Wallingford settlement with CMEEC by Record Journal

IN ARBITRATION AT JAMS __________________________________________ ) TOWN OF WALLINGFORD, CT, DEPT OF ) PUBLIC UTILITIES, ELECTRIC DIVISION, ) Claimant ) ) and ) Case # 1400015484 ) CONNECTICUT MUNICIPAL ELECTRIC ) ENERGY COOPERATIVE, ) Respondent ) __________________________________________)

FINAL AWARD [ORDER No. 23] May 1, 2019 This arbitration was initiated on April 14, 2015 by Claimant Town of Wallingford, Connecticut, Department of Public Utilities, Electric Division (“Wallingford” or “WED”) against Respondent Connecticut Municipal Electric Energy Cooperative (“CMEEC”), and memorialized in a Supplemental Arbitration Agreement executed on July 24, 2015. Claimant Wallingford is represented by Town Attorney Gerald E. Farrell, Sr., Corporation Counsel Janis M. Small, and the firm of McCarter & English, LLP by Robert A. O’Neil, Kimberly B. Frank, Denise C. Goulet, and Shawn Smith. Respondent CMEEC is represented by General Counsel Robin Kipnis, Special Counsel Philip L. Sussler, and the firm of Spiegel & McDiarmid, LLP by Scott H. Strauss, Jeffrey A. Schwarz, and Anjali G. Patel. All in-person hearings were held at the offices of McCarter & English, LLP at 185 Asylum St., in Hartford, Connecticut.

I. PROCEDURAL HISTORY Following a discovery process/ information exchange during the fall of 2015 and early 2016, both parties filed summary disposition motions on March 15, 2016. Their Responses were filed April 29, 2016, a hearing on the motions was held on June 20th, and short post-hearing memos were filed on July 12th. Several subsequent filings regarding Errata were addressed in Order No. 4 dated August 10, 2016. An initial Interim Award addressing the partiesâ&#x20AC;&#x2122; summary disposition requests was entered on September 15, 2016. Following additional filings, including September 21 and 27 memos regarding the estimated financial impact of various summary disposition requests, a Corrected Interim Award was entered on September 28, 2016. Additional party filings were received on October 18th, an additional hearing was held on October 20th, and the parties filed further memoranda on October 31, 2016. An Expanded Interim Award Regarding Summary Disposition (Order No. 8) was issued December 19, 2016. Following the finalization of summary disposition rulings, Wallingford filed a January 16, 2017 Motion to Compel CMEEC responses to certain discovery. CMEEC responded on January 17, 2017. Wallingfordâ&#x20AC;&#x2122;s January 20 Answer included a request for clarification of Order Nos. 5 and 8 regarding certain issues, to which CMEEC responded on February 2, 2017. Order No. 9 (dated January 12, 2017) requested a CMEEC status report regarding its provision of true-up statements for 2014 and 2015, its calculation of MOA true-up amounts for the period January 2014 through November 2016, and certain additional information. CMEEC and Wallingford both responded to Order No. 9 on January 20, 2017.

Order No. 10 (January 23, 2017) directed CMEEC to provide annual true-up statements under the MOA and Springing Contracts. CMEEC complied on January 24, 2017 and filed updated statements on February 28, April 17 and 18, and May 12, 2017. A further prehearing conference was held on January 25, 2017. The following day, Order No. 11 set forth the procedural schedule for submission of pre-filed testimony and the hearing start date. On February 9th, the parties each filed lists of issues remaining for hearing; Wallingford responded to CMEEC’s list on February 13, 2017. Order No. 12 (February 22, 2017) clarified rulings in Order Nos. 5 and 8. Order No. 13 (March 22, 2017) further clarified the remaining hearing issues. After Wallingford filed its Direct Testimony and exhibits on April 14, 2017, CMEEC filed a Motion to Dismiss (on April 24, 2017) regarding certain issues raised by this direct testimony. Wallingford responded on April 26, 2017, CMEEC answered on April 27, 2017, and the motion was rejected in its entirety on April 28, 2017. After CMEEC filed its Direct Testimony and Exhibits on May 22, 2017, it submitted its Information Sharing Counter-Proposal on May 26, 2017. Wallingford submitted Rebuttal Testimony on June 7, 2017 and responded to CMEEC’s Information Sharing CounterProposal on June 13, 2017. On June 16, 2017, CMEEC submitted several revised exhibits, and Wallingford submitted both revised direct expert testimony and several revised exhibits. Wallingford also submitted a Motion for Appropriate Relief regarding confidentiality, seeking to lift the Protective Order regarding CMEEC’s confidential designation for materials produced in discovery and pleadings. CMEEC responded on July 10, 2017, Wallingford answered on July 18, 2017, and Order No. 16 (July 31, 2017) denied Wallingford’s motion.

The evidentiary hearing commenced on June 19, 2017 in Hartford and continued through June 22, 2017. After the hearing, the parties filed Initial Post-Hearing briefs on August 9, 2017 and Reply briefs on September 11, 2017. On October 18, 2017, Wallingford “removed an issue from contention” by agreeing that it would treat as confidential CMEEC true-up process information designated as exempt from FOIA disclosure, until such time as CMEEC waived confidentiality or the state FOI Commission ruled it to be subject to disclosure. After post-hearing briefing, the parties stated differing perspectives on the necessity for, and scope of, closing argument, but expressed a joint willingness to respond to arbitrator posthearing questions. For purposes of the arbitration agreement’s sixty-day post-hearing time limit on issuance of a Final Award, counsel stipulated on October 20, 2017 that the hearing would be deemed concluded at such time as the arbitrator issued an order to that effect. On November 20, 2017, to help narrow the issues to be addressed in closing argument, the arbitrator posed a series of written questions to counsel. The parties responded on December 1, 2017. A continuation of the in-person hearing occurred on January 17, 2018, following which (on January 24, 2018) the parties submitted a joint proposed “process to explore settlement of … arbitration issues” to conclude with a status report on February 20, 2018. Following a brief telephonic hearing on January 29, 2018, the settlement process began. On February 20, 2018 and again on March 29 and April 3rd, the parties jointly requested further time extensions. On April 6, 2018 they reported that their settlement efforts had been unsuccessful and requested “that the arbitration proceed to conclusion.”

After an April 23, 2018 counsel-only call, the parties jointly requested on April 27, 2018 the issuance of an Interim Award, to be followed by a “compliance phase,” after which a Final Award would be issued. They also agreed and requested confirmation that the 60-day period for issuance of the Final Award not begin to run until after issuance of an explicit order indicating that the hearing was concluded and further, that “the thirty-day clock on initiating judicial process to confirm or vacate the Final Award or any portion thereof will not commence until” the issuance of a clearly-denoted Final Award. This joint party request is hereby granted. The Post-Hearing Partial Interim Award (PIA) [Order #18] requested by the parties was issued on May19, 2018. It included in a single integrated document earlier summary disposition rulings and post-hearing rulings on issues contested during the evidentiary portion of the hearing. It also included both the “statement of the reasons for” the rulings required by the parties’ arbitration agreement (15.3), and the separate list of findings of fact and conclusions of law it calls for. The findings and conclusions supplement the statement of reasoning. Together they constituted a single integrated explanation, so that no inference could be drawn if a ruling or explanation appeared in one but not the other. Pursuant to directives in the Post-Hearing PIA, CMEEC submitted its Compliance Filing on July 9, 2018, Wallingford submitted its Comments on CMEEC’s Filing on September 7, 2018 and CMEEC responded to Wallingford’s Comments on October 15, 2018, after which the parties jointly requested leave to participate in further technical conferences. On November 14, 2018, Wallingford requested a brief enlargement of filing time due in part to its reviewing justunsealed federal Grand Jury indictments charging CMEEC’s CEO, CFO, and several current and former CMEEC Board Members with several federal crimes. On November 23rd, Wallingford commented on CMEEC’s September 7 filing, and on November 29, 2018 CMEEC responded.

A Partial Interim Award re Compliance [Order #20] was issued on January 29, 2019. In February 2019, the parties made submissions relating to the granting of interest and CMEEC’s reconsideration request of the ruling related to the treatment of Bozrah Power & Light load. On March 13, 2019, Order #22 provided Compliance Clarification Rulings. On March 22, 2019, counsel communicated that the parties had reached a “comprehensive settlement,” subject only to documentation and final approval by their respective governing bodies. Counsel indicated that, after approval and execution, the settlement agreement would be jointly submitted for inclusion in the record. On April 12, 2019 the parties reported agreement on the wording of their Settlement Agreement and the expected timeline for approvals by their governing bodies. On April 26, 2019, counsel submitted for the record the fully-executed Settlement Agreement and Release between Wallingford and CMEEC (“Settlement Agreement”). It is incorporated below and is the basis for the Final Order in this proceeding.

This FINAL AWARD includes below and incorporates he following sections: II. Summary Disposition Rulings [on eight issues] [p. 7] III. Post-Evidentiary-Hearing Rulings [p. 35] IV. Findings and Conclusions [p. 58] V. Interim Order re Post-Ruling Steps [p. 79] VI. Partial Interim Award, Findings, and Order re Compliance [p. 81] VII. Compliance Clarification Rulings [p. 88] VIII. The Parties’ Settlement Agreement and Release [p. 94] IX. FINAL ORDER [p. 98]

II. SUMMARY DISPOSITION RULINGS In consideration of all of the party filings described above and all October 20, 2016 hearing arguments, the Expanded Interim Award regarding summary disposition (Order No. 8), incorporated herein directly below, replaced and expanded the rulings set forth previously in September 28, 2016 Corrected Order No. 5. WED and CMEEC each request summary disposition rulings on four issues. Wallingford requests summary disposition rulings as follows: 1-that CMEEC be required to provide annual true-up statements, with cost allocations based on services provided, and be ordered to produce such statements for calendar years 2012 and 2013; 2-that CMEEC provide information indicating the basis for its charges, that it allow WED to audit its records and that, during future dispute resolution processes, it provide good faith responses and conduct reasonablyrequested studies; 3-that WED’s NYPA (New York Power Authority) power allocation and RILGC (Rhode Island Landfill Gas Contract) be declared not to be “energy-only Forward Products” and that RILGC-related charges be discontinued and past payments be refunded; and 4that Bozrah (Bozrah Light & Power) and MTUA (Mohegan Tribal Utility Authority)-related revenues be credited against Fixed Costs. CMEEC also requests four summary disposition rulings as follows: 1-that WED be barred from challenging bills rendered more than eleven months prior to its initiating this arbitration; 2that WED is not entitled to crediting or return of its debt-service-coverage payments; 3-that WED’s allocation of CMARS3 costs is appropriate; and 4-that WED is not entitled to crediting of nonmember sales revenues after January 1, 2013.

Based on review of all of the parties’ filings, and on counsel’s argument at the June 20th and October 20th Hartford pre-hearing conferences, each party’s summary disposition motions are granted in part, denied in part, and deferred in part, as set forth more specifically below. The order in which the motions are discussed is initially based on the likely size of their impact on shaping the scope or focus of the hearing on the merits, and then on the basis of the timing of the issue having arisen. 1. Annual post-audit true ups. A significant number of issues in this proceeding relate to whether CMEEC is required to perform annual post-audit true ups under the various agreements between Wallingford and CMEEC (the PSA, the MOA, and the Springing Contracts) and whether allocated costs must be related to services rendered, including under the Pierce Project and MicroGen Agreements. Indeed, in its Post-Oral Argument Memorandum (POAM) requesting a summary ruling on this issue, Wallingford characterizes this as “the single most significant issue in this arbitration.” Accordingly, it is addressed first. The PSA. It is clear that one provision of the PSA, paragraph four of Section 4.1, provides for an annual post-audit true-up. The fourth paragraph of Section 4.1 states directly that Within thirty (30) days after the completion of CMEEC’s annual audit … CMEEC will furnish Wallingford a statement of the aggregate Fixed Costs and Revenue Requirements for the previous Year and any adjustments or credits thereto, and …if …the actual Fixed Costs and Revenue Requirements … and any adjustments or credits thereto exceed or are less than the estimate thereof … the amount of the deficiency or excess in Fixed Costs shall be added or credited … to Wallingford’s monthly statements … [emphasis added]. Wallingford contends, and CMEEC largely agrees, that similarly-worded requirements are found in the MOA (Section 3 and the A&G Component in Rate 9 Section 3) and in the Springing Contracts (Pierce Project and 50 in 5 or MicroGen). Despite the undisputed clarity of this language (which Wallingford’s POAM characterizes as “the Unambiguous Terms of the Contracts”), CMEEC readily acknowledges that it “has never 8

performed an annual, post-audit cost reallocation.” And Wallingford concurs that the Section 4.1 procedure of providing annual statements was never followed, and that no annual true up ever occurred during the nine years from the parties’ 2004 signing of the PSA until the contract ended in 2013. These nine years included time periods during which Wallingford representatives to the CMEEC Board occupied CMEEC leadership positions, including as members of the CMEEC Board’s Budget and Finance Committee, and even as the CMEEC Board Chair (2005-06). Indeed, Wallingford acknowledges that it did not itself request that post-audit statements be provided and an annual subsequent true-up occur until after it began to consider whether it should source its power supply to a source other than CMEEC. The explanation for why the parties jointly ignored an “unambiguous term” for so many years is clear and unambiguous from other language in the contract itself. The first sentence of the first paragraph of PSA Section 4.1 (the same Section whose fourth paragraph contains the “annual statement” provision relied upon by Wallingford) provides that Wallingford shall pay CMEEC for all Electric Products delivered each month pursuant to the terms of this Contract at the rates, charges or formulae for payment and the terms and conditions as set forth in Rate 9 which is included as Attachment 13…. (emphasis added). Thus, the PSA explicitly incorporates Rate 9 within it by reference. Under Rate 9, Wallingford was billed in accordance with the same rate schedule and procedures that applied to CMEEC member municipalities, including specifically Section 8 of Rate 9, which provides that: Deviations between collections under this Rate Schedule and the Seller’s [CMEEC’s] actual expenses will be reconciled through a month–to-month or a year-to-year prospective true-up as appropriate” [emphasis added] PSA Section 4.1, by incorporating Rate 9 within it, provides in essence two alternative methods for true-ups to be performed, monthly or annually. Not surprisingly, since CMEEC’s true-up procedure for both Wallingford and its member municipalities had been a monthly process for 9

several years prior to the PSA, it chose to continue with its monthly, rather than an annual, trueup process. The PSA Section 4.1 provision in its fourth paragraph providing for an annual statement following an annual audit is an indication of the procedure to be followed in the event that an annual true-up is performed. The Section 4.1 first paragraph Rate 9 provision authorizing the monthly true-up alternative makes no reference to an annual statement. Thus the integrated PSA contract does not require an annual statement in the event that true-ups are performed monthly rather than annually. WED representatives were of course completely aware that CMEEC never provided an annual statement, but was instead providing monthly, rather than annual, true-ups, and WED officials never protested this. Although the record indicates a variety of WED inquiries over many years about a variety of CMEEC billing practices and charges, the record includes no indication of WED ever having objected to monthly versus annual true-ups. On the contrary, it indicates instances of Wallingford representatives citing the monthly true-up practice explicitly, including for example in a January 2011 report to the Wallingford PUC which stated that “CMEEC bills us an estimate based on their budget and then true-up for the previous month.” With regard to these many years of WED officials’ course of dealing of not challenging the monthly true-up process or the absence of an annual statement, Wallingford contends that its officials’ conduct did not constitute consent to a PSA amendment. Its POAM states that “the parties [never] agreed that the [monthly] Rate 9 Rider true-up language is a substitute for … the PSA [annual] true-up requirement.” It also states that CMEEC cannot prove that the Town of Wallingford “officially assented” [emphasis in original] to any course of dealing by WED officials, which assent could only be provided “at authorized meetings duly held.” This argument is

inapposite. The issue is not whether WED officials’ behavior in the years following the signing of the PSA constituted an unauthorized amendment to the PSA. In 2004, when the integrated PSA was signed, its clear terms already provided for the alternatives of monthly or annual true-ups, as well as the lack of a requirement for an annual statement in the event that monthly true-ups were provided. The relevance of subsequent WED official behavior is not whether the behavior constituted consent to an amendment of the PSA (authorized or not), but rather whether the courseof-dealing confirmed a clear mutual understanding of the meaning of the original 2004 fullyintegrated contract. Even if that were not the case, WED is a sophisticated business entity with a $70 million budget that serves 45,000 customers.

Its leaders are able, sophisticated business persons,

knowledgeable about business interactions and the importance of stability and long-term contracts in the electric industry. It would be a disservice to them, and a major alteration in normal business practices, to rule in effect that none of their actions could be relied upon by Wallingford’s business partners unless accompanied by a formal certification of municipal authorization at an official meeting duly held. In their official capacities, WED officers are authorized to act, and have acted, on the Town’s behalf. The parties’ course of dealing over many years following the execution of the integrated PSA contract is a powerful indicator of the parties’ mutual intent regarding the meaning of their contract at the time they signed it. Their actions indicate their interpretation of “as appropriate,” as it pertained to monthly versus annual true-ups. The parties’ mutual actions indicate their mutual agreement that monthly true-ups were “appropriate” and consistent with their contractual intent, and that an annual statement was therefore not required so long as monthly true-ups occurred.

Accordingly, WED’s request for a ruling that the PSA contractually requires an annual statement and true-up was DENIED in the September 28, 2016 Interim Award: Summary Disposition Rulings [Order No. 5]. In part because Wallingford’s POAM indicated that “the MOA true-ups concern declining sales volumes through 2017,” and that “the monetary implication of the [true-up requirement] issue related to the Springing Contracts is many orders of magnitude greater than the issues associated with the PSA or the MOA,” Order No. 5 provided leave for the parties to provide additional information later in the arbitration regarding this issue under the MOA and Springing Contracts. This leave was also granted in part to afford Wallingford a further opportunity to make its case for a favorable summary disposition ruling under the provisions of the MOA and Springing Contracts. The parties were invited to file memoranda on October 18, 2016 regarding how the holding in the September Interim Award regarding the PSA applied to MOA and Springing Contracts requirements, if at all. In its October 18 memorandum, Wallingford stated incorrectly that the September Interim Award PSA ruling was based on parole evidence. In fact, as hopefully clarified in this Expanded Interim Award in the preceeding paragraphs, the PSA ruling is rather based squarely in the unambiguous words of the fully integrated PSA contract, which explicitly incorporated Rate 9 by reference as its Attachment 13.

The ruling did however accept as truthful the uncontested

representations of counsel for both parties that no annual statement had ever been provided, and that the absence of one had never been contested until after Wallingford initiated its consideration of obtaining its electric supply from a source other than CMEEC. Hopefully an arbitrator may rely on the truthfulness of representations when counsel for opposing parties attest to the same uncontested fact.

