HomeMy WebLinkAboutStaff Report 166-10TO:
ATTN:
FROM:
DATE:
SUBJECT:
HONORABLE CITY COUNCIL
FINANCE COMMITTEE
CITY MANAGER
MARCH 16, 2010
DEPARTMENT: UTILITIES
CMR: 166:10
Adoption of Four Resolutions Approving Four Power Purchase Agreements
with Ameresco Forward LLC, Ameresco San Joaquin LLC, Ameresco
Avenal LLC, and Ameresco Crazy Horse LLC for the Acquisition in the
Aggregate of Up to 166,000 Megawatt -hours per Year of Energy Over
Twenty Years at an Estimated Cost Not to Exceed $388.5 Million
RECOMMENDATION
Staff recommends that the Finance Committee recommend that Council:
1. Adopt a resolution approving a Power Purchase Agreement (PPA) with Ameresco
Forward LLC, a Delaware limited liability company, for the acquisition of up to 47,000
megawatt -hours (MWh) per year of energy over twenty years at an estimated cost not to
exceed $108.6 million;
2. Adopt a resolution approving a PPA with Ameresco San Joaquin LLC, a Delaware
limited liability company, for the acquisition of up to 52,000 MWh per year of energy
over twenty years at an estimated cost not to exceed $124.7 million, including, if
required, a payment of up to $1.425 million for electric interconnection costs;
3. Adopt a resolution approving a PPA (or a PPA in substantially similar form) with
Ameresco Avenal LLC, a Delaware limited liability company, for the acquisition of up to
16,000 MWh per year of energy over twenty years at an estimated cost not to exceed
$45.1 million, including if required, a payment of up to $1.425 million for electric
interconnection costs; and
4. Adopt a resolution approving a PPA and Amendment No. 1 to the PPA with Ameresco
Crazy Horse LLC, a Delaware limited liability company, for the acquisition of up to
52,000 MWh per year of energy over twenty years at an estimated cost not to exceed
$110.1 million, including, if required, a payment of up to $1.425 million for electric
interconnection costs.
Additionally, for these agreements, staff recommends the Council waive the application of the
investment -grade credit rating requirement of Section 2.30.340(d) of the Palo Alto Municipal
Code as the Ameresco companies are not rated by credit agencies.
REPORT SUMMARY
Council approval of the four proposed contracts, expected to cost up to $284.5 million over 20
years, for renewable power will result in achievement of the goal to meet 33% of the Citywide
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electric needs with renewable energy. The additional cost of the renewable power over the
estimated cost of "brown power" will result in a rate impact of a little less than 0.5 cents per
kilowatt-hour (¢/kWh), about a 4% rate impact over current rates. Meeting the renewable energy
goal is a major component, along with maximizing energy efficiency, of achieving the
greenhouse gas reduction goals in the City's Climate Protection Plan.
The four contracts require the City to purchase the renewable energy produced from electric
generators fueled by landfill gas at new projects. Since the projects have not yet been built, there
are several costs that are currently unknown associated with the projects. One is the size of the
generator since that depends upon the amount and quantity of landfill gas that can be developed
at each site. Another is the cost of the interconnection equipment required to connect to the
electric grid and another is whether emissions control equipment is required and the cost of that
equipment. All of these uncertainties will be resolved within two years and prior to delivery of
the renewable energy. The Ameresco companies have provided attractive pricing to the City
before the uncertainties are resolved in order to induce the City to execute contracts for the
power purchases to allow it to complete the financing and begin construction as soon as possible
to receive Federal stimulus funds.
BACKGROUND
In 2002, the Council adopted a renewable resource portfolio standard with the objective of
meeting 20 percent of the City's electrical load with new renewable resources by 2015, while
ensuring the retail rate impact does not exceed 0.5¢/kWh on average, amounting to a premium of
approximately 5 percent of the average retail rate (CMR:398:02).
In March 2007, the Council advanced and increased the Renewable Portfolio Standard (RPS)
with a target to meet 20 percent of City loads with renewable resources by 2008 and 33 percent
by 2015. The new target was to be achieved while maintaining the retail rate impact measure of
0.50/kWh (CMR:158:07).
The City is currently receiving about 18 percent of its electricity from RPS resources. The City
has executed agreements with other projects that will result in a 21 percent RPS when they are
operational (expected in 2012) with minimal impact on retail rates. The City is still seeking new
renewable energy equal to approximately 12 percent of annual usage to meet the 33 percent
renewable portfolio goal by 2015.
The City issued its fifth Request for Proposals (RFP) for electric power supplies from renewable
resources in October 2009. Forty-two project proposals were received by the RFP closing date
of November 10, 2009. Staff evaluated the proposals on the basis of quality and completeness of
proposal, bidders' qualifications and financial stability, project viability, compatibility with
City's existing portfolio, and total cost of proposal and value to City. These four Ameresco
proposals were more attractive than the other proposals received in response to the RFP. Other
proposals were more expensive than the proposals from Ameresco and would likely have
resulted in a retail rate exceeding the constraint in the RPS guideline.
Ameresco is interested in starting construction on these projects by the end of 2010 to qualify for
Federal stimulus funds. Ameresco has stated that its positive experience in executing five
CMR: 166:10 Page 2 of 12
renewable power PPAs with Palo Alto since 2004, encouraged it to propose these four PPAs to
Palo Alto in hopes of negotiating contracts in time to meet construction deadlines. Ameresco
has cited that this is the reason for its relatively low-priced proposals to Palo Alto. Ameresco
indicates that delays in contract approval would jeopardize qualification for stimulus funds and
would lead to higher prices for the PPAs.
DISCUSSION
Ameresco develops and operates landfill gas -fired power plants across the United States,
including four operating in, and two others undergoing permitting in, California. Ameresco is
executing landfill gas fuel purchase agreements and site lease agreements with four landfills that
will enable development of the four projects described below.
Development of landfill gas power plants involves two cost uncertainties which are determined
by outside agencies and typically are unknown to the developer and the City until many months
after commitment to a PPA. These contingencies are: 1) the cost of the required interconnection
with the electric transmission grid owned by Pacific Gas and Electric Company (PG&E); and 2)
the cost of emission control equipment that may be required by the local air pollution control
district. In the past, Council has agreed to reopen PPAs to accommodate price changes for these
uncertainties or the developers have priced the uncertainties into the PPAs. To explicitly deal
with these uncertainties, staff and Ameresco have negotiated either price formulas or prepayment
terms that will incorporate these costs in three of the PPAs (all except for the Forward Landfill
project). The final cost will depend on the conditions imposed by PG&E for interconnection
charges and on equipment requirements imposed by the governing air pollution control district.
These conditions are expected to be determined in 2012 during later stages of permitting or early
operation for the projects. The effect of these contract terms is that the City, not Ameresco,
bears the risk of these yet -to -be -determined costs. Staff believes that having the City take the
risk is justified by getting a lower rate.
For each project, Ameresco has estimated the size of equipment that will be required to match
the estimated availability of landfill gas. However, during each project's final engineering
phase, based on the volume and quality of landfill gas available, the equipment size will be
selected. Therefore, the electricity generated could range up or down from the estimated output.
These outcomes would change the amount of energy produced by Ameresco and purchased by
Palo Alto, but all the energy produced would be purchased at the price and terms in the proposed
PPAs. The uncertainty of project size and output will be resolved well before energy deliveries
begin.
Ameresco plans to build all four plants, which would qualify as renewable power projects under
State -adopted definitions. They will be electrically connected to the transmission system
operated by the California Independent System Operator. Under the terms of the PPAs, Palo
Alto would pay predetermined rates over the terms of the agreements for any energy delivered.
Palo Alto would pay only for energy after its delivery. If delivered volumes decrease, Palo
Alto's volume -based payments to Ameresco would decrease proportionately, freeing up money
to purchase replacement renewable energy from other sources.
CMR: 166:10 Page 3 of 12
To encourage innovation, the parties negotiated a term in three of the PPAs (all except for the
Avenal project) that enables Ameresco to install engine heat recovery technology that could
boost electric output from the same landfill gas by 5% to 25% and to sell this additional
renewable energy to the City under the same contract and terms.
Forward Landfill
The Forward Landfill project has the simplest PPA of the four, with a single price that requires
Ameresco to take the risk of cost changes in interconnection requirements and emissions controls
requirements. The Forward Landfill project is located in Manteca, California, and uses a landfill
gas -fired turbine to produce a net output of 4.6 Megawatts (MW) with an annual estimated
output of 38 gigawatt-hours (GWh), or about 3.8% of Palo Alto's electric needs. The price is 9.9
0/kWh (equivalent to $99/MWh) escalating at 1.5% annually for the 20 -year delivery term.
This would result in a nominal cost of $87.6 million during the 20 -year delivery term. The
levelized cost is approximately $1.4 million per year (or $35 per MWh) higher than the current
projected cost of purchasing the same volume of traditional ("brown") energy from the market.
Although the project size is likely to be 4.6 MW, it could range from 1.6 MW to 5.7 MW, with a
corresponding range in energy production. At the maximum project size, energy production
would be 47 GWh at a nominal cost of $108.6 million during the 20 -year delivery term.
San Joaquin Landfill
The San Joaquin Landfill project is expected to be a 4.3 MW project at the San Joaquin Landfill
operated by San Joaquin County in Linden, California. Ameresco has site development rights
and a gas purchase agreement in place with the County. Under the proposed PPA, Palo Alto
would receive and pay for the entire net output from the expected 4.3 MW plant, or 36
GWh/year amounting to 3.6% of the City's total electric load. The plant may be sized up to
6.2MW, a size that could produce 52 GWh/year amounting to approximately 5.2% of the City's
total electric load.
If emissions controls are required on the San Joaquin project, the City would pay a cost
proportionate "rate adder." If emission controls are required, the rate adder is $0.60/MWh plus
$0.55/MWh for each $100,000 of emission controls expense that Ameresco incurs. The first -
year rate adder is capped at $10.01/MWh and would escalate at 1.5% per year. This formula
allows the City to benefit if the cost of emission control equipment is less than the maximum
anticipated.
To minimize the cost the City pays for the interconnection costs over the term of the PPA, the
City negotiated a prepayment for the incremental interconnection costs. The prepayment for the
interconnection would be 1.5 times the amount of the PG&E interconnection charge that exceeds
$300,000 up to a maximum payment of $1.425 million. (The reason that Ameresco would collect
1.5 times the cost is that the prepayment is taxable for Ameresco which has an effective 33% tax
rate.) For example, if the interconnection costs were $750,000, then the City's up -front payment
(before energy deliveries started) would be $675,000 [1.5 X ($750,000 — $300,000)]. As shown
in Table 1 below, the City would also pay an energy rate of $93.33/MWh plus, if emission
controls are required, the emissions control rate adder described above would apply, for all
energy deliveries. Rates would escalate at 1.5% per year.
CMR: 166:10 Page 4 of 12
Table 1- San Joaquin Landfill First -Year Prices and Pay -Ahead Cost
San Joaquin Landfill
Emission Controls
Required ($/MWh)
Emission Controls
Not Required
($/MWh)
PG&E Interconnection
Cost
Interconnection
Pay -Ahead Cost
>_ $1,250,000
$1,425,000
Up to $103.34
$93.33
$1,000,000
$1,050,000
Up to $103.34
$93.33
$750,000
$675,000
Up to $103.34
$93.33
$500,000
$300,000
Up to $103.34
$93.33
Up to $300,000
$0
Up to $103.34
$93.33
The Avenal Landfill
The Avenal Landfill project is a 1.4 MW project at the Avenal Landfill operated by Waste
Connections in Avenal, California. Ameresco is finalizing a site lease and a gas purchase
agreement with the landfill. Under the proposed PPA, Palo Alto would receive and pay for the
entire net output from the 1.4 MW plant that would produce an expected 12 GWh/year
amounting to approximately 1.2% of the City's total electric load. The plant may be sized
between 0.8 MW and 1.9 MW. At 1.9 MW, the plant could produce 16 GWh/year, or 1.6% of
the City's total electric load.
As with the San Joaquin Landfill project, if emissions controls are required on the Avenal
project, the City would pay a cost proportionate rate adder. If emission controls are required, the
rate adder is $0.60/MWh plus $0.80/MWh for each $100,000 of emission controls expense
Ameresco incurs to build the initial plant. The first year rate adder is capped at $15.23/MWh
and would escalate at 1.5% per year.
Ameresco and the City negotiated a pricing matrix whereby the starting price the City would pay
was dependent upon the actual PG&E interconnection cost and whether or not emission control
equipment is required by the San Joaquin Valley Air Pollution Control District. Under the
proposed PPA, Palo Alto would purchase the full output of the plant at a starting price from the
pricing matrix based on interconnection costs and on emission control equipment requirements.
Table 2 below is the pricing matrix that shows the negotiated first -year prices based on various
outcomes.
Table 2 - Avenal Landfill First -Year Prices
Avenal Landfill
Emission Controls
Required ($/MWh)
Emission Controls
Not Required ($/MWh)
PG&E Interconnection Cost
>_ $1,250,000
Up to $123.35
$108.56
$1,000,000
Up to $121.78
$106.55
$750,000
Up to $119.76
$104.53
$500,000
Up to $117.73
$102.50
Up to $300,000
Up to $116.14
$100.91
In the highest cost scenario with emission controls required and PG&E interconnection costs of
more than $1.25 million, the price would be 12.335 0/kWh escalating at 1.5% annually for the
20 -year delivery term. This would result in a nominal cost of $33.2 million during the 20 -year
CMR: 166:10
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delivery term for the 1.4 MW sized project. The levelized cost is approximately $0.81 million
per year (or $70 per MWh) higher than the current projected cost of purchasing the same volume
of brown energy from the market. Staff recommends this pricing matrix rather than prepaying
the incremental interconnection costs as with the San Joaquin Landfill project since the savings
are minimal for that option.
The Avenal Landfill project has a relatively high initial cost to develop the site and for the
interconnections needed to operate the first engine. After the initial project is built and
operational in 2012, Ameresco expects to be able to expand it approximately every four years as
increased amounts of landfill gas are produced by the growing landfill. Palo Alto would be well
positioned to negotiate additional purchases from the site at relatively more attractive pricing.
However, under the proposed PPA, Palo Alto is neither obligated to take energy from any
expansion projects from this project nor obligated to negotiate an agreement for energy from any
expansion projects.
Ameresco is especially interested in getting the Avenal Landfill project executed so it has agreed
to discount the price of the Crazy Horse Landfill project PPA by $5.00/MWh if Palo Alto
executes the Avenal PPA and the Avenal Landfill project achieves commercial operation. To
implement the pricing discount made available by executing the Avenal PPA, Amendment No. 1
to the PPA must be executed (Attachment I). Amendment No. 1 would only be effective if Palo
Alto executes both the Avenal and the Crazy Horse PPAs.
Crazy Horse Landfill
The Crazy Horse Landfill project is a 4.3 MW project at the Crazy Horse Canyon Landfill
operated by the Salinas Valley Solid Waste Authority (SVSWA) in Salinas, California.
Ameresco has site development rights and a gas purchase agreement in place with the SVSWA.
Ameresco does not expect emissions controls to be required on the Crazy Horse project, so there
is no rate adder included. Under the proposed PPA, Palo Alto would receive and pay for the
entire net output from the expected 4.3 Megawatt (MW) Crazy Horse Landfill plant amounting
to 36 GWh/ year or approximately 3.6% of the City's total electric load. The plant size could
range from 1.6 MW to 6.2 MW. If sized at the maximum 6.2 MW, the plant could produce 52
GWh/year, or approximately 5.2% of the City's electric load.
As with the San Joaquin Landfill project, the City negotiated a prepayment for the incremental
interconnection costs. The prepayment for the interconnection would be 1.5 times the amount of
the PG&E interconnection charge that exceeds $300,000 up to a maximum payment of $1.425
million. As shown in Table 3 below, the City would also pay an energy rate of $91.08/MWh if it
also takes delivery of Avenal output or $96.08/MWh without Avenal. Rates in either case would
escalate at 1.5% per year.
CMR: 166:10 Page 6 of 12
Table 3 — Crazy Horse Landfill First -Year Prices with Pay Ahead Costs
Crazy Horse Landfill
Without Avenal PPA
($/MWh)
With Avenal PPA
$/MWh
PG&E Interconnection
Cost
Interconnection
Pay -Ahead Cost
>= $1,250,000
$1,425,000
$96.08
$91.08
$1,000,000
$1,050,000
$96.08
$91.08
$750,000
$675,000
$96.08
$91.08
$500,000
$300,000
$96.08
$91.08
Up to $300,000
$0
$96.08
$91.08
Summary of the Four Proposed PPAs
Table 4 below summarizes the information provided above for the four proposed PPAs for the
landfill gas -to -energy renewable energy projects. The energy production and, therefore, the
costs, shown in Table 4 assume that the equipment operates 95% of the time over the 20 -year
term of the PPA. This relatively high "capacity factor" is assumed to determine the maximum
amount of money that could be spent under the contract. The actual capacity factor is more
likely to be around 90%.
Table 4 — Summary of the Four Proposed PPAs
Given the Most Likely Plant Sizin
Project
Maximum
Energy
Produced
(GWh/yr)
First Year
Energy
Cost
(¢/kWh)
Maximum
Contract Cost
20 Years
($million)
Maximum
Renewable
Cost Premium
($million/year)
Forward
38
9.900
87.6
1.40
San Joaquin
36
10.334
86.9
1.40
Avenal
12
12.335
33.2
0.81
Crazy Horse (without Avenal)
36
9.608
80.9
1.40
Crazy Horse (with Avenal)
36
9.108
76.8
1.20
All Projects
122
10.033
284.5
4.81
All Projects (except Avenal)
110
9.95
255.4
4.00
Table 5 below summarizes the information for the four proposed PPAs for the landfill gas -to -
energy renewable energy projects if the maximum plant size were installed. Since these plant
sizes are possible, although unlikely, these costs are used for the maximum not to exceed
amounts in the PPAs.
CMR: 166:10
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Table 5 — Summary of the Four Proposed PPAs
Given the Maximum Plant Sizin
Project
Maximum
Energy
Produced
(GWh/yr)
First Year
Energy
Cost
(¢/kWh)
Maximum
Contract Cost
20 Years
($million)
Maximum
Renewable
Cost Premium
($million/year)
Forward
47
9.900
108.6
1.7
San Joaquin
52
10.334
124.7
2.1
Avenal
16
12.335
45.1
1.1
Crazy Horse (without Avenal)
52
9.608
116.1
2.1
Crazy Horse (with Avenal)
52
9.108
110.1
1.8
All Projects
166
10.022
388.5
6.7
All Projects (except Avenal)
151
9.952
349.4
5.9
Execution of the four proposed PPAs would add about 12.2% of the City's total electric supply
needs from new renewable energy sources. Since existing renewable energy PPAs will account
for about 21% of the City's total electric needs when all plants are operational, these new PPAs
will result in an RPS of 33.3%, very close to the 33% RPS target.
The cost premium of the four proposed PPAs results in a retail rate impact of about 0.47¢/kWh.
The existing renewable energy PPAs together have required a cost premium over brown power
of about 0.01 ¢/kWh so the total renewable premium including the existing and the proposed new
PPAs results in a retail rate impact of about 0.480/kWh, or very near the 0.50/kWh limit in the
RPS guideline. However, it must be noted that the prices and renewable premiums shown here
assume the highest price under the contracts (emissions controls are required and PG&E
interconnection costs are high) and that the capacity factor for each project is 95%. Therefore,
the actual premium is expected to be even further below the 0.50/kWh retail rate impact limit.
As shown in Table 5, approval of the three larger, lower cost PPAs (all but the Avenal PPA)
would result in a total RPS of about 31.9% with a retail rate impact estimated at 0.42 cents per
kWh (shy of the 33% RPS target and within the 0.5 0/kWh rate impact limit).
Comparison with Other Price Benchmarks
The contract prices for these four proposed new PPAs are similar to the renewable energy PPA
most recently approved by Council. The Johnson Canyon landfill gas -to -energy PPA with
Ameresco that Council approved in August 2009 (CMR: 343:09) had a start price of 10.9 0/kWh
in an air district that does not require additional emission controls. The prices also are similar to
the California Public Utilities Commission (CPUC) Market Price Referent (MPR) of 10.9 0/kWh
for projects delivering energy for 20 years starting in 2013. The CPUC calculates the MPR
based on the cost of new efficient gas -fired generation, including the cost of carbon dioxide
emission allowances.
Prior History and City Contracts with Ameresco
The City has previously executed five PPAs with Ameresco for projects that are expected to
deliver 92 gigawatt hours per year of renewable energy (amounting to 9% of the City's electric
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needs, or about 42% of the City's RPS committed contract volume to date) once all are
operational. Executing all four of the new PPAs under consideration would raise Ameresco's
supply percentage to 21% of the City's electric needs or about 63% of the City's RPS portfolio.
Ameresco's provision of a relatively high share of renewable generation may appear to present a
concentration risk, but the risks to the City are mitigated by a number of factors, including the
City's step-in rights to operate the plants in the event of default, the absence of a cross -default
provision, which isolates each contract from default by one of the other contracts, and
Ameresco's reliable record of performance with the City since executing the first contract with
them in 2004. In a worst case scenario of energy not being delivered, Palo Alto would not pay
for the energy could purchase less expensive "brown power" in the near term if required and
would pursue new sources of renewable energy.
Credit Risk
Ameresco is a relatively small company that does not have a credit rating from Moody's Investor
Services or Standard and Poor's. Ameresco is a rapidly growing company and as such does face
some of the stresses inherent in rapid growth. These stresses led to an increase in the estimated
default frequency (EDF) from 0.4% to 1.1% based on staff analysis of the company's 2007 and
2008 audited financial reports. Interim unaudited financial reports for the first 3 quarters of 2009
indicate a further increase in financial stress on this rapidly growing firm, with the EDF growing
to 4.3%. The higher EDF rate leads to increased potential default risk to the City. Despite this
increased risk, it should be noted that the City only pays for energy that is actually delivered.
While a default would make the City "short" renewable power, the City could consider other,
likely more expensive, sources of renewable power or even temporarily halt its renewable
purchases and purchase much less expensive wholesale (brown) power.
Because energy deliveries for each PPA will be tied to a specific generator at a specific location,
in contrast to market contracts whose deliveries are often backed by the financial strength or
collateral of companies rather than a physical asset, staff recommends that the Council waive the
investment -grade credit requirement for public agency contracts required under Section 2.20.340
(d) of the Palo Alto Municipal Code. This conforms to Council action on prior renewable
resource contracts with similar characteristics (CMR:461:04, CMR:100:05, CMR:350:05,
CMR:437:08, and CMR:343:09). This waiver is intended to benefit only small, but sound,
companies that do not have credit ratings. Palo Alto has had a positive experience to date with
Ameresco in regards to its five existing landfill gas -to -energy agreements.
The proposed PPAs between Palo Alto and Ameresco (Attachments B, D, F, and H) were
reviewed by Utilities staff, the City Attorney's office, and the Energy Risk Manager to determine
that the combination of value, price, terms, creditworthiness of provider, and credit assurances
warrant Palo Alto's participation.
Other Risks
Two other risks need to be raised with regard to the project. The first is the risk that after the
City's prepayment occurs, the project does not reach completion. This could be due to a
financial default of Ameresco, or some other factor such as a force majeure event. In the case of
a financial default, the City's risk is directly proportional to the time from payment to project
completion. This is expected to be 6 months or less. This would expose the City to a risk of
CMR: 166:10 Page 9 of 12
approximately 2% or less of the payment costs for each project. It should be noted that by the
time the City pays the interconnect cost, Ameresco would have invested more than 50% of
project total costs as well as the initial $300,000 per site.
Another potential risk, which staff deems acceptable, is technology risk. This is the risk that
during the course of the 20 year project, new technologies are developed and deployed which
significantly reduce the market prices of renewable electricity, and the market turns from a
"sellers market" to a "buyer's market". Historically, especially between 1900 and 1970, new
generation technologies did significantly reduce energy prices. In the case of these projects,
however, the goal is to achieve the Renewable Portfolio Standards by 2015. A new technology
could be developed in the short term to dramatically reduce renewable power costs, although
currently there are no market indications that such a breakthrough is likely. Nevertheless, this
risk does exist, though rendering an assessment of impact of this risk is problematic.
RESOURCE IMPACT
The cost of renewable supplies under the four agreements is expected to be up to $284.5 million
over 20 years if the plant size for all projects is as expected. The annual expected cost is up to
$12.6 million in the first year with the cost escalating 1.5% per year over the 20 -year term of the
PPAs.
Approval of all four PPAs would result in an RPS of about 33.0% with a retail rate impact
estimated at up to 0.48 0/kWh (meeting the 33% RPS target and slightly below the 0.5 0/kWh
rate impact limit guideline). Minor uncertainties remain about plant sizing and ultimate costs. If
more resources are needed to meet the 33% target, staff will return to Council with additional
resources for consideration before 2015.
If all plants are built to the maximum size, the cost could be up to $388.5 million over 20 years
with an annual cost of $16.7 million in the first year, escalating 1.5% per year of the 20 -year
term of the PPAs. In this case, the RPS could be 37.4% with a total RPS rate impact of 0.65
0/kWh.
POLICY IMPLICATIONS
Adoption of these resolutions allows the City to participate in the agreements to purchase
renewable energy and thereby is consistent with the Council's Top Five Priority of
Environmental Protection. Participating in the agreement is also consistent with the following
City policies and guidelines:
1. The Council -approved Climate Protection Plan, adopted December 3, 2007, containing
Utilities Goal 2: Reduce carbon intensity of energy supply provided by Utilities;
2. The Council -approved Utilities Strategic Plan with regard to employing balanced
environmental solutions;
3. The energy risk management policies;
4. The rate impact limits and the renewable portfolio targets in Long-term Electric
Acquisition Plan Guideline (LEAP) #6;
5. The portfolio diversification goals in LEAP Guideline #3;
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6. The City's Sustainability Policy Statement, adopted April 2, 2001 (CMR 175:01) and
revised June 18, 2007 (CMR 260:07);
7. The Green Government Pledge, adopted July 19, 1999 (CMR 284:99);
8. The US Mayors' Climate Protection Agreement; and
9. The Comprehensive Plan, specifically:
a. GOAL N-9: A clean, efficient, competitively -priced energy supply that makes use of
cost-effective renewable resources.
b. POLICY N-44: Maintain Palo Alto's long-term supply of electricity and natural gas
while addressing environmental and economic concerns.
c. POLICY N-48: Encourage the appropriate use of alternative energy technologies.
ENVIRONMENTAL REVIEW
Execution of these agreements does not meet the definition of a project, pursuant to section
21065 of the California Environmental Quality Act (CEQA). However, the City intends to
receive output from projects that will constitute a project for the purposes of CEQA. Project
developers will be responsible for acquiring necessary environmental reviews and permits on
projects to be developed.
CMR: 166:10 Page 11 of 12
ATTACHMENTS
A: Resolution approving Renewable Energy Power Purchase Agreement between Palo Alto and
Ameresco Forward LLC
B: Renewable Energy Power Purchase Agreement between Palo Alto and Ameresco Forward
LLC
C: Resolution approving Renewable Energy Power Purchase Agreement between Palo Alto and
Ameresco San Joaquin LLC
D: Renewable Energy Power Purchase Agreement between Palo Alto and Ameresco San
Joaquin LLC
E: Resolution approving Renewable Energy Power Purchase Agreement between Palo Alto and
Ameresco Avenal LLC
F: Renewable Energy Power Purchase Agreement between Palo Alto and Ameresco Avenal
LLC
G: Resolution approving Renewable Energy Power Purchase Agreement between Palo Alto and
Ameresco Crazy Horse LLC
H: Renewable Energy Power Purchase Agreement between Palo Alto and Ameresco Crazy
Horse LLC
I: Amendment No. 1 to the Power Purchase Agreement between Palo Alto and Ameresco
Crazy Horse LLC
PREPARED BY:
REVIEWED BY:
DEPARTMENT APPROVAL:
CITY MANAGER APPROVAL:
TOM KABAT
Senior Resource Originator
JANE RATCHYEN
Assistant Director, Re o irce Management
KARL VAN ORSDOL
Energy Risk Manager
VALE
Dire
JAM NE
City Man. ger
CMR: 166:10 Page 12 of 12
ATTACHMENT A
Not Yet Approved
Resolution
Resolution of the Council of the City of Palo Alto Approving
the Long Term Power Purchase Agreement (Landfill Gas
Power) with Ameresco Forward LLC for the Purchase of
Electricity Generated by Landfill Gas Electric
Generating Facilities
WHEREAS, the City of Palo Alto (the "City"), a municipal utility and a
chartered city is a member of the Northern California Power Agency ("NCPA");
WHEREAS, on March 5, 2007, the City approved eight electric portfolio
planning and management guidelines to guide the development and management of the
City's long-term electricity acquisition plan; one of the guidelines is to pursue and target
levels of new renewable resource energy purchases equal to thirty percent (30%) and
thirty-three percent (33%) of the City's expected energy load by 2012 and 2015,
respectively;
WHEREAS, the City is interested in purchasing power generated by renewable
resources for the benefit of its electric customers;
WHEREAS, by purchasing these sources of renewable energy, the City will help
reduce the production of greenhouse gases and assist in reducing volatile organic
compound emissions;
WHEREAS, Ameresco Forward LLC ("Ameresco") proposed its project in
response to the City's Request for Proposals 134307 ("RFP") in November 2009, and it
was deemed competitive with other RFP respondents;
WHEREAS, the execution of this power purchase agreement with Ameresco is
anticipated to enable the City to meet the three -percent portion of its goal of sourcing 33%
of its energy needs from renewable electric energy;
WHEREAS, the City is allocated a 100 percent share of the power from the
initial project, amounting to 5.7 megawatts of plant net output;
WHEREAS, the power purchase agreement allows Ameresco to sell the City
additional output, if developed, from engine heat recovery, at the contract price;
WHEREAS, San Joaquin County will be the lead agency for the purposes of
compliance with the requirements of the California Environmental Quality Act;
NOW, THEREFORE, the Council of the City of Palo Alto does hereby
RESOLVE, as follows:
SECTION 1. The Council hereby approves the City's execution of the long-
term Power Purchase Agreement (Landfill Gas Power) made between Ameresco Forward
100302 j 0073328 1
Not Yet Approved
LLC, as Seller, and the City of Palo Alto, as Buyer. The delivery term of the Power
Purchase Agreement is twenty (20) years, commencing upon the Commercial Operation
Date of the planned electric generation facility. Quantity is a 100 percent share of the
plant's net output. Spending authority under the Power Purchase Agreement is not to
exceed one hundred eight million six hundred thousand dollars ($108,600,000). The City
Manager is hereby authorized to sign the Power Purchase Agreement with Ameresco
Forward LLC and the City Manager or his designee is authorized to sign any
confirmations executed in connection with the Power Purchase Agreement on behalf of
the City.
SECTION 2. With respect to the Council's award of the Power Purchase
Agreement referred to in Section 1 above, the Council hereby waives the
creditworthiness requirements of Palo Alto Municipal Code section 2.30.340(c) as it
may apply to Ameresco Forward LLC.
SECTION 3. The Council finds that the adoption of this resolution does not
constitute a project under the California Environmental Quality Act and no
environmental assessment is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENTIONS:
ABSENT:
ATTEST: APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:
City Manager
Senior Asst. City Attorney
Director of Utilities
Director of Administrative
Services
100302 j 0073328 2
ATTACHMENT B
POWER PURCHASE AGREEMENT
This Power Purchase Agreement is entered into this day of
2010 (the "Effective Date") by and between the City of Palo Alto, a California
chartered municipal corporation and Ameresco Forward LLC, a Delaware limited
liability company.
RECITALS
1 Seller intends to develop, finance, build, own and operate a Landfill Gas
electric generating facility to be located at the Forward Landfill (the
"Landfill") located at 9999 S. Austin Road, Manteca, California, on a site
leased from Republic, which owns the Landfill.
2. Buyer is engaged in the procurement and supply of electricity to residential
and commercial customers in the City of Palo Alto.
3 Buyer wishes to purchase the Output of the Plant and intends to resell related
Energy to its residential and commercial customers.
4. Buyer is willing to purchase, and Seller is willing to sell, the Output of the
Plant, on the terms and conditions and at the prices set forth in this Agreement.
5. Seller may determine to incorporate heat recovery equipment to produce
additional electrical output to be included and sold as Energy in accordance
with the terms of this Agreement.
6. Seller may determine to expand the Plant in the future depending on the
availability of Landfill Gas and other factors in accordance with the terms of
this Agreement.
7. Buyer will have a right of first refusal to purchase Expansion Plant Output,
such right to be exercisable as provided in this Agreement.
NOW THEREFORE, in consideration of these premises and the mutual
promises set forth below, the Parties agree, as follows.
SANFRAN 90103 (2K)
AGREEMENT
ARTICLE I - DEFINITIONS
Initially capitalized terms, whenever used in this Agreement, have the meanings set
forth below unless otherwise herein defined. The term "including," when used in
this Agreement, shall mean to include "without limitation."
1.1 Agreement: This Power Purchase Agreement, including all appendices, as it
may be amended from time to time.
1.2 Availability Threshold: The mechanical availability of the Plant calculated
as of the end of each calendar month during the Term as a percentage in
accordance with the following:
A = 100 x Available Hours
Base Hours
Where:
A = Availability Threshold
Available Hours = the number of hours during the prior twenty-four (24)
months in which the Plant is capable of delivering Energy to the
Point of Interconnection; provided that, to the extent that the
Plant is not capable of delivering all of the net Initial Capacity (in
this instance, Initial Capacity shall not include any capacity of
the Plant from equipment for recovering waste heat from the
prime mover engines of the Plant to utilize that waste heat to
produce additional Energy (to the extent such equipment for
recovering waste heat is or is not installed by Seller)) in any hour,
the Available Hours with respect to such hour shall be reduced
pro rata to reflect the fraction of the net Initial Capacity (in this
instance, Initial Capacity shall not include any capacity of the
Plant from equipment for recovering waste heat from the prime
mover engines of the Plant to utilize that waste heat to produce
additional Energy (to the extent such equipment for recovering
waste heat is or is not installed by Seller)) the Plant is capable of
delivering in such hour.
Base Hours = the number of hours during the same twenty-four (24)
months period referred to in Available Hours; provided that, to
the extent that the Plant is partially or wholly incapable or
2
SANFRAN 90103 (2K)
otherwise unable to deliver Energy in any hour as a result of a
Force Majeure Event or because of fuel unavailability in any hour
due to no fault or negligence of Seller, that hour (or if the Plant's
capacity is only partially constrained, the pro rata portion of that
hour) shall be excluded from the Base Hours.
There shall be no Availability Threshold during the first twelve (12) month
period following the Commercial Operation Date. Starting with the thirteenth
(13th) month after the Commercial Operation Date and continuing through the
twenty-fourth (24th) month, the above formula will be used to determine the
Availability Threshold with the exception that both Available Hours and Base
Hours will be calculated, starting with the first hour of operation on the
Commercial Operation Date and including all relevant hours thereafter to the
end of the month relevant. Starting with the twenty-fifth (25th) month, the
Availability Threshold shall be calculated on a rolling basis using the previous
twenty-four (24) month period.
1.3 Buyer: The City of Palo Alto, a California chartered municipal corporation,
and any successor or permitted assignee.
1.4 Commercial Operation: The condition of the Plant (in this instance, Plant
shall not include equipment for recovering waste heat from the prime mover
engines of the Plant for purposes of utilizing such waste heat to produce
additional Energy to the extent such equipment is not then installed by Seller)
whereupon it (a) is certified by Seller to be complete in accordance with
manufacturers' recommendations except for punch list items, and (b) has
passed the performance test set forth in Appendix E while synchronized with
the LDC System or ISO transmission grid.
1.5 Commercial Operation Date: The date upon which Commercial Operation
first occurs.
1.6 Contractual Obligations: As to Seller, any material agreement, instrument or
undertaking to which Seller is a party or by which it or any of its property is
bound.
1.7 Effective Date: As defined in the first paragraph of this Agreement.
3
SANFRAN 90103 (2K)
1.8 Energy: The electricity generated by the Plant and delivered to Buyer by the
Seller, pursuant to this Agreement, respectively, at the Point of
Interconnection, as expressed in units of kilowatt-hours (kWh) or megawatt -
hours (MWh), including Test Energy.
1.9 Environmental Attributes: Any and all credits, benefits, emissions
reductions, offsets, and allowances, howsoever entitled, attributable to the
generation from the Plant or Expansion Plant(s), as the case may be, and its
displacement of conventional energy generation. Environmental Attributes
include but are not limited to: (1) any avoided emissions of pollutants to the
air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon
monoxide (CO) and other pollutants; (2) any avoided emissions of carbon
dioxide (CO2), methane (CH4) and other greenhouse gases (GHGs) that have
been determined by the United Nations Intergovernmental Panel on Climate
Change to contribute to the actual or potential threat of altering the Earth's
climate by trapping heat in the atmosphere; and (3) the reporting rights to
these avoided emissions such as Green Tag Reporting Rights. Green Tag
Reporting Rights are the right of a Green Tag purchaser to report the
ownership of accumulated Green Tags in compliance with federal or state law,
if applicable, and to a federal or state agency or any other party at the Green
Tag purchaser's discretion, and include without limitation those Green Tag
Reporting Rights accruing under Section 1605(b) of The Energy Policy Act of
1992 and any present or future federal, state, or local law, regulation or bill,
and international or foreign emissions trading program. Green Tags are
accumulated on kWh basis and one Green Tag represents the Environmental
Attributes associated with one (1) MWh of energy. Environmental Attributes
do not include (i) any energy, capacity, reliability or other power attributes
from the Plant or Expansion Plant(s), (ii) production tax credits associated
with the construction or operation of the Plant, Expansion Plant(s), Landfill, or
any other associated contract or right, and other financial incentives in the
form of credits, reductions, or allowances associated with the Plant, Expansion
Plant(s), Landfill, or any other associated contract or right, that are applicable
to a state or federal income taxation obligation, (iii) fuel -related subsidies or
"tipping fees" that may be paid to Seller to accept certain fuels, or local
subsidies received by the Seller or the owner of the Landfill for the destruction
of particular pre-existing pollutants or the promotion of local environmental
benefits, or (iv) emission reduction credits encumbered or used by the Plant or
Expansion Plant(s) for compliance with local, state, or federal operating
and/or air quality permits.
4
SANFRAN 90103 (2K)
1.10 Environmental Attribute Reporting Rights: All rights to report ownership
of the Environmental Attributes to any person or entity, under Section 1605(b)
of the Energy Policy Act of 1992 or otherwise.
1.11 Environmental Law: Any federal, state and local laws, including statutes,
regulations, rulings, orders, administrative interpretations and other
governmental restrictions and requirements relating to the discharge of air
pollutants, water pollutants or process waste water or otherwise relating to the
environment or hazardous substances, as amended from time to time.
1.12 Expansion Plant: Any expansion of the Plant from its Initial Capacity, or any
other electricity generating facility owned or controlled by Seller or its
affiliate(s) located at the Landfill and fueled by Landfill Gas. Each such
expansion of the Plant or additional facility shall be deemed to be an
"Expansion Plant."
1.13 Expansion Plant Output: All capacity, energy, associated Environmental
Attributes, ancillary services, contributions towards resource adequacy or
reserve requirements (if any) and any other reliability or power attributes
produced by Seller at any Expansion Plant.
1.14 FERC: Federal Energy Regulatory Commission and its successor
organization, if any.
1.15 Force Majeure Event: Any act or event that delays or prevents a Party from
timely performing obligations under this Agreement or from complying with
conditions required under this Agreement to the extent that such act or event is
reasonably unforeseeable and beyond the reasonable control of and without the
fault or negligence of the Party relying thereon as justification for such delay,
nonperformance, or noncompliance. Force Majeure Events typically include:
(i) acts of God or the elements, extreme or severe weather conditions,
explosion, fire, epidemic, landslide, mudslide, sabotage, lightning, earthquake,
flood or similar cataclysmic event, acts of public enemy, war, blockade, civil
insurrection, riot, civil disturbance or strike or other labor difficulty caused or
suffered by a Party; (ii) any restraint or restriction imposed by law or by rule,
regulation or other acts or omissions of governmental authorities, whether
federal, state or local which by exercise of due diligence and in compliance
with applicable law a Party could not reasonably have been expected to avoid
SANFRAN 90103 (2K)
5
and to the extent which, by exercise of due diligence and in compliance with
applicable law, has been unable to overcome (so long as the affected Party has
not applied for or assisted such act by a governmental authority); and (iii)
electric transmission interruptions or curtailments (not including any such
event that results from a failure by Buyer to obtain firm transmission or similar
rights, or otherwise to make congestion -related payments); provided that the
term "Force Majeure Event" does not include (a) economic conditions that
render a Party's performance of this Agreement at the Price unprofitable or
otherwise uneconomic (including Buyer's ability to buy Energy or
Environmental Attributes at a lower price, or Seller's ability to sell Energy or
Environmental Attributes at a higher price, than the Price), (b) a governmental
act by Buyer that delays or prevents Buyer from timely performing its
obligations under this Agreement, (c) a Plant Outage, including as a result of a
failure or shortage of landfill gas, except, in any case, if caused by an event or
circumstance that meets the requirements set forth in this Section 1.15 (other
than as described in (iii) above), (d) failure or delay in grant of Permits, or (e)
failures or delays by the LDC or the ISO in entering into all agreements with
Seller contemplated by this Agreement.
1.16 Governmental Authority: Any federal, state or local government, or political
subdivision thereof, including, without limitation, any municipality, township
or county, or any entity or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any corporation or other entity owned or
controlled by any of the foregoing.
1.17 Initial Capacity: The installed gross capacity of the Plant on the Commercial
Operation Date, such capacity to be not less than 2.0 MW and not more than
6.0 MW (gross nameplate), and not less than 1.6 MW and not more than 5.7
MW (net at the Point of Interconnection) and as further specified (and possibly
increased from the installed gross capacity (which may increase the net at the
Point of Interconnection) of the Plant on the Commercial Operation Date)
pursuant to Section 4.3(c).
1.18 Interconnection: Construction, installation, operation and maintenance of all
Interconnection Facilities.
1.19 Interconnection Agreement: The agreement between Seller and LDC
pursuant to which Seller and LDC set forth the terms and conditions for
SANFRAN 90103 (2K)
6
Interconnection of the Plant to the LDC System, as amended from time to
time.
1.20 Interconnection Facilities: All the facilities installed for the purpose of
interconnecting the Plant to the LDC System, including, but not limited to,
transformers and associated equipment, relay and switching equipment and
safety equipment.
1.21 ISO: The California Independent System Operator Corporation, or its
functional successor.
1.22 kWh: kilowatt-hour.
1.23 Landfill Gas: The gas (and its constituent elements) generated from
decomposition of materials deposited in the Landfill.
1.24 LD Amount: The Monthly LD Amount multiplied by 12 (twelve).
1.25 LDC: Pacific Gas and Electric Company, a California corporation.
1.26 LDC System: The electric power generation, transmission, substation and
distribution facilities owned, operated and/or maintained by LDC, which shall
include, without limitation, after construction and installation, the circuit
reinforcements, extensions, and associated terminal facility reinforcements or
additions required to interconnect LDC's facilities with the Plant.
1.27 Lender(s): Any Person(s) providing money or extending credit (including any
capital lease) to Seller for (i) the construction of the Plant, (ii) the term or
permanent financing of the Plant, or (iii) working capital or other ordinary
business requirements for the Plant. "Lender(s)" shall not include trade
creditors of Seller.
1.28 LFG Agreement: As defined in Section 4.2(d).
1.29 Monthly LD Amount: The product of (i) $7000 per MW, (ii) Buyer's
Percentage Share and (iii) the Initial Capacity (in this instance, Initial Capacity
shall not include any capacity of the Plant from equipment for recovering
waste heat from the prime mover engines of the Plant to utilize that waste heat
to produce additional Energy (to the extent such equipment for recovering
7
SANFRAN 90103 (2K)
waste heat is or is not installed by Seller)) specified under Section 4.3(c) (net
at the Point of Interconnection).
1.30 MW: Megawatt.
1.31 MWh: Megawatt hour.
1.32 NCPA: The Northern California Power Agency, a joint action agency
organized and existing under the laws of the State of California.
1.33 Outage: A physical state in which all or a portion of the Plant is unavailable
to provide Energy to the Point of Interconnection, or in which any portion of
the LDC System is unavailable to receive Energy, to the extent that the
unavailability affects the LDC System's ability to accept delivery of Energy at
the Point of Interconnection, whether planned or unplanned.
1.34 Output: All actual capacity of the Initial Capacity and associated Energy, as
well as the following, as associated with the Initial Capacity and/or associated
Energy: Environmental Attributes; ancillary services; contributions towards
resource adequacy or reserve requirements (if any) and any other reliability or
power attributes.
1.35 Parties: Buyer and Seller, and their respective successors and permitted
assignees.
1.36 Party: Buyer or Seller, and each such Party's respective successors and
permitted assignees.
1.37 Percentage Share: One Hundred percent (100%).
1.38 Permits: All material federal, state or local authorizations, certificates,
permits, licenses and approvals required by any Governmental Authority for
the construction, ownership, operation and maintenance of the Plant (in this
instance, Plant shall not include the equipment for recovering waste heat from
the prime mover engines of the Plant for purposes of utilizing such waste heat
to produce additional Energy to the extent such equipment is or is not installed
by Seller).
8
SANFRAN 90103 (2K)
1.39 Person: An individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity.
1.40 Plant: The generation facility described in Recital 1 to be constructed and
owned by Seller and located on the Site for the generation and delivery of
electricity, including the step-up transformer, revenue quality meter and all
other facilities up to the Point of Interconnection, but not including any
Expansion Plant. At any time during the Term, Seller may, in Seller's sole
discretion, construct and/or install and own equipment for recovering waste
heat from the prime mover engines of the Plant for purposes of utilizing such
waste heat to produce additional Output (Seller makes no written or oral
representation or warranty, either express or implied, regarding the current or
future existence of any such additional Output), provided that such equipment
for recovering waste heat shall be become part of the Plant (including, after
installation of such equipment, part of the definition of Plant) and shall not be
considered an Expansion Plant.
1.41 Point of Interconnection: The point on the electrical system where the Plant
is physically interconnected with the LDC System, which is anticipated to be
at the high side of Seller's step-up transformers at the Plant.
1.42 Price: As defined in Section 2.3.
1.43 Production Incentives: Any and all tax credits, deductions, allowances and
exemptions applicable to federal, state and local taxes and any other payment,
credit, deduction, benefit, grant or monetary incentive provided by any
Governmental Authority or any Person, and all air emission credits, reductions
or offsets, whether now in effect or arising in the future, in each case arising
from the activities contemplated by this Agreement, including the extraction,
sale, purchase, processing and/or distribution of Landfill Gas and/or the
generation and sale of electricity using Landfill Gas as a fuel, including
"Renewable Energy Production Incentive Payments" from the U.S.
Department of Energy, emission credits, reductions, offsets or any other
similar benefits arising from the generation, collection, production, purchase,
use, reduction, conversion, destruction or resale of Landfill Gas.
Notwithstanding the foregoing, Production Incentives shall not include
anything that qualifies as Output, but Production Incentives shall include
Section 29 Credits and Section 45 Credits.
9
SANFRAN 90103 (2K)
1.44 Prudent Utility Practice: Those practices, methods and equipment, as
changed from time to time, that:
(i)
when engaged in are commonly used in the United States of America in
prudent electrical engineering and operations to operate landfill gas
generation electric equipment and related electrical equipment lawfully
and with safety, reliability, efficiency and expedition; or
(ii) in the exercise of reasonable judgment considering the facts known,
when engaged in could have been expected to achieve the desired result
consistent with applicable law, safety, reliability, efficiency and
expedition.
Prudent Utility Practices are not limited to an optimum practice, method,
selection of equipment or act, but rather are a range of acceptable practices,
methods, selections of equipment or acts.
1.45 Reimbursement Amount: As defined in Section 4.1(h).
1.46 Republic: A direct or indirect subsidiary or other affiliate of Republic
Services, Inc.
1.47 Requirements of Law: Collectively, any federal or state law, treaty,
franchise, rule, regulation, order, writ, judgment, injunction, decree, award or
determination of any arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon Seller or Buyer or any of their
property or to which Seller or Buyer or any of their respective properties are
subject.
1.48 Section 29 Credits: Those tax credits available under Section 29 of Subtitle
A, Chap. 1A, Part IV of the Internal Revenue Code of 1986, as amended, as of
the Effective Date.
1.49 Section 45 Credits: Those tax credits available under Section 45 of Subtitle
A, Chap. 1A, Part IV of the Internal Revenue Code of 1986, as amended, or
any other similar federal, state or local tax credits, deductions, payments or
benefits arising from the purchase of Landfill Gas or the generation and sale of
10
SANFRAN 90103 (2K)
electricity using Landfill Gas as a fuel, not including any Environmental
Attributes.
1.50 Seller: Ameresco Forward LLC, a Delaware limited liability company, and
any successor or permitted assignee.
1.51 Seller's Interconnection Costs: As defined in Section 4.1(h).
1.52 Site: The real property in Manteca, California on which the Plant is to be built
and located, as more particularly described in Appendix A.
1.53 Site Control: The point at which Seller satisfies one or more of the following
conditions: (1) Seller is (a) the lessee under a lease, or (b) the grantee under
an exclusive easement, with the owner (or its subsidiary) of the Landfill that
allows Seller to construct and operate the Plant at the Site during the Term in
accordance with this Agreement; (2) Seller has a fee ownership of the Site; or
(3) any other form of site control acceptable to Buyer in its reasonable
discretion.
1.54 Term: The period of time during which the Agreement is in effect.
1.55 Test Energy: Energy generated by the Plant and delivered to the Point of
Interconnection prior to the Commercial Operation Date.
1.56 WREGIS: Western Renewable Energy Generation Information System, or its
successor; provided that the successor is capable of performing substantially
similar functions and is acceptable to both Parties.
1.57 WREGIS Certificates: The meaning set forth in WREGIS Operating Rules.
1.58 WREGIS Operating Rules: The rules describing the operations of the
Western Renewable Energy Generation Information System, as published by
WREGIS and as may be amended from time to time.
SANFRAN 90103 (2K)
ARTICLE II
TERM, PURCHASE AND SALE
2.1 Term
This Agreement shall be effective upon execution by authorized
representatives of both Parties and, unless earlier terminated pursuant to an
express provision of this Agreement, shall continue until the twentieth (20th)
anniversary of the Commercial Operation Date.
2.2 Purchase and Sale of the Output
(a) In accordance with the terms and conditions hereof, commencing on the
Commercial Operation Date and continuing throughout the Term, Seller shall
sell and deliver at the Point of Interconnection, and Buyer shall purchase,
accept from Seller at the Point of Interconnection and pay for, Buyer's
Percentage Share of the Output produced during the Term pursuant to the
terms of this Agreement. Prior to the Commercial Operation Date, Buyer shall
purchase and accept from Seller at the Point of Interconnection and pay for,
Buyer's Percentage Share of the Output relating to Test Energy pursuant to the
terms of this Agreement. All Test Energy shall be scheduled in accordance
with the procedures set forth in Appendix D. Seller shall not sell to any other
party, and Buyer may claim credit for, Buyer's Percentage Share of the Output
as may be available from time to time.
(b) Throughout the Term, Seller shall sell and transfer to Buyer, and Buyer
shall purchase and receive from Seller, all right, title and interest in and to the
Environmental Attributes associated with Buyer's Percentage Share of the
Output, if any, whether now existing or subsequently generated or acquired
(other than by direct purchase from a third party) by Seller, or that hereafter
come into existence, during the Term, as a component of the Output purchased
by Buyer from Seller hereunder. Seller agrees to transfer and make such
Environmental Attributes available to Buyer immediately to the fullest extent
allowed by applicable law upon Seller's production or acquisition of the
Environmental Attributes. If Seller receives any tradable Environmental
Attributes based on the greenhouse gas reduction benefits or other emission
offsets attributed to its fuel usage, it shall be entitled to retain sufficient
Environmental Attributes to ensure that there are zero net emissions associated
12
SANFRAN 90103 (2K)
with the production of electricity from such facility. Seller shall not assign,
transfer, convey, encumber, sell or otherwise dispose of all or any portion of
Buyer's Percentage Share of the Environmental Attributes to any Person other
than Buyer. Seller makes no written or oral representation or warranty, either
express or implied, regarding the current or future existence of any
Environmental Attributes.
(c) Seller shall use commercially reasonable efforts to use WREGIS to
authenticate the transfer of "WREGIS Certificates" from Seller to Buyer in
accordance with WREGIS reporting protocols and the terms of this
Agreement. Seller shall use commercially reasonable efforts to register the
Plant with WREGIS. After the Plant is registered with WREGIS, Seller agrees
to use commercially reasonable efforts to transfer WREGIS Certificates to
Buyer using the Forward Certificate Transfer method, as described in
WREGIS Operating Rules and as designated by Buyer. Buyer shall be
responsible for providing required information and taking any action that may
be necessary for the registration of the Plant and for transfer of WREGIS
Certificates to Buyer's WREGIS account.
Except as the Parties may otherwise agree, in writing, in the event that
WREGIS is not in operation, or WREGIS does not track Seller's transfer of
WREGIS Certificates to Buyer, or its designees, on or before the 30th day of
each calendar month, Seller shall document the production and transfer of
Environmental Attributes under this Agreement by delivering to Buyer an
attestation for the Environmental Attributes produced by the Plant, in whole
MWh, in the preceding calendar quarter. The form of attestation shall be
substantially in the form as set forth in Appendix B.
Seller shall be responsible for the WREGIS expenses associated with
registering the Plant, maintaining its account, paying the WREGIS
Certificates' issuance fees, and transferring WREGIS Certificates to Buyer.
Buyer shall be responsible for the WREGIS expenses associated with
maintaining its account and subsequent transferring or retiring of WREGIS
Certificates. Seller shall, as instructed by Buyer and at Buyer's cost, dispute
data with WREGIS. Notwithstanding anything herein to the contrary, if
Seller's cost (including labor billed at standard external rates) associated with
WREGIS in connection with this Agreement or compliance with this Section
2.2 exceeds $2,500 in any calendar year, Buyer shall reimburse Seller for the
amount in excess of $2,500; provided, however, Buyer may designate an
alternate accounting system(s), at no cost to Seller, to document or otherwise
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SANFRAN 90103 (2K)
verify that transfer of RECs or other Environmental Attributes if Seller's
WREGIS costs exceed $2,500 in any calendar year. The $2,500 amount shall
be escalated at a rate of 1.5% annually, commencing on the first day of the
January following the Commercial Operation Date and continuing every
subsequent anniversary thereafter.
For the purposes of this Section 2.2, "commercially reasonable efforts" shall
exclude (i) making any changes to the Plant or any Expansion Plant or the
method of operation thereof and (ii) expenditure of any funds other than
nominal filing fees.
