Loading...
HomeMy WebLinkAboutStaff Report 443-10TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMENT: UTILITIES DATE: DECEMBER 6, 2010 CMR: 443.10 REPORT TYPE: CONSENT SUBJECT: Approval of the Agreement for the Transfer of Renewabie Energy Certificates Associated with Project Capacity and Energy of Geothermal Generating Project Number 3 to the Turlock Irrigation District RECOMMENDATION Staff recommends that the City Council approve the Agreement for the Transfer of Renewable Energy Certificates Associated with Project Capacity and Energy of Geothermal Generating Project Number 3 to the Turlock Irrigation District for the Renewable Energy Certificates that accrued during 2010 and delegate to the City Manager the authority to sign the Agreement. EXECUTIVE SUMMARY Palo Alto, along with other members of the Northern California Power Agency ("NCP A"), was a project participant under the "Agreement for Construction, Operation and Financing of Geothermal Generating Project Number Three" dated July 1, 1983. In 1984 and 1985 Palo Alto permanently transferred Palo Alto's rights to capacity and energy from the project to the Turlock Irrigation . District ("TID"). At the time of the transfers, the term "Renewable Energy Certificates" ("RECs") was not defined, but since then, RECs have become associated with the production of electricity from renewable energy resources, such as the geothermal projects. Because NCPA, as the Joint Powers Authority, is the project owner, NCPA also registers and holds the RECs associated with the geothermal projects. To facilitate the ability of project participants to avail themselves of the use of their share of the RECs, NCPA is developing a policy for the transfer of the RECs from NCP A to the NCPA project participants. This policy will take several months to develop so, to facilitate the timely sale of RECs generated in 2010, NCPA has developed an interim agreement. The NCP A Commission approved the interim agreement at its October 28, 2010 meeting. NCPA has asked Palo Alto and TID to execute an additional agreement to authorize NCPA to transfer the RECs associated with Palo Alto's original project participation to TID. BACKGROUND By 1984, staff analysis had found that the round-the-clock generation from the geothermal project was not a good fit for the City's newly forecasted small summer daytime peaking needs. CMR: 443.10 Page 1 of3 So in 1984, Palo Alto entered into a multi-party contract with other geothermal project participants to transfer their rights to capacity and energy from the project to TID who did have the need for the output. Under the "Agreement for Transfer of Rights to Capacity and Energy of Geothermal Generating Project Number 3", dated October 1,1984, (the "Transfer Agreement"), TID acquired 8.964% of Palo Alto's entitlement percentage of capacity and energy from the NCPA Geothermal Generating Project Number 3 ("Project No.3"). The following year, ina separate two-party agreement, the "Agreement Between the Turlock Irrigation District and the City of Palo Alto", dated December 30,1985, (the "1985 Agreement"), TID agreed to acquire all of Palo Alto's remaining 3.352% entitlement percentage of the capacity and energy of Project No.3. Under the Transfer Agreement and the 1985 Agreement, Palo Alto is deemed to have transferred to TID a permanent entitlement percentage of 12.316%, which represents Palo Alto's entire interest in Project No.3. The term .RECs refers to the environmental attributes that were not recognized at the time that Palo Alto entered into the Transfer Agreement and the 1985 Agreement, but that now are associated with the production of electricity from a renewable energy resource, such as the· NCPA geothermal projects. Because NCPA, as the Joint Powers Authority, is the project owner, NCPA also registers and holds the RECs associated with the geothermal projects. NCPA, on behalf of its members is developing a policy that will govern the protocol applicable to the transfer of RECs associated with the projects from NCPA to the NCPA project participants. Several proj ect participants want the ability to sell RECs accrued during 2010 (the "2010 RECs") now held by NCP A and, to support those projects participants who are in active negotiations to execute sales, NCP A has approved an interim mechanism to allow for the transfer of a limited number of 20 1 0 RECs. DISCUSSION The Agreement for the Transfer of Renewable Energy Certificates Associated with Project Capacity and Energy of Geothermal Generating Project Number 3 to the Turlock Irrigation District (the "Agreement") would be made solely for the purpose of facilitating the transfer of the 2010 RECs associated with the transferred entitlement percentages, which N CPA will transfer to TID. By executing the Agreement, Palo Alto acknowledges that TID has disclosed its intention to sell the Project No. 3's 2010 RECs, and Palo Alto agrees not to take action that will block, restrain, or otherwise impair the transfer of these 2010 RECs from NCP A to TID, or take action that will prevent the sale of these 2010 RECs by TID to any third party. Two other NCPA members, the City of Gridley and the Plumas-Sierra Rural Electric Cooperative, who also permanently transferred their entitlement percentages to TID in 1984, have also been requested to execute this new Agreement. RESOURCE IMPACT Palo Alto has not counted or had plans to include the value of the RECs from Geothermal Generating Project Number 3 in its portfolio, as it has been the custom and practice to treat the transfer agreements as transferring all rights, costs and liabilities of the project. Therefore, this Agreement is not expected to have any material resource impact on Palo Alto. POLICY IMPLICATIONS Approval of this resolution does not change existing polity or constitute any new policy. CMR: 443.10 Page 20f3 ENVIRONMENTAL REVIEW Execution of the Agreement would not result in a direct or reasonably foreseeable indirect change in the physical environment and therefore does not meet the definition of a project, pursuant to section 21065 of the California Environmental Quality Act (CEQA). ATTACHMENTS A: Agreement for the Transfer of Renewable Energy Certificates Associated with Project Capacity and Energy of Geothermal Generating Project Number 3 B: NCP A Staff Report for October 28 th NCP A Commission Meeting C: Agreement for Transfer of Rights to Capacity and Energy of Geothermal Generating Project Number 3, dated as of October 1, 1984 D: Agreement Between the Turlock Irrigation District and the City of Palo Alto, dated December 30, 1985 PREPARED BY: DEPARTMENT APPROVAL: CITY MANAGER APPROVAL: DEBRA LLOYD \) L Acting Assistant Director, Utilities Resource Management -_. ---------~ ---------------------- CMR: 443.10 Page 3 of3 ;) Agreement for the Transfer of Renewable Energy Certificates Associated with Project Capacity and Energy Of Geothermal Generating Project Number 3 ATTACHMENT A This Agreement for the Transfer of Renewable Energy Credits (the "Agreement"), dated as of , 2010 (the "Effective Date") is entered into by and among the Turlock Irrigation District ("TID"), the City of Gridley ("Gridley"), the City of Palo Alto ("Palo Alto"), and the Plumas-Sierra Rural Electric Cooperative ("PSREC") (individually, "Party" and, collectively, "Parties"), with reference to the following facts: Recitals: A. Under the "Agreement for Transfer of Rights to Capacity and Energy of Geothermal Generating Project Number 3", dated as of October 1, 1984, (the "Transfer Agreement"), TID acquired "Transferred East Block Entitlement Percentages" (as such term is defined in Section 1 (f) of the Transfer Agreement) of capacity and energy of the NCPA Geothermal Generating Project Number 3 ("Project No.3") from Gridley, Palo Alto, and PSREC in the following percentages: Gridley, 0.118%; Palo Alto, 8.964%; and PSREC, 0.227%, or the sum total of 9.309%. B. By the "Agreement Between the Turlock Irrigation District and the City of Palo Alto", dated December 30, 1985 (the "1985 Agreement"), TID agreed to purchase a portion of Palo Alto's rights to capacity and energy under the "Agreement for Construction, Operation, and Financing of Geothermal Generating Project NO.3" ("Third Phase Agreement") between the Northern California Power Agency ("NCPA") and several members of NCPA, including Palo Alto. Under section 2 of the 1985 Agreement, TID agreed to acquire "all of Palo Alto's remaining 3.352% in the East Block Entitlement Percentage of the capacity and energy of the Project to which Palo Alto is entitled under the Third Phase Agreement on the terms and conditions equivalent to the Transfer Agreement." Under the Transfer Agreement and the 1985 Agreement, Palo Alto is deemed to have transferred to TID a "Permanent Transferred East Block Entitlement Percentage" of 12.316%, which represents Palo Alto's entire interest in the East Block and in Project NO.3. C. The Parties acknowledge that the sum total of the "Permanent Transferred East Block Entitlement Percentages" of Gridley, Palo Alto, and PSREC is 12.661%, they intend to clarify the ownership of RECs associated with Project No.3, and they do not intend to modify any provision of the Transfer Agreement or the 1985 Agreement or establish any firm understanding of any term or condition of either agreement by entering into this Agreement. Agreement: NOW, THEREFORE, the Parties agree, as follows: 1 1. The term "Renewable Energy Certificates" ("RECs") refers to all environmental attributes associated with the production of electricity from a renewable energy resource. Such a resource, to which this Agreement applies, includes both Project No.3 and NCPA Geothermal Project No.2, which are operated as a shared resource (collectively, the "Projects"). 