A second element in Wallingford’s October 18 memorandum also misconceives the September Interim Award PSA ruling where it states that WED’s “past failure to require annual true-ups should not operate as a bar to enforcing its PSA contract right to annual true-ups….” As explained in the September Interim Award ruling, the provisions of the integrated PSA do not grant WED a contract right to annual true-ups or an annual statement except in the event that the alternative, monthly true-ups, are not provided, (which no party is contending to be the case). Accordingly, the September Interim Award holding that the PSA does not require an annual statement or annual true-ups, so long as monthly true-ups are provided, is AFFIRMED. The MOA. Based on consideration of the parties’ post-Order No. 5 filings and their October 20 hearing presentations, Wallingford’s request for a summary disposition ruling that the MOA requires an annual statement and annual true-up is addressed next. The MOA itself is a brief document, about three pages long with only six paragraphs. It was executed in February 2012 while PSA Amendment No.5 was being negotiated, and the parties agree that it took effect on January 1, 2014 after the PSA terminated on December 31, 2013. It applies to the four calendar years 2014 through 2017. Paragraph 6 provides that billing and payment under the MOA shall be performed “in a manner consistent with the terms of the Original Contract, and all applicable provisions therein.” The Original Contract includes the PSA and its explicit incorporation by reference of Rate 9. Rate 9, which contains the Section 8 monthly or annual true-up provision, is also referred to explicitly nine additional times in the six-paragraph MOA. It is beyond dispute that, when the MOA was executed, it was the mutual intent of the parties that Rate 9 would apply. A little more than a year after the MOA was executed, Wallingford evolved from considering alternative energy sources to giving formal notice in May 2013 that it would definitely be purchasing its primary electric supply elsewhere. Senior representatives of both parties met in

July 2013 to seek to clarify how billing would occur during what the Wallingford notice had converted into a shorter-term, declining-volume contract. In an effort to clarify how the MOA term “usage-related” would be interpreted, and to streamline and simplify procedures during the four-year MOA transition period, CMEEC proposed two alternative budget-based formulas upon which Wallingford might be billed, one of which provided for lower Wallingford monthly payments. Not surprisingly, Wallingford chose the lower monthly payments option. Although CMEEC internally considered the adoption of a budget-based formula to be a way to enable it to dispense with the administrative burden of a true-up process, representatives of all parties concurred at the October 20, 2016 arbitration hearing that this was never stated directly nor addressed explicitly at the parties’ July 2013 meeting. Thereafter, however, CMEEC affirms unambiguously that, starting from the January 1, 2014 MOA effective date, it ceased providing monthly true-ups -- and also did not provide any annual true-ups.

CMEEC contends that

Wallingford’s July 2013 agreement to be billed monthly on the basis of the budget formula constitutes its agreement to, in effect, amend the MOA to eliminate the Rate 9 true-up requirement. No matter how simplifying and administratively desirable it might be to dispense with trueups, and no matter how small the actual economic impact of continuing true-ups might be, the MOA requires that modifications be signed and in writing. There is no evidentiary basis for a legal conclusion that consideration of a one-page July 16, 2013 document labeled “Regarding Forward Energy Contract Administrative Cost,” which is unsigned and upon which the word “trueup” does not appear, can constitute a legally-binding amendment to the parties’ MOA. Indeed, the reason the parties’ multiple contracts provide for true-ups is that Wallingford was regularly billed throughout the PSA period on the basis of budgeted amounts, subject to reconciliation with actual expenditures. In that sense, Wallingford’s July 2013 agreement to be billed monthly on the basis

of a specific formula budget amount largely affirms a continuation of prior arrangements that previously were subject to reconciliation through true-up. As explained above, if no monthly trueups are provided (as allowed for in Rate 9), an annual statement and a true-up are required. Accordingly, Wallingford’s summary disposition request for a ruling that it is entitled under the MOA (i.e., for calendar years 2014-17) to receive an annual post-audit statement and annual trueup is GRANTED. Prior to the October 20 hearing, CMEEC presented information that the total true-up amount difference during a 28-month period under the MOA approximated $3000. CMEEC is ORDERED to provide Wallingford an expanded calculation from January 2014 through November 2016, along with the backup information used in its calculation and, after Wallingford review, to meet with Wallingford representatives to answer questions they might have about the data and process used in making the determination. Thereafter, senior representatives of both parties are urged to meet to seek to determine an expeditious, efficient, and fair method to determine a reasonable MOA true-up. They are also urged to consider whether the resources required to make a full evidentiary presentation on this issue is a cost-effective way to proceed. The Springing Contracts. Wallingford’s summary disposition request for a ruling that it is entitled to annual post-audit true-ups under the Springing Contracts arises in a legal context different from the parties’ respective rights under the PSA and the MOA. This stems from the fact that, as the parties’ stipulated at the October 20, 2016 arbitration pre-hearing conference (and as they stated in counsel’s joint November 7, 2016 email): “Rate 9 under the PSA is not applicable to the Springing Contracts.” The parties also agree that, for the purposes of this legal analysis, the provisions of both Springing Contracts (the Pierce Project and the 50 in 5 contracts) are essentially

the same. Accordingly, although wording provisions of the July 2006 Pierce Project contract are cited here, the reasoning and ruling apply to the 50-in-5 (MicroGen) contract as well. Section 3.1 of the Pierce contract contains wording similar to the PSA and MOA: Within thirty (30) days after completion of CMEEC’s annual audit … CMEEC will furnish Wallingford a statement of the actual aggregate Fixed Costs and Variable Costs for the previous year and the budget information for the subsequent two years and Wallingford’s Entitlement Allocation of such costs. Based on the post-audit statement, Section 3.1 then provides for an annual true-up adjustment: “the amount of the deficiency or excess in [actual] Fixed Costs or Variable Costs shall be added or credited…to Wallingford’s monthly statements during the current year….” As the parties stipulated, the Rate 9 alternative of a monthly true-up does not apply. CMEEC contends that, despite this language, no annual statement and true-up are required under the Springing Contracts due to various considerations related to the three separate components included in the monthly Pierce Project invoices it sends to Wallingford. It explains that the three monthly invoice components are A-Direct Costs (such as fuel and O&M contract costs) incurred in the direct operation of the Pierce Project; B- CMEEC Gross Administrative and General (A&G) Costs which are directly assigned to the Pierce Project (such as insurance, labor allocations, and debt service) in the same manner as they are assigned to other CMEEC projects (including, for example, to MicroGen, or administrative costs related to non-member sales); and C- CMEEC residual or “Net” A&G Costs, which are a common pool of residual CMEEC A&G costs that remain after gross A&G expenses have been allocated to various CMEEC projects. These are allocated to Pierce (and some other projects) on the basis of capacity ratio. Regarding Direct Costs, CMEEC contends that no true-up is required because it adopted a practice under the Springing Contracts of billing Wallingford only for actual Direct Costs after they have been incurred (i.e., on a lagging basis), so that there is no budget-based invoice billed

amount to true-up against. To underscore this, CMEEC explicitly affirms that if it “were…to resume billing directly assigned costs based on estimates [i.e. budgets], it would be obligated to true-up those costs.” (Second Post-Hearing Brief at 5) With regard to those Gross A&G Costs which CMEEC “directly assigns” to the Pierce Project, CMEEC appears to categorize these as a second element of direct cost, although it has not represented with absolute clarity that these “directly assigned” A&G amounts are billed only on a lagging, or after-incurred basis. Section 1.8 (viii) does provide unambiguously that CMEEC is entitled to charge and Wallingford is required to pay “Direct assignment charges.” The definition of Fixed Costs in Section 1.8 includes: (viii) direct assignment charges which shall reflect direct time or materials spent in managing, oversight, administration, procurement, operation and maintenance of the Pierce Project… However, this subsection viii makes no reference either to “A&G” or to “budget.” With regard to the third component, “Net” A&G Costs, CMEEC contends that Wallingford is required to pay budgeted, rather than actual, amounts because of the definition of Fixed Costs contained in Section 1.8, with the result that no true-up is required. The Section 1.8 definition states (emphasis added) that: Fixed Costs shall mean…all costs, other than Variable Costs, attributable to the Pierce Project that are paid or incurred by CMEEC…resulting from the construction ownership, maintenance, retirement…betterments and modifications to the Pierce Project, including without limitation, the following items of cost: Section 1.8 then lists eight cost items, the seventh of which reads: (vii) administrative and general costs of CMEEC which shall reflect the administrative and general portion of the budget, including working capital amounts, allocated to the Pierce Project which are not directly assigned to the Pierce Project shall be assigned to the Pierce Project on the basis of the ratio of… [several capacity factors].

The parties agree that this sub-section I.8 (vii) contains a scrivener’s error in that the sentence is grammatically incorrect and appears to have omitted either a word or a punctuation mark or both. CMEEC urges that the meaning is most clearly understood by inserting a period or semi-colon after “working capital” and removing the comma after “amounts.” Accordingly, it contends that subsection (vii) requires Wallingford to pay Net A&G costs “reflect[ed in] the administrative and general portion of the budget” and, because it is obligated to pay a budgeted rather than an actuallyincurred amount, no annual statement or true-up of Net A&G costs is required. In further support of this interpretation CMEEC points to the Section 4.1 provision that gives Wallingford the right to challenge, in a formal multi-step Dispute Resolution process, the inclusion or allocation of any budget costs it believes to be unreasonable or inappropriate. This is a right that Wallingford did not have under the PSA or MOA. CMEEC also contends that basing required payments on budgeted amounts is “nothing unusual,” that it is consistent with industry standards, and that requiring otherwise would be “inconsistent with CMEEC billing practices” and would result in multiple ongoing disputes. It further contends that Wallingford is not prejudiced by this practice because, according to an internal CMEEC calculation, Wallingford actually paid $78,000 less under the Springing Contracts during a specified period. The difficulty with CMEEC’s elaborate contention is that the contract itself unambiguously provides otherwise. Its fundamental structure and language provide for monthly payments based on budget amounts, followed by a post-audit true-up process. Section 3.1 states in its first sentence that “Wallingford shall pay its Fixed Cost Allocation for the prior month based upon the Annual Budget…” The first sentence of the next (the second) paragraph provides that, each year 30 days after its annual audit, CMEEC shall furnish Wallingford a statement indicating the previous year’s actual costs compared with budget information for the subsequent two years. The next sentence

provides further that “the amount of [any] deficiency or excess in [previously paid] Fixed Costs or Variable Costs shall be added or credited…to Wallingford’s monthly statements during the current year...” [explanatory words added]. In short, Section 3.1 unambiguously requires an annual postaudit statement and, if a variation is shown, a financial true-up in subsequent monthly invoices. CMEEC’s contentions regarding the three components of its Springing Contract invoices are each addressed in turn. Regarding billing of direct costs, CMEEC’s presentation of its contrary-to-the-contract practice has not, at this summary disposition stage of the arbitration, been subject to discovery or cross-examination. Assuming, however, that annual CMEEC audits confirm (as expected), that CMEEC billing is in fact based on actual previously-incurred costs, CMEEC annual post-audit statements can, with little effort, reflect this. And the financial impact would be that no true-up adjustments of direct costs would be required, so long as CMEEC continues this practice. Regarding directly-assigned Gross A&G Costs, annual CMEEC audits should indicate the actual amounts of the A&G cost categories CMEEC assigned to the Pierce Project (and similarly to the 50-in-5 Project). The audit would also likely indicate whether such costs are “attributable to the Pierce [or 50-in-5] Project[s].” In the event that they are, CMEEC annual post-audit statements would so certify, and again, the financial result would be that no subsequent true-up adjustment of Gross A&G costs would be required. However, if the actual directly-assigned Pierce (and/or the 50-in-5) Gross A&G costs should differ from the budgeted amounts which Wallingford previously paid, a subsequent monthly true-up is required, per Section 3.1 of the Pierce Project contract. Regarding Net A&G costs, CMEEC’s elaborate explanation requires reading into the contract words and meaning that are not there. For example, the word “Net” (as a modifier of

A&G), upon which CMEEC’s explanation is based, does not appear anywhere in the definition of Fixed Costs. More importantly, I find that the words “attributable to the Pierce Project” in the first sentence of the Section 1.8 definition of Fixed Costs are controlling. They apply to the subsection vii reference to “A&G” costs as stated in the definition (and “Net A&G” costs as explained by CMEEC), as well as to the other seven cost items enumerated in Section 1.8. I find further that the fact that the Net A&G portion of Wallingford’s initial monthly payments is based on (“reflected in”) CMEEC’s budget is consistent with the overall structure and language of the contract. It is consistent with Section 3.1’s provision for initial budget-based monthly payments subject to year-end post-audit true-up. It provides the definition of how the initial monthly budgetbased invoices shall be calculated. And it is a clear indication that Wallingford is legally required to pay a portion of CMEEC Net A&G costs (in addition to CMEEC Direct Costs and Gross A&G costs allocated to the Pierce Project), and that the amount of monthly Net A&G costs shall be as indicated in CMEEC’s budget. I also find that the subsection (vii) words “shall reflect …the budget” do not indicate that these costs are not subject to a true-up as provided in Section 3.1. Rather, they indicate, consistent with the overall structure of the Pierce contract (as in the previous PSA and MOA contracts), that Wallingford monthly invoice amounts are to be based on CMEEC budget amounts and are then subject to annual true-ups per Section 3.1. An additional indication that the parties clearly intended a true-up process is that the 2006 Pierce Project contract was entered into only two years after they signed the PSA, relatively early in the PSA’s operation, when true-ups were the parties’ normal course of dealing, and the contracts employ language virtually identical to that in the PSA itself. CMEEC is undoubtedly correct that requiring an annual true-up to payments that initially reflect budget amounts is inconsistent with its billing practices, yet that is of course the very reason

this arbitration was initiated. It would also appear to be the case, as CMEEC states, that providing annual post-audit statements and performing true-ups is more administratively demanding than employing “simpler, less-expensive-to-administer” capacity ratios. However, no matter how administratively more convenient, or simplified, or streamlined, or desirable it might be for CMEEC to act otherwise, the contractual requirements are clear and unambiguous. And of course the arbitration agreement between the parties provides unambiguously that “The arbitrator shall have no power to amend or add to this Contract or any part hereof….” Accordingly, Wallingford’s summary disposition request that it be declared to be entitled to receive annual post-audit statements and true-ups under the Springing Contracts is GRANTED. CMEEC’s Third Post-Hearing Brief provides important numbers to assist in providing perspective on this issue. CMEEC budget amounts indicate that Wallingford’s total 2016 Net A&G payments under the two Springing Contracts will total just over 10% of CMEEC’s total Net A&G budget, and will result in a total Wallingford payment of approximately $690,000. If an indepth actual-versus-budget analysis were to indicate a 10%, or even a 20% variation, the potential Wallingford overpayment from such a full examination would be in the $70-140,000 range. The words of the Pierce Project contract signed over a decade ago say what they say. The parties appear to agree that Wallingford raised this issue with CMEEC more than three years ago in the months following their July 2013 meeting. Perhaps it might behoove the executives of both entities to consider whether further discussion and a mutual contract amendment might provide a less-onerous and more cost-effective way to set formula-based payments that would at the same time protect Wallingford’s legitimate interest in not being over-charged.

2. The eleven-month bill challenge limit. Both parties have indicated that perhaps the second most far-reaching ruling in terms of the future scope of this arbitration is the length of time for which Wallingford can challenge past CMEEC actions.

CMEEC requests a summary

disposition ruling that “Wallingford may not challenge any bill rendered by CMEEC before May 14, 2014—the date that is eleven months before the day on which Wallingford ‘invoked’ arbitration.” WED contends that CMEEC’s argument is “a red herring that has no bearing on the issues in this arbitration.” PSA Section 9.4, labeled “Finality of Bills Provisions,” states that: Neither Party shall have the right to challenge any bill, invoke arbitration, or bring any judicial or administrative action of any kind questioning the propriety or accuracy of such bill, or issue a corrected bill, following a period of eleven (11) months from the date it is rendered. CMEEC contends that “bill finality” (aka “claims limitation”) provisions are enforceable and serve important public interests, that PSA Section 9.4 is unambiguous, and that WED’s trueup and other claims, even if valid, do not toll this claims limitation provision. WED responds that its challenge to non-performance of the annual true-up requirement is not a challenge to individual bills, and that PSA Section 9.4, read in conjunction with PSA Section 15’s Dispute Resolution provision requires, in effect, that the 11-month limit be tolled until voluntary dispute resolution efforts are concluded in order that PSA Section 9.4 does not “impose a limitation that effectively precludes good faith negotiations and mediation.” The language of PSA Section 9.4 is broad and comprehensive. It refers to “any” bill and “any” judicial action of “any” kind (including arbitration) that challenges “the propriety or accuracy” of a bill (i.e. any bill). This provision is even-handed in that it also precludes CMEEC from adjusting (including increasing) any bill after eleven months. FERC, First Circuit, and Connecticut court rulings all uphold the validity and enforceability of claims limitation provisions, 22

and especially “where the contract is made between sophisticated commercial parties with no obvious disparities in bargaining power,” as is the case here. Wallingford’s characterization that it is challenging the non-performance of a contractual obligation rather than a specific billed amount interprets PSA Section 9.4 too narrowly. The PSA Section 9.4 limitation applies to any challenge to “the propriety” of a bill, and the essence of WED’s challenge is that bills rendered without benefit of an annual statement and true-up are invalid and therefore improper. Other provisions in the contracts (e.g., PSA Section 9.2 and Springing Contracts Sections 6.2) pertain to corrections of computational and similar smaller errors. Moreover, WED is unambiguous in its summary disposition motion that it “initiated this arbitration because it” believed “that CMEEC was in fact overcharging it for the services rendered.” Thus, these constitute challenges to past billings. Although from a policy perspective it possibly would have been desirable for PSA Section 15’s Dispute Resolution provisions to include a stand still element to provide additional time to enable the processes to be employed with less time pressure, the words of the PSA contract do not provide this. And an arbitrator is not empowered to modify the terms of the parties’ contract, regardless of how reasonable s/he feels an alternative provision might be. Moreover, as CMEEC contends, it is possible for parties to negotiate directly and mediate in far less than eleven months. In addition, Connecticut courts have held explicitly that settlement negotiations do not toll claim limitation provisions. It is likely that able WED counsel’s knowledge of this law formed part of the basis for WED proposing a Stand Still Agreement in November 2013 so that, as it later explained, it would not be prejudiced by “the passage of time” during negotiation and mediation that could “render CMEEC billings immune from challenge.”

Accordingly, I conclude and hold that PSA Section 9.4, by its unambiguous terms, precludes WED from pursuing claims for any monetary relief prior to eleven months before the initiation of this arbitration, which the parties agree occurred on April 14, 2015. CMEEC’s summary disposition motion on this issue is therefore GRANTED.

