HomeMy WebLinkAboutStaff Report 5428
City of Palo Alto (ID # 5428)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 3/17/2015
City of Palo Alto Page 1
Council Priority: Environmental Sustainability
Summary Title: Palo Alto CLEAN Program Updates and Extension
Title: Utilities Advisory Commission Recommendation that Council Continue
the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program at the Rate
of 16.5 Cents per Kilowatt-hour for Solar Resources for a 20-Year Contract
and a Program Cap of 3 Megawatts, and Add a 25-Year Contract Term Option;
Staff Recommendation that Council Expand CLEAN Program Eligibility to
Non-Solar Renewable Energy Resources with a Rate Equal to their Avoided
Cost for 20- and 25-year Contracts and Program Cap of 3 Megawatts; and
Approval of Amended CLEAN Program Power Purchase Agreement
From: City Manager
Lead Department: Utilities
Recommended Motion
I move that the Finance Committee recommend that the City Council:
1. Adopt a resolution (Attachment A) to:
a. Continue the Palo Alto CLEAN program at the current price of 16.5 cents per
kilowatt-hour (¢/kWh) for a 20-year contract, add a 25-year contract term option
with a 16.5 ¢/kWh price, and continue with a program limit of 3 megawatts
(MW) for solar energy resources, amending the CLEAN Program’s Eligibility Rules
and Regulations accordingly;
b. Amend the CLEAN Program’s Eligibility Rules and Requirements to allow non-
solar eligible renewable energy resources to participate; and
c. Offer local, non-solar eligible renewable energy resources a contract price of 9.3
¢/kWh for a 20-year contract term, or 9.4 ¢/kWh for a 25-year contract term,
with such resources subject to a separate 3 MW capacity cap; and
2. Direct staff to return to the Council with a review of the program in one year or at the
time the program capacity is filled, whichever comes first.
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Recommendation
Staff and the Utilities Advisory Commission (UAC) request that the Finance Committee
recommend that the City Council:
1. Adopt a resolution to continue the Palo Alto CLEAN program at the current price of 16.5
cents per kilowatt-hour (¢/kWh) for a 20-year contract, add a 25-year contract term
option with a 16.5 ¢/kWh price, and continue with a program limit of 3 megawatts
(MW) for solar energy resources, amending the CLEAN Program’s Eligibility Rules and
Regulations accordingly;
2. Direct staff to return to the Council with a review of the program in one year or at the
time the program capacity is filled, whichever comes first; and
3. Approve the attached amended CLEAN program Power Purchase Agreement (PPA)
(Attachment B) to implement the recommended changes and delegate authority to the
City Manager to make any additional changes otherwise necessary to implement any of
the recommended changes identified in this report that are approved by Council.
In addition, staff requests that the Finance Committee recommend that the City Council adopt
a resolution:
1. Amending the Palo Alto CLEAN Program’s Eligibility Rules and Requirements to allow
non-solar eligible renewable energy resources to participate; and
2. Offer local, non-solar eligible renewable energy resources a contract price of 9.3 ¢/kWh
for a 20-year contract term, or 9.4 ¢/kWh for a 25-year contract term, with such
resources subject to a separate 3 MW capacity cap.
The resolution (Attachment A) included as part of this Staff Report incorporates all of the above
recommendations. The amended Palo Alto CLEAN Eligibility Rules and Requirements, which
implement all of the above recommendations as well, are shown in Exhibit A-1 attached to the
resolution. As noted above, staff also seeks approval of an amended PPA (Attachment B)
included with this staff report, which incorporates all of the above recommendations. Staff also
requests that Council delegate authority to the City Manager to make additional changes to the
CLEAN Program PPA that are approved by the City Attorney’s office as may be otherwise
necessary to implement the recommendations set forth in this Staff Report that are approved
by Council.
Executive Summary
In March 2012 the Council adopted the Palo Alto CLEAN (Clean Local Energy Accessible Now)
program (also commonly referred to as a feed-in tariff, or FIT, program). The program was
designed to address the Long-term Electric Acquisition Plan (LEAP) Objective to enhance supply
reliability through the pursuit of local generation opportunities, and to complement the City of
Palo Alto Utilities’ (CPAU’s) existing PV Partners solar rebate program. Palo Alto CLEAN created
an additional alternative for property owners by enabling them to build a new solar system on
their property and sell the energy to CPAU under a long-term, fixed-rate contract rather than
participate in the PV Partners program and use the energy on site.
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Though solar developers expressed interest in Palo Alto CLEAN in 2012, the price (14 ¢/kWh for
a 20-year contract) proved insufficient to facilitate the most common business model used by
project developers, which involves a third-party investor leasing roof space from a property
owner. In December 2012, Council increased the Palo Alto CLEAN program price to 16.5 ¢/kWh
for a 20-year contract with a program cap of 2 megawatts (MW). In February 2014, Council
increased the program capacity limit from 2 MW to 3 MW. At that time, Council directed staff
to return with a review of the program in one year, or at the time the program cap was
reached.
The UAC and staff recommend continuing the Palo Alto CLEAN program for solar resources at
the current 16.5 ¢/kWh price, with a program limit of 3 MW for solar energy resources.
Although no applications have been received to date, there continues to be interest by
developers in the program. Staff has continued its marketing efforts to commercial customers
and property owners, both for the PV Partners program and Palo Alto CLEAN, but expects that
most growth in commercial solar installations will come from customers participating in the PV
Partners program, with Palo Alto CLEAN participation increasing slowly as property owners are
educated about how to make the program work for them and as funding runs out for the PV
Partners program. Although Palo Alto CLEAN is available to all, including residential, customers,
staff expects residents will continue to install PV systems that generate electricity for use on-
site and have the advantages of lowering utility bills through net metering.
In response to comments from solar developers, the UAC and staff also recommend including a
25-year contract term option for solar resources in order to encourage participation. Extending
the maximum contract term length by five years will increase the City’s total cost commitment
over the life of the program from $20 million to $25 million.
Finally, staff recommends expanding Palo Alto CLEAN to include non-solar renewable energy
generation resources, as staff expressly indicated would ultimately be done at the time the
program was first introduced in 2012 and at the time that Council terminated the Power from
Local Ultra-clean Generation Incentive (PLUG-In) program in June 2014. However, because
such resources do not provide the same level of local benefits as local solar generation, staff
recommends compensating these resources at their avoided cost level (contract price of 9.3
¢/kWh for a 20-year contract term, or 9.4 ¢/kWh for a 25-year contract term) consistent with
adopted Council policy Non-solar eligible renewable energy resources would be subject to a
separate 3 MW capacity cap.
The UAC discussed staff’s recommendations at its December 10, 2014 meeting and
unanimously agreed with staff’s recommendations to extend the Palo Alto CLEAN program’s
16.5 ¢/kWh price for local solar resources and to add a 25-year contract term option while
retaining the 3MW program limit. However, the UAC did not support staff’s recommendation
to expand the program to include local, non-solar resources as it did not feel that staff’s
presentation and the report to the UAC provided sufficient support to justify the need for the
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expansion of the program to non-solar eligible renewable energy resources set forth in the
recommendation. In response, staff expanded the discussion in this report to support that
recommendation, including by referring to: the original CLEAN program’s intent to expand to
non-solar resources, the intent when Council terminated the PLUG-In program to capture any
local renewable resources under the Palo Alto CLEAN program, and the need to be consistent
with the Council policy to pay only avoided cost for energy produced by a potential future
anaerobic digester project.
Background
CPAU has a long history of supporting solar power. It initiated the PV Partners program in
1999, and in 2007 the program was expanded to meet the requirements of the State’s Million
Solar Roofs Bill (Senate Bill 1 (SB1), 2006). Under the PV Partners program CPAU provides
rebates to residential and commercial customers who install solar for their own use. The
program has been successful at stimulating solar development, with 5.9 MW of local solar
capacity installed by nearly 681 participants as of the end of September 2014. Palo Alto is one
of the top ten utilities nationwide in PV installations per customer.
Through the PV Partners program, CPAU already provides substantial financial support for local
solar. CPAU’s total SB1 program budget for 2008 through 2017 is $13 million and the total
program goal is 6.6 MW. When this goal is achieved the energy generated by the program
annually will be 11.2 GWh (1.1% of Palo Alto load). The cost of the program is roughly $1.3
million per year for the rebates plus the cost of administration and the lost distribution system
revenue associated with net metering. At the same time, the local solar generation reduces
CPAU’s total supply costs by approximately $1.15 million per year by reducing the cost of
energy purchases, transmission and capacity so that the rate impact is less than 0.2% per year
while rebates are being paid. Due to SB1, PV Partners is a state mandated program, and
regardless of the rate impact, CPAU is required to offer it until the total program budget of $13
million has been exhausted, which is expected to occur within the next one to two years.
In March 2012, the City expanded its support for local distributed generation by launching Palo
Alto CLEAN with a price of 14 ¢/kWh for a 20-year contract (Staff Report 2548, Resolution
9236). The program expanded the options available to property owners by enabling them to
sell energy directly to CPAU under a long term contract instead of using the energy on site.
Initially Palo Alto CLEAN generated a high level of interest from solar developers who wanted to
lease rooftops in Palo Alto in order to build a solar system and sell the energy to CPAU.
However, it soon became apparent that the 14 ¢/kWh price was insufficient to enable third-
party developers to earn their target returns while still offering attractive rooftop lease rates.
In December 2012, Council extended the CLEAN program and increased the rate to 16.5 ¢/kWh
for a 20-year contract (Staff Report 3316, Resolution 9308). In February 2014, Council extended
the CLEAN program again at the rate of 16.5 ¢/kWh for a 20-year contract, increased the
program capacity limit to 3 MW, and requested that staff return to review the program after
one year or when the 3 MW cap was reached (Staff Report 4378, Resolution 9393).
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The Palo Alto CLEAN program has no deadline for participation and interest by solar developers
remains, but no applications have been received for the CLEAN program as of the end of
October 2014. However, CPAU has provided assistance to the Public Works Department to
work with the CLEAN Coalition to issue a Request for Proposals to install solar canopies on the
top decks of five city-owned parking garages (three downtown and two on Cambridge Avenue),
which would provide an estimated 1.5 MW of local solar capacity. Staff interviewed all three
respondents, has selected a top candidate, and (at the time of this writing) is in negotiations for
the site lease. As soon as City Council approves the site lease, the applicant may apply to the
Palo Alto CLEAN program.
Staff also joined a Department of Energy funded initiative, Commercial Acceleration of Solar
Energy for Silicon Valley (CASE-SV), to offer free assistance and educational webinars to
companies in Silicon Valley. Staff has promoted the CLEAN program in local meetings with solar
developers as well as presenting information at the Solar Power International conference held
in October 2014. The property owners who have investigated the program to date either chose
not to participate or chose to evaluate projects under the PV Partners program instead.
However, staff still regularly receives new inquiries about the Palo Alto CLEAN program from
developers and property owners.
Despite the lack of participation, there have been positive outcomes from the program offering.
The program prompted developers to take a serious look at the cost of developing solar
projects in Palo Alto, and some of them shared that information with CPAU staff. At the same
time, the solar project permitting processes at the development center have been improved
based on input gathered from solar developers. In addition, many public utilities across the
country have called CPAU to discuss how to follow Palo Alto’s lead and develop a CLEAN
program in their own service areas
Discussion
When establishing the CLEAN price of 16.5 ¢/kWh in December 2012, Council reviewed the
market value of the local solar energy and determined that there were additional financial and
environmental benefits to increasing local solar generation. In February 2014, when Council re-
affirmed the 16.5 ¢/kWh price, staff estimated the cost of buying renewable energy outside of
Palo Alto and transmitting it to Palo Alto was 9.9 ¢/kWh (including renewable energy value,
transmission and capacity) for a 20-year contract. Therefore, purchasing the energy generated
from 3 MW of local solar projects at 16.5 ¢/kWh was expected to cost about $320,000 per year
more than buying the same energy outside of Palo Alto (and having it transported to Palo Alto).
This was equivalent to a 0.27% increase in the electric utility’s costs. Council determined that
this additional cost was acceptable as a means to encourage local solar installations and in light
of additional benefits of encouraging local solar generation.
Updated Value of Renewable Energy
In June 2014, the City executed a long-term Power Purchase Agreement (PPA) to buy
renewable energy from a 25 MW solar energy project near Bakersfield at a cost of about 6.9
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¢/kWh (Staff Report 4791, Resolution 9416). The cost to deliver that energy to Palo Alto,
combined with the capacity related benefits that local solar would provide, is projected to be
an additional 3.4 ¢/kWh, for a total value of local solar energy of 10.3 ¢/kWh. Based on the
cost of the City’s latest signed PPA (plus transmission costs and capacity value) of 10.3 ¢/kWh,
the cost of continuing the 16.5 ¢/kWh CLEAN price for 3 MW of solar PV projects is about
$310,000 per year more than buying the same energy outside of Palo Alto. This is equivalent to
a 0.26% increase in the electric utility’s costs.
Palo Alto CLEAN Program Price for Local Solar – History and Proposal
Table 1 below shows the history of the Palo Alto CLEAN price since the program started as well
as the proposed CLEAN price for local solar, which is a continuation of the current 16.5 ¢/kWh
rate.
Table 1 – Palo Alto CLEAN Program Prices for Local Solar
Council
Approval
Avoided Cost of Local
Solar Generation *
(¢/kWh)
CLEAN Price
(¢/kWh)
Annual Excess
Cost (Rate Impact)
Total Excess
Cost over 20-
year Term
March 2012 13.553 14.0 $15,000 (0.01%)
for 2 MW cap
$300,000
December 2012 11.6 16.5 $160,000 (0.10%)
for 2 MW cap
$3.2 million
February 2014 9.9 16.5 $332,500 (0.27%)
for 3 MW cap
$6.45 million
Current Proposal 10.3 16.5 $310,000 (0.26%)
for 3 MW cap
$6.2 million
* The cost of buying renewable energy outside of Palo Alto and transmitting it to Palo Alto.
Add a 25-Year Contract Term Option
Since the inception of Palo Alto CLEAN, staff has held numerous meetings and conversations
with solar developers who are eager to participate in the program. To date, however, these
developers have been unsuccessful in finding sufficient local rooftop space at lease rates that
are low enough to make the project financially attractive under the current program structure.
Although, as noted above, Public Works recently issued a Request for Proposals to lease
rooftop space on five City-owned parking garages, and is currently in negotiations on the lease
with the finalist – who is expected to apply to participate in the CLEAN program once the lease
is approved by the City Council.
Recently, staff distributed a survey to a large number of local solar developers inquiring about
program modifications that they would like to see. A number of these developers indicated that
the CLEAN Program might be somewhat more attractive to them (and their investors) if the PPA
term were extended from 20 to 25 years in part, to synchronize the term of a PPA with the 25-
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year expected life of solar panels. The City does not have a strong preference for one contract
term or the other; therefore, staff and the UAC recommend allowing developers to choose
either a 20- or 25-year contract term at the time they execute a CLEAN program PPA. The
levelized value of local solar energy is estimated at 10.4 ¢/kWh for a 25-year contract term so
the impact on ratepayers is $7.6 million over a 25-year term as shown in Table 2.
Table 2 – Cost of Palo Alto CLEAN Program by Contract Term
Contract
Term
Avoided Cost of Local Solar
Generation * (¢/kWh)
CLEAN Price
(¢/kWh)
Annual Excess
Cost for 3 MW
Total Excess
Cost over Term
20 years 10.3 16.5 $310,000 $6.2 million
25 years 10.4 16.5 $305,000 $7.6 million
* The cost of buying renewable energy outside of Palo Alto and transmitting it to Palo Alto.
