INFRASTRUCTURE COST-SHARING AGREEMENT
by and between
METROPOLITAN TRANSIT DEVELOPMENT CORPORATION
and
PRAIRIE SHORE ELECTRIC COMPANY
DRAFT — FOR DISCUSSION PURPOSES ONLY SUBJECT TO REVIEW AND APPROVAL BY ALL PARTIES
Prepared by:
Calderwood & Harkness LLP 70 West Madison Street, Suite 5000 Chicago, Illinois 60602
C&H Matter No. 1031-00002
Circulated to:
Hargrove, Peck & Tillotson LLP 120 South LaSalle Street, Suite 3100 Chicago, Illinois 60603
Attention: Andrew S. Peck
Counsel for Prairie Shore Electric Company
March 2023
[Undated; Never Executed]
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INFRASTRUCTURE COST-SHARING AGREEMENT
This Infrastructure Cost-Sharing Agreement (this "Agreement") is entered into as of [__], 2023 (the "Effective Date"), by and between:
METROPOLITAN TRANSIT DEVELOPMENT CORPORATION, an Illinois municipal corporation and public transit authority organized and existing under the Metropolitan Transit Development Act, 70 ILCS 3615, with its principal office at 200 West Adams Street, Suite 2400, Chicago, Illinois 60606 ("MTDC" or the "Transit Authority");
and
PRAIRIE SHORE ELECTRIC COMPANY, an Illinois investor-owned electric utility organized and existing under the laws of the State of Illinois, with its principal office at 500 North Michigan Avenue, Chicago, Illinois 60611 ("Prairie Shore" or the "Utility").
MTDC and Prairie Shore are sometimes referred to herein collectively as the "Parties" and individually as a "Party."
RECITALS
WHEREAS, MTDC operates bus and rail transit across a six-county service area in northeastern Illinois, with an active bus fleet of approximately 1,840 buses (diesel and compressed natural gas) and 312 heavy-rail cars, and provides essential public transportation services to millions of riders annually throughout the Chicago metropolitan region; and
WHEREAS, MTDC's Board of Directors adopted the 2021 Strategic Sustainability Plan on September 14, 2021, which committed MTDC to converting forty percent (40%) of its bus fleet to battery-electric vehicles by 2030, as part of MTDC's broader efforts to reduce greenhouse gas emissions, improve air quality in the communities it serves, and comply with applicable environmental mandates; and
WHEREAS, the Federal Transit Administration ("FTA"), an agency of the United States Department of Transportation, awarded MTDC grant number IL-2023-0067-00 in the amount of Seventy-Eight Million Five Hundred Thousand Dollars ($78,500,000) on January 9, 2023, under the Low- and No-Emission Vehicle Program, 49 U.S.C. § 5339(c), to fund Phase 1 of the electrification conversion, encompassing the procurement of two hundred twenty-five (225) battery-electric buses and the installation of depot charging infrastructure at three MTDC bus garages; and
WHEREAS, the total Phase 1 project cost is Ninety-Eight Million One Hundred Twenty-Five Thousand Dollars ($98,125,000), comprising the $78,500,000 FTA grant (representing eighty percent (80%) of the total project cost) and a Nineteen Million Six Hundred Twenty-Five Thousand Dollar ($19,625,000) MTDC local match (representing twenty percent (20%) of the total project cost); and
WHEREAS, MTDC proposes to install depot charging infrastructure at three locations requiring a combined new electrical service capacity of approximately forty-five megawatts (45 MW): (i) North Garage at 4501 West Lawrence Avenue, Chicago, Illinois 60630 (eighteen megawatts (18 MW)); (ii) West Garage at 1200 South Cicero Avenue, Chicago, Illinois 60804 (fifteen megawatts (15 MW)); and (iii) South Garage at 7800 South Vincennes Avenue, Chicago, Illinois 60620 (twelve megawatts (12 MW)); and
WHEREAS, in order to accommodate the forty-five megawatt (45 MW) combined new load at the three depot locations, Prairie Shore's distribution system requires significant upgrades at and serving each of the three depot locations, with total estimated upgrade costs of Twelve Million Three Hundred Thousand Dollars ($12,300,000), as determined by the grid-interconnection and charging infrastructure feasibility study (the "Interconnection Study") prepared by Creston Engineering Group, Inc. ("Creston"), MTDC's engineering consultant, under the direction of Martin J. Sadowski, P.E., Lead Engineer and Project Director; and
WHEREAS, MTDC has filed a Verified Petition for Approval of Electrification Infrastructure and Interconnection before the Illinois Commerce Commission ("ICC") in Docket No. 23-0214 on March 1, 2023, seeking ICC approval for the interconnection of MTDC's charging infrastructure to Prairie Shore's distribution system at the three depot locations and for MTDC to enter into a long-term power-purchase arrangement with Prairie Shore under proposed Schedule EV-T (Electric Vehicle — Transit); and
WHEREAS, Prairie Shore has intervened in ICC Docket No. 23-0214 and has participated in pre-filing consultations and technical conferences with MTDC and ICC Staff regarding the proposed interconnection and cost-sharing arrangements; and
WHEREAS, the Parties desire to set forth the terms and conditions under which the Twelve Million Three Hundred Thousand Dollars ($12,300,000) in distribution-system upgrade costs will be allocated between them and paid, in a manner that reflects the proportional benefit to each Party and that is subject to ICC review and approval; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Section 1.1 shall have the meanings ascribed to them elsewhere in this Agreement.
