HomeMy WebLinkAboutStaff Report 1441City of Palo Alto (ID # 1441)
Finance Committee Staff Report
Report Type:Meeting Date: 3/1/2011
March 01, 2011 Page 1 of 6
(ID # 1441)
Council Priority: Environmental Sustainability
Title: Agreements for Western GeoPower Renewable Energy
Subject: Utilities Advisory Commission Recommendation to City Council to
Adopt Two Resolutions: (1) Approving An Agreement Terminating the Third
Phase Agreement For Western GeoPower Incorporated Renewable Energy
Power Purchase Agreement, and (2) Approving a new Third Phase Agreement
For Western GeoPower Inc Renewable Energy Power Purchase Agreement for
the Acquisition of Up to 15 Percent of Project Energy over 25 Years at a Cost Not
to Exceed $95 Million
From:City Manager
Lead Department: Utilities
Recommendation
Staff and the Utilities Advisory Commission (UAC) recommend that the Finance Committee
recommend that the City Council approve the Agreement Terminating the Third Phase
Agreement for Western GeoPower Incorporated Renewable Energy Power Purchase Agreement
(Termination Agreement).
Additionally, the UAC recommends that the Finance Committee recommend that the City
Council approve a new Third Phase Agreement for Western GeoPower Inc. Renewable Energy
Power Purchase Agreement.
Executive Summary
The City signed an agreement in 2008 to receive renewable power from Western GeoPower, a
geothermal project in northern California, at a price of $98 per megawatt-hour (MWh). The
project would have provided enough renewable energy for up to 3% of the City’s energy supply
needs. However, at that price the project could not secure financing and staff and the UAC
recommend terminating this agreement. The project has been proposed again, but with a
$113/MWh price. The City could commit to this price now for the same amount of energy in
the original agreement as recommended by the UAC. Staff recommends that the City wait until
it has conducted a more thorough review of alternatives and can make a studied
recommendation on pursuing the project. Staff understands it could get a share of the project
at the $113/MWh price before the end of 2011 from the City of Santa Clara, which has said that
March 01, 2011 Page 2 of 6
(ID # 1441)
it would commit to more of the project now to move the project forward. However, at this
time, Santa Clara has not made any written commitment to offer the City a share of the project
in the future at the same price.
Background
On February 19, 2008, the Council adopted Resolution 8798, approving the Northern California
Power Agency (NCPA) Third Phase Agreement for Western GeoPower renewable energy power
purchase and the City’s participation in the agreement for the purchase of up to 5 average
megawatts of energy within an average procurement price cap of $98 per megawatt-hour
(MWh)(CMR 141:08). The original Third Phase Agreement was executed on May 28, 2008 by
NCPA. NCPA also executed an agreement with Western GeoPower, to purchase the energy
from Western GeoPower’s proposed geothermal project at a price of $98/MWh (equivalent to
9.8 cents per kilowatt-hour). This power would be passed through to participating members,
including Palo Alto, at NCPA’s cost.
The financial crisis of 2008 undermined project financing that Western GeoPower was seeking.
New financing available to Western GeoPower required a larger cash flow leading to their
request for a contract price of $117/MWh. Council approved an amended Third Phase
Agreement with the higher delivery price of $117/MWh on August 3, 2009 (CMR 347:09), but it
was not fully executed as Western GeoPower was shortly thereafter taken over by, and became
a subsidiary of, another company named Ram Power.
Since August 2009, NCPA attempted various negotiated solutions with the developer. Based on
information NCPA provided, staff considered the project an unsuccessful contracting effort and
moved on to meet the 33% Renewable Portfolio Standard (RPS) target by issuing a Request For
Proposals (RFP) in the fall of 2009 that ultimately resulted in two Power Purchase Agreements
(PPAs) with landfill-gas-to-energy projects (San Joaquin and Crazy Horse Canyon) approved by
Council in May 2010 (CMR: 226:10). Currently, qualifying renewable resources comprise about
19 percent of the City’s electric power needs. With three power projects under construction,
contracted qualifying renewable supplies are expected to supply about 27% of the City’s
electric power needs in 2013 if energy efficiency goals are achieved.
Discussion
In late 2010 and early 2011, NCPA negotiated again with Western GeoPower (in its new form as
a subsidiary of Ram Power) and is positioned to replace the original agreements that were to
provide renewable energy output from the project at $98/MWh with new agreements
providing the energy at $113/MWh. Ram Power stated that this price increase is required to
get the project financed and built. To replace the original $98/MWh contracts NCPA requests
participants of the original Third Phase Agreement to execute the attached Termination
Agreement and, if interested, execute a new Third Phase Agreement for $113/MWh power.
Executing the Termination Agreement clears the way for interested members to move ahead
with the new $113/MWh-priced agreements.
March 01, 2011 Page 3 of 6
(ID # 1441)
The City of Santa Clara’s municipal utility, Silicon Valley Power (SVP), plans to initially subscribe
to all unsubscribed shares of the new $113/MWh Third Phase Agreement and later amend the
agreement to allow Palo Alto, in particular, or others, to later participate in the project. SVP
has indicated its willingness to hold this option open until the end of calendar year 2011,
however there is no written agreement memorializing this understanding.
The City has the following options regarding the Western GeoPower project:
1.The City declines to execute the Termination Agreement.In this case, the City would not be
able to enter into the new Third Phase Agreement at the $113/MWh price.In addition, the
other participants may have difficulty executing the new Third Phase Agreement replacing
the one Palo Alto declined to terminate.
2.The City executes the Termination Agreement and:
a.declines to enter into the new Third Phase Agreement at the $113/MWh price at this
time. In this case, SVP has indicated that it would take up as much of the project share
as required for the project to go forward. SVP has verbally indicated that it would offer
Palo Alto a share of the project later in 2011 at the $113/MWh price; or
b.enter into the new Third Phase Agreement at the $113/MWh price. In the new Third
Phase Agreement, the City may specify an upper limit on its participation share. The
final participation level would be determined once all participants execute the new
Third Phase Agreement. For example, the City may define its participation as:
(1)“up to 15%” of the project output, which amounts to about 3.8 average
megawatts (MW), which is enough to meet about 3.3% of the City’s annual
electric needs. This is the maximum share of project output that the City agreed
to in the original $98/MWh agreement;
(2)“up to 10%” of the project output, which amounts to about 2.5 average
megawatts (MW), or enough to meet about 2.2% of the City’s annual electric
needs; or
(3)“up to 30%” of the project output, which amounts to about 7.5 average
megawatts (MW), or enough to meet about 6.6% of the City’s annual electric
needs.
The Termination Agreement has been reviewed by staff and the City Attorney’s office. The new
draft Third Phase Agreement has been reviewed by staff, but it has not yet been finalized by
NCPA.
Staff recommends option 2.a.: executing the Termination Agreement and deferring a final
decision to participate again until later in 2011. Taking this option will result in the termination
of the original $98/MWh-priced Third Phase Agreement in order to facilitate contracting efforts
between NCPA and its other interested members. Staff will work with SVP to be allowed to opt
in to the project sometime before the end of 2011. Later in 2011, after Council approval of the
Long-term Electric Acquisition Plan (LEAP) and further evaluation of this project, staff may
March 01, 2011 Page 4 of 6
(ID # 1441)
recommend that the Council participate in a share of the $113/MWh-priced Third Phase
Agreement for GeoPower output.
At its meeting in February 2011, the UAC reviewed staff’s recommendation and agreed that the
Council should execute the Termination Agreement. The UAC also voted unanimously to
recommend option 2.b.(1): immediately entering into the new Third Phase Agreement at the
$113/MWh price for a maximum share of up to 15% of the project.
Preliminary Evaluation of the Western GeoPower Project at a Flat $113/MWh price
Staff has not had time to thoroughly evaluate the attributes of the agreement and the new
price of $113/MWh. A preliminary evaluation of how a 15% share of the Western GeoPower
project would impact Palo Alto’s resource mix, renewable resource portfolio, rates and RPS
targets can be found in Attachment F.
Staff’s Recommendation
Since it has been about 16 months since the City tested the renewable market independently
with an RFP, staff cannot say with certainty that the price offered for the Western GeoPower
project is the best available. In addition, although the UAC and the Finance Committee
recommend the Council approve the proposed updated Long-term Electric Acquisition Plan
(LEAP), the Council has not yet considered LEAP so approving the project is not consistent with
Council direction from May 2010 to re-examine the policies and goals used in the alternate
energy program, including energy efficiency plans and resource acquisition policies and plans
prior to making any further recommendations on the acquisition of new renewable resources.
Staff has a verbal agreement with Silicon Valley Power (SVP) to allow City to participate in the
Western GeoPower project if the participation commitment is made by the end of 2011. This
will permit an in depth analysis by staff and time to complete a thorough review and
recommendation.
Commission Review and Recommendation
On February 2, 2011, staff presented a recommendation to the UAC to execute the Termination
Agreement and to wait before deciding whether to agree to the new $113/MWh price for the
Western GeoPower project.
The UAC agreed with staff’s recommendation to execute the Termination Agreement as a
necessary step to allow the project to go forward. In addition, the UAC was in favor of
immediately executing a new Third Phase Agreement for the Western GeoPower project at the
$113/WMh price rather than wait to join the project at a later date, after a more thorough
evaluation and completion of outstanding planning activities, specifically the LEAP and Utilities
Strategic Plan updates.
The reasons commissioners provided for recommending moving forward now with the new
Third Phase Agreement included the following: the $113/MWh price appears to be very
competitive as it is essentially the same price as the landfill gas contracts Council approved last
March 01, 2011 Page 5 of 6
(ID # 1441)
year, the Western GeoPower project does not have the environmental issues regarding landfill
operation that were raised when those landfill gas contracts were approved, the Western
GeoPower project would add diversity to the renewable resource portfolio, which now contains
only wind and landfill gas projects, the project was previously approved by Council and the
price change is reasonable given what we know about the prices of renewable energy projects,
the project would move the City closer to achieving its RPS goals, adding the project to the
portfolio still leaves room for additional energy efficiency or local project that may occur as a
result of a future feed-in tariff program, there is no need to take more time to evaluate the
merits of this project or to issue another request for proposals to determine if the price is
competitive.
After discussion, the commission voted unanimously (6-0) to recommend that the Council
execute the Termination Agreement and enter into the new Third Phase Agreement at the
$113/MWh price at a participation level of up to 15% of the project. The draft notes from the
UAC’s February 2, 2011 meeting are available as Attachment F.
Resource Impact
Executing the Termination Agreement has no resource impact.
Policy Implications
Adoption of the Resolution authorizing the Termination Agreement has no policy implications.
Environmental Review
Execution of these agreements does not meet the definition of a project, pursuant to section
21065 of the California Environmental Quality Act (CEQA). However, the City intends to receive
output from projects that will constitute a project for the purposes of CEQA. Project
developers will be responsible for acquiring necessary environmental reviews and permits on
projects to be developed.
Attachments:
·Attachment A: Resolution Terminating Third Phase Agreement for Western GeoPower Inc
Renewable Energy Power Purchase Agreement (DOC)
·Attachment B: Agreement Terminating the Third Phase Agreement for Western GeoPower
Incorporated Renewable Energy Power Purchase Agreement (DOC)
·Attachment C: Draft 2011 Third Phase Agreement for Western GeoPower Inc. Renewable
Energy Power Purchase Agreement (DOC)
·Attachment D: 2008 Third Phase Agreement for Western GeoPower Incorporated
Renewable Energy Power Purchase Agreement (DOC)
·Attachment E: Excerpted draft notes from the UAC's February 2, 2011 meeting (DOC)
·Attachment F: Preliminary Evaluation of the new Western GeoPower Project (DOC)
March 01, 2011 Page 6 of 6
(ID # 1441)
Prepared By:Tom Kabat, Manager
Department Head:Valerie Fong, Director
City Manager Approval: James Keene, City Manager
Not Yet Approved
1
110223 jb 0073505
Resolution No ____
Resolution of the Council of the City of Palo Alto Approving
Agreement Terminating the Third Phase Agreement for
Western GeoPower Incorporated Renewable Energy Power
Purchase Agreement
WHEREAS, the City of Palo Alto (the “City”), a municipal utility and a chartered
city, is a member of the Northern California Power Agency (“NCPA”), and the City and other
NCPA members have collectively entered into a both a Power Purchase Agreement (the “PPA”)
with Western GeoPower Incorporated (“WGI”) A fully owned subsidiary of Ram Power Corp
for a term of twenty (20) years and at a price of $98.00 per megawatt-hour (“$98/MWh”)and a
Third Phase Agreement for the Western GeoPower, Inc. Geysers Geothermal Project Renewable
Energy Power Purchase Agreement (the “TPA”), which TPA allocates all costs and benefits of the
PPA to participating NCPA members;and
WHEREAS, the underlying project has not been built since the financial crisis of
2009 interfered with WGI’s ability to finance the project at the cash flow provided by the
$98/MWh PPA; and
WHEREAS, WGI has subsequently been taken over by Ram Power Corp and is now
a fully owned subsidiary of Ram Power Corp; and
WHEREAS, WGI and NCPA have negotiated a new replacement PPA with a 25
year term and a $113/MWh price that is attractive to several NCPA members and would be
financeable to build the eligible renewable resource; and
WHEREAS, the City desires to complete certain electric resource planning work
prior to making new PPA commitments; and
WHEREAS, The City of Santa Clara’s electric utility has offered to initially
subscribe to all available shares and to subsequently amend their participation if requested before
December 31, 2011 to allow Palo Alto to subscribe to an up to 15% share of the project at that
time if the City then desires; and
WHEREAS, The City of Santa Clara’s electric utility does not require the City to
subscribe to a share of the project at any time; and
WHEREAS, The NCPA Commission, on January xx, 2011, approved the Agreement
Terminating the Third Phase Agreement for Western GeoPower Incorporated Renewable Energy
Power Purchase; and
WHEREAS, The NCPA Commission, on February xx, 2011, approved the Renewable
Energy Power Purchase Agreement between Northern California Power Agency and Western
GeoPower Incorporated; and
Not Yet Approved
2
110223 jb 0073505
WHEREAS, The NCPA Commission, on March xx, 2011, approved the Third Phase
Agreement for the Western GeoPower, Inc. Geysers Geothermal Project Renewable Energy
Power Purchase Agreement (the “new TPA”), which new TPA allocates all costs and benefits of
the PPA to participating NCPA members; and
WHEREAS, The City’s cooperation in terminating the Third Phase Agreement for
Western GeoPower Incorporated Renewable Energy Power Purchase Agreement is needed to
facilitate the replacement of the prior un-financeable $98/MWh PPA with a new financeable
$113/MWh PPA for participating members not including Palo Alto at this time;
NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE
as follows:
SECTION 1. The Council hereby approves Agreement Terminating the Third Phase
Agreement for Western GeoPower Incorporated Renewable Energy Power Purchase Agreement
and delegates to the City Manager the authority to sign the contract on behalf of the City.
SECTION 2. The Council finds that the adoption of this resolution does not meet
the definition of a project under Section 21065 of the California Environmental Quality Act and,
therefore, no environmental assessment is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:APPROVED:
____________________________________________________________
City Clerk Mayor
APPROVED AS TO FORM:______________________________
City Manager
______________________________
Sr. Asst. City Attorney ______________________________
Director of Utilities
______________________________
Director of Administrative Services
AGREEMENT TERMINATING
THE THIRD PHASE AGREEMENT
FOR
WESTERN GEOPOWER INCORPORATED
RENEWABLE ENERGY POWER PURCHASE AGREEMENT
THIS TERMINATION AGREEMENT (the “Agreement”) is entered into this ___ day of
_______, 2011 by and between the Northern California Power Agency, a joint powers agency of
the State of California (“NCPA”) and those of its Members who entered into the Third Phase
Agreement for Western GeoPower Incorporated Renewable Energy Power Purchase Agreement
on May 6, 2008 (“Participants”)(collectively, the “Parties”).
