HomeMy WebLinkAboutStaff Report 6485
City of Palo Alto (ID # 6485)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 2/16/2016
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 the City Council
Adopt a Resolution to Continue the Palo Alto Clean Local Energy Accessible
Now (CLEAN) Program at the Current Contract Price of $0.165 per kilowatt-
hour for Local Solar Resources and at the Avoided Cost Level ($0.081 to
$0.082 per kilowatt-hour) for Local Non-solar Eligible Renewable Resources
From: City Manager
Lead Department: Utilities
Recommendation
Staff and the Utilities Advisory Commission (UAC) request that the Finance Committee
recommend that the City Council:
1. Adopt a resolution (Attachment A) to:
a. Maintain the Palo Alto CLEAN program price for local solar energy resources at
the current price of 0.165 dollars per kilowatt-hour ($/kWh) for a 20-year or 25-
year contract term, and continue with a program limit of 3 megawatts (MW);
and
b. Reduce the Palo Alto CLEAN program price for local non-solar eligible renewable
energy resources to the updated avoided cost of such energy ($0.081/kWh for a
20-year contract term, or $0.082/kWh for a 25-year contract term), from the
prior avoided cost projection ($0.093/kWh for a 20-year contract term, or
$0.094/kWh for a 25-year contract term), and continue with a separate program
limit of 3 MW specifically for local non-solar eligible renewable resources; and
2. Approve the attached amended CLEAN program Power Purchase Agreement (PPA)
(Attachment B) to implement the recommended changes.
The resolution (Attachment A) included as part of this Staff Report incorporates the above
recommendations. The amended Palo Alto CLEAN Eligibility Rules and Requirements, which
implement the above recommendations, 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 the above recommendations.
City of Palo Alto Page 2
Council has previously delegated 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 that are approved by Council.
Executive Summary
In March 2012 the Council adopted the Palo Alto CLEAN 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, standardized contract rather than use the energy on site.
Though solar developers expressed interest in Palo Alto CLEAN in 2012, the initial contract price
($0.14 per kilowatt-hour (kWh) for a 20-year term) 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. Council increased the Palo Alto CLEAN price to
$0.165/kWh in December 2012. In May 2015, Council added a 25-year contract term option,
and expanded the program to include non-solar eligible renewable energy resources, setting
their contract prices at the avoided cost level ($0.093/kWh for a 20-year contract or
$0.094/kWh for a 25-year contract).
Although the avoided cost of local solar resources has declined since Council’s May 2015
decision, the UAC and staff recommend continuing the contract of $0.165/kWh for local solar
projects. The UAC and staff also recommend continuing to offer non-solar eligible renewable
energy resources a CLEAN price equal to the avoided cost of the energy produced by those
resources—which is currently estimated at $0.081/kWh for a 20-year term, and $0.082/kWh for
a 25-year term.
Background
CPAU has a long history of supporting solar power. It initiated the PV Partners program in 1999
to provide rebates to residential and commercial customers who install solar for their own use,
and in 2007 the program was expanded to meet the requirements of the State’s Million Solar
Roofs Bill (Senate Bill 1 (SB1), 2006). CPAU is mandated by SB1 to offer rebates through the PV
Partners until the total SB1 program budget of $13 million has been exhausted, which is
expected to occur within a year. Currently, $585,000 in funds remain unreserved for
commercial solar PV systems. All residential rebate funds were reserved as of August 2014.
In March 2012, the City expanded its support for local distributed generation by launching Palo
Alto CLEAN (Clean Local Energy Accessible Now) with a price of $0.14/kWh for a 20-year
contract (Staff Report 2548, Resolution 9235). The program, which was set to expire in
December 2012, expanded the options available to property owners by enabling them to sell
City of Palo Alto Page 3
energy directly to CPAU under a standardized long-term contract instead of using the energy on
site. After receiving no response to the program, in December 2012, Council extended the
CLEAN program and increased the rate to $0.165/kWh for a 20-year contract (Staff Report
3316, Resolution 9308). In February 2014, Council extended the CLEAN program again at the
rate to $0.165/kWh for a 20-year contract, and increased the program capacity limit to 3 MW
(Staff Report 4378, Resolution 9393).