3. Credit for Non-Member Margin Sales/ Amendment 5.

Wallingford’s fourth

summary disposition request and CMEEC’s fourth summary disposition request both pertain to the meaning and impact of PSA Amendment 5. Because this is the only issue on which both parties have made summary disposition requests for contrary affirmative rulings, this issue is addressed next. Wallingford requests an Interim Award ruling that Amendment 5 did not alter the PSA Section 1.19 requirement that non-member sales revenues be credited to it. CMEEC requests a ruling that, effective January 1, 2013, WED is no longer entitled to credits for non-member sales revenues, nor is it required to functionalize non-member costs. The parties agree that historically non-member sales revenue was credited to Wallingford under the PSA, and that CMEEC stopped providing such credits effective January 1, 2013. The question is whether CMEEC’s cessation was appropriate under PSA Amendment No. 5. Section 5 of PSA Amendment No. 5 states: Section 4.5.3 of the Original Contract is hereby amended by removing the provision for Wallingford to receive any benefits associated with Non-Member sales or other benefits categorized as Non-Member Margins on and after January 1, 2013. Wallingford contends that Amendment 5 is “patently defective” because it refers to PSA Section 4.5.3 (which both parties agree does not exist); because ‘Non-Member’ and ‘Non-Member Margins’ are capitalized, “giving the impression” that they are PSA defined terms (even though both agree that neither are in fact defined in the PSA); and because Section 6 of Amendment 5

provides that except for Amendment 5, “the Original Contract shall remain in full force and effect.” In addition, WED seeks a ruling that under the PSA, CMEEC is required by GAAP and ratemaking principles to allocate the share of Fixed and A&G Costs incurred to provide services to third parties. CMEEC contends that Amendment 5 altered WED’s right to receive revenue credits and that the contract does not require CMEEC to “refunctionalize” its costs. Amendment 5 was negotiated at Wallingford’s request to provide WED a short, one-year power supply while it continued its evaluation of power supplier options. Although the term “NonMember” is not defined in the PSA, the term “Member” is, and the common sense meaning of “Non-Member” thus clearly means any entity that does not fall within the definition of “Member.” Moreover, extrinsic record evidence indicates that WED officials used the terms “non-members” and “margin” themselves. One example was its explaining to the Wallingford PUC in 2012 that “through the end of this calendar year, [we] will continue to enjoy a pro-rata share of the profit or margin earned by CMEEC on its sales to non-members….” It is perhaps significant that no WED official filed an affidavit in support of Wallingford’s motion indicating that they did not understand the meaning of the terms. It might even be considered insulting to them to rule that they did not understand the meaning of “Non-Member Margin” which was defined and used in the CMEEC Board Meeting packages they received month after month for many years. The parties agree that “Section 4.5.3” is a reference to a PSA section that does not exist. Given the extrinsic evidence indicating that both parties concurred (WED through its explanations to the Wallingford PUC) on what the impact of Amendment 5 would be, it is clear that the 4.5.3 reference was a mutual drafting mistake. Connecticut law is clear that a mutual drafting error, a scrivener’s error, does not negate a contract where, as here, the intent of the parties is clear.

Finally, the contract does not require CMEEC to functionalize costs associated with nonmember benefits. No PSA provision expressly requires that CMEEC functionalize costs related to third-party sales, and Connecticut rulings hold that a term not expressly included in a contract should not be read into it unless it arises by necessary implication from other provisions of the contract. Here, WED has offered no evidence to support its contention that CMEEC is required to functionalize or to support its contention regarding GAAP or other ratemaking principles. In light of all of these circumstances, WED’s summary disposition motion regarding credit for thirdparty sales is DENIED and CMEEC’s summary disposition motion regarding the same is GRANTED.

4. Debt-service coverage (“DSC”) payments/Amendment 4. CMEEC requests a ruling that Wallingford is not entitled to a refund, or any other form of repayment or credit, of past amounts WED paid for past “debt service coverage.” This DSC charge is an additional amount equal to 10% more than the actual amount required to pay the cost of CMEEC’s annual debt service. Wallingford agrees that the contracts provide for CMEEC to collect the excess 10%, but contends that the excess payment is in effect an escrow-like mechanism to assure CMEEC bondholders that CMEEC will have sufficient revenue to pay its annual debt service, and that after the end of any year during which CMEEC has in fact paid its debt service in full, the excess 10% should be returned as part of an annual true-up. Wallingford points to the contractual provision that revenues collected for budgeted expenses in excess of the amount actually paid out are required to be repaid through a true up mechanism. CMEEC states that it has been its practice for many years to credit these additional 10% payments to member equity, and that WED personnel were fully aware of this practice. CMEEC

provides evidence that Wallingford sought in 2009 and 2011 to negotiate specific contractual amendments that would have provided for the return of these payments to WED, but CMEEC did not agree, and after each negotiation Wallingford eventually signed new agreements that did not include the explicit change it had sought. Wallingford contends that the underlying contracts (PSA, MOA, and Springing Contracts) provide no explicit authorization for CMEEC’s practice, but do provide explicitly for a true up process, and that its 2009 and 2011 failures to persuade CMEEC to alter its practice did not constitute its assent to an affirmative contractual authorization for CMEEC to continue it. The record evidence is clear that Wallingford was fully aware of CMEEC’s DSC “practice” and that it objected to it. In April 2009, its PUC initially voted not to participate in the 50 in 5 Project because it included “a requirement for 10% … DSC.” Later in 2009, it proposed a PSA Section 4.4.6 providing for refunding DSC monies to WED either in the event it applied for membership and was not accepted, or upon termination of the Contract. Amendment 4 signed the following month did provide for crediting accumulated debt service payments as “contributed equity” if Wallingford became a CMEEC member. It also provided that if Wallingford requested membership and was denied, its accumulated DSC amounts would be “rebated,” or if the contract were terminated per Section 11, its DSC amounts would be “refunded.” Yet both the rebate and the refund wording are followed in each sentence by a “provided, however” provision. Also, a later sentence provides for remissions to Wallingford “on an ongoing basis amounts paid” subject to a further qualifier “to the extent such amounts collected are in excess of the Wallingford Working Capital Requirement.” Neither party’s filing addresses squarely, or elucidates the full meaning of, these provisions. Given the limits of the partial evidentiary filings submitted to date and the parties’ respective positions, it is unclear whether no

“genuine issue of material fact” exists sufficient to provide a basis for summary disposition. Thus, CMEEC has not met in full its burden for prevailing on summary disposition. Accordingly, this request is DENIED. However, perhaps to state the obvious: a summary disposition denial, especially due to facts being in contention, does not constitute an affirmative ruling to the contrary of the requested ruling.

5. Wallingford’s Allocation of CMARS3 Costs. CMEEC requests a ruling that its 2011 allocation of $570,000 in CMARS3 costs to Wallingford was appropriate and that it should be barred from further pursuing any CMARS3-related claim in this arbitration. CMEEC contends that Wallingford has been well-versed in CMARS3 information since 2009, that it participated in CMEEC’s cost allocation decision-making process in 2011, and that it is barred by the PSA’s 11 month claims limitation provision from pursuing any claim related to it in this arbitration. Wallingford contends that this issue involves disputed issues of material fact making it unsuitable for summary disposition, that it is not barred by the claims limitation clause because it is not challenging individual bills and that, because it receives no benefits from the program, it is not obligated under the contract to pay for costs associated with it. Record evidence does clearly establish that WED’s Director voted in October 2011, as a member of CMEEC Board’s Budget and Finance Committee, to recommend the amount of Wallingford’s allocation and that, at the full Board Meeting a week later, one of Wallingford’s two CMEEC board members also voted to approve WED’s allocation. Moreover, the MOA executed four months later affirms that “Nothing herein shall affect the obligations of Wallingford and CMEEC…related to CMARS3.”

Regarding the 11-month claim limitation provision, WED’s contention as it applies to CMARS3 charges is somewhat different than its argument based on a PSA annual true up requirement in that it is possible that CMEEC’s current monthly invoices include charges for CMARS3 costs. Wallingford’s POAM stated that it was uncertain whether CMEEC has already fully recovered CMARS3 costs in rates, or whether the entirety of Wallingford’s $570,000 allocation is yet to be collected, or whether “a multiple of that amount” is at stake. Pursuant to an arbitrator request, CMEEC reported on September 21, 2016 that “Wallingford’s payment of its share of CMARS3 charges was completed on March 11, 2016,” and that “The total amount of CMARS3 charges billed to Wallingford during that period [from June 5, 2014 to March 1, 2016] was $330,494.” Wallingford contends that disputed issues of material fact related to CMARS3 remain to be decided, devoting four pages of its Response to this contention. CMEEC contends that WED was fully briefed on CMARS3 benefits before it agreed to its allocation and that WED has identified no genuine disputes.

Yet CMEEC’s Motion devotes more than seven pages to

explaining the factual basis for its motion and explaining why the apportionment was “reasonable” and how WED has benefited from CMARS3 independently of its smart grid enhancement properties. While considerable evidence has been provided to support a conclusion that extensive information was provided to Wallingford before the allocation, that it benefited from the program, and that its allocation was reasonable, too many facts remain contested to support a conclusion at this time that no disputed issues of material fact exist. Accordingly, at least at this summary disposition stage of the arbitration, CMEEC’s motion is DENIED.

6. NYPA and RILG Resources. Wallingford requests a ruling that neither NYPA nor RILG power purchases are “energy-only Forward Products” under the MOA and that CMEEC accordingly be ordered to discontinue billing WED for any RILG costs and that it refund with interest all past RILG-related costs charged to it. In support, WED contends that the MOA is unambiguous in defining Forward Products as “energy-only” and being for fewer than five years, and that the MOA therefore does not include either WED’s NYPA allocation or the RILG contract. In response, CMEEC contends that NYPA and RILG power purchases fall within the MOA definition of Forward Products, that both were entered into before the February 23, 2012 execution of the MOA and before Wallingford’s 2013 termination Notice, and that WED officials confirmed at the time of MOA execution that WED would “pay under the MOA for all energy and capacity…[at] the same cost per MWh as paid by all other CMEEC Rate 9 customers.” Several MOA provisions relate to this dispute. MOA Section 2.a provides that CMEEC will acquire for Wallingford’s benefit Forward Products [defined as “financial hedges and/or forward contract energy”] in accordance with its Risk Management Policy, which, as currently approved, provides for the procurement of energy-only Forward Products for the current year and the subsequent four (4) full calendar years. [emphasis added] Also, MOA Section 2.d provides that after the date of a Wallingford Notice of intent to contract with an entity other than CMEEC, CMEEC would not acquire any additional Future Products on WED’s behalf and would charge WED 35% of the cost of any Forward Products already contracted for prior to receipt of WED’s notice. In addition, Section 5 provides that CMEEC shall not purchase for WED’s account “any Forward Product for a period when the scheduled delivery or financial settlement of the Forward Product is a date that is later than December 31, 2017.” Because both of CMEEC’s power purchase agreements with NYPA (the Niagara and St. Lawrence contracts) purchase “capacity” as well as energy (and thus are not “energy only” contracts), and 30

because both are long term rather than short term contracts providing for power delivery after December 31, 2017, it would appear that neither constitutes a Section 2.a Forward Product. A key factual question, however, is whether they constitute Forward Products already contracted for prior to WED’s May 2013 Notice. Record evidence appears to indicate that both were entered into long before the Wallingford exit issue even arose, and as such both constitute “existing legacy contracts” entered into as part of the portfolio of resources CMEEC acquired for the Rate 9 customer group to secure or lock in a long-term power supply for them. If so, the MOA Section 2.a CMEEC obligation to “plan to serve Wallingford’s projected future load requirements consistent with all typical standards and methods within CMEEC’s business processes under the Rate 9 structure” arguably makes the NYPA and RILG contracts a pre-existing portion of what CMEEC is required to provide and WED is required to pay for. Important factual issues remain to be clarified at the hearing regarding this issue. The summary disposition requirement that “no disputed issues of material fact” exist, as regards this WED request, is not met. Accordingly, this summary disposition request is DENIED.

7. Information provision, audit right, and future studies. Wallingford’s second summary disposition request is for an interim order declaring that CMEEC must i- provide information WED requests, ii- permit WED to audit its books and records, and iii- provide good faith information responses and perform reasonably-requested studies during dispute resolution processes. CMEEC responds, with regard to “i” and “iii”, that these “two requests are restatements of contract provisions, and the obligations provided in those provisions are not in dispute.” Regarding “ii”, an audit right, CMEEC responds that the contracts provide for WED to “examine”

CMEEC “accounts” in on-site inspections, but do not provide a formal right to “audit” CMEEC books. The collective provisions of the four contracts envision, and require, that the parties will each provide extensive information to the other. In addition, the parties’ consent Scheduling Order in this matter commits both parties to provide “swift and full access to all relevant data including direct costs.” Clearly CMEEC is required by the contracts and the consent Order to provide significant information to WED and, in dispute resolution, to respond in good faith to information requests, including to the extent of conducting studies that are reasonably requested by WED where CMEEC has control of the data. CMEEC acknowledges explicitly that it “does not challenge that it is obliged to explain to Wallingford the bases for charges imposed upon it…” Accordingly, WED’s request for a declaration that it is entitled to receive extensive information from CMEEC and that CMEEC must respond in good faith to data requests including, in dispute resolution, by conducting “reasonably requested” studies is GRANTED. However (and this is a significant “however”) this ruling is essentially a restatement of unambiguous contract provisions and the consent order provision. It does not constitute a finding that CMEEC has heretofore failed to perform its duty to provide appropriate information. Nor does this ruling constitute an order for CMEEC to take any explicit additional action at this time. If WED believes that specific CMEEC responses fall short of CMEEC’s contractual information provision responsibilities, and the parties are unable to reach mutual agreement by conferring, the appropriate step is for WED to request a specific discovery order to remedy any claimed denials. Wallingford’s motion states explicitly that the parties “have not yet conferred on Wallingford’s concerns regarding the adequacy of CMEEC’s data responses,” and that “Wallingford will not seek the assistance of the Arbitrator [’s] intervention until the parties have conferred.” This WED

statement articulates well the appropriate sequence for resolution of any specific disagreements. The test is “reasonableness,” and any actual disputes regarding specific requests should be brought to the arbitrator for quick resolution. Wallingford also seeks a declaration that it is entitled to audit CMEEC books and records. In support, it cites PSA Section 13.7 (and similar language in the Springing Contracts), the key words of which provide WED a right to “examine such accounts” (i.e. CMEEC’s). WED quotes dictionary definitions of such words as “accounts,” “examine,” and “audit” to urge that the meaning of WED’s right to “examine such accounts” constitutes the functional equivalent of a right to audit. The difficulty with this contention is that the four contracts represent lengthy, comprehensive, and precise agreements between the parties. Where the parties agreed to an “audit,” the contracts use the word “audit” (e.g., PSA 4.1). Elsewhere, the contractual wording indicates different rights. Importantly, two consecutive sentences of PSA 13.7 use different words to describe records-related rights and responsibilities. It provides that “Each Party shall cause its accounts to be audited annually by a firm of independent public accountants and shall supply copies of such audits to the other Party.” Thus, it requires that every year each party receive a copy of the other’s audit conducted by independent auditors. Closely juxtaposed to this provision, the previous sentence provides that “each [shall] have the right at any reasonable time during normal business hours to examine such accounts.” Given the juxtaposition of the two sentences, the contract meaning is unambiguous that the two processes are not the same. Clearly, a reading that gave WED a right to conduct a second full audit after one had already been conducted by an independent firm and provided to it by CMEEC would be redundant and would make little business sense. Alternatively, a WED right to examine CMEEC accounts midyear or before a full independent

audit had been concluded makes sense as a reasonable additional process for gaining information and understanding. Accordingly, Wallingford’s request for a declaration that it is entitled to audit CMEEC’s books is DENIED. SUMMARY DISPOSITION RECAP 1. WED’s summary disposition motion on the annual true-up requirement is denied under the PSA, but granted for the period under the MOA. It is also granted for the period during which the Springing Contracts are in effect. 2. WED’s summary disposition motion regarding information provision and future studies is granted, and its request that it be declared to have a right to audit CMEEC accounts is denied. 3. WED’s summary disposition motion regarding NYPA and RILGC-related power contracts is denied. 4. WED’s summary disposition motion regarding non-Member sales revenue is denied. 5. CMEEC’s summary disposition motion regarding the claims limitation provision is granted. 6. CMEEC’s summary disposition motion regarding debt-service-coverage payments is denied. 7. CMEEC’s summary disposition motion regarding WED’s allocation of CMARS3 costs is denied. And 8.

CMEEC’s summary disposition motion regarding non-member sales revenues is

granted.

III. POST-EVIDENTIARY HEARING RULINGS As stated above, the evidentiary hearing was held June 19-22, 2017 in Hartford, CT. Initial post-hearing briefs were filed on August 9, and Reply briefs were filed on September 11, 2017. After the conclusion of the hearing and post-hearing filings, eight contract issues remained for decision. These related to: -

employee time reporting under the MOA and Springing Contracts,

the appropriate amount of labor overhead adder,

what general business A&G expenses are chargeable under the Springing Contracts,

Wallingford DSC payments,

Wallingford payment for NYPA/ RILG power,

Wallingford’s share of CMARS3 costs,

CMEEC compliance with the covenant of good faith and fair dealing, and

party requests for award of arbitration costs.

The parties also advocate different Information Sharing Proposals for the future. Finally, they disagree somewhat regarding the form that the future “compliance filing” process (calculating any refunds and implementing the ruling) might take.

Additional background findings. Before addressing each substantive issue in turn, brief findings regarding the history of the parties’ relationship and the fundamentals of their economics can provide important context. CMEEC was formed in 1995 with several smaller municipalities becoming Members. Wallingford declined to become a Member, but elected instead to sign an all-requirements

contract, the System Power Sales Agreement (later renewed in the 2004 PSA) to purchase all of its electricity through CMEEC. Although a non-Member, Wallingford was the biggest customer, accounting for more than a third (roughly 35%) of CMEEC’s load. This unusual circumstance was reflected in CMEEC governance. While each Member municipality had one seat on the CMEEC board, non-Member Wallingford had two seats (likely reflecting its portion of CMEEC load). While not being an official full-voting board Member in all respects, Wallingford’s representatives served in CMEEC board officer capacities, including as members of its Audit and Finance Committee and sometimes even as the CMEEC board chair. In 2009, when CMEEC was preparing to apply for a federal grant to develop a Smart Grid capacity, Wallingford declined to participate, although it agreed to pay a portion of the CMARS3 software system upgrade done in connection with it based on the full cost of the project. Wallingford’s 2012 announcement that it intended to explore the possibility of sourcing its electric load elsewhere led to a series of negotiations and interim agreements with CMEEC (PSA amendments and the MOA) that defined the parties’ relationship during WED’s exploration and, eventually, its transition. Recognizing that the potential loss of more than a third of its load could have a significant effect on its operations, CMEEC took steps to seek to enhance its financial stability. This included, in 2013, the imposition of a $1/MWh fee on all participants, which lacked contractual authorization, led to opposition, and was subsequently rescinded. Perhaps recognizing that even if Wallingford changed from being an all-requirements customer, it would nonetheless continue to purchase power for some years under the Pierce and 50-in-5 (aka MicroGen) Springing Contracts, CMEEC also made internal budgetary changes which attributed significant additional costs to those projects. Without any change in the operations of the Springing Contract projects themselves, Wallingford’s Pierce A&G charges

nearly quadrupled from $100,000 (2012), to $300,000+ (2013) to $400,000 (2016). Similarly, its 50-in-5 A&G charges trebled from <$100,000 (2012) to $250,000 (2013) to $300,000+ (2016). While CMEEC’s desire to stabilize its finances during and following the loss of a customer accounting for a third of its load is understandable from a business perspective, any modifications it made must remain consistent with the provisions of the parties’ contractual requirements. Disagreement regarding what was consistent or inconsistent with those requirements is of course a central part of the parties’ disputes which led to this arbitration (which itself followed a significant attempt to resolve differences through mediation). With this history as background, the remaining hearing issues are addressed in turn.