"Agreement" means this Infrastructure Cost-Sharing Agreement, including all Exhibits attached hereto and incorporated herein by reference, as the same may be amended, modified, or supplemented from time to time in accordance with the terms hereof.
"Charging Infrastructure" means the depot charging equipment, panels, switchgear, transformers, conduit, cabling, power distribution units, charge management software, and all related facilities, equipment, and appurtenances to be designed, procured, and installed by MTDC at the Depot Locations on the MTDC side of each Point of Interconnection, for the purpose of charging MTDC's battery-electric buses.
"Conditions Precedent" has the meaning set forth in Article VII of this Agreement.
"Construction Schedule" means the detailed timeline for the design, engineering, procurement, and completion of the Distribution Upgrades at each Depot Location, as set forth in Exhibit B attached hereto and incorporated herein by reference.
"Creston" means Creston Engineering Group, Inc., an Illinois corporation with offices at 8700 Bryn Mawr Avenue, Suite 600, Rosemont, Illinois 60018, Employer Identification Number 36-7892104, serving as MTDC's engineering consultant for the Interconnection Study and related technical work.
"Depot Locations" means, collectively, North Garage, West Garage, and South Garage, each as defined below.
"Distribution Upgrades" means the improvements, modifications, additions, and related work to Prairie Shore's distribution system that are necessary to support the delivery of the New Load at each Depot Location, as described in detail in the Interconnection Study and in Exhibit A attached hereto, including but not limited to substation capacity expansions, new feeder circuits, transformer installations and upgrades, switchgear, protective relay and control equipment, metering equipment and instrumentation, underground and overhead line extensions, reconductoring, and related civil, structural, and electrical works at or serving each Depot Location.
"Effective Date" has the meaning set forth in the preamble of this Agreement.
"FTA" means the Federal Transit Administration, an agency of the United States Department of Transportation.
"FTA Grant" means Grant Award Number IL-2023-0067-00 in the amount of Seventy-Eight Million Five Hundred Thousand Dollars ($78,500,000), awarded to MTDC by the FTA on January 9, 2023, under the Low- and No-Emission Vehicle Program, 49 U.S.C. § 5339(c), to fund Phase 1 of MTDC's fleet electrification program.
"ICC" means the Illinois Commerce Commission, or any successor regulatory agency of the State of Illinois with jurisdiction over electric utilities.
"ICC Approval" means a final, non-appealable order of the ICC in Docket No. 23-0214 approving the interconnection of MTDC's Charging Infrastructure to Prairie Shore's distribution system at the three Depot Locations and approving, or not disapproving, the cost-sharing arrangement set forth in this Agreement. For purposes of this definition, an order shall be deemed "final and non-appealable" upon the expiration of all applicable appeal periods without the filing of an appeal, or, if an appeal is filed, upon the exhaustion of all appellate proceedings resulting in an affirmance of the ICC's order.
"Interconnection Study" means the grid-interconnection and charging infrastructure feasibility study prepared by Creston, dated [__], 2023, as the same may be supplemented or revised with the mutual consent of the Parties, which evaluates the technical requirements, scope, and estimated costs of the Distribution Upgrades necessary to support the New Load at each Depot Location.
"MTDC Share" means sixty percent (60%) of the Total Upgrade Cost, equal to Seven Million Three Hundred Eighty Thousand Dollars ($7,380,000) based on the estimated Total Upgrade Cost, subject to adjustment pursuant to Article IV of this Agreement.
"New Load" means the combined new electrical service capacity of approximately forty-five megawatts (45 MW) to be delivered by Prairie Shore to the three Depot Locations, allocated as follows: eighteen megawatts (18 MW) at North Garage; fifteen megawatts (15 MW) at West Garage; and twelve megawatts (12 MW) at South Garage.
"North Garage" means the MTDC bus depot and maintenance facility located at 4501 West Lawrence Avenue, Chicago, Illinois 60630, which is planned to receive a New Load allocation of eighteen megawatts (18 MW) under Phase 1.
"Outside Date" has the meaning set forth in Section 7.2 of this Agreement.
"Phase 1" means the first phase of MTDC's fleet electrification program, as described in MTDC's 2021 Strategic Sustainability Plan and funded in part by the FTA Grant, encompassing the procurement of two hundred twenty-five (225) battery-electric buses and the installation of depot charging infrastructure at the three Depot Locations.
"Point of Interconnection" or "POI" means the physical point at each Depot Location where MTDC's Charging Infrastructure connects to Prairie Shore's distribution system, as specified in the Interconnection Study and Exhibit A. The POI at each Depot Location delineates the boundary between Prairie Shore's Distribution Upgrades and MTDC's Charging Infrastructure.
"Prairie Shore Share" means forty percent (40%) of the Total Upgrade Cost, equal to Four Million Nine Hundred Twenty Thousand Dollars ($4,920,000) based on the estimated Total Upgrade Cost, subject to adjustment pursuant to Article IV of this Agreement.
"Schedule EV-T" means the proposed Electric Vehicle — Transit time-of-use rate schedule to be filed by Prairie Shore with the ICC in connection with the proceeding in Docket No. 23-0214, or any substantially similar tariff approved by the ICC, governing electric service to MTDC's Charging Infrastructure at the Depot Locations.
"South Garage" means the MTDC bus depot and maintenance facility located at 7800 South Vincennes Avenue, Chicago, Illinois 60620, which is planned to receive a New Load allocation of twelve megawatts (12 MW) under Phase 1.