Expanding CLEAN Program Eligibility to Non-Solar Eligible Renewable Energy Resources at their
Avoided Cost
When Council first approved the Palo Alto CLEAN program in March 2012, the impetus for the
program was the community’s desire for a feed-in tariff program to encourage greater rates of
large rooftop solar PV development in Palo Alto. At the time, there was little to no potential
seen for other types of renewable energy resources to be sited locally, due to lack of resource
potential and developable land. However, in the March 2012 staff report (Staff Report 2548),
staff noted that, “[w]hile the first year of the program is restricted to solar systems on large
rooftops, future program years may include a wider range of renewable technologies and may
be available to smaller projects
In addition, in June 2014 Council terminated the PLUG-In program (Staff Report 4878,
Resolution 9440). This program was designed to encourage high efficiency renewable and non-
renewable local distributed generation projects. Besides the program having no participants
and being inconsistent with the City’s recently adopted Carbon Neutral Plan, another reason
cited in the report for the program’s termination was that the City “anticipates expanding [the
Palo Alto CLEAN program] to other [non-solar] local renewable electric supplies.”
As new technology and energy storage systems are developed, local renewable energy
generation, including technology beyond local solar, in combination with storage systems, has
the potential to provide resiliency to the City’s electric distribution system. Further, local
renewable energy generation that participates in the CLEAN Program provides long-term supply
cost certainty and value to the entire community—benefits that are not provided when such
energy is sold to the City on a short-term basis or used on-site.
For these reasons, staff recommends expanding the program’s eligibility criteria to include all
eligible renewable energy resources (as defined by state law), rather than limiting participation
to solar resources. Doing so would permit the proposed anaerobic digester facility near the
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Baylands to apply to the CLEAN program if Public Works staff decides to sell all of that
resource’s output to CPAU, rather than using it onsite to meet the Regional Water Quality
Control Plant’s (RWQCP’s) energy needs. Expanded eligibility beyond solar resources would
also allow other locally-sited resources to participate in the program, so long as they meet the
state’s definition of a renewable resource1 and satisfy all of the City’s other zoning and
permitting requirements.
Palo Alto would not be the first utility in the country to allow non-solar resources to participate
in a feed-in tariff (FIT) program; the Los Angeles Department of Water and Power currently has
a 100 MW FIT program that is likewise open to all resources that are deemed to be renewable
under state law. Sonoma Clean Power also has a FIT program with broad eligibility2.
However, because solar generation facilities provide certain local economic and environmental
benefits that do not apply to non-solar resources, staff recommends offering a contract price to
these non-solar projects that is equal to the estimated cost of buying renewable energy outside
of Palo Alto and transmitting it to Palo Alto (9.3 ¢/kWh for a 20-year contract, or 9.4 ¢/kWh for
a 25-year contract). This pricing is consistent with prior Council action to price non-solar
renewable resources at avoided cost. The City Council’s May 12, 2014 motion stated that the
proposed anaerobic digester facility be compensated at “the local market price for Northern
California for green electricity” for any electrical generation that the facility produces and sells
to CPAU (Staff Report 4744).
The avoided cost estimate for non-solar resources assumes that the generation resource will be
producing energy essentially around the clock all year long, which is, for example, how an
anaerobic digester facility would be expected to operate. This is in contrast to a solar energy
resource, which only produces power during the middle of the day, when wholesale energy
costs are significantly higher. This difference in the generation profile of solar resources is the
reason behind the 1.0 ¢/kWh premium in the avoided cost of solar energy compared to non-
solar energy. Because the contract price for these resources will be equal to the value of
renewable energy generation to the City, their participation in the Palo Alto CLEAN program will
not have any rate impact on customers.
While staff believes that there is unlikely to be much uptake from non-solar resources due to
the lack of non-solar resource potential and the high cost of land in Palo Alto, staff recommends
that the non-solar renewable resources be subject to a 3 MW cap, which is separate from the 3
MW cap for solar resources. Even though Public Works staff expects that a potential anaerobic
digester is unlikely to participate in the CLEAN program, as it would be more financially
beneficial to the project to use its output onsite to meet the RWQCP’s electricity needs,
1 The state’s renewable resource definitions are articulated in Section 399.12(e) of the Public Utilities Code and
Section 25741 of the Public Resources Code. Examples of eligible renewable resources (besides solar) include wind,
landfill gas, biomass, geothermal, small hydroelectric and ocean/tidal resources. Electrical generation provided by
a fuel cell is eligible as well, provided that the fuel cell uses a renewable fuel to produce this output.
2 See Sonoma Clean Power’s ProFIT program: https://sonomacleanpower.org/profit/.
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expanding the program will provide another option for consideration when evaluating the
economics of that technology.
Recommendation
As noted above, in addition to adding a 25-year contract term option, staff and the UAC
recommend that the current CLEAN price of 16.5 ¢/kWh for solar projects continue for another
year, or until the 3 MW cap for solar projects is reached. There has been renewed interest by
customers and solar developers and solar system costs have continued to decrease so it is
anticipated that the price may be sufficient to attract some participation in 2015.
Further, staff recommends opening the CLEAN program to non-solar renewable energy
resources, and offering such resources a contract price equal to the avoided cost of energy for
baseload generation facilities: 9.3 ¢/kWh for a 20-year contract, or 9.4 ¢/kWh for a 25-year
contract, under a separate 3MW cap.
Staff updated the CLEAN program PPA (Attachment B) so that it can accommodate the two
options for the delivery term (20-year and 25-year) and so that it can accommodate non-solar
eligible renewable energy resources. Staff additionally made minor clerical changes and
removed Section 6.9 (“Participating Intermittent Resource Program”), which addresses a
program that is no longer available to new generation facilities. Staff seeks Council approval of
the amended CLEAN program PPA and also requests delegation of authority from Council to the
City Manager to make such other changes to the CLEAN program PPA that are approved by the
City Attorney’s office as may be necessary to implement any recommendations set forth in this
staff report that are approved by Council.
Commission Review and Recommendation
The UAC considered staff’s recommendation at its December 10, 2014 meeting. While
expressing overall support for the Palo Alto CLEAN program, and expressing no concerns about
adding a 25-year contract term option to the program, some commissioners voiced concerns
about the proposal to expand the program to non-solar renewable energy resources.
For example, some Commissioners indicated concerns about potential unanticipated
consequences resulting from opening the program to such resources, in terms of the type and
scale of projects that might participate. Staff’s original proposal to the UAC included no cap on
non-solar resource participation. The commission expressed general support for including a
program cap on participation by non-solar resources. Commissioners also stated their interest
in seeing a fuller discussion of the rationale and potential impacts of opening the program up to
non-solar resources before providing their formal endorsement for such a proposal.
After its discussion, the UAC voted 3-2 (with Vice Chair Waldfogel and Commissioners Eglash
and Hall voting yes, Chair Foster and Commissioner Melton voting no, Commissioner Cook
abstaining, and Commissioner Chang absent) to recommend that the City Council:
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1. Continue the Palo Alto CLEAN program at the current price of 16.5 cents per kilowatt-
hour (¢/kWh) for a 20-year contract, add a 25-year contract term option with a 16.5
¢/kWh price, and continue with a program limit of 3 megawatts (MW) for solar
resources; and,
2. Direct staff to return to the Council with a review of the program in one year or at the
time the program capacity is filled, whichever comes first.
The draft notes from the UAC’s December 10, 2014 meeting are provided as Attachment C.
In response to the commission’s comments at its December 10, 2014 meeting, staff modified its
proposal by including a program participation cap of 3 MW on non-solar renewable energy
resources. In addition, staff has expanded the discussion on the proposal to expand the CLEAN
program to non-solar resources in this report—specifically, noting the Council’s May 12, 2014
motion establishing the compensation rate to be paid by CPAU to the anaerobic digester for
electricity sales, and elaborating on the participation eligibility requirements for non-solar
resources and the historical background for expanding the program’s eligibility criteria.
Resource Impact
Staff estimates the current cost of buying energy from solar resources outside of Palo Alto is
10.3 ¢/kWh (including transmission and capacity) for a 20-year contract, or 10.4 ¢/kWh for a
25-year contract. Purchasing the energy generated from 3 MW of local solar projects at 16.5
¢/kWh is expected to cost about $310,000 per year more than buying the same energy outside
of Palo Alto. This is equivalent to a 0.26% increase in the electric utility’s costs. If the program
increased costs by $310,000 per year, staff has determined that the system average electric
rate would have to increase by 0.03 ¢/kWh. This is equivalent to a bill impact of $1.50 per year
for the median residential customer using 410 kWh/month, or $2.30 per year for a residential
customer using 650 kWh/month.
Expanding the program to local, non-solar renewable energy projects is not expected to impact
the cost to the Utility since the recommended price for those projects is equal to the value of
acquiring such projects outside the City.
In addition to the energy costs described above, staff time is associated with marketing and
project review. The project review can be absorbed with existing staff over the life of the
program, and costs will be recovered through project review fees. The additional marketing will
require about 0.1 FTE of staff time and may involve an additional budget for marketing
materials, which would be requested through the annual budget process. The marketing work
will be absorbed by existing staff, but will decrease time spent on other account management
and efficiency program delivery activities.
Policy Implications
The recommendation to continue the CLEAN program and expand it to non-solar eligible
renewable energy resources supports the City’s carbon neutral electric supply portfolio policy
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as well as the LEAP Objective to enhance supply reliability through the pursuit of local
generation opportunities.
Environmental Review
Adoption of this resolution is not subject to California Environmental Quality Act (CEQA) review
under California Public Resources Code section 21080(b)(8), because the price adopted reflects
the reasonable cost of the CLEAN Program’s operating expenses, including the cost of
purchasing renewable energy from local renewable energy generating systems and the value of
local benefits to CPAU and its ratepayers. Approval of the amended CLEAN program PPA is not
a project under CEQA, and therefore, no environmental assessment is necessary.
Attachments:
Attachment A: Resolution Expanding the Palo Alto CLEAN Program's Eligibility to Non-
Solar Renewable Energy Resources and Adding a 25-Year Contract Term Option (with
Exhibit A-1 Revised Program Rules) (PDF)
Attachment B: Updated Palo Alto CLEAN Power Purchase Agreement (PDF)
Attachment C: Final Excerpted Minutes of the December 10 2014 UAC Meeting (PDF)
*NOT YET APPROVED*
Resolution No. _________
Resolution of the Council of the City of Palo Alto Expanding the Palo Alto Clean Local Accessible
Now Program’s Eligibility to Non-solar Renewable Energy Resources and Adding a 25-Year
Contract Term Option
R E C I T A L S
A. On March 5, 2012, the City approved the Palo Alto Clean Local Energy Accessible
Now (CLEAN) Program (or feed-in tariff). Under the Palo Alto CLEAN Program, participants who
build a new solar generating system in Palo Alto may obtain a long-term, fixed-price contract
with the City to sell the energy from the system to the City’s electric utility.
B. The first program year of Palo Alto CLEAN commenced on April 2, 2012 and was
originally set to terminate on December 31, 2012.
C. On February 3, 2014, Council approved Resolution 9393, which continued Palo
Alto CLEAN and established a maximum total Palo Alto CLEAN Program cost commitment of
$20,000,000 over the life of the program. This amount was sufficient for a program cap of 3
megawatts (MW) of generating capacity.
D. The City wants to add a 25-year contract term option at a price of 16.5 cents per
Kilowatt-hour (kWh), while continuing to offer the program at the current price of 16.5 cents
per kWh for a 20-year contract under the existing 3 MW cap of generating capacity.
E. The City also wants to open the program to local, non-solar eligible renewable
energy resources and offer contract prices of 9.3 cents per kWh for a 20-year contract term or
9.4 cents per kWh for a 25-year contract term for such resources.
F. The City intends that non-solar, local eligible renewable energy resources not be
counted toward the Palo Alto CLEAN Program’s 3 MW generating capacity cap for solar
resources, but be subject to a separate 3 MW generating capacity cap of their own.
The Council of the City of Palo Alto (“City”) RESOLVES:
SECTION 1. The Council adopts revised Palo Alto CLEAN Program Eligibility Rules
Requirements, set forth in Exhibit A-1 attached to this Resolution.
SECTION 2. The Council authorizes the City Manager or his designee to sign contracts
for the output of one or more solar, or other non-solar eligible renewable energy resource
meeting the CLEAN Program Eligibility Rules and Requirements described in Section 1. The total
CLEAN Program cost commitment made by the City during the life of the program shall not
exceed $25,000,000, which is sufficient for a program cap of 3 MW of local solar generating
capacity and 3 MW of local, non-solar generating capacity over a 25-year contract term.
ATTACHMENT A
*NOT YET APPROVED*
SECTION 3. The Council finds that the City of Palo Alto Utilities’ (CPAU’s) purchase of
energy from local renewable sources provides additional local benefits to CPAU when
compared to energy purchased outside Palo Alto, which in turn become benefits to CPAU
ratepayers and the local community. These benefits include a reduction in CPAU’s costs and
energy losses associated with energy transmission and distribution, and a reduction in CPAU’s
capacity requirements. When the City purchases energy from local sources, a portion of the
City’s electric expenditures remain within the community, which provides revenue for local
economic development. Locating generation near load centers can also reduce the need for
new transmission lines, thus reducing the environmental impacts of the electric system and
improving reliability in transmission-constrained regions like the Greater Bay Area. When solar
systems are installed on rooftops and parking facilities, the shade created reduces the energy
required for cooling and creates value for vehicle owners. In addition, as new technology and
energy storage systems are developed, the local renewable energy generation, in combination
with storage systems, has the potential to provide resiliency to the City’s electric distribution
system. Further, local renewable energy generation that participates in the CLEAN Program
provides long-term certainty and value to the entire community – benefits that are not
provided when such energy is sold to the City on a short-term basis or used on-site. The
Council therefore finds that offering the Palo Alto CLEAN Program to participants is a
reasonable cost of providing electric service to CPAU’s electric customers.
SECTION 4. The Council finds that the adoption of this resolution is not subject to
California Environmental Quality Act review under California Public Resources Code section
21080(b)(8), because the rate adopted reflects the reasonable cost of the CLEAN Program’s
operating expenses, including the cost of purchasing renewable energy from local solar
generating systems, and the value of local benefits to CPAU and its ratepayers as described in
SECTION 3 of this resolution.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ _______________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ _______________________
Senior Deputy City Attorney City Manager
___________________________
Director of Utilities
___________________________
Director of Administrative Services
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW)
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS
Effective __________
A. PARTICIPATION ELIGIBILITY:
The Palo Alto Clean Local Energy Accessible Now Program (the “CLEAN Program”) is open to
participation by any Eligible Renewable Energy Resource, as defined in Section D.4, that
satisfies these Program Eligibility Rules and Requirements.
B. TERRITORIALITY REQUIREMENT:
In order to be eligible to participate in the CLEAN Program, an Eligible Renewable Energy
Resource must be located in and generating electricity from within the utility service area of
the City of Palo Alto.
C. PRICES AND TERM FOR ELIGIBLE RENEWABLE RESOURCES:
The following purchase price shall apply to the electricity produced by an Eligible
Renewable Energy Resource participating in the Program, except as provided in Section D.5.
Solar Energy Resources:
Contract Term Contract Price
20 years $0.165 / kWh
25 years $0.165 / kWh
Other, Non-Solar Eligible Renewable Energy Resources:
Contract Term Contract Price
20 years $0.093 / kWh
25 years $0.094 / kWh
D. ADDITIONAL RULES AND REQUIREMENTS:
1.The owner of the Eligible Renewable Energy Resource shall enter into an Eligible
Renewable Energy Resource Power Purchase Agreement (“PPA”) with the City of Palo
Alto prior to delivering energy to the City.
2.The maximum, aggregate generation capacity from all solar facilities participating in the
CLEAN Program is three (3) Megawatts (“MW”) (the “Program Capacity – Solar”, based
on the generating facility’s California Energy Commission rating, CEC-AC). Generating
capacity from non-solar, eligible renewable energy resources will not be counted
towards this 3 MW cap, but will be subject to a separate 3 MW cap of its own (the
“Program Capacity – Non-Solar”.
3.An application for participation in the CLEAN Program to sell output to the City (the
“Application”) may be submitted at any time. Applications will be considered in the
EXHIBIT A-1
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW)
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS
Effective __________
order received.
4. Eligible Renewable Energy Resource means an electric generating facility that: (a) is
defined and qualifies as an “eligible renewable energy resource” under California Public
Utilities Code Section 399.12(e) and California Public Resources Code Section 25741,
respectively, as amended; and (b) meets the territoriality requirement set forth in
Section B.
