HomeMy WebLinkAboutStaff Report 1459City of Palo Alto (ID # 1459)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 3/21/2011
March 21, 2011 Page 1 of 6
(ID # 1459)
Summary Title: Amendments to NCPA Geothermal Project Agreements
Title: Adoption of a Resolution Approving Three Contracts with the Northern
California Power Agency (a) Amendment No. Two to Agreement for
Construction, Operation and Financing of Geothermal Project No. 3, (b)
Amended and Restated Geothermal Project Operating Agreement between
NCPA and the Project Participants; and (c) Amendment No. 2 to NCPA Facilities
Agreement
From:City Manager
Lead Department: Utilities
Recommendation
Staff recommends that Council adopt a resolution authorizing the City Manager to execute
the following Northern California Power Agency (NCPA) Geothermal Project Agreements
and Facilities Agreement amendments:
·Amendment Number Two to Agreement For Construction, Operation And Financing
Of Geothermal Generating Project Number 3 (Third Phase Agreement);
·Amended And Restated Geothermal Project Operating Agreement Between
Northern California Power Agency And The Geothermal Project Participants
(Operating Agreement); and
·Amendment Number One To Northern California Power Agency Facilities
Agreement (Facilities Agreement)
Executive Summary
Council’s approval of these amendments will reduce Palo Alto’s risk of assuming future financial
obligations for a project that Palo Alto no longer has an ownership interest in. The Turlock
Irrigation District (TID) will be terminating its NCPA membership on April 1, 2011. TID has
been a participant in various NCPA projects and their termination of membership has
required NCPA to update or develop a number of agreements and policy documents. On
February 24, 2011, the NCPA Commission approved five agreements related to a project in
which TID has decided to retain their ownership interest, the Geothermal Generating
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Project Number Three (Geothermal Project). Of the five related agreements approved by
the NCPA Commission in February, three also require approval of the participating
members’ governing boards: the amended Third Phase Agreement; the amended
Operating Agreement; and the amended Facilities Agreement. Council’s approval of these
three agreements is necessary for TID to complete its withdrawal from the NCPA Joint
Powers Agreement (JPA).
Amendments to the Geothermal Project Agreements are of interest to Palo Alto, because
TID’s ownership in the project originates from project entitlements that Palo Alto and two
other NCPA members (Gridley and Plumas-Sierra) permanently transferred to TID in 1984
and 1985. However, until this time, TID has not been a signatory to the Third Phase
Agreement. Additionally, under the 1984 transfer agreement the transferring members,
including Palo Alto, indemnified TID from any liability for property damage, which could
include decommissioning costs. The proposed amendments to the Third Phase Agreement
will incorporate the 1984 and 1985 transfers, formally recognizing TID as a project
participant and recognizing that Palo Alto, Gridley and Plumas are contingently liable for
bond payments only in the event of a TID default. The amended Operating Agreement
provides that TID will assume the obligations of Palo Alto, Gridley and Plumas relating to
the project’s operating, capital improvement, maintenance, financing and
decommissioning costs. The indemnity and insurance obligations assumed under the
1984 agreement will be extinguished as of April 1, 2011, because the 1984 agreement and
the 1985 agreement will be terminated as of that date.
Background
NCPA is an organization of publicly-owned electric utilities including Palo Alto. NCPA arranges
for delivery of the City's electric power and manages electric resources that Palo Alto jointly
owns with other NCPA members. In June 2009, TID provided formal notice to NCPA and all
NCPA members of its intent to terminate its membership in NCPA effective no later than April
1, 2011. Over the past 18 months, NCPA staff has inventoried all relevant agreements, policies,
and procedures and updated or developed new agreements and policy documents, as
necessary, to effectuate TID's withdrawal.
NCPA identified the following three categories of agreements, policies and procedures requiring
review and/or revision:
1) Natural gas related programs and projects;
2) Geothermal related programs and projects; and
3) Obligations under existing governance agreements to be settled prior to exit.
Natural Gas Related Programs and Projects
All work has been completed associated with the natural gas related programs and projects.
This included terminating the Natural Gas Purchase Program Third Phase agreement (approved
by Council on May 17, 2010, CMR: 224:10), removing TID from the natural gas procurement and
pipeline capacity management agreement, and modifying natural gas pipeline tariff agreements
to reflect a split of pipeline capacity between NCPA and TID. No further action by Palo Alto is
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required at this time.
Geothermal Related Programs and Projects
TID will retain its interests in Geothermal Project No.3 even after its withdrawal from NCPA.
However, TID is not a signatory to the Third Phase Agreement and its rights and entitlements
flow instead from:
·1984 and 1985 letter agreements between TID Palo Alto, Gridley, and Plumas by which
project entitlement percentages are transferred. These letter agreements are also
referred to as the “Transfer Agreements”, and Palo Alto, Gridley and Plumas are often
referred to as the “permanently transferring participants”;
·Letter agreements between TID and NCPA by which NCPA agreed to treat TID as a
project participant; and
·NCPA governance documents such as the Facilities Agreement and the Geothermal
Project Operating Agreement.
The letter agreements permitted TID's commissioner to vote at Commission meetings and
through its appointed representative on the Facilities Committee. After April 1, 2011, TID will
no longer have a commissioner on the NCPA Commission. Further, because the Facilities
Agreement provides that representation on the Committee is contingent on being an NCPA
member, TID will not have a representative on the Facilities Committee to formally represent
its entitlements in the geothermal project. As a result, NCPA and TID have been negotiating
agreements that will ensure that TID’s rights and obligations as embodied in the letter
agreements are continued in successor agreements to be implemented upon TID’s withdrawal
and that continuing NCPA member interests are protected in an equal fashion.
In order to finalize TID’s withdrawal the Geothermal Project participants, including Palo Alto,
will need to approve amendments to the Third Phase Agreement, the Operating Agreement,
and the Facilities Agreement to reflect TID’s participation in the project as a non-NCPA
member. The NCPA Commission approved the amendments to these three agreements at their
February 24, 2011 Commission meeting and is requesting that Palo Alto approve them before
April 1, 2011.
Additional agreements approved by the NCPA Commission on February 24 were the Fourteenth
Supplemental Indenture of Trust, and the Facilities Agreement Schedule FA 10.00 –Federal Tax
Guidelines Relating to Private Business Use. Both of these only required approval by the NCPA
Commission and therefore no further action on them is required by Palo Alto at this time.
Obligations under Existing Governance Agreements to be Settled Prior to Exit
NCPA and TID have negotiated a settlement that identifies their claims against each other and
establishes a payment amount that will be used to settle both known and unknown claims that
were outstanding at the time of the settlement. This “Exit Agreement” will also be used to
terminate certain remaining agreements between the parties as required due to the
termination of membership and to establish dispute resolution scope limits and processes for
disputed payments. This particular agreement requires approval by only the NCPA Commission
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and TID.
A detailed description of the above mentioned agreements, along with a summary of steps
taken by NCPA related to TID's withdrawal, is found in the NCPA Staff Report dated February
22, 2011 (Attachment B). The Membership Withdrawal and Exit Agreement between NCPA and
TID, the Fourteenth Supplemental Indenture of Trust, and the Facilities Agreement Schedule FA
10.00 are shown in Attachments G, H, and I.
Discussion
The following description of the proposed amendments is summarized from a letter to Council
from the City Attorney, which is provided in Attachment J. Amendment Number Two to the
Geothermal Third Phase Agreement (Attachment D) implements the following changes:
1)TID is formally recognized as a project participant in regard to its 12.661% ‘Transferred
Project Entitlement Percentage’ interest in the Geothermal Project, and the project
interests of Palo Alto, Gridley and Plumas will be correspondingly reduced. Specifically
Palo Alto’s interest will be formally reduced from 12.316% to 0%. Palo Alto, Gridley and
Plumas will remain contingently liable only in the event that TID defaults on a bond
payment.1 Given Palo Alto’s original 12.316% interest transferred to TID, Palo Alto
would be contingently responsible for 97.275% (about $225,000/year) of TID’s bond
payment obligations. Palo Alto, Gridley and Plumas’ contingent liability will cease by
2024, when the 2009 Bonds are no longer outstanding, or earlier if the 2009 Bonds are
refinanced or restructured.2 In the event of a TID default Palo Alto, Gridley and Plumas
may each recover from TID their respective shares of bond payments made on behalf of
TID, however, their respective interests in the project will not change.
2)The term “Project Entitlement Percentage” is redefined to include capacity, energy and
associated attributes of the project, including renewable energy certificates (RECs), so
TID will be able to claim the RECs on a retroactive and prospective basis as of April 1,
2011. Though Palo Alto has not claimed RECs from the project in the past, the
amendment to the Third Phase Agreement clarifies that Palo Alto cannot lay claim to
these RECs as of April 1, 2011.
3)If Palo Alto, Gridley or Plumas fails to pay its share of TID’s default in payment, then
each of the other non-defaulting NCPA member project participants will be entitled to
pay the amount(s) in default and receive a prorated portion of the interest(s) of the
defaulting parties. As Palo Alto has a 0% interest in the Project, it will not be required to
pay for any defaults by Gridley and Plumas and it will not be entitled to receive any
1 The only outstanding bonds related to the current Third Phase Agreement are the 2009 Series A Bonds issued
under the Indenture of Trust, dated as of November 1, 1983. 2 The NCPA Commission adopted a resolution (Attachment C)approving the amendment to the 3rd Phase
Agreement; the resolution contains a Palo Alto amendment, which provides that NCPA will use reasonable efforts
to eliminate the City’s contingent liability before 2024 if the 2009 Bonds can be refinanced in a manner that will
achieve costs savings to NCPA.
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portion of the defaulting members’ interests.
The amended and restated Operating Agreement (Attachment E) makes the following changes:
1)TID, as a project participant, will assume the obligations of Palo Alto, Gridley and Plumas
relating to the project’s operating, capital improvement, maintenance, financing and
decommissioning costs, for the project interest transferred to TID. The indemnity and
insurance obligations under the 1984 agreement will be extinguished as of April 1, 2011,
because the 1984 agreement and the 1985 agreement will be terminated as of that
date.
2)After April 1, 2011, TID, as a non-member of NCPA, will not have the right to vote at an
NCPA Commission meeting on any issue relating to the project. However, TID can direct
Palo Alto, Gridley and Plumas’ NCPA Commissioners to vote at a NCPA Commission
meeting on behalf of and in accordance with TID’s instructions on any matter directly
related to its interest in the project.
Amendment Number One to the Facilities Agreement (Attachment F) permits TID to designate a
representative to the Facilities Committee which has purview over the project. There are no
issues implicated for Palo Alto in this amendment.
Resource Impact
The NCPA Commission has not yet decided how to allocate the costs of the NCPA and TID
negotiated settlement between the remaining NCPA members (this refers to TID’s remaining
share of the current fiscal year NCPA budget and other outstanding claims). However, the
impact to Palo Alto is not anticipated to exceed $25,000. Costs currently paid by TID for NCPA
JPA fees, judicial costs, and regulatory costs will be reallocated to the remaining NCPA members
in future budget years.
Palo Alto remains contingently liable for 97.275% (about $225,000/year) of TID’s bond payment
obligations only in the event of a TID default, and the amended agreements will terminate this
contingent liability when the 2009 Bonds are no longer outstanding.
Attachments:
·Attachment A: Resolution for NCPA Agreements for TID Withdrawal (DOC)
·Attachment B: NCPA Staff Report on TID Agreement Approvals Required for Withdrawal
from the NCPA JPA (PDF)
·Attachment C: NCPA Commission Resolution (PDF)
·Attachment D: Amendment No 2 to Geothermal 3rd Phase Agreement (PDF)
·Attachment E: Amended and Restated Geothermal Operating Agreement (PDF)
·Attachment F: Amendment No 1 to the NCPA Facilities Agreement (PDF)
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·Attachment G: Membership Withdrawal and Exit Agreement Between NCPA and TID (PDF)
·Attachment H: Fourteenth Supplemental Indenture of Trust (PDF)
·Attachment I: Facilities Schedule FA 10 00 (Federal Tax Guidelines Tax Exempt Status)
(PDF)
·Attachment J: Letter to Council from the City Attorney, March 14, 2011 (PDF)
Prepared By:Debra Lloyd, Manager
Department Head:Valerie Fong, Director
City Manager Approval: James Keene, City Manager
ATTACHMENT A
* Not Yet Approved *
1
110302 sh 0073513
Resolution No ____
Resolution of the Council of the City of Palo Alto Approving
Amendments to Three Geothermal Generating Project
Agreements Pertaining to Turlock Irrigation District’s
Withdrawal from Membership in the Northern California
Power Agency
WHEREAS, the Turlock Irrigation District (“TID”) has provided the required two-
years’ notice of termination of membership in the Northern California Power Agency (“NCPA”)
in accordance with the Joint Powers Agreement, as amended (“JPA”), and the NCPA
Commission has determined that TID’s withdrawal shall be effective as of April 1, 2011; and
WHEREAS,TID’s termination of membership under the JPA will affect the rights
and obligations under various agreements of TID, NCPA members and NCPA, and thus will
require those agreements to be terminated or amended; and
WHEREAS,under the JPA, a member is obligated to pay its pro-rata share of all
debts, liabilities and obligations of NCPA as of the effective date of termination as a condition
precedent to such member’s withdrawal from membership; and
WHEREAS,TID and NCPA have identified the agreements to be terminated or
amended, and the parties have reached agreement on and settled their respective claims; and
WHEREAS,as of February 24, 2011, the NCPA Commission approved the
following agreements that NCPA members, including Palo Alto, are now required to approve by
action of their governing bodies:
1.Amendment Number Two to Agreement for Construction, Operation and Financing of Geothermal Generating Project Number 3;
2.Amended and Restated Geothermal Project Operating Agreement Between
Northern California Power Agency and the Geothermal Project Participants; and
3.Amendment Number One to Northern California Power Agency Facilities
Agreement.
NOW, THEREFORE,the Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. The Council hereby approves and authorizes the City Manager on
behalf of the City of Palo Alto to execute the following contracts: (1) Amendment Number Two
to Agreement For Construction, Operation And Financing Of Geothermal Generating Project
Number 3; (2) Amended And Restated Geothermal Project Operating Agreement Between
Northern California Power Agency And The Geothermal Project Participants; and (3)
Amendment Number One To Northern California Power Agency Facilities Agreement.