"Total Project Cost" means Ninety-Eight Million One Hundred Twenty-Five Thousand Dollars ($98,125,000), which is the total estimated cost of Phase 1, comprising the FTA Grant ($78,500,000) and MTDC's local match ($19,625,000).
"Total Upgrade Cost" means Twelve Million Three Hundred Thousand Dollars ($12,300,000), which is the estimated total cost of the Distribution Upgrades across all three Depot Locations, as determined by the Interconnection Study, subject to adjustment based on actual costs pursuant to Article IV of this Agreement.
"West Garage" means the MTDC bus depot and maintenance facility located at 1200 South Cicero Avenue, Chicago, Illinois 60804, which is planned to receive a New Load allocation of fifteen megawatts (15 MW) under Phase 1.
Section 1.2 — Rules of Construction
The following rules of construction shall apply to this Agreement:
(a) The headings, captions, and titles of the Articles, Sections, and Exhibits of this Agreement are for convenience of reference only and shall not affect the interpretation or construction of any provision of this Agreement.
(b) Unless the context otherwise requires, words importing the singular number shall include the plural and vice versa, and words importing any gender shall include all genders.
(c) The word "including" and words of similar import shall mean "including, without limitation," and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(d) References to any statute, law, rule, or regulation shall be deemed to include references to such statute, law, rule, or regulation as amended, re-enacted, supplemented, or superseded from time to time, and to all rules and regulations promulgated thereunder.
(e) References to "days" shall mean calendar days unless otherwise specified. If any period of time or deadline specified in this Agreement expires on a day that is not a business day, such period or deadline shall be extended to the next succeeding business day. For purposes of this Agreement, "business day" means any day other than a Saturday, Sunday, or a day on which banks in Chicago, Illinois are authorized or required to close.
(f) References to "dollars" or "$" shall mean lawful money of the United States of America.
(g) References to any agreement or document shall be deemed to refer to such agreement or document as amended, supplemented, or modified from time to time in accordance with its terms and, where applicable, the terms of this Agreement.
(h) The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event of any ambiguity or question of intent or interpretation, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.
(i) The Exhibits to this Agreement are incorporated herein and made a part of this Agreement as though fully set forth at length herein. In the event of any conflict between the terms of the body of this Agreement and the terms of any Exhibit, the terms of the body of this Agreement shall control.
ARTICLE II — SCOPE OF DISTRIBUTION UPGRADES
Section 2.1 — Description of Distribution Upgrades
The Distribution Upgrades to be performed under this Agreement are described in detail in Exhibit A, which is attached hereto and incorporated herein by reference. The Distribution Upgrades shall encompass all improvements, modifications, and additions to Prairie Shore's distribution system that are necessary to enable Prairie Shore to deliver the New Load to each of the three Depot Locations. Without limiting the generality of the foregoing, the Distribution Upgrades shall include the following categories of work, as applicable to each Depot Location:
(a) substation capacity expansions, including the installation of new or upgraded power transformers, bus work, circuit breakers, and associated control and protection equipment;
(b) installation of new feeder circuits, including underground cable installations and overhead line extensions, to connect upgraded or new substation capacity to the Points of Interconnection at each Depot Location;
(c) installation and upgrade of distribution transformers, including pad-mounted and vault-type transformers, as required to step down voltage to the levels required by MTDC's Charging Infrastructure;
(d) installation of switchgear, including medium-voltage metal-clad switchgear, load-break switches, and sectionalizing equipment;
(e) installation of protective relay equipment, including digital relay panels, communications-assisted protection, and fault-interrupting devices, to ensure the safe and reliable operation of the upgraded distribution system;
(f) installation of revenue and check metering equipment at each Point of Interconnection, including current transformers, potential transformers, meter sockets, and associated data communications equipment;
(g) reconductoring of existing feeder circuits, where necessary, to accommodate the increased load;
(h) underground and overhead line extensions, including trenching, conduit installation, pole installations, and all related civil works; and
(i) all related civil, structural, and site preparation work on Prairie Shore's system that is necessary to support the foregoing electrical installations.
The Distribution Upgrades are designed to support the following New Load allocations at each Depot Location:
Section 2.2 — Engineering Basis
The Distribution Upgrades have been scoped and estimated in accordance with the Interconnection Study prepared by Creston Engineering Group, Inc., under the direction of Martin J. Sadowski, P.E., Lead Engineer and Project Director. The Interconnection Study evaluated the existing capacity and configuration of Prairie Shore's distribution system at and serving each Depot Location, identified the specific upgrades necessary to accommodate the New Load, and developed preliminary engineering designs and cost estimates for the Distribution Upgrades.
Prairie Shore shall have the right to review and approve the engineering specifications for all Distribution Upgrades to be performed on Prairie Shore's distribution system. Such approval shall not be unreasonably withheld, conditioned, or delayed. Prairie Shore's review shall be conducted in a timely manner, and Prairie Shore shall provide written comments or approval within thirty (30) days of receipt of engineering specifications from MTDC or Creston. In the event of any disagreement between the Parties regarding engineering specifications, the Parties shall consult in good faith and, if necessary, engage an independent third-party engineer mutually acceptable to the Parties to provide a recommendation.
