HomeMy WebLinkAboutStaff Report 296-06City of Palo Alto
City Manager’s Report
3
TO:
FROM:
DATE:
SUBJECT:
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT: UTILITIES
JULY 17, 2006 CMR:296:06
ADOPTION OF RESOLUTION APPROVING THE NORTHERN
CALIFORNIA POWER AGENCY GREEN POWER PROJECT (NGPP)
THIRD PHASE AGREEMENT AND PARTICIPATION BY THE CITY OF
PALO ALTO IN THE NGPP FOR THE PURCHASE OF RENEWABLE
ELECTRICITY OF UP TO 15 AVERAGE MEGAWATTS OF ENERGY
OVER 25 YEARS WITH AN ESTIMATED COST OF UP TO $230
MILLION (2006 DOLLARS)
RECOMMENDATION
Staff and the Utility Advisory Commission recommend that City Council adopt the resolution
approving the Northern California Power Agency Green Power Project (NGPP) Third Phase
Agreement (Agreement) and the City of Palo Alto’s participation in the NGPP for the purchase
of renewable electricity of up to 15 average megawatts (aMW) of energy. Additionally, for this
Agreement, staff recommends Council waive the investment-grade credit rating requirement
under Section 2.30.340 (d) of the Palo Alto Municipal Code.
DISCUSSION
Participation in the NGPP program has the potential of supplying up to 13% of the City’s
electrical energy needs with eligible renewable resources. This will increase the share of eligible
renewable resources in the portfolio from 17% to 30%. Combined with the 50% of supply from
large hydro resources and 3% voluntary PaloAltoGreen Program, the City’s mix of non-fossil
fuel resources would increase to 83%.
The City’s participation in the NGPP Third Phase Agreement (Attachment 2) will occur within
the following parameters:
CMR:296:06 Page 1 of 4
1.The City’s participation will be at 15 average MW, resulting in 131 GWh/year of energy
deliveries that would meet 13% of the City’s retail electric load.
2.The City’s share of participation in this Agreement is expected to be 18.5% as shown in
Exhibit A of the agreement.
3. The average procurement price of energy shall not exceed $70/MWh (in 2006 dollars)
and the maximum contract price for any single contract shall not exceed $250/MWh.
(Note: The NCPA Commission on June 22, 2006 approved the average procurement
price limit at $70/MWh in 2006 real dollar terms. The June 7, 2006 Utility Advisory
Commission report had the $70/MWh average price limit in 2005 dollars, not the updated
number.)
4. The total cost of renewable energy purchases under this agreement over 25 years could be
up to $230 million (in 2006 dollars) or $310 million in nominal dollars over 25 years.
5. The term of any single contract shall not exceed 25 years.
6. Each resource shall be allocated to participating members according to the approved
participation percentages of the agreement (Exhibit A).
7. Each participating member covenants and agrees to appropriate funds on an annual basis
as part of its electric budget to pay for resources contracted under the agreement.
8. A pro forma Request for Proposals to solicit renewable electric power supply and a pro
forma Renewable Energy Power Purchase Agreement are included as Exhibits G & F to
the agreement.
9. Section 10.5 of the agreement provides the NCPA Commission discretion to modify
Exhibit A to incorporate changing participating member percentages, Exhibit C to
include resources as they are approved by the NCPA Commission and exclude resources
once their term expires, Exhibit E to determine the contract price for individual supply
contracts, and Exhibit G to update the pro-forma Power Purchase Agreement to
accommodate changes specific to each renewable resource contract. Additionally, section
10.5 of the Agreement provides the NCPA General Manager discretion to modify the
form of the Request for Proposal (Exhibit F) and to develop evaluation and analysis
schedules for the proposed resource (Exhibit B)..
The NCPA Commission on June 22, 2006 created the NGPP program and approved the Third
Phase Member Agreement for Participating Members within the parameters outlined above. The
NCPA Commission approval packet is provided as Attachment 3.
Potential suppliers of renewable resources under the Agreement could be small companies that
may not have a credit rating from Moody’s or Standard and Poor’s. Since energy deliveries will
be tied to specific generators and specific locations, as opposed to market contracts whose
deliveries are often backed by financial strength or collateral rather than a physical asset, staff
recommends that Council waive the investment-grade credit rating requirement for public
agency contracts under Section 2.30.340 (d) of the Palo Alto Municipal Code. This conforms to
Council action on prior renewable resource contracts (CMR: 461:04). This waiver will be
evaluated on a case-by-case basis and will be provided only for small companies that do not have
credit ratings.
CMR:296:06 Page 2 of 4
BOARD/COMMISSION REVIEW AND RECOMMENDATIONS
The NGPP Third Phase Agreement parameters were presented to the Utilities Advisory
Commission (UAC) at its June 7, 2006 meeting (Attachment 4). The Commissioners had several
questions related to performance risks, retail rate impacts, contract start dates, limits on
individual contracts, and cost of administering the program. These questions were answered by
staff to the satisfaction of the Commissioners. Excerpts of the UAC meeting minutes is in
Attachment 5. The UAC voted unanimously to approve the staff request.
RESOURCE IMPACT
The cost of renewable supply under this Agreement could be up to $230 million (in 2006 dollars)
or $310 million in nominal dollars over 25 years. The incremental retail rate impact is estimated
at less than 0.3 cents/kWh.
POLICY IMPLICATIONS
Participation in NGPP supports the Council-approved Utilities Strategic Plan to enhance
customer satisfaction and utility infrastructure, employ balanced environmental solutions, and
provide fair and reasonable returns to the City and competitive rates to customers through
municipal ownership. Participation is also in accordance with the Utilities Energy Risk
Management Policies. The rationale for the staff recommendation to waive the credit
requirements for public agency contracts under Section 2.30.340 (d) of the Palo Alto Municipal
Code is explained in the report and conforms to prior Council waivers in this regard.
Participating in NGPP conforms to the rate impact limits in LEAP Guideline 6 and aims to
purchase renewable energy supplies in excess of the target of 20% of expected portfolio load by
2015.
LEAP Guideline #6: Renewable Portfolio Investments: The City shall continue to offer a
renewable resource-based retail rate for all customers who want to voluntarily select an
increased content of renewable energy. In addition to the voluntary program, the City
shall invest in new renewable resources to meet the City’s sustainability goals while
ensuring that the retail rate impact does not exceed 0.5C/kWh on average. Pursue a target
level of new renewable purchases of ten percent of the expected portfolio load by 2008
and move to a twenty percent target by 2015, contingent on economic viability. The
contracts for investment in renewable resources are not to exceed 30 years in term.
LEAP Guideline # 3 limits the amount of fixed price energy purchases to 75% of expected load
for 5 years or more out, assuming an average hydro year. This guideline was designed to
maintain some exposure (25%) to shorter term market prices to mitigate the risks of owning
high-priced resources if energy prices in the future reduce considerably. Entering into this
Agreement has the potential to reduce shorter-term market price exposure to approximately 17%
and commit up to 83% of expected supplies with long term fixed price contracts. This
recommendation also results in an estimated retail rate impact of 0.3C/kWh, under the 0.5C/kWh
The Agreement also meets LEAP Guideline #2B which states: Manage hydro production risks
by diversifying to renewable and/or fossil fuel generation technologies. .
CMR:296:06 Page 3 of 4
Implementing LEAP Renewable Portfolio Investments also supports the City’s Sustainability
Policy Statement adopted April 2, 2001 (CMR 175:01); the Green Government Pledge adopted
July 19, 1999 (CMR 284:99); the U.S. Mayors’ Climate Protection Agreement; and elements of
the Comprehensive Plan, specifically:
1.GOAL N-9: A clean, efficient, competitively-priced energy supply that makes use of
cost-effective renewable resources, and Policies
2.POLICY N-44: Maintain Palo Alto’s long-term supply of electricity and natura! gas
while addressing environmental and economic concerns.
3. POLICY N-48: Encourage the appropriate use of alternative energy technologies.
ATTACHMENTS
1. Resolution approving NGPP Third Phase Agreement and City’s participation at 15 MW.
2.NGPP Third Phase Agreement and associated exhibits A through G
3.NCPA Commission Staff Report and Commission Approvals on June 22, 2006.
4.UAC Report on NGPP - June 7, 2006
5.UAC Meeting Minutes of June 7, 2006
PREPARED BY:
Shiva Swaminathan
Senior Resource Planner
DEPARTMENT APPROVAL:
CITY MANAGER APPROVAL:
CARL YEATS
Director of Adm ;trative Services
EMI~.~ HANSON
Assistant City Manager
CMR:296:06 Page 4 of 4
***NOT YET APPROVED***
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO
ALTO APPROVING THE NORTHERN CALIFORNIA POWER
AGENCY GREEN POWER PROJECT (NGPP)THIRD PHASE
AGREEHENT AND PARTICIPATION OF THE CITY OF PALO
ALTO IN THE NGPP TO FACILITATE THE PURCHASE OF
RENEWABLE ENERGY OF UP TO 15 AVEKAGE HEGAWATTS
OF ENERGY OVER 25 YEARS AT AN ESTIMiTED COST OF
UP TO $230 HiLLiON (iN 2006 DOLLARS)
WHEREAS, the City of Pa!o Alto ("City"), a municipal
utility and a chartered city, is a member of the Northern
California Power Agency "NCPA"); and
WHEREAS, the City, along with other members of NCPA,
desires to collectively contract for or develop renewable energy
resources to meet customer electrical loads; and
WHEREAS, the City, by entering into the NGPP Third Phase
Agreement ("Agreement"), will be able to meet the City’s Long
Term Electricity Acquisition Plan ("LEAP") targets for renewable
energy, reduce reliance on fossil fuels and their associated
fuel price volatilities, assist the State of California in
meeting its renewable energy goals, lower the delivery risk by
spreading energy deliveries across multiple projects, avoid a
duplication of efforts, and achieve economies of scale; and
WHEREAS, on June 22, 2006, the NCPA Commission approved
Resolution No. 06-26, authorizing the creation of the NGPP
Program and the Agreement for Participating Members to purchase
green energy from NCPA; and
WHEREAS, NCPA is ready, willing and able to enter into
power purchase agreements on behalf of its participating
members, and it will efficiently and effectively assist in
meeting its participating members’ goals;and
WHEREAS, the City is ready, willing and able to purchase
such renewable energy supplies through NCPA power purchase
agreements with suppliers;
NOW, THEREFORE, the Council of the City of Palo Alto
does hereby RESOLVE as follows:
1
060703 cs 0072736
***NOT YET APPROVED***
SECTION i. The Council hereby approves the Northern
California Power Agency Green Power Project Third Phase
Agreement, including the delegation of authority to amend
exhibits to the Agreement,as set forth in section 10.5 of the
Agreement, and also approves the City of Palo A!to’s
participation in the Agreement for the purchase of renewable
energy of up to 15 average megawatts of energy, within an
average procurement price cap of $70/MWh (in 2006 dollars) and a
maximum contract price of $250/MWh for any single resource added
to the NGPP. The total cost of renewable energy purchases under
this Agreement over 25 years could be up to $230 million (in
2006 dollars) or $310 million in nominal dollars) over 25
years.
SECT!ON 2. With respect to the Agreement, the Council
hereby waives the creditworthiness terms and conditions
requirements of the Pa!o Alto Municipal Code section
2.30.340(d).
SECTION 3. The Council finds that the adoption of this
resolution does not constitute a project under the California
Environmenta! Quality Act and the CEQA Guidelines and,
therefore, no environment assessment is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:APPROVED:
City Clerk
APPROVED AS TO FORM:
Senior Asst. City Attorney
Mayor
City Manager
Director of Utilities
2
060703 cs 0072736
***NOT YET APPROVED***
Director of Administrative
Services
3
060703 cs 0072736
Attachment 2
NCPA GREEN POWER PROJECT
THIRD PHASE AGREEMENT
THIRD PHASE MEMBER AGREEMENT
FOR
PARTICIPAT~TG MEMBERS
TO
PURCHASE POWER
FROM THE
NORTHERN- CALIFORNIA POWER AGENCY
PROCURED FROM THE
NCPA GREEN POWER PROJECT
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
TABLE OF CONTENTS
SECTION 1. DEFINITIONS ..................................................................................................................5
1.1 DEFINITIONS .................................................................................................................................5
1.2 RULES OF INTERPRETATION ........................................................................................................15
SECTION 2.EFFECTIVE DATE OF AGREEMENT ......................................................................15
SECTION 3.PROCUREMENT PROCESS .......................................................................................16
3.!
3.2
0..3
3.4
3.5
3.6
3.7
3.8
3.9
REQUEST FOR PROPOSALS AND PPA(S) ......................................................................................16
PARTICIPANT .~_PPROVAL OF PROCUREMENT PROCESS ................................................................17
PROCUREMENT PERIOD ...............................................................................................................17
APPROVAL OF NGPP RESOURCES ...............................................................................................17
INVESTIGATION OF DEVELOPMENT OPPORTUNITIES ...................................................................18
DELIVERY OF ELECTRICITY / ALLOCATION OF ENVIRONMENTAL ATTRIBUTES ..........................19
CAPACITY ENTITLEMENT ............................................................................................................19
PAYM ENTS TO COUNTERPARTIES ................................................................................................20
REMOVAL OF NGPP RESOURCES FROM NGPP ...........................................................................20
SECTION 4.COOPERATION :~M.ND FURTHER ASSURANCES ...................................................20
SECTION 5.BUDGET, OPEP,_a, TLNG FUND, INVOICLNG ...........................................................21
5.1
5.2
5.3
5.4
5.5
5.6
5.7
PAYMENT OF NGPP COSTS AND MAINTAINING WORKING CAP1TAL RESERVE ...........................21
INITLAL BUDGET .........................................................................................................................2 !
ANNUAL BUDGET AND FINAL ANNUAL BUDGET SETTLEMENT ..................................................2 !
OPERATING ACCOUNT ................................................................................................................22
INVOICING ...................................................................................................................................24
AUDITING AND SETTLEMENT DATA ............................................................................................25
R~VENUE COVENANT .................................................................................................................26
SECTION 6.A3)MINISTtL~_TION OF AGREEMENT ....................................................................27
6.1
6.2
6.3
6.4
GENERAL ....................................................................................................................................27
ACTION BY PARTICIPANTS ..........................................................................................................27
NGPP OVERSIGHT COMMITTEE .................................................................................................28
PARTICIPANT REPRESENTATD/ES ................................................................................................28
SECTION 7. PARTICIPATION PERCENTAGE; ADMISSION .&ND WITHDRAWAL OF
P.~RTICIPA_N TS ......................................................................................................................................... 29
7.1
7.2
7.3
PARTICIPATION PERCENTAGES ...................................................................................................29
ADMISSION OF NEW PARTICIPANTS ............................................................................................29
WITHDRAWAL OF PARTICIPANTS ................................................................................................30
SECTION 8.TERM AaND TERMINATION ......................................................................................31
SECTION
9.1
9.2
9.3
9.4
9.5
SECTION
9.DEFAULT AND REMEDIES .......................................................................................31
EVENTS OF DEFAULT ..................................................................................................................31
CURE OF AN EVENT OF DEFAULT ................................................................................................32
PARTICIPATION RIGHTS OF DEFAULTING PARTY. ......................................................................._3.3
REMEDIES IN THE EVENT OF DEFAULT ........................................................................................33
EFFECT OF TERaMINATION OR SUSPENSION ..................................................................................36
10.MISCELL.~NEOUS ..................................................................................................38
THIRD PI-L~.SE AGREEMENT - NCPA GREEN POWER POOL
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
t0.9
t0.10
10.11
10.12
10.13
CONFIDENTIALITY ......................................................................................................................3 8
IN DEMN IFICATtON AND HOLD HARM LES S ...................................................................................3 8
SEVEtL~L LIABILITIES .................................................................................................................38
NO CON SEQUENTIAL DAMAGES ..................................................................................................39
_A_MEN DM ENTS .............................................................................................................................39
S EVEKABI L1TY ............................................................................................................................40
GOVEm~ING LAW ........................................................................................................................40
HEADINGS ...................................................................................................................................40
NOTICES ......................................................................................................................................40
WA~NTY OF AUTHORITY. .......................................................................................................41
COUNTE~ARTS ..........................................................................................................................41
ASSIGNMENT ..............................................................................................................................41
LIST OF EXHIBITS ........................................................................................................................41
Exhibits
Exhibit A
Exhibit B
Exhibit C
Exl~ibit D
Exhibit E
E:d~ibit F
Exhibit G
Participation Percentages
Foma of Resource Schedule
Approved Resource Schedules
Average Procurement Price
Contract Price
Form of Request for Proposals
Form of Power Purchase A~eement
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
NCPA GREEN POWER PROJECT THIRD PHASE AGREEMENT
This Third Phase A~eement (hereinafter ~A~eement") is entered into on the effective
date by and between the NORTHERN CALIFORNIA POWER AGENCY, a joint powers
agency, created pursuant to the laws of the State of California (hereinafter "NCPA") and
its members executing this A~eement as reflected on Exhibit A hereto (hereinafter
*~Participants"’) for the purpose of procuring electrical power from NCPA’s Green Power
project (hereinafter "NGPP"). NCPA and the Participants are referred to herein
individually as a "Party" and collectively as the "Parties.
RECITALS
A.NCPA and the Participants are interested in purchasing additional
electricity generation fiom renewable resources for the benefit of the customers of the
Participants.
B.By purchasing electricity generated from renewable resources, NCPA and
the Participants will help reduce the production of many enviromnental pollutants, assist
in reducing reliance on fossil fuels, assist in stabilizing the Participants’ elect~ic retail
rates, and aid the State of California in reaching its renewable energy goals.
C.This A~eement will enable NCPA to negotiate and enter into aNeements
to purchase electricity fi’om renewable resources and investigate the acquisition of
physical assets to generate electricity using renewable resources.
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
D.The Participants desire to obligate and enable NCPA to conduct the
foregoing activities, and deliver electricity from renewable resources to the Participants,
and to obligate and enable the Participants to take delivery of and pay for such electricity
and to investigate the acquisition of physical assets or the development of such to deliver
electricity and to pay NCPA for the costs of undertaking the foregoing activities.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and covenants hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which are hereby acl~owledged, the Parties a~ee and intend to be
legally bound as follows:
Section 1.Definitions.
1.1 Definitions. v~q~enever used in this A~eement (including the Recitals
hereto), the following terms shall have the following respective meanings:
1.1.1 "Adjusting Participant" has the meaning set forth in Section
7.3.1.
1.1.2 "Agreement" means this Third Phase Member A~eement
(Third Phase) To Purchase Power From The Northern California Power Agency Procured
From The NCPA Green Power Project, including all Exhibits, attached hereto and
incorporated by reference, as the same may be amended from time to time in accordance
with the terms and conditions hereof.
’7.2.
1.1.3 "Allocating Participant" has the meaning set forth in Section
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
1. ! .4 "A~mual Budget" has the meaning set forth in Section 5.2.3.
1.1.5 "Associate Member" means a~ associate member of NCPA
admitted to NCPA in accordance with Article IV, Section 7 of the Joint Powers
A~eement.
!.1.6 "Average Capacity" in MW means the annual quantity of
electricity in MVvT~ forecast to be delivered from all NGPP Resources including the
Proposed Resource calculated at the time a decision is made by NCPA with respect to
whether to approve the Proposed Resource in accordance with Section 3.4 divided by the
nmnber of hours in the year.
1.1.7 "Average Procurement Price" means the forecast average
procurement price calculated in accordance with Exhibit D at the time a decision is made
by the Participants pursuant to Section 6.2 with respect to whether to approve a Proposed
Resource in accordance with Section 3.4.
1.!.8 "Average Procurement Price Cap" means $70!M\~qa.
1.1.9 "Business Day" means any day other than a Saturday,
Sunday or legal holiday on which convnercial bar&ing institutions, in San Francisco.
California are authorized or required by law, regulation or executive order to be closed.
t.1.10
1.1.11
"Claims" has the meaning set forth in Section10.2.
"Co~ranission" means the NCPA Commission.
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
1.1.12 "Constitutive Documents" means, with respect to NCPA, the
Joint Powers A~eement and any resolutions or bylaws adopted thereunder, and with
respect to each Participant, the California Government Code and other statutory
provisions applicable to such Participant, any applicable a~’eements, charters, contracts
or other docmnents concerning the forlnation, operation or decision making of such
Participant, including, if applicable, its City Charter, and any codes, ordinances, bylaws,
and resolutions adopted by such Participant’s governing body.
1.1.13 ~°Contract Price" means the forecast contract price for
procuring elecWicity from a Proposed Resource calculated in accordance with Exhibit E
at the time a decision is made with respect to whether to approve a Proposed Resource in
accordance with Section 3.4.
1.t.14 °’Defaulting Party" has the meaning set forth in Section 9.1.
hereto.
1.1.15 ~Effective Date" has the meaning set forth in the preamble
1.1.16 "Electric System" means, with respect to each Participant, all
properties and assets, real and personal, tangible and intangible, of the Participant now or
hereafter existing, used for or pertaining to the generation, translnission, transformation,
distribution aad sale of electric capacity and energy, or the utilization of such, including
all additions, extensions, expansions, improvements and bettem-~ents thereto and
equipment thereof; provided, however, that to the extent the Participant is not the sole
owner of an asset or property or to the extent that an asset or property is used in part for
the above described purposes, only the Participant’s ownership interest in such asset or
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
property or only the part of the asset or property used for electric purposes shall be
considered to be pat of its Electric System.
1.1.17 "EliNble Renewable Resource" means an electric power
generator (i) producing power from one or more of the following fuels: Biomass,
Biodiesel, Fuel cells using renewable fuels, Digester gas, Geothermal, Landfill gas,
Municipal solid waste conversion, Ocean wave, Ocean thermal, Tidal cunent,
Photovoltaic, Small hydroelectric (30 megawatts or less), Solar thermal, Wind, or other
fuels and technologies as may be deleted fiom or added to this list by the Participants,
pursuant to Section 6.2, fi’om time to time, and any additions or enhancements to a
facility using such fuels and teclmology and (ii) which are (a) located within California,
(19) are located outside of California and have their first point of intercom~ection with the
Western Electricity Coordinating Council transmission system located within California
or (c) are located outside of California but deliver electricity to a substation or node
within California, or (d) as otherwise determined by the Participants pursuant to Section
6.2.
1.1.18 ’°Enviromnental Attributes" means any and all credits,
benefits, emissions reductions, offsets, and allowances, howsoever entitled, directly
attributable to the generation fiom NGPP Resources. Environmental Attributes include
but are not limited to: (1) any avoided emissions of pollutants to the air, soil or water
such as sulfur oxides (SO~), nitrogen oxides (NO~), carbon monoxide (CO) and other
pollutants; (2) any avoided emissions of carbon dioxide (CO2), methane (CH4) and other
~ee~aouse gases (GHGs) that have been determined by the United Nations
Intergoven=nental Panel on Climate Change to contribute to the actual or potential tl~reat
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
of altering the Earth’s climate by trapping heat in the atmosphere; and (3) the reporting
rights to these avoided emissions such as Green Tag Reporting Ri~ats. Environmental
Attributes do not include (1) any energy, capacity, reliability or other power attributes
from NGPP Resources, (2) production tax credits associated with the construction or
operation of the energy projects and other financial incentives in the form of credits,
reductions, or allowances associated with a project that are applicable to a state or federal
income taxation obligation, (3) fuel-related subsidies or "tipping fees" that may be paid to
Seller to accept certain fuels, or local subsidies received by the generator for the
destruction of particular pre-existing pollutants or the promotion of local enviromnenta!
benefits, or (4) emission reduction credits encmnbered or used by NGPP Resources for
compliance with local, state, or federal operating and/or air quality permits.
1.1.19 "Event of Default" has the meaning set forth in Section 9.1.
1.1.20 "Initial Budget:’ has the meaning set forth in Section 5.2.
Section
1.1.21 "Initial Procurement Period" has the meaning set forth in
1.1.22 "Joint Powers A~eement" memas that certain Northen~
California Power Agency Joint Power ANeement by and among the Members as the
same 1nay be amended fi’om time to time.
1.!.23 "Maximum Average Capacity" means the sum of the
Participant elections expressed as average ai:amal MWs labeled as "Total Ammal aMW"
in Exhibit A.
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
1.1.24 "Maximum Contract Price" means $250/M5q~.
of NCPA.
1.1.25 "Member" means an?, Voting Member or Associate Member
1.1.26 "MW" means megawatt.
1.1.27 "M\\q~" means megawatt-hour.
1.1.28 "NCPA" has the meaning set forth in the preamble hereto.
1.1.29 "NCPA Axmual Budget" means NCPA’s ammal budget for
the relevant fiscal year adopted by the Commission.
1.1.30 "NGPP" means the NCPA
consists of the pool of NGPP Resources.
Green Power Project, which
1.1.31 "NGPP Costs" means any and all costs, internal and
extemaI, direct and indirect, incu~ed by NCPA in com~ection with performing its
obligations under this A~eement, including performing the Procurement Activities,
providing the Project Services, negotiating and implementing any and all Power Purchase
Ageements, arranNng for any financing associated with procm-ing electricity fiom an
NGPP Resource, purchasing completed Eligible Renewable Resources, purchasing
electric energy, capacity and other electricity services from Eligible Renewable
Resources, investigate and provide recommendations regarding the development,
construction, installation, operation, ownership and maintenance of Eligible Renewable
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Resources. NGPP Costs shall not include costs incurred
activities not within the scope of this aNeement.
by NCPA for selwices or
1.1.32
the Participants in
Percentages.
the
"NGPP Cost Allocation" means the NGPP Costs allocated to
NCPA Ammal Budget in proportion to the Participation
1.1.33 "NGPP Oversight Committee" means a committee of
representatives of Members who are also Participants under this A~eement established at
the NCPA general manager’s discretion, for the purpose of offering input and
recommendations to NCPA Staff or the general manager with respect to matters
pertaining to this AN’eement pursuant to the provisions of Section 6.3.
1.1.34 "NGPP Resource" means a Proposed Resource that has been
approved as aa~ NGPP Resource in accordance with Section 3.4.
1.1.35 "Operating Account" means the account established by
NCPA and funded by the Participants in accordance with Section 5.4, the funds of which
are available for use by NCPA in accordance with the temps and conditions hereof.
hereto.
!.1.36 "Participant" has the meaning set fo~-th in the preamble
Section 6.4.
1.1.37 "Participant Representative" has the meaning set forth in
THIRD PHASE AGREEME_NU7 - NCPA GREEN POWER POOL
1.1.38
preamble hereto.
"Party" or "Parties" has the meaning set forth in the
Section 7.1.
1.!.39 "Participation Percentages" has the meaning set forth in
1.1.40 °’Power Purchase A~eement" or "PPA" means an
a~eement executed by NCPA, or to be executed by NCPA, for the purchase and delivery
of electric energy, capacity or other energy selwices and Enviromnental Attributes.
1.t.41 "Procure" and other forms of such verb, including
Procurement, Procuring, and Procured, means acquiring the output of EliNble Renewable
Resources, including all Enviromnental Attributes associated with any electricity
generated in comaection therewith, tlv-ough contracts with facilities owned by third
parties, by purchasing existing Eligible Renewable Resources, by developing,
constructing, installing, owning, operating, maintaining, and controlling Eligible
Renewable Resources, or such other means as may be approved by the Participants from
time to time.
Section 3.
1.1.42 ~Procurement Activities" means those activities described in
Section 3.].
"Procurement Conditions" has the lneaning set forth in
t.1.44 ~Project Services" shall include but not be limited to:
accounting, billing, settlements and recordkeeping activities required by and directly
THIRD PP~a~SE AGREEMENT - NCPA GREEN POWER POOL
related to Procurement Activities and the A~eement; le~slative, re~o-ulatory and legal
services with a direct impact on the A~eement or the NGPP portfolio; and reasonable
and customary indirect costs. Disallowed services are activities performed solely for the
benefit of one or more non-Participants.
1.1.45 "Proposed Resource" has the meaning set forth in Section
1.1.46 "Resource Schedule" means a Resource Schedule,
substantially in the form of Exhibit B, identifying the location of the Proposed Resource,
its size and tectmo!ogy, type of Procurement, the estimated costs (both total and per
Mgq~) and underlying assumptions, key milestone dates (such as commercial operation
date and delivery period), a description of the definitive ageements, a proposed budget
for pursuing the Procurement of electricity from the Proposed Resource and a proposed
mechanism for financing the Procurement.
1.1.47 "Revenues" means, with respect to each Participant with the
exception of BART, all income, rents, rates, fees, charges, and other moneys derived by
the Participant from the ownersNp or operation of its Electric System, including, without
limiting the generality of the foregoing, (a) all income, rents, rates, fees, charges or other
moneys derived from the sale, furnishing and supplying of elect~-ic capacity and energy
and other services, facilities, and con=nodities sold, furnished, or supplied tlvou~ the
facilities of its Electric System, (b) the earnings on and income derived ~om the
investment of such income, rents, rates, fees, charges or other moneys to the extent that
the use of such earnings and income is limited by or pursuant to law to its Electric
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
System and (c) the proceeds derived by the Participant directly or indirectly from the
sate, lease or other disposition of all or a part of the Electric System, but the term
Revenues shall not include (i) customers’ deposits or any other deposits subject to refund
until such deposits have become the property of the Participant or (ii) contributions fi’om
customers for the payment of costs of construction of facilities to serve them. In regard to
BART, BART sha!l generate revenues sufficient to cover its obligations under this
A~’eement through tariffs, fees, or other sources of revenue except tl:u’ough such sources
as may be limited by law.
1.!.48 "Scheduling Protocols" means the contractual or other
an’angements between NCPA and the relevant Participant concerning the scheduling,
delivery and metering of electricity.
1.1.49
in Section " "
"Subsequent Procurement Period" has the meaning set forth
1.1.50 "Term" has the meaning set forth in Section 8.
Agreement.
1.!.51 "Voting Member" means a party to the Joint Powers
Section 7.3.
1.1.52 "Withdrawing Participant" has the meaning set forth in
1.1.53 "Working Capital Reser~,e" meaas the Participant’s
Participation Percentage of the sum of the NGPP Costs estimated by NCPA to be
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
incurred during the tlv’ee (3) most expensive months of the twelve (!2) months following
the date on which NCPA prepares such estimate in accordance with Section 5.
1.2 Rules of Interpretation.
As used in this Ageement (including the Recitals hereto), unless in any such case the
context requires otherwise: the terms "herein," "hereto," "herewith" mad "hereof" are
references to this A~eement taken as a whole and not to any particular provision; the
term "include," "includes" or "including" shall mean "including, for example and without
limitation;" and references to a "Section," "subsection," "clause," or "Exhibit" shall mean
a Section, subsection, clause or Exhibit of this A~’eement, as the case may be. All
references to a Nven a~eement, instrument or other document shall be a reference to that
ageement, instrument or other document as modified, amended, supplemented and
restated through the date as of which such reference is made, and reference to a law,
regulation or ordinance includes any mnendment or modification thereof. A reference to
a "person" includes any individual, partnership, finn, company, corporation, joint
venture, trust, association, organization or other entity, in each case whether or not
having a separate legal personality and includes its successors and permitted assigns. The
sin~.malar shall include the plural and the masculine shal! include the feminine, and ~,ice
Section 2.Effective Date of A~reement
This A~’eement shall be effective as of the Effective Date upon execution of at1
Participants and NCPA provided however such Effective Date shall be no later than the
date established by the NCPA general manager upon 30 days written notice. The general
manager of NCPA shall notify a!l Participants in w~-iting when all Participants and NCPA
THIRD PHASE AGREEMENT - NCFA GREEN POWER POOL
have executed this AgTeement. A copy of such notification shall be affixed to the official
copy of this Agreement.
