HomeMy WebLinkAbout1999-12-13 City Council (25)City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
13
FROM:CITY MANAGER DEPARTMENT: UTILITIES
DATE:
SUBJECT:
DECEMBER 13, 1999 CMR: 449:99
ADOPTION OF A RESOLUTION APPROVING AN AMENDMENT TO
UTILITIES RULE AND REGULATION #5, RATIFICATION OF TWO
CUSTOMER CONTRACTS FOR ENERGY SERVICES, AND
APPROVAL OF AN AMENDMENT TO ONE CUSTOMER
CONTRACT FOR ENERGY SERVICES.
REPORT IN BRIEF
Staff recommends that Council adopt a resolution approving a change to Utilities Rule and
Regulation 5 to amend the City Manager’s authority related to the pricing of energy contracts
between the City of Palo Alto and its utility customers. In amending this rule, Council will
retain authority to approve the pricing terms either by exercising approval of utility rate
schedules or specific prices applicable to contracts. This change clarifies the ratemaking
authority with respect to the City Council and the City Manager.
To conform with the proposed change to Utilities Rule and Regulation 5, staff recommends
that Council ratify the two existing customer contracts for energy services, and approve
Amendment Number One to one of these contracts. The amendment will return the
customer to a standard utility tariff (Electric Rate E-7).
CMR: 449:99 Page 1 of 4
RECOMMENDATION
Staff recommends that Council adopt and approve:
1) A resolution amending Utilities Rule and Regulation #5,
2) Ratification of two contracts for energy services,
3) An amendment to one of the two contracts.
BACKGROUND
In 1996, Council evaluated the competitive pressures on the City of Palo Alto Utilities arising
from electric industry deregulation in California. At that time, Council decided to explore
opportunities to offer customers a choice of electric supplier while seeking to retain them as
customers of the Electric Utility. The Electric Direct Access Program approved by Council
(Resolution 7657, March 24, 1997) provided a phase-in schedule to provide choice to electric
customers, beginning with the largest commercial and industrial customers and expanding
later to residential customers.
Having the option of direct access led to inquiries from customers requesting longer terms
for contracts for energy services than was provided in standard tariffs. These discussions led
to negotiations which resulted in two contracts being approved in 1997 and 1999 by the City
Manager, who was delegated the authority to enter into those contracts by the Council.
Council subsequently expressed reservations that the development of the standard energy and
energy services contracts, without sufficient oversight, could lead to inconsistencies and
increased rates for non-contract customers. Consequently, in view of the reservations
expressed by Council and the staff’s experience with the pricing of the two existing
contracts, new pricing and contracting guidelines will soon be presented to Council for
review and adoption. The contract guideline revisions planned are in addition to the change
requested at this time for Utilities Rule and Regulation 5.
DISCUSSION
Utilities Rule and Regulation 5 is titled "Contracts" and delegates authority to the City
Manager to establish the specific terms, including pricing, of contracts between the City of
Palo Alto and its utility customers. The proposed revision to this rule would limit the City
Manager’s authority to approving non-price terms only; the Council’s authority to establish
energy prices would not be affected by this revision. To conform with this proposed revision
to Utilities Rule and Regulation 5, staff presents the two existing contracts with Syntex
(USA) Inc. and UCSF Stanford Health Services to Council for ratification (see attachments
A and B).
The customized contract for energy services was originally designed to collect the total
CMR: 449:99 Page 2 of 4
amount of revenue normally collected from each customer, but with payment schedules-
designed to meet the customer’s needs. Staff developed the pricing for the two existing
contracts using assumptions related to customer consumption, budgetary goals and Utilities
expenses such as supply, distribution, transfers, stranded cost recovery schedules, and other
factors. These assumptions resulted in a price for the Syntex (USA) Inc. contract that is
substantially higher than is warranted under current economic conditions, particularly due
to the City’s suspension-of collection of the Transition Cost Recovery Charge in July 1999.
By mutual agreement, the City and Syntex (USA) Inc. have agreed to apply electric service
and the applicable pricing provisions under the standard Electric Rate Schedule E-7. This
is the rate schedule the customer was previously served under.
RESOURCE IMPACT
No significant resource impact is expected as a result of these recommendations.
POLICY IMPLICATIONS
The adoption of the resolution approving the change to Utilities Rule and Regulation 5 will
permit the City Manager to continue to establish the specific non-price terms of contracts
between the City of Palo Alto and its energy customers. The Council retains the authority
to approve the price structure .of current and future energy services.
ENVIRONMENTAL REVIEW
Approval of these recommendations does
Environmental Quality Act.
not constitute a project under the California
CMR: 449:99 Page 3 of 4
ATTACHMENTS
Resolution
Utility Rule and Regulation #5
Energy and Energy Services Contract with UCSF-Stanford Health Care
Energy and Energy ,S,,ervices Contract with Syntex (USA) Inc.
Amendment to Energy and Energy Services Contract with Syntex (USA) Inc.
PREPARED BY:Tom Auzenne, Manager, Utility Marketing Services
REVIEWED BY:Grant Kolling, Senior Assistant City Attorney
DEPARTMENT HEAD:
ULRICH
Director of Utilities
CITY MANAGER APPROVAL:
HARRISON
Assistant City Manager
CMR: 449:99 Page 4 of 4
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
APPROVING AND ADOPTING AN AMENDMENT TO RULE AND
REGULATION 5 GOVERNING UTILITY SERVICES CONTRACTS
EFFECTIVE DECEMBER 13, 1999
WHEREAS, pursuant to Chapter ~12.20 of the Palo Alto
Municipal Code the City Council may by resolution adopt rules and
regulations governing utility services contracts and the fees and
charges therefore; and
WHEREAS, the City Council has determined to revise the
existing rule and regulation-number 5 pertaining to the authority
of the City Manager to establishthe{:non-price terms and conditions
of utility services contracts;
NOW, THEREFORE, the Council of the City of Palo Alto does
hereby RESOLVE as foll@ws:
SECTION i. Pursuant to Section 12.20.010 of the Palo Alto
Municipal Code, the rule and regulation number 5, as amended,
governing utility services contracts and the authority of the City
Manager to establish the non-price terms and conditions of utility
services contracts, attached hereto and incorporated herein, is
hereby approved and adopted.
SECTION 2. This Council finds that the provisions of this
resolution will not have a significant impact on the environment,
therefore, an environmental assessment is not required to be
performed.
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991208 syn 0071784
SECTION 3.
December 13, 1999.
The foregoing changes shall become effective
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:APPROVED:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
Senior Asst. City Attorney City Manager
Director of
Administrative Services
Director of Utilities
991208 syn 0071784
CONTRACTS
RULE AND REGULATION 5
TYPES OF SERVICE CONTRACTS
For electric, gas, or fiber optic services in large quantities or under special
conditions, CPAU may require a suitable written agreement for new or existing
customers. The following is a list of special services which may be the subject of a o
contract. Additional services may apply at the discretion of the Director of Utilities.
2.
3.
4.
5.
6.
7.
8.
10.
11.
12.
13.
14.
15.
Line Extensions.
Temporary Service.
Special Facilities.
CPAU service to special districts and institutions.
Special type service requirements.
Work performed for other agencies at their expense
Customers purchasing energy from other entities, such as an ESP
Customers purchasing natural energy gas or power from CPAU
under special arrangements
Power Marketers or ESPs
Work performed or Energy Service Providers at Customer expense
Special Metering and/or Billing Services
Special Energy Services
Long-term service agreements greater than 3 years.
Loans to Customers to irmance Demand Side Management at
Customer’s site
Standby Service
CONTRACT GUIDELINES
Contracts between CPAU and its customers shall be based on the following
policy guidelines:
Larger commercial customers will have the ability to negotiate provision of
Energy Services from CPAU.
Revenues realized from each contract will, at a minimum, recover all
applicable Energy Services costs over the term of the contract.
CITY OF PALO ALTO UTILITIES
Issued by the City council
Effective 12-13-99
Supercedes Sheet No. -1 dated 7-1-98 CiTY OF PALO ALTO
UTILITIES Sheet No.-1
CONTRACTS
RULE AND REGULATION 5
o
s
Pricing arrangements differing from those offered in the current and
successor rate schedules will not shift costs to the other customers in the
short-or long-term.
Custom tailored contracts must include sufficient insurance and/or "off
ramps" to protect CPAU or the customer from unanticipated events.
The same pricing, terms, and conditions for one customer will be made
available to other customers of similar size, service and load characteristics.
CONTRACT APPLICATION PROCEDURES
In general, the following application procedures are applicable to service contracts.
1.Completion of applicable forms as necessary;
Depending on the type of service contract, Customers shall request
consideration for a special contractual agreement in writing to the Director
of Utilities specifying their objectives, including the desired term of the
contract.
3.If applicable, fees or deposits shall be paid.
4.If applicable, compliance with the City’s insurance requirements.
(END)
CITY OF PALO ALTO UTILITIES
Issued by the City council
Effective 12-13-99
Supercedes Sheet No. -2 dated 7-1-98 CiTY OF PALO ALTO
UTILITIES Sheet No.-2
ENERGY AND ENERGY SERVICES CONTRACT
BETWEEN
THE CITY OF PALO ALTO
UCS~-STA~OR~
ARTICLE
1
2
3
4
5
6
7
8
9
i0
II
12
13
14
15
16
TABLE OF CONTENTS
HEADING
SPECIAL TERMS
TERM AND TERMINATION
ENERGY AND ENERGY SERVICES
EXCEPTIONS TO ENERGY SALES AND SERVICES
ENERGY AND ENERGY SERVICES CHARGES
TAXES
SECURITY DEPOSIT
OBLIGATIONS OF THE PARTIES
INSURANCE
INDEMNITY AND LIMI.TATIONS
WAIVER
REPRESENTATIONS AND WARRANTIES
ASSIGNMENT
DEFAULT AND REMEDIES FOR DEFAULT
NOTICE
MISCELLANEOUS PROVISIONS
PAGE
1
2
3
4
4
5
6
7
7
7
8
8
9
i0
12
13
SUMMARY OF-EXHIBITS AIqD ATTACPIMENTS
EXHIBIT "A"SPECIAL TERMS
EXHIBIT~"B"CALCULATION OF TERMINATION PAYMENT
EXHIBIT "C"CUSTOMER ACCOUNTS
CONFIRMATION SCHEDULE NO. 1 (ENERGY)
CONFIRMATION SCHEDULE NO. 1 (ENERGY SERVICES)
971201 s)~ 0071280
ENERGY AND ENERGY SERVICES CONTRACT
¯ " ~hysical Contrac0
THIS ENERGY AND E~ERGY SERVICES CONTRACT, dated as of
. ~.~...., ~, is made and entered intoby and between the CITYOF PALO ALTO and UCSF-STANFORD HEALTH CARE, in reference to the
following facts:
A. The CITY, the owner of natural gas and electric
utility distribution systems which are regulated by the City
Council, supplies and distributes Energy and Energy Services to
Palo Alto residents and businesses at prices which.are adopted by
resolution and established under rates set forth in the Utility
Rules and Regulations.
B. Since 1992, substantial~ changes in federal and
California law have resulted in the deregulation of the natura! gas
and electric utility industries. In July 1994, the CITY first
offered to eligible industrial customers and large, commercial
Customers an opportunity to acquire Transporhation Service without
purchasing natural gas~from the CITY. On March 24, 1997, the City
Council responded to developments prompted by the passage of
Assembly Bill 1890 in September 1996 by adopting Resolution No.
7657, which authorizes Direct Transactions between the CITY’s
Customers and alternate suppliers of electricity and further
authorizes the CITY to develop new energy products and services and
engage in such other actions as will benefit the CITY’s Customers.
C. The CITY has introduced Energy Services that will be
made available to eligible indust-rial Customers and large
commercial Customers. UCSF-STANFORD HEALTH CARE has been
determined to be eligible to receive Energy and Energy Services at
one or more of its Facilities.
THE PARTIES AGREE as follows:
ARTICLE i.SPECIAL TERMS
i~I The special terms that are denoted by initial or
full capitalized letters in this Contract and the Confirmation
Schedules shall have the meanings set forth in EXHIBIT "~’, unless
the context clearly indicates otherwise.
1.2 The CITY shall have the right, but not the
obligation, to adopt standard terms and conditions governing the
CITY’s use of its Utility System, and every part thereof, at any
time during the Term hereof by ordinance or resolution, or both, as
a result of changes in federal, state or local law or policy.
1.2.1 In the event that the CITY adopts standard
terms and conditions governing the CITY’s use of its Utility System
which (i) would materially and adversely affect the rights or
obligations of the CUSTOMER, then, upon the request ~of the
CUSTOMER, the Parties shall in good faith confer and attempt to
971201 syn 0071281
1
renegotiate the Provisions- of this Contract which are affected
thereby.
1.2.2 If the Parties-are unable to reach mutual
agreement on such renegotiated Provisions within thirty (30) Days
after the Day on which .the CUSTOMER’s election to renegotiate is
communicated, in writing, to the CITY, the CUSTOMER will have the
right for a period of sixty (60) more Days to terminate this
Contract by giving not less than thirty (30) Days written notice of
termination to the CITY. Any such termination shall be deemed a
termination by the CUSTOMER for convenience and the CUSTOMER shall
be obligated to pay to the CITY , or shall be entitled to receive
from the CITY, respectively, the difference between the amount that
the CUSTOMER would have paid in the absence of this Contract and
the amount that the CUSTOMER actually paid under this Contract.
Unless otherwise-agreed to by the Parties during the coUrse of
renegotiations, the Charges in effect and applicable to the sale of
Energy and the rendering of Energy Services hereunder shall
continue in effect during the period of renegotiation and notice
under the Provisions of this Article.
1.2.3 Subject to. Subsection 1.2.2 above, to the
-degree or extent any specia! term in this Contract is, directly, in
conflict with the standard terms and conditions adopted by the CITY
following the execution of this Contract,. the applicable Provision
that imposes the higher duty or standard shall govern.
ARTICLE 2. TERM AND TERMINATION
2.1 This Contract shall be bindingon the Parties on the
Commencement Date.
2.2 The Initial Term hereof shall be approximately seven
(7) years, beginning on the Day of the Billing Period commencing
in December 1997 and expiring on the Day of the Billing Period
ending in November 2004.
2.3 The Initial Term may be extended by the Parties, by
mutual agreement, for a period of seven (7) years, provided,
however, any Extension Term may be terminated earlier in accordance
with the Provisions hereof. The City Manager, acting on behalf of
the CITY and with the approval of the City Attorney as to form,
will approve the application of the CUSTOMER to extend the Initial
Term, provided that:
2.3.1 The CUSTOMER gives to the Utilities Director,
acting on behalf of the CITY, a written request to extend the Term
not less than ninety (90) Days prior to the expiration of the
Initial Term;
2.3.2 The CUSTOMER submits any and all documents and
information reasonably reqdested by the CITY in support of the
written request to extend the Term, pays any and all CITY
processing fees and other Charges and complies with all other CITY-
971201 syn 0071281
2
established terms, conditions and procedures pertaining to the
request to extend the Term;
2.3.3 The CUSTOMER is not then in default under the
Provisions hereof on the Day that the CUSTOMER Submits the written
request to extend the Initia! Term; and
2..3.4 The Parties, by mutual agreement, agree to be
bound by all other Provisions, if any, governing the rights and
obligations of the Parties during the Extension Term.
ARTICLE 3. ENERGY AND ENERGY SERVICES
3.1 Subject to the Provisions hereof, the CITY agrees to
sell Energy and render Energy Services to the CUSTOMER, and the
CUSTOMER agrees to purchase Energy and receive_Energy Services from
the CITY, as more fully described in one or more of the
Confirmation Schedules. The CITY’s obligation to sell Energy or
render Energy Services is expressly conditioned on the right of the
CITY to offer or withdraw any kind of Energy or .Energy Services now
or hereafter offered to any Customer, including the CUSTOMER,
during the Term of this Contract ; provided, however, the CITY
shall continue to offer those Energy or Energy Services which the
CITY is committed to sell or render to the CUSTOMER~during the Term
of this Contract. Nothing in this Contract shall be deemed or
construed to .grant, convey, create, or vest in a Party any estate
or interest in the rea! property or persona! property of the other
Party, except as maybe provided herein.
3.2 Subject to the applicable Utilities Rules and
Regulations, which shall take precedence, the CITY, and its
officers, employees, agents and contractors~shall have reasonable
access to the CUSTOMER’s Facilities to inspect and perform
alterations, maintenance and repair work on theUtility System, or
any portion thereof, that is located at the Facilities subject to
the following Provisions: (a) the CITY shall provide the CUSTOMER
with reasonable prior notice of any occasion for which access is
sought, except in the event of an Emergency; (b) the CITY’s
representatives shall check in with the CUSTOMER’s designated
representative upon arriva! at the Facilities, and the CITY’s
representatives shall be- escorted at all times in the Sole
Discretion of the CUSTOMER; and (c) the CITY shall repair and
restore (or at the election of the CUSTOMER reimburse the CUSTOMER
for the reasonable costs of repairing and restoring) al! damage to
the CUSTOMER’s Facilities caused solely by the CITY’s
representatives.
3.3 Subject to the applicable Utilities Rules and
Regulations, which shal! take precedence, the CUSTOMER shall
maintain at all times during the Term of this Contract its
eligibility to purchase Energy and receive Energy Service pursuant
to the eligibility criteria set forth in the Utility Rules and
Regulations.
971201 syn 0071281
3.4 The procedures for the initiation of the purchase of
Energy and the rendering of Energy Services shallbe identified by
the Parties in one or more of the Confirmation Schedules, to the
extent the procedures are not established unde~ the Utility Rules
and Regulations.