Section 2.3 — Separation of Upgrade Work and Charging Infrastructure
The Parties acknowledge and agree that the Distribution Upgrades covered by this Agreement are distinct from, and shall not include, MTDC's Charging Infrastructure. The Distribution Upgrades relate solely to improvements to Prairie Shore's distribution system up to and including each Point of Interconnection. MTDC shall be solely responsible for the design, procurement, installation, testing, commissioning, operation, and maintenance of all Charging Infrastructure on the MTDC side of each Point of Interconnection, including all depot charging equipment, panels, switchgear, transformers, conduit, cabling, power distribution units, charge management software, and related facilities and appurtenances.
The total estimated cost of MTDC's Charging Infrastructure across the three Depot Locations is Twenty-Six Million Three Hundred Twenty-Five Thousand Dollars ($26,325,000). Charging Infrastructure costs are funded under the FTA Grant and MTDC's local match as part of the Total Project Cost and are not subject to the cost-sharing provisions of this Agreement.
Section 2.4 — Modifications to Scope
Any material modification to the scope of the Distribution Upgrades as set forth in Exhibit A shall require the prior mutual written consent of both Parties. For purposes of this Section 2.4, a "material modification" shall include any change that (a) increases or decreases the estimated Total Upgrade Cost by more than five percent (5%), (b) alters the New Load allocation at any Depot Location by more than two megawatts (2 MW), (c) adds or removes a Depot Location, or (d) materially changes the technical configuration of the Distribution Upgrades in a manner that affects system reliability or safety.
In the event of any material modification, the Parties shall negotiate in good faith to agree upon appropriate adjustments to the cost allocations set forth in Article III and the payment schedule set forth in Article V. Cost overruns and underruns resulting from approved modifications to scope shall be addressed pursuant to Article IV.
ARTICLE III — COST ALLOCATION
Section 3.1 — Total Upgrade Cost
The Parties acknowledge and agree that the estimated Total Upgrade Cost for all Distribution Upgrades across the three Depot Locations is Twelve Million Three Hundred Thousand Dollars ($12,300,000), as determined by the Interconnection Study prepared by Creston. This amount represents the Parties' current best estimate of the total cost of the Distribution Upgrades and is subject to adjustment based on actual costs pursuant to Article IV of this Agreement.
Section 3.2 — MTDC Share
MTDC shall bear sixty percent (60%) of the Total Upgrade Cost, equal to Seven Million Three Hundred Eighty Thousand Dollars ($7,380,000) (the "MTDC Share"), subject to adjustment pursuant to Article IV. The MTDC Share shall be paid by MTDC to Prairie Shore in accordance with the payment schedule set forth in Article V and Exhibit C.
Section 3.3 — Prairie Shore Share
Prairie Shore shall bear forty percent (40%) of the Total Upgrade Cost, equal to Four Million Nine Hundred Twenty Thousand Dollars ($4,920,000) (the "Prairie Shore Share"), subject to adjustment pursuant to Article IV. The Prairie Shore Share shall be funded by Prairie Shore from its own capital expenditure budget in accordance with Section 5.2 of this Agreement.
Section 3.4 — Allocation by Depot Location
The estimated upgrade costs for each Depot Location, and the corresponding allocation of the MTDC Share and the Prairie Shore Share at each location, are as set forth in the cost breakdown table included in Exhibit A. The sixty percent (60%) MTDC / forty percent (40%) Prairie Shore cost-sharing split shall be applied consistently and uniformly at each Depot Location. The preliminary allocation by Depot Location is estimated as follows:
The per-location cost estimates set forth above are preliminary and are subject to refinement based on final engineering, site surveys, and permitting requirements. Any adjustments to per-location estimates shall not alter the aggregate sixty/forty (60/40) cost-sharing allocation unless the Parties agree otherwise in writing.
Section 3.5 — Rationale for Cost-Sharing Split
The Parties acknowledge that the sixty percent (60%) MTDC / forty percent (40%) Prairie Shore cost-sharing allocation reflects the proportional benefit that each Party derives from the Distribution Upgrades. Specifically:
(a) MTDC, as the primary beneficiary of the new charging capacity, bears the larger share because the Distribution Upgrades are being constructed principally to enable MTDC's fleet electrification program and to deliver the New Load necessary to charge MTDC's battery-electric buses. Without MTDC's electrification initiative, the Distribution Upgrades would not be necessary.
(b) Prairie Shore, as the beneficiary of substantial new permanent load of approximately forty-five megawatts (45 MW), significant rate-base additions, distribution-system enhancements that improve reliability and capacity for the broader service area, and long-term electric sales revenue under Schedule EV-T, bears a meaningful share of the cost reflecting these enduring economic and system benefits.
The Parties further acknowledge that the cost-sharing allocation set forth in this Article III is subject to review and approval by the ICC in Docket No. 23-0214. To the extent the ICC modifies the allocation, the Parties shall negotiate in good faith to amend this Agreement to conform to the ICC's order.
ARTICLE IV — COST ADJUSTMENTS AND TRUE-UP
Section 4.1 — Preliminary Cost Estimates vs. Actual Costs
The Parties acknowledge that the Total Upgrade Cost of Twelve Million Three Hundred Thousand Dollars ($12,300,000) is an estimate based on the Interconnection Study and reflects preliminary engineering, prevailing material and labor costs, and assumptions regarding permitting and construction conditions as of the date of the Interconnection Study. Actual costs of the Distribution Upgrades may vary from the estimated Total Upgrade Cost based on, among other factors, final engineering design, unforeseen site conditions, changes in material or equipment prices, permitting requirements, labor availability and costs, weather conditions, and other construction contingencies.