1. Employee time reporting. Perhaps the most fundamental post-hearing issue for decision (and which has a significant dollar impact) relates to CMEEC’s contractual obligation to reconcile its annual actual expenses to the budgeted amounts it bills Wallingford monthly throughout the year. One significant dimension of this “true-up” process is determining whether actual employee time spent on the Pierce and 50 in 5 projects differs from the amount of employee time CMEEC originally budgeted (and billed Wallingford for) related to this Springing Contract project work. As provided in Section 1.8 of the Pierce contract: “(viii) direct assignment charges … shall reflect direct time or materials spent …” (emphasis added). In its Reply Brief, CMEEC accurately states the unambiguous contractual requirement: “The contracts require reconciliation of billed costs to ‘actual aggregate Fixed Costs’” (emphasis added). However, it contends that the contracts “neither specify how those costs should be measured nor direct that they be based on timesheets.” It states that the Springing Contracts “do not specify how CMEEC must calculate [labor and overhead] charges,” and that “The contracts

do not mention ‘timesheets,’ ‘time tracking,’ or ‘time records.’” As a result, it describes its practice as follows: CMEEC does not reallocate costs as between the projects and Net A&G at the end of the year based on time records or any other retrospective assessment of how employees spent their time. (emphasis added) Is short, CMEEC is unequivocal that, after year end, it does not make any form of retrospective analysis of whether actual employee time spent on Springing Contract projects differed from what it billed Wallingford based on its initial budget estimates and that, as a result, it makes no form of readjustment whatsoever. While the overall cost of the A&G labor component that CMEEC charges Wallingford is not totally clear, it is clear that it is a not-insignificant part of the dollar amounts in dispute in this arbitration (including on a going-forward basis). While CMEEC is correct that the word “timesheets” does not appear in the contracts, this is not dispositive. (Parenthetically, it is perhaps worth noting that the term “true-up” does not appear either although, as noted, both parties have used this term repeatedly throughout this arbitration and for years beforehand—while disagreeing, of course, on what is required.) Fortunately, the key to legal resolution of this issue is found in unambiguous wording that does appear in the parties’ contracts, rather than in words (i.e., timesheets) that do not appear. And, as noted earlier, multiple contracts covering decades of the parties’ relationship contain similar-although not always exactly identical--language related to the “true-up” provision. Thus, this analysis of the 50-in-5/MicroGen contract language applies to the parties’ other contracts as well. CMEEC contends that Wallingford’s position on this issue comes down to reliance on one single word: “actual.” Yet “actual,” which occurs twice in the key paragraph of Section 3.1, is fundamental to the essence of the provision and without it, the remainder of the paragraph makes no sense whatsoever. The Section 3.1 paragraph provides for CMEEC to

furnish Wallingford a statement of the actual aggregate [costs] for the previous year and the budget information for the subsequent year and … if … the statement [indicates that] … the actual [costs] … exceed or are less than the estimate thereof … the amount of the deficiency or excess … shall be added or credited [to subsequent Wallingford payments]. (emphasis added) The fundamental provision for “add[ing] or credit[ing]” any “deficiency or excess” only makes sense if “actual” means something -- and that something is different from “budgeted.” The Order No. 8 ruling on summary disposition (p. 8 above) held squarely that: [The contracts’] fundamental structure and language provide for monthly payments based on budget amounts, followed by a post-audit true-up process. Section 3.1 states in its first sentence that “Wallingford shall pay its Fixed Cost Allocation for the prior month based upon the Annual Budget…” [Then] ... each year 30 days after its annual audit, CMEEC shall furnish Wallingford a statement indicating the previous year’s actual costs compared with budget information for the subsequent two years. [Then] .. “the amount of [any] deficiency or excess in [previously paid] Fixed Costs or Variable Costs shall be added or credited…to Wallingford’s monthly statements during the current year...” [emphasis and transitional and explanatory words added]. In short, Section 3.1 unambiguously requires an annual post-audit statement and, if a variation is shown, a financial true-up in subsequent monthly invoices. In this arbitration, CMEEC initially took the position that no annual statements were contractually required. Now, after that interpretation has been firmly rejected in summary disposition, it argues that major adjustments are not required because, by (its) definition, actual amounts are the same as budgeted amounts. This convoluted contention flies in the face of clear unambiguous contractual language and the contractual intent which is readily discerned from it. Because labor costs are a major component of the costs subject to annual review and trueup, and because CMEEC employees submit weekly timesheets that they are instructed to fill out to indicate what they worked on during the preceding period, a Wallingford expert witness examined CMEEC employee time records for the relevant period. CMEEC H.R. directives instruct employees to complete and submit Tenrox-brand reporting forms promptly and accurately each week. Yet Wallingford’s expert’s analysis found a significant disparity between

the amount of Tenrox time that CMEEC employees reported spending on Pierce and MicroGen related tasks and the amount of time CMEEC had budgeted for such tasks and Wallingford had previously paid for in its regular monthly payments. CMEEC does not dispute Wallingford’s expert’s conclusion that Tenrox records report less time spent on Springing Contract tasks than was budgeted. In responds, however, with two contentions: 1-that the contracts do not explicitly require it to keep employee time records, and 2-that the Tenrox time records its employees do submit do not accurately reflect actual time spent on specific tasks. Rather, it contends that they are used only (or primarily) to indicate employee workplace absences due to illness, vacation, off-site training, and similar reasons. While CMEEC is correct that the contracts do not explicitly require it in so many words to keep track of employee time, they do require it (as set forth in summary disposition above, p. 17) to identify accurately costs “attributable to” the Springing Projects, of which labor costs are a significant component. CMEEC, like any party to any contract, must employ reasonable business measures to meet its contractual obligations, and it breaches those obligations if it fails to comply due to a deliberate business choice to employ only half measures not capable of achieving compliance. By perhaps simplistic analogy, if ApplePickerC were to contract with AppleTreeOwnerW to pick all of W’s apples from his 20’ apple trees, the absence of the word “ladder” in the contract would not mean that C would be excused from performing under the contract (which could be achieved by using a ladder) simply because C chose not to use a ladder. C has implicitly contracted to use reasonable business methods to meet her obligation to pick all the apples. It is not a valid defense to nonperformance for C to say she is unable to perform in full because she owns no ladders, or because her ladders are only 10’ tall. Nor (in perhaps an

even closer analogy to the circumstances here) would it be a valid defense for C to say that she cannot pick all the apples because, even though she owns 20’ ladders, she has never used them to pick apples higher than 10’, and she instructs her workers not to climb any higher than that. Uncontested hearing evidence established that CMEEC adopted its new computerized Tenrox-brand time recording system to be an improvement over its previous system. The employee policy manual distributed by CMEEC’s HR Lead instructs employees to record their time accurately and promptly in Tenrox each week, and the Tenrox manual presented in evidence provides guidance for employees regarding how to record time for various projects and tasks. Senior CMEEC executives testified that they sometimes personally spoke with employees about submitting time records using the system. At the hearing, CMEEC presented four employee witnesses regarding Tenrox time reporting practices. All offered strikingly parallel testimony to the effect that in submitting their Tenrox time reports, they did not report accurately the tasks they had performed, as instructed by the CMEEC H.R. lead and employee policy manual, but rather used Tenrox almost exclusively to report time present at, or absent from, the workplace. Although more than half of CMEEC’s hearing fact witnesses (four of seven) testified about how the Tenrox time system operated, CMEEC chose not to present testimony from its H.R. Lead person who still works for CMEEC, is responsible for implementing Tenrox, and who issued the written instructions to employees regarding its use. Instead, CMEEC’s first Tenroxrelated witness was a mid-level manager who cheerfully acknowledged that the H.R. lead had contacted him 13 times in 2015 alone regarding his failure to submit his Tenrox reports on time. Regarding his behavior, he testified that “I’d say I’m at one end of the spectrum which is I don’t think reflective of my peers, so I don’t necessarily talk about this.” In other words, his conduct

using the system is self-described as being an outlier, at one end, rather than at the top, of the bell-shaped curve of actual employee practice. Yet he was proffered by CMEEC as a representative employee to testify under oath regarding how the system worked in practice. Importantly, however, both this employee -- and every other CMEEC employee timesheet witness who testified to not complying with written policies regarding Tenrox -- also testified that they would be able to submit daily timesheets indicating rough approximations of their daily activity, if instructed to do so by their superiors. CMEEC’s CEO similarly testified that employees could comply with such a practice, if directed to do so. I find and hold that CMEEC has unambiguously contracted to provide Wallingford annual accountings of “actual” employee time (“labor”) attributable to Springing Contract project work, that “actual” employee time spent on such work differs from original budget time estimates developed in advance of the fiscal year, that CMEEC has in place (and instructs its employees to use accurately) a cloud-based Tenrox employee time reporting system, that this system has the ready capacity to be used to report employee time spent on Springing Contract tasks accurately, and that it is a clear breach of CMEEC’s unambiguous contractual obligations, under the factual circumstances found to exist here, to fail to do so. I find further that, while Tenrox employee time past reporting is less than a perfect accounting of “actual” employee time “attributable to” Springing Contract project work (and Wallingford’s expert accounting is accordingly less than perfect), these records provide the best available evidence for past time periods. I find further that the evidence establishes unequivocally that CMEEC employees could in the future provide more accurate time reporting without it being unduly burdensome, if instructed by CMEEC superiors to do so, and that failure

to do so, after the implementation period for this order would constitute a further ongoing breach. Accordingly, CMEEC is directed to calculate and pay to WED an amount that reflects the difference between budgeted labor amounts previously paid by WED and the amount of employee time reported in the Tenrox time system as being devoted to Springing Contractrelated work. CMEEC is also directed to revise its Tenrox reporting categories to provide more precise future indications of categories of tasks that relate to the Pierce and MicroGen projects. In addition, CMEEC officers and its HR Lead are directed to instruct employees (reinforced by in-service training) that they are required to submit daily time statements that indicate in roughly hourly intervals the number of hours they spend on Pierce and MicroGen-related activity during each day.

2. Labor-overhead adder. Linked to the issue of CMEEC employee labor hours attributable to Springing Contract projects (and charged to Wallingford) is the question of what related percentage amount should be attributed to overhead costs associated with the labor. CMEEC employs and charges Wallingford a 100% overhead load factor, consisting of 50% for labor-related fringe benefits and 50% for other employee carrying costs, such as employee development, desk space, computers, maintenance and supplies. Regarding the second, the “carrying cost” element, this number represents a CMEEC management decision which its expert opined was “consistent with other multi-function industries,” including the power and transportation industries. Wallingford contends in opposition that a 100% labor adder is a significant overcharge, that the percentage is “inherently inaccurate” and “irrational” on its face, and that the total correct percentage (according to its expert’s calculations) should be

47.95% (based on previous three-year actual amounts). Wallingford’s expert’s calculation limits labor overhead to actual fringe benefits (such as health care, retirement and annual leave), and attributes zero percent to other employee carrying costs such as recruitment, training, office space, computers, and supplies. I find that CMEEC has failed to provide any persuasive evidentiary foundation (any report or document) to support the numerical basis of its 50% carrying cost adder. Its CEO testified that he “wouldn’t characterize it as [the result of a] structured” analysis or review. And CMEEC’s expert’s general references to literature and general industry practices similarly fail to provide any persuasive evidentiary basis for applying a 50% carrying cost adder on top of a 50% fringe-based adder. I also find, however, that Wallingford’s expert’s allowance of zero percentage is inappropriate and does not account for reasonably-calculated employee carrying costs. CMEEC’s Reply Brief indicates that it employed a 12.53% “indirect overhead component” (in addition to its benefits-based fringe calculation) when it filed its ConnSmart Budget Change Explanation. In the circumstance here, where neither a 100% nor a 48% labor adder is persuasive, I find and hold that a total 60% labor adder (roughly 48% fringe-based and approximately 12% “indirect” overhead component-based) is consistent with the hearing evidence. I direct accordingly that this 60% total percentage shall be used by CMEEC in recalculating its charges to WED for labor costs attributable to Springing Contract projects.

3. General Business Expense Costs. Wallingford contends that it should not be charged a percentage of A&G costs for a number of categories of CMEEC business expenses under the Springing Contracts because these general business expenses are not “attributable to” the Pierce or MicroGen projects (as they are required to be by the contracts). CMEEC contends that such

activities as participating in industry associations, monitoring NEPOOL activity, keeping abreast of industry-related legislative developments, and tracking energy services costs are prudent, even necessary, business practices important to cost-effective service delivery and that accordingly, Wallingford should pay a reasonable share. As stated in its post-hearing reply brief, CMEEC contends that the challenged activities and charges result in knowledge, or business advantage, or “resources that benefit CMEEC generally and [therefore] the projects indirectly.” As a result, CMEEC contends that it is equitable for Wallingford to pay a fair share. This CMEEC formulation, however, misstates the contractual test and misapplies the contractual requirement. For the most part, Wallingford does not question the validity or appropriateness of CMEEC undertaking these practices for its broader business purposes. (The one exception is what the press sometimes referred to as “Derbygate,” CMEEC’s practice--until publicly disclosed--of funding expensive, by-invitation-only “team building” or “management retreat” trips to the Kentucky Derby for selected management and board members and families.) Rather, Wallingford’s contention is that these general business practices are not activities “attributable to” the projects, as the contract requires, so they should not be charged for them. As set forth more fully in the summary disposition discussion (above at page 16), CMEEC’s “common sense approach reflect[ing] that Pierce and MicroGen benefit indirectly from every A&G expense that supports CMEEC’s operation and continuing vitality” conflicts with the contracts’ “attributable to” requirement. For example, while monitoring legislative developments is not only appropriate, but likely vital, to CMEEC operations, the cost of doing this (including such items as Governors Ball tickets) may not be charged to third-party customers whose costs are contractually defined as being limited to those “attributable to” the projects. As noted, that term occurs multiple times in the Springing Contract paragraph that defines costs.

To adopt CMEEC’s interpretation would write “attributable to” out of the contract and render the words nugatory. “Attributable to” is an unambiguous and key contract term, repeated numerous times, which cannot be ignored in determining the amount CMEEC charges Wallingford for Springing Contract electricity. With regard to individual general business practice charge amounts challenged by Wallingford, I find and hold as follows: Association dues and social A&G expenses. Overall costs related to industry group association dues, office parties and dinners, Governors Ball tickets, Board of Directors retreats and golf outings, Rankin membership dues, and consultant presentations are not “attributable to” the Springing Projects and may not be charged to Wallingford. Legislative lobbying and regulatory monitoring A&G expenses. Lobbying trips to DC and lobbying efforts in Connecticut and Massachusetts are not “attributable to” the Projects and may not be charged to Wallingford as A&G expenses. Because Wallingford witnesses agreed that some portion of lobbying and regulatory activities might be attributable to the projects, its expert attempted to exclude only those lobbying and regulatory costs not so attributable. In the future, CMEEC is not precluded from directly assigning WED a portion of some of these types of costs, if it documents clearly and explains fully the specifics of the direct connection between the projects and a cost it believes to be attributable to the projects. This may include clearly-documented employee time indicated in contemporaneous records. Legal. CMEEC legal expenses that are documented to be “attributable to” Springing Contract projects are costs that may be directly-assigned to them. Other general CMEEC legal expenses not specifically documented and may not be charged to WED as A&G.

Strategic planning, financial Planning, Miscellaneous & General, and Board of Director costs. These are additional categories of general business costs which are net A&G and may not be assigned directly to WED because they are not specifically attributable to Springing Contract projects. Power Supply (PS)/Portfolio Management (PM); Market Operations; Business Intelligence (BI), Customer Program Management (CPM); Financial Advising costs. As CMEEC stated, record evidence indicates that these costs are A&G expenses incurred to support CMEECâ&#x20AC;&#x2122;s overall operations and are thus costs not-directly-assignable to the projects. As such, under the contracts, they are A&G costs not attributable to, and therefore not chargeable to, WED. Competitively Energy Services, Conservation and Load Management (CLM), and Load Forecasting costs. Like the other types of general business expenses described above, these costs support CMEECâ&#x20AC;&#x2122;s overall operation and may not be charged to WED as A&G costs because they are not attributable to the projects. CMARS and Disaster Recovery Business Continuity Project costs. In post-hearing filings, WED acknowledged that its witnesses agreed that these costs are appropriately partially attributable to the Pierce and MicroGen projects.

Transco. Although Transco costs are discussed here under the heading of General Business Expense costs, Transco costs are in fact a specific business expense cost. Transco is a separate company from CMEEC that was created to facilitate acquisition and ownership of transmission facilities as a hedge against rising regional transmission costs. Although Transco is a separate legal entity, CMEEC employees provide 100% of its staffing in return for Transco

paying CMEEC an annual fee. Historically, CMEEC treated employee salary and overhead for Transco work as Net A&G and credited the Transco payment as “margin.” While this was appropriate under previous contracts when WED was a CMEEC full-requirements customer, it is not consistent with the Springing Contracts’ “attributable to” requirement. CMEEC labor costs incurred to provide services to Transco (approximately $700,000 in 2015 and 2016) may not be treated as residual A&G and billed in part to WED. In addition, CMEEC’s dramatic change in its treatment of Transco costs coincident with WED’s notice of its considering other suppliers (decreasing costs directly assigned to Transco, while increasing costs directly assigned to the projects) constitutes a further instance of highly questionable CMEEC conduct. Because Wallingford pays a different percentage of directly assigned A&G than it does of allocated residual A&G, contractually-correct treatment of these costs is important to ensure appropriate initial budget allocations and subsequent accuracy in annual true-up statements. CMEEC’s 2012 budget allocation of approximately $500,000 in costs directly assigned to Transco plummeted in its 2013 budget to less than $50,000, while costs directly assigned to the Pierce and MicroGen projects doubled from 2013 forward.