On April 22, 2014, the City Council adopted the Local Solar Plan (Staff Report 4608, Resolution
9402), which set the overarching goal of meeting 4% of the City’s total energy needs from local
solar by 2023 and unified the City’s approach toward local solar and described a set of diverse
strategies for meeting the 4% target in a cost-effective manner that does not create a burden
on non-solar customers. Prior programs, incentives, and policies involving solar installed in the
City—including specifically PV Partners, net energy metering, and Palo Alto CLEAN—are
integrated into the Local Solar Plan strategies. The CLEAN program plays an integral role in
achieving the Local Solar Plan goal contributing about 0.5% of the City’s total energy needs
once the program’s 3 MW cap on local solar projects is reached.
In December 2014, staff presented a recommendation to the UAC to continue the CLEAN
program for solar resources at the $0.165/kWh for a 20-year contract, while also adding a 25-
year contract term option and expanding the program to non-solar renewable energy
resources, setting the price for those resources at the avoided cost level ($0.093 /kWh for a 20-
year contract, $0.094/kWh for a 20-year contract) (UAC report). The staff recommendation also
included maintaining the 3 MW cap on solar resources, and not adopting a cap on the
participation of eligible non-solar resources since they would be compensated at the avoided
cost and did not cause any impact on rates. The UAC unanimously supported the
recommendations concerning solar resources, but did not support the recommendation to
expand the program to non-solar renewable energy resources, siting insufficient justification in
the staff report for the addition of these resources.
In March 2015, staff presented the same recommendation described above to the Finance
Committee, with the addition of a 3 MW participation cap on eligible non-solar resources and
an expanded discussion of the extension of the program to non-solar resources in the report
(Staff Report 5428). The Finance Committee considered staff’s and the UAC’s
recommendations, and committee members expressed no concerns with the proposals to add
a 25-year contract term option or to expand the program to non-solar eligible renewable
energy resources. However, Committee members expressed serious concern about the
proposal to continue offering the contract price of $0.165/kWh for solar resources, rather than
a lower rate closer to the current avoided cost of that solar energy. Ultimately the Finance
Committee voted unanimously to recommend that Council expand the CLEAN program to non-
solar resources, but to set the contract prices for both solar and non-solar resources equal to
those resources’ avoided costs (for solar resources, $0.103/kWh for a 20-year contract and
$0.104/kWh for a 25-year contract; for non-solar resources, $0.093 /kWh for a 20-year
contract, $0.094/kWh for a 20-year contract).
City of Palo Alto Page 4
In May 2015, Council considered the UAC and Finance Committee recommendations (Staff
Report 5849) and were advised that reducing the CLEAN Program price for solar resources
(from 16.5¢/kWh to 10.3¢/kWh or 10.4 ¢/kWh, depending on contract term length) also has
implications for a City project (solar installations on City-owned parking garages) and a City
program (the Community Solar Program) under design at the time. The Council voted to:
extend the CLEAN program again at the rate of $0.165/kWh for a 20-year contract for solar
resources; add a 25-year contract term option; and expand the program to include non-solar
eligible renewable energy resources—setting contract prices for such resources at the level of
their avoided cost, which at the time was $0.093/kWh for a 20-year contract or $0.094/kWh for
a 25-year contract, and setting a separate 3 MW program capacity limit on such resources.
One important consideration in Council’s decision to maintain the contract rate of $0.165/kWh
for solar resources, rather than reducing it to the avoided cost level as the Finance Committee
advocated, was the expectation that the Public Works Department would soon be executing a
lease of rooftop space at several downtown parking garages with a company that would use
that space to develop a group of solar facilities (totaling about 1.5 MW of capacity) that would
participate in the CLEAN program. Although negotiations with that vendor later fell through, at
the time staff anticipated that the City would receive about $155,000 per year in revenue from
that lease, and Council specified that those revenues should be directed to the Electric Fund in
order to mitigate the impact on electric ratepayers of maintaining a CLEAN program rate for
solar resources that was greater than their avoided cost. On January 25, Council approved a
lease agreement with a solar developer to construct solar PV systems (for a total of 1.3 MW) on
four city-owned parking structures with an annual lease payment of $20,000 per year plus the
installation of electric vehicle chargers (Staff Report 6535) with the expectation that the
develop would submit an application to the CLEAN program.