RECITALS:
WHEREAS, on or about May 6, 2008, NCPA and the Participants executed the Third
Phase Agreement for Western GeoPower Incorporated Renewable Energy Power Purchase
Agreement (“Third Phase Agreement”);
WHEREAS, on May 16, 2008, NCPA executed a power purchase agreement (“PPA”)
with Western GeoPower Incorporated (“Western Geo”) to purchase the entire expected electric
output from a new Western Geo geothermal project (“Project”) located in the Geysers
Geothermal Field located in Sonoma and Lake Counties in the State of California;
WHEREAS, the purpose of the Third Phase Agreement was to provide the means
necessary for NCPA to be able to enter into the PPA on behalf of the Participants and to enable
and obligate the Participants to take delivery of and pay for such electricity as might be
generated by the Project;
WHEREAS, the price in the PPA for energy generated by the Project was $98 per
megawatt hour (“Project Price”);
WHEREAS, due to financial pressures, Western Geo was never able to build the Project,
and has stated that it is unable to provide energy to NCPA at the Project Price;
WHEREAS, Western Geo has proposed revising the PPA to reflect a change in the
Project Price to $113 per megawatt hour (“Amended Price”), and not all Participants wish to
participate in the Project for the Amended Price; and
WHEREAS, NCPA and the Participants have agreed to terminate the Third Phase
Agreement, and those Participants desiring that NCPA enter into an amended and restated PPA
(“Amended and Restated PPA”)with Western Geo for energy at the Amended Price will enter
into a new third phase agreement (“North Geysers Third Phase Agreement”)to cover any costs
and obligations associated with the Amended and Restated PPA on an ongoing basis.
NOW, THEREFORE, the Parties hereby agree as follows:
1564960.4 2
1.Termination of the Third Phase Agreement. The Third Phase Agreement, and all
rights and obligations of the Parties pursuant to the Third Phase Agreement, except such matters
as survive its termination, including without limitation Section 10.5 thereof (“Surviving
Obligations”), are hereby terminated effective as of the Effective Date.The Effective Date shall
be the Effective Date of the North Geysers Third Phase Agreement.
2.Mutual Release.Except as to the Surviving Obligations, which are not
waived or relinquished by the Parties, the Parties hereby release and discharge one another and
their successors and assigns, agents, employees and representatives from any and all obligations,
claims, actions and liabilities, whether past, present or future, of whatever character, known or
unknown, by reason of or existing in connection with the Third Phase Agreement (the “Settled
Obligations”). The Parties acknowledge that they have read and understand the terms of Section
1542 of the California Civil Code, which provides as follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his or her favor at the time
of executing the release, which if known by him or her must
have materially affected his or her settlement with the debtor.
The Parties hereby waive and relinquish all rights and benefits they, and each of them, may have
under Civil Code Section 1542 with respect to the Settled Obligations, and acknowledge that the
consequence of such waiver and relinquishment is that no Party may make a claim against
another Party for damages that may be discovered in the future with respect to the Settled
Obligations.
Initials:_________________
Participant Agency
4. Payment of Outstanding Costs by Participants. The Participants each agree to pay
or reimburse NCPA for any and all costs and expenses incurred to date under the Third Phase
Agreement, pursuant to each Participant’s Participation Percentages, as that term is defined in
the Third Phase Agreement.
5. Other Documents. Each Party shall cooperate fully in the execution of any and all
other documents and in the completion of any additional actions that may be necessary or
appropriate to give full force and effect to the terms and intent of this Agreement.
6.Amendment. This Agreement constitutes the entire agreement between the
Parties as to the subject matter hereof and may only be amended by a writing signed by all
Parties.
7.Invalidity. If any term, provision or application of this Agreement is held invalid
3
or unenforceable, the remainder of this Agreement and any application of the terms and
provisions shall not be affected thereby, but shall remain valid and enforceable.
8.Non-waiver.The waiver of any breach of any of the provisions of this Agreement
by either Party shall not constitute a continuing waiver or a waiver of any subsequent breach by
the other Party either of the same or of another provision of this Agreement.
9.Attorneys’Fees.Should any litigation, including arbitration proceedings, be
commenced between the Parties concerning this Agreement or the rights and duties of either of
the Parties in relation thereto, the party prevailing in such litigation or arbitration, in addition to
such other relief as may be granted in such proceeding, shall receive from the losing party a
reasonable sum as and for his attorney fees in the litigation or arbitration, the amount of which
shall be determined by the Court or the arbitrator.
10.Notices.Any notice required to be given pursuant to this Agreement, or desired
to be given in connection with this Agreement, shall be given in writing as provided in the Third
Phase Agreement.
11.Counterparts. This Agreement may be signed in counterparts and shall be
governed by and construed in accordance with the laws of the State of California.
12. Warranty of Authority. The Parties each hereby represent and warrant that
he/she/it has the authority to enter into this Agreement. Each signatory to this Agreement hereby
warrants that he/she is duly authorized to execute this Agreement on behalf of and as the lawful
act and deed of the entity for which he or she signs.
13.Governing Law/Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to principles of conflicts of
laws. Any action to enforce or interpret this Agreement shall be filed in the Superior Court of
Placer County, California or in the Federal District Court for the Eastern District of California.
1564960.4 4
Executed at Placer County, California, on day and year first above set forth.
NORTHERN CALIFORNIA
POWER AGENCY
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
CITY OF ALAMEDA
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
CITY OF LOMPOC
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
CITY OF PALO ALTO
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
PORT OF OAKLAND
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
5
BAY AREA RAPID TRANSIT AUTHORITY
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
TRUCKEE DONNER REPUBLIC UTILITY
DISTRICT
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
CITY OF LODI
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
CITY OF ROSEVILLE
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
SILICON VALLEY POWER
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
1
THIRD PHASE AGREEMENT
FOR
WESTERN GEOPOWER, INC. GEOTHERMAL PROJECT
RENEWABLE ENERGY POWER PURCHASE AGREEMENT
DRAFT THIRD PHASE AGREEMENT
1563911.2 i
TABLE OF CONTENTS
Section………………………………………………………………………….…….Page
RECITALS..…......…………..……………………………………………1
1.Definitions…………………..……………………………………………2
2.Effectiveness of Agreement…………………………………………...8
3.Delivery of Electricity / Allocation of Resource Adequacy…………..
Capacity and Environmental Attributes…….…….………………….8
4.Cooperation and Further Assurances………….……………..….…….8
5.Payment Obligations, Security Account, Invoicing……….…….........9
6.Administration of Agreement………………………………………...13
7.Admission of New Participants………….…………………...……….14
8.Withdrawal of Participants……………………………………………15
9.Term and Termination………….……………………………………..15
10.Default and Remedies…...…………………………………………….16
11.Miscellaneous…………………………………………………………..20
EXHIBIT A RENEWABLE ENERGY POWER PURCHASE AGREEMENT
between NORTHERN CALIFORNIA POWER AGENCY and
WESTERN GEOPOWER INCORPORATED
EXHIBIT B PARTICIPATION PERCENTAGES
DRAFT THIRD PHASE AGREEMENT
1563911.2 i
This Third Phase Agreement for the Western GeoPower, Inc. Geysers Geothermal Project
Renewable Energy Power Purchase Agreement (this “Agreement”) is between the Northern
California Power Agency, a joint powers agency of the State of California (“NCPA”) and those of
its Members who execute this Agreement (“Participants”). NCPA and the Participants are
referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
A.WHEREAS, NCPA and the Participants are interested in purchasing additional
renewable electric capacity and energy for the benefit of the Participants’ customers;and
B.WHEREAS, on or about May 6, 2008, NCPA and certain of its members executed
the “Third Phase Agreement for Western Geopower Incorporated Renewable Energy Power
Purchase Agreement”("the Previous Third Phase Agreement"), by which which NCPA agreed, on
behalf of those members executing the Previous Third Phase Agreement, to enter into a power
purchase agreement (“PPA”) with Western GeoPower, Inc. (“Western GeoPower”)to purchase the
entire expected Project Output from a new WesternGeoPower geothermal project located in the
Geysers Geothermal Field in the Mayacamas Mountains of Sonoma and Lake Counties in the State
of California (“the Project”); and
C.WHEREAS, on May 16, 2008, in conformance with the Previous Third Phase
Agreement, NCPA executed a PPA with Western GeoPower to purchase the entire expected
Project Output at a price of $98 per megawatt hour; and
D.WHEREAS, due to certain financial conditions, WesternGeoPower was unable to
build the Project and has proposed that the price for energy be increased, which proposal is
acceptable to NCPA and to the Participants, who desire that NCPA enter into a revised PPA with
Western GeoPower; and
1563911.2 2
E.WHEREAS, the Previous Third Phase Agreement has been terminated by an
Agreement Terminating the Third Phase Agreement for Western GeoPower Incorporated
Renewable Energy Power Purchase Agreement, dated _____________, 2011; and
F.WHEREAS, on _____,2011 NCPA and Western GeoPower propose to entere into an
Amended and Restated Renewable Energy Power Purchase Agreement (“Amended PPA”)by
which NCPA would agree to purchase the entire expected Project Output of the Project from
Western GeoPower at a price of $113 per megawatt hour;and
G.WHEREAS, NCPA and the Participants wish to enter into this Agreement to
provide all means necessary for NCPA to fulfill obligations incurred on behalf of NCPA and the
Participants pursuant to the Amended PPA and to enable and obligate the Participants to take
delivery of and pay for such electricity and to pay NCPA for the costs of undertaking the foregoing
activities;
H.WHEREAS, NCPA and its members have (or will have) entered into the Facilities
Agreement, dated September 22, 1993, which provides for services which NCPA shall perform for
its members, and for the provisions to be contained in third phase agreements such as this
Agreement;
I.WHEREAS, NCPA and its members have (or will have) entered into the Scheduling
Coordination Program Agreement (“SCPA”), dated August 28, 2002, which provides for CAISO
scheduling services and cost allocations which NCPA shall perform for its members;
NOW, THEREFORE, in consideration of the foregoing, and the mutual promises and
covenants hereinafter set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree and intend to be legally bound, as
follows:
Section 1.Definitions.
1.1 Definitions.Whenever used in this Agreement (including the Recitals
hereto), the following terms shall have the following respective meanings:
1563911.2 3
1.1.1 “Agreement” means this Third Phase Agreement for Western
GeoPower, Inc. Geothermal Project, including all Exhibits attached hereto, as the same may be
amended from time to time in accordance with the terms and conditions hereof.
1.1.2 “Amended PPA” means the Amended and Restated Renewable
Energy Power Purchase Agreement between NCPA and Western GeoPower, Inc., dated as of
______, attached hereto as Exhibit A.
1.1.3 “Annual Budget” means the budget for the ensuing Budget Year
adopted by the Commission, as it may be amended from time to time.
1.1.4 “Associate Member” means an associate member of NCPA
admitted to NCPA in accordance with Article IV, Section 7 of the Joint Powers Agreement.
1.1.5 “Budget Year” means the NCPA fiscal year; currently the twelve
month period beginning July 1 and ending on the next following June 30.
1.1.6 “Business Day” means any day except a Saturday, Sunday, or a
Federal Reserve Bank holiday. A Business Day shall open at 8:00 a.m. and close at 5:00 p.m. local
time.
1.1.7 “Capacity Attributes” means any current or future defined
characteristic, certificate, tag, credit, or ancillary service attribute, whether general in nature or
specific as to the location or any other attribute of the Project, intended to value any aspect of the
capacity of the Project to produce Energy or ancillary services, including, but not limited to, any
accounting construct so that the full capacity of the Project may be counted toward a resource
adequacy requirement or any other measure by the CPUC, the CAISO, the FERC, or any other
entity invested with the authority under federal or state law, to require NCPA to procure, or to
procure at NCPA’s expense, Resource Adequacy Capacity or other such products.
1.1.8 “Claims” has the meaning set forth in Section 11.2.
1.1.9 “Commission”means the NCPA Commission.
1563911.2 4
1.1.10 “Constitutive Documents” means, with respect to NCPA, the
Amended and Restated Joint Powers Agreement and any resolutions or bylaws adopted
thereunder, and with respect to each Participant, the California Government Code and Public
Utilities Code,and other statutory provisions applicable to such Participant, any applicable
agreements, charters, contracts or other documents concerning the formation, operation or
decision making of such Participant, including, if applicable, its City Charter, and any codes,
ordinances, bylaws, and resolutions adopted by such Participant’s governing body.
1.1.11 “Defaulting Party” has the meaning set forth in Section 10.1.
1.1.12 “Effective Date” has the meaning set forth in the Section 9 of this
Agreement.
1.1.13 “Electric System” means, with respect to each Participant, all
properties and assets, real and personal, tangible and intangible, of the Participant now or
hereafter existing, used or pertaining to the generation, transmission, transformation, distribution
or sale of electric capacity and energy, or the utilization of such, including all additions, extensions,
expansions, improvements and betterments thereto and equipment thereof; provided, however,
that to the extent the Participant is not the sole owner of an asset or property or to the extent that
an asset or property is used in part for the above described purposes, only the Participant’s
ownership interest in such asset or property or only the part of the asset or property used for
electric purposes shall be considered to be part of its Electric System.
1.1.14 “Energy” means the electricity generated by the Generating Facility
pursuant to this Agreement, as expressed in units of KWh or MWh as measured at the meter(s), as
that term is defined the PPA.
1.1.15 “Environmental Attributes" means any and all credits, benefits,
emissions reductions, offsets, and allowances, howsoever entitled, directly attributable to the
power purchase. 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 (CO2),
1563911.2 5
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 Earth’s climate by trapping heat in the atmosphere; and (3) the reporting rights to
these avoided emissions such as Green Tag Reporting Rights. Environmental Attributes do not
include: (1) any Energy, capacity, reliability or other power attributes; (2) production tax credits
associated with the construction or operation of the energy Projects and other financial incentives
in the form of credits, reductions, or allowances associated with the Project that are applicable to a
state or federal income taxation obligation;(3) fuel-related subsidies or "tipping fees" that may be
paid to Seller to accept certain fuels, or local subsidies received by the generator for the destruction
of particular pre-existing pollutants or the promotion of local environmental benefits; or (4)
emission reduction credits encumbered or used by the Unit(s) for compliance with local, state, or
federal operating and/or air quality permits.
1.1.16 “Event of Default” has the meaning set forth in Section 5.5.3 and
Section 10.1.
1.1.17 “Generating Facility” means Western GeoPowers, Inc.’s electricity
generating facility as more particularly described in Exhibit 2 [Description of Generating Facility]
of the Amended PPA, together with all materials, equipment systems, structures, features and
improvements necessary to produce electricity at such facility, specifically including the site, land
rights, mineral rights and interests in land.
1.1.18 “Joint Powers Agreement” means the Amended and Restated
Northern California Power Agency Joint Power Agreement dated January 1, 2008, establishing
NCPA, as the same may be amended from time to time.
1.1.19 “Member” means any Member of NCPA or Associate Member of
NCPA.
1.1.20 “MW” means megawatt.
1.1.21 “MWh” means megawatt hour.
1563911.2 6
1.1.22 “NCPA” has the meaning set forth in the preamble hereto.
1.1.23 “Participation Percentage” has the meaning, with respect to each
Participant,the percentage of the total capacity of the Project, and the Energy associated with such
capacity, to which such Participant is entitled pursuant to the terms of this Agreement. The Project
Participation Percentage for each Participant shall be in the percentage set forth in Exhibit B,
attached hereto and incorporated herein. Exhibit B shall be amended from time to time in
accordance with this Agreement.
1.1.24 “Project” refers to the Western Geopower project to develop,
finance, operate and maintain the Generating Facility which is the subject of the Amended PPA.
1.1.25 “Project Cost Allocation” means the Project Costs allocated to the
Participants in the Annual Budget.