4. Debt Service Coverage (DSC). In essence, the DSC dispute (described more fully at page 25 above) relates to the additional 10% payment on top of the regular insurance premium charge, which is required by CMEEC’s Bond Resolution to help assure that it has the economic capacity to make good on its debt payment obligations. At the end of each year this accumulated 10% add-on, which is not paid to the insurance company, is credited to each CMEEC member’s account. Not being a member, Wallingford does not receive this credit. It contends that it

should, however, because since this amount was not actually paid to the insurance company at year’s end, is was not an actual “cost” subject to cost recovery and should be credited back as part of the required annual true-up process. Wallingford’s position regarding DSC “evolved” during the arbitration. At the hearing (and in post-hearing briefing), it contended that, under the 50-in-5/MicroGen contract, it was not even required to pay the DSC initially since it did not fall within that contract’s definition of a Fixed Cost. Three factors undercut this eventual, evidentiary hearing WED contention. 1-Previously throughout the two-year arbitration, Wallingford repeatedly affirmed that it was contractually required to pay the additional DSC 10%, while arguing that it was entitled to a credit for it through the true-up process. 2-Wallingford’s CEO testified at the hearing that he did consider DSC to be a Fixed Cost. And 3-the only witness who supported Wallingford’s final position was its non-lawyer expert who was opining on the meaning of a defined term, a legal judgement which is the arbitrator’s responsibility to determine. Section 1.19 of the 2004 PSA explicitly obligates Wallingford to pay as a Fixed Cost “any costs associated with new Debt Service Obligations of CMEEC incurred after the date of this Amended Contract … incurred, in part or in whole, on behalf of Wallingford….” Thereafter, the 2009 PSA Amendment 3 made the 50-in-5 project a New Project within the meaning of section 1.19. In addition, Section 1.9 of the 50-in-5 contract defines Fixed Costs to include “amounts required under the Bond Resolution…to be paid...which are necessary…to prevent a loss of revenues [from the 50 in 5 project].” The Bond Resolution requires CMEEC to “charge and collect rates that include a sum equal to 110% of the Aggregate Debt Service for such Fiscal Year.” Thus, the DSC falls squarely within Section 1.9’s Fixed Cost definition.

Further, any possible doubt regarding the meaning of these provisions is eliminated by Section 3 of the 2010 PSA Amendment 4. It states that Wallingford’s “Fixed Costs obligation payment includes…required debt service coverage amounts and required debt service reserves.” It also provides in Section 4.4.6 (2) and (3) for the return of such payments in the event Wallingford becomes a CMEEC member, or asks to become a member and is denied. There is absolutely no way to give any rational meaning to (2) and (3), if Wallingford were not required to make DSC payments in the first place. Accordingly, Wallingford’s request for DSC relief is DENIED. I find and hold that CMEEC’s Bond Resolution requires it to collect amounts sufficient to cover 110% of its debt service obligations, which means DSC charges. The record establishes that, after years of paying the DSC since 1995, Wallingford considered it unfair that it was required to pay this charge (which ultimately contributed to member equity), that Wallingford desired to alter this, and that it sought multiple times to negotiate changes in the parties’ contracts to change this requirement. Yet each such renegotiation attempt was unsuccessful, and Wallingford each time signed new contracts (PSA amendments) that retained the requirement without change. When 50-in-5 project financing was originally structured as a capital lease which did not entail a DSC, Wallingford agreed to participate. When CMEEC made its 2013 decision to refinance in order to lower each municipality’s (including Wallingford’s) payments, Wallingford could have financed its obligation independently. When it opted instead to continue financing through CMEEC, it became subject to the Bond Resolution requirement. It cannot now achieve contract changes through arbitration which it repeatedly failed to achieve at the bargaining table. I hold that the contract interpretation urged by Wallingford is DENIED, that no repayment of past DSC charges is required, that Wallingford is contractually obligated to continue to pay

Pierce and 50-in-5 DSC charges so long as it continues to participate in those projects, and that Wallingford DSC payment amounts are not to be considered credits to be refunded to Wallingford in the required annual true-up process. Accordingly, no relief is due.

5. CMARS3 Funding. CMARS3 refers to a major update of CMEEC software capacity to serve two functions: extension/modernization of CMEEC’s legacy software system, and expansion of that system to incorporate multiple dimensions of SmartGrid data collection and analysis. When CMEEC was developing its application for federal funding to help pay for new SmartGrid functioning in 2009, Wallingford decided not to participate in the SmartGrid system, and the parties agreed that Wallingford would not be required to pay any SmartGrid costs. Wallingford contends that it should not have to pay for that portion of CMARS3 costs related to SmartGrid, that it was charged and paid for SmartGrid functionality, and that it is accordingly entitled to receive a refund. The total cost of CMARS3 was $1.76 million. In round numbers, USDOE paid 50% ($880k), Wallingford paid $570,000 (about 35% of the total), and CMEEC members paid $310,000. About $231,000 of Wallingford’s payments occurred after May 14, 2014. Evidence indicates that CMEEC represented to Wallingford early in the process (200910) that CMARS3 was primarily an upgrade of the legacy system. Later, in a July 2013 memo, it indicated that CMARS3 was 98% upgrade and 2% SmartGrid. These representations were the basis for Wallingford agreeing to pay approximately 1/3 of the total CMARS3 cost. Subsequently, Wallingford became aware that CMEEC stated to DOE in its grant application and in its December 2011 Revised Project Execution Plan that CMARS3 “extended the functions and capabilities of the legacy system primarily by incorporating new” SmartGrid data to be

leveraged “for smart grid benefits.” (emphasis added). In post-hearing briefing, Wallingford contends it was affirmatively misled by the earlier misrepresentations and that, if it were to be refunded the $231k it has paid since May 2014, this would produce a more equitable result. It would thus bear 13% of the total cost (26% of the non-DOE portion), while CMEEC members would pay 37%. CMEEC responds that Wallingford was an active participant (including active board participant) in all CMEEC affairs at the time of the SmartGrid application and CMARS3 purchase decision; that it voted for the CMARS3 upgrade; that it should be held responsible for understanding the extensive information presented to it at the time; and that Wallingford’s CEO testified at the hearing both that CMARS3 was “the data engine for everything CMEEC does” and that he did not feel affirmatively misled at the time of his vote to fund the upgrade. Many dimensions of this issue are addressed in the Summary Disposition section above at pp. 26. If anything, the evidence presented at the hearing expanded and elaborated on the degree of Wallingford briefing, involvement, and exposure to information at the time of the initial decision to fund the upgrade. Virtually all additional evidence is consistent with and confirmatory of the near-ruling on summary disposition. Wallingford’s contention on this issue is one that largely hangs on the single word, “primarily,” which occurred not in a key contract provision, but rather deep in a 74-page CMEEC staff report to a federal agency. WED’s CEO testified that he had no basis to opine whether “primary” indicated 51/49, 80/20, or any other ratio. Given these facts, the appearance of a single somewhat ambiguous word in an unsworn administrative report does not outweigh the contract language and extensive sworn testimony and evidentiary documentation sufficiently to

reverse the payment of $570,000 (or Wallingford’s subsequently-requested $231,000) which was made pursuant to a clear contractual agreement. Accordingly, Wallingford’s request for repayment, or true-up crediting, or other relief regarding CMARS3 amounts it paid pursuant to an otherwise clear commitment is DENIED. 6. NYPA/ RILG. More extensive background regarding this issue is set forth in the summary disposition discussion above at pp. 28-29. At the hearing, the evidence confirmed the tentative summary disposition conclusion that the NYPA and RILG contracts do not fall within the MOA’s Section 2.a definition of Forward Product. Both of them provide for “capacity” as well as energy (rather than being “energy only”), and hearing evidence established that CMEEC’s then Risk Management Policy provided for energy only, and that CMEEC’s senior official had struck the word “capacity” in the last draft of the agreement. Similarly, it is undisputed that both contracts are of considerably longer duration than the maximum five-year length stated in the definition of Forward Products. These conclusions, however, do not end the inquiry. Wallingford’s fundamental purpose in signing the February 2012 MOA, as stated in the sixth WHEREAS clause, was to assure that during the pendency of Wallingford’s solicitation and valuation of proposals regarding its future power supply … CMEEC [will] continue to plan for the continued supply by CMEEC of electric products in the form of energy, necessary [to meet] Wallingford’s electric requirements for a period of years following the expiration of the Original Contract [i.e., the amended PSA]. To achieve this, CMEEC committed to do two things. First, it committed to plan to serve Wallingford’s projected future load requirements consistent with all typical standards and methods within CMEEC’s business processes under the Rate 9 structure…. And, second, it committed to acquire such additional Forward Products as are necessary to assure that the aggregate portfolio of Forward Products acquired for the benefit of all Rate 9 customers (“Rate 9 Portfolio”) takes into account Wallingford load requirements …. [emphasis added].

Thus the MOA is explicit and unambiguous that CMEEC was contractually obligated to plan to meet future Wallingford load requirements by combining then-existing Rate 9 Portfolio supply elements with whatever additional, short term Forward Products were necessary to assure that Wallingford’s power supply needs were met. Both parties agree that the NYPA and RILG contracts were part of the existing Rate 9 Portfolio at the time of the MOA signing in February 2012. NYPA power was first contracted for in 1985 and subsequently renewed through a 2003 FERC fifty-year license. And the RILG long-term power purchase agreement was entered into in 2010. Thus, neither NYPA nor RILG power agreements had to meet the definition of new Forward Products since they were both part of the then-existing aggregate portfolio (i.e. part of the “typical standards and methods within CMEEC’s business processes”) by means of which CMEEC would continue to assure Wallingford’s power supply requirements. Accordingly, Wallingford’s request for a change in the billing procedures and amounts for NYPA and RILG power is DENIED.

7. Good Faith and Fair Dealing. Wallingford alleges that CMEEC’s pattern of conduct over many years, both before and during the arbitration, constitutes a breach of the covenant of good faith and fair dealing inherent in every Connecticut contract. State Supreme Court rulings hold that to constitute such a breach, a party’s actions must have been taken “in bad faith.” Tests of bad faith include a showing of a “design to mislead,” or “dishonest purpose” that is “not prompted by an honest mistake.” Importantly, however, evidence of “bad faith may also include” a party’s “interpretation of a contract in a manner than evades its spirit.” Wallingford contends that repeated CMEEC misconduct under the contracts, when combined with summary

disposition rulings that reject fundamental CMEEC contract interpretations, suffice to meet the bad faith test. CMEEC contends that the parties have good faith differences of opinion regarding the meaning of various contractual provisions, that its conduct was appropriate, and that Wallingford’s contention regarding the bad faith standard would render virtually every judicial finding of any contractual breach to be a breach of the good faith covenant. At times, CMEEC counsel have articulated contract interpretation rationales that can most generously only be characterized as convoluted. However, in some instances (such as the parties’ historic approach to the true-up requirement and process), they nonetheless reflect the continuation of practices agreed to by both parties and followed for many years under multiple contracts. Some of these practices were explicitly agreed to, or acquiesced in, by Wallingford, or even voted for by its own senior, presumably-knowledgeable officials at times during which they served in CMEEC board leadership capacities. Wallingford acknowledged repeatedly (including in its post-hearing brief), that its officials only began to question some CMEEC contract interpretations after it began to wind down its more-than-a-decade-long business relationship. Not being legally trained, these officials “discovered” many of these nuanced contractual interpretation disagreements only with the assistance of attorneys and experts. Because of this history, many CMEEC interpretations were defenses of historic practices. And many Wallingford contentions regarding alleged breaches have been ruled, in this and in earlier summary disposition rulings, not to violate contractual requirements. Moreover, some Wallingford conduct during this arbitration could itself be alleged to be not in good faith. As noted, one “breach” urged by a (non-lawyer) Wallingford expert witness

continued to be argued after the conclusion of the hearing, even though Wallingford counsel had stated a clear contrary position for many months throughout the arbitration, and even though the sworn live testimony of Wallingford’s senior client witness at the hearing itself contradicted its own expert’s position. This same senior official testified under cross-examination that he would not have filed sworn written pre-hearing testimony regarding a different contention, if he had reviewed his own written statements beforehand. Wallingford similarly pressed a claim that Amendment No. 5 was invalid based on arguments that can at best only be characterized as farfetched, some of which were clearly rebutted by prior WED officials’ statements and conduct. Wallingford has not met its burden of demonstrating that CMEEC acted in bad faith. To date, sufficient evidence does not exist in the record to support a finding that the good faith/fair dealing covenant was breached. Accordingly, Wallingford’s request for a declaration of breach of that covenant and for appropriate relief is DENIED at this time. However, a very important, subsequent compliance phase of this proceeding is yet to come. Since this Interim Award will be followed by a Final Award, this ruling regarding good faith and fair dealing could be subject to further evaluation and revision based on party conduct in the forthcoming contractual compliance phase of this arbitration.

8. Arbitration Costs. Wallingford requests an award of arbitration expenses and attorney fees due to it having been forced by CMEEC conduct to initiate and prosecute this long and expensive process. CMEEC opposes this as being unwarranted and contends that, if anything, it should be awarded costs and fees due to Wallingford’s “vexatious” conduct during the proceeding which has “unreasonably exacerbated” arbitration costs.

The parties’ arbitration provision provides that “The decision of the arbitrator shall determine and specify how the expenses of the arbitration shall be borne.” This differs from the general “American rule” that, except under extraordinary circumstances or when explicitly statutorily authorized, each party shall bear its own expenses of the arbitration, including attorney fees and other costs. There is little doubt that each party’s conduct has from time to time deeply aggrieved the other. Also, each from time to time has exhibited conduct very much not welcomed by this arbitrator. This includes CMEEC’s years of resisting actual true-ups, being less than fully forthcoming with information, making convoluted arguments about budget estimates and actual expenses being the same thing, continuing past practices after Order No. 8, and presenting employee time-keeping-related testimony that strained credulity. Wallingford, on the other hand, continued to press a large number of breach contentions that were directly contradicted by extensive documentary evidence (as well as, in one instance, by its own lead witness) and which are soundly and unequivocally and repeatedly rejected in this Award. WED also contended earlier in the arbitration that actions of its senior business representatives did not bind it contractually in dealings with long-time business partners. It also sought to reargue one issue under the guise of a request for “clarification.” At different points in the arbitration, the arbitrator has been of the mind that one party or the other was unreasonably prolonging the process, causing unwarranted ratepayer expense, or straying outside the bounds of “reasonableness,” and that an award of at least some costs might appropriately be entered against it. Over the course of the arbitration, however, this feeling shifted from one party to the other, and sometimes back. On balance, considering all of the many factors that have been presented during this lengthy two-year process, I conclude that the

more fair and reasonable holding regarding arbitration costs, at least to this point in time, is that each party shall bear its own arbitration expenses. However, because this Partial Interim Award will be followed by a Final Award issued after the key “compliance” phase of this arbitration, this conclusion may be subject to re-evaluation depending on subsequent party conduct.

IV. FINDINGS AND CONCLUSIONS The parties’ arbitration agreement states that this arbitration award shall provide “a statement of the reasons for [the] decision,” and in addition “shall separately list findings of fact and conclusions of law.” Accordingly, this additional listing confirming the above Partial Interim Award findings is provided here. As stated above, these Findings and Conclusions supplement the statement of reasons. Together they constitute a single integrated ruling, so that no inference may be drawn if a ruling is specifically articulated in one, but not in the other.

1. GENERAL FACTS F.1

Both parties, CMEEC and WED (Wallingford Electric Division, or Wallingford) are public or quasi-public business entities led by business persons knowledgeable about electric industry practices.

F.2

During the development and negotiation of multiple multi-year contracts between them, both were represented by knowledgeable counsel. The parties negotiated the contracts freely, neither was in an inferior bargaining position, and no evidence was presented indicating mistake or fraud in the contracts’ formations.

F.3

Under the 2004 CMEEC-Wallingford Power Supply Agreement (PSA), WED was a CMEEC all-requirements customer until December 31, 2013.

F.4

From 2004 through the end of 2013, Wallingford had two representatives on the CMEEC Board. WED representatives served on the Board’s Budget and Finance Committee and once even as CMEEC Board Chair (2005-06).

F.5

On January 1, 2014, WED transitioned to service under the Parties’ Memorandum of Agreement (MOA), and the 50-in-5 (aka MicroGen) and Pierce Agreements (together, the Springing Contracts).

F.6

The MOA was executed February 23, 2012 and expired on December 31, 2017.

F.7

The Pierce Agreement was executed July 1, 2006, went into effect January 1, 2014 and expires December 31, 2021 unless WED opts to extend it.

F.8

The Pierce project is an 84 MW dual-fueled (gas/oil) peaking plant with interconnection facilities, located in Wallingford, which operates within ISO New England markets.

F.9

The MicroGen Agreement was executed on June 22, 2009, went into effect on January 1, 2014, and expires on December 31, 2018 unless WED opts to extend it.

F.10

The MicroGen (aka 50-in-5) project totals 50 MW of behind-the-meter generating units operated by CMEEC to reduce its peak contribution to the ISO network load.

F.11

This arbitration was initiated on April 14, 2015.

2. CLAIMS RESOLVED BY SUMMARY DISPOSITION A. Post-Audit True-Up Under the PSA F.12

PSA Section 4.1 provides that Wallingford shall pay CMEEC for all Electric Products delivered each month pursuant to the Contract’s terms at the rates, charges or formulae

for payment and the terms and conditions set forth in Rate 9 (included as PSA Attachment 13). F.13

Rate 9 § 8 provides: “Deviations between collections under this Rate Schedule and the Seller’s [CMEEC’s] actual expenses will be reconciled through a month–to-month or a year-to-year prospective true-up as appropriate” [emphasis added].

F.14

PSA Section 4.1, by incorporating Rate 9, provided two alternative methods for true-ups to be performed, monthly or annually, and did not require an annual statement if monthly true-ups were provided.

F.15

From the parties’ 2004 signing of the PSA until the contract ended in 2013, CMEEC conducted monthly true-ups. No annual true ups occurred.

F.16

Wallingford did not request a post-audit true-up until it was considering whether it should source its power supply from other than CMEEC.

F.17

The Parties’ nine-year course-of-dealing under the PSA confirmed a clear mutual understanding that the contract provided for the alternatives of monthly or annual trueups, and did not require an annual statement so long as monthly true-ups were performed. Under the PSA (2004-13), so long as monthly true-ups are provided, no annual statement or true-up is required.

L.1

PSA. CMEEC complied by conducting monthly true-ups, and did not breach the PSA.