3.5 As a condition precedent to the sale of Energy by
the CITY pursuant to the Provisions of this Contract, the .CUSTOMER
shall make or cause to be made any and all necessary modifications
to the Facilities to the reasonable satisfaction of the Utilities
Director, acting on behalf of the CITY. Any such modifications
shall be set forth in one or more of the Confirmation Schedules.
ARTICLE 4.EXCEPTIONS TO ENERGY SALES AND SERVICES
4.1 The CITY shall be temporarily excused from the
obligation to sel! Energy or render Energy Services, as the case
may be, to the CUSTOMER under any of the following conditions:
(a) The occurrence of an event of Force Majeure for the
period of time that the CITY is temporarily unable to deliver
Energy;
(b) The failure of the CUSTOMER to perform a material
obligation which is a condition precedent to the CITY’s obligation
of performance.
ARTICLE 5.ENERGY AND ENERGY SERVICES C~GES
5.1 The Charges for Energy and Energy Services,
including, without limitation, Connection Charges, Demand Charges,
Energy Charges, Energy Service Charges, Metering Charges,
Reservation Charges, Distribution Charges, Storage Charges and
Charges for Standby Service, shall be as set forth in one or more
~Confirmation Schedules.
5.2 On or before the fifteenth Day after the end of the
Billing Period, the CITY shal! submit to the CUSTOMER a billing
statement for each Billing Period, in which Energy is sold or
Energy Services are rendered to the CUSTOMER. All amounts shal!
become due and payable within thirty (30) Days of the date of the
billing statement. Payment shall be made in United States dollars
and delivered or mailed to the Customer Service Center, Department
of Utilities, City of Palo Alto, 4th Floor, 250 Hamilton Avenue,
Palo Alto, CA 94301 or Post Office Box 10250, Palo Alto, CA 94303.
5.3 Except as otherwise provided in this Contract or any
Confirmation Schedule, a billing statement that is not paid in full
within the time permitted hereunder or as may be established under
the Utility Rules and Regulations wil! accrue interest charges on
the unpaid balance at the rate established in the Utility Rules and
Regulations or at the maximum rate allowed by Law, whichever is
lower.
971201 syn 0071281
5.4 In addition to the rights of the CITY reserved under
this Contract or allowed ~y Law, if the CUSTOMER fails to pay the
billing statements as they shal! become due for a period of three
(3) consecutive Billing Periods, the CITY, acting by and through
the Utilities Director in his Sole Discretion, may suspend sales of
Energy and the rendering of Energy Services to the CUSTOMER, assess
Charges for Energy and Energy Services set forth in the utility
rate schedules under the Utility Rules and Regulations, or
¯ undertake such other reasonably necessary action, including,
without limitation, imposing security deposit and other financial
reporting requirements.
5.5 The CITY acknowledges that the CUSTOMER has
requested the CITY to maintain the confidentiality of information,
including, without limitation, information pertaining to the
CUSTOMER’s Load,Demand and the Charges paid to the CITY, and, to
the extent permitted by Law, any such information shall be deemed
Confidential Information under this Contract and shall not be
disc!osed by any Party to a Third Party, unless such disclosure is
compelled by Law. If any Third Party seeks access to Confidential
Information that is protected from disclosure under this Contract,
the Party receiving the request shall inform the other Party in a
timely manner in order that either Party or the Parties may
initiate timely appropriate lega! action to prevent such
disclosure. Section 14.4 notwithstanding, damages for breach of
this confidentiality by a Party shall be established and awarded
after appropriate legal action by the Party injured by such
disclosure is instituted.
ARTICLE 6. TAXES
6.1 The CUSTOMER shall pay before delinquency and
without notice or demand any Tax which is levied, imposed or
assessed in compliance with Laws against the CUSTOMER’s income or
the Facilities, or for which the CUSTOMER may become liable under
the Provisions hereof, and any payment made under this Article
shall not reduce the amount of the Energy Charges, Energy Service
Charges or any other Charge that is required to be paid by the
CUSTOMER to the CITY, as follows:
6.1.1 The CUSTOMER promptly shall pay any Tax, fine or
penalty which may be due and payable to the CITY in connection
with this Contract and all licenses and privileges granted
hereunder.
6.2 In the event that the CUSTOMER desires in good faith
to contest or review by appropriate lega! or administrative
proceedings any Tax specified or reasonably contemplated under the
Provisions of this Article 6, the CUSTOMER shal!, at least ten (I0)
Days prior to the delinquency of any Tax, or within the period of
time allowed by Law, give the CITY written notice of its intention
to so contest. The CUSTOMER may withhold payment of the Tax being
contested if, but only if, nonpayment is permitted during the
pendency of such proceedings without the forec!osure of any Tax
lien or the imposition of any fine or penalty. The contest shall
971201 syn 0071281
5
be prosecuted to completion without unreasonable delay and at the
CUSTOMER’s sole cost and’-expense. Within ten (i0) Days or the
period of time allowed by Law after the final determination of the
amount due from the CUSTOMER with respect to any contested Tax, the
CUSTOMER shall pay the amount so determined to be due, together
with all costs, expenses and interest. The failure to pay any Tax
hereunder (except as provided by this Section 6.2) shall constitute
an Event of Default by the CUSTOMER, and the obligation to pay the
same Shall survive the expiration or earlier termination hereof.
6.3 The CUSTOMER covenants and agrees to indemnify and
hold harmless the CITY from and against any cost, expense or damage
resulting from such contest or proceeding, and further covenants
and agrees to indemnify and hold harmless the CITY from and against
any liability, loss or damage resulting from any Tax required to be
paid by the CUSTOMER, from any other sums imposed thereon,and from
any proceedings to enforce the collection of any Tax for which the
CUSTOMER may be liable, provided, however, that the foregoing~shall
not apply to any contest or other proceeding relating to any Tax
imposed by the CITY.
6.4 if the CUSTOMER fails to pay any Tax required to be
paid by the CUSTOMER hereunder, the CITY has the right, but not the
obligation, on five (5) Days prior written notice to the CUSTOMER
following the assessment of any delinquency against the CUSTOMER,
to pay, discharge, or adjust such Tax for the CUSTOMER’s benefit.
In such event, the CUSTOMER, upon demand of the CITY, promptly
shall reimburse the CITY for the ful! amount paid,~ discharged or
adjusted .by the CITY, together with interest thereon from its due
date at the maximum rate of interest allowed by Law until paid.
Any receipt showing payment by the CITY on behalf of the CUSTOMER
shall be prima faci@ evidence that the amount of such payment was
necessary and reasonable and made by the CITY on the CUSTOMER’s
behalf.
ARTICLE 7. SECURITY DEPOSIT
7.1 The CITY, acting by and through the CITY Manager,
may require a security deposit to be posted by the CUSTOMER for any
reasonable fixed period of time (not to exceed the duration of the
Term) under the following conditions:
(a) Whenever the CUSTOMER has failed to pay billing
statements in a timely manner for three (3) consecutive Billing
Periods, or there exists some other Event of CUSTOMER Default that
bears on the CUSTOMER’s financia! capability;
(b) Whenever the rights and obligations of .the CUSTOMER
under this Contract shall be assumed by an Affiliate of the
CUSTOMER; or
(c) Whenever the CITY, in good faith, acting by and
through the CITY Manager and the CITY Attorney, determines that the
CUSTOMER is unable to perform its material financia! obligations
under this Contract, including, without limitation, the failure to
971201 syn 0071231
6
timely pay all Energy Charges and Energy Services Charges and other
Charges, and there is a re&sonable probability that such condition
of insecurity may continue~ to exist, and the CUSTOMER fails to
provide adequate assurances of further performance.
If a security deposit is required by the CITY, the CUSTOMERshall
comply with such requirements in a timely manner, and a failure
thereof shall constitute an Event of DefauIt. The [equir~ments for
the posting of a security deposit and its return to the CUSTOMER
shal! be as set forth in the Utility Rules and Regulations.
7.2 In addition to the foregoing, the City Manager , in
good faith, may require the CUSTOMER to periodically submit one or
more financial statements and information if she determines that it
is reasonably necessary to document the CUSTOMER’s ability to
perform, and, in connection herewith, the the requirements of the
Utility Rules and Regulations pertaining to the provision of such
financial statements shall apply to the Parties.
ARTICLE 8.OBLIGATIONS OF TEE PARTIES
8.1 The CUSTOMER willuse best efforts to maintain,
service and repair the Facilities in a manner that facilitates the
provision of Energy under this Contract. The interconnection of
the Utility System, including the CUSTOMER’s Meter(s), shall be
effected by the mutual cooperation of the Parties.
8.2 The CITY will use best efforts to construct,
maintain, service and repair its Utility System, including the
CUSTOMER’s Meter(s), to assure the reliable delivery of Energy to
the CUSTOMER.
ARTICLE 9. INSURANCE
9.1 During the Term hereof, the CUSTOMER, at its sole
cost and expense, shall obtain and maintain or cause to be obtained
and maintained the policies of insurance and the amounts specified
in the Confirmation Schedule(s), or if such requirements are not
addressed in the Confirmation-Schedule(s), in the Utility Rules and
Regulations, including, without limitation, workers compensation
and employers liability insurance, commercial general liability
insurance, and fire al! risk replacement cost insurance.
ARTICLE i0.INDEMNITY AND LIMITATIONS
i0.i Each Party shal! indemnify, protect, defend (with
counsel reasonably acceptable to the other Party) and hold harmless
the other Party, its council members, directors, officers,
trustees, employees, partners, principals, contractors, agents and
representatives, from and against any and al! administrative and
judicial proceedings and orders, charges, claims, costs, damages,
demands, expenses, fines, judgments, liabilities, losses,
penalties, and remedial actions of any kind (collectively,
"Damages"), including, without limitation, reasonable attorney’s
fees and the costs of defense arising, directly or indirectly, in
971201 syn 0071221
7
whole or in part, out of Such Party’s activities or such Party’s
property described in thi~ Contract and not arising out of the sole
negligence or willful misconduct of the other.Party. The other
Party shall be liable only for the Damages arising from its
negligence or willful misconduct, and shall not be responsible for
any Damages occurring by reason of anything done or omitted to be
done by any Third Party who is not an agent or representative of
that Party.
ARTICLE ii. WAIVER
ii.i The consent by a Party to any act by the other
Party shall not be deemed to imply consent or to constitute the
waiver of a breach of any Provision hereof or a continuing waiver
of any subsequent breach of the same or any other Provision, nor
shal! any custom or practice which may arise between the Parties in
the administration of any part~ of the Provisions hereof be
construed to waive or lessen the right of a Party to insist upon
the performance by the other Party in strict accordance with the
Provisions hereof.
11.2 The CUSTOMER waives any and all claims or causes of
action against the CITY, or its council members, officers,
employees, and agents, which it may now or hereafter have at any
time for any economic or non-economic loss or damage suffered by"
the CUSTOMER as a result of a Curtailment of Energy sold to the
CUSTOMER, where the Curtailment is beyond the reasonable contro! of
the CITY, except as such claim or cause of action may arise froi
the active negligence or the willfu! misconductof the.CITY, its
council members, officers, employees, or agents. In the event of
a Curtailment, the CITY shall use reasonable efforts to obtain
Energy from alternate Energy Suppliers.
ARTICLE 12.REPRESENTATIONS AND WARRANTIES
12.1 The CUSTOMER represents and warrants:
12.1.1 It is a corporation duly organized and validly
existing and in good standing under the Laws of the State of
California. It has all requisite corporate power and authority to
own or lease its property, real and personal, and operate its
business as and where it is now being conducted.
12.1.2 It has the power and authority to enter into this
Contract and perform its obligations hereunder. The execution,
delivery and performance hereof have been duly authorized by al!
necessary corporate actions and proceedings. This Contract is (and
any other :instrument, document or writing to be executed and
delivered by the CUSTOMER pursuant hereto wil! be) legal, valid and
binding obligations of the CUSTOMER, and enforceable against the
CUSTOMER in accordance with the Provisions hereof except as may be
limited by applicable Laws.
12.1.3 The execution and delivery hereof and any other
instrument, document or writing contemplated hereby by the CUSTOMER
971201 syn 0071281
will not conflict with or violate or constitute a breach or default
under the .articles of inc6rporation or bylaws of the CUSTOMER
12.1.4 All information, financial statements, records,
reports, resolutions, certifications and other documents- or.
writings which will be submitted by the CUSTOMER pursuant to the
Provisions hereof wil! be true and correct at the time such
information, financia! statements, records, reports, resolutions,
certifications and other documents or writings are submitted or
made available to the CITY.
12.2 The CITY represents and warrants:
12.2.1 It is a municipal corporation duly organized and
validly existing and in good standing under the Laws of the State
of California. It~has all requisite corporate power and authority
to own or lease its property, real and personal, and operate its
business as and.where it is now being conducted.
12.2.2 It has the powerand authority to enter into this
Contract and perform its obligations hereunder. The execution,
delivery and performance hereof have been duly authorized by all
necessary actions and proceedings. This Contract is (and any other
instrument, document or writing to be executed and delivered by the
CITY pursuant hereto wil! be) legal, valid and binding obligations
of the CITY, and enforceable against the CITY in accordance with
the Provisions hereof except as may-be limited by applicable Laws.
12.2.3 The execution and delivery hereof and any other
instruments, documents or writings contemplated hereby by the CITY~
will not conflict with or violate any provision ofthe Charter of
the City of Palo Alto or the Palo Alto Municipa~ Code.
12.2.4 To the extent required by Law, it will obtain the
authorization of the CPUC or FERC, or both, to provide Energy
within and without the jurisdictional boundaries of Palo Alto, and
to operate as an energy service provider.
ARTICLE 13.ASSIGNMENT
13.1 The CUSTOMER may assign or transfer, pursuant to a
merger or sale of all or substantially all of the assets or stock
of the CUSTOMER, all of its rights and obligations under this
Contract to any Person, so long as the surviving or purchasing
entity assumes, in writing, all of the obligations of the CUSTOMER
under this Contract, and the CITY, acting by and through the City
Manager, confers its approval, which shall not be unreasonably
withheld. The CUSTOMER may assign some or all of its rights
hereunder to any Affiliate .of the CUSTOMER, provided that the
CUSTOMER gives thirty (30) Days prior written notice to the City
Manager and the City Attorney and obtains the written approval of
the City Manager acting , which consent shall not be unreasonably
withheld.
971201 syn 0071281
13.2 Any assignment, transfer, license, conveyance,
sale, hypothecation or encumbrance hereof by the CUSTOMER not
authorized hereunder shall be null and void, and, at the option of
the CITY, acting by and through the City Manager with the approval
of the City Attorney, shall constitute, an Event of CUSTOMER
Default
13.3 The CUSTOMER, as assignor, and any Person,
including an Affiliate, as assignee, to whom the rights and
obligations of the CUSTOMER under this Contract are assigned shall
be and remain jointly and severally liable for the performance of
all obligations of the CUSTOMER under this Contract.
ARTICLE 14.DEFAULT AND REMEDIES FOR DEFAULT
14.1 This Contract may be terminated by the ~CITY upon
the occurrence of a default by the CUSTOMER under this Contract
("Event of CUSTOMER Default"), and the ~CUSTOMER fails to cure the
same within thirty (30) Days or such longer period of time as is
provided.below,, after receipt of notice thereof from the CITY, or,
when the cure reasonably requires more than thirty (30) Days, the
failure of the CUSTOMER to commence to cure within such thirty (30)
Days and thereafter diligently and continuously prosecute such cure
to completion, including, without limitation, any of the following
Events of Default:
14.1.1 Failure to pay any Energy Charges or Energy
Services Charges , when due, unless the CUSTOMER in good faith
disputes all or any portion of such Energy Charges and Energy
Services Charges, in which case the CUSTOMER shall pay only the
undisputed portion, if any, until such dispute is resolved;
14.1.2 Failure to pay any Tax, when due, or the failure
to perform any other obligation requiring the payment of money
under the Provisions hereof, and the failure continues for a period
of forty-five (45) Days, unless the CUSTOMER~in good faith disputes
al! or any portion of such Tax, in which case the CUSTOMER shall
pay only the undisputed portion, if any, unti! such dispute is
resolved;
14.1.3 Failure to observe, perform or comply with any
materia! Provision hereof .required to be observed, performed or
complied with by the CUSTOMER;
14.1.4 Assignment or transfer of its interest in this
Contract, whether voluntarily or by operation of Law, in violation
of the Provisions hereof;
14.1.5 General assignment of its assets for the benefit
of its creditors;
14.1.6 Filing by or against the CUSTOMER a petition to
have the CUSTOMER adjudicated a bankrupt, or a petition for a
reorganization or arrangement under any Law relating to bankruptcy
971201 syn 00712~1
10
or insolvency, unless the same is dismissed within one hundred
eighty (180) Days after ~th~ same is :instituted;
14.1.7 A Person other than the CITY Qbtains an order or
decree in any court of competent jurisdiction enjoining, or
prohibiting the CUSTOMER from performing under this Contract, and
such order or decree is not vacated within one hundred eighty (180)
Days after the granting thereof, unless the CUSTOMER upon the
written demand of the CITY indemnifies the CITY against loss or
damage suffered by the CITY as a result of the CUSTOMER’s
nonperformance pursuant to such order or decree; and
14.1.8 Any representation, warranty, or statement made
by the CUSTOMER in this Contract that shall prove to have been
incorrect in any materia! respect when made.
If there is an Event of CUSTOMER Default, the CITY shall give
notice to the CUSTOMER at least thirty (30) Days before any
termination shal! become effective.