(d) During the Term, Seller shall not report to any person or entity that the
Environmental Attributes granted hereunder to Buyer belong to anyone other
than Buyer, and Buyer may report under any program that such Environmental
Attributes purchased hereunder belong to it.
2.3 Price
Subject to the provisions of Section 4.1(k), Buyer shall pay Seller $99.00 per
MWh of Energy delivered or tendered to Buyer at the Point of Interconnection,
which price shall be escalated at a rate of 1.5% (of the then -current price)
annually on the anniversary of (i) the first day of the first full month following
the Commercial Operation Date or (ii) if the Commercial Operation Date falls
on the first day of the month, the Commercial Operation Date. The Price shall
be the total compensation owed by Buyer for Output delivered or tendered to
Buyer hereunder.
2.4 Tax Credits
Buyer agrees and acknowledges that all Production Incentives shall be owned
by Seller and/or the owner of the Landfill; provided, that to the extent Buyer
pays in full for emission offsets and otherwise makes any additional payments
pursuant to Section 4.3(j) in full, Seller shall pay Buyer the Percentage Share
of up to one hundred percent (100%) of the net economic value (net of
reasonable transaction fees) realized by Seller from the Section 45 Credits
until Seller has reimbursed Buyer for all such payments made by Buyer
pursuant to Section 4.3(j). Buyer shall not claim Production Incentives. Buyer
agrees to cooperate with Seller and/or the owner of the Landfill as may be
necessary to allow maximization of the value of, and realization of, all
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SANFRAN 90103 (2K)
Production Incentives; provided that Buyer shall not be required to incur
additional costs or accept any diminution in value of its rights under this
Agreement or of the Output purchased hereunder. In addition, Buyer shall not
take any action (except as otherwise permitted under this Agreement), that
would in any way reduce or eliminate the availability to Seller or the owner of
the Landfill of any Production Incentive, including without limitation the
Section 29 Credits, and Buyer shall forego any credits or benefits available to it
(other than Environmental Attributes) to the extent necessary to allow Seller and
the owner of the Landfill to obtain the full benefit of the Production Incentives,
but in no event shall Buyer be required to forego receipt of Energy.
2.5 Riiht of First Refusal for Expansion Plant and Expansion Plant Output
(a) Seller may in its sole discretion determine, from time to time, during the
Term to develop, finance, construct and/or operate an Expansion Plant. Each
time such a determination is made, Seller shall notify Buyer of such
determination and shall offer in writing to sell the Percentage Share of the
Expansion Plant Output to Buyer. The offer shall include the price to be paid
by Buyer for the Percentage Share of the Expansion Plant Output, the term of
the proposed power purchase agreement and the other principal terms and
conditions of the proposed sale. If Buyer wishes to accept such offer to
purchase all (but not less than all) of such Percentage Share of the Expansion
Plant Output, Buyer shall so notify Seller within sixty (60) days of its receipt
of such offer. Buyer and Seller shall promptly thereafter enter into good faith
negotiation of a definitive power purchase agreement incorporating the terms
of such offer. Until such an Expansion Plant power purchase agreement is
executed, the Seller's proposal, accepted by Buyer (including any
modifications agreed upon in writing by both parties), shall control all
dealings between the Parties relating to the Expansion Plant. Should any issue
arise that is not covered by such documentation, the terms of this Agreement
shall apply.
(b) If Buyer does not accept Seller's offer to purchase Buyer's Percentage
Share of the Expansion Plant Output within sixty (60) days of receipt of
Seller's offer, Seller shall be free to offer to sell that portion of the Expansion
Plant Output to any third party at a price and on other terms and conditions
which, taken as a whole, are at least as favorable to Seller as the price and
other terms and conditions set forth in Seller's offer to Buyer. If Seller offers
to break up Buyer's Percentage Share of the Expansion Plant Output to sell to
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multiple independent buyers, Seller shall notify Buyer in writing of the terms
and conditions of such offers and Buyer shall again have the right of first
refusal consistent with the terms set forth above for each of the lesser amounts
being offered to the third parties. If Buyer does not purchase its Percentage
Share of the Expansion Plant Output and Seller sells such Expansion Plant
Output to a third party, Seller shall promptly certify, in writing, to Buyer that
the terms and conditions of sale of such Expansion Plant Output to such third
party, taken as a whole, are at least as favorable to Seller as the price and other
terms and conditions set forth in Seller's offer to Buyer, and Seller shall
provide the relevant contract and any other supporting documentation for such
certification. Upon the sale of such Expansion Plant Output in compliance
with this Agreement, Buyer shall have no further rights to be offered or to
purchase such Expansion Plant Output. Buyer's refusal of its Percentage
Share of the Expansion Plant Output from one Expansion Plant shall not affect
Buyer's right to purchase its Percentage Share of the Expansion Plant Output
from a later Expansion Plant under the terms of this Agreement. Seller shall
not sell or provide Buyer's Percentage Share of the Expansion Plant Output to
any third party unless it can do so without compromising in any material way
its ability to provide Buyer's Percentage Share of the Output to Buyer
hereunder. The materiality of any such impact shall be determined by Buyer in
its reasonable discretion. If Seller sells or provides Expansion Plant Output to
any third party, Seller shall not employ Landfill Gas to fuel such Expansion
Plant in any hour unless the Landfill Gas flow requirements of the Initial
Capacity have been, and shall continue to be, met.
2.6 Option to Install Emission Controls
Buyer may at its option, exercised from time to time, install emission controls
on the Plant in connection with the Initial Capacity and on any Expansion
Plant from which Buyer purchases Expansion Plant Output (so long as Buyer
purchase all such Expansion Plant Output) beyond those then required to meet
the Requirements of Law applicable to Seller or the Plant; provided that (a)
Buyer shall (i) bear all costs and financial, regulatory and operational risks
thereof, including, without limitation, the capital cost thereof and any increase
in operation or maintenance expenses, and (ii) shall keep Seller whole in all
respects, including for decreases in Output and other adverse effects on the
Initial Capacity and the Expansion Plant and its performance, increases in
operations and maintenance costs and failures of such emission controls to
operate, and (b) Buyer shall not make any such changes to the Initial Capacity
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or the Expansion Plant without the consent of Seller to the design and plan for
implementation of such changes, such approval not to be unreasonably
withheld.
ARTICLE III
METERING AND BILLING
3.1 Metering Requirements
The transfer of Energy from Seller to Buyer shall be measured by revenue
quality metering equipment at the Point of Interconnection. Such metering
equipment, including any equipment required for communicating meter data
(e.g., a dedicated data line) to Buyer or the ISO, shall be selected, provided,
installed, owned, maintained and operated, at Seller's sole cost and expense,
by Seller or its designee in accordance with applicable ISO rules. Seller shall
exercise reasonable care in the maintenance and operation of any such
metering equipment, and shall test and verify the accuracy of each meter at
least annually. Seller shall inform Buyer upon at least ten (10) days' prior
written notice of the time and date of these tests, and shall permit Buyer to be
present at such tests and to receive the results of such tests. Subject to Buyer
paying for its Percentage Share of the cost of any update or upgrade to such
metering equipment pursuant to a new requirement of the ISO, the LDC or any
other Governmental Authority adopted following the Commercial Operation
Date, each of Seller's meters shall be accurate to the metering specifications
then in effect for ISO meter accuracy. Seller shall further install and maintain
all equipment and data circuits necessary to transmit all monitored real time
supervisory control and data acquisition ("SCADA") system data and real time
data from the ISO meter to the ISO and the NCPA, while adhering to both ISO
and NCPA communications protocols. Seller shall provide a copy of each
Certificate of Compliance, if any, issued by the ISO.
Buyer and NCPA shall be provided access to all monitored SCADA points to
be used at their discretion in real time monitoring. Buyer may further, at its
sole cost and expense, install and maintain check meters and all associated
measuring equipment necessary to permit an accurate determination of the
quantities of Energy delivered under this Agreement provided that said
equipment does not interfere with the Seller's metering equipment. Seller
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shall permit Buyer or Buyer's representative access to its Plant for the purpose
of installing and maintaining such check meters. Seller shall submit to the
ISO, or allow the ISO to retrieve, any meter data required by the ISO related to
the Plant output in accordance with the ISO's settlement and billing protocol
and meter data tariffs. Buyer shall have reasonable access to relevant meters
and associated facilities, as well as real time access to all meter data, as is
necessary for Buyer or its agent to perform its duties as scheduling coordinator
and comply with the requirements of the ISO tariff.
3.2 Billing
Seller shall read the meter at the end of each calendar month of the Term, and
provide to Buyer on or before the tenth (10th) day of the following month an
invoice based upon the meter data for Energy delivered in such calendar
month and the corresponding attestation pursuant to Section 2.2(c) (if such
attestation is required). Such invoice may be transmitted electronically via e-
mail to [*AcctsPayable@ncpa.com], or to any other email address designated
in writing by Buyer, with a copy to follow via United States Mail to the notice
address designated below. Should either Seller or Buyer determine at a later
date, but in no event later than two (2) years after the original invoice date,
that the invoice amount was incorrect, that Party shall promptly notify the
other Party of the alleged error. If the amount invoiced was too low, Buyer
shall, upon receiving verification of the error and supporting documentation
from Seller, pay any undisputed portion of the difference within thirty (30)
days of receipt of verification. If the amount invoiced was too high, Seller
shall, upon receiving verification of the error and supporting documentation
from Buyer, pay any undisputed portion of the difference within thirty (30)
days of receipt of verification. Any such amount shall be subject to the
interest rate as designated in Section 3.3 running from the original due date of
payment.
3.3 Payment
For Energy delivered to Buyer pursuant this Agreement, Buyer or its agent
shall pay Seller by electronic transfer of funds by the later of the twentieth
(20th) day of the month or the tenth (10th) business day after the invoice is
received in accordance with Section 3.2. If such due date falls on a weekend
or legal holiday, such due date shall be the next day which is not a weekend or
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legal holiday. Payments made after the due date shall be considered late and
shall bear interest on the unpaid balance at an annual rate equal to two percent
(2%) plus the average daily prime rate as determined from the "Money Rates"
section of the West Coast Edition of The Wall Street Journal for the days of
the late payment period multiplied by the number of days elapsed from and
including the day after the due date, to and including the payment date.
Interest shall be computed on the basis of a 365 -day year. In the event this
index is discontinued or its basis is substantially modified, the Parties shall
agree on a substitute equivalent index. Should Buyer in good faith dispute the
amount of an invoice, Buyer or its agent may withhold such disputed amounts
until the dispute is resolved by arbitration or other permissible method. Such
disputed amounts shall bear interest at the interest rate described above.
Failure of Buyer or its agent to withhold any amount is not a waiver of Buyer's
right to challenge such amount. Both Parties shall maintain all payment
records relating to this Agreement for a minimum of two (2) years, and shall
permit the other Party, upon reasonable notice, to inspect and audit such
records as the requesting Party deems reasonably necessary to protect its
rights.
ARTICLE IV
SELLER'S OBLIGATIONS
During the Term, Seller hereby agrees to perform the following affirmative
obligations:
4.1 Development, Finance, Construction and Operation of the Plant
Seller shall:
(a) Develop, finance and construct the Plant.
(b) Provide Buyer access to a "real time" Plant monitoring system (which,
at a minimum, shall provide "real time" information regarding the net output
of the Plant) that is anticipated to be internet-based and include alarms.
(c) Seek, obtain, maintain, comply with and, as necessary, renew and
modify from time to time, all Permits, certificates or other authorizations
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SANFRAN 90103 (2K)
which are required by any Requirements of Law or Governmental Authority as
prerequisites to engaging in the activities required of Seller by the Agreement
and to meeting Seller's obligation to operate the Plant consistently with the
terms of the Agreement.
(d) Operate, maintain, and repair the Plant in accordance with this
Agreement, all Requirements of Law applicable to Seller or the Plant,
Contractual Obligations, Permits and in accordance with Prudent Utility
Practice, including with respect to efforts to maintain availability of the Initial
Capacity.
(e) Obtain and maintain the policies of insurance in amounts and with
coverages as set forth in Appendix C.
(f) Operate and maintain in a manner consistent with Prudent Utility
Practice the facilities it will own and otherwise cooperate with LDC in the
physical interconnection of the Plant to the LDC System in accordance with
the Interconnection Agreement.
(g) By October 1St of each year of the Term, provide Buyer and NCPA with
an annual projection of scheduled Outages for the following calendar year.
Should Seller make any changes to such projection, it will notify Buyer and
NCPA of such changes at least fourteen (14) days in advance of any newly
scheduled or rescheduled Outage. If Buyer requests a change to the scheduled
date of any Outage (including to a date set forth in a change notice from
Seller), Seller shall consider such request in good faith and notify Buyer of its
decision within seven (7) days. In no instance will Seller schedule Outages of
more than twenty-four (24) hours between June 1st and September 30th during
the Term. In connection with any Outage, whether it is a scheduled or
unscheduled Outage, Seller shall notify Buyer and NCPA, as soon as
practicable, of the percentage of Plant expected to be out of service and how
long the Outage is expected to last. If the Outage is total (a one hundred
percent (100%) Outage) and is due to a failure of the Plant rather than the
transmission and distribution system beyond the Point of Interconnection,
Seller shall give Buyer and NCPA at least four (4) hours notice before Seller
commences re -energizing the Plant. In addition, Seller will comply with
NCPA's reasonable scheduling protocols, as they may be changed from time
to time. A copy of the current version of NCPA's scheduling protocols, which
the Parties agree are reasonable, is attached as Appendix D.
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SANFRAN 90103 (2K)
(h) Negotiate and enter into an Interconnection Agreement with LDC to
enable Buyer to transmit Energy received at the Point of Interconnection
through the ISO -controlled grid. Seller shall be responsible for and pay all
initial non -recurring costs and charges arising under the Interconnection
Agreement (even if not actually incurred) prior to the Commercial Operation
Date in compliance with the Interconnection Agreement and associated rules
and requirements in place as of the Commercial Operation Date (the "Seller's
Interconnection Costs"); provided, however, if the Seller's Interconnection
Costs are, in Seller's reasonable discretion estimated to exceed, and/or do
exceed, three hundred fifty thousand dollars ($350,000.00), then Seller may
terminate this Agreement without liability of either Party to the other by giving
notice to Buyer in writing of such termination; provided, that such notice and
such termination shall not be effective if Buyer, by written notice to Seller
within fourteen (14) days following such notice from Seller, agrees to adjust
the Price payable under Section 2.3 of this Agreement and/or agrees to
reimburse Seller for costs (including, without limitation, Seller's
Interconnection Costs in excess of three hundred fifty thousand dollars
($350,000.00)), and within forty-five (45) days thereafter agrees with Seller in
writing (each in their sole discretion) to an amendment of this Agreement
revising the Price payable under Section 2.3 of this Agreement and/or to
reimburse Seller for costs (including, without limitation, Seller's
Interconnection Costs in excess of three hundred fifty thousand dollars
($350,000.00)). All other out-of-pocket costs and charges related to
interconnection other than these initial non -recurring costs and charges will be
reimbursed, on a pro rata, energy basis, by the purchasers of energy from the
Plant. During the Term prior to any Expansion Plant becoming available for
commercial service, Buyer will reimburse Seller for its Percentage Share of
such other out-of-pocket costs and charges under the Interconnection
Agreement paid or required to be paid by Seller to LDC or its successor;
provided, however, Buyer shall be responsible for its Percentage Share of such
other out-of-pocket costs and charges under the Interconnection Agreement
only to the extent Buyer has approved in writing, in the sole discretion of
Buyer, the Interconnection Agreement, including any amendments (which
shall not include changes in relevant tariffs) from time to time. Upon
completion of an Expansion Plant which uses the Interconnection Facilities,
such other out-of-pocket costs and charges shall be prorated, on a Percentage
Share of energy basis, and Buyer's share would be based on its Percentage
Share of Energy compared to the energy of the Expansion Plant delivered to
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SANFRAN 90103 (2K)
the Point of Interconnection. Seller shall cooperate with Buyer to minimize
any such costs as are to be reimbursed by Buyer.
(i) Negotiate and enter into a Participating Generator Agreement and a
Meter Service Agreement for ISO Metered Entities with the ISO, the load
control area operator for the LDC System that is interconnected with the Plant.
Buyer shall pay for or reimburse Seller for Buyer's Percentage Share of any
such costs or charges associated with these agreements, except to the extent
such cost or charge is required to be paid by Seller under Sections 3.1 and
4.1(h) of this Agreement. Seller shall cooperate with Buyer to minimize any
such costs as are to be reimbursed by Buyer.
(j) Coordinate all Plant start-ups and shut -downs, in whole or in part, with
Buyer in accordance with ISO scheduling protocols and the reasonable
protocols established by Buyer that are not inconsistent with the ISO tariff and
ISO procedures.
(k) Maintain an Availability Threshold of at least seventy percent (70%).
Should Seller fail to maintain such an Availability Threshold, the Price
applicable to Output sold and purchased during each month during which the
Availability Threshold is below seventy percent (70%) shall be seven and one-
half percent (7.5%) below the Price that would otherwise be in effect pursuant
to Section 2.3 until the Availability Threshold is increased to at least seventy
percent (70%). Except as otherwise expressly stated in Sections 6.4 and 7.6,
the foregoing shall be Buyer's sole remedy for any shortfall of or failure to
produce Output or failure to maintain any particular Availability Threshold.
4.2 GeneralObligations
(a) Seller shall obtain in its own name and at its own expense any and all
pollution or environmental credits or offsets necessary to operate the Plant in
compliance with the Environmental Laws.
(b) Seller shall keep complete and accurate operating and other records and
all other data for the purposes of proper administration of the Agreement,
including such records as may be required by any Governmental Authority or
Prudent Utility Practice.
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SANFRAN 90103 (2K)
(c) Seller shall continue to (i) preserve, renew and keep in full force and
effect its organizational existence and good standing, and take all reasonable
action to maintain all applicable Permits, rights, privileges, licenses and
franchises necessary or desirable in the ordinary course of its business; and (ii)
comply with all Contractual Obligations and Requirements of Law applicable
to Seller or the Plant.
(d) Within ninety (90) days after the Effective Date, Seller shall make
available for review by Buyer, and its representatives, at Seller's attorney's
offices in San Francisco, California, a fully executed copy of its contract with
Republic, including all exhibits, attachments, and other supporting documents
thereto, for the purchase of Landfill Gas (the "LFG Agreement"). Such
contract may be redacted to remove pricing information. If (i) Seller does not
fulfill its obligations under the first two sentences of this Section 4.2(d) within
the time allowed, or (ii) Seller fulfills such obligations but Buyer in its
reasonable discretion does not approve of the terms of the LFG Agreement,
then Buyer may, as its sole remedy and without liability of one Party to the
other Party, terminate this Agreement by written notice given no later than
sixty (60) days after Seller has fulfilled, or failed to fulfill, as the case may be,
such obligations under such first two sentences. Other than increasing the
amount of fuel purchased thereunder, Seller shall not allow such contract to be
amended or otherwise modified, nor shall it waive or fail to enforce any of its
rights thereunder, without Buyer's prior written approval, whose approval
shall not be unreasonably withheld. Seller shall make the LFG Agreement
available to Buyer for review during normal business hours at Seller's
attorney's offices in San Francisco, California throughout the Term within
seven (7) days of receipt of a written request by Buyer.
(e) Seller shall provide to Buyer such other information regarding the
permitting, engineering, construction or operations of the Plant as Buyer may
from time to time reasonably request, subject to licensing or other restrictions
of Seller or a third party with respect to confidentiality, disclosure or use.
(f) Seller shall enter into any agreements with the ISO required by the ISO
for generators delivering power into the ISO -controlled grid. Except for such
costs and charges as are expressly identified in this Agreement as Seller's
costs, Buyer shall reimburse Seller for all costs and charges under such
agreements. Seller shall cooperate with Buyer to minimize any such costs as
are to be reimbursed by Buyer.
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SANFRAN 90103 (2K)
(g) Seller shall provide Buyer with a copy of its ultimate corporate parent's
audited financial statements as at the end of its accounting year prepared in
accordance with Generally Accepted Accounting Principles ("GAAP")
consistently applied, no later than four (4) months after the end of such
accounting year of such entity. Seller shall also provide, on a quarterly basis,
an unaudited financial statement in the form of Appendix F, prepared in
accordance with GAAP consistently applied for Seller and for Seller's ultimate
corporate parent. Such financial statements shall be certified by an officer of
Seller as fairly presenting the financial condition of the Seller subject only to
what would typically be included in year-end audit adjustments and footnotes.
If, from time to time, an audited year-end financial statement is prepared for
Seller, Seller shall provide it to Buyer no later than four (4) months after the
end of Seller's accounting year.
4.3 Construction Milestones
(a) The Parties agree that time is of the essence and that certain milestones
(individually, a "Milestone" and, collectively, the "Milestones") for the
development, financing and construction of the Plant must be achieved in a
timely fashion or Buyer shall suffer damages. Seller shall provide Buyer with
documentation satisfactory to Buyer, in Buyer's reasonable discretion, to
support the achievement of the Milestones by the dates set forth below.
(b) The following events are all of the Milestones:
(i) By the date ninety (90) days following the Effective Date, Seller
shall have signed an LFG Agreement with Republic and have
obtained Site Control.
(ii) By the date twenty-six (26) months following the date that Buyer
approves the LFG Agreement, Seller shall (a) have obtained all
Permits necessary, in final form, to commence construction of the
Plant and (b) have entered into an Interconnection Agreement.
(iii) By the date one (1) month following the later of (a) the
finalization of all necessary Permits described in Section
4.3(b)(ii), and (b) entering into an Interconnection Agreement,
Seller shall have arranged financing for construction of the Plant
or otherwise made funds available to commence and complete
construction.
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SANFRAN 90103 (2K)
(iv) By the date twelve (12) months following the later of (a) the
finalization of all necessary Permits described in Section
4.3(b)(ii), and (b) entering into an Interconnection Agreement,
Seller shall have commenced construction of the Plant.
(v) By the date eighteen (18) months following the arrangement of
financing or availability of funds for construction, Seller shall
have achieved the Commercial Operation Date.
(c) Starting on the Effective Date, Seller shall provide to Buyer monthly
progress reports concerning the progress towards completion of the
Milestones. In addition, within five (5) business days of the completion of
each Milestone, Seller shall provide a certification to Buyer along with any
supporting documentation (if applicable), demonstrating the satisfaction of the
Milestone. Seller shall provide to Buyer additional information concerning
Seller's progress towards, or confirmation of, achievement of the Milestones,
as Buyer may reasonably request from time to time. Within seven (7) days of
the later of (i) obtaining the authority to construct for the Plant from the
applicable air quality management district or (ii) Seller's receipt of the system
impact and facility cost studies from the LDC, but in no event later than the
date set forth in Section 4.3(b)(ii), Seller shall specify the Initial Capacity of
the Plant (which shall be subject to the limits contained in Section 1.17);
provided, however, Seller may (in Seller's sole discretion) increase the Initial
Capacity of the Plant at any time during the Term by adding equipment for
recovering waste heat from the prime mover engines of the Plant for purposes
of utilizing such waste heat to produce additional Energy. If Seller decides to
increase the Initial Capacity of the Plant during the Term (after Seller has
originally specified the Initial Capacity of the Plant), then Seller shall provide
Buyer with written notice of the date of such increase, the amount of such
increase, and the entire capacity of the Plant (as increased) as of such date.
The new increased capacity of the Plant shall then become the Initial Capacity
of the Plant from the date set forth in Seller's written notice until the end of the
Term (the Initial Capacity of the Plant (as increased) shall be not less than 2.0
MW and not more than 6.0 MW (gross nameplate), and not less than 1.6 MW
and not more than 5.7 MW (net at the Point of Interconnection). Seller makes
no written or oral representation or warranty, either express or implied,
regarding whether or not Seller will add equipment for recovering waste heat
from the prime mover engines of the Plant and/or utilize that waste heat to
produce additional Energy.
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SANFRAN 90103 (2K)
(d) Upon becoming aware that it will, or is reasonably likely to, fail to
achieve a Milestone by the required date, for any reason, including a Force
Majeure Event, Seller shall so notify Buyer, in writing, as soon as is
reasonably practicable. Such notice shall explain the cause of the delay,
provide an updated date for achievement of the Milestone(s) and describe
Seller's plan for meeting the Milestone. Seller's notice will also explain any
impact such delay may or will have on any other Milestone, and measures to
be taken to mitigate such impact.
(e) In the event that a Force Majeure Event causes any delay to the
achievement of the Milestones set forth in Sections 4.3(b)(iii), (iv), or (v), such
Milestone's deadline may be extended, together with any Force Majeure Event
extensions for other Milestones, for a period not to exceed six (6) months. The
extension of the deadline for any Milestone shall extend the deadline for all
subsequent Milestones, provided that in no event shall the combined
extensions for Force Majeure Events for any or all of the Milestones exceed
six (6) months.
(f) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(i) for any reason, Buyer may terminate this Agreement, without liability
of either Party to the other, by giving notice to Seller in writing of such
termination at any time prior to Seller curing its failure. Such option to
terminate shall be Buyer's sole remedy for any failure to meet the Milestone
set forth in Section 4.3(b)(i).
(g) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(ii) for any reason, Buyer may terminate this Agreement, without
liability of either Party to the other, within ten (10) business days after the
Milestone date by giving notice to Seller in writing of such termination. If
Seller meets the Milestone set forth in Section 4.3(b)(ii) prior to Buyer giving
written notice of termination, this Agreement shall remain in full force and
effect. If Buyer does not terminate this Agreement within ten (10) business
days after the Milestone date, Seller shall continue to pursue satisfaction of the
relevant Milestone, and Buyer must give Seller sixty (60) days' prior written
notice to terminate this Agreement, during which period if Seller cures such
defect and achieves the relevant Milestone, such termination shall be void and
this Agreement shall remain in full force and effect. Such option to terminate
shall be Buyer's sole remedy for any failure to meet the Milestone set forth in
Section 4.3(b)(ii).
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SANFRAN 90103 (2K)
(h) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(iv) within six (6) months after the relevant Milestone date for any
reason (or up to twelve (12) months if also delayed by a Force Majeure Event),
Seller may deposit an amount, per month, equal to the Monthly LD Amount
into a segregated escrow account reasonably acceptable to Buyer by the first
day of such month, for every month after such Milestone date until the
Milestone is met. Such funds will be used towards any liquidated damages as
set forth in Section 7.4(c), and shall be held in escrow until such time that
liquidated damages, if any, become payable to Buyer. Should the amount in
the escrow account exceed the final amount of liquidated damages, such
excess funds shall be returned to Seller. Should Seller (i) at any time fail to
make such monthly deposits or (ii) fail to satisfy the Milestone set forth in
Section 4.3(b)(iv) for more than twelve (12) months, Buyer may terminate this
Agreement upon written notice to Seller of such termination. Upon such
termination, Seller will pay to Buyer, within thirty (30) days of the termination
notice, an amount equal to the LD Amount as liquidated damages. Seller's
escrow option, Buyer's option to terminate, and liquidated damages shall be
Buyer's sole remedies for any failure of Seller to meet the Milestones set forth
in Section 4.3(b)(iii) or (iv).
(i) Seller covenants that it will diligently pursue all Milestones including
the Commercial Operation Date, which Seller envisions will occur within
thirty (30) months following the execution of this Agreement.
(j) In the event that any of the approvals described in Section 4.3(b)(ii) are
not obtained by the date specified in Section 4.3(b)(ii) for satisfaction of the
relevant Milestone or are obtained on a basis not reasonably satisfactory to
Seller, including without limitation, in the case of the air permit (from the air
pollution control district that has jurisdiction over construction and operation
of the Plant), approval of construction and operation of the Plant on a basis not
consistent with internal combustion engines without emission controls,
pollution or environmental credits or offsets, Seller may terminate this
Agreement without liability of either Party to the other Party by giving notice
to Buyer, in writing, of such termination; provided that such notice must be
given no later than fourteen (14) days following the earlier of (a) the date on
which a given approval not satisfactory to Seller is received, in writing, or (b)
the date specified in Section 4.3(b)(ii) for satisfaction of the relevant
Milestone; further provided, that such notice and such termination shall not be
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effective if Buyer, by written notice to Seller within fourteen (14) days
following such notice from Seller, agrees (i) to pay Seller with the first invoice
following the Commercial Operation Date the reasonable all -in cost (including
reasonable broker fees, if any) to purchase all such offsets sufficient to operate
the Plant at full Initial Capacity (less reasonably projected scheduled Outages
for maintenance) for the term of this Agreement, and (ii) to adjust the price
payable under Section 2.3 of this Agreement and within thirty (30) days
thereafter agrees with Seller (each in their sole discretion), in writing, to an
amendment of this Agreement revising such price. Failure to provide notice of
termination by the date specified above shall constitute a waiver of the right to
terminate this Agreement as provided in this Section 4.3(j). In the event that
Seller exercises such termination right, Buyer shall have a right of first refusal
to purchase the output of any electricity generating facility owned or
controlled by Seller or its affiliate(s) located at the Landfill and fueled by
Landfill Gas. Such right of first refusal shall conform to the provisions of
Section 2.5. The provisions of this Section 4.3(j) shall survive termination of
this Agreement under this Section 4.3(j) for a period of five (5) years from the
effective date of such termination.
ARTICLE V
BUYER'S OBLIGATIONS
5.1 Delivery and Transmission
Except for Seller's obligations pursuant to Sections 3.1 and 4.1(h), Buyer shall
be solely responsible for paying its Percentage Share of costs and charges
associated with the receipt of Energy, under this Agreement, at the Point of
Interconnection and for the transmission and delivery of the Energy from the
Point of Interconnection to any other point downstream of the Point of
Interconnection (including, without limitation, transmission costs and charges,
competition transition charges, applicable control area service charges,
transmission congestion charges, inadvertent energy flows, any other ISO
charges related to the transmission of such Energy by the ISO and any charge
assessed or collected in the future pursuant to any utility tariff or rate schedule,
however defined, for transmission or transmission -related service rendered by
or for any transmission -owning or operating entity). NCPA, acting on behalf
of Buyer, shall be scheduling coordinator for the transmission of Energy from
the Plant in accordance with applicable ISO rules. Buyer's duties as
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scheduling coordinator shall be limited to those duties as are specifically
required of scheduling coordinators in the ISO tariff and the ISO protocols.
Commercial arrangements for such transmission and delivery services will be
coordinated and settled by NCPA directly with the ISO or other third parties.
At the option of Buyer, the Plant may be included within NCPA's metered
sub -system in connection with the scheduling of power over the ISO grid and
related functions; provided that such inclusion shall have no adverse effect on
Plant operations or Seller (or any such effect shall be fully mitigated by
Buyer). Seller will do all things reasonably needed to allow Buyer to comply
with any obligations, and minimize any potential liability, under the ISO tariff;
provided, that if such actions require any actions beyond the giving of notice
provided by Buyer, then Buyer shall reimburse its Percentage Share of all out-
of-pocket costs and charges of such actions. If and to the extent that Seller
fails to comply with the notice provision in Section 4.1(g) concerning Outages
or with its obligations as outlined in the previous sentence, Seller shall be
wholly responsible for all imbalances, deviations, or any other ISO charges or
penalties associated with such Outage or ISO tariff obligation. Buyer may
replace NCPA as Scheduling Coordinator for the Plant. If NCPA ceases to be
the Scheduling Coordinator for the Plant and Buyer is unable, within fourteen
(14) business days of notice from Seller, to appoint a replacement Scheduling
Coordinator, Seller shall have the right to appoint a replacement Scheduling
Coordinator on Buyer's behalf, and Buyer shall enter into all reasonable and
appropriate agreements with such replacement Scheduling Coordinator at its
own cost.
5.2 Taxes
Buyer shall pay and be fully responsible for any sales, use, gross receipts,
utility or other taxes, assessments or fees, if any, incurred or imposed on the
sale or transfer of Energy from Seller to Buyer under this Agreement. Buyer
shall not be responsible for any taxes measured on the net income of Seller or
ad valorem taxes paid by Seller or Republic associated with the Site or the
Landfill.
5.3 Notification of Transmission Outages
Buyer will exercise reasonable efforts to provide Seller with as much advance
notice as practicable of any Outage on the LDC System or other transmission
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or delivery facilities which may adversely affect the delivery of Energy to
Buyer.
ARTICLE VI
FORCE MAJEURE
6.1 Force Majeure Events
It is understood that at times unavoidable delays or interruptions in delivery or
performance may result from Force Majeure Events. The performance of each
Party under this Agreement may be subject to interruptions or reductions due
to a Force Majeure Event. Both Parties shall in good faith use such effort as is
reasonable under all the circumstances known to that Party affected by the
Force Majeure Event at the time to remove or remedy the cause(s) and mitigate
the inability to perform. However, the obligation to use such reasonable
efforts shall not be interpreted to require resolution of labor disputes by
acceding to demands of the opposition when such course is inadvisable in the
discretion of the Party having such difficulty.
6.2 Remedial Action
Subject to the limitation on extensions of Milestones set forth in Section
4.3(e), a Party shall not be liable to the other Party if the Party is prevented
from performing its obligations hereunder due to a Force Majeure Event. The
Party rendered unable to fulfill an obligation by reason of a Force Majeure
Event shall take all action necessary to remove such inability with all due
speed and diligence. The nonperforming Party shall be prompt and diligent in
attempting to remove the cause of its failure to perform, and nothing herein
shall be construed as permitting that Party to continue to fail to perform after
said cause has been removed. Notwithstanding the foregoing, the existence of
a Force Majeure Event shall not excuse any Party from its obligations to make
payment of amounts due hereunder.
6.3 Notice
In the event of any delay or nonperformance resulting from a Force Majeure
Event, the Party suffering the Force Majeure Event shall, as soon as
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practicable under the circumstances, notify the other Party in writing of the
nature, cause, date of commencement thereof and the anticipated extent of any
delay or interruption in performance.
6.4 Termination Due To Force Majeure Event
Subject to Section 4.3(e), if a Party is prevented from performing its material
obligations under this Agreement for a period of twelve (12) consecutive
months or longer, the unaffected Party may terminate this Agreement, without
liability of either Party to the other, upon thirty (30) days' written notice at any
time during the Force Majeure Event.
ARTICLE VII
DEFAULT/REMEDIES/TERMINATION
7.1 Events of Default by Buyer
The following shall each constitute an "Event of Default" by Buyer:
(a) Buyer breaches any material obligation (other than one covered by
Section 7.1(b) or (c) of this Agreement) and fails to cure such breach within
thirty (30) days after the receipt of written notification of breach by Seller or
such longer period as may be necessary to cure such breach as long as Buyer is
exercising diligent efforts to cure such default.
(b) Buyer fails to make any payment due under this Agreement within thirty
(30) days after the receipt of written notice that such payment is due.
(c) The initiation of an involuntary proceeding against Buyer under the
bankruptcy or insolvency laws, which involuntary proceeding remains
undismissed for sixty (60) consecutive days, or in the event of the initiation by
Buyer of a voluntary proceeding under the bankruptcy or insolvency laws.
7.2 Events of Default by Seller
(1) The following shall each constitute an "Event of Default" by Seller if
Seller does not cure within the time set forth in clause (2), below:
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(a) Seller breaches any material obligation (other than ones covered by
Sections 7.2(1)(b), (c), (d), (e) or (f) of this Agreement or for which a remedy
is specified).
(b) Seller fails to make any payment due under this Agreement within thirty
(30) days after the receipt of written notice that such payment is due.
(c) The initiation of an involuntary proceeding against Seller under the
bankruptcy or insolvency laws, which involuntary proceeding remains
undismissed for sixty (60) consecutive days, or in the event of the initiation by
Seller of a voluntary proceeding under the bankruptcy or insolvency laws.
(d) Seller sells or transfers Buyer's share of the Output (or any individual
component thereof) or Expansion Plant Output (or any individual component
thereof) or the right to Buyer's share of the Output (or any individual
component thereof) or Expansion Plant Output (or any individual component
thereof), to the extent that such Expansion Plant Output is purchased by Buyer,
to any Person other than Buyer.
(e) Seller fails to comply with the terms of Buyer's right of first refusal as
described in Section 2.5 of this Agreement.
(f) Subject to Section 7.4(c), Seller fails, for any reason other than an
unauthorized act or omission by Buyer, to achieve the Commercial Operation
Date by the applicable Milestone deadline as set forth in Section 4.3(b)(v), as
such deadline may be extended as a result of a Force Majeure Event in
accordance with Section 4.3(e).
(2) Time for Cure. Nothing described in any of Sections 7.2(1)(a), (d) or (e)
above shall constitute an Event of Default if Seller cures the event, failure or
circumstance within (30) days after the receipt of written notification by Buyer
or such longer period as may be necessary to cure as long as Seller is
exercising diligent efforts to cure.
7.3 Termination for Default
(a) In the event the defaulting Party fails to cure the Event of Default within
the period for curative action under Sections 7.1 or 7.2, as applicable, the non -
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defaulting Party may terminate the Agreement by notifying the defaulting
Party in writing of (i) the decision to terminate and (ii) the effective date of the
termination.
(b) Upon termination of the Agreement by Buyer pursuant to Section 7.3(a)
due to an Event of Default by Seller, (i) Buyer shall have no future or further
obligation to purchase the Output of the Plant or to make any payment
whatsoever under this Agreement, except for payments for obligations arising
or accruing prior to the effective date of termination, and (ii) Seller shall, if
Buyer has paid in full for emission offsets pursuant to Section 4.3(j), either (A)
reimburse Buyer pro rata for any unused such offsets paid for by Buyer or (B)
transfer to Buyer title to any unused such offsets paid for by Buyer. Upon
termination of the Agreement by Seller pursuant to Section 7.3(a) due to an
Event of Default by Buyer, Seller shall have no future or further obligation to
deliver the Output of the Plant to Buyer or to satisfy any other obligation of
this Agreement, except for payments or other obligations arising or accruing
prior to the effective date of termination. After the effective date of
termination, the Agreement shall not be construed to provide any residual
value to either Party or any successor or any other Person, for rights to, use of
or benefits from the Plant to any Person.
7.4 Damates
(a) For all claims, causes of action and damages the Parties shall be entitled
to the recovery of actual damages allowed by law unless otherwise limited by
the Agreement. Neither the enumeration of Events of Default in Sections 7.1
and 7.2, nor the termination of this Agreement by a non -defaulting Party
pursuant to Section 7.3(a), shall limit the right of a non -defaulting Party to
rights and remedies available at law, including, but not limited to, claims for
breach of contract or failure to perform by the other Party and for direct
damages incurred by the non -defaulting Party as a result of the termination of
this Agreement.
(b) Except as otherwise specifically and expressly provided in the
Agreement, neither Party shall be liable to the other Party under this
Agreement for any indirect, special or consequential damages, including but
not limited to loss of use, loss of revenues, loss of profit, interest charges, cost
of capital or claims of its customers or members to which service is made.
Except as set forth in Section 4.1(k) and except to the extent Seller violates its
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undertaking not to provide or sell rights to part or all of the Output to a party
other than Buyer, Seller shall not be liable to Buyer for failure to provide any
specific amount of Output hereunder.
(c) In the event that Seller fails to meet the Commercial Operation Date by
the applicable Milestone deadline as set forth in Section 4.3(b)(v), as such
deadline may be extended as a result of a Force Majeure Event in accordance
with Section 4.3(e), Seller shall be liable for liquidated damages in the amount,
per month, equal to the Monthly LD Amount for each full month (with parts of
a month pro rated) that Seller is late in satisfying the Milestone. So long as
Seller is paying such liquidated damages on a monthly basis, up to twelve (12)
months, Buyer shall not be permitted to terminate this Agreement. If after
twelve (12) months following the relevant Milestone deadline Seller has failed
to achieve Commercial Operation, or if for any reason Seller fails to pay, or
discontinues paying, the monthly liquidated damages provided for above,
Buyer may terminate this Agreement upon thirty (30) days' prior written
notice to Seller. This twelve (12) month period shall not be extended as a
result of a Force Majeure Event. Upon such termination, Seller shall pay
Buyer, within thirty (30) days of receipt of the termination notice, a lump sum
equal to the LD Amount. No other damages or remedy shall be available to
Buyer on the basis of such failure to meet the Milestone set forth in Section
4.3(b)(v) or termination of this Agreement based on failure to achieve
Commercial Operation within twelve (12) months of that Milestone deadline.
(d) The Parties agree that the liquidated damages set forth in Sections
4.3(h) and 7.4(c) are reasonable and represent a fair and genuine estimate of
the damages Buyer will suffer upon the failure of Seller to achieve
Commercial Operation by the agreed upon date(s). The Parties acknowledge
that it would be impracticable or extremely difficult to fix Buyer's actual
damages, and therefore have deemed the liquidated damages set forth above to
be the amount of damage sustained by Buyer upon such a failure. The Parties
further agree that payment of such amount shall be as liquidated damages and
not as a penalty, and is therefore not subject to avoidance under California
Civil Code section 1671.
7.5 Indemnification
Seller and Buyer agree to defend, indemnify, and hold each other, and their
respective officers, directors, employees and agents, harmless from and against
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all claims, demands, losses, liabilities, and expenses (including reasonable
attorneys' fees) (collectively "Damages") for personal injury or death to
persons and damage to each other's physical property or facilities or the
property of any other Person to the extent arising out of, resulting from, or
caused by the negligent or intentional and wrongful acts, errors, or omissions
of the indemnifying Party. This indemnification obligation shall apply
notwithstanding any negligent or intentional acts, errors or omissions of the
indemnitees but the indemnifying Party's liability to pay Damages to the
indemnified Party shall be reduced in proportion to the percentage by which
the indemnitees' negligent or intentional acts, errors or omissions caused the
Damages. Neither Party shall be indemnified for its Damages resulting from
its sole negligence or willful misconduct. These indemnity provisions shall
not be construed to relieve any insurer of its obligation to pay claims
consistent with the provisions of a valid insurance policy.
Buyer shall defend, indemnify and hold Seller and its officers, directors,
employees and agents harmless from and against all claims, demands, losses,
liabilities and expenses (including reasonable attorneys fees) arising out of or
connected with the interaction with third parties in connection with WREGIS
or any alternate accounting system(s) designated by Buyer.
7.6 Buyer's Right to Operate
If Seller (i) fails to maintain the Availability Threshold for a period of nine (9)
months in any twelve (12) month period, or (ii) fails to generate Energy for
sixty (60) consecutive days, then Buyer or its designee may, but shall not be
obligated to, step-in and assume operational control from Seller of the Plant;
provided that Buyer shall not be permitted to step-in and take control so long
as Seller or any Lender(s) is using commercially reasonable efforts to remedy
the failures described in (i) or (ii) above. Buyer, its employees, contractors
and designees shall have the unrestricted right to enter the Plant to the extent
necessary to operate the Plant. Upon the exercise of this right, Buyer or its
designee shall at all times operate the Plant using Prudent Utility Practice and
shall comply, to the extent commercially practicable, with the terms of this
Agreement. Notwithstanding the foregoing, Seller shall not be excused from
any obligation or remedy available to Buyer as a result of Buyer's operation
of, or election not to operate, the Plant. Buyer shall pay Seller the applicable
rate for Output provided hereunder, less any costs incurred by Buyer to operate
the Plant. Buyer shall indemnify and hold Seller harmless from any liability to
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third parties arising out of Buyer's failure to operate the Plant using Prudent
Utility Practice. Upon Buyer's satisfaction that Seller has the ability to operate
the Plant in accordance with this Agreement, Seller shall resume operational
control.
Should Lender(s) refuse to finance the Plant, or materially condition such
financing, solely as a result of this Section 7.6, and Seller gives Buyer written
notice of such refusal to finance, Buyer shall have the following options: (1)
terminate this Agreement without liability of one Party to the other Party; (2)
renegotiate this Section 7.6 with Seller and Lender(s) in a manner mutually
acceptable; (3) delete this Section 7.6 in its entirety (which deletion will not
require Seller's additional consent); or (4) arrange for financing for the Plant
under materially equivalent terms and conditions as the Lender(s) were
prepared to provide but for this Section 7.6. If Buyer fails to elect and
complete one of these options within sixty (60) days of written notice from
Seller, Seller shall have the right to terminate this Agreement without liability
of one Party to the other Party.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Seller's Representations and Warranties
Seller represents and warrants to Buyer that as of the Effective Date:
(i) Seller is duly organized and validly existing as a limited liability
company under the laws of Delaware, and has the lawful power to
engage in the business it presently conducts and contemplates
conducting in this Agreement and Seller is duly qualified in each
jurisdiction wherein the nature of the business transacted by it makes
such qualification necessary;
(ii) Seller has the legal power and authority to make and carry out this
Agreement and to perform its obligations hereunder; all such actions
have been duly authorized by all necessary proceedings on its part. As
of the Effective Date, (a) the Plant shall on the Commercial Operation
Date be a "qualifying small power production facility" as that term is
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defined in Section 3(17)(C) of the Federal Power Act, and will possess
all of the exemptions from regulation provided in 18 CFR Sections
292.601(c) and 292.602; and (b) this Agreement is not required to be
filed with FERC and no approval (except with respect to "qualifying
small power production facility" status) with respect to this Agreement
is required from FERC. In the event that the Plant is not a "qualifying
small power production facility" on the Commercial Operation Date or
any date thereafter, Seller shall make appropriate filings under the
Federal Power Act within sixty (60) days so as to comply with
applicable law, subject at all times to the provisions of Article IX of this
Agreement;
(iii) The execution, delivery and performance of this Agreement by Seller
will not conflict with its governing documents, any applicable laws, or
any covenant, agreement, understanding, decree or order to which Seller
is a party or by which it is bound or affected;
(iv) This Agreement has been duly and validly executed and delivered by
Seller and, as of the date first set forth herein, constitutes a legal, valid
and binding obligation of Seller, enforceable in accordance with its
terms against Seller, except to the extent that its enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally or by general
principles of equity; and
(v) There are no actions, suits, proceedings or investigations pending or, to
the knowledge of Seller, threatened in writing against Seller, at law or in
equity before any Governmental Authority, which individually or in the
aggregate are reasonably likely to have a materially adverse effect on
the business, properties or assets or the condition, financial or otherwise,
of Seller, or to result in any impairment of Seller's ability to perform its
obligations under this Agreement.
8.2 Buyer Representations and Warranties
Buyer represents and warrants to Seller that as of the Effective Date:
(i) Buyer is a chartered city and municipal corporation, duly organized and
validly existing, and has the lawful power to engage in the business it
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SANFRAN 90103 12K)
presently conducts and contemplates conducting in this Agreement and
Buyer is duly qualified in each jurisdiction wherein the nature of the
business transacted by it makes such qualification necessary;
(ii) Buyer has the legal power and authority to make and carry out this
Agreement and to perform its obligations hereunder and all such actions
have been duly authorized by all necessary proceedings on its part;
(iii) The execution, delivery and performance of this Agreement by Buyer
will not conflict with its governing documents, any applicable laws or
any covenant, agreement, understanding, decree or order to which Buyer
is a party or by which it is bound or affected;
(iv) This Agreement has been duly and validly executed and delivered by
Buyer and, as of the first date set forth herein, constitutes a legal, valid
and binding obligation of Buyer, enforceable in accordance with its
terms against Buyer, except to the extent that its enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally or by general
principles of equity; and
(v) There are no actions, suits, proceedings or investigations pending or, to
the knowledge of Buyer, threatened in writing against Buyer, at law or
in equity before any Governmental Authority, which individually or in
the aggregate are reasonably likely to have a materially adverse effect
on the business, properties or assets or the condition, financial or
otherwise, of Buyer, or to result in any impairment of Buyer's ability to
perform its obligations under this Agreement.
ARTICLE IX
NO CHANGE TO RATES, TERMS OR CONDITIONS
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The Parties intend that the standard of review for changes to any rate, charge,
classification, term or condition of this Agreement at FERC shall be the most
stringent standard permissible under applicable law. As to the Parties, it is
understood that the standard is the "Mobile -Sierra public interest" standard of
review, as stated by the United States Supreme Court in Morgan Stanley Capital
Group Inc. v. Public Utility District No. 1 of Snohomish County, Nos. 06-1457, 128
S.Ct. 2733 (2008), and consistent with the order of the Supreme Court in NRG Power
Marketing, LLC, et al., v. Maine Public Utilities Commission et al., No. 08-674, 130
S.Ct. 693 (2010) ("NRG Order"). As to all other persons it is intended that the same
standard, to the maximum degree as may be made applicable to other than the
Parties, apply, to the maximum degree permitted under the NRG Order.
ARTICLE X
MISCELLANEOUS
10.1 Assignment
The rights and obligations of this Agreement may not be assigned by either
Party without the prior written consent of the other Party, which consent shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing,
Seller may use subcontractors without Buyer's consent to comply with the
terms of this Agreement, provided that, notwithstanding the use of
subcontractors, Seller shall remain responsible for all of its obligations under
this Agreement. Buyer may furthermore use any agent it so designates for
scheduling and billing purposes, so long as Buyer remains responsible for all
of its obligations under this Agreement. Any purported assignment of this
Agreement in the absence of the required consent, except as provided in
Section 10.2, shall be void.
10.2 Financing
Notwithstanding Section 10.1, Seller may, without the consent of Buyer,
assign, transfer or hypothecate its rights under this Agreement to Lenders as
collateral security in connection with any financing of the purchase or
operation of the Plant, provided that such Lender(s) or its designee agree(s), in
writing, that upon assuming any of Seller's prospective rights under this
Agreement, such Lender also shall be bound by all of Seller's prospective
obligations under this Agreement. Notwithstanding any such assignment,
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Seller's obligations under this Agreement shall continue in their entirety in full
force and effect and Seller shall remain fully liable for all of its obligations
under or relating to this Agreement. Each such collateral assignment and any
purchaser or transferee shall be subject to Buyer's rights and defenses
hereunder and under applicable law. Seller shall provide prior written notice
to Buyer at least seven (7) days prior to any such collateral assignment.
In order to facilitate the obtaining of financing of the Plant, Buyer shall
execute, upon request, a commercially reasonable consent to assignment, with
respect to a collateral assignment hereof to Lenders in connection with the
documentation of the financing or refinancing for the Plant. Any assignment
in violation of this Agreement shall be void, ab initio. Buyer shall consider in
good faith any amendments to this Agreement proposed by Seller which relate
to financing of the Plant or other amendments requested by Seller in order to
receive or maintain financing from Lenders.
10.3 Notices
Any notice, demand, request, or communication required or authorized by this
Agreement shall be delivered either by hand, facsimile, overnight courier or
mailed by certified mail, return receipt requested with postage prepaid, to:
City of Palo Alto
250 Hamilton Avenue, Seventh Floor
Palo Alto, CA 94301
Attention: City Clerk
Telecopier: (650) 328-3631
on behalf of Buyer;
with a copy to:
City of Palo Alto
250 Hamilton Avenue, Eighth Floor
Palo Alto, CA 94301
Attention: Senior Assistant City Attorney / Utilities
Telecopier: (650) 329-2646
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and to:
City of Palo Alto
250 Hamilton Avenue, Third Floor
Palo Alto, CA 94301
Attention: Director of Utilities
Telecopier: (650) 321-0651
and to:
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Attention: Power Contracts Administrator
Telecopier: (916) 781-4255
and to:
Ameresco Forward LLC
c/o Ameresco, Inc.
111 Speen Street, Suite 410
Framingham, MA 01701
Attention: General Counsel
Telecopier: (508) 661-2201
Telephone: (508) 661-2200
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with a copy to:
Ameresco Forward LLC
c/o Ameresco, Inc.
111 Speen Street, Suite 410
Framingham, MA 01701
Attention: Vice President, Renewable Energy
Telecopier: (508) 661-2201
Telephone: (508) 661-2200
on behalf of Seller.
The designation and titles of the person to be notified or the address of
such person may be changed at any time by written notice delivered in the
manner set forth in this Section 10.3. Any such notice, demand, request, or
communication shall be deemed received (i) if delivered by hand by a Party or
sent by facsimile or (ii) upon receipt by the receiving Party if sent by courier
or U.S. mail.
10.4 Captions
All titles, subject headings, section titles and similar items are provided for the
purpose of reference and convenience and are not intended to be inclusive,
definitive or to affect the meaning of the contents or scope of the Agreement.
10.5 No Third Party Beneficiary
No provision of the Agreement is intended to, nor shall it in any way, inure to
the benefit of any customer, property owner or any other third party, so as to
constitute any such Person a third -party beneficiary under the Agreement, or of
any one or more of the terms hereof, or otherwise give rise to any cause of
action in any Person not a Party hereto.
10.6 No Dedication
No undertaking by one Party to the other Party under any provision of the
Agreement shall constitute the dedication of that Party's system or any portion
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thereof to the other Party or to the public or affect Seller as an independent
entity and not a public utility.
10.7 Entire Agreement; Integration
This Agreement, together with all appendices attached hereto, constitutes the
entire agreement between the Parties and supersedes any and all prior oral or
written understandings. No amendment, addition to or modification of any
provision hereof shall be binding upon the Parties, and neither Party shall be
deemed to have waived any provision or any remedy available to it, unless
such amendment, addition, modification or waiver is in writing and signed by
a duly authorized officer or representative of the Parties.
10.8 Applicable Law
The Agreement is made in the State of California and shall be interpreted and
governed by the laws of the State of California and/or the laws of the United
States, as applicable.
10.9 Venue
The Parties hereby submit to the exclusive jurisdiction of the federal courts for
the Northern District of the State of California; provided, however, that if such
federal courts sitting in the Northern District of the State of California refuse
jurisdiction, the Parties agree to the exclusive jurisdiction of the state courts
sitting in the County of San Francisco, State of California.
10.10 Nature of Relationship
The duties, obligations and liabilities of the Parties are intended to be several
and not joint or collective. The Agreement shall not be interpreted or
construed to create an association, joint venture, fiduciary relationship or
partnership between Seller and Buyer or to impose any partnership obligation
or liability or any trust or agency obligation or relationship upon either Party.
Seller and Buyer shall not have any right, power or authority to enter into any
agreement or undertaking for, or act on behalf of, or act as or be an agent or
representative of or otherwise bind the other Party.
43
SANFRAN 90103 (2K)
10.11 Good Faith and Fair Dealing; Reasonableness
The Parties agree to act reasonably and in accordance with the principles of
good faith and fair dealing in the performance of this Agreement. Unless
expressly provided otherwise in this Agreement, (i) wherever the Agreement
requires the consent, approval or similar action by a Party, such consent,
approval or similar action shall not be unreasonably withheld or delayed, and
(ii) wherever the Agreement gives a Party a right to determine, require, specify
or take similar action with respect to matters, such determination, requirement,
specification or similar action shall be reasonable.
10.12 Severability
Should any provision of the Agreement be or become void, illegal or
unenforceable, the validity or enforceability of the other provisions of the
Agreement shall not be affected and shall continue in full force and effect. The
Parties will, however, use their best endeavors to agree on the replacement of
the void, illegal, or unenforceable provision(s) with legally acceptable clauses
which correspond as closely as possible to the sense and purpose of the
affected provision.
