Section 2. Energy Delivery, Surplus Energy Sales and Ownership.

2.1. Delivery of Power.

Pursuant to the Act and Applicable Commission Orders, Utility is ordered to transmit, or provide for the transmission of, and distribute DWR Power to Customers over Utility's transmission and distribution system in accordance with Applicable Law, Applicable Tariffs and any agreements between the Parties.

2.2. Data and Information Communications Procedures.

(a) Utility shall estimate Customer usage and Utility-retained generation for a given trade day and shall communicate the net of such estimate to DWR by 7:00 a.m. on the preceding Business Day; provided, however, upon the Operating Order Effective Date, Utility is directed to comply with the data and information communications procedures of the Operating Order. In the event that DWR observes a persistent deviation between estimated Customer usage and actual Customer usage, or between estimated Utility-retained generation and actual Utility-retained generation, DWR may request Utility to review, and Utility will promptly commence to review, Utility's forecast methodology and will report the results of such review to DWR; provided, however, that Utility shall have no obligation to correct or minimize such deviation except as provided in Attachment E hereto.

(b) DWR agrees to send to Utility in writing each day the Scheduling Coordinator-to-Scheduling Coordinator Trade between DWR and Utility. This information shall be delivered no later than 9:30 a.m. for trades in the Day-Ahead Market for the following day, and no later than two hours and twenty minutes prior to the start of the delivery hour for trades in the Hour-Ahead Market. Utility is ordered, and DWR agrees to separately provide these schedules to the ISO prior to the close of the respective markets. The above deadlines for DWR are set because the ISO Day-Ahead Market currently closes at 10:00 a.m. on the day before delivery and the ISO Hour-Ahead Market currently closes two hours before the delivery hour. If these closing times should change, the deadlines for submission of DWR data to Utility shall change proportionately, which revised deadlines shall be confirmed in writing by DWR and Utility. DWR agrees that, upon Utility's request, DWR shall supply information to Utility substantiating to Utility's reasonable satisfaction (i) the total amount of energy purchased by DWR in the Day-Ahead Market and Hour-Ahead Market; and (ii) other such information that may be required for Utility to verify the DWR Charges, or any component thereof, including information regarding the allocation of such energy among Customers and other third parties to the extent so required. Notwithstanding the provisions of this paragraph (b), upon the Operating Order Effective Date, Utility shall schedule and dispatch Power as provided in the Operating Order.

(c) The basis for remittances of revenues for Power Charges shall be the amounts collected from Customers for actual DWR Powersupplied, as further described in Attachment B of this Servicing Order and, on and after the Operating Order Effective Date, consistent with the principles set forth in Exhibit C of the Operating Order. The basis for the remittance of revenues for Bond Charges shall be amounts collected from Customers pursuant to future Applicable Commission Orders implementing such Bond Charges (including, without limitation, the portion of any "charge" imposed by the Commission on Customers receiving ESP Power or Power provided by other third parties, which portion constitutes a Bond Charge). If and when ordered by the Commission, the remaining portion of any such charge shall be remitted to DWR in a manner reasonably agreed upon by the Parties or as provided in Applicable Commission Orders. All DWR Charges shall be at the applicable Commission-approved rates.

(d) Adjustments to the remittance of revenues to DWR in (c) above will be based on the following, (i) the difference between any quantities used to estimate the dispatched Power quantities necessary for calculating remittance of revenues to DWR and those dispatched Power quantities which are actually reflected in ISO settlement statements, and (ii) the difference between the Utility estimate of Customer usage and the actual Customer usage. Utility shall include an adjustment of DWR Charges, DWR Power, DWR Surplus Energy Sales Revenues, Utility-Provided Electric Power and, as applicable, ESP Power or third-party provided power, on its next Consolidated Utility Bill if so provided for in Attachment B hereto.

(e) On and after the Operating Order Effective Date, Utility shall perform surplus Power sales consistent with the Contract Allocation Order and the Operating Order. Utility shall also calculate and remit DWR Surplus Energy Sales Revenues consistent with the Contract Allocation Order and the Operating Order. The basis for remittance of DWR Surplus Energy Sales Revenues shall be amounts collected by Utility from third parties for sales of surplus Power, as further described in Attachment J hereto and Exhibit C of the Operating Order, all in accordance with the Contract Allocation Order. Attachment J hereto includes a procedure for the remittance of Preliminary Monthly Surplus Energy Sales Revenues Remittance Amount and a procedure for truing up for the differences between the Preliminary Monthly Surplus Energy Sales Revenues Remittance Amount and the Actual Monthly Surplus Energy Sales Revenues Remittance Amount.