5. The California Energy Commission’s (“CEC”) certification of the Eligible Renewable
Energy Resource shall be required within six (6) months of the commercial operation
date of the generating facility; the facility’s owner shall provide written notice of the
CEC’s certification to the City within ten (10) business days of receipt of said
certification. If the City agrees, in its sole discretion, to take delivery of the generating
facility’s electricity prior to the CEC’s certification, then, as the facility’s electricity
cannot be considered in fulfillment of the City’s RPS requirements, the price that the
City will pay for the generating facility’s electricity (the “Pre-Certification Price”) will be
set to $0.076 per kWh (for a 20-year contract term) or $0.08 per kWh (for a 25-year
contract term), based on the estimated levelized cost of brown power over a 20-year or
25-year period, respectively. Upon the CEC’s certification of the generating facility and
the provision of notice of such certification to the City in accordance with this section,
the City will pay the Price set forth in Section C of these CLEAN Program Rules and
Requirements and the PPA (collectively referred to as the “Contract Price”) for the
generating facility’s electricity delivered on and after the date of the CEC’s certification.
The City will, in its sole discretion, “true-up”, as appropriate, the difference between the
Contract Price and the Pre-Certification Price for any electricity received and paid for by
the City, effective as of the date of certification of the Eligible Renewable Energy
Resource.
6. If an Eligible Renewable Energy Resource is authorized to participate in the CLEAN
Program, then that Resource shall not be entitled to receive any rebate or other
incentive from the City’s Photovoltaic (PV) Partners Program or any other similar
incentive program funded by the City’s ratepayers. To the extent any rebate or
incentive is paid to the owner of the Resource, that rebate or incentive shall be
disgorged and refunded to the City upon 30 days’ notice, if the Eligible Renewable
Energy Resource continues to participate in the CLEAN Program. If a rebate or an
incentive has been paid to the Eligible Renewable Energy Resource, then that Resource
shall be ineligible to participate in the CLEAN Program.
7. All electricity generated by the Eligible Renewable Energy Resource shall be delivered
only to the City. No portion of the electricity may be used to offset any load of the
generating facility (other than incidental loads associated with operating the generating
facility).
8. A metering and administration fee will be charged to each Eligible Renewable Energy
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW)
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS
Effective __________
Resource that participates in the CLEAN Program. See Utilities Rate Schedule E-15
(Electric Service Connection Fees).
040914 jrm 0180042 1
POWER PURCHASE AGREEMENT
ELIGIBLE RENEWABLE ENERGY RESOURCE
(Palo Alto Clean Local Energy Accessible Now Program)
This Power Purchase Agreement - Eligible Renewable Energy Resource, dated, for convenience,
, 20 (the “Effective Date”), is entered into by and between the CITY OF PALO
ALTO, a California chartered municipal corporation, and ,
a corporation (individually, a “Party” and, collectively, the “Parties”).
RECITALS
1.The Buyer has adopted and implemented its CLEAN Program, which allows an owner of a
qualifying electric generation system to sell to the Buyer the power output of a small-scale distributed
generation Eligible Renewable Energy Resource, subject to the CLEAN Program’s rules and requirements.
2.The Seller owns or operates and desires to interconnect its Facility in parallel with Buyer’s
Distribution System and sell the Energy produced by its Facility, net of Station Service Load, directly to the
Buyer in furtherance of the CLEAN Program.
3.The Parties do not intend this Agreement to constitute an agreement by the Buyer to provide
retail electrical service to the Seller.
4.The Parties wish to enter into a power purchase agreement for the sale and purchase of the
Output of the Facility. The Parties will enter into a separate “Interconnection Agreement” in connection
with this Agreement.
NOW THEREFORE, in consideration of the foregoing recitals and the following covenants,
terms and conditions, the Parties agree, as follows:
AGREEMENT
1.1 DEFINITIONS
The initially capitalized terms, whenever used in this Agreement, have the meanings set forth
below, unless they are otherwise herein defined. The terms “include,” “includes,” and “including,” when
used in this Agreement, shall mean, respectively, “include, without limitation,“ “includes, without
limitation” and “including, without limitation.”
“Agreement” means this Power Purchase Agreement – Eligible Renewable Energy Resource between the
Buyer and the Seller.
“Business Day” means any day except a Saturday, Sunday, or a day that the City observes as a regular
holiday under Palo Alto Municipal Code section 2.08.100(a).
“Buyer” refers to the City of Palo Alto, California, with a principal place of business at 250 Hamilton
Avenue, Palo Alto, California 94301.
“Buyer’s Distribution System” means the wires, transformers, and related equipment used by the Buyer to
deliver electric power to the Buyer’s retail customers, typically at sub-transmission level voltages or lower.
“CAISO” means the California Independent System Operator Corporation, or successor entity.
“CAISO Tariff” means the CAISO FERC Electric Tariff, as amended.
“Capacity” means the ability of a generator at any given time to produce Energy at a specified rate, as
ATTACHMENT B
040914 jrm 0180042 2
measured in megawatts (“MW”) or kilowatts (“kW”), and any reporting rights associated with it.
“Capacity Attributes” means any current or future defined characteristic, certificate, tag, credit, or
ancillary service attribute, whether general in nature or specific as to the location or any other attribute of
the Facility, intended to value any aspect of the Contract Capacity of the Facility to produce Energy or
ancillary services, including contributions towards Resource Adequacy (including those requirements
defined in Section 40 of the CAISO Tariff) or reserve requirements (if any), and any other reliability or
power attributes.
“CEC” means the California Energy Resources Conservation and Development Commission, or successor
agency.
“Certificate of RPS Eligibility” means a certificate issued by the CEC as evidence of RPS Certification of
the Facility.
“City” means the government of the City of Palo Alto, California.
“CLEAN Program” refers to the Palo Alto Clean Local Energy Accessible Now Program, a renewable
energy program established by the City by adoption of resolution number , dated , of the
Palo Alto City Council, whereby the Buyer will purchase from the Seller the Output of Eligible Renewable
Energy Resources that meet specified criteria set forth in the City’s applicable ordinances and resolutions.
“Commercial Operation” means the period of operation of the Facility, once the Commercial Operation
Date has occurred.
“Commercial Operation Date” means the date specified in the Commercial Operation Date Confirmation
Letter, which the Parties execute and exchange in accordance with this Agreement.
“Contract Capacity” means the installed electrical Capacity available upon the Commercial Operation
Date of the Facility in an amount, as specified in Exhibit “PPA-A.” “Contract Capacity” is measured at the
Buyer’s revenue meter at the Delivery Point and is net of any Station Service Loads, any applicable Facility
step-up transformer losses, and distribution losses on Buyer’s Distribution System up to the Delivery Point.
“Contract Price” means the price paid by the Buyer to the Seller for the Output generated at the Facility
and received by the Buyer, as set forth in Exhibit “PPA-A.”
“CPUC” means the California Public Utilities Commission, or successor agency.
“Delivery Point” means the point of interconnection to Buyer’s Distribution System, where the Buyer
accepts title to the Output.
“Delivery Term” has the meaning set forth in Section 14.2 hereof.
“Eligible Renewable Energy Resource” means an electric generating facility that is defined and qualified
as an “eligible renewable energy resource” under California Public Utilities Code Section 399.12(e) and
California Public Resources Code Section 25471, respectively, as amended.
“Energy” means electrical energy generated from the Facility and delivered to Buyer’s Distribution System
with the voltage and quality required by the Buyer, and measured in megawatt-hours (“MWh”) or kilowatt-
hours (“kWh”), as metered at the Delivery Point.
“Facility” means the qualifying renewable energy generation equipment and associated power conditioning
and interconnection equipment that deliver the Output to the Buyer at the Delivery Point.
“FERC” means the Federal Energy Regulatory Commission, or successor agency.
040914 jrm 0180042 3
“Forced Outage” means an unplanned outage of one or more of the Facility’s components that results in a
reduction of the ability of the Facility to produce Capacity.
“Force Majeure” means an event or circumstance, which prevents a Party from performing its obligations
under this Agreement, and which is not in the reasonable control of, or the result of negligence of, the Party
claiming Force Majeure, and which by the exercise of due diligence is unable to overcome or cause to be
avoided. “Force Majeure” shall include: (a) An act of nature, riot, insurrection, war, explosion, labor
dispute, fire, flood, earthquake, storm, lightning, tidal wave, backwater caused by flood, act of the public
enemy, terrorism, or epidemic; (b) Interruption of transmission or generation services as a result of a
physical emergency condition (and not congestion-related or economic curtailment) not caused by the fault
or negligence of the Party claiming Force Majeure and reasonably relied upon and without a reasonable
source of substitution to make or receive deliveries hereunder, civil disturbances, strike, labor disturbances,
labor or material shortage, national emergency, restraint by court order or other public authority or
governmental agency, actions taken to limit the extent of disturbances on the electrical grid; or (c) Other
similar causes beyond the control of the Party affected, which causes such Party could not have avoided by
the exercise of due diligence and reasonable care. A Party's financial incapacity, the Seller’s ability to sell
the Output at a more favorable price or under more favorable conditions, or the Buyer’s ability to acquire
the Output at a more favorable price or under more favorable conditions or other economic reasons shall
not constitute an event of Force Majeure. “Force Majeure” does not include a Forced Outage to the extent
such event is not caused or exacerbated by an event of Force Majeure, as described above, and does not
include the Seller’s inability to obtain financing, permits, or other equipment and instruments necessary to
plan for, construct, or operate the Facility.
“Good Utility Practice” means those practices, methods and acts that would be implemented and followed
by prudent operators of electric energy generating facilities in the western United States, similar to the
Facility, during the relevant time period, which practices, methods and acts, in the exercise of prudent and
responsible professional judgment in the light of the facts known at the time the decision was made, could
reasonably have been expected to accomplish the desired result consistent with good business practices,
reliability, and safety. The Seller acknowledges that its use of Good Utility Practice does not exempt it
from performing any of its obligations arising under this Agreement. “Good Utility Practice” includes, at a
minimum, those professionally responsible practices, methods and acts described in the preceding
paragraph that comply with manufacturers’ warranties, restrictions in this Agreement, the interconnection
requirements of Buyer, the requirements of governmental authorities, and WECC and NERC standards.
“Good Utility Practice” also includes the taking of reasonable steps to ensure that:
(a) Equipment, materials, resources, and supplies, including spare parts inventories, are available
to meet the Facility’s needs;
(b) Sufficient operating personnel are available at all times and are adequately experienced and
trained and licensed as necessary to operate the Facility properly and efficiently, and are capable
of responding to reasonably foreseeable emergency conditions at the Facility and emergencies
whether caused by events on or off the Facility’s site;
(c) Preventive, routine, and non-routine maintenance and repairs are performed on a basis that
ensures reliable, long-term and safe operation of the Facility, and are performed by
knowledgeable, trained, and experienced personnel utilizing proper equipment and tools;
(d) Appropriate monitoring and testing are performed to ensure equipment is functioning as
designed; and
(e) Equipment is not operated in a reckless manner, in violation of manufacturer’s guidelines or in
a manner unsafe to workers, the general public, or the connecting utility’s electric system or
contrary to environmental laws, permits or regulations or without regard to defined limitations
such as, flood conditions, safety inspection requirements, operating voltage, current, volt ampere
reactive (VAR) loading, frequency, rotational speed, polarity, synchronization, and control system
limits; and equipment and components are designed and manufactured to meet or exceed the
standard of durability that is generally used for electric energy generating facilities operating in the
western United States and will function properly over the full range of ambient temperature and
weather conditions reasonably expected to occur at the Facility site and under both normal and
emergency conditions.
040914 jrm 0180042 4
“Green Attributes” refers to the definition set forth in the Standard Terms and Conditions, Appendix A-2,
as amended, Decision D.07-02-011, as modified by D.07-05-057, of the CPUC, which incorporates the
definition of “Environmental Attributes” set forth in the Standard Terms and Conditions, Appendix A-1, as
amended, D. 04-06-014. “Green Attributes” includes any and all credits, benefits, emissions reductions,
environmental air quality credits, offsets, and allowances, howsoever entitled, attributable to the generation
from the Facility, and its displacement of conventional energy generation, whether existing now or arising
in the future. “Green Attributes” includes RECs, as well as (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”), nitrous oxide,
hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and other greenhouse gases (“GHGs”) that have
been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law,
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
and RECs. “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 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 a kWh basis and one Green Tag represents the Green Attributes associated with one (1)
MWh of Energy. “Green Attributes” do not include (i) any Energy, Capacity, reliability, or other power
attributes of the Facility, (ii) production or investment tax credits associated with the construction or
operation of the Facility and other financial incentives in the form of credits, grants, reductions, or
allowances associated with the Facility 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 generator for the destruction of particular pre-existing pollutants or the promotion
of local environmental benefits, or (iv) emission reduction credits encumbered, used or created by the
Facility for compliance with or sale under local, state, or federal operating and/or air quality permits or
programs. If the Facility is a biomass or landfill facility and the Seller receives any tradable Green
Attributes based on the Facility’s greenhouse gas reduction benefits or other emission offsets attributed to
its fuel usage, the Seller shall provide the Buyer with sufficient Green Attributes to ensure that there are
zero net emissions associated with the production of electricity from the Facility. “Green Attributes”
includes any other environmental credits or benefits recognized in the future and attributable to Energy
generated by the Facility during the Term that may not be represented by Green Tag Reporting Rights or
RECs, unless otherwise excluded herein. Any Green Attributes provided under this Agreement shall be
documented by RECs, or any other representation of the environmental benefits of the Output, the monthly
cumulative total of which shall be provided to the Buyer, as specified herein.
“Interconnection Agreement” refers to the agreement between the Buyer and the Seller, specific to the
interconnection of the Facility to Buyer’s Distribution System.
“NERC” means the North American Electric Reliability Corporation, or successor organization.
“NCPA” means Northern California Power Agency, a California joint action agency, or successor agency.
“Output” means all Capacity associated with Contract Capacity and associated Energy made available
from the Facility, as well as any Capacity Attributes, Green Attributes, or other attributes existing now or in
the future associated with Contract Capacity and/or associated Energy. “Output” does not include
production or investment tax credits associated with the construction or operation of the Facility and other
financial incentives in the form of credits, grants, reductions, or allowances associated with the Facility that
are applicable to a state or federal income taxation obligation.
“Planned Outage” means an outage, scheduled in advance, of one or more of the Facility’s components
that results in a reduction of the ability of the Facility to produce Capacity.
040914 jrm 0180042 5
“Pre-Certification Price” means the contract price to be paid for all Energy delivered to the Buyer prior to
the RPS Certification Date, as specified in Exhibit “PPA-A”.
“Renewable Energy Credit” or “REC” has the meaning set forth in Section 399.12(h)(1) and (2) of the
California Public Utilities Code, and includes a certificate of proof that one unit of electricity was generated
by an Eligible Renewable Energy Resource. Currently, RECs are used to convey all Green Attributes
associated with electricity production by a renewable energy resource. RECs are accumulated on a kWh
basis and one REC represents the Green Attributes associated with the generation of 1 MWh (1,000 kWhs)
from the Facility. For purposes of this Agreement, the term REC shall be synonymous with the term Green
Tag, green ticket, bundled or unbundled renewable energy credit, tradable renewable energy certificates, or
any other term used to describe the documentation that evidences the renewable and Green Attributes
associated with electricity production by an Eligible Renewable Energy Resource.
“Renewables Portfolio Standard” or “RPS” means the standard adopted by the State of California
pursuant to Senate Bill 2 1st Extraordinary Session (SBX1 2, Chapter 1, Statutes 2011-12), and California
Public Utilities Code Sections 399.11through 399.31, inclusive, as may be amended, setting minimum
renewable energy targets for local publicly owned electric utilities.
“Reservation Deposit” means the monetary deposit submitted by the Seller (or the Facility sponsor on
behalf of the Seller) to secure a reservation of the CLEAN Program’s prices. The Reservation Deposit is
set forth in Exhibit “PPA-A.”