* Not Yet Approved *
2
110314 sh 0073513
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
AMENDMENT NUMBER TWO TO
AGREEMENT FOR CONSTRUCTION, OPERATION AND FINANCING OF
GEOTHERMAL GENERATING PROJECT NUMBER 3
This Amendment Number Two to Agreement for Construction, Operation, and
Financing of Geothermal Generating Project Number 3 ("Amendment Number Two") is made
this 1st day of April, 2011 by and among the Northern California Power Agency ("NCPA"), a
California joint powers agency; the Cities of Alameda, Biggs, Gridley ("Gridley"), Healdsburg,
Lodi, Lompoc, Palo Alto ("Palo Alto"), Roseville, Santa Clara, and Ukiah; the Plumas Sierra
Rural Electric Cooperative ("Plumas"), a rural electrical cooperative; and the Turlock Irrigation
District ("TID"), a California irrigation district ( collectively the "Parties")
W I T N E S S E T H:
WHEREAS,
A. Each of the Parties other than TID is a party to that certain Agreement for
Construction, Operation and Financing of Geothermal Generating Project Number 3, dated as
of July 1, 1983; and
B. Each of the Parties other than TID is a party to that certain Amendment Number
One to Agreement for Construction, Operation and Financing of Geothermal Generating
Project Number 3, dated as of August 1, 1983 ( "Amendment Number One"); and
C. The Agreement for Construction, Operation and Financing of Geothermal
Generating Project Number 3 as amended by Amendment Number One is hereafter referred to
as the "Original Agreement" and as amended and supplemented from time to time is hereafter
referred to as the "Agreement"; and
D. Pursuant to the Original Agreement, NCPA agreed to construct, operate, and finance
a certain geothermal generating project located in Lake and Sonoma Counties constituting the
Project for the benefit of those parties other than NCPA executing it (the "Original Project
Participants"), each of whom is entitled to its Project Entitlement Percentage of Project
capacity and energy and is obligated to pay for the costs of said Project in accordance with
Section 5 of the Original Agreement; and
E. The Original Project Participants and TID entered into an Agreement for Transfer
of Rights to Capacity and Energy of Geothermal Generating Project Number 3, dated as of
October 1, 1984 (the "First Transfer Agreement") by which each Original Project Participant
transferred to TID specified and varying East Block Entitlement Percentages of Project capacity
and energy in each calendar year, to and including 2000, and, from calendar year 2001 until the
end of the life of the Project, Gridley permanently transferred 0.118% of its 0.456% of East
Block Entitlement Percentage of Project capacity and energy to TID, and Plumas permanently
transferred 0.227% of its 0.91% East Block Entitlement Percentage of Project capacity and
energy to TID; and
GEOTHERMAL THIRD PHASE AMENDMENT TWO 1
Execution Version
F. Palo Alto and TID entered into an agreement dated December 30, 1985 (the "Second
Transfer Agreement") and pursuant to the First Transfer Agreement and the Second Transfer
Agreement, Palo Alto permanently transferred all of its 12.316% East Block Entitlement
Percentage of Project capacity and energy to TID; and
G. The First Transfer Agreement and the Second Transfer Agreement are hereafter
collectively referred to as the "Transfer Agreements", and resulted in Gridley having rights to a
0.3360% Project Entitlement Percentage of Project capacity and energy, Palo Alto having rights
to a zero % Project Entitlement Percentage of Project capacity and energy, Plumas having rights
to a 0.7010% Project Entitlement Percentage of Project capacity and energy, and TID having
rights to a 6.3305% Project Entitlement Percentage of Project capacity and energy, together with
all additions thereto pursuant to section 7(d) of the Agreement, being referred to as the
"Transferred Project Entitlement Percentage" ; and
H. Gridley, Palo Alto and Plumas are hereafter collectively referred to as the
"Transferors"; and
I. The Transferors, while having permanently transferred all their respective rights to the
Transferred Project Entitlement Percentage to TID pursuant to the Transfer Agreements,
remain liable to NCPA with respect to all payments under the Agreement related to the
Transferred Project Entitlement Percentage to the extent TID does not make such payments;
and
J. As of the effective date of this Amendment Number Two, the only outstanding bonds
relating to the Project are NCPA's Geothermal Project 3 Revenue Bonds, 2009 Series A (the
"2009 Series A Bonds") issued under the Indenture of Trust, dated as of November 1, 1983,
between NCPA and U.S. Bank Trust National Association, as successor Trustee (as amended
and supplemented, the "Indenture") and the Indenture is the only existing Bond Resolution for
purposes of the Original Agreement; and
K. The Indenture provides that NCPA will not consent or agree to any amendment of
the Agreement which will reduce the payments required thereunder or which will in any manner
materially impair or materially adversely affect the rights of NCPA thereunder or the rights or
security of the holders of the bonds issued under the Indenture; provided that nothing in the
Indenture shall be construed so as to prohibit any other amendment of the Agreement; and
L. The Parties desire to amend the Original Agreement to, among other things, reflect
the terms of the Transfer Agreements by substituting TID for the Transferors as the Project
Participant under the Agreement with respect to the Transferred Project Entitlement Percentage
while, in order to avoid the appearance of the impairment of the security of the holder of any
2009 Series A Bond, so long as any 2009 Series A Bond remains outstanding under the
Indenture, each of the Transferors shall continue to remain liable for all payment obligations
accruing under the Agreement which are related to the Transferred Project Entitlement
Percentage such Transferor transferred to TID; and
GEOTHERMAL THIRD PHASE AMENDMENT TWO 2
Execution Version
M. The Parties also desire to amend the Original Agreement to clarify that
environmental attributes associated with the Project capacity and energy are included within the
rights held by the Project Participants, including TID;
NOW, THEREFORE, the Parties hereto agree as follows:
1. Terms used in this Amendment Number Two and not defined herein have the
meaning given to them in the Original Agreement.
2. To provide that TID, and not the respective Transferors, is the Project Participant
with respect to the Transferred Project Entitlement Percentage, Appendix "A" of the
Agreement ("SCHEDULE OF PROJECT PARTICIPANTS AND PROJECT
ENTITLEMENT PERCENTAGES") is hereby amended in its entirety to read as provided in
Exhibit 1 hereto to include a 12.661% TID East Block Entitlement Percentage and a 6.3305%
Project Entitlement Percentage and to correspondingly reduce the East Block Entitlement
Percentages and Project Entitlement Percentages of the Transferors.
3. To recognize that the 2009 Series A Bonds were issued when the Transferors were
the Project Participants with respect to the Transferred Project Entitlement Percentage, and to
increase the security for the 2009 Series A Bonds by adding TID as the Project Participant with
respect to the Transferred Project Entitlement Percentage while maintaining the respective
payment obligations of the Transferors under the Agreement with respect to the Transferred
Project Entitlement Percentage so long as any 2009 Series A Bonds remain outstanding under
the Indenture, Section 5(f) of the Original Agreement is hereby supplemented by adding at the
end thereof the following:
"Notwithstanding anything in this Section 5(f) or elsewhere in this Agreement to
the contrary, in the event the Turlock Irrigation District ("TID") should fail to timely pay
any amount payable by it under the Agreement, which payment obligation accrued while
any of NCPA's Geothermal Project 3 Revenue Bond, 2009 Series A ("the 2009 Series A
Bonds") remained outstanding under the Indenture of Trust, dated as of November 1,
1983, between NCPA and U.S. Bank Trust National Association, as successor Trustee, as
amended and supplemented (the "Indenture"), the City of Gridley ("Gridley"), the City
of Palo Alto ("Palo Alto") and the Plumas Sierra Rural Electric Cooperative ("Plumas"
and together with Gridley and Palo Alto the "Transferors") shall remain contingently
and secondarily obligated for each such payment in the following proportions, such that
the security of the holders of the 2009 Series A Bonds with respect to the Agreement is
not adversely affected by the addition of TID as a Project Participant and the reduction
of the Project Entitlement Percentages of the Transferors with respect to the
Transferred Project Entitlement Percentage:
Transferor Share of Amounts Not Paid by TID
Gridley 0.932%
Palo Alto 97.275%
Plumas 1.793%
GEOTHERMAL THIRD PHASE AMENDMENT TWO 3
Execution Version
In the event TID fails to make a payment when due under the Agreement, which
payment obligation became due while any of the 2009 Series A Bonds remain
outstanding under the Indenture, NCPA shall, not more than ten (10) days after the due
date for such payment, send the written demand contemplated by Section 7(a) of the
Agreement to TID and to the Transferors by electronic means or overnight delivery
service or by such other means as shall provide for delivery the next business day. Such
demand shall specify the amount due but not received by NCPA. If TID has not made
the missed payment by the twenty-fifth (25th) day following NCPA's sending the
demand for payment, each Transferor shall, not later than the thirtieth (30th) day from
the date of such demand, pay its respective share of the amount specified in the NCPA
notice of nonpayment from the sources specified in the Agreement for other payments
thereunder by the Project Participants. The Transferors' contingent and secondary
obligation for payments which TID fails to make when due under the Agreement shall
cease, and the Transferors shall be relieved of all obligations to make payments pursuant
to this Section 5(f), on the first date when no 2009 Series A Bonds remain outstanding
under the Indenture; provided, however, that nothing in this sentence shall relieve any
Transferor of its obligation to pay amounts which became due from TID under the
Agreement prior to such first date.
In addition to any other remedy available under the Agreement, each Transferor
may directly recover from TID any payments made pursuant to this section as well as
any costs or damages incurred by it as a consequence of the failure of TID to make
any payment under the Agreement, including the recovery of any attorneys fees."
4. The Original Agreement is hereby supplemented by adding a new Section 17 thereto
to read as follows:
"17. Attributes Associated with Project. A Project Entitlement Percentage of
Project capacity and energy includes not only the rights to electric capacity and energy,
but also the rights to a proportionate share of any associated attributes of the Project that
either exist or may exist in the future. This includes attributes such as environmental
credits, renewable energy credits, resource adequacy credits or other attributes associated
with the production of electricity from a renewable energy resource, along with ancillary
services. In all cases the right to a proportionate share of any associated attributes of the
Project is subject to the terms of this Agreement including the provisions hereof relating
to the loss by a Project Participant of the rights to Project capacity and energy including
the associated attributes
Upon the request of a Project Participant, evidence of the ownership of such associated
attributes will be provided by NCPA to the requesting Project Participant (and may
thereafter be sold by the Project Participant to third persons subject to the terms of
Section 18 of this Agreement and without being subject to a right of first refusal by
other Project Participants), in proportion to its respective Project Entitlement
Percentages of Project capacity and energy but subject to the provisions of Section 18 of
GEOTHERMAL THIRD PHASE AMENDMENT TWO 4
Execution Version
this Agreement and such commercially reasonable conditions as may be imposed or
adopted by the NCPA Commission from time to time.
5. The Original Agreement is hereby supplemented by adding a new Section 18 thereto
to read as follows:
"18. Federal Tax Matters. Each Project Participant recognizes that Bonds
issued with respect to the Project may bear interest that is excluded from gross income
for federal income tax purposes or may be issued under circumstances that entitle NCPA
or Bondholders to subsidy payments from the United States or federal tax credits with
respect to such Bonds (such exclusion from gross income or entitlement to a subsidy or
tax credit being referred to herein as a "Tax Benefit") and subject to the provisions of
federal tax law that limit, among other things, the arrangements permitted with respect to
the sale, assignment, delegation, or other disposition of Project Entitlement Percentages
of Project capacity and/or energy, or environmental and other associated attributes of
the Project. Each Project Participant shall comply with the covenants relating to Tax
Benefits contained in the Bond Resolutions, including the limitations on private use
permitted under such covenants as if the Project Participant had made such covenant
with respect to its Project Entitlement Percentage of Project capacity and energy. No
sale, assignment, delegation or other disposition of all or any portion of a Project
Participant's rights or obligation under this Agreement, including Project Entitlement
Percentages of Project capacity and/or energy, or environmental and other Project
attributes, that have been financed in whole or part with Bonds which have a Tax Benefit
shall be effective until: (i) such Project Participant shall have given prior written notice
thereof to NCPA; and (ii) NCPA's bond counsel shall have rendered an opinion to the
effect that (A) such sale, assignment, delegation or other disposition will not adversely
affect the Tax Benefits associated with such Bonds; and (B) such sale, assignment,
delegation or other disposition is within any private use restriction or other limitation
with respect to the Tax Benefits associated with such Bonds applying such restrictions
and other limitations solely to the Project Participant's Project Entitlement Percentage of
Project capacity and energy and not to the Project as a whole. Notwithstanding the
immediately preceding sentence, each Project Participant may, without obtaining such
bond counsel opinion, sell, assign, delegate or make such other disposition to which it is
entitled hereunder in a transaction which complies with tax-related guidelines established
by the NCPA Commission from time to time which guidelines have been approved by
NCPA's bond counsel."
6. The Original Agreement is hereby supplemented by adding a new Section 19 thereto
to read as follows:
"19. "In-lieu" JPA Cost Assessment for Non-Members. Project Participants
may not necessarily be members of NCPA. NCPA members pay a joint powers
agreement cost assessment for NCPA administrative costs, pursuant to the joint powers
agreement by which NCPA is formed, and non-NCPA member Project Participants
hereby likewise agree to pay for a portion of those costs, but only as applied to the non-
GEOTHERMAL THIRD PHASE AMENDMENT TWO 5
Execution Version
NCPA member Project Participant's Project Entitlement Percentage of energy produced
on behalf of the Project Participant. In addition to other payments required by this
Agreement, non-NCPA member Project Participants shall pay the annual "in-lieu" JPA
Cost Assessment, invoiced by NCPA in twelve (12) equal billings, which will be
separately identified for each non-NCPA member Project Participant. If a non-NCPA
member Project Participant later becomes an NCPA member, such Project Participant
shall no longer be required to pay the in-lieu JPA Cost Assessment. If an NCPA
member Project Participant later withdraws from NCPA, and is no longer an NCPA
member, such Project Participant will thereafter be subject to the in-lieu JPA Cost
Assessment as described in this section.
The In-lieu JPA Cost Assessment shall be:
In-lieu JPA Cost Assessment = (JPA Cost Assessment Rate) x (MWh of Project energy
produced on behalf of the Project Participant in the prior calendar year as metered at the
point of delivery)
The "JPA Cost Assessment Rate" shall be the amount per MWh charged to NCPA
members in any given year by the NCPA Commission as a JPA assessment pursuant to
Article IV section 3(a) of the Amended and Restated Northern California Power Agency
Joint Powers Agreement, and shall in no event exceed 15 cents per megawatt hour."