Section 3.Procurement Process
3.1 Request for Proposals and PPA(s). All Procurement Activities
undertaken pursuant to this A~’eement, shall be pursuant to and in accordance with the
form of Request for Proposals and accompanying PPA(s) attached hereto and
incorporated herein by reference as Exhibits F & G. NCPA represents that the following
conditions will be observed when undertaking its Procurement Activities. ("Procurement
Conditions") ¯
(i) Each Proposed Resource shall be an EliNble Renewable Resource;
(ii) The Average Capacity of all NGPP Resources shall not exceed the
Maximmn Average Capacity;
(iii) The period of time for which NCPA is obligated to accept and pay for
electricity under any singular PPA shall not exceed twenty-five years;
(iv) The Contract Price for purchasing electricity under any singular PPA shall
not exceed the Maximum Contract Price;
(v) The PPA(s) will be approved as to fom~ by NCPA’s general counsel;
(vi) Where Procurement of electricity from a Proposed Resource requires that
NCPA obtain financing, each PPA shal! be subject to NCPA obtaining reasonable
financing;
(vii) All Enviromnental Attributes associated with the Proposed Resource will
be transferred to NCPA;
(viii) The Average Procurement Price shall not exceed the Average
Procurement Price Cap, except as noted in Exhibit D.
THIRD PHASE AGREEMENT - NCPA GREEN POI4~ER POOL
3.2 Participant Approval of Procurement Process. Prior to execution of
this A~’eement, the NCPA shall have prepared the aforementioned form of Request for
Proposals and accompanying form of PPA. By executing this Agreement, the Participant
acl~aowledges and a~’ees to be bound by the procurement process contained in or
referenced by the Request for Proposals and PPA(s) at such time as the PPA(s) may be
approved by the Participants pursuant to Section 6.2 as provided for herein.
3.3 Procurement Period. The Initial Procurement Period (the "Initial
Procurement Period") shall commence on the Effective Date and terminate on the third
(3’a) a~miversary thereof. At any time, and from time to time, during the Term, the
Participants may, upon the request of NCPA or any Participant, approve additional
Procurement Periods (each a "Subsequent Procurement Period") in accordance with
Section 6.2, provided, however, that no Subsequent Procurement Period shall extend
beyond the Tem~ of this A~eement.
3.4 Approval of NGPP Resources
3.4.1 Identification of Resources and Request for Review. If
and when NCPA identifies an EliNble Renewable Resource that it wishes to include as a
NGPP Resource ("Proposed Resource"), NCPA will present to the Co~rmaission or to
the NGPP Oversi~at Convnittee, if so directed by the general manager, a Resource
Schedule, substantially in the fonts attached hereto as Exhibit B, for such Proposed
Resource and copies of the relevant PPA(s) proposed to be executed by the counterparties
thereto other than NCPA and, if applicable, any Participant. NCPA shall also make
available for review any other infom~ation or materials prepared in com~ection with the
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
evaluation of such Eli~ble Renewable Resource and produce such other summaries or
analyses as the Commission or the NGPP Oversight Colranittee may reasonably request.
3.4.2 Review by Oversight Committee. At the general manager’s
discretion, the NGPP Oversight Committee may review, comment and recommend to
NCPA on whether to include the relevant Proposed Resource as an NGPP Resource.
3.4.3 Action by NCPA. NCPA shall take action to add a Proposed
Resource as a NGPP Resource following an affirmative vote of the Participants pursuant
to the provisions of Section 6.2.
3.5 Investigation of Development Opportunities. NCPA shall conduct
investigations and analysis of potential development opportunities for EliNble
Renewable Resources on behalf of the Participants. Such investigations and analysis
may include but shall not be limited to: resource selection, market analysis, site
acquisition, cost analysis of permitting and consta-uction and partnership opportunities.
At the general manager’s discretion, the NGPP Oversight Committee may review the
recommendations of NCPA and comment accordingly. NCPA shall am~ually budget at
least the sum of One Hundred Thousaaad Dollars ($100,000) for the activities referred to
herein during any Procurement Period. To the ~eatest extent possible, NCPA shall seek
to recover the costs associated with such activities tl=’ough the financing of projects
resulting from such activities. The Participants a~-ee that any decision to acquire a
power plant as a physical resource asset shall be made pursuant to Section 6.2 and shall
be subject to the terms and conditions of a Third Phase A~eement specifically
addressing that transaction. The Participants further a~ee to participate in any NGPP
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Resource resulting from such activities to the same extent as its Participation Percentage.
No NCPA action related to development opportunities shall require any Participant to
commit to more power than its Average MW Participant election stated in Exhibit A.
3.6
electricity delivered to NCPA from an NGPP Resource shall be delivered to
Participant in accordance with such Participant’s Pa~nticipation Percentage and
Delivery of Electricity / Allocation of Environlnental Attributes. Any
each
each
Participant shall accept its relevant percentage of such electricity. NCPA may allocate
electricity generated by, and/or delivered to NCPA fi’om, any particular NGPP Resource
among the Participaats in such percentages as NCPA may, in its reasonable discretion
and subject to the approval of the affected Participant, determine are necessary, desirable,
or appropriate; provided that the ag~egate quantity of electricity delivered to any
Pa-ticipant during a calendar month shall equa! such Participant’s Participation
Percentage of the ag~’egate amount of electricity generated and/or delivered to NCPA
from all NGPP Resources dm-ing the relevant calendar month. Such electricity shal! be
delivered to the Participants in accordance with the Scheduling Protocols. Enviro~m~ental
Attributes, as defined herein, obtained by NCPA as a result of performance under this
A~eement shall likewise be tc’ansferred to each Participant in accordance with such
Participant’s Participation Percentage.
3.7 Capacity Entitlement. The collective capacity available from the
NGPP Resources for plaiming and reliability purposes shall be allocated among the
Participants in accordance with their respective Participation Percentage.
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
3.8 Payments to Counterparties. NCPA shall pay all NGPP Costs using
funds flom the Operating Account, fiom amounts paid to NCPA in accordance with
Section 5, or such other sources as may be a~eed upon in writing by the Parties fiom
time to time.
3.9 Removal of NGPP Resources fiom NGPP. Any NGPP Resource that
delivers electricity to NCPA under a PPA shall be automatically removed from the NGPP
on the date its PPA terminates or expires. Any other NGPP Resource shall continue to be
included in the NGPP until such time as the Participants approve removing it from the
NGPP and approves the subsequent use of such NGPP Resource, including whether such
NGPP Resource should be sold or decolrnnissioned pursuant to Section 6.2. Any
proceeds or costs associated with removing an NGPP Resource from the NGPP shall be
allocated among the Participants in accordance with the Participation Percentages unless
othe!-wise a~meed upon in writing by the Participants.
Section 4. Cooperation and Further Assurances
Each of the Parties aNees to provide such information, execute and deliver any
instruments and documents and to take such other actions as may be necessary or
reasonably requested by any other Party which are not inconsistent with the provisions of
this AN-eement and which do not involve the assumption of obligations other than those
provided for in this ANeement, in order to give ful! effect to this A~eement and to can’y
out the intent of this Ageement. Further, the Parties a~ee to cooperate and act in good
faith in cormection with obtaining any financing required in order to Procure electricity
THIRD PI-L~SE AGREEMENT - NCPA GREEN POWER POOL
fiom an NGPP Resource, including with respect to negotiating and executing any
a~eements to implement any financing arrangements.
Section 5. Budget. Operatin~ Fund. Invoicin~
5.1 Payment of NGPP Costs and Maintainin~ Workin~ Capital Reserve.
Each Participant shall pay to NCPA the NGPP Costs in proportion to its’ Participation
Percentage and shall maintain its Working Capital Reserve in the Operating Accomat.
5.2 Initial Bud_~et. Promptly following the Effective Date, NCPA, in
conjunction with the Participants, shall prepare an initial budget (the ~’Initial Budget")
estimating the NGPP Costs expected to be incurred over the balance of the fiscal year
following the Effective Date.
5.3 Ammal Budget and Final Almual Bud_~et Settlement
5.3.1 A~mual Budget. After development of the Initial Budget and
prior to the begimaing of each fiscal year for which no budget has been adopted and for
each fiscal year for which a budget will be adopted, NCPA, in conjunction with the
Participants, shall prepare and deliver to each Participant a budget ("Annual Budget")
estimating the NGPP Costs expected to be incurred over such fiscal year as a result of
this A~eement. The NGPP Costs identified in each Ammal Budget shall be allocated to
the Participants in the NCPA Ammal Budget on the basis of Participation Percentages
and shall be identified in the NCPA Ammal Budget as "NGPP Cost Allocations." Any
Participant may request a detailed accounting of NCPA costs included as NGPP Costs in
THIRD Pt-La_SE AGREEMENT - NCPA GREEN POWER POOL
the Armual Budget and such Participant shall pay the reasonable costs of such accounting
review.
5.3.2 Final Ammal Budget Settlement. A final Annual Budget
settlement for the prior fiscal year will be produced each year after the ammal audit is
completed. This shall normally occur on or prior to December 1 of each year.
5.4 Operating Account
5.4.1 Initial Amounts. Within thirty (30) days after the Effective
Date, each Participant shall deposit into the Operating Account its Palnticipation
Percentage of the estimated costs identified in the Initial Budget.
5.4.2 Subsequent Deposits. Periodically, but in any event witlzin
thirty (30) days following execution by NCPA of any PPA or any financing commitment
and at least quarterly, NCPA shall review and revise its estimate of NGPP Costs for the
succeeding twelve (12) months. Following such review, NCPA shall determine whether
each Participant has a balance in the Operating Account equal to its Working Capital
Reser~,e. To the extent that any Participant’s balance in the Operating Account is g-reater
than one hundred and ten percent (110%) of its Working Capital Reserve, NCPA shall
credit such amount to the Participant’s next invoice. To the extent that m~y Participant’s
balance in the Operating Account is less than ninety percent (90%) of its Working Capital
Rese~we, NCPA shall add to such Participant’s next invoice an amount necessary to cause
such Participant’s balance in the Operating Account to equal the Working Capital
ReseraTe.
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
5.4.3 Use of O~eratin~ Account Funds. NCPA may use any and
all funds deposited into the Operating Account to pay any NGPP Costs, including making
payments to counterpm-ties under any PPA, payment of consultants, attorneys and
accountants performing services related to Procurement Activities or Project Services,
reimbursing NCPA for its internal costs associated with perfom-~ing its obligations under
this A~’eement, and paying any Claims, without regard to any individual Participant’s
balance in the Operating Account or proportionate share of NGPP Costs and irrespective
of whether NCPA has issued an invoice for such NGPP Costs to the Participants or
whether a Participant has made timely payments of invoices.
5.4.4 Emergency Additions. In the event that the funds in the
Operating Account are insufficient to allow payment of an invoice, demand, request for
further assurances, or Claims, NCPA shall notify all Participants and then prepare and
send a special or emergency assessment to the Participants. Each Participant shall pay to
NCPA such assessment when and if assessed by NCPA within five (5) Business Days
following the invoice date of the assessment.
5.4.5 Accountin~ and Interest. NCPA shall maintain a record of
each Participant’s deposits into and payments fl’om the Operating Account. Interest
earned on the Operating Account shall be credited to the Participants in accordance with
the Participants share of the balance in the Operating Account. Any losses in the
Operating Account shall be allocated among the Participants in accordance with their
Participation Percentages.
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
5.4.6 Return of Funds. On the termination of this A~eement with
respect to a Participant or a permitted withdrawal of a Participant in accordance with this
Agreement, the affected Participant or Participants may apply to NCPA for the remm of
their share of Operating Account funds ninety (90) days after the effective date of such
termination or withdrawal. NCPA shall, in its sole discretion, as determined by a vote of
the Participants, excluding the vote of the withdrawing or terminated Participant(s) that
are members thereof, estimate the then outstanding liabilities of the Participant(s),
including any estimated contingent liabilities and shall retain all such funds until all such
liabilities have been fully paid or otherwise satisfied in full. The balance of the
Participant’s share of the Operating Account will be refunded to the Participant.
5.5 Invoicing
5.5.1 Invoices. NCPA will issue an invoice to each Participant for
its proportionate share of the NGPP Costs (or any adjustments thereto) based on such
Participant’s Participation Percentage. Such invoice may include estimated costs and
estimated settlement and meter data. Each invoice shall include: (i) the total NGPP Costs
attributable to Procurement Activities for such month and the relevant Participant’s share
thereof; (ii) the total NGPP Costs attributable to Project Services for such month and the
relevant Participant’s share thereof; (iii) the quantity of elect~-icity and Enviro~m~ental
Attributes, by NGPP Resource, delivered to such Participant (or an estimate thereof) and
the unit price for such electricity; (iv) appropriate settlement and meter data (or an
estimate thereof); (v) an?, adjustments to prior invoices required based on actual data
received that was estimated in a previous invoice; (vi) notice of the amount, if any, that
THIRD PI-LASE AGREEMENT - NCPA GREEN POWER POOL
NCPA has paid or expects to pay using funds available in the Operating Account; and
(vii) amounts due from (or credited to) such Pm-ticipant under Section 5.4.2.
5.5.2 Pawnent of Invoices. All invoices delivered by NCPA
hereunder are due and payable no later than thirty (30) days following the invoice date;
provided, however, that any amount due on a day other than a Business Day may be paid
on the following Business Day. NCPA may apply a Participant’s share of the Operating
Account to the palanent of all or any portion of an invoice issued to such Participant,
provided that application of such funds fi’orn the Operating Account shall not relieve the
Participant fiom any late payment charges pursuant to Section 5.5.3. To the extent that
NCPA applies funds from the Operating Account to pay an mnount due under an invoice,
following receipt of payment of such invoice by the relevant Palnticipant, NCPA shall
deposit the relevant portion of the pa?a:nent into the Operating Account and credit such
deposit to such Pm-ticipant.
5.5.3 Late Pa~anents. Any amount due and not paid by a
Participant in accordance with Section 5.5.2 shall bear interest computed on a daily basis
until paid at the lesser of (i) the per amum prime rate (or reference rate) of the Bm:tk of
America NT & SA then in effect, plus two percent (2%) or (ii) the maximum rate
permitted by law.
5.6 Auditin~ and Settlement Data
5.6.1 Settlement Data. NCPA will make metering and settlement
data available to the Participants. Procedures and formats for the provision of such data
will be as established by the Participants and NCPA from time to time.
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
5.6.2 Audit Rights. Each Participant shall have the right to audit
any data created or maintained by NCPA pursuant to tl~s A~eement on thirty (30) days
prior written notice (unless other~,ise a~eed by NCPA). All audit rights shall be
exercised in accordance with the rules and procedures adopted by NCPA.
5.7 Revenue Covenant. ,Q~y failure of a Participant to meet its obligations
hereunder or to cure such failure in a timely manner shall constitute a Default and the
Defaulting Party shall be subject to such remedies of NCPA as provided for herein. Each
Participant covenants and aNees (i) to continue to pay or advance to NCPA, from its
electric department revenues only or, in the case of BART, its tariffs, fees or other
sources of revenue provided that such sources shall not include any sums derived from
sources the use of which is limited by law to expenditures other than operating expenses,
its percentage share of the costs authorized by Participants in accordance with this
A~eement in co~mection with its participation in the Project. Each Participant fmnther
aNees that it will fix the rates and charges for se~wices provided by its electric
department, or in the case of BART, its general revenues, so that it will at all times have
sufficient money in its department revenue funds to meet this obligation; (ii) to make
payments under this A~eement fi’om the Revenues of, and as an operating expense of, its
Electric System; (iii) to make pa?~nents under this A~eelnent whether or not there is an
inten-uption in, interference with, or reduction or suspension of services provided under
this A~eement; such payments not being subject to any reduction, whether by offset or
otherwise, and regardless of whether any dispute exists provided such interruption,
interference or reduction in services is caused by forces constituting an Act of God and
not reasonably contemplated by the Parties; and (iv) to operate its Electric System and the
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
business in connection therewith in an efficient maturer and at reasonable cost and to
maintain its Electric System in good repair, working order, and condition.
Section 6.Administration of Agreement
6.1 General. NCPA has the sole overall responsibility and authority for
the administration of this A~’eement. Any acts, decisions or approvals taken, made or
sought by NCPA under this Ageement shall be taken, made or sought, as applicable, in
accordance with NCPA’s Constitutive Docmnents and Section 6.2.
6.2 Action by Participants
(a) Forum: Whenever any action anticipated by this Ageement is
required to be taken by the Participants, including but not limited to, the expressed
authorization to add or to detract fi’om the list of EliNble Renewable Resources, such
actions shall be taken at a regular or special meeting of the NCPA Conm~ission but shall
be pm-ticipated in only by those Commissioners, or their designated alternates, who are
Participants.
(b) Ouorum: A quorum at NCPA Colmnission meetings for purposes of
acting upon matters relating to this A~eement shall consist of Co~rmaissioners, or their
designated alternates representing at least tt~-ee Participants having a combined majority
interest based upon Participation Percentages.
(c) Voting: Each Participant shall have the right to cast one vote with
respect to matters pertaining to this A~eement, with a majority vote of the Participants
required for action subject to the following exceptions;
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
i.Upon request of any Pa~nticipant representative, the voting
on an issue shall be by Participation Percentage with a 65% or more favorable vote fi’om
two or more Participants necessary to carry the action.
ii.After any decision related to this A~eement is taken by
the affirmative vote of Participants holding Participation Percentages of less than 65%,
the action can be reviewed and revised if a Participant gives notice of intention to seek
such review and revision to NCPA and each of the other Participants within ten (10) days
following the date on which such action was taken. Upon receipt of such a request for
reconsideration, the chairman of the Connanission shall agendize the matter for
reconsideration at the next regnalar meeting of the Commission or at a special meeting if
the circumstances so wanant. The action shall be upheld upon the affirmative vote of
authorized representatives of two or more Participants holding at least 65% of the total
Participation Percentages. Any action taken upon reconsideration shall be final.
6.3 NGPP Oversight Comanittee
NCPA may seek input and reconm~endations fi’om the Participants regarding
performance under this Ageement. Accordingly, the general manager of NCPA may
establish, in his discretion, a committee comprised of Participant Representatives which
may meet fiom time to time. Such conmaittee shall be referred to as the NGPP Oversight
Comlnittee The NGPP Oversight Conm~ittee may report to NCPA staff or the general
manager of NCPA, as the general manager deems approp~-iate. The NGPP Oversight
Committee may adopt rules of procedure consistent with the provisions of this
A~eement as it deems appropriate.
6.4 Participant Representatives
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
If the general manager establishes an NGPP Oversight Comrnittee, each Participant shall:
(i)Authorize and desi~aate one representative (~Participant
Representative"), and in its discretion, one or more alternates ("Desi~ated Alternate") to
serve on the NGPP Oversi~at Committee;
(ii) Authorize its Participant Representative and Designated Alternates
to vote on behalf of such Participant on recolmnendations on matters pertaining to this
Agreement; and
(iii) Deliver to NCPA, written notice containing the name and contact
information of such Participant’s Participant Representative and Designated Alternate(s),
if any.
Section 7. Participation Percentage: Admission and Withdrawa! of Participants
7.1 Pm’Vicipation Percent:ages. The Participation Percentages of each
Participant are as set forth in Exhibit A, as the san~e may be modified fi’om time to time
in accordance with the terms and conditions hereof.
7.2 Admission of New Participants. Following the Effective Date of
this A~eement, no Member ("Additional Member") may execute this AN’cement and
become a Participant unless one or more of the Participants ("Allocating Participants")
elect to a!locate a portion of its Participant Percentage to such Member. Upon aNcement
of the Allocating Participant and the Additional Member, the Additional Member shall
deliver to NCPA and each other Participant the written a~eement between the Additional
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Member and the Allocating Participant(s) indicating the a~eed upon change in
Participation Percentage(s), a counterpart of this A~eement executed by the Additional
Member, evidence that such a~’eements have been approved in accordance with its
applicable Constitutive Docmnents and payment of such Member’s share of the
Operating Account. Any reduction in any Allocating Participant’s share of the Operating
Account shall be credited to the Allocating Participants in accordance with Section 5.4.2.
Upon receipt of all required documents, NCPA shall provide to all Participants, an
updated Exhibit A reflecting the revised Participation Pe.rcentages
7.3 Withdrawal of Participants
7.3.1 Requirements and Process. Subsequent to the Effective Date of this
A~eement, a~y Participant may voluntarily withdraw from this ANeement
("Withdrawing Participant") upon written a~-eement with one or more Participants
("Adjusting Participant") to assulne the Withdrawing Participant’s full Participation
Percentage and provided further that such withdrawal does not violate any applicable
financing conditions. The Withdrawing Participant shall provide notice of intent to
withdraw to NCPA together with the applicable a~eement between the Withdrawing
Participant and the Adjusting Participant(s) regarding assumption of the Withdrawing
Pa-ticipant’s Participation Percentage along with evidence that such a~eement was
approved in accordance with applicable Constitutive Documents. Upon receipt of a!l
required documents, NCPA shall send a revised Exhibit A to all Participaats reflecting
the new allocation of Participation Percentages.
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
7.3.2 Associated Costs. A Withdrawing Participant shall reimburse
NCPA for any and all costs resulting from its withdrawal, including but not limited to the
legal, accounting, and administrative costs of winding up and assuring the complete
satisfaction and discharge of the Withdrawing Participant’s obligations.
7.3.3 No Effect on Prior Liabilities. Withdrawal by any Participant will
not terminate any ongoing or un-discharged contingent liabilities or obligations resulting
from this Agreement until they are satisfied in full or such Withdrawing Participant has
provided a mechanism reasonably acceptable to NCPA and the remaining Participants,
for the satisfaction in full thereof.
Section 8. Term and Termination
The term ("Term") of this A~eement shall commence on the Effective Date and
shall continue until (i) terminated by consent of all of the Participants that have not
previously withdrawn from this A~eement in accordance with Section 7.3 or othe~w~dse
voluntm-ily or involuntarily had their participation in this Agreement tem~inated or (ii) all
NGPP Resources have been removed from the NGPP.
Section 9. Default and Remedies
9.1 Events of Default. An~ event of default under this A~eement shall
exist with respect to a Party ("Defaulting Par~") upon the occurrence of any one or
more of the following:
(i) if any Par~y fails to make any pa?anent when due hereunder five (5)
Business Days after receipt of notice given by NCPA of such non-payment; or
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
(ii) if any Party fails to perform any other covenant or obligation under
this A~eement where such failure is not cured witlain ten (10) days following receipt of a
notice from NCPA demanding cure (provided that this shall not apply to any failure to
make payments (which is covered by Section 9.1 (i))); or
(iii) if any representation or wan-anty of any Party material to the
transactions contemplated hereby shall prove to have been false or misleading in any
material respect when made and that Party does not cure the facts underlying such
inconect representation or warranty so that the representation or warranty is corrected, to
the satisfaction to the other Participants, within ten (10) days of the date of receipt of
notice from any other Party demanding cure; or
(iv) if any Party is in default or in breach of any of its covenants under any
other a~’eement with NCPA and such default or breach is not cured within the time
pei-iods specified in such a~’eement; or
(v) the failure of NCPA to perfoma any covenant or obligation under this
A~eement following a ten (10) day notice to cure by any non-defaulting Participant.
9.2 Cure of an Event of Default. An Event of Default shall be deemed
cured only if such default shall be remedied within the time period specified in Section
9.1, above , as may be applicable after written notice has been sent to the Defaulting
Party from NCPA specifying the default mad demanding that the same be remedied
provided that failure of a Party to provide such notice shall not be deemed a waiver of
such default. If such default is not reasonably capable of cure within the applicable time
period specified herein, then the default shall not be deemed an Event of Default if the
Defaulting Party commences to remedy the default within the applicable time period
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
specified herein and thereafter diligently pursues such reinedy until such default is fully
cured; provided, however, that in no event shall any Party be entitled to longer than thirty
(30) days to cure an Event of Default with respect to any payment obligation under this
Ageement after receipt of written notice thereof.
9.3 Participation R~hts Of Defaultin~ Party. Notwithstanding anything
herein to the contrary, upon the occurrence of an Event of Default and until such Event of
Default is cured, the Participant that is the Defaulting Pa-ty shall not have the right to
participate under Section 6.2 on any matter with respect to this A~eement.
9.4 Remedies in the Event of Default
9.4.1 Remedies of NCPA. Upon the occurrence of an Event of DefauIt
where a Participant is the Defaulting Party, without limiting its other rights or remedies
available under this Agreement, at law or in equity, and without constituting or resulting
in a waiver, release or estoppel of any ri~t, action or cause of action NCPA may have
against the Participant, NCPA may:
(i) suspend the provision of ser~,ices under this A~’eement to such
Defaulting Party, including the delivery of electricity and other attributes of any NGPP
Resources until the Event of Default is cured;
(ii) demand that the Defaulting Party provide further assurances
that it is ready, willing and able to meet its obligations under this A~eement; and
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
(iii) terminate this A~eement as to the Defaulting Party on ten
(10) days prior written notice to the Defaulting Party and following approval of the non-
defaulting Participants; and
(iv) Subject to limitations as otherwise referenced in this
ANeement, NCPA shall have the right, duty and obligation to pursue all remedies under
law or in equity against any Defaulting Participant in curing or mitigating such default.
~an~y Defaulting Party shall remain liable under this Ageement for any damages resulting
from such default including damages resulting from subsequent purchases as authorized
by this Ageement.
9.4.2 Sale/Transfer of Participants Account Upon Default. Upon
default of a Participaat caused by the failure of such Participant to pay any sums due, and
provided tlaat such default is not cured in a timely maimer, then NCPA shall use its best
efforts to sell a~d transfer for the defaulting Participant’s account all or a portion of the
Participant’s capacity mad/or energy and/or Enviro~zmental Attributes for the remainder of
the tem~ of this Agneement. The price to be paid to NCPA by the Non-Defaulting
Participants for the Defaulting Participant’s capacity, energy, or enviromnental attributes
shall be at cost as opposed to market price. The Defaulting party shall receive no
compensation fi’om such sale. Notwithstanding that all or any portion of the Participant’s
capacity, energy or enviromnental attributes is sold or transferred, the Participant shall
remain liable for all of its obligations hereunder unless released therefi’om by NCPA and
the transferee upon assumption by the transferee. To the extent that any portion of the
defaulting Participant’s capacity and/or energy is unable to be sold by NCPA, then the
Participation Percentages of each non-defaulting Participant shall be automatically
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
increased for the remaining term of this Ageement pro-rata with those of the other non-
defaulting Participants and the defaulting Participant’s Participation Percentage be
reduced accordingly, but only for the purpose of computing the Percentages of the non-
defaulting Participants. The sum of any increases of a non-defaulting Participant’s
Participation Percentage shall not exceed twenty-five (25) percent of the non-defaulting
Participant’s oriNnal Participation Percentage on an accumulated basis without the
written consent of such non-defaulting Participant.
9.4.3 Remedies of Participants. Upon the occurrence of an Event of
Default, and following the applicable cure periods, where NCPA is the Defaulting Party,
the Participants may, without limiting their other rights or remedies available under this
ANeement, at law or in equity, and without constituting or resulting in a waiver, release
or estoppet of any right, action or cause of action the Participants may have against
NCPA, terminate this A~eement in whole, subject to the provisions of Section 9.5.4.
9.4.4 Special Covenants Re~ardin~ Operatin~ Account. In the event that
a Participant’s balance in the Operating Account is insufficient to cover all invoices for
NGPP Costs sent to such Participant, then, without limiting NCPA’s other rights or
remedies available under this A~’eement, at law or inequity, such Participant shall
cooperate in good faith with NCPA and shall cure the default as rapidly as possible, on an
emergency basis, taking all such action as is necessary, including, but not limited to,
raising rates and charges to its customers to increase its Revenues to replenish its share of
the Operating Account as provided herein, drawing on its cash-on-hand and lines of
credit, obtaining further assurances by way of credit support and letters of credit, and
taking all such other action as will cure the default quickly.
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
9.5 Effect of Termination or Suspension
9.5.1 Generally. The suspension or termination of this A~eement will not
terminate, waive, or other-,vise discharge any ongoing or undischarged liabilities,
contingent liabilities or obligations arising from this A~’eement until such obligations are
satisfied in full., and all of the costs incurred by NCPA in connection with such
suspension or termination, including reasonable attorney fees, the fees and expenses of
other experts, including auditors and accountants, other costs and expenses that NCPA is
entitled to recover under this A~eement, and other reasonable and necessary costs
associated with any and all of the remedies, are paid in full.
9.5.2 Suspension bv NCPA. If performance of all or any portion of this
A~eement is suspended by NCPA with respect to a Participant in accordance with
Section 9.4.1 (i), such Participant shall pay any and all costs incurred by NCPA as a
result of such suspension including reasonable attorney fees, the fees and expenses of
other experts, including auditors and accountants, other reasonable and necessary costs
associated with such suspension and any portion of the NGPP Costs that were not
recovered fi’om such Participant as a result of such suspension.
9.5.3 Termination by NCPA. If this A~’eement is terminated by NCPA
with respect to a Participant in accordance with Section 9.4.1 (iii), (i) such Participant
shall pay any and all costs incurred by NCPA as a result of such termination including
reasonable attorney fees, the fees and expenses of other experts, including auditors and
accountants, other reasonable and necessary costs associated with such suspension and
any portion of the NGPP Costs that were not, or will not be, recovered fl’om such
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Participant as a result of such termination, and (ii) such Participant’s Participation
Percentage shall be allocated among the remaining Participants in like manner as defined
in Section 9.4.2; provided however, if NCPA tem~inates this Agreement with respect to
the last remaining Participant, then this Agreement shall terminate.
9.5.4 Termination by Participants. If this Agreement is terminated by all
Participants in accordance with Section 9.4.3, or by unanimous consent of all of the
Parties hereto, then the Participants shall pay to NCPA all previously unpaid NGPP Costs
incurred as of the date of such termination, and following such tenr~ination, the
Participants shall cooperate and act in good faith to negotiate and agree upon the method
of allocating among the Participants in proportion to their respective Participation
Percentages the costs and benefits of the NGPP Resources, all PPAs then in effect, and
any financing agreements or cormnitments and any matters pertaining to the
adrninistration, management, control, operation and maintenance of the NGPP Resources.
NCPA shall reasonably cooperate with the Participants in comaection with implementing
the foregoing and the Participants shall inde~maify NCPA for any costs incurred in
connection therewith, including reasonable attorney fees, fees and expenses of other
experts, including auditors and accountants and other reasonable mad necessary costs. If
the Parties are unable to reach agreement as to the foregoing, then the Parties agree to
submit the matter to mediation with a mutually agreed upon mediator. If the Parties are
still unable to reach agreement following mediation, then the matter shall be submitted to
binding arbitration subject to the rules of the Aaa~erican Arbitration Association, the costs
of such arbitration being borne in proportion among the Parties according to their
Participation Percentages.
