HomeMy WebLinkAboutStaff Report 2501-4047CITY OF PALO ALTO
Finance Committee
Regular Meeting
Tuesday, August 19, 2025
Agenda Item
1.Recommend City Council Approval of a Third Phase Agreement with Northern California
Power Agency for the Purchase of Energy Storage Services from Trolley Pass Project LLC,
over a Term of up to 20 Years for a Total Not to Exceed Amount of $161.7 Million; CEQA
status: not a project under CEQA Guidelines Section 15378(a) Item Removed Off Agenda
Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Utilities
Meeting Date: August 19, 2025
Report #:2501-4047
TITLE
Recommend City Council Approval of a Third Phase Agreement with Northern California Power
Agency for the Purchase of Energy Storage Services from Trolley Pass Project LLC, over a Term
of up to 20 Years for a Total Not to Exceed Amount of $161.7 Million; CEQA status: not a project
under CEQA Guidelines Section 15378(a)
RECOMMENDATION
The Utilities Advisory Commission (UAC) and staff recommend that the Finance Committee
recommend the City Council:
1. Authorize the City Manager, or their designee, to execute a Third Phase Agreement
(Attachment A) with the Northern California Power Agency (NCPA) to purchase the output
of a 50-megawatt (MW) share of a grid-connected battery energy storage system (BESS)
owned by Trolley Pass Project LLC, a subsidiary of Aypa Power Development (Aypa), over
a period of 20 years, at a total cost not to exceed $161.7 million;
2. Authorize the City Manager, or their designee, to execute on behalf of the City all related
documents or agreements necessary to administer the Third Phase Agreement that are
consistent with the Palo Alto Municipal Code and City Council-approved policies,
including, but not limited to, collateral assignment agreements; and take any and all
actions as are necessary or advisable to implement and administer the Third Phase
Agreement; and,
3. Authorize the City Manager, or their designee, to approve and execute amendments to
the Third Phase Agreement, as may be required from time to time, so long as the contract
price and length of the agreement remain unchanged.
EXECUTIVE SUMMARY
Through a Request for Proposals (RFP) recently conducted by NCPA, the City can enter into an
agreement to purchase energy storage capacity from Aypa's Trolley BESS Project. This agreement
is for a 50 MW share of a grid-connected battery energy storage system (BESS) over 20 years, at
a cost not to exceed $161.7 million. The project is expected to begin operations in June 2029.
The proposed contract is intended to help the City ensure continued compliance with its resource
adequacy (RA) capacity procurement obligations and to provide a financial hedge against the
market price exposure created by the solar resources in the City’s supply portfolio. The
recommendation aligns with the City's 2023 Integrated Resource Plan (IRP) and will help satisfy
requirements under Assembly Bill (AB) 2514 regarding energy storage procurement.
While the market for renewable energy and storage has seen price increases recently due to
strong demand, supply chain issues, inflation, and tax and trade policy uncertainties, staff
analysis indicates that the Trolley project will provide net financial benefits to the City. The
contract is structured with NCPA acting as an intermediary, and participating NCPA members will
enter into Third Phase Agreements with NCPA. The City will not be at risk of paying for output
that is not delivered.
BACKGROUND
The proposed contract will help the City’s electric utility satisfy one of its core needs: resource
RA capacity to meet its RA procurement requirements. This recommendation is also consistent
with the new resource acquisition schedule outlined in the City’s 2023 IRP. Furthermore, this
report and the recommendation to procure BESS capacity from the two projects will enable the
City to satisfy its requirements under Assembly Bill (AB) 2514 to regularly evaluate the cost-
effectiveness of energy storage.1
Load Requirements
The City’s overall electricity consumption in 2024 was 922 gigawatt-hours (GWh), which
represents a 12% increase (100 GWh) from the level in 2021. While this is a substantial amount
of load growth in such a short period of time, it tracks closely with the load projections that staff
presented in the 2023 IRP, as illustrated by Figure 1 below. While the trajectory of future load
remains uncertain, staff anticipates some level of additional growth due to the City’s aggressive
building and transportation electrification efforts, as well as reports of potential new data center
projects from some of the City’s commercial customers.
1 The City’s most recent AB 2514 Energy Storage Report (Staff Report 12142, April 2021) found that “neither
energy storage within the City nor on the transmission system [is] cost effective for the utility or its customers as a
whole,” and therefore the City declined to establish an energy storage procurement target at the time. However, it
also noted that staff “will continue to monitor this rapidly maturing space and continue looking for specific
projects which by virtue of their location could provide extraordinary resiliency, lower carbon emissions, and/or
lower distribution system costs,” and that staff will evaluate utility-scale storage proposals and “will move forward
with competitive projects that complement CPAU’s existing supply portfolio.” This report serves as an update to
this 2021 report’s analysis on the cost-effectiveness of utility-scale energy storage resources, with staff now finding
them to provide a net benefit to the City.
Staff Report 12142: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-
manager-reports-cmrs/year-archive/2021/id-12142.pdf
Figure 1: Actual and Projected Load Compared to 2023 IRP Load Projections
RA Requirements
In response to the severe electricity shortages, rolling blackouts, and increasing wholesale
electricity prices that gripped the state during the energy crisis of 2000-2001, in 2004 California
adopted an official RA program. The purpose of the program is to ensure the safe and reliable
operation of the electric grid by requiring utilities to procure and maintain sufficient generating
capacity – including from BESS facilities – to meet statewide peak demand plus a planning reserve
margin (currently around 15%). While the City currently meets its system RA obligations,
approximately 50 MW of RA capacity from its largest hydroelectric resource is at risk starting as
early as 2027 due to potential regulatory changes.
The Market for Energy Storage and Renewable Energy in California
California's renewable energy and storage market has evolved significantly over the past decade
due to shifting state and federal policies. While solar and storage prices steadily declined from
2010 to 2020, they have begun to increase in recent years. This market shift is attributable to: (a)
strong demand driven by the state's ambitious procurement requirements for renewable energy,
RA, and storage; (b) pandemic-related supply chain issues and inflation; and (c) recent volatility
in federal trade policy and uncertainty surrounding future federal tax incentives for renewable
energy and storage projects.
In 2022, Congress passed the Inflation Reduction Act (IRA), which provided generous benefits to
developers of renewable energy and storage projects, and which extended those benefits into
the 2030s. However, in July Congress passed a wide-ranging domestic policy law that dramatically
scales back those benefits for solar and wind projects and adds new restrictions on the incentives
for energy storage and other renewable resources. Furthermore, the U.S. has recently imposed
a shifting series of tariffs on imports coming from most countries, including very steep ones on
goods coming from China – which is a major producer of solar cells, lithium-ion batteries, as well
as the raw materials and components that go into those products. This unprecedented level of
policy uncertainty facing the renewable energy and storage industry in the U.S. has caused many
project developers to put their development efforts on hold and has led others to raise the prices
of the projects they are marketing.
Despite these challenges, renewable energy and storage capacity continue to grow steadily, as
utilities strive to meet their various procurement requirements and ensure system reliability in
the face of growing loads. Today, California has approximately 20,000 MW of utility-scale solar
capacity in operation3, along with approximately 30,000 MW of behind-the-meter solar capacity.4
The state’s BESS capacity has also exploded, going from just 771 MW in 2019 to over 15,000 MW
operating today.5
ANALYSIS
Results of NCPA’s 2024 Renewable Energy and Storage RFP
In early 2024, NCPA6 issued an RFP for new renewable and/or carbon-free generating resources
and energy-storage resources.7 By the submission deadline in April 2024, NCPA had received a
total of about 30 proposals, all of which were for solar and/or BESS facilities. Palo Alto staff
evaluated these proposals, primarily based on the economic value provided by each project
relative to its cost, narrowing the list down to a handful of projects. During the evaluation, some
projects were removed from consideration after securing contracts with other buyers.
Ultimately, Palo Alto staff expressed strong interest in the Trolley contract, as well as a portion
of a 200 MW solar-plus-storage project located in Fresno County. Unfortunately, after months of
negotiations between the project developer and NCPA and member utility staff, the solar-plus-
storage discussions broke down due to an inability to agree to terms related to the risks
associated with interconnection delays and tariff price risk. As a result, staff will pursue other
avenues in the coming months for procuring additional renewable energy capacity.