(f) All data and information to be exchanged between the Parties in connection with scheduling and settlement of transactions shall be in the format agreed to by Utility and DWR and shall, except as otherwise provided by this Servicing Order or Utility Applicable Tariffs, or as may be approved by Utility in its reasonable discretion, be submitted electronically. If DWR receives any information that is unreadable, or contains data that cannot be processed by DWR's system, or is otherwise damaged, DWR agrees to inform Utility of such problem. Until any such problem is corrected, DWR shall not be responsible for processing information received in this condition. The foregoing notwithstanding, DWR agrees that it is not excused from its obligation to process information if DWR cannot read or otherwise process the information sent by Utility as a result of defects, errors, bugs, or viruses in DWR's systems or software or due to negligence or wrongful act(s) or failure(s) to act on the part of DWR's employees, agents, independent contractors, subcontractors or assigns. Similarly, if Utility receives any information that is unreadable, or contains data that cannot be processed by Utility's system, or is otherwise damaged, PG&E is ordered to inform DWR of such problem. Until any such problem is corrected, Utility shall not be responsible for processing information received in this condition. The foregoing notwithstanding, Utility shall not be excused from its obligation to process information if Utility cannot read or otherwise process the information sent by DWR as a result of defects, errors, bugs, or viruses in Utility's systems or software or due to negligence or wrongful act(s) or failure(s) to act on the part of Utility's employees, agents, independent contractors, subcontractors or assigns.

2.3. Ownership of DWR Power, Surplus Power, Utility-Provided Electric Power and DWR Revenues.

Notwithstanding any other provision herein, and in accordance with the Act and Section 80110 of the California Water Code, DWR shall retain title to all DWR Power sold by DWR to Customers or any surplus Power sold by Utility on DWR's behalf, in accordance with the terms of the Operating Order and consistent with the Contract Allocation Order. In accordance with the terms hereof and the Operating Order, as the case may be, Utility is acting solely as the servicing agent for DWR with respect to DWR Charges collected from Customers and with respect to sales of surplus Power to third-party purchasers, and nothing in this order should be construed to suggest other than that DWR shall retain title to all DWR Charges and DWR Surplus Energy Sales Revenues. In accordance with the Act and Section 80104 of the California Water Code, upon the delivery of DWR Power to Customers or the sale of surplus Power to third-party power purchasers made by Utility on behalf of DWR, those Customers and third-party power purchasers, shall be deemed to have purchased that power from DWR, and payment for any such sale shall be a direct obligation of such Customers or third-party purchasers, as the case may be, to DWR. All DWR Revenues and DWR Charges shall constitute property of DWR. To the extent any moneys are received by the Utility during the process of collection, and pending their transfer to DWR, the moneys shall be segregated by the Utility and shall be held in trust for the benefit of DWR. Notwithstanding any other provision herein, Utility shall retain title to all Utility-Provided Electric Power supplied by Utility to Customers and all surplus Power provided by Utility.

2.4. Allocation of DWR Power and DWR Surplus Energy Sales Revenues.

DWR Power will be allocated pursuant to the Act and other Applicable Law and Applicable Tariffs. On and after the Operating Order Effective Date, DWR Power and DWR Surplus Energy Sales Revenues shall be allocated consistent with the Contract Allocation Order, and as provided in the Operating Order and this Servicing Order.

2.5. Imbalance Energy.

The treatment of Imbalance Energy and the allocation of cost responsibility with respect to certain ISO charges, as between the Parties, shall be governed by Attachment I, as the same may be hereafter amended by Applicable Commission Orders, and Imbalance Energy Remittances after Utility's Collection Curve Implementation Date (as such terms are described in the Attachment I) shall be governed by the provisions set forth in Attachment B hereto; provided, however, on and after the Operating Order Effective Date, this Section shall be superceded by the provisions relating to such ISO charges provided in the Operating Order, including Exhibit D of such Agreement.

2.6. DWR Surplus Energy Sales Revenues.

The treatment of surplus Power shall be governed by the Contract Allocation Order and as further provided by Attachment J hereto and the Operating Order, as the same may be hereafter amended by written agreement of the Parties.