“Resource Adequacy” means a requirement by a governmental authority or in accordance with its FERC-
approved tariff, or a policy approved by a local regulatory authority, that is binding upon either Party and
that requires that Party to procure a certain amount of electric generating capacity.
“RPS Certification” means certification by the CEC that the Facility qualifies as an Eligible Renewable
Energy Resource for RPS purposes, and that all Energy produced by the Facility qualifies as generation
from an Eligible Renewable Energy Resource, as evidenced by a Certificate of RPS Eligibility.
“RPS Certification Date” means the date on which the RPS Certification begins, as specified in the
Certificate of RPS Eligibility.
“Seller” means with a principal place of business at
, , .
“Station Service Load” means the electrical loads associated with the operation and maintenance of the
Facility, which may at times be supplied from the Facility’s Energy.
“Term” has the meaning set forth in Section 14.1 hereof.
“WECC” means the Western Electricity Coordinating Council, the regional entity responsible for
coordinating and promoting regional bulk electric system reliability in the Western Canada and the United
States, or any successor organization.
2.0 SELLER’S GENERATING FACILITY, PURCHASE PRICE AND PAYMENT
2.1 Facility. This Agreement governs the Buyer’s purchase of the Output from the Facility,
as described in Exhibit “PPA-A.” The Seller shall not modify the Facility to increase or decrease the
Contract Capacity after the Commercial Operation Date.
2.2 Products Purchased. During the Delivery Term, the Seller shall sell and deliver, or cause
to be delivered, and the Buyer shall purchase and receive, or cause to be received, the Output from the
Facility. The Seller shall not have the right to procure the Output from sources other than the Facility for
sale or delivery to the Buyer under this Agreement or to substitute the Output.
040914 jrm 0180042 6
2.3 Delivery Term. The Delivery Term shall commence on the Commercial Operation Date .under this
Agreement, and shall continue for an uninterrupted period of twenty (20) years. This period will commence
on the first day of the calendar month immediately following the Commercial Operation Date. As evidence
of the Commercial Operation Date, the Parties shall execute and exchange the “Commercial Operation
Date Confirmation Letter,” attached hereto as Exhibit “PPA-B.” The Commercial Operation Date shall be
the date on which the Parties acknowledge, in writing, that the Facility starts operating and is otherwise in
compliance with applicable interconnection and system protection requirements, including the final
approvals by the City’s building department official.
2.4 Payment for Products Purchased.
2.4.1 Deliveries Prior to RPS Certification Date. Once the Facility has achieved
Commercial Operation, if the CEC has not issued a Certificate of RPS Eligibility for the Facility
or the Facility has not been registered with the appropriate entity for the tracking of Green
Attributes, the Buyer will pay the Seller for the Output by multiplying the Pre-Certification Price
by the quantity of Energy.
2.4.2 Deliveries After RPS Certification Date. Once the Facility has achieved
Commercial Operation, the CEC has issued a Certificate of RPS Eligibility for the Facility, and
the Facility has been registered with the appropriate entity for the tracking of Green Attributes, the
Buyer shall pay the Seller for all Output on or after the RPS Certification Date by multiplying the
Contract Price by the quantity of Energy.
2.4.3 True-up Upon Issuance of Certificate of RPS Eligibility. Once the Facility has
achieved Commercial Operation, the CEC has issued a Certificate of RPS Eligibility for the
Facility, and the Facility has been registered with the appropriate entity for the tracking of Green
Attributes, the Buyer will pay the Seller an amount equal to the difference between the Contract
Price and the Pre-Certification Price for the Output (a) that was delivered on or after the RPS
Certification Date and (b) for which the Seller has already received payment at the Pre-
Certification Energy Price.
2.4.4 Energy in Excess of Contract Capacity. The Seller shall not receive payment for
any Energy or Green Attributes delivered in any hour to the Buyer in excess of the following
amount of energy (in kilowatt-hours): 110% of the Contract Capacity (in kilowatts) multiplied by
one hour. Any payment in excess of this amount shall be refunded to the Buyer, on demand.
2.5 Billing. The Buyer shall pay the Seller by check or electronic funds transfer, on a
monthly basis, within thirty (30) days of the meter reading date.
2.6 Title and Risk of Loss. Title to and risk of loss related to the Output shall be transferred
from the Seller to the Buyer at the Delivery Point. The Seller warrants that it will deliver to the Buyer the
Output free and clear of all liens, security interests, claims, encumbrances or any interest therein or thereto
by any person, arising prior to the Delivery Point.
2.7 No Additional Incentives. The Seller warrants that it has not received any other
incentives funded by the Buyer’s ratepayers and it further agrees that, during the Term, it shall not seek
additional compensation or other benefits from the Buyer pursuant to the following programs of the Buyer:
(a) Photovoltaic (PV) Partners Program; (b) Power from Local Ultra-Clean Generation Incentive (PLUG-
In) Program; or (c) other similar programs that are or may be funded by the Buyer’s ratepayers.
040914 jrm 0180042 7
3.0 RPS CERTIFICATION; GREEN ATTRIBUTES
3.1 CEC Certification. The Seller, at its own cost and expense, shall obtain the RPS
Certification within six (6) months of the Commercial Operation Date. The Seller shall maintain the RPS
Certification at all times during the Delivery Term. The foregoing provision notwithstanding, the Seller
shall not be in breach of this Agreement and the Buyer shall not have the right to terminate this Agreement,
if the Seller’s failure to obtain or maintain the RPS Certification is due to a change in California law,
occurring after the Commercial Operation Date, so long as the Seller has used commercially reasonable
efforts to obtain and maintain the RPS Certification and the Seller’s actions or omissions did not contribute
to its inability to obtain and maintain the RPS Certification.
3.2 Obligation to Deliver Green Attributes. The Seller shall sell and deliver to the Buyer, and
the Buyer shall buy and receive from the Seller, all right, title, and interest in and to Green Attributes
associated with Energy, produced by the Facility and delivered to the Buyer at the Delivery Point, whether
now existing or that hereafter come into existence during the Term, except as otherwise excluded herein;
provided, the Buyer shall not be obligated to purchase and pay the Seller for any Green Attributes
associated with any amount of the Output, that is generated by any fuel which is not renewable and which
cannot be counted for the purpose of the production of Green Attributes. The Seller agrees to sell and make
all such Green Attributes available to the Buyer to the fullest extent allowed by applicable law, in
accordance with the terms and conditions of this Agreement. The Seller warrants that the Green Attributes
provided under this Agreement to the Buyer shall be free and clear of all liens, security interests, claims
and encumbrances.
3.3 Conveyance of Green Attributes. The Seller shall provide Green Attributes associated
with the Facility, which shall be documented and conveyed to the Buyer in accordance with the procedure
described in Exhibit “PPA-D.”
3.4 Additional Evidence of Green Attributes Conveyance. At the Buyer’s request, the Seller
shall provide additional reasonable evidence to the Buyer or to third parties of the Buyer’s right, title, and
interest in the Green Attributes and any other information with respect to Green Attributes, as may be
requested by the Buyer.
3.5 Modification of Green Attributes Conveyance Procedure. The Buyer may unilaterally
modify Exhibit “PPA-D” in order to reflect changes necessary in the Green Attributes conveyance
procedures, so that the Buyer may be able to receive and report the Green Attributes, purchased under this
Agreement, as belonging to the Buyer.
3.6 Reporting of Ownership of Green Attributes. The Seller shall not report to any person or
entity that the Green Attributes sold and conveyed to the Buyer belong to any person other than the Buyer.
The Buyer may report under any applicable program that Green Attributes purchased by the Buyer
hereunder belong to it.
3.7 Greenhouse Gas Emissions. The Seller shall comply with any laws and/or regulations
regarding the need to offset emissions of GHGs by delivering to the Buyer the Energy from the Facility
with a net zero GHG impact.
4.0 CONVEYANCE OF CAPACITY ATTRIBUTES
4.1 Conveyance of Resource Adequacy Capacity. The Seller shall not report to any person or
entity that the Resource Adequacy Capacity, as defined in the CAISO Tariff) associated with the Facility,
if any, belongs to a person other than the Buyer, which may report that Resource Adequacy Capacity
purchased hereunder belongs to it to fulfill the Resource Adequacy requirements, as defined in Section 40
of the CAISO Tariff, as amended, or any successor program. The Seller shall take those actions described
in Section 6.0 hereof, as applicable, to secure recognition of Resource Adequacy Capacity by the CAISO.
4.2 Conveyance of Other Capacity Attributes. In addition to the obligations imposed on the
040914 jrm 0180042 8
Seller under Section 4.1, the Seller will undertake any and all actions reasonably needed to enable the
Buyer to effect the recognition and transfer of any Capacity Attributes in addition Resource Adequacy, to
the extent that such Capacity Attributes exist now or will exist in the future; provided, if such actions
require any actions beyond the giving of notice by the Seller, then the Buyer shall reimburse all out-of-
pocket costs and charges of such actions.
4.3 Reporting of Ownership of Capacity Attributes. The Seller shall not report to any person
or entity that the Capacity Attributes sold and conveyed to the Buyer belong to any person other than the
Buyer. The Buyer may report under any such program that such Capacity Attributes purchased hereunder
belong to it.
5.0 METERING AND OPERATIONS
5.1 Timing of Outages. The Seller may not schedule or take any Planned Outage from 12:00
p.m. through 7:00 p.m. Pacific Time during the months of June through October.
5.2 Outage Reporting.
5.2.1 Buyer Request. The Seller is not required to report any Planned Outage or Forced
Outage, unless the Buyer first submits a written request to the Seller to commence Outage
reporting. Upon receipt of such a request, the Seller shall report all subsequent Planned Outages
and the Forced Outages according to the procedures described in subsections 5.2.2 and 5.2.3, and
shall continue such reporting until (a) the termination of this Agreement for any reason, or (b) the
Buyer subsequently provides written notice to the Seller that the Seller may cease such reporting
in the future.
5.2.2 Planned Outage Notifications. The Seller shall notify the Buyer at least 72 hours in
advance of any Planned Outage that would result in a reduction in the effective Output of the
Facility during the period over which the Planned Outage is scheduled. Notification shall be
provided by e-mail to the e-mail address (or addresses) set forth in Exhibit “PPA-F.”
5.2.3 Forced Outage Notifications. Within 24 hours of the occurrence of a Forced
Outage of the Facility that impacts the ability of the Facility to produce Energy, the Seller shall
notify the Buyer of the Forced Outage, including the Capacity of the Facility that is impacted, and
the expected duration of the Forced Outage. Within 24 hours of the return of the Facility to service
following the Forced Outage, the Seller shall notify the Buyer of the return-to-service details.
Notification shall be made by e-mail to the address (or addresses) set forth in Exhibit “PPA-F.”
5.3 Metering. The Buyer shall furnish and install one or more standard watt-hour meters to
read Energy generated by the Facility, and it will charge a meter fee to the Seller to cover the costs
associated with the meter’s purchase and installation. As requested, the Seller shall provide and install a
meter socket in accordance with the Buyer’s metering standards. The Buyer reserves the right to install
additional metering equipment at its sole cost and expense.
6.0 PARTICIPATING GENERATORS
6.1 Applicability. This Section 6.0 shall apply if the Facility meets the definition of a
“Participating Generator,” as may be defined by the CAISO Tariff. This Section 6.0 shall not apply if the
definition applies to the Facility only upon the election by the Seller. For the purposes of this Section 6.0,
all special terms not otherwise defined in Section 1.0 are defined in the CAISO Tariff.
6.2 Participating Generator Agreement. The Buyer will notify the CAISO of the Seller’s
interconnection to Buyer’s Distribution System. If the CAISO requires it, the Seller, at its own expense,
shall negotiate and enter in to two contracts, a “Participating Generator Agreement” and a “Meter Services
Agreement for CAISO Metered Entities,” with the CAISO.
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6.3 Scheduling Coordination. If the CAISO requires the Seller to enter in to a Participating
Generator Agreement, then the Seller shall designate NCPA as the Buyer’s scheduling coordinator. The
Buyer, acting in its sole discretion, may replace NCPA as the scheduling coordinator for the Facility. If
NCPA ceases to be the scheduling coordinator for the Facility and the Buyer has not, upon fourteen (14)
days’ prior written notice of inquiry from the Seller, appointed a replacement scheduling coordinator, then
the Seller shall have the right to appoint a replacement scheduling coordinator on the Buyer’s behalf.
Thereafter, the Buyer shall enter into all reasonable and appropriate agreements with such replacement
scheduling coordinator at its own costs.
6.4 Scheduling Procedure. The Buyer may require the Seller to provide the Buyer with
Energy forecasts on a periodic basis, as may be necessary for the Buyer to account for expected Facility
generation in its daily power scheduling process. The requirements are set forth in Exhibit “PPA-C.”
6.5 Modification of Scheduling and Outage Notification Procedure. The Buyer may
unilaterally modify Exhibit “PPA-C” to reflect changes necessary in the scheduling and Outage notification
procedures. The Buyer shall give the Seller reasonable notice of any such changes.
6.6 Provision of Other Equipment. If the Seller is required to enter into a Participating
Generator Agreement with the CAISO, then the Seller, at its own cost and expense, shall provide and
maintain data transmission-grade phone line and telecommunications equipment at the meter location that
complies with applicable requirements of the CAISO, the Buyer, and NCPA. Any meter installed by the
Seller shall comply at all times with the CAISO’s metering requirements. If the Seller fails to provide or
maintain any such required equipment or data connection, then the Buyer shall acquire, install and maintain
the same at the Seller’s sole cost and expense.
6.7 Designation as Resource Adequacy Resource. The Buyer may submit a written request
to the Seller to obtain the CAISO’s designation of the Facility as a Resource Adequacy Resource. Upon
receipt of such request, the Seller shall provide such information and undertake such steps as may be
required by the CAISO in order to complete such an assessment. If the Buyer makes such a request, then
the Buyer shall be responsible for the following: (1) any costs charged to the Seller by the CAISO as a
condition of applying for or receiving designation as a Resource Adequacy Resource, including any
deposits required during the study process or the cost of any related studies or deliverability assessments
performed by the CAISO; (2) the capital, installation, and maintenance costs of any additional equipment
required by the CAISO as a condition of receiving designation as a Resource Adequacy Resource; (3) the
costs of any Network Upgrades, as defined in the CAISO Tariff, as may be required by the CAISO,
provided, the Buyer shall receive any subsequent repayments from the CAISO or the Participating
Transmission Owner related to such upgrades; and (4) any charges or penalties assessed by the CAISO as a
consequence of the Facility’s designation as a Resource Adequacy Resource.
6.8 CAISO Charges. The Buyer shall be solely responsible for paying all costs and charges
associated with the receipt of Energy under this Agreement, at the Delivery Point, and for the transmission
and delivery of Energy from the Delivery Point to any other point downstream of the Delivery Point,
including transmission costs and charges, competition transition charges, applicable control area service
charges, transmission congestion charges, inadvertent energy flows, any other CAISO charges related to
the transmission of such Energy by the CAISO 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. The Seller will undertake any and all
actions reasonably needed to allow the Buyer to comply with any obligations, and minimize any potential
liability, under the CAISO tariff. If and to the extent that the Seller fails to comply with the notice
provision in Exhibit “PPA-C,” concerning Outages, or with its obligations as outlined in the previous
sentence, the Seller shall be wholly responsible for all imbalances, deviations, or any other CAISO charges
or penalties associated with such Outage or other CAISO Tariff obligation.
6.9 Inclusion in Metered Subsystem. At the option of the Buyer, the Facility may be
included within NCPA’s metered sub-system in connection with the scheduling of power over the CAISO
grid and related functions; provided, however, that such inclusion shall have no adverse effect on the
Facility’s operations or the Seller (or any such effect shall be fully mitigated by the Buyer). The Seller will
undertake any and all actions reasonably needed to allow the Buyer to comply with any obligations, and
040914 jrm 0180042 10
minimize any potential liability, under the CAISO Tariff; provided, that if such actions require any actions
beyond the giving of notice to be provided by the Buyer, then the Buyer shall reimburse the Seller for all
out-of-pocket costs and charges of such actions.