1.1.26 “Project Costs” means any and all costs, directly or indirectly,
incurred by NCPA as a result of entering into the Amended PPA. Project costs include, but are not
limited to related legal fees and associated staff time, administrative and general overhead costs,
scheduling coordination costs, charges for transmission, transmission related costs and costs
associated with the Amended PPA or other NCPA associated Agreements, including the Facilities
Agreement and the SCPA or a successor agreement.
1.1.27 “Project Output” means all Energy generated pursuant to the
Amended PPA from the geothermal Project currently being developed by Western GeoPower in
conjunction with this Project,and related Environmental Attributes and Capacity Attributes;
1.1.28 “Participant” has the meaning set forth in the preamble hereto.
1.1.29 “Party” or “Parties” has the meaning set forth in the preamble
hereto; provided that “third parties” are entities that are not party to this Agreement.
1.1.30 “Resource Adequacy Capacity” is that capacity in MWs that has
been approved by each Participant as capacity available to ensure that adequate resources are
1563911.2 7
available to meet peak demand and operating and planning reserves for the purposes of local area
and system reliability.
1.1.31 “Revenues” means, with respect to each Participant, all income,
rents, rates, fees, charges, and other moneys derived by the Participant from the ownership or
operation of its Electric System, including, without limiting the generality of the foregoing, (a) all
income, rents, rates, fees, charges or other moneys derived from the sale, furnishing and supplying
of electric capacity and Energy and other services, facilities, and commodities sold, furnished, or
supplied through the facilities of its Electric System;(b) the earnings on and income derived from
the investment of such income, rents, rates, fees, charges or other moneys to the extent that the use
of such earnings and income is limited by or pursuant to law to its Electric System;and (c) the
proceeds derived by the Participant, directly or indirectly, from the sale, lease or other disposition
of all or a part of the Electric System. The term “Revenues” shall not include:(i) customers’
deposits or any other deposits subject to refund until such deposits have become the property of
the Participant or (ii) contributions from customers for the payment of costs of construction of
facilities to serve them.
1.1.32 “Scheduling Protocols” means the applicable provisions of the
SCPA, or successor document and any other contractual or other arrangements between NCPA
and the relevant Participant concerning the scheduling, delivery and metering of the Amended
PPA.
1.1.33 “Security Account” means the account established by NCPA and
funded by the Participants in accordance with Section 5.3, the funds of which are available for use
by NCPA in accordance with the terms and conditions hereof.
1.1.34 “Term” has the meaning set forth in Section 9.
1.2 Rules of Interpretation. As used in this Agreement (including the Recitals
hereto), unless in any such case the context requires otherwise: the terms “herein,” “hereto,”
“herewith” and “hereof” are references to this Agreement taken as a whole and not to any
particular provision; the term “include,” “includes” or “including” shall mean “including, for
1563911.2 8
example and without limitation;” and references to a “Section,” “subsection,” “clause,” or
“Exhibit” shall mean a Section, subsection, clause or Exhibit of this Agreement, as the case may be.
All references to a given agreement, instrument or other document shall be a reference to that
agreement, instrument or other document as modified, amended, supplemented and restated
through the date as of which such reference is made, and reference to a law, regulation or
ordinance includes any amendment or modification thereof. A reference to a “person” includes
any individual, partnership, firm, company, corporation, joint venture, trust, association,
organization or other entity, in each case whether or not having a separate legal personality and
includes its successors and permitted assigns. The singular shall include the plural and the
masculine shall include the feminine, and vice versa.
Section 2.Effectiveness of Agreement.This Agreement shall be effective as to each
Participant as of the Effective Date upon execution by the Participant, as described in Section 9
below.
Section 3.Delivery of Electricity/Allocation of Resource Adequacy Capacity and
Environmental Attributes. By executing this Agreement, each Participant acknowledges and
agrees to be bound by the take-or-pay process contained in or referenced herein. Any electricity
delivered to NCPA under the PPA shall be delivered to each Participant in proportion to such
Participant’s Participation Percentage and each Participant shall accept and pay for its relevant
percentage of such Energy. To the extent Participant is unable to accept such deliveries in full,
NCPA shall dispose of such surplus in its discretion, in such a manner as to attempt to maximize
Participant value. Notwithstanding the above, NCPA may allocate capacity and Energy procured
through the Amended PPA among the Participants in such percentages as NCPA may, in its
reasonable discretion,determine are necessary, desirable, or appropriate, in order to accommodate
Participant Transfer Rights pursuant to Section 7, herein. Such Energy shall be scheduled for the
Participants in accordance with the Scheduling Protocols. Resource Adequacy Capacity and
Environmental Attributes obtained by NCPA as a result of performance under this Agreement
shall likewise be allocated to each Participant by its Participation Percentage.
1563911.2 9
3.1 Payments to Counterparty.NCPA shall pay all costs incurred hereunder
using operating funds or Security Account funds, paid to NCPA in accordance with Section 5, or
such other sources as may be agreed upon in writing by the Parties from time to time.
Section 4.Cooperation and Further Assurances.Each of the Parties agrees to provide such
information, execute and deliver any instruments and documents and to take such other actions as
may be necessary or reasonably requested by any other Party which are not inconsistent with the
provisions of this Agreement and which do not involve the assumption of obligations other than
those provided for in this Agreement, in order to give full effect to this Agreement and to carry out
the intent of this Agreement.
Section 5.Payment Obligations, Security Account, Invoicing.
5.1 Participant Payment Obligations.Each Participant agrees to pay to NCPA
each month its respective portion of the Project Costs. In addition, each Participant shall maintain
working capital in accordance with NCPA’s Annual Budget, and maintain its Security Account as
provided in this Agreement.
5.2 Calculation of and True-Up for Project Costs.Upon the conclusion of a
Budget Year,NCPA shall compare each Participant’s payment of estimated Project Costs with the
actual Project Costs incurred on behalf of each Participant such that overpayments will be credited
to, and underpayments will debited to,the Participant’s account in accordance with NCPA’s
Annual Budget settlements.
5.3 Security Account.
5.3.1 Initial Amounts. NCPA shall notify each Participant three (3)
months prior to the expected initial delivery of Energy of the initial security amounts which
Participant shall be obligated to pay for under this Agreement. Each Participant shall ensure that
sufficient funds are on deposit in the Security Account equal to the highest (3) months of the
immediately following (12) months of estimated Project Costs; provided, however, that such
deposit may be satisfied, in whole or in part, either in cash,by posting an irrevocable standby letter
of credit or furnishing any other negotiable instrument satisfactory to NCPA’s General Manager,
1563911.2 10
exercising his or her reasonable discretion. Such Security Account will be seaprate and apart from
any other security account held by NCPA on behalf of a Participant.
5.3.2 Subsequent Deposits.Periodically, and at least quarterly, NCPA
shall review and revise its estimate of all costs for which each Participant shall be obligated to pay
for under this Agreement for the succeeding twelve (12) months. Following such review, NCPA
shall determine whether each Participant has a sufficient balance in the Security Account. To the
extent that any Participant’s balance in the Security Account is greater than one hundred and ten
percent (110%) of the amount required herein, NCPA shall credit such amount as soon as
practicable to the Participant’s next following invoice. To the extent that any Participant’s balance
in the Security Account is less than ninety percent (90%) of the amount required herein, NCPA
shall add such amount as soon as practicable to such Participant’s next invoice. Credits or
additions shall not be made to Participants who satisfy these Security Account requirements in
whole, through the use of a letter of credit, provided that the amount of the letter of credit shall be
adjusted in a like manner to assure an amount equal to the highest three (3) months of estimated
Project Costs.
5.3.3 Use of Security Account Funds.NCPA may use any and all funds
deposited into the Security Account to pay any costs it incurs hereunder, including making
payments to the counterparty under the Amended PPA. NCPA may use any and all funds
without regard to any individual Participant’s balance in the Security Account or proportionate
share of Project Costs and irrespective of whether NCPA has issued an invoice for such costs to the
Participants or whether a Participant has made timely payments of invoices. Should a Participant
have satisfied its Security Account requirements, in whole or in part, by posting a letter of credit,
NCPA may draw on such letter of credit to satisfy Participant’s obligations hereunder.
5.3.4 Emergency Additions.In the event that the funds are withdrawn
pursuant to section 5.3.3, or if the Security Account is insufficient to allow payment of an invoice,
demand, request for further assurances by third parties, or Claims,NCPA shall notify all
Participants and then prepare and send a special or emergency assessment to the Participants.
Each Participant shall pay to NCPA such assessment when and if assessed by NCPA within two
1563911.2 11
(2) Business Days of the invoice date of the assessment or consent to and direct NCPA to draw on
any existing letter of credit Participant has established for such purposes.
5.3.5 Accounting and Interest.NCPA shall maintain a detailed
accounting of each Participant’s deposits into and shares of withdrawals from the Security
Account. Interest earned on the Security Account shall be proportionately credited to the
Participants in accordance with their Security Account balances. Any losses in the Security
Account caused by early termination of investments shall be allocated among the Participants in
accordance with their proportionate Participation Percentages.
5.3.6 Return of Funds. On the termination of this Agreement with
respect to a Participant in accordance with this Agreement, the affected Participant or Participants
may apply to NCPA for the return of their share of Security Account funds ninety (90) days after
the effective date of such termination or withdrawal. NCPA shall, in its sole discretion, as
determined by the General Manager, estimate the then outstanding liabilities of the Participant(s),
including any estimated contingent liabilities and shall retain all such funds until all such liabilities
have been fully paid or otherwise satisfied in full. The balance of the Participant’s share of the
Security Account will be refunded to the Participant.
5.3.7 Default Relating to Security Account.In addition to any
other remedy available in this Agreementor in law or equity, in the event of an Event of
Default relating to the Security Account, NCPA shall have those rights provided in Section
10.4.4 and the Participant agrees to take the actions specified in that section to cause such
Event of Default.
5.4 Invoicing.
1563911.2 12
5.4.1 Invoices.As part of NCPA’s regular, monthly, advance billing or
by separate special invoice, as required in the circumstances, NCPA will issue an invoice to each
Participant for its proportionate share of the Project Costs due (or any adjustments thereto) based
on Sections 5.1 and 5.2 above. Such invoices may include estimated costs and estimated settlement
and meter data. Each invoice shall include: (i) the total Project Costs attributable to the activities
under this Agreement for such month and the relevant Participant’s share thereof; (ii) the quantity
of Energy, Resource Adequacy Capacity and Environmental Attributes delivered to such
Participant (or an estimate thereof) and the unit price for such Energy; (iii) appropriate settlement
and meter data (or an estimate thereof);and (iv)any adjustments to prior invoices required based
on actual data received that was estimated in a previous invoice. NCPA may also invoice an
amount, if any, that NCPA has paid or reasonably expects to pay using funds available in the
Security Account; and amounts due from (or credited to) such Participant under Section 5.3.2.
5.4.2 Payment of Invoices.All invoices delivered by NCPA hereunder
are due and payable on the date indicated on such invoice;provided, however, that any amount
due on a day other than a Business Day may be paid on the following Business Day. NCPA may
apply a Participant’s share of the Security Account to the payment of all or any portion of an
invoice issued to such Participant, provided that application of such funds from the Security
Account shall not relieve the Participant from any late payment charges pursuant to Section 5.4.3.
To the extent that NCPA applies funds from the Security Account to pay an amount due under an
invoice, following receipt of payment of such invoice by the relevant Participant, NCPA shall
deposit the relevant portion of the payment into the Security Account and credit such deposit to
such Participant.
5.4.3 Late Payments.Any amount due and not paid by a Participant in
accordance with Section 5.4.2 shall bear interest computed on a daily basis until paid at the lesser
of (i) the per annum prime rate (or reference rate) of the Bank of America NT&SA then in effect,
plus two percent (2%) or (ii) the maximum rate permitted by law.
5.5 Settlement Data and Examination of Books and Records.
1563911.2 13
5.5.1 Settlement Data.NCPA will make metering and settlement data
available to the Participants. Procedures and formats for the provision of such data will be as
established by the Participants and NCPA from time to time.
5.5.2 Examination of Books and Records.Any Participant to this
Agreement shall have the right to examine the books and records created and maintained by
NCPA pursuant to this Agreement at any reasonable, mutually agreed upon time.
5.5.3 Revenue Covenant. Any failure of a Participant to meet its
obligations hereunder or to cure such failure in a timely manner shall constitute an Event of
Default and the Defaulting Party shall be subject to such remedies of NCPA as provided for herein.
Each Participant covenants and agrees (i) to continue to pay or advance to NCPA, from its electric
department revenues only, its percentage share of the costs authorized by Participants in
accordance with this Agreement in connection with its participation in the Project. Each
Participant further agrees that it will fix the rates and charges for services provided by its electric
department, so that it will at all times have sufficient money in its department revenue funds to
meet this obligation; (ii) to make payments under this Agreement from the Revenues of, and as an
operating expense of, its Electric System; (iii) to make payments under this Agreement whether or
not there is an interruption in, interference with, or reduction or suspension of services provided
under this Agreement; such payments not being subject to any reduction, whether by offset or
otherwise, and regardless of whether any dispute exists provided such interruption, interference
or reduction in services is caused by forces constituting a force majeure1 and not reasonably
contemplated by the Parties; and (iv) to operate its Electric System in an efficient manner and to
maintain its facilities in good repair, condition and working order so that: (a) the Participant’s
obligations to make payments under this Agreement are not adversely affected or threatened; and
(b) NCPA’s bond rating and ability to negotiate and enter into a PPA are not adversely affected or
threatened.
Section 6.Administration of Agreement
1 For the purposes of Section 5.5.3, a force majeure shall be defined as any natural disaster or uncontrollable
force not preventable by any human agency, such as, but not limited to, any storm, flood, or violent or
destructive natural force.
1563911.2 14
6.1 General.The NCPA Commission has sole overall responsibility and
authority for the administration of this Agreement. Any acts, decisions or approvals taken, made
or sought by NCPA under this Agreement shall be taken, made or sought, as applicable, in
accordance with NCPA’s Constitutive Documents and Section 6.2.
6.2 Action by Participating Members.
(a)Forum. Whenever any action anticipated by this Agreement is
required to be taken by the Participants, such actions shall be taken at a regular or special meeting
of the NCPA Commission but shall be participated in only by those Commissioners, or their
designated alternates, who are Participants.
(b) Quorum. A quorum at NCPA Commission meetings for purposes of
acting upon matters relating to this Agreement shall consist of Commissioners, or their designated
alternates,representing at least two Participants having a combined majority interest based upon
Participation Percentages.
(c) Voting. Each Participant shall have the right to cast one vote with
respect to matters pertaining to this Agreement, with a majority vote of the Participating Members
required for action subject to the following exceptions:
(i)Upon request of any Participant representative, the voting on
an issue related to this Agreement shall be by Participation Percentage with a 65% or more
favorable vote necessary to carry the action. The 65% required by the preceding sentence shall be
reduced by the amount that the Participation Percentage of any Participant exceeds 35%, but shall
not be reduced below a majority interest.
(ii)After any decision related to this Agreement is taken by the
affirmative vote of less than 65% of the Participation Percentage, the action may be reviewed and
revised if a Participant gives notice of intention to seek such review and revision to NCPA and
each of the other Participants within ten (10) days following the date on which such action was
taken. Upon receipt of such a request for reconsideration, NCPA shall agendize the matter for
reconsideration at the next regular meeting of the Commission or at a special meeting if the
circumstances so warrant. The action shall be upheld upon the affirmative vote by Participation
Percentage of not less than 65%. Any action taken upon reconsideration shall be final.The vote of
1563911.2 15
65% of the Participation Percentage required by the previous sentence may be reduced by the
amount that the Participation Percentage of any Participant exceeds 35%, but shall not be reduced
below a majority interest.
(iii) Participants agree to abide by the terms and conditions of
NCPA’s Facilities Agreement,as it may be amended from time-to-time. Any Participants who are
not currently signatories to the Facilities Agreement agree to become signatories within thirty (30)
days of the date of this Agreement.