Section 4.2 — Cost Overruns
(a) If the actual Total Upgrade Cost exceeds the estimated Total Upgrade Cost of $12,300,000 by an amount up to and including ten percent (10%) of the estimated Total Upgrade Cost (i.e., up to One Million Two Hundred Thirty Thousand Dollars ($1,230,000), for a total actual cost of up to $13,530,000), such cost overrun shall be allocated between the Parties on the same sixty percent (60%) MTDC / forty percent (40%) Prairie Shore basis as set forth in Article III. Prairie Shore shall promptly notify MTDC in writing when it becomes aware that actual costs are reasonably likely to exceed the estimated Total Upgrade Cost, together with a detailed explanation of the reasons for the anticipated overrun.
(b) If the actual Total Upgrade Cost exceeds the estimated Total Upgrade Cost by more than ten percent (10%) but not more than fifteen percent (15%) (i.e., the overrun exceeds $1,230,000 but does not exceed $1,845,000, for a total actual cost between $13,530,001 and $14,145,000), the Parties shall negotiate in good faith regarding the allocation of such excess overrun amounts. Either Party may seek guidance from the ICC regarding the appropriate allocation of cost overruns exceeding ten percent (10%) of the estimated Total Upgrade Cost.
(c) If the actual Total Upgrade Cost exceeds the estimated Total Upgrade Cost by more than fifteen percent (15%) (i.e., the overrun exceeds $1,845,000, for a total actual cost exceeding $14,145,000), either Party shall have the right to terminate this Agreement pursuant to Section 10.5, subject to the provisions of Section 10.6 regarding the effect of termination.
Section 4.3 — Cost Underruns
If the actual Total Upgrade Cost is less than the estimated Total Upgrade Cost of $12,300,000, each Party shall benefit proportionally from the cost savings in accordance with the sixty percent (60%) MTDC / forty percent (40%) Prairie Shore cost-sharing allocation. MTDC's aggregate payment obligation shall be reduced to sixty percent (60%) of the actual Total Upgrade Cost, and Prairie Shore's aggregate funding obligation shall be reduced to forty percent (40%) of the actual Total Upgrade Cost.
Section 4.4 — True-Up Mechanism
(a) Within ninety (90) days after the completion of all Distribution Upgrades at all three Depot Locations and the issuance of the final Milestone Completion Certificate for Milestone 4 (Final Completion) under Exhibit D, Prairie Shore shall prepare and deliver to MTDC a final cost reconciliation statement (the "True-Up Statement"). The True-Up Statement shall set forth, in reasonable detail, the actual Total Upgrade Cost, a breakdown of actual costs by Depot Location and by major cost category (engineering, equipment, construction labor, permits, and other), the aggregate amount paid by MTDC, and the true-up payment (if any) due from or to MTDC.
(b) MTDC shall have thirty (30) days from receipt of the True-Up Statement to review the statement and provide written notice to Prairie Shore of acceptance or of any objections. If MTDC does not provide written notice of objection within such thirty-day period, the True-Up Statement shall be deemed accepted. If MTDC provides timely written notice of objection, the Parties shall negotiate in good faith to resolve any disputed items within an additional thirty (30) days. Any disputed items that remain unresolved after such period shall be submitted for resolution in accordance with Article XIV.
(c) Any true-up payment due from either Party to the other shall be made within thirty (30) days of acceptance (or deemed acceptance) of the True-Up Statement, or within thirty (30) days of resolution of any disputed items, as applicable.
ARTICLE V — PAYMENT SCHEDULE
Section 5.1 — MTDC Payment Schedule
MTDC's total payment obligation of Seven Million Three Hundred Eighty Thousand Dollars ($7,380,000) (the MTDC Share, subject to adjustment pursuant to Article IV) shall be paid to Prairie Shore in installments tied to the following construction milestones, as further detailed in Exhibit C:
(a) Milestone 1 — Notice to Proceed: Twenty percent (20%) of the MTDC Share, equal to One Million Four Hundred Seventy-Six Thousand Dollars ($1,476,000), shall be due and payable upon the satisfaction (or waiver) of all Conditions Precedent set forth in Article VII and the issuance by Prairie Shore of a Notice to Proceed for the Distribution Upgrades.
(b) Milestone 2 — 50% Completion: Thirty percent (30%) of the MTDC Share, equal to Two Million Two Hundred Fourteen Thousand Dollars ($2,214,000), shall be due and payable upon certification by Prairie Shore, in the form of a Milestone Completion Certificate substantially in the form attached as Exhibit D, that fifty percent (50%) of the Distribution Upgrades have been completed as measured by the Construction Schedule.
(c) Milestone 3 — Substantial Completion: Thirty percent (30%) of the MTDC Share, equal to Two Million Two Hundred Fourteen Thousand Dollars ($2,214,000), shall be due and payable upon certification by Prairie Shore, in the form of a Milestone Completion Certificate, that the Distribution Upgrades have been substantially completed. "Substantial completion" means that the Distribution Upgrades are sufficiently complete to enable the delivery of the New Load to each Depot Location, notwithstanding minor punch-list items that do not materially affect functionality or safety.
(d) Milestone 4 — Final Completion and True-Up: Twenty percent (20%) of the MTDC Share, equal to One Million Four Hundred Seventy-Six Thousand Dollars ($1,476,000), shall be due and payable upon (i) final completion of all Distribution Upgrades, including all punch-list items, (ii) MTDC's acceptance of the Distribution Upgrades at each Point of Interconnection, and (iii) completion of the cost true-up process described in Section 4.4. The Milestone 4 payment shall be adjusted to reflect any true-up amounts due pursuant to Article IV.