The City received its very first application to the Palo Alto CLEAN program on January 8 for a
113 kW solar carport installation at the Unitarian Universalist Church of Palo Alto for a 25-year
contract term. When the application for the city-owned garages has been received and
processed, approximately half of the total 3 MW program capacity will remain.
The CLEAN program has 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, in response to frequent
requests from developers for detailed information about the City’s electrical distribution
system, staff is in the process of developing a map showing the locations of likely low-cost
interconnection points. In addition, several 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
City of Palo Alto Page 5
Value of Local Solar Resources
When establishing the CLEAN price of $0.165/kWh in December 2012, Council reviewed the
market value of local solar energy and determined that, beyond the value of the energy itself,
there were additional financial and environmental benefits to increasing local solar generation.
In May 2015, when Council re-affirmed the $0.165/kWh price, staff estimated the cost of
buying remote solar energy outside of Palo Alto and transmitting it to Palo Alto was
$0.103/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
$0.165/kWh was expected to cost about $310,000 per year more than buying the same energy
outside of Palo Alto (and having it transported to Palo Alto). This extra cost is equivalent to a
0.26% increase in the electric utility’s costs.
However, at the time Council re-affirmed the $0.165/kWh price, Public Works staff was nearing
the end of negotiations on a lease agreement of parking garage rooftop space to a solar
developer—who intended to install solar systems on these rooftops totaling about 1.5 MW, and
have those resources participate in the CLEAN program—that was expected to provide
approximately $150,000 per year in lease payments to the City. In May 2015, when it re-
affirmed the $0.165/kWh price for solar resources, Council also directed that the roughly
$150,000 per year in lease payments under this arrangement be allocated to the Electric Fund
to offset the additional cost to ratepayers of providing a contract price exceeding the avoided
cost of the energy generated through the program. Council determined that this additional
cost (after being offset by the $150,000 per year in lease payments) was acceptable as a means
to encourage local solar installations and in light of additional benefits of encouraging local
solar generation.
Unfortunately, lease negotiations between the City and the solar developer foundered and the
City ceased negotiations with the developer1. The City then began lease negotiations with
another respondent to the RFP, which were successfully concluded when Council approved a
lease agreement on January 25, 2016 (Staff Report 6535). The lease agreement includes lease
payments of $20,000 per year to the City, which is significantly lower than the $150,000 per
year that was being discussed with the first developer. However, the lease terms require
installation of 18 new Level 2 electric vehicle chargers and electrical infrastructure to support
an additional 80 future new Level 2 chargers. The electrical vehicle chargers and infrastructure
have a significant value that is in addition to the rent. Additionally, the Council Policy and
Services Committee is expected in the near future to discuss options for changing the City’s
current policy of free use of electric vehicle chargers. Changes to the policy may result in the
generation of revenue from the new electric vehicle chargers that could be used to offset the
additional cost to ratepayers of the $0.165/kWh CLEAN program price, in addition to the
$20,000 per year in rent payments.
1 See this staff report for an explanation of staff’s June 29, 2015 recommendation to reject the developer’s
proposal: http://www.cityofpaloalto.org/civicax/filebank/documents/48009.
City of Palo Alto Page 6
Updated Value of Renewable Energy
In April 2015, the City released an RFP for renewable energy projects that could deliver energy
to the City starting in 2021. Although the City has not yet approved a Power Purchase
Agreement (PPA) resulting from this RFP, the responses that the City received to this
solicitation can be used to estimate the current value of renewable energy in California. Of the
41 project proposals received in this RFP, staff placed the 10 highest-ranking proposals on a
“shortlist”; the average proposed price of these shortlisted proposals was $0.055/kWh2. On a
levelized basis over a 20-year term, 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
$0.034/kWh for a total value of local solar energy of $0.089/kWh. Over a 25-year term, the
levelized delivery- and capacity-related cost is $0.035/kWh for a total value of local solar energy
of $0.09/kWh.