7. The proviso contained in Section 7(d) of the Agreement is hereby amended to read as
follows:
"provided, however, that the sum of such increases for any nondefaulting Project
Participant shall not exceed, without the written consent of such nondefaulting Project
Participant, an accumulated maximum of 25% of the nondefaulting Project Participant's
Project Entitlement Percentage set forth in Appendix A as in effect on April 1, 2011."
8. Section 11(e) of the Original Agreement is hereby amended in its entirety to read as
follows:
"Any Project Participant may veto a discretionary action of the Project
Participants relating to the Project that was not taken by a 65% or greater Project
Entitlement Percentage vote within 10 days following mailing of notice of such Project
Participants' action by giving written notice of the veto to NCPA and the other Project
Participants unless at a meeting of the NCPA Commission called for the purpose of
considering the veto and held within 30 days after such veto notice, the holders of 65%
or greater of Project Entitlement Percentages shall vote to override the veto."
9. Subsection (a), (b) and (c) of Section 12 of the Original Agreement are hereby deleted.
Subsection (d) of Section 12 of the Original Agreement is hereby amended by deleting the
subsection designation (d) and amending the language of former subsection (d) in its entirety to
read as follows:
GEOTHERMAL THIRD PHASE AMENDMENT TWO 6
Execution Version
"The term of this Agreement commenced on December 14, 1983. The Term of
this Agreement shall continue until the later of: (i) the expiration of the useful life of the
Project, or (ii) the date on which all Bonds issued have been retired, or full provision
made for their retirement, including interest until their retirement date. In the event of
the termination of the existence of NCPA prior to the termination of this Agreement, it
is the intent of the Project Participants that this Agreement continue as an agreement
among the Project Participants with the Project Participants performing the duties and
obligations of NCPA as a group."
10. Section 14 of the Original Agreement is hereby amended in its entirety to read as
follows:
"This Agreement is a service schedule and a third phase agreement attached to
and incorporated into the Facilities Agreement by and among the Project Participants
and NCPA. "
11. By execution of this Amendment Number Two, TID shall be deemed to have
executed the Agreement and be considered a Project Participant for all purposes of the
Agreement.
12. Except as provided in this Amendment Number Two, the Original Agreement shall
remain in full force and effect.
13. This Amendment Number Two may be executed in several counterparts, all or any
of which shall be regarded for all purposes as one original and shall constitute and be but one
and the same instrument.
IN WITNESS WHEREOF, each Project Participant has executed this Amendment
Number Two with the approval of its governing body and NCPA has executed this Amendment
Number Two in accordance with the authorization of its Commission.
NORTHERN CALIFORNIA POWER AGENCY
By: ______________________________
Approved as to form:
_________________________________
CITY OF ALAMEDA CITY OF BIGGS
By:__________________________ By:_______________________
Approved as to form: Approved as to form:
GEOTHERMAL THIRD PHASE AMENDMENT TWO 7
Execution Version
_____________________________ __________________________
CITY OF GRIDLEY CITY OF HEALDSBURG
By:___________________________ By:________________________
Approved as to form: Approved as to form:
______________________________ ___________________________
CITY OF LODI CITY OF LOMPOC
By:____________________________ By:_________________________
Approved as to form: Approved as to form:
_______________________________ ____________________________
CITY OF PALO ALTO CITY OF ROSEVILLE
By:____________________________ By:__________________________
Approved as to form: Approved as to form:
________________________________ ____________________________
CITY OF SANTA CLARA CITY OF UKIAH
By:_____________________________ By:__________________________
Approved as to form: Approved as to form:
________________________________ _____________________________
PLUMAS-SIERRA RURAL TURLOCK IRRIGATION DISTRICT
ELECTRIC COOPERATIVE
By:______________________________ By:__________________________
Approved as to form: Approved as to form:
_________________________________ _____________________________
GEOTHERMAL THIRD PHASE AMENDMENT TWO 8
Execution Version
GEOTHERMAL THIRD PHASE AMENDMENT TWO 9
Execution Version
Exhibit 1
APPENDIX A
In effect April 1, 2011
SCHEDULE OF PROJECT PARTICIPANTS AND PROJECT ENTITLEMENT
PERCENTAGES
PROJECT
PARTICIPANT
PROJECT NO. 2
ENTITLEMENT
PERCENTAGE
EAST BLOCK
ENTITLEMENT
PERCENTAGE
PROJECT
ENTITLEMENT
PERCENTAGE
City of Alameda 14.994% 18.771% 16.8825%
City of Biggs 0.000% 0.454% 0.227%
City of Gridley* 0.334% 0.338% 0.336%
City of Healdsburg 3.252% 4.096% 3.674%
City of Lodi 14.560% 6.000% 10.28%
City of Lompoc 3.266% 4.096% 3.681%
City of Palo Alto* 0.000% 0.000% 0.000%
City of Roseville 3.252% 12.514% 7.883%
City of Santa Clara 54.651% 34.13% 44.3905%
City of Ukiah 4.972% 6.257% 5.6145%
Plumas Sierra Rural
Electric Cooperative*
0.719% 0.683% 0.701%
Turlock Irrigation
District*
0.000% 12.661% 6.3305%
TOTALS 100.000% 100.000% 100.000%
* Pursuant to Section 5(f) of the Agreement, the City of Gridley, the City of Palo Alto and the
Plumas Sierra Rural Electric Cooperative remain contingently and secondarily responsible for
all payment obligations of Turlock Irrigation District while the 2009 Series A Bonds remain
outstanding.
1590958.2
1
AMENDED AND RESTATED
GEOTHERMAL PROJECT OPERATING AGREEMENT
BETWEEN
NORTHERN CALIFORNIA POWER AGENCY
AND
THE GEOTHERMAL PROJECT PARTICIPANTS
DATED AS OF April 1, 2011
2
TABLE OF CONTENTS
RECITALS ............................................................................................................ 4
AGREEMENT ....................................................................................................... 6
Definitions ......................................................................................................... 6
1.1 Agreement ............................................................................................... 6
1.2 Cost-Effective .......................................................................................... 6
1.3 Efficiency ................................................................................................. 7
1.4 Facilities Agreement ................................................................................ 7
1.5 Facilities Committee ................................................................................ 7
1.6 Legal Notice ............................................................................................. 7
1.7 Modified Operational Plan ........................................................................ 7
1.8 NCPA Management Services Costs ........................................................ 7
1.9 Operating Entity ....................................................................................... 7
1.10 Operational Plan .................................................................................... 8
1.11 Power Plant ........................................................................................... 8
1.12 Project.................................................................................................... 8
1.13 Project Costs ......................................................................................... 8
1.14 Project Entitlement Percentage ............................................................. 8
1.15 Project No. 2 Member Agreement ......................................................... 8
1.16 Project No. 3 Third Phase Agreement ................................................... 9
1.17 Project Participants ................................................................................ 9
1.18 Prudent Utility Practice ........................................................................... 9
1.19 Steamfield .............................................................................................. 9
1.20 Substantial Deviation ............................................................................. 9
Project as Single Shared Resource .................................................................... 10
Term; Amendment; Termination of Prior Agreement .......................................... 10
Continuing Monitoring ......................................................................................... 10
Plan Adoption ..................................................................................................... 10
Planning .............................................................................................................. 10
Steamfield and Power Plant Operations ............................................................. 11
Project Costs ...................................................................................................... 11
3
Surplus Capacity and Energy Sales .................................................................... 12
Project Annual Budget ........................................................................................ 12
Project Participant Direction and Review ............................................................ 13
Scheduling .......................................................................................................... 15
Reduced Steam Availability ................................................................................ 16
Reduced Transmission Capacity ........................................................................ 16
Power Plant Repair, Retirement, Replacement and Enhancement .................... 16
Power Plant Production Reduction, Suspension or Retirement .......................... 16
Notices ................................................................................................................ 17
Facilities Agreement ........................................................................................... 18
Project Agreements—Precedence, Interpretation and Severability .................... 18
Agreements Terminated by this Agreement ........................................................ 19
Counterparts ......................................................... Error! Bookmark not defined.
4
AMENDED AND RESTATED
GEOTHERMAL PROJECT OPERATING AGREEMENT
BETWEEN
NORTHERN CALIFORNIA POWER AGENCY
AND
THE GEOTHERMAL PROJECT PARTICIPANTS
This Agreement dated as of April 1, 2011 (“Effective Date”), by and among
the Northern California Power Agency (NCPA), a joint powers agency and public
entity of the State of California, and certain of its Members, the Cities of
Alameda, Biggs, Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Roseville, Santa
Clara, and Ukiah, the Turlock Irrigation District (TID), and the Plumas-Sierra
Rural Electric Cooperative (each of the foregoing being referred to individually as
a "Party" and all of the foregoing being referred to as the "Parties"), is made with
reference to these
RECITALS:
A. The Project No. 2 Member Agreement provided for the construction,
operation, and financing of NCPA Geothermal Generating Project No. 2,
consisting of two nameplate-rated 55-megawatt geothermal electric generating
units ("Project No. 2").
B. The Project No. 3 Third Phase Agreement provided for: (i) the
construction, operation, and financing of NCPA Geothermal Generating Project
No. 3, consisting of two nameplate-rated 55-megawatt geothermal electric
generating units on the East Block ("Project No. 3"); (ii) refinancing of Project No.
2; (iii) sharing of resources, facilities and costs between and among Project No. 2
and Project No. 3 ; and (iv) defining the term “Project” to include both Project No.
2 and Project No. 3.
C. Pursuant to section 4 of the Project No. 3 Third Phase Agreement, NCPA
agreed to provide to each Project Participant, and each Project Participant
agreed to take, or cause to be taken, such participant’s Project Entitlement
Percentage of the capacity and energy of the Project.
D. Section 16 of the Project No. 3 Third Phase Agreement provides that
NCPA may, in accordance with the provisions on Project Participant direction
and review in section 11, enter into agreements for the transfer or sharing of
resources, facilities, and costs between and among the Project No. 3 and other
entities and projects (including without limitation Project No. 2), which
agreements may provide, among other things, for the transfer or sharing of
steam, transmission facilities, generating equipment, spare parts, staff,
5
insurance, taxes and other payments, and for the integrated operation of the
Project No. 3 and Project No. 2 by NCPA.
E. Section 16(c) of the Project No. 3 Third Phase Agreement constitutes
approval by the participants in Project No. 2 of, among other things, equal
sharing between Project No. 2 and the East Block portion of the Project of steam
from the Project No. 2 area and the East Block area.
F. Section 16(d) of the Project No. 3 Third Phase Agreement provides in part
that, subject to the specific terms of contemplated agreements for transfer or
sharing of resources, facilities and costs in subsections (a) and (b) of section 16,
Project No. 2 and the East Block portion of Project No. 3 shall be conducted for
the mutual benefit of all participants therein.
G. On July 28, 1983, NCPA on behalf of the Project Participants in Project
No. 2 and Project No. 3, declared in a Memorandum of Understanding Re: NCPA
Geothermal Projects, approved by the Project Participants for Project No. 2 and
Project No. 3 (“1983 Memorandum of Understanding”), voting separately and in
accordance with the procedures required of them, that the Project Participants
would negotiate a further agreement as authorized by the Project No. 3 Third
Phase Agreement, which would include concepts with reference to the operation
of the two projects.
H. In the Agreement for Transfer of Rights to Capacity and Energy of
Geothermal Generating Project Number 3, dated as of October 1, 1984, ("the
First Transfer Agreement"), as supplemented by the “Agreement Between the
Turlock Irrigation District and the City of Palo Alto”, dated December 30, 1985
("the Second Transfer Agreement"), TID acquired a permanent transferred East
Block Entitlement Percentage of 12.661%, consisting of 12.316% from Palo Alto;
0.118% from Gridley; and 0.227% from Plumas-Sierra Rural Electric
Cooperative.
I. On August 30, 1985 NCPA purchased the two federal geothermal
resources leases which are the source of steam supply for all four units of the
Project.
J. Project Participants in Project No. 3 have acquired the interest of Project
Participants in Project No. 2 in the drill-rig funded by the Development Fund
pursuant to the Memorandum of Understanding Re: NCPA Geothermal Projects
dated July 28, 1983.
K. The NCPA Facilities Agreement, dated September 22, 1993, was entered
into by the Cities of Alameda, Biggs, Gridley, Healdsburg, Lodi, Lompoc, Palo
Alto, Redding, Roseville, Santa Clara, and Ukiah, and the Plumas-Sierra Rural
Electric Cooperative. TID approved the Facilities Agreement on August 29,
1995.
6
L. In accordance with the Project No. 3 Third Phase Agreement and the
1983 Memorandum of Understanding, NCPA and the Project Participants
consider the Project as a single shared resource, because of the finite nature of
the steam reservoir, and have previously entered into a Geothermal Operating
Agreement dated as of October 29 ,1990 to provide the means to manage
Steamfield usage, to optimize that usage, and make appropriate reflections
thereof in cost accounting and budgeting, to modify or clarify some of the
understandings among them, including certain understandings in the
Memorandum of Understanding Re: NCPA Geothermal Projects, in order to
achieve those objectives, and to supersede the Memorandum of Understanding.
M. The Parties by this Agreement now intend to amend, restate and
supersede the prior Geothermal Project Operating Agreement.
NOW THEREFORE, in consideration of the premises described in the
recitals, and of the promises, covenants, terms and conditions in this Agreement,
NCPA and the Project Participants do hereby enter into this
AGREEMENT:
1. Definitions. Unless the context requires otherwise, the definitions
contained in the Project No. 3 Third Phase Agreement shall be used in this
Agreement and the additional capitalized terms in this Agreement shall have the
following meanings:
1.1. “Agreement” means this Amended and Restated Geothermal Project
Operating Agreement by and among NCPA and the Project Participants.
1.2. "Bid" means an offer for the Supply or Demand of Energy or Ancillary
Services, including Self- Schedules, submitted by Scheduling Coordinators for
specific resources, conveyed through several components that apply differently
to the different types of service offered to or demanded from any of the CAISO
markets. All capitalized terms in this section 1.2 have the meaning as defined in
Appendix A – Master Definition Supplement of the CAISO Tariff, and are
implemented in accordance with Article 30 – Bid and Self Schedule Submission
for All CAISO Markets, as the referenced sections of CAISO Tariff may be
amended from time to time.
1.3. "CAISO" means the California Independent System Operator, a non-
profit public benefit corporation established by AB1890 which acts as a balancing
authority for the California electrical grid and wholesale electric markets, or a
successor agency or entity.
1.4. “Cost-Effective” means that the benefits to the Project outweigh the
costs taking into account the uncertainty of projected costs and benefits and the
7
time value of money.