Section 7.Admission of New Participants. Following the Effective Date of this Agreement,
no Member (“Additional Member”) may execute this Amended Agreement and become a
Participant unless one or more of the Participants (“Allocating Participants”) elect to allocate a
portion of its Participant Percentage to such Member. Upon agreement of the Allocating
Participant and the Additional Member, the Additional Member shall deliver to NCPA and each
other Participant the written agreement between the Additional Member and the Allocating
Participant(s) indicating the agreed upon change in Participation Percentage(s), a counterpart of
this Agreement executed by the Additional Member, evidence that such agreements have been
approved in accordance with its applicable Constitutive Documents and payment of such
Member’s share of the Security Account. Any reduction in any Allocating Participant’s share of
the Security Account shall be credited to the Allocating Participants in accordance with Section 5.3.
Upon receipt of all required documents, NCPA shall provide to all Participants an updated Exhibit
B reflecting the revised Participation Percentages.
Section 8.Withdrawal of Participants. No Participant may withdraw from this Agreement
after the Effective Date.
Section 9.Term and Termination.
9.1 This Agreement shall become effective on the Effective Date when it has been
executed and delivered to NCPA by Participants, the Participation Percentages of which, in the
aggregate, equal at least 65% participation in the Project. NCPA shall provide written notices to all
Participants,establishing the Effective Date. The remaining Participants listed in Exhibit B shall
have forty-five (45)days, following the notice of the Effective Date to execute and deliver
1563911.2 16
counterparts of this Agreement to NCPA. If any Participants listed on Exhibit B fails to execute and
deliver this Agreement or the Facilities Agreement within such forty-five (45)days, unless
otherwise agreed to by the Participants who have executed the Agreement, the Participating
Percentages of such member or members shall be allocated to those Participants in proportion to,
but not exceeding, their Participation Percentages.
9.2 This Agreement shall be coterminous with the Amended PPA contained in
Exhibit A.
9.3 This Agreement may be terminated by the Parties if NCPA successfully
exercises its right of first refusal to purchase the entire Western GeoPower Project as set forth in
Section 3.5(a)of the Amended PPA. In the event of termination pursuant to this Section 9.2, the
Participants shall pay to NCPA all previously unpaid costs and obligations incurred as of the date
of such termination. Following such termination, the Participants shall cooperate and act in good
faith to negotiate and agree upon the method of allocating among the Participants,in proportion to
their respective Participation Percentages the costs and benefits of the Amended PPA and any
financing agreements or commitments and any matters pertaining to the administration,
management, control, operation and maintenance of the Amended PPA, including, but not limited
to,re-subscribing the Project capacity with additional NCPA Members or non-Member
participants. NCPA shall reasonably cooperate with the Participants and other NCPA Members in
connection with implementing the foregoing,and the Participants shall indemnify NCPA for any
costs and obligations incurred in connection therewith, including reasonable attorneys' fees, fees
and expenses of other experts, including auditors and accountants and other reasonable and
necessary costs.
Section 10.Default and Remedies
10.1 Events of Default.An Event of Default under this Agreement shall exist
with respect to a Party (the “Defaulting Party”) upon the occurrence of any one or more of the
following:
1563911.2 17
(i) if any Party fails to make any payment or to provide assurances as
required of NCPA under this Agreement when due hereunder two (2) Business Days after receipt
of notice given by NCPA of such non-payment; or
(ii) the failure of the Defaulting Party to perform any other covenant or
obligation under this Agreement where such failure is not cured within ten (10) calendar days
following receipt of a notice from NCPA demanding cure (provided that this shall not apply to any
failure to make payments (which is covered by Section 10.1 (i)); or
(iii)if any representation or warranty of the Defaulting Party material to
the transactions contemplated hereby is or shall prove to have been incorrect in any material
respect when made and the Defaulting Party does not cure the facts underlying such incorrect
representation or warranty so that the representation or warranty becomes true and correct within
ten (10) calendar days of the date of receipt of notice from any other Party demanding cure; or
(iv)if a Participant is in default or in breach of any of its covenants
under any other agreement with NCPA and such default or breach is not cured within the time
period(s)specified in such agreement or, if not specified, within ten (10) calendar days of the date
of receipt of notice; or
(v) the failure of NCPA to perform any covenant or obligation under this
Agreement within ten (10) calendar days following the delivery of a notice to cure by any non-
defaulting Member.
10.2 Cure of an Event of Default.An Event of Default shall be deemed cured
only if such default shall be remedied within the time period specified in Section 10.1, above, as
may be applicable after written notice has been sent to the Defaulting Party from NCPA specifying
the default and demanding that the same be remedied;provided,that failure of a Party to provide
such notice shall not be deemed a waiver of such default.
10.3 Participation Rights Of Defaulting Party.Notwithstanding anything herein
to the contrary, upon the occurrence of an Event of Default and until such Event of Default is
cured, a Participant that is the Defaulting Party shall not have the right to participate under Section
6.2 on any matters with respect to this Agreement.
10.4 Remedies in the Event of Default.
1563911.2 18
10.4.1 Upon the occurrence of an Event of Default where a Participant is
the Defaulting Party, without limiting its other rights or remedies available under this Agreement,
at law or in equity, and without constituting or resulting in a waiver, release or estoppels of any
right, action or cause of action NCPA or a non-defaulting Participant may have against the
Participant, NCPA may:
(i) suspend the provision of goods and/or services under this
Agreement to such Defaulting Party, including the delivery of Energy and other attributes of the
Amended PPA until the Event of Default is cured; and
(ii) demand that the Defaulting Party provide further assurances to
compel the correction of the default, including mandating the collection of a surcharge to produce
Revenues to secure the cure of the Event of Default; and
(iii)terminate this Agreement as to the Defaulting Party on ten (10) days
prior written notice to the Defaulting Party and following approval of the non-defaulting
Participants.
10.4.2 Sale/Transfer of Participants Account Upon Default.Upon any
default of a Participant caused by the failure of such Participant to pay any sums due, and
provided that such default is not cured in a timely manner, then NCPA shall use its best efforts to
sell and transfer for the Defaulting Party’s account all or a portion of the Participant’s capacity
and/or Energy and/or Environmental Attributes for the remainder of the term of this Agreement.
Notwithstanding that all or any portion of the Participant’s capacity, energy or environmental
attributes may be so sold or transferred, the Participant shall remain liable for all of its obligations
hereunder.
10.4.3 Remedies of Participants.Upon the occurrence of an Event of
Default, and following the applicable cure periods, where NCPA is the Defaulting Party, the
Participant may, without limiting their other rights or remedies available under this Agreement, at
law or in equity, and without constituting or resulting in a waiver, release or estoppel of any right,
1563911.2 19
action or cause of action the Participants may have against NCPA, bring such action as may be
applicable to compel performance by NCPA.
10.4.4 Special Covenants Regarding Security Account.In the event that a
Participant’s balance of the Security Account is insufficient to cover all invoices for costs incurred
under this Agreement sent to such Participant, then, without limiting NCPA’s other rights or
remedies available under this Agreement, at law or in equity, such Participant shall cooperate in
good faith with NCPA and shall cure said default within thirty (30) days, on an emergency basis,
taking all such action as is necessary, including, but not limited to, raising rates and charges to its
customers to increase its Revenues to replenish its share of the Security Account as provided
herein, drawing on its cash-on-hand and lines of credit, obtaining further assurances by way of
credit support and letters of credit, and taking all such other action as will cure the default.
10.5 Effect of Termination or Suspension.
10.5.1 The suspension or termination of this Agreement will not
terminate, waive, or otherwise discharge any ongoing or undischarged contingent liabilities or
obligations arising from this Agreement until such obligations are satisfied in full, and all of the
costs incurred by NCPA in connection with such suspension or termination, including reasonable
attorneys' fees, the fees and expenses of other experts, including auditors and accountants, other
costs and expenses that NCPA is entitled to recover under this Agreement, and other reasonable
and necessary costs associated with any and all of the remedies, are paid in full.
10.5.2 Suspension by NCPA.If performance of all or any portion of this
Agreement is suspended by NCPA with respect to a Participant in accordance with Section
10.4.1(i), such Participant shall pay any and all costs and obligations incurred by NCPA as a result
of such suspension, including reasonable attorneys' fees, the fees and expenses of other experts,
including auditors and accountants, other reasonable and necessary costs associated with such
suspension and any portion of the Project Costs that were not recovered from such Participant as a
result of such suspension.
1563911.2 20
10.5.3 Termination by NCPA.If this Agreement is terminated by NCPA
with respect to a Participant in accordance with Section 10.4.1 (iii),such Participant shall pay any
and all costs and obligations incurred by NCPA as a result of such termination including
reasonable attorneys' fees, the fees and expenses of other experts, including auditors and
accountants, other reasonable and necessary costs associated with such termination and any
portion of the Project Costs that were not, or will not be, recovered from such Participant as a
result of such termination; provided, however, if NCPA terminates this Agreement with respect to
the last Participant, then this Agreement shall terminate.
10.5.4 Termination by Participants. This Agreement may be terminated
by unanimous consent of all of the Parties hereto. In that event,the Participants shall pay to NCPA
all previously unpaid costs and obligations incurred as of the date of such termination,and
following such termination, the Participants shall cooperate and act in good faith to negotiate and
agree upon the method of allocating among the Participants in proportion to their respective
Participation Percentages the costs and benefits of the Amended PPA and any financing
agreements or commitments and any matters pertaining to the administration, management,
control, operation and maintenance of the Amended PPA. NCPA shall reasonably cooperate with
the Participants in connection with implementing the foregoing and the Participants shall
indemnify NCPA for any costs and obligations incurred in connection therewith, including
reasonable attorneys' fees, fees and expenses of other experts, including auditors and accountants
and other reasonable and necessary costs. If the Parties are unable to reach agreement as to the
foregoing, then the Parties agree to submit the matter to mediation with a mutually agreed upon
mediator. If the Parties are still unable to reach agreement following mediation, then the matter
shall be submitted to binding arbitration subject to the rules of the American Arbitration
Association, the costs of such arbitration being borne proportionally among the Participants.
Section 11.Miscellaneous.
11.1 Confidentiality.The Participants and NCPA will keep confidential all
confidential or trade secret information made available to them in connection with this Agreement,
to the extent possible, consistent with applicable laws, including the California Public Records Act.
1563911.2 21
It shall be the responsibility of the holder of the claim of confidentiality or trade secret to defend at
its expense against any request that such information be disclosed. Confidential or trade secret
information shall be marked or expressly identified as such.
11.2 Indemnification and Hold Harmless.Subject to the provisions of Section
11.4, each Participant agrees to indemnify, defend and hold harmless NCPA and its Members,
including their respective governing officials, officers, agents, and employees, from and against
any and all claims, suits, losses, costs, damages, expenses and liability of any kind or nature,
including reasonable attorneys’ fees and the costs of litigation, including experts (“Claims”),to the
extent caused by any acts, omissions, breach of contract, negligence (active or passive), gross
negligence, recklessness, or willful misconduct of a Participant, its governing officials, officers,
employees, subcontractors or agents, to the maximum extent permitted by law.
11.3 Several Liabilities.No Participant shall be liable under this Agreement for
the obligations of any other Participant, and each Participant shall be solely responsible and liable
for performance of its obligations under this Agreement, except as otherwise provided for herein,
and the obligation of each Participant under this Agreement is a several obligation and not a joint
obligation with those of the other Participants.
11.4 No Consequential Damages.FOR ANY BREACH OF ANY PROVISION OF
THIS AGREEMENT FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
PROVIDED IN THIS AGREEMENT, THE LIABILITY OF THE DEFAULTING PARTY SHALL BE
LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER DAMAGES OR REMEDIES
ARE HEREBY WAIVED. IF NO REMEDY OR MEASURE OF DAMAGE IS EXPRESSLY
PROVIDED, THE LIABILITY OF THE DEFAULTING PARTY SHALL BE LIMITED TO ACTUAL
DAMAGES ONLY AND ALL OTHER DAMAGES AND REMEDIES ARE HEREBY WAIVED. IN
NO EVENT SHALL NCPA OR ANY PARTICIPANT OR THEIR RESPECTIVE SUCCESSORS,
ASSIGNS, REPRESENTATIVES, DIRECTORS, OFFICERS, AGENTS,OR EMPLOYEES BE LIABLE
FOR ANY LOST PROFITS, CONSEQUENTIAL, SPECIAL, EXEMPLARY, INDIRECT, PUNITIVE
OR INCIDENTAL LOSSES OR DAMAGES, INCLUDING LOSS OF USE, LOSS OF GOODWILL,
LOST REVENUES, LOSS OF PROFIT OR LOSS OF CONTRACTS EVEN IF SUCH PARTY HAS
1563911.2 22
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NCPA AND EACH
PARTICIPANT EACH HEREBY WAIVES SUCH CLAIMS AND RELEASES EACH OTHER AND
EACH OF SUCH PERSONS FROM ANY SUCH LIABILITY.
The Parties acknowledge that California Civil Code section 1542 provides that: “A general release
does not extend to claims which the creditor does not know or suspect to exist in his or her favor at
the time of executing the release, which if known by him or her must have materially affected his
or her settlement with the debtor.” The Parties waive the provisions of section 1542, or other
similar provisions of law, and intend that the waiver and release provided by this section of this
Agreement shall be fully enforceable despite its reference to future or unknown claims.
11.5 Amendments.Except where this Agreement specifically provides
otherwise, this Agreement may be amended only by written instrument executed by the Parties
with the same formality as this Agreement.
11.6 Severability.In the event that any of the terms, covenants or conditions of
this Agreement or the application of any such term, covenant or condition, shall be held invalid as
to any person or circumstance by any court having jurisdiction, all other terms, covenants or
conditions of this Agreement and their application shall not be affected thereby, but shall remain
in force and effect unless the court holds that such provisions are not severable from all other
provisions of this Agreement.
11.7 Governing Law.This Agreement shall be interpreted, governed by, and
construed under the laws of the State of California.
11.8 Headings.All indices, titles, subject headings, section titles and similar
items are provided for the purpose of convenience and are not intended to be inclusive, definitive,
or affect the meaning of the contents of this Agreement or the scope thereof.
11.9 Notices.Any notice, demand or request required or authorized by this
Agreement to be given to any Party shall be in writing, and shall either be personally delivered to a
Participant and the Secretary of the Commission or transmitted to the Participant and the Secretary
of the Commission at the address shown on the signature pages hereof. The designation of such
1563911.2 23
address may be changed at any time by written notice given to the Secretary of the Commission
who shall thereupon give written notice of such change to each Participant.
11.10 Warranty of Authority.Each Participant, and NCPA, represents and
warrants that it has been duly authorized by all requisite approval and action to execute and
deliver this Agreement and that this Agreement is a binding, legal, and valid agreement
enforceable in accordance with its terms as to the Participant and as to NCPA. Upon execution of
this Agreement, each Participant shall deliver to NCPA a resolution of the governing body of such
Participant, evidencing approval of and authority to enter into this Agreement, that such authority
was duly exercised in accordance with such Participant’s Constitutive Documents.
11.11 Counterparts.This Agreement may be executed in any number of
counterparts, and each executed counterpart shall have the same force and effect as an original
instrument and as if all the signatories to all of the counterparts had signed the same instrument.
Any signature page of this Agreement may be detached from any counterpart of this Agreement
without impairing the legal effect of any signatures thereon, and may be attached to another
counterpart of this Agreement identical in form hereto but having attached to it one or more
signature pages.
11.12 Assignment.Except as provided by Section 7,no Participant may assign or
otherwise transfer its interest in its Participation Percentage or any other rights and obligations
under this Agreement without the express written consent of NCPA, which shall not be
unreasonably withheld.
11.13 Exercise of the Right of First Refusal. The Parties contemplate that NCPA
may exercise an option to purchase the underlying assets of the Amended PPA as per the voting
procedures of this Agreement outlined in Section 6. Participation in any such purchase shall be in
accordance with the then existing Participation Percentages, unless such Participation Percentages
are otherwise agreed upon by the Participants. At such time as NCPA exercises its right of first
refusal, this Agreement shall be amended to reflect the purchase of the underlying assets and the
Project.
