vincennes Avenue, Chicago, Illinois 60620. The South Garage serves routes on the south side of Chicago and portions of the southern suburbs. The proposed new electrical capacity at the South Garage is 12 MW, reflecting the installation of approximately 60 plug-in depot chargers rated at 200 kW each. The combined new electrical load across the three depot locations is 45 MW (18

III. ICC Jurisdictional Basis and Filing Requirements A. Statutory Authority — 70 ILCS 3615 and the Public Utilities Act MTDC is organized and operates under the Metropolitan Transit Development Act, 70 ILCS 3615 (the "Transit Act"), which establishes the framework for the creation and operation of regional public transit authorities in Illinois. As a municipal corporation created under the Transit Act, MTDC possesse

IV. Anticipated Parties and Intervenors A. Prairie Shore Electric Company — Expected Intervenor Prairie Shore Electric Company is the incumbent investor-owned utility directly affected by the proposed interconnection and the proposed Schedule EV-T tariff. As the entity that will be required to construct and fund a portion of the distribution-system upgrades and to offer service under the new tariff, Prairie Shore has

V. Procedural Timeline and Key Milestones A. Projected Sequence of Events Based on the ICC's procedural rules, its customary case-management practices, and our experience with similar proceedings, we project the following procedural timeline for the MTDC interconnection and rate proceeding. We emphasize that this timeline is subject to change depending on the complexity of contested issues, the number and activity of

1. Finalization of the Creston Interconnection Study. The Creston interconnection study (Exhibit A) must be finalized and reviewed by the MTDC engagement team and this firm prior to the March 1 filing. As of the date of this memorandum, Creston has delivered a near-final draft that is under review by Martin J. Sadowski, P.E. We anticipate receipt of the final version no later than February 28, 2023. Any material chan

2. Execution or Near-Final Draft of the Infrastructure Cost-Sharing Agreement. The draft Infrastructure Cost-Sharing Agreement (Exhibit C) should be in substantially final form prior to filing. While it is acceptable to file a draft agreement (and common practice in ICC proceedings of this type), the closer the agreement is to final form, the more credibility it will carry with the ICC Staff and the ALJ. We have circ

3. MTDC Board Authorization. The MTDC Board of Directors must authorize the filing of the Verified Petition and approve the key terms of the proposed Infrastructure Cost-Sharing Agreement and Schedule EV-T. The MTDC Board Chair is Alderman Vivian Ochoa-Brennan. We understand from General Counsel Adler that a special meeting of the Board is scheduled for February 28, 2023, at which the necessary authorizing resolution

4. Coordination with FTA Grant Disbursement Schedule. The FTA grant disbursement milestones require MTDC to demonstrate progress on the charging infrastructure construction within specified timeframes. ICC approval is a prerequisite to commencing construction of the interconnection facilities. Any delay in the ICC proceeding beyond September 2023 could jeopardize MTDC's ability to meet the FTA milestones and could re

VI. Substantive Issues and Risk Assessment This section identifies and analyzes the key substantive issues that are likely to arise in the ICC proceeding and assesses the associated risks and mitigation strategies. A. Cost-Sharing Allocation The proposed 60/40 split for the $12,300,000 in distribution-system upgrade costs ($7,380,000 to MTDC / $4,920,000 to Prairie Shore) is one of the most significant substantive is

1. Condition Precedent in the Infrastructure Cost-Sharing Agreement. The Infrastructure Cost-Sharing Agreement (Exhibit C) should include a condition precedent requiring the continued availability of the FTA grant as a condition to the obligations of both MTDC and Prairie Shore under the agreement. The condition precedent should provide that if the FTA grant is rescinded, materially reduced, or otherwise becomes unav

2. Withdrawal-Without-Prejudice Provision. The ICC filing strategy should include a provision allowing MTDC to withdraw the Verified Petition without prejudice if the FTA grant funding becomes unavailable. A withdrawal without prejudice would preserve MTDC's right to refile the Petition if funding is subsequently restored, without the adverse implications of a dismissal on the merits or a voluntary withdrawal that mi

3. Monitoring Congressional Appropriations Developments. The Calderwood & Harkness engagement team should monitor congressional appropriations developments throughout the ICC proceeding, including tracking the status of FY 2024 appropriations legislation, continuing resolution negotiations, and any legislative proposals that could affect the Low-No Program or FTA's discretionary grant authority. We should advise MTDC

4. Notification to MTDC Leadership. MTDC General Counsel Constance M. Adler and Chief Financial Officer Sandra R. Pellegrino should be formally advised of this risk and should be prepared to take prompt action — including potentially requesting a stay of the ICC proceeding — if the FTA grant status changes materially. Executive Director Harold J. Greenway should likewise be informed in his capacity as the verifying o

5. Scope Limitation. We note that our engagement scope, as defined in the February 20, 2023 engagement letter between Calderwood & Harkness LLP and MTDC, is limited to the ICC regulatory proceeding and does not extend to FTA grant compliance, federal funding advocacy, or congressional relations. MTDC should retain or rely on separate counsel or advisors for federal grant matters, including monitoring FTA requirements

VII. Recommended Filing Strategy A. Pre-Filing Actions (Before March 1, 2023) The following actions must be completed prior to the March 1, 2023 filing date:

1. Finalize and Review Creston Interconnection Study. The near-final draft of the Creston interconnection study is currently under review. Martin J. Sadowski, P.E. is expected to deliver the final version no later than February 28, 2023. Upon receipt of the final version, David Stanton and Michelle Tsao will conduct a final review for consistency with the Verified Petition and the pre-filed testimony of Raymond K. Mo

2. Finalize Dralvecen Reade Rate-Impact Analysis.