When Council re-affirmed the $0.165/kWh price in May 2015, the avoided cost for solar energy
was estimated to be $0.103/kWh for a 20-year term, and $0.104/kWh for a 25-year term. The
$0.014/kWh reduction in the estimated avoided cost of local solar energy from then to now is
entirely due to a reduction in the estimated value of the renewable energy itself. Previously,
the energy value was based on the last long-term renewable PPA that the City executed; this
agreement, signed in June 2014, was to buy energy from a 25 MW solar energy project in
central California at a cost of about $0.069/kWh (Staff Report 4791, Resolution 9416).
The energy generated by 3 MW of local solar projects would supply about 0.5% of the City’s
total electricity needs. Table 1 below shows the history of the Palo Alto CLEAN price since the
program started as well as the proposed CLEAN price for solar resources for a 20-year contract
term.
2 Note that the price for the proposed PPA under consideration by the Finance Committee (Staff Report 6517) is
only $0.03676/kWh for a 25-year term.
City of Palo Alto Page 7
Table 1 – Palo Alto CLEAN Program Prices for Local Solar
Council
Approval
Avoided Cost of Local
Solar Generation *
($/kWh)
CLEAN
Price
($/kWh)
Annual Cost above
Avoided Cost
(Rate Impact)
Total Excess
Cost over 20-
year Term
March 2012 0.136 0.140 $15,000 (0.01%)
for 2 MW cap $300,000
December 2012 0.116 0.165 $160,000 (0.10%)
for 2 MW cap $3.2 million
February 2014 0.099 0.165 $332,500 (0.27%)
for 3 MW cap $6.45 million
May 2015 0.103 0.165 $310,000 (0.26%)
for 3 MW cap $6.2 million
Current
Proposal 0.089 0.165 $380,000 (0.32%)
for 3 MW cap $7.6 million
* The cost of buying remote solar energy outside of Palo Alto and transmitting it to Palo Alto.
As shown in Table 1, based on the current total avoided cost estimates, the cost of continuing
the $0.165/kWh CLEAN price for 3 MW of solar PV projects is about $380,000 per year more
than buying the same energy outside of Palo Alto (and transporting it to Palo Alto). This is
equivalent to a 0.32% increase in the electric utility’s costs.
For non-solar local eligible renewable energy resources, the estimated avoided cost
experienced a similar reduction based on the results of the City’s recent renewable energy RFP.
The energy generated by 3 MW of local non-solar renewable energy projects would supply
about 2.2% of the City’s total electricity needs (assuming that the projects are “baseload”
resources that operate at a high capacity around-the-clock). For these resources, the current
estimated avoided costs are $0.081/kWh for a 20-year term, and $0.082/kWh for a 25-year
term – which are down from $0.093/kWh and $0.094/kWh, respectively, in May 2015. Table 2
compares the current proposal to the price offered since May 2015 when non-solar resources
were first eligible for the Palo Alto CLEAN program. Note that the excess cost is zero since the
price is set equal to the avoided cost.
Table 2 – Palo Alto CLEAN Program Prices for Local Non-Solar Eligible Renewables
Council
Approval
Avoided Cost of Local Non-
Solar Renewable Generation
* ($/kWh)
CLEAN
Price
($/kWh)
Annual Cost above
Avoided Cost
(Rate Impact)
Total Excess
Cost over 20-
year Term
May 2015 0.093 0.093 $0 (0%)
for 3 MW cap $0
Current
Proposal 0.081 0.081 $0 (0%)
for 3 MW cap $0
* The cost of buying remote baseload renewable energy and transmitting it to Palo Alto.
City of Palo Alto Page 8
Figure 1 illustrates the make-up of the various components of the total value of local solar and
non-solar renewable energy. When the Council approved increasing the CLEAN contract price
for solar resources from $0.14/kWh to $0.165/kWh in December 2012, they found that the
increase was justified because local solar resources provide some additional benefits to the
community that would be extremely difficult to quantify. These additional benefits of solar
resources include:
keeping a portion of the City’s electric expenditures within the community, which
provides revenue for local economic development;
reducing 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;
providing shade to local buildings and parking structures, which reduces the need for
energy to provide cooling; and
the potential—if the solar facility is paired with an energy storage system or employs
modern inverters—to provide resiliency to the City’s electric distribution system.