Each milestone payment shall be due within thirty (30) days of Prairie Shore's submission to MTDC of the applicable Milestone Completion Certificate and supporting invoices, in accordance with the requirements set forth in Exhibit C. MTDC shall not be obligated to make any milestone payment unless and until it has received a properly completed Milestone Completion Certificate and reasonably detailed supporting invoices and documentation.
Section 5.2 — Prairie Shore Investment
Prairie Shore's total funding obligation of Four Million Nine Hundred Twenty Thousand Dollars ($4,920,000) (the Prairie Shore Share, subject to adjustment pursuant to Article IV) shall be funded from Prairie Shore's capital expenditure budget. Prairie Shore shall be responsible for ensuring that adequate funds are committed and available to complete the Distribution Upgrades in a timely manner. Prairie Shore acknowledges that it may seek to include its share of the Distribution Upgrades in its rate base in future rate proceedings before the ICC, subject to ICC review and approval, and that the inclusion of such amounts in rate base is not a condition of this Agreement and shall not affect Prairie Shore's obligations hereunder.
Section 5.3 — Late Payments
Any payment due under this Agreement that is not received by the applicable due date shall bear interest from and after the due date at a rate equal to the prime rate as published in The Wall Street Journal on the first business day of the month in which payment was due, plus two percent (2%) per annum, compounded monthly, until paid in full. The payment of interest on late payments shall not constitute a waiver of any other rights or remedies available to the non-defaulting Party under this Agreement or applicable law.
Section 5.4 — Disputed Amounts
In the event of a bona fide dispute regarding any amount payable under this Agreement, the undisputed portion of the amount shall be paid when due. The Party disputing any portion of an invoice or payment request shall provide written notice to the other Party specifying in reasonable detail the basis for the dispute within the applicable payment period. The Parties shall use good-faith efforts to resolve any payment dispute promptly. If the Parties are unable to resolve a payment dispute within sixty (60) days of written notice, either Party may seek resolution through the dispute resolution procedures set forth in Article XIV, including, where applicable, a determination by the ICC.
ARTICLE VI — CONSTRUCTION RESPONSIBILITIES
Section 6.1 — Prairie Shore as Constructing Party
Prairie Shore shall be responsible for the design, engineering, procurement, construction, testing, and commissioning of all Distribution Upgrades on Prairie Shore's distribution system, from the substation level through and including each Point of Interconnection. Prairie Shore shall perform the Distribution Upgrades in a good and workmanlike manner, in accordance with applicable industry standards, prudent utility practice, applicable codes and regulations, and the engineering specifications set forth in the Interconnection Study and Exhibit A.
Prairie Shore shall have the right to engage qualified contractors and subcontractors to perform portions of the Distribution Upgrades, provided that Prairie Shore shall remain solely responsible for the work of its contractors and subcontractors. MTDC shall have the right to be consulted regarding Prairie Shore's selection of major contractors and subcontractors for the Distribution Upgrades, but MTDC shall not have the right of approval over such selections.
Section 6.2 — MTDC Construction Obligations
MTDC shall be solely responsible for all site preparation and civil work at the Depot Locations that is necessary to accommodate the Points of Interconnection, including grading, paving, foundation work, conduit stubs, and related site improvements. MTDC shall coordinate the timing and sequencing of its site preparation work with Prairie Shore's Construction Schedule to ensure that each Depot Location is ready to receive Prairie Shore's Distribution Upgrades at the applicable milestone date.
MTDC shall also be solely responsible for the design, procurement, installation, testing, commissioning, operation, and maintenance of all Charging Infrastructure on the MTDC side of each Point of Interconnection, as further described in Section 2.3 of this Agreement.
Section 6.3 — Construction Timeline
The Construction Schedule for the Distribution Upgrades is set forth in Exhibit B. The target date for substantial completion of all Distribution Upgrades shall be no later than [__], 2024, contingent upon (a) timely satisfaction of the Conditions Precedent set forth in Article VII, (b) continued availability of the FTA Grant, (c) timely receipt of all required permits and regulatory approvals, and (d) the absence of force majeure events. The Construction Schedule shall be coordinated with MTDC's Phase 1 bus delivery schedule and Charging Infrastructure installation timeline to ensure that the Distribution Upgrades are completed in advance of or concurrent with the arrival of MTDC's battery-electric buses.
Prairie Shore shall use commercially reasonable efforts to complete the Distribution Upgrades in accordance with the Construction Schedule. In the event that Prairie Shore anticipates a delay of more than thirty (30) days beyond any milestone date in the Construction Schedule, Prairie Shore shall promptly notify MTDC in writing, specifying the reason for the delay, the expected duration, and any proposed mitigation measures.
Section 6.4 — Coordination
The Parties shall designate the following individuals as their respective project managers for purposes of coordinating the design, engineering, and construction of the Distribution Upgrades and the Charging Infrastructure:
(a) MTDC Project Manager: Raymond K. Mosley, Director of Capital Programs, Metropolitan Transit Development Corporation, 200 West Adams Street, Suite 2400, Chicago, Illinois 60606.
(b) Prairie Shore Project Manager: Judith A. Engstrom, Vice President, Regulatory Affairs, Prairie Shore Electric Company, 500 North Michigan Avenue, Chicago, Illinois 60611, or her designee.
Each Party may change its project manager by written notice to the other Party. The project managers shall serve as the primary points of contact between the Parties for all matters relating to the construction activities under this Agreement.