Aypa’s Trolley BESS Project Summary
Aypa submitted several BESS project proposals into NCPA’s 2024 RFP, including the Trolley
project. Trolley is a planned 400 MW BESS project located in San Bernardino County, near the
3 Energy Information Administration: https://www.eia.gov/state/analysis.php?sid=CA
4 Solar Energy Industries Association: https://seia.org/wp-content/uploads/2025/03/California-3.pdf
5 Governor’s office: https://www.gov.ca.gov/2025/05/19/since-governor-newsom-took-office-californias-battery-
storage-has-increased-1944-and-just-achieved-a-major-milestone/
6 NCPA is a not-for-profit Joint Powers Agency whose membership includes municipalities, a rural electric
cooperative, and other publicly owned entities, including the City of Palo Alto. The mission of NCPA is to provide
members cost effective wholesale power, energy-related services, and advocacy on behalf of public power
consumers through joint action.
7 Section 2.30.340(d) of the City’s Municipal Code permits the City to procure wholesale utility commodities and
services through public agencies, including NCPA.
City of Rancho Cucamonga. The project is at an advanced stage of development, with an executed
interconnection agreement (with Southern California Edison), and a Full Capacity Deliverability
Status (FCDS) designation from the California Independent System Operator (CAISO), allowing its
capacity to count towards RA obligations. It is expected to begin operating in June 2029.
The 20-year Energy Storage Services Agreement (ESSA) with Aypa has a contract price of
$12.71/kW-month. However, due to current federal tax and trade policy uncertainty, the
agreement allows Aypa to seek a slight price increase (up to 6%) within the next year if an
independent evaluator confirms it's necessary for project viability due to cost increases such as
changes in tax law or supply chain problems beyond Aypa's control. Even with a potential price
increase, the Trolley project remains competitive with other BESS proposals presented to NCPA
and is still projected to offer a net financial benefit to the City over its contract term.
Due to the high penetration levels of solar generation in California (particularly Southern
California), there are often wide intraday price spreads between the solar-heavy mid-day hours
and the more expensive evening hours, when load tends to increase just as solar generation
tapers off. BESS facilities are perfectly positioned to capture this value opportunity, charging
during the low-priced midday period and discharging during the high-priced evening hours.13
Despite the significant increase in California’s BESS capacity over the last several years, solar
generation capacity continues to grow at an even faster rate, suggesting that this value
opportunity is likely to persist or even expand in the future.
The Trolley project's estimated net energy arbitrage value over the contract term will roughly
equal its contract cost, based on a long-term forecast of energy prices at its location and a model
of the battery's four-hour charging/discharging pattern. The project will also provide valuable RA
capacity to the City. Assuming the project’s RA capacity value equals NCPA's current monthly
Capacity Pool Program prices, staff estimates the project's overall net value to be approximately
$7.70/kW-month, or $4.63 million annually for a 50 MW share.
Other NCPA members seeking a share of the Trolley project include the Cities of Santa Clara (200
MW), Redding (45 MW), Alameda (10 MW), and several smaller members. Staff recommends
that Palo Alto contract for a 50 MW share of the Trolley project, primarily due to the RA needs of
the City’s existing resource portfolio (as discussed further below). If Palo Alto receives a 50 MW
share, NCPA members will collectively be contracting for 320 MW of the project’s total 400 MW
capacity.
13 The Trolley BESS project will be scheduled by NCPA in a way that maximizes the total net revenue it produces –
whether in the ancillary services (regulation up/down) market, or in the energy market. Most likely it will be used
in the “energy arbitrage” manner described here, charging during the lowest priced hours of the day and
discharging during the highest priced hours. While it will not explicitly operate as a “load-following” resource (i.e.,
one that attempts to balance the City’s load and resource supplies), because the City’s portfolio has a high
concentration of solar generation it tends to have surplus supplies during the lowest priced hours of the day, and
therefore the BESS will likely have the effect of balancing the City’s load and generation supplies.
Accurately predicting the net value of any 15- or 20-year contract is challenging due to significant
uncertainties in future energy and RA prices, which are influenced by macroeconomic conditions,
regulations, and regional power market dynamics. Furthermore, the Trolley contract has added
economic valuation uncertainty due to the potential for a slight contract price increase discussed
above even after execution. Nonetheless, staff anticipates the resource will be a beneficial long-
term investment for the City.
Contract Structure
The Trolley agreement is structured as a direct contract between NCPA and the project
developer, Aypa. To enable NCPA to enter into this agreement, participating NCPA members
must execute Third Phase Agreements with NCPA, which specify the rights and obligations of
NCPA and participating members regarding governance and administration of the agreement.
These Third Phase Agreements also obligate the participating members to pay their contract
percentage share of all project costs, including administrative services costs, scheduling
coordination costs, and all other costs related to the ESSA. The City and NCPA utilized the same
contractual arrangement in 2023 for the Calpine geothermal agreement.
Palo Alto’s Electric Supply Portfolio with the Trolley Project
As noted earlier, the Trolley project will provide the City with valuable RA capacity and a financial
hedge against intraday market price volatility. In addition, adding this BESS capacity to the City’s
supply portfolio aligns with the City’s adopted 2023 Integrated Resource Plan (IRP).
However, because BESS facilities only store (rather than generate) energy, this resource will not
have any impact on the City’s renewable portfolio standard (RPS) position. Additionally, BESS
facilities actually consume a small amount of energy, due to the 10-15% roundtrip efficiency
losses that are inherent to batteries. This minimal effect on the City’s load-resource balance is
illustrated by the small gray bars below the x-axis in Figure 2.
As Figure 2 illustrates, starting in 2029 staff projects that the City’s load will exceed the volume
of generation supplies that are currently under contract, and these deficits are projected to grow
over time as existing contracts expire and the City’s load increases. Staff is actively working to
acquire resources to fill these deficit positions – for example, by initiating discussions with two
of the City’s existing suppliers about extending wind and landfill gas PPAs that are set to expire
in the next few years. NCPA is also preparing to issue another RFP in early 2026 for new
renewable energy and storage resources, and Utilities staff will again actively participate in this
process to pursue new generation supplies.
Figure 2: Projected Annual Load and Energy Supplies with Trolley
As a load-serving entity within the CAISO balancing authority, the City must comply with Resource
Adequacy (RA) market obligations. CAISO RA requirements specify the annual and monthly
generating capacity levels the City must procure for local, system, and flexible RA needs – which
are based on the City’s projected peak load plus a planning reserve margin (PRM). The City
currently satisfies its RA requirements by leveraging its own resources, participating in NCPA's
Capacity Pool Program, and engaging in bilateral transactions with other market participants. The
BESS capacity from the Trolley contract will contribute to the City's system RA requirements.
Figures 3 below indicates that the City currently has system RA surpluses of approximately 50
MW per month. The recommended share of the Trolley contract would increase the City’s system
RA surplus position by 50 MW. Note, however, that roughly half of the RA capacity that the City
receives from its largest single resource (representing about 50 MW from the Western Base
Resource hydroelectric contract) is at risk as early as 2027 due to potential regulatory changes.
Figure 3: Annual Average System RA Balance Forecast with Trolley
Consistency with IRP’s Recommended Plan
In 2023, in accordance with state law, the City adopted an Integrated Resource Plan (IRP) that
included an extensive analysis of its future load and resource needs. The IRP’s Recommended
Plan called for acquiring 25 MW of new solar generation capacity in both 2030 and 2031 (followed
by additional volumes in the late 2030s and early 2040s), plus some BESS capacity in the early
2040s15. Approving the Trolley contract aligns with the IRP’s recommendations, although the
BESS capacity will come online about a decade sooner than planned. This deviation is justified by
the potential loss of significant RA capacity from the City’s existing supply portfolio—a possibility
that was not apparent in 2023 – and the strong financial merit of the Trolley contract.
Also, in the IRP staff noted that an important goal in new resource acquisitions was to diversify
the City’s supply portfolio and reduce its seasonal and intraday market price exposure. Given that
Palo Alto’s current electric supply portfolio lacks large-scale energy storage capacity, the
recommended addition of 50 MW of BESS capacity will significantly diversify the City’s resource
mix. And with a significant concentration of solar resources in both the City's supply portfolio and
the broader CAISO grid, the addition of this BESS capacity will allow NCPA to balance the City’s
load while substantially mitigating the City's exposure to daily low-priced hours.
15 Specifically, the Recommended Plan included 25 MW of 4-hour BESS capacity in 2041, 25 MW of 10-hour BESS
capacity in 2043, and 25 MW of 8-hour BESS capacity in 2045.