10.13 Confidentiality
All information disclosed by Seller, including, without limitation, all
engineering documents, designs, specifications and financial information, shall
be kept confidential and shall not be disclosed to any third party except as
provided in this Section 10.13. Buyer acknowledges Seller's request to hold
all information regarding this Agreement confidential. Buyer shall disclose
such information to third parties only to the extent required by California law
(including, without limitation, the California Constitution, the California
Public Records Act and the Brown Act). Notwithstanding the foregoing,
either Party may disclose this Agreement to Republic or its representatives,
NCPA or its representatives, or to Lender(s) or potential Lender(s) or its/their
representatives; provided that prior to such disclosure, the recipient shall
agree, in writing, to keep the material confidential under terms no less
stringent than as set forth in this Section 10.13. Buyer also shall be permitted
to disclose this Agreement and related information to the City Council of Palo
Alto for the express purpose of obtaining approval to execute this Agreement;
provided that in connection with such disclosure Buyer shall only disclose
44
SANFRAN 90103 12K)
such information to the extent required by California law (including, without
limitation, the California Constitution, the California Public Records Act and
the Brown Act). Each Party shall be bound by its obligations of
confidentiality hereunder for a period of two (2) years from expiration or any
earlier termination of this Agreement. Notwithstanding anything to the
contrary in this Section 10.13, nothing in this Agreement shall restrict any
Party from using or disclosing confidential information in any manner it
chooses, which confidential information (i) is or becomes generally available
to the public other than as a result of a disclosure directly or indirectly by the
disclosing Party or its representative; (ii) was within the using or disclosing
Party's possession prior to it being furnished hereunder, provided that such
information is not subject to another confidentiality agreement with, or other
contractual, legal or fiduciary obligation of confidentiality to, any other party
with respect to such information; (iii) is rightfully obtained by a Party from
third parties authorized to make such disclosure without restriction; or (iv) is
legally required to be disclosed by judicial, administrative or other
governmental action as determined by such Party's attorney acting in good
faith (including, but not limited to, the California Constitution, the California
Public Records Act and the Brown Act), provided that prompt notice of said
judicial or other governmental action shall have been given to the non -
disclosing Party and that the non -disclosing Party shall, at its sole cost and
expense, be afforded the opportunity (consistent with the legal obligations of
the disclosing Party) to exhaust all reasonable legal remedies to maintain the
confidential information in confidence.
10.14 Cooperation
The Parties agree to reasonably cooperate with each other in the
implementation and performance of the Agreement. Such duty to cooperate
shall not require either Party to act in a manner inconsistent with its rights
under the Agreement.
10.15 Counterparts
This Agreement may be executed in two or more counterparts and by different
Parties on separate counterparts, all of which shall be considered one and the
same agreement and each of, which shall be deemed an original.
[signature page follows]
45
SANFRAN 90103 12K)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed as of the Effective Date.
AMERESCO FORWARD LLC
By Amt / cp, Inc., its s me er
By: Y' .
THE CITY OF PALO ALTO
APPROVAL AS TO FORM:
By:
Name: Michael T. Bakas
Name: Grant Kolling
Title: Senior Assistant City Attorney
Date:
Title: Vice President
Date: 1 £ f C\' 9 . 2O 10
CITY OF PALO ALTO
By:
CITY OF PALO ALTO
By:
Name: Lalo Perez
Title: Administrative Services Director
Date:
Name: Valerie O. Fong
Title: Utilities Director
Date:
CITY OF PALO ALTO
By:
Name: James Keene
Title: City Manager
Date:
46
SANFRAN 90103 (2K)
COMMONWEALTH OF MASSACHUSETTS
SS
COUNTY OF MIDDLESEX
On this (l''r' day of c/'tck , <)-oio, before me, the undersigned notary
public, personally appeared Yh i divA .PT , as the Ui ci %�� L - 1 of
Ameresco, Inc., a Delaware corporation, the sole member of Ameresco Forward
LLC, a Delaware limited liability company, proved to me through satisfactory
evidence of identification, which was j'uivt , to be the person whose
name is signed on the preceding docui'nent, and acknowledged to me that he signed
the preceding document voluntarily for its stated purpose as Vi, u 4-r ' 4
of Ameresco, Inc., a Delaware corporation, the sole member of Ameresco Forward
LLC, a Delaware limited liability company.
My Commission expires /1 `
44)
Notary Public
47
SANFRAN 90103 12K)
APPENDIX A
SITE DRAWINGS
Seller shall provide to Buyer the final Site Drawings prior to the Commercial
Operation Date.
48
SANFRAN 90103 (2K)
APPENDIX B
FORM OF ATTESTATION
Ameresco Forward LLC
Environmental Attribute Attestation and Bill of Sale
Ameresco Forward LLC ("Ameresco") hereby sells, transfers and delivers to
("Customer")
the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation of
the indicated energy for delivery to the grid (as such term(s) are defined in the
(identify contract) (the "Contract') dated , 20
between Ameresco and Customer) arising from the generation for delivery to the grid of the energy by the
Facility described below:
Facility name and location: Fuel Type:
Capacity (MW): Operational Date:
(for facility that has added renewable capacity, show operational date and amount of new capacity)
As applicable: CEC Reg. no. Energy Admin. ID no. Q.F. ID no.
Dates MWhrs generated
20
20
20
in the amount of one Environmental Attribute or its equivalent for each megawatt hour generated; and Ameresco
further attests, warrants and represents as follows:
i) to the best of its knowledge, the information provided herein is true and correct;
ii) its sale to Customer is its one and only sale of the Environmental Attributes and associated
Environmental Attribute Reporting Rights referenced herein;
iii) the Facility generated and delivered to the grid the energy in the amount indicated as undifferentiated
energy; and
[check one:]
iv) Ameresco owns the Facility.
iv) to the best of Ameresco's knowledge, each of the Environmental Attributes and Environmental
Attribute Reporting Rights associated with the generation of the indicated energy for delivery to the
grid have been generated and sold by the Facility.
This serves as a bill of sale, transferring from Ameresco to Customer all of Ameresco's right, title and interest in
and to the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation
of the energy for delivery to the grid.
Contact Person: tel: 1-508-661-2200; fax: 1-508-661-2201
WITNESS MY HAND,
AMERESCO FORWARD LLC
By: Ameresco, Inc., its sole member
By
Its
Date:
B-1
49
SANFRAN 90103 (2K)
APPENDIX C
INSURANCE COVERAGES
At its own expense, Seller shall secure and maintain during the Term the
following insurance with the coverage amounts indicated for occurrences
during and arising out of Seller's performance of this Agreement. Such
insurance shall be placed with responsible and reputable insurance companies
in compliance with Requirements of Law applicable to Seller.
1. Workers' Compensation/Employer's Liability. Seller shall
maintain Workers' Compensation Insurance and Employer's
Liability Insurance which comply with Requirements of Law
applicable to Seller.
2. Automobile Liability. Seller shall maintain Automobile Liability
Insurance in compliance with Requirements of Law applicable to
Seller, including coverage for owned, non -owned and hired
automobiles for both bodily injury (including death) and property
damage, including automobile liability contractual endorsement
and uninsured/underinsured motorist protection endorsements.
3. Third Party Liability. Seller shall maintain third party liability
insurance in compliance with Requirements of Law applicable to
Seller on a project -specific basis covering against legal
responsibility to others as a result of bodily injury, property
damage and personal injury arising from the operation and
maintenance of the Plant. Such policy shall be written with a
limit of liability not less than $10,000,000 and a deductible not to
exceed $10,000. Such liability may be in any combination of
primary and excess/umbrella. Coverage shall include, but not be
limited to, premises/operations, explosion, collapse, underground
hazards, broad form property damage and personal injury
liability. Such coverage shall not contain exclusions for punitive
or exemplary damages, unless prohibited by law.
50
SANFRAN 90103 (2K1
APPENDIX D
SCHEDULING PROTOCOLS
1. Prior to three (3) business days before the end of a month, Seller is to
provide to NCPA and Buyer a monthly forecast of loads and/or
generation for the following month. At a minimum, monthly forecasts
will be hourly kilowatt (kW) values by weekday, Saturday, and
Sunday/Holiday.
2. No later than 1400 hrs. each Thursday, Seller shall provide a forecast of
loads and/or generation for the following week to the extent it is
different from the monthly forecast in Paragraph 1. Weekly forecasts
will be hourly kW values for each hour of the week.
3. Daily modifications to forecasts. Unless otherwise mutually agreed,
Seller may make changes to the weekly forecast by providing such
changes to NCPA prior to 0800 hrs. two (2) days before the active
scheduling day.
a. Example: For power that is scheduled for generation or delivery on
Thursday, March 25, 2010, changes must be submitted to NCPA by
no later than 0800 hrs. on Tuesday, March 23, 2010.
4. Hourly modifications to active schedules. Unless otherwise mutually
agreed, Seller may make changes to active schedules by providing such
changes to NCPA with a minimum of four (4) hours' notice before the
active hour to be changed. Changes to active schedules are limited to two
(2) changes per day, excluding forced outages, unless otherwise agreed to
between the parties. One request for a schedule change, of one hour or
multiple hours duration, constitutes one schedule change.
a. Example: For power that is scheduled for generation or delivery in
hour ending 1500 hrs. (for the period from 1401 hrs. to 1500 hrs.),
changes must be submitted to NCPA no later than 1100 hrs.
5. NCPA is to be notified of all planned or forced generation outages.
6. At Seller's request, NCPA will modify generation and load schedules for
unforeseen circumstances in accordance with the above scheduling
timeline constraints and NCPA Schedule Coordination Agreement.
51
SANFRAN 90103 (2K)
7. All notices and schedules are to be submitted to NCPA by phone, fax or
email to the following persons: Chief Dispatcher/Scheduler.
8. In the absence of forecasts and schedules as noted above, NCPA will
utilize the most current information provided by Seller in the development
and submission of schedules.
52
SANFRAN 90103 (2K)
EXAMPLE FORM OF DAY -AHEAD SCHEDULE
For: June ,
Hour Ended:
Expected Capability
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Expected Daily Temperatures, F
Low
High
Contact
Information:
Scheduling
Coordinator:
Facility:
CITY:
SANFRAN 90103 12K)
APPENDIX E
PERFORMANCE TEST
Seller shall coordinate and schedule, with Buyer, a performance test after
completion of all equipment startup and commissioning activities. This
performance test may be performed before completing punch list items. Buyer
shall be permitted to witness the performance test, including access to and copies
of control room logs, control system display screens, and instrumentation data for
a reasonable period of time before, during and after the performance test, and may
also concurrently conduct a site inspection of the Landfill and Plant and associated
facilities, systems and equipment. Seller shall supply a written copy of the
performance test results to Buyer within five (5) business days following the
conclusion of the test.
The performance test shall continue for one hundred twenty (120) consecutive
hours (the "Test Period") to demonstrate the following:
1) Net Generator Output: The power output for each generator shall be recorded
for the Test Period to verify the net initial capacities. This performance test shall
be performed for all engine/generators simultaneously and will be considered
successful if the average net output for the Test Period is equal to eighty percent
(80%) of the net Initial Capacity (in this instance, Initial Capacity shall not include
any capacity of the Plant from equipment for recovering waste heat from the
prime mover engines of the Plant to utilize that waste heat to produce additional
Energy (to the extent such equipment for recovering waste heat is or is not
installed by Seller)) designated in this Agreement. All power measurements shall
be based on a power factor of 0.90.
2) Compliance: The performance test shall also demonstrate the ability of the
Plant to comply with all material safety, system reliability, environmental, and
other requirements of its permits, this Agreement, any interconnection agreements,
and the LFG Agreement.
SANFRAN 9010312K)
54
APPENDIX F
SELLER'S SAMPLE QUARTERLY FINANCIAL STATEMENT
Balance Sheets
December 31, 2006 and 2007
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Accounts receivable
Prepaid and other current assets
Total current assets
Other assets:
Project assets, net
Due from member
Debit issuance costs, net
Total other assets
LIABILITY AND MEMBER'S EQUITY
Current liabilities:
Current portion of long-term debt
Accounts payable
Accrued expenses
Total current liabilities
Long-term liabilities:
Long-term debt, less current portion
Deferred tax liabilities
Total long-term liabilities
Member's equity
SANFRAN 9010312K}
55
Statements of Operations
Years Ended December 31, 2006 and 2007
Revenues:
Electricity Sales
Costs of revenue:
Operation and maintenance
Depreciation of project assets
Gross profit (loss)
Operating expenses:
Selling, general and administrative
Operating income (loss)
Interest and other financing costs
Income (loss) before tax benefit (provision)
Income tax benefit (provision)
Net income (loss)
SANFRAN 9010312K)
Statements of Cash Flows
Years Ended December 31, 2006 and 2007
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred issuance costs
Deferred taxes
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable
Prepaid expenses
Accounts payable
Due to (from) member
Net cash provided by operating activities
Cash flows from investing activities:
Accounts payable relating to construction activity
Accrued expenses relating to construction activity
Purchase of project assets
Net cash used in investing activities
Cash flows from financing activities:
Increase in restricted cash
Capital contributions
Distributions to member
Proceeds from debt issuance
Debt issuance costs
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest
Income taxes
Supplemental disclosure of noncash transactions:
Accrued purchases of project assets
SANFRAN 90103 (2K)
ATTACHMENT C
Not Yet Approved
Resolution
Resolution of the Council of the City of Palo Alto Approving
the Long Term Power Purchase Agreement (Landfill Gas
Power) with Ameresco San Joaquin LLC for the Purchase of
Electricity Generated by Landfill Gas Electric
Generating Facilities
WHEREAS, the City of Palo Alto (the "City"), a municipal utility and a
chartered city is a member of the Northern California Power Agency ("NCPA");
WHEREAS, on March 5, 2007, the City approved eight electric portfolio
planning and management guidelines to guide the development and management of the
City's long-term electricity acquisition plan; one of the guidelines is to pursue and target
levels of new renewable resource energy purchases equal to thirty percent (30%) and
thirty-three percent (33%) of the City's expected energy load by 2012 and 2015,
respectively;
WHEREAS, the City is interested in purchasing power generated by renewable
resources for the benefit of its electric customers;
WHEREAS, by purchasing these sources of renewable energy, the City will help
reduce the production of greenhouse gases and assist in reducing volatile organic
compound emissions;
WHEREAS, Ameresco San Joaquin LLC ("Ameresco") proposed its project in
response to the City's Request for Proposals 134307 ("RFP") in November 2009, and it
was deemed competitive with other RFP respondents;
WHEREAS, the execution of this power purchase agreement with Ameresco is
anticipated to enable the City to meet the three -percent portion of its goal of sourcing
33% of its energy needs from renewable electric energy;
WHEREAS, the City is allocated a 100 percent share of the power from the
initial project, amounting up to 6.2 megawatts of plant net output;
WHEREAS, the power purchase agreement allows Ameresco to sell the City
additional output, if developed, from engine heat recovery, at the contract price;
WHEREAS, the County of San Joaquin will be the lead agency for the purposes
of compliance with the requirements of the California Environmental Quality Act;
NOW, THEREFORE, the Council of the City of Palo Alto does hereby
RESOLVE, as follows:
SECTION 1. The Council hereby approves the City's execution of the long-
term Power Purchase Agreement (Landfill Gas Power) made between Ameresco San
100308jb 0073322 1
Not Yet Approved
Joaquin LLC, as Seller, and the City of Palo Alto, as Buyer. The delivery term of the
agreement is twenty (20) years, commencing upon the Commercial Operation Date of
the planned electric generation facility. Quantity is a 100 percent share of the plant's net
output. Spending authority under the agreement is not to exceed one hundred twenty
four million seven hundred thousand dollars ($124,700,000). The City Manager is
hereby authorized to sign the agreement with Ameresco San Joaquin LLC and the City
Manager or his designee is authorized to sign any confirmations executed in connection
with the agreement on behalf of the City.
SECTION 2. With respect to the Council's award of the Power Purchase
Agreement referred to in Section 1 above, the Council hereby waives the
creditworthiness requirements of Palo Alto Municipal Code section 2.30.340(c) as it
may apply to Ameresco San Joaquin LLC.
SECTION 3. The Council finds that the adoption of this resolution does not
constitute a project under the California Environmental Quality Act and no
environmental assessment is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENTIONS:
ABSENT:
ATTEST: APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:
City Manager
Senior Asst. City Attorney
Director of Utilities
Director of Administrative
Services
100308 j 0073322 2
ATTACHMENT D
POWER PURCHASE AGREEMENT
This Power Purchase Agreement is entered into this day of
2010 (the "Effective Date") by and between the City of Palo Alto, a California
chartered municipal corporation and Ameresco San Joaquin LLC, a Delaware limited
liability company.
RECITALS
1 Seller intends to develop, finance, build, own and operate a Landfill Gas
electric generating facility to be located at the Foothill Sanitary Landfill (the
"Landfill") located at 6484 N. Waverly Road, Linden, California, on a site
leased from San Joaquin County, which owns the Landfill.
2. Buyer is engaged in the procurement and supply of electricity to residential
and commercial customers in the City of Palo Alto.
3. Buyer wishes to purchase the Output of the Plant and intends to resell related
Energy to its residential and commercial customers.
4. Buyer is willing to purchase, and Seller is willing to sell, the Output of the
Plant, on the terms and conditions and at the prices set forth in this Agreement.
5 Seller may determine to incorporate heat recovery equipment to produce
additional electrical output to be included and sold as Energy in accordance
with the terms of this Agreement.
6. Seller may determine to expand the Plant in the future depending on the
availability of Landfill Gas and other factors in accordance with the terms of
this Agreement.
7 Buyer will have a right of first refusal to purchase Expansion Plant Output,
such right to be exercisable as provided in this Agreement.
NOW THEREFORE, in consideration of these premises and the mutual
promises set forth below, the Parties agree, as follows.
SANFRAN 90103 (2K)
AGREEMENT
ARTICLE I - DEFINITIONS
Initially capitalized terms, whenever used in this Agreement, have the meanings set
forth below unless otherwise herein defined. The term "including," when used in
this Agreement, shall mean to include "without limitation."
1.1 Agreement: This Power Purchase Agreement, including all appendices, as it
may be amended from time to time.
1.2 Availability Threshold: The mechanical availability of the Plant calculated
as of the end of each calendar month during the Term as a percentage in
accordance with the following:
A = 100 x Available Hours
Base Hours
Where:
A = Availability Threshold
Available Hours = the number of hours during the prior twenty-four (24)
months in which the Plant is capable of delivering Energy to the
Point of Interconnection; provided that, to the extent that the
Plant is not capable of delivering all of the net Initial Capacity (in
this instance, Initial Capacity shall not include any capacity of
the Plant from equipment for recovering waste heat from the
prime mover engines of the Plant to utilize that waste heat to
produce additional Energy (to the extent such equipment for
recovering waste heat is or is not installed by Seller)) in any hour,
the Available Hours with respect to such hour shall be reduced
pro rata to reflect the fraction of the net Initial Capacity (in this
instance, Initial Capacity shall not include any capacity of the
Plant from equipment for recovering waste heat from the prime
mover engines of the Plant to utilize that waste heat to produce
additional Energy (to the extent such equipment for recovering
waste heat is or is not installed by Seller)) the Plant is capable of
delivering in such hour.
Base Hours = the number of hours during the same twenty-four (24)
months period referred to in Available Hours; provided that, to
the extent that the Plant is partially or wholly incapable or
z
SANFRAN 90103 12K)
otherwise unable to deliver Energy in any hour as a result of a
Force Majeure Event or because of fuel unavailability in any hour
due to no fault or negligence of Seller, that hour (or if the Plant's
capacity is only partially constrained, the pro rata portion of that
hour) shall be excluded from the Base Hours.
There shall be no Availability Threshold during the first twelve (12) month
period following the Commercial Operation Date. Starting with the thirteenth
(13th) month after the Commercial Operation Date and continuing through the
twenty-fourth (24th) month, the above formula will be used to determine the
Availability Threshold with the exception that both Available Hours and Base
Hours will be calculated, starting with the first hour of operation on the
Commercial Operation Date and including all relevant hours thereafter to the
end of the month relevant. Starting with the twenty-fifth (25th) month, the
Availability Threshold shall be calculated on a rolling basis using the previous
twenty-four (24) month period.
1.3 Buyer: The City of Palo Alto, a California chartered municipal corporation,
and any successor or permitted assignee.
1.4 Commercial Operation: The condition of the Plant (in this instance, Plant
shall not include equipment for recovering waste heat from the prime mover
engines of the Plant for purposes of utilizing such waste heat to produce
additional Energy to the extent such equipment is not then installed by Seller)
whereupon it (a) is certified by Seller to be complete in accordance with
manufacturers' recommendations except for punch list items, and (b) has
passed the performance test set forth in Appendix E while synchronized with
the LDC System or ISO transmission grid.
1.5 Commercial Operation Date: The date upon which Commercial Operation
first occurs.
1.6 Confirmation Notice: As defined in Appendix G.
1.7 Contractual Obligations: As to Seller, any material agreement, instrument or
undertaking to which Seller is a party or by which it or any of its property is
bound.
1.8 Effective Date: As defined in the first paragraph of this Agreement.
3
SANFRAN 90103 (2K)
1.9 Energy: The electricity generated by the Plant and delivered to Buyer by the
Seller, pursuant to this Agreement, respectively, at the Point of
Interconnection, as expressed in units of kilowatt-hours (kWh) or megawatt -
hours (MWh), including Test Energy.
1.10 Environmental Attributes: Any and all credits, benefits, emissions
reductions, offsets, and allowances, howsoever entitled, attributable to the
generation from the Plant or Expansion Plant(s), as the case may be, and its
displacement of conventional energy generation. Environmental Attributes
include but are not limited to: (1) any avoided emissions of pollutants to the
air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon
monoxide (CO) and other pollutants; (2) any avoided emissions of carbon
dioxide (CO2), methane (CH4) and other greenhouse gases (GHGs) that have
been determined by the United Nations Intergovernmental Panel on Climate
Change to contribute to the actual or potential threat of altering the Earth's
climate by trapping heat in the atmosphere; and (3) the reporting rights to
these avoided emissions such as Green Tag Reporting Rights. Green Tag
Reporting Rights are the right of a Green Tag purchaser to report the
ownership of accumulated Green Tags in compliance with federal or state law,
if applicable, and to a federal or state agency or any other party at the Green
Tag purchaser's discretion, and include without limitation those Green Tag
Reporting Rights accruing under Section 1605(b) of The Energy Policy Act of
1992 and any present or future federal, state, or local law, regulation or bill,
and international or foreign emissions trading program. Green Tags are
accumulated on kWh basis and one Green Tag represents the Environmental
Attributes associated with one (1) MWh of energy. Environmental Attributes
do not include (i) any energy, capacity, reliability or other power attributes
from the Plant or Expansion Plant(s), (ii) production tax credits associated
with the construction or operation of the Plant, Expansion Plant(s), Landfill, or
any other associated contract or right, and other financial incentives in the
form of credits, reductions, or allowances associated with the Plant, Expansion
Plant(s), Landfill, or any other associated contract or right, that are applicable
to a state or federal income taxation obligation, (iii) fuel -related subsidies or
"tipping fees" that may be paid to Seller to accept certain fuels, or local
subsidies received by the Seller or the owner of the Landfill for the destruction
of particular pre-existing pollutants or the promotion of local environmental
benefits, or (iv) emission reduction credits encumbered or used by the Plant or
4
SANFRAN 90103 (2K)
Expansion Plant(s) for compliance with local, state, or federal operating
and/or air quality permits.
1.11 Environmental Attribute Reporting Rights: All rights to report ownership
of the Environmental Attributes to any person or entity, under Section 1605(b)
of the Energy Policy Act of 1992 or otherwise.
1.12 Environmental Law: Any federal, state and local laws, including statutes,
regulations, rulings, orders, administrative interpretations and other
governmental restrictions and requirements relating to the discharge of air
pollutants, water pollutants or process waste water or otherwise relating to the
environment or hazardous substances, as amended from time to time.
1.13 Expansion Plant: Any expansion of the Plant from its Initial Capacity, or any
other electricity generating facility owned or controlled by Seller or its
affiliate(s) located at the Landfill and fueled by Landfill Gas. Each such
expansion of the Plant or additional facility shall be deemed to be an
"Expansion Plant."
1.14 Expansion Plant Output: All capacity, energy, associated Environmental
Attributes, ancillary services, contributions towards resource adequacy or
reserve requirements (if any) and any other reliability or power attributes
produced by Seller at any Expansion Plant.
1.15 FERC: Federal Energy Regulatory Commission and its successor
organization, if any.
1.16 Fixed Increase For Emission Controls: As defined in Appendix G.
1.17 Force Majeure Event: Any act or event that delays or prevents a Party from
timely performing obligations under this Agreement or from complying with
conditions required under this Agreement to the extent that such act or event is
reasonably unforeseeable and beyond the reasonable control of and without the
fault or negligence of the Party relying thereon as justification for such delay,
nonperformance, or noncompliance. Force Majeure Events typically include:
(i) acts of God or the elements, extreme or severe weather conditions,
explosion, fire, epidemic, landslide, mudslide, sabotage, lightning, earthquake,
flood or similar cataclysmic event, acts of public enemy, war, blockade, civil
insurrection, riot, civil disturbance or strike or other labor difficulty caused or
SANFRAN 90103 (2K)
5
suffered by a Party; (ii) any restraint or restriction imposed by law or by rule,
regulation or other acts or omissions of governmental authorities, whether
federal, state or local which by exercise of due diligence and in compliance
with applicable law a Party could not reasonably have been expected to avoid
and to the extent which, by exercise of due diligence and in compliance with
applicable law, has been unable to overcome (so long as the affected Party has
not applied for or assisted such act by a governmental authority); and (iii)
electric transmission interruptions or curtailments (not including any such
event that results from a failure by Buyer to obtain firm transmission or similar
rights, or otherwise to make congestion -related payments); provided that the
term "Force Majeure Event" does not include (a) economic conditions that
render a Party's performance of this Agreement at the Price unprofitable or
otherwise uneconomic (including Buyer's ability to buy Energy or
Environmental Attributes at a lower price, or Seller's ability to sell Energy or
Environmental Attributes at a higher price, than the Price), (b) a governmental
act by Buyer that delays or prevents Buyer from timely performing its
obligations under this Agreement, (c) a Plant Outage, including as a result of a
failure or shortage of landfill gas, except, in any case, if caused by an event or
circumstance that meets the requirements set forth in this Section 1.17 (other
than as described in (iii) above), (d) failure or delay in grant of Permits, or (e)
failures or delays by the LDC or the ISO in entering into all agreements with
Seller contemplated by this Agreement.
1.18 Governmental Authority: Any federal, state or local government, or political
subdivision thereof, including, without limitation, any municipality, township
or county, or any entity or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any corporation or other entity owned or
controlled by any of the foregoing.
1.19 Increase For Emission Controls: As defined in Appendix G.
1.20 Initial Capacity: The installed gross capacity of the Plant on the Commercial
Operation Date, such capacity to be not less than 2.0 MW and not more than
6.6 MW (gross nameplate), and not less than 1.6 MW and not more than 6.2
MW (net at the Point of Interconnection) and as further specified (and possibly
increased from the installed gross capacity (which may increase the net at the
Point of Interconnection) of the Plant on the Commercial Operation Date)
pursuant to Section 4.3(c).
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SANFRAN 90103 (2K)
1.21 Interconnection: Construction, installation, operation and maintenance of all
Interconnection Facilities.
1.22 Interconnection Agreement: The agreement between Seller and LDC
pursuant to which Seller and LDC set forth the terms and conditions for
Interconnection of the Plant to the LDC System, as amended from time to
time.
1.23 Interconnection Facilities: All the facilities installed for the purpose of
interconnecting the Plant to the LDC System, including, but not limited to,
transformers and associated equipment, relay and switching equipment and
safety equipment.
1.24 ISO: The California Independent System Operator Corporation, or its
functional successor.
1.25 kWh: kilowatt-hour.
1.26 Landfill Gas: The gas (and its constituent elements) generated from
decomposition of materials deposited in the Landfill.
1.27 LD Amount: The Monthly LD Amount multiplied by 12 (twelve).
1.28 LDC: Pacific Gas and Electric Company, a California corporation.
1.29 LDC System: The electric power generation, transmission, substation and
distribution facilities owned, operated and/or maintained by LDC, which shall
include, without limitation, after construction and installation, the circuit
reinforcements, extensions, and associated terminal facility reinforcements or
additions required to interconnect LDC's facilities with the Plant.
1.30 Lender(s): Any Person(s) providing money or extending credit (including any
capital lease) to Seller for (i) the construction of the Plant, (ii) the term or
permanent financing of the Plant, or (iii) working capital or other ordinary
business requirements for the Plant. "Lender(s)" shall not include trade
creditors of Seller.
1.31 LFG Agreement: As defined in Section 4.2(d).
SANFRAN 90103 (2K)
7
1.32 Monthly LD Amount: The product of (i) $7000 per MW, (ii) Buyer's
Percentage Share and (iii) the Initial Capacity (in this instance, Initial Capacity
shall not include any capacity of the Plant from equipment for recovering
waste heat from the prime mover engines of the Plant to utilize that waste heat
to produce additional Energy (to the extent such equipment for recovering
waste heat is or is not installed by Seller)) specified under Section 4.3(c) (net
at the Point of Interconnection).
1.33 MW: Megawatt.
1.34 MWh: Megawatt hour.
1.35 NCPA: The Northern California Power Agency, a joint action agency
organized and existing under the laws of the State of California.
1.36 Outage: A physical state in which all or a portion of the Plant is unavailable
to provide Energy to the Point of Interconnection, or in which any portion of
the LDC System is unavailable to receive Energy, to the extent that the
unavailability affects the LDC System's ability to accept delivery of Energy at
the Point of Interconnection, whether planned or unplanned.
1.37 Output: All actual capacity of the Initial Capacity and associated Energy, as
well as the following, as associated with the Initial Capacity and/or associated
Energy: Environmental Attributes; ancillary services; contributions towards
resource adequacy or reserve requirements (if any) and any other reliability or
power attributes.
1.38 Parties: Buyer and Seller, and their respective successors and permitted
assignees.
1.39 Party: Buyer or Seller, and each such Party's respective successors and
permitted assignees.
1.40 Percentage Share: One Hundred percent (100%).
1.41 Permits: All material federal, state or local authorizations, certificates,
permits, licenses and approvals required by any Governmental Authority for
the construction, ownership, operation and maintenance of the Plant (in this
8
SANFRAN 90103 (2K)
instance, Plant shall not include the equipment for recovering waste heat from
the prime mover engines of the Plant for purposes of utilizing such waste heat
to produce additional Energy to the extent such equipment is or is not installed
by Seller).
1.42 Person: An individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity.
1.43 Plant: The generation facility described in Recital 1 to be constructed and
owned by Seller and located on the Site for the generation and delivery of
electricity, including the step-up transformer, revenue quality meter and all
other facilities up to the Point of Interconnection, but not including any
Expansion Plant. At any time during the Term, Seller may, in Seller's sole
discretion, construct and/or install and own equipment for recovering waste
heat from the prime mover engines of the Plant for purposes of utilizing such
waste heat to produce additional Output (Seller makes no written or oral
representation or warranty, either express or implied, regarding the current or
future existence of any such additional Output), provided that such equipment
for recovering waste heat shall be become part of the Plant (including, after
installation of such equipment, part of the definition of Plant) and shall not be
considered an Expansion Plant.
1.44 Point of Interconnection: The point on the electrical system where the Plant
is physically interconnected with the LDC System, which is anticipated to be
at the high side of Seller's step-up transformers at the Plant.
1.45 Price: As defined in Section 2.3 and Appendix G.
1.46 Production Incentives: Any and all tax credits, deductions, allowances and
exemptions applicable to federal, state and local taxes and any other payment,
credit, deduction, benefit, grant or monetary incentive provided by any
Governmental Authority or any Person, and all air emission credits, reductions
or offsets, whether now in effect or arising in the future, in each case arising
from the activities contemplated by this Agreement, including the extraction,
sale, purchase, processing and/or distribution of Landfill Gas and/or the
generation and sale of electricity using Landfill Gas as a fuel, including
"Renewable Energy Production Incentive Payments" from the U.S.
Department of Energy, emission credits, reductions, offsets or any other
9
SANFRAN 90103 (2K)
similar benefits arising from the generation, collection, production, purchase,
use, reduction, conversion, destruction or resale of Landfill Gas.
Notwithstanding the foregoing, Production Incentives shall not include
anything that qualifies as Output, but Production Incentives shall include
Section 29 Credits and Section 45 Credits.
1.47 Prudent Utility Practice: Those practices, methods and equipment, as
changed from time to time, that:
(i) when engaged in are commonly used in the United States of America in
prudent electrical engineering and operations to operate landfill gas
generation electric equipment and related electrical equipment lawfully
and with safety, reliability, efficiency and expedition; or
(ii) in the exercise of reasonable judgment considering the facts known,
when engaged in could have been expected to achieve the desired result
consistent with applicable law, safety, reliability, efficiency and
expedition.
Prudent Utility Practices are not limited to an optimum practice, method,
selection of equipment or act, but rather are a range of acceptable practices,
methods, selections of equipment or acts.
1.48 Reimbursement Amount: As defined in Section 4.1(h).
1.49 Required Emission Controls: means any equipment and/or devices that need
to be installed, in Seller's sole discretion, to treat engine emissions at the Plant
to meet Requirements of Law and/or requirements of law applicable to Seller
and/or the Plant (including, without limitation, any permit, any air permit in
connection with the Plant, and any approvals in connection with the
construction and/or operation of the Plant). Required Emission Controls shall
include, without limitation, any (i) Selective Catalytic Reduction equipment or
any such other commercially used equipment at such time for nitrogen oxides
(NOx) emission reduction, (ii) Oxidizing Catalysts or any such other
commercially used equipment at such time for carbon monoxide (CO)
reduction, and/or (iii) a Continuous Emission Monitor or any such other
commercially used equipment at such time that performs a similar function.
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SANFRAN 90103 (2K)
1.50 Requirements of Law: Collectively, any federal or state law, treaty,
franchise, rule, regulation, order, writ, judgment, injunction, decree, award or
determination of any arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon Seller or Buyer or any of their
property or to which Seller or Buyer or any of their respective properties are
subject.
1.51 San Joaquin County: The County of San Joaquin, a political subdivision of
the State of California with principal offices at 44 N. San Joaquin Street, Suite
627 Stockton, California 95202
1.52 Section 29 Credits: Those tax credits available under Section 29 of Subtitle
A, Chap. 1A, Part IV of the Internal Revenue Code of 1986, as amended, as of
the Effective Date.
1.53 Section 45 Credits: Those tax credits available under Section 45 of Subtitle
A, Chap. 1A, Part IV of the Internal Revenue Code of 1986, as amended, or
any other similar federal, state or local tax credits, deductions, payments or
benefits arising from the purchase of Landfill Gas or the generation and sale of
electricity using Landfill Gas as a fuel, not including any Environmental
Attributes.
1.54 Seller: Ameresco San Joaquin LLC, a Delaware limited liability company,
and any successor or permitted assignee.
1.55 Seller's Interconnection Costs: As defined in Section 4.1(h).
1.56 Site: The real property in Linden, California on which the Plant is to be built
and located, as more particularly described in Appendix A.
1.57 Site Control: The point at which Seller satisfies one or more of the following
conditions: (1) Seller is (a) the lessee under a lease, or (b) the grantee under
an exclusive easement, with the owner (or its subsidiary) of the Landfill that
allows Seller to construct and operate the Plant at the Site during the Term in
accordance with this Agreement; (2) Seller has a fee ownership of the Site; or
(3) any other form of site control acceptable to Buyer in its reasonable
discretion.
1.58 Term: The period of time during which the Agreement is in effect.
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SANFRAN 90103 (2K)
1.59 Test Energy: Energy generated by the Plant and delivered to the Point of
Interconnection prior to the Commercial Operation Date.
1.60 Variable Increase For Emission Controls: As defined in Appendix G.
1.61 WREGIS: Western Renewable Energy Generation Information System, or its
successor; provided that the successor is capable of performing substantially
similar functions and is acceptable to both Parties.
1.62 WREGIS Certificates: The meaning set forth in WREGIS Operating Rules.
1.63 WREGIS Operating Rules: The rules describing the operations of the
Western Renewable Energy Generation Information System, as published by
WREGIS and as may be amended from time to time.
ARTICLE II
TERM, PURCHASE AND SALE
2.1 Term
This Agreement shall be effective upon execution by authorized
representatives of both Parties and, unless earlier terminated pursuant to an
express provision of this Agreement, shall continue until the twentieth (20th)
anniversary of the Commercial Operation Date.
2.2 Purchase and Sale of the Output
(a) In accordance with the terms and conditions hereof, commencing on the
Commercial Operation Date and continuing throughout the Term, Seller shall
sell and deliver at the Point of Interconnection, and Buyer shall purchase,
accept from Seller at the Point of Interconnection and pay for, Buyer's
Percentage Share of the Output produced during the Term pursuant to the
terms of this Agreement. Prior to the Commercial Operation Date, Buyer shall
purchase and accept from Seller at the Point of Interconnection and pay for,
Buyer's Percentage Share of the Output relating to Test Energy pursuant to the
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SANFRAN 90103 (2K)
terms of this Agreement. All Test Energy shall be scheduled in accordance
with the procedures set forth in Appendix D. Seller shall not sell to any other
party, and Buyer may claim credit for, Buyer's Percentage Share of the Output
as may be available from time to time.
(b) Throughout the Term, Seller shall sell and transfer to Buyer, and Buyer
shall purchase and receive from Seller, all right, title and interest in and to the
Environmental Attributes associated with Buyer's Percentage Share of the
Output, if any, whether now existing or subsequently generated or acquired
(other than by direct purchase from a third party) by Seller, or that hereafter
come into existence, during the Term, as a component of the Output purchased
by Buyer from Seller hereunder. Seller agrees to transfer and make such
Environmental Attributes available to Buyer immediately to the fullest extent
allowed by applicable law upon Seller's production or acquisition of the
Environmental Attributes. If Seller receives any tradable Environmental
Attributes based on the greenhouse gas reduction benefits or other emission
offsets attributed to its fuel usage, it shall be entitled to retain sufficient
Environmental Attributes to ensure that there are zero net emissions associated
with the production of electricity from such facility. Seller shall not assign,
transfer, convey, encumber, sell or otherwise dispose of all or any portion of
Buyer's Percentage Share of the Environmental Attributes to any Person other
than Buyer. Seller makes no written or oral representation or warranty, either
express or implied, regarding the current or future existence of any
Environmental Attributes.
(c) Seller shall use commercially reasonable efforts to use WREGIS to
authenticate the transfer of "WREGIS Certificates" from Seller to Buyer in
accordance with WREGIS reporting protocols and the terms of this
Agreement. Seller shall use commercially reasonable efforts to register the
Plant with WREGIS. After the Plant is registered with WREGIS, Seller agrees
to use commercially reasonable efforts to transfer WREGIS Certificates to
Buyer using the Forward Certificate Transfer method, as described in
WREGIS Operating Rules and as designated by Buyer. Buyer shall be
responsible for providing required information and taking any action that may
be necessary for the registration of the Plant and for transfer of WREGIS
Certificates to Buyer's WREGIS account.
Except as the Parties may otherwise agree, in writing, in the event that
WREGIS is not in operation, or WREGIS does not track Seller's transfer of
WREGIS Certificates to Buyer, or its designees, on or before the 30th day of
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SANFRAN 90103 (2K)
each calendar month, Seller shall document the production and transfer of
Environmental Attributes under this Agreement by delivering to Buyer an
attestation for the Environmental Attributes produced by the Plant, in whole
MWh, in the preceding calendar quarter. The form of attestation shall be
substantially in the form as set forth in Appendix B.
Seller shall be responsible for the WREGIS expenses associated with
registering the Plant, maintaining its account, paying the WREGIS
Certificates' issuance fees, and transferring WREGIS Certificates to Buyer.
Buyer shall be responsible for the WREGIS expenses associated with
maintaining its account and subsequent transferring or retiring of WREGIS
Certificates. Seller shall, as instructed by Buyer and at Buyer's cost, dispute
data with WREGIS. Notwithstanding anything herein to the contrary, if
Seller's cost (including labor billed at standard external rates) associated with
WREGIS in connection with this Agreement or compliance with this Section
2.2 exceeds $2,500 in any calendar year, Buyer shall reimburse Seller for the
amount in excess of $2,500; provided, however, Buyer may designate an
alternate accounting system(s), at no cost to Seller, to document or otherwise
verify that transfer of RECs or other Environmental Attributes if Seller's
WREGIS costs exceed $2,500 in any calendar year. The $2,500 amount shall
be escalated at a rate of 1.5% annually, commencing on the first day of the
January following the Commercial Operation Date and continuing every
subsequent anniversary thereafter.
For the purposes of this Section 2.2, "commercially reasonable efforts" shall
exclude (i) making any changes to the Plant or any Expansion Plant or the
method of operation thereof and (ii) expenditure of any funds other than
nominal filing fees.
(d) During the Term, Seller shall not report to any person or entity that the
Environmental Attributes granted hereunder to Buyer belong to anyone other
than Buyer, and Buyer may report under any program that such Environmental
Attributes purchased hereunder belong to it.
2.3 Price
Subject to the provisions of Section 4.1(k), Buyer shall pay Seller the Price, as
determined in Appendix G, per MWh of Energy delivered or tendered to Buyer
14
SANFRAN 90103 12K)
at the Point of Interconnection. The Price shall be the total compensation
owed by Buyer for Output delivered or tendered to Buyer hereunder.
2.4 Tax Credits
Buyer agrees and acknowledges that all Production Incentives shall be owned
by Seller and/or the owner of the Landfill; provided, that to the extent Buyer
pays in full for emission offsets and otherwise makes any additional payments
pursuant to Section 4.3(j) in full, Seller shall pay Buyer the Percentage Share
of up to one hundred percent (100%) of the net economic value (net of
reasonable transaction fees) realized by Seller from the Section 45 Credits
until Seller has reimbursed Buyer for all such payments made by Buyer
pursuant to Section 4.3(j). Buyer shall not claim Production Incentives. Buyer
agrees to cooperate with Seller and/or the owner of the Landfill as may be
necessary to allow maximization of the value of, and realization of, all
Production Incentives; provided that Buyer shall not be required to incur
additional costs or accept any diminution in value of its rights under this
Agreement or of the Output purchased hereunder. In addition, Buyer shall not
take any action (except as otherwise permitted under this Agreement), that
would in any way reduce or eliminate the availability to Seller or the owner of
the Landfill of any Production Incentive, including without limitation the
Section 29 Credits, and Buyer shall forego any credits or benefits available to it
(other than Environmental Attributes) to the extent necessary to allow Seller and
the owner of the Landfill to obtain the full benefit of the Production Incentives,
but in no event shall Buyer be required to forego receipt of Energy.
2.5 Right of First Refusal for Expansion Plant and Expansion Plant Output
(a) Seller may in its sole discretion determine, from time to time, during the
Term to develop, finance, construct and/or operate an Expansion Plant. Each
time such a determination is made, Seller shall notify Buyer of such
determination and shall offer in writing to sell the Percentage Share of the
Expansion Plant Output to Buyer. The offer shall include the price to be paid
by Buyer for the Percentage Share of the Expansion Plant Output, the term of
the proposed power purchase agreement and the other principal terms and
conditions of the proposed sale. If Buyer wishes to accept such offer to
purchase all (but not less than all) of such Percentage Share of the Expansion
Plant Output, Buyer shall so notify Seller within sixty (60) days of its receipt
of such offer. Buyer and Seller shall promptly thereafter enter into good faith
15
SANFRAN 90103 (2K)
negotiation of a definitive power purchase agreement incorporating the terms
of such offer. Until such an Expansion Plant power purchase agreement is
executed, the Seller's proposal, accepted by Buyer (including any
modifications agreed upon in writing by both parties), shall control all
dealings between the Parties relating to the Expansion Plant. Should any issue
arise that is not covered by such documentation, the terms of this Agreement
shall apply.
(b) If Buyer does not accept Seller's offer to purchase Buyer's Percentage
Share of the Expansion Plant Output within sixty (60) days of receipt of
Seller's offer, Seller shall be free to offer to sell that portion of the Expansion
Plant Output to any third party at a price and on other terms and conditions
which, taken as a whole, are at least as favorable to Seller as the price and
other terms and conditions set forth in Seller's offer to Buyer. If Seller offers
to break up Buyer's Percentage Share of the Expansion Plant Output to sell to
multiple independent buyers, Seller shall notify Buyer in writing of the terms
and conditions of such offers and Buyer shall again have the right of first
refusal consistent with the terms set forth above for each of the lesser amounts
being offered to the third parties. If Buyer does not purchase its Percentage
Share of the Expansion Plant Output and Seller sells such Expansion Plant
Output to a third party, Seller shall promptly certify, in writing, to Buyer that
the terms and conditions of sale of such Expansion Plant Output to such third
party, taken as a whole, are at least as favorable to Seller as the price and other
terms and conditions set forth in Seller's offer to Buyer, and Seller shall
provide the relevant contract and any other supporting documentation for such
certification. Upon the sale of such Expansion Plant Output in compliance
with this Agreement, Buyer shall have no further rights to be offered or to
purchase such Expansion Plant Output. Buyer's refusal of its Percentage
Share of the Expansion Plant Output from one Expansion Plant shall not affect
Buyer's right to purchase its Percentage Share of the Expansion Plant Output
from a later Expansion Plant under the terms of this Agreement. Seller shall
not sell or provide Buyer's Percentage Share of the Expansion Plant Output to
any third party unless it can do so without compromising in any material way
its ability to provide Buyer's Percentage Share of the Output to Buyer
hereunder. The materiality of any such impact shall be determined by Buyer in
its reasonable discretion. If Seller sells or provides Expansion Plant Output to
any third party, Seller shall not employ Landfill Gas to fuel such Expansion
Plant in any hour unless the Landfill Gas flow requirements of the Initial
Capacity have been, and shall continue to be, met.
16
SANFRAN 90103 (2K)
2.6 Option to Install Emission Controls
Buyer may at its option, exercised from time to time, install emission controls
on the Plant in connection with the Initial Capacity and on any Expansion
Plant from which Buyer purchases Expansion Plant Output (so long as Buyer
purchase all such Expansion Plant Output) beyond those then required to meet
the Requirements of Law applicable to Seller or the Plant; provided that (a)
Buyer shall (i) bear all costs and financial, regulatory and operational risks
thereof, including, without limitation, the capital cost thereof and any increase
in operation or maintenance expenses, and (ii) shall keep Seller whole in all
respects, including for decreases in Output and other adverse effects on the
Initial Capacity and the Expansion Plant and its performance, increases in
operations and maintenance costs and failures of such emission controls to
operate, and (b) Buyer shall not make any such changes to the Initial Capacity
or the Expansion Plant without the consent of Seller to the design and plan for
implementation of such changes, such approval not to be unreasonably
withheld.
ARTICLE III
METERING AND BILLING
3.1 Metering Requirements
The transfer of Energy from Seller to Buyer shall be measured by revenue
quality metering equipment at the Point of Interconnection. Such metering
equipment, including any equipment required for communicating meter data
(e.g., a dedicated data line) to Buyer or the ISO, shall be selected, provided,
installed, owned, maintained and operated, at Seller's sole cost and expense,
by Seller or its designee in accordance with applicable ISO rules. Seller shall
exercise reasonable care in the maintenance and operation of any such
metering equipment, and shall test and verify the accuracy of each meter at
least annually. Seller shall inform Buyer upon at least ten (10) days' prior
written notice of the time and date of these tests, and shall permit Buyer to be
present at such tests and to receive the results of such tests. Subject to Buyer
paying for its Percentage Share of the cost of any update or upgrade to such
metering equipment pursuant to a new requirement of the ISO, the LDC or any
17
SANFRAN 90103 (2K)
other Governmental Authority adopted following the Commercial Operation
Date, each of Seller's meters shall be accurate to the metering specifications
then in effect for ISO meter accuracy. Seller shall further install and maintain
all equipment and data circuits necessary to transmit all monitored real time
supervisory control and data acquisition ("SCADA") system data and real time
data from the ISO meter to the ISO and the NCPA, while adhering to both ISO
and NCPA communications protocols. Seller shall provide a copy of each
Certificate of Compliance, if any, issued by the ISO.
Buyer and NCPA shall be provided access to all monitored SCADA points to
be used at their discretion in real time monitoring. Buyer may further, at its
sole cost and expense, install and maintain check meters and all associated
measuring equipment necessary to permit an accurate determination of the
quantities of Energy delivered under this Agreement provided that said
equipment does not interfere with the Seller's metering equipment. Seller
shall permit Buyer or Buyer's representative access to its Plant for the purpose
of installing and maintaining such check meters. Seller shall submit to the
ISO, or allow the ISO to retrieve, any meter data required by the ISO related to
the Plant output in accordance with the ISO's settlement and billing protocol
and meter data tariffs. Buyer shall have reasonable access to relevant meters
and associated facilities, as well as real time access to all meter data, as is
necessary for Buyer or its agent to perform its duties as scheduling coordinator
and comply with the requirements of the ISO tariff.
3.2 Bi11ing
Seller shall read the meter at the end of each calendar month of the Term, and
provide to Buyer on or before the tenth (10th) day of the following month an
invoice based upon the meter data for Energy delivered in such calendar
month and the corresponding attestation pursuant to Section 2.2(c) (if such
attestation is required). Such invoice may be transmitted electronically via e-
mail to [*AcctsPayable@ncpa.com], or to any other email address designated
in writing by Buyer, with a copy to follow via United States Mail to the notice
address designated below. Should either Seller or Buyer determine at a later
date, but in no event later than two (2) years after the original invoice date,
that the invoice amount was incorrect, that Party shall promptly notify the
other Party of the alleged error. If the amount invoiced was too low, Buyer
shall, upon receiving verification of the error and supporting documentation
18
SANFRAN 90103 (2K)
from Seller, pay any undisputed portion of the difference within thirty (30)
days of receipt of verification. If the amount invoiced was too high, Seller
shall, upon receiving verification of the error and supporting documentation
from Buyer, pay any undisputed portion of the difference within thirty (30)
days of receipt of verification. Any such amount shall be subject to the
interest rate as designated in Section 3.3 running from the original due date of
payment.
3.3 Payment
For Energy delivered to Buyer pursuant this Agreement, Buyer or its agent
shall pay Seller by electronic transfer of funds by the later of the twentieth
(20th) day of the month or the tenth (10th) business day after the invoice is
received in accordance with Section 3.2. If such due date falls on a weekend
or legal holiday, such due date shall be the next day which is not a weekend or
legal holiday. Payments made after the due date shall be considered late and
shall bear interest on the unpaid balance at an annual rate equal to two percent
(2%) plus the average daily prime rate as determined from the "Money Rates"
section of the West Coast Edition of The Wall Street Journal for the days of
the late payment period multiplied by the number of days elapsed from and
including the day after the due date, to and including the payment date.
Interest shall be computed on the basis of a 365 -day year. In the event this
index is discontinued or its basis is substantially modified, the Parties shall
agree on a substitute equivalent index. Should Buyer in good faith dispute the
amount of an invoice, Buyer or its agent may withhold such disputed amounts
until the dispute is resolved by arbitration or other permissible method. Such
disputed amounts shall bear interest at the interest rate described above.
Failure of Buyer or its agent to withhold any amount is not a waiver of Buyer's
right to challenge such amount. Both Parties shall maintain all payment
records relating to this Agreement for a minimum of two (2) years, and shall
permit the other Party, upon reasonable notice, to inspect and audit such
records as the requesting Party deems reasonably necessary to protect its
rights.
ARTICLE IV
SELLER'S OBLIGATIONS
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SANFRAN 90103 (2K)
During the Term, Seller hereby agrees to perform the following affirmative
obligations:
4.1 Development, Finance, Construction and Operation of the Plant
Seller shall:
(a) Develop, finance and construct the Plant.
(b) Provide Buyer access to a "real time" Plant monitoring system (which,
at a minimum, shall provide "real time" information regarding the net output
of the Plant) that is anticipated to be internet-based and include alarms.
(c) Seek, obtain, maintain, comply with and, as necessary, renew and
modify from time to time, all Permits, certificates or other authorizations
which are required by any Requirements of Law or Governmental Authority as
prerequisites to engaging in the activities required of Seller by the Agreement
and to meeting Seller's obligation to operate the Plant consistently with the
terms of the Agreement.
(d) Operate, maintain, and repair the Plant in accordance with this
Agreement, all Requirements of Law applicable to Seller or the Plant,
Contractual Obligations, Permits and in accordance with Prudent Utility
Practice, including with respect to efforts to maintain availability of the Initial
Capacity.
(e) Obtain and maintain the policies of insurance in amounts and with
coverages as set forth in Appendix C.
(f) Operate and maintain in a manner consistent with Prudent Utility
Practice the facilities it will own and otherwise cooperate with LDC in the
physical interconnection of the Plant to the LDC System in accordance with
the Interconnection Agreement.
(g) By October 1St of each year of the Term, provide Buyer and NCPA with
an annual projection of scheduled Outages for the following calendar year.
Should Seller make any changes to such projection, it will notify Buyer and
NCPA of such changes at least fourteen (14) days in advance of any newly
scheduled or rescheduled Outage. If Buyer requests a change to the scheduled
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SANFRAN 90103 j2K1
date of any Outage (including to a date set forth in a change notice from
Seller), Seller shall consider such request in good faith and notify Buyer of its
decision within seven (7) days. In no instance will Seller schedule Outages of
more than twenty-four (24) hours between June 1st and September 30th during
the Term. In connection with any Outage, whether it is a scheduled or
unscheduled Outage, Seller shall notify Buyer and NCPA, as soon as
practicable, of the percentage of Plant expected to be out of service and how
long the Outage is expected to last. If the Outage is total (a one hundred
percent (100%) Outage) and is due to a failure of the Plant rather than the
transmission and distribution system beyond the Point of Interconnection,
Seller shall give Buyer and NCPA at least four (4) hours notice before Seller
commences re -energizing the Plant. In addition, Seller will comply with
NCPA's reasonable scheduling protocols, as they may be changed from time
to time. A copy of the current version of NCPA's scheduling protocols, which
the Parties agree are reasonable, is attached as Appendix D.
