HomeMy WebLinkAbout2005-01-18 City Council(CMR:354:03), Task #1 of which is to acquire renewable energy resources to meet LEAP
Guideline 6.
On January 14, 2004, staff presented the Utilities Renewable Energy Supply Implementation
Plan (Plan) to the Utilities Advisory Commission (UAC). The UAC report, presentation and
surrounding discussion summary were provided to Council as inforn1ation on March 1, 2004
(CMR:168:04). The Plan has two tiers: (1) power purchase agreements (PPAs) for the near term
(2005-2008) to meet the 10 percent renewable investment target by 2008, and (2) exploring new
resource development opportunities for the longer term (2009-2015) to meet the twenty percent
renewable investment goal by 2015. Resources being pursued for the near term are 20 MW of
wind energy from Solano County with deliveries beginning in December 2004 (CMR:425:04);
and 3-10 MW of electricity from landfill gas from various locations in and around the Bay Area,
with deliveries expected to ramp up from 2006 to 2007. The proposed projects were selected by
means. of the NCP A Renewable Energy RFP, described in detail in the previous staff reports. On
March 15, 2004, (CMR:174:04) Council approved Second Phase and Third Phase Member
Agreements with Northern California Power Association to facilitate completing renewable
energy supply contracts with three vendors. The proposed contract is the result of those efforts,
implementing Tier 1 of the Renewable Energy Supply Implementation Plan.
Staff provided a progress report to Council in August 2004 (CMR: 370:04), which included a
UAC Report from July 2004 that describes the basic tenets of the renewable energy contracts.
Council approved the first two renewable energy contracts for wind (CMR:424:04) and landfill
gas energy (CMR:461:04) on November 8, 2004, together expected to meet approximately seven
percent of the City's annual electric load.
DISCUSSION
Staff is recommending that Council adopt a Resolution approving the Long-Term Power
Purchase Agreement with Ameresco Ox Mountain Energy, LLC. for a 50 percent share of the
proposed 13.4 MW (gross) capacity of the Ox Mountain landfill generating facility located in
Half Moon Bay, California. The term of the agreement is 20 years. The total contact amount is
$61.8 million.
The contract was developed in cooperation with NCP A and Alameda Power & Telecom (APT).
APT is purchasing the remaining 50 percent share of the output from the facility. NCPA will
serve as the scheduling coordinator, managing the day-to-day balancing activities within the
NCP A pool; verifying deliveries, monitoring supplier compliance with contractual obligations,
and managing invoicing and payment. Negotiations are being completed for potential additional
renewable energy resources, and staff expects to bring the resulting contracts to Council for
approval to meet these goals as they are completed.
A copy of the contract is attached for Council and available to the public on file with the City
Clerk. The key terms of the contract are as follows:
CMR:I00:05 Page 2 of5
• Term: 20 years, with deliveries commencing when construction is completed and the
facility is operational. The Ox Mountain facility is expected to be operational in August
2007.
• Quantity: 50 percent of the output from the facility. The initial design capacity of the Ox
Mountain facility is 13.4 MW gross (12.6 MW net), with expected annual generation of
106,650 MWh (51,325 MWh to Palo Alto, approximately five percent of the City's
annual load). The final installed capacity may be lower than the initial design capacity,
depending on air permit and electrical interconnection requirements. The final installed
capacity may be as low as 5.7 MW gross (5.3 MW net), which would result in annual
generation of 43,200 MWh (21,600 to Palo Alto, approximately 2 percent of the City's
annual load). The contract includes a right to purchase the output from additions to the
facility at a price to be determined at the time that additions are proposed, and the option
for Palo Alto and Alameda to assign one's share of the contract to the other. Any such
amendments would be subject to Council approval.
• Product: Electric generation from landfill gas operates around the clock, except for
scheduled and unplanned equipment outages. NCP A will serve as scheduling coordinator
for the facility.
• Price: $521MWh in the first year, escalating at 1.5 percent per year. The price in year 20
is $69/MWh. The total contract amount is $61,714,563 based on estimated generation at
13.4 MW gross initial capacity, and $25,959,300 based on the 5.7 MW minimum final
installed gross capacity.
• Credit and Performance: Ameresco, Inc. is a small company relative to the large
investment-grade energy companies and does not have a credit rating from Moody's or
Standard and Poor's. Energy deliveries are tied to a specific generator and specific
location, as opposed to market contracts whose deliveries are often' backed by a
company's financial strength or collateral rather than a physical asset. The City receives a
discount if the generating equipment availability falls below acceptable levels, and the
contract includes provisions 'to allow Palo Alto or Alameda to step in to operate the
facility if necessary. The City will monitor Ameresco's quarterly and annual financial
. statements throughout the duration of the contract. Staff consequently recommends that
Council waive the investment-grade credit rating requirement otherwise applicable to
electric power contracts.
• Off-Ramps: Either party may terminate the contract if the other party does not meet its
obligations under the. contract, which include performance, payment, and meeting
permitting, construction, and operation date milestones. The contract includes penalty
payments to the City for late completion of the project. Should the contract be terminated
due to default by the supplier, the supplier is required to cover the City's net costs of
replacing the equivalent LFG energy. Venue for dispute resolution by agreement of the
parties is the County of San Francisco instead of Santa Clara County due to the joint
purchase with APT.
CMR:100:05 Page 3 of5
Other customers of Ameresco, Inc. include BMW (South Carolina), Chicopee Electric Light
(Massachusetts), and the Southern California Public Power Association (SCPPA).
RESOURCE IMPACT
The estimated annual cost at the proposed design capacity is $2,700,000 in the first year, rising
to $3,SOO,000 in year 20. At the minimum installed capacity the estimated annual costs are
$1,100,000 rising to $l,SOO,OOO. These costs have been factored into 10ng-terIi1 budget
projections, and will be included in future budget year proposals. Annual costs may' fluctuate
slightly due to the as-delivered nature of a generator-specific purchase, but are expected to be
within five percent of the estimated cost.
The 20-year price schedule is $S2.00/MWh, escalating at 1.S percent per year, which is roughly
equivalent to the current projected prices for base load electricity, meaning that there is
essentially no rate premium above market prices. .
POLICY IMPLICATIONS
The proposed contract is a key element of the Utilities Renewable Energy Supply
Implementation Plan (CMR: 168:04), and supports the Council-approved Utilities Strategic Plan
(CMR 432:02) and Utilities Strategic Implementation Plan (CMR:223:01).
Renewable energy supplies are required to meet the targets established by Council in LEAP
Guideline #6 (Renewable Portfolio Investments) and also support LEAP Guideline #2 (Hydro
Risk Management) and #3 (Market Risk Management) by diversifying Palo Alto's resources.
• 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 ,O.S¢/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 201S, contingent on economic viability. The
contracts for investment in renewable resources are not to exceed 30 years in term.
Implementing LEAP Renewable Portfolio Investments also supports the City's Sustainability
Policy Statement, adopted April 2, 2001 (CMR 17S:01), the Green Government Pledge, adopted
July 19, 1999 (CMR 284:99) 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 ~lectricitY, and natural gas
while addressing environmental and economic concerns. '
3. POLICY N~48: Encourage the appropriate use of alternative energy technologies.
CMR:100:0S Page 4 ofS
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POWER PURCHASE AGREEMENT
This Power Purchase Agreement is entered into this __ day of January 2005
by and between The City 'of Palo Alto, a chartered city organized under the laws of
the State of California and Ameresco Half Moon Bay LLC, a Delaware limited
. liability company.
RECITALS
1. Seller intends to develop, finance, build, own and operate a Landfill Gas
electric generating facility to be located at the Ox Mountain Landfill (the
"Landfill") . in the City of Half Moon Bay, Califonlia, on a site leased from
Browning-Ferris Industries of California, Inc. ("BFI"), which owns the
Landfill.
2. Buyer is engaged in the procurement and supply of electricity to residential and
commercial customers in the City of Palo Alto.
3. Buyer wishes to. purchase a portion of the Output of the Plant and intends to
resell related Energy to its residential and commercial customers.
4. Buyer is willing to purchase, and Seller is willing to sell, a portion of the
Output of the Plant, on the terms and conditions and at the prices set forth in
this Agreement.
5.· Seller may determine to expand the Plant in the future depending on the
availability of Landfill Gas and other factors in accordance with the terms of
this Agreement.
6. Buyer will have a right of first refusal to purchase Expansion Plant Output,
such right to be exercisable as provided in this Agreement.
NOW THEREFORE, in consideration of these premises and the mutual
promises set forth below, Seller and Buyer agree as follows.
SANFRAN 90103 (2K)
AGREEMENT
ARTICLE I -DEFINITIONS
Initially capitalized terms, whenever used in this Agreement, have the meanings set
forth below unless otherwise herein defined. The term "including," when used ,in this
Agreement, shall mean to include "without limitation."
1.1 Agreement: This Power Purchase Agreement, including all appendices, as it
may be amended from time to time.
1.2 Alameda: Alameda Power & Telecom, a department of the City of Alameda.
1.3 Alameda Agreement: That certain power purchase agreement entered into by
Alameda and Seller on or about the date hereof concerning a portion of the
Output of the Plant.
1.4 Availability Threshold: The mechanical availability of the Plant calculated as
of the end of each calendar month during the Term as a percentage 111
accordance with the following:
A = 100 x Available Hours
Base Hours
Where:
SANFRAN 90\03 (2K)
A = Availability Threshold
Available Hours = the number of hours during the twenty-four (24) prior
months in which the Plant is capable of delivering Energy to the
Point of Interconnection; provided that, to the extent that the Plant
is not capable of delivering all of the net Initial Capacity in any
hour, the Available Hours with respect to such hour shall be
reduced pro rata to reflect the fraction of the net Initial Capacity
the Plant is capable of delivering in such hour.
Base Hours = the number of hours during the twenty-four (24) prior
months; provided that, to the extent that the Plant is partially or
wholly incapable or otherwise unable to deliver Energy in any
hour as a result of a Force Majeure Event or because of fuel
unavailability in any hour due to no fault or negligence of Seller,
that hour (or if the Plant's capacity is only partially constrained,
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the pro rata portion of that hour) shall be excluded from the Base
Hours.
There shall be no Availability Threshold during the first twelve (12) months
following the Commercial Operation Date. Starting with the thirteenth (13th)
month after the Commercial Operation Date and continuing through the
twenty-foUlih (24th) mOl~th, the above formula will be used to determine the
Availability Threshold with the exception that both Available Hours and Base
Hours will be calculated starting with the first hour of operation on the
Commercial Operation Date and including all relevant hours thereafter to the
end of the month relevant. Starting with the twenty-fifth (25th) month, the
Availability Threshold shall be calculated on a rolling basis using the previous
twenty-four (24) months.
1.5 BFI: As defined in the Recitals
1.6 Buyer: The City of Palo Alto, a chartered city organized under the laws of the
State of California, and any successor or permitted assignee.
1.7 Change in Law: The enactment or issuance of any new law or regulation, the
amendment, alteration, modification or repeal of any existing law or regulation
or any authoritative interpretation of any existing law or regulation issued by a
competent court, tribunal or Governmental Authority contrary to the existing
official interpretation thereof, in each case coming into effect after the date of
this Agreement and which must be complied with in order for the Plant to be
constnlcted and operated lawfully.
1.8 Commercial Operation: The condition of the Plant whereupon it (a) is
certified by Seller to be complete in accordance with manufacturers'
recommendations except for punch list items, and (b) has passed the
performance test set forth in Appendix E while synchronized with the LDC
System or ISO transmission grid.
1.9 Commercial Operation Date: The date upon which Commercial Operation
first occurs.
1.10 Contractual Obligations: As to Seller, any material agreement, instmment or
undertaking to which Seller is a party or by which it or any of its property is
) bound.
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SANFRAN 90103 (2K)
1.11 EA Agency: Any local, state or federal entity, or any other Person, that has
responsibility for or jurisdiction over a program 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
Commission, and any successor agency thereto.
1.12 Emergency: Any condition or situation which (i) endangers life or property or
(ii) affects Buyer's physical ability to maintain safe, adequate, and continuous
electric power and energy to Buyer's customers.
1.13 Energy: The electricity generated by the Plant and delivered to Buyer and
Alameda by the Seller, pursuant to this Agreement and the Alameda
Agreement, respectively, at the Point of Interconnection, as expressed in units
of kilowatt-hours (kWh) or megawatt-hours (MWh), including Test Energy.