14.2 This Contract may be terminated by the CUSTOMER
upon the occurrence of any of the following defaults by the CITY
(collectively, Event of CITY Default), including, without
limitation:
14~2.! Failure to observe, perform or comply with any
material Provision hereof required to be observed, performed or
complied with by the CITY, and the CITY fails to cure the same
within thirty (30) Days, or, when the cure reasonably requires more
than thirty (30) Days, the failure of the CITY to commence to cure
within such thirty (30) Days and thereafter diligently and
continuously prosecute such cure to completion;
14.2.2 General assignment of its assets for the benefit
of its creditors, or the filing by or~ against the CITY a petition
to have the CITY adjudicated a bankrupt, or a petition for a
reorganization or arrangement under any Law relating to bankruptcy
or insolvency, unless the same is dismissed within one hundred
eighty (180) Days after the same is instituted, unless the CITY
upon the written demand of the CUSTOMER indemnifies the CUSTOMER
against loss or damage suffered by the CUSTOMER as a result of the
CITY’s non-performance pursuant to such order or decree; and
14.2.3 A Person other than the CUSTO..~ER obtains an order
or decree in any court of competent jurisdiction enjoining or
prohibiting the CITY from performing under this Contract, and such
order or decree is not vacated within one hundred eighty (180) Days
after the granting thereof, unless the CITY upon the written demand
of the CUSTOMER indemnifies the CUSTOMER against loss or damage
suffered by the CUSTOMER as a result of the CITY’s non-performance
pursuant to such order or decree.
If there is an Event of CITY Default, the CUSTOMER shall give
notice to the CITY at least thirty (30) Days before any
termination shal! become effective.
971201 s~,~ 0071281
1!
14.3 In. addition to all other rights and remedies
provided by Law or otherwise provided in this Contract, to which
the Non-Defaulting Party may resort cumulatively, or in the
alternative,.the Non-Defaulting Party may:
14.3.1 Except as otherwise provided herein, keepthis
Contract in effect and enforce all of its rights and remedies
hereunder, including the right to payment of all Energy Charges and
Energy Services Charges and Other Charges as they may become due,
or the right to delivery of Energy and Energy Services, by
appropriate legal action;
14.3.2 Seek the specific performance hereof by the
Defaulting Party or other rights or remedies at law or in equity;
and
14.3.3 Terminate for cause this Contract by giving
notice of termination.
14.4 NOTWITHSTANDING AIqY OTHER PROVISION OF THIS
CONTRACT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY
CONSEQUENTIAL, INDIRECT, LIQUIDATED, INCIDENTAL OR SPECIAL DAMAGES
OR LOST REVENUE OR LOST PROFITS TO AIqY PERSON ARISING OUT OF THIS
CONTRACT OR THE PERFORMANCE OR NONPERFORMANCE OF ANY PROVISION OF
THIS CONTRACT,EVEN IF SUCH PARTY HAS BEEN INFORMED OF THE
POSSIBILITY OF SUCH DAMAGES. THE CITY’S TOTAL LIABILITY FOR ANY
CLAIM OR DEMAND OF THE CUSTOMER ARISING OUT OF THIS CONTRACT SHALL
NOT EXCEED THE AMOUNT OF THE ENERGY CHARGES PAID BYTHE CUSTOMER
UNDER THIS CONTRACT TO THE CITY PRIOR TO THE DATE OF CLAIM OR
DEMAND.
14.5 Neither the CUSTOMER nor the CITY shall be in
default in-the performance of any obligations under this Contract
when a failure of performance shal! be-due to an event of Force
Maj eure.
14.6 Neither the CUSTOMER nor the CITY shall be relieved
of its obligation to perform if such failure is due to causes
arising out of its own negligence or due to removable or remediable
causes which it fails to remove or remedy within a reasonable time
period.
14.7 Either the CUSTOMER or the CITY, if rendered unable
to fulfil! any of its obligations under this Contract by reason of
an event of Force Majeure, will give prompt written notice of such
fact to the other and shall exercise due diligence to remove such
inability with all reasonable speed.
ARTICLE 15.NOTICE
15.1 All notices which shall or may be given pursuant to
this Contract shall be in writing and.delivered by the United
States Posta! Service, by means of. private express delivery
systems, or by facsimile transmission, provided a copy of the same
971201 syn 0071281
12
is followed by delivery by. the United States Postal Service or by
private express delivery Systems, as follows:
City of Palo Alto
250 Hamilton Avenue
P. O. Box 10250
Palo Alto, CA 94303
Attn.: City Clerk
Telephone No.:~ (650) 329-2571
CITY:
City of Palo Alto
250 Hamilton Avenue
P. 0. Box 10250
Palo Alto, CA 94303
Attn.: Director of Utilities
Telephone No.: (650) 329-2277
Copy to:
UCSF-STANFORD HEALTH CARE
300 Pasteur Drive
Stanford, CA 94305
Attn.: Paul Watkins, Director
Telephone No.: (650) 725-5059
FAX No.: (650) 723-8344
CUSTOMER:
UCSF-STANFORD HEALTH CARECopy to:
Attn.:
Telephone No.:
FAX No.:
Notices hereunder shall be effective upon delivery to the
addressee.
ARTICLE 16.MISCELLANEOUS PROVISIONS
16.1 This Contract contains the entire understanding
between the Parties with respect to the subject matter herein.
There are no representations, warranties, agreements or
understandings (whether ora! or written) between the Parties
relating to the subject matter hereof which are not fully expressed
herein. This Contract may not be amended except pursuant to a
written instrument signed by the Parties. This Contract shall be
binding upon and inure to the benefit of the successors and
permitted assignees of the Parties. .The Article headings hereof
are inserted for convenience of reference only, are not a part
hereof and shall have no effect on the construction or
.interpretation hereof. This Contract may be executed in any number
of counterparts, eachof which shall be an origina!, but all of
which together shall constitute one and the same instrument. All
exhibits, Confirmation Schedules and amendments thereto referred to
in this Contract and any addenda, attachments, and schedules which
may, from time to time, be referred to in any duly executed
amendment to this Contract are by such reference incorporated in
this Contract and shall be deemed a Part hereof.
971201 syn 0071281
13
16.2 This ContraCt shall be governed by and construed .in
accordance with the Laws of the State of California without regard
to its conflicts of laws rules or principles.. In the event that
suit is brought by a Party, the Parties agree that trial-of such
action shall be vested exclusively in the state courts of
California, County of Santa Clara, or in the United States District
Court, Northern District of California, in the County of Santa
Clara. If any Provision is held by a court of competent
jurisdiction in a final judicial action to be void, voidable, or
unenforceable, such Provision shall be deemed severable from the
remaining Provisions and shall in no way affect the validity of the
remaining portions.hereof.
16.3 Each Party and its counsel have reviewed this
Contract. Accordingly, the normal rule of construction ~to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the construction and inZerpretation
hereof.
16.4 Time is of the essence. For the purposes hereof,
the time in which an act is to be performed shall be computed by
excluding the first Day and including the last. If the time in
which an act is to be performed falls on a Saturday, Sunday, or any
Day observed as a.official holiday by the CITY, the time for
performance shal! be extended to the following Business Day.
IN WITNESS WHEREOF, this Contract is executed by the duly
appointed representatives of the Parties on the date first above
stated in the city of Palo Alto, County of Santa Clara, California.
APPRO~ AS TO FORM:
Seni~sst. City Attorney
OF
APPROVED~/~ /
Directoif Ut%l i~e st
SiR43IARY OF EXHIBITS AND ATTACHI~ENTS
EXHIBIT "A"SPECIAL TERMS
EXHIBIT "B"CALCULATION OF TERMINATION PAYMENT
EXHIBIT "C"CUSTOMER ACCOUNTS
CONFIRMATION SCHEDULE NO. 1 (ENERGY)
CONFIRMATION SCHEDULE NO. 1 (ENERGY SERVICES)
14
97i201 syn 0071281
CERTIFXCATE OF ACKNOWLEDGMENT
(Civil Code § 1189)
STATE OF
COUNTY OF
)
)
)
/ !
On /~~ ~ .., before me, the undersigned, a
notary .~ublic/in and for said County, personally appeared
(check one) [ ] personally known to me ([~ or proved to me on the
basis ofsatisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument, and acknowledged to me
that he/she/they executed the same in his/her/their authorized
capacity(is), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
~;~ No~o~, Pu~c -- Corlfotnlc~ ~
971201 syn 00712~I
15
EXHIBIT
"SPECIAL TERMS
"Administrative Services Director" means the individu~l
designated as the director of administrative services under Section
2.08.150 of Chapter 2.08 of Title 2 of the Palo Alto Municipal
Code, and any Person who is~designated the representative of the
director of administrative services.
’~ffiliate"means (i) any Person or entity that, directly
or indirectly, owns, controls or holds with the power to vote .fifty
percent (50%) or more of the outstanding voting rights of the
CUSTOMER, (ii) any Person or entity fifty percent (50%) or more of
the outstanding voting securities of which is, directly or
indirectly, owned, controlled or held with power to vote .by the
CUSTOMER, (iii) any Person or entity who is a director or executive
officer of a Person or entity which is an affiliate thereof under
(i) or (ii), (iv) any Person or entity that, directly or
indirectly, through one or more intermediaries, is under common
control with the CUSTOMER, or (v) any general partner-or-limited
partner of a Person or entity that, directly or indirectly, owns,
controls or holds with power to vote eighty percent (80%) or more
of the outstanding voting rights of the CUSTOMER. For the purposes
of (iv) above, a Person or entity shal! be deemed under common
contro! with the CUSTOMER only if the Person or entity that
exercises such common contro! owns, controls or holds twenty-five
(25%) or more of the outstanding voting rights of both the CUSTOMER
and any such other Person or entity.
"Agency" means any local, county, state or federal
governmental body or quasi-governmental body, including, without
limitation, the CPUC, the FERC and any joint powers agency, but
excluding the CITY and any board, commission or council of the
CITY.
"AnciIlary Services" means the Energy Services offered by
the CITY to al! Customers, including, without limitation, Balancing
Service, Backup Generation Service, Load Monitoring Service,
Scheduling Coordination Service, Voltage Support Service and
Standby Services, as more fully described in one or more
Confirmation Schedules to this Contract.
"Average Daily Quantity" or "ADQ" means the quantity of
Energy purchased by the CUSTOMER from one or mo±e Energy Suppliers
on a daily basis in each calendar month, which the CITY is required
to deliver to one or more of the Delivery Points, as more fully
described in one or more Confirmation Schedules to this Agreement.
"Average Demand" means the average metered demand of the
CUSTOMER determined over a specified period of time, as described
in one or more of the Confirmation Schedules.
"Average Monthly Quantity" or "AMQ" means the quantity of
Energy purchased by the CUSTOMER from one or more Energy Suppliers
971201 syn 0071222
!
on a monthly basis in each calendar year, which the CITY is
required to de}iver to one’or more of the Delivery Points, as more
fully described in one or more the Confirmation Schedules to this
Contract.
"Backup Generation Services" means the Capacity and Energy
services provided to a Customer to replace the loss of its
generation sources and to cover that portion of Demand that exceeds
the supply of generation.
"Balancing Service" means a type of Energy Services that
may be provided by the CITY to accommodate the difference between
a Customer’s consumption of the quantity of natura! gas that is
received at one or more of the Delivery Points and the quantity of
natural gas purchased by the CITY on behalf of the Customer for
delivery to one Or more of the Customer’s Energy Suppliers, as more
fully described, if applicable, in one or more of the Confirmation
Schedules.
"Billing Period" means the period of time between the
times and dates on which any of the CUSTOMER’s Meters is read for
billing purposes, as more fully described in one or more of ~the
Confirmation Schedules.
"British Thermal Unit" or "Btu" means the unit of
measurement of a quantity of heat or thermal energy measured on a
"dry" basis (free of water vapor). One (i) Btu equals the amount
of heat or thermal energy required to raise the temperature of one
pound of pure water from 58.5 degrees Fahrenheit to 59.5 degrees
Fahrenheit at a standard atmospheric pressure of 14.73 pounds
square inch absolute.
"Business Day" means any Day, except a Saturday, Sunday,
or any Day observed as a legal holiday by the CITY.
"Capacity"means (i) in the case of electricity, the total
quantity of power that can be transmitted over the applicable
portions of the Utility System for a specified period of time, and
(ii) in the case of natura! gas, the total quantity of natural gas
that can flow through the applicable portions of the Utility System
for a specified period of time.
"Capacity Constraint" means a physical condition of the
applicable portion of the Utility System which impedes the flow of
natural gas to one or more of the Delivery Points.
"Charge" means any assessment, cost, fee or levy for
Energy or Energy Services, other than a Tax.
"CITY" means the government of the City of Palo. Alto, a
chartered city and a municipal corporation duly organized and
validly existing under the Laws of the State of California, with a
principa! place of business located at 250 Hamilton Avenue, Palo
Alto, County of Santa Clara.
971201 syn 0071282
2
~City Attorney" means the individual designated as the
city attorney of the CITY dnder Section,2.08.120 of Chapter 2.08 of
Title 2 of the Palo Alto Municipal. Code, and any Person who is
designated the representative of the city attorney.
"City Clerk" means the individualdesignate~ a~ the City
clerk of the CITY under Section 2.08.110 of Chapter 2.08 of Title
2 of the Palo Alto. Municipal Code, -and any Person who is
designated the representative of the city clerk.
"City Gate" means the portion of the Utility System at
which a Transmission Provider’s power facilities or a Transportation
Provider’s natural gas facilities is interconnected.
"City Manager" means the individual designated as the ~city
manager of the CITY under Section 2.08.140 of Chapter 2.08 of Title
2 of the Palo Alto Municipal Code, and any Person who is
designated the representative of the city manager.
"Commencement Date" means the Day on which this Contract
.is approved by the CITY.
"Conduit" means an underground pipe in which electric
wires are located or situated.
"Confidential Information" means information concerning
the CUSTOMER that is designated as or marked confidentia! and (i)
is protected as a trade secret under the Laws of the state of
California or pursuant to a written agreement of confidentiality,
(2) pertains to the business of the CUSTOMER that is known and made
available only to the CUSTOMER or its Affiliates, or both, and (3)
is considered confidential and privileged information under the
Provisions hereof. It does not mean information that (I) is or may
become generally known in the trade or business of the CUSTOMER or
its Affiliates, or both, (2) is received by the CITY in good faith
from a Third Party who has the right to disc!ose such information
and who has not received such information, directly or indirectly,
from the CUSTOMER or its Affiliates, or both, (3) is in the
possession of the CITY or generally known to the CITY prior to the
Commencement Date hereof, or (4) is required to be disclosed to the
CITY as a condition precedent to any action to be taken by the
CITY.
"Confirmation" means a written notice confirming-the
details of a specific Transaction for the purchase of Energy or the
rendering of Energy Services as set forth in a Confirmation
Schedule.
"Confirmation Deadline" means forty-eight (48) hours after
a Party receives a Confirmation.
"Confirmation Schedule" means a written confirmation of
a Transaction involving the purchase of Energy or the rendering of
Energy Services.
971201 syn 00712~2
"Contract" means this Energy and Energy Services Contract
between the City of Palo ~ito and DEF Corporation.
"Contract Price" means the sum total of any and all Energy
Charges or any and all Energy Services Charges, or both, pursuant
to the execution of a Transaction.
"Contract Year" means a period of twelve (12) consecutive
.Months, beginning on the Commencement Date, and every twelve (12)
consecutive Months thereafter.
"CPUC" means the State of California Public Utilities
Commission and any successor agency or agencies.
"Curtailment" means the act of reducing or interrupting
the delivery of natural gas to one or more of the Delivery Points.
"Customer"means any Person who receives power or natural
gas from an Energy Supplier, including the CITY.
"CUSTOME~’means (Name), a corporation duly organized and
validly existing under the Laws of the State of (fil! in), with a
principa! place of business located at (Street Address and City),
and its directors, officers, employees, partners, principals,
agents and contractors and its successors and permitted assignees.
"Day" means any calendar day/ unless a Business Day is
specified, commencing at 12:00:00 a.m. Pacific Standard Time on a
calendar day and ending at 12:00:00 a.m. Pacific Standard Time on
the following calendar day.
"Decatherm" means a unit of measurement of the~energy
content of natural gas equa! to i0 Therms or 1,000,000 Btu.
"Defaulting Party" means a Party who commits a material
breach and is in default of this Contract.
"Delivery Period" means that period of time beginning on
the Day on which Scheduling obligations of the CITY commence and
ending on the Day on which Scheduling obligations of the CITY
terminate.
"Delivery Point" means the place or !ocation of any of the
CUSTOMER’s Meters at which Energy is delivered by the CITY to the
CUSTOMER pursuant to the execution of a Transaction, as more fully
described in one or more of the Confirmation Schedules.
"Demand" means the total quantity of natural gas or power,
expressed in Therms or Kilowatts, respectively, that the CITY is
required to deliver to one or more of the Facilities at a specified
period of time, as more fully described in one or more of the
Confirmation Schedules.
971201 syn 0071282
"Demand Charge".means the price charged by the CITY to
meet the CUSTOMER’s Demand,’as more fullydescribed in one or more
of the Confirmation Schedules.
"Department of Utilities" means the City of Palo,
Department of Utilities, which represents the City of Palo Alto in
utilities matters.
"Direct Transaction" means the engagement of an Energy
Supplier (other than the CITY acting as an Energy Supplier) by the
CUSTOMER to supply Energy or render Energy Services.
"Distribution Charges" means the Charges imposed by the
CITY for the transportation of Energy from the City Gate to the
Delivery Point(s).
"Early Termination Date" means the Day on which the
termination of the Term for cause becomes effective.
"Emergency" means the occurrence of an event not arising
by an event of Force Majeure which causes physical conditions of
property to pose an imminent threat to the health, safety, or
welfare of any Person and which requires the immediate attention of
a Party.