B. Post-Audit True-Up Under the MOA and Springing Contracts F.18

The MOA and Springing Contracts contain substantially similar provisions to the PSA regarding the requirement of an annual true-up. Rate 9 applied to the MOA, so CMEEC

had the alternative (as under the PSA) of providing either monthly or annual true-ups. The parties stipulate, however, that Rate 9 did not apply under the Springing Contracts. F.19

CMEEC confirms that, under the MOA, it did not provide a monthly true-up as it had done under the PSA, nor did it provide an annual true-up under either the MOA or the Springing Contracts, as they require.

L.2

MOA and Springing Contracts. CMEEC breached the MOA and Springing Contracts by failing to provide annual true-ups as required. Under the MOA (2014-17), annual true-ups are required because no monthly true-ups were provided.

L.3

CMEEC’s failure to true-up budgeted directly assigned labor costs to actual labor costs, as well as other costs, violated the MOA Section 6 requirement of annual true-ups

L.4

CMEEC breached the MOA by failing to provide annual true-ups as required.

L.5

CMEEC similarly breached the Springing Contracts by failing to provide annual true-ups as required.

C . The 11-Month Claim-Limitation Provision F.20

PSA § 9.4 states that: “Neither Party shall have the right to challenge any bill, invoke arbitration, or bring any judicial or administrative action of any kind questioning the propriety or accuracy of such bill, or issue a corrected bill, following a period of eleven (11) months from the date it is rendered.”

F.21

Section 11.3 of each Springing Contract contains the same limitation.

F.22

The provisions apply to “any” bill and prohibit “any” action of “any” kind (including arbitration) that challenges “the propriety or accuracy” of a bill (i.e. any bill) more than 11 months after the bill was rendered.

F.23

The provisions contain no standstill element tolling the limitations period while the parties pursue negotiation or mediation.

F.24

WED’s claims in this Arbitration constitute challenges to past billings.

F.25

Other provisions in the contracts (e.g., PSA Section 9.2 and Springing Contracts Sections 6.2) pertain to corrections of computational and similar smaller errors. Claims Limitation Provision. Contractual claims-limitation provisions are valid and enforceable under Connecticut law.

L.6

The PSA and Springing Contract claims-limitation provisions are unambiguous.

L.7

The PSA and Springing Contract claims-limitation provisions preclude WED from pursuing claims for monetary relief related to bills rendered before May 14, 2014.

D. Margin Credits F.26

Historically, non-member sales revenue was credited to WED under the PSA but, after Amendment 5, WED stopped receiving these credits effective January 1, 2013.

F.27

PSA Amendment 5 was negotiated at Wallingford’s request to provide WED a short term, one-year power supply while it continued its evaluation of power supplier options.

F.28

Section 5 of Amendment 5 eliminates WED’s entitlement to receive “any benefits associated with Non-Member sales or other benefits categorized as Non-Member Margins on and after January 1, 2013.”

F.29

Although “Non-Member” is not defined in the PSA, “Member” is, and a “Non-Member” is any entity that does not fall within the definition of “Member.”

F.30

“Non-Member Margin” was defined and used in monthly CMEEC Board Meeting packages that Wallingford representatives received over many years.

F.31

Amendment 5, § 5 refers to a PSA section (4.5.3) that does not exist, but § 5 was a mutual drafting mistake. Record evidence demonstrates that both parties agreed what the impact of Amendment 5 would be. Margin Credit. Under Connecticut law, a mutual drafting error does not negate a contract where the intent of the parties is clear.

L.8

Pursuant to Amendment 5, effective January 1, 2013, WED was no longer entitled to credits for non-member sales revenues or other benefits categorized as Non-Member Margins.

L.9

CMEEC did not breach the contracts by not providing WED with Margin credits after January 1, 2013.

ADDITIONAL FACT background AND THE TRUE-UP REQUIREMENT A. History F.32

Wallingford announced in 2012 that it intended to explore alternative options for sourcing its electric load.

F.33

Following this announcement, CMEEC initiated changes in pricing and cost allocations.

F.34

in 2013, CMEEC imposed a $1/MWh fee which lacked contractual authorization, led to opposition, and was subsequently rescinded.

F.35

Without change in the operations of the Springing Contract projects, Wallingford’s share of Pierce Project A&G charges increased from $100,000 (2012), to $300,000+ (2013) to $400,000 (2016).

F.36

Wallingford’s charge for 50 in 5 A&G increased from <$100,000 (2012) to $250,000 (2013) to $300,000+ (2016).

B. Employee time reporting F.37

Section 1.8 of the Pierce contract (and a similar section of the MicroGen contract) states that “(viii) direct assignment charges … shall reflect direct time or materials spent …” on Pierce Project activity.

F.38

Both contracts require reconciliation of billed costs to “actual aggregate Fixed Costs.”

F.39

Pierce Project contract Section 3.1 states that CMEEC shall “furnish Wallingford a statement of the actual aggregate [costs] for the previous year and the budget information for the subsequent year and … if … the statement [indicates that] … the actual [costs] … exceed or are less than the estimate thereof … the amount of the deficiency or excess … shall be added or credited [to subsequent Wallingford payments].

F.40

The contracts do not use the word “true-ups,” although the parties themselves used the term for many years, including throughout the arbitration, to describe monthly and/or annual adjustments.

F.41

The contracts do not specify how CMEEC must calculate labor and overhead costs.

F.42

CMEEC stated that it “does not reallocate costs as between the projects and Net A&G at the end of the year based on time records or any other retrospective assessment of how employees spent their time.”

F.43

In recent years, CMEEC adopted and promulgated a Tenrox brand employee time reporting system as an improvement over its previous system.

F.44

The employee policy manual distributed by CMEEC’s HR Lead instructs employees to record their time accurately and promptly in Tenrox each week.

F.45

The Tenrox manual provides guidance for employees regarding how to record time to various projects and tasks.

F.46

CMEEC agrees that its employee Tenrox time reports indicate significantly less CMEEC employee time spent on Springing Contract project activity than CMEEC bills WED for.

F.47

Some CMEEC supervisors orally instructed employees to fill out Tenrox time reports in a manner inconsistent with written CMEEC HR department employee manual guidance.

F.48

One mid-level employee witness testified that CMEEC’s HR Lead had contacted him thirteen times in a single year about his failing to submit his Tenrox time reports on time.

F.49

Although the majority of CMEEC’s arbitration fact witnesses testified about Tenrox system time reporting, CMEEC did not call its HR Lead as a witness.

F.50

While CMEEC employee time reported in the Tenrox time-keeping system is by no means completely accurate, it nonetheless reflects actual employee time spent on individual projects and tasks more accurately than do the generalized full-year budget estimates on which CMEEC monthly bills to WED are based.

F.51

The Tenrox time reporting system can be modified to provide more accurate and more detailed employee time reporting.

F.52

CMEEC’s CEO and every CMEEC line-employee witness testified that more accurate and detailed daily time reports could be submitted if employees were instructed to do so.

L.10

Employee time reporting. The Springing Contracts require WED to pay for “direct time” and materials required to operate the projects.

L.11

The contracts require CMEEC to provide WED an accurate annual report of “actual aggregate [project] Fixed Costs.” “Actual” is not the same as full-year budget estimates.

L.12

CMEEC breached the Contracts by failing to provide actual costs, including actual labor costs.

L.13

For the current and future years, the Contracts require CMEEC to provide WED documentation of actual project-related labor costs.

L.14

The Contracts require that CMEEC’s current Tenrox-brand employee time recording system, or another similar system of its choosing, be used to provide accurate accountings of actual employee Springing Contract project-related time.

L.15

The Contracts require CMEEC officials to direct that employees submit regular, current, accurate reports of the time they spend on Springing Project work.

L.16

The Contracts require that CMEEC report annually to WED a comparison of actual versus budgeted employee Spring Project time (and other costs) and a process to reconcile or true-up WED monthly payments with actual annual total costs.

C. Labor overhead adder F.53

In addition to billing WED monthly for budgeted Springing Contract direct labor costs, CMEEC bills WED double this amount by adding a !00% labor overhead adder.

F.54

CMEEC’s justification for this 100% addition is that 50% represents the cost of its employee fringe benefits and 50% reflects other employee “carrying costs.”

F.55

No persuasive evidence (no report or document) was presented in support of the 50% “carrying cost” adder.

F.56

CMEEC’s CEO testified that the “carrying cost” amount it charged WED was not the result of any structured analysis or review, but was more of a business judgement call.

F.57

CMEEC’s expert testimony related to a literature search and general references to other industry (such as transportation) practices did not provide a credible basis to justify CMEEC’s 50% “carrying cost” adder.

F.58

In its ConnSmart Budget Change Explanation, CMEEC added a 12% “indirect” overhead labor component to a 48% fringe-based labor adder for a rough total labor adder of 60%.

F.59

Wallingford’s expert calculated CMEEC’s actual three-year average fringe benefit total to be 47.95%.

F.60

The evidence thus establishes that a total 60% labor overhead adder is a reasonable and accurate amount for CMEEC to charge WED for indirect Springing Contract labor costs.

L.17

Labor Overhead Adder. The Springing Contracts allow CMEEC to charge WED a reasonable and accurate labor overhead amount, in addition to its actual documented Project-related labor costs.

L.18

A 60% labor overhead adder is an accurate (and reasonable) amount related to CMEEC’s actual additional labor costs.

L.19

CMEEC breached the Springing Contracts when it charged WED an inaccurate and unjustified 100% additional labor cost adder unrelated to its actual labor adder cost.

L.20

The contracts require CMEEC to calculate and repay to CMEEC the excess Springing Contract labor adder costs (above 60%) that WED has paid since May 14, 2014.

GENERAL BUSINESS EXPENSES. F.61

CMEEC charges WED monthly (and WED has paid CMEEC) a portion of a variety of its operational costs characterized in this Interim Award as general business expenses.

F.62

Many of the categories of costs that CMEEC charges WED under the Springing Contracts are reasonable business expenses for CMEEC to incur, but they do not meet the Springing Contracts’ requirement of being “attributable to” the projects themselves.

F.63

Miscellaneous A&G. These costs include association dues, office parties and dinners, Governor’s Ball tickets, Board of Directors retreats and golf outings, deferred compensation, Rankin membership dues, and consultant presentations. While they may be perfectly reasonable general business expenses, they do not meet the contractual test of being “attributable to” the Projects. However, more specific future CMEEC record keeping might establish that a portion of these costs are in fact attributable to the projects.

F.64

Lobbying, Regulatory, and Legal costs. CMEEC representatives conduct a significant amount of legislative lobbying activity in Connecticut, Massachusetts and Washington DC. They also monitor regulatory developments in these and other jurisdictions. Because the vast majority of these activities relate to the broad scope of CMEEC interests rather than the Pierce and MicroGen projects, these costs are not attributable to them. This also applies to CMEEC legal costs which arise from the broad sweep of its many interests and involvements. Only legal costs documented to be directly related to (ie “attributable to”) the Projects may be properly billed to WED under the contracts. While future more-specific record keeping might document that some portion of these costs can be directly assigned to these Projects, CMEEC record keeping to date has failed to establish a relationship. Accordingly these past costs may not be billed to WED.

F.65

Strategic planning, financial Planning, and Conservation and Load Management costs. These costs similarly constitute general business expenses which may not be

charged to WED because they have not been documented to be specifically attributable to the Springing Contract projects. F.66

Load Forecasting costs relate to tracking loads, weather conditions, and comparing actual and forecasted loads. Because Wallingford is no longer a CMEEC full requirements customer, these do not benefit WED, except as they relate to the Projects. Future, more specific Tenrox employee time recording might demonstrate some peak load tracking Springing Contract project applicability.

F.67

Competitive Energy Services. CMEECâ&#x20AC;&#x2122;s assignment of 25% of revenues recovered as the actual employee cost associated with this activity is not corroborated by employee Tenrox time reporting.

F.68

Business Intelligence. CMEEC employee time recording does not indicate what employee time spent on Business Intelligence tasks is attributable to the projects. Although CMEEC allocated 5% of employee Business Intelligence time to the Pierce Project, 10% to the 50-in-5 Project and 10% to Transco, employee Tenrox time records do not document this. Future specificity might.

F.69

The Tenrox time recording system is readily adaptable to facilitating accurate employee time reporting attributable to varying tasks and/or projects, if CMEEC management instructs employees to use the system conscientiously.

L.21

CMEECâ&#x20AC;&#x2122;s failure to configure the use of its Tenrox time recording software to facilitate accurate employee time and activity reporting breached its contractual duty to document appropriate WED charges through the contractually-required true-up process.

L.22

CMEECâ&#x20AC;&#x2122;s failure to instruct employees to use its installed Tenrox system conscientiously to report their time and work activities breached its contractual duty to document appropriate WED charges in the contractually-required true-up process.

F.70

Portfolio Management. CMEEC allocation of employee time for Portfolio Management services to the Pierce and 50-in-5 Projects was not documented in employee Tenrox time records and therefore is not properly billable to Wallingford.

F.71

Market Operations. These costs relate to CMARS services and to ISO New England and NEPOOL costs associated with market activities. While a small portion of these costs might be attributable to the Projects, more specific employee time reporting is required to establish this.

F.72

Debt Issuance. Only bond costs directly related to the Springing Contract projects (and not to other projects or to Transco) may be assigned to the Projects.

F.73

Disaster Recovery Business Continuity and CMARS costs, in contrast, are types of CMEEC operational expenses that benefit the Springing Projects directly and may appropriately be charged to WED.

L.23

General Business Expenses. It is a breach of the Springing Contracts for CMEEC to charge WED a portion of its normal reasonable operational business costs, if the costs are not directly attributable to the Springing Contract projects.

L.24

CMEEC breached the Springing Contracts when it billed WED for general business expenses identified above in this section that are not attributable to the Pierce or MicroGen projects.

F.74

Transco costs are a related, but somewhat distinct category of costs. Transco is a separate legal entity from CMEEC, created to facilitate acquisition and ownership of transmission facilities as a hedge against rising regional transmission costs.

F.75

CMEEC employees provide 100% of the staffing for Transco activity in return for Transco paying CMEEC an annual fee.

F.76

Historically, CMEEC treated employee salary and overhead for Transco work as Net A&G and credited the Transco payment as “margin.”

F.77

While this was appropriate when WED was a CMEEC full requirements customer, it is not consistent with the Springing Contracts “attributable to” requirement.

L.25

CMEEC labor costs incurred to provide services to Transco (approximately $700,000 in 2015 and 2016) may not be treated as residual A&G and billed in part to WED.

L.26

The Springing Contracts’ true-up provisions require CMEEC to calculate and repay to WED amounts previously paid for these services.

L.27

In the future, CMEEC may not bill WED for these categories of expenses under the Springing Contracts.

DEBT SERVICE COVERAGE (DSC) F.78

WED’s claim for refunds of DSC payments under the PSA are time-barred because those amounts were invoiced more than 11 months before this arbitration commenced.

F.79

Wallingford’s claim for Pierce Project DSC refunds was dropped during the arbitration.

F.80

Wallingford’s claim for MicroGen (50-in-1) DSC repayment was based only on its expert witness’s interpretation of the MicroGen Agreement’s definition of a Fixed Cost,although numerous previous Wallingford pleadings and counsel arguments stated otherwise.

F.81

DSC payments meet two separate criteria of the MicroGen Agreement Section 1.9 definition of a Fixed Cost. They are both (1) a “cost[], other than [a] Variable Cost[]” that results from the construction or ownership of the project, and (2) an amount required under CMEEC’s bond resolution.

F.82

The MicroGen Agreement obligated Wallingford to pay a share of project financing costs.

F.83

CMEEC incurred debt to finance its construction and ownership of MicroGen and, although this was initially financed through a capital lease, it subsequently refinanced the debt through bond issuances, as permitted under the Agreement.

F.84

CMEEC knew that CMEEC’s bond covenants require it to charge and collect annual rates equal to 110% of its Aggregate Debt Service.

F.85

When CMEEC refinanced, WED had the option of funding its required share of MicroGen financing costs through a capital contribution or otherwise, but chose instead to fund its share through CMEEC indebtedness.

F.86

All MicroGen Project participants, both CMEEC Members and Wallingford, are required to make DSC payments.

F.87

CMEEC has long applied member DSC payments to member equity to help assure that CMEEC is adequately capitalized and financially healthy, and to reduce its cost of capital, which benefits members, other customers, and all project participants.

F.88

WED’s claim that CMEEC must return MicroGen DSC through annual true-ups is contrary to the Agreement’s terms and the parties’ past dealing and long course of performance.

F.89

Under the PSA, CMEEC did not rebate Wallingford DSC payments either in monthly or in year-end true-ups.

F.90

WED attempted to negotiate a PSA Amendment that would have provided the return of its DSC payments if it chose an alternate supplier, but CMEEC did not accept this proposal.

F.91

WEDâ&#x20AC;&#x2122;s negotiation of PSA Amendment No. 4, which set forth limited circumstances under which its DSC payments would be refunded (none of which occurred), would not have been necessary if DSC payments were already required to be rebated in the true-up process.

L.28

DSC Refunds. Wallingford is estopped from claiming that the MicroGen Agreement does not authorize CMEEC to collect DSC payments because it previously agreed repeatedly that CMEEC could do so.

L.29

DSC payments fall within the definition of a MicroGen Fixed Cost.

L.30

CMEEC did not breach the MicroGen Agreement by not rebating WEDâ&#x20AC;&#x2122;s DSC payments.

CMARS3 F.92

CMEEC developed CMARS3, the third iteration of its business intelligence/ information technology system, to extend the capabilities of its business platform application.

F.93

CMARS3 is central to CMEEC operations, including supporting the Pierce and MicroGen projects.

F.94

WED and its representatives on the CMEEC board received extensive information on the CMARS3 program before the cost allocation was developed and approved by the Board.

F.95

One of WED’s Board representatives was a member of the CMEEC Board Budget and Finance Committee at the time that the cost allocation methodology was developed.

F.96

WED’s Director voted in October 2011, as a member of CMEEC Board’s Budget and Finance Committee, to recommend the amount of WED’s allocation and, at the full Board meeting a week later, one of WED’s representatives voted to approve WED’s allocation.

F.97

CMEEC’s cost allocation methodology was not unreasonable and WED concurred.

F.98

The DOE Project Execution Plan describes both smart grid-related and CMEEC operational benefits of CMARS3, and WED’s CEO testified that it benefits WED.

F.99

The MOA executed four months after the CMARS3 allocation was approved by the board provides that “Nothing herein shall affect the obligations of Wallingford and CMEEC . . . related to CMARS3.”

L.31

CMARS3. CMEEC did not breach the contract by charging Wallingford a portion of CMARS3 costs.

L.32

WED is not entitled to a refund of its CMARS3 costs.