Risk Management Assessment
In general, businesses in the renewable industry often lack extensive financial and operational
track records, and due to their capital-intensive nature, they tend to be highly leveraged as well.
Aypa fits this pattern, in that it does not have a credit rating or an extensive balance sheet.
However, it is a Blackstone portfolio company with a proven history of developing energy storage
and hybrid (solar-plus-storage) renewable projects across North America, with 35 projects
completed or under construction.
To mitigate the credit risk associated with the supplier, the contract requires that Aypa provide
a significant amount of collateral (in the form of cash or a letter of credit)17, which would protect
the City and the other offtakers in a scenario where the facility is unable to produce the
contracted output and the market price of the replacement storage capacity is higher than the
price of this resource. And crucially, under the terms of the proposed contract the City is not at
risk for paying for output that is not delivered. The City will only be obligated to pay if Trolley’s
capacity is available to be used for RA compliance and energy arbitrage purposes.
FISCAL/RESOURCE IMPACT
Council approval of this Third Phase Agreement will grant the City the rights to a 50 MW share of
the Trolley BESS, with a total not-to-exceed amount of $8.08 million/year during the 20-year
contract term (which is expected to begin in June 2029). Funding for the purchase of the Trolley
output will be included in the Electric Utility Fund budget beginning in FY 2029.
STAKEHOLDER ENGAGEMENT
Utilities staff and the City Attorney’s Office coordinated with NCPA staff as well as staff from
other participating NCPA member agencies to negotiate the terms of the contract with Aypa.
Utilities staff also consulted with Administrative Services Department staff to assess the credit
risk associated with this contract.
At its July 9, 2025 meeting, the UAC reviewed staff’s recommendation to contract for a 50 MW
share of the Trolley BESS project. Commissioners inquired about how the project will be operated
and various contract provisions, the impacts that the recent passage of the federal domestic
policy law may have on the renewable energy and storage industry, and the risks the City may
face through this agreement. Following this discussion, the UAC voted unanimously (7-0) to
recommend that the City Council approve the staff recommendation.
ENVIRONMENTAL REVIEW
The Finance Committee’s recommendation to approve the Trolley Third Phase Agreements
does not meet the definition of a project under the California Environmental Quality Act
17 The collateral requirement will initially be $20 million for NCPA’s share of the contract, increasing to $40 million
on January 1, 2028. Once the project begins operating, the collateral requirement will be $32 million throughout
the term of the agreement.
(CEQA), pursuant to CEQA Guidelines sections 15378(a) since Palo Alto’s purchase of capacity
and storage under this Agreement has no potential to result in a physical change to the
environment. The Seller, Trolley Pass Project, LLC, is responsible for obtaining CEQA approvals
from Rancho Cucamonga, the Lead Agency, under Article 13 of the Agreement. The City has no
obligation to make any purchases under the Agreement until CEQA approvals are complete, the
judicial review period for CEQA challenges has passed, or such challenges, if any, have been
dismissed.
ATTACHMENTS
Attachment A: Third Phase Agreement with NCPA for the Trolley BESS Project
APPROVED BY:
Alan Kurotori, Utilities Director
Staff: Jim Stack, Ph.D, Senior Resource Planner
THIRD PHASE AGREEMENT
FOR
ENERGY STORAGE SERVICE AGREEMENT
WITH
TROLLEY PASS PROJECT LLC
i
THIRD PHASE AGREEMENT FOR BATTERY ENERGY STORAGE AGREEMENT
TABLE OF CONTENTS
Section 1. Definitions.....................................................................................................3
Section 2. Purpose........................................................................................................10
Section 3. Sale and Purchase of Product...................................................................10
Section 4. Billing and Payments ................................................................................11
Section 5. Security Deposit Administration.............................................................14
Section 6. Cooperation and Further Assurances.....................................................19
Section 7. Participant Covenants and Defaults .......................................................19
Section 8. Administration of Agreement..................................................................23
Section 9. Transfer of Rights by Participants...........................................................25
Section 10. Term and Termination..............................................................................26
Section 11. Withdrawal of Participants ......................................................................26
Section 12. Settlement of Disputes and Arbitration..................................................27
Section 13. Miscellaneous.............................................................................................27
EXHIBIT A. Project Participation Percentages ...........................................................40
EXHIBIT B. Eenergy Storage Services Agreement.....................................................40
1
THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
This THIRD PHASE AGREEMENT (“this Agreement”) is dated as of
______________, 20__ by and among the Northern California Power Agency, a joint
powers agency of the State of California (“NCPA”), and the signatories to this Agreement
other than NCPA (“Participants”). NCPA and the Participants are referred to herein
individually as a “Party” and collectively as the “Parties”.
RECITALS
A. NCPA has heretofore been duly established as a public agency pursuant to
the Joint Exercise of Powers Act of the Government Code of the State of California and,
among other things, is authorized to acquire, construct, finance, and operate buildings,
works, facilities, and improvements for the generation and transmission of electric
capacity and energy for resale.
B. Each of the Participants is a signatory to the Joint Powers Agreement which
created NCPA and therefore is a Member.
C. Each of the Participants to this Agreement have executed the Amended and
Restated Facilities Agreement, dated October 1, 2014, which establishes the framework
under which Project Agreements are created for the development, design, financing,
construction, and operation of specific NCPA Projects.
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
D. The Participants desire NCPA to enter into an Energy Storage Service
Agreement (“ESSA”) with Trolley Pass Project LLC (“Seller”), to purchase the Product for
the benefit of the Participants’ customers.
E. Each Participant is authorized by its Constitutive Documents to obtain the
Product for its present or future requirements, through contracts with NCPA or otherwise.
F. To enable NCPA to enter into the ESSA on behalf of the Participants,
pursuant to the terms and conditions of the Amended and Restated Facilities Agreement,
NCPA and the Participants wish to enter into this Agreement to provide all means
necessary for NCPA to fulfill obligations incurred on behalf of NCPA and the Participants
pursuant to the ESSA, and to enable and obligate the Participants to take delivery of and
pay for the Product and to pay NCPA for all costs it incurs for undertaking the foregoing
activities.
G. Upon full execution of this Agreement, NCPA will enter into the ESSA on
behalf of the Participants, and such ESSA shall be deemed a NCPA Project by the
Commission.
H. Each of the Parties intends to observe the provisions of this Agreement in
good faith and shall cooperate with all other Parties in order to achieve the full benefits of
joint action.
I. The Parties desire to equitably allocate costs of NCPA’s provision of services
under this Agreement among the Participants.
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
J. The Participants further desire, insofar as possible, to insulate other
Members who are not Participants, from risks inherent in the services and transactions
undertaken on behalf of the Participants pursuant to this Agreement.
NOW, THEREFORE, the Parties agree as follows:
Section 1. Definitions.
1.1 Definitions. Whenever used in this Agreement (including the Recitals
hereto), the following terms shall have the following respective meanings, provided,
capitalized terms used in this Agreement (including the Recitals hereto) that are not
defined in Section 1 of this Agreement shall have the meaning indicated in Section 1 of the
Power Management and Administrative Services Agreement, dated October 1, 2014:
1.1.1 “Actual Contract Price Increase” has the meaning set forth in
Section 1.1 of the ESSA.
1.1.2 “Administrative Services Costs” means that portion of the NCPA
administrative, general and occupancy costs and expenses, including those costs and
expenses associated with the operations, direction and supervision of the general
affairs and activities of NCPA, general management, treasury operations, accounting,
budgeting, payroll, human resources, information technology, facilities management,
salaries and wages (including retirement benefits) of employees, facility operation and
maintenance costs, taxes and payments in lieu of taxes (if any), insurance premiums,
fees for legal, engineering, financial and other services, power management services,
4
THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
general settlement and billing services and general risk management costs, that are
charged directly or apportioned to the provision of services under this Agreement.
Administrative Services Costs as separately defined herein and used in the context of
this Agreement is different and distinct from the term Administrative Services Costs as
defined in Section 1 of the Power Management and Administrative Services
Agreement.
1.1.3 “Agreement” means this Third Phase Agreement, including all
Exhibits attached hereto.
1.1.4 "All Resources Bill” has the meaning set forth in the Power
Management and Administrative Services Agreement.
1.1.5 “CAISO” means the California Independent System Operator
Corporation, or its functional successor.