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Section 10. Miscellaneous
t0.1 Confidentiality. The Participants and NCPA will keep confidential all
confidential or trade secret information made available to them in connection with this
A~eement, to the extent possible,
California Public Records Act and
consistent with applicable laws, including the
the California Constitution. It shall be the
responsibility of the holder of the claim of confidentiality or trade secret to defend at its
expense against any request that such infomaation be disc!osed. Confidential or trade
secret information shall be marked or expressly identified as such.
10.2 Indemnification and Hold Harmless. Subject to the provisions of
Section 10.4, each Participaat a~ees to indemnify, defend and hold harmless NCPA and
its Members, including their respective entities governing officials, officers, agents, and
employees, fi’om and against any and all claims, suits, losses, costs, damages, expenses
and liability of any kind or nature, including reasonable attorneys’ fees and the costs of
litigation, including experts ("Claims"), to the extent caused by any acts, omissions,
breach of contract, negligence (active or passive), a’oss negligence, recklessness, or
will~l misconduct of a Participant, its governing officials, officers, employees,
subcontractors or agents, to the maximum extent permitted by law.
10.3 Several Liabilities. No Participant shall be liable under this
Ageement for the obligations of any other Participant, and each Participant shall be
solely responsible and liable for perfomaance of its obligations under this A~eement,
except as otherwise provided for herein, and the obligation of each Participant under this
A~eement is a several obligation and not a joint obligation with those of the other
Participants.
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
10.4 No Consequential Dama_~es. FOR ANY BREACH OF ANY
PROVISION OF THIS AGREEMENT FOR WHICH AN EXPRESS REMEDY OR
MEASURE OF DAMAGES IS PROVIDED 1N THIS AGREEMENT, THE LIABILITY
OF THE DEFAULTING PARTY SHALL BE LIMITED AS SET FORTH IN SUCH
PROVISION, AND ALL OTHER DAMAGES OR REMEDIES ARE HEREBY
WAIVED. IF NO REMEDY OR MEASURE OF DA_MAGE IS EXPRESSLY
PROVIDED, THE LIABILITY OF THE DEFAULTING PARTY SHALL BE LIMITED
TO ACTUAL DAMAGES ONLY AND ALL OTHER DAMAGES AND REMEDIES
ARE HEREBY WAIVED. IN NO EVENT SHALL NCPA OR ANY PARTICIPANT
OR THEIR RESPECTIVE SUCCESSORS, ASSIGNS, REPRESENTATIVES,
DIRECTORS, OFFICERS, AGENTS, OR EMPLOYEES BE LIABLE FOR ANY
LOST PROFITS, CONSEQUENTIAL, SPECIAL, EXEMPLARY, INDIRECT,
PUNITIVE OR INCIDENTAL LOSSES OR DAMAGES, INCLUDING LOSS OF USE,
LOSS OF GOODWILL, LOST REVENUES, LOSS OF PROFIT OR LOSS OF
CONTRACTS EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, AND NCPA AND EACH PARTICIPANT
EACH HEREBY RELEASES EACH OTHER AND EACH OF SUCH PERSONS
FROM ANY SUCH LIABILITY.
10.5 Amendments. Except where this ANeement specifically provides
otherwise, this Agneement may be amended only by a written instrument executed by the
Parties with the same formality as this Agreement. Notwithstanding the above, the
Parties hereby a~ee that the Participants have the discretion to modifs, the provisions of
the following Exhibits pursuant to Section 6.2: A (Participation Percentages), C
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
(Appros;ed Resource Schedules), E (Contract Price), and G (Form of Power Purchase
A~eement). The Parties further agee that the NCPA general manager has the discretion
to modify the provisions of Exhibits B (Form of Resource Schedule) and F (Form of
Request for Proposals).
t0.6 Severabititv. In the event that any of the terms, covenants or
conditions of this A~eement or the application of any such term, covenant or condition,
shall be held invalid as to any person or circumstance by any court having jm~sdiction, all
other terms, covenants or conditions of this A~eement and their application shall not be
affected thereby, but shall remain in force and effect unless the court holds that such
provisions are not severable fl’om all other provisions of this Ageement.
10.7 Governin~ Law. This A~’eement shall be interpreted, governed by,
and construed under the laws of the State of California.
10.8 Headings. All indices, titles, subject headings, section titles and
similar items m’e provided for the purpose of convenience and are not intended to be
inclusive, definitive, or affect the meaning of the contents of this A~m’eement or the scope
thereof.
10.9 Notices. Any notice, demand or request required or authorized by this
Ageement to be ~ven to may Party shall be in w~-iting, and shall either be personally
delivered to the Participant Representative and the secretary of the Commission or
transmitted to the Participant and the secretary at the address shown on the signature
pages hereof. The designation of such address may be changed at any time by written
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
notice given to the secretary of the Commission who shall thereupon Nve written notice
of such change to each Participant.
10.10 Wan’antv of Authority. Each Participant, and NCPA, represents and
warrants that it has been duly authorized by all requisite approval and action to execute
and deliver this Ageement and that this A~eement is a binding, legal, and valid
agreement enforceable in accordance with its terms as to the Participant and as to NCPA.
Upon the execution of this A~eement, each Participant shall deliver to NCPA evidence
of such Participant’s authority to enter into this A~’eement and that such authority was
exercised in accordance with such Participant’s Constitutive Docmnents.
10.11 Counterparts. This A~eement may be executed in any number of
counterpai~s, and each executed counterpart shall have the same force and effect as an
oriNnal instrument and as if all the si~aatories to all of the counterparts had si~ed the
sane instrument. Any si~aature page of this A~eement may be detached from any
counterpart of this Ageement without impairing the legal effect of any siN~atures
thereon, and may be attached to another counterpart of this A~-eement identical in form
hereto but having attached to it one or more signature pages.
10.12 Assimm~ent. Except as provided by Section 7, no Participant may
assign or otherwise transfer all or any portion of its Participation Percentage or any other
rights and obligations under this A~eement without the express written consent of
NCPA.
10.13 List of Exhibits. The Exhibits referenced herein shall be denoted as
follows:
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
B-
C-
D-
E-
F-
G-
Participation Percentages
Form of Resource Schedule
Approved Resource Schedules
Average Procurement Price
Contract Price
Form of Request for Proposals
Form of Power Purchase A~eement
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
IN WITNESS \VHEREOF, each Participant has executed this AN’eement with the
approval of its governing body, and NCPA has authorized this A~eement in accordance
with the authorization of its Comlnission.
NORTHERN CALIFORNIA
POWER AGENCY
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
BAY AREA RAPID TRANSIT
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
By:
Its:
By:
Its:
By:
Its:
By:
Its:
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
CITY OF HEALDSBURG
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
LASSEN MU~TICIPAL UTILITY DISTRICT
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
By:
Its:
By:
Its:
By:
Its:
By:
Its:
CITY OF LOMPOC
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
CITY OF PALO ALTO
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
By:
Its:
By:
Its:
By:
Its:
By:
Its:
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
PLUMAS SIERRA REC
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
PORT OF OAKLAND
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
By:
Its:
By:
Its:
By:
Its:
By:
Its:
CITY OF ROSEVILLE
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
CITY OF SANTA CLARA
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
By:
Its:
By:
Its:
By:
Its:
By:
Its:
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
TURLOCK IRRIGATION DISTRICT
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
CITY OF UKIAH
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
By:
Its:
By:
Its:
By:
Its:
By:
Its:
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
By:
Its:
By:
Its:
By:
Its:
By:
Its:
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Exhibit A
Participation Percentages
Participant
Alameda
BART
Biggs
Gridley
Heatdsburg
Lassen
Lodi
Lompoc
Palo Alto
Plumas
Port of Oakland
Redding
Roseville
SVP
TID
Truckee Donner
Ukiah
Total Annual aMW
Participant Election
(aMW)*
7.0
2.0
3.0
5.0
15.0
2.0
25.0
15.0
3.0
78.0
~ aMW = Average Capacity in Average MW
Participation
Percentage
8.9744%
2.5641%
3.8462%
6,4103%
19.2308%
1.2821%
2.5641%
32.0513%
19.2308%
3.8462%
100.0000%
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Exhibit B
Form of Resource Schedule
[to be developed]
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Exhibit C
Approved Resource Schedules
The Resource Schedule submitted in comaection with approving a Proposed Resource
under Section 3 will be added to this Exhibit following approval of such Proposed
Resource in accordance with Section 3.4
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Exhibit D
Average Procurement Price
The Average Procurement Price shall include the cost for alt active resources in the
NCPA Green Power Project. Anytime a new resource is to be considered for addition to
the NGPP, the cost impact of the new resource to the Average Procurement Price shall be
recalculated As active resources within the NGPP terminate, the Average Procurement
Price may exceed the Average Procurement Price Cap.
The Average Procurement Price will be calculated as follows:
1)The discount rate to be used to determine present value shall be 2.41%. This factor
reflects the average Implicit Price Deflator (IPD) for U.S. Gross Domestic Product for
the years 1986 through 2005.
2)For each resource
a) Estimate the expected generation over the life of the resource,
b) Calculate the almual cost,
c) Present value the amaual cost to 2006 using the average IPD
3) Sum the following for all active resources in the NGPP and the resource(s) for
addition to the NGPP:
a) The expected generation,
b) PV of annual cost
4) Divide the total PV of annual cost by the total expected generation.
Example Calculation:
IPD =2.41%l Year
2005 2006 2007
Resource 1
Expected Generation (MWh)
Annual Cost ($1,000’s)
PV of Annual Cost ($1,000’s)
Resource 2
Expected Generation (MWh)
Annual Cost ($1,000’s)
PV of Annual Cost ($1,000’s)
Resource 2
Expected Generation (MWh)
Annual Cost ($1,000’s)
PV of Annual Cost ($I ,000’s)
Total
87,381
4.321
104,857
6,038
24,966
3,571
12,483 24,966 24,966
$624 $1,267 $1,286
$624 $1.237 $1.226
$
$
$
$
17,476
$1,084
$1,033
8,322 8,322
$1,248 $1,248
$1,219 $1,190
$
$
$
$
$
$
2008
24,966
1,325
1,234
58,254
3,612
3.363
8,322
1,248
!,162
$
$
$
$
$$
2009
29,127
1,806
1,642
All Resource Summary
Total Expected Generation (MWh)
Total of PV of Annual Cost ($1,000’s)
Contract Price
Total Resource 1 Resource 2 Resource 3
217,204 87,38!104,857 24,966
13,930 $4,321 $ 6,038 $ 3,571
64.13 $49.45 $57.58 $ 143.05
Average Procurement Price
Resource n
$
$
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Exhibit E
Contract Price
The Contract Price shall include all costs for the resource under consideration. Anytime
a new resource is to be considered for addition to the NGPP, the Contract Price cost shall
be calculated.
The Contract Price will be calculated as follows:
1)The discount rate to be used to determine present value shall be 2.41%. This factor
reflects the average hnplicit Price Deflator (IPD) for U.S. Gross Domestic Product for
the years 1986 tt~rough 2005.
2)For the resource under consideration:
a) Estimate expected generation over the life of the resource,
b) Calculate the ammal cost,
c) Present value the annual cost to 2006 using the average IPD
3) Sum the following:
a) The expected generation over the life of the resource,
b) PV of annual cost
4) Divide the total PV of almual cost by the tota! expected generation.
Example Calculation:
IPD =2.41% .J Year
Total 2005 2006 2007
Resource Under Consideration
Expected Generation (MWh)
Annual Cost ($1,000’s)
PV of Annual Cost ($1,000’s)
Contract Price
74,898 I 24,966
$$1,267
3,697 $$1,237
49.36
~"-f Contract Price
24,966
$1,286
$1,226
$
$
2O08
24,966
1,325
1,234
$
$
2(
THIRD PHASE AGREEMENT - NCPA GREEN POWER POOL
Exhibil F
CPA
NORTHERN CALIFORNIA POWER A6ENCY
REQUEST for PROPOSALS
For
RENEWABLE ELECTRIC PO’~¥ER SUPPLY PROPOSALS
RFP Issue Date:September 5, 2006
Response Deadline:September 25, 2006, 5:00pro Pacific Prevailing Time (PPT)
1 PURPOSE AND SCOPE
The Northern California Power Agency (NCPA) is accepting proposals for Eli~ble
Renewable Resources to meet the expected long-term electric power needs of its Members.
This RFP is limited to those parties who currently have fights in, own, or propose to develop,
an Eli~ble Renewable Resource generating facility(ies).
NCPA may procure power supply resom’ces fiom those Respondents whose proposals, in
NCPA’s sole jud~nent, represent the ~-eatest value to the NCPA Members when compared
with other electric supply options available to NCPA. The issuance of this Request For
Proposals (RFP) does not constitute a commitment by NCPA to purchase such resources fi’om
may source. NCPA reserves the right to revise, suspend or terminate this RFP and any
schedule related thereto at its sole discretion without liability to any Respondent.
2 DESCRIPTION OF NCPA
NCPA is a nonprofit California joint powers agency established in 1968. Its Members are:
the cities o,f Alameda, Bay Area Rapid Transit District, Biggs, Gridley, Healdsburg, Lodi,
Lompoc, Palo Alto, Redding, Roseville, Santa Clara, Ukiah, the Port of Oaldand, the Truckee
NCPA RFP for Renewable Electric Power Supply - September 2006, Page 1 Version = 2006-04-18
Dom~er Public Utility District, and the Turlock Irrigation District; and three Associate
Members: Lassen Municipal Utility District, Placer County Water Agency, and the Plumas-
Sierra Rural Electric Cooperative. These Members serve nearly 700,000 electric consumers in
Central and Northern California. Attachment 3 displays the locations of each NCPA Member
and jointly owned resources.
As a CAISO Schedule Coordinator, NCPA makes arrangements for physical power deliveries
to its Members through the CAISO Grid. In addition, NCPA’s members hold additional
transmission-related rights throu~a other pre-existing contracts.
In Fiscal Year 2004-05, NCPA Members met a combined peak demand of 1845 megawatts
(MW) and supplied 9542 gigawatt-hours (GWh) of energy. To meet these loads, NCPA
Members own and operate geothen-nal generation located in the Geysers region of California,
multiple hydroelectric facilities, gas fired combustion turbines (CTs) located in five Members’
service areas, miscellaneous small projects, numerous existing power supply contracts and
Western Area Power Administration (Western) contracts for capacity and associated energy.
Those Members participating in this RFP have the exclusive authority to set retail rates
sufficient to cover power purchase obligations, with the exception of BART, which has tariffs,
fees or other sources of revenue except as such may be limited by law-. Power purchase
contracts between NCPA and third parties are not subject to prudence review by state
regaalatory agencies and may be enforced according to their terms, in accordance with
Califon~ia law. The California Public Utilities Commission lacks jurisdiction over the power
purchase contracts of such NCPA Members. Contracts to be executed as a result of this RFP
are intended as binding legal a~’eements enforceable in the California com-ts.
With the exception of BART, each NCPA Member, participating in this RFP, operates its own
electric system as an enterprise and special fund and such members are obligated to establish
and collect fees and charges for electricity furnished through its electric system sufficient to
pay any and all amounts payable fi’om electric system revenues, which include amounts of
capacity or enerD,, or both, furnished pursuant to an a~eement entered into as a result of this
RFP. BART shall generate revenues sufficient to cover its obligations under an aN-eement
through tm-iffs, fees or other sources of revenue except through such sources which may be
limited by law. Fees and charges for electricib furnished through each NCPA Member’s
electric system are not considered taxes and are thus not subject to California tax and voter
approved provisions such as Propositions 13, 62, and 218.
3 DESCRIPTION OF REQUESTED POWER SUPPLY
NCPA will accept long-term contract or equity position proposals for renewable electric
power supply resources which include, but may not be limited to: biomass, biodiesel, fuel
cells using renewable fuels, digester gas, geothel-mal, landfill gas, municipal solid waste,
ocean wave, ocean thermal, tidal cun’ent, waste tire, waste gasification (various fuels), solar
(thermal), solar (photovoltaic), wind, or small hydro(30MW or less) which are (a) located
NCPA RFP for Renewable Electric Power Supply - September 2006, Page 2 Version = 2006-04-18
within California, (b) are located outside of California and have their first point of
intercomaection with the Western Electricity Coordinating Council transmission system
located within California or (c) are located outside of California but deliver electricity to a
substation or node within California.
Respondents may submit proposals that specify an energy- source other than one of those listed
above. Any Respondent, who chooses to propose an energy source not on the above list, must
provide adequate documentation in its proposal which identifies the fuel source as Eligible
Renewalole. After verification of the proposal as an Eligible Renewable Resource project,
NCPA, in its sole discretion, will make a determination as to the suitability of the proposal for
this RFP process.
NCPA will not accept proposals for renewable resources that do not retain their Renewable
Energy Credits/Attributes (REC). Additionally, this RFP is limited to generating facilities that
have an installed capacity as follows:
a)PV Solar facilities directly connected to the distribution system of a
participating NCPA Mernber: 10kW or larger,
b)Other facilities directly connected to the distribution system of a
pa-ticipating NCPA Member: 100kW or larger,
c)All other facilities:1MW or larger.
Depending on the value and type of proposals received, NCPA could accept, fi’om one or
more proposals, up to a total of 83aMW. [Average MW(aMW) - For example, 100MW of
installed wind capacity at 32% ammal capacity factor would be equivalent to 32aMW.]
4 POWER PURCHASE AGREEMENT (PPA)
NCPA has prepared a pro-fornaa PPA for the purchase of renewable energy and associated
enviromaaental att~-ibutes.
Capitalized terms used in this RFP and not otherwise defined have the meanings Wen to
them in the PPA. Respondents must review the pro-forma PPA to have a full understanding of
this RFP.
The PPA and associated Addenda contemplate the sale of both renewable energy and RECs.
Any proposal made for the sale of both renewable energy and associated RECs must be made
by the Respondent with the assumption that the pro-fonna will be the basis for any definitive
agreements between the Respondent and NCPA.
Any executed a~’eement for the purchase of Eligible Renewable Resource energy will be
presented to the NCPA Commission and will be subject to the approval of the Commission
and any other applicable authorities that have jurisdiction over any or all of the subject matter.
NCPA RFP for Renewable ElecMc Power Supply- September 2006, Page 3 Version = 2006-04-18
NCPA reserves the right to update, modify, or revise any or all of the terms and conditions
contained in the pro-forma PPA and associated addenda.
5 SECURITY
NCPA will not post security, collateral, or other assurances for credit purposes for any reason
whatsoever prior to or during the term of any agreement arising from this RFP.
Proposals that include or are contingent on NCPA providing security, collateral, or other
assurances will be deemed non-responsive and will not be considered.
6 PROPOSALSUBMITTAL
All responses, questions and COl:nmunications shall be submitted to the following email
address: NCPAGreenRFP2006~ncpa.c~m
You may also direct questions to:
Dana W. Griffith
Power Coordination and Planning Engineer
Tel: 916-781-3636
Fax: 916-783-7693
NCPA, in its sole discretion, may reject any late or non-responsive proposal.
NCPA must receive all proposals and appropriate attactvnents by electronic e-mail no later
than 5:00 p.m. (PPT) on September 25, 2005.
A hard copy of the proposal is not required; however, Respondents may also send a hard copy
to NCPA no later than 5:00 p.m. (PPT) September 26, 2005.
Each proposal package submitted in response to this RFP shall contain only one proposed
resource. Respondents may submit more than one proposal in separate proposal packages.
Proposais, including proposed prices, will remain binding on the Respondent tl:u’ough the date
of completion of negotiations and the NCPA Commission approval process (120 days). A
duly authorized officer of the Respondent must simon the proposal.
None of the material received by NCPA fi’om the Respondent in response to this RFP will be
returned to Respondent. All materials and proposals submitted by the Respondent will become
the property of NCPA and may be used by NCPA for the purpose of evaluating proposals,
executing any agreements, regulatory hearings, and administering any resulting definitive
agreements.
NCPA RFP for Renewable Electric Power Supply - September 2006, Page 4 Version = 2006-04-t8
All responses that may arise fiom this RFP are considered commitments for use in developing
the agTeement between NCPA and the Respondent.
7 EVALUATION PROCESS
The RFP evaluation process will be completed in two stages. The first stage includes the
submission of the Stage 1 Proposal Questionnaire (Attachment 1), an initial screening by
NCPA, and a preliminary evaluation by NCPA.
NCPA will perform an initial screening to identify and eliminate any proposal that is non-
responsive to the RFP, does not meet the minimum requirements set forth in the RFP, is
clearly not economically competitive with other proposals, or is submitted by a Respondent
that lacks appropriate creditworthiness, sufficient financial resources, or qualifications to
provide dependable and reliable service.
NCPA will then perform a preliminary evaluation of the remaining proposals and rank their
value relative to other proposals as well as all other available options.
NCPA expects the initial screening and proposal evaluation process wilt take approximately
six weeks after the date of closing for submission of complete proposals; however, the
timeline will depend on the number and complexity of proposals received. After the initial
screening and evaluation process, NCPA will notify.- each Respondent of its status.
Respondents will be notified whether their proposal is on the "Short List", "Secondary List",
or listed as "Not Considered at this Time".
The Stage 2 process may include presentations to NCPA and the participating NCPA
Members, verification of certain key Proposal data, and reviews of other issues as needed.
Any Respondent who is notified that its proposal meets the Stage 1 criteria and is advanced to
the "Short List" will be advised of the due date for any additional Stage 2 questions.
NCPA may request that Respondents complete supplemental questionnaires and/or meet for
oral interviews at any stage of the RFP process. Respondents failing to provide information,
deemed necessary by NCPA to adequately review a proposal, may be eliminated from further
consideration at an5, stage or time during the RFP process.
8 EVALUATION CRITERIA
NCPA will, in its sole discretion, evaluate responsive power supply proposals to determine
which proposals are likely to provide the greatest overall value to its Member utilities. All
proposals will be evaluated based on factors that include, but are not limited to: proposal term,
technology, energy source, location, delivery point, status, timeline, joint action partners,
environmenta! benefits as wel! as Respondent’s experience, public credit rating, financial
NCPA RFP for Renewable Electric Power Supply- September 2006, Page 5 Version = 2006-04-18
stability, extent of off-balance sheet financing, product price and terms, delivery, seta;ice
levels, and other relevant criteria.
In addition, depending on the project being proposed, proximity to load may have value to
certain NCPA Members. Those Members may be interested in being a host or assisting in
direct connection to their distribution Nid.
Evaluations will be based on information provided dm-ing the two-stage RFP process, possible
oral interviews with the Respondent, mail or email requests, information already known by
NCPA, and other publicly available information.
All determinations made by NCPA with respect to any Respondent or its proposal, including
the determinations described in this RFP, shall be made by NCPA in its sole discretion and
without liability. No debriefings will be provided as these determinations will be final and are
not subject to review.
9 GENERAL PROVISIONS
If the Respondent so specifies and clearly identifies portions of its proposal as
"PROPRIETARY AND CONFIDENTIAL", NCPA will make reasonable efforts to treat the
marked portions as confidential information. Such information may, however, be made
available under applicable State or Federal law. NCPA also reserves the right to release such
information to its agents, contractors, or Mernber utilities for the purpose of evaluating a
Respondent’s proposal. Such agents, contractors and Melnber utilities will be required to
observe the same care with respect to disclosure as NCPA. Under no circumstances will
NCPA, its Commission, managers, agents, contractors or Member utilities, be liable for any
damages resulting from any disclosure of Respondent’s claimed confidential information
during or after this RFP process.
Although NCPA is interested in meeting its needs by acquiring resources that provide the
~’eatest value to its Members, evaluation of a proposal does not constitute a con’unitment by
NCPA to purchase energy and!or capacity from any source. NCPA Members and NCPA are
not obligated in any way to proceed with this RFP or consider or enter into any a~eement or
undertake any liability to any Respondent in connection with this RFP and any and all
proposals, whether qualified or not, may be rejected without any liability whatsoever to any
Respondent on the part of NCPA or any NCPA Member.
NCPA shall not be responsible for any costs incmTed by Respondent to prepare, submit,
negotiate, contract, or participate in this RFP process.
Those Respondents who submit proposals a~ee to do so without legal recourse against
NCPA, its Commission, managers, agents, contractors or Member utilities for rejection of
their proposal(s) or for failure to execute an a~eement for any reason. NCPA shall not be
liable to any Respondent or party at law or in equity for any reason whatsoever for any acts or
NCPA RFP for Renewable Electric Power Supply- September 2006, Page 6 Version = 2006-04-18
omissions arising out of or in coimection with this RFP. By submitting its proposal, each
Respondent waives any right to challenge an?, valuation by NCPA of any proposal of any
Respondent or any determination of NCPA to select or reject any proposal of any Respondent
or take an?, action contemplated by this RFP, including any right of a Respondent to intervene
in any governing body proceeding for the purpose of protesting the selection or rejection of
any proposal, any other decision of NCPA contemplated by this RFP or any resulting
a~’eement related to a selected proposal. Each Respondent, in submitting its proposal,
inevocably agees and acknowledges that it is making its proposal subject to and in ageement
with the terms of this RFP and a~’ees that NCPA shall be entitled to specific performance of
its rights hereunder and injunctive relief.
NCPA RFP for Renewable Electric Power Supply - September 2006, Page 7 Version = 2006-04-18
Exhibit G DRAFT June 21, 2006
2006 PRO FORMA
RENE~VABLE ENERGY PO~,VER PURCHASE AGREEMENT
betrveen
NORTHERN CALIFORNIA POWER AGENCY
and
[SELLERW~3IE]
[DATE]
SANFRAN 156146 (2K)
RENEWABLE ENERGY POWER PURCHASE AGREEMENT
This Renewable Energy Power Purchase A~eement, together with the exhibits,
attachments, and any referenced collateral ageement or similar an’angement between the Parties
(collectively, the "A~eement") is made and effective as of the following date: [Insert Date]
("Effective Date") by and between the Northern California Power Agency, a joint powers agency
established pursuant to the laws of the State of California (°’Buyer" or "NCPA"), and [Insert
Seller’s Name], a [arnsert Seller’s business registration and location thereqtq ("Seller").
WHEREAS, Seller intends to construct, own, and operate a [ ] MW [Insert resource
t3~pe]-powered generating facility, which qualifies as of the Effective Date as an eliNble
renewable energy resource ("ERR") under the State of California Renewable Portfolio Standard
Progam ("RPS"), as codified at California Public Utilities Code Section 399.11, et seq? and
desires to sell electricity produced by such generating facility together with all Enviromnental
Attributes and Capacity Attributes, each as defined below, to Buyer pursuant to the terms and
conditions set forth herein; and
WHEREAS, Buyer desires to purchase electricity generated by Seller’s generating
facility, together with all Envirom’nental Attributes and Capacity Attributes pursuant to the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises hereof, and the covenants and
conditions contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Buyer and Seller, intending to be legally bound,
hereby a~ee as follows.
SANFRAN 156146 (2K)
AGREEMENT
ARTICLE 1: DEFINITIONS
Unless otherwise required by the context in which any term appears, (i) initially-
capitalized terms used in this A~eement shall have the meanings specified in this Article; (ii)
terms defined in the singular shall include the plural and vice versa; (iii) references to ’~Articles,"
"Sections," and "Exhibits" shall be to articles, sections, or exhibits hereof; (iv) all references to a
particular entity shall include a reference to such entity’s successors and permitted assigns; (v)
the words "herein," "hereof," and "hereunder" shall refer to this Ageement as a whole and not to
any particular section or subsection hereof; (vi) all accounting terms not specifically defined
herein shall be construed in accordance with GAAP, consistently applied; (vii) references to this
A~’eement shall include a reference to all appendices and Exhibits hereto, as the same may be
amended, modified, supplemented, or replaced from time to time; (viii) terms used in the
masculine shall include the feminine and neuter and vice versa; and (ix) the term "including,"
when used in this A~eement, shall mean to include without limitation.
1.1 "Adjustanent Period" means (i) the actual period when inaccurate measurements were
made by a defective Meter, if that period can be determined to the mutual satisfaction of
the Parties, or (ii) if the actual period ca~mot be detem~ined to the mutual satisfaction of
the Parties, one-half the period from the date of the last previous test of the Meter to the
date such failure is discovered.
"A~-eement" has the meaning set forth in the prean~ble of this A~eement.
"Available Hours" means the number of hours during the Peak Months or Non-Peak
Months, as applicable, of each Contract Year in which the Generating Facility is capable
of delivering Energy to the Delivery Point; provided that, to the extent that the
Generating Facility is not capable of delivering all of the Contract Capacity in any hour,
the Available Hours with respect to such hour shall be reduced pro rata to reflect the
fi’action of the Contract Capacity that the Generating Facility is capable of delivering in
such hour.
1.4 "Availability" means the ability of the Generating Facility to produce and of Seller to
deliver Output at a level at least equal to the Contract Capacity, assuming adequate
[I~sert resource ONe] resource. Availability shall be detem~ined as a percentage for the
Peak Months and Non-Peak Months of each Contract Year in accordance with the
following formula:
Available HoursAvailability = 100 x Base Hours
SANFILg.N 156146 2K)
1.5 "Availability Shortfall Damages" means an amount equal to the following folTnula:
Availability Shortfall Damages = (A) x (B) x (C) x (D)
1.6
1.7
1.8
1.9
1.10
1.11
1.12
where:
(A)equals the positive difference between the required Availability in any pel-iod
and the actual Availability in such period, expressed as a decimal;
(B)equals the prevailing Contract Price;
(C)equals the quotient of the nmnber of months in the relevant period divided by
twelve (12); and
(D) equals the Expected Annual Contract Quantity.
"Base Hours" means the nmnber of hours during the Peak Months or Non-Peak Months,
as applicable, of each Contract Year; provided that, to the extent that the Generating
Facility is partially or wholly incapable or otherwise unable to deliver Energy in any hour
as a result of a Force Majeure Event that hour (or if the Generating Facility’s capacity is
only partially constrained, the pro rata portion of that hour) shall be excluded fiom the
Base Hours.
"Business Day"’ means any day except a Saturday, Sunday, or a Federal Rese~we Bai~
holiday. A Business Day shall beNn at 8:00 a.m. and end at 5:00 p.m. local time for the
relevant Party’s principal place of business. The relevant Party, in each instance unless
otherwise specified, shall be the Party fi’om whom the notice, payment or delivery is
being sent, or by whom the notice, payment or delivery is received, as the context
requires.
"Buyer" has the meaning set forth in the preamble of this A~’eement.
"Buyout Payment" means the amount set forth in Exhibit 1 [Buyout Payment Form].
°~Capacity Att~-ibutes" means any and all current or furore defined characteristics,
certificates, tags, credits, ancillary service attributes, or accounting constructs, howsoever
entitled, including Resource Adequacy Benefits, and any tracking or accounting
associated with the foregoing, attributed to or associated with the electricity generating
capacity of the Generating Facility, or any unit of electricity generating capacity of the
Generating Facility, during the Term.