These additional benefits are shown in Figure 1, making up the difference between the current
quantifiable avoided cost of local solar energy ($0.089/kWh) and the current contract price
($0.165/kWh).
City of Palo Alto Page 9
Figure 1 – Breakdown of the Total Value of Local Solar and Non-Solar Renewables
Implications of CLEAN Price on City Programs and Projects
The CLEAN Program price for solar resources has implications for a City project (Solar
Installations on City-Owned Parking Garages), a City program (the Community Solar Program),
and the Palo Alto CLEAN Program in general. Reducing the contract price under the CLEAN
Program for solar resources may negatively impact these initiatives.
Solar Installations on City-Owned Parking Garages Project
In March 2014, the City released a Request for Proposals (RFP) for the installation and
operation of a solar PV system at one or more of the five City-owned parking structures (Staff
Report 4540). The RFP was structured to solicit projects that could be eligible to participate in
the Palo Alto CLEAN Program providing an estimated 1.5 MW of local solar capacity. After
negotiations ceased with one contractor, Public Works staff completed negotiations for a site
lease for the project on four garages for a total of 1.3 MW with another contractor. The
contactor is expecting that the rooftop solar installations will receive a CLEAN contract at a
price of 16.5 ¢/kWh for a 25-year contract term3. The project may not be viable or significant
changes to the lease may be required if the CLEAN Program price is reduced.
3 As of February 3, the CLEAN program for this project has not been submitted, but staff is in contact with the
developer and expects the application to be submitted very shortly.
City of Palo Alto Page 10
CLEAN Program Participation
The Palo Alto CLEAN Program received the first application from a solar PV project in January 8,
2016 and expects to receive the second application for the City parking structures by mid-
February. Staff expects that as the rebates from the PV Partners program get used up and with
the end of the Net Energy Metering (NEM) on the horizon, interest in the CLEAN program will
increase despite the comparatively high rates that property owners in Palo Alto charge for
leasing their rooftop space, as well as the lack of space available to install ground-mounted or
parking structure-based projects.
Community Solar Program
As part of the Local Solar Plan, staff is developing a voluntary community solar share program,
which would be available to all electric ratepayers and would primarily benefit community
members who do not have good solar access but want to participate in a local solar project.
This program anticipates finding a host site (possibly a City facility) that would have a Power
Purchase Agreement (PPA) with the City similar to the CLEAN PPA and at the CLEAN price. If
the CLEAN contract price is reduced and a community solar PPA price is reduced to the same
level, it may impact the feasibility of the community solar program. The City could decide to set
a different contract price for the output from the community solar project, but may have
difficulty explaining how it could offer a different contract price to the community solar project
than to other local solar projects through the CLEAN Program.
Recommendation
The UAC and staff recommend that the current CLEAN price of $0.165/kWh for solar projects
continue. As solar system costs have continued to decrease, it is anticipated that at the current
contract price the CLEAN program may attract its first participants in 2016. In addition, the UAC
and staff recommend continuing to offer non-solar eligible renewable energy resources a
CLEAN price equal to the avoided cost of the energy produced by those resources, which is
currently estimated at $0.081/kWh for a 20-year term, and $0.082/kWh for a 25-year term.
Additionally, the UAC and staff recommend continuing with program caps of 3 MW each for the
local solar and the non-solar local renewable resources.
Commission Review and Recommendation
The UAC considered staff’s recommendation at its December 2, 2015 meeting. Some
commissioners had questions about how the avoided cost of renewable energy is calculated,
and requested that staff enumerate the various non-monetary benefits that local solar
resources provide. Commissioner Balantine noted that local generation resources cannot
provide one of the benefits staff cited (grid resiliency in the event of an earthquake or other
emergency situation) unless they use the most modern type of inverters available. But the
commissioners was largely supportive of the staff recommendation.