11.14 List of Exhibits.The Exhibits referenced herein shall be denoted as follows:
1563911.2 24
Exhibit A -AMENDED AND RESTATED RENEWABLE ENERGY POWER PURCHASE
AGREEMENT BETWEEN THE NORTHERN CALIFORNIA POWER AGENCY
AND WESTERN GEOPOWER INCORPORATED
Exhibit B -PARTICIPATION PERCENTAGES
1563911.2
IN WITNESS WHEREOF, each Participant has executed this Agreement with the approval of its
governing body, and NCPA has authorized this Agreement in accordance with the authorization
of its Commission.
NORTHERN CALIFORNIA
POWER AGENCY
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
CITY OF LOMPOC
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
CITY OF ROSEVILLE
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
CITY OF SANTA CLARA
By:
Title
Date:
Approved as to Legal Form
By:
Its: Attorney
Date:
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THIRD PHASE AGREEMENT
FOR
WESTERN GEOPOWER INCORPORATED
RENEWABLE ENERGY POWER PURCHASE AGREEMENT
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TABLE OF CONTENTS
Section………………………………………………………………………….…….Page
RECITALS..…......…………..……………………………………………3
1.Definitions…………………..……………………………………………4
2.Effectiveness of Agreement…………………………………………...10
3.Delivery of Electricity / Allocation of Resource Adequacy…………..
Capacity and Environmental Attributes…….……………………….11
4.Cooperation and Further Assurances……………………….……….11
5.Payment Obligations, Security Account, Invoicing……..…….........12
6.Administration of Agreement………………………………………...16
7.Transfer of Rights by Participants…………………………...……….18
8.Withdrawal of Participants……………………………………………18
9.Term and Termination………….……………………………………..18
10.Default and Remedies…...…………………………………………….19
11.Miscellaneous…………………………………………………………..23
EXHIBIT A
EXHIBIT B
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This Third Phase Agreement for Western GeoPower Incorporated Renewable Energy Power
Purchase Agreement is between the Northern California Power Agency, a joint powers agency
of the State of California (“NCPA”) and those of its Members who execute this Agreement
(“Participants”). NCPA and the Participants are referred to herein individually as a “Party”
and collectively as the “Parties”.
RECITALS
A.WHEREAS, NCPA and the Participants are interested in purchasing additional
renewable electric capacity and energy for the benefit of the Participants’ customers:
B.WHEREAS, The Participants desire that NCPA negotiate and enter into a
renewable energy power purchase agreement (PPA) with the Western GeoPower Incorporated
("Western GeoPower") for twenty (20) years;and
C.WHEREAS, NCPA has executed a .PPA with Western GeoPower to purchase the
entire expected Project Output from a new Western GeoPower geothermal project (“Project”)
located in the Geysers Geothermal Field located in Mayacamas Mountains of Sonoma and Lake
Counties in the State of California; and
D.WHEREAS, NCPA, on behalf of the Participants, will purchase the Project
output of for at a fixed price not to exceed ninety-eight dollars ($98.00) per megawatt hour for
the initial term of twenty (20) years; and
E.WHEREAS, NCPA and the Participants wish to enter into this Agreement to
provide all means necessary for NCPA to fulfill obligations incurred on behalf of NCPA and the
Participants pursuant to the PPA and to enable and obligate the Participants to take delivery of
and pay for such electricity and to pay NCPA for the costs of undertaking the foregoing
activities; and
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F.WHEREAS, NCPA and its members have (or will have) entered into the Facilities
Agreement,dated September 22, 1993,which provides for services which NCPA shall perform
for its members, and for the provisions to be contained in third phase agreements such as this
Agreement.
G.WHEREAS, NCPA and its members have (or will have) entered into the
Scheduling Coordination Program Agreement (“SCPA”),dated August 28, 2002, which
provides for CAISO scheduling services and cost allocations which NCPA shall perform for its
members.
NOW, THEREFORE, in consideration of the foregoing, and the mutual promises and
covenants hereinafter set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree and intend to be legally bound,
as follows:
Section 1.Definitions
1.1 Definitions.Whenever used in this Agreement (including the Recitals
hereto), the following terms shall have the following respective meanings:
1.1.1 “Agreement” means this NCPA Third Phase Agreement for
Western GeoPower Incorporated Renewable Energy Power Purchase Agreement, including all
Exhibits attached hereto, as the same may be amended from time to time in accordance with the
terms and conditions hereof.
1.1.2 “Annual Budget” means the budget for the ensuing Budget
Year adopted by the Commission, as it may be amended from time to time.
1.1.3 “Associate Member” means an associate member of NCPA
admitted to NCPA in accordance with Article IV, Section 7 of the Joint Powers Agreement.
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1.1.4 “Budget Year” means the NCPA fiscal year; currently the twelve
month period beginning July 1 and ending on the next following June 30.
1.1.5 “Business Day” means any day except a Saturday, Sunday, or a
Federal Reserve Bank holiday. A Business Day shall open at 8:00 a.m. and close at 5:00 p.m.
local time.
1.1.6 "Capacity Attributes” means any current or future defined
characteristic, certificate, tag, credit, or ancillary service attribute, whether general in nature or
specific as to the location or any other attribute of the Project, intended to value any aspect of
the capacity of the Project to produce Energy or ancillary services, including, but not limited to,
any accounting construct so that the full Contract Capacity of the Project may be counted
toward a Resource Adequacy Requirement or any other measure by the CPUC, the CAISO, the
FERC, or any other entity invested with the authority under federal or state law, to require
Buyer to procure, or to procure at Buyer’s expense, Resource Adequacy or other such products.
1.1.7 “Claims” has the meaning set forth in Section 11.2.
1.1.8 "Commission” means the NCPA Commission.
1.1.9 Not Applicable under this Agreement.
1.1.10 “Constitutive Documents” means, with respect to NCPA, the
Joint Powers Agreement and any resolutions or bylaws adopted thereunder, and with respect to
each Participant, the California Government Code and other statutory provisions applicable to
such Participant, any applicable agreements, charters, contracts or other documents concerning
the formation, operation or decision making of such Participant, including, if applicable, its City
Charter, and any codes, ordinances, bylaws, and resolutions adopted by such Participant’s
governing body.
1.1.11 Not applicable under this Agreement.
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1.1.12 “Defaulting Party” has the meaning set forth in Section 9.1.
1.1.13 “Not applicable under this Agreement”
1.1.14 “Effective Date” has the meaning set forth in the Section 9 of this
Agreement.
1.1.15 “Electric System” means, with respect to each Participant except
the San Francisco Bay Area Rapid Transit District (“BART”), all properties and assets, real and
personal, tangible and intangible, of the Participant now or hereafter existing, used or
pertaining to the generation, transmission, transformation, distribution or sale of electric
capacity and energy, or the utilization of such, including all additions, extensions, expansions,
improvements and betterments thereto and equipment thereof; provided, however, that to the
extent the Participant is not the sole owner of an asset or property or to the extent that an asset
or property is used in part for the above described purposes, only the Participant’s ownership
interest in such asset or property or only the part of the asset or property used for electric
purposes shall be considered to be part of its Electric System.
1.1.16 “Environmental Attributes" means any and all credits, benefits,
emissions reductions, offsets, and allowances, howsoever entitled, directly attributable to the
power purchase. 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 (CO2), 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 Earth’s climate by trapping heat in the atmosphere; and (3) the
reporting rights to these avoided emissions such as Green Tag Reporting Rights.
Environmental Attributes do not include: (1) any energy, capacity, reliability or other power
attributes; (2) production tax credits associated with the construction or operation of the energy
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Projects and other financial incentives in the form of credits, reductions, or allowances
associated with the Project that are applicable to a state or federal income taxation obligation:
(3) fuel-related subsidies or "tipping fees" that may be paid to Seller to accept certain fuels, or
local subsidies received by the generator for the destruction of particular pre-existing pollutants
or the promotion of local environmental benefits; or (4) emission reduction credits encumbered
or used by the Unit(s) for compliance with local, state, or federal operating and/or air quality
permits.
1.1.17 “Event of Default” has the meaning set forth in Section 5.5.3 and
Section 10.1.
1.1.18 “Joint Powers Agreement” means that certain Northern
California Power Agency Joint Power Agreement first made July 19, 1968 and revised as of
April 1, 1973, establishing NCPA, as the same may be amended from time to time.
1.1.19 “Member” means any Member of NCPA or Associate Member
of NCPA.
1.1.20 “MW” means megawatt.
1.1.21 “MWh” means megawatt hour.
1.1.22 “NCPA” has the meaning set forth in the preamble hereto.
1.1.23 “Participation Percentage.” has the meaning, with respect to
each Project Participant, the percentage of the total capacity of the Project, and the energy
associated with such capacity, to which such Participant is entitled pursuant to the terms of this
Agreement. The Project Participation Percentage for each Project participant shall be in the
percentage set forth in Exhibit B,attached hereto and incorporated herein. Exhibit B,shall be
amended from time to time in accordance with this Agreement.
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1.1.24 “Project Cost Allocation” means the Project Costs allocated to
the Participants in the Annual Budget.
1.1.25 “Project Costs” means any and all costs, directly or indirectly,
incurred by NCPA as a result of entering into the PPA. NCPA costs include, but are not limited
to related legal fees and associated staff time, administrative and general overhead costs,
charges for transmission, transmission related costs and costs associated with the .PPA or other
NCPA associated Agreements, including the Facilities Agreement and the SCPA.
1.1.26 “Project Output” means all energy generated from the
geothermal Project currently being developed by Western GeoPower in conjunction with this
Project, related Environmental Attributes and Capacity Attributes;
1.1.27 “Participant” has the meaning set forth in the preamble hereto.
(i)“Party” or “Parties” has the meaning set forth in the
preamble hereto; provided that “Third Parties” are entities that are not party to this
Agreement.
1.1.28 “PPA” means the Renewable Energy Power Purchase
Agreement attached hereto as Exhibit A.
1.1.29 Not applicable under this Agreement.
1.1.30 “Resource Adequacy Capacity” is that capacity in megawatts
that has been approved by each Participant.as capacity available to ensure that adequate
resources are available to meet peak demand and operating and planning reserves for the
purposes of local area and system reliability.
1.1.31 “Revenues” means, with respect to each Participant with the
exception of BART, all income, rents, rates, fees, charges, and other moneys derived by the
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Participant from the ownership or operation of its Electric System, including, without limiting
the generality of the foregoing, (a) all income, rents, rates, fees, charges or other moneys derived
from the sale, furnishing and supplying of electric capacity and energy and other services,
facilities, and commodities sold, furnished, or supplied through the facilities of its Electric
System, (b) the earnings on and income derived from the investment of such income, rents,
rates, fees, charges or other moneys to the extent that the use of such earnings and income is
limited by or pursuant to law to its Electric System,and (c) the proceeds derived by the
Participant,directly or indirectly,from the sale, lease or other disposition of all or a part of the
Electric System, but the term “Revenues”shall not include (i) customers’ deposits or any other
deposits subject to refund until such deposits have become the property of the Participant or (ii)
contributions from customers for the payment of costs of construction of facilities to serve them.
In regards to BART, “Revenues”means, all income, rents, rates, fees, charges, grants, fares or
tariffs, subventions and other moneys derived by the Participant from its operation,including,
without limiting the generality of the foregoing, (i) the earnings on and income derived from
the investment of such income, rents, rates, fees, charges grants, fares or tariffs, subventions or
other moneys and (ii) the proceeds derived by the Participant,directly or indirectly,from the
sale, lease or other disposition of all or a part of its assets, but the term “Revenues”shall not
include any moneys derived from sources,the use of which is limited by law to expenditures
other than operating expenses.
1.1.32 “Scheduling Protocols” means the applicable provisions of the
.SCPA and any other contractual or other arrangements between NCPA and the relevant
Participant concerning the scheduling, delivery and metering of the PPA.
1.1.33 “Security Account” means the account established by NCPA
and funded by the Participants in accordance with Section 5.3, the funds of which are available
for use by NCPA in accordance with the terms and conditions hereof.
1.1.34 Not applicable under this Agreement.
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1.1.35 “Term” has the meaning set forth in Section 9.
1.1.36 Not applicable under this Agreement.
1.1.37 Not applicable under this Agreement.
1.2 Rules of Interpretation. As used in this Agreement (including the Recitals
hereto), unless in any such case the context requires otherwise: the terms “herein,” “hereto,”
“herewith” and “hereof” are references to this Agreement taken as a whole and not to any
particular provision; the term “include,” “includes” or “including” shall mean “including, for
example and without limitation;” and references to a “Section,” “subsection,” “clause,” or
“Exhibit” shall mean a Section, subsection, clause or Exhibit of this Agreement, as the case may
be. All references to a given agreement, instrument or other document shall be a reference to
that agreement, instrument or other document as modified, amended, supplemented and
restated through the date as of which such reference is made, and reference to a law, regulation
or ordinance includes any amendment or modification thereof. A reference to a “person”
includes any individual, partnership, firm, company, corporation, joint venture, trust,
association, organization or other entity, in each case whether or not having a separate legal
personality and includes its successors and permitted assigns. The singular shall include the
plural and the masculine shall include the feminine, and vice versa.
Section 2.Effectiveness of Agreement This Agreement shall be effective as to each
Participant as of the Effective Date upon execution by the Participant, as described in Section 9
below.
Section 3.Delivery of Electricity / Allocation of Resource Adequacy Capacity and
Environmental Attributes.By executing this Agreement, each Participant acknowledges and
agrees to be bound by the take-or-pay process contained in or referenced herein. Any electricity
delivered to NCPA under the PPA .shall be delivered to each Participant in proportion to such
Participant’s Participation Percentage and each Participant shall accept and pay for its relevant
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percentage of such electricity. To the extent Participant is unable to accept such deliveries in
full, NCPA shall dispose of such surplus in its discretion, in such a manner to maximize
Participant value. Notwithstanding the above, NCPA may allocate and pool capacity and
energy procured through the PPA among the Participants in such percentages as NCPA may, in
its reasonable discretion, determine are necessary, desirable, or appropriate. Such electricity
shall be scheduled for the Participants in accordance with the Scheduling Protocols. Resource
Adequacy Capacity and Environmental Attributes obtained by NCPA as a result of
performance under this Agreement shall likewise be allocated to each Participant by its
Participation Percentage.
3.1 Payments to Counterparty.NCPA shall pay all costs incurred hereunder
using operating funds or Security Account funds, paid to NCPA in accordance with Section 5,
or such other sources as may be agreed upon in writing by the Parties from time to time.
Section 4.Cooperation and Further Assurances Each of the Parties agrees to provide such
information, execute and deliver any instruments and documents and to take such other actions
as may be necessary or reasonably requested by any other Party which are not inconsistent with
the provisions of this Agreement and which do not involve the assumption of obligations other
than those provided for in this Agreement, in order to give full effect to this Agreement and to
carry out the intent of this Agreement. Further, the Parties agree to cooperate and act in good
faith in connection with obtaining any credit support required in order to procure electricity
from an Eligible Contract Purchase, including,with respect to negotiating and executing,any
agreements to implement any credit support arrangements.
Section 5.Payment Obligations, Security Account, Invoicing
5.1 Participant Payment Obligations.Each Participant agrees to pay to
NCPA each month its respective portion of the Project Costs. In addition, each Participant shall
maintain working capital in accordance with NCPA’s Annual Budget, and maintain its Security
Account as provided in this Agreement.
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5.2 Calculation of and True-Up for Project Costs.Upon the conclusion of a
Budget Year NCPA shall compare each Participant’s payment of estimated Project Costs with
the actual Project Costs incurred on behalf of each Participant such that overpayments will be
credited to, and underpayments will debited to the Participant’s account in accordance with
NCPA’s Annual Budget settlements.