2. NCPA, on behalf of its members, including the Parties to this Agreement, is developing a policy that will govern the protocol applicable to the transfer of RECs associated with the Projects from NCPA to the NCPA project participants. In furtherance of this policy, this Agreement is made solely for the purpose of facilitating the transfer of the RECs that are attributable to the "Permanent Transferred East Block Entitlement Percentages" of Gridley, Palo Alto and PSREC transferred to TID, accruing during 2010 (the "2010 RECs"), which NCPA will transfer to TID. Gridley, Palo Alto and PSREC acknowledge that TID has disclosed its intention to sell all or a portion of the 2010 RECs, and they, Gridley, Palo Alto and PSREC, agree not to take action that will block, restrain, or otherwise impair the transfer of the 2010 RECs from NCPA to TID or take action that will prevent the sale of the 2010 RECs by TID to any third party. 3. This Agreement shall apply only to the 2010 RECs that are being transferred pursuant to Section 2 hereof. Nothing in this Agreement shall be deemed or construed by the Parties to establish the terms and conditions of a binding agreement or understanding between NCPA and its members, including the Parties hereto, with respect to any RECs arising under the Transfer Agreement or the 1985 Agreement for any period after 2010, .or to constitute a waiver of any right or claim of right under the Transfer Agreement or the 1985 Agreement to suchRECs accruing after 2010. 4. TID shall indemnify and hold harmless Gridley, Palo Alto and PSREC, individually and jointly, from any and all claims, suits, liabilities, losses and damages that may arise in connection with the transfer of the 2010 RECs from NCPA to TID or in connection with the sale of such 2010 RECs by TID to any third party. 5. The Parties agree that this Agreement shall not be binding on any Party, unless and until this Agreement is approved by any such Party's governing board to the extent such approval is required by law, custom or practice or by any such Party's otherwise authorized representative. 6. The Parties agree that the normal rule of construction to the effect that any ambiguity is to be resolved against the drafting party will not be employed in the interpretation of this Agreement. 7. In the event that an action is brought in connection with any right or obligation arising, directly or indirectly, under this Agreement, the Parties agree that trial of such action will be vested exclusively in the state courts of California or in the United States District Court for the Northern District of California in the County of Sacramento, State of California. 2 8. This Agreement may be executed in any number of counterparts, each of which will be an original, but all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, the Parties by their duly authorized representatives have signed this Agreement as of the Effective Date. Approved as to form TURLOCK IRRIGATION DISTRICT General Counsel . Approved as to form CITY OF GRIDLEY City Attorney I . Approved as to form CITY OF PALO ALTO Senior Asst. City Attorney Approved as to form General Counsel City Manager PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE 3 ATTACHMENT B 651 Commerce Drive Roseville, CA 95678 phone (916) 781-3636 fax (916) 783-7693 web www.ncpa.com Commission Staff Report AGENDA ITEM NO.: I ~ Date: October 21, 2010 To: NCPA Commission Subject: WREGIS Renewable Energy Certificates (REC's) Transfers Background The Western Renewable Energy Information System (WREGIS) is an independent and automated web-based renewable energy registry and tracking system that receives data on renewable energy generation and creates merchantable Renewable Energy Certificates referred to as REC's. NCPA registered to become an account holder with WREGIS on May 13, 2009 and has been registering eligible NCPA generation projects with WREGIS since June 2, 2009. The REC's associated with the output from registered units have been accumulating in NCPA's accounts from the date each generation unit was accepted for registration by WREGIS. NCPA began receiving requests from project participants to transfer WREGIS REC's from NCPA's accounts to a project participant's account beginning around March of 2010. The purpose for a project participant requesting a transfer of a REC from NCPA's account to the project participants account has been to enable a sale of the REC by the project participant to a third party. Prior to receiving a REC transfer from NCPA, project participants must register with . WREGIS to be able to accept the transfer. In order for a project participant to sell a REC to a third party, the project participant must have control or ownership of the REC. This control or ownership of NCPA project REC's is obtained through the process of NCPA electronically transferring a REC from an NCPA WREGIS account to a project participants WREGIS account. To date, NCPA has transferred REC's to only one project participant, SVP. NCPA has received transfer requests from other project participants, however, those requests were subsequently rescinded, either because the anticipated sale of the transferred REC fell through, or the project participant had not yet registered with WREGIS to be able to accept the transfer. In July of 2010, as NCPA was completing its review of the contracts associated withTID's potential exit from the agency, staff became aware of a potential ambiguity as to which project participant was entitled to REC's from the geothermal project and after reviewing the informal process being used for transferring REC's generally, put a hold on all further REC transfers until . entitlement/ownership to a REC was conclusively established and a more formalized process, buttressed with policies, procedures and agreements could be put in place to govern the REC transfers. Subsequent to NCPA placing a hold on all further transfers of REC's, TID sent a letter demanding that NCPA transfer the REC's that TID believes it is entitled to uoder the transfer agreement that it has with certain NCPAmembers in the geothermal project. NCPA is working with TID and the affected geothermal project participants to resolve any ambiguities associated with the question of who is entitled to the REC's under the transfer agreement. Separately, SVP entered into an SR: 214:10 WREGIS Renewable Energy Certificates (REC's) Transfers October 21, 2010 Page 2 agreement for sale of August 2010 REC's prior to the hold being placed on any further transfers of REC's from NCPA to a project participant's account and will need a transfer by December to support the sale that was made prior to the hold being put in place. Issue Several project participants want the ability to sell WREGIS REC's now held by NCPA on project participants behalves; one project participant has sold WREGIS REC's and requires a transfer to . support the sale and at least one project participant is in active negotiations for a sale, and will require a transfer to consummate the sales transaction if executed. To support the project participants that have either entered into a sale, or are in active negotiations to consummate a sale, NCPA is proposing to establish an interim mechanism to allow for the transfer of a limited number of 2010 WREGIS REC's and to develop a permanent mechanism in parallel with the interim mechanism, with approvals for the permanent mechanism occurring at most, two to three months after the interim mechanism. . The interim transfer mechanism would 1) ensure that NCPA is authorized to transfer REC's to the requesting participant, 2) protect the tax exempt status of the project bonds from which the REC is generated, and 3) will incorporate prOVisions to ensure that errors of any kind and adjustments to meter data that will affect entitlements to REC are addressed. The permanent transfer mechanism will build upon the interim agreement