1.14 Environmental Attributes: Any and all credits, benefits, emissions
reductions, offsets, and allowances, howsoever entitled, attributable to the
generation from the Plant or Expansion Plante s), as the case may be, and its
displacement of conventional energy generation. Environmental Attributes
include but are not limited to: (1) any avoided emissions of pollutants to the
. air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon
monoxide (CO) and other pollutants; (2) any avoided emissions of carbon
dioxide (C02), methane (CH4) and other greenhouse gases (GHGs) that have
been determined by the United Nations Intergovernmental Panel on Climate
Change to contribute to the actual or potential threat of altering the Emih' s
climate by trapping heat in the atmosphere; and (3) the reporting rights 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
accumulated Green Tags in compliance with federal or state law, if applicable,
and to a federal or state agency or any other pmiy at the Green Tag purchaser's
discretion, and include without limitation those Green Tag Reporting Rights
accruing under Section 1605(b) of The Energy Policy Act of 1992 and any
present or future federal, state, or local law, regulation or bill, and international
or foreign emissions trading program. Green Tags are accumulated on kWh
basis and one Green Tag represents the Environmental Attributes associated
with one (1) MWh of energy. Environmental Attributes do not include (i) any
energy, capacity, reliability or other power attributes from the Plant or
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Expansion Plant(s), (ii) production tax credits associated with the constnlCtion
or operation of the Plant, Expansion Plant(s), Landfill, or any other associated
contract or right, and other financial incentives in the fonn of credits,
reductions, or allowai1ces associated with the Plant, Expansion Plant(s),
Landfill, or any other associated contract or right, that are applicable to a state
or federal income taxation obligation, (iii) fuel-related subsidies or "tipping
fees" that may be paid to Seller to accept certain fuels, or local subsidies
received by the Seller or the owner of the Landfill for the destruction of
particular pre-existing pollutants or the promotion of local environmental
benefits, or (iv) emission reduction credits encumbered or used by the Plant or
Expansion Plant(s) for compliance with local, state, or federal operating and/or
air quality pennits.
1.15 Environmental A.ttributes Reporting Rights: All rights to report ownership
of the Environmental Attributes to any person or entity, under Section 1605(b)
of the Energy Policy Act of 1992 or otherwise.
1.i6 Environmental Law: Any federal, state and local laws including statutes,
regulations, nllings, orders, administrative interpretations and other
goven1mental restrictions and requirements relating to the discharge of air
pollutants, water pollutants or process waste water or otherwise relating to the
environment or hazardous substances, as amended from time to time.
1.17 Expansion Plant: Any expansion of the Plant from its Initial Capacity, or any
other electricity generating facility owned or controlled by Seller or its
affiliate(s) located at the Landfill and fueled by Landfill Gas. Each such
expansion of the Plant or additional facility shall be deemed to be an
"Expansion Plant."
1.18 Expansion Plant Output: All capacity, energy, associated Environmental
Attributes, ancillary services, contributions towards resource adequacy or
reserve requirements (if any) and any other reliability or power attributes
produced by Seller at any Expansion Plant.
1.19 FERC: Federal Energy Regulatory Commission and its successor
organization, if any.
1.20 Force Majeure Event: Any act or event that delays or prevents a Party from
timely perfonning obligations under this Agreement or from complying with
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conditions required under this Agreement to the extent that such act or event is
reasonably unforeseeable and beyond the reasonable control of and without the
fault or negligence of the Party relying thereon as justification for such delay,
nonperformance, or noncompliance. Force Majeure Events typically include:
(i) acts of God or the elements, extreme or severe weather conditions,
explosion, fire, epidemic, landslide, mudslide, sabotage, lightning, earthquake,
flood or similar cataclysmic event, acts of public enemy, war, blockade, civil
insurrection, riot, civil disturbance or strike or other labor difficulty caused or
suffered by a Party; (ii) any restraint or restriction imposed by law or by nlle,
regulation or other acts or omissions of governmelital authorities, whether
federal, state or local which by exercise of due diligence and in compliance
with applicable law a Party could not reasonably have been expected to avoid
and to the extent which, by exercise of due diligence and in compliance with
applicable law, has been unable to overcome (so long as the affected Party has
not applied for or assisted such act by a governmental authority); and (iii)
electric transmission interruptions or curtailments (not including any such
event that results from a failure by Buyer to obtain firm transmission or similar
rights, or otherwise to make congestion-related payments); provided that the
term "Force Majeure Event" does not include (a) economic conditions that
render a Party's performance of this Agreement at the Price unprofitable or
otherwise uneconomic (including Buyer's ability to buy Energy or
Environmental Attributes at a lower price, or Seller's ability to sell Energy or
Environmental Attributes at a higher price, than the Price), (b) a governmental
act by Buyer that delays or prevents Buyer from timely performing its
obligations under this Agreement, (c) a Plant Outage, including as. a result of a
failure or shortage of landfill gas, except, in any case, if caused by an event or
circumstance that meets the requirements set forth in this Section 1.18 (other
than as described in (iii) above), (d) failure or delay in grant of Permits, or (e)
failures or delays by the LDC or the ISO in entering into all agreements with
Seller conteinplated by this Agreement.
1.21 Governmental Authority: Any federal or state government, or political
subdivision thereof, including, without limitatjon, any municipality, township
or county, or any entity or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any corporation or other entity owned or
controlled by any of the foregoing.
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1.22 Initial Capacity: The installed gross capacity of the Plant on the Commercial
Operation Date, such capacity to be not less than 5.7 MW and not more than
13.4 MW (gross nameplate), and not less than 5.3 MW and not more than 12.6
MW (net at the Point of Interconnection) and as further specified pursuant to
Section 4.3(c).
1.23 Interconnection: Constnlction, installation, operation and maintenance of all
Interconnection Facilities.
1.24 Interconnection Agreement: The agreement between Seller and LDC
pursuant to which Seller and LDC set forth the terms and conditions for
Interconnection of the Plant to the LDC System, as amended from time to time.
1.25 Interconnection Facilities: All the facilities installed for the purpose of
interconnecting the Plant to the LDC System, including, but not limited to,
transformers and associated equipment, relay and switching equipment and
safety equipment.
1.26 ISO: The California Independent System Operator Corporation, or its
functional successor.
1.27 Landfill Gas: The gas (and its constituent elements) generated from
decomposition of materials deposited in the Landfill.
1.28 LD Amount: The Monthly LD Amount multiplied by 12 (twelve).
1.29 LDC: Pacific Gas and Electric Company, a California corporation.
1.30 LDC System: The electric power generation, transmission, substation and
distribution facilities owned, operated and/or maintained by LDC, which shall
include, without limitation, after construction and installation, the circuit
reinforcements, extensions, and associated terminal facility reinforcements or
additions required to interconnect LDC's facilities with the Plant.
1.31 Lender(s): Any Person(s) providing money or extending credit (including any
capital lease) to Seller for (i) the construction of the Plant, (ii) the term or
permanent financing of the Plant, or (iii) working capital or other ordinary
. business requirements for the Plant. "Lender( s)" shall not include trade
) creditors of Seller.
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SANFRAN 90103 (2K)
1.32 LFG Agreement: As defined in Section 4.2( d).
1.33 Monthly LD Amount: The product of (i) $7000 per MW, (ii) Buyer's
Percentage Share and (iii) the Initial Capacity specified under Section 4.3( c) (net at
the Point of Interconnection).
1.34 MW: Megawatt.
1.35 MWh: Megawatt hour.
1.36 Outage: A physical state in which all or a portion of the Plant is unavailable to
provide Energy to the Point of IntercOlmection, or in which any portion of the
LDC System is unavailable to receive Energy, to the extent that the
unavailability affects the LDC System's ability to accept delivery of Energy at
the Point of Interconnection, whether planned or unplanned.
1.37 Output: All actual capacity of the Initial Capacity and 'associated Energy, as
well as the following, as associated with the Initial Capacity and/or associated
Energy: Environmental Attributes; ancillary services; contributions towards
resource adequacy or reserve requirements (if any) and any other reliability or
power attributes.
1.38 Parties: Buyer and Seller, and their respective successors and permitted
aSSIgnees.
1.39 Party: Buyer or Seller, and each such Party's respective successors and
permitted assignees.
1.40 Percentage Share: Fifty percent (50%), as may be adjusted from time to time
in accordance with Section 2.2( e).
1.41 Permits: All material federal, state or local authorizations, certificates,
permits, licenses and approvals required by any Governmental Authority for
the construction, ownership, operation and J;Ilaintenance of the Plant.
1.42 Person: An in<:iividual, partnership, corporation (including a business tnlst),
limited liability company, joint stock company, trust, unincorporated
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1.43 Plant: The generation facilities described in the Recitals to be constructed and
owned by Seller and located on the Site for the generation and delivery of
electricity, including the step-up transformer, revenue quality meter and all
other facilities up to the Point of Interconnection, but not including any
Expansion Plant.
1.44 Point of Interconnection: . The point on the electrical system where the Plant
is physically interconnected with the LDC System, which is anticipated to be at
the high side of Seller's step-up transformers at the Plant.
1.45 Price: As defined in Section 2.3.
1.46 Production Incentives: Any and all tax credits, deductions, allowances and
exemptions applicable to federal, state and local taxes and any other payment,
credit, deduction, benefit~ grant or monetary incentive provided by any federal,
state or local govenunental authority or any Person, and all air emission
credits, reductions or offsets, whether now in effect or arising in the future, in
each case arising from the activities contemplated by this Agreement, including
the extraction, sale, purchase, processing and/or distribution of Landfill Gas
and/or the generation and sale of electricity using Landfill Gas as a fuel,
including "Renewable Energy Production Incentive Payments" from the U.S.
Department of Energy, emission credits, reductions, offsets or any other similar
benefits arising from the generation, collection, production, purchase, use,
reduction, conversion, destruction or resale of Landfill Gas. Notwithstanding
the foregoing, Production Incentives shall not include anything that qualifies as
Output as defined herein (including any Environmental Attributes), and shall
include Section 29 Credits and Section 45 Credits.
1.47 Prudent Utility Practice: Those practices, methods and equipment, as
changed from time to time, that:
(i) when engaged in are commonly used in the United States of America in
prudent electrical engineering and operations to operate landfill gas
generation electric equipment· and related electrical equipment lawfully
and with safety, reliability, efficiency and expedition; or
(ii) in the exercise of reasonable judgment considering the facts known,
when engaged in could have been expected to achieve the desired result
SANFRAN 90103 (lK) 9
consistent with applicable law, safety, reliability, efficiency and
expedition.
Prudent Utility Practices are not limited to an optimum practice, method,
selection of equipment or act, but rather are a range of acceptable practices,
methods, selections of equipment or acts.
1.48 Requirements. of Law: Collectively, any federal or state law, treaty,
franchise, rule, regulation, order, writ, judgment, 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 propedies are subject.
1.49 BFI: As defined in the Recitals.
1.50 Section 29 Credits: Those tax credits available under Section 29 of Subtitle A,
Chap. lA, Pad IV of the Internal Revenue Code of 1986, as amended as of the
date of this Agreement.
1.51 Section 45· Credits: Those tax credits available under Section 45 of Subtitle
A, Chap. lA, Part IV of the Internal Revenue Code of 1986, as amended, or
any other similar state, federal or local tax credits, deductions, payments or
. benefits arising from the purchase of Landfill Gas or the generation and sale of
electricity using Landfill Gas as a fuel, not including any Environmental
Attributes.
1.52 Seller: Ameresco HalfMoon Bay LLC, a Delaware limited liability company,
and any successor or permitted assignee.
1.53 Site: The real property in the HalfMoon Bay, CalifoTIlia on which the Plant is
to be built and located, as more particularly described in Appendix A.
1.54 Site Control: The point at which Seller satisfies one or more of the following
conditions: (1) Seller is (a) the lessee under a lease, or (b) the grantee under an
exclusive easement, with the owner (or its subsidiary) of the Landfill that
allows Seller to construct and operate the Plant at the Site during the Term in
accordance with this Agreement; (2) Seller has a fee ownership of the Site; or
(3) any other form of site control acceptable to Buyer in its reasonable
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1.55 Station Service Power: The energy used by Seller to operate the Plant.