7.0 COMMERCIAL OPERATION DATE; REFUND OF RESERVATION DEPOSIT
7.1 Commercial Operation Date. The Facility shall achieve Commercial Operation by the
Commercial Operation Date deadline (the “Deadline”), which is one (1) year from the Effective Date.
7.2 Reservation Deposit. The Buyer acknowledges that, as of the Effective Date or other
date established by the Buyer, the Seller has provided the Reservation Deposit to the Buyer.
7.2.1 If the Commercial Operation Date occurs on or prior to the Deadline, the Buyer
shall refund to the Seller the Reservation Deposit without interest.
7.2.2 If the Commercial Operation Date commences within seventy (70) days of the
Deadline, the Seller, as liquidated damages and not as a penalty, shall relinquish its claim to a ten
percent (10%) portion of the amount of the Reservation Deposit for every full week transpiring
between the Deadline and the Commercial Operation Date, but the total amount to be relinquished
to the Buyer shall not exceed 100% of the Reservation Deposit.
7.2.3 If the Facility has not achieved Commercial Operation within seventy (70) days of
the Deadline, then the Buyer may terminate this Agreement without liability of either Party to the
other Party by giving written notice of termination to the Seller.
7.2.4 If the Seller gives notice of termination to terminate the Agreement before
Commercial Operation occurs, then the Buyer shall refund a percentage of the Reservation
Deposit equal to the following: the percentage to be refunded will equal A/B, where A equals the
number of days between the date of the Seller’s notice of termination, received by the Buyer, and
the Deadline, and B equals the number of days between the Effective Date and the Deadline.
7.3 Return of Reservation Deposit. The Buyer shall return to the Seller the Reservation
Deposit, without interest, in the event that (a) the Buyer furnishes written notice of the costs of
interconnection (defined in the Interconnection Agreement to include the costs related to the
Interconnection Facilities and Distribution Upgrades) to the Seller and (b) within thirty (30) days of receipt
of the notice regarding costs of interconnection, the Seller provides the Buyer with written notice that the
Seller does not intend to sign the Interconnection Agreement and does intend to proceed with the project.
8.0 REPRESENTATION AND WARRANTIES; COVENANTS
8.1 Representations and Warranties. On the Effective Date, each Party represents and
warrants to the other Party that:
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8.1.1 It is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation;
8.1.2 The execution, delivery and performance of this Agreement is within its powers,
have been duly authorized by all necessary action and do not violate any of the terms and
conditions in its governing documents, any contracts to which it is a party or any law, rule,
regulation, order or the like applicable to it;
8.1.3 This Agreement and each other document executed and delivered in accordance
with this Agreement constitutes its legally valid and binding obligation enforceable against it in
accordance with its terms;
8.1.4 It is not bankrupt and there are no proceedings pending or being contemplated by it
or, to its knowledge, threatened against it which would result in it being or becoming bankrupt;
8.1.5 There is not pending or, to its knowledge, threatened against it or any of its
affiliates, if any, any legal proceedings that could materially adversely affect its ability to perform
its obligations under this Agreement; and
8.1.6 It is acting for its own account, has made its own independent decision to enter into
this Agreement and as to whether this Agreement is appropriate or proper for it based upon its
own judgment, is not relying upon the advice or recommendations of the other Party in so doing,
and is capable of assessing the merits of, and understands and accepts, the terms, conditions and
risks of this Agreement.
8.2 General Covenants. Each Party covenants that, during the Term:
8.2.1 It shall continue to be duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation;
8.2.2. It shall maintain (or obtain from time to time as required, including through
renewal, as applicable) all regulatory authorizations necessary for it to legally perform its
obligations under this Agreement; and
8.2.3 It shall perform its obligations under this Agreement in a manner that does not
violate any of the terms and conditions in its governing documents, any contracts to which it is a
party or any law, rule, regulation, order or the like applicable to it.
8.3 Covenant by Seller. The Seller covenants that, during the Term:
8.3.1 If the Eligible Renewal Energy Resource or the Facility is considered an ‘eligible
qualifying facility’ under applicable law and has a net power production capacity of greater than
one (1) megawatt, then the Seller covenants and agrees that, within thirty (30) days of the
Effective Date or longer period allowed by law, it will complete and file Form No. 556 or other
similar form with FERC as the same may be required by law.”
9.0 GENERAL CONDITIONS
9.1 Facility Care and Interconnection. During the Delivery Term, the Seller shall execute
and maintain an “Interconnection Agreement” with the Buyer, whereby the Seller shall pay and be
responsible for designing, installing, operating, and maintaining the Facility in accordance with all
applicable laws and regulations and shall comply with all applicable Buyer, WECC, FERC, and NERC
requirements, including applicable interconnection and metering requirements. The Seller shall also comply
with any modifications, amendments or additions to the applicable tariff and protocols. The Seller also shall
arrange and pay independently for any and all necessary costs under the Interconnection Agreement with
the Buyer.
040914 jrm 0180042 12
9.2 Standard of Care. The Seller shall: (a) operate and maintain the Facility in a safe manner
in accordance with its existing applicable interconnection agreements, manufacturer’s guidelines, warranty
requirements, Good Utility Practice, industry norms (including standards of the National Electrical Code,
Institute of Electrical and Electronic Engineers, American National Standards Institute, and the
Underwriters Laboratories, and in accordance with the requirements of all applicable federal, state and
local laws and the National Electric Safety Code, as such laws and code norms may be amended from time
to time; (b) obtain any governmental authorizations and permits required for the construction and operation
thereof. The Seller shall make any necessary and commercially reasonable repairs with the intent of
optimizing the availability of electricity to the Buyer. The Seller shall reimburse the Buyer for any and all
losses, damages, claims, penalties, or liability that the Buyer incurs as a result of the Seller’s failure to
obtain or maintain any governmental authorizations and permits required for the construction and operation
of the Facility throughout the Term.
9.3 Access Rights. The Buyer, its authorized agents, employees and inspectors shall have the
right to inspect the Facility on reasonable advance notice during normal business hours and for any
purposes reasonably connected with this Agreement or the exercise of any and all rights secured to the
Buyer by law, including, without limitation, its ordinances, resolutions, tariffs, utility rate schedules or
utilities rules and regulations. The Buyer shall make reasonable efforts to coordinate its emergency
activities with the safety and security departments, if any, of the Facility’s operator. The Seller shall keep
the Buyer advised of current procedures for communicating with the Facility operator’s safety and security
departments.
9.4 Protection of Property. Each Party shall be responsible for protecting its own facilities
from possible damage resulting from electrical disturbances or faults caused by the operation, faulty
operation, or non-operation of the other Party’s facilities and such other Party shall not be liable for any
such damages so caused.
9.5 Insurance. During the Term, the Seller shall obtain and maintain and otherwise comply
with the insurance requirements, as set forth in Exhibit “PPA-E.”
9.6 Buyer’s Performance Excuse; Seller Curtailment.
9.6.1 Buyer Performance Excuse. The Buyer shall not be obligated to accept or pay for
the Output during Force Majeure that affects the Buyer’s ability to accept Energy.
9.6.2 Seller Curtailment. The Buyer may require the Seller to interrupt or reduce
deliveries of Energy: (a) whenever necessary to construct, install, maintain, repair, replace,
remove, or investigate any of its equipment or part of the Buyer’s Distribution System or facilities;
or (b) if the Buyer determines that curtailment, interruption, or reduction is necessary due to a
System Emergency, as defined in the CAISO Tariff, an unplanned outage on Buyer’s Distribution
System, Force Majeure, or compliance with Good Utility Practice.
9.7 Notices of Outages. Whenever possible, the Buyer shall give the Seller reasonable notice
of the possibility that interruption or reduction of deliveries may be required.
9.8 No Additional Loads. The Seller shall not connect any loads not associated with Station
Service Loads at the location of the Facility in a manner that would reduce Energy provided from the
Facility to the Buyer hereunder. The Seller shall obtain separate retail electric service under the Buyer’s
rate schedules for the service of such additional loads.
10.0 FORCE MAJEURE
10.1 Effect of Force Majeure. A Party shall be excused from its performance under this
Agreement to the extent, but only to the extent, that its performance hereunder is prevented by Force
Majeure. A Party claiming Force Majeure shall exercise due diligence to overcome or mitigate the effects
040914 jrm 0180042 13
of Force Majeure; provided, that nothing in this Agreement shall be deemed to obligate the Party affected
by Force Majeure (a) to forestall or settle any strike, lock-out or other labor dispute against its will; or (b)
for Force Majeure affecting the Seller only, to purchase electric power to cure Force Majeure.
10.2 Remedial Action. A Party shall not be liable to the other Party if the Party is prevented
from performing its obligations hereunder due to Force Majeure. The Party rendered unable to fulfill an
obligation by reason of Force Majeure 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 that cause has been removed. Notwithstanding the foregoing, the existence of Force
Majeure shall not excuse any Party from its obligations to make payment of amounts due hereunder.
10.3 Notice of Force Majeure. In the event of any delay or nonperformance resulting from
Force Majeure, the Party directly impacted by Force Majeure 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.
10.4 Termination Due to Force Majeure. If a Party will be prevented from performing its
material obligations under this Agreement for an estimated period of twelve (12) consecutive months or
longer due to Force Majeure, then the unaffected Party may terminate this Agreement, without liability of
either Party to the other, upon thirty (30) Days’ prior written notice at any time during Force Majeure.
11.0 INDEMNITY
11.1 Indemnity by the Seller. The Seller shall indemnify, defend, and hold harmless the
Buyer, its elected and appointed officials, directors, officers, employees, agents, and representatives against
and from any and all losses, claims, demands, liabilities and expenses, actions or suits, including reasonable
costs and attorney’s fees, resulting from, or arising out of or in any way connected with claims by third
parties associated with (A) (i) Energy delivered at the Delivery Point; (ii) the Seller’s operation and/or
maintenance of the Facility; or (iii) the Seller’s actions or inactions with respect to this Agreement, and (B)
any loss, claim, action or suit, for or on account of injury, bodily or otherwise, to, or death of, persons, or
for damage to or destruction of property belonging to the Buyer or other third party, excepting only such
loss, claim, action or suit as may be caused solely by the willful misconduct or gross negligence of the
Buyer, its agents, employees, directors or officers.
11.2 Indemnity by the Buyer. The Buyer shall indemnify, defend, and hold harmless the
Seller, its directors, officers, employees, agents, and representatives against and from any and all losses,
claims, demands, liabilities and expenses, actions or suits, including reasonable costs and attorney’s fees
resulting from, or arising out of or in any way connected with claims by third parties associated with acts of
the Buyer, its officers, employees, agents, and representatives, relating to: (A) Energy delivered by the
Seller under this Agreement after the Delivery Point, and (B) any loss, claim, action or suit, for or on
account of injury, bodily or otherwise, to, or death of, persons, or for damage to or destruction of property
belonging to the Seller or other third party, excepting only such loss, claim, action or suit as may be caused
solely by the willful misconduct or gross negligence of the Seller, its agents, employees, directors or
officers.
12.0 LIMITATION OF DAMAGES
EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT THERE IS NO WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL
IMPLIED WARRANTIES ARE DISCLAIMED. LIABILITY SHALL BE LIMITED TO DIRECT
ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY
ARE WAIVED UNLESS EXPRESSLY HEREIN PROVIDED. NEITHER PARTY SHALL BE LIABLE
FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES,
LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR
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CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. UNLESS EXPRESSLY
HEREIN PROVIDED, AND SUBJECT TO THE PROVISIONS OF SECTION 11 (INDEMNITY), IT IS
THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES
AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES
RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH
NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE.
13.0 NOTICES
Notices shall, unless otherwise specified herein, be given, in writing, and may be delivered by
hand delivery, United States mail, overnight courier service, facsimile or electronic messaging (e-mail) to
the addresses set forth in Exhibit “PPA-F.”. Whenever this Agreement requires or permits delivery of a
“notice” (or requires a Party to “notify”), the Party with such right or obligation shall provide a written
communication in the manner specified below. A notice sent by facsimile transmission or electronic mail
will be recognized and shall be deemed received on the Business Day on which such notice was transmitted
if received before 5 p.m. Pacific Time (and if received after 5 p.m., on the next Business Day) and a notice
by overnight mail or courier shall be deemed to have been received two (2) Business Days after it was sent
or such earlier time as is confirmed by the receiving Party unless it confirms a prior oral communication, in
which case any such notice shall be deemed received on the day sent. A Party may change its addresses by
providing notice of same in accordance with this provision. A Party may request a change to Exhibit “PPA-
F” as necessary to keep the information current.
14.0 TERM, TERMINATION EVENT AND TERMINATION
14.1 Term. The Term shall commence upon the execution by the duly authorized representatives
of each of the Parties, and shall remain in effect until the conclusion of the Delivery Term, unless
terminated sooner pursuant to the terms and conditions of this Agreement. All indemnity rights shall
survive the termination of this Agreement for twelve (12) months.
14.2 Delivery Term. The Delivery Term of the Agreement is _______ years and is defined as
the period of time from the Commercial Operation Date through the expiration or early
termination of this Agreement.
14.3 Termination Event.
14.3.1 The Buyer shall have the right, but not the obligation, to terminate this Agreement
upon the occurrence of any of the following, each of which is a “Termination Event”: (a) The
Facility has not achieved Commercial Operation within seventy (70) days following the Deadline;
(b) After the Commercial Operation Date, the Seller has not sold or delivered Energy from the
Facility to the Buyer for a period of twelve (12) consecutive months; (c) If the Facility does not
obtain RPS Certification within six (6) months of the Commercial Operation Date and maintain
RPS Certification as required by Section 3.2; or (d) The Seller breaches any other material
obligation of this Agreement.
14.3.2 The Seller shall have the right, but not the obligation, to terminate this Agreement
upon the occurrence of any of the following, each of which is a “Termination Event”: (a) The
Buyer fails to make a payment due and payable under this Agreement within thirty (30) days after
written notice that such payment is due; or (b) The Buyer breaches any other material obligation
of this Agreement. The preceding sentence notwithstanding, the Seller may terminate this
Agreement without cause at any time prior to the Commercial Operation Date, subject to the
provisions of Section 7 of this Agreement.
14.4 Time to Cure. None of the events described in Section 14.2.1 and 14.2.2 shall constitute
a Termination Event if the Buyer or the Seller cures the event, failure, or circumstance within thirty (30)
days after receipt of written notification sent by the other Party, seeking termination, or such longer period
as may be necessary to cure so long as the Party subject to the Terminating Event is exercising diligent
efforts to cure.
14.5 Termination.
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14.5.1 Declaration of a Termination Event. If a Termination Event has occurred and is
continuing, the Party with the right to terminate shall have the right to: (a) send notice, designating
a day, no earlier than thirty (30) days after such notice is deemed to be received (as provided in
Section 13), as an early termination date of this Agreement (the “Early Termination Date”), unless
the Seller has timely communicated with the Buyer and the Parties have agreed to resolve the
circumstances giving rise to the Termination Event; (b) accelerate all amounts owing between the
Parties; and (c) terminate this Agreement and end the Delivery Term effective as of the Early
Termination Date.
14.5.2 Release of Liability for Termination Event. Upon termination of this Agreement
pursuant to this section neither Party shall be under any further obligation or subject to liability
hereunder, except with respect to the indemnity provision in Section 11 hereof, which shall remain
in effect for a period of 12 months following the Early Termination Date.
14.6 No Limitation on Damages. Nothing in this Agreement shall be deemed or construed to
limit a Party’s right to recover damages from the other Party, except as otherwise provided in this
Agreement.
15.0 RELEASE OF DATA
Except as may be exempt from disclosure under applicable law, the Seller authorizes the Buyer to
release to any regulatory authority having jurisdiction over the Facility or a Party, or to any request made
pursuant to the California Constitution or the California Public Records Act, information regarding the
Facility, including the Seller’s name and location, operational characteristics, the Term of this Agreement,
the Facility resource type, the scheduled Commercial Operation Date, the actual Commercial Operation
Date, the Contract Capacity, payments made to the Seller and Energy production information. The Seller
acknowledges that this information may be made publicly available.