NYPA/ RILG F.100 The New York Power Authority (NYPA) operates the Niagara and St. Lawrence power projects, and CMEEC, since 1985, has been the “designated bargaining agent” for securing and administering Connecticut’s allocation of its share of the output of the two projects.

F.101 Connecticut is allocated 3.1 MW of St. Lawrence power under a contract running until 2032, and 10.1 MW of Niagara Project Power under a contract subject to renewal in 2025. F.102 The Rhode Island Landfill Gas (RILG) contract is a long-term power purchase agreement (PPA) between CMEEC and Rhode Island LFG Genco, LLC entered into in 2010. F.103 Under the PSA, Wallingford paid for its proportionate share of power supply costs, which included Wallingford’s share of (a) the output of the two NYPA projects and the RILG contract; and (b) CMEEC’s administrative and general costs. F.104 The MOA obligates CMEEC to continue to furnish the resources needed to meet Wallingford’s needs, consistent with CMEEC’s obligation under the PSA, on a declining volumes basis until the end of 2017. F.105 The NYPA and RILG contracts were part of the portfolio of resources used by CMEEC to serve the “Rate 9 Customer Group,” to which WED belonged under the PSA, and are part of the portfolio of resources for which Wallingford is responsible under the MOA. F.106 If NYPA and RILG were excluded from Wallingford’s power supply portfolio under the MOA, CMEEC would have had to buy other power to replace those resources, and would bill Wallingford for the replacement (including A&G) under the MOA. F.107 Evidence was presented that WED was aware—both before and after signing the MOA— that NYPA and RILG were included under the MOA. F.108 Absent the MOA, there is no current contract in place between CMEEC and WED for CMEEC to deliver, and WED to pay for, NYPA power and CMEEC associated A&G costs.

L.33

NYPA/RILG. The MOA authorizes CMEEC to charge WED for energy and CMEEC A&G costs associated with WED receipt of power from the Niagara and St. Lawrence projects.

L.34

The MOA authorizes CMEEC to charge WED for energy and CMEEC A&G costs associated with WED’s receipt of power from the Rhode Island Landfill Gas project.

L.35

Wallingford’s claim that CMEEC breached the MOA by charging Wallingford for the NYPA and RILG transactions is rejected.

IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING F.109 CMEEC’s provision of information under multiple contracts that require full, open, and transparent information sharing with WED has been less than forthcoming at many points over the years. These include pre-dispute resolution under the contracts, discovery responses early in this arbitration, and subsequent filings as the arbitration proceeded. F.110 The contracts all provide for WED to make monthly payments based on budgeted amounts, subject to subsequent review and adjustment to reflect actual amounts spent or costs incurred. CMEEC’s ultimate contention -- that no actual adjustments (or even accountings) are required under the contracts because (in essence) actual costs and budgeted costs are, by definition, the same thing -- may understandably be viewed as an interpretation of the contracts in a manner that evades their spirit. F.111 The user manual and written HR department instructions for CMEEC’s Tenrox time reporting system directed employees to record accurately and promptly their time spent on various categories of work activities. Multiple CMEEC witnesses testified that senior personnel orally overrode these written instructions, telling employees to record time

only weekly and in a manner that did not indicate accurately either their actual activities or the amount of time they spent on each. The record was silent regarding the timing of these oral instructions. F.112 Wallingford raised numerous contentions throughout the arbitration process that were rejected emphatically. These included arguing that a contractual amendment was invalid because of an obvious scribner error and because the term Non-Members was not defined, even though CMEEC and WED officials both used this term repeatedly over many years. F.113 WED also contended that its officialsâ&#x20AC;&#x2122; conduct (and even votes) could not bind WED because no formal Commission vote had been taken in a duly-noticed meeting to instruct the officials how to act. F.114 WED also urged, post-evidentiary-hearing, a position contrary to what its counsel had stated repeatedly over many months throughout the arbitration and contrary to what its senior witness testified to at the hearing. F.115 Many other similar contentions were rejected, although only after significant ratepayer resources on both sides were expended researching, analyzing, and presenting contentions in writing, in rebuttal, and orally. L.36

Good Faith/Fair Dealing. To constitute a breach of the implied covenant of good faith and fair dealing under a contract, a partyâ&#x20AC;&#x2122;s acts that impede their contractual partyâ&#x20AC;&#x2122;s right to receive benefits it reasonably expects to receive must have been taken in bad faith.

L.37

The various tests that indicate bad faith under Connecticut law include fraud, deceit, sinister motive, and action not prompted by an honest mistake.

L.38

In addition, however, evidence of “bad faith may include” a party’s “interpretation of a contract in a manner than evades its spirit.” Landry v. Spitz.

L.39

CMEEC’s contorted interpretation of the MOA’s and Springing Contract’s fundamental requirement of a true-up process to reconcile “actual” and “budgeted” costs bordered on evading the spirit of the contracts.

L.40

To date, CMEEC behavior under the contracts, taken as a whole (including many good faith differences of opinion regarding contract language where its interpretations prevailed) has not been proven to constitute a breach of the covenant of good faith and fair dealing.

ARBITRATION COSTS F.116 The contracts provide that “[t]he decision of the arbitrator shall determine and specify how the expenses of the arbitration shall be borne.” This differs from the standard “American rule” under which each party bears its own expenses. F.117 WED advanced a number of claims, some of which it subsequently abandoned, some of which were readily defeated by clear written documentary evidence, and some of which were denied summarily. F.118 CMEEC resisted providing, or was slow to provide, various types of information required under the contract, or which it was directed to provide during the arbitration. F.119 CMEEC’s interpretation of the contracts’ fundamental true-up requirement defied logic, and the arbitrator at times felt misled by some CMEEC statements and characterizations. F.120 Both parties’ litigation tactics and strategies and other conduct have at times clearly caused both parties’ ratepayers to incur unnecessary costs.

L.41

Arbitration expense. The general “American rule” is that each party bears its own litigation costs, including attorney fees.

L.42

Connecticut law allows for an award of attorney fees to a prevailing party where the opposing party acts in bad faith, wantonly, vexatiously, or for oppressive reasons.

L.43

The bad faith exception to the common law rule that parties pay their own attorney costs applies not only to pre-filing conduct under the contract and the filing of an action, but also to the manner in which the litigation or arbitration is conducted.

L.44

At various points in time (and taken as a whole) conduct by both parties in this arbitration could justify their being required to pay some or all of the other’s arbitration expenses.

L.45

On balance, each party’s unwelcome conduct -- to date -- has been offset by unwelcome conduct of the other.

L.46

Accordingly, as of this writing, neither party’s arbitration expense shall be ordered to be borne by the other.

L.47

At this point in the arbitration, I hold that each party shall bear its own attorney fees and costs in full.

V. INTERIM ORDER re POST-RULING STEPS 1. Within ten (10)days of the issuance of the Interim Award, the parties were directed to report any discrepancies they believe existed between the explanatory text of the Interim Award and the additional Findings and Conclusions set forth in Section IV. 2. Within twenty (20) days of the issuance of the Award, the parties were directed to meet and confer regarding a next-steps process and timetable and to report back regarding any compliance plan steps or deadlines they request be modified.

3. Because the parties had, earlier in the proceeding, each submitted Information Sharing Proposals reflecting their conflicting views of what the contracts require, they were directed, within thirty (30) days of the issuance of the Interim Award, to amend their proposals to reflect the rulings provided therein and to exchange their amended proposals. Following the exchange of their amended proposals, the parties were directed to meet and confer to seek to reach agreement on information sharing on a going-forward basis and to report the result of that effort within ten days of the exchange of their proposals. 3. Within forty-five (45) days of issuance of the Interim Award, CMEEC was directed to file a compliance plan that would indicate, among other things: (1) dollar amounts it believes this Interim Award requires it to repay to WED in each category of disputed costs ruled upon, (2) other remedial steps it will take to comply with the rulings, and (3) the timeline it proposes to follow to initiate and complete each of the steps it intends to take to bring its operations into compliance with the contractual requirements indicated. Within thirty (30) days of CMEECâ&#x20AC;&#x2122;s filing of its compliance plan, WED was directed to file a response indicting its agreement or disagreement with the elements of the plan. Regarding elements where there is disagreement, WED was required to state the reasons for its disagreements, along with an alternative proposal indicating how it believed the matter should be addressed.. Within ten (10) days of WED filing of its response, CMEEC was directed to file a reply indicting its acceptance or rejection of each WED proposal, along with the reasons for its rejection. 4. Within sixty (60) days of issuance of the Partial Interim Award, CMEEC was directed to instruct its employees to submit accurate daily time records to indicate in general hourly blocks the amount of their time spent on Pierce and Microgen project activity. (Employee

hearing testimony indicated that end-of-each-day reporting of hourly increments would not be unduly burdensome.) In the interim, CMEEC was directed to revise its Tenrox pull-down menus and make other adjustments to the software program in order to facilitate employee ability to record time spent on activities attributable to these projects. In addition, CMEEC employees were required to be provided training on how to accomplish this task most efficiently. Senior management and the H.R. Lead were required to direct employees to complete and submit their time reports accurately, and senior management was prohibited, directly or indirectly, from indicating or suggesting otherwise. 6. Jurisdiction was retained for the conduct of the compliance phase of the arbitration. At the conclusion of the compliance phase, as requested by the parties, formal notice will be provided that the hearing phase is concluded, and the sixty-day clock for issuance of a Final Award shall commence. The parties’ thirty-day clock for initiation of judicial review, if any, of all or any part of the Final Award shall commence on the date of the Final Award.

VI. PARTIAL INTERIM AWARD, FINDINGS, AND ORDER re COMPLIANCE The issues raised by the parties’ multiple compliance filings are resolved as follows: CMEEC Rate 9 load volumes versus EIA-filed data. Wallingford’s initial September 2018 comments on CMEEC’s July 2018 Compliance Plan alleged that the true-up volumes contained in CMEEC’s 2014-16 compliance filing were materially understated because they vary significantly from volumes reported to the federal Energy Information Administration (EIA) on Form 861. Falsely or fraudulently filing such EIA data is a criminal offense and “may result in a criminal fine,” so Wallingford urged that these data be used as the more certain and certified standard. CMEEC responded that the MOA explicitly incorporated Rate 9 and did not mention

EIA data, that a major part of the differences in the two reports was due to the inclusion of the Bozrah load in 2014 and 2015 and that, as a practical matter, EIA data “is not reported and published on a sufficiently timely basis” to be used for true-up purposes since it’s not-fullyreliable “early release” data are published in August and final data are not published until October. Ruling: Both the MOA’s explicit incorporation of Rate 9 data and the impracticality of the late availability of the EIA data for true-up purposes require that Rate 9 rather than EIA data be used for true-up purposes. Bozrah load volume. Whether 2014 and 2015 Rate 9 data should be modified to include the Bozrah Light and Power load volumes for true-up purposes is a separate question. The parties agreed that “Rate 9 loads are the loads of CMEEC’s members,” and that Bozrah become a CMEEC member on January 1, 2016. As a result, because Borah volume is included in CMEEC Rate 9 2016 and 2017 filings, Wallingford characterized these respectively as “close” or “very close” to EIA-reported volumes and conceded that Rate 9 data was appropriate for these years. CMEEC contended, however, that prior to Bozrah becoming a CMEEC member, there was no legitimate basis for including its load. Wallingford countered that Bozrah was a whollyowned affiliate of CMEEC member Groton and pointed to Bozrah’s inclusion in CMEEC’s 2013 year end “Participant Billing” memorandum. Ruling: the first line of CMEEC’s 2013 “Participant” memo refers to the “eight members/participants” and lists Bozrah and MTUA along with the six municipal members. The second page refers to “Load Data” and “total megawatt hours of load used” and states in the same paragraph that “All members and Bozrah have selected stabilized rates …”. Because Bozrah is a wholly-owned affiliate of a CMEECmember (Groton), and because it is repeatedly characterized as a “participant,” Bozrah’s load should be included in the load totals used in the 2014 and 2015 true-ups.

CMARS SMD Charges in Net A&G. Wallingford comments that CMEEC has erred in its true-up calculation of Net A&G charges by including CMARS SMD costs, which it contends should be excluded. In partial support thereof, it submits a single page from an early CMEEC pre-Summary Disposition exhibit labeled “2013 Total A&G Budget,” which was part of a “CMEEC 5-Year Proposed Budget” (Revision 3, printed 10/24/14). This page shows a pie-chart budget which WED characterized as “clearly show[ing] that at that time … ‘Net A&G’ is shown as total A&G LESS [certain] categories,” including CMARS SMD. Wallingford stated that after it signed the MOA, “CMEEC began treating CMARS SMD as a component of MOA Net A&G, with the effect of materially increasing Wallingford’s charges under the MOA.” For the four years 2014-17, CMARS SMD budget amounts total approximately $1.1 million. CMEEC responded that the record clearly established that CMARS and CMARS SMD were both terms that describe the same legacy data platform, that WED witness Adair testified at the hearing that CMARS was “the data engine for everything CMEEC does,” and that the Partial Interim Award held accordingly that CMARS costs are among the “types of CMEEC operational expenses that benefit the Springing Projects directly and may appropriately be charged to WED.” CMEEC also responded that the MOA, unlike the Springing Contracts, did not include an “attributable to” requirement, and that WED had waived this argument by failing to raise it in pre-filed testimony or at trial and “by taking a contrary position on brief.” Ruling: for all of these reasons, Wallingford’s request to exclude CMARS SMD costs from Net A&G in 2014-17 is denied. Broadband Installation, Retirement Benefit, Charitable Donations. Wallingford urged that several other modest expense items be excluded from the A&G costs it is required to pay under the MOA and the Springing Contracts. Its expert accordingly eliminated these items in

determining his calculation of the damage amount he believed WED is owed. CMEEC responded that, although expenses must be “attributable to” the Pierce and MicroGen projects under the Springing Contracts, there is no parallel requirement in the MOA, so WED should accordingly pay the same costs other Rate 9 customers pay. Rulings: The broadband service supports all CMEEC functioning, including the Springing Projects, so that a portion of the CWIP cost paying for its installation is appropriately includable in A&G under the MOA -- and are also “attributable to” the Springing Contract Projects. Charitable contributions and former CEO supplemental retirement expenses are not “attributable.” Accordingly, they are not required to be paid by WED under the Springing Contracts. Labor overhead adder. Based on the evidence presented at the June 2017 hearing, Order 18 (the May 2018 Post-Hearing Rulings) rejected CMEEC’s 100% labor overhead adder and held that “a total 60% labor overhead adder is a reasonable and accurate amount for CMEEC to charge WED for indirect Springing Contract labor costs.” Wallingford’s comments on Order 18 observed correctly that the Order’s Findings and Conclusions did not require explicitly that the 60% adder be applied on a go-forward basis. CMEEC’s Compliance Plan indicated that it would initially apply the 60% adder going forward, but also stated its intention to engage an independent consultant to evaluate its “approach to assigning overhead costs to CMEEC projects” and determine “a commercially reasonable and appropriate overhead adder for assigning overhead costs to CMEEC labor.” Once this study is completed, it proposed to use the consultant-determined “appropriate” rate. Wallingford objected to this compliance proposal, urging that the 60% amount be embodied in a permanent order and indicating skepticism regarding the objectivity of a “study” conducted by a hired-consultant. WED’s skepticism was very understandable, given CMEEC’s

repeated actions through the years (including multiple times in this proceeding) to “redefine” cost accounting arrangements to Wallingford’s financial detriment. CMEEC responded that Wallingford is entitled to purchase power under the Springing Contracts for several decades, that economics can and do change and evolve over time, and that the Partial Interim Award indicates with regard to several other issues that better, clearer, more specific future documentation of certain kinds of costs could justify changes that would allow their being attributed to the Springing Projects in future billing. Ruling: The Post-Hearing PIA requires that the 60% adder be used in calculating prior damages and on a going-forward basis; however, it does not require that this percentage remain fixed in perpetuity. Based on hearing evidence regarding prior history, a 60% labor overhead is appropriate for 2018 and 2019. If, however, an objective study thereafter indicates that a different percentage more accurately reflects actual documented overhead costs, a different documented percentage may be used. Time interval tracking. The CMEEC Compliance Plan included a revised Personnel Labor Tracking System, accompanied by written instructions from its Human Resources Director. Employees are “required to record in Tenrox their actual time worked each day,” to do this “at the end of each workday (or, if more convenient, during the course of each day),” and to “record accurately (in hourly or shorter intervals) the amount of time” spent on their various departmental Work Functions, including explicitly time spent on the Pierce or MicroGen project. Wallingford raised a number of objections to this new system based in significant part on an internal CMEEC December 14, 2016 memo entitled “Category Changes in Tenrox.” As an initial matter, Wallingford raised forceful objection to its not having been provided this memo prior to the hearing in response to its May 23, 2017 data request 13-2. CMEEC counsel concur that the memo fell within the scope of WED’s request and should have been provided, and

investigated how the non-production had occurred. Reporting that it had produced 161 pdf files six days after WED’s request, while seeking simultaneously to respond to two further WED data requests during this same six-day interval, counsel stated that “as best as [we have] been able to reconstruct what occurred … several potentially responsive emails inadvertently were not transferred to the queue of materials waiting to be reviewed.” Given the intensity and volume of document production in the immediate period leading up to the hearing, I conclude that counsel’s failure to produce was inadvertent rather than intentional. I do, however, concur with Wallingford’s view that the substance of the memo provides a further indication that CMEEC witness testimony regarding the Tenrox system at the evidentiary hearing in this arbitration was affirmatively misleading, as well as being lacking in credibility. Regarding the substance of the memo, Wallingford interpreted it as requiring CMEEC employees, effective January 1, 2017, to record their time in 15-minute intervals. It requested accordingly that 15-minute, rather than hourly, time-reporting intervals be ordered to be used in future CMEEC employee time reporting. Although the actual wording of the key sentence is reasonably subject to two interpretations, its meaning is clarified by the next immediately following sentence. Taken together, the two sentences indicate that the smallest time increment the Tenrox system is capable of recording is 15-minutes and that, as a result, any department or work group that “requires more finite level of time tracing” will need to make an additional arrangement to achieve that. The sentences do not require that employees record their time in 15-minute intervals. Ruling: Wallingford’s request that 15-minute-time-interval reporting be required is denied. Non-Pierce-project time Information Sharing. CMEEC’s Compliance Plan explicitly directed employees to record their Pierce and MicroGen (and several other specific projects’)

time, but did not require them to record their non-designated-project time in the same manner. Wallingford urged that CMEEC employees be required to record 100% of their full work-day time (Springing Contract and non-Springing Contract) in a consistent manner in Tenrox and that 100% of all employee time information be required to be provided to WED. CMEEC responded that the contracts have been held to require them to document employee time “attributable to” the two Springing Contracts projects, but that the contracts do not contain any requirement regarding how other CMEEC employee non-Springing-Contract time is to be recorded. Also, counsel reported jointly on January 8, 2019 that the MicroGen contract ended on December 31, 2018 (subject to true-up) so that, going forward, the Pierce Project is the only project subject to the terms of a Springing Contract. Ruling: The contractual requirement that CMEEC document employee time “attributable to” the Pierce and MicroGen projects (and now only the Pierce Project) and provide that information to WED does not carry with it any specific requirement regarding the manner in which CMEEC employee time unrelated to these projects must be recorded. Nor does it require that such non-project-related information be submitted to WED. Next Steps. Counsel were requested to review this Award and confer promptly with their clients regarding its substance. Thereafter, they were requested to confer with each other, and report back (jointly or separately) regarding whether any further clarification or rulings would be helpful to provide clear compliance guidance going forward -- and/or other next final steps. Counsel were requested to agree swiftly on a suitable, very-prompt report-back date no event later than February 7, 2019.