1.56 Term: The period of time during which the Agreement is in effect.
1.57 Test Energy: Energy generated by the Plant and delivered to the Point of
IntercOIDlection prior to the Conunercial Operation Date.
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ARTICLE II
TERM, PURCHASE AND SALE
Term
This Agreement shall be effective upon execution by authorized representatives
of both Parties and, unless earlier terminated pursuant to an express provision
of this Agreement, shall continue until the twentieth (20th) anniversary of the
Commercial Operation Date.
Purchase and Sale of the Output
(a) In accordance with the terms and conditions hereof, commencing on the
Commercial Operation Date and continuing tm'oughout the Term, Seller shall
sell and deliver at the Point of Interconnection, and Buyer shall purchase,
accept from Seller at the Point of Interconnection and pay for, its Percentage
Share of the Output produced during the Term pursuant to the terms of this
Agreement. Prior to the Commercial Operation Date, Buyer shall purchase and
accept from Seller at the Point of IntercOlmection and pay for, the Percentage
Share of Output relating to Test Energy pursuant to the terms of this
Agreement. All Test Energy shall be scheduled in accordance with the
procedures set forth in Appendix D. The Parties acknowledge that Alameda
has agreed to purchase, accept from Seller at the Point of Interconnection and
pay for, the remainder of the Output produced during the Term pursuant to the
telms of the Alameda Agreement. Seller shall not sell to any other party, and
Buyer may claim credit for, Buyer's Percentage Share of the Output as may be
available from time to time.
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(b) Throughout the Telm, Seller shall sell and transfer to Buyer, and Buyer
shall purchase and receive from Seller, all right, title and interest in and to the
Environmental Attributes associated with Buyer's Percentage Share of the
Output, if any, whether now existing or subsequently generated or acquired
(other than by direct purchase from a third party) by Seller, or that hereafter
come into existellce, during the Telm, as a component of the Output purchased
by Buyer from Seller hereunder. Seller agrees to transfer and make such
Environmental Attributes available to Buyer immediately to the fullest extent
allowed by applicable law upon Seller's production or acquisition of the
Environmental Attributes. If Seller receives. any tradablF Environmental
Attributes based on the greenhouse gas reduction benefits or other emission
offsets attributed to its fuel usage, it shall be, entitled to retain sufficient
Enviromnental Attributes to ensure that there are zero net emissions associated
with the production of electricity from such facility. Seller shall not assign,
transfer, convey, encumber, sell or otherwise dispose of all or any portion of
the Buyer's Percentage Share of the Enviromnental Attributes to any Person
other than Buyer. Seller makes no written or oral representation or warranty,
either express or implied, regarding the current or future existence of any
Envirornriental Attributes.
(c) During the Term, Seller shall not report to any person or entity that the
Environmental Ath-ibutes granted hereunder to Buyer belong to anyone other
than Buyer, and Buyer may report under any program that such Environmental
Attributes purchased hereunder belong to it.
(d) Seller will document the production of Enviromnental Attributes under
this Agreement by delivering with each invoice to Buyer an attestation for
Environmental Attributes produced by the Plant and purchased by Buyer in the
preceding calendar month. The form of attestation is set forth as Appendix B.
Appendix B 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 Enviromnental Attributes purchased
hereunder. At Buyer's request, the Pmiies, each at their own expense, shall
execute all such documents and instruments in order to effect the transfer of the
Environmental Attributes specified in this Agreement to Buyer or its designees
as Buyer may reasonably request. In the event of the promulgation of a scheme (
involving Environmental Attributes administered by EA Agency, upon
notification by 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
12 SANFRAN 90103 (2K)
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shall promptly give the other Party copies of all documents it submits to the EA
Agency to effectuate any transfers.
(e) From time to time during any portion of the TelID when the Alameda
Agreement is in effect, upon notice to Seller signed by both Buyer and
Alameda, Buyer and Alameda may adjust the Percentage Share in their sole,
unlimited discretion, provided that the sum of Buyer's Percentage Shai"e and
the percentage share of Alameda under the Alameda Agreement shall equal
100%.
(1) In the event that Alameda fails, for any reason, to purchase or accept
delivery of its share of the Output, or any pOliion thereof, under the Alameda
Agreement and such failure can reasonably be expected to continue for less
than thirty (30) consecutive days, Seller shall, as soon as practicable, offer to
Buyer in writing the right to purchase such Output under the same terms as set
forth in this Agreement. Buyer shall have twenty-four (24) hours to accept
such offer. Should such failure reach thirty (30) consecutive days, and is
reasonably expected to continue for an additional twenty-nine (29) consecutive
days or less, then Buyer shall again have the opporhmity to purchase such
Output under the same terms as set forth in this Agreement. Buyer shall have
twenty-four (24) hours from the time Seller notifies Buyer in writing of such
extension to &ccept such offer. The foregoing shall be repeated for each failure
that is reasonably expected to last for less than thirty (30) consecutive days.
Should any such failure be reasonably expected to continue for thirty (30)
consecutive days or more, the Parties shall employ the procedure set forth in
Section 2.2( e )(2) below.
(2) In the event that Alameda fails, for any reason, to purchase or accept
delivery of its share of the Output, or any portion thereof, under the Alameda
Agreement and such failure can be reasonably expect to continue for thirty (30)
consecutive days or more, Seller shall, as soon as practicable, offer to Buyer in
writing the right to purchase such Output at the price determined by Seller in
good faith to reflect the prevailing market price for the Output, but, in other
respects, under the terms of this Agreement. Buyer shall have five (5) days to
inform Seller, in writing, of its intent to consider the offer. Should Buyer
inform Seller that it is considering the offer, Buyer shall have sixty (60) days in
which to notify Seller, in wrIting, of its acceptance or rejection of the offer.
During the period in which Buyer is considering Seller's offer (which period
may be terminated upon twenty-four (24) hours written notice to Seller), Buyer
shall purchase such Output, in addition to its own Percentage Share of Output,
13 SAN FRAN 90103 (2K)
under the same terms as set forth in this Agreement. If Buyer accepts ·Seller's
offer to purchase the Alameda Output, the parties shall execute an amendment
to this Agreement setting forth the price of the additional Output. If Buyer
rejects Seller's offer to purchase the Alameda Output, Seller shall have the
right to sell to one or more third patiy buyers. In such case, Seller shall
promptly celiify in writing to Buyer that the terms and conditions of the sale to
such third party buyer(s), taken as a whole, are at least as favorable to Seller as
the price and other telIDS 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. If such terms are less favorable to Seller
than as previously offered to Buyer, Buyer shall have the right of first refusal
consistent with the terms offered to the third party buyer(s). Buyer shall have
sixty (60) days to notify Seller in writing of its intent to accept such offer.
Upon the sale of such Output to any third party buyer( s), Buyer shall have no
further rights to be offered or to purchase such Output.
Buyer consents to a corresponding provision being included in the Alameda
Agreement, and agrees that if the conditions requiring Seller to offer Buyer's
share of the Output to Alameda are satisfied, Seller's duties to mitigate
damages, if any, shall be affected by Seller's obligations as stated herein in )
Section 2.2(e).
(f) Seller agrees that it shall not consent to an assignment, amend or waive
any of its material rights under the Alameda Agreement, administer the
Alameda Agreement in a manner materially different than its administration of
this Agreement, or otherwise treat Alameda materially differently than Buyer,
without Buyer's express prior written approval, which approval may be
withheld in Buyer's sole and unlimited discretion.
2.3 Price
Subject to the provisions of Section 4.1(k), Buyer shall pay Seller $0.052 per
kWh of Energy delivered or tendered to Buyer at the Point of Intercomlection,
which price shall be escalated at a rate of 1.5% (of the then-current price)
annually on the anniversary of (i) the first day of the first full month following
the Commercial Operation Date or (ii) if the Commercial Operation Date falls
on the first day of the month, the Commercial Operation Date. The Price shall
be the total compensation owed by Buyer for Output delivered or tendered to
Buyer hereunder.
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2.4 Tax Credits
Buyer agrees and acknowledges that all Production Incentives shall be owned
by Seller and/or the owner of the Landfill. Buyer shall not claim Production
Incentives. Buyer agrees to cooperate with Alameda and Seller and/or the.
owner of the Landfill as may be necessary to allow maximization of the value
of, and realization of, all Production Incentives; provided that Buyer shall not
be required to incur additional costs or accept any diminution in value of its
rights under this Agreement or of the Output purchased hereunder. In addition,
Buyer shall not take any action (except as otherwise permitted under this
Agreement), that would in any way reduce or eliminate the availability to Seller
or the owner of the Landfill of any Production Incentive, including without
limitation the Section 29 Credits, and Buyer shall forego any credits or benefits
available to it (other than Environmental Attributes) to the extent necessary to
allow Seller and the owner of the Landfill to obtain the full benefit of the
Production Incentives, but in no event shall Buyer be required to forego receipt of
Energy.
2.5 Right of First Refusal for Expansion Plant and Expansion Plant Output
(a) Seller may in its sole discretion determine, from time to time, during the
Term to develop, finance, constnlct 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 Percentage Share of the
Expansion Plant Output to Buyer. Seller shall offer the remainder of the
Expansion Plant Output to Alameda under the same terms and conditions as are
offered to Buyer. If Alameda does not take such share of this Expansion Plant
Output or if Alameda desires and Seller allows Alameda to take a portion of
such share of this Expansion Plant Output, then Buyer shall have the right to
take all or a portion of the rejected Expansion 'Plant Output under the same
tenns as those offered in cOlmection with Buyer's Percentage Share of the
Expansion Plant Output, such right to be exercised by Buyer within sixty (60)
days following written notice from Seller or be deemed irrevocably to have
been waived. The offer shall include the price to be paid by Buyer for the
Percentage Share of the Expansion Plant Output, the term of the proposed
power purchase agreement and the other principal terms and conditions of the
. proposed sale. If Buyer wishes to accept such offer to purchase all (but not less
than all) of such Percentage Share of the Expansion Plant Output, Buyer shall
so notify Seller within sixty (60) days of its receipt of such offer. Buyer and
15 SANFRAN 90103 (2K)
Seller shall promptly thereafter enter into good faith negotiation of a definitive
power purchase agreement incorporating the telTI1S of such offer. Until such an
Expansion Plant PPA is executed, the Seller's proposal, accepted by Buyer
(including any modifications agreed upon in writing by both parties), shall
control all dealings between the Parties relating to the Expansion Plant. Should
any issue arise that is not covered by such documentation, the terms of this
Agreement shall apply.
(b) If Buyer does not accept Seller's offer to purchase its Percentage Share
of the Expansion Plant Output within sixty (60) days of receipt of Seller's
offer, Seller shall be free to offer to sell that portion of the Expansion Plant
Output to one or more third parties at a price and on other te1ms and conditions
which, taken as a whole, are at least as favorable to Seller as the price and other
terms and conditions set forth in Seller's offer to Buyer. If Seller offers to
break up Buyer's Percentage Share of the Expansion Plant Output to sell to
multiple independent buyers, Seller shall notify Buyer in writing of the tenns
and conditions of such offers and Buyer shall again have the right of first
refusal consistent with the terms set forth above for each of the lesser amounts
being offered to the third parties. If Buyer does not purchase its Percentage
Share of 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
terms 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 Agreement, Buyer shall have no further rights to be offered or to
purchase such Expansion Plant Output. Buyer's refusal of its Percentage Share
of the Expansion Plant Output from one Expansion Plant shall not affect
Buyer's right to purchase its Percentage Share of the Expansion Plant Output
from a later Expansion Plant under the terms of this Agreement. Seller shall
not sell or provide Buyer's Percentage Share of the Expansion Plant Output to
any third party unless it can do so without compromising in any material way
its ability to provide Buyer's Percentage Share of the Output to Buyer
hereunder. The materiality of any such impact shall be determined by Buyer in
its reasonable discretion. If Seller sells or provides Expansion Plant Output to
any third party, Seller shall not employ Landfill Gas to fuel the Expansion
Capacity in any hour unless the Landfill Gas flow requirements of the Initial
Capacity have been, and shall continue to be, met.