1.1.6 “CAISO Tariff” means the duly authorized tariff, rules, protocols
and other requirements of the CAISO, as amended from time to time.
1.1.7 “Capacity Damages” has the meaning set forth in Section 1.1 of the
ESSA.
1.1.8 “Change in Tax Law” has the meaning set forth in Section 1.1 of
the ESSA.
1.1.9 “Commercial Operation” has the meaning set forth in Section 1.1
of the ESSA.
5
THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
1.1.10 “Commercial Operation Date” has the meaning set forth in Section
1.1 of the ESSA.
1.1.11 "Commission” has the meaning set forth in the Power
Management and Administrative Services Agreement.
1.1.12 “Constitutive Documents” means, with respect to NCPA, the Joint
Powers Agreement and any resolutions or bylaws adopted thereunder with respect to
the governance of NCPA, and with respect to each Participant, the California
Government Code and other statutory provisions applicable to such Participant, any
applicable agreements, charters, contracts, or other documents concerning the
formation, operation or decision making of such Participant, including, if applicable, its
city charter, and any codes, ordinances, bylaws, and resolutions adopted by such
Participant’s governing body.
1.1.13 “Contract Price” has the meaning set forth in Section 1.1 of the
ESSA.
1.1.14 “Defaulting Participant” has the meaning set forth in Section 7.2.
1.1.15 “Electric System” has the meaning set forth in the Power
Management and Administrative Services Agreement.
1.1.16 “Event of Default” has the meaning set forth in Section 7.2.
1.1.17 “Facility” has the meaning set forth in Section 1.1 of the ESSA.
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
1.1.18 “Final Independent Report” has the meaning set forth in Section
1.1 of the ESSA.
1.1.19 “General Operating Reserve” means the NCPA General Operating
Reserve created through resolution of the Commission, as the same may be amended
from time to time.
1.1.20 “Initial Independent Report” has the meaning set forth in Section
1.1 of the ESSA.
1.1.21 “Installed Battery Capacity” has the meaning set forth in Section
1.1 of the ESSA.
1.1.22 “MW” means megawatt.
1.1.23 “MWh” means megawatt hour.
1.1.24 “NCPA” has the meaning set forth in the Recitals hereto.
1.1.25 “Participant” has the meaning set forth in the recitals of this
Agreement.
1.1.26 “Party” or “Parties” has the meaning set forth in the preamble
hereto; provided that “Third Parties” are entities that are not Party to this Agreement.
1.1.27 “Power Management and Administrative Services Agreement”
means the NCPA Power Management and Administrative Services Agreement, dated
as of October 1, 2014, between NCPA and the Members who are signatories to that
agreement by which NCPA provides Power Management and Administrative Services.
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
1.1.28 “Product” has the meaning set forth in Section 1.1 of the ESSA.
1.1.29 “Project” or “ESSA” means the Energy Storage Service Agreement,
dated as of ____________, 20__ between NCPA and Seller, under which NCPA, on
behalf of the Participants, purchases Product from the Facility located in San
Bernardino County, California, consisting of a separately metered 300 MWAC section of
a larger battery energy storage facility commonly known as the Trolley Battery Energy
Storage Project. Upon final execution of the ESSA, the Project shall be deemed a NCPA
Project in accordance with the Amended and Restated Facilities Agreement. The ESSA
has been attached to this Agreement as Exhibit B.
1.1.30 “Project Costs” means all costs charged to and paid by NCPA
pursuant to the ESSA.
1.1.31 “Project Participation Percentage” has the meaning set forth in the
Power Management and Administrative Services Agreement, and are set forth in
Exhibit A of this Agreement.
1.1.32 “Proposed Contract Price Increase” has the meaning set forth in
Section 1.1 of the ESSA.
1.1.33 “Proposed Contract Price Increase Cap” has the meaning set forth
in Section 1.1 of the ESSA.
1.1.34 “Revenue” means , with respect to each Participant, all income,
rents, rates, fees, charges, and other moneys derived by the Participant from the
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
ownership or operation of its Electric System, including, without limiting the generality
of the foregoing: (a) all income, rents, rates, fees, charges or other moneys derived from
the sale, furnishing and supplying of electric capacity and energy and other services,
facilities, and commodities sold, furnished, or supplied through the facilities of its
Electric System; (b) the earnings on and income derived from the investment of such
income, rents, rates, fees, charges or other moneys to the extent that the use of such
earnings and income is limited by or pursuant to law to its Electric System; (c) the
proceeds derived by the Participant directly or indirectly from the sale, lease or other
disposition of all or a part of the Electric System; and (d) the proceeds derived by
Participant directly or indirectly from the consignment and sale of freely allocated
greenhouse gas compliance instruments into periodic auctions administered by the
State of California under the California Cap-and-Trade Program, provided that such
proceeds are a permitted use of auction proceeds, but the term Revenues shall not
include (i) customers' deposits or any other deposits subject to refund until such
deposits have become the property of the Participant or (ii) contributions from
customers for the payment of costs of construction of facilities to serve them.
1.1.35 “Scheduling Protocols” means the applicable provisions of the
Amended and Restated Scheduling Coordination Program Agreement, and any other
contractual or other arrangements between NCPA and the Participants concerning the
scheduling, delivery and metering of the ESSA.
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
1.1.36 “Security Deposit” means the account established by NCPA and
funded by the Participants in accordance with Section 5, the funds of which are
available for use by NCPA in accordance with the terms and conditions hereof.
1.1.37 “Seller” means Trolley Pass Project LLC, as set forth in Recital D of
this Agreement, or as otherwise set forth in the ESSA.
1.1.38 “Storage Contract Capacity” has the meaning set forth in Section
1.1 of the ESSA.
1.1.39 “Supply Chain Event” has the meaning set forth in Section 1.1 of in
the ESSA.
1.1.40 “Term” has the meaning set forth in Section 10.
1.1.41 “Third Party” means an entity (including a Member) that is not
Party to this Agreement.
1.2 Rules of Interpretation. As used in this Agreement (including the Recitals
hereto), unless in any such case the context requires otherwise: The terms “herein,”
“hereto,” “herewith” and “hereof” are references to this Agreement taken as a whole and
not to any particular provision; the term “include,” “includes” or “including” shall mean
“including, for example and without limitation;” and references to a “Section,”
“subsection,” “clause,” “Appendix”, “Schedule”, or “Exhibit” shall mean a Section,
subsection, clause, Appendix, Schedule or Exhibit of this Agreement, as the case may be.
All references to a given agreement, instrument, tariff or other document, or law,
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
regulation or ordinance shall be a reference to that agreement, instrument, tariff or other
document, or law, regulation or ordinance as such now exists and as may be amended
from time to time, or its successor. A reference to a “person” includes any individual,
partnership, firm, company, corporation, joint venture, trust, association, organization or
other entity, in each case whether or not having a separate legal personality and includes
its successors and permitted assigns. A reference to a “day” shall mean a Calendar Day
unless otherwise specified. The singular shall include the plural and the masculine shall
include the feminine, and vice versa.
Section 2. Purpose. The purpose of this Agreement is to: (i) set forth the terms and
conditions under which NCPA shall enter into the ESSA on behalf of the Participants, (ii)
authorize NCPA, acting on behalf of the Participants, to engage in all activities related to
that basic purpose, and (iii) specify the rights and obligations of NCPA and the
Participants with respect to the ESSA.
Section 3. Sale and Purchase of Product. By executing this Agreement, each
Participant acknowledges and agrees to be bound by the terms and conditions of the
Agreement, and that the Agreement is written as a “take-or-pay” agreement. Any Product
delivered to NCPA under the ESSA shall be delivered to each Participant in proportion to
such Participant’s Project Participation Percentage as set forth in Exhibit A, and each
Participant shall accept and pay for its respective percentage of such Product. To the
extent a Participant is unable to accept such deliveries in full, NCPA shall dispose of such
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
surplus in its sole discretion, in such a manner to attempt to maximize Participant value
and that Participant shall reimburse to NCPA any costs incurred by NCPA in doing so.
Notwithstanding the above, NCPA may allocate Product procured through the ESSA
among the Participants in such percentages as NCPA may, in its reasonable discretion,
determine are necessary, desirable, or appropriate, in order to accommodate Participant
transfer rights pursuant to Section 9.
3.1 Scheduling. Product delivered from Seller shall be scheduled for and to the
Participants in accordance with Scheduling Protocols, and the terms and conditions of the
ESSA.