VII. COMPLIANCE CLARIFICATION RULINGS The parties’ February 7, February 20, and February 27, 2019 Compliance Clarification filings raised four additional issues to be resolved in order to finalize the amount of the damages payment CMEEC is required make to Wallingford. These included whether the “attributable to” standard applies to MOA refunds; the appropriate level of granularity for Springing Contract time interval reporting; whether the 2014-15 Bozrah load treatment, upon reconsideration, should be modified; and whether CMEEC must pay interest on its damage payments to Wallingford (and, if so, at what rate). Procedural Order 21 granted CMEEC leave to file a short Bozrah reconsideration request and WED an opportunity to reply. It also offered CMEEC an opportunity to respond to Wallingford regarding interest, if it wished, albeit with a strong indication that it would bear a heavy burden of persuasion on this issue. 1-Attributability under the MOA. CMEEC’s February 7, 2019 filing appropriately identified a misstatement on page 84 of Compliance Order 20. Discussing charitable contributions and supplemental CEO retirement benefits and the Springing Contracts’ attributability requirement, Order 20 stated in error that these are not required to be paid by WED under the MOA. It should have correctly stated that they are not required to be paid by WED under the Springing Contracts. This misstatement is corrected in this Final Order. 2-Time Interval Tracking. Wallingford’s February 7, 2019 Request for Clarification regarding Time Interval Tracking seeks confirmation that CMEEC is not permitted or required to utilize time intervals for Springing Contract reporting “that [are] less granular than called for by the CMEEC Compliance plan,” and that they “should reflect the granularity that is appropriate under the circumstances.” While Wallingford’s request is less than crystal clear, it appears to be contrary to Compliance Order 20’s holdings (at page 86) that “15-minute-time-interval

reporting” is not required and that the Springing Contracts do not include “any specific requirement regarding the manner in which CMEEC employee time unrelated to these projects must be recorded.” Accordingly, this Wallingford request for clarification was denied. 3-Treatment of the 2014-15 Bozrah load. CMEEC sought and was granted leave to request reconsideration of Compliance Order 20’s ruling regarding treatment of the 2014-15 Bozrah load. It did so on February 20, 2019, and Wallingford replied on February 28, 2019. CMEEC’s representation that the cost of this ruling approaches $500,000 is a factor in making reconsideration appropriate. CMEEC stated that Wallingford first raised this issue in September 2018, more than a year after the evidentiary hearing, and that “timeliness matters” (including under the JAMS arbitration rules). It urged that the pre-2016 distinction between Bozrah being a CMEEC “participant” versus a “Rate 9 customer” was fundamental, and that this was indicated by the 2013 memo’s reference to “eight members/participants” and its separate references to Groton and Bozrah (and MTUA). Moreover, as per WED’s filing, Groton’s and Bozrah’s independent status was further indicated by their reporting their loads separately to the EIA. Finally, CMEEC urged that, if the ruling is not reversed, “WED’s rate will wrongly be different from that imposed on every other Rate 9 customer.” Wallingford responded that its objection was timely because the appropriate time for it to challenge a payment begins only after a true-up report is submitted, and that it was only following CMEEC’s true-up report that it discovered that the Bozrah load “was not considered when calculating the MOA A&G charge.” It characterized CMEEC’s position as “catch me if you can” and as being contrary to the PSA Section 13.4.2 provision that “a primary principle of this contract … now and as it may be amended in the future, is equitable and nondiscriminatory

treatment of Wallingford.” Finally, WED argued that the MOA does not require identical rates and that, as CMEEC previously stated, WED and CMEEC Members pay “rates that are set on the same basis, but [are] themselves not identical” and are not “the same $/MWh rate for service.” An initial important CMEEC argument was that Wallingford did not raise this issue before the hearing and did not present supporting documents and hearing witnesses, who would be subject to cross-examination and other similar challenge. But for the fundamental provisions of the parties’ contractual obligations, this CMEEC argument would likely prevail. However, a fundamental provision of the parties’ multiple contracts is that CMEEC is obligated to provide an annual post-audit true-up and Wallingford, after receiving and examining the true-up, is then afforded the opportunity to challenge CMEEC explanations and request repayment. Here, no true-ups were presented until after the hearing and indeed until after the ruling that such true-ups were contractually-required. As a result, Wallingford first received the required information necessary to document its challenge long after the hearing had occurred. Accordingly, Wallingford’s challenge to the inclusion of the Bozrah load was timely. A second important consideration is the interpretation of the “Participant Billing, Year Ended 12/31/2013” document. The first sentence refers to CMEEC’s “eight member/ participants,” and the second sentence lists eight entities: “Groton, Norwich, Jewett City, East Norwalk, South Norwalk, Wallingford, Bozrah and MTUA.” One interpretation of this listing is that it first lists five “members” and then three independent “participants,” thereby indicating that Bozrah is a non-member “participant.” However, the treatment of “participants” described three paragraphs later contradicts this. The first sentence of the fourth paragraph refers to “Member, Wallingford, and MTUA billed

amounts.” Because it makes no separate reference to Bozrah, the fourth paragraph therefore appears to include Bozrah in the Member category. Moreover, this treatment continues throughout the fourth paragraph. It states that “Documentation of Member and Wallingford review consists of an Excel worksheet found on ….” The next sentence states “MTUA documentation of review is found on ….” Then the paragraph ends. It does not make any further independent statement referring to “documentation of Bozrah….” Again, the implication is inescapable that for the practical operational purpose of back up documentation, Bozrah data are included in the Member category. An additional indication of this operational merging is found in the final paragraph of the memo’s first page under the heading “Prepare Load Reports.” This paragraph states in part “Groton presents load data in two separate formats, where the others have only one format.” Again, the implication is strong that Bozrah is treated as part of Groton for this aspect of documentation, albeit in a separate format. The final three pages of the memo make perhaps a half dozen references to “Member/Participants” without further elaboration. Thus, while the document may not be 100% consistent in its treatment of Bozrah (and its load), on balance I find and hold that it supports a finding that the Bozrah load is appropriately treated as part of the Groton load for purposes of calculating damages due under the 2014 and 2015 true-ups. 4-Interest due on CMEEC breach-of-contract damage payments to Wallingford. The parties’ contracts provide that Connecticut law shall apply. Section 37-3a of Chapter 673 of Connecticut General Statutes provides in pertinent part: “Rate recoverable as damages. …. Interest at the rate of ten percent a year, and no more, may be recovered and allowed in civil actions or arbitration proceedings under chapter 909, including … as damages for the detention of money after it becomes payable.”

Wallingford stated that it is entitled to interest on “refunds” under the contracts and requested in its February 28, 2019 submission a ruling that the contracts “do require the payment of interest regardless of the magnitude of the overcharge.” CMEEC stated in response that the contracts explicitly provide for interest in two circumstances, a-when Wallingford fails to pay an outstanding bill within 15 days, and b-when CMEEC issues a “corrected bill” or other similar computational or recording error. However, the contract provisions related to Disputed Bills and Dispute Resolution do not contain any similar explicit provision for interest. Accordingly, CMEEC initially indicated to WED that it did not intend to pay interest on damage amounts awarded. Following the arbitrator’s statement that CMEEC would face a “very steep hurdle of persuasion” in arguing against an award of prejudgment interest, CMEEC urged in its February 20, 2019 submission that the contracts’ explicit interest rates for late payments or for fixing computational errors (two percentage points over the prime rate for commercial loans to large corporate customers then in effect at certain banks) should “provide the interest rate that could be considered equitable in these circumstances.” Here, the parties’ contracts provide repeatedly for either to pay the other interest (at prime +2) for even the smallest of amounts due, either to CMEEC for late payment, or to Wallingford for adjustments due to CMEEC computational or other similar errors. In addition, both PSA Section 9.2 and the Springing Contracts Section 6.2 provide in identical language that “Any refund due to Wallingford shall be made immediately with interest” and reference “errors in arithmetic, computation, meter readings, estimating, or otherwise ….” (emphasis added). Accordingly, I find and hold that CMEEC is required to pay Wallingford interest on all damage amounts due as true-up payments resulting from contract breaches as found in this arbitration.

The remaining question is whether the interest rate CMEEC must pay Wallingford should be the contractual rate (prime plus 2) applicable in the event of good faith computational errors or late payments, or whether it should be the Connecticut statutory rate (10%) authorized for “damages for the detention of money after it becomes payable.” Connecticut law makes this decision a matter of court or arbitrator discretion. Here, the parties’ contracts never anticipated or addressed major breaches of the size, complexity, creativity, and duration this arbitration has found to have occurred. The parties’ foundational MOA affirmed that “a primary principle of this contract … now and as it may be amended in the future, is equitable and nondiscriminatory treatment of Wallingford….” Also, as found in the summary disposition ruling (p. 31) and agreed by CMEEC: “The collective provisions of the [parties’] four contracts envision, and require, that the parties will each provide extensive information to the other.” Regrettably, however, multiple rulings in this arbitration hold that CMEEC failed to act in accordance with these standards. Additional factors support the applicability of the statutory maximum 10% interest rate as the equitable rate in this matter. If the 2014 true-up had occurred as required, significant repayment amounts would have “become payable” in mid-2015, nearly four years ago – and subsequent breaches, each resulting in CMEEC “detaining” money that otherwise would be “payable,” might have been avoided. Other equitable factors include CMEEC’s evolving explanations of its conduct (initially contending that no true-ups were due, then reporting that true-ups had indeed occurred—because under its interpretation estimated budget amounts were the same as actual costs), CMEEC’s presentation of hearing witnesses found not to have been credible, and CMEEC presentations having led the arbitrator to feel “affirmatively misled.” A

final equitable factor is that, although there has been neither a finding of a violation of the covenant of good faith and fair dealing nor an award of attorney fees, the record does come close to justifying such rulings. Accordingly, multiple equitable factors constitute the basis for holding that the appropriate interest rate for CMEEC to pay Wallingford for contractual breaches found in this arbitration is the Connecticut statutory rate of 10%. Next Steps. The parties were directed to confer and to provide a joint filing that sets out stipulated damages or, if they are unable to stipulate as to any value, setting forth in detail the basis for any differences. The purpose of this filing was to present the Arbitrator support for a detailed monetary calculation to be included in the Final Award.

VIII. SETTLEMENT AGREEMENT AND RELEASE On April 29, 2019 the parties submitted the fully-executed Settlement Agreement and Release between Wallingford and CMEEC (“Settlement Agreement”). As requested, its text is included in full immediately below and is hereby incorporated as part of this Final Award.

SETTLEMENT AGREEMENT AND RELEASE The Connecticut Municipal Electric Energy Cooperative (“CMEEC”) and the Town of Wallingford, Department of Public Utilities, Electric Division (“Wallingford”) (collectively, the “Parties”) enter into this Settlement Agreement and Release (“Agreement”) as of April 25, 2019 for the purpose of resolving in full JAMS Arbitration Proceeding Ref. # 1400015484, now pending before Arbitrator Eric Van Loon (the “Proceeding”). RECITALS WHEREAS, the Proceeding involves multiple issues pertaining to the rights and obligations of Wallingford and CMEEC under the 2004 Amended Contract for the Supply of Electric Power and Energy, as amended by Amendment Nos. 1 – 5 (the “PSA”) (1RD-1); the Memorandum of Agreement for the Supply

of Electric Products, as amended by Amendment No. 1 (the “MOA”) (1RD-2), the Contract for the Sale of Pierce Project Electric Power and Energy (“Pierce Agreement”) (1RD-3); and the Contract for the Sale of 50 in 5 Peaking Project Power and Energy and Crediting of Avoided Costs Benefits, (“Microgen Agreement”) (1RD-4) (the Pierce Agreement and the Microgen Agreement are referred to as the “Springing Contracts” and the agreements collectively are referred to as the “Disputed Contracts”) and WHEREAS, Arbitrator Van Loon has issued a series of Interim Awards that have included rulings on the issues raised by the Parties, excepting the computation and award of monetary damages and interest; and WHEREAS, the record includes data pertaining to the claimed damages associated with calendar years 2014, 2015, 2016 and 2017; and WHEREAS, the Parties desire to settle claims as to the damages and interest payable by CMEEC to Wallingford for those periods to reflect the rulings of the Arbitrator; and WHEREAS, the Parties also desire to settle the amount to be paid by CMEEC to Wallingford in satisfaction of CMEEC’s obligation to perform a true-up of 2018 budgeted costs to actual costs under the Springing Contracts; and WHEREAS, the Parties wish to agree on the issuance of a Final Award that will bring the Proceeding to a conclusion: NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, receipt of which is hereby acknowledged, the Parties agree as follows: I.EXPANSION OF THE SCOPE OF THE ARBITRATION TO INCLUDE 2018 TRUE-UPS The Parties agree to expand the scope of the Arbitration to include resolution of the 2018 Trueup of charges imposed under the Springing Contracts as provided in Section II. II. PAYMENTS FOR CALENDAR YEARS 2014-2017 AND FOR 2018 TRUE-UPS The Parties Agree that CMEEC shall pay to Wallingford the sum of $3,670,000, which payment shall be in satisfaction of all claims that Wallingford either raised or could have raised concerning (1) charges imposed upon Wallingford under any of the Disputed Contracts during the period 2014-2017, and (2) the 2018 true-ups performed by CMEEC of charges under the Springing Contracts. CMEEC shall render this payment in full to Wallingford within ten (10) days of the execution of this Agreement by the duly authorized representatives of CMEEC and Wallingford. If CMEEC fails to make payment to Wallingford on or before the 10th day following execution of this Agreement, interest will begin to accrue on the unpaid amount at the rate of ten percent (10%) per annum.

III. ELEMENTS OF FINAL AWARD A. Incorporation of Interim Awards as Final Awards The Arbitrator shall issue a Final Award within thirty (30) days of the filing of this Settlement Agreement in the Proceeding. The Final Award shall incorporate all prior Interim Awards and rulings, and shall state that in any instance in which a ruling on an issue in an Interim Award differs from a ruling on the same issue in a subsequent Interim Award, the most recently issued ruling governs. B. Expansion of Scope of Arbitration The Final Award shall state that at the request of the Parties the scope of the Arbitration has been expanded to address the 2018 True-ups under the Springing Contracts. C. Award of Damages and Interest The Final Award shall state that the damages and interest payable to Wallingford are as stated in Section II above. The Final Award shall include this Settlement Agreement as an Exhibit. D. Information Exchange The Final Award shall state that for the Pierce Agreement true-ups for 2019 and thereafter, CMEEC will provide Wallingford with the supporting information CMEEC committed to provide during the arbitration. E.

No Other Rulings The Final Award shall not include any new or additional rulings other than those provided for by

this Agreement. F.

Parties Agreement Not to Contest Final Award CMEEC and Wallingford each agree that it will not contest the Final Award.

IV. RELEASE Upon issuance of the Final Award and payment by CMEEC to Wallingford of the stipulated payments provided in Section II, the Parties mutually release each other from any claim for damages that were raised or could have been raised in the Proceeding.

V. MISCELLANEOUS A. Governing law This Agreement shall be governed, construed and interpreted in accordance with the laws of the State of Connecticut, without regard to principles of conflicts of law. No litigation may be brought other than in the State courts of Connecticut, returnable to the Judicial District of New Haven. B. Amendments This Agreement shall not be altered or amended except by an instrument in writing executed by authorized officers of the Parties. C. Headings; attachments. The headings used for the sections and articles herein are for convenience and reference purposes only, and shall in no way affect the meaning or interpretation of the provisions of this Agreement. D. Entirety This Agreement contains the entire agreement between the Parties with respect to the subject matter hereof. Any representation, inducement, promise or agreement that is not expressly set forth or incorporated by reference in this Agreement shall be of no force or effect. E.

Execution by counterparts This Agreement may be executed in any number of counterparts, and upon execution by all

Parties, each executed counterpart shall have the same force and effect as an original instrument and as if all Parties had signed the same instrument. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon, and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more signature pages. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their respective names by their duly authorized officers. Connecticut Municipal Electric Energy Cooperative

Town of Wallingford, Department of Public Utilities, Electric Division

___________________________________

By: Michael Lane

By: William W. Dickinson, Jr.

Interim Chief Executive Officer

Mayor

IX. FINAL ORDER As requested, this Final Order, which concludes this arbitration, incorporates the provisions of the parties’ Settlement Agreement and Release. It provides as follows: 1. This Final Award incorporates all prior Interim Awards and rulings, and does not include any new or additional rulings other than those provided for by the parties’ Agreement. In any instance in which a ruling on an issue in an Interim Award differs from a ruling on the same issue in a subsequent Interim Award, the most recently issued ruling governs. 2. At the request of the Parties, the scope of the Arbitration has been expanded to address the 2018 True-ups under the Springing Contracts. 3. CMEEC shall pay to Wallingford the sum of $3,670,000, which payment shall be in satisfaction of all claims that Wallingford either raised or could have raised concerning (1) charges imposed upon Wallingford under any of the Disputed Contracts during the period 2014-2017, and (2) the 2018 true-ups performed by CMEEC of charges under the Springing Contracts. CMEEC shall render this payment in full to Wallingford within ten (10) days of the execution of the parties’ Settlement Agreement by the duly authorized representatives of CMEEC and Wallingford (i.e., by May 6, 2019). If CMEEC fails to make payment to Wallingford on or before the 10th day following execution of their Agreement, interest will begin to accrue on the unpaid amount at the rate of ten percent (10%) per annum. 4. For the Pierce Agreement true-ups for 2019 and thereafter, CMEEC will provide Wallingford with the supporting information CMEEC committed to provide during the arbitration.

5. The parties are requested to review the form and text of this Final Order and to report any “computational, typographical or other similar error” (JAMS Rule 24(j) within seven (7) calendar days.

SO ORDERED /s/ Eric E. Van Loon__ Eric E. Van Loon, Arbitrator Dated: May 1, 2019 evanloon@JAMSADR.com JAMS, 1 Beacon St., S.2210 Boston, MA 02108