’~Commercial Operation" means that: (i) the Generating Facility has been constructed in
accordance with Good Utility Practice, all Permits, Requirements of Law, and the
specifications set forth in Exhibit 2 [Description of Generatin~ Facility]; (ii) all of the
requirements set forth in Article 7 have been satisfied; and (iii) Seller has successfully
completed the Comlnercial Operation Performance Tests.
~Commercial Operation Date" means the date on which Colmnercial Operation first
Occurs.
SANFRAN 156146 (2K)
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20
1.21
1.22
1.23
"Commercial Operation Perfon-nance Tests" means the tests set forth in Exhibit 3
[Cormnercial Operation Performance Tests].
"Confidential Information" means information in respect of the business of either Party
provided by one Party to the other in accordance with, or in furtherance of, this
A~eement including this Ageement, the content of documents, ideas, business methods,
finances, prices, business plans, financial development plans, manpower plans, customer
lists or details, computer systems, software, M~ow-how, trade secrets or other matters
com~ected with such Party’s obligations hereunder; provided, however, that "Confidential
Information" shall not include information that (i) at the time of disclosure or thereafter is
generally available to, or 1,mown by, the punic other thma as a result of a disclosure by the
receiving Party or its representatives; (ii) was available to the receiving Party on a non-
confidential basis from a source other than the disclosing Party; or (iii) was otheea;ise
independently acquired or developed by the receiving Party without violating its
obligations hereunder.
"Contract Capacity" means the installed electricity generating capacity of the Generating
Facility, net of all on-site and other uses permitted under this A~eement and of all line or
transformation losses to the Delivery Point, which shall be [ ] MW.
"Contract Price" means the price in SU.S. (unless otherwise provided for) to be paid by
Buyer to Seller for the purchase of the Output, as specified in Exhibit 4 [Contract Price!.
"Contractual Obligations" means, as to Seller, any material a~-eement, instrument or
undertaking to which Seller is a party or by which it or any of its property is bound.
"Contract Yea"’ means each year beN~ming on Januaw 1 st and ending on December 31 st
of such yea" following the Coir~nercial Operation Date; provided, however, that the first
Contract Year shall convnence on the Conv’nercial Operation Date and end on the
following December 31st, mad the last Contract Year shall end on the relevant
almiversary of the Co~ma~ercial Operation Date as set forth in Section 2.1.
"Control Area" means the electric power system (or combination of electric power
systems) under the operational control of the ISO or any other electric power system
under the operational control of another orgarLization vested with authority comparable to
that of the ISO.
"Credit Support Amount" means the amount determined in accordance with Exhibit 5
[Credit Support Amountl.
"Damages" has the meaning set forth in Section 10.4.
"Delay Liquidated Dmnages" means an amount equal to $per day.
"Delivery Point" means the point at which the Output will be delivered by Seller and
received by Buyer hereunder, as specified in Exhibit 2 [Description of Generating
Facilitv-[.
SANFRAN 156146 (2K)
4
1.24
1.25
1.26
1.27
1.28
"EA Agency" means any local, state or federal entity, or any other Person, that has
responsibility for or jurisdiction over a pro~am involving transferability of
Environmental Attributes, including the Clean Air Markets Division of the United States
Environmental Protection Agency, the California Resources, Conservation and
Development Commission, the California Public Utilities Colrnnission, and any
successor agency thereto.
"Effective Date" has the meaning set forth in the preamble of this Agreement.
"Emergency" means any condition or situation which poses an imminent tlveat to: (i)
life or property, or (ii) Buyer’s, or any of its member’s, ability to maintain safe, adequate,
and continuous electric power and energy service to its customers.
"Energy" means the electricity generated by the Generating Facility pursuant to this
Agreement, as expressed in units of kWh or MWh.
’°Enviroimaental Attributes" means may and all credits, benefits, emissions reductions,
offsets, and allowances, howsoever entitled, a~ributable to the generation from the
Generating Facility or Expansion Plant(s), as the case may be, and its displacement of
conventional energy generation. Enviro~maental Attributes include: (i) any avoided
emissions of pollutants to the air, soil or water such as sulfur oxides (SOx), nitrogen
oxides (NOx), carbon monoxide (CO) a~d other pollutants; (ii) any avoided emissions of
carbon dioxide (CO2), methane (CH4) and other ~-eenhouse gases that have been
detemained by the United Nations Intergoven~nental Panel on Climate Change to
contribute to the actual or potential threat of altering the Em-th’s climate by trapping heat
in the atmosphere; and (iii) the reporting ri~ats to these avoided emissions such as Green
Tag Reporting Rights.
"Green Tag Reporting Rights" are the right of a Green Tag purchaser to report the
ownership of accmnulated Green Tags in compliance with federal or state law, if
applicable, and to a federal or state agency or any other party at the Green Tag
purchaser’s discretion, and include those Green Tag Reporting Rights acc~naing under
Section 1605(b) of The Energy Policy Act of 1992 and any present or future federal,
state, or local law, regulation or bill, and international or foreign emissions trading
pro~am. °’Green Tags" are accmrmlated on MWh basis and one Green Tag represents
the Enviro~:~nental Attributes associated with one (1) MWh of energy.
Environmental Attributes do not include: (i) any energy, capacity, reliability or other
power attributes fiom the Generating Facility or Expansion Plant(s), (ii) Production Tax
Credits associated with the construction or operation of the Generating Facility, or
Expansion Plant(s), and other financial incentives in the form of credits, reductions, or
allowances associated with the Generating Facility or Expansion Plant(s) that are
applicable to a state or federal income taxation obligation, (iii) fuel-related subsidies or
"tipping fees" that may be paid to Seller to accept certain fuels, or local subsidies
received by Seller or the owners of the Site for the destruction of particular pre-existing
pollutants or the promotion of local environmental benefits, or (iv) emission reduction
SANFP~A.N 156146 (2K)
5
1.29
1.30
1.31
1.32
1.33
1.34
1.35
1.36
1.37
1.38
1.39
1.40
1.41
credits encumbered or used by the Generating Facility or Expansion Plant(s) for
compliance with local, state, or federal operating and/or air quality permits.
"Envirolmaental Attributes Reporting Rights" means all rights to report ownership of the
Environmental Attributes to any Person, including under Section 1605(b) of the Energy
Policy Act of 1992.
"ERR" has the meaning set forth in the recitals of this Ageement.
"Event of Default" has the meaning set forth in Article 10.
"Expansion Plant" means any expansion of the Generating Facility from its Contract
Capacity. Each such expansion of the Generating Facility shall be deemed to be an
Expansion Plant.
"Expansion Plant Output" means all capacity and associated Energy, Test Energy, and
associated Environmental Attributes and Capacity Attributes produced by Seller at any
Expansion Plant.
"Expected Animal Contract Quantity" means the amount of Energy and Environmental
Attributes that Seller expects to deliver to Buyer hereunder in a Nven Contract Year other
than the first mad last Contract Years (which may be partial years), as set forth in Exhibit
6 [Expected Annual Contract Quantity Form].
"Expected Commercial Operation Date" means the date on which the Convr~ercial
Operation Date is expected to occur, as specified in Exhibit 7 [Milestones].
"FERC" means the Federal Energy Regulatow Conmaission mad its successor
organization, if any.
"Force Majeure Event" has the meaning set forth in Section 8.1.
"GAAP" means Generally Accepted Accounting Principles in the United States of
America that is consistently applied.
"Generating Facility" means Seller’s electricity generating facility as more particularly
described in Exhibit 2 [Description of Generatin~ Facility], together with all materials,
equipment systems, structures, features and improvements necessaw to produce
electricity at such facility, excluding the Site, land rights and interests in la~d.
"Governmental Authority" means any federal or state govermnent, or political
subdivision thereof, including, any municipality, township or county, or any entity or
authority exercising executive, legislative, judicial, regulatory or administrative functions
of or pertaining to govenmaent, including, any corporation or other entity owned or
controlled by any of the foregoing.
"Guarantor" means a Person that guarantees the obligations of Seller by executing a
Guaranty.
SANFILg.N 156146 i’2K)
1.42
1.43
1.44
1.45
1.46
1.47
1.48
1.49
1.50
1.51
1.52
1.53
"Guaranty" means a guaranty in the form attached hereto as Exhibit 8 [Guaranty
A~eement].
"Interconnection" means the intercolmection of the Generating Facility with the
Transmission System, including construction, installation, operation and maintenance of
all Interconnection Facilities.
"Interconnection Agreement" means the aNcement between Seller and the Transmission
Provider pursuant to which Seller and the Transmission Provider set forth the tem3s and
conditions for Interconnection of the Generating Facility to the Transmission System, as
amended from time to time.
"Interconnection Facilities" means all of the facilities installed for the purpose of
intercomaecting the Generating Facility to the Transmission System, including
transformers and associated equipment, relay and switching equipment and safety
equipment.
"Interest Rate" means, for any date, the lesser of: (i) the per annum rate of interest equal
to the prime lending rate as may from time to time be published in the I47all Street
Journal under "Money Rates" on such day (or if not published on such day on the most
recent preceding day on which published); and (ii) the maxin-mm rate permitted by
applicable law.
"Intermittent Resources" means Generating Facilities that use wind or solar energy, or
tidal or wave action, to generate electricity, or any other resource a~’eed upon by Seller
and Buyer.
"Investment Tax Credits" or "ITC" means investment tax credits under Section 48 of the
Internal Revenue Code, as amended fi’om time-to-time during the Tenn.
"ISO" means the California Independent System Operator Corporation, or its functional
successor.
"ISO TarifF’ means the duly authorized tariff, rules, protocols and other requirements of
the ISO, as amended fiom time to time.
"kWh" means a ~loWatt-hour of electric energy.
"Lender(s)" means any Person(s) providing money or extending credit (including any
capital lease) to Seller for: (i) the construction of the Generating Facility; or (ii) the term
or permanent financing of the Generating Facility.
"Letter(s) of Credit" means one or more irrevocable, transferable standby letters of credit
issued by a U.S. conmaercial bank, or the U.S. branch of a foreiNa bank, with such bank
having a credit rating of at least A- from S&P or A3 from Moody’s, in the form attached
hereto as Exhibit 9 [Letter of Credit].
SANFRAN 156146 (2K)
1.54
1.55
1.56
1.57
1.58
1.59
1.60
1.61
1.62
1.63
1.64
1.65
1.66
1.67
1.68
1.69
"Meters" means the physical metering devices, data processing equipment and apparatus
associated with the meters owned by Seller or Transmission Provider or its designee, and
used to determine the quantities of Energy generated by the Generating Facility and to
record other related paran~eters required for the reporting of data to Seller in accordance
with the requirements of Article 4.
"Meter Service A~eement for ISO Metered Entities" has the meaning set forth in the
ISO Tariff.
"Milestones" means the events that are set forth in Exhibit 7 [Milestones].
"Moody’s" means Moody’s Investor Services, Inc. or its successor.
"MW" means a megaWatt of electric energy.
"M~Vh" means a megaWatt-hour of electric energy.
"Non-Peak Months" means, collectively, the months of October, November, December,
January, Februar3,, March, April and May during each Contract Y’ear.
"Outage" means a physical state in which all or a portion of the Generating Facility is
unavailable to provide Energy to the Delivery Point, including any duration or reduction
in the capacity of the Generating Facility, whether plmmed or unplanned.
’°Output" means (i) the Con~’act Capacity and associated Energy, (ii) Test Energy, and
(iii) all Environmental Attributes and Capacity Attributes.
"Participating Generator A~eement" has the meaning set forth in the ISO tariff.
"Parties" means Buyer and Seller, and their respective successors mad permitted
assigaaees.
"Party" means Buyer or Seller, and each such Party’s respective successors and permitted
assQm~ees.
"Peak Months" means, co!lectively, the months of June, July, August and September
during each Contract Year.
"Pent, its" means, collectively, all federal, state or local authorizations, certificates,
permits, licenses and approvals required by any Govenvnental Authority for the
construction, ownership, operation and maintenance of the Generating Facility.
"Person" means an individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, tinast, unincorporated association, joint
venture, Govermnental Authority or other entity.
"Production Tax Credits" or "PTC" means production tax credits under Section 45 of the
Internal Revenue Code, as an~ended fi’om time-to-time during the Tel-re.
SANFRAN 156146 (2K)
1.70
1.71
1.72
1.73
1.74
1.75
"Prudent Utility Practice" means those practices, methods and equipment, as changed
fi’om time to time, that: (i) when engaged in, or employed, are commonly used in the
State of California in p~nadent electrical engineering and operations to operate electricity
equipment lawfully and with safety, reliability, efficiency and expedition; or (ii) in the
exercise of reasonable jud~nent considering the facts tmown, when engaged in could
have been expected to achieve the desired result consistent with applicable law, safety,
reliability, efficiency and expedition.
Prudent Utility Practices are not limited to an optimum practice, lnethod, selection of
equipment or act, but rather are a range of acceptable practices, methods, selections of
equipment or acts.
"Replacement Price" means either (a) the price at which Buyer, acting in a commercially
reasonable maturer, purchased or purchases a replacement for any Output required to be,
but not, delivered by Seller hereunder, plus (i) costs reasonably incuned by Buyer in
purchasing such substitute Output, and (ii) additional transmission charges, if any,
reasonably incun’ed by Buyer to the Delivery Point; or at Buyer’s option, (b) the market
price at the Delivery Point for such Output not delivered as determined by Buyer in a
commercially reasonable maimer; provided, however, Buyer shall not be required to
purchase any replacement for Output not delivered to determine the Replacement Price
under (b) above, or to utilize or change its utilization of its owned or controlled assets or
market positions to minhnize Seller’s liability.
For the purposes of this definition, Buyer may purchase or value Energy, Envirolm~ental
Attributes and Capacity Attributes, together or separately, and if separately, the
Replacement Price shall be the sum of the relevant costs and values. Buyer shall be
considered to have purchased replacement Output to the extent Buyer shall have entered
into one or more an’angements in a conmaercially reasonable mamaer whereby Buyer
repro’chases its obligation to sell and deliver the Output to anotlaer party at the Delivery
Point.
"Resource Adequacy Benefits" means the rights and privileges attached to any generating
resource that satisfy any entity’s resource adequacy obligations.
"Required Credit Rating" means a rating on a Party’s unsecured, senior long-term debt
obligations, une~aanced by any insurance or other mechanism, of not less than "BBB-"
by S&P or "Baa3" by Moody’s.
"Requirements of Law" means, collectively, any federal or state law, treaty, fi’anchise,
rule, regulation, order, writ, judNa~ent, injunction, decree, award or determination of any
arbitrator or a court or other Governmental Authority, in each case applicable to or
binding upon Seller or Buyer or any of their property or to which Seller or Buyer or any
of their respective properties are subject.
"RPS" or "Renewable Portfolio Standard ProN’am" has the meaning set forth in the
recitals of this A~’eement.
SANFRAN 156!46 (2K)
1.76
1.77
1.78
1.79
1.80
1.81
1.82
1.83
1.84
1.85
1.86
"Schedule" or "Scheduling" means the actions of Se!ler, Buyer and/or their designated
representatives, including each Party’s Transmission Providers, if applicable, of
notifying, requesting and confirming to each other the quantity of Energy to be delivered
on any Nven day or days hereunder during the Tema at the Delivery Point.
"Scheduling Coordinator" means an entity certified by the ISO for the purposes of
undertaking the responsibilities specified by ISO Tariff Section 2.2.6, as amended from
time-to-time.
"Seller" has the meaning set forth in the preamble of this A~eement.
"Site" mealls the real property on which the Generating Facility is to be built and located,
as more particularly described in Exhibit 2 [Description of Generatin~ Facility!.
"Site Control" means the point at which Seller satisfies one or more of the following
conditions: (i) Seller is (a) the lessee under a lease, or (b) the ~’m~tee under an exclusive
easement, in each case with the owner of the Site that allows Seller to construct and
operate the Generating Facility at the Site during the Term in accordance with this
A~eement; (ii) Seller has a fee ownership of the Site; or (iii) any other form of site
control acceptable to Buyer in its reasonable discretion.
"S&P" means the Standard & Poor’s Rating Group (a division of McGraw-Hill, Inc.) or
its successor.
"Taxes" means any federal, state, local or foreiN~ income, g’oss receipts, license, payroll,
employment, excise, severance, stanp, occupation, premium, windfall profits,
envirolm~ental, customs duties, capital stock, fi-anchise, profits, withholding, social
security (or sinailar), unemployment, disability, real property (including assessments, fees
or other charges based on the use or ownership of real property), personal property,
transactional, sales, use, transfer, registration, value added, alternative or add on
minimum, estimated tax, or other tax of any kind whatsoever, or any liability for
unclaimed property or escheatment under common law principles, including any interest,
penalty or addition thereto, whether disputed or not, including any item for which
liability arises as a transferee or successor-in-interest.
"Term" has the meaning set forth in Section 2.1.
"Test Energy" means Energy generated by the Generating Facility prior to the
Conm~ercial Operation Date.
"Test Energy Price" means the price that is eighty percent (80%) of the Contract Price.
"Transmission Provider" means any entity or entities responsible for the intercom~ection
of the Generating Facility with a Control Area or transmitting Energy on behalf of Seller
fiom the Generating Facility to the Delivery Point, and on behalf of Buyer from the
Delivery Point.
SANFtLAN 156145 (2K)
10
1.87 ’°Transmission System" means the facilities used for the transmission of electricity in
interstate co~r~nerce, including any modifications or up~ades made to such facilities,
owned or operated by the Transmission Provider.
SANFRAN 156146 (2K)
11
2.1
2.2
2.3
ARTICLE 2: TERM; TERMINATION AND SURVIVAL OF OBLIGATIONS
Effective Date and Term
This ANeement shall become effective on the Effective Date and, unless earlier
temainated pursuant to an express provision of this A~’eement, shall continue until the
day before the [Insert Term] amfiversary of the Commercial Operation Date ("Tema").
Buyer Termination Option
(a) Generally. Buyer may, in its sole and unlimited discretion, terminate this
A~eement at any time after two (2) years fi’om the Comlnercial Operation Date, upon
thirty (30) days advance written notice to Se!ler, without liability of any kind (other than
for previously accrued obligations) provided that within this thirty (30) day period Buyer
pays to Seller the Buyout Payment. Termination under this Section 2.2 shall not be
implied from any Event of Default or other act or omission of Buyer other than by
express written notice by Buyer invo~ng this Section 2.2.
(19) Buyout Payment. The Buyout Payment shall be determined pursuant to Exhibit 1
[Buyout Payment]. Buyer sha!l remit the Buyout Payment to Seller in equal monthly
installments over the lesser of (i) five (5) years, or (ii) the remaining Term of this
A~eement. The Buyout Payment shall not be considered as a measure of damages or for
any purpose other than in connection with this Section 2.2.
(c) Disputes. Any disputes regarding the provisions of this Section 2.2 or Exhibit 1
[Buyout Payment] shall be resolved in accordance with Section 11.2(d) of this
A~eement. Notwithstanding any such dispute, this A~eement shall terminate upon the
effective date of the notice to Seller pursuant to Section 2.2(a).
Effect of Termination - Survival of Obligations
(a) Generally. Except as set forth in section 2.3(b) or as otherwise expressly set forth
herein, upon expiration or termination of this ANeement, neither Party shall have future
or further rights or obligations under this Agreement.
(b)Survival of Obligations. The following rights, obligations or provisions shall
survive temaination or expiration of tNs A~eement:
(i)
(ii)
obligations by one Party to the other for pa3aaaent of any amounts, or for
performance of may duties, that have accrued or arose prior to, or have
directly resulted fi’om, the expiration or termination of this A~’eement;
indenmity obligations contained in Section 9.4, which shall survive to the
full extent of the statute of limitations period applicable to any third party
claim;
(iii) limitation of liability provisions contained in Section 11.18;
SANFRAN 1561,16 (2K)
12
(iv)for a period of one (1) year after the expiration or termination date, the right
to dispute an invoice pursuant to Section 5.1 (5); or
(v) the obligations under Section 11.5.
3.1
ARTICLE 3: PURCHASE AND SALE
Purchase and Sale of Output
(a) Generally. In accordance with the temas and conditions hereof, commencing on the
Conmaercial Operation Date and continuing throughout the Terns, Seller shall sell and
deliver at the Delivery Point, and Buyer shall purchase and accept from Seller at the
Delivery Point, and pay the Contract Price for, all of the Output. Seller shall only
Schedule and deliver Energy and Environmental Attributes mad Capacity Attributes fi’om
the Generating Facility.
(b) Test Energy. Prior to the Con=nercial Operation Date, Seller shall sell and deliver
at the Delivery Point, and Buyer shall purchase and accept fi’om Seller at the Delivery
Point, and pay the Test Energy Price for the Test Energy. All Test Energy shall be
Scheduled in accordance with Section 3.1(c) and Exhibit 10 [Operations Forecasts and
Schedulin.~ Protocols].
(c) Scheduled and Delivered Amounts..1 Seller shall use good faith efforts to ensure
that the anounts Scheduled hereunder match the amounts generated by the Generating
Facility. Notwithstanding anything herein to the conta’a3,, the Parties acknowledge that,
because of the scheduling requirements of the ISO, Scheduled deliveries and metered
generation may be unequal durfiag may period. Buyer shall make monthly payments
based upon the amount Scheduled through the ISO, and shall reconcile differences
between metered generation and the Energy Scheduled by Seller’s Scheduling
Coordinator in the next monthly period after actual meter data is available and confirmed
by the ISO as follows:
(i)If the metered generation is more than the amount of Energy Scheduled
through the ISO then the following reconciliation shall apply:
If the actual imbalaace energy price received by Seller (or its
Scheduling Coordinator) from the ISO is less than the Contract Price,
Buyer shall pay to Seller (in addition to amounts paid for Scheduled
Energy) the amount equal to (A) eighty percent (80%) of the
difference between (i) the Contract Price for such excess Energy
amounts, and (ii) the greater of zero dollars ($0.0) per M’~qa or the
actual imbalance energy price received by Seller (or its Scheduling
Coordinator) fi’om the ISO in respect of such excess Energy,
multiplied by (B) the amount of the excess Energy generated.
_1 [NOTE: This section shall not apply to projects less than 1 MW.]
SANFRAN 156 !~46 (2 K)
13
(ii)
(iii)
(iv)
o If the actual imbalance energ3~ price received by Seller (or its
Scheduling Coordinator) from the ISO is greater than the Contract
Price, Seller shall pay to Buyer an amount equal to (A) the difference
between (i) the actual imbalance energy price received by Seller (or
its Scheduling Coordinator) from the ISO, and (ii) the Contract Price
for the excess Energy not Scheduled to Buyer, multiplied by (B) the
anount of such excess Ener~,.
In either case, all Environmental Attributes and any Capacity
Attributes associated with such excess Energy shall be transferred to
Buyer at no additional cost to Buyer.
If the metered generation is less than the amount of Energy Scheduled
tt~’ough the ISO then the following reconciliation shall apply:
If the price paid by Seller (or its Scheduling Coordinator) to the ISO
is less than the Contract Price, Seller shall retain all payments for the
Scheduled amounts, but shall retum to Buyer the amount equal to (A)
the difference between (i) the Contract Price for such generation, and
(ii) the actual imbalance energy price paid by Seller (or its Scheduling
Coordinator) to the ISO for such excess Scheduled generation,
multiplied by (B) the amount of such excess Scheduled generation.
o If the price paid by Seller (or its Scheduling Coordinator) to the ISO
is geater than the Contract Price, Buyer shall pay to Seller (in
addition to amounts paid for Scheduled EnergT) the anount equal to
(A) eighty percent (80%) of the difference between (i) the lower of (a)
two times the Contract Price or (b) the price paid by Seller (or its
Scheduling Coordinator) to the ISO and (ii) the Contract Price,
multiplied by (B) the amount of such excess Scheduled generation.
Notwithstanding the foregoing, if.. beNm~ing with the fourth month
following the Commercial Operation Date and for each lnonth thereafter,
the average over the month of each hourly difference between the
Scheduled amount and the generated amount, expressed as a percentage of
the relevant hour’s Scheduled amount, is ~’eater than plus or minus ten
percent (10%), then, with respect to such month:
!. the percentages set forth in Sections 3.1(c)(i)(1)(A) and
3, l(c)(ii)(2(A) shall be reduced to fifty percent (50%), and
2. the zero dollars per ($0.0) per MWh value in Section 3.1(c)(i)(1)(A)
shall be increased to the amount equal to the Contract Price multiplied
by 0.5, and
3.the two times the Comract Price value in Section 3,1(c)(ii)2.(A)(i)(a)
shall be reduced to 1.5 times the Contract P~ice.
Except as set forth in this Section 3.1(c), in the event that the amount of
Output generated by the Generating Facility deviates fi’om the Scheduled
SANFRAN 156146 (2K)
14
3.2
3.3
amounts in any time intelwal, Seller shall bear any costs (and hold Buyer
harmless therefrom) and retain any revenues associated with the deviation.
(d) Intermittent Resources. If, and for so long as, the Seller is pa-ticipating in the
Participating Intermittent Resource Program (’°PIRP") established under ISO Tariff
Amendment 42, and Seller’s Schedules are established under such program, Buyer shall
pay to Seller the Scheduled amounts, and there shall be no reconciliation pursuant to
Section 3.1(c)(i),(ii), and (iii). However, if at any time dm-ing the Term, Seller is no
longer participating in PIP_P, or its Schedules are not established under PIRP, Section
3.1 (c) shall apply.
Delivery Poh~t
(a) Allocation of Costs and Risks. Seller shall be responsible for any costs or charges
imposed on or associated with the Output or the delivery of the Output hereunder up to
and at the Delivery Point. Buyer shall be responsible for any costs or charges imposed on
or associated with the Output, or its receipt, after the Delivery Point.
(b)Title and Risk of Loss. Title to, and risk of loss related to, the Output shall transfer
from Seller to Buyer after the Delivery Point.
Environmental Attributes and Capacity Attributes
(a) Generally. Thioughout the Tema, Seller shall transfer to Buyer, and Buyer shall
receive from Seller, all rights, titles and interest in and to the Enviromaaental Attaibutes
and Capacity Attributes, if any, whether now existing or subsequently generated or
acquired (other than by direct purchase from a third pa-ty) by Seller, or that hereafter
come into existence, during the Term, as a component of the Output purchased by Buyer
from Seller herem~der. Seller agrees to transfer and make such Enviromnental Attributes
and Capacity Attributes available to Buyer immediately to the fullest extent al!owed by
applicable law upon Seller’s production or acquisition of the Environmental Attributes
mad Capacity Attributes. Seller agrees that the Contract Price and the Test Energy Price,
as applicable are the full compensation for all Energy, Environmental Attributes, and
Capacity Attributes.
(b) No Assignment. Seller shall not assign, transfer, com, ey, encumber, sell or
otherwise dispose of any portion of the Environmental Attributes and Capacity Attributes
to any Person other than Buyer.
(c) RPS Compliance. Before delivery of any Test Energy hereunder, Seller shall cause:
(i) the Generating Facility to be certified by the appropriate entity having jurisdiction as
an ERR for purposes of the RPS legislation; and (ii) all Output delivered to Buyer from
the Generating Facility to qualify as output of an ERR for purposes of the RPS
legislation. Seller shall ensure that the Generating Facility maintains ERR status
tl~roughout the Tema of this Agreement. Seller shall cooperate reasonably with Buyer
and provide such certifications or attestations to Buyer as are reasonably necessary to
verify that all Enviro~maental Attributes attaibutable to the Energy have been transferred
to Buyer.
SANFIL~N 156146 (2K)
15
3.4
3.5
(d) Reporting Rights. During the Term, Seller shall not report to any Person that the
Environmental Attributes and Capacity Attributes granted hereunder to Buyer belong to
anyone other than Buyer, and Buyer may report under any program that such attributes
purchased hereunder belong to it.
(e) Attestation. Seller shall document the production of Environmental Attributes
under this AN’eement by delivering with each invoice to Buyer an attestation for
Environmental Attributes produced by the Generating Facility and purchased by Buyer in
the preceding calendar month. On or before March 31st of each year following a
Contract Year, Seller shall document the transfer of Environlnental Attributes to Buyer
under this A~eement by delivering to Buyer an attestation for Environmental Attributes
transferred under this A~eement in the preceding Contract Year. The form of attestation
is set forth as Exhibit 11 [Fonn of Attestationl. Exhibit 11 [Fo~¢n of Attestation] shall be
updated or changed by the Parties as necessary to ensure that Buyer receives full and
complete title to, and the ability to record with any EA Agency as its own, all of the
Environmental Attributes purchased hereunder.
(f) Documentation. At Buyer’s request, the Parties, each at their own expense, shall
execute all such documents and instruments in order to effect the transfer of the
Enviromnental Attributes specified in this Agreement to Buyer or its designees, as Buyer
may reasonably request. Upon notification by an EA Agency that any transfers
contemplated by this Agreement will not be recorded, the Parties shall promptly
cooperate in taking all reasonable actions necessary so that such transfer can be recorded.
Each Party shall promptly We the other Party copies of all documents it submits to the
EA Agency to effectuate any transfers.
Tax Credits
Buyer agees and act~aowledges that all PTCs and ITCs in effect on the Effective Date
shall be owned by Seller and/or the owners of the Site. In the event that new tax credits
or increased levels of existing tax credits, or other financial incentives applicable to the
Generating Facility or the Output are enacted or implemented after the Effective Date and
during the Term of the Agreement, Seller agrees to share with Buyer fifty percent (50%)
of the value of such tax credits and/or financial incentives realized by Seller or its
affiliates in respect of the Generating Facility or the Output.
Right of First Refusal for Expansion Plant and Expansion Plant Output
(a) Buyer’s Right to Purchase. Se!1er may in its sole discretion determine, from time to
time, during the Tenr~ to develop, finance, construct and/or operate an Expansion Plant.
Each time such a determination is made, Seller shall notify Buyer of such determination
and shall offer in writing to sell the Expansion Plant Output to Buyer. The offer shall
include the price to be paid by Buyer for the Expansion Plant Output, and the term of the
proposed power purchase agreement ("PPA"). The PPA shall othe~dse conform to the
terms and conditions of this Agreement. If Buyer wishes to accept such offer to purchase
all (or a portion) of the Expansion Plant Output, Buyer shalI so notify Seller within sixty
(60) days of its receipt of such offer. The Parties shall promptly thereafter enter into a
SANFRAN 1561,16 (2K)
16
3.6
definitive PPA incorporating the terms of such offer. Until such ma Expansion Plant PPA
is executed, Seller’s proposal accepted by Buyer (including any modifications a~’eed
upon in writing by both Parties), shall control all dealings between the Parties relating to
the Expansion Plant.