(h) Negotiate and enter into an Interconnection Agreement with LDC to
enable Buyer to transmit Energy received at the Point of Interconnection
through the ISO -controlled grid. Seller shall be responsible for and pay all
initial non -recurring costs and charges arising under the Interconnection
Agreement (even if not actually incurred) prior to the Commercial Operation
Date in compliance with the Interconnection Agreement and associated rules
and requirements in place as of the Commercial Operation Date (the "Seller's
Interconnection Costs"); provided, however, if the Seller's Interconnection
Costs are, in Seller's reasonable discretion estimated to exceed, and/or do
exceed, one million two hundred fifty thousand dollars ($1,250,000.00), then
Seller may terminate this Agreement without liability of either Party to the
other by giving notice to Buyer in writing of such termination; provided, that
such notice and such termination shall not be effective if Buyer, by written
notice to Seller within fourteen (14) days following such notice from Seller,
agrees to adjust the Price payable under Section 2.3 of this Agreement (and
Appendix G hereto) and/or agrees to reimburse Seller more than the maximum
Reimbursement Amount (as defined below), and within forty-five (45) days
thereafter agrees with Seller in writing (each in their sole discretion) to an
amendment of this Agreement revising the Price payable under Section 2.3 of
this Agreement (and Appendix G hereto) and/or revising the Reimbursement
Amount. All other out-of-pocket costs and charges related to interconnection
other than these initial non -recurring costs and charges will be reimbursed, on
a pro rata, energy basis, by the purchasers of energy from the Plant. During
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SANFRAN 90103 (2K)
the Term prior to any Expansion Plant becoming available for commercial
service, Buyer will reimburse Seller for its Percentage Share of such other out-
of-pocket costs and charges under the Interconnection Agreement paid or
required to be paid by Seller to LDC or its successor; provided, however,
Buyer shall be responsible for its Percentage Share of such other out-of-pocket
costs and charges under the Interconnection Agreement only to the extent
Buyer has approved in writing, in the sole discretion of Buyer, the
Interconnection Agreement, including any amendments (which shall not
include changes in relevant tariffs) from time to time. If Seller's
Interconnection Costs are above three hundred thousand dollars
($300,000.00), then Buyer shall reimburse (and pay) Seller, on a dollar for
dollar basis, an amount equal to the product of (a) the amount (in dollars)
equal to the difference between Seller's Interconnection Costs and three
hundred thousand dollars ($300,000.00), times (b) 1.5 (the product thereof
being the "Reimbursement Amount"); provided, however, the maximum
Reimbursement Amount that Buyer shall be obligated to reimburse (pay) to
Seller shall be one million four hundred twenty-five thousand dollars
($1,425,000.00). Notwithstanding anything to the contrary in the immediately
previous sentence, Seller may terminate this Agreement without liability of
either Party to the other Party if Seller's Interconnection Costs (calculated
without taking into consideration any Reimbursement Amount) are estimated
to exceed and/or do exceed one million two hundred fifty thousand dollars
($1,250,000.00) as provided above in this Section 4.1(h). Buyer shall pay
Seller the Reimbursement Amount within thirty (30) days after the Buyer
receives an invoice from Seller for such Reimbursement Amount (Seller may
send one invoice to Buyer for the entire Reimbursement Amount or Seller may
send multiple invoices to Buyer which total the entire Reimbursement
Amount). Seller shall not invoice Buyer for any of Seller's Interconnection
Costs until Seller's Interconnection Costs have exceeded three hundred
thousand dollars ($300,000.00) and Seller shall provide Buyer with evidence
of Seller's Interconnection Costs such as the Interconnection Agreement
and/or invoices. Upon completion of an Expansion Plant which uses the
Interconnection Facilities, such other out-of-pocket costs and charges shall be
prorated, on a Percentage Share of energy basis, and Buyer's share would be
based on its Percentage Share of Energy compared to the energy of the
Expansion Plant delivered to the Point of Interconnection. Seller shall
cooperate with Buyer to minimize any such costs as are to be reimbursed by
Buyer.
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SANFRAN 90103 (2K1
(i) Negotiate and enter into a Participating Generator Agreement and a
Meter Service Agreement for ISO Metered Entities with the ISO, the load
control area operator for the LDC System that is interconnected with the Plant.
Buyer shall pay for or reimburse Seller for Buyer's Percentage Share of any
such costs or charges associated with these agreements, except to the extent
such cost or charge is required to be paid by Seller under Sections 3.1 and
4.1(h) of this Agreement. Seller shall cooperate with Buyer to minimize any
such costs as are to be reimbursed by Buyer.
(j) Coordinate all Plant start-ups and shut -downs, in whole or in part, with
Buyer in accordance with ISO scheduling protocols and the reasonable
protocols established by Buyer that are not inconsistent with the ISO tariff and
ISO procedures.
(k) Maintain an Availability Threshold of at least seventy percent (70%).
Should Seller fail to maintain such an Availability Threshold, the Price
applicable to Output sold and purchased during each month during which the
Availability Threshold is below seventy percent (70%) shall be seven and one-
half percent (7.5%) below the Price that would otherwise be in effect pursuant
to Section 2.3 (and Appendix G) until the Availability Threshold is increased
to at least seventy percent (70%). Except as otherwise expressly stated in
Sections 6.4 and 7.6, the foregoing shall be Buyer's sole remedy for any
shortfall of or failure to produce Output or failure to maintain any particular
Availability Threshold.
4.2 General Obligations
(a) Seller shall obtain in its own name and at its own expense any and all
pollution or environmental credits or offsets necessary to operate the Plant in
compliance with the Environmental Laws.
(b) Seller shall keep complete and accurate operating and other records and
all other data for the purposes of proper administration of the Agreement,
including such records as may be required by any Governmental Authority or
Prudent Utility Practice.
(c) Seller shall continue to (i) preserve, renew and keep in full force and
effect its organizational existence and good standing, and take all reasonable
action to maintain all applicable Permits, rights, privileges, licenses and
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SANFRAN 90103 (2K)
franchises necessary or desirable in the ordinary course of its business; and (ii)
comply with all Contractual Obligations and Requirements of Law applicable
to Seller or the Plant.
(d) Within ninety (90) days after the Effective Date, Seller shall make
available for review by Buyer, and its representatives, at Seller's attorney's
offices in San Francisco, California, a fully executed copy of its contract with
San Joaquin County, including all exhibits, attachments, and other supporting
documents thereto, for the purchase of Landfill Gas (the "LFG Agreement").
Such contract may be redacted to remove pricing information. If (i) Seller
does not fulfill its obligations under the first two sentences of this Section
4.2(d) within the time allowed, or (ii) Seller fulfills such obligations but Buyer
in its reasonable discretion does not approve of the terms of the LFG
Agreement, then Buyer may, as its sole remedy and without liability of one
Party to the other Party, terminate this Agreement by written notice given no
later than sixty (60) days after Seller has fulfilled, or failed to fulfill, as the
case may be, such obligations under such first two sentences. Other than
increasing the amount of fuel purchased thereunder, Seller shall not allow such
contract to be amended or otherwise modified, nor shall it waive or fail to
enforce any of its rights thereunder, without Buyer's prior written approval,
whose approval shall not be unreasonably withheld. Seller shall make the
LFG Agreement available to Buyer for review during normal business hours at
Seller's attorney's offices in San Francisco, California throughout the Term
within seven (7) days of receipt of a written request by Buyer.
(e) Seller shall provide to Buyer such other information regarding the
permitting, engineering, construction or operations of the Plant as Buyer may
from time to time reasonably request, subject to licensing or other restrictions
of Seller or a third party with respect to confidentiality, disclosure or use.
(f) Seller shall enter into any agreements with the ISO required by the ISO
for generators delivering power into the ISO -controlled grid. Except for such
costs and charges as are expressly identified in this Agreement as Seller's
costs, Buyer shall reimburse Seller for all costs and charges under such
agreements. Seller shall cooperate with Buyer to minimize any such costs as
are to be reimbursed by Buyer.
(g) Seller shall provide Buyer with a copy of its ultimate corporate parent's
audited financial statements as at the end of its accounting year prepared in
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SANFRAN 90103 (2K1
accordance with Generally Accepted Accounting Principles ("GAAP")
consistently applied, no later than four (4) months after the end of such
accounting year of such entity. Seller shall also provide, on a quarterly basis,
an unaudited financial statement in the form of Appendix F, prepared in
accordance with GAAP consistently applied for Seller and for Seller's ultimate
corporate parent. Such financial statements shall be certified by an officer of
Seller as fairly presenting the financial condition of the Seller subject only to
what would typically be included in year-end audit adjustments and footnotes.
If, from time to time, an audited year-end financial statement is prepared for
Seller, Seller shall provide it to Buyer no later than four (4) months after the
end of Seller's accounting year.
4.3 Construction Milestones
(a) The Parties agree that time is of the essence and that certain milestones
(individually, a "Milestone" and, collectively, the "Milestones") for the
development, financing and construction of the Plant must be achieved in a
timely fashion or Buyer shall suffer damages. Seller shall provide Buyer with
documentation satisfactory to Buyer, in Buyer's reasonable discretion, to
support the achievement of the Milestones by the dates set forth below.
(b) The following events are all of the Milestones:
(i) By the date ninety (90) days following the Effective Date, Seller
shall have signed an LFG Agreement with San Joaquin County
and have obtained Site Control.
(ii) By the date twenty-six (26) months following the date that Buyer
approves the LFG Agreement, Seller shall (a) have obtained all
Permits necessary, in final form, to commence construction of the
Plant and (b) have entered into an Interconnection Agreement.
(iii) By the date one (1) month following the later of (a) the
finalization of all necessary Permits described in Section
4.3(b)(ii), and (b) entering into an Interconnection Agreement,
Seller shall have arranged financing for construction of the Plant
or otherwise made funds available to commence and complete
construction.
(iv) By the date twelve (12) months following the later of (a) the
finalization of all necessary Permits described in Section
4.3(b)(ii), and (b) entering into an Interconnection Agreement,
Seller shall have commenced construction of the Plant.
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SANFRAN 90103 (2K)
(v) By the date eighteen (18) months following the arrangement of
financing or availability of funds for construction, Seller shall
have achieved the Commercial Operation Date.
(c) Starting on the Effective Date, Seller shall provide to Buyer monthly
progress reports concerning the progress towards completion of the
Milestones. In addition, within five (5) business days of the completion of
each Milestone, Seller shall provide a certification to Buyer along with any
supporting documentation, demonstrating the satisfaction of the Milestone.
Seller shall provide to Buyer additional information concerning Seller's
progress towards, or confirmation of, achievement of the Milestones, as Buyer
may reasonably request from time to time. Within seven (7) days of the later
of (i) obtaining the authority to construct for the Plant from the applicable air
quality management district or (ii) Seller's receipt of the system impact and
facility cost studies from the LDC, but in no event later than the date set forth
in Section 4.3(b)(ii), Seller shall specify the Initial Capacity of the Plant
(which shall be subject to the limits contained in Section 1.20); provided,
however, Seller may (in Seller's sole discretion) increase the Initial Capacity
of the Plant at any time during the Term by adding equipment for recovering
waste heat from the prime mover engines of the Plant for purposes of utilizing
such waste heat to produce additional Energy. If Seller decides to increase the
Initial Capacity of the Plant during the Term (after Seller has originally
specified the Initial Capacity of the Plant), then Seller shall provide Buyer
with written notice of the date of such increase, the amount of such increase,
and the entire capacity of the Plant (as increased) as of such date. The new
increased capacity of the Plant shall then become the Initial Capacity of the
Plant from the date set forth in Seller's written notice until the end of the Term
(the Initial Capacity of the Plant (as increased) shall be not less than 2.0 MW
and not more than 6.6 MW (gross nameplate), and not less than 1.6 MW and
not more than 6.2 MW (net at the Point of Interconnection). Seller makes no
written or oral representation or warranty, either express or implied, regarding
whether or not Seller will add equipment for recovering waste heat from the
prime mover engines of the Plant and/or utilize that waste heat to produce
additional Energy.
(d) Upon becoming aware that it will, or is reasonably likely to, fail to
achieve a Milestone by the required date, for any reason, including a Force
Majeure Event, Seller shall so notify Buyer, in writing, as soon as is
reasonably practicable. Such notice shall explain the cause of the delay,
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SANFRAN 90103 (2K1
provide an updated date for achievement of the Milestone(s) and describe
Seller's plan for meeting the Milestone. Seller's notice will also explain any
impact such delay may or will have on any other Milestone, and measures to
be taken to mitigate such impact.
(e) In the event that a Force Majeure Event causes any delay to the
achievement of the Milestones set forth in Sections 4.3(b)(iii), (iv), or (v), such
Milestone's deadline may be extended, together with any Force Majeure Event
extensions for other Milestones, for a period not to exceed six (6) months. The
extension of the deadline for any Milestone shall extend the deadline for all
subsequent Milestones, provided that in no event shall the combined
extensions for Force Majeure Events for any or all of the Milestones exceed
six (6) months.
(f) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(i) for any reason, Buyer may terminate this Agreement, without liability
of either Party to the other, by giving notice to Seller in writing of such
termination at any time prior to Seller curing its failure. Such option to
terminate shall be Buyer's sole remedy for any failure to meet the Milestone
set forth in Section 4.3(b)(i).
(g) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(ii) for any reason, Buyer may terminate this Agreement, without
liability of either Party to the other, within ten (10) business days after the
Milestone date by giving notice to Seller in writing of such termination. If
Seller meets the Milestone set forth in Section 4.3(b)(ii) prior to Buyer giving
written notice of termination, this Agreement shall remain in full force and
effect. If Buyer does not terminate this Agreement within ten (10) business
days after the Milestone date, Seller shall continue to pursue satisfaction of the
relevant Milestone, and Buyer must give Seller sixty (60) days' prior written
notice to terminate this Agreement, during which period if Seller cures such
defect and achieves the relevant Milestone, such termination shall be void and
this Agreement shall remain in full force and effect. Such option to terminate
shall be Buyer's sole remedy for any failure to meet the Milestone set forth in
Section 4.3(b)(ii).
(h) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(iv) within six (6) months after the relevant Milestone date for any
reason (or up to twelve (12) months if also delayed by a Force Majeure Event),
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SANFRAN 90103 (2K)
Seller may deposit an amount, per month, equal to the Monthly LD Amount
into a segregated escrow account reasonably acceptable to Buyer by the first
day of such month, for every month after such Milestone date until the
Milestone is met. Such funds will be used towards any liquidated damages as
set forth in Section 7.4(c), and shall be held in escrow until such time that
liquidated damages, if any, become payable to Buyer. Should the amount in
the escrow account exceed the final amount of liquidated damages, such
excess funds shall be returned to Seller. Should Seller (i) at any time fail to
make such monthly deposits or (ii) fail to satisfy the Milestone set forth in
Section 4.3(b)(iv) for more than twelve (12) months, Buyer may terminate this
Agreement upon written notice to Seller of such termination. Upon such
termination, Seller will pay to Buyer, within thirty (30) days of the termination
notice, an amount equal to the LD Amount as liquidated damages. Seller's
escrow option, Buyer's option to terminate, and liquidated damages shall be
Buyer's sole remedies for any failure of Seller to meet the Milestones set forth
in Section 4.3(b)(iii) or (iv).
(i) Seller covenants that it will diligently pursue all Milestones including
the Commercial Operation Date, which Seller envisions will occur within
thirty (30) months following the execution of this Agreement.
(j) In the event that any of the approvals described in Section 4.3(b)(ii) are
not obtained by the date specified in Section 4.3(b)(ii) for satisfaction of the
relevant Milestone or are obtained on a basis not reasonably satisfactory to
Seller, including without limitation, in the case of the air permit (from the air
pollution control district that has jurisdiction over construction and operation
of the Plant), approval of construction and operation of the Plant on a basis not
consistent with internal combustion engines without emission controls,
pollution or environmental credits or offsets, Seller may terminate this
Agreement without liability of either Party to the other Party by giving notice
to Buyer, in writing, of such termination; provided that such notice must be
given no later than fourteen (14) days following the earlier of (a) the date on
which a given approval not satisfactory to Seller is received, in writing, or (b)
the date specified in Section 4.3(b)(ii) for satisfaction of the relevant
Milestone; further provided, that such notice and such termination shall not be
effective if Buyer, by written notice to Seller within fourteen (14) days
following such notice from Seller, agrees (i) to pay Seller with the first invoice
following the Commercial Operation Date the reasonable all -in cost (including
reasonable broker fees, if any) to purchase all such offsets sufficient to operate
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SANFRAN 90103 (2K)
the Plant at full Initial Capacity (less reasonably projected scheduled Outages
for maintenance) for the term of this Agreement, and (ii) to adjust the price
payable under Section 2.3 (and Appendix G) of this Agreement and within
thirty (30) days thereafter agrees with Seller (each in their sole discretion), in
writing, to an amendment of this Agreement revising such price. Failure to
provide notice of termination by the date specified above shall constitute a
waiver of the right to terminate this Agreement as provided in this Section
4.3(j). In the event that Seller exercises such termination right, Buyer shall
have a right of first refusal to purchase the output of any electricity generating
facility owned or controlled by Seller or its affiliate(s) located at the Landfill
and fueled by Landfill Gas. Such right of first refusal shall conform to the
provisions of Section 2.5. The provisions of this Section 4.3(j) shall survive
termination of this Agreement under this Section 4.3(j) for a period of five (5)
years from the effective date of such termination.
ARTICLE V
BUYER'S OBLIGATIONS
5.1 Delivery and Transmission
Except for Seller's obligations pursuant to Sections 3.1 and 4.1(h), Buyer shall
be solely responsible for paying its Percentage Share of costs and charges
associated with the receipt of Energy, under this Agreement, at the Point of
Interconnection and for the transmission and delivery of the Energy from the
Point of Interconnection to any other point downstream of the Point of
Interconnection (including, without limitation, transmission costs and charges,
competition transition charges, applicable control area service charges,
transmission congestion charges, inadvertent energy flows, any other ISO
charges related to the transmission of such Energy by the ISO and any charge
assessed or collected in the future pursuant to any utility tariff or rate schedule,
however defined, for transmission or transmission -related service rendered by
or for any transmission -owning or operating entity). NCPA, acting on behalf
of Buyer, shall be scheduling coordinator for the transmission of Energy from
the Plant in accordance with applicable ISO rules. Buyer's duties as
scheduling coordinator shall be limited to those duties as are specifically
required of scheduling coordinators in the ISO tariff and the ISO protocols.
Commercial arrangements for such transmission and delivery services will be
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SANFRAN 90103 (2K)
coordinated and settled by NCPA directly with the ISO or other third parties.
At the option of Buyer, the Plant may be included within NCPA's metered
sub -system in connection with the scheduling of power over the ISO grid and
related functions; provided that such inclusion shall have no adverse effect on
Plant operations or Seller (or any such effect shall be fully mitigated by
Buyer). Seller will do all things reasonably needed to allow Buyer to comply
with any obligations, and minimize any potential liability, under the ISO tariff;
provided, that if such actions require any actions beyond the giving of notice
provided by Buyer, then Buyer shall reimburse its Percentage Share of all out-
of-pocket costs and charges of such actions. If and to the extent that Seller
fails to comply with the notice provision in Section 4.1(g) concerning Outages
or with its obligations as outlined in the previous sentence, Seller shall be
wholly responsible for all imbalances, deviations, or any other ISO charges or
penalties associated with such Outage or ISO tariff obligation. Buyer may
replace NCPA as Scheduling Coordinator for the Plant. If NCPA ceases to be
the Scheduling Coordinator for the Plant and Buyer is unable, within fourteen
(14) business days of notice from Seller, to appoint a replacement Scheduling
Coordinator, Seller shall have the right to appoint a replacement Scheduling
Coordinator on Buyer's behalf, and Buyer shall enter into all reasonable and
appropriate agreements with such replacement Scheduling Coordinator at its
own cost.
5.2 Taxes
Buyer shall pay and be fully responsible for any sales, use, gross receipts,
utility or other taxes, assessments or fees, if any, incurred or imposed on the
sale or transfer of Energy from Seller to Buyer under this Agreement. Buyer
shall not be responsible for any taxes measured on the net income of Seller or
ad valorem taxes paid by Seller or San Joaquin County associated with the
Site or the Landfill.
5.3 Notification of Transmission Outages
Buyer will exercise reasonable efforts to provide Seller with as much advance
notice as practicable of any Outage on the LDC System or other transmission
or delivery facilities which may adversely affect the delivery of Energy to
Buyer.
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SANFRAN 90103 (2K)
ARTICLE VI
FORCE MAJEURE
6.1 Force Majeure Events
It is understood that at times unavoidable delays or interruptions in delivery or
performance may result from Force Majeure Events. The performance of each
Party under this Agreement may be subject to interruptions or reductions due
to a Force Majeure Event. Both Parties shall in good faith use such effort as is
reasonable under all the circumstances known to that Party affected by the
Force Majeure Event at the time to remove or remedy the cause(s) and mitigate
the inability to perform. However, the obligation to use such reasonable
efforts shall not be interpreted to require resolution of labor disputes by
acceding to demands of the opposition when such course is inadvisable in the
discretion of the Party having such difficulty.
6.2 Remedial Action
Subject to the limitation on extensions of Milestones set forth in Section
4.3(e), a Party shall not be liable to the other Party if the Party is prevented
from performing its obligations hereunder due to a Force Majeure Event. The
Party rendered unable to fulfill an obligation by reason of a Force Majeure
Event shall take all action necessary to remove such inability with all due
speed and diligence. The nonperforming Party shall be prompt and diligent in
attempting to remove the cause of its failure to perform, and nothing herein
shall be construed as permitting that Party to continue to fail to perform after
said cause has been removed. Notwithstanding the foregoing, the existence of
a Force Majeure Event shall not excuse any Party from its obligations to make
payment of amounts due hereunder.
6.3 Notice
In the event of any delay or nonperformance resulting from a Force Majeure
Event, the Party suffering the Force Majeure Event shall, as soon as
practicable under the circumstances, notify the other Party in writing of the
nature, cause, date of commencement thereof and the anticipated extent of any
delay or interruption in performance.
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SANFRAN 90103 (2K)
6.4 Termination Due To Force Majeure Event
Subject to Section 4.3(e), if a Party is prevented from performing its material
obligations under this Agreement for a period of twelve (12) consecutive
months or longer, the unaffected Party may terminate this Agreement, without
liability of either Party to the other, upon thirty (30) days' written notice at any
time during the Force Majeure Event.
ARTICLE VII
DEFAULT/REMEDIES/TERMINATION
7.1 Events of Default by Buyer
The following shall each constitute an "Event of Default" by Buyer:
(a) Buyer breaches any material obligation (other than one covered by
Section 7.1(b) or (c) of this Agreement) and fails to cure such breach within
thirty (30) days after the receipt of written notification of breach by Seller or
such longer period as may be necessary to cure such breach as long as Buyer is
exercising diligent efforts to cure such default.
(b) Buyer fails to make any payment due under this Agreement within thirty
(30) days after the receipt of written notice that such payment is due.
(c) The initiation of an involuntary proceeding against Buyer under the
bankruptcy or insolvency laws, which involuntary proceeding remains
undismissed for sixty (60) consecutive days, or in the event of the initiation by
Buyer of a voluntary proceeding under the bankruptcy or insolvency laws.
7.2 Events of Default by Seller
(1) The following shall each constitute an "Event of Default" by Seller if
Seller does not cure within the time set forth in clause (2), below:
(a) Seller breaches any material obligation (other than ones covered by
Sections 7.2(1)(b), (c), (d), (e) or (f) of this Agreement or for which a remedy
is specified).
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SANFRAN 90103 (2K)
(b) Seller fails to make any payment due under this Agreement within thirty
(30) days after the receipt of written notice that such payment is due.
(c) The initiation of an involuntary proceeding against Seller under the
bankruptcy or insolvency laws, which involuntary proceeding remains
undismissed for sixty (60) consecutive days, or in the event of the initiation by
Seller of a voluntary proceeding under the bankruptcy or insolvency laws.
(d) Seller sells or transfers Buyer's share of the Output (or any individual
component thereof) or Expansion Plant Output (or any individual component
thereof) or the right to Buyer's share of the Output (or any individual
component thereof) or Expansion Plant Output (or any individual component
thereof), to the extent that such Expansion Plant Output is purchased by Buyer,
to any Person other than Buyer.
(e) Seller fails to comply with the terms of Buyer's right of first refusal as
described in Section 2.5 of this Agreement.
(f) Subject to Section 7.4(c), Seller fails, for any reason other than an
unauthorized act or omission by Buyer, to achieve the Commercial Operation
Date by the applicable Milestone deadline as set forth in Section 4.3(b)(v), as
such deadline may be extended as a result of a Force Majeure Event in
accordance with Section 4.3(e).
(2) Time for Cure. Nothing described in any of Sections 7.2(1)(a), (d) or (e)
above shall constitute an Event of Default if Seller cures the event, failure or
circumstance within (30) days after the receipt of written notification by Buyer
or such longer period as may be necessary to cure as long as Seller is
exercising diligent efforts to cure.
7.3 Termination for Default
(a) In the event the defaulting Party fails to cure the Event of Default within
the period for curative action under Sections 7.1 or 7.2, as applicable, the non -
defaulting Party may terminate the Agreement by notifying the defaulting
Party in writing of (i) the decision to terminate and (ii) the effective date of the
termination.
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SANFRAN 90103 (2K)
(b) Upon termination of the Agreement by Buyer pursuant to Section 7.3(a)
due to an Event of Default by Seller, (i) Buyer shall have no future or further
obligation to purchase the Output of the Plant or to make any payment
whatsoever under this Agreement, except for payments for obligations arising
or accruing prior to the effective date of termination, and (ii) Seller shall, if
Buyer has paid in full for emission offsets pursuant to Section 4.3(j), either (A)
reimburse Buyer pro rata for any unused such offsets paid for by Buyer or (B)
transfer to Buyer title to any unused such offsets paid for by Buyer. Upon
termination of the Agreement by Seller pursuant to Section 7.3(a) due to an
Event of Default by Buyer, Seller shall have no future or further obligation to
deliver the Output of the Plant to Buyer or to satisfy any other obligation of
this Agreement, except for payments or other obligations arising or accruing
prior to the effective date of termination. After the effective date of
termination, the Agreement shall not be construed to provide any residual
value to either Party or any successor or any other Person, for rights to, use of
or benefits from the Plant to any Person.
7.4 Damages
(a) For all claims, causes of action and damages the Parties shall be entitled
to the recovery of actual damages allowed by law unless otherwise limited by
the Agreement. Neither the enumeration of Events of Default in Sections 7.1
and 7.2, nor the termination of this Agreement by a non -defaulting Party
pursuant to Section 7.3(a), shall limit the right of a non -defaulting Party to
rights and remedies available at law, including, but not limited to, claims for
breach of contract or failure to perform by the other Party and for direct
damages incurred by the non -defaulting Party as a result of the termination of
this Agreement.
(b) Except as otherwise specifically and expressly provided in the
Agreement, neither Party shall be liable to the other Party under this
Agreement for any indirect, special or consequential damages, including but
not limited to loss of use, loss of revenues, loss of profit, interest charges, cost
of capital or claims of its customers or members to which service is made.
Except as set forth in Section 4.1(k) and except to the extent Seller violates its
undertaking not to provide or sell rights to part or all of the Output to a party
other than Buyer, Seller shall not be liable to Buyer for failure to provide any
specific amount of Output hereunder.
34
SANFRAN 90103 (2K)
(c) In the event that Seller fails to meet the Commercial Operation Date by
the applicable Milestone deadline as set forth in Section 4.3(b)(v), as such
deadline may be extended as a result of a Force Majeure Event in accordance
with Section 4.3(e), Seller shall be liable for liquidated damages in the amount,
per month, equal to the Monthly LD Amount for each full month (with parts of
a month pro rated) that Seller is late in satisfying the Milestone. So long as
Seller is paying such liquidated damages on a monthly basis, up to twelve (12)
months, Buyer shall not be permitted to terminate this Agreement. If after
twelve (12) months following the relevant Milestone deadline Seller has failed
to achieve Commercial Operation, or if for any reason Seller fails to pay, or
discontinues paying, the monthly liquidated damages provided for above,
Buyer may terminate this Agreement upon thirty (30) days' prior written
notice to Seller. This twelve (12) month period shall not be extended as a
result of a Force Majeure Event. Upon such termination, Seller shall pay
Buyer, within thirty (30) days of receipt of the termination notice, a lump sum
equal to the LD Amount. No other damages or remedy shall be available to
Buyer on the basis of such failure to meet the Milestone set forth in Section
4.3(b)(v) or termination of this Agreement based on failure to achieve
Commercial Operation within twelve (12) months of that Milestone deadline.
(d) The Parties agree that the liquidated damages set forth in Sections
4.3(h) and 7.4(c) are reasonable and represent a fair and genuine estimate of
the damages Buyer will suffer upon the failure of Seller to achieve
Commercial Operation by the agreed upon date(s). The Parties acknowledge
that it would be impracticable or extremely difficult to fix Buyer's actual
damages, and therefore have deemed the liquidated damages set forth above to
be the amount of damage sustained by Buyer upon such a failure. The Parties
further agree that payment of such amount shall be as liquidated damages and
not as a penalty, and is therefore not subject to avoidance under California
Civil Code section 1671.
7.5 Indemnification
Seller and Buyer agree to defend, indemnify, and hold each other, and their
respective officers, directors, employees and agents, harmless from and against
all claims, demands, losses, liabilities, and expenses (including reasonable
attorneys' fees) (collectively "Damages") for personal injury or death to
persons and damage to each other's physical property or facilities or the
property of any other Person to the extent arising out of, resulting from, or
35
SANFRAN 90103 (2K)
caused by the negligent or intentional and wrongful acts, errors, or omissions
of the indemnifying Party. This indemnification obligation shall apply
notwithstanding any negligent or intentional acts, errors or omissions of the
indemnitees but the indemnifying Party's liability to pay Damages to the
indemnified Party shall be reduced in proportion to the percentage by which
the indemnitees' negligent or intentional acts, errors or omissions caused the
Damages. Neither Party shall be indemnified for its Damages resulting from
its sole negligence or willful misconduct. These indemnity provisions shall
not be construed to relieve any insurer of its obligation to pay claims
consistent with the provisions of a valid insurance policy.
Buyer shall defend, indemnify and hold Seller and its officers, directors,
employees and agents harmless from and against all claims, demands, losses,
liabilities and expenses (including reasonable attorneys fees) arising out of or
connected with the interaction with third parties in connection with WREGIS
or any alternate accounting system(s) designated by Buyer.
7.6 Buyer's Right to Operate
If Seller (i) fails to maintain the Availability Threshold for a period of nine (9)
months in any twelve (12) month period, or (ii) fails to generate Energy for
sixty (60) consecutive days, then Buyer or its designee may, but shall not be
obligated to, step-in and assume operational control from Seller of the Plant;
provided that Buyer shall not be permitted to step-in and take control so long
as Seller or any Lender(s) is using commercially reasonable efforts to remedy
the failures described in (i) or (ii) above. Buyer, its employees, contractors
and designees shall have the unrestricted right to enter the Plant to the extent
necessary to operate the Plant. Upon the exercise of this right, Buyer or its
designee shall at all times operate the Plant using Prudent Utility Practice and
shall comply, to the extent commercially practicable, with the terms of this
Agreement. Notwithstanding the foregoing, Seller shall not be excused from
any obligation or remedy available to Buyer as a result of Buyer's operation
of, or election not to operate, the Plant. Buyer shall pay Seller the applicable
rate for Output provided hereunder, less any costs incurred by Buyer to operate
the Plant. Buyer shall indemnify and hold Seller harmless from any liability to
third parties arising out of Buyer's failure to operate the Plant using Prudent
Utility Practice. Upon Buyer's satisfaction that Seller has the ability to operate
the Plant in accordance with this Agreement, Seller shall resume operational
control.
36
SANFRAN 90103 (2K)
Should Lender(s) refuse to finance the Plant, or materially condition such
financing, solely as a result of this Section 7.6, and Seller gives Buyer written
notice of such refusal to finance, Buyer shall have the following options: (1)
terminate this Agreement without liability of one Party to the other Party; (2)
renegotiate this Section 7.6 with Seller and Lender(s) in a manner mutually
acceptable; (3) delete this Section 7.6 in its entirety (which deletion will not
require Seller's additional consent); or (4) arrange for financing for the Plant
under materially equivalent terms and conditions as the Lender(s) were
prepared to provide but for this Section 7.6. If Buyer fails to elect and
complete one of these options within sixty (60) days of written notice from
Seller, Seller shall have the right to terminate this Agreement without liability
of one Party to the other Party.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Seller's Representations and Warranties
Seller represents and warrants to Buyer that as of the Effective Date:
(i) Seller is duly organized and validly existing as a limited liability
company under the laws of Delaware, and has the lawful power to
engage in the business it presently conducts and contemplates
conducting in this Agreement and Seller is duly qualified in each
jurisdiction wherein the nature of the business transacted by it makes
such qualification necessary;
(ii) Seller has the legal power and authority to make and carry out this
Agreement and to perform its obligations hereunder; all such actions
have been duly authorized by all necessary proceedings on its part. As
of the Effective Date, (a) the Plant shall on the Commercial Operation
Date be a "qualifying small power production facility" as that term is
defined in Section 3(17)(C) of the Federal Power Act, and will possess
all of the exemptions from regulation provided in 18 CFR Sections
292.601(c) and 292.602; and (b) this Agreement is not required to be
filed with FERC and no approval (except with respect to "qualifying
37
SANFRAN 90103 12K)
small power production facility" status) with respect to this Agreement
is required from FERC. In the event that the Plant is not a "qualifying
small power production facility" on the Commercial Operation Date or
any date thereafter, Seller shall make appropriate filings under the
Federal Power Act within sixty (60) days so as to comply with
applicable law, subject at all times to the provisions of Article IX of this
Agreement;
(iii) The execution, delivery and performance of this Agreement by Seller
will not conflict with its governing documents, any applicable laws, or
any covenant, agreement, understanding, decree or order to which Seller
is a party or by which it is bound or affected;
(iv) This Agreement has been duly and validly executed and delivered by
Seller and, as of the date first set forth herein, constitutes a legal, valid
and binding obligation of Seller, enforceable in accordance with its
terms against Seller, except to the extent that its enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally or by general
principles of equity; and
(v) There are no actions, suits, proceedings or investigations pending or, to
the knowledge of Seller, threatened in writing against Seller, at law or in
equity before any Governmental Authority, which individually or in the
aggregate are reasonably likely to have a materially adverse effect on
the business, properties or assets or the condition, financial or otherwise,
of Seller, or to result in any impairment of Seller's ability to perform its
obligations under this Agreement.
8.2 Buyer Representations and Warranties
Buyer represents and warrants to Seller that as of the Effective Date:
(i)
Buyer is a chartered city and municipal corporation, duly organized and
validly existing, and has the lawful power to engage in the business it
presently conducts and contemplates conducting in this Agreement and
Buyer is duly qualified in each jurisdiction wherein the nature of the
business transacted by it makes such qualification necessary;
SANFRAN 90103 (2K)
38
(ii) Buyer has the legal power and authority to make and carry out this
Agreement and to perform its obligations hereunder and all such actions
have been duly authorized by all necessary proceedings on its part;
(iii) The execution, delivery and performance of this Agreement by Buyer
will not conflict with its governing documents, any applicable laws or
any covenant, agreement, understanding, decree or order to which Buyer
is a party or by which it is bound or affected;
(iv) This Agreement has been duly and validly executed and delivered by
Buyer and, as of the first date set forth herein, constitutes a legal, valid
and binding obligation of Buyer, enforceable in accordance with its
terms against Buyer, except to the extent that its enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally or by general
principles of equity; and
(v) There are no actions, suits, proceedings or investigations pending or, to
the knowledge of Buyer, threatened in writing against Buyer, at law or
in equity before any Governmental Authority, which individually or in
the aggregate are reasonably likely to have a materially adverse effect
on the business, properties or assets or the condition, financial or
otherwise, of Buyer, or to result in any impairment of Buyer's ability to
perform its obligations under this Agreement.
ARTICLE IX
NO CHANGE TO RATES, TERMS OR CONDITIONS
39
SANFRAN 90103 (2K)
The Parties intend that the standard of review for changes to any rate, charge,
classification, term or condition of this Agreement at FERC shall be the most
stringent standard permissible under applicable law. As to the Parties, it is
understood that the standard is the "Mobile -Sierra public interest" standard of
review, as stated by the United States Supreme Court in Morgan Stanley Capital
Group Inc. v. Public Utility District No. 1 of Snohomish County, Nos. 06-1457, 128
S.Ct. 2733 (2008), and consistent with the order of the Supreme Court in NRG Power
Marketing, LLC, et al., v. Maine Public Utilities Commission et al., No. 08-674, 130
S.Ct. 693 (2010) ("NRG Order"). As to all other persons it is intended that the same
standard, to the maximum degree as may be made applicable to other than the
Parties, apply, to the maximum degree permitted under the NRG Order.
ARTICLE X
MISCELLANEOUS
10.1 Assignment
The rights and obligations of this Agreement may not be assigned by either
Party without the prior written consent of the other Party, which consent shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing,
Seller may use subcontractors without Buyer's consent to comply with the
terms of this Agreement, provided that, notwithstanding the use of
subcontractors, Seller shall remain responsible for all of its obligations under
this Agreement. Buyer may furthermore use any agent it so designates for
scheduling and billing purposes, so long as Buyer remains responsible for all
of its obligations under this Agreement. Any purported assignment of this
Agreement in the absence of the required consent, except as provided in
Section 10.2, shall be void.
10.2 Financing
Notwithstanding Section 10.1, Seller may, without the consent of Buyer,
assign, transfer or hypothecate its rights under this Agreement to Lenders as
collateral security in connection with any financing of the purchase or
operation of the Plant, provided that such Lender(s) or its designee agree(s), in
writing, that upon assuming any of Seller's prospective rights under this
Agreement, such Lender also shall be bound by all of Seller's prospective
obligations under this Agreement. Notwithstanding any such assignment,
40
SANFRAN 90103 (2K)
Seller's obligations under this Agreement shall continue in their entirety in full
force and effect and Seller shall remain fully liable for all of its obligations
under or relating to this Agreement. Each such collateral assignment and any
purchaser or transferee shall be subject to Buyer's rights and defenses
hereunder and under applicable law. Seller shall provide prior written notice
to Buyer at least seven (7) days prior to any such collateral assignment.
In order to facilitate the obtaining of financing of the Plant, Buyer shall
execute, upon request, a commercially reasonable consent to assignment, with
respect to a collateral assignment hereof to Lenders in connection with the
documentation of the financing or refinancing for the Plant. Any assignment
in violation of this Agreement shall be void, ab initio. Buyer shall consider in
good faith any amendments to this Agreement proposed by Seller which relate
to financing of the Plant or other amendments requested by Seller in order to
receive or maintain financing from Lenders.
10.3 Notices
Any notice, demand, request, or communication required or authorized by this
Agreement shall be delivered either by hand, facsimile, overnight courier or
mailed by certified mail, return receipt requested with postage prepaid, to:
City of Palo Alto
250 Hamilton Avenue, Seventh Floor
Palo Alto, CA 94301
Attention: City Clerk
Telecopier: (650) 328-3631
on behalf of Buyer;
with a copy to:
City of Palo Alto
250 Hamilton Avenue, Eighth Floor
Palo Alto, CA 94301
Attention: Senior Assistant City Attorney / Utilities
Telecopier: (650) 329-2646
41
SANFRAN 90103 (2K)
and to:
City of Palo Alto
250 Hamilton Avenue, Third Floor
Palo Alto, CA 94301
Attention: Director of Utilities
Telecopier: (650) 321-0651
and to:
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Attention: Power Contracts Administrator
Telecopier: (916) 781-4255
and to:
Ameresco San Joaquin LLC
c/o Ameresco, Inc.
111 Speen Street, Suite 410
Framingham, MA 01701
Attention: General Counsel
Telecopier: (508) 661-2201
Telephone: (508) 661-2200
42
SANFRAN 90103 (2K)
with a copy to:
Ameresco San Joaquin LLC
c/o Ameresco, Inc.
111 Speen Street, Suite 410
Framingham, MA 01701
Attention: Vice President, Renewable Energy
Telecopier: (508) 661-2201
Telephone: (508) 661-2200
on behalf of Seller.
The designation and titles of the person to be notified or the address of
such person may be changed at any time by written notice delivered in the
manner set forth in this Section 10.3. Any such notice, demand, request, or
communication shall be deemed received (i) if delivered by hand by a Party or
sent by facsimile or (ii) upon receipt by the receiving Party if sent by courier
or U.S. mail.
10.4 Captions
All titles, subject headings, section titles and similar items are provided for the
purpose of reference and convenience and are not intended to be inclusive,
definitive or to affect the meaning of the contents or scope of the Agreement.
10.5 No Third Party Beneficiary
No provision of the Agreement is intended to, nor shall it in any way, inure to
the benefit of any customer, property owner or any other third party, so as to
constitute any such Person a third -party beneficiary under the Agreement, or of
any one or more of the terms hereof, or otherwise give rise to any cause of
action in any Person not a Party hereto.
10.6 No Dedication
No undertaking by one Party to the other Party under any provision of the
Agreement shall constitute the dedication of that Party's system or any portion
43
SANFRAN 90103 (2K)
thereof to the other Party or to the public or affect Seller as an independent
entity and not a public utility.
10.7 Entire Agreement; Integration
This Agreement, together with all appendices attached hereto, constitutes the
entire agreement between the Parties and supersedes any and all prior oral or
written understandings. No amendment, addition to or modification of any
provision hereof shall be binding upon the Parties, and neither Party shall be
deemed to have waived any provision or any remedy available to it, unless
such amendment, addition, modification or waiver is in writing and signed by
a duly authorized officer or representative of the Parties.
10.8 Applicable Law
The Agreement is made in the State of California and shall be interpreted and
governed by the laws of the State of California and/or the laws of the United
States, as applicable.
10.9 Venue
The Parties hereby submit to the exclusive jurisdiction of the federal courts for
the Northern District of the State of California; provided, however, that if such
federal courts sitting in the Northern District of the State of California refuse
jurisdiction, the Parties agree to the exclusive jurisdiction of the state courts
sitting in the County of San Francisco, State of California.
10.10 Nature of Relationship
The duties, obligations and liabilities of the Parties are intended to be several
and not joint or collective. The Agreement shall not be interpreted or
construed to create an association, joint venture, fiduciary relationship or
partnership between Seller and Buyer or to impose any partnership obligation
or liability or any trust or agency obligation or relationship upon either Party.
Seller and Buyer shall not have any right, power or authority to enter into any
agreement or undertaking for, or act on behalf of, or act as or be an agent or
representative of or otherwise bind the other Party.
44
SANFRAN 90103 (2K)
10.11 Good Faith and Fair Dealing; Reasonableness
The Parties agree to act reasonably and in accordance with the principles of
good faith and fair dealing in the performance of this Agreement. Unless
expressly provided otherwise in this Agreement, (i) wherever the Agreement
requires the consent, approval or similar action by a Party, such consent,
approval or similar action shall not be unreasonably withheld or delayed, and
(ii) wherever the Agreement gives a Party a right to determine, require, specify
or take similar action with respect to matters, such determination, requirement,
specification or similar action shall be reasonable.
10.12 Severabilit
Should any provision of the Agreement be or become void, illegal or
unenforceable, the validity or enforceability of the other provisions of the
Agreement shall not be affected and shall continue in full force and effect. The
Parties will, however, use their best endeavors to agree on the replacement of
the void, illegal, or unenforceable provision(s) with legally acceptable clauses
which correspond as closely as possible to the sense and purpose of the
affected provision.
10.13 Confidentiality
All information disclosed by Seller, including, without limitation, all
engineering documents, designs, specifications and financial information, shall
be kept confidential and shall not be disclosed to any third party except as
provided in this Section 10.13. Buyer acknowledges Seller's request to hold
all information regarding this Agreement confidential. Buyer shall disclose
such information to third parties only to the extent required by California law
(including, without limitation, the California Constitution, the California
Public Records Act and the Brown Act). Notwithstanding the foregoing,
either Party may disclose this Agreement to San Joaquin County or its
representatives, NCPA or its representatives, or to Lender(s) or potential
Lender(s) or its/their representatives; provided that prior to such disclosure,
the recipient shall agree, in writing, to keep the material confidential under
terms no less stringent than as set forth in this Section 10.13. Buyer also shall
be permitted to disclose this Agreement and related information to the City
Council of Palo Alto for the express purpose of obtaining approval to execute
this Agreement; provided that in connection with such disclosure Buyer shall
45
SANFRAN 90103 (2K)
only disclose such information to the extent required by California law
(including, without limitation, the California Constitution, the California
Public Records Act and the Brown Act). Each Party shall be bound by its
obligations of confidentiality hereunder for a period of two (2) years from
expiration or any earlier termination of this Agreement. Notwithstanding
anything to the contrary in this Section 10.13, nothing in this Agreement shall
restrict any Party from using or disclosing confidential information in any
manner it chooses, which confidential information (i) is or becomes generally
available to the public other than as a result of a disclosure directly or
indirectly by the disclosing Party or its representative; (ii) was within the using
or disclosing Party's possession prior to it being furnished hereunder, provided
that such information is not subject to another confidentiality agreement with,
or other contractual, legal or fiduciary obligation of confidentiality to, any
other party with respect to such information; (iii) is rightfully obtained by a
Party from third parties authorized to make such disclosure without restriction;
or (iv) is legally required to be disclosed by judicial, administrative or other
governmental action as determined by such Party's attorney acting in good
faith (including, but not limited to, the California Constitution, the California
Public Records Act and the Brown Act), provided that prompt notice of said
judicial or other governmental action shall have been given to the non -
disclosing Party and that the non -disclosing Party shall, at its sole cost and
expense, be afforded the opportunity (consistent with the legal obligations of
the disclosing Party) to exhaust all reasonable legal remedies to maintain the
confidential information in confidence.
10.14 Cooperation
The Parties agree to reasonably cooperate with each other in the
implementation and performance of the Agreement. Such duty to cooperate
shall not require either Party to act in a manner inconsistent with its rights
under the Agreement.
10.15 Counterparts
This Agreement may be executed in two or more counterparts and by different
Parties on separate counterparts, all of which shall be considered one and the
same agreement and each of, which shall be deemed an original.
[signature page follows]
46
SANFRAN 90103 (2K)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed as of the Effective Date.
AMERE O SAN JOAQUIN LLC
By Amel/esgo/Inc. yifs solejnergber
By: 1
Name: Michael T. Bakas
Title: Vice President
(y Date: 1 acc' �`.4lJ
THE CITY OF PALO ALTO
APPROVAL AS TO FORM:
By:
Name: Grant Kolling
Title: Senior Assistant City Attorney
Date:
CITY OF PALO ALTO
By:
Name: Lalo Perez
Title: Administrative Services Director
Date:
CITY OF PALO ALTO
By:
Name: Valerie O. Fong
Title: Utilities Director
Date:
CITY OF PALO ALTO
By:
Name: James Keene
Title: City Manager
Date:
47
SANFRAN 90103 (2K)
COMMONWEALTH OF MASSACHUSETTS
SS
COUNTY OF MIDDLESEX
On this RSA day of Ma r c L ;2,0 I D , before me, the undersigned notary
public, personally appeared m c1,Ke i T. a,t , as the V la, f'rr'Sidt'ti k-- of
Ameresco, Inc., a Delaware corporation, the sole member of Ameresco San Joaquin
LLC, a Delaware limited liability company, proved to me through satisfactory
evidence of identification, which wa t r, 0,4 ; j & c_ , to be the person whose
name is signed on the preceding docment, and acknowledged to me that he signed
the preceding document voluntarily for its stated purpose as Iii ce 6-64,4--
of Ameresco, Inc., a Delaware corporation, the sole member of Ameresco San
Joaquin LLC, a Delaware limited liability company.
My Commission expires 1) H V 2 J5_
�M�o.
.rOK n,,,�
to.... : €zRR r'C.l�'•
4
2 i? r N2. 20 J' '. '
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O �fi �Q Soo „TA .. •
Notary Public
AGO
SANFRAN 90103 (2K1
48
APPENDIX A
SITE DRAWINGS
Seller shall provide to Buyer the final Site Drawings prior to the Commercial
Operation Date.
49
SANFRAN 90103 12K)
APPENDIX B
FORM OF ATTESTATION
Ameresco San Joaquin LLC
Environmental Attribute Attestation and Bill of Sale
Ameresco San Joaquin LLC ("Ameresco") hereby sells, transfers and delivers to
("Customer")
the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation of
the indicated energy for delivery to the grid (as such term(s) are defined in the
(identify contract) (the "Contract') dated , 20
between Ameresco and Customer) arising from the generation for delivery to the grid of the energy by the
Facility described below:
Facility name and location: Fuel Type:
Capacity (MW): Operational Date:
(for facility that has added renewable capacity, show operational date and amount of new capacity)
As applicable: CEC Reg. no. Energy Admin. ID no. Q.F. ID no.
Dates MWhrs generated
20
20
20
in the amount of one Environmental Attribute or its equivalent for each megawatt hour generated; and Ameresco
further attests, warrants and represents as follows:
i) to the best of its knowledge, the information provided herein is true and correct;
ii) its sale to Customer is its one and only sale of the Environmental Attributes and associated
Environmental Attribute Reporting Rights referenced herein;
iii) the Facility generated and delivered to the grid the energy in the amount indicated as undifferentiated
energy; and
[check one:]
iv) Ameresco owns the Facility.
iv) to the best of Ameresco's knowledge, each of the Environmental Attributes and Environmental
Attribute Reporting Rights associated with the generation of the indicated energy for delivery to the
grid have been generated and sold by the Facility.
This serves as a bill of sale, transferring from Ameresco to Customer all of Ameresco's right, title and interest in
and to the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation
of the energy for delivery to the grid.
Contact Person: tel: 1-508-661-2200; fax: 1-508-661-2201
WITNESS MY HAND,
AMERESCO SAN JOAQUIN LLC
By: Ameresco, Inc., its sole member
By
Its
Date:
B-1
50
SANFRAN 90103 (2K)
APPENDIX C
INSURANCE COVERAGES
At its own expense, Seller shall secure and maintain during the Term the
following insurance with the coverage amounts indicated for occurrences
during and arising out of Seller's performance of this Agreement. Such
insurance shall be placed with responsible and reputable insurance companies
in compliance with Requirements of Law applicable to Seller.
1. Workers' Compensation/Employer's Liability. Seller shall
maintain Workers' Compensation Insurance and Employer's
Liability Insurance which comply with Requirements of Law
applicable to Seller.
2. Automobile Liability. Seller shall maintain Automobile Liability
Insurance in compliance with Requirements of Law applicable to
Seller, including coverage for owned, non -owned and hired
automobiles for both bodily injury (including death) and property
damage, including automobile liability contractual endorsement
and uninsured/underinsured motorist protection endorsements.
3. Third Party Liability. Seller shall maintain third party liability
insurance in compliance with Requirements of Law applicable to
Seller on a project -specific basis covering against legal
responsibility to others as a result of bodily injury, property
damage and personal injury arising from the operation and
maintenance of the Plant. Such policy shall be written with a
limit of liability not less than $10,000,000 and a deductible not to
exceed $10,000. Such liability may be in any combination of
primary and excess/umbrella. Coverage shall include, but not be
limited to, premises/operations, explosion, collapse, underground
hazards, broad form property damage and personal injury
liability. Such coverage shall not contain exclusions for punitive
or exemplary damages, unless prohibited by law.
51
SANFRAN 90103 (2K)
APPENDIX D
SCHEDULING PROTOCOLS
1. Prior to three (3) business days before the end of a month, Seller is to
provide to NCPA and Buyer a monthly forecast of loads and/or
generation for the following month. At a minimum, monthly forecasts
will be hourly kilowatt (kW) values by weekday, Saturday, and
Sunday/Holiday.
2. No later than 1400 hrs. each Thursday, Seller shall provide a forecast of
loads and/or generation for the following week to the extent it is
different from the monthly forecast in Paragraph 1. Weekly forecasts
will be hourly kW values for each hour of the week.
3. Daily modifications to forecasts. Unless otherwise mutually agreed,
Seller may make changes to the weekly forecast by providing such
changes to NCPA prior to 0800 hrs. two (2) days before the active
scheduling day.
a. Example: For power that is scheduled for generation or delivery on
Thursday, March 25, 2010, changes must be submitted to NCPA by
no later than 0800 hrs. on Tuesday, March 23, 2010.
4. Hourly modifications to active schedules. Unless otherwise mutually
agreed, Seller may make changes to active schedules by providing such
changes to NCPA with a minimum of four (4) hours' notice before the
active hour to be changed. Changes to active schedules are limited to two
(2) changes per day, excluding forced outages, unless otherwise agreed to
between the parties. One request for a schedule change, of one hour or
multiple hours duration, constitutes one schedule change.
a. Example: For power that is scheduled for generation or delivery in
hour ending 1500 hrs. (for the period from 1401 hrs. to 1500 hrs.),
changes must be submitted to NCPA no later than 1100 hrs.
5. NCPA is to be notified of all planned or forced generation outages.
6. At Seller's request, NCPA will modify generation and load schedules for
unforeseen circumstances in accordance with the above scheduling
timeline constraints and NCPA Schedule Coordination Agreement.
52
SANFRAN 90103 (2K)
7. All notices and schedules are to be submitted to NCPA by phone, fax or
email to the following persons: Chief Dispatcher/Scheduler.
8. In the absence of forecasts and schedules as noted above, NCPA will
utilize the most current information provided by Seller in the development
and submission of schedules.
53
SANFRAN 90103 (2K)
EXAMPLE FORM OF DAY -AHEAD SCHEDULE
For: June ,
Hour Ended:
Expected Capability
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
71
22
23
24
Expected Daily Temperatures, F
Low
High
Contact
Information:
Scheduling
Coordinator:
Facility:
CITY:
SANFRAN 90103 12K)
APPENDIX E
PERFORMANCE TEST
Seller shall coordinate and schedule, with Buyer, a performance test after
completion of all equipment startup and commissioning activities. This
performance test may be performed before completing punch list items. Buyer
shall be permitted to witness the performance test, including access to and copies
of control room logs, control system display screens, and instrumentation data for
a reasonable period of time before, during and after the performance test, and may
also concurrently conduct a site inspection of the Landfill and Plant and associated
facilities, systems and equipment. Seller shall supply a written copy of the
performance test results to Buyer within five (5) business days following the
conclusion of the test.
The performance test shall continue for one hundred twenty (120) consecutive
hours (the "Test Period") to demonstrate the following:
1) Net Generator Output: The power output for each generator shall be recorded
for the Test Period to verify the net initial capacities. This performance test shall
be performed for all engine/generators simultaneously and will be considered
successful if the average net output for the Test Period is equal to eighty percent
(80%) of the net Initial Capacity (in this instance, Initial Capacity shall not include
any capacity of the Plant from equipment for recovering waste heat from the
prime mover engines of the Plant to utilize that waste heat to produce additional
Energy (to the extent such equipment for recovering waste heat is or is not
installed by Seller)) designated in this Agreement. All power measurements shall
be based on a power factor of 0.90.
2) Compliance: The performance test shall also demonstrate the ability of the
Plant to comply with all material safety, system reliability, environmental, and
other requirements of its permits, this Agreement, any interconnection agreements,
and the LFG Agreement.