Section 4. Billing and Payments
4.1 Participant Payment Obligations. Each Participant agrees to pay to NCPA
each month its respective portion of the Project Costs, Administrative Services Costs,
scheduling coordination costs, and all other costs for services provided in accordance with
this Agreement and the Amended and Restated Facilities Agreement. In addition to the
aforementioned monthly payment obligations, each Participant is obligated to fund: (i)
any and all required Security Deposits calculated in accordance with Section 5, and (ii) any
working capital requirements for the Project maintained by NCPA as determined,
collected and set forth in the Annual Budget.
4.2 Invoices. NCPA will issue an invoice to each Participant for its share of
Project Costs, Administrative Services Costs, scheduling coordination costs, and all other
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costs for services provided in accordance with this Agreement and the Amended and
Restated Facilities Agreement. Such invoice may be either the All Resources Bill or
separate special invoice, as determined by NCPA. At NCPA’s discretion, invoices may be
issued to Participants using electronic media or physical distribution.
4.3 Payment of Invoices. All invoices delivered by NCPA (including the All
Resources Bill) are due and payable thirty (30) Calendar Days after the date thereof;
provided, however, that any amount due on a day other than a Business Day may be paid
on the following Business Day.
4.4 Late Payments. Any amount due and not paid by a Participant in accordance
with Section 4.3 shall be considered late and bear interest computed on a daily basis until
paid at the lesser of (i) the per annum prime rate (or reference rate) of the Bank of America
NT&SA then in effect, plus two percent (2%) or (ii) the maximum rate permitted by law.
4.5 Billing Disputes. A Participant may dispute the accuracy of any invoice
issued by NCPA under this Agreement by submitting a written dispute to NCPA, within
thirty (30) Calendar Days after the date of such invoice; nonetheless the Participant shall
pay the full amount billed when due. If a Participant does not timely question or dispute
the accuracy of any invoice in writing, then the invoice shall be deemed to be correct.
Upon review of a submitted dispute, if an invoice is determined by NCPA to be incorrect,
then NCPA shall issue a corrected invoice and refund any amounts that may be due to the
Participant. If NCPA and the Participant fail to agree on the accuracy of an invoice within
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thirty (30) Calendar Days after the Participant has disputed it, then the General Manager
shall promptly submit the dispute to the Commission for resolution. If the Commission
and the Participant fail to agree on the accuracy of a disputed invoice within sixty (60)
Calendar Days after its submission to the Commission, then the dispute may then be
resolved under the mediation and arbitration procedures set forth in Section 12 of this
Agreement; provided, however, that prior to resorting to either mediation or arbitration
proceedings, the full amount of the disputed invoice must be paid by the Participant.
4.6 Billing/Settlement Data and Examination of Books and Records.
4.6.1 Settlement Data. NCPA shall make billing and settlement data
available to the Participants in the All Resources Bill, or other invoice, or upon request.
NCPA may also, at its sole discretion, make billing and settlement support information
available to Participants using electronic media (e.g. electronic data portal).
Procedures and formats for the provision of such electronic data submission may be
established by the Commission from time to time. Without limiting the generality of
the foregoing, NCPA may, in its reasonable discretion, require the Participants to
execute a non-disclosure agreement prior to providing access to the NCPA electronic
data portal.
4.6.2 Examination of Books and Records. Any Participant to this
Agreement shall have the right to examine the books and records created and
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maintained by NCPA pursuant to this Agreement at any reasonable, mutually agreed
upon time.
Section 5. Security Deposit Administration
5.1 Security Deposit Requirements. Each Participant agrees that any funds
deposited at NCPA to satisfy Participant’s Security Deposit requirements pursuant to this
Agreement shall be irrevocably committed and held by NCPA in the General Operating
Reserve, and that such funds may be used by NCPA in accordance with Section 5.1.3.
Each Participant’s Security Deposit will be accounted separately from and in addition to
any other security accounts or deposits maintained pursuant to any other agreement
between NCPA and the Participant, or any other such security account or deposits
required of Members. In connection with fulfilling the Security Deposit requirements of
this Agreement, Participant may elect to use its uncommitted funds held in the General
Operating Reserve to satisfy in whole or in part its Security Deposit required under
Section 5. If Participant chooses to satisfy in whole or in part its security requirements
using its uncommitted funds held in the General Operating Reserve, then Participant is
required to execute and deliver to NCPA an Irrevocable Letter of Direction, directing
NCPA to utilize Participant’s uncommitted General Operating Reserve funds for such
purposes, and the designated funds will thereafter be irrevocably committed and held by
NCPA to satisfy the requirements of this Agreement.
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5.1.1 Initial Amounts. No later than ninety (90) day prior to the
Commercial Operation Date, each Participant shall ensure that sufficient Security
Deposit funds have been deposited with and are held by NCPA in an amount not
greater than the highest three (3) months of estimated Project Costs, as estimated by
NCPA. Such Security Deposit requirement may be satisfied by Participant in whole or
part either in cash, through irrevocable commitment of its uncommitted funds held in
the General Operating Reserve in accordance with Section 5.1, or through a clean,
irrevocable letter of credit satisfactory to NCPA’s General Manager.
5.1.2 Subsequent Deposits. Periodically, and at least quarterly, NCPA
shall review and revise its estimate of Project Costs for which Participant shall be
obligated to pay under this Agreement. Following such review, NCPA shall determine
whether each Participant has a sufficient Security Deposit balance at NCPA. To the
extent that any Participant’s Security Deposit balance is greater than one hundred and
ten percent (110%) of the amount required herein, NCPA shall credit such amount as
soon as practicable to the Participant’s next following All Resources Bill, or by separate
special invoice. To the extent that any Participant’s Security Deposit balance is less
than ninety percent (90%) of the amount required herein, NCPA shall add such amount
as soon as practicable to such Participant’s next All Resources Bill, or as necessary, to a
special invoice to be paid by Participant upon receipt. Credits or additions shall not be
made to Participants who satisfy these Security Deposit requirements in whole through
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
the use of a letter of credit; provided, that the amount of the letter of credit shall be
adjusted, as required from time to time, in a like manner to assure an amount not to
exceed the highest three (3) months of estimated Project Costs is available to NCPA, as
determined by NCPA.
5.1.3 Use of Security Deposit Funds. NCPA may use any and all
Security Deposit funds held by NCPA (or utilize a letter of credit provided in lieu
thereof) to pay any costs it incurs hereunder, including making payments to Seller,
without regard to any individual Participant’s Security Deposit balance or
proportionate share of Project Costs, and irrespective of whether NCPA has issued an
All Resources Bill or special invoice for such costs to the Participants or whether a
Participant has made timely payments of All Resources Bills or special invoices.
Should Participant have satisfied its Security Deposit requirements in whole or part
through a letter of credit, NCPA may draw on such letter of credit to satisfy
Participant’s obligations hereunder at NCPA’s sole discretion. Notwithstanding the
foregoing, if any Participant fails to pay any costs incurred by NCPA pursuant to this
Agreement, NCPA shall first use that non-paying Participant’s Security Deposit and
shall not use any other Participants’ Security Deposit until such non-paying
Participant’s Security Deposit has been exhausted.
5.1.4 Accounting. If Security Deposit funds or a letter of credit are used
by NCPA to pay any costs it incurs hereunder as described in Section 5.1.3, then NCPA
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
will maintain a detailed accounting of each Participant’s shares of funds withdrawn,
and upon the collection of all or a part of such withdrawn funds, NCPA will credit
back to each non-defaulting Participant the funds collected in proportion to such non-
defaulting Participant’s share of funds initially withdrawn.
5.1.5 Emergency Additions. In the event that funds are withdrawn
pursuant to Section 5.1.3, or if the Security Deposit held by NCPA is otherwise
insufficient to allow for NCPA to pay any invoice, demand, request for further
assurances by Seller, or claims, NCPA shall notify all Participants of the deficiency. In
conjunction with such notice, NCPA shall send a special or emergency assessment
invoice to the Participant or Participants that caused or are otherwise responsible for
the deficiency. Each Participant of such an invoice shall pay to NCPA such assessment
when and if assessed by NCPA within two (2) Business Days of the invoice date of the
assessment, or shall consent to and direct NCPA to draw on any existing letter of credit
Participant has established for such purposes. In the event that the Participant or
Participants that caused or are otherwise responsible for the deficiency cannot, does
not or will not pay to NCPA the special or emergency assessment within two (2)
Business Days after the invoice date, NCPA shall immediately submit a special or
emergency invoice to all remaining Participants, and such remaining Participants shall
pay to NCPA such assessment within two (2) Business Days after the invoice date of
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
the assessment, or shall consent to and direct NCPA to draw on any existing letter of
credit that Participant has established for such purposes.