and 1) address and resolve all ambiguities associated with the question of which member is entitled to the REC, 2) address right of first refusal issues, 3) ensure that bond counsel recommendations to protect the tax exempt status of the bonds are incorporated into any sales transactions, and 4) will continue to incorporate provisions to ensure that errors of any kind and adjustments to meter data that will affect entitlements to REC are addressed. Discussion A draft Interim REC Transfer Letter Agreement is attached for the commission's approval. A separate agreement between TID and geothermal transfer participants confirming TID's rights to the geothermal REC's will be used for the pu~poses of authorizing NCPA to transfer REC's from an NCPA WREGIS account to a member's WREGIS account only. Any sales of REC's to a third party would be handled exclusively by the member receiving the transfer with no further involvement of NCPA in the commercial terms, conditions or obligations of the sale. If project participants want NCPA to sell REC's on a project participant's behalf, NCPA at some future date, will develop a program (similar to the market purchase program) to provide for this service, but views the development of the interim and permanent transfer mechanisms as the critical path items required to enable immediate REC sales as requested by the memberShip. Fiscal Impact The costs of developing the REC transfer procedures and agreements will be absorbed within the Power Management budget and allocated in accordance with the Power Management cost allocation methodology. The cost of registering eligible generating units has been included in plant budgets and will be allocated based on project participation shares. The transaction costs of effectuating a transfer through WREGIS will be allocated directly to the project participant requesting the transfer. SR: 214:10 "' . WREGIS Renewable Energy Certificates (REC's) Transfers October21,2010 Page 3 Environmental Analysis This activity would not result in a direct or reasonably foreseeable indirect change in the physical environment and is therefore not a "project" for purposes of Section 21065 the California Environmental Quality Act. No environmental review is necessary. Recommendation It is recommended that the Commission, by resolution: 1. Approve the Interim REC transfer Agreement with minor modifications as provided in item 3 below. 2. Authorize NCPA staff to transfer REC's in accordance with project participant requests and direction for the time frame specified in the Interim REC Transfer Agreement. 3. Authorize the General Manager to execute the Interim REC Transfer Agreement with minor modifications as reviewed and deemed acceptable by general counsel. Respectfully submitted, ~&ul~1VlP.. JAMES H. POPE ~ General Manager Attachments (2) \, SR: 214:10 DAVID DOCKHAM .Assistant General Manager, Power Management RESOLUTION 10-94 RESOLUTION OF THE NORTHERN CALIFORNIA POWER AGENCY APPROVING THE WREGIS RENEWABLE ENERGY CERTIFICATES TRANSFERS (reference Staff Report #214:10) WHEREAS, The Western Renewable Energy Information System (WREGIS) is an independent and automated web-:-based renewable energy registry and tracking system that receives data on renewable energy generation and creates merchantable Renewable Energy Certificates (REC's), and WHEREAS, NCPA registered to become an account holder with WREGIS on May 13, 2009 and has been registering generation units with WREGIS since June 2, 2009, and WHEREAS, NCPA has been requested to transfer REC's currently held in NCPA accounts to project participant accounts in order that project participants can retire, transfer, sell or hold the REC's to which they are entitled, and WHEREAS, NCPA is in the process of developing a permanent procedure and transfer agreement that will govern the details associated with transfer of REC's from NCPA to project participants, and WHEREAS, project participants have requested a limited transfer of REe's from NCPA to project participants in order to facilitate a possible sale of REC's before certain anticipated REC values expire, and/or to support a previously executed sale of REC's, prior to the permanent procedure and transfer agreements being finalized, and . WHEREAS, NCPA' and project participants jointly agree that an interim transfer of REC's in accordance with the Interim REC Transfer Agreement is in the mutual best interest of all project participants, and ' , WHEREAS,theenvironmental impact is addressed in Staff Report #214:10; and NOW, THEREFORE BE IT RESOLVED, that the Commission of the Northern California Power Agency; 1. Approves the Interim REC transfer Agreement with minor modifications as provided in item 3 below 2. Authorizes NCPA staff to transfer REC's in accordance with project participant requests and direction for the time frame specified in the Interim REC Transfer Agreement ,3. Authorizes the General Manager to execute the Interim REC Transfer Agreement with minor modifications as reviewed and deemed acceptable by general counsel. PASSED, ADOPTED and APPROVED this 28th day of October 2010, by the following vote on roll call: GARYW. PLASS CHAIRMAN Alameda BART Biggs Gridley Healdsburg Lodi Lompoc Palo Alto Port of Oakland Redding Roseville Santa Clara TID Truckee Donner Ukiah Plumas-Sierra -2- Abstained Absent ATTEST: DENISE DOW ASSISTANT SECRETARY INTERIM AGREEMENT FOR NCPA GEOTHERMAL PROJECTS NUMBERS 2 AND 3 TRANSFERS OF RENEWABLE ENERGY CERTIFICATES Participant: [Insert Participant Name] Period: Entire months of August through December 2010 1. NCPA is in the process of developing a permanent policy regarding the transfer of Renewable Energy Certificates ("RECs") from NCPA projects to project participants. Participant and NCPA agree that the terms and conditions of this interim letter agreement CAgreemenf'} are made solely for the purpose of facilitating the transfer of a limited set of RECs prior to the adoption of a permanent policy and associated 'Permanent Transfer Agreement" regarding the transfer of RECs from NCPA to project participants. The terms and conditions of this Agreement are specific to this Agreement and have no precedential value as to the development of the terms or conditions that are ultimately included in the permanent policy or associated "Permanent Transfer Agreemenf'. , 2. Participant hasa Project Entitlement Percentage of [6.3305%] of the Project Capacity and Energy from NCPA Geothermal Projects Numbers 2 and 3 ("Project"). Project Capacity and Energy includes, butis not limited to, all renewable and environmental attributes associated with the production of electricity from a renewable energy resource, commonly referred to as Renewable Energy Certificates ('HECs"). , 3. Participant hereby requests NCPA and NCPA agrees to electronically transfer into Participant's Western Renewable Energy Generation Information System ("WREGIS") account its pro-rata share, in whole megawatts, based on Project Entitlement Percentage, of the WREGIS certificates attributable to the generation of the Project for the time period specified above. \ 4. Such transfer shall be evidenced by the transfer of the Project RECs as electronically recorded in NCPA'~ "WREGIS" account to the WREGIS account of the Participant. NCPA acknowledges that Participant has provided NCPA with documentation of the Participant's WREGIS account. Should any regulatory or other entity require additional or alternate means to evidence the transfer of the Project RECs to the Participant, NCPA will cooperate to meet that entity's requirements. 5. NCPA agrees that the Participant owns all rights and title to its pro-rata share of Project RECs based on its Project Entitlement Percentage, and such rights and title are transferable and available for resale by the Participant. NCPA further agrees that, unless directed by the Participant in writing, it will not sell to third parties the Participant's pro-rata share of the Project RECs. 6. Participant agrees to pay for its proportionate share of NCPA's costs to carry out NCPA's REC transfer process for the Project (including WREGIS registration fees and certificate transfer costs) for the above time period. 7, Participant agrees to reimburse NCPA for NCPA's reasonable costs to respond to any investigation by WREGIS, CPUC, or any other regulatory or enforcement agency having jurisdiction as to the validity of any transferred Project REC under this letter agreement by NCPA to Participant. If more than J ~ I • r the Participant's Project REC transfers are being investigated, NCPA agrees that all such costs shall be proportionately allocated among the Project REC transfer participants based upon the total number of Project RECs under investigation. 