16.0 ASSIGNMENT
Neither Party shall assign this Agreement or its rights hereunder without the prior written consent
of the other Party, which consent shall not be unreasonably withheld.
16.1 Upon the written request of the Seller, the Buyer will execute a “Lender Consent and
Agreement” between the Seller and the Seller’s lender(s), if any, in the form acceptable to the Parties;
provided, for illustration purposes only, an exemplar is attached hereto as Exhibit “PPA-G.”
16.2 Notwithstanding the foregoing, no Consent and Agreement shall be required for:
16.2.1 Any assignment or transfer of this Agreement by the Seller to an affiliate of the
Seller, provided that such affiliate’s creditworthiness is equal to or better than that of Seller, as
reasonably determined by the non-assigning or non-transferring Party; or
16.2.2 Any assignment or transfer of this Agreement by the Seller or the Buyer to a
person succeeding to all or substantially all of the assets of such Party, provided that such person’s
creditworthiness is equal to or greater than that of such Party, as reasonably determined by the
non-assigning or non-transferring Party.
16.2.3 Notification of any assignment or transfer of this Agreement under Section 16.2.1
or 16.2.2 shall be given to the non-assigning or non-transferring Party in accordance with Exhibit
“PPA-F.”
17.0 APPLICABLE LAW, VENUE, ATTORNEYS’ FEES, AND INTERPRETATION
This Agreement will be governed by and construed in accordance with the laws of the State of
California. The Parties will comply with applicable laws pertaining to their obligations arising under this
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Agreement. In the event that an action is brought, the Parties agree that trial of such action will be vested
exclusively in the state courts of California or in the United States District Court for the Northern District
of California in the County of Santa Clara, State of California. The prevailing party in any action brought to
enforce the provisions of this Agreement may recover its reasonable costs and attorneys' fees expended in
connection with that action. If a court of competent jurisdiction finds or rules that any provision of this
Agreement, the Exhibits, or any amendment thereto is void or unenforceable, the unaffected provisions of
this Agreement, the Exhibits, or any amendment thereto will remain in full force and effect. The Parties
agree that the normal rule of construction to the effect that any ambiguity is to be resolved against the
drafting party will not be employed in the interpretation of this Agreement or any Exhibit or any
amendment thereof.
18.0 SEVERABILITY
If any provision in this Agreement is determined to be invalid, void or unenforceable by any court
having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other
provision, agreement or covenant of this Agreement and the Parties shall use their best efforts to modify
this Agreement to give effect to the original intention of the Parties.
19.0 COUNTERPARTS; INTERPRETATION OF CONFLICTING PROVISIONS
This Agreement may be executed in one or more counterparts, each of which shall be deemed an
original and all of which shall be deemed one and the same Agreement. Delivery of an executed
counterpart of this Agreement by facsimile or portable document format (“PDF”) transmission will be
deemed as effective as delivery of an originally executed counterpart. Each Party delivering an executed
counterpart of this Agreement by facsimile or PDF transmission will also deliver an originally executed
counterpart, but the failure of any Party to deliver an originally executed counterpart of this Agreement will
not affect the validity or effectiveness of this Agreement. In the event of a conflict between the Agreement
and any, some or all of the Exhibits, the document imposing the more specific duty or obligation will
prevail.
20.0 GENERAL
No amendment to or modification of this Agreement shall be enforceable unless reduced to writing and
executed by both Parties. This Agreement shall not impart any rights enforceable by any third party other
than a permitted successor or assignee bound to this Agreement. Waiver by a Party of any default by the
other Party shall not be construed as a waiver of any other default. The headings used herein are for
convenience and reference purposes only.
//
//
//
//
//
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040914 jrm 0180042 17
21. EXHIBITS
The following exhibits shall be deemed incorporated in and made a part of this Agreement.
Exhibit “PPA-A” - Facility Description, Prices, and Reservation Deposit
Exhibit “PPA-B” - Commercial Operation Date Confirmation Letter
Exhibit “PPA-C” - Scheduling and Outage Notification Procedure
Exhibit “PPA-D” - Green Attributes Reporting and Conveyance Procedures
Exhibit “PPA-E” - Insurance Requirements
Exhibit “PPA-F” - Notices
Exhibit “PPA-G” - Form of Lender Consent and Agreement
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their
authorized representatives as of the Effective Date.
CITY OF PALO ALTO SELLER
APPROVED AS TO FORM
Senior Deputy City Attorney
APPROVED
City Manager
Director of Utilities
040914 jrm 0180042 18
EXHIBIT “PPA-A”
Facility Description, Rates, and Reservation Deposit
Program Rates
Contract Term: Twenty (20) or twenty-five (25) years
Contract rate: $0.165 per kWh for solar resources
$0.093 per kWh for non-solar resources, 20 year contract term
$0.094 per kWh for non-solar resources, 25 year contract term
Pre-certification rate: $0.08 per kWh
Reservation Deposit
Reservation Deposit ($20/kW of Contract Capacity) $
Service address:
Facility Description:
Contract Capacity: kW (CEC-AC), based on solar array rating (Panel rated
output at PV USA test conditions x inverter efficiency)
Facility primary fuel/technology:
040914 jrm 0180042 19
EXHIBIT “PPA-B”
Commercial Operation Date Confirmation Letter
In accordance with the terms of the Power Purchase Agreement (Palo Alto CLEAN), dated
(the “Agreement”) by and between the City of Palo Alto, as the Buyer, and
, as the Seller, this Confirmation Letter serves to
document the Parties’ agreement that (i) the conditions precedent to the occurrence of the Commercial
Operation Date have been satisfied, and (ii) the Buyer has received Energy, as specified in the Agreement,
as of , . The actual installed Contract Capacity is kW.
This Confirmation Letter shall confirm the Commercial Operation Date, as defined in the Agreement, as of
the date referenced in the preceding sentence.
IN WITNESS WHEREOF, each Party has caused this letter to be duly executed by its authorized
representative as of the date of last signature provided below:
Buyer Seller
By: By:
Name: Name:
Title: Director of Utilities Title:
Date: Date:
In recognition of the Commercial Operation Date relative to the Effective Date of the Agreement by
and between the Buyer and the Seller, the Seller hereby calculates the amount to return, if any, of the
Seller’s deposit, as follows:
Original Reservation Deposit Amount: $
Commercial Operation Date Deadline:
□ Commercial Operation Date is prior to Deadline
□ Commercial Operation Date occurred weeks following the Deadline, meaning that %
of the Reservation Deposit is relinquished by Seller per Section 7.2.2 of the Power Purchase
Agreement.
Amount (if any) of Reservation Deposit to return to the Seller is: $
040914 jrm 0180042 20
EXHIBIT “PPA-C”
Scheduling and Outage Notification Procedure
C.1 Applicability. This Exhibit” PPA-C” shall apply if the Facility is subject to Section 6.0
of this Agreement.
C.2 Annual Operations Forecast
C.2.1 By the tenth (10th) day September of each calendar year, the Seller will provide
NCPA with an annual operations forecast detailing hourly expected generation and all proposed
planned Outages for the next calendar year. The annual operations forecast for the calendar year
shall be provided by not later than ninety (90) days prior to the scheduled Commercial Operation
Date of the Generating Facility.
C.2.2 NCPA may request modifications to the annual operations forecast at any time,
and the Seller shall use good faith efforts to accommodate the requested modifications.
C.2.3 The Seller shall not conduct Planned Outages at times other than as set forth in
its annual operations forecast, unless approved in advance by NCPA, which approval shall not be
withheld or delayed unreasonably.
C.2.4 The Seller shall not schedule or conduct Planned Outages from 12:00 p.m.
through 7:00 p.m. Pacific Time during the months of June through October.
C.3. Short Term Operations Forecasts
C.3.1. Quarterly Operations Forecast
C.3.1.1 By the fifth (5th) day of January, April and July of each Contract Year,
the Seller shall provide a calendar quarter-operations forecast by hour of expected
generation and all proposed Planned Outages for the next full calendar quarter and the
twelve (12) months following that calendar quarter. As an example, by January 5, 2014,
the Seller would provide a calendar quarter-operations forecast by hour of expected
generation for the period, April 1, 2014 through June 30, 2014, and identify all proposed
Planned Outages for the period, April 1, 2014 through June 30, 2015.
C.3.1.2 NCPA will approve or require modifications to the proposed calendar
quarter-operations forecast within ten (10) days of receipt of the forecast.
C.3.1.3 If required by NCPA, the Seller will provide a modified calendar
quarter-operations forecast within seven (7) days after receipt of required modifications
from NCPA.
C.3.2 Weekly Update
C.3.2.1 By 14:00 of each Wednesday, the Seller shall provide an electronic
update, in a format specified by NCPA, to the calendar quarter-operations forecast for the
following seven (7) days (Thursday through the next Wednesday).
C.3.2.2 The weekly update shall include hourly expected generation and all
proposed planned Outages for the relevant seven (7) day period.
C.4 Outage Detail for Annual and Short Term Operations Forecasts. Outage information
provided by the Seller shall include, at a minimum, the start time and stop time of the Outage, capacity out
of service (kW), the equipment that is or will be out of service, and the reason for the Outage.
040914 jrm 0180042 21
C.5 General Scheduling Protocols
C.5.1 Daily Modifications to Forecasts. Unless otherwise mutually agreed, the Seller
may make changes to the weekly update to the calendar quarter-operations forecast by providing
such changes to NCPA prior to 08:00 of the day that is two (2) Business Days before the active
scheduling day as determined by the WECC prescheduling calendar. Example: For power that is
scheduled for generation or delivery on Friday, March 29, 2014, changes must be submitted to
NCPA by 08:00 on Wednesday, March 27, 2014.
C.5.2 Hourly Modifications to Active Schedules. Unless otherwise mutually agreed,
the Seller may request changes to active schedules by providing such changes to NCPA with a
minimum of four (4) hours’ notice prior to the applicable CAISO market deadline (e.g. Hour
Ahead Scheduling Process (“HASP”) Scheduling deadline, as defined in the CAISO Tariff).
Active day Schedule changes are not binding. 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. Example: For power that is scheduled for generation or delivery in hour ending 15:00 (for
the period from 14:01 to 15:00), changes must be submitted to NCPA by 10:00.
C.5.3. Unforeseen Circumstances. At the Seller’s request, NCPA may, but is not
required to, modify the Schedules for the Generation Facility Output due to unforeseen
circumstances in accordance with the above scheduling timeline constraints described in this
Exhibit PPA-C.
C.5.4. Absence of Forecasts. In the absence of forecasts and schedules as required by
this Agreement or this Exhibit, NCPA shall utilize the most current information the Seller
provides in the development and submission of Schedules.
C.6 Outage Reporting Protocols
C.6.1. Notification. The Seller shall notify NCPA of all planned or forced Outages of
the Generating Facility to ensure compliance with the CAISO Outage Coordination and
Enforcement Protocols.
C.6.1.1 Outage information provided by the Seller shall include, at a minimum,
the start time and stop time of the Outage, Capacity out of service (kW), equipment out of
service, and the reason for the Outage.
C. 6.1.2 Seller shall provide the Planned Outages not included in the annual
operations forecast, the calendar quarter-operations forecast, or the weekly update, to
NCPA at least four (4) Business Days prior to the start of the requested outage.
C. 6.1.3 At any time prior to the start of a Planned Outage, the CAISO may
deny the Outage due to a System Emergency (as defined in the CAISO Tariff) or as
otherwise permitted under the CAISO Tariff. If NCPA receives notice that the CAISO
has denied an Outage in accordance with the CAISO Tariff, NCPA will notify the Seller
as soon as possible and the Seller shall modify the planned Outage as required by the
CAISO.
C.6.2 Commencement of an Outage. The Seller shall not begin any Planned Outage
without the prior approval of NCPA and the CAISO.
C.6.3 Forced Outages
C.6.3.1 The Seller shall report the Forced Outages to NCPA within twenty (20)
040914 jrm 0180042 22
minutes of such Outages.
C.6.3.2 The Seller’s notice of a Forced Outage sent to NCPA shall include the
reason for the Outage (if known), expected duration of the Outage, and the Capacity
reduction.
C.6.3.3 By the end of the next Business Day following the day on which a
Forced Outage has occurred, the Seller shall provide to NCPA a detailed written report,
specifying the reason for the Outage, expected duration of such Outage, capacity
reduction, and actions taken to mitigate such Outage.
C.6.4 Return to Service. The Seller shall notify NCPA as soon as possible, but in any
case before the Generating Facility is returned to service.
C.7 Notices. All Scheduling notices and Schedules shall be submitted to NCPA by phone,
fax or email, or other means as may be mutually agreed by the Parties, to the persons designated in Exhibit
“PPA-F.”
C.8 Changes in Scheduling and Outage Procedure. The Buyer shall revise Exhibit “PPA-C,”
or, as appropriate, give written notice to the Seller regarding the revision, and issue a new Exhibit
“PPA-C,” which shall then become part of the Agreement to reflect changes in the scheduling and outage
notification procedure.
040914 jrm 0180042 23
EXHIBIT “PPA-D”
Green Attributes Reporting and Conveyance Procedures
D.1 Additional Definitions for the Conveyance of Green Attributes
D.1.1 “Certificate Transfers” means the process, as described in the WREGIS
Operating Rules, whereby a WREGIS account holder may request that WREGIS Certificates from
a specific generating unit shall be directly deposited to another WREGIS account.
D.1.2 “WREGIS Certificates” means a certificate created within the WREGIS system
that represents all Renewable and Green Attributes from one MWh of electricity generation from
an Eligible Renewable Energy Resource that is registered with WREGIS.
D.1.3 “WREGIS Operating Rules” means the document published by WREGIS that
governs the operation of the WREGIS system for registering, tracking, and conveying, among
others, RECs produced from Eligible Renewable Energy Resources that shall be registered with
WREGIS.
D.1.4 “WREGIS” means Western Renewable Energy Generation Information System.
D.2 RECs. Green Attributes shall be conveyed by the Seller to the Buyer through RECs,
which shall be registered tracked and conveyed to the Buyer, using WREGIS.
D.3 WREGIS Registration. Prior to the Commercial Operation Date, the Buyer will register
the Facility in the Buyer’s WREGIS account on behalf of the Seller. The Buyer shall charge back to the
Seller any costs of registering and maintaining the registration of the Facility with WREGIS. The Seller
shall provide to the Buyer any documents required by WREGIS and assign the Seller’s rights to register the
Facility in WREGIS, using agreements provided by WREGIS.
D.4 B u yer ’s W REGI S Acco unt . The Buyer shall, at its sole expense, establish and maintain
the Buyer’s WREGIS account sufficient to accommodate the WREGIS Certificates produced by the output
of the Facility. The Buyer shall be responsible for all expenses associated with (A) establishing and
maintaining the Buyer’s WREGIS Account, and (B) subsequently transferring or retiring WREGIS
Certificates.
D.5 Qualified Reporting Entity. The Buyer shall be the Qualified Reporting Entity (as such
term is defined by WREGIS) for the Facility, and shall be responsible for providing the metered Output
data to WREGIS.
D.6 Reporting of Environmental Attributes. In lieu of the Seller’s transfer of the WREGIS
Certificates using Certificate Transfers from the Seller’s WREGIS account to the Buyer’s WREGIS
account, the Buyer shall report the Facility as being held directly in its WREGIS account, which will
preclude the Seller from reporting the Facility in its own WREGIS account.
D.6.1 By avoiding the use of Certificate Transfers, there will be no transaction costs to
the Seller or the Buyer for the Certificate Transfers that would otherwise be used.
D.6.2 WREGIS Certificates for the Facility will be created on a calendar month basis
in accordance with the certification procedure established by the WREGIS Operating Rules in an
amount equal to the Energy generated by the Project and delivered to the Buyer in the same
calendar month.
D.6.3 WREGIS Certificates will only be created for whole MWh amounts of energy
generated. Any fractional MWh amounts (i.e., kWh) will be carried forward until sufficient
generation is accumulated for the creation of a WREGIS Certificate and all such accumulated
040914 jrm 0180042 24
MWh of Environmental Attributes will then be available to Buyer.