The Parties shall hold monthly progress meetings, either in person or by videoconference, to review the status of the Distribution Upgrades, discuss any issues or concerns, coordinate construction schedules and activities, and address any other matters arising under this Agreement. In addition to monthly meetings, Prairie Shore shall provide written progress reports to MTDC on a monthly basis, summarizing the status of the Distribution Upgrades, work completed during the reporting period, anticipated activities for the next reporting period, and any deviations from the Construction Schedule or budget.
Section 6.5 — Permits and Approvals
Each Party shall be responsible for obtaining all permits, licenses, approvals, and regulatory authorizations that are necessary to perform its respective scope of work under this Agreement. Without limiting the generality of the foregoing:
(a) Prairie Shore shall be responsible for obtaining all permits and approvals required for the Distribution Upgrades on Prairie Shore's distribution system, including any municipal permits, building permits, street-opening permits, environmental permits, and utility-specific regulatory approvals.
(b) MTDC shall be responsible for obtaining all permits and approvals required for site preparation work, Charging Infrastructure installation, and other MTDC construction activities at the Depot Locations, including any transit authority permits, municipal permits, building permits, and environmental permits applicable to MTDC's work.
Each Party shall cooperate with the other Party, and shall provide reasonable assistance, in connection with the other Party's efforts to obtain required permits and approvals.
Section 6.6 — Access to Depot Locations
MTDC shall grant Prairie Shore and its authorized contractors and subcontractors reasonable access to the Depot Locations for the purpose of performing the Distribution Upgrades, including surveying, engineering inspections, equipment delivery, construction activities, testing, and commissioning. All access shall be subject to MTDC's operational requirements, safety protocols, and security procedures, as communicated by MTDC's project manager. Prairie Shore and its contractors shall comply with all MTDC rules and regulations applicable to persons and vehicles at the Depot Locations. MTDC shall not unreasonably restrict or delay access to the Depot Locations in a manner that would impede Prairie Shore's ability to complete the Distribution Upgrades in accordance with the Construction Schedule.
ARTICLE VII — CONDITIONS PRECEDENT
Section 7.1 — Conditions Precedent to Effectiveness
This Agreement shall not become effective, and neither Party shall have any binding obligation hereunder (other than the obligations set forth in Article XV (Confidentiality) and Section 16.2 (Entire Agreement), which shall become effective upon execution), until each of the following conditions precedent (collectively, the "Conditions Precedent") has been satisfied or waived in accordance with Section 7.3:
(a) ICC Approval. Receipt of a final, non-appealable order of the ICC in Docket No. 23-0214 approving the interconnection of MTDC's Charging Infrastructure to Prairie Shore's distribution system at the three Depot Locations and approving, or not disapproving, the cost-sharing arrangement set forth in this Agreement, on terms and conditions acceptable to both Parties in their reasonable judgment.
(b) FTA Grant Availability. Continued availability of the FTA Grant (Grant Award Number IL-2023-0067-00) in the amount of Seventy-Eight Million Five Hundred Thousand Dollars ($78,500,000) under 49 U.S.C. § 5339(c), and receipt by MTDC of written confirmation from the FTA that grant funds remain obligated and available for disbursement for Phase 1, including the Charging Infrastructure components thereof.
(c) Schedule EV-T Approval. Approval by the ICC of Prairie Shore's proposed Schedule EV-T (Electric Vehicle — Transit) rate schedule, or a substantially similar tariff governing electric service to MTDC's Charging Infrastructure at the Depot Locations, providing for a blended rate of approximately $0.062 per kilowatt-hour (kWh), on terms and conditions acceptable to both Parties in their reasonable judgment.
(d) MTDC Board Approval. Formal authorization by the MTDC Board of Directors, acting at a duly convened meeting, to execute this Agreement and to expend the MTDC Share from MTDC's capital program budget, in accordance with MTDC's governing statutes, bylaws, and applicable procurement regulations.
(e) Prairie Shore Board Approval. Formal authorization by the Board of Directors of Prairie Shore Electric Company, acting at a duly convened meeting, to execute this Agreement and to commit to funding the Prairie Shore Share from Prairie Shore's capital expenditure budget.
(f) Interconnection Application. Prairie Shore's acceptance of MTDC's interconnection application for the New Load at each Depot Location, in accordance with Prairie Shore's applicable interconnection procedures and standards, and confirmation by Prairie Shore that its distribution system can accommodate the New Load upon completion of the Distribution Upgrades.
(g) Environmental Approvals. Receipt of all required environmental clearances, permits, and approvals necessary for the construction of the Distribution Upgrades, including any approvals required under applicable federal, state, and local environmental laws and regulations, including the National Environmental Policy Act (42 U.S.C. § 4321 et seq.) to the extent applicable to the FTA-funded portions of Phase 1, and the Illinois Environmental Protection Act (415 ILCS 5).
Section 7.2 — Deadline for Satisfaction
All Conditions Precedent set forth in Section 7.1 must be satisfied or waived on or before [__], 2024 (the "Outside Date"). If all Conditions Precedent have not been satisfied or waived by the Outside Date, either Party may terminate this Agreement by written notice to the other Party in accordance with Section 10.1, and, upon such termination, neither Party shall have any further obligation to the other Party under this Agreement, except as set forth in Section 10.6.
Section 7.3 — Waiver of Conditions
Any Condition Precedent may be waived only by the Party or Parties for whose benefit such condition exists, by written notice delivered to the other Party. The waiver of any Condition Precedent shall not constitute a waiver of any other Condition Precedent or of any other right or remedy under this Agreement.
