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Participation in the California Air Resources Board's Low Carbon Fuel Standard Program — Page 3 higher carbon intensity fuel providers that are required to submit LCFS credits. The diagram below illustrates the basic operations of the LCFS Program: Required Participants Must Turn in Credits to CARB High Carbon Intensity Fuels Gasoline, Diesel, High Carbon Biofuels Voluntary Opt -In Participants Generate Credits $ - Pay for Credits Credits for Compliance Low Carbon Intensity Fuels Electricity, Ethanol, Natural Gas, Low Carbon Biofuels, Hydrogen RPU can generate LCFS credits from electricity used as a transportation fuel for the following types of electric transportation: • EV charging at single- and multi -family residences • Public access EV charging provided by RPU • RPU and City EV fleets • Electric forklifts and electric forklift fleets CARB did not establish an auction or other formal market mechanism for credit transactions; instead, all transactions take place in the secondary market between buyers and sellers. Brokers may be used to help identify LCFS credit buyers. RPU anticipates selling its LCFS credits utilizing well-established internal controls, including mirroring oversight for secondary market transactions for power purchase and sale. LCFS Program Requirements Revenue from the sale of LCFS credits is legally required, per CARB regulation, to be used to provide benefits to customers who are or will be EV owners. Programs could include, but are not limited to, providing rebates for EV chargers, promoting EV use in low-income and disadvantaged communities, incentivizing companies to provide electric fleets, and/or educating the public on the benefits of EVs. Future use of the LCFS credit proceeds for new rebate programs or infrastructure investment will be subject to Board and Council approval. LCFS Program participants are also required to submit quarterly and annual reports on how much revenue was received from sale of LCFS credits, how the revenue has been or is planned to be spent, and how the LCFS Program is being administered. Revenues will be expended on programs administered by RPU that benefit customers and are compliant with the LCFS Program regulation. To the extent allowed by law, RPU will ensure that it recovers its administrative costs incurred as a result of the LCFS Program. FISCAL IMPACT: Participation in the LCFS Program is anticipated to generate approximately $120,000 in revenue for RPU in the first year (FY 2018-19), with revenues increasing in subsequent years as the