"Energy" means the quantity of electricity, measured in
Kilowatt-Hours, or the quantity of natural gas, measured in Therms,
or both, that is delivered by the CITY to one or more of the
Delivery Points, as more fully described in one or more of the
Confirmation Schedules.
"Energy Charge" means the price of an Energy product that
is delivered to the CUSTOMER, as more fully described in one or
more of the Confirmation Schedules.
"Energy Services" means the Energy-related services that
are rendered to the CUSTOMER, as more fully described in one or
more of the Confirmation Schedules.
"Energy Supplier" means the Person or entity which is
engaged in the business of selling electricity or natural gas, or
both, to a Customer , as described in one or more of the
Confirmation Schedules.
"Event of Default" means any Provision described in
Article 14 which entitles the Non-Defaulting Party to exercise the
rights set forth in this Contract, or by Law, upon the occurrence
of a default by the Defaulting Party.
"Expiration Date" means the Day on which the Term hereof
expires.
"Extension Term" shall have the meaning set forth in
Section 2.3 hereof.
971201 syn 0071282
"Faci!itles" means the real property, building facilities,
and other improvements an~ appurtenances thereon occupied by the
CUSTOMER within the jurisdictional boundaries of Palo Alto, at
which one or more of the Delivery Points is !ocated, in existence
either at the Commencement Date or during.the Term hereof and. not
located within the Public Right-of-Way or the Public Utility
Easements, to which Energy is dispatched, as more fully described
in one or more of the Confirmation Schedules.
means the Federal Energy Regulatory Commission.
"Force Majeure" means the occurrence of any event having
a materia! adverse effect on the design, construction,
installation, management, operation, testing, use or enjoyment of
the Utility System or the Facilities, which event includes, without
limitation, an Act of God, an act of a superior governmenta!
authority, an act of a public enemy, a labor dispute or strike or
a boycott which could not be reasonably contemplated by the
Party affected thereby, !oss of transmission or transportation
services, a defect in manufactured equipment, fire, floods,
earthquakes, or any other similar cause.
"GAAP" means generally accepted accounting principles
consistently applied.
"Eazardous Materials" means any substance or material
which has been determined by any Agency, including the CITY, to be
capable of posing risk of injury to health, safety, and property,
including petroleum and petroleum products and all of those
materials and substances designated as hazardous or toxic by the
United States Environmental Protection Agency, the California Water
Quality Control Board, the United States Department ofLabor, the
California Department of Industrial~ Relations, the California
Department of Health Services, the California Health and Welfare
Agency in connection with the Safe Water and Toxic Enforcement Act
of 1986, the United States Department of Transportation, the United
States Department of Agriculture, the United States Consumer
Product Safety Commission, the United States Department of Health
and Human Services, the United States Food and Drug Administration
or any other Agency now or hereafter authorized to regulate
materials and substances in the environment. Without limiting the
generality of the foregoing, the term "Hazardous Materials" shall
.include all of" those materials and substances defined~ as "toxic
materials" in Section 66680 through 66685 of Title 22 of the
California Code of Regulations, Division 4, Chapter 30, as the same
may be amended from time to time.
"Improvement"means any addition, alteration, betterment,
construction or modification to the Utility System or the
Facilities.
"Initial Term" shall have the meaning set forth in Section
2.2 hereof.
971201 syn 0071282
6
"Interstate Delivery" means the transmission of
electricity over wires or the transportation ofnatural gas through
pipelines subject to regulation by the FERC.
"Intrastate Delivery" means the transmission . of
electricitY over wires or the transportation of natural gas through
pipelines subject to regulation by the CPUC.
"Kilowatt" or "KW" means a unit of measurement of power
equal to 1,000 watts.
"Kilowatt-Hour" or "KWH" means a unit of measurement of
power consumption of 1,000 watts for.a period of one hour.
"La~’means any administrative or judicia! act, decision,
bill, certificate, charter, code, constitution, opinion, order,
ordinance, policy, procedure, rate, regulation, resolution, rule,
schedule, specification, statute, tariff, or other requirement of
any district, local, municipa!, county, joint powers, state, or
federal agency, or any other Agency having joint or several
jurisdiction over the Parties to this Contract, in effect either at
the Commencement Date or during the Term hereof, including, without
limitation, any regulation or order of an official or quasi-
official entity or body governing the applicable service provided
by the CITY, including the Provisions of this Contract, to which a
Customer may be.subject or bound.
"Letter of Credit" means an irrevocable transferable
standby letter of credit issued by a major United States commercial
bank or a foreign bank with a United States branch office with such
bank having a credit rating of at least "A-’, from S&P or "A3" from~
Moody’s and being in a form reasonably acceptable to the Party in
whose favor the letter of credit is issued.
"Load" means the quantity of Energy required by the
CUSTOMER over a specific period of time, or the amount Of power
delivered.or required at any specific point on the Utility System.
"Load Factor" means the ratio of average Load to Peak Load
during a specific period of time expressed as a percentage.
"Load Monitoring Services" means services which entail,
without limitation, the assessment of the functions, operation and
performance of a Customer’s power facilities and a review of the
efficiency of electricity consumption over one or more periods of
time.
"Loop Flow~ means the difference between the path or paths
on which the Parties have agreed that power will be delivered to
the CUSTOMER and the actual path or paths on which such power is
delivered.
"Loss" means the amount of power expressed as a percentage
that is not delivered by the Energy supplier to the CUSTOMER on
account of ambient conditions existing at the time of transmission.
971201 s}m 0071222
7
"Market-based Energy" means Energy, the price of which is
established on the open m~rket at the California border (in the
case of natural gas) or on the NYMEX (in the case of electricity),
or other comparable index.
"Maximum Daily Quantity" or "MDQ" means the maxlmum
quantity of natural gas that is purchased by the CUSTOMER and is
scheduled for delivery each Day by the CITY to one or more of the
Delivery Points.
"Minimum Daily Quantity" means the minimum quantity of
natura! gas that is purchased by the CUSTOMER and is scheduled for
delivery each Day by the CITY to one or more of the Delivery
Points.
"MCF"means a unit of measurement of the volume of natural
gas equa! to 1,000 cubic feet.
"Megawatt" or "MW" means a unit of measurement of power
equal to 1,000 KW.
"Megawatt-Hour" or "MWH" means a unit of measurement of
power consumption of 1,000 KW for a period of one hour.
"Meter" means the equipment or instrument that measures
the quantity of electricity or natura! gas, or both, delivered by
the CITY to one or more of the Delivery Points.
"Metering Charge" means the Charge(s) for the.purchase,
installation, testing, maintenance, repair and removal of metering
or other.similar data gathering equipment .related to the energy use
of the Customer.
"Mill" means a unit of measurement for the pricing of
Energy, expressed in terms of one-tenth of one cent.
"Ml~Btu" means a unit of measurement of the
natural gas equal to 1,000,000 Btu.
quantity of
"Month" means a calendar month, commencing at 12:00:00
a.m. Pacific Standard Timeon the first Day of the calendar month
and ending at 12:00:00 a.m. Pacific Standard Time on the first Day
of the following calendar month.
"Moody’s" means Moody’s ~Investor Services, Inc. or its
successors and assigns.
"Multiplier" means a factor which is used to convert a
quantity of natural gas measured at one or more of the CUSTOMER’s
Meters into heat or therma! energy for billing purposes, and is
used to convert the average number of Therms per i00 CF of natura!
gas consumed over a specified period of time.
"Nomination"means the quantity of natural gas ordered by
the CUSTOMER for delivery during~ a specified period of time.
971201 syn 00712~2
8
"Non-Defaultlng Party" means any Party who is not a
Defaulting Party.
"I/YMEX" means the New York Mercantile. Exchange.
"Off-Peak Demand" means a level Of Demand of the CUSTOMER
during a specified period of time of a Day, usually commencing at
ii:00 p.m. of the first Day and expiring at 6:00 a.m. of the
following Day.
"Other Gas" means any combustible gaseous or vaporous
mixture which is used to produce heat or thermal energy by burning,
including, without limitation, compressed natura! gas, liquefied
petroleum gas, gas manufactured from coal or oil, gas produced from
biomass, or gas produced at or from a landfill, or a combination of
any of the above items; provided, however, natura! gas is not
considered an Other Gas.
"Parties" means the CITY and the CUSTOMER.
"Party" means the CITY or the CUSTOMER.
"Peak Demand" means a level of Demand of the CUSTOMER
during a specified period of time of a Day, usually commencing at
6:00 a.m. and expiring at ii:00 p.m. on the same Day.
"Peak Load" means the maximum Load consumed or produced
over a specified period of time.
"Person" means any individual,- for profit corporation,
nonprofit corporation, limited liability company, partnership,
limited liability partnership, joint venture, business trust, sole
proprietorship, or other form of business association.
"PG&E" means the Pacific Gas and Electric Company,
corporation duly organized and validly existing under the Laws of
the State of California, its directors, officers, employees,
partners, principals, agents and contractors and its successors and
permitted assignees.
"Poles" mean those poles, to which electric power
distribution lines are attached, that are separately owned by the
CITY, or are jointly owned by the CITY with Pac Bell or PG&E, or
both, pursuant to one or more written agreements.
"Provision" means any agreement,, circumstance, clause,
condition, covenant, fact, objective, qualification, restriction,
recita!, reservation, representation, term, warranty, or other
stipulation in this Contract or in Law that defines or otherwise
controls, establishes, or limits the performance required or
permitted by any Party hereto. All Provisions, whether covenants
or conditions, shall be deemed io be both covenants and conditions.
"Public Right-of-Way" means the areas owned, occupied or
used by the CITY for the purposes of furnishing on a retail basis
971201 s}~ 0071282
9
electricity, natural gas, water, sewer, storm drain, refuse or
communications commodity a~d/or distribution service, and the means
of public transportation, to the general public, including, without
limitation, the public alleys, avenues, boulevards, courts, curbs,
gutters, lanes, places, roads, sidewalks, ~sidewalk planter ar~as,.
streets, and ways, in existence either at the Commencement Date or
at any time during the Term hereof.
"Public Utility Easements" means the areas occupied or
used by the CITY for the purpose of providing Energy to the general
public and all Energy Services offered by the Department of
Utilities, the rights of which were acquired by easements
appurtenant or in gross, or are other interests or estates in real
property,~ or are the highest use permitted to be granted by the
nature of the CITY’s interest in and to the affected rea! property.
This term incorporates all public service easements for utilities
that have been recorded by the CITY with the Recorder of the County
of Santa Clara, California.
"Receipt Point" means a place or location at which
electricity or natura! gas is received by the CITY from its Energy
Supplier.
"Reservation Charge" means a fee payable at the outset by
a recipient of Energy service based on tota! entitlement for gas
transportation services.
"Scheduling"means (i) in reference to the CITY, the act
o~ making power or natura! gas available for delivery to or for the
account of the CUSTOMER or (ii) in reference to the CUSTOMER, the
act of causing the CUSTOMER’s Transmission Provider or
Transportation Provider to make available at one of more of the
Delivery Points sufficient transmission capacity or transportation
capacity to permit such Transmission Provider or Transportation
Provider to receive the quantities of power or natural gas that the
CITY must make available at one or more of the Delivery Points.
"Scheduling Coordination Services" means the arrangement
of the delivery of Energy to.a CUSTOMER by an Energy Supplier who
acts through a Third Party.
"Shrinkage" means the loss of a small percentage of the
volume of natural gas that is transported and delivered to one or
more of the Delivery Points.
"Sole Discretion" means, whenever a Provision rests in the
!’Sole Discretion" of an individual representing a Party to this
Contract, then that individua! must base a decision upon factors as
is deemed appropriate by that individual, and that individual shall
not be required to state any reason for the decision. The other
Party affected by the decision may not compe! a contrary or
different decision on any such matter, and notwithstanding any
other Provision hereof, the individual exercising the "Sole
Discretion" shall not be liable to the other Party for any effect
of the decision.
971201 ~’n 0071282
!0
"S&P"means the Standard & Poor’s Rating Group,.a division
of McGraw-Hill, Inc., or fts successors and assigns.
"Standby Services" means support service that is
available, as needed, to supplement a Customer to replace normally.
scheduled power.
"Storage Charges"~means a Charge for the service in which
natura! gas in received by the seller of the service and held for
the account of the Customer for redelivery at a later time.
"Tax"means any assessment, charge, imposition, license,
or levy (including any utility users tax) in effect either at the
Commencement Date or during the Term hereof and imposed by any
Agency, including the CITY.
"Term"means the Initial Term and the Extension Term, if
applicable.
"Therm" means a unit of measurement.of the heat or thermal
energy content of natural gas. One (i) therm equals I00,000 Btu.
"Third Party" means any ~arty other than the CITY or the
CUSTOMER.
"Transaction"means any agreement or amendment thereto by
the Parties for the purchase of Energy or the rendering of Energy
Services, or both, as set forth in one or more Confirmation
Schedules.
"Transition Cost Recovery Charge" means the cost that is
assessed or levied by the CITY, in order to recover the expenses
and liabilities associated with the uneconomic investment in
electric generation facilities, of any such Person and that,
directly or indirectly, would affect an ongoing Transaction;
provided, however, any such cost will be applied in a non-
discriminatory manner and made applicable to all similarly situated
parties.
"Transmission Provider" means any Third Party that
provides Transmission Service.
"Transmission Service" means the scheduling of the
Interstate Delivery or Intrastate Delivery, or both, of power.
"Transportation Provider" means any Third .Party that
provides Transportation Service.
"T.ransportation Service" means the scheduling of the
Interstate Delivery or Intrastate Delivery, or both, of natural
gas.
"Utilities Director" means the individual designated as
the director of utilities under Section 2.08.200 of Chapter 2.08 of
971201 D~ 0071282
!1
Title 2 of the Palo Alto Municipal Code, and any Person who is
’Vdesignated the representatl e of the director of utilities.
"Utility Rules and Regulations" means the compendium of
utility rules, regulations and rate schedules prepared by the
Department of Utilities and adopted by ordinance or resolutioi of
the Council pursuant to Chapter 12.20 of the Palo Alto Municipal
Code.
"Utility System" means the CITY’s electric power and
natural gas distribution systems, including, without limitation,
all substations, distribution towers, generators, transformers,
busses, wires, poles, vaults,, conduits, capacitors, resistors,
pipes, valves, fittings, and risers that are used to deliver Energy
to Customers.
"Voltage Support Services" means the technical assistance
rendered to a Customer in monitoring the quality and quantity of a
direct electric current passing through an electrical circuit,
including, without limitation, an electrical conductor.
"Year" means a calendar year, unless a Contract Year is
specified, commencing at 12:00:00 a.m. Pacific Standard Time on the
first Day of the calendar year and ending at 12:00:00 a.m. Pacific
Standard Time on the first Day of the fol!owing calendar year.
In additional to the foregoing, other Special Terms are defined
throughou~ the Contract and the Confirmation Schedules.
971201 syn 0071282
12
EXHIBIT
CALCULATION OF TERMINATION PAYMENT
Either Party may terminate this Contract for convenience upon at
least thirty (30) Days prior written notice to the other; and upon
the payment of the applicabletermination payment as more f~lly
described below.
CUSTOMER TERMINATES FOR CONVENIENCE:
If the CUSTOMER terminates this Contract for convenience, the
following Provisions will apply:
A) If the aggregate Energy Charges paid by the CUSTOMER
during the Term were greater than the aggregate Energy Charges
that the CUSTOMER would have paid if the Energy Charges were
calculated in accordance with the utility rate schedule(s)
that would be applicable to the CUSTOMER in the absence of
this Contract, then the CITY shal! pay the CUSTOMER a sum of
money equal to ninety percent (90%) of the difference between
these amounts (i.e., 90% of the excess amount paid by the
CUSTOMER). In such event, the CITY shal! pay the CUSTOMER in
a lump sum, in cash, plus interest at a rate established under
Section 5.3 of the Contract from the termination date until
the date of payment in~fuli, or the CITY may elect to credit
the amount (including interest, if authorized by any CITY
rule, regulation or procedures) against the CUSTOMER’s future
purchases of Energy for a period not to exceed five (5) Years
from the effective termination date. Any amounts remaining
unpaid shall be paid by the CITY to the CUSTOMER in a lump sum
at the end of such five-year period.
B) If the aggregate Energy Charges paid by the CUSTOMER during
the Term were less than the aggregate Energy Charges that the
CUSTOMER would have paid if the Energy Charges were calculated
in accordance with the utility rate schedule(s) that would be
applicable to the CUSTOMER in the absence of this Contract,
then the CUSTOMER shal! pay the CITY a lump sum of money equal
to one hundred ten percent (110%) of the difference between
these amounts (i.e., 110% of the savings realized by the
CUSTOMER). In such event, the CUSTOMER shall pay the CITY in
a lump sum, in cash, plus interest at a rate established under
Section 5.3 of the Contract from the termination date unti!
the date of payment in full.
CITY TERMTNATES FOR CONVENIENCE:
If the CITY terminates this Contract for convenience, the
following Provisions will apply:
A) If the aggregate Energy Charges paid by the CUSTOMER
during the Term were greater than the aggregate Energy Charges
that the CUSTOMER would have paid if the Energy Charges were
calculated in accordance with the utility rate schedule(s)
that would be applicable to the CUSTOMER in the absence of
971201 syn 0071282
13
this Contract, then the CITY shall pay the CUSTOMER a sum of
money equal to one" hundred ten percent (110%) of the
difference between these amounts (i.e., 110% of the excess
amount paid by the CUSTOMER). In such event, the CITY shal!
pay the CUSTOMER in a lump sum, in cash, plus interest at a
rate established under Section 5.3 of the Contract.