(a) Conditions Precedent (a), (c), (f), and (g) exist for the benefit of both Parties and may only be waived by mutual written agreement.
(b) Condition Precedent (b) exists for the benefit of both Parties and may only be waived by mutual written agreement.
(c) Condition Precedent (d) exists for the benefit of MTDC and may be waived solely by MTDC.
(d) Condition Precedent (e) exists for the benefit of Prairie Shore and may be waived solely by Prairie Shore.
ARTICLE VIII — REPRESENTATIONS AND WARRANTIES
Section 8.1 — Mutual Representations and Warranties
Each Party hereby represents and warrants to the other Party, as of the date of execution of this Agreement, as follows:
(a) Organization and Good Standing. It is duly organized, validly existing, and in good standing under the laws of the State of Illinois, and has all requisite power and authority to own, lease, and operate its properties and assets and to carry on its business as presently conducted.
(b) Authority. It has full corporate, governmental, or other organizational power and authority to enter into this Agreement and to perform its obligations hereunder. The execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate, governmental, or other organizational action, subject to the satisfaction of the Conditions Precedent set forth in Article VII.
(c) No Conflicts. The execution, delivery, and performance of this Agreement do not and will not (i) violate any provision of its organizational documents, (ii) violate, conflict with, result in a breach of, or constitute a default under any law, statute, regulation, rule, order, judgment, decree, or injunction applicable to it, or (iii) violate, conflict with, result in a breach of, constitute a default under, or require the consent of any party to, any material contract, agreement, or instrument to which it is a party or by which it or its assets are bound.
(d) Enforceability. This Agreement, when duly executed and delivered by both Parties and upon satisfaction of the Conditions Precedent, constitutes (or will constitute) a valid and binding obligation of such Party, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
Section 8.2 — MTDC Representations and Warranties
MTDC hereby represents and warrants to Prairie Shore, as of the date of execution of this Agreement, as follows:
(a) Status. MTDC is an Illinois municipal corporation and public transit authority duly created and existing under the Metropolitan Transit Development Act, 70 ILCS 3615, with the statutory authority to acquire, construct, operate, and maintain a public transportation system, and to enter into contracts and agreements necessary and convenient to carry out its statutory purposes.
(b) FTA Grant. The FTA Grant (Grant Award Number IL-2023-0067-00) was awarded to MTDC by the FTA on January 9, 2023, in the amount of Seventy-Eight Million Five Hundred Thousand Dollars ($78,500,000), under the Low- and No-Emission Vehicle Program, 49 U.S.C. § 5339(c). To MTDC's knowledge, as of the date of this Agreement, the FTA Grant remains in full force and effect and has not been rescinded, suspended, or materially modified.
(c) Local Match. MTDC has identified and committed to providing the local match of Nineteen Million Six Hundred Twenty-Five Thousand Dollars ($19,625,000) required under the FTA Grant, representing twenty percent (20%) of the Total Project Cost.
(d) ICC Filing. MTDC filed the Verified Petition for Approval of Electrification Infrastructure and Interconnection before the ICC in Docket No. 23-0214 on March 1, 2023, and, to MTDC's knowledge, such petition is pending before the ICC in due course.
(e) Consultants. MTDC has engaged Creston Engineering Group, Inc. to prepare the Interconnection Study and has engaged Dralvecen Reade & Co. to prepare the grant compliance and rate-impact analysis in connection with Phase 1 and the ICC proceeding in Docket No. 23-0214.
(f) Financial Capacity. MTDC's fiscal year 2023 operating budget is approximately One Billion Four Hundred Twenty Million Dollars ($1,420,000,000). MTDC has sufficient financial capacity to fund the MTDC Share from its capital program budget, subject to satisfaction of the Conditions Precedent.
(g) Financial Statements. MTDC's most recent audited financial statements, prepared by Fielding & Calloway CPAs, LLC, present fairly, in all material respects, the financial position of MTDC as of the date of such statements, in conformity with generally accepted accounting principles as applied to governmental entities.
Section 8.3 — Prairie Shore Representations and Warranties
Prairie Shore hereby represents and warrants to MTDC, as of the date of execution of this Agreement, as follows:
(a) Status. Prairie Shore is an investor-owned electric utility duly organized and existing under the laws of the State of Illinois, authorized to provide electric distribution and delivery services in its service territory, and regulated by the ICC under the Illinois Public Utilities Act, 220 ILCS 5.
(b) Technical and Financial Capacity. Prairie Shore has the technical expertise, qualified personnel, and financial capacity to design, engineer, procure, construct, test, commission, and complete the Distribution Upgrades in accordance with the terms of this Agreement, the Interconnection Study, and applicable industry standards and regulatory requirements.
(c) Standards of Performance. The Distribution Upgrades will be designed and constructed in accordance with applicable industry standards, including those of the National Electrical Safety Code (NESC), the Institute of Electrical and Electronics Engineers (IEEE), and the National Fire Protection Association (NFPA), as well as Prairie Shore's own engineering and construction standards, prudent utility practice, and all applicable federal, state, and local codes, regulations, and requirements.
(d) Schedule EV-T Filing. Prairie Shore will file for ICC approval of Schedule EV-T (Electric Vehicle — Transit) in connection with the proceeding in Docket No. 23-0214, and will use commercially reasonable efforts to support the approval of Schedule EV-T or a substantially similar tariff.
ARTICLE IX — INDEMNIFICATION