5.3 Security Account.
5.3.1 Initial Amounts. NCPA shall notify each Participant three
months prior to the expected initial delivery of power of the initial security amounts which
Participant shall be obligated to pay for under this Agreement. Each Participant shall ensure
that sufficient funds are on deposit in the Security Account equal to the highest (3) months of
the immediately following (12) months of estimated Project Costs ; provided,however,that
such deposit may be satisfied,in whole or part,either in cash or through a letter of credit
satisfactory to NCPA’s General Manager.
5.3.2 Subsequent Deposits.Periodically, and at least quarterly, NCPA
shall review and revise its estimate of all costs for which Participant shall be obligated to pay for
under this Agreement for the succeeding twelve (12)months. Following such review, NCPA
shall determine whether each Participant has a sufficient balance in the Security Account. To
the extent that any Participant’s balance in the Security Account is greater than one hundred
and ten percent (110%) of the amount required herein, NCPA shall credit such amount as soon
as practicable to the Participant’s next following invoice. To the extent that any Participant’s
balance in the Security Account is less than ninety percent (90%) of the amount required herein,
NCPA shall add such amount as soon as practicable to such Participant’s next invoice. Credits
or additions shall not be made to Participants who satisfy these Security Account requirements
in whole,through the use of a letter of credit, provided that the amount of the letter of credit
shall be adjusted in a like manner to assure an amount equal to the highest three (3) months of
estimated Project Costs.
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5.3.3 Use of Security Account Funds.NCPA may use any and all
funds deposited into the Security Account to pay any costs it incurs hereunder, including
making payments to the counterparty under the PPA.NCPA may use any and all funds
without regard to any individual Participant’s balance in the Security Account or proportionate
share of Project Costs and irrespective of whether NCPA has issued an invoice for such costs to
the Participants or whether a Participant has made timely payments of invoices. Should
Participant have satisfied its Security Account requirements,in whole or in part,through a
letter of credit, NCPA may draw on such letter of credit to satisfy Participant’s obligations
hereunder.
5.3.4 Emergency Additions.In the event that the funds are
withdrawn pursuant to section 5.3.3, or if the Security Account is insufficient to allow payment
of an invoice, demand, request for further assurances by Third Parties, or Claims, NCPA shall
notify all Participants and then prepare and send a special or emergency assessment to the
Participants. Each Participant shall pay to NCPA such assessment when and if assessed by
NCPA within two (2) Business Days of the invoice date of the assessment or consent to and
direct NCPA to draw on any existing letter of credit Participant has established for such
purposes.
5.3.5 Accounting and Interest.NCPA shall maintain a detailed
accounting of each Participant’s deposits into and shares of withdrawals from the Security
Account. Interest earned on the Security Account shall be proportionately credited to the
Participants in accordance with their Security Account balances. Any losses in the Security
Account caused by early termination of investments shall be allocated among the Participants in
accordance with their proportionate Participation Percentages.
5.3.6 Return of Funds. On the termination of this Agreement with
respect to a Participant or a permitted withdrawal of a Participant in accordance with this
Agreement, the affected Participant or Participants may apply to NCPA for the return of their
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share of Security Account funds ninety (90) days after the effective date of such termination or
withdrawal. NCPA shall, in its sole discretion, as determined by the General Manager, estimate
the then outstanding liabilities of the Participant(s), including any estimated contingent
liabilities and shall retain all such funds until all such liabilities have been fully paid or
otherwise satisfied in full. The balance of the Participant’s share of the Security Account will be
refunded to the Participant.
5.4 Invoicing.
5.4.1 Invoices.As part of NCPA’s regular, monthly, advance billing
or by separate special invoice, as required in the circumstances, NCPA will issue an invoice to
each Participant for its proportionate share of the Project Costs due (or any adjustments thereto)
based on Sections 5.1 and 5.2 above. Such invoices may include estimated costs and estimated
settlement and meter data. Each invoice shall include: (i) the total Project Costs attributable to
the activities under this Agreement for such month and the relevant Participant’s share thereof;
(ii) the quantity of electricity, Resource Adequacy Capacity and Environmental Attributes.
delivered to such Participant (or an estimate thereof) and the unit price for such electricity; (iii)
appropriate settlement and meter data (or an estimate thereof); (iv) including any adjustments
to prior invoices required based on actual data received that was estimated in a previous
invoice. In addition NCPA may invoice an amount, if any, that NCPA has paid or reasonably
expects to pay using funds available in the Security Account; and amounts due from (or
credited to) such Participant under Section 5.3.2.
5.4.2 Payment of Invoices.All invoices delivered by NCPA
hereunder are due and payable on the date indicated on such invoice, provided, however, that
any amount due on a day other than a Business Day may be paid on the following Business
Day. NCPA may apply a Participant’s share of the Security Account to the payment of all or
any portion of an invoice issued to such Participant, provided that application of such funds
from the Security Account shall not relieve the Participant from any late payment charges
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pursuant to Section 5.4.3. To the extent that NCPA applies funds from the Security Account to
pay an amount due under an invoice, following receipt of payment of such invoice by the
relevant Participant, NCPA shall deposit the relevant portion of the payment into the Security
Account and credit such deposit to such Participant.
5.4.3 Late Payments.Any amount due and not paid by a Participant
in accordance with Section 5.4.2 shall bear interest computed on a daily basis until paid at the
lesser of (i) the per annum prime rate (or reference rate) of the Bank of America NT&SA then in
effect, plus two percent (2%) or (ii) the maximum rate permitted by law.
5.5 Settlement Data and Examination of Books and Records.
5.5.1 Settlement Data.NCPA will make metering and settlement data
available to the Participants. Procedures and formats for the provision of such data will be as
established by the Participants and NCPA from time to time.
5.5.2 Examination of Books and Records.Any Participant to this
Agreement shall have the right to examine the books and records created and maintained by
NCPA pursuant to this Agreement at any reasonable, mutually agreed upon time.
5.5.3 Revenue Covenant. Any failure of a Participant to meet its
obligations hereunder or to cure such failure in a timely manner shall constitute a Default and
the Defaulting Party shall be subject to such remedies of NCPA as provided for herein. Each
Participant covenants and agrees (i) to continue to pay or advance to NCPA, from its electric
department revenues only or, in the case of BART, its tariffs, fees or other sources of revenue,
provided that such sources shall not include any sums derived from sources,the use of which is
limited by law to expenditures other than operating expenses, its percentage share of the costs
authorized by Participants in accordance with this Agreement in connection with its
participation in the Project. Each Participant further agrees that it will fix the rates and charges
for services provided by its electric department, or in the case of BART, its general revenues, so
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that it will at all times have sufficient money in its department revenue funds to meet this
obligation; (ii) to make payments under this Agreement from the Revenues of, and as an
operating expense of,its Electric System, or in the case of BART, its general revenues; (iii) to
make payments under this Agreement whether or not there is an interruption in, interference
with, or reduction or suspension of services provided under this Agreement; such payments not
being subject to any reduction, whether by offset or otherwise, and regardless of whether any
dispute exists provided such interruption, interference or reduction in services is caused by
forces constituting an Act of God and not reasonably contemplated by the Parties; and (iv) to
operate its Electric System., or in the case of BART, its transit system, in an efficient manner and
to maintain its facilities in good repair, condition and working order so that: (a) the Participant’s
obligations to make payments under this Agreement are not adversely affected or threatened;
and (b) NCPA’s bond rating and ability to negotiate and enter into a .PPA are not adversely
affected or threatened.
Section 6. Administration of Agreement
6.1 General.The NCPA Commission has sole overall responsibility and
authority for the administration of this Agreement. Any acts, decisions or approvals taken,
made or sought by NCPA under this Agreement shall be taken, made or sought, as applicable,
in accordance with NCPA’s Constitutive Documents and Section 6.2.
6.2 Action by Participating Members.
(a)Forum: Whenever any action anticipated by this
Agreement is required to be taken by the Participating Members, such actions shall be taken at a
regular or special meeting of the NCPA Commission but shall be participated in only by those
Commissioners, or their designated alternates, who are Participants.
(b) Quorum:A quorum at NCPA Commission meetings for
purposes of acting upon matters relating to this Agreement shall consist of Commissioners, or
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their designated alternates representing at least two Participants having a combined majority
interest based upon Participation Percentages.
(c) Voting:Each Participant shall have the right to cast one
vote with respect to matters pertaining to this Agreement, with a majority vote of the
Participating Members required for action subject to the following exceptions:
(i)Upon request of any Participant representative, the voting
on an issue related to this Agreement shall be by Participation Percentage with a 65% or more
favorable vote necessary to carry the action. The 65% required by the preceding sentence shall
be reduced by the amount that the Participation Percentage of any Participant exceeds 35%, but
shall not be reduced below a majority interest.
(ii)After any decision related to this Agreement is taken by
the affirmative vote of less than 65% of the Program Participants, the action can be reviewed
and revised if a Participant gives notice of intention to seek such review and revision to NCPA
and each of the other Participants within ten (10) days following the date on which such action
was taken. Upon receipt of such a request for reconsideration, the Chair Person of the
Commission shall agendize the matter for reconsideration at the next regular meeting of the
Commission or at a special meeting if the circumstances so warrant. The action shall be upheld
upon the affirmative vote of authorized representatives the Participants. Any action taken upon
reconsideration shall be final.
Section 7.Transfer of Rights by Participants
7.1 A Participant has the right to make transfers, sales, assignments and
exchanges (collectively “transfers(s)”) its Participation Percentage and rights thereto. If a
Participant desires to transfer a portion or its entire share of the Project for a specific time
interval, or permanently, NPCA will,if requested by such Participant, use its best efforts to
transfer that portion of the Participant’s share of the Project.
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7.2 Before NCPA may transfer an excess Project share pursuant to section 7.1
to any person or entity other than a Participant, it shall give all Participants the right to
purchase the share on the same terms and conditions. Before NCPA may transfer an excess
Project share pursuant to section 7.1 to any person or entity other than an NCPA member, it
shall give all NCPA members the right to purchase the share on the same terms and conditions.
Such right shall be exercised within thirty (30) days of receipt of notice of said right.
7.3 No transfer shall relieve a Participant of any of its obligations under this
Agreement except to the extent that NCPA receives payment of these obligations from a
transferee.
Section 8.Withdrawal of Participants. No Participant may withdraw from this
Agreement except as provided herein Refer Section 7 above for discussion. However, NCPA
will use its best efforts to assist any Participant that wishes to transfer all or any portion of its
rights pursuant to Section 7 above.
Section 9.Term and Termination. This Agreement shall become effective when it has
been executed and delivered to NCPA by Participants, the Participation Percentages of which,
in the aggregate, equal at least 65% participation in the Project. NCPA shall provide written
notices to all Participants establishing the “effective date”. The remaining Participants listed in
Exhibit B shall have 45 days, following the notice of the effective date to execute and deliver
counterparts of this Agreement to NCPA. If any Participants listed on Exhibit B fails to execute
and deliver this Agreement within such 45 days, unless otherwise agreed to by the Participants
who have executed the Agreement, the Participating Percentages of such member or members
shall be spread among those Participants in proportion to their Participation Percentages. This
Agreement shall be coterminous with the PPA contained in Exhibit A.
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Section 10.Default and Remedies
10.1 Events of Default.An Event of Default under this Agreement shall exist
with respect to a Party (“Defaulting Party”) upon the occurrence of any one or more of the
following:
(i) if any Party fails to make any payment or to provide assurances as
required of NCPA under this Agreement when due hereunder two (2) Business Days after
receipt of notice given by NCPA of such non-payment; or
(ii) the failure of the Defaulting Party to perform any other covenant
or obligation under this Agreement where such failure is not cured within ten (10)days
following receipt of a notice from NCPA demanding cure (provided that this shall not apply to
any failure to make payments (which is covered by Section 10.1 (i)); or
(iii)if any representation or warranty of the Defaulting Party material
to the transactions contemplated hereby shall prove to have been incorrect in any material
respect when made and the Defaulting Party does not cure the facts underlying such incorrect
representation or warranty so that the representation or warranty becomes true and correct
within ten (10) calendar days of the date of receipt of notice from any other Party demanding
cure; or
(iv)if a Participant is in default or in breach of any of its covenants
under any other agreement with NCPA and such default or breach is not cured within the time
periods specified in such agreement; or
(v) the failure of NCPA to perform any covenant or obligation under
this Agreement following a ten (10) day notice to cure by any non-defaulting Member.
10.2 Cure of an Event of Default.An Event of Default shall be deemed cured
only if such default shall be remedied within the time period specified in Section 10.1, above, as
may be applicable after written notice has been sent to the Defaulting Party from NCPA
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specifying the default and demanding that the same be remedied provided that failure of a
Party to provide such notice shall not be deemed a waiver of such default.
10.3 Participation Rights Of Defaulting Party.Notwithstanding anything
herein to the contrary, upon the occurrence of an Event of Default and until such Event of
Default is cured, the Participant that is the Defaulting Party shall not have the right to
participate under Section 6.2 on any matters with respect to this Agreement.
10.4 Remedies in the Event of Default.
10.4.1 Remedies of NCPA. Upon the occurrence of an Event of Default
where a Participant is the Defaulting Party, without limiting its other rights or remedies
available under this Agreement, at law or in equity, and without constituting or resulting in a
waiver, release or estoppels of any right, action or cause of action NCPA may have against the
Participant, NCPA may:
(i) suspend the provision of services under this Agreement to such
Defaulting Party, including the delivery of electricity and other attributes of the PPA until the
Event of Default is cured; and
(ii) demand that the Defaulting Party provide further assurances to
compel the correction of the default, including mandating the collection of a surcharge to
produce Revenues to secure the cure of the Event of Default; and
(iii) terminate this Agreement as to the Defaulting Party on ten (10)
days prior written notice to the Defaulting Party and following approval of the non-defaulting
Participants.
10.4.2 Sale/Transfer of Participants Account Upon Default.Upon any
default of a Participant caused by the failure of such Participant to pay any sums due, and
provided that such default is not cured in a timely manner,then NCPA shall use its best efforts
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to sell and transfer for the defaulting Participant’s account all or a portion of the Participant’s
capacity and/or energy and/or Environmental Attributes for the remainder of the term of this
Agreement. Notwithstanding that all or any portion of the Participant’s capacity is so sold or
transferred, the Participant shall remain liable for all of its obligations hereunder unless released
therefrom by NCPA upon assumption by a transferee or assignee.
10.4.3 Remedies of Participants.Upon the occurrence of an Event of
Default, and following the applicable cure periods, where NCPA is the Defaulting Party, the
Participant may, without limiting their other rights or remedies available under this Agreement,
at law or in equity, and without constituting or resulting in a waiver, release or estoppel of any
right, action or cause of action the Participants may have against NCPA, terminate this
Agreement in whole, subject to the provisions of Section10.5.4.
10.4.4 Special Covenants Regarding Security Account.In the event
that a Participant’s balance of the Security Account is insufficient to cover all invoices for costs
incurred under this Agreement sent to such Participant, then, without limiting NCPA’s other
rights or remedies available under this Agreement, at law or in equity, such Participant shall
cooperate in good faith with NCPA and shall cure the default within thirty (30) days, on an
emergency basis, taking all such action as is necessary, including, but not limited to, raising
rates and charges to its customers to increase its Revenues to replenish its share of the Security
Account as provided herein, drawing on its cash-on-hand and lines of credit, obtaining further
assurances by way of credit support and letters of credit, and taking all such other action as will
cure the default.
10.5 Effect of Termination or Suspension.
10.5.1 The suspension or termination of this Agreement will not
terminate, waive, or otherwise discharge any ongoing or undischarged contingent liabilities or
obligations arising from this Agreement until such obligations are satisfied in full, and all of the
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costs incurred by NCPA in connection with such suspension or termination, including
reasonable attorneys'fees, the fees and expenses of other experts, including auditors and
accountants, other costs and expenses that NCPA is entitled to recover under this Agreement,
and other reasonable and necessary costs associated with any and all of the remedies, are paid
in full.