5.1.6 Security Deposit Interest. NCPA shall maintain a detailed
accounting of each Participant’s Security Deposits, and withdrawals of such funds,
held by NCPA. Security Deposits held by NCPA shall be invested by NCPA in
accordance with the General Operating Reserve policies and investment policies
adopted by the NCPA Commission. Interest earned on the Security Deposit funds
shall be proportionately credited to the Participants in accordance with their weighted
average balances held therein. Any Security Deposit losses caused by early
termination of investments shall be allocated among the Participants in accordance
with the General Operating Reserve provisions and guidelines approved by the
Commission, as the same may be amended from time to time; provided, however, to
the extent that either the General Operating Reserve provisions and guidelines do not
apply or the Security Deposit is not adequate to cover the losses, then such losses shall
be allocated among the Participants in accordance with their proportionate Security
Deposit balances.
5.1.7 Return of Funds. Upon termination or a permitted withdrawal of
a Participant in accordance with this Agreement, the affected Participant may apply to
NCPA for the return of their share of Security Deposit funds ninety (90) days after the
effective date of such termination or withdrawal. However, NCPA shall, in its sole but
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
reasonable discretion, as determined by the NCPA General Manager, estimate the then
outstanding liabilities of the Participant, including any estimated contingent liabilities
and shall retain all such funds, if any, until all such liabilities have been fully paid or
otherwise satisfied in full. After all such liabilities have been satisfied in full, as
determined by NCPA’s General Manager, any remaining balance of the Participant’s
share of the Security Deposit will be refunded to the Participant within sixty (60) days
thereafter.
Section 6. Cooperation and Further Assurances. Each of the Parties agree to provide
such information, execute and deliver any instruments and documents and to take such
other actions as may be necessary or reasonably requested by any other Party which are
consistent with the provisions of this Agreement and which do not involve the assumption
of obligations other than those provided for in this Agreement, in order to give full effect
to this Agreement and to carry out the intent of this Agreement. The Parties agree to
cooperate and act in good faith in connection with obtaining any credit support required
in order to satisfy the requirements of this Agreement.
Section 7. Participant Covenants and Defaults
7.1 Each Participant covenants and agrees: (i) to make payments to NCPA, from
its Electric System Revenues, of its obligations under this Agreement as an operating
expense of its Electric System; (ii) to fix the rates and charges for services provided by its
Electric System, so that it will at all times have sufficient Revenues to meet the obligations
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
of this Agreement, including the payment obligations; (iii) to make all such payments due
NCPA under this Agreement whether or not there is an interruption in, interference with,
or reduction or suspension of services provided under this Agreement, such payments not
being subject to any reduction, whether by offset or otherwise, and regardless of whether
any reasonable dispute exists; and (iv) to operate its Electric System, and the business in
connection therewith, in accordance with Good Utility Practices.
7.2 Events of Default. An Event of Default under this Agreement shall exist
upon the occurrence of any one or more of the following by a Participant (the “Defaulting
Participant”):
(i) the failure of any Participant to make any payment in full to NCPA when
due;
(ii) the failure of a Participant to perform any covenant or obligation of this
Agreement where such failure is not cured within thirty (30) Calendar Days following
receipt of a notice from NCPA demanding cure; provided, that this subsection shall not
apply to any failure to make payments specified by subsection 7.2 (i));
(iii) if any representation or warranty of a Participant material to the services
provided hereunder shall prove to have been incorrect in any material respect when made
and the Participant does not cure the facts underlying such incorrect representation or
warranty so that the representation or warranty becomes true and correct within thirty
(30) Calendar Days after the date of receipt of notice from NCPA demanding cure; or
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(iv) if a Participant is in default or in breach of any of its covenants or
obligations under any other agreement with NCPA and such default or breach is not cured
within the time periods specified in such agreement.
7.3 Uncontrollable Forces. A Party shall not be considered to be in default in
respect of any obligation hereunder if prevented from fulfilling such obligation by reason
of Uncontrollable Forces; provided, that in order to be relieved of an Event of Default due
to Uncontrollable Forces, a Party affected by an Uncontrollable Force shall:
(i) first provide oral notice to the General Manager using telephone
communication within two (2) Business Days after the onset of the Uncontrollable Force,
and provide subsequent written notice to the General Manager and all other Parties within
ten (10) Business Days after the onset of the Uncontrollable Force, describing its nature
and extent, the obligations which the Party is unable to fulfill, the anticipated duration of
the Uncontrollable Force, and the actions which the Party will undertake so as to remove
such disability and be able to fulfill its obligations hereunder; and
(ii) use due diligence to place itself in a position to fulfill its obligations
hereunder and if unable to fulfill any obligation by reason of an Uncontrollable Force such
Party shall exercise due diligence to remove such disability with reasonable dispatch;
provided, that nothing in this subsection shall require a Party to settle or compromise a
labor dispute.
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7.4 Cure of an Event of Default. An Event of Default shall be deemed cured only
if such default shall be remedied or cured within the time periods specified in Section 7.2
above, as may be applicable, provided, however, upon request of the Defaulting
Participant the Commission may waive the default at its sole discretion, where such
waiver shall not be unreasonably withheld.
7.5 Remedies in the Event of Uncured Default. Upon the occurrence of an Event
of Default which is not cured within the time limits specified in Section 7.2, without
limiting other rights or remedies available under this Agreement, at law or in equity, and
without constituting or resulting in a waiver, release or estoppel of any right, action or
cause of action NCPA may have against the Defaulting Participant, NCPA may take any
or all of the following actions:
(i) suspend the provision of services under this Agreement to such
Defaulting Participant; or
(ii) demand that the Defaulting Participant provide further assurances to
guarantee the correction of the default, including the collection of a surcharge or increase
in electric rates, or such other actions as may be necessary to produce necessary Revenues
to correct the default.
7.6 Effect of Suspension.
7.6.1 Generally. The suspension of this Agreement will not terminate,
waive, or otherwise discharge any ongoing or undischarged liabilities, credits or
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obligations arising from this Agreement until such liabilities, credits or obligations are
satisfied in full.
7.6.2 Suspension. If performance of all or any portion of this Agreement
is suspended by NCPA with respect to a Participant in accordance with subsection
7.5(i), then such Participant shall pay any and all costs incurred by NCPA as a result of
such suspension including reasonable attorney’s fees, the fees and expenses of other
experts, including auditors and accountants, or other reasonable and necessary costs
associated with such suspension and any portion of the Project Costs, scheduling and
dispatch costs, and Administrative Services Costs that were not recovered from such
Participant as a result of such suspension.
Section 8. Administration of Agreement
8.1 Commission. The Commission is responsible for the administration of this
Agreement. Each Participant shall be represented by its Commissioner or their designated
alternate Commissioner (“Alternate”) pursuant to the Joint Powers Agreement. Each
Commissioner shall have authority to act for the Participant represented with respect to
matters pertaining to this Agreement.
8.2 Forum. Whenever any action anticipated by this Agreement is required to be
jointly taken by the Participants, such action shall be taken at regular or special meetings
of the NCPA Commission.
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8.3 Quorum. For purposes of acting upon matters that relate to administration
of this Agreement, a quorum of the Participants shall consist of those Commissioners, or
their designated Alternate, representing a numerical majority of the Participants.
8.4 Voting. Each Participant shall have the right to cast one vote with respect to
matters pertaining to this Agreement. A unanimous vote of all Participants shall be
required for action regarding: (i) any transfer of rights to a Third Party as described in
Section 9 of this Agreement; and (ii) for matters related to any of the following actions as
provided for in the ESSA: (a) exercising any early termination provisions as set forth in the
ESSA, and (b) exercising any assignment rights as set forth in the ESSA. For all other
matters pertaining to this Agreement, a majority vote of the Participants shall be required
for action.
8.5 Storage Rate Adjustment Event. Section 2.5 of the ESSA permits the Seller to
request a Contract Price adjustment from NCPA to address cost increases that Seller
incurs as a result of a Change in Tax Law or Supply Chain Event. If the Proposed Contract
Price Increase or Actual Contract Price Increase is equal to or less than the Proposed
Contract Price Increase Cap, then as further set forth in Section 2.5 of the ESSA, such
Proposed Contract Price Increase or Actual Contract Price Increase shall be deemed
accepted by the Participants and NCPA, and the parties to the ESSA shall amend the
Contract Price in the ESSA.