1.5. “Efficiency” means the ratio of the net electric energy produced by a
generator to the energy of the steam supplied to that generator from the
steamfield.
1.6. "Facilities Agreement" means the agreement between NCPA and
certain of its Members and non-NCPA members, including the Project
Participants, dated as of September 22, 1993 and providing for the manner in
which NCPA operates projects on behalf of project participants, as such
agreement exists or may hereafter be amended.
1.7. "Facilities Committee" means the committee of project participants in
the various NCPA projects, including the Project, established by Article 4 of the
Facilities Agreement.
1.8. "Fiscal Year" means a one year period ending on June 30 of each
year.
1.9. “Legal Notice” means sufficient notice under the California open
meeting laws.
1.10. “Modified Operational Plan” means an Operational Plan amended
by the NCPA Commission upon the advice of the Facilities Committee from time
to time.
1.11. "NCPA Administrative Services Costs" means that portion of Project
Cost reflected in the NCPA Annual Budget including administrative, general and
occupancy costs and expenses, including those costs and expenses associated
with the operations, direction and supervision of the general affairs and activities
of NCPA, general management, treasury operations, accounting, budgeting,
payroll, human resources, information technology, facilities management,
salaries and wages (including retirement benefits) of employees, facility
operation and maintenance costs, taxes and payments in lieu of taxes (if any),
insurance premiums, fees for legal, engineering, financial and other services,
power management costs, scheduling and load dispatch costs, energy risk
management and settlements costs that are charged directly or apportioned to
the development, financing, construction, improvement, maintenance, operation
or decommissioning of the Project. The cost of NCPA legislative and regulatory
efforts, unless directly related to the Project, shall not be considered to be NCPA
Administrative Services Costs.
1.12. "Operating Entity" means an operating entity as defined in Facilities
Schedule FA 3.02 of the Facilities Agreement.
8
1.13. “Operational Plan” means the five or more-year plan for the operation
of the Steamfield and Power Plants adopted pursuant to this Agreement. An
Operational Plan shall set objectives and parameters for operation of the
Steamfield and the Power Plants. The Operational Plan (i) shall establish the
maximum, and otherwise describe the, annual and monthly capacity and energy
output of the Power Plant and the associated Project Participants’ annual
capacity and energy entitlement, based on Project Entitlement Percentages and
(ii) shall include operating guidelines for Power Plant operations and scheduling,
Steamfield operations and development, minimum operating levels, Project
maintenance schedules, Project enhancement schedules, and related cost
information. The Operational Plan shall provide for avoiding, correcting, and
addressing Substantial Deviations. The general goals of an Operational Plan
shall be the Cost-Effective optimization of Steamfield and Power Plant usage.
1.14. “Power Plant” means one or more of the electric generating units at
the Project originally nameplate-rated at 55 megawatts each.
1.15. “Project” means Project No. 2 and Project No. 3, including, but not
limited to, the Steamfield and the Power Plants, and all improvements, including
reclaimed water facilities, pipelines, appurtenances and pumping equipment
installed to arrest steamfield degradation, photovoltaic systems, and other
existing and future additions, betterments, equipment, materials, and
appurtenances necessary or convenient for the generation, transformation, and
transmission of electric power (including utilization of the NCPA Tap Lines and
the Castle Rock-Lakeville 230kV Transmission lines) from Project No. 2 and
Project No. 3 controlled or funded by NCPA.
1.16. “Project Costs” means all the costs described in Section 5a of the
Project No. 3 Third Phase Agreement and Section 8 of this Agreement.
1.17. “Project Entitlement Percentage” means, with respect to each
Project Participant, the percentage so identified and set forth opposite the name
of such Project Participant in Appendix A to the Project No. 3 Third Phase
Agreement, as amended, as such percentage shall be revised from time to time
in accordance with sections 7(d) and 13 thereof. “East Block Entitlement
Percentage” and “Project No. 2 Entitlement Percentage” mean, with respect to
each Project Participant the percentages so identified and set forth opposite the
name of such Project Participant in the same Appendix A, as such percentages
shall be revised from time to time in accordance with sections 7(d) and 13
thereof.
1.18. “Project No. 2 Member Agreement” means the "Amended and
Restated Agreement for Construction, Operation and Financing of NCPA
Geothermal Generating Unit # 2 Project," dated as of January 1, 1980,as
supplemented by the "Shell Member Supplement 1" dated as of May 1, 1980
and the "Shell Member Supplement 2" dated as of July 1, 1980, by and among
9
NCPA and certain of its Members, to wit: the Cities of Alameda, Biggs, Gridley,
Healdsburg, Lodi, Lompoc, Roseville, Santa Clara, and Ukiah, and the Plumas-
Sierra Rural Electric Cooperative, which provided for the construction, operation,
and financing of Project No. 2.
1.19. “Project No. 3 Third Phase Agreement” means the Agreement for
Construction, Operation and Financing of Geothermal Generating Project
Number 3, dated as of July 1, 1983, as amended and supplemented, by and
among NCPA and certain of its Members, to wit: the Cities of Alameda, Biggs,
Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Roseville, Santa Clara, and Ukiah,
and the Plumas-Sierra Rural Electric Cooperative, which provided for the
construction, operation, and financing of Project No. 3.
1.20. “Project Participants” means all of the signatories to this
Agreement, excluding NCPA, each of whom is also a signatory to the Project No.
3 Third Phase Agreement.
1.21. “Prudent Utility Practice” means any of the practices, methods and
acts engaged in or approved by a significant portion of the electric utility industry
during the relevant time period, or any of the practices, methods and acts which,
in the exercise of reasonable judgment in light of the facts known at the time the
decision was made, could have been expected to accomplish the desired result
at the lowest reasonable cost consistent with Northern American Electric
Reliability Corporation (“NERC”) and Western Electric Coordinating Council
(“WECC”) approved business practices, reliability, safety and expedition. Prudent
Utility Practice is not intended to be limited to the optimum practice, method, or
act to the exclusion of all others, but rather to be acceptable practices, methods,
or acts generally accepted in the WECC region.
1.22. "Self-Schedule" means the Bid component that indicates the
quantities in megawatt hours ("MWhs") with no specification of a price that the
Scheduling Coordinator is submitting to the CAISO, which indicates that the
Scheduling Coordinator is a Price Taker, Regulatory Must Run Generation or
Regulatory Must Take Generation, which includes existing transmission contracts
(" ETC") and transmission ownership rights ("TOR") Self- Schedules and Self-
Schedules for Converted Rights. All Capitalized terms in this section 1.21 have
the meaning as defined in Appendix A – Master Definition Supplement of the
CAISO Tariff as that Tariff may be amended from time to time.
1.23. “Steamfield” means the geothermal steam resource available to the
Project from federal Geothermal Resources Leases CA 949 and CA 950 held by
NCPA, and other arrangements which may make a geothermal steam resource
available to the Project.
1.24. “Substantial Deviation” means a variation from a major objective or
parameter in an Operational Plan or Modified Operational Plan of plus or minus
10
five (5%) percent or more, unless otherwise provided in a plan.
2. Project as Single Shared Resource. The Project shall be considered as a
single shared resource to be operated in accordance with the Project No. 3 Third
Phase Agreement and this Agreement. This Agreement implements Article 16 of
the Project No. 3 Third Phase Agreement and supersedes and replaces the 1983
Memorandum of Understanding and the 1990 Geothermal Project Operating
Agreement.
3. Term; Amendment; Termination of Prior Agreement.
a. This Agreement shall remain in force and effect from the Effective
Date until this Agreement is superseded by another agreement among the same
parties for the operation of the Project as a facility or until the Project Participants
terminate or cancel this Agreement with the same formality as its execution, as
provided in this section 3.
b. Any action to amend, supersede, terminate or cancel this Agreement
shall require the written consent and approval of all Project Participants.
c. The 1983 Memorandum of Understanding and the 1990 Geothermal
Project Operating Agreement are hereby terminated and superseded by this
Agreement.
4. Periodic Reporting. NCPA shall report to the Project Participants each
month in a form or forms approved by the Facilities Committee, on the
operational status of the Steamfield and the Power Plants and attainment of the
Operational Plan and any Modified Operational Plan, such report or reports at a
minimum shall contain a monthly and Fiscal Year-to-date summary of activities,
expenditures compared to the Annual Budget, and monthly and Fiscal Year-to-
date summary of plant availability, energy production, capacity levels, minimum
and maximum operating levels compared to forecast.
5. Operational Plan Adoption. In cooperation with the Project Participants,
NCPA staff shall each year prepare a draft Operational Plans for the Project for
review by the Facilities Committee and adoption by the NCPA Commission.
Adoption of the annual Operation Plan by the NCPA Commission shall occur not
later than September 30th of each year, unless otherwise agreed by the Facilities
Committee NCPA shall conduct Steamfield and Power Plant operations in
accordance with the adopted Operational Plan (or any adopted Modified
Operational Plan). Provided, however, that NCPA shall have the authority to
make or adjust to a Substantial Deviation as may be required by Prudent Utility
Practice.
6. Modified Operational Plan. In cooperation with the Project Participants,
NCPA staff shall prepare Modified Operational Plans as may be required and
11
shall present such Modified Operational Plan to the Facilities Committee. If the
Facilities Committee determines to recommend changes in the Operational Plan,
the Facilities Committee shall present a draft Modified Operational Plan to the
NCPA Commission as soon as practical which may adopt such Modified
Operational Plan.
7. Steamfield and Power Plant Operations. Pursuant to section 11 of the
Project No. 3 Third Phase Agreement, entitled Member Direction and Review,
the Project Participants do hereby direct NCPA to operate the Steamfield and
Power Plants in accordance with Operational Plans and Modified Operational
Plans adopted by the NCPA Commission, and as a single shared resource
between Project No. 2 and Project No. 3. The Project Participants may schedule
energy in compliance with such plans. The Project Participants may reduce, but
not increase, the amount of their scheduled monthly energy subject to limitations
specified in the Operation Plan. For example, for CY 2011, the limitation is 15
Megawatts total, allocated among all Project Participants in any scheduling hour.
If NCPA encounters a Substantial Deviation or determines there is a need to
make a Substantial Deviation from an Operational Plan or Modified Operational
Plan, NCPA staff shall take such action as may be required by Prudent Utility
Practice and promptly notify the Facilities Committee and the Project Participants
in writing. NCPA staff shall give such prompt notification of any Substantial
Deviation which NCPA: (i) determines needs to be taken or made at least seven
(7) days in advance, unless emergency conditions and Prudent Utility Practice
require action beforehand; or (ii) encounters, within seven (7) days of the
Substantial Deviation. Special meetings of the Facilities Committee may be
called to consider the Substantial Deviation and such changes of the Operational
Plan and the Modified Operational Plan as may be appropriate under the
circumstances.
8. Project Costs.
a. NCPA shall account for Project Costs under the Federal Energy
Regulatory Commission Uniform System of Accounts for Public Utilities Subject
to the Federal Power Act. Project Cost elements classified as fixed costs shall
be assigned to capacity and variable costs shall be assigned to energy. Fixed
and variable costs shall be determined in accordance with the schedules
attached to the Facilities Agreement. The variable price for steam and such
other costs which vary with energy output shall be allocated to the Project
Participants at the same price per unit of energy output without regard to which
Power Plant is the source of the energy. Project Participants shall pay for
capacity and energy from the Project and Project Costs associated with the
Project in accordance with this Agreement and the Project No. 3 Third Phase
Agreement.
b. The Parties acknowledge that section 5(a) of the Project No. 3 Third
Phase Agreement provides, in part, that:
12
"NCPA shall fix charges to the Project Participants to produce revenues
to NCPA from the Project to meet the costs described in (i) and (ii) above
based on East Block Entitlement Percentages applied to such costs
allocable to the East Block portion of the Project and Project No. 2
Entitlement Percentages applied to such costs allocable to the Project No.
2 portion of the Project; and to meet the costs described in (iii) above ,
based on the anticipated energy sales of the East Block portion of the
Project and, on the anticipated energy sales of the Project No. 2 portion of
the Project, respectively,"
and the Parties further acknowledge that such provision is not consistent with the
treatment of Project No. 2 and Project No. 3 as a single resource as provided in
this Agreement. Solely among themselves and NCPA, the Project Participants
waive as the price for steam and the costs of Steamfield operation, maintenance,
and development that sentence of section 5(a) of the Project No. 3 Third Phase
Agreement as recited above,
c. The annual budget shall reflect monthly estimates of fixed and
variable costs of the Project. Monthly billings by NCPA to the Project
Participants shall compare the actual fixed and variable costs with the annual
budget estimates.
9. Surplus Capacity and Energy Sales.
a. Section 9 of the Project No. 3 Third Phase Agreement, which relates
to sales of surplus capacity and energy by NCPA upon the request of a Project
Participant, does not apply to any transfers under Section 8 of the Project No. 3
Third Phase Agreement. The term “rights” under Section 8 shall be deemed to
include attributes as defined in Section 17 of the Project No. 3 Third Phase
Agreement.
b. When, pursuant to a Project Participant's request, NCPA sells surplus
energy or capacity on the day ahead of the delivery date or during the active day
for delivery, prices for capacity, energy, and ancillary services (all as defined in
the CAISO tariff) shall be established at the Geothermal Project generator
location in accordance with the Bid and Self-Schedule provisions contained in the
CAISO tariff for the market into which the capacity, energy and ancillary services
were sold. When NCPA sells surplus energy or capacity for Project Participants
on any other forward basis, the price will be as specified by the Project
Participant selling the surplus with such pricing communicated to NCPA in
advance of the transaction scheduling date and the Project Participant shall
assume responsibility for any additional CAISO costs, including those identified
in Section 12(b).
10. Project Annual Budget.
13
a. The Project No. 3 Third Phase Agreement requires, in section 6, that
prior to the beginning of each Fiscal Year, the NCPA Commission will adopt an
annual budget for the Fiscal Year covering all costs and expenses relating to the
Project.
The Project annual budget may be part of a multi-year budget. NCPA shall use
the same cost allocation formula or method for allocating each category of NCPA
Administrative Costs to the Project and other NCPA projects and programs.
Such cost allocation formulas and methodologies shall be based upon cost
causation principles and provide for fair and equitable allocation of such costs to
the Project and avoid placing an unfair burden of such costs on the Project.
The existing cost allocation methodology for allocating power management costs,
including risk management, settlements, and dispatching and scheduling costs to
the Project resulting from the NCPA Power Management Cost Allocation Study
(known as "the Nexant Study") shall continue in effect until changed by vote of
the NCPA Commission. Any change to that methodology shall be based on cost
causation principles and shall not discriminate against any Project Participant.