10.5.2 Suspension by NCPA.If performance of all or any portion of
this Agreement is suspended by NCPA with respect to a Participant in accordance with Section
10.4.1(i), such Participant shall pay any and all costs and obligations incurred by NCPA as a
result of such suspension,including reasonable attorneys'fees, the fees and expenses of other
experts, including auditors and accountants, other reasonable and necessary costs associated
with such suspension and any portion of the Project Costs that were not recovered from such
Participant as a result of such suspension.
10.5.3 Termination by NCPA.If this Agreement is terminated by
NCPA with respect to a Participant in accordance with Section 10.4.1 (iii), (i) such Participant
shall pay any and all costs and obligations incurred by NCPA as a result of such termination
including reasonable attorneys'fees, the fees and expenses of other experts, including auditors
and accountants, other reasonable and necessary costs associated with such termination and
any portion of the Project Costs that were not, or will not be, recovered from such Participant as
a result of such termination; provided, however, if NCPA terminates this Agreement with
respect to the last Participant, then this Agreement shall terminate.
10.5.4 Termination by Participants.If this Agreement is terminated by
all Participants in accordance with Section 10.4.3, or by unanimous consent of all of the Parties
hereto, then the Participants shall pay to NCPA all previously unpaid costs and obligations
incurred as of the date of such termination,, and following such termination, the Participants
shall cooperate and act in good faith to negotiate and agree upon the method of allocating
among the Participants in proportion to their respective Participation Percentages the costs and
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benefits of the PPA and any financing agreements or commitments and any matters pertaining
to the administration, management, control, operation and maintenance of the PPA. NCPA
shall reasonably cooperate with the Participants in connection with implementing the foregoing
and the Participants shall indemnify NCPA for any costs and obligations incurred in connection
therewith, including reasonable attorneys'fees, fees and expenses of other experts, including
auditors and accountants and other reasonable and necessary costs. If the Parties are unable to
reach agreement as to the foregoing, then the Parties agree to submit the matter to mediation
with a mutually agreed upon mediator. If the Parties are still unable to reach agreement
following mediation, then the matter shall be submitted to binding arbitration subject to the
rules of the American Arbitration Association, the costs of such arbitration being borne
proportionally among the Participants.
Section 11. Miscellaneous
11.1 Confidentiality.The Participants and NCPA will keep confidential all
confidential or trade secret information made available to them in connection with this
Agreement, to the extent possible, consistent with applicable laws, including the California
Public Records Act. It shall be the responsibility of the holder of the claim of confidentiality or
trade secret to defend at its expense against any request that such information be disclosed.
Confidential or trade secret information shall be marked or expressly identified as such.
11.2 Indemnification and Hold Harmless.Subject to the provisions of Section
11.4, each Participant agrees to indemnify, defend and hold harmless NCPA and its Members,
including their respective governing officials, officers, agents, and employees, from and against
any and all claims, suits, losses, costs, damages, expenses and liability of any kind or nature,
including reasonable attorneys’ fees and the costs of litigation, including experts (“Claims”), to
the extent caused by any acts, omissions, breach of contract, negligence (active or passive), gross
negligence, recklessness, or willful misconduct of a Participant, its governing officials, officers,
employees, subcontractors or agents, to the maximum extent permitted by law.
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11.3 Several Liabilities.No Participant shall be liable under this Agreement
for the obligations of any other Participant, and each Participant shall be solely responsible and
liable for performance of its obligations under this Agreement, except as otherwise provided for
herein, and the obligation of each Participant under this Agreement is a several obligation and
not a joint obligation with those of the other Participants.
11.4 No Consequential Damages.FOR ANY BREACH OF ANY PROVISION
OF THIS AGREEMENT FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES
IS PROVIDED IN THIS AGREEMENT, THE LIABILITY OF THE DEFAULTING PARTY
SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER DAMAGES
OR REMEDIES ARE HEREBY WAIVED. IF NO REMEDY OR MEASURE OF DAMAGE IS
EXPRESSLY PROVIDED, THE LIABILITY OF THE DEFAULTING PARTY SHALL BE
LIMITED TO ACTUAL DAMAGES ONLY AND ALL OTHER DAMAGES AND REMEDIES
ARE HEREBY WAIVED. IN NO EVENT SHALL NCPA OR ANY PARTICIPANT OR THEIR
RESPECTIVE SUCCESSORS, ASSIGNS, REPRESENTATIVES, DIRECTORS, OFFICERS,
AGENTS, OR EMPLOYEES BE LIABLE FOR ANY LOST PROFITS, CONSEQUENTIAL,
SPECIAL, EXEMPLARY, INDIRECT, PUNITIVE OR INCIDENTAL LOSSES OR DAMAGES,
INCLUDING LOSS OF USE, LOSS OF GOODWILL, LOST REVENUES, LOSS OF PROFIT OR
LOSS OF CONTRACTS EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES, AND NCPA AND EACH PARTICIPANT EACH HEREBY WAIVES
SUCH CLAIMS AND RELEASES EACH OTHER AND EACH OF SUCH PERSONS FROM
ANY SUCH LIABILITY.
The Parties acknowledge that California Civil Code section 1542 provides that: “A general
release does not extend to claims which the creditor does not know or suspect to exist in his or
her favor at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.” The Parties waive the provisions of
section 1542, or other similar provisions of law, and intend that the waiver and release provided
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by this section of this Agreement shall be fully enforceable despite its reference to future or
unknown claims.
11.5 Amendments.Except where this Agreement specifically provides
otherwise, this Agreement may be amended only by written instrument executed by the Parties
with the same formality as this Agreement.
11.6 Severability.In the event that any of the terms, covenants or conditions
of this Agreement or the application of any such term, covenant or condition, shall be held
invalid as to any person or circumstance by any court having jurisdiction, all other terms,
covenants or conditions of this Agreement and their application shall not be affected thereby,
but shall remain in force and effect unless the court holds that such provisions are not severable
from all other provisions of this Agreement.
11.7 Governing Law.This Agreement shall be interpreted, governed by, and
construed under the laws of the State of California.
11.8 Headings.All indices, titles, subject headings, section titles and similar
items are provided for the purpose of convenience and are not intended to be inclusive,
definitive, or affect the meaning of the contents of this Agreement or the scope thereof.
11.9 Notices.Any notice, demand or request required or authorized by this
Agreement to be given to any Party shall be in writing, and shall either be personally delivered
to a Participant and the Secretary of the Commission or transmitted to the Participant and the
Secretary of the Commission at the address shown on the signature pages hereof. The
designation of such address may be changed at any time by written notice given to the
Secretary of the Commission who shall thereupon give written notice of such change to each
Participant.
11.10 Warranty of Authority.Each Participant, and NCPA, represents and
warrants that it has been duly authorized by all requisite approval and action to execute and
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deliver this Agreement and that this Agreement is a binding, legal, and valid agreement
enforceable in accordance with its terms as to the Participant and as to NCPA. Upon execution
of this Agreement, each Participant shall deliver to NCPA a resolution of the governing body of
such Participant,evidencing approval of and authority to enter into this Agreement,that such
authority was duly exercised in accordance with such Participant’s Constitutive Documents.
11.11 Counterparts.This Agreement may be executed in any number of
counterparts, and each executed counterpart shall have the same force and effect as an original
instrument and as if all the signatories to all of the counterparts had signed the same
instrument. Any signature page of this Agreement may be detached from any counterpart of
this Agreement without impairing the legal effect of any signatures thereon, and may be
attached to another counterpart of this Agreement identical in form hereto but having attached
to it one or more signature pages.
11.12 Assignment.Except as provided by Section 7 no Participant may assign
or otherwise transfer its interest in its Participation Percentage or any other rights and
obligations under this Agreement without the express written consent of NCPA, which shall
not be unreasonably withheld.
11.13 Exercise of the Right of First Refusal. Participants shall abide by the
NCPA Facilities Agreement in the exercise of any options by NCPA to purchase the underlying
assets of the PPA as per the voting procedures of this Agreement outlined in Section 6.
Participation in any such purchase shall be in accordance with the then existing Participation
Percentages, unless such Participation Percentages are otherwise agreed upon by the
Participants.
11.14 List of Exhibits.The Exhibits referenced herein shall be denoted as
follows:
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Exhibit A -RENEWABLE ENERGY POWER PURCHASE AGREEMENT between
NORTHERN CALIFORNIA POWER AGENCY and WESTERN GEOPOWER
INCORPORATED
Exhibit B -PARTICIPATION PERCENTAGES
IN WITNESS WHEREOF, each Participant has executed this Agreement with the approval of its
governing body, and NCPA has authorized this Agreement in accordance with the authorization
of its Commission.
NORTHERN CALIFORNIA
POWER AGENCY
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: __________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
ALAMEDA POWER AND TELECOM
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: __________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
BAY AREA RAPID TRANSIT
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
CITY OF LODI
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: __________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
CITY OF LOMPOC
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
CITY OF PALO ALTO
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
PLUMAS-SIERRA RURAL
ELECTRIC COOPERATIVE
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
PORT OF OAKLAND
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
CITY OF ROSEVILLE
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
SILICON VALLEY POWER
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
TRUCKEE DONNER PUBLIC
UTILITY DISTRICT
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
CITY OF TURLOCK
[Address]
[City, State, Zip]
[Telephone]
[Facsimile]
_____________________________
By:__________________________
Title: ________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: Attorney
Date:
ATTACHMENT E
DRAFT
Excerpt of:
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF FEBRUARY 2, 2011
ITEM 5: ACTION: Agreement Terminating the Third Phase Agreement for Western GeoPower
Incorporated Renewable Energy Power Purchase Agreement
Director Fong provided a brief summary of the report. Palo Alto signed up for the project with a
$98 per megawatt-hour ((MWh), but the project does not go forward due to financing difficulties.
The Northern California Power Agency (NCPA) has been able to negotiate an agreement for the
project, but at the higher price of $113/MWh. Fong indicated that staff feels that it cannot
recommend going forward with this project at $113/MWh at this time since it has not completed
some of the planning work requested by Council: LEAP, GULP, and the Strategic Plan. In addition,
the City of Santa Clara has offered to take on more of the project initially and has indicated a
willingness to let Palo Alto in to the project. First, Palo Alto needs to step aside to let participants,
including Santa Clara, proceed with the project. Therefore, staff’s recommendation is to terminate
the original $98/MWh contract so that participants can sign up for the available project at
$113/MWh.
Commissioner Foster asked for clarification that there is no reason to agree to execute the
$113/MWh contract now since Santa Clara will offer it to us later. Fong indicated that the first thing
to not be a roadblock is to execute the termination agreement. Then, Santa Clara has offered to
provide Palo Alto the opportunity to become a participant in the project if it can complete its
required planning tasks and approvals by the end of the year.
Commissioner Melton said that the geothermal source looked good in the past to us and still looks
good to us and noted that the feed-in tariffs can only supply half of our remaining RPS needs over
the next five years. He asked if staff was inclined to do the project. Senior Resource Originator
Tom Kabat indicated that the size of the project would fit nicely into the portfolio and could help
achieve the RPS goals. He anticipated that the City could release another request for proposals
for renewable power to verify that the $113/MWh was a competitive price. Commissioner Melton
said that the price seemed to be in the ballpark of what we’ve seen in the recent past.
Commissioner Keller agreed that we need to get out of the way now by terminating the existing
contract, but asked if there could be anything lost by waiting such as having the price move. She
asked about the term of the contract and if the plant was currently operational. Kabat stated that
the contract term was 25 years and that the plant is not yet operational, but there have been test
wells drilled. She asked if there was certainty that there is 25 years of a steam source. Kabat
indicated that he is not certain of the life of the steam source, but because the contract is a Power
Purchase Agreement, the City would only pay for actual generation produced.
ATTACHMENT E
Commissioner Foster stated that he supports terminating the original agreement and, in general, is
supportive of this renewable purchase. However, if the decision can be delayed, this is acceptable.
Commissioner Eglash indicated that he did not agree with the recommendation and disagreed with
the statement in the report that the price of $113/MWh was “reasonably competitive.” Instead, he
noted that we know that the price is very competitive as it is essentially the same price as the
landfill gas contracts Council approved last year. In addition, one of the issues with those landfill
gas contracts was the fact that we already had many such contracts in the portfolio and there was
a question of resource diversity. The Western GeoPower contract would add diversity to the
portfolio. Environmental issues regarding the operation of the landfills was also raised as another
concern and the Western GeoPower project would not have these concerns. For those reasons,
this contract is overwhelmingly compelling and we still have far enough to go to achieve the RPS
goals and enough uncertainty around the PV FIT that this would be a good decision.
Commissioner Eglash concluded that having too much renewable energy at $113/MWh is a happy
problem to have, it’s a terrific deal and he would support recommending it to the Council.
Commissioner Foster indicated that he was persuaded by Commissioner Foster’s arguments.
Commissioner Melton also indicated that he was supportive of the project at the $113/MWh and
advised against hesitating on the project. Commissioner Eglash could recommend option 2.b in
the report (execute the Termination Agreement and not enter into the new Third Phase Agreement
at the $113/MWh price at this time), while staff recommended 2.a. (execute the Termination
Agreement and enter into the new Third Phase Agreement at the $113/MWh price at this time).
Commissioner Keller asked for staff’s reaction to Commissioner Eglash’s proposal. Fong indicated
that staff does support option 2.b., but it has heard many times from the Council that it must have
LEAP and the Strategic Plan completed and approved before bringing any new renewable
resources for consideration. The new price does look attractive to staff and it has had discussions
with Santa Clara to allow the City to get the price if it is able to act by the end of the year.
Commissioner Eglash is sympathetic to staff’s position, but this is a case to treat as an exception
and that the burden to make the recommendation is on the Commission and not on staff. This is
one case where the staff and the Commission are under different pressures and may make
different recommendations to the Council. He itemized the reasons for the Commission to make a
recommendation to agree to the new contract now: 1) it is an attractive price; 2) it is well within the
scope of what we do; 3) the Finance Committee will be able to review the project’s merits even if
staff does not have the time to do its usual thorough review; and 4) the project is not a new project,
but a derivative of an earlier one which was approved. We would not be doing anyone at the City a
favor to take part of a year to more fully analyze and vet the project or to send out another request
for proposals. We already know the project is a good one with a reasonable price.
Fong indicated that there is no problem with staff taking a recommendation to the Finance
Commission that is different from the UAC’s recommendation. Commissioner Eglash indicated
that staff should explain that the reason for not agreeing with the UAC’s recommendation is based
on procedural concerns and not on disagreement with the merits of the project.
Regarding the choices on the participation level for the project, Commissioner Eglash indicated
that it would be best to stick with the level from the original agreement (up to 15% of the project
ATTACHMENT E
size), which would provide about 3% of the City’s annual electric needs. Thus, this would not be a
proposal for a new level.
ACTION: Commissioner Berry made a motion to execute the Termination Agreement and enter
into the new Third Phase Agreement at the $113/MWh price at a participation level of up to 15% of
the project. Commissioner Eglash seconded the motion. The motion carried unanimously by a
vote of 6 to 0, with Cook absent.
Preliminary Evaluation of the new Western GeoPower Project
Preliminary Evaluation of the Western GeoPower Project at a Flat $113/MWh price
The following sections discuss the City’s Renewable Portfolio Standard (RPS) goals, current
progress towards meeting the RPS goals, Council direction in August 2009 and May 2010,
integration of energy efficiency into the electric resource portfolio, and information regarding
the market prices for renewable energy.
Renewable Portfolio Standard Goals
The City’s current renewable portfolio standard (RPS) target as adopted by Council in March
2007 is to meet 33 percent of City loads with renewable resources by 2015. The target is to be
achieved while not exceeding the retail rate impact measure of 0.5¢/kWh (CMR:158:07).