D.6.4 If a WREGIS Certificate Modification (as such term is defined by WREGIS)
will be required to reflect any errors or omissions regarding the Green Attributes from the Facility,
then the Buyer will manage the submission of the WREGIS Certificate Modification.
D.6.5 Due to the expected delay in the creation of WREGIS Certificates relative to the
timing of invoice payments under Section 2, the Buyer will normally be making an invoice
payment for the Output for a given month in accordance with Section 2 before the WREGIS
Certificates for such month may be created in the Buyer’s WREGIS account. Notwithstanding this
delay, the Buyer shall have all right and title to all such WREGIS Certificates upon payment to the
Seller in accordance with Section 2.
D.7 Changes in Green Attributes Reporting and Conveyance Procedures. The Buyer shall
revise this Exhibit “PPA-D,” as appropriate, give written notice to the Seller regarding the revision, and
issue a new Exhibit “PPA-D,” which shall then become part of this Agreement in the event that:
D.7.1 WREGIS changes the WREGIS Operating Rules (as defined by WREGIS) after
the Effective Date or applies the WREGIS Operating Rules in a manner inconsistent with this
Exhibit “PPA-D” after the Effective Date; or,
D.7.2 WREGIS is replaced as the primary method that the Buyer uses for conveyance
of Green Attributes, or additional methods to convey all Green Attributes, are required.
040914 jrm 0180042 25
EXHIBIT “PPA-E”
Insurance Requirements
CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, WILL FOR THE TERM OF THE
CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW,
AFFORDED BY COMPANIES WITH A BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR
AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA.
AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AS SPECIFIED,
BELOW:
REQUIRED
TYPE OF COVERAGE
REQUIREMENT
MINIMUM LIMITS
EACH
OCCURRENCE AGGREGATE
YES
YES
WORKER’S COMPENSATION
AUTOMOBILE LIABILITY
STATUTORY
STATUTORY
YES
COMMERCIAL GENERAL
LIABILITY, INCLUDING
PERSONAL INJURY, BROAD FORM
PROPERTY DAMAGE BLANKET
CONTRACTUAL, AND FIRE LEGAL
LIABILITY
BODILY INJURY
PROPERTY DAMAGE
BODILY INJURY & PROPERTY DAMAGE
COMBINED.
$1,000,000
$1,000,000
$1,000,000
$2,000,000
$2,000,000
$2,000,000
YES
COMPREHENSIVE AUTOMOBILE
LIABILITY, INCLUDING, OWNED,
HIRED, NON-OWNED
BODILY INJURY
- EACH PERSON
- EACH OCCURRENCE
PROPERTY DAMAGE
BODILY INJURY AND PROPERTY
DAMAGE, COMBINED
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
NO
PROFESSIONAL LIABILITY,
INCLUDING, ERRORS AND
OMISSIONS, MALPRACTICE
(WHEN APPLICABLE), AND
NEGLIGENT PERFORMANCE
ALL DAMAGES
$1,000,000
YES
THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: PROPOSER, AT ITS SOLE COST AND
EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY PROPOSER AND ITS SUBCONSULTANS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S
LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSURES CITY, ITS COUNCIL MEMBERS,
OFFICERS, AGENTS, AND EMPLOYEES.
I. INSURANCE COVERAGE MUST INCLUDE:
A. A PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE
OR OF COVERAGE CANCELLATION; AND
B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR’S
AGREEMENT TO INDEMNIFY CITY – SEE, SAMPLE AGREEMENT FOR SERVICES.
II. SUBMIT CERTIFICATE(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE, OR COMPLETE THIS
SECTION AND IV THROUGH V, BELOW.
A. NAME AND ADDRESS OF COMPANY AFFORDING COVERAGE (NOT AGENT OR BROKER):
B. NAME, ADDRESS, AND PHONE NUMBER OF YOUR INSURANCE AGENT/BROKER:
040914 jrm 0180042 26
C. POLICY NUMBER(S):
D. DEDUCTIBLE AMOUNT(S) (DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR
APPROVAL):
III. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AND
PROPOSER’S SUBMITTAL OF CERTIFICATES OF INSURANCE EVIDENCING COMPLIANCE WITH THE
REQUIREMENTS SPECIFIED HEREIN.
IV. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL
INSURES”
A. PRIMARY COVERAGE
WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS
AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY
OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSURES.
B. CROSS LIABILITY
THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSURES UNDER THE POLICY
SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER,
BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL
LIABILITY OF THE COMPANY UNDER THIS POLICY.
C. NOTICE OF CANCELLATION
1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE
NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY
WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION.
2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM,
THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE
EFFECTIVE DATE OF CANCELLATION.
V. PROPOSER CERTIFIES THAT PROPOSER’S INSURANCE COVERAGE MEETS THE ABOVE
REQUIREMENTS:
THE INFORMATION HEREIN IS CERTIFIED CORRECT BY SIGNATURE(S) BELOW. SIGNATURE(S) MUST BE
SAME SIGNATURE(S) AS APPEAR(S) ON SECTION II, ATTACHMENT A, PROPOSER’S INFORMATION FORM.
Firm:
Signature:
Name:
(Print or type name)
Signature:
Name:
(Print or type name)
040914 jrm 0180042 27
NOTICES SHALL BE MAILED TO:
PURCHASING AND
CONTRACT ADMINISTRATION
CITY OF PALO ALTO
P.O. BOX 10250
PALO ALTO, CA 94303.
040914 jrm 0180042 28
EXHIBIT “PPA-F”
Notices
Contract Administration
BUYER: SELLER:
City of Palo Alto
Utilities Resource Management
250 Hamilton Avenue
Palo Alto, CA 94301
Ph: 650-329-2689
Email: UtilityCommoditySettlements@CityofPaloAlto.Org
Billing and Settlements
BUYER: SELLER:
City of Palo Alto
Utilities Resource Management
250 Hamilton Avenue
Palo Alto, CA 94301
Ph: 650-329-2689
Email: UtilityCommoditySettlements@CityofPaloAlto.Org
Forecasting and Outage Reporting under Section 6 of this Agreement
Planned Outages:
BUYER: SELLER:
Northern California Power Agency Real-
Time Dispatch
651 Commerce Drive
Roseville, CA 95678
Ph: 916-786-3518
Forced Outages
BUYER: SELLER:
Northern California Power Agency Real-
Time Dispatch
651 Commerce Drive
Roseville, CA 95678
Ph: 916-786-3518
Forecasting and Scheduling
BUYER: SELLER:
Northern California Power Agency
Operations and Pre-Scheduling
651 Commerce Drive
Roseville, CA 95678
Ph: 916-786-0123
040914 jrm 0180042 29
EXHIBIT “PPA-G”
Form of Lender Consent and Agreement
This CONSENT AND AGREEMENT (this “Consent”), dated as of , 20 , is entered into
by and among the CITY OF PALO ALTO, a California chartered municipal corporation (the “City”),
, a corporation (the “Lender),” by its agent,
(the “Administrative Agent”), and , a
corporation (the “Borrower”) (collectively, the “Parties”). Unless otherwise defined, all
capitalized terms have the meaning given in the Contract (as hereinafter defined).
RECITALS
A. Borrower intends to develop, construct, install, test, own, operate and use an approximately
MW electric generating facility located in the city of Palo Alto in the State of California, known as
the Project (the “Project”).
B. In order to partially finance the development, construction, installation, testing, operation and
use of the Project, Borrower has entered into that certain financing agreement dated as of
(as amended, amended and restated, supplemented or otherwise modified from time to time, the “Financing
Agreement”), among Borrower, the financial institutions from time to time parties thereto (collectively, the
“Lenders”) , and Administrative Agent for the Lenders, pursuant to which, among other things, Lenders
have extended commitments to make loans and other financial accommodations to, and for the benefit of,
Borrower.
C. The City and Borrower have entered into that certain Power Purchase Agreement, dated as of
(attached hereto and incorporated herein by reference, as amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the
“Power Purchase Agreement”).
D. The City and Borrower have entered into that certain Interconnection Agreement, dated as of
_ (attached hereto and incorporated herein by reference, as amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the
“Interconnection Agreement”).
E. Pursuant to a security agreement executed by Borrower and Administrative Agent for the
Lenders (as amended, amended and restated, supplemented or otherwise modified from time to time, the
“Security Agreement”), Borrower has agreed, among other things, to assign, as collateral security for its
obligations under the Financing Agreement and related documents (collectively, the “Financing
Documents”), all of its right, title and interest in, to and under the Power Purchase Agreement and
Interconnection Agreement to Administrative Agent for the benefit of itself, the Lenders and each other
entity or person providing collateral security under the Financing Documents.
F. It is a requirement under the Financing Agreement that the Parties hereto execute this Consent.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, the Parties agree, as follows:
1. CONSENT TO ASSIGNMENT. The City acknowledges the assignment referred to in Recital E
above, consents to an assignment of the Power Purchase Agreement and Interconnection Agreement
pursuant thereto, and agrees with Administrative Agent, as follows:
(a) Administrative Agent shall be entitled (but not obligated) to exercise all rights and to cure any
040914 jrm 0180042 30
defaults of Borrower under the Power Purchase Agreement or Interconnection Agreement, as the
case may be, subject to applicable notice and cure periods provided in the Power Purchase
Agreement and Interconnection Agreement. Upon receipt of notice from Administrative Agent,
the City agrees to accept such exercise and cure by Administrative Agent if timely made by
Administrative Agent under the Power Purchase Agreement or Interconnection Agreement, as the
case may be, and this Consent. Upon receipt of Administrative Agent's written instructions and to
the extent allowed by law, the City agrees to make directly to such account as Administrative
Agent may direct the City, in writing, from time to time, all payments to be made by the City to
Borrower under the Power Purchase Agreement or Interconnection Agreement, as the case may
be, from and after the City’s receipt of such instructions, and Borrower consents to any such
action. The City shall not incur any liability to Borrower under the Power Purchase Agreement,
Interconnection Agreement, or this Consent for directing such payments to Administrative Agent
in accordance with this subsection (a).
(b) The City will not, without the prior written consent of Administrative Agent (such consent not
to be unreasonably withheld), (i) cancel or terminate the Power Purchase Agreement or
Interconnection Agreement, or consent to or accept any cancellation, termination or suspension
thereof by Borrower, except as provided in the Power Purchase Agreement or Interconnection
Agreement and in accordance with subparagraph 1(c) hereof, (ii) sell, assign or otherwise dispose
(by operation of law or otherwise) of any part of its interest in the Power Purchase Agreement or
Interconnection Agreement, except as provided in the Power Purchase Agreement or
Interconnection Agreement, or (iii) amend or modify the Power Purchase Agreement or
Interconnection Agreement in any manner materially adverse to the interest of the Lenders in the
Power Purchase Agreement and Interconnection Agreement as collateral security under the
Security Agreement.
(c) The City agrees to deliver duplicates or copies of all notices of default delivered by the City
under or pursuant to the Power Purchase Agreement or Interconnection Agreement to
Administrative Agent in accordance with the notice provisions of this Consent. The City shall
deliver any such notices concurrently with delivery of the notice to Borrower under the Power
Purchase Agreement or Interconnection Agreement. To the extent that a cure period is provided
under the Power Purchase Agreement or Interconnection Agreement, Administrative Agent shall
have the same period of time to cure the breach or default that Borrower is entitled to under the
Power Purchase Agreement or Interconnection Agreement, except that if the City does not deliver
the default notice to Administrative Agent concurrently with delivery of the notice to Borrower
under the Power Purchase Agreement or Interconnection Agreement, then as to Administrative
Agent, the applicable cure period under the Power Purchase Agreement or Interconnection
Agreement shall begin on the date on which the notice is given to Administrative Agent. If
possession of the Project is necessary to cure such breach or default, and Administrative Agent or
its designee(s) or assignee(s) declare Borrower in default and commence foreclosure proceedings,
Administrative Agent or its designee(s) or assignee(s) will be allowed a reasonable period to
complete such proceedings so long as Administrative Agent or its designee(s) continue to perform
any monetary obligations under the Power Purchase Agreement or Interconnection Agreement, as
the case may be. The City consents to the transfer of Borrower's interest under the Power Purchase
Agreement and Interconnection Agreement to the Lenders or Administrative Agent or their
designee(s) or assignee(s) or any of them or a purchaser or grantee at a foreclosure sale by judicial
or nonjudicial foreclosure and sale or by a conveyance by Borrower in lieu of foreclosure and
agrees that upon such foreclosure, sale or conveyance, the City shall recognize the Lenders or
Administrative Agent or their designee(s) or assignee(s) or any of them or other purchaser or
grantee as the applicable party under the Power Purchase Agreement and Interconnection
Agreement (provided that such Lenders or Administrative Agent or their designee(s) or
assignee(s) or purchaser or grantee assume the obligations of Borrower under the Power Purchase
Agreement and Interconnection Agreement, including, without limitation, satisfaction and
compliance with all credit provisions of the Power Purchase Agreement and Interconnection
Agreement, if any, and provided further that such Lenders or Administrative Agent or their
designee(s) or assignee(s) or purchaser or grantee has a creditworthiness equal to or better than
040914 jrm 0180042 31
Borrower, as reasonably determined by City).
(d) In the event that either the Power Purchase Agreement or Interconnection Agreement, or both
is rejected by a trustee or debtor-in-possession in any bankruptcy or insolvency proceeding, and if,
within forty-five (45) days after such rejection, Administrative Agent shall so request, the City
will execute and deliver to Administrative Agent a new power purchase agreement or
interconnection agreement, as the case may be, which power purchase agreement or
interconnection agreement shall be on the same terms and conditions as the original Power
Purchase Agreement or Interconnection Agreement for the remaining term of the original Power
Purchase Agreement or Interconnection Agreement before giving effect to such rejection, and
which shall require Administrative Agent to cure any defaults then existing under the original
Power Purchase Agreement or Interconnection Agreement. Notwithstanding the foregoing, any
new renewable power purchase agreement or interconnection agreement will be subject to all
regulatory approvals required by law. The City will use good faith efforts to promptly obtain any
necessary regulatory approvals.
(e) In the event Administrative Agent, the Lenders or their designee(s) or assignee(s) elect to
perform Borrower's obligations under the Power Purchase Agreement and Interconnection
Agreement, succeed to Borrower’s interest under the Power Purchase Agreement and
Interconnection Agreement, or enter into a new power purchase agreement or interconnection
agreement as provided in subparagraph 1(d) above, the recourse of the City against Administrative
Agent, Lenders or their designee(s) and assignee(s) shall be limited to such Parties’ interests in the
Project, and the credit support required under the Power Purchase Agreement and Interconnection
Agreement, if any.
(f) In the event Administrative Agent, the Lenders or their designee(s) or assignee(s) succeed to
Borrower's interest under the Power Purchase Agreement and Interconnection Agreement,
Administrative Agent, the Lenders or their designee(s) or assignee(s) shall cure any then-existing
payment and performance defaults under the Power Purchase Agreement or Interconnection
Agreement, except any performance defaults of Borrower itself, which by their nature are not
susceptible of being cured. Administrative Agent, the Lenders and their designee(s) or assignee(s)
shall have the right to assign all or a pro rata interest in the Power Purchase Agreement and
Interconnection Agreement to a person or entity to whom Borrower’s interest in the Project is
transferred, provided such transferee assumes the obligations of Borrower under the Power
Purchase Agreement and Interconnection Agreement and has a creditworthiness equal to or better
than Borrower, as reasonably determined by the City. Upon such assignment, Administrative
Agent and the Lenders and their designee(s) or assignee(s) (including their agents and employees)
shall be released from any further liability thereunder accruing from and after the date of such
assignment, to the extent of the interest assigned.