If a non-NCPA member Project Participant pays an In-lieu JPA Cost Assessment
(pursuant to section 19 of the Project No. 3 Third Phase Agreement), then
payment of such assessment shall be deemed to cover all costs incurred by
NCPA which are not included within the Project annual budget or NCPA
Administrative Services Costs or which in any way relates to the non-NCPA
member’s activities or characteristics not related to its participation in the Project
(including, but not limited to, the amount of the non-NCPA member’s native
electric loads or demands or revenues or any other similar characteristic). No
other non-Project Costs shall be assessed to a non-NCPA member without its
written consent. Nothing herein is intended in any way to limit or restrict the uses
to which the proceeds from the In-lieu JPA Cost Assessment may be applied by
NCPA.
b. The annual budget, as it relates to the Project and any amendment
affecting Project Costs, shall not go into effect until it has been reviewed by the
Facilities Committee and received the approval of the NCPA Commission.
11. Project Participant Direction and Review.
a. Project Participant Direction and Review in General.
i. All directions to NCPA with respect to the Project, and all meetings
of NCPA in connection therewith, shall be as provided in accordance
with section 11 of the Project No. 3 Third Phase Agreement and this
Agreement.
14
ii. NCPA shall comply with all lawful directions of the Project
Participants with respect to the Project, including relating to this
Agreement, to the fullest extent authorized by law. Actions,
authorizations and approvals of Project Participants, including giving
directions to NCPA, shall be taken only at meetings of authorized
representatives of Project Participants sitting as the NCPA
Commission or the Facilities Committee duly called and held pursuant
to applicable law.
b. Participation at NCPA Commission Meetings.
i. A non-NCPA Member Project Participant may not vote or
participate directly as if it had an NCPA Commission representative
in meetings of the NCPA Commission, other than as a member of
the public or as otherwise permitted by this section.
ii. Notwithstanding the provisions of subsection (c) of Section 11 of
the Project No. 3 Third Phase Agreement, Article 8(b) of the
Amended and Restated Northern California Power Agency Joint
Powers Agreement, or sub-subsection b (i) of this section, at any
meeting of the NCPA Commission upon the demand of any Project
Participant, including a non-NCPA Member Project Participant, the
vote on any issue relating to the Project shall be by Project
Entitlement Percentage. In any case where such a demand is
made, sixty-five (65%) percent or greater affirmative vote shall be
required to take action.
iii. Nothing herein is intended to prevent or prohibit TID from directing
the vote of the NCPA Commission representatives for the City of
Palo Alto, the City of Gridley, and the Plumas-Sierra Rural Electric
Cooperative to vote TID's Permanent Transferred East Block
Entitlement Percentages in Project No. 3 acquired from those
agencies in the manner directed by TID pursuant to section 21(b).
iv. Any Project Participant, including a non-NCPA member Project
Participant, may veto a discretionary action of the Project
Participants relating to the Project that was not taken by a sixty-five
(65%) percent or greater Project Entitlement Percentage vote
within 10 days following mailing of notice of such action, by giving
written notice of veto to NCPA and other Project Participants,
unless at a meeting of the NCPA Commissioners called for the
purpose of considering the veto and held within 30 days after such
veto notice, the holders of 65% or greater of the Project
Entitlement Percentage shall vote to override the veto, The sixty-
five (65%) percent of the Project Entitlement Percentage specified
in this subsection shall be reduced by the amount that the Project
15
Entitlement Percentage of any Project Participant shall exceed
thirty-five (35%) but such sixty-five (65%) shall not be reduced
below a majority in interest.
c. Representation of Project Participants on Facilities Committee. Each
Project Participant, whether or not an NCPA member, shall be entitled to
designate one member of the Facilities Committee, who shall have voting rights
only with respect to matters relating to the Project to provide it representation
with respect to the Project. The Facilities Committee shall advise NCPA on
matters relating to the Project in accordance with the terms of the Facilities
Agreement, and shall have such other authority as may be delegated to it by the
NCPA Commission or the Project Participants.
The Parties agree to cooperate in the amendment of the facilities
Agreement to the extent necessary to effectuate this subsection.
d. Rights of Non-NCPA Member Project Participants.
i. Meetings in General. Except for meetings of the NCPA
Commission covered in Subsection (b) and of the Facilities
Committee covered in Subsection (c), attendance and participation
at all other NCPA meetings by any Project Participant that is not a
NCPA member is limited to those meetings which are subject to the
Ralph M. Brown Act.
ii. NCPA shall ensure that all Project Participants, including Project
Participants that are not NCPA members, timely receive copies of
notices, agendas, staff reports (relating to the Project), and minutes
of any meeting of any committee, subcommittee, or working group
which is subject to the Ralph M. Brown Act and at which the Project
is an agenda item. In addition, all Project Participants, including
Project Participants that are not NCPA members, have the right to
inspect and to obtain copies of documents that are public records
pursuant to the California Public Records Act.
12. Scheduling
a. Each Operating Entity may direct NCPA to Bid, including Self-Schedule, its
Project Entitlement Percentage of the Project in any manner and for delivery to
any scheduling point on the CAISO controlled grid, provided that such Bid,
including Self-Schedule, shall be consistent with licensing and regulatory criteria,
including obligations of NCPA under interconnection agreements, the CAISO
tariff and the NCPA Second Amended and Restated Metered Subsystem
Aggregator Agreement (“MSSA Agreement”), as each of those documents may
be amended from time to time.
16
b. The Operating Entity directing NCPA to Bid, including Self-Schedule, its
Project Entitlement Percentage of the Project to any scheduling point on the
CAISO controlled grid, is financially responsible for all costs incurred by NCPA in
complying with such direction, including but not limited to the costs of losses,
congestion, scheduling fees and any other charges allocated to NCPA by the
CAISO related to NCPA’s obligation to Bid and deliver the Operating Entity’s
Project Entitlement Percentage of the Project between the generator scheduling
point (i.e. point of interconnection) and the point of delivery requested by the
Operating Entity.
c. All Scheduling direction to NCPA by an Operating Entity shall utilize NCPA’s
web services and be performed in accordance with the procedures contained in
the NCPA Power Schedule Guide, as may be amended from time to time.
Provided, however, that until appropriate software (as reasonably determined by
NCPA's Assistant General Manager for Power Management) is available to TID,
TID may Bid or Self-Schedule by providing written notice or direction to NCPA via
fax or electronic means.
13. Reduced Steam Availability. In the event of an extended period of reduced
steam availability, the available steam from the Steamfield shall be allocated to
maximize the Efficiency of the Project, and operated pursuant to the Operational
Plan, or Modified Operational Plan, to best meet all Project Participant
requirements from the Project and to achieve the most Cost-Effective use of the
Project, within the objectives and parameters of such plans, so that available
capacity and energy are allocated to the Project Participants in accordance with
their Project Entitlement Percentages.
14. Reduced Transmission Capacity. In the event of an extended period of
reduced transmission capacity, the Power Plants shall be operated pursuant to
the Operational Plan, or Modified Operational Plan, to best meet all Project
Participant requirements from the Project and to achieve the most Cost-Effective
use of the Project, within the objectives and parameters of such plans, so that
available capacity and energy are allocated to the Project Participants in
accordance with their Project Entitlement Percentages.
15. Power Plant Repair, Retirement, Replacement and Enhancement. NCPA
shall allocate the costs of repair, retirement, replacement, or enhancement of the
Project to the Project Participants in accordance with their Project Entitlement
Percentages without regard to which part of the Project or Power Plant is
affected by the need for repair, retirement, replacement, or enhancement.
16. Power Plant Production Reduction, Suspension or Retirement. An
Operational Plan or a Modified Operational Plan may include objectives and
parameters for the reduction of production of any Power Plant, and the
suspension of production, or retirement of any Power Plant from service in the
Project. In the event of a long-term reduction or production, suspension, or
17
retirement of any Power Plant in the Project, (i) the selection of the Power Plant
for reduction, suspension, or retirement shall be made on the basis of which
remaining Power Plant or Power Plants will result in the most Cost-Effective
operation of the Project, and (ii) the Project Participants shall remain responsible
for any debt service remaining on Bonds issued to support the acquisition,
construction, completion, or refinancing of the Power Plants in accordance with
their Project No. 2 Entitlement Percentages and East Block Entitlement
Percentages, except as provided in section 14 of this Agreement. All other debt
service responsibility and costs, and the capacity and energy from the remaining
Power Plants shall be allocated to the Project Participants in accordance with
their Project Entitlement Percentages.
17. Notices. Notices shall be in writing and shall be delivered by hand effective
upon receipt or by over-night or express mail effective upon receipt or by
facsimile effective the first business day after receipt, addressed as follows:
NORTHERN CALIFORNIA POWER AGENCY
Attn: General Manager
651 Commerce Drive
Roseville, CA 95678
FAX (916) 783-7603
TURLOCK IRRIGATION DISTRICT
Attn: General Manager
333 E. Canal Drive
Turlock, CA 95381
FAX (209) 656-2143
CITY OF ALAMEDA CITY OF BIGGS
Attn: Utility Director . Attn.: City Administrator
2000 Grand Street 465 "C" Street
Alameda, CA 94501 Biggs, CA 95917
FAX (510) 748-3956 FAX (530) 868-5239
CITY OF GRIDLEY CITY OF HEALDSBURG
Attn.: Utility Director Attn.: City Administrator
685 Kentucky St. 401 Grove St.
Gridley, CA 95948 Healdsburg, CA 95448
FAX (530) 846-3229 FAX ( 707) 431-2710
CITY OF LODI CITY OF LOMPOC
18
Attn.: Utility Director Attn.: Utilities Director
1331 South Ham Lane P.O. Box 8001
Lodi, CA 95242 100 Civic Center Plaza
Lompoc, CA 93438
FAX ( 209) 333-6839 FAX (805) 875-8399
CITY OF PALO ALTO CITY OF ROSEVILLE
Attn: Director of Utilities Attn: Electric Utility Director
250 Hamilton Avenue 2090 Hilltop Circle
Palo Alto, CA 94301 Roseville, CA 95747
FAX (650) 321-0651 FAX (916) 784-3797
CITY OF SANTA CLARA CITY OF UKIAH
Attn: Utility Director Attn.: Utility Director
1500 Warburton Avenue 300 Seminary Avenue
Santa Clara, CA 95050 Ukiah, CA 95482
FAX (408) 249-0217 FAX (707) 463-6740
PLUMAS SIERRA RURAL ELECTRIC COOPERATIVE
Attn: General Manager
73233 Highway 70
Portola, CA 9612218.
FAX (530) 832-6070
Any Party to this Agreement may amend either its address for notice or facsimile
number at any time by providing written notice to the other Parties.
18. Facilities Agreement. This Agreement is a Facilities Schedule pursuant to
section 1.5 of the Facilities Agreement; provided, not withstanding Section 21.2
of the Facilities Agreement, that this Facilities Schedule may not be amended
except in accordance with Section 3b of this Agreement.
19. Project Agreements—Precedence, Interpretation and Severability. This
Agreement is a further statement and modification of the agreements by and
among NCPA and the Project Participants in Project No. 2 Agreement, Project
No. 3 Third Phase Agreement, and the Facilities Agreement, which is intended to
be harmonized with those agreements so as to eliminate conflict. This
Agreement shall not be deemed to modify or change any obligation of NCPA or
the Project Participants arising out of the Project No. 2 Agreement or the Project
No. 3 Third Phase Agreement to the holders of bonds, including but not limited to
the 2009 Series A Bonds relating to the Project. Nothing in this Agreement shall
in any way alter or diminish the obligations of the Project Participants pursuant to
19
section 5(b) of the Project No. 3 Third Phase Agreement. In the event of a
conflict between those agreements and this Agreement which does not adversely
affect the rights of a holder of bonds, including the 2009 Series A Bonds, this
Agreement shall take precedence. In the event of a conflict between this
Agreement and the Facilities Agreement, this Agreement shall take precedence.
Any provision of this Agreement found invalid by a court of competent jurisdiction
shall be severed from this Agreement if the remaining provisions will effectuate
the intent of the parties.
20. Agreements Terminated by this Agreement. The following agreements
relating to the Project are hereby terminated:
a. The Turlock Transfer Agreement (the “First Transfer Agreement”).
b. The letter agreement dated August 6, 1985 signed by TID and NCPA
with respect TID's rights under the Turlock Transfer Agreement.
c. The "Agreement Between the Turlock Irrigation District and the City of
Palo Alto" dated December 30, 1985 (the “Second Transfer Agreement”).
d. The "Layoff Equalization Agreement By and Between City of Biggs, City
of Gridley, City of Healdsburg, City of Lodi, Plumas-Sierra Rural Electric
Cooperative, City of Roseville, City of Palo Alto, and Turlock Irrigation District In
Support of the 1998 Hydroelectric and Geothermal Revenue Refunding Bonds of
the Northern California Power Agency," ("the Layoff Equalization Agreement")
with respect to the sharing of benefits from the refinancing of the Project and the
NCPA hydroelectric project, provides that it terminates upon termination of the
Turlock Transfer Agreement (referred to in the Layoff Equalization Agreement as
the "Layoff Agreement"). The Turlock Transfer Agreement is terminated by this
Agreement, and hence the Layoff Equalization Agreement is also terminated.
21. Rights and Obligations under the First and Second Transfer Agreements.
a. Notwithstanding the termination of the First and Second Transfer
Agreements pursuant to Section 20 of this Agreement, the Parties agree that the
City of Gridley, City of Palo Alto, and the Plumas-Sierra Rural Electric
Cooperative permanently transferred all of their rights, title, interests, and
benefits in the Permanent Transferred East Block Entitlement Percentage to TID
and that TID assumed all of the obligations, duties, and burdens associated with
the Permanent Transferred East Block Entitlement Percentage transferred to
TID, including but not limited to, financing, construction, operation, maintenance,
replacement, additions and betterments, and decommissioning costs associated
with the Permanent Transferred East Block Entitlement Percentage.
b. Under Section 11 of the First Transfer Agreement, the City of Gridley,
City of Palo Alto, and the Plumas-Sierra Rural Electric Cooperative agreed “that
20
the [TID] may vote at meetings of the Project Participants pursuant to Section 11
of the Third Phase Agreement as if it had the East Block Entitlement Percentage
equal to the Transferred East Block Entitlement Percentages, and the voting
rights of the Transferring Participants shall be reduced accordingly.”