SANFRAN 90103 (2K)
55
APPENDIX F
SELLER'S SAMPLE QUARTERLY FINANCIAL STATEMENT
Balance Sheets
December 31, 2006 and 2007
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Accounts receivable
Prepaid and other current assets
Total current assets
Other assets:
Project assets, net
Due from member
Debit issuance costs, net
Total other assets
LIABILITY AND MEMBER'S EQUITY
Current liabilities:
Current portion of long-term debt
Accounts payable
Accrued expenses
Total current liabilities
Long-term liabilities:
Long-term debt, less current portion
Deferred tax liabilities
Total long-term liabilities
Member's equity
SANFRAN 9010312K)
56
Statements of Operations
Years Ended December 31, 2006 and 2007
Revenues:
Electricity Sales
Costs of revenue:
Operation and maintenance
Depreciation of project assets
Gross profit (loss)
Operating expenses:
Selling, general and administrative
Operating income (loss)
Interest and other financing costs
Income (loss) before tax benefit (provision)
Income tax benefit (provision)
Net income (loss)
SANFRAN 90103 (2K)
Statements of Cash Flows
Years Ended December 31, 2006 and 2007
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred issuance costs
Deferred taxes
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable
Prepaid expenses
Accounts payable
Due to (from) member
Net cash provided by operating activities
Cash flows from investing activities:
Accounts payable relating to construction activity
Accrued expenses relating to construction activity
Purchase of project assets
Net cash used in investing activities
Cash flows from financing activities:
Increase in restricted cash
Capital contributions
Distributions to member
Proceeds from debt issuance
Debt issuance costs
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest
Income taxes
Supplemental disclosure of noncash transactions:
Accrued purchases of project assets
SANFRAN 9010312K)
APPENDIX G
Buyer shall pay Seller $93.33 per MWh of Energy delivered or tendered to Buyer at the Point of
Interconnection, provided, however, if any Required Emission Controls are installed, prior to the
later of the (i) Commercial Operation Date, and (ii) date that is sixty (60) days after the completion
of stack tests that Seller is required to perform (in connection with the Plant) by Requirements of
Law and/or any permit, then the price Buyer shall pay Seller per MWh of Energy delivered or
tendered to Buyer at the Point of Interconnection shall be $93.33 per MWh plus (a) $0.60 per MWh
of Energy delivered or tendered to Buyer at the Point of Interconnection (the "Fixed Increase For
Emission Controls"), plus (b) $0.0000055 per MWh of Energy delivered or tendered to Buyer at the
Point of Interconnection for each $1.00 of Seller's costs and/or expenses associated with the design,
engineering, equipment, installation and commissioning of any and all Required Emission Controls
(the "Variable Increase For Emission Controls" and collectively with the Fixed Increase For
Emission Controls, the "Increase For Emission Controls"). The Increase For Emission Controls
shall not exceed a maximum of $10.01 per MWh. The entire price that Buyer shall pay Seller per
MWh of Energy delivered or tendered to Buyer at the Point of Interconnection ($93.33 per MWh
plus any Increase For Emission Controls) shall be escalated at a rate of 1.5% (of the then -current
price) annually on the anniversary of (i) the first day of the first full month following the
Commercial Operation Date or (ii) if the Commercial Operation Date falls on the first day of the
month, the Commercial Operation Date.
Buyer shall pay Seller $93.33 per MWh of Test Energy delivered or tendered to Buyer at the Point
of Interconnection; provided, however, that the amount due and/or paid to Seller for Test Energy
shall be adjusted (it can only be adjusted up) after the Seller provides Buyer with the Confirmation
Notice as further set forth below.
To, among other things, confirm the price (as set forth in Section 2.3 of the Agreement and this
Appendix G) to be paid from Buyer to Seller in dollars per MWh of Energy delivered or tendered to
Buyer at the Point of Interconnection, Seller will provide Buyer with a written notice setting forth
twenty annual price rates (in dollars per MWh of Energy delivered or tendered to Buyer at the Point
of Interconnection) for the portion of the Term on and after the Commercial Operation Date (as each
such annual price rate shall be escalated as set forth in the last sentence of the first paragraph in this
Appendix G), starting with the first annual price rate which will be $93.33 per MWh of Energy
delivered or tendered to Buyer at the Point of Interconnection, plus, to the extent applicable, the
Increase For Emission Controls (such notice being referred to as the "Confirmation Notice"). The
Confirmation Notice shall be (a) provided to Buyer on or prior to the later of the (i) date ten (10)
days after the Commercial Operation Date, and (ii) date that is seventy (70) days after the
completion of stack tests that Seller is required to perform (in connection with the Plant) by
Requirements of Law and/or any permit; and (b) substantially in the form attached hereto in
Appendix G-1 (with items in brackets modified and blank spaces filled -in as applicable). If Seller
does not provide the Confirmation Notice to Buyer until after the Commercial Operation Date, then
the price Buyer shall pay Seller (the price in dollars per MWh of Energy delivered or tendered to
Buyer at the Point of Interconnection) after the Commercial Operation Date shall be $93.33 per
MWh (which shall be paid in accordance with the terms of the Agreement) until the date of the
Confirmation Notice to Buyer (at which point such price may increase); provided, however, that
SANFRAN 90103 (2K)
after the date of the Confirmation Notice, Seller shall, within sixty (60) days following such date,
send a statement to Buyer setting forth any additional amount owed from Buyer to Seller under this
Agreement for the time period (during the Term) prior to the date of the Confirmation Notice if the
price (in dollars per MWh of Energy delivered or tendered to Buyer at the Point of Interconnection)
as set forth in the Confirmation Notice is more than $93.33 per MWh during the first year following
(i) the first day of the first full month following the Commercial Operation Date or (ii) if the
Commercial Operation Date falls on the first day of the month, the Commercial Operation Date.
The amount due from Buyer to Seller pursuant to such statement shall be the difference of (a) the
product of the total price (in dollars per MWh) for such first year (as set forth in the Confirmation
Notice) times the total MWhs of Energy (including Test Energy) delivered or tendered to Buyer at
the Point of Interconnection prior to the date of the Confirmation Notice, minus (b) the product of
$93.33 times the total MWhs of Energy (including Test Energy) delivered or tendered to Buyer at
the Point of Interconnection prior to the date of the Confirmation Notice (nothing in this sentence
shall impact Buyer's obligation to also pay Seller $93.33 per MWh of Energy delivered or tendered
to Buyer at the Point of Interconnection prior to the date of the Confirmation Notice (the payment
from Buyer to Seller of the amount set forth in the statement is additional)). Buyer shall pay the
amount set forth in such statement to Seller within thirty (30) days of Buyer's receipt of the
statement. On and after the date of Confirmation Notice, Buyer shall pay Seller the applicable
annual price rate, as set forth in the Confirmation Notice, per MWh of Energy delivered or tendered
to Buyer at the Point of Interconnection. Seller's failure to send Buyer a Confirmation Notice shall
neither be an Event of Default by Seller nor shall it be cause for Buyer not to pay for Energy
delivered or tendered to Buyer at the Point of Interconnection.
SANFRAN 90103 (2K)
APPENDIX G-1
[Letterhead]
[DATE]
[VIA
]
City of Palo Alto
250 Hamilton Avenue, Seventh Floor
Palo Alto, CA 94301
Attention: City Clerk
Re: Power Purchase Agreement — Confirmation Notice
Dear City Clerk:
Reference is made to the Power Purchase Agreement (the "Power Purchase Agreement"), dated as
of [ ], 2010, between the City of Palo Alto ("Buyer") and Ameresco San Joaquin
LLC ("Seller"). Unless otherwise defined herein, capitalized terms used herein shall have the
meanings given to such terms in the Power Purchase Agreement.
In accordance with the terms of Section 2.3 and Appendix G of the Power Purchase Agreement,
Seller hereby gives notice (the Confirmation Notice as defined in Appendix G of the Power
Purchase Agreement) to Buyer that Seller [has/has not] installed Required Emission Controls [at a
cost (including, without limitation, costs and/or expenses associated with the design, engineering,
equipment, installation and commissioning of any and all Required Emission Controls) of
[$ ]]. Therefore, in accordance with the terms of Section 2.3 and Appendix G of the
Power Purchase Agreement, the price Buyer shall pay Seller in dollars per MWh of Energy
delivered or tendered to Buyer at the Point of Interconnection from the Commercial Operation Date
until [the first anniversary of (i) the first day of the first full month following the Commercial
Operation or (ii) if the Commercial Operation Date falls on the first day of the month, the
Commercial Operation Date (Year 1 as set forth in the chart below)] and for each year thereafter
[(the final year (20) being a partial year if the Commercial Operation Date does not fall on the first
day of the month)] through the remainder of the Term shall be as follows in the chart below:
Year
Price in dollars per MWh
of Energy delivered or
tendered to Buyer at the
Point of Interconnection
SANFRAN 90103 )2K)
1
[this column is to be
filled -in]
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Sincerely,
Ameresco San Joaquin LLC
[By: Ameresco, Inc., its sole member]
By:
Name:
Title:
Enclosures
cc: City of Palo Alto, 250 Hamilton Avenue, Eighth Floor, Palo Alto, CA 94301, Attention:
Senior Assistant City Attorney / Utilities (with enclosures and sent via )
City of Palo Alto, 250 Hamilton Avenue, Third Floor, Palo Alto, CA 94301, Attention:
Director of Utilities (with enclosures and sent via )
Northern California Power Agency, 651 Commerce Drive, Roseville, CA 95678, Attention:
Power Contracts Administrator (with enclosures and sent via )
SANFRAN 90103 (2K)
ATTACHMENT E
Not Yet Approved
Resolution
Resolution of the Council of the City of Palo Alto Approving
the Long Term Power Purchase Agreement (Landfill Gas
Power) with Ameresco Avenal LLC for the Purchase of
Electricity Generated by Landfill Gas Electric
Generating Facilities
WHEREAS, the City of Palo Alto (the "City"), a municipal utility and a
chartered city is a member of the Northern California Power Agency ("NCPA");
WHEREAS, on March 5, 2007, the City approved eight electric portfolio
planning and management guidelines to guide the development and management of the
City's long-term electricity acquisition plan; one of the guidelines is to pursue and target
levels of new renewable resource energy purchases equal to thirty percent (30%) and
thirty-three percent (33%) of the City's expected energy load by 2012 and 2015,
respectively;
WHEREAS, the City is interested in purchasing power generated by renewable
resources for the benefit of its electric customers;
WHEREAS, by purchasing these sources of renewable energy, the City will help
reduce the production of greenhouse gases and assist in reducing volatile organic
compound emissions;
WHEREAS, Ameresco Avenal LLC ("Ameresco") proposed its project in
response to the City's Request for Proposals 134307 ("RFP") in November 2009, and it
was deemed competitive with other RFP respondents;
WHEREAS, the execution of this power purchase agreement with Ameresco is
anticipated to enable the City to meet the three -percent portion of its goal of sourcing 33%
of its energy needs from renewable electric energy;
WHEREAS, the City is allocated a 100 percent share of the power from the
initial project, amounting to 1.9 megawatts of plant net output;
WHEREAS, the power purchase agreement allows Ameresco to sell the City
additional output, if developed, from engine heat recovery, at the contract price;
WHEREAS, the City of Avenal will be the lead agency for the purposes of
compliance with the requirements of the California Environmental Quality Act;
NOW, THEREFORE, the Council of the City of Palo Alto does hereby
RESOLVE, as follows:
SECTION 1. The Council hereby approves the City's execution of the long-
term Power Purchase Agreement (Landfill Gas Power) made between Ameresco Avenal
100302 j 0073326 1
Not Yet Approved
LLC, as Seller, and the City of Palo Alto, as Buyer. The delivery term of the Power
Purchase Agreement is twenty (20) years, commencing upon the Commercial Operation
Date of the planned electric generation facility. Quantity is a 100 percent share of the
plant's net output. Spending authority under the Power Purchase Agreement is not to
exceed forty five million one hundred thousand dollars ($45,100,000). The City Manager
is hereby authorized to sign the Power Purchase Agreement with Ameresco Avenal LLC
and the City Manager or his designee is authorized to sign any confirmations executed in
connection with the Power Purchase Agreement on behalf of the City.
SECTION 2. With respect to the Council's award of the Power Purchase
Agreement referred to in Section 1 above, the Council hereby waives the
creditworthiness requirements of Palo Alto Municipal Code section 2.30.340(c), as it
may apply to Ameresco Avenal LLC.
SECTION 3. The Council finds that the adoption of this resolution does not
constitute a project under the California Environmental Quality Act and no
environmental assessment is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENTIONS:
ABSENT:
ATTEST: APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:
City Manager
Senior Asst. City Attorney
Director of Utilities
Director of Administrative
Services
100302 j 0073326 2
ATTACHMENT F
POWER PURCHASE AGREEMENT
This Power Purchase Agreement is entered into this day of
2010 (the "Effective Date") by and between the City of Palo Alto, a California
chartered municipal corporation and Ameresco Avenal LLC, a Delaware limited
liability company.
RECITALS
1 Seller intends to develop, finance, build, own and operate a Landfill Gas
electric generating facility to be located at the Avenal Landfill (the "Landfill")
located at 201 Hydril Road, Avenal, California, on a site leased or subleased
from the Landfill Owner, Lessee or Operator (any one or more of the parties
defined within the definition of Landfill Owner, Lessee or Operator, as may be
applicable in Seller's sole discretion).
2. Buyer is engaged in the procurement and supply of electricity to residential
and commercial customers in the City of Palo Alto.
3. Buyer wishes to purchase the Output of the Plant and intends to resell related
Energy to its residential and commercial customers.
4. Buyer is willing to purchase, and Seller is willing to sell, the Output of the
Plant, on the terms and conditions and at the prices set forth in this Agreement.
5. Seller may determine to incorporate heat recovery equipment to produce
additional electrical output to be included and sold as Energy in accordance
with the terms of this Agreement.
6. Seller may determine to expand the Plant in the future depending on the
availability of Landfill Gas and other factors in accordance with the terms of
this Agreement.
7. Buyer will have a right of first refusal to purchase Expansion Plant Output,
such right to be exercisable as provided in this Agreement.
SANFRAN 90103 (2K)
NOW THEREFORE, in consideration of these premises and the mutual
promises set forth below, the Parties agree, as follows.
AGREEMENT
ARTICLE I - DEFINITIONS
Initially capitalized terms, whenever used in this Agreement, have the meanings set
forth below unless otherwise herein defined. The term "including," when used in
this Agreement, shall mean to include "without limitation."
1.1 Agreement: This Power Purchase Agreement, including all appendices, as it
may be amended from time to time.
1.2 Availability Threshold: The mechanical availability of the Plant calculated
as of the end of each calendar month during the Term as a percentage in
accordance with the following:
A = 100 x Available Hours
Base Hours
Where:
A = Availability Threshold
Available Hours = the number of hours during the prior twenty-four (24)
months in which the Plant is capable of delivering Energy to the
Point of Interconnection; provided that, to the extent that the
Plant is not capable of delivering all of the net Initial Capacity (in
this instance, Initial Capacity shall not include any capacity of
the Plant from equipment for recovering waste heat from the
prime mover engines of the Plant to utilize that waste heat to
produce additional Energy (to the extent such equipment for
recovering waste heat is or is not installed by Seller)) in any hour,
the Available Hours with respect to such hour shall be reduced
pro rata to reflect the fraction of the net Initial Capacity (in this
instance, Initial Capacity shall not include any capacity of the
Plant from equipment for recovering waste heat from the prime
mover engines of the Plant to utilize that waste heat to produce
additional Energy (to the extent such equipment for recovering
waste heat is or is not installed by Seller)) the Plant is capable of
delivering in such hour.
2
SANFRAN 90103 (2K)
Base Hours = the number of hours during the same twenty-four (24)
months period referred to in Available Hours; provided that, to
the extent that the Plant is partially or wholly incapable or
otherwise unable to deliver Energy in any hour as a result of a
Force Majeure Event or because of fuel unavailability in any hour
due to no fault or negligence of Seller, that hour (or if the Plant's
capacity is only partially constrained, the pro rata portion of that
hour) shall be excluded from the Base Hours.
There shall be no Availability Threshold during the first twelve (12) month
period following the Commercial Operation Date. Starting with the thirteenth
(13th) month after the Commercial Operation Date and continuing through the
twenty-fourth (24th) month, the above formula will be used to determine the
Availability Threshold with the exception that both Available Hours and Base
Hours will be calculated, starting with the first hour of operation on the
Commercial Operation Date and including all relevant hours thereafter to the
end of the month relevant. Starting with the twenty-fifth (25th) month, the
Availability Threshold shall be calculated on a rolling basis using the previous
twenty-four (24) month period.
1.3 Buyer: The City of Palo Alto, a California chartered municipal corporation,
and any successor or permitted assignee.
1.4 Commercial Operation: The condition of the Plant (in this instance, Plant
shall not include equipment for recovering waste heat from the prime mover
engines of the Plant for purposes of utilizing such waste heat to produce
additional Energy to the extent such equipment is not then installed by Seller)
whereupon it (a) is certified by Seller to be complete in accordance with
manufacturers' recommendations except for punch list items, and (b) has
passed the performance test set forth in Appendix E while synchronized with
the LDC System or ISO transmission grid.
1.5 Commercial Operation Date: The date upon which Commercial Operation
first occurs.
1.6 Confirmation Notice: As defined in Appendix G.
3
SANFRAN 90103 (2K)
1.7 Contractual Obligations: As to Seller, any material agreement, instrument or
undertaking to which Seller is a party or by which it or any of its property is
bound.
1.8 Effective Date: As defined in the first paragraph of this Agreement.
1.9 Energy: The electricity generated by the Plant and delivered to Buyer by the
Seller, pursuant to this Agreement, respectively, at the Point of
Interconnection, as expressed in units of kilowatt-hours (kWh) or megawatt -
hours (MWh), including Test Energy.
1.10 Environmental Attributes: Any and all credits, benefits, emissions
reductions, offsets, and allowances, howsoever entitled, attributable to the
generation from the Plant or Expansion Plant(s), as the case may be, and its
displacement of conventional energy generation. Environmental Attributes
include but are not limited to: (1) any avoided emissions of pollutants to the
air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon
monoxide (CO) and other pollutants; (2) any avoided emissions of carbon
dioxide (CO2), methane (CH4) and other greenhouse gases (GHGs) that have
been determined by the United Nations Intergovernmental Panel on Climate
Change to contribute to the actual or potential threat of altering the Earth's
climate by trapping heat in the atmosphere; and (3) the reporting rights to
these avoided emissions such as Green Tag Reporting Rights. Green Tag
Reporting Rights are the right of a Green Tag purchaser to report the
ownership of accumulated Green Tags in compliance with federal or state law,
if applicable, and to a federal or state agency or any other party at the Green
Tag purchaser's discretion, and include without limitation those Green Tag
Reporting Rights accruing under Section 1605(b) of The Energy Policy Act of
1992 and any present or future federal, state, or local law, regulation or bill,
and international or foreign emissions trading program. Green Tags are
accumulated on kWh basis and one Green Tag represents the Environmental
Attributes associated with one (1) MWh of energy. Environmental Attributes
do not include (i) any energy, capacity, reliability or other power attributes
from the Plant or Expansion Plant(s), (ii) production tax credits associated
with the construction or operation of the Plant, Expansion Plant(s), Landfill, or
any other associated contract or right, and other financial incentives in the
form of credits, reductions, or allowances associated with the Plant, Expansion
Plant(s), Landfill, or any other associated contract or right, that are applicable
to a state or federal income taxation obligation, (iii) fuel -related subsidies or
4
SANFRAN 90103 (2K)
"tipping fees" that may be paid to Seller to accept certain fuels, or local
subsidies received by the Seller, the owner of the Landfill, or any Landfill
Owner, Lessee or Operator for the destruction of particular pre-existing
pollutants or the promotion of local environmental benefits, or (iv) emission
reduction credits encumbered or used by the Plant or Expansion Plant(s) for
compliance with local, state, or federal operating and/or air quality permits.
1.11 Environmental Attribute Reporting Rights: All rights to report ownership
of the Environmental Attributes to any person or entity, under Section 1605(b)
of the Energy Policy Act of 1992 or otherwise.
1.12 Environmental Law: Any federal, state and local laws, including statutes,
regulations, rulings, orders, administrative interpretations and other
governmental restrictions and requirements relating to the discharge of air
pollutants, water pollutants or process waste water or otherwise relating to the
environment or hazardous substances, as amended from time to time.
1.13 Expansion Plant: Any expansion of the Plant from its Initial Capacity, or any
other electricity generating facility owned or controlled by Seller or its
affiliate(s) located at the Landfill and fueled by Landfill Gas. Each such
expansion of the Plant or additional facility shall be deemed to be an
"Expansion Plant."
1.14 Expansion Plant Output: All capacity, energy, associated Environmental
Attributes, ancillary services, contributions towards resource adequacy or
reserve requirements (if any) and any other reliability or power attributes
produced by Seller at any Expansion Plant.
1.15 FERC: Federal Energy Regulatory Commission and its successor
organization, if any.
1.16 Fixed Increase For Emission Controls: As defined in Appendix G.
1.17 Force Majeure Event: Any act or event that delays or prevents a Party from
timely performing obligations under this Agreement or from complying with
conditions required under this Agreement to the extent that such act or event is
reasonably unforeseeable and beyond the reasonable control of and without the
fault or negligence of the Party relying thereon as justification for such delay,
nonperformance, or noncompliance. Force Majeure Events typically include:
5
SANFRAN 90103 (2K)
(i) acts of God or the elements, extreme or severe weather conditions,
explosion, fire, epidemic, landslide, mudslide, sabotage, lightning, earthquake,
flood or similar cataclysmic event, acts of public enemy, war, blockade, civil
insurrection, riot, civil disturbance or strike or other labor difficulty caused or
suffered by a Party; (ii) any restraint or restriction imposed by law or by rule,
regulation or other acts or omissions of governmental authorities, whether
federal, state or local which by exercise of due diligence and in compliance
with applicable law a Party could not reasonably have been expected to avoid
and to the extent which, by exercise of due diligence and in compliance with
applicable law, has been unable to overcome (so long as the affected Party has
not applied for or assisted such act by a governmental authority); and (iii)
electric transmission interruptions or curtailments (not including any such
event that results from a failure by Buyer to obtain firm transmission or similar
rights, or otherwise to make congestion -related payments); provided that the
term "Force Majeure Event" does not include (a) economic conditions that
render a Party's performance of this Agreement at the Price unprofitable or
otherwise uneconomic (including Buyer's ability to buy Energy or
Environmental Attributes at a lower price, or Seller's ability to sell Energy or
Environmental Attributes at a higher price, than the Price), (b) a governmental
act by Buyer that delays or prevents Buyer from timely performing its
obligations under this Agreement, (c) a Plant Outage, including as a result of a
failure or shortage of landfill gas, except, in any case, if caused by an event or
circumstance that meets the requirements set forth in this Section 1.17 (other
than as described in (iii) above), (d) failure or delay in grant of Permits, or (e)
failures or delays by the LDC or the ISO in entering into all agreements with
Seller contemplated by this Agreement.
1.18 Governmental Authority: Any federal, state or local government, or political
subdivision thereof, including, without limitation, any municipality, township
or county, or any entity or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any corporation or other entity owned or
controlled by any of the foregoing.
1.19 Increase For Emission Controls: As defined in Appendix G.
1.20 Initial Capacity: The installed gross capacity of the Plant on the Commercial
Operation Date, such capacity to be not less than 1.0 MW and not more than
2.2 MW (gross nameplate), and not less than 0.8 MW and not more than 1.9
6
SANFRAN 90103 (2K)
MW (net at the Point of Interconnection) and as further specified (and possibly
increased from the installed gross capacity (which may increase the net at the
Point of Interconnection) of the Plant on the Commercial Operation Date)
pursuant to Section 4.3(c).
1.21 Interconnection: Construction, installation, operation and maintenance of all
Interconnection Facilities.
1.22 Interconnection Agreement: The agreement between Seller and LDC
pursuant to which Seller and LDC set forth the terms and conditions for
Interconnection of the Plant to the LDC System, as amended from time to
time.
1.23 Interconnection Facilities: All the facilities installed for the purpose of
interconnecting the Plant to the LDC System, including, but not limited to,
transformers and associated equipment, relay and switching equipment and
safety equipment.
1.24 ISO: The California Independent System Operator Corporation, or its
functional successor.
1.25 kWh: kilowatt-hour.
1.26 Landfill Gas: The gas (and its constituent elements) generated from
decomposition of materials deposited in the Landfill.
1.27 Landfill Owner, Lessee or Operator: Waste Connections, Inc., any direct or
indirect subsidiary or other affiliate of Waste Connections, Inc. (including,
without limitation, Madera Disposal Systems, Inc.), and/or the City of Avenal.
1.28 LD Amount: The Monthly LD Amount multiplied by 12 (twelve).
1.29 LDC: Pacific Gas and Electric Company, a California corporation.
1.30 LDC System: The electric power generation, transmission, substation and
distribution facilities owned, operated and/or maintained by LDC, which shall
include, without limitation, after construction and installation, the circuit
reinforcements, extensions, and associated terminal facility reinforcements or
additions required to interconnect LDC's facilities with the Plant.
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SANFRAN 90103 (2K)
1.31 Lender(s): Any Person(s) providing money or extending credit (including any
capital lease) to Seller for (i) the construction of the Plant, (ii) the term or
permanent financing of the Plant, or (iii) working capital or other ordinary
business requirements for the Plant. "Lender(s)" shall not include trade
creditors of Seller.
1.32 LFG Agreement: As defined in Section 4.2(d).
1.33 Monthly LD Amount: The product of (i) $7000 per MW, (ii) Buyer's
Percentage Share and (iii) the Initial Capacity (in this instance, Initial Capacity
shall not include any capacity of the Plant from equipment for recovering
waste heat from the prime mover engines of the Plant to utilize that waste heat
to produce additional Energy (to the extent such equipment for recovering
waste heat is or is not installed by Seller)) specified under Section 4.3(c) (net
at the Point of Interconnection).
1.34 MW: Megawatt.
1.35 MWh: Megawatt hour.
1.36 NCPA: The Northern California Power Agency, a joint action agency
organized and existing under the laws of the State of California.
1.37 Outage: A physical state in which all or a portion of the Plant is unavailable
to provide Energy to the Point of Interconnection, or in which any portion of
the LDC System is unavailable to receive Energy, to the extent that the
unavailability affects the LDC System's ability to accept delivery of Energy at
the Point of Interconnection, whether planned or unplanned.
1.38 Output: All actual capacity of the Initial Capacity and associated Energy, as
well as the following, as associated with the Initial Capacity and/or associated
Energy: Environmental Attributes; ancillary services; contributions towards
resource adequacy or reserve requirements (if any) and any other reliability or
power attributes.
1.39 Parties: Buyer and Seller, and their respective successors and permitted
assignees.
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SANFRAN 90103 (2K)
1.40 Party: Buyer or Seller, and each such Party's respective successors and
permitted assignees.
1.41 Percentage Share: One Hundred percent (100%).
1.42 Permits: All material federal, state or local authorizations, certificates,
permits, licenses and approvals required by any Governmental Authority for
the construction, ownership, operation and maintenance of the Plant (in this
instance, Plant shall not include the equipment for recovering waste heat from
the prime mover engines of the Plant for purposes of utilizing such waste heat
to produce additional Energy to the extent such equipment is or is not installed
by Seller).
1.43 Person: An individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity.
1.44 Plant: The generation facility described in Recital 1 to be constructed and
owned by Seller and located on the Site for the generation and delivery of
electricity, including the step-up transformer, revenue quality meter and all
other facilities up to the Point of Interconnection, but not including any
Expansion Plant. At any time during the Term, Seller may, in Seller's sole
discretion, construct and/or install and own equipment for recovering waste
heat from the prime mover engines of the Plant for purposes of utilizing such
waste heat to produce additional Output (Seller makes no written or oral
representation or warranty, either express or implied, regarding the current or
future existence of any such additional Output), provided that such equipment
for recovering waste heat shall be become part of the Plant (including, after
installation of such equipment, part of the definition of Plant) and shall not be
considered an Expansion Plant.
1.45 Point of Interconnection: The point on the electrical system where the Plant
is physically interconnected with the LDC System, which is anticipated to be
at the high side of Seller's step-up transformers at the Plant.
1.46 Price: As defined in Section 2.3 and Appendix G.
1.47 Production Incentives: Any and all tax credits, deductions, allowances and
exemptions applicable to federal, state and local taxes and any other payment,
9
SAN FRAN 90103 (2K)
credit, deduction, benefit, grant or monetary incentive provided by any
Governmental Authority or any Person, and all air emission credits, reductions
or offsets, whether now in effect or arising in the future, in each case arising
from the activities contemplated by this Agreement, including the extraction,
sale, purchase, processing and/or distribution of Landfill Gas and/or the
generation and sale of electricity using Landfill Gas as a fuel, including
"Renewable Energy Production Incentive Payments" from the U.S.
Department of Energy, emission credits, reductions, offsets or any other
similar benefits arising from the generation, collection, production, purchase,
use, reduction, conversion, destruction or resale of Landfill Gas.
Notwithstanding the foregoing, Production Incentives shall not include
anything that qualifies as Output, but Production Incentives shall include
Section 29 Credits and Section 45 Credits.
1.48 Prudent Utility Practice: Those practices, methods and equipment, as
changed from time to time, that:
(i)
when engaged in are commonly used in the United States of America in
prudent electrical engineering and operations to operate landfill gas
generation electric equipment and related electrical equipment lawfully
and with safety, reliability, efficiency and expedition; or
(ii) in the exercise of reasonable judgment considering the facts known,
when engaged in could have been expected to achieve the desired result
consistent with applicable law, safety, reliability, efficiency and
expedition.
Prudent Utility Practices are not limited to an optimum practice, method,
selection of equipment or act, but rather are a range of acceptable practices,
methods, selections of equipment or acts.
1.49 Required Emission Controls: means any equipment and/or devices that need
to be installed, in Seller's sole discretion, to treat engine emissions at the Plant
to meet Requirements of Law and/or requirements of law applicable to Seller
and/or the Plant (including, without limitation, any permit, any air permit in
connection with the Plant, and any approvals in connection with the
construction and/or operation of the Plant). Required Emission Controls shall
include, without limitation, any (i) Selective Catalytic Reduction equipment or
any such other commercially used equipment at such time for nitrogen oxides
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SANFRAN 90103 (2K)
(NOx) emission reduction, (ii) Oxidizing Catalysts or any such other
commercially used equipment at such time for carbon monoxide (CO)
reduction, and/or (iii) a Continuous Emission Monitor or any such other
commercially used equipment at such time that performs a similar function.
1.50 Requirements of Law: Collectively, any federal or state law, treaty,
franchise, rule, regulation, order, writ, judgment, injunction, decree, award or
determination of any arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon Seller or Buyer or any of their
property or to which Seller or Buyer or any of their respective properties are
subject.
1.51 Section 29 Credits: Those tax credits available under Section 29 of Subtitle
A, Chap. 1A, Part IV of the Internal Revenue Code of 1986, as amended, as of
the Effective Date.
1.52 Section 45 Credits: Those tax credits available under Section 45 of Subtitle
A, Chap. 1A, Part IV of the Internal Revenue Code of 1986, as amended, or
any other similar federal, state or local tax credits, deductions, payments or
benefits arising from the purchase of Landfill Gas or the generation and sale of
electricity using Landfill Gas as a fuel, not including any Environmental
Attributes.
1.53 Seller: Ameresco Avenal LLC, a Delaware limited liability company, and any
successor or permitted assignee.
1.54 Seller's Interconnection Costs: As defined in Section 4.1(h).
1.55 Site: The real property in Avenal, California on which the Plant is to be built
and located, as more particularly described in Appendix A.
1.56 Site Control: The point at which Seller satisfies one or more of the following
conditions: (1) Seller is (a) the lessee under a lease (or sublease), or (b) the
grantee under an exclusive easement, with the owner (or its subsidiary) of the
Landfill or any one or more of the parties defined within the definition of
Landfill Owner, Lessee or Operator as may be applicable in Seller's sole
discretion, that allows Seller to construct and operate the Plant at the Site
during the Term in accordance with this Agreement; (2) Seller has a fee
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SANFRAN 90103 (2K)
ownership of the Site; or (3) any other form of site control acceptable to Buyer
in its reasonable discretion.
1.57 Term: The period of time during which the Agreement is in effect.
1.58 Test Energy: Energy generated by the Plant and delivered to the Point of
Interconnection prior to the Commercial Operation Date.
1.59 Variable Increase For Emission Controls: As defined in Appendix G.
1.60 WREGIS: Western Renewable Energy Generation Information System, or its
successor; provided that the successor is capable of performing substantially
similar functions and is acceptable to both Parties.
1.61 WREGIS Certificates: The meaning set forth in WREGIS Operating Rules.
1.62 WREGIS Operating Rules: The rules describing the operations of the
Western Renewable Energy Generation Information System, as published by
WREGIS and as may be amended from time to time.
ARTICLE II
TERM, PURCHASE AND SALE
2.1 Term
This Agreement shall be effective upon execution by authorized
representatives of both Parties and, unless earlier terminated pursuant to an
express provision of this Agreement, shall continue until the twentieth (20`h)
anniversary of the Commercial Operation Date.
2.2 Purchase and Sale of the Output
(a) In accordance with the terms and conditions hereof, commencing on the
Commercial Operation Date and continuing throughout the Term, Seller shall
sell and deliver at the Point of Interconnection, and Buyer shall purchase,
accept from Seller at the Point of Interconnection and pay for, Buyer's
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SANFRAN 90103 (2K)
Percentage Share of the Output produced during the Term pursuant to the
terms of this Agreement. Prior to the Commercial Operation Date, Buyer shall
purchase and accept from Seller at the Point of Interconnection and pay for,
Buyer's Percentage Share of the Output relating to Test Energy pursuant to the
terms of this Agreement. All Test Energy shall be scheduled in accordance
with the procedures set forth in Appendix D. Seller shall not sell to any other
party, and Buyer may claim credit for, Buyer's Percentage Share of the Output
as may be available from time to time.
(b) Throughout the Term, Seller shall sell and transfer to Buyer, and Buyer
shall purchase and receive from Seller, all right, title and interest in and to the
Environmental Attributes associated with Buyer's Percentage Share of the
Output, if any, whether now existing or subsequently generated or acquired
(other than by direct purchase from a third party) by Seller, or that hereafter
come into existence, during the Term, as a component of the Output purchased
by Buyer from Seller hereunder. Seller agrees to transfer and make such
Environmental Attributes available to Buyer immediately to the fullest extent
allowed by applicable law upon Seller's production or acquisition of the
Environmental Attributes. If Seller receives any tradable Environmental
Attributes based on the greenhouse gas reduction benefits or other emission
offsets attributed to its fuel usage, it shall be entitled to retain sufficient
Environmental Attributes to ensure that there are zero net emissions associated
with the production of electricity from such facility. Seller shall not assign,
transfer, convey, encumber, sell or otherwise dispose of all or any portion of
Buyer's Percentage Share of the Environmental Attributes to any Person other
than Buyer. Seller makes no written or oral representation or warranty, either
express or implied, regarding the current or future existence of any
Environmental Attributes.
(c) Seller shall use commercially reasonable efforts to use WREGIS to
authenticate the transfer of "WREGIS Certificates" from Seller to Buyer in
accordance with WREGIS reporting protocols and the terms of this
Agreement. Seller shall use commercially reasonable efforts to register the
Plant with WREGIS. After the Plant is registered with WREGIS, Seller agrees
to use commercially reasonable efforts to transfer WREGIS Certificates to
Buyer using the Forward Certificate Transfer method, as described in
WREGIS Operating Rules and as designated by Buyer. Buyer shall be
responsible for providing required information and taking any action that may
be necessary for the registration of the Plant and for transfer of WREGIS
Certificates to Buyer's WREGIS account.
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SANFRAN 90103 (2K)
Except as the Parties may otherwise agree, in writing, in the event that
WREGIS is not in operation, or WREGIS does not track Seller's transfer of
WREGIS Certificates to Buyer, or its designees, on or before the 30th day of
each calendar month, Seller shall document the production and transfer of
Environmental Attributes under this Agreement by delivering to Buyer an
attestation for the Environmental Attributes produced by the Plant, in whole
MWh, in the preceding calendar quarter. The form of attestation shall be
substantially in the form as set forth in Appendix B.
Seller shall be responsible for the WREGIS expenses associated with
registering the Plant, maintaining its account, paying the WREGIS
Certificates' issuance fees, and transferring WREGIS Certificates to Buyer.
Buyer shall be responsible for the WREGIS expenses associated with
maintaining its account and subsequent transferring or retiring of WREGIS
Certificates. Seller shall, as instructed by Buyer and at Buyer's cost, dispute
data with WREGIS. Notwithstanding anything herein to the contrary, if
Seller's cost (including labor billed at standard external rates) associated with
WREGIS in connection with this Agreement or compliance with this Section
2.2 exceeds $2,500 in any calendar year, Buyer shall reimburse Seller for the
amount in excess of $2,500; provided, however, Buyer may designate an
alternate accounting system(s), at no cost to Seller, to document or otherwise
verify that transfer of RECs or other Environmental Attributes if Seller's
WREGIS costs exceed $2,500 in any calendar year. The $2,500 amount shall
be escalated at a rate of 1.5% annually, commencing on the first day of the
January following the Commercial Operation Date and continuing every
subsequent anniversary thereafter.
For the purposes of this Section 2.2, "commercially reasonable efforts" shall
exclude (i) making any changes to the Plant or any Expansion Plant or the
method of operation thereof and (ii) expenditure of any funds other than
nominal filing fees.
(d) During the Term, Seller shall not report to any person or entity that the
Environmental Attributes granted hereunder to Buyer belong to anyone other
than Buyer, and Buyer may report under any program that such Environmental
Attributes purchased hereunder belong to it.
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SANFRAN 90103 (2K)
2.3 Price
Subject to the provisions of Section 4.1(k), Buyer shall pay Seller the Price, as
determined in Appendix G, per MWh of Energy delivered or tendered to Buyer
at the Point of Interconnection. The Price shall be the total compensation
owed by Buyer for Output delivered or tendered to Buyer hereunder.
2.4 Tax Credits
Buyer agrees and acknowledges that all Production Incentives shall be owned
by Seller, the owner of the Landfill, and/or any Landfill Owner, Lessee or
Operator; provided, that to the extent Buyer pays in full for emission offsets
and otherwise makes any additional payments pursuant to Section 4.3(j) in
full, Seller shall pay Buyer the Percentage Share of up to one hundred percent
(100%) of the net economic value (net of reasonable transaction fees) realized
by Seller from the Section 45 Credits until Seller has reimbursed Buyer for all
such payments made by Buyer pursuant to Section 4.3(j). Buyer shall not
claim Production Incentives. Buyer agrees to cooperate with Seller, the owner
of the Landfill, and/or any Landfill Owner, Lessee or Operator as may be
necessary to allow maximization of the value of, and realization of, all
Production Incentives; provided that Buyer shall not be required to incur
additional costs or accept any diminution in value of its rights under this
Agreement or of the Output purchased hereunder. In addition, Buyer shall not
take any action (except as otherwise permitted under this Agreement), that
would in any way reduce or eliminate the availability to Seller, the owner of the
Landfill, and/or any Landfill Owner, Lessee or Operator of any Production
Incentive, including without limitation the Section 29 Credits, and Buyer shall
forego any credits or benefits available to it (other than Environmental
Attributes) to the extent necessary to allow Seller, the owner of the Landfill, and
any Landfill Owner, Lessee or Operator to obtain the full benefit of the
Production Incentives, but in no event shall Buyer be required to forego receipt
of Energy.
2.5 Right of First Refusal for Expansion Plant and Expansion Plant Output
(a) Seller may in its sole discretion determine, from time to time, during the
Term to develop, finance, construct and/or operate an Expansion Plant. Each
time such a determination is made, Seller shall notify Buyer of such
determination and shall offer in writing to sell the Percentage Share of the
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SANFRAN 90103 (2K)
Expansion Plant Output to Buyer. The offer shall include the price to be paid
by Buyer for the Percentage Share of the Expansion Plant Output, the term of
the proposed power purchase agreement and the other principal terms and
conditions of the proposed sale. If Buyer wishes to accept such offer to
purchase all (but not less than all) of such Percentage Share of the Expansion
Plant Output, Buyer shall so notify Seller within sixty (60) days of its receipt
of such offer. Buyer and Seller shall promptly thereafter enter into good faith
negotiation of a definitive power purchase agreement incorporating the terms
of such offer. Until such an Expansion Plant power purchase agreement is
executed, the Seller's proposal, accepted by Buyer (including any
modifications agreed upon in writing by both parties), shall control all
dealings between the Parties relating to the Expansion Plant. Should any issue
arise that is not covered by such documentation, the terms of this Agreement
shall apply.
(b) If Buyer does not accept Seller's offer to purchase Buyer's Percentage
Share of the Expansion Plant Output within sixty (60) days of receipt of
Seller's offer, Seller shall be free to offer to sell that portion of the Expansion
Plant Output to any third party at a price and on other terms and conditions
which, taken as a whole, are at least as favorable to Seller as the price and
other terms and conditions set forth in Seller's offer to Buyer. If Seller offers
to break up Buyer's Percentage Share of the Expansion Plant Output to sell to
multiple independent buyers, Seller shall notify Buyer in writing of the terms
and conditions of such offers and Buyer shall again have the right of first
refusal consistent with the terms set forth above for each of the lesser amounts
being offered to the third parties. If Buyer does not purchase its Percentage
Share of the Expansion Plant Output and Seller sells such Expansion Plant
Output to a third party, Seller shall promptly certify, in writing, to Buyer that
the terms and conditions of sale of such Expansion Plant Output to such third
party, taken as a whole, are at least as favorable to Seller as the price and other
terms and conditions set forth in Seller's offer to Buyer, and Seller shall
provide the relevant contract and any other supporting documentation for such
certification. Upon the sale of such Expansion Plant Output in compliance
with this Agreement, Buyer shall have no further rights to be offered or to
purchase such Expansion Plant Output. Buyer's refusal of its Percentage
Share of the Expansion Plant Output from one Expansion Plant shall not affect
Buyer's right to purchase its Percentage Share of the Expansion Plant Output
from a later Expansion Plant under the terms of this Agreement. Seller shall
not sell or provide Buyer's Percentage Share of the Expansion Plant Output to
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SANFRAN 90103 (2K)
any third party unless it can do so without compromising in any material way
its ability to provide Buyer's Percentage Share of the Output to Buyer
hereunder. The materiality of any such impact shall be determined by Buyer in
its reasonable discretion. If Seller sells or provides Expansion Plant Output to
any third party, Seller shall not employ Landfill Gas to fuel such Expansion
Plant in any hour unless the Landfill Gas flow requirements of the Initial
Capacity have been, and shall continue to be, met.
2.6 Option to Install Emission Controls
Buyer may at its option, exercised from time to time, install emission controls
on the Plant in connection with the Initial Capacity and on any Expansion
Plant from which Buyer purchases Expansion Plant Output (so long as Buyer
purchase all such Expansion Plant Output) beyond those then required to meet
the Requirements of Law applicable to Seller or the Plant; provided that (a)
Buyer shall (i) bear all costs and financial, regulatory and operational risks
thereof, including, without limitation, the capital cost thereof and any increase
in operation or maintenance expenses, and (ii) shall keep Seller whole in all
respects, including for decreases in Output and other adverse effects on the
Initial Capacity and the Expansion Plant and its performance, increases in
operations and maintenance costs and failures of such emission controls to
operate, and (b) Buyer shall not make any such changes to the Initial Capacity
or the Expansion Plant without the consent of Seller to the design and plan for
implementation of such changes, such approval not to be unreasonably
withheld.
ARTICLE III
METERING AND BILLING
3.1 Metering Requirements
The transfer of Energy from Seller to Buyer shall be measured by revenue
quality metering equipment at the Point of Interconnection. Such metering
equipment, including any equipment required for communicating meter data
(e.g., a dedicated data line) to Buyer or the ISO, shall be selected, provided,
installed, owned, maintained and operated, at Seller's sole cost and expense,
by Seller or its designee in accordance with applicable ISO rules. Seller shall
17
SANFRAN 90103 12K)
exercise reasonable care in the maintenance and operation of any such
metering equipment, and shall test and verify the accuracy of each meter at
least annually. Seller shall inform Buyer upon at least ten (10) days' prior
written notice of the time and date of these tests, and shall permit Buyer to be
present at such tests and to receive the results of such tests. Subject to Buyer
paying for its Percentage Share of the cost of any update or upgrade to such
metering equipment pursuant to a new requirement of the ISO, the LDC or any
other Governmental Authority adopted following the Commercial Operation
Date, each of Seller's meters shall be accurate to the metering specifications
then in effect for ISO meter accuracy. Seller shall further install and maintain
all equipment and data circuits necessary to transmit all monitored real time
supervisory control and data acquisition ("SCADA") system data and real time
data from the ISO meter to the ISO and the NCPA, while adhering to both ISO
and NCPA communications protocols. Seller shall provide a copy of each
Certificate of Compliance, if any, issued by the ISO.
Buyer and NCPA shall be provided access to all monitored SCADA points to
be used at their discretion in real time monitoring. Buyer may further, at its
sole cost and expense, install and maintain check meters and all associated
measuring equipment necessary to permit an accurate determination of the
quantities of Energy delivered under this Agreement provided that said
equipment does not interfere with the Seller's metering equipment. Seller
shall permit Buyer or Buyer's representative access to its Plant for the purpose
of installing and maintaining such check meters. Seller shall submit to the
ISO, or allow the ISO to retrieve, any meter data required by the ISO related to
the Plant output in accordance with the ISO's settlement and billing protocol
and meter data tariffs. Buyer shall have reasonable access to relevant meters
and associated facilities, as well as real time access to all meter data, as is
necessary for Buyer or its agent to perform its duties as scheduling coordinator
and comply with the requirements of the ISO tariff.
3.2 Billing
Seller shall read the meter at the end of each calendar month of the Term, and
provide to Buyer on or before the tenth (10t11) day of the following month an
invoice based upon the meter data for Energy delivered in such calendar
month and the corresponding attestation pursuant to Section 2.2(c) (if such
attestation is required). Such invoice may be transmitted electronically via e-
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SAN FRAN 90103 (2K)
mail to [*AcctsPayable@ncpa.com], or to any other email address designated
in writing by Buyer, with a copy to follow via United States Mail to the notice
address designated below. Should either Seller or Buyer determine at a later
date, but in no event later than two (2) years after the original invoice date,
that the invoice amount was incorrect, that Party shall promptly notify the
other Party of the alleged error. If the amount invoiced was too low, Buyer
shall, upon receiving verification of the error and supporting documentation
from Seller, pay any undisputed portion of the difference within thirty (30)
days of receipt of verification. If the amount invoiced was too high, Seller
shall, upon receiving verification of the error and supporting documentation
from Buyer, pay any undisputed portion of the difference within thirty (30)
days of receipt of verification. Any such amount shall be subject to the
interest rate as designated in Section 3.3 running from the original due date of
payment.
3.3 Payment
For Energy delivered to Buyer pursuant this Agreement, Buyer or its agent
shall pay Seller by electronic transfer of funds by the later of the twentieth
(20th) day of the month or the tenth (10th) business day after the invoice is
received in accordance with Section 3.2. If such due date falls on a weekend
or legal holiday, such due date shall be the next day which is not a weekend or
legal holiday. Payments made after the due date shall be considered late and
shall bear interest on the unpaid balance at an annual rate equal to two percent
(2%) plus the average daily prime rate as determined from the "Money Rates"
section of the West Coast Edition of The Wall Street Journal for the days of
the late payment period multiplied by the number of days elapsed from and
including the day after the due date, to and including the payment date.
Interest shall be computed on the basis of a 365 -day year. In the event this
index is discontinued or its basis is substantially modified, the Parties shall
agree on a substitute equivalent index. Should Buyer in good faith dispute the
amount of an invoice, Buyer or its agent may withhold such disputed amounts
until the dispute is resolved by arbitration or other permissible method. Such
disputed amounts shall bear interest at the interest rate described above.
Failure of Buyer or its agent to withhold any amount is not a waiver of Buyer's
right to challenge such amount. Both Parties shall maintain all payment
records relating to this Agreement for a minimum of two (2) years, and shall
permit the other Party, upon reasonable notice, to inspect and audit such
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SANFRAN 90103 (2K)
records as the requesting Party deems reasonably necessary to protect its
rights.
ARTICLE IV
SELLER'S OBLIGATIONS
During the Term, Seller hereby agrees to perform the following affirmative
obligations:
4.1 Development, Finance, Construction and Operation of the Plant
Seller shall:
(a) Develop, finance and construct the Plant.
(b) Provide Buyer access to a "real time" Plant monitoring system (which,
at a minimum, shall provide "real time" information regarding the net output
of the Plant) that is anticipated to be internet-based and include alarms.
(c) Seek, obtain, maintain, comply with and, as necessary, renew and
modify from time to time, all Permits, certificates or other authorizations
which are required by any Requirements of Law or Governmental Authority as
prerequisites to engaging in the activities required of Seller by the Agreement
and to meeting Seller's obligation to operate the Plant consistently with the
terms of the Agreement.
(d) Operate, maintain, and repair the Plant in accordance with this
Agreement, all Requirements of Law applicable to Seller or the Plant,
Contractual Obligations, Permits and in accordance with Prudent Utility
Practice, including with respect to efforts to maintain availability of the Initial
Capacity.
(e) Obtain and maintain the policies of insurance in amounts and with
coverages as set forth in Appendix C.
(f) Operate and maintain in a manner consistent with Prudent Utility
Practice the facilities it will own and otherwise cooperate with LDC in the
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SANFRAN 90103 (2K)
physical interconnection of the Plant to the LDC System in accordance with
the Interconnection Agreement.
(g) By October 1St of each year of the Term, provide Buyer and NCPA with
an annual projection of scheduled Outages for the following calendar year.
Should Seller make any changes to such projection, it will notify Buyer and
NCPA of such changes at least fourteen (14) days in advance of any newly
scheduled or rescheduled Outage. If Buyer requests a change to the scheduled
date of any Outage (including to a date set forth in a change notice from
Seller), Seller shall consider such request in good faith and notify Buyer of its
decision within seven (7) days. In no instance will Seller schedule Outages of
more than twenty-four (24) hours between June 1st and September 30th during
the Term. In connection with any Outage, whether it is a scheduled or
unscheduled Outage, Seller shall notify Buyer and NCPA, as soon as
practicable, of the percentage of Plant expected to be out of service and how
long the Outage is expected to last. If the Outage is total (a one hundred
percent (100%) Outage) and is due to a failure of the Plant rather than the
transmission and distribution system beyond the Point of Interconnection,
Seller shall give Buyer and NCPA at least four (4) hours notice before Seller
commences re -energizing the Plant. In addition, Seller will comply with
NCPA's reasonable scheduling protocols, as they may be changed from time
to time. A copy of the current version of NCPA's scheduling protocols, which
the Parties agree are reasonable, is attached as Appendix D.
(h) Negotiate and enter into an Interconnection Agreement with LDC to
enable Buyer to transmit Energy received at the Point of Interconnection
through the ISO -controlled grid. Seller shall be responsible for and pay all
initial non -recurring costs and charges arising under the Interconnection
Agreement (even if not actually incurred) prior to the Commercial Operation
Date in compliance with the Interconnection Agreement and associated rules
and requirements in place as of the Commercial Operation Date (the "Seller's
Interconnection Costs"); provided, however, if the Seller's Interconnection
Costs are, in Seller's reasonable discretion estimated to exceed, and/or do
exceed, one million two hundred fifty thousand dollars ($1,250,000.00), then
Seller may terminate this Agreement without liability of either Party to the
other by giving notice to Buyer in writing of such termination; provided, that
such notice and such termination shall not be effective if Buyer, by written
notice to Seller within fourteen (14) days following such notice from Seller,
agrees to adjust the Price payable under Section 2.3 of this Agreement (and
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Appendix G hereto), and within forty-five (45) days thereafter agrees with
Seller in writing (each in their sole discretion) to an amendment of this
Agreement revising the Price payable under Section 2.3 of this Agreement
(and Appendix G hereto). All other out-of-pocket costs and charges related to
interconnection other than these initial non -recurring costs and charges will be
reimbursed, on a pro rata, energy basis, by the purchasers of energy from the
Plant. During the Term prior to any Expansion Plant becoming available for
commercial service, Buyer will reimburse Seller for its Percentage Share of
such other out-of-pocket costs and charges under the Interconnection
Agreement paid or required to be paid by Seller to LDC or its successor;
provided, however, Buyer shall be responsible for its Percentage Share of such
other out-of-pocket costs and charges under the Interconnection Agreement
only to the extent Buyer has approved in writing, in the sole discretion of
Buyer, the Interconnection Agreement, including any amendments (which
shall not include changes in relevant tariffs) from time to time. Upon
completion of an Expansion Plant which uses the Interconnection Facilities,
such other out-of-pocket costs and charges shall be prorated, on a Percentage
Share of energy basis, and Buyer's share would be based on its Percentage
Share of Energy compared to the energy of the Expansion Plant delivered to
the Point of Interconnection. Seller shall cooperate with Buyer to minimize
any such costs as are to be reimbursed by Buyer.
(i) Negotiate and enter into a Participating Generator Agreement and a
Meter Service Agreement for ISO Metered Entities with the ISO, the load
control area operator for the LDC System that is interconnected with the Plant.
Buyer shall pay for or reimburse Seller for Buyer's Percentage Share of any
such costs or charges associated with these agreements, except to the extent
such cost or charge is required to be paid by Seller under Sections 3.1 and
4.1(h) of this Agreement. Seller shall cooperate with Buyer to minimize any
such costs as are to be reimbursed by Buyer.
(j) Coordinate all Plant start-ups and shut -downs, in whole or in part, with
Buyer in accordance with ISO scheduling protocols and the reasonable
protocols established by Buyer that are not inconsistent with the ISO tariff and
ISO procedures.
(k) Maintain an Availability Threshold of at least seventy percent (70%).
Should Seller fail to maintain such an Availability Threshold, the Price
applicable to Output sold and purchased during each month during which the
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Availability Threshold is below seventy percent (70%) shall be seven and one-
half percent (7.5%) below the Price that would otherwise be in effect pursuant
to Section 2.3 (and Appendix G) until the Availability Threshold is increased
to at least seventy percent (70%). Except as otherwise expressly stated in
Sections 6.4 and 7.6, the foregoing shall be Buyer's sole remedy for any
shortfall of or failure to produce Output or failure to maintain any particular
Availability Threshold.
4.2 General Obligations
(a) Seller shall obtain in its own name and at its own expense any and all
pollution or environmental credits or offsets necessary to operate the Plant in
compliance with the Environmental Laws.
(b) Seller shall keep complete and accurate operating and other records and
all other data for the purposes of proper administration of the Agreement,
including such records as may be required by any Governmental Authority or
Prudent Utility Practice.
(c) Seller shall continue to (i) preserve, renew and keep in full force and
effect its organizational existence and good standing, and take all reasonable
action to maintain all applicable Permits, rights, privileges, licenses and
franchises necessary or desirable in the ordinary course of its business; and (ii)
comply with all Contractual Obligations and Requirements of Law applicable
to Seller or the Plant.