(b) Seller’s Right to Sell to Third Parties. If Buyer does not accept Seller’s offer to
purchase all of the Expansion Plant Output within ninety (90) days of receipt of Seller’s
offer, Seller shall be fiee to offer to sell that portion of the Expansion Plant Output not
accepted by Buyer to one or more third parties at a price and on other terms and
conditions which, taken as a whole, are at least as favorable to Seller as the price and
other temps and conditions set forth in Seller’s offer to Buyer. If Buyer does not purchase
the Expansion Plant Output and Seller sells such Expansion Plant Output to a third party,
it shall promptly certify in writing to Buyer that the terms and conditions of sale of such
Expansion Plant Output to such third party, taken as a whole, are at least as favorable to
Seller as the price and other temas and conditions set forth in Seller’s offer to Buyer, and
Seller shall provide the relevant contract and any other supporting documentation for
such certification. Upon the sale of such Expansion Plant Output in compliance with this
A~m’eement, Buyer shall have no further rights to be offered or to purchase such
Expansion Plant Output. Buyer’s refusal of Expansion Plant Output from one Expansion
Plant shall not affect Buyer’s right to purchase the Expansion Plant Output from a later
Expansion Plant under the terms of this A~’eement. Seller shall not sell nor provide
Buyer’s Expansion Plant Output to any third party unless it can do so without
compromising in any material way its ability to provide the Output to Buyer hereunder.
The materiality of any such impact shall be determined by Buyer in its reasonable
discretion.
Option to Install Emission Controls
Buyer may at its option, exercised fi’om time to time, install emission controls on the
Generating Facility in comaection with the Contract Capacity beyond those then required
to meet the Requirements of Law applicable to Seller or the Generating Facility, provided
that:
(i)
(ii)
Buyer shall (a) bear all costs and financial, regulatory and operational risks
thereof, including the capital cost thereof and any increase in operation or
maintenance expenses, (b) keep Seller whole in all respects, including for
decreases in Output and other adverse effects on the Contract Capacity and
its performance, increases in operations and maintenance costs and failures
of such emission controls to operate; and (c) retain any and all benefits
resulting fi’om the emission controls installed by Buyer, including
environmental offsets, additional energy production, operation and
maintenance cost savings, and tax credits; and
Buyer shall not make any such changes to the Contract Capacity without the
approval of Seller to the design and plan for implementation of such
changes, such approval not to be um’easonably witl~held.
SANFRAN 156 t 46 (2K)
17
4.1
4.2
ARTICLE 4: METERING
Meterin~ Requirements
(a) Meters. The transfer of Energy from Seller to Buyer shall be measured by revenue
quality Meters at the Delivery Point. Such Meters shall be selected, provided, installed,
owned, maintained and operated, at Seller’s sole cost and expense, by Seller or its
desi~aee in accordance with the ISO Tariff. Seller shall exercise reasonable care in the
maintenance and operation of the Meters, and shall test and verify the accuracy of each
Meter at least annually. Seller shall inform Buyer in advance of the time and date of
these tests, and shall permit Buyer to be present at such tests and to receive the results of
such tests.
(b) SCADA. Seller shall install and maintain all equipment and data circuits necessary
to determine and transmit real time supervisory control and data acquisition ("SCADA")
system data and real time data from the Meter to the ISO. Seller shall provide to Buyer a
copy of each certificate of compliance issued by ISO, if any.
(c) Access by Buyer. Buyer shall be provided access to all monitored SCADA points
to be used at its discretion in real time monitoring. Buyer may further, at its sole cost and
expense, install any updates or up~ades to the Meters, as well as install and maintain
check meters and all associated measuring equipment necessary to penNt an accurate
determination of the quantities of Energy delivered under this Ageement, provided that
such equipment does not interfere with Seller’s Meters. Seller shall pent, it Buyer or
Buyer’s representative access to its Generating Facility for the pro-pose of installing and
maintaining such check meters.
(d) ISO Requirements. Seller shall submit to the ISO, or allow the ISO to retrieve, may
meter data required by the ISO related to the Generating Facility and its Output in
accordance with the ISO’s settlement and billing protocol and meter data tariffs.
Meter Inaccuracies and Retroactive Adiustments
If a Meter fails to reNster, or if the measurement made by a Meter is found upon testing
to be inaccurate by an amount exceeding plus or minus one percent (1%), an adjustment
shall be made correcting all measurements made by the inaccurate or defective Meter
during the Adjustment Period. If the Parties are unable to agree on the amount of the
adjustment to be applied to the Adjustment Period, the an~ount of the adjustment shall be
determined: (i) by correcting the error if the percentage of error is ascertainable by
calibration, tests or mathenaatical calculation, or (ii) if not so ascertainable, by estimating
on the basis of the deliveries under similar conditions dm-ing periods when the Meter was
registering accurately. Upon the determination of the amount of any adjustment and
upon acceptance of such adjustment by the ISO, if applicable, Buyer shall pay to Seller
any additional amounts then due for deliveries of Output during the Adjustment Period at
such time as other payments are due for the billing period in which the detemaination is
made, or Buyer shall be entitled to a credit against the next subsequent payments due for
the deliveries of Output, whichever case is applicable.
SANFR,~ 156146 (2K)
18
4.3 Records and Audits
Seller and Buyer shall each keep complete and accurate records and all other data
required by each Pa-ty for the purposes of proper administration of this Aa’eement,
including such records as may be required by state or federal reg-ulatory authorities. To
facilitate payment and verification, Seller and Buyer shall keep all books and records
necessary for billing and payments and ~ant the other Party reasonable access to those
records. Seller and Buyer, at their own expense, shall have the right to audit and to
examine the billing and operating records and data kept by the other Party relating to the
~’ansactions under, and the administration of, this A~eement at any time during normal
business hours thi’oughout the Term of this A~’eement and for two years thereafter. All
such records and data shall be maintained by each Party tl:a-oughout the Term of this
A~’eement and for a period of not less than two (2) years following the termination
hereof. All such audits and exmninations shall be conducted upon reasonable notice and
during normal business hours.
5.1
ARTICLE 5: BILLING AND PAYMENT
Bi!lin~
(a) Generally. Seller shall read the Meters at the end of each calendar month of the
Term, and provide to Buyer on or before the tenth (10th) day of the following month: (i)
an invoice based upon the Meter data for Energy delivered in such previous calendar
month; and (ii) the con’esponding attestation pursuant to Exhibit 11 [Form of
Attestation]. Such invoice shall be delivered as specified reader Section 1 !. 1.
(b) Disputes over Invoice. Should either Seller or Buyer determine at a later date, but
in no event later than one (1) yeaa after the oriNnal invoice date, that the invoice amount
was inconect, that Party shall promptly noti~ the other Party of the error. In the event
that an invoice or portion thereof, or any other claim or adjustment arising hereunder, is
disputed, pa?nnent of the undisputed portion of the invoice shall be required to be made
when due, with notice of the objection given to the other Party. Payment of the disputed
amount shall not be required until the dispute is resolved. Upon resolution of the dispute,
any required payment shall be made within thirty (30) Business Days of such resolution
along with interest accrued at the Interest Rate from, and including, the due date to, but
excluding the date paid. Inadvertent overpayments by Buyer shall be returned upon
request or deducted by Seller fi’om subsequent payments, with interest accrued at the
Interest Rate fi’om, and including, the date of such overpayment to, but excluding the date
repaid or deducted by, Seller. Any dispute with respect to an invoice is waived unless the
other Party is notified in accordance with this Section 5.1 (b) within one (1) year after the
invoice is rendered or any specific adjustment to the invoice is made. If an invoice is not
rendered within one (1) year after the close of the month dm-ing which performance
occm-red, the ri~t to pa?qnent for such performance is waived. Failure of Buyer or its
agent to withhold any payment amount is not a waiver of Buyer’s right to challenge such
alnount.
SANFRAN 156146 (2K)
19
5.2
5.3
5.4
Payment
(a) Generally. Subject to Section 5. l(b), all invoices under this Agreement shall be due
and payable on or before thirty (30) days after receipt of the invoice or, if such day is not
a Business Day, then on the next Business Day. Each Party shall make payments by
electronic funds transfer as set forth in Exhibit 12 [Payment/Wire Instructions], or by
other mutually a~eeable method(s), to the account desi~aated by the other Party.
(b) Late Payments and Interest Rate. Payments made after the due date shall be
considered late and shall bear interest on the unpaid balance at an ammal rate equal to
two percent (2%) plus the Interest Rate. Interest shall be computed on the basis of a 365-
day year.
Netting. of Payments
The Parties hereby agee that they shall discharge mutual debts mad payment obligations
due and owing to each other on the same date through netting, in which case all amounts
owed by each Patty to the other for the purchase and sale of Output during the monthly
billing period under this A~’eement, including any related damages, interest, and
payments or credits, shall be netted so that only the excess anaount remaining due shall be
paid by the Party who owes it.
Allocation of Taxes
Seller shall pay or cause to be paid all Taxes on or with respect to the Output sold and
delivered heremader arising at, or prior to, the Delivery Point. Buyer shall pay or cause to
be paid all Taxes on or with respect to the Output purchased mad received from the
Delivery Point (other than ad valorem, franchise or income taxes which are related to the
sale of the Output and are, therefore, the responsibility of Seller). In the event Seller is
required by law or regulation to remit or pay Taxes which are Buyer’s responsibility
hereunder, Buyer shall promptly reimburse Se!ler for such Taxes. If Buyer is required by
law or regulation to remit or pay Taxes which are Seller’s responsibility hereunder, Buyer
may deduct the amount of any such Taxes fi’om the sums due to Se!ler under this
Agreelnent. Nothing shall obligate or cause a Patty to pay or be liable to pay any Taxes
for which it is exempt under the law. In the event that such Party does not prepare
audited financial statements, such Party shall provide financial statements prepared in
accordance with GAAP demonstrating its financial condition in form mad substance
reasonably acceptable to the other Patty.
6.1
ARTICLE 6: CREDIT REQUIREMENTS
Financial Information
If requested by one Party, the other Patty shall deliver: (i) within one hundred and
twenty (120) days following the end of each fiscal year, a copy of the other Party’s
ammal report containing audited consolidated financial statements for such fiscal year,
and (ii) within sixty (60) days after the end of each of its first tlv’ee (3) fiscal quarters of
SANFRAN 156146 (2K)
2O
6.2
each fiscal year, a copy of the other Party’s quarterly report containing unaudited
consolidated financial statements for such fiscal quarter. In all cases the statements shall
be for the most recent accounting period and prepared in accordance with GAAP;
provided, however, that should any such statements not be available on a timely basis due
to a delay in preparation or certification, such delay shall not be an Event of Default so
long as the other Party diligently pursues the preparation, certification and delivery of the
statements.
Credit
(a) Required Credit Rating. Subject to Sections 6.2Co) and (c) below, Seller, or its
Guarantor (if applicable), shall maintain a nainimmn credit rating no lower than the
Required Credit Rating throughout the Term of this AN’eement.
(b) Seller’s Failure to Maintain Required Credit Rating. At any time during the Term
of this AN’eement, in the event that Seller’s credit rating by either S&P or Moody’s is
lower than the Required Credit Rating, or in the event that Seller’s senior unsecured long-
term debt is not rated by S&P or Moody’s, then Seller shall provide to the other within
tlv’ee (3) Business Business Days of request: (i) a Guaranty fi’om a Guarantor with a
credit rating equal to, or better than, the Required Credit Rating; or (ii) either a Letter of
Credit or cash in an amount equa! to the Credit Support Amount. If Seller’s credit rating
is below the Required Credit Rating on the Effective Date of this Agreement, Seller shall
provide contemporaneously with the A~’eement: (i) a Guaranty from a Guarantor with a
credit rating equal to, or better than, the Required Credit Rating; or (ii) either a Letter of
Credit or cash in an amount equal to the Credit Support Amount.
(c) Guarantor’s Failure to Maintain Required Credit Ratin~. In the event that Seller’s,
aad its Guarantor’s, credit rating by either S&P or Moody’s is lower than the Required
Credit Rating, or in the event that Seller’s, and its Guarantor’s (if applicable), senior
unsecured long-term debt is not rated by S&P or Moody’s, then Seller shall provide to the
other within three (3) Business Days of request either a Letter of Credit or cash in an
amount equal to the Credit Support Amount.
7.1
ARTICLE 7:SELLER’S ADDITIONAL OBLIGATIONS
During the Term of this Agreement, Seller hereby aN’ees to perform the following
obligations, in addition to Seller’s obligations pursuant to Articles 3, 4, 5, and 6:
Construction. Operation and Maintenance of the Generatin~ Facilit3~
(a) Generally. Seller shall develop, finance, construct, own, operate, and maintain the
Generating Facility in accordance with this A~-eement, all Requirements of Law,
Contractual Obligations, Permits and Prudent Utility Practice.
(b) Compliance. Seller shall, in its own name and at its own expense, seek, obtain,
maintain, comply with and, as necessary, renew and modify from time to time, all
Permits and other authorizations that are required by any Requirements of Law or
SANFRAN 1561-~ 6 (2K)
21
7.2
Governmental Authority as are necessary for Seller to engage in the activities and
obligations required by the Agreement.
(c) Records. Seller shall keep complete and accurate operating and other records and
all other data for the purposes of proper administration of this Agreement as reasonably
required by Buyer, including such records as may be required by any Governmental
Authority or Prudent Utility Practice.
(d) Disclosure. Seller shall provide to Buyer such info~Tnation regarding the
permitting, enNneering, construction or operations of the Generating Facility as Buyer
may from time to time reasonably request, subject to licensing or other restrictions of
Seller or a third patty with respect to confidentiality, disclosure or use.
(e) Insurance. Seller shall obtain and maintain the policies of insurance in amounts and
with coverage as set forth in Exhibit 14 [Seller’s Insurance Infonriation].
Milestones
(a) Generally. Seller covenants that it will diligently pursue all Milestones set forth in
Exhibit 7 [Milestones], including the Co~maaercial Operation Date. The Parties agree that
time is of the essence in colmection with the completion of the Generating Facility, and
that certain Milestones for the development, financing and construction of the Generating
Facility must be achieved in a timely fashion or Buyer shall suffer damages. Seller shall
achieve the Milestones by the corresponding dates set forth in Exlzibit 7 [Milestones!.
(b) Monthly Reports. Stating on the Effective Date, Seller shall provide to Buyer
monthly progress reports concerning the progress towards completion of the Milestones.
In addition, within five (5) Business Days of the completion of each Milestone, Seller
shall provide a certification to Buyer (along with any supporting documentation)
demonstrating the satisfaction of such Milestone. Seller shall provide to Buyer additional
information concerning Seller’s progress towards, or confirmation of, achievement of the
Milestones, as Buyer may reasonably request from time to time.
(c) Notice of Failure To Achieve a Milestone. Upon becoming aware that Seller wi11,
or is reasonably likely to, fail to achieve one or more Milestone(s) by the required date,
for any reason including a Force Majeure Event, Seller shall so notify Buyer in writing as
soon as is reasonably practical. Such notice shall explain the cause of the delay, provide
an updated date for achievement of the Milestone(s), and describe Seller’s pla~ for
meeting such Milestone(s). Seller’s notice will also explain any impact such delay may
or will have on any other Milestone, and the measures to be taken to mitigate such
impact.
(d) Failure To Achieve Milestone. In the event that Seller fails to meet any Milestone
by the applicable Milestone deadline as set forth in Exhibit 7 [Milestones], as such
deadline may be extended as a result of a Force Majeure Event in accordance with
Section 7.2(e), Seller shall be liable for Delay Liquidated Damages for each full month
(with parts of a monthpro rated) that Seller is late in satisfying the Milestone. So long as
Seller is paying such Delay Liquidated Damages on a monthly basis Buyer shall not be
SANFRAN 156146 (2K)
22
7.3
7.4
permitted to terminate this AN’eement, provided that in no event shall the combined
extensions by payment of Delay Liquidated Damages for any or all of the Milestones
exceed twelve (12) months. If any Milestone has not been satisfied within twelve (12)
months following the relevant Milestone deadline, or if for any reason Seller fails to pay,
or discontinues paying, the monthly Delay Liquidated Damages provided for above,
Seller shall have committed an Event of Default. The twelve (12) month period referred
to in the prior sentence shall not be extended as a result of a Force Majeure Event.
(e) Force Ma_ieure Event. In the event that a Force Majeure Event causes any delay in
the achievement of a Milestone, such Milestone’s deadline may be extended, together
with any Force Majeure Event extensions for other Milestones, for a period not to exceed,
in the ag~’egate, six (6) months. The extension of the deadline for any Milestone shall
extend the deadline for all subsequent Milestones, provided that in no event shall the
combined extensions for Force Majeure Events for any or all of the Milestones exceed six
(6) months. The extension provided for in this Section 7.2(e) shall be the only effect of a
Force Majeure Event on Seller’s obligations with respect to the Milestones.
(f) Waiver of Right. Buyer may, at its discretion, N’ant waivers for Seller’s failure to
meet any of the Milestones, but in no way shall any such waiver constitute a waiver of
any furore failures by Seller to meet other Milestones.
Commercial Operation Performance Tests
No later than fourteen (14) days prior to conducting its Co~ranercial Operation
Performance Tests, Seller shall notify- Buyer of the date on which it intends to conduct
such tests. Within seven (7) days of the successful completion of Seller’s Convnercial
Operation Perfonr~ance Tests, Seller shall provide to Buyer written notification of the
Commercial Operation Date, including any relevant data demonstrating that Commercial
Operation has occurred. Buyer has the right to be present during any Comlnercial
Operation Performance Test, and to receive all information, including meter and
performance data associated with such tests. Seller may change the date for such tests
upon written notice to Buyer, provided that Buyer has at least fourteen (14) days’ notice
of the date of such tests.
Performance Guaranties
(a) Availability. By noon on Wednesday of each week throughout the Tenn, Seller
shall deliver to Buyer a report detailing the expected Availability of the Generating
Facility for the next week and the actual availability of the Generating Facility for the
preceding week. The report shall include any and all full or partial unit shut-downs or
derations, Force Majeure Events, scheduled maintenance, forced outages, curtailments,
and other events affecting Availability. Unless challenged by Buyer, Seller’s report of
actual Availability shall determine such Availability. If challenged, Seller’s report shall
be considered Seller’s determination of Availability and shall not be considered evidence
of actual Availability. Seller shall provide to Buyer, upon request, all information
concerning Availability as Buyer may reasonably request. Seller shall, with respect to
each Contract Year, maintain an Availability of ninety-five percent (95%) or more during
SANFRAN 156146 (2K)
the Peak Months and an Availability of eighty percent (80%) or more during the Non-
Peak Months. Within thirty (30) days of the end of each Peak Months and Non-Peak
Months, Seller shall provide a period performance report detailing the actual Availability
of the Generating Facility during the given period of months. In the event that Seller fails
to meet the Availability during either the Peak Months or the Non-Peak Months of any
Contract Year, Seller shall pay to Buyer within thirty (30) days of the period perfom~ance
report, or, at Buyer’s option (as effected by written notice to Seller within fifteen (15)
days of the period perfom~ance report), Buyer may offset payments to Seller in the next
monthly billing statement, an amount equal to the Availability Shortfall Damages.
(b)Expected Amaual Contract Quantity.
(i)For all resources not identified as Inte~xnittent Resources, if during any
Contract Year, other than the first and last Contract Years, Seller fails to
Schedule and deliver to Buyer hereunder from the Generating Facility
seventy percent (70%) or more of the Expected Annual Contract Quantity
for any reason Seller shall pay to Buyer the product of (i) the positive
difference between the Replacement Price and the Contract Price, and (ii)
the difference between seventy percent (70%) of the Expected A~mual
Contract Quantity and the an~ount of Energy actually Scheduled and
delivered.
(ii)For all resources identified as Intermittent Resources, if during any Contract
Year, other than the first and last Contract Years, Seller fails to Schedule
and deliver one hundred and fmCy percent (140%) of the Expected _Annual
Contract Quantity on a rolling ~,o (2) year basis, Seller shall pay to Buyer
the product of (i) the positive difference between the Replacement Price and
the Contract Price, and (ii) the difference between one hundred and forty
percent (140%) of the Expected Ammal Contract Quantity and the amount
of Energy actually Scheduled and delivered.
(iii)For all resources, if Seller is prevented from generating or delivering Output
due to a Force Majeure Event, Seller’s obligation under this Section 7.4(b)
shall be reduced to the extent of such impact.
(ix,)Any dispute regarding the calculation of the Replacement Price shall be
resoh, ed in accordance with Section 11.2(d) of this A~’eement.
(c) Limitations. If during any Contract Year, Seller pays to Buyer an~ounts under
Section 7.4(a), such amounts shall be subtracted fiom any amounts that Seller may also
owe to Buyer under Section 7.4(b). The Palties recoNaize al~d agree that (i) the actual
damages to Buyer for a failure by Seller to meet the required Availability or to deliver the
Expected Ammal Contract Quantity are difficult or inconvenient to detem~ine, (ii)
payment of anaounts by Seller pursuant to this Section 7.4 is an appropriate remedy, and
(iii) any such payment does not constitute a forfeiture or penalty of any kind, but rather
constitutes anticipated costs to Buyer under the terms of this A~’eement.
SANFRAN 156146 (2K)
24
7.5
7.6
Obli.oation to Schedule and Deliver
(a) Scheduling. Seller shall be responsible for designating a Scheduling Coordinator
for the transmission of Energy fi’om the Generating Facility to the Delivery Point in
accordance with applicable ISO rules. The Scheduling Coordinator shall be identified in
Exhibit 10 [Operations Forecasts and Scheduling Protocols]. Seller may change its
Scheduling Coordinator upon thirty-five (35) days advance wl-itten notice to Buyer.
Seller shall Schedule or cause to be Scheduled the Energy generated by the Generating
Facility in accordance with, and shall at all times comply with, all applicable ISO
requirements mad the provisions of Exhibit 10 [Operations Forecasts and Schedulin~
Protocols].
(b) Aaxeement with Transmission Provider. Seller shall, at its own cost and expense,
negotiate and enter into an Intercom~ection Aa’eement and such other aaeements with
the Transmission Provider as needed to enable Seller to transmit Energy to the Delivery
Point.
(c) A,_oxeements with ISO. Seller shall, at its own cost and expense, negotiate and enter
into any aaeements with the ISO required by the ISO for generators delivering power
into the tSO-controlled aid, including a Meter Service AN’cement for ISO Metered
Entities and a Participating Generator A~eement.
(d) Start-ups and Shut-downs. Seller shall coordinate all Generating Facility start-ups
and slmt-downs, in whole or in part, with Buyer in accordance with ISO scheduling
protocols and the reasonable protocols established by Buyer that are not inconsistent with
the ISO Tariff and ISO procedures, as specified in Exhibit 10 [Operations Forecasts and
Scheduling Protocols].
Modifications to the Generating Facility
Seller shall obtain Buyer’s written consent, which shall not be unreasonably witt~eld or
delayed prior to making any modifications to the Generating Facility that could adversely
affect Seller’s or Buyer’s ability to perform its obligations under this Aaeement,
including the delivery of the Expected A~mual Contract Quantity and meeting the
Availability requirements of Section 7.4. Any such modifications shall be conducted in
accordance with Good Utility Practice and all applicable laws and reliability criteria, as
such may be mnended froln time to time.
8.1
ARTICLE 8: FORCE MAJEURE
Force Majeure Events
(a) Excuse. Subject to Section 8.2 below, and except as expressly set forth herein,
neither Party shall be considered in default under this Aaeement for may delay or failure
in its performance under this Aaeement (including any obligation to deliver or accept
Output) if such delay or failure is due to a Force Majeure Event, but only to the extent
that:
SANFRAN 156146 (2K)
25
(i)such Force Majeure Event is not attributabIe to fault or negligence on the
part of that Party;
(ii)such Force Majeure Event is caused by factors beyond that Party’s
reasonable control; mad
(iii)despite taking all reasonable teclmical and commercial precautions and
measures to prevent, avoid, mitigate or overcome such event and the
consequences thereof, the Party affected has been unable to prevent, avoid,
mitigate or overcome such event or consequences.
(b) Definition. "Force Majeure Event" may include, subject to Section 8.1(a) above
and (c) below:
(i)acts of God such as storms, floods, lightning and earthquakes;
(ii)sabotage or destruction by a third party of facilities and equipment relating
to the performance by the affected Party of its obligations under this
Ageement;
(iii)Transmission System or generating equipment failm’e;
(iv)war, riot, acts of a public enemy or other civil disturbance;
(v)strike, walkout, lockout or other si~.maificant labor dispute;
(vi)curtaihnent by the ISO, or its successor, but only to the extent that the ISO
declares a "Force Majuere" m~der the ISO Tariff; or
(c)Exclusion. "Force Majeure Event" does not include the fo!lowing:
(i)economic hardship of either Party;
(ii)an Outage, except if caused directly by an event or circumstance that meets
the requirements set forth in this Section 8.1 ;
(iii) failure or delay in the Nanting of Permits;
(iv)failures or delays by the Transmission Provider or the ISO in entering into,
or performing under, all agreements with Seller contemplated by this
Agreement;
(v)curtailment or interruption of transmission services, other than by the ISO
where the ISO declares a "Force Majeure" under the ISO Tariff; or
(vi)insufficiency, unavailability, failure, or dinainislzment of [hzsert resot:rce
ONe] resource, except as a result of an event that would otherwise qualify as
a Force Maj eure Event.
SANFRAN 156l’46 (2K)
26
8.2
8.3
Conditions
In addition to the conditions set forth in Section 8.1 (a) above, a Party may rely on a claim
of a Force Majeure Event to excuse its performance only to the extent that such Party:
(i)provides prompt notice of such Force Majeure Event to the other Party,
giving an estimate of its expected duration and the probable impact on the
performance of its obligations under this Agreement;
(ii)exercises all reasonable efforts to continue to perform its obligations under
this Agreement;
(iii)expeditiously takes action to correct or cure the event or condition excusing
performance so that the suspension of perfomaance is no greater in scope
and no longer in duration than is dictated by the problem; provided,
however, that settlement of strikes or other labor disputes shall be
completely within the sole discretion of the Pal~ affected by such strike or
labor dispute;
(iv)exercises all reasonable efforts to mitigate or limit damages to the other
Party; and
(v)provides prompt notice to the other Party of the cessation of the event or
condition Wing rise to its excuse from performance.
Termination Due To Force Ma,ieure Event
In addition to and without limiting any other provisions of this A~’eement, if a Pat5, is
prevented from perfomaing its material obligations under this A~eement for a period of
either (i) tlv’ee hundred and sixty five (365) consecutive days or more, or (ii) seven
hundred and thirty (730) non-consecutive days or more (whether full or partial days), the
unaffected Party may terminate this Agreement, without liability of either Party to the
other, upon thirty (30) days written notice at any time during the Force Majeure Event.
9.1
ARTICLE 9: DEFAULT/REMEDIES/TERMINATION
Events of Default Generally
An "Event of Default" shall mean, with respect to each Party, the occun’ence of any of
the following:
(i)the failure to make, when due, any payment required pursuant to this
A~eement if such failure is not remedied within thirty (30) Business Days
after written notice;
SANFRAN 156146 (2K)
27
(ii)
(iii)
(iv)
(v)
any representation or warranty made by such Party herein is false or
misleading in an?, material respect when made or when deemed made or
repeated;
the failure to perform any material covenant or obligation set forth in this
Agreement (except to the extent constituting a separate Event of Default,
and except for the obligations set forth in Section 7.4, the exclusive
remedies for which are provided in such Section) if such failure is not
remedied within thirty (30) days after written notice (provided that if such
failure is not capable of being remedied within such period, then for such
longer period as is reasonably needed to effect the relnedy, not to exceed
one-hundred-eighty (180) days, so long as the failing Party diligently
pursues such remedy);
the initiation of an involuntary proceeding against such Part3, under the
bankruptcy or insolvency laws, which involuntary proceeding remains
undismissed for sixty (60) days, or in the event of the initiation by such
Party of a voluntary proceeding under the bankruptcy or insoh,ency laws;
such Party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all of its assets to, another entity and, at the
time of such consolidation, amalgamation, merger or transfer, the resulting,
surviving or transferee entity fails to assmne all the obligations of such
Party under this A~’eement to which it or its predecessor was a party by
operation of law or pursuant to an a~eement reasonably satisfactory to the
other Party; or
(vi) with respect to each Party’s Guarantor, if any:
if any representation nor warranty made by a Guarantor in connection
with this Agreement is false or misleading in any material respect
when made or when deemed made or repeated;
o the failure of a Guarantor to make any payment required or to perform
any other material covenant or obligation in any Guaranty made in
connection with this A~eement and such failure is not remedied
within three (3) Business Days after written notice;
the initiation of an involuntary proceeding against such Guarantor
under the bankruptcy or insolvency laws, which involuntary
proceeding remains undismissed for sixty (60) consecutive days, or in
the event of the initiation by such Guarantor of a voluntary
proceeding under the bankruptcy or insolvency laws;
the failure of a Guarantor’s Guaranty to be in full force and effect for
purposes of this A~eement (other than in accordance with its terms)
prior to the satisfaction of all obligations of such Party to which such
Guaranty shall relate without the written consent of the other Party; or
SANFRAN 156146 (.K)
28
9.2
9.3
5.if a Guarantor repudiates, disaffimas, disclaims, or rejects, in whole or
in part, or challenges the validity of any Guaranty.
Additional Events of Default by Seller
In addition to the Events of Default in Sections 7.2 and 9.1 above, the following sha!l
each constitute an E~ ent of Default" by Seller:
(i)Seller Schedules and/or delivers to Buyer energy or other product from a
resource other tha~ the Generating Facility specified in this A~eement;
(ii)Seller fails, with respect to a Generating Facility that is not identified as an
Intermittent Resource, to Schedule and/or deliver at least one-half of the
Expected Ammal Contract Quantity during any Contract Year, other than
the first and last Contract Years, for a~y reason, including Force Majeure
Event;
(iii)Seller fails, with respect to a Generating Facility that is identified as an
Intel-mittent Resource, to Schedule and/or deliver at least one-half of the
Expected Annual Contract Quaatity during one of any two consecutive
Contract Years, not including the first and last Contract Years, for any
reason, including Force Majeure Event;
(iv)Seller fails to satisfy the creditworthiness requirements set forth in Section
6.2 of this Agreement;
(v)Seller sells or transfers Buyer’s share of the Output (or any individua!
component thereof) to any Person other than Buyer; or
(vi)Seller fails to comply with the terms of Buyer’s right of first refusal as
described in Section 3.5 of this A~’eement.
Remedies: Termination for Default
(a) Tem-dnation for Default. In the event the defaulting Party fails to cure the Event of
Default within the period for curative action under Sections 9.1 or 9.2, as applicable, the
non-defaulting Party may tem~inate the A~eement by notifying the defaulting Party in
w~iting of (i) the decision to terminate, and (ii) the effective date of the termination.
(b) Remedies. For all claims, causes of action and dan~ages with respect to an Event of
Default, in addition to the right to termination under Section 9.3(a), the non-defaulting
Party shall be entitled to foreclose upon, or otherwise employ, any security provided by
the defaulting Party, and to recover actual dan~ages allowed by law unless otherwise
limited by this A~’eement. Neither the enumeration of Events of Default in Sections 9.1
and 9.2, nor the termination of this Agreement by a non-defaulting Party pursuant to
Section 9.3(a), shall limit the right of a non-defaulting Party to rights and remedies
available at law, including claims for breach of contract or failure to perform by the other
SANFRAN 156146 (2K)
29
9.4
9.5
Party and for direct damages incurred by the non-defaulting Party as a result of the
termination of this Agreement.