B) If the aggregate Energy Charges paid by the CUSTOMER during
the Term were less than the aggregate Energy Charges that the
CUSTOMER would have paid if the Energy Charges were calculated
in accordance with theutility rate schedule(s) that would be
applicable to the CUSTOMER in th4 absence of this Contract,
then the CUSTOMER shall pay the CITY a sum of money equa! to
ninety percent (90%) of the difference between these amounts
(i.e., 90% of the savings realized by the CUSTOMER). In such
event, the CUSTOMER shall pay to the CITY in a lump sum, in
cash, plus interest at a rate establfshed under Section 5.3 of
the Contract from the terminate date until the date of payment
in full, or the CUSTOMER may elect to make monthly payments in
equa! amounts over a five-year period..
APPLICABLE RATE SCHEDULES
For the purposes of this EXHIBIT-"B", the applicable utility
rate schedule(s) shall be:
(I) For current CUSTOMER accounts, the current applicable
utility rate schedule shall apply;
(2)If more than one utility rate schedule applies to a
specific CUSTOMER account, the seasona! energy utility
rate schedule shall apply;
(3)
(4)
If the seasonal utility rate schedule ceases to exist,
the annual utility rate schedule shall apply;.and
If the CUSTOMER adds new CUSTOMER’s Facilities tO its
account, the CITY will evaluate the Load of each of the
CUSTOMER’s Facilities and apply the applicable utility
rate schedules to each of the CUSTOMER’s Facilities.
971201 syn 0071282
14
CONFIDENTIAL INFORMATION
The following attachments to the original contract are not reproduced here as they are
confidential:
Exhibit C, Customer Accounts
Confidential Information, Confirmation Schedule No. 1 For Purchase of Energy
Confidential Information, Confirmation Schedule No. 1 For Acquisition of
Energy Services
ENERGY AND ENERGY SERVICES CONTRACT
SYNTEX (U. S. A.) INC. AND
THE CITY OF PALO ALTO UTILITIES
.[anua~ 1999
CITY OF PALO ALTO
UTILITIE.S
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990107 syn 0071551
ENERGY AND ENERGY SERVICES CONTRACT
BETWEEN
THE CITY OF PALO ALTO
SYNTEX (U.S.A.) INC.
TABLE OF CONTENTS
ARTICLE
1
2
3
4
6
7
8
9
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II
12
13
14
15
16
HEADING
SPECIAL TERMS
TERM AND TERMINATION
ENERGY AND ENERGY SERVICES
EXCEPTIONS TO ENERGY SALES AND SERVICES
ENERGY AND ENERGY SERVICES CHARGES
TAXES
SECURITY DEPOSIT
OBLIGATIONS OF THE PARTIES
INSURANCE
INDEMNITY AND LIMITATIONS
WAIVER
REPRESENTATIONS AND WARRANTIES
ASSIGNMENT
DEFAULT AND REMEDIES FOR DEFAULT
NOTICE
MISCELLANEOUS PROVISIONS
2
3
5
5
6
7
8
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II
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S~Y OF EXHIBITS AIqD ATTACHIMENTS
EXHIBIT ~’A"
EXHIBIT
EXHIBIT
EXHIBIT "D"
CONFIRMATION SCHEDULE NO. I
CONFIRMATION SCHEDULE NO. i
SPECIAL TERMS’
APPLICABLE RATE SCHEDULES
CUSTOMER.ACCOUNTS
COST EFFECTIVENESS CRITERIA FOR ENERGY
EFFICIENCY PROJECTS
(ENERGY)
(ENERGY SERVICES)
990107 ~ 0071551
ENERGY AND ENERGY SERVICES CONTRACT
(Physical Contract)
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~/~; THIS ENERGY AND ENERGY SERVICES CONTRACT, dated a~ of/ , ~, is made. and entered into by and between the CITY
O~ PASO ALTO and SYNTEX (U.S.A.) INC., in reference to the
following facts:
A. The CITY, the owner of natural gas and electric
utility distribution systems which are regulated by the City
Counci!, supplies and distributes Energy and Energy Services to
Palo Alto residents and businesses at prices which are adopted by
resolution and established under rates set forth in the Utility
Rules and Regulations.
B. Since 1992, substantial changes in federal and
California law have resulted in the deregulation of the natural gas
and electric utility industries. In July 1994, the CITY first
offered to eligible industrial Customers and large commercial
Customers an opportunity to acquire Transportation Service without
purchasing natura! gas from the CITY. On March 24, 1997, the City
Council responded to developments prompted by the passage of
Assembly Bill 1890 in September 1996 by adopting Resolution No.
7657, which authorizes Direct Transactions between the CITY’s
Customers and alternate suppliers of electricity and further
authorizes the CITY to develop new energy products and services and
engage in such other actions as will~benefit the CITY’s Customers.
C. -The CITY has introduced Energy Services that will be
made available to eligible industrial Customers and large
commercial Customers. SYNTEX (U.S.A.) INC. has been determined to
be eligible to receive Energy and Energy Services at one or more of
its Facilities.
THE PARTIES AGREE as follows:
ARTICLE i.SPECIAL TERMS
i.I The special terms that are denoted by initial or
full capitalized letters in this Contract and the Confirmation
Schedules shall have the meanings set forth in EXHIBIT "A", unless
the context clearly indicates otherwise.
1.2 The CITY shall have the right, but not the
obligation, to adopt standard terms and conditions governing the
CITY’s use of its Utility System, and every part thereof, at any
time during the Term hereof by ordinance or resolution, or both, as
a result of changes in federal, state or local law or policy.
990107 s~n 0071547
1.2.1 In the event that the CITY adopts standard
terms and conditions gbverning the CITY’s use of its Utility
System which (I) would materially and adversely affect the rights
or obligations of the CUSTOMER, then, upon~ the request of the
CUSTOMER, the Parties shal! in good faith confer and attempt to
renegotiate the Provisions of this Contract which are affected
thereby.
1.2.2 If the Parties are unable to reach mutual
agreement on such renegotiated Provisions within thirty (30) Days
after the Day on which the CUSTOMER’s election to renegotiate is
communicated, in writing, to the CITY, the CUSTOMER will have the
right for a period of sixty (60) more Days to terminate this
Contract by giving not less than thirty (30) Days written notice of
termination to the CITY. Any such termination shall be deemed a
termination by the CUSTOMER for convenience and the CUSTOMER shall
be obligated to pay to the CITY , or shall be entitled to receive
from the CITY, respectively, the difference between the amount that
the CUSTOMER would have paid in the absence of this Contract and
the amount that the CUSTOMER actually paid under this Contract.
Unless otherwise agreed to by the Parties during the course of
renegotiations, the Charges in effect and applicable to the sale of
Energy and the rendering of Energy Services hereunder shall
continue in effect during the period of renegotiation and notice
under the Provisions of this Article.
1.2.3 Subject to Subsection 1.2.2 above, to the
degree or extent any special term in this Contract is, directly, in
conflict with the standard terms and conditions adopted by the CITY
following the execution of this Contract, the applicable Provision
that imposes the higher duty or standard shall govern.
ARTICLE 2.TERM AND TERMINATION
2.1 This Contract shall be binding on the Parties on the
Commencement Date.
2.2 The Initia! Term ~ereof shall be approximately five
(5) years, beginning on the Day of the Billing Period commencing
in January 1999 and expiring on the Day of the Billing P@riod
ending in December 2003.
2.3 The Initial Term may be extended by the Parties, by
mutual agreement, provided, however, the Initial Term and any
Extension Term may be terminated earlier in accordance with the
Provisions hereof. The City Manager, acting on behalf of the CITY
and with the approval of the City Attorney as to form, will approve
the application of the CUSTOMER to extend the Initial Term,
provided that:
990107 s.vn 0071547
2
2.3.1 The CUSTOMER gives to the Utilities Direct
acting on behalf of the CITY, a written request to extend the Term
not less than thirty (30) Days prior to the .expiration of the
Initial Term;
2.3.2~ The CUSTOMER submits any ahd all documents and
information reasonably requested by the CITY in support o~ the
written request to extend the Term and complies with al! other
reasonable CITY-established terms, conditions and procedures
pertaining to the request to extend the Term;
2.3.3 The CUSTOMER is not then in default under the
Provisions hereof on the Day that the CUSTOMER submits the w~itten
request to extend the Initial Term; and
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2.3.4 The Parties, by mutual agreement, agree to be
bound by all other Provisions, if any, governing the rights and
obligations of the Parties during the Extension Term.
2.4 T~is Contract may be terminated for convenience by
a Party in accordance with the Provisions of Section 2.5, provided,
however, the Party wishing to terminate for convenience shall give
the other Party not less than thirty (30) Days’ prior written
notice as a condition precedent to the effective date of any notice
of termination for-convenience.
2.5 One or more Provisions may be renegotiated by the
Parties only for a period of 90 Days commencing not later than 120
Days prior to the end of the second and fourth Contract Years. The
Party initiating a request to renegotiate a Provision shall give
the other Party written notice of its request as a condition
precedent to the other Party’s obligation to enter into
renegotiations. If the Parties fai! to duly execute an amendment
to or a restatement of this Contract before the expiration of the
ninety-day period, then either Party may terminate for convenience
in accordance with the requirements of Section 2.4, otherwise, this
Contract shall remain in effect.
2.5.1 The CUSTOMER acknowledges and understands that,
if this Contract is terminated for convenience or for cause by any
Party, it will be obligated to pay for electric utility services
provided by the CITY in accordance with the applicable utility rate
schedule of the CITY generally defined in EXHIBIT "B".
ARTICLE 3. ENERGY AND ENERGY SERVICES
3.1 Subject to the Provisions hereof, the CITY agrees to
sell Energy and render Energy Services to the CUSTOMER, and the
CUSTOMER agrees to purchase Energy and receive Energy Services from
the CITY, as more fully described in one or more of the
Confirmation Schedules. The CITY’s obligation to sell Energy or
990107 s)~ 0071547
3
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render Energy Services is expressly conditioned on the right of the
CITY to offer or withdraw.any kind of Energy or Energy Services now
or hereafter offered to any Customer, including the CUSTOMER,
during the Term of this Contract ; providedi however, the CITY
shall continue to offer those Energy or Energy Services which the
CITY is committed to sel! or render to the CUSTOMER during the-Term
of this Contract. Nothing in this Contract shall be deemed or
construed to grant, convey, Create, or vest in a Party any estate
or interest in the tea! property or p~rsonal property of the other
Party, except as may be provided herein.
3.2 Subject to the applicable Utilities Rules and
Regulations, which shall take precedence, the CITY, and its
officers, employees, agents and contractors shall have reasonable
access to the CUSTOMER’s Facilities to inspect and perform
alterations, mafntenance and repair work on the Utility System, or
any portion thereof, that is !ocated at the Facilities subject to
the following Provisions: (a) the CITY shall provide the CUSTOMER
with five (5) days prior notice of any occasion for which access
is sought, except in the event of an Emergency; (b) the CITY’s
representatives shall check in with the CUSTOMER’s designated
representative upon arrival at the Facilities, and the CITY’s
representatives shall be escorted at al! times in the Sole
Discretion of the CUSTOMER; and (c) the CITY shall repair and
restore (or at the election of the CUSTOMER reimburse the CUSTOMER
for the reasonable costs of repairing and restoring) all damage to
the CUSTOMER’s Facilities ’caused by the CITY’s representatives.
3.3 Subject to the applicable Utilities Rules and
Regulations, which shal! take precedence, the CUSTOMER shal!
maintain at al! times during the Term of this Contract its
eligibility to purchase Energy and receive Energy Service pursuant
to the eligibility criteria set forth in the Utility Rules and
Regulations.
3.4. The procedures for the initiation of the purchase of
Energy and the rendering of Energy Services shall be identified by
the Parties in one or more of the Confirmation Schedules, to the
extent the procedures are-not established under the Utility Rules
and Regulations.
3.5 As a condition precedent to the sale of Energy by
the CITY pursuant to the Provisions of this Contract, the CUSTOMER
shal! make or cause to be made any and all necessary modifications
to the Facilities to the reasonable satisfaction of the Utilities
Director, acting on behalf of the CITY. Any such modifications
shall be set forth in one or more of the Confirmation Schedules.
990107 syn 0071547
ARTICLE 4,EXCEPTIQN$ TQ ENERGY SALES AND SERVICES
4.1 The CITY shall be temporarily excused from the
obligation to sell Energy or render Energy Services, as the case
may be, to the CUSTOMER under any of the following conditions:
(a)
period of time
Energy;
The occurrence of an event of Force Majeure for the
that the CITY is temporarily unable to deliver
(b) The failure of the CUSTOMER to perform a material
obligation which is a condition precedent to the CITY’s obligation
of performance.
ARTICLE 5. ENERGY AND ENERGY SERVICES CHARGES
5.1 The Charges for Energy and Energy Services,
including, without limitation, Connection Charges, Demand Charges,
Energy Charges, Energy Service Charges, Metering Charges,
Reservation Charges, Distribution Charges, Storage Charges and
Charges for Standby Service, Shal! be as set forth in one or more
Confirmation Schedules.
5.2 On or before the fifteenth Day after the end of the
Billing Period, the CITY shall submit to the CUSTOMER a billing
statement for each¯ Billing Period, in which Energy is sold or
Energy Services are rendered to the CUSTOMER. Al! amounts shall
become due and payable within thirty (30) Days of the date of the
billingstatement. In the event a delay in distributing’the bill
statement is caused by the CITY, an extended payment period beyond
30 days shall be made available to reflect such delay and late
payment fees shall be waived during this extended period. Payment
shall be made in United States dollars and delivered or mailed to
the Customer Service Center, Department of Utilities, City of Palo
Alto, 4th F!oor, 250 Hamilton Avenue, Palo Alto, CA 94301 or Post
Office Box 10250, Palo Alto, CA 94303.
5.3 Except as otherwise provided in this Cbntract or any
Confirmation Schedule, a billing statement that is not paid in full
within the time permitted hereunder or as may be established under
the~Utility Rules and Regulations will accrue interest charges on
the unpaid balance at the rate established in the Utility Rules and
Regulations or at the maximum rate allowed by Law, whichever is
lower.
5.4 In addition to the rights of the CITY reserved under
this Contractor allowed by Law, if the CUSTOMER fails to pay the
billing statements as they shall become due for a period of three
(3) consecutive Billing Periods, the CITY, acting by and through
the Utilities Director in his Sole Discretion, may suspend sales of
Energy and the rendering of Energy Services to the CUSTOMER, assess
990107 syn 0071547
5
|
!
Charges for Energy and Energy Services set forth in the utility
rate schedules under the Utility Rules and Regulations, or
undertake such other reasonably necessary action, including,
without limitation, imposing security deposit and other financial
reportingrequirements.
5.5 The CITY acknowledges that the CUSTOMER has
requested the CITY to maintain the confidentiality of information,
including, without limitation, information pertaining to the
CUSTOMER’s Load, Demand and the Charges paid to the CITY, and, to
the extent permitted by Law, any such information shall be deemed
Confidential Information under this Contract and shall not .be
disclosed by any Party to a Third Party, unless such disclosure is
compelled by Law. If any Third Party seeks access to Confidential
Information that is protected from disclosure under this Contract,
the Party receiving the request shal! inform the other Party in a
timely manner in order that either Party or the Parties may
initiate timely appropriate legal action to prevent such
disclosure. Section 14.4 notwithstaDding, damages for breach of
this confidentiality by a Party shall be established and awarded
after appropriate legal action by the Party injured by such
disclosure is instituted.
ARTICLE 6. TAXES
6.1 The CUSTOMER shall pay before delinquency and
Without notice or demand any Utility Tax which.is levied, imposed
or assessed in compliance with Laws against the CUSTOMER’s income
or the Facilities, or for which the CUSTOMER may become liable
under the Provisions hereof, and any payment made under this
Article shall not reduce the amount of the Energy Charges, Energy
Service charges or any other Utility Charge that is required to be
paid by the CUSTOMER to the CITY, as follows:
6.1.1 The CUSTOMER promptly shall pay any Tax, fine or
penalty which may be due and payable to the CITY in connection
with this Contract and all licenses and privileges granted
hereunder.
6.2 In the event that the CUSTOMER desires in good faith
to contest or review by appropriate legal or administrative
proceedings any Utility Tax specified or reasonably contemplated
under the Provisions of this Article 6, the CUSTOMER shall, at
least ten (i0) Days prior to the delinquency of any Utility Tax, or
within the period of time allowed by Law, give the CITY written
notice of its intention to so contest. The CUSTOMER may withhold
payment of the Utility Tax being contested if, but only if,
nonpayment is permitted during the pendency of such proceedings
without the foreclosure of any Utility Tax lien or the imposition
of any fine or penalty. The contest shall be prosecuted to
completion without unreasonable delay and at the CUSTOMER’s sole
9~)107 syn 0071547
6
I cost and expense. Within ten (i0) Days or the period of ti
allowed by Law after the ~inal determination of the amount due from
the CUSTOMER with respect to any contested Utility Tax, the
CUSTOMER shall pay the amount so .determined to be due, together
with interest thereon to the extent required by law. The failure
to pay any Utility Tax hereunder (except as provided by ~this
Section 6.2) shall constitute an Event of Default by the CUSTOMER,
and the obligation to pay the same shall survive the.expiration or
earlier termination hereof.
I
i
i
6.3 The CUSTOMER covenants and agrees to indemnify and
hold harmless the CITY from and against any cost, expense or damage
~resulting from such contest or proceeding, and further covenants
and agrees to indemnify and hold harmless the CITY from and against
any liability, loss or damage resulting from any Utility Tax
required to bepaid by the CUSTOMER, from any other sums imposed
thereon, and from any proceedings to enforce the collection of any
Utility Tax for which the CUSTOMER. may be liable, provided,
however, that the foregoing shall not apply to any contest or other
proceeding relating to any Utility Tax imposed by the CITY.