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
If the Proposed Contract Price Increase and/or Actual Contract Price Increase is
greater than the Proposed Contract Price Increase Cap by an amount that is less than or
equal to fifteen percent (15.00%) of the original Contract Price, in aggregate, then the
NCPA General Manager is hereby delegated authority by the Participants to approve the
price increase based on their determination that (1) the Initial Independent Report or Final
Independent Report supports the Proposed Contract Price Increase and/or Actual Contract
Price Increase, and (2) the ESSA with the Proposed Contract Price Increase and/or Actual
Contract Price Increase is still favorable when compared to current market conditions for
similar products. The NCPA General Manager shall notify the Commission of the
acceptable Proposed Contract Price Increase and/or Actual Contract Price Increase and
associated modifications to the ESSA with the foregoing findings, if any, at the next
available Commission meeting. If the Proposed Contract Price Increase and/or Actual
Contract Price Increase is greater than fifteen percent (15.00%) of the original Contract
Price, in aggregate, then the proposed modifications to the ESSA will be brought to the
Commission for discussion and further action.
Section 9. Transfer of Rights by Participants
9.1 A Participant has the right to make transfers, sales, assignments and
exchanges (collectively “transfers(s)”) of any portion of its Project Participation Percentage
and rights thereto, subject to the approval provisions in Section 8.4 of this Agreement,
provided that the transferee satisfies all applicable criterion in the ESSA. If a Participant
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
desires to transfer a portion or its entire share of the Project for a specific time interval, or
permanently, then NCPA will, if requested by such Participant, use its best efforts to
transfer that portion of the Participant’s share of the Project.
9.2 Unless otherwise set forth in this Agreement, before a Participant may
transfer an excess Project share pursuant to Section 9.1 to any person or entity other than a
Participant, it shall give all other Participants the right to purchase the share on the same
terms and conditions. Before a Participant may transfer an excess Project share pursuant
to Section 9.1 to any person or entity other than a Member, it shall give all Members the
right to purchase the share on the same terms and conditions. Such right shall be
exercised within thirty (30) days of receipt of notice of said right.
No transfer shall relieve a Participant of any of its obligations under this
Agreement except to the extent that NCPA receives payment of these obligations from a
transferee.
Section 10. Term and Termination. This Agreement shall become effective when it has
been duly executed by all Participants, and delivered to and executed by NCPA (the
“Effective Date”). NCPA shall notify all Participants in writing of the Effective Date. The
Term of this Agreement shall be coterminous with the ESSA, and shall commence on the
Effective Date, and shall continue through the term of the ESSA.
Section 11. Withdrawal of Participants. No Participant may withdraw from this
Agreement except as otherwise provided for herein.
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Section 12. Settlement of Disputes and Arbitration. The Parties agree to make best
efforts to settle all disputes among themselves connected with this Agreement as a matter
of normal business under this Agreement. The procedures set forth in Section 10 of the
Power Management and Administrative Services Agreement shall apply to all disputes
that cannot be settled by the Participants themselves; provided, that the provisions of
Section 4.5 shall first apply to all disputes involving invoices prepared by NCPA.
Section 13. Miscellaneous
13.1 Confidentiality. The Parties will keep confidential all confidential or trade
secret information made available to them in connection with this Agreement, to the extent
possible, consistent with applicable laws, including the California Public Records Act.
Confidential or trade secret information shall be marked or expressly identified as such.
If a Party (“Receiving Party”) receives a request from a Third Party for access to, or
inspection, disclosure or copying of, any other Party’s (the “Supplying Party”) confidential
data or information, which the Receiving Party has possession of (“Disclosure Request”),
then the Receiving Party shall provide notice and a copy of the Disclosure Request to the
Supplying Party within three (3) Business Days after receipt of the Disclosure Request.
Within three (3) Business Days after receipt of such notice, the Supplying Party shall
provide notice to the Receiving Party either:
(i) that the Supplying Party believes there are reasonable legal grounds for
denying or objecting to the Disclosure Request, and the Supplying Party requests the
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Receiving Party to deny or object to the Disclosure Request with respect to identified
confidential information. In such case, the Receiving Party shall deny the Disclosure
Request and the Supplying Party shall defend the denial of the Disclosure Request at its
sole cost, and it shall indemnify the Receiving Party for all costs associated with denying
or objecting to the Disclosure Request. Such indemnification by the Supplying Party of the
Receiving Party shall include all of the Receiving Party’s costs reasonably incurred with
respect to denial of or objection to the Disclosure Request, including but not limited to
costs, penalties, and the Receiving Party’s attorney’s fees; or
(ii) that the Receiving Party may grant the Disclosure Request without any
liability by the Receiving Party to the Supplying Party.
13.2 Indemnification and Hold Harmless. Subject to the provisions of Section
13.4, each Participant agrees to indemnify, defend and hold harmless NCPA and its
Members, including their respective governing boards, officials, officers, agents, and
employees, from and against any and all claims, suits, losses, costs, damages, expenses
and liability of any kind or nature, including reasonable attorneys’ fees and the costs of
litigation, including experts, to the extent caused by any acts, omissions, breach of
contract, negligence (active or passive), gross negligence, recklessness, or willful
misconduct of that Participant, its governing officials, officers, employees, subcontractors
or agents, to the maximum extent permitted by law.
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13.3 Several Liabilities. No Participant shall, in the first instance, be liable under
this Agreement for the obligations of any other Participant or for the obligations of NCPA
incurred on behalf of other Participants. Each Participant shall be solely responsible and
liable for performance of its obligations under this Agreement, except as otherwise
provided for herein. The obligation of each Participant under this Agreement is, in the
first instance, a several obligation and not a joint obligation with those of the other
Participants.
Notwithstanding the foregoing, the Participants acknowledge that any debts
or obligations incurred by NCPA under this Agreement on behalf of any of them shall be
borne solely by such Participants in proportion to their respective Project Participation
Percentages, and not by non-Participant Members of NCPA, pursuant to Article IV,
Section 3(b) of the Joint Powers Agreement.
In the event that a Participant should fail to pay its share of the debts or
obligations incurred by NCPA as required by this Agreement, the remaining Participants
shall, in proportion to their Project Participation Percentages, pay such unpaid amounts
and shall be reimbursed by the Participant failing to make such payments.
13.4 No Consequential Damages. FOR ANY BREACH OF ANY PROVISION OF
THIS AGREEMENT FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES
IS PROVIDED IN THIS AGREEMENT, THE LIABILITY OF THE DEFAULTING PARTY
SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
DAMAGES OR REMEDIES ARE HEREBY WAIVED. IF NO REMEDY OR MEASURE OF
DAMAGE IS EXPRESSLY PROVIDED, THE LIABILITY OF THE DEFAULTING PARTY
SHALL BE LIMITED TO ACTUAL DAMAGES ONLY AND ALL OTHER DAMAGES
AND REMEDIES ARE HEREBY WAIVED. IN NO EVENT SHALL NCPA OR ANY
PARTICIPANT OR THEIR RESPECTIVE SUCCESSORS, ASSIGNS, REPRESENTATIVES,
DIRECTORS, OFFICERS, AGENTS, OR EMPLOYEES BE LIABLE FOR ANY LOST
PROFITS, CONSEQUENTIAL, SPECIAL, EXEMPLARY, INDIRECT, PUNITIVE, OR
INCIDENTAL LOSSES OR DAMAGES, INCLUDING LOSS OF USE, LOSS OF
GOODWILL, LOST REVENUES, LOSS OF PROFIT OR LOSS OF CONTRACTS EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND
NCPA AND EACH PARTICIPANT EACH HEREBY WAIVES SUCH CLAIMS AND
RELEASES EACH OTHER AND EACH OF SUCH PERSONS FROM ANY SUCH
LIABILITY.
The Parties acknowledge that California Civil Code section 1542 provides that: “A general
release does not extend to claims which the creditor does not know or suspect to exist in
his or her favor at the time of executing the release, which if known by him or her must
have materially affected his or her settlement with the debtor.” The Parties waive the
provisions of section 1542, or other similar provisions of law, and intend that the waiver
and release provided by this Section of this Agreement shall be fully enforceable despite
its reference to future or unknown claims.