(d) Within ninety (90) days after the Effective Date, Seller shall make
available for review by Buyer, and its representatives, at Seller's attorney's
offices in San Francisco, California, a fully executed copy of its contract with
the Landfill Owner, Lessee or Operator (any one or more of the parties defined
within the definition of Landfill Owner, Lessee or Operator, as may be
applicable in Seller's sole discretion), including all exhibits, attachments, and
other supporting documents thereto, for the purchase of Landfill Gas (the
"LFG Agreement"). Such contract may be redacted to remove pricing
information. If (i) Seller does not fulfill its obligations under the first two
sentences of this Section 4.2(d) within the time allowed, or (ii) Seller fulfills
such obligations but Buyer in its reasonable discretion does not approve of the
terms of the LFG Agreement, then Buyer may, as its sole remedy and without
liability of one Party to the other Party, terminate this Agreement by written
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notice given no later than sixty (60) days after Seller has fulfilled, or failed to
fulfill, as the case may be, such obligations under such first two sentences.
Other than increasing the amount of fuel purchased thereunder, Seller shall not
allow such contract to be amended or otherwise modified, nor shall it waive or
fail to enforce any of its rights thereunder, without Buyer's prior written
approval, whose approval shall not be unreasonably withheld. Seller shall
make the LFG Agreement available to Buyer for review during normal
business hours at Seller's attorney's offices in San Francisco, California
throughout the Term within seven (7) days of receipt of a written request by
Buyer.
(e) Seller shall provide to Buyer such other information regarding the
permitting, engineering, construction or operations of the Plant as Buyer may
from time to time reasonably request, subject to licensing or other restrictions
of Seller or a third party with respect to confidentiality, disclosure or use.
(f) Seller shall enter into any agreements with the ISO required by the ISO
for generators delivering power into the ISO -controlled grid. Except for such
costs and charges as are expressly identified in this Agreement as Seller's
costs, Buyer shall reimburse Seller for all costs and charges under such
agreements. Seller shall cooperate with Buyer to minimize any such costs as
are to be reimbursed by Buyer.
(g) Seller shall provide Buyer with a copy of its ultimate corporate parent's
audited financial statements as at the end of its accounting year prepared in
accordance with Generally Accepted Accounting Principles ("GAAP")
consistently applied, no later than four (4) months after the end of such
accounting year of such entity. Seller shall also provide, on a quarterly basis,
an unaudited financial statement in the form of Appendix F, prepared in
accordance with GAAP consistently applied for Seller and for Seller's ultimate
corporate parent. Such financial statements shall be certified by an officer of
Seller as fairly presenting the financial condition of the Seller subject only to
what would typically be included in year-end audit adjustments and footnotes.
If, from time to time, an audited year-end financial statement is prepared for
Seller, Seller shall provide it to Buyer no later than four (4) months after the
end of Seller's accounting year.
4.3 Construction Milestones
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(a) The Parties agree that time is of the essence and that certain milestones
(individually, a "Milestone" and, collectively, the "Milestones") for the
development, financing and construction of the Plant must be achieved in a
timely fashion or Buyer shall suffer damages. Seller shall provide Buyer with
documentation satisfactory to Buyer, in Buyer's reasonable discretion, to
support the achievement of the Milestones by the dates set forth below.
(b) The following events are all of the Milestones:
(i) By the date ninety (90) days following the Effective Date, Seller
shall have signed an LFG Agreement with the Landfill Owner,
Lessee or Operator (any one or more of the parties defined within
the definition of Landfill Owner, Lessee or Operator, as may be
applicable in Seller's sole discretion) and have obtained Site
Control.
(ii) By the date twenty-six (26) months following the date that Buyer
approves the LFG Agreement, Seller shall (a) have obtained all
Permits necessary, in final form, to commence construction of the
Plant and (b) have entered into an Interconnection Agreement.
(iii) By the date one (1) month following the later of (a) the
finalization of all necessary Permits described in Section
4.3(b)(ii), and (b) entering into an Interconnection Agreement,
Seller shall have arranged financing for construction of the Plant
or otherwise made funds available to commence and complete
construction.
(iv) By the date twelve (12) months following the later of (a) the
finalization of all necessary Permits described in Section
4.3(b)(ii), and (b) entering into an Interconnection Agreement,
Seller shall have commenced construction of the Plant.
(v) By the date eighteen (18) months following the arrangement of
financing or availability of funds for construction, Seller shall
have achieved the Commercial Operation Date.
(c) Starting on the Effective Date, Seller shall provide to Buyer monthly
progress reports concerning the progress towards completion of the
Milestones. In addition, within five (5) business days of the completion of
each Milestone, Seller shall provide a certification to Buyer along with any
supporting documentation (if applicable), demonstrating the satisfaction of the
Milestone. Seller shall provide to Buyer additional information concerning
Seller's progress towards, or confirmation of, achievement of the Milestones,
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as Buyer may reasonably request from time to time. Within seven (7) days of
the later of (i) obtaining the authority to construct for the Plant from the
applicable air quality management district or (ii) Seller's receipt of the system
impact and facility cost studies from the LDC, but in no event later than the
date set forth in Section 4.3(b)(ii), Seller shall specify the Initial Capacity of
the Plant (which shall be subject to the limits contained in Section 1.20);
provided, however, Seller may (in Seller's sole discretion) increase the Initial
Capacity of the Plant at any time during the Term by adding equipment for
recovering waste heat from the prime mover engines of the Plant for purposes
of utilizing such waste heat to produce additional Energy. If Seller decides to
increase the Initial Capacity of the Plant during the Term (after Seller has
originally specified the Initial Capacity of the Plant), then Seller shall provide
Buyer with written notice of the date of such increase, the amount of such
increase, and the entire capacity of the Plant (as increased) as of such date.
The new increased capacity of the Plant shall then become the Initial Capacity
of the Plant from the date set forth in Seller's written notice until the end of the
Term (the Initial Capacity of the Plant (as increased) shall be not less than 1.0
MW and not more than 2.2 MW (gross nameplate), and not less than 0.8 MW
and not more than 1.9 MW (net at the Point of Interconnection). Seller makes
no written or oral representation or warranty, either express or implied,
regarding whether or not Seller will add equipment for recovering waste heat
from the prime mover engines of the Plant and/or utilize that waste heat to
produce additional Energy.
(d) Upon becoming aware that it will, or is reasonably likely to, fail to
achieve a Milestone by the required date, for any reason, including a Force
Majeure Event, Seller shall so notify Buyer, in writing, as soon as is
reasonably practicable. Such notice shall explain the cause of the delay,
provide an updated date for achievement of the Milestone(s) and describe
Seller's plan for meeting the Milestone. Seller's notice will also explain any
impact such delay may or will have on any other Milestone, and measures to
be taken to mitigate such impact.
(e) In the event that a Force Majeure Event causes any delay to the
achievement of the Milestones set forth in Sections 4.3(b)(iii), (iv), or (v), such
Milestone's deadline may be extended, together with any Force Majeure Event
extensions for other Milestones, for a period not to exceed six (6) months. The
extension of the deadline for any Milestone shall extend the deadline for all
subsequent Milestones, provided that in no event shall the combined
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extensions for Force Majeure Events for any or all of the Milestones exceed
six (6) months.
(0 In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(i) for any reason, Buyer may terminate this Agreement, without liability
of either Party to the other, by giving notice to Seller in writing of such
termination at any time prior to Seller curing its failure. Such option to
terminate shall be Buyer's sole remedy for any failure to meet the Milestone
set forth in Section 4.3(b)(i).
(g) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(ii) for any reason, Buyer may terminate this Agreement, without
liability of either Party to the other, within ten (10) business days after the
Milestone date by giving notice to Seller in writing of such termination. If
Seller meets the Milestone set forth in Section 4.3(b)(ii) prior to Buyer giving
written notice of termination, this Agreement shall remain in full force and
effect. If Buyer does not terminate this Agreement within ten (10) business
days after the Milestone date, Seller shall continue to pursue satisfaction of the
relevant Milestone, and Buyer must give Seller sixty (60) days' prior written
notice to terminate this Agreement, during which period if Seller cures such
defect and achieves the relevant Milestone, such termination shall be void and
this Agreement shall remain in full force and effect. Such option to terminate
shall be Buyer's sole remedy for any failure to meet the Milestone set forth in
Section 4.3(b)(ii).
(h) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(iv) within six (6) months after the relevant Milestone date for any
reason (or up to twelve (12) months if also delayed by a Force Majeure Event),
Seller may deposit an amount, per month, equal to the Monthly LD Amount
into a segregated escrow account reasonably acceptable to Buyer by the first
day of such month, for every month after such Milestone date until the
Milestone is met. Such funds will be used towards any liquidated damages as
set forth in Section 7.4(c), and shall be held in escrow until such time that
liquidated damages, if any, become payable to Buyer. Should the amount in
the escrow account exceed the final amount of liquidated damages, such
excess funds shall be returned to Seller. Should Seller (i) at any time fail to
make such monthly deposits or (ii) fail to satisfy the Milestone set forth in
Section 4.3(b)(iv) for more than twelve (12) months, Buyer may terminate this
Agreement upon written notice to Seller of such termination. Upon such
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termination, Seller will pay to Buyer, within thirty (30) days of the termination
notice, an amount equal to the LD Amount as liquidated damages. Seller's
escrow option, Buyer's option to terminate, and liquidated damages shall be
Buyer's sole remedies for any failure of Seller to meet the Milestones set forth
in Section 4.3(b)(iii) or (iv).
(i) Seller covenants that it will diligently pursue all Milestones including
the Commercial Operation Date, which Seller envisions will occur within
thirty (30) months following the execution of this Agreement.
(j) In the event that any of the approvals described in Section 4.3(b)(ii) are
not obtained by the date specified in Section 4.3(b)(ii) for satisfaction of the
relevant Milestone or are obtained on a basis not reasonably satisfactory to
Seller, including without limitation, in the case of the air permit (from the air
pollution control district that has jurisdiction over construction and operation
of the Plant), approval of construction and operation of the Plant on a basis not
consistent with internal combustion engines without emission controls,
pollution or environmental credits or offsets, Seller may terminate this
Agreement without liability of either Party to the other Party by giving notice
to Buyer, in writing, of such termination; provided that such notice must be
given no later than fourteen (14) days following the earlier of (a) the date on
which a given approval not satisfactory to Seller is received, in writing, or (b)
the date specified in Section 4.3(b)(ii) for satisfaction of the relevant
Milestone; further provided, that such notice and such termination shall not be
effective if Buyer, by written notice to Seller within fourteen (14) days
following such notice from Seller, agrees (i) to pay Seller with the first invoice
following the Commercial Operation Date the reasonable all -in cost (including
reasonable broker fees, if any) to purchase all such offsets sufficient to operate
the Plant at full Initial Capacity (less reasonably projected scheduled Outages
for maintenance) for the term of this Agreement, and (ii) to adjust the price
payable under Section 2.3 (and Appendix G) of this Agreement and within
thirty (30) days thereafter agrees with Seller (each in their sole discretion), in
writing, to an amendment of this Agreement revising such price. Failure to
provide notice of termination by the date specified above shall constitute a
waiver of the right to terminate this Agreement as provided in this Section
4.3(j). In the event that Seller exercises such termination right, Buyer shall
have a right of first refusal to purchase the output of any electricity generating
facility owned or controlled by Seller or its affiliate(s) located at the Landfill
and fueled by Landfill Gas. Such right of first refusal shall conform to the
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SANFRAN 90103 (2K1
provisions of Section 2.5. The provisions of this Section 4.3(j) shall survive
termination of this Agreement under this Section 4.3(j) for a period of five (5)
years from the effective date of such termination.
ARTICLE V
BUYER'S OBLIGATIONS
5.1 Delivery and Transmission
Except for Seller's obligations pursuant to Sections 3.1 and 4.1(h), Buyer shall
be solely responsible for paying its Percentage Share of costs and charges
associated with the receipt of Energy, under this Agreement, at the Point of
Interconnection and for the transmission and delivery of the Energy from the
Point of Interconnection to any other point downstream of the Point of
Interconnection (including, without limitation, transmission costs and charges,
competition transition charges, applicable control area service charges,
transmission congestion charges, inadvertent energy flows, any other ISO
charges related to the transmission of such Energy by the ISO and any charge
assessed or collected in the future pursuant to any utility tariff or rate schedule,
however defined, for transmission or transmission -related service rendered by
or for any transmission -owning or operating entity). NCPA, acting on behalf
of Buyer, shall be scheduling coordinator for the transmission of Energy from
the Plant in accordance with applicable ISO rules. Buyer's duties as
scheduling coordinator shall be limited to those duties as are specifically
required of scheduling coordinators in the ISO tariff and the ISO protocols.
Commercial arrangements for such transmission and delivery services will be
coordinated and settled by NCPA directly with the ISO or other third parties.
At the option of Buyer, the Plant may be included within NCPA's metered
sub -system in connection with the scheduling of power over the ISO grid and
related functions; provided that such inclusion shall have no adverse effect on
Plant operations or Seller (or any such effect shall be fully mitigated by
Buyer). Seller will do all things reasonably needed to allow Buyer to comply
with any obligations, and minimize any potential liability, under the ISO tariff;
provided, that if such actions require any actions beyond the giving of notice
provided by Buyer, then Buyer shall reimburse its Percentage Share of all out-
of-pocket costs and charges of such actions. If and to the extent that Seller
fails to comply with the notice provision in Section 4.1(g) concerning Outages
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or with its obligations as outlined in the previous sentence, Seller shall be
wholly responsible for all imbalances, deviations, or any other ISO charges or
penalties associated with such Outage or ISO tariff obligation. Buyer may
replace NCPA as Scheduling Coordinator for the Plant. If NCPA ceases to be
the Scheduling Coordinator for the Plant and Buyer is unable, within fourteen
(14) business days of notice from Seller, to appoint a replacement Scheduling
Coordinator, Seller shall have the right to appoint a replacement Scheduling
Coordinator on Buyer's behalf, and Buyer shall enter into all reasonable and
appropriate agreements with such replacement Scheduling Coordinator at its
own cost.
5.2 Taxes
Buyer shall pay and be fully responsible for any sales, use, gross receipts,
utility or other taxes, assessments or fees, if any, incurred or imposed on the
sale or transfer of Energy from Seller to Buyer under this Agreement. Buyer
shall not be responsible for any taxes measured on the net income of Seller or
ad valorem taxes paid by Seller or the City of Avenal, California associated
with the Site or the Landfill.
5.3 Notification of Transmission Outages
Buyer will exercise reasonable efforts to provide Seller with as much advance
notice as practicable of any Outage on the LDC System or other transmission
or delivery facilities which may adversely affect the delivery of Energy to
Buyer.
ARTICLE VI
FORCE MAJEURE
6.1 Force Majeure Events
It is understood that at times unavoidable delays or interruptions in delivery or
performance may result from Force Majeure Events. The performance of each
Party under this Agreement may be subject to interruptions or reductions due
to a Force Majeure Event. Both Parties shall in good faith use such effort as is
reasonable under all the circumstances known to that Party affected by the
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Force Majeure Event at the time to remove or remedy the cause(s) and mitigate
the inability to perform. However, the obligation to use such reasonable
efforts shall not be interpreted to require resolution of labor disputes by
acceding to demands of the opposition when such course is inadvisable in the
discretion of the Party having such difficulty.
6.2 Remedial Action
Subject to the limitation on extensions of Milestones set forth in Section
4.3(e), a Party shall not be liable to the other Party if the Party is prevented
from performing its obligations hereunder due to a Force Majeure Event. The
Party rendered unable to fulfill an obligation by reason of a Force Majeure
Event shall take all action necessary to remove such inability with all due
speed and diligence. The nonperforming Party shall be prompt and diligent in
attempting to remove the cause of its failure to perform, and nothing herein
shall be construed as permitting that Party to continue to fail to perform after
said cause has been removed. Notwithstanding the foregoing, the existence of
a Force Majeure Event shall not excuse any Party from its obligations to make
payment of amounts due hereunder.
6.3 Notice
In the event of any delay or nonperformance resulting from a Force Majeure
Event, the Party suffering the Force Majeure Event shall, as soon as
practicable under the circumstances, notify the other Party in writing of the
nature, cause, date of commencement thereof and the anticipated extent of any
delay or interruption in performance.
6.4 Termination Due To Force Majeure Event
Subject to Section 4.3(e), if a Party is prevented from performing its material
obligations under this Agreement for a period of twelve (12) consecutive
months or longer, the unaffected Party may terminate this Agreement, without
liability of either Party to the other, upon thirty (30) days' written notice at any
time during the Force Majeure Event.
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ARTICLE VII
DEFAULT/REMEDIES/TERMINATION
7.1 Events of Default by Buyer
The following shall each constitute an "Event of Default" by Buyer:
(a) Buyer breaches any material obligation (other than one covered by
Section 7.1(b) or (c) of this Agreement) and fails to cure such breach within
thirty (30) days after the receipt of written notification of breach by Seller or
such longer period as may be necessary to cure such breach as long as Buyer is
exercising diligent efforts to cure such default.
(b) Buyer fails to make any payment due under this Agreement within thirty
(30) days after the receipt of written notice that such payment is due.
(c) The initiation of an involuntary proceeding against Buyer under the
bankruptcy or insolvency laws, which involuntary proceeding remains
undismissed for sixty (60) consecutive days, or in the event of the initiation by
Buyer of a voluntary proceeding under the bankruptcy or insolvency laws.
7.2 Events of Default by Seller
(1) The following shall each constitute an "Event of Default" by Seller if
Seller does not cure within the time set forth in clause (2), below:
(a) Seller breaches any material obligation (other than ones covered by
Sections 7.2(1)(b), (c), (d), (e) or (f) of this Agreement or for which a remedy
is specified).
(b) Seller fails to make any payment due under this Agreement within thirty
(30) days after the receipt of written notice that such payment is due.
(c) The initiation of an involuntary proceeding against Seller under the
bankruptcy or insolvency laws, which involuntary proceeding remains
undismissed for sixty (60) consecutive days, or in the event of the initiation by
Seller of a voluntary proceeding under the bankruptcy or insolvency laws.
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(d) Seller sells or transfers Buyer's share of the Output (or any individual
component thereof) or Expansion Plant Output (or any individual component
thereof) or the right to Buyer's share of the Output (or any individual
component thereof) or Expansion Plant Output (or any individual component
thereof), to the extent that such Expansion Plant Output is purchased by Buyer,
to any Person other than Buyer.
(e) Seller fails to comply with the terms of Buyer's right of first refusal as
described in Section 2.5 of this Agreement.
(f) Subject to Section 7.4(c), Seller fails, for any reason other than an
unauthorized act or omission by Buyer, to achieve the Commercial Operation
Date by the applicable Milestone deadline as set forth in Section 4.3(b)(v), as
such deadline may be extended as a result of a Force Majeure Event in
accordance with Section 4.3(e).
(2) Time for Cure. Nothing described in any of Sections 7.2(1)(a), (d) or (e)
above shall constitute an Event of Default if Seller cures the event, failure or
circumstance within (30) days after the receipt of written notification by Buyer
or such longer period as may be necessary to cure as long as Seller is
exercising diligent efforts to cure.
7.3 Termination for Default
(a) In the event the defaulting Party fails to cure the Event of Default within
the period for curative action under Sections 7.1 or 7.2, as applicable, the non -
defaulting Party may terminate the Agreement by notifying the defaulting
Party in writing of (i) the decision to terminate and (ii) the effective date of the
termination.
(b) Upon termination of the Agreement by Buyer pursuant to Section 7.3(a)
due to an Event of Default by Seller, (i) Buyer shall have no future or further
obligation to purchase the Output of the Plant or to make any payment
whatsoever under this Agreement, except for payments for obligations arising
or accruing prior to the effective date of termination, and (ii) Seller shall, if
Buyer has paid in full for emission offsets pursuant to Section 4.3(j), either (A)
reimburse Buyer pro rata for any unused such offsets paid for by Buyer or (B)
transfer to Buyer title to any unused such offsets paid for by Buyer. Upon
termination of the Agreement by Seller pursuant to Section 7.3(a) due to an
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SANFRAN 90103 (2K)
Event of Default by Buyer, Seller shall have no future or further obligation to
deliver the Output of the Plant to Buyer or to satisfy any other obligation of
this Agreement, except for payments or other obligations arising or accruing
prior to the effective date of termination. After the effective date of
termination, the Agreement shall not be construed to provide any residual
value to either Party or any successor or any other Person, for rights to, use of
or benefits from the Plant to any Person.
7.4 Damages
(a) For all claims, causes of action and damages the Parties shall be entitled
to the recovery of actual damages allowed by law unless otherwise limited by
the Agreement. Neither the enumeration of Events of Default in Sections 7.1
and 7.2, nor the termination of this Agreement by a non -defaulting Party
pursuant to Section 7.3(a), shall limit the right of a non -defaulting Party to
rights and remedies available at law, including, but not limited to, claims for
breach of contract or failure to perform by the other Party and for direct
damages incurred by the non -defaulting Party as a result of the termination of
this Agreement.
(b) Except as otherwise specifically and expressly provided in the
Agreement, neither Party shall be liable to the other Party under this
Agreement for any indirect, special or consequential damages, including but
not limited to loss of use, loss of revenues, loss of profit, interest charges, cost
of capital or claims of its customers or members to which service is made.
Except as set forth in Section 4.1(k) and except to the extent Seller violates its
undertaking not to provide or sell rights to part or all of the Output to a party
other than Buyer, Seller shall not be liable to Buyer for failure to provide any
specific amount of Output hereunder.
(c) In the event that Seller fails to meet the Commercial Operation Date by
the applicable Milestone deadline as set forth in Section 4.3(b)(v), as such
deadline may be extended as a result of a Force Majeure Event in accordance
with Section 4.3(e), Seller shall be liable for liquidated damages in the amount,
per month, equal to the Monthly LD Amount for each full month (with parts of
a month pro rated) that Seller is late in satisfying the Milestone. So long as
Seller is paying such liquidated damages on a monthly basis, up to twelve (12)
months, Buyer shall not be permitted to terminate this Agreement. If after
twelve (12) months following the relevant Milestone deadline Seller has failed
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to achieve Commercial Operation, or if for any reason Seller fails to pay, or
discontinues paying, the monthly liquidated damages provided for above,
Buyer may terminate this Agreement upon thirty (30) days' prior written
notice to Seller. This twelve (12) month period shall not be extended as a
result of a Force Majeure Event. Upon such termination, Seller shall pay
Buyer, within thirty (30) days of receipt of the termination notice, a lump sum
equal to the LD Amount. No other damages or remedy shall be available to
Buyer on the basis of such failure to meet the Milestone set forth in Section
4.3(b)(v) or termination of this Agreement based on failure to achieve
Commercial Operation within twelve (12) months of that Milestone deadline.
(d) The Parties agree that the liquidated damages set forth in Sections
4.3(h) and 7.4(c) are reasonable and represent a fair and genuine estimate of
the damages Buyer will suffer upon the failure of Seller to achieve
Commercial Operation by the agreed upon date(s). The Parties acknowledge
that it would be impracticable or extremely difficult to fix Buyer's actual
damages, and therefore have deemed the liquidated damages set forth above to
be the amount of damage sustained by Buyer upon such a failure. The Parties
further agree that payment of such amount shall be as liquidated damages and
not as a penalty, and is therefore not subject to avoidance under California
Civil Code section 1671.
7.5 Indemnification
Seller and Buyer agree to defend, indemnify, and hold each other, and their
respective officers, directors, employees and agents, harmless from and against
all claims, demands, losses, liabilities, and expenses (including reasonable
attorneys' fees) (collectively "Damages") for personal injury or death to
persons and damage to each other's physical property or facilities or the
property of any other Person to the extent arising out of, resulting from, or
caused by the negligent or intentional and wrongful acts, errors, or omissions
of the indemnifying Party. This indemnification obligation shall apply
notwithstanding any negligent or intentional acts, errors or omissions of the
indemnitees but the indemnifying Party's liability to pay Damages to the
indemnified Party shall be reduced in proportion to the percentage by which
the indemnitees' negligent or intentional acts, errors or omissions caused the
Damages. Neither Party shall be indemnified for its Damages resulting from
its sole negligence or willful misconduct. These indemnity provisions shall
35
SANFRAN 90103 (2K)
not be construed to relieve any insurer of its obligation to pay claims
consistent with the provisions of a valid insurance policy.
Buyer shall defend, indemnify and hold Seller and its officers, directors,
employees and agents harmless from and against all claims, demands, losses,
liabilities and expenses (including reasonable attorneys fees) arising out of or
connected with the interaction with third parties in connection with WREGIS
or any alternate accounting system(s) designated by Buyer.
7.6 Buyer's Right to Operate
If Seller (i) fails to maintain the Availability Threshold for a period of nine (9)
months in any twelve (12) month period, or (ii) fails to generate Energy for
sixty (60) consecutive days, then Buyer or its designee may, but shall not be
obligated to, step-in and assume operational control from Seller of the Plant;
provided that Buyer shall not be permitted to step-in and take control so long
as Seller or any Lender(s) is using commercially reasonable efforts to remedy
the failures described in (i) or (ii) above. Buyer, its employees, contractors
and designees shall have the unrestricted right to enter the Plant to the extent
necessary to operate the Plant. Upon the exercise of this right, Buyer or its
designee shall at all times operate the Plant using Prudent Utility Practice and
shall comply, to the extent commercially practicable, with the terms of this
Agreement. Notwithstanding the foregoing, Seller shall not be excused from
any obligation or remedy available to Buyer as a result of Buyer's operation
of, or election not to operate, the Plant. Buyer shall pay Seller the applicable
rate for Output provided hereunder, less any costs incurred by Buyer to operate
the Plant. Buyer shall indemnify and hold Seller harmless from any liability to
third parties arising out of Buyer's failure to operate the Plant using Prudent
Utility Practice. Upon Buyer's satisfaction that Seller has the ability to operate
the Plant in accordance with this Agreement, Seller shall resume operational
control.
Should Lender(s) refuse to finance the Plant, or materially condition such
financing, solely as a result of this Section 7.6, and Seller gives Buyer written
notice of such refusal to finance, Buyer shall have the following options: (1)
terminate this Agreement without liability of one Party to the other Party; (2)
renegotiate this Section 7.6 with Seller and Lender(s) in a manner mutually
acceptable; (3) delete this Section 7.6 in its entirety (which deletion will not
require Seller's additional consent); or (4) arrange for financing for the Plant
36
SANFRAN 90103 (2K)
under materially equivalent terms and conditions as the Lender(s) were
prepared to provide but for this Section 7.6. If Buyer fails to elect and
complete one of these options within sixty (60) days of written notice from
Seller, Seller shall have the right to terminate this Agreement without liability
of one Party to the other Party.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Seller's Representations and Warranties
Seller represents and warrants to Buyer that as of the Effective Date:
(i) Seller is duly organized and validly existing as a limited liability
company under the laws of Delaware, and has the lawful power to
engage in the business it presently conducts and contemplates
conducting in this Agreement and Seller is duly qualified in each
jurisdiction wherein the nature of the business transacted by it makes
such qualification necessary;
(ii) Seller has the legal power and authority to make and carry out this
Agreement and to perform its obligations hereunder; all such actions
have been duly authorized by all necessary proceedings on its part. As
of the Effective Date, (a) the Plant shall on the Commercial Operation
Date be a "qualifying small power production facility" as that term is
defined in Section 3(17)(C) of the Federal Power Act, and will possess
all of the exemptions from regulation provided in 18 CFR Sections
292.601(c) and 292.602; and (b) this Agreement is not required to be
filed with FERC and no approval (except with respect to "qualifying
small power production facility" status) with respect to this Agreement
is required from FERC. In the event that the Plant is not a "qualifying
small power production facility" on the Commercial Operation Date or
any date thereafter, Seller shall make appropriate filings under the
Federal Power Act within sixty (60) days so as to comply with
applicable law, subject at all times to the provisions of Article IX of this
Agreement;
37
SANFRAN 90103 (2K)
(iii) The execution, delivery and performance of this Agreement by Seller
will not conflict with its governing documents, any applicable laws, or
any covenant, agreement, understanding, decree or order to which Seller
is a party or by which it is bound or affected;
(iv) This Agreement has been duly and validly executed and delivered by
Seller and, as of the date first set forth herein, constitutes a legal, valid
and binding obligation of Seller, enforceable in accordance with its
terms against Seller, except to the extent that its enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally or by general
principles of equity; and
(v) There are no actions, suits, proceedings or investigations pending or, to
the knowledge of Seller, threatened in writing against Seller, at law or in
equity before any Governmental Authority, which individually or in the
aggregate are reasonably likely to have a materially adverse effect on
the business, properties or assets or the condition, financial or otherwise,
of Seller, or to result in any impairment of Seller's ability to perform its
obligations under this Agreement.
8.2 Buyer Representations and Warranties
Buyer represents and warrants to Seller that as of the Effective Date:
(i) Buyer is a chartered city and municipal corporation, duly organized and
validly existing, and has the lawful power to engage in the business it
presently conducts and contemplates conducting in this Agreement and
Buyer is duly qualified in each jurisdiction wherein the nature of the
business transacted by it makes such qualification necessary;
(ii) Buyer has the legal power and authority to make and carry out this
Agreement and to perform its obligations hereunder and all such actions
have been duly authorized by all necessary proceedings on its part;
(iii) The execution, delivery and performance of this Agreement by Buyer
will not conflict with its governing documents, any applicable laws or
any covenant, agreement, understanding, decree or order to which Buyer
is a party or by which it is bound or affected;
38
SANFRAN 90103 (2K)
(iv) This Agreement has been duly and validly executed and delivered by
Buyer and, as of the first date set forth herein, constitutes a legal, valid
and binding obligation of Buyer, enforceable in accordance with its
terms against Buyer, except to the extent that its enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally or by general
principles of equity; and
(v) There are no actions, suits, proceedings or investigations pending or, to
the knowledge of Buyer, threatened in writing against Buyer, at law or
in equity before any Governmental Authority, which individually or in
the aggregate are reasonably likely to have a materially adverse effect
on the business, properties or assets or the condition, financial or
otherwise, of Buyer, or to result in any impairment of Buyer's ability to
perform its obligations under this Agreement.
ARTICLE IX
NO CHANGE TO RATES, TERMS OR CONDITIONS
The Parties intend that the standard of review for changes to any rate, charge,
classification, term or condition of this Agreement at FERC shall be the most
stringent standard permissible under applicable law. As to the Parties, it is
understood that the standard is the "Mobile -Sierra public interest" standard of
review, as stated by the United States Supreme Court in Morgan Stanley Capital
Group Inc. v. Public Utility District No. 1 of Snohomish County, Nos. 06-1457, 128
S.Ct. 2733 (2008), and consistent with the order of the Supreme Court in NRG Power
Marketing, LLC, et al., v. Maine Public Utilities Commission et al., No. 08-674, 130
S.Ct. 693 (2010) ("NRG Order"). As to all other persons it is intended that the same
standard, to the maximum degree as may be made applicable to other than the
Parties, apply, to the maximum degree permitted under the NRG Order.
ARTICLE X
MISCELLANEOUS
10.1 Assitnment
39
SANFRAN 90103 (2K)
The rights and obligations of this Agreement may not be assigned by either
Party without the prior written consent of the other Party, which consent shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing,
Seller may use subcontractors without Buyer's consent to comply with the
terms of this Agreement, provided that, notwithstanding the use of
subcontractors, Seller shall remain responsible for all of its obligations under
this Agreement. Buyer may furthermore use any agent it so designates for
scheduling and billing purposes, so long as Buyer remains responsible for all
of its obligations under this Agreement. Any purported assignment of this
Agreement in the absence of the required consent, except as provided in
Section 10.2, shall be void.
10.2 Financing
Notwithstanding Section 10.1, Seller may, without the consent of Buyer,
assign, transfer or hypothecate its rights under this Agreement to Lenders as
collateral security in connection with any financing of the purchase or
operation of the Plant, provided that such Lender(s) or its designee agree(s), in
writing, that upon assuming any of Seller's prospective rights under this
Agreement, such Lender also shall be bound by all of Seller's prospective
obligations under this Agreement. Notwithstanding any such assignment,
Seller's obligations under this Agreement shall continue in their entirety in full
force and effect and Seller shall remain fully liable for all of its obligations
under or relating to this Agreement. Each such collateral assignment and any
purchaser or transferee shall be subject to Buyer's rights and defenses
hereunder and under applicable law. Seller shall provide prior written notice
to Buyer at least seven (7) days prior to any such collateral assignment.
In order to facilitate the obtaining of financing of the Plant, Buyer shall
execute, upon request, a commercially reasonable consent to assignment, with
respect to a collateral assignment hereof to Lenders in connection with the
documentation of the financing or refinancing for the Plant. Any assignment
in violation of this Agreement shall be void, ab initio. Buyer shall consider in
good faith any amendments to this Agreement proposed by Seller which relate
to financing of the Plant or other amendments requested by Seller in order to
receive or maintain financing from Lenders.
10.3 Notices
40
SANFRAN 90103 (2K)
Any notice, demand, request, or communication required or authorized by this
Agreement shall be delivered either by hand, facsimile, overnight courier or
mailed by certified mail, return receipt requested with postage prepaid, to:
City of Palo Alto
250 Hamilton Avenue, Seventh Floor
Palo Alto, CA 94301
Attention: City Clerk
Telecopier: (650) 328-3631
on behalf of Buyer;
with a copy to:
City of Palo Alto
250 Hamilton Avenue, Eighth Floor
Palo Alto, CA 94301
Attention: Senior Assistant City Attorney / Utilities
Telecopier: (650) 329-2646
and to:
City of Palo Alto
250 Hamilton Avenue, Third Floor
Palo Alto, CA 94301
Attention: Director of Utilities
Telecopier: (650) 321-0651
41
SANFRAN 90103 (2K)
and to:
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Attention: Power Contracts Administrator
Telecopier: (916) 781-4255
and to:
Ameresco Avenal LLC
c/o Ameresco, Inc.
111 Speen Street, Suite 410
Framingham, MA 01701
Attention: General Counsel
Telecopier: (508) 661-2201
Telephone: (508) 661-2200
with a copy to:
Ameresco Avenal LLC
c/o Ameresco, Inc.
111 Speen Street, Suite 410
Framingham, MA 01701
Attention: Vice President, Renewable Energy
Telecopier: (508) 661-2201
Telephone: (508) 661-2200
on behalf of Seller.
The designation and titles of the person to be notified or the address of
such person may be changed at any time by written notice delivered in the
manner set forth in this Section 10.3. Any such notice, demand, request, or
communication shall be deemed received (i) if delivered by hand by a Party or
sent by facsimile or (ii) upon receipt by the receiving Party if sent by courier
or U.S. mail.
42
SANFRAN 90103 (2K)
10.4 Captions
All titles, subject headings, section titles and similar items are provided for the
purpose of reference and convenience and are not intended to be inclusive,
definitive or to affect the meaning of the contents or scope of the Agreement.
10.5 No Third Party Beneficiary
No provision of the Agreement is intended to, nor shall it in any way, inure to
the benefit of any customer, property owner or any other third party, so as to
constitute any such Person a third -party beneficiary under the Agreement, or of
any one or more of the terms hereof, or otherwise give rise to any cause of
action in any Person not a Party hereto.
10.6 No Dedication
No undertaking by one Party to the other Party under any provision of the
Agreement shall constitute the dedication of that Party's system or any portion
thereof to the other Party or to the public or affect Seller as an independent
entity and not a public utility.
10.7 Entire Agreement; Integration
This Agreement, together with all appendices attached hereto, constitutes the
entire agreement between the Parties and supersedes any and all prior oral or
written understandings. No amendment, addition to or modification of any
provision hereof shall be binding upon the Parties, and neither Party shall be
deemed to have waived any provision or any remedy available to it, unless
such amendment, addition, modification or waiver is in writing and signed by
a duly authorized officer or representative of the Parties.
10.8 Applicable Law
The Agreement is made in the State of California and shall be interpreted and
governed by the laws of the State of California and/or the laws of the United
States, as applicable.
43
SANFRAN 90103 (2K)
10.9 Venue
The Parties hereby submit to the exclusive jurisdiction of the federal courts for
the Northern District of the State of California; provided, however, that if such
federal courts sitting in the Northern District of the State of California refuse
jurisdiction, the Parties agree to the exclusive jurisdiction of the state courts
sitting in the County of San Francisco, State of California.
10.10 Nature of Relationship
The duties, obligations and liabilities of the Parties are intended to be several
and not joint or collective. The Agreement shall not be interpreted or
construed to create an association, joint venture, fiduciary relationship or
partnership between Seller and Buyer or to impose any partnership obligation
or liability or any trust or agency obligation or relationship upon either Party.
Seller and Buyer shall not have any right, power or authority to enter into any
agreement or undertaking for, or act on behalf of, or act as or be an agent or
representative of or otherwise bind the other Party.
10.11 Good Faith and Fair Dealing; Reasonableness
The Parties agree to act reasonably and in accordance with the principles of
good faith and fair dealing in the performance of this Agreement. Unless
expressly provided otherwise in this Agreement, (i) wherever the Agreement
requires the consent, approval or similar action by a Party, such consent,
approval or similar action shall not be unreasonably withheld or delayed, and
(ii) wherever the Agreement gives a Party a right to determine, require, specify
or take similar action with respect to matters, such determination, requirement,
specification or similar action shall be reasonable.
44
SANFRAN 90103 (2K)
10.12 Severability
Should any provision of the Agreement be or become void, illegal or
unenforceable, the validity or enforceability of the other provisions of the
Agreement shall not be affected and shall continue in full force and effect. The
Parties will, however, use their best endeavors to agree on the replacement of
the void, illegal, or unenforceable provision(s) with legally acceptable clauses
which correspond as closely as possible to the sense and purpose of the
affected provision.
10.13 Confidentiality
All information disclosed by Seller, including, without limitation, all
engineering documents, designs, specifications and financial information, shall
be kept confidential and shall not be disclosed to any third party except as
provided in this Section 10.13. Buyer acknowledges Seller's request to hold
all information regarding this Agreement confidential. Buyer shall disclose
such information to third parties only to the extent required by California law
(including, without limitation, the California Constitution, the California
Public Records Act and the Brown Act). Notwithstanding the foregoing,
either Party may disclose this Agreement to any Landfill Owner, Lessee or
Operator or any of their representatives, NCPA or its representatives, or to
Lender(s) or potential Lender(s) or its/their representatives; provided that prior
to such disclosure, the recipient shall agree, in writing, to keep the material
confidential under terms no less stringent than as set forth in this Section
10.13. Buyer also shall be permitted to disclose this Agreement and related
information to the City Council of Palo Alto for the express purpose of
obtaining approval to execute this Agreement; provided that in connection
with such disclosure Buyer shall only disclose such information to the extent
required by California law (including, without limitation, the California
Constitution, the California Public Records Act and the Brown Act). Each
Party shall be bound by its obligations of confidentiality hereunder for a period
of two (2) years from expiration or any earlier termination of this Agreement.
Notwithstanding anything to the contrary in this Section 10.13, nothing in this
Agreement shall restrict any Party from using or disclosing confidential
information in any manner it chooses, which confidential information (i) is or
becomes generally available to the public other than as a result of a disclosure
directly or indirectly by the disclosing Party or its representative; (ii) was
within the using or disclosing Party's possession prior to it being furnished
45
SANFRAN 90103 (2K)
hereunder, provided that such information is not subject to another
confidentiality agreement with, or other contractual, legal or fiduciary
obligation of confidentiality to, any other party with respect to such
information; (iii) is rightfully obtained by a Party from third parties authorized
to make such disclosure without restriction; or (iv) is legally required to be
disclosed by judicial, administrative or other governmental action as
determined by such Party's attorney acting in good faith (including, but not
limited to, the California Constitution, the California Public Records Act and
the Brown Act), provided that prompt notice of said judicial or other
governmental action shall have been given to the non -disclosing Party and that
the non -disclosing Party shall, at its sole cost and expense, be afforded the
opportunity (consistent with the legal obligations of the disclosing Party) to
exhaust all reasonable legal remedies to maintain the confidential information
in confidence.
10.14 Cooperation
The Parties agree to reasonably cooperate with each other in the
implementation and performance of the Agreement. Such duty to cooperate
shall not require either Party to act in a manner inconsistent with its rights
under the Agreement.
10.15 Counterparts
This Agreement may be executed in two or more counterparts and by different
Parties on separate counterparts, all of which shall be considered one and the
same agreement and each of, which shall be deemed an original.
[signature page follows]
46
SANFRAN 90103 (2K)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed as of the Effective Date.
AMERESCO AVENAL LLC
By Amer o, Inc., its a maul;er
By:
Name: Michael T. Bakas
Title: Vice President A Date: 1" `arvkn t,Ot
THE CITY OF PALO ALTO
APPROVAL AS TO FORM:
By:
Name: Grant Kolling
Title: Senior Assistant City Attorney
Date:
CITY OF PALO ALTO
By:
Name: Lalo Perez
Title: Administrative Services Director
Date:
CITY OF PALO ALTO
By:
Name: Valerie O. Fong
Title: Utilities Director
Date:
CITY OF PALO ALTO
By:
Name: James Keene
Title: City Manager
Date:
47
SANFRAN 90103(2K)
COMMONWEALTH OF MASSACHUSETTS
) SS
COUNTY OF MIDDLESEX
On this 1 day of !Mtn , Zp/ a , before me, the undersigned notary
public, personally appeared i'v► i 6/ix ark T (? ka,L.; , as the V d q weil'e * of
Ameresco, Inc., a Delaware corporation, the sole member of Ameresco Avenal LLC,
a Delaware limited liability company, proved to me through satisfactory evidence of
identification, which was r,sowe 1 ,4A/s-ec dje., to be the person whose name is
signed on the preceding document, and acknowledged to me that he signed the
preceding document voluntarily for its stated purpose as Vice Pits' d e t of
Ameresco, Inc., a Delaware corporation, the sole member of Ameresco Avenal LLC,
a Delaware limited liability company.
My Commission expires 11 11' "2"
pM M1mnN�
N� a hhy
per (P%40 so,
Notary Public
SANFRAN 90103 (2K)
48
APPENDIX A
SITE DRAWINGS
Seller shall provide to Buyer the final Site Drawings prior to the Commercial
Operation Date.
49
SANFRAN 90103 (2K)
APPENDIX B
FORM OF ATTESTATION
Ameresco Avenal LLC
Environmental Attribute Attestation and Bill of Sale
Ameresco Avenal LLC ("Ameresco") hereby sells, transfers and delivers to
("Customer")
the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation of
the indicated energy for delivery to the grid (as such term(s) are defined in the
(identify contract) (the "Contract') dated , 20
between Ameresco and Customer) arising from the generation for delivery to the grid of the energy by the
Facility described below:
Facility name and location: Fuel Type:
Capacity (MW): Operational Date:
(for facility that has added renewable capacity, show operational date and amount of new capacity)
As applicable: CEC Reg. no. Energy Admin. ID no. Q.F. ID no.
Dates MWhrs generated
20
20
20
in the amount of one Environmental Attribute or its equivalent for each megawatt hour generated; and Ameresco
further attests, warrants and represents as follows:
i) to the best of its knowledge, the information provided herein is true and correct;
ii) its sale to Customer is its one and only sale of the Environmental Attributes and associated
Environmental Attribute Reporting Rights referenced herein;
iii) the Facility generated and delivered to the grid the energy in the amount indicated as undifferentiated
energy; and
[check one:I
iv) Ameresco owns the Facility.
iv) to the best of Ameresco's knowledge, each of the Environmental Attributes and Environmental
Attribute Reporting Rights associated with the generation of the indicated energy for delivery to the
grid have been generated and sold by the Facility.
This serves as a bill of sale, transferring from Ameresco to Customer all of Ameresco's right, title and interest in
and to the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation
of the energy for delivery to the grid.
Contact Person: tel: 1-508-661-2200; fax: 1-508-661-2201
WITNESS MY HAND,
AMERESCO AVENAL LLC
By: Ameresco, Inc., its sole member
By
Its
Date:
B-1
50
SANFRAN 90103 (2K)
APPENDIX C
INSURANCE COVERAGES
At its own expense, Seller shall secure and maintain during the Term the
following insurance with the coverage amounts indicated for occurrences
during and arising out of Seller's performance of this Agreement. Such
insurance shall be placed with responsible and reputable insurance companies
in compliance with Requirements of Law applicable to Seller.
1. Workers' Compensation/Employer's Liability. Seller shall
maintain Workers' Compensation Insurance and Employer's
Liability Insurance which comply with Requirements of Law
applicable to Seller.
2. Automobile Liability. Seller shall maintain Automobile Liability
Insurance in compliance with Requirements of Law applicable to
Seller, including coverage for owned, non -owned and hired
automobiles for both bodily injury (including death) and property
damage, including automobile liability contractual endorsement
and uninsured/underinsured motorist protection endorsements.
3. Third Party Liability. Seller shall maintain third party liability
insurance in compliance with Requirements of Law applicable to
Seller on a project -specific basis covering against legal
responsibility to others as a result of bodily injury, property
damage and personal injury arising from the operation and
maintenance of the Plant. Such policy shall be written with a
limit of liability not less than $10,000,000 and a deductible not to
exceed $10,000. Such liability may be in any combination of
primary and excess/umbrella. Coverage shall include, but not be
limited to, premises/operations, explosion, collapse, underground
hazards, broad form property damage and personal injury
liability. Such coverage shall not contain exclusions for punitive
or exemplary damages, unless prohibited by law.
51
SANFRAN 90103 (2K)
APPENDIX D
SCHEDULING PROTOCOLS
1. Prior to three (3) business days before the end of a month, Seller is to
provide to NCPA and Buyer a monthly forecast of loads and/or
generation for the following month. At a minimum, monthly forecasts
will be hourly kilowatt (kW) values by weekday, Saturday, and
Sunday/Holiday.
2. No later than 1400 hrs. each Thursday, Seller shall provide a forecast of
loads and/or generation for the following week to the extent it is
different from the monthly forecast in Paragraph 1. Weekly forecasts
will be hourly kW values for each hour of the week.
3. Daily modifications to forecasts. Unless otherwise mutually agreed,
Seller may make changes to the weekly forecast by providing such
changes to NCPA prior to 0800 hrs. two (2) days before the active
scheduling day.
a. Example: For power that is scheduled for generation or delivery on
Thursday, March 25, 2010, changes must be submitted to NCPA by
no later than 0800 hrs. on Tuesday, March 23, 2010.
4. Hourly modifications to active schedules. Unless otherwise mutually
agreed, Seller may make changes to active schedules by providing such
changes to NCPA with a minimum of four (4) hours' notice before the
active hour to be changed. Changes to active schedules are limited to two
(2) changes per day, excluding forced outages, unless otherwise agreed to
between the parties. One request for a schedule change, of one hour or
multiple hours duration, constitutes one schedule change.
a. Example: For power that is scheduled for generation or delivery in
hour ending 1500 hrs. (for the period from 1401 hrs. to 1500 hrs.),
changes must be submitted to NCPA no later than 1100 hrs.
5. NCPA is to be notified of all planned or forced generation outages.
6. At Seller's request, NCPA will modify generation and load schedules for
unforeseen circumstances in accordance with the above scheduling
timeline constraints and NCPA Schedule Coordination Agreement.
52
SANFRAN 90103 (2K)
7. All notices and schedules are to be submitted to NCPA by phone, fax or
email to the following persons: Chief Dispatcher/Scheduler.
8. In the absence of forecasts and schedules as noted above, NCPA will
utilize the most current information provided by Seller in the development
and submission of schedules.
53
SANFRAN 90103 (2K)
EXAMPLE FORM OF DAY -AHEAD SCHEDULE
For: June ,
Hour Ended:
Expected Capability
1
2
3
4
5
6
7
R
9
10
11
12
13
14
15
16
17
18
19
70
71
22
23
24
Expected Daily Temperatures, F
Low
High
Contact
Information:
Scheduling
Coordinator:
Facility:
CITY:
SANFRAN 90103 (2K)
APPENDIX E
PERFORMANCE TEST
Seller shall coordinate and schedule, with Buyer, a performance test after
completion of all equipment startup and commissioning activities. This
performance test may be performed before completing punch list items. Buyer
shall be permitted to witness the performance test, including access to and copies
of control room logs, control system display screens, and instrumentation data for
a reasonable period of time before, during and after the performance test, and may
also concurrently conduct a site inspection of the Landfill and Plant and associated
facilities, systems and equipment. Seller shall supply a written copy of the
performance test results to Buyer within five (5) business days following the
conclusion of the test.
The performance test shall continue for one hundred twenty (120) consecutive
hours (the "Test Period") to demonstrate the following:
1) Net Generator Output: The power output for each generator shall be recorded
for the Test Period to verify the net initial capacities. This performance test shall
be performed for all engine/generators simultaneously and will be considered
successful if the average net output for the Test Period is equal to eighty percent
(80%) of the net Initial Capacity (in this instance, Initial Capacity shall not include
any capacity of the Plant from equipment for recovering waste heat from the
prime mover engines of the Plant to utilize that waste heat to produce additional
Energy (to the extent such equipment for recovering waste heat is or is not
installed by Seller)) designated in this Agreement. All power measurements shall
be based on a power factor of 0.90.
2) Compliance: The performance test shall also demonstrate the ability of the
Plant to comply with all material safety, system reliability, environmental, and
other requirements of its permits, this Agreement, any interconnection agreements,
and the LFG Agreement.
SANFRAN 90103 (2K)
55
APPENDIX F
SELLER'S SAMPLE QUARTERLY FINANCIAL STATEMENT
Balance Sheets
December 31, 2006 and 2007
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Accounts receivable
Prepaid and other current assets
Total current assets
Other assets:
Project assets, net
Due from member
Debit issuance costs, net
Total other assets
LIABILITY AND MEMBER'S EQUITY
Current liabilities:
Current portion of long-term debt
Accounts payable
Accrued expenses
Total current liabilities
Long-term liabilities:
Long-term debt, less current portion
Deferred tax liabilities
Total long-term liabilities
Member's equity
SANFRAN 90103 (2K)
56
Statements of Operations
Years Ended December 31, 2006 and 2007
Revenues:
Electricity Sales
Costs of revenue:
Operation and maintenance
Depreciation of project assets
Gross profit (loss)
Operating expenses:
Selling, general and administrative
Operating income (loss)
Interest and other financing costs
Income (loss) before tax benefit (provision)
Income tax benefit (provision)
Net income (loss)
SANFRAN 90103 (2K)
Statements of Cash Flows
Years Ended December 31, 2006 and 2007
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred issuance costs
Deferred taxes
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable
Prepaid expenses
Accounts payable
Due to (from) member
Net cash provided by operating activities
Cash flows from investing activities:
Accounts payable relating to construction activity
Accrued expenses relating to construction activity
Purchase of project assets
Net cash used in investing activities
Cash flows from financing activities:
Increase in restricted cash
Capital contributions
Distributions to member
Proceeds from debt issuance
Debt issuance costs
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest
Income taxes
Supplemental disclosure of noncash transactions:
Accrued purchases of project assets
SANFRAN 90103 (2K)
APPENDIX G
COLUMN 1
COLUMN 2
Seller's Interconnection Costs
Price in dollars per MWh of Energy
delivered or tendered to Buyer at the Point
of Interconnection if Required Emission
Controls are not installed
Greater than $1,250,000.00
See the last sentence of
item 2 below
$1,250,000.00
$108.56 per MWh
$1,000,000.00
$106.55 per MWh
$750,000.00
$104.53 per MWh
$500,000.00
$102.50 per MWh
$300,000.00 or less
$100.91 per MWh
Please note items 1 through 5 below as they apply to the above chart.
1. Buyer shall pay Seller the price per MWh of Energy delivered or tendered to Buyer at the
Point of Interconnection as determined from the above chart and this Appendix G
(determined based upon Seller's Interconnection Costs as set forth in the chart and as further
provided in item 2 below); provided, however, if any Required Emission Controls are
installed, prior to the later of the (i) Commercial Operation Date, and (ii) date that is sixty
(60) days after the completion of stack tests that Seller is required to perform (in connection
with the Plant) by Requirements of Law and/or any permit, then the price Buyer shall pay
Seller per MWh of Energy delivered or tendered to Buyer at the Point of Interconnection
shall be a price determined from the above chart in this Appendix G (determined based upon
Seller's Interconnection Costs as set forth in the chart and as further provided in item 2
below) plus (a) $0.60 per MWh of Energy delivered or tendered to Buyer at the Point of
Interconnection (the "Fixed Increase For Emission Controls"), plus (b) $0.000008 per MWh
of Energy delivered or tendered to Buyer at the Point of Interconnection for each $1.00 of
Seller's costs and/or expenses associated with the design, engineering, equipment,
installation and commissioning of any and all Required Emission Controls (the "Variable
Increase For Emission Controls" and collectively with the Fixed Increase For Emission
Controls, the "Increase For Emission Controls"). The total price rate (including any Increase
For Emission Controls) for the first year after the Commercial Operation Date shall not
exceed $123.35 per MWh of Energy delivered or tendered to Buyer at the Point of
Interconnection.
2. The price that Buyer pays Seller (in dollars per MWh of Energy delivered or tendered to
Buyer at the Point of Interconnection) determined from column 2 of the chart in this
Appendix G (as such price shall be increased annually as set forth below in item 3) shall be
increased on a prorated straight line basis if Seller's Interconnection Costs are more than
$300,000.00 but are less than $1,250,000.00 as follows: (i) if Seller's Interconnection Costs
are more than $300,000.00 but are less than or equal to $500,000.00, then the prices set forth
in column 2 shall be increased on a prorated straight line basis from $100.91 per MWh
SANFRAN 90103 (2K)
through $102.50 per MWh; (ii) if Seller's Interconnection Costs are more than $500,000.00
but are less than or equal to $750,000.00, then the prices set forth in column 2 shall be
increased on a prorated straight line basis from $102.50 per MWh through $104.53 per
MWh; (iii) if Seller's Interconnection Costs are more than $750,000.00 but are less than or
equal to $1,000,000.00, then the prices set forth in column 2 shall be increased on a prorated
straight line basis from $104.53 per MWh through $106.55 per MWh; (iv) if Seller's
Interconnection Costs are more than $1,000,000.00 but are less than or equal to
$1,250,000.00, then the prices set forth in column 2 shall be increased on a prorated straight
line basis from $106.55 per MWh through $108.56 per MWh. If Seller's Interconnection
Costs are more than $1,250,000.00, then the price shall be $108.56 per MWh; provided,
however, Seller may terminate this Agreement in accordance with Section 4.1(h) of this
Agreement.
3. The price that Buyer pays Seller in dollars per MWh of Energy delivered or tendered to
Buyer at the Point of Interconnection based upon the chart in this Appendix G and item 2
above (as such price may be increased for any Increase For Emission Controls pursuant to
item 1 above) shall be escalated at a rate of 1.5% (of the then -current price) annually on the
anniversary of (i) the first day of the first full month following the Commercial Operation
Date or (ii) if the Commercial Operation Date falls on the first day of the month, the
Commercial Operation Date.