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2.6 Option to Install Emission Controls
. Buyer and Alameda may at their option, exercised jointly from time to time,
install emission controls ·on the Plant in connection with the Initial Capacity
and on any Expansion Plant from which Buyer or Alameda purchases
Expansion Plant Output (so long as Buyer and/or Alameda purchase all such
Expansion Plant Output) beyond those then required to meet the Requirements
of Law applicable to Seller or the Plant; provided that (a) Buyer and Alameda
shall (i) bear all costs and financial, regulatory and operational risks thereof,
including without limitation the capital cost thereof and any increase in
operation or maintenance expenses, .and (ii) shall keep Seller whole in all
respects, including for decreases in Output and other adverse effects on the
Initial Capacity and the Expansion Capacity and its performance, increases in
operations and maintenance costs and failures of such emission controls to
operate, and (b) neither Buyer nor Alameda shall make any such changes to the
Initial Capacity or the Expansion Capacity without the consent of Seller to the
design and plan for implementation of such changes, such approval not to be
unreasonably withheld. .
ARTICLE III
METERING AND BILLING
3.1 Metering Requirements
The transfer of Energy from Seller to Buyer shall be measured by revenue
quality metering equipment at the Point of Interconnection. Such metering
equipment, including any equipment required for communicatillg meter data
(e.g., a dedicated data line) to Buyer or the ISO, shall be selected, provided,
installed, owned, maintained and operated, at Seller's sole cost and expense, by
Seller or its designee in accordance with applicable ISO rules. Seller shall
exercise reasonable care in the maintenance and operation of any such metering
equipment, 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. Subject to Buyer paying for its Percentage Share of the
) cost of any update or upgrade to such metering equipment pursuant to a new
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17 SANFRAN 90103 (2K)
requirement of the ISO, the LDC or any. other Govelnmental Authority adopted I following the Commercial Operation Date, each of Seller's meters shall be
accurate to the metering specifications then in effect for ISO meter accuracy.
Seller shall further install and maintain all equipment and data circuits
necessary to transmit all monitored real time supervisory control and data
acquisition ("SCADA") system data and real time data from the ISO meter to
the ISO and NCPA, while adhering to both ISO and NCPA communications
protocols. Seller shall provide a copy of each Certificate of Compliance issued.
by ISO, if any.
Buyer and NCP A shall be provided access to all monitored SCADA points to
be used at their discretion in real time monitoring. Buyer may further, at its
sole cost and expense, install and maintain check meters and all associated
measuring equipment necessary to permit an accurate determination of the
quantities of Energy delivered under this Agreement provided that said
equipment does not interfere with the Seller's metering equipment. Seller shall
pelTI1it Buyer or Buyer's representative 'access to its Plant for the purpose of
installing and maintaining such check meters. Seller shall submit to the ISO, or
allow the ISO to retrieve, any meter data required by the ISO related to the
Plant output in accordance with the ISO's settlement and billing protocol and
meter data tariffs. Buyer shall have reasonable access to relevant meters and
associated facilities, as well as real time access to all meter data, as is necessary
for Buyer or its agent to perform its duties as scheduling coordinator and
comply with the requirements of the ISO Tariff.
Buyer shall use commercially reasonable efforts to coordinate with Alameda
concerning check meters, associated measuring equipment and meter tests so as
to avoid unnecessary duplication of equipment or efforts.
3.2 Billing
Seller shall read the meter at the end of each calendar month of the Tenn, and
provide to Buyer on or before the .1 oth day of the following month an invoice
based upon the meter data for Energy delivered in such calendar month and the
corresponding attestation pursuant to Section 2.2( d). Such invoice may be
transmitted electronically via e-mail to*AcctsPayable@ncpa.com. or to any
other email address designated in writing by Buyer, with a copy to follow via
United States Mail to the notice address designated below. Should either the
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Seller or the Buyer determine at a later date, but in no event later than two (2) )
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18 SAN FRAN 90103 (2K)
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3.3
years after the original invoice date, that the invoice amount was incorrect, that
Party shall promptly notify the other Party of the error. If the amount invoiced
was too low, Buyer shall, upon receiving verification of the error and
suppOliing documentation from the Seller, pay any undisputed portion of t~e
difference within thirty (30) days of receipt of verification. If the amount
invoiced was too high, Seller shall, upon receiving verification of the error and
supporting documentation from the Buyer, pay any undisputed portion of the
difference within thirty (30) days of receipt of verification. Any such amount
shall be subject to the interest rate as designated in Section 3.3 nmning from
the original due date of payment.
Payment
For Energy delivered to Buyer pursuant this Agreement, Buyer or its agent
shall pay Seller by electronic transfer of funds by the later of the 20th day of the
month or the 10th business day after the invoice is received in accordance with
Section 3.2. If such due date falls on a weekend or legal holiday, such due date
shall be the next day which is not a weekend or legal holiday. Payments made
after the due date shall be considered late and shall bear interest on the unpaid
balance at an atmual rate equal to two percent (2%) plus the average daily
prime rate as determined from the "Money Rates" section of the West Coast
Edition of The Wall Street Journal for the days of the late payment 'period
multiplied by the number of days elapsed from and including the day after the
due date, to and including the payment date. Interest shall be computed on the
basis of a 365-day year. In the event this index is discontinued or its basis is
'substantially modified, the Parties shall agree on a substitute equivalent index.
Should Buyer in good faith dispute the amount of an invoice, Buyer or its agent
may withhold such disputed amounts until the dispute is resolved by arbitration
or other permissible method. Such disputed amounts shall bear interest at the
interest rate described above. Failure of Buyer or its agent to withhold any
amount is not a waiver of Buyer's right to challenge such amount. Both Parties
shall maintain all records relating to the other Party or this Agreement for a
minimum of two (2) years, and shall permit the other Party, upon reasonable
notice, to inspect and audit such . records as the requesting Party deems
reasonably necessary to protect its rights.
19 SAN FRAN 90103 (2K)
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ARTICLE IV
SELLER'S OBLIGATIONS
During the Term, Seller hereby agrees to perfOlm the following affin11ative
obligations:
4.1 Development, Finance, Construction and Operation of the Plant
Seller shall:
(a) Develop, finance and construct the Plant.
(b) Provide Buyer access to a "real time" Plant monitoring system (which, at
a minimum, shall provide "real time" information regarding the net output of
the Plant) that is anticipated to be internet-based and include alarms.
(c) Seek, obtain, maintain, comply with and, as necessary, renew and
modify from time to time, all Perrillts, certificates or other authorizations which
are required by any Requirements of Law or Goverm11ental Authority as
prerequisites to engaging in the activities required of Seller by the Agreement
and to meeting Seller's obligation to operate the Plant consistently with the
terms of the Agreement.
(d) Operate, maintain, and repair the Plant in accordance with this
Agreement, all Requirements of Law applicable to Seller or the Plant,
Contractual Obligations, Permits and in accordance with Prudent Utility
Practice, including with respect to efforts to maintain availability of the Initial
Capacity.
(e) Obtain and maintain the policies of insurance 111 amounts and with
coverages as set forth in Appendix C.
(f) Operate and maintain in a manner consistent with Prudent Utility
Practice the facilities it will own and otherwise cooperate with LDC in the
physical interconnection of the Plant to the LDC System in accordance with the
Intercolllection Agreement.
20 SAN FRAN 90103 12K)
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(g) By October 1st of each year of the Term, provide Buyer and NCPA with
an mIDual projection of scheduled Outages for the following calendar year.
Should Seller make any changes to such projection, it will notify Buyer and
NCPA of such changes at least fourteen (14) days in advance of any newly
scheduled or rescheduled Outage. If Buyer requests a change to the scheduled
date of any Outage (including to a date set forth in a change notice from
Seller), Seller shall consider such request in good faith and notify Buyer of its
decision within seven (7) days. In no instance will Seller schedule Outages of
more than twenty-four (24) hours between June 1st and September 30th during
the Term. In connection with any Outage, whether a scheduled or unscheduled
Outage, Seller shall notify Buyer and NCP A, as soon as practicable, of the
percentage of Plant expected to be out of service and how long the Outage is
expected to last. If the Outage is total and is due to failure of the Plant rather
than the transmission and distribution system beyond the Point of
Interconnection, Seller shall give Buyer and NCPA at least four (4) hours
notice before re-energizing the Plant. In addition, Seller will comply with
NCPA's reasonable scheduling protocols, as they may be changed from time to
time. A copy of the cunent version of NCPA's scheduling protocols, which
the Parties agree are reasonable, is attached as Exhibit D. Buyer shall use
commercially reasonable efforts. to coordinate with Alameda regarding any
requested changes to scheduled outages to avoid duplication.
(h) Negotiate and enter into an Interconnection Agreement with LDC to
enable Buyer to transmit Energy received at the Point of Interconnection
through the ISO-controlled grid. Seller shall be responsible for and pay all
initial non-recuning costs and charges arising under the Interconnection
Agreement (even if not actually incUlTed) prior to the Commercial Operation
Date in compliance with the Interconnection Agreement and associated nIles
and requirements in place as of the Commercial Operation Date. All other out-
of-pocket costs and charges related to interconnection other than these initial
non-recuning costs and charges will be reimbursed, on a pro rata, energy basis,
by the purchasers of energy from the Plant. During the Term of this
Agreement prior to any Expansion Plant becoming available for commercial
service, Buyer will reimburse Seller for its Percentage Share of such other out-
of-pocket costs and charges under the IntercOlIDection Agreement paid or
required to be paid by Seller to LDC or its successor; provided, however,
Buyer shall be responsible for its Percentage Share of such other out-of-pocket
costs and charges under the Interconnection Agreement only to the extent
Buyer has approved in writing, in the sole discretion of Buyer, the
21
SANFRAN 90103 (2K)
Interconnection Agreement, including any amendments (which shall not
include changes in relevant tariffs) from time to time. Upon completion of an
Expansion Plant which uses the Interconnection Facilities, such other out-of-
pocket costs and charges shall be prorated, on a Percentage Share of energy
basis, and Buyer's share would be based on its Percentage Share of Energy
compared to the energy of the Expansion Plant delivered to the Point of
Interconnection. Seller shall cooperate with Buyer to minimize any such costs
as are to be reimbursed by Buyer.
(i) Negotiate and enter into a Participating Generator Agreement and a
Meter Service Agreement for ISO Metered Entities with the ISO, who is the
load control area operator for the LDC System to which the Plant is
interconnected. Buyer shall pay for or reimburse Seller for its Percentage
Share of any such costs or charges associated with these agreements, except to
the extent such cost or charge is required to be paid by Seller under this
Agreement in Sections 3.1 and 4.1 (h). Seller shall cooperate with Buyer to
minimize any such costs as are to be reimbursed by Buyer.
(j) Coordinate all Plant start-ups and shut-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.
(k) Maintain an Availability Threshold of seventy percent (70%). Should
Seller fail to maintain such an Availability Threshold, the Price applicable to
Output sold and purchased during each month during which the Availability
Threshold is below seventy percent (70%) shall be seven and one-half percent
(7.5%) below the Price that would otherwise be in effect pursuant to Section
2.3 until the Av').ilability Threshold is increased to at least seventy percent
(70%). Except as otherwise expressly stated in Sections 6.4 and 7.6, the
foregoing shall be Buyer's sole remedy for any shortfall of or failure to
produce Output or failure to maintain any patiicular Availability Threshold.
4.2 General Obligations
(a) Seller shall obtain in its own name and at its own expense any and all
pollution or environmental credits or offsets necessary to operate the Plant in
compliance with the Environmental Laws.
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SANFRAN 90103 (2K)
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(b) Seller shall keep complete and accurate operating and other records and
all other data for the purposes of proper administration of the Agreement,
including such records as may be required by any Governmental Authority or
Prudent Utility Practice.
(c) Seller shall continue to (i) preserve, renew and keep in full force and
effect its organizational existence and good standing, and take all reasonable
action to maintain all applicable Permits, rights, privileges, licenses and
franchises necessary or desirable in the ordinary course of its business; and (ii)
comply with all Contractual Obligations and Requirements of Law applicable
to Seller or the Plant.