Notwithstanding the termination of the First and Second Transfer Agreements
pursuant to Section 20 of this Agreement, the City of Gridley, City of Palo Alto,
and the Plumas-Sierra Rural Electric Cooperative agree to vote at any NCPA
Commission meeting TID’s Permanent Transferred East Block Entitlement
Percentages in Project No. 3 acquired from those agencies under the First and
Second Transfer Agreement in the manner directed by TID.
c. The Parties agree that nothing in this Section 21 is intended to apply to
the East Block Entitlement Percentages permanently retained by the City of
Gridley and the Plumas-Sierra Rural Electric Cooperative, and that nothing in this
Section 21 is intended to apply to the Transferred East Block Entitlement
Percentages not permanently transferred to TID.
22. Counterparts. This Agreement may be executed in several counterparts, all
or any of which shall be regarded for all purposes as one original and shall
constitute and be but one and the same instrument.
WHEREFORE, NCPA, upon authorization by its Commission sitting as a whole,
at a duly and regularly called meeting, and the Project Participants, after all due
authorization by their governing bodies, have executed this Agreement, as
evidenced by the signatures of their authorized representatives below.
SIGNATURE PAGES FOLLOW
Remainder of this Page is Blank
21
FIRST SIGNATURE PAGE
AMENDED AND RESTATED GEOTHERMAL OPERATING AGREEMENT
NORTHERN CALIFORNIA POWER TURLOCK IRRIGATION
AGENCY DISTRICT
By: __________________________ By:________________________
Its: General Manager Its: General Manager
Date: ___________________ Date:___________________
Approved as to form: Approved as to form:
_____________________________ __________________________
General Counsel General Counsel
CITY OF BIGGS CITY OF GRIDLEY
By: __________________________ By:________________________
Its: City Manager Its: City Manager
Date:___________________ Date:_________________
Approved as to form: Approved as to form:
_____________________________ __________________________
City Attorney City Attorney
CITY OF HEALDSBURG CITY OF LODI
By: ___________________________ By:________________________
Its: City Manager Its: City Manager
Date:_________________ Date:_________________
Approved as to form: Approved as to form:
_______________________________ __________________________
City Attorney City Attorney
SECOND SIGNATURE PAGE
AMENDED AND RESTATED GEOTHERMAL OPERATING AGREEMENT
22
CITY OF LOMPOC CITY OF PALO ALTO
By: ____________________________ By:________________________
Its: City Manager Its: City Manager
Date:________________ Date:________________
Approved as to form: Approved as to form:
________________________________ __________________________
City Attorney City Attorney
CITY OF ROSEVILLE CITY OF UKIAH
By: _____________________________ By:________________________
Its: City Manager Its: City Manager
Date:______________________ Date:___________________
Approved as to form: Approved as to form:
________________________________ __________________________
City Attorney City Attorney
PLUMAS SIERRA
RURAL ELECTRIC COOPERATIVE CITY OF SANTA CLARA
By:______________________________ By: _______________________
Its: General Manager Its: City Manager
Date:_______________________ Date: _____________________
Approved as to form: Approved as to form:
_________________________________ __________________________
General Counsel City Attorney
AMENDMENT NO. 1
TO
NORTHERN CALIFORNIA POWER AGENCY
FACILITIES AGREEMENT
This Amendment no. 1 is made as of April 1, 2011 by and between the Northern
California Power Agency, a joint powers agency ("NCPA"), certain of its member agencies, and
the Turlock Irrigation District, a California Irrigation District ("TID"), with reference to the
following:
A. NCPA and certain of its members, consisting of the Cities of Alameda, Biggs,
Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Roseville, Santa Clara and Ukiah; [the Port of
Oakland]; TID; and associate NCPA member Plumas Sierra Rural Electric Cooperative have
entered into a Facilities Agreement dated as of September 22, 1993.
B. The Facilities Agreement provides for the means by which NCPA provides services
to the NCPA generating projects, allocates costs to and among such projects, and by which the
project participants can provide direction to NCPA with respect to the governance and
operation of such projects.
C. At the time of its approval, the signatories to the Facilities Agreement did not
contemplate that a participant in an NCPA generating project could be a non-NCPA member.
Hence, the Facilities Agreement provides in section 1.17 that a "participant" in the Facilities
Agreement is a member of NCPA which is signatory to the Facilities Agreement, and in Article
4 that the Facilities Committee by which project participants in NCPA projects provide
direction to NCPA is composed of participants.
D. TID has given notice to NCPA of its withdrawal from NCPA effective April 1, 2011,
but will remain a project participant in the Geothermal Project no. 3. In an Amended and
Restated Geothermal Operating Agreement dated as of April 1, 2011, the participants in that
project, including TID, and NCPA have agreed to amend the Facilities Agreement as necessary
to provide TID the ability to remain a signatory to the Facilities Agreement and to have an on-
going participation on the Facilities Committee.
NOW, THEREFORE, the Parties agree as follows:
1. Section 4.9 is hereby added to Article 4 ("Facilities Committee") of the Facilities
Agreement to read as follows:
"4.9 Notwithstanding any other provision of this Agreement to the contrary, Turlock
Irrigation District shall be entitled to designate one member of the Facilities
Committee for so long as Turlock Irrigation District shall remain a project
participant in Geothermal Project No. 3, which member shall have voting rights
only with respect to those matters directly relating to said project."
EXECUTION VERSION
AMENDMENT 1 TO FACILITIES AGREEMENT
2. Amendments to the Facilities Agreement which do not impair the rights of TID as
provided in section 1 shall not require the consent of TID, provided that TID shall be given
written notice of any amendment to the Facilities Agreement.
3. In all other respects the Facilities Agreement shall remain in full force and effect.
WHEREFORE, NCPA upon authorization of its Commission, and the Facilities
Agreement participants, after all due authorization by their respective governing bodies, have
executed this First Amendment as evidenced by the signatures of their authorized
representatives below.
NORTHERN CALIFORNIA POWER TURLOCK IRRIGATION
AGENCY DISTRICT
By: __________________________ By:________________________
Its: General Manager Its: General Manager
Date: ___________________ Date:___________________
Approved as to form: Approved as to form:
_____________________________ __________________________
General Counsel General Counsel
CITY OF BIGGS CITY OF GRIDLEY
By: __________________________ By:________________________
Its: City Manager Its: City Manager
Date:___________________ Date:_________________
Approved as to form: Approved as to form:
_____________________________ __________________________
City Attorney City Attorney
CITY OF HEALDSBURG CITY OF LODI
By: ___________________________ By:________________________
Its: City Manager Its: City Manager
EXECUTION VERSION
AMENDMENT 1 TO FACILITIES AGREEMENT
Date:_________________ Date:_________________
Approved as to form: Approved as to form:
_______________________________ __________________________
City Attorney City Attorney
CITY OF LOMPOC CITY OF PALO ALTO
By: ____________________________ By:________________________
Its: City Manager Its: City Manager
Date:________________ Date:________________
Approved as to form: Approved as to form:
________________________________ __________________________
City Attorney City Attorney
CITY OF ROSEVILLE CITY OF UKIAH
By: _____________________________ By:________________________
Its: City Manager Its: City Manager
Date:______________________ Date:___________________
Approved as to form: Approved as to form:
________________________________ __________________________
City Attorney City Attorney
PLUMAS SIERRA RURAL ELECTRIC COOPERATIVE
By:______________________________
Its: General Manager
Date:_______________________
Approved as to form:
_________________________________
General Counsel
EXECUTION VERSION
AMENDMENT 1 TO FACILITIES AGREEMENT
EXECUTION VERSION
AMENDMENT 1 TO FACILITIES AGREEMENT
CITY OF SANTA CLARA
By: _______________________
Its: City Manager
Date: ______________________
Approved as to form:
___________________________
City Attorney
1586612.3
1586612.2
MEMBERSHIP WITHDRAWAL AND EXIT AGREEMENT BETWEEN
NORTHERN CALIFORNIA POWER AGENCY
AND
TURLOCK IRRIGATION DISTRICT
This Membership Withdrawal and Exit Agreement ("this Agreement") is
entered into as of April 1, 2011(“Effective Date”), by and between the Northern
California Power Agency (“NCPA”), a California joint powers authority, and the
Turlock Irrigation District (“TID”), a California irrigation district, (collectively, the
“Parties” or individually, “Party”), and
W I T N E S S E T H:
A. NCPA was created by a joint powers agreement first made on July 19,
1968, and which was most recently amended and restated on January 1, 2008
("the Joint Powers Agreement"); and
B. On September 27, 1984, the NCPA Commission approved
Supplement No. 1 to the Joint Powers Agreement, revised as of April 1, 1973,
admitting the TID as a member of NCPA, which Supplement became effective on
March 24, 1987, the date of TID’s execution of it; and
C. The Joint Powers Agreement provides in Article IV section 2(a) that
any member may terminate its membership upon two (2) years prior written
notice to all other members. TID has provided such two (2) year notice which
notice is effective on April 1, 2011 and TID shall no longer be a member of NCPA
from and after that date; and
D. This Agreement sets forth and resolves all outstanding issues between
the Parties; and
E. The Project Participants in the Geothermal Generating Project Number
3 and TID have entered into an Agreement for Transfer of Rights to Capacity
and Energy of Geothermal Generating Project No. 3, dated as of October 1,
1984 (the "First Transfer Agreement") by which the Project Participants
transferred to TID specified and varying Entitlement Percentages of Project
capacity and energy in each calendar year, and, from calendar year 2001 until
the end of the life of the Geothermal Generating Project Number 3, Gridley, Palo
Alto, and Plumas each permanently transferred certain Entitlement Percentages
of Project capacity and energy to TID. In addition, Palo Alto and TID entered into
an agreement dated December 3, 1985 ("the Second Transfer Agreement") by
which Palo Alto permanently transferred the remainder of its East Block
Entitlement Percentage to TID. The First Transfer Agreement and the Second
Transfer Agreement are collectively referred to as the "Transfer Agreements."
1
F. TID and NCPA have entered into a letter agreement dated August 6,
1985 ("the Letter Agreement") by which NCPA's obligations to TID relative to
Geothermal Generating Project No. 3 in light of the First Transfer Agreement
were specified; and
G. The on-going rights and obligations of TID as a participant in NCPA
Geothermal Generating Project No. 3, subsequent to TID's withdrawal as a
member of NCPA, are separately resolved and agreed to in Amendment Number
Two to Agreement for Construction, and Financing of Geothermal Generating
Project Number 3 and in an Amended and Restated Geothermal Project
Operating Agreement (collectively, the "Geothermal Project Agreements"), and
Amendment No. 1 to Northern California Power Agency Facilities Agreement,
each of which is entered into concurrently with this Agreement; and
H. The Parties intend to provide each other mutual releases for all claims
and matters that have been resolved to date or are unknown.
NOW, THEREFORE, the Parties agree as follows:
1. Effective Date. This Agreement shall take effect on April 1, 2011.
2. Termination of Membership. On and after April 1, 2011, TID shall no longer
be a member of NCPA or a party to the Joint Powers Agreement, and shall be
deemed to have withdrawn from NCPA.
3. Claims Arising Prior to TID’s Termination of Membership.
a. The following known claims between NCPA and TID have arisen prior
to TID’s termination of membership.
(1) The amount owed by TID to NCPA pursuant to Article IV
section 2 (b) of the Joint Powers Agreement for TID’s pro-rata share of all debts,
liabilities and obligations of NCPA as of the date of termination. These debts
represent TID's share of obligations of NCPA for non-Geothermal Project No. 3
employees, including both pension and retiree medical benefits.
(2) The amounts invoiced by NCPA to TID in its “All Resources
Bills” for costs allegedly attributable to TID through March 31, 2011, which
invoices TID has paid under protest beginning in July 2010.
(3) NCPA’s claim that TID is required to pay the full amount of the
2010-2011 annual cash contribution pursuant to Article IV section 3 of the Joint
Powers Agreement even though TID has only been a member of NCPA for nine
of the twelve months during that period.
2
(4) NCPA's claim that it has inadvertently failed to bill TID for
certain transmission costs relating to Geothermal Project No. 3, and that TID
must pay all such costs to NCPA upon presentation of the bill to TID.
(5) TID's claim for damages relating to the sale of renewable
energy credits from Geothermal Project No. 3 as set forth in the August 20, 2010
letter from James Farrar of TID to James Pope of NCPA.
b. The Parties acknowledge that $219,819.00 is the current amount
owing from TID to NCPA with respect to the claim listed in section 3(a)(1). This
amount has been included in the calculation of the "net" amount to be paid by
TID pursuant to section 3(d). The amount owed for the claim listed in section
3(a)(1) is not final, and shall be twice subject to "true-up" as provided in this
subsection and in accordance with the methodology in Exhibit "A", and may
therefore be either increased or decreased, as a consequence of anticipated
actuarial reports requested by NCPA (at its cost). The Parties agree that amount
shall be subject to true-up such that TID shall be responsible for 11.347% of the
4.181% legislative and regulatory share share of all actuarially determined cost
increases or decreases in NCPA’S unfunded actuarial accrued liability
attributable to non-NCPA Project employees, including legislative and regulatory
staff for pension and retiree medical benefits. As of June 30, 2011 the unfunded
liabilities were calculated to be $46,335,308 ($41,374,505 retirement, $4,960,803
medical) as of June 30, 2009.
(1) The amount shall be subject to true up in approximately
August, 2011 when the medical retiree report for the fiscal year ending
June 30, 2011 is provided to NCPA.
(2) The amount shall be further subject to true up in
approximately October, 2012 when the CalPERS retiree pension report for
the fiscal year ending June 30, 2011 is provided to NCPA.
NCPA shall provide notice to TID within ten (10) days following receipt of
each actuarial report as to any additional amounts due, as well as the
calculations by NCPA supporting the TID share. TID shall be entitled to review
the report and NCPA’s calculations. The Parties agree to mutually resolve any
significant inaccuracies in the report or in NCPA’s calculations. TID shall pay any
increase, or NCPA shall refund any decrease, in TID's share within 30 days after
each such notice.
(c) Amounts paid by TID that are Project Costs during FY2011, as
defined in the Amended and Restated Geothermal Project Operating Agreement
between NCPA and the Geothermal Project Participants, will be subject to the
annual true-up and settlement process by the NCPA Commission in accordance
with NCPA's standard procedures, at the same time and on an equal basis with
remaining NCPA members. Such true-up is estimated to occur in February,
3
2012, and may result in a payment by NCPA to TID or by TID to NCPA in
addition to the net settlement amount stated in section 3(d). Non Project Costs,
including Legislative and Regulatory Program Costs and Natural Gas Information
Program Costs are settled as part of the net settlement amount described in
section 3d and will not be trued up.