8. Participant agrees to reimburse NCPA for NCPA's reasonable costs of responding to any claim brought by a non-regulatory/non-enforcement third party concerning the Project RECs transferred under this letter agreement from NCPA to Participant. NCPA agrees that the Participant shall be in charge of the defense of any such claim if the Participant so elects. 9. If any Project REC transferred by NCPA to the Participant is. later determined by WREGIS, CPUC, or any other regulatory or enforceable agency having jurisdiction to be invalid or inaccurate for any reason, including, but not limited to, revised meter data, Qualified Reporting Entity ("QRE") errors or WREGIS errors, Participant agrees to remedy the problem at Participant's expense. NCPA agrees that the Participant shall be in charge of remedying the problem if the Participant so elects unless the problem also involves other participants, in which case,the affected participants shall be responsible for remedying the problem. If the invalidity or inaccuracy was caused by an error by NCPA, then NCPA agrees to remedy the problem at NCPA's expense as a Project cost. Costs and losses caused by any error committed by NCPA, net of allY applicable insurance, may be allocated by NCPAto all participants in NCPA's REC transfer process for the Project in the same manner as the costs are allocated to all participants pursuant to Section 6 above. 10. Participant agrees not to transfer, assign, sell or exchange any Project RECs, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Project Bonds being treated as an obligation not described in Section 103(a) of the Internal Revenue Code of 1954, as amended, by reason of classification of such Bond as an "industrial development bond" within the meaning of Section 103(b) of said Code. 11. NCPA makes no representations as to whether the Project RECs qualify for or meet any renewable portfolio standards, renewable energy standards, or any other renewable type standard. NCPA is making the Project RECs available AS IS. It is the Participant's responsibility to verify whether the Project RECs will qualify for California, Federal, or other renewable requirements. [end of letter agreement] Interim Agreement for NCPA Geothermal Projects Nos. 2 and 3 For Transfers of Renewable Energy Certificates 10/2010 Page2of2 . 'I ( AGREEHENT FOR IRANSFER OF RIGHTS TO CAPACITY AND ENERGY OF GEOTHER~ll>.L GENERATING PROJECT NUMBER 3 Dated as of October 1, 1984 By and Among City of Biggs City of Gridley City of Healdsburg City of LodL City of Palo Alto City of Roseville City of Ukiah. Plumas-Sierra Rural Electric Cooperative and Turlock Irrigation District section 1. 2. 3. 4. 5. 6. 7. a. . TABLE OF CONTENTS .Title Definitions • • • • • • • II • • • • • • • • • 2 Purpose . . . , . . . . . . . . . . . . • • • 4 Construction and Operation of Proj ect •••• 4 Transfer of Rights to Capacity and Energy of the Proj ect •••••••••••••••• 4 Rates and Charges • .• • • • • • • • • • Annual Budget and Bill in g Statement •• Obligations in the Event of Default under t his Agreement ••••••• •• • • • • Obligations in Event of Default 'under the Third Phase Agreement ••••••••• • • • 5 .' . • 6 • • • 7 • • • 8 9. Transfers, Sales and Assignments of Transferred East Block Entitlement Percentages ••••••••••••••••• 9 Surplus Transferred East Block Entitlement Percentages •••••••••••••••• .10 Direction and Review ••••••••••••• 11 Insurance and Indemnification •••••••• 11 Intention to Amend Third Phase Agreement • •• 11 Term .................. • • • •• 12 Termination and Amendments ••••••••• ..12 Miscellaneous • • • • • • • • • • • • • APPENDIX A -Schedule of Transferring Participants and Transferred East Block • •• 12 Entitlement Percentages •••••••• 1 APPENDIX B -Form of Opinion of Counsel ••••••• 1 -i- AGREEMENT FOR lRANSFER OF RIGHTS 10 CAPACITY AND ENERGY OF GEOTHER!f!AL GENERATING PROJECT NUMBER 3 This Agreement, dated a s of October I!' 1984, by and among the Transferring Participants (capitalized terms used herein shall have the meanings given such terms in Section 1 hereof) and the Turlock Irrigation District, WITNESSETH: WHEREAS, each of the Transferring Participants has entered in t 0 th e Third Phase Agreement with NCPA pursuant to which NCPA' has agreed to provide, and each of the Transferring Participants has agreed to take or cause to be taken, their respective East Block Entitlement Percentages of the capacity and energy of the Project; and, \VHERFAS, the Transferring Participants have determined to tr a nsf era p 0 r t ion 0 f the i r res p e c t i veE as t B I 0 ekE n tit I e men t Percen tages of the capacity and energy of the Proj ect to the District on the tenns and conditions herein contained; and \VHERFAS, NCPA has financed the cost of the Project through the issuance of the following Bonds: $230,000 ,000 aggregate princi­ pal amount of its Geothermal Project Number 3 Revenue Bonds, 1983 Series A, $90,00D,OOO aggregate principal amount of its Geothermal Project Number 3 Short Term Commercial Paper Notes, Series A, and $400,000,000 aggregate principal amount of its Geothermal Project Number 3 Revenue Bonds, 1984 Series A, a portion of the proceeds of which were applied to the payment of such Notes; and WHEREAS, the Third Phase Agreement provides that the Transferring Participants are required to make the payments relating to their respective East Block Entitlement Percentages of the capac­ it y and energy of the Proj ect specified in the Third Phase Agreement, including payments with respect to Bonds, whether or not the Project is completed, operable, operating or retired and notwithstanding the suspension, interruption, interference, reduction or curtailment of Project output or the capacity and energy contracted for in whole or in part-for any reason whatsoever; and WHEREAS, the District has agreed to acquire the Permanent Transferred East Block Entitlement Percentages of the capacity and· energy of the Proj ect on the terms and condit~ons contained herein, inc Iud i n g the 0 b I i gat ion tom a k epa y m ents wit h res p e c t t 0 s u c h permanent Transferred East Block Entitlement Percentages to the extent that the Transferring Participants are obligated to make -1- . " payments for such rights to capacity and energy of the Project undar the Thi rd Phase Agreement; and WHEREAS, the District has agreed to acquire the Transferred East Block Entitlement Percentages of the capacity and energy of the Proj ect in excess of the Permanent Transferred East Block Entitlement Percentages on the terms and conditions contained herein, including the obligation to make payments with respect to such Transferred East Block Entitlement Percentages to the extent th a t the Transferring Participants are obligated to make payments for such rights to capac­ ity and energy of the Project under the Third Phase Agreement; pro­ vided that NCPA is able to contractually arran~e for delivery of such capacity and energy to the District on a fum basis, subject to normal transmission emergency outages and curtailment;. and WHEREAS, the transfer to the District of the Transferred East Block Entitlement Percentages of the capacity and energy of the· Proj ect is authorized under the Third Phase Agreement and under the existing Bond Resolutions; NOW THEREFORE, the parties hereto do agree as follows: 1. Definitions. Terms used herein which are defined in the Third Phase Agreement shall have the Same meanings herein as are given such terms in the Third Phase Agreement. In addition, the fol­ lowing terms shall, for all purposes of th i s Agreement, have the fol­ lowing meanings: (a) "District" means the Turlock Irrigation District. (b) "District Electric System" means all properties and assets, real and personal, tangible and intangible, of the District now or hereafter existing, used or pertaining to the generation, transmission, transformation, distribution and sale of electric capacity and energy, including all additions, extensions, expansions, improvements and betterments thereto and equippings thereof; pro­ vided, however, that to the extent the District 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 electric purposes, only the District's ownership interest in such asset or property or only the p art of the asset or property. so used for electric purposes shall be considefed to be part of the District Electric System. (c) "District Revenues" means all income, rents, rates, fees, charges, and other moneys derived by the District from the ownership or' operation of the District Electric System, including, without limiting the generality. of the foregoing, (i) all income, rents, rates, fees, charges or other moneys derived from the sal.e, furnishing, and supplying of the electric capacity and energy and -2- other services, facilities, and commodities sold, furnished, or supplied through the facilities of the District Electric System, (Ii) the earnings on and income derived from the investment