City of Palo Alto Page 11
After its discussion, the UAC voted 4-0 (with Vice Chair Cook and Commissioners Balantine,
Eglash and Danaher voting yes, and Chair Foster and Commissioners Hall and Schwartz absent)
to recommend that the City Council:
1. Maintain the Palo Alto CLEAN program price for local solar energy resources at the
current price of 0.165 dollars per kilowatt-hour ($/kWh) for a 20-year or 25-year
contract term, and continue with a program limit of 3 megawatts (MW); and
2. Reduce the Palo Alto CLEAN program price for local non-solar eligible renewable energy
resources to the updated avoided cost of such energy ($0.081/kWh for a 20-year
contract term, or $0.082/kWh for a 25-year contract term), from the prior avoided cost
projection ($0.093/kWh for a 20-year contract term, or $0.094/kWh for a 25-year
contract term), and continue with a separate program limit of 3 MW specifically for local
non-solar eligible renewable resources.
The draft notes from the UAC’s December 2, 2015 meeting are provided as Attachment C.
In response to the UAC’s comments at its December 2, 2015 meeting, staff added Figure 1,
which shows the breakdown of the value provided by local solar and non-solar renewable
energy resources to this report.
Resource Impact
Staff estimates the current cost of buying energy from solar resources outside of Palo Alto is
$0.089/kWh (including transmission and capacity) for a 20-year contract, or $0.09/kWh for a
25-year contract. Purchasing the energy generated from 3 MW of local solar projects at
$0.165/kWh is expected to cost about $380,000 per year more than buying the same energy
outside of Palo Alto. This is equivalent to a 0.32% increase in the electric utility’s costs. If the
program increased costs by $380,000 per year, staff has determined that the system average
electric rate would have to increase by $0.0004/kWh. This is equivalent to a bill impact of
$1.85 per year for the median residential customer using 410 kWh/month, or $2.80 per year for
a residential customer using 650 kWh/month.
Changing the program price offered 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.
City of Palo Alto Page 12
Policy Implications
The recommendation to continue the CLEAN program supports the City’s carbon neutral
electric supply portfolio policy 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 Continuing the Palo Alto CLEAN Program (with Exhibit A-1
Revised Program Rules) (PDF)
Attachment B: Updated Palo Alto CLEAN Power Purchase Agreement (PDF)
Attachment C: Excerpted Minutes of the December 2 2015 UAC Meeting (PDF)
Attachment A
*NOT YET APPROVED*
151026 jjs 01-0024 1
Resolution No. _________
Resolution of the Council of the City of Palo Alto Continuing the Palo Alto
Clean Local Accessible Now Program at the Same Contract Rate of 16.5¢/kWh
for Solar Resources and Decreasing the Contract Rate for Non-Solar
Renewable Energy Resources to 8.1¢/kWh to 8.2¢/kWh Based on the
Reduced Avoided Cost of Local Renewable Energy
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. Council extended the program beyond its original termination date of December
31, 2012 and has periodically reviewed the contract price and program cap.
C. On May 27, 2015, Council approved Resolution 9512, which continued Palo Alto
CLEAN at the contract price of $0.165 per kilowatt-hour (kWh) for local solar resources, added a
25-year contract term option, and expanded the program’s eligibility to local non-solar eligible
renewable energy resources, establishing contract prices of $0.093 per kWh for a 20-year term
or $0.094 per kWh for a 25-year term for such resources. These contract rates were set to be
equal to the then current estimated avoided cost of the energy generated by these resources.
The resolution further established separate program caps of 3 megawatts (MW) of generating
capacity for both the solar and non-solar resources.
D. As solar system costs have continued to decrease, and as the deadline for the
steep reduction in the federal ITC approaches, it is anticipated that at the current contract price
the CLEAN program may attract its first participants in 2016.
E. In April 2015, the City released a Request for Proposals for projects that could
deliver renewable energy to the City, and results indicate that the avoided cost of energy
generated by renewable resources has dropped since Council adopted a CLEAN Program price
for local non-solar resources in May 2015.
F. The City therefore wants to continue the CLEAN program for solar resources at
the same contract price and program parameters (including the separate 3 megawatt (MW)
caps applicable to the solar and non-solar portions of the program), while reducing the contract
prices available to local non-solar eligible renewable resources to $0.081 per kWh for a 20-year
term or $0.082 per kWh for a 25-year term for such resources, which is equal to the current
estimated avoided cost of energy generated by these resources.