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
13.5 Waiver. No waiver of the performance by a Party of any obligation under
this Agreement with respect to any default or any other matter arising in connection with
this Agreement shall be effective unless given by the Commission or the governing body
of a Participant, as applicable. Any such waiver by the Commission in any particular
instance shall not be deemed a waiver with respect to any subsequent performance,
default or matter.
13.6 Amendments. Except where this Agreement specifically provides otherwise,
this Agreement may be amended only by written instrument executed by the Parties with
the same formality as this Agreement.
13.7 Assignment of Agreement.
13.7.1 Binding Upon Successors. This Agreement shall inure to the
benefit of and shall be binding upon the respective successors and assignees of the
Parties to this Agreement.
13.7.2 No Assignment. Neither this Agreement, nor any interest herein,
shall be transferred or assigned by a Party hereto except with the consent in writing of
the other Parties hereto, which consent shall not be unreasonably withheld.
13.8 Severability. In the event that any of the terms, covenants or conditions of
this Agreement or the application of any such term, covenant or condition, shall be held
invalid as to any person or circumstance by any court having jurisdiction, all other terms,
covenants or conditions of this Agreement and their application shall not be affected
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
thereby, but shall remain in force and effect unless the court holds that such provisions are
not severable from all other provisions of this Agreement.
13.9 Governing Law. This Agreement shall be interpreted, governed by, and
construed under the laws of the State of California.
13.10 Headings. All indices, titles, subject headings, section titles and similar items
are provided for the purpose of convenience and are not intended to be inclusive,
definitive, or affect the meaning of the contents of this Agreement or the scope thereof.
13.11 Notices. Any notice, demand or request required or authorized by this
Agreement to be given to any Party shall be in writing, and shall either be personally
delivered to a Participant’s Commissioner or Alternate, and to the General Manager, or
shall be transmitted to the Participant and the General Manager at the addresses shown on
the signature pages hereof. The designation of such addresses may be changed at any
time by written notice given to the General Manager who shall thereupon give written
notice of such change to each Participant. All such notices shall be deemed delivered
when personally delivered, two (2) Business Days after deposit in the United States mail
first class postage prepaid, or on the first Business Day following delivery through
electronic communication.
13.12 Warranty of Authority. Each Party represents and warrants that it has been
duly authorized by all requisite approval and action to execute and deliver this Agreement
and that this Agreement is a binding, legal, and valid agreement enforceable in accordance
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
with its terms. Upon execution of this Agreement, each Participant shall deliver to NCPA
a resolution of the governing body of such Participant evidencing approval of and
authority to enter into this Agreement.
13.13 Counterparts. This Agreement may be executed in any number of
counterparts, and each executed counterpart shall have the same force and effect as an
original instrument and as if all the signatories to all of the counterparts had signed the
same instrument. Any signature page of this Agreement may be detached from any
counterpart of this Agreement without impairing the legal effect of any signatures thereon,
and may be attached to another counterpart of this Agreement identical in form hereto but
having attached to it one or more signature pages.
13.14 Venue. In the event that a Party brings any action under this Agreement, the
Parties agree that trial of such action shall be vested exclusively in the state courts of
California in the County of Placer or in the United States District Court for the Eastern
District of California.
13.15 Attorneys’ Fees. If a Party to this Agreement brings any action, including an
action for declaratory relief, to enforce or interpret the provisions of this Agreement, then
each Party shall bear its own fees and costs, including attorneys’ fees, associated with the
action.
13.16 Counsel Representation. Pursuant to the provisions of California Civil Code
Section 1717 (a), each of the Parties were represented by counsel in the negotiation and
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
execution of this Agreement and no one Party is the author of this Agreement or any of its
subparts. Those terms of this Agreement which dictate the responsibility for bearing any
attorney’s fees incurred in arbitration, litigation or settlement in a manner inconsistent
with the provisions of Section 13.2 were intentionally so drafted by the Parties, and any
ambiguities in this Agreement shall not be interpreted for or against a Party by reason of
that Party being the author of the provision.
13.17 No Third Party Beneficiaries. Nothing contained in this Agreement is
intended by the Parties, nor shall any provision of this Agreement be deemed or construed
by the Parties, by any third person or any Third Parties, to be for the benefit of any Third
Party, nor shall any Third Party have any right to enforce any provision of this Agreement
or be entitled to damages for any breach by the Parties of any of the provisions of this
Agreement.
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
IN WITNESS WHEREOF, NCPA and each Participant have, by the signature of its
duly authorized representative shown below, executed and delivered a counterpart of this
Agreement.
NORTHERN CALIFORNIA
POWER AGENCY
651 Commerce Drive
Roseville, CA 95678
_____________________________
By: Randy S. Howard
Title: General Manager
Date:
Approved as to form:
_____________________________
By: Jane E. Luckhardt
Its: General Counsel
Date:
Attestation (if applicable):
_____________________________
By:__________________________
Its:
Date:
CITY OF SANTA CLARA
1500 Warburton Avenue
Santa Clara, CA 95050
_____________________________
By:__________________________
Title: __________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: City Attorney
Date:
Attestation (if applicable):
_____________________________
By:__________________________
Its:
Date:
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
CITY OF ALAMEDA
2000 Grand Street
P.O. Box H
Alameda, CA 94501
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: City Attorney
Date:
Attestation (if applicable)
_____________________________
By:__________________________
Its:
Date:
CITY OF LOMPOC
100 Civic Center Plaza
Lompoc, CA 93436
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:
Its: City Attorney__________________
Date:
Attestation (if applicable)
_____________________________
By:__________________________
Its:
Date:
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
CITY OF PALO ALTO
250 Hamilton Avenue
Palo Alto, CA 94301
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:
Its: City Attorney__________________
Date:
Attestation (if applicable)
_____________________________
By:__________________________
Its:
Date:
CITY OF REDDING
777 Cypress Avenue
Redding, CA 96001
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:
Its: City Attorney__________________
Date:
Attestation (if applicable)
_____________________________
By:__________________________
Its:
Date:
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
CITY OF SHASTA LAKE
4477 Main Street
Shasta Lake, CA 96019
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:
Its: City Attorney__________________
Date:
Attestation (if applicable)
_____________________________
By:__________________________
Its:
Date:____________________________
CITY OF UKIAH
300 Seminary Avenue
Ukiah, CA 95482
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:
Its: City Attorney__________________
Date:
Attestation (if applicable)
_____________________________
By:__________________________
Its:
Date:____________________________
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
CITY OF OAKLAND, acting
by and through its
Board of Port Commissioners
530 Water Street
Oakland, CA 94607
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:
Its: City Attorney__________________
Date:
Attestation (if applicable)
_____________________________
By:__________________________
Its:
Date:____________________________
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
EXHIBIT A
PROJECT PARTICIPATION PERCENTAGES
Table 1 of this Exhibit A lists the Members, and their respective initial Project Participation
Percentage share of the Project, that are expected to execute this Agreement by signature,
and therefore become Participants (the “Initial Participants):
On the Effective Date of the Agreement, NCPA shall prepare Table 2 to reflect the Final
Project Participation Percentages of each Participant, and such Table 2 will be added to
this Exhibit A as an amendement to this Agreement. NCPA shall provide Notice to each
Participant of Table 2 that is incorporated into this Exhibit A as described herein.
Pursuant to Section 5 of Exhibit B of the ESSA, if, at Commercial Operation, the Installed
Battery Capacity is less than one hundred percent (100%) of the Storage Contract Capacity,
Seller shall have one hundred twenty (120) days after the Commercial Operation Date to
install additional capacity such that the Installed Battery Capacity is equal to (but not
greater than) the one hundred percent (100%) of the Storage Contract Capacity. If Seller
fails to construct the Storage Contract Capacity by such date, Seller shall pay NCPA
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
Capacity Damages, and for each MW (or portion thereof) that the Storage Contract
Capacity exceeds the Installed Battery Capacity, the Project Participation Share for the
Participants shall be automatically adjusted and reduced, on a pro rata basis, to equal to
actual amount of Installed Battery Capacity.
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THIRD PHASE AGREEMENT FOR ENERGY STORAGE SERVICE AGREEMENT
EXHIBIT B
Energy Storage Service Agreement
The Energy Storage Service Agreement between Trolley Pass Project LLC and
Northern California Power Agency has been attached to this Agreement as Exhibit B.