2. REPRESENTATIONS AND WARRANTIES. The City hereby represents and warrants that as
of the date of this Consent:
(a) It (i) is duly formed and validly existing under the laws of the State of California, and (ii) has
all requisite power and authority to enter into and to perform its obligations hereunder and under
the Power Purchase Agreement and Interconnection Agreement, and to carry out the terms hereof
and thereof and the transactions contemplated hereby and thereby;
(b) the execution, delivery and performance of this Consent, the Power Purchase Agreement and
the Interconnection Agreement have been duly authorized by all necessary action on its part and
do not require any approvals, material filings with, or consents of any entity or person which have
not previously been obtained or made;
(c) each of this Consent, the Power Purchase Agreement, and the Interconnection Agreement is in
full force and effect;
040914 jrm 0180042 32
(d) each of this Consent, the Power Purchase Agreement, and the Interconnection Agreement has
been duly executed and delivered on its behalf and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors’ rights generally and (ii) general equitable principles (whether considered
in a proceeding in equity or at law);
(e) there is no litigation, arbitration, investigation or other proceeding pending for which the City
has received service of process or, to the City’s actual knowledge, threatened against the City
relating solely to this Consent, the Power Purchase Agreement, or the Interconnection Agreement
and the transactions contemplated hereby and thereby;
(f) the execution, delivery and performance by it of this Consent, the Power Purchase Agreement,
and the Interconnection Agreement, and the consummation of the transactions contemplated
hereby, will not result in any violation of, breach of or default under any term of any material
contract or material agreement to which it is a party or by which it or its property is bound, or of
any material requirements of law presently in effect having applicability to it, the violation, breach
or default of which could have a material adverse effect on its ability to perform its obligations
under this Consent;
(g) neither the City nor, to the City’s actual knowledge, any other party to the Power Purchase
Agreement or Interconnection Agreement, is in default of any of its obligations thereunder; and
(h) to the City’s actual knowledge, (i) no Force Majeure Event exists under, and as defined in, the
Power Purchase Agreement or Interconnection Agreement and (ii) no event or condition exists
which would either immediately or with the passage of any applicable grace period or giving of
notice, or both, enable either the City or Borrower to terminate or suspend its obligations under the
Power Purchase Agreement or the Interconnection Agreement.
Each of the representations and warranties set forth herein shall survive the execution and delivery
of this Consent and the consummation of the transactions contemplated hereby.
3. NOTICES. All notices required or permitted hereunder shall be given, in writing, and shall be
effective (a) upon receipt if hand delivered, (b) upon telephonic verification of receipt if sent by facsimile
and (c) if otherwise delivered, upon the earlier of receipt or three (3) Business Days after being sent
registered or certified mail, return receipt requested, with proper postage affixed thereto, or by private
courier or delivery service with charges prepaid, and addressed as specified below:
If to the City:
[ ]
[ ]
[ ]
Telephone No.: [ ]
Facsimile No.: [ ]
Attn: [ ]
If to Administrative Agent:
[ ]
[ ]
[ ]
Telephone No.: [ ]
Facsimile No.: [ ]
Attn: [ ]
040914 jrm 0180042 33
If to Borrower:
[ ]
[ ]
[ ]
Telephone No.: [ ]
Facsimile No.: [ ]
Attn: [ ]
Any party shall have the right to change its address for notice hereunder to any other location within the
United States by giving thirty (30) days written notice to the other parties in the manner set forth above.
4. ASSIGNMENT, TERMINATION, AMENDMENT. This Consent shall be binding upon and
benefit the successors and assigns of the Parties hereto and their respective successors, transferees and
assigns (including without limitation, any entity that refinances all or any portion of the obligations under
the Financing Agreement). The City agrees (a) to confirm such continuing obligation, in writing, upon the
reasonable request of (and at the expense of) Borrower, Administrative Agent, the Lenders or any of their
respective successors, transferees or assigns, and (b) to cause any successor-in-interest to the City with
respect to its interest in the Power Purchase Agreement or Interconnection Agreement to assume, in writing
and in form and substance reasonably satisfactory to Administrative Agent, the obligations of City
hereunder. Any purported assignment or transfer of the Power Purchase Agreement or Interconnection
Agreement not in conjunction with the written instrument of assumption contemplated by the foregoing
clause (b) shall be null and void. No termination, amendment, or variation of any provisions of this Consent
shall be effective unless in writing and signed by the parties hereto. No waiver of any provisions of this
Consent shall be effective unless in writing and signed by the party waiving any of its rights hereunder.
5. GOVERNING LAW. This Consent shall be governed by the laws of the State of California
applicable to contracts made and to be performed in California. The federal courts or the state courts
located in California shall have exclusive jurisdiction to resolve any disputes with respect to this Consent
with the City, Assignor, and the Lender or Lenders irrevocably consenting to the jurisdiction thereof for
any actions, suits, or proceedings arising out of or relating to this Consent.
6. COUNTERPARTS. This Consent may be executed in one or more duplicate counterparts, and
when executed and delivered by all the parties listed below, shall constitute a single binding agreement.
7. SEVERABILITY. In case any provision of this Consent, or the obligations of any of the Parties
hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining
provisions, or the obligations of the other Parties hereto, shall not in any way be affected or impaired
thereby.
8. ACKNOWLEDGMENTS BY BORROWER. Borrower, by its execution hereof, acknowledges
and agrees that neither the execution of this Consent, the performance by the City of any of the obligations
of the City hereunder, the exercise of any of the rights of the City hereunder, or the acceptance by the City
of performance of the Power Purchase Agreement by any party other than Borrower shall (1) release
Borrower from any obligation of Borrower under the Power Purchase Agreement or Interconnection
Agreement, (2) constitute a consent by the City to, or impute knowledge to the City of, any specific terms
or conditions of the Financing Agreement, the Security Agreement or any of the other Financing
Documents, or (3) except as expressly set forth in this Consent, constitute a waiver by the City of any of its
rights under the Power Purchase Agreement or Interconnection Agreement. Borrower and Administrative
Agent acknowledge hereby for the benefit of City that none of the Financing Agreement, the Security
040914 jrm 0180042 34
Agreement, the Financing Documents or any other documents executed in connection therewith alter,
amend, modify or impair (or purport to alter, amend, modify or impair) any provisions of the Power
Purchase Agreement.
CITY OF PALO ALTO ADMINISTRATIVE AGENT
APPROVED AS TO FORM
Senior Deputy City Attorney
BORROWER
APPROVED
City Manager
Director of Utilities
Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 1 of 4
EXCERPTED FINAL MINUTES OF THE DECEMBER 10, 2014
UTILITIES ADVISORY COMMISSION MEETING
ITEM 2 (Original Agenda New Business Item 1): ACTION: Staff Recommendation that the
Utilities Advisory Commission Recommend that Council Continue the Palo Alto Clean Local
Energy Accessible Now (CLEAN) Program at the Rate of 16.5 cents per Kilowatt-hour for a 20-
Year Contract and a Program Cap of 3 Megawatts, Add a 25-Year Contract Term Option, and
Expand CLEAN Program Eligibility to Non-Solar Renewable Energy Resources
Senior Resource Planner Jim Stack summarized the history of the Palo Alto CLEAN program
from when it was first adopted in March 2012 to the last updated price and program cap in
February 2014. Stack indicated that the City released a Request for Proposals for lease
agreements for City-owned parking structures and has selected a finalist who is expected to
participate in the program at five facilities for a total of about 1.5 megawatts (MW).
Stack explained that the value of local solar has fallen since the program was first launched, but
has increased slightly since last year's evaluation. He said that staff recommends that the
current price of 16.5 cents/kilowatt-hour (¢/kWh) and program participation cap of 3 MW be
recommended to Council. He also said that staff recommends allowing participants to choose
either a 20-year or 25-year contract term, noting that some developers had requested a longer
contract term given that it would align better with the solar module lifetime and product
warranties.
Stack also said that staff recommends expanding the CLEAN program’s eligibility to include non-
solar local renewable resources, while offering these resources a contract price that is equal to
their avoided cost (9.3 ¢/kWh for a 20-year term or 9.4 ¢/kWh for a 25-year term). He noted
that expanding the program to non-solar resources has been discussed since the program’s
inception, but that it was initially not done due to the fact that the City already had a competing
program (the Power from Local Ultra-clean Generation Incentive, or PLUG-In, program) in place
for such resources. However, this program was terminated by Council earlier this year. Stack
noted that the potential anaerobic digester facility that has been discussed for the wastewater
treatment plant has been mentioned as a possible non-solar participant in the CLEAN program.
Finally, Stack stated that staff recommends that there be no participation cap on non-solar
resources participating in the CLEAN program, given that these resources will be compensated
at their avoided cost and therefore not have any impact on ratepayers.
Commissioner Eglash asked if resources are paid only for the energy that is delivered, not based
on their nameplate capacity. Stack said that this was the case; that payments are made only for
energy received, as with a regular power purchase agreement (PPA). Commissioner Eglash
ATTACHMENT C
Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 2 of 4
noted that this means the City does not have to worry about degradation of the solar panels
over time.
Commissioner Eglash commented on the types of non-solar resources that would be eligible for
the program, and asked about a hypothetical example of a system of lead-acid batteries that
are charged at night using electricity from the grid, and whether that would be eligible to
participate in the program. Stack stated that the program Eligibility Rules and Requirements
stipulate that a resource must be deemed an “eligible renewable” resource under the California
Public Utilities Code in order to participate.
Commissioner Eglash asked whether there are any risks that the City should consider in opening
the program up to non-solar renewable energy resources, and also asked whether there are
any other utilities that are allowing non-solar renewable energy resources to participate in their
feed-in tariff programs. Senior Deputy City Attorney Jessica Mullan mentioned that the Los
Angeles Department of Water and Power has a feed-in tariff program that is open to wind and
biomass projects.
Commissioner Eglash asked whether a customer who wanted to install a small wind turbine on
their property would have to go through a zoning review process in order to do that. Assistant
Director Jane Ratchye stated that such a project would have to go through a regular City review
process—possibly including an architectural review process and an environmental review
process—just like any other development project.
Vice Chair Waldfogel asked whether a fuel cell using “green gas” would be considered a
renewable resource by the California Energy Commission (CEC). Stack stated it would be
considered a renewable resource, while Ratchye noted that it would likely be difficult to get
physical “green gas” delivered to the City. Commissioner Eglash asked whether a fuel cell such
as a Bloom Box that simply used a regular natural gas supply would be deemed eligible, and
Stack stated that it would not. Vice Chair Waldfogel asked whether a Bloom Box that used gas
from the City’s PaloAltoGreen Gas program would be eligible. Stack stated that it would not,
because that program uses environmental offsets to “green up” a regular natural gas supply,
whereas the state Public Utilities Code requires that fuel cells use actual green gas in order to
be deemed a renewable electricity supply.
Commissioner Eglash asked Stack for his opinion on whether the staff recommendation to open
the CLEAN program to non-solar renewable energy resources was wise and well thought out.
Stack responded that he thought it did make sense to open the program to non-solar resources
rather than discriminate against them, and that as long as they can pass through the City’s
regular permitting and review processes they should be eligible to participate.
Commissioner Eglash stated his concern that opening the program up to any type of renewable
resource, for a 20- or 25-year term, with no participation cap (for non-solar resources) exposed
the City to risks that it may not have considered. However, he also noted that the City regularly
signs long-term PPAs, locking in a contract price for an extended period of time.
Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 3 of 4
Ratchye agreed that opening the CLEAN program to non-solar resources would not be
significantly different from the City’s regular PPA process. She also noted that staff would be
returning to Council every year to review the program and its contract price, so the prices and
terms being proposed right now would not be available forever. She also noted that staff does
not expect significant participation from non-solar resources. She stated that the only real
concern with the staff proposal was for a non-solar price that was based on the avoided cost of
a baseload type of resource, such as an anaerobic digester, and that it might not accurately
reflect the value of a renewable resource with a different generation profile such as a wind
resource. Finally, she pointed out that one way to address the concern about participation of
non-solar resources in the CLEAN program would be to impose a program participation cap on
those resources.
Commissioner Eglash noted that in the case of regular PPAs, each project is reviewed by the
UAC, the Finance Committee, and the full City Council. Whereas with the CLEAN program the
City would be committing itself to projects of unlimited size without any additional review. He
suggested that the UAC might want to consider requiring Council approval of larger projects.
Ratchye responded that the UAC could certainly make that recommendation; however, it would
defeat the purpose of a feed-in tariff program, which is to establish a known price and a
standard contract and a set of participation criteria, and allow projects to participate in the
program without going through the typical thorough review process. She also noted that the
chances of a giant locally-sited project are incredibly remote.
Vice Chair Waldfogel commented that large projects would have long lead times to develop and
that it would not be unreasonable to expect some negotiations to occur for such large projects.
Commissioner Hall stated that he has problems with the anaerobic digester being part of this
program due to the fact that it could be a very large project and it should have to go through
the regular PPA negotiation and review process. He also said that since the anaerobic digester
would likely be a City-owned project (but not owned by Utilities) and therefore it would be a
transfer price and this could be an issue for the public. However, he likes the idea of having a
feed-in tariff program in place, and that in the future fuel cells could be a good technology to
participate in the program as their prices come down.
Commissioner Foster noted that although there has not been any uptake for the program yet,
he is supportive of continuing the program for solar at the 16.5 ¢/kWh price and that he
supports adding a 25-year contract term option. He also noted that for solar projects, the
incremental cost of those projects participating is very small for residential customers (he
calculated the rate impact as 12.5 ¢/month for the median residential customer, assuming the
CLEAN program was fully subscribed).
Commissioner Foster noted that the anaerobic digester is a large motivation for expanding the
program to non-solar projects, and that it is a complicated project for the City. He noted that if
that project participates in the CLEAN program it will bring certainty to one aspect of the
project (the revenue it will receive for the power it generates) that is currently up in the air. He
also stated that because the project will be compensated at its avoided cost he feels that the
Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 4 of 4
arrangement is reasonable and therefore he supports the non-solar portion of the staff
recommendation in addition to the solar portion.
Commissioner Melton stated that he is also comfortable with the staff proposal and that he is
convinced that there will not be any off-the-wall projects coming out of this program, since any
resource that wishes to participate must be defined by the state as an eligible renewable
energy resource.
Commissioner Cook stated that he also likes the staff recommendation, but he would put a cap
on the non-solar projects, such as 3 MW, in order to have more control on the City’s exposure.
For a compelling project that is larger than 3 MW, the developers would come to staff to
discuss the project and staff could seek Council approval of the project or seek Council approval
to raise the 3 MW cap. He also stated that he is not concerned about the transfer pricing issue,
since the price is set at the avoided cost of the energy.
Commissioner Eglash commented that Commissioner Cook’s recommendation did not signal
that the City would reject projects larger than 3 MW, but that such projects would have to go
through a more thorough review process.
Ratchye asked Stack to remind the Commission about the size of the anaerobic digester project.
Stack stated that Public Works staff currently anticipates that the project will consist of three
800 kilowatt (kW) engines, with two engines operating and one idle at any point in time;
therefore the project would have an operating capacity of about 1.6 MW.
Ratchye also reminded the Commission that when Council terminated the PLUG-In program
earlier this year, staff told Council that after terminating that program, it would return to
Council with a recommendation to expand the CLEAN program to include non-solar renewable
energy resources such as the anaerobic digester.
ACTION:
Chair Foster made a motion to approve staff’s recommendation. Commissioner Melton
seconded the motion.
Commissioner Eglash, explaining that he doesn't feel that the UAC has received a full discussion
and justification for non-solar projects, made a substitute motion to eliminate the non-solar
aspect of the staff recommendation. His motion was to approve staff’s recommendation parts
1.a. and 2 (Adopt a resolution to continue the Palo Alto CLEAN program at the current price of
16.5 cents per kilowatt-hour (¢/kWh) for a 20-year contract, add a 25-year contract term option
with a 16.5 ¢/kWh price, and continue with a program limit of 3 megawatts (MW) for solar
energy resources; and Direct staff to return to the Council with a review of the program in one
year or at the time the program capacity is filled, whichever comes first.). Commissioner Hall
seconded the substitute motion. The motion carried by a vote of 3-2 (with Chair Foster and
Commissioner Melton voting no, Vice Chair Waldfogel and Commissioners Eglash and Hall
voting yes, Commissioner Cook abstaining, and Commissioner Chang absent).