(c) Limitations. Except as otherwise specifically and expressly provided in this
Agreement, neither Party shall be liable to the other under this Agreement for any
indirect, special or consequential danaages, including loss of use, loss of revenues, loss of
profit, interest charges, cost of capita! or claims of its customers or members to which
service is made. Under no circumstances shall the non-defaulting Party be required to
make a termination payment or other payment in respect of any damages to the defaulting
Party (except for payments due under this Agreelnent for performance prior to
termination).
Indenmification
Seller and Buyer agree to defend, indelrmify, and hold each other, and their respective
officers, directors, employees and agents, harmless from and against all claims, demands,
losses, liabilities, and expenses (including reasonable attorneys’ fees) (collectively,
"Damages") for personal injury or death to persons and damage to each other’s physical
property or facilities or the property of any other Person to the extent arising out of,
resulting from, or caused by the negligent or intentional and wrongful acts, errors, or
omissions of the indemnifying Party. This indemnification obligation shall apply
notwithstanding any negligent or intentional acts, errors or omissions of the indenmitees
but the indemnifying Party’s liability to pay Damages to the indemnified Party shall be
reduced in proportion to the percentage by which the indermaitees’ negligent or
intentional acts, errors or omissions caused the Damages. Neither Party shall be
indemnified for its Danaages resulting fi’om its sole negligence or willful misconduct.
These indemnity provisions shall not be construed to relieve any insurer of its obligation
to pay claims consistent with the provisions of a valid insurance policy.
Buyer’s Right to Operate
(a) Generally. If an Event of Default under Sections 9.2(ii) or 9.2(iii) occurs, then
Buyer or its desiN~ee may, but shall not be obligated to, step-in and assume operational
control fi’om Seller of the Generating Facility; provided that Buyer shall not be pemaitted
to step-in and take control so long as Seller or any of Seller’s Lenders are using
co~rmaercially reasonable efforts to remedy the Events of Default. Buyer, its employees,
contractors and designees shall have the unrestricted right to enter the Generating Facility
to the extent necessary to operate the Generating Facility. Upon the exercise of this right,
Buyer or its desi~aee shall at all times operate the Generating Facility using Prudent
Utility Practice and shall comply, to the extent co~mnercially practicable, with the terms
of this Agreement. Notwithstanding the foregoing, Seller shall not be excused from any
obligation or remedy available to Buyer as a result of Buyer’s operation of, or election
not to operate, the Generating Facility. Buyer shall pay Seller the applicable Contract
Price for Output provided hereunder, less any costs incurred by Buyer to operate the
Generating Facility. Buyer shall indemnify and hold Seller harmless from any liability to
third parties arising out of Buyer’s failure to operate the Generating Facility using
Prudent Utility Practice. Upon Buyer’s satisfaction that Seller has the ability to operate
SANFRAN 156146 (2K)
30
the Generating Facility in accordance with this Agreement, Seller shall resume
operational control.
10.1
ARTICLE 10: REPRESENTATIONS, WARRANTIES AND COVENANTS
Seller’s Representations. XYarranties and Covenants
Seller represents, wan’ants and covenants to Buyer that as of the date of execution of this
A~eement:
(i)Seller is duly organized and validly existing as a [Seller-’x busit~ess
registration] under the laws of [State of Registrations], and has the lawful
power to engage in the business it presently conducts and contemplates
conducting in this Ageement and Seller is duly qualified in each
jurisdiction wherein the nature of the business transacted by it makes such
qualification necessary;
(ii)Seller has the legal power and authority to make and CatTy out this
Agreement and to perfon~n its obligations hereunder; all such actions have
been duly authorized by all necessary proceedings on its part. As of the
Cmmr~ercial Operation Date, (a) the Generating Facility is a "qualifying
small power production facility" as that tenza is defined in Section 3(17)(C)
of the Federal Power Act, and will possess all of the exemptions
regulation provided in 18 C.F.R. Sections 292.601(c) and 292.602; or (b)
Seller has market-based rate authority, and has made all filings required in
comaection with this Ageement, under Federal Power Act;
(iii)throughout the Term: (a) the Generating Facility will qualify and be
certified by the CEC as an ERR under the rules and requirements in effect
as of the Effective Date; and (b) the Output delivered to Buyer will qualify
as output fi’om an ERR under the requirements of the RPS LeNslation and
under the rules and requirements in effect as of the Effective Date;
(iv)this A~’eement has been duly and validly executed and delivered by Seller
and, as of the Effective Date, constitutes a legal, valid and binding
obligation of Seller, enforceable in accordance with its temas against Seller,
except to the extent that its enforceability may be limited by ba~’uptcy,
insolvency, reorganization, moratoriuna or other similar laws affecting the
rights of creditors generally or by general principles of equity;
(v)there are no actions, suits, proceedings or investigations pending or, to the
-l.mowledge of Seller, tlveatened in writing against Seller, at law or in equity
before any Governmental Authority, which individually or in the aggregate
are reasonably likely to have a materially adverse effect on the business,
properties or assets or the condition, financial or otherwise, of Seller, or to
result in any impairment of Seller’s ability to perform its obligations under
this Agreement;
SANI=P~ad~ 156146 (2K)
31
10.2
(vi)Seller will deliver to Buyer at the Delivery Point the Output free and clear
of all liens, security interests, claims and encmnbrances or any interest
therein, or thereto, by any Person.
(vii)
(viii)
Seller holds and will hold tl’noughout the Tenn, the rights to all
Environmental Attributes and Capacity Attributes, which it has conveyed
and has COlrnr, itted to convey to Buyer hereunder; and
the execution, delivery and performance of this A~eement by Seller will
not conflict with its governing documents, any applicable laws, or any
covenant, a~eement, understanding, decree or order to which Seller is a
party or by which it is bound or affected.
Buyer Representations and Warranties
Buyer represents and warrants to Seller that as of the date of execution of this
A~eement:
(i)Buyer is a joint powers agency established pursuant to the laws of the State
of California, and has all requisite corporate power and authority to own,
lease, and operate its properties and to carry on its business as is now being
conducted;
(ii)Buyer is duly qualified or licensed to do business as a joint powers agency
and is in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so duly qualified
or licensed and in good standing would not have a material adverse effect;
(iii)
(iv)
Buyer has the legal power and authority to make and can’y out this
ANeement and to perfom:t its obligations hereunder and all such actions
have been duly authorized by all necessary proceedings on its pat;
the execution, delivery and perfomaance of this Aweement by Buyer will
not conflict with its governing documents, any applicable laws or any
covenant, agreement, understanding, decree or order to which Buyer is a
party or by which it is bound or affected;
(v)this A~’eement has been duly and validly executed and delivered by Buyer
and, as of the Effective Date, constitutes a legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms against Buyer,
except to the extent that its enforceability may be limited by bankauptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights of creditors generally or by general principles of equity; and
(vi)there are no actions, suits, proceedings or im,estigations pending or, to the
knowledge of Buyer, tt~aeatened in writing against Buyer, at law or in equity
before any Governmental Authority, wkich individually or in the ag~egate
SAN FIL~.N 156146
32
are reasonably likely to have a materially adverse effect on the business,
properties or assets or the condition, financial or otherwise, of Buyer, or to
result in any impairment of Buyer’s ability to perform its obligations under
this A~eement.
11.1
11.2
ARTICLE 11: MISCELLANEOUS
Notices
All written notices, requests, statements or payments under this A~eement shall, unless
othe~,ise specified herein, be deemed properly sent if delivered in person or sent by
facsimile, reliable overnight courier, or sent by reNstered or certified mail, postage
prepaid to the persons specified in Exhibit 12 [Contacts]. Notice by facsimile or hand
delivery shall be effective at the close of business on the day actually received, if
received during a Business Day, and otherwise shall be effective at the close of the next
Business Day. Notice by overnight United States mail or courier shall be effective on the
next Business Day after it was sent. A Party may change its addresses by providing
notice of same in accordance herewith.
Dispute Resolution
(a) Arbitration or Mediation. Subject to Section 5.1(b), any dispute under this
A~eement between Seller and Buyer shall, at the request of any Party, be refen’ed to a
senior representative of each of the Parties for resolution on an informal basis as
promptly as practicable. In the event the senior representatives are unable to resolve the
dispute, the matter may be submitted to arbitration or mediation on such terms and
conditions as the Parties may agree.
(b) Litigation. In the event the Parties are unable to satisfactorily resolve the Dispute
within thirty (30) calendar days of such referral or such other period as the Parties may
mutually a~ee, subject to any extensions of time as may be mutually ageed upon in
writing, or any arbitration aga’eement, either Party may initiate litigation in a court of law
with jurisdiction located in San Francisco, California, or pursuant to Section 11.12, if
applicable, which shall be the exclusive venue to litigate disputes.
(c) Remedies. Nothing in this Section 11.2 shall be construed to delay the exercise of
remedies pursuant to Section 9.3 pending the resolution of any dispute.
(d) Expert Arbitration. Notwithstanding the provisions of Sections 11.2(a) or (b),
disputes expressly referred for resolution under this Section 11.2(d) shall be resolved in
the following mamaer.
(i)Each Party shall, within fourteen (14) days of referral, appoint an expert for
inclusion on the arbitral panel.
(ii)Within fourteen (14) days of the later of such appointments, the two Party-
appointed experts shall appoint a third expert. The third expert shall have at
SANFRAN 156146 (2K)
11.3
11.4
11.5
least five (5) years of experience in electricity generation and sales matters
in California and shall not have been employed by either Party, including as
a consultant, or have had any other financial relationship to either Party, in
the last three (3) years.
(iii)In the event that a third expert cannot be agn’eed upon, within such fourteen
(14) day period, the Parties shall request [Name to be determined] to
appoint the third expert.
(iv)Within fourteen (14) days of the appointment of the third expert, each Par~y
shall provide to the experts and the other Party such materials as it
determines to be relevant to the dispute. The experts may, in their
judg-ment, convene a hearing at which each Party may be subject to inquiry
by the experts and/or the other Party; provided, however, such Party shall
not be required to provide materials beyond those already provided.
The experts shall render a decision on the dispute by a simple majority vote
within sixty (60) days of the selection of the third expert, and shall produce
a written explanation for their decision.
Regulatory Compliance
Each Party shall at all times comply with all applicable laws, ordinances, rules and
regulations applicable to it. As applicable, each Party shall gve all required notices, shall
procure and maintain all Permits necessary for performance of this Agreement, mad shall
pay its respective charges mad fees in comaection therewith. In the event of any chaage to
the ISO Tariff that materially impacts either Party’s obligations or ability to perfol-m
under this Ageement, either Party may request that the Parties engage in good faith
negotiations to amend this A~eement such that an equitable balance of benefits and
burdens may be restored to the Parties. In the event that the Parties are unable to a~ee
upon any amendments to this Ageement within sixty (60) days of the request for
negotiations, either Party may invoke the dispute resolution provisions of Section ! 1.2(d).
Pending any resolution under Section 11.2(d), the Parties shall continue to comply with
the provisions of this A~eement.
No Dedication of Facilities
Any undertaking by one Party to the other under any provision of this A~’eement shall
not constitute the dedication of the Generating Facility or any portion thereof to the
public or to any portion thereof.
Confidentiality
All Confidential Information obtained by either Party from the other Party shall be used
only in com~ection with such Party’s exercise of its rights or performance of its
obligations under this A~’eement and shall not be disclosed to any third pal~:y, except as
may be required by law, applicable regulation or judicial process; provided, however, that
if the receiving Party is required to disclose such Confidential Information by applicable
SANFRAN 15614612K)
34
11.6
11.7
law, reg~alation or legal process, the receiving Party shall promptly notify the disclosing
Party of such pending disclosure prior to such disclosure; provided further that Buyer
may, at any time, disclose any information (i) determined by its atton~ey to be required
by law to be disclosed by a public entity such as the Buyer, and (ii) to those of its
members that receive some or all of the Output, whether directly or indirectly, from
Buyer. The provisions of this Section 11.5 shall survive for ttv-ee (3) years after the
termination of this Ageement.
AssiRnment
(a) Buyer. Buyer may, without the consent of Seller (and without relieving itself from
liability hereunder) assig-n this A~eement or assign or delegate its rights and obligations
under this Ageement, if such assi~vnent is made to: (i) one or more of its member
lnunicipal utilities; or (ii) where such assigmnent does not occur by operation of law, any
successor to Buyer provided such successor is a municipal utility or public utility holding
a certificate of public convenience and necessity granted by the California Public Utilities
Colr~nission.
(b) Seller. Seller may, without the consent of Buyer (and without relieving itself from
liability herem~der): pledge, encumber, or assign this A~eement or the account,
revenues or proceeds hereof as collateral security in connection with any financing or
other financial anangements for the Generating Facility, provided that in connection with
any such pledge, encumbrance, or assignment, the assignee a~ees that upon any
foreclosure or exercise of similar remedies upon the Generating Facility or material assets
thereof,, such assignee shall be bound by this A~’eement.
(c) Written Consent Needed. Except as stated above, neither this Ageement nor any of
the rights, interests, or obligations hereunder shall be assigned by either Party, without
the prior written consent of the other Party, which consent shall not be uareasonably
witkheld. _Any assignment of this A~m’eement in violation of the foregoing shall be, at the
option of the non-assigning Party, void.
(d) Bindin~ on Parties. This Agreement and all of the provisions hereof are binding
upon, and inure to the benefit of, the Parties and their respective successors mad permitted
assi~mas.
Waiver of Rights
Waivers of any rights hereunder must be in writing and shall not be implied from
performance or usage of trade. The failure of either party to this Agreement to enforce or
insist upon compliance with or strict performance of any of the terms or conditions
hereof, or to take advantage of any of its rights hereunder, shall not constitute a waiver or
relinquistmaent of any such terms, conditions or rights, but the same shal! be and remain
at all times in full force and effect.
SANFKAN 156146 (2K)
35
11.8
11.9
11.10
11.11
11.12
11.13
11.14
Section Headings
All titles, subject headings, section titles and similar items are provided for the purpose of
reference and convenience and are not intended to be inclusive, definitive or to affect the
meaning of the contents or scope of the Agreement.
No Third Partn, Beneficiary
This Agreement shall not be construed to create fights in, or to grant remedies to, any
third party (other than a permitted successor or assignee bound to this Agreement) as a
beneficiary of this Agreement or any duty, obligation or undertaking established herein.
Forward Contract
The Parties acknowledge and agree that this Agreement and the transactions
contemplated by this Agreement constitute a "forward contract" within the meaning of
the United States Ba -nkruptcy Code.
Applicable Law
This Agreement is made in the State of California and shall be interpreted and governed
by the laws of the State of California and!or the laws of the United States, as applicable.
Venue
The Parties hereby submit to the exclusive jurisdiction of the federal courts for the
Northern District of the State of California; proxdded, however, that if such federal courts
sitting in the Northern District of the State of California refuse jurisdiction, the Parties
agree to the exclusive jm-isdiction of the state courts sitting in the County of San
Francisco, State of California.
Nature of Relationship
The duties, obligations and Iiabilities of the Parties are intended to be several and not
joint or collective. The Agreement shall not be interpreted or construed to create an
association, joint venture, fiduciary relationship or partnership between Seller and Buyer
or to impose any partnership obligation or liability or any trust or agency obligation or
relationship upon either Party. A Party shall not have any fight, power or authority to
enter into any agreement or undertaking for, or act on behalf of, or act as or be an agent
or representative of or otherwise bind the other Party.
Good Faith and Fair Dealing: Reasonableness
The Parties aN’ee to act reasonably and in accordance with the principles of good faith
and fair dealing in the performance of this Agreement. Unless expressly provided
otherwise in this AN’eement: (i) wherever the Agreement requires the consent, approval
or similar action by a Party, such consent, approval or similar action shall not be
um’easonably withheld or delayed; and (ii) wherever the Agreement gives a Party a fight
SANFR-~.N 156146 (2K)
36
11.15
11.16
11.17
11.18
to determine, require, specify or take similar action with respect to matters, such
deterlnination, requirement, specification or similar action shall be reasonable.
Severabilitv
Should any provision of this A~’eement be or become void, illegal or unenforceable, the
validity or enforceability of the other provisions of this AN’eement shall not be affected
and shall continue in fall force and effect. The Parties will, however, use their best
endeavors to agree on the replacement of the void, illegal, or unenforceable provision(s)
with legally acceptable clauses that correspond as closely as possible to the sense and
pro-pose of the affected provision.
Counterparts
This A~eement may be executed in two or more counterparts and by different Parties on
separate counterparts, all of which shall be considered one and the same A~’eement, and
each of which shall be deemed an oriNnal.
Cooperation
The Parties agee to reasonably cooperate with each other in the implementation and
performance of the Agreement. Such duty to cooperate shall not require either Pa-ty to
act in a maimer inconsistent with its rights under this Ageement.
Limitation of Liabilities
To the extent permitted by law, no Party’s directors, members of its governing bodies,
officers or employees shall be liable to any other pa-ty or parties for may !oss or damage
to property, loss of earnings or revenues, personal injury, or may other direct, indirect, or
consequential damages or injury, or punitive danaages, which may occur or result fi’om
the performaace or non-performance of tNs A~eement, including may negligence arising
hereunder. Any liability or damages faced by am officer or employee of a federal agency
or by that agency that would result from the operation of this provision shall not be
inconsistent with federal law. THERE IS NO WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED
WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM THAT THE
EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS
AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH
OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF
DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF
DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S
LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION AND ALL
OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED,
UNLESS THE PROVISION IN QUESTION PROVIDES THAT THE EXPRESS
REMEDIES ARE IN ADDITION TO OTHER REMEDIES THAT MAY BE
AVAILABLE. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY
PROVIDED HEREIN, THE OBLIGOR’S LIABILITY SHALL BE LIMITED TO
DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES
SANFRAN 156146 (2K)
37
11.19
11.20
11.21
11.22
SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES
OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY
HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT
DAMAGES, LOST PROFITS OR OTHER BUS1-NESS INTERRUPTION DAMAGES,
BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION
OR OTHERWISE. UNLESS EXPRESSLY HEREIN PROVIDED, AND SUBJECT TO
THE PROVISIONS OF SECTION 9.4, IT IS THE INTENT OF THE PARTIES THAT
THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF
DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED
THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH
NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE.
TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE
LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE
DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN
ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES CALCULATED
HEREL~rDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM
OR LOSS.
Further Assurances
The Parties hereto agee to execute and deliver promptly, at the expense of the Party
requesting such action, any and all other and further instruments, documents and
infon’nation that a Party may request, and that are reasonably necessary, or appropriate, to
give full force and effect to the terms and intent of this A~eement.
Time is of the Essence
Time is of the essence to this Ageement and in the performance of all of the covenants,
obligations and conditions hereof.
Construction
The Parties ackmowledge that this A~eement was jointly prepared by them, by and
tlv-ough their respective legal counsel, and any uncertainty or ambiguity existing herein
shall not be interpreted against either Patty on the basis that the Party drafted the
lan~maage, but otherwise shall be interpreted according to the application of the rules on
interpretation of contracts.
Entire Agreement: Inteo.ration
This Agreement, together with all exhibits attached hereto, constitutes the entire
agreement between the Pro-ties and supersedes any and all prior oral or written
understandings. No amendment, addition to or modification of any provision hereof shall
be binding upon the Parties, and neither Party shall be deemed to have waived any
provision or any remedy available to it, unless such amendment, addition, modification or
waiver is in writing and si~ed by a duly authorized officer or representative of the
Parties.
SANFFLa-N 156146 (2K)
38
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
executed by their duly authorized representatives on the Effective Date first written.
BUYER:
NORTHERN CALIFORNIA PO~VER AGENCY
By:
Name:
Title:
SELLER:
[NAME OF SELLER]
By:.
Name:
Title:
be
SANFRAN 156146 (2K)
39
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
Exhibit 6
Exhibit 7
E~aibit 8
Exhibit 9
Exhibit 10
Exhibit 11
Exhibit 12
Exhibit 13 a
Exhibit 13b
Exhibit 14
EXHIBITS
Buyout Payment Form
Description of Generating Facility
Commercial Operation Performance Tests
Contract Price
Credit Support Amount
Expected Ammal Contract Quantity Form
Milestones
Guaranty A~o-reement
Letter of Credit
Operations Forecasts and Scheduling Protocols
Fonr~ of Attestation
Payment / Wire Instructions
Contacts, Buyer
Contacts, Seller
Seller’s Insurance Infom~ation
SANFRAN 156146 (2K)
Exhibit 1
BUYOUT PAY~r~ENTs
Contract Year Buyout Payment in US$
Time period prior to the Commercial $ [Bt(vout Payment Price]
Operation Date
Contract Year 1 $ [Buyout Payment Price]
Contract Year 2 I $ [Buyout Payment Price]
Contract Year 3 $ [Buyout Payment Price]
Contract Year 4 $ [Buyout Payment Price]
Contract Year 5 $ [Bto~out Payment Price]
Contract Year 6 $ [Buyout Payment Price]
Contract Year 7 $ [Buyout Pa.wnent Price]
Contract Year 8 $ [Buyout Payment Price]
Contract Year 9 $ [Buyout Pqvment Price]
Contract Year 10 $ [Buyout Payment Price]
Contract Year !1 $ [Bto,out Payment Price]
Contract Year 12 $ [Bto:out Payment Price]
Contract Year 13 $ [Buyout Payment Price]
Contract Year 14 $ [Bto,out Payment Price]
Contract Year 15 $ [Bto;out Payment Price]
Exkibit 1
SANFIb\N 156146 (2K)Page 1
Exhibit 2
DESCRIPTION OF GENERATING FACILITY
Narlte:
Owner:
Location:
Equipment:
Type of Facility :
Delivery Point:
Operator:
Buyer :NCPA
Name
Signature
Date
Seller :
Name
Signature
Date
SANFRAN 156146 (2K)
Exhibit 2
Page 1
Exhibit 3
COMMERCIAL OPERATION PERFOR_MANCE TESTS
Seller shall coordinate and schedule with Buyer a Performance Test after completion of all
equipment startup and conmaissioning activities. This Performance Test may be performed before
completing punch list items. Buyer shall be permitted to witness the Perfomaance Test, including
access to and copies of control room logs, control system display screens, and instrumentation data
for a reasonable period of time before, during and after the Performance Test, and may also
concurrently conduct a site inspection of the Generating Facility, systems and equipment. Seller
shall supply a written copy of the Performance Test results to Buyer within five (5) business days
following the conclusion of such test. The Performance Test shall consist of uninterrupted
operation of the Generating Facility for a period of no less than [ ].
1) Compliance. The Performance Test shall demonstrate the ability of the Generating Facility to
comply with all material safety, system reliability, enviromnental, and other Requirements of Law,
this A~eement, and any related agaeements, including any interconnection a~eements.
2) Contract Capacity. The Performance Test shall demonstrate the abilit3, of the Generating
Facility to reliably generate the full Contract Capacity.
3)
4)
[TO BE FURTHER DETER3/HA~D]
SANFRAN 156146
Exhibit 3
Page 1
Exhibit 4
CONTRACT PRICE
Contract Price (Choose One)
[]1)Flat Rate Pricing:
The Contract Price Shall be
($IMWh).
OR
[] 2)Escalated Pricing:
The Contract Price Shall be
($/MWh).
beginning (year).
The Contract Price Shall be escalated each
January 1st as follows:
OR
[] 3) Defined Prices as stated to the right.
Defined Price
Year Price 3)
$/MWh
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027 ,
2028
2029
2030
2031 I
SANFP~.N 156146 (2K)
Exhibit 4
Page 1
DtL&FT June 21, 2006
Exhibit 5
CREDIT SUPPORT .~IOUNT
[TO BE DETERMINED]
SANFRAN 156146 (2K)
Exhibit 5
Page 1
Exhibit 6
EXPECTED ANNUAL CONTRACT QUANTITY
Contract Year Expected Annual Contract Quantity
Contract Year 1 [Expected Annual Contract Quantity]
Contract Year 2 [Expected Annual Contract Quantity]
Contract Year 3 [Expected Annual Contract Quantity]
Contract Year 4 [Expected Annual Contract Quantity]
Contract Year 5 [Expected Annual Contract Quantity]
![ExpectedAnnual Contract Quantity]Colltract Year 6
Contract Year 7 [Expected Annual Contract QuantiO,]
Contract Year 8 [Expected Annual Contract Quantity]
Contract Year 9 [Expected Annual Contract Quantity]
Contract Year 10 [Expected Annual Contract Quantity]
Contract Year 11 [Expected Annual Contract Quantity]
Contract Year 12 [Expected Annual Contract Quantity]
Contract Year 13 [Expected Annual Contract QuantiO,]
Contract Year 14 [Expected Annual Contract Quantity]
Contract Year 15 [Expected Annual Contract Quantity]
Contract Year 16 [Expected Annual Contract QuantiO~]
Contract Year 17 [Expected Annual Contract Quantitl.~]
Contract Year 18 [Expected Annual Contract Quantity]
Contract Year 19 [Expected Annual Contract Quantity]
Contract Year 20 [Expected Annual Contract Quantity]
Contract Year 21 [Expected Annual Contract Quantity]
Contract Year 22 [Ea~ected Annual Contv’act Quantity]
Contract Year 23 [Expected Annual Contract Quantity]
Contract Year 24 [Expected Annual Contract Quantity]
Contract Year 25 [EaTected Annual Contract Quantity]
SANFtL,\N 156146 (2K)
Exhibit 6
Page 1
Exhibit 7
CONSTRUCTION MILESTONES
[TO BE DETERMINED]
SANFRAN 156146 (2K)
Exl~ibit 7
Page 1
Exhibit 8
GUARANTY AGREEMENT
This Guaranty AgTeement (the "Guaranty") is made by [Insert Guarantor’s Name] ("Guarantor"),
a [Insert Guarantor’s business registration and location thereoJ], in favor of Northern California
Power Agency (individually and collectively, the "Counterparty").
WHEREAS, Counterparty is a party to the Renewable Energy Power Purchase Agreement between
Northern California Power Agency and [Insert Seller’s Name] ("Agreement") with [Insert Seller’s
Name], a subsidiary of Guarantor (the "Company"); and
WHEREAS, the Guarantor is the parent of Company, and will receive substantial and direct
benefits fi’om the transactions contemplated by the Agreement and has agreed to enter into this
Guaranty to provide assurance for the payment obligations of Company in connection with the
Agreement and to induce the Counterpart), to enter into the Agreement.
NOW, THEREFORE, in consideration of good and valuable consideration, the adequacy, receipt
and sufficiency of which are hereby ac~aowledged, the Guarantor hereby agrees as follows:
Guaranty. The Guarantor hereby unconditionally, irrevocably and absolutely guarantees the
full and punctual payment when due (subject to written demand in accordance with Paragaph
6 below) of Company’s payment obligations arising under the Agreement, as such Agreement
may be amended or modified by agreement between Company and the Counterpart?, from
time to time (the "Guaranteed Obligations"). In addition, Guarantor shall reimburse
Counterparty for all sums paid to Counterparty by Company with respect to such Guaranteed
Obligations which Counterparty is subsequently required to return to Company or a
representative of Company’s creditors as a result of Company’s ba~,a-uptcy, insolvency,
reorganization, liquidation, receivership, or similar proceeding. The Guarantor’s obligations
and liability under this Guaranty shall be limited to payment obligations o~ly and the
Guarantor shall have no obligation to perform reader the Agreement, including, without
limitation, to sell, deliver, supply or transport gas, electricity or any other commodity.
If all or a pat of any payment made by Guarantor to Counterparty hereunder is later
deten~ained to have been improper because such anaount was not actually owed by Company
to Counterparty under the Agreement, Counterparty shall repay such anaount to Guarantor
within ten (10) business days of written demand by Guarantor together with any interest,
reasonable attorneys’ fees, and/or costs of collection, if any, required by the AN’eement to be
paid by Counterparty in the collection of such anaount.
Guaran~ Absolute. The liability of Guarantor under this Guaranty shall be absolute,
irrevocable and unconditional fiTespective of:
(a)
Co)
any defect or deficiency in the Agreement or any other docmnents executed in
comaection with the Agreement;
any modification, extension or waiver of any of the terms of the Agreement;
SANFRAN ! 5 6146 (2K)
Exhibit 8
Page 1
(c)any change in the time, manner, terms or place of payment of or in any other term of,
all or any of the Guaranteed Obligations, or any other amendment or waiver of or
any consent to departure from the Agreement or any other agreement or instrument
executed in connection therewith;
(d)
(e)
(f)
(g)
any sale, exchange, release or non-perfection of any property standing as secm-ity for
the liabilities hereby guaranteed or any liabilities incurred directly or indirectly
hereunder or any setoff against any of said liabilities, or any release or amendment or
waiver of or consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;
except as to applicable statutes of limitation, failure, omission, delay, waiver or
refusal by the Counterparty to exercise, in whole or in pat, any right or remedy held
by the Counterparty with respect to the Agreement or any transaction under the
Agreement;
any change in the existence, structure or ownership of the Guarantor or Company, or
any ban~kruptcy, insolvency, reorganization, liquidation, receivership, or similar
proceeding affecting Company or its assets; or
subject to Guarantor’s reservations in the last sentence of this Paragraph 2, any
dispute between Counterpa-ty and the Company in connection with the Guaranteed
Obligations.
The obligations of the Guarantor hereunder are several and not joint with Company or may
other person, and are prinaary obligations for which the Guarantor is the principal obligor.
There are no conditions precedent to the enforcement of this Guaranty, except as expressly
contained herein. It shall not be necessary for the Counterparty, in order to enforce payment
by the Guarantor under this Guaranty, to exhaust its remedies against Company, any collateral
pledged by Company, may other g-aarantor, or any other person liable for the payment or
perfom~ance of the Guaranteed Obligations. This Guaranty is one of payment and not of
collection mad shall apply regardless of whether recovery of all such Guaranteed Obligations
may be discharged, or uncollectible in any banka-uptcy, insolvency, reorganization, liquidation,
receivership, or similar proceeding affecting Company or its assets. This Guaranty is a
continuing g-uaranty and shall apply to all present and future transactions entered into under
the Agreement
Without linaiting Guarantor’s own defenses and rights hereunder, Guarantor reserves to itself
all rights, setoffs, counterclaims and other defenses to which Company is or may be entitled to
arising fi’om or out of the Agreements or otherwise, except as limited herein and except for
defenses arising out of any lack of authority by Colnpany to enter into the Guaranteed
Obligations or the bankruptcy, insolvency, reorganization, liquidation, receivership, or similar
proceeding affecting Company or its assets.