6.4 If the CUSTOMER fails to pay any Utility Tax
required to be paid by the CUSTOMER hereunder, the CITY~ has the
right, but not the obligation, on five (5) Days prior written
notice to the CUSTOMER following the assessment of any delinquency
against the CUSTOMER, to pay, discharge, or adjust such Utility Tax
for the CUSTOMER’s benefit. In such event, the CUSTOMER, upon
demand of the CITY, promptly shall reimburse the CITY for the full
amount paid, discharged or adjusted by the CITY, together with
interest thereon from its due date at the maximum rate of interest
allowed by Law until paid. ihny receipt showing payment by the CITY
on.behalf of the CUSTOMER shall be prima facLe evidence that the
amount of such payment was necessary and reasonable and made by the
CITY on the CUSTOMER’s behalf.
~d%TICLE 7.SECURITY DEPOSIT
7.1 The CITY, acting by and through the CITY Manager,
may require a security deposit to be posted by the CUSTOMER for any
reasonable fixed period of time (not to exceed the duration of the
Term) under the following conditions:
(a) Whenever the CUSTOMER has failed to pay billing
statements in a timely manner for two (2) consecutive Billing
Periods, or there exists some other Event of CUSTOMER Default that
bears on the CUSTOMER’s financial capability; or
(b) Whenever the rights and obligations of the CUSTOMER
under this Contract shall be assumed by an Affiliate of the
CUSTOMER.
990107 syn 0071547
7
(c) If a security deposit is required by the CITY, the
CUSTOMER shall comply with such requirements in a timely manner,
and a failure thereof shall constitute an Event of Default. The
requirements for the posting of a security deposit and its return
to the CUSTOMER shall be as set forth in the Utility Rules and
Regulations.
7.2 In addition to the foregoing, the City Manager , in
good faith, may require the CUSTOMER to periodically submit one or
more financial statements and information if she determines that it
is reasonably necessary to document the CUSTOMER’s ability to
perform, and, in connection herewith, the the requirements of the
Utility Rules and Regulations pertaining to the provision of such
financial statements shall apply to the Parties.
ARTICLE 8.QBLIGATIONS OF THE PARTIES
8.1 The CUSTOMER will use reasonable efforts to
maintain, service and repair the Facilities in a manner that
facilitates the provision of Energy under this Contract. The
interconnection of the Utility System, including the CUSTOMER’s
Meter(s), shall be effected by the mutual cooperation of the
Parties.
8.2 The CITYwill use reasonable efforts to construct,
maintain, service and repair its Utility System, including the
CUSTOMER’s Meter(s), to assure the reliable delivery of Energy to
the CUSTOMER.
ARTICLE ~. INSURANCE
9.1 During the Term hereof, the CUSTOMER, at its sole
cost and expense, shall obtain and maintain or cause to be obtained
and maintained the policies of insurance or give proof of a
program of self-insurance and the amounts specified in the
Confirmation Schedule(s)> or if such requirements are not addressed
in the Confirmation Schedule(s), in the Utility Rules and
Regulations, including, without limitation, workers compensation
and employers liability insurance, commercial general liability
insurance, and fire all risk replacement cost insurance.
ARTICLE I0.INDEMNITY AND LIMITATIQNS
i0.I Each Party shall indemnify, protect, defend (with
counsel reasonably acceptable to the other Party) and hold harmless
the other Party, its counci! members, directors, officers,
trustees, employees, partners, principals, contractors, agents and
representatives, from and against any and al! administrative and
judicial proceedings and orders, charges, claims, costs, damages,
demands, expenses, fines, judgments, liabilities, losses,
penalties, and remedial actions Of any kind (collectively,
990107 syn 0071547
8
"Damages"), including, without limitation, reasonable attorney’s
fees and the costs of defense arising, directly or indirectly, in
whole or in part, out of° such~Party’s activities or such Party’s
property described in this Contract and not arising out of the sole
negligence or willful misconduct of the other Party. The other
Party shall be liable only for the Damages arising from its
negligence or willful misconduct, and shall not be responsible for
any Damages occurring by reason of anything done or omitted to be
done by any Third Party who is not an agent or representative of
that Party.
ARTICLE ii. WAIVER
Ii.I The consent by a Party to any act by the other
Party shal! not be deemed to imply consent or to constitute the
waiver of a breach of any Provision hereof or a continuing waiver
of any subsequent breach of the same or any other Provision, nor
shall any custom or practice which may arise between the Parties in
the administration of any part of the Provisions hereof be
construed to waive or lessen the right of a Party to insist upon
the performance by the other Party in strict accordance with the
Provisions hereof.
11.2 The CUSTOMER waives any and-all claims or causes of
action against the CITY, or its council members, officers,
employees, and agents, which it may now or hereafter have at any
time for any economic or non-economic loss or damage suffered by
the CUSTOMER as a result of a Curtailment of Energy sold to the
CUSTOMER, where the Curtailment is beyond the reasonable contro! of
the CITY, except as such claim or cause of action may arise from
~he active negligence or the willfu! misconduct of the CITY, its
council members, officers, employees, or agents. In the event of
a Curtailment, the CITY shal! use reasonable efforts to obtain
Energy from alternate Energy Suppliers.
ARTICLE 12.REPRESENTATIONS AND WARRANTIES
12.1 The CUSTOMER represents and warrants:
12.1.1 It is a corporation duly organized and validly
existing and in good standing under the Laws of the State of
Delaware. It has all requisite corporate power and authority to
own or lease its property, tea! and personal, and operate its
business as and where it is now being conducted.
12.1.2 It has the power and authority to enter into this
Contract and perform its obligations hereunder. The execution,
delivery and performance hereof have been duly authorized by all
necgssary corporate actions and proceedings. This Contract is (and
any other instrument, document or writing to be executed and
delivered by the CUSTOMER pursuant hereto will be) legal, valid and
990107 syn 0071547
9
binding obligations of the CUSTOMER, and enforceable against the
CUSTOMER in accordance with the Provisions hereof except as may be
limited by applicable Laws.
12.1.3 The execution and delivery hereof and any other
instrument, document or writing contemplated hereby by the CUSTOMER
will not conflict with or violate or constitute a breach or default
under the articles of incorporation or bylaws of the CUSTOMER
12.1.4 All information, financial statements, records,
reports, resolutions, certifications and other documents or
writings which will be submitted by the CUSTOMER pursuant to the
Provisions hereof will be true and correct at the time .such
information, financial statements, records, reports, resolutions,
certifications and other documents or writings are submitted or
made available to the CITY.
12.2 The CITY represents and warrants:
12.2.1 It is a municipa! corporation duly organized and
validly existing and in good standing under the Laws of the State
of California. It has all requisite corporate power and authority
to own or lease its property, rea! and personal, and operate its
business as and where it is now being conducted.
12.2.2 It has the power and authority to enter into this
Contract and perform its obligations hereunder. The execution,
delivery and performance hereof have been duly authorized by all
necessary actions and proceedings. This Contract is (and any.other
instrument, document or writing to be executed and delivered by the
CITY pursuant hereto will be) legal, valid and binding obligations
of the CITY, and enforceable against the CITY in accordance with
the Provisions hereof except as may be limited by applicable Laws.
12.2.3 The execution and delivery hereof and any other
instruments, documents or writings contemplated hereby by the CITY
will not conflict with or violate any provision of the Charter of
the City of Palo Alto or the Palo Alto Municipal Code.
12.2.4 To the extent required by Law, it will obtain the
authorization of the CPUC or FERC, or both, to provide Energy
within and without the jurisdictional boundaries of Palo Alto, and
to operate as an energy service provider..
12.2.5.The CITY will use reasonable efforts to assure
that its systems required for-the provision of Energy and Energy
Services are fully Year 2000 compliant.
990107 syn 0071547
10
ARTICLE 13.
13.1 The CUSTOMER may assign or transfer, pursuant to a
merger or sale of all or substantially all of the assets or stock
of the CUSTOMER, al! of its rights and obl’igations under this
Contract to any Person, so long as the" surviving or purchising
entity asstunes, in writing, all of the obligations of the CUSTOMER
under this Contract, and the CITY, acting by and through the City
Manager, confers its approval, which shal! not be unreasonably
withheld. The CUSTOMER may assign some or all of its rights
hereunder to any Affiliate of the CUSTOMER, provided that the
CUSTOMER gives thirty (30) Days prior written notice to the City
Manager and the City Attorney and obtains the written approva! of
the City Manager acting , which consent shal! not be unreasonably
withheld.
13.2 Any assignment, transfer, license, conveyance,
~sale, hypothecation or encumbrance hereof by the CUSTOMER not
authorized hereunder shall be null and void, and, at the option of
the CITY, acting by and through the City Manager with the approval
of the City Attorney, shal! constitute an Event of CUSTOMER
Default.
13.3 The CUSTOMER, as assignor, and any Person,
including an Affiliate, as assignee, to whom the rights and
obligations of the CUSTOMER under this Contract are assigned shall
be and remain jointly and severally liable for the performance of
all obligations of the CUSTOMER under this Contract.
ARTICLE 14.DEFAULT AND REMEDIES FOR DEFAULT
14.1 This Contract may be terminated by the CITY upon
the occurrence of a default by the CUSTOMER under this Contract
("Event of CUSTOMER Default"), and the CUSTOMER fails to cure the
same within thirty (30) Days or such longer period of time as is
provided.below, after receipt of notice thereof from the CITY, or,
when the cure reasonably requires more than thirty (30) Days, the
failure of the CUSTOMER to commence to cure within such thirty (30)
Days and thereafter diligently and .continuously p~osecute such cure
to completion, including, without limitation, any of the following
Events of Default:
14.1.1 Failure to pay any Energy Charges or Energy
Services Charges , when due, unless the CUSTOMER in good faith
disputes all or any portion of such Energy Charges and Energy
Services Charges, in which case the CUSTOMER shall pay only the
undisputed portion, if any, until such dispute is resolved;
14.1.2 Failure to pay any Utility Tax, when due, or the
failure to perform any other obligation requiring the payment of
money under the Provisions hereof, and the failure continues for a
ii
990107 syn 0071547
period of forty-five (45)~Days, unless the CUSTOMER in good faith
disputes all or any portiQn of such Utility Tax, in which case the
CUSTOMER shall pay only the undisputed portion, if any, until such
dispute is resolved;
14.1.3 Failure to observe, perform or comply with any
material Provision hereof required to be observed, performed or
complied with by the CUSTOMER;
14.1.4 Assignment or transfer of its interest in this
Contract, whether voluntarily or by operation of Law, in violation
of the Provisions hereof;
14.1.5 General assignment of its assets for the benefit
of its creditors;
14.1.6 Filing by or against the CUSTOMER a petition to
have the CUSTOMER adjudicated a bankrupt, or a petition for a
reorganization or arrangement under any Law relating to bankruptcy
or insolvency, unless the same is dismissed within one hundred
eighty (180) Days after the same~is instituted;
14.1.7 A Person other than the CITY obtains an order or
decree in any court of competent jurisdiction enjoining or
prohibiting the CUSTOMER from performing under this Contract, and
such order or decree is not Vacated within one hundred eighty (180).
Days after the granting thereof, unless the CUSTOMER upon the
written demand of the CITY indemnifies the CITY against loss or
damage suffered by the CITY as a result of the CUSTOMER’s
nonperformance pursuant to such order or decree; and
14.1.8 Any representation, warranty, or statement made
by the CUSTOMER in this Contract that shall prove to have been
incorrect in any material respect when made.
If there is an Event of CUSTOMER Default, the CITY shall give
notice to the CUSTOMER at least thirty (30) Days before any
termination shall become effective.
14.2 This Contract may be terminated by the CUSTOMER
upon the occurrence of any of the following defaults by the CITY
(collectively, Event of CITY Default), including, without
limitation:
14.2.1 Failure to observe, perform or comply wit’h any
material Provision hereof required to be observed, performed or
complied with by the CITY, and the CITY fails to cure the same
within thirty (30) Days, Or, when the cure reasonably requires more
than thirty (30) Days, the failure of the CITY to commence to cure
within such thirty (30) Days and thereafter diligently and
continuously prosecute such cure to completion;
990107 syn 0071547
12
~.benefit14.2 2 General assignment of its assets for the
of its creditors, or the filing by or against the CITY a petition
.to have the CITY adjudicated a bankrupt, or a petition for a
reorganization or arrangement under any Law relating to bankruptcy
or insolvency, unless the same is dismissed’ within one hundred
eighty (180) Days after the same is instituted, unless the CITY
upon the written demand of the CUSTOMER indemnifies the CUSTOMER
against loss or damage suffered by the CUSTOMER as a result of the
CITY’s non-performance pursuant to such order or decree; and
14.2.3 A Personother than the CUSTOMER obtains an order
or decree in any court of competent jurisdiction enjoining or
prohibiting the CITY from performing under this Contract,~ and such
order or decree is not vacated within one hundred.eighty (180) Days
after the granting thereof, unless the CITY upon the written demand
of the CUSTOMER indemnifies the CUSTOMER against loss or damage
suffered by the CUSTOMER as a result of the CITY’s non-performance
pursuant to such order or decree.
If there is an Event of CITY Default, the CUSTOMER shall give
notice to the CITY at least thirty (30) Days before any
~termination shall become effective.
14.3 In addition to all other rights and remedies
provided by Law or otherwise provided in this Contract, to which
the Non-Defaulting Party may resort cumulatively, or in the
alternative, the Non-Defaulting Party may:
14.3.1 Except as otherwise provided herein, keep this
Contract in effect and enforce all of its rights and remedies
hereunder, including the right to payment of all Energy Charges and
Energy Services Charges and Other Charges as they may become due,
or the right to delivery of Energy and Energy Services, by
appropriate lega! action;
14.3.2 Seek the specific performance hereof by the
Defaulting Party or other rights or remedies at law or in equity;
and
14.3.3 Terminate for cause this Contract by giving
notice of termination.
14.4 NOTWITHSTANDING ANY OTHER’ PROVISION OF THIS
CONTRACT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY
CONSEQUENTIAL, INDIRECT, LIQUIDATED, INCIDENTAL OR SPECIAL DAMAGES
OR LOST REVENUE OR LOST PROFITS TO ANY PERSON ARISING OUT OF THIS
CONTRACT OR THE PERFORMANCE OR NONPERFORMANCE OF ANY PROVISION OF
THIS CONTRACT, EVEN IF SUCH PARTY HAS BEEN INFORMED OF THE
POSSIBILITY OF SUCH DAMAGES. THE CITY’S TOTAL LIABILITY FOR ANY
CLAIM OR DEMAND OF THE CUSTOMER ARISING OUT OF THIS CONTRACT SHALL
NOT EXCEED THE AMOUNT OF THE ENERGY CHARGES PAID BY THE CUSTOMER
990107 syn 0071547
13
UNDER THIS CONTRACT TO THE CITY PRIOR TO THE DATE OF CLAIMOR
DEMAND.
14.5 Neither the CUSTOMER nor the’ ~CITY -shall be in
default in the performance of any obligations under this Contract
when a failure of performance shall be due to an event of Force
Majeure.
14.6 Neither the CUSTOMER nor the CITY shall be relieved
of its obligation to perform if such failure is due to causes
arising out of its own negligence or due to removable or remediable
causes which it failsto remove or remedy within a reasonable time
period.
14.7 Either the CUSTOMER or the CITY, if rendered unable
to fulfill any of its obligations under this Contract by reason of
an event Of Force Majeure, will give prompt written notice of such
fact to the other and shall exercise due diligence to remo~e such
inability with all reasonable speed.
ARTICLE 15.NOTICE,,
15.1 All notices which shall or may be given pursuant to
this Contract shal! be in writing and delivered by the United
States Postal Service, by means of private~ express delivery
systems, or by facsimile transmission, provided a copy of the same
is followed by delivery by the United States Postal Service or by
private express delivery systems, as follows:
CITY:City of Palo Alto
250 Hamilton Avenue
P. O. Box 10250
Palo Alto, CA 94303
Attn.: City Clerk
Telephone No.: (650) 329-2571
Copy to:
CUSTOMER:
City of Palo Alto
250 Hamilton Avenue
P. O. Box i0250~
Palo Alto, CA 94303
Attn.: Director of Utilities
Telephone No.: (650) 329-2277
SYNTEX (U.S.A.) INC.
3401 Hillview Road
Palo Alto, CA 94304
Attn.: Jerry Meek
Telephone No.: (650) 852-3180
FAX No.: ~ (650) 855-5078
99~107 s)~ 0071547
14
Copy to:SYNTEX (U.S.A.) INC
3401 Hillview Road
Palo Alto, CA 94304
Attn.: Legal Affairs Division
Telephone No.: (650) 496-6715
FAX No.: (650) 852-1338
Notices hereunder shall
addressee.
be effective upon delivery to the
ARTICLE 16.MISCELLANEOUS PROVISIONS
16.1 This Contract contains the entire understanding
between the Parties with respect to the subject matter herein.
There are no representations, warranties% agreements or
understandings (whether oral or written) between the Parties
relating to the subject matter hereof which are not fully expressed
herein. This Contract may not be amended except pursuant to a
written instrument signed by the Parties. This Contract shall be
binding upon and inure to the ~benefit of the successors and
permitted assignees of the Parties. The Article headings hereof
are inserted for convenience of reference only, are not a part
hereof and shall have no effect on the construction or
interpretation hereof. This Contract may be executed inany number
of counterparts, each of which shall be an original, but all o~
which together shall constitute one and the same instrument. All
exhibits, Confirmation Schedules and amendments thereto referred to
in this Contract and any addenda, attachments, and schedules which
may, from time to time, be referred to ~in any duly~ executed
amendment to this Contract are by Such reference incorporated in
this Contract and shall be deemed a part hereof. In the event of
a conflict between the terms of this Contract and the
attachments/exhibits/schedules hereto, the terms of this Contract
shall govern.