(d) Prior to the. date ninety (90) days following the later of (a) the date of
this Agreement and (b) the date of the Alameda Agreement, Seller shall make
available for review by Buyer, and its representatives, at Buyer's offices in
Palo Alto, California, a fully executed copy of its contract with BFI, including
all. exhibits, attachments, and other supporting documents thereto, for the
purchase of Landfill Gas (the "LFG Agreement"). Such contract may be
redacted to remove pricing information. If (i) Seller does not fulfill its
obligations under the first two sentences of this Section 4.2( d) in the time
allowed, or (ii) Seller fulfills st1Gh obligations but Buyer in its reasonable
discretion does not approve of the terms of the LFG Agreement, then Buyer
may, as its sole remedy and without liability of one party to the other, terminate
this Agreement by written notice given no later than sixty (60) days after Seller
has fulfilled, or failed to fulfill, as the case may be, such obligations under such
first two sentences. If Alameda exercises its corresponding right of termination
under the Alameda Agreement, then Seller shall by written notice offer Buyer
the option to amend this Agreement to increase the Percentage Share to one
hundred percent (100%). If Buyer does not exercise such option by written
notice to Seller within sixty (60) days following such written notice from
Seller, then such option shall expire and Seller may, at its sole option exercised
by written notice to Buyer, terminate this Agreement without liability of one
party to the other. Other than increasing the amount of fuel purchased
thereunder, Seller shall not allow such contract to be amended or otherwise
modified, nor shall it waive or fail to enforce any of its rights thereunder,
without Buyer's prior written approval, whose approval shall not be
unreasonably withheld. Seller shall make the LFG Agreement available to
Buyer for review during normal business hours at Buyer's offices in Palo Alto,
23
SANFRAN 90103 (lK)
Califonlia throughout the term of this Agreement within seven (7) days of a
written request by Buyer.
(e) Seller shall provide to Buyer such other infomlation regarding the
pelTIlitting, engineering, construction or operations of the Plant as Buyer may
from time to time reasonably request, subject to licensing or other restrictions·
of Seller or a third party with respect to confidentiality, disclosure or use.
(f) Seller shall enter into any agreements with the ISO required by the ISO
for generators delivering power into the ISO-controlled grid. Except for such
costs and charges as are expressly identified in this Agreement as Seller's
costs, Buyer shall reimburse Seller for all costs and charges under such
agreements. Seller shall cooperate with Buyer to minimize any such costs as
are to be reimbursed by Buyer.
. (g) Seller shall provide Buyer with a copy of its. ultimate corporate parent's
audited financial statements as at the end of its accounting year prepared in
accordance with GAAP, no later than four (4) months after the end of such ,
accounting year of such entity. Seller shall also provide, on a quarterly basis,
an unaudited financial statement in the form of Appendix F, prepared in
accordance with GAAP consistently applied for Seller and for Seller's ultimate
corporate patent. Such financial statements shall be certified by an officer of
Seller as fairly presenting the financial condition of ' the Seller subject only to
what would typically be included in year-end audit adjustments and footnotes.
If, from time to time, an audited year-end financial statement is prepared for
Seller, Seller shall provide it to Buyer no later than four (4) months after the
end of Seller's accounting year.
4.3 Construction Milestones
(a) The Parties agree that time is of the essence and that certain milestones
("Milestones") for the development, financing and construction of the Plant
must be achieved in a timely fashion or Buyer shall suffer clamages. Seller
shall provide Buyer with documentation satisfactOlY to Buyer, in Buyer's
reasonable discretion, to support the achievement of Milestones by the dates set
forth below.
(b) The following events are all of the Milestones:
24 SANFRAN 90103 (2K)
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(i) By the date ninety (90) days following the date of the later of (a)
this. Agreement and (b) the Alameda Agreement, Seller shall have
signed an LFG Agreement with BFI and have obtained Site
Control.
(ii) By the date twenty (20) months following the later of Ca) the later
of the date that (i) Buyer and (ii) Alameda approves the LFG
Agreement, and (b) if applicable pursuant to Section 4.2( d), the
date Buyer exercises an option to increase its Percentage Share to
one hundred percent (100%) or such option expires, Seller shall
(a) have obtained all Permits necessary, in final form, to
commence construction of the Plant and (b) have entered into an
Interconnection Agreement.
(iii) By the date one (1) month following the later of (a) the
finalization of all necessary Permits described in Section
4.3(b )(ii), and (b) entering into an Interconnection Agreement,
Seller shall have arranged financing for construction of the Plant
or otherwise made funds available to commence and complete
constnlction.
(iv) By the date twelve (12) months following the later of (a) the
finalization of all necessary Permits described in Section
4.3 (b)(ii), and (b) entering into an Interconnection Agreement,
Seller shall have commenced construction of the Plant.
(v) By the date eighteen (18) months following the arrangement of
financing or availability of funds for construction, Seller shall
have achieved the Commercial Operation Date.
(c) Starting on the effective date of this Agreement, Seller shall provide to
Buyer monthly progress reports conceming the progress towards completion of
the Milestones. In addition, within five business days of the completion of
each Milestone, Seller shall provide a certification to Buyer (along with any
suppOliing documentation, demonstrating the satisfaction of the Milestone.
Seller shall provide to Buyer additional information conceming Seller's
progress towards, or confirmation of, achievement of the Milestones, as Buyer
may reasonably request from time to time. Within seven (7) days of the later
of (i) obtaining the authority to construct for the Plant from the applicable air
quality management district or (ii) Seller's receipt of the system impact and
facility cost studies· from the LDC, but in no event later than the date set forth
in Section 4.3(b )(ii), Seller shall specify the Initial Capacity of the Plant (which
shall be subject to the limits contained in Section 1.20).
25 SANFRAN 90103 (2K)
(d) Upon becoming aware that it will, or is reasonably likely to, fail to
achieve a Milestone by the required date, for any reason including Force
Majeure Event, Seller shall so notify Buyer in writing as soon as is reasonably
practical. Such notice shall explain the cause the delay, provide an updated
date for achievement of the Milestone(s) and describe Seller's plan for meeting
the Milestone .. Seller's notice will also explain any impact such delay mayor
. will have on any other Milestone, and measures to be taken to mitigate such
impact.
(e) In the event that a Force Majeure Event causes any delay to the
achievement of the Milestones set forth in Sections 4.3(b )(iii), (iv), or (v), such
Milestone's deadline may be extended, together with any Force Majeure Event
extensions for other Milestones, for a period not to exceed 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.
(f) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b )(i) for any reason, Buyer may terminate this Agreement, without liability
of either Party to the other, by giving notice to Seller in writing of such
termination at any time prior to Seller curing its failure. Such option to
terminate shall be Buyer's sole remedy for any failure to meet the Mile"stone set
forth in Section 4.3(b )(i).
(g) In the event that Seller fails to meet the Milestone set f011h in Section
4.3(b )(ii) for any reason, Buyer may terminate this Agreement, with<;mt liability
of either Party to the other, within ten (10) business days after the Milestone
date by giving notice to Seller in writing of such termination. If Seller meets
the Milestone set forth in Section 4.3(b )(ii) prior to Buyer giving written notice
of termination, this Agreement shall remain in full force and effect. If Buyer
does not tenninate this Agreement within ten (10) business days after the
. Milestone date, Seller shall continue ·to pursue satisfaction of the relevant
Milestone and Buyer must give Seller sixty (60) days notice to terminate this
Agreement, during which period if Seller cures such defect and achieves the
relevant Milestone, such telmination shall be void and this Agreement shall
remain in full force and effect. Such option to terminate shall be Buyer's sole
)
remedy for any failure to meet the Milestone set forth in Section 4.3(b )(ii). )
26
SAN FRAN 90103 (2K)
)
(h) In the event that Seller fails to meet the Milestone set forth in Section
4.3(b)(iv) within six (6) months after the relevant Milestone date for any reason
(or up to twelve (12) months if also delayed by a Force Majeure Event), Seller
may deposit an amount, per month, equal to the Monthly LD Amount into a
segregated escrow account reasonably acceptable to Buyer by the first day of
such month, for every month after such date until the Milestone is met. Such
funds will be used towards any liquidated damages as set forth in Section
7 A( c), and shall be held in escrow until such time that liquidated damages, if
any, become payable to Buyer. Should the amount in the escrow account
exceed the final amount of liquidated damages, such excess funds shall be
returned to Seller. Should Seller (i) at any time fail to make such monthly
deposits or (ii) fail to satisfy the Milestone set forth in Section 4.3(b )(iv) for
more than twelve (12) months, Buyer may terminate this Agreement upon
written notice to Seller of such termination. Upon such termination, Seller will
pay to Buyer, within thirty (30) days of the terminati9nnotice, an amount equal
to the LD Amount as liquidated damages. Such Seller escrow option, Buyer
option to terminate, and liquidated damages shall be Buyer's sole remedy for
any failure of Seller to meet the Milestones set forth in Section 4.3(b )(iii) or
(iv).
(i) Seller covenants that it will diligently pursue all Milestones including
the Commercial Operation Date, which Seller envisions will occur within thirty
(30) months following the execution of this Agreement.
U) In the event that any of the approvals described in Section 4.3(b )(ii) are not
obtained by the date specified in Section 4.3(b )(ii) for satisfaction of the
relevant Milestone or are obtained on a basis not reasonably satisfactory to
Seller, including without Ilmitation, in the case of the air permit, approval of
construction and operation of the Plant on a basis not consistent with internal
combustion engines without emission controls, pollution or environmental
credits or offsets, Seller may terminate this Agreement without liability of
either Party to. the other by giving notice to Buyer in writing of such
telmination; provided that such notice must be given.no later than fourteen (14)
days following the earlier of (a) the date on which a given approval not
satisfactory to Seller is received in writing or (b) the date specified in Section
4.3(b)(ii) for satisfaction of the relevant Milestone. Failure to provide notice of
termination by the date specified above shall constitute a waiver of the right to
terminate this Agreement as provided in this Section 4.3U). In the event that
27 SANFRAN 90103 (2K)
Seller exercises such termination right, Buyer shall have a right of first refusal
to purchase the output of any electricity generating facility owned or controlled
by Seller or its affiliate(s) located at the Landfill and fueled by Landfill Gas.
Such right of first refusal shall conform to the provisions of Section 2.5. The
provisions of this Section 4.3U) shall survive termination of this Agreement
under this Section 4.3U) for a period of five (5) years from such ternlination.
ARTICLE V
BUYER'S OBLIGATIONS
5.1 Delivery and Transmission
Except for Seller's obligations pursuant to Sections 3.1 and 4.1(h), Buyer shall
be solely responsible for paying its Percentage Share of costs and charges
associated with the receipt of Energy, under this Agreement, at the Point of
IntercOlmection and for the transmission and delivery of the Energy from the
Point of Interconnection to any other point downstream of the Point of
Interconnection (including, without limitation, transmission costs and charges,
competition transition charges, applicable control area service charges,
transmission congestion charges, inadvertent energy flows, any other ISO
charges related to the transmission of such Energy by the ISO and any charge
assessed or collected in the future pursuant to any utility tariff or rate schedule,
however defined, for transmission or transmission-related service rendered by
or for any transmission-owning or operating entity). The Northern CalifOlllia
Power Agency ("NCP A"), acting on behalf of Buyer, shall be scheduling
coordinator for the transmission of Energy from the Plant in accordance with
applicable ISO nIles. Buyer's duties as scheduling coordinator shall be limited
to those duties as are specifically required of scheduling coordinators in the
ISO Tariff and the ISO protocols. Commercial arrangements for such
transmission and delivery services will be coordinated and settled by NCPA
directly with the ISO or other third parties. At the option of Buyer and
Alameda, to be exercised jointly, the Plant may be included within NCPA's
metered sub-system in cOlU1ection with the scheduling of power over the ISO
grid and related functions; provided that such inclusion shall have no adverse
effect on Plant operations or Seller (or any such effect shall be fully mitigated
by Buyer and/or Alameda). Seller will do all things reasonably needed to
allow Buyer to comply with any obligations, and minimize any potential
28 SAN FRAN 90103 (2K)
)
)
)
5.2
5.3
liability, under the ISO Tariff; provided, that if such actions require any actions .
beyond the giving of notice provided by Buyer, then Buyer shall reimburse its
'Percentage Share of all out-of-pocket costs and charges of such actions. If and
to the extent that Seller fails to comply with the notice provision in Section
4.1 (g) concenling Outages or with its obligations as outlined in the previous
sentence, Seller shall be wholly responsible for all imbalances, deviations, or
any other ISO charges or penalties associated with such Outage or ISO Tariff
obligation. Buyer may, jointly with Alameda, replace NCPA as Scheduling
Coordinator for the Plant. If NCP A ceases to be Scheduling Coordinator for
the Plant and Buyer and Alameda are unable, upon fourteen days notice from
Seller, to appoint jointly a replacement Scheduling Coordinator, Seller shall
have the right to appoint a replacement Scheduling Coordinator on their behalf,
and Buyer and Alameda shall enter into all reasonable and appropriate
agreements with such replacement Scheduling Coordinator at their own cost.