of such income, rents, rates, fees, charges or other moneys to the extent that the use of such earnings and income is limited by or pursuant to law to the District Electric System and (iii) the proceeds derived by the District directly or indirectly from the sale, lease or other disposition of all or a part of the District Electric System as per­ mitted by this Agreement, but the term "District Revenues" shall not inc Iud e (y) c us tom e rs ' d e p 0 sit s 0 r an y 0 the r d e p 0 sit s sub j e c t t 0 refund until such deposits have become the property of the District, or (z) contributions from customers for the payment of costs of con­ struction of facilities to serve them. (d) "Permanent Transferred East Block Entitlement Percentage" means, as of any date of determination and with respect to each Transferring Participant, such Transferring Participant's East Block Entitlement Percentage of the capacity and energy of the Project identified in Appendix A, as being the permanently trans­ ferred portion of such Transferring Participant's East Block Entitlement Percentage, as such Appendix A shall be amended from time tot i m e ina c cor dan c e wit h Sec t ion s 8 {a ) an d 1 3 her e 0 f. (e) 'Third Phase Agreement" means the "Agreement for Construction, Operation and Financing of Geothermal Generating Project Number 3" dated as of July I" 1983, by and among NCPA and the Project Participants, as amended and supplemented. (f) "Transferred East Block Entitlement Percentages" means, as of any date of determination and with respect to each Transferring P arti cip an t, such Trans ferring P arti c i p an t' s East Block Entitlement Percentage of the capacity and energy of the Project identified and set forth opposite the name of such Transferring Participant in Appendix A hereto, as such Appendix A shall be amended from time to time in accordance with Sections 8 (a) and 13 hereof; provided, how­ ever, that, except for increases pursuant to Section 8(a) of this Agreement, the term "Transferred E as t Block Entitlement Percentages" s hall not include any capacity and energy of the Proj ect in excess of 9.309 percent if NCPA is unable to contractually arrange fo r delivery of such capacity and energy to the District on a firm basis subject to norm al tr an s m iss ion emergency outages and c urtailmen t. The Transfe'rring Participants shall direct NCPA to provide support ser­ vices at cost to the District at the District's request during any such outages or curtailment. If the Transferred East Block Entitlement Percentages are less than that set forth in Appendix A hereto because of NCPA's inability to contractually arrange for transmission service, each of the Transferring Participants' . Transferred East Block Entitlement Percentages shall be reduced .PX..Q. .r..a.t.a. or a s otherwise agreed by the Trans ferring P arti c ip ants. -3- (g) "Transferring Participants" means those Project Participants executing th i s Agreement. 2. Purpose. The purpose of t his Agreement is to provide 'for the transfer of a portion of the Transferring Participants" East Block Entitlement Percentages of the capacity and energy of the Project to the District and to establish the terms and conditions of such transfer. 3. Construction and Operation of Project. The District acknowledges that, pursuant to the Third Phase Agreement,' NCPA has agreed to use its best efforts to cause or accomplish the construc­ tion, operation and financing of the Project, the obtaining of all necessary authority and rights, and the performance of all things necessary and convenient therefor. The District will cooperate wit h NCPA to that end. The District hereby consents to the pledge and assignment to NCPA, and to any Trustee for any Bonds, of all of each Transferring Participant's right, title and interest in, to and under th i s Agreement, including a 11 or any portion of the payments received or to be received hereunder from the District. Upon notice from a Transferring Participant, NCPA or any Trustee who is an assignee of such rights, the District shall make payments due by it hereunder directly to any such Trustee. Such pledge and assignment shall be made effective for such time as the assigning Trensferring Participant shall determine and provide or as to assignments made by NCPA, as NCPA s hall determ ine and provide. 4. Transfer of Rights to Capacity and Energy of the Proj ect. (a) Subject to the terms and conditions of this Agreement, each Transferring Participant hereby sells, transfers, assigns and conveys, and the District hereby accepts and agrees to take, or cause to be taken, each Transferring Participant's Transferred East Block Entitlement Percentage to the capacity and energy of the Project. (b) Each Transferring Participant shall direct NCPA to deliver such Transferring Participant's Transferred East Block Entitlement Percentage to or for the District, subject to the terms of this",Agreement and the Third Phase Agreement. Such delivery shall be at points mutually agreed upon by NCPA and the District. Such agreement shall not be unreasonably withheld by the District and each Transferring Participant wi II direct that such agreement is not unreasonably. withheld by NCPA. The Transferring Participants shall direct NCPA to remain available to make or cause to be made all necessary and possible arrangements for transmission and support of the Transferred East Block Entitlement Percentages to such points -4- over the lines of NCPA or others. Wheeling or delivery services provided by NCPA for the District with respect to capacity and energy sales related to the Transferred East Block Entitlement Percentages shall be as provided in service schedules as provided in Article III of the Hember Service Agreement with respect to the Transferring Participants and each Transferring Participant wi Ii direct NCPA to remain available to make or cause to be made all necessary and possi.,.. ble arrangements for transmission and support to the District of its Transferred East Block Entitlement Percentages relating to such capacity and energy sal e s. 5.. Rates and Charges. (a) The District shall pay for the Transferred East Block Entitlement Percentages acquired by it pursu­ ant tot his Agreement, in accordance with the provisions of Section 6 hereof, such amounts as the Transferring Participants are obligated to pay with respect to the Transferred East Block Entitlement Percentages under the Third Phase Agreement. In the event any Transferring Participant pays any amount under the Third Phase Agreement with respect to the Transferred East Block Entitlement Percentages, the District shall repay such amounts to the Transferring Participant, together with interest thereon from the date of payment, to the extent permitted by law, at an annual rate to be established by the Commission of NCPA at the time of the adoption of the then most recent annual budget. (b) The District shall make payments under this Agreement solely from the District Revenues and asan operating expense of the District Electric System. Nothing herein shall be construed as pro­ hi biting th e District from using any other funds and revenues fo r purposes of satisfying any provisions of this Agreement. , (c) The District shall make payments under this Agreement whether or not the Project is completed, operable, operating or retired and notwithstanding the suspension, interruption, interfer­ ence, reduction or curtailment of Project output or the capacity and energy contracted for in whole or in part for any reason whatsoever. Such payments are not subject to any reduction, whether by offset or otherwise, and are not conditioned upon performance by NCPA or any Project Participant, including any Transferring Participant, under this Agreement, the Third Phase Agreement or any other agreement. .. (d) The District covenants and agrees to establish and col­ lect fees and charges for electric capacity and energy furnished through facilities of the District Electric System sufficient to pro­ vide District Revenues adequate to meet its obligations under this· Agreement and to pay any and a 11 other mounts payable from or con­ stituting a charge or lien upon any Or all the District Revenues. (e) The District covenants and agrees that it shall, at all times, operate the properties of the District Electric System, and the business in connection therewith, in an efficient manner and at -5- reasonable co st and s hall maintain the Dis tric t Electric System in good repair, working order and condition. (f) With regard to any capacity and energy of the Project in excess of the Permanent Transferred East Block Entitlement Percentages, notwithstanding the District's obligation under Section 5 (a) hereof, the District shall not be required to pay the costs of any capital additions to the Project which are not necessary to pro- .vide such capacity and energy to the District. To the extent not included in amounts due under Section 5 (a) hereof, the District agrees to pay an equitable share of the costs of any capital addi­ tions to the Project which are necessary to provide capacity and energy in excess of the Permanent Transferred East Block Entitlement Percentages to the District. 