Waiver. Guarantor hereby waives:
(a)except for the acceptance required from Counterparty below, notice of acceptance of
this Guaranty, notice of the creation or existence of any of the Guaranteed
SANFILa.N 156146 (2K)
Exhibit 8
Page 2
(b)
(c)
(d)
(e)
Obligations and notice of any action by the Counterparty in reliance hereon or in
connection herewith;
notice of the entry into the A~eement between Company and the Counterpa-ty and
notice of any amendments, supplements or modifications thereto; or any waiver of
consent under the A~’eement, including waivers of the payment and performance of
the obligations thereunder;
notice of any increase, reduction or rea~Tangement of Company’s obligations under
the A~eement or notice of any extension of time for the payment of any sums due
and payable to the Counte~-party under the Ageement;
except as expressly set forth herein, presentment, demand for payment, notice of
dishonor or nonpayment, protest and notice of protest or any other notice of any
other kind with respect to the Guaranteed Obligations; and
any requirement that suit be brought against, or any other action by the Counterparty
be taken against, or any notice of default or other notice be Nven to, or any demand
be made on, Company or any other person, or that any other action be taken or not
taken as a condition to the Guarantor’s liability for the Guaranteed Obligations under
this Guaranty or as a condition to the enforcement of this Guaranty against the
Guarantor.
Subrogation. The Guarantor shall be subrogated to all rights of the Counterparty against
Company in respect of any anounts paid by the Guarantor pursuant to the GuarantT, provided
that the Guarantor waives any rights it may acquire by way of subrogation under this
Guaranty, by any payment made hereunder or otherwise (including, without limitation, any
statutory rights of subrogation under Section 509 of the Bankruptcy Code, 11 U.S.C. §509, or
othel~,ise), reinabursement, exoneration, contribution, indelnnification, or any right to
participate in any claim or remedy of the Counterparty against Company or any collateral
which the Counterparty now has or acquires, until all of the Guaranteed Obligations shall have
been irrevocably paid to the Counterparty in full. If (a) the Guarantor shall perform and shall
make payment to the Counterpa-ty of all or any part of the Guaranteed Obligations and (b) all
the Guaranteed Obligations shall have been paid in full, the Counterparty shall, at the
Guarantor’s request, execute and deliver to the Guarantor appropriate documents necessary to
evidence the transfer by subrogation to the Guarantor of any interest in the Guaranteed
Obligations resulting fi’om such payment by the Guarantor.
Notices. All demands, notices and other communications provided for hereunder shall, unless
otherwise specifically provided herein, (a) be in writing addressed to the party receiving the
notice at the address set forth below or at such other address as may be designated by written
notice, from time to time, to the other party, and (b) be effective upon delivery, when mailed
by U.S. mail, reNstered or certified, return receipt requested, postage prepaid, or personally
delivered. Notices shall be sent to the following addresses:
SANFtL~.N 156146 (2K)
Exhibit 8
Page 3
If to Counterpea-ty:
NORTHERN CALIFORNIA POWER AGENCY
180 Cirby Way
Roseville, CA 95678
Attention: Treasurer/Controller
If to Guarantor:
[h~sert Guarantor’s Address]
10.
Demand and Payment. Counterparty is not entitled to make demand upon Guarantor until a
default occurs in payment of any Guaranteed Obligations by Company to Counterparty. Aaay
demand by the Counterparty for payanent hereunder shall be in writing, reference this
Guaranty, reference the Guaranteed Obligations, and signed by a duly authorized
representative of the Counterparty and delivered to the Guarantor pursuant to Para~’aph 5
hereof. There are no other requirements of notice, presentment or demand. The Guarantor
shall pay, or cause to be paid, such Guaranteed Obligations within ten (10) business days of
receipt of such demand.
No Waiver; Remedies. Except as to applicable statutes of limitation, no failure on the part of
Counterparty to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The remedies herein
pro~dded are cumulative and not exclusive of any remedies provided by law.
Term; Termination. This Guaranty shall continue in full force and effect from the Effective
Date until all Guaranteed Obligations arising with respect to the A~eement have been fully
satisfied.
Assignment; Successors and Assigns. The Guarantor shall not assi~a its rights hereunder
without the prior written consent of the Counterparty, and any assi~ament without such prior
written consent shall be null and void and of no force or effect. This Guaranty shall be
binding upon and inure to the benefit of the each party hereto and their respective successors
and pemaitted assi~as.
Amendments, Etc. No amendment of this Guaranty shall be effective unless in writing and
signed by Guarantor and Counterparty. No waiver of any provision of this Guaranty nor
consent to any departure by the Guarantor therefrom shall in any event be effective unless
such waiver shall be in writing and sigaaed by Counterparty. Any such waiver shall be
effective only in the specific instance mad for the specific purpose for which it was ~ven.
SANFP.AN 156146 {2K)
Exhibit 8
Page 4
11.Caption. The captions in this Guaranty have been inserted for convenience only and shall be
Nven no substantive meaning or si~onificance whatsoever in construing the terms and
provisions of this Guaranty.
12.Representation and Warranties.
The Guarantor represents and warrants as follows:
(a)The Guarantor is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has full corporate power to execute,
deliver and perform this Guaranty.
The execution, delivery and performance of this Guaranty have been and remain
duly authorized by all necessary corporate action and do not contravene the
Guarantor’s constitutional documents or any contractual restriction binding on the
Guarantor or its assets.
(c)This Guaranty constitutes the legal, valid and binding obligation of the Guarantor
enforceable against Guarantor in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditor’s rights and to general equity principles.
13.
14.
15.
Foreign Currency Obligations. Subject to the limitation of Guarantor’s total liability set
forth in Paragraph 1 hereof, the Guarantor shall make payment in the currency in which the
Company is required to pay its payment obligations (the "Original Currency"). For the
purposes of calculating Guarantor’s total liability hereunder and applying the limitation on
Guarantor’s total liability, the value of the payment obligation in the Original Currency shall
be converted to US Dollm’s by the Guarantor at the rate equal to the applicable spot exchange
rate of a large co~mnercial bank located in Canada or the United States on the date that
payment is made by the Guarantor.
GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, A_ND
CONSTRUED IN ACCORDANCE V¢ITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD OR REFERENCE TO THE CONFLICT OF LAWS
PRINCIPLES OF ANY JURISDICTION. GUARANTOR HEREBY CONSENTS TO
THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL COURTS IN SAN
FRANCISCO, CALIFORNIA IN CONNECTION WITH ANY DISPUTE ARISING
UNDER THIS GUARANTY. However, if any provision of this Guaranty shall be prohibited
by or invalid under such law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
Entire Agreement and Termination of Prior Guaranty. This Guaranty constitutes the
entire a~eement and understanding between Guarantor and Counterparty with respect to the
Guaranteed Obligations and supersedes and replaces in its entirety any and all guaranties
previously issued by Guarantor to Counterparty with respect to the Guaranteed Obligations, or
any part of them.
SANFtL4,N 156146 (2K)
Exhibit 8
Page 5
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and
delivered by its duly authorized representative effective as of this __ day of ,200[
] (~Effective Date").
[ Guarantor’s Nam e]
By:
Name:
Title:
ACCEPTED AND AGREED TO
THIS DAY OF
By:
Name:
Title:
,200[
SANFR~N 156146 (2K)
Exlaibit 8
Page 6
Exhibit 9
FORM OF LETTER OF CREDIT
[TO BE DETER3!INED]
SANFRAN 156 !46 (2K)
Exhibit 9
Page 1
Exhibit 10
OPERATIONS FORECASTS
and
SCHEDULING PROTOCOLS
1.Annual Operations Forecast
1,1.No later than September 10th of each Contract Yea’, Seller will provide an Aimual
Operations Forecast detailing hourly expected generation and all proposed plamaed
outages for the next Calendar Year. The Annual Operations Forecast for the first
Calendar Year shall be provided no later than ninety (90) days prior to the Conmaercial
Operation Date.
1.2.Buyer may request modifications to the Annual Operations Forecast at any time, and
Seller shall use good faith efforts to acconmaodate Buyer’s requested modifications.
1.3.Seller shall not conduct plaimed outages at times other than as set forth in its Annual
Operations Forecast, unless approved in advance by Seller, which approval shall not be
withheld or delayed unreasonably.
1.4. Seller shall not conduct plamaed outages during the Peak Months.
Short Term Operations Forecasts
2.1. Quarterly Operations Forecast
2.1.1.Twenty (20) days prior to beNmaing of each quarter, Seller shall proxdde a
Quarterly Operations Forecast by hour of expected generation and all proposed
pla~med outages.
2.1.2.Quarterly Operations Forecast will also include any requested additions or
modifications to plalmed outages for the next twelve (12) months.
Buyer wi11 approve or require modifications to the proposed Quarterly
Operations Forecast within ten (10) calendar days of receipt of the Quarterly
Operations Forecast.
2.1.4.If required by Buyer, Seller will provide a modified Quarterly Operations
Forecast to Buyer no later than seven (7) calendar days after receipt of required
modifications fiom Buyer.
2.2. WeeMy Update
2.2.1.No later than 14:00 each Wednesday prior to the following week (Sunday
through Saturday), Seller may provide an electronic update, in a format specified
by Buyer, to the Quarterly Operations Forecast for the next seven (7) calendar
SANFRAN 156!,16 (2K)
Exhibit 10
Page 1
days
2.2.2.The Weekly Update shall include hourly expected generation and all proposed
plamaed Outages.
3.Outage Detail for Annual and Short Term Operations Forecasts
3.1.Outage information provided by Seller is to include, at a mininmm, start and stop time
of Outage, capacity out of service (kWh), equiplnent out of service, and reason for the
Outage.
4.General Scheduling Protocols
4.1.Daily modifications to forecasts. Unless otherwise mutually agreed, Seller may
make changes to the weekly forecasts by providing such changes to Buyer prior to 08:00
two (2) Business Days before the active scheduling day.
4.1. !. Active scheduling day as determined by the WECC Prescheduling calendar.
4.1.2.Example: For power that is scheduled for generation or delivery on Thursday,
March 29, changes must be submitted to Buyer no later than 08:00 on Tuesday,
Marcia 27.
4.2.Hourly modifications to active schedules. Unless other,~Tise mutually ageed, Seller
may make changes to active schedules by providing such changes to Buyer with a
minilrmm of four (4) hours notice before the active hour to be changed. Changes to
active schedules are limited to two (2) changes per day, excluding forced outages,
unless otherwise agreed to between the parties. One request for a schedule change, of
one hour or mnltiple hours duration, constitutes one schedule change.
4.2.1.Example: For power that is scheduled for generation or delivery in hour
ending 15:00 (for the period from 14:01 to 15:00), changes must be
submitted to Buyer no later than 10:00.
At Seller’s request, Buyer may modify generation and load schedules for unforeseen
circumstances in accordance with the above scheduling timeline constraints and Buyer’s
Schedule Coordination A~’eement.
4.4.In the absence of forecasts and schedules as required by this Agreement or this Exhibit,
Buyer shall utilize the most current information provided by Seller in the development and
submission of Schedules.
4.5.Daily or Hourly modifications do not modify Monthly Contractual Energy for issues
related to pricing or default.
5. Additional Scheduling Protocols When NCPA is the Scheduling Coordinator
5.1. Seller is to notify NCPA of all planned or forced generation outages to ensure compliance
SANFRAN 156146 (2K)
Exhibit 10
Page 2
5.2.
5.3.
5.4.
5.1.2.
ISO Outage Coordination and Enforcement Protocols.
Outage information provided by Seller is to include, at a minimmn, start and stop
time of Outage, capacity out of service (kW), equipment out of service, and reason
for the Outage.
Plarmed Outages not included in the Aramal Operations Forecast, the Quarterly
Operations Forecast, or the Weekly Update, shall be provided by Seller to Buyer at
least four (4) business days prior to the start of the requested outage.
Forced Outages
5.2.1.
5.2.2.
5.2.4.
"Forced Outages" are any unplalmed reduction in the capability of a generating
facility.
Forced Outages shall be reported by Seller to NCPA within twenty (20) minutes of
such outages.
Notice by Seller to NCPA of a Forced Outage shall include the reason for the outage
(if M~own), expected duration of the outage, and the capacity reduction.
Within forty-six (46) hours of a Forced Outage, a detailed verbal report shall be
provided by Seller to NCPA specifying the reason for the outage, expected duration
of such outage, capacity reduction, and actions taken to mitigate such outage.
Commencement of an Outage - Seller shall not beNn any plam~ed Outage without prior
approval of NCPA and the ISO.
Return to Service - Seller shall notify NCPA imanediately whenever a generating unit is
returned to service.
6. When NCPA is not the Scheduling Coordinator
6.1.Seller shall cause its Scheduling Coordinator to provide all required Outage reporting
information directly to the ISO as required by the then existing ISO scheduling protocols.
7. Notices
7.1.All Scheduling notices and Schedules are to be submitted to Buyer by phone, fax or email
to the following persons:
7.1.1.For Day Ahead Schedule changes, inform the Buyer’s Pre-Scheduling Contact listed
in Exhibit 13a [Contacts, Buyer].
7.1.2.For Hourly Modifications, infoma the Buyer’s Schedule Coordinator Contact listed
in Exhibit 13a [Contacts. Buyer].
7.1.3. For forced Outages, inform the Buyer’s Dispatcher Contact listed in Exhibit 13a
SANFRAN 156146 (2K)
Exhibit 10
Page 3
7.1.4.
[Contacts. Buyer].
For plamaed Outages, inform the Buyer’s Dispatcher and Supervisor of Dispatch
Operations Contacts listed in Exhibit 13a [Contacts. Buyer].
SANFRAN 156146 (2K)
Exhibit 10
Page 4
8. Example Form Of Day-Ahead Schedule:
June ],2007
Hour Ended Expected Capability
1 2
2 2
3 2
4 2
5 2
6 2
7 1
8 1
9 2
10 2
11 2
12 2
13 0
14 0
15 0
16 1
17 2
18 2
19 2
2O 2
21 2
22 2
23 2
24 2
Expected Daily Temperatures
High
Contact Information:
Scheduling Coordinator:
Facility / City:
SANFRAN 156!46 (2K)
(in Fahrenheit):
Exhibit 10
Page 5
Exhibit 11
FORM OF ATTESTATION
Environmental Attribute Attestation and Bill of Sale
[Name of Seller] ("Seller") hereby sells, transfers and delivers to Northern California Power Agency ("Buyer") the
Environmental Attributes and Environmental Attributes Reporting Rights associated with the generation of the indicated
energy for delivery to the ~-id (as such terms are defined in the Long Term Power Purchase A~-eement ("Agreement")
dated [Date], between Buyer and Seller) arising from the generation for delivery to the grid of the energy by the
Generating Facility described below:
Facility name and location: Pro]ect Name
EIA ID #:CEC ID #:
Fuel Type:Capacity (MW):
Dates M\Vkrs ~enerated Dates
(County, California)
ISO Meter ID #:
Operational Date:
MWhrs ~enerated
in the amount of one Environmental Attribute for each megaWatt hour generated; and Seller further attests, warrants
mad represents as follows:
i)
ii)
iii)
(check one)
to the best of its "knowledge, the Lrfformation provided herein is true and correct;
this transfer to Buyer is the one and only sale of the Environmental Attributes and associated
Environmental Attributes Reporting Rights referenced herein;
the Facility generated and delivered to the ~d the energy ia~ the amount indicated as undifferentiated
energy; and
__ iv’) Seller owns the facility.
__ iv) to the best of Seller’s ~knowledge, each of the Envhomnental Attributes associated with the generation
of the indicated energy for delivery to the grid have been generated and sold by the Facility.
This serves as a bill of sale, transferring from Seller to Buyer all of Seller’s right, title and interest in and to the
Enviromnental Attributes associated with the generation of the energy for delivery to the grid.
Contact Person: Name:Phone:
WITNESS MY HAND,
Seller:
By
Title
Date:
SANFRAN 156146 (2K)
Exhibit 11
Page !
Exhibit 12
PAYMENT / WIRE INSTRUCTIONS
NORTHERN CALIFORNIA POWER AGENCY (Buyer)
WIRE INSTRUCTIONS
The following information is to be used when wiring funds for deposit to Buyer:
U.S. Bank
ABA# 121122676
For Deposit to:
Northern California Power Agency
Acct. No. 1-534-0216-2744
For information purposes, please fax a copy of the wire instructions to Buyer at (916) 781-4255,
Attention Treasurer-Controller.
[Seller’s Name]
WIRE INSTRUCTIONS
(Seller)
The following infomaation is to be used when wiring funds for deposit to [Seller’s Name]:
For Deposit to:
For information purposes, please fax a copy of the wire instructions to [Seller’s ?~r~mle] at [Seller’s
phoebe number], Attention [Seller’s relevant contactperson].
SANFILAN 156146 (2K)
Exhibit 12
Page 1
Exhibit 13a
NCPA (BUYER) CONTACTS
1. Contract Management
Name Phone
Dana Gfiffith 916-781-4219
2. Billing/Invoice Issues
Name Phone
Bob Caracristi 916-781-4224
Mike Daniels 916-781-4205
3. NCPA Pre-Scheduling
Email
dana.~-iffith@ncpa, corn
Elnail
bob. caracristi@ncpa, corn
mike.daniels@ncpa, corn
Monthly, weekly and daily generation schedules ax’e to be provided to NCPA Pre-
Scheduling contacts.
N aria e
Kevin McMahan
Norm Worthington
Don Imamura
Ken Goeke
Pre-Scheduling
Phone Email
916-786-0123
916-781-4227
916-786-0124
916-781-4240
916-781-4290
(FAX) 916-781-4239
4. NCPA Schedule Coordination
kevin.mcmahan@ncpa, coin
norm.worthin~on@ncpa, coin
don.imamura@ncpa, corn
ken. go eke@ncp a. coin
All Hour Ahead or Real-Time Schedule changes are to be provided to NCPA Scheduling
Coordinator Contacts.
Name Phone Email
NCPA Scheduling Coordinator 916-781-4237 SC2@ncpa.com
(FAX) 916-781-4226
NCPA Dispatch/Outage Coordination
All Plalmed and/or Forced Outages of Generating Facilities are to be provided to NCPA
Dispatch/Outage Coordination.
SANFtLAN 156146 (2K)
Exhibit 13a
Page 1
Name Phone Email
Dave Wilke 916-781-4225
(Supela,isor qf Dispatch Operations)
NCPA Dispatch 916-786-3518
NCPA Scheduling Coordinator 916-781-4237
NCPA Dispatch (FAX) 916-781-4226
dave.wilke@ncpa.com
Dispatch@ncpa. corn
S C2 @ncp a. corn
SANFRAN 156146
Exhibit 13 a
Page 2
Contract Management
Naxne
Exhibit 13b
[Name of Seller] (SELLER) CONTACTS
Phone Email
2. Billing/Invoice Issues
Name Phone Email
Pre-Seheduling and Dispatch/Outage Coordination
Annual, Quarterly, Weekly and Daily generation schedules:
Name Phone Email
Pre-Scheduling (FAX)
Operator and Real Time Issues
All Plalmed and/or Forced Outages of generation facilities are to be provided to NCPA
Dispatch/Outage Coordination.
Name Phone Email
(FAX) 916-781-4226
SANFRAN 156146 (2K)
Exhibit 13b
Page 1
Exhibit 14
SELLER’S INSURANCE INFORMATION
[TO BE DETERMIneD]
Attachment 3
PA
ORTHERN CALIFORNIA POWER AGENCY
Commission Staff Report ITEM NO.__~
June 13, 2006
TO:The NCPA Commission
SUBJECT:Adoption of a Resolution Approving Creation of the Northern California Power
Agency Green Power Project (NGPP) and The NCPA Third Phase Member
Agreement for Participating Members to Purchase Green Power from NCPA to be
Acquired Through PPAs and Physical Assets .Classified as Renewable Electric
Generating Projects - Action Item
Back~ound
As mandated by statute (SB 1078, Sher, 2002), municipal utilities are obligated to develop and
implement a Renewables Portfolio Standard (RPS) so as "to encourage renewable resources, while
taking into consideration the effect of the standard on rates, reliability, and financial resources and
the goal of environmental improvement" (Public Utilities Code Section 387(a)). In many cases, the
mandate of creating and implementing a RPS merely confirmed and ratified renewable programs
already in place by NCPA Members. Public policy and state law now emphasize the importance of
utilizing renewable resources to meet power loads. In light of SB 1078 and the actions of both
public and investor owned utilities, it is anticipated that eligible renewable resources will become
limited as utility demands increase. R is thus proper for NCPA to become very proactive in taking
.the necessary steps to ensure the availability of sufficient resources to meet the needs of its
members.
NCPA staff has had multiple discussions with Member Utility Directors regarding the mechanism
to accomplish such purpose. Agreement was reached during the August 2005 Commission meeting
that NCPA would develop Member agreements to obtain renewable energy through generation or
purchase activities meeting specified terms and conditions. These renewable agreements will aid in
the reduction of pollutants, diminish reliance on fossil fuels, and assist both the Members, their
customers and the State of California in reaching renewable energy goals. At the same time, NCPA
Members will benefit from lowered risk by spreading energy requirements over mu!tiple Projects,
avoid duplication of efforts, and achieving economies of scale.
Accordingly, staff presented the Commission with a request to proceed to create these contracts in
August of 2005. The Commission approved this process and the contracts have now been created.
Outhne of Contracts
Copies of the three primary documents associated with the NGPP are attached. These documents
are: 1) the Third Phase Agreement, 2) pro-forma Request for Proposals (RFP), and 3) the pro-forma
Power Purchase Agreement (PPA).
SR: 162:6
Adoption of a Resolution Approving Creation of the Northern California Power Agency Green
Power Project (NGPP) and The NCPA Third Phase Member Agreement to Purchase Green Power
from NCPA to be Acquired Through PPAs and Physical Assets Classified as Renewable Electric
Generating Projects
June 7, 2006
Page 2
The NGPP Third Phase Agreement is an agreement between each participating Member and NCPA,
and authorizes NCPA to procure eligible renewable power supply resources through one or more
Request for Proposals (RFP). The objective of the RFPs will be to seek out those proposals that
will meet the renewable resource standards and provide the best value for the participants in the
NGPP. The NGPP portfolio of eligible renewable resources is expected to include purchases from
independent renewable power producers through long-term or equity position contracts.
The NCPA Facilities Agreement, effective September 22, 1993, provides for three phases of Project
planning and development. The First Phase is exploratory, the Second Phase consists of all work,
licensing and permitting ancillary to a Project, and the final Third Phase where participants commit
to participation levels and the Project is financed and constructed. Because of the nature of this
Project, the Members directed NCPA to bypass the First and Second Phases and complete the
necessary documents required to enter into the final the Third Phase Agreement.
All Projects directly governed by the NGPP Third Phase Agreement will be acquired through
individual PPAs for renewable power projects built, owned, and operated by third party suppliers.
The NGPP Third Phase Agreement also directs NCPA to investigate, construct and operate
renewable power projects. These physical assets will be controlled through additional Third Phase
Agreements for each project, with the rights to output fromthese physical projects allocated on the
same basis as the output from the PPAs under the NGPP Third Phase Agreement. NCPA will serve
as the scheduling coordinator, manage the day-to-day scheduling activities, verify deliveries,
monitor supplier compliance with contractual obligations, manage invoicing and payment, and
perform other activities needed for safe and prudent project operation and accounting. NCPA will
receive power directly from the Projects, and allocate the energy deliveries and costs to the
participating members.
The pro-forma Power Purchase Agreement (PPA), also attached, defines the key issues of quantity,
type, metering, scheduling, liability, operatin~scheduling requirements, etc. Each PPA may differ
due to specific circumstances of the renewable power supplier.
The output from all Projects under the NGPP Third Phase Agreement will be based on Participant
percentages established in the NGPP Third Phase Agreement. The Participant percentages will be
calculated based on the final average megawatt (aMW) elections of each Participant relative to the
total aMW of all Participants. These percentages define both the benefits and costs of the NGPP to
be allocated to each Participant.
The final product specification, volume, contract term, and pricing for each individual Project to be
included in the NGPP are to be finalized during negotiations. Once agreed upon by Participating
Member staffs and NCPA staff, NGPP Participant representatives (Participant Commissioners or
their designee(s)) will vote on the inclusion of each resource in the NGPP. In the case of PPAs,
energy payments will be made as energy is delivered; in the case of physical assets, debt payments
will be defined and paid monthly. In both cases, payment terms and conditions will be specified in
the contracts.
SR: 162:6
Adoption of a Resolution Approv#~g Creation of the Northern California Power Agency Green
Power Project (NGPP) and The NCPA Third Phase Member Agreement to Purchase Green Power
fi’om NCPA to be Acquired Through PPAs and Physical Assets Classified as Renewable Electric
Generating Projects
June 7, 2006
Page 3
Environmental Review
Execution of the NGPP Third Phase Agreement does not constitute a Project for the purposes of the
California Environmental Quality Act (CEQA). However, the Participating Members intend to
receive output from Projects that will constitute a Project for the purposes of CEQA. The NGPP
Third Phase Agreement provides for NCPA, on behalf of itself and the Project Participants to
ensure that environmental review has been conducted and certified prior to finalization of any
power acquisition.
Recommendation
Staff recommends that the Commission authorizes the adoption of the attached Resolution which
approves participation (by Participating Members) in the NCPA Green Power Project.
Respectfully submitted,
DG/]3J-B/dg
Attachments:
Prepared by:
BRYAN J. BERTACCHI
Assistant General Manager
Generation Services
Prepared by:
DANA GRI~ITH
Power Coordination
and Planning Engineer
Power Management
NCPA Resolution No. 06-26 Authorizing Execution of the Agreement
NGPP Third Phase Agreement
NGPP form of Request for Proposals
NGPP pro-forma Power Purchase Agreement
RESOLUTION 06-26
RESOLI_FfION OF THE NORTHERN CALIFORNIA POWER AGENCY TO APPROVE
THE NCPA GREEN POWER PROJECT (NGPP) THIRD PHASE AGREEMEaNT FOR
THE ACQUISITION OF RENEWABLE ELECTRIC GENERATION
WKEREAS, the Northern California Power Agency (NCPA) Members have identified
the need for additional green resources to meet their anticipated demand for energy and
ca)acity over the next ten years and beyond; and
WHEREAS, Members have considered options including market purchases,
acquisition of existing projects, partnerships in resources development with other entities,
increasing the capacity at existing NCPA plants, and developing new and more efficient
resources; and
WHEREAS, Members desire to increase the utilization of renewable energy resources
as part of their power mix strategy and have accordingly each adopted a Renewable Portfolio
Standard (RPS); and
WHEREAS, entering into the NGPP Third Phase Agreement will assist the Participating
Members in: meeting their RPS and other renewable power goals, will reduce reliance on fossil
fuels and associated fuel price volatilities, will contribute to the State of California in meeting its
renewable energy goals, will reduce delivery risk by spreading energy deliveries across multiple
projects, avoiding duplication of efforts, and achieving economies of scale; and
WHEREAS, the Participating Members are ready, willing and able to purchase-such
power supplies from NCPA through the NCPA power purchase agreements; and
WHEREAS, NCPA is ready willing and able to enter into power purchase agreements
on behaK of the Participating Members to efficiently and effectively assist in meeting the
Member’s RPS goals.
NOW, THEREFORE BE 1T RESOLVED, that the Commission approves the proposal
and the plan described in the attached Staff Report 162:6 authorizing the creation of the NOPP.
FURTHERMORE, The Commission, a) Approves the activities and intent of the NGPP Third
Phase Agreement; b) Directs the NCPA General Manager and his staff to finalize the documents
with any such non-substantial changes as approved by the NCPA General Counsel; and c)
approves the forwarding of the final form of the attached documents to Participating Members to
attain authority to enter into the NOPP Third Phase Agreement.
FI.rRI’IKERMORE, The Commission finds that the adoption of this resolution does not constitute
a project under the Califomia Environmental Quality Act and no environmental assessment is
required:
PASSED, ADOPTED and APPROVED this 22nd day of June 2006, by the following vote on
roll call:
JASON LILES
CHAIRM.AN
Vote Abstained
Alameda
BART
Biggs
Oridley
Healdsburg
Lodi ~t ,
Lompoc , ~/
Palo Alto
Port of Oakland . ,¥
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ATTEST:DENISE DOW
ASSISTANT SECRETARY
Attachment 4
MEMORANDUM 1.
TO:UTILITIES ADVISORY COMMISSION
FROM:UTILITIES DEPARTMENT
DATE:
SUBJECT:
JUNE 7, 2006
APPROVAL OF THE CITY OF PALO ALTO’S PARTICIPATION
IN NORTHERN CALIFORNIA POWER AGENCY GREEN
POWER PROJECT FOR THE PURCHASE OF UP TO 15
AVERAGE MEGAWATTS OF ENERGY
REQUEST
Staff requests that the U.AC recommend that City Council approve the participation by
the City of Palo _Alto (City) in the Northern California Power _Agency (NCP_A) Green
Power Project, for the purchase of up to 15 average megawatts (MW) of energy.
BACKGROUND
Council-approved Long Term Electric Acquisition Plan (LEAP) guidelines call for
investments in new renewable resources to meet the City’s sustainability goals, while
ensuring the retail rate impact does not exceed 0.5 cents/kWh (CMR:398:02 of August
2002, Guideline #6). The Council guideline also approved a new renewable purchase
target of 10% of the expected portfolio load by 2008 and move to a 20% target by 2015,
in addition to the City’s voluntary 100% renewable energy progam, PaloAltoGreen.
Since 2002, the City has executed five renewable energy purchase ageements, three from
landfill gas generation and two from wind generation sources. Eligible renewable energy
is projected to contribute 13% of electric energy supply in 2006. The executed contracts
are expected to meet !7% of the City’s retail load by year 2009, plus the 3% due to
voluntary subscription to PaloAltoGreen. The average cost of these contracts is 6.1
cents/kWh and the retail rate impact is next to nil.
DISCUSSION
The City has executed wind and landfill gas contracts at an average cost of 6.1
cents/kWh, with minimal impact on customer retail electric rates. Historically, renewable
energy prices have tended to be higher than fossil fuel based resources. However, due to
higher fossil fuel prices during the last several years and production tax credits available
to developers of new renewable resources, renewable energy prices have been
competitive with fossil fuel-based electricity prices. Because of the low cost for the
existing hydroelectric resources that comprise half of the City’s long-term electric energy
Page 1 of 5
supply, the projected average electric commodity costs for the entire supply are lower
than either renewable or conventional electricity resources that will be needed to fill the
remaining load requirements.
The current competitiveness of renewable energy prices, along with the City’s preference
for clean renewable energy reflected in the Comprehensive Plan, Green Government
Pledge, and Sustainability Policy, has prompted staff to pursue renewable energy based
generation beyond the 20% target, but still within the 0.5 cent/kWh retail rate impact
threshold set by Council. The City, along with 10 other NCPA members, has developed a
program to jointly pursue additional green energy resources. If successful, an additional
15 MW average annual energy supply will increase the City’s eligible renewable
portfolio mix from 17% to 30%, in addition to the 3% voluntary PaloAltoGreen program.
Combined with the 50% of supply from large hydroelectric resources, the City’s portfolio
mix of non-fossil fuel resources would increase to 80% (83% total). The resulting !ong-
term mix is illustrated below. The projected load includes reductions due to accelerated
energy efficiency efforts, which apprdximately offset anticipated load growth from
economic growth and redevelopment.
Projected Energy Supply Portfolio
Normal Hydro Year- with NGPP
Palo Alto
Green 3% (± 25%)
The City’s participation in the NCPA Green Power Project (NGPP)has the potential to
achieve economies of scale in contracting and management. Upon approval of the NGPP
Third Phase Agreement (Agreement) by the NCPA Commission (expected in June), the
Agreement will be submitted to the governing bodies of the participating members.