16.2 This Contract shall be governed by and construed in
accordance with the Laws of the State of California without regard
to its conflicts of laws rules or principles. In the event that
suit is brought by a Party, the Parties agree that trial of such
action shall be vested exclusively in the state courts of
California, County of Santa Clara, or in the United States District
Court, Northern District of California, in the County. of Santa
Clara. If any Provision is held by a court of competent
jurisdiction in a final judicial action to be void, voidable, or
unenforceable, such Provision shall be deemed severable from the
remaining Provisions and shall in no way affect the validity of the
remaining portions hereof.
16.3 Each Party and its counsel have reviewed this
Contract. Accordingly, t~e normal rule of construction to the
l 990107 syn 0071547
15
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the construction and interpretationhereof.
16.4 Time is of the essence. For the purposes hereof~
the time in which an act is to be performed shal! be computed by
excluding the first Day and including the last. If the time in
which an act is to be performed falls on a Saturday, Sunday, or any
Day observed as a official holiday by the CITY, the time for
performance shall be extended to the following Business Day.
IN WITNESS WHEREOF, this Contract is executed by the duly
appointed representatives of the Parties on the date first above
stated in the City of Palo Alto, County of Santa Clara, California.
AgPROVZDAS TO FORM:
Senior Asst. City Attorney
APPROVED:
Director~f Uti~ie~
:ITY OF
ger
~SYNTEX (U.S.A.) INC.
B
Its:
[Two signatures to be notarized]
(Compliance with Corp. Code ~ 313 is
required if the entity on- whose behalf
this contract is signed is a corporation.
In the alternative, a certified corporate
resolution attesting to the signatory
authority of the individuals signing in
their respective capacities is acceptable)
SUbi4ARY OF EXHIBITS A!qD ATTACHMENTS
EXHIBIT ~’A" .
EXHIBIT "B"
EXHIBIT ~’C"
EXHIBIT "D"
CONFIRMATION SCHEDULE NO. i
CONFIRMATION SCHEDULE NO. 1
SPECIALTERMS
APPLICABLE RATE SCHEDULES
CUSTOMER ACCOUNTS
COST.EFFECTIVE CRITERIA FOR ENERGY EFFICIENCY
PROJECTS
(ENERGY)
(ENERGY SERVICES)
16
990107 syn 0071547
CERTIFICATE OF ACKNOWLEDG~4ENT
(Civil Code § 1189)
STATE OF
COUNTY OF
)
)
)
On =<~..D~I~.%.o~ b i /~ { , before me,. the undersigned, a
notary public in andU fo~ skid County, personally appeared
(check one) .~ personally known to me ([ ]or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument, and acknowledged to me
that he/she/they executed the same in his/ her/their authorized
capacity(is), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Commi~on iI 1079495
Lv Notary Publ:z -- Califomla
Santa Clara County
~ Comm, Expires Dec 3.1999
STATE OF
COUNTY OF
CERTIFICATE OF ACKNOWLEDGMENT
(Civil Code § 1189)
)
)
)
On
notary public in and for
, before me, the undersigned, a
said County, pe~sonally appeared
,
(check one) [ ] personally known to me ([ ] or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument, and acknowledged to me
that he/she/they executed the same in his/ her/their authorized
capacity(is), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
17i990107 syn 0071547
EXHIBIT ~A"
SPECIAL TERMS,,
"Administrative Services Director" means the individual
designated as the director of administrative services under Section
2.08.150 of Chapter 2.08 of Title 2 of the Palo Alto Municipa!
Code, and any Person who is designated the. representative of the
director of administrative services.
"Affiliate" means (i)any Person or entity that, directly
or indirectly, owns, controls or holds with the power to vote fifty
percent (50%) or more of the outstanding voting rights of the
CUSTOMER, (ii) any Person or entity fifty percent (50%) or more of
the outstanding voting securities of which is, directly or
indirectly, owned, controlled or held with power to vote by the
CUSTOMER, (iii) any Person or entity who is a director or executive
officer of a Person or entity which is an affiliate thereof under
(i) or (ii), (iv) any Person or entity that, directly or
indirectly, through one or more intermediaries, is under common
contro! with the CUSTOMER, or (v) any general partner or limited
partner of a Person or entity that, directly or indirectly, owns,
controls or holds with power to vote eighty percent (80%) or more
of the outstanding voting rights, of the CUSTOMER. For the purposes
of (iv) above, a Person or entity shall be deemed under common
control with the CUSTOMER only if the Person or entity that
exercises such common control owns, controls or holds twenty-five
(25%) or more of the outstanding voting rights of both the CUSTOMER
and any such other Person or entity.
"Agency" means any local, county, state or federal
governmenta! body or quasi-governmental body, including, without
limitation, the CPUC, the FERC and any joint powers agency, but
excluding the CITY and any board, commission or council of the
CITY.
~Ancillary Services" means the Energy Services offered by
the CITY to all Customers,including, without limitation, Balancing
Service, Backup Generation Service, Load Monitoring Service,
Scheduling Coordination Service, ~ Voltage Support Service and
Standby Services, as more fully described in one or more
Confirmation Schedules to this Contract.
~Average Daily Quantity" or \~ADQ" means the quantity of
Energy purchased by the CUSTOMER from one or more Energy Suppliers
on a daily basis in each calendar month, which the CITY is required
to deliver to one or more of the Delivery Points, as more fully
described in one or more Confirmation Schedules to this Agreement.
1990107 s.%~ 0071550
~Average Demand" means the average metered demand of th~
CUSTOMER determined over a specified period of time, as described
in one or more of the Confirmation Schedules.
~Average Monthly Quantity" or ~AMQ" means the quantity.of
Energy purchased by the CUSTOMER from one or more Energy Suppliers
on a monthly basis in each calendar year, which the CITY is
required to deliver to one or more of the Delivery Points, as more
fully described in one or more the Confirmation Schedules to this
Contract.
~Backup Generation Services" means the Capacity and
Energy services provided to a Customer to replace the loss of its
generation sources and to cover that portion of Demand that exceeds
the supply of generation.
~Balancing Service" means a type of Energy Services that
may be provided by the CITY to accommodate the difference between
a Customer’s consumption of the quantity of natural gas that is
received at one or more of the Delivery Points and the quantity of
natural gas purchased by the CITY onbehalf of the Customer for
delivery to one or more of the Customer’s Energy Suppliers, as
more fully described, if applicable, in one or more of the
Confirmation Schedules.
’~Billing Period" means the period of time between the
times and dates on which any of the CUSTOMER’s Meters is read for
billing purposes, as more fully, described in one or more of the
Confirmation Schedules~
~British Thermal Unit" or ~Btu" means the unit of
measurement of a quantity of heat or therma! energy measured on a
"dry" basis (free of water vapor). One (i) Btu equals the amount
of heat or thermal energy required to raise the temperature of one
pound of pure water from 58.5 degrees Fahrenheit to 59.5 degrees
Fahrenheit at a standard atmospheric pressure of- 14.73 pounds
square inch absolute.
"Business Day" means any Day, except a Saturday, Sunday,
or any Day observed as a legal holiday by the CITY.
~Capacity" means (i) in the case of electricity, the
total quantity of power that can be transmitted over the applicable
portions of the Utility System for a specified period of time, and
(ii) in the case of natural gas, the total quantity of natural gas
that can flow through the applicable portions of the Utility System
for a specified period of time.
’~Capacity Constraint" means a physical condition of the
applicable portion of the Utility System which impedes the flow of
natural gas to one or more of the Delivery Points.
990107 s>~ 0071550
"Charge" means any assessment, cost, fee or levy for
Energy or Energy Services, other than a Tax.
"CITY"means the government of the City of PaloAlto, a
chartered city and a municipal -corporation ’duly organized and
validly existing under the Laws of the State of California, w~th a
principal place of business located at 250 Hamilton Avenue, Palo
Alto, County of Santa Clara.
"City Attorney~’ means the individual designated as the
city attorney of the CITY under Section 2.08.120 of Chapter 2.08 of
Title 2 of the Palo Alto Municipal Code, and any Person who is
designated the representative of the city attorney.
"City Clerk" means the individual designated as the city
clerk of the CITY under Section 2_.08.110 of Chapter 2.08 of Title
2 of the Palo Alto Municipal Code, and any Person who is
designated the representative of the city clerk.
~ ~City Gate" means the portion o5 the Utility System at
which a Transmission Provider’s power facilities or a
Transportation Provider’s natura! gas facilities is interconnected.
"City Manager" means the individual designated asthe
city manager of the CITY under Section 2.08.140 of Chapter 2.08 of
Title 2 of the Palo Alto Municipal Code, and any Person who is
designated the representative of the city manager.
"COB" means the California/Oregon Border.
~COB Firm Index Price" means the Dow Jones Telerate
California/Oregon Border Firm Electricity Price Index in U.S.
dollars per MWh for daily firm electricity traded during Off-Peak
or On-Peak hours, as the case may be, as published by Dow Jones.
"COB Non-Firm Index Price" means the Dow Jones Telerate
California/Oregon Border Firm Electricity Price Index in U.S.
dollars perMWh for daily non-firm electricity traded during Off-
Peak or On-Peak hours, as the case may be, as published by Dow
Jones.
"Commencement Date" means the Day on. which this Contract
is approved by the CITY.
~Conduit/’ means an underground pipe in which electric
wires are located or situated.
"Confidential Information" means information concerning
the CUSTOMER that is designated as or marked confidential and (I)
is protected as a trade secret under the Laws of the state of
California or pursuant to a written agreement of confidentiality,
(2) pertains to the business of the CUSTOMER that is known and made
990107 syn 0071550 3
available only to the CUSTOMER or its or both, and
is considered confidenti~l and privileged information under the
Provisions hereof. It does not mean informationthat (i) is or may
known in the trade.or business of the CUSTOMERbecomegenerallyor
its Affiliates, or both, (2) is received by the CITY in good faith
from a Third Party who has the right to disclose such information
and who has not receivedsuch information, directly or indirectly,
from the CUSTOMER or its Affiliates, or both, (3) is in the
possession of the CITY or generally known to the CITY prior to the
Commencement Date hereof, or (4) is required to be disclosed to the
CITY as a condition precedent .to any action to be taken by the
CITY.
"Confirmation" means a written notice confirming the
details of a specific Transaction for the purchase of Energy or the
rendering of Energy Services as set forth in a Confirmation
Schedule.
~Confirmation Deadline" means forty-eight (48)
after a Party receives a Confirmation.
hours
~’Confirmation Schedule" means a written confirmation of
a Transaction involving the purchase of Energy or the rendering of
Energy Services.
"Contract" means this Energy and Energy Services
Contract between the City of Palo Alto and Syntex (U.S.A.) Inc.
~\Contract Price" means the sum total of any and all
Energy Charges or any and all Energy Services Charges, or both,
pursuant to the execution of a Transaction.
"Contract Year" means a period of twelve (12) consecutive
Months, beginning on the Conuaencement Date, and every twelve (12)
consecutive Months thereafter.
"CPUC" means the State of California Public Utilities
Commission and any successor agency or agencies.
"Curtailment" means the act of reducing or intgrrupting
the delivery of natural gas to one or more of the Delivery Points.
~Customer" means any Person who receives power or natural
gas from an Energy Supplier, including the CITY.
"CUSTOMER" means Syntex (U.S.A.) Inc., a corporation duly
organized and validly existing under the Laws of the State of
Delaware, with a principal place of business located at 340i
Hillview Avenue, Palo Alto, California 94304, and its directors,
officers, employees, partners, principals, agents and contractors
and its successors and permitted assignees.
990107 syn 0071550 4
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"Day" means any.calendar day, unless a Business Day is
specified, commencing at 12:00:00 a.m. Pacific Standard Time on a
calendar day and ending a~ 12:00:00 a.m. Pacific Standard Time on
the following calendar day.
"Decatherm" means a unit of measursment of the energy
content of natural gas equal to i0 Therms or 1,000,000 Btu.
"Defaulting Party" means a Party who commits a material
breach and is in default of this Contract.
’,Delivery Period" means that period~ of time beginning on
the Day on which Scheduling obligations of the CITY commence and
ending on the Day on which Scheduling obligations of the CITY
terminate.
~Delivery Point" means the place or location of any of
the CUSTOMER’s Meters at which Energy.is delivered by the CITY to
the CUSTOMER pursuant to the execution of a Transaction, as more
fully described in one or more of the Confirmation Schedules.
~Demand" means the total quantity of natural gas or
power, expressed in Therms or Kilowatts, respectively, that the
CITY is required to deliver to one or more of the Facilities at a
specified period of time, as more fully described in one or more of
the Confirmation Schedules.
"Demand Charge" means the price charged by the CITY to
meet the CUSTOMER’s Demand, as more fully described in one or more
of the Confirmation Schedules.
"Department of Utilities" means the City of Palo,
Department of Utilities, which represents the City of Palo Alto in
utilities matters.
"Direct Transaction" means the engagement of an Energy
Supplier (other than the CITY acting as an Energy Supplier) by the
CUSTOMER to supply Energy or render Energy Services.
’~Distribution Charges" means the Charges imposed by the
CITY for the transportation of Energy from the City Gate to the
Delivery Point(s).
"Early Termination Date" means the Day on which the
termination of the Term for cause becomes effective.
~Emergency"means the occurrence of an event not arising
by an event of Force Majeure which causes physical conditions of
property to pose an imminent threat to the health, safety, or
welfare of any Person and which requires the immediate attention of
a Party.
990 tO7 syn 0071550 5
~Energy" means the quantity of ele~tricity~ measured
Kilowatt-Hours, or the quantity of natural gas, measured in Therms,
or both, that is delivered by the CITY to one or more of the
DeliveryPoints, as more fully described in one or more of the
Confirmation Schedules.
~Energ~y Charge" means the price of an Energy product
that is delivered to the CUSTOMER, as more fully described in one
or more of the Confirmation Schedules.
~Energy Services’~ means the Energy-related services that
are rendered to the CUSTOMER,-as more fully described in one or
more of the Confirmation Schedules.
~Ener.gy Supplier" means the Person or entity which is
engaged in the business of selling electricity or natural gas, or
both, to a Customer ,as described in one or more of the
Confirmation Schedules.
~Event of Default" means any "Provision described in
Article 14 which entitles the Non-Defaulting Party to exercise the
rights set forth in this Contract, or by Law, upon the occurrence
of a default by the Defaulting Party.
expires.
’~Expiration Date" means the Day on which the Term hereof
"Extension Term" shall have the meaning set forth in
Section 2.3 hereof.
"Facilities" means the real property, building
facilities, and other improvements and appurtenances thereon
occupied by the CUSTOMER within the jurisdictiona! boundaries of
Palo Alto, at which one or more of the. Delivery Points is located,
in existence either at the Commencement Date or during the Term
hereof and not located within the Public Right-of-Way or the Public
Utility Easements, to which Energy is dispatched, as more fully
described in one or more of the Confirmation Schedules.
~FERC" means the Federal Energy Regulatory Conunission.
"Force ~4ajeure" means the occurrence, of any event having
a materia! adverse effect on the design, construction,
installation, management, operation, testing, use or enjoyment of
the Utility System or ~he Facilities, which event includes, without
limitation, an Act of God, an act of a superior governmental
authority, an act of a public enemy, a labor dispute or strike or
a boycott which could not be reasonably contemplated by the
Party affected thereby, loss of transmission or transportation
services, a defect in manufactured equipment, fire, floods,
earthquakes, or any other similar cause
990107 syn 0071550 6
~GAAP" means generally accepted accounting principles
consistently applied.
"Hazardous Materials" means any substance or material
which has been determined by any Agency, including the CITY, to be
capable of posing risk of injury to health, safety, and property,
including petroleum and petroleum products and all of those
materials and substances designated as hazardous or toxic by the
United States Environmental Protection Agency, the California Water
Quality Control Board, the United States Department of Labor, the
California Department of Industria! Relations, the California
Department of Health Services, the California Health and Welfare
Agency in connection with the Safe Water and Toxic Enforcement Act
of 1986, the UnitedStates Department of Transportation, the United
States Department of Agriculture, the United States Consumer
Product Safety Commission, the United States Department of Health
and Human Services, the United States Food and Drug Administration
or any other Agency now or hereafter authorized to regulate
materials and substances in the environment. Without limiting the
generality of.the foregoing, theterm "Hazardous Materials" shall
include al! of those materials and substances defined as "toxic
materials" in Section 66680 through 66685 of Title 22 of the
California Code of Regulations, Division 4, Chapter 30, as ~the. same
may be amended from time to time.
"Improvement" means any addition, alteration, betterment,
construction or modification to the Utility System or the
Facilities.
"Initial Term" shall have the meaning set forth in
Section 2.2 hereof.
~Interstate Delivery" means the transmission of
electricity over wires or the transportation of natural gas through
pipelines subject to regulation by the FEKC.
~Intrastate Delivery" means the transmission of
electricity over wires or the transportation of natural gas through
pipelines subject to regulation by the CPUC.
~Kilowatt" or ~kW" means a unit of measurement of power
equal to 1,000 watts.
~Kilowatt-Hour" or ~kWh" means a unit of measurement of
power consumption of 1,000 watts for a period~of one hour.