Taxes
Buyer shall pay and be fully responsible for any sales, use, gross receipts,
utility or other taxes, assessments or fees, if any, incurred or imposed on the
sale or transfer of Energy from Seller to Buyer under this Agreement. Buyer
shall not be responsible for any taxes measured on the net income of Seller or
ad valorem taxes paid by Seller or BFI associated with the Site or the Landfill.
Notification of Transmission Outages
Buyer will exercise reasonable efforts to provide Seller with as much advance
notice as practicable of any Outage on the LDC System or other transmission
or delivery facilities which may adversely affect the delivery of Energy to
Buyer.
ARTICLE VI
FORCE MAJEURE
6.1 Force Majeure Events
It is understood that at times unavoidable delays or intemlptions in delivery or
) perfonnance may result from Force Majeure Events. The performance of each
29 SANFRAN 90103 (2K)
Party under this Agreement may be subject to interruptions or reductions due to
a Force Majeure Event. Both Parties shall in good faith use such effort as is
reasonable under all the circumstances lmown to that Party affected by the
Force Majeure Event at the time to remove or remedy the cause(s) and mitigate
the inability to perform. However, the obligation to use such reasonable efforts
shall not be interpreted to require resolution of labor disputes by acceding to
demands of the opposition when such course is inadvisable in the discretion of
the Party having such difficulty.
6.2 Remedial Action
Subject to the limitation on extensions of Milestones set forth in Section 4.3(e),
a Party shall not be liable to the other Party if the Party is prevented from
performing its obligations hereunder due to a Force Majeure Event. The Party
rendered unable to fulfill an obligation by reason of a Force Majeure Event
shall take all action necessary t<;> remove such inability with all due speed and
diligence. The nonperforming Party shall be prompt and diligent in attempting
to remove the cause of its failure to perform, and nothing herein shall be
constmed as pennitting that Party to continue to fail to perform after said cause )
has been removed. Notwithstanding the foregoing, the existence of a Force
Majeure Event shall not excuse any Party from its obligations to make payment
of amounts due hereunder.
6.3 Notice
In the event of any delay or nonperformance resulting from a Force Majeure
Event, the Party suffering the Force Majeure Event shall, as soon as practicable
under the circumstances, notify the other Party in writing of the nature, cause,
date of commencement thereof and the anticipated extent of any delay or
intenl1ption in performance.
6.4 Termination Due To Force Majeure Event
Subject to Section 4.3( e), if a Party is prevented from performing its material
obligations under this Agreement for a period of twelve (12) consecutive
months or longer, 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.
30
SAN FRAN 90103 (2K)
1 /
)
ARTICLE VII
DEFAULT/REMEDIES/TERMINATION
7.1 Events of Default by Buyer
7.2
The following shall each constitute an "Event of Default" by Buyer:
(a) Buyer breaches any material obligation (other than one covered by
Section 7.1(b) or (c) of this Agreement) and fails to cure such breach within
thirty (30) days after written notification of breach by Seller or such longer
period as may be necessary to cure such breach as long as Buyer is exercising
diligent efforts to cure such default.
(b) Buyer fails to make any payment due under this Agreement within thirty
(30) days after written notice that such payment is due.
( c ) The initiation of an involuntary proceeding against Buyer under the
bankruptcy or insolvency laws, which involuntary proceeding remains·
undismissed for sixty (60) consecutive days, or in the event of the initiation by
Buyer of a voluntary proceeding under the bankruptcy or insolvency laws.
Events of Default by Seller
(1) The following shall each constitute an "Event of Default" by the Seller if
Seller does not cure within the time set f01ih in clause (2), below:
(a) Seller breaches any .material obligation (other than ones covered by
Sections 7.2(b), (c), (d), (e) or (f) of this Agreement or for which a remedy is
specified).
(b) Seller fails to make any payment due under this Agreement within thirty .
(30) days after written notice that such payment is due.
(c) The initiation of an involuntary proceeding against Seller under the
banknlptcy or insolvency laws, which involuntary proceeding remains
undismissed for sixty (60) consecutive days, or in the event of the initiation by
Seller of a voluntary proceeding under the bankruptcy or insolvency laws.
31 SANFRAN 9010] (2K)
( d) Seller sells or. transfers Buyer's share of the Output (or any individual
component thereof) or Expansion· Plant Output (or any individual component
thereof) or the right to Buyer's share of the Output (or any individual
component thereof) or Expansion Plant Output (or any individual component
thereof), to the extent that such Expansion Plant Output is purchased by Buyer,
to any Person other than Buyer.
(e) Seller fails to comply with the tenns of Buyer's right of first refusal as
described in Section 2.6 of this Agreement.
(f) Subject to Section 7.4(c), Seller fails, for any reason other than an
unauthorized act or omission by Buyer, to achieve the Commercial Operation
Date by the applicable Milestone deadline as set forth in Section 4.3(b )(v), as
such deadline may be extended as a result of a Force Majeure Event in
accordance with Section 4.3(e).
(2) Time for Cure. Nothing described in Section 7.2(l)(a) above shall
')
constitute an Event of Default if Seller cures the event, failure or circumstance )
within (30) days after written notification by Buyer or such longer period as
may be necessary to cure as long as Seller is exercising diligent efforts to cure.
7.3 Termination for Default
( a) In the event the defaulting Party fails to cure the Event of Default within
the period for curative action under Sections 7.1 or 7.2, as applicable, the non-
defaulting Party may tenninate the Agreement by notifying the defaulting Party
in writing of (i) the decision to terminate and (ii) the effective date of the
termination.
(b) Upon tennination of the Agreement by Buyer pursuant to Section 7.3(a)
due to an Event of Default by Seller, Buyer shall have no future or further
obligation to purchase the Output of the Plant or to make any payment
whatsoever under this Agreement, except for payments for obligations arising
or accruing prior to the effective date of tennination. Upon tennination of the
Agreement by Seller pursuant to Section 7.3(a) due to an Event of Default by
Buyer, Seller shall have no future or further obligation to deliver the Output of
the Plant to Buyer or to satisfy any other obligation of this Agreement, except
for payments or other obligations arising or accruing prior to the effective date )
32
SANFRAN 90103 (2K)
)
)
7.4
of tennination. After the effective date of telmination, the Agreement shall not
be constnled to provide any residual value to either Party or any successor or
any other Person, for rights to, use of or benefits from the Plant to any Person. '
( c ) Default by Alameda under the Alameda Agreement shall not be
construed as a default by Buyer, and shall not give rise to any liability
hereunder or to of the telmination provisions set forth above with respect to
Buyer.
Damages
(a) For all claims, causes of action and damages the Parties shall be entitled
to the recovery of actual damages allowed by law unless otherwise limited by
the Agreement. Neither the enumeration of Events of Default in Sections 7.1
and 7.2, nor the termination of this Agreement by a non-defaulting Party
pursuant to Section 7.3(a), shall limit the right of a non-defaulting Party to
rights and remedies available at law, including, but not limited to, claims for
breach of contract or failure to perform by the other Party and for direct
damages inculTed by the non-defaulting Party as a result of the tennination of
this Agreement.
(b) Except as otherwise specifically and expressly provided in the
Agreement, neither Party shall be liable to the other Party under this
Agreement for any indirect, special or consequential damages, including but
not limited to loss of use, loss of revenues, loss of profit, interest charges, cost
of capital or claims of its customers or members to which service is made.
Except as set forth in Section 4.1(k) arid except to the extent Seller violates its
undertaking not to provide or sell rights to part or all of the Output to a party
other than Buyer, Seller shall not be liable to Buyer for failure to provide any
specific amount of Output hereunder,
( c) In the event that Seller fails to meet the Commercial Operation Date by
the applicable Milestone deadline as set forth in Section 4.3(b)(v), as such
deadline may be extended as a result of a Force Majeure Event in accordance
with Section 4,3(e), Seller shall be liable for liquidated damages in the amount,
per month, equal to the Monthly LD Amount for each full month (with parts of
a month pro rated) that Seller is late in satisfying the Milestone. So long as
Seller is paying such liquidated damages on a monthly basis, up to twelve (12)
months, Buyer shall not be permitted to terminate this Agreement. If after
33 SAN FRAN 90103 (2K)
twelve (12) months following the relevant Milestone deadline Seller has failed
to achieve Commercial Operation, or if for any reason Seller fails to pay, or
discontinues paying, the monthly liquidated damages provide for above, Buyer
may terminate this Agreement by written notice to Seller. This twelve (12)
month period shall not be extended as a result of a Force Majeure Event. Upon
such termination, Seller shall pay Buyer, within thirty (30) days of the
tennination notice, a hnnp sum equal to the LD Amount. No other damages or
remedy shall be available to Buyer on the basis of such failure to meet the
Milestone set fmih in Section 4.3 (b )( v) or tern1ination of this Agreement based
on failure to achieve Commercial Operation within twelve (12) months of that
Milestone deadline.
(d) The Parties agree that the liquidated damages set forth in Sections
4.3(h) and 7.4(c) are reasonable and represent a fair and genuine estimate of the
damages Buyer will suffer upon the failure of Seller to achieve Commercial
Operation by the agreed upon date(s). The Parties aclmowledge that it would
be impracticable or extremely difficult to fix Buyer's actual damages, and
therefore have deemed the liquidated damages set forth above to be the amount
of damage sustained by Buyer upon such a failure. The Parties further agree
that payment of such amount shall be as liquidated damages and not as a·
penalty, and is therefore not subject to avoidance under California Civil Code
section 1671.
7.5 Indemnification
Seller and Buyer agree to defend, indemnify, 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) (collectiveJy "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, elTors, or omissions
of the indemnifying Party. This indemnification obligation shall apply
notwithstanding any negligent or intentional acts, elTOfS or omissions of the
indemnitees but the indemnifying Party's liability to pay Damages to the
indemnified Party shall be reduced in proportion to the percentage by which
the indemnitees' negligent or intentional acts, errors or omissions caused the
Damages. Neither Party shall be indemnified for its Damages resulting from
)
its sole negligence or willful misconduct. These indemnity provisions shall not )
34 SAN FRAN 90103 (2K)
)
)
)
7.6
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
If Seller (i) fails to maintain the Availability Threshold for a period of nine (9)
months in any twelve (12) month period, or (ii) fails to generate Energy for
sixty (60) consecutive days, then Buyer or its designee may, but shall not be
obligated to, step-in and assume operational control from Seller of the Plant;
provided that Buyer shall not be pennitted to step-in and take control so long as
Seller or any of Seller's Lenders are using commercially reasonable efforts to
remedy the failures described in (i), or (ii) above. Buyer, its employees,
contractors and designees shall have the umestricted right to enter the Plant to
the extent necessary to operate the Plant. Upon the exercise of this right, Buyer
or its designee shall at all times operate the Plant using Prudent Utility Practice
and shall comply, to the extent commercially practicable, with the tenus of this
Agreement and the telIDS of the Alameda 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
Plant. Buyer shall pay Seller the applicable rate for Output provided
hereunder, less any costs incurred by Buyer to operate the Plant. Prior to
assuming operational control, Buyer shall consult with Alameda. In the event
that Alameda has, and desires to exercise, the right to step-in and assume
operational control of the Plant under the Alameda Agreement, Buyer shall not
exercise its rights hereunder without Alameda's written consent. Buyer and
Alameda may exercise their step-in rights jointly. Buyer shall indemnify and
hold Seller harmless from any liability to third parties (including Alameda)
arising out of Buyer's failure to operate the Plant using Prudent Utility
Practice. Upon Buyer's satisfaction that Seller has the ability to operate the
Plant in accordance with this Agreement, Seller shall resume operational
control.