Attachment A
*NOT YET APPROVED*
151026 jjs 01-0024 2
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 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.
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. Approval of the amended CLEAN Program Eligibility Rules and
//
//
Attachment A
*NOT YET APPROVED*
151026 jjs 01-0024 3
Requirements attached to the Resolution as Exhibit 1 is not a project under CEQA, and
therefore, no environmental review is required.
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 $0.081 / kWh
25 years $0.082 / 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”, 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 for the solar program. Instead non-solar, local eligible renewable energy
resources will be subject to a 3 MW cap of their own.
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 1 to ATTACHMENT A
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 25471,
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
$0.08193 per kWh for non-solar resources, 20 year contract term
$0.08294 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: Page 1 of 4
DRAFT EXCERPTED MINUTES OF THE DECEMBER 2, 2015
UTILITIES ADVISORY COMMISSION MEETING
ITEM 2. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend
that the City Council Adopt a Resolution to Continue the Palo Alto Clean Local Energy Accessible
Now (CLEAN) Program at the Current Contract Price of $0.165 per kilowatt-hour for Local Solar
Resources and at the Avoided Cost Level ($0.081 to $0.082 per kilowatt-hour) for Local Non-
solar Eligible Renewable Resources
Senior Resource Planner Jim Stack noted that staff returns every year near the end of the year
to update the program and the value (or "avoided cost") of local renewable supplies. He
discussed the history of the program as it changed from when the program was first adopted in
March 2012. He noted that when the Finance Committee last reviewed the program, it voted to
reduce the contract price for solar resources from 16.5 cents/kWh to the avoided cost at the
time (9.3 cents/kWh), however the Council ultimately approved continuing the 16.5 cents/kWh
price, but directed that the rent revenues from an impending project to put solar PV on City
parking garage rooftops be allocated to the Electric Fund to offset the rate impact of paying a
contract price that exceeds the avoided cost. Stack noted that despite the avoided cost being
lowered based on the latest renewable energy request for proposals, staff recommends that
the 16.5 cent/kWh price be continued.
Commissioner Eglash asked why, given the direction from Council in May, this topic is coming
back to the UAC now. Stack said that it is prudent to revisit the value of solar and the program
annually. Assistant Director Jane Ratchye added that it has been a full year since this item was
last discussed by the UAC.
Commissioner Eglash said he expects as the cost of solar has fallen and continues to fall, that
the CLEAN price should eventually be attractive to someone. Stack reminded that the federal
Investment Tax Credit (ITC) is scheduled to fall significantly at the end of 2016, which will
change the economics for projects. Commissioner Eglash noted that the value of solar has
fallen and the excess cost (the amount by which the CLEAN contract price exceeds the local
solar avoided cost) has grown, but it is still small compared to the impact to the electric utility
from the drought so he is persuaded to agree with the staff recommendation to maintain the
16.5 cent/kWh price.
DRAFT
ATTACHMENT C
Utilities Advisory Commission Minutes Approved on: Page 2 of 4
Commissioner Ballantine commented that additional equipment is required for local solar
installations to provide local grid resiliency because if there is a power outage, solar systems
employing standard inverters will all shut off as well and will not continue to provide power to
the building or the grid. He said that supply reliability is an interesting issue and the City may
want to think about encouraging or requiring systems to use new grid technology so that all the
inverters for these systems don’t turn off when we really want them to be operating. He said
that installations operating independent of the utility system may be considered too. He noted
that there could be a technical situation with the inverters in the event of a voltage variation
that could lead to reduced reliability. He suggested that the program should consider this
problem in its design. He added that if the program does not have any takers, maybe there are
other issues such as obtaining financing that could be solved. He said that perhaps a different
incentive structure could be contemplated with a focus on the loading of the distribution
system since there could be a location on the distribution system that would benefit more from
the addition of distributed generation, but that as certain types of renewables come online, the
City may see negative impacts on the system in some areas.
Commissioner Danaher asked how the avoided cost of the non-solar renewable energy was
calculated. Stack explained that the non-solar renewable energy is calculated by looking at the
general cost of renewable energy based on results from the latest Request for Proposals (RFP)
for baseload-type projects like a biomass generator, and adding in additional values provided by
local generation, such as reduced transmission costs, resource adequacy capacity requirements,
and distribution system losses. Commissioner Danaher asked why the avoided cost of solar was
higher than for non-solar local renewables. Ratchye replied that it is because energy prices
tend to be higher in the middle of the day, which coincides with when solar systems are
generating energy.