"Law" means any administrative or judicial act, decision,
bil!, certificate, charter, code, constitution, opinion, order,
ordinance, policy, procedure, rate, regulation, resolution, rule,
schedule, specification, statute, tariff, or other requirement of
any district, local, municipal, county, joint powers, state, or
federal agency, or any other Agency having joint or several
jurisdiction over the Parties to this .Contract~ in effect either
the Commencement Date or during the Term hereof, including, without
limitation, any regulatixDn or order of an official or quasi-
governing the applicable service providedofficialentityorbody
by the CITY, including the Provisions of this Contract, to which a
Customer may be subject or bound.
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~Letter of Credit" means an irrevocable transferable
standby letter of credit issued by a major United States commercial
bank or a foreign bank with a United States branch office with such
bank having a credit rating of at least "A-" from S&P or "A3" from
Moody’s and being in a form reasonably acceptable to the Party in
whose favor the letter of credit is issued.
’~Load" means the quantity of Energy required by the
CUSTOMER over a specific period of time, or the amount of power
delivered or required at any specific point on the Utility System.
"Load Factor" means the ratio of average Load to Peak
Load during a specific period of time expressed as a percentage.
"Load Monitoring Services" means services which entail,
without limitation, the assessment of the functions, operation and
performance of a Customer’s power facilities and a review of the
efficiency of electricity consumption over one or more periods of
time.
"Loop Flow" means the difference between the path or
Paths on which the Parties have agreed that power wil! be delivered
to the CUSTOMER and the actual path or paths on which such power is
delivered.
"Loss" means the amount of power expressed as a
percentage that is not delivered by the Energy supplier to the
CUSTOMER on account of ambient conditions existing at the time of
transmission.
~Market-based Energy" means Energy, the price of which is
established on the open market at the California.border (in the
case of natural gas) or on the NTMEX (in the case of electricity),
or other comparable index.
~’Maximum Daily Quantity" or ’~MDQ" means the maximum
quantity of natural gas that is purchased by the CUSTOMER and is
scheduled for delivery, each Day by the CITY to one or more of the
D%livery Points.
~\Minimum Daily Quantity" means the minimum quantity of
natura! gas that is purchased by the CUSTOMER and is scheduled for
delivery each Day by the CITY to one or more of the Delivery
Points.
990107 ~n 0071550 8
"MCF" means a ~unit of measurement of the volume of
natural gas equal to 1,00Q cubic feet.
~Megawatt"~ or ~MW" means a unit of measurement of power
equa! to 1,000 kW.
\,Megawatt-Hour" or ~MWh" means a unit of measurement of
power consumption of 1,000 kW for a period of one hour.
"Meter" means the equipment or instrument that measures
the quantity of electricity or natura! gas, or both, delivered by
the CITY toone or more of the Delivery Points. "
~Metering Charge" means the Charge(s) for the purchase,
installation, testing, maintenance, repair and removal of metering
or other similar data gathering equipment related to the energy use
of the Customer.
"Mill" means~ a unit of measurement for the pricing of
Energy, expressed in terms of one-tenth of one cent.
’~MMBtu" means a unit of measurement of the
natural gas equal to 1,000,000 Btu.
quantity of
~Month" means a calendar month, commencing at 12:00:00
a.m. Pacific Standard Time on the first Day of the calendar month
and ending at 12:00:00 a.m. Pacific Standard Time on the first Day
of the following calendar month.
,,Moody’s" means Moody’sInvestor Services, Inc. or its
successors and assigns.
,,Multiplier" means a factor which is used to convert a
quantity of natural gas measu-red at one or more of the CUSTOMER’s
Meters into heat or thermal ,energy for billing purposes, and is
used to convert the average number of Therms per i00 CF of natural
gas consumed over a specified period of time.
"NERC Holidmys" means the holidays defined by the North
American Electric Reliability Council, .or New Year’s Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas
Day.
,,Nomination".means the quantity of natural gas ordered by
the CUSTOMER for delivery during a specified period of time.
,,Non-Defaulting Party" means any Party who is not a
Defaulting Party.
"NYMEX" means the New York Mercantile Exchange.
990107 syn 0071550
~’NYMEX Forward Price" means the daily settlement price
for the Month as quoted by the New York Mercantile Exchange for its
electri’city futures contract at COB for such Month.
nOn-Peak Hours" means the hours of each day that are
classified as On-Peak by the North American Electric Reliability
Council (NERC): 6:00 a.m. through I0:00 p.m. Monday through
Saturday, except for NERC Holidays.
~Off-Peak Hours" means the hours of each day that are
classified as Off-Peak by the North American Electric Reliability
Council (NERC): Midnight through 6:00 a.m. and I0:00 p.m. through
midnight Monday through Saturday and al! day Sundays and NERC
Holidays.
~Other Gas" means any combustible gaseous or vaporous
mixture which is used to produce heat or therma! energy by burning,
including, without limitation, compressed natural gas, liquefied
petroleum gas, gas manufactured from coal or oil, gas produced from
biomass, or gas produced at or from a landfill, or a combination of
any of the above items; provided, however, natural gas is not
considered an Other Gas.
~\Parties" means the CITY and the CUSTOMER.
~’Party" means the CITY or the CUSTOMER.
~Peak Demand" means a level of Demand of the CUSTOMER
during a specified period of time of a Day, usually commencing at
6:00 a.m. and expiring at i0:00 p.m. on the same Day.
’~Peak Load" means the maximum Load consumed or produced
over a specified period of time.
"Person" means any individual, for profit corporation,
nonprofit corporation, limited liability company, partnership,
limited liability partnership, joint venture, business trust, sole
proprietorship, or other form of business association.
~PG&E" means the Pacific Gas and Electric Company, a
corporation duly organized and validly existing under the Laws of
the State of California, its directors, officers, employees,
partners, principals, agents and contractors and its successors and
permitted assignees.
"Poles" mean those poles, to which electric power
distribution lines are attached, that are separately owned~by the
CITY, or are jointly owned by the CITY with Pac Bel! or PG&E, or
both, pursuant to one or more written agreements.
990107 syn 0071550 1 0
~Power Supply Charge" means the price of an Energy
Product that is .delivered ~o the CUSTOMER, as more fully described
in ~one or more of the Confirmation Schedules.
~Pro~ision" means any agreement, citcttmstance, clause,
condition, covenant, fact, objective, qualification, restriction;
recital, reservation, representation, term, warranty, or other
stipulation in this Contract or in Law that defines or otherwise
controls, establishes, or limits the performance required or
permitted by any Party hereto. All Provisions, whether covenants
or conditions, shall be deemed to be both covenants and conditions.
’~Public Benefits Charge" means the portion of the total
electric rate which is dedicated to funding public benefits
programs. Public benefit programs include demand side management,
renewable energy, research, development and demonstration (RD&D)
and low income programs.
"Public Right-of-Way" means the areas owned, occupied or
used by the CITY for the purposes of furnishing on a retail basis
electricity, natural gas, waterr sewer,- storm drain, refuse or
communications commodity and/or distribution service, and the means
of public transportation, to the.general public, including, without
limitation, the public alleys, avenues, boulevards, courts, curbs,
gutters, lanes, places, roads, sidewalks, sidewalk planter areas,
streets, and ways, in existence either at the Commencement Date or
at any time during the Term hereof.
"Public Utility Easements" means the areas occupied or
used by the CITY for the purpose of providing Energy to the general
public and all Energy Services offered by the Department of
Utilities, the rights of which were acquired by easements
appurtenant or in gross, or are other interests or estates in real
property, or are the highest use permitted to be granted by the
nature of the CITY’s interest in and to the affected real property.
This term incorporates al! public service easements for utilities
that have been recorded by the CITY with the Recorder of the County
of Santa Clara, California.
~Receipt Point" means a place or location at which
electricity or natural gas is received by the CITY from its Energy
Supplier.
’~Reservmtion Charge" means a fee payable at the. outset by
a recipient of Energy service based on total entitlement for gas
transportation services.
"Scheduling"means (i) in reference to the CITY, the act
of making power or natural gas available for delivery to or for the
account of the CUSTOMER or (ii) in reference to the CUSTOMER, the
act of causing the CUSTOMER’s Transmission Provider or
Transportation Provider to make available at one of more of the
990107 syn 0071550 i!
Delivery Points sufficient transmission capacity or transportation
capacity to permit such .Transmission Provider or Transportation
Provider to receive the quantities of power or natural gas that the
CITY must make available at one or more of the Delivery Points.
"Scheduling Coordination Services" means the arrangement
of the delivery of Energy to a CUSTOMER by an Energy Supplier who
acts through a Third Party.
"Shrinkage" means the loss of a small percentage of the
volume of natural gas that is transported and delivered to one or
more of the Delivery Points.
"Sole Discretion" means, whenever a Provision rests in
the "Sole Discretion" of an individual representing a Party to this
Contract, then that individual must base a decision upon factors as
is deemed appropriate by that individual, and that individual shal!
not be required to state any reason for the decision. The other
Party affected by th~ decision may not compel a contrary or
different decision on any such matter, and notwithstanding any
other Provision hereof, the individual exercising the "Sole
Discretion" shall not be liable to the other Party for any effect
of the decision.
’~S&P" means the Standard & Poor’s .Rating Group,
division of McGraw-Hill, Inc., or its successors and assigns.
a
~Standby Services" means support service that is
available, as needed, to supplement a Customer to replace normally
scheduled power.
’~Storage Charges" means a Charge for the service in which
natural gas in received by the seller of the service and held for
the account of the Customer for redelivery at a later time.
"Tax" means any assessment, charge, imposition, license,
or levy (including any utility users tax) in effect either at the
Commencement Date or during the Term hereof and imposed by any
Agency, including the CITY as a result of the provision of Energy
or Energy Services.
"Term" means the Initial Term and the Extension Term, if
applicable.
"Therm" means a unit of measurement of the heat or
therma! energy content of natural gas. One (i) therm equals
i00,000 Btu.
"Third Party" means any party other than the CITY or the
CUSTOMER.
990107 syn 007!550 12
~Transaction" means any agreement or amendment thereto by
the Parties for the purchase of Energyor the rendering of Energy
Services, or both, as set forth in one or.more Confirmation
Schedules.
~Transition Cost Recovery Charge, means the cost that is
assessed or levied by the CITY, in order to recover the expenses
and liabilities associated with the uneconomic investment in
electric generation facilities of any such Person and that,
directly or indirectly, would affect an ongoing Transaction;
provided, however, any such cost will be applied in a non-
discriminatory manner and made applicable to al! similarly situated
parties.
’~Transmission Provider" means any Third Party that
provides Transmission Service.
"Transmission Service" means the scheduling of the
Interstate Delivery or Intrastate Delivery, or both, of power.
"Transportation Provider" means any Third Party "that
provides Transportation Service.
’,Transportation Service" means the scheduling of the
Interstate Delivery or Intrastate Delivery,~ or both, of natural
gas.
"Utilities Director" means the individual designated as
the director of utilities under Section 2.08.200 of Chapter 2.08 of
Title. 2 of the Paio Alto Municipal Code, and any Person who is
designated the representative of the director of utilities.
"Utility Rules and Regulations" means the compendium of
utility rules, regulations and rate schedules prepared by the
Department of Utilities and adopted by ordinance or resolution of
the Council pursuant to Chapter 12.20 of the Palo Alto Municipal
Code.
~Utility System" means the CITY’s electric power and
natural gas distribution systems, including, without limitation,
all substations, distribution towers,, generators, transformers,
busses, wires, poles, vaults, conduits, capacitors, resistors,
pipes, valves, fittings, and risers that are used to deliver Energy
to Customers.
~Voltage Support Services" means the technical assistance
rendered to a Customer in monitoring the quality and quantity of a
direct electric current passing through an electrica! circuit,
including, without limitation, an electrical conductor.
~’Year" means a calendar year, unless a Contract Year is
specified, commencing at 12:00:00 a.m. Pacific Standard Time on the
990107 s)m 0071550 13
first Day of the calendar year and ending at 12:00:00 a.m. Pacif
Standard Time on the first Day of the fol!owing calendar year.
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In additional to the foregoing, other Specia’l Terms are defined
throughout the Contract and the Confirmation Schedules.
990 I07 ~n 0071550 14
EXHIBIT ~B"
APPLICABLE RATE SCHEDULES
The term "applicable rate schedules" used in Subsection 2.5.1 Shall
mean:
(1)For current CUSTOMER accounts, the then applicable utility
rate schedule shall apply;
2)
(3)
If more than one utility, rate schedule applies to a specific
CUSTOMER account, the demand and energy charge rate schedules
then applicable to CUSTOMER, as a large commercia! electric
service customer had CUSTOMER not selected to pay under one of
severa! utility rate schedules applicable to large commercial
electric service customers (as of the execution of this
Contract, the Utility Rate Schedule E-7) shal! apply.
If the CUSTOMER adds new CUSTOMER’s Facilities to its account,
the CITY will evaluate the. Load of each of the CUSTOMER’s
Facilities and will apply the utility rate schedule(s) to each
of the CUSTOMER’s Facilities as the CITY deems appropriate.
I:
990107 syn 0071550
I EXHIBIT ~D" "
COST EFFECTIVENESS CRITERIA FOR ENERGY EFFICIENCY PROJECTS
I
!
I
I
I
Qualifying Projects
Retrofit projects: Installation of new equipment which
results in annual electrica! energy savings compared to the
existing equipment. Energy savings may result from the
installation of new, more efficient equipment, and/or the
installation of controls which allow a process to operate more
efficiently.
New construction: Installation of equipment which results in
annual electrica! energy savings compared to the State’s
Title-24 energy standards for Non-residential buildings (or
standard practice for those applications not covered by Title-
24)
I Economic Criteria
Each key customer may receive up to 25% of their annual Public
Benefit charge contributions in incentives. Projects are eligibl9for funding up to 100% of the project cost projects which have a
simple payback no greater than the life of the equipment. For
projects with a simple payback greater than the equipment life, the
incentive shall be no greater than the savings times [he project
life. Eligible project costs include:engineering~ design,
equipment, and installation labor.
Application Process
CUSTOMER submits an application to CPAU. Application is approved
in 30 business days for qualifying projects. Once project is
complete, the CUSTOMER submits final project invoices. Key Account
Representatives will inspect the project prior to final payment to
the CUSTOMER by check or as a bill credit.
990107 s~,~ 0071550
CONFIDENTIAL INFORMATION
The following attachments to the original contract are not reproduced here as they are
confidential:
Exhibit C, Customer Accounts
Confidential Information, Confirmation Schedule No. 1 For Purchase of Energy
Confidential Information, Confirmation Schedule No. 1 For Acquisition of
Energy Services
AMENDMENT NO. ONE TO
ENERGY AND ENERGY SERVICES CONTRACT NO.
BETWEEN TH~ CITY OF PALO ALTO AND
SYNTEX (USA) , INC.
This Amendment No. One to Energy and Energy Services
Contract No. ("Contract") is entered into ,
1999, by and between the CITY OF PALO ALTO, a California municipal
corporation ("CITY"), and SYNTEX (USA), INC., a Delaware
corporation, !ocated at 3401 Hillview, Palo Alto, CA ("CUSTOMER").
RE C I TAL S:
WHEREAS, the Contract was entered into between
parties for the provision of Energy and Energy Services; and
~WHEREAS, the parties wish to amend the Contract;
the
NOW, THEREFORE, in consideration of the covenants, terms,
conditions, and provisions of this Amendment, the parties agree:
SECTION i. ~Section 2.4 is hereby amended in its entirety
to read, as follows:
"2.4 The Parties acknowledge and understand ’that
this Contract may be not terminated for convenience, and
they each hereby expressly waive the right to terminate
for convenience and not for cause this Contract."
SECTION 2. Section 2.5 is hereby deleted in its entirety.
SECTION 3. Paragraph 2.5.1 is hereby renumbered Section
2.5, and, as renumbered, is amended in its entirety to read, as
follows:
"2.5 The CUSTOMER acknowledges and understands
that, if this Contract is terminated for cause, it will
be obligated to pay for electric utility service provided
by the CITY in accordance with the CITY’s utility rate
schedule then applicable to the customer class not
entitled to the benefit of a contracted-for rate, to
which the CUSTOMER would be assigned, as described in
EXHIBIT "B"
SECTION 4. Confirmation Schedule No. 1 For Purchase of
Energy (Electricity and/or Natural Gas) is hereby amended to read
as set forth in the attachment to this Amendment No. One, which is
incorporated in full by this reference:
CONFIRMATION SCHEDULE NO. 1 FOR PURCHASE OF ENERGY
(Electricity and/or Natural Gas).
991208 syn 0071730
SECTION 5. Except as herein modified, all other
provisions of the Contract, including any exhibits and subsequent
amendments thereto, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have by their duly
authorized representatives executed this. Amendment on the date
first above written.
ATTEST:CITY OF PALO ALTO
City Clerk
APPROVED AS TO FORM:
Senior Asst. City Attorney
APPROVED:
Mayor
SYNTEX (USA), INC.
By:
Title:
Assistant City Manager
Director of Utilities
~By:
Title:
[NOTARIZATION OF SIGNATURES REQUIRED]
Director of Administrative
Services
Risk Manager
Attachments:
REVISED EXHIBIT "B"
REVISED CONFIRMATION SCHEDULE NO. 1 FOR PURCHASE OF ENERGY
991208 syn 0071730
2
CERTIFICATE OF ACKIqOWLED~NT
(Cigi! Code § 1189)
STATE OF
COUNTY OF
)
)
)
On , before me, the undersigned, a
notary public in and for said County, personally appeared
, personally
known to me (or proved to me on the basis of satisfactory evidence)
to be the person(~) whose name(s) is/a~e subscribed to the within
instrument, and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature of Notary Public
STATE OF
COUNTY OF
)
)
)
On , before me, the undersigned, a
notary public in and for said County, personally appeared
, personally
known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within
instrument, and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature of Notary Public
991208 syn 0071730