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ABAG POWER also requires a refundable deposit for Working Capital equal to two months of RNG payments in the amount of $17,600. These costs are directly related to the SB 1383 procurement requirements and will be paid using the PGS special revenue reserve Fund 171. The refundable Working Capital deposit will be returned to Fund 171 when remitted back to the City. Expenditure Cost Reference to Agreement SB 1383 compliant $ 211,680 Exhibit C renewable natural gas Service Fee $ 4,500 Exhibit B Refundable deposit for $ 17,600 Exhibit C Working Capital Total Contract Amount $ 233,780 BACKGROUND In September 2016, Governor Brown signed into law SB 1383 (Lara, Chapter 395, Statutes of 2016), establishing methane emissions reduction targets in a statewide effort to reduce emissions of short-lived climate pollutants (SLCP) in various sectors of California's economy. The law codifies the California Air Resources Board's Short-Lived Climate Pollutant Reduction Strategy, established pursuant to SB 605 (Lara, Chapter 523, Statutes of 2014), to achieve reductions in the statewide emissions of short-lived climate pollutants. These actions seek to address the many impacts of climate change on human health and on the environment. Methane emissions resulting from the decomposition of organic waste in landfills are a significant source of greenhouse gas (GHG) emissions contributing to global climate change. Additionally, organic materials including waste that can be readily prevented, recycled, or composted account for a significant portion of California's overall waste stream. All SB 1383 regulations went into effect January 1, 2022. Under SB 1383, the City is required to procure certain levels of compost, RNG used for transportation fuels, electricity, heating applications, or pipeline injection, or electricity from biomass conversion produced from organic waste. The City's procurement target is established by State regulation, according to population. In 2023, ABAG POWER established an RNG aggregation program to assist members in meeting jurisdictional procurement targets created by SB 1383. Under the program, ABAG POWER conducts pooled purchasing of RNG (i.e., biomethane) and related fuels to achieve reductions in GHG emissions, address the recycling of organic waste, and assist participants with the promotion and use of low carbon fuels. At the request of its member agencies, ABAG POWER issued a Request for Offers (RFO) seeking supplies of SB 1383 compliant biomethane RNG. ABAG POWER has identified a supplier and has negotiated terms on behalf of interested agencies to procure RNG. DISCUSSION The State issued to the City a procurement target of 6,357 tons per year of recovered organic waste products. The City will meet approximately 30 percent of its SB 1383 procurement target with the purchase of RNG through this agreement with ABAG Page 2 of 3