NCPA shall provide notice and copies of all related staff reports to TID not less
than ten (10) days prior to the NCPA Commission meeting at which the true-up
and settlement is to occur. Following NCPA Commission action, NCPA shall
provide notice to TID of any increase or decrease in its power management costs
which have been determined. TID shall pay any increase, or NCPA shall refund
any decrease, in TID's share of power management costs within 30 days after
such notice.
(d) Subject to the true-up provisions of sections 3(b) 3(c) in full settlement
of all claims by NCPA against TID, and in full settlement of all claims by TID
against NCPA, NCPA acknowledges payment of $213,000 by TID which the
Parties agree is the net of the known claims by one against the other.
4. Mutual General Release.
The Parties hereby mutually waive and release each other from any and all
claims, debts, or obligations arising out of TID's membership in NCPA, the
Transfer Agreements, the Letter Agreement or the other agreements terminated
by the Amended and Restated Geothermal Project Operating Agreement,
whether such claims are known or unknown to them.
The Parties acknowledge that California Civil Code section 1542 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 execution of 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 Civil Code section 1542.
5. Notice. Any notice required by this Agreement shall be in writing and shall be
either delivered to or mailed by U.S. Mail, first class postage prepaid, addressed
as follows:
NORTHERN CALIFORNIA POWER AGENCY
Attn: James H. Pope, General Manager
651 Commerce Drive
Roseville, CA 95678
4
And
Attn: Michael F. Dean, NCPA General Counsel
Meyers Nave
555 Capitol Mall, suite 1200
Sacramento, CA 95814
TURLOCK IRRIGATION DISTRICT
Attn: General Manager
333 E. Canal Drive
Turlock, CA 95381
And
Attn: Roger Masuda, TID General Counsel
Griffith & Masuda, A Professional Law Corporation
517 East Olive Street
Turlock, CA 95380
6. Dispute Resolution. Notwithstanding the dispute resolution provisions which
may exist in the Joint Powers Agreement or in any other agreement between the
Parties to the contrary, the Parties agree that any dispute arising out of or in
connection with the provisions of this Agreement shall be resolved as provided in
this section. All such disputes shall be submitted to arbitration in accordance
with J.A.M.S./Endispute (“JAMS”), unless otherwise agreed by the Parties.
The Parties further agree:
a. Either Party may submit a matter to binding arbitration by
JAMS within sixty (60) days of the dispute arising. In all cases submitted
to JAMS for arbitration, the Parties agree: to a single arbitrator (who shall
be experienced in both the electric industry and public agency law); to
advance their respective administrative fees; and to advance in equal
shares the arbitrator’s fee.
b. The Parties incorporate the provisions of California Code of
Civil Procedure section 1283.05 into their agreement to arbitrate their
disputes, without the limitations as to depositions set forth in subdivision
(e) of section 1283.05.
c. Notwithstanding any rules or procedures of JAMS to the
contrary, the arbitrator shall be bound to render a decision in accordance
with applicable state and federal laws and shall issue written findings of
5
fact and conclusions of law (the “written opinion”). In any petition to
confirm, correct or vacate the arbitration award, the arbitrator’s written
opinion shall be subject to judicial review for the purpose of ensuring that it
conforms to applicable state and federal laws. Except for this limited right
of judicial review and other statutory grounds for correcting or vacating the
arbitrator’s award, the Parties agree that the decision of the arbitrator shall
be binding upon them. All costs associated with arbitration, including the
arbitrator's fees, shall be recovered by the prevailing party who shall be
designated by the arbitrator for this purpose. Each party shall bear its own
attorney's fees and expert witness fees.
d. This Agreement shall be construed in accordance with
California law. The venue for any mediation or arbitration under this
Agreement shall be Stockton, California, unless otherwise agreed by the
Parties.
7. Prior Agreements.
a. The following agreements between the Parties are hereby terminated:
i.. The "Energy Exchange Agreement" dated September 6, 1988.
ii.. The "Member Services Agreement" dated September 25, 1990.
iii.. The "Agreement for Sale of Capacity and Energy of Combustion
Turbine Project Number Two-Unit Two" dated August 1, 1992.
b. The Parties acknowledge that the Facilities Agreement, dated
September 22, 1993, provides that signatories to it are members of NCPA. The
Parties agree to cooperate in good faith to amend the Facilities Agreement as
may be necessary to permit TID to continue to participate in the Facilities
Committee established by the Facilities Agreement as contemplated by the
Amended and Restated Geothermal Operating Agreement entered into
concurrently with this Agreement.
c. The Parties acknowledge that the Facilities Agreement, as amended
pursuant to subsection b hereof to permit TID's participation in the Facilities
Committee, the Amended and Restated Geothermal Operating Agreement, and
the Agreement for Construction, Operation and Financing of Geothermal Project
Number 3, as amended by Amendment Number Two, entered into concurrently
with this Agreement, shall remain in full force and effect.
8. Interpretation. Each Party to this Agreement has been represented by its
counsel in the negotiation of this Agreement. In the event of any uncertainty, this
6
Agreement shall not be construed in favor or against any individual Party by
reason of California Civil Code section 1654.
IN WITNESS WHEREOF, the parties have caused this agreement to be
approved and executed.
NORTHERN CALIFORNIA POWER TURLOCK IRRIGATION
AGENCY DISTRICT
By: __________________________ By:________________________
Its: General Manager Its: Assistant General Manager
Date: ___________________ Date:___________________
Approved as to form: Approved as to form:
_____________________________ __________________________
General Counsel General Counsel
7
8
Exhibit A
Methodology for Determining True Up in Section 3b
The methodology for determining the TID share of any increased or decreased
liability pursuant to Section 3(b) shall be:
Medical Retiree Adjustment
(2011 unfunded medical liability determined by medical retiree actuarial reports-
$4,960,803) x (0.04181 Legislative & Regulatory Share of unfunded liability) x
(0.11347 TID Share) = True up of TID Share of NCPA’s Unfunded Actuarial
Accrued Liability for retiree medical
CalPERS Pension Adjustment
(2011 unfunded retirement liability determined by pension actuarial reports-
$41,374,505) x (0.04181 Legislative & Regulatory Share of unfunded liability) x
(0.11347 TID Share) = True up for TID Share of NCPA’s Unfunded Actuarial
Accrued Liability for CalPERS Pension
1572100.10
FOURTEENTH SUPPLEMENTAL
INDENTURE OF TRUST
between
NORTHERN CALIFORNIA POWER AGENCY
and
U.S. BANK NATIONAL ASSOCIATION, as TRUSTEE
relating to
Geothermal Project Number 3 Revenue Bonds
Dated as of April 1, 2011
OHS West:261076045.2
TABLE OF CONTENTS
Page
ARTICLE I AUTHORITY AND DEFINITIONS ............................................................... 2
101. Supplemental Indenture of Trust .......................................................................... 2
102. Authority for the Fourteenth Supplemental Indenture of Trust ............................ 2
103. Definitions............................................................................................................. 2
104. Rules of Construction ............................................................................................ 3
ARTICLE II AMENDMENTS TO ORIGINAL INDENTURE ........................................... 4
201. Amendments to Section 712 ................................................................................. 4
ARTICLE III MISCELLANEOUS ........................................................................................ 4
301. Effectiveness .......................................................................................................... 4
302. Bondholder Consent............................................................................................... 4
303. Indenture of Trust to Remain in Effect .................................................................. 5
304. Counterparts ........................................................................................................... 5
OHS West:261076045.2 i
OHS West:261076045.2
FOURTEENTH SUPPLEMENTAL INDENTURE OF TRUST
THIS FOURTEENTH SUPPLEMENTAL INDENTURE OF TRUST, made
and entered into as of April 1, 2011, by and between Northern California Power Agency, a joint
exercise of powers agency established pursuant to the laws of the State of California (“NCPA”),
and U.S. Bank National Association, a national banking association, incorporated under the laws
of the United States of America and authorized to accept and execute trusts of the character
herein set out, as successor trustee (the “Trustee”);
W I T N E S S E T H :
WHEREAS, NCPA has heretofore entered into an Indenture of Trust, dated as of
November 1, 1983 (the “Original Indenture of Trust”), as supplemented and amended by the
First Supplemental Indenture of Trust, dated as of November 1, 1983 (the “First Supplemental
Indenture of Trust”), the Second Supplemental Indenture of Trust, dated as of October 1, 1984
(the “Second Supplemental Indenture of Trust”), the Third Supplemental Indenture of Trust,
dated as of October 1, 1985 (the “Third Supplemental Indenture of Trust”), the Fourth
Supplemental Indenture of Trust, dated as of November 1, 1986 (the “Fourth Supplemental
Indenture of Trust”), the Fifth Supplemental Indenture of Trust, dated as of January 30, 1987 (the
“Fifth Supplemental Indenture of Trust”), the Sixth Supplemental Indenture of Trust, dated as of
May 1, 1993 (the “Sixth Supplemental Indenture of Trust”), the Seventh Supplemental Indenture
of Trust, dated as of September 1, 1994 (the “Seventh Supplemental Indenture of Trust”), the
Eighth Supplemental Indenture of Trust, dated as of April 1, 1996 (the “Eighth Supplemental
Indenture of Trust”), the Ninth Supplemental Indenture of Trust, dated as of April 1, 1996 (the
“Ninth Supplemental Indenture of Trust”), the Tenth Supplemental Indenture of Trust, dated as
of April 1, 1996 (the “Tenth Supplemental Indenture of Trust”), the Eleventh Supplemental
Indenture of Trust, dated as of August 1, 1998 (the “Eleventh Supplemental Indenture of Trust”),
the Twelfth Supplemental Indenture of Trust, dated as of August 1, 1998 (the “Twelfth
Supplemental Indenture of Trust”), and the Thirteenth Supplemental Indenture of Trust, dated as
of March 1, 2009 (the “Thirteenth Supplemental Indenture of Trust”), each by and between
NCPA and the Trustee (such Original Indenture of Trust, as amended and supplemented the
"Indenture of Trust"), to provide for the securing of Bonds (capitalized terms used herein and not
otherwise defined shall have the meanings given such terms pursuant to Section 103 hereof); and
WHEREAS, the only Bonds which remain Outstanding under the Indenture of
Trust are the $35,610,000 aggregate principal amount of Geothermal Project Number 3 Revenue
Bonds, 2009 Series A; and
WHEREAS, NCPA and the Parties have entered into Amendment Number Two
to the Project Number 3 Member Agreement; and
WHEREAS, Amendment Number Two provides, among other things, for the
Novation of TID for the Transferors with respect to the Transferred Project Entitlement
Percentage on the terms and conditions specified therein, including the Novation going into
effect only when no 2009 Series A Bonds remain Outstanding; and
WHEREAS, NCPA desires to amend Section 712 of the Original Indenture of
Trust to provide for the Project Number 3 Member Agreement being amended to permit the
Novation of TID for the Transferors with respect to the Transferred Project Entitlement
Percentage; and
OHS West:261076045.2 2
WHEREAS, Section 1001(7)) of the Original Indenture of Trust provides that at
any time and from time to time, NCPA and the Trustee may enter into a Supplemental Indenture
of Trust which, upon the filing with the Trustee of a copy thereof certified by an Authorized
NCPA Representative, shall be fully effective in accordance with its terms, to modify any of the
provisions of the Indenture of Trust in any respect whatever provided that such modification
shall be, and shall expressed to be, effective only after all Bonds of each Series Outstanding at
the date of execution and delivery of such Supplemental Indenture of Trust shall cease to be
Outstanding; and
WHEREAS, this Fourteenth Supplemental Indenture of Trust provides that the
amendments to Section 712 of the Original Indenture to permit the amendments of the Project
Number 3 Member Agreement with respect to the Novation shall go into effect when no 2009
Series A Bonds remain Outstanding; and
WHEREAS, all acts and things have been done and performed which are
necessary to make this Fourteenth Supplemental Indenture of Trust a valid and binding
agreement;
NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THIS
FOURTEENTH SUPPLEMENTAL INDENTURE OF TRUST WITNESSETH:
That, in consideration of the premises, the acceptance by the Trustee of the trusts
hereby created and originally created by the Original Indenture of Trust, the mutual covenants
herein contained and the purchase and acceptance of the Bonds by the Holders thereof, and for
other valuable consideration, the receipt whereof is hereby acknowledged, and in order to secure
the payment of the principal of, Redemption Price, if any, and interest on the Bonds according to
their tenor and effect, and the performance and observance by NCPA of all the covenants and
conditions contained in the Indenture of Trust and the Bonds on its part to be performed, it is
agreed by and between NCPA and the Trustee as follows:
ARTICLE I
AUTHORITY AND DEFINITIONS
101. Supplemental Indenture of Trust. This Fourteenth Supplemental Indenture of
Trust is supplemental to the Original Indenture of Trust as heretofore amended and
supplemented.
102. Authority for the Fourteenth Supplemental Indenture of Trust. This
Fourteenth Supplemental Indenture of Trust is entered into in accordance with Article X of the
Original Indenture of Trust.
103. Definitions.
(a) Except as provided by this Fourteenth Supplemental Indenture of Trust, all
terms which are defined in Section 101 of the Original Indenture of Trust, Section 103 of the
First Supplemental Indenture of Trust, Section 103 of the Second Supplemental Indenture of
Trust, Section 103 of the Third Supplemental Indenture of Trust, Section 103 of the Fourth
Supplemental Indenture of Trust, Section 103 of the Fifth Supplemental Indenture of Trust,
Section 103 of the Sixth Supplemental Indenture of Trust, Section 103 of the Seventh
Supplemental Indenture of Trust, Section 103 of the Eighth Supplemental Indenture of Trust,
OHS West:261076045.2 3
Section 103 of the Ninth Supplemental Indenture of Trust, Section 103 of the Tenth
Supplemental Indenture of Trust, Section 103 of the Eleventh Supplemental Indenture of Trust,
Section 103 of the Twelfth Supplemental Indenture of Trust, or Section 103 of the Thirteenth
Supplemental Indenture of Trust, shall have the same meanings, respectively, in this Fourteenth
Supplemental Indenture of Trust as such terms are given in said Section 101 of the Original
Indenture of Trust, Section 103 of the First Supplemental Indenture of Trust, Section 103 of the
Second Supplemental Indenture of Trust, Section 103 of the Third Supplemental Indenture of
Trust, Section 103 of the Fourth Supplemental Indenture of Trust, Section 103 of the Fifth
Supplemental Indenture of Trust, Section 103 of the Sixth Supplemental Indenture of Trust,
Section 103 of the Seventh Supplemental Indenture of Trust, Section 103 of the Eighth
Supplemental Indenture of Trust, Section 103 of the Ninth Supplemental Indenture of Trust,
Section 103 of the Tenth Supplemental Indenture of Trust, Section 103 of the Eleventh
Supplemental Indenture of Trust, Section 103 of the Twelfth Supplemental Indenture of Trust, or
Section 103 of the Thirteenth Supplemental Indenture of Trust, respectively.