NCPA will then solicit interest from renewable energy suppliers. Based on responses
from suppliers, NCPA staff along with participating members will recommend to the
NCPA Commission a number of contracts for approval. These contracts with suppliers
will be within parameters of the Agreement. The Agreement parameters are as follows:
!. The City’s participation will be at !5 MW average annual energy or -13% of the
City’s retail electric load (131,400 MWh per year).
2. The City’s share of participation in Agreement is expected to be 21%, which will
make Palo Alto the second largest participant. The City of Santa Clara will be the
largest participant (35%).
Page 2 of 5
The average procurement price of energy shall not exceed $70/MWh (in 2005
dollars) and the maximum contract price for any single contract shall not exceed
$250/MWh.
The term of any single contract shall not exceed 25 years.
Each contract shall be allocated to participants according to the approved
participation percentages of the Agreement..
6. Each participating city covenants and agrees to appropriate funds on an annual
basis as part of its electric budget to pay for contracted resources under the
Agreement.
If the entire 15 MW annual energy supply is contracted under the NGPP at the maximum
average purchase price of $70/MWh (2006 dollars), the resulting average annual cost to
the City would be $9.2 million in 2006 dollars, or approximately $12.4 million for 25
years. The estimated retail rate impact of Palo Alto’s existing contracts is negligible, and
the projected maximum rate impact of the full 30% renewable energy by means of NGPP
is less than 0.3 cents/kWh, well within the Council approved LEAP guideline limit of 0.5
cents/kWh (Guideline #6).
Participating in NGPP increases the probability that energy supplies may exceed the
City’s !oad in certain months. The potential surplus position is unknown and wil! depend
on the specific pattern of resources selected through the solicitation. However, based on
certain assumptions, the surplus position is anticipated to be 4-8% of total annual load in
a normal hydro year, occurring only in April, May and June. The possible systematic
monthly surplus energy will be managed either through energy exchange arrangements
within NCPA or the through occasional short-term sales of surplus energy to the electric
market.
Lono~-term Fixed Prices
To mitigate t.he risk of a future decline in market prices, Council-approved LEAP
Guidelines limited the amount of fixed-price energy contracts beyond five years out at
75% of expected load (LEAP Guideline # 3C(iii)). Achieving a 30% renewable resource
supply at long-term fixed price, along with City’s 50% hydro portfolio supply and current
contracts for Palo Alto Green (3%) will increase the fixed price energy supplies to 83%
of retail load needs in an average hydro year. Reaching this 83% level of supply
resources at long term fixed price increases the risk of having a high cost supply
portfolio, if the price for energy in future years declines.
Since renewable resource supply development is capital intensive, cost recovery at fixed
price over the life of the plant is the most common contractual model required to develop
new renewable supply. LEAP Guideline 3.c.(ii) that deals with managing market risk
states, "Procuring resources at fixed price for at most 75% of expected load for 5 or
more years out, assuming average hydro conditions. " Staff has weighed the pros of
providing incentives for renewable energy developers through long-term fixed price
energy contracts and the merits of achieving long term retail cost stability versus the cons
of maintaining short-term energy price exposure to guard against declining future prices.
Page 3 of 5
Based on the evaluation, staff recommends that the City contract for renewable energy
supply at fixed price for up to 33%, even though this will result in fixed price portfolio
supply reaching 83% (50% large hydro + 33% renewable), in effect increasing the LEAP
Guideline #3 limit from 75% to 83% for renewable energy supplies. Exposure to rising
electric prices in the future and susceptibility to long-term price volatility will be reduced,
and fewer near-term market purchases will be required to balance the remaining 17% of
the portfolio.
POLICY IMPLICATIONS
Participation in NGPP supports the Council-approv4d Utilities Strategic Plan to enhance
customer satisfaction and utility infrastructure, employ balanced environmental solutions,
and provide fair and reasonable returns to the City and competitive rates to customers
through municipal ownership. Participation is in also accordance with the Utilities
Energy Risk Management Policies.
Participating in NGPP conforms to the rate impact limits in LEAP Guideline 6, and aims
to purchase renewable energy supplies in excess of the target of 20% of expected
portfolio load by 2015.
Participating in NGPP at 15 average MW supports LEAP Guideline #3 (Market Risk
Management) by further diversifying Palo Alto’s resources, but exceeds the long-term
fixed price limit for electricity purchases beyond 5 years of 75%. Participating in this
renewable resource acquisition would raise the limit to 83%.
Implementing LEAP Renewable Portfolio Investments also supports City’s Sustainability
Policy Statement, adopted April 2, 2001 (CMR 175:01), the Green Government Pledge,
adopted July 19, 1999 (CMR 284:99), the US Mayors’ Climate Protection Agreement,
and elements of the Comprehensive Plan, specifically:
1.GOAL N-9: A clean, efficient, competitively-priced energy supply that makes use
of cost-effective renewable resources, and Policies
2. POLICY N-44: Maintain Palo Alto’s long-term supply of electricity and natural
gas while addressing environmental and economic concerns.
3. POLICY N-48: Encourage the appropriate use of alternative energy technologies.
RESOURCE IMPACTS
The maximum average cost for the renewable resources over 25 years is up to $230
million in 2005 dollars ($310 million actual). Should any of the renewable resources
come on-line in FY 06/07, there would be onlya negligible impact on the supply cost
projected in the electric supply budget.
NEXTSTEPS
The .NGPP Third Phase Agreement will be presented to the NCPA Commission for
approval, expected in June 2006. Once approved, by the NCPA Commission, staff wilt
Page 4 of 5
submit the Agreement to Council. All NGPP participants will submit the Agreement to
their governing boards for approval. Once approved by all participants, NCPA will
initiate a competitive solicitation process to seek resources from one or more suppliers
sufficient to meet the NGPP subscription level, with a goal of September 2006. Contracts
will be between the NCPA as the buyer and the suppliers as sellers. Staff will inform
Council as the contracts are finalized.
PREPARED BY: Shiv Karl Knapp, Monica Padilla
REVIEWED BY:
APPROVED BY:
GIRISH BALACHANDRAN
ASSISTANT, d)IRECTOR, RESOURCE MANAGEMENT
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c~ Y~:rs c/_~DmECTOR OF AD~rrN~STR~TIVE SERViCeS
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Page 5 of b
Attachment 5
UTILITIES ADVISORY COMMISSION
MINUTES OF JUNE 07, 2006
CALL TO ORDER
The June 7, 2006 Utilities Advisory Commission meeting was called to order by Chairman George
Bechtel. Let us start with roll call and to my left Keller Present, Bechtel Present, Melton present,
Beecham Present and just thought I will mention that there are three commissioners and also our
liaison Beecham present and the two commissioners Dexter Dawes and Dick Rosenbaum will not
be here tonight.
ORAL COMM UNICATIONS
None
APPROVAL OF THE MINUTES
Motion: Commissioner Melton motioned the minutes from May 3, 2006. Commissioner Keller
seconded the motion. Unanimous approval.
AGENDA REVIEW
Bechtel mentioned that he sees only one item on the Agenda and assumes there will be nothing
there.
REPORT FROM COMMISSION MEETINGS/EVENTS
Any reports from Commissioners? Meetings, Events’?. If none lets move on to the Director of
Utilities Report from Girish.
UTILITIES DIRECTOR REPORT
Utilities Advisory Commission Minutes from 6/7/06: DRAFT 6/15/06 Page 1 of 18
Girish announced that he was sitting for Carl Yeats, Director and he has just a short information
report. Just a couple of items.
CMUA Board of Governor’s adopts Greenhouse Gas Reduction Principles. Press release
that is attached to this report. (Marilyn I will send the attachment when the UAC packet
goes out)
2.Palo Alto started receiving wind power from the Shiloh wind project in Solano County on
June 1.
3. Council will be considering adopting the FY 06-07 budget next Monday, June 12.
AB 1234 Ethics Training for the UAC has been scheduled for Tuesday, June 27, 2006 from
6:00pm - 9:00pm in the council chambers and that is the reason why Carl Yeats couldn’t make
it today because he is at the Ethics Training with the council members.
Bechtel said that he assumes everyone responded or at least knows what happens if they
don’t show up?
Beecham: That is why there are two scheduled. I would add that if you can’t make it there are
probably other classes you can take and you could do it on line.
Bechtel said that he saw that. I guess we all got a note from the City Attorney’s Office. But the
$50 fee is a good motivation to not take a nice vacation that night. Okay. Girish anything more
to add? Girish replied: That’s it.
UNFINISHED BUSINESS
None.
NEW BUSINESS
ITEM 1: ACTION ITEM:
Utilities Advisory Commission Minutes from 6/7/06: DRAFT 6/15/06 Page 2 of 18
Recommendation that we approve an action on the NCPA Green Power Project. So I will turn the
floor on to you Girish.
Girish said he will have Karl Knapp make a presentation of this. Shiva and Karl have worked on
this quite a bit. Just to give you a little bit of background on this. The Council back in 2001
approved a Long Term Electric Acquisition Plan and Objectives for the portfolio. We have a
renewal portfolio standard. We participated in the previous RFP with NCPA on Green Power
Projects. We have done our own RFP over the last three years and this is getting to the next
phase of acquiring renewable resources. So there are some issues that came up that we explain
in this staff report and we will talk about it in more detail in this presentation. We have our Energy
Risk Manager also here to answer any questions that may come up.
Karl Knapp - The NCPA Green Power Pool is an opportunity for Palo Alto to possibly buy beyond
the LEAP 20% renewable energy target. It is basically 11 NCPA members would rather pool their
resources together to buy the renewal energy if they want to buy. There is a total of 80 megawatts
worth of interest. TrYing to do it all in one big shot rather than piece meal looks like a good
opportunity?
Staff thinks that this is a good opportunity to diversify our green power pool and to make progress
in achieving a "low-carb" energy portfolio. It looks like we could achieve 33% or more and still
remain below the LEAP ½ cent per kWh rate impact Guideline to achieve the 20% target. The cost
effectiveness of having a large pool is a big driver and there is also some risk sharing enhanced
through joint action.
Staff is recommending a 15MW average participation out of the 80. This level will add about 12 ½
to 13% of the City’s electric supply, which will take us up to somewhere between 30-33% of total
load instead of 20%. It maintains some option for landfill expansion, as some of our contracts
include the option to buy additional output at Santa Cruz, or at Half Moon Bay or at Keller
Canyon, and also leaves some room to trY to keep our load down through more aggressive
Utilities Advisory Commission Minutes from 6/7/06: DRAFT 6/15/06 Page 3 of 18
efficiency and some small cogeneration opportunities. It does allow for some direct procurement
by CPAU in parallel rather than going all the way to 15% (18 MW).
One of the issues we would like to point out is, it may result in some seasonal energy surpluses. It
is hard to fill any of these seasonal needs by just getting renewable energy in September-
October-November. For short term the only problem is that if some of the resources start before
August 2008 because we have not bought that far out really very much. Long-term seasonal
energy surpluses that may result occur in May-July, and represent 4% to 8% of our total annual
load even though we have 17% shortfall overall.
Credit and Market Price Risk are addressed well with NCPA’s Third-Phase Agreement, and NCPA
also has their own Risk Management procedures set up. Participating may result in exceeding the
LEAP long term fixed price purchasing limit of 75% for fixed price purchases soooner than three
years out, achieving potentially up to 83%. Staff recommends approval for 15 MW participation in
the NCPA Green Power Project.
Bechtel - Karl are you going to -if you plan to cover later what strategies do you have in line for
that 4% - 8% surplus annually. Karl Knapp replied that there are 3-4 different ways to do it.
One is to arrange exchanges within the pool with other participants, and another might be to sell
surplus energy that may result into short term markets because we would still want to have the
energy in a dry year.
Karl Knapp described the NGPP Third-Phase Agreement. The proposed total subscription is 81
MW, with 11 participants anticipated. There is an average price limit in the contracts. NCPA would
be able to buy up to 81 MW as long as the average cost for the whole pool does not exceed $70
per megawatt hour in 2005 dollars. If deliveries start five years from now and it would be a few
percent higher than that in actual dollars. No individual contract should exceed $250/MWh (also in
2005 $).
Keller asked if the pool cost includes transmission. Karl answered that the pool cost includes the
commodity cost and transmission into California at NP-15, but not from there to Palo Alto or other
Utilities Advisory Commission Minutes from 6/7/06: DRAFT 6/15/06 Page 4 of 18
participants. NP-15 is the same place where all the energy deliveries are for the rest of the NCPA
Pool. As far as time and term, the 3rd Phase Agreement remains in place until CPAU withdraws.
The initial procurement window for NCPA is limited to 3 years. More time to fill the need may be
approved by a vote of participants. Participants are represented by a board of members from all
participating utilities. No individual contract should be over 25 years.
The goal here is to seek Power Purchase Agreements with suppliers, but owned projects may also
be considered.
There is a 75% fixed price limit in the LEAP guidelines for purchases longer than 3 years. Knapp
described the percentage numbers in the table on the presentation slide "NGPP Participation
Alternatives". The first number on the left (15% in the first row) represents the projected fraction of
the non-Palo Alto Green load. The second number (18%) is what we expect to have, and the third
number (20%) is what Palo Alto has contracted for to be built if the contracts are built to their
maximum size and actually operate at 100% availability. So far, we have found that these facilities
are operating closer to 90-92%. (Marilyn, once again the attachment will go in the packet)
The total cost is roughly about 310 million dollars over 25 years. Council so far has already
approved 252 million dollars for contracts ranging from 15 to 25 years.
Bechtel asked what is the rate impact on this? Are we getting a premium of 10% for Palo Alto
Green?
Palo Alto Green Program doesn’t have any rate impact for non-participating customers. Palo Alto
Green is one hundred percent wind and solar and not just "green only". Even though the wind and
solar combination is competitive with the market price, it is not competitive with our average cost
which is half low-cost large hydro from Western and Calaveras. People buying Palo Alto Green
are not receiving the low-cost hydro, and that’s where the I 1/2cent premium comes from.
The estimated maximum rate impact of 0.3 cents results from a maximum price that is about $9.00
per MWh above the projected "low" market price for electricity, times 33%, which is $3/MWh or 0.3
Utilities Advisory Commission Minutes from 6/7/06: DRAFT 6/15/06 Page 5 of 18
cents/kWh. Karl Knapp showed the slide illustrating the long-term volume variability that could be
a result from the project, showing one example monthly profile that this could end up looking like in
the long run, for which staff assumed that the 15 megawatts could have the same shape that we
have now, which is a little over half wind a little less than half landfill gas. You could think of this
slide as a kind of worst case because the wind resources that we have, although they fill in nicely
back in August and September, they also fill in nicely in May and June when we already have
plenty of power. So this is the scenario that exacerbates the occasional monthly surplus position,
which turns out not be that big of a problem. The example this is just for a normal hydro year.
Finally, staff requests that UAC recommend to Council to approve participating in the NCPA Green
Power Pool for the purchase of up to 15 averages MW of renewable energy.
John Melton said it implies only participation, but it is a change in Council Policy to permit
participation; is that right? Karl Knapp replied this is just a request to exceed the existing limit
specifically for purchasing additional renewable energy. We are not necessarily asking them to
raise the limit from 75% to 83% for just any resources. We are saying just allow us to participate in
it even though it may be above 75%.
Bechtel asked if there were any questions for staff?
Marilyn asked are these costs for the actual energy or for the expected energy? My concern about
it is payments that depend on high performance - procurement costs for facilities that do not
generate what you expect. Are procurement costs prorated based on actual energy produced?
The intent is to meet these needs with Power Purchase Agreements, in which we pay per MWh
actually delivered. If a project is proposed, NCPA would impose penalties for underperformance
through its contracting process.
On page three you have a layout on consumer costs underneath. 9.2 million in 2006 dollars and
12.4 for 25 years. Does that mean that we pay less in early years and more lately? (Attachment will
go out)
Utilities Advisory Commission Minutes from 6/7/06: DRAFT 6/15/06 Page 6 of 18
The "2006 dollar" costs are in terms like the $70 per kilowatt hr -"real" dollars. In actual dollars,
the contract price would be starting at $70 from now increasing 2.41%, which is the long-term CPI
(Consumer Price Index) for the last fifteen years. If it started at $70 and went up at 2.41% per year
for 25 years, that would be at the highest level that still meets the criteria of $70/MWh limit.
Alternatively, if it starts of $80 instead of $70 dollar limit with 1½% per year, it could also match the
$70/MWh limit in 2005 dollars, but the average actual cost is actually lower. Different escalation
rates need to be put into current dollar terms. Some contracts may actually not start deliveries
right away.
Keller questioned if the risk is on NCPA for the facilities that don’t produce the power that is
expected and who is going to pay the penalties?
Generally these will be power purchase agreements so if you don’t buy their power you don’t have
to pay anything.
Beecham asked are we not talking about buying a plant or buying any hard assets---when you say
power purchase agreements?
’No’ It is the intent, but it is left open if in the NCPA RFP that if projects are proposed, then there is
an alternative to actually have NCPA build the project in which case whoever is building the project
would have to address the performance risk. We do not anticipate doing this.
Keller asked if there is a risk if you build a geothermal plant, and it lasts 10 years instead of 25 and
you get only half the energy?
Girish replied that we expect that with the power purchase agreement that we only got to buy the
output of the plant. So if the plant does not produce then we don’t pay. So unlike take or pay
contracts where you are going to pay regardless of what the output of the contract is - it is not
anticipated that these power purchase agreements are going to be like that. Just like all the
agreements that we already have in place -- if they don’t produce we don’t pay. That manages
Utilities Advisory Commission Minutes from 6/7/06: DRAFT 6/15/06 Page 7 of 18
some of the risk, essentially credit risk in that sense. There is also market price risk - if the market
power is less than the price that we contract for, we will be the ones who eat that, but that risk is
like any other contract we take on.
Keller replied okay that answers the question. Thank you.
Melton asked what is the NCPA general operating system? What are they expecting to happen out
of this? Is this going to be primarily wind? They have done some geothermal and are they thinking
more geothermal? I am just trying to figure out what is going through NCPA process.
We are not sure what to expect other than there has been no stated preference either, but based
on our RFP and few others like PG&E, there were biomass, geothermal and even solar projects
and a few wind projects. The other similar wind projects that are closer to the California border
also have very different monthly patters. They are more flat and storm driven while in California
they are driven more by the temperature difference in the summer between central valley and the
ocean more in the summer where it is kind of flat. No one really knows, but there is a lot of
potential that has been identified in a number of studies of renewable energy potential throughout
California. My guess is that there will be a mix of stuff which will be lot easier to deal with at 80
megawatts than in little pieces.
Girish added that NCPA has given themselves - the agreement gives NCPA 3 years to actually go
out and procure these resources and so the expectation is we go out in a sequential manner to test
the market, get some responses and if we are able to contract for 81 megawatts in the first go we
may do that. There is going to be a subset of members who will be part of our committee that
works with NCPA. It depends what the market offers up. It could be geothermal from Southern
California, it could be wind from here, solar. We just have to see.
It is having a bigger pool that opens up the potential variety. No one seems to want to build
biomass or geothermal facilities to supply 25-30 megawatts -- it needs to be 50-80 megawatts to
work.
Utilities Advisory Commission Minutes from 6/7/06: DRAFT 6/15/06 Page 8 of 18
Bechtel asked if there is going to be any impact on our cost, our NCPA related cost for this
program? Is additional staff required by NCPA or whatever?
Girish replied there is no real incremental cost. At this point there is no additional staff required. It
is going to be contracts that will be managed. Their existing staff will both manage these contracts
and they have risk management procedures to handle them.
Bechtel said to Girish that he mentioned three years. At three years the agreement is terminated?
Or what happens? Why did you mention three years?
Girish answered that the procurement phase of this project ends in three years unless all the
participants decide that they need more time. Basically then we would extend the time. We do not
want to have an agreement in place and get to the 81 megawatts over a 10 year period. We want
them relatively soon-- so we say let’s get this procurement done within the three year period.
Beecham: Girish you mean that we have all contracts in place and all turned on within 3 years?
The goal is to have contracts signed within the 3 years. Girish said that it is just like what we have
gone through. We signed contracts with renewable power developers and Council approved them,
and some have come on-line some six/eight months later like Santa Cruz Landfill Project etc. And
it depends, it could be existing projects that are being built right now that would satisfy what you
just said.
Bechtel said he assumes that if we get a response to our RFP and it says we can’t deliver for 10
years that is probably going to go away; we want something sooner. If is four years or some
reasonable time after that then it is up to the committee at NCPA to decide on if this is reasonably
delivery date and we go with that?
Girish replied that one of the evaluation criteria is the start date, and there will be another criteria
that may be utilized to filter the proposals when they come in.
Utilities Advisory Commission Minutes from 6/7/06: DRAFT 6/15/06 Page 9 of 18
Bechtel asked if each of the individual Contracts have to be approved by the Council?
Girish replied ’No’. There are limits provided in the Agreement -- the maximum price for any one
contract not exceed an average price for the entire pool cannot exceed the pre-authorized price of
$70.
Girish said we do it this way as renewable comes to us in very small chunks and the lead time and
admin time we have to go through this versus other so-called conventional generation projects-
that might have say 250 megawatts, which may be one unit and then you are done with it. Here
you may be dealing with several different counterparties and the sizes are different, the start time
may be different so we bound ourselves with price and term, average price not to exceed 70 mils
and the unit price of any one contract not to exceed 250 mils in a contract length won’t exceed 25
years.
Bechtel asked if there is any actual limit on an individual contract?
Price, volume, and term are each limited, which bounds the total.
Bechtel said so as long as we are not contracting for more than our share.
Okay. Other questions?
Melton asked: How does $70 per megawatt hour purchase for this goal. How does that compare
to natural-gas generated energy today?
Karl Knapp explained a chart on the slide show and explained several different long-term electric
market price scenarios and resulting possible rate impacts if NGP was filled to its maximum volume
at its maximum allowable price limit. Under the low price scenario, there could be a 0.3 cents per
kWh added cost, and if the prices follow the high scenario, they rates would be 0.6 cents per kWh
lower.
Utilities Advisory Commission Minutes from 6/7/06: DRAFT 6/15/06 Page 10 of 18
Bechtel said this energy, this 15 megawatts --if we didn’t do this since hydro is what it is trading off
for fossil fuel generated electricity. So if we look at this, one has to make a judgment about what is
the forward likelihood of prices of fossil fuels. Well, we will never see a $25 per barrel oil in our
lifetime it seems to me quite---almost no brainier at $70 per megawatt hr. because it is just hard to
believe that you are going to be able to buy fossil generated electricity at below that price.
Keep in mind that the $70 in 2005 dollars could be as high at $93 dollars actual average - so it
may depend on what type of dollars you are asking. I agree with you. My concern is that the limit
we set the limit may be too low. But we should try anyway.
Keller asked if there are existing additional renewable energy resources to purchase. How are
they going to be produced?
Girish replied there isn’t anyone on the other side of this contract at this point of time. We can take
this in to any level we want to, but we looked at it just on the third slide. We thought with this
approach we get to fill safely between 75-85% of portfolio renewab!e and in the next three years
we will know how much of that 81 megawatts actually materialized. And if we can get a lot more
responses at a price say below $70 the participants come together and change limits or create a
new Green Power Pool but at this point this is a pretty decent step we are taking. We are going to
do 83% to get to connect to what commissioner Melton was saying. It is not a slam dunk that this
price is going to be less than market. Gasoline, or natural gas prices could come down and we
could have this little more expensive, in which case having some portion of our portfolio exposed to
market is a pretty decent diversified portfolio strategy. But to be specific about answer to your
question, we could raise it even more that 15 megawatts, this is essentially a request to have
NCPA go out and contract. We will see in the next three years what the responses are -- whether
we can actually get to that level.
Bechtel asked? When does the current Western contract end?
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Girish replied: I believe it is 2018.
Shiva replied: It is 2023.
Bechtel said we have another possibility of reduced hydro line in the 2023 period if Western
changes.
Shiva said: ’Yes’
Karl Knapp said that in 2011, there is also a change in the spring with the Seattle City might
exchange ending.
Girish said right now it is not favorable to us. There have been years when it has been favorable to
US.
Beecham inquired about the bottom line that is 2005 dollars the monthly rate increase? I am
talking about rate impact.
Karl Knapp said that basically is the difference in average market price in 2005 dollars times 33%.
Beecham asked what is the impact to actual average residential impact?
650 * .3 cents, or about two dollars.
Beecham asked how the forward price curve was obtained for 10 years?
Shiva replied we actually got it from the curve that we use in our model, and update on the weekly
basis for market price quotes.
Beecham said the actual dots and the following curves those are the changes out now in the actual
forward market?
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Shiva answered: The gas side we get ten years up to ten years out, for electric side until about
2010 and then from that point we use escalation factors in our models.
Beecham said we talked about the risk about the role of market. Can you tell us how you access
the risk? and how UAC and the Council should sum up with this risk relative to how much we are
getting beyond 75 percent 5 years from now?
Girish replied that on one hand and KVO can also add to this, I think the rate impact numbers
$3.00 megatt an hour and $6. that is the rate that could be because it is based on high and low
market prices.
Beecham said the risk is that we buy high power and it drops.
Girish replied ’Yes’
Beecham said and that is not represented on this chart.
Karl Knapp mentioned that if the price drops in its lowest curve that is how much we would pay
above market price. We are expecting rate impact is zero we are trying to represent what happens
to the rate if things go bad -- about $3.00.
Girish said just to add to this, It goes back to Council setting guideline saying that don’t exceed a
0.5 cent per kilowatt hour rate impact. So here we did a range what rate impact could be and
based on these assumptions $3.00 is the highest rate impact of .3 cents, versus ,5 cent being the
limit. I would answer that is how we would advice Council and UAC saying is that within that limit
that there was a potential rate impact.
Bechtel said as I recall we had a discussion on that I think in 2002 we talked about this. We were
looking at it from the point that it is a good thing to have green power and how much is it worth to
have green power? We did not have anything to do with length contract,
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Knapp pointed out that there is a contract term limit of 30 years in the Guideline.
Bechtel stated that the rate impact had to do more with how much are we willing to spend to have a
high content of green power in our portfolio.
Okay any other questions?
Beecham: So as we are potentially long, in certain period of time as we go out, in the early
summer months, and we are selling out in the market because we have access -- any sense of
how much of a bath we might take -is this is still kind of representative the situation?
Knapp said that it is included in the rate impact estimate. It would result in the added cost of
,3cents. We would seek to share any realized surplus with other members of the pool,
Shiva mentioned to add to that the average price per year is composed of two prices. In the spring
market actual price in the market is lower than in the summer. So if your question is do we pay
$70 for this contract fixed? We compare that with comparable market with our portfolio.
Beecham asked which contract out here is typically expected to get have a lower price in the
spring? and would the power we are buying are having a similar curve?
Shiva replied that the market in summer is 80; in the spring it is 60, and so the average cost is 70.
Karl Knapp said it has a variable value but it has a constant price. It could be below market in some
months and above market in others.
Melton said that if it is a constant price contract that means we are paying the same for energy
year around, but we know we got this May through July surplus that is historically low price in the
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market, It might be we that we are having to sell surplus power. At the same time in the summer
we will be higher than below the cost.
Shiva said that our current expectation is that we will need to sell some of our electricity portfolio,
during these high-hydro months, at a price that may be below the monthly market price.
Karl Van Orsdol. There are also a lot of other special issues. One of them is liquefied natural gas
that may be coming into California system, development of any new power plants, long-term
suggestions of the weather being drier, and therefore us having a greater hydro risks, and this
really trades off much higher volumetric hydro risks against credit risks. It diversifies us.
Bechtel asked Karl Van Orsdol if he was comfortable with this? He replied yes, and would like to
see who is going to respond. Sure, I am comfortable with the recommendation, and would like to
see what kinds of technologies come in, what seasonal with our surplus of power in the spring, or
seasonal to that. Sure, I think we should go ahead and see what we can get from this.
Bechtel said. Since we have no power point at this point we cannot ask for specific. When we
have a chance... I am assuming that we have enough flexibility that we don’t like what we see in
terms of Contract or as participants, that I would hope that we would have good participation, so
that this comes about. We talked earlier about that this is significant reduction in fossil fuel
possibility for us in our portfolio.
Keller asked what is the risk of power not actually being there. Does this take more than three
years and four years? I know when I was on the other side of this at PG&E trying to get new
renewable energy, it took longer and was harder than expected..
Girish asked to clarify if the question is what the risk is of NCPA not getting to that 81 megawatts
average?
Keller especially in the short term?
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Girish replied that my gutt feeling is that renewables are the wave of the future. I mean investment
dollars also flowing in over here. So it is just a matter of time.
Karl Knapp added we are going to try.
Melton: The opportunity to try is the important thing. The opportunity to get away from fossil fuel is
the thing. Get the portfolio more toward independence form fossil fuel.
Shiva: That includes energy efficiency and demand response, as part of that mix, too.
Beecham since Karl brought up hydro changing in the future, and that there are some that believe
that global warming or climate change could mean that hydro will be substantially lower in future --
do we have any estimates we were kind of putting our faith in at this point on long term plans for
hydro?
Girish said about the impact on global warming on the snow pack? I do not have on the tip of my
fingers. I have looked at some studies from UC Berkeley where they did some scenario planning
of different climate change scenarios and how each of those will impact the Sierra snow pack so
we could bring it back at some point- we are working on developing a climate change plan, so
perhaps we could bring it back in the future.
Karl Van Orsdol said that some of the results do suggest that there may not necessarily be a
reduction in precipitation in inches but will be more variable and earlier runoff because of the
warmer temperatures. More likelihood of floods, less steady of supply of water to hydroelectric
facilities during the summer months.
Beecham said part of the reason for the question, ... protocol...we were told by one of our
Senator’s Offices, that our hydro may be worthless, because of the potential for less snow fall
/rainfall because of the climate change. I am not sure that it is more likely scenario either but I am
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sure that there are papers out there or analysis of it that may be available to help us make make
those plans.
Bechtel any questions? None thank you very much. Then should we entertain a motion that we
recommend to the City Council that we approve the participation by the City of Palo Alto in the
Northern California Power Agency Green Power Project to purchase up to 15 average megawatts.
Open to motion. Melton -Moved. Keller: second. All in favor: aye: then approved unanimously
by three members present. Thank you very much,
Girish said to Commissioner Bechtel. I have one announcement.
Bechtel- sure.
Girish. I would like to introduce Jennie Castelino to the UAC. In her new role of being the
administrative assistant to the Utilities Department. She is going to do this through October, This
is a temporary move where Dee Zichowic used to this as Dee is now temporarily working on
projects with Human Resource Department. This is an opportunity for Jennie who has been for a
long time valuable employee in the Utilities Department to take on some added responsibilities.
Bechtel responded. I know you have been doing a great job behind the scenes. That is great
Jennie.
Our next meeting will be on July 5, 2006 in the Council Chambers at 7:00pm
Meeting adjourned at 8:10pm.
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Respectfully submitted,
Jennie Castelino
City of Palo Alto Utilities
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