Commissioner Eglash suggested that the breakdown of the value of solar could be added to the
report to clarify all the parts that make up the avoided cost, and noted that a prior staff report
had provided that detail. Stack said that the breakdown of the components of the avoided cost
could be added to the report as it goes to the Finance Committee and Council for consideration.
Vice Chair Cook agreed that the Council would benefit from seeing this diagram of the makeup
of the avoided costs.
Commissioner Danaher said that he still doesn’t understand why local solar is more valuable
than solar from Central Valley transmitted to the City. Stack summarized the aspects of the
avoided costs including the losses and transmission costs. Ratchye noted that the difference
between the avoided cost (about 8.9 cents/kWh) and the CLEAN price was part of the findings
made by Council when it last approved the CLEAN price. She pointed to Attachment A of the
report, the draft resolution, which lists the additional values of local solar in Section 3 including:
“a portion of the City’s electric expenditures remain within the community, which provides
revenue for local economic development”, reducing the need for new transmission lines,
shading which can reduce the energy required for building cooling and create value for vehicle
owners, and resiliency of the City’s distribution system in combination with other equipment
such as electric storage systems (e.g. batteries).
Utilities Advisory Commission Minutes Approved on: Page 3 of 4
Commissioner Ballantine suggested that with grid support capable inverters, the local resiliency
value can be realized. Without that, it can't provide local resiliency. He said that there must be
grid support capable inverters, or storage, or direct wiring to load to actually have a local
resiliency benefit.
Commissioner Danaher said that the goal is to have the cleanest possible resources at the
lowest possible cost. He said that he would rather not subsidize local solar if it can be found
outside the City for a better price. He would prefer one price for solar and a premium price for
solar that can actually provide local reliability. He noted that the extra $380,000 per year for 25
years (the difference between the solar avoided cost and the CLEAN price of 16.5 cents/kWh)
could pay for extra staff, which could be more valuable.
Vice Chair Cook said that there is great interest in having solar locally and that Commissioner
Danaher is a new commissioner without the benefit of those prior discussions.
Commissioner Danaher said that if there were grid support capable inverters included, then the
value would be increased and the price could be increased.
Commissioner Ballantine said that factoring grid support capability into the proposal would
take time and can't be done overnight. He said that this is what we have right now and he
supports it.
Commissioner Eglash recommends approval of continuing the CLEAN price at 16.5 cents/kWh,
noting that the proposal is the same as Council action just 7 months ago. Ratchye explained
that the situation is different from the Council action in May 2015 in some significant ways. She
reminded that the Finance Committee voted unanimously to reduce the CLEAN price for local
solar to the avoided cost, but that the Council ultimately decided to continue the 16.5
cents/kWh price after directing that the expected revenue from the expected lease for the City
garage solar systems be allocated to the Electric Fund to cover the excess cost for the portion of
the program cap that was planned to be used by that project. However, the lease negotiations
are proceeding with a new vendor and the lease payments are significantly less than the
original proposal. In addition, Ratchye reminded that the avoided cost of local solar has
declined consistent with the latest renewable energy RFP results.
Commissioner Eglash said that the Council and community recognize the value of local solar
and that it has been consistent in its support for the extra costs above the market value. He
noted that he opposed such a high CLEAN price when it was initially presented to the UAC, but
supports the recommendation tonight because of the strong support for solar in the
community.
Commissioner Danaher recommended that the report that moves on to the Council explicitly
enumerate the benefits of local solar.
Utilities Advisory Commission Minutes Approved on: Page 4 of 4
ACTION:
Commissioner Eglash made a motion that the UAC recommend that Council support the staff
recommendation. Vice Chair Cook seconded the motion. The motion carried by a 3-0 vote with
Vice Chair Cook and Commissioners Eglash and Ballantine voting yes, Commissioner Danaher
abstaining and Chair Foster and Commissioners Hall and Schwartz absent.