Should Seller's Lender( s) refuse. to finance the Plant, or materially condition
such financing, solely as a result of this Section 7.6, and Seller gives Buyer
written notice of such refusal to. finance, Buyer shall have the following
options: (1) telminate this Agreement without liability of one Party to the
other; (2) renegotiate this Section 7.6 with Seller and Lender(s) in a manner
mutually acceptable; (3) delete this Section 7.6 in its entirety (which deletion
will not require Seller's additional consent); or (4) arrange for financing for the
35 SAN FRAN 90)03 (2K)
Plant under materially equivalent terms and conditions as the Lender(s) were
prepared to provide but for this Section 7.6. If Buyer fails to elect and
complete one of these options within sixty (60) days of written notice from
Seller, Seller shall have the right to terminate this Agreement without liability
of one party to the other. If Alameda elects to telminate the Alameda
Agreement under Section 7.6 of the Alameda Agreement, Seller shall offer in
writing to Buyer Alameda's Percentage Share. If Buyer fails to accept
Alameda's Percentage Share in writing within sixty (60) days, Seller may
terminate this Agreementwithout liability of one Party to the other.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Seller's Representations and Warranties
\
Seller represents and warrants to Buyer that as of the date of execution of this
Agreement:
(i) Seller is duly organized and· validly existing as a limited liability
company under the laws of Delaware, and has the lawful power to
engage in the business it presently conducts and contemplates
conducting in this Agreement 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 carry out this
Agreement and to perform its obligations hereunder; all such actions
have been duly authorized by all necessary proceedings on its part. As
of the date of execution hereof, ( a) the Plant shall on the Commercial
Operation Date be a "qualifying small power production facility" as that
term is defined in Section 3(17)(C) of the Federal Power Act, and will
possess all of the exemptions from reguhition provided in 18 CFR
Sections 292.601(c) and 292.602; and (b) this Agreement is not required
to be filed with FERC and no approval (except with respect to
"qualifying small power production facility" status) with respect to this
Agreement is required from FERC. In the event that the Plant is not a
)
II qualifying small power production facility II on the Commercial )
36 SANFRAN 90103 (2K)
)
)
(iii)
(iv)
Operation Date or any date thereafter, Seller shall make appropriate
filings under the Federal Power Act within sixty (60) days so as to
comply with applicable law, subject at all times to the provisions of
Article IX of this Agreement;
The execution, delivery and performance of this Agreement by Seller
will not conflict with its goveming documents, any applicable laws, or
any covenant, agreement, understanding, decree or order to which Seller
is a party or by which it is bound or affected;
This Agreement has been duly and validly executed and delivered by
Seller and, as of the date first set forth herein, constitutes a legal, valid
and binding obligation of Seller, enforceable in accordance with its
terms against Seller, except to the extent that its enforceability may be
limited by bankmptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally or by general
principles of equity; and
(v) There are no actions, suits, proceedings or investigations pending or, to
the knowledge of Seller, threatened in writing against Seller, at law or in
equity before any Govemmental Authority, which individually or in the
aggregate are reasonably likely to have a materially adverse effect on the
business, propeliies or assets or the condition, financial or otherwise, of
Seller, or to result in any impaitment of Seller's ability to perform its
obligations under this Agreement.
8.2 Buyer Representations and Warranties
Buyer represents and warrants to Seller that as of the date of execution of this
Agreement:
(i) Buyer is The City of Palo Alto, a chartered city and municipal
corporation, duly organized and validly existing, and has the lawful
power to engage in the business it presently conducts and contemplates
conducting in this Agreement and Buyer is duly qualified in each
jurisdiction wherein the nature of the business transacted by it makes
such qualification necessary;
37 SAN FRAN 90103 (2K)
(ii) Buyer has the legal power and authority to make and carry out this
Agreement and to perform its obligations hereunder and all such actions
have been duly authorized by all necessary proceedings on its pali;
(iii) The execution, delivery and performance of this Agreement 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 paliy or by which it is bound or affected;
(iv) This Agreement has been duly and validly executed and delivered by
Buyer and, as of the first date set forth herein, constitutes a legal, valid
and binding obligation of Buyer, enforceable in accordance with its
telms against Buyer, except to the extent that its enforceability may be
limited by bankmptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally or by general
principles of equity; and
(v) There are no actions, suits, proceedings or investigations pending or, to
the knowledge of Buyer, threatened in writing against Buyer, at law or in
equity before any Govemmental 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
Buyer, or to result in any impairment of Buyer's ability to perform its
obligations under this Agreement.
ARTICLE IX
NO CHANGE TO RATES, TERMS OR CONDITIONS
No change may be made to the rates, terms or conditions of this Agreement at
the request of any Paliy, or by FERC acting sua sponte on behalf of any Party, except
as required by FERC in the public interest. To that end and to the extent any such
rights exist, each PartY waives any and all rights to seek changes to the rates, terms
and conditions contained in this Agreement pursuant to sections 205 or 206 of the
Federal Power Act or otherwise. The telIDS of this Agreement shall be interpreted as
being fixed and subject only to the "public interest" standard of review, consistent
with the interpretation by the Federal Energy Regulatory Commission of United Gas
38 SAN FRAN 90103 (2K)
)
)
1 /
Pipe Line Co. v. Mobile Gas Svcs., 350 U.S. 332 (1956), and F.P.c. v. Sierra Pac.
Power Co., 350 U.S. 348 (1956), as of the date of execution of this Agreement.
ARTICLE X
MISCELLANEOUS·
10.1 Assignment
The rights and obligations of this Agreement may not be assigned by either
Party without the prior written consent of the other Party, which consent shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing, Seller
may use subcontractors without Buyer's consent to comply with the terms of
this Agreement provided that notwithstanding the use of said subcontractors,
Seller shall remain responsible for all its obligations under this Agreement.
Buyer may furthermore use any agent it s6 designates for scheduling and
billing purposes, so long as Buyer remains responsible for all of its obligations
under this Agreement. Any purported assigmnent of this Agreement in the
absence of the required consent, except as provided in 10.2, shall be void.
10.2 Financing
Notwithstanding Section 10.1, Seller may, without the consent of Buyer,
collaterally assign its rights under this Agreement to Lenders as collateral
security in cOlmection with any financing of the purchase or operation of the
Plant, provided that such Lender(s) or its designee agree(s) in writing that upon
assuming any of Seller's prospective rights under this Agreement, such Lender
also shall be bound by all of Seller's prospective obligations under this
Agreement. Notwithstanding any such assignment, Seller's obligations under
this Agreement shall continue in their entirety in full force and effect and Seller
shall remain fully liable for all of its obligations under or relating to this
Agreement. Each such collateral assignment and any purchaser or transferee
shall be subject to Buyer's rights and defenses hereunder and under applicable
law. Seller shall provide prior written notice to Buyer at least seven (7) days
prior to any such collateral assignment.
In order to facilitate . the obtaining of financing of the Plant, Buyer shall
execute, upon request, a commercially reasonable consent to assignment, with
39 SANFRAN 90103 (2K)
respect to a collateral assignment hereof to Lenders in connection with the
documentation of the financing or refinancing for the Plant. Any assignment in
violation of this Agreement shall be void, ab initio. Buyer shall consider in
good faith any amendments to this Agreement proposed by Seller which relate
to financing of the Plant or other amendments requested by Seller in order to
receive or maintain financing from Lenders.
10.3 Notices
Any notice, demand, request, or communication required or authorized by this
Agreement shall be delivered either by hand, facsimile, ovenlight courier or
mailed by certified mail, return receipt requested with postage prepaid, to:
The City of Palo Alto
250 Hamilton Avenue, Third Floor
Palo Alto, CA 94301
Attention: Senior Assistant City Attorney / Utilities
Telecopier: (650) 329-2946
on behalf of Buyer;
with a copy to:
SANFRAN 90103 (2K)
The City of Palo Alto
250 Hamilton Avenue, Third Floor
Palo Alto, CA 94301
Attention: Director of Utilities
Telecopier: (650) 329-2946
40
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and to:
Northem.Califomia Power Agency
180 Cirby Way
Roseville, CA 95678
Attention: Power Contracts Administrator·
Telecopier: 916-781-4255
and to:
Ameresco Half Moon Bay LLC
c/o Ameresco, Inc.
111 Speen Street, Suite 410
Framingham, MA 01701
Attention: General Counsel
Telecopier: (508) 661-2201
Telephone: (508) 661-2200
with a copy to:
Ameresco Half Moon Bay LLC
c/o Ameresco, Inc.
111 Speen Street, Suite 410
Framingham, MA 01701
Attention: Vice President, Renewable Energy
Telecopier: (508) 661-2201
Telephone: (508) 661-2200
on behalf of Seller.
The designation and titles of the person to be notified or the address of
such person may be changed at any time by written notice delivered in the
manner set forth in this Section 10.3. Any such notice, demand, request, or
cOlTI1TIunication shall be deemed received (i) if delivered by hand by a Pmiy or
sent by facsimile or (ii) upon receipt by the receiving Party if sent by courier or
U.S. mail.
SAN FRAN 90103 (2K) 41
10.4 Captions
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.
10.5 No Third Party Beneficiary
No provision of the Agreement is intended to, nor shall it in any way, inure to
the benefit of any customer, property owner or any other third patty, including
Alameda, so as to constitute any such Person a third-party beneficiary under
the Agreement, or of anyone or more of the terms hereof, or otherwise give
rise to any cause of action in any Person not a Party hereto.
10.6 No Dedication
No undertaking by one Party to the other under any provision of the Agreement
shall constitute the dedication of that Party's system or any portion thereof to '\
the other Party or to the public or affect Seller as an independent entity and not )
a public utility.
\
10.7 Entire Agreement; Integration
This Agreement, together with all Appendices attached hereto, constitutes the
entire agreement between the Parties 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 signed by a
duly authorized officer or representative of the Patties.
10.8 Applicable Law
The Agreement is made in the State of California and shall be interpreted and
govemed by the laws of the State of Califomia and/or the laws of the United
States, as applicable.
42
SANFRAN 90103 (2K)
)
10.9 Venue
The Parties hereby submit to the exclusive jurisdiction of the federal courts for
the NOlihenl District of the State of Cali fomi a; provided, however, that if such
federal comis sitting in the Northem District of the State of Califomia refuse
jurisdiction, the Parties agree to the exclusive jurisdiction of the state courts
sitting in the County of San Francisco, State ofCalifomia.
10.10 Nature of Relationship
The duties, obligations and liabilities of the Parties are intended to be several
and not joint or collective. The Agreement shall not be interpreted or construed
to create an assoc~ation, joint venture, fiduciary relationship or partnership
between Seller and Buyer or to impose any palinership obligation or liability or
any trust or agency obligation or relationship upon either Party. Seller and
Buyer shall not have any right, 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.
) 10.11 Good Faith and Fair Dealing; Reasonableness
)
The Paliies agree 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 Agreement, (i) wherever the Agreement
requires the consent, approval or similar action by a Party, such consent,
approval or similar action shall not be unreasonably withheld or delayed, and
(ii) wherever the Agreement gives a Party a right to determine, require, specify
or take similar action with respect to matters, such determination, requirement,
specification or similar action shall be reasonable.
43 SANFRAN 90103 (2K)
10.12 Severability
Should any provision of the Agreement be or become void, illegal or
unenforceable, the validity or enforceability of the other provisions of the
Agreement shall not be affected and shall continue in full 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
which correspond as closely as possible to the sense and purpose of the
affected provision.
10.13 Confidentiality
All information disclosed by Seller, including without limitation all
engineering documents, designs, specifications and financial information, shall
be kept confidential and shall not be disclosed to any third party except as
provided in this Section 10.13. Buyer acknowledges Seller's requestto hold all
information regarding this Agreement confidential. Buyer shall disclose such
infOlmation to third parties only to the extent required by California law
(including, without limitation, the California Constitution, the California Public )
Records Act and the Brown Act). Notwithstanding the foregoing, either Party
may disclose this Agreement to BFI or its representatives, the Northenl
California Power Agency or its representatives, or to Lenders or potential
Lenders or their representatives; provided that prior to such disclosure, the
recipient shall agree in writing to keep the material confidential under tern.1s no
less stringent than as set forth in this Section 10.13. Buyer also shall be
permitted to disclose this Agreement and related information to the City
Council of Palo Alto and/or the City Council of Alameda for the express
purpose of obtaining approval to execute this Agreement; provided that jn
connection with such disclosure Buyer shall only disclose such information to
the extent required by California law (including, without limitation, the
California Constitution, the CalifoTIlia Public Records Act and the Brown Act).