4. Buyer shall pay Seller $100.91 per MWh of Test Energy delivered or tendered to Buyer at
the Point of Interconnection; provided, however, that the amount due and/or paid to Seller
for Test Energy shall be adjusted (it can only be adjusted up) after the Seller provides Buyer
with the Confirmation Notice as further set forth in item 5 below.
5. To, among other things, confirm the price (as set forth in Section 2.3 of the Agreement and
this Appendix G) to be paid from Buyer to Seller in dollars per MWh of Energy delivered or
tendered to Buyer at the Point of Interconnection, Seller will provide Buyer with a written
notice setting forth twenty annual price rates (in dollars per MWh of Energy delivered or
tendered to Buyer at the Point of Interconnection) for the portion of the Term on and after
the Commercial Operation Date starting at the applicable price from the chart in this
Appendix G during the first year (as such price is adjusted pursuant to item numbers 1 and 2
above in this Appendix G) as such price is annually escalated pursuant to item number 3
above in this Appendix G (such notice being referred to as the "Confirmation Notice"). The
Confirmation Notice shall be (a) provided to Buyer on or prior to the later of the (i) date ten
(10) days after the Commercial Operation Date, and (ii) date that is seventy (70) days after
the completion of stack tests that Seller is required to perform (in connection with the Plant)
by Requirements of Law and/or any permit; and (b) substantially in the form attached hereto
in Appendix G-1 (with items in brackets modified and blank spaces filled -in as applicable).
If Seller does not provide the Confirmation Notice to Buyer until after the Commercial
Operation Date, then the price Buyer shall pay Seller (the price in dollars per MWh of
Energy delivered or tendered to Buyer at the Point of Interconnection) after the Commercial
Operation Date shall be $100.91 per MWh (which shall be paid in accordance with the terms
of the Agreement) until the date of the Confirmation Notice to Buyer (at which point such
SANFRAN 90103 (2K)
price may increase); provided, however, that after the date of the Confirmation Notice, Seller
shall, within sixty (60) days following such date, send a statement to Buyer setting forth any
additional amount owed from Buyer to Seller under this Agreement for the time period
(during the Term) prior to the date of the Confirmation Notice if the price (in dollars per
MWh of Energy delivered or tendered to Buyer at the Point of Interconnection) as set forth
in the Confirmation Notice is more than $100.91 per MWh during the first year following (i)
the first day of the first full month following the Commercial Operation Date or (ii) if the
Commercial Operation Date falls on the first day of the month, the Commercial Operation
Date. The amount due from Buyer to Seller pursuant to such statement shall be the
difference of (a) the product of the total price (in dollars per MWh) for such first year (as set
forth in the Confirmation Notice) times the total MWhs of Energy (including Test Energy)
delivered or tendered to Buyer at the Point of Interconnection prior to the date of the
Confirmation Notice, minus (b) the product of $100.91 times the total MWhs of Energy
(including Test Energy) delivered or tendered to Buyer at the Point of Interconnection prior
to the date of the Confirmation Notice (nothing in this sentence shall impact Buyer's
obligation to also pay Seller $100.91 per MWh of Energy delivered or tendered to Buyer at
the Point of Interconnection prior to the date of the Confirmation Notice (the payment from
Buyer to Seller of the amount set forth in the statement is additional)). Buyer shall pay the
amount set forth in such statement to Seller within thirty (30) days of Buyer's receipt of the
statement. On and after the date of Confirmation Notice, Buyer shall pay Seller the
applicable annual price rate, as set forth in the Confirmation Notice, per MWh of Energy
delivered or tendered to Buyer at the Point of Interconnection. Seller's failure to send Buyer
a Confirmation Notice shall neither be an Event of Default by Seller nor shall it be cause for
Buyer not to pay for Energy delivered or tendered to Buyer at the Point of Interconnection.
Notwithstanding anything to the contrary, Seller may terminate this Agreement in
accordance with Section 4.1(h) of this Agreement.
SANFRAN 90103 (2K)
APPENDIX G-1
[Letterhead]
[DATE]
[VIA
City of Palo Alto
250 Hamilton Avenue, Seventh Floor
Palo Alto, CA 94301
Attention: City Clerk
Re: Power Purchase Agreement — Confirmation Notice
Dear City Clerk:
Reference is made to the Power Purchase Agreement (the "Power Purchase Agreement"), dated as
of [ ], 2010, between the City of Palo Alto ("Buyer") and Ameresco Avenal LLC
("Seller"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings
given to such terms in the Power Purchase Agreement.
In accordance with the terms of Section 2.3 and Appendix G of the Power Purchase Agreement,
Seller hereby gives notice (the Confirmation Notice as defined in Appendix G of the Power
Purchase Agreement) to Buyer that Seller's Interconnection Costs are [ ] and Seller
[has/has not] installed Required Emission Controls [at a cost (including, without limitation, costs
and/or expenses associated with the design, engineering, equipment, installation and commissioning
of any and all Required Emission Controls) of [$ ]]. [Enclosed with this letter are
invoices and/or portions of agreements showing Seller's Interconnection Costs.] Therefore, in
accordance with the terms of Section 2.3 and Appendix G of the Power Purchase Agreement, the
price Buyer shall pay Seller in dollars per MWh of Energy delivered or tendered to Buyer at the
Point of Interconnection from the Commercial Operation Date until [the first anniversary of (i) the
first day of the first full month following the Commercial Operation or (ii) if the Commercial
Operation Date falls on the first day of the month, the Commercial Operation Date (Year 1 as set
forth in the chart below)] and for each year thereafter [(the final year (20) being a partial year if the
Commercial Operation Date does not fall on the first day of the month)] through the remainder of
the Term shall be as follows in the chart below:
Year
Price in dollars per MWh
SANFRAN 90103 12K)
of Energy delivered or
tendered to Buyer at the
Point of Interconnection
l
[this column is to be
filled -in]
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Sincerely,
Ameresco Avenal LLC
[By: Ameresco, Inc., its sole member]
By:
Name:
Title:
Enclosures
cc: City of Palo Alto, 250 Hamilton Avenue, Eighth Floor, Palo Alto, CA 94301, Attention:
Senior Assistant City Attorney / Utilities (with enclosures and sent via )
City of Palo Alto, 250 Hamilton Avenue, Third Floor, Palo Alto, CA 94301, Attention:
Director of Utilities (with enclosures and sent via )
SANFRAN 90103 (2K)
Northern California Power Agency, 651 Commerce Drive, Roseville, CA 95678, Attention:
Power Contracts Administrator (with enclosures and sent via )
SANFR.AN 90103 (2K)
Not Yet Approved
ATTACHMENT G
Resolution
Resolution of the Council of the City of Palo Alto Approving
the Long -Term Power Purchase Agreement (Landfill Gas
Power) and Amendment No. 1 to Power Purchase Agreement
with Ameresco Crazy Horse LLC for the Purchase of
Electricity Generated by Landfill Gas Electric
Generating Facilities
WHEREAS, the City of Palo Alto (the "City"), a municipal utility and a
chartered city is a member of the Northern California Power Agency ("NCPA");
WHEREAS, on March 5, 2007, the City approved eight electric portfolio
planning and management guidelines to guide the development and management of the
City's long-term electricity acquisition plan; one of the guidelines is to pursue and target
levels of new renewable resource energy purchases equal to thirty percent (30%) and
thirty-three percent (33%) of the City's expected energy load by 2012 and 2015,
respectively;
WHEREAS, the City is interested in purchasing power generated by renewable
resources for the benefit of its electric customers;
WHEREAS, by purchasing these sources of renewable energy, the City will help
reduce the production of greenhouse gases and assist in reducing volatile organic
compound emissions;
WHEREAS, Ameresco Crazy Horse LLC ("Ameresco") proposed its project in
response to the City's Request for Proposals 134307 ("RFP") in November 2009, and it
was deemed competitive with other RFP respondents;
WHEREAS, the execution of this power purchase agreement with Ameresco (the
"Crazy Horse PPA") is anticipated to enable the City to meet the three -percent portion
of its goal of sourcing 33% of its energy needs from renewable electric energy;
WHEREAS, the City is allocated a 100 percent share of the power from the
initial project, amounting to 6.2 megawatts of plant net output;
WHEREAS, the Crazy Hose PPA allows Ameresco to sell the City additional
output, if developed, from engine heat recovery, at the contract price;
WHEREAS, Ameresco is agreeable to granting the City, and the City is
agreeable to accepting, a price discount of $5 per megawatt -hour under the Crazy Horse
PPA, provided that the City subsequently enters into a power purchase agreement with
Ameresco Avenal LLC, an affiliate of Ameresco Crazy Horse LLC, on mutually
acceptable terms and conditions; and
100302 j 0073327 1
Not Yet Approved
WHEREAS, the Salinas Valley Solid Waste Authority will be the lead agency
for the purposes of compliance with the requirements of the California Environmental
Quality Act;
NOW, THEREFORE, the Council of the City of Palo Alto does hereby
RESOLVE, as follows:
SECTION 1. The Council hereby approves the City's execution of both the
long-term Power Purchase Agreement (Landfill Gas Power) and the Amendment No. 1
to Power Purchase Agreement, made between Ameresco Crazy Horse LLC, as Seller,
and the City of Palo Alto, as Buyer. The delivery term of the Power Purchase
Agreement is twenty (20) years, commencing upon the Commercial Operation Date of
the planned electric generation facility. Quantity is a 100 percent share of the plant's net
output. Spending authority under the Power Purchase Agreement and the Amendment
No. 1 to Power Purchase Agreement is not to exceed one hundred ten million one
hundred thousand dollars ($110,100,000). The City Manager is hereby authorized to
sign the Power Purchase Agreement and the Amendment No. 1 to Power Purchase
Agreement with Ameresco Crazy Horse LLC, and the City Manager or his designee is
authorized to sign any confirmations executed in connection with the Power Purchase
Agreement and the Amendment No. 1 to Power Purchase Agreement on behalf of the
City.
SECTION 2. With respect to the Council's approval and award of the Power
Purchase Agreement and the Amendment No. 1 to Power Purchase Agreement referred
to in Section 1 above, the Council hereby waives the creditworthiness requirements of
Palo Alto Municipal Code section 2.30.340(c), as it may apply to Ameresco Crazy
Horse LLC.
100302 j 0073327 2
Not Yet Approved
SECTION 3. The Council finds that the adoption of this resolution does not
constitute a project under the California Environmental Quality Act and no
environmental assessment is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENTIONS:
ABSENT:
ATTEST: APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:
City Manager
Senior Asst. City Attorney
Director of Utilities
Director of Administrative
Services
100302 j 0073327 3
ATTACHMENT H
POWER PURCHASE AGREEMENT
This Power Purchase Agreement is entered into this day of
2010 (the "Effective Date") by and between the City of Palo Alto, a California
chartered municipal corporation and Ameresco Crazy Horse LLC, a Delaware
limited liability company.
RECITALS
1. Seller intends to develop, finance, build, own and operate a Landfill Gas
electric generating facility to be located at the Crazy Horse Canyon Landfill
(the "Landfill") located at 350 Crazy Horse Canyon Road, Salinas, California,
on a site leased from Salinas Valley Solid Waste Authority, which owns the
Landfill.
2. Buyer is engaged in the procurement and supply of electricity to residential
and commercial customers in the City of Palo Alto.
3. Buyer wishes to purchase the Output of the Plant and intends to resell related
Energy to its residential and commercial customers.
4. Buyer is willing to purchase, and Seller is willing to sell, the Output of the
Plant, on the terms and conditions and at the prices set forth in this Agreement.
5. Seller may determine to incorporate heat recovery equipment to produce
additional electrical output to be included and sold as Energy in accordance
with the terms of this Agreement.
6. Seller may determine to expand the Plant in the future depending on the
availability of Landfill Gas and other factors in accordance with the terms of
this Agreement.
7 Buyer will have a right of first refusal to purchase Expansion Plant Output,
such right to be exercisable as provided in this Agreement.
NOW THEREFORE, in consideration of these premises and the mutual
promises set forth below, the Parties agree, as follows.
SANFRAN 90103 (2K)
AGREEMENT
ARTICLE I - DEFINITIONS
Initially capitalized terms, whenever used in this Agreement, have the meanings set
forth below unless otherwise herein defined. The term "including," when used in
this Agreement, shall mean to include "without limitation."
1.1 Agreement: This Power Purchase Agreement, including all appendices, as it
may be amended from time to time.
1.2 Availability Threshold: The mechanical availability of the Plant calculated
as of the end of each calendar month during the Term as a percentage in
accordance with the following:
A = 100 x Available Hours
Base Hours
Where:
A = Availability Threshold
Available Hours = the number of hours during the prior twenty-four (24)
months in which the Plant is capable of delivering Energy to the
Point of Interconnection; provided that, to the extent that the
Plant is not capable of delivering all of the net Initial Capacity (in
this instance, Initial Capacity shall not include any capacity of
the Plant from equipment for recovering waste heat from the
prime mover engines of the Plant to utilize that waste heat to
produce additional Energy (to the extent such equipment for
recovering waste heat is or is not installed by Seller)) in any hour,
the Available Hours with respect to such hour shall be reduced
pro rata to reflect the fraction of the net Initial Capacity (in this
instance, Initial Capacity shall not include any capacity of the
Plant from equipment for recovering waste heat from the prime
mover engines of the Plant to utilize that waste heat to produce
additional Energy (to the extent such equipment for recovering
waste heat is or is not installed by Seller)) the Plant is capable of
delivering in such hour.
Base Hours = the number of hours during the same twenty-four (24)
months period referred to in Available Hours; provided that, to
2
SANFRAN 90103 (2K)
the extent that the Plant is partially or wholly incapable or
otherwise unable to deliver Energy in any hour as a result of a
Force Majeure Event or because of fuel unavailability in any hour
due to no fault or negligence of Seller, that hour (or if the Plant's
capacity is only partially constrained, the pro rata portion of that
hour) shall be excluded from the Base Hours.
There shall be no Availability Threshold during the first twelve (12) month
period following the Commercial Operation Date. Starting with the thirteenth
(13th) month after the Commercial Operation Date and continuing through the
twenty-fourth (24th) month, the above formula will be used to determine the
Availability Threshold with the exception that both Available Hours and Base
Hours will be calculated, starting with the first hour of operation on the
Commercial Operation Date and including all relevant hours thereafter to the
end of the month relevant. Starting with the twenty-fifth (25th) month, the
Availability Threshold shall be calculated on a rolling basis using the previous
twenty-four (24) month period.
1.3 Buyer: The City of Palo Alto, a California chartered municipal corporation,
and any successor or permitted assignee.
1.4 Commercial Operation: The condition of the Plant (in this instance, Plant
shall not include equipment for recovering waste heat from the prime mover
engines of the Plant for purposes of utilizing such waste heat to produce
additional Energy to the extent such equipment is not then installed by Seller)
whereupon it (a) is certified by Seller to be complete in accordance with
manufacturers' recommendations except for punch list items, and (b) has
passed the performance test set forth in Appendix E while synchronized with
the LDC System or ISO transmission grid.
1.5 Commercial Operation Date: The date upon which Commercial Operation
first occurs.
1.6 Contractual Obligations: As to Seller, any material agreement, instrument or
undertaking to which Seller is a party or by which it or any of its property is
bound.
1.7 Effective Date: As defined in the first paragraph of this Agreement.
3
SANFRAN 90103 (2K)
1.8 Energy: The electricity generated by the Plant and delivered to Buyer by the
Seller, pursuant to this Agreement, respectively, at the Point of
Interconnection, as expressed in units of kilowatt-hours (kWh) or megawatt -
hours (MWh), including Test Energy.
1.9 Environmental Attributes: Any and all credits, benefits, emissions
reductions, offsets, and allowances, howsoever entitled, attributable to the
generation from the Plant or Expansion Plant(s), as the case may be, and its
displacement of conventional energy generation. Environmental Attributes
include but are not limited to: (1) any avoided emissions of pollutants to the
air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon
monoxide (CO) and other pollutants; (2) any avoided emissions of carbon
dioxide (CO2), methane (CH4) and other greenhouse gases (GHGs) that have
been determined by the United Nations Intergovernmental Panel on Climate
Change to contribute to the actual or potential threat of altering the Earth's
climate by trapping heat in the atmosphere; and (3) the reporting rights to
these avoided emissions such as Green Tag Reporting Rights. Green Tag
Reporting Rights are the right of a Green Tag purchaser to report the
ownership of accumulated Green Tags in compliance with federal or state law,
if applicable, and to a federal or state agency or any other party at the Green
Tag purchaser's discretion, and include without limitation those Green Tag
Reporting Rights accruing under Section 1605(b) of The Energy Policy Act of
1992 and any present or future federal, state, or local law, regulation or bill,
and international or foreign emissions trading program. Green Tags are
accumulated on kWh basis and one Green Tag represents the Environmental
Attributes associated with one (1) MWh of energy. Environmental Attributes
do not include (i) any energy, capacity, reliability or other power attributes
from the Plant or Expansion Plant(s), (ii) production tax credits associated
with the construction or operation of the Plant, Expansion Plant(s), Landfill, or
any other associated contract or right, and other financial incentives in the
form of credits, reductions, or allowances associated with the Plant, Expansion
Plant(s), Landfill, or any other associated contract or right, that are applicable
to a state or federal income taxation obligation, (iii) fuel -related subsidies or
"tipping fees" that may be paid to Seller to accept certain fuels, or local
subsidies received by the Seller or the owner of the Landfill for the destruction
of particular pre-existing pollutants or the promotion of local environmental
benefits, or (iv) emission reduction credits encumbered or used by the Plant or
Expansion Plant(s) for compliance with local, state, or federal operating
and/or air quality permits.
SANFRAN 90103 (2K)
4
1.10 Environmental Attribute Reporting Rights: All rights to report ownership
of the Environmental Attributes to any person or entity, under Section 1605(b)
of the Energy Policy Act of 1992 or otherwise.
1.11 Environmental Law: Any federal, state and local laws, including statutes,
regulations, rulings, orders, administrative interpretations and other
governmental restrictions and requirements relating to the discharge of air
pollutants, water pollutants or process waste water or otherwise relating to the
environment or hazardous substances, as amended from time to time.
1.12 Expansion Plant: Any expansion of the Plant from its Initial Capacity, or any
other electricity generating facility owned or controlled by Seller or its
affiliate(s) located at the Landfill and fueled by Landfill Gas. Each such
expansion of the Plant or additional facility shall be deemed to be an
"Expansion Plant."
1.13 Expansion Plant Output: All capacity, energy, associated Environmental
Attributes, ancillary services, contributions towards resource adequacy or
reserve requirements (if any) and any other reliability or power attributes
produced by Seller at any Expansion Plant.
1.14 FERC: Federal Energy Regulatory Commission and its successor
organization, if any.
1.15 Force Majeure Event: Any act or event that delays or prevents a Party from
timely performing obligations under this Agreement or from complying with
conditions required under this Agreement to the extent that such act or event is
reasonably unforeseeable and beyond the reasonable control of and without the
fault or negligence of the Party relying thereon as justification for such delay,
nonperformance, or noncompliance. Force Majeure Events typically include:
(i) acts of God or the elements, extreme or severe weather conditions,
explosion, fire, epidemic, landslide, mudslide, sabotage, lightning, earthquake,
flood or similar cataclysmic event, acts of public enemy, war, blockade, civil
insurrection, riot, civil disturbance or strike or other labor difficulty caused or
suffered by a Party; (ii) any restraint or restriction imposed by law or by rule,
regulation or other acts or omissions of governmental authorities, whether
federal, state or local which by exercise of due diligence and in compliance
with applicable law a Party could not reasonably have been expected to avoid
5
SANFRAN 90103 (2K)
and to the extent which, by exercise of due diligence and in compliance with
applicable law, has been unable to overcome (so long as the affected Party has
not applied for or assisted such act by a governmental authority); and (iii)
electric transmission interruptions or curtailments (not including any such
event that results from a failure by Buyer to obtain firm transmission or similar
rights, or otherwise to make congestion -related payments); provided that the
term "Force Majeure Event" does not include (a) economic conditions that
render a Party's performance of this Agreement at the Price unprofitable or
otherwise uneconomic (including Buyer's ability to buy Energy or
Environmental Attributes at a lower price, or Seller's ability to sell Energy or
Environmental Attributes at a higher price, than the Price), (b) a governmental
act by Buyer that delays or prevents Buyer from timely performing its
obligations under this Agreement, (c) a Plant Outage, including as a result of a
failure or shortage of landfill gas, except, in any case, if caused by an event or
circumstance that meets the requirements set forth in this Section 1.15 (other
than as described in (iii) above), (d) failure or delay in grant of Permits, or (e)
failures or delays by the LDC or the ISO in entering into all agreements with
Seller contemplated by this Agreement.
1.16 Governmental Authority: Any federal, state or local government, or political
subdivision thereof, including, without limitation, any municipality, township
or county, or any entity or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any corporation or other entity owned or
controlled by any of the foregoing.
1.17 Initial Capacity: The installed gross capacity of the Plant on the Commercial
Operation Date, such capacity to be not less than 2.0 MW and not more than
6.6 MW (gross nameplate), and not less than 1.6 MW and not more than 6.2
MW (net at the Point of Interconnection) and as further specified (and possibly
increased from the installed gross capacity (which may increase the net at the
Point of Interconnection) of the Plant on the Commercial Operation Date)
pursuant to Section 4.3(c).
1.18 Interconnection: Construction, installation, operation and maintenance of all
Interconnection Facilities.
1.19 Interconnection Agreement: The agreement between Seller and LDC
pursuant to which Seller and LDC set forth the terms and conditions for
6
SANFRAN 90103 (2K)
Interconnection of the Plant to the LDC System, as amended from time to
time.
1.20 Interconnection Facilities: All the facilities installed for the purpose of
interconnecting the Plant to the LDC System, including, but not limited to,
transformers and associated equipment, relay and switching equipment and
safety equipment.
1.21 ISO: The California Independent System Operator Corporation, or its
functional successor.
1.22 kWh: kilowatt-hour.
1.23 Landfill Gas: The gas (and its constituent elements) generated from
decomposition of materials deposited in the Landfill.
1.24 LD Amount: The Monthly LD Amount multiplied by 12 (twelve).
1.25 LDC: Pacific Gas and Electric Company, a California corporation.
1.26 LDC System: The electric power generation, transmission, substation and
distribution facilities owned, operated and/or maintained by LDC, which shall
include, without limitation, after construction and installation, the circuit
reinforcements, extensions, and associated terminal facility reinforcements or
additions required to interconnect LDC's facilities with the Plant.
1.27 Lender(s): Any Person(s) providing money or extending credit (including any
capital lease) to Seller for (i) the construction of the Plant, (ii) the term or
permanent financing of the Plant, or (iii) working capital or other ordinary
business requirements for the Plant. "Lender(s)" shall not include trade
creditors of Seller.
1.28 LFG Agreement: As defined in Section 4.2(d).
1.29 Monthly LD Amount: The product of (i) $7000 per MW, (ii) Buyer's
Percentage Share and (iii) the Initial Capacity (in this instance, Initial Capacity
shall not include any capacity of the Plant from equipment for recovering
waste heat from the prime mover engines of the Plant to utilize that waste heat
to produce additional Energy (to the extent such equipment for recovering
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SANFRAM 90103 (2K)
waste heat is or is not installed by Seller)) specified under Section 4.3(c) (net
at the Point of Interconnection).
1.30 MW: Megawatt.
1.31 MWh: Megawatt hour.
1.32 NCPA: The Northern California Power Agency, a joint action agency
organized and existing under the laws of the State of California.
1.33 Outage: A physical state in which all or a portion of the Plant is unavailable
to provide Energy to the Point of Interconnection, or in which any portion of
the LDC System is unavailable to receive Energy, to the extent that the
unavailability affects the LDC System's ability to accept delivery of Energy at
the Point of Interconnection, whether planned or unplanned.
1.34 Output: All actual capacity of the Initial Capacity and associated Energy, as
well as the following, as associated with the Initial Capacity and/or associated
Energy: Environmental Attributes; ancillary services; contributions towards
resource adequacy or reserve requirements (if any) and any other reliability or
power attributes.
1.35 Parties: Buyer and Seller, and their respective successors and permitted
assignees.
1.36 Party: Buyer or Seller, and each such Party's respective successors and
permitted assignees.
1.37 Percentage Share: One Hundred percent (100%).
1.38 Permits: All material federal, state or local authorizations, certificates,
permits, licenses and approvals required by any Governmental Authority for
the construction, ownership, operation and maintenance of the Plant (in this
instance, Plant shall not include the equipment for recovering waste heat from
the prime mover engines of the Plant for purposes of utilizing such waste heat
to produce additional Energy to the extent such equipment is or is not installed
by Seller).
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SANFRAN 90103 (2K)
1.39 Person: An individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity.
1.40 Plant: The generation facility described in Recital 1 to be constructed and
owned by Seller and located on the Site for the generation and delivery of
electricity, including the step-up transformer, revenue quality meter and all
other facilities up to the Point of Interconnection, but not including any
Expansion Plant. At any time during the Term, Seller may, in Seller's sole
discretion, construct and/or install and own equipment for recovering waste
heat from the prime mover engines of the Plant for purposes of utilizing such
waste heat to produce additional Output (Seller makes no written or oral
representation or warranty, either express or implied, regarding the current or
future existence of any such additional Output), provided that such equipment
for recovering waste heat shall be become part of the Plant (including, after
installation of such equipment, part of the definition of Plant) and shall not be
considered an Expansion Plant.
1.41 Point of Interconnection: The point on the electrical system where the Plant
is physically interconnected with the LDC System, which is anticipated to be
at the high side of Seller's step-up transformers at the Plant.
1.42 Price: As defined in Section 2.3.
1.43 Production Incentives: Any and all tax credits, deductions, allowances and
exemptions applicable to federal, state and local taxes and any other payment,
credit, deduction, benefit, grant or monetary incentive provided by any
Governmental Authority or any Person, and all air emission credits, reductions
or offsets, whether now in effect or arising in the future, in each case arising
from the activities contemplated by this Agreement, including the extraction,
sale, purchase, processing and/or distribution of Landfill Gas and/or the
generation and sale of electricity using Landfill Gas as a fuel, including
"Renewable Energy Production Incentive Payments" from the U.S.
Department of Energy, emission credits, reductions, offsets or any other
similar benefits arising from the generation, collection, production, purchase,
use, reduction, conversion, destruction or resale of Landfill Gas.
Notwithstanding the foregoing, Production Incentives shall not include
anything that qualifies as Output, but Production Incentives shall include
Section 29 Credits and Section 45 Credits.
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SANFRAN 90103 (2K)
1.44 Prudent Utility Practice: Those practices, methods and equipment, as
changed from time to time, that:
(i)
when engaged in are commonly used in the United States of America in
prudent electrical engineering and operations to operate landfill gas
generation electric equipment and related electrical equipment lawfully
and with safety, reliability, efficiency and expedition; or
(ii) in the exercise of reasonable judgment considering the facts known,
when engaged in could have been expected to achieve the desired result
consistent with applicable law, safety, reliability, efficiency and
expedition.
Prudent Utility Practices are not limited to an optimum practice, method,
selection of equipment or act, but rather are a range of acceptable practices,
methods, selections of equipment or acts.
1.45 Reimbursement Amount: As defined in Section 4.1(h).
1.46 Requirements of Law: Collectively, any federal or state law, treaty,
franchise, rule, regulation, order, writ, judgment, injunction, decree, award or
determination of any arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon Seller or Buyer or any of their
property or to which Seller or Buyer or any of their respective properties are
subject.
1.47 Salinas Valley Solid Waste Authority: Salinas Valley Solid Waste Authority,
a joint powers authority under the laws of the State of California with principal
offices at 128 Sun Street, #101, Salinas, California 93901.
1.48 Section 29 Credits: Those tax credits available under Section 29 of Subtitle
A, Chap. 1A, Part IV of the Internal Revenue Code of 1986, as amended, as of
the Effective Date.
1.49 Section 45 Credits: Those tax credits available under Section 45 of Subtitle
A, Chap. 1A, Part IV of the Internal Revenue Code of 1986, as amended, or
any other similar federal, state or local tax credits, deductions, payments or
benefits arising from the purchase of Landfill Gas or the generation and sale of
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SANFRAN 90103 (2K)
electricity using Landfill Gas as a fuel, not including any Environmental
Attributes.
1.50 Seller: Ameresco Crazy Horse LLC, a Delaware limited liability company,
and any successor or permitted assignee.
1.51 Seller's Interconnection Costs: As defined in Section 4.1(h).
1.52 Site: The real property in Salinas, California on which the Plant is to be built
and located, as more particularly described in Appendix A.
1.53 Site Control: The point at which Seller satisfies one or more of the following
conditions: (1) Seller is (a) the lessee under a lease, or (b) the grantee under
an exclusive easement, with the owner (or its subsidiary) of the Landfill that
allows Seller to construct and operate the Plant at the Site during the Term in
accordance with this Agreement; (2) Seller has a fee ownership of the Site; or
(3) any other form of site control acceptable to Buyer in its reasonable
discretion.
1.54 Term: The period of time during which the Agreement is in effect.
1.55 Test Energy: Energy generated by the Plant and delivered to the Point of
Interconnection prior to the Commercial Operation Date.
1.56 WREGIS: Western Renewable Energy Generation Information System, or its
successor; provided that the successor is capable of performing substantially
similar functions and is acceptable to both Parties.
1.57 WREGIS Certificates: The meaning set forth in WREGIS Operating Rules.
1.58 WREGIS Operating Rules: The rules describing the operations of the
Western Renewable Energy Generation Information System, as published by
WREGIS and as may be amended from time to time.
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SANFRAN 90103 (2K)
ARTICLE II
TERM, PURCHASE AND SALE
2.1 Term
This Agreement shall be effective upon execution by authorized
representatives of both Parties and, unless earlier terminated pursuant to an
express provision of this Agreement, shall continue until the twentieth (20th)
anniversary of the Commercial Operation Date.
2.2 Purchase and Sale of the Output
(a) In accordance with the terms and conditions hereof, commencing on the
Commercial Operation Date and continuing throughout the Term, Seller shall
sell and deliver at the Point of Interconnection, and Buyer shall purchase,
accept from Seller at the Point of Interconnection and pay for, Buyer's
Percentage Share of the Output produced during the Term pursuant to the
terms of this Agreement. Prior to the Commercial Operation Date, Buyer shall
purchase and accept from Seller at the Point of Interconnection and pay for,
Buyer's Percentage Share of the Output relating to Test Energy pursuant to the
terms of this Agreement. All Test Energy shall be scheduled in accordance
with the procedures set forth in Appendix D. Seller shall not sell to any other
party, and Buyer may claim credit for, Buyer's Percentage Share of the Output
as may be available from time to time.
(b) Throughout the Term, Seller shall sell and transfer to Buyer, and Buyer
shall purchase and receive from Seller, all right, title and interest in and to the
Environmental Attributes associated with Buyer's Percentage Share of the
Output, if any, whether now existing or subsequently generated or acquired
(other than by direct purchase from a third party) by Seller, or that hereafter
come into existence, during the Term, as a component of the Output purchased
by Buyer from Seller hereunder. Seller agrees to transfer and make such
Environmental Attributes available to Buyer immediately to the fullest extent
allowed by applicable law upon Seller's production or acquisition of the
Environmental Attributes. If Seller receives any tradable Environmental
Attributes based on the greenhouse gas reduction benefits or other emission
offsets attributed to its fuel usage, it shall be entitled to retain sufficient
Environmental Attributes to ensure that there are zero net emissions associated
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SANFRAN 90103 (2K)
with the production of electricity from such facility. Seller shall not assign,
transfer, convey, encumber, sell or otherwise dispose of all or any portion of
Buyer's Percentage Share of the Environmental Attributes to any Person other
than Buyer. Seller makes no written or oral representation or warranty, either
express or implied, regarding the current or future existence of any
Environmental Attributes.
(c) Seller shall use commercially reasonable efforts to use WREGIS to
authenticate the transfer of "WREGIS Certificates" from Seller to Buyer in
accordance with WREGIS reporting protocols and the terms of this
Agreement. Seller shall use commercially reasonable efforts to register the
Plant with WREGIS. After the Plant is registered with WREGIS, Seller agrees
to use commercially reasonable efforts to transfer WREGIS Certificates to
Buyer using the Forward Certificate Transfer method, as described in
WREGIS Operating Rules and as designated by Buyer. Buyer shall be
responsible for providing required information and taking any action that may
be necessary for the registration of the Plant and for transfer of WREGIS
Certificates to Buyer's WREGIS account.
Except as the Parties may otherwise agree, in writing, in the event that
WREGIS is not in operation, or WREGIS does not track Seller's transfer of
WREGIS Certificates to Buyer, or its designees, on or before the 30th day of
each calendar month, Seller shall document the production and transfer of
Environmental Attributes under this Agreement by delivering to Buyer an
attestation for the Environmental Attributes produced by the Plant, in whole
MWh, in the preceding calendar quarter. The form of attestation shall be
substantially in the form as set forth in Appendix B.
Seller shall be responsible for the WREGIS expenses associated with
registering the Plant, maintaining its account, paying the WREGIS
Certificates' issuance fees, and transferring WREGIS Certificates to Buyer.
Buyer shall be responsible for the WREGIS expenses associated with
maintaining its account and subsequent transferring or retiring of WREGIS
Certificates. Seller shall, as instructed by Buyer and at Buyer's cost, dispute
data with WREGIS. Notwithstanding anything herein to the contrary, if
Seller's cost (including labor billed at standard external rates) associated with
WREGIS in connection with this Agreement or compliance with this Section
2.2 exceeds $2,500 in any calendar year, Buyer shall reimburse Seller for the
amount in excess of $2,500; provided, however, Buyer may designate an
alternate accounting system(s), at no cost to Seller, to document or otherwise
13
SANFRAN 90103 (2K)
verify that transfer of RECs or other Environmental Attributes if Seller's
WREGIS costs exceed $2,500 in any calendar year. The $2,500 amount shall
be escalated at a rate of 1.5% annually, commencing on the first day of the
January following the Commercial Operation Date and continuing every
subsequent anniversary thereafter.
For the purposes of this Section 2.2, "commercially reasonable efforts" shall
exclude (i) making any changes to the Plant or any Expansion Plant or the
method of operation thereof and (ii) expenditure of any funds other than
nominal filing fees.
(d) During the Term, Seller shall not report to any person or entity that the
Environmental Attributes granted hereunder to Buyer belong to anyone other
than Buyer, and Buyer may report under any program that such Environmental
Attributes purchased hereunder belong to it.
2.3 Price
Subject to the provisions of Section 4.1(k), Buyer shall pay Seller $96.08 per
MWh of Energy delivered or tendered to Buyer at the Point of Interconnection,
which price shall be escalated at a rate of 1.5% (of the then -current price)
annually on the anniversary of (i) the first day of the first full month following
the Commercial Operation Date or (ii) if the Commercial Operation Date falls
on the first day of the month, the Commercial Operation Date. The Price shall
be the total compensation owed by Buyer for Output delivered or tendered to
Buyer hereunder.
2.4 Tax Credits
Buyer agrees and acknowledges that all Production Incentives shall be owned
by Seller and/or the owner of the Landfill; provided, that to the extent Buyer
pays in full for emission offsets and otherwise makes any additional payments
pursuant to Section 4.3(j) in full, Seller shall pay Buyer the Percentage Share
of up to one hundred percent (100%) of the net economic value (net of
reasonable transaction fees) realized by Seller from the Section 45 Credits
until Seller has reimbursed Buyer for all such payments made by Buyer
pursuant to Section 4.3(j). Buyer shall not claim Production Incentives. Buyer
agrees to cooperate with Seller and/or the owner of the Landfill as may be
necessary to allow maximization of the value of, and realization of, all
14
SANFRAN 90103 (2K)
Production Incentives; provided that Buyer shall not be required to incur
additional costs or accept any diminution in value of its rights under this
Agreement or of the Output purchased hereunder. In addition, Buyer shall not
take any action (except as otherwise permitted under this Agreement), that
would in any way reduce or eliminate the availability to Seller or the owner of
the Landfill of any Production Incentive, including without limitation the
Section 29 Credits, and Buyer shall forego any credits or benefits available to it
(other than Environmental Attributes) to the extent necessary to allow Seller and
the owner of the Landfill to obtain the full benefit of the Production Incentives,
but in no event shall Buyer be required to forego receipt of Energy.
2.5 Right of First Refusal for Expansion Plant and Expansion Plant Output
(a) Seller may in its sole discretion determine, from time to time, during the
Term to develop, finance, construct and/or operate an Expansion Plant. Each
time such a determination is made, Seller shall notify Buyer of such
determination and shall offer in writing to sell the Percentage Share of the
Expansion Plant Output to Buyer. The offer shall include the price to be paid
by Buyer for the Percentage Share of the Expansion Plant Output, the term of
the proposed power purchase agreement and the other principal terms and
conditions of the proposed sale. If Buyer wishes to accept such offer to
purchase all (but not less than all) of such Percentage Share of the Expansion
Plant Output, Buyer shall so notify Seller within sixty (60) days of its receipt
of such offer. Buyer and Seller shall promptly thereafter enter into good faith
negotiation of a definitive power purchase agreement incorporating the terms
of such offer. Until such an Expansion Plant power purchase agreement is
executed, the Seller's proposal, accepted by Buyer (including any
modifications agreed upon in writing by both parties), shall control all
dealings between the Parties relating to the Expansion Plant. Should any issue
arise that is not covered by such documentation, the terms of this Agreement
shall apply.
(b) If Buyer does not accept Seller's offer to purchase Buyer's Percentage
Share of the Expansion Plant Output within sixty (60) days of receipt of
Seller's offer, Seller shall be free to offer to sell that portion of the Expansion
Plant Output to any third party at a price and on other terms and conditions
which, taken as a whole, are at least as favorable to Seller as the price and
other terms and conditions set forth in Seller's offer to Buyer. If Seller offers
to break up Buyer's Percentage Share of the Expansion Plant Output to sell to
15
SANFRAN 90103 (2K)
multiple independent buyers, Seller shall notify Buyer in writing of the terms
and conditions of such offers and Buyer shall again have the right of first
refusal consistent with the terms set forth above for each of the lesser amounts
being offered to the third parties. If Buyer does not purchase its Percentage
Share of the Expansion Plant Output and Seller sells such Expansion Plant
Output to a third party, Seller shall promptly certify, in writing, to Buyer that
the terms and conditions of sale of such Expansion Plant Output to such third
party, taken as a whole, are at least as favorable to Seller as the price and other
terms and conditions set forth in Seller's offer to Buyer, and Seller shall
provide the relevant contract and any other supporting documentation for such
certification. Upon the sale of such Expansion Plant Output in compliance
with this Agreement, Buyer shall have no further rights to be offered or to
purchase such Expansion Plant Output. Buyer's refusal of its Percentage
Share of the Expansion Plant Output from one Expansion Plant shall not affect
Buyer's right to purchase its Percentage Share of the Expansion Plant Output
from a later Expansion Plant under the terms of this Agreement. Seller shall
not sell or provide Buyer's Percentage Share of the Expansion Plant Output to
any third party unless it can do so without compromising in any material way
its ability to provide Buyer's Percentage Share of the Output to Buyer
hereunder. The materiality of any such impact shall be determined by Buyer in
its reasonable discretion. If Seller sells or provides Expansion Plant Output to
any third party, Seller shall not employ Landfill Gas to fuel such Expansion
Plant in any hour unless the Landfill Gas flow requirements of the Initial
Capacity have been, and shall continue to be, met.
2.6 Option to Install Emission Controls
Buyer may at its option, exercised from time to time, install emission controls
on the Plant in connection with the Initial Capacity and on any Expansion
Plant from which Buyer purchases Expansion Plant Output (so long as Buyer
purchase all such Expansion Plant Output) beyond those then required to meet
the Requirements of Law applicable to Seller or the Plant; provided that (a)
Buyer shall (i) bear all costs and financial, regulatory and operational risks
thereof, including, without limitation, the capital cost thereof and any increase
in operation or maintenance expenses, and (ii) shall keep Seller whole in all
respects, including for decreases in Output and other adverse effects on the
Initial Capacity and the Expansion Plant and its performance, increases in
operations and maintenance costs and failures of such emission controls to
operate, and (b) Buyer shall not make any such changes to the Initial Capacity
16
SANFRAN 90103 (2K)
or the Expansion Plant without the consent of Seller to the design and plan for
implementation of such changes, such approval not to be unreasonably
withheld.
ARTICLE III
METERING AND BILLING
3.1 Metering Requirements
The transfer of Energy from Seller to Buyer shall be measured by revenue
quality metering equipment at the Point of Interconnection. Such metering
equipment, including any equipment required for communicating meter data
(e.g., a dedicated data line) to Buyer or the ISO, shall be selected, provided,
installed, owned, maintained and operated, at Seller's sole cost and expense,
by Seller or its designee in accordance with applicable ISO rules. Seller shall
exercise reasonable care in the maintenance and operation of any such
metering equipment, and shall test and verify the accuracy of each meter at
least annually. Seller shall inform Buyer upon at least ten (10) days' prior
written notice of the time and date of these tests, and shall permit Buyer to be
present at such tests and to receive the results of such tests. Subject to Buyer
paying for its Percentage Share of the cost of any update or upgrade to such
metering equipment pursuant to a new requirement of the ISO, the LDC or any
other Governmental Authority adopted following the Commercial Operation
Date, each of Seller's meters shall be accurate to the metering specifications
then in effect for ISO meter accuracy. Seller shall further install and maintain
all equipment and data circuits necessary to transmit all monitored real time
supervisory control and data acquisition ("SCADA") system data and real time
data from the ISO meter to the ISO and the NCPA, while adhering to both ISO
and NCPA communications protocols. Seller shall provide a copy of each
Certificate of Compliance, if any, issued by the ISO.
Buyer and NCPA shall be provided access to all monitored SCADA points to
be used at their discretion in real time monitoring. Buyer may further, at its
sole cost and expense, install and maintain check meters and all associated
measuring equipment necessary to permit an accurate determination of the
quantities of Energy delivered under this Agreement provided that said
equipment does not interfere with the Seller's metering equipment. Seller
17
SANFRAN 90103 (2K)
shall permit Buyer or Buyer's representative access to its Plant for the purpose
of installing and maintaining such check meters. Seller shall submit to the
ISO, or allow the ISO to retrieve, any meter data required by the ISO related to
the Plant output in accordance with the ISO's settlement and billing protocol
and meter data tariffs. Buyer shall have reasonable access to relevant meters
and associated facilities, as well as real time access to all meter data, as is
necessary for Buyer or its agent to perform its duties as scheduling coordinator
and comply with the requirements of the ISO tariff.
3.2 Billint
Seller shall read the meter at the end of each calendar month of the Term, and
provide to Buyer on or before the tenth (10th) day of the following month an
invoice based upon the meter data for Energy delivered in such calendar
month and the corresponding attestation pursuant to Section 2.2(c) (if such
attestation is required). Such invoice may be transmitted electronically via e-
mail to [*AcctsPayable@ncpa.com], or to any other email address designated
in writing by Buyer, with a copy to follow via United States Mail to the notice
address designated below. Should either Seller or Buyer determine at a later
date, but in no event later than two (2) years after the original invoice date,
that the invoice amount was incorrect, that Party shall promptly notify the
other Party of the alleged error. If the amount invoiced was too low, Buyer
shall, upon receiving verification of the error and supporting documentation
from Seller, pay any undisputed portion of the difference within thirty (30)
days of receipt of verification. If the amount invoiced was too high, Seller
shall, upon receiving verification of the error and supporting documentation
from Buyer, pay any undisputed portion of the difference within thirty (30)
days of receipt of verification. Any such amount shall be subject to the
interest rate as designated in Section 3.3 running from the original due date of
payment.
3.3 Payment
For Energy delivered to Buyer pursuant this Agreement, Buyer or its agent
shall pay Seller by electronic transfer of funds by the later of the twentieth
(20th) day of the month or the tenth (10th) business day after the invoice is
received in accordance with Section 3.2. If such due date falls on a weekend
or legal holiday, such due date shall be the next day which is not a weekend or
18
SANFRAN 90103 (2K)
legal holiday. Payments made after the due date shall be considered late and
shall bear interest on the unpaid balance at an annual rate equal to two percent
(2%) plus the average daily prime rate as determined from the "Money Rates"
section of the West Coast Edition of The Wall Street Journal for the days of
the late payment period multiplied by the number of days elapsed from and
including the day after the due date, to and including the payment date.
Interest shall be computed on the basis of a 365 -day year. In the event this
index is discontinued or its basis is substantially modified, the Parties shall
agree on a substitute equivalent index. Should Buyer in good faith dispute the
amount of an invoice, Buyer or its agent may withhold such disputed amounts
until the dispute is resolved by arbitration or other permissible method. Such
disputed amounts shall bear interest at the interest rate described above.
Failure of Buyer or its agent to withhold any amount is not a waiver of Buyer's
right to challenge such amount. Both Parties shall maintain all payment
records relating to this Agreement for a minimum of two (2) years, and shall
permit the other Party, upon reasonable notice, to inspect and audit such
records as the requesting Party deems reasonably necessary to protect its
rights.
ARTICLE IV
SELLER'S OBLIGATIONS
During the Term, Seller hereby agrees to perform the following affirmative
obligations:
4.1 Development, Finance, Construction and Operation of the Plant
Seller shall:
(a) Develop, finance and construct the Plant.
(b) Provide Buyer access to a "real time" Plant monitoring system (which,
at a minimum, shall provide "real time" information regarding the net output
of the Plant) that is anticipated to be internet-based and include alarms.
(c) Seek, obtain, maintain, comply with and, as necessary, renew and
modify from time to time, all Permits, certificates or other authorizations
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SANFRAN 90103 (2K)
which are required by any Requirements of Law or Governmental Authority as
prerequisites to engaging in the activities required of Seller by the Agreement
and to meeting Seller's obligation to operate the Plant consistently with the
terms of the Agreement.
(d) Operate, maintain, and repair the Plant in accordance with this
Agreement, all Requirements of Law applicable to Seller or the Plant,
Contractual Obligations, Permits and in accordance with Prudent Utility
Practice, including with respect to efforts to maintain availability of the Initial
Capacity.
(e) Obtain and maintain the policies of insurance in amounts and with
coverages as set forth in Appendix C.
(f) Operate and maintain in a manner consistent with Prudent Utility
Practice the facilities it will own and otherwise cooperate with LDC in the
physical interconnection of the Plant to the LDC System in accordance with
the Interconnection Agreement.
(g) By October 1St of each year of the Term, provide Buyer and NCPA with
an annual projection of scheduled Outages for the following calendar year.
Should Seller make any changes to such projection, it will notify Buyer and
NCPA of such changes at least fourteen (14) days in advance of any newly
scheduled or rescheduled Outage. If Buyer requests a change to the scheduled
date of any Outage (including to a date set forth in a change notice from
Seller), Seller shall consider such request in good faith and notify Buyer of its
decision within seven (7) days. In no instance will Seller schedule Outages of
more than twenty-four (24) hours between June 1st and September 30th during
the Term. In connection with any Outage, whether it is a scheduled or
unscheduled Outage, Seller shall notify Buyer and NCPA, as soon as
practicable, of the percentage of Plant expected to be out of service and how
long the Outage is expected to last. If the Outage is total (a one hundred
percent (100%) Outage) and is due to a failure of the Plant rather than the
transmission and distribution system beyond the Point of Interconnection,
Seller shall give Buyer and NCPA at least four (4) hours notice before Seller
commences re -energizing the Plant. In addition, Seller will comply with
NCPA's reasonable scheduling protocols, as they may be changed from time
to time. A copy of the current version of NCPA's scheduling protocols, which
the Parties agree are reasonable, is attached as Appendix D.
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SANFRAN 90103 (2K)
(h) Negotiate and enter into an Interconnection Agreement with LDC to
enable Buyer to transmit Energy received at the Point of Interconnection
through the ISO -controlled grid. Seller shall be responsible for and pay all
initial non -recurring costs and charges arising under the Interconnection
Agreement (even if not actually incurred) prior to the Commercial Operation
Date in compliance with the Interconnection Agreement and associated rules
and requirements in place as of the Commercial Operation Date (the "Seller's
Interconnection Costs"); provided, however, if the Seller's Interconnection
Costs are, in Seller's reasonable discretion estimated to exceed, and/or do
exceed, one million two hundred fifty thousand dollars ($1,250,000.00), then
Seller may terminate this Agreement without liability of either Party to the
other by giving notice to Buyer in writing of such termination; provided, that
such notice and such termination shall not be effective if Buyer, by written
notice to Seller within fourteen (14) days following such notice from Seller,
agrees to adjust the Price payable under Section 2.3 of this Agreement and/or
agrees to reimburse Seller more than the maximum Reimbursement Amount
(as defined below), and within forty-five (45) days thereafter agrees with
Seller in writing (each in their sole discretion) to an amendment of this
Agreement revising the Price payable under Section 2.3 of this Agreement
and/or revising the Reimbursement Amount. All other out-of-pocket costs and
charges related to interconnection other than these initial non -recurring costs
and charges will be reimbursed, on a pro rata, energy basis, by the purchasers
of energy from the Plant. During the Term prior to any Expansion Plant
becoming available for commercial service, Buyer will reimburse Seller for its
Percentage Share of such other out-of-pocket costs and charges under the
Interconnection Agreement paid or required to be paid by Seller to LDC or its
successor; provided, however, Buyer shall be responsible for its Percentage
Share of such other out-of-pocket costs and charges under the Interconnection
Agreement only to the extent Buyer has approved in writing, in the sole
discretion of Buyer, the Interconnection Agreement, including any
amendments (which shall not include changes in relevant tariffs) from time to
time. If Seller's Interconnection Costs are above three hundred thousand
dollars ($300,000.00), then Buyer shall reimburse (and pay) Seller, on a dollar
for dollar basis, an amount equal to the product of (a) the amount (in dollars)
equal to the difference between Seller's Interconnection Costs and three
hundred thousand dollars ($300,000.00), times (b) 1.5 (the product thereof
being the "Reimbursement Amount"); provided, however, the maximum
Reimbursement Amount that Buyer shall be obligated to reimburse (pay) to
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Seller shall be one million four hundred twenty-five thousand dollars
($1,425,000.00). Notwithstanding anything to the contrary in the immediately
previous sentence, Seller may terminate this Agreement without liability of
either Party to the other Party if Seller's Interconnection Costs (calculated
without taking into consideration any Reimbursement Amount) are estimated
to exceed and/or do exceed one million two hundred fifty thousand dollars
($1,250,000.00) as provided above in this Section 4.1(h). Buyer shall pay
Seller the Reimbursement Amount within thirty (30) days after the Buyer
receives an invoice from Seller for such Reimbursement Amount (Seller may
send one invoice to Buyer for the entire Reimbursement Amount or Seller may
send multiple invoices to Buyer which total the entire Reimbursement
Amount). Seller shall not invoice Buyer for any of Seller's Interconnection
Costs until Seller's Interconnection Costs have exceeded three hundred
thousand dollars ($300,000.00) and Seller shall provide Buyer with evidence
of Seller's Interconnection Costs such as the Interconnection Agreement
and/or invoices. Upon completion of an Expansion Plant which uses the
Interconnection Facilities, such other out-of-pocket costs and charges shall be
prorated, on a Percentage Share of energy basis, and Buyer's share would be
based on its Percentage Share of Energy compared to the energy of the
Expansion Plant delivered to the Point of Interconnection. Seller shall
cooperate with Buyer to minimize any such costs as are to be reimbursed by
Buyer.
(i) Negotiate and enter into a Participating Generator Agreement and a
Meter Service Agreement for ISO Metered Entities with the ISO, the load
control area operator for the LDC System that is interconnected with the Plant.
Buyer shall pay for or reimburse Seller for Buyer's Percentage Share of any
such costs or charges associated with these agreements, except to the extent
such cost or charge is required to be paid by Seller under Sections 3.1 and
4.1(h) of this Agreement. Seller shall cooperate with Buyer to minimize any
such costs as are to be reimbursed by Buyer.
(j) Coordinate all Plant start-ups and shut -downs, in whole or in part, with
Buyer in accordance with ISO scheduling protocols and the reasonable
protocols established by Buyer that are not inconsistent with the ISO tariff and
ISO procedures.
(k) Maintain an Availability Threshold of at least seventy percent (70%).
Should Seller fail to maintain such an Availability Threshold, the Price
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applicable to Output sold and purchased during each month during which the
Availability Threshold is below seventy percent (70%) shall be seven and one-
half percent (7.5%) below the Price that would otherwise be in effect pursuant
to Section 2.3 until the Availability Threshold is increased to at least seventy
percent (70%). Except as otherwise expressly stated in Sections 6.4 and 7.6,
the foregoing shall be Buyer's sole remedy for any shortfall of or failure to
produce Output or failure to maintain any particular Availability Threshold.
4.2 General Obligations
(a) Seller shall obtain in its own name and at its own expense any and all
pollution or environmental credits or offsets necessary to operate the Plant in
compliance with the Environmental Laws.
(b) Seller shall keep complete and accurate operating and other records and
all other data for the purposes of proper administration of the Agreement,
including such records as may be required by any Governmental Authority or
Prudent Utility Practice.
(c) Seller shall continue to (i) preserve, renew and keep in full force and
effect its organizational existence and good standing, and take all reasonable
action to maintain all applicable Permits, rights, privileges, licenses and
franchises necessary or desirable in the ordinary course of its business; and (ii)
comply with all Contractual Obligations and Requirements of Law applicable
to Seller or the Plant.
(d) Within ninety (90) days after the Effective Date, Seller shall make
available for review by Buyer, and its representatives, at Seller's attorney's
offices in San Francisco, California, a fully executed copy of its contract with
Salinas Valley Solid Waste Authority, including all exhibits, attachments, and
other supporting documents thereto, for the purchase of Landfill Gas (the
"LFG Agreement"). Such contract may be redacted to remove pricing
information. If (i) Seller does not fulfill its obligations under the first two
sentences of this Section 4.2(d) within the time allowed, or (ii) Seller fulfills
such obligations but Buyer in its reasonable discretion does not approve of the
terms of the LFG Agreement, then Buyer may, as its sole remedy and without
liability of one Party to the other Party, terminate this Agreement by written
notice given no later than sixty (60) days after Seller has fulfilled, or failed to
fulfill, as the case may be, such obligations under such first two sentences.
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Other than increasing the amount of fuel purchased thereunder, Seller shall not
allow such contract to be amended or otherwise modified, nor shall it waive or
fail to enforce any of its rights thereunder, without Buyer's prior written
approval, whose approval shall not be unreasonably withheld. Seller shall
make the LFG Agreement available to Buyer for review during normal
business hours at Seller's attorney's offices in San Francisco, California
throughout the Term within seven (7) days of receipt of a written request by
Buyer.
(e) Seller shall provide to Buyer such other information regarding the
permitting, engineering, construction or operations of the Plant as Buyer may
from time to time reasonably request, subject to licensing or other restrictions
of Seller or a third party with respect to confidentiality, disclosure or use.