As of February 2011 a proposed update of LEAP awaits final Council action. While staff, the
UAC and the Finance Committee (CMR: 426:10) have recommended some changes to the LEAP
Strategy related to RPS, the proposed LEAP RPS Strategy is similar to the existing LEAP RPS
Guideline in that it still has a target of meeting 33 percent of the City’s electric consumption
with renewable resources by 2015 within the 0.5¢/kWh rate impact limit.
Current Status of Renewable Resources in Electric Portfolio
Five Power Purchase Agreements (PPAs) for energy generated from new renewable resources
are currently delivering energy to Palo Alto. An additional three PPAs have been executed for
projects that are under construction. The resources for all eight existing PPAs are shown in
Table 1 below.
Table 1 –Existing Renewable Energy Contracts
Supplier Technology
Date Contract
Executed
Actual or
Estimated
Online Date
Annual
Energy
(GWh)
High Winds Iberdrola Wind Nov. 2004 Dec. 2004 51.8
Shiloh Iberdrola Wind Oct. 2005 June 2006 74.4
Santa Cruz Ameresco Landfill Gas Nov. 2004 Feb. 2006 11.2
Half Moon Bay Ameresco Landfill Gas Jan. 2005 Apr. 2009 40.8
Keller Canyon Ameresco Landfill Gas Aug. 2005 Aug. 2009 11.8
Subtotal –Operating 190.0
Johnson Canyon Ameresco Landfill Gas Aug. 2009 June 2012 11.2
Crazy Horse Ameresco Landfill Gas May 2010 Jan. 2013 32.0
San Joaquin Ameresco Landfill Gas May 2010 Jan. 2013 32.0
Subtotal –Under Construction 75.2
Total –All Executed Contracts 265.2
In addition, through its contract with the Western Area Power Administration, the City receives
hydroelectric energy that includes a small amount of energy from “small” hydroelectric projects
that qualify under the state’s standard for renewable energy. The City also receives a share of
the New Spicer Meadow qualifying small hydroelectric output as part of the Calaveras
Hydroelectric Project. If these supplies are included (as proposed in the LEAP update), they
would add about 1% towards the RPS goals of the portfolio in normal water years. Together,
when all of the committed facilities reach commercial operating status, these resources –plus
the output of the small hydro facilities –will provide about 27.5% of Palo Alto’s total energy
supply needs as shown in Figure 1 below:
Figure 1 –Palo Alto’s Renewable Resources
0
50
100
150
200
250
300
350200320042005200620072008200920102011201220132014201520162017201820192020Calendar Year
GWh per Year
Small Hydro
Short-term
Renewables
Crazy Horse
LFG
San Joaquin
LFG
Johnson
Canyon LFG
Keller Canyon
LFG
Half Moon Bay
LFG
Santa Cruz
LFG
Shiloh Wind
High Winds
2015 RPS
Goal: 33%
(331 GWh)Actual Projected
Note that the volumes in Figure 1 are actual deliveries through 2010 and estimated deliveries
after 2010. Energy deliveries from the wind energy contracts were lower than expected in 2009
due to a transmission line outage for an upgrade project.
“Green Premium” Calculation
To conform to the rate impact limitation of 0.5 ¢/kWh on average, staff compares the total cost
of the renewable resource to the wholesale market price of non-renewable energy at the time
that the contract is executed. The rate impacts from each renewable resource are added
together to determine if the new resource would drive the cumulative retail rate impact above
the 0.5 ¢/kWh upper limit. The limit is converted into an annual premium “budget”for
qualifying renewables. For example, for 2010, the annual premium is calculated by multiplying
the annual energy sales (approximately 1,000,000 MWh/year) by the premium (0.5 ¢/kWh, or
$5/MWh) to get a green premium budget of $5.0 million/year.
For each resource the levelized1 cost impact ($/year) is calculated based on the renewable
energy cost plus transmission charges, minus any system or local capacity value provided, and
minus the wholesale market price quote for non-renewable energy (or “brown power”) plus
transmission charges.
Table 2 below shows the amount of the green premium budget that has been used up with the
existing eight PPAs. As shown, the contracts that were executed in 2004 and 2005 were priced
very near the brown energy market price. Prices for the last three contracts were significantly
higher than the brown energy market price. As shown in Table 2, for the eight existing
renewable contracts, the total green premium that is expected to be paid annually once all
projects are generating (expected in 2013) is $2.31 million, which corresponds to a rate impact
of about 0.231 ¢/kWh. This means that there is still room (up to $2.69 million per year) to
acquire additional renewable energy to meet the 33% RPS goal within the 0.5 ¢/kWh rate
impact limit.
Table 2 –Green Premium for Existing Renewable Energy Contracts
Date Contract
Executed
Annual
Energy
(GWh)
Levelized
Project
Cost
($/MWh)
Adjusted *
Brown
Market Cost
($/MWh)
Green
Premium
($/MWh)
Green
Premium
($1000/yr)
High Winds Nov. 2004 51.8 57.60 55.0 2.56 132
Shiloh Wind Oct. 2005 74.4 62.95 69.5 (6.50)(484)
Santa Cruz Nov. 2004 11.2 62.32 59.3 2.97 33
Half Moon Bay Jan. 2005 40.8 58.97 67.5 (8.55)(349)
Keller Canyon Aug. 2005 11.8 70.88 83.9 (13.00)(154)
Johnson Canyon Aug. 2009 11.2 98.66 67.3 56.35 633
Crazy Horse May 2010 32.0 107.58 70.8 36.81 1,178
San Joaquin May 2010 32.0 118.08 76.8 41.26 1,321
Total -All Committed Contracts 265.2 2,310
*Brown Market Costs are levelized across the project’s contract period, and adjusted for
the comparison project’s monthly and daily delivery profile, local and system capacity
value, transmission costs and losses.
Note that the Brown Market Cost does not include any future cost for greenhouse gas (GHG)
emissions allowances. These costs could be imposed starting in 2014. The cost for these
1 Levelizing is a process of taking nominal cash flows, discounting them to present value, summing the present
values, and amortizing the present value into uniform annual payments like a mortgage. The discounting and the
amortizing are both performed with the user’s discount rate or time value of money.
allowances is highly uncertain at this time. As part of the Climate Protection Plan (CPP)
approved by the Council in December 2007, a GHG adder of $20 per metric ton, escalating by
5% per year, is to be incorporated in utility purchasing decisions. The impact of the $20/ton
GHG adder would be to add about $10/MWh onto the levelized brown energy market prices
shown in the Table 2. This would effectively lower the green premium attributed to renewable
energy projects.
Council Action in August 2009 and May 2010
In July 2009, when staff requested that the Finance Committee recommend that the Council
approve the PPA with Ameresco Johnson Canyon landfill (CMR: 305:09), the Finance Committee
discussed the rising cost of renewable energy and stated that these high prices should prompt a
review of the policies and guidelines related to the acquisition of renewable power and the
emphasis on efficiency improvements that could reduce electricity use.
In August 2009, the Council agreed with the Finance Committee’s recommendation and
directed staff to work with the UAC to re-evaluate the policies and plans related to the
acquisition of renewable energy and energy efficiency and report back to the Finance
Committee (CMR: 342:09).
In May 2010, when Council approved 20-year renewable energy PPAs with Ameresco San
Joaquin and Crazy Horse landfills (CMR: 226:10), it also directed staff to:
A.Return to the Finance Committee before making any further
recommendations on the acquisition of any new renewable energy
resources with a re-examination of the policies and goals that are being
used in the alternate energy program, including the energy efficiency
plans and the electric acquisition policies and plans; and
B.In its review, staff should provide information on the flexibility of the 33%
target date with the option of aligning it to the State mandated goal.
Following extensive review with the UAC, the Finance Committee recommended Council
approval of proposed updates to LEAP (CMR: 426:10) and the Gas Utility Long-term Plan (GULP)
(CMR: 432:10) in December 2010. The proposed LEAP guidelines include direction related to
the pursuit of renewable energy supplies and the evaluation and funding of energy efficiency.
Council is scheduled to consider the updated LEAP and GULP in March 2011.
2010 Ten-Year Electric Energy Efficiency (EE) Plan
In May 2010, the Council approved the 2010 Ten-Year Electric EE Plan (CMR: 218:10). The 2010
EE Plan doubled the energy savings goals that were in the 2007 EE Plan. Figure 2 below shows
the actual electric load since 1990 and the load forecast until 2020 without additional EE, with
the 2007 EE Plan goals and with the 2010 EE Plan goals. The load forecast includes the
expected increased load due to the construction of the Stanford Hospital expansion project.
Figure 2 –Electric Consumption Forecast and Planned Energy Efficiency
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1990 1995 2000 2005 2010 2015 2020
Annual Load (MWh)
Historic load + Forecast with 2010 EE plan goals
Forecast with 2007 EE Plan goals
Forecast with no additional EE Program
Historic and Projected Annual Electric Loads
Impact of Energy Efficiency Programs on Load Forecast
The citywide electric load in 2020 is projected to be about 1,087 GWh/year with no active
energy efficiency efforts. If the goals in the 2010 ten-year EE Plan are achieved, the 2020 load
is projected to be about 1,001 GWh/year, a load reduction of about 86 GWh/year. If the goals
in the 2010 EE Plan are achieved, a 33% RPS goal in 2020 would require about 330 GWh/year of
renewable energy. Therefore, meeting the 2010 EE Plan goals would reduce the amount of
renewable energy required to meet a 33% RPS goal in 2020 by 29 GWh/year. In addition,
meeting the 2010 EE Plan goals reduces the amount of other (non-renewable) power purchases
by 57 GWh/year.
The Market for Renewable Resources in California and the West
With the arrival of RPS goals for investor owned utilities (IOUs) and the likelihood of still higher
RPS goals as a result of pending state legislation, the developers of renewable power are bullish
on the pricing prospects for their products. Legislation under consideration that establishes
higher RPS targets, California in-state renewable quotas, carbon taxes, or carbon cap-and-trade
mechanisms drive the bullishness of renewable energy project developers.
In the meantime, the California Public Utilities Commission’s (CPUC) “Market Price Referent”
(MPR) has impacted renewable energy prices. The MPR is published by the CPUC periodically
and consists of prices above which renewable projects proposed to IOUs would face additional
CPUC scrutiny. Therefore, the MPR acts as a renewable energy price floor for Palo Alto, as
proposers know they can get at least the MPR if they offer the project to the IOUs. For 25-year
base load power contracts with delivery starting in 2013 the current levelized MPR is
$112.45/MWh.
The City seeks new renewable supplies through several activities. The most successful method
to date has been to issue RFPs for renewable power, the last of which was released in the fall of
2009. The City also participates in a joint effort with other members of the Northern California
Power Agency (NCPA), the NCPA Green Power Project (NGPP), which aims to attract larger
projects that can be shared among the members. The NGPP has negotiated and worked
toward contracts with several proposers, but no PPA has yet been executed in the six years
NGPP has sought renewable energy. Other projects are brought to the NCPA by project
developers for the consideration of the NCPA general membership; the Western GeoPower
project is one of those projects. In addition, staff plans to propose a local solar photovoltaic
(PV) feed-in tariff (FIT) for Council consideration in the spring or summer of 2011. At a February
2011 UAC study session on PV FITs, an industry advocate told the UAC that the City could meet
about 2.4% of its electric needs from PV FITs by 2015.
Palo Alto’s Renewable Resource Portfolio with the Western GeoPower Project
The City has made commitments to renewable resources projected to provide 27.4% of its
energy from qualified renewable resources by 2013. If a 15% share of the Western GeoPower
Project is added, Palo Alto’s renewable resources would increase to about 30.8% of total load in
2014, or about 2.2% short of the 33% RPS target. Figure 3 below illustrates the renewable
resources already in the portfolio plus a 15% share of the Western GeoPower project.
Figure 3 –Palo Alto’s Renewable Resources Plus the Western GeoPower Project
0
50
100
150
200
250
300
350
200
3
200
5
200
7
200
9
201
1
201
3
201
5
201
7
201
9
202
1
202
3
202
5
202
7
202
9
203
1
203
3
203
5
203
7
Calendar Year
GWh/yr
WesternGeoPower
Small Hydro
Crazy Horse
LFG
San Joaquin
LFG
JohnsonCanyon LFG
Short-term
Renewables
Keller Canyon
LFG
Half Moon BayLFG
Santa Cruz
LFG
Shiloh Wind
High Winds
2015 RPS Goal:
33% (331 GWh)
As shown in Figure 3, the terms for the existing resources expire at varying times over the next
25 years so that contract extensions or new resources will be needed to continue to meet the
RPS goals in the future.
Table 3 below shows a summary of the information for the current renewable PPAs and the
Western GeoPower project including the levelized price, adjusted brown market cost, and
green premium.
Table 3 –Summary of Current Renewable Energy Supplies and Western GeoPower
Delivery
Begins
Annual
Generation
(GWh)
Levelized
Price
($/MWh)
Adjusted
Brown
Market
Price
($/MWh)
Green
Premium
($/MWh)
Total
Annual
Green
Premium
($1000)
Small Hydro Before 2000 10.0 0
High Winds Dec 2004 51.8 57.60 55.0 2.56 132
Shiloh Wind Jan 2006 74.4 62.95 69.5 (6.50)(484)
Santa Cruz Feb 2006 11.2 62.32 59.3 2.97 33
Half Moon Bay Apr 2009 40.8 58.97 67.5 (8.55)(349)
Keller Canyon Aug 2009 11.8 70.88 83.9 (13.00)(154)
Johnson Canyon Oct 2011 11.2 98.66 67.3 56.35 633
Crazy Horse Jan 2013 32.0 107.58 70.8 36.81 1,178
San Joaquin Jan 2013 32.0 118.08 76.8 41.26 1,321
Total Committed Projects 275.2 Total Committed Green Premium 2,310
Western Geo 33.1 113.0 74.0 39.01 1,290
Total with Western GeoPower 308.3 Total Green Premium
with Western Geo 3,600
If the City agreed to the new Third Phase Agreement with Western GeoPower, renewable
energy would supply about 31% of the City’s electric energy usage by 2014. The retail rate
impact for this renewable power would amount to about 0.36 ¢/kWh, still within the 0.5 ¢/kWh
rate impact limit.
Resource Impact
The cost of renewable energy supplies under a new Western GeoPower agreement for a flat price
of $113/MWh for up to 15% of the project output is expected to be up to $95.0 million over the
25-year term of the agreement. The annual expected cost is up to $4.0 million. Approval of the
new Western GeoPower Third Phase Agreement would result in a retail rate impact from all
renewable resources, including Western GeoPower, estimated at up to 0.36¢/kWh, beginning no
earlier than 2013.
Staff’s Conclusion on the Western GeoPower Project After Preliminary Review
As shown in Table 3 above, the price for the Western GeoPower Project is similar to the price of
the last two contracts approved by Council in May 2010 for the Crazy Horse and San Joaquin
landfill-gas-to-energy projects. In addition, there continues to be strong market for renewable
resources due to the likelihood that state legislation mandating a 33% RPS goal will be signed
into law. The price is also close to the MPR; however, the MPR is due to be updated soon and
could possibly fall about 5-10 percent depending on certain factors, such as the price of natural
gas.
Since it has been about 16 months since the City tested the renewable market independently
with an RFP, staff cannot say with certainty that the price offered for the Western GeoPower
project is the best available. Waiting to commit to Western GeoPower would give the City time
to issue another Request for Proposals for renewable energy and get solid alternatives to
compete with the Western GeoPower option. In addition, although the UAC and the Finance
Committee recommend the Council approve the proposed updated LEAP, the Council has not
yet considered LEAP so approving the project is not completely consistent with the Council
direction from May 2010.
Finally, although the deadline for signing the new Third Phase Agreement is short,Silicon Valley
Power (SVP) has verbally agreed to let the City participate in the Third Phase Agreement later in
2011 to permit staff to conduct a more thorough review and provide a recommendation on
whether to enter into the new Third Phase Agreement.