Each Party shall be bound by its obligations of confidentiality hereunder for a
period of two (2) years from expiration or any earlier tennination of this
Agreement'. N otwithstandiilg anything to the contrary in this Section 10.13,
nothing shall restrict any Party from using or disclosing confidential
infOlmation in any mamler it chooses which (i) is or becomes generally
available to the public other than as a result of a disclosure directly or
indirectly by the disclosing Party or its representative; (ii) was within the using
or disclosing Party's possession prior to it being furnished hereunder,provided )
44 SANFRAN 90103 (2K)
}
)
that such information is not subject to another confidentiality agreement with,
or other contractual, legal or fiduciary obligation of confidentiality to, any
other patty with respect to such infOlmation; (iii) is rightfully obtained by a
Party from third parties authorized to make such disclosure without restriction;
or (iv) is legally required to be disclosed by judicial or other governmental
action as detelmined by such Party's attOTIley acting in good faith (including,
but not limited to, the Califomia Constitution, the Califomia Public Records
Act and the Brown Act), provided that prompt notice of said judicial or other
govemmental action shall have been given to the non-disclosing Patty and that
the non-disclosing Party shall, at its sole cost and expense, be afforded the
opportunity (consistent with the legal obligations of the disclosing Party) to
exhaust all reasonable legal remedies to maintain the confidential information
in confidence.
10.14 Cooperation
The Parties agree to reasonably cooperate with each other in the
implementation and performance of the Agreement. Such duty to cooperate
shall not require either Party to act in a manner inconsistent with its rights
under the Agreement.
10.15 Counterparts
This Agreement 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 agreement and each of, which shall be deemed an original.
[signature page follows]
45
SAN FRAN 90103 (2K)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the day and year first above written.
AMERESCO HALF MOON BAY LLC THE CITY OF PALO ALTO
By Am"11' )n~, it~ Q n:emb" APPROVAL AS TO FORM:
(4 .f;~, J2 i7L By: f I < ,,"'t. " ~ I ('; By:
{V\k~~ 1', -:"
Name: {)(.\.ka.~ Name: Grant Kolling
Title: Vtre f V t. ~ " t-lt-l'\ ..(-Title: Senior Assistant City Attorney
Date: -:) 01.>'\ !.I (Wa S! -:).00; Date: ,
CITY OF PALO ALTO CITY OF PALO ALTO
APPROV AL BY ADMINISTRATIVE SERVICES APPROVAL BY UTILITIES DIRECTOR
DIRECTOR
By: By:
Name: Carl Yeats Name: John Ulrich
Title: Administrative Services Director Title: Utilities Director
Date: Date:
CITY OF PALO ALTO CITY OF PALO ALTO
APPROV AL BY CITY MANAGER APPROVAL BY MAYOR:
By: By:
Name: Frank Benest Name: Jim Burch
Title: City Manager Title: Mayor
Date: Date:
46 SANFRAN 90103 (2K)
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APPENDIXB
FORM OF ATTESTATION
Ameresco Half Moon Bay LLC
Environmental Attribute Attestation and Bill of Sale
Ameresco HalfMoon Bay LLC (tlAmerescotl) hereby sells, transfers and delivers to
________ -,--__ -,-_-,-__ ----:-_----:-____ :--_-:-_ (tlCustomer")
the Environmental Athibutes and Environmental Attribute Reporting Rights associated with the generation of
the indicated energy for delivery to the grid (as such lelln(s) are defined in the
_____________ (identify contract) (the "Contract') dated __ ,200_
between Ameresco and Customer) arising from the generation ·for delivery to the grid of the energy by the
Facility described below:
Facility name and location: Fuel Type:
Capacity (MW):_ Operational Date: ____ _
(for facility that has added renewable capacity, show operational date and amount. of new capacity)
As applicable: CEC Reg. no. _ Energy Admin. ID no. __ Q.F. ID no. _
______ 200
______ 200
______ 200
MWhrs generated
in the amount of one Environmental Athibute or its equivalent for each megawatt hour generated; and Ameresco
further attests, wanants and represents as follows:
i) to the best of its knowledge, the infonnation provided herein is true and con'ect;
ii) its sale to Customer is its one and only sale of the Environmental Attributes and associated
Environmental Attribute RepOiting Rights referenced herein;
iii) the Facility generated and delivered to the grid the energy in the amount indicated as undifferentiated
energy; and
[check one:]
_ iv) Ameresco owns the Facility.
_ iv) to the best of Ameresco's knowledge, each of the Environmental Attributes and Environmental.
Attribute Reporting Rights 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, transfening from Ameresco to Customer all of Ameresco's right, title and interest in
and to the Environmental Attributes and Environmental AttJibute Rep0l1ing Rights associated with the
generation oflhe energy for delivelY to the grid.
Contact Person: __ ~ ____ tel: 1-508-661-2200; fax: 1-508-661-2201
WITNESS MY HAND,
SANFRAN 90103 12K)
AMERESCO HALF MOON BAY LLC
By: Ameresco, Inc., its sole member
By
Its
Date:
B-1
49
APPENDIXC
INSURANCE COVERAGES
At its own expense, Seller shall secure and maintain during the Term the
following insurance with the coverage amounts indicated for occurrences
during and arising out of Seller's performance of this Agreement. Such
insurance shall be placed with responsible and reputable insurance companies
in compliance with Requirements of Law applicable to Seller.
1. Workers' Compensation/Employer's· Liability. Seller shall
maintain Workers' Compensation Insurance and Employer's
Liability Insurance which comply with Requirements of Law
applicable to Seller.
2. Automobile Liability. Seller shall maintain Automobile Liability
Insurance in compliance with Requirements of Law applicable to
Seller, including coverage for owned, non-owned and hired
automobiles for both bodily injury (including death) and property
damage, including automobile liability. contractuaL.endorsement.
and uninsured/underinsured motorist protection endorsements.
3. Third Party Liability. Seller shall maintain third party liability
insurance in compliance with Requirements of Law applicable to
Seller on a project-specific basis covering against legal
responsibility to others asa result of bodily injury, property
damage and personal injury arising from the operation and
maintenance of the Plant. Such policy shall be written with a
limit of liability not less than $10,000,000 and a deductible not to
exceed $10,000. Such liability may be in any combination of
primary and excess/umbrella. Coverage shall include, but not be
limited to, premises/operations, explosion, collapse, underground
hazards, broad form property damage and personal injury
liability. Such coverage shall not contain exclusions for punitive
or exemplary damages.
50 SANFRAN 90103 (2K)
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APPENDIXD
SCHEDULING PROTOCOLS
1. Prior to three (3) workdays before the end of a month, Seller is to provide
to NCP A and Buyer a monthly forecast of loads and/or generation for the
following month. At a minimum, monthly forecasts will be hourly
kilowatt (kW) values by weekday, Saturday, and Sunday/Holiday.
2. No later than 14:00 each Thursday, Seller is to provide a forecast of
loads and/or generation for the following week to the extent different
from the monthly forecast in Paragraph 1. Weeldy forecasts will be
hourly kW values for each hour of the week.
3. Daily modifications to forecasts. Unless otherwise mutually agreed,
Seller may make changes to the Weeldy forecast by providing such
changes to NCPA prior to 08:00 two (2) workdays before the active
scheduling day.
) a. Example: For power that is scheduled for generation or delivery on
Thursday, March 29, changes must be submitted to NCPA no later
than 08:00?n Tuesday, March 27.
4. Hourly modifications to active schedules. Unless otherwise mutually
agreed, Seller may make changes to active schedules by providing such
changes to NCP A with a minimum of 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
multiple hours duration, constitutes one schedule change.
a. Example: For power that is scheduled for generation or delivelY in
hour ending 15:00 (for the period from 14:01 to 15:00), changes
must be submitted to NCPA no later than 11 :00.
5. NCPA is to be notified of all plmmed or forced generation outages.
6. At Seller's request, NCPA will modify generation and load schedules for
unforeseen circumstances in· accordance with the above scheduling
timeline constraints and NCP A Schedule Coordination Agreement.
51 SANFRAN 90103 (2K)
7. All notices and schedules are to be submitted to NCPA by phone, fax or
email to the following persons: Chief DispatcherlScheduler.
8. In the absence of forecasts and schedules as noted above, NCP A will
utilize the most CUlTent infOlmation provided by Seller in the development
and submission of schedules.
SANfRAN 90103 (2K) 52
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EXAMPLE FORM OF DAY-AHEAD SCHEDULE
For: June __ , 2004
Hour Ended: Expected Capability
1 2 __________________________ ..2 _______________________________________________________ 2 ____________________________________________________ _
1 2
4 2
5 2
6 2
J 1
R 1
-.-22 1------10 2
11 2
12 2
13 0
14 0
15 0
10 1
17 2
________________________ ~8_____ _ _______ -------------------_____ .----2 _________________________ _
___________________ _____ _ __ ___ .19______________ __ _________ ____________ ____ _____________ 2 ________________________________ _
20 2
21 2
22 2.
21 2
24 2
Expected Daily Temperatures, F
Low
High
Contact
Information:
Scheduli11g
Coordinator: -
Facility:
CITY:
SANFRAN 90103 (2K)
APPENDIXE
PERFORMANCE TEST
The Seller shall coordinate and schedule, with Buyer and Alameda, a PerfOlmance
Test after completion of all equipment startup and commissioning activities. This
performance test may be performed before completing punch list items. Buyer and
Alameda shall be permitted to witness the PerfOlmance 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
Landfill and Plant and associated facilities, systems and equipment. Seller shall
supply a written copy of the Performance Test results to both Buyer and Alameda
within five (5) business days following the conclusion of the test.
The Perfonnance Test shall continue for one hundred twenty (120) consecutive
hours (the "Test Period") to demonstrate the following:
1) ·Net Generator Output: The power output for each generator shall be recorded
for the Test Period to verify the net initial capacities. This Performance Test shall
be performed for all engine/generators simultaneously and will be considered
successful if the average net output for the Test Period is equal to eighty percent
(80%) of the net Initial Capacity designated in this Agreement. All power
measurements shall be based on a power factor of 0.90.
2) Compliance: The PerfOlmance Test shall also demonstrate the ability of the
Plant to comply with all material safety, system reliability, environmental, and
other requirements of its pelmits, this Agreement, any interconnection agreements,
and the LFG Agreement.
SANFRAN 90103 (2K) 54
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APPENDIXF
SELLER'S SAMPLE QUARTERLY FINANCIAL STATEMENT
Balance Sheets
December 31, 2003 and 2002
ASSETS
Cunent assets:
Cash and cash equivalents
Restricted cash
Accounts receivable
Prepaid and other cunent assets
Total cun-ent assets
Other assets:
Project assets, net
Due from member
Debit issuance costs, net
Total other assets
LIABILITY AND MEMBER'S EQUITY
Cunent liabilities:
Clm-ent pOltion oflong-tenll debt
Accounts payable
Accmed expenses
Total current liabilities
Long-tenll liabilities:
Long-tenn debt, less cunent portion
DefelTed tax liabilities
Totallong-tenn liabilities
Member's equity
SANFRAN 90103 (2K) 55
Statements of Operations
Years Ended December 31, 2003 and 2002
Revenues:
Electricity Sales
Costs of revenue:
Operation and maintenance
Depreciation of proj ect assets
Gross profit (loss)
Operating expenses:
Selling, general and administrative
Operating income (loss)
Interest and other financing costs
Income (loss) before tax benefit (provision)
Income tax benefit(provision)
Net income (loss)
SANFRAN 90103 (2K)
)
)
;
?
) Statements of Cash Flows
Years Ended December 31, 2003 and 2002
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred issuance costs
Deferred taxes
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable
Prepaid expenses
Accounts payable
Due to (from) member
Net cash provided by operating activities
Cash flows from investing activities:
Accounts payable relating to construction activity
Accrued expenses relating to construction activity
Purchase of project assets
, )
Net cash used in investing activities
I
\ , Cash flows from financing activities:
Increase in restricted cash
Capital contributions
Distributions to member
Proceeds from debt issuance
Debt issuance costs
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest
Income taxes
Supplemental disclosure of noncash t.·ansactions:
Accmed purchases of project assets
)
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SANFRAN 9010) (2K)
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