(f) Seller shall enter into any agreements with the ISO required by the ISO
for generators delivering power into the ISO -controlled grid. Except for such
costs and charges as are expressly identified in this Agreement as Seller's
costs, Buyer shall reimburse Seller for all costs and charges under such
agreements. Seller shall cooperate with Buyer to minimize any such costs as
are to be reimbursed by Buyer.
(g) Seller shall provide Buyer with a copy of its ultimate corporate parent's
audited financial statements as at the end of its accounting year prepared in
accordance with Generally Accepted Accounting Principles ("GAAP")
consistently applied, no later than four (4) months after the end of such
accounting year of such entity. Seller shall also provide, on a quarterly basis,
an unaudited financial statement in the form of Appendix F, prepared in
accordance with GAAP consistently applied for Seller and for Seller's ultimate
corporate parent. Such financial statements shall be certified by an officer of
Seller as fairly presenting the financial condition of the Seller subject only to
what would typically be included in year-end audit adjustments and footnotes.
If, from time to time, an audited year-end financial statement is prepared for
Seller, Seller shall provide it to Buyer no later than four (4) months after the
end of Seller's accounting year.
4.3 Construction Milestones
(a) The Parties agree that time is of the essence and that certain milestones
(individually, a "Milestone" and, collectively, the "Milestones") for the
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development, financing and construction of the Plant must be achieved in a
timely fashion or Buyer shall suffer damages. Seller shall provide Buyer with
documentation satisfactory to Buyer, in Buyer's reasonable discretion, to
support the achievement of the Milestones by the dates set forth below.
(b) The following events are all of the Milestones:
(i) By the date ninety (90) days following the Effective Date, Seller
shall have signed an LFG Agreement with Salinas Valley Solid
Waste Authority and have obtained Site Control.
(ii) By the date one hundred fifty (150) days following the date of the
LFG Agreement between Seller and Salinas Valley Solid Waste
Authority (the date of the LFG Agreement shall be the date the
LFG Agreement is made and entered into and fully executed),
Seller shall have completed to Seller's satisfaction a review of the
Site and the results of such review shall be satisfactory to Seller
(including, without limitation, a Phase I environmental site
assessment, a Phase II environmental site assessment and/or any
other environmental assessment/study), if Seller decides, in
Seller's sole discretion (at Seller's cost), to do such review of the
Site.
(iii) By the date twenty-six (26) months following the later of the (1)
date that Buyer approves the LFG Agreement, and (2) date one
hundred fifty (150) days following the date of the LFG
Agreement between Seller and Salinas Valley Solid Waste
Authority (the date of the LFG Agreement shall be the date the
LFG Agreement is made and entered into and fully executed),
Seller shall (a) have obtained all Permits necessary, in final form,
to commence construction of the Plant and (b) have entered into
an Interconnection Agreement.
(iv) By the date one (1) month following the later of (a) the
finalization of all necessary Permits described in Section
4.3(b)(iii), and (b) entering into an Interconnection Agreement,
Seller shall have arranged financing for construction of the Plant
or otherwise made funds available to commence and complete
construction.
(v) By the date twelve (12) months following the later of (a) the
finalization of all necessary Permits described in Section
4.3(b)(iii), and (b) entering into an Interconnection Agreement,
Seller shall have commenced construction of the Plant.
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SANFRAN 90103 (2K)
(vi) By the date eighteen (18) months following the arrangement of
financing or availability of funds for construction, Seller shall
have achieved the Commercial Operation Date.
(c) Starting on the Effective Date, Seller shall provide to Buyer monthly
progress reports concerning the progress towards completion of the
Milestones. In addition, within five (5) business days of the completion of
each Milestone, Seller shall provide a certification to Buyer along with any
supporting documentation (if applicable), demonstrating the satisfaction of the
Milestone. Seller shall provide to Buyer additional information concerning
Seller's progress towards, or confirmation of, achievement of the Milestones,
as Buyer may reasonably request from time to time. Within seven (7) days of
the later of (i) obtaining the authority to construct for the Plant from the
applicable air quality management district or (ii) Seller's receipt of the system
impact and facility cost studies from the LDC, but in no event later than the
date set forth in Section 4.3(b)(iii), Seller shall specify the Initial Capacity of
the Plant (which shall be subject to the limits contained in Section 1.17);
provided, however, Seller may (in Seller's sole discretion) increase the Initial
Capacity of the Plant at any time during the Term by adding equipment for
recovering waste heat from the prime mover engines of the Plant for purposes
of utilizing such waste heat to produce additional Energy. If Seller decides to
increase the Initial Capacity of the Plant during the Term (after Seller has
originally specified the Initial Capacity of the Plant), then Seller shall provide
Buyer with written notice of the date of such increase, the amount of such
increase, and the entire capacity of the Plant (as increased) as of such date.
The new increased capacity of the Plant shall then become the Initial Capacity
of the Plant from the date set forth in Seller's written notice until the end of the
Term (the Initial Capacity of the Plant (as increased) shall be not less than 2.0
MW and not more than 6.6 MW (gross nameplate), and not less than 1.6 MW
and not more than 6.2 MW (net at the Point of Interconnection). Seller makes
no written or oral representation or warranty, either express or implied,
regarding whether or not Seller will add equipment for recovering waste heat
from the prime mover engines of the Plant and/or utilize that waste heat to
produce additional Energy.
(d) Upon becoming aware that it will, or is reasonably likely to, fail to
achieve a Milestone by the required date, for any reason, including a Force
Majeure Event, Seller shall so notify Buyer, in writing, as soon as is
reasonably practicable. Such notice shall explain the cause of the delay,
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SANFRAN 90103 (2K)
provide an updated date for achievement of the Milestone(s) and describe
Seller's plan for meeting the Milestone. Seller's notice will also explain any
impact such delay may or will have on any other Milestone, and measures to
be taken to mitigate such impact.
(e) In the event that a Force Majeure Event causes any delay to the
achievement of the Milestones set forth in Sections 4.3(b)(iv), (v), or (vi), such
Milestone's deadline may be extended, together with any Force Majeure Event
extensions for other Milestones, for a period not to exceed six (6) months. The
extension of the deadline for any Milestone shall extend the deadline for all
subsequent Milestones, provided that in no event shall the combined
extensions for Force Majeure Events for any or all of the Milestones exceed
six (6) months.
(f) In the event that Seller fails to meet the Milestones set forth in Section
4.3(b)(i) or (ii) for any reason, Buyer may terminate this Agreement, without
liability of either Party to the other, by giving notice to Seller in writing of
such termination at any time prior to Seller curing its failure. Such option to
terminate shall be Buyer's sole remedy for any failure to meet the Milestone
set forth in Section 4.3(b)(i) or (ii).
(g) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(iii) for any reason, Buyer may terminate this Agreement, without
liability of either Party to the other, within ten (10) business days after the
Milestone date by giving notice to Seller in writing of such termination. If
Seller meets the Milestone set forth in Section 4.3(b)(iii) prior to Buyer giving
written notice of termination, this Agreement shall remain in full force and
effect. If Buyer does not terminate this Agreement within ten (10) business
days after the Milestone date, Seller shall continue to pursue satisfaction of the
relevant Milestone, and Buyer must give Seller sixty (60) days' prior written
notice to terminate this Agreement, during which period if Seller cures such
defect and achieves the relevant Milestone, such termination shall be void and
this Agreement shall remain in full force and effect. Such option to terminate
shall be Buyer's sole remedy for any failure to meet the Milestone set forth in
Section 4.3(b)(iii).
(h) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(v) within six (6) months after the relevant Milestone date for any reason
(or up to twelve (12) months if also delayed by a Force Majeure Event), Seller
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SANFRAN 90103 (2K)
may deposit an amount, per month, equal to the Monthly LD Amount into a
segregated escrow account reasonably acceptable to Buyer by the first day of
such month, for every month after such Milestone date until the Milestone is
met. Such funds will be used towards any liquidated damages as set forth in
Section 7.4(c), and shall be held in escrow until such time that liquidated
damages, if any, become payable to Buyer. Should the amount in the escrow
account exceed the final amount of liquidated damages, such excess funds
shall be returned to Seller. Should Seller (i) at any time fail to make such
monthly deposits or (ii) fail to satisfy the Milestone set forth in Section
4.3(b)(v) for more than twelve (12) months, Buyer may terminate this
Agreement upon written notice to Seller of such termination. Upon such
termination, Seller will pay to Buyer, within thirty (30) days of the termination
notice, an amount equal to the LD Amount as liquidated damages. Seller's
escrow option, Buyer's option to teimnunate, and liquidated damages shall be
Buyer's sole remedies for any failure of Seller to meet the Milestones set forth
in Section 4.3(b)(iv) or (v).
(i) Seller covenants that it will diligently pursue all Milestones including
the Commercial Operation Date, which Seller envisions will occur within
thirty-five (35) months following the execution of this Agreement.
(j) In the event that any of the approvals described in Section 4.3(b)(iii) are
not obtained by the date specified in Section 4.3(b)(iii) for satisfaction of the
relevant Milestone or are obtained on a basis not reasonably satisfactory to
Seller, including without limitation, in the case of the air permit (from the air
pollution control district that has jurisdiction over construction and operation
of the Plant), approval of construction and operation of the Plant on a basis not
consistent with internal combustion engines without emission controls,
pollution or environmental credits or offsets, Seller may terminate this
Agreement without liability of either Party to the other Party by giving notice
to Buyer, in writing, of such termination; provided that such notice must be
given no later than fourteen (14) days following the earlier of (a) the date on
which a given approval not satisfactory to Seller is received, in writing, or (b)
the date specified in Section 4.3(b)(iii) for satisfaction of the relevant
Milestone; further provided, that such notice and such termination shall not be
effective if Buyer, by written notice to Seller within fourteen (14) days
following such notice from Seller, agrees (i) to pay Seller with the first invoice
following the Commercial Operation Date the reasonable all -in cost (including
reasonable broker fees, if any) to purchase all such offsets sufficient to operate
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SANFRAN 90103 (2K)
the Plant at full Initial Capacity (less reasonably projected scheduled Outages
for maintenance) for the term of this Agreement, and (ii) to adjust the price
payable under Section 2.3 of this Agreement and within thirty (30) days
thereafter agrees with Seller (each in their sole discretion), in writing, to an
amendment of this Agreement revising such price. Failure to provide notice of
termination by the date specified above shall constitute a waiver of the right to
terminate this Agreement as provided in this Section 4.3(j). In the event that
Seller exercises such termination right, Buyer shall have a right of first refusal
to purchase the output of any electricity generating facility owned or
controlled by Seller or its affiliate(s) located at the Landfill and fueled by
Landfill Gas. Such right of first refusal shall conform to the provisions of
Section 2.5. The provisions of this Section 4.3(j) shall survive termination of
this Agreement under this Section 4.3(j) for a period of five (5) years from the
effective date of such termination.
(k) In the event that Seller has not completed to Seller's satisfaction a
review of the Site or the results of such review are not satisfactory to Seller as
contemplated in Section 4.3(b)(ii), Seller may terminate this Agreement
without liability of either Party to the other Party by giving notice to Buyer, in
writing, of such termination, provided that such notice must be given no later
than one hundred sixty-four (164) days following the date of the LFG
Agreement between Seller and Salinas Valley Solid Waste Authority (the date
of the LFG Agreement shall be the date the LFG Agreement is made and
entered into and fully executed).
ARTICLE V
BUYER'S OBLIGATIONS
5.1 Delivery and Transmission
Except for Seller's obligations pursuant to Sections 3.1 and 4.1(h), Buyer shall
be solely responsible for paying its Percentage Share of costs and charges
associated with the receipt of Energy, under this Agreement, at the Point of
Interconnection and for the transmission and delivery of the Energy from the
Point of Interconnection to any other point downstream of the Point of
Interconnection (including, without limitation, transmission costs and charges,
competition transition charges, applicable control area service charges,
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SANFRAN 90103 (2K)
transmission congestion charges, inadvertent energy flows, any other ISO
charges related to the transmission of such Energy by the ISO and any charge
assessed or collected in the future pursuant to any utility tariff or rate schedule,
however defined, for transmission or transmission -related service rendered by
or for any transmission -owning or operating entity). NCPA, acting on behalf
of Buyer, shall be scheduling coordinator for the transmission of Energy from
the Plant in accordance with applicable ISO rules. Buyer's duties as
scheduling coordinator shall be limited to those duties as are specifically
required of scheduling coordinators in the ISO tariff and the ISO protocols.
Commercial arrangements for such transmission and delivery services will be
coordinated and settled by NCPA directly with the ISO or other third parties.
At the option of Buyer, the Plant may be included within NCPA's metered
sub -system in connection with the scheduling of power over the ISO grid and
related functions; provided that such inclusion shall have no adverse effect on
Plant operations or Seller (or any such effect shall be fully mitigated by
Buyer). Seller will do all things reasonably needed to allow Buyer to comply
with any obligations, and minimize any potential liability, under the ISO tariff;
provided, that if such actions require any actions beyond the giving of notice
provided by Buyer, then Buyer shall reimburse its Percentage Share of all out-
of-pocket costs and charges of such actions. If and to the extent that Seller
fails to comply with the notice provision in Section 4.1(g) concerning Outages
or with its obligations as outlined in the previous sentence, Seller shall be
wholly responsible for all imbalances, deviations, or any other ISO charges or
penalties associated with such Outage or ISO tariff obligation. Buyer may
replace NCPA as Scheduling Coordinator for the Plant. If NCPA ceases to be
the Scheduling Coordinator for the Plant and Buyer is unable, within fourteen
(14) business days of notice from Seller, to appoint a replacement Scheduling
Coordinator, Seller shall have the right to appoint a replacement Scheduling
Coordinator on Buyer's behalf, and Buyer shall enter into all reasonable and
appropriate agreements with such replacement Scheduling Coordinator at its
own cost.
5.2 Taxes
Buyer shall pay and be fully responsible for any sales, use, gross receipts,
utility or other taxes, assessments or fees, if any, incurred or imposed on the
sale or transfer of Energy from Seller to Buyer under this Agreement. Buyer
shall not be responsible for any taxes measured on the net income of Seller or
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SANFRAN 90103 (2K)
ad valorem taxes paid by Seller or Salinas Valley Solid Waste Authority
associated with the Site or the Landfill.
5.3 Notification of Transmission Outages
Buyer will exercise reasonable efforts to provide Seller with as much advance
notice as practicable of any Outage on the LDC System or other transmission
or delivery facilities which may adversely affect the delivery of Energy to
Buyer.
ARTICLE VI
FORCE MAJEURE
6.1 Force Majeure Events
It is understood that at times unavoidable delays or interruptions in delivery or
performance may result from Force Majeure Events. The performance of each
Party under this Agreement may be subject to interruptions or reductions due
to a Force Majeure Event. Both Parties shall in good faith use such effort as is
reasonable under all the circumstances known to that Party affected by the
Force Majeure Event at the time to remove or remedy the cause(s) and mitigate
the inability to perform. However, the obligation to use such reasonable
efforts shall not be interpreted to require resolution of labor disputes by
acceding to demands of the opposition when such course is inadvisable in the
discretion of the Party having such difficulty.
6.2 Remedial Action
Subject to the limitation on extensions of Milestones set forth in Section
4.3(e), a Party shall not be liable to the other Party if the Party is prevented
from performing its obligations hereunder due to a Force Majeure Event. The
Party rendered unable to fulfill an obligation by reason of a Force Majeure
Event shall take all action necessary to remove such inability with all due
speed and diligence. The nonperforming Party shall be prompt and diligent in
attempting to remove the cause of its failure to perform, and nothing herein
shall be construed as permitting that Party to continue to fail to perform after
said cause has been removed. Notwithstanding the foregoing, the existence of
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SANFRAN 90103 (2K)
a Force Majeure Event shall not excuse any Party from its obligations to make
payment of amounts due hereunder.
6.3 Notice
In the event of any delay or nonperformance resulting from a Force Majeure
Event, the Party suffering the Force Majeure Event shall, as soon as
practicable under the circumstances, notify the other Party in writing of the
nature, cause, date of commencement thereof and the anticipated extent of any
delay or interruption in performance.
6.4 Termination Due To Force Majeure Event
Subject to Section 4.3(e), if a Party is prevented from performing its material
obligations under this Agreement for a period of twelve (12) consecutive
months or longer, the unaffected Party may terminate this Agreement, without
liability of either Party to the other, upon thirty (30) days' written notice at any
time during the Force Majeure Event.
ARTICLE VII
DEFAULT/REMEDIES/TERMINATION
7.1 Events of Default by Buyer
The following shall each constitute an "Event of Default" by Buyer:
(a) Buyer breaches any material obligation (other than one covered by
Section 7.1(b) or (c) of this Agreement) and fails to cure such breach within
thirty (30) days after the receipt of written notification of breach by Seller or
such longer period as may be necessary to cure such breach as long as Buyer is
exercising diligent efforts to cure such default.
(b) Buyer fails to make any payment due under this Agreement within thirty
(30) days after the receipt of written notice that such payment is due.
(c) The initiation of an involuntary proceeding against Buyer under the
bankruptcy or insolvency laws, which involuntary proceeding remains
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SANFRAN 90103 (2K)
undismissed for sixty (60) consecutive days, or in the event of the initiation by
Buyer of a voluntary proceeding under the bankruptcy or insolvency laws.
7.2 Events of Default by Seller
(1) The following shall each constitute an "Event of Default" by Seller if
Seller does not cure within the time set forth in clause (2), below:
(a) Seller breaches any material obligation (other than ones covered by
Sections 7.2(1)(b), (c), (d), (e) or (f) of this Agreement or for which a remedy
is specified).
(b) Seller fails to make any payment due under this Agreement within thirty
(30) days after the receipt of written notice that such payment is due.
(c) The initiation of an involuntary proceeding against Seller under the
bankruptcy or insolvency laws, which involuntary proceeding remains
undismissed for sixty (60) consecutive days, or in the event of the initiation by
Seller of a voluntary proceeding under the bankruptcy or insolvency laws.
(d) Seller sells or transfers Buyer's share of the Output (or any individual
component thereof) or Expansion Plant Output (or any individual component
thereof) or the right to Buyer's share of the Output (or any individual
component thereof) or Expansion Plant Output (or any individual component
thereof), to the extent that such Expansion Plant Output is purchased by Buyer,
to any Person other than Buyer.
(e) Seller fails to comply with the terms of Buyer's right of first refusal as
described in Section 2.5 of this Agreement.
(f) Subject to Section 7.4(c), Seller fails, for any reason other than an
unauthorized act or omission by Buyer, to achieve the Commercial Operation
Date by the applicable Milestone deadline as set forth in Section 4.3(b)(vi), as
such deadline may be extended as a result of a Force Majeure Event in
accordance with Section 4.3(e).
(2) Time for Cure. Nothing described in any of Sections 7.2(1)(a), (d) or (e)
above shall constitute an Event of Default if Seller cures the event, failure or
circumstance within (30) days after the receipt of written notification by Buyer
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SANFRAN 90103 (2K)
or such longer period as may be necessary to cure as long as Seller is
exercising diligent efforts to cure.
7.3 Termination for Default
(a) In the event the defaulting Party fails to cure the Event of Default within
the period for curative action under Sections 7.1 or 7.2, as applicable, the non -
defaulting Party may terminate the Agreement by notifying the defaulting
Party in writing of (i) the decision to teiiiiinate and (ii) the effective date of the
termination.
(b) Upon termination of the Agreement by Buyer pursuant to Section 7.3(a)
due to an Event of Default by Seller, (i) Buyer shall have no future or further
obligation to purchase the Output of the Plant or to make any payment
whatsoever under this Agreement, except for payments for obligations arising
or accruing prior to the effective date of termination, and (ii) Seller shall, if
Buyer has paid in full for emission offsets pursuant to Section 4.3(j), either (A)
reimburse Buyer pro rata for any unused such offsets paid for by Buyer or (B)
transfer to Buyer title to any unused such offsets paid for by Buyer. Upon
termination of the Agreement by Seller pursuant to Section 7.3(a) due to an
Event of Default by Buyer, Seller shall have no future or further obligation to
deliver the Output of the Plant to Buyer or to satisfy any other obligation of
this Agreement, except for payments or other obligations arising or accruing
prior to the effective date of termination. After the effective date of
termination, the Agreement shall not be construed to provide any residual
value to either Party or any successor or any other Person, for rights to, use of
or benefits from the Plant to any Person.
7.4 Damages
(a) For all claims, causes of action and damages the Parties shall be entitled
to the recovery of actual damages allowed by law unless otherwise limited by
the Agreement. Neither the enumeration of Events of Default in Sections 7.1
and 7.2, nor the termination of this Agreement by a non -defaulting Party
pursuant to Section 7.3(a), shall limit the right of a non -defaulting Party to
rights and remedies available at law, including, but not limited to, claims for
breach of contract or failure to perform by the other Party and for direct
damages incurred by the non -defaulting Party as a result of the termination of
this Agreement.
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SANFRAN 90103 (2K)
(b) Except as otherwise specifically and expressly provided in the
Agreement, neither Party shall be liable to the other Party under this
Agreement for any indirect, special or consequential damages, including but
not limited to loss of use, loss of revenues, loss of profit, interest charges, cost
of capital or claims of its customers or members to which service is made.
Except as set forth in Section 4.1(k) and except to the extent Seller violates its
undertaking not to provide or sell rights to part or all of the Output to a party
other than Buyer, Seller shall not be liable to Buyer for failure to provide any
specific amount of Output hereunder.
(c) In the event that Seller fails to meet the Commercial Operation Date by
the applicable Milestone deadline as set forth in Section 4.3(b)(vi), as such
deadline may be extended as a result of a Force Majeure Event in accordance
with Section 4.3(e), Seller shall be liable for liquidated damages in the amount,
per month, equal to the Monthly LD Amount for each full month (with parts of
a month pro rated) that Seller is late in satisfying the Milestone. So long as
Seller is paying such liquidated damages on a monthly basis, up to twelve (12)
months, Buyer shall not be permitted to terminate this Agreement. If after
twelve (12) months following the relevant Milestone deadline Seller has failed
to achieve Commercial Operation, or if for any reason Seller fails to pay, or
discontinues paying, the monthly liquidated damages provided for above,
Buyer may terminate this Agreement upon thirty (30) days' prior written
notice to Seller. This twelve (12) month period shall not be extended as a
result of a Force Majeure Event. Upon such termination, Seller shall pay
Buyer, within thirty (30) days of receipt of the termination notice, a lump sum
equal to the LD Amount. No other damages or remedy shall be available to
Buyer on the basis of such failure to meet the Milestone set forth in Section
4.3(b)(vi) or termination of this Agreement based on failure to achieve
Commercial Operation within twelve (12) months of that Milestone deadline.
(d) The Parties agree that the liquidated damages set forth in Sections
4.3(h) and 7.4(c) are reasonable and represent a fair and genuine estimate of
the damages Buyer will suffer upon the failure of Seller to achieve
Commercial Operation by the agreed upon date(s). The Parties acknowledge
that it would be impracticable or extremely difficult to fix Buyer's actual
damages, and therefore have deemed the liquidated damages set forth above to
be the amount of damage sustained by Buyer upon such a failure. The Parties
further agree that payment of such amount shall be as liquidated damages and
35
SANFRAN 90103 (2K)
not as a penalty, and is therefore not subject to avoidance under California
Civil Code section 1671.
7.5 Indemnification
Seller and Buyer agree to defend, indemnify, and hold each other, and their
respective officers, directors, employees and agents, harmless from and against
all claims, demands, losses, liabilities, and expenses (including reasonable
attorneys' fees) (collectively "Damages") for personal injury or death to
persons and damage to each other's physical property or facilities or the
property of any other Person to the extent arising out of, resulting from, or
caused by the negligent or intentional and wrongful acts, errors, or omissions
of the indemnifying Party. This indemnification obligation shall apply
notwithstanding any negligent or intentional acts, errors or omissions of the
indemnitees but the indemnifying Party's liability to pay Damages to the
indemnified Party shall be reduced in proportion to the percentage by which
the indemnitees' negligent or intentional acts, errors or omissions caused the
Damages. Neither Party shall be indemnified for its Damages resulting from
its sole negligence or willful misconduct. These indemnity provisions shall
not be construed to relieve any insurer of its obligation to pay claims
consistent with the provisions of a valid insurance policy.
Buyer shall defend, indemnify and hold Seller and its officers, directors,
employees and agents harmless from and against all claims, demands, losses,
liabilities and expenses (including reasonable attorneys fees) arising out of or
connected with the interaction with third parties in connection with WREGIS
or any alternate accounting system(s) designated by Buyer.
7.6 Buyer's Right to Operate
If Seller (i) fails to maintain the Availability Threshold for a period of nine (9)
months in any twelve (12) month period, or (ii) fails to generate Energy for
sixty (60) consecutive days, then Buyer or its designee may, but shall not be
obligated to, step-in and assume operational control from Seller of the Plant;
provided that Buyer shall not be permitted to step-in and take control so long
as Seller or any Lender(s) is using commercially reasonable efforts to remedy
the failures described in (i) or (ii) above. Buyer, its employees, contractors
and designees shall have the unrestricted right to enter the Plant to the extent
necessary to operate the Plant. Upon the exercise of this right, Buyer or its
36
SANFRAN 90103 (2K)
designee shall at all times operate the Plant using Prudent Utility Practice and
shall comply, to the extent commercially practicable, with the terms of this
Agreement. Notwithstanding the foregoing, Seller shall not be excused from
any obligation or remedy available to Buyer as a result of Buyer's operation
of, or election not to operate, the Plant. Buyer shall pay Seller the applicable
rate for Output provided hereunder, less any costs incurred by Buyer to operate
the Plant. Buyer shall indemnify and hold Seller harmless from any liability to
third parties arising out of Buyer's failure to operate the Plant using Prudent
Utility Practice. Upon Buyer's satisfaction that Seller has the ability to operate
the Plant in accordance with this Agreement, Seller shall resume operational
control.
Should Lender(s) refuse to finance the Plant, or materially condition such
financing, solely as a result of this Section 7.6, and Seller gives Buyer written
notice of such refusal to finance, Buyer shall have the following options: (1)
terminate this Agreement without liability of one Party to the other Party; (2)
renegotiate this Section 7.6 with Seller and Lender(s) in a manner mutually
acceptable; (3) delete this Section 7.6 in its entirety (which deletion will not
require Seller's additional consent); or (4) arrange for financing for the Plant
under materially equivalent terms and conditions as the Lender(s) were
prepared to provide but for this Section 7.6. If Buyer fails to elect and
complete one of these options within sixty (60) days of written notice from
Seller, Seller shall have the right to terminate this Agreement without liability
of one Party to the other Party.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Seller's Representations and Warranties
Seller represents and warrants to Buyer that as of the Effective Date:
(i) Seller is duly organized and validly existing as a limited liability
company under the laws of Delaware, and has the lawful power to
engage in the business it presently conducts and contemplates
conducting in this Agreement and Seller is duly qualified in each
37
SANFRAN 90103 (2K)
jurisdiction wherein the nature of the business transacted by it makes
such qualification necessary;
(ii) Seller has the legal power and authority to make and carry out this
Agreement and to perform its obligations hereunder; all such actions
have been duly authorized by all necessary proceedings on its part. As
of the Effective Date, (a) the Plant shall on the Commercial Operation
Date be a "qualifying small power production facility" as that term is
defined in Section 3(17)(C) of the Federal Power Act, and will possess
all of the exemptions from regulation provided in 18 CFR Sections
292.601(c) and 292.602; and (b) this Agreement is not required to be
filed with FERC and no approval (except with respect to "qualifying
small power production facility" status) with respect to this Agreement
is required from FERC. In the event that the Plant is not a "qualifying
small power production facility" on the Commercial Operation Date or
any date thereafter, Seller shall make appropriate filings under the
Federal Power Act within sixty (60) days so as to comply with
applicable law, subject at all times to the provisions of Article IX of this
Agreement;
(iii) The execution, delivery and performance of this Agreement by Seller
will not conflict with its governing documents, any applicable laws, or
any covenant, agreement, understanding, decree or order to which Seller
is a party or by which it is bound or affected;
(iv) This Agreement has been duly and validly executed and delivered by
Seller and, as of the date first set forth herein, constitutes a legal, valid
and binding obligation of Seller, enforceable in accordance with its
terms against Seller, except to the extent that its enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally or by general
principles of equity; and
(v) There are no actions, suits, proceedings or investigations pending or, to
the knowledge of Seller, threatened in writing against Seller, at law or in
equity before any Governmental Authority, which individually or in the
aggregate are reasonably likely to have a materially adverse effect on
the business, properties or assets or the condition, financial or otherwise,
38
SANFRAN 90103 (2K)
of Seller, or to result in any impairment of Seller's ability to perform its
obligations under this Agreement.
8.2 Buyer Representations and Warranties
Buyer represents and warrants to Seller that as of the Effective Date:
(i)
Buyer is a chartered city and municipal corporation, duly organized and
validly existing, and has the lawful power to engage in the business it
presently conducts and contemplates conducting in this Agreement and
Buyer is duly qualified in each jurisdiction wherein the nature of the
business transacted by it makes such qualification necessary;
(ii) Buyer has the legal power and authority to make and carry out this
Agreement and to perform its obligations hereunder and all such actions
have been duly authorized by all necessary proceedings on its part;
(iii) The execution, delivery and performance of this Agreement by Buyer
will not conflict with its governing documents, any applicable laws or
any covenant, agreement, understanding, decree or order to which Buyer
is a party or by which it is bound or affected;
(iv) This Agreement has been duly and validly executed and delivered by
Buyer and, as of the first date set forth herein, constitutes a legal, valid
and binding obligation of Buyer, enforceable in accordance with its
terms against Buyer, except to the extent that its enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally or by general
principles of equity; and
(v) There are no actions, suits, proceedings or investigations pending or, to
the knowledge of Buyer, threatened in writing against Buyer, at law or
in equity before any Governmental Authority, which individually or in
the aggregate are reasonably likely to have a materially adverse effect
on the business, properties or assets or the condition, financial or
otherwise, of Buyer, or to result in any impairment of Buyer's ability to
perform its obligations under this Agreement.
39
SANFRAN 90103 (2K)
ARTICLE IX
NO CHANGE TO RATES, TERMS OR CONDITIONS
The Parties intend that the standard of review for changes to any rate, charge,
classification, term or condition of this Agreement at FERC shall be the most
stringent standard permissible under applicable law. As to the Parties, it is
understood that the standard is the "Mobile -Sierra public interest" standard of
review, as stated by the United States Supreme Court in Morgan Stanley Capital
Group Inc. v. Public Utility District No. 1 of Snohomish County, Nos. 06-1457, 128
S.Ct. 2733 (2008), and consistent with the order of the Supreme Court in NRG Power
Marketing, LLC, et al., v. Maine Public Utilities Commission et al., No. 08-674, 130
S.Ct. 693 (2010) ("NRG Order"). As to all other persons it is intended that the same
standard, to the maximum degree as may be made applicable to other than the
Parties, apply, to the maximum degree permitted under the NRG Order.
ARTICLE X
MISCELLANEOUS
10.1 Assignment
The rights and obligations of this Agreement may not be assigned by either
Party without the prior written consent of the other Party, which consent shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing,
Seller may use subcontractors without Buyer's consent to comply with the
terms of this Agreement, provided that, notwithstanding the use of
subcontractors, Seller shall remain responsible for all of its obligations under
this Agreement. Buyer may furthermore use any agent it so designates for
scheduling and billing purposes, so long as Buyer remains responsible for all
of its obligations under this Agreement. Any purported assignment of this
Agreement in the absence of the required consent, except as provided in
Section 10.2, shall be void.
10.2 Financing
Notwithstanding Section 10.1, Seller may, without the consent of Buyer,
assign, transfer or hypothecate its rights under this Agreement to Lenders as
collateral security in connection with any financing of the purchase or
40
SANFRAN 90103 (2K)
operation of the Plant, provided that such Lender(s) or its designee agree(s), in
writing, that upon assuming any of Seller's prospective rights under this
Agreement, such Lender also shall be bound by all of Seller's prospective
obligations under this Agreement. Notwithstanding any such assignment,
Seller's obligations under this Agreement shall continue in their entirety in full
force and effect and Seller shall remain fully liable for all of its obligations
under or relating to this Agreement. Each such collateral assignment and any
purchaser or transferee shall be subject to Buyer's rights and defenses
hereunder and under applicable law. Seller shall provide prior written notice
to Buyer at least seven (7) days prior to any such collateral assignment.
In order to facilitate the obtaining of financing of the Plant, Buyer shall
execute, upon request, a commercially reasonable consent to assignment, with
respect to a collateral assignment hereof to Lenders in connection with the
documentation of the financing or refinancing for the Plant. Any assignment
in violation of this Agreement shall be void, ab initio. Buyer shall consider in
good faith any amendments to this Agreement proposed by Seller which relate
to financing of the Plant or other amendments requested by Seller in order to
receive or maintain financing from Lenders.
10.3 Notices
Any notice, demand, request, or communication required or authorized by this
Agreement shall be delivered either by hand, facsimile, overnight courier or
mailed by certified mail, return receipt requested with postage prepaid, to:
City of Palo Alto
250 Hamilton Avenue, Seventh Floor
Palo Alto, CA 94301
Attention: City Clerk
Telecopier: (650) 328-3631
on behalf of Buyer;
with a copy to:
41
SANFRAN 90103 (2K)
City of Palo Alto
250 Hamilton Avenue, Eighth Floor
Palo Alto, CA 94301
Attention: Senior Assistant City Attorney / Utilities
Telecopier: (650) 329-2646
and to:
City of Palo Alto
250 Hamilton Avenue, Third Floor
Palo Alto, CA 94301
Attention: Director of Utilities
Telecopier: (650) 321-0651
and to:
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Attention: Power Contracts Administrator
Telecopier: (916) 781-4255
and to:
Ameresco Crazy Horse LLC
c/o Ameresco, Inc.
111 Speen Street, Suite 410
Framingham, MA 01701
Attention: General Counsel
Telecopier: (508) 661-2201
Telephone: (508) 661-2200
42
SANFRAN 90103 (2K)
with a copy to:
Ameresco Crazy Horse LLC
c/o Ameresco, Inc.
111 Speen Street, Suite 410
Framingham, MA 01701
Attention: Vice President, Renewable Energy
Telecopier: (508) 661-2201
Telephone: (508) 661-2200
on behalf of Seller.
The designation and titles of the person to be notified or the address of
such person may be changed at any time by written notice delivered in the
manner set forth in this Section 10.3. Any such notice, demand, request, or
communication shall be deemed received (i) if delivered by hand by a Party or
sent by facsimile or (ii) upon receipt by the receiving Party if sent by courier
or U.S. mail.
10.4 Captions
All titles, subject headings, section titles and similar items are provided for the
purpose of reference and convenience and are not intended to be inclusive,
definitive or to affect the meaning of the contents or scope of the Agreement.
10.5 No Third Party Beneficiary
No provision of the Agreement is intended to, nor shall it in any way, inure to
the benefit of any customer, property owner or any other third party, so as to
constitute any such Person a third -party beneficiary under the Agreement, or of
any one or more of the terms hereof, or otherwise give rise to any cause of
action in any Person not a Party hereto.
10.6 No Dedication
No undertaking by one Party to the other Party under any provision of the
Agreement shall constitute the dedication of that Party's system or any portion
43
SANFRAN 90103 (2K)
thereof to the other Party or to the public or affect Seller as an independent
entity and not a public utility.
10.7 Entire Agreement; Integration
This Agreement, together with all appendices attached hereto, constitutes the
entire agreement between the Parties and supersedes any and all prior oral or
written understandings. No amendment, addition to or modification of any
provision hereof shall be binding upon the Parties, and neither Party shall be
deemed to have waived any provision or any remedy available to it, unless
such amendment, addition, modification or waiver is in writing and signed by
a duly authorized officer or representative of the Parties.
10.8 Applicable Law
The Agreement is made in the State of California and shall be interpreted and
governed by the laws of the State of California and/or the laws of the United
States, as applicable.
10.9 Venue
The Parties hereby submit to the exclusive jurisdiction of the federal courts for
the Northern District of the State of California; provided, however, that if such
federal courts sitting in the Northern District of the State of California refuse
jurisdiction, the Parties agree to the exclusive jurisdiction of the state courts
sitting in the County of San Francisco, State of California.
10.10 Nature of Relationship
The duties, obligations and liabilities of the Parties are intended to be several
and not joint or collective. The Agreement shall not be interpreted or
construed to create an association, joint venture, fiduciary relationship or
partnership between Seller and Buyer or to impose any partnership obligation
or liability or any trust or agency obligation or relationship upon either Party.
Seller and Buyer shall not have any right, power or authority to enter into any
agreement or undertaking for, or act on behalf of, or act as or be an agent or
representative of or otherwise bind the other Party.
44
SANFRAN 90103 (2K)
10.11 Good Faith and Fair Dealing; Reasonableness
The Parties agree to act reasonably and in accordance with the principles of
good faith and fair dealing in the performance of this Agreement. Unless
expressly provided otherwise in this Agreement, (i) wherever the Agreement
requires the consent, approval or similar action by a Party, such consent,
approval or similar action shall not be unreasonably withheld or delayed, and
(ii) wherever the Agreement gives a Party a right to determine, require, specify
or take similar action with respect to matters, such determination, requirement,
specification or similar action shall be reasonable.
10.12 Severability
Should any provision of the Agreement be or become void, illegal or
unenforceable, the validity or enforceability of the other provisions of the
Agreement shall not be affected and shall continue in full force and effect. The
Parties will, however, use their best endeavors to agree on the replacement of
the void, illegal, or unenforceable provision(s) with legally acceptable clauses
which correspond as closely as possible to the sense and purpose of the
affected provision.
10.13 Confidentiality
All information disclosed by Seller, including, without limitation, all
engineering documents, designs, specifications and financial information, shall
be kept confidential and shall not be disclosed to any third party except as
provided in this Section 10.13. Buyer acknowledges Seller's request to hold
all information regarding this Agreement confidential. Buyer shall disclose
such information to third parties only to the extent required by California law
(including, without limitation, the California Constitution, the California
Public Records Act and the Brown Act). Notwithstanding the foregoing,
either Party may disclose this Agreement to Salinas Valley Solid Waste
Authority or its representatives, NCPA or its representatives, or to Lender(s) or
potential Lender(s) or its/their representatives; provided that prior to such
disclosure, the recipient shall agree, in writing, to keep the material
confidential under terms no less stringent than as set forth in this Section
10.13. Buyer also shall be permitted to disclose this Agreement and related
information to the City Council of Palo Alto for the express purpose of
obtaining approval to execute this Agreement; provided that in connection
45
SANFRAN 90103 (2K)
with such disclosure Buyer shall only disclose such information to the extent
required by California law (including, without limitation, the California
Constitution, the California Public Records Act and the Brown Act). Each
Party shall be bound by its obligations of confidentiality hereunder for a period
of two (2) years from expiration or any earlier termination of this Agreement.
Notwithstanding anything to the contrary in this Section 10.13, nothing in this
Agreement shall restrict any Party from using or disclosing confidential
information in any manner it chooses, which confidential information (i) is or
becomes generally available to the public other than as a result of a disclosure
directly or indirectly by the disclosing Party or its representative; (ii) was
within the using or disclosing Party's possession prior to it being furnished
hereunder, provided that such information is not subject to another
confidentiality agreement with, or other contractual, legal or fiduciary
obligation of confidentiality to, any other party with respect to such
information; (iii) is rightfully obtained by a Party from third parties authorized
to make such disclosure without restriction; or (iv) is legally required to be
disclosed by judicial, administrative or other governmental action as
determined by such Party's attorney acting in good faith (including, but not
limited to, the California Constitution, the California Public Records Act and
the Brown Act), provided that prompt notice of said judicial or other
governmental action shall have been given to the non -disclosing Party and that
the non -disclosing Party shall, at its sole cost and expense, be afforded the
opportunity (consistent with the legal obligations of the disclosing Party) to
exhaust all reasonable legal remedies to maintain the confidential information
in confidence.
10.14 Cooperation
The Parties agree to reasonably cooperate with each other in the
implementation and performance of the Agreement. Such duty to cooperate
shall not require either Party to act in a manner inconsistent with its rights
under the Agreement.
10.15 Counterparts
This Agreement may be executed in two or more counterparts and by different
Parties on separate counterparts, all of which shall be considered one and the
same agreement and each of, which shall be deemed an original.
[signature page follows]
46
SANFRAN 90103 (2K)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed as of the Effective Date.
AMERESCO CRAZY HORSE LLC
By Amer /s96, tic., its sole'fnember-°--
By: V
Name: Michael T. Bakas
Title: Vice President
Date: f1 adnAl g, 2010
THE CITY OF PALO ALTO
APPROVAL AS TO FORM:
By:
Name: Grant Kolling
Title: Senior Assistant City Attorney
Date:
CITY OF PALO ALTO
By:
Name: Lalo Perez
Title: Administrative Services Director
Date:
CITY OF PALO ALTO
By:
Name: Valerie 0. Fong
Title: Utilities Director
Date:
CITY OF PALO ALTO
By:
Name: James Keene
Title: City Manager
Date:
47
SANFRAN 90103 (2K)
COMMONWEALTH OF MASSACHUSETTS
) SS
COUNTY OF MIDDLESEX
On this V.r\ day of INA Ok , Z1wo, before me, the undersigned notary
public, personally appeared iv i dl& T f,/4 , as the klt'u. fres i (C„',* of
Ameresco, Inc., a Delaware corporation, the sole member of Ameresco Crazy Horse
LLC, a Delaware limited liability company, proved to me through satisfactory
evidence of identification, which was p-b-w Vfne d1 , to be the person whose
name is signed on the preceding document, and acknowledged to me that he signed
the preceding document voluntarily for its stated purpose as V i u
of Ameresco, Inc., a Delaware corporation, the sole member of Ameresco Crazy
Horse LLC, a Delaware limited liability company.
My Commission expires 11 '12/ tv1
De K1 j
eicn
a? J s if •
y4 ,,LiMOf..01AIN'
%,,,,,IOTN �� Coe`
Notary Public
SANFRAN 90103 (2K)
48
APPENDIX A
SITE DRAWINGS
Seller shall provide to Buyer the final Site Drawings prior to the Commercial
Operation Date.
49
SANFRAN 90103 (2K)
APPENDIX B
FORM OF ATTESTATION
Ameresco Crazy Horse LLC
Environmental Attribute Attestation and Bill of Sale
Ameresco Crazy Horse LLC ("Ameresco") hereby sells, transfers and delivers to
("Customer")
the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation of
the indicated energy for delivery to the grid (as such term(s) are defined in the
(identify contract) (the "Contract') dated , 20
between Ameresco and Customer) arising from the generation for delivery to the grid of the energy by the
Facility described below:
Facility name and location: Fuel Type:
Capacity (MW):_ Operational Date:
(for facility that has added renewable capacity, show operational date and amount of new capacity)
As applicable: CEC Reg. no. Energy Admin. ID no. Q.F. ID no.
Dates MWhrs generated
20
20
20
in the amount of one Environmental Attribute or its equivalent for each megawatt hour generated; and Ameresco
further attests, warrants and represents as follows:
i) to the best of its knowledge, the information provided herein is true and correct;
ii) its sale to Customer is its one and only sale of the Environmental Attributes and associated
Environmental Attribute Reporting Rights referenced herein;
iii) the Facility generated and delivered to the grid the energy in the amount indicated as undifferentiated
energy; and
[check one:]
iv) Ameresco owns the Facility.
iv) to the best of Ameresco's knowledge, each of the Environmental Attributes and Environmental
Attribute Reporting Rights associated with the generation of the indicated energy for delivery to the
grid have been generated and sold by the Facility.
This serves as a bill of sale, transferring from Ameresco to Customer all of Ameresco's right, title and interest in
and to the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation
of the energy for delivery to the grid.
Contact Person: tel: 1-508-661-2200; fax: 1-508-661-2201
WITNESS MY HAND,
AMERESCO CRAZY HORSE LLC
By: Ameresco, Inc., its sole member
By
Its
Date:
B-1
50
SANFRAN 90103 (2K)
APPENDIX C
INSURANCE COVERAGES
At its own expense, Seller shall secure and maintain during the Term the
following insurance with the coverage amounts indicated for occurrences
during and arising out of Seller's performance of this Agreement. Such
insurance shall be placed with responsible and reputable insurance companies
in compliance with Requirements of Law applicable to Seller.
1. Workers' Compensation/Employer's Liability. Seller shall
maintain Workers' Compensation Insurance and Employer's
Liability Insurance which comply with Requirements of Law
applicable to Seller.
2. Automobile Liability. Seller shall maintain Automobile Liability
Insurance in compliance with Requirements of Law applicable to
Seller, including coverage for owned, non -owned and hired
automobiles for both bodily injury (including death) and property
damage, including automobile liability contractual endorsement
and uninsured/underinsured motorist protection endorsements.
3. Third Party Liability. Seller shall maintain third party liability
insurance in compliance with Requirements of Law applicable to
Seller on a project -specific basis covering against legal
responsibility to others as a result of bodily injury, property
damage and personal injury arising from the operation and
maintenance of the Plant. Such policy shall be written with a
limit of liability not less than $10,000,000 and a deductible not to
exceed $10,000. Such liability may be in any combination of
primary and excess/umbrella. Coverage shall include, but not be
limited to, premises/operations, explosion, collapse, underground
hazards, broad form property damage and personal injury
liability. Such coverage shall not contain exclusions for punitive
or exemplary damages, unless prohibited by law.
51
SANFRAN 90103 (2K)
APPENDIX D
SCHEDULING PROTOCOLS
1. Prior to three (3) business days before the end of a month, Seller is to
provide to NCPA and Buyer a monthly forecast of loads and/or
generation for the following month. At a minimum, monthly forecasts
will be hourly kilowatt (kW) values by weekday, Saturday, and
Sunday/Holiday.
2. No later than 1400 hrs. each Thursday, Seller shall provide a forecast of
loads and/or generation for the following week to the extent it is
different from the monthly forecast in Paragraph 1. Weekly forecasts
will be hourly kW values for each hour of the week.
3. Daily modifications to forecasts. Unless otherwise mutually agreed,
Seller may make changes to the weekly forecast by providing such
changes to NCPA prior to 0800 hrs. two (2) days before the active
scheduling day.
a. Example: For power that is scheduled for generation or delivery on
Thursday, March 25, 2010, changes must be submitted to NCPA by
no later than 0800 hrs. on Tuesday, March 23, 2010.
4. Hourly modifications to active schedules. Unless otherwise mutually
agreed, Seller may make changes to active schedules by providing such
changes to NCPA with a minimum of four (4) hours' notice before the
active hour to be changed. Changes to active schedules are limited to two
(2) changes per day, excluding forced outages, unless otherwise agreed to
between the parties. One request for a schedule change, of one hour or
multiple hours duration, constitutes one schedule change.
a. Example: For power that is scheduled for generation or delivery in
hour ending 1500 hrs. (for the period from 1401 hrs. to 1500 hrs.),
changes must be submitted to NCPA no later than 1100 hrs.
5. NCPA is to be notified of all planned or forced generation outages.
6. At Seller's request, NCPA will modify generation and load schedules for
unforeseen circumstances in accordance with the above scheduling
timeline constraints and NCPA Schedule Coordination Agreement.
52
SANFRAN 90103 (2K)
7. All notices and schedules are to be submitted to NCPA by phone, fax or
email to the following persons: Chief Dispatcher/Scheduler.
8. In the absence of forecasts and schedules as noted above, NCPA will
utilize the most current information provided by Seller in the development
and submission of schedules.
53
SANFRAN 90103 (2K)
EXAMPLE FORM OF DAY -AHEAD SCHEDULE
For: June ,
Hour Ended:
Expected Capability
1
2
3
4
5
6
7
R
9
10
11
12
13
14
15
16
17
1R
19
20
21
22
23
24
Expected Daily Temperatures, F
Low
High
Contact
Information:
Scheduling
Coordinator:
Facility:
CITY:
SANFRAN 90103 (2K)
APPENDIX E
PERFORMANCE TEST
Seller shall coordinate and schedule, with Buyer, a performance test after
completion of all equipment startup and commissioning activities. This
performance test may be performed before completing punch list items. Buyer
shall be permitted to witness the performance test, including access to and copies
of control room logs, control system display screens, and instrumentation data for
a reasonable period of time before, during and after the performance test, and may
also concurrently conduct a site inspection of the Landfill and Plant and associated
facilities, systems and equipment. Seller shall supply a written copy of the
performance test results to Buyer within five (5) business days following the
conclusion of the test.
The performance test shall continue for one hundred twenty (120) consecutive
hours (the "Test Period") to demonstrate the following:
1) Net Generator Output: The power output for each generator shall be recorded
for the Test Period to verify the net initial capacities. This performance test shall
be performed for all engine/generators simultaneously and will be considered
successful if the average net output for the Test Period is equal to eighty percent
(80%) of the net Initial Capacity (in this instance, Initial Capacity shall not include
any capacity of the Plant from equipment for recovering waste heat from the
prime mover engines of the Plant to utilize that waste heat to produce additional
Energy (to the extent such equipment for recovering waste heat is or is not
installed by Seller)) designated in this Agreement. All power measurements shall
be based on a power factor of 0.90.
2) Compliance: The performance test shall also demonstrate the ability of the
Plant to comply with all material safety, system reliability, environmental, and
other requirements of its permits, this Agreement, any interconnection agreements,
and the LFG Agreement.
SANFRAN 90103 (2K)
55
APPENDIX F
SELLER'S SAMPLE QUARTERLY FINANCIAL STATEMENT
Balance Sheets
December 31, 2006 and 2007
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Accounts receivable
Prepaid and other current assets
Total current assets
Other assets:
Project assets, net
Due from member
Debit issuance costs, net
Total other assets
LIABILITY AND MEMBER'S EQUITY
Current liabilities:
Current portion of long-term debt
Accounts payable
Accrued expenses
Total current liabilities
Long-term liabilities:
Long-term debt, less current portion
Deferred tax liabilities
Total long-term liabilities
Member's equity
SANFRAN 90103 (2K)
56
Statements of Operations
Years Ended December 31, 2006 and 2007
Revenues:
Electricity Sales
Costs of revenue:
Operation and maintenance
Depreciation of project assets
Gross profit (loss)
Operating expenses:
Selling, general and administrative
Operating income (loss)
Interest and other financing costs
Income (loss) before tax benefit (provision)
Income tax benefit (provision)
Net income (loss)
SANFRAN 90103 (2K)
Statements of Cash Flows
Years Ended December 31, 2006 and 2007
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred issuance costs
Deferred taxes
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable
Prepaid expenses
Accounts payable
Due to (from) member
Net cash provided by operating activities
Cash flows from investing activities:
Accounts payable relating to construction activity
Accrued expenses relating to construction activity
Purchase of project assets
Net cash used in investing activities
Cash flows from financing activities:
Increase in restricted cash
Capital contributions
Distributions to member
Proceeds from debt issuance
Debt issuance costs
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest
Income taxes
Supplemental disclosure of noncash transactions:
Accrued purchases of project assets
SANFRAN 90103 (2K)
ATTACHMENT I
Amendment No. 1 to Power Purchase Agreement
This Amendment No. 1 to Power Purchase Agreement ("Amendment No. 1") is
entered into this day of , 2010 (the "Effective Date") by and between the
City of Palo Alto, a California chartered municipal corporation ("Buyer") and Ameresco
Crazy Horse LLC, a Delaware limited liability company ("Seller").
RECITALS
A. Seller and Buyer entered into that certain power purchase agreement dated
, 2010 regarding the purchase and sale of electricity
generated at the Crazy Horse Canyon Landfill (the "Crazy Horse Landfill"),
located at 350 Crazy Horse Canyon Road, Salinas, California (the "Crazy Horse
Power Purchase Agreement").
B. An affiliate of Seller ("Affiliate") intends to develop, finance, build, own and
operate a landfill gas -based electric generating facility (the "Avenal Project"), to
be located at the Avenal Landfill (the "Avenal Landfill") located at 201 Hydril
Road, Avenal, California.
C. Seller and Buyer anticipate that Affiliate and Buyer may enter into a power
purchase agreement regarding the purchase and sale of electricity generated at the
Avenal Landfill (the "Avenal Power Purchase Agreement").
D. To induce Buyer to enter into the Avenal Power Purchase Agreement, Seller is
willing to reduce the price payable by Buyer under the Crazy Horse Power
Purchase Agreement if Buyer and Affiliate, each in their sole discretion, enter into
the Avenal Power Purchase Agreement and the Avenal Project reaches
commercial operation. Seller and Buyer are entering into this Amendment No. 1
to Power Purchase Agreement regarding the Crazy Horse Landfill to effect such
inducement.
NOW THEREFORE, in consideration of these premises and the mutual
promises set forth below, Seller and Buyer agree, as follows.
If (a) Buyer and Affiliate, each in their sole discretion, enter into the Avenal Power
Purchase Agreement, and (b) the Avenal Project reaches commercial operation (as it
may be defined in the Avenal Power Purchase Agreement), then the Price under the
Crazy Horse Power Purchase Agreement applicable at all times following the
satisfaction of such conditions shall be reduced by $5.00 per MWH, so that the
resulting Price will be less than what it would have been absent this Amendment No.
1 to Power Purchase Agreement. The Price, as reduced, shall escalate in accordance
with Appendix G, and shall be reflected in a new Appendix G-1.
IN WITNESS WHEREOF, the Parties have caused this Amendment No. 1 to
Power Purchase Agreement to be duly executed as of the Effective Date.
AMERESCO CRAZY HORSE LLC
By Amer sco, Inc., it ole member
By: t L By:
THE CITY OF PALO ALTO
APPROVAL AS TO FORM:
Name: Michael T. Bakas
Title: Vice President
Date: PI wry^ `9 1 Zulu
Name: Grant Kolling
Title: Senior Assistant City Attorney
Date:
CITY OF PALO ALTO
By:
CITY OF PALO ALTO
By:
Name: Lalo Perez
Title: Administrative Services Director
Date:
Name: Valerie O. Fong
Title: Utilities Director
Date:
CITY OF PALO ALTO
By:
Name: James Keene
Title: City Manager
Date:
COMMONWEALTH OF MASSACHUSETTS )
SS
COUNTY OF MIDDLESEX )
On this day of Pa rc:i-\ , Zol y, before me, the undersigned notary
public, personally appeared yh i �ha e l T ct k.15, as the Vic e. f\q' ,i -„-A- of
Ameresco, Inc., a Delaware corporation, the sole member of Ameresco Crazy Horse
LLC, a Delaware limited liability company, proved to me through satisfactory evidence
of identification, which was pctis rwu ('� lcyc.3 to be the person whose name is signed
on the preceding document, and acknowledged to me that he signed the preceding
document voluntarily for its stated purpose as Vic. •r e{e,_ A— of Ameresco, Inc.,
a Delaware corporation, the sole member of Ameresco Crazy Horse LLC, a Delaware
limited liability company.
My Commission expires /1 "/ Z " / V 7T
Notary P
COR)