6. Annual Budget and Billing Statement. The Transferring Participants and the District acknowledge that the Third Phase Agreement provides that, prior to the beginning of each NCPA . fiscal year, the Commission of NCPA will adopt an annual budget for such fiscal year €or costs and expenses relating to the Project and shall promptly give notice to each Project Participant of its projected share of such costs and expenses. E a c h T ran s fer r i n g Par tic i pan t w i I I d ire c t N CP A tog i v e notice to the District of the projected share of such costs and expenses related to the Transferred East Block Entitlement Percentages and to prepare a bill in g statement, based on estimates, to be sent to the District not later than the fifteenth (15th) day of each calendar month showing the amount payable by the District of costs payable under Section Sea) of this Agreement by the District for the second succeeding calendar month, and the amount of any cred­ its or debits as a result of any appropriate adjustments. Amounts shown on the billing statement are due and payable thirty (30) days after the date of the billing statement. Any amount due and not paid by th e District within th i rty (30) days after the date of the bill i ng statement shall bear interest from the due date until paid a t an annual rate to be established by the Commission of NCPA at the time of adoption of the then most recent annual budget. 01 or before the day five (5) calendar months after the end of each NCPA fiscal year, the Transferring Participants shall direct NCPA to"submit to the District a statement of the aggregate monthly costs of the Transferred East Block Entitlement Percentages for such fi s c al year. If the actual aggregate monthly costs and other amounts payable for any fiscal year with respect to the Transferred East Block En titlemen t Percentages exceed the bill in g s to the District, the deficiency shall be added to the District's immediately succeed­ ing billing statement. If the actual aggregate monthly costs and the District!s obligations with respect to the Transferred East Block Entitlement Percentages, and any adjustment of or credit to the District!s obligations with respect to the Transferred East Block -6- , .. Entitlement Percentages or other amounts payable for any fiscal year, are less than the billings to the District, such excess shall be credited~to the District's billing statement for such period (not to exceed the immediately succeeding six months) and in such amounts as shall be determined by NCPA. If the District questions or disputes the correctness of any billing statement by NCPA, it shall pay the amount claimed when due and shall within thirty (30) days of the receipt of such billing statement request an explanation from NCPA. If the bill is deter­ mined to be incorrect, the Transferring Participants shall direct NCPA to issue a corrected bill and refund any amount which may be due the District, which refund shall bear interest from the date NCPA received payment until the date of the refund a t an annual rate to be established by the Commission of NCPA a t the time of adoption of the then most recent annual budget. If NCPA and the District fa i Ito agree on the correctness of a bill within thirty (30) days after the District has requested an explanation, the District agrees to, and the'Transferring Participants shall cause NCPA to, promptly submit the di s pu te to arb i tr at ion under section 1280 .e.t..aeg. of the Code of Civil Procedure. 7. Obligations in the Event of Default under this Agreement. (a) Upon fa i 1 u r e of the District to make any payment in full when due under this Agreement, NCPA or a Transferring Participant shall make written demand upon the District, and if said failure is not remedied within thirty (30), days from the date of such demand, such fa i 1 u res hall constitute a defaul ta t the exp ira tion of such period. Notice of such demand shall be provided to NCPA and to each other Transferring Participant by the Transferring Participant making such written demand. (b) Upon the failure of the District to make any payment, which failure constitutes a default under this Agreement, the Transferring Participants shall cause NCPA to sell and transfer for the District's account all or a portion of the District's rights to the Transferred East Block Entitlement Percentages for all or a por­ tion of the remainder of the term of this Agreement, including, if so directed by the Transferring participants, such a sale to any or a II of the Transferring' Participants .. The Transferring Participants shall not permit NCPA to sell such rights to the Transferred East Block Entitlement Percentages, directly or indirectly, in any manner, and s h a II not take or permit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103 (a) of the Internal Revenue Code of' 1954, as amended, by reason of classification of such Bond as an "industrial developnent bond" within the meaning of Section 103(b) of said Code. Notwithstanding that all or any portion of the District's. rights to the Transferred East Block Entitlement Percentages is so sold or transferred, the District shall remain liable to pay the full amount of its obligations under Section 5 hereof as if such sale or -7- \ . [ ~ transfer had not been made, except that such liability shall be discharged to the extent that NCPA shall receive payment from the purchaser or transferee thereof. (c) Upon the failure of the District to make any payment which failure constitutes a default under this Agreement and causes NCPA to be in default under the Steam Sales Agreement, the Project No. 2 Steam Sales Agreement or any Bond Resolution, the Transferring Participants may (in addition to the remedy provided by subsection tb) of this Section 7) terminate the provisions of this Agreement ins 0 far a s the sam e e n t i t1 e the Dis t ric t t 0 its ri g h t s tot h e Transferred E as t Block Entitlement Percentages. Irrespective of I such termination, the obligations of the District under this Agreement shall continue in full force and effect. (d) If NCPA fails to act in accordance with the direction of the Transferring Participants, the Transferring Participants shall con sen t tot h e Dis t ri c tin i t i at i n g an d m a i n t a i n in gas u it d ire c t1 y agains t NCPA to enforce t his Agreement. 8. Obligations in Event of Default u:x1Er the Tbird Phase Agreement. (a) To the extent that any Transferring Participant's East Block En ti tlem ent Percentage is increased pursuant to Section 7 (d) of the Third Phase Agreement, such Transferring Participant's Permanent Transferred East Block Entitlement Percentage transferred to the Dis tri c thereunder s hall be increased by the amount of each increase in th e Transferring Part i c ip an t' sEa s t Block Entitlement Percentage multiplied by a fraction the numerator of which is such Transferring P artic ip an t' s Permanent Transferred East Block Entitlement Percentage and the denominator of which is the Transferring Participant's East Block Entitlement Percentage each determined as of the time immedi­ ately prior to such increase; provided, however, that the sum of such increases for the District shall not exceed, without written consent of the Dis t ric t, an accumulated maximum of 25% of th e aggre ga te amount of the Permanent Transferred East Block Entitlement Percentages transferred hereby, as initially set forth in Appendix A. (b) The Third Phase Agreement provides that if a Project Participant shall fail or refuse to pay any amounts due to NPPA, the fact that the other Project Participants have increased their obliga­ tion to NCPA pursuant to Section 7 of the Third Phase Agreement shall not relieve the defaulting Project Participant of its liability under the Third Phase Agreement and that the nondefaulting Project participants may recover from such defaulting Project Participant any increased obligations resulting from such default. Each Transferring participant hereby assigns to the District all of its right of recovery from a defaulting Project Participant with respect to its Transferred East Block Entitlement Percentage to the extent of any · , increase in the District's obligations hereunder caused by the defaulting Project Participant. (c) If the Transferring Participants' rights under this Agreement are assigned to NCPA or a Trustee for any Bonds, NCPA, or to the extent provided in the related Bond Resolution, such Trustee, shall have the right to initiate and maintain suit to enforce this Agreement. 