(b) Amendment Number Two Definitions. Except as provided by this
Fourteenth Supplemental Indenture of Trust, all terms which are defined in Amendment Number
Two (as defined in subsection (c) of this Section 103) shall have the same meanings,
respectively, in this Fourteenth Supplemental Indenture of Trust as such terms are given in
Amendment Number Two.
(c) Additional Definitions. The following terms shall, for all purposes of the
Indenture of Trust, have the following meanings set forth below:
Amendment Number Two means Amendment Number Two to Agreement for
Construction, Operation, and Financing of Geothermal Generating Project Number 3, dated April
1, 2011, by and among NCPA, the Cities of Alameda, Biggs, Gridley, Healdsburg, Lodi,
Lompoc, Palo Alto, Roseville, Santa Clara, and Ukiah, the Plumas Sierra Rural Electric
Cooperative, and the Turlock Irrigation District in the form attached hereto as Exhibit A.
Effective Time means the initial time when no 2009 Series A Bond of any
maturity remains Outstanding.
Fourteenth Supplemental Indenture of Trust means this Fourteenth
Supplemental Indenture of Trust, amending and supplementing the Original Indenture of Trust as
heretofore amended and supplemented.
Novation means: the release and discharge of the obligation of each of the
Transferors to make payments with respect to the Transferred Project Entitlement Percentage
pursuant to Section 5(f) of the Project Number 3 Member Agreement (as amended by
Amendment Number Two) to the extent the obligation to make such payments accrues after the
Effective Time.
104. Rules of Construction. Words of the masculine gender shall be deemed and
construed to include correlative words of the feminine and neuter genders. Unless the context
shall otherwise indicate, words importing the singular number shall include the plural number
and vice versa, and words importing persons shall include corporations and associations,
including public bodies, as well as natural persons. Defined terms shall include any variant of
the terms set forth in this Article I.
OHS West:261076045.2 4
The terms “hereby,” “hereof,” “hereto,” “herein,” “hereunder,” and any similar
terms, as used in this Fourteenth Supplemental Indenture of Trust, refer to this Fourteenth
Supplemental Indenture of Trust as a whole and not to any particular Article or Section hereof.
ARTICLE II
AMENDMENTS TO ORIGINAL INDENTURE
201. Amendments to Section 712. Subsection 1 of Section 712 of the Original
Indenture of Trust is amended in its entirety, as of the Effective Time, to read as follows:
NCPA shall receive and forthwith deposit in the Revenue Fund all amounts
payable to it pursuant to the Project Number 3 Member Agreement and the Project Number 2
Member Agreement or payable to it pursuant to any other contract for the use of NCPA Capacity
or any part thereof. NCPA shall enforce or cause to be enforced the provisions of the Project
Number 3 Member Agreement and the Project Number 2 Member Agreement and duly perform
its covenants and agreements thereunder. Except for the Novation, NCPA will not consent or
agree to or permit any rescission of or amendment to or otherwise take any action under or in
connection with the Project Number 3 Member Agreement and the Project Number 2 Member
Agreement which will reduce the payments required thereunder or which will in any manner
materially impair or materially adversely affect the rights of NCPA thereunder or the rights or
security of the Bondholders under the Indenture of Trust; however, nothing herein shall be
construed so as to prohibit any other amendment of the Project Number 3 Member Agreement
and the Project Number 2 Member Agreement. A copy of the Project Number 3 Member
Agreement and the Project Number 2 Member Agreement certified by an Authorized NCPA
Representative shall be filed with the Trustee, and a copy of any such amendment certified by an
Authorized NCPA Representative shall be filed with the Trustee.
ARTICLE III
MISCELLANEOUS
301. Effectiveness. This Fourteenth Supplemental Indenture of Trust shall be in full
force and effect from and after the execution and delivery hereof by NCPA and the Trustee and
the satisfaction of the requirements of subsection 7 of Section 1001 of the Original Indenture of
Trust with respect to this Fourteenth Supplemental Indenture of Trust; provided that the
amendment to Section 712 of the Original Indenture of Trust pursuant to Section 201 hereof
shall not go into effect until the Effective Time.
302. Reference in Bonds. Pursuant to subsection 7(ii)(b) of Section 1001 of the
Original Indenture of Trust, this Fourteenth Supplemental Indenture of Trust shall be specifically
referred to in the text of all Bonds of any Series authenticated and delivered after the date of
execution and delivery of this Fourteenth Supplemental Indenture of Trust and of Bonds issued
in exchange therefor or in place thereof.
303. Indenture of Trust to Remain in Effect. Save and except as heretofore
amended and supplemented and as amended and supplemented by this Fourteenth Supplemental
Indenture of Trust, the Indenture of Trust shall remain in full force and effect.
OHS West:261076045.2 5
304. Counterparts. This Fourteenth Supplemental Indenture of Trust may be
executed in any number of counterparts, each of which, when so executed and delivered, shall be
an original; but such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, Northern California Power Agency has caused these
presents to be signed in its name and on its behalf by its General Manager and to evidence its
acceptance of the trusts hereby created, the Trustee has caused these presents to be signed in its
name and on its behalf by one of its authorized officers, all as of the first day of April, 2011.
NORTHERN CALIFORNIA POWER
AGENCY
By:
Name: James H. Pope
Title: General Manager
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
Authorized Officer
FA 10 00 - 1 TBD, 2011
NCPA Facilities Agreement
Facilities Agreement Schedule FA 10.00
Federal Tax Guidelines Relating to Private Business Use
A. Scope
NCPA has issued a number of Bond issues (the “Bonds”) for the NCPA Projects
which have been “traditional” tax exempt bond or Build America Bond
obligations, which are “tax advantaged” under provisions of the Internal
Revenue Code (the “Tax Status”). This Facilities Schedule summarizes and
documents the various federal tax restrictions approved by the Commission to be
used as guidelines relating to private business use of the NCPA Projects and the
capacity and energy from the NCPA Projects required to qualify and maintain
the Tax Status of the Bonds. Failure to comply with the private business use
requirements set forth in this Facilities Schedule may adversely affect the Tax
Status of the Bonds.
B. Definitions
Unless defined in Section B of this Facilities Schedule, all terms used in this
Facilities Schedule with initial capitalization shall have the same meaning as
those contained in Article 1 of the Agreement.
a. Bonds means bonds, notes or other evidences of indebtedness of
NCPA (including, without limitation, contracts relating to letters of
credit or other credit enhancement devises, interest rate swap and
other agreements relating to interest rate or other cash-flow
exchanges such as those authorized by the Public Finance Contracts
Law, and other contracts which are characterized as debt by NCPA
at or prior the execution thereof) issued to finance or refinance a
NCPA Project and to finance or refinance any contributions-in-aid-
of-construction for construction necessary for the adjacent electric
system to interconnect with a NCPA Project and includes
additional bonds to complete a NCPA Project and may consist of
that portion of an issue of NCPA bonds, notes or other evidences of
indebtedness issued to finance the costs of a NCPA Project, which
portion is specifically identified as Bonds.
FA 10 00 - 2 TBD, 2011
b. Build America Bonds (“BABs”) means taxable municipal bonds
that feature tax credits and/or federal subsidies for bondholders
and state and local government bond issuers.
c. Internal Revenue Code means all federal tax laws.
d. Internal Revenue Service means the federal agency responsible for
administering and enforcing the Treasury Department’s revenue
laws, through the assessment and collection of taxes, determination
of pension plan qualification, and related activities.
e. Treasury Regulations means tax regulations issued by the Internal
Revenue Service.
C. Restrictions on Non-Governmental Use
Neither NCPA nor the Participants may expect that (i) more than five (5) percent
of the proceeds of a Bond issue will be used to make or finance loans to any
person other than a state or local governmental unit, or (ii) except as described
below, more than the permitted amount of the proceeds of a Bond issue (that is,
the lesser of 10 percent or $15 million, as applicable) will be used in any trade or
business carried on by any natural person or any activity carried on by anyone
other than a natural person or a state or local governmental unit.
“Use” includes the sale of power (whether consisting of capacity, energy, or both,
including the sale of ancillary services) to non-governmentally owned utilities
(including e.g., the federal government, Bonneville Power Administration and
Western Area Power Administration) pursuant to output or requirements
contracts as well as any other arrangements for the sale of power on terms
different from those available to the general public. Such may include contracts
with retail customers that contain provisions which obligate a customer to make
payments that are not contingent on the output requirements of the customer or
that obligate the customer to have output requirements (including provisions
which obligate the customer not to cease operations). The private business use
restrictions are applied by taking into account any arrangements NCPA or any of
the Participants have with non-exempt persons (generally, for these purposes
any entity or person other than a municipally owned utility) for the sale of power
from a NCPA Project. Use also includes providing a non-governmental person
with control, whether direct or indirect, over the operations, maintenance or
decision making as to when to run or not run a particular NCPA Project (in tax
FA 10 00 - 3 TBD, 2011
parlance such rights would be called “special legal entitlements”). Such special
legal entitlements also may create private business use.
Applicable Treasury Regulations provide an exception to private business use if
the non-governmental person uses the property (or the capacity or energy for the
property) as a member of the general public. This occurs if the “property is
intended to be available and in fact is reasonably available for use on the same
basis by natural persons not engaged in a trade or business.” Use on the same
basis as the general public may include a fee or charge for use, so long as the
rates charged are generally applicable and uniformly applied. These rates may
vary in certain respects, such as different rates based on volume, so long as the
difference in rates is customary and reasonable. Any arrangement that gives the
non-exempt person special priority rights or preferential benefits is not use on
the same basis as the general public.
D. Specific Private Business Use Exceptions Relating to the NCPA Projects
NCPA and the Participants will enter into a variety of arrangements with non-
exempt persons, including wholesale customers of NCPA, wholesale and retail
customers of the Participants, and non-governmental utilities and other
providers and purchasers of electric generation, transmission, and distribution
service. Each of these arrangements will be treated as private business use in
evaluating compliance with the limits described in Section B, except to the extent
that the arrangement either satisfies one of the following exceptions to the
limitations on private business use and private security or payments, or NCPA
or the Participants obtain an opinion of Bond Counsel to the effect that the
arrangement will not adversely affect the Tax Status of the Bonds:
1. in the case of sales of electric generation or distribution service, the term of
such transaction will not exceed three (3) years (including renewal
options) and will be negotiated, arm’s length arrangements that provide
for compensation at fair market value or are based on generally applicable
and uniformly applied rates, and the related facility (e.g. a NCPA Project)
was not financed with a principal purpose of providing that facility for
use by that non-governmental person;
2. in the case of sales of electric generation or distribution service, the
compensation for such service and any other payments in respect of such
use will not exceed NCPA’s or the Participant’s, as applicable, properly
allocable cost of ordinary and necessary expenses that are directly
FA 10 00 - 4 TBD, 2011
attributable to the operation of the financed property used by the non-
governmental person;
3. in the case of sales of electric generation or distribution service, the output
is sold (i) to a retail customer pursuant to a requirements contract that
does not require the customer to make payments unless it actually has
requirements, (ii) under a contract pursuant to which the average annual
payments made under the contract do not exceed the amount permitted
under the de minimis rule contained in the applicable regulations, (iii)
under a contract the terms of which comply with (1) above, or (iv) from
non-bond financed system resources of the Participant which are
physically capable of supplying the output being sold;
4. the arrangement will not involve use of the Project (e.g., non-bond
financed resources or contracts involving the resale of generation provide
by an investor owned utility to NCPA);
5. the use of the NCPA Projects that would constitute private business use is
allocable to (i) Bonds that have been “remediated” within the meaning of
Treasury Regulation section 1.141-12 (or repaid in their entirety), or (ii)
equity, or (iii) taxable bonds issued by NCPA, or (iv) issues of bonds that
have been fully repaid;
6. an agreement that provides for the swapping or pooling of output by one
or more non-governmental persons to the extent that: (i) the swapped
output is reasonably expected to be approximately equal in value
(determined over periods of one year or less), and (ii) the purpose of the
agreement is to enable each of the parties to satisfy different peak load
demands, to accommodate temporary outages, to diversify supply, or to
enhance reliability in accordance with prudent reliability standards; and
7. the use of the NCPA Project is by an entity that qualifies as an agency or
instrumentality of NCPA approved by the Internal Revenue Service or
Bond Counsel.
E. Sale of Renewable Energy Certificates
In a private letter ruling, the Internal Revenue Service concluded that under
certain circumstances the sale of renewable energy certificates (“RECs”) does not
create any private business use. If a Participant transacts to sell some or all of the
FA 10 00 - 5 TBD, 2011
RECs resulting from the generation at one or more of the NCPA Projects to non-
governmental person with contract terms longer than three (3) years (contracts of
three (3) years or less would meet one of the exceptions from private business
use described in Section C) such transaction must satisfy the following basic
requirements to satisfy the Internal Revenue Service:
1. that the purchase of RECs does not entitle the REC purchaser to any
electric energy from the NCPA Project;
2. the Participant will retain exclusive control over its entitlement to the
NCPA Project, its operations and any decision regarding how or whether
to operate the NCPA Project;
3. the Participant will not be under any obligation to produce, or cause to be
produced, any renewable energy or to operate, or cause the Project to be
operated at all or at any particular level;
4. the REC contracts will not give the REC purchaser any direct or indirect
voice in how any component of the NCPA Project will be operated or
maintained.
F. Compliance with Private Business Use Limits by Participants
Private business use limitations set forth in this Facilities Schedule apply in
aggregate to all actions by NCPA and the Participants. Accordingly, NCPA will
implement internal procedures and requirements necessary to assure compliance
with the private business use limits as specified in this Facilities Schedule,
including:
1. contractual obligations of the Participants to comply with private business
use limits and other requirements of the Internal Revenue Code, and
2. regularly surveying the Participants to determine compliance with the
private business use limits and other requirements of the Internal Revenue
Code.
Participants are required to comply with private business use limits and other
requirements of the Internal Revenue Code pursuant to applicable Project
Agreement, and Participants are strongly encouraged to established internal
procedures and requirements necessary to assure compliance.