9. Transfers, Sales and Assignments of Transferred East Block Entitlement Percentages. The District has fu 11 and unfet­ tered rights to make sales, transfers and exchanges (collectively "assignm ents") of its r i gh t s to Tran s ferred East B lock Entitlement Percentages except as expressly provided otherwise in th i s Agreement. (a) The District shall not assign ownership of all or sub­ stantially all of the District Electric System to another entity until it has first complied with the provisions of this subsection (a). A consolidation with another governmental entity or change in governmental form is not deemed a transfer of ownership. (1) Such disposition or assignment shall be under terms and conditions that provide assurance that the obli­ gations of the Dis tr i c t under this Agreement, and that the Transferring Participants' obligations under the Third Phase Agreement and under other agreements made or-to be made by the Transferring Participants to carry out the Proj ect, as the same relate to the Transferred East Block Entitlement Percentages will be promptly and adequately met. The Transferring Participants or NCPA may require that sufficient moneys of the District to discharge such obligations be irrevocably set aside and maintained. in a trust account, as a condition to the transfer of the District Electric System, if no other adequate assurance is avai lable. (2) The District shall give ninety (90) days advance written notice to the Transferring Participants and NCPA of any proposed transfer pursuant to this subsection (a). Appendix A tot his Agreement shall be amended as appropri­ ate'to reflect any transaction pursuant to this subsection (a) • (b) Notwithstanding any other provision of this Agreement, the District shall not assign, sellr transfer or exchange any portion of its rights to Transferred East Block Entitlement Percentages, directly or indirectly, in any manner, 'and shall not take or permit to be taken any other action or actions, which would result in any of the Bon d s b e i n g t rea ted a s a.n 0 b 1 i gat ion not des c rib e din Section l03(a) of the Internal Revenue Code of 1954, as amended, by -9- reason of classification of such Bond as an "industrial developnent bond" within the meaning of Section 103 (b) of said Code. 1 O. Surplus Transferred East Block Entitlement Percentages. (a) When NCPA offers surplus capacity and energy of the Project to the Transferring Participants as provided in the Third Phase Agreement, the Transferring Participants shall, if directed by the District to do so, take and sell to the District such surplus capacity and energy. In the event there are ~more requests for sur­ plus than there is surplus available, each Transferring Participant shall offer the District a portion of such surplus capacity and energy equal to the surplus capacity and energy offered to such Transferring Participant multiplied by a fraction the numerator of which is such Transferring Participant's Transferred East Block Entitlement Percentage and the denominator of which is the Transferring Participant's East Block Entitlement Percentage each determined as of the time such offer of surplus capacity and energy is made. . (b) When the District has surplus rights to capacity and energy of the Project, the Transferring Participants shall direct NCPA, if requested by the District to do so, to sell such surplus rights to Transferred East Block Entitlement Percentages on behalf of the District in the following manner: (Ii NCPA shall use its best efforts to sell such surplus rights to Transferred East Block Entitlement Percentages at a price at least equal to the District's cost therefor. (2) Transferring Participants shall have a right of first refusal, other Project Participants shall have the right of second refusal, and other NCPA members shall have the right of third refusal, at the sales prices set forth in subsections (c) and (d) of this Section 10. (3) If NCPA can purchase equivalent capacity and/or energy from other sources for less than the District's cost for ,capacity and/or energy from the Project, as the case may' be, the sales price of such capacity and/or energy to a Transferring Participant, Project Participant orNCPA member shall be equal to the cost of purchasing the capac­ i ty and/or energy from such other source. (4) If the alternative cost of purchasing capacity and/or energy for Transferring Participants, Project Participants or members of NCPA is more than the District's cost for capacity and/or energy from the Project, then the sales price shall be the District's cost from the Project . -10- plus one-half the difference between the District's cost from the Proj ect and the cost of capacity andlor energy from such alternative source. ( 5 ) N CPA s h a II not s e I I s u c h rig h t s toT ran s fer red East Block Entitlement Percentages, directly or indirectly, in any manner, and shall not take or pemit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103 (a) of the Internal Revenue Code of 1954, as amended, by reason of classification of such Bond as an "industrial development bond" within the meaning of Section 103 (b) of said Code. 11. Direction and Review. A II directions to NCPA with respect to the Proj ect and all meetings of NCPA in connection there­ with s h a II be as provided in Section 11 of the Third Phase Agreement and for such purposes, the Transferring Participants agree that the District may vote at meetings of the Project Participants pursuant to Section 11 of the Third Phase Agreement as if it had the East Block Entitlement Percentage equal to the Transferred East Block Entitlement Percentages, and the voting rights of the Transferring Participants shall be reduced accordingly, unless the Project Participants agree at such meeting that voting will be on a one member one vote basis, with a majority vote· of those present required for action, in which case the District shall be entitled to one vote; provided that the Transferring Participants shall not agree that voting shall be on a one member one vote basis unless the District directs the Transferring Participants to do so. 12. Ins u ran c e and In d e m n i fi c at ion. The T ran s fer r i n g P arti cip an ts s h a II indemnify and hold harmless the District from any liability for personal injury or property damage resulting from any accident or occurrence arising out of or in any way related to the construction or operation o£ the Project, provided, however, that such liability of the Transferring Participants shall be limited to the extent the proceeds of insurance and other moneys available to the Transferring Participants under Section 10 of the Third Phase Agreement are available therefor. 13. Intention to Amend Third Phase Agreement. It i s the intention of the parties to this Agreement that the Third Phase Agreement shall be amended to include the District as a Project Participant and to amend the East Bock Entitlement Percentages to grant the District an East Block Entitlement Percentage equal to the Permanent Transferred East Block Entitlement Percentages, if and to the extent permitted thereunder and under any Bond Resolution. In the event of such amendment of the Third Phase Agreement, unless oth­ erwise agreed to among the parties hereto, this Agreement shall remain in full force and effect but shall be construed to apply only to the Transferred East Block Entitlement Percentages in excess of -11- the Permanent Transferred East Block Entitlement Percentages from the effective date of such amendment of the Third Phase Agreement. 14. Term. (a) This Agreement shall become effective for a 11 purposes upon the ex ecuti on hereof by the Dis tdc t and th e Transferring Participants and delivery to the Transferring Participants of an opinion of an attorney or firm of attorneys acting as counsel to the District in substantially the form attached hereto as Appendix B. (b) The term of this Agreement shall continue until the termination of th e Third Phase Agreement. 15. Termination and Amendments. This Agreement shall not be subject to termination by any party under any circumstances, whether based upon the default of any other party under this Agreement, or any other instrument, or otherwise, except as specifi­ c ally provided herein. 16. Miscellaneous. The headings of the sections hereof are inserted for convenience only and shall not be deemed a part of t his Agreement. If anyone or more of the covenants or agreements prwided in this Agreement to be perfontled should be determined to be invalid or contrary to law, such covenant or agreement shall be deemed and construed to be severable from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Agreement. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. " -12- IN WITNESS h~EREDF each Transferring Participant has ex-­ cuteo t his Agteenent bS its duly authorized officers, a..'id caused its official seal to be affixed hereto, and the District has executed this ]:.greernent in accoroance with the authorization of its Board as of the cate fi r s t above written. CITY OF BIGGS By An~d-.------~------------- [SEAL] CITY OF GRIDLEY By ... _ }~d_. ____________________ __ [SEAL) HEALDSBURG By~ __________________ _ And __ ..--__ ~--__ ---------- {SEAL] CITY OF LOPI BY~ __ . __ .~ _______ ~ ______ __ ArdJ __ ~ ATTEST: +:-~~. L 4/1£!1.+<~ of at i'T¥ies / [SEAL] CITY OF R'SEVILLE Bv __________ . __ And _____________________ _ [SEAL] CITY OF UXIAH By ____________________ _ And~ __________________ _ {SEAL] PLUMAS-SIERRA RURAL ELECTIU C 'COOPERATIVE By-..,. ____________________ _ Arid ..... _____ -_____ _ APPENOIX A SCHF.')ULE Or TRA"ISF!;::l!UHG PARTICIPANTS AND TR~NSFE~REO ~AST ~l~CK !NTlrLEHENT PERCENTAGES (From 1985 to End of Prolect Llfl!~. 2001 TO 1?3S 1986 1987 19S5 1981 19QO 1991· 1992 1993 1994 1~95 1996 1997 1998 1999 2000 LIFE' He"3!~ _1:1 __ .IZ1. __ ,;1. __ i~l ___ ill. _.JI1 .•• 111 ___ lll. __ 1~1 __ .lX1 ___ Ill. __ ill. __ 1Xl ••. 111_ ~_111 ___ lI1 ___ '~1. ALAHEOA 0.000 0.330 O.(lIJO 0.000 0.300 '0.000 0.000 0.000 0.000 0.000 0.0'00 0.000 0.000 0.000 0.000 0.000 0.000 atGGS 0.:>0:) 0.111 o.l1a ;).llS 0.118 0.236 0.236 O.ZH 0.236 0.236 0.236 0.209 0.209 0.20.9 0.209 0.209 0.000 GRIDl!l.Y 0.113 0.221 :>.221 u.227 5.227 c.ns 0.345 0.34$ 0.30\5 O.H5 O.H5 0.318 0.316 0.318 0.3[8 Q.31S 0.118 HEAL:lSaUl'!Q 0 • .:l00 0.321 0.327 ').827 0.827 1.5~S 1.H5 1.645 1.645 1.6~5 1.645 1.455 1.455 1045$ 1.455 1.455 0.000 LOot 0.000 0.173 0.773 ;i. 773 0.773 1.555 1.555 1.555 1.555 1.SSS 1.SSS 0.b36 0.636 0.636 0.636 0.636 0.006 t. Ol1Pt)~ 0.00;) 0.353 a .010 0.000 O. 000 0.009 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.1) on PALO ALTJ 8.?64 1.12:7 9dH 7.127 9.127 12.316 12.316 12.:310 12.316 12.316 12.316 12.J16 12.3H 12.316 12.31/0 12.316 a.9.H PLUMAS-SZE:"aA Ihl21 (l.4H 0.464 :J.46~ 0.·H,4 0.700 0.700 0.700 0,700 0.700 0.700 0.645 0.645 0.1>45 0.645 0.645 0.221 .R1lSaVlU.= O.:lO~ ~.127 5.727 5.727 5.721 B.421 8.421 ~.421 11''''27 S.H7 !104'Z7 T.aO'/' 7.809 7.509 7.809 7.B090.000 UKIAH ~~Jgn .1&JSS _l~J~5 _1.355 _l~JSS _Z&lJO _Z~I~n _z.ZGn _Z~IQQ ~Z~!Qn _~.raQ .'LiUG _'L~QO _Z~iQQ _Z~iQU _Z~~QU Q~gUQ TOTAL AT ?LlNT • Tr .. "sferr~:t tu tr.~ District 'h309 1'1.61818.61& is.f;1S Uh61B 27 .• 921. 27.924 27.924 27.924-27.924 27.92425.788 ZS.788 25.78825.788 25.78B 9.309 RESOLUTION NO. 6353 RESOLUTION OF 1HE COUNCIL OF THE CITY OF PALO AL10 APPROVING AGREEMENT FOR 1RANSFER OF RIGHTS 10 CAPACITY AND ENERGY 0 F GEOTHERMAL GENERATING PROJECT NUMBER 3 TO TURLOCK IRRIGATION DISTRICT WHER.eAS, the City of Palo Alto is a party to the "Agreement for Constriction, Operation and Financing of Geothermal Generating Project Number 3, dated as of July I, 1983 11 ( by and among NCPA and various Project Participants, as amended and supplemented, hereinafter referred to as the "Third Phase Agreement"; and WHE.REAS, Palo A I to desires to transfer a portion of its East Block Entitlement Percentage of the capacity and energy of the Project under the Third Phase Agreement to the Turlock Irrigation District; NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The "Agreement for Transfer of Rights to Capacity and Energy of Geothermal Generating Project Number 3, dated as of October 1,1984, By and Among the City of Biggs, City of Gridley, City of H~aldsburg, City of Lodi, City of Palo Alto, City of Roseville, City of Ukiah, Plumas-Sierra Rural Electric Cooperative, and Turlock Irrigation District" is hereby approved. SECTION 2. The Mayor and City Manager are hereby authorized to execute t e same on behalf of the City of Palo Alto. SECTION 3. The Council ±inds and determines that none of the provisions of this resolution will have any significant environmental effect. INTRODUCED AND PASSED: February 25, 1985 AYES': Bechtel, Cobb, Fl etcher, Klein, Levy, Renzel, Sutorius, Witherspoon, 1.40011 ey NOES: None ABS1ENTIONS: None ABSENT: None City Attorney '-. ~'7 ___ 'f .... . -' Dlr~ctor of ''Finance THE FOREGOING DOCUMEN'I' " tmlFIf1J ro BE ;i.' cotmEcr CJ:P{ OF ntE ,ORIG11W: N FILElN THIS OFFICE. ' , . 'I:. HN J. TANNER ;...lTV CL~R lTV OF .W ~\ ~ I BY ,~ ........ • "I • DATED: ,'~ . ~. ~ r .... , \ . /f .' I .<; ,J " 1;1 E' C!;'" I v ATTACHMENT n A G R E E MEN T ." ,.... ... /):,,/",...1 : J J" 2 .:;-~:. . ," ~ . :'; ....... ~ ~ '" '" I _" I~ .. / :r: . MCDONOUGH' L:1 \ f.,./ BETWEEN THE TURLOCK IRRIGATION D1 AND THE CITY OF PALO ALTO ... " 1\ . \ ''';JAr'l 2 2 198~ \.~ This Ag~eement is made and entered into this 30th day of December, 1985, between the Turlock Irrigation District and the City H.A. FONTES of Palo A 1 to. ",,/ '. ( 11 ...; • / .. //. '-'-!.. i·' WHERSAS, the City of Palo Alto (PALO ALTO) and the Turlock I":'~i'-' Irrigation District (TURLOCK) are parties to that certain agreement i,!,:..:.J dated as of October 1, 1984, entitled "Agreement for Transfer of ~.,r Rights to Capacity and Energy of Geothermal Generating Project No. 3," ~-'" "" hereafter referred to as the uTransfer Agreement'·; and (,i .. '':'':/'i' WHE~EAS, pursuant to said agreement, TURLOCK has agreed to pur-/1 chase a portion of the rights of Paio Alto to capacity and energy under the "~gr2ement for Constru~tion, Operation, and Financing of Geothermal Generating Project No.3," dated as of July 1, 1983, by and among the Northern California Power Agency (NC?A) and the project par­ ticipants, one of '~hom;s PALO ALTO, as such Agreei:'lent may be amended and supplemented, hereinafter reiar'l"ea to as the "Third Phasa Agree­ ment"; and WHE~:AS, TUR~OCK desires to acquire and PALO ALTO wishes to transfer its remaining 3.352% interest in the East Block Entitlement Percentage of Project capacity and energy under said Third Phase Agreen:ent; and NOW, THEREFCRE, the parties hereto agree as follows: S~CTION 1. Terms used herein which are defined in the Transfer Agreement or the Third Phase Agreement shall have the same meanings herein as are given such terms in those agreements. SECTION 2. TURLOCK hereby offers to acquire from PALO ALTO all of PALO ALTOls remaining 3.352% interest in the East Block Entitlement Percentage of the capacity and energy of the Project to which PALO ALTO is entitled under the Third Phase Agreement on terms and condi­ tiar.s aquiva1 c nt to the Transfer Agreement. SECTION 3. Subject to acceptance by PALO ALTO the parties intend that or. January i, 1986,01'" the com.l1ercial operation date of the first unit of Geothermal Generati~g Project No.3, whichever is sooner, TURLOCK will be de~med to have a Permanent iransfarred East aloc~ Entitlement Percentage from PALO'ALTO of an additional 3.352% I~hich together with the prior transfer to TURLOCK by PALO ALTO of 8.964% shall constitute a transfer to TUR~OCK of PALO ALTO's entire original East Block Entitlement "?ercentage. \ . '. ' ... ;. .. ::., .. -.......... _----------.---------.-------...-,-.--..... .,..."....,....~----.... ... ----.--~....., ............. """":"'".....,........ -~ ~.' " .,. , . SECTION 4. The parties agree to undertake w.hatever steps and to execute whatever documents, including but not limited to an amendment to the Transfer Agreement, they deem legally necessary and advisable to perfect the transfer of East BlocK Entitlement Percentage in a manner which is mutually agreeable. 'This Agreement shall not increase or decrease the Transferred East Block Entitlement Percentage of any Transferring Participant other than PALO ALTO as set forth in Appendix A to the Transfer Agreement • . SECTION 5. In the interim t after January 1, 1986 or the cammer .. cial operation date of the first unit of Geothermal Generating Project No.3, whichever' is sooner, NCPA is directed by both TURLOCK and PALO ALTO to treat, schedu1e, budget and prepare billings for PALO ALTO's remaining East Slock Entitlement ?ercentage of 3.352% as though it were a Permanent Transferred East Block Entitlement Percentage of TURLOCK pursuant to the Transfer Agreement, provided that NC?A is not required to do anything inconsistent with its obligations pursuant to the definition of "Transferred East Block Entitlement Percentages" contained in the Transfer Agreement. SECTION 5. This offer shall remain open until its acceptance by PALO ALTO or its prior written revocation by TURLOCK actually received by PALO ALTO. TURLOCK IRRIGATION DISTRICT ". 4 .. ." This offer is hereby acc2?ted by the City Gf Pa10 Alto and shall be deemed effective as of the date and year above written. I ' , ATTESi: I , ... CITY OF PALO ALTO , . " , APPROVED AS TO FORM: Senior ;Assistant City Attorney APPROVED: tHrec tor of 'Ut iIi 1;A'es / ',' '--------, .-----....--------~---......--.... --